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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 1
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ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended June 30, 2014 |
or |
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TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period
from to
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Commission File Number 001-32490
HYPERDYNAMICS CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE
(State or other jurisdiction of
incorporation or organization) |
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87-0400335
(IRS Employer
Identification Number) |
12012 Wickchester Lane, Suite 475
Houston, Texas 77079
(Address of principal executive offices, including zip code)
(713) 353-9400
(Issuer's telephone number, including area code)
Securities
registered under Section 12(b) of the Exchange Act:
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Title of Each Class |
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Name of Each Exchange on Which Registered |
Common Stock, $0.001 par value |
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NYSE Amex |
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. o Yes ý No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. o Yes ý No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. ý Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). ý Yes o No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge , in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
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Large accelerated filer o |
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Accelerated filer ý |
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Non-accelerated filer o (Do not check if a
smaller reporting company) |
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Smaller reporting company o |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12-b-2 of the Exchange
Act) o Yes ý No
As of December 31, 2013, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was $85,659,625 based on the
closing sale price as reported on the NYSE. We had 21,046,591 shares of common stock outstanding on October 22, 2014.
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EXPLANATORY NOTE
Hyperdynamics Corporation (the "Company," "we," "us" or "our") is filing this Amendment No. 1 on Form 10-K/A (this
"Amendment") to amend its Annual Report on Form 10-K for the year ended June 30, 2014, filed with the SEC on September 12, 2014 (the "Original Form 10-K").
This
Amendment is being filed to amend the Original Form 10-K to include the information required by Items 10 through 14 of Part III of Form 10-K. The Company
is also updating its list of exhibits in Item 15 of this report to include the certifications specified in Rule 13a-14(a) under the Securities Exchange Act of 1934 required to be filed
with this Amendment. Except for (i) the addition of the Part III information and (ii) the filing of related updated certifications, no other changes have been made to the Original
Form 10-K. Except as described above, this Amendment does not reflect events occurring after the filing of the Original Form 10-K or modify or update those disclosures as affected by
subsequent events.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Board of Directors
The following table sets forth the name, age, and positions and offices with us of each of our Directors as of the date of this
Amendment. Each of their current terms as our directors expires at the Annual Meeting. There is no family relationship between or among any of the Directors and our Executive Officers. Board of
Directors vacancies are filled by a majority vote of the Board of Directors. Our Board has an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, a Government
Relations Committee, and a Technical Committee.
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Name
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Position |
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Age |
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Ray Leonard |
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Director, CEO and President |
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61 |
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Robert A. Solberg* |
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Director and Non-Executive Chairman |
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68 |
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Herman Cohen* |
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Director |
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82 |
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William O. Strange* |
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Director |
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71 |
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Fred Zeidman* |
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Director |
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68 |
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Ian Norbury* |
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Director |
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63 |
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Ray Leonard was appointed to the Board of Directors and was appointed CEO and President in July 2009. Mr. Leonard most recently
served as the Vice President of Eurasia & Exploration for the newly formed Kuwait Energy Company from December 2006 to June 2009. From January 2005 to November 2006, Mr. Leonard served
as the Senior Vice President of International Exploration and Production of
MOL Plc. Mr. Leonard also served as Vice President of Exploration & New Ventures for YUKOS, Russia's second largest oil company, based in Moscow, Russia from February 2001 to
December 2004. Prior to joining YUKOS, Leonard held the title of Vice President of Exploration with First International Oil from June 1998 to January 2001. Previously, Mr. Leonard spent
19 years with Amoco, where he began as a geologist and was promoted to the executive level as Vice President of Resource Acquisitions. During his tenure at Amoco, he held a three-year
assignment as Division Geologist in West Africa. Mr. Leonard holds a Master of Arts in Geology from the University of Texas-Austin and a Bachelor of Science in Geosciences from the University
of Arizona.
In
addition to the professional and education background and experience described above, the following experience, qualifications, attributes and/or skills led the Board of Directors to
conclude that Mr. Leonard should serve as a director:
Leadership
ExperienceMr. Leonard has held numerous roles in key executive management over his career including the Vice President of Exploration for YUKOS and First
International Oil, and Senior Vice President of Exploration and Production for MOL.
Industry
ExperienceMr. Leonard has worked in the Oil & Gas industry his entire career in various Exploration and Production companies and has presented in
numerous international forums on world oil reserves and future industry trends.
Robert A. Solberg was appointed to the Board of Directors in August 2009 and serves as non-executive Chairman of the Board of Directors.
He was the president of Texaco Inc.'s Worldwide Development division from 1998 until his retirement in 2002. Prior to 1998, Mr. Solberg held senior management positions at
Texaco, Inc. for operations in the U.S., the Middle East, Asia, Latin America, West Africa, and Europe. Mr. Solberg retired in July 2010 after serving as a director and the non-executive
chairman of Scorpion Offshore, an offshore drilling company that was traded on the Oslo, Norway stock exchange. Mr. Solberg is also a director and equity participant in JDR Cables Ltd, a
privately owned company which supplies custom subsea connection equipment and power cables.
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Mr. Solberg
is a licensed petroleum engineer, and he holds a B.S Degree in Civil EngineeringUniversity of North Dakota (1969).
In
addition to the professional and education background and experience described above, the following experience, qualifications, attributes and/or skills led the Board of Directors to
conclude that Mr. Solberg should serve as a director:
Leadership
ExperienceMr. Solberg has held various key executive positions with public companies such as the president of Texaco Inc.'s Worldwide Development
division and the chairman of Scorpion Offshore.
Industry
ExperienceMr. Solberg has worked in the Oil & Gas industry his entire career in various Exploration and Production companies.
Herman Cohen was appointed to the Board of Directors in July 2009. Mr. Cohen has been the owner of Cohen & Woods
International since 1998. At Cohen & Woods International, Mr. Cohen specializes in providing strategic planning services to African governments and companies doing business in Africa.
Mr. Cohen also served as a Senior Advisor to the Global Coalition for Africa from 1993 to 1998 under contract to the World Bank. Previous to his position at the World Bank, Mr. Cohen
served in the U.S. Foreign Service from 1955 to 1993. During his diplomatic career, Mr. Cohen served as the U.S. Ambassador to Senegal and Gambia from 1977 to 1980, and from 1989 to 1993
Mr. Cohen served as assistant secretary of state for African Affairs under President George H.W. Bush.
In
addition to the professional and education background and experience described above, the following experience, qualifications, attributes and/or skills led the Board of Directors to
conclude that Mr. Cohen should serve as a director:
Leadership
ExperienceAs reflected above, Mr. Cohen has held numerous positions within the U.S. Government of significant responsibility including, among others, the
American Ambassador to Senegal and the U.S. assistant secretary of state for African Affairs.
William O. Strange was appointed to the Board of Directors in November 2010. Mr. Strange was an audit partner with
Deloitte & Touche LLP prior to his retirement in May 2005. He joined the international accounting firm in 1964 and became a partner in 1976. During his 41 years with
Deloitte & Touche LLP he specialized in audits of SEC registrants for a variety of publicly traded energy clients in exploration and production, petrochemicals, pipelines, and oil
services. Since 2005 he has been engaged in independent financial and accounting consulting services. Mr. Strange is a graduate of the University of Oklahoma and lives in Houston. He is on the
Audit Committee of the Presbytery of the New Covenant, the governing body for Presbyterian Churches in the Gulf Coast area. He has served as the President of the Petroleum Club of Houston and as a
member of the Major Cases Committee of the Texas State Board of Public Accountancy. In January 2014, he was elected Treasurer of Habitat for Humanity Northwest Harris County.
In
addition to the professional and education background and experience described above, the following experience, qualifications, attributes and/or skills led the Board of Directors to
conclude that Mr. Strange should serve as a director:
Leadership
ExperienceMr. Strange worked over 41 years for Deloitte & Touche LLP, including 29 years as an audit partner. While at
Deloitte & Touche LLP, most of his clients were in the energy industry, including many exploration and production companies and he spent the vast majority of his time working on clients
which reported to the SEC. He has also lived overseas and understands foreign operations.
Financial
ExperienceIn addition to his over 41 years at Deloitte & Touche LLP, Mr. Strange was considered a Senior Technical Partner at
Deloitte & Touche LLP. He has extensive knowledge of energy industry economics and business methods. He has worked with more than 20 audit committees of public company clients and
understands the best practices of audit committees.
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Fred Zeidman was appointed to our Board of Directors in December 2009. Mr. Zeidman was a director from August 2008 to September
2011 for SulphCo Inc., a publicly traded crude oil field technology oil service company. In March 2008, Mr. Zeidman was appointed the Interim President of Nova Biosource
Fuels, Inc. ("Nova"), a publicly traded biodiesel technology company, and served in that position until the company's acquisition in November 2009 and as a Nova director since June 2007. From
August 2009 through November 2009, Mr. Zeidman was appointed Chief Restructuring Officer for Transmeridian Exploration, Inc. and served in that position until its sale in November 2009.
Mr. Zeidman has been Bankruptcy Trustee of AremisSoft Corp since 2004. Mr. Zeidman currently serves as Chairman Emeritus of the University of Texas Health Science System Houston, he
serves as interim Chief Financial Officer of the Texas Heart Institute, and on the Board of the Memorial Hermann System. Mr. Zeidman is Chairman of the Board of Petroflow Energy and a Director
of Lucas Energy Inc., Straight Path Communications Inc. and Petro River Oil. Mr. Zeidman served as Chairman of the United States Holocaust Memorial Council from March 2002 through
September 2010. Mr. Zeidman was on the board of Compact Power, Inc., an energy storage systems company from November 2007 to November 2009. Mr. Zeidman has served on the board of
Prosperity Bank for 27 years. He also served as CEO, President and Chairman of the Board of Seitel Inc., an oil field services company, from June 2002 until its sale in February 2007.
Mr. Zeidman served as a Managing Director of the law firm Greenberg Traurig, LLP from July 2003 to December 2008.
In
addition to the professional and education background and experience described above, the following experience, qualifications, attributes and/or skills led the Board of Directors to
conclude that Mr. Zeidman should serve as a director:
Leadership
ExperienceMr. Zeidman has served in numerous roles of executive and directorship responsibility including serving on the board of Prosperity Bank for
27 years and acting as Chairman of the United States Holocaust Memorial Council.
Financial
ExperienceMr. Zeidman has a Masters in Business Administration degree and was the Chief Restructuring Officer for Transmeridian Exploration.
Ian Norbury joined the Board of Directors in January 2013. Mr. Norbury is a Director of Hannon Westwood, a U.K. firm providing
consultancy services for the oil and gas industry. Prior to joining Hannon Westwood in 2003, Mr. Norbury held various positions with Amerada Hess International since 1985, most recently as
Executive Manager, Exploration with responsibility for worldwide exploration performance, including West Africa. He previously held senior geologist positions with Conoco and Amoco. Mr. Norbury
earned his BSC in Geology and Geography at the University of London.
In
addition to the professional and education background and experience described above, the following experience, qualifications, attributes and/or skills led the Board to conclude that
Mr. Norbury should serve as a director:
Leadership
ExperienceMr. Norbury has held various key executive positions such as the executive manager of exploration at Amerada Hess International.
