Proxy Statement (Form DEF 14A)
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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☑Filed by the Registrant
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☐Filed by a party other than the Registrant
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CHECK THE APPROPRIATE BOX:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY):
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No fee required
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Fee paid previously with preliminary materials
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11
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Letter from the Chairman of the Board
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Dear Fellow Shareholders:
It is my pleasure to invite you to attend the 2025 Annual Meeting of Stockholders of
The following Notice of Annual Meeting describes the business to be conducted at the Annual Meeting. We encourage you to review the materials and vote your shares.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU CAST YOUR VOTE "FOR" PROPOSALS 1, 2, AND 3, AS DESCRIBED IN THE PROXY STATEMENT.
The Board of Directors of
Whether or not you plan to attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. You can ensure that your shares are represented and voted at the meeting by submitting your proxy/voting instruction over the Internet or by telephone. If you received your proxy materials by mail, you may also submit your proxy/voting instruction by mail by using the traditional proxy/voting instruction card that was included. Instructions for these convenient ways to vote are set forth on both the Notice of Internet Availability of Proxy Materials and the proxy/voting instruction card.
The Annual Meeting will be completely virtual to enable our stockholders to participate from any location around the world that is convenient to them. You will be able to attend the Annual Meeting atwww.virtualshareholdermeeting.com/STR2025. If the Annual Meeting is postponed or adjourned, your proxy will still be valid and may be voted at the rescheduled meeting. You may change or revoke your proxy until it is voted. If you are planning to attend our meeting, please monitor the
Thank you for your continued support of
Sincerely,
Chairman of the Board
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VOTING YOUR SHARES IS IMPORTANT.
PLEASE SUBMIT YOUR PROXY/VOTING INSTRUCTION OVER THE INTERNET OR BY TELEPHONE. YOU CAN ALSO COMPLETE, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY/VOTING INSTRUCTION CARD IF YOU RECEIVED PROXY MATERIALS BY MAIL.
| 2025 PROXY STATEMENT |
1
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Letter from the CEO
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Dear Fellow Shareholders:
While different businesses have unique performance metrics to gauge the success of their strategies (think ad revenue or number of users for a social media company, or market share for consumer products company), the one metric we all have in common is whether we are able to increase intrinsic value per share over time. While the feedback loop for some businesses between capital investment and value creation is short, the minerals business by its nature requires more time to measure success. At Sitio, we view our company as the permanent home for the highest quality mineral interests across a diverse set of operators. The >30,000 existing wells on our acreage will produce oil and gas for decades to come and we estimate that operators can drill over 44,000 additional wells on our acreage just in the target zones that are economic with today's technology. Given this duration of our asset base, the returns we realize on our acquisitions will be realized over decades, not quarters.
We have been acquiring mineral interests for almost nine years and the long-term intrinsic value creation results of our investments are beginning to show up. Production per debt adjusted share from our assets has increased by approximately 20% on a compounded annual basis since we have been public. Since 2019, we have reduced our cash G&A per unit of production by 70% while we have quintupled our acreage footprint over that time. Our 91% Adjusted EBITDA margin is higher than 99% of companies in the S&P 500. We have returned over
The opportunity set for additional minerals acquisitions is enormous. The challenges for Sitio will be to maintain our acquisition underwriting discipline and to adapt our acquisition strategy to changing market conditions. With our people and systems in place today, I am confident we can acquire and manage significantly more assets while driving margins and cash flow per share even higher. We appreciate your support and look forward to the year ahead.
Sincerely,
Chief Executive Officer & Director
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Notice of Annual Meeting of Stockholders
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Date and Time
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Location
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Record Date
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Agenda
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Board Recommendation
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Page
Reference
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1
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To elect the director nominees named in the accompanying proxy statement (the "Proxy Statement") to our Board
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"FOR"each of the nominees
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2
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To conduct a non-binding advisory vote to approve the Company's compensation of its named executive officers (the "Say-on-Pay Vote")
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"FOR"
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3
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To ratify the appointment, by the Audit Committee of the Board, of
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"FOR"
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Stockholders will also transact such other business as may properly come before the meeting or any adjournment or postponement thereof.
The Proxy Statement more fully describes these matters. We have not received notice of any other matter that may be properly presented at the Annual Meeting.
Only holders of common stock of record at the close of business on March 21, 2025 , are entitled to notice of and to vote at the Annual Meeting and any adjournments or postponements thereof. The use of cameras, sound recording equipment, communication devices or other similar equipment is prohibited.
Your vote is important. Please submit your proxy/voting instruction over the Internet or by telephone by following the instructions on your Notice of Internet Availability of Proxy Materials about how to view the proxy materials. If you received your proxy materials by mail, you may submit your proxy/voting instruction over the Internet or by telephone or by completing, signing, dating and promptly mailing your proxy/voting instruction card that was included. If you attend and plan to participate in the Annual Meeting via live webcast, you may vote online during the meeting using your smartphone or computer.
By Order of the Board of Directors,
Executive Vice President, General Counsel and Secretary
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IMPORTANT NOTICE
Voting your shares is important. If you do not expect to attend the Annual Meeting via live webcast, or if you plan to attend but wish to vote by proxy, please submit your proxy/voting instruction over the Internet or by telephone. If you received your proxy materials by mail, you may also submit your proxy/voting instruction by completing, signing, dating and promptly mailing the proxy/voting instruction card that was included and for which a postage-paid retuenvelope was provided.
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Internet
Visitwww.proxyvote.com
Available until
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Telephone
Call 1-800-690-6903
Available until
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Mail
Complete, sign and date your proxy/voting instruction card and mail in the postage paid retuenvelope.
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Virtual Meeting
If you attend and plan to participate in the Annual Meeting via the live webcast, you may vote online during the meeting using your smartphone or computer.
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| 2025 PROXY STATEMENT |
3
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Highlights
Company Overview
Sitio is a stockholder returns driven company focused on large-scale consolidation of high-quality oil and gas mineral and royalty interests across premium basins, with a diversified set of top-tier operators. Sitio has an objective of generating cash flow from operations that can be distributed to stockholders and reinvested to expand its mineral and royalty interest portfolio.
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270,000+
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200+
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30,000+
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Total Acquisitions to Date
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Gross Wells
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Our Investment Thesis
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1
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3
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4
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5
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Mineral and royalty interest ownership provides unique, cost advantaged oil and gas exposure
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Differentiated, large-scale consolidation strategy across diversified operators, active minerals management and focus on value-creating innovation
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Premier asset base focused at the front end of operators' cost curves
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Disciplined capital allocation focused on value creation and returns
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Best-in-class governance model led by experienced board and management
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2024 Financial and Operational Highlights
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Solid Operational Performance
▪Topped consensus estimates for 4Q24 production (~41 MBoe/d)
▪Full year 2024 pro forma production (>39 MBoe/d) exceeded high end of STR guidance(1)
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Accretive Acquisitions Enhance Outlook
▪Closed 16 transactions in 2024 for
▪Expected returns exceeded STR underwriting thresholds
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Strong Returns to Shareholders
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Investments in People and Technology Create a More Scalable Enterprise
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▪Future unit cost savings in Cash G&A per Boe due to proprietary data management systems
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(1)Pro forma for the previously announced DJ Basin acquisition that closed on April 4, 2024 , as if it was owned on January 1, 2024 .
(2)Sitio share price as of March 24, 2025 . Share count as of March 21, 2025 .
(3)We define Cash G&A as general and administrative expense less (a) non-cash share-based compensation expense, (b) merger-related transaction costs and (c) rental income.
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Highlights
Mineral and Royalty Businesses are a Structurally Advantaged Asset Class
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Simplicity
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Profitability
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▪Mineral interests are perpetual real property interests and, when leased for royalties, have no development capital expenses
▪No physical operations or associated regulatory risks
▪No environmental liabilities: zero scope 1 emissions and scope 2 emissions are only from power consumption at Sitio office locations
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▪Highest margin component of the energy value chain, with limited direct exposure to cost inflation, enables sector leading EBITDA to free cash flow conversion ratios
▪Ability to retua majority of discretionary cash flow to stockholders while maintaining a conservative balance sheet
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Efficiency
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Scalability
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▪No field staff or lease operating expenses and 100% of capital expenditures are discretionary and tied to corporate investments and acquisitions
▪Data management systems improve royalty management capabilities
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▪Highly fragmented mineral and royalty ownership with limited number of buyers capable of large-scale acquisitions
▪G&A expenses do not increase linearly with company scale
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Corporate Responsibility
▪Zero environmental liabilities
▪No scope 1 emissions; scope 2 emissions are only from power consumption at Sitio office locations
▪Sitio's lease form, used to permit E&P operators to explore for and produce oil, natural gas and NGLs on its properties, provides an economic disincentive for flaring gas
▪Target leasing minerals to operators with strong environmental track records
▪Company culture that embraces innovation, prioritizes teamwork, and rewards differentiated contributions
▪~47% of Sitio's current employees are women
▪Management team and employees have experience across the oil and gas value chain to provide unique perspectives on minerals
| 2025 PROXY STATEMENT |
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Proxy Summary
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PROPOSAL 1
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Election of Directors
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The election of each of the director nominees named in this Proxy Statement to hold office until our 2026 Annual Meeting of Stockholders (the "2026 Annual Meeting") or until their respective successors are duly elected and qualified.
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The Board recommends that stockholders voteFORthe election of each of the nominees.
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See page 19
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The following table provides summary information about each of the director nominees standing for election to the Board for a one-year term expiring on the date of our 2026 Annual Meeting or until their respective successors are duly elected and qualified. The nominees for director, each of whom has consented to serve, if elected, are as follows:
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IndependentChairman of the Board
Committee Memberships:
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Chief Executive Officer and Director
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IndependentBoard Member
Committee Memberships:
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IndependentBoard Member
Committee Memberships:
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IndependentBoard Member
Committee Memberships:
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IndependentBoard Member
Committee Memberships:
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IndependentBoard Member
Committee Memberships:
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IndependentBoard Member
Committee Memberships:
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John R. ("J.R.") Sult, 65
IndependentBoard Member
Committee Memberships:
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AC- Audit Committee
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NCGC- Nominating and Corporate Governance Committee
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- Member
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- Chair
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CC- Compensation Committee
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6
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Proxy Summary
Board Snapshot
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Independence
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Age
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Gender
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Skills and Experience
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8/9
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6/9
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9/9
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Best in Class Governance Incentivizes Board and Management to Optimize Stockholder Returns
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Stockholders
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Board of Directors
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Compensation & Management
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▪Board and management compensation is structured to drive absolute total long-term stockholder returns
▪Capital allocation policy prioritizes retuof capital to stockholders while preserving balance sheet strength using retained cash
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▪8 of 9 members of the Board are independent
▪Director compensation is substantially equity-based and required to be held until the end of Board service
▪Seven-year term limits for outside directors
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▪Incentive compensation is 100% equity based, with emphasis on absolute total stockholder retuinstead of relative returns or growth with no relationship to stockholder returns
▪Experienced, dedicated management team is 100% focused on Sitio's business
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PROPOSAL 2
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Non-Binding Advisory Vote to
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The approval, on a non-binding, advisory basis, of the Company's compensation of its named executive officers.
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The Board recommends that stockholders voteFORthis proposal.
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See page 52
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| 2025 PROXY STATEMENT |
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Proxy Summary
Executive Compensation Alignment with Long-Term Stockholder Value
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No short-term incentive compensation /
cash bonus for executives
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75% of long-term incentive compensation tied to
absolute total shareholder return
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No portion of compensation tied to
relative metrics
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Compensation program provides industry-leading
alignment with shareholders
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Target Pay Mix
Conoscenti 2024 & 2025 Target Total Compensation
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Proxy Summary
Compensation Program Governance
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What We Do
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What We Don't Do
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Focus on absolute total stockholder return
Significant portion of pay is at risk
Majority of equity awards are in the form of performance-based compensation
Annual equity awards for executive officers subject to three-year vesting periods
Maintain policy prohibiting hedging transactions and short sales by insiders
Maintain policy requiring stock ownership and retention by all of our executive officers
Regularly evaluate risks of our compensation policy
Compensation Committee engages an independent compensation consultant and follows a comprehensive process
Consider market data when establishing compensation
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NO payout of PSUs when absolute TSR is negative
NO cash bonuses or short-term incentive compensation
NO performance awards issued based on relative achievement
NO excessive benefits or perquisites
NO single-trigger change in control acceleration on time-vested awards
NO employment agreements
NO tax gross up in connection with a change in control
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PROPOSAL 3
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Ratification of Independent Registered Public Accounting Firm
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To ratify the appointment, by the Audit Committee of the Board, of
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The Board recommends that stockholders voteFORthis proposal.
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See page 77
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| 2025 PROXY STATEMENT |
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Annual Meeting of Stockholders
This Proxy Statement is furnished to stockholders of Sitio for use at its Annual Meeting to be held at 11:00 AM Central Time , on Tuesday, May 13, 2025 , atwww.virtualshareholdermeeting.com/STR2025, or at any postponements or adjournments of the Annual Meeting for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. The approximate date on which this Proxy Statement and the enclosed proxy card are first being furnished or sent to stockholders is March 28, 2025 .
Proxy Statement for 2025 Annual Meeting of Stockholders
The Board of Directors (the "Board") of Sitio Royalties Corp. (which we refer to as "Sitio," "Sitio Royalties ," the "Company," "we," "our" or "us") is furnishing this Proxy Statement to you over the Internet or delivering this Proxy Statement to you by mail in connection with the solicitation of proxies by the Board and the solicitation of voting instructions, in each case for use at the Annual Meeting to be held on May 13, 2025 , and at any adjournments or postponements thereof.
On or about March 28, 2025 , we will commence mailing the Notice of Internet Availability of Proxy Materials to most of our stockholders, and we also will commence mailing to some of our stockholders, and make available electronically over the Internet to all of our stockholders: (1) the Notice of 2025 Annual Meeting of Stockholders and this Proxy Statement and (2) our 2025 Annual Report for Stockholders, which includes our Annual Report on Form 10-K for the year ended December 31, 2024 and our audited financial statements. If you receive your proxy materials by mail, a proxy/voting instruction card will be included.
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Table of Contents
| 2025 PROXY STATEMENT |
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Information About the Proxy Process and Voting
What is a proxy and what is a proxy statement?
A proxy is your legal designation of another person to vote the shares you own. That other person is called a proxy. If you designate someone as your proxy, the document in which you make that designation also is called a proxy. This document is a proxy statement. It is a document that we are required by law to provide to you when we ask you to name a proxy to vote your shares. We encourage you to read this Proxy Statement carefully.
Why did I receive a Notice of Internet Availability of Proxy Materials instead of a paper copy of the proxy materials?
The rules of the U.S. Securities and Exchange Commission (the "SEC") permit us to furnish proxy materials over the Internet. As a result, we are mailing to most of our stockholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of our proxy materials. All stockholders receiving the Notice of Internet Availability of Proxy Materials will have the ability to access our proxy materials over the Internet and, if desired, to request to receive a paper copy of our proxy materials by mail. Instructions on how to access our proxy materials over the Internet or to request a paper copy may be found in the Notice of Internet Availability of Proxy Materials. In addition, the Notice of Internet Availability of Proxy Materials contains instructions on how you may elect to receive future proxy materials electronically on an ongoing basis.
Why didn't I receive a notice in the mail about the Internet availability of the proxy materials?
We are providing paper copies of our proxy materials instead of a Notice of Internet Availability of Proxy Materials to our stockholders who have previously requested to receive paper copies of our proxy materials. In addition, we are providing notice of the availability of our proxy materials by e-mail to our stockholders who have previously elected to receive proxy materials electronically. Those stockholders should have received an e-mail containing instructions and links to the website where our proxy materials are available and to the proxy voting website.
How can I access the proxy materials over the Internet?
Your Notice of Internet Availability of Proxy Materials or proxy/voting instruction card contains instructions on how to (1) view our proxy materials for the Annual Meeting over the Internet and (2) elect to receive future proxy materials electronically by e-mail. Our proxy materials also are available on our website athttps://investors.sitio.com.
Electing to receive future proxy materials electronically will help us conserve natural resources and reduce the cost of delivering our proxy materials. If you elect to receive future proxy materials electronically, you will receive an e-mail containing instructions and links to the website where our proxy materials are available and to the proxy voting website. Your election to receive proxy materials electronically by e-mail will remain in effect until you terminate it.
How may I obtain a paper copy of the proxy materials?
If you receive a Notice of Internet Availability of Proxy Materials by mail, you will find instructions about how to obtain a paper copy of our proxy materials on the Notice of Internet Availability of Proxy Materials. If you receive notice of the availability of our proxy materials bye-mail, you will find instructions about how to obtain a paper copy of our proxy materials included in that e-mail. Stockholders who do not receive a Notice of Internet Availability of Proxy Materials or an e-mail regarding the availability of our proxy materials will receive a paper copy of our annual report, Proxy Statement and proxy card by mail.
What is a record date and who is entitled to vote at the meeting?
A record date is the date, as of the close of business on which, stockholders of record are entitled to notice of and to vote at a meeting of stockholders. The Record Date for the Annual Meeting is March 21, 2025 and was established by our Board as required under the laws of Delaware , our state of incorporation. Thus, owners of record of shares of Sitio's Class A common stock, par value $0.0001 per share (the "Class A common stock") and Class C common stock, par value $0.0001 per share (the "Class C common stock," and, together with the Class A common stock, the "common stock") as of the close of business on March 21, 2025 are entitled to receive notice of and to vote at the Annual Meeting and at any adjournments or postponements thereof.
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Information About the Proxy Process and Voting
How many shares can be voted and what is a quorum?
You are entitled to one vote for each share of Sitio's common stock (a "share") that you owned as of the close of business on March 21, 2025 , and you may vote all of those shares. Only our common stock has voting rights. On the Record Date, there were 151,368,473 shares of our common stock outstanding and entitled to vote at the Annual Meeting and approximately 80 holders of record and approximately 38,312 beneficial owners holding shares in "street name."
A quorum is the minimum number of shares that must be represented online or by proxy for us to conduct the Annual Meeting. The attendance online or by proxy of holders of a majority of the shares of common stock entitled to vote at the Annual Meeting, or 75,684,237 shares of our common stock based on the Record Date of March 21, 2025 , will constitute a quorum to hold the Annual Meeting. If you grant your proxy over the Internet, by telephone or by your proxy/voting instruction card, your shares will be considered present at the Annual Meeting and counted toward the quorum.
What different methods can I use to vote my shares?
You have a choice of voting your shares:
▪Over the Internet
▪By telephone
▪By mail
▪Via smartphone or computer during the virtual Annual Meeting
Even if you plan to attend the Annual Meeting, we encourage you to vote your shares beforehand over the Internet, by telephone or by mail. Please carefully read the instructions below on how to vote your shares. Because the instructions vary depending on how you own your shares and the method you use to vote your shares, it is important that you follow the instructions that apply to your situation.
| If you vote your shares over the Internet or by telephone, you should not retua proxy/voting instruction card. | ||||||||
What is the difference between a stockholder of record and a beneficial owner of shares held in street name?
Stockholder of Record. If your shares are registered directly in your name with the Company's transfer agent, Continental Stock & Trust Company , you are considered the stockholder of record with respect to those shares, and the proxy materials were sent directly to you by the Company.
Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a broker, bank, broker-dealer, custodian or other similar organization, then you are the beneficial owner of shares held in "street name," and the proxy materials were forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting during the Annual Meeting. As a beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account, but you must follow the "vote instruction form" that organization has provided to you to vote or attend the Annual Meeting.
How do I vote my shares if I am a "stockholder of record" (shares registered in my name)?
Voting over the Internet. Voting over the Internet is easy, fast and available 24 hours a day. If you receive a Notice of Internet Availability of Proxy Materials by mail, you may submit your proxy/voting instruction over the Internet by following the instructions on the Notice of Internet Availability of Proxy Materials. If you receive notice of the availability of our proxy materials by e-mail, you may submit your proxy/voting instruction over the Internet by following the instructions included in that e-mail. If you receive a proxy/voting instruction card by mail, you may submit your proxy/voting instruction over the Internet by following the instructions on the proxy/ voting instruction card. You will be able to confirm that the Internet voting system has properly recorded your vote, which will be counted immediately, and there is no need to retua proxy/voting instruction card.
Voting by telephone. Voting by telephone also is easy, fast and available 24 hours a day. If you live in the United States or Canada , you may vote by telephone by calling toll-free 1-800-690-6903. If you receive a Notice of Internet Availability of Proxy Materials by mail, you must have the control number that appears on the notice when voting. If you receive notice of the availability of our proxy materials by e-mail, you must have the control number included in that e-mail when voting. If you receive a proxy/voting instruction card by mail, you must have the control number that appears on the proxy/voting instruction card when voting. You will be able to confirm that the telephone voting system has properly recorded your vote, which will be counted immediately, and there is no need to retua proxy/voting instruction card.
| 2025 PROXY STATEMENT |
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Information About the Proxy Process and Voting
Voting by mail. You can save us expense by voting over the Internet or by telephone. Alternatively, if you received a proxy/voting instruction card by mail, you may vote by mail by completing, signing, dating and promptly mailing your proxy/voting instruction card in the accompanying postage-paid retuenvelope.
Voting at the meeting. The Annual Meeting will be held online. Please have your 16-digit control number on your Notice of Internet Availability, proxy card or in the voting instructions that accompanied your proxy materials to participate in the Annual Meeting by visitingwww.virtualshareholdermeeting.com/STR2025. You will be able to vote your shares electronically during the Annual Meeting.
How do I vote my shares if I am a "beneficial owner" (shares held in "street name")?
Voting over the Internet, by telephone or by mail. If your shares are registered or held in the name of your broker, bank, or other nominee ("street name"), you have the right to direct your broker, bank, or other nominee on how to vote your shares by using the method specified by your broker, bank, or other nominee. In addition to voting by mail, most brokerage firms and banks participate in Internet or telephone voting programs. These programs provide eligible "street name" stockholders the opportunity to vote over the Internet or by telephone. Voting forms will provide instructions for stockholders whose brokerage firms or banks participate in these programs.
Voting at the meeting. If your shares are registered or held in the name of your broker, bank, or other nominee and you plan to attend and participate in the Annual Meeting, you should contact your broker, bank, or other nominee (preferably at least five days before the Annual Meeting) and obtain a "legal proxy" in order to be able to attend, participate in or vote at the Annual Meeting.
Can I change my vote after I have voted?
You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting by granting a new proxy bearing a later date (which automatically revokes the earlier proxy) whether made via the Internet, by telephone or by mail, by attending the Annual Meeting virtually and voting online during the meeting or by filing a revocation with the Company's Corporate Secretary, at 1401 Lawrence Street , Suite 1750, Denver, CO 80202.
If you hold your shares in street name, you may change your vote by contacting your broker or other nominee and following their instructions. Please note, however, that if your shares of record are held by a broker, bank, broker-dealer, custodian, or other similar organization, you must instruct your broker, bank, broker-dealer, custodian, or other similar organization that you wish to change your vote by following the procedures on the voting instruction form provided to you by such organization.
What happens if I do not indicate how to vote my proxy?
If you sign your proxy card without providing further instructions, your shares will be voted:
▪"FOR"the election of each of the director nominees named in this Proxy Statement to hold office until our 2026 Annual Meeting or until their respective successors are duly elected and qualified;
▪"FOR"the approval, on a non-binding, advisory basis, of the Company's compensation of its named executive officers; and
▪"FOR"the ratification of the appointment, by the Audit Committee of the Board, KPMG as our independent registered accounting firm for the fiscal year ending December 31, 2025 .
In addition, you are entitled to vote on any other matters that may properly come before the Annual Meeting or any adjournment or postponement thereof.
How will my shares be voted if I do not provide instructions to my broker?
