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CD&A TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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Soliciting Material under §240.14a-12

 

LAREDO PETROLEUM, INC.

(Name of Registrant as Specified In Its Charter)

 

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2021
  Laredo Petroleum, Inc.
Notice of Annual Meeting of Stockholders
and Proxy Statement

 

 

 

 

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Thursday, May 20, 2021
9:00 a.m. Central Time


 

The Bank of America Building
Lower Level
15 West Sixth Street
Tulsa, Oklahoma 74119


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GRAPHIC   LETTER FROM OUR CHAIR AND OUR CHIEF EXECUTIVE OFFICER

To the Stockholders of Laredo Petroleum, Inc.:

Throughout 2020, the energy industry and Laredo faced the unprecedented challenges of a global pandemic and historic oil price declines. Although this macro environment resulted in some temporary adjustments to Laredo's business plans, it also highlighted the financial and operational flexibility of the Company and the safety-oriented culture that serves to mitigate overall risk for Laredo. Our business structure and planning enabled the Company to operate effectively as oil prices fell rapidly, and as we put stringent COVID-19 oriented safety measures in place to protect all of our employees.

In early 2020, we capitalized on a brief strengthening of debt markets to refinance our unsecured notes, extending our first term-debt maturities to 2025. Additionally, we entered the year with 90% of our expected oil production hedged at a WTI-equivalent price of $60 per barrel. These proactive actions supported the capital structure of the Company in an uncertain financing environment and underpinned the cash flows we anticipated when making previous capital investments. Operationally, we quickly moved to delay capital investments until oil prices strengthened and drilling and completions costs fell to reflect the new operational environment.

Through the uncertainty surrounding COVID-19 impacts during 2020, we continued to deliver on our commitment to safety and the environment. We implemented additional safety and distancing measures for our workers and contractors and moved to a remote work environment. The Company further reduced its already low flaring and venting of produced natural gas, reducing flaring/venting by 58% versus 2019 and only flaring/venting 0.71% of produced natural gas by the fourth quarter of 2020.

We are excited about the opportunities that lie ahead in 2021. The challenges of 2020 did not change our focus on our strategic transformation that we began at the end of 2019. The Company executed its operational transition to Howard County and completed its first package of wells at the end of 2020. We acquired more acreage directly adjacent to our existing properties in Howard County at prices not seen since horizontal development began in the Midland Basin. We are maintaining a strong focus on risk management, entering 2021 with approximately 75% of our expected 2021 oil production hedged. Additionally, we have begun the process of integrating climate-change risk into our planning processes, committing to emissions reductions targets and reporting ESG metrics within SASB, TCFD and IPECA frameworks. The Board of Directors and executive management of Laredo are committed to executing on the Company's strategy at the highest ethical, environment and safety standards, and creating value for all of our stakeholders.


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Sincerely,

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William E. Albrecht
Non-Executive Board Chair



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Sincerely,

GRAPHIC

Jason Pigott
President & Chief Executive Officer

April 1, 2021


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GRAPHIC   Notice of 2021 Annual Meeting of Stockholders

GRAPHIC


GRAPHIC   PROXY STATEMENT

Table of Contents

 
  Page
LETTER TO STOCKHOLDERS    
        
NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS    
        
PROXY OVERVIEW & HIGHLIGHTS   1
        
CORPORATE GOVERNANCE AND BOARD MATTERS   17

PROPOSAL ONE: ELECTION OF DIRECTORS AT THE 2021 ANNUAL MEETING

 

17

Director Qualifications

 

18

Director Leadership

 

25

Director Independence

 

25

Director Compensation

 

26

Director Stock Ownership

 

29

Director Oversight of Risk Management

 

29

Director Meetings & Executive Sessions

 

30

Director Committees

 

31

Communications with Directors

 

38
        
AUDIT MATTERS   39

PROPOSAL TWO: RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

39

Audit Services

 

40

Audit and Other Fees

 

40

Audit Committee Report

 

40
        
EXECUTIVE COMPENSATION MATTERS   44

PROPOSAL THREE: ADVISORY VOTE APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

 

44

Compensation Discussion & Analysis

 

45

CD&A Executive Summary

 
46

 
  Page

Say-on-Pay Results & Management Responsiveness

 
49

Named Executive Officers

 
50

2020 Compensation Alignment & Pay for Performance

 
52

Compensation Philosophy & Process for Determining Executive Compensation

 
56

2020 Executive Compensation Program

 
60

Material Changes for 2021 Executive Compensation

 
71

Employment, Severance or Change in Control Agreements

 
76

Compensation Committee Report

 

77

Compensation Tables

 

78

CEO Pay Ratio

 

91
        
STOCK OWNERSHIP INFORMATION   93
        
PROPOSAL FOUR: APPROVAL OF AMENDMENTS TO THE EQUITY INCENTIVE PLAN   95
        
PROPOSAL FIVE: APPROVAL OF AMENDMENTS TO THE CHARTER TO ADOPT A MAJORITY VOTING STANDARD   104
        
PROXY STATEMENT QUESTIONS & ANSWERS   106
        
ADDITIONAL INFORMATION   115
        
ANNEX A: PROPOSED AMENDMENTS TO THE LAREDO PETROLEUM, INC. OMNIBUS EQUITY INCENTIVE PLAN   A-1
        
ANNEX B: PROPOSED AMENDMENTS TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION   B-1

Our 2021 Proxy Statement and 2020 Annual Report are available online at
http://materials.proxyvote.com/516806

Laredo Petroleum, Inc. 2021 Proxy Statement  |  i


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GRAPHIC   PROXY OVERVIEW & HIGHLIGHTS

This summary highlights information contained elsewhere in this Proxy Statement for the 2021 Annual Meeting of Stockholders (the "Annual Meeting"). This summary does not contain all of the information you should consider and is not a form for voting. You should read the entire Proxy Statement carefully before voting.

Company Overview

Laredo Petroleum, Inc. (the "Company," "Laredo," "we," "us," or "our") is an independent energy company focused on the acquisition, exploration and development of oil and natural gas properties, primarily in the Permian Basin of West Texas. Our headquarters are in Tulsa, Oklahoma, and our development and production is in largely contiguous sections in the neighboring Texas counties of Howard, Glasscock, Reagan, Sterling and Irion.

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*
As of, or for the year ended, December 31, 2020, as applicable.

Summary of Strategy and Highlights of Execution on Strategy in 2020

Our strategy is to create stakeholder value through the development of our Permian Basin acreage. We do this by optimizing our assets, managing our risk and seeking to acquire additional high-margin inventory. Below are highlights of our accomplishments in executing this strategy during 2020:

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Optimizing Our Assets

    Maintained one of the lowest drilling, completions and operating cost structures in the Permian Basin, including further reductions in drilling and completion costs by 21%.

    Reduced unit lease operating expenses ("LOE") by 17% from full-year 2019 and reduced unit general and administrative expenses ("G&A"), excluding long-term incentive program expenses, by 21% from full-year 2019.

    Transitioned our development program to our acreage positions in Howard and Glasscock Counties, which put our low cost structure to work on our oiliest acreage to produce the highest rates of return.

Managing Our Risk

    Issued two series of senior unsecured notes and paid off our then outstanding senior unsecured notes resulting in pushing out the maturity dates on our long-term debt to 2025 and 2028.

    Received $234.1 million of cash flow through our hedge program.

    Repurchased $61 million of term-debt in open market purchases at 62.5% of par.

Laredo Petroleum, Inc. 2021 Proxy Statement  |  1


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    Formalized our management and oversight of our environmental, social and governance ("ESG") efforts and continued work to incorporate ESG considerations into our broader risk management strategy.

    Published our inaguaral ESG and Climate Risk Report on February 22, 2021 and established emissions reduction targets for our Company.

    Reduced volume of flared/vented natual gas by 58%, flaring/venting only 0.71% of the Company's produced natural gas during full-year 2020.

Seeking High-Margin Inventory

    Added 4,000 net acres in Howard County at an average price of $7,200 per net undeveloped acre.

COVID Response

Like the rest of the world, we faced many new challenges executing on our corporate strategy in 2020 due to the COVID-19 pandemic. This resulted in adjustments to our development cadence throughout the year in response to the volatile commodity prices. As we faced these new obstacles, we continued to prioritize the health and safety of our team in this new environment by implementing several new measures, including the following:

    Created a Steering Team and Task Force to stay abreast of new pandemic information, which enabled us to make timely decisions to protect our workforce and communicate our action plan to all employees.

    Transitioned to a remote work force where possible and developed protocols for maintaining social distance and protecting our employees.

    Kept our Board of Directors apprised of the effects of the pandemic and our response and took all actions within the framework of their oversight.

    Provided employees additional mental health care, including (i) providing free access to a temporary mental health platform to help manage stress and strengthen mental resilience; and (ii) incorporating a tele-medicine feature as part of our health benefit plan mid-year 2020.

2  | Laredo Petroleum, Inc. 2021 Proxy Statement


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Corporate Governance and Board Matters Overview

    GRAPHIC   PROPOSAL ONE: ELECTION OF DIRECTORS AT THE 2021 ANNUAL MEETING

The Board unanimously recommends that stockholders vote FOR the election of Jarvis V. Hollingsworth, Lisa M. Lambert, Lori A. Lancaster and Edmund P. Segner, III.

  See page 17 for
more information.

 
   

The Laredo Board of Directors (the "Board" or "Board of Directors") currently consists of eleven directors serving staggered three year terms. The Board has nominated four directors for election at the Annual Meeting. The Board has nominated Jarvis V. Hollingsworth, Lisa M. Lambert and Lori A. Lancaster to serve as Class II directors of the Company to hold office until the 2024 annual meeting. Edmund P. Segner, III, has been nominated to serve as a Class I director of the Company to hold office until the 2023 annual meeting (Mr. Segner, III was elected at the 2020 annual meeting to serve as a Class II director, but has changed classes as a result of our Board refreshment). James R. Levy and Dr. Myles W. Scoggins will depart the Board upon the expiration of their current terms at the Annual Meeting. After the Annual Meeting, assuming the stockholders elect the four nominees of the Board, and consistent with our bylaws, the Board anticipates reducing the size of the Board from eleven directors to nine directors.

Board Composition & Attributes

Our Board regularly evaluates each director in light of the Company's strategy and evolving needs. The information below illustrates the year over year evolution of our Board's composition and the Board's proactive refreshment efforts.

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      *
      Reflects the anticipated composition of the Board at the conclusion of the Annual Meeting, assuming stockholders elect all nominees to the Board. Age is calculated as of March 23, 2021.

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      *
      As previously announced, Randy A. Foutch departed the Board at the conclusion of the 2020 annual meeting, and Peter R. Kagan departed the Board in August 2020.

4  | Laredo Petroleum, Inc. 2021 Proxy Statement


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The Board believes that its membership should reflect a diversity of industries, experience, gender, race, ethnicity and age to help ensure that it serves the long-term interests of stockholders and fulfills its fundamental responsibility to promote the best interests of the Company. As a result of our active refreshment, we have made significant strides in all of those categories. We now have expanded experience in corporate governance, technological innovation and business development to help drive our corporate strategies that include increasing our high-margin inventory through acquisitions, optimizing our assets with technological innovations that drive down costs and managing our risks by reducing our leverage. We have also expanded our collective environmental and sustainability experience, which allows us to better incorporate climate risk analysis and ESG best practices. We believe our Board composition provides a well-rounded variety of skills, qualifications, experience and diversity and represents an effective mix of company knowledge and fresh perspectives.

The below table is a short summary of each director's key qualifications and expertise. For more detailed director biographies, see Director Qualifications on page 18.


