def14a
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
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to §240.14a-12
DELTA
PETROLEUM CORPORATION
(Name of Registrant as Specified in
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No
fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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TABLE OF CONTENTS
DELTA
PETROLEUM CORPORATION
370 SEVENTEENTH STREET,
SUITE 4300
DENVER, COLORADO 80202
(303) 293-9133
April 15,
2010
Dear Delta Stockholders:
On behalf of the Board of Directors, it is a pleasure to invite
you to attend the Annual Meeting of Stockholders to be held at
10:00 a.m. (MDT) on Tuesday, May 25, 2010, at the
Companys offices located at 370 17th Street,
Suite 4300, Denver, Colorado 80202.
Business matters expected to be acted upon at the meeting are
described in detail in the accompanying Notice of the Annual
Meeting and Proxy Statement. Members of management will report
on our operations, followed by a period for questions and
discussion.
We hope you can attend the meeting. Regardless of the number of
shares you own, your vote is very important. Please ensure that
your shares will be represented at the meeting by signing and
returning your proxy now, even if you plan to attend the meeting.
Thank you for your continued support.
Sincerely,
John R. Wallace
President and Chief Operating Officer
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 25, 2010
TO THE STOCKHOLDERS OF DELTA PETROLEUM CORPORATION:
As a stockholder of Delta Petroleum Corporation, a Delaware
corporation (Delta or the Company), you
are invited to be present in person or to be represented by
proxy at the Annual Meeting of Stockholders, to be held at the
Companys offices located at 370 17th Street,
Suite 4300, Denver, Colorado 80202, on Tuesday,
May 25, 2010, at 10:00 a.m. (MDT) for the following
purposes:
1. To elect John R. Wallace, Hank Brown, Kevin R. Collins,
Jerrie F. Eckelberger, Jean-Michel Fonck, Aleron H.
Larson, Jr., Russell S. Lewis, Anthony Mandekic, James J.
Murren, Jordan R. Smith, and Daniel J. Taylor, to one-year terms
on the Board of Directors or until their successors have been
duly elected;
2. To consider and vote upon the ratification of the
appointment of KPMG LLP as the independent registered public
accounting firm for Delta for the fiscal year ending
December 31, 2010; and
3. To transact such other business as may be properly
brought before the meeting and any adjournments thereof.
Stockholders of Delta of record at the close of business on
March 26, 2010 are entitled to vote at the meeting and all
adjournments thereof.
One-third of the outstanding shares of Common Stock of Delta
must be represented at the meeting to constitute a quorum.
Therefore, all stockholders are urged either to attend the
meeting or to be represented by proxy. If a quorum is not
present at the meeting, a vote for adjournment will be taken
among the stockholders present or represented by proxy. If a
majority of the stockholders present or represented by proxy
vote for adjournment, it is Deltas intention to adjourn
the meeting until a later date and to vote proxies received at
such adjourned meeting(s).
The Company is pleased to take advantage of the Securities and
Exchange Commission rules that allow issuers to furnish proxy
materials to their stockholders on the Internet. The Company
believes the rules allow it to provide its stockholders with the
information they need, while lowering the costs of delivery and
reducing the environmental impact of the Annual Meeting of
Stockholders. Accordingly, stockholders of record at the close
of business on March 26, 2010 will receive a Notice
Regarding the Availability of Proxy Materials and may vote at
the Annual Meeting and any adjournment or postponement of the
meeting.
To assure your representation at the Annual Meeting, you are
urged to cast your vote, as instructed in the Notice Regarding
the Availability of Proxy Materials, over the Internet or by
telephone as promptly as possible. You may also request a paper
proxy card to submit your vote by mail, if you prefer. Any
stockholder of record attending the Annual Meeting may vote in
person, even if he or she has voted over the Internet, by
telephone or returned a completed proxy card.
Whether or not you expect to attend the meeting in person, your
vote is very important. Please cast your vote regardless of the
number of shares you hold.
By Order of the Board of Directors
John R. Wallace
President and Chief Operating Officer
Denver, Colorado
April 15, 2010
DELTA
PETROLEUM CORPORATION
370 SEVENTEENTH STREET,
SUITE 4300
DENVER, COLORADO 80202
(303) 293-9133
PROXY
STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 2010
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors (our Board or
our Board of Directors) of Delta Petroleum
Corporation (us, our, we,
Delta or the Company) of proxies to be
voted at our Annual Meeting of Stockholders (the Annual
Meeting or the Meeting) to be held on
May 25, 2010, at the Companys offices located at 370
17th Street, Suite 4300, Denver, Colorado 80202, at
10:00 a.m. (MDT), and at any adjournment thereof. Each
holder of record at the close of business on March 26, 2010
of shares of our common stock, par value $0.01 per share (the
Common Stock), will be entitled to one vote for each
share so held. As of March 26, 2010, there were
282,821,518 shares of Common Stock issued and outstanding.
Whether or not you are able to attend the Annual Meeting, you
are urged to complete and return your proxy or voting
instructions, which are being solicited by the Companys
Board of Directors and which will be voted as you direct on your
proxy or voting instructions when properly completed. In the
event no directions are specified, such proxies and voting
instructions will be voted FOR the ratification of the
appointment of KPMG LLP as our independent auditors for the
fiscal year ending December 31, 2010.
We will pay all expenses of this proxy solicitation. In addition
to this proxy solicitation, proxies may be solicited in person
or by telephone or other means (including by our directors or
employees without additional compensation). We will reimburse
brokerage firms and other nominees, custodians and fiduciaries
for costs incurred by them in distributing proxy materials to
the beneficial owners of shares held of record by such persons.
The U.S. Securities and Exchange Commission has adopted
rules that allow us to mail a notice to our stockholders
advising that our proxy statement, annual report to
stockholders, electronic proxy card and related materials are
available for viewing, free of charge, on the Internet.
Stockholders may then access these materials and vote over the
Internet or request delivery of a full set of materials by mail
or email. Last year, we elected to not to utilize this new
process for the 2009 annual meeting, but we are utilizing this
method for this years annual meeting. These rules give us
the opportunity to serve you more efficiently by making the
proxy materials available quickly online, reducing costs
associated with printing and postage and reducing the
environmental impact of providing information for our meeting.
We will begin mailing the required notice, called a Notice of
Internet Availability of Proxy Materials, to stockholders on or
about April 15, 2010. The proxy materials will be posted on
the Internet, at www.materials.proxyvote.com/247907, no
later than the day we begin mailing the Notice. If you receive
the Notice, you will not receive a paper or email copy of the
proxy materials unless you request one in the manner set forth
in the Notice.
The Notice of Internet Availability of Proxy Materials contains
important information, including:
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The date, time and location of the annual meeting;
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A brief description of the matters to be voted on at the meeting;
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A list of the proxy materials available for viewing on
www.proxyvote.com and the control number you will use to
access the site; and
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Instructions on how to access and review the proxy materials
online, how to vote your shares over the Internet, and how to
get a paper or email copy of the proxy materials, if that is
your preference.
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If your shares are held in an account at a brokerage firm, bank,
broker-dealer or other similar organization, then you are the
beneficial owner of shares held in street name, and
the Notice of Internet Availability of Proxy
Materials was forwarded to you by that organization. The
organization holding your account is considered the stockholder
of record for purposes of voting at the Annual Meeting. As a
beneficial owner, you have the right to direct that organization
on how to vote the shares held in your account.
Shares of common stock held in a stockholders name as the
stockholder of record may be voted in person at the Annual
Meeting. Shares of common stock held beneficially in street name
may be voted in person only if you obtain a legal proxy from the
broker, trustee or nominee that holds your shares giving you the
right to vote the shares.
Whether you hold shares directly as the stockholder of record or
beneficially in street name, you may direct how your shares are
voted without attending the Annual Meeting. If you are a
stockholder of record, you may vote by submitting a proxy
electronically via the Internet, by telephone, or if you have
requested a paper copy of these proxy materials, by returning
the proxy or voting instruction card. If you hold shares
beneficially in street name, you may vote by submitting voting
instructions to your broker, trustee or nominee.
The presence at the Meeting, in person or by proxy, of the
holders of one-third of the shares of our Common Stock
outstanding as of the record date will constitute a quorum.
There must be a quorum for any action to be taken at the Meeting
(other than an adjournment or postponement of the Meeting).
Abstentions and broker non-votes (i.e., proxies from brokers or
nominees indicating that such persons have not received
instructions from the beneficial owner or other persons eligible
to vote shares as to a matter with respect to which the brokers
or nominees do not have discretionary power to vote) are counted
as present for purposes of determining the presence or absence
of a quorum for the transaction of business.
If a quorum is not present at the Meeting, a vote for
adjournment will be taken among the stockholders present or
represented by proxy. If a majority of the stockholders present
or represented by proxy vote for adjournment, it is our
intention to adjourn the Meeting until a later date and to vote
proxies received at such adjourned meeting(s).
Votes cast in favor of and against proposed actions (whether in
person or by proxy) will be counted for us by our Secretary at
the Meeting, but this count may be at least partially based upon
information tabulated for us by our transfer agent or others. In
the election of directors, the eleven candidates will be elected
by a plurality of affirmative votes. Abstentions and broker
non-votes will have no effect on the election of directors. The
affirmative vote of the majority of the outstanding shares of
Common Stock present in person or by proxy will be required to
approve the ratification of the appointment of KPMG LLP as our
independent auditors for the fiscal year ending
December 31, 2010. Abstentions and broker non-votes will,
in effect, be votes against the ratification of the selection of
the independent auditors. Neither of the proposals to be voted
on at the Annual Meeting gives rise to dissenters rights.
You may revoke or change your proxy or voting instructions at
any time before the Annual Meeting. To revoke your proxy, send a
written notice of revocation or another signed proxy with a
later date to the Corporate Secretary of the Company at Delta
Petroleum Corporation, 370 Seventeenth Street, Suite 4300,
Denver, Colorado 80202 before the beginning of the Annual
Meeting. You may also automatically revoke your proxy by
attending the Annual Meeting and voting in person. Attendance at
the Annual Meeting will not in and of itself constitute
revocation of a proxy. To revoke your voting instructions,
submit new voting instructions to your broker, trustee or
nominee; alternatively, if you have obtained a legal proxy from
your broker or nominee giving you the right to vote your shares,
you may attend the Annual Meeting and vote in person. All shares
represented by a valid proxy received prior to the Annual
Meeting will be voted.
PROPOSAL 1
ELECTION OF DIRECTORS
General
Our directors are elected annually by the stockholders to serve
until the next annual meeting of stockholders and until their
respective successors are duly elected and qualified, or until
the earlier of their death, resignation or retirement. Our
bylaws provide that the number of directors comprising the whole
Board shall from time to time be fixed and determined by
resolution adopted by our Board of Directors. Our Board has
established the size of the Board at fifteen directors, with
four Board seats currently vacant. Our Board is recommending
that our eleven current directors be re-elected.
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Each nominee consented to be named as a nominee in this proxy
statement, and we expect that each nominee will be able to serve
if elected. If any nominee becomes unavailable or unwilling to
accept his nomination for election for any reason, a substitute
nominee may be proposed by our Board and the shares represented
by proxy will be voted for any substitute nominee, unless the
Board otherwise reduces the number of directors. Proxies cannot
be voted for a greater number of persons than the number of
nominees named below.
Pursuant to the terms of the Company Stock Purchase Agreement
(the Tracinda Agreement), dated December 29,
2007, between Delta and Tracinda Corporation
(Tracinda), Tracinda is entitled, at all times that
it beneficially owns not less than ten percent of our
outstanding Common Stock, to designate a number of nominees for
election to serve on our Board of Directors and each of its
Committees that is equal to Tracindas pro rata share of
stock ownership in our Company multiplied by the number of
directors on our Board or Committee, as the case may be, with
any fractional number being rounded to the nearest whole number.
Tracinda is currently entitled to designate five nominees but
has chosen to nominate only three designees at this time. The
persons designated by Tracinda for nomination for election to
the Board are Anthony Mandekic, James J. Murren and Daniel J.
Taylor, who are all currently directors.
The Board has maintained the size of the Board at fifteen
directors in order to maintain flexibility should it wish to add
additional members with complimentary skills and experience to
our Board and to accommodate the additional two directors that
Tracinda is entitled to nominate. The proxies solicited hereby
cannot be voted for the election of more than eleven directors.
The Role
of the Nominating and Corporate Governance Committee in the
Nomination Process
At the Annual Meeting, our stockholders will be asked to elect
the eleven director nominees set forth below for a one-year term
expiring on the date of the next annual meeting of stockholders
following the 2010 Annual Meeting of Stockholders. While our
Board does not anticipate that any of the director nominees will
be unable to stand for election as a director nominee at the
Annual Meeting, if that occurs, proxies will be voted in favor
of such other person or persons who are recommended by our
Nominating and Corporate Governance Committee and designated by
our Board. All of the director nominees currently are members of
our Board, all of the director nominees have been recommended
for re-election by our Nominating and Corporate Governance
Committee and approved and nominated for re-election by our
Board and all of the director nominees have consented to serve
if elected. Set forth below is information regarding the
director nominees, which has been confirmed by each of them for
inclusion in this Proxy Statement.
In identifying and recommending nominees for positions on our
Board, our Nominating and Corporate Governance Committee places
emphasis on the following criteria, among others:
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Judgment, character, expertise, skills and knowledge useful to
the oversight of our business;
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Business or other relevant experience; and
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The extent to which the interplay of the nominees
expertise, skills, knowledge and experience with that of other
members of our Board will build a board that is effective,
collegial and responsive to the needs of the Company.
