SEC Form DEF 14A filed by Gulfport Energy Corporation

GULFPORT ENERGY CORPORATION
713 Market Drive
Oklahoma City, Oklahoma 73114

April 5, 2024

Notice is given that the 2024 Annual Meeting of Stockholders (including any adjournments or postponements, the “Annual Meeting”) of Gulfport Energy will be held on May 22, 2024 at 9:00 a.m., Central Time at Gulfport Headquarters located at 713 Market Drive, Oklahoma City, OK 73114 to vote on the proposals listed in the following table.

GULFPORT ENERGY CORPORATION

713 Market Drive
Oklahoma City, Oklahoma 73114

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PROXY STATEMENT
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The summary below highlights information contained elsewhere in this proxy statement. It does not contain all the information that you should consider in connection with the matters before the Annual Meeting. Please read the entire proxy statement carefully before voting your shares.

Gulfport is an independent natural gas-weighted exploration and production company with assets primarily located in the Appalachia and Anadarko basins. Our principal properties are located in eastern Ohio targeting the Utica and Marcellus and in central Oklahoma targeting the SCOOP Woodford and Springer formations. Our corporate headquarters are located in Oklahoma City, Oklahoma and shares of Gulfport’s Common Stock trade on the New York Stock Exchange (NYSE) under the ticker symbol “GPOR”.

Gulfport aims to create sustainable value through the economic development of our significant resource plays in the Utica and SCOOP operating areas. Our strategy is to develop our assets in a manner that generates sustainable cash flow, improves margins and operating efficiencies, while improving our ESG and safety performance. To accomplish these goals, we allocate capital to projects we believe offer the highest rate of return and deploy leading drilling and completion techniques and technologies in our development efforts. We believe our plan to generate free cash flow on an annual basis will allow us to return capital to shareholders and increase our resource depth through incremental leasehold opportunities that provide optionality to our future development plans.

Our Board is comprised of seven directors, including the Company’s Chief Executive Officer, John Reinhart, and six non-employee directors, Timothy Cutt, David Wolf, Jason Martinez, Jeannie Powers, David Reganato, and Mary Shafer-Malicki. They are diverse, industry-leading experts with an average of approximately 25 years of industry leadership experience across multiple disciplines. Each of our directors will stand for election annually and must be elected by a majority of shares voted.

The following table provides summary information about each director nominee who is standing for election at the Annual Meeting. For more information about the background and qualifications of each nominee, please see “Election of Directors and Director Biographies” on page 8 of this proxy statement. We ask you to vote “FOR” each of our director nominees.

Gulfport’s Work Safe Program is behaviorally based and focuses on twelve rules derived from Company policies (critical tasks) and cultural conditions linked to serious safety incidents in our industry. Critical Task Rules require specific operating procedures to mitigate hazardous work site conditions and complete work safely. Cultural Condition Rules are defined as work site conditions or human behaviors that have been linked to the root cause of most incidents. Employees and contractors are expected to apply and follow the requirements that coincide with the twelve rules. We continue educating employees and contractors on this program through safety meetings and training programs. Our goal is to not only improve our safety performance but to proactively prevent incidents before they occur.

Stop Work is one of the Work Safe Program’s critical tasks. Our Chief Executive Officer, John Reinhart, signed and communicated a Stop Work Authority and Obligation letter to the Company’s employees and our contractors. This letter outlines Gulfport’s commitment to health, safety and the environment and provides the expectation and support to Gulfport employees and contract partners to stop work when conditions warrant. Every person on a Gulfport work site has the authority — and obligation — to stop any work that may cause an unsafe condition, create personal risk, or harm the environment.

Health, Safety & Environment Highlights for 2023:

•        Achieved MIQ certification for Appalachian assets.

•        Reduced combined total recordable incident rate by 17% in 2023 compared to 2022.

•        Invested in and implemented technology to reduce emissions, waste and our physical footprint on drilling locations.

•        Reduced water disposal volumes and freshwater consumption through water re-use or water sharing agreements with other operators.

Diversity.    Diversity, equity and inclusion are paramount to our organization, our leadership team and our culture. Diversity and inclusion are also important at our Board level, where over 42% of our directors identify as gender or ethnically diverse. We continue to make efforts to attract and recruit diverse candidates, evaluate pay equity and offer our employees and managers development training and resources and ongoing training on our workplace policies. We also encourage employees to provide feedback and ideas on how Gulfport can continuously improve, and we ask our employees to sign a commitment indicating that they will speak up if they observe or become aware of any actions that are inconsistent with our core values, our Code of Business Conduct and Ethics, or other Company policies. We are also committed to supporting veterans through our recruiting and hiring efforts as well as supporting several causes that assist veterans and active-duty military.

As an affirmative action employer, we are driven to locate qualified diversity candidates and provide metrics on our diversity. In 2023, we either maintained or improved our diversity in key areas with approximately 43% of our employees identifying as gender or ethnically diverse, including 37% of our new hires. Through outreach and recruiting, we continue to make progress in 2024.

In 2023, all employees participated in multiple trainings that covered our Business Code of Conduct and Ethics, Company policies, and topics related to diversity, equity and inclusion. We understand that a workplace environment that embraces diversity and is inclusive of different ideas and perspectives is a healthy environment and one that provides the best solutions to complex challenges.

Board Diversity.    Our Nominating, Environmental, Social and Governance Committee is dedicated to diversity and adopted a Board Diversity Policy. The policy requires that the Committee include diverse candidates in all director searches, taking into account diversity of gender, race, ethnicity, background, age, thought and tenure on our Board (in connection with the consideration of the renomination of an existing director), including by affirmatively instructing any search firm retained to assist the Committee in identifying director candidates to include diverse candidates from traditional and non-traditional candidate groups. These efforts have led to over 42% of our directors identifying as gender or ethnically diverse.

Human Rights Policy.    Gulfport is committed to serve as a positive force in its communities, and the Company remains dedicated to upholding the highest standards of human rights, clearly defined in our Human Rights Policy.

Gulfport respects fundamental human rights and views them as an integral part of corporate ethics and social responsibility. The Company adheres to the highest ethical conduct as outlined in Gulfport’s Business Code of Conduct and Ethics and Supplier Code of Conduct.

Gulfport applies fair labor practices throughout its operations and adheres to applicable workplace, employment, privacy and human rights standards. Consistent with the United Nations Guiding Principles on Business and Human Rights, Gulfport recognizes the responsibility of governments to protect and fulfill human rights. As an operating rights owner, it is the Company’s obligation to respect human rights and comply with applicable laws.

Gulfport provides a diverse, equitable and inclusive workplace for all employees and job candidates, and it does not tolerate unlawful discrimination or workplace harassment in any form.

Gulfport is committed to maintaining and improving its strong and diverse supplier network which supports the Company’s goal of making a positive contribution in the communities where it does business. We regularly assess risk within Supply Chain and expect contractors and suppliers to comply with applicable laws and respect the Company’s voluntary commitments, the Supplier Code of Conduct, our Business Code of Conduct and Ethics and EHS policies.