Experience

 

 

 

William E. Albrecht

 

 

 

Jarvis V. Hollingsworth

 

 

 

Dr. Craig M. Jarchow

 

 

 

Lisa M. Lambert

 

 

 

Lori A. Lancaster

 

 

 

Pamela S. Pierce

 

 

 

Jason Pigott

 

 

 

Frances Powell Hawes

 

 

 

Edmund P. Segner, III

 

 

 

# of
Directors
Accounting & Financial Reporting                                           6/9
                                   
CEO or Senior Officer Experience                                           8/9
                                   
Compensation                                           4/9
                                   
Corporate Governance                                           6/9
                                   
Environmental & Sustainability                                           5/9
                                   
Exploration & Production                                           7/9
                                   
Finance                                           9/9
                                   
Midstream                                           4/9
                                   
Oil & Gas Service Providers                                           5/9
                                   
Other Public Company Board Experience                                           6/9
                                   
Technology Expertise                                           1/9
                                   
Gender Diversity                                           4/9
                                   
Racial Diversity                                           2/9
                                   
*
Reflects the anticipated composition of the Board at the conclusion of the Annual Meeting, assuming stockholders elect all nominees to the Board.

Laredo Petroleum, Inc. 2021 Proxy Statement  |  5


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Governance Highlights

Below is a short summary of our practices and policies, including new changes made this year to enhance the voice of our stockholders in the management of the Company. See the Director Oversight of Risk Management, Director Meetings & Executive Sessions, and Director Committees sections for a full discussion of the Board's responsibilities.

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In March 2021, the Board adopted the Laredo Petroleum, Inc. Third Amended and Restated Bylaws ("Bylaws") to adopt a majority voting standard in uncontested director elections effective for the 2021 director elections. Previously, the Bylaws provided that directors be elected by a plurality of the votes cast. Pursuant to this plurality voting standard, the director nominees receiving the highest number of FOR votes were elected regardless of the number of WITHHOLD votes received. Pursuant to a majority voting standard, a director nominee will not be elected when the number of votes cast against the director exceed the number of votes cast for the director. A plurality vote will continue to apply in contested director elections where the number of director nominees exceeds the number of directors to be elected.

As part of this transition, the Board also revised the Bylaws to include a director resignation policy, so that if a director does not receive a majority of the votes cast, he/she does not automatically remain on the Board until a successor is elected. Instead a director must tender a resignation. Then the Nominating, Corporate Governance, Environmental and Social ("NCE&S") Committee makes a recommendation and the Board may choose to accept the resignation and appoint a director to fill the vacancy or reject the resignation until a successor can be elected, or until such directors' earlier removal or death. In each case the Board will publicly announce its decision and the justifications supporting such decision.

6  | Laredo Petroleum, Inc. 2021 Proxy Statement


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Board and Committee Meetings and Oversight

The Board has tasked each of its committee with certain supervisory functions as outlined in more detail beginning on page 31. Below is a summary of each committee's role:

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Each director serving on a committee has the requisite qualifications necessary for the position.

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*
Reflects the anticipated composition of the Board at the conclusion of the Annual Meeting, assuming stockholders elect all nominees to the Board. During 2020, all members of the Audit Committee were financial literate and all directors serving on any committee were independent.

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Environmental, Social and Governance Responsibility

Laredo has long taken great pride in being a responsible operator and "doing the right thing" in the treatment of the land, water and air around us, the people who work for us and the communities that support us. Over the past year, we have focused on formalizing our management of ESG responsibility and the creation of initiatives to challenge ourselves to perform even better. Below are the highlights of our initiatives.

ESG Oversight

The Board changed the Nominating and Corporate Governance Committee to the Nominating, Corporate Governance, Environmental and Social Committee and amended its charter to include monitoring and evaluating programs and policies related to ESG matters. These efforts include:

 

Laredo's ESG Performance

Strategies and policies related to human capital management

ESG communications

Regulatory compliance matters

 

ESG and climate-related risks or exposures and actions for managing those risks

ESG trends and stakeholder concerns

The full Board also receives updates on the Company's ESG efforts at regularly scheduled Board meetings. Management of our daily ESG efforts is led by the ESG Management Committee, a multi-disciplined team of leaders throughout the company, who are responsible for implementing, executing and assessing new and ongoing ESG efforts throughout the Company. Additionally, in February 2021, we hired a new Vice President and Chief Sustainability Officer to assist with our ESG efforts.

In February 2021, we released our inaugural ESG and Climate Risk Report on our website at www.laredopetro.com. This report aligns with leading reporting standards and frameworks, such as the Sustainability Accounting Standards Board ("SASB"), the Task Force on Climate-related Financial Disclosures ("TCFD") and the International Petroleum Industry Environmental Conservation Association ("IPIECA").

Environmental

Laredo's flared gas is nearly half of its peer average over the past two years, according to a Rystad Energy Report released October 28, 2020 and our Scope 1 and 2 emissions are already below the Oil and Gas Climate Initiative 2025 targets, but we strive to do more. Laredo announced new ESG targets to reduce emissions further by 2025. Our 2020 executive compensation performance metrics include Spill Severity Rate and Air Stewardship metrics, and in 2021, those metrics were strengthened, as discussed in the Compensation Discussion and Analysis Section of this Proxy Statement. We continue to seek ways to make our development more sustainable and address climate-risks that affect our strategies, including by conducting climate-related scenario analysis.

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Social

Laredo offers a comprehensive benefits program, including covering over 80% of health insurance premiums and allowing flexible work schedules. We invest in a variety of leadership programs and support and encourage an inclusive environment knowing a diverse workforce will better drive our success. Though we were recognized by the 2019 National Conversation on Board Diversity for our Board gender diversity, we continue to assess diversity across our workforce to identify our strengths and areas for improvement.

We also believe an engaged, safe and well-trained workforce is key to accomplishing our strategic goals, so our best practices include: annual training, pre-job safety meetings, on-site contractor management and safety personnel, hazard hunts, stop work authority and root cause analysis review of any incidents.

2020 Safety Metrics
(as of Dec. 31, 2020)
0
employee or
contractor
fatalities
  2
employee
recordable
incidents
  0.74
Total
Recordable
Incident Rate
  0
Vehicle
Incident
Rate






           

2020 Workforce Metrics
(as of Dec. 31, 2020)
25%
diverse based
on ethnicity
  27%
diverse based
on gender
  5%
US military
veterans
  38%
women in
leadership

Through payroll deductions and Laredo's Matching Gift Program, Laredo employees donated over $65,000 in 2020. Additionally, through Laredo's corporate giving and donation matches during our 2020 Charitable Giving Campaign, we supported our communities with an additional $146,712 and received the Tulsa Area United Way's Momentum Award granted to a Tulsa company in recognition of the best second year campaign.

COVID-19

Since the start of the COVID-19 pandemic, Laredo has committed to keeping our employees and communities safe. The Laredo Coronavirus Steering Team and Task Force regularly meet to stay current with information and make timely decisions. We have implemented several measures for all employees, such as transitioning to remote work and keeping pay and benefits whole for those whose work routines have been disrupted by the pandemic.

Corporate Governance

As highlighted above and discussed in detail in the Corporate Governance and Board Matters section of this Proxy Statement, Laredo strives to adopt and maintain the highest level of corporate governance best practices. See the Director Oversight of Risk Management, Director Meetings & Executive Sessions and Director Committees sections for a full discussion of the Board's responsibilities.

Laredo Petroleum, Inc. 2021 Proxy Statement  |  9


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Stockholder Engagement

The Board believes ongoing, meaningful dialogue with its stockholders is a key element of good corporate governance. The benefits of regular engagement include:

    Gaining and maintaining stockholder trust through visibility and transparency.

    Keeping the Board and management accountable for addressing stockholder concerns.

    Providing the Board and management team awareness of emerging governance, compensation and ESG issues that are important to our stockholders.

The members of the Board and management team regularly meet with stockholders on a variety of topics, and the valuable feedback gained during these discussions helps shape our decision-making. Topics include our corporate strategies and goals, Company performance, executive compensation, corporate governance policies and practices and environmental and social matters.

Our engagement with stockholders is ongoing throughout the year.

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Following our 2020 annual meeting, we reached out to over 50 of our largest stockholders, representing almost 54% of our shares outstanding at September 30, 2020, requesting to speak with them regarding executive compensation, board refreshment and other ESG matters. The Board Chair, Compensation Committee Chair, General Counsel and Vice President of Investor Relations participated on all calls, and we received feedback from holders of 37.62% of our shares outstanding. In these meetings, we were particularly mindful of understanding investors' views with respect to our executive compensation program and practices. Please see Say-on-Pay Results & Management Responsiveness for discussion of the changes we have made to our executive compensation program over the past two years in response to stockholder feedback. Set forth below is a summary of the feeback received from stockholders and outcomes.

 

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*
See Say-on-Pay Results & Management Responsiveness in the Compensation Discussion and Analysis of this Proxy Statement for more details on changes to our executive compensation program over the past two years.

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Audit Matters Overview

    GRAPHIC   PROPOSAL TWO: RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board unanimously recommends that stockholders vote FOR the appointment of Grant Thornton, LLP as the Company's independent registered public accounting firm for the fiscal year 2021.

  See page 39 for
more information.

 
   

The Audit Committee of the Board appoints and oversees the independent registered public accounting firm that audits our financial statements. As part of this oversight, the Audit Committee has established general best practices to ensure the auditor's qualifications, independence and performance, including the following:

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The Audit Committee elected to re-appoint Grant Thornton, LLP ("GT") as the independent registered public accounting firm to audit our financial statements for the fiscal year beginning January 1, 2021. GT was our independent auditor for the 2020 fiscal year and has audited Laredo's consolidated financial statements since its inception in 2007. The Audit Committee completed an evaluation and bid process with other firms in 2019 and believes that continuing to engage GT is in the best interest of the Company and its stockholders. GT is already familiar with the Company, which avoids fees that would be included for the additional time and costs that would be necessary in onboarding or educating a new independent registered public accounting firm.

The Company expects that one or more representatives of GT will be present at the Annual Meeting to respond to questions and make a statement if desired.

The Audit Committee's Report starting on page 40 contains a fulsome discussion of the Audit Committee's investigation into and oversight of the remediation of our internal controls surrounding our reserves reporting that caused us to file an amendment to our first quarter filings with the Securities Exchange Commission ("SEC").

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Executive Compensation Matters Overview

    GRAPHIC   PROPOSAL THREE: ADVISORY VOTE APPROVING THE COMPENSATION OR OUR NAMED EXECUTIVE OFFICERS

The Board unanimously recommends that stockholders vote FOR the advisory resolution approving the compensation of our named executive officers.

  See page 44
for more information.

 
   

The Board establishes the Company's compensation philosophy and practices and annually reviews and updates the executive compensation program based upon recommendations from the Compensation Committee. The process includes reviewing the prior year say-on-pay voting results, soliciting input from its independent compensation consultant, reflecting on all feedback received from stockholders throughout the year, comparing the Company's compensation program with its peers and evaluating the Company and management team's performance.

General best practices that the Board and Compensation Committee have implemented include the following:

LOGO

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LOGO

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2020 Compensation Program

Our compensation program for our NEOs had four key components in 2020: (1) salary rate; (2) short-term incentive program ("STIP") awards; (3) long-term incentive program ("LTIP") awards of restricted stock; and (4) LTIP awards of performance units. The key components of our compensation program and how each supports our compensation objectives are presented in the following table:

LOGO

(1)
The STIP performance metrics are for the 2020 performance year and include changes adopted by the Board to better reflect the criteria important to our stockholders with an emphasis on return-based metrics.

(2)
The LTIP performance unit awards' performance metrics described here apply to 2020 grants and include changes adopted by the Board to give equal weight to all three criteria. For the performance metrics used to determine payout of performance unit awards granted in 2018 and 2019, please see page 82.