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Our Nominating and Corporate Governance Committee does not set
specific, minimum qualifications that nominees must meet in
order for the Committee to recommend them to our Board, but
rather believes that each nominee should be evaluated based on
his or her individual merits, taking into account the needs of
the Company and the composition of our Board. In considering
diversity, we consider diversity of viewpoints, backgrounds and
experience. We do not, however, have any formal policy regarding
diversity in identifying nominees for a directorship, but
rather, consider it among the various factors relevant to any
particular nominee. Our Nominating and Corporate Governance
Committee evaluates possible candidates in detail and suggests
individuals to explore in more depth. In the event that we
decide to fill a vacancy that exists or we decide to increase
the size of the Board, we identify, interview and examine, and
make recommendations to the Board regarding appropriate
candidates. We identify potential candidates principally through
suggestions from the Companys directors and senior
management. Our President and Board members may also seek
candidates through informal discussions with third parties. We
also consider candidates recommended or suggested by
stockholders.
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The Nominating and Corporate Governance Committee determined
that Mr. Smith should be nominated because of his
experience in the oil and gas business, Mr. Collins because
of his business experience and acumen with respect to financial
matters, Mr. Wallace because of his oil and gas experience
and his position as President of our Company, Mr. Fonck
because of his experience in the oil and gas business,
Mr. Larson because of his business experience and his
familiarity with legal matters and his perspective on the
Company as one of its founders, Mr. Eckelberger because of
his business experience and knowledge of legal matters,
Mr. Lewis because of his knowledge and experience with
respect to financial matters, and Mr. Brown because of his
knowledge of legal and financial matters and his business and
political experience. The Committee acknowledged that, although
Messrs. Taylor, Mandekic and Murren are designated as
nominees by Tracinda Corporation pursuant to its contractual
relationship with the Company, each of them is eminently
qualified to serve as a Director and brings significant outside
business experience to the Board that has proved to be
invaluable to date.
Board
Leadership Structure
The Boards current leadership structure separates the
positions of Chairman and principal executive officer. Daniel
Taylor, a designee of Tracinda Corporation, serves as our Board
Chairman and John Wallace serves as our President. The Board has
determined our leadership structure based on factors such as the
experience of the applicable individuals, the current business
and financial environment faced by the Company, particularly in
view of its financial condition and industry conditions
generally, Mr. Taylors role on the Board since the
consummation of the Tracinda investment in February 2008, and
other relevant factors. After considering these factors, the
Company determined that separating the positions of Chairman of
the Board and principal executive officer is the appropriate
leadership structure at this time. The Board, through the
Chairman, is currently responsible for the strategic direction
of the Company. The President is currently responsible for the
day to day leadership and performance of the Company, while the
Chairman of the Board provides guidance to the President, sets
the agenda for the Board meetings and presides over meetings of
the Board. The Board believes that this is appropriate under
current circumstances because it allows management to make the
operating decisions necessary to manage the business, while
helping to keep a measure of independence between the oversight
function of our Board of Directors and operating decisions. The
Board feels that this provides an appropriate balance of
strategic direction, operational focus, flexibility and
oversight.
The
Boards Role in Risk Oversight
It is managements responsibility to manage risk and bring
to the Board of Directors attention any material risks to
the Company. The Board of Directors has oversight responsibility
through its Audit Committee which oversees the Companys
risk policies and processes relating to the financial statements
and financial reporting processes and the guidelines, policies
and processes for mitigating those risks.
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Nominees
The following individuals are nominees to serve on our Board of
Directors:
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Name
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Age
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Positions
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Period of Service as a Director
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John R. Wallace
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President, Chief Operating Officer and Director
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June 2007 to Present
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Hank Brown
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70
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Director
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June 2007 to Present
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Kevin R. Collins
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53
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Director
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March 2005 to Present
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Jerrie F. Eckelberger
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65
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Director
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September 1996 to Present
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Jean-Michel Fonck
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68
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Director
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May 27, 2009 to Present
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Aleron H. Larson, Jr.
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64
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Director
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May 1987 to Present
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Russell S. Lewis
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55
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Director
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June 2002 to Present
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Anthony Mandekic
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68
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Director
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May 27, 2009 to Present
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James J. Murren
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48
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Director
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February 2008 to Present
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Jordan R. Smith
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74
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Director
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October 2004 to Present
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Daniel J. Taylor
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Chairman of the Board
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February 2008 to Present
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The following is biographical information as to the business
experience of each of our current directors, all of whom are
also nominees for director.
John R. Wallace, President and Chief Operating Officer,
joined Delta in October 2003 as Executive Vice President of
Operations and was appointed President in February 2006 and a
Director in June 2007. In addition, he has served as the
President and a Director of Amber Resources Company of Colorado
from June 5, 2009 to the present. Since April 1, 2005,
he has also served as Executive Vice President and Director of
DHS Drilling Company. Mr. Wallace was Vice President of
Exploration and Acquisitions for United States Exploration, Inc.
(UXP), a Denver-based publicly-held oil and gas
exploration company, from May 1998 to October 2003. Prior to
UXP, Mr. Wallace served as president of various privately
held oil and gas companies engaged in producing property
acquisitions and exploration ventures. He received a Bachelor of
Science degree in Geology from Montana State University in 1981.
He is a member of the American Association of Petroleum
Geologists and the Independent Petroleum Association of the
Mountain States.
Hank Brown has served as Senior Counsel to the law firm
of Brownstein Hyatt Farber Schreck P.C. since June 1, 2008
and is a member of that firms Government Relations and
Natural Resources groups. He served as the President of the
University of Colorado from August 2005 to March 2008. Prior to
joining CU, he was President and CEO of the Daniels Fund and
served as the President of the University of Northern Colorado
from 1998 to 2002. He served Colorado in the United States
Senate (elected in 1990) and served five consecutive terms
in the U.S. House representing Colorados
4th Congressional District
(1980-1988).
He also served in the Colorado Senate from 1972 to 1976.
Mr. Brown was a Vice President of Monfort of Colorado from
1969 to 1980. For more than the past five years, he has served
as a member of the Board of Directors of Sealed Air Corporation
and of Sensient Technology Corporation, and during 2008 and 2009
he served on the Board of Directors of Guaranty Bank and
Trust Company. He is both an attorney and a C.P.A. He
earned a Bachelors degree in Accounting from the
University of Colorado in 1961 and received his Juris Doctorate
degree from the University of Colorado Law School in 1969. While
in Washington, D.C., Mr. Brown earned a Master of Law
degree in 1986 from George Washington University.
Kevin R. Collins currently serves as Chief Financial
Officer of Bear Tracker Energy, a position he has held since
April 2007. Prior to his current position, Mr. Collins
served as President and Chief Executive Officer of Evergreen
Energy, Inc. from September 2006 until his retirement on
June 1, 2009. He also served on Evergreens Board of
Directors until he resigned effective July 1, 2009. Prior
to that, he served as Evergreens Executive Vice
President Finance and Strategy from September 2005
to September 2006, and acting Chief Financial Officer from
November 2005 until March 31, 2006. From 1995 until 2004,
Mr. Collins was an executive officer of Evergreen
Resources, Inc., serving as Executive Vice President and Chief
Financial Officer until Evergreen Resources merged with Pioneer
Natural Resources Co. in September 2004. He became a Certified
Public Accountant in 1983 after receiving his Bachelor of
Science degree in Business Administration and Accounting
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from the University of Arizona. Mr. Collins has over
13 years of public accounting experience and has also
served as Vice President and a board member of the Colorado Oil
and Gas Association, President of the Denver Chapter of the
Institute of Management Accountants, and a board member and
Chairman of the Finance Committee of the Independent Petroleum
Association of Mountain States.
Jerrie F. Eckelberger is an investor, real estate
developer and attorney who has practiced law in the State of
Colorado since 1971. He graduated from Northwestern University
with a Bachelor of Arts degree in 1966 and received his Juris
Doctor degree in 1971 from the University of Colorado School of
Law. From 1972 to 1975, Mr. Eckelberger was a staff
attorney with the Eighteenth Judicial District Attorneys
Office in Colorado. From 1975 to the present,
Mr. Eckelberger has been engaged in the private practice of
law in the Denver area. Mr. Eckelberger previously served
as an officer, director and corporate counsel for Roxborough
Development Corporation. Since March, 1996, Mr. Eckelberger
has engaged in the investment and development of Colorado real
estate through several private companies in which he is a
principal.
Jean-Michel Fonck is President of Geopartners SAS, a
service company for petroleum studies located in France, and has
consulted with the firm of JMF-Conseil SARL to various oil
companies since 2001. Mr. Fonck was previously employed by
TOTAL SA (TOTAL), serving in various capacities
there from 1968 until 2001. During his tenure at TOTAL, he
worked in Paris in mathematical applications to geology and
exploration venture appraisals, in Indonesia as chief geologist,
in Argentina and Egypt as exploration manager and in Paris again
as division manager for Exploration New Ventures and
International Exploration Coordination. In 1991, Mr. Fonck
became President and CEO of the TOTAL exploration and production
branch in Houston, and then returned to Paris in 1994 to serve
as Vice President of Exploration and Reservoir Evaluation for
the TOTAL group. Mr. Fonck graduated from Ecole des Mines
(Nancy) in 1963.
Aleron H. Larson, Jr. has operated as an independent
in the oil and gas industry individually and through public and
private ventures since 1978. Mr. Larson served as Chairman
of the Board, Secretary and Director of Delta, as well as Amber
Resources, until his retirement on July 1, 2005, at which
time he resigned as Chairman of the Board and as an executive
officer of the Company. He ceased to be an officer or director
of Amber Resources on January 3, 2006. Mr. Larson
practiced law in Breckenridge, Colorado from 1971 until 1974.
During this time he was a member of a law firm,
Larson & Batchellor, engaged primarily in real estate
law, land use litigation, land planning and municipal law. In
1974, he formed Larson & Larson, P.C., and was
engaged primarily in areas of law relating to securities, real
estate, and oil and gas until 1978. Mr. Larson received a
Bachelor of Arts degree in Business Administration from the
University of Texas at El Paso in 1967 and a Juris Doctor
degree from the University of Colorado in 1970.
Russell S. Lewis is Executive Vice President, Strategic
Development for VeriSign, Inc., located in Dulles, Virginia,
which is a provider of Internet infrastructure services.
Mr. Lewis has held a variety of senior executive level
roles at VeriSign since 1999, including the GM of
VeriSigns Naming and Directory Services Group and Senior
Vice President of Corporate Development. Mr. Lewis has been
a member of the Board of Directors of Delta Petroleum since June
2002. For the preceding 15 years, Mr. Lewis was
President and CEO of TransCore, a wireless transportation
systems integration company. Prior to that, Mr. Lewis
managed an oil and gas exploration subsidiary of a publicly
traded utility and was Vice President of EF Hutton in its
Municipal Finance group. Mr. Lewis also serves on the Board
of Directors of Braintech, Inc., NameMedia, Inc., and Dropps,
Inc. Mr. Lewis has a Bachelors of Arts degree in Economics
from Haverford College and an MBA from the Harvard School of
Business.
Anthony Mandekic currently serves as the
Secretary/Treasurer of Tracinda Corporation and has held such
position since Tracinda Corporations inception in 1976.
Mr. Mandekic also currently serves as Chairman of the Lincy
Foundation, a charitable organization founded by Mr. Kirk
Kerkorian, and has served as its Chief Financial Officer and a
Director since 1989. Since May of 2006 he has served as a member
of the Board of Directors of MGM Mirage and as a member of its
Executive Committee, Diversity Committee and Compensation
Committee. In May of 2007, Mr. Mandekic became Chairman of
the MGM Mirage Compensation Committee and also became a member
of the MGM Mirage Corporate Governance and Nominating Committee
in 2009. Mr. Mandekic is a graduate of the University of
Southern California with a bachelors degree in
Science-Accounting and is a Certified Public Accountant.
6
James J. Murren is the Chairman and CEO of MGM Mirage,
where he is also a member of the Board of Directors and the
Executive Committee. Mr. Murren previously served in the
following capacities for MGM Mirage: President
(1999-2008),
Chief Operating Officer
(2007-2008),
Chief Financial Officer
(1998-2007),
and Treasurer
(2001-2007).
Prior to his employment at MGM Mirage, Mr. Murren spent
14 years on Wall Street as a top-ranked equity analyst and
was appointed to Director of Research and Managing Director of
Deutsche Bank. Mr. Murren received a Bachelor of Arts
degree in Art History and Urban Studies from Trinity College in
1983.
Jordan R. Smith is President of Ramshorn Investments,
Inc., a wholly owned subsidiary of Nabors Drilling USA LP
located in Houston, Texas, where he is responsible for drilling
and development projects in a number of producing basins in the
United States. He has served in such capacity for more than the
past five years. Mr. Smith has served on the Board of the
University of Wyoming Foundation and the Board of the Domestic
Petroleum Council, and is also Founder and Chairman of the
American Junior Golf Association. He has also served as a
director of Clayton Williams Energy, Inc. from July 2000 to the
present. Mr. Smith received Bachelor and Master degrees in
Geology from the University of Wyoming in 1956 and 1957,
respectively.
Daniel J. Taylor has been an executive of Tracinda
Corporation since February 2006 and has served as a Director of
MGM Mirage since March 2007. Mr. Taylor does not have a
specific title at Tracinda but his primary responsibilities
include assisting with the management of Tracindas
investments. He was initially employed by Tracinda from May 1991
until July 1997, and has been employed in his current position
at Tracinda since February 2006. During the interim period he
was employed by
Metro-Goldwyn-Mayer
Inc., a then public corporation (MGM), first as
Executive Vice President-Finance, and then as Chief Financial
Officer from August 1997 to April 2005, at which time MGM
was sold. He then served as President of MGM until January 2006.
Mr. Taylor received a Bachelor of Science degree in
Business Administration with an emphasis in Accounting from
Central Michigan University in 1978. He served as a director of
Inforte Corp. until July 2007.