Community Engagement.    Gulfport strives to positively impact and improve the communities where we live and operate. We uphold our corporate responsibility and put our core values in action forming partnerships that give back to our operating areas and enhance lives in our communities. Gulfport recognizes that its operations can create a significant economic and social impact and actively engages with communities in which we operate. Gulfport supports programs that make a lasting and positive impact on education, health and community development. Gulfport is proud to support campaigns for nonprofit agencies in Oklahoma and Ohio through volunteer efforts as well as financial and in-kind contributions. Gulfport continues emphasizing volunteerism as an important part of our corporate culture. We center our giving efforts to support education, health and human services, environmental stewardship and our veterans. In 2022, Gulfport formed its Community Impact Committee consisting of employees from its headquarters and field offices in Oklahoma and Ohio. This committee is dedicated to seeking partnerships and volunteer opportunities all centered around these key focus areas.

In the last 12 months, Gulfport has partnered with over 30 organizations with missions centered around our key focus areas. Through monetary contributions and volunteering efforts, we have supported organizations dedicated to protecting and sustaining the environment, supplying life-sustaining formula and food for babies and toddlers in times of crisis, enhancing the lives of adults with developmental disabilities and supporting veterans and youth through community programs.

We believe effective corporate governance requires regular constructive discussions with our stakeholders and we focus our sustainability priorities and disclosures on the issues that are most important to them. To identify these priorities, we engage internal and external stakeholders and weigh their views with respect to both Gulfport’s specific activities and the general business climate of our industry. In addition to these efforts, management engages with stockholders and potential stockholders through targeted outreach and participation in various conference and industry events.

Key Stakeholders include:

•        Contractors and Suppliers

•        Employees

•        Government and Regulatory Agencies

•        Industry Peers

•        Investors

•        Landowners

•        Local Communities

•        Service Providers

•        Trade Associations

This feedback helps shape our corporate governance practices, and has specifically resulted in:

Stockholder Engagement and Annual Say-On-Pay Advisory Vote

At the Annual Meeting, our stockholders will again have an opportunity to cast an advisory Say-On-Pay vote on the compensation paid to our named executive officers as described in this proxy statement. The details of the executive compensation program and its pay for performance alignment are discussed in the “Compensation Discussion & Analysis (CD&A)” on page 25 of this proxy statement.

Gulfport Energy engages in discussions with our stockholders at investor conferences and through direct calls and meetings with the Company’s management team that represented over 70% of the shares outstanding. Through these conversations our stockholders emphasized their expectation that our compensation programs should be designed to focus our executive team on driving results that ensure the financial health of the organization while also driving long-term stockholder value. Specifically, after carefully considering input from stockholders, the Company took the following actions in 2023:

•        Utilized performance-based and time-based equity awards in the form of performance-based restricted stock units tied to relative total shareholder return (“TSR”) and absolute total shareholder return, vesting over a three-year performance period; 60% of all equity awards to NEOs were performance-based;

•        Adjusted performance incentive opportunities and long-term equity award targets to closely align our executives’ financial interests with those of our stockholders and to continue to link a large portion of executives’ compensation to the performance of our stock and our operational performance;

•        Continued utilizing metrics in the annual incentive plan to include financial metrics directly tied to the financial health of the Company, including production per day, capital expenses, lease operating expenses, free cash flow generation, and specific and quantifiable health, safety, environmental and social metrics; and

•        Provided robust disclosure of our performance metrics and targets for both performance-based cash and equity awards.

Stock Performance Graph

The following Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filings.

The performance graph below illustrates changes over the period of December 31, 2022 through December 31, 2023, in cumulative total stockholder return on Gulfport Common Stock as measured against the cumulative total return of the S&P 500 Index, the S&P Oil & Gas Exploration and Production Index and the 2023 Peer Group. The graph tracks the performance of a $100 investment in our Common Stock, each peer company and in each index (with the reinvestment of all dividends for the index securities) from December 31, 2022 to December 31, 2023.

Note: 2023 Peer Group defined further on page 32.

The Company is asking its stockholders to vote to elect seven directors to serve on the Board of Directors until the 2025 Annual Meeting of Stockholders (the “2025 Annual Meeting”) or until their respective successors have been duly elected and qualified.

Our Board of Directors currently consists of seven members who are elected annually. Six of these seven directors are non-employee directors, and five of the seven directors are independent under the NYSE listing standards.

The directors standing for election this year are listed below. If any nominee should decline election or should become unable to serve as a director of our Company for any reason before election at the Annual Meeting, votes will be cast by the persons appointed as proxies for a substitute nominee, if any, designated by the Board of Directors.

There are no family relationships among any of the nominees, directors or any of the executive officers.

Vote Required and Board Voting Recommendation

Directors will be elected at the Annual Meeting by a majority of the votes cast. Abstentions and broker non-votes will have no effect on the voting results for Proposal 1.

C      Committee Chair.

+      Satisfies NYSE independence and other applicable independence rules for membership on such Committees.

Yes. The charters for each Committee can be found on our website at https://www.gulfportenergy.com/investors/corporate-governance/governance-documents. You may also obtain copies of these charters, as well as our Code of Business Conduct and Ethics, which is described below, by writing to our Chief Legal and Administrative Officer and Corporate Secretary, Patrick Craine, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114.

Our Board of Directors has determined that five of our seven current Board members (David Wolf, Jason Martinez, Jeannie Powers, David Reganato, and Mary Shafer-Malicki) meet the independence requirements in the NYSE listing standards and are free of any relationship that, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors of the Company. Mr. Reinhart, our President, Chief Executive Officer and Director, is not considered by the Board of Directors to be an independent director because of his current employment with the Company. Mr. Cutt, our Board Chair, is not considered by the Board of Directors to be an independent director because of his previous employment as Chief Executive Officer of the Company. Our Board is currently over 42% diverse.

Board and Committee Evaluations

Director Performance Evaluations

The Board of Directors met 12 times in 2023. In addition to these meetings, the Board of Directors adopted resolutions by unanimous written consent. Each director attended over 87% of the aggregate meetings of the Board of Directors and the meetings of the Committees on which they served.

Our non-management directors routinely meet in an executive session following regularly scheduled meetings of the Board of Directors.

Individuals may communicate with our Board of Directors or individual directors by writing to our Chief Legal and Administrative Officer and Corporate Secretary, Patrick Craine, at Gulfport Energy Corporation, 713 Market Drive, Oklahoma City, Oklahoma 73114. Our Chief Legal and Administrative Officer and Corporate Secretary will review all correspondence and forward our Board of Directors correspondence that, in the opinion of our Chief Legal and Administrative Officer and Corporate Secretary, relates to the function of our Board of Directors or a Board Committee or otherwise requires their attention. Directors may review a log of all correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be immediately brought to the attention of the Chair of the Audit Committee and handled in accordance with our Audit Committee’s procedures.

Recognizing that director attendance at our Annual Meeting can provide stockholders an opportunity to communicate with directors about issues affecting the Company, we actively encourage our directors to attend, either virtually or in person, the Annual Meeting of Stockholders. All Directors attended our 2023 Annual Meeting of Shareholders.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics designed to help directors and employees resolve ethical issues. Our Code of Business Conduct and Ethics applies to all directors and employees. Our Code of Business Conduct and Ethics covers various topics including, but not limited to, conflicts of interest, fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee complaint procedures. Our Code of Business Conduct and Ethics, together with any amendments or waivers, are posted on our website at https://www.gulfportenergy.com/investors/corporate-governance/governance-documents.

Corporate Governance Guidelines

We have adopted Corporate Governance Guidelines to assist the Board in exercising its responsibilities. The Corporate Governance Guidelines reflect the Board’s commitment to monitor the effectiveness of policy and decision making at the Board and management levels, with a view to enhancing stockholder value over the long term. The Corporate Governance Guidelines also assure that the Board will have the necessary authority and practices in place to review and evaluate the Company’s business operations as needed and to make decisions that are independent of the Company’s management. Our Corporate Governance Guidelines, together with any amendments or waivers, are posted on our website at https://www.gulfportenergy.com/investors/corporate-governance/governance-documents.