(3)
For 2019, we prohibited maximum performance unit award payout in the event of a negative absolute total shareholder return. For the performance unit awards granted in 2020, we capped payout at 100% in the event of a negative absolute total shareholder return.

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Proposal Four Overview

    GRAPHIC   PROPOSAL FOUR: APPROVAL OF AMENDMENTS TO THE EQUITY INCENTIVE PLAN

The Board unanimously recommends that stockholders vote FOR amendments to the Laredo Petroleum, Inc. Omnibus Equity Incentive Plan to (1) require a double trigger for equity vesting in the event of a change in control and (2) increase the maximum number of shares of our common stock issuable under the plan from 1,492,500 shares to 2,432,500 shares.

  See page 95 for
more information.

 
   

The current Equity Incentive Plan provides that equity awards accelerate and payout if a change of control occurs. The proposed amendment provides equity awards will only payout in the event of a change in control if there is both a change in control and actual or constructive termination of the individual's position without cause. This aligns with our Change in Control Executive Severance Plan, which also provides that severance payments in the event of a change in control require both a change in control and an actual or constructive termination of an individual's position without cause. Our Board believes this is good governance.

The Board also recommends approval of the amendment to the Equity Incentive Plan to increase the number of shares of common stock authorized for issuance enabling the continued use of the Equity Incentive Plan for equity awards. Our Board, Compensation Committee and management all believe that the effective use of share-based long-term incentive compensation is vital to our continued ability to recruit, hire and retain the individuals required to successfully execute our business plans by providing a direct link between compensation and long-term stockholder value creation.

Proposal Five Overview

    GRAPHIC   PROPOSAL FIVE: APPROVAL OF A MAJORITY VOTING STANDARD FOR CERTAIN STOCKHOLDER VOTES

The Board unanimously recommends that stockholders vote FOR amendments to the Amended and Restated Certificate of Incorporation of Laredo Petroleum, Inc. ("Charter") to implement a majority voting standard for a stockholder vote to (1) amend certain provisions of the Charter, (2) amend the Bylaws or (3) remove a director for cause.

  See page 104 for
more information.

 
   

The current Charter contains certain "supermajority" voting standards requiring the affirmative vote of at least 75% of the voting power of all of the then-outstanding shares of stock entitled to vote, voting together as a single class, to amend certain provisions of our Charter, to amend the Bylaws and to remove a director for cause. The Nominating, Corporate Governance, Environment and Social Committee and the Board request that stockholders approve amendments to change the voting standard in each case to only require the affirmative vote of a majority of the votes cast at the annual meeting of stockholders. If approved, the Board plans to adopt corresponding changes to our Bylaws.

After review, the Board found the proposed Charter amendments are standard for many public companies and allow for better corporate governance by giving stockholders a greater voice and ability to influence the management of the Company.

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GRAPHIC   CORPORATE GOVERNANCE AND BOARD MATTERS

Proposal One: Election of Directors at the 2021 Annual Meeting

The Company's Board is divided into three classes, designated Class I, Class II and Class III. Each class serves a staggered three-year term. As a result, typically approximately one-third of the director positions are subject to election at each annual meeting of stockholders. Our Board currently consists of eleven members as follows:

    CLASS I     CLASS II     CLASS III
    With a term expiring in 2023     With a term expiring in 2021     With a term expiring in 2022
       
   

Dr. Craig M. Jarchow

Jason Pigott

     

Jarvis V. Hollingsworth

Lisa M. Lambert

Lori A. Lancaster

James R. Levy

Dr. Myles W. Scoggins

Edmund P. Segner, III

     

William E. Albrecht

Pamela S. Pierce

Frances Powell Hawes

The NCE&S Committee recommends, and the Board has nominated, four directors for election to the Board to serve until the applicable annual meeting of stockholders and thereafter until each of their successors is elected and qualified or his or her earlier resignation or removal. In accordance with good governance practices, newly appointed directors are placed in the class up for election at the next annual meeting. Because we had three new directors appointed since our last annual meeting, the number of directors up for election this year is larger than usual. To better balance our director classes, one director nominee will serve for less than three years. The Board nominated Jarvis V. Hollingsworth, Lisa M. Lambert and Lori A. Lancaster to serve as Class II directors of the Company to hold office until the 2025 annual meeting. Edmund P. Segner, III has been nominated to serve as a Class I director of the Company to hold office until the 2023 annual meeting. James R. Levy and Dr. Myles W. Scoggins will depart the Board at the expiration of their current terms, which is at the Annual Meeting. After the Annual Meeting, assuming stockholders elect the four nominees of the Board, the Board of Directors will be as follows:

    CLASS I     CLASS II     CLASS III
    With a term expiring in 2023     With a term expiring in 2024     With a term expiring in 2022
       
   

Dr. Craig M. Jarchow

Jason Pigott

Edmund P. Segner, III

     

Jarvis V. Hollingsworth

Lisa M. Lambert

Lori A. Lancaster

     

William E. Albrecht

Pamela S. Pierce

Frances Powell Hawes

The biographical information for director nominees and our other directors and the process for reviewing and selecting nominees is set forth below in the Director Qualifications section.

In March 2021, the Board amended the Bylaws to adopt a majority voting standard for uncontested director elections (replacing our prior plurality voting standard). Assuming the presence of a quorum, each of the director nominees receiving affirmative votes of a majority of the shares voted at the Annual Meeting will be elected. Cumulative voting is not permitted in the election of directors. Unless otherwise instructed, the proxyholders will vote the proxies received by them for the four nominees. The Board also amended the Bylaws to require roughly equal classes.

Each of the nominated directors has consented to serve on the Board, and the Board has no reason to believe any nominees will be unable or unwilling to serve if elected. If a nominee becomes unable or unwilling to accept nomination or election, either the number of the Company's directors will be reduced or the proxyholders will vote for the election of a substitute nominee that the Board recommends.

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CORPORATE GOVERNANCE AND BOARD MATTERS


 

 

GRAPHIC

 

The Board of Directors unanimously recommends that stockholders vote FOR the election of each of Jarvis V. Hollingsworth, Lisa M. Lambert, Lori A. Lancaster and Edmund P. Segner, III.

 

 

Director Qualifications

The Board seeks to recruit and nominate directors who provide the Board with the necessary skills, backgrounds and experience to oversee the Company's policies and strategies and the management of the business by the CEO and other executive officers. The NCE&S Committee annually reviews the composition of the Board and evaluates its effectiveness and regularly evaluates potential director candidates. For each director nominee, the Board considers, at a minimum, a candidate's judgment, experience, character, business acumen and independence from the Company. Additionally, the Board considers diversity of experience, gender, race, ethnicity and age, as well as any other self-identified diversity characteristics of directors and candidates to becomes directors. When evaluating the suitability of an incumbent director for re-election, the Board and NCE&S Committee also consider the director's past performance, including attendance at meetings and contributions to the Board.

Director nominees come from a variety of sources, including stockholders, management, directors and search firms. The NCE&S Committee has retained Russell Reynolds, a third-party search firm, to assist in identifying and evaluating potential candidates for the Board. See the Identification of Director Candidates for information on proposing a candidate for our Board. The NCE&S Committee evaluates and interviews all potential candidates and recommends nominees to the Board. The full Board then votes to appoint a nominee by majority vote and recommends the nominee for election by stockholders at the next annual meeting.

The Board and the NCE&S Committee also periodically review the size of the Board to ensure it is appropriate, consistent with our historical approach and in accordance with our Corporate Governance Guidelines.

Our current independent Board members range in age from 47 to 69, with four women members and two racially diverse members. Our Board also has directors with backgrounds in different industries from different geographic locations and a good mix of longer-tenured directors who possess a deep understanding of the Company and newer directors who bring fresh perspectives.

BOARD COMPOSITION*

GRAPHIC

*
This information reflects the anticipated composition of the Board at the conclusion of the Annual Meeting, assuming stockholders elect all nominees to the Board. Age is calculated as of March 23, 2021.

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CORPORATE GOVERNANCE AND BOARD MATTERS

Set forth below is biographical information as of March 23, 2021 for each director nominee and continuing director.

CLASS II DIRECTOR NOMINEES

GRAPHIC

SECRETARY/GENERAL COUNSEL, KAYNE ANDERSON CAPITAL ADVISORS, L.P.

INDEPENDENT DIRECTOR

Director since Nov. 2020

Age 58

COMMITTEES

Audit

NCE&S



  JARVIS V. HOLLINGSWORTH

       
   CAREER HIGHLIGHTS

Kayne Anderson Capital Advisors,  L.P.

Secretary/General Counsel

Executive Committee and Board of Directors

Bracewell,  LLP

Partner

Management and Finance Committees

OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS

None

    OTHER CURRENT ENGAGEMENTS

Teacher Retirement System of Texas, Board Chairman

Memorial Hermann Hospital System, Finance Committee

PRIOR DIRECTORSHIPS

Frost Bank (Cullen/Frost Bankers, Inc.), Director

EDUCATION

JD, University of Houston

BS, United States Military Academy at West Point

   

   KEY QUALIFICATIONS AND EXPERIENCE

Mr. Hollingsworth's service as General Counsel and Director of a leading alternatives investment management firm with approximately $30 billion in assets and service as Board Chairman for a Texas state agency that manages a $175 billion-plus pension fund highlight the legal and financial background that he brings to our Board. Mr. Hollingsworth is a former Partner at the law firm Bracewell LLP in Houston, Texas where he had a fiduciary practice counseling boards of directors and trustees on corporate governance and strategic matters. His legal, management and governance experience contribute significantly to our Board and our move to include ESG initiatives as part of the Nominating, Corporate Governance, Environmental and Social Committee. For these reasons, among others, we believe Mr. Hollingsworth is qualified to serve as a director.

GRAPHIC

FOUNDER AND PRESIDENT, NATIONAL GRID PARTNERS

INDEPENDENT DIRECTOR

Director since Aug. 2020

Age 53

COMMITTEES

Audit

NCE&S


  LISA M. LAMBERT

       
   CAREER HIGHLIGHTS

National Grid Partners

Founder and President

National Grid

Chief Technology and Innovation Officer

The Westly Group

Managing Partner

Intel Corporation

Managing Director, Software and Services Fund and Diversity Fund

    OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS

None

OTHER CURRENT ENGAGEMENTS

UPWARD, CEO and Chairman, a non-profit global network of executive women

PRIOR DIRECTORSHIPS

National Venture Capital Association

EDUCATION

MBA, Harvard Business School

BS, Management Information Systems, Pennsylvania State University

   

   KEY QUALIFICATIONS AND EXPERIENCE

Ms. Lambert has extensive experience in the technology industry, leading innovation efforts and global investment initiatives. Her work with National Grid focuses on advancing energy systems, including at the intersection of energy and emerging technology to create a smarter, renewable future. She brings a new perspective to our Board that will contribute significantly to our strategy of fostering a digital fist mindset to make our business thrive in a digital era and to our continued commitment to ESG, For these reasons, among others, we believe Ms. Lambert is qualified to serve as a director.

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GRAPHIC

MANAGING DIRECTOR, UBS SECURITIES, GLOBAL ENERGY GROUP

INDEPENDENT DIRECTOR

Director since Nov. 2020

Age 51

COMMITTEES

Audit

Compensation

  LORI A. LANCASTER

       
   CAREER HIGHLIGHTS

UBS Securities

Managing Director in the Global Energy Group

Goldman, Sachs & Co.

