CONCHO RESOURCES INC (Form: 8-K, Received: 05/19/2017 06:03:40)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 17, 2017

Concho Resources Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction

of Incorporation)


001-33615		76-0818600
(Commission File Number)		(I.R.S. Employer Identification No.)

One Concho Center 600 West Illinois Avenue Midland, Texas		79701
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (432) 683-7443

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 5.02

Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

(b) Resignation of Officer . Concho Resources Inc. (the “ Company ”) held its 2017 Annual Meeting of Stockholders (the “Annual Meeting” ) on May 17, 2017. Following the Annual Meeting, the Board of Directors (the “ Board ”) of the Company held a special meeting.

At the Board’s May 17, 2017 meeting, E. Joseph Wright notified the Board of his intention to retire from his position as Executive Vice President and Chief Operating Officer of the Company in January 2019. The Company has planned for the transition of Mr. Wright’s duties and responsibilities and has announced that C. William Giraud will succeed Mr. Wright as Chief Operating Officer upon Mr. Wright’s retirement.

(c) Appointment of Officer . Also at the May 17, 2017 meeting, the Board promoted Jack F. Harper to the role of President of the Company. Mr. Harper will also continue to serve as the Company’s Chief Financial Officer.

Mr. Harper has no familial relationships with any director or other executive officer of the Company. There are no arrangements or understandings between Mr. Harper and any other persons pursuant to which Mr. Harper was appointed as President and Chief Financial Officer. For additional information about Mr. Harper, including biographical information and information regarding related party transactions, please refer to the Company’s Proxy Statement filed with the Securities and Exchange Commission on April 5, 2017 (File No. 001-33615), which information is incorporated herein by reference.

(d) Election of Director . At the Board’s May 17, 2017 meeting, the Board increased the size of the Board from nine directors to ten directors. The Board also appointed Mr. Wright as a director to fill the vacancy resulting from the expansion of the Company’s Board from nine directors to ten directors. Mr. Wright will serve as a Class II director and his term on the Board will expire at the Company’s annual meeting of stockholders in 2018 or until his earlier resignation or removal.

There are no understandings or arrangements between Mr. Wright and any other person pursuant to which Mr. Wright was elected to serve as a director of the Company. There are no relationships between Mr. Wright and the Company or any of its subsidiaries that would require disclosure pursuant to Item 404(a) of Regulation S-K. As an employee director, Mr. Wright will receive compensation in accordance with the Company’s policies for compensating employee directors.

(e) Retirement Agreement . In connection with Mr. Wright’s anticipated retirement as described above, the Company entered into a Retirement Agreement (the “ Retirement Agreement ”) with Mr. Wright on May 17, 2017, which agreement was approved by the Compensation Committee of the Board. The Retirement Agreement effectively amends Mr. Wright’s existing Employment Agreement with the Company dated December 19, 2008 that was filed on such date as Exhibit 10.3 to the Company’s Current Report on Form 8-K, as amended by First Amendment to Employment Agreement, the form of which was filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 6, 2011 (such Employment Agreement, as amended, the “ Employment Agreement ”).

Pursuant to the Retirement Agreement, any automatic extension of the term of the Employment Agreement that would otherwise occur on January 1, 2019 will be for a period beginning on such date and ending on January 5, 2019, which is the expected date of Mr. Wright’s retirement, subject to the potential deferment of Mr. Wright’s retirement date for up to six months under certain circumstances (January 5, 2019 or the deferred retirement date, as applicable, the “ Retirement Date ”).

The Retirement Agreement provides that Mr. Wright will be eligible to receive an annual bonus for 2018 in the amount of $600,000 (the “ 2018 Bonus ”), and such bonus will be paid on or before January 5, 2019 provided that Mr. Wright remains continuously employed by the Company until such date. In the event that certain change of control transactions, as outlined in the Retirement Agreement, occur prior to Mr. Wright’s retirement date, Mr. Wright may be eligible for a special bonus (the “ Special Bonus ”) in the form of a lump sum cash payment in the amount of (x) two times Mr. Wright’s annualized base salary as in effect immediately prior to the Retirement Date, (y) the annual cash performance bonus, if any, paid to him with respect to the 2017 calendar year, and (z) $600,000.

