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

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

☐ Preliminary Proxy Statement

☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☒ Definitive Proxy Statement

☐ Definitive Additional Materials

☐ Soliciting Material under §240.14a-12

 

 

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☐ Fee paid previously with preliminary materials.

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CONTANGO OIL & GAS COMPANY
717 TEXAS AVENUE, SUITE 2900
HOUSTON, TEXAS 77002
(713) 236-7400

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 2017

Dear Contango

Stockholder:

March 31, 2017

We are pleased to invite you to attend the 2017 Annual Meeting of Stockholders of Contango Oil & Gas Company. The Annual Meeting will be held on May 11, 2017, at 9:30 a.m., local time, at the Chase Center Auditorium, located at 601 Travis St., Houston, Texas 77002.

The enclosed Notice of Annual Meeting and the accompanying proxy statement describe the various matters to be acted upon during the Annual Meeting. In addition, there will be a report on the state of our business and an opportunity for you to ask questions of our management.

You may vote your shares by submitting a proxy by Internet, by telephone, by completing, signing, dating and returning the enclosed proxy card or by voting your shares in person at the Annual Meeting. The enclosed proxy card describes your voting options in more detail. Our report to the stockholders, including our Annual Report on Form 10-K for the year ended December 31, 2016, also accompanies the enclosed proxy statement.

The Annual Meeting gives us an opportunity to review our business results and discuss the steps we have taken to position our company for the future. We appreciate your ownership of Contango’s common stock, and I hope you will be able to join us at the Annual Meeting.

 

 

 

 

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CONTANGO OIL & GAS COMPANY
717 TEXAS AVENUE, SUITE 2900
HOUSTON, TEXAS 77002
(713) 236-7400

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 11, 2017

The 2017 Annual Meeting of Stockholders (the “Annual Meeting”) of Contango Oil & Gas Company, a Delaware corporation, will be held on May 11, 2017, at 9:30 a.m., local time, at the Chase Center Auditorium, located at 601 Travis St., Houston, Texas 77002 for the following purposes:

(1) the election of six directors to our Board until the 2018 Annual Meeting of Stockholders;

(2) the ratifying of the appointment of Grant Thornton LLP as our independent registered public accounting firm;

(3) the holding of an advisory vote on named executive officer compensation;

(4) the approval of the amendment and restatement of the Amended and Restated 2009 Incentive Compensation Plan to, among other items, increase the number of shares authorized for issuance thereunder and to extend the term thereof;

(5) the re-approval of the material terms of the Amended and Restated  2009 Incentive Compensation Plan, as amended, in accordance with the stockholder approval requirements of Section 162(m) of the Internal Revenue Code; and

(6) the transacting of such other business as may arise that can properly be conducted at the Annual Meeting or any adjournment or postponement thereof.

Our Board has fixed the close of business on March 17, 2017 as the record date (the “Record Date”) for the determination of stockholders entitled to notice of and to vote at the Annual Meeting or any adjournment(s) or postponement(s) thereof. Only stockholders of record at the close of business on the Record Date are entitled to notice of and to vote at the Annual Meeting. A list of stockholders entitled to vote at the Annual Meeting will be available for examination at our offices for 10 calendar days prior to the Annual Meeting. The list will also be available during the Annual Meeting for inspection by stockholders.

EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ACCOMPANYING ENVELOPE OR USE THE TELEPHONE OR INTERNET VOTING.

	By Order of the Board of Directors,
Houston, Texas	John A. Thomas
March 31, 2017	Vice President, General Counsel and Corporate Secretary

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 11, 2017

The Notice of Annual Meeting of Stockholders, the Proxy Statement for the 2017 Annual Meeting of Stockholders and the
Annual Report to Stockholders for the year ended
December 31, 2016 are available at
www.proxyvote.com

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CONTANGO OIL & GAS COMPANY

717 TEXAS AVENUE, SUITE 2900

HOUSTON, TEXAS 77002

(713) 236-7400

PROXY STATEMENT

FOR

THE 2017 ANNUAL MEETING OF STOCKHOLDERS

Unless the context requires otherwise, references in this proxy statement to “Contango,” “we,” “us” and “our” are to Contango Oil & Gas Company, a Delaware corporation, and its consolidated subsidiaries. Unless the context otherwise requires, references to the “stockholders” are to the holders of shares of our common stock, par value $0.04 per share (“Common Stock”).

The accompanying proxy is solicited by the Board of Directors of Contango (our “Board”) to be voted at our 2017 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 11, 2017, at the time and place and for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders (the “Notice”) and at any adjournment(s) or postponement(s) thereof.

This proxy statement and accompanying form of proxy are being mailed to our stockholders on or about March 31, 2017. Our Annual Report on Form 10-K (the “Annual Report”) covering the year ended December 31, 2016 is enclosed, but does not form any part of the materials for solicitation of proxies.

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

At the Annual Meeting, our stockholders will act upon the matters outlined in the Notice, including (1) the election of six directors to our Board, each for a term ending on the date of the 2018 Annual Meeting of Stockholders (this proposal is referred to as the “Election of Directors”), (2) the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm (this proposal is referred to as the “Ratification of Grant Thornton”), (3) holding an advisory vote on named executive officer compensation (this proposal is referred to as the “Compensation Advisory Vote”), (4) the approval of the amendment and restatement to the Amended and Restated 2009 Incentive Compensation Plan; (5) re-approval of the material terms of the Amended and Restated 2009 Incentive Compensation Plan pursuant to Section 162(m) of the Internal Revenue Code, and (6) the transaction of such other business as may arise that can properly be conducted at the Annual Meeting or any adjournment or postponement thereof. Also, management will report on our performance during the last fiscal year and respond to questions from our stockholders.

A proxy is another person that you legally designate to vote your stock. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card.

It is a document that regulations of the Securities and Exchange Commission (the “SEC”) require that we give to you when we ask you to sign a proxy card to vote your stock at the Annual Meeting.

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One copy of the Notice, this proxy statement and the Annual Report (collectively, the “Proxy Materials”) will be sent to stockholders who share an address, unless they have notified us that they want to continue receiving multiple packages. This practice, known as “householding,” is designed to reduce duplicate mailings and save significant printing and postage costs. If you received a householded mailing this year and you would like to have additional copies of the Proxy Materials mailed to you or you would like to opt out of this practice for future mailings, we will promptly deliver such additional copies to you if you submit your request in writing to our Investor Relations Department, at 717 Texas Avenue, Suite 2900, Houston, Texas 77002, or call at (713) 236-7400. You may also contact us in the same manner if you received multiple copies of the Annual Meeting materials and would prefer to receive a single copy in the future. The Proxy Materials are also available at www.proxyvote.com .

Despite our efforts related to householding, you may receive more than one set of voting materials, including multiple copies of the proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. Similarly, if you are a stockholder of record and hold shares in a brokerage account, you will receive a proxy card and a voting instruction card. Please complete, sign, date and return each proxy card and voting instruction card that you receive to ensure that all your shares are voted at the Annual Meeting.

The record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on March 17, 2017 (the “Record Date”). The Record Date is established by our Board as required by Delaware law. On the Record Date, we had 25,232,989 shares of Common Stock issued and outstanding.