Managing Director in the Global Natural Resources Group

Nomura Securities

Managing Director in the Global Natural Resources Group

    OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS

HighPoint Resources Corp. (formerly Bill Barrett Corp.) (Audit Committee and Nominating and Corporate Governance Committee Chair)

PRIOR DIRECTORSHIPS

Energen Corporation

EDUCATION

MBA, University of Chicago

BS, Texas Christian University

   

   KEY QUALIFICATIONS AND EXPERIENCE

Ms. Lancaster has extensive experience in the oil and gas sector. During her 18-year tenure in investment banking, she led or was a key member of the execution team on more than $60 billion of announced energy merger and acquisition deals and led the structuring and execution of numerous capital markets transactions. Her wealth of knowledge in financing and structuring deals will be key as we execute on our strategies to expand our high-margin drilling inventory through acquisitions and reduce our leverage. Additionally, she brings public company audit committee and nominating and corporate governance experience to our team. For these reasons, among others, we believe Ms. Lancaster is qualified to serve as a director.

CLASS I DIRECTOR NOMINEE

GRAPHIC

FORMER PRESIDENT, CHIEF OF STAFF AND DIRECTOR, EOG RESOURCES, INC.

INDEPENDENT DIRECTOR

Director since 2011

Age 67

COMMITTEES

Audit

Compensation



  EDMUND P. SEGNER, III

       
   CAREER HIGHLIGHTS

Rice University

Professor in the Practice of Engineering Management, Department of Civil and Environmental Engineering

EOG Resources, Inc.

President, Chief of Staff and Director

Principal Financial Officer

    OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS

Archrock, Inc. (audit committee)

HighPoint Resources Corp. (formerly Bill Barrett Corp.) (Audit and Reserves and EHS committees and Compensation Committee Chair)

PRIOR DIRECTORSHIPS

Archrock Partners, L.P. (formerly Exterran Partners, L.P.)

Midcoast Holdings, LLC, the general partner of Midcoast Energy Partners, L.P.

Seahawk Drilling, Inc.

EDUCATION

Certified Public Accountant

MA, Economics, University of Houston

BS, Civil Engineering, Rice University

   

   KEY QUALIFICATIONS AND EXPERIENCE

Mr. Segner's service as President, Principal Financial Officer and director of publicly traded oil and gas exploration and development companies demonstrates a strong operational, financial, accounting and strategic background and enables him to provide our Board with valuable business, leadership and management experience and insights into many aspects of the operations of exploration and production. Mr. Segner also brings financial and accounting expertise to the Board, including through his experience in financing transactions for oil and gas companies, his background as a certified public accountant, his service as a Principal Financial Officer, his supervision of other principal financial officers and principal accounting officers and his service on the audit committees of other companies. For these reasons, among others, we believe Mr. Segner is qualified to service as a director.

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CORPORATE GOVERNANCE AND BOARD MATTERS

CONTINUING CLASS I DIRECTORS

GRAPHIC

PRESIDENT, CEO AND DIRECTOR, CASTLETON RESOURCES, LLC

INDEPENDENT DIRECTOR

Director since 2019

Age 60

COMMITTEES

Compensation (Chair)

Audit

  DR. CRAIG M. JARCHOW

       
   CAREER HIGHLIGHTS

Castleton Resources LLC

President, Chief Executive Officer and Director (May 2017-present)

Castleton Commodities International

President, Upstream

Pine Brook Road Partners

Managing Director and Partner

First Reserve Corporation

Director and Partner

Amoco Corporation & Apache Corporation

Operational roles of increasing responsibility

    OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS

None

EDUCATION

PhD, Geophysics, Stanford University

MBA, MIT Sloan School of Management

MS, Geophysics, Stanford University

BA, Geology, University of California, Santa Barbara

   

   KEY QUALIFICATIONS & EXPERIENCE

Dr. Jarchow has more than 29 years of industry experience serving in operational roles for oil and gas companies, advising financial services firms on energy focused investments and building and leading an operating company. His geology and geophysics background combined with his managerial experience building and leading a company aides us in the development of our assets and the acquisition of new properties to expand our high-margin inventory. For these reasons, among others, we believe Dr. Jarchow is qualified to serve as a director.

GRAPHIC

PRESIDENT AND CHIEF EXECUTIVE OFFICER, LAREDO PETROLEUM, INC.

Director since May 2019

Age 47





  JASON PIGOTT

       
   CAREER HIGHLIGHTS

Laredo Petroleum, Inc.

President and Chief Executive Officer, October 2019 to present

Director and President

Chesapeake Energy Corporation

Executive Vice President—Operations and Technical Services

Executive Vice President, Operations

Senior Vice President, Operations

Anadarko Petroleum Corporation

General Manager

Reservoir Engineering Manager

    OTHER CURRENT PUBLIC COMPANY BOARDS

None

EDUCATION

MBA, University of North Carolina

BS, Petroleum Engineering, Texas A&M University

   

   KEY QUALIFICATIONS AND EXPERIENCE

Mr. Pigott has more than 21 years of experience in the energy exploration and production industry, most recently serving as Executive Vice President—Operations and Technical Services for Chesapeake Energy Corporation where he led all drilling and completions operations, digital operations, supply chain and land efforts. Prior to joining Chesapeake in 2013, he was with Anadarko Petroleum for 14 years, serving in positions of increasing responsibility, focused primarily on onshore unconventional play development in the Eagle Ford Shale, Haynesville Shale, Delaware Basin and various tight-sand plays in East Texas. Mr. Pigott's extensive background in leading multidisciplinary operational and technical organizations, as well as experience contributing to executive-level strategic decisions, contributes significant value to our Board of Directors. For these reasons, among others, we believe Mr. Pigott is qualified to serve as director.

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CORPORATE GOVERNANCE AND BOARD MATTERS

CONTINUING CLASS III DIRECTORS

GRAPHIC

FORMER PRESIDENT, OXY OIL AND GAS, AMERICAS

NON-EXECUTIVE CHAIRMAN

INDEPENDENT

Director since Feb. 2020

Age 69

COMMITTEES

Compensation

NCE&S


  WILLIAM E. ALBRECHT

       
   CAREER HIGHLIGHTS

California Resources Corporation

Non-Executive Chair of the Board

Occidental Petroleum Corporation

Vice President

President, Oxy Oil & Gas, Americas

President, Oxy Oil & Gas, USA

EOG Resources,  Inc.

Executive Officer

Tenneco Oil Company

Petroleum Engineer

    OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS

Halliburton Company (Compensation and Health, Safety and Environment committees)

Valaris, plc (Compensation and Nominating, Governance and Sustainability committees)

PRIOR DIRECTORSHIPS

California Resources Corporation (Non-Executive Chair of the Board)

Rowan Companies, PLC (Non-Executive Chair of the Board)

EDUCATION

Board Leadership Fellow, National Association of Corporate Directors

MS, University of Southern California

BS, United States Military Academy at West Point

   

   KEY QUALIFICATIONS AND EXPERIENCE

Mr. Albrecht has more than 40 years of experience in the domestic oil and gas industry. His engineering background provides him with the ability to fully comprehend, analyze and offer insights on the wide variety of technically challenging projects facing us as we develop our shale play assets. In addition, his service in a variety of executive positions for oil and gas companies and as a director for large public companies brings extensive managerial and operational experience of upstream assets to our Board. For these reasons, among others, we believe Mr. Albrecht is qualified to serve as a director.


GRAPHIC

CHIEF EXECUTIVE OFFICER AND PRESIDENT, SCIENTIFIC DRILLING INTERNATIONAL, INC.

INDEPENDENT

Director since May 2007

Age 66

COMMITTEES

Compensation

NCE&S






  PAMELA S. PIERCE

       
   CAREER HIGHLIGHTS

Scientific Drilling International, Inc.

Chief Executive Officer and President

Ztown Investments, Inc.

Partner

Huber Energy, LP (an operating company of J.M. Huber Corp.)

President and Chief Executive Officer

Mirant Americas Energy Capital and Production Company

President

Vastar Resources, Inc.

Vice President of Business Development

Offshore Business Unit Manager

ARCO Oil and Gas Company/ARCO Alaska

Offshore Business Unit Manager

Vice President of Safety, Health, Environmental and External Affairs

    OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS

ShawCor Ltd. (Compensation and Organization Development committee chair and Nominating and Corporate Governance Committee)

OTHER CURRENT ENGAGEMENTS

Scientific Drilling International, Inc., Board Member

University of Oklahoma College of Engineering Board of Visitors

PRIOR DIRECTORSHIPS

Michael Baker Corporation

EDUCATION

Independent Petroleum Association of America's Executive Oil and Gas Course, Harvard College

MBA, Corporate Finance, University of Dallas

BS, Petroleum Engineering, University of Oklahoma

   

   KEY QUALIFICATIONS AND EXPERIENCE

Ms. Pierce is a highly experienced business executive with extensive knowledge of the energy industry. She has experience in both the operational side of the industry, as well as the service sector, which is an important component affecting our operations. Her breadth of experiences in the industry allows her to bring a perspective on issues that may not be readily apparent to others. Her general business acumen enhances the Board of Directors' discussions on all matters affecting us, and her leadership insights contribute significantly to the Board of Directors' decision-making process. For these reasons, among others, we believe Ms. Pierce is qualified to serve as a director.

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CORPORATE GOVERNANCE AND BOARD MATTERS

 

GRAPHIC

FORMER CHIEF FINANCIAL OFFICER, GRANT PRIDECO, INC.

INDEPENDENT

Director since December 2018

Age 66

COMMITTEES

Audit (Chair)

NCE&S








  FRANCES POWELL HAWES

       
   CAREER HIGHLIGHTS

New Process Steel, L.P.

Chief Financial Officer

American Electric Technologies, Inc.

Senior Vice President and Chief Financial Officer

NCI Building Systems, Inc.

Chief Financial Officer, Executive Vice President and Treasurer

Grant Prideco, Inc.

Chief Financial Officer and Treasurer

Weatherford International Ltd.

Various positions of increasing responsibility, including Chief Accounting Officer, Vice President, Accounting and Controller

    OTHER CURRENT PUBLIC COMPANY DIRECTORSHIPS

Archrock Inc. (Audit Committee chair and Nominating and Corporate Governance Committee)

PGT Innovations, Inc. (Audit Committee)

OTHER CURRENT ENGAGEMENTS

Financial Executives International, Houston Chapter

PRIOR DIRECTORSHIPS

Energen Corporation

Express Energy Services, LLC

EDUCATION

Texas-certified Public Accountant

Strategic Financial Leadership Program in Executive Education, Dartmouth College

Director Professionalism Course, National Association of Corporate Directors

BBA, Accounting, University of Houston

   

   KEY QUALIFICATIONS AND EXPERIENCE

Ms. Powell Hawes has over 21 years of experience as a financial advisor and chief financial officer for both public and privately held companies. She is a highly experienced director, chief financial officer and financial advisor with extensive knowledge of not only publicly traded energy companies, but also privately held companies in complementary markets. Her knowledge and management experience on the Audit Committee enhances the Board of Directors' decision-making process on all issues affecting the Company, and her strong accounting and leadership background contributes significantly to the Board's understanding of the Company's strategic opportunities. For these reasons, among others, we believe Ms. Powell Hawes is qualified to serve as a director.

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CORPORATE GOVERNANCE AND BOARD MATTERS

CLASS II DIRECTOR NOT STANDING FOR RE-ELECTION IN MAY 2021

GRAPHIC

FORMER MANAGING DIRECTOR, WARBURG PINCUS, LLC

INDEPENDENT

Director since May 2007

Age 45

COMMITTEES

Compensation



  JAMES R. LEVY

       
   CAREER HIGHLIGHTS

Warburg Pincus, LLC

Former Managing Director, Energy Group

Kohlberg & Company

Associate

Wasserstein Perella & Co.