It is possible for a proxy to indicate that some of the shares represented are not being voted with respect to certain proposals. This occurs, for example, when a broker, bank, or other nominee does not have discretion under New York Stock Exchange ("NYSE") rules to vote on a matter without instructions from the beneficial owner of the shares and has not received such instructions. In these cases, non-voted shares will not be considered present and entitled to vote with respect to that matter, although they may be considered present and entitled to vote for other purposes and will be counted in determining the presence of a quorum. Under NYSE rules, brokers, banks and other nominees have discretionary voting power to vote without receiving voting instructions from the beneficial owner on "routine" matters, but not on "non-routine" matters. Under NYSE rules as currently in effect, "routine" matters include, among other things, ratification of the appointment of an independent registered public accounting firm. The proposal to ratify the appointment of KPMG as our independent registered public accounting firm for fiscal year 2025 is considered "routine" under NYSE rules. This means that if you hold your shares through a broker, bank or other nominee, and you do not provide voting instructions by the 10th day before the Annual Meeting, your broker, bank, or other nominee has the discretion to vote your shares on the proposal to ratify the appointment of KPMG as our independent registered public accounting firm for fiscal year 2025. Under NYSE rules, the proposal to elect the nominees for director named in this Proxy Statement and the proposal to approve the compensation of the Company's named executive officers are not "routine" and your broker, bank, or other nominee will not have the discretion to vote your shares on these proposals.
|
14
|
|||||
Information About the Proxy Process and Voting
What does it mean if I receive more than one Notice of Internet Availability of Proxy Materials or more than one proxy/voting instruction card?
If you receive more than one Notice of Internet Availability of Proxy Materials or more than one proxy/voting instruction card, you own shares of Sitio's common stock in multiple accounts with your brokers(s) and/or our transfer agent.Please vote all of these shares. We recommend that you contact your broker(s) and/or our transfer agent to consolidate as many accounts as possible under the same name and address. Our transfer agent is Continental Stock Transfer & Trust Company , which may be reached by telephone at 1-212-509-4000, by e-mail atcstmail@continentalstock.comor over the Internet athttps://www.continentalstock.com/for-shareholders.
How does the Board recommend that I vote my shares?
A proxy that is properly completed and returned will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly complete and retua proxy, but do not provide any voting instructions, your shares will be voted in accordance with the Board's recommendations. The Board's recommendations can be found with the description of each proposal in this Proxy Statement. In summary, the Board recommends a vote:
▪Proposal 1 -FORthe election of each of the director nominees named in this Proxy Statement to hold office until our 2026 Annual Meeting or until their respective successors are duly elected and qualified;
▪Proposal 2 -FORthe approval, on a non-binding, advisory basis, of the Company's compensation of its named executive officers; and
▪Proposal 3 -FORthe ratification of the appointment, by the Audit Committee of the Board, KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2025 .
If any other business properly comes before the stockholders for a vote at the Annual Meeting, your shares will be voted at the discretion of the holders of the proxy. At the date of this Proxy Statement, the Board knows of no matters, other than those stated immediately above, to be presented for consideration at the Annual Meeting.
Who may vote during the Annual Meeting?
Stockholders who owned shares of the Company's common stock as of the close of business on March 21, 2025 are entitled to vote during the Annual Meeting. As of the Record Date, there were 151,368,473 shares of our common stock issued and outstanding.
How many votes must be present to hold the Annual Meeting?
Your shares are counted as present at the Annual Meeting if (a) you attend the Annual Meeting and vote during the Annual Meeting, (b) you vote (either by mail, telephone or online) in advance of the Annual Meeting (even if you abstain from voting on one proposal or all three proposals) or (c) your shares are registered in the name of a bank or brokerage firm and you do not provide voting instructions and such bank or broker casts a vote on the ratification of the selection of KPMG to serve as our independent registered accounting firm. On March 21, 2025 , there were 151,368,473 shares of the Company's common stock outstanding and entitled to vote. In order for us to conduct the Annual Meeting, a majority of our outstanding shares of common stock entitled to vote during the Annual Meeting must be present at the beginning of the Annual Meeting. This is referred to as a quorum. Consequently, 75,684,237 shares of common stock must be present or represented at the beginning of the Annual Meeting to constitute a quorum.
How many votes do I have?
Each share of common stock is entitled to one vote on each matter that comes before the Annual Meeting. Information about the stock holdings of our directors and executive officers is contained in the section of this Proxy Statement entitled "Security Ownership of Certain Beneficial Owners and Management."
What is the proxy card?
The proxy card enables you to appoint Christopher L. Conoscenti , the Company's Chief Executive Officer, and Brett S. Riesenfeld , the Company's Executive Vice President, General Counsel and Corporate Secretary, each as your representative at the Annual Meeting. By completing and returning the proxy card, you are authorizing Messrs. Conoscenti and Riesenfeld to vote your shares during the Annual Meeting in accordance with your instructions on the proxy card. This way, your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, it is strongly recommended that you complete and retuyour proxy card or vote via telephone or online before the Annual Meeting date to ensure your vote is counted in case your plans change. If a proposal comes up for vote during the Annual Meeting that is not on the proxy card, the representatives you have appointed as proxies will vote your shares, under your proxy, according to their best judgment.
| 2025 PROXY STATEMENT |
15
|
||||
Information About the Proxy Process and Voting
Is my vote kept confidential?
To the extent possible, proxies, ballots and voting tabulations identifying stockholders are kept confidential and will not be disclosed except as may be necessary to meet legal requirements.
Who will tabulate and oversee the vote?
Representatives of Broadridge Investor Communication Solutions, Inc. will tabulate and oversee the vote.
How can I attend the Annual Meeting?
All stockholders are welcome to attend the Annual Meeting. If you were a stockholder as of the Record Date, or if you hold a valid proxy, you will be able to participate in the Annual Meeting online and submit questions during the meeting by visitingwww.virtualshareholdermeeting.com/STR2025. You also will be able to vote your shares electronically during the Annual Meeting.
To participate in the Annual Meeting, you will need the 16-digit control number included on your Notice of Internet Availability, on your proxy card or in the voting instructions that accompanied your proxy materials. If your shares are held in street name and your voting instruction form indicates that you may vote those shares through thehttp://www.proxyvote.comwebsite, then you may access and participate in the Annual Meeting with the 16-digit access code indicated on that voting instruction form. Otherwise, stockholders who hold their shares in street name should contact their bank, broker or other nominee (preferably at least five days before the Annual Meeting) and obtain a "legal proxy" in order to be able to attend, participate in or vote at the Annual Meeting.
The Annual Meeting webcast will begin promptly at 11:00 AM Central Time . We encourage you to access the meeting prior to the start time. Online check-in will begin at 10:30 AM Central Time and you should allow ample time for the check-in procedures.
What if I have technical difficulties during check-in or the meeting?
We will have technicians ready to assist you if you have any technical difficulties during check-in or the meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual meeting log in page.
How can I ask questions during the Annual Meeting?
As part of the Annual Meeting, we will hold a live question and answer session, during which we intend, time permitting, to answer all written questions pertinent to Sitio and meeting matters that are submitted before or during the meeting in accordance with the Annual Meeting's Rules of Conduct, which will be posted on the Annual Meeting website. Questions may be submitted the day of or during the Annual Meeting throughwww.virtualshareholdermeeting.com/STR2025. Answers to any such questions that are not addressed during the meeting will be published on the Investor Relations section of our website athttps://investors.sitio.comshortly after the meeting. Questions and answers may be grouped by topic and substantially similar questions will be grouped and answered once. We reserve the right to edit or reject questions we deem inappropriate.
Where can I find the voting results of the Annual Meeting?
We intend to announce the preliminary voting results at the Annual Meeting and to disclose detailed, final voting results in a Current Report on Form 8-K, which we will file with the SEC and make available on the Investor Relations section of our website athttps://investors.sitio.com/financials/sec-filingswithin four business days of the Annual Meeting (or, if final results are not available at that time, within four business days of the date on which final results become available).
Who can help answer my questions?
Stockholders who have questions about the proposals described in this Proxy Statement, how to execute your vote, or need assistance in completing or submitting their proxy cards should contact Brett S. Riesenfeld , Sitio's Executive Vice President, General Counsel and Corporate Secretary at 1-720-640-7620 or by sending a letter to Mr. Riesenfeld at the offices of the Company at 1401 Lawrence Street , Suite 1750, Denver, CO 80202.
|
16
|
|||||
Annual Meeting Information
Date, Time, Place and Purpose of the Annual Meeting
The Annual Meeting will be held on Tuesday, May 13, 2025 , at 11:00 AM Central Time , atwww.virtualshareholdermeeting.com/STR2025. You are cordially invited to attend the Annual Meeting, at which stockholders will be asked to consider and vote upon the following proposals, which are more fully described in this Proxy Statement:
▪Proposal 1 - the election of the director nominees named in this Proxy Statement to hold office until our 2026 Annual Meeting or until their respective successors are duly elected and qualified;
▪Proposal 2 - the approval, on a non-binding, advisory basis, of the Say-on-Pay Vote; and
▪Proposal 3 - the ratification of the appointment, by the Audit Committee of the Board, KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2025 .
▪In addition, you are entitled to vote on any other matters that may properly come before the Annual Meeting or any adjournment or postponement thereof.
The Annual Meeting will be conducted via live webcast. The Annual Meeting will be virtual only and stockholders will not be able to attend the Annual Meeting in person this year. Stockholders will be able to submit questions via the online platform before and during a portion of the Annual Meeting. You may submit questions prior to the Annual Meeting by logging ontowww.proxyvote.comwith your 16-digit control number. You will be able to participate in the Annual Meeting online and submit questions during the Annual Meeting atwww.virtualshareholdermeeting.com/STR2025. You will also be able to vote your shares electronically. This Proxy Statement provides information on how to join the Annual Meeting online and about the business we plan to conduct.
|
It is important that you retain a copy of the control number found on the proxy card, voting instruction form or Notice of Internet Availability of Proxy Materials, as such number will be required in order for stockholders to gain access to any meeting held partially or solely by means of remote communication.
|
||||||||
Matters to be Decided at the Annual Meeting
At the date of this Proxy Statement, our Board was not aware of any business to be acted upon or matters to be raised at the Annual Meeting other than those referred to in this Proxy Statement and does not intend to bring before the Annual Meeting any matter other than the proposals described in this Proxy Statement.
The proxy card accompanying this Proxy Statement confers discretionary authority upon the named proxy holders with respect to amendments or variations to the matters identified in the accompanying Notice of Annual Meeting and with respect to any other matters which may properly come before the Annual Meeting. If other matters do properly come before the Annual Meeting, or at any adjournment(s) or postponement(s) of the Annual Meeting, we expect that shares of our common stock, represented by properly submitted proxies will be voted by the proxy holders in accordance with the recommendations of our Board.
Solicitation of Proxies
We will pay for the cost of preparing, assembling, printing and mailing this Proxy Statement and the accompanying proxy card and the cost of soliciting proxies relating to the Annual Meeting. Some banks and brokers have customers who beneficially own common stock listed of record in the names of nominees. We intend to request banks and brokers to solicit such customers and will reimburse them for their reasonable out-of-pocket expenses for such solicitations. If any additional solicitation of the holders of our outstanding shares of common stock is deemed necessary, we anticipate making such solicitation directly. The solicitation of proxies may be supplemented by telephone, telegram and personal solicitation by officers, directors and other employees of the Company, but no additional compensation will be paid to such individuals.
| 2025 PROXY STATEMENT |
17
|
||||
Miscellaneous Matters
Annual Report on Form 10-K- Our Annual Report on Form 10-K for our fiscal year ended December 31, 2024 has been filed with the SEC and is available on the Investor Relations section of our website athttps://investors.sitio.com/financials/sec-filingsor on the SEC's website athttps://www.sec.gov/. We will gladly furnish to any stockholder, without charge, a copy of our most recent Annual Report on Form 10-K (including the financial statements and schedules thereto) upon written request from the stockholder addressed to:ir@sitio.comor by writing to Alyssa Stephens , Vice President of Investor Relations , at 1401 Lawrence Street , Suite 1750, Denver, CO 80202.
Stockholder List- A list of our stockholders of record as of the Record Date of March 21, 2025 will be available for examination for any purpose germane to the Annual Meeting during normal business hours at Sitio, 1401 Lawrence Street , Suite 1750, Denver, CO 80202, at least 10 calendar days prior to the Annual Meeting. The list will also be available virtually for inspection by any stockholder present at the Annual Meeting.
Principal Offices- Our principal executive offices are located at 1401 Lawrence Street , Suite 1750, Denver, CO 80202. Our telephone number is 1-720-640-7620.
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18
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|||||
|
PROPOSAL 1
Election of Directors
|
||||||||||||||
|
The Board currently consists of nine directors. Our amended and restated bylaws (the "Bylaws") provide that the number of directors will be determined by the Board, and the number of directors is currently set at nine. At the recommendation of Sitio's
|
||||||||||||||
|
▪
▪
▪
|
▪
▪
▪
|
▪
▪
▪John R. ("J.R.") Sult
|
||||||||||||
|
For election as directors to serve until our 2026 Annual Meeting or until their successors are elected and qualified.
All such nominees named above have indicated a willingness to serve as directors but should any of them decline or be unable to serve, proxies may be voted for another person nominated as a substitute by the Board. There are no family relationships, of first cousins or closer, among the Company's directors and executive officers, by blood, marriage, or adoption.
The following information is furnished with respect to each of the nominees of the Board, including information regarding their business experience, director positions held currently or at any time during the last five years, involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes, or skills that caused the
Biographical information for each nominee is contained in the "Board of Directors' Nominees" section below.
Vote Required
The election of directors in this proposal requires the affirmative vote of a plurality of the votes cast by stockholders entitled to vote on the election of directors. Neither abstentions nor broker non-votes will have any effect on the outcome of voting on director elections. Therefore, it is important that you vote your shares by proxy or online at the Annual Meeting.
|
||||||||||||||
|
Recommendation of the Board
The Board recommends that stockholders voteFORthe election of each of the nominees.
|
|||||||||||
| 2025 PROXY STATEMENT |
19
|
||||
Board of Directors' Nominees
The following table provides summary information about each of the director nominees standing for election to the Board for a one-year term expiring on the date of our 2026 Annual Meeting. The nominees for director, each of whom has consented to serve, if elected, are as follows:
|
Committee Memberships
|
|||||||||||||||||
|
|
Age
|
Independence
|
AC
|
CC
|
NCGC
|
||||||||||||
|
Chairman of the Board
|
40
|
||||||||||||||||
|
Chief Executive Officer and Director
|
49
|
||||||||||||||||
|
Independent Board Member
|
57
|
||||||||||||||||
|
Independent Board Member
|
63
|
||||||||||||||||
|
Independent Board Member
|
45
|
||||||||||||||||
|
Independent Board Member
|
59
|
||||||||||||||||
|
Independent Board Member
|
57 | ||||||||||||||||
|
Independent Board Member
|
71
|
||||||||||||||||
|
John R. ("J.R.") Sult
Independent Board Member
|
65
|
||||||||||||||||
|
AC- Audit Committee
|
NCGC- Nominating and Corporate Governance Committee
|
- Member
|
- Chair
|
||||||||||||||
|
CC- Compensation Committee
|
|||||||||||||||||
Board Snapshot
|
Independence
|
Age
|
Gender
|
|||||||||||||||||||||||||||
| Independent | <50 years: | Female | |||||||||||||||||||||||||||
| 8 | 3 | 3 | |||||||||||||||||||||||||||
| Not Independent | 50-60 years: | Male | |||||||||||||||||||||||||||
| 1 | 3 | 6 | |||||||||||||||||||||||||||
| >60 years: | |||||||||||||||||||||||||||||
| 3 | |||||||||||||||||||||||||||||
|
20
|
|||||
Board of Directors' Nominees
Board Matrix
|
Personal Demographic / Board Information
|
|||||||||||||||||||||||||||||
|
Age
|
40
|
49
|
57
|
63
|
45
|
59
|
57
|
71
|
65
|
||||||||||||||||||||
|
Gender
|
M
|
M
|
M
|
F
|
F
|
F
|
M
|
M
|
M
|
||||||||||||||||||||
|
Number of Current Public Boards(1)
|
1
|
1
|
2
|
1
|
1
|
3
|
4
|
2
|
2
|
||||||||||||||||||||
|
Sitio Director Since
|
2022
|
2022
|
2022
|
2022
|
2020(2)
|
2022
|
2022
|
2022
|
2022
|
||||||||||||||||||||
|
Industry Experience
|
|||||||||||||||||||||||||||||
|
Upstream Energy
|
|||||||||||||||||||||||||||||
|
Mineral Rights
|
|||||||||||||||||||||||||||||
|
Acquisitive Companies
|
|||||||||||||||||||||||||||||
|
Equities Portfolio Management
|
|||||||||||||||||||||||||||||
|
Business Competencies
|
|||||||||||||||||||||||||||||
|
Public Company Executive
|
|||||||||||||||||||||||||||||
|
M&A
|
|||||||||||||||||||||||||||||
|
Capital Markets
|
|||||||||||||||||||||||||||||
|
Operations
|
|||||||||||||||||||||||||||||
(1)Numbers include Sitio for each director.
(2)Because the seven-year term limit for non-management directors was implemented alongside the Falcon Merger (as defined below), Ms. Harvey's term on the Company's Board is deemed to have begun in June 2022 for purposes of the term limit policy.
| 2025 PROXY STATEMENT |
21
|
||||
Board of Directors' Nominees
Director Biographies
|
Chairman of the Board
Director since:2022
Age:40
|
||||||||||||||
|
Director Qualifications
|
||||||||||||||
|
▪Joined our Board in
▪Appointed to the
▪Partner of
▪Member of the firm's investment team, and serves in various capacities including research, analysis and diligence of investment opportunities as well as the negotiation and execution of investment strategies.
|
▪
▪Served as a Vice President, Energy Investing for
▪Equity Research Associate for E&P at
▪Holds a Bachelor of Arts degree in Mathematics from
|
|||||||||||||
|
Chief Executive Officer and Director
Director since:2022
Age:49
|
||||||||||||||
|
Director Qualifications
|
||||||||||||||
|
▪Joined our Board in
▪Joined Kimmeridge as the Chief Executive Officer of its mineral and royalty interest business in
▪Previously,
|
▪His clients at
▪Advised on numerous mergers and acquisition transactions and served as an active bookrunner on equity, equity-linked and debt transactions during his investment banking career.
▪Holds a Bachelor of Arts degree from the
|
|||||||||||||
|
22
|
|||||
Board of Directors' Nominees
|
Director since:2022
Age:57
|
||||||||||||||
|
Director Qualifications
|
||||||||||||||
|
▪Joined our Board in
▪Served as Vice President and Treasurer of
▪Served as Assistant Treasurer of
▪Responsible for managing all treasury related matters, including corporate finance, cash and banking/operations, insurance, pensions, enterprise risk management and credit and counterparty risk.
▪Led financing transactions, including bond and equity issuances, revolving credit and receivables facilities, merger and acquisition financings and major corporate restructurings (public spin-offs) during his tenure.
|
▪Served as Senior Tax Counsel at
▪Currently serves as a Director and Chair of the Audit Committee of the Board of Directors of
▪Previously served as a director and Chair of the
▪Involved with several non-profit and educational boards.
▪Holds a Bachelor of Science degree in Accounting from SoutheUniversity, a Juris Doctor from
|
|||||||||||||
|
Director since:2022
Age:63
|
||||||||||||||
|
Director Qualifications
|
||||||||||||||
|
▪Joined our Board in
▪Joined the Board of Directors of
▪Former Investment Manager at
|
▪Management consultant assisting senior executives in the technology, pharmaceutical, media and financial industries with strategic initiatives, prior to her role at DUMAC.
▪Worked for ten years at
▪Served on the advisory board of over 20 private equity and real assets partnerships in the
▪Received a Bachelor of Science degree in Engineering from
|
|||||||||||||
| 2025 PROXY STATEMENT |
23
|
||||
Board of Directors' Nominees
|
Director since:2020
Age:45
|
||||||||||||||
|
Director Qualifications
|
||||||||||||||
|
▪Joined our Board in
▪Served as a member of and as Chairman of the
▪Joined
▪
▪Made upstream oil and gas investments on behalf of two private equity funds,
|
▪Worked as an investment banker at
▪Serves on the board of
▪Served as a director for
▪Earned a Bachelor of Business Administration degree in Finance at
▪Earned a Master of Business Administration from the
|
|||||||||||||
|
Director since:2022
Age:59
|
||||||||||||||
|
Director Qualifications
|
||||||||||||||
|
▪Joined our Board in
▪Served as a director of
▪Serves on the board and on the audit committee and compensation committee of each of
▪Most recently with
|
▪Employed at Concho in various roles and capacities with ever increasing leadership responsibilities for 15 years.
▪Served in a number of engineering and operations positions with
▪Received her B.S. in Chemical Engineering from
|
|||||||||||||
(4)Because the seven-year term limit for non-management directors was implemented alongside the Falcon Merger, Ms. Harvey's term on the Company's Board is deemed to have begun in June 2022 for purposes of the term limit policy.
|
24
|
|||||
Board of Directors' Nominees
|
Director since:2022
Age:57
|
||||||||||||||
|
Director Qualifications
|
||||||||||||||
|
▪Joined our Board in
▪Served as a director of Brigham from
▪Enjoyed a 25-year career in the oil and gas industry with
▪Most recently served as
▪Held a series of executive positions at
▪Parker filed for bankruptcy protection under Chapter 11 of the
|
▪Worked for
▪Served in multiple roles of increasing responsibility at
▪Holds a Juris Doctorate from
▪Director of
▪Director and member of the Compensation Committee and chair of the
▪Served as a director of
▪Director of
|
|||||||||||||
| 2025 PROXY STATEMENT |
25
|
||||
Board of Directors' Nominees
|
Director since:2022
Age:71
|
||||||||||||||
|
Director Qualifications
|
||||||||||||||
|
▪Joined our Board in
▪Served as a director of Brigham from
▪Has over 45 years of experience in the oil and gas industry. He currently is owner of Stoneburner Consulting Services.
▪Served as Senior Advisor and Partner with
▪Served as president of the North America Shale Production Division for
▪Served as president and chief operating officer of
▪Began his career as a geologist in 1977 and held positions at
|
▪Formerly served as a director for private upstream companies Saguaro Resources,
▪Formerly served as non-Executive Chairman of
▪Serves on the advisory council of
▪Former board member for not-for-profit Memorial Assistance Ministries and past President and former board member of the
▪Holds a B.S. in Geological Sciences from the
|
|||||||||||||
|
26
|
|||||
Board of Directors' Nominees
|
John R. ("J.R.") Sult
Director since:2022
Age:65
|
||||||||||||||
|
Director Qualifications
|
||||||||||||||
|
▪Joined our Board in
▪Served as a director of Brigham from
▪Served as Executive Vice President and Chief Financial Officer of
▪Executive Vice President and Chief Financial Officer of
▪Served as Executive Vice President, Chief Financial Officer and director of
▪Served as Chief Accounting Officer of El Paso and as Senior Vice President, Chief Financial Officer and Controller of El Paso's
|
▪Served as Vice President and Controller of
▪Managed an independent consulting practice that provided a broad range of finance and accounting advisory services and assistance to public companies in the energy industry.
▪Prior to private practice, was an audit partner with
▪Graduated from
▪Served on the board of directors of
▪Served on the board of directors of
▪Serves on the Board of Directors of
|
|||||||||||||
| 2025 PROXY STATEMENT |
27
|
||||
Executive Officers
The following persons are the executive officers of the Company.
| Age | Position | |||||||
| 49 | Chief Executive Officer | |||||||
| 47 | Chief Financial Officer | |||||||
| 43 | Executive Vice President, Operations | |||||||
| 42 | Executive Vice President of Land | |||||||
| 44 | Executive Vice President of Corporate Development | |||||||
| 40 | Executive Vice President, General Counsel and Secretary | |||||||
|
Chief Executive Officer and Director
Age:49
|
||||||||
|
▪Serves as Chief Executive Officer of Sitio.
▪Joined Kimmeridge as the Chief Executive Officer of its mineral and royalty interest business in
▪Previously,
|
▪His clients at
▪Advised on numerous mergers and acquisition transactions and served as an active bookrunner on equity, equity-linked and debt transactions during his investment banking career.
▪Holds a Bachelor of Arts degree from the
|
||||||||||
|
Chief Financial Officer
Age:47
|
||||||||
|
▪Serves as Chief Financial Officer of Sitio.
▪Joined Kimmeridge as the Chief Financial Officer of its mineral and royalty interest business in
|
▪Focused on strategy, financial planning, analysis and mergers and acquisition transactions while at
▪Holds a Master of Business Administration from the
|
||||||||||
|
28
|
|||||
Executive Officers
|
Executive Vice President, Operations
Age:43
|
||||||||
|
▪Serves as Executive Vice President, Operations of Sitio.