A quorum is the presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the shares of our Common Stock outstanding and entitled to vote as of the Record Date. There must be a quorum for the Annual Meeting to be held. If a quorum is not present, the Annual Meeting may be adjourned from time to time until a quorum is reached. Proxies received but marked as abstentions or broker non-votes will be included in the calculation of votes considered to be present at the Annual Meeting.

Subject to the limitations set forth below, stockholders at the close of business on the Record Date may vote at the Annual Meeting.

Each holder of Common Stock is entitled to one vote per common share on all matters to be acted upon at the Annual Meeting. Neither our Certificate of Incorporation, as amended, nor our bylaws allow for cumulative voting rights.

Most stockholders hold their shares through a broker, bank or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned in street name.

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Stockholders of Record : Stockholders of record may vote their shares or submit a proxy to have their shares voted by one of the following methods:

Street Name Stockholders : Street name stockholders may generally vote their shares or submit a proxy to have their shares voted by one of the following methods:

Yes. If you are a stockholder of record, you can revoke your proxy at any time before it is exercised by:

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If you are a street name stockholder and you vote by proxy, you may change your vote by submitting new voting instructions to your bank, broker or nominee in accordance with that entity’s procedures.

Yes. We treat all stockholder meeting proxies, ballots and voting tabulations confidentially if the stockholder has requested confidentiality on the proxy or ballot.

If you so request, your proxy will not be available for examination nor will your vote be disclosed prior to the tabulation of the final vote at the Annual Meeting except (1) to meet applicable legal requirements or (2) to allow the independent election inspectors to count and certify the results of the vote. The independent election inspectors may, however, at any time inform us whether or not a stockholder has voted.

If you hold your shares in “street name,” you will receive instructions from your broker or other nominee describing how to vote your shares. If you do not instruct your broker or nominee how to vote your shares, they may vote your shares as they decide as to each matter for which they have discretionary authority under the rules of the NYSE MKT LLC (the “NYSE MKT”).

There are also non-discretionary matters for which brokers and other nominees do not have discretionary authority to vote unless they receive timely instructions from you. When a broker or other nominee does not have discretion to vote on a particular matter, you have not given timely instructions on how the broker or other nominee should vote your shares and the broker or other nominee indicates it does not have authority to vote such shares on its proxy, a “broker non-vote” results. Although any broker non-vote would be counted as present at the Annual Meeting for purposes of determining a quorum, it would be treated as not entitled to vote with respect to non-discretionary matters.

Abstentions occur when stockholders are present at the Annual Meeting but fail to vote or voluntarily withhold their vote for any of the matters upon which the stockholders are voting.

If your shares are held in street name and you do not give voting instructions, the record holder will not be permitted to vote your shares with respect to Proposal 1 ( Election of Directors ), and your shares will be considered broker non-votes with respect to this proposal. If your shares are held in street name and you do not give voting instructions, the record holder will nevertheless be entitled to vote your shares with respect to Proposal 2 ( Ratification of Grant Thornton ) in the discretion of the record holder. If you shares are held in street name and you do not give voting instructions, the record holder will not be permitted to vote your shares with respect to Proposal 3 ( The Compensation Advisory Vote ), Proposal 4 ( Approval of the amendment and restatement of the Amended and Restated 2009 Incentive Compensation Plan ), Proposal 5 ( The 162(m) Re-Approval )  and your shares will be considered broker non-votes with respect to this proposal.

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Our Board has appointed Allan D. Keel and E. Joseph Grady as the management proxy holders for the Annual Meeting. If you are a stockholder of record, your shares will be voted by the management proxy holders in accordance with the instructions on the proxy card you submit by mail, or the instructions provided for any proxy submitted by telephone or Internet, as applicable. For stockholders who have their shares voted by duly submitting a proxy by mail, telephone or Internet, the management proxy holders will vote all shares represented by such valid proxies as our Board recommends, unless a stockholder appropriately specifies otherwise.

Our Board recommends a vote:

Other than the matters specified in the Notice, we do not expect any matters to be presented for a vote at the Annual Meeting. If you grant a proxy, the management proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the Annual Meeting. Under our bylaws, the deadline for notifying us of any additional proposals to be presented at the Annual Meeting has passed and, accordingly, stockholders may not present proposals at the Annual Meeting.

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We will bear all expenses of soliciting proxies. We have engaged Broadridge Financial Solutions to aid in the distribution of proxy materials and to provide voting and tabulation services for the Annual Meeting for a fee of approximately $9,000, plus reimbursement for reasonable out-of-pocket expenses. Our directors, officers and employees may also solicit proxies in person or by other means of communication. Such directors, officers and employees will not be additionally compensated but may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation. In addition, we may reimburse brokerage firms, custodians, nominees, fiduciaries and other persons representing beneficial owners of our Common Stock for their reasonable expenses in forwarding solicitation material to such beneficial owners.

You may submit proposals for consideration at future stockholder meetings, including director nominations. Please read “Stockholder Proposals and Director Nominations for the 2018 Annual Meeting” for information regarding the submission of stockholder proposals and director nominations for consideration at next year’s annual meeting.

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CORPORATE GOVERNANCE AND OUR BOARD

The Company’s Certificate of Incorporation and bylaws provide for the annual election of directors.  At each annual meeting of stockholders, our directors will be elected for a one-year term and serve until their respective successors have been elected and qualified.

Our Board held twelve meetings during 2016.  During 2016, no directors attended fewer than 75% of the total number of meetings of our Board and committees on which that director served.

We encourage, but do not require, our directors to attend annual meetings of stockholders.  At our 2016 Annual Meeting of Stockholders, five out of the seven serving members of our Board attended.

As required under the listing standards of the NYSE MKT, a majority of the members of our Board must qualify as independent, as affirmatively determined by our Board. Our Nominating Committee evaluated all relevant transactions and relationships between each director nominated for election at the Annual Meeting, or any of his or her family members, and our company, senior management and independent registered accounting firm. Based on this evaluation and the recommendation of our Nominating Committee, our Board has determined that B.A. Berilgen, B. James Ford, Lon McCain, and Charles M. Reimer are each an independent director, as that term is defined in the listing standards of the NYSE MKT. In making its independence recommendation, the Committee noted in particular the following at the time of determination:

Mr. Ford is a senior advisor to Oaktree Capital Management, L.P. (“Oaktree Capital Management”), which, through its affiliates OCM GW Holdings, LLC (“Oaktree Holdings”) and OCM Crimson Holdings, LLC (“OCM Crimson”), owns approximately 5.1% of our Common Stock. This significant ownership position could result in the interest of Mr. Ford becoming misaligned with those of our smaller stockholders.

Our Board has the authority to appoint committees to perform certain management and administrative functions. Our Board has established a Compensation Committee, Audit Committee, Nominating Committee and Investment Committee. Our Board, in its business judgment, has determined that the Compensation Committee, Audit Committee and Nomination Committee are comprised entirely of independent directors as currently required under the listing standards of the NYSE MKT and applicable rules and requirements of the SEC. The Board may also delegate certain duties and responsibilities to the committees it establishes; for example, the Board may delegate the duty of determining appropriate salaries for our executive officers from time to time.