Analyst/Associate

OTHER CURRENT PUBLIC COMPANY BOARDS

Brigham Minerals, Inc. (Compensation and Nominating and Corporate Governance Committees)

OTHER ENGAGEMENTS

Prep for Prep, Board of Trustees

    PRIOR DIRECTORSHIPS

Antero Midstream GP, LP

Antero Resources Corporation

ATX Energy Partners

Chisholm Energy Holdings, LLC

Citizen Energy Holdings, LLC

Hawkwood Energy, LLC

Independence Resources Management LLC

Ossidiana Energy Holdings, LLC

Terra Energy Partners, LLC

EDUCATION

BA, History, Yale University

   

   KEY QUALIFICATIONS AND EXPERIENCE

Mr. Levy has significant experience with various segments of the energy industry. As a result of Mr. Levy's service on the boards of various energy companies, he is able to share best practices not only in the industry, but also in all areas of corporate governance and management. In addition, as our youngest director, he is able to provide a generational point of view at times different than others on our Board. Finally, Mr. Levy's relationship with Warburg Pincus provides us with access to other programs and viewpoints, such as those related to the ESG area. For these reasons, among others, we believe Mr. Levy is qualified to serve as a director.


GRAPHIC

PRESIDENT EMERITUS, COLORADO SCHOOL OF MINES

INDEPENDENT

Director since May 2012

Age 73

COMMITTEES

Audit

NCE&S (Chair)

  DR. MYLES W. SCOGGINS

       
   CAREER HIGHLIGHTS

Colorado School of Mines

President Emeritus

16th President

Exxon Mobil Corporation

Executive Vice President, ExxonMobil Production Co.

Mobil Oil Corporation

Senior executive positions in the upstream oil and gas business, including President, International Exploration & Production and Global Exploration and an officer and member of the executive committee

    PRIOR DIRECTORSHIPS

QEP Resources, Inc.

Cobalt International Energy, Inc.

Trico Marine Services, Inc.

Questar Corporation

Venoco, Inc.

EDUCATION

Ph.D., Petroleum Engineering, University of Tulsa

   

   KEY QUALIFICATIONS AND EXPERIENCE

Dr. Scoggins has more than 50 years of experience in the oil and gas exploration and production industry both offshore and onshore. Dr. Scoggins' breadth of knowledge and experience, ranging from his engineering background to his extensive career as a member of senior management with large publicly traded companies (both domestically and internationally, off-shore and on-shore), provides him with unique and invaluable expertise in the upstream oil and gas business. Dr. Scoggins' experiences enable him to provide our Board with an abundance of observations applicable to our business, both from an operational and managerial perspective. For these reasons, among others, we believe Dr. Scoggins is qualified to serve as a director.

*
As previously announced, Randy A. Foutch departed the Board in May 2020 and Peter R. Kagan departed the Board in August 2020.

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CORPORATE GOVERNANCE AND BOARD MATTERS

Director Leadership

In 2019, the Board acted to separate the roles of Board Chair and CEO. In 2020, the Board elected an independent director to serve as the non-executive Board Chair. The Board believes separating the roles of Chair and CEO and making the Board Chair an independent director provides further accountability by optimizing the Board's processes, ability to constructively challenge management and appropriately prioritize matters.

The Chair facilitates the Board's business and activities as follows:

BOARD CHAIR RESPONSIBILITIES
  Propose a quarterly schedule of major Board discussions items     Guide the Board's governance processes


 

Approve the agenda, schedule and information sent to directors prior to Board meetings

 


 

Oversee the Board's evaluations and CEO evaluation


 

Chair all Board meetings

 


 

Serve as liaison between CEO and management and the other independent directors


 

Lead executive sessions of the Board without management present (unless invited)

 


 

Advise the Nominating, Corporate Governance, Environmental and Social Committee in choosing Committee chairs and membership


 

Call additional Board or independent director meetings

 


 

Be available for direct communication with stockholders as appropriate

The Board believes that the decision as to who should serve as Board Chair and CEO is the proper responsibility of the Board, and the Board will continue to carefully consider whether to combine or separate the roles of Chair and CEO in the future. At the present time, the Board believes the interests of all stockholders are best served through a leadership model that separates the independent Board Chair and CEO position.

Director Independence

The Board has determined that each continuing director and director nominee, except Mr. Pigott, meets the standards of independence set forth in our Corporate Governance Guidelines and the NYSE Listed Company Manual.

GRAPHIC

*
Reflects the anticipated composition of the Board at the conclusion of the Annual Meeting, assuming stockholders elect all nominees to the Board.

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To make this determination, the Board considers all relevant facts and circumstances indicating whether a director has a material relationship with the Company either directly or as a partner, stockholder or officer of an organization that does business with the Company. Material relationships can include commercial, banking, consulting, legal, accounting, charitable and familial relationships.

GRAPHIC

Annually, each director must complete a questionnaire to disclose, among other things, information regarding ownership in the Company, compensation received from the Company (if any) and any relationship a director has either directly or indirectly through a family member or otherwise with certain Board or Company advisors or other companies with whom Laredo does business. Additionally, each director must disclose at each regularly scheduled Board meeting, and has an affirmative obligation to promptly inform the Company's General Counsel of, changes in circumstances or transactions or relationships that could impact his or her designation by the Board as independent. During its assessment, the Board considered the following directorships and transactions for director independence in 2020:

Directors
  Organization/
Individual

  Relationship
  Transaction
  Amount for each
of the last three
years

Peter R. Kagan*   Warburg Pincus, LLC   Managing Director   Stock Ownership   <22% of the Company's
common stock
James R. Levy**   Warburg Pincus, LLC   Managing Director   Stock Ownership   <22% of the Company's
common stock
All Directors   Various charitable organizations   Director or Trustee   Charitable donations by Laredo   <1% of the Company's
revenues
*
Peter R. Kagan departed the Board in August 2020.

**
James R. Levy will depart the Board at the expiration of his current term, which is at the Annual Meeting.

The Board concluded all of the above listed matters fall below the relevant thresholds for independence set forth in the NYSE Listed Company Manual and the Company's Corporate Governance Guidelines. Specifically regarding the stock ownership of Warburg Pincus, LLC, the Board specifically considered the NYSE Listed Company Manual provisions that state, with respect to the independence of an individual director, "the concern is independence from management" and "the Exchange does not view ownership of even a significant amount of stock, by itself, as a bar to an independence finding."

Director Compensation

All independent directors receive both an annual retainer and an annual fee (together the "Director Base Compensation") for their service on the Laredo Board totaling $200,000. The Company pays the Director Base Compensation ratably following each regularly scheduled quarterly Board meeting for services provided since the previous Board meeting. Beginning May 14, 2020, Directors receive 50% of the Director Base Compensation in cash and the remainder in stock. The director stock awards vest immediately. We implemented this structure, in part, to provide the directors' the cash needed to pay taxes on the stock component of the Director Base Compensation. The Company also reimburses independent directors for their expenses to attend Board meetings.

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On May 14, 2020, in light of the economic uncertainty resulting from the COVID-19 pandemic and the unprecedented market volatility and historic decline in commodity prices, the independent directors of the Board agreed to a 20% reduction of the Director Base Compensation. Prior to this reduction, the Director Base Compensation had remained unchanged since June 1, 2017. In addition, on May 14, 2020, the independent directors agreed that director compensation will be paid 50% in the form of cash and 50% in the form of stock. The directors anticipate no change to the director compensation structure for 2021.

The below table sets for the Director Base Compensation paid prior to the May reduction and the Director Base Compensation going forward.

 
  Amount Paid
Prior to
May 2020

  Amount Paid
After
May 14, 2020

  Terms of Payment
Retainer   $90,000   $72,000  

Paid ratably following each regularly scheduled quarterly Board meeting.

 
Director Fees   $160,000   $128,000  

Paid ratably following each regularly scheduled quarterly Board meeting.

 
Expense Reimbursement   Varies   Varies  

The Company reimburses non-employee directors for their expenses to attend board meetings.

 

Directors are also permitted to participate in our Charitable Matching Gift Program, which provides a Company match for up to $1,000 in donations to an approved charity.

Directors who performed additional leadership roles, received the following compensation:

 
  Amount Paid
  Terms of Payment
Non-Executive Board Chair*   $70,000   Paid in cash ratably following each regularly scheduled Board meeting.
 
Audit Committee Chair   $20,000   Paid in cash ratably following each regularly scheduled Board meeting.
 
Compensation Committee Chair   $20,000   Paid in cash ratably following each regularly scheduled Board meeting.
 
NCE&S Chair   $15,000   Paid in cash ratably following each regularly scheduled Board meeting.
 
Lead Independent Director*   $30,000   Paid in cash ratably following each regularly scheduled Board meeting.
 
*
Effective May 14, 2020, Laredo elected an independent director to serve as Non-Executive Board Chair and began paying a Non-Executive Board Chair fee. Payment of the Lead Independent Director fee ceased on May 14, 2020.

To determine our director compensation, the Compensation Committee reviewed a market-based analysis and consulted with its independent compensation consultant. The independent compensation consultant performed a competitive review of outside director compensation paid by our peers, which included consideration of the significant time commitment our Board provides to the Company. The Company's Equity Incentive Plan prohibits granting a stock award to any individual in a given year of more than 71,750 shares, which also applies to our directors

The following table summarizes the compensation earned by our non-employee directors for the fiscal year ended December 31, 2020.

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Director compensation table for the year ended December 31, 2020

Name
  Stock awards(1)(2)
  Fees earned paid
in cash(2)

  Total
 

William E. Albrecht(3)

  $ 99,983   $ 152,517   $ 252,500  

Jarvis V. Hollingsworth(3)

  $ 24,995   $ 25,005   $ 50,000  

Dr. Craig M. Jarchow

  $ 99,983   $ 112,709   $ 212,692  

Peter R. Kagan(4)

  $ 49,989   $ 50,011   $ 100,000  

Lisa M. Lambert(3)

  $ 49,994   $ 50,006   $ 100,000  

Lori A. Lancaster(3)

  $ 24,995   $ 25,005   $ 50,000  

James R. Levy

  $ 99,983   $ 100,017   $ 200,000  

Pamela S. Pierce

  $ 102,482   $ 104,826   $ 207,308  

Frances Powell Hawes

  $ 102,482   $ 117,518   $ 220,000  

Dr. Myles W. Scoggins

  $ 101,858   $ 113,142   $ 215,000  

Edmund P. Segner, III

  $ 103,732   $ 103,768   $ 207,500  
(1)
The amounts reported represent the aggregate grant-date fair value of stock awards granted to Laredo's non-employee independent directors, based on the closing price of our common stock on the NYSE on the grant date, in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") Topic 718.

(2)
The amounts reported are for compensation earned for services rendered for 2020, which include compensation earned for services rendered for the fourth quarter of 2020 that was paid during the first quarter of 2021 in accordance to the fee summary noted above.

(3)
Mr. Albrecht, Mr. Hollingsworth, Ms. Lambert and Ms. Lancaster joined the board of directors effective February 20, 2020, November 19, 2020, August 13, 2020 and November 19, 2020, respectively.

(4)
Mr. Kagan resigned as a director of the Company and from all committees of the Board on which he served effective August 13, 2020.

Directors who are also employees of the Company do not receive any additional compensation for serving on our Board. See our Summary Compensation Table for the total compensation received by Jason Pigott in 2020.

On February 25, 2021, the Board adopted the Laredo Petroleum, Inc. Nonqualified Director Deferred Compensation Plan (the "Director Deferred Compensation Plan"), an unfunded nonqualified deferred compensation plan administered by the Compensation Committee. Pursuant to the Director Deferred Compensation Plan, non-employee directors may elect to defer some or all of any cash or stock compensation received. Cash deferrals are invested in an array of investment options as designated by the Compensation Committee's designee the Laredo 401k Administration Committee, and stock is credited to the participant's deferred stock account as of the date the stock would otherwise have been granted. Distributions will be paid in cash, unless the Compensation Committee approves payment in stock. At this time, only non-employee directors are eligible to participate. Directors may begin deferrals starting with compensation awarded after the Board meeting in May 2021.

