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): January 9, 2018

 

 

PARSLEY ENERGY, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware   001-36463   46-4314192

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification Number)

303 Colorado Street, Suite 3000

Austin, Texas 78701

(Address of Principal Executive Offices)

(Zip Code)

(737) 704-2300

(Registrant’s Telephone Number, Including Area Code)

 

 

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:

 

☐ 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 grown company 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 Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Chief Executive Officer Succession Plan

On January 9, 2018, Bryan Sheffield, Chairman of the Board and Chief Executive Officer of Parsley Energy, Inc. (the “Company”) informed the Board of Directors (the “Board”) of the Company that he intends to step down from his position as the Company’s Chief Executive Officer effective January 1, 2019 (the “Transition Date”). The Board, upon the recommendation of its Nominating and Governance Committee (the “Nominating and Governance Committee”), has approved a succession plan pursuant to which, as of the Transition Date, Mr. Sheffield would remain with the Company in the role of Executive Chairman of the Board, and Matt Gallagher, currently the Company’s President and Chief Operating Officer, would succeed Mr. Sheffield as the Company’s Chief Executive Officer and be appointed as the Company’s President and Chief Executive Officer. Until such time, Mr. Gallagher will continue to serve as the Company’s President and Chief Operating Officer. Additional information regarding the terms of Mr. Gallagher’s existing Employment Agreement is available in the Company’s definitive proxy statement for its 2017 Annual Meeting of Stockholders under the caption “Compensation Discussion and Analysis,” and such information is incorporated herein by reference.

Mr. Sheffield is expected to continue as Executive Chairman of the Board through December 31, 2019, at which time he would retire as an employee and officer of the Company, but continue serving as Chairman of the Board, a non-employee director position. The changes in Mr. Sheffield’s relationship with the Company described above were not a result of any disagreements with the Company on any matter relating to the Company’s operations, policies, or practices, and the events described in this Current Report on Form 8-K (this “Report”) are conditioned on Mr. Gallagher’s actual assumption of the position of Chief Executive Officer of the Company effective as of the Transition Date.

Mr. Sheffield’s Letter Agreement

The Compensation Committee of the Board (the “Compensation Committee”) has approved the following with respect to Mr. Sheffield’s compensation for his service as Executive Chairman of the Board ( i.e. , from the Transition Date, when he steps down as Chief Executive Officer, through the date he is no longer an employee or officer of the Company, which is expected to occur on December 31, 2019):

 

  •   his employment agreement, as amended (the “Employment Agreement”), will remain in effect until such time as he is no longer an employee or officer of the Company; and

 

  •   his base compensation, benefits, and the limited perquisites to which he is entitled will remain at the same level as in effect immediately prior to the Transition Date and he will be eligible to receive an annual cash bonus for the 2019 fiscal year; however, he will not be granted new equity awards while he is serving as Executive Chairman.

Upon his retirement as an employee and officer of the Company, expected to occur on December 31, 2019, Mr. Sheffield will be compensated as a non-employee director while he remains on the Board as Chairman, and he will no longer be entitled to any compensation as an employee or officer of the Company. The Company and Mr. Sheffield entered into a letter agreement memorializing these terms on January 9, 2018, which is attached as Exhibit 10.1 to this Report and incorporated herein by reference. Additional information regarding the terms of Mr. Sheffield’s existing Employment Agreement is available in the Company’s definitive proxy statement for its 2017 Annual Meeting of Stockholders under the caption “Compensation Discussion and Analysis,” and such information is incorporated herein by reference.

Director Appointment

On January 9, 2018, the Board, upon the recommendation of its Nominating and Governance Committee, appointed Matt Gallagher to the Board as a Class III director, with a term expiring at the 2020 annual meeting of stockholders, and until he is either re-elected or his successor is elected and qualified. As an employee of the Company, Mr. Gallagher does not meet the independence requirements under the rules of the New York Stock Exchange and the Company’s independence standards and will not serve on any committees of the Board.

 

2

There are no family relationships between Mr. Gallagher and any director or executive officer of the Company or any person nominated or chosen by the Company to become a director or executive officer. There are no arrangements or understandings between Mr. Gallagher and any other persons pursuant to which he was selected as a director. Mr. Gallagher will not receive any director compensation for serving on the Board.

Additional information regarding Mr. Gallagher’s indemnification agreement with the Company is available in Item 1.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 4, 2014 under the caption “Indemnification Agreements,” and additional biographical information about Mr. Gallagher and information regarding certain additional relationships between Mr. Gallagher and the Company is available in Item 5.02 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 5, 2017, and such information is incorporated herein by reference.

