Lightstream raised bonuses as share price plummeted

Lightstream Resources Ltd. increased 2015 cash bonuses for three executives months before the Calgary-based oil producer proposed a debt-for-equity swap to stay afloat as its stock was down to pennies.

Chief financial officer Peter Scott and chief operating officer Rene LaPrade saw their non-equity compensation for last year, paid in December, increase about 11 per cent from 2014 to $200,000 each, according to a filing from the company.

The bonus for Peter Hawkes, vice-president for geosciences, surged 32 per cent to $119,763.

Share-based awards and total compensation fell for each of the executives as the stock plunged almost 80 per cent to end the year at 26 cents.

The disclosure was part of a report in advance of a Sept. 30 annual meeting, at which shareholders and bondholders will vote on a restructuring proposed by Lightstream to cut debt by $904 million.

Unsecured bondholders, including Mudrick Capital Management LP, have said they’re opposed to the terms of the deal, which would hand control of the company to top-ranked bondholders.

The plan is the latest attempt by Lightstream to stay in business as it struggles to make debt payments with a crude market rout exceeding two years.

The producer entered the downturn highly leveraged and has avoided parting with its prized Bakken assets in Saskatchewan, even after starting a sales process in December 2014.

If the restructuring doesn’t proceed, Lightstream plans to secure a buyer for all or part of the company under the court-supervised Companies’ Creditors Arrangement Act process, a way to reorganize rather than liquidate through bankruptcy.

Craig Lothian, a former director of Lightstream who was on the compensation committee in 2015, said he resigned from the board on Dec. 21 during a meeting to approve the bonuses because he was opposed to them and voted against them.

Lothian, in an email, said he stepped down verbally from the board during the meeting and followed up with an email immediately after. Lightstream, in a news release, indicated Lothian had resigned but didn’t give a reason.

Chief executive John Wright, 56, saw his cash award fall 6.9 per cent to $186,200.

The CEO’s total compensation fell 24 per cent to about $1.6 million. The bonus for Mary Bulmer, vice-president of corporate services, fell 11 per cent to $133,867.

In 2015, the bonuses were paid in cash, while prior to that, bonuses were typically paid in cash as well as deferred common shares, according to the filing.

Under the restructuring plan, all outstanding deferred common shares will be adjusted in value and be immediately and fully vested and exercisable.

Bonuses for 2015 reflect the executives’ achievement of some, but not all, corporate performance measures, the filing said.

The figures reflect a decision by the board’s compensation committee to “substantially reduce the available bonus pool,” recognizing poor share price performance, the erosion of investment value for shareholders and the low oil price operating environment, according to the document.

Lightstream’s executive compensation levels were determined in relation to 12 Canadian domestic producers in its peer group, according to the company’s management information circular.

Among those peers, all lowered bonuses for each executive in 2015 except in two cases.

Crew Energy Inc. didn’t award cash bonuses at all for last year, while Torc Oil & Gas Ltd. lowered bonuses and paid out most in shares, rather than cash.

In opposing the restructuring, Mudrick has argued Lightstream is favouring Apollo Global Management LLC and Blackstone Group LP’s GSO Capital, which became the highest-ranked bondholders in a previous debt swap last year.