Incentive Plan to Align with Shareholder Interests
23 October 2024
Pantheon Resources plc
Pantheon Announces Revised Incentive Plan to More Strongly Align With Shareholder Interests
Pantheon Resources plc (AIM: PANR) ("Pantheon" or "the Company"), developing the Kodiak and Ahpun oil fields in close proximity to pipeline and transportation infrastructure on Alaska's North Slope, today announced the details of the replacement Employee Stock Ownership Plan ("ESOP") having retired all earlier plans, as previously indicated. The new ESOP consists of a share award scheme (the "Share Award Scheme") for all employees and a long-term incentive plan ("LTIP") for Executive Directors and certain other officers of the Company.
ESOP Highlights:
· Under the Share Award Scheme, all employees of the Company, including Executive Directors, will be eligible to receive share awards (via Restricted Stock Units or "RSU's") vesting over three years for either 25% or 33% of their total base compensation.
· The LTIP strengthens alignment with shareholders by ensuring that the initial share option awards are subject to challenging performance conditions (noted below) and have exercise prices of nearly 4x Pantheon's 22nd October 2024 closing share price.
New Incentive Plan Background
The new incentive arrangements have been designed to incentivize, retain and attract talent, simplify historic schemes, reduce potential future dilution and align management and all staff with shareholders.
Historically, Pantheon's long term incentive programme comprised two components; (1) share options, and (2) a milestone based plan whereby benefits accrued upon the booking of reserves, put in place when Pantheon's core focus was in East Texas. No benefit was ever paid from the second plan and, in late 2023 Pantheon announced the cancellation of this reserves-based incentive plan.
The Company has now retired its remaining share option based incentive plan (originally adopted in 2009 and amended in 2014) with the ESOP which, where practicable, looks to follow the principles of the Main Market of the London Stock Exchange. No share options had been awarded to employees since January 2022. The new ESOP reduces the total award limit to 10% of the current total issued share capital of the Company over a 10-year period (down from 15% under the 2009 plan), with a maximum of 5% of this limit awarded as discretionary awards to individuals, rather than as part of a common award scheme.
While the ESOP has been under consideration over the past year, with delivery of Independent Expert Reports covering all the Company's discovered resources, signing of the Gas Sales Precedent Agreement with the Alaska Gasline Development Corporation and completion of a fundraise for the planned Megrez well, the Company is now in a window ahead of spudding the Megrez well to make the initial grants under the new plan:
Pantheon's Non-Executive Directors ("NEDs") do not participate in the ESOP. However, each of them is committed to investing personally in the Company.
While the ESOP is flexible and permits a range of awards, the Remuneration Committee has adopted an award framework split into two elements:
Share Award Scheme Framework
The Company has adopted a revised remuneration structure available to all staff, consisting of base pay and a significant proportion (with a minimum of 25% rising to 33% for senior employees) of overall remuneration paid in contingent share awards or RSUs. Contingent share awards are share grants with deferred vesting and potentially other conditions to issue. RSUs are non-tradable securities with deferred vesting, commonly used in the United States for employee incentive and retention by providing equity exposure that is relinquished upon resignation, convertible into ordinary shares of the Company ("Ordinary Shares") on a one for one basis at vesting. Contingent share awards and RSUs can have slightly different tax treatment depending on the holders residency. However, they are economically equivalent (provided they have similar vesting and other conditions), and are referred to throughout collectively as "RSUs".
The Company is today accordingly issuing in aggregate 9,087,584 RSUs across all staff members (excluding NEDs). The number of RSUs in this initial grant has been calculated using a price of $0.2206, being the 17p price for the July 2024 placement, using current exchange rates, and represents a small premium to the closing share price on 22nd October 2024). Under the Share Award Scheme, the initial RSUs, granted to all staff, vest over three years beginning in 2025. Subsequent awards will generally be issued at the market price and vest over three years beginning on the first anniversary of a grant. Details of grants to Persons Discharging Managerial Responsibilities ("PDMRs") are disclosed below.
The Company anticipates annual grants under the Share Award Scheme following the Annual General Meeting ("AGM") each year on a consistent basis, with new employees typically becoming eligible for such grants 12 months from their joining date unless earlier eligibility is expressly agreed by the Board.
LTIP
The Remuneration Committee has also adopted a strategy for discretionary incentives that involves issuing out-of-the-money options to senior management, which are subject to milestone- and/or time-based vesting conditions. The exercise price of the initial option grant, the first for more than two and a half years, is $0.835 (c. 64p at current exchange rates), representing a 290% premium to the share price of 16.56p (as at close on 22nd October 2024). The Company is today making aggregate awards of options over 9,500,000 ordinary shares in the Company ("Ordinary Shares") with the grants to PDMRs disclosed below.
