Cano Petroleum Inc. 2008 Executive Cash Incentive Award Summary
This document outlines Cano Petroleum Inc.'s 2008 cash incentive awards for its named executive officers. The awards are based on achieving specific company performance goals in production, reserves, EBITDA, and cost efficiency, with an additional discretionary component. Each executive's potential bonus is tied to their base salary and ranges from 50% to 150% of a target amount, depending on performance against set thresholds. The agreement details the performance measures, their weightings, and the corresponding bonus payout levels for each executive.
EXHIBIT 10.2
SUMMARY OF 2008 CASH INCENTIVE AWARDS
The 2008 Awards are based on the following threshold, target and maximum performance goals for fiscal year 2008 and the weighting set forth next to the goals (Cano notes that these goals are part of Cano’s incentive program and do not correspond to any financial or performance guidance that Cano has provided or will provide and should not be considered as statements of Cano’s expectations or estimates):
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| Performance Goals |
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| Performance Measure |
| Threshold |
| Target |
| Maximum |
| Weighting |
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| Company Goals |
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| Production* |
| 1,976 BOEPD |
| 2,470 BOEPD |
| 3,211 BOEPD |
| 35 | % | |||
| Proved Developed Producing Reserves |
| 12,683,000 BOE |
| 14,171,000 BOE |
| 18,422,000 BOE |
| 20 | % | |||
| EBITDA |
| $ | 17,075,000 |
| $ | 21,344,000 |
| $ | 27,474,200 |
| 10 | % |
| Finding & Development Costs |
| $ | 10.50 per BOE |
| $ | 8.75 per BOE |
| $ | 6.13 per BOE |
| 10 | % |
| Committee Discretionary Award |
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| 25 | % | |||
*Average daily production for fiscal year 2008.
Cano calculates EBITDA as earnings before interest, taxes, depreciation and amortization.
The 2008 Awards potential payout levels for each Named Executive Officer are set forth below:
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| 2008 Bonus Payout |
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| Base Salary |
| Target Bonus |
| Threshold |
| Target |
| Maximum |
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| S. Jeffrey Johnson |
| $ | 509,480 |
| 75 | % | $ | 191,000 |
| $ | 382,000 |
| $ | 573,000 |
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| Morris B. “Sam” Smith |
| $ | 300,000 |
| 75 | % | $ | 112,500 |
| $ | 225,000 |
| $ | 338,000 |
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| Patrick McKinney |
| $ | 250,000 |
| 75 | % | $ | 93,750 |
| $ | 187,500 |
| $ | 281,000 |
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| Michael J. Ricketts |
| $ | 187,000 |
| 50 | % | $ | 47,000 |
| $ | 94,000 |
| $ | 141,000 |
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