Political Contribution Policy

Engagement in the political, legislative and regulatory process is important to the success of the Company. The Company has delegated compliance and oversight over this function to the Nominating, Environmental, Social and Governance Committee and has adopted a political contributions and activity policy that sets forth the ways by which the Company and its employees may participate in the political, legislative and regulatory process. All political contributions and activities are subject to compliance with applicable laws.

Director Qualifications

As provided by the Nominating, Environmental, Social and Governance Committee’s charter, the Committee identifies, investigates, and recommends candidates to our Board of Directors with the goal of creating a balance of knowledge, experience, and diversity. The Committee identifies candidates using third-party search firms, as well as through the extensive networks of our directors and management team in the oil and natural gas industry.

It is our policy that potential directors should possess the highest personal and professional ethics, integrity and values and be committed to representing the interests of our stockholders. In addition to reviewing a candidate’s background and accomplishments, candidates are reviewed in the context of the current composition of our Board of Directors, the skills necessary to provide effective oversight in critical areas and the evolving needs of our business. It is the policy of our Board of Directors that, at all times, at least a majority of its members meet the standards of independence promulgated by the NYSE and the SEC and that its members reflect a range of talents, skills and expertise, particularly in the areas of accounting and finance, management, leadership and oil and gas-related industries sufficient to provide sound and prudent guidance with respect to our operations and the interests of our stockholders.

Board Diversity Policy

Our Nominating, Environmental, Social and Governance Committee is dedicated to diversity and adopted a Board Diversity Policy in April 2022. The policy requires that the Nominating, Environmental, Social and Governance Committee consider diversity in its evaluation of candidates for Board membership. Our Nominating, Environmental, Social and Governance Committee, in accordance with its charter, seeks to include diverse candidates in all director searches, taking into account diversity of gender, race, ethnicity, background, age, thought and tenure on our Board (in connection with the consideration of the renomination of an existing director), including by affirmatively instructing any search firm retained to assist the Nominating, Environmental, Social and Governance Committee in identifying director candidates to include diverse candidates from traditional and non-traditional candidate groups. In accordance with its charter, our Nominating, Environmental, Social and Governance Committee periodically reviews and makes recommendations regarding the composition of the Board and the size of the Board. These efforts have led to over 42% of our directors identifying as gender or ethnically diverse.

We also require that the members of our Board of Directors be able to dedicate the time and resources sufficient to ensure the diligent performance of their duties on our behalf, including attending meetings of the Board of Directors and applicable Committee meetings. In accordance with its charter, our Nominating, Environmental, Social and Governance Committee periodically reviews the criteria for the selection of directors to serve on our Board and recommends any proposed changes to our Board of Directors for approval.

Nomination Process

Our Board of Directors will consider stockholder nominations for director candidates upon written submission to our Chief Legal and Administrative Officer and Corporate Secretary along with, among other things, the nominee’s qualifications and certain biographical information regarding the nominee, the nominee’s written consent to serve as a director if elected and being named in the proxy or information statement and information regarding the status of the stockholder submitting the recommendation, all in the manner required by the Second Amended and Restated Bylaws of the Company (the “Bylaws”) and the applicable rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by our Board of Directors at a regularly scheduled or special Board meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, materials will be forwarded to our Board of Directors. See “Submission of Future Stockholder Proposals” below for additional detail regarding submitting director nominees.

The following table sets forth the name, age, positions, and business experience of each of our executive officers (other than John Reinhart, who also serves as a member of our Board and who is listed under “Election of Directors and Director Biographies”):

2023 was an exceptional year for Gulfport Energy. The Company delivered on all fronts, highlighted by our high quality resource base and the continued improvement of development efficiencies throughout the year. The Company delivered net production well above initial expectations while staying within its initial capital expenditures expectations. The 2023 development program led to meaningful adjusted free cash flow generation, and after adjusting for cash flow utilized for attractive discretionary acreage acquisitions, Gulfport allocated approximately 99% of adjusted free cash flow to repurchasing our common stock during 2023. All of this was achieved while maintaining our strong balance sheet, ample liquidity and financial leverage below one times. The Company’s accomplishments were realized by the investment community and Gulfport’s stock price appreciated over 80% during 2023, outperforming the S&P 500 which appreciated by 24% and Gulfport’s 2023 compensation peer group average appreciation of 0.2%.

From an executive compensation perspective, we were able to set realistic, challenging targets for our short and long-term incentive plans. We were pleased to see the financial and operational results exceed our expectations. We were able to deliver on our compensation strategy of providing compensation opportunities that were tied to Company performance. Our philosophy is to remain competitive within the oil and gas industry for similarly situated operations.

Please review the Compensation Discussion and Analysis, where we explain how we tie pay and performance together to reward our executives. We are confident our shareholders will once again agree with the compensation decisions we made regarding our executive team as they overwhelmingly did based on the 99.8% of votes we received on our 2023 Say-On-Pay vote.

Thank you for your confidence and investment in Gulfport Energy.

Respectfully submitted by the Compensation Committee,

Jason Martinez, Chair

David Reganato

Mary Shafer-Malicki

David Wolf

Dated: April 5, 2024

This Compensation Discussion and Analysis, or CD&A, explains the Compensation Committee’s compensation philosophy, summarizes our executive compensation programs, and describes compensation decisions for Gulfport’s current and former Chief Executive Officer, or CEO, current and former Chief Financial Officer, or CFO, and the next three highest paid executive officers for 2023. These executive officers, known as our NEOs, are as follows:

During 2023, we had the following notable achievements:

Financial

•        Generated $723.2 million of operating cash flows.

•        Reduced total lease operating expenses, midstream costs and taxes other than income per Mcfe by 13%.

•        Maintained a strong balance sheet and low financial leverage, with liquidity at December 31, 2023 totaling $720.1 million.

•        Expanded our common stock repurchase authorization in February 2023 and October 2023 to a total of $650 million.

•        Returned substantially all full year adjusted free cash flow, excluding discretionary acreage acquisitions, to shareholders by repurchasing 1.5 million shares of common stock for approximately $148.9 million.

•        Reported year-end estimated net proved reserves of 4.2 Tcfe.

Health, Safety & Environmental

•        Achieved MIQ certification for Appalachian assets.

•        Reduced our combined total recordable incident rate by 17% in 2023 compared to 2022.

•        Invested in and implemented technology to reduce emissions, waste and our physical footprint on drilling locations.

•        Reduced water disposal volumes and freshwater consumption through water re-use or water sharing agreements with other operators.

•        Employees completed over 2,600 hours of Health, Safety and Environmental training.

•        Over 200 service companies completed Contractor Orientation covering topics such as:

•        Gulfport’s Contractor expectations

•        Work Safe;

•        Stop Work;

•        JSA’s;

•        Incident Reporting; and

•        Spill Prevention

•        PPE requirements

•        Gulfport Drug/Alcohol/Weapons Policy

•        Business Conduct

•        Other Applicable OSHA Regulations

•        Hot Work Permits

•        Confined Space Permits

•        Lock Out Tag Out Requirements

Social

•        Appointed two gender diverse directors, resulting in over 42% diversity of Directors.

