WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
report (Date of earliest event reported): August 29,
2008
Petroleum Development
Corporation
(Exact
Name of Registrant as Specified in Charter)
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Nevada
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0-7246
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95-2636730
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State
or Other Jurisdiction of Incorporation
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Commission
File Number
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IRS
Employer Identification No.
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120 Genesis Boulevard,
Bridgeport, WV 26330
(Address
of Principal Executive Offices)
Registrant's
telephone number, including area code 304-842-3597
no
change
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General
Instruction A.2. below):
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[ ]
Written communications pursuant to Rule 425 under Securities Act (17 CFR
230.425)
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[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item
5.02. Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On August
29, 2008 the Company finalized a compensation agreement with Steven R. Williams,
its former chief executive officer and currently an advisor and chairman of the
board of directors. His agreement is effective as of June 23, 2008
and under it the Company has appointed Mr. Williams as an Advisor to the Company
through September 30, 2008, after which Mr. Williams will serve solely as
Chairman of the Company's Board of Directors. As an Advisor to the
Company, Mr. Williams is an employee of the Company. We summarize the material
provisions of the agreement as follows.
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Base Salary and
Retainer. Under the agreement, Mr. Williams receives an
annual base salary of $340,000 prorated during the time he serves as
Advisor. Upon termination of his employment, Mr. Williams as
Chairman of the Board of Directors will receive a minimum cash retainer of
$45,000 on an annualized basis. This retainer will be in
addition to the cash retainer and stock compensation payable to other
non-employee directors.
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2008 Performance
Bonus. In addition to his base salary, Mr. Williams will
be entitled to a performance bonus for his service as an employee during
the term of his employment from January 1 through September 30,
2008. The "target bonus" will be equal to 90% of his base
salary during 2008, in respect of his serving as CEO from January 1
through June 23, 2008 and as Advisor from June 23 through September 30,
2008. Depending upon Mr. Williams' performance, the bonus may
be less or more than the target bonus, but not to exceed 180% of his base
salary.
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Retirement
Compensation. Mr. Williams' retirement compensation will
be the same as was disclosed in the Company's proxy statement for its
annual meeting of shareholders held on June 23,
2008.
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Accelerated Vesting of
Outstanding Stock Options, Restricted Stock and Performance
Shares.
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100%
of the then unvested stock options (totaling 5,227 shares) held by Mr.
Williams will vest on the date that Mr. Williams is no longer an Advisor
of the Company;
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o
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100%
of the unvested shares of restricted stock (totaling 13,070 shares; not
including performance shares awarded under the 2007 and 2008 LTIPs) will
vest when and if Mr. Williams retires, in a Board-approved retirement, as
a Director of the Company;
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With
regard to the 2007 and 2008 LTIP performance shares (14,683 and 22,757
shares, respectively), for purposes of the service vesting requirement,
50% of these LTIP shares will vest on the date that Mr. Williams is no
longer an Advisor of the Company or other employee position; and the
remaining 50% of these LTIP shares will vest when and if Mr. Williams
retires, in a Board-approved retirement, as a Director. To be
earned, these 2007 and 2008 LTIP performance shares will vest, if at all,
only if they also satisfy the performance targets established by the
Compensation Committee in March 2008 as presented in the relevant
documentation of the awards.
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Restrictive
Covenants. Mr. Williams will be bound by his
compensation agreement's provisions regarding the non-disclosure and
return of confidential information; no solicitation of Company employees;
and non-competition obligations.
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Termination as an
Employee. Following his termination as an employee of
the Company, the Company will pay Mr. Williams his earned 2008 performance
bonus, when the performance data is available, but not later than March
15, 2009; any incentive, deferred or other compensation which has been
earned or has become payable under any Company agreement or compensation
or benefit plan; any unpaid expense reimbursement; and any other payments
for benefits earned by Mr. Williams under any employment agreement or
plan.
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Most of
the above acceleration in equity grants pertains to performance shares that have
worth only if the Company achieves certain specified increased share price
targets in future years. The Compensation Committee believes that
this acceleration will help align Mr. Williams' interests with the transition to
the new chief executive officer and the future success of the
Company. Furthermore, the acceleration of the restricted stock and
the performance units is contingent on approval by the Board of his retirement
from the Board; in rendering such future approval decision, the Board will be
able to consider the success of Mr. Williams in his role in the transition of
the chief executive officer and in the future success of the Company as an
Advisor and as Chairman.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Petroleum
Development Corporation
Date August
29, 2008
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By
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/s/
Richard W. McCullough
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Richard
W. McCullough
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President
and Chief Executive Officer
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