▪Joined Kimmeridge in
|
▪Spent two years at
▪Has eight years of engineering experience working for
▪Holds a Master of Engineering from
|
||||||||||
|
Executive Vice President of Land
Age:42
|
||||||||
|
▪Serves as Executive Vice President of Land of Sitio.
▪Joined Kimmeridge as Vice President of Land of its mineral and royalty interest business in
▪Previously, an independent land consultant for multiple upstream companies from
▪Land Manager for
|
▪Involved in Kimmeridge's investment in 299
▪Advised on acquisitions/divestitures, grassroots leasing, managing drilling programs and all other facets of land management during his career.
▪Served as a Non-Commissioned Officer in the
▪Holds a Bachelor of Science degree in Business from the
|
||||||||||
| 2025 PROXY STATEMENT |
29
|
||||
Executive Officers
|
Executive Vice President of Corporate Development
Age:44
|
||||||||
|
▪Serves as Executive Vice President of Corporate Development of Sitio.
▪Served as Senior VP of Exploration for Brigham, where he held positions of increasing responsibility since February of 2013, prior to Sitio.
▪Focused his geologic efforts in the Midland,
▪Began career as a Petroleum Geologist for
▪As an onshore exploration and development geologist for Stalker, he was a key player in several new field discoveries and field redevelopment projects in
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▪Earned a Bachelor of Arts degree in Geology (2003) as well as a Master of Arts degree in Petroleum Geology (2006) both from the
▪Actively engaged alumnus of the
▪An active member of the
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Executive Vice President, General Counsel and Secretary
Age:40
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▪Serves as Executive Vice President, General Counsel and Secretary of Sitio.
▪Joined Kimmeridge as the General Counsel of its mineral and royalty interest business in
▪Served as an attorney at
|
▪Represented public and private companies in capital markets offerings and mergers and acquisitions, primarily in the oil and natural gas industry while at
▪Holds a Bachelor of Arts degree from
|
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30
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Corporate Governance Matters
Business Ethics & Transparency
Corporate Code of Business Conduct and Ethics
The Board has adopted a code of business conduct and ethics (the "Corporate Code of Business Conduct and Ethics") that applies to all directors, officers and other employees, including our principal executive officer, principal financial officer and principal accounting officer. The purpose of the Corporate Code of Business Conduct and Ethics is to promote honest and ethical conduct in our business operations, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; to promote full, fair, accurate, timely and understandable disclosure in periodic reports required to be filed by us; and to promote compliance with all applicable rules and regulations that apply to us and our officers. As established in Sitio's Corporate Code of Business Conduct and Ethics, the Company does not make direct or indirect political contributions in support of any party or candidate in any U.S. election. The Company encourages the personal and financial participation of its directors, officers and other employees in federal, state and local elective processes.
Additionally, Sitio's Corporate Code of Business Conduct and Ethics does not allow bribes, kickbacks or any other form of payoff from the Company's funds or assets. Sitio's fundamental policy is to conduct its business with honesty and integrity in accordance with the highest legal and ethical standards. The Company and its directors, officers and other employees must comply with all applicable legal requirements of the United States and each other country in which the Company conducts business. The Company's Executive Vice President, General Counsel and Secretary is responsible for oversight of the Company's Corporate Code of Business Conduct and Ethics. Any waiver of this code may be made only by the Board and will be promptly disclosed as required by applicable U.S. federal securities laws and the corporate governance rules of the NYSE. All executive officers and other employees are required to certify their compliance with the Corporate Code of Business Conduct and Ethics in connection with their onboarding process and annually thereafter. The Corporate Code of Business Conduct and Ethics is available in the Investor Relations section under the "Governance Documents" tab of our website athttps://investors.sitio.com.
Whistleblower Policy and Hotline
The Company's Executive Vice President, General Counsel and Secretary is responsible for oversight of the Company's Whistleblower Hotline. The Company's Audit Committee is responsible for administering complaints received by the Company regarding accounting, internal accounting controls or auditing matters, potential violations of applicable laws, rules and regulations or of the Company's codes, policies and procedures, whether through the Company's Whistleblower Hotline or otherwise.
Sitio's Whistleblower Hotline is:
| Independently administered |
Available to all persons at
https://investors.sitio.com/whistleblower-information/ |
||||||||||
| Anonymous, if desired by the whistleblower | Available 24/7/365 in English, Spanish and French | ||||||||||
Because Sitio believes that strong standards of business ethics and transparency are paramount, Sitio's Whistleblower Policy requires that Sitio not penalize or retaliate, nor tolerate retaliation, against an employee who has reported a concein good faith. Sitio employees are informed of and required to read the Company Whistleblower Policy in connection with their onboarding process. As of the date of this Proxy Statement, Sitio has not received any reports through its Whistleblower Hotline.
| 2025 PROXY STATEMENT |
31
|
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Corporate Governance Matters
Corporate Governance Guidelines
The Board has adopted corporate governance guidelines (the "Corporate Governance Guidelines") in accordance with the corporate governance rules of the NYSE. Sitio employees are informed of and required to read the Corporate Governance Guidelines in connection with their onboarding process. The Corporate Governance Guidelines are available in the Investor Relations section under the "Governance Documents" tab of our website athttps://investors.sitio.com.
Bribery and Anti-Corruption Policy
The Board has adopted a standalone Bribery and Anti-Corruption Policy that applies to all directors, officers and other employees. The Bribery and Anti-Corruption Policy aims to prevent the Company from gaining unfair advantages in business dealings and ensure proper recording of payments and expenses. It prohibits bribery of both government officials and private sector entities, emphasizing compliance with legal standards and ethical business conduct. The Bribery and Anti-Corruption Policy outlines strict regulations against bribery, corruption, and improper payments, including guidelines for interactions with government personnel and the handling of gifts. Additionally, it establishes mechanisms for reporting concerns and prohibits retaliation against whistleblowers in accordance with the Company's Whistleblower Policy, emphasizing the Company's commitment to ethical business practices and transparency. The Bribery and Anti-Corruption Policy is available in the Investor Relations section under the "Governance Documents" tab of our website athttps://investors.sitio.com.
Corporate Responsibility
Sitio's Approach to Corporate Responsibility
Since Sitio's inception, the Company has been committed to implementing best-in-class corporate governance and partnering with responsible operators. Sitio's governance model and compensation structure provides strong alignment between the interests of shareholders and those of the Board and management. As a company with a specialized business focused on the acquisition, development and management of mineral and royalty interests, Sitio's employees are its most important resource. Sitio's fully staffed, experienced team is dedicated solely to its business of efficiently managing its assets while pursuing and consummating acquisitions. There are many benefits of mineral ownership, including no capital expenditures to explore, develop, or operate the oil and gas resources, no lease operating expense, no direct exposure to fluctuating oilfield service costs, and no environmental liabilities associated with the drilling and production of oil and gas.As a mineral and royalty company, Sitio does not produce oil or gas and does not directly develop or operate any oil and gas related infrastructure. The Company has a limited physical footprint, no field staff, and limited influence over the E&P operations that occur on its acreage. Due to the scope of its operations, Sitio has no Scope 1 greenhouse gas ("GHG") emissions and its Scope 2 GHG emissions are only from power consumption at its office locations. While Sitio faces direct exposure to only a limited set of corporate responsibility risks and opportunities due to its business model, the Company supports the efforts of its operators to follow corporate responsibility, environmental and sustainability best practices to minimize our indirect exposure to risks associated with these issues. Sitio's Board, with assistance from the Company's Audit Committee, oversees the Company's corporate responsibility efforts.
Sitio's Key Operators
Sitio's customers are the E&P companies that operate the wells on the lands in which Sitio holds mineral and royalty interests. In addition to utilizing technical analysis to identify attractive mineral and royalty interests, Sitio's management team strives to acquire mineral and royalty interests in properties with top-tier E&P operators. Sitio seeks E&P operators that are well-capitalized and have a strong track record of operating safely and responsibly, and that Sitio believes will continue to maximize production through the application of the latest drilling and completion techniques across its mineral and royalty interests. Sitio expects that its operators conduct their business with integrity and in alignment with industry best practices. Sitio targets minerals under operators with strong environmental track records, prioritizes responsible environmental practices and has language in its standard lease form that disincentivizes E&P companies from flaring natural gas. As Sitio continues to gain additional scale, it intends to further work with operators to reduce flaring and venting of methane and operate under environmental best practices.
As of December 31, 2024 , approximately 142 E&P operators were producing oil and gas from horizontally drilled wells on Sitio's acreage. All of Sitio's key public operators provide disclosure regarding their sustainability efforts, including in many instances reporting highlighting the initiatives that they have implemented to help mitigate sustainability risks and their corporate responsibility initiatives.
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Corporate Governance Matters
Governance
Corporate Responsibility Oversight
The Board and employee base are reflective of a culture that embraces innovation, prioritizes teamwork, and rewards differentiated contributions. Sitio's compensation for its Board and executive management is structured to be well aligned with shareholders, with incentive compensation for executive management that is 100% equity based, with an emphasis on absolute total shareholder retuover a three-year period.
Sitio's Board, with assistance from the Company's Audit Committee, oversees the Company's corporate responsibility efforts. Sitio's Board receives periodic updates from the management team regarding the Company's corporate responsibility efforts. Sitio has established a Corporate Responsibility Taskforce comprised of Sitio's Executive Vice President, General Counsel and Secretary, Vice President of Finance and Investor Relations and other members of the Company's Finance and Legal teams to spearhead the Company's corporate responsibility efforts.
To date, Sitio has implemented several corporate responsibility-related policies and charters, including its:
| Audit Committee Charter | Compensation Committee Charter |
Nominating and Corporate
Governance Committee Charter
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Corporate Code of Business
Conduct and Ethics
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Corporate Governance Guidelines | Human Rights Policy | ||||||||||||
| Bribery and Anti-Corruption Policy | Environmental, Health and Safety Policy | Whistleblower Policy | ||||||||||||
| Clawback Policy | Supplemental Clawback Policy | Stock Ownership Guidelines | ||||||||||||
For more information about each of the above-referenced policies and charters, please see the Investor Relations section under the "Governance Documents" tab of the Company's website athttps://investors.sitio.com. For more information about Sitio's Corporate Code of Business Conduct and Ethics, Corporate Governance Guidelines, Bribery and Anti-Corruption Policy and Whistleblower Policy, please see "Business Ethics & Transparency" above. For more information about Sitio's Human Rights Policy, please see "Human Rights" below. For more information about Sitio's Environmental, Health and Safety Policy, please see "Environment" below. For more information about Sitio's Clawback Policy, Supplemental Clawback Policy and Stock Ownership Guidelines, please see "Executive Compensation" below.
Cybersecurity
Cybersecurity and information technology plays an important role in the success of Sitio. As a mineral and royalty company, Sitio has become increasingly dependent on digital technologies to perform many of its services and to process and record financial and operating data. The Company provides users with access consistent with the principle of least privilege, which requires that users be given no more access than necessary to complete their job functions. The Company requires all its employees complete annual information security trainings and implements periodic simulated phishing attacks. Sitio has installed firewalls and other protection software, as well as multi-factor authentication for employees accessing Company information. Additionally, the Company utilizes encryption methods to protect sensitive data, third-party service providers for alerts regarding suspicious activity, and consultants to perform testing and conduct regular assessments of the Company cybersecurity safeguards.
Sitio's management team periodically briefs the Audit Committee regarding information technology and cybersecurity matters and developments. Sitio has implemented a monitoring and detection system to help identify cybersecurity incidents. In the event of an incident, the Company intends to follow its incident response plan, which outlines the steps to be followed from incident detection to mitigation, recovery, and notification, including notifying key functional areas, as well as senior leadership and the Board, as appropriate. As of the date of this Proxy Statement, Sitio has not experienced any material cybersecurity incidents or breaches.
| 2025 PROXY STATEMENT |
33
|
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Corporate Governance Matters
Social
Sitio considers its workforce to be essential. The Company seeks to structure its hiring practices, compensation and benefits programs, and employee practices to attract and retain high-quality personnel and to provide a comfortable and collegial work environment. Additionally, Sitio ensures that every employee is a shareholder of the Company. Benefits for all non-executive employees include:
|
▪Competitive base salary, annual bonus and other incentives
▪25 days paid time off and 11 paid holidays annually
▪One-time Restricted Stock Unit ("RSU") award grant upon hire
▪Eligibility for annual discretionary RSU awards
▪Company-paid health, vision, and dental insurance
|
▪401(k) safe harbor contributions
▪Company-paid parental leave
▪Company-paid short and long-term disability
▪Company-paid life and AD&D insurance
▪Reimbursement for fertility and family planning
|
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Sitio seeks to maximize employee satisfaction and engagement. Employee satisfaction and engagement measures include:
|
▪Available formal, confidential grievance reporting through the Whistleblower program for employees
▪Bi-annual employee engagement survey and internal review and discussion of results
▪Employee training and development
▪Annual 360 performance review and feedback process, inclusive of the CEO and other named executive officers
▪Company-supported certifications and licenses
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▪Other job-specific development training programs and networking opportunities
▪Focus on succession planning and employee development at multiple levels throughout the Company
▪A Director of Human Resources responsible for leading Sitio's human capital management function, talent development strategy and employee training
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Sitio's employee base and its Board value individuals who possess a wide array of skill sets, high energy and a forward-thinking attitude.
Sitio makes all employment decisions based on individual merit. Sitio is an equal opportunity employer, and in accordance with applicable federal and state laws, will not discriminate in recruitment, employment, promotion, training or any other job-related matters regardless of race, religion, color, sex, sexual orientation, gender identity, national origin, age, disability, or veteran status as proscribed under applicable federal, state, or local law. Sitio's Board, with assistance from the Company's Compensation Committee, oversees the Company's human capital management function.
Community Relations
Sitio believes that it is imperative for all companies to have a positive impact on their communities. As part of its engagement efforts, Sitio hosts an annual Volunteer Day at each of its offices, where employees volunteer their time and effort to give back to local communities.
Additionally, Sitio supports its operators' efforts to engage with their respective local communities. Sitio believes that its operators have a track record of strong community engagement, including through local stakeholder identification and consultation and local philanthropic initiatives. For more information on Sitio's operators' community engagement efforts, please see "Sitio's Key Operators."
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34
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Corporate Governance Matters
Human Rights
Sitio respects human rights and seeks to avoid infringing on the rights of others. The Company's commitment to respecting human rights is based in part on the federal and state laws applicable to the jurisdictions in which Sitio operates. The Company is committed to maintaining a workplace free from harassment and discrimination. Harassment and discrimination is strictly prohibited under Sitio's Employee Handbook. Additionally, Sitio does not employ public or private security forces in connection with any of its operations.
Further, the Board has adopted a Human Rights Policy that applies to all directors, officers and other employees. Sitio's Human Rights Policy is aligned with the United Nations Universal Declaration of Human Rights and the two International Covenants making up the International Bill of Human Rights, the International Labour Organization's Declaration of Fundamental Principles and Rights at Work, the United Nations Guiding Principles on Business and Human Rights, and the United Nations Global Compact. The Human Rights Policy underscores the Company's commitment to upholding human rights standards in all aspects of its operations and relationships. It outlines principles and expectations for employees, officers, and directors to ensure compliance with applicable laws and support for international human rights frameworks. The Policy covers various human rights concerns, including equal opportunity, child labor, forced labor, due diligence, and respect for indigenous communities. Additionally, it establishes mechanisms for reporting concerns in accordance with the Company's Whistleblower Policy and emphasizes training and awareness initiatives. Additionally, as outlined in the Human Rights Policy, Sitio supports its operators' efforts to protect, promote and conduct their operations in a manner that respects human rights. The Human Rights Policy is available in the Investor Relations section under the "Governance Documents" tab of our website athttps://investors.sitio.com.
Sitio is committed to ensuring a safe and healthy working environment and provides company-paid health, vision and dental insurance to all of its employees. As an acquirer and manager of mineral and royalty interests, Sitio's workforce is comprised solely of office personnel. Sitio and its employees do not conduct any oil and gas operations or field work. As a minerals and royalty company, Sitio does not operate or maintain any oil and gas drilling rigs or frac fleets. Due to the nature of Sitio's business, the Company does not face material workforce healthy and safety risks and therefore has not implemented a formal health and safety management system. However, the Board has adopted an EH&S Policy, applicable to all directors, officers and other employees, that underscores the Company's commitment to adhere to EH&S laws and regulations, prioritizing human health, safety, and environmental protection. Further, Sitio has not experienced any reported workforce health and safety-related incidents as a public company.
Environment
Environmental, Health and Safety Policy
The Board has adopted an Environmental, Health and Safety ("EH&S") Policy that applies to all directors, officers and other employees. The EH&S Policy underscores the Company's commitment to adhere to EH&S laws and regulations, prioritizing human health, safety, and environmental protection. The EH&S Policy emphasizes compliance with EH&S standards, including those related to occupational safety, health, and environmental protection. Sitio aims to minimize its environmental impacts, promote EH&S responsibility, provide necessary resources and training, and foster a culture of environmental awareness. Additionally, the EH&S Policy outlines transparent mechanisms for reporting EH&S concerns, ensuring accountability, and prohibiting retaliation against whistleblowers in accordance with the Company's Whistleblower Policy. The Environmental, Health and Safety Policy is available in the Investor Relations section under the "Governance Documents" tab of our website athttps://investors.sitio.com.
| 2025 PROXY STATEMENT |
35
|
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Corporate Governance Matters
Greenhouse Gas Emissions & Climate Change
| 2024 | 2023 | |||||||
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In 2024, Sitio had no Scope 1 emissions. In 2024, Sitio's market-basedScope 2emissions as calculated by an independent third party were approximately186 MT CO2E(.
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In 2023, Sitio had no Scope 1 emissions. In 2023, Sitio's market-basedScope 2emissions as calculated by an independent third party were approximately
|
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| Scope 1 | Presently, Sitio has no environmental liabilities and, due to the nature of its business, no Scope 1 GHG emissions. | ||||
| Scope 2 | The Company's minimal Scope 2 emissions are from power consumption at Sitio's three office locations. | ||||
| Offices | Sitio's |
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| Form Lease | The Company's form lease agreement with operators provides an economic disincentive for the flaring of natural gas, which is designed to reduce unnecessary methane and other GHG emissions by the Company's operators. | ||||
(5)Mboe is defined as one thousand barrels of oil equivalent, calculated by converting natural gas to oil equivalent barrels at a ratio of six thousand cubic feet of natural gas to one barrel of crude oil. This is an energy content correlation and does not reflect a value or price relationship between the commodities.
For further discussion of Sitio's direct and indirect climate-related risks, please see the Risk Factors and other disclosure in the Company's Annual Report on Form 10-K.
Biodiversity Impacts
As a mineral and royalty company, Sitio does not directly control the biodiversity impacts of E&P activities on its acreage. Sitio generally acquires mineral and royalty interests separately from surface interests on the same lands, meaning that except forde minimissurface interests, Sitio does not have control or visibility into surface activities. Therefore, Sitio does not have the ability to conduct restoration programs at operational sites, develop an environmental management system, collect or report data on spills, or perform biodiversity impact assessments.
However, Sitio supports its operators' efforts to minimize ecological and biodiversity impacts from their operations. For more information on the Company's operators, please see "Sitio's Key Operators." Further, Sitio has implemented an EH&S Policy with the goal of conducting the Company's operations in a manner that minimizes adverse impacts on the environment and fulfills the Company's EH&S responsibilities.
Air Emissions, Water and Waste Management
As a mineral and royalty company, Sitio does not incur any plugging and abandonment obligations or environmental liabilities associated with oil and gas production. These obligations and liabilities are borne by the working interest owner(s) in the wells on Sitio's acreage. As Sitio does not have any direct oil and gas operations, the Company does not have relevant traditional E&P company emissions (such as direct NOx, SOx, VOC, PM or HAP emissions) and waste metrics or related disclosures. However, Sitio does endeavor to minimize its direct emissions and waste impact where possible.
Sitio only has limited direct consumption of water and water resources through the operation of its three offices. The Company recognizes the crucial role that water plays in the communities in which it operates and in the oil and gas industry. Sitio supports the efforts of its operators to implement responsible water use practices, such as sustainable sourcing, recycling, reuse and safe disposal of water in their operations.
No hazardous materials are used in Sitio's direct operations. Non-hazardous waste recycling programs are utilized in each of Sitio's corporate offices.
Additionally, Sitio supports its operators' efforts to minimize their air emissions and waste impact.
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36
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Corporate Governance Matters
Board Composition
The number of members of our Board will be fixed from time to time exclusively by resolution of the Board, pursuant to the Restated Certificate of Incorporation and Bylaws (each as amended from time to time) and subject to the terms of the Director Designation Agreement the Company entered into with certain of its stockholders. Currently, the number of directors comprising our Board is set at nine. In accordance with the Restated Certificate of Incorporation, at each annual meeting of stockholders, each director will be elected for a term expiring at the next annual meeting. Moreover, pursuant to the Corporate Governance Guidelines, there are seven-year term limits for non-management directors. The Nominating and Corporate Governance Committee is responsible for reviewing the advisability or need for any changes in the number and composition of the Board.
Director Independence
As a public company, we are subject to various requirements of Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley") and the rules of the NYSE. Generally, these rules require that a specified number or percentage of directors serving on the Board and certain committees meet applicable standards of independence. Our Board may increase the number of directorships to ensure that our Board includes the requisite number of independent directors pursuant to Sarbanes-Oxley and rules of the NYSE.
In evaluating director candidates, we assess whether a candidate possesses the integrity, judgment, knowledge, experience, skills and expertise that are likely to enhance the Board's ability to oversee the Company's affairs and business, including, when applicable, to enhance the ability of the committees of the Board to fulfill their duties. Our Board has determined that, with the exception of Mr. Conoscenti , all of our director nominees are independent under the independence standards of the NYSE. In making this determination, the Board affirmatively determined that each independent director has no material relationship with the Company.
Leadership Structure of the Board
The Bylaws and Corporate Governance Guidelines provide the Board with the flexibility to combine or separate the positions of Chairman of the Board and Chief Executive Officer and/or to implement a lead director in accordance with its determination that utilizing one or the other structure would be in the best interests of our Company. Effective December 2022 , the two positions are separate; Mr. Lockshin serves as our Chairman of the Board and Mr. Conoscenti serves as a director and our Chief Executive Officer. Mr. Lockshin qualifies as "independent" under our Corporate Governance Guidelines and the independence standards of the NYSE. When the position of Chairman is not held by an independent director, a Lead Independent Director will be designated by the Board, based on the recommendation of the Nominating and Corporate Governance Committee .
The Chairman of the Board establishes the agenda for each Board meeting. Each director is free to suggest the inclusion of items on the agenda and to raise any Board meeting subjects that are not on the agenda for a given meeting. Non-management directors have regularly scheduled meetings in executive sessions. Such executive sessions are led by our Chairman of the Board. By meeting in executive sessions on a regular basis, the independent directors have the opportunity to identify and evaluate issues facing the Company, engaging in a frank and candid dialogue without management being present.
The Board has concluded that our current leadership structure is appropriate at this time and will continue to periodically review our leadership structure and may make such changes in the future as it deems appropriate.
| 2025 PROXY STATEMENT |
37
|
||||
Corporate Governance Matters
Role of Board in Risk Oversight Process
Risk assessment and oversight are an integral part of our governance and management processes. The Board encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations.
|
Board of Directors
|
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The Board is responsible for monitoring and assessing strategic risk exposure.
|
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Audit Committee
|
Compensation Committee
|
Nominating and Corporate
Governance Committee
|
||||||||||||
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▪Discusses with management the Company's guidelines and policies related to risk management, including exposure to financial risk, commodity price risk and cybersecurity risk.
▪Reviews management's monitoring of compliance programs and the Corporate Code of Business Conduct and Ethics.
▪Monitors compliance with legal and regulatory requirements and considers and approves or disapproves any related-person transactions.
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▪Assesses risks related to the Company's compensation policies and programs.
▪Oversees the Company's trading, anti-hedging and pledging policies applicable to executive officers and directors.
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▪Evaluates the adequacy of the Corporate Governance Guidelines in light of changing corporate governance trends and regulations.
▪Advises Board and makes recommendations regarding corporate governance practices.