•        Completed Diversity Equity and Inclusion related training for all employees.

•        Increased total number and total percentage of employees that identified as gender or ethnically diverse.

•        Partnered with over 30 organizations that support Gulfport’s key focus areas in Oklahoma and Ohio through volunteering and monetary contributions.

In consideration of our long-term strategy and stockholder feedback following a robust program of engagement (see “Stockholder Engagement and Annual Say-on-Pay Advisory Vote” below), the Company took the following actions in 2023:

•        Continued to use absolute and relative TSR and time-based vesting in equity plan grants to maximize the link between performance-based pay of our executives and shareholder value over time.

•        Established annual performance bonus opportunities and long-term equity award targets to closely align our NEOs’ financial interests with those of our stockholders and to continue to link a larger portion of NEOs’ compensation to the performance of our stock and operational performance.

•        Selected metrics in our annual incentive plan to include financial metrics directly tied to the financial health of the Company and specific and quantifiable health, safety and environmental metrics.

•        Continued to provide robust disclosure of our performance metrics and targets for both performance-based cash and equity awards.

•        Utilized formal stock ownership guidelines to ensure our Board of Directors and executive officers own a stake in the Company that is sufficient to align their interests with their fellow stockholders.

The Compensation Committee of our Board of Directors oversees our compensation programs for executive officers and all employees. During 2023, the Compensation Committee was comprised of Jason Martinez (Chair), David Reganato, Mary Shafer-Malicki, David Wolf, and Guillermo (Bill) Martinez. All members of the Compensation Committee are independent directors.

The Role of Our Compensation Committee

The Compensation Committee generally reviews and typically makes its decisions regarding the annual compensation of our NEOs at its regular meetings in the first half of each year. These decisions include:

•        Approving base salaries, target, annual cash incentive levels and long-term equity-based incentive levels;

•        Establishing applicable performance objectives for performance-based awards;

•        Granting long-term equity-based incentive awards and determining the types of awards for the current year; and

•        Certifying annual performance-based cash incentive awards and performance-based long-term incentive award payouts.

The Compensation Committee may also adjust compensation as necessary at other times during the year, such as in the case of promotions, other changes in employment status and significant corporate events, as well as to reflect changing market conditions or for other competitive purposes.

In making its decisions, the Compensation Committee assesses each NEO’s impact during the year and overall value to Gulfport, specifically considering the NEO’s contribution to the growth of Gulfport’s value, operational and financial performance, performance in the NEO’s primary area of responsibility, impact on strategic initiatives, recommendations of our independent compensation consultant, the NEO’s role and trajectory in succession planning and development, recommendations from our CEO with respect to our other NEOs and other intangible qualities that contribute to corporate and individual success.

The Role of our CEO

The Compensation Committee evaluates our CEO based on the Company’s performance metrics, leadership roles as a member of the Board and our lead representative to the investment community and other criteria. The CEO’s total compensation package is determined by the Compensation Committee, based upon its evaluation and input from our independent compensation consultant. Our CEO’s compensation ultimately reflects Gulfport’s performance, personal performance, competitive industry practices and the terms of our employment arrangement with the CEO.

Our CEO evaluates each of the other NEOs and makes compensation recommendations to the Compensation Committee. In developing recommendations, the CEO considers the recommendations of the Compensation Committee’s independent compensation consultant, as well as each NEO’s performance against the Company performance metrics and contribution to Gulfport’s performance. The independent compensation consultant reviews and provides comments to the Compensation Committee based on our CEO’s recommendation with respect to our NEOs, other than our CEO. Our CEO does not participate in deliberations or decisions concerning his own compensation.

The Role of the Compensation Consultants

For 2023, the Compensation Committee retained the service of WTW to perform executive compensation advisory services, reporting directly to the Compensation Committee Chair. The Compensation Committee determined that the expertise that WTW had in the executive compensation consulting space with other similar Exploration and Production (“E&P”) companies, in addition to deep insights into compensation practices of other similar companies, was critical for Gulfport Energy. WTW provided contemporary best practices in base pay administration, short-term incentive plan design and long-term incentive plan design. This information, which included reviews of peers, a broader E&P group and general industry practices, was used by the Compensation Committee to determine base salary, short-term incentives and long-term incentives for our executives.

WTW also provided support with regulatory and other considerations that affect compensation programs generally, as requested by the Compensation Committee, as well as assistance in preparation of the CD&A.

WTW reported exclusively to the Compensation Committee, with respect to the services described above. During 2023, WTW provided other non-executive compensation consulting services to us, but the total fees for such services did not exceed $120,000. The Compensation Committee reviewed the independence of WTW and determined that there were no conflicts of interest because of the Compensation Committee’s engagement of WTW.

The Compensation Committee evaluates the independence of its compensation consultant(s) on an ongoing basis.

Base Salary

The Compensation Committee engaged WTW to review the overall competitiveness of our executive compensation program for 2023, with a continued focus on ensuring the alignment of management compensation with performance and the achievement of Gulfport’s long-term goals. The Compensation Committee reviews NEO base salaries on an annual basis, with a goal of providing market competitive, fixed cash compensation. The Compensation Committee assesses comparable salary information provided by its independent compensation consultant as a factor when determining the base pay for NEOs.

Other factors the Compensation Committee considers in determining base pay for each of the NEOs include, but are not limited to: the NEO’s responsibilities, experience, leadership, potential future contribution and demonstrated individual performance. The relative weighting of these factors varies by NEO depending on their position and responsibilities. In March 2023, the base salaries of the executive team were reviewed and changes were made to certain executives’ base salaries after reviewing the current labor market for executive talent, performance and other job-related factors for each executive. A summary of the changes is reflected in the table below.

Annual Incentive Awards

The Compensation Committee established a performance-based annual cash incentive program for 2023 that tied our NEOs’ compensation directly to pre-established performance metrics. Targeted annual incentive award levels were based on market information supplied by the independent compensation consultant. Individual awards may be decreased at the discretion of the Compensation Committee based on overall corporate performance for the year and other considerations.

2023 Annual Short-Term Incentive (“STI”) Bonus Metrics and Annual STI Payments

The Compensation Committee determined that the appropriate Key Performance Indicators (“KPIs”) for the 2023 STI plan should focus primarily on generating adjusted free cash flow and executing certain strategic objectives that were important to the continued success of the organization and were responsive to shareholder feedback. After reviewing the operating and financial targets for 2023 with the Board of Directors, the Gulfport Energy executive management team and the independent compensation advisor, the Compensation Committee approved performance targets accordingly. The KPIs included thresholds, targets and maximums that were based on predetermined financial and key performance metrics.

The financial metrics chosen were generally common measures in the oil and gas industry and were viewed as measures of success by our shareholders. The Compensation Committee also believed it was critical to focus on other strategic initiatives that while not directly measured in financial terms, are key indicators of successful companies in the oil and gas industry. Total Recordable Incident Rate (“TRIR”) and spills are common measurements and targets that reflect either industry benchmark information (TRIR) or improvement over prior results (spills). The Compensation Committee also adopted a set of strategic initiatives that focused on environmental and corporate and social governance activities. Specifically, the organization would be measured on making substantial improvement in the areas of Appalachian gas certification with an “A” grade from MIQ, completing a successful organizational restructuring, and retrofitting natural gas pneumatics with air in the MidCon.