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Director Stock Ownership

Pursuant to our Corporate Governance Guidelines, directors have five years from their appointment date to reach the following stock ownership guidelines:

Position   Stock ownership requirement
Directors   $400,000 worth of company stock

Based on the highest closing price of our common stock since January 1, 2021 ($42.37), the following recently appointed directors have not yet reached the stock ownership requirement: Mr. Hollingsworth, Dr. Jarchow, Ms. Lambert and Ms. Lancaster. Each director has five years from his/her appointment date to meet this requirement. All other directors have satisfied our stock ownership guidelines.

Director Oversight of Risk Management

Our Board takes a comprehensive approach in its oversight of the management of the Company. This includes: (1) creating and approving governance policies and best practices; (2) meeting regularly to review and discuss strategies and reports from senior management; (3) supervising senior management through one of the Board committees; and (4) engaging regularly with stockholders to receive feedback. For a summary of our policies and practices and our stockholder engagement program, see the Proxy Overview and Highlights.

Our governance documents listed below are all located on our website www.laredopetro.com under the Investor Relations Tab. The information on our website is not incorporated by reference or otherwise made a part of this Proxy Statement.

    THIRD AMENDED AND
RESTATED BYLAWS
    CODE OF CONDUCT AND
BUSINESS ETHICS
    AUDIT
COMMITTEE
CHARTER
    NOMINATING, CORPORATE
GOVERNANCE,
ENVIRONMENTAL & SOCIAL
COMMITTEE CHARTER
                                
    CORPORATE
GOVERNANCE
GUIDELINES
    CODE OF ETHICS FOR
SENIOR FINANCIAL
OFFICERS
    COMPENSATION
COMMITTEE
CHARTER
    POLICY STATEMENT
REGARDING RELATED
PARTY TRANSACTIONS

CODE OF CONDUCT AND BUSINESS ETHICS

The Board has adopted a Code of Conduct and Business Ethics applicable to our employees, directors and officers and a Code of Ethics for Senior Financial Officers, in accordance with applicable U.S. federal securities laws and the NYSE Listed Company Manual. Any waiver of these codes may be made only by our Board and will be promptly disclosed as required by applicable U.S. federal securities laws and the NYSE rules. In accordance with good corporate governance practices, we periodically review and revise these documents as necessary.

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CORPORATE GOVERNANCE GUIDELINES

The Company's Corporate Governance Guidelines cover the following:

Board size

 

Age limits and Retirement

Director independence

 

Other directorships

Section of the Chairman

 

Change in status of directors

Board meetings and agenda

 

Succession planning

Access to management and advisers

 

Director compensation

Executive sessions

 

Stock ownership guidelines

Committees of the Board of Directors

 

Director orientation and education

Stockholder communications with the Board of Directors

 

Annual performance evaluations

Board communications with third parties

 

 

The NYSE Listed Company Manual requires listed companies to adopt certain governance guidelines. The Company believes the Corporate Governance Guidelines comply with the NYSE Listed Company Manual. Annually, the Nominating, Corporate Governance, Environmental and Social Committee reviews the Corporate Governance Guidelines and recommends any changes for Board approval.

Director Meetings & Executive Sessions

Our Corporate Governance Guidelines require that the Board hold at least four meetings each year, and that our independent directors meet in executive session regularly. Our Board held 11 meetings in 2020, and our independent directors met in executive session during four of those meetings. Each Director attended at least 75% of the aggregate total number of Board meetings and Board committee meetings on which the Board member served in 2020. All of the Board members attended last year's annual meeting, and all incumbent directors attended 100% of the Board meetings while serving.

 
 
COMMITTEES  
 
Board
Audit
Compensation
NCE&S
Total

Meetings in 2020

11 6 5 4 26

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Director Committees

The Board of Directors has three standing committees:

    THE AUDIT
COMMITTEE
    THE COMPENSATION
COMMITTEE
    THE NOMINATING, CORPORATE
GOVERNANCE, ENVIRONMENTAL &
SOCIAL COMMITTEE

The Board has adopted charters to govern the specific function of each committee, which are reviewed annually and updated as needed. Below is a description of committee membership and responsibilities.

          COMMITTEES
  Director   Independent   Audit   Compensation   NCE&S
  William E. Albrecht GRAPHIC *       GRAPHIC   GRAPHIC
  Jarvis V. Hollingsworth***     GRAPHIC  FE     GRAPHIC
  Dr. Craig M. Jarchow*     GRAPHIC  FE   GRAPHIC GRAPHIC  
  Lisa M. Lambert**     GRAPHIC  FE     GRAPHIC
  Lori A. Lancaster***     GRAPHIC  FE   GRAPHIC  
  James R. Levy       GRAPHIC  
  Pamela S. Pierce       GRAPHIC GRAPHIC   GRAPHIC
  Jason Pigott          
  Frances Powell Hawes     GRAPHIC  FE     GRAPHIC
  Dr. Myles W. Scoggins     GRAPHIC  FE     GRAPHIC
  Edmund P. Segner, III     GRAPHIC  FE   GRAPHIC  

GRAPHIC  Chair         GRAPHIC  Member        FE Financial Expert

*
Appointed to respective committees in February 2020.
**
Appointed to respective committees in August 2020.
***
Appointed to respective committees in November 2020.
+
Mr. Albrecht took over as independent Non-Executive Chair in May 2020.
++
Ms. Pierce served as Compensation Committee Chair until July 1, 2020 when Dr. Jarchow took over as Compensation Committee Chair.

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 AUDIT COMMITTEE

  Meetings in 2020: 6
 

 MEMBERS

 

PRIMARY RESPONSIBILITIES

 
 

Frances Powell Hawes (Chair)

Jarvis H. Hollingsworth (appointed November 2020)

Dr. Craig M. Jarchow (appointed February 2020)

Lisa M. Lambert (appointed August 2020)

Lori A. Lancaster (appointed November 2020)

Dr. Myles W. Scoggins

Edmund P. Segner, III

CHARTER AND AUDIT COMMITTEE REPORT

The Audit Committee Charter is available on our website at www.laredopetro.com.

The Audit Committee Charter contains the full list of the Audit Committee's responsibilities.

The Audit Committee Report is set forth beginning on page 40 of this Proxy Statement.

MEETINGS

The Audit Committee Charter requires that the Audit Committee meet as often as it determines necessary, but at least four times each year. In 2020, the Audit Committee held six meetings and six executive sessions, either in person or by teleconference. The Audit Committee regularly meets in executive session with each of our external auditors and our internal audit manager.

  Financial Statements

Oversee (1) the quality and integrity of Laredo's financial statements and its related accounting and financial reporting processes and internal controls over financial reporting, and (2) the audits of the Company's financial statements, including reviewing with management and the independent registered public accounting firm our annual audited and quarterly financial statements and other financial disclosures, including earnings releases.

Oversight of the Relationship with the Independent Auditor

Engage and oversee the Company's independent registered public accounting firm (taking into account the vote on stockholder ratification) and consider the independence, qualifications and performance of the independent registered public accounting firm.

Approve all audit and permissible non-audit services to be performed by the independent registered public accounting firm.

Review and evaluate the performance of the lead audit partner of the independent registered public accounting firm and periodically consider whether there should be a rotation of the independent registered public accounting firm.

Oversight of the Relationship with the Independent Reserve Engineer

Engage the Company's independent reserve engineer and review and discuss with management the reserve report prepared by the independent reserve engineer.

Oversight of the Internal Audit Function

Review and approve the internal audit department's audit plan, staffing, budget and responsibilities.

Oversight of Compliance Matters

Review Laredo's compliance with legal and regulatory requirements, by reviewing and discussing the implementation and effectiveness of our compliance program.

Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding: (a) accounting, internal accounting controls, audit matters and other federal securities law matters and (b) confidential, anonymous submissions by employees of concerns regarding accounting or auditing matters or other federal securities law matters and (c) any material legal matter.

Review and discuss with management, policies and guidelines regarding risk assessment and management, major risk exposures and steps taken to monitor and control exposures.

Review and provide oversight of all related party transactions.

FINANCIAL LITERACY OF AUDIT COMMITTEE AND DESIGNATION OF FINANCIAL EXPERTS

As a part of its annual self-assessment process, the Board of Directors evaluated each of the members of the Audit Committee for financial literacy and financial expertise in March 2020 and March 2021. The Board of Directors determined that each of the current members of the Audit Committee is financially literate and qualifies as a financial expert as defined by the SEC.

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AUDIT COMMITTEE INDEPENDENCE

Only independent directors serve on the Audit Committee. Members of the Audit Committee must also meet heightened standards for independence set forth by the SEC. Those standards require that a director not be an affiliate of the Company and that the director not receive from the Company, directly or indirectly, any consulting, advisory or other compensatory fees except for fees paid for services as a director. In connection with its assessment of the independence of each director pursuant to the NYSE Listed Company Manual, the Board of Directors also determined that each of the Audit Committee members met the additional independence standards of the SEC applicable to members of the Audit Committee.

No Audit Committee member concurrently serves on the audit committee of more than two other public companies.

GRAPHIC   GRAPHIC

Related-Party Transactions

The Laredo Board recognizes that transactions involving the Company and related parties present a heightened risk of conflicts of interest, and therefore, has adopted a Policy Statement Regarding Related Party Transactions ("Policy Statement"). This Policy Statement is available on our website, www.laredopetro.com. The Policy Statement prohibits the Company from entering into a related party transaction unless (1) the Audit Committee approves such transaction in accordance with the Policy Statement; or (2) the transaction is approved by a majority of the disinterested directors of the Company.

A "Related-Party Transaction" is a transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount involved exceeds $120,000, and a related person had, has or will have a direct or indirect material interest.

A "Related Person" means:

    any person who is, or at any time during the applicable period was, one of the Company's executive officers or one of its directors;

    any person who is known by the Company to be the beneficial owner of more than 5.0% of the Company's common stock;

    any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5.0% of the Company's common stock; and

    any entity in which any of the foregoing persons (i) has direct or indirect control, (ii) is a partner or principal or in a similar position, (iii) has a 10.0% or greater beneficial ownership interest or (iv) is

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      employed if (a) the person is directly involved in the negotiation of the Related-Party Transaction or will share or have primary responsibility for such transaction or (b) the person's compensation from the entity is directly tied to such transaction.

The Audit Committee annually reviews and assesses the adequacy of this Policy Statement.

Procedures for Review, Approval and Ratification of Related-Party Transactions

In reviewing and approving any Related-Party Transaction, the Audit Committee shall:

    Satisfy itself that it has been fully informed as to the material facts of the Related Person's relationship and interest and as to the material facts of the proposed Related-Party Transaction;

    Take into account the extent of the Related Person's interest in the Related-Party Transaction; and

    Determine that the Related-Party Transaction is fair to the Company and that the Related-Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances.

At each Audit Committee meeting, management can recommend any Related-Party Transactions, if applicable, the Company desires to pursue. After review, the Audit Committee shall approve or disapprove such transactions, and at each subsequently scheduled meeting, management shall update the Audit Committee as to any material change to those proposed transactions. The Audit Committee establishes any guidelines it determines are necessary or appropriate for management to follow in its dealings with Related Persons in Related-Party Transactions. No member of the Audit Committee participates in the review or approval of any Related-Party Transaction if that member is a Related Person.

If management becomes aware of a proposed Related-Party Transaction or an existing Related-Party Transaction that the Audit Committee has not pre-approved, management promptly notifies the Audit Committee Chair to complete a the above-described review process. If management, in consultation with the Company's Chief Executive Officer or Chief Financial Officer, determines that it is not practicable to wait until the next Audit Committee meeting, the Audit Committee Chair has the delegated authority to review, consider and determine whether any such transaction is fair to the Company and whether the transaction should be approved, or ratified. The Audit Committee Chair reports to the Audit Committee any transactions reviewed by her pursuant to this delegated authority at the next Audit Committee meeting.

