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UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

 

  Filed by the Registrant   Filed by a Party other than the Registrant

 

Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material under §240.14a-12

 

 

ANTERO RESOURCES CORPORATION

 

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):
No fee required
Fee paid previously with preliminary materials
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11
 

 

JUNE 5, 2024

8:30 A.M. Mountain Time

 

Antero Principal Executive Offices

1615 Wynkoop Street
Denver, CO 80202

NOTICE

of 2024 Annual Meeting
of Shareholders

 

The 2024 Annual Meeting of Stockholders of Antero Resources Corporation (“Antero”) will be held online on Wednesday, June 5, 2024, at 8:30 A.M. Mountain Time. The Annual Meeting is being held for the purposes listed below:
 
AGENDA
1. Elect the two Class II members of Antero Resources Corporation’s Board of Directors (the “Board”) named in this Proxy Statement to serve until Antero’s 2027 Annual Meeting of Stockholders,
2. Ratify the appointment of KPMG LLP as Antero’s independent registered public accounting firm for the year ending December 31, 2024,
3. Approve, on an advisory basis, the compensation of Antero’s named executive officers,
4. Approve the Amended and Restated Antero Resources Corporation 2020 Long Term Incentive Plan, and
5. Transact other such business as may properly come before the meeting and any adjournment or postponement thereof.
These proposals are described in the accompanying proxy materials.
RECORD DATE
April 15, 2024
 
By order of the Board of Directors,
   
Yvette K. Schultz
Chief Compliance Officer, Senior Vice President—Legal, General Counsel and Corporate Secretary

WHO MAY VOTE:

 

You will be able to vote at the Annual Meeting only if you were a stockholder of record at the close of business on April 15, 2024, the record date for the Annual Meeting. The Board requests your proxy for the Annual Meeting, which will authorize the individuals named in the proxy to represent you and vote your shares at the Annual Meeting or any adjournment or postponement thereof.

 

HOW TO RECEIVE ELECTRONIC DELIVERY OF FUTURE ANNUAL MEETING MATERIALS:

 

Pursuant to rules adopted by the Securities and Exchange Commission, we have elected to provide access to our proxy solicitation materials electronically, rather than mailing paper copies of these materials to each stockholder. Beginning on April 25, 2024, we will mail to each stockholder a Notice of Internet Availability of Proxy Materials with instructions on how to access the proxy materials, vote, or request paper copies.

 

IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 5, 2024:

 

This Notice of Annual Meeting and Proxy Statement and the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”) are available on our website free of charge at www.anteroresources.com in the “SEC Filings” subsection of the “Investors” section.

 

YOUR VOTE IS IMPORTANT

 

Your vote is important. We urge you to review the accompanying Proxy Statement carefully and to submit your proxy as soon as possible so that your shares will be represented at the meeting.


 

                 
REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:                        
                 
If you are a registered stockholder as of the record date, you may vote your shares or submit a proxy to have your shares voted by one of the following methods:  

INTERNET

Use the website
listed on the
Notice of Internet
Availability
(the “Notice”)

 

 

BY
TELEPHONE

Use the toll-free
number listed on
the Notice

 

 

BY MAIL

Sign, date and
return your
proxy card in
the provided
pre-addressed
envelope

 

 

DURING THE
ANNUAL MEETING

Vote online during the
Annual Meeting.
See page 10 of the
Proxy Statement for
instructions on
how to attend online

 

Table of Contents

 

PROXY STATEMENT 4
   
PROXY SUMMARY 4
Corporate Responsibility 4
Executive Compensation Highlights 7
Investor Outreach 8
Current Directors and Board Nominees 8
2024 Annual Meeting of Stockholders 9
Cautionary Note Regarding Forward-Looking Statements 11
   
ITEM ONE: ELECTION OF DIRECTORS 13
     
DIRECTORS 15
Class I Directors 15
Class II Directors 17
Class III Directors 18
   
EXECUTIVE OFFICERS 20
   
CORPORATE GOVERNANCE 21
Corporate Governance Guidelines 21
Director Independence 21
Board Leadership Structure 21
Election of Lead Director 22
How Director Nominees are Selected 23
Board’s Role in Risk Oversight 24
Board and Committee Self-Evaluations 24
Majority Vote Director Resignation Policy 25
Meetings 25
How to Contact the Board 25
Available Governance Materials 26
   
BOARD COMMITTEES 27
General 27
Audit Committee 27
Compensation Committee 27
Nominating & Governance Committee 28
Conflicts Committee 28
Environmental, Social and Governance (ESG) Committee 28
   
COMPENSATION OF DIRECTORS 29
General 29
Annual Cash Retainers 29
Equity-Based Compensation 30
Fees 30
Stock Ownership Guidelines 30
2023 Non-Employee Director Compensation 30
   
ITEM TWO:  RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 31
     
AUDIT MATTERS 32
Audit Committee Report 32
Audit and Other Fees 33
   
ITEM THREE: ADVISORY VOTE ON EXECUTIVE COMPENSATION 34
     
  -  2024 Proxy Statement 2
 
COMPENSATION DISCUSSION AND ANALYSIS 35
2023 Named Executive Officers 35
Stockholder Engagement Efforts in 2023 35
Compensation Philosophy and Objectives of Our Compensation Program 38
Compensation Best Practices 38
Implementing Our Compensation Program Objectives 39
Elements of Direct Compensation 42
Other Benefits 48
2024 Material Compensation Decisions 49
Other Matters 50
Compensation Committee Report 53
   
EXECUTIVE COMPENSATION TABLES  54
Summary Compensation Table 54
Grants of Plan-Based Awards for Fiscal Year 2023 55
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table 56
Outstanding Equity Awards at 2023 Fiscal Year-End 57
Option Exercises and Stock Vested in Fiscal Year 2023 62
Pension Benefits 62
Nonqualified Deferred Compensation 62
Potential Payments Upon Termination or Change in Control 63
Chief Executive Officer Pay Ratio 71
Pay Versus Performance 73
   
ITEM FOUR: APPROVAL OF AMENDED AND RESTATED ANTERO RESOURCES CORPORATION 2020 LONG TERM INCENTIVE PLAN 76
   
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT  87
Beneficial Ownership 87
   
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 88
   
DELINQUENT SECTION 16(A) REPORTS 88
   
RELATED PERSON TRANSACTIONS 89
General 89
Agreements with Antero Midstream Corporation 89
Employment 94
   
QUORUM AND VOTING 95
Voting Stock 95
Quorum 95
Stockholder List 95
Vote Required 96
Default Voting 97
Revoking Your Proxy 97
Solicitation Expenses 97
Copies of the Annual Report 97
   
ADDITIONAL INFORMATION  98
Proxy Materials, Annual Report and Other Information 98
Stockholders Sharing an Address 98
Stockholder Proposals and Director Nominations for the 2025 Annual Meeting 98
   
APPENDIX A: FORM OF AMENDED AND RESTATED ANTERO RESOURCES CORPORATION 2020 LONG TERM INCENTIVE PLAN 100

 

  -  2024 Proxy Statement 3
 
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PROXY STATEMENT

 

PROXY SUMMARY

 

This summary highlights information contained in this Proxy Statement. This proxy summary does not contain all of the information you should consider, and you should read this entire Proxy Statement before voting.

 

Corporate Responsibility

 

Some highlights of our ESG and corporate responsibility efforts appear below. Please visit https://www.anteroresources.com/esg for more information and a link to our most recent ESG report.(1)

 

Human Capital Management

 

The largest contribution in making Antero a responsible and sustainable company comes from our talented and experienced employees.

 

The safety and security of our people and the integrity of our operations are our top priorities. Our health and safety compliance program seeks to protect our workforce and the communities in which we operate by striving for “Zero incidents, Zero harm, Zero compromise.” We have sought to implement developed and thoughtful processes for identifying and mitigating safety risks:

 

Identification – behavior-based safety programs, job safety analysis, emergency response drills and contractor vetting through a reputable third-party vendor

 

Mitigation – contractor safety improvement plans, root cause analyses, risk ranking/mitigation reviews, pre-job safety startup reviews, and a library of over 30 individual training courses

 

We believe that our success as a company is not only measured by our financial results but also by how we treat our employees. We strive to help our people enjoy healthier lives, achieve educational goals, and pursue economic opportunities for themselves and their families by offering competitive compensation and benefits, including:

 

Healthcare coverage – medical and prescription, dental and vision

 

Financial assistance – health savings accounts, student loan repayment reimbursement, dependent care flexible spending account coverage and 401(k) plan with matching up to 6%

 

Insurance – basic life, accidental death and disability, short-term and long-term disability coverage

 

Lifestyle – employee assistance program, holidays and personal choice days, paid vacation and sick leave, company-paid parental leave, gym memberships and/or fitness subscription reimbursement, and free parking and public transportation

 

Doing the right thing is essential to our culture. To that end, we conduct an annual, company-wide ethics and compliance training program that covers, among other things, ethical business practices, insider trading, and anti-discrimination and anti-harassment.

 

We aim to respect human rights and promote them in our supply chain through, among other things, our company policies, including:

 

Supplier Code of Conduct – promotes the fair and ethical treatment by suppliers, contractors, independent consultants and other parties that Antero works with through a set of guidelines focusing on equal opportunity, workplace safety, protection of the environment, among other things

 

(1)Please note that this Internet address is for information purposes only, and no information found and/or provided at such Internet address, contained on our website in general, or included in our ESG Report is intended or deemed to be incorporated by reference in this Proxy Statement.

 

  -  2024 Proxy Statement 4
 
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Human, Labor and Indigenous Rights Policy – promotes respect of human rights through compliance with applicable national and local laws as well as pertinent trends and norms with respect to compensation, discrimination, health and safety, community and indigenous peoples, and that prohibits child labor, forced labor and human trafficking, as well as workplace harassment, discrimination, and misuse of employer power, in line with applicable laws related to all of these topics; and provides access to a hotline for reporting concerns or grievances

 

Community Engagement

 

We are committed to enhancing the communities where we live and work. Recent highlights of our community engagement and investment include:

 

Together with Antero Midstream Corporation (“Antero Midstream”):

 

Committed to donate $4.0 million to West Virginia University Benjamin M. Statler College of Engineering and Mineral Resources

 

Generated property and severance taxes of $170.9 million in 2023 and $918.5 million over the last five years

 

Contributed meaningful employment opportunities in the Appalachian Region

 

Together with the Antero Foundation and Antero Midstream:

 

Donated $1.3 million to philanthropic and community endeavors, including $0.2 million to 57 regional food pantries in West Virginia and Ohio in 2023

 

Donated $3.8 million to philanthropic and community endeavors over the last five years, including regional food pantries, healthcare providers, homeless outreach and shelter providers, and crisis outreach and shelter services

 

Diversity, Equity and Inclusion

 

We recognize the importance of supporting and promoting diversity in our workplace. Our Diversity and Inclusion Policy prohibits all forms of unlawful discrimination based on, among other things, age, race, ethnicity, religion, sex, gender identity and other impermissible factors. In addition, we identify qualifications, attributes, and skills that are important to be represented on the Board. We consider individuals of all backgrounds, skills and viewpoints when seeking employees and candidates for Board service.

 

As set forth in our Diversity and Inclusion Policy and our Nominating & Governance Committee Charter, we view diversity broadly to include diversity of backgrounds, skills and viewpoints as well as traditional diversity concepts such as race, gender, national origin, religion, sexual orientation or identity. Our Diversity and Inclusion Policy and our Nominating and Governance Committee Charter require that each initial pool of candidates to be considered to fill a vacancy on the Board includes at least one individual who is considered diverse based on the traditional diversity concepts described therein.

 

We embrace an approach that values diversity, and we are committed to making opportunities for development and progress available to all employees so their talents can be fully developed and our and their success can be maximized. We believe that creating an environment that cultivates a sense of belonging requires encouraging employees to educate themselves about each other’s experiences, and we strive to promote the respect and dignity of all persons. We also believe it is important that we foster education, communication and understanding about diversity, inclusion and belonging. In line with our commitment to equal employment opportunity and diversity and inclusion, our outside recruiters are asked to review our Diversity and Inclusion Policy and implement practices that align with it, including providing us with a diverse initial pool of employee candidates.

 

  -  2024 Proxy Statement 5
 
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In recent years, we have promoted a number of women to senior management roles, including our Chief Compliance Officer, Senior Vice President—Legal, General Counsel and Corporate Secretary, Chief Accounting Officer and Senior Vice President—Accounting, Senior Vice President—Geology and Vice President—Production. In 2023, over one-third of our newly hired employees identified as individuals from a group that has been historically underrepresented.

 

As of December 31, 2023:

 

23% 43% 21%
of our employees
are women
of our independent
directors are women
of our directors and corporate
officers are women
           

 

Governance

 

Our Board has ultimate oversight over the company’s operational performance and ethical conduct. This includes, in partnership with our executive leadership team, managing our risk mitigation. Highlights of our corporate, environmental and social governance programs include:

 

Director independence and Board composition

 

Seven out of eight directors are independent

 

We have an independent lead director

 

Each Board committee is chaired by an independent director and comprised entirely of independent directors

 

The ages of our directors range from 48 to 79 years old, and the average director tenure is 8.9 years

 

Focus on Environmental and Social Matters

 

We have an ESG Committee of the Board that guides and governs our ESG initiatives

 

We have an ESG Advisory Council, made up of members of management from across the organization, that develops a centralized, systematic approach for identifying, managing and communicating ESG risks and opportunities

 

15% of executive target annual incentive compensation is tied to certain ESG performance metrics

 

In 2023, 100% of employees completed training for our Diversity and Inclusion Policy, our Human Labor and Indigenous Rights Policy, our Supplier Code of Conduct, and with respect to unconscious bias

 

Valuing investor feedback and alignment with stockholders

 

We proactively engage with stockholders and other stakeholders, including with respect to ESG programs and performance

 

Our executive compensation program and robust stock ownership guidelines applicable to directors and executives were thoughtfully designed to incentivize the maximization of shareholder value

 

Our corporate policies generally prohibit hedging or pledging company stock

 

  -  2024 Proxy Statement 6
 
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Environment and Safety

 

We believe safety and environmental stewardship are intrinsically linked. “Zero incidents, Zero harm, Zero compromise” is designed to empower every employee to make the safest decisions to protect our people and be a good steward to the environment. Our dedicated staff of health, safety, security and environmental (“HSSE”) professionals manage our HSSE programs and are committed to our performance as a safe and sustainable energy company. In addition, stewardship of the environment is a fundamental value in our overall business strategy.

 

Our Environment and Safety highlights include:

 

2023 environmental and safety performance

 

Scope 1 GHG emissions of 0.2 million metric tons of CO2e

 

Scope 1 GHG intensity of 0.18 metric tons of CO2e/Mmscfe, a 14% reduction from 2022

 

89% of wastewater generated is recycled

 

TRIR and LTIR for our employees and contractors of 0.188 and zero, respectively, in 2023, maintaining our commitment to the safety of our employees and contractors

 

Continued progress towards Net Zero Scope 1 (direct) and Scope 2 (indirect from the purchase of energy) emissions by 2025 through the following:

 

Initiated a responsibly sourced gas certification effort that will expand the number of wells and production that is Trustwell certified by Project Canary

 

Conducted three aerial flyovers of 78 well pad locations as part of our emissions monitoring initiatives

 

Replaced or converted approximately 500 natural gas-controlled pneumatics in 2023 and approximately 6,700 natural gas-controlled pneumatics since 2021 as part of our plan to replace or convert all of our natural gas-driven pneumatics to air-driven pneumatics by the end of 2025

 

Utilized our GHG & Methane Reduction Working Group and ESG Advisory Council to identify emission-reduction opportunities

 

Active participation in the U.S. EPA Natural Gas STAR program, ONE Future, The Environmental Partnership, and the Colorado State University’s Methane Emissions Technology Evaluation Center (through December 31, 2023), which provides us with information and resources to help reduce our Scope 1 and Scope 2 GHG emissions

 

ESG disclosures are aligned with the Sustainability Accounting Standards Board (SASB) and the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD)

 

Management regularly reports to the Board ESG Committee on pertinent ESG risks and opportunities, including climate related topics

 

Executive Compensation Highlights

 

Key 2023 Company performance highlights include:

 

Achieved 6% net production growth compared to 2022 while targeting a maintenance capital program

 

Invested $909 million in drilling and completion capital, in line with the 2023 budget

 

Reduced cash operating costs by $0.21 per Mcfe, an 8% reduction compared to 2022 cash operating costs

 

Below is a summary of key components and decisions of our executive compensation program for, and performance levels achieved in 2023:

 

Long-term incentive compensation awards are 50% performance-based equity awards for our Named Executive Officers based on absolute TSR performance hurdles and leverage metrics. All long-term incentive awards vest over several years to reward sustained Company performance over time.

 

A meaningful portion of our annual incentive plan is tied to a qualitative assessment of certain ESG performance metrics by the Compensation Committee. Our ESG performance is focused on three primary areas:

 

  -  2024 Proxy Statement 7
 
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Progress towards Net Zero (Scope 1 and 2) emissions by the end of 2025

 

Water Recycling

 

Total Recordable Incident Rate

 

The annual incentive plan for 2023 also included other metrics we felt were key to value creation, including operational strategy (disciplined capital expenditures and production volume), leverage goals, and cash cost containment. The Compensation Committee determined that, in order to better align the 2023 Annual Incentive Program payouts with the interests of shareholders, those payouts should be reduced from 137.4% to 120% of target. The full details of our annual incentive plan metrics, goals and results are shown on page 44 of the proxy.

 

Performance share unit awards with a performance period ending in 2023 paid out at between 112.5% and 200% of target.

 

Each of the Named Executive Officers is employed at-will and none of the Named Executive Officers is party to an employment agreement, severance agreement or change in control agreement.

 

Investor Outreach

 

Antero and the Board value input from stockholders, and we are committed to maintaining an open dialogue to receive feedback on important items. In 2023, we met with stockholders to discuss, among other things, compensation and ESG matters.

 

The Compensation Committee solicited and carefully considered the feedback received from our stockholders during the stockholder outreach conducted in 2023, which was generally supportive of our executive compensation program, with the exception of the off-cycle awards granted in October of 2022. Further, we have historically had strong support for our executive compensation program (Say-on-Pay votes have averaged over 97% approval in the five years prior to 2023). As a result, there were no material changes to the Company’s compensation program or philosophy during 2023 and no off-cycle awards were granted to our Named Executive Officers in 2023. For additional information regarding our shareholder engagement regarding executive compensation and the feedback we received from our shareholders, please see “Compensation Discussion and Analysis—2023 Say-on-Pay Advisory Vote.”

 

Current Directors and Board Nominees

 

  Director
Class
      Committee Memberships
Name Age Occupation Director Since Audit Comp Nom & Gov Conflicts ESG
Paul M. Rady
Chairman of the Board
Class I 70 Antero’s Chief Executive Officer and President 2004          
Brenda R. Schroer Class I 48 Chief Financial Officer and Member of Board of Managers of Endeavor Energy Resources 2021      
Thomas B. Tyree, Jr. Class I 63 Former Chairman of Northwoods Energy LLC 2019    
W. Howard Keenan, Jr. Class II 73 Member of Yorktown Partners LLC 2004      
Jacqueline C. Mutschler Class II 62 Independent Director of Weatherford International plc; Executive Consultant 2020  
Robert J. Clark Class III 79 Former Chairman of 3 Bear Energy, LLC; Energy Consultant 2013    
Benjamin A. Hardesty
Lead Director
Class III 74 Owner of Alta Energy LLC 2013    
Vasiliki (Vicky) Sutil Class III 59 Independent Director of Delek US Holdings, Inc. 2019      
   Chairperson                  

 

  -  2024 Proxy Statement 8
 
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Board Composition Highlights

 

 

2024 Annual Meeting of Stockholders

 

We are pleased this year to conduct the Annual Meeting solely online via the Internet through a live webcast and online stockholder tools. We are conducting the Annual Meeting virtually because we believe a virtual format makes it easier for stockholders to attend and participate. Moreover, this format empowers stockholders around the world to participate at no cost.

 

Here are several ways our virtual format will enhance stockholder access and participation and protect stockholder rights:

 

We Encourage Questions. Stockholders can submit questions for the meeting online in advance or live during the meeting, following the instructions below. During the meeting, we will answer as many appropriate stockholder-submitted questions as time permits. Following the Annual Meeting, we will publish an answer to each appropriate question we received on our Investor Relations website at www.anteroresources.com/investors as soon as practical.

 

We Believe in Transparency. Although the live webcast is available only to stockholders at the time of the meeting, we will post a webcast replay, the final report of the inspector of election, and answers to all appropriate questions asked by stockholders in connection with the Annual Meeting to our Investor Relations website at www.anteroresources.com/investors.

 

We Proactively Take Steps to Facilitate Your Participation. During the Annual Meeting, we will offer live technical support for all stockholders attending the meeting.

 

Meeting Admission

 

You are entitled to attend and participate in the virtual Annual Meeting only if you were a stockholder as of the close of business on April 15, 2024 or if you hold a valid proxy for the Annual Meeting. If you are not a stockholder, you may still view the meeting after the recording has been posted on our Investor Relations website.

 

Attending Online. If you plan to attend the Annual Meeting online, please read the instructions below so you understand how to gain admission. If you do not comply with these procedures, you will not be able to participate in the Annual Meeting.

 

Stockholders may participate in the Annual Meeting by visiting www.virtualshareholdermeeting.com/ AR2024. If you are a stockholder of record, you will need the control number on your Notice of Internet Availability (the “Notice”) or proxy card to log in. For beneficial stockholders who do not have a control number, instructions to gain access to the meeting may be provided on the voting instruction card you receive from your broker, bank, or other nominee.

 

Stockholders of record hold shares directly with Equiniti Trust Company, LLC (formerly American Stock Transfer and Trust Company LLC). “Beneficial” or “street name” stockholders hold shares through a broker, bank, or other nominee.

 

  -  2024 Proxy Statement 9
 
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Please allow ample time to check in to the virtual meeting. The site will be available beginning at 8:15 A.M. Mountain Time. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual Shareholder Meeting log in page.

 

Asking Questions. Stockholders who wish to submit a question in advance may do so on our Annual Meeting website, www.virtualshareholdermeeting. com/AR2024, which will be open 15 minutes before the Annual Meeting begins. Stockholders also may submit questions live during the meeting. We plan to reserve up to 20 minutes for appropriate stockholder questions to be read and answered by Company personnel during the meeting, but we will only address questions that are germane to the matters being voted on at our Annual Meeting. Stockholders can also access copies of this Proxy Statement and annual report at our Annual Meeting website.

 

Voting Before or During the Meeting

 

Whether you are a stockholder of record or a beneficial stockholder, you may direct how your shares are voted without participating in the Annual Meeting. We encourage stockholders to vote well before the Annual Meeting, even if they plan to attend. If you are a registered stockholder as of the record date, you may vote your shares or submit a proxy to have your shares voted by one of the following methods:

 

Online. Submit a proxy electronically using the website listed on the Notice. You will need the control number from your Notice to log on to the website. Internet voting facilities will be available until 11:59 p.m., Eastern Time, on Tuesday, June 4, 2024.

 

By Telephone. Request the proxy materials and submit a proxy by telephone using the toll-free number listed on the Notice. You will need the control number from your Notice when you call. Telephone voting facilities will be available until 11:59 p.m., Eastern Time, on Tuesday, June 4, 2024.

 

By Mail. You may request a hard copy proxy card by following the instructions on the Notice. You can submit your proxy by signing, dating and returning your proxy card in the provided pre-addressed envelope.

 

In Person Online. If you are a registered stockholder and you attend the Annual Meeting online, you can vote via the Internet during the meeting. Follow the instructions at www.virtualshareholdermeeting.com/AR2024 to vote during the meeting.

 

If you are a beneficial stockholder, you will receive instructions from the holder of record that you must follow for your shares to be voted. Most banks and brokers offer Internet and telephone voting. If you do not give voting instructions, your broker will not be permitted to vote your shares on any matter that comes before the Annual Meeting except the ratification of our auditors.

 

As of the record date, 310,170,039 shares of common stock were outstanding and entitled to be voted at the Annual Meeting.

 

Revoking Your Proxy or Changing Your Vote.

Stockholders of record may revoke their proxy at any time before the electronic polls close by submitting a later-dated vote via the Internet, by telephone or by mail; by delivering instructions to our Secretary before the Annual Meeting commences; or by voting online in person during the Annual Meeting. Simply attending the meeting will not affect a vote that you have already submitted.

 

Beneficial stockholders may revoke any prior voting instructions by contacting the broker, bank, or other nominee that holds their shares prior to the Annual Meeting or by voting online during the meeting.