Accordingly, the total initial awards issued under the ESOP (being the Share Award Scheme and LTIP) aggregate to 18,587,584 shares or 1.64% of the current issued share capital. This brings the total awards under the ESOP plan combined with all options granted in the past 10 years to 6.1%, of the newly reduced headroom of 10%. Together, these measures serve to increase alignment of employee incentives with value creation for shareholders and to reduce employee churn.
Awards to PDMRs
The initial awards to PDMRs of the Company under the new ESOP are:
Grantee | Number of RSUs Awarded | Number of LTIP Options Awarded | LTIP Exercise Price |
John Cheatham, Chief Executive Officer | 969,818 | 1,500,000 | $0.835 |
Robert Rosenthal, Technical Director | 953,752 | 1,500,000 | $0.835 |
David Hobbs, Executive Chairman | 543,039 | 5,000,000 | $0.835 |
Philip Patman Jr, Chief Financial Officer | 815,986 | Nil | - |
The terms of the RSUs are as described above.
Under the LTIP, in each case, 500,000 options are subject to continued employment, vesting 20% annually, commencing on December 31, 2024. The remaining options are subject to challenging performance targets with differentiated criteria applying to different roles. In all cases, vesting occurs over five years (with no vesting until performance condition is met and catch up thereafter) subject to continued employment and with Board discretion to extend deadlines by up to six months, unless otherwise specified. The relevant performance criteria are:
· U.S. Listing Award: Securing a listing on a senior U.S. exchange by December 31, 2025. If the Board determines that a U.S. listing is not desirable or practicable (other than due to the company failing to prosecute the listing plan effectively), the Board can delay the measuring date by up to one year instead of making such a determination. If the Board makes such a determination, vesting is pushed out by one year.
· Non-Dilutive Financing Award: This award vests if non-dilutive financing is committed - with what the Board believes are reasonably achievable conditions - for an amount of at least $100 million by December 31, 2027.
· Final Investment Decision ("FID") Award: This award vests if the FID for the Ahpun project is taken by December 31, 2027.
· FID Award with Backup: This award vests if the FID for the Ahpun project is taken by December 31, 2027 or proven and probable ("2P") reserves of more than 2 billion barrels are booked at Kodiak by December 31, 2028.
The resulting PDMR interests are:
Name | Ordinary Shares owned | Ordinary Shares owned as a % of current issued share capital | RSUs subject to vesting | Total Share Options (vested and unvested) | RSUs and Share Options as a % of Current Issues Share Capital | Avg Ex Price of Share Options * |
John Cheatham, Chief Executive Officer | 4,529,463 | 0.40% | 969,818 | 8,475,000 | 0.84% | 51p |
Robert Rosenthal, Technical Director | 2,073,122 | 0.18% | 953,752 | 8,475,000 | 0.83% | 51p |
Philip Patman Jr, Chief Financial Officer | 114,184 | 0.01% | 815,986 | 0.07% | ||
David Hobbs, Executive Chairman | 4,040,238 | 0.36% | 543,039 | 5,000,000 | 0.49% | 64p |
* Calculated as the weighted average price using £1.00 = $1.30 for the current grants
Jeremy Brest, Chairman of Pantheon' Remuneration Committee, commented: "This new incentive program and award framework provides significant incentive alignment for every employee - from the most junior to the CEO - with a significant portion of their overall pay delivered in shares. Moreover, the initial set of option awards further cements this alignment by setting ambitious targets for senior management. These options only have value if the share price more than triples from today's and if our ambitious performance targets are achieved."
David Hobbs, Pantheon Executive Chairman, commented: "Jeremy and the Remuneration Committee have followed through on the Board's commitment to recast executive compensation such that it is aligned with shareholders' interests to reduce the risk of the plan paying out without investors also achieving significant realisable gains."
About Pantheon Resources
Pantheon Resources plc is an AIM listed Oil & Gas company focused on developing its 100% owned Ahpun and Kodiak fields located on State of Alaska land on the North Slope, onshore USA. Independently certified best estimate contingent recoverable resources attributable to these projects currently total c. 1.6 billion barrels of ANS crude and 6.6 Tcf of associated natural gas. The Company owns 100% working interest in c. 259,000 acres.