In April of 2023, after performance targets for the annual STI had been set in March of 2023, the Board of Directors made a strategic decision to increase the Company’s 2023 capital program after management’s operational efficiencies provided the opportunity to accelerate activity. Realizing that these additional expenditures were not included in the initial target setting process, the Board of Directors adjusted the 2023 performance metrics to account for the accelerated capital in the 2023 incentive payment results.

At the completion of the performance period ending December 31, 2023, the Compensation Committee reviewed financial and operating results and the attainment of key performance indicators and approved 2023 STI payout results based on those achievements. This achievement resulted in an overall payout of 165% of target awards. Below is a summary of KPIs and results for the 2023 plan year.

2023 STI Metrics

(1)   Adjusted Free Cash Flow is a non-GAAP measure defined as net cash provided by operating activities from the Company’s Consolidated Statement of Cash Flows less the sum of changes in operating assets and liabilities included in the operating activities section of the Consolidated Statement of Cash Flows less non-recurring general and administrative and other expenses from the Consolidated Statement of Operations less incurred capital expenditures and capitalized expenses. Adjusted Free Cash Flow was calculated assuming realized commodity pricing received throughout the year was consistent with the forward curve pricing used to set the approved Adjusted Free Cash Flow Metric in February of 2023.

(2)   The impact of the changes to the Company’s 2023 capital program on the 2023 incentive payment results as described above consisted of increased capital expenditures of $23 million, which reduced the 2023 actual Capex metric and increased the 2023 Adjusted Free Cash Flow metric results.

2023 Target Annual STI Opportunities and Actual Annual STI Payments

The Compensation Committee established the target annual cash STI opportunity for each of the NEOs, taking into consideration the terms of any applicable employment agreement, and approved the following cash payments based on the Company’s 2023 results performance as described above.

2023 INCENTIVE COMPENSATION PLAN

(1)  Pursuant to his Transition and Services Agreement, Mr. Cutt received a prorated bonus at target for his service as Chief Executive Officer during 2023.

(2)  Pursuant to the terms of his employment agreement and in connection with the termination of his employment, Mr. Buese received a pro-rata portion of his annual bonus for 2023.

Long-Term Incentive Awards

Each year we grant our NEOs long-term incentive awards, that have historically consisted of equity-based awards. The Compensation Committee determines the amount of these awards, as well as the mix of equity vehicles. The objectives of our long-term incentive plan are to: (i) create significant alignment between the interests of our NEOs and our stockholders; (ii) attract and retain the services of critical talent; and (iii) focus our executives on our sustained growth and financial success.

The Compensation Committee considers the grant date fair value of the long-term incentive package, the package’s potential dilutive effect on our outstanding shares of common stock and the number of shares available for grant under the 2021 Incentive Plan (as defined below) in determining the aggregate number of shares to be awarded as individual long-term incentive awards for our NEOs. The Compensation Committee evaluates stockholder dilution based on equity compensation plans compared to the total amount of the Company’s outstanding common stock. In determining the appropriate long-term incentive awards to grant NEOs other than the CEO, the Compensation Committee considers the recommendations of the CEO. The Compensation Committee reviewed market values with respect to the annual long-term incentive awards granted to similarly situated executives at the Compensation Peer Group. In 2023, the Compensation Committee determined that the Named Executive Officers would receive equity grants consisting of 60% performance-based restricted stock units and 40% time-based restricted stock units. The time-based restricted stock units granted to our Named Executive Officers vest in equal annual installments over a three-year period.

The performance based restricted stock units vest after a three-year performance period, based on the Company’s achievement of relative TSR as compared to a peer group of companies and absolute TSR, in each case, as described in the chart below.

2023 Equity Awards

(1)   The time-based restricted stock unit values are based on the closing price of the Company’s common stock on the grant date.

(2)   The performance-based restricted stock unit awards are shown in this table based on the target number of shares subject to the awards and the closing price of the Company’s common stock on the grant date. The Company used a Monte Carlo simulation for purposes of determining the grant date fair value of these awards as reflected in the Summary Compensation Table. Please see note 2 to the Summary Compensation Table.

Compensation Risk Management

The Compensation Committee continues to review the risks and rewards associated with our compensation policies and programs. We believe that our policies and programs encourage and reward prudent business judgment, encourage short-term stockholder value creation, and prioritize long-term growth by discouraging excessive risk taking. With respect to specific elements of compensation:

•        Integrated Approach – Our programs balance short- and long-term incentives for our executive officers by providing an appropriate mix of fixed, performance-based, discretionary and equity compensation, with the goal of creating both short- and long-term stockholder value.

•        Attract Top Talent – Annual base salaries for our NEOs do not encourage excessive risk-taking as they are fixed amounts that are subject to discretionary increases by our Compensation Committee that may be based on, among other factors, annual performance evaluations. We believe that annual base salaries are set at reasonable levels, as compared to the base salaries of similarly situated individuals at our peer group companies, and therefore do not negate the effect of other compensation elements that encourage long-term service, growth and performance that may increase stockholder value.

•        Support Business Objectives and Strategic Goals – Our annual incentive awards are determined based on financial, operational and strategic Company performance measures, which mitigate excessive risk-taking that could produce unsustainable gains in one area of performance at the expense of our overall long-term interests. The Company’s goals are designed to ensure a proper balance between stock performance, operational measures, financial goals and strategic goals. In addition, the Compensation Committee sets performance goals that it believes are reasonable considering our past performance, then-current business projections and market conditions.

•        Pay for Performance – The Compensation Committee believes that performance-based equity awards tied to the Company’s stock price and relative performance versus peers, and cash compensation, with meaningful performance targets, such as those under our Annual Incentive Plan (as defined below), will further align our NEOs’ interests with those of our stockholders, will motivate our NEOs to contribute to the Company’s growth and profitability and will link a larger portion of our NEOs’ compensation to the performance of the Company.

•        Maximize Stockholder Value – Our annual incentive awards are subject to maximum payout caps that limit the amount an NEO may earn on any individual metric or operational measures.

•        Create Ownership Culture – Performance-based and time-based restricted stock unit awards, in each case, vesting over time, as well as robust stock ownership guidelines for our NEOs and non-employee directors, promote stock ownership culture and ensure that our NEOs and directors have a continuing stake in the long-term success of the Company. We believe that our long-term equity awards granted to our NEOs discourage excessive risk taking, as there is a balance between performance-based and time-based awards that moderates the risk that may otherwise exist if equity awards were to vest based solely on achieving performance targets.

Based on the foregoing, the Compensation Committee believes that the Company utilizes compensation policies and programs such that there are no risks that are reasonably likely to have a material adverse impact on the Company.

Clawback Provisions

Under the Sarbanes-Oxley Act of 2002, incentive compensation received by our Chief Executive Officer and Chief Financial Officer may be subject to clawback in the event of a restatement of our financial statements. On July 31, 2023, the Board approved a written executive compensation clawback policy. The Board has adopted a compensation recovery policy, also known as a “clawback,” pursuant to which the Company may seek to recover from any current or former executive officer all cash and equity incentive-based compensation in the event of an accounting restatement resulting from the Company’s material non-compliance with financial reporting requirements under applicable securities laws. The amount of incentive-based compensation subject to such recovery would be the amount in excess of what the executive officer received over the amount the executive would have earned in accordance with the restatement as determined by the Compensation

Committee. The compensation recovery policy also contains provisions related to the forfeiture of stock options, restricted shares, RSUs and PSUs. Under these forfeiture provisions, the company may cancel such long-term incentive awards, in whole or in part, whether or not vested, for no consideration, for executives who engage in serious breaches of conduct, including violations of employment agreements, confidential or other proprietary matters, or otherwise act in competition with the Business of the company. We believe these provisions serve to ensure that executives act in the best interest of the Company and its shareholders.