 

  -  2024 Proxy Statement 10
 
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Cautionary Note Regarding Forward-Looking Statements

 

This Proxy Statement includes “forward-looking statements.” Such forward-looking statements are subject to a number of risks and uncertainties, many of which are not under Antero Resources’ control. All statements, except for statements of historical fact, made in this Proxy Statement regarding activities, events or developments Antero Resources expects, believes or anticipates will or may occur in the future, including those regarding (1) ESG and sustainability-related activities; (2) our plans, strategies, initiatives, and objectives; (3) our assumptions, outlooks and expectations; (4) the scope and impact of our ESG risks and opportunities; and (5) standards, engagement, disclosure and expectations of third parties are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are aspirational and not guarantees or promises that they will be achieved. All forward-looking statements speak only as of the date of this hereof. Although Antero Resources believes that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements. Except as required by law, Antero Resources expressly disclaims any obligation to and does not intend to publicly update or revise any forward-looking statements.

 

The actual conduct of our activities, including the development, implementation, progress or continuation of any initiatives (including ESG and sustainability-related ones), commitments, strategies, and objectives, discussed or forecasted in this report may differ materially in the future. The reader should thus not place undue reliance on these forward-looking statements. In addition, many of the assumptions, standards, methodologies, statistics, metrics and measurements used in preparing this Proxy Statement, the 2022 ESG Report, and other ESG and sustainability-related information provided by the Company continue to evolve and are based on management’s beliefs, assumptions, and expectations based on currently available information believed to be reasonable at the time of preparation but should not be considered guarantees. The standards, methodologies, statistics, metrics and measurements used, and the expectations and assumptions they are based on, have not been verified by any third party. Statistics, metrics, and measurements relating to ESG matters are estimates and may be based on assumptions or developing standards. In some cases, the information is prepared, or based on information prepared, by governmental agencies, third-party vendors and consultants, or other third parties, and is not independently verified by Antero Resources.

 

Antero Resources cautions you that these forward-looking statements are subject to risks, uncertainties and assumptions, including those incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil, most of which are difficult to predict and many of which are beyond Antero Resources’ control. These risks include, but are not limited to, those identified in our most recent filings with the Securities and Exchange Commission (“SEC”) on Form 10-K and Form 10-Q. While we anticipate continuing to monitor and report on certain sustainability information, we cannot guarantee that such data will be consistent year-to-year, as methodologies and expectations continue to evolve and vary across companies, industries, jurisdictions and regulatory bodies. We hereby expressly disclaim any obligation or duty not otherwise required by legal, contractual, and other regulatory requirements to update, correct, provide additional details regarding, supplement, or continue providing such data, in any form, in future. Furthermore, there are sources of uncertainty and limitations that exist that are beyond our control and could impact the Company’s plans and timelines, including the reliance on technological and regulatory advancements and market participants’ behaviors and preferences.

 

In addition, while we seek to align these disclosures with the recommendations of various third-party frameworks, such as the Task Force on Climate-Related Financial Disclosures, we cannot guarantee strict adherence to these framework recommendations. Additionally, our disclosures based on these frameworks may change due to revisions in framework requirements, availability of information, changes in our business or applicable governmental policy, or other factors, some of which may be beyond our control. Moreover, with regards to our participation in, or certification under, various frameworks, we may incur certain costs associated with such frameworks

 

  -  2024 Proxy Statement 11
 
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and cannot guarantee that such participation or certification will have the intended results on our or our products’ ESG profile. In addition, the calculation of the methane leak loss rate disclosed in the 2022 ESG Report is based on ONE Future protocol, which is based on the EPA Greenhouse Gas Reporting Program currently in effect. We also calculate our Scope 1 GHG emissions in accordance with the EPA Greenhouse Gas Program, which is subject to change, and revisions to this program could result in the calculation of increased emissions from our operations, which in turn could impact our ability to realize our Scope 1 and 2 GHG emission reductions on our proposed timeline. Scope 1 GHG emissions are the Company’s direct greenhouse gas emissions, and Scope 2 GHG emissions are the Company’s indirect greenhouse gas emissions associated with the purchase of electricity, steam, heat or cooling. Antero Resources anticipates achieving Net Zero Scope 1 and Scope 2 GHG emissions by 2025 through operational efficiencies and the purchase of carbon offsets; however, achieving Net Zero Scope 1 and Scope 2 GHG emissions is aspirational and we could face unexpected material costs as a result of our efforts to do so. Moreover, given uncertainties related to the use of emerging technologies, the state of markets for and availability of verified quality carbon offsets, we cannot predict whether or not we will be able to achieve Net Zero Scope 1 and Scope 2 GHG emissions in a timely fashion, if at all, or whether any offsets we purchase will ultimately achieve the emission reduction it represents.

 

This Proxy Statement and the 2022 ESG Report contain statements based on hypothetical or severely adverse scenarios and assumptions, and these statements should not necessarily be viewed as being representative of current or actual risk or forecasts of expected risk. These scenarios cannot account for the entire realm of possible risks and have been selected based on what we believe to be a reasonable range of possible circumstances based on information currently available to us and the reasonableness of assumptions inherent in certain scenarios; however, our selection of scenarios may change over time as circumstances change. While future events discussed in this Proxy Statement or the 2022 ESG Report may be significant, and with respect to which we may even use the word “material” or similar concepts of “materiality,” any potential significance should not be read as necessarily rising to the level of “materiality” of certain disclosures included in Antero Resources’ SEC filings.

 

  -  2024 Proxy Statement 12
 
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ITEM ONE: ELECTION OF DIRECTORS

 

The Board is currently comprised of eight directors divided into three classes. Directors in each class are elected to serve for three-year terms and until they are re-elected, their successors are elected and qualified, or until his or her death or until they resign or are removed. Each year, the directors of one class stand for re-election as their terms of office expire.

 

Based on recommendations from our Nominating & Governance Committee, the Board has nominated the following individuals for election as Class II directors of Antero, with terms to expire at the 2027 Annual Meeting of Stockholders, barring an earlier death, resignation or removal:

 

W. Howard Keenan, Jr. Jacqueline C. Mutschler

 

All nominees currently serve as Class II directors of Antero. Their biographical information is contained in “Directors” below.

 

The Board has no reason to believe that any of its nominees will be unable or unwilling to serve if elected. If a nominee becomes unable or unwilling to accept nomination or election, either the size of the Board will be reduced or the individuals acting under your proxy will vote for the election of a substitute nominee recommended by the Board.

 

THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF THE DIRECTOR NOMINEES.

 

  -  2024 Proxy Statement 13
 
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Summary of Director Qualifications and Experience

 

We recognize the importance of diversity on our Board. Pursuant to our Diversity and Inclusion Policy and the Nominating and Governance Committee Charter, we view diversity broadly to include diversity of backgrounds, skills and viewpoints as well as traditional diversity concepts such as race, gender, national origin, religion or sexual orientation or identity. The Board believes that all directors should have sound business judgment, personal and professional integrity, an ability to work as part of a team, willingness to commit the required time to serve as a Board member, business experience, and financial literacy. The Nominating & Governance Committee considers diversity along with other factors when seeking an initial pool of qualified candidates for director nominees, and accordingly, our Diversity and Inclusion Policy requires that each initial pool of candidates to be considered to fill a vacancy on the Board shall include at least one individual who is considered diverse based on the traditional diversity concepts described therein.

 

As of the date hereof, the Board embodied a diverse set of experiences, qualifications, attributes, and skills, as shown below:

 

  Rady Schroer Tyree Keenan Mutschler Clark Hardesty Sutil
Executive Leadership
Financial  
Accounting/Audit          
Risk Management
Operations    
Industry
Environmental and/or Climate Change-Related      
Health or Safety            
Human Resources Management        
Cybersecurity              
Racial/Ethnic Diversity                
Gender Diversity          

 

  -  2024 Proxy Statement 14
 
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DIRECTORS

 

We were originally formed in 2004 as Antero Resources II Corporation. Through a series of internal reorganization transactions, Antero Resources II Corporation’s successor and certain of its affiliates were merged with and into Antero Resources Appalachian Corporation. That entity was renamed Antero Resources Corporation in June 2013 in connection with our initial public offering.

 

Set forth below is the background, business experience, attributes, qualifications and skills of each Antero director and director nominee. In some cases, references to our directors’ tenure with Antero date back to our original formation in 2004.

 

Each of the Class II directors is up for reelection at the Annual Meeting.

 

Class I Directors

 

 

Age: 70

Director Since: 2004

Committee Memberships: None

 

Paul M. Rady

Chairman, Chief Executive Officer and President

 

Key Skills, Attributes and Qualifications:

 

Co-Founder of Antero Resources, serving as President of Antero Resources since April 30, 2021 and as Chairman of the Board of Directors and Chief Executive Officer of Antero Resources since May 2004

President of Antero Midstream since April 30, 2021 and Chief Executive Officer and Chairman of the Board of Directors of Antero Midstream since the closing of Antero Midstream’s simplification transactions (the “Simplification Transactions”) in March 2019

Served as Chief Executive Officer and Chairman of Antero’s predecessor company from its founding in 2002 to its ultimate sale to XTO Energy, Inc. in 2005

Served as President, CEO and Chairman of Pennaco Energy from 1998 until its sale to Marathon in 2001

Worked with Barrett Resources from 1990 until 1998, moving from Chief Geologist to Exploration Manager, EVP Exploration; President, COO and Director; and ultimately CEO

Began his career with Amoco, where he served ten years as a geologist focused on the Rockies and Mid-Continent

 

Has significant experience as a chief executive of oil and gas companies, together with his training as a geologist and broad industry knowledge.

 

Other Public Company Boards:

 

Antero Midstream; Antero Midstream Partners LP (until March 2019)

 

  -  2024 Proxy Statement 15
 
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Age: 48

Director Since: 2021

Committee Memberships: Audit Committee (chair), Environmental, Social and Governance (ESG) Committee

  Brenda R. Schroer
 

Key Skills, Attributes and Qualifications:

 

Chief Financial Officer and Board of Managers of Endeavor Energy Resources since January 2023

Served as Chief Financial Officer of Aris Water Solutions, Inc. (“Aris”) from June 2021 to September 2022. Previously served as Interim Chief Financial Officer of Aris’ predecessor, Solaris Midstream Holdings (“Solaris”), beginning in March 2021 until June 2021.

Served as Senior Vice President, Chief Financial Officer and Treasurer of Concho Resources Inc. (“Concho”) from January 2019 until it was acquired by ConocoPhillips in January 2021. Previously served as Senior Vice President, Chief Accounting Officer and Treasurer of Concho from May 2017 to January 2019 as well as other roles (including Vice President, Chief Accounting Officer and Treasurer) starting in 2013.

Served on the Board of Directors of Solaris from July 2019 through February 2021.

Prior to joining Concho in 2013 as Vice President and Chief Accounting Officer, Brenda was with Ernst & Young LLP since 1999, and her most recent position was Americas Oil & Gas Sector Resident with the National Audit practice

 

Has significant experience in the oil and gas industry over several decades.

 

Other Public Company Boards:

 

N/A

     

 

Age: 63

 

Director Since: 2019

 

Committee Memberships: Audit Committee, Conflicts Committee, Environmental, Social and Governance (ESG) Committee

  Thomas B. Tyree, Jr.
 

Key Skills, Attributes and Qualifications:

 

From 2018 through 2023, served sequentially as Chief Executive Officer, Executive Chairman and Chairman of Northwoods Energy LLC, a private upstream oil and gas company that he co-founded in 2018

In 2021, served as Chief Executive Officer and Director of Extraction Oil & Gas, Inc., a formerly publicly traded upstream oil and gas company. Previously served as Executive Chairman starting in 2020

From 2006 to 2016, served as President, Chief Financial Officer and as a Director of Vantage Energy, LLC

From 2003 to 2006, served as Chief Financial Officer of Bill Barrett Corporation, a formerly publicly traded company

From 1989 to 2003, worked as an investment banker at Goldman, Sachs & Co.

 

Has significant experience in the oil and gas industry over several decades.

 

Other Public Company Boards:

 

Enerflex Ltd.; Extraction Oil & Gas, Inc. (until November 2021); Bonanza Creek Energy, Inc.
(until March 2020).

 

  -  2024 Proxy Statement 16
 
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Class II Directors

 

 

Age: 73

Director Since: 2004

Committee Memberships: Compensation Committee, Nominating & Governance Committee

  W. Howard Keenan, Jr.
 

Key Skills, Attributes and Qualifications:

 

Since 1997, has been a Member of Yorktown Partners LLC, a private investment manager focused on the energy industry

From 1975 to 1997, was in the Corporate Finance Department of Dillon, Read & Co. Inc. and active in the private equity and energy areas, including the founding of the first Yorktown Partners fund in 1991

Serves on the boards of directors of multiple Yorktown Partners portfolio companies

Serves on the Board of Directors of Antero Midstream

 

Has over 40 years of experience with energy companies and investments and broad knowledge of the oil and gas industry.

 

Other Public Company Boards:

 

Aris Water Solutions, Inc.; Solaris Oilfield Infrastructure, Inc.; Brigham Minerals, Inc. (until the first quarter of 2022); Antero Midstream; Ramaco Resources, Inc. (until 2019); Antero Midstream Partners LP (until 2019); Concho Resources (until 2013); Geomet Inc. (until 2012)

     

 

Age: 62

Director Since: 2020

Committee Memberships: Audit Committee, Nominating & Governance Committee, Conflicts Committee, Environmental, Social and Governance (ESG) Committee

  Jacqueline C. Mutschler
 

Key Skills, Attributes and Qualifications:

 

Executive Consultant for the energy and technology sectors since 2014

Member of Weir Group plc Technology Advisory Board from 2015 to 2017

From 2006 until retirement in 2014, served as Senior Vice President of Upstream Technology at BP, PLC

Held BP Vice President domestic and international roles between 2001 and 2006, including U.S. unconventional gas production

From 1986 to 2001, held production management, financial business planning and geophysical roles for BP Onshore U.S. and Gulf of Mexico businesses

 

Has over 30 years of experience in the oil and natural gas industry, including 28 years with BP plc.

 

Other Public Company Boards:

 

Weatherford International plc

 

  -  2024 Proxy Statement 17
 
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Class III Directors

 

 

Age: 79

Director Since: 2013

Committee Memberships: Compensation Committee (chair), Nominating & Governance Committee, Conflicts Committee (chair)

  Robert J. Clark
 

Key Skills, Attributes and Qualifications:

 

Founder and former Chairman of 3 Bear Energy, LLC, a midstream energy company with operations in the Delaware Basin in southwest New Mexico. 3 Bear Energy, LLC was sold to a subsidiary of Delek Logistics Partners, LP in June 2022. Mr. Clark currently serves as an energy consultant.

Formed, operated and subsequently sold Bear Tracker Energy in 2013 (to Summit Midstream Partners, LP); a portion of Bear Cub Energy in 2007 (to Regency Energy Partners, L.P.), and the remaining portion in 2008 (to GeoPetro Resources Company); and Bear Paw Energy in 2001 (to ONEOK Partners, L.P., formerly Northern Border Partners, L.P.)

Member of both the Executive Committee and the Board of Directors of the Boys & Girls Club of Metro Denver and a member of the Board of Directors of Judi’s House, a Denver charity providing counseling for grieving children and adults who have lost a sibling or spouse

 

Has significant experience with energy companies, with over 45 years of experience in the industry.

 

Other Public Company Boards:

 

N/A

 

  -  2024 Proxy Statement 18
 
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Age: 74

Director Since: 2013

Committee Memberships: Nominating & Governance Committee (chair), Compensation Committee, Environmental, Social and Governance (ESG) Committee

  Benjamin A Hardesty (Lead Director)
 

Key Skills, Attributes and Qualifications:

 

Owner of Alta Energy LLC, a consulting business focused on oil, natural gas and energy infrastructure in the Appalachian Basin and onshore United States, since May 2010

President of Dominion E&P, Inc., a subsidiary of Dominion Energy, Inc. (formerly Dominion Resources Inc.) engaged in the exploration and production of natural gas in North America, from September 2007 until retirement in May 2010. Joined Dominion in 1995 and served as president of Dominion Appalachian Development, Inc. until 2000 and general manager and vice president-Northeast Gas Basins until 2007

Member of the Board of Directors of Blue Dot Energy Services, LLC from 2011 until its sale to B/E Aerospace, Inc. in 2013

Member of the Board of Directors of KLX, Inc. from 2014 until its sale to The Boeing Company in 2018

Member of the Board of Directors of KLX Energy Services Holdings, Inc. from 2018 until its merger with Quintana Energy Services in 2020

From 1982 to 1995, served successively as vice president, executive vice president and president of Stonewall Gas Company, and from 1978 to 1982, served as vice president, operations of Development Drilling Corp.

Served as an active duty officer in the U.S. Army Security Agency and as a reserve officer

Director emeritus and past president of the West Virginia Oil & Natural Gas Association and past president of the Independent Oil & Gas Association of West Virginia

Trustee and past chairman of the Nature Conservancy of West Virginia and a member of the Board of Directors and the Executive Committee of the West Virginia Chamber of Commerce

Serves as a member of the Advisory Committee of the West Virginia School of Petroleum and Natural Gas Engineering Department of Statler College of Engineering and Mineral Resources at West Virginia University

Member of the Board of Directors of the Gas & Oil Association of West Virginia

 

Has significant experience in the oil and natural gas industry, including in Antero’s areas of operation.

 

Other Public Company Boards:

 

KLX Energy Services Holdings, Inc. (until August 2020); KLX Inc. (until October 2018)

     

 

Age: 59

Director Since: 2019

Committee Memberships: Environmental, Social and Governance (ESG) Committee (chair), Audit Committee

  Vasiliki (Vicky) Sutil
 

Key Skills, Attributes and Qualifications:

 

From July 2017 to January 2020, worked with SK E&P Company focusing on strategic planning

From 2014 to 2016, served as Vice President of Commercial Analysis for CRC Marketing, Inc.

From 2000 to 2014, worked with Occidental Petroleum Corporation in different capacities, including roles in corporate development, mergers and acquisitions and financial planning

Other experience includes ARCO Products Company and Mobil Oil Corporation working as a project engineer and business analyst in the refining and marketing divisions

 

Has significant experience in the oil and gas industry, including a background in corporate development, commercial negotiations, corporate planning and project management.

 

Other Public Company Boards:

 

Delek US Holdings, Inc.; Plains All American Pipeline, L.P. (until 2015); Plains GP Holdings, L.P. (until 2015)

 

  -  2024 Proxy Statement 19
 
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EXECUTIVE OFFICERS

 

The table below sets forth the name, age and principal position of each of our executive officers as of December 31, 2023.

 

Name   Age   Principal Position
Paul M. Rady   70   Chairman of the Board, Chief Executive Officer and President
Michael N. Kennedy   49   Chief Financial Officer and Senior Vice President—Finance
Yvette K. Schultz   42   Chief Compliance Officer, Senior Vice President—Legal, General Counsel and Corporate Secretary

 

Biographical information for Mr. Rady is set forth under “Directors” above. References to a position held by one of the below officers at “Antero” means that the person held such position at Antero Resources Corporation, Antero Midstream, the general partner of Antero Midstream GP LP, and the general partner of Antero Midstream Partners LP, as applicable.

 

Michael N. Kennedy has served as Antero Resources Corporation’s Chief Financial Officer since April 30, 2021 and Antero Resources Corporation’s Senior Vice President of Finance since January 2016, prior to which Mr. Kennedy served as Vice President of Finance beginning in August 2013. Mr. Kennedy has also served as Antero Midstream’s Senior Vice President of Finance since the closing of the Simplification Transactions in March 2019. Mr. Kennedy served as Antero Midstream’s Chief Financial Officer from the closing of the Simplification Transactions in March 2019 until April 30, 2021 as well as the Chief Financial Officer and Senior Vice President of Finance of the general partner of Antero Midstream GP LP beginning in April 2017 and as Chief Financial Officer and Senior Vice President of Finance of the general partner of Antero Midstream Partners LP beginning in February 2014. Mr. Kennedy was Executive Vice President and Chief Financial Officer of Forest Oil Corporation (“Forest”) from 2009 to 2013. From 2001 until 2009, Mr. Kennedy held various financial positions of increasing responsibility within Forest. From 1996 to 2001, Mr. Kennedy was an auditor with Arthur Andersen focusing on the Natural Resources industry. Mr. Kennedy holds a B.S. in Accounting from the University of Colorado at Boulder.

 

Yvette K. Schultz has served as Antero’s Chief Compliance Officer and Senior Vice President of Legal since January 2022, and as Antero’s General Counsel since January 2017. Ms. Schultz has also served as Antero’s Corporate Secretary since April 2021. Ms. Schultz was previously Antero’s Director of Legal from 2015 to 2017. Prior to joining Antero, Ms. Schultz was an attorney at Vinson & Elkins L.L.P. from 2008 to 2012 and at Latham & Watkins LLP from 2012 to 2015. Ms. Schultz holds a B.S. in Computer Science and Masters degree in Business Administration from the University of South Dakota. She also holds a J.D. and B.C.L. from the Paul M. Hebert Law Center at Louisiana State University.

 

  -  2024 Proxy Statement 20
 
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CORPORATE GOVERNANCE

 

Corporate Governance Guidelines

 

Antero’s sound governance practices and policies provide an important framework to assist the Board in fulfilling its duties to stockholders. The Corporate Governance Guidelines include provisions concerning the following:

 

qualifications, independence, responsibilities, tenure, and compensation of directors;
background (including skills, experience and viewpoint) and diversity (including race, gender, national origin, religion and sexual orientation or identity) of directors, pursuant to Antero’s Diversity and Inclusion Policy;
service on other boards;
director resignation process;
role of the Chairman of the Board and the Lead Director;
meetings of the Board and of the independent directors;
interaction between the Board and outside parties;
annual performance reviews of the Board;
director orientation and continuing education;
attendance at meetings of the Board and the Annual Meeting;
stockholder communications with directors;
committee functions, committee charters, and independence;
director access to independent advisors and management; and
management evaluation and succession planning.

 

The Corporate Governance Guidelines are available on Antero’s website at www.anteroresources.com in the “Governance” subsection of the “Investors” section. The Nominating & Governance Committee reviews the Corporate Governance Guidelines periodically and as necessary, and any proposed additions or amendments are presented to the Board for its approval.

 

Director Independence

 

Rather than adopting categorical standards, the Board assesses director independence on a case-by-case basis, in each case consistent with applicable legal requirements and the listing standards of the New York Stock Exchange (NYSE). After reviewing all relationships each director has with Antero, including the nature and extent of any business relationships, as well as any significant charitable contributions made to organizations where directors serve as board members or executive officers, the Board has affirmatively determined that none of the directors have material relationships with Antero and all of them are independent as defined by NYSE listing standards except Mr. Rady, Antero’s Chief Executive Officer and President.

 

 

7 of 8

Directors are Independent

 

 
 

 

Board Leadership Structure

 

Antero does not have a formal policy addressing whether the roles of Chairman of the Board and Chief Executive Officer should be separate or combined. The directors serving on the Board have considerable professional and industry experience, significant experience as directors of both public and private companies, and a unique understanding of the challenges and opportunities Antero faces. Accordingly, the Board believes it is in the best position to evaluate Antero’s needs and to determine how best to organize its leadership structure to meet those needs at any given time.

 

  -  2024 Proxy Statement 21
 
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At present, the Board has chosen to combine the positions of Chairman and Chief Executive Officer. The Board believes the current Chief Executive Officer is the individual with the necessary experience, commitment, and support of the other members of the Board to effectively carry out the role of Chairman. Mr. Rady brings valuable insight to the Board due to the perspective and experience he has gained as our Chief Executive Officer and as one of our founders. As the principal executive officer since our inception, Mr. Rady has unparalleled knowledge of our business and operations. As a significant stockholder, Mr. Rady is invested in our long-term success. In addition, the Board believes that combining the roles of Chairman and Chief Executive Officer at the present time promotes strong alignment of strategic development and execution, effective implementation of strategic initiatives, and clear accountability for Antero’s success. Because seven of the eight directors are independent under NYSE rules, the Board believes this leadership structure does not impede independent oversight of Antero.

 

The Nominating & Governance Committee reviews this leadership structure every year. The Board believes it is important to retain the flexibility to determine whether the roles of Chairman and Chief Executive Officer should be separated or combined.

 

Election of Lead Director

 

To facilitate candid discussion among Antero’s directors, the non-management directors meet regularly in executive sessions.

 

The Corporate Governance Guidelines permit the Board, on the recommendation of the Nominating & Governance Committee, to choose a Lead Director to preside at these executive sessions. The Lead Directors responsibilities include:

 

BOARD LEADERSHIP

Presiding over the non-management executive session held at each Board meeting

Calling meetings of the independent directors, as needed

Conferring with the committee chairs and the Chairman, where appropriate, on agenda planning to ensure coverage of key strategic issues

Facilitating the Board’s ability to periodically review and provide input on and monitor management’s execution of the company’s long-term strategy

Serving as the independent directors’ representative in crisis situations

Acting as a key advisor to the CEO on a wide variety of company matters

Being authorized, in consultation with the Board, to retain independent advisors

Engaging directly with key members of the leadership team

Participating in Board-level enterprise risk management

BOARD CULTURE

Serving as liaison between the Chairman and the independent directors

Facilitating discussion among the independent directors on key issues and concerns

Facilitating Board discussions that demonstrate constructive questioning of management

Promoting teamwork and communication among the independent directors

Fostering an environment that allows for engagement and commitment of Board members  

BOARD MEETINGS

Presiding at all meetings or executive sessions of the Board at which the Chairman is not present

PERFORMANCE AND DEVELOPMENT

Leading, in conjunction with the Compensation Committee, the annual performance assessment of the CEO

Facilitating the Board’s engagement with the CEO and CEO succession planning

Leading the Board’s annual self- assessment and recommendations for improvement, if any

 

SHAREHOLDER ENGAGEMENT

Ensuring that he or she is available for direct engagement on matters related to Board governance and oversight, if requested by major shareholders

Ensuring appropriate board oversight of key stakeholder and investor engagement and disclosures

 

Mr. Hardesty has served in this role since 2019, chairing executive sessions of the non-management directors and establishing the agenda for these meetings. As the Lead Director, Mr. Hardesty joins the Chairman in providing leadership and guidance to the Board.