At the present time Messrs. Collins, Eckelberger, Lewis,
Smith, and Taylor serve on the Audit Committee;
Messrs. Eckelberger, Brown, Collins, Lewis, Mandekic,
Murren, and Smith serve on the Compensation Committee; and
Messrs. Smith, Collins, Eckelberger, Lewis, Murren, and
Taylor serve on the Nominating & Corporate Governance
Committee. In conjunction with the February 2008 equity issuance
to Tracinda Corporation, and in accordance with the related
Company Stock Purchase Agreement, Tracinda designated
Messrs. Mandekic, Murren and Taylor to serve on our Board
of Directors.
All directors will hold office until the next annual meeting of
stockholders.
Required
Vote
The eleven persons receiving the highest number of
FOR votes from stockholders in the
election of directors at the Annual Meeting will be elected.
Recommendation
of the Board of Directors
Our Board of Directors recommends that you vote FOR the
re-election of each of John R. Wallace, Hank Brown, Kevin R.
Collins, Jerrie F. Eckelberger, Jean-Michel Fonck, Aleron H.
Larson, Jr., Russell S. Lewis, Anthony Mandekic, James J.
Murren, Jordan R. Smith and Daniel J. Taylor for director to
serve on our Board of Directors.
CORPORATE
GOVERNANCE
Board
Membership and Director Independence
Our Board of Directors has determined that each of Hank Brown,
Kevin R. Collins, Jerrie F. Eckelberger,
Jean-Michel
Fonck, Russell S. Lewis, Anthony Mandekic, James J. Murren,
Jordan R. Smith and Daniel J. Taylor qualifies as an independent
director under rules promulgated by the United States Securities
and Exchange Commission (the SEC) and The NASDAQ
Stock
Market®
listing standards, and has concluded that none of these
directors has a material relationship with the Company that
would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director. During the
fiscal year ended December 31, 2009, our Board of Directors
met on twenty occasions, either in person or by telephone
conference call, and acted by written
7
consent on two occasions. Each of our current directors attended
at least 75% of the aggregate total of meetings of the Board of
Directors and committees on which he served during his service
term, with the exceptions of Mr. Murren, who attended 45%
of the Board meetings, 57% of the meetings of the Compensation
Committee and 0% of the meetings of the Nominating and Corporate
Governance Committee; Mr. Lewis, who attended 71% of the
meetings of the Audit Committee; and Mr. Smith, who
attended 43% of the meetings of the Audit Committee and 71% of
the meetings of the Compensation Committee.
Directors standing for election are expected to attend the
Annual Meeting of Stockholders. Of the thirteen directors
standing for election at the Annual Meeting of Stockholders held
on May 27, 2009, seven attended the meeting.
Committees
of the Board of Directors
Our Board of Directors has established an Audit Committee, a
Compensation Committee and a Nominating and Corporate Governance
Committee. The full text of all of the charters of the Board
Committees is available on the Companys website at
www.deltapetro.com. The Board has determined that each of
the directors who serve on these Committees is
independent under The NASDAQ Stock
Market®
listing standards. The directors who serve on each of these
Committees are as follows:
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Nominating and
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Corporate
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Audit
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Compensation
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Governance
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Name of Director
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Committee
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Committee
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Committee
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Kevin R. Collins
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Chairman
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Member
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Member
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Jerrie F. Eckelberger
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Member
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Chairman
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Member
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Russell S. Lewis
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Member
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Member
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Member
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Jordan R. Smith
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Member
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Member
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Chairman
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James J. Murren
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Member
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Member
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Daniel J. Taylor
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Member
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Member
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Hank Brown
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Member
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Anthony Mandekic
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Member
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Audit Committee. We have a standing Audit
Committee established in accordance with applicable SEC and
NASDAQ Stock Market rules. The Audit Committee oversees and
monitors our independent audit process and assists the Board of
Directors in fulfilling its responsibilities with respect to
matters involving the accounting, financial reporting and
internal control functions of the Company and its subsidiaries.
It is also charged with the responsibility for reviewing all
related party transactions for potential conflicts of interest.
A discussion of the role of the Audit Committee is provided
under Report of the Audit Committee.
The Board has determined that each of Messrs. Lewis and
Collins is an audit committee financial expert as
defined by rules adopted by the SEC.
The Audit Committee met seven times in fiscal year 2009.
Compensation Committee. The Compensation
Committee reviews the performance of our executives, sets
compensation and compensation-related policies and makes
recommendations to the Board of Directors in the area of
executive compensation and policies on equity incentives. The
specific nature of the Compensation Committees roles and
responsibilities as they relate to executive officers is set
forth under Compensation Discussion and Analysis.
The Compensation Committee met on four occasions either in
person or by telephone conference call, and acted by written
consent on two occasions during 2009.
Nominating and Corporate Governance
Committee. The Nominating and Corporate
Governance Committee makes recommendations to the Board of
Directors regarding the persons who shall be nominated for
election as directors. The Committee has not established any
minimum qualifications for persons to be considered for
nomination but will be guided by the following criteria: that
the individual (i) be of the highest character and
8
integrity, (ii) be free of any conflict of interest that
would violate any applicable law or regulation or interfere with
proper performance of the responsibilities of a director,
(iii) possess substantial and significant experience that
would be of particular importance to Delta in the performance of
the duties of a director, (iv) have sufficient time
available to devote to the affairs of Delta, and (v) have a
desire to represent the balanced best interests of the
stockholders as a whole.
The Nominating and Corporate Governance Committee met one time
in fiscal year 2009.
Stockholder
Nominations of Directors
Stockholders who wish to recommend a director candidate to serve
on the Board of Directors to the Nominating and Corporate
Governance Committee should submit a letter addressed to the
chairperson of the Nominating and Corporate Governance Committee
no later than 120 days prior to the date of the next Annual
Meeting of Stockholders. The notice shall contain the following
information:
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The name of the nominating stockholder(s) and the address, phone
number and
e-mail
address at which the nominating stockholder(s) can be contacted.
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Evidence of the number of shares of Deltas Common Stock
held by the nominating stockholder(s), a statement of how long
the nominating stockholder(s) has held those shares, and a
statement that the nominating stockholder(s) will continue to
hold those shares at least through our next annual meeting of
stockholders.
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The candidates full name, together with the address, phone
number and
e-mail
address at which the candidate can be contacted.
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A statement of the candidates qualifications and
experiences and any other qualities that the nominating
stockholder(s) believes that the candidate would bring to the
Board.
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A description of any relationship and all arrangements or
understandings, if any, between the nominating stockholder(s)
and the candidate and any other person or persons with respect
to the candidates proposed service on the Board.
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Information that would bear on the independence of the
recommended candidate (such as affiliated transactions or
relationships).
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Any proceedings adverse to Delta, including legal proceedings,
to which the recommended candidate or an associate is a party.
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Information regarding whether the nominating stockholder(s) or
recommended candidate has plans to submit proposals for Delta or
seeks to address any personal interest involving Delta.
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The candidates resume, which must include at a minimum a
detailed description of the candidates business,
professional or other appropriate experience for at least the
last ten (10) years, a list of other boards of directors on
which the candidate currently serves or on which he or she
served in the last ten (10) years, and undergraduate and
post-graduate educational information.
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A written statement, signed by the candidate, agreeing that if
he or she is selected by the Committee and the Board, he or she
will (i) be a nominee for election to the Board,
(ii) provide all information necessary for us to include in
our proxy statement under applicable SEC or NASDAQ rules, and
(iii) serve as a director if he or she is elected by
stockholders.
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Any additional information that the nominating stockholder(s)
believes is relevant to the Committees consideration of
the candidate.
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A nominee for director should be a person of integrity and be
committed to devoting the time and attention necessary to
fulfill his or her duties to Delta. The Nominating and Corporate
Governance Committee will evaluate the independence of directors
and potential directors, as well as their business experience,
understanding of and experience in the energy industry, personal
skills, or specialized skills or experience, relative to those
of the then-current directors. Diversity of background and
experience, including diversity of race, ethnicity,
international
9
background, gender and age, are also important factors in
evaluating candidates for Board membership. The Committee will
also consider issues involving possible conflicts of interest of
directors or potential directors, the results of interviews of
selected candidates by members of the Committee and the Board,
and the totality of the circumstances.
Code of
Ethics
Our Board of Directors adopted a Code of Business Conduct and
Ethics in November 2003 (amended in October 2004 and January
2007), which applies to all of our executive officers, directors
and employees. A copy of the Code of Business Conduct and Ethics
is available on our website at www.deltapetro.com or by
writing to our Secretary at 370 Seventeenth Street,
Suite 4300, Denver, Colorado 80202.
Compensation
Committee Interlocks and Insider Participation
No member of the Compensation Committee has ever been an officer
of Delta or any of its subsidiaries, and no Delta employee
served on the Compensation Committee during the last fiscal year.
Certain
Relationships and Related Transactions
Review,
Approval or Ratification of Transactions with Related
Persons
The Board of Directors has recognized that transactions between
the Company and certain related persons present a heightened
risk of conflicts of interest. In order to ensure that the
Company acts in the best interests of its stockholders, the
Board has delegated the review and approval of related party
transactions to the Audit Committee in accordance with the
Companys written Audit Committee Charter. After its
review, the Audit Committee will only approve or ratify
transactions that are fair to the Company and not inconsistent
with the best interests of the Company and its stockholders. Any
director who may be interested in a related party transaction
shall recuse himself from any consideration of such related
party transaction.
Transactions
with Related Persons
On March 26, 2009, the Company entered into a Contingent
Payment Rights Purchase Agreement with Tracinda Corporation, a
holder of approximately 40% of the Companys outstanding
common stock at the time. On March 26, 2009, Tracinda
purchased a contingent payment right, or a CPR, for
$14.9 million, and subsequently purchased an additional CPR
for $10.1 million on April 1, 2009 following the
Companys receipt of an opinion of an independent
investment banking firm relating to the transaction, as required
under the Companys 7% Senior Notes Indenture for
transactions with affiliates. The CPRs provided Tracinda with
the right to receive up to $27,884,713 of the net proceeds that
the Company anticipated receiving in connection with its claims
and the claims of Amber Resources Company of Colorado, a 91.68%
owned subsidiary of the Company, in the case captioned Amber
Resources Co., et. al. v. United States, Civ Act.
No. 2-30,
filed in the United States Court of Federal Claims (the
Amber Case). In May 2009, immediately prior to
receipt of the litigation proceeds related to the Amber Case,
the Company purchased for $26.0 million the CPRs previously
sold to Tracinda Corporation for $25.0 million.
During fiscal years 2001 and 2000, Aleron H. Larson, Jr.
and Roger A. Parker, officers of the Company at the time,
guaranteed certain borrowings which have subsequently been
repaid. As consideration for the guarantee of the Companys
indebtedness, each officer was assigned a 1% overriding royalty
interest (ORRI) in the properties acquired with the
proceeds of the borrowings. Each of Mr. Larson and
Mr. Parker earned approximately $67,000 for their
respective 1% ORRI during the year ended December 31, 2009.
In addition, in December 1999, Mr. Larson and
Mr. Parker, officers of the Company at the time, guaranteed
certain other borrowings which have subsequently been repaid,
the proceeds of which were utilized by the Company to purchase
interests in certain offshore California leases that later
became the subject of the Amber Case. As consideration for the
guarantee of the Companys indebtedness, each officer was
assigned a 1% ORRI in the properties acquired with the proceeds
of the borrowings, as well as a 1% ORRI in compensation received
for the properties from the United States. Because the Company
received payments from the United States with respect to these
leases as a result of the conclusion of the Amber Case, each of
Mr. Larson, a director, and Mr. Parker, a director and
chief executive officer of the Company until
10
May 2009, received approximately $814,341 during the year
ended December 31, 2009 pursuant to the terms of his
agreement with the Company.
Stockholder
Communications with the Board of Directors
Stockholders wishing to contact the Board of Directors or
specified members or Committees of the Board should send
correspondence to the Secretary, Delta Petroleum Corporation,
370 Seventeenth Street, Suite 4300, Denver, Colorado 80202.
All communications so received from stockholders of the Company
will be forwarded to the members of the Board of Directors or to
a specific director or Committee if so designated by the
stockholder. A stockholder who wishes to communicate with a
specific director or Committee should send instructions asking
that the material be forwarded to the director or to the
appropriate committee chairman. All stockholders are also
encouraged to communicate directly with both officers and
directors regarding issues affecting the Company at the Annual
Meeting of Stockholders.
COMPLIANCE
WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF
1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our executive officers, directors and persons
who beneficially own more than ten percent (10%) of a registered
class of our equity securities, to file initial reports of
ownership of Delta securities and reports of changes in
ownership of Delta securities with the Securities and Exchange
Commission (SEC).
To our knowledge, during the fiscal year ended December 31,
2009, our officers and directors complied with all applicable
Section 16(a) filing requirements.
These statements are based solely on a review of the copies of
such reports furnished to us by our officers and directors and
their written representations that such reports accurately
reflect all reportable transactions.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
STOCKHOLDERS AND MANAGEMENT
Security
Ownership of Certain Beneficial Owners
The following table presents information concerning persons
known by us to own beneficially 5% or more of our issued and
outstanding Common Stock as of March 31, 2010.
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Amount and Nature
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Percent of
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Name and Address
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of Beneficial Ownership
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Class(1)
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Tracinda Corporation(2)
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93,797,701
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33.17
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%
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150 South Rodeo Drive, Suite 250
Beverly Hills, CA 90212
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First Trust Portfolios L.P.(3)
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18,125,702
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6.41
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%
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120 East Liberty Drive, Suite 400
Wheaton, Illinois 60187
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(1) |
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We have authorized 600,000,000 shares of $.01 par
value Common Stock, of which 282,821,518 shares were issued
and outstanding as of March 31, 2010. We also have
authorized 3,000,000 shares of $.01 par value
preferred stock, of which no shares are outstanding. |
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(2) |
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This disclosure is based on an amendment to Schedule 13D
filed with the SEC on November 30, 2009. The
Schedule 13D was filed on behalf of Tracinda Corporation
and Kirk Kerkorian, both of which reported having sole voting
and dispositive power over 93,797,701 shares. Tracinda
Corporation is wholly owned by Kirk Kerkorian. |
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(3) |
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This disclosure is based on a Schedule 13G filed with the
SEC on February 1, 2010. At the time of filing, the
reporting person reported having shared voting and dispositive
power over 18,125,702 shares. First Trust Advisors
L.P. is an affiliate of First Trust Portfolios L.P. and
acts as portfolio supervisor of the unit investment trusts which
hold shares of common stock of the Company. The Charger
Corporation is the general partner of both First
Trust Portfolios L.P. and First Trust Advisors L.P. |
11
Security
Ownership of Management
The following table contains information about the beneficial
ownership (unless otherwise indicated) of our Common Stock as of
March 31, 2010 by:
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each of our current directors and nominees for director;
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each executive officer; and
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all current directors and current executive officers as a group.