In addition, each award granted pursuant to the 2021 Incentive Plan (including awards granted to our NEOs) is conditioned on repayment or forfeiture in accordance with applicable laws, our Company policies and any relevant provisions in the related award agreements. Further, under the terms of our NEOs employment agreements, any equity awards granted, any proceeds of any equity awards that previously have been sold, transferred or otherwise disposed of, and any annual incentive award will be subject to clawback by us, now or in the future, under the Dodd-Frank Act and the Sarbanes-Oxley Act, each as amended, and their rules, regulations and binding, published guidance.

Stock Ownership Guidelines for Executive Officers

We believe it is important for our executive officers to align their financial interests with those of our stockholders. Accordingly, effective April 27, 2022, our Board of Directors adopted a formal stock ownership policy that requires our CEO to achieve a stock ownership level equal to the value of common stock that is five times the value of his annual base salary within five years of the effective date of such stock ownership policy. The Compensation Committee also designated our other executive officers that are subject to Section 16 reporting obligations under the Exchange Act, to be subject to the stock ownership policy. The stock ownership level for our other NEOs and Section 16 officers is three times the value of their respective annual base salaries to be achieved within five years of the effective date of our stock ownership policy. Messrs. Craine and Sluiter have met the company’s share ownership guidelines. Messrs. Reinhart, Hodges and Rucker have not been in their position long enough to be required to meet the minimum stock ownership reaffirmed guidelines; however, all are on track to do so within the prescribed timeframe through expected grants.

Our non-employee directors are also subject to the stock ownership policy discussed above under “Stock Ownership Guidelines for Directors.”

Anti-Hedging and Pledging Policies

We have a policy prohibiting directors, executive officers and certain other designated employees from speculative trading in our securities, including hedging transactions, short selling, and trading in put options, call options, swaps or collars, or holding our securities in margin accounts. We also have a policy prohibiting directors, executive officers and certain other designated employees from pledging Gulfport securities. To our knowledge, all individuals follow these policies.

Termination and Change of Control Benefits

As noted above, certain of our NEOs are (or were formerly) party to an employment agreement with the Company which provides (or provided) for certain payments and benefits in the event of a termination of such NEO under specific circumstances. The NEOs’ employment agreements are designed to avoid distraction potentially detrimental to stockholder value upon a change in control and to enhance protection for the NEOs in connection with such events. These agreements (and the severance payments referenced below) are described in more detail under “NEO Employment Agreements and Termination and Change of Control Benefits.”

Perquisites and Other Personal Benefits

We provide certain of our NEOs with a limited number of perquisites or other personal benefits, primarily consisting of life insurance premiums and Company-sponsored sporting events tickets. The Company does not offer any excessive perquisites to executives that are not generally provided to other non-executives. We believe these limited benefits help provide a competitive compensation package. The value of these benefits is disclosed in the “Summary Compensation Table.”

The Company does not have any private or chartered aircraft arrangements. We restrict personal use of Company-owned or chartered aircraft by our executive officers and other employees, as well as members of our Board of Directors. Our aircraft use policy requires that any personal use of a chartered aircraft by any NEO be reported as a perquisite, based on the aggregate incremental value of such personal use. There was no business or personal use of Company-owned or chartered aircraft in 2023.

Accounting Implications of Executive Compensation Policy

We are required to recognize compensation expense of all stock-based awards pursuant to the provisions of FASB ASC Topic 718, “Compensation-Stock Compensation.” Under U.S. generally accepted accounting principles, or GAAP, only vested shares are included in basic shares outstanding. Also, under GAAP, non-vested shares are included in diluted shares outstanding when the effect is dilutive.

The Compensation Committee believes that linking a large portion of our executive officers’ compensation to both performance-based long-term equity incentive awards and performance-based bonus arrangements, with meaningful performance metrics, appropriately aligns our executives’ interests with those of our stockholders and are consistent with market practices. The Compensation Committee also believes that our current compensation policies and practices enhance retention of executive talent through multi-year vesting of stock awards and discourage unnecessary and excessive risk taking. The Compensation Committee further believes that our other compensation policies and practices, such as our policy prohibiting pledging and hedging of our stock by our executive officers and directors, as well as the lack of significant perquisites and absence of pension or supplemental retirement benefits (aside from those afforded under our broad-based 401(k) plan) for our executive officers are consistent with prudent compensation philosophy and the interests of our stockholders. The Compensation Committee will continue to consider the outcome of our stockholders’ future “Say-On-Pay” votes when making compensation decisions for our NEOs.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion with management, the Compensation Committee recommended that the Compensation Discussion and Analysis be included in this proxy statement.

Respectfully submitted by the Compensation Committee:

Jason Martinez

David Reganato

Mary Shafer-Malicki

David Wolf

Dated: April 5, 2024

Compensation Committee Interlocks and Insider Participation

None of Messrs. J. Martinez (Chair), Reganato, B. Martinez, Ms. Shafer-Malicki, or Mr. Wolf, representing all the directors who served on the Compensation Committee during the past fiscal year, is or has ever been an officer or employee of ours or has engaged in any related party transaction in which our Company was a participant. None of our executive officers during the past fiscal year serves, or has served during the past fiscal year, as a member of the Board of Directors or Compensation Committee of any other company that has one or more executive officers serving, or that has served during the past fiscal year, as a member of our Board of Directors or Compensation Committee.

The following table provides information concerning equity awards granted to our NEOs that were outstanding as of December 31, 2023.

(1)   Represents awards of time-based restricted stock units granted to certain of our NEOs under the 2021 Incentive Plan, each of which vest annually in three equal installments over the three-year period commencing as of the grant date, subject to continued service through each applicable vesting date (except for Mr. Cutt’s July 21, 2021 grant, whose time-based restricted stock units vest bi-annually in eight equal installments over the four-year period commencing as of the grant date, subject to continued service through each applicable vesting date).

(2)   The market value of restricted stock units that have not vested is based on the closing price of $133.20 per share of our common stock on the NYSE on December 29, 2023, the last trading day of 2023.

(3)   Represents awards of performance-based restricted stock units granted to certain of our NEOs under the 2021 Incentive Plan, each of which vest based on the Company’s achievement of certain absolute and relative TSR metrics and the applicable NEOs’ continued service over a three-year performance period (except for Mr. Cutt’s July 21, 2021 grant, whose service-vesting date is May 17, 2022). Such performance-based restricted stock units are shown above at the target level.

The following table provides the number of shares acquired upon vesting of restricted stock awards for certain of our NEOs.

(1)   The amounts reflected in this column represent the market value of the underlying Common Shares as of the vesting date. If the vesting date was not a trading day, the value is based on the closing price per share of our common stock on the last trading day prior to the vesting date.

(2)   Reflects the accelerated vesting of all outstanding time-vesting restricted stock units at his termination date of May 3, 2023. See ‘Buese Termination’ paragraph in ‘Termination, Resignation or Change of Control’ section below for further details.