Industry
ExperienceMr. Norbury has worked in the Oil & Gas industry his entire career in various Exploration and Production companies.
Executive officers
Jason D. Davis, 42, became our Chief Financial Officer, Principal Accounting Officer
and Corporate Secretary in July 2009. In August 2010, Mr. Davis stepped down as the Chief Financial Officer and in June 2013 relinquished the position of Corporate Secretary. He currently
serves as the Vice President of Finance and Treasurer. Mr. Davis is a licensed certified public accountant and has served in various financial positions for several companies including the
Assistant Controller at Isolagen, Inc. (AMEX: ILE) from March 2004 to August 2005, the Manager of SEC Reporting at Texas Genco, LLC from August 2005 to June 2006, and the Controller at
Particle Drilling Technologies, Inc.
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(PDRT.PK)
from June 2006 to June 2009. Mr. Davis also served as the interim Chief Financial Officer for Particle Drilling Technologies, Inc. from January 2009 to June 2009.
Mr. Davis was an accountant with Deloitte & Touche LLP after obtaining his BBA in Accountancy and Taxation from the University of Houston in 1997 until 2003.
David Wesson, 55, became our Vice President and Chief Financial Officer on January 1, 2014. Mr. Wesson previously served as
our Controller and Principal Accounting Officer from 2010 through January 2014. On August 1, 2014, effective with the resignation of Chris DePue, he again assumed the role of Principal
Accounting Officer, in addition to serving as Chief Financial Officer. From 1988 to 2009, he was employed by Swift Energy Company, serving as Controller from 2001 to 2009. He previously worked at
Tenneco Oil Company as a Senior Accountant/Financial Analyst. Mr. Wesson received a BBA in Accounting from Texas Tech University. He is a licensed Certified Public Accountant.
Paolo Amoruso, 44, became our Vice President of Commercial and Legal Affairs in July 2011 and Corporate Secretary
in June 2013. From June 2010, to July 2011, Mr. Amoruso served as our Director of Commercial and Legal Affairs. From 2003 to 2010, Mr. Amoruso was employed by Devon Energy Corporation,
serving as Tax Counsel and then Assistant General Counsel for the International Division. He previously worked at Shell Oil Company as Tax Counsel beginning in 1998. Mr. Amoruso holds
an LL.M. in Taxation from the New York University School of Law, a Juris Doctorate, Masters in Business Administration, and a B.S. in Economics from the University of Houston. He is licensed to
practice law in the State of Texas.
Christopher
DePue, our former Controller and Principal Accounting Officer, resigned his positions with us and our subsidiaries, effective August 1, 2014.
Shareholder Communications
Stockholders and others who wish to communicate with the Board or any particular Director, including the Independent Director presiding
over executive session meetings of Independent Directors, or with any executive officer of the Company, may do so by writing to Paolo Amoruso, Secretary, 12012 Wickchester Lane,
Suite 475, Houston, Texas 77079.
All
such correspondence is reviewed by the Secretary's office, which logs the material for tracking purposes. The Board has asked the Secretary's office to forward to the appropriate
Director(s) all
correspondence, except for personal grievances, items unrelated to the functions of the Board, business solicitations, advertisements and materials that are profane.
In
order for a stockholder business proposal or nomination for director to be properly brought before an annual meeting of stockholders, the stockholder must have delivered a notice to
the Secretary at the principal executive offices of the Company not earlier than the close of business 120 days prior to the one-year anniversary of the prior Annual Meeting, and not later than
the 90th day prior to the one-year anniversary of the last Annual Meeting; provided, however, that in the event that the date of the next annual meeting is more than 30 days before or
more than 60 days after the one-year anniversary of this Annual Meeting, notice by the stockholder must be so delivered not earlier than the close of business on the 120th day prior to
the date of the next annual meeting and not later than the close of business on the later of the 90th day prior to the date of the next annual meeting or, if the first public announcement of
the date of the next annual meeting is less than 100 days prior to the date of the next annual meeting, the 10th day following the day on which public announcement of the date of the
next meeting is first made by the Company. If the number of directors to be elected to the Board is increased effective after the time period for which nominations would otherwise be due pursuant to
the Amended and Restated Bylaws, and there is no public announcement by the Company naming the nominees for the additional directorships by 100 days prior to the one-year anniversary of the
last Annual Meeting, the stockholder's notice will be considered timely, but only with respect to nominees for any new positions created by such increase, if it is be
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delivered
as described above not later than the close of business on the 10th day following the day on which such public announcement is first made by the Company. Stockholders submitting a
notice of a proposal must also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder, as well as with the requirements of the Company's Amended and
Restated Bylaws.
Board Meetings During Fiscal Year 2014
The Board of Directors held eleven meetings during the fiscal year ended June 30, 2014.
Board Committees
Committee Assignments
The table below reflects the composition of the committees of the Board.
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Audit
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Compensation
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Nominating and
Corporate
Governance
Committee |
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Government
Relations
Committee |
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Technical
Committee |
Robert A. Solberg* |
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Member |
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Chairman |
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Chairman |
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Member |
William O. Strange |
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Chairman |
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Member |
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Member |
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Ray Leonard |
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Member |
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Member |
Fred Zeidman |
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Member |
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Member |
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Member |
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Member |
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Herman Cohen |
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Member |
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Member |
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Member |
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Ian Norbury |
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Member |
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Member |
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Chairman |
The
Audit Committee of the Company reviews the adequacy of systems and procedures for preparing the financial statements and the suitability of internal financial controls. The Audit
Committee also reviews and approves the scope and performance of the Company's independent registered public accounting firm. Messrs. Zeidman, Solberg, and Strange are the members of the Audit
Committee. All committee members are independent. Mr. Strange is the chairman of the Audit Committee and a financial expert based on his experience as an audit partner at Deloitte &
Touche LLP. The Audit Committee has a written charter, which is available at the Company's website at www.hyperdynamics.com. The Audit Committee reviews and assesses the adequacy of the Audit
Committee charter annually. During the year ended June 30, 2014, the Audit Committee met four times.
The
members of our Compensation Committee are Messrs. Cohen, Solberg, Zeidman, and Strange. Mr. Solberg is the chairman of the Compensation Committee. All committee members
are independent. During the year ended June 30, 2014, the Compensation Committee met three times. The Compensation Committee has a written charter, which is available at the Company's website
at www.hyperdynamics.com.
The
Compensation Committee reviews the performance of the Company's executive personnel and develops and makes recommendations to the Board of Directors with respect to executive
compensation policies. The Compensation Committee is empowered by the Board of Directors to establish and administer the executive compensation programs of the Company. The details of the processes
and procedures for the consideration and determination of executive and director compensation are described in the section entitled "Executive
CompensationCompensation Discussion and Analysis." The objectives of the Compensation Committee are to attract and retain key individuals who are important to the continued success of
Hyperdynamics and to provide strong financial incentives, at reasonable cost to stockholders, for senior management to enhance the value of the stockholders' investment.
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The members of our Nominating and Corporate Governance Committee are Messrs. Solberg, Zeidman, Strange, Cohen, and Norbury. Mr. Solberg is the
chairman of the Nomination and Corporate Governance Committee. All committee members are independent. During the year ended June 30, 2014, the Nomination and Corporate Governance Committee did
not meet. Though neither the Board of Directors nor the Nominating and Corporate Governance Committee has a formal policy concerning diversity, the Board of Directors values diversity on the Board and
believes diversity should be considered in the director identification and nominating process. The Nominating and Corporate Governance Committee has a written charter, which is available at the
Company's website at www.hyperdynamics.com.
The
members of our Government Relations Committee are Messrs. Cohen, Leonard, Norbury, and Zeidman. Messrs. Cohen, Norbury. and Zeidman are independent. During the year
ended June 30, 2014, the Governmental Relations Committee met four times. The Governmental Relations Committee does not have a charter.
The
members of our Technical Committee are Messrs. Solberg, Leonard, and Norbury. Messrs. Solberg and Norbury are independent. Mr. Norbury is the chairman of the
Technical Committee. The Technical Committee was formed on June 18, 2013 and met four times during the year ended June 30, 2014. The Technical Committee does not have a charter.
Executive Sessions of Independent Directors
NYSE rules require that our Independent Directors meet in regularly scheduled executive sessions without management present. Robert A.
Solberg, the Chairman of our Board of Directors, is the presiding Independent Director at these executive sessions. The non-management directors met in executive sessions four times during the fiscal
year ended June 30, 2014.
Board Leadership Structure and Risk Oversight
Board of Directors Leadership Structure. Our Board of Directors has no fixed policy with respect to the separation of the offices of
Chairman of the
Board of Directors and Chief Executive Officer. Our Board retains the discretion to make this determination on a case-by-case basis from time to time as it deems to be in the best interests of the
Company and our stockholders at any given time. The Board currently believes that separating the positions of CEO and Chairman is the best structure to fit the Company's needs. This structure ensures
a greater role for the Independent Directors in the oversight of the Company and active participation of the Independent Directors in setting agendas and establishing priorities and procedures for the
work of the Board. As described above, the Audit, Compensation, and Nominating and Corporate Governance Committees are comprised entirely of Independent Directors. The Board also believes that this
structure is preferred by a significant number of the Company's stockholders.
Board of Directors Risk Oversight. The Board's role in the Company's risk oversight process includes receiving regular reports from
members of senior
management on areas of material risk to the Company, including operational, financial, legal and regulatory, and strategic and reputational risks. The full Board (or the appropriate committee in the
case of risks that are under the purview of a particular committee) receives these reports from the appropriate "risk owner" within the organization to enable it to understand our risk identification,
risk management and risk mitigation strategies. When a committee receives the report, the chairman of the relevant committee reports on the discussion to the full Board during the next Board meeting.
This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.
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Audit Committee Report
The Audit Committee has reviewed and discussed the audited financial statements with management. The Audit Committee has discussed with
the independent auditors the matters required to be discussed by SAS 90 (Codification of Statements on Auditing Standards, AU § 380), as may be modified or supplemented. The Audit
Committee has received the written disclosures and the letter from the independent accountants required by the applicable requirements of the Public Company Accounting Oversight Board regarding the
independent accountant's communications with the Audit Committee concerning independence, as may be modified or supplemented, and has discussed with the independent accountant the independent
accountant's independence. Based on the review and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 2014.
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Members of the Audit Committee: |
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/s/ Robert A. Solberg
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/s/ Fred Zeidman
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/s/ William O. Strange
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires our executive officers and
directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide
us with copies of those filings. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year
ended June 30, 2014, all filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with, except that David Wesson, our Vice President and
Chief Financial Officer, filed one Form 4, reporting an option grant, five days late.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar functions and our directors and officers. We will provide without charge a copy of our Code of Business Conduct and Ethics
upon request. Such request should be directed in writing to: Paolo Amoruso, Secretary, Hyperdynamics Corporation, 12012 Wickchester Lane, Suite 475 Houston, TX 77079, voice:
(713) 353-9400, fax: (713) 353-9421. Our Code of Business Conduct and Ethics is available on our website at www.hyperdynamics.com.
Item 11. Executive Compensation.