 

  -  2024 Proxy Statement 22
 
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How Director Nominees are Selected

 

Renominating incumbent directors

 

Before recommending to the Board that an existing director be nominated for reelection at the annual meeting of stockholders, the Nominating & Governance Committee will review and consider the director’s:

 

past Board and committee meeting attendance and performance;
length of Board service;
personal and professional integrity, including commitment to Antero’s core values;
relevant experience, skills, qualifications and contributions to the Board; and
independence under applicable standards.

 

The Nominating & Governance Committee is responsible for assessing the appropriate balance of skills and characteristics required of Board members.

 

Appointing New Directors and Filling Vacancies

 

The Board believes that all directors should have sound business judgment, personal and professional integrity, an ability to work as part of a team, willingness to commit the required time to serve as a Board member, business experience, and financial literacy. The Nominating & Governance Committee considers diversity of background and experience along with other factors when reviewing director candidates.

 

For information regarding the experiences, qualifications, attributes, and skills of the current members of our Board, please see “Proxy Summary—Summary of Director Qualifications and Experience.”

 

The Nominating & Governance Committee will treat informal recommendations for directors that are received from Antero’s stockholders in the same manner as recommendations received from any other source. The Nominating & Governance Committee and the Board will also consider the benefits of all aspects of diversity, and will consider whether, and if so how, to identify new candidates for Board service and when identifying potential new Board members or filing a vacancy on the Board, commits to seeking out diverse candidates to the extent possible. Our Diversity and Inclusion Policy requires that each initial pool of candidates to be considered to fill a vacancy on the Board shall include at least one individual who is considered diverse based on the traditional diversity concepts described therein.

 

  -  2024 Proxy Statement 23
 
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Board’s Role in Risk Oversight

 

In the normal course of its business, Antero is exposed to a variety of risks, including market risks relating to changes in commodity prices, interest rate risks, technical risks affecting Antero’s resource base, cybersecurity risks, political risks, and credit and investment risk. Our Board reviews risks that the Company faces in the short-, intermediate- and long-term timeframe in relation to our business on a regular basis. At least annually, our Board also receives updates from management regarding information security, cybersecurity and data security risks in connection with Antero’s Enterprise Risk Management program. The Board and each committee has distinct responsibilities for monitoring other risks, as shown below.

 

The Board of Directors
The Board oversees Antero’s strategic direction. To that end, the Board considers the potential rewards and risks of Antero’s business opportunities and challenges, and it monitors the development and management of risks that impact our strategic goals.

Audit Committee

 

The Audit Committee monitors the effectiveness of Antero’s systems of financial reporting, auditing and internal controls, as well as related legal and regulatory compliance and cybersecurity matters, including ESG disclosures in our quarterly and annual SEC reports, Antero’s privacy and cybersecurity risk exposures, as well as plans and activities to monitor and mitigate such risks.

 

Nominating & Governance Committee

 

The Nominating & Governance Committee oversees the management of risks associated with Board organization, membership and structure; succession planning for our directors and executive officers; and corporate governance.

 

Compensation Committee

 

The Compensation Committee oversees Antero’s compensation policies and practices.

 

Environmental, Social and Governance (ESG) Committee

 

The Environmental, Social and Governance (ESG) Committee provides guidance to the Board on, and oversees Antero’s risk management policies related to the environment, including with respect to climate change, Antero’s health and safety program, and social and political trends, issues and concerns applicable to Antero’s business activities and performance. The ESG Committee regularly receives reports from management on pertinent ESG risks or opportunities, including climate related topics.

 

Conflicts Committee

 

The Conflicts Committee assists the Board in investigating, reviewing and evaluating potential conflicts of interest, including those between Antero and Antero Midstream.

 

 

Board and Committee Self-Evaluations

 

The Board believes that a robust and constructive evaluation process is an essential component of Board effectiveness and good corporate governance. To that end, the Board, the Audit Committee, the Compensation Committee, the Nominating & Governance Committee and the ESG Committee each conduct an annual self-assessment to evaluate their performance, composition, and effectiveness, and to identify areas for improvement.

 

These evaluations take the form of wide-ranging and candid discussions. The Lead Director facilitates discussions evaluating the full Board, and the committee chairs facilitate discussions regarding their respective committees.

 

  -  2024 Proxy Statement 24
 
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Majority Vote Director Resignation Policy

 

Directors are elected by a plurality of votes cast in an uncontested election. The Corporate Governance Guidelines require that an incumbent director who fails to receive more votes cast “for” than “withheld” must tender a resignation. The Nominating & Governance Committee will act on an expedited basis to determine whether to accept any such resignation, and will submit its recommendation for prompt consideration by the Board. The Board expects the director whose resignation is under consideration to abstain from participating in this decision. The Nominating & Governance Committee and the Board may consider any factors they deem relevant in deciding whether to accept a director’s resignation.

 

Meetings

 

The Board held 5 meetings in 2023. The outside directors held 4 executive sessions. No director attended fewer than 75% of the meetings of the Board and of the committees of the Board on which that director served during the respective time he or she served.

 

Directors are encouraged to attend the Annual Meetings of Stockholders. All of the members of the Board attended the 2023 Annual Meeting.

 

How to Contact the Board

 

General Communications

 

Stockholders and other interested parties may communicate with us by writing to Antero Resources Corporation, 1615 Wynkoop Street, Denver, Colorado 80202. Stockholders may submit their thoughts to the Board, any committee of the Board, or individual directors on a confidential or anonymous basis by sending the communication in a sealed envelope marked “Stockholder Communication with Directors” and clearly identifying the intended recipient(s).

 

Antero’s Chief Compliance Officer and Corporate Secretary will review and forward each communication, as soon as reasonably practicable, to the addressee(s) if the communication falls within the scope of matters generally considered by the Board. To the extent the subject matter of a communication is appropriate and relates to matters that have been delegated by the Board to a committee other than the addressee(s) or to an executive officer, the Chief Compliance Officer and Corporate Secretary also may forward the communication to the applicable officer or committee chair.

 

Legal or Compliance Concerns

 

Information regarding legal or compliance concerns may be submitted confidentially and anonymously, although Antero may be obligated by law to disclose the information or identity of the person providing the information in connection with government or private legal actions and in other circumstances.

 

Antero’s policy is not to take any adverse action, and not to tolerate any retaliation, against any person for asking questions or making good faith reports of possible violations of law, Antero’s policies or our Corporate Code of Business Conduct and Ethics.

 

  -  2024 Proxy Statement 25
 
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Insider Trading Policy

 

Antero’s Insider Trading Policy, which applies to all employees, officers, and directors, prohibits hedging of Antero securities and engaging in any other transactions involving Antero-based derivative securities, regardless of whether the covered person is in possession of material, non-public information. The policy does not affect certain transactions made pursuant to Antero’s incentive, retirement, stock purchase, or dividend reinvestment plans, or other transactions involving purchases and sales of company securities between a covered person and Antero. Antero’s Insider Trading Policy also prohibits purchasing Antero common stock on margin (e.g., borrowing money to fund the stock purchase) and pledging Antero securities.

 

Available Governance Materials

 

The following materials are available on Antero’s website at www.anteroresources.com under “Investors” and then “Governance—Governance Documents.”

 

Certificate of Incorporation of the Company;
Bylaws of the Company;
Charters of the Audit Committee, the Compensation Committee, the Nominating & Governance Committee, and the Environmental, Social and Governance Committee;
Corporate Code of Business Conduct and Ethics;
Financial Code of Ethics;
Corporate Governance Guidelines;
Human, Labor and Indigenous Rights Policy;
Diversity and Inclusion Policy;
Supplier Code of Conduct;
Whistleblower Policy;
Political Advocacy Policy; and
Biodiversity Policy.

 

Stockholders may obtain a copy, free of charge, of any of these documents by sending a written request to Antero Resources Corporation, 1615 Wynkoop Street, Denver, Colorado, 80202. Any amendments to Antero’s Corporate Code of Business Conduct and Ethics will be posted in the “Governance” subsection of our website.

 

  -  2024 Proxy Statement 26
 
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BOARD COMMITTEES

 

General

 

The Board had five standing committees in 2023: the Audit Committee, the Compensation Committee, the Nominating & Governance Committee, the Conflicts Committee and the Environmental, Social and Governance (ESG) Committee. Committee charters are available on Antero’s website at www.anteroresources.com in the “Governance—Governance Documents” subsection of the “Investors” section.

 

The Board creates ad hoc committees on an as-needed basis. There were no ad hoc committees in 2023.

 

Audit Committee

Current Members:

Brenda R. Schroer (chair)

Jacqueline C. Mutschler
Vasiliki (Vicky) Sutil
Thomas B. Tyree, Jr.

 

Number of meetings in 2023:
6

 

 

The Audit Committee oversees, reviews, acts on, and reports to the Board on various audit and accounting matters, including:

 

the selection of Antero’s independent accountants,

the scope of annual audits,

fees to be paid to the independent accountants,

the performance of Antero’s independent accountants, and

Antero’s accounting practices.

 

In addition, the Audit Committee oversees Antero’s compliance with legal and regulatory requirements relating to financial, accounting, auditing and related compliance matters, including ESG disclosures in our quarterly and annual SEC reports, as well as Antero’s privacy and cybersecurity risk exposures, and its plans and activities to monitor and mitigate such risks.

 

The Board has determined that all members of the Audit Committee meet the heightened independence standards applicable to audit committee members prescribed by rules of the NYSE and the Securities and Exchange Commission (“SEC”). In addition, the Board believes each of Ms. Schroer and Mr. Tyree is an “audit committee financial expert” as defined in SEC rules.

     

Compensation Committee

Current Members:

Robert J. Clark (chair)

Benjamin A. Hardesty W. Howard Keenan Jr.

 

Number of meetings in 2023:
5

 

 

The Compensation Committee establishes salaries, incentives and other forms of compensation for our executive officers. The Compensation Committee also administers Antero’s incentive compensation and benefit plans, and reviews and recommends to the Board for approval the compensation of our non-employee directors.

 

The Board has determined that all members of the Compensation Committee meet the NYSE’s heightened requirements applicable to compensation committee members, and also meet the heightened independence requirements under SEC rules and the tax code. No Antero executive officer serves on the board of directors of a company that has an executive officer who serves on the Board.

 

 

  -  2024 Proxy Statement 27
 
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Nominating & Governance Committee

Current Members:

Benjamin A. Hardesty (chair)

Robert J. Clark
W. Howard Keenan, Jr.
Jacqueline C. Mutschler.

 

Number of meetings in 2023:
4

 

 

The Nominating & Governance Committee identifies, evaluates and recommends qualified nominees to serve on the Board, develops and oversees Antero’s internal corporate governance processes, and directs all matters relating to the succession of Antero’s Chief Executive Officer.

 

The Board has determined that all members of the Nominating & Governance Committee meet the NYSE’s independence standards.

 

Conflicts Committee

Current Members:

Robert J. Clark (chair)
Jacqueline C. Mutschler
Thomas B. Tyree, Jr.

 

Number of meetings in 2023:
1

  The Conflicts Committee assists the Board in investigating, reviewing and evaluating certain potential conflicts of interest, including those between Antero and Antero Midstream, and carries out any other duties delegated by the Board that relate to potential conflict matters.

Environmental, Social and Governance (ESG) Committee

Current Members:

Vasiliki (Vicky) Sutil (chair)
Benjamin A. Hardesty
Jacqueline C. Mutschler
Brenda R. Schroer
Thomas B. Tyree, Jr.

 

Number of meetings in 2023:
4

 

The Environmental, Social and Governance (ESG) Committee provides guidance to the Board on, and oversees Antero’s risk management policies related to the environment, including with respect to climate change, Antero’s health and safety program, and social and political trends, issues and concerns applicable to Antero’s business activities and performance. The ESG Committee also advises the Board and management on significant public policy issues that are pertinent to the Company and its stakeholders.

 

Members of the ESG Committee have experience in areas relating to ESG, including environmental stewardship, social responsibility and community relations. Vasiliki (Vicky) Sutil, the ESG Committee Chair, brings ESG experience from her time on the Environmental, Health and Safety Board Committee at Delek. Benjamin Hardesty is a trustee and past chairman of the Nature Conservancy of West Virginia and a member of the board of directors of the West Virginia Chamber of Commerce.

 

During 2023, the ESG Committee reviewed, and Antero published, its 2022 ESG Report, which is available at https://www.anteroresources.com/community-sustainability.

 

  -  2024 Proxy Statement 28
 
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COMPENSATION OF DIRECTORS

 

General

 

Our non-employee directors are entitled to receive compensation consisting of retainers, fees and equity awards as described below. The Compensation Committee reviews non-employee director compensation periodically and recommends changes, if appropriate, to the Board for approval.

 

Our employee directors do not receive additional compensation for their services as directors. All compensation received from Antero as employees is disclosed in the Summary Compensation Table on page 54.

 

Annual Cash Retainers

 

Effective April 15, 2023, some of the annual retainers payable to non-employee directors of the Board were increased slightly, as indicated below. These modifications were made to ensure that our director compensation is competitive with that paid by our peers so that we can attract and retain qualified individuals to serve on our Board.

 

Recipient  Amount 
Non-employee director  $100,000 
    (previously $80,000) 
Lead Director  $40,000 
    (previously $25,000) 
Audit Committee:     
Chairperson  $24,000 
Other members  $10,000 
Compensation Committee:     
Chairperson  $20,000 
    (previously $15,000) 
Other members  $7,500 
Nominating & Governance and ESG Committees:     
Chairperson  $15,000 
Other members  $7,500 
Conflicts Committee:     
Chairperson  $5,000 
Other members  $5,000 

 

All retainers are paid in cash on a quarterly basis in arrears, but directors have the option to elect, on an annual basis, to receive all or a portion of their cash retainers in the form of shares of our common stock.

 

  -  2024 Proxy Statement 29
 
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Equity-Based Compensation

 

In addition to cash compensation, our non-employee directors receive annual equity-based compensation consisting of fully-vested stock with an aggregate grant date value equal to $215,000 (increased from $200,000 in 2022), subject to the terms and conditions of the Antero Resources Corporation 2020 Long-Term Incentive Plan (“AR LTIP”) and the agreements pursuant to which such awards are granted. These awards are granted in arrears on a quarterly basis, so each installment has a grant date fair value of approximately $53,750. Prior to April 15, 2023, the annual equity-based compensation for non-employee directors had an aggregate grant date fair value of $200,000, such that the first two installments paid to each director in 2023 had a grant date fair value of approximately $50,000.

 

Fees

 

For 2023, the directors who are members of Board committees were eligible to receive a fee of $1,500 for each committee meeting attended in excess of ten meetings for such committee per calendar year (up to a maximum of $22,500 per committee). Directors are also reimbursed for reasonable expenses incurred to attend meetings and activities of the Board or its committees, and to attend and participate in general education and orientation programs for directors.

 

Stock Ownership Guidelines

 

Under our stock ownership guidelines, within five years of being elected or appointed to the Board, a non-employee director is required to own shares of our common stock with a fair market value equal to at least five times the amount of the annual cash retainer. These stock ownership guidelines are designed to align our directors’ interests more closely with those of our stockholders. All of the directors who are subject to this requirement and who have been on the Board for at least five years are in compliance with the ownership guidelines. For information regarding stock ownership guidelines applicable to our executive officers, please see “Compensation Discussion and Analysis—Other Matters—Stock Ownership Guidelines.”

 

2023 Non-Employee Director Compensation

 

The following table provides information concerning the compensation of our non-employee directors for the fiscal year ended December 31, 2023.

 

Name   Fees Earned
or Paid in Cash
($)(1)
  Stock Awards
($)(2)
  Total
($)
Robert J. Clark   134,250   207,470   341,720
Benjamin A. Hardesty   161,250   207,470   368,720
W. Howard Keenan, Jr.   110,000   207,470   317,470
Jacqueline C. Mutschler   125,000   207,470   332,470
Brenda R. Schroer   126,500   207,470   333,970
Vasiliki (Vicky) Sutil   120,000   207,470   327,470
Thomas B. Tyree, Jr.   117,500   207,470   324,970
(1) Includes annual cash retainer, committee fees, committee chair fees and meeting fees earned during fiscal 2023.
(2) Amounts in this column reflect the aggregate grant date fair value of shares granted under the AR LTIP to each non-employee director during fiscal year 2023, computed in accordance with the rules of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). See Note 10 to our consolidated financial statements on Form 10-K for the year ended December 31, 2023, for additional detail regarding assumptions underlying the value of these equity awards. Each of Messrs. Clark, Hardesty and Keenan held 1,526 exercisable stock options previously granted under the Antero Resources Corporation Long-Term Incentive Plan (the “Prior LTIP”) as of December 31, 2023.

 

  -  2024 Proxy Statement 30
 
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ITEM TWO:   RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Audit Committee of the Board has selected KPMG LLP as Antero’s independent registered public accounting firm for the year ending December 31, 2024. KPMG LLP has audited Antero’s and its predecessor’s financial statements since 2003. The Audit Committee annually evaluates the accounting firm’s qualifications to continue to serve Antero. In evaluating the accounting firm, the Audit Committee considers the reputation of the firm and the local office, the industry experience of the engagement partner and the engagement team, and the experience of the engagement team with clients of similar size, scope and complexity as Antero. The Audit Committee is directly involved in the selection of the new engagement partner when rotation is required every five years in accordance with SEC rules. KPMG LLP completed the audit of Antero’s annual consolidated financial statements for the year ended December 31, 2023, on February 14, 2024.

 

The Board is submitting the selection of KPMG LLP for ratification at the Annual Meeting. The submission of this matter for ratification by stockholders is not legally required, but the Board and the Audit Committee believe the ratification proposal provides an opportunity for stockholders to communicate their views about an important aspect of corporate governance. If our stockholders do not ratify the selection of KPMG LLP, the Audit Committee will reconsider, but will not be required to rescind, the selection of that firm as Antero’s independent registered public accounting firm.

 

Representatives of KPMG LLP are expected to be present at the Annual Meeting. They will have the opportunity to make a statement, and are expected to be available to respond to appropriate questions.

 

The Audit Committee has the authority and responsibility to retain, evaluate and replace Antero’s independent registered public accounting firm. Stockholder ratification of the appointment of KPMG LLP does not limit the authority of the Audit Committee to change Antero’s independent registered public accounting firm at any time.

 

THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE SELECTION OF KPMG LLP AS ANTERO’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2024.

 

  -  2024 Proxy Statement 31
 
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AUDIT MATTERS

 

The material in this report is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether made before or after the date hereof and irrespective of any general incorporation language in such filing.

 

Audit Committee Report

 

Pursuant to its charter, the Audit Committee’s principal functions include: (i) overseeing the accounting and financial reporting process of Antero and audits of Antero’s financial statements (ii) the appointment, compensation, retention and oversight of the work of the independent auditors hired for the purpose of issuing an audit report or performing other audit, review or attest services for Antero; (iii) pre-approving audit or non-audit services proposed to be rendered by Antero’s independent registered public accounting firm; (iv) annually reviewing the qualifications and independence of the independent registered public accounting firm’s engagement partner and other senior personnel who are providing services to Antero; (v) overseeing Antero’s internal auditor and reviewing the internal auditor’s reports and annual internal audit plan; (vi) reviewing with management and the independent registered public accounting firm Antero’s annual and quarterly financial statements, earnings press releases, and financial information and earnings guidance distributed publicly; (vii) approving or ratifying certain related party transactions as set forth in Antero’s Related Persons Transactions Policy; (viii) reviewing with management Antero’s major financial risk exposures; (ix) assisting the Board in monitoring compliance with legal and regulatory requirements relating to financial, accounting, auditing and related compliance matters; (x) preparing the report of the Audit Committee for inclusion in Antero’s proxy statement; and (xi) annually reviewing and reassessing its performance and the adequacy of its charter.

 

While the Audit Committee has the responsibilities and powers set forth in its charter, and Antero’s management and the independent registered public accounting firm are accountable to the Audit Committee, it is not the duty of the Audit Committee to plan or conduct audits or to determine that Antero’s financial statements and disclosures are complete and accurate and in accordance with generally accepted accounting principles and applicable laws, rules and regulations.

 

In performing its oversight role, the Audit Committee has reviewed and discussed Antero’s audited financial statements with management and the independent registered public accounting firm.

 

The Audit Committee also has discussed with the independent registered public accounting firm the matters required to be discussed by the applicable standards and regulations of the Public Company Accounting Oversight Board (the “PCAOB”). The Audit Committee has received the written disclosures and the written statement from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence. The Audit Committee also has considered whether the provision of non-audit services by the independent registered public accounting firm to Antero is compatible with maintaining the firm’s independence, and has discussed with the independent registered public accounting firm its independence.

 

Based on the reviews and discussions described in this Audit Committee Report, and subject to the limitations on the roles and responsibilities of the Audit Committee referred to herein and in its charter, the Audit Committee recommended to the Board that Antero’s audited financial statements for the year ended December 31, 2023, be included in the Form 10-K, which was filed with the SEC on February 14, 2024.

 

Members of the Audit Committee:

 

Brenda R. Schroer (Chairman)
Jacqueline C. Mutschler
Vasiliki (Vicky) Sutil
Thomas B. Tyree, Jr.

 

  -  2024 Proxy Statement 32
 
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Audit and Other Fees

 

The table below sets forth the aggregate fees and expenses billed by KPMG LLP for the last two fiscal years to Antero (in thousands):

 

   For the Years Ended
December 31
   2022   2023
Audit Fees(1)         
Audit and Quarterly Reviews  $1,609   $1,697
Other Filings       
SUBTOTAL   1,609    1,697
Audit-Related Fees(2)       
Tax Fees       
All Other Fees       
TOTAL  $1,609   $1,697
(1) Includes the audit of Antero’s annual consolidated financial statements included in the Annual Report on Form 10-K and internal controls over financial reporting and review of Antero’s quarterly financial statements included in Quarterly Reports on Form 10-Q.
(2) Represents fees related to Antero Resources’ other filings with the SEC, including review and preparation of registration statements, comfort letters and consents.

 

The charter of the Audit Committee and its pre-approval policy require the Audit Committee to review and pre-approve the independent registered public accounting firm’s fees for audit, audit-related, tax and other services. The Chairman of the Audit Committee has the authority to grant pre-approvals up to a certain limit, provided such approvals are within the pre-approval policy and are ratified by the Audit Committee at a subsequent meeting. For the year ended December 31, 2023, the Audit Committee approved all of the services described above.

 

  -  2024 Proxy Statement 33
 
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ITEM THREE:   ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

Our policies are conceived with the intention of attracting and retaining highly qualified individuals capable of contributing to the creation of value for our stockholders. Our compensation program for 2023 was designed to be competitive with market practices and to align the interests of our Named Executive Officers with those of Antero and its stockholders.

 

Stockholders are urged to read the Compensation Discussion and Analysis section of this Proxy Statement, which discusses how our compensation design and practices reflect our compensation philosophy for calendar year 2023. The Compensation Committee and the Board believe that our compensation practices for 2023 were effective in implementing our guiding principles.

 

Pursuant to Section 14A of the Exchange Act, we are submitting this annual proposal to our stockholders for an advisory vote to approve the compensation of our Named Executive Officers. This proposal, commonly known as a “say-on-pay” proposal, gives stockholders the opportunity to express their views on the compensation of our Named Executive Officers for 2023. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers for 2023 and the principles, policies and practices described in this Proxy Statement. Accordingly, the following resolution is submitted for stockholder vote at the Annual Meeting:

 

“RESOLVED, that the stockholders of Antero Resources Corporation approve, on an advisory basis, the compensation of its named executive officers during 2023 as disclosed in the proxy statement for the 2024 Annual Meeting pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and other related tables and disclosures.”

 

As this is an advisory vote, the result is not likely to affect previously granted compensation. The Compensation Committee will consider the outcome of the vote when evaluating our compensation practices going forward.

 

THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT.

 

  -  2024 Proxy Statement 34
 
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COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion and Analysis provides details on the following matters:

 

Our 2023 say-on-pay advisory vote;
Our 2023 executive compensation program and the compensation awarded under that program;
Material actions taken with respect to our 2024 executive compensation program; and
Pertinent executive compensation policies.

