In early March, EQT hired a new Chief Operating Officer–Gary E. Gould, hired away from Harold Hamm at Continental Resources where he oversaw production and resource development (see EQT Hires New COO for $1.1M – Tells Him to Cut Costs). Gould is being paid $550,000 a year with a $500,000 signing bonus ($1.1 million total), for his first year. Turns out that doesn’t come close to the money he’ll make if he sticks around a few years.
Yesterday EQT announced Gould will make some “inducement awards” if he sticks around. How much? (1) 190,810 shares of stock that will gradually vest over the next three years; (2) 30,580 shares of stock which will vest at the end of three years; (3) 61,160 “performance share units” which vest over time, part of EQT’s 2019 Incentive Performance Share Unit Program; and (4) stock options to purchase 110,100 shares of EQT stock at an exercise price of $20.44, which will vest at the end of three years.
It’s hard to accurately calculate how much that package is worth, because we don’t know the value of the performance share units nor anything about that program. But let’s look at just the first two items in the list, 190,810 shares of stock and 30,580 shares (total of 221,390 shares of stock). At yesterday’s closing share price of $21.05, Gould’s shares of stock would be worth $4.66 million today. The company’s stock price will almost certainly go up over time.
The performance share units are likely worth at least another $500,000. And who knows where the share price will be in three years when Gould has the right to buy shares at $20.44. If the share price three years from now is the same as today, $21.05, and he exercises his right to buy shares at $20.44, and if he turned around and sold them, he’d pocket another $67K and change. If EQT shares were to double, to say $40/share, he’d make $2.15 million. That’s why it’s called an incentive or “inducement.” If Gould performs well, the company performs well, and the stock price goes up.
EQT Corporation (NYSE: EQT) today announced, in accordance with New York Stock Exchange Rules, that it has granted to Gary E. Gould, its Executive Vice President and Chief Operating Officer, on April 22, 2019, employment inducement awards consisting of the following: 190,810 shares of time-based restricted stock, which will vest ratably over three years, subject to Mr. Gould’s continued service; 30,580 shares of time-based restricted stock, which will vest at the end of three years, subject to Mr. Gould’s continued service; 61,160 performance share units, which are subject to the vesting and performance terms of the company’s 2019 Incentive Performance Share Unit Program; and stock options to purchase 110,100 shares of stock at an exercise price of $20.44, which will vest at the end of three years, subject to Mr. Gould’s continued service. These awards were approved by the company’s Management Development and Compensation Committee without shareholder approval as “employment inducement awards” under the New York Stock Exchange rules. These awards were granted to Mr. Gould pursuant to the terms of his offer letter, which was previously disclosed by the company on a Form 8-K filed with the SEC on March 7, 2019.*
On the other hand, Toby and Derek Rice have their sites set on cleaning house at EQT. You can bank on the fact Gould won’t have a job come July if the Rice brothers get their way and replace most of the board of directors. (We wonder what happens to Gould’s incentives if he gets canned by the Rice boys?) The Rice brothers intend to sweep out top management and replace everyone currently in senior positions. Stay tuned for that drama.
*EQT Corporation (Apr 22, 2019) – EQT Corporation Announces Grant of Inducement Awards to Executive Vice President and Chief Operating Officer
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