Compensation Discussion and Analysis
Our compensation discussion and analysis for the fiscal year ended June 30, 2014 discusses the compensation for our Named
Executive Officers ("NEOs") consisting of our Chief Executive Officer,
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Chief
Financial Officer and the three most highly compensated current executive officers: Ray Leonard, David Wesson, Jason Davis, Paolo Amoruso, and Paul C. Reinbolt. Mr. Reinbolt resigned his
positions as Executive Vice President and Chief Financial Officer effective December 31, 2013. The NEOs are also reflected in the Summary Compensation Table below. In this compensation
discussion and analysis, the terms "we" and "our" refer to Hyperdynamics Corporation, and not the Compensation Committee.
Compensation Overview, Objectives, and Elements
We are an early-stage and relatively small company in the oil and gas exploration industry and our operations in the last several years
have focused on oil and gas exploration in our Concession offshore the coast of the Republic of Guinea in West Africa, identifying additional prospects that may contain oil or gas and identifying
other oil & gas companies to farm-out participating interests in the Concession. We have accomplished this with a small team of management individuals with significant industry experience. We
have designed our compensation program to attract and retain these highly experienced individuals, who have competing opportunities at more established companies, as well as to motivate and reward
these individuals for the successful execution of our business plan.
The
Compensation Committee of the Board of Directors reviews the performance of our executives and develops and makes recommendations to the Board of Directors with respect to executive
compensation policies. The Compensation Committee is empowered by the Board of Directors to establish and administer our executive compensation programs.
Because
of the uniqueness of our business and operations, the Compensation Committee has concluded that we do not have a single group of peer or comparison companies for purposes of
traditional benchmarking and percentile targeting and, as such, the Compensation Committee does not use traditional benchmarking or percentile targeting against a stated peer group in setting
compensation. Rather than looking to a single peer or comparison group of companies, our compensation practice concerning our executives is to review compensation on a position-by-position basis and
determine the particular skill set required to be successful at the Company for the particular position in question. The skill set necessarily varies among positions but may include: executive
management experience at oil and gas enterprises; offshore experience and technical expertise; international experience; experience growing and maturing a company; relevant financial and commercial
experience; and relevant compliance and legal experience. As a result, the Compensation Committee's determinations in setting compensation are often qualitative and subjective, depending on the
executive's position.
The
details of the processes and procedures for the consideration and determination of executive compensation are described below.
What are the objectives of our executive officer compensation program?
The objectives of the Compensation Committee in determining executive compensation are to (1) attract and retain key individuals
who are important to the continued success of Hyperdynamics, and (2) provide strong financial incentives, at reasonable cost to the stockholders, for senior management to enhance the value of
the stockholders' investment.
What is our executive officer compensation program designed to reward?
Our compensation program is designed to reward individuals for the achievement of our business goals and to foster continuity of
management by encouraging key individuals to maintain long-term careers with Hyperdynamics.
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What are the elements of our executive officer compensation program and why do we provide each element?
The elements of compensation that the Compensation Committee uses to accomplish these objectives include (1) base salaries,
(2) bonus, and (3) long term incentives in the form of stock and stock options. From time to time, we also provide perquisites to certain executives and health and insurance to all
employees. The elements of compensation that we offer help us to attract and retain our officers. The specific purpose of each element of compensation is outlined below.
Base Salaries
We provide fixed annual base salaries as consideration for each executive's performance of his or her job duties. Salaries are set
based on level of responsibility, skills, knowledge, experience, and contribution to Hyperdynamics' business.
Bonus
Annual cash bonuses may be awarded as part of annual salary and it is a component of variable compensation. Bonuses are based on goals
and objectives that each executive must meet during the fiscal year. Each executive is given a target bonus percentage. The Chief Executive Officer recommends a bonus amount to the Compensation
Committee and the full Board of Directors approves the awarded bonuses, if any.
Our
historic policy has been to set such executive's bonus in a range of 50% to 100% of that executive's annual base salary with a target of 75% of the executive's annual base salary.
The Compensation Committee or Board of Directors usually approves annual bonuses for our executives during the month of June of the fiscal year that concludes at the end of that month. Our Chief
Executive Officer, Ray Leonard, has specific performance related goals and targets usually set by the
Compensation Committee in the month of June (prior to the commencement of the applicable fiscal year). The following June (at the end of the fiscal year) the Compensation Committee evaluates the Chief
Executive Officer's performance against those goals and targets and recommends a bonus amount to the Board of Directors following that evaluation. Mr. Leonard's target range is 50% to 200% of
base salary under the terms of his employment agreement. The Compensation Committee set our former Chief Financial Officer's bonus target amount at 75% of our Chief Executive Officer's bonus for the
2014 fiscal year.
Long-term Incentives
We can provide long-term incentives in the form of stock and stock options. Our practice has been to provide stock options as our
preferred form of long-term incentives. Long-term incentives are a component of variable compensation because the amount of income ultimately earned is dependent upon and varies with our common stock
price over the term of the option. The stock option awards tie a portion of executive compensation to the stock price and accordingly our financial and operating results. We do not use a formula to
determine stock and stock option awards to executives. Stock option awards are not designed to be tied to yearly results. We view stock option awards as a means to encourage equity ownership by
executives and thus to generally align the interests of the executives with the stockholders.
Our
2010 Plan authorizes the Compensation Committee to grant stock options, restricted stock, and stock registered under a Form S-8 registration statement to officers and other
key employees. The Compensation Committee implements this authority by awarding stock options designed to align the interests of all senior executives to those of stockholders. This is accomplished by
awarding stock options, which rise in value based upon the market price rise of Hyperdynamics' common stock, on a systematic basis.
11
Table of Contents
The
actual amount of long-term incentives that each of our executives is eligible to receive is established by that executive's employment agreement.
If
an executive does not have an employment agreement with us, our policy has been to make such executive's long-term incentive grant in the form of stock options. Prior to the reverse
stock split effective July 1, 2013, the number of shares underlying the stock options was set at 50% the dollar amount of that executive's annual cash bonus. For example, if an executive's
annual cash bonus was $150,000, a stock option to purchase 75,000 shares of our common stock would have been granted. In
June 2014, the stock option award for each executive was set at 50% the dollar amount of that executive's annual cash bonus, and then divided by two. For example, if an executive's annual cash bonus
was $150,000, a stock option to purchase 37,500 shares of our common stock would be granted. The Compensation Committee or Board of Directors usually approves long-term incentive grants during the
month of June of the fiscal year that concludes at the end of that month.
We
report the estimated fair value of our stock option grants, as determined for accounting purposes in accordance with ASC 718, using either the Black-Scholes option pricing model or a
Monte Carlo model, in the Summary Compensation Table and the Grants of Plan-Based Awards Table. The amount reflected for accounting purposes does not reflect whether the executive has or will realize
a financial benefit from the awards. Because stock option awards are made at a price equal to or above the market price on the date of grant, stock options have no intrinsic value at the time of
grant. We believe the potential appreciation of the option awards over the stock price provide motivation to executives.
Perquisites
Perquisites are determined on a case-by-case basis by the Compensation Committee. During the fiscal year ended June 30, 2014, no
executive officer received any perquisites.
How do we determine the amount for each element of executive officer compensation?
Our policy is to provide compensation packages that are competitively reasonable and appropriate for our business needs. We consider
such factors as competitive compensation packages as negotiated with our officers; evaluations of the Chief Executive Officer and other executive officers; achievement of performance goals and
milestones as additional motivation for certain executives; officers' ability to work in relationships that foster teamwork among our executive officers; officers' individual skills and expertise, and
labor market conditions. We did not engage a third-party compensation consultant during the fiscal years ended June 30, 2012, 2013 or 2014.
During
the fiscal years ended June 30, 2012, 2013, and 2014, total executive compensation consists of base salary, bonuses, and option awards. Generally, the option awards for
executives are negotiated in the executive's contract, with an exercise price based on the market price on the grant date. Special option awards are also granted to employees on a case-by-case basis
during the year for significant achievement. Because of the simplicity of the compensation package, there is very little interaction between decisions about the individual elements of compensation.
Administration of Executive Compensation
The Compensation Committee reviews and approves corporate goals and objectives relevant to compensation of the Chief Executive Officer,
evaluates the Chief Executive Officer's performance, and sets his compensation. The Compensation Committee also reviews the Chief Executive Officer's recommendations for and sets the salaries and
bonuses of other key officers and employees. In determining compensation policies and procedures, the Compensation Committee considers the results of shareholder advisory votes on executive
compensation and how the votes have affected executive compensation decision and policies.
12
Table of Contents
The Compensation Committee or Board of Directors usually sets annual salaries during the month of December of the fiscal year that ends the following
June 30th and usually approves the payment of annual bonuses and the grant of long-term incentives during the month of June of the fiscal year that concludes at the end of that month.
Chief Executive Officer involvement in compensation decisions
The Chief Executive Officer makes recommendations to the Compensation Committee concerning the employment packages of all subordinate
officers. Neither the Chief Executive Officer nor any other Company officer or employee attends periodic executive sessions of the Compensation Committee.
How compensation or amounts realizable from prior compensation are considered
The amount of past compensation generally does not affect current year considerations because bonuses and long term incentives are
awarded for each individual fiscal year's job performance.
At
our Annual Meeting held on February 17, 2011, our stockholders approved the compensation of our NEOs. The Compensation Committee viewed the vote as a strong expression of our
stockholders' general satisfaction with the Company's current executive compensation programs and the guiding principles described herein. As part of its ongoing review process, the Committee
regularly evaluates our compensation programs to ensure they meet changing business needs and support alignment with stockholders' interests.
Tax considerations
Our compensation plans are designed generally to ensure full tax deductibility of compensation paid under the plans.
This
includes compliance with Section 162(m) of the Internal Revenue Code, which limits our tax deduction for an executive's compensation to $1 million unless certain
conditions are met. For fiscal year ended June 30, 2014, the full amount of all compensation provided to all executives was tax deductible to the Company.
Timing, grant date, and exercise price for stock option awards
Our policy is to award stock options upon hiring of the employee and on a case by case basis throughout the year. Stock option exercise
prices are the closing price on the date of grant. We also have made certain awards based on the completion of performance criteria.
Analysis of variations in individual NEOs compensation
Each NEO's compensation is detailed in the Compensation Tables below. For those NEOs who have employment agreements, each such
agreement is described under the caption "Agreements with Executives and Officers."
Employment Agreements
As more fully described below in "Agreements with Executives and Officers," in July 2009, the Compensation Committee approved
employment agreements with Ray Leonard, our current Chief Executive Officer and President, and Jason Davis, our former Chief Financial Officer and current Treasurer. Mr. Leonard's employment
agreement was amended in September 2012, effective July 2012.
13
Table of Contents
2014 Compensation Decisions for Our Named Executive Officers
In June 2013, the Compensation Committee reviewed the proposed corporate goals and objectives from Mr. Leonard that would
establish the criteria upon which Mr. Leonard's annual cash bonus and long-term incentive grant would be based for fiscal year 2014. Mr. Leonard developed a proposed set of performance
metrics for 2014 aligned with the corporate goals and objectives set by the Compensation Committee in June 2013, which were subject to review and approval by the Board and/or the Compensation
Committee. The Compensation Committee approved that the bonus for Mr. Leonard would be determined by allocating 50% of the amount to the stock price, 25% to funding the Guinea exploration
program, and 25% to diversification.