▪Advises Board about the appropriate composition of the Board and its committees.
|
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Management
|
||||||||||||||
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▪Management discusses strategic and operational risks at regular management meetings and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing the Company.
▪Throughout the year, senior management reviews these risks with the Board at regular Board meetings as part of management presentations that focus on business functions, operations or strategies and presents the steps taken by management to mitigate or eliminate such risks.
|
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Oversight of Cybersecurity Risk.
Management is responsible for assessing, identifying, and managing risks from cybersecurity threats. Through the Company's enterprise risk management program, the Board of Directors, with assistance from the Audit Committee, is responsible for overseeing the Company's cybersecurity function, including information security and IT risks, as well as management's actions to identify, assess, mitigate, and remediate those risks. The Audit Committee assists the Board in exercising oversight of the Company's cybersecurity function, including information security, and IT risks. All employees are required to receive annual cybersecurity awareness training. As of the date of this Proxy Statement, the Company has not been subject to any material cybersecurity incidents or breaches.
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Management Succession Planning.
The Board, with assistance from the
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38
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Corporate Governance Matters
Committees of the Board of Directors
We have an Audit Committee (the "Audit Committee"), a Compensation Committee (the "Compensation Committee") and a Nominating and Corporate Governance Committee of the Board and may have such other committees as the Board shall determine from time to time. Each of the standing committees of the Board have the composition and responsibilities described below.
Each of these committees has a charter, which, along with our Corporate Code of Business Conduct and Ethics are available in the Investor Relations section under the "Governance Documents" tab on our websitehttps://investors.sitio.comand stockholders may obtain printed copies, free of charge, by sending a written request to Sitio Royalties Corp. , 1401 Lawrence Street , Suite 1750, Denver, CO 80202; Attn: Corporate Secretary. Information contained on or available through our website is not part of or incorporated by reference into this Proxy Statement or any other report we may file with the SEC .
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Audit Committee
|
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|
Members:
John R. ("J.R.") Sult
Meetings in 2024:
8
Additional information regarding the functions performed by the Audit Committee is set forth in the "Audit Committee Charter" that is posted in the
|
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Principal Responsibilities
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|||||||||||
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▪Assist the Board in overseeing our accounting, financial reporting and enterprise risk management processes and the audits of our financial statements and internal controls over financial reporting; and
▪Coordinate the appointment, compensation and oversight of the Company's independent auditor, oversight of internal audit and other audit-related matters, if applicable.
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Our Board has affirmatively determined that each of
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During the year ended December 31, 2024 , the Audit Committee consisted of Mr. Clark , Ms. Harvey and Mr. Sult , with Mr. Clark serving as committee chair.
| 2025 PROXY STATEMENT |
39
|
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Corporate Governance Matters
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Compensation Committee
|
||||||||||||||
|
Members:
Meetings in 2024:
5
The Compensation Committee's duties are discussed in detail in the "Compensation Committee Charter" that is posted in the
|
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Principal Responsibilities
|
||||||||||||||
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▪Oversee the Company's overall compensation philosophy that applies to all Company employees;
▪Review, evaluate and approve the agreements, plans, policies and programs of the Company to compensate the Company's executive officers and directors; and
▪Otherwise discharge the Board's responsibilities relating to compensation of the Company's executive officers and directors.
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Our Board has affirmatively determined that each of
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During the year ended December 31, 2024 , the Compensation Committee consisted of Ms. Gould , Mr. Lockshin , Ms. Burleson and Mr. Duplantier , with Ms. Gould serving as committee chair.
The charter also provides that the Compensation Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the Compensation Committee will consider the independence of each such adviser, including the factors required by the NYSE listing rules and the SEC .
The Compensation Committee has the sole authority to retain, amend the engagement with, and terminate any compensation consultant to be used to assist in the evaluation of director, Chief Executive Officer, or executive officer compensation, including employment contracts and change in control provisions. The Compensation Committee has sole authority to approve the consultant's fees and other retention terms and has authority to cause the Company to pay the fees and expenses of such consultants. For more information, please see "Compensation Discussion and Analysis."
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40
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Corporate Governance Matters
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Nominating and Corporate Governance Committee
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Members:
John R. ("J.R.")
Meetings in 2024:
4
Additional information regarding the functions performed by the
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Principal Responsibilities
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▪Assist our Board in identifying, evaluating, and recommending potential qualified nominees to serve as members of our Board, recommending committee members and structure and advising our Board about corporate governance processes and practices;
▪Conduct annual Board performance reviews, including reviews of individual directors; and
▪Lead CEO succession planning efforts.
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Our Board has affirmatively determined that each of
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During the year ended December 31, 2024 , the Nominating and Corporate Governance Committee consisted of Ms. Harvey , Mr. Sult and Mr. Stoneburner , with Mr. Sult serving as committee chair.
| 2025 PROXY STATEMENT |
41
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Corporate Governance Matters
Identification of Director Candidates
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Identification
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Evaluation
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In identifying potential director candidates, the
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In addition, the
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Recommendation
|
|||||||||||||||||||||||||||||||||||||||||
It is the responsibility of the Nominating and Corporate Governance Committee to identify, evaluate and recommend to the Board the director nominees for election at the annual meetings of stockholders, as well as to fill vacancies or additions on our Board that may occur between annual meetings. The Nominating and Corporate Governance Committee endeavors to recommend only director candidates who possess the highest personal values and integrity; who have experience and have exhibited achievements in one or more of the key professional, business, financial, legal and other challenges that face a U.S. minerals and royalties company; who exhibit sound judgment, intelligence, personal character and the ability to make independent analytical inquiries; who demonstrate a willingness to devote sufficient time to Board duties; and who are likely to be able to serve on our Board for a sustained period. The Board and the Nominating and Corporate Governance Committee are also committed to providing investors with disclosure concerning the backgrounds, skills and qualifications of our directors. We have found that the strength of our directors' professional and leadership experience allows for open and robust dialog and enhances the Board's decision-making ability.
The Board and the Nominating and Corporate Governance Committee have reflected in the charter of the Nominating and Corporate Governance Committee our commitment to consider a mix in professional experiences, skills and background and the optimal enhancement of the current mix of talent and experience on the Board when considering individual director candidates and future opportunities for strengthening our Board's composition. In that regard, the Nominating and Corporate Governance Committee endeavors to achieve an overall variety and mix of skills among our directors over time. The Nominating and Corporate Governance Committee values the skills set forth in the Company's skills matrix set forth in this Proxy Statement, among others. The Nominating and Corporate Governance Committee believes the current members of the Board reflect varied experience in the oil and gas industry and finance and investment analysis fields, among other areas, as well as demonstrated leadership experience. The Nominating and Corporate Governance Committee will continue to seek opportunities to enhance this skill set mix and does not discriminate based upon race, religion, sex, sexual orientation, gender identity, national origin, age, disability, citizenship, or any other legally protected status.
|
42
|
|||||
Corporate Governance Matters
Submission of Stockholder Proposals for the 2026 Annual Meeting
For any proposal to be considered for inclusion in our proxy statement and proxy card for submission to the stockholders at the 2026 Annual Meeting, it must be submitted in writing and comply with the requirements of Rule 14a-8 of the Exchange Act. Such proposals are due 120 calendar days before the anniversary of the date we release our proxy materials for the prior year, which means such proposals must be received by the Secretary of the Company at the principal executive office at 1401 Lawrence Street , Suite 1750, Denver, CO 80202, no later than November 28, 2025 ; however, if we hold the 2026 Annual Meeting more than 30 calendar days before or after the anniversary of this year's meeting, such proposals will be due within a "reasonable time" before we begin to print and send the proxy materials for the 2026 Annual Meeting.
In addition, our Bylaws provide notice procedures for stockholders to nominate a person as a director and to propose business to be considered by stockholders at a meeting. A stockholder's notice to the Secretary with respect to such business, to be timely, must be received by the Secretary at the principal executive offices of the Company not later than the close of business on the 90thday nor earlier than the close of business on the 120thday before the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120thday before the meeting and not later than the later of (i) the close of business on the 90thday before the meeting or (ii) the close of business on the 10thday following the day on which public announcement of the date of the annual meeting is first made by the Company. Accordingly, for our 2026 Annual Meeting, assuming the meeting is held on or about May 13, 2026 , and if we do not issue a public announcement changing the date of the meeting, notice of a nomination or proposal must be delivered to us no later than the close of business on February 12, 2026 and no earlier than the close of business on January 13, 2026 . Nominations and proposals also must satisfy other requirements set forth in our Bylaws.
In the case of nominations, in addition to satisfying the foregoing requirements, stockholders who intend to solicit proxies in support of director nominees other than the Company's nominees must provide notice which sets forth the information required by Rule 14a-19 of the Exchange Act ("Rule 14a-19"), and such notice must be received no later than the earlier of the time provided in our Bylaws or the time provided in Rule 14a-19. Thus, for our 2026 Annual Meeting, assuming the meeting is held on or about May 13, 2026 , such stockholders must provide proper written notice that sets forth all of the information required by Rule 14a-19 to our principal executive office between January 13, 2026 and February 12, 2026 . However, if the Board or the Chair of the 2026 Annual Meeting determines that any stockholder proposal was not made in accordance with the foregoing provisions, such proposal shall not be presented for action at the 2026 Annual Meeting.
Meetings of the Board, Board and Committee Member Attendance and Annual Meeting Attendance
During 2024, the Board held 15 meetings, and each of the Company's continuing directors who was then-serving attended or participated in at least 80% of all regularly scheduled meetings of our Board and committees of which he/she was a member. All then-current directors attended the Company's 2024 Annual Meeting of Stockholders held on May 14, 2024 (the "2024 Annual Meeting"). We encourage all of our directors and nominees for director to attend the Annual Meeting; however, attendance is not mandatory.
| 2025 PROXY STATEMENT |
43
|
||||
Corporate Governance Matters
Board and Committee Evaluation Process
|
Complete
Assessment
|
Participate in
One-on-One
Interviews and
Receive 360 Feedback
from Management
|
Review
Responses
|
Incorporate
Feedback
|
|||||||||||||||||||||||||||||||||||||||||
|
▪Board and committee effectiveness and culture
▪Board and committee structure, leadership, duties and composition
▪Board processes and best practices
▪Board oversight, risk management and tone at the top
▪Quality and frequency of meetings
▪Quality of information and materials provided to Board and committees
|
▪One-on-one interviews conducted with each director
▪Chair of
▪Interviews provide additional, candid feedback on Board effectiveness and individual director strengths and performance, as well as areas for improvement
|
▪The Board works with executive management to facilitate any action items from the Board and committee evaluation process
▪
|
||||||||||||||||||||||||||||||||||||||||||
Director Onboarding and Continuing Education
We provide each new director with an orientation that consists of a series of in-person briefings provided by senior management and others on our business operations, strategic plans, significant finance, accounting and risk management issues, corporate governance, compliance, and key policies and practices. The orientation sessions are tailored to the particular director depending on their level of experience serving on other public company boards, their knowledge of the Company and its industry and the oversight areas of applicable committees. Every orientation provides each director with an in-depth overview of the Company's strategic plans, corporate governance practices and other key policies and practices.
Each director is expected to remain informed and engage in ongoing learning opportunities as necessary to maintain expertise to perform their responsibilities as a director. Board meetings include periodic third-party speakers to ensure the Board is made aware of trends and developments on a wide range of topics relevant to the Board. From time to time, we provide pertinent articles and information relating to our business, financial affairs, risks, competitors, corporate governance and changes in legal and regulatory issues. On occasion, we may also coordinate training and educational sessions for directors from outside experts. We reimburse directors for reasonable costs associated with attending relevant director education programs.
|
44
|
|||||
Corporate Governance Matters
We believe that regular stockholder engagement is essential to our Company's success, and welcome all communication from stockholders. Should stockholders and interested parties wish to communicate with the Board or any specified individual directors, such correspondence should be sent to the attention of the Corporate Secretary at 1401 Lawrence Street , Suite 1750, Denver, CO 80202. The mailing envelope must contain a clear notation indicating that the enclosed letter is a "STR Stockholder - Board Communication" or "STR Stockholder - Director Communication." All such letters must identify the author as a stockholder and clearly state whether the intended recipients are all members of the Board or just certain specified individual directors. The Company's General Counsel will review each communication received from stockholders and other interested parties and will forward the communication, as expeditiously as reasonably practicable, to the addressees if: (i) the communication complies with the requirements of any applicable policy adopted by the Board relating to the subject matter of the communication and (ii) the communication falls within the scope of matters generally considered by the Board. If the subject matter of a communication relates to matters that have been delegated by the Board to a committee or to an executive officer of the Company, then the Company's Corporate Secretary may forward the communication to the executive officer or chairman of the committee to which the matter has been delegated. If requested, any questions or comments will be kept confidential to the extent reasonably possible. The acceptance and forwarding of communications to the members of the Board or an executive officer does not imply or create any fiduciary duty of the Board members or executive officer to the person submitting the communications.
Compensation Committee Interlocks and Insider Participation
Our Compensation Committee is currently comprised of Ms. Gould , Mr. Lockshin , Ms. Burleson and Mr. Duplantier . None of such persons was an officer or employee of the Company or any of its subsidiaries during fiscal year 2024 or was formerly an officer or employee of the Company. During fiscal year 2024, no member of our Board was an executive officer of a company at which one of our executive officers served as a member of the board of directors or compensation committee.
| 2025 PROXY STATEMENT |
45
|
||||
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial ownership of our common stock as of March 21, 2025 based on information filed with the SEC or obtained from the persons named below, with respect to the beneficial ownership of shares of our common stock by:
▪each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
▪each of our executive officers and directors (including our nominees) that beneficially owns shares of our common stock; and
▪all our executive officers and directors as a group.
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. Other than as specifically noted below, the mailing address for each listed beneficial owner is in care of Sitio Royalties Corp. 1401 Lawrence Street , Suite 1750, Denver, CO 80202. The percentages are based on 77,977,229 shares of Class A common stock and 73,391,244 shares of Class C common stock outstanding as of March 21, 2025 .
|
Shares Beneficially Owned by Certain Beneficial Owners and Management(1)(2)
|
||||||||||||||||||||||||||
|
Class A Common Stock
|
Class
|
Combined Voting Power(3)
|
||||||||||||||||||||||||
|
|
Number
|
Percentage
|
Number
|
Percentage
|
Number
|
Percentage
|
||||||||||||||||||||
|
5% Stockholders:
|
||||||||||||||||||||||||||
|
|
- | - | 20,095,233 |
27.4%
|
20,095,233 |
13.3%
|
||||||||||||||||||||
|
|
10,431 |
*
|
15,443,610 |
21.0%
|
15,454,041 |
10.2%
|
||||||||||||||||||||
|
Kimmeridge(6)
|
- | - | 36,495,520 |
49.7%
|
36,495,520 |
24.1%
|
||||||||||||||||||||
|
Vanguard(7)
|
7,833,988 |
10.0%
|
- | - | 7,833,988 |
5.2%
|
||||||||||||||||||||
|
BlackRock(8)
|
6,224,599 |
8.0%
|
- | - | 6,224,599 |
4.1%
|
||||||||||||||||||||
|
|
5,906,087 |
7.6%
|
- | - | 5,906,087 |
3.9%
|
||||||||||||||||||||
|
Fidelity(10)
|
4,018,485 |
5.2%
|
- | - | 4,018,485 |
2.7%
|
||||||||||||||||||||
|
|
6,263,396 |
8.0%
|
- | - | 6,263,396 |
4.1%
|
||||||||||||||||||||
|
Directors, Director Nominees and Executive Officers:
|
||||||||||||||||||||||||||
|
|
34,821 |
*
|
- | - | 34,821 |
*
|
||||||||||||||||||||
|
|
114,950 |
*
|
80,962 |
*
|
195,912 |
*
|
||||||||||||||||||||
|
|
34,821 |
*
|
- | - | 34,821 |
*
|
||||||||||||||||||||
|
|
37,313 |
*
|
- | - | 37,313 |
*
|
||||||||||||||||||||
|
|
52,459 |
*
|
- | - | 52,459 |
*
|
||||||||||||||||||||
|
|
32,779 |
*
|
- | - | 32,779 |
*
|
||||||||||||||||||||
|
|
41,724 |
*
|
- | - | 41,724 |
*
|
||||||||||||||||||||
|
|
24,390 |
*
|
- | - | 24,390 |
*
|
||||||||||||||||||||
|
John R. ("J.R.") Sult(18)
|
88,739 |
*
|
- | - | 88,739 |
*
|
||||||||||||||||||||
|
|
45,313 |
*
|
51,534 |
*
|
96,847 |
*
|
||||||||||||||||||||
|
|
33,931 |
*
|
41,908 |
*
|
75,839 |
*
|
||||||||||||||||||||
|
|
30,861 |
*
|
40,488 |
*
|
71,349 |
*
|
||||||||||||||||||||
|
|
182,952 |
*
|
102,006 |
*
|
284,958 |
*
|
||||||||||||||||||||
|
|
41,223 |
*
|
41,887 |
*
|
83,110 |
*
|
||||||||||||||||||||
|
All Executive Officers, Directors and Director Nominees as a Group (14 persons)
|
796,276 |
*
|
358,785 |
*
|
1,155,061 |
*
|
||||||||||||||||||||
* Less than 1%.
|
46
|
|||||
Security Ownership of Certain Beneficial Owners and Management
(1)Pursuant to Rule 13d-3 promulgated under the Exchange Act, a person has beneficial ownership of a security as to which that person, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares voting power and/or investment power of such security and as to which that person has the right to acquire beneficial ownership of such security within 60 days.
(2)Subject to the terms of the Second Amended and Restated Agreement of Limited Partnership of Sitio Royalties Operating Partnership, LP ("Sitio OpCo"), holders of limited partnership interest units ("OpCo Units") in Sitio OpCo (other than Sitio) generally have the right to redeem all or a portion of their OpCo Units (together with a corresponding number of shares of Class C common stock) for Class A common stock at a ratio of one share of Class A common stock for each OpCo Unit (and corresponding share of Class C common stock). Sitio has the option to deliver cash in lieu of shares of Class A common stock upon exercise by a holder of OpCo Units.
(3)This column reflects the combined voting power of the Class A common stock and Class C common stock held by each identified stockholder as of March 21, 2025 . Consideration Allocation Rights represent the right to receive shares of Class A common stock held by certain employees of the Company that may be forfeited back to the Company in certain circumstances and reallocated among the holders of the Consideration Allocation Rights. The holders of the Consideration Allocation Rights are not entitled to vote or dispose of the Class A common stock underlying such rights unless such Class A common stock is forfeited back to the Company and reallocated among the holders of the Consideration Allocation Rights. Because the holders of the Consideration Allocation Rights are not entitled to vote or dispose of the shares of Class A common stock underlying such rights, such shares were not included when calculating a holder's combined voting power.
(4)Reported shares include (i) 8,637,727 shares of Class C common stock held by BX Royal Aggregator LP and (ii) 11,457,506 shares of Class C common stock, including those underlying the rights of certain stockholders to receive one shares of Class C common stock and one unit of Sitio OpCo for each restricted security forfeited (each such right, an "Allocation Right"), held by RRR Aggregator LLC ("RRR Aggregator"). The Class C common stock held by RRR Aggregator represents 11,400,218 units of Sitio OpCo and an equal number of shares of Class C common stock previously held directly by Rock Ridge Royalty Company LLC ("Rock Ridge") that were distributed to RRR Aggregator in a distribution, which are convertible, as a unit, into an equal number of shares of Class A common stock. Includes 57,288 shares of Class C common stock underlying the Allocation Rights previously held directly by Rock Ridge that were in part assigned to RRR Aggregator. BCP VI/BEP Holdings Manager L.L.C. is the general partner of BX Royal Aggregator LP . Blackstone Energy Management Associates L.L.C. and Blackstone Management Associates VI L.L.C. are the managing members of BCP VI/BEP Holdings Manager L.L.C. Blackstone EMA L.L.C. is the sole member of Blackstone Energy Management Associates L.L.C. BMA VI L.L.C. is the sole member of Blackstone Management Associates VI L.L.C. BX Primexx Topco LLC is the sole member of RRR Aggregator. BCP VII/BEP II Holdings Manager L.L.C. is the managing member of BX Primexx Topco LLC . Blackstone Energy Management Associates II L.L.C. and Blackstone Management Associates VII L.L.C. are the managing members of BCP VII/BEP II Holdings Manager L.L.C. Blackstone EMA II L.L.C. is the sole member of Blackstone Energy Management Associates II L.L.C. BMA VII L.L.C. is the sole member of Blackstone Management Associates VII L.L.C. Blackstone Holdings III L.P. is the managing member of each of BMA VI L.L.C. , Blackstone EMA L.L.C. , BMA VII L.L.C. and Blackstone EMA II L.L.C. Blackstone Holdings III GP L.P. is the general partner of Blackstone Holdings III L.P. Blackstone Holdings III GP Management L.L.C. is the general partner of Blackstone Holdings III GP L.P. Blackstone Inc. ("Blackstone") is the sole member of Blackstone Holdings III GP Management L.L.C. Blackstone Securities Partners L.P. , an affiliate of Blackstone , identifies as a registered broker-dealer and acts as broker-dealer with respect to securities offerings by various investment funds managed by Blackstone and its affiliates. Blackstone Securities Partners L.P. is not involved in this transaction. The sole holder of the Series II preferred stock of Blackstone is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly-owned by Blackstone's senior managing directors and controlled by its founder, Stephen A. Schwarzman . Adam Jenkins and Mark Henle , each an employee of an affiliate of BX Royal Aggregator LP and RRR Aggregator, and Erik Belz , a former employee of an affiliate of BX Royal Aggregator LP and RRR Aggregator, previously served on the board of directors of Falcon, the predecessor to STR Sub, Inc. (f/k/a Sitio Royalties Corp. ) ("Old Sitio"). Additionally, Alan Hirshberg , a senior advisor of an affiliate of BX Royal Aggregator LP and RRR Aggregator, previously served on the board of directors of Falcon. The address of each of the persons identified in this note is c/o Blackstone Inc. , 345 Park Avenue , New York, NY 10154.
(5)Reported shares include 12,935,120 shares of Class C common stock (including those underlying the Allocation Rights) held by Source Energy Partners, LLC ("Source Energy"). Also includes 10,431 shares of Class A common stock held by OCM FIE, LLC , 5,610 shares of Class C common stock held by Source Energy Permian II, LLC ("Source II"), 2,502,880 shares of Class C common stock held by Sierra Energy Royalties, LLC ("Sierra"). Sierra Energy Intermediate, LLC ("Sierra Intermediate") is the sole member of Source II and the sole member of Sierra. Sierra Energy Holdings, LLC ("Sierra Holdings ") is the sole member of Sierra Intermediate. Opps XI PVDC PT, L.P. ("Opps XI") is the majority equity holder of Sierra Holdings . Oaktree Fund AIF Series (Cayman), L.P. ("Oaktree Fund AIF Series") is the general partner of Opps XI. Oaktree AIF (Cayman) GP Ltd. ("Oaktree AIF") is the general partner of Oaktree Fund AIF Series. Oaktree Capital Management, L.P. ("OCMP LP ") is the managing member of OCM FIE, LLC and Oaktree AIF. Oaktree Capital Management GP, LLC ("Management GP") is the general partner of OCMP LP . Atlas OCM Holdings, LLC ("Atlas OCM"), is the sole managing member of Management GP. OCM Source Holdings, L.P. ("OCM Source") is the sole owner of Series A Units of Source Energy. Oaktree Fund GP, LLC ("Fund GP") is the general partner of OCM Source. Oaktree Fund GP I, L.P. ("Fund GP I") is the managing member of Fund GP. Oaktree Capital I, L.P. ("Capital I"), is the general partner of Fund GP I. OCM Holdings I, LLC ("Holdings I") is the general partner of Capital I. Oaktree Holdings, LLC ("Holdings") is the managing member of Holdings I. Oaktree Capital Group, LLC ("OCG") is the managing member of Holdings . Oaktree Capital Group Holdings GP, LLC is the indirect owner of the class B units of OCG. Brookfield Corporation (f/k/a Brookfield Asset Management Inc. ) ("BAM"), as the indirect owner of the class A units of OCG, has the ability to appoint and remove certain directors of OCG. BAM Partners Trust , as the sole owner of Class B Limited Voting Shares of BAM, has the ability to appoint and remove certain directors of BAM. OCM FIE, LLC is an affiliate of OCM investments, LLC and Brookfield Oaktree Wealth Solutions LLC , each of which is a registered broker-dealer and acts as broker-dealer with respect to securities offerings by various investment funds managed by Oaktree Capital Management, L.P. and its affiliates. Neither such broker-dealer is involved in this transaction. Allen Li , a Senior Vice President at Oaktree Capital Management, L.P. , was a director at Sitio (f/k/a Falcon Minerals Corporation ) from June 2022 to December 29, 2022 . Mr. Li was also a director at Desert Peak, which merged into Falcon, since August 2021 . The address of each of the persons identified in this note is 333 S. Grand Avenue , 28th Floor, Los Angeles, CA 90071.
| 2025 PROXY STATEMENT |
47
|
||||
Security Ownership of Certain Beneficial Owners and Management
(6)Reported shares include (i) 32,390,232 shares of Class C common stock (including those underlying the Allocation Rights) held by KMF DPM HoldCo, LLC and (ii) 4,288,682 shares of Class C common stock (including those underlying the Allocation Rights) held by Chambers DPM HoldCo, LLC . Kimmeridge, a Delaware limited liability company, is the investment adviser to the ultimate parent company of KMF DPM HoldCo, LLC and Chambers DPM HoldCo, LLC . Kimmeridge is party to certain agreements with the Company and KMF Land, LLC , the Company's predecessor for accounting purposes (the "accounting predecessor" and, together with Falcon and Old Sitio, the "Predecessors"). Kimmeridge is managed by a board of managers, each of whom is a Managing Member, consisting of Benjamin Dell , Henry Makansi , Neil McMahon , Noam Lockshin , Alexander Inkster , Neda Jafar and Denis Laloy . Mr. Lockshin currently serves on our Board. The address of each of the persons identified in this note is 15th Little West 12th Street-Fourth Floor, New York, New York 10014.