The Audit Committee was established to oversee and appraise the audit efforts of our independent registered public accounting firm, and monitor our accounts, procedures and internal controls. During 2016, the Audit Committee consisted of Messrs. McCain (Committee Chairman), Berilgen and Schoonover prior to our 2016 Annual Meeting of Stockholders and Messrs. McCain (Committee Chairman), Berilgen and Ford thereafter.  Following the Annual Meeting, it is expected that the Audit Committee will consist of Messrs. McCain (Committee Chairman), Berilgen and Ford.  Each member of our Audit Committee is considered “independent” as described above. The Audit Committee met four times during 2016. Upon review by and recommendation of our Nominating Committee, our Board has determined that Mr. McCain was an “audit committee financial expert” as defined under applicable rules and regulations of the SEC. Our Audit Committee has adopted a charter, which is posted on our website www.contango.com under “Corporate Governance.”

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The responsibilities of the Compensation Committee, which are discussed in detail in the “Compensation Committee Charter” that is posted on our website at www.contango.com under “Corporate Governance,” include among other things, the responsibility to:

The Compensation Committee is delegated all authority of the Board as may be required or advisable to fulfill the purposes of the Compensation Committee. The Compensation Committee may form and delegate some or all of its authority to subcommittees when it deems appropriate. Meetings may, at the discretion of the Compensation Committee, include members of the Company’s management, other members of the Board, consultants or advisors, and such other persons as the Compensation Committee or its chairperson may determine.

The Compensation Committee has the sole authority to retain, amend the engagement with, and terminate any compensation consultant to be used to assist in the evaluation of director, CEO or executive officer compensation, including employment contracts and change in control provisions. The Compensation Committee has sole authority to approve the consultant’s fees and other retention terms and has authority to cause the Company to pay the fees and expenses of such consultants.

From time to time the Compensation Committee engages the services of Longnecker & Associates (“Longnecker”), an experienced compensation consulting firm that specializes in the energy industry. In selecting Longnecker as its independent compensation consultant, the Compensation Committee assessed the independence of Longnecker pursuant to SEC rules and considered, among other things, whether Longnecker provides any other services to us, the policies of Longnecker that are designed to prevent any conflict of interest between Longnecker, the Compensation Committee and us, any personal or business relationship between Longnecker and a member of the Compensation Committee or one of our executive officers and whether Longnecker owns any shares of our common stock. Longnecker is engaged by, and reports only to, the Compensation Committee and will perform the compensation advisory services requested by the Compensation Committee. Longnecker does not provide any other services to the Company, and the Compensation Committee has concluded that we do not have any conflicts of interest with Longnecker. Among the services Longnecker has been asked to perform were apprising the Compensation Committee of compensation-related trends, developments in the marketplace and industry best practices; informing the Compensation Committee of compensation-related regulatory developments; providing peer group survey data to establish compensation ranges for the various elements of compensation; providing an evaluation of the competitiveness of the Company’s executive and director compensation and benefits programs; assessing the relationship between executive pay and performance; and advising on the design of the Company’s incentive compensation programs.   As discussed in more detail below, the Compensation Committee has engaged Meridian Compensation Partners, LLC (“Meridian”), an experienced compensation consulting firm with significant energy industry experience, to provide compensation-related services in 2017.

The Compensation Committee annually compares our executive compensation program to those of other companies within the oil and gas industry through the use of energy industry compensation surveys from Effective Compensation Inc. (“ECI”).  ECI surveys are utilized as they are industry-specific and derive their data from direct contributions from a large number of participating companies.  The ECI surveys compile data from many companies that we currently consider to be in our peer group, as well as companies somewhat larger than us but with which we compete for talent.  The surveys were used to compare our executive compensation program against companies (the “Peer Group”) that have comparable market capitalization, revenues, capital expenditure budgets, geographic focus and number of employees.   The Compensation Committee regularly reviews and refines the Peer Group as

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appropriate.  When we refer to “peers,” “Peer Group” or “peer companies” or similar phrases, we are referring to this list of companies, as it may be updated by the Compensation Committee from time to time.

During 2016, the members of the Compensation Committee were Messrs. Ford (Committee Chairman), Berilgen and Reimer. Each member of the Compensation Committee during 2016 was an “outside director” as defined under section 162(m) of the Code and was “independent” as defined in the applicable rules of the NYSE MKT and the SEC. The Compensation Committee held two meetings during 2016.

The principal function of the Nominating Committee, which is discussed in detail in the “Nominating Committee Charter” that is posted on our website at www.contango.com under “Corporate Governance,” is to oversee, identify, evaluation and select qualified candidates for election to the Board. The Nominating Committee identifies individuals qualified to become Board members and recommends to the Board nominees for election as directors of the Company, taking into account that the Board as a whole shall have competency in industry knowledge, accounting and finance, and business judgment. While the Company does not have a formal diversity policy, the Nominating Committee seeks members from diverse backgrounds so that the Board consists of members with a broad spectrum of experience and expertise and with a reputation for integrity. Directors should have experience in positions with a high degree of responsibility, be leaders in the companies or institutions with which they are affiliated, and be selected based upon contributions that they can make to the Company. The Nominating Committee shall give the same consideration to candidates for director nominees recommended by Company stockholders as those candidates recommended by others.

During 2016, the members of the Nominating Committee were Messrs. Berilgen (Committee Chairman) and McCain. Each member of the Nominating Committee during 2016 was “independent” as defined in the applicable rules of the NYSE MKT and the SEC. The Nominating Committee held one meeting during 2016.

Because the Nominating Committee believes that director nominees should be considered on a case-by-case basis on each nominee’s merits, regardless of who recommended the nominee, it has not adopted a formal policy with regard to the consideration of any director candidates recommended by stockholders. For a description of the procedures that stockholders must follow in order to timely nominate director candidates, please see “ Stockholder Proposals and Director Nominations for the 2018 Annual Meeting .”

The Investment Committee was created by the Board on October 1, 2013 in connection with the closing of the Company’s merger (the “Merger”) with Crimson Exploration Inc. (“Crimson”). The purpose of the Investment Committee, which is discussed in detail in the “Investment Committee Charter” that is posted on our website at www.contango.com under “Corporate Governance,” is to allocate, subject to Board approval, the amount and nature of all capital expenditures of the Company and its subsidiaries, and review and discuss the plan for such capital expenditures with Company management. The members of the Investment Committee are Messrs. Romano (Chairman) and Keel. The Investment Committee did not hold any formal meetings during 2016 although the members of the Investment Committee met frequently on an informal basis and the full Board was active in the evaluation of potential capital expenditures by the Company.

We have adopted a “code of ethics” as defined by the applicable rules of the SEC, and it is posted on our website: www.contango.com under “Corporate Governance.” Any amendment to the code of ethics will be posted promptly on our website.