In
making annual cash bonus payments and long-term incentive grants for our executives for 2014, the Compensation Committee evaluated the achievement of the above corporate goals and
objectives specifically for Mr. Leonard and for the other NEOs, the foregoing goals and objectives and other factors, including the Company's reduction-in-force that occurred during 2013
resulting in the reduction
in the number of the Company's employees and the amount of severance paid to those employees, and the individual performance of each of the NEOs during 2014.
Described
below are the details of the processes and procedures for the consideration and determination of executive compensation for fiscal year 2014.
Salaries
In June 2013, the Board of Directors approved the annual base salaries for our NEOs for fiscal year 2014 (to be effective
July 1, 2013). The annual salaries authorized for fiscal year 2014 for our NEOs were as follows: Mr. Leonard ($400,000), Mr. Davis ($235,500), Mr. Wesson ($230,000),
Mr. Amoruso ($258,750), and Mr. Reinbolt ($300,000).
The
Board of Directors approved an annual base salary for Mr. Leonard of $400,000, which represents no increase in Mr. Leonard's salary of $400,000 in 2013. The Board
approved and Mr. Leonard entered into an amended and restated employment agreement in September 2012, effective July 2012, pursuant to which Mr. Leonard is eligible to receive a minimum
annual salary of $400,000 subject to increase by the Board of Directors.
In
setting fiscal year 2014 annual salaries for each of Messrs. Davis, Wesson, Amoruso, and Reinbolt in June 2013, the Compensation Committee and Board of Directors reviewed and
evaluated each of the foregoing NEOs individual performance, experience level and level of responsibility among other factors and also took into consideration the challenges facing us as evidenced by
reduction-in-force during 2013. Based on the recommendation of Mr. Leonard, the Board of Directors decided to increase the salaries for Messrs. Davis, Wesson, Amoruso, and Reinbolt from
each NEO's 2013 salary. The salaries of Messrs. Davis, Wesson, Amoruso, and Reinbolt reflected in the below Summary Compensation Table reflect the salary paid to each NEO during fiscal year
2014.
Bonuses
Under the terms of Mr. Leonard's employment, Mr. Leonard is eligible to receive incentive compensation, as may be adopted
and approved by the Compensation Committee from time to time. Mr. Leonard's target cash bonus award opportunity under his employment agreement is 100% of his base annual salary with a minimum
threshold of 50% of his salary and a maximum of 200% of his salary, and is subject to such other terms, conditions and restrictions as may be established by the Board or the Compensation Committee.
Under the terms of his employment agreement,
Mr. Leonard develops and submits his personal performance metrics for review and approval of the Compensation Committee. Since the inception of Mr. Leonard's employment, the metrics for
his bonus award have
14
Table of Contents
been
based on annual objectives related to advancing our exploration activities and/or achieving funding from equity capital raises or participation in the Concession or stock price appreciation.
Consistent
with his agreement, in June 2013, Mr. Leonard developed a proposed set of performance metrics for 2014 aligned with the corporate goals and objectives set by the
Compensation Committee in June 2013, which were subject to review and approval by the Board and/or the Compensation Committee. The Compensation Committee approved that the bonus would be determined by
allocating 50% of the amount to the stock price, 25% to funding the Guinea exploration program, and 25% to diversification, with each component to be reviewed by the Committee next year with the
following metrics:
(1) Stock
PriceMr. Leonard would receive 100% (half of the 200% target amount), or $200,000, if the closing stock price on June 30, 2014 (or, if
not a trading day, the immediate preceding trading day) is two times the closing stock price on June 28, 2013, and 200%, or $400,000, if the stock price is four times. Because the stock price
target was not achieved during the fiscal year, the Committee did not allocate any cash bonus for this category.
(2) Funding
the Guinea Exploration ProgramIf funding approved by the Board was obtained prior to June 30, 2014 and the Corporation retained 25% or more
interest in the Concession, then Mr. Leonard would be allocated 100%, or $100,000, and if such funding was obtained without any dilution of the Corporation's interest, then Mr. Leonard
would be allocated 200%, or $200,000. Because this objective was not met, the Committee did not allocate any cash bonus for this category.
(3) DiversificationMr. Leonard
would be allocated 100%, or $100,000, if prior to June 30, 2014, the Corporation closed a new project approved by
the Board that (a) did not use funds allocated to Guinea exploration, and (b) was projected to generate material cash flow from production within two years of closing, and
Mr. Leonard would be allocated 200%, or $200,000, if such cash flow was projected to be obtained within one year of closing. Because this objective was not met, the Committee did not allocate
any cash bonus for this category.
Based
on the above analysis, the Committee determined to pay Mr. Leonard's "threshold" bonus amount of 50% of base salary in lieu of the target amount of 100% or the maximum
amount of 200%. Accordingly, Mr. Leonard received a bonus of $200,000.
At
the commencement of fiscal year 2014, all of the NEOs (and Mr. Leonard whose bonus range was set by his employment agreement), were eligible to receive an annual cash bonus
within the range of 50% of that NEO's annual salary to 100% of his salary. In making its decision in June 2014 to grant cash bonuses to Messrs. Davis ($117,750), Wesson ($115,000), and Amoruso
($129,375) for fiscal year 2014, the Compensation Committee evaluated the individual performance of each of the foregoing the NEOs and, in addition, assessed the Company's recent reduction-in-force
and the financial condition of the Company. The Committee approved the foregoing cash bonuses at the minimum level of 50% of each NEO's salary.
Paul
C. Reinbolt, our former Executive Vice President and Chief Financial Officer, resigned his positions with us and our subsidiaries, effective December 31, 2013. In connection
with the termination of his employment, in December 2013, the Company paid him bonus of $150,000, or 50% of his accrued bonus for the fiscal year ending June 30, 2014, as required pursuant to
his employment agreement.
Long-Term Incentive Grants
In June 2014, the Compensation Committee in connection with its approval of the 2014 annual cash bonuses approved stock option grants
to our NEOs as follows: Mr. Leonard (50,000), Mr. Davis (29,438), Mr. Wesson (28,750), and Mr. Amoruso (32,344).
15
Table of Contents
Under
the terms of his employment agreement, Mr. Leonard is eligible to receive stock options in an amount equal to 50% of the number of dollars of his annual cash bonus, as
adjusted for the July 1, 2013 reverse stock split. The stock options will have an exercise price equal to the fair market value of our common stock on the date of grant, with one-half of these
options vesting on each anniversary of the date of grant, and expiring five years after issuance. The Committee approved a grant of a 5-year option for 50,000 shares of common stock.
In
June 2014, the Compensation Committee approved option grants of 25% of the dollar amount of the cash bonuses for each of Messrs. Davis (29,438 options), Wesson (28,750 options)
and Amoruso (32,344 options).
COMPENSATION TABLES
The following tables show salaries, bonuses, incentive awards, retirement benefits and other compensation relating to fiscal years
ended June 30, 2014, 2013 and 2012 for our Chief Executive Officer, Chief Financial Officer, and our other NEOs. Columns for which there was no compensation have been omitted.
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name & Principal Position
(a)
|
|
Year
(b) |
|
Salary
($) (c) |
|
Bonus
($) (d)(1) |
|
Stock
Awards
($) (e)(2) |
|
Option
Awards
($) (f)(2) |
|
All Other
Compensation
($) (g)(3) |
|
Total
($) (h) |
|
Ray Leonard, President and CEO |
|
|
2014 |
|
|
400,000 |
|
|
200,000 |
|
|
|
|
|
116,214 |
|
|
|
|
|
716,214 |
|
|
|
|
2013 |
|
|
400,000 |
|
|
300,000 |
|
|
|
|
|
43,660 |
|
|
10,018 |
|
|
753,678 |
|
|
|
|
2012 |
|
|
363,000 |
|
|
363,000 |
|
|
|
|
|
223,938 |
|
|
11,065 |
|
|
961,003 |
|
Jason Davis, Vice President Finance and Treasurer |
|
|
2014 |
|
|
235,500 |
|
|
117,750 |
|
|
|
|
|
68,422 |
|
|
|
|
|
421,672 |
|
|
|
|
2013 |
|
|
231,000 |
|
|
173,250 |
|
|
|
|
|
25,213 |
|
|
|
|
|
429,463 |
|
|
|
|
2012 |
|
|
220,000 |
|
|
140,000 |
|
|
|
|
|
48,071 |
|
|
|
|
|
408,071 |
|
David Wesson, Controller and Principal Accounting Officer |
|
|
2014 |
|
|
230,000 |
|
|
115,000 |
|
|
|
|
|
71,359 |
|
|
|
|
|
416,359 |
|
|
|
|
2013 |
|
|
204,000 |
|
|
153,000 |
|
|
|
|
|
22,265 |
|
|
10,220 |
|
|
389,485 |
|
|
|
|
2012 |
|
|
198,000 |
|
|
110,000 |
|
|
|
|
|
38,817 |
|
|
10,130 |
|
|
356,947 |
|
Paolo Amoruso, Vice President of Legal Affairs and Secretary(4) |
|
|
2014 |
|
|
258,750 |
|
|
159,375 |
|
|
|
|
|
75,176 |
|
|
|
|
|
493,301 |
|
|
|
|
2013 |
|
|
242,700 |
|
|
182,025 |
|
|
|
|
|
35,608 |
|
|
10,267 |
|
|
470,600 |
|
Paul Reinbolt, Former Executive Vice President and CFO(5) |
|
|
2014 |
|
|
150,000 |
|
|
150,000 |
|
|
|
|
|
|
|
|
|
|
|
300,000 |
|
|
|
|
2013 |
|
|
300,000 |
|
|
225,000 |
|
|
|
|
|
32,744 |
|
|
|
|
|
557,744 |
|
|
|
|
2012 |
|
|
275,000 |
|
|
193,330 |
|
|
|
|
|
1,895,386 |
|
|
|
|
|
2,363,716 |
|
- (1)
- Column
(d): Bonus payments made during the fiscal years ended 2014, 2013, and 2012 were made in June 2014, June 2013, and July 2012.
- (2)
- Columns
(e) and (f): Reflects the grant date fair value, computed in accordance with FASB ASC Topic 718, for option awards granted in fiscal year
2014, 2013, and 2012. For a description of the assumptions used for purposes of determining grant date fair value, see Note 8 to the Financial Statements included in our Annual Report on
Form 10-K for the year ended June 30, 2014.
- (3)
- Column
(g): Consists of payments made for Company matches of the 401(k) plan that exceeded $10,000.
- (4)
- Paolo
Amoruso, our Vice President and Secretary, became an NEO effective June 25, 2013. As such, the Summary Compensation Table above includes
information for Mr. Amoruso only for the fiscal years ended June 30, 2013 and June 30, 2014. Column (d) includes a $30,000 retention bonus paid on June 30, 2014,
pursuant to a June 30, 2014 Retention Bonus Agreement entered into with the Company. Under the Agreement, 50% of a retention bonus of $60,000 was paid on June 30, 2014, and the remaining
50% will be
16
Table of Contents
paid
to Mr. Amoruso on December 31, 2014 if he is still actively employed by the Company, and in compliance with the Company's policies and directives concerning job performance and
conduct, on that date.