The Retirement Agreement also provides that certain long-term incentive awards under the Company’s 2015 Stock Incentive Plan will be made to Mr. Wright during the first four days of January, 2018 provided that he is employed by the Company on the date of grant. Specifically, Mr. Wright would receive a restricted stock award (the “ 2018 RSA ”) with a value on the date of grant equal to $1,700,000, a one-year of service vesting requirement, and otherwise the same terms and conditions as the restricted stock awards made to similarly situated executives on or about the date of grant. Mr. Wright would also receive an award of performance units (the “ 2018 PSU ”) with the same grant date value as the 2018 RSA and the same terms and conditions as performance unit awards made to similarly situated executives on or about the date of grant, except that Mr. Wright would not forfeit the 2018 PSU if he retires on the Retirement Date as described below. The 2018 RSA and the 2018 PSU will be the only long-term incentive awards Mr. Wright receives after May 17, 2017 for his service as an officer of the Company.

Upon Mr. Wright’s retirement on the Retirement Date, the Retirement Agreement provides that the Company will provide him with the following benefits (the “ Retirement Benefits ”): (i) his unvested shares of restricted stock granted to him by the Company will fully vest on the Retirement Date; (ii) his unvested performance units will not be forfeited and will become payable based on the satisfaction of certain conditions and (iii) he will be reimbursed by the Company for (or the Company may directly pay) the premiums associated with the continuation coverage he may elect for up to 18 months following his retirement under the Company’s group health plans.

A copy of the Retirement Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference. The above description of the Retirement Agreement is a summary and is qualified in its entirety by reference to the complete text of the Retirement Agreement.

Item 5.07

Submission of Matters to a Vote of Security Holders.

At the Annual Meeting, the Company’s stockholders were requested to (i) elect three Class I directors to serve on the Company’s Board of Directors for a term of office expiring at the Company’s 2020 Annual Meeting of Stockholders, (ii) ratify the Audit Committee of the Board of Directors’ selection of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017, (iii) approve, on an advisory basis, the compensation of the Company’s named executive officers and (iv) approve, on an advisory basis, the frequency of the stockholder vote on the compensation of the Company’s named executive officers. Each of these items is more fully described in the Company’s definitive proxy statement, which was filed with the Securities and Exchange Commission on April 5, 2017.

At the close of business on March 20, 2017, the record date for the Annual Meeting, there were 148,170,944 shares of the Company’s common stock issued, outstanding and entitled to vote at the Annual Meeting. The results of the matters voted upon at the Annual Meeting are as follows:

Proposal No. 1 — Election of Class I Directors : The election of each Class I director was approved as follows:


Nominee	For		Against		Abstain		Broker Non-Votes
Timothy A. Leach		125,738,829		1,027,980		405,760		3,465,982
William H. Easter III		125,988,416		1,029,651		154,502		3,465,982
John P. Surma		126,593,286		424,846		154,437		3,465,982

Proposal No. 2 — Ratification of the Selection of Grant Thornton LLP : The ratification of the selection of Grant Thornton LLP was approved as follows:


For		Against		Abstain
	130,017,068		464,661		156,822

Proposal No. 3 — Approval, on an Advisory Basis, of the Compensation of the Company’s Named Executive Officers : The compensation of the Company’s named executive officers was approved on an advisory basis as follows:


For		Against		Abstain		Broker Non-Votes
	125,450,986		1,318,519		403,064		3,465,982

Proposal No. 4 — Approval, on an Advisory Basis, of the Frequency of the Stockholder Vote on the Compensation of the Company’s Named Executive Officers : The holding of the advisory vote on the compensation of the Company’s named executed officers every year was approved on an advisory basis as follows:


One Year		Two Years		Three Years		Abstain		Broker Non-Votes
	116,038,147		18,285		10,834,735		281,402		3,465,982

The Company has determined that it will hold an advisory vote on the compensation of its named executive officers every year, until the next stockholder advisory vote on the frequency of the advisory vote on the compensation of the Company’s named executive officers.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.


