Governance

At Callon, we are committed to high ethical standards and effective and sustainable corporate governance. We believe this commitment promotes the long-term interests of our shareholders, helps build public trust in our Company and strengthens Board and management accountability. We continually assess our governance principles to ensure that we are operating our business responsibly, ethically and in a manner aligned with the interests of our shareholders.

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Callon Petroleum

Integrity

We always strive to do the right thing and pride ourselves on being a preferred partner. We are consistently open, honest, ethical and genuine. We do what we say and are accountable for our actions.

Our strong commitment to ethics is described in our Code of Business Conduct and Ethics. At Callon, we place great importance on the trust our stakeholders place in us, and we expect our team to operate in accordance with the highest ethical standards and relevant laws.

The Code of Business Conduct establishes our expectations for all Callon representatives including avoiding conflicts of interest, prohibiting insider trading and political contributions, proper use of company assets and recording of company transactions, and promoting equal employment opportunities and anti-harassment in the workplace. We provide recurring training to help employees understand and comply with the Code, and all employees must provide an annual certification of their understanding of and compliance with the Code.

It is important to us that our employees and others working on Callon’s behalf have multiple outlets to ask questions or raise ethical concerns. In addition to contacting internal organizational representatives, Callon team members may anonymously report issues or concerns via a confidential, third-party EthicsPoint website or by calling the Callon Helpline at (844) 471-7637. As described in the Code, we will not tolerate retaliation for good faith reporting of suspected violations of the Code.

Our Board is responsible for directing our business strategy, overseeing our governance policies and culture and promoting the long-term interests of the Company. The Board believes that sound corporate governance policies and practices provide an important framework for fulfilling our duties to shareholders. The framework for our corporate governance can be found in our governance documents, which include:

In keeping with sound corporate governance practices, each of these documents is reviewed annually and is maintained on our website at the links above or by going to About Callon – Governance.

Governance Highlights

  • Seven out of eight directors are independent.
  • One director is female.
  • All committees are composed entirely of independent directors.
  • An independent, non-executive director serves as Chairman of the Board.
  • We conduct regular executive sessions of independent directors.
  • Board and committee evaluations are conducted annually.
  • We have an “overboarding” policy, a majority vote standard for uncontested elections, and stringent insider trading, anti-hedging and anti-pledging policies.
  • Our board oversees strategic planning, risk oversight, ESG practices and succession planning.
  • We do not have a poison pill (shareholder rights plan).
  • The Compensation Committee has engaged an independent executive compensation consultant.
  • We have adopted annual Say-On-Pay voting and meaningful officer and director stock ownership guidelines.

Callon Board

Board Composition

Seeking the best combination of experience and diverse thinking.

We value diversity of thought and experience in the board room to enhance the overall strategic and oversight functions of Callon's Board. Our goal is to assemble a Board that brings a variety of perspectives and skills and who can challenge each other in the best interests of shareholders. Over time, the Board refreshes its membership to achieve the appropriate balance between maintaining longer-term directors with deep knowledge of the Company and adding directors who bring a diversity of perspectives and experience. The table to the left provides a summary of the experience and skills of the current members of Callon's Board, and full biographies of our directors are available here.

Directors will have tenures of five or fewer years
7/8 Directors will be independent

Aligning the interests of our executives and shareholders.

Our compensation program reflects a pay-for-performance philosophy that is designed to align the interests of our executives with those of our shareholders. Our program includes competitive base salary, an annual cash bonus incentive aligned with annual performance targets, and long-term incentive awards, 60% of which are based on relative total shareholder return over a three-year period. For more information about our compensation programs, see our most recent proxy statement (link to SEC filings).

Key governance attributes of our compensation programs:

  • Independent executive compensation consultant reporting to the Compensation Committee
  • Annual Say-On-Pay voting
  • No employment agreements with NEOs
  • No excise or other tax gross-ups in our compensation plans
  • Double-trigger change-in-control provisions in our severance agreements and equity awards
  • Significant director and executive officer stock ownership guidelines
  • Annual assessment of compensation programs to ensure avoidance of excessive risk taking

2019 annual cash bonus program

The Compensation Committee has established an annual bonus program for 2019 that is designed to align executive officers’ interests with shareholder priorities of corporate returns on capital and progress toward free cash flow generation. The bonus program includes a performance-based formulaic assessment for 60% of the bonus and a discretionary assessment linked to qualitative strategic objectives for 40% of the bonus. Under the program, each officer’s bonus is capped at 200% of target. The formulaic portion of the bonus for 2019 is based on achievement of defined performance levels and weightings related to:

Quantitative Objective Weighting
Net Debt/EBITDA 15%
(LOE + Cash G&A)/BOE 12.5%
Cash Return on Cash Invested 12.5%
Oil Production 10%
Proved Developed F&D/BOE 10%

The strategic qualitative objectives that will influence the remaining 40% of the 2019 annual cash bonus program are related to:

  • Health, safety and environmental performance and employee engagement
  • Organizational and talent development
  • Advancement of "life of field" development plans and associated well productivity initiatives
  • Other strategic initiatives, including selective divestitures of non-core assets to reduce capital intensity