- (5)
- Paul
C. Reinbolt, our former Executive Vice President and Chief Financial Officer, resigned his positions with us and our subsidiaries, effective
December 31, 2013. Column (d) includes a bonus of $150,000, or 50% of his accrued bonus for the fiscal year ending June 30, 2014, paid by the Company as required pursuant to his
employment agreement.
Bonuses and Stock Awards
The following tables show cash and stock awards made to the named executives in fiscal year 2014 and their outstanding equity awards at
the end of fiscal year 2014.
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
Action
Date
(b) |
|
Grant Date
(3) (b) |
|
Threshold
($) (c) |
|
Target
($) (d) |
|
Maximum
($) (e) |
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(f) |
|
Exercise
or Base
Price of
Option
Awards
($/Share)
($) (g) |
|
Grant Date
Fair Value
Awards of
Stock &
Options
($) (h) |
|
Ray Leonard |
|
|
6/30/2014 |
|
|
6/30/2014 |
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
3.25 |
|
|
116,214 |
|
Jason Davis |
|
|
6/30/2014 |
|
|
6/30/2014 |
|
|
|
|
|
|
|
|
|
|
|
29,438 |
|
|
3.25 |
|
|
68,422 |
|
David Wesson |
|
|
9/17/2013 |
|
|
9/17/2013 |
|
|
|
|
|
|
|
|
|
|
|
1,500 |
|
|
4.91 |
|
|
4,536 |
|
David Wesson |
|
|
6/30/2014 |
|
|
6/30/2014 |
|
|
|
|
|
|
|
|
|
|
|
28,750 |
|
|
3.25 |
|
|
66,823 |
|
Paolo Amoruso |
|
|
6/30/2014 |
|
|
6/30/2014 |
|
|
|
|
|
|
|
|
|
|
|
32,344 |
|
|
3.25 |
|
|
75,176 |
|
17
Table of Contents
OUTSTANDING EQUITY AWARDS AT 2014 FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
No. of
Securities
Underlying
Unexercised
Options
Exercisable
(#)(b)(1) |
|
No. of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(c)(1) |
|
Option
Exercise
Price
($/Share)
(d)(1) |
|
Option
Expiration
Date
(e) |
|
No. of
Shares or
Units of
Stock That
Have
Not Vested
(#)(f) |
|
Market Value
of Shares
or Units
of Stock
That Have
Not Vested
($)(g) |
|
Ray Leonard |
|
|
142,500 |
|
|
150,000 |
|
|
3.92 |
|
|
7/22/2014 |
|
|
|
|
|
|
|
Ray Leonard |
|
|
30,250 |
|
|
15,109 |
|
|
6.72 |
|
|
6/29/2017 |
|
|
|
|
|
|
|
Ray Leonard |
|
|
6,250 |
|
|
12,500 |
|
|
3.60 |
|
|
6/25/2018 |
|
|
|
|
|
|
|
Ray Leonard |
|
|
|
|
|
50,000 |
|
|
3.25 |
|
|
6/30/2019 |
|
|
|
|
|
|
|
Jason Davis |
|
|
20,125 |
|
|
|
|
|
12.88 |
|
|
10/09/2014 |
|
|
|
|
|
|
|
Jason Davis |
|
|
12,500 |
|
|
|
|
|
7.20 |
|
|
1/7/2015 |
|
|
|
|
|
|
|
Jason Davis |
|
|
417 |
|
|
208 |
|
|
20.16 |
|
|
1/30/2017 |
|
|
|
|
|
|
|
Jason Davis |
|
|
5,833 |
|
|
2,917 |
|
|
6.72 |
|
|
6/29/2017 |
|
|
|
|
|
|
|
Jason Davis |
|
|
3,609 |
|
|
7,219 |
|
|
3.60 |
|
|
6/25/2018 |
|
|
|
|
|
|
|
Jason Davis |
|
|
|
|
|
29,438 |
|
|
3.25 |
|
|
6/30/2019 |
|
|
|
|
|
|
|
Jason Davis |
|
|
2,500 |
|
|
|
|
|
40.24 |
|
|
2/15/2021 |
|
|
|
|
|
|
|
Jason Davis |
|
|
10,000 |
|
|
|
|
|
34.40 |
|
|
6/30/2021 |
|
|
|
|
|
|
|
David Wesson |
|
|
417 |
|
|
208 |
|
|
20.16 |
|
|
1/30/2017 |
|
|
|
|
|
|
|
David Wesson |
|
|
4,586 |
|
|
2,289 |
|
|
6.72 |
|
|
6/29/2017 |
|
|
|
|
|
|
|
David Wesson |
|
|
3,186 |
|
|
6,374 |
|
|
3.60 |
|
|
6/25/2018 |
|
|
|
|
|
|
|
David Wesson |
|
|
750 |
|
|
750 |
|
|
4.91 |
|
|
9/17/2018 |
|
|
|
|
|
|
|
David Wesson |
|
|
|
|
|
28,750 |
|
|
3.25 |
|
|
6/30/2019 |
|
|
|
|
|
|
|
David Wesson |
|
|
11,250 |
|
|
|
|
|
10.32 |
|
|
4/5/2020 |
|
|
|
|
|
|
|
David Wesson |
|
|
1,250 |
|
|
|
|
|
24.64 |
|
|
12/3/2020 |
|
|
|
|
|
|
|
David Wesson |
|
|
5,625 |
|
|
|
|
|
34.40 |
|
|
6/30/2021 |
|
|
|
|
|
|
|
Paolo Amoruso |
|
|
1,250 |
|
|
|
|
|
33.52 |
|
|
9/20/2016 |
|
|
|
|
|
|
|
Paolo Amoruso |
|
|
417 |
|
|
208 |
|
|
20.16 |
|
|
1/30/2017 |
|
|
|
|
|
|
|
Paolo Amoruso |
|
|
7,590 |
|
|
3,795 |
|
|
6.72 |
|
|
6/29/2017 |
|
|
|
|
|
|
|
Paolo Amoruso |
|
|
1,250 |
|
|
625 |
|
|
6.56 |
|
|
11/21/2017 |
|
|
|
|
|
|
|
Paolo Amoruso |
|
|
3,792 |
|
|
7,584 |
|
|
3.60 |
|
|
6/25/2018 |
|
|
|
|
|
|
|
Paolo Amoruso |
|
|
|
|
|
32,344 |
|
|
3.25 |
|
|
6/30/2019 |
|
|
|
|
|
|
|
Paolo Amoruso |
|
|
11,250 |
|
|
|
|
|
8.80 |
|
|
6/21/2020 |
|
|
|
|
|
|
|
Paolo Amoruso |
|
|
1,250 |
|
|
|
|
|
24.64 |
|
|
12/3/2020 |
|
|
|
|
|
|
|
Paolo Amoruso |
|
|
6,875 |
|
|
|
|
|
34.40 |
|
|
6/30/2021 |
|
|
|
|
|
|
|
- (1)
- The
share amounts and exercise prices reflected in this table have been adjusted to give effect to the July 1, 2013 reverse split.
OPTION EXERCISES AND RESTRICTED STOCK VESTING DURING FISCAL YEAR 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
No. of
Shares
Acquired on
Exercise
(#)(1) |
|
Value
Realized on
Exercise
($) |
|
No. of
Shares
Acquired on
Vesting
(#) |
|
Value
Realized on
Vesting
($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- No
restricted stock for any officer or director vested, nor did any officer or director exercise options, during the fiscal year ended June 30, 2014.
18
Table of Contents
Agreements with Current Executives and Officers
We entered into a three-year employment agreement with Ray Leonard, our current CEO, President and Director effective as of
July 22, 2009, as amended, effective December 11, 2009. On September 10, 2012, effective as of July 23, 2012, we entered into an amended and restated employment agreement
with Mr. Leonard. The agreement, as amended and restated, has a one-year term that is automatically extended for successive one-year periods following the end of the initial one-year term
unless otherwise terminated by delivery of written notice by either party prior to May 31 of each period. The agreement provides that Mr. Leonard will serve as our President and Chief
Executive Officer. Mr. Leonard's current base salary is $400,000, which is subject to annual adjustments, at the discretion of the Board, but in no event shall the Company pay
Mr. Leonard a base salary less than that set forth above, or any increased base salary later in effect, without the consent of Mr. Leonard.
In
connection with our hiring of Mr. Leonard in July 2009, we granted Mr. Leonard an option to purchase 62,500 shares of our common stock (after giving effect to the
reverse split) at an exercise price of $3.92 (after giving effect to the reverse split) which immediately vested. Mr. Leonard was also granted options to purchase 37,500 shares of our common
stock (after giving effect to the reverse split) at an exercise price of $3.92 that vest on a monthly basis over five years. Both of these options expired on July 22, 2014, five years after
their issuance.
In
connection with the commencement of Mr. Leonard's employment in 2009, a stock option award was made, with trigger events of the following three cumulative net cash to us equity
capital money raising transactions:
-
- When $8 million cumulative is raised, the award is 26,250 stock options (after giving effect to the reverse
split).
-
- When $20 million cumulative is raised, the award is 48,750 stock options (after giving effect to the reverse
split).
-
- When $30 million cumulative is raised, the award is 75,000 stock options (after giving effect to the reverse
split).
All
awards vest 1/36 per month over a three-year period from the trigger event. The Performance Option-Grant Awards options have a five year life, and the exercise price is $3.92. All
trigger events were satisfied.
The
2009 stock option award also provided for trigger events based on achieving the following share price thresholds, which have been adjusted to give effect to the reverse split:
|
|
|
$16.00/share |
|
11,250 stock options |
$24.00/share |
|
26,250 stock options |
$40.00/share |
|
75,000 stock options |
$72.00/share |
|
150,000 stock options |
All
awards vest 1/36 per month over a three-year period from the trigger event. These Performance Option-Grant Awards options have a five-year life, and the exercise price is $3.92
(after giving effect to the reverse split). For awards related to the $16.00 and $24.00 share price (after giving effect to the reverse split), the stock option is earned if the closing price of the
shares trade at or above the target price for 15 consecutive trading days. For awards related to the $40.00 and $72.00 share price (after giving effect to the reverse split), the stock option is
earned if the closing price of the shares trade at or above the target price for 5 consecutive trading days. All trigger events were satisfied, except for the $72.00 share price (after giving effect
to the reverse split).
19
Table of Contents
As
part of the annual review of Mr. Leonard's performance, on June 30, 2014, we granted Mr. Leonard five-year options to purchase 50,000 shares of our common stock
(as adjusted to give effect to the reverse split) at $3.25 per share based on the market value on the stock on the date of grant. The options vest in equal amounts over a two-year period.