(7)Based on Schedule 13G filed March 6, 2025 , the Vanguard Group, Inc.'s clients, including investment companies registered under the Investment Company Act of 1940 and other managed accounts, have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities reported herein. No one other person's interest in the securities reported herein is more than 5%. The address of the business office of each of the persons identified in this note is 100 Vanguard Blvd. , Malvern, PA 19355.
(8)Based on Schedule 13G filed November 8, 2024 , reported shares consist of 6,224,599 shares of Class A common stock held by BlackRock, Inc. The address of the person identified in this note is 55 East 52nd Street , New York, NY 10055.
(9)Based on Schedule 13G filed February 12, 2024 , reported shares of 5,906,087 shares of Class A common stock held by Neuberger Berman Group LLC . Neuberger Berman Investment Advisers LLC serves as investment manager to Neuberger Berman Group LLC . Neuberger Berman Group LLC , through its subsidiaries Neuberger Berman Investment Advisers Holdings LLC and Neuberger Trust Holdings LLC , controls Neuberger Berman Trust Co N.A. , Neuberger Berman Asia Ltd. , Neuberger Berman Canada ULC , Neuberger Berman Trust Co of Delaware N.A. and Neuberger Berman Investment Advisers LLC and certain affiliated persons. The address of each of the persons identified in this note is 1290 Avenue of the Americas , New York, NY 10104.
(10)Based on Schedule 13G filed February 12, 2025 , reported 4,018,485.39 shares of Class A common stock held by FMR LLC . One or more other persons are known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Class A common stock of Sitio. No one other person's interest in the Class A common stock of Sitio is more than five percent of the total outstanding Class A common stock. The address of each of the persons identified in this note is 245 Summer Street , Boston, Massachusetts 02210.
(11)Based on Schedule 13G filed February 23, 2025 , reported 6,263,396 shares of Class A common stock held by Adage Capital Management, L.P. , a Delaware limited partnership ("ACM"). ACM is the investment manager of Adage Capital Partners, L.P. , a Delaware limited partnership ("ACP"), with respect to the shares of Class A common stock of Sitio directly held by ACP. Robert Atchinson is the (i) managing member of Adage Capital Advisors, L.L.C. , a limited liability company organized under the laws of the State of Delaware ("ACA"), the managing member of Adage Capital Partners GP, L.L.C. , a limited liability company organized under the laws of the State of Delaware ("ACPGP"), the general partner of ACP and (2) managing member of Adage Capital Partners LLC , a Delaware limited liability company ("ACPLLC"), general partner of ACM, with respect to the shares of Class A common stock directly held by ACP. Phillip Gross is the (i) managing member of ACA, the managing member of ACPGP and (2) managing member of ACPLLC, the general partner of ACM, with respect to the shares of Class A common stock directly held by ACP. The address of each of the persons identified in this note is 200 Clarendon Street , 52nd Floor, Boston, Massachusetts 02116.
(12)Reporting person beneficially owns (i) 23,111 shares of Class A common stock and (ii) 24,390 deferred share units ("DSUs") granted pursuant to Sitio's Long-Term Incentive Plan (the "Sitio LTIP"). Such DSUs vest in four equal quarterly installments over the one-year period following their grant date, subject to the reporting person's continuous service through each such date, and 21,220 DSUs are vested as of the date of this Proxy Statement.
(13)Reporting person beneficially owns (i) 25,603 shares of Class A common stock and (ii) 24,390 DSUs granted pursuant to the Sitio LTIP. Such DSUs vest in four equal quarterly installments over the one-year period following their grant date, subject to the reporting person's continuous service through each such date, and 21,220 DSUs are vested as of the date of this Proxy Statement.
(14)Reporting person beneficially owns (i) 40,749 shares of Class A common stock and (ii) 24,390 DSUs granted pursuant to the Sitio LTIP. Such DSUs vest in four equal quarterly installments over the one-year period following their grant date, subject to the reporting person's continuous service through each such date, and 21,220 DSUs are vested as of the date of this Proxy Statement.
(15)Reporting person beneficially owns (i) 21,069 shares of Class A common stock and (ii) 24,390 DSUs granted pursuant to the Sitio LTIP. Such DSUs vest in four equal quarterly installments over the one-year period following their grant date, subject to the reporting person's continuous service through each such date, and 21,220 DSUs are vested as of the date of this Proxy Statement.
(16)Reporting person beneficially owns (i) 30,014 shares of Class A common stock and (ii) 24,390 DSUs granted pursuant to the Sitio LTIP. Such DSUs vest in four equal quarterly installments over the one-year period following their grant date, subject to the reporting person's continuous service through each such date, and 21,220 DSUs are vested as of the date of this Proxy Statement.
(17)Reporting person beneficially owns 24,390 DSUs granted pursuant to the Sitio LTIP. Such DSUs vest in four equal quarterly installments over the one-year period following their grant date, subject to the reporting person's continuous service through each such date, and 21,220 DSUs are vested as of the date of this Proxy Statement.
(18)Reporting person beneficially owns (i) 77,029 shares of Class A common stock and (ii) 24,390 DSUs granted pursuant to the Sitio LTIP. Such DSUs vest in four equal quarterly installments over the one-year period following their grant date, subject to the reporting person's continuous service through each such date, and 21,220 DSUs are vested as of the date of this Proxy Statement.
|
48
|
|||||
Certain Relationships and Interested Transactions
Policies and Procedures for Review of Interested Transactions
As part of our commitment to good governance, the Board and Audit Committee review potential conflicts of interest to ensure decisions are being made with the best interest of the Company in mind. We define an "Interested Transaction" is a transaction, arrangement, or relationship in which we are or will be a participant, the amount of which involved exceeds $120,000 and in which any related person had, has, or will have a direct or indirect material interest. A "Related Person" means:
▪a director or director nominee of the Company;
▪a senior officer of the Company, which, among others, includes each vice president and officer of the Company that is subject to reporting under Section 16 of the Exchange Act;
▪a stockholder (together with any of its controlling or controlled affiliates) owning more than 5% of any class of the Company's voting stock (together, a "5% Stockholder");
▪a person who is an 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, director nominee, senior officer or 5% Stockholder and any person (other than a tenant or employee) sharing the household of the director, director nominee, senior officer or 5% Stockholder; or
▪an entity that is owned or controlled by someone listed above, an entity in which someone listed above has a substantial ownership interest or control of the entity, or an entity in which someone listed above is an executive officer or general partner, or holds a similar position.
Our Board adopted the written Related Persons Transaction Policy of Old Sitio prior to the completion of the December 29, 2022 merger transactions with Brigham contemplated by the Agreement and Plan of Merger, dated as of September 6, 2022 (the "Brigham Merger"), effective as of December 29, 2022 . Pursuant to this policy, our Audit Committee will review all material facts of all Interested Transactions and either approve or disapprove entry into the Interested Transaction, subject to certain limited exceptions. In determining whether to approve or disapprove entry into an Interested Transaction, our Audit Committee shall consider, among other factors, the following: (i) whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances; (ii) the extent of the Related Person's interest in the transaction; and (iii) whether the Interested Transaction is material to the Company. Further, the policy will require that all Interested Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance with applicable laws, rules and regulations.
Sitio OpCo Partnership Agreement
On June 7, 2022 , the Company entered into the Second Amended and Restated Agreement of Limited Partnership of Sitio OpCo (as amended, the "Partnership Agreement"). The Partnership Agreement provides that, subject to certain restrictions, each holder of limited partnership interests in Sitio OpCo ("OpCo Units") generally has the right to cause Sitio OpCo to redeem all or a portion of its OpCo Units in exchange for shares of Class A common stock on a one-for-one basis or, if either we or Sitio OpCo so elect, cash. In connection with such redemption of OpCo Units, a corresponding number of shares of Class C common stock will be cancelled.
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Certain Relationships and Interested Transactions
The Partnership Agreement additionally provides that, on the exercise by a holder of OpCo Units to redeem such OpCo Units, Sitio OpCo will be entitled to settle any such redemption by delivering to the redeeming limited partner, in lieu of shares of the Class A common stock, an amount of cash equal to: (a) other than in the case of clause (b), if the Class A common stock trades on a securities exchange or automated or electronic quotation system, the product of (i) the number of shares of the Class A common stock that would have been received in such redemption and (ii) the volume weighted average price per share of the Class A common stock for the five consecutive full trading days immediately prior to the delivery of the notice of redemption; (b) if the redemption is in connection with an underwritten offering to the public equity securities of the Company pursuant to a registration statement, the product of (i) the number of shares of Class A common stock that would have been received in such redemption and (ii) the price per share of Class A common stock sold in such public offering (reduced by the amount of any discount associated with such share of Class A common stock); or (c) if the Class A common stock no longer trades on a securities exchange or automated or electronic quotation system, the product of (i) the number of shares of Class A common stock that would have been received in such redemption and (ii) the fair market value of one share of Class A common stock as determined in good faith by the general partner of Sitio OpCo.
Registration Rights Agreements for the Benefit of the Registration Rights Holders
Pursuant to that certain Registration Rights Agreement, dated as of August 23, 2018 (the "2018 RRA"), by and among Falcon and the other parties thereto, Falcon agreed to register for resale under the Securities Act of 1933 (as amended, the "Securities Act"), all or any portion of the shares of Class A common stock that such parties held on the date thereof and that they may acquire thereafter, including upon the exchange or redemption of any other security therefor. Such holders are entitled to an unlimited number of underwritten offerings, provided that the gross proceeds of each underwritten offering is more than $30 million . Such holders also have certain "piggy-back" registration rights with respect to registration statements and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. We will bear the expenses incurred in connection with the filing of any such registration statements. The foregoing description of the 2018 RRA is a summary only and is qualified in its entirety by reference to the 2018 RRA, a copy of which was filed with the SEC on August 29, 2018 as Exhibit 4.2 to Falcon's Current Report on Form 8-K and is incorporated herein by reference.
Pursuant to that certain Registration Rights Agreement, dated as of January 11, 2022 (the "January 2022 RRA"), by and among Old Sitio and the other parties thereto, Old Sitio agreed to register for resale, pursuant to Rule 415 of the Securities Act, certain shares of our Class A common stock held by certain selling stockholders, including any shares of Class A common stock issued or issuable upon the redemption of certain shares of Class C common stock and OpCo Units held by such selling stockholders. Additionally, such selling stockholders received certain piggyback rights to participate in underwritten offerings of the Company, subject to customary exceptions, and to demand certain underwritten offerings. The foregoing description of the January 2022 RRA is a summary only and is qualified in its entirety by reference to the January 2022 RRA, a copy of which was filed with the SEC on January 12, 2022 as Exhibit 10.2 to Falcon's Current Report on Form 8-K and is incorporated herein by reference.
In connection with the Brigham Merger, we entered into that certain Registration Rights Agreement, dated as of December 29, 2022 (the "December 2022 RRA"), by and among us and the other parties thereto. The December 2022 RRA provides that, subject to the terms and conditions thereof, we will register for resale, pursuant to a registration statement filed pursuant to Rule 415 of the Securities Act, shares of our Class A common stock held by certain selling stockholders from time to time, including any shares of Class A common stock issued or issuable upon the redemption of OpCo Units held by such selling stockholders. Additionally, such selling stockholders received certain piggyback rights to participate in underwritten offerings of the Company, subject to customary exceptions, and to demand certain underwritten offerings. The foregoing description of the December 2022 RRA is a summary only and is qualified in its entirety by reference to the December 2022 RRA, a copy of which was filed with the SEC on December 29, 2022 as Exhibit 10.1 to our Current Report on Form 8-K and is incorporated herein by reference.
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Certain Relationships and Interested Transactions
In connection with the closing of the June 14, 2023 issuance of 2,508,490 shares of Class C common stock and 2,508,490 OpCo Units in exchange for certain mineral and royalty interests, the Company entered into a customary registration rights agreement, dated as of June 14, 2023 (the "June 2023 RRA"), pursuant to which the Company agreed to file within 60 days after the closing date and use commercially reasonable efforts to cause to become effective a registration statement or a post-effective amendment or prospectus supplement pursuant to a registration statement, as applicable, under the Securities Act, to permit the resale of the Class A common stock, into which the Opco Units and a corresponding number of shares of Class C common stock are redeemable. The foregoing description of the June 2023 RRA is a summary only and is qualified in its entirety by reference to the June 2023 RRA, a copy of which was filed with the SEC on June 15, 2023 as Exhibit 4.1 to our Current Report on Form 8-K and is incorporated herein by reference.
Director Designation Agreement
On January 11, 2022 , in connection with the execution of the merger agreement contemplating the merger transaction (the "Falcon Merger") with Sitio OpCo, Ferrari Merger Sub A LLC ("Merger Sub"), and DPM HoldCo, LLC ("Desert Peak"), pursuant to which Merger Sub merged with and into Desert Peak with Desert Peak continuing as the surviving entity and wholly owned subsidiary of Sitio OpCo, Falcon entered into that certain Director Designation Agreement (the "Director Designation Agreement") with Chambers DPM HoldCo, LLC , KMF DPM HoldCo, LLC , Source Energy Leasehold, LP , Permian Mineral Acquisitions, LP , Rock Ridge Royalty Company, LLC and Royal Resources L.P. (collectively, the "Sponsors"). On April 13, 2022 , Rock Ridge Royalty Company and Royal Resources L.P. executed a waiver pursuant to which they irrevocably waived their rights to designate a nominee for election to the Board pursuant to the Director Designation Agreement.
At the closing of the Brigham Merger, the Company, Old Sitio, and the Sponsors entered into an Assignment, Assumption and Amendment Agreement to the Director Designation Agreement. Pursuant to the Director Designation Agreement, as amended, the Sponsors may designate nominees to be included in the slate of nominees recommended by the Board so long as they continue to beneficially own sufficient common stock in the Company in accordance with the terms of the Director Designation Agreement.
One director nominee, Noam Lockshin , has been designated pursuant to the amended Director Designation Agreement this year. Mr. Lockshin qualifies as "independent" under our Corporate Governance Guidelines and the independence standards of the NYSE.
Delinquent Section 16(A) Reports
Under U.S. securities laws, directors, executive officers and persons holding more than 10% of our common stock must report their initial ownership of common stock and any changes in that ownership to the SEC . The SEC has designated specific due dates for such reports, and we must identify in this Proxy Statement those persons who did not file such reports when due.
Based solely upon a review of Forms 3 and 4 and any amendments furnished to us during our fiscal year ended December 31, 2024 , and Forms 5 and any amendments furnished to us with respect to the same year, we believe that our directors, officers and greater than 10% beneficial owners complied with all applicable Section 16 filing requirements.
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PROPOSAL 2
Non-Binding Advisory Vote to
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Our executive compensation is designed to attract, motivate and retain our executive officers, who are critical to our success. Our named executive officers are rewarded for the achievement of our financial and strategic goals and for driving corporate financial performance and stability through base salaries and the opportunity to eaannual performance-based and long-term equity incentive awards. Oriented around alignment with stockholders, our executive compensation program is designed to promote our long-term growth by providing for a significant upside in compensation for our executive officers when our stockholders do well, and a significant downside when Company performance is below threshold levels. Our compensation plan is specifically designed to avoid the common compensation issue in the oil and natural gas industry, where management is rewarded while stockholders suffer poor returns. Accordingly, as further explained herein, our compensation plan places a high proportion of management's compensation at risk based on the Company's actual performance. The Board is asking stockholders to approve on an advisory, non-binding basis, the following resolution at the Annual Meeting:
RESOLVED, that the stockholders of the Company approve, on an advisory basis, the compensation of the Company's named executive officers, as disclosed in the tabular and narrative disclosure set forth in the Proxy Statement, including under "Compensation Discussion and Analysis."
The Say-on-Pay Vote is advisory, and therefore not binding on the Company or the Board and will not overrule any decisions made by the Board and will not require the Board to take any specific action. Nevertheless, the vote will provide information to the Board regarding stockholder sentiment about our executive compensation philosophy, policies and practices, which the Board will be able to consider when determining executive compensation going forward.
Vote Required
The approval, on a non-binding, advisory basis, of the compensation of our named executive officers as reported in this proposal requires the affirmative vote of the majority of the shares present online or by proxy and entitled to vote on the matter at the Annual Meeting. Abstentions will have the effect of a vote against the proposal. Broker "non-votes" will have no legal effect on this proposal.
As an advisory vote, this proposal is not binding on the Board or the Compensation Committee, will not overrule any decisions made by the Board or the Compensation Committee, and will not require the Board or the Compensation Committee to take any specific action. Although the vote is non-binding, the Board and the Compensation Committee value the opinions of our stockholders and will carefully consider the outcome of the vote when making future compensation decisions for our named executive officers. To the extent there is any significant vote against our named executive officers' compensation as disclosed in this Proxy Statement, we will consider our stockholders' concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
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Recommendation of the Board
The Board recommends that stockholders voteFORthe non-binding, advisory proposal to approve the compensation of our named executive officers.
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Executive Compensation
Compensation Discussion and Analysis
Background
This Compensation Discussion and Analysis ("CD&A") is intended to provide perspective regarding our executive compensation program for 2024. Please read this CD&A together with the tables and related narrative about executive compensation that follow.
Below are our named executive officers (collectively referred to in the following as our "NEOs") for 2024, whose compensation is described in this CD&A.
|
Chief Executive Officer
and Director
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Chief Financial Officer
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Executive Vice President, Land
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Executive Vice President,
Operations
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Executive Vice President of
Corporate Development
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Executive Summary
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No short-term incentive compensation /
cash bonus for executives
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75% of long-term incentive compensation tied to
absolute total shareholder return
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No portion of compensation tied to
relative metrics
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Compensation program provides industry-leading
alignment with shareholders
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Our executive compensation program is designed to support our business strategy by attracting, motivating, and retaining high-quality leadership and incentivizing our executive officers to achieve performance goals over the long-term. To accomplish these objectives, our executive compensation program is heavily weighted toward equity-based compensation that is based on our absolute total stockholder retu("TSR"), thus directly aligning the interests of our executive officers with those of our stockholders. The program consists of time-based restricted stock units ("RSUs") and performance stock units ("PSUs") subject to performance-based vesting with a targeted three-year annualized TSR of 10%. To execute on our vision, grow our business responsibly, and create value for our stockholders, it is critical that we have a sophisticated and dedicated management team committed to the long-term success of the Company and aligned with our stockholders. Therefore, we do not currently maintain an annual cash bonus program or other short-term incentive program for our executive officers and instead focus on at-risk long-term incentives. All of our executive officers' long-term incentive compensation is in the form of equity, and the substantial majority of that equity is at-risk PSUs tied to absolute stockholder return. Additionally, all of our executive officers are subject to our mandatory board-approved stock ownership and retention guidelines. Our compensation program for 2024 is described in greater detail below.
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Executive Compensation
Compensation Philosophy
We maintain executive compensation programs that reflect positive corporate governance features. Our executive compensation philosophy ties compensation to our financial and operating performance goals. Specifically, the 2024 executive compensation program includes performance metrics for NEOs that are closely aligned with financial returns to our stockholders and are designed to result in annual and long-term value creation.
As a general matter, the design of our executive compensation program is as follows:
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Performance-Based
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Stockholder-Aligned
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▪A significant portion of total compensation is performance-based.
▪Performance metrics focus business strategy and corporate objectives on absolute total stockholder return.
▪Awards are leveraged to achievement of performance goals and the creation of stockholder value.
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▪Long-term incentives are equity-based and represent a significant portion of the total compensation of executives and other key employees.
▪The design of long-term incentive awards focuses on creating stockholder value and encourages retention of executives and key employees through the use of multi-year vesting schedules as well as mandatory stock ownership and retention guidelines.
▪A significant portion of compensation is at risk.
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Competitive
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Clear and Well-Communicated
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▪Our compensation program is intended to be competitive with the market and supports the Company's ability to attract and retain key talent.
▪Total compensation is designed to be perceived as fair and equitable, both internally and externally.
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▪Straightforward, transparent compensation programs deliver a strong, clear message.
▪Compensation programs that surpass prevailing market practices and corporate governance standards provide transparency and comfort to stockholders.
▪Appropriately managing risk within the compensation program facilitates the creation of stockholder value.
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Stockholder Alignment and Target Pay Mix
A key element of our compensation philosophy is that the pay of our NEOs is strongly aligned with our stockholders. The Compensation Committee believes that the mix and design of our compensation program establishes strong alignment with stockholders, specifically through the use of at-risk equity-based long-term incentive ("LTI") awards, which represent the largest component of the compensation for our NEOs. For example, at-risk equity-based LTI awards granted by us to the NEOs represented approximately 88% of the 2024 target total compensation for Mr. Conoscenti , 84% for Ms. Osicka , 82% for Messrs. James, Marcoux and McDavid (excluding employer 401(k) safe harbor contributions and the payment of life insurance premiums on behalf of the NEO). Our compensation program aligns the interests of our stockholders with the interests of our NEOs by subjecting the substantial majority of LTI awards granted to our NEOs to performance-based vesting based on absolute total stockholder returns. Our compensation philosophy places an emphasis on performance-based compensation and, if absolute stockholder returns are negative, the performance-based equity awards granted to the NEOs will not be earned. The charts below illustrate how the mix of target compensation for Mr. Conoscenti compares with the practices among the CEOs of our peer group companies.
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Executive Compensation
Conoscenti 2024 & 2025 Target Total Compensation
Compensation Program Governance
We have worked extensively and deliberately to develop a thoughtful, fair, and effective compensation program for our NEOs that helps us to deliver long-term sustainable growth to our stockholders. The following chart highlights several features of our compensation practices that are intended to meet our objectives:
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Performance-Based
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Stockholder-Aligned
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Focus on absolute total stockholder return
Significant portion of pay is at risk
Majority of equity awards are in the form of performance-based compensation
Annual equity awards for executive officers subject to three-year vesting periods
Maintain policy prohibiting hedging transactions and short sales by insiders
Maintain policy requiring stock ownership and retention by all of our executive officers
Regularly evaluate risks of our compensation policy
Compensation Committee engages an independent compensation consultant and follows a comprehensive process
Consider market data when establishing compensation
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NO payout of PSUs when absolute TSR is negative
NO cash bonuses or short-term incentive compensation
NO performance awards issued based on relative achievement
NO excessive benefits or perquisites
NO single-trigger change in control acceleration on time-vested awards
NO employment agreements
NO tax gross up in connection with a change in control
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Executive Compensation
2024 NEO Compensation
Overview of Executive Compensation and our Compensation Process
We have established an executive compensation program that is intended to attract, motivate, and retain key executives and to reward executives for creating and increasing the value of the Company. These objectives are taken into consideration when creating the Company's compensation arrangements, when setting each element of compensation under those programs, and when determining the proper mix of the various compensation elements for each of the NEOs. We annually re-evaluate whether our compensation programs and the levels of pay awarded under each element of compensation achieve these objectives.