 

2023 Named Executive Officers

 

The table below sets forth the name and principal position of each of our 2023 Named Executive Officers.

 

Name Principal Position
Paul M. Rady Chairman of the Board, Chief Executive Officer and President
Michael N. Kennedy Chief Financial Officer and Senior Vice President—Finance
Yvette K. Schultz Chief Compliance Officer, Senior Vice President—Legal, General Counsel and Corporate Secretary

 

2023 Say-on-Pay Advisory Vote

 

At the Company’s 2023 annual meeting, our stockholders were asked to approve, on an advisory basis, the compensation of the Named Executive Officers. Advisory votes in favor of our executive compensation program were cast by approximately 52% of the shares of common stock counted as present and entitled to vote at such meeting. The Company will continue to hold annual Say-on-Pay advisory votes.

 

Historical Say on Pay Support

 

The Compensation Committee strives to ensure that our executive compensation program is aligned with the interests of our stockholders and adheres to our pay-for-performance philosophy. Historically, our executive compensation program has received very strong stockholder support (averaging over 97% approval in the five years prior to 2023). We were disappointed with the 52% stockholder support for our 2023 Say-on-Pay vote. During 2023, the Company engaged with its stockholders and sought to better understand their views and address their concerns.

 

Stockholder Engagement Efforts in 2023

 

We reached out to
stockholders representing:
  We engaged with
stockholders representing:
  Our Chief Financial Officer
participated in meetings with:
>45%   >40%   100%
of our outstanding stock
  of our outstanding stock
  of the stockholders we engaged with

 

  -  2024 Proxy Statement 35
 
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Our management team undertook an extensive stockholder engagement effort in 2023, with a specific focus on getting feedback on our executive compensation program as well as board diversity. As part of our stockholder outreach, we contacted our top 25 stockholders, representing over 45% of our total shares outstanding, and engaged with stockholders representing nearly 40% of our total shares outstanding. By reaching out to stockholders representing approximately 45% of total shares outstanding rather than a smaller pool of stockholders, we were able to solicit input from a wide range of stockholders with different interests and perspectives. We believe that discussions with a broad range of our stockholders helps ensure that the Board and our management team understands our stockholders’ priorities and can work to address those priorities effectively.

 

Meetings with our stockholders occurred prior to and following our 2023 Annual Meeting of Stockholders.

 

Our Chief Financial Officer participated in all of these stockholder outreach meetings, and the Chairman of our Compensation Committee also participated in certain of these stockholder outreach meetings. The Board, Compensation Committee and management team take our stockholders’ concerns seriously and are committed to listening and incorporating changes to our compensation program when warranted.

 

We asked for and received meaningful stockholder feedback on specific elements of our executive compensation program. As can be seen below, the stockholders we spoke with almost universally indicated that they were supportive of our executive compensation program but in the future would prefer not to see the Company grant long-term incentive awards outside of the normal annual grant cycle, which the Company did in 2022 to correct a misalignment between pay and performance that had accumulated over the immediately preceding three years.

 

Compensation Committee Responsiveness to Say-on-Pay Vote and Stockholder Feedback

 

The Compensation Committee and the Board value performance-based compensation and strive for our executive compensation program to align with Company performance initiatives. In October 2022, after working with management and our independent compensation consultant to complete an evaluation of the performance and equity compensation granted by the Company over the prior three years compared to its peers (the “Evaluation”), the Compensation Committee granted additional long-term incentive awards to our Named Executive Officers as a correction of a misalignment between pay and performance. One of the key factors driving the Compensation Committee’s decision was the Company’s reduction in long term debt by approximately $2.6 billion since December 31, 2019, largely in part due to the work of our Named Executive Officers.

 

The Compensation Committee shares our stockholders’ goals of delivering compensation that is consistent with market and aligned with Company performance, and it approached the decision to make the October 2022 grants to the Named Executive Officers with great thoughtfulness, care and contemplation. Long-term incentive awards represent a substantial portion of compensation for our Named Executive Officers. Following the Evaluation, the Compensation Committee felt that our long-term incentive awards had failed to provide market compensation to our Named Executive Officers for the prior three fiscal years given our extraordinary performance over that period. As a result, the Compensation Committee had concerns about the retention of our management team and the effectiveness of the executive compensation program as a motivational tool going forward. After significant thought and deliberation, the Compensation Committee and the Board felt that the Company’s executive compensation program was inadequate during the prior three fiscal years and that the grant of additional long-term incentive awards comprised 50% of restricted stock units and 50% of performance share units was appropriate to ensure the program was realigned with market while simultaneously encouraging management retention and Company performance going forward. These restricted stock units vest on the first three anniversaries of October 15, 2022, contingent upon continued service through each such vesting date. The number of performance share units granted in October of 2022 that become earned, if any, are contingent upon Company achievement of performance goals relating to absolute TSR (as defined below) and the ratio of Net Debt to EBITDAX (each as defined below) over performance periods ranging from January 1, 2023 to December 31, 2025.

 

  -  2024 Proxy Statement 36
 
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The Company received the following feedback from our stockholders:

 

Compensation Element and Description Shareholder Reaction Stockholder Feedback and Board Response
OVERALL COMPENSATION PROGRAM    
Provide executives with a competitive mix of fixed, time-based and performance-based compensation. Positive Stockholders are largely supportive of our executive compensation program and, therefore, the Compensation Committee has not made large changes to our historical program.
ANNUAL INCENTIVE AWARDS    
Encourage short-term financial and operational performance that is aligned with our business strategy and will lead to long-term stockholder value. Positive Stockholders largely supported our 2022 annual incentive plan, particularly the addition of a total debt metric and a slight decrease in the weighting of each of Net Debt/EBITDAX and Cash Costs to make room for the new metric. Stockholders generally did not object to the Compensation Committee’s use of discretion with regard to the 2022 annual incentive plan.
LONG-TERM INCENTIVE PROGRAM    
Our performance share units encourage performance that delivers value to, and direct alignment with, stockholders through stock price appreciation and minimizing debt relative to cash flow. Restricted stock units provide an additional retention mechanism.
On-cycle annual performance share units and restricted stock units Positive Stockholders supported our use of Net Debt to EBITDAX multiple and total shareholder return as the performance metrics for our performance share units, as both metrics are in line with shareholder interests.
Special 2022 restricted stock units and performance share units Negative Stockholders that we spoke with who voted not to approve the 2022 compensation of our Named Executive Officers cited this as their primary concern. Off-cycle long-term incentive awards were not granted to our Named Executive Officers in 2023.

 

The Compensation Committee considered the feedback received from our stockholders during the stockholder outreach conducted in 2023. After extensive conversations, the Compensation Committee elected not to make sweeping changes to our executive compensation program mid-year for the 2023 Fiscal Year or to change the pillars of our executive compensation program for the 2024 fiscal year because it became apparent after considering the Company’s historic Say-on-Pay votes and stockholder feedback received during 2023 that stockholders largely support our executive compensation program, with the exception of the decision to issue additional long-term incentive awards to management in October of 2022 to correct a misalignment between pay and performance. The Compensation Committee and the Board did not make any off-cycle grants to our Named Executive Officers in 2023.

 

As discussed in more detail in Proposal Three above, the Board has recommended that stockholders vote, on a non-binding advisory basis, to approve the compensation paid to our Named Executive Officers during the 2023 Fiscal Year, as described more fully below.

 

How to Communicate with our Board

 

We welcome and value feedback from our stockholders. You may communicate with our Board, our Compensation Committee or an individual director by letter, email or telephone, directed in care of the Company’s Chief Compliance Officer, Senior Vice President-Legal, General Counsel and Corporate Secretary, who will review and forward each communication, as soon as reasonably practicable, to the addressee(s) if the communication falls within the scope of matters generally considered by the Board or the Compensation Committee, as appropriate. Please direct such communications to:

 

Antero Resources Corporation

Chief Compliance Officer, Senior Vice President-Legal, General Counsel and Corporate Secretary
1615 Wynkoop Street
Denver, Colorado 80202
303-357-7310
investorrelations@anteroresources.com

 

  -  2024 Proxy Statement 37
 
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Compensation Philosophy and Objectives of Our Compensation Program

 

Since our inception, our compensation philosophy has been predominantly focused on recruiting individuals who are motivated to help us achieve superior performance and growth. Our company was founded by entrepreneurs whose strategy was to employ high-impact executives who are extremely effective at sparking superior performance with low overhead. These highly qualified and experienced individuals have contributed to the continued success of our Company. As a result of certain of our Named Executive Officers being founders of the Company and our historical emphasis on long-term equity-based compensation, as of April 15, 2024, our Named Executive Officers hold approximately 5.4% of our outstanding shares, which ensures they identify with the best interests of our stockholders.

 

We seek to attract, retain, and motivate exceptional executive talent by providing our executives with a competitive mix of fixed, time-based and performance-based compensation. Our performance-based compensation program focuses on motivating returns and value creation per share, disciplined capital investment, efficient operations, and generation of distributable cash flow. We believe our compensation philosophy and practices for 2023 promote a strong alignment between Named Executive Officer pay and Company performance.

 

Compensation Best Practices

 

Our Compensation Committee is committed to maintaining compensation best practices and employing methods that motivate our executives create long-term value while minimizing risk to investors. The following table highlights the compensation best practices we followed during 2023 with respect to our Named Executive Officers:

 

What We Do
Use a representative and relevant peer group
Target reasonable compensation levels relative to peers with a focus on performance-based, at-risk components
Enforce robust minimum stock ownership guidelines
Evaluate the risk of our compensation programs
Include performance based long-term incentives
Use and review compensation tally sheets
Engage an independent compensation consultant
Maintain a clawback policy
What We Don’t Do
No tax gross ups for executive officers
No excessive perquisites
No severance plans or agreements for Named Executive Officers
No guaranteed bonuses for Named Executive Officers
No management contracts
No granting stock options with an exercise price less than the fair market value of the Company’s common stock on the date of grant outside of transactional context (e.g., substitution of pre-existing target company awards for Company awards in an acquisition)
No reduction of the exercise price of an outstanding stock option without stockholder approval outside of transactional context (e.g., substitution of pre-existing target company awards for Company awards in an acquisition)
No hedging or pledging of Company stock
No separate benefit plans for Named Executive Officers


 

  -  2024 Proxy Statement 38
 
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Implementing Our Compensation Program Objectives

 

Role of the Compensation Committee

 

The Compensation Committee oversees all elements of our executive compensation program and has the final decision-making authority on all executive compensation matters. Each year, the Compensation Committee reviews, modifies (if necessary), and approves our peer group, the goals and objectives relevant to the compensation of all Named Executive Officers, as well as the executive compensation program as a whole, including performance goals for the annual cash incentive program, if applicable, and long-term equity awards. In addition, the Compensation Committee is responsible for reviewing the performance of the Chief Executive Officer and the Company’s Chief Financial Officer within the framework of our executive compensation goals and objectives. The Compensation Committee also evaluates the performance of the other Named Executive Officer in consultation with our Chief Executive Officer and Chief Financial Officer. These evaluations are taken into account when setting the compensation for our Named Executive Officers.

 

Actual compensation decisions for individual officers are the result of a subjective analysis of a number of factors, including the individual officer’s role within our organization, performance, experience, skills or tenure with us, changes to the individual’s position, and relevant trends in compensation practices.

 

The Compensation Committee also considers a Named Executive Officer’s current and prior aggregate compensation when setting future compensation. The Compensation Committee determines whether adjustments to compensation are necessary to adopt emerging best practices, reflect Company performance, retain each executive or provide additional or different performance incentives. Thus, the Compensation Committee’s decisions regarding compensation are the result of the exercise of judgment based on all reasonably available information.

 

Role of the Antero Midstream Compensation Committee and Allocation of Compensation Expenses

 

Our Named Executive Officers provide services to us and to Antero Midstream. In 2023, the Compensation Committee and the Antero Midstream Compensation Committee (the “AM Compensation Committee”) each separately discussed its Named Executive Officers’ aggregate total cash compensation and then approved an aggregate total 2023 base salary and 2023 target bonus for services our Named Executive Officers provide to both Antero and Antero Midstream. Cash compensation included base salary and annual cash incentives in 2023. We pay all elements of cash compensation to, and provide all benefits for, our Named Executive Officers. Antero Midstream reimburses us for a portion of base salaries paid to our Named Executive Officers based on the percentage of all non-compensation general and administrative expenses attributable to each company and calculated quarterly on gross property and equipment, capital expenditure and labor costs, the last of which is calculated based on an estimate of how much time our employees spend providing services to Antero Midstream, in the aggregate, during each quarter (the “Reimbursement Percentage”). Antero Midstream reimbursed us for a portion of our Named Executive Officer’s base salary that equaled 25.5% in 2023 (the “2023 NEO AM Reimbursement Percentage”). The Compensation Committee and the AM Compensation Committee established its own performance metrics for its annual cash incentive program, and Antero Midstream reimbursed us for all amounts paid pursuant to Antero Midstream’s annual cash incentive program.

 

Antero Midstream reimburses us for the portion of the cost of all health and welfare benefits, employer 401(k) contributions, and the limited perquisites we provide to our Named Executive Officers that are attributable to services provided to Antero Midstream. This amount is calculated as the product of the total cost of such benefits and the 2023 NEO AM Reimbursement Percentage.

 

The Compensation Committee established the value of the long-term incentive awards that we granted to our Named Executive Officers at a level compared to similarly situated executives in the peer group, reviewing the Company’s performance and

 

  -  2024 Proxy Statement 39
 
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in consultation with the Company’s independent compensation consultant. The Compensation Committee believes the value granted will motivate and reward longer-term strategy development and execution by the Company. The value of long-term incentive awards was established independently and not in coordination with Antero Midstream.

 

Consistent with the allocation of compensation expense for our Named Executive Officers described above, unless otherwise indicated, the information included in this Compensation Discussion and Analysis, as well as the tables that follow, only pertains to the compensation paid by us for services our Named Executive Officers provided to us in 2023. For information regarding compensation paid to our Named Executive Officers for services provided to Antero Midstream in 2023, please see the Proxy Statement filed by Antero Midstream on April 25, 2024.

 

Role of Management

 

The Chief Executive Officer, together with our Chief Financial Officer, typically provide recommendations to the Compensation Committee regarding the compensation levels for the other Named Executive Officer and for our executive compensation program as a whole. In making their recommendations, the Chief Executive Officer and the Chief Financial Officer, as applicable, consider the Named Executive Officer’s performance during the year, the Company’s performance during the year, compensation levels of similarly situated executives of companies with which we compete for executive talent, and independent oil and gas company compensation surveys. The Compensation Committee considers these recommendations when reviewing the performance of, and setting compensation for, the other executive officers.

 

Role of External Advisors

 

The Compensation Committee has the authority to retain an independent executive compensation consultant. For 2023, the Compensation Committee retained NFPCC. In compliance with the SEC and NYSE disclosure requirements, the Compensation Committee reviewed the independence of NFPCC under six independence factors. After its review, the Compensation Committee determined that NFPCC was independent.

 

In 2023, NFPCC:

 

Collected and reviewed all relevant Company information, including our historical compensation data and our organizational structure;
With input from management, assisted the Compensation Committee in its evaluation of the peer group of companies to use for executive compensation comparisons and made recommendations regarding modifications;
Assessed our compensation program’s position relative to market for our directors, Named Executive Officers and other officers and relative to our stated compensation philosophy;
Prepared a report of its analysis, findings and recommendations for our executive and director compensation programs; and
Completed other ad hoc assignments, such as helping with the design of incentive arrangements.

 

NFPCC’s reports were provided to the Compensation Committee and also used by Messrs. Rady and Kennedy in making their recommendations to the Compensation Committee.

 

  -  2024 Proxy Statement 40
 
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Competitive Peer Analysis

 

When assessing the soundness of our compensation programs, the Compensation Committee compares the pay practices for our Named Executive Officers against the pay practices of other companies. This process recognizes our philosophy that our compensation practices should be competitive, though marketplace information is only one of the many factors we consider.

 

Messrs. Rady and Kennedy and the Compensation Committee used market compensation data provided by NFPCC to assess the total compensation levels of our Named Executive Officers relative to market. Market data is developed by comparing each executive officer’s compensation with that of similarly situated officers of companies in our Peer Group (described below) and of oil and gas companies in general. In determining whether an officer is similarly situated, we consider the specific responsibilities assumed by our executives and executives at other organizations, and give greater weight to Peer Group data if a position appears comparable to the position of one of our Named Executive Officers. Otherwise, we supplement Peer Group data with industry data from the 2023 Oil and Gas E&P Industry Compensation Survey prepared by Effective Compensation, Incorporated.

 

Peer Group

 

NFPCC recommended and, after evaluation and discussion the Compensation Committee, approved a peer group for use in determining compensation for 2023 of onshore publicly traded oil and gas companies that are reasonably similar to us in terms of size and operations. We believe these companies are properly aligned across financial metrics such as revenue, market capitalization, and enterprise value, complexity and geography of operations. The 2023 peer group is unchanged from 2022 except that CNX Resources Corporation was removed because it’s revenue, market capitalization, enterprise value and asset value were all substantially below those of the Company. We added Marathon Oil Corporation because its revenue, market capitalization, enterprise value, and asset value were in line with our peers. We refer to the following ten companies as the “Peer Group”:

 

2023 APPROVED PEER GROUP

 

Company Ticker
APA Corp. APA
Coterra Energy Inc. CTRA
Continental Resources, Inc.(1) CLR
Devon Energy Corporation DVN
Diamondback Energy Inc. FANG
EQT Corporation EQT
Marathon Oil Corporation MRO
Ovintiv Inc. OVV
Range Resources Corporation RRC
Southwestern Energy Company SWN

 

(1) Continental Resources, Inc. was taken private in November of 2022, months after filing it’s 2022 annual report. Compensation data from the 2022 annual report for Continental Resources, Inc. (along with the same data from the other members of the peer group) was considered by the Compensation Committee when making 2023 compensation decisions in early 2023.

 

  -  2024 Proxy Statement 41
 
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Elements of Direct Compensation

 

Our Named Executive Officers’ compensation for 2023 included the key components described below.

 

Pay Component   Form of Pay   How Amount is Determined   Objective
Base salary   Cash   Market-competitive amount that reflects the executive’s relative skills, responsibilities, experience and contributions   Provide a minimum, fixed level of cash compensation
Annual incentive awards   Cash   Operational strategy execution, Net Debt/EBITDAX, Total Net Debt, Cash Costs, and ESG   Encourage short-term financial and operational performance that is aligned with our business strategy and will lead to long-term stockholder value
Long-term incentive awards   Performance share units  

Three-year absolute total stockholder return

 

 

Three-year Net Debt to EBITDAX multiple

 

 

Encourage performance that delivers value to, and direct alignment with, stockholders through stock price appreciation

Encourage minimizing debt relative to cash flow

    Restricted stock units   33% vests on each of the first three anniversaries of grant   Provide an additional retention mechanism

 

With respect to the compensation attributable to services provided to us by our Named Executive Officers, the components of our Named Executive Officers’ compensation for 2023, calculated based on amounts reported for 2023 in the Summary Compensation Table below, except that target annual incentive levels are used rather than actual 2023 annual incentive award levels, were distributed as follows:

 

 

Base Salaries

 

Base salaries are designed to provide a minimum, fixed level of cash compensation for services rendered during the year. In addition to providing a base salary that is competitive with salaries paid by other independent oil and gas exploration and production companies, the Compensation Committee also considers whether our pay levels appropriately align each Named Executive Officer’s base salary level relative to the base salary levels of our other officers. Our objective is to have base salaries that accurately reflect each officer’s relative skills, experience and contributions to the Company. To that end, annual base salary adjustments are based on a subjective analysis of many individual factors, including:

 

the responsibilities of the officer;
the period over which the officer has performed those responsibilities;
the scope of, and level of expertise and experience required for, the officer’s position;

 

  -  2024 Proxy Statement 42
 
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the strategic impact of the officer’s position;
the rate of inflation; and
the potential future contribution and demonstrated individual performance of the officer.

 

In addition to the individual factors listed above, the Compensation Committee considers our overall business performance and implementation of Company objectives when determining annual base salaries. While these metrics generally provide context for making salary decisions, base salary decisions do not depend on attainment of specific goals or performance levels, and no specific weighting is given to one factor over another.

 

Base salaries are reviewed annually, but are not increased if the Compensation Committee believes that (1) our executives are currently compensated at proper levels in light of Company performance or external market factors, or (2) an increase or addition to other elements of compensation would be more appropriate in light of our stated objectives.

 

In March of 2023, the Compensation Committee approved a 10% increase of aggregate base salary levels for services provided both to us and Antero Midstream to each of the Named Executive Officers as compared to 2022 aggregate base salary levels, after considering substantial inflation levels and the 2023 increases in pay being approved by companies with which we compete for executive talent.

 

The table below reflects the portion of the base salary allocated to the Company in 2023 for each Named Executive Officer. For additional information, see “Implementing Our Compensation Program Objectives—Role of the Antero Midstream Compensation Committee and Allocation of Compensation Expenses” above.

 

Executive Officer   2023 Allocated
Base Salary(1)
 
Paul M. Rady      $ 1,065,350  
Michael N. Kennedy   $ 540,870  
Yvette K. Schultz   $ 389,263  

 

(1) The amount of base salary allocated to the Company changes from year to year based on the NEO AM Reimbursement Percentage for that year. As a result, increases or decreases in the amount of base salary allocated to the Company may not indicate an increase or decrease in the executive’s aggregate base salary. The increase in aggregate base salary paid to the Named Executive Officers for services provided to both the Company and Antero Midstream that was approved by both the Compensation Committee and the AM Compensation Committee was 10% for each Named Executive Officer for 2023.

 

Annual Cash Incentive Awards

 

Purpose and Operation

 

Annual cash incentive payments, which we also refer to as cash bonuses, are a key component of each Named Executive Officer’s annual compensation package. The Compensation Committee adopted bonus targets for each of the Named Executive Officers, expressed as a percentage of base salary. The bonus target percentages for our Named Executive Officers for 2023 were unchanged from 2022 and were as follows:

 

Executive Officer   Target
Bonus (as a %
of base salary)
Paul M. Rady       130%  
Michael N. Kennedy     100%  
Yvette K. Schultz     85%  

 

  -  2024 Proxy Statement 43
 
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2023 Performance Metrics

 

The maximum payout opportunity under the annual incentive program is 200% of the Named Executive Officer’s target bonus.

 

In April 2023, the Compensation Committee approved an annual incentive plan for the 2023 fiscal year. The 2023 annual incentive plan mirrors the 2022 annual incentive plan which has a significant focus on operational performance and debt reduction. This structure is intended to provide payout levels that are consistent with our stockholders’ investment objectives, while remaining competitive with companies with which we compete for executive talent.

 

In April of 2023 the Compensation Committee selected the following metrics, weightings and performance levels for the 2023 annual cash incentive program.

 

Selected Metrics       Weighting       Threshold
Performance
(50%)
      Target
Performance
(100%)
      Maximum
(200%)
      Performance
Score
(% of Target)
      Weighted
Score
Operational Strategy Execution                        
Meeting Budgeted D&C Capital
($ Millions)
      130.1%   32.5%
                         
Meeting Budgeted Production
Volumes (MMcfe/d)
      200%   50.0%
                         
Net Debt/EBITDAX       87.8%   11.0%
                         
Total Net Debt
($ Millions)
      0%   0%
                         
Cash Costs
($ Millions)
      138.9%   13.9%
                         
ESG    

Qualitative Assessment

 

  200.0%   30.0%
                         
                    Preliminary
Total
  137.4%
                         
                    Discretionary
Decrease
  (17.4)%
                         
                    Total   120%

 

  -  2024 Proxy Statement 44
 
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Metric   Definition   Rationale
D&C Capital   Drilling and Completion (“D&C”) capital represents the accrued drilling and completion capital for 2023, as presented in the 4th quarter of 2023, the full year earnings press release furnished as exhibit 99.1 to the Form 8-K filed with the SEC on February 14, 2024, and our Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 14, 2024.   Managing capital motivates our Named Executive Officers to operate within acceptable budgetary guidelines.
Production Volumes   Average net production volumes on an equivalent basis (MMcfe/d), as presented in the full year earnings press release furnished as exhibit 99.1 to the Form 8-K filed with the SEC on February 14, 2024 and our Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 14, 2024. Assumes no adjustments related to royalty adjustments for uneconomic natural gas liquids (“NGLs”).   Production volumes are critical to our profitability. Measuring these volumes motivates our Named Executive Officers to grow our business responsibly.
Net Debt/EBITDAX   Year-end 2023 Net Debt divided by 2023 full-year Adjusted EBITDAX, each as presented in the full year earnings press release furnished as exhibit 99.1 to the Form 8-K filed with the SEC on February 14, 2024.   Managing the balance sheet leverage is essential for growing our business efficiently. Net Debt/EBITDAX is a key debt coverage ratio that our Compensation Committee believes motivates management to minimize debt relative to cash flow.
Total Net Debt   Year-end total debt as presented in the full year earnings press release furnished as exhibit 99.1 to the Form 8-K filed with the SEC on February 14, 2024.   Managing absolute levels of total debt incentivizes management to protect the balance sheet through cyclical commodity price environments that could result in material changes in the cash flow of the business.
Cash Costs   Includes lease operating expense, gathering, compression, processing, transportation, production and ad valorem taxes, net marketing expense and general and administrative costs (excluding equity-based compensation).   Controlling cash costs motivates our Named Executive Officers to operate in a disciplined and efficient manner.
ESG   The Compensation Committee of our Board considered ESG matters in this assessment, which included non-financial performance related to our safety record, reductions in greenhouse gas emissions, and the safety of our work environment and strong environmental record.   These functions are critical to the success of the business and the execution of our overall strategy. Our people are motivated to work in a safe environment that shows progress toward sustainability.