Beginning
with the effective date of the amended employment agreement, Mr. Leonard will participate in any incentive compensation plan ("ICP") applicable to Mr. Leonard's
position, as may be adopted by us from time to time and in accordance with the terms of such plan(s). Mr. Leonard's cash target award opportunity under the ICP will be 100% of his base salary
with a threshold of 50% and a 200% maximum, and shall be subject to such other terms, conditions and restrictions as may be established by the Board or the Compensation Committee. He also is entitled
to receive stock options in an amount equal to 50% of the number of dollars of the cash award, as adjusted for the July 1, 2013 reverse stock split. The stock options will have an exercise
price equal to the fair market value of our common stock on the date of grant, with one-third of these options vesting on each anniversary of the date of grant, and expiring five years after issuance.
Annually, Mr. Leonard will develop a proposed set of current year performance metrics that are subject to review and approval by the Board and/or the Compensation Committee. Since the inception
of Mr. Leonard's employment, the metrics for his bonus award have been based on annual objectives related to advancing our exploration activities and/or achieving funding from equity capital
raises or participation in the Concession or stock price appreciation.
Finally,
Mr. Leonard will receive certain standard benefits, including reimbursement in accordance with our standard policies and procedures of business and business-related
business expenses and dues and fees to industry and professional organizations, four weeks of paid vacation each calendar year, and participation by Mr. Leonard and his spouse and dependents in
all benefits, plans and programs available to our executive employees.
The
Employment Agreement with Mr. Leonard may be earlier terminated by us in the event of his death or inability to perform, or for cause, including material breach of his duties
involving fraud. Mr. Leonard may terminate the Employment Agreement for good reason, including a material reduction in his reporting responsibilities or a change of more than 75 miles in the
location of his principal place of employment. Either we or Mr. Leonard may terminate the Employment Agreement without cause or without good reason. If we terminate Mr. Leonard without
cause, or if Mr. Leonard terminates for good reason, or upon expiration of the employment term due to our notice to terminate, then Mr. Leonard will be entitled to receive one year's
base salary, his bonus award at the target level for the performance period in effect on the employment termination date, and full vesting of all stock option and restricted stock awards held by him
with a twelve month period to exercise (or the expiration of the award term, if that occurs sooner).
Director Compensation for Fiscal Year Ended June 30, 2014
The following table sets forth compensation amounts for our Independent Directors for the fiscal year ended June 30, 2014.
20
Table of Contents
DIRECTOR COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned
or Paid
in Cash
($) |
|
Stock
Awards
($) |
|
Option
Awards
($)(1) |
|
All Other
Compensation
($) |
|
Total
($) |
|
Ray Leonard(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert A. Solberg |
|
|
84,000 |
|
|
|
|
|
35,621 |
(3) |
|
|
|
|
119,621 |
|
William O. Strange |
|
|
76,000 |
|
|
|
|
|
35,621 |
(4) |
|
|
|
|
111,621 |
|
Herman Cohen |
|
|
66,000 |
|
|
|
|
|
35,621 |
(5) |
|
|
|
|
101,621 |
|
Lord David Owen |
|
|
70,000 |
|
|
|
|
|
35,621 |
(6) |
|
|
|
|
105,621 |
|
Fred Zeidman |
|
|
76,000 |
|
|
|
|
|
35,621 |
(7) |
|
|
|
|
111,621 |
|
Ian Norbury |
|
|
72,000 |
|
|
|
|
|
35,621 |
(8) |
|
|
|
|
107,621 |
|
- (1)
- The
share amounts reflected in this table have been adjusted to give effect to the reverse split.
- (2)
- We
do not provide additional compensation to employees who also serve as directors for their service on the Board of Directors. All compensation paid to
Mr. Leonard is reflected above in the Summary Compensation Table.
- (3)
- During
the year ended June 30, 2014, Mr. Solberg received five year options to purchase 15,000 shares, with 50% vesting on June 30,
2015 and 50% vesting on June 30, 2016.
- (4)
- During
the year ended June 30, 2014, Mr. Strange received five year options to purchase 15,000 shares, with 50% vesting on June 30,
2015 and 50% vesting on June 30, 2016.
- (5)
- During
the year ended June 30, 2014, Mr. Cohen received five year options to purchase 15,000 shares, with 50% vesting on June 30, 2015
and 50% vesting on June 30, 2016.
- (6)
- During
the year ended June 30, 2014, Lord Owen received five year options to purchase 15,000 shares, with 50% vesting on June 30, 2015 and 50%
vesting on June 30, 2016. Lord Owen resigned as a director on September 16, 2014.
- (7)
- During
the year ended June 30, 2014, Mr. Zeidman received five year options to purchase 15,000 shares, with 50% vesting on June 30,
2015 and 50% vesting on June 30, 2016.
- (8)
- During
the year ended June 30, 2014, Mr. Norbury received five year options to purchase 15,000 shares, with 50% vesting on June 30,
2015 and 50% vesting on June 30, 2016.
Director Compensation Arrangements
The compensation program for our independent directors consists of the following:
-
- Cash compensation consisting of quarterly payments, as applicable, of: (i) $11,000 for services as a director,
(ii) $5,000 for service as the chairman of the Audit Committee and Government Relations Committee, (iii) $2,500 for service as a member of the Audit Committee or Government Relations
Committee, (iv) $1,500 for service as a member of the Compensation Committee, Nominating and Corporate Governance Committee and Technical Committee, and (v) $3,000 for service as the
chairman of the Compensation Committee, Nominating and Corporate Governance Committee and Technical Committee.
-
- An annual grant, pursuant to our 2010 Equity Incentive Plan, of options to purchase shares of our common stock. The
options are to be granted on or about July 1st of each year, have an exercise price equal to the then current closing price of our common stock, vest 50% on the first anniversary of the
grant date and vest the remaining 50% on the second anniversary of the grant date. The options have a 5 year term.
21
Table of Contents
Director Option Grants
The Board made grants of options to our directors on June 30, 2014 for the fiscal year ended June 30, 2015, as reflected
in the table below. The grants were made pursuant to our 2010 Equity Incentive Plan. The options granted on June 30, 2014 have an exercise price of $3.25 per share, which was the closing price
of our common stock on June 30, 2014, have a term for five years from the date of grant, and vest 50% on June 30, 2015 and 50% on June 30, 2016. The following table sets forth the
number of shares of our common stock underlying the options granted to each of our independent directors during the fiscal year 2014:
|
|
|
|
|
Name of Director
|
|
Shares of Common
Stock Underlying
Options Granted for
Fiscal Year Ending
June 30, 2014 |
|
Robert A. Solberg |
|
|
15,000 |
|
William O. Strange |
|
|
15,000 |
|
Fred Zeidman |
|
|
15,000 |
|
Herman Cohen |
|
|
15,000 |
|
Lord David Owen |
|
|
15,000 |
|
Ian Norbury |
|
|
15,000 |
|
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Messrs. Cohen, Solberg, Strange and Zeidman, all of whom are considered to be
independent. None of these individuals is or has been an officer or employee of Hyperdynamics during the fiscal year ended June 30, 2014 or as of the date of this proxy statement, or is serving
or has served as a member of the compensation committee of another entity that has an executive officer serving on the Compensation Committee. No executive officer of Hyperdynamics served as a
director of another entity that had an executive officer serving on the Compensation Committee. Finally, no executive officer of Hyperdynamics served as a member of the compensation committee of
another entity that had an executive officer serving as a director of the Company.
Compensation Committee Report
The Compensation Committee, consisting of Messrs. Cohen, Solberg, Strange and Zeidman, is responsible for establishing and
administering the executive compensation programs of Hyperdynamics. The Compensation Committee of Hyperdynamics has reviewed and discussed the Compensation Discussion and Analysis required by
Item 402(b) of Regulation S-K with management and, based on
22
Table of Contents
such
review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Annual Report.
|
|
|
|
|
THE COMPENSATION COMMITTEE |
|
|
/s/ Robert A. Solberg
|
|
|
|
|
/s/ Herman Cohen
|
|
|
|
|
/s/ William O. Strange
|
|
|
|
|
/s/ Fred Zeidman
|
|
|
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Equity Compensation Plan Information
The following table gives aggregate information under all equity compensation plans of Hyperdynamics as of June 30, 2014.(1)
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants, and Rights(1) |
|
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights(1) |
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (A)(1) |
|
|
|
A
|
|
B
|
|
C
|
|
Equity compensation plans approved by security holders |
|
|
1,441,732 |
|
$ |
8.76 |
|
|
231,324 |
|
Equity compensation plans not approved by security holders |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,441,732 |
|
$ |
8.76 |
|
|
231,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- All
numbers in the table above reflect the impact of our July 1, 2013 reverse stock split.
The
Stock and Stock Option Plan (the "1997 Plan") of Hyperdynamics was adopted May 7, 1997 and amended on December 3, 2001, on January 21, 2005, and on
February 20, 2008. The total number of shares authorized under the Plan, as amended, was 1,750,000, after giving effect to our recent reverse stock split. The Board terminated the 1997 Plan
effective upon stockholder approval of the 2010 Equity Incentive Plan (the "2010 Plan").
Our
2008 Restricted Stock Award Plan (the "2008 Plan") was adopted on February 20, 2008. The total number of shares authorized under the 2008 Plan was 375,000, after giving effect
to our recent reverse stock split. The Board terminated the 2008 Plan effective upon stockholder approval of the 2010 Plan.
23
Table of Contents
On February 18, 2010, at our annual meeting of stockholders, the stockholders approved the 2010 Plan. On February 17, 2012 the 2010 Plan was amended
to increase issuable shares from 625,000 to 1,250,000, in each case after giving effect to our July 1, 2013 reverse stock split.
The
2010 Plan provides for the grants of shares of common stock, restricted stock units or incentive stock options and/or nonqualified stock options to purchase our common stock to
selected employees, directors, officers, agents, consultants, attorneys, vendors, and advisors. Shares of common stock, options, or restricted stock can only be granted under the Plan within
10 years from the effective date of February 18, 2010. A maximum of 1,250,000 shares, after giving effect to our July 1, 2013 reverse stock split, are issuable under the 2010
Plan.
The
purpose of the Plan is to further our interest, and the interest of our subsidiaries and our stockholders by providing incentives in the form of stock or stock options to key
employees, consultants, directors, and vendors who contribute materially to our success and profitability. We believe that our future success will depend in part on our continued ability to attract
and retain highly qualified personnel as employees, independent consultants, and directors. The issuance of stock and grants of options will recognize and reward outstanding individual performances
and contributions and will give such persons a proprietary interest in us, thus enhancing their personal interest in our continued success and progress. We pay wages, salaries, and consulting rates
that we believe are competitive. We use the 2010 Plan to augment our compensation packages.
The
following table provides a reconciliation of the securities remaining available for issuance as of June 30, 2014 under the 2010 Plan:
|
|
|
|
|
|
|
2010 Plan(1) |
|
Shares available for issuance, June 30, 2013 |
|
|
345,906 |
|
Increase in shares available for issuance |
|
|
|
|
Stock options granted |
|
|
(372,086 |
) |
Restricted stock granted |
|
|
(21,030 |
) |
Previously issued options cancelled or expired |
|
|
278,534 |
|
|
|
|
|
|
|
|
|
|
Shares available for issuance, June 30, 2014 |
|
|
231,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- All
numbers in the table above reflect the impact of our July 1, 2013 reverse stock split.