The Compensation Committee has primary responsibility over our executive compensation program, including the decisions regarding the various levels and forms of compensation for each of our NEOs. The Compensation Committee's primary objectives were to:
| 1 | 2 | 3 | |||||||||||||||
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utilize equity compensation to align the incentives of executives with the interests of stockholders by tying a large portion of compensation to performance
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retain and motivate executives to create long-term shareholder value
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set competitive pay practices | |||||||||||||||
As a result of the actions of our Compensation Committee, the compensation of our NEOs consists primarily of the following items, which are described in greater detail in the sections below:
▪annual base salary;
▪equity-based long-term incentive compensation (comprised of both time-based vesting equity awards and performance-based equity awards); and
▪severance benefits for certain terminations of employment (with double trigger change in control severance benefits).
Role of Independent Compensation Consultant
Under its charter, the Compensation Committee is authorized to engage an independent consultant. To ensure we meet our compensation objectives as a public company, the Committee engaged Meridian Compensation Partners (the "Compensation Consultant") to advise on matters related to executive and non-employee director compensation. The Compensation Consultant provided independent advice on executive and outside director compensation and evaluated and recommended appropriate modifications to our compensation program consistent with our program's objectives. The Compensation Consultant reports directly to the Compensation Committee, which has the sole authority to approve the Compensation Consultant's scope of work, fees, and other terms of engagement. Outside of providing advisory services to the Compensation Committee, the Compensation Consultant does not provide any other services to management or the Company. During 2024, the scope of the Compensation Consultant's engagement included: a review of the current compensation practices among our peer group used to assess the competitiveness of our executive compensation programs; an analysis of the realizable pay of our NEOs; and updates on notable legislative and regulatory activities. The Compensation Consultant did not have authority to make decisions regarding compensation and served solely in an advisory role.
Role of Executive Officers in Compensation Decisions
In determining the compensation of our NEOs, the Compensation Committee considers the information and advice provided by the Compensation Consultant, our corporate goals, historic and projected performance, the current economic and commodities environment, individual performance of our NEOs, and other relevant factors. With respect to the compensation of the NEOs other than our CEO, the Compensation Committee also considers the recommendations of our CEO. The Compensation Committee retains sole discretion to make final compensation determinations, and the Compensation Committee may accept, modify, or reject any recommendations or observations made by our CEO. In addition, the Compensation Committee may invite any NEO to attend Compensation Committee meetings to report on matters relevant to the Compensation Committee's analysis. All NEOs are excluded from any decisions or discussions regarding their individual compensation.
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Executive Compensation
The Compensation Committee utilized peer data as a reference for informing decisions about competitive pay rates and compensation program design for our NEOs. Factors considered in selecting peers included operations in related industry sectors, comparable market capitalization and revenues, similarity of business strategy, and availability and clarity of publicly-filed compensation data. The Compensation Consultant worked with our Compensation Committee to select the group of publicly-traded companies that would serve as our peer group, based in part on our market capitalization, which as of year-end 2024 was approximately $2.9 billion . We calculated our market capitalization by multiplying the share price of our common stock by the total number of outstanding shares of Class A common stock and Class C common stock. The Compensation Committee also included factors such as whether a company is publicly traded, domiciled in the United States and a participant in the oil and gas industry, which factors apply to all peers in the selected peer group.
Compensation Peer Group Selection Methodology
| Publicly-traded on NYSE or NASDAQ | Oil and gas or mineral and royalty | ||||||||||||||||
| Operations primarily based in |
Median market capitalization of
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||||||||||||||||
The peer group used in the market analysis to inform 2024 compensation decisions was as follows:
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▪
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▪
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▪
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▪
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▪
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▪
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||||||||||||
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▪
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▪
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▪
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||||||||||||
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▪
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▪
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▪
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▪
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▪
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▪
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▪
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Based on a review of the peer group data, the recommendations of the Compensation Consultant, and its own analysis, the Compensation Committee approved the 2024 compensation program for our NEOs as described below.
Key Elements of the 2024 Executive Compensation Program
The following discussion provides details regarding the four primary elements of the 2024 compensation program set for our NEOs. Central to our compensation philosophy is to incentivize and reward the achievement of strategic and financial goals of the Company, which we believe in tushould correlate to an increase in stockholder value over the longer term. The compensation provided to our NEOs for 2024 consists of (i) an annualized base salary, (ii) the grant of equity-based awards, (iii) severance benefits upon certain terminations of employment, and (iv) certain customary health, welfare, and retirement plan benefits on the same basis as those provided to our other employees. These elements have been chosen as the compensation components designed to allow us to adhere to our compensation philosophy described above.
(6)As compared to the Company's market capitalization of $3.8 billion as of September 30, 2023 .
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Executive Compensation
Base Salary
Each NEO's base salary is a fixed component of annual compensation based on such officer's position and responsibilities. The Compensation Committee reviews the base salaries for each NEO annually as well as at the time of any promotion or significant change in job responsibilities. The Compensation Committee may adjust base salaries periodically based on competitive positioning, as well as individual and company performance.
The base salaries of our NEOs remained unchanged from fiscal year 2023 to 2024 based on competitive positioning, as well as individual and company performance, as shown below:
| 2024 Annual Base Salary ($) |
|||||
| 850,000 | |||||
| 550,000 | |||||
| 500,000 | |||||
| 500,000 | |||||
| 500,000 | |||||
Long-Term Equity Incentive Compensation
We currently maintain the Sitio LTIP, pursuant to which certain equity awards for 2024 were granted. The Sitio LTIP is intended to promote our long-term success and increase long-term stockholder value by attracting, motivating, and aligning the interests of our independent directors, officers, and other employees with those of our stockholders. The Sitio LTIP provides for the grant, from time to time, at the discretion of the Board or a committee thereof, of stock options, stock appreciation rights, restricted stock, RSUs, bonus stock awards, dividend equivalents, other stock-based awards, cash awards, substitute awards, and performance awards. Long-term incentive awards are granted with the intention of fostering a long-term view of the business, retaining and rewarding grantees for their efforts and achievements, and providing management with an ownership interest to help further align their actions with the interests of the stockholders. We do not grant equity awards, including options, in anticipation of the release of material non-public information, and the release of material non-public information is not timed on the basis of option or other equity grant dates. We have not historically awarded any options to our NEOs and did not do so during the last completed fiscal year ended December 31, 2024 .
Long-Term Equity Incentive Grants for 2024
2024 ANNUAL EQUITY AWARDS
In 2024, we granted annual equity-based awards (each, an "Annual Equity Award") to our NEOs under the Sitio LTIP, consisting of RSUs, representing 25% of each individual's total Annual Equity Award value, and PSUs, representing 75% of each individual's Annual Equity Award value.
The RSUs vest in equal installments on the first three anniversaries of the applicable date of grant, so long as the NEO remains continuously employed by us through each vesting date. Vesting of RSUs will accelerate in full upon a termination by us of the recipient's employment without cause or, following a change in control of us, by the recipient for good reason.
The PSUs will be eligible to be earned based on achievement of certain pre-established goals for annualized absolute TSR performance over a three-year period following December 31, 2023 or such shorter period through the date of a change in control of us or the recipient's termination of employment by us without cause, subject to the NEOs continuous service with us through the end of the performance period. For purposes of determining our annualized absolute TSR over the performance period, the beginning stock price will be based on our 20-day volume weighted average stock price for the last 20 trading days of 2023 and the ending stock price will be based on our 20-day volume weighted average stock price for the last 20 trading days of 2026. The performance targets associated with the PSU award structure are outlined below:
| Annualized Absolute TSR Goal |
Percentage of Target PSUs Earned |
|||||||
| Base of Range | Less than 0% | 0% | ||||||
| Threshold | 0% | 50% | ||||||
| Target | 10% | 100% | ||||||
| Maximum | 20% | 200% | ||||||
PSU payouts for results that fall in between a stated performance level will be interpolated linearly.
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58
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Executive Compensation
DIVIDEND EQUIVALENT RIGHTS
Each grant of RSUs and PSUs included the right to receive dividend equivalent rights ("DERs"). In the event we declare and pay a dividend on our outstanding shares of stock and an NEO holds RSUs that have not yet vested and been settled, we will pay to the NEO an amount in cash equal to the cash dividends such NEO would have received if the NEO were the holder of record of the number of shares of stock related to the number of RSUs that have not vested and settled within 30 days following the date on which we pay the dividend to our stockholders generally. The Compensation Committee determined that including the right to receive DERs is in the best interest of our stockholders due to the design of our compensation program statistically providing lower cash compensation to our NEOs in comparison to our peers.
With respect to the PSU awards held by our NEOs, each PSU is granted in tandem with a corresponding DER. Each vested DER entitles the NEO to receive payments in an amount equal to any dividends paid by us in respect of the share of stock underlying the PSU to which such DER relates. The DERs will vest upon the Compensation Committee's certification of the level of achievement with respect to the applicable performance goals contained in the PSU award agreement. DERs are paid to the holder in cash within 60 days following the vesting of the associated award (if any) and are forfeited if the underlying award is forfeited for any reason. The NEOs are not entitled to receive any interest with respect to the payment of the DERs.
The number of RSUs and PSUs granted to the NEOs in 2024 is set forth below:
|
Total Number of
RSUs Granted in
2024
|
Target Number of
PSUs Granted in
2024
|
|||||||
| 63,131 | 189,394 | |||||||
| 30,992 | 92,975 | |||||||
| 24,105 | 72,314 | |||||||
| 24,105 | 72,314 | |||||||
| 24,105 | 72,314 | |||||||
Severance Benefits
We believe that it is important to provide our executive officers with certain severance and change in control payments and benefits in order to establish a stable work environment for the individuals responsible for our day-to-day management and further incentivize those individuals to seek out appropriate mergers and acquisitions that will deliver value to our stockholders without being fearful of job security. We historically have not maintained any individual employment, severance, or change in control agreements with any of our executive officers. However, to better assist us in our above-stated goal, we maintain the Sitio Royalties Corp. Amended and Restated Severance Plan (the "Severance Plan"), which covers our NEOs.
The Severance Plan provides certain severance and change in control payments and benefits to our executive officers and certain other individuals who are selected for participation by our Board, or a committee thereof (as applicable, for purposes of the Severance Plan, the "Administrator").
If a participant's employment with us is terminated by us without cause or by the participant for good reason during the period beginning on the date that a change in control of us occurs and ending on the date that is six months following the date that such a change in control occurs (the "CIC Period"), the participant is entitled to receive: (i) an amount equal to (a) 36 months of base salary for Mr. Conoscenti or (b) 24 months of base salary for all other NEOs, in each case, paid in a lump sum, and (ii) all unvested equity-based awards granted under the Sitio LTIP that are held by the participant immediately prior to the termination date shall immediately become fully vested, provided that any equity-based awards that are subject to performance-based vesting conditions shall be calculated and settled, without proration, based on the greater of (x) target performance and (y) actual performance and achievement of the applicable performance goals through the date of the change in control.
If a participant's employment with us is terminated by us without cause or by the participant for good reason outside of the CIC Period, or due to death or disability at any time, the participant is entitled to receive: (i) an amount equal to (a) 24 months of base salary for Mr. Conoscenti or (b) 18 months of base salary for all other NEOs, in each case, payable in monthly installments, and (ii) all unvested equity-based awards granted under the Sitio LTIP that are held by the participant immediately prior to the termination date shall immediately become fully vested, provided that, with respect to any equity-based awards that are subject to performance-based vesting conditions, a pro-rata amount of such award (calculated based on the number of days that the participant was employed by us during the applicable performance period) will remain outstanding and will become earned based on actual performance and achievement of the applicable performance goals through the end of the applicable performance period.
| 2025 PROXY STATEMENT |
59
|
||||
Executive Compensation
The Severance Plan does not provide a tax gross-up provision for federal excise taxes that may be imposed under section 4999 of the Code. Instead, the Severance Plan includes a "best of net" provision, which states that, if amounts payable to a plan participant under the Severance Plan (together with any other amounts that are payable by us as a result of a change in control (the "Payments")) exceed the amount allowed under section 280G of the Code for such participant, thereby subjecting the participant to an excise tax under section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), then the Payments will either be: (i) reduced to the level at which no excise tax applies, such that the full amount of the Payments would be equal to $1 less than three times the participant's "base amount," which is generally the average W-2 earnings for the five calendar years immediately preceding the date of termination, or (ii) paid in full, which would subject the participant to the excise tax.
The Severance Plan contains restrictive covenants that apply to participants, including confidentiality, non-competition (which applies for three months following a participant's termination of employment), and non-solicitation (which applies for 12 months following a participant's termination of employment).
Other Elements of 2024 Compensation
Retirement and Health and Welfare Plans
We generally offered the same types of retirement, health, and welfare benefits to the NEOs as part of our total executive compensation package as we did to other eligible employees.
We maintain a plan intended to provide benefits under section 401(k) of the Code, where employees are allowed to contribute portions of their base compensation into a retirement account to encourage all employees, including any participating NEOs, to save for the future (the "401(k) Plan"). The 401(k) Plan permits all eligible employees, including our NEOs, to make voluntary pre-tax contributions and/or Roth after-tax contributions to the plan. In addition, we make employer non-elective safe-harbor contributions equal to 3% of an eligible employee's compensation under the 401(k) Plan. The non-elective contributions are 100% vested when made. All contributions under the 401(k) Plan are subject to certain annual dollar limitations, which are periodically adjusted as required by law.
Incentive Compensation Recoupment Policy
The Company adopted the Sitio Royalties Corp. Clawback Policy (the "Clawback Policy") effective as of November 7, 2023. In the event that the Company is required to prepare a financial restatement, the Compensation Committee shall, to the extent practicable, recoup all incentive-based compensation calculated on a pre-tax basis received after October 2, 2023, by a person (i) after beginning service as an executive officer, (ii) who served as an executive officer at any time during the performance period for that incentive-based compensation; (iii) while the Company had a class of securities listed on a national securities exchange or national securities association; and (iv) during the applicable period, that exceeded the amount of incentive-based compensation that otherwise would have been received had the amount been determined based on the Financial Reporting Measures (as defined in the Clawback Policy), as reflected in the restatement. The Clawback Policy is available in the Investor Relations section under the "Governance Documents" tab of our website athttps://investors.sitio.com.
Supplemental Clawback Policy
The Company adopted the Sitio Royalties Corp. Supplemental Clawback Policy (the "Supplemental Policy") effective as of March 14, 2024. In the event the Compensation Committee determines that any current or former chief executive officer, president, chief financial officer, chief accounting officer (or, if applicable, the controller), executive vice president, senior vice president or any other vice president of the Company has committed Misconduct (as defined in the Supplemental Policy), the Compensation Committee may, in its sole discretion, require (i) the repayment of incentive compensation paid to the covered person within the 24-month period prior to the date that the Company becomes aware of the misconduct or (ii) forfeiture of outstanding but unpaid incentive compensation by the covered person. The Supplemental Policy does not supersede or replace the Clawback Policy in any respect. The Supplemental Policy is available in the Investor Relations section under the "Governance Documents" tab of our website athttps://investors.sitio.com.
|
60
|
|||||
Executive Compensation
Stock Ownership and Retention Guidelines
The Company adopted the Sitio Royalties Corp. Stock Ownership and Retention Guidelines (the "Stock Ownership Guidelines") effective as of February 27, 2024. The Stock Ownership Guidelines require the Company's CEO to own at least five times his annual base salary in Company stock and the Company's CFO and Executive Vice Presidents to own at least three times his or her annual base salaries in Company stock, subject to certain phase-in requirements. The Stock Ownership Guidelines also require directors to own at least three times their annual long-term incentive compensation in Company stock, subject to certain phase-in requirements. Company stock (or stock equivalents) that counts towards satisfaction of the Stock Ownership Guidelines includes (i) shares of stock owned directly by the executive officer or director, (ii) shares of stock owned indirectly by the executive officer or director (e.g., by a spouse or other immediate family member residing in the same household or a trust for the benefit of the executive officer or director or his or her immediate family residing in the same household), (iii) unvested time-based RSUs and restricted stock, (iv) DSUs, whether vested or unvested and (v) OpCo Units in Sitio OpCo. Performance-based equity awards (including PSUs) that have not been earned do not count towards satisfaction of the Stock Ownership Guidelines.
Compensation Risk Assessment
In accordance with the requirements of Item 402(s) of Regulation S-K, to the extent that risks may arise from our compensation policies and practices for our employees that are reasonably likely to have a material adverse effect on us, we are required to discuss our policies and practices for compensating our employees (including our employees that are not NEOs) as they relate to our risk management practices and risk-taking incentives. We have determined that our compensation policies and practices for our employees, including our NEOs, do not encourage excessive risk-taking and are not reasonably likely to have a material adverse effect on us. Our Compensation Committee routinely assesses our compensation policies and practices and takes this consideration into account as part of its review.
Policies Regarding Hedging
Our Insider Trading Policy prohibits certain types of trading activity by certain of our directors, officers, employees, and outside consultants to the extent such persons receive or are aware of material, non-public information regarding us or any of our business partners. Transactions that are prohibited include any trading of our securities whenever such persons are in possession of material non-public information, and any transactions or instruments that hedge exposure to the risk of price fluctuations in the equity securities issued by us, as held by such person (including transactions in derivative securities, such as options, warrants, stock appreciations rights or similar rights where the value is derived from the value of an equity security). All transactions in our securities by any of our directors or officers must undergo a pre-clearance process before execution is authorized.
Actions Taken Since Fiscal Year-End
In February 2025, the Compensation Committee changed the base salaries of Ms. Osicka and Messrs. James, Marcoux and McDavid based on competitive positioning, as well as individual and company performance, as shown below. Mr. Conoscenti's base salary was unchanged from 2024 to 2025.
| Annual Base Salary ($) |
|||||
| 850,000 | |||||
| 575,000 | |||||
| 525,000 | |||||
| 525,000 | |||||
| 525,000 | |||||
| 2025 PROXY STATEMENT |
61
|
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Executive Compensation
On February 24, 2025, the Compensation Committee also approved the Annual Equity Awards for 2025 to our NEOs under the Sitio LTIP, which Annual Equity Awards consist of RSUs, subject to time-based vesting, and PSUs. The awards are subject to substantially similar terms as described above for the Annual Equity Awards granted in respect of 2024. The value of the 2025 Annual Equity Awards granted to our NEOs is shown below. The number of RSUs or target PSUs, as applicable, subject to each award was determined by dividing the amount shown by the closing price of our Class A common stock on February 27, 2025 (which was $19.50).
| Value of RSUs ($) |
Value of PSUs (target) ($) |
|||||||
| 1,375,000 | 4,125,000 | |||||||
| 675,000 | 2,025,000 | |||||||
| 537,500 | 1,612,500 | |||||||
| 537,500 | 1,612,500 | |||||||
| 537,500 | 1,612,500 | |||||||
The RSUs vest in equal installments on the first three anniversaries of the date of grant, so long as the executive officer remains continuously employed by us through each vesting date. Vesting of RSUs will accelerate in full (i) upon a termination by us of the recipient's employment without cause, (ii) following a change in control of us, or (iii) by the recipient for good reason.
The PSUs will be eligible to be earned based on achievement of certain pre-established goals for annualized absolute TSR over a three-year period or such shorter period through the date of a change in control of us or the recipient's termination of employment by us without cause. Upon the termination of a recipient's employment by us without cause or by the recipient for good reason that occurs during the PSU CIC Period, then a number of PSUs will become earned based on the greater of (i) target performance or (ii) actual performance and achievement of the applicable performance goals through the date of the change in control. Upon the termination of a recipient's employment by us without cause or by the recipient for good reason that occurs outside of the PSU CIC Period, or that occurs due to death or disability at any time, then a pro-rata number of PSUs (calculated based on the number of days that the recipient was employed by us during the applicable performance period) will remain outstanding and will become earned based on actual performance and achievement of the applicable performance goals through the end of the applicable performance period. The performance targets associated with the PSU award structure are outlined below:
| Annualized Absolute TSR Goal |
Percentage of Target PSUs Earned |
|||||||
| Base of Range | Less than 0% | 0 | % | |||||
| Threshold | 0 | % | 50 | % | ||||
| Target | 10 | % | 100 | % | ||||
| Maximum | 20 | % | 200 | % | ||||
For purposes of determining our annualized absolute TSR over the performance period, the beginning stock price will be based on our 20-day volume weighted average stock price ending on December 31, 2024, and the ending price will generally be based on the 20-day volume weighted average stock price ending on December 31, 2027. PSU payouts for results that fall in between a stated performance level will be interpolated linearly.
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62
|
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Executive Compensation
The Compensation Committee also determined that our peer group used to inform 2025 compensation should be comprised of the following companies:
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▪SouthwesteEnergy Company
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▪NortheOil &
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Consistent with 2024, each member of the peer group for 2025 is publicly traded on the NYSE or NASDAQ, an oil and gas or mineral and royalty company, with operations primarily based on the United States and had a median market capitalization of $4.7 billion as of September 30, 2024.
Summary Compensation Table
The table below sets forth the annual compensation for the NEOs for the fiscal year ended December 31, 2024, and historical annual compensation for the fiscal years ended December 31, 2023 and December 31, 2022.
| Year |
Salary(1)
($)
|
Bonus ($) |
Stock
Awards(2)
($)
|
All Other
Compensation(3)
($)
|
Total ($) |
||||||||||||||||||
|
(Chief Executive Officer and Director)
|
2024 | 850,000 | 6,052,394 | 11,830 | 6,914,223 | ||||||||||||||||||
| 2023 | 791,667 | - | 5,943,906 | 32,304 | 6,767,877 | ||||||||||||||||||
| 2022 | 283,562 | - | 9,685,728 | 32,774 | 10,002,064 | ||||||||||||||||||
|
(Chief Financial Officer)
|
2024 | 550,000 | 2,971,178 | 11,314 | 3,532,492 | ||||||||||||||||||
| 2023 | 520,833 | - | 2,701,758 | 24,424 | 3,247,015 | ||||||||||||||||||
| 2022 | 212,671 | - | 5,297,241 | 24,483 | 5,534,395 | ||||||||||||||||||
|
(Executive Vice President of Land)
|
2024 | 500,000 | 2,310,922 | 11,120 | 2,822,042 | ||||||||||||||||||
| 2023 | 470,833 | - | 2,269,500 | 21,925 | 2,762,258 | ||||||||||||||||||
| 2022 | 184,315 | - | 4,590,972 | 22,447 | 4,797,734 | ||||||||||||||||||
|
(Executive Vice President, Operations)
|
2024 | 500,000 | 2,310,922 | 11,145 | 2,822,067 | ||||||||||||||||||
| 2023 | 470,833 | - | 2,269,500 | 21,935 | 2,762,268 | ||||||||||||||||||
| 2022 | 184,315 | - | 4,590,972 | 22,447 | 4,797,734 | ||||||||||||||||||
|
(Executive Vice President of Corporate Development)
|
2024 | 500,000 | 2,310,922 | 12,197 | 2,823,119 | ||||||||||||||||||
| 2023 | 475,000 |
157,500
|
(5)
|
2,269,500 | 34,327 | 2,936,327 | |||||||||||||||||
| 2022 | - | - | - | - | - | ||||||||||||||||||
(1)The amounts reflected in this column represent the total salary earned in 2024.