 

  -  2024 Proxy Statement 45
 
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2023 Annual Incentive Program Payouts

 

When determining the performance score for the ESG metric the Compensation Committee considered the Company’s internal ESG scorecard which highlighted specific achievements in the areas of environmental performance, social and safety factors, and social governance, including the following:

 

Ranked #2 Oil & Gas Company in Rystad Energy AS’s 2023 ESG Scorecard Report (#1 Environmental Company);
Upgraded to an “AA” from “A” by MSCI Inc.’s ESG ratings;
Significantly reduced the number of recordable injuries from 9 in 2022 to 4 in 2023; and
Zero employee fatalities for the 6th consecutive year.

 

The Compensation Committee determined that, in order to better align the 2023 Annual Incentive Program payouts with the interests of shareholders, those payouts should be reduced to 120% of target.

 

The 2023 annual cash bonus amounts reported below reflect the portion of the annual cash bonus for each Named Executive Officer allocated to the Company. For additional information, see “Implementing Our Compensation Program Objectives—Role of the Antero Midstream Compensation Committee and Allocation of Compensation Expenses” above.

 

Executive Officer  Preliminary
Percentage of 2023
Target Bonus to
be Paid for 2023
Performance
  Preliminary Allocated
2023 Annual Cash
Bonus Payments(1)
  Final Percentage of
2023 Target Bonus
to be Paid for 2023
Performance
  Final Allocated 2023
Annual Cash Bonus
Payments(1)
Paul M. Rady   137.4%       $1,902,928       120%        $1,661,946   
Michael N. Kennedy   137.4%  $743,155    120%  $649,044 
Yvette K. Schultz   137.4%  $454,620    120%  $397,048 
(1) The amounts in this column are reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table, below.

 

Long-Term Incentive Awards

 

Annual Long-Term Incentive Awards Granted in 2023

 

Each of the Named Executive Officers received a grant comprised 50% of restricted stock units and 50% of performance share units in March of 2023 pursuant to the AR LTIP. The Compensation Committee grants RSUs as a retention tool and in order to align the interests of our Named Executive Officers with the interests of our stockholders and grants PSUs to incent management to make sound capital investment decisions that align with shareholder value creation. The restricted stock units, or “RSUs,” granted to the Named Executive Officers in 2023 vest ratably on the first three anniversaries of the date of grant, subject to continued service. One-half of the performance share units, or “PSUs,” granted to our Named Executive Officers in 2023 will vest based on absolute total stockholder return, or “TSR,” while the other half will vest based on our Net Debt to EBITDAX multiple. The Compensation Committee selected absolute TSR because it provides a rigorous framework that rewards the Named Executive Officers for improving absolute stock price, and because it directly aligns the incentive for our Named Executive Officers to our investors’ experience. The Compensation Committee selected Net Debt to EBITDAX multiple because managing balance sheet leverage is essential for growing our business efficiently and this metric is a key debt coverage measurement that the Compensation Committee believes will motivate management to minimize debt relative to cash flow.

 

  -  2024 Proxy Statement 46
 
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Absolute TSR PSUs

 

The absolute TSR PSUs granted in March of 2023 have four performance periods. One quarter of the target amount of PSUs may be earned based on performance for each of the following performance periods: March 7, 2023 to March 7, 2024; March 7, 2024 through March 7, 2025; March 7, 2025 to March 7, 2026; and March 7, 2023 to March 7, 2026.

 

The payouts for the absolute April TSR PSUs are determined as follows:

 

Performance Level     Absolute TSR     Percentage
of Eligible
Target Amount
Earned for Each
Performance
Period %
     Percentage of
Target PSUs
Earned for Each
Performance
Period
Floor   0            0%      0%  
Target   10%   100%   25%
Maximum   20%   200%   50%

 

“Absolute TSR” for purposes of these PSUs is measured by reference to the Company’s 20-day average volume-weighted closing price per share of stock for the first twenty trading days of the applicable performance period and the Company’s 20-day average volume-weighted closing price per share of stock for the last twenty trading days of the applicable performance period. If the Company’s absolute TSR falls between the floor and target amounts or the target and maximum amounts, then the percentage of the target amount of PSUs that are earned for the relevant performance period will be determined using linear interpolation between the relevant performance levels.

 

Net Debt to EBITDAX PSUs

 

The Net Debt to EBITDAX multiple PSUs granted in March of 2023 have three performance periods. One third of the target amount of PSUs may be earned based on performance during each of the following performance periods: January 1, 2023 to December 31, 2023; January 1, 2024 through December 31, 2024; and January 1, 2025 to December 31, 2025.

 

The payouts for the Net Debt to EBITDAX PSUs are determined as follows:

 

Level     Net Debt to
EBITDAX Multiple
     Percentage
of Eligible
Target Amount
Earned for Each
Performance
Period*
     Percentage of
Target Amount
of PSUs Earned
For Each
Performance
Period*
Floor   > 2.5x        0%       0%     
Target   2.0x   100%   33.33%
Maximum   1.5x   200%   66.66%

 

For definitions regarding “Net Debt” and “EBITDAX” as used in the 2023 Net Debt to EBITDAX multiple PSUs, please see “Annual Cash Incentive Awards –2023 Performance Metrics” above. If the Company’s Net Debt to EBITDAX multiple falls between the floor and target amounts or the target and maximum amounts, then the percentage of the target amount of PSUs that are earned for the relevant performance period will be determined using linear interpolation between the relevant performance levels.

 

  -  2024 Proxy Statement 47
 
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Target Value of Long-Term Incentive Awards

 

The table below shows the values approved by the Compensation Committee for the annual long-term incentive awards granted to our Named Executive Officers in 2023. These values were established by the Compensation Committee after referencing the 25th, 50th, and 75th percentiles of the Peer Group. The percentiles are reference points only. We consider individual performance, the nature and responsibility of the Named Executive Officer’s position, the impact, contribution and expertise of the Named Executive Officer, and the importance of retaining the individual along with the competitiveness of the market for the Named Executive Officer’s talents and services.

 

Executive Officer   2023 Target Long-Term
Incentive Value(1)
Paul M. Rady     $ 10,000,000        
Michael N. Kennedy   $ 4,300,000  
Yvette K. Schultz   $ 2,625,000  
(1) The amounts set forth in this column differ from the amounts set forth under the “Summary Compensation Table” and the “Grants of Plan-Based Awards for Fiscal Year 2023” below, as these amounts were set by the Compensation Committee and then divided by the closing price on the applicable date of grant to determine the number of restricted stock units and target performance share units to be granted. The amounts set forth under “Summary Compensation Table” and the “Grants of Plan-Based Awards for Fiscal Year 2023” below reflect the grant date fair value of the number of restricted stock units and target performance share units granted, as computed in accordance with FASB ASC Topic 718, resulting in a slightly higher value attributable to the grants under those tables.

 

The number of performance share units and restricted stock units granted to our Named Executive Officers in 2023 are described more fully under “Grants of Plan-Based Awards for Fiscal Year 2023” below.

 

Other Benefits

 

Health and Welfare Benefits

 

Our Named Executive Officers are eligible to participate in all of our employee health and welfare benefit arrangements on the same basis as other employees (subject to applicable law). These arrangements include medical, dental, vision and disability insurance, as well as health savings accounts.

 

We provide these benefits to ensure that we can competitively attract and retain officers and other employees. This is a fixed component of compensation, and these benefits are provided on a non-discriminatory basis to all employees.

 

Retirement Benefits

 

We maintain an employee retirement savings plan through which employees may save for retirement or future events on a tax-advantaged basis. Participation in the 401(k) plan is at the discretion of each individual employee, and our Named Executive Officers participate in the plan on the same basis as all other employees. The plan permits us to make discretionary matching and non-elective contributions.

 

During 2023, the Company matched 100% of the first 6% of eligible compensation that employees contributed to the plan. These matching contributions are immediately fully vested. Antero Midstream reimburses the Company for a portion of these matching contributions as a general and administrative expense.

 

  -  2024 Proxy Statement 48
 
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Perquisites and Other Personal Benefits

 

We provide those very limited perquisites to our Named Executive Officers that are frequently provided by those companies with which we compete for executive talent in order to offer a competitive pay package. Perquisites do not play a significant role in our Named Executive Officers’ total compensation. See the All Other Compensation column of the Summary Compensation Table, below, for additional information regarding the limited perquisites provided to our Named Executive Officers in 2023.

 

2024 Material Compensation Decisions

 

Base Salaries

 

In March 2024, after comparing base salary levels to those of similarly situated executives in the 2024 Peer Group, reviewing the Company’s performance during 2023, and discussing the recommendations of Messrs. Rady and Kennedy and NFPCC, the Compensation Committee approved the following increases to base salary for the Named Executive Officers for 2024:

 

Executive Officer  2023
Allocated
Base Salary(1)
   2024 Allocated
Base Salary(1)
   Percentage
Increase
Paul M. Rady  $1,065,350   $1,107,964    4%
Michael N. Kennedy  $540,870   $562,475    4%
Yvette K. Schultz  $389,263   $404,833    4%
(1) Allocated base salary included here is calculated based on the 2023 Reimbursement Percentage. The actual percentage of base salary allocated to the Company for 2024 will not be determinable until the 2024 Reimbursement Percentage is calculated following the end of 2024.

 

Annual Cash Incentive Awards

 

In April 2024, the Compensation Committee approved an annual incentive plan for the 2024 fiscal year. The 2024 annual incentive plan mirrors the 2023 annual incentive plan. We believe this structure motivates our Named Executive Officers to accomplish specific objectives that are important to our success and sustainable growth.

 

Long-Term Incentive Awards

 

Consistent with 2023, the Compensation Committee granted 50% performance-based long-term equity awards and 50% time-based equity awards to our Named Executive Officers in March 2024. These awards are subject to the terms and provisions of the 2020 AR LTIP and the award agreements pursuant to which they were granted.

 

  -  2024 Proxy Statement 49
 
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Other Matters

 

No Employment, Severance or Change-in-Control Agreements

 

We do not maintain any employment, severance or change-in-control agreements with any of our Named Executive Officers.

 

As discussed below under “Potential Payments Upon a Termination or a Change in Control,” our Named Executive Officers would be entitled to receive accelerated vesting of their performance share units, restricted stock units and cash retention awards (if applicable) that remain unvested upon their termination of employment with us under certain circumstances or upon the occurrence of certain corporate events.

 

Stock Ownership Guidelines

 

Under our stock ownership guidelines, our executive officers are required to own a minimum number of shares of our common stock within five years of becoming an executive officer. In particular, each of our executive officers is required to own shares of our common stock having an aggregate fair market value equal to at least a designated multiple of the executive officer’s base salary. The guidelines for executive officers are set forth in the table below.

 

Officer Level Ownership Guideline
Chief Executive Officer, President, and Chief Financial Officer 5x annual base salary
Vice President 3x annual base salary
Other Officers (if applicable) 3x annual base salary

 

Compliance with these guidelines is measured as of June 30 of each year. If an individual covered by the ownership guidelines satisfies the guidelines on a prior determination date, a subsequent decrease in our stock price will not cause that executive to be out of compliance on a later determination date. As of June 30, 2023, all of our Named Executive Officers and directors were in compliance with these guidelines or had time remaining before compliance was required. Consistent with our stock ownership guidelines, any noncompliance may be considered by the Compensation Committee when making future compensation or promotion decisions.

 

These stock ownership guidelines are designed to align our executive officers’ interests more closely with those of our stockholders. The chart below shows the significant levels of stock ownership of our Named Executive Officers and the ratio of their ownership to their respective base salaries.

 

We believe the high level of ownership demonstrates significant alignment with our stockholders.

 

 

 

Shares directly and beneficially owned by our Named Executive Officers count towards satisfaction of our stock ownership guidelines. Vested and unvested stock options, unvested restricted stock units, and other conditional equity-based awards (including performance-based awards) do not count towards satisfaction of our stock ownership guidelines. However, for purposes of the chart above, unvested restricted stock units held by our Named Executive Officers are included. Values reported in the chart above are as of June 30, 2023, the measurement date for our stock ownership guidelines.

 

  -  2024 Proxy Statement 50
 
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Tax and Accounting Treatment of Executive Compensation Decisions

 

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), generally imposes a $1 million limit on the amount of compensation paid to “covered employees” (as defined in Section 162(m)) that a public corporation may deduct for federal income tax purposes in any year. The “Tax Cuts and Jobs Act,” enacted in 2017, repealed the performance-based compensation exception to the Section 162(m) deduction limitation for tax years beginning after December 31, 2017. In addition, the Tax Cuts and Jobs Act generally expanded the scope of who is considered a “covered employee.” With these changes, compensation paid to certain of our executives will be subject to the $1 million per year deduction limitation imposed by Section 162(m). While we will continue to monitor our compensation programs in light of the deduction limitation imposed by Section 162(m), our Compensation Committee considers it important to retain the flexibility to design compensation programs that are in the best long-term interests of the Company and our stockholders. As a result, we have not adopted a policy requiring that all compensation be fully deductible. The Compensation Committee may conclude that paying compensation at levels in excess of the limits under Section 162(m) is in the best interests of the Company and our stockholders. The Company will not be able to deduct for federal income tax purposes a portion of the compensation paid to our Named Executive Officers in 2023.

 

Many other Code provisions and accounting rules affect the payment of executive compensation and are generally taken into consideration as our compensation arrangements are developed. Our goal is to create and maintain compensation arrangements that are efficient, effective and in full compliance with these requirements.

 

Risk Assessment

 

We have reviewed our compensation policies and practices to determine whether they create risks that are reasonably likely to have a material adverse effect on our Company. In connection with this risk assessment, we reviewed the design of our compensation and benefits program and related policies and determined that certain features of our programs and corporate governance generally help mitigate risk. Among the factors considered were the mix of cash and equity compensation, the balance between short- and long-term objectives of our incentive compensation, the degree to which programs provide for discretion to determine payout amounts, and our general governance structure.

 

Our Compensation Committee believes that evaluating overall business performance and implementing Company objectives assists in mitigating excessive risk-taking that could harm our value or reward poor judgment by our executives. Several features of our programs reflect sound risk-management practices.

 

The Compensation Committee believes our overall compensation program provides a reasonable balance between short- and long-term objectives, which helps mitigate the risk of excessive risk-taking in the short-term.
The metrics that determine ultimate value awarded under our incentive compensation programs are associated with total Company value. We do not believe these metrics create pressure to meet specific financial or individual performance goals.
The mix of time- and performance-based equity awards and multi-year vesting of our equity awards discourages excessive risk-taking and undue focus on short-term gains that may not be sustainable.

 

Due to the foregoing program features, the Compensation Committee concluded that our compensation policies and practices for all employees, including our Named Executive Officers, are not reasonably likely to have a material adverse effect on the Company.

 

  -  2024 Proxy Statement 51
 
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Tally Sheets

 

The Compensation Committee uses tally sheets as a reference point in reviewing and establishing our Named Executive Officers’ compensation. The tally sheets provide a holistic view of all material elements of our Named Executive Officers’ compensation, including base salary, annual cash incentive awards, long-term equity incentive awards and indirect compensation such as perquisites and retirement benefits. Tally sheets also demonstrate the amounts each executive could potentially receive under various termination and change in control scenarios, and include a summary of all shares beneficially owned.

 

Hedging and Pledging Prohibitions

 

Our Insider Trading Policy prohibits our Named Executive Officers from engaging in speculative transactions involving our common stock, including buying or selling puts or calls, short sales, purchasing securities on margin, or otherwise hedging the risk of ownership of such securities. The Insider Trading Policy also prohibits our Named Executive Officers from pledging shares of such securities as collateral.

 

Clawback Policy

 

Effective November 30, 2023, we adopted the Antero Resources Corporation Incentive Compensation Recovery Policy (the “Clawback Policy”). The Clawback Policy is intended to comply with the requirements of Section 10D of the Exchange Act and Section 303A.14 of the NYSE Listing Company Manual. Under the terms of the Clawback Policy, in the event of a restatement of our financial statements due to material non-compliance with any financial reporting requirement under applicable securities laws, the Compensation Committee shall take reasonably prompt action to cause the Company to recover from any covered executive the amount of any incentive-based compensation granted, earned or vested within the three preceding completed fiscal years, to the extent the value of such compensation was in excess of the amount of incentive compensation that would have been granted, earned, or vested had the financial statements been in compliance with the financial reporting requirements. Each executive officer, including our Named Executive Officers, principal accounting officer, and former executive officers, are considered “covered executives” for purposes of the Clawback Policy. Incentive-based compensation is not subject to the Clawback Policy if it is received (i) prior to the date a covered executive becomes an executive officer or (ii) prior to October 2, 2023.

 

The Prior LTIP and the AR LTIP generally provide that, to the extent required by applicable law or any applicable securities exchange listing standards, or as otherwise determined by the Compensation Committee, all awards under the Prior LTIP and the AR LTIP are subject to the provisions of any clawback policy the Company implements.

 

  -  2024 Proxy Statement 52
 
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Compensation Committee Report

 

The material in this report is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by reference into any filing under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in such filing.

 

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, and at the recommendation of the Compensation Committee, the Board of Directors has determined that the Compensation Discussion and Analysis should be included in this Proxy Statement and incorporated by reference into our Annual Report on Form 10-K.

 

 

Compensation Committee Members:

 

Robert J. Clark, Chairman

Benjamin A. Hardesty

W. Howard Keenan Jr.

 

  -  2024 Proxy Statement 53
 
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EXECUTIVE COMPENSATION TABLES

 

Summary Compensation Table

 

The following table summarizes, with respect to our Named Executive Officers, information relating to the compensation earned for services rendered in all capacities during the fiscal years ended December 31, 2023, 2022, and 2021. The table reflects only the portion of the compensation earned by our Named Executive Officers attributable to their services to the Company, and does not include compensation earned for services provided to Antero Midstream or its subsidiaries. See above under “Compensation Discussion and Analysis—Implementing Our Compensation Program Objectives—Role of the Antero Midstream Compensation Committee and Allocation of Compensation Expenses” for further discussion of the allocation methodology used.

 

Name and
Principal Position
    Year    Salary
($)
    Bonus
($)
    Stock
Awards
($)(2)
    Non-Equity
Incentive Plan
Compensation
($)(3)
    All Other
Compensation
($)(4)
    Total
($)
Paul M. Rady
(Chairman of the Board of Directors, Chief Executive Officer and President)
      2023   1,065,350        10,770,416     1,661,946        14,751           13,512,463   
  2022   942,500    564,840    21,853,164    1,273,035    8,282    24,641,821 
  2021   702,900        4,791,874    953,132    8,236    6,456,142 
Michael N. Kennedy
(Chief Financial Officer, and Sr. Vice President— Finance)
  2023   540,870    266,667(1)    4,631,209    649,044    26,656    6,114,446 
  2022   478,500    487,255    7,476,082    497,162    20,207    8,959,206 
  2021   362,100    266,667    1,064,852    409,173    19,362    2,122,154 
Yvette K. Schultz
(Chief Compliance Officer, Sr. Vice President— Legal, General Counsel and Corporate Secretary)
  2023   389,263        2,827,203    397,048    30,731    3,644,245 
  2022   344,375    134,943    5,750,785    304,135    8,410    6,542,648 
  2021                        

 

(1) Reflects the portion of the special cash retention award granted to Mr. Kennedy during 2020 that vested and was paid out in 2023.
(2) The amounts in this column represent the grant date fair value of restricted stock units and performance share units granted to the Named Executive Officers in 2023 pursuant to the AR LTIP, each as computed in accordance with FASB ASC Topic 718. See Note 10 to our consolidated financial statements on Form 10-K for the year ended December 31, 2023, for additional detail regarding assumptions underlying the value of these equity awards. If the maximum level of performance for the annual Net Debt to EBITDAX PSUs granted in March 2023 was achieved, then the value of such award granted to Messrs. Rady and Kennedy and Ms. Schultz would be $5,000,000, $2,149,955, and $1,312,486, respectively.
(3) The amounts in this column represent the annual incentive plan payments.
(4) The amounts in this column represent the Company’s allocated portion of the amount of the Company’s 401(k) match for fiscal 2023 for each participating Named Executive Officer. Additionally, for Mr. Kennedy and Ms. Schultz, this amount includes $11,905, which is the Company’s allocated portion of the cost of financial services provided to each of Mr. Kennedy and Ms. Schultz by Ayco Financial Planning and Consulting during 2023.

 

  -  2024 Proxy Statement 54
 
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Grants of Plan-Based Awards for Fiscal Year 2023

 

The table below sets forth the awards granted to our Named Executive Officers during 2023, including awards under the 2023 annual cash incentive plan and the performance share units and restricted stock units granted under the AR LTIP.

 

          Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)
    Estimated Future Payouts Under
Incentive Plan Awards(2)
    All Other
Stock
Awards:
Number of
Shares of
Stock or
    Grant Date
Fair Value
of Stock
and Option
Name  Grant
Date
  Threshold
($)
    Target
($)
    Maximum
($)
  Threshold
(#)
    Target
(#)
    Maximum
(#)
  Units
(#)(3)
  Awards
($)(4)
Paul M. Rady      692,478    1,384,955    2,769,910                          
Absolute TSR PSUs(5)  3/7/23                      96,302    192,604         3,270,416 
Net Debt to EBITDAX PSUs(6)  3/7/23                      96,302    192,604         2,500,000 
RSUs(7)  3/7/23                                 192,604    5,000,000 
Michael N. Kennedy      270,435    540,870    1,081,740                          
Absolute TSR PSUs(5)  3/7/23                      41,409    82,818         1,406,250 
Net Debt to EBITDAX PSUs(6)  3/7/23                      41,409    82,818         1,074,978 
RSUs(7)  3/7/23                                 82,819    2,149,981 
Yvette K. Schultz      165,437    330,873    661,746                          
Absolute TSR PSUs(5)  3/7/23                      25,279    50,558         858,475 
Net Debt to EBITDAX PSUs(6)  3/7/23                      25,279    50,558         656,243 
RSUs(7)  3/7/23                                 50,558    1,312,486 

 

(1) These columns represent the threshold, target and maximum amount that may be earned under our 2023 annual cash incentive plan.
(2) These columns reflect the threshold, target and maximum number of shares that may be earned under performance share units granted to each of Messrs. Rady and Kennedy and Ms. Schultz on March 7, 2023.
(3) This column reflects the number of restricted stock units granted to each of Messrs. Rady and Kennedy and Ms. Schultz on March 7, 2023.
(4) The amounts in this column represent the grant date fair value of restricted stock units and performance share units granted to the Named Executive Officers pursuant to the AR LTIP, as computed in accordance with FASB ASC Topic 718. See Note 10 to our consolidated financial statements on Form 10-K for the year ended December 31, 2023, for additional detail regarding assumptions underlying the value of these equity awards.
(5) One quarter of the absolute TSR PSUs granted on March 7, 2023 are earned (or not) based upon our TSR performance for each of four performance periods: (i) from March 7, 2023 to March 7, 2024, (ii) from March 7, 2024 to March 7, 2025, (iii) from March 7, 2025 to March 7, 2026, and (iv) from March 7, 2023 to March 7, 2026. The Named Executive Officers are each eligible to receive up to 200% of one quarter of the target amount of TSR PSUs awarded, as determined at the end of each applicable performance period (subject to continued service through the fourth and final performance period). There is no performance threshold applicable to the absolute TSR PSUs, but if TSR performance falls between zero and target performance (10% absolute TSR) or between target and maximum performance (20% absolute TSR), then the number of absolute TSR PSUs that will become vested and earned will be determined using linear interpolation between the relevant performance levels.
(6) One third of the Net Debt to EBITDAX PSUs granted on March 7, 2023 are earned (or not) based upon our Net Debt to EBITDAX multiple for each of three performance periods: (i) from January 1, 2023 to December 31, 2023, (ii) from January 1, 2024 to December 31, 2024, and (iii) from January 1, 2025 to December 31, 2025. The Named Executive Officers are each eligible to receive up to 200% of one third of the target amount of Net Debt to EBTIDAX PSUs awarded, as determined at the end of each applicable performance period. There is no performance threshold applicable to the Net Debt to EBITDAX PSUs, but if the Net Debt to EBITDAX multiple falls between 2.5x (or higher) and target performance (2.0x) or between target and maximum performance (1.5x), then the number of Net Debt to EBITDAX PSUs that will become vested and earned will be determined using linear interpolation between the relevant performance levels.
(7) The restricted stock units granted to the Named Executive Officers on March 7, 2023 are subject to ratable vesting on the first three anniversaries of March 7, 2023, in each case, subject to such Named Executive Officer’s continued employment through such date.