Other Related-Party Transactions

None.

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 COMPENSATION COMMITTEE

  Meetings in 2020: 5
 

 MEMBERS

 

PRIMARY RESPONSIBILITIES

 
 

Dr. Craig M. Jarchow (Chair) (appointed in February 2020 and became Chair July 1, 2020)

William E. Albrecht (appointed in February 2020)

Lori A. Lancaster (appointed in November 2020)

James R. Levy

Pamela S. Pierce

Edmund P. Segner, III

CHARTER AND COMMITTEE REPORT

The Compensation Committee Charter is available on our website at www.laredopetro.com.

The Compensation Committee Charter contains the full list of the Compensation Committee's responsibilities.

The Compensation Committee Report is set forth beginning on page 77.

MEETINGS

The Compensation Committee Charter requires that the Compensation Committee meet as often as it determines necessary but at least once each year. In 2020, the Compensation Committee held five meetings and five executive sessions either in person or by teleconference.

 

Establish the Company's general compensation philosophy and objectives in consultation with senior management.

Review and approve the Company's goals and objectives relevant to the compensation of the Chief Executive Officer, annually evaluate the Chief Executive Officer's performance in light of those goals and objectives, and, based on this evaluation, recommend to the Board the Chief Executive Officer's compensation level, including salary, bonus, incentive and equity compensation.

Recommend to the Board compensation for all other named executive officers.

Review and make recommendations to the Board with respect to all employment agreements, severance arrangements, change in control provisions and agreements and any special supplemental benefits applicable to the Company's executive officers.

Review and make recommendations to the Board regarding any incentive and equity-based compensation applicable to the Company's employees.

Administer the Company's equity-based compensation plans, including the grant of performance unit awards and other equity awards under such plans.

Review and make recommendations to the Board of Directors with respect to director compensation.

Review and discuss with management the disclosures in the Compensation Discussion and Analysis of the Company's Proxy Statement.

COMPENSATION COMMITTEE INDEPENDENCE

Only independent directors serve on the Compensation Committee. Members of the Compensation Committee must meet heightened standards for independence set forth by the NYSE Listed Company Manual. Those standards require that the Board consider (1) each director's sources of compensation, including any consulting, advisory or other compensatory fees paid by the Company, and (2) whether a director is affiliated with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company.   GRAPHIC

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Additionally, members of the Compensation Committee must meet the definition of "Non-Employee Director included in Section 16 of the Exchange Act. In connection with its assessment of the independence of each director, the Board also determined that all committee members met the additional independence standards of the NYSE and in the Exchange Act.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No member of the Compensation Committee has been at any time a Laredo employee. None of the Company's executive officers serve on the Board of Directors or compensation committee of a company that has an executive officer that serves on the Company's Board or Compensation Committee. No member of the Company's Board is an executive officer of a company in which one of the Company's executive officers serves as a member of the board of directors or compensation committee of that company.

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 NOMINATING, CORPORATE GOVERNANCE,
ENVIRONMENTAL & SOCIAL COMMITTEE


 
Meetings in 2020: 4
 

 MEMBERS

 

PRIMARY RESPONSIBILITIES

 
 

Dr. Myles W. Scoggins (Chair)

Jarvis V. Hollingsworth (appointed in November 2020)

William E. Albrecht (appointed in February 2020)

Peter R. Kagan (departed in August 2020)

Lisa M. Lambert (appointed in August 2020)

Pamela S. Pierce

Frances Powell Hawes

CHARTER

The Nominating, Corporate Governance, Environmental and Social Committee Charter is available on our website at www.laredopetro.com. The Nominating, Corporate Governance, Environmental and Social Committee Charter contains the full list of the Committee's responsibilities.

MEETINGS

The Nominating, Corporate Governance, Environmental and Social Committee Charter requires that the Nominating, Corporate Governance, Environmental and Social Committee meet as often as it determines necessary but at least once each year. In 2020, the Nominating, Corporate Governance, Environmental and Social Committee held four meetings and two executive sessions either in person or by teleconference.

  Oversight of Board and Committee Membership

Identify, evaluate and recommend qualified nominees to serve on the Company's Board.

Review and make recommendations regarding the composition and size of the Board.

Oversight of Governing Policies, Practices and Procedures

Develop and recommend corporate governance guidelines for the Company.

Conduct an annual assessment of the qualifications and performance of the Board and each of the directors.

Review and make recommendations regarding the composition, size, purpose, structure, operations and charter of each of the Board's committees, including the creation of additional committees or elimination of existing committees.

Recommend committee assignments for directors.

Oversight of Programs and Policies relating to ESG

Review the Company's performance on environmental and social matters, including the approval of any performance metrics and targets.

Review any significant environmental, health or safety incidents or material regulatory compliance matters and monitor the status of subsequent actions.

Review strategies and policies relation to human capital management, including diversity and inclusion and talent development and retention.

Review significant ESG risks and exposures, and the Company's actions for managing those risks.

Oversee any reports issues by the Company in connection with its ESG initiatives.

NOMINATING, CORPORATE GOVERNANCE, ENVIRONMENTAL AND SOCIAL COMMITTEE INDEPENDENCE

Only independent directors serve on the Nominating, Corporate Governance, Environmental and Social Committee. In connection with its assessment of the independence of each director, the Board determined that all members met the general independence standards of the Company's Corporate Governance Guidelines and NYSE Listed Company Manual.   GRAPHIC

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Communications with Directors

Stockholders or other interested parties can contact any director, any Board committee or the Company's independent directors as a group, by writing to them at the following address: Laredo Petroleum, Inc. c/o Corporate Secretary, 15 W. Sixth Street, Suite 900 Tulsa, Oklahoma 74119. All such communications will be given to the appropriate member(s) of the Board. Comments or complaints relating to the Company's accounting, internal accounting controls or auditing matters will also be referred to the Audit Committee.

IDENTIFICATION OF DIRECTOR CANDIDATES

The Board or stockholders may nominate directors in accordance with the Company Bylaws. The Nominating, Corporate Governance, Environmental and Social Committee will review all nominees, including stockholder nominees, in accordance with its charter. For more information on the factors considered by the Board to evaluate a candidate, see the Director Qualification section.

The Board and Nominating, Corporate Governance, Environmental and Social Committee will consider any nominee by stockholders for election at the annual meeting of stockholders to be held in 2022 if that nomination is submitted in writing, between January 16, 2022 and February 15, 2022, or in the event the Company's 2022 annual meeting of stockholders is advanced or delayed more than 30 days from the date of the Annual Meeting, not later than the later of (i) the 90th day before the 2022 annual meeting or (ii) the 10th day following the day on which public announcement of the date of the annual meeting is first made by the Company. If the number of directors to be elected to the Board is increased and there has been no public announcement naming all nominees for director or indicating the increase at least 10 days before the last day a stockholder may deliver a notice of nomination in accordance with the preceding sentence, a stockholder's notice will be considered timely, but only with respect to nominees for any new positions created by such increase, if it is received by the Corporate Secretary at the principal executive offices of the Company 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.

The written nomination must include information specified in the Bylaws, including certain biographical information and a description of certain arrangements and understandings between the nominee and the recommending stockholder.

Each submission must also include a completed and signed questionnaire and a written representation and agreement that such person (i) is not and will not become a party to any voting or compensation agreement not disclosed to the Company or that could interfere with the nominee's ability to comply with his or her fiduciary duties under applicable law or provide any direct or indirect compensation, reimbursement or indemnification in connection with service as a director, (ii) will comply with all of the Company's applicable corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and (iii) that such person intends to serve a full term if elected as director.

STOCKHOLDER PROPOSALS

Written requests for inclusion of any other stockholder proposal should be addressed to the above-listed address. The Company suggests that any such proposal be sent by certified mail, return receipt requested. For more information see the Proxy Statement Question and Answers.

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Proposal Two: Ratification of Selection
of Independent Registered Public Accounting Firm

The Audit Committee of the Board of Directors has selected GT as the independent registered public accounting firm of the Company for the fiscal year beginning January 2021. The Board of Directors is providing stockholders the opportunity to vote to ratify the appointment of GT. The submission of this matter for approval by stockholders is not legally required, but the Board of Directors and the Audit Committee believe the submission provides an opportunity for stockholders through their vote to communicate with the Board of Directors and the Audit Committee about an important aspect of corporate governance. If the stockholders do not ratify the selection of GT the Audit Committee will reconsider the selection of that firm as the Company's auditors but will be under no obligation to appoint a new public accounting firm.

The Audit Committee has the sole authority and responsibility to retain, evaluate and replace the Company's independent registered public accounting firm. As part of this oversight, the Audit Committee has established general best practices to ensure the auditor's qualifications, independence and performance, including the following:

GRAPHIC

During 2020, the Audit Committee conducted its annual evaluation of the Company's independent registered public accounting firm, reviewing the work performed and the experience and qualifications of the team members and elected to re-appoint GT as the independent registered public accounting firm to audit our financial statements for the fiscal year beginning January 1, 2021. GT was our independent auditor for the 2020 fiscal year and has audited Laredo's consolidated financial statements since its inception in 2007. In 2019, the Audit Committee solicited bids from other registered public accounting firms but elected to continue with GT. The Audit Committee and the Board of Directors believe that continuing to engage GT is in the best interest of the Company and its stockholders. GT is already familiar with the Company, which avoids fees that would be included for the additional time and costs that would be necessary in onboarding or educating a new independent registered public accounting firm.

The Company expects that one or more representatives of GT will be present at the Annual Meeting. The representative(s) will have an opportunity to respond to appropriate questions and to make a statement if desired.

The stockholders' ratification of the selection of GT does not limit the authority of the Audit Committee to change auditors at any time.

    GRAPHIC   The Board of Directors unanimously recommends that stockholders vote FOR the selection of Grant Thornton, LLP as the Company's independent registered public accounting firm for the fiscal year 2021.    

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Audit Services

GT's audit services for the fiscal year of 2020 included auditing our consolidated financial statements, auditing the effectiveness of our internal control over financial reporting and services related to periodic filings made with the SEC. The Company anticipates GT will perform similar services for the fiscal year 2021.

The Audit Committee Charter and its pre-approval policy require that the Audit Committee review and pre-approve the plan and scope of GT's audit and tax services. Laredo's Audit Committee pre-approved 100% of the services included in "Audit fees" and "Tax fees" presented in the table below.

Audit and Other Fees

GT's fees for professional services are as follows:

    2020     2019  

Audit fees(1)

  $ 690,000   $ 630,000  

Tax fees(2)

    19,610     19,250  

Total

  $ 709,610   $ 649,250  
(1)
Audit fees represent fees for professional services provided in connection with: (a) the annual audit of Laredo's consolidated financial statements; (b) the review of Laredo's quarterly consolidated financial statements; and (c) the review of Laredo's other filings with the SEC, including review and preparation of registration statements, comfort letters, consents and research necessary to comply with generally accepted auditing standards for the years ended December 31, 2020 and 2019.

(2)
Tax fees represent review of Laredo's tax return and consultation on tax matters incurred during the years ended December 31, 2020 and 2019.

Audit Committee Report

The Company has determined (i) that all current or former Audit Committee members in 2020 and 2021 are independent as defined in Section 10A of the Securities Exchange Act of 1934, as amended ("Exchange Act") and pursuant to the NYSE Listed Company Manual; and (ii) all current or former Audit Committee members in 2020 and 2021 are financially literate. In March 2021, the Board determined that all current Audit Committee members in 2021 qualify as financial experts pursuant to the Exchange Act.

