Earnings and 10-K Out



Items of note:

At the annual meeting of stockholders held on December 29, 2021, Mr. McGinnis did not receive a majority of the votes cast with respect to his re-election as a director. Notwithstanding the terms of the Stockholders’ Agreement, Horizon and SoftVest did not vote for the re-election of Mr. McGinnis. If Horizon and SoftVest had voted for Mr. McGinnis, he would have received a majority of the votes cast. Pursuant to our amended and restated bylaws, Mr. McGinnis promptly tendered his resignation, subject to acceptance by the Board, to the Board. The Nominating and Corporate Governance Committee of the Board will make a recommendation to the Board as to whether to accept or reject the tendered resignation. The Board will act on the tendered resignation, taking into account the Nominating and Corporate Governance Committee’s recommendation and the failure of Horizon and Soft Vest to vote for Mr. McGinnis as described in the previous paragraph, and publicly disclose its decision regarding the tendered resignation within ninety days of the date of the certification of the annual meeting results

Salaries and related employee expenses. Salaries and related employee expenses were $40.0 million for the year ended December 31, 2021 compared to $32.2 million for the comparable period of 2020. The increase in salaries and related employee expenses during 2021 as compared to the same period of 2020 is principally due to $6.7 million of severance costs and a $1.4 million increase in pension costs, partially offset by decreased usage of contract labor by our Water Services and Operations segment.

Total income tax expense was $93.0 million and $43.6 million for the years ended December 31, 2021 and 2020, respectively. During the quarter ended December 31, 2021, the Company recorded an out of period tax adjustment of $19.4 million to current income tax expense and income taxes payable, $13.0 million of which related to historical annual periods and $6.4 million of which related to current year quarterly periods.

Who resigned?

Who negotiated the employment agreement that ended up in a $7mm severance payment?

Who was overzealous with the depletion accounting?

Who is accountable? Or is $19mm just table scraps these days?

Another fumble at the one yard line…

10 thoughts on “Earnings and 10-K Out

  1. “Our business could be negatively affected as a result of the actions of activist or hostile stockholders”


  2. Reads like Board isn’t getting rid of McGinnis. Nonsense line “If Horizon and Soft Vest would have voted for him”, he would’ve kept his seat. Corporate Governance has never meant so little.

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  3. As of December 31, 2021, we had cash and cash equivalents of $428.2 million…… For the year ended December 31, 2021, we repurchased $19.9 million of shares and paid $85.3 million in dividends to our stockholders.

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  4. And not a word that I could see about the shareholder advisory vote to destagger the board. Not even a timeline to suggest when they might consider it.

    One has to give them credit….they have world class stonewalling skills.

    Liked by 1 person

    • Ted, earlier I emailed Shawn of investors relations asking if he could give me a date when the board would settle the two issues: Dana and declassify. Haven’t heard back.

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  5. We still have another bite at the apple during the Q&A at the results call tomorrow. Any analyst worth their salt will be focused on these questions regarding governance.

    Particularly after the 10-K issued today showed a material weakness in internal controls that resulted in incorrect tax treatment of depletion for O&G gas royalty interests.

    If Mr. McGinnis was truthful in the filing that purported that he was the second largest shareholder, I might be more concerned about whether Mr. Oliver and Mr. Stahl disregarded their agreement.

    The company depends on the reputation and integrity of its directors and executive officers. We need to understand whether any of these individuals misrepresented any material facts.

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