 

  -  2024 Proxy Statement 55
 
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Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

 

The following is a discussion of material factors necessary to an understanding of the information disclosed in the Summary Compensation Table and the Grants of Plan-Based Awards for Fiscal Year 2023 table.

 

Performance Share Units

 

The Compensation Committee granted annual performance share units to our Named Executive Officers in March 2023. Fifty percent of the performance share units will be earned (or not) based upon absolute TSR measured over four performance periods spanning each of the three years following grant, plus a cumulative period of three years following grant; and 50% of the performance share units will be earned (or not) based upon our Net Debt to EBITDAX multiple measured over three performance periods spanning the calendar year inclusive of grant and each of the two calendar years following grant.

 

Generally, the performance share units will not vest until the last date of the final performance period applicable to such performance share units. The potential acceleration and forfeiture events related to these performance share units are described in greater detail under the heading “Potential Payments Upon Termination or Change in Control” below.

 

Restricted Stock Units

 

The Compensation Committee granted restricted stock units to each of our Named Executive Officers in March 2023. The restricted stock units vest over a three-year period, if such employees remain continuously employed by us from the grant date through the applicable vesting date. The potential acceleration and forfeiture events related to these restricted stock units are described in greater detail under the heading “Potential Payments Upon Termination or Change in Control” below.

 

  -  2024 Proxy Statement 56
 
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Outstanding Equity Awards at 2023 Fiscal Year-End

 

The following table provides information concerning equity awards granted by the Company to our Named Executive Officers that had not vested as of December 31, 2023.

 

   Option Awards  Stock Awards
Name  Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
  Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
  Option
Exercise
Price
($)
  Option
Expiration
Date
  Number of
Units That
Have Not
Vested
(#)
  Market Value
of Units That
Have Not
Vested
($)(1)
  Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
  Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(2)
Paul M. Rady                        
Restricted Stock Units(3)              840,188  19,055,464      
Performance Share Units(4)                    423,250  9,599,310
Stock Options    100,000  50.00  4/15/25            
Michael N. Kennedy                        
Restricted Stock Units(3)              260,103  5,899,136      
Performance Share Units(4)                    148,276  3,362,900
Stock Options    25,000  50.00  4/15/25            
Yvette K. Schultz                        
Restricted Stock Units(3)              187,071  4,242,770      
Performance Share Units(4)                    87,953  1,994,774
(1) The amounts reflected in this column represent the market value of our common stock underlying (i) the unvested restricted stock units and (ii) the performance share units for which performance has been achieved but which require continued service, in each case, held by the Named Executive Officers, computed based on the closing price of our common stock on December 29, 2023, which was $22.68 per share.
(2) The amounts reflected in this column represent the market value of our common stock underlying the performance share units reported in the preceding column, computed based on the closing price of our common stock on December 29, 2023, which was $22.68 per share.

 

  -  2024 Proxy Statement 57
 
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(3) The amounts in this row represent unvested restricted stock units and unvested performance share units for which the applicable performance goals have been achieved held by each Named Executive Officer that vest on the applicable remaining vesting dates as follows, subject to the Named Executive Officer’s continued employment:

 

  Name  Award  Number
Unvested on
12/31/2023
  Vesting
Schedule
  Remaining Vesting Dates
  Paul M. Rady  2020 RSU       83,750  Vest in full  April 15, 2024
     2021 RSU   118,172   Ratable  April 15, 2024 and April 15, 2025
     2022 (April) RSU   89,759   Ratable  April 15, 2024 and April 15, 2025
     2022 (October) RSU   95,239   Ratable  October 15, 2024 and October 15, 2025
     2023 RSU   192,604   Ratable  March 7, 2024, March 7, 2025 and March 6, 2026
     2021 Absolute TSR PSU   59,086   Vest in full  April 15, 2024
     2022 (April) Net Debt to EBITDAX PSU   89,758   Vest in full  December 31, 2024
     2022 (April) Absolute TSR PSU   0   Vest in full  April 15, 2025
     2022 (October) Net Debt to EBITDAX PSU   47,618   Vest in full  December 31, 2025
     2022 (October) Absolute TSR PSU   0   Vest in full  December 31, 2025
     2023 Net Debt to EBITDAX PSU   64,202   Vest in full  December 31, 2025
  Michael N. Kennedy  2021 RSU   26,261   Ratable  April 15, 2024 and April 15, 2025
     2022 (April) RSU   30,707   Ratable  April 15, 2024 and April 15, 2025
     2022 (October) RSU   32,582   Ratable  October 15, 2024 and October 15, 2025
     2023 RSU   82,819   Ratable  March 7, 2024, March 7, 2025 and March 7, 2026
     2021 Absolute TSR PSU   13,130   Vest in full  April 15, 2024
     2022 (April) Net Debt to EBITDAX PSU   30,708   Vest in full  December 31, 2024
     2022 (April) Absolute TSR PSU   0   Vest in full  April 15, 2025
     2022 (October) Net Debt to EBITDAX PSU   16,290   Vest in full  December 31, 2025
     2022 (October) Absolute TSR PSU   0   Vest in full  December 31, 2025
     2023 Net Debt to EBITDAX PSU   27,606   Vest in full  December 31, 2025
  Yvette K. Schultz  2020 RSU   21,697   Vest in full  April 15, 2024
     2021 RSU   13,130   Ratable  April 15, 2024 and April 15, 2025
   2022 (April) RSU   23,621   Ratable  April 15, 2024 and April 15, 2025
     2022 (October) RSU   25,063   Ratable  October 15, 2024 and October 15, 2025
   2023 RSU   50,558   Ratable  March 7, 2024, March 7, 2025 and March 7, 2026
   2022 (April) Net Debt to EBITDAX PSU   23,620   Vest in full  December 31, 2024
   2022 (April) Absolute TSR PSU   0   Vest in full  April 15, 2025
   2022 (October) Net Debt to EBITDAX PSU   12,530   Vest in full  December 31, 2025
   2022 (October) Absolute TSR PSU   0   Vest in full  December 31, 2025
     2023 Net Debt to EBITDAX PSU   16,852   Vest in full  December 31, 2025

 

  -  2024 Proxy Statement 58
 
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(4) This row includes outstanding performance share units as set forth below. The amounts included in the below table reflect (A) target performance for all performance share units for which the applicable performance periods had not yet begun as of December 31, 2023 because no such performance share units have a threshold and (B) reflect one tier above actual performance as of December 31, 2023 for all performance share units for which the applicable performance periods had begun as of December 31, 2023 but were not yet completed as of such date. Performance share units for which the applicable performance period was completed as of December 31, 2023 but which require each Named Executive Officer’s continued employment through a later date are reported in the “Number of Units That Have Not Vested” column and described in Footnote 3 to this table. The actual number of shares earned pursuant to performance share units may vary substantially from the amounts set forth above based on actual performance through the end of the applicable performance period.

 

 

  Name  Award  Number of
Unvested
PSUs on
12/31/2023
  Reported
Performance
Level
  Applicable Performance Period and Performance Period End Date
  Paul M. Rady  2021 Absolute TSR PSU   29,543   Target  One-year performance period ending April 15, 2024
   2021 Absolute TSR PSU   59,086   Maximum  Three-year performance period ending April 15, 2024
   2022 (April) Absolute TSR PSU   16,830   Target  One-year performance period ending April 15, 2024
   2022 (April) Absolute TSR PSU   16,829   Target  One-year performance period ending April 15, 2025
   2022 (April) Absolute TSR PSU   16,829   Target  Three-year performance period ending April 15, 2025
   2022 (April) Net Debt to EBITDAX PSU   22,439   Target  One-year performance period ending December 31, 2024
   2022 (October) Absolute TSR PSU   17,857   Target  One-year performance period ending December 31, 2024
   2022 (October) Absolute TSR PSU   17,857   Target  One-year performance period ending December 31, 2025
   2022 (October) Absolute TSR PSU   17,858   Target  Three-year performance period ending December 31, 2025
   2022 (October) Net Debt to EBITDAX PSU   23,809   Target  One-year performance period ending December 31, 2024
   2022 (October) Net Debt to EBITDAX PSU   23,810   Target  One-year performance period ending December 31, 2025
   2023 Net Debt to EBITDAX PSU   32,101   Target  One-year performance period ending December 31, 2024
   2023 Net Debt to EBITDAX PSU   32,100   Target  One-year performance period ending December 31, 2025
   2023 Absolute TSR PSU   24,075   Target  One-year performance period ending March 7, 2024
   2023 Absolute TSR PSU   24,076   Target  One-year performance period ending March 7, 2025
   2023 Absolute TSR PSU   24,075   Target  One-year performance period ending March 7, 2026
     2023 Absolute TSR PSU   24,076   Target  Three-year performance period ending March 7, 2026

 

  -  2024 Proxy Statement 59
 
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  Name  Award  Number of
Unvested
PSUs on
12/31/2023
  Reported
Performance
Level
  Applicable Performance Period and Performance Period End Date
  Michael N. Kennedy  2021 Absolute TSR PSU   6,565   Target  One-year performance period ending April 15, 2024
     2021 Absolute TSR PSU   13,130   Maximum  Three-year performance period ending April 15, 2024
   2022 (April) Absolute TSR PSU   5,758   Target  One-year performance period ending April 15, 2024
   2022 (April) Absolute TSR PSU   5,757   Target  One-year performance period ending April 15, 2025
   2022 (April) Absolute TSR PSU   5,757   Target  Three-year performance period ending April 15, 2025
   2022 (April) Net Debt to EBITDAX PSU   7,676   Target  One-year performance period ending December 31, 2024
   2022 (October) Absolute TSR PSU   6,109   Target  One-year performance period ending December 31, 2024
   2022 (October) Absolute TSR PSU   6,109   Target  One-year performance period ending December 31, 2025
   2022 (October) Absolute TSR PSU   6,109   Target  Three-year performance period ending December 31, 2025
   2022 (October) Net Debt to EBITDAX PSU   8,145   Target  One-year performance period ending December 31, 2024
   2022 (October) Net Debt to EBITDAX PSU   8,146   Target  One-year performance period ending December 31, 2025
   2023 Net Debt to EBITDAX PSU   13,803   Target  One-year performance period ending December 31, 2024
   2023 Net Debt to EBITDAX PSU   13,803   Target  One-year performance period ending December 31, 2025
   2023 Absolute TSR PSU   10,352   Target  One-year performance period ending March 7, 2024
   2023 Absolute TSR PSU   10,352   Target  One-year performance period ending March 7, 2025
   2023 Absolute TSR PSU   10,352   Target  One-year performance period ending March 7, 2026
     2023 Absolute TSR PSU   10,353   Target  Three-year performance period ending March 7, 2026

 

  -  2024 Proxy Statement 60
 
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  Name  Award  Number of
Unvested
PSUs on
12/31/2023
  Reported
Performance
Level
  Applicable Performance Period and Performance Period End Date
  Yvette K. Schultz  2022 (April) Absolute TSR PSU   4,429   Target  One-year performance period ending April 15, 2024
   2022 (April) Absolute TSR PSU   4,429   Target  One-year performance period ending April 15, 2025
   2022 (April) Absolute TSR PSU   4,428   Target  Three-year performance period ending April 15, 2025
   2022 (April) Net Debt to EBITDAX PSU   5,905   Target  One-year performance period ending December 31, 2024
   2022 (October) Absolute TSR PSU   4,699   Target  One-year performance period ending December 31, 2024
   2022 (October) Absolute TSR PSU   4,699   Target  One-year performance period ending December 31, 2025
   2022 (October) Absolute TSR PSU   4,700   Target  Three-year performance period ending December 31, 2025
   2022 (October) Net Debt to EBITDAX PSU   6,266   Target  One-year performance period ending December 31, 2024
   2022 (October) Net Debt to EBITDAX PSU   6,266   Target  One-year performance period ending December 31, 2025
   2023 Net Debt to EBITDAX PSU   8,426   Target  One-year performance period ending December 31, 2024
   2023 Net Debt to EBITDAX PSU   8,427   Target  One-year performance period ending December 31, 2025
   2023 Absolute TSR PSU   6,320   Target  One-year performance period ending March 7, 2024
   2023 Absolute TSR PSU   6,320   Target  One-year performance period ending March 7, 2025
   2023 Absolute TSR PSU   6,320   Target  One-year performance period ending March 7, 2026
     2023 Absolute TSR PSU   6,319   Target  Three-year performance period ending March 7, 2026

 

  -  2024 Proxy Statement 61
 
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Option Exercises and Stock Vested in Fiscal Year 2023

 

The following table provides information concerning equity awards that vested or were exercised by our Named Executive Officers during the 2023 fiscal year.

 

   Option Awards(1)  Stock Awards
Name  Number of Shares
Acquired on Exercise
(#)
  Value Realized
on Exercise
($)
  Number of Shares
Acquired on Vesting
(#)(2)
  Value Realized
on Vesting
($)(3)
Paul M. Rady           871,579            20,723,661     
Michael N. Kennedy           543,598    15,446,330 
Yvette K. Schultz           58,423    1,445,098 
(1) There were no stock option exercises during the 2023 fiscal year.
(2) This column reflects the number of restricted stock units and performance share units held by each Named Executive Officer that vested during the 2023 fiscal year.
(3) The amounts reflected in this column represent the aggregate market value realized by each Named Executive Officer upon vesting of the restricted stock units and the performance share units, computed based on the closing price of our common stock on the applicable vesting date.

 

Pension Benefits

 

We do not provide pension benefits to our employees.

 

Nonqualified Deferred Compensation

 

We do not provide nonqualified deferred compensation benefits to our employees.

 

  -  2024 Proxy Statement 62
 
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Potential Payments Upon Termination or Change in Control

 

Prior LTIP and AR LTIP Awards

 

Restricted Stock Units and Stock Options

 

Any unvested restricted stock units or stock options subject to time-based vesting criteria granted to our Named Executive Officers under the Prior LTIP and the AR LTIP will become immediately fully vested (and, in the case of stock options granted under the Prior LTIP, fully exercisable to the extent not already fully exercisable) if the applicable Named Executive Officer’s employment with us terminates due to his death or “disability” or in the event of a “change in control” (as such terms are defined in the Prior LTIP or AR LTIP, as applicable). Such awards will be forfeited for zero consideration in connection with all other termination scenarios.

 

Performance Share Units

 

2021 Absolute TSR Performance Share Units Granted Under the AR LTIP to Messrs. Rady and Kennedy:

 

 Upon a Named Executive Officer’s termination due to his death or “disability” or upon the occurrence of a “change in control,” (i) any continued employment conditions will be deemed satisfied on the date of such termination of employment or the “change in control” for the portion of the performance share units subject to a performance period that has been completed as of the date of such termination of employment or “change in control,” and such performance share units will be settled based on the actual level of performance achieved, (ii) any performance period that has begun but has not been completed will end on the date of such termination of employment or “change in control,” and the portion of the performance share units subject to such performance period will be settled based on the actual level of performance achieved as of such date, and (iii) the target number of performance share units that are subject to a performance period that has not yet begun as of the date of such termination of employment or “change in control” will be settled.
   
The Named Executive Officer’s termination of employment for any reason other than for “cause” that occurs on or after April 15, 2022, will result in (i) the satisfaction of any continued employment conditions for the portion of the performance share units subject to a performance period that has been completed as of the date of such termination of employment, (ii) settlement of the number of performance share units subject to a completed performance period based on the actual level of performance achieved, (iii) the deemed ending of the three-year performance period applicable to such performance share units as of the date of such termination of employment, and (iv) settlement of a prorated portion of the performance share units subject to such three-year performance period based on the actual level of performance achieved as of the date of such termination of employment. For the avoidance of doubt, if such termination of employment occurs prior to April 15, 2022, then all performance share units will be forfeited for zero consideration as of the date of such termination of employment, and if any one-year performance period applicable to such performance share units has not yet begun as of the date of such termination of employment, the number of performance share units subject to such performance period will be forfeited for zero consideration as of the date of such termination of employment.

 

2021 Net Debt to EBITDAX Performance Share Units Granted Under the AR LTIP to Messrs. Rady and Kennedy:

 

Upon a Named Executive Officer’s termination due to his death or “disability” or upon the occurrence of a “change in control,” (i) any continued employment conditions will be deemed satisfied on the date of such termination of employment or the “change in control” for the portion of the

 

  -  2024 Proxy Statement 63
 
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performance share units subject to a performance period that has been completed as of the date of such termination of employment or “change in control,” and such performance share units will be settled based on the actual level of performance achieved, (ii) any performance period that has begun but has not been completed will end on the date of such termination of employment or “change in control,” and the portion of the performance share units subject to such performance period will be settled based on the actual level of performance achieved as of such date, and (iii) the target number of performance share units that are subject to a performance period that has not yet begun as of the date of such termination of employment or “change in control” will be settled.

 

The Named Executive Officer’s termination of employment for any reason other than for “cause” that occurs on or after December 31, 2021 will result in (i) the satisfaction of any continued employment conditions for the portion of the performance share units subject to a performance period that has been completed as of the date of such termination of employment, (ii) settlement of the number of performance share units subject to a completed performance period based on the actual level of performance achieved and (iii) forfeiture of all such performance share units subject to a performance period that has not yet begun or is not yet completed as of the date of such termination of employment for zero consideration.

 

2022 (April and October) Absolute TSR Performance Share Units Granted Under the AR LTIP to Messrs. Rady and Kennedy and Ms. Schultz:

 

Upon a Named Executive Officer’s termination due to his death or “disability” or upon the occurrence of a “change in control,” (i) any continued employment conditions will be deemed satisfied on the date of such termination of employment or the “change in control” for the portion of the performance share units subject to a performance period that has been completed as of the date of such termination of employment or “change in control,” and such performance share units will be settled based on the actual level of performance achieved, (ii) any performance period that has begun but has not been completed will end on the date of such termination of employment or “change in control,” and the portion of the performance share units subject to such performance period will be settled based on the actual level of performance achieved as of such date, and (iii) the target number of performance share units that are subject to a performance period that has not yet begun as of the date of such termination of employment or “change in control” will be settled.

 

The Named Executive Officer’s termination of employment for any reason other than for “cause” that occurs after April 15, 2023, will result in (i) the satisfaction of any continued employment conditions for the portion of the performance share units subject to a performance period that has been completed as of the date of such termination of employment, (ii) settlement of the number of performance share units subject to a completed performance period based on the actual level of performance achieved, (iii) the deemed ending of the three-year performance period applicable to such performance share units as of the date of such termination of employment, and (iv) settlement of a prorated portion of the performance share units subject to such three-year performance period based on the actual level of performance achieved as of the date of such termination of employment. For the avoidance of doubt, if such termination of employment occurs prior to April 15, 2023, then all performance share units will be forfeited for zero consideration as of the date of such termination of employment, and if any one-year performance period applicable to such performance share units has not yet begun as of the date of such termination of employment, the number of performance share units subject to such performance period will be forfeited for zero consideration as of the date of such termination of employment.

 

2022 (April and October) Net Debt to EBITDAX Performance Share Units Granted Under the AR LTIP to Messrs. Rady and Kennedy and Ms. Schultz:

 

Upon a Named Executive Officer’s termination due to his death or “disability” or upon the occurrence of a “change in control,” (i) any continued employment conditions will be deemed satisfied on the date of such termination of employment or the “change in control” for the portion of the performance share units subject to a performance period that has been completed as of the date of such termination of employment or “change in control,” and such performance share units will be settled based on the actual level of performance achieved, (ii) any performance period that has begun but has not been completed will end on the date of such termination of employment or “change in control,” and the portion of the performance share units subject to such performance period will be settled based on the actual level of performance achieved as of such

 

  -  2024 Proxy Statement 64
 
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date, and (iii) the target number of performance share units that are subject to a performance period that has not yet begun as of the date of such termination of employment or “change in control” will be settled.

 

The Named Executive Officer’s termination of employment for any reason other than for “cause” that occurs on or after December 31, 2022 will result in (i) the satisfaction of any continued employment conditions for the portion of the performance share units subject to a performance period that has been completed as of the date of such termination of employment, (ii) settlement of the number of performance share units subject to a completed performance period based on the actual level of performance achieved and (iii) forfeiture of all such performance share units subject to a performance period that has not yet begun or is not yet completed as of the date of such termination of employment for zero consideration.

 

2023 Absolute TSR Performance Share Units Granted Under the AR LTIP to Messrs. Rady and Kennedy and Ms. Schultz:

 

Upon a Named Executive Officer’s termination due to his death or “disability” or upon the occurrence of a “change in control,” (i) any continued employment conditions will be deemed satisfied on the date of such termination of employment or the “change in control” for the portion of the performance share units subject to a performance period that has been completed as of the date of such termination of employment or “change in control,” and such performance share units will be settled based on the actual level of performance achieved, (ii) any performance period that has begun but has not been completed will end on the date of such termination of employment or “change in control,” and the portion of the performance share units subject to such performance period will be settled based on the actual level of performance achieved as of such date, and (iii) the target number of performance share units that are subject to a performance period that has not yet begun as of the date of such termination of employment or “change in control” will be settled.

 

The Named Executive Officer’s termination of employment for any reason other than for “cause” that occurs on or after March 7, 2024 will result in (i) the satisfaction of any continued employment conditions for the portion of the performance share units subject to a performance period that has been completed as of the date of such termination of employment, (ii) settlement of the number of performance share units subject to a completed performance period based on the actual level of performance achieved, (iii) the deemed ending of the three-year performance period applicable to such performance share units as of the date of such termination of employment, and (iv) settlement of a prorated portion of the performance share units subject to such three-year performance period based on the actual level of performance achieved as of the date of such termination of employment and the number of completed one-year performance periods as of the date of such termination of employment. For the avoidance of doubt, if any one-year performance period applicable to such performance share units has not yet begun as of the date of such termination of employment, the number of performance share units subject to such performance period will be forfeited for zero consideration as of the date of such termination of employment, and if the first one-year performance period has not yet been completed as of the date of such termination of employment, the number of performance share units subject to the three-year performance period will be forfeited for zero consideration as of the date of such termination of employment.

 

2023 Net Debt to EBITDAX Performance Share Units Granted Under the AR LTIP to Messrs. Rady and Kennedy and Ms. Schultz:

 

Upon a Named Executive Officer’s termination due to his death or “disability” or upon the occurrence of a “change in control,” (i) any continued employment conditions will be deemed satisfied on the date of such termination of employment or the “change in control” for the portion of the performance share units subject to a performance period that has been completed as of the date of such termination of employment or “change in control,” and such performance share units will be settled based on the actual level of performance achieved, (ii) any performance period that has begun but has not been completed will end on the date of such termination of employment or “change in control,” and the portion of the performance share units subject to such performance period will be settled based on the actual level of performance achieved as of such date, and (iii) the target number of performance share units that are subject to a performance period that has not yet begun as of the date of such termination of employment or “change in control” will be settled.

 

  -  2024 Proxy Statement 65
 
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The Named Executive Officer’s termination of employment for any reason other than for “cause” that occurs on or after December 31, 2023 will result in (i) the satisfaction of any continued employment conditions for the portion of the performance share units subject to a performance period that has been completed as of the date of such termination of employment, (ii) settlement of the number of performance share units subject to a completed performance period based on the actual level of performance achieved and (iii) forfeiture of all such performance share units subject to a performance period that has not yet begun or is not yet completed as of the date of such termination of employment for zero consideration.

 

Definitions

 

For purposes of the awards granted under the Prior LTIP and the AR LTIP, a Named Executive Officer will be considered to have incurred a “disability” if the executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of at least 12 months.

 

For purposes of the awards granted under the Prior LTIP, a “change in control” generally means the occurrence of any of the following events:

 

A person or group of persons acquires beneficial ownership of 50% or more of either (a) the outstanding shares of our common stock or (b) the combined voting power of our voting securities entitled to vote in the election of directors, in each case with the exception of (i) any acquisition directly from us, (ii) any acquisition by us or any of our affiliates, or (iii) any acquisition by any employee benefit plan sponsored or maintained by us or any entity controlled by us;

 

The incumbent members of the Board cease for any reason to constitute at least a majority of the Board;

 

The consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of our assets, or an acquisition of assets of another entity (a “Business Combination”), in each case, unless, following such Business Combination, (A) our outstanding common stock immediately prior to such Business Combination represents more than 50% of the outstanding common equity interests and the outstanding voting securities entitled to vote in the election of directors of the surviving entity, (B) no person or group of persons beneficially owns 20% or more of the common equity interests of the surviving entity or the combined voting power of the voting securities entitled to vote generally in the election of directors of such surviving entity, and (C) at least a majority of the members of the board of directors of the surviving entity were members of the incumbent Board at the time of the execution of the initial agreement or corporate action providing for such Business Combination; or

 

Approval by our stockholders of a complete liquidation or dissolution of the Company.