Pantheon's stated objective is to demonstrate sustainable market recognition of a value of $5-$10/bbl of recoverable resources by end 2028. This is based on bringing the Ahpun field forward to FID and producing into the TAPS main oil line (ANS crude) by the end of 2028. The Gas Sales Precedent Agreement signed with AGDC provides the potential for Pantheon's natural gas to be produced into the proposed 807mile pipeline from the North Slope to Southcentral Alaska during 2029. Once the Company achieves financial self-sufficiency, it will apply the resultant cashflows to support the FID on the Kodiak field planned, subject to regulatory approvals, targeted by the end of 2028 or early 2029.
A major differentiator to other ANS projects is the close proximity to existing roads and pipelines which offers a significant competitive advantage to Pantheon, allowing for shorter development timeframes, materially lower infrastructure costs and the ability to support the development with a significantly lower pre-cashflow funding requirement than is typical in Alaska. Furthermore, the low CO2 content of the associated gas allows export into the planned natural gas pipeline from the North Slope to Southcentral Alaska without significant pre-treatment.
The Company's project portfolio has been endorsed by world renowned experts. Netherland, Sewell & Associates estimate a 2C contingent recoverable resource in the Kodiak project that total 1,208 mmbbl of ANS crude and 5,396 bcf of natural gas. Cawley Gillespie & Associates estimate 2C contingent recoverable resources for Ahpun's western topset horizons at 282 mmbbl of ANS crude and 803 bcf of natural gas. Lee Keeling & Associates estimated possible reserves and 2C contingent recoverable resources totalling 79 mmbbl of ANS crude and 424 bcf natural gas.
Further information, please contact:
Corporate Contact
Pantheon Resources plc
+44 20 7484 5361
[email protected]
Nominated Adviser and Broker
Canaccord Genuity Limited
Henry Fitzgerald-O'Connor, James Asensio, Charlie Hammond
+44 20 7523 8000
Public Relations Contact
BlytheRay
Tim Blythe, Megan Ray, Matthew Bowld
+44 20 7138 3204
Investor Relations Contact
MZ Group
Lucas Zimmerman, Ian Scargill
+1 949 259 4987
[email protected]
NOTIFICATION AND PUBLIC DISCLOSURE OF TRANSACTIONS BY PERSONS DISCHARGING MANAGERIAL RESPONSIBILITIES AND PERSONS CLOSELY ASSOCIATED WITH THEM
1 | Details of the person discharging managerial responsibilities / person closely associated
| |
a) | Name | a. David Hobbs b. Jay Cheatham c. Robert Rosenthal
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2 | Reason for the notification
| |
a) | Position/status | a. Executive Chairman b. Chief Executive Officer c. Technical Director
|
b) | Initial notification/Amendment | Initial Notification
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3 | Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor | |
a) | Name | Pantheon Resources plc
|
b) | LEI | 213800SWHY5DNQS64J23
|
4 | Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
| |
a) | Description of the financial instrument, type of instrument | Options over ordinary shares
ISIN: GB00B125SX82
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b) | Nature of the transaction | Grant of Options over Ordinary Shares
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c) | Price(s) and volumes(s) | a. 5,000,000 options to acquire shares at an exercise price of $0.835 per share b. 1,500,000 options to acquire shares at an exercise price of $0.835 per share c. 1,500,000 options to acquire shares at an exercise price of $0.835 per share
|
d) | Aggregated information - Aggregated volume - Price
| N/A (single transaction)
|
e) | Date of the transaction | 22 October, 2024 |
f) | Place of the transaction | Outside of a trading venue
|
1 | Details of the person discharging managerial responsibilities / person closely associated
| |
a) | Name | a. David Hobbs b. Jay Cheatham c. Robert Rosenthal d. Philip Patman, Jr
|
2 | Reason for the notification
| |
a) | Position/status | a. Executive Chairman b. Chief Executive Officer c. Technical Director d. Chief Financial Officer
|
b) | Initial notification/Amendment | Initial Notification
|
3 | Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor | |
a) | Name | Pantheon Resources plc
|
b) | LEI | 213800SWHY5DNQS64J23
|
4 | Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
| |
a) | Description of the financial instrument, type of instrument | Restricted Stock Units
|
b) | Nature of the transaction | Initial Grant
|
c) | Price(s) and volumes(s) | a. Restricted Stock Units to acquire 543,039 ordinary fully paid shares for nil consideration. b. Restricted Stock Units to acquire 969,818 ordinary fully paid shares for nil consideration. c. Restricted Stock Units to acquire 953,752 ordinary fully paid shares for nil consideration. d. Restricted Stock Units to acquire 815,986 ordinary fully paid shares for nil consideration.
|
d) | Aggregated information - Aggregated volume - Price
| N/A (single transaction)
|
e) | Date of the transaction | 22 October 2024 |
f) | Place of the transaction | Outside of a trading venue
|
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