Security ownership of certain beneficial owners and management
The following table sets forth certain information as of October 22, 2014 with respect to the beneficial ownership of shares of
common stock by (1) each person known to us that owns beneficially more than 5% of the outstanding shares of common stock, (2) each of our directors, (3) each of our executive
officers, and (4) all of our executive officers and directors as a group. As of October 22, 2014, we had 21,046,591 shares of common stock outstanding. Beneficial ownership is determined
in accordance with Rule 13d-3 under the Securities Exchange Act. In computing the number of shares beneficially owned by a person or group and the percentage ownership of that person or group,
shares of our common stock subject to options currently exercisable or exercisable within 60 days after October 22, 2014 are deemed outstanding, but are not deemed outstanding for
purposes of computing
24
Table of Contents
the
percentage ownership of any other person. The address of each director & officer named in the below table is c/o Hyperdynamics Corporation, 12012 Wickchester Lane, Suite 475 Houston,
TX 77079.
|
|
|
|
|
|
|
|
Name of Beneficial Owner
|
|
Number of Shares of
Common Stock
Beneficially Owned(1) |
|
Percent of
Class |
|
BlackRock, Inc. |
|
|
2,568,190 |
(2) |
|
12.2 |
|
Ray Leonard |
|
|
336,360 |
(3) |
|
1.6 |
|
Robert A. Solberg |
|
|
73,612 |
(4) |
|
* |
|
Herman Cohen |
|
|
27,625 |
(5) |
|
* |
|
Fred Zeidman |
|
|
30,875 |
(6) |
|
* |
|
William O. Strange |
|
|
26,625 |
(7) |
|
* |
|
Ian Norbury |
|
|
6,750 |
(8) |
|
* |
|
Jason Davis |
|
|
40,484 |
(9) |
|
* |
|
David Wesson |
|
|
33,001 |
(10) |
|
* |
|
Paolo Amoruso |
|
|
39,924 |
(11) |
|
* |
|
Directors and Executive Officers as a group (10 persons) |
|
|
615,255 |
|
|
2.9 |
|
- *
- Less
than 1%
- (1)
- The
share amounts and exercise prices reflected in this table have been adjusted to give effect to the reverse split.
- (2)
- Based
on reported ownership as follows for the period ended June 30, 2014: (1) BlackRock Investment Management (UK) Ltd., 1,937,576
shares; (2) BlackRock Fund Advisors, 621,102 shares; (3) BlackRock Advisors LLC, 9,512 shares. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY
10055.
- (3)
- This
amount includes: 157,375 shares of common stock and options to purchase 178,985 shares of common stock.
- (4)
- This
amount includes: 48,862 shares of common stock and options to purchase 24,750 shares of common stock.
- (5)
- This
amount includes: 7,625 shares of common stock and options to purchase 20,000 shares of common stock.
- (6)
- This
amount includes: 1,375 shares of common stock and options to purchase 29,500* shares of common stock.
- (7)
- This
amount includes: 4,125 shares of common stock and options to purchase 22,500 shares of common stock.
- (8)
- This
amount includes: 6,750 shares of common stock.
- (9)
- This
amount includes: 5,625 shares of common stock and options to purchase 34,859 shares of common stock.
- (10)
- This
amount includes: 5,938 shares of common stock and options to purchase 27,063 shares of common stock. This amount does not include 9,265 unvested
restricted shares.
- (11)
- This
amount includes: 6,250 shares of common stock and options to purchase 33,674 shares of common stock. This amount does not include 7,353 unvested
restricted shares.
- *
- This
amount assumes that options exercisable at $0.88 per share until December 8, 2014 will not be exercised.
25
Table of Contents
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Certain Transactions, Corporate Governance
Conflicts of Interest
We have a conflict of interest policy governing transactions involving related parties. In accordance with the policy, transactions
involving related parties must be pre-approved by the Audit Committee, which is comprised of Independent Directors.
We
did not enter into any transactions, excluding employment relationships, with related parties since July 1, 2013, the beginning of the last fiscal year.
Corporate Governance Guidelines
We have adopted a set of Corporate Governance Guidelines that provide the framework for the governance of the Company and reflect the
Board of Directors' belief that sound corporate governance policies and practices provide an essential foundation for the Board in fulfilling its oversight responsibilities. Our Corporate Governance
Guidelines are available at the Company's website at www.hyperdynamics.com.
Director Independence
Our common stock is listed on the NYSE. We use SEC Rule 10A-3 and the NYSE definition of Independent Director in determining
whether a director is independent in the capacity of director and in the capacity as a member of a Board committee. In determining director independence, we have not relied on any exemptions from any
rule's definition of independence.
Directors
serving on our Audit Committee must also comply with additional NYSE requirements as follows:
- (a)
- The
director must not have participated in the preparation of our financial statements or any current subsidiary at any time during the past three years;
and
- (b)
- The
director is able to read and understand fundamental financial statements, including our balance sheet, income statement, and cash flow statement.
We
currently have six directors, five of whom are Independent Directors. The Board has determined that the following Directors are independent under SEC Rule 10A-3 and the NYSE
listing standards because they have no relationship with the Company (other than being a Director and stockholder of the Company): Robert A. Solberg, William O. Strange, Fred Zeidman, Herman Cohen,
and Ian Norbury.
26
Table of Contents
Item 14. Principal Accounting Fees and Services
Audit, Audit-related and Other Fees
Aggregate fees for professional services rendered to the Company by Deloitte & Touche LLP and Hein &
Associates LLP for the years ended June 30, 2014 and 2013 were as follows:
|
|
|
|
|
|
|
|
|
|
Years ended June 30, |
|
|
|
2014 |
|
2013 |
|
Audit Fees(1) |
|
$ |
330,523 |
|
$ |
544,645 |
|
Audit-related fees(2) |
|
|
49,756 |
|
|
9,261 |
|
All other fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
380,279 |
|
$ |
553,906 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- Fiscal
2014 audit fees were billed to us by our current Certifying Accountant: Hein & Associates LLP, for professional services related to
their audit of our annual financial statements in our Form 10K and Sarbanes-Oxley 404 attest services. Fiscal 2014 and 2013 audit fees were billed to us by our predecessor Certifying
Accountant: Deloitte & Touche LLP, for professional services related to their audit of our annual financial statements in our Form 10K and Sarbanes-Oxley 404 attest services
(Fiscal 2013 only) and reviews of our unaudited quarterly financial statements included in our Form 10-Qs (both Fiscal 2014 and 2013).
- (2)
- Fiscal
2014 and 2013 audit related fees include $49,756 and $9,261, respectively billed to us by Deloitte and Touche LLP for professional services
rendered for assurance and related services that were reasonably related to the performance of audit or review of the Company's financial statements.
Audit Committee Pre-Approval
Our Audit Committee Charter provides that either (i) the Audit Committee shall pre-approve all auditing and non-auditing
services of the independent auditor, subject to de minimis exceptions for other than audit, review or attest services that are approved by the Audit Committee prior to completion of the audit; or
(ii) the engagement of the independent auditor be entered into pursuant to pre-approved policies and procedures established by the Audit Committee, provided that the policies and procedures are
detailed as to the particular services and the Audit Committee is informed of each service. The Audit Committee pre-approved 100% of Hein & Associates LLP and Deloitte &
Touche LLP fees, respectively, for audit services in fiscal years 2013 and 2014. Except as indicated above, there were no fees other than audit fees for years 2013 and 2014, and the auditors
engaged performed all the services described above with their full time permanent employees.
27
Table of Contents
Part IV
Item 15. Exhibits, Financial Statement Schedules
(A)
|
|
|
|
Exhibit
Number |
|
Description |
|
3.1.1 |
|
Certificate of Incorporation(1) |
|
|
|
|
|
3.1.2 |
|
Certificate of Amendment of Certificate of Incorporation, dated January 21, 1997(1) |
|
|
|
|
|
3.1.3 |
|
Certificate of Amendment of Certificate of Incorporation, dated September 20, 1999(1) |
|
|
|
|
|
3.1.4 |
|
Certificate of Amendment of Certificate of Incorporation, dated December 22, 2003(1) |
|
|
|
|
|
3.1.5 |
|
Certificate of Amendment of Certificate of Incorporation, dated March 11, 2011(2) |
|
|
|
|
|
3.1.6 |
|
Certificate of Amendment of Certificate of Incorporation, dated June 28, 2013(18) |
|
|
|
|
|
3.1.7 |
|
Series B Certificate of Designation(4) |
|
|
|
|
|
3.2 |
|
Amended and Restated By-laws(15) |
|
|
|
|
|
4.1 |
|
Form of Common Stock Certificate(3) |
|
|
|
|
|
4.2 |
|
Form of Common Stock Purchase Warrant issued to investors on February 2, 2012(17) |
|
|
|
|
|
10.1 |
|
Hydrocarbon Production Sharing Contract (PSA) between SCS Corporation and the Republic of Guinea, dated September 22, 2006(5) |
|
|
|
|
|
10.2 |
|
Amendment No. 1 to the Hydrocarbons Production Sharing Contract between SCS Corporation and the Republic of Guinea, dated March 25, 2010(8) |
|
|
|
|
|
10.3 |
* |
Amended and Restated Employment Agreement between Hyperdynamics and Ray Leonard, effective as of July 23, 2012(6) |
|
|
|
|
|
10.4 |
|
Sale and Purchase Agreement between Hyperdynamics Corporation and Dana Petroleum (E&P) Limited, effective as of December 4, 2009(9) |
|
|
|
|
|
10.5 |
|
Operating Agreement between SCS Corporation and Dana Petroleum (E&P) Limited, dated January 28, 2010(13) |
|
|
|
|
|
10.6 |
* |
2010 Equity Incentive Plan as amended(11) |
|
|
|
|
|
10.7 |
* |
Form of Incentive Stock Option Agreement(7) |
|
|
|
|
|
10.8 |
* |
Form of Non-Qualified Stock Option Agreement(7) |
|
|
|
|
|
10.9 |
* |
Form of Restricted Stock Agreement(7) |
|
|
|
|
|
10.10 |
|
Contract Number: AGR/C105/10 between SCS Corporation and AGR Peak Well Management Limited for Provision of Well Construction Management Services, including LOGIC General Conditions as Appendix I(10) |
|
|
|
|
|
10.11 |
|
Agreement for the Supply of Marine Seismic Data Application and Processing Services, dated September 20, 2011 between SCS Corporation and CGG Veritas Services SA(16) |
|
|
|
|
|
10.12 |
|
Form of Securities Purchase Agreement, dated January 30, 2012, between Hyperdynamics Corporation and investors in the offering(17) |
|
|
|
|
|
10.13 |
|
Placement Agency Agreement, dated January 30, 2012, by and between Hyperdynamics Corporation and Rodman & Renshaw, LLC(17) |
|
|
|
|
28
Table of Contents
|
|
|
|
Exhibit
Number |
|
Description |
|
10.14 |
|
Purchase and Sale Agreement between SCS Corporation Ltd. and Tullow Guinea Ltd., dated November 20, 2012.(12) |
|
|
|
|
|
10.15 |
|
Joint Operating Agreement Novation and Amendment Agreement relating to the Operating Agreement for the Hydrocarbon Production Sharing Contract, offshore Guinea, between SCS Corporation Ltd., Dana Petroleum E&P
Limited, and Tullow Guinea Ltd. dated December 31, 2012.(14) |
|
|
|
|
|
10.16 |
|
Parent Company Guarantee between Tullow Oil plc and SCS Corporation Ltd., dated December 31, 2012(14) |
|
|
|
|
|
10.17 |
|
Retention Bonus Agreement between Hyperdynamics and Paolo Amoruso, dated June 30, 2014(19) |
|
|
|
|
|
10.18 |
|
Settlement Deed between Hyperdynamics Corporation, SCS Corporation Ltd., AGR Well Management Ltd, and Jasper Drilling Private Ltd dated May 16, 2014.(20) |
|
|
|
|
|
14.1 |
|
Code of Ethics(1) |
|
|
|
|
|
21.1 |
|
Subsidiaries of the Registrant(20) |
|
|
|
|
|
31.1 |
** |
Certification of Chief Executive Officer of Hyperdynamics Corporation required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 |
|
|
|
|
|
31.2 |
** |
Certification of Chief Financial Officer of Hyperdynamics Corporation required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 |
|
|
|
|
|
32.1 |
|
Certification of Chief Executive Officer of Hyperdynamics Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350)(20) |
|
|
|
|
|
32.2 |
|
Certification of Principal Financial Officer of Hyperdynamics Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350)(20) |
- *
- Management
contracts or compensatory plans or arrangements.