 

For purposes of the awards granted under the AR LTIP, a “change in control” generally has the same meaning as given to such term in the Prior LTIP, except that the second prong of such definition has been clarified as follows:

 

The incumbent members of the Board cease for any reason (other than death or disability) to constitute at least a majority of the Board; provided, however, that any individual becoming a director that is approved by a vote of at least two-thirds of the incumbent members of the Board shall be considered an incumbent member of the Board for these purposes.

 

For purposes of the 2021, 2022 and 2023 performance share units granted under the AR LTIP, “cause” shall mean a finding by the Compensation Committee of the executive’s: (i) final conviction of, or plea of nolo contendere to, a crime that constitutes a felony (or state law equivalent); (ii) gross negligence or willful misconduct in the performance of the executive’s duties that would reasonably be expected to have a material adverse economic effect on us or any of our affiliates; (iii) willful failure without proper legal reason to perform the executive’s duties; or (iv) a material breach of any material provision of the applicable award agreement or any other written agreement or corporate policy or code of conduct established by us or any of our affiliates that would reasonably be expected to have a material adverse economic effect on us or any of our affiliates.

 

  -  2024 Proxy Statement 66
 
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Quantification of Benefits

 

The following table summarizes the compensation and other benefits that would have become payable to each Named Executive Officer, assuming such Named Executive Officer was terminated either (i) as a result of his death or disability or (ii) for any reason other than cause or a change in control of the Company, in each case, on December 31, 2023. The restricted stock units, performance share units and, once exercised, the stock options represent a direct interest in shares of our common stock, which had a closing price on December 29, 2023, of $22.68 per share.

 

Name   Restricted
Stock Units
($)
  Performance
Share Units
($)
  Stock
Options
($)(3)
  Total
($)
 
Paul M. Rady                  
Death; Disability; Change in Control(1)   13,143,604   12,580,664     25,724,268  
Termination Other Than For Cause     6,805,240     6,805,240  
Michael N. Kennedy                  
Death; Disability; Change in Control(1)   3,909,329   4,334,511     8,243,840  
Termination Other Than For Cause     2,188,333     2,188,333  
Yvette K. Schultz                  
Death; Disability; Change in Control(1)   3,040,685   2,602,734     5,643,419  
Termination Other Than For Cause     1,202,085     1,202,085  
(1)Upon a change in control or upon a Named Executive Officer’s termination of employment due to his death or disability, in each case, on December 31, 2023, acceleration of the outstanding performance share units is as follows:

 

Award   Applicable Performance Period   Performance Level   Percentage of Award
Eligible to Vest, Subject to
Performance Specified in
“Performance Level” Column
of this Table
2021 Absolute TSR PSU   One-year performance period ending April 15, 2022   Actual performance achieved, or 200%    
  One-year performance period ending April 15, 2023   Actual performance achieved, or 0%    
  One-year performance period ending April 15, 2024   Actual performance achieved, which was trending at 0% on December 31, 2023    
  Three-year performance period ending April 15, 2024   Actual performance achieved, which was trending at 200% on December 31, 2023    
2022 (April) Absolute TSR PSU   One-year performance period ending April 15, 2023   Actual performance achieved, or 0%   100%
  One-year performance period ending April 15, 2024   Actual performance achieved, which was trending at 0% on December 31, 2023    
  One-year performance period ending April 15, 2025   Target performance, or 100%    
  Three-year performance period ending April 15, 2025   Actual performance achieved, which was trending at 0% on December 31, 2023    

 

  -  2024 Proxy Statement 67
 
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Award   Applicable Performance Period   Performance Level   Percentage of Award
Eligible to Vest, Subject to
Performance Specified in
“Performance Level” Column
of this Table
2022 (April) Net Debt to EBITDAX PSU   One-year performance period ended December 31, 2022   Actual performance achieved, or 200%    
  One-year performance period ending December 31, 2023   Actual performance achieved, or 200%    
  One-year performance period ending December 31, 2024   Target performance, or 100%    
2022 (October) Absolute TSR PSU   One-year performance period ending December 31, 2023   Actual performance achieved, or 0%    
  One-year performance period ending December 31, 2024   Target performance, or 100%    
  One-year performance period ending December 31, 2025   Target performance, or 100%    
  Three-year performance period ending December 31, 2025   Actual performance achieved, which was trending at 0% on December 31, 2023    
2022 (October) Net Debt to EBITDAX PSU   One-year performance period ending December 31, 2023   Actual performance achieved, or 200%    
  One-year performance period ending December 31, 2024   Target performance, or 100%   100%
  One-year performance period ending December 31, 2025   Target performance, or 100%    
2023 Absolute TSR PSU   One-year performance period ending March 7, 2024   Actual performance achieved, which was trending at 0% on December 31, 2023    
  One-year performance period ending March 7, 2025   Target performance, or 100%    
  One-year performance period ending March 7, 2026   Target performance, or 100%    
  Three-year performance period ending March 7, 2026   Actual performance achieved, which was trending at 0% on December 31, 2023    
2023 Net Debt to EBITDAX PSU   One-year performance period ending December 31, 2023   Actual performance achieved, or 200%    
  One-year performance period ending December 31, 2024   Target performance, or 100%    
  One-year performance period ending December 31, 2025   Target performance, or 100%    
(2)Upon a Named Executive Officer’s termination other than for cause on December 31, 2023, acceleration of the outstanding performance share units is as follows:

 

  -  2024 Proxy Statement 68
 
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Award   Applicable Performance Period   Performance Level   Percentage of Award
Eligible to Vest, Subject to
Performance Specified in
“Performance Level”
Column of this Table
2021 Absolute TSR PSU   One-year performance period ended April 15, 2022   Actual performance achieved, or 200%   100% because the applicable performance period had been completed as of December 31, 2023
  One-year performance period ended April 15, 2023   Actual performance achieved, or 0%   100% because such performance period had been completed as of December 31, 2023
  One-year performance period ended April 15, 2024   N/A   0% because such performance period had not yet been completed as of December 31, 2023
  Three-year performance period ending April 15, 2024   Actual performance, which was trending at 200% on December 31, 2023   66% due to proration
2022 (April) Absolute TSR PSU   One-year performance period ending April 15, 2023   Actual performance achieved, or 0%   100% because such performance period had been completed as of December 31, 2023
  One-year performance period ending April 15, 2024   N/A   0% because such performance period had not yet been completed as of December 31, 2023
  One-year performance period ending April 15, 2025   N/A   0% because such performance period had not yet begun as of December 31, 2023
  Three-year performance period ending April 15, 2025   Actual performance, which was trending at 0% on December 31, 2023   33% due to proration
2022 (April) Net Debt to EBITDAX PSU   One-year performance period ended December 31, 2022   Actual performance achieved, or 200%   100% because the applicable performance period had been completed as of December 31, 2023
  One-year performance period ending December 31, 2023   Actual performance achieved, or 200%   100% because the applicable performance period had been completed as of December 31, 2023
  One-year performance period ending December 31, 2024   N/A   0% because such performance period had not yet begun as of December 31, 2023

 

  -  2024 Proxy Statement 69
 
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Award   Applicable Performance Period   Performance Level   Percentage of Award
Eligible to Vest, Subject to
Performance Specified in
“Performance Level”
Column of this Table
2022 (October)
Absolute TSR PSU
  One-year performance period ending December 31, 2023   Actual performance achieved, or 0%   100% because such performance period had been completed as of December 31, 2023
  One-year performance period ending December 31, 2024   N/A   0% because such performance period had not yet begun as of December 31, 2023
  One-year performance period ending December 31, 2025   N/A   0% because such performance period had not yet begun as of December 31, 2023
  Three-year performance period ending December 31, 2025   N/A   0% because such performance period had not yet been completed as of December 31, 2023
2022 (October) Net Debt to EBITDAX PSU   One-year performance period ending December 31, 2023   Actual performance achieved, or 200%   100% because the applicable performance period had been completed as of December 31, 2023
  One-year performance period ending December 31, 2024   N/A   0% because such performance period had not yet begun as of December 31, 2023
  One-year performance period ending December 31, 2025   N/A   0% because such performance period had not yet begun as of December 31, 2023
2023 Absolute TSR
PSU
  One-year performance period ending March 7, 2024   N/A   0% because such performance period had not yet been completed as of December 31, 2023
  One-year performance period ending March 7, 2025   N/A   0% because such performance period had not yet begun as of December 31, 2023
  One-year performance period ending March 7, 2026   N/A   0% because such performance period had not yet begun as of December 31, 2023
  Three-year performance period ending March 7, 2026   N/A   0% because such performance period had not yet been completed as of December 31, 2023

 

  -  2024 Proxy Statement 70
 
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Award   Applicable Performance Period   Performance Level   Percentage of Award
Eligible to Vest, Subject to
Performance Specified in
“Performance Level”
Column of this Table
2023 Net Debt to EBITDAX PSU   One-year performance period ending December 31, 2023   Actual performance achieved, or 200%   100% because the applicable performance period had been completed as of December 31, 2023
  One-year performance period ending December 31, 2024   N/A   0% because such performance period had not yet begun as of December 31, 2023
  One-year performance period ending December 31, 2025   N/A   0% because such performance period had not yet begun as of December 31, 2023
(3)Because (i) each of the Named Executive Officer’s stock options were fully vested on December 31, 2023 and (ii) the exercise price of stock options held by our Named Executive Officers exceeded the fair market value of the Company’s common stock on December 31, 2023, no value would have been received by our Named Executive Officers with respect to their stock options in connection with the accelerated vesting of these awards.

 

Chief Executive Officer Pay Ratio

 

Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, this section provides information regarding the relationship of the annual total compensation of all of our employees to the annual total compensation of our Chief Executive Officer, Mr. Rady. For 2023, the median of the annual total compensation of all Company employees (other than our Chief Executive Officer), calculated in accordance with paragraph (c)(2)(x) of Item 402 of Regulation S-K, was $107,038, and the annual total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table, was $13,512,463.

 

Based on this information, for 2023, the ratio of the annual total compensation of Mr. Rady to the median of the annual total compensation of all of our employees was approximately 126 to 1.

 

  -  2024 Proxy Statement 71
 
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Methodology and Assumptions

 

We selected December 31, 2023, as the date on which to determine our employee population for purposes of identifying the median of the annual total compensation of all of our employees (other than the Chief Executive Officer) because it was efficient to collect payroll data and other necessary information as of that date. As of December 31, 2023, our employee population consisted of 603 individuals, including all individuals employed by the Company or any of its consolidated subsidiaries, whether as full-time, part-time, seasonal or temporary workers. This population does not include independent contractors. All of our employees are located in the United States.

 

In identifying our median employee in 2023, we used the annual total compensation as reported in Box 1 of each employee’s Form W-2 for 2023 provided to the Internal Revenue Service, minus the amount of each employee’s compensation that Antero Midstream reimbursed us for, calculated using the same methodology used to determine the 2023 NEO AM Reimbursement Percentage, as described above under “Compensation Discussion and Analysis—Implementing Our Compensation Program Objectives—Role of the Antero Midstream Compensation Committee and Allocation of Compensation Expenses.” We  believe this methodology provides a reasonable basis for determining the allocated portion of each employee’s total annual compensation, and is an economical method of evaluating the total annual compensation of our employees and identifying our median employee. For the 55 employees hired during 2023, we utilized the annual total compensation reported on each such employee’s Form W-2 for 2023 without annualization adjustments, less the amount of such employee’s compensation that Antero Midstream reimbursed us for. No cost-of-living adjustments were made in identifying our median employee, as all of our employees (including our Chief Executive Officer) are located in the United States. This calculation methodology was consistently applied to our entire employee population, determined as of December 31, 2023, to identify our median employee in 2023. After we identified our median employee, we calculated each element of our median employee’s annual compensation for 2023 in accordance with paragraph (c)(2)(x) of Item 402 of Regulation S-K using the allocation methodology described above, which resulted in annual total compensation of $107,038. The difference between our median employee’s total compensation reported on Form W-2 and our median employee’s annual total compensation calculated in accordance with paragraph (c)(2)(x) of Item 402 of Regulation S-K was $16,057. This amount reflects the Company’s 401(k) match and non-cash imputed earnings offset by benefits deductible from gross income. Similarly, the 2023 annual total compensation of our Chief Executive Officer was calculated in accordance with paragraph (c)(2)(x) of Item 402 of Regulation S-K, as reported in the “Total” column of the Summary Compensation Table.

 

  -  2024 Proxy Statement 72
 
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Pay Versus Performance

 

Pursuant to the amendments to Section 14(i) of the Exchange Act, Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, this section provides information regarding the relationship of compensation paid to our Named Executive Officers (“NEOs”) relative to our financial performance.

 

The following table summarizes compensation values reported in the Summary Compensation Table for our principal executive officer (“PEO”) and the average for our other NEOs, as compared to “compensation actually paid” or “CAP” and the Company’s financial performance for the years ended December 31, 2023, 2022, 2021, and 2020:

 

           Average                
   Summary       Summary   Average   Value of Initial Fixed $100        
   Compensation   Compensation   Compensation   Compensation   Investment Based On:       Total Net
   Table Total for   Actually Paid to   Table Total for   Actually Paid to       Peer   Net Income   Debt
Year  PEO(1)   PEO(1)(2)   Non-PEO NEOs(1)    Non-PEO NEOs(1)(2)   TSR   Group TSR(3)   ($MM)   ($MM)(4)
(a)  (b)   (c)   (d)   (e)   (f)   (g)   (h)   (i)
2023  $13,512,463   $(6,495,757)   $4,879,345   $1,133,652   $796   $243   $243   $1,538
2022  $24,641,821   $65,573,452   $7,538,143   $14,955,404   $1,087   $244   $1,899   $1,183
2021  $6,456,142   $34,006,228   $1,966,171   $12,904,483   $614   $161   $(187)   $2,125
2020  $3,443,976   $8,091,318   $3,589,822   $7,758,258   $191   $76   $(1,268)   $3,002
as described in “Compensation Discussion and Analysis—Implementing Our Compensation Program Objectives—Competitive Peer Analysis”. For 2023, the peer group was comprised of APA Corp., Coterra Energy Inc., Continental Resources, Inc., Devon Energy Corporation, Diamondback Energy Inc., EQT Corporation, Marathon Oil Corporation, Ovintiv Inc., Range Resources Corporation and Southwestern Energy Company. The 2023 peer group removed CNX Resources Corporation and added Marathon Oil Corporation when compared to the 2022 peer group. The value of the initial $100 fixed investment of the 2022 peer group’s TSR for the 2023 year would have been $248 rather than the $243 disclosed in this column in 2023 for the 2023 peer group.

(1) The PEO reflected in columns (b) and (c) represents Paul M. Rady. The non-PEO NEOs reflected in columns (d) and (e) represent the following individuals by year:
  a. 2023: Michael N. Kennedy and Yvette K. Schultz.
  b. 2022: Michael N. Kennedy, W. Patrick Ash and Yvette K. Schultz.
  c. 2021: Alvyn A. Schopp, Michael N. Kennedy, W. Patrick Ash and Glen C. Warren, Jr.
  d. 2020: Glen C. Warren, Jr., Alvyn A. Schopp, Michael N. Kennedy and W. Patrick Ash.

(2) The Company deducted from and added to the Summary Compensation Table total compensation the following amounts to calculate compensation actually paid in accordance with Item 402(v) of Regulation S-K as disclosed in columns (c) and (e) for each PEO and Non-PEO NEOs in 2023. As the Company’s NEOs do not participate in any defined benefit plans, no adjustments were required to amounts reported in the Summary Compensation Table totals related to the value of benefits under such plans.
   
   2023
       Average 
       Non-CEO 
   Paul Rady   NEOs 
Total Compensation from Summary Compensation Table  $13,512,463   $4,879,345 
Adjustments for Equity Awards        
Grant date values in the Summary Compensation Table  $(10,770,416)  $(3,729,206)
Year-end fair value of unvested awards granted in the current year  $10,404,468   $3,602,497 
Year-over-year difference of year-end fair values for unvested awards granted in prior years  $(13,289,917)  $(2,962,241)
Fair values at vest date for awards granted and vested in current year  $0   $0 
Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years  $(6,352,355)  $(656,743)
Forfeitures during current year equal to prior year-end fair value  $0   $0 
Dividends or dividend equivalents not otherwise included in the total compensation  $0   $0 
Total Adjustments for Equity Awards  $(20,008,220)  $(3,745,693)
Compensation Actually Paid (as calculated)  $(6,495,757)  $1,133,652 

(3) The peer group disclosed is the group of companies whose executive compensation we consider when determining our NEO’s compensation as described in “Compensation Discussion and Analysis—Implementing Our Compensation Program Objectives—Competitive Peer Analysis”. For 2023, the peer group was comprised of APA Corp., Coterra Energy Inc., Continental Resources, Inc., Devon Energy Corporation, Diamondback Energy Inc., EQT Corporation, Marathon Oil Corporation, Ovintiv Inc., Range Resources Corporation and Southwestern Energy Company. The 2023 peer group removed CNX Resources Corporation and added Marathon Oil Corporation when compared to the 2022 peer group. The value of the initial $100 fixed investment of the 2022 peer group’s TSR for the 2023 year would have been $248 rather than the $243 disclosed in this column in 2023 for the 2023 peer group.

(4) A description of Total Net Debt can be found on page 44 of this Proxy Statement.

 

  -  2024 Proxy Statement 73
 
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Narrative Disclosure to Pay versus Performance Table

 

The illustrations below provide a graphical description of CAP and the following measures:

 

the Company’s cumulative TSR and the Peer Group’s cumulative TSR;
the Company’s Net Income; and
the Company selected measure, which is Total Net Debt.

 

CAP and Cumulative TSR/Cumulative Peer Group TSR

 

 

 

CAP and Net Income

 

 

  -  2024 Proxy Statement 74
 
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CAP and Total Net Debt

 

 

Disclosure of Most Important Performance Measures for Fiscal Year 2023

 

The measures listed below represent the most important financial performance measures that we used to determine CAP for fiscal year 2023.

 

Most Important Performance Measures
D&C Capital
Average Net Production Volumes
Net Debt to EBITDAX
Total Net Debt
TSR

 

  -  2024 Proxy Statement 75
 
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ITEM FOUR:   APPROVAL OF AMENDED AND RESTATED ANTERO RESOURCES CORPORATION 2020 LONG TERM INCENTIVE PLAN

 

The use of equity-based awards under the Prior LTIP was a key component of our compensation program from its adoption in 2013 until the adoption of the AR LTIP in 2020, and the use of equity-based awards under the AR LTIP has been a key component of our compensation program since its adoption in 2020. Upon the adoption of the AR LTIP, no further awards were permitted to be made under the Prior LTIP. The ability to grant equity-based compensation awards is critical to attracting and retaining highly qualified individuals. The Board believes that it is in the best interest of our stockholders for those individuals to have an ownership interest in the Company in recognition of their present and potential contributions and to align their interests with those of our future stockholders.

 

The Board has determined that the current number of shares available for grants under the AR LTIP (which is our only active equity-based plan) is not sufficient to meet the objectives of our compensation program going forward. Accordingly, the Board has adopted, subject to stockholder approval, and proposes that our stockholders approve the Amended and Restated Antero Resources Corporation 2020 Long Term Incentive Plan (the “Amended AR LTIP”) in order to increase the number of shares of our common stock available for future grants, as described below, and extend the term of the Amended AR LTIP until the tenth anniversary of the Annual Meeting.

 

At the Annual Meeting, our stockholders will be asked to approve the Amended AR LTIP. If approved by our stockholders, the Amended AR LTIP will be effective as of the date of the Annual Meeting. The Amended AR LTIP provides for an additional 4,866,100 shares of our common stock that will be available for awards under the Amended AR LTIP, for a total of 14,916,100 shares of common stock since the original adoption of the AR LTIP on June 17, 2020, subject to the adjustment, recycling and counting provisions of the Amended AR LTIP, as described below. If the proposed Amended AR LTIP is not approved by our stockholders, then the AR LTIP will remain in effect.

 

Background and Purpose of the Proposal

 

The AR LTIP authorizes awards to be granted covering up to 10,050,000 shares of our common stock, subject to adjustment in accordance with the terms of the AR LTIP upon certain changes in capitalization and similar events. As of March 8, 2024, there were approximately 4,390,095 shares of our common stock available for new awards under the AR LTIP.

 

On April 17, 2024, subject to and effective upon approval by our stockholders, the Board determined that it is in the Company’s best interest to amend and restate the AR LTIP by adopting the Amended AR LTIP, pursuant to which the number of shares of our common stock authorized for issuance thereunder will be increased by 4,866,100 from 10,050,000 to 14,916,100. Since the original adoption of the AR LTIP on June 17, 2020, subject to the adjustment, recycling and counting provisions of the Amended AR LTIP, as described below. The Amended AR LTIP is intended to provide flexibility to enable the continued use of stock-based compensation consistent with the objectives of our compensation program. The length of time the Amended AR LTIP share pool will support our incentive compensation program will depend on numerous factors that cannot be fully anticipated by us at this time including our share price, our executive retention rate, and changes in our compensation practices, which may be influenced by all of the preceding variables as well as changes in the compensation practices of companies with which we compete for executive talent.

 

  -  2024 Proxy Statement 76
 
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Historical Award Information and Equity Use

 

Summarized below is the total number of shares outstanding pursuant to awards granted and shares available for issuance for future equity awards under the AR LTIP as of March 8, 2024. Also shown are the number of shares that would be available for future grant if the Amended AR LTIP is approved.

 

   Shares Subject to   Shares Subject to   Shares Remaining
   Outstanding Stock   Outstanding RSUs   Available for
   Options(1)   and PSUs(2)   Future Grant
As of March 8, 2024
(Before Amended AR LTIP is Approved):
              
Antero Resources Corporation Long-Term Incentive Plan (4)   258,696        
Antero Resources Corporation 2020 Long-Term Incentive Plan       7,200,441    4,390,095
TOTAL   258,696    7,200,441    4,390,095
Shares Available for Future Grant if Amended AR LTIP is Approved             9,256,195
(1) As of March 8,, 2024, the 258,696 stock options outstanding had a weighted average exercise price of $50.04 and a weighted average life of 1.1 years.
(2) This column reflects performance share units and restricted stock units granted under the AR LTIP, outstanding and unvested as of March 8, 2024. If the service conditions are fulfilled, each restricted stock unit is settleable in one share of our common stock and is reflected as such above. Because the number of shares of common stock to be issued upon settlement of outstanding performance share unit awards is subject to performance conditions, the number of shares of common stock actually issued may be substantially less than the number reflected in this column. Performance share unit awards with completed performance conditions that remain subject to time-based vesting requirements are reflected at the amount of shares expected to be earned based on the performance condition results. Performance share unit awards with uncompleted performance conditions, which are also subject to a time-based vesting requirement, are reflected at the maximum amount of shares that could be earned based on the performance condition results.

 

Total potential dilution was 3.89% of fully diluted shares outstanding as of March 8, 2024, and would be 5.50% after the increase in the share reserve implemented by adoption of the Amended AR LTIP. Fully diluted shares includes common shares outstanding, equity grants outstanding, and shares available for future grant.

 

The following table sets forth information regarding stock-settled, time-vested equity awards granted, and performance-based equity awards earned, over each of the last three fiscal years:

 

  2023 2022 2021  
Stock Options/ Stock Appreciation Rights (SARs) Granted 0 0 0  
Stock-Settled Time-Vested Restricted Shares/ Units Granted(1) 1,531,756 1,610,349 1,584,133  
Stock-Settled Performance-Based Shares/ Units Earned(2) 399,903 2,421,424 67,000  
Weighted-Average Basic Common Shares Outstanding 299,793,000 307,202,000 308,146,000 3-Year Average
Share Usage Rate 0.6% 1.3% 0.5% 0.8%
(1) This row includes restricted stock units and awards to directors of fully vested shares of common stock.
(2) Performance-based shares/units in the table above, were calculated based on the applicable number of shares earned each year.

 

For additional information regarding stock-based awards previously granted by us under the AR LTIP, please see Note 9 to our consolidated financial statements on Form 10-K for the year ended December 31, 2023. As of April 15, 2024, there were 310,170,039 shares of our common stock outstanding. The closing price per share of our common stock on the New York Stock Exchange as of April 15, 2024 was $29.00.

 

The proposed Amended AR LTIP is included as Appendix A hereto. If our stockholders approve this proposal, we intend to file, pursuant to the Securities Act, a registration statement on Form S-8 to register the additional shares available for delivery under the Amended AR LTIP.

 

  -  2024 Proxy Statement 77
 
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Summary of the Amended AR LTIP

 

The following summary provides a general description of the material features of the Amended AR LTIP but is not a complete description of all provisions of the Amended AR LTIP and is qualified in its entirety by reference to the full text of the Amended AR LTIP included as Appendix A, which is incorporated by reference in this proposal. The purpose of the Amended AR LTIP is to attract, retain and motivate qualified persons as employees, directors and other service providers of the Company and its affiliates. The Amended AR LTIP also provides a means through which such persons can acquire and maintain stock ownership or awards, the value of which is tied to the performance of the Company, thereby strengthening their concern for the Company and its affiliates.