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Amount and
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Nature of
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Beneficial
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Percent of
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Name and Address of Beneficial Owner
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Ownership(1)
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Class(2)
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Kevin K. Nanke
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1,154,109
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(3)
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*
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John R. Wallace
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1,074,694
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(4)
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*
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Stanley F. Freedman
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598,527
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(5)
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*
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Aleron H. Larson, Jr.
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437,991
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(6)
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*
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Russell S. Lewis
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207,413
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(7)
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*
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Daniel J. Taylor
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131,432
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(8)
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*
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Jerrie F. Eckelberger
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115,772
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(9)
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*
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Jordan R. Smith
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115,772
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(10)
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*
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Hank Brown
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94,254
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(11)
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*
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Kevin R. Collins
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82,017
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(12)
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*
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James J. Murren
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67,254
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(13)
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*
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Anthony Mandekic
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46,527
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(14)
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*
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Jean-Michel Fonck
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36,527
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(15)
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*
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All executive officers and current directors and nominees for
director as a Group (13 persons)
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4,162,289
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(16)
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1.47
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%
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* |
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Represents beneficial ownership of less than one percent (1.0%)
of the outstanding shares of our Common Stock. |
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(1) |
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If a stockholder holds options or other securities that are
exercisable or otherwise convertible into our Common Stock
within 60 days of March 31, 2010, we treat the Common
Stock underlying those securities as owned by that stockholder,
and as outstanding shares when we calculate the
stockholders percentage ownership of our Common Stock.
However, we do not consider that Common Stock to be outstanding
when we calculate the percentage ownership of any other
stockholder. |
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(2) |
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We have 600,000,000 shares of $.01 par value Common
Stock, of which 282,821,518 shares were issued and
outstanding as of March 31, 2010. We also have an
authorized capital of 3,000,000 shares of $.01 par
value preferred stock, of which no shares are outstanding. |
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(3) |
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Includes 184,386 shares of Common Stock owned directly,
580,973 unvested restricted shares and 40,000 unearned
performance shares owned by Mr. Nanke. Also includes
options to purchase 348,750 shares of Common Stock that are
currently exercisable or exercisable within 60 days of
March 31, 2010. |
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(4) |
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Includes 55,599 shares of Common Stock owned directly,
661,595 unvested restricted shares and 70,000 unearned
performance shares owned by Mr. John Wallace. Also includes
options to purchase 287,500 shares of Common Stock that are
currently exercisable or exercisable within 60 days of
March 31, 2010. In addition, Mr. Wallace owns an
economic interest in 17,200 shares of Common Stock relating
to his ownership interest in a family trust. |
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(5) |
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Includes 39,460 shares of Common Stock owned directly,
519,067 unvested restricted shares and 40,000 unearned
performance shares owned by Mr. Freedman. |
12
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(6) |
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Includes 63,491 shares of Common Stock owned by
Mr. Larson directly. Also includes options to purchase
370,000 shares of Common Stock that are currently
exercisable or exercisable within 60 days of March 31,
2010. Also includes 4,500 shares held by his daughter. |
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(7) |
|
Includes 153,413 shares of Common Stock owned directly by
Mr. Lewis and options to purchase 54,000 shares of
Common Stock that are currently exercisable or exercisable
within 60 days of March 31, 2010. |
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(8) |
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Includes 131,432 shares of Common Stock owned directly by
Mr. Taylor. |
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(9) |
|
Includes 101,772 shares of Common Stock owned directly by
Mr. Eckelberger and options to purchase 14,000 shares
of Common Stock that are currently exercisable or exercisable
within 60 days of March 31, 2010. |
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(10) |
|
Includes 101,772 shares of Common Stock owned directly by
Mr. Smith and options to purchase 14,000 shares of
Common Stock that are currently exercisable or exercisable
within 60 days of March 31, 2010. |
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(11) |
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Includes 94,254 shares of Common Stock owned directly by
Mr. Brown. |
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(12) |
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Includes 82,017 shares of Common Stock owned directly by
Mr. Collins. |
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(13) |
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Includes 67,254 shares of Common Stock owned directly by
Mr. Murren. |
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(14) |
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Includes 46,527 shares of Common Stock owned directly by
Mr. Mandekic. |
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(15) |
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Includes 36,527 shares of Common Stock owned directly by
Mr. Fonck. |
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(16) |
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Includes all warrants, options and shares referenced in
footnotes (3) through (15) above as if all warrants
and options had been exercised and as if all resulting shares
were voted as a group. |
PLAN
INFORMATION
We maintain the following equity-based compensation plans: 2008
New-Hire Equity Incentive Plan and 2009 Performance and Equity
Incentive Plan. We also maintain our 1993 Incentive Plan, as
amended, 2001 Incentive Plan, 2002 Incentive Plan, 2004
Incentive Plan, as amended, and 2006 New-Hire Equity Incentive
Plan, although there are no additional securities available for
issuance under those plans. Our stockholders have approved each
of these plans except for the 2008 New-Hire Equity Incentive
Plan, which was approved by our Board of Directors.
The following table sets forth our equity compensation plans in
the aggregate, the number of shares of our Common Stock subject
to outstanding options and rights under these plans, the
weighted-average exercise price of outstanding options, and the
number of shares remaining available for future award grants
under these plans as of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
Remaining Available
|
|
|
Number of Securities
|
|
Weighted-Average
|
|
for Issuance Under
|
|
|
to be Issued Upon
|
|
Exercise Price of
|
|
Equity Compensation
|
|
|
Exercise of Outstanding
|
|
Outstanding
|
|
Plans (Excluding
|
|
|
Options, Warrants and
|
|
Options, Warrants
|
|
Securities Reflected
|
|
|
Rights
|
|
and Rights
|
|
in Column (a))
|
Plan Category
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
1,427,750
|
|
|
$
|
8.21
|
|
|
|
24,140,100
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
413,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,427,750
|
|
|
|
|
|
|
|
24,553,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview
The following Compensation Discussion and Analysis describes the
material elements of compensation for the named executive
officers identified in the Summary Compensation Table below. As
more fully described below, the Compensation Committee of the
Board of Directors reviews and recommends to the full Board of
Directors the total direct compensation programs for our named
executive officers. Our principal executive officer also reviews
the base salary, annual bonus and long-term compensation levels
for the other named executive officers.
Compensation
Philosophy and Objectives
Our compensation philosophy has been to encourage growth in our
oil and natural gas reserves and production, encourage growth in
cash flow and profitability, and enhance stockholder value
through the creation and maintenance of compensation
opportunities that attract and retain highly qualified executive
officers. To achieve these goals, the Compensation Committee
believes that the compensation of executive officers should
reflect the growth and entrepreneurial environment that has
characterized our industry in the past, while ensuring fairness
among the executive management team by recognizing the
contributions each individual executive makes to our success.
The Compensation Committee has recommended that our executive
compensation program include the following components:
|
|
|
|
|
a base salary at a level equal to the 50th to the 75th
percentile of a group of other oil and natural gas exploration
and production enterprises that have some characteristics
similar to Delta and could compete with Delta for executive
officer level employees;
|
|
|
|
annual incentive compensation to reward achievement of Company
objectives, individual responsibility and productivity, high
quality work, reserve growth, performance and
profitability; and
|
|
|
|
long-term incentive compensation in the form of stock-based
awards.
|
As described below, the Compensation Committee has, with the
assistance of an outside compensation consultant, periodically
reviewed data about the compensation of executives in the oil
and gas industry. Based on these reviews, we believe that the
elements of our executive compensation program have been
comparable to those offered by our industry competitors.
For 2009, the Compensation Committee and the Board of Directors,
with the full agreement of management, determined that in view
of current industry conditions, the depressed macroeconomic
environment, and the Companys financial condition, our
near-term approach to executive compensation required
modification. As such, we reduced base salaries of our executive
officers and other senior personnel by 20% during the period
from March 2009 until June 2009, and delayed the payment of
bonuses due under the CMS Plan (see Annual Incentive
Compensation, below) for 2008 performance until July 2009.
Outside
Advisor
The Compensation Committee has retained Effective Compensation
Incorporated, or ECI, as an outside advisor to review our
executive compensation program and broad-based equity
compensation practices and to assist in ongoing development of
our executive compensation philosophy. The Compensation
Committee developed a group of oil and gas exploration and
production companies with some similar characteristics as Delta
and that could potentially compete with Delta for executive
officer level employees with which to compare compensation
14
programs. ECI has performed analyses of compensation levels for
these companies in our industry. Most recently, this group of
companies has included the following:
Berry Petroleum Company
Bill Barrett Corporation
Cimarex Energy Co.
Forest Oil Corporation
St. Mary Land & Exploration Company
Whiting Petroleum Corp.
Encana Corporation, Pioneer Natural Resources Company and Plains
Exploration & Production Company, which were
previously part of the group, were removed from the group as a
result of a determination that a group of six companies is
sufficient for comparison and the three companies that were
deleted had fewer characteristics that were similar to Delta.
Elements
of Deltas Compensation Program
The compensation program for Deltas executive officers is
composed of three principal components: base salary, annual
incentive compensation and long-term incentive compensation in
the form of stock-based awards.
Base Salary. Base salaries (paid in cash) for
our executives have been established based on the scope of their
responsibilities, taking into account competitive market
compensation paid by a group of comparable companies for similar
positions. We have reviewed our executives base salaries
in comparison to salaries for executives in similar positions
and with similar responsibilities at comparable companies. Base
salaries are reviewed annually, and typically are adjusted from
time to time to realign salaries with market levels after taking
into account individual responsibilities, performance,
experience and other criteria.
The Compensation Committee reviews with the principal executive
officer his recommendations for base salaries for the named
executive officers, except for the principal executive officer,
each year. New base salary amounts have historically been based
on an evaluation of individual performance and expected future
contributions and a review of survey data provided by ECI to
ensure competitive compensation against the external market,
defined as the companies in our industry with which we compete.
The Company has targeted base salaries for executive officers,
including the principal executive officer, at the 50th to the
75th percentile for this group of oil and gas companies, which
we believe is critical to our ability to attract and retain top
level talent.
ECI provided a comprehensive review of our compensation
structure in place for 2008. Our executive officer compensation
for 2008 was compared to data from the annual proxies and
subsequent disclosures of comparable companies, as well as
compensation surveys prepared by ECI. Base salaries for our
named executive officers were generally compared to comparable
positions or comparable pay rank. As with prior years, for 2008,
our named executive officers salaries were determined to
be approximately at the 75th percentile in the aggregate.
In early 2009, in response to the current economic downturn, low
oil and gas commodity prices, and Deltas financial
condition, the Compensation Committee recommended that the Board
of Directors not increase any of the salary levels for the named
executive officers. In February 2009, based on recommendations
from our executive officers, the Board of Directors instituted a
temporary 20% salary cut for all executive officers and other
senior personnel from March 2009 until June 2009. The cuts were
applied to the 2008 salary levels. No assessment was made as to
whether the resulting changes to the salary levels of the named
executive officers reduced their compensation levels below the
75th percentile of companies to which we have compared our
compensation in the past.
In November 2009, the Compensation Committee made a
recommendation to the Board of Directors that the base salary of
each of the named executive officers be increased by 6%
effective January 1, 2010. This recommendation was based on
the Compensation Committees determination that such an
increase was fair and necessary for Delta to be competitive with
other companies and because there had been no salary increase in
2009. In July 2009, ECI provided a comprehensive review of our
compensation structure that would be in place for 2010. Our
executive officer compensation planned for 2010 was compared to
data from the annual proxies and subsequent disclosures of
comparable companies, as well as compensation surveys prepared
by ECI. Base salaries
15
for our named executive officers were generally compared to
comparable positions or comparable pay rank. For 2010, our named
executive officers salaries were determined to be
generally from the 50th to 75th percentile.
Annual Incentive Compensation. In the past,
the Compensation Committee has recommended to the Board, and the
Board has subsequently approved, the bonus (if any) for each
named executive officer. In 2005, the Compensation Committee
adopted a performance-based annual incentive plan we refer to as
the Capital Management System (CMS). All Delta
employees, including the named executive officers, have been
eligible to participate in the CMS. The Compensation Committee
has established one or more goals and minimum performance
thresholds under the CMS. When the specific goals in the CMS
were achieved, there was a substantial benefit to our
stockholders and to our employees, including the named executive
officers.