The Chairman of the Board is selected by the members of the Board. The positions of Chairman and CEO were separated at the closing of the Merger. The Board has determined that the current structure is appropriate at this time in that it enables Mr. Keel to focus on his role as CEO of the Company, while enabling Mr. Romano, the Chairman of our Board, to continue to provide leadership on policy at the Board level. Although the roles of CEO and

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Chairman are currently separated, the Board has not adopted a formal policy requiring such separation. The Board believes that the right Board leadership structure should, among other things, be informed by the needs and circumstances of the Company and the then current membership of the Board, and that the Board should remain adaptable to shaping the leadership structure as those needs and circumstances change.

Our risk management program is overseen by our Board and its committees, with support from our management. Our Board oversees an enterprise-wide approach to oil and gas industry risk management, designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance stockholder value. A fundamental part of risk management is a thorough understanding of the risks a company faces, understanding of the level of risk appropriate for our company and the steps needed to manage those risks effectively. The involvement of the full Board in setting our business strategy is a key part of its overall responsibilities and together with management determines what constitutes an appropriate level of risk for our company. Our Board believes that the practice of including all members of our management team in our risk assessments allows the Board to more directly and effectively evaluate management capabilities and performance, allows the Board to more effectively and efficiently communicate its concerns and wishes to the entire management team and provides all members of management with a direct communication avenue to the Board.

While our Board has the ultimate oversight responsibility for the risk management process, other committees of our Board also have responsibility for specific risk management activities. In particular, the Audit Committee focuses on financial risk, including internal controls, and oversees compliance with regulatory requirements. In setting compensation, the Compensation Committee approves compensation programs for the officers and other key employees to encourage an appropriate level of risk-taking behavior consistent with our business strategy.

More information about the Company’s corporate governance practices and procedures is available on the Company’s website at www.contango.com .

Stockholders desiring to communicate with our Board, or any director in particular, may do so by mail addressed as follows: Attn: Board of Directors, Contango Oil & Gas Company, 717 Texas Avenue, Suite 2900, Houston, Texas 77002. Our Chief Executive Officer, Chief Financial Officer or Corporate Secretary review each such communication received from stockholders and other interested parties and will forward the communication, as expeditiously as reasonably practicable, to the Board (or individual director) if: (1) the communication complies with the requirements of any applicable policy adopted by us relating to the subject matter; or (2) the communication falls within the scope of matters generally considered by our Board.

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EXECUTIVE OFFICERS

The following table sets forth the names, ages and titles, as of March 17, 2017, of each of our executive officers.

Name		Age		Position
Allan D. Keel		57		President, Chief Executive Officer and Director
E. Joseph Grady		64		Senior Vice President and Chief Financial Officer
Jay S. Mengle		63		Senior Vice President—Engineering
Thomas H. Atkins		58		Senior Vice President—Exploration
James J. Metcalf Jr.		59		Senior Vice President—Operations

 

The following provides summary information regarding the experiences of our President and Chief Executive Officer, our Senior Vice President and Chief Financial Officer and our three most highly compensated current executive officers. The named executive officer profiles exclude A. Carl Isaac who served as Senior Vice President – Operations until his resignation from such position on January 15, 2017. Due to his role as Senior Vice President – Operations during the 2016 year, he is required to be identified as a named executive for 2017 in the compensation disclosures that follow these biographies. 

Allan D. Keel’s biographical information may be found on page 35 of this proxy statement.

E. Joseph Grady Mr. Grady was appointed Senior Vice President and Chief Financial Officer on October 1, 2013 following the closing of the Merger. Mr. Grady had previously served as Senior Vice President and Chief Financial Officer of Crimson from March 2005 until the closing of the Merger. Mr. Grady has over 40 years of financial, operational and administrative experience, including over 30 years in the oil and gas industry. Prior to joining Crimson, Mr. Grady was managing director of Vision Fund Advisors, Inc., a financial advisory firm which he co-founded in 2001, until its dissolution in June 2008. He was formerly Senior Vice President-Finance and Chief Financial Officer of Texas Petrochemicals Holdings, Inc. from April 2003 to July 2004, Vice President-Chief Financial Officer and Treasurer of Forcenergy Inc. from 1995 to 2001, and he held various financial management positions with Pelto Oil Company from 1980 to 1990, including Vice President-Finance from 1988 to 1990. Mr. Grady is a CPA and received a Bachelor of Science degree in Accounting from Louisiana State University.

Jay S. Mengle Mr. Mengle was appointed Senior Vice President – Engineering on October 1, 2013 following the closing of the Merger. Mr. Mengle had previously served as Senior Vice President – Operations and Engineering of Crimson from April 2005 until May 2010 and Senior Vice President – Engineering from May 2010 until the closing of the Merger. Mr. Mengle joined Crimson after serving as the Shelf Asset Manager – Gulf of Mexico for Kerr-McGee Corporation subsequent to its 2004 merger with Westport Resources Corporation (“Westport”). Mr. Mengle was with Westport Resources from 1998 to 2004, where he started Westport’s Gulf Coast/Gulf of Mexico drilling and production operations. Prior to joining Westport, Mr. Mengle also served in various drilling, production and marketing management capacities at Norcen Energy Resources, Kirby Exploration and Mobil Oil Corp. Mr. Mengle received his Bachelor of Science degree in Petroleum Engineering from the University of Texas.

Thomas H. Atkins Mr. Atkins was appointed Senior Vice President – Exploration on October 1, 2013 following the closing of the Merger. Mr. Atkins had previously served as Vice President – Exploration of Crimson from April 2005 until the closing of the Merger. Mr. Atkins served as the General Manager – Gulf of Mexico for Newfield Exploration Company where he was employed from 1998 until joining Crimson. Prior to his tenure at Newfield, Mr. Atkins served in various exploration capacities with EOG Resources and its predecessor companies from 1984 to 1998, including prospect generator, development geologist and finally as Exploration Manager. Mr. Atkins also worked at the Superior Oil Company from 1981 through 1984. Mr. Atkins received a Bachelor of Science degree in Geology from the University of Oklahoma.

James J. Metcalf Jr.  Mr. Metcalf was appointed Senior Vice President – Operations on February 6, 2017.  Prior to joining Contango, Mr. Metcalf was Vice President of Operations at Advance Energy Partners, LLC from 2014 through 2016.  Prior to his tenure at Advance Energy Partners, Mr. Metcalf was a consultant to Newfield Exploration Company during 2013 and 2014 and Vice President of Drilling for Newfield from 2005 through 2013.  Before serving as Vice President of Drilling, Mr. Metcalf held several other positions of increasing responsibility at

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Newfield from 1995 and 2005.  Prior to joining Newfield, Mr. Metcalf worked for several other independent oil and gas companies.   Mr. Metcalf earned his Bachelor of Science in Petroleum Engineering from Marietta College.

Our executive officers are elected annually by our Board and serve one-year terms or until their death, resignation or removal by our Board. There are no family relationships between any of our directors and executive officers. In addition, there are no arrangements or understandings between any of our executive officers and any other person pursuant to which any person was selected as an executive officer.

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COMPENSATION DISCUSSION AND ANALYSIS

The following Compensation Discussion and Analysis contains statements regarding future individual and company performance targets and goals. These targets and goals are disclosed in the limited context of our executive compensation program and should not be understood to be statements of management’s expectations or estimates of results or other guidance. We specifically caution stockholders not to apply these statements to other contexts.