 

The Amended AR LTIP provides for potential grants of: (i) incentive stock options qualified as such under U.S. federal income tax laws (“ISOs”); (ii) stock options that do not qualify as incentive stock options (“Nonstatutory Options,” and together with ISOs, “Options”); (iii) stock appreciation rights (“SARs”); (iv) restricted stock awards (“Restricted Stock Awards”); (v) restricted stock units (“Restricted Stock Units” or “RSUs”); (vi) vested stock awards (“Stock Awards”); (vii) dividend equivalents; (viii) other stock-based or cash awards; and (ix) substitute awards (referred to collectively as the “Awards”).

 

Key features of the Amended AR LTIP include:

 

No automatic Award grants are promised to any eligible individual;
Shares (i) withheld or surrendered in payment of the exercise or purchase price or taxes related to an Option or SAR or (ii) repurchased on the open market with the proceeds from the exercise price of an Option, in each case, whether granted under the Amended AR LTIP or the AR LTIP, will not be available for new Awards under the Amended AR LTIP;
No automatic acceleration of vesting of Awards on a change in control in the plan;
No 280G gross-ups;
No evergreen for the share reserve;
Ten year term;
Except as permitted in the grant of Substitute Awards, no discounted options or related Awards may be granted;
No repricing, replacement or re-granting of Options, SARS or other Stock Awards without shareholder approval if the effect would be to reduce the exercise price of the Award (except in the event of certain equitable adjustments or a change in control, as further described below);
Awards are subject to potential reduction, cancellation or forfeiture pursuant to any clawback policy adopted by the Company, including the Clawback Policy;
Awards are generally non-transferrable except to an Award recipient’s immediate family member or related family trust, pursuant to a qualified domestic relations order or by will or the laws of descent or distribution;
Meaningful annual limits on total director compensation; and
Dividends and dividend equivalents are subject to restrictions and risk of forfeiture to the same extent as the Award with respect to which such dividends or dividend equivalents are accrued and will not be paid unless and until such Award has vested.

 

Eligibility to Participate

 

Employees, non-employee directors and other service providers of the Company and its affiliates are eligible to receive awards under the Amended AR LTIP. Eligible individuals to whom an Award is granted under the Amended AR LTIP are referred to as “Participants.”

 

As of March 8, 2024, the Company and its affiliates have 3 executive officers, 7 non-employee directors, and 603 other employees who will be eligible to participate in the Amended AR LTIP.

 

  -  2024 Proxy Statement 78
 
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Securities to be Offered

 

Subject to adjustment, in the event of any distribution, recapitalization, stock split, merger, consolidation or other corporate event, the aggregate number of shares of our common stock that may be issued pursuant to Awards under the Amended AR LTIP is equal to 14,916,100, since the original adoption of the AR LTIP on June 17, 2020 and all such shares will be available for issuance upon the exercise of ISOs. This number represents an increase of 4,866,100 shares of our common stock, from 10,050,000 common shares reserved for issuance under the AR LTIP to 14,916,100 common shares reserved for issuance under the Amended AR LTIP.

 

If all or any portion of an Award, including an award granted under the Prior LTIP that is outstanding as of the effective date of the Amended AR LTIP (an “Existing Award”), expires or is cancelled, forfeited, exchanged, settled for cash or otherwise terminated without the actual delivery of shares, any shares subject to such Award or Existing Award will again be available for new Awards under the Amended AR LTIP.

 

Any shares withheld or surrendered in payment of any taxes relating to Awards or Existing Awards (other than Options or SARs) will be again available for new Awards under the Amended AR LTIP. For the avoidance of doubt, irrespective of whether such awards are granted under the Amended AR LTIP, the AR LTIP or the Prior LTIP, (i) shares withheld or surrendered in payment of any exercise or purchase price of an Option or SAR or taxes relating to an Option or SAR and (ii) shares repurchased on the open market with the proceeds from the exercise price of an Option, in each case, will not be available for new Awards under the Amended AR LTIP.

 

As of March 8, 2024, 4,744,942 shares of our common stock originally reserved under the Prior LTIP had become available for grant under the AR LTIP pursuant to the above recycling provisions and up to an additional 258,696 shares could become available if all outstanding stock options expire without exercise or are otherwise cancelled or forfeited.

 

Director Compensation Limits

 

Under the Amended AR LTIP, in a single calendar year, a non-employee director may not be paid compensation, whether denominated in cash or Awards, for such individual’s service on the Board in excess of $750,000. Additional cash amounts or Awards of up to $100,000 may be paid for any calendar year in which a non-employee director serves on a special committee of the Board or serves as lead director.

 

Administration

 

The Board (or a committee of two or more directors appointed by the Board) will administer the Amended AR LTIP (as applicable, the “Administrator”). Subject to the terms of the Amended AR LTIP and applicable law, the Administrator has broad authority to select Participants to receive awards, determine the types of awards and terms and conditions of awards and interpret provisions of the Amended AR LTIP. Subject to applicable law, the Administrator is also authorized to interpret the Amended AR LTIP, to establish, amend and rescind any rules and regulations relating to the Amended AR LTIP, to delegate duties under the Amended AR LTIP, to terminate, modify or amend the Amended AR LTIP (except for certain amendments that require stockholder approval as described below), and to make any other determinations that it deems necessary or desirable for the administration of the Amended AR LTIP. The Administrator may correct any defect, supply any omission or reconcile any inconsistency in the Amended AR LTIP in the manner and to the extent the Administrator deems necessary or desirable.

 

Source of Shares

 

Shares of our common stock issued under the Amended AR LTIP may come from authorized but unissued shares, from treasury stock held by the Company or from previously issued shares of our common stock reacquired by the Company, including shares purchased on the open market.

 

  -  2024 Proxy Statement 79
 
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Prohibition on Repricing

 

Except as may be related to Substitute Awards or in the event of certain equitable adjustments or a change in control, as described in the Amended AR LTIP, without the approval of the stockholders of the Company, the terms of outstanding Awards may not be amended to (i) reduce the exercise price or grant price of an outstanding Option or SAR, (ii) grant a new Option, SAR or other Award in substitution for, or upon the cancellation of, any previously granted Option or SAR that has the effect of reducing the exercise price or grant price, (iii) exchange any Option or SAR for Stock, cash or other consideration when the exercise price or grant price per share of stock under such Option or SAR exceeds the fair market value of a share of our common stock or (iv) take any other action that would be considered a “repricing” of an Option or SAR under the applicable listing standards of the national securities exchange on which our common stock is listed.

 

Awards Under the Amended AR LTIP

 

Options

 

An Option represents a right to purchase our common stock at a fixed exercise price. The Company may grant Options to eligible persons including: (i) ISOs which comply with the requirements of Section 422 of the Code; and (ii) Nonstatutory Options. The exercise price of each Option granted under the Amended AR LTIP will be stated in the option agreement and may vary; however, except in limited circumstances, the exercise price for an Option must not be less than the fair market value per share of our common stock as of the date of grant (or 110% of the fair market value for certain ISOs), nor may the Option be repriced without the prior approval of the Antero Resources shareholders. Options may be exercised as the Administrator determines, but not later than 10 years from the date of grant. The Administrator determines the methods and form of payment for the exercise price of an Option (including, in the discretion of the Administrator, payment in shares of our common stock, other Awards or other property) and the methods and forms in which our common stock will be delivered to a Participant.

 

SARs

 

A SAR is the right to receive an amount equal to the excess of the fair market value of one share of our common stock on the date of exercise over the grant price of the SAR, payable in either cash or shares of our common stock or any combination thereof as determined by the Administrator. The grant price of a share of our common stock subject to the SAR will be determined by the Administrator, but in no event will that grant price be less than the fair market value of a share of our common stock on the date of grant. The Administrator has the discretion to determine the other terms and conditions of a SAR award.

 

Restricted Stock Awards

 

A Restricted Stock Award is a grant of shares of our common stock subject to a risk of forfeiture, performance conditions, restrictions on transferability and any other restrictions imposed by the Administrator in its discretion. Restrictions may lapse at such times and under such circumstances as determined by the Administrator. Except as otherwise provided under the terms of an award agreement, the holder of a Restricted Stock Award will generally have rights as a stockholder, including the right to vote the common stock subject to the Restricted Stock Award and to receive dividends on the common stock subject to the Restricted Stock Award during the restriction period (subject to limitations on payment of dividends on unvested Awards, as described below). Unless otherwise determined by the Administrator and specified in the award agreement, common stock distributed in connection with a stock split or stock dividend, and other property (other than cash) distributed as a dividend, will be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock Award with respect to which such common stock or other property has been distributed. In addition, any cash dividends will be subject to restrictions and risk of forfeiture to the same extent as the Restricted Stock with respect to which such dividends were paid and will not be paid unless and until such Restricted Stock has vested and been earned.

 

  -  2024 Proxy Statement 80
 
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RSUs

 

RSUs are rights to receive our common stock, cash, or a combination of both equal in value to the number of shares of our common stock covered by the RSUs at the end of a specified period or upon the occurrence of a specified event. The Administrator will subject RSUs to restrictions to be specified in the RSU award agreement, and those restrictions may lapse at such times determined by the Administrator.

 

Stock Awards

 

The Administrator is authorized to grant vested common stock as a Stock Award. The Administrator will determine any terms and conditions applicable to grants of common stock, including performance criteria, if any, associated with a Stock Award.

 

Dividend Equivalents

 

Dividend equivalents entitle a Participant to receive cash, shares of our common stock, other Awards, or other property equal in value to dividends or other distributions paid with respect to a specified number of shares of our common stock. Dividend equivalents may be awarded on a free-standing basis or in connection with another Award (other than a Restricted Stock Award, Stock Award, Option or SAR). The terms and conditions applicable to dividend equivalents will be determined by the Administrator and set forth in an award agreement, provided, however, that dividend equivalents granted in connection with another Award will be subject to restrictions and a risk of forfeiture to the same extent as the Award with respect to which such dividends accrue and will not be paid unless and until such Award has vested and been earned.

 

Other Stock-Based or Cash Awards

 

Other stock-based Awards are awards denominated in or payable in, valued in whole or in part by reference to, or otherwise based on or related to, the value of our common stock. Cash awards may be granted on a free-standing basis, as an element of or a supplement to, or in lieu of any other Award.

 

Substitute Awards

 

The Company may grant Awards in substitution for any other Award granted under the Amended AR LTIP or another plan of the Company or its affiliates or any other right of a person to receive payment from the Company or its affiliates. Awards may also be granted in substitution for awards held by individuals who become eligible individuals as a result of certain business transactions, in which case, subject to applicable stock exchange requirements, shares of our common stock subject to such Awards will not be added to or subtracted from the number of shares of our common stock authorized to be granted under the Amended AR LTIP. Substitute Awards that are Options or SARs may have an exercise price per share that is less than the fair market value of a share of our common stock on the date of substitution if the substitution complies with the requirements of Section 409A of the Code and the guidance and regulations promulgated thereunder and other applicable laws.

 

Other Provisions

 

Dividends and Dividend Equivalents

 

Dividends and dividend equivalents are subject to restrictions and risk of forfeiture to the same extent as the Award with respect to which such dividends or dividend equivalents are accrued and will not be paid unless and until such Award has vested.

 

Recapitalization

 

In the event of any “equity restructuring” event (such as a stock dividend, stock split, reverse stock split or similar event) with respect to our common stock, the Administrator will equitably adjust (i) the aggregate number or kind of shares that may be delivered under the Amended AR LTIP, (ii) the number or kind of shares or amount of cash subject to an Award, (iii) the terms and conditions of Awards, including the purchase price or exercise price of Awards and performance goals, and (iv) the applicable share-based limitations with respect to Awards provided in the Amended AR LTIP, in each case to equitably reflect such event.

 

Change in Control

 

Except to the extent otherwise provided in any applicable Award Agreement, no Award will vest solely upon the occurrence of a change in control. In the event of a change in control or other relevant changes to the Company or our common stock, the Administrator may, in its discretion, (i) accelerate the time of exercisability of an Award, (ii) require Awards to be surrendered in exchange for a cash payment (including canceling an Option or SAR for

 

  -  2024 Proxy Statement 81
 
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no consideration if it has an exercise price or the grant price greater than or equal to the value paid in the transaction), (iii) cancel Awards that remain subject to a restricted period as of the date of the change in control or other event without payment, or (iv) make any other adjustments to Awards that the Administrator deems appropriate to reflect such change in control or other event.

 

Tax Withholding

 

The Company and any of its affiliates have the right to withhold, or require payment of, the amount of any applicable taxes due or potentially payable upon exercise, award or lapse of restrictions. The Administrator will determine, in its sole discretion, the form of payment acceptable for such tax withholding obligations, including the delivery of cash or cash equivalents, our common stock (including previously owned shares, net settlement, a broker-assisted sale, or other cashless withholding or reduction of the amount of shares otherwise issuable or delivered pursuant to the Award), other property, or any other legal consideration the Administrator deems appropriate.

 

Limitations on Transfer of Awards

 

Participants may not assign, alienate, pledge, attach, sell or otherwise transfer or encumber any Award, other than a Stock Award. Options and SARs may only be exercised by a Participant during that Participant’s lifetime or by the person to whom the Participant’s rights pass by will or the laws of descent and distribution. Notwithstanding these restrictions, to the extent specifically provided by the Administrator, a Participant may assign or transfer, without consideration, an Award, other than an ISO, to immediate family members or related family trusts or other entities; however, no Award (other than a Stock Award, which is a fully vested share of our common stock) may be transferred to a third-party financial institution for value.

 

All shares of our common stock subject to an Award and evidenced by a stock certificate will contain a legend restricting the transferability of the shares pursuant to the terms of the Amended AR LTIP, which can be removed once the restrictions have terminated, lapsed or been satisfied. If shares are issued in book entry form, a notation to the same restrictive effect will be placed on the transfer agent’s books in connection with such shares.

 

Clawback

 

All Awards under the Amended AR LTIP will be subject to any clawback policy adopted by the Company, as in effect from time to time, including the Antero Resources Corporation Incentive Compensation Recovery Policy adopted by the Board, effective as of November 30, 2023.

 

Plan Amendment and Termination

 

The Administrator may amend or terminate any Award or award agreement or amend the Amended AR LTIP at any time and the Board may amend or terminate the Amended AR LTIP at any time; however, stockholder approval will be required for any amendment to the extent necessary to comply with applicable law or exchange listing standards. The Administrator does not have the authority, without the approval of stockholders, to amend any outstanding Option or SAR to reduce its exercise price per share or take any other action that would be considered a repricing under the applicable exchange listing standards. Without the consent of an affected Participant, no action by the Administrator or the Board to amend or terminate any Award, award agreement or the Amended AR LTIP, as applicable, may materially and adversely affect the rights of such Participant under any previously granted and outstanding Award.

 

Term of the Amended AR LTIP

 

If our shareholders approve this proposal, the Amended AR LTIP will become effective as of the date of the Annual Meeting. Unless earlier terminated by action of the Board, the Amended AR LTIP will terminate on the tenth anniversary of the Annual Meeting. Awards granted before the termination date of the Amended AR LTIP will continue to be effective according to their terms and conditions.

 

Federal Income Tax Consequences

 

The following discussion is for general information only and is intended to briefly summarize the United States federal income tax consequences to Participants arising from participation in the Amended AR LTIP. This description is based on current law, which is subject to change (possibly retroactively). The tax treatment of a Participant in the Amended AR LTIP may vary depending on

 

  -  2024 Proxy Statement 82
 
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his or her particular situation and may, therefore, be subject to special rules not discussed below. No attempt has been made to discuss any potential foreign, state, or local tax consequences. In addition, Nonstatutory Options and SARs with an exercise price less than the fair market value of shares of our common stock on the date of grant, SARs payable in cash, RSUs, and certain other Awards that may be granted pursuant to the Amended AR LTIP, could be subject to additional taxes unless they are designed to comply with certain restrictions set forth in Section 409A of the Code and guidance promulgated thereunder.

 

Tax Consequences to Participants

 

Options and SARs

 

Participants will not realize taxable income upon the grant of an Option or SAR. Upon the exercise of a Nonstatutory Option or an SAR, a Participant will recognize ordinary compensation income (subject to the Company’s withholding obligations if the Participant is an employee) in an amount equal to the excess of (i) the amount of cash and the fair market value of the common stock received, over (ii) the exercise price of the Award. A Participant will generally have a tax basis in any shares of common stock received pursuant to the exercise of a Nonstatutory Option or SAR that equals the fair market value of such shares on the date of exercise. Subject to the discussion under “Tax Consequences to the Company” below, the Company will be entitled to a deduction for federal income tax purposes that corresponds as to timing and amount with the compensation income recognized by a Participant under the foregoing rules. When a Participant sells the common stock acquired as a result of the exercise of a Nonstatutory Option or SAR, any appreciation (or depreciation) in the value of the common stock after the exercise date is treated as long- or short-term capital gain (or loss) for federal income tax purposes, depending on the holding period. The common stock must be held for more than 12 months to qualify for long-term capital gain treatment.

 

Participants eligible to receive an ISO will not recognize taxable income on the grant of an ISO. Upon the exercise of an ISO, a Participant will not recognize taxable income, although the excess of the fair market value of the shares of common stock received upon exercise of the ISO (“ISO Stock”) over the exercise price will increase the alternative minimum taxable income of the Participant, which may cause such Participant to incur alternative minimum tax. The payment of any alternative minimum tax attributable to the exercise of an ISO would be allowed as a credit against the Participant’s regular tax liability in a later year to the extent the Participant’s regular tax liability is in excess of the alternative minimum tax for that year.

 

Upon the disposition of ISO Stock that has been held for the required holding period (generally, at least two years from the date of grant and one year from the date of exercise of the ISO), a Participant will generally recognize capital gain (or loss) equal to the excess (or shortfall) of the amount received in the disposition over the exercise price paid by the Participant for the ISO Stock. However, if a Participant disposes of ISO Stock that has not been held for the requisite holding period (a “Disqualifying Disposition”), the Participant will recognize ordinary compensation income in the year of the Disqualifying Disposition in an amount equal to the amount by which the fair market value of the ISO Stock at the time of exercise of the ISO (or, if less, the amount realized in the case of an arm’s length disposition to an unrelated party) exceeds the exercise price paid by the Participant for such ISO Stock. A Participant would also recognize capital gain to the extent the amount realized in the Disqualifying Disposition exceeds the fair market value of the ISO Stock on the exercise date. If the exercise price paid for the ISO Stock exceeds the amount realized (in the case of an arm’s-length disposition to an unrelated party), such excess would ordinarily constitute a capital loss.

 

The Company will generally not be entitled to any federal income tax deduction upon the grant or exercise of an ISO, unless a Participant makes a Disqualifying Disposition of the ISO Stock. If a Participant makes a Disqualifying Disposition, the Company will then, subject to the discussion below under “Tax Consequences to the Company,” be entitled to a tax deduction that corresponds as to timing and amount with the compensation income recognized by a Participant under the rules described in the preceding paragraph.

 

  -  2024 Proxy Statement 83
 
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Under current rulings, if a Participant transfers previously held shares of our common stock (other than ISO Stock that has not been held for the requisite holding period) in satisfaction of part or all of the exercise price of an Option, whether a Nonstatutory Option or an ISO, no additional gain will be recognized on the transfer of such previously held shares in satisfaction of the Nonstatutory Option or ISO exercise price (although a Participant would still recognize ordinary compensation income upon exercise of a Nonstatutory Option in the manner described above). Moreover, the number of shares of common stock received upon exercise which equals the number of shares of previously held common stock surrendered in satisfaction of the Nonstatutory Option or ISO exercise price will have a tax basis that equals, and a capital gains holding period that includes, the tax basis and capital gains holding period of the previously held shares of common stock surrendered in satisfaction of the Nonstatutory Option or ISO exercise price. Any additional shares of common stock received upon exercise will have a tax basis that equals the amount of cash (if any) paid by the Participant, plus the amount of compensation income recognized by the Participant under the rules described above.

 

The Amended AR LTIP generally prohibits the transfer of Awards other than by will or according to the laws of descent and distribution or pursuant to a domestic relations order, but the Amended AR LTIP allows the Administrator to permit the transfer of Awards (other than ISOs) in limited circumstances, in its discretion. For income and gift tax purposes, certain transfers of Nonstatutory Options should generally be treated as completed gifts, subject to gift taxation.

 

The IRS has not provided formal guidance on the income tax consequences of a transfer of Nonstatutory Options (other than in the context of divorce) or SARs. However, the IRS has informally indicated that after a transfer of stock options (other than in the context of divorce pursuant to a domestic relations order), the transferor will recognize income, which will be subject to withholding, and employment or payroll taxes will be collectible at the time the transferee exercises the stock options. If a Nonstatutory Option is transferred pursuant to a domestic relations order, the transferee will recognize ordinary income upon exercise by the transferee, which will be subject to withholding, and employment or payroll taxes (attributable to and reported with respect to the transferor) will be collectible from the transferee at such time.

 

In addition, if a Participant transfers a vested Nonstatutory Option to another person and retains no interest in or power over it, the transfer is treated as a completed gift. The amount of the transferor’s gift (or generation-skipping transfer, if the gift is to a grandchild or later generation) equals the value of the Nonstatutory Option at the time of the gift. The value of the Nonstatutory Option may be affected by several factors, including the difference between the exercise price and the fair market value of the stock, the potential for future appreciation or depreciation of the stock, the time period of the Nonstatutory Option and the illiquidity of the Nonstatutory Option. The transferor will be subject to a federal gift tax, which will be limited by (i) the annual exclusion of $18,000 per donee (for 2024, subject to adjustment in future years), (ii) the transferor’s lifetime unified credit, or (iii) the marital or charitable deductions. The gifted Nonstatutory Option will not be included in the Participant’s gross estate for purposes of the federal estate tax or the generation-skipping transfer tax.

 

This favorable tax treatment for vested Nonstatutory Options has not been extended to unvested Nonstatutory Options. Whether such consequences apply to unvested Nonstatutory Options or to SARs is uncertain and the gift tax implications of such a transfer is a risk the transferor will bear upon such a disposition.

 

Restricted Stock Awards; RSUs; Stock Awards; Other Stock-Based or Cash Awards

 

A Participant will recognize ordinary compensation income upon receipt of cash pursuant to a cash award or, if earlier, at the time the cash is otherwise made available for the Participant to draw upon. Individuals will not have taxable income at the time of grant of an RSU, but rather, will generally recognize ordinary compensation income at the time he or she receives cash or a share of our common stock in settlement of the RSU, as applicable, in an amount equal to the cash or the fair market value of the common stock received.

 

A recipient of a Restricted Stock Award or Stock Award generally will be subject to tax at ordinary income tax rates on the fair market value of the common stock when it is received, reduced by any amount paid by the recipient; however, if the common stock is not transferable and is subject to a substantial risk of forfeiture when received, a Participant will recognize ordinary compensation income in an amount equal to the fair market value of the common stock (i) when the common stock

 

  -  2024 Proxy Statement 84
 
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first becomes transferable and is no longer subject to a substantial risk of forfeiture, in cases where a Participant does not make a valid election under Section 83(b) of the Code, or (ii) when the Award is received, in cases where a Participant makes a valid election under Section 83(b) of the Code. If a Section 83(b) election is made and the shares are subsequently forfeited, the recipient will not be allowed to take a deduction for the value of the forfeited shares. If a Section 83(b) election has not been made, any dividends received with respect to a Restricted Stock Award that is subject at that time to a risk of forfeiture or restrictions on transfer generally will be treated as compensation that is taxable as ordinary income to the recipient; otherwise the dividends will be treated as dividends.

 

A Participant who is an employee will be subject to withholding for federal, and generally for state and local, income taxes at the time he or she recognizes income under the rules described above. The tax basis in the common stock received by a Participant will equal the amount recognized by the Participant as compensation income under the rules described in the preceding paragraph, and the Participant’s capital gains holding period in those shares will commence on the later of the date the shares are received or the restrictions lapse. Subject to the discussion below under “Tax Consequences to the Company,” the Company will be entitled to a deduction for federal income tax purposes that corresponds as to timing and amount with the compensation income recognized by a Participant under the foregoing rules.

 

Tax Consequences to the Company

 

Reasonable Compensation

 

In order for the amounts described above to be deductible by the Company (or its subsidiary), such amounts must constitute reasonable compensation for services rendered or to be rendered and must be ordinary and necessary business expenses.

 

Golden Parachute Payments

 

Our ability (or the ability of one of our subsidiaries) to obtain a deduction for future payments under the Amended AR LTIP could also be limited by the golden parachute rules of Section 280G of the Code, which prevent the deductibility of certain excess parachute payments made in connection with a change in control of an employer-corporation.

 

Compensation of Covered Employees

 

The ability of the Company (or its subsidiary) to obtain a deduction for amounts paid under the Amended AR LTIP could be limited by Section 162(m) of the Code. Section 162(m) of the Code limits the Company’s ability to deduct compensation, for federal income tax purposes, paid during any year to a “covered employee” (within the meaning of Section 162(m) of the Code) in excess of $1,000,000.

 

New Plan Benefits