In the past, the goals of the CMS have been to (1) maximize
the net present value (NPV 10%) of the proved reserve base of
Deltas oil and gas properties (Goal 1), and
(2) add new proved producing reserves and value through the
drilling of non-proved properties and the acquisition of proved
reserves (Goal 2). The component factors considered
in the evaluation of whether or not the Goal 1 objectives were
met during the year (and, if so, the degree to which they were
met) include the following: (a) the degree to which
production of proved developed producing reserves on base
properties was increased above the forecast for the year,
(b) the degree to which operating costs were reduced below
the forecast, (c) the degree to which oil and gas marketing
was improved to achieve greater net-backs to the Company,
(d) the degree to which proved non-producing and proved
undeveloped wells were drilled and completed earlier, less
expensively or added more reserves than were included in the
reserve report, and (e) the degree to which proved
non-producing and proved undeveloped reserves were added to the
reserve report. The component factors considered in the
evaluation of whether or not the Goal 2 objectives were met
during the year (and, if so, the degree to which they were met)
include the following determinations: (a) whether or not a
net present value of 10% or greater was achieved on the drilling
program for proved reserve add projects (after taking into
consideration the cost of drilling, land, geophysical, lease
rentals and the general and administrative expense proportional
to the drilling), and (b) whether or not a net present
value of 10% or greater was achieved on proved reserve property
acquisitions after taking into consideration the cost of the
acquisition and the general and administrative expense
proportional to the acquisition. In addition to Goals 1 and 2,
additional factors have been considered by the Compensation
Committee in making recommendations concerning bonuses to the
named executive officers. These factors have included our
earnings before interest, taxes, depreciation, depletion,
amortization, and exploration expenses; cost controls; levels of
production; guidance; cash flows and the discharge of an
individual participants responsibilities.
For Goals 1 and 2, the Compensation Committee set a target award
and the related performance criteria, which may be expressed as
a percentage of a participants base salary. In 2008, the
minimum threshold for Goal 1 was 95% of our reserve base, and
the minimum threshold for Goal 2 being satisfaction of a net
present value of at least 10% for new reserves. We believe it is
necessary to omit disclosure of the remaining specific
performance targets established under the CMS Plan because such
disclosure would cause us competitive harm in the retention of
our employees and in the marketplace with respect to our planned
operations.
For 2008, the achieved score was 25% as to Goal 1 and 0% as to
Goal 2. Combining the two, 25% of the CMS target was attained.
The Compensation Committee discussed other factors that could be
taken into account for bonus awards. The Compensation Committee
noted a number of positive management and Company
accomplishments in 2008, including the closing of the Tracinda
transaction; the joint venture agreement relating to our
Columbia River Basin exploration project; and the Encana
transaction involving a significant acquisition in the Piceance
Basin. The Compensation Committee also took note of the fact
that production was up over 40% in 2008 as compared to 2007. Due
to current economic conditions, low commodity prices and the
Companys financial condition, in February 2009, the
Companys senior management, the Compensation Committee and
the Board of Directors mutually agreed that no annual bonuses
should be awarded at that time to the named executive officers
for 2008. In June 2009 a determination was made that 25% of the
amount of bonuses being non-discretionary under the CMS plan
would be paid. In July 2009, 25% of the bonus was paid to all
employees, including the named executive officers.
During 2009, the Compensation Committee recommended, and the
Board of Directors adopted, a new Annual Bonus Award Plan. All
Delta employees, including the named executive officers, were
eligible to participate in the
16
Annual Bonus Award Plan. For the named executive officers, the
plan includes some of the elements of the CMS based plan but
also includes specific achievements that benefit the Company.
The Annual Bonus Award Plan gives the Board of Directors full
discretion as to whether bonuses are to be paid, but if the
Board determines that bonuses are to be awarded, the plan
provides that for the named executive officers, 25% of any
bonuses be tied to fixed metrics and specific transactions and
75% be completely discretionary. The full target bonus for each
of the named executive officers was 70% of his base salary. CMS
Goal 1 under the plan was essentially the same as under the
original CMS plan, but Goal 2 was replaced by New CMS Goal 2
related to rate of return on all oil and gas wells, regardless
of reserve category. For the 25% portion of the bonus, the plan
provided that CMS Goal 1 and CMS Goal 2 each represent 25% and
that accomplishing specific transactions that increase the value
of the Company represent the remaining 50%. As under the CMS,
the minimum threshold for CMS Goal 1 was 95% of our reserve
base. The minimum threshold for Goal 2 was an overall rate of
return of at least 10%. The specific transactions category is
subjective and is based on a review of accomplishments during
the year.
After the end of 2009, the Compensation Committee determined
that the goals for the named executive officers for the portion
of bonuses under the fixed metric category had been met as
follows: CMS Goal 1 78%; New CMS Goal 2
0%; and specific transactions 50%. Based on this
assessment, the Compensation Committee determined that overall
the targets for the named executive officers had been met and
recommended that 25% of the bonus target be paid. In making its
recommendations with regard to the discretionary portion of the
named executive officers bonuses, the Compensation Committee
considered a number of factors including the practices of
competing companies, the current commodity price levels, the
market price of Deltas common stock, and the
Companys financial condition.
The Compensation Committee has not made any determination
regarding a bonus plan for 2010.
Long Term Incentive Compensation. We believe
the use of stock-based awards creates an ownership culture that
encourages the long-term performance of our executive officers.
In January 2007, our stockholders approved the 2007 Performance
and Equity Incentive Plan (the 2007 Plan) and in
December 2009, our stockholders approved the 2009 Performance
and Equity Incentive Plan (the 2009 Plan). The 2007
and 2009 Plans are designed to be omnibus plan allowing Delta to
grant a wide range of compensatory awards including stock
options, stock appreciation rights, phantom stock, restricted
stock, stock bonuses and cash bonuses to persons who contribute,
and are expected to contribute, to our success and to create
stockholder value, including the named executive officers.
May 2008
and June 2009 Retention Stock Awards
In May 2008, restricted stock awards were made under the 2007
Plan to all of the employees of Delta, including the named
executive officers, of which one-third of the granted shares
vested on July 1, 2009, one-third will vest on July 1,
2010 and the remaining one-third will vest on July 1, 2011.
Employees who were terminated in connection with the
Companys recent reductions in force were permitted to
retain ownership of shares that would have otherwise vested on
July 1, 2009. In order for the shares to vest, the
remaining employees must be employed on the vesting date, except
that upon a Change of Control (as defined in the 2007 Plan) all
unvested shares will vest for persons who are employees of Delta
at that time. In June 2009, restricted stock awards were awarded
under the 2007 Plan to certain key employees of Delta, including
the named executive officers, with such awards to vest on the
earlier of a Change in Control of the Company or July 1,
2010, provided that the employee is still employed by the
Company on the vesting date. Both of these awards were made for
the purpose of providing incentives to Deltas employees to
continue their employment with Delta and contribute to our long
term success.
In its recommendations to the Board of Directors concerning the
numbers of shares to be granted in May 2008, the Compensation
Committee recommended that the total number of shares to be
granted to the named executive officers as a group should be
250,000 shares and vest over a period of three years. The
Compensation Committee based this number of shares on the market
price of Deltas Common Stock at that time and the equity
award programs for executive officers of comparable companies.
Allocation of the 250,000 shares among the named executive
officers was made based on the respective individuals
contributions to Deltas success in the past and those
expected in the future, as well as their individual
responsibilities.
17
The number of restricted shares granted to each of the named
executive officers in May 2008 was as follows:
|
|
|
|
|
|
|
Number of Shares of
|
Named Executive Office
|
|
Common Stock Granted
|
|
Roger A. Parker, CEO*
|
|
|
85,000
|
|
John R. Wallace, President & COO
|
|
|
65,000
|
|
Kevin K. Nanke, Treasurer & CFO
|
|
|
50,000
|
|
Stanley F. Freedman, Executive Vice
|
|
|
50,000
|
|
President, General Counsel and Secretary
|
|
|
|
|
|
|
|
* |
|
Mr. Parker resigned as an executive officer and director of
Delta on May 26, 2009 and the shares shown above were
forfeited in conjunction with his Severance Agreement described
below. |
In its recommendations to the Board of Directors concerning
shares granted in June 2009, the Compensation Committee
recommended that the named executive officers should be awarded
shares based on a percentage of their salaries and taking into
consideration the market price of Deltas Common Stock at
that time. The allocation of shares to the named executive
officers was based on a number of factors, including a desire to
reward loyalty and hard work and the recognition that the named
executive officers had received only limited bonuses for 2008
and did not received any salary increases for 2009.
The number of restricted shares granted to each of the named
executive officers in June 2009 was as follows:
|
|
|
|
|
|
|
Number of Shares of
|
Named Executive Office
|
|
Common Stock Granted
|
|
John R. Wallace, President & COO
|
|
|
106,061
|
|
Kevin K. Nanke, Treasurer & CFO
|
|
|
93,939
|
|
Stanley F. Freedman, Executive Vice
|
|
|
83,333
|
|
President, General Counsel and Secretary
|
|
|
|
|
December
2009 Retention Stock Awards
In December 2009, restricted stock awards were made under the
2009 Plan to all of the employees of Delta, including the named
executive officers, of which one-third of the granted shares
will vest on July 1, 2010, one-third will vest on
July 1, 2011 and the remaining one-third will vest on
July 1, 2012. In its recommendations to the Board of
Directors concerning shares granted in December 2009, the
Compensation Committee recommended that the named executive
officers should be awarded shares approximating the value of
their current salary, to vest over a three year period. The
Compensation Committee based the recommended number of shares on
the market price of Deltas Common Stock at that time. In
recommending these awards, the Compensation Committee also
considered the retention stock awards by the companies in the
group of six companies to which Delta compares itself.
The number of restricted shares granted to each of the named
executive officers in December 2009 was as follows:
|
|
|
|
|
|
|
Number of Shares of
|
Named Executive Office
|
|
Common Stock Granted
|
|
John R. Wallace, President & COO
|
|
|
512,200
|
|
Kevin K. Nanke, Treasurer & CFO
|
|
|
453,700
|
|
Stanley F. Freedman, Executive Vice
|
|
|
402,400
|
|
President, General Counsel and Secretary
|
|
|
|
|
Performance
Share Awards
In February 2007, the named executive officers received
performance share grants providing that the shares of restricted
Common Stock awarded vest if the market price of Delta stock
reaches and maintains certain price levels during the
10-year
period following the date of grant (the Term). The
awards were intended to provide incentive compensation to the
named executive officers tied to significant increases in
stockholder value. The price thresholds
18
chosen were $40, $50, $60, $75 and $90. The grants provided that
if the market price for Deltas Common Stock reached and
remained at these price thresholds for a certain period, then
the associated Common Stock award would vest. These awards were
based on the principle that stock price increases would reward
both the stockholders and the executive officers.
As of March 31, 2009, four of the tranches of performance
shares had been forfeited because the vesting conditions had not
been met within the required periods. On May 26, 2009,
Mr. Parker resigned as an executive officer and director of
the Company and forfeited all of his remaining performance
shares. The only shares of Common Stock included in the
performance share grants that continue to be outstanding for the
three remaining named executive officers are those included in
the first tranche. The first tranche of restricted Common Stock
vests in full as of the date that the average daily closing
price of our Common Stock on NASDAQ equals or exceeds $40.00 for
trading days within any period of 90 calendar days during the
Term, provided that the average closing price over the last 20
trading days of such period shall have equaled or exceeded
$40.00.
The numbers of shares currently held by the named executive
officers under the performance shares grants are as follows:
|
|
|
|
|
|
|
Number of Shares
|
Named Executive Officer
|
|
of Common Stock
|
|
Roger A. Parker*
|
|
|
100,000
|
|
John R. Wallace
|
|
|
70,000
|
|
Kevin K. Nanke
|
|
|
40,000
|
|
Stanley F. Freedman
|
|
|
40,000
|
|
|
|
|
* |
|
Mr. Parker resigned as an executive officer and director of
the Company on May 26, 2009 and forfeited all of his
remaining performance shares. |
Restricted Common Stock issued pursuant to the performance share
awards will vest only if the executive officer is employed by us
at the time the vesting criteria are satisfied, and all unvested
restricted Common Stock subject to performance share awards will
lapse and be forfeited to the extent not vested prior to a
termination of the executive officers employment with us.
The performance share award must vest, if at all, within ten
(10) years following the grant date.
Each of the three named executive officers has expressed his
intention to return the performance shares to the Company some
time during 2010 since it is unlikely that the $40.00 threshold
will be reached in the foreseeable future.
Change in Control and Severance. We have
employment agreements with each of our executive officers
pursuant to which the officer will receive benefits if his
employment is terminated (other than for misconduct) due to
death, disability, and certain employment terminations following
a change in control. The details and amount of such benefits are
described in Executive Officer Compensation
Potential Payments Upon Termination or Change in Control.
Other Benefits. All employees may participate
in our 401(k) Retirement Savings Plan, or 401(k) Plan,
established in 2006. Each employee may make before tax
contributions in accordance with the Internal Revenue Service
limits. We provide this 401(k) Plan to help our employees save a
portion of their cash compensation for retirement in a tax
efficient manner. In the past, Delta has made a matching
contribution in an amount equal to 100% of the employees
elective deferral contribution below 3% of the employees
compensation and 50% of the employees elective deferral
that exceeds 3% of the employees compensation but does not
exceed 6% of the employees compensation. However, due to
current economic conditions, in February 2009 the Board of
Directors suspended the matching contributions under the 401(k)
Plan for all employees, including the named executive officers,
but subsequently announced reinstatement of the match effective
January 1, 2010.
All fulltime employees, including our named executive officers,
may participate in our health and welfare benefit programs,
including medical, dental and vision care coverage, disability
insurance and life insurance.
19
Accounting
and Tax Considerations
Our restricted stock award policies have been impacted by the
implementation of Statement of Financial Accounting Standards
No. 123(R), which we adopted on July 1, 2005.
We have structured our compensation program to comply with
Internal Revenue Code Sections 162(m) and 409A. Under
Section 162(m) of the Internal Revenue Code, a limitation
is placed on tax deductions of any publicly-held corporation for
individual compensation to certain executives of such
corporation exceeding $1,000,000 in any taxable year, unless the
compensation is performance-based. If an executive officer is
entitled to nonqualified deferred compensation benefits that are
subject to Section 409A, and such benefits do not comply
with Section 409A, then the benefits are taxable in the
first year they are not subject to a substantial risk of
forfeiture. In such case, the executive officer is subject to
regular federal income tax, interest and an additional federal
income tax of 20% of the benefit included in income. Delta has
no individuals with non-performance based compensation paid in
excess of the Internal Revenue Code Section 162(m) tax
deduction limit.