Exhibit Number		Description

10.1		Retirement Agreement, dated May 17, 2017, by and between Concho Resources Inc. and E. Joseph Wright.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


			CONCHO RESOURCES INC.

Date:	May 18, 2017	By:	/s/ Travis L. Counts
		Name:	Travis L. Counts
		Title:	Senior Vice President, General Counsel and Corporate Secretary

EXHIBIT INDEX


Exhibit Number		Description

10.1		Retirement Agreement, dated May 17, 2017, by and between Concho Resources Inc. and E. Joseph Wright.

Exhibit 10.1

RETIREMENT AGREEMENT

THIS RETIREMENT AGREEMENT (this “ Retirement Agreement ”) is entered into on the 17th day of May, 2017, by and between Concho Resources Inc., a Delaware corporation (“ Company ”), and E. Joseph Wright (“ Executive ”).

WHEREAS , Executive has indicated to Company that he desires to retire from employment with Company on January 5, 2019; and

WHEREAS , Company and Executive have heretofore entered into that certain Employment Agreement effective as of January 1, 2009, as amended by that certain First Amendment to Employment Agreement dated as of November 19, 2010 (as amended, the “ Employment Agreement ”); and

WHEREAS , Company and Executive desire to amend the Employment Agreement in certain respects in connection with Executive’s proposed retirement;

NOW, THEREFORE , in consideration of the premises set forth above and the mutual agreements set forth herein, Company and Executive hereby agree that the Employment Agreement shall be amended as hereafter provided, effective as of May 17, 2017:

1. The following shall be added to the end of Section 1.1(l) of the Employment Agreement:

“In addition, the term “ Involuntary Termination ” shall not include a termination on the Retirement Date (as defined in Section 3.1) by reason of Executive’s retirement.”

2. The following new paragraphs (n) and (o) shall be added to the end of Section 1.1 of the Employment Agreement:

“(n) “ Potential Change of Control ” shall mean a transaction or event that (i) has been publicly announced prior to (and is still pending and has not closed or otherwise been consummated as of) January 5, 2019, (ii) is the subject of an agreement entered into by Company or some other action taken by Company, and (iii) would constitute, upon closing or consummation, both a Change of Control and a change in control event (as defined in Treasury regulation section 1.409A-3(i)(5)).

(o) “ Special Bonus Amount ” shall mean an amount equal to the sum of (i) two times Executive’s annualized base salary as in effect pursuant to Section 4.1 immediately prior to the Retirement Date, (ii) the annual cash performance bonus, if any, paid to Executive by Company pursuant to Section 4.2 with respect to the 2017 calendar year, and (iii) $600,000.”

3. The following shall be added to the end of Section 3.1 of the Employment Agreement:

“Notwithstanding the foregoing, any automatic extension of the term of employment that occurs on January 1, 2019 pursuant to the preceding sentence shall be for a period beginning on such date and ending on January 5, 2019 (the “ Earliest Retirement Date ”); provided, however, that if a Potential Change of Control exists as of the Earliest Retirement Date, then Company may, in its sole discretion, extend any automatic extension of the term of employment that occurs on January 1, 2019 until any date within the six-month period beginning on January 6, 2019 (such six-month period being referred to herein as the “ Maximum Potential Extension Period ”), by providing Executive with a written notice of such extension in accordance with Section 8.3 on or prior to the Earliest Retirement Date that specifies the last day of such extended term (such specified date being referred to herein as the “ Deferred Retirement Date ”); provided, further, that there shall be no further automatic extensions of the term of employment on or after the Earliest Retirement Date or the Deferred Retirement Date, as applicable (such applicable date being referred to herein as the “ Retirement Date ”). Unless sooner terminated pursuant to the terms of this Agreement, Executive’s employment shall terminate on the Retirement Date by reason of Executive’s retirement. If Executive’s employment so terminates on the Retirement Date, then, for purposes of Sections 5.1 and 7.1(b), Executive shall be deemed to have given timely written notice to Company that Executive’s employment hereunder will terminate upon expiration of the term provided in this Section 3.1.”

4. The following shall be added to the end of Section 3.5 of the Employment Agreement:

“Notwithstanding the foregoing, if Executive’s employment hereunder shall terminate on the Retirement Date by reason of Executive’s retirement as provided in Section 3.1, then such termination shall not give rise to an automatic resignation of Executive from the Board (if applicable).”