This Compensation Discussion and Analysis (1) provides an overview of our compensation policies and programs; (2) explains our compensation objectives, policies and practices with respect to our executive officers; and (3) identifies the elements of compensation for each of the individuals identified in the following table (our principal executive officer, principal financial officer and the three most highly compensated executive officers), whom we refer to in this proxy statement as our “named executive officers.”

Name		Principal Position
Allan D. Keel		Chief Executive Officer and President
E. Joseph Grady		Senior Vice President and Chief Financial Officer
Jay S. Mengle		Senior Vice President—Engineering
A. Carl Isaac		Senior Vice President—Operations
Thomas H. Atkins		Senior Vice President—Exploration

 

Objectives and Philosophy of Our Executive Compensation Program

Our executive compensation program is designed to attract and retain highly qualified executives and to motivate them to maximize shareholder return. We strive to achieve a balance between cash and non-cash compensation similar to that of our peers, and believe a significant portion of the compensation for each of our named executive officers should be incentive-based to emphasize a pay-for-performance philosophy. Therefore, overall competitive compensation levels and incentive pay levels vary based on the achievement of company-wide performance objectives and individual performance. Specifically, our compensation program is designed to:

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Attract and retain individuals with superior ability;

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Align named executive officers’ incentives with our corporate strategies, business objectives and the long-term interests of our shareholders; and

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Increase the incentive to achieve key strategic and financial corporate performance measures by linking incentive award opportunities to the achievement of performance objectives in these areas.

To achieve these objectives, we focused in 2016 on the following corporate performance objectives:

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Attaining a forecasted level of production;

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Attaining a forecasted level of cash flow;

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Attaining a specific (reduced) level of operating costs;

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Minimizing negative revisions to on-shore proved reserve estimates;

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Minimizing the cost of, and exposure to, liabilities associated with adverse health, safety and environmental activity;

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Obtaining accretive shareholder return; and

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We have also implemented various best practice standards for our compensation program, as follows:

The Compensation Committee from time to time adjusts and/or replaces objectives and assigns relative weights or rankings to the applicable factors, but also from time to time makes subjective determinations of compensation levels based upon a consideration of all of these factors.

On behalf of our Board, the Compensation Committee reviews and evaluates all compensation for our executive officers, including our compensation philosophy, policies and plans. The Board has final approval of all compensation decisions made by the Compensation Committee with respect to our senior executive officers, unless and to the extent that a certain decision or element of compensation has been fully delegated to the Compensation Committee. Our Chief Executive Officer and Chief Financial Officer also typically play important roles in the executive compensation process, including evaluating the other executive officers and assisting in the development of performance target goals, although the Compensation Committee or the Board, as applicable, has the final decision-making authority over compensation decisions. The Compensation Committee takes into consideration our named executive officers’ total compensation, including base salary, annual incentives and long-term incentives, both cash and equity, when considering market based adjustments to our named executive officers’ compensation.

The Compensation Committee also has the authority to retain a compensation consultant from time to time, as further described above under the heading “ Corporate Governance and Our Board – Compensation Committee ,” to review our compensation policies and programs to determine our competiveness within the oil and gas industry and advise the Compensation Committee as to whether modifications should be adopted in order to attract, motivate and retain key employees. Our Compensation Committee retained Longnecker, an experienced compensation consulting firm that specializes in the energy industry, during 2013 in connection with setting compensation for our named executive officers and directors following the merger with Crimson.  During 2016, the Compensation Committee retained Longnecker to help assess industry compensation trends, including trends associated with the depressed oil and natural gas price environment, for general compensation purposes.  Also during 2016 Longnecker assisted us with the amendment and restatement of the named executive officer’s employment agreements and with the modification of our equity incentive program, each of which are described in more detail below.  For 2016, the Compensation Committee utilized information from Longnecker, along with the most recent ECI survey data, and determined that no increases in base salaries were warranted.  The selected Peer Group included within ECI’s survey data for 2016 included Alta Mesa Holdings, LP, Approach Resources, Inc., Eclipse Resources Corporation, Indigo Minerals LLC, Oasis Petroleum Inc., Panhandle Oil & Gas Inc., Penn Virginia Corporation, Rex Energy Operating Corporation, Sanchez Oil & Gas Corporation, Stone Energy Corporation, and Swift Energy Company. 

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At the beginning of 2017, the Compensation Committee engaged Meridian.  Although Meridian’s engagement will largely be limited to addressing compensation items for the 2017 year, they did provide market comparison data for executives in conjunction with their peer group recommendations that the Compensation Committee utilized, in part, in determining the discretionary portion of our 2016 annual cash bonus awards, which were not determined until the beginning of the 2017 year.  Meridian has or will assist the Compensation Committee in 2017 with the following items: determining an appropriate peer group with respect to 2017 compensation, creating a cash bonus structure for the 2017 year, providing guidance on 2017 equity-based incentive award levels, and determining the number of additional shares to be added to our Amended and Restated 2009 Incentive Compensation Plan (the “2009 Plan”). In selecting Meridian as its independent compensation consultant, the Compensation Committee assessed the independence of Meridian pursuant to SEC rules and considered, among other things, whether Meridian provides any other services to us, the policies of Meridian that are designed to prevent any conflict of interest between Meridian, the Compensation Committee and us, any personal or business relationship between Meridian and a member of the Compensation Committee or one of our executive officers and whether Meridian owns any shares of our common stock. Meridian is engaged by, and reports only to, the Compensation Committee and will perform the compensation advisory services requested by the Compensation Committee. Meridian does not provide any other services to the Company, and the Compensation Committee has concluded that we do not have any conflicts of interest with Meridian.

At our 2016 annual meeting of shareholders, we presented shareholders with a vote to approve, on an advisory basis, the compensation paid to our named executive officers as disclosed in the “Executive Compensation” section of our proxy statement relating to that meeting (referred to as a “say-on-pay” proposal).  Approximately 88% of the votes cast on the say-on-pay proposal voted in favor of the proposal. We believe this strongly affirms shareholders’ support of our approach to executive compensation, and we did not make any material changes to our program solely due to the advisory vote received. The changes described further below with respect to our long-term equity award program were driven by other considerations. At our 2016 annual meeting we also presented our shareholders with an advisory vote to approve the frequency that we would present our shareholders with a say-on-pay proposal, and we recommended that our shareholders approve an annual vote because we believe that periodic shareholder advisory votes on executive compensation are appropriate and our Compensation Committee values the feedback provided by our shareholders through such votes.  Our shareholders agreed and provided an advisory vote for an annual say-on-pay proposal.   We will take the advisory vote on say-on-pay that we conduct at this year’s annual meeting into consideration when making compensation decisions in the future.

The principal components of our executive compensation program include:

We provide base salaries to our executive officers to compensate them for services rendered during the year at levels that we believe are competitive in the oil and gas industry and that are designed to allow us to attract, motivate and retain executive officers. Base salaries are a major component of the total annual cash compensation paid to our executive officers and are reviewed annually by the Compensation Committee. Unless delegated to the Compensation Committee, base salary determinations are made by our Board taking into consideration salary recommendations from the Compensation Committee. The Compensation Committee considers senior management’s recommendations as to appropriate compensation for members of management reporting to them.

