Denise McWatters

About Denise McWatters

Executive Vice President, General Counsel, and Corporate Secretary at Delek US Holdings (DK) since February 2021; age 65 . Previously served as General Counsel, Chief Compliance Officer, and Corporate Secretary at HF Sinclair (formerly HollyFrontier) from May 2008 to August 2019, and as General Counsel at The Beck Group from 2005 to October 2007; earlier a shareholder at two national law firms . 2024 Annual Incentive Plan (AIP) paid 26% of base salary ($122,669) based on a 35% “Sum of the Parts” modifier despite no achievement under performance metrics, indicating discretion tied to strategic execution . Long-term PSUs measuring relative TSR from the 2022–2024 cycle paid at 57% (29th percentile), reflecting below-median TSR versus peers .

Past Roles

Fixed Compensation

Multi-year compensation summary (Summary Compensation Table):

Perquisites detail (2024):

• 401(k) match: $46,000; group term life insurance: $13,086; total all other compensation: $59,086 .

Employment agreement (amended Nov 2024) fixed terms:

• Base salary: $470,000; one-year consulting agreement beginning July 2026 at $250,000 .

Performance Compensation

2024 AIP opportunity and actual (McWatters):

2024 AIP metrics (company-wide):

Long-term incentives (PSUs/RSUs):

• 2025 LTI design: RSUs vest quarterly over three years; PSUs vest at end of 3-year performance period based on relative TSR vs 25 S&P 400 Energy peers; payout from 0–200% depending on percentile rank .
• 2024 grants (McWatters): PSUs across four performance periods (2024, 2025, 2026 one-year tranches and 2024–2026 three-year tranche) with threshold/target/max counts and grant-date fair values; plus EOP PSUs targeting enterprise cost reductions .

Relative TSR payout schedule (PSUs):

Enterprise Optimization Plan (EOP) features:

• Performance period through Dec 31, 2025; payouts contingent on ≥$100 million annualized FCF savings (average of Q3/Q4 2025 vs Q2 2024 baseline); payouts above target require 0–20% stock price hurdle through payout in March 2026; PSU target set at 1x target bonus, max 3x .

2024 vesting activity (McWatters):

Equity Ownership & Alignment

Employment Terms

Key terms of McWatters Employment Agreement (amended Nov 2024):

• Term extension: to June 30, 2026 .
• Base salary: $470,000; target bonus: 75% of base; maximum payout opportunity: 200% of target; grant of $750,000 time-vesting RSUs vesting quarterly through June 30, 2026; one-year consulting agreement starting July 2026 at $250,000 .
• Non-solicitation: applies during term and for one year thereafter .

Severance and change-of-control economics:

• Termination without cause or for good reason: cash equal to current base salary + target bonus; 12 months family health coverage; prorated annual bonus based on actual company performance; equity vesting—PSUs prorated based on actual results at cycle end; full-value and appreciation awards vest to the lesser of six months post-termination or remaining term .
• Voluntary resignation with ≥3 months’ notice (no good reason): 50% of annual base salary plus 12 months family health coverage .
• Change in control (within 2 years; double trigger): 2x base salary + target bonus; 12 months health coverage; prorated bonus; immediate vesting of all unvested equity .
• Estimated payouts (assuming event at Dec 31, 2024): termination total $1,992,051 (includes severance $1,175,005; COBRA $26,355; vacation $94,000; accelerated RSUs $125,292; accelerated PSUs $571,398) ; change-in-control total $3,579,821 (includes severance $1,997,509; COBRA $26,355; vacation $94,000; accelerated RSUs $377,451; accelerated PSUs $1,084,507) .
• Clawback: Human Capital and Compensation Committee may recoup incentive compensation upon material restatement or misconduct within three years; awards subject to clawback per law and exchange rules .

Investment Implications

• Pay-for-performance alignment shows tight gating: 2024 AIP metrics paid zero due to EBITDA below threshold; payout came via discretionary “Sum of the Parts” modifier tied to strategic asset sales, midstream acquisitions, balance sheet actions, and intercompany optimizations—implies compensation committee uses discretion to reward execution beyond pure financial results .
• Retention and transition visibility: Contract extended to June 30, 2026 with significant time-vesting RSUs and a post-employment consulting arrangement; severance provides 1x salary+target bonus and 2x under change-in-control, reducing retention risk but increasing transaction-related payouts if a deal occurs .
• Ownership alignment is moderate: Beneficial ownership is <1% of DK shares and DKL units with unvested RSUs/PSUs outstanding; quarterly RSU vesting creates consistent potential supply, but hedging/pledging prohibitions and 10b5-1/blackout controls mitigate opportunistic selling risk; she meets ownership guidelines (2x salary) per committee oversight .
• Execution risk and incentive mix: A meaningful portion of equity is performance-based PSUs linked to relative TSR and EOP FCF savings with stock price hurdles, creating sensitivity to peer-relative performance and cost-out delivery; prior 2022–2024 PSU payout at 57% underscores below-median TSR, a risk factor if not improved .
• Governance safeguards: Robust clawback policy, strict insider trading controls, and prohibited hedging/pledging reduce governance red flags; strong say-on-pay support (>95% in 2024) suggests investor acceptance of the program .