Summary of Chief Executive Officer Succession Plan

A summary of the dates and events described in this Report are contained in the table below:

 

Dates

  

Event

January 9, 2018    Mr. Gallagher is appointed to the Board as a Class III director.
Through December 31, 2018   

Mr. Sheffield continues to serve as Chairman and Chief Executive Officer.

 

Mr. Gallagher continues to serve as President and Chief Operating Officer.

January 1, 2019 ( i.e. , the Transition Date)   

Mr. Sheffield steps down as Chief Executive Officer but remains as an employee and officer of the Company in the role of Executive Chairman.

 

Mr. Gallagher succeeds Mr. Sheffield as Chief Executive Officer and is appointed as the Company’s President and Chief Executive Officer.

 

The offices of Chairman and Chief Executive Officer are separated.

December 31, 2019    Mr. Sheffield is expected to retire as an employee and officer of the Company and continue serving as Chairman of the Board thereafter.

 

Item 7.01. Regulation FD Disclosure.

A copy of the Company’s news release announcing the Chief Executive Officer succession plan and appointment of Mr. Gallagher to the Board is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information in this Item 7.01 (including the exhibit) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

 

Item 9.01. Financial Statements and Exhibits.

 

  (d) Exhibits.

 

Exhibit
No.

  

Description

10.1†    Letter Agreement, dated as of January 9, 2018, by and between the Company and Bryan Sheffield.
99.1    News Release, dated January 9, 2018, titled “Parsley Energy Announces CEO Succession Plan.”

 

† Compensatory plan or arrangement

 

3

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.

 

    PARSLEY ENERGY, INC.
    By:  

/s/ Colin W. Roberts

      Colin W. Roberts
      Executive Vice President—General Counsel
Dated: January 9, 2018      

 

4

Exhibit 10.1

P ARSLEY E NERGY , I NC .

January 9, 2018

Bryan Sheffield

303 Colorado Street, Suite 3000

Austin, Texas 78701

Dear Bryan:

This letter sets out the understanding between you and Parsley Energy, Inc. (the “Company) in connection with your transition from the role of Chairman of the Board and Chief Executive Officer (“CEO”) of the Company to Executive Chairman.

On January 9, 2018, the Board of Directors of the Company (the “Board”) approved your transition to the newly created position of Executive Chairman of the Board, to be effective January 1, 2019 (the “Transition Date”), on which date you will no longer serve as CEO. It is currently contemplated by you and the Company that you will serve in the position of Executive Chairman from the Transition Date until December 31, 2019, at which time you will retire as an officer and employee of the Company but continue to serve as Chairman of the Board, a non-employee director position. In connection with this transition, the Compensation Committee of the Board has approved the following compensation arrangements for you, effective as of the Transition Date (subject to the Company’s payroll practices maintained for all officers of the Company):

 

  •   your employment agreement, as amended (the “Employment Agreement”), will remain in effect until such time as you are no longer an employee or officer of the Company;

 

  •   your base compensation, benefits, and the limited perquisites to which you are entitled will remain at the same level as in effect immediately prior to the Transition Date, and you will be eligible to receive an annual cash bonus for the 2019 fiscal year; however, you will not be granted new equity awards while you are serving as Executive Chairman; and

 

  •   upon your retirement as an officer and employee of the Company, your compensation shall transition to that of a nonemployee director, as determined by the Board and Compensation Committee.

You will be an employee and officer of the Company (but not the principal executive officer if a new CEO is appointed) for all purposes throughout the period that you serve as Executive Chairman, including, without limitation, for purposes of any long-term incentive plan awards granted to you prior to your appointment as Executive Chairman. By signing below you agree and acknowledge that the above compensation arrangements, as well as your transition to serving solely as Executive Chairman and subsequently as Chairman of the Board, in and of themselves, do not give rise to a right on your part to terminate your employment with the Company and its subsidiaries for “Good Reason” (as such term is defined in your Employment Agreement).

 

1

You further acknowledge that nothing in this letter shall be construed in any way to limit the right of the Company to terminate your employment, with or without cause, or for you to terminate your employment with the Company, with or without reason, nor shall this letter limit your right to resign from the Board at any time or limit the rights of the stockholders of the Company.

If you agree that the foregoing properly sets forth our understanding, please sign both copies of this letter and return one executed copy to me, keeping the other for your records.

Executed as of the date first set forth above.

 

PARSLEY ENERGY, INC.

