Business Context and Reporting Period
This Form 8-K Current Report was filed by California Resources Corporation on March 22, 2021. The filing discloses the appointment of Mark A. McFarland as President and Chief Executive Officer, removing his previous interim title. Mr. McFarland had previously served as Interim CEO since December 31, 2020, following the Company's emergence from bankruptcy in October 2020.
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on executive compensation and corporate governance changes.
Material Changes
The primary material change is the formalization of Mark A. McFarland's role as permanent President and CEO. This transition is accompanied by a new two-year Employment Agreement effective March 22, 2021, which establishes specific compensation terms and severance provisions not previously in place for his interim tenure.
Guidance, Outlook, and Compensation Details
The filing details the following compensation structure for Mr. McFarland:
- Base Salary: $850,000 annualized.
- Annual Cash Bonus: Target value of 120% of base salary (subject to a 2021 adjustment for interim fees).
- Initial Long-Term Incentive Awards:
- Performance Stock Units (PSUs): Grant date target value of $7,993,870.
- Restricted Stock Units (RSUs): Grant date value of $6,291,692.
- Future Annual Awards (Commencing 2023): Target grant date value of not less than 588% of base salary, comprised of 70% PSUs and 30% RSUs.
- Severance Provisions: In the event of termination without Cause or resignation for Good Reason prior to term expiration, Mr. McFarland is eligible for 24 months of base salary, one to two times the target annual bonus (depending on Change in Control status), and full vesting of initial awards.
PSU vesting is tied to the Company's stock price performance over a three-year period, with thresholds ranging from 115% to 174.9% of the closing price preceding the grant date.
Investor Verification Checklist
- Verify the specific vesting schedule and performance thresholds for the $7,993,870 in Initial PSUs.
- Review the full text of the Employment Agreement (Exhibit 10.1) for definitions of "Cause," "Good Reason," and "Change in Control."
- Confirm the calculation of the 2021 bonus adjustment regarding interim fees earned between January 1 and March 21, 2021.
- Monitor future filings for the Company's stock price performance relative to the PSU vesting thresholds.