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All of our executive officers were subject to employment agreements that provided for a fixed base salary during the 2016 year. The revised employment agreements we entered into with Messrs. Keel, Grady, Mengle and Atkins also contain a fixed base salary amount that is at the same level as the original 2013 agreements.  These salaries were originally determined by the Compensation Committee and Board in 2013 in connection with the Merger after consultation with Longnecker and taking into account many factors, including:

The table discloses the annual base salaries for each of our named executive officers for the years 2014 to 2017, which were originally set mid-2013.  The base salaries of all of our named executive officers were held constant during the 2015 to 2017 years in recognition of conditions in the oil and gas industry and, as targeted by the Compensation Committee and confirmed by the most recent ECI survey, remain comparable to the 50th percentile of our peer group.  

Name		Base Salary for 2014		Base Salary for 2015 (1)		Base Salary for 2016 (1)		Base Salary for 2017
Allan D. Keel		$600,000		$600,000		$600,000		$600,000
E. Joseph Grady		$400,000		$400,000		$400,000		$400,000
Jay S. Mengle		$300,000		$300,000		$300,000		$300,000
A. Carl Isaac		$320,000		$320,000		$320,000		$320,000
Thomas H. Atkins		$310,000		$310,000		$310,000		$310,000

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Our named executive officers are eligible to participate in an annual, performance-based cash incentive compensation plan that is designed to reward all employees on the basis of our Company attaining pre-determined performance measures. The annual incentive plan is governed by the 2009 Plan.  The Compensation Committee retains the flexibility to make certain adjustments to the final awards for all employees, including our named executive officers, within the overall parameters of the plan, to better recognize the impact of their general contributions to the Company’s success, individual strengths and individual efforts that each individual officer may have exerted on our behalf during the fiscal year. The Compensation Committee does not have the authority to increase the bonus over the calculated amount under the performance-based cash incentive plan for such individual performance goals, however, the Compensation Committee or Board has the authority to award additional discretionary amounts in recognition of specific contributions unrelated to the targets set for the performance-based cash incentive awards.

The Compensation Committee annually approves the performance metrics and quantitative goals that make up the cash incentive bonus awards, typically within the first three months of the applicable calendar year. The

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performance metrics and quantitative goals are reviewed annually by the Compensation Committee with input from our executive officers, advice from retained experts, when deemed appropriate, and adjusted, as needed, in order to reflect our current structure and operations.  Each year a threshold, target and maximum goal are set for each individual metric.  For 2016, the performance goal categories for our named executive officers consisted of the following metrics and relative weightings:

Elements of our 2016 Annual Cash Incentive Program

 

Performance Metric	Weight of Metric to Total Award	Threshold	Target	Maximum
Oil and Gas Production (1)	6%	25.0 Bcfe	26.3 Bcfe	28.9 Bcfe
Earnings before Interest, Taxes, Depreciation, Amortization and Exploration Expenses (EBITDAX) (2)	6%	$25.9 million	$27.3 million	$30.0 million
Lease Operating Expense (LOE) (3)	6%	$25.5 million	$24.2 million	$22.8 million
Onshore Negative Reserve Revisions (4)	6%	-2.0 Bcfe	0	+ 4.0 Bcfe
Health, Safety and Environmental Costs (5)	6%	N/A	1	N/A
Relative Total Shareholder Return (TSR) (6)	20%	Equal to index performance	10% over index performance	30% over index performance
Subjective based upon Strategic Initiative Progress  (7)	50%	25%	50%	100%

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Amounts potentially earned under the performance-based cash incentive awards are set at certain percentages of the participant’s base salary. The employment agreements with our named executive officers provide that they are eligible to participate in our annual cash incentive bonus plan. The employment agreements provide for minimum (referred to herein as “threshold”), target and maximum award levels for each calendar year that are based on a percentage of the executive’s base salary. The bonus target levels, as a percentage of base salary, which each named executive officer is eligible to receive as an incentive bonus under their employment agreements are as follows:

Name		Threshold		Target		Maximum
Allan D. Keel		50%		100%		150%
E. Joseph Grady		50%		90%		130%
Jay S. Mengle		50%		80%		120%
A. Carl Isaac		50%		80%		120%
Thomas H. Atkins		50%		80%		120%

 

Should our financial and operating results meet or exceed either the pre-determined “threshold,” “target” and “maximum” values assigned a particular performance category (with linear interpolations between each level), then each named executive officer is generally paid a corresponding percentage of his annual salary amount for that metric.  As noted above, the Compensation Committee retains the right to make what it determines to be appropriate adjustments to actual performance results for the year, to the extent it believes that adjustments are warranted.  For example, in determining the actual level of EBITDAX for a particular year, it may exclude the effects of certain non-cash income/expense items such as the mark to market benefit/charge to our results of operations required by FASB ASC Topic 815, “Derivatives and Hedging,” non-cash charges to our results of operations related to FASB ASC Topic 718 or the variance in EBITDAX caused by the variance between actual NYMEX benchmark oil and gas prices and the forecasted NYMEX benchmark prices incorporated into the performance goals (since NYMEX prices are largely not within management’s control).

We satisfied each of the company performance metrics for the 2016 year as follows:

Performance Metric		Percentage of Target Goal Achieved for Metric		Approximate Weighted Percentage of Target Award Level Earned for Metric (1)		Approximate Percentage  of Total Award Attributable to Metric (1)
Oil and Gas Production		98.8%		5.3%		7.3%
Earnings before Interest, Taxes, Depreciation, Amortization and Exploration Expenses		99.9%		5.9%		8.2%
Lease Operating Expense (LOE)		99.3%		6.4%		8.8%
Onshore Negative Reserve Revisions		100.0%		9.0%		12.4%
Health, Safety and Environmental Costs		83.0%		5.0%		6.8%
Relative Total Shareholder Return (TSR)		69.0%		16.9%		23.2%
Strategic Initiatives (2)		N/A		25.00%		33.3%
Total						100%

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Our Compensation Committee was conscious of the need to control potential cash incentive awards in an uncertain oil and gas market and determined that 50% of the bonus would be discretionary, dependent on whether the Company achieved appropriate strategic initiative(s) and the state of the market at the time of the award.  Although the discretionary portion of the award comprised a potential 50% of the total award, there were limitations on the amounts that could be discretionarily paid.  The Compensation Committee determined that when the six company performance metrics could be calculated for 2016 with respect to the first 50% of the award that was performance-based, the percentage of the target award that was earned solely based upon the six company performance goals would be determined.  The resulting percentage would then become the maximum percentage that could be awarded to any executive pursuant to the discretionary component of the award.  For example, the 2016 company performance metrics were earned in the aggregate at 91.67% of target, therefore the Compensation Committee was limited to awarding 91.67% of the allotted discretionary portion of the target award.  The Compensation Committee ultimately awarded approximately half of the potential strategic initiative oriented discretionary award with respect to the 2016 year.  Among the factors considered by the Compensation Committee when evaluating the portion of the strategic initiative oriented discretionary award for the 2016 year were the company’s acquisition of an acreage position in the Southern Delaware Basin and the completion of a public offering of shares of the company’s common stock to fund the acquisition and provide capital for the initial development of the acreage.