COMPENSATION
COMMITTEE REPORT
The following Compensation Committee Report does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any other Company filing under
the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates
this Report.
The Compensation Committee of the Board of Directors has
reviewed and discussed the Compensation Discussion and Analysis
required by Item 402(b) of SEC
Regulation S-K
with management. The Compensation Committee recommended to the
Board of Directors that the Compensation Discussion and Analysis
be included in the registrants Proxy Statement on
Schedule 14A.
Respectfully submitted by the Compensation Committee of the
Board of Directors:
Jerrie F. Eckelberger (Chairman)
Hank Brown
Russell S. Lewis
Anthony Mandekic
James J. Murren
Kevin R. Collins
Jordan R. Smith
20
EXECUTIVE
OFFICER COMPENSATION
Summary
Compensation Table
The following table sets forth summary information concerning
compensation awarded to, earned by, or accrued for services
rendered to the Company in all capacities by our principal
executive officer, principal financial officer, our one other
executive officer, and our former chief executive officer who
served during fiscal year 2009 (collectively, the named
executive officers), for fiscal years 2007, 2008 and 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)(1)
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)
|
|
John R. Wallace,
|
|
|
2009
|
|
|
$
|
335,417
|
|
|
$
|
|
|
|
$
|
895,987
|
|
|
$
|
|
|
|
$
|
180,500
|
|
|
$
|
24,307
|
|
|
$
|
1,436,211
|
|
President and Chief
|
|
|
2008
|
|
|
|
350,000
|
|
|
|
|
|
|
|
2,027,847
|
|
|
|
|
|
|
|
15,313
|
|
|
|
69,555
|
|
|
|
2,462,715
|
|
Operating Officer
|
|
|
2007
|
|
|
|
310,000
|
|
|
|
|
|
|
|
2,211,374
|
|
|
|
228,740
|
|
|
|
99,218
|
|
|
|
63,000
|
|
|
|
2,912,332
|
|
Kevin K. Nanke,
|
|
|
2009
|
|
|
|
297,083
|
|
|
|
|
|
|
|
793,637
|
|
|
|
|
|
|
|
169,900
|
|
|
|
25,939
|
|
|
|
1,286,559
|
|
Treasurer and Chief
|
|
|
2008
|
|
|
|
310,000
|
|
|
|
|
|
|
|
1,276,558
|
|
|
|
|
|
|
|
13,563
|
|
|
|
74,293
|
|
|
|
1,674,414
|
|
Financial Officer
|
|
|
2007
|
|
|
|
275,000
|
|
|
|
|
|
|
|
1,373,293
|
|
|
|
136,740
|
|
|
|
87,960
|
|
|
|
69,691
|
|
|
|
1,942,684
|
|
Stanley F. Freedman,
|
|
|
2009
|
|
|
|
263,542
|
|
|
|
|
|
|
|
703,930
|
|
|
|
|
|
|
|
141,800
|
|
|
|
21,859
|
|
|
|
1,131,131
|
|
Executive Vice President,
|
|
|
2008
|
|
|
|
275,000
|
|
|
|
|
|
|
|
1,448,594
|
|
|
|
|
|
|
|
12,031
|
|
|
|
69,325
|
|
|
|
1,804,950
|
|
General Counsel and Secretary
|
|
|
2007
|
|
|
|
260,000
|
|
|
|
|
|
|
|
1,451,823
|
|
|
|
|
|
|
|
83,213
|
|
|
|
64,378
|
|
|
|
1,859,414
|
|
Roger A. Parker,
|
|
|
2009
|
|
|
|
206,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,447
|
|
|
|
215,697
|
|
Former Chief Executive Officer*
|
|
|
2008
|
|
|
|
550,000
|
|
|
|
|
|
|
|
3,184,662
|
|
|
|
|
|
|
|
|
|
|
|
70,604
|
|
|
|
3,805,266
|
|
|
|
|
2007
|
|
|
|
520,000
|
|
|
|
|
|
|
|
3,300,213
|
|
|
|
273,481
|
|
|
|
|
|
|
|
65,022
|
|
|
|
4,158,716
|
|
|
|
|
* |
|
Mr. Parker resigned as Chief Executive Officer and a
Director on May 26, 2009. |
|
(1) |
|
These amounts shown represent the aggregate grant date fair
value for stock awards and option awards granted to the named
executive officers computed in accordance with FASC ASC Topic
718. |
|
(2) |
|
The amounts reflect the cash bonus awards to the named executive
officers under the CMS and Annual Bonus Award Plan, which are
discussed in further detail under the heading Elements of
Deltas Compensation Program under the caption
Annual Incentive Compensation. Awards under the
respective plans were accrued and earned in the year represented
and paid in the following year. |
|
(3) |
|
Amounts in the All Other Compensation column consist
of the following payments we paid to or on behalf of the named
executive officers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
|
Auto
|
|
|
|
|
|
|
|
|
Contributions to
|
|
Auto
|
|
Maintenance
|
|
Health
|
|
|
|
|
|
|
Retirement Plans
|
|
Allowance
|
|
and Insurance
|
|
Club
|
|
Total
|
Name
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
John R. Wallace
|
|
|
2009
|
|
|
$
|
|
|
|
$
|
18,000
|
|
|
$
|
6,307
|
|
|
$
|
|
|
|
$
|
24,307
|
|
|
|
|
2008
|
|
|
|
47,000
|
|
|
|
18,000
|
|
|
|
4,555
|
|
|
|
|
|
|
|
69,555
|
|
|
|
|
2007
|
|
|
|
45,000
|
|
|
|
18,000
|
|
|
|
|
|
|
|
|
|
|
|
63,000
|
|
Kevin K. Nanke
|
|
|
2009
|
|
|
|
|
|
|
|
18,000
|
|
|
|
5,539
|
|
|
|
2,400
|
|
|
|
25,939
|
|
|
|
|
2008
|
|
|
|
47,000
|
|
|
|
18,000
|
|
|
|
6,893
|
|
|
|
2,400
|
|
|
|
74,293
|
|
|
|
|
2007
|
|
|
|
45,000
|
|
|
|
18,000
|
|
|
|
4,291
|
|
|
|
2,400
|
|
|
|
69,691
|
|
Stanley F. Freedman
|
|
|
2009
|
|
|
|
|
|
|
|
18,000
|
|
|
|
3,859
|
|
|
|
|
|
|
|
21,859
|
|
|
|
|
2008
|
|
|
|
47,000
|
|
|
|
18,000
|
|
|
|
4,325
|
|
|
|
|
|
|
|
69,325
|
|
|
|
|
2007
|
|
|
|
45,000
|
|
|
|
18,000
|
|
|
|
1,378
|
|
|
|
|
|
|
|
64,378
|
|
Roger A. Parker*
|
|
|
2009
|
|
|
|
|
|
|
|
7,500
|
|
|
|
1,947
|
|
|
|
|
|
|
|
9,447
|
|
|
|
|
2008
|
|
|
|
47,000
|
|
|
|
18,000
|
|
|
|
5,604
|
|
|
|
|
|
|
|
70,604
|
|
|
|
|
2007
|
|
|
|
45,000
|
|
|
|
18,000
|
|
|
|
2,022
|
|
|
|
|
|
|
|
65,022
|
|
|
|
|
* |
|
Mr. Parker resigned as Chief Executive Officer and a
Director on May 26, 2009. |
21
Grants of
Plan-Based Awards
The following table provides additional information about
restricted stock awards and equity and non-equity incentive plan
awards granted to our named executive officers during fiscal
2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Value of
|
|
|
Grant Date
|
|
Estimated Future Payouts Under
|
|
Shares of
|
|
Stock and
|
|
|
or
|
|
Non-Equity Incentive Plan Awards(1)
|
|
Stock or
|
|
Option
|
|
|
Performance
|
|
Threshold
|
|
Target
|
|
Max
|
|
Units
|
|
Awards
|
Name
|
|
Period
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
($)
|
|
John R. Wallace,
|
|
|
01/01/09-
|
|
|
$
|
245,000
|
|
|
$
|
245,000
|
|
|
$
|
490,000
|
|
|
|
|
|
|
$
|
|
|
President and Chief
|
|
|
12/31/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Officer
|
|
|
07/01/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,061
|
|
|
|
199,395
|
|
|
|
|
12/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
512,200
|
|
|
|
696,592
|
|
Kevin K. Nanke,
|
|
|
01/01/09-
|
|
|
|
217,000
|
|
|
|
217,000
|
|
|
|
434,000
|
|
|
|
|
|
|
|
|
|
Treasurer and Chief
|
|
|
12/31/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Officer
|
|
|
07/01/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,939
|
|
|
|
176,605
|
|
|
|
|
12/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
453,700
|
|
|
|
617,032
|
|
Stanley F. Freedman,
|
|
|
01/01/09-
|
|
|
|
192,500
|
|
|
|
192,500
|
|
|
|
385,000
|
|
|
|
|
|
|
|
|
|
Executive Vice President,
|
|
|
12/31/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Counsel and
|
|
|
07/01/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,333
|
|
|
|
156,666
|
|
Secretary
|
|
|
12/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
402,400
|
|
|
|
547,264
|
|
Roger A. Parker,
|
|
|
01/01/09-
|
|
|
|
385,000
|
|
|
|
385,000
|
|
|
|
770,000
|
|
|
|
|
|
|
|
|
|
Former Chief
|
|
|
12/31/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer*
|
|
|
05/26/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
1,700,000
|
|
|
|
|
* |
|
Mr. Parker resigned as Chief Executive Officer and a
Director on May 26, 2009. |
|
(1) |
|
Non-Equity Incentive Plan Awards are determined if goals set
forth in the Annual Bonus Award Plan are met. In March 2010, the
2009 Annual Bonus Award Plan bonuses were paid. |
22
Outstanding
Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
or Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Awards:
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
Number
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
of Unearned
|
|
Shares,
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Units of
|
|
Shares,
|
|
Units or
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Stock
|
|
Units or Other
|
|
Other
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
that
|
|
Rights
|
|
Rights
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
Stock that
|
|
have
|
|
that have
|
|
that
|
|
|
Options
|
|
Options
|
|
Exercise
|
|
Option
|
|
have not
|
|
not
|
|
not
|
|
have
|
|
|
(#)
|
|
(#)
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
|
Vested
|
|
not Vested
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
($)
|
|
Date
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
John R. Wallace,
|
|
|
200,000
|
|
|
|
|
|
|
|
5.44
|
|
|
|
12/03/13
|
|
|
|
661,595
|
(1)
|
|
|
688,059
|
|
|
|
70,000
|
(2)
|
|
|
2,800,000
|
|
President and Chief
|
|
|
87,500
|
|
|
|
|
|
|
|
15.34
|
|
|
|
12/21/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin K. Nanke,
|
|
|
68,750
|
|
|
|
|
|
|
|
3.75
|
|
|
|
07/14/10
|
|
|
|
580,973
|
(3)
|
|
|
604,212
|
|
|
|
40,000
|
(4)
|
|
|
1,600,000
|
|
Treasurer and Chief
|
|
|
55,000
|
|
|
|
|
|
|
|
3.29
|
|
|
|
01/09/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Officer
|
|
|
137,500
|
|
|
|
|
|
|
|
5.29
|
|
|
|
08/26/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,500
|
|
|
|
|
|
|
|
15.34
|
|
|
|
12/21/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley F. Freedman,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
519,067
|
(5)
|
|
|
539,830
|
|
|
|
40,000
|
(6)
|
|
|
1,600,000
|
|
Executive Vice President, General Counsel and Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger A. Parker,
|
|
|
150,000
|
|
|
|
|
|
|
$
|
15.34
|
|
|
|
12/21/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Chief Executive Officer*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Mr. Parker resigned as Chief Executive Officer and a
Director on May 26, 2009. |
|
(1) |
|
The vesting dates for Mr. Wallaces unvested
restricted stock awards at fiscal year-end are as follows:
290,460 shares vest on 7/1/10, 192,400 shares vest on
7/1/11 and 170,734 shares vest on 7/1/12. |
|
(2) |
|
The first tranche of Mr. Wallaces equity incentive
plan awards consisting of 70,000 shares vest as of the date
that the average daily closing price of our common stock on
NASDAQ equals or exceeds $40.00 for trading days within any
period of 90 calendar days during the term of the award,
provided that the average closing price over the last 20 trading
days of such period shall have equaled or exceeded $40.00. |
|
(3) |
|
The vesting dates for Mr. Nankes unvested restricted
stock awards at fiscal year-end are as follows:
261,838 shares vest on 7/1/10, 167,900 shares vest on
7/1/11 and 151,234 shares vest on 7/1/12. |
|
(4) |
|
The first tranche of Mr. Nankes equity incentive plan
awards consisting of 40,000 shares vest as of the date that
the average daily closing price of our common stock on NASDAQ
equals or exceeds $40.00 for trading days within any period of
90 calendar days during the term of the award, provided that the
average closing price over the last 20 trading days of such
period shall have equaled or exceeded $40.00. |
|
(5) |
|
The vesting dates for Mr. Freedmans unvested
restricted stock awards are as follows: 234,132 shares vest
on 7/1/10,
150,800 shares vest on 7/1/11 and 134,134 shares on
7/1/12. |
|
(6) |
|
The first tranche of Mr. Freedmans equity incentive
plan awards consisting of 40,000 shares vest as of the date
that the average daily closing price of our common stock on
NASDAQ is traded equals or exceeds $40.00 for trading days
within any period of 90 calendar days during the term of the
award, provided that the average closing price over the last 20
trading days of such period shall have equaled or exceeded
$40.00. |
23
Option
Exercises and Stock Vested
The following table provides information about the value
realized by the named executive officers for option award
exercises and stock award vesting during fiscal 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
Option Awards
|
|
|
|
Number of Shares
|
|
Value
|
|
|
Number of Shares
|
|
Value Realized
|
|
Acquired
|
|
Realized
|
|
|
Acquired on Exercise
|
|
on Exercise
|
|
on Vesting
|
|
on Vesting
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
John R. Wallace
|
|
|
|
|
|
$
|
|
|
|
|
17,011
|
|
|
$
|
79,704
|
|
Kevin K. Nanke
|
|
|
|
|
|
|
|
|
|
|
25,022
|
|
|
|
54,899
|
|
Stanley F. Freedman
|
|
|
|
|
|
|
|
|
|
|
19,774
|
|
|
|
43,899
|
|
Roger A. Parker*
|
|
|
|
|
|
|
|
|
|
|
58,501
|
|
|
|
251,547
|
|
|
|
|
* |
|
Mr. Parker resigned as Chief Executive Officer and a
Director on May 26, 2009. |
Employment
Agreements
On May 5, 2005, we entered into Employment Agreements with
the following executive officers: Kevin K. Nanke and John R.