Report on Annual Oversight

During the last fiscal year, and earlier this year in preparation for the filing with the SEC of the Company's Annual Report on Form 10-K for the year ended December 31, 2020, the Audit Committee:

    reviewed and discussed the Company's audited consolidated financial statements as of and for the year ended December 31, 2020 with management and with GT;

    considered the adequacy of the Company's internal controls and the quality of its financial reporting, and discussed these matters with management and with GT;

    reviewed and discussed with GT (i) their judgments as to the quality of the Company's accounting policies, (ii) their written disclosures and letter required by Public Company Accounting Oversight Board Independence Rules, and their independence, and (iii) the matters required to be discussed by the Public Company Accounting Oversight Board's Auditing Standard No. 1301, Communications with Audit Committees;

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    evaluated the process by which the Company's Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer make the certifications required by the SEC in connection with the filing with the SEC of the Company's periodic reports, including reports on Forms 10-K and 10-Q;

    pre-approved all auditing services and non-audit services to be performed for the Company GT as required by the applicable rules promulgated pursuant to the Exchange Act, considered whether the rendering of non-audit services was compatible with maintaining GT's independence, and concluded that GT's independence was not compromised by the provision of such services (details regarding the fees paid to GT in fiscal year 2019 and 2020 for audit services, tax services and all other services, are set forth in "Audit and Other Fees" above); and

    based on the reviews and discussions referred to above, recommended to the Board of Directors that the audited consolidated financial statements referred to above be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

As recommended by the NYSE's corporate governance rules, the Audit Committee also considered whether, to assure continuing auditor independence, it would be advisable to regularly rotate the audit firm itself. The Audit Committee has concluded that the current benefits to the Company from continued retention of GT warrant retaining the firm at this time. The Audit Committee will, however, continue to review this issue on an annual basis.

Report on First Quarter 2020 Restatement and Remediated Material Weakness

In the course of preparing the Company's unaudited consolidated financial statements for the second quarter ended June 30, 2020, management identified an error in the Company's unaudited consolidated financial statements for the quarter ended March 31, 2020, due to an overstatement of approximately $160 million in the estimated present value ("PV-10") of its reserves as of March 31, 2020, which caused an understatement in its full cost ceiling impairment expense and related adjustments for such quarter.

Management reported the deficiency to the Audit Committee at the beginning of the third quarter of 2020, and the Audit Committee, at the direction of the Board, immediately initiated and oversaw an investigation into the matters related to the Company's future production costs component of the PV-10 of its reserves that are used to determine the need for any impairment of oil and natural gas properties on the Company's balance sheet. The Audit Committee held several meetings, with active participation by the full Board and GT, to consider and take action on matters relating to the internal investigation. Following such investigation, the Audit Committee in conjunction with management, concluded on August 4, 2020 that the error resulted in a material weakness in the Company's internal control over financial reporting as of March 31, 2020 because management had not designed and maintained effective controls to sufficiently review the completeness and accuracy of the future production costs component of the estimated PV-10 reserves. The Audit Committee, in conjunction with management, concluded that the error was isolated to the Company's previously issued financial statements for the quarter ended March 31, 2020 and therefore, those financial statements should be restated to correct the error identified. On August 5, 2020, the Company filed Amendment No. 1 on Form 10-Q/A to amend its previously issued Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, originally filed with the SEC on May 7, 2020 to correct such errors contained therein.

Additionally, the Audit Committee oversaw the Company's implementation of a remediation to address the material weakness, which included the following actions:

    Implementation of additional (or enhanced) procedures to verify the completeness and accuracy of data inputs into the reserves application for pricing and operating expenses;

    Implementation of additional (or enhanced) procedures to perform detailed reviews of reserves report components, including (but not necessarily limited to) pricing and operating expenses; and

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    Revision and communication of the accounting controls, policies and procedures relating to identifying and assessing changes that could potentially impact the system of internal controls governing the full costs ceiling test calculation.

The Audit Committee and management believe the control improvements described above remediated the material weakness, and that our disclosure controls and procedures were effective as of December 31, 2020. GT issued their report expressing an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2020. The Audit Committee and management will continue to monitor the design and effectiveness of these and other processes, procedures, policies and controls and make any further changes management determines appropriate.

Conclusion

Notwithstanding the foregoing actions and the responsibilities set forth in the Audit Committee Charter, the Audit Committee members are not professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management or GT. The Audit Committee serves a board-level oversight role, in which it provides advice, counsel and direction to management and GT on the basis of the information it receives, discussions with management and the independent auditors, and the experience of the Audit Committee's members in business, financial and accounting matters. The Audit Committee has the authority to engage its own outside advisers, including experts in particular areas of accounting, as it determines appropriate, apart from counsel or advisers hired by management. Management is responsible for the Company's financial reporting process, including its system of internal controls, and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States. GT is responsible for expressing an opinion on those financial statements. The Audit Committee has relied, without independent verification, on management's representation that the consolidated financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States and on the representations of the independent registered public accountants included in their report on the Company's consolidated financial statements.

The Audit Committee meets regularly with management, including private discussions with GT, and receives the communications described above. The Audit Committee has also established procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and (ii) the confidential, anonymous submission by the Company's employees of concerns regarding questionable accounting or auditing matters. However, this oversight does not provide us with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, our considerations and discussions with management and GT do not assure that the Company's consolidated financial statements are presented in accordance with generally accepted accounting principles or that the audit of the Company's consolidated financial statements has been carried out in accordance with generally accepted auditing standards.

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Audit Committee of the Board of Directors

 


Frances Powell Hawes, Chair
Jarvis V. Hollingsworth (appointed November 2020)
Dr. Craig M. Jarchow (appointed February 2020)
Lisa M. Lambert (appointed August 2020)
Lori A. Lancaster (appointed November 2020)
Dr. Myles W. Scoggins (retiring May 2021)
Edmund P. Segner, III

The information contained in this Audit Committee Report and references in this Proxy Statement to the independence of the Audit Committee members shall not be deemed to be "soliciting material" or to be "filed" with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates such information by reference in such filing.

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GRAPHIC   EXECUTIVE COMPENSATION MATTERS

Proposal Three: Advisory Vote Approving the
Compensation of Our Named Executive Officers

We are seeking stockholder approval on an advisory, non-binding basis of the compensation of our named executive officers as disclosed in the Executive Compensation Matters section of this Proxy Statement. In this proposal, stockholders are being asked to vote on the following advisory resolution:

"RESOLVED, that the stockholders approve, on an advisory basis, the compensation of our named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and the other narrative executive compensation disclosure in the Proxy Statement for our 2021 Annual Meeting of Stockholders."

To learn more about our compensation program, including our process for determining executive compensation, please see the Compensation Discussion & Analysis.

Although the vote is advisory and non-binding, our Board of Directors and Compensation Committee value the opinions that our stockholders express in their votes and will carefully consider the voting results in connection with their ongoing evaluation of our compensation program.

The affirmative "FOR" vote of a majority of the votes cast at the Annual Meeting is required to approve, on an advisory basis, the compensation of our named executive officers. Unless otherwise instructed on the proxy, properly executed proxies will be voted in favor of approving on an advisory, non-binding basis the compensation of our named executive officers.

    GRAPHIC   The Board of Directors unanimously recommends that stockholders vote FOR the advisory resolution approving the compensation of our named executive officers.    

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Compensation Discussion & Analysis

The following discussion and analysis contains statements regarding our named executive officers' past and future performance targets and goals. These targets and goals are disclosed in the limited context of our compensation programs and should not be understood to be statements of management's expectations or estimates of results or other guidance.

CD&A TABLE OF CONTENTS

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CD&A EXECUTIVE SUMMARY

As outlined in our Proxy Overview & Highlights Section, our strategy for creating stakeholder value is three-fold: (1) optimize our assets, (2) manage our risks and (3) seek to acquire high margin inventory. Despite the global pandemic, we have successfully executed that strategy in 2020. Below are some of the highlights of our year.

    Exceeded oil and total production guidance for all four quarters.

    Produced an average of 87,750 barrels of oil equivalent per day and 26,849 barrels of oil per day, an increase of 8% and a decrease of 6%, respectively, from full-year 2019, while reducing capital expenditures by 27% over the same period.

    Maintained one of the lowest drilling, completions and operating costs structures in the Permian Basin, including further reductions in drilling and completion costs by 21% to $540 per foot from $680 per foot.

    Reduced unit LOE by 17% from full-year 2019 and reduced unit G&A, excluding LTIP expenses, by 21% from full-year 2019.

    Transitioned our development program to our acreage positions in Howard and Glasscock Counties, which put our low cost structure to work on our oiliest acreage to produce the highest rates of return.

    Initiated the first mobile sand mine in the Permian Basin, eliminating truck traffic on the roads and saving approximately $90,000/well for Howard County completions.

    Added 4,000 net acres in Howard County at an average price of $7,200 per net undeveloped acre.

    Issued two series of senior unsecured notes and paid off our then outstanding senior unsecured notes extending the maturity dates on our long-term debt to 2025 and 2028.

    Received $234.1 million of cash flow from our hedge program.

    Repurchased $61 million of term-debt in open market purchases at 62.5% of par.

    Made significant strides on our "Intelligent Well" initiative to automate as much of our process as possible.

    Formalized our management and oversight of our ESG efforts and continued work to incorporate ESG considerations into our broader risk management strategy.

    Published our inaugural ESG and Climate Risk Report on February 22, 2021 and established emission reduction targets for the Company.

    Reduced volume of flared/vented natural gas by 58%, flaring/venting only 0.71% of the Company's produced natural gas during the full-year 2020.

    Successfully transitioned to a remote work environment where possible due to pandemic-related safety concerns, and implemented safety protocols for employees in the field.

For our 2020 compensation program, we did not change our NEOs' salary rate, STIP target or LTIP target percentages from 2019. Only our General Counsel had an increase in his LTIP target percentage from 2019, which was due to his promotion to senior vice president in April 2019. His LTIP target percentage did not change from April 2019 through 2020.

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The STIP and LTIP performance metrics for 2020 were updated from those used in 2019 to better reflect criteria we heard were important to our stockholders and to strengthen the alignment of those metrics with our corporate strategy. These changes include the following:

    Expanded our STIP metrics from four in 2019 to seven in 2020. We added two performance metrics around air stewardship and spill severity rate in response to stockholder feedback and to better align incentives with our ESG efforts. We added one performance metric regarding maintaining our low cost structure. We added three performance metrics relating to generating free cash flow, lowering our debt and adding drilling inventory. Based on investor feedback and our shift in strategy from growing production to value generation, we believe these changes better reflect the items on which investors would like us to focus. As part of this, we replaced the cash flow return on average capital employed metric with metrics we believe are more responsive to investor sentiment and dropped the Oil Production and Proved Developed Reserves metrics because those metrics are focused on incentivizing growth and not on value creation to match what our investors have indicated they prefer. None of our 2020 STIP performance metrics pre-set in February 2020 were reconfigured due to the COVID-19 pandemic.

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    Updated the weighting given to the performance metrics used for the performance unit awards to give them equal weight.

GRAPHIC

    Capped the payout of the performance unit awards at 100% if the absolute three-year total shareholder return is below zero.

    Expanded the peer group used for the performance unit awards granted in 2020 to make the performance comparison more representative of a broader energy market and to protect against the peer group shrinking in size below an acceptable level due to mergers, acquisitions, bankruptcies or other liquidation events of peer companies during the performance period.

For a full description of our 2020 Executive Compensation Program, see the discussion beginning on page 60.

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The Board made two changes to the STIP performance metrics before approving the STIP payout percentage for 2020.

The Board modified the definition for wells to be included in the Drilling Rate of Return calculation from wells "with first oil production in 2020" to "with