The awards to each named executive officer with respect to the company components in the 2016 year are reflected within two separate columns of the Summary Compensation Table below.  The amount earned with respect to the company performance metrics are listed below in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table, and the discretionary portion is reflected in the Bonus Awards column of the Summary Compensation Table.  The awards were paid in February 2017.

The revised employment agreements we entered into with Messrs. Keel, Grady, Mengle and Atkins in November 2016 set forth bonus targets for each applicable executive officer beginning with the 2017 year.  Messrs. Keel and Grady will have target bonus amounts set at 100% of base salary, and Messrs. Mengle and Atkins will have a target bonus amount set at 80% of base salary.

In addition to the annual cash incentive awards described above, our 2009 Plan also allows us to grant equity-based incentive awards to our named executive officers and other eligible employees.  We have adopted a long-term equity award program under the 2009 Plan (the “LTIP”) pursuant to which each of our employees, including our named executive officers, is eligible to participate. The annual equity awards contemplated by the LTIP will provide the named executive officers with a longer-term stake in our Company. The equity awards granted under the LTIP are intended to act as a long-term retention tool and align employee and stockholder interests by increasing compensation as stockholder value increases.  Due to the difficult and uncertain conditions facing the oil and gas industry, when establishing the long-term incentive compensation award parameters for our named executive officers for the beginning of 2016, our Compensation Committee determined that the amount and type of awards granted would be discretionary.

2015 Awards

In recent years the Compensation Committee has granted awards on a “look-back” basis.  The Compensation Committee would analyze the results from the performance metrics utilized in determining cash incentive bonus awards for the year, and would then make decisions regarding the type and level of equity-based awards that should be granted with respect to that year.  Because the company metrics could not be determined until the end of the year in question, awards were not granted until the year following the year for which the awards related to. Under the

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SEC disclosure rules, equity awards are reported in the year of grant, without regard to the year to which the service may have related.  This created a disconnect in our disclosures, as the equity awards reported within the compensation tables that follow the Compensation Discussion and Analysis would not relate to services provided in the applicable year. This grant process was in place during the 2015 year, therefore awards of time-based restricted stock awards that appear in the Summary Compensation Table for the 2016 year actually relate to services provided during the 2015 year. 

Named Executive Officer		Restricted Stock Grant (#)(1)		Value on Grant Date ($)(2)
Allan D. Keel		51,486		648,724
E. Joseph Grady		24,518		308,927
Jay S. Mengle		18,388		231,689
A. Carl Isaac		19,614		247,136
Thomas H. Atkins		—		—

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2016 Awards 

In October 2016 our Board determined to modify our annual equity program, and engaged Longnecker to assist in determining the appropriate modifications.  The Compensation Committee first desired to clarify the award process by granting equity-based awards on a “look-forward” basis, a trend within the oil and gas industry.  LTIP awards will be granted as an incentive to superior performance in future years, which will be accomplished by having the awards subject to both time-based and performance-based vesting conditions.  Due to the SEC disclosure rules described above, this has resulted in both the 2015 LTIP awards and the new 2016 LTIP awards being disclosed within the compensation tables for the 2016 year, but the overlap in awards is due solely to our change in process and is not expected to occur in the future. 

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The second change the Compensation Committee made in October 2016 was the inclusion of a performance-based vesting component to our equity grants.  The Board determined that the annual equity awards granted pursuant to the LTIP should be granted 50% in time-based restricted stock awards that vest in three annual installments, and 50% in performance-based restricted stock unit awards.  The performance period for the performance awards will be three years.   During this period, our stock performance will be measured against the performance of the companies comprising the S&P Oil & Gas Exploration & Production Exchange Traded Fund over the same period (the “XOP Index”). At the end of the period, the target number of stock units will be multiplied by a modifier. The modifier will be based on our performance during the applicable performance period compared to the fund over the same period, as reflected in the following table:  

		MCF Price Performance Over XOP Index		% of Award Payout (1)		% of Award Payout if MCF Absolute Performance is Negative (1)(2)
Maximum:		30.00%		200%		100%
		28.00%		190%		95%
		26.00%		180%		90%
		24.00%		170%		85%
		22.00%		160%		80%
		20.00%		150%		75%
		18.00%		140%		70%
		16.00%		130%		65%
		14.00%		120%		60%
		12.00%		110%		55%
Target:		10.00%		100%		50%
		8.00%		90%		45%
		6.00%		80%		40%
		4.00%		70%		35%
		2.00%		60%		30%
Threshold:		0%		50%		25%

 

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The number of time-based restricted stock, and the threshold, target and maximum number of performance-based restricted stock unit awards granted to our named executive officers during the 2016 year are reflected below:

Named Executive Officer		Restricted Stock (#) (1)		Restricted Stock Value on Grant Date ($)(2)		Performance Based Restricted Stock Units (#) (3)		Performance- Based Restricted Stock Units Value on Grant Date ($)(2)		Total Value on Grant Date
Allan D. Keel		60,300		628,326		60,300		984,096		1,612,422
E. Joseph Grady		28,700		299,054		28,700		468,384		767,438
Jay S. Mengle		21,500		224,030		21,500		350,880		574,910
A. Carl Isaac		23,000		239,660		23,000		375,360		615,020
Thomas H. Atkins		22,300		232,366		22,300		363,936		596,302

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Replacement Program Awards

The remaining equity grants reflected within the Summary Compensation Table and the Grants of Plan-Based Awards Table for the 2016 year reflect the fully vested grants of our common stock that were provided to our named executive officers in connection with the replacement program described above.  Although the stock was granted pursuant to the 2009 Plan, it does not relate to equity awards that we have granted pursuant to our annual equity compensation program described above. The replacement program was terminated during the 2016 year.  The shares of stock issued to our named executive officers during 2016 pursuant to the replacement program are reflected below:

Named Executive Officer		Number of Shares		Value on Grant Date ($)(2)
Allan D. Keel		3,125		20,000
E. Joseph Grady		2,084		13,338
Jay S. Mengle		1,563		10,003
A. Carl Isaac		1,667		10,669
Thomas H. Atkins		1,615		10,336

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Each of the current employment agreements with our named executive officers provide for severance payments upon a termination for any reason other than cause, including termination pursuant to a change of control. These agreements also provide for the accelerated vesting of certain equity awards in the event of an involuntary termination in connection with a change of control. We believe that the executive officers should be provided an incentive to consummate a change of control that would generate attractive returns for our stockholders. Without such an incentive, the executive officers may not diligently pursue such opportunities. In addition, severance provisions were included as a means of attracting and retaining executives and to provide replacement income if their employment is terminated under certain circumstances. Each employment agreement contains similar but not identical provisions regarding severance payments and relevant provisions of those agreements are provided in the section titled “ Executive Compensation—Potential Payments upon Termination or Change of Control .”

Our named executive officers are eligible to participate in all of our employee benefit plans, such as medical, dental, vision, group life, short and long-term disability, and our 401(k) plan, in each case, on the same basis as other employees, subject to applicable laws. We also provide vacation and other paid holidays to all employees, including our named executive officers. We pay membership dues for private clubs for two of our named executive officers as these memberships are intended to be used in part for business entertainment purposes.  