/s/ Colin W. Roberts

Colin W. Roberts
Executive Vice President—General Counsel

 

AGREED AND ACCEPTED:

/s/ Bryan Sheffield

Bryan Sheffield
Chairman of the Board and Chief Executive Officer
Parsley Energy, Inc.

 

2

Exhibit 99.1

 

LOGO    NEWS RELEASE

Parsley Energy Announces CEO Succession Plan

AUSTIN, Texas, January  9, 2018 – Parsley Energy, Inc. (NYSE: PE) (“Parsley” or the “Company”) today announced that next year, in January 2019, Chairman of the Board and Chief Executive Officer Bryan Sheffield will be succeeded as CEO by Matt Gallagher, the Company’s current President and Chief Operating Officer. Mr. Gallagher is appointed to Parsley’s Board of Directors effective immediately. Mr. Sheffield will serve as CEO through the end of 2018, in the newly-created position of Executive Chairman throughout 2019, and as Chairman of the Board thereafter. As part of the succession plan, the Board has determined to separate the roles of Chairman and CEO at the time of Mr. Sheffield’s transition to Executive Chairman.

“This announcement is the culmination of a thoughtful and thorough succession planning process in which the Board and Bryan unanimously agree that Matt Gallagher is the ideal person to serve as Parsley’s next CEO and lead Parsley into its next stage of growth and development,” said Ray Alameddine, the Company’s lead director. “Bryan and Matt have worked closely together on every strategic decision for the last several years, Matt is deeply respected across the organization, and Bryan will continue to provide guidance as his role evolves. For these reasons, we expect a seamless transition, accompanied by continued growth and operational excellence. Matt has the right combination of industry expertise, financial acumen, leadership, and work ethic to lead Parsley with distinction. Importantly, he is acutely attuned to the Company’s core values, having helped establish and foster Parsley’s identity through his years of service as a founding officer.”

“On behalf of the Board and the entire team at Parsley, we thank Bryan for his visionary leadership and outstanding decade of service as CEO in building this great Company and making Parsley the premier operator that it is today,” said Mr. Alameddine. “Among his many contributions, Bryan has instilled a culture of excellence and ethical leadership, and he has recruited and groomed an exceptionally strong and capable senior leadership team, including an outstanding leader who is well prepared to succeed him.”

“I am proud of both the tremendous growth of our company and the abiding teamwork that made our growth possible,” said Mr. Sheffield. “From our humble start, contract operating 100 wells in the Permian, we have built a publicly traded company that today operates over 1,200 wells and is closing in on production of 100,000 net Boe per day. After ten exhilarating and intense years in this role and with the Company well positioned for the future, I am looking forward to spending more time with my family, knowing that Parsley is in good hands with Matt leading the next phase of our expansion. I am confident that Matt is the right person to lead as CEO, and I am excited to work with him in our current roles for the remainder of this year, as Executive Chairman throughout 2019, and as Chairman thereafter.”

“It is an incredible honor to succeed Bryan as CEO,” said Mr. Gallagher. “I believe that the foundation Bryan established—including a strong balance sheet, superior acreage position, and team culture that emphasizes innovation and integrity—paves the way for superior long-term value creation for our stockholders.”

Matt Gallagher has served as the Company’s President and Chief Operating Officer since January 2017. Since joining the Company in 2010, he has served in positions of increasing responsibility across the company, including overseeing engineering and geoscience activities. Prior to joining Parsley, Mr. Gallagher served in various engineering and investor relations functions with Pioneer Natural Resources between 2005 and 2010. Mr. Gallagher has a Bachelor of Science in Petroleum Engineering from the Colorado School of Mines, serves on the board of directors of the Permian Basin Petroleum Association, and is a member of the Permian Basin Society of Petroleum Engineers and the West Texas Geological Society.

About Parsley Energy, Inc.

Parsley Energy, Inc. is an independent oil and natural gas company focused on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin in West Texas. For more information, visit our website at www.parsleyenergy.com .

Forward-Looking Statements

Certain statements contained in this news release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Parsley’s expectations or beliefs concerning future events, and it is possible that the results described in this news release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of Parsley’s control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, Parsley does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for Parsley to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements found in the Company’s filings with the SEC, including, but not limited to, its Annual Report on Form 10-K, its subsequent Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K. The risk factors and other factors noted in the Company’s SEC filings could cause actual results to differ materially from those contained in any forward-looking statement.

Contact Information:

Brad Smith, Ph.D., CFA

Senior Vice President, Corporate Strategy and Investor Relations

ir@parsleyenergy.com

(512) 505-5199

or

Kyle Rhodes

Director of Investor Relations

ir@parsleyenergy.com

(512) 505-5199

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