(2)The amounts reflected in this column for represent the aggregate grant date fair value of RSUs and PSUs granted to the NEOs by the Company pursuant to the Sitio LTIP. The grant date fair value of PSUs is based on the probable outcome of the performance conditions as of the date of grant, which was target. The value of the PSU awards at target reflected in this column is as follows for each NEO: Mr. Conoscenti , $4,668,562, Ms. Osicka , $2,291,834, Mr. James , $1,782,540, Mr. Marcoux , $1,782,540, and Mr. McDavid , $1,782,540. If the maximum amount, rather than the probable amount, were reported in the table with respect to the PSUs, the values associated with the PSUs would be as follows for each NEO: Mr. Conoscenti , $9,337,124; Ms. Osicka , $4,583,668, Mr. James , $3,565,080, Mr. Marcoux , $3,565,080, and Mr. McDavid , $3,565,080. However, as described above in the CD&A, there is potential for the value of each NEOs PSU awards to equal zero depending on the Company's results with respect to absolute total stockholder return. The value of all RSU awards reflected in this column is as follows for each NEO: Mr. Conoscenti , $1,383,832, Ms. Osicka , $679,345, Mr. James , $528,382, Mr. Marcoux , $528,382, and Mr. McDavid , $528,382. Regarding assumptions underlying the valuation of these equity awards, please see Note 11 to our Financial Statements.
| 2025 PROXY STATEMENT |
63
|
||||
Executive Compensation
(3)Amounts reported in the "All Other Compensation" column for 2024 reflect the following:
| 401(k) Contributions ($) |
Life Insurance Premiums ($) |
Tax
Distributions
($)(1)
|
Total ($) |
|||||||||||
| 10,350 | 60 | 1,420 | 11,830 | |||||||||||
| 10,350 | 60 | 904 | 11,314 | |||||||||||
| 10,350 | 60 | 710 | 11,120 | |||||||||||
|
|
10,350 | 60 | 735 | 11,145 | ||||||||||
| 10,350 | 60 | 1,787 | 12,197 | |||||||||||
(1)This column reflects certain tax distributions made by us to all NEOs except Mr. McDavid with respect to the one-time grant of restricted securities (the "Restricted Securities") that were granted by the holders of units of Desert Peak (the "DPM Holders") in 2022 pursuant to an Assignment and Allocation Agreement (the "Assignment Agreement") entered into by and between us, KMF DPM HoldCo, LLC, Chambers DPM HoldCo, LLC, Rock Ridge Royalty Company LLC, Source Energy Leasehold, LP and Permian Mineral Acquisitions, LP, Desert Peak, Sitio OpCo, and each of the NEOs, such tax distributions made pursuant to, and in accordance with, the Partnership Agreement of Sitio OpCo. Mr. McDavid owns Class C common stock and OpCo Units as a result of his legacy ownership in Brigham. As a result, such distributions to all NEOs were made not just to the NEOs but to all holders of Class C common stock and OpCo Units pro rata.
(4)Mr. Conoscenti also serves as a member of our Board; however, he does not receive any compensation from us for his service on the Board.
(5)This amount reflects the cash component that vested in 2023 of a one-time retention bonus granted to Mr. McDavid in 2022 in connection with the Brigham Merger (the "Retention Bonus"). The Retention Bonus consisted of 50% equity in the form of 10,953 RSUs (granted in 2022 and that vested on December 29, 2024) and 50% cash, 25% of which vested in 2022 and 25% vested in 2023, as reflected in the table above.
2024 Grants of Plan-Based Awards
| Grant Date |
Estimated Future Payouts Under Equity
Incentive Plan Awards(1)
|
All Other Stock Awards: Number of Shares of Stock (#) |
Grant Date
Fair Value
of Stock Awards
($)(3)
|
||||||||||||||||||||
| Threshold (#) |
Target (#) |
Maximum (#) |
|||||||||||||||||||||
| 2/27/2024 | - | - | - | 63,131 |
(2)
|
1,383,832 | |||||||||||||||||
| 2/27/2024 | 94,697 | 189,394 | 378,788 | - | 4,668,562 | ||||||||||||||||||
| 2/27/2024 | - | - | - | 30,992 |
(2)
|
679,345 | |||||||||||||||||
| 2/27/2024 | 46,488 | 92,975 | 185,950 | - | 2,291,834 | ||||||||||||||||||
| 2/27/2024 | - | - | - | 24,105 |
(2)
|
528,382 | |||||||||||||||||
| 2/27/2024 | 36,157 | 72,314 | 144,628 | - | 1,782,540 | ||||||||||||||||||
| 2/27/2024 | - | - | - | 24,105 |
(2)
|
528,382 | |||||||||||||||||
| 2/27/2024 | 36,157 | 72,314 | 144,628 | - | 1,782,540 | ||||||||||||||||||
| 2/27/2024 | - | - | - | 24,105 |
(2)
|
528,382 | |||||||||||||||||
| 2/27/2024 | 36,157 | 72,314 | 144,628 | - | 1,782,540 | ||||||||||||||||||
(1)These columns reflect the threshold, target, and maximum payouts of the PSUs granted to our NEOs during the 2024 fiscal year.
(2)These amounts reflect the RSUs granted to our NEOs during the 2024 fiscal year.
(3)The values in the "Grant Date Fair Value" column reflect the grant date fair value of RSU and PSUs granted to our NEOs during the applicable fiscal year and determined in accordance with FASB ASC Topic 718. Regarding assumptions underlying the valuation of these equity awards, please see Note 11 to our Financial Statements.
|
64
|
|||||
Executive Compensation
Narrative to the Summary Compensation Table and Grants of Plan-Based Awards Table
Employment Agreements
We do not currently maintain employment agreements with any of our NEOs.
PSU Awards and RSU Awards
We granted RSUs (which are subject to time-based vesting) and PSUs (which are subject to performance-based vesting) to our NEOs pursuant to the Sitio LTIP in 2024. The terms and conditions, including vesting, associated with such awards are further described above in the CD&A under "-2024 NEO Compensation." The potential acceleration and forfeiture events relating to the awards, determined as of December 31, 2024, are described in greater detail under "-Potential Payments Upon Termination or a Change in Control" below.
Salary and Bonus in Proportion to Total Compensation
We do not currently maintain an annual cash bonus program or other short-term incentive program for our executive officers. As a result, the table below reflects the 2024 annualized base salary for the NEOs in proportion to the total compensation reported for the NEOs pursuant to the Summary Compensation Table, rounded to the nearest whole percent.
| Year | Annualized Base Salary ($) |
Annualized Base Salary as a Percentage of Total Compensation |
|||||||||
| 2024 | 850,000 | 12% | |||||||||
| 2024 | 550,000 | 16% | |||||||||
| 2024 | 500,000 | 18% | |||||||||
|
|
2024 | 500,000 | 18% | ||||||||
| 2024 | 500,000 | 18% | |||||||||
Outstanding Equity Awards at 2024 Fiscal Year-End
The following table reflects information regarding outstanding equity-based awards held by our NEOs as of December 31, 2024.
| Stock Awards | ||||||||||||||
|
Number of Shares
or Units of Stock That
Have Not Vested(1)(3)
(#)
|
Market Value of
Shares or Units
of Stock That
Have Not Vested(2)
($)
|
Equity Incentive Plan
Awards: Number of
Unearned Shares That
Have Not Vested(3)(4)
(#)
|
Equity Incentive
Plan Awards: Market
or Payout Value of
Unearned Shares That
Have Not Vested(2)
($)
|
|||||||||||
| 159,908 | 3,067,035 | 467,072 | 8,958,441 | |||||||||||
| 85,194 | 1,634,021 | 230,227 | 4,415,754 | |||||||||||
| 70,610 | 1,354,300 | 189,140 | 3,627,705 | |||||||||||
| 70,610 | 1,354,300 | 189,140 | 3,627,705 | |||||||||||
| 38,992 | 747,867 | 139,307 | 2,671,908 | |||||||||||
(1)The amounts in this column reflect all outstanding RSUs and, with respect to Messrs. Conoscenti, James, and Marcoux and Ms. Osicka the one-time award granted by the DPM Holders of Restricted Securities held as of December 31, 2024, which vest as set forth in Footnote 3 below, so long as the applicable NEO remains continuously employed by us or one of our affiliates from the grant date through each applicable vesting date. See the section below titled "-Potential Payments Upon Termination or Change in Control" for a description of potential acceleration and forfeiture provisions of such awards.
| 2025 PROXY STATEMENT |
65
|
||||
Executive Compensation
(2)The amounts reflected in these columns represent the market value of the Class A common stock underlying the RSUs or the Restricted Securities (which were granted by the DPM Holders), as applicable, held by the NEOs as of December 31, 2024, which was computed based on the closing price of our Class A common stock on December 31, 2024, which was $19.18 per share. Since vested Restricted Securities can be exchanged for shares of our Class A common stock on a one-for-one basis, we believe that it is appropriate to calculate the market value of the Restricted Securities granted by the DPM Holders using the closing price of our Class A common stock.
(3)The following sub-table reflects the regularly scheduled vesting date for each award that is disclosed as outstanding within the main table above:
| Vesting Date or Last Date of Performance Period |
Number of Time-Based RSUs to Vest |
Number of Restricted Securities to Vest |
Number of Performance-Based PSUs to Vest |
|||||||||||
| June 7, 2025 | 11,358 | |||||||||||||
| June 7, 2025 | 102,221 | |||||||||||||
| June 6, 2025 | 23,215 | |||||||||||||
| June 6, 2026 | 23,213 | |||||||||||||
| March 1, 2025 | 19,496 | |||||||||||||
| March 1, 2026 | 19,495 | |||||||||||||
| December 31, 2025 | 175,457 | |||||||||||||
| February 27, 2025 | 21,044 | |||||||||||||
| February 27, 2026 | 21,044 | |||||||||||||
| February 27, 2027 | 21,044 | |||||||||||||
| December 31, 2026 | 189,394 | |||||||||||||
| June 7, 2025 | 6,388 | |||||||||||||
| June 7, 2025 | 57,499 | |||||||||||||
| June 6, 2025 | 15,047 | |||||||||||||
| June 6, 2026 | 15,045 | |||||||||||||
| March 1, 2025 | 8,861 | |||||||||||||
| March 1, 2026 | 8,861 | |||||||||||||
| December 31, 2025 | 79,753 | |||||||||||||
| February 27, 2025 | 10,331 | |||||||||||||
| February 27, 2026 | 10,331 | |||||||||||||
| February 27, 2027 | 10,331 | |||||||||||||
| December 31, 2026 | 92,975 | |||||||||||||
| June 7, 2025 | 5,537 | |||||||||||||
| June 7, 2025 | 49,833 | |||||||||||||
| June 6, 2025 | 13,040 | |||||||||||||
| June 6, 2026 | 13,041 | |||||||||||||
| March 1, 2025 | 7,444 | |||||||||||||
| March 1, 2026 | 7,443 | |||||||||||||
| December 31, 2025 | 66,993 | |||||||||||||
| February 27, 2025 | 8,035 | |||||||||||||
| February 27, 2026 | 8,035 | |||||||||||||
| February 27, 2027 | 8,035 | |||||||||||||
| December 31, 2026 | 72,314 | |||||||||||||
|
66
|
|||||
Executive Compensation
| Vesting Date or Last Date of Performance Period |
Number of Time-Based RSUs to Vest |
Number of Restricted Securities to Vest |
Number of Performance-Based PSUs to Vest |
|||||||||||
| June 7, 2025 | 5,537 | |||||||||||||
| June 7, 2025 | 49,833 | |||||||||||||
| June 6, 2025 | 13,040 | |||||||||||||
| June 6, 2026 | 13,041 | |||||||||||||
| March 1, 2025 | 7,444 | |||||||||||||
| March 1, 2026 | 7,443 | |||||||||||||
| December 31, 2025 | 66,993 | |||||||||||||
| February 27, 2025 | 8,035 | |||||||||||||
| February 27, 2026 | 8,035 | |||||||||||||
| February 27, 2027 | 8,035 | |||||||||||||
| December 31, 2026 | 72,314 | |||||||||||||
| March 1, 2025 | 7,444 | |||||||||||||
| March 1, 2026 | 7,443 | |||||||||||||
| December 31, 2025 | 66,993 | |||||||||||||
| February 27, 2025 | 8,035 | |||||||||||||
| February 27, 2026 | 8,035 | |||||||||||||
| February 27, 2027 | 8,035 | |||||||||||||
| December 31, 2026 | 72,314 | |||||||||||||
(4)This column reflects all PSUs (based on target performance), which vest as set forth in Footnote 3 above, so long as the applicable NEO remains continuously employed by us or one of our affiliates from the grant date through each applicable vesting date and if the applicable performance conditions are met. See the section below titled "-Potential Payments Upon Termination or Change in Control" for a description of potential acceleration and forfeiture provisions of the respective awards.
Stock Vested in 2024
The following table provides information, on an aggregate basis, about the NEOs equity awards that vested during the fiscal year ended December 31, 2024. None of our NEOs hold stock option awards.
| Number of Shares Acquired On Vesting (#) |
Value Realized
On Vesting
($)(1)
|
|||||||
| 54,069 | 1,226,374 | |||||||
| 30,298 | 685,868 | |||||||
| 26,021 | 588,927 | |||||||
| 26,021 | 588,927 | |||||||
| 18,397 | 375,507 | |||||||
(1)The amounts reported in this column equal to the number of Class A common stock earned multiplied by the closing price of our Class A common stock on the applicable date earned, or, if the date on which such shares earned was not a trading day, the last trading day immediately prior to such date. The value is calculated before payment of any applicable withholding or other income taxes.
Pension Benefits and Non-Qualified Deferred Compensation
We have not maintained, and do not currently maintain, a defined benefit pension plan or a non-qualified deferred compensation plan providing for retirement benefits.
| 2025 PROXY STATEMENT |
67
|
||||
Executive Compensation
Potential Payments Upon Termination and Change in Control
Each of the NEOs is eligible to participate in our Severance Plan that provides for severance compensation or accelerated vesting of equity awards in the event of certain terminations of employment, including in connection with a change in control. The outstanding equity awards held by each of the NEOs also contain certain severance and change in control benefits as described in more detail below; however, each of the award agreements is subject to the terms and conditions of the Severance Plan.
Treatment of Equity Awards
Each of the NEOs currently hold Annual Equity Awards and, with the exception of Mr. McDavid , a one-time, non-recurring grant of the Restricted Securities. The RSU awards and Restricted Securities automatically become fully vested if the NEO's employment with us is terminated due to the NEO's disability or death. Additionally, upon the termination of the NEOs employment by us without cause or by the NEO for good reason following a change in control, then the RSUs and Restricted Securities shall immediately become fully vested as of the date of termination provided the NEO executes and does not revoke a release of all claims in a form acceptable to us.
The PSU awards held by each of our NEOs also contain provisions for potential payment upon certain terminations of employment. The PSU awards provide that upon an NEO's termination of employment due to (i) disability, (ii) death, (iii) termination by us without cause outside of the Change in Control Period (as defined below), or (iv) resignation by the NEO for good reason outside of the Change in Control Period, then the NEO shall be deemed to have satisfied a portion of the service requirement with respect to the PSUs, calculated based on the number of days the NEO was employed by or provided services to us or our affiliate between the date of grant and the date of such termination of employment and such pro rata number of PSUs will remain outstanding and will become vested PSUs based on actual performance and achievement of the performance goals set forth in the PSU award agreement through the performance period end date, which is either June 7, 2025, December 31, 2025, or December 31, 2026. If an NEO is terminated by us without cause or resigns for good reason during the Change in Control Period, provided the NEO executes and does not revoke a release of all claims in a form acceptable to us, then the NEO will be deemed to have satisfied the service requirement with respect to the PSUs (without proration) based on the greater of (y) target or (z) actual performance and achievement of the performance goals set forth in the PSU award agreement.
For purposes of the Annual Equity Awards and Restricted Securities, the following definitions generally apply:
▪"Cause" generally means (A) the NEO's material breach of the applicable award agreement or of any other written agreement between the NEO and us or any of our affiliates, including the NEO's breach of any material representation, warranty or covenant made under any such agreement; (B) the NEO's material breach of any policy or code of conduct established by us or any of our Affiliates and applicable to the NEO; (C) the NEO's violation of any law applicable to the workplace (including any law regarding anti-harassment, anti-discrimination, or anti-retaliation); (D) the NEO's fraud, theft, dishonesty, gross negligence, willful misconduct, embezzlement, or breach of fiduciary duty related to us or any of our affiliates or the performance of the NEO's duties hereunder; (E) the conviction or indictment of the NEO for, or plea of guilty or nolo contendere by the NEO to, any felony (or state law equivalent) or any crime involving moral turpitude; or (F) the NEO's willful failure or refusal, other than due to disability, to perform the NEO's obligations to the us or any of our Affiliates or to follow any lawful directive from us or any of our Affiliates, as determined by us; provided, however, that if the NEO's actions or omissions are of such a nature that the we determine that they are curable by the NEO, such actions or omissions must remain uncured thirty (30) days after we first provided the NEO written notice of the obligation to cure such actions or omissions.
▪"Change in Control Period" means the period beginning on the date that a change in control of us occurs and ending on the date that is six (6) months following the date that a change in control occurs.
▪"Disability" generally means a determination by us that the NEO is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
▪"Good Reason" generally means a material diminution in the NEO's base salary; (B) a material diminution in the NEO's authority, duties, and responsibilities, taken as a whole; or (C) a material breach by us any of our obligations under the applicable award agreement. Any assertion of the NEO of a termination for good reason shall not be effective unless all of the following conditions are satisfied: (1) the condition described in clause (A), (B), or (C) above giving rise to the NEO's termination of employment must have arisen without the NEO's consent; (2) the NEO must provide written notice to us of the existence of such condition(s) within thirty (30) days after the initial occurrence of such condition(s); (3) the condition(s) specified in such notice must remain uncorrected for thirty (30) days following our receipt of such written notice; and (4) the date of the NEO's termination of employment must occur within sixty (60) days after the initial occurrence of the condition(s) specified in such notice.
|
68
|
|||||
Executive Compensation
Severance Plan
If an NEO's employment with us is terminated by us without cause or by the NEO for good reason during the CIC Period, the participant is entitled to receive: (i) an amount equal to (a) 36 months of base salary for Mr. Conoscenti or (b) 24 months of base salary for all other NEOs, in each case, paid in a lump sum, and (ii) all unvested equity-based awards granted under the Sitio LTIP that are held by the participant immediately prior to the termination date shall immediately become fully vested, provided that any equity-based awards that are subject to performance-based vesting conditions shall be calculated and settled, without proration, based on the greater of (x) target performance and (y) actual performance and achievement of the applicable performance goals through the date of the change in control.
If a participant's employment with us is terminated by us without cause or by the participant for good reason outside of the CIC Period, or due to death or disability at any time, the participant is entitled to receive: (i) an amount equal to (a) 24 months of base salary for Mr. Conoscenti or (b) 18 months of base salary for all other NEOs, in each case, payable in monthly installments, and (ii) all unvested equity-based awards granted under the Sitio LTIP that are held by the participant immediately prior to the termination date shall immediately become fully vested, provided that, with respect to any equity-based awards that are subject to performance-based vesting conditions, a pro-rata amount of such award calculated based on the number of days the NEO was employed by or provided services to us or our affiliate between the date of grant and the date of such termination of employment and such pro rata number of PSUs will remain outstanding and will become vested PSUs based on actual performance and achievement of the performance goals set forth in the PSU award agreement through the performance period end date.
Quantification of Benefits
The following table summarizes the compensation and other benefits that would have become payable to each NEO assuming his or her employment terminated on December 31, 2024, given the NEO's base salary as of that date, and, with respect to the RSUs, PSUs and Restricted Securities, the closing price of our Class A common stock on December 31, 2024, which was $19.18. In addition, the following table summarizes the compensation that would become payable to the NEOs assuming a qualifying termination and a change in control occurred on December 31, 2024. The amounts included below for performance-based equity awards reflects the settlement of such awards based on target performance. Each of the values below reflects our best estimate of the amounts and benefits that could be payable upon a termination scenario, but amounts cannot be known with certainty until or unless such an event were to occur.
| Benefits and Payments | Termination Due to Death or Disability ($) |
Termination Without Cause or for Good Reason During CIC Period ($) |
Termination Without Cause or for Good Reason Outside CIC Period ($) |
||||||||
| Cash Severance | 1,700,000 | 2,550,000 | 1,700,000 | ||||||||
| Accelerated Equity Awards | 8,645,953 | 12,025,476 | 8,645,953 | ||||||||
| Total | 10,345,953 | 14,575,476 | 10,345,953 | ||||||||
| Cash Severance | 825,000 | 1,100,000 | 825,000 | ||||||||
| Accelerated Equity Awards | 4,388,148 | 6,049,775 | 4,388,148 | ||||||||
| Total | 5,213,148 | 7,149,775 | 5,213,148 | ||||||||
| Cash Severance | 750,000 | 1,000,000 | 750,000 | ||||||||
| Accelerated Equity Awards | 3,661,771 | 4,982,005 | 3,661,771 | ||||||||
| Total | 4,411,771 | 5,982,005 | 4,411,771 | ||||||||
| Cash Severance | 750,000 | 1,000,000 | 750,000 | ||||||||
| Accelerated Equity Awards | 3,661,771 | 4,982,005 | 3,661,771 | ||||||||
| Total | 4,411,771 | 5,982,005 | 4,411,771 | ||||||||
| Cash Severance | 750,000 | 1,000,000 | 750,000 | ||||||||
| Accelerated Equity Awards | 1,994,647 | 3,419,775 | 1,994,647 | ||||||||
| Total | 2,744,647 | 4,419,775 | 2,744,647 | ||||||||
| 2025 PROXY STATEMENT |
69
|
||||
Executive Compensation
2024 Director Compensation
For the year ended December 31, 2024, Sitio directors received compensation for their services on our Board and committees thereof consisting of the items below:
|
Board Fees Are Entirely Equity(1)
$300,000
|
Deferred Share Units (DSUs)
Equity awards that consist of shares of our Class A common stock that are subject to vesting and are not issued until the director's departure from the Board
No annual cash retainer for non-employee directors.
Annual committee fees of $25,000, $20,000 and $15,000 paid quarterly to chairs of Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, respectively.
|
|||||||||||||
(1)An annual equity award is granted to each non-employee director under the Sitio LTIP that vests quarterly over a one-year period and must be held for the duration of service.
The DSUs granted to our directors in 2024 vest in equal quarterly installments over the one-year period beginning on the applicable date of grant. Additionally, the DSUs will vest in full upon the termination of a recipient's service relationship by us for any reason within 12 months following a change in control of us, or due to death or disability at any time. Any vested DSUs will be settled in shares of our Class A common stock when a recipient's service relationship is terminated for any reason. Our non-employee directors are reimbursed for certain reasonable expenses (including costs of travel, food, and lodging) incurred in connection with their services to us. Spouses of our directors are also invited to join the directors in attending our annual holiday party. This travel may result in the non-employee director recognizing income for tax purposes. We do not reimburse the non-employee director for the taxes incurred in connection with such income.
Directors who are also our employees do not receive any additional compensation for their service on our board of directors. We maintain certain requirements for our directions that we believe create a unique alignment with our stockholders, specifically the requirements that (i) directors hold their annual equity-based award of DSUs for the duration of their respective service on our Board, (ii) the DSUs vest quarterly over a one-year period and (iii) directors are subject to annual elections. These requirements incentivize our directors to make decisions based on the long-term interests of the Company.
Term Limit. With the exception of the Chief Executive Officer, who will be exempted from term limits, our directors serve for a maximum of seven years. Given similar term limit deadlines among the current directors, we anticipate managing the transition over a period of the next several years so as to provide for a more seamless transition. We do not maintain a mandatory retirement age for our directors.
The following table provides information concerning the compensation of our directors who served on our Board, other than Mr. Conoscenti (whose compensation has been reported within the Summary Compensation Table), for the fiscal year ended December 31, 2024:
| Fees Earned or Paid in Cash ($) |
Stock Awards(1)(2)
($)
|
Total ($) |
|||||||||
| - | 305,842 | 305,842 | |||||||||
| 25,000 | 305,842 | 330,842 | |||||||||
| 20,000 | 305,842 | 325,842 | |||||||||
| - | 305,842 | 305,842 | |||||||||
| - | 305,842 | 305,842 | |||||||||
| - | 305,842 | 305,842 | |||||||||
| John R. ("J.R.") Sult | 15,000 | 305,842 | 320,842 | ||||||||
| - | 305,842 | 305,842 | |||||||||
(1)Amounts included in this column reflect the aggregate grant date fair value of DSUs granted to the independent directors, computed in accordance with FASB ASC Topic 718, disregarding the estimate of forfeitures, in each case pursuant to the Sitio LTIP. Regarding assumptions underlying the valuation of these equity awards, please see Note 11 to our Financial Statements. As of December 31, 2024, each non-employee director reflected in the table above held 6,340 unvested DSUs in the aggregate.