5. The following shall be added to the end of Section 4.2 of the Employment Agreement:

“Notwithstanding the foregoing, if Executive is employed by Company on January 1, 2018, then, for the year beginning on such date, Executive shall be eligible to receive an annual bonus in the amount of $600,000 (the “ 2018 Bonus ”) in lieu of participating in Company’s annual cash incentive plan, and Executive shall be eligible to receive payment of such amount on or before the Earliest Retirement Date provided that he remains continuously employed by Company until the Earliest Retirement Date and subject to the provisions of Section 5.10(c). In addition, notwithstanding the provisions of Sections 5.1 and 5.10(b) but subject to the provisions of Sections 5.5, 5.7 and 5.10(c), if (i) Executive is employed by Company on the Earliest Retirement Date, (ii) a Potential Change of Control exists as of the Earliest Retirement Date and (iii) the transaction or event giving rise to such Potential Change of Control actually closes or is otherwise consummated and gives rise to both a Change of Control and a change in control

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event (as defined in Treasury regulation section 1.409A-3(i)(5)) on or before the last day of the Maximum Potential Extension Period (the date of such closing or other consummation within such time period being referred to herein as the “ Closing Date ”), then Company shall provide Executive with a special bonus in the form of a lump sum cash payment in an amount equal to the Special Bonus Amount under only the following two circumstances:

(A)

if Company did not elect a Deferred Retirement Date for Executive pursuant to Section 3.1 and Executive’s employment hereunder shall terminate on the Earliest Retirement Date by reason of Executive’s retirement as provided in Section 3.1, then the Special Bonus Amount shall be paid on the Closing Date; and

(B)

if Company did elect a Deferred Retirement Date for Executive pursuant to Section 3.1 and Executive’s employment hereunder shall terminate on the Deferred Retirement Date by reason of Executive’s retirement as provided in Section 3.1, then the Special Bonus Amount shall be paid on the later of the Closing Date and the Deferred Retirement Date.

Further, Executive shall not be eligible to participate in Company’s annual cash incentive plan or to receive an annual bonus for the calendar year beginning on January 1, 2019. Any differences between Executive’s annual incentive and bonus opportunities for calendar years 2018 and 2019 and those provided to similarly situated executives with respect to such calendar years shall not give rise to a Change in Duties.”

6. The following new Section 5.10 shall be added to the end of Article 5 of the Employment Agreement:

“ 5.10 Additional Agreements Relating to Equity Awards and Termination of Employment on the Retirement Date by Reason of Executive’s Retirement .

(a) 2018 Restricted Stock and Performance Unit Awards – During the period beginning on January 1, 2018 and ending on January 4, 2018, Company shall grant Executive an award of restricted stock (the “ 2018 Restricted Stock Award ”) and an award of performance units (the “ 2018 Performance Unit Award ,” and, together with the 2018 Restricted Stock Award, the “ 2018 Awards ”) under Company’s 2015 Stock Incentive Plan; provided, however, that Executive must be employed by Company on the date of such grant (the “ Date of Grant ”) in order to receive the 2018 Awards. The 2018 Restricted Stock Award and the 2018 Performance Unit Award shall each have a value on the Date of Grant equal to $1,700,000, with such value being determined using the same methodology used to determine the value of the corresponding awards that are granted by Company to similarly situated executives on or about the Date of Grant. The 2018 Restricted Stock Award shall be made based on the same form

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of award agreement as is used for purposes of making similar restricted stock awards to similarly situated executives on or about the Date of Grant, except that the 2018 Restricted Stock Award shall be subject to the provisions of Section 5.10(c) and shall include a vesting schedule that provides for 100% vesting upon the first anniversary of the Date of Grant rather than any other vesting schedule that may be included in such similar awards to similarly situated executives. The 2018 Performance Unit Award shall be made based on the same form of award agreement as is used for purposes of making similar performance unit awards to similarly situated executives on or about the Date of Grant, except that the 2018 Performance Unit Award shall, subject to the provisions of Section 5.10(c), provide for the treatment described in Section 5.10(b)(i) in the event Executive’s employment hereunder shall terminate on the Retirement Date by reason of Executive’s retirement as provided in Section 3.1. The 2018 Awards shall be the only equity awards granted to Executive after May 17, 2017 for his service as an officer of Company, and any difference between the equity awards granted to Executive and those equity awards provided to similarly situated executives after such date shall not give rise to a Change in Duties.