Wallace. The initial term of employment under each of the
Employment Agreements was through December 31, 2006, and
the term of each Employment Agreement would be automatically
extended for additional one-year terms thereafter unless either
party gives notice of termination at least 60 days prior to
the end of a term. The base annual salary for Messrs. Nanke
and Wallace was $225,000. Each of these executive officers would
also be entitled to bonuses based on a percentage of their base
salary as determined by the Compensation Committee of the Board
of Directors upon satisfaction of performance criteria
established by the Compensation Committee. Each of the
Employment Agreements has since been automatically extended for
three additional one-year terms and currently expires on
December 31, 2010.
In the event the employment of either of these executive
officers is terminated other than for cause (as defined in the
Employment Agreements) or if either of them resigns for
good reason (as defined in the Employment
Agreement), then that executive officer will be entitled to
receive a payment equal to two times his annual base salary,
annual automobile allowance and his average annual bonus for the
three fiscal years preceding the fiscal year in which the
termination occurs, but not less than the greater of that
executive officers (i) highest annual target bonus
during any of these three preceding fiscal years or
(ii) target bonus for the fiscal year in which the
termination occurs. In the event that either of these Employment
Agreements is not renewed and the executive officer is
terminated within 24 months following the last day of
employment under the expired Employment Agreement, at the time
that his employment is terminated the executive officer will
receive the same payment as stated above, reduced
proportionately by the number of months he continues to be
employed by us during such 24 month period. The Employment
Agreements also include non-solicitation and non-competition
obligations on the part of the executive officers that survive
for one year following the date of termination.
On January 11, 2006, we entered into an Employment
Agreement with Stanley F. Freedman, who became Executive Vice
President, General Counsel and Secretary of Delta on
January 3, 2006. The initial term of employment under the
Employment Agreement commenced effective January 1, 2006
and continued through December 31, 2006. The term of the
Employment Agreement would be automatically extended for
additional one-year terms thereafter unless either party gives
notice of termination at least 60 days prior to the end of
a term. The base annual salary for Mr. Freedman was
$240,000. He was also entitled to receive 40,000 shares of
restricted Common Stock that would vest three years after the
date of grant, and he was entitled to receive bonuses based on a
percentage of his base salary, as determined by the Compensation
Committee of the Board of Directors, upon satisfaction of
performance criteria established by the Compensation Committee.
Mr. Freedmans Employment Agreement has since been
automatically extended for three additional one-year terms and
currently expires on December 31, 2010.
In the event the employment of Mr. Freedman is terminated
other than for cause (as defined in the Employment Agreement) or
if he resigns for good reason (as defined in the
Employment Agreement), then he will be entitled to receive a
payment equal to two times his annual base salary, annual
automobile allowance and his average annual
24
bonus for the three years preceding the fiscal year in which the
termination occurs, but not less than the greater of his
(i) highest annual target bonus during any of these three
preceding fiscal years or (ii) target bonus for the fiscal
year in which the termination occurs. In the event that his
Employment Agreement is not renewed and he is terminated within
24 months following the last day of employment under the
expired Employment Agreement, at the time that his employment is
terminated he will receive the same payment as stated above,
reduced proportionately by the number of months he continues to
be employed by us during such 24 month period. The
Employment Agreement also includes non-solicitation and
non-competition obligations on the part of Mr. Freedman
that survive for one year following the date of termination.
Change
in Control Agreements
On April 30, 2007, we entered into new Change in Control
Executive Severance Agreements (CIC Agreements) with
Messrs. Nanke, Wallace and Freedman which provide that,
following a change in control of the Company as defined in the
CIC Agreements and the termination of employment of the
executive officer during the period beginning 6 months
prior to and ending 24 months after the change in control,
the executive officer would not receive a payment under the
Employment Agreement. Instead, he would receive a payment equal
to three times his annual base salary, annual automobile
allowance and his average annual bonus for the three years
preceding the fiscal year in which the change in control occurs,
but not less than the greater of that executive officers
(i) highest annual target bonus during any of these three
preceding fiscal years or (ii) target bonus for the fiscal
year in which the change in control occurs, in addition to the
continuation of certain benefits including medical insurance and
other benefits provided to the executive officer for a period of
three years. The CIC Agreements also include non-solicitation
and non-competition obligations on the part of the executive
officer that survive for one year following the date of
termination. The CIC Agreements also provide that if a payment
under the CIC Agreements would be subject to excise tax
payments, the executive officer will receive a
gross-up
payment equal to such excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended, and all taxes,
including any interest, penalties or income tax imposed on the
gross-up
payment.
The CIC Agreements define a change in control as the occurrence
of any of the following: (1) any Person becomes a
beneficial owner of 35% or more of Deltas voting
securities, except as the result of any acquisition of voting
securities by Delta or any acquisition of voting securities of
Delta directly from Delta (as authorized by the Board);
(2) the persons who constitute the incumbent Board cease
for any reason to constitute at least a majority of the Board
unless such change was approved by at least two-thirds (2/3) of
the incumbent Board; (3) the consummation of a
reorganization, merger, share exchange, consolidation, or sale
or disposition of all or substantially all of the assets of
Delta unless the persons who beneficially own the voting
securities of Delta immediately before that transaction
beneficially own, immediately after the transaction, at least
70% of the voting securities of Delta or any other corporation
or other entity resulting from or surviving the transaction; or
(4) Deltas stockholders approve a complete
liquidation or dissolution of Delta or a sale of substantially
all of its assets.
Severance
Agreement
On May 26, 2009, we entered into a Severance Agreement with
Roger Parker, Deltas former Chief Executive Officer and
Chairman of our Board of Directors. Pursuant to the Severance
Agreement, effective as of the close of business on May 26,
2009 Mr. Parker resigned from his positions as Chairman of
the Board, Chief Executive Officer and as a director of Delta,
as well as his positions as a director, officer and employee of
Deltas subsidiaries. In consideration for
Mr. Parkers resignation and his agreement to
(a) relinquish all his rights under his employment
agreement, his
change-in-control
agreement, certain stock agreements, bonuses relating to past
and pending transactions benefiting Delta, and any other
interests he might claim arising from his efforts as Chairman of
our Board of Directors
and/or Chief
Executive Officer, and (b) stay on as a consultant to
facilitate an orderly transition and to assist in certain
pending transactions, Delta agreed to pay Mr. Parker
$4,700,000 in cash (the Cash Consideration), issue
to him 1,000,000 shares of Delta common stock (the
Shares), pay him the aggregate of any accrued unpaid
salary, vacation days and reimbursement of his reasonable
business expenses incurred through the effective date of the
agreement, and provide to him insurance benefits similar to his
pre-resignation benefits for a thirty-six month period.
Mr. Parker received a portion of the Cash Consideration in
immediately available funds, and the remaining Cash
Consideration and the Shares were deposited in a rabbi trust and
distributed to Mr. Parker on
25
or about November 27, 2009. Delta filed a registration
statement with the Securities and Exchange Commission that
registered the resale of the Shares. The Severance Agreement
also contains mutual releases and non-disparagement provisions,
as well as other customary terms.
Potential
Payments Upon Termination or Change in Control
The following table reflects the potential payments and benefits
upon termination (i) for cause, and (ii) other than
for cause or death, disability or retirement, within and not
within the period beginning six months prior to and ending
24 months following a change in control (Measurement
Period) of Delta under the respective CIC Agreement for
each named executive officer. The amounts payable assume
termination of employment on December 31, 2009.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not Within the Measurement
|
|
|
|
|
|
|
|
|
|
Within the Measurement Period
|
|
|
|
|
|
|
|
|
Period
|
|
|
|
|
|
|
|
|
|
Acceleration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Options
|
|
|
|
|
|
Excise
|
|
|
|
|
|
|
|
|
of Options
|
|
|
|
|
|
Excise
|
|
|
|
|
|
|
Severance
|
|
|
& Stock
|
|
|
|
|
|
Tax &
|
|
|
|
|
|
Severance
|
|
|
& Stock
|
|
|
|
|
|
Tax &
|
|
|
|
|
|
|
& Bonus
|
|
|
Awards
|
|
|
Benefits
|
|
|
Gross-Ups
|
|
|
Total
|
|
|
& Bonus
|
|
|
Awards
|
|
|
Benefits
|
|
|
Gross-Ups
|
|
|
Total
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
John R. Wallace
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For Cause
|
|
|
2,520,000
|
|
|
|
688,059
|
|
|
|
127,035
|
|
|
|
1,124,154
|
|
|
|
4,459,248
|
|
|
|
1,680,000
|
|
|
|
688,059
|
|
|
|
84,690
|
|
|
|
1,124,154
|
|
|
|
3,576,903
|
|
Kevin K. Nanke
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For Cause
|
|
|
2,232,000
|
|
|
|
604,212
|
|
|
|
127,035
|
|
|
|
|
|
|
|
2,963,247
|
|
|
|
1,488,000
|
|
|
|
604,212
|
|
|
|
84,690
|
|
|
|
|
|
|
|
2,176,902
|
|
Stanley F. Freedman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not For Cause
|
|
|
1,980,000
|
|
|
|
539,830
|
|
|
|
129,168
|
|
|
|
918,227
|
|
|
|
3,567,225
|
|
|
|
1,320,000
|
|
|
|
539,830
|
|
|
|
86,112
|
|
|
|
918,227
|
|
|
|
2,864,169
|
|
|
|
|
* |
|
Cause is defined in the CIC Agreement, and Not
For Cause means resignation by the executive for Good
Reason (as defined in the CIC Agreement) or termination of the
executive by the Company without Cause. |
Director
Compensation
The following table sets forth a summary of the compensation we
paid to our non-employee directors in 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
Stock
|
|
|
|
|
or Paid in Cash
|
|
Awards
|
|
Total
|
Name
|
|
($)
|
|
($)(1)
|
|
($)
|
|
Hank Brown
|
|
$
|
34,583
|
|
|
$
|
90,240
|
|
|
$
|
124,823
|
|
Kevin R. Collins
|
|
|
40,000
|
|
|
|
90,240
|
|
|
|
130,240
|
|
Jerrie F. Eckelberger
|
|
|
39,167
|
|
|
|
90,240
|
|
|
|
129,407
|
|
Jean-Michel Fonck
|
|
|
25,000
|
|
|
|
54,144
|
|
|
|
79,144
|
|
Aleron H. Larson Jr.
|
|
|
33,333
|
|
|
|
90,240
|
|
|
|
123,573
|
|
Russell S. Lewis
|
|
|
35,000
|
|
|
|
90,240
|
|
|
|
125,240
|
|
Anthony Mandekic
|
|
|
26,250
|
|
|
|
54,144
|
|
|
|
80,394
|
|
James J. Murren
|
|
|
35,000
|
|
|
|
90,240
|
|
|
|
125,240
|
|
Jordan R. Smith
|
|
|
36,667
|
|
|
|
90,240
|
|
|
|
126,907
|
|
Neal A. Stanley(2)
|
|
|
8,750
|
|
|
|
|
|
|
|
8,750
|
|
Daniel J. Taylor
|
|
|
35,000
|
|
|
|
163,895
|
|
|
|
198,895
|
|
James B. Wallace(3)
|
|
|
29,167
|
|
|
|
|
|
|
|
29,167
|
|
|
|
|
(1) |
|
On the first business day of 2010 each of the non-employee
directors except for Messrs. Mandekic and Fonck (but
including Mr. Taylor) received a grant of
48,000 shares of common stock, and each of
Messrs. Mandekic and Fonck received a grant of
28,800 shares of common stock as equity compensation for
their services as directors during 2009. Mr. Taylor also
received a grant of 39,178 shares of common stock on the
first business day of 2010 as equity compensation for his
services as Board Chairman during the period from May 26,
2009 |
26
|
|
|
|
|
through December 31, 2009. The fair value of such common
stock was computed in accordance with FAS 123(R) based on the
closing price on the date of grant. |
|
(2) |
|
Neal A. Stanley resigned effective February 28, 2009. |
|
(3) |
|
James B. Wallace resigned effective November 4, 2009. |
Annual
Retainers
In 2009, each non-employee director of the Company received an
annual retainer of $40,000. This retainer amount was reduced
from $50,000 effective February 25, 2009 in light of the
Companys financial condition. In addition, four months of
the annual retainer was paid in common stock, in lieu of cash.
For 2010, the annual retainer has been reset at $50,000, and it
is anticipated that it will be paid in cash on a monthly basis.
Each Board Committee chair also receives an additional retainer
each year in the following amounts: chair of the Audit
Committee, $10,000; chair of the Compensation Committee, $5,000;
and chair of the Nominating and Corporate Governance Committee,
$5,000. In addition, each non-employee director who is not a
chairman but serves on one or more Committees of the Board
receives an annual retainer of $2,500. The additional retainer
amounts are also paid to the directors in cash in equal monthly
installments. The Company reimburses the directors for costs
incurred by them in traveling to Board and Committee meetings.
Stock
Grants
In addition, at the discretion of the Board of Directors, each
non-employee director is eligible to receive an annual grant of
shares of Common Stock. In recent years, and again in 2010, the
number of shares awarded to each director was 6,000 shares.