We maintain a retirement savings plan, the 401(k) Plan, for the benefit of our eligible employees who have attained the age of 18. Currently, employees may elect to defer their compensation up to the statutorily prescribed limit. During the plan year, we make a safe-harbor contribution based on a formula that provides a Company match of 100% of the first 6% of eligible compensation. We also may make an additional, discretionary contribution based on each eligible employee’s eligible annual compensation for the prior calendar year. All contributions made by us on behalf of an employee are 100% vested when contributed. The 401(k) Plan is intended to qualify under Sections 401(a) and 501(a) of the Code. As such, contributions to the 401(k) Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, and all contributions are deductible by us when made.

On May 17, 2021, our Board adopted the Gulfport Energy Corporation 2021 Stock Incentive Plan (the “2021 Incentive Plan”) and authorized and reserved 2,828,123 shares of Gulfport’s common stock for issuance to Gulfport’s employees (including our NEOs), consultants and non-employee directors pursuant to equity incentive awards to be granted under the 2021 Incentive Plan, which may be in the form of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights and performance awards or any combination of the foregoing.

The plan administrator may at any time amend or terminate the Annual Incentive Plan in whole or in part.

Our Board of Directors has delegated its authority to administer the Annual Incentive Plan to the Compensation Committee, to whom we refer as the plan administrator. The plan administrator has the authority to administer the Annual Incentive Plan and to exercise all the powers and authorities either specifically granted to it under the Annual Incentive Plan or necessary or advisable in the administration of the Annual Incentive Plan, including (but not limited to) the following:

•        to interpret the Annual Incentive Plan and any award;

•        to prescribe rules relating to the Annual Incentive Plan;

•        to determine the persons to receive awards;

•        to determine the terms, conditions, restrictions and performance criteria, including performance factors and performance targets, relating to any award;

•        to accelerate an award that is designed not to be deferred compensation subject to Code Section 409A (after the attainment of the applicable performance target or targets);

•        to adjust performance targets in recognition of specified events such as unusual or non-recurring events affecting us or our financial statements, including certain asset dispositions, cessation of operations resulting from a natural disaster, or in response to changes in applicable laws, regulations, or accounting principles as specified in the Annual Incentive Plan or in the performance targets established for any performance period;

•        to waive restrictive conditions for an award (but not performance targets); and

•        to make any other determinations that may be necessary or advisable for administration of the Annual Incentive Plan.

The following table sets forth, as of December 31, 2023, certain information with respect to all compensation plans under which equity securities are authorized for issuance.

(1)   Refers to the 2021 Stock Incentive Plan.

(2)   Includes an aggregate of 449,180 unvested restricted stock units and shares of unvested restricted stock granted under the 2021 Stock Incentive Plan.

(3)   No options were outstanding as of December 31, 2023, and neither restricted stock units nor shares of restricted common stock have an exercise price.

Former Chief Executive Officer Offer Letter and Employment Agreement

On April 29, 2022, we entered into an employment agreement with Mr. Cutt to serve as our Chief Executive Officer and Executive Chair of the Board of Directors.

Pursuant to the employment agreement, the term of Mr. Cutt’s service as Chief Executive Officer shall continue until such time as either Mr. Cutt or the Company gives notice of intent to terminate. Mr. Cutt will continue to serve as Board Chair following the termination of his employment as Chief Executive Officer (subject to the Board’s ability to remove him at any time). The employment agreement also provides for, among other things, (i) an annual base salary of $785,000, (ii) eligibility to receive an annual bonus with a target bonus opportunity of 120% of base salary; (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans; and (iv) benefits that are customarily provided to similarly situated executives of the Company.

Mr. Cutt’s employment agreement also contains a one-year post-employment non-solicitation clause and standard confidentiality, trade secrets and cooperation provisions.

On January 24, 2023, we entered into a Transition and Services Agreement (“TSA”) with Mr. Cutt where he transitioned employment from Chief Executive Officer to Executive Chair of the Board. The transition period was from January 24, 2023, through March 1, 2023 (“Service Period”), during which time Mr. Cutt was employed by the Company as Executive Chair of the Board.

Pursuant to the terms of the PSA, Mr. Cutt received the same base salary he had as Chief Executive Officer, his annual bonus for fiscal year 2022 and a pro-rated portion of his target annual bonus for fiscal year 2023.

The TSA clarifies that Mr. Cutt’s outstanding equity awards granted during his tenure as Chief Executive Officer shall continue to be eligible to vest following the end of his service as Chief Executive Officer or Executive Chair of the Board in accordance with the vesting provisions contained in the applicable RSU Award Agreements and the PSU Award Agreements as long as Mr. Cutt continues to provide services to the Company as a member of the Board.

Former Chief Financial Officer Employment Agreement

On May 17, 2021, we entered into an employment agreement with Mr. Buese to serve as our Executive Vice President and Chief Financial Officer.

Pursuant to the employment agreement, the term of Mr. Buese’s service as Executive Vice President and Chief Financial Officer shall continue until such time as either Mr. Buese or the Company gives notice of intent to terminate. The employment agreement also provides for, among other things, (i) an annual base salary of $450,000 (increased to $470,000 in 2022), (ii) eligibility to

receive an annual bonus with a target bonus opportunity of 90% of base salary; (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans; and (iv) benefits that are customarily provided to similarly situated executives of the Company.

Mr. Buese’s employment agreement also contains a one-year post-employment non-solicitation clause and standard confidentiality, trade secrets and cooperation provisions.

On May 3, 2023, pursuant to the terms of Mr. Buese’s employment agreement, Mr. Buese received termination compensation consisting of the sum of his base salary, his target annual bonus, and the pro-rata portion of his annual bonus. Additionally, Mr. Buese received payment of any paid time off accrued but unused, payment equal to monthly COBRA premium for twelve months, an acceleration of all unvested RSUs and pro-rata vesting of PSUs at the end of the respective performance periods.

NEO Employment Agreements and Termination and Change of Control Benefits

Our NEOs are parties to an employment agreement with the Company.

Pursuant to the employment agreements with Messrs. Reinhart, Hodges, Craine, Rucker, and Sluiter (collectively, the “Employment Agreements”, and such individuals, the “Covered NEOs”), each current employment agreement provides for an initial term that extends through December 31, 2026; provided that the term will automatically renew for successive one-year terms unless the Company or the Covered NEO gives written notice not to renew at least 90 days before the end of the initial term or any renewal term. If a “change of control” (as described in the applicable Employment Agreement) occurs during the term thereof, the term will be extended to the later of the original expiration date of the term or the date that is 24 months after the effective date of the change of control.

The Employment Agreements provide each Covered NEO with, among other things: (i) an annual base salary, (ii) eligibility to earn a target annual bonus under the Company’s Annual Incentive Plan of base salary, (iii) eligibility for annual grants of equity awards as determined in the sole discretion of the Compensation Committee pursuant to the Company’s equity compensation plans, and (iv) benefits that are customarily provided to similarly situated executives of the Company.

In addition, our Covered NEOs will be entitled to receive (or have already received) specified payments and benefits upon certain termination events pursuant to the Employment Agreements, including termination following a change of control. The Compensation Committee believes that these provisions encourage our Covered NEOs to remain in our employment, as applicable, in the event of a change of control of the Company and during circumstances which indicate that a change of control might occur. The Compensation Committee believes termination and change of control benefits are important in maintaining strong leadership and in encouraging retention in these situations and encourages our Covered NEOs to act in the best interests of stockholders without distraction based on uncertainty regarding their employment status, as applicable. Under the Employment Agreements, if a Covered NEO’s employment is terminated without “cause” by the Company or by the applicable Covered NEO for “good reason” during such time that is not within the 24-month period following a “change of control” (as such terms are defined in the Employment Agreements), such Covered NEO will be entitled to severance compensation equal to:

•        100% of annual base salary and target annual bonus;

•        pro-rata target annual bonus;

•        pro-rated vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “RSU and PSU Grant Agreements” for terms applicable to equity awards; and

•        a lump sum payment equal to the Covered NEO’s monthly COBRA premium for a 12-month period.