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Other Matters

Tax Considerations

Although our Compensation Committee considers the tax and accounting treatment associated with the cash and equity grants it makes, these considerations are not dispositive. Section 162(m) of the Code places a limit of $1.0 million per person on the amount of compensation that we may deduct in any year with respect to our chief executive officer and our three most highly compensated executive officers other than the chief executive officer and the chief financial officer. There is an exemption from the $1.0 million limitation for performance-based compensation that meets certain requirements. Our benefit plans are generally designed to permit compensation to be structured to meet the qualified performance-based compensation exception. To maintain flexibility in compensating named executive officers in a manner designed to promote varying company goals, our Compensation Committee has not adopted a policy requiring all compensation to be deductible. The Compensation Committee therefore retains the ability to evaluate the performance of our executive officers and to pay appropriate compensation, even if some of it may be non-deductible, to ensure competitive levels of total compensation is paid to certain individuals.

We account for stock-based awards based on their grant date fair value, as determined under FASB ASC Topic 718. In connection with its approval of stock-based awards, the Compensation Committee is cognizant of and sensitive to the impact of such awards on stockholder dilution and our financial statements.

Risk Considerations in our Overall Compensation Program

When establishing and reviewing our executive compensation program, the Compensation Committee has considered whether the program encourages unnecessary or excessive risk taking and has concluded that it does not. While behavior that may result in inappropriate risk taking cannot necessarily be prevented by the structure of compensation practices, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us. Our compensation program is comprised of both fixed and incentive-based elements. The fixed compensation (i.e., base salary) provides reliable, foreseeable income that mitigates the focus of our employees on our immediate financial performance or our stock price, encouraging employees to make decisions in our best long-term interests. The incentive components are designed to be sensitive to both our short- and long-term goals, performance and stock price. In combination, we believe that our compensation structures do not encourage our officers and employees to take unnecessary or excessive risks in performing their duties. In conclusion, we believe that our compensation policies and practices for all employees, including executive officers, do not create risks that are reasonably likely to have a material adverse effect on our company.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board of Directors of Contango Oil & Gas Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

THE COMPENSATION COMMITTEE

B. James Ford (Chairman)
B.A. Berilgen
Charles M. Reimer

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No member of the Compensation Committee is or was during 2016 an employee, or is or ever has been an officer, of the Company or its subsidiaries.  No executive officer of the Company has served as a director or a member of the compensation committee of another company whose executive officers serve as a member of the Company’s Board or Compensation Committee.

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the compensation and benefits that were paid to or earned by our named executive officers for years 2014, 2015 and 2016. 

Name and Principal Position		Year		Salary ($)(1)		Bonus ($)(2)		Stock Awards ($)(3)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)(4)		All Other Compensation ($)(5)		Total ($)
Allan D. Keel		2016		600,000		145,410		2,281,146		—		290,819		50,212		3,367,587
Chief Executive Officer		2015		580,000		—		975,336		—		108,000		51,014		1,715,151
and President		2014		600,000		—		—		—		426,800		50,494		1,077,294
E. Joseph Grady		2016		400,000		87,348		1,089,702		—		174,696		51,394		1,803,140
Senior Vice President		2015		386,667		—		480,212		—		65,800		53,220		985,899
and Chief Financial Officer		2014		400,000		—		—		—		259,600		54,139		713,739
A. Carl Isaac		2016		320,000		—		872,825		—		—		41,113		1,233,938
Senior Vice President –		2015		309,334		—		381,715		—		48,400		41,633		781,082
Operations		2014		320,000		—		—		—		188,300		43,952		552,252
Jay S. Mengle		2016		300,000		59,330		816,602		—		118,659		33,792		1,328,383
Senior Vice President –		2015		290,000		—		357,847		—		45,400		34,328		727,574
Engineering		2014		300,000		—		—		—		176,500		35,747		512,247
Thomas H. Atkins		2016		310,000		61,307		606,638		—		122,615		40,099		1,140,659
Senior Vice President –		2015		299,667		—		369,781		—		46,900		43,630		759,977
Exploration		2014		310,000		—		—		—		182,400		51,734		544,134

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		Matching 401(k) Contributions ($)		Insurance Premiums* ($)		ORRI Payments** ($)		Club Dues*** ($)		Total ($)
Allan D. Keel		15,900		15,804		—		18,508		50,212
E. Joseph Grady		15,900		31,856		—		3,637		51,394
A. Carl Isaac		15,900		25,213		—		—		41,113
Jay S. Mengle		15,900		17,892		—		—		33,792
Thomas H. Atkins		15,900		23,012		1,187		—		40,099

 

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*     Represents premium payments made on behalf of the executive officers for medical, dental, vision, life insurance and accidental death and dismemberment coverage.

**   Mr. Atkins receives royalty payments attributable to overriding royalty interests granted to him pursuant to an Overriding Royalty Interest Plan that was previously maintained by Crimson and terminated in 2010. Mr. Atkins also

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received royalty payments from third-party operators attributable to overriding royalty interests granted to him pursuant to the Crimson Overriding Royalty Interest Plan; such amounts are not reflected above.

*** Represents payments made on behalf of the executive officers for membership dues at private clubs

				Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (5)						Estimated Future Payouts Under Equity Incentive Plan Awards						All Other Stock		Grant Date Fair Value
Name		Grant Date		Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)		Maximum (#)		Awards: Number of Shares (#)		of Stock and Option Awards ($)
Allan D. Keel		1/4/2016 (1)
		4/26/2016 (2)
		10/20/2016 (3)														60,300		628,326
		10/20/2016 (4)								30,150		60,300		120,600				984,096
				150,000		300,000		450,000
E. Joseph Grady		1/4/2016 (1)														2,084		13,338
		4/26/2016 (2)														24,518		308,927
		10/20/2016 (3)														28,700		299,054
		10/20/2016 (4)								14,350		28,700		57,400				468,384
				100,000		180,000		260,000
A. Carl Isaac		1/4/2016 (1)														1,667		10,669
		4/26/2016 (2)														19,614		247,136
		10/20/2016 (3)														23,000		239,660
		10/20/2016 (4)								11,500		23,000		46,000				375,360
				80,000		128,000		192,000
Jay S. Mengle		1/4/2016 (1)														1,563		10,003
		4/26/2016 (2)														18,388		231,689
		10/20/2016 (3)														21,500		224,030
		10/20/2016 (4)								10,750		21,500		43,000				350,880
				75,000		120,000		180,000
Thomas H. Atkins		1/4/2016 (1)														1,615		10,336
		10/20/2016 (3)														22,300		232,366
		10/20/2016 (4)								11,150		22,300		44,600				363,936
				77,500		124,000		186,000

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Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

The table below reflects the ratio of base salary and discretionary cash bonuses to total compensation for each of our named executive officers:

Named Executive Officer		Base Salary and Discretionary Bonus as a Percent of Total Compensation
Allan D. Keel		22.13%
E. Joseph Grady		27.03%
A. Carl Isaac		25.93%
Jay S. Mengle		27.05%
Thomas H. Atkins		32.41%