All such Common Stock is granted pursuant to the Companys
equity incentive plans and is generally awarded on the first
business day of each year. Each grant of Common Stock is fully
vested upon grant.
Indemnification
of Directors
Pursuant to the Companys certificate of incorporation, the
Company provides indemnification of its directors and officers
to the fullest extent permitted under the Delaware General
Corporation Law and provides certain indemnification to its
executive officers under their employment agreements. The
Company believes that this indemnification is necessary to
attract and retain qualified directors and officers.
Narrative
Disclosure of Compensation Policies and Practices as they Relate
to Risk Management
In accordance with the requirements of
Regulation S-K,
Item 402(s), to the extent that risks may arise from the
Companys compensation policies and practices that are
reasonably likely to have a material adverse effect on the
Company, we are required to discuss those policies and practices
for compensating the employees of the Company (including
employees that are not named executive officers) as they relate
to the Companys risk management practices and the
possibility of incentivizing risk-taking. We have determined
that the compensation policies and practices established with
respect to the Companys employees are not reasonably
likely to have a material adverse effect on the Company and,
therefore, no such disclosure is necessary. The Compensation
Committee and the Board are aware of the need to routinely
assess our compensation policies and practices and will make a
determination as to the necessity of this particular disclosure
on an annual basis.
PROPOSAL 2
APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Subject to ratification by our stockholders, the Audit Committee
has selected the firm of KPMG LLP, Suite 2700, 707
17th Street, Denver, Colorado 80202, as our independent
registered public accounting firm to examine and audit our
financial statements for the fiscal year ending
December 31, 2010. This firm has audited our financial
statements for more than seven years and is considered to be
well qualified. The selection of such firm as our independent
registered public accounting firm is being submitted for
ratification at the Annual Meeting.
27
Action by stockholders is not required for the appointment of
the independent registered public accounting firm, but the
ratification of its appointment is being submitted by the Audit
Committee in order to give our stockholders an opportunity to
vote on the designation of auditors. In the event this proposal
is defeated, the stockholder vote will not be binding on the
Company but may be considered by our Audit Committee when it
considers selecting other auditors for the next fiscal year.
However, because of the difficulty and expense of making any
substitution of auditors after the beginning of the fiscal year,
KPMGs appointment for the 2010 fiscal year will be
permitted to stand unless the Audit Committee finds other
reasons for making a change.
A representative of KPMG LLP will be present at the Annual
Meeting with the opportunity to make a statement if he or she
desires to do so and will also be available to respond to
appropriate questions.
Principal
Accountant Fees and Services
The following table summarizes the aggregate fees billed by KPMG
LLP for the 2009 and 2008 fiscal years:
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
Fiscal Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Audit fees
|
|
$
|
723,000
|
|
|
$
|
867,000
|
|
Audit-related fees
|
|
|
167,000
|
|
|
|
7,800
|
|
Tax fees
|
|
|
116,000
|
|
|
|
|
|
All other fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,006,000
|
|
|
$
|
874,800
|
|
|
|
|
|
|
|
|
|
|
Audit Fees. Fees for audit services consisted
of the audit of our annual financial statements and reports on
internal controls required by the Sarbanes-Oxley Act of 2002 and
reviews of our quarterly financial statements.
Audit Related Fees. Fees billed for audit
related services related to professional services rendered by
KPMG LLP for assurance and related services that are reasonably
related to the performance of the audit or review of
Deltas financial statements but are not included in audit
fees above.
Audit
Committee Pre-Approval Policy
The Companys independent registered public accounting firm
may not be engaged to provide non-audit services that are
prohibited by law or regulation to be provided by it, nor may
the Companys independent registered public accounting firm
be engaged to provide any other non-audit service unless it is
determined that the engagement of the principal accountant
provides a business benefit resulting from its inherent
knowledge of the Company while not impairing its independence.
Our Audit Committee must pre-approve permissible non-audit
services. During fiscal year 2009, our Audit Committee approved
100% of the non-audit services provided to Delta by its
independent registered public accounting firm.
Required
Vote
Ratification of the appointment of KPMG LLP as our independent
auditors for fiscal year 2010 requires the affirmative vote of a
majority of the votes cast in person or by proxy at the Annual
Meeting.
Recommendation
of the Board of Directors
Our Board of Directors recommends that you vote FOR
ratification of the appointment of KPMG LLP as our independent
auditors for the fiscal year ending December 31, 2010.
28
REPORT OF
THE AUDIT COMMITTEE
The following Report of the Audit Committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any other Company filing under
the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent the Company specifically incorporates
this Report.
The Audit Committee is currently comprised of Kevin R. Collins
(Chairman), Jerrie F. Eckelberger, Russell S. Lewis, Jordan R.
Smith and Daniel J. Taylor. Until February 28, 2009, Neal
A. Stanley also served on the Audit Committee. The Audit
Committee is responsible for overseeing and evaluating the
Companys financial reporting process on behalf of the
Board of Directors, selecting and retaining the independent
auditors, and overseeing and reviewing the internal audit
function of the Company.
Management has the primary responsibility for the Companys
financial reporting process, accounting principles, and internal
controls, as well as preparation of the Companys financial
statements in accordance with generally accepted accounting
principles in the United States (GAAP). The
independent auditors are responsible for performing audits of
the Companys consolidated financial statements and the
effectiveness of the Companys internal control over
financial reporting in accordance with the standards of the
Public Company Accounting Oversight Board (United States) and
issuing reports thereon. The Audit Committee is responsible for
overseeing the conduct of these activities. It is not the Audit
Committees duty or responsibility to conduct auditing or
accounting reviews or procedures or to independently verify the
representations made by management and the independent auditors.
The Audit Committees considerations and discussions with
management and the independent auditors do not assure that the
Companys financial statements are presented in accordance
with GAAP or that the audits of the annual financial statements
and the effectiveness of the Companys internal control
over financial reporting have been carried out in accordance
with the standards of the Public Company Accounting Oversight
Board (United States), or that the independent auditors are, in
fact, independent.
The Audit Committee has met and held discussions with management
and the independent auditors on a regular basis. The Audit
Committee plans and schedules its meetings with a view to
ensuring that it devotes appropriate attention to all of its
responsibilities. The Audit Committees meetings include,
whenever appropriate, executive sessions with the independent
auditors without the presence of the Companys management.
The Audit Committee has reviewed and discussed with both
management and the independent auditors the Companys
consolidated financial statements as of and for the year ended
December 31, 2009, including a discussion of the quality,
not just the acceptability, of the accounting principles, the
reasonableness of significant judgments and the clarity of the
disclosures in the financial statements. Management advised the
Audit Committee that the financial statements were prepared in
accordance with GAAP. The Audit Committee has relied on this
representation, without independent verification, and on the
representations of the independent auditors included in their
report on the consolidated financial statements.
The Audit Committee discussed with the independent auditors the
matters required to be discussed pursuant to Statement of
Auditing Standards No. 114, The Auditors
Communication With Those Charged With Governance, as
amended by Statement of Auditing Standards No. 89,
Audit Adjustments and Statement of Auditing
Standards No. 90, Audit Committee
Communications. The independent auditors have provided to
the Audit Committee the written disclosures and the letter
required by Public Company Accounting Oversight Board (PCAOB)
Rule 3526, Communication with Audit Committees
Concerning Independence, and the Audit Committee has
discussed with the independent auditors their independence. The
Audit Committee has also considered whether the independent
auditors provision of other non-audit services to the
Company is compatible with maintaining auditor independence. The
Audit Committee has concluded that the provision of non-audit
services by the independent auditors was compatible with the
maintenance of independence in the conduct of their auditing
functions.
Based upon its review and discussions with management and the
independent auditors and the reports of the independent
auditors, and in reliance upon such information,
representations, reports and opinions, the Audit Committee
recommended that the Board of Directors approve the audited
financial statements for inclusion in the Companys annual
report on
Form 10-K
for the year ended December 31, 2009, and the Board of
Directors accepted the Audit Committees recommendations.
29
Members of the Audit Committee:
Kevin R. Collins (Chairman)
Jerrie F. Eckelberger
Russell S. Lewis
Jordan R. Smith
Daniel J. Taylor
STOCKHOLDER
PROPOSALS
Any stockholder proposals to be included in the Board of
Directors solicitation of proxies for the Annual Meeting
of Stockholders to be held in May 2011 must be received by
Stanley F. Freedman, Executive Vice President and Secretary, at
370 Seventeenth Street, Suite 4300, Denver, Colorado 80202,
no later than December 15, 2010 in order to be included in
the proxy statement and proxy relating to that meeting. Such
proposals must comply with all of the requirements of SEC
Rule 14a-8.
In accordance with the Companys Bylaws, in order for a
stockholder to present any matter before the Annual Meeting to
be held in May 2011 that is not to be included in the proxy
statement and proxy, a stockholders notice of such matter
must be delivered to the Secretary at the Companys
principal offices (see preceding paragraph) not less than ninety
days nor more than one hundred twenty days prior to the date of
the meeting; provided, however, that in the event that public
disclosure of the date of the meeting is first made less than
one hundred days prior to the date of the meeting, notice by the
stockholder in order to be timely must be so received not later
than the close of business on the tenth day following the day on
which such public disclosure of the date of the meeting was made.
GENERAL
AND OTHER MATTERS
The Board of Directors knows of no matter, other than those
referred to in this Proxy Statement, which will be represented
at the Annual Meeting; however, if any other matters are
properly brought before the Meeting or any of its adjournments,
the person or persons voting the proxies will vote them in
accordance with their judgment on such matters.
Householding of Proxy
Materials. The SEC has adopted rules that permit
companies and intermediaries such as brokers to satisfy delivery
requirements for proxy statements with respect to two or more
stockholders sharing the same address by delivering a single
proxy statement addressed to those stockholders. This process,
which is commonly referred to as householding,
potentially provides extra convenience for stockholders and cost
savings for us. Under this procedure, multiple stockholders who
share the same last name and address will receive only one copy
of the annual proxy materials, unless they notify us that they
wish to continue receiving multiple copies. We have undertaken
householding to reduce our printing costs and postage fees.
If you wish to opt-out of householding and continue to receive
multiple copies of the proxy materials at the same address, you
may do so at any time prior to thirty days before the mailing of
proxy materials, which will typically be mailed in April or May
of each year, by notifying our Secretary, Stanley F. Freedman,
in writing at: 370 Seventeenth Street, Suite 4300,
Denver, Colorado 80202 or by telephone
(303) 293-9133.
You also may request additional copies of the proxy materials by
notifying us in writing at the same address or contacting us at
(303) 293-9133,
and we will undertake to deliver such additional copies
promptly. If you share an address with another stockholder and
currently are receiving multiple copies of the proxy materials,
you may request householding by notifying us at the above
referenced address or telephone number.
30
AVAILABLE
INFORMATION
Upon request of any stockholder, our Annual Report on
Form 10-K
for the year ended December 31, 2009, as filed with the
SEC, will be sent to the stockholder without charge. All
requests should be addressed to our Secretary at 370 Seventeenth
Street, Suite 4300, Denver, Colorado 80202 or by telephone
(303) 293-9133.
You are urged to submit your proxy promptly. You may revoke your
proxy at any time before it is voted. If you attend the Annual
Meeting, as we hope you will, you may vote your shares in person.
By Order of the Board of Directors
John R. Wallace
President and Chief Operating Officer
April 15, 2010
31
DELTA PETROLEUM CORPORATION
ATTN: ANDREA BROWN
370 SEVENTEENTH STREET, STE 4300
DENVER, CO 80202
VOTE BY
INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you access the web site and follow the instructions
to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M.
Eastern Time the day before the cut-off date or meeting date. Have your proxy card in
hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we
have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR RECORDS |
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THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN THIS PORTION ONLY |
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For |
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Withhold |
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For All |
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All |
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All |
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Except |
The Board of Directors recommends that you
vote FOR the following: |
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1. Election of Directors |
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Nominees |
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To withhold authority to vote for any
individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below.
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01 John R. Wallace
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02 Hank Brown
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03 Kevin R. Collins
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04 Jerrie F. Eckelberger
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05 Aleron H. Larson, Jr. |
06 Russell S. Lewis
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07 James J. Murren
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08 Jordan R. Smith
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09 Daniel J. Taylor
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10 Anthony Mandekic |
11 Jean-Michel Fonck
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The Board of Directors recommends you vote FOR the following proposal(s): |
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For |
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Against |
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Abstain |
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2
To consider and vote upon the ratification of the appointment of KPMG LLP as the independent
registered public accounting firm for Delta Petroleum Corporation
for the fiscal year ending December 31, 2010. |
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3
To transact such other business as may be properly brought before the meeting and any adjournment thereof. |
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Please sign exactly as your name(s) appear(s) hereon. When signing as
attorney, executor, administrator, or other fiduciary, please give full
title as such. Joint owners should each sign personally. All holders must
sign. If a corporation or partnership, please sign in full corporate or
partnership name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint Owners) |
Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy Statement, Annual Report is/
are available at www.proxyvote.com.
DELTA PETROLEUM CORPORATION.
Annual Meeting of Stockholders
May 25, 2010 10:00 AM MDT
This proxy is solicited by the Board of Directors
The undersigned hereby constitutes and appoints John R. Wallace and Stanley F. Freedman, or each of them,
lawful attornies and proxies of the undersigned, with full power of substitution, for and in the name, place and
stead of the undersigned, to attend the Annual Meeting of Stockholders of Delta Petroleum Corporation, to be
held in the Companys offices located at 370 17th Street, Suite 4300, Denver Colorado 80202 on Tuesday, May
25, 2010, at 10:00 a.m (MDT), and any adjournment(s) thereof, with all powers the undersigned would possess if
personally present to vote thereat, as provided below, the number of shares the undersigned would be entitled to
vote if personally present.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is
made, this proxy will be voted in accordance with the Board of Directors recommendations.
Continued and to be signed on reverse side