If, however, such Covered NEO’s employment is terminated without cause by the Company or by the Covered NEO for good reason, in each case, within 24 months following a change of control, such Covered NEO will instead be entitled to severance compensation equal to:

•        200% of sum of annual base salary plus target annual bonus (300% for Mr. Reinhart);

•        pro-rated target annual bonus;

•        immediate vesting of the Covered NEO’s unvested equity awards (with performance award vesting based on performance through the termination date); however, see “RSU and PSU Grant Agreements” for terms applicable to equity awards; and

•        a lump sum payment equal to the Covered NEO’s monthly COBRA premium for an 18-month period.

Under the NEO Employment Agreements:

“Good reason” is generally defined as (i) the elimination of the Covered NEO’s position, a material reduction in the duties and/or reassignment of the Covered NEO to a new position of materially less authority; (ii) a material reduction in the Covered NEO’s base salary, in either case, subject to a cure period of 30 days; (iii) the relocation of the NEO’s principal place of employment by more than 50 miles.

“Cause” is generally defined as (i) the Covered NEO’s willful and continued failure to perform substantially such Covered NEO’s duties with the Company (other than any failure resulting from incapacity due to physical or mental illness) or (ii) the Covered NEO’s willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company.

Severance benefits payable under the Employment Agreements are generally conditioned on timely execution of a waiver and release of claims.

Each Employment Agreement also contains a one-year post-employment non-solicitation clause and standard confidentiality, trade secrets and cooperation provisions.

RSU and PSU Grant Agreements:

Mr. Reinhart on January 24, 2023, Messrs. Craine, Rucker, and Sluiter on March 3, 2023, and Mr. Hodges on April 3, 2023, each received an award of time-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) under the 2021 Stock Incentive Plan.

Pursuant to the applicable award agreements, upon the applicable NEO’s termination of employment or service for cause, any unvested RSUs or PSUs will be immediately forfeited for no consideration.

Upon a termination of the applicable NEO’s employment or service due to death or “disability”, by the Company without “cause” (each as defined in the 2021 Incentive Plan) or due to a resignation by the applicable NEO for “good reason” (as defined in the applicable award agreement), (i) any unvested RSUs will accelerate and fully vest, and (ii) a prorated portion of the PSUs will vest based on the actual achievement of the performance conditions to be determined at the expiration of the performance period, and any remaining unvested PSUs will be forfeited (provided, that if the applicable NEO is terminated by the Company without cause or resigns for good reason within the first 18 months of the performance period, the Compensation Committee will have sole discretion whether the PSUs will accelerate and vest in such manner.

Upon the occurrence of a “change in control” (as defined in the 2021 Incentive Plan), to the extent the RSUs or PSUs, as applicable, are not assumed by the surviving entity, (i) any unvested RSUs will accelerate and fully vest, and (ii) the applicable NEO will become vested in 100% of the target award of PSUs or, if greater, the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as if the change in control was the last day of the performance period (except that the TSR for the Company and each of the peer companies will be determined using the closing price as of the closing date of the change in control compared to the reference value).

Upon the occurrence of a change in control, to the extent the RSUs or PSUs, as applicable, are assumed by the surviving entity, (i) upon the termination of the applicable NEO’s employment or service due to death or disability, by the Company without cause or by the applicable NEO for good reason within the 24 month period following such change in control, any unvested RSUs will accelerate and fully vest, and (ii) the PSUs will be converted, as of the date of such change in control, into time-based restricted stock units (the “Converted RSUs”), subject to the applicable NEO’s continuous employment or service through the date of such change in control, with the number of PSUs to be converted equal to 100% of the target award of PSUs or, if greater, the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as if the change in control was the last day of the performance period (except that the TSR for the Company and each of the peer companies will be determined using the closing price as of the closing date of the change in control compared to the reference value), and 100% of the Converted RSUs will vest, if at all, on the last day of the performance period, subject to the applicable

NEO’s continuous employment or service through such date; provided, that if the applicable NEO’s employment or service is terminated due to death or disability, by the Company without cause or by the applicable for good reason following such change in control, 100% of the Converted RSUs will vest as of the date of such termination.

In the event of (i) a change in the composition of the Board such that, for a period of 30 days, the majority of the members of the Board are no longer considered “independent” (as described in the applicable award agreement) or (ii) any stockholder becomes the beneficial owner of more than 75% of the total combined voting power of all classes of stock of the Company (each such event, a “Special CiC Event”), (x) any unvested RSUs will accelerate and fully vest, and (y) the applicable NEO will become vested in 100% of the target award of PSUs or, if greater the percentage of the target award of PSUs earned based on the actual achievement of the performance conditions to be determined as of the Special CiC Event (determined as if the Special CiC Event was the last day of the performance period).

The following tables provide information regarding potential payments to each of our NEOs as of December 31, 2023, in connection with certain termination events, including a termination related to a change of control of the Company.

Pursuant to Item 402(u) of Regulation S-K, we are disclosing the pay ratio and supporting information comparing the median of the annual total compensation of our employees (including full-time, part-time, seasonal and temporary employees) other than Mr. Reinhart, our President and Chief Executive Officer and Board Director, as of December 31, 2023 (the date selected to identify the ‘median employee’, as further described below), and the annual total annualized compensation of Mr. Reinhart. The pay ratio is calculated in a manner consistent with Item 402(u) of Regulation S-K.

For the year ended December 31, 2023, our last completed fiscal year:

•        The annual total compensation of our median employee was approximately $112,932.

•        The total annualized compensation of Mr. Reinhart was approximately $5,601,076.

Based on this information, for 2023 the ratio of the annual total compensation of Mr. Reinhart to the median of the annual total compensation of all other employees was approximately 50:1.

We selected December 31, 2023, as the date upon which we identified the median employee. We reviewed the Medicare Taxable Earnings as reported on IRS Form W-2 (Box 5) for 2023 for all individuals employed by us on December 31, 2023 (other than Mr. Reinhart) and identified the median employee based on Medicare Taxable Earnings.

Once we identified our median employee, we calculated that employee’s annual total compensation for 2023 in the same manner that we determined the total compensation of our named executive officers for purposes of the Summary Compensation Table set forth above. This resulted in an annual total compensation of $112,932 for the identified employee for the year ended December 31, 2023. The total compensation for Mr. Reinhart was calculated based on the values included in the Summary Compensation Table set forth above, and was then annualized for 2023, by assuming Mr. Reinhart earned a full year of base salary ($785,000) and was paid a STI payment at 165% of target achievement ($1,554,300). Mr. Reinhart participates in the Company’s benefit plans, including the 401(k) plan, has imputed income on Company-paid life insurance provided to all employees, and income for non-cash fringe benefits for Company-sponsored sporting event tickets. We made no material assumptions, adjustments, or estimates to identify the median employee or to determine total compensation, and we did not annualize the compensation for any employees that were not employed by us the entire year (other than for Mr. Reinhart, as described above).

We believe that the pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. In addition, because the Securities and Exchange Commission rules for identifying the median employee allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to our pay ratio, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.