- **
- Filed
herewith.
- (1)
- Incorporated
by reference to Form 10-K filed September 11, 2013.
- (2)
- Incorporated
by reference to Schedule 14A filed January 11, 2011 and filed herewith.
- (3)
- Incorporated
by reference to Form S-1 filed January 12, 2006, as amended.
- (4)
- Incorporated
by reference to Form 8-K filed June 15, 2001.
- (5)
- Incorporated
by reference to Form 8-K filed September 28, 2006.
- (6)
- Incorporated
by reference to Form 10-K filed on September 13, 2012.
- (7)
- Incorporated
by reference to Form S-8 filed June 14, 2010.
- (8)
- Incorporated
by reference to Form 8-K, dated March 31, 2010.
- (9)
- Incorporated
by reference to Form 8-K, filed December 7, 2009.
- (10)
- Incorporated
by reference to Form 8-K filed December 6, 2010.
29
Table of Contents
- (11)
- Incorporated
by reference to Form 8-K filed November 6, 2012.
- (12)
- Incorporated
by reference to Form 8-K filed November 21, 2012.
- (13)
- Incorporated
by reference to Form 8-K, dated January 29, 2010.
- (14)
- Incorporated
by reference to Form 8-K filed January 7, 2013.
- (15)
- Incorporated
by reference to Form 8-K filed on December 28, 2011.
- (16)
- Incorporated
by reference to Form 8-K filed on September 23, 2011
- (17)
- Incorporated
by reference to Form 8-K filed on February 1, 2012.
- (18)
- Incorporated
by reference to Form 8-K filed on June 28, 2013.
- (19)
- Incorporated
by reference to Form 8-K filed on July 1, 2014.
- (20)
- Incorporated
by reference to Form 10-K filed on September 12, 2014.
30
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
|
|
HYPERDYNAMICS CORPORATION |
October 24, 2014 |
|
By: |
|
/s/ RAY LEONARD
Ray Leonard President, CEO and Director |
31
Table of Contents
Exhibit Index
|
|
|
|
Exhibit Number |
|
Description |
|
3.1.1 |
|
Certificate of Incorporation(1) |
|
|
|
|
|
3.1.2 |
|
Certificate of Amendment of Certificate of Incorporation, dated January 21, 1997(1) |
|
|
|
|
|
3.1.3 |
|
Certificate of Amendment of Certificate of Incorporation, dated September 20, 1999(1) |
|
|
|
|
|
3.1.4 |
|
Certificate of Amendment of Certificate of Incorporation, dated December 22, 2003(1) |
|
|
|
|
|
3.1.5 |
|
Certificate of Amendment of Certificate of Incorporation, dated March 11, 2011(2) |
|
|
|
|
|
3.1.6 |
|
Certificate of Amendment of Certificate of Incorporation, dated June 28, 2013(18) |
|
|
|
|
|
3.1.7 |
|
Series B Certificate of Designation(4) |
|
|
|
|
|
3.2 |
|
Amended and Restated By-laws(15) |
|
|
|
|
|
4.1 |
|
Form of Common Stock Certificate(3) |
|
|
|
|
|
4.2 |
|
Form of Common Stock Purchase Warrant issued to investors on February 2, 2012(17) |
|
|
|
|
|
10.1 |
|
Hydrocarbon Production Sharing Contract (PSA) between SCS Corporation and the Republic of Guinea, dated September 22, 2006(5) |
|
|
|
|
|
10.2 |
|
Amendment No. 1 to the Hydrocarbons Production Sharing Contract between SCS Corporation and the Republic of Guinea, dated March 25, 2010(8) |
|
|
|
|
|
10.3 |
* |
Amended and Restated Employment Agreement between Hyperdynamics and Ray Leonard, effective as of July 23, 2012(6) |
|
|
|
|
|
10.4 |
|
Sale and Purchase Agreement between Hyperdynamics Corporation and Dana Petroleum (E&P) Limited, effective as of December 4, 2009(9) |
|
|
|
|
|
10.5 |
|
Operating Agreement between SCS Corporation and Dana Petroleum (E&P) Limited, dated January 28, 2010(13) |
|
|
|
|
|
10.6 |
* |
2010 Equity Incentive Plan as amended(11) |
|
|
|
|
|
10.7 |
* |
Form of Incentive Stock Option Agreement(7) |
|
|
|
|
|
10.8 |
* |
Form of Non-Qualified Stock Option Agreement(7) |
|
|
|
|
|
10.9 |
* |
Form of Restricted Stock Agreement(7) |
|
|
|
|
|
10.10 |
|
Contract Number: AGR/C105/10 between SCS Corporation and AGR Peak Well Management Limited for Provision of Well Construction Management Services, including LOGIC General Conditions as Appendix I(10) |
|
|
|
|
|
10.11 |
|
Agreement for the Supply of Marine Seismic Data Application and Processing Services, dated September 20, 2011 between SCS Corporation and CGG Veritas Services SA(16) |
|
|
|
|
|
10.12 |
|
Form of Securities Purchase Agreement, dated January 30, 2012, between Hyperdynamics Corporation and investors in the offering(17) |
|
|
|
|
|
10.13 |
|
Placement Agency Agreement, dated January 30, 2012, by and between Hyperdynamics Corporation and Rodman & Renshaw, LLC(17) |
|
|
|
|
|
10.14 |
|
Purchase and Sale Agreement between SCS Corporation Ltd. and Tullow Guinea Ltd., dated November 20, 2012.(12) |
|
|
|
|
Table of Contents
|
|
|
|
Exhibit Number |
|
Description |
|
10.15 |
|
Joint Operating Agreement Novation and Amendment Agreement relating to the Operating Agreement for the Hydrocarbon Production Sharing Contract, offshore Guinea, between SCS Corporation Ltd., Dana Petroleum E&P
Limited, and Tullow Guinea Ltd. dated December 31, 2012.(14) |
|
|
|
|
|
10.16 |
|
Parent Company Guarantee between Tullow Oil plc and SCS Corporation Ltd., dated December 31, 2012(14) |
|
|
|
|
|
10.17 |
|
Retention Bonus Agreement between Hyperdynamics and Paolo Amoruso, dated June 30, 2014(19) |
|
|
|
|
|
10.18 |
|
Settlement Deed between Hyperdynamics Corporation, SCS Corporation Ltd., AGR Well Management Ltd, and Jasper Drilling Private Ltd dated May 16, 2014. |
|
|
|
|
|
14.1 |
|
Code of Ethics(1) |
|
|
|
|
|
21.1 |
|
Subsidiaries of the Registrant(20) |
|
|
|
|
|
31.1 |
** |
Certification of Chief Executive Officer of Hyperdynamics Corporation required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 |
|
|
|
|
|
31.2 |
** |
Certification of Chief Financial Officer of Hyperdynamics Corporation required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 |
|
|
|
|
|
32.1 |
|
Certification of Chief Executive Officer of Hyperdynamics Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350)(20) |
|
|
|
|
|
32.2 |
|
Certification of Principal Financial Officer of Hyperdynamics Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of Chapter 63 of Title 18 of the United States Code (18
U.S.C. 1350)(20) |
- *
- Management
contracts or compensatory plans or arrangements.
- **
- Filed
herewith.
- (1)
- Incorporated
by reference to Form 10-K filed September 11, 2013.
- (2)
- Incorporated
by reference to Schedule 14A filed January 11, 2011 and filed herewith.
- (3)
- Incorporated
by reference to Form S-1 filed January 12, 2006, as amended.
- (4)
- Incorporated
by reference to Form 8-K filed June 15, 2001.
- (5)
- Incorporated
by reference to Form 8-K filed September 28, 2006.
- (6)
- Incorporated
by reference to Form 10-K filed on September 13, 2012.
- (7)
- Incorporated
by reference to Form S-8 filed June 14, 2010.
- (8)
- Incorporated
by reference to Form 8-K, dated March 31, 2010.
- (9)
- Incorporated
by reference to Form 8-K, filed December 7, 2009.
- (10)
- Incorporated
by reference to Form 8-K filed December 6, 2010.
- (11)
- Incorporated
by reference to Form 8-K filed November 6, 2012.
- (12)
- Incorporated
by reference to Form 8-K filed November 21, 2012.
- (13)
- Incorporated
by reference to Form 8-K, dated January 29, 2010.
Table of Contents
- (14)
- Incorporated
by reference to Form 8-K filed January 7, 2013.
- (15)
- Incorporated
by reference to Form 8-K filed on December 28, 2011.
- (16)
- Incorporated
by reference to Form 8-K filed on September 23, 2011
- (17)
- Incorporated
by reference to Form 8-K filed on February 1, 2012.
- (18)
- Incorporated
by reference to Form 8-K filed on June 28, 2013.
- (19)
- Incorporated
by reference to Form 8-K filed on July 1, 2014.
- (20)
- Incorporated
by reference to Form 10-K filed on September 12, 2014.
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EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I,
Ray Leonard, certify that:
1. I
have reviewed this 10-K/A of Hyperdynamics Corporation;
2. Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The
registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
(b) Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated
the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed
in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
5. The
registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's
auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial
reporting.
Date:
October 24, 2014
|
|
|
|
|
By: |
|
/s/ RAY LEONARD
Ray Leonard Chief Executive Officer |
|
|
QuickLinks
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
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EXHIBIT 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I,
David Wesson, certify that:
1. I
have reviewed this 10-K/A of Hyperdynamics Corporation;
2. Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The
registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
(b) Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated
the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed
in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
5. The
registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's
auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial
reporting.
Date:
October 24, 2014
|
|
|
|
|
By: |
|
/s/ DAVID WESSON
David Wesson Chief Financial Officer |
|
|
QuickLinks
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002