(b) Termination on the Retirement Date by Reason of Executive’s Retirement – Notwithstanding provisions of Section 5.1 to the contrary, if Executive’s employment hereunder shall terminate on the Retirement Date by reason of Executive’s retirement as provided in Section 3.1, then, subject to the provisions of Sections 5.5, 5.6 (as modified by Section 5.10(c)) and 5.7, Company shall provide Executive with the following benefits:

(i) Notwithstanding anything to the contrary in the 2018 Performance Unit Award or in that certain Performance Unit Award Agreement between Company and Executive dated January 2, 2017, solely for purposes of such awards, Executive shall not be treated as having terminated employment with Company on the Retirement Date, but, rather, shall be deemed to be continuing in the employment of Company until and through the last day of the Performance Period (as such term is defined in the applicable award agreement).

(ii) Notwithstanding anything to the contrary in those certain Restricted Stock Agreements between Company and Executive dated January 2, 2017, and January 4, 2016, to the extent that the shares of restricted stock awarded to Executive pursuant to such agreements are not vested as of the Retirement Date, such shares shall become fully vested and nonforfeitable on such date.

(iii) During the portion, if any, of the 18-month period immediately following Executive’s termination of employment that Executive is eligible to elect and elects to continue coverage for himself and his spouse and eligible dependents, if any, under Company’s or a subsidiary’s group health plans, as applicable, under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and/or sections 601 through 608 of the Employee

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Retirement Income Security Act of 1974, as amended, Company shall promptly reimburse Executive on a monthly basis for the amount Executive pays to effect and continue such coverage (or Company may directly pay for such coverage). Notwithstanding the foregoing, if the provision of the benefits described in the preceding sentence cannot be provided in the manner so described without penalty, tax or other adverse impact on Company, then Company and Executive shall negotiate in good faith to determine an alternative manner in which Company may provide substantially equivalent benefits to Executive without such adverse impact on Company.

(c) Release – If Executive’s employment hereunder will terminate on the Retirement Date by reason of Executive’s retirement as provided in Section 3.1, then, notwithstanding provisions in Section 5.6 to the contrary, Company and Executive shall each take such actions as are necessary to cause the release described in Section 5.6 to be executed by Executive on the day immediately preceding the Retirement Date. In the event that Executive revokes such release in a timely manner in accordance with the provisions thereof, then Executive shall (i) not receive any of the benefits described in Section 5.10(b) and Executive shall immediately return to Company any money or other property that Executive received pursuant to Section 5.10(b), (ii) forfeit any right to the 2018 Bonus and the Special Bonus Amount and Executive shall immediately return to Company any portion of the 2018 Bonus and Special Bonus Amount that Company may have paid to Executive, and (iii) forfeit the shares of stock subject to the 2018 Restricted Stock Award and Executive shall immediately return to Company any shares of stock that Executive may have received pursuant to the 2018 Restricted Stock Award.

(d) Amendment to Award Agreements – The actions described in Sections 5.10(b)(i) and (ii) have been approved by the Compensation Committee, and Executive and Company agree that the provisions of Sections 5.10(b)(i) and (ii) constitute amendments to the awards described therein.”

7. Except as expressly modified by this Retirement Agreement, the terms of the Employment Agreement shall remain in full force and effect and are hereby confirmed and ratified.

8. This Retirement Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Retirement Agreement.

[Signatures on the following page.]

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IN WITNESS WHEREOF , the parties hereto have executed and delivered this Retirement Agreement as of the date first set forth above.


“COMPANY”

CONCHO RESOURCES INC.

By:		/s/ Tim Leach
Name:		Tim Leach
Title:		Chairman and Chief Executive Officer

“EXECUTIVE”

/s/ E. Joseph Wright
E. Joseph Wright

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