(2)Directors are entitled to dividend equivalent rights on DSUs prior to vesting. Such amounts are not included in this column because they are factored into the grant date fair value of the DSUs.
|
70
|
|||||
Executive Compensation
Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Conoscenti , our Chief Executive Officer.
For 2024, our last completed fiscal year:
▪The median of the annual total compensation of all employees of our company (other than Mr. Conoscenti ) was $212,173; and
▪The annual total compensation of Mr. Conoscenti , as reported in the Summary Compensation Table included above, was $6,914,223.
▪Based on this information, for 2024, the ratio of the annual total compensation of Mr. Conoscenti to the median of the annual total compensation of all employees was reasonably estimated to be 33 to 1.
To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps:
▪We determined that, as of December 31, 2024, our employee population consisted of approximately 72 individuals with all of these individuals located in the United States . This population consisted of our full-time employees, and we do not currently have any part-time or temporary employees.
▪We used a consistently applied compensation measure of base salary to identify our median employee.
▪We identified our median employee by consistently applying this compensation measure to all of our employees included in our analysis. Since all of our employees, including our CEO, are located in the United States , we did not make any cost of living adjustments in identifying the median employee.
▪With respect to the annual total compensation of Mr. Conoscenti , we used the amount reported in the "Total" column of our 2024 Summary Compensation Table above.
| 2025 PROXY STATEMENT |
71
|
||||
Executive Compensation
Pay Versus Performance
As required by Item 402(v) of Regulation S-K, we are providing the following information regarding the relationship between executive compensation and our financial performance for each of the last three completed calendar years. In determining the "Compensation Actually Paid" to our NEOs, we are required to make various adjustments to amounts that have been previously reported in the Summary Compensation Table in previous years, as the SEC's valuation methods for this section differ from those required in the Summary Compensation Table. The table below summarizes compensation values both previously reported in our Summary Compensation Table, as well as the adjusted values required in this section for the 2020, 2021, 2022, 2023, and 2024 fiscal years. Note that for our NEOs other than our principal executive officer (the "PEO"), compensation is reported as an average of each of the NEOs total compensation for the respective fiscal year.
| Year (a) |
Summary
Compensation
Table Total
for PEO #1 -
Conoscenti(1)
($)(b)
|
Compensation
Actually Paid
to PEO #1 -
Conoscenti(2)
(c)
|
Summary
Compensation
Table Total
to PEO #2 -
Gunderson(1)
($)(b)
|
Compensation
Actually Paid
to PEO #2(2)-
Gunderson
(c)
|
Average
Summary
Compensation
Table Total
for Non-PEO
NEOs(1)
(d)
|
Average
Compensation
Actually Paid
to Non-PEO
NEOs(1)(3)
(e)
|
Value of Initial
Fixed $100
Investment Based
On(4):
|
Net Income
(loss) ($)
(h)
|
|||||||||||||||||||||||||||
|
TSR
(f)
|
Peer
Group TSR
(g)
|
||||||||||||||||||||||||||||||||||
| 2024 | $ | 6,914,223 | $ | (9,388) | - | - | $ | 2,999,930 | $ | 173,142 | 104 | 158 | $ | 94,929,000 | |||||||||||||||||||||
| 2023 | 6,767,877 | 4,033,803 | - | - | 2,817,517 |
(6)
|
1,659,730 | 120 | 160 | (46,695,000) | |||||||||||||||||||||||||
| 2022 | 10,002,064 | 10,036,622 | 1,928,228 | 9,249,309 | 4,290,778 | 3,574,496 | 135 | 154 | 184,131,000 | ||||||||||||||||||||||||||
| 2021 | - | - | 1,479,825 | 4,990,961 | 1,651,369 | 4,809,182 | 82 | 106 | 27,492,000 | ||||||||||||||||||||||||||
| 2020 | - | - | 684,672 | 732,584 | 976,621 | (313,557) | 48 | 64 | 10,448,000 | ||||||||||||||||||||||||||
1)The PEO and the non-PEO NEOs for each year are as follows:
a)PEO:
i)2024: Christopher L. Conoscenti
ii)2023: Christopher L. Conoscenti
iii)2022: Christopher L. Conoscenti and Bryan C. Gunderson , the former President and Chief Executive Officer of Falcon
iv)2021: Bryan C. Gunderson
v)2020: Bryan C. Gunderson
b)Non-PEO NEOs:
i)2024: Carrie L. Osicka , Britton L. James , Jarret J. Marcoux , and A. Dax McDavid ,
ii)2023: Carrie L. Osicka , Britton L. James , Jarret J. Marcoux , A. Dax McDavid , and Brett S. Riesenfeld
iii)2022: Carrie L. Osicka , Britton L. James , Jarret J. Marcoux , Brett S. Riesenfeld , and Matthew B. Ockwood , the former Chief Financial Officer of Falcon
iv)2021: Matthew B. Ockwood , Michael Downs , the former Chief Operating Officer of Falcon, and Daniel C. Herz , the former President and Chief Executive Officer of Falcon
v)2020: Michael Downs and Daniel C. Herz
|
72
|
|||||
Executive Compensation
2)The table below reflects the relevant increases and deductions taken to calculate the "Compensation Actually Paid" to our PEOs for the respective fiscal year. As our PEOs do not participate in any defined benefit plans, no adjustments were required to amounts reported in the Summary Compensation Table totals related to the value of benefits under such plans.
|
2024
(Conoscenti)
|
2023
(Conoscenti)
|
2022
(Conoscenti)
|
2022
(Gunderson)
|
2021
(Gunderson)
|
2020
(Gunderson)
|
|||||||||||||||
| ADJUSTMENTS TO DETERMINE COMPENSATION "ACTUALLY PAID" FOR PEO | ||||||||||||||||||||
| Summary Compensation Table Total | $ | 6,914,223 | $ | 6,767,877 | $ | 10,002,064 | $ | 1,928,228 | $ | 1,479,825 | $ | 684,672 | ||||||||
| Add (Subtract): | ||||||||||||||||||||
| Deduction for amounts reported under the "Stock Awards" column in the Summary Compensation Table | $ | (6,052,394) | $ | (5,943,906) | $ | (9,685,728) | - | $ | (801,994) | $ | (173,802) | |||||||||
| Addition of fair value at year-end of equity awards granted during the year that remain unvested as of year-end | $ | 4,250,145 | $ | 5,147,331 | $ | 9,720,286 | - | $ | 3,010,112 | $ | 1,140,764 | |||||||||
| Fair value at vesting date of awards granted during the year and vested in the same year | - | - | - | - | - | - | ||||||||||||||
| Change in fair value of equity awards granted in prior years that were unvested as of the end of the year | $ | (5,212,090) | $ | (1,735,188) | - | - | $ | 873,283 | $ | (800,250) | ||||||||||
|
Change in fair value of equity awards granted in prior years that vested during the year
|
$ | 90,727 | $ | (202,312) | - | $ | 7,748,431 | $ | 429,735 | $ | (118,800) | |||||||||
| Equity awards granted in prior years that were forfeited during the year | - | - | - | $ | (427,350) | - | - | |||||||||||||
| Dividends or other earnings paid on equity awards during the year | - | - | - | - | - | - | ||||||||||||||
| Total Equity Award Related Adjustments | $ | (6,923,611) | $ | (2,734,074) | $ | 34,558 | $ | 7,321,081 | $ | 3,511,136 | $ | 47,912 | ||||||||
| COMPENSATION ACTUALLY PAID TOTALS | $ | (9,388) | $ | 4,033,803 | $ | 10,036,622 | $ | 9,249,309 | $ | 4,990,961 | $ | 732,584 | ||||||||
3)The table below reflects the relevant increases and deductions taken to calculate the "Compensation Actually Paid" to our non-PEO NEOs for the respective fiscal year. As our non-PEO NEOs do not participate in any defined benefit plans, no adjustments were required to amounts reported in the Summary Compensation Table totals related to the value of benefits under such plans.
| 2024 |
2023
|
2022
|
2021
|
2020
|
|||||||||||||
| ADJUSTMENTS TO DETERMINE COMPENSATION "ACTUALLY PAID" TO NON- |
|||||||||||||||||
| Average Summary Compensation Table Total... | $ | 2,999,930 | $ | 2,817,517 | $ | 4,290,778 | $ | 1,651,369 | $ | 976,621 | |||||||
| Add (Subtract): | |||||||||||||||||
| Deduction for amounts reported under the "Stock Awards" column in the Summary Compensation Table | $ | (2,475,986) | $ | (2,288,025) | $ | (3,797,430) | $ | (665,218) | $ | (549,862) | |||||||
| Addition of fair value at year end of equity awards granted during the year that remain unvested as of year end | $ | 1,754,395 | $ | 2,000,809 | $ | 3,813,148 | $ | 2,461,067 | $ | 1,730,619 | |||||||
| Fair value at vesting date of awards granted during the year and vested in the same year | - | - | - | - | - | ||||||||||||
| Change in fair value of equity awards granted in prior years that were unvested as of the end of the year | $ | (2,129,652) | $ | (799,105) | - | $ | 1,146,692 | $ | (2,131,204) | ||||||||
| Change in fair value of equity awards granted in prior years that vested during the year | $ | 24,456 | $ | (71,466) | $ | 144,600 | $ | 215,271 | $ | (339,731) | |||||||
| Equity awards granted in prior years that were forfeited during the year | - | - | $ | (876,600) | - | - | |||||||||||
| Dividends or other earnings paid on equity awards during the year | - | - | - | - | - | ||||||||||||
| Total Equity Award Related Adjustments | $ | (2,826,788) | $ | (1,157,787) | $ | (716,283) | $ | 3,157,813 | $ | (1,290,178) | |||||||
| AVERAGE COMPENSATION ACTUALLY PAID TOTALS | $ | 173,142 | $ | 1,659,730 | $ | 3,574,496 | $ | 4,809,182 | $ | (313,557) | |||||||
| 2025 PROXY STATEMENT |
73
|
||||
Executive Compensation
4)The values disclosed in (a) the TSR column represent the measurement period value of an investment of $100 in our Class A common stock (which, for fiscal years 2020 and 2021, represents the Class A common stock of Falcon) and (b) the Peer Group TSR column represent the measurement period value of an investment of $100 in the SPDR S&P Oil & Gas Exploration and Production ETF ("XOP"), in each case, from December 31, 2019, through each of December 31, 2020, December 31, 2021, December 31, 2022, December 31, 2023, and December 31, 2024. XOP is a weighted composite of 53 oil and gas exploration and production companies.
Narrative Disclosure to Pay Versus Performance Table
We did not include a "Company-Selected Measure" (as described in Item 402(v)) in the Pay Versus Performance table because the most important, and only, financial measure used by us to link "Compensation Actually Paid" to our NEOs to company performance is TSR, which is already required to be disclosed in the table. Since Sitio was formed as a result of the Falcon Merger and our current NEOs (other than A. Dax McDavid ) were appointed in connection with the Falcon Merger, which closed on June 7, 2022, we believe it is difficult to link "Compensation Actually Paid" to our NEOs to our financial performance as opposed to TSR over the time periods presented in the Pay Versus Performance table. Nevertheless, a significant portion of our current compensation program is comprised of equity awards, including awards based on absolute TSR targets. Hence, based on our compensation program and philosophy, "Compensation Actually Paid" to our NEOs should move commensurate with changes in our TSR, as shown in the year-over-year change from 2022 through 2024. For more detail regarding the Company's equity awards, please see "Compensation Discussion and Analysis-Long-Term Equity Incentive Compensation."
While "Compensation Actually Paid" was reduced in 2024 as compared to 2023, the compensation philosophy did not change. The difference in the amounts presented between 2022 and 2024 were due to (i) one-time transaction-related equity awards granted in 2022 in connection with the Falcon Merger that are not expected to recur and (ii) changes in the Company's stock price (including the Company's TSR). Specifically with respect to fiscal year 2023, the "Compensation Actually Paid" to our PEO and non-PEO NEOs are aligned with our TSR due primarily to the use of equity incentives, which are tied directly to our stock price.
In 2024, the Company's stock price and the Company's TSR decreased (although the Company's TSR still outpaced the initial fixed $100 investment), and the "Compensation Actually Paid" to our PEO and non-PEO NEOs also declined. We believe that the decline in "Compensation Actually Paid" of our PEO and non-PEO NEOs for 2024 is attributable to these decreases in the Company's stock price and the Company's TSR given the equity awards granted to our PEO and non-PEO NEOs during 2024 and prior years, especially the high proportion of PSU awards, relate to annualized absolute TSR performance metrics. In addition, the substantial improvement in our Net Income between 2020 and 2022 is directionally aligned with the increase in "Compensation Actually Paid" over the same time period. The same dynamic resulted in a decrease in "Compensation Actually Paid" during 2023. While our Net Income rebounded in 2024, decreases to the Company's stock price and the Company's TSR in 2024 were the primary factors that caused a decline in our PEO and non-PEO NEOs' "Compensation Actually Paid" for 2024.
The Compensation Actually Paid to our PEO and non-PEO NEOs does not reflect amounts actually earned or realized by our PEO and non-PEO NEOs for the respective fiscal year; rather these amounts, in part, reflect the changes from year to year of the value of unvested equity awards. These unvested equity awards are at risk and may never become vested; therefore, this value may never be realized by our PEO and non-PEO NEOs.
As shown in the tables above, changes in the market price of our Class A common stock following the date of grant of an award can impact the level of compensation that is actually paid to our NEOs. To assist in understanding the changes to the equity awards reflected above, the following table reflects the value of one share of our Class A common stock (which, for fiscal years 2020 and 2021, represents the Class A common stock of Falcon) as of each of the following dates. If that date reflects a non-business day, the value reported is the last trading date of the applicable calendar year.
| 12/31/2024 | 12/29/2023 | 12/30/2022 | 12/31/2021 | 12/31/2020 | |||||||||||||
| Closing Market Price of our Common Stock | $ | 19.18 | $ | 23.51 | $ | 28.85 | $ | 19.48 | $ | 12.60 | |||||||
Tabular List
The following list represents the only and, hence, the most important financial performance measure used by us to link compensation actually paid to our NEOs for fiscal year 2024, to company performance.
|
Total Stockholder Return
|
||
|
74
|
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Executive Compensation
Equity Compensation Plan Information
The following table sets forth information with respect to the securities that may be issued under our equity incentive plans as of December 31, 2024.
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a)(#) |
Weighted-average exercise
price of outstanding options,
warrants, and rights(5)
(b)($)
|
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column(a))(4)
(c)
|
|||||||||||
| Equity compensation plans approved by stockholders | ||||||||||||||
|
▪Sitio LTIP(1)
|
3,701,312 | - | 4,348,285 | |||||||||||
|
▪Brigham LTIP(2)
|
13,160 | - | 3,492,361 | |||||||||||
| Equity compensation plans not approved by stockholders | ||||||||||||||
|
▪Sitio Affiliate LTIP(3)
|
- | - | - |
(6)
|
||||||||||
|
▪Assignment Agreement(4)
|
154,763 | - | - | |||||||||||
| Total | 3,869,235 | - | 7,840,646 | |||||||||||
(1)Reflects securities that may be issued under the Sitio LTIP, including RSUs, PSUs (assuming maximum performance), and DSUs.
(2)Reflects securities that may be issued under the Brigham Minerals, Inc. 2019 Long-Term Incentive Plan, which was assumed by us in connection with the Brigham Merger, including RSUs and PSUs (assuming maximum performance).
(3)Reflects securities that may be issued under the Sitio Royalties Corp. Affiliate Incentive Plan (the "Sitio Affiliate LTIP").
(4)Reflects securities that may be issued in exchange for vested Restricted Securities granted by the DPM Holders pursuant to the Assignment Agreement on a one-for-one basis (or an equivalent amount of cash). Other than the outstanding Restricted Securities that were granted by the DPM Holders, there are no additional securities authorized for issuance pursuant to the Assignment Agreement.
(5)None of the outstanding awards granted under any of the equity incentive plans described in the table above have an exercise price.
(6)The number of securities that may be issued under the Sitio Affiliate LTIP is equal to the number of securities that may be issued under the Sitio LTIP. To the extent that any shares are issued under the Sitio LTIP, the number of shares available for issuance under the Sitio Affiliate LTIP is reduced on a one-for-one basis, and vice versa.
| 2025 PROXY STATEMENT |
75
|
||||
Report of the Compensation Committee of the Board of Directors
The following report of the Compensation Committee of the Company shall not be deemed to be "soliciting material" or to be "filed" with the SEC , nor shall this report be incorporated by reference into any filing made by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
The Compensation Committee has reviewed and discussed the above Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee recommended to our Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference to our Annual Report on Form 10-K.
|
Compensation Committee of the Board of Directors
|
|||||
|
76
|
|||||
|
PROPOSAL 3
Ratification of Independent Registered Public Accounting Firm
|
||||||||
|
The Audit Committee has appointed
As described in its charter, the Audit Committee is responsible for the appointment, compensation, retention and oversight of the work of the Company's independent registered public accounting firm. On an annual basis, the Audit Committee considers the engagement of the independent registered public accounting firm. The Audit Committee also periodically considers whether there should be a rotation of the independent registered public accounting firm, which it did in connection with a request for proposal to three global professional services firms, including
In selecting
▪
▪
▪
▪
▪the timeliness, quality, candor and insight of
▪the appropriateness of
The members of the Audit Committee and the Board believe that the continued retention of
Representatives of
Neither our Bylaws nor other governing documents or law require stockholder ratification of the appointment of
|
||||||||
| 2025 PROXY STATEMENT |
77
|
||||
Proposal 3 - Ratification of Independent Registered Public Accounting Firm
Principal Accountant Fees and Services
The following tables provide information regarding the aggregate fees incurred by the Company from KPMG for 2024 and 2023:
|
Company, or its Predecessor
and the Previous Owners
|
||||||||
| 2024 | 2023 | |||||||
|
Audit Fees(1)
|
$ | 1,130,000 | $ | 1,225,500 | ||||
| Audit-Related Fees | $ | - | $ | - | ||||
| Tax Fees | $ | 581,892 | $ | 991,901 | ||||
| All Other Fees | $ | - | $ | - | ||||
| Total | $ | 1,711,892 | $ | 2,217,401 | ||||
(1)Audit fees represent amounts billed for each of the years presented for professional services rendered in connection with those services normally provided in connection with statutory and regulatory filings or engagements including comfort letters, consents and other services related to SEC matters. The decrease in audit fees in 2024 compared to 2023 is primarily due to the ongoing efforts of the Company to reduce G&A, and in connection with the request for proposal conducted in 2024.
Pre-Approval Policies and Procedures
The Audit Committee pre-approves all audit and non-audit services provided by our independent registered public accounting firm and pre-approved all the fees reported above. This policy is set forth in the charter of the Audit Committee, which is available in the Investor Relations section under the "Governance Documents" tab of our website athttps://investors.sitio.com.
Vote Required
The approval of the proposal to ratify the selection of KPMG as our independent registered public accounting firm in this proposal requires the affirmative vote of the majority of the shares present online or by proxy and entitled to vote on the matter at the Annual Meeting. Abstentions will have the effect of a vote against the proposal. Brokers have the authority to exercise their discretion with respect to this proposal if they do not receive instructions from the beneficial owner. Therefore, it is important that you vote your shares by proxy or online at the Annual Meeting.
|
Recommendation of the Board
The Board recommends that stockholders voteFORthe proposal to ratify the appointment of
|
|||||||||||
|
78
|
|||||
Report of the Audit Committee of the Board of Directors
The following report of the Audit Committee shall not be deemed to be "soliciting material" or to be "filed" with the SEC , nor shall this report be incorporated by reference into any filing made by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
The purposes of the Audit Committee of the Board are to (i) exercise oversight of the accounting and financial reporting processes of the Company and audits of the Company's financial statements and internal controls over financial reporting, (ii) assist the Board in fulfilling its oversight responsibilities regarding the (a) integrity of the Company's financial statements; (b) Company's compliance with legal and regulatory requirements; (c) qualifications, independence and performance of any independent auditor engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; and (d) effectiveness and performance of the Company's internal audit function, (iii) annually, prepare this report, and (iv) perform such other functions as the Board may assign to the Audit Committee from time to time. The roles and responsibilities of the Audit Committee are fully set forth in the Audit Committee Charter available on the Company's website at:https://investors.sitio.com/governance/governance-documents/default.aspx.
The Audit Committee consists of Company directors who satisfy the requirements of independence, financial literacy and other qualifications under applicable law and regulations of the SEC and the NYSE and is chaired by Morris R. Clark . The Board annually reviews these standards and has determined that each of Mr. Clark , Mr. Sult and Ms. Harvey is independent, financially literate and has accounting or related financial management expertise. Our Board has also determined that Mr. Clark qualifies as the "audit committee financial expert" as defined by SEC rules. The Audit Committee has directed the preparation of this report and has approved its content and submission to the stockholders.
Management is responsible for the Company's internal control over financial reporting. The independent auditor is responsible for performing an independent audit of the Company's consolidated financial statements and management's assessment of the effectiveness of internal controls over financial reporting in accordance with generally accepted auditing standards in the United States of America and issuing a report thereon. The Audit Committee's responsibility is to monitor and oversee these processes. The Audit Committee is primarily responsible for appointing and overseeing the Company's independent auditor as well as determining their compensation.
In connection with these responsibilities, the Audit Committee met with management and KPMG to review and discuss the December 31, 2024 audited consolidated financial statements and management's assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2024. The Audit Committee also discussed with the independent auditor the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the "PCAOB") and the SEC , including but not limited to critical audit matters and changes in fee levels.
The Audit Committee specifically considers non-audit fees when assessing the independent auditor's independence. The Audit Committee also received the written disclosures and the letter from the independent auditor required by the PCAOB regulating the independent auditor's communications with the Audit Committee concerning independence and has discussed with the independent auditor that firm's independence.
Based upon the Audit Committee's review and discussions with management and the independent auditor referred to above, the Audit Committee recommended to our Board that the audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 26, 2025.
|
Audit Committee of the Board of Directors
John R. ("J.R.") Sult,Member
|
|||||
| 2025 PROXY STATEMENT |
79
|
||||
Other Matters
Management knows of no other business to be presented for action at the meeting. If other matters properly come before the meeting or any adjournment of the meeting, the persons named as proxies will vote upon them in accordance with their best judgment.
Householding Information
Unless we have received contrary instructions, we may send a single copy of this Proxy Statement to any household at which two or more stockholders reside if we believe the stockholders are members of the same family. This process, known as "householding," reduces the volume of duplicate information received at any one household and helps to reduce our expenses. However, if stockholders prefer to receive multiple sets of our disclosure documents at the same address this year or in future years, the stockholders should follow the instructions described below. Similarly, if an address is shared with another stockholder and together both of the stockholders would like to receive only a single set of our disclosure documents, the stockholders should follow these instructions:
▪If the shares are registered in the name of the stockholder, the stockholder should contact Brett S. Riesenfeld , Sitio's Executive Vice President, General Counsel and Corporate Secretary, 1401 Lawrence Street, Suite 1750, Denver, CO 80202, or via telephone at 720-640-7620, to inform us of his or her request; or
▪If a broker, bank, broker-dealer, custodian or other similar organization holds the shares, the stockholder should contact that representative directly.
Where You Can Find More Information
We file annual and quarterly reports and other reports and information with the SEC . We distribute to our stockholders annual reports containing financial statements audited by our independent registered public accounting firm and, upon request, quarterly reports for the first three quarters of each fiscal year containing unaudited financial information. The annual and quarterly reports and other reports and information are filed through the Electronic Data Gathering, Analysis and Retrieval (known as "EDGAR") system and are publicly available on the SEC's website, located athttp://www.sec.gov. We will provide without charge to you, upon written or verbal request, a copy of the reports and other information filed with the SEC . In addition, we provide information regarding our corporate governance and financial and stock information on our corporate website athttps://investors.sitio.com.
Any requests for copies of information, reports or other filings with the SEC should be directed to Brett S. Riesenfeld , Sitio's Executive Vice President, General Counsel and Corporate Secretary, at 1401 Lawrence Street, Suite 1750, Denver, CO 80202.
By Order of the Board of Directors,
Executive Vice President, General Counsel
and Corporate Secretary
|
80
|
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Attachments
Disclaimer
AM Best Affirms Credit Ratings of Nan Shan General Insurance Co., Ltd.
Fourth Quarter 2024 Press Release
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