Gary Hanna
About Gary Hanna
Gary C. Hanna (age 67) is President and Director of Prairie Operating Co. (PROP) since May 2023. He holds a BBA from the University of Oklahoma and has 40+ years of energy-sector leadership (Permian, Mid-Continent, GOM; international exposure in SE Asia, Mexico, Barbados) including Chairman/Interim CEO of Rosehill Resources (2017–2020) and senior roles at KLR Group . As a non-PEO NEO at PROP, his “compensation actually paid” for 2024 was $2.73M (average non-PEO NEO CAP), during a year the company posted a net loss of $40.9M and a cumulative TSR value of $8.07 on a $100 base, per the Pay vs Performance table .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Rosehill Resources, Inc. | Chairman and Interim CEO | 2017–2020 | Led independent E&P with focus in core Delaware Basin, overseeing production and reserves growth efforts . |
| KLR Group, LLC | Chairman, President and Co-CEO | 2015–2017 | Merchant bank/private investments across energy; capital formation, M&A, fund mgmt. . |
| Prairie LLC (private) | Co-Founder and Member | 2022–2023 | Basis of PROP merger; strategic asset platform for PROP . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Crown Electrokinetics Corp (NASDAQ: CRKN) | Director | 2021–2022 | Public smart-glass technology company . |
Fixed Compensation
| Year | Base Salary ($) | Target Bonus (%) | Actual Bonus ($) | All Other Comp ($) | Notes |
|---|---|---|---|---|---|
| 2024 | 550,000 | 250% of salary (per employment agreement) | 550,000 (discretionary) | 13,800 (401k match) | Employment agreements amended Aug-2023; salary/targets annually reviewed . |
| 2023 | 362,788 | 250% (agreement) | 1,000,000 (discretionary) | 263,200 (one-time non-accountable expense reimbursement + 401k match) |
Compensation committee uses an independent consultant (Zayla, a Gallagher company) for award design .
Performance Compensation
| Component | Grant/Performance Period | Metric(s) | Target/Weighting | Status/Vesting | Amount/Value |
|---|---|---|---|---|---|
| RSUs | Granted 2024 (125,619 units) | Service | — | Vests ratably over 3 years starting Mar 5, 2025 | $869,283 MV at 12/31/24 . |
| RSUs | Granted 2024 (61,560 units) | Service | — | Cliff vests Dec 18, 2025 | $425,995 MV at 12/31/24 . |
| PSUs | 3-year period 1/1/2024–12/31/2026 (83,746 target) | Relative TSR | 0–200% of target | Vests Mar 2027 based on relative TSR | $579,522 MV at 12/31/24 . |
- 2024 cash bonuses were discretionary (no disclosed formulaic metrics), indicating potential use of discretion despite loss-making year .
- RSU/PSU treatment on termination: pro-rata vesting upon without-cause/GD reason; full vest for death/disability; RSUs full vest at retirement ≥65; PSUs continue through performance period at retirement .
- Change-in-control (CoC) equity: 100% accelerate if not assumed; if assumed and terminated without cause/for good reason within 24 months, RSUs 100% vest, PSUs vest at greater of target or actual-to-date .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 3,513,253 shares (7.23% of class) as of 4/8/2025 . |
| Ownership composition | 1,148,834 merger consideration shares; 2,333,333 fully exercisable non-compensatory options; 31,086 from RSU vesting . |
| Shares outstanding (for % calc) | 42,942,127 as of record date (4/8/2025) . |
| Unvested awards at 12/31/2024 | RSUs: 125,619 (3-year ratable from 3/5/2025), 61,560 (cliff 12/18/2025); PSUs: 83,746 target (TSR 2024–2026) . |
| Option details | Non-compensatory options to acquire PROP stock at $0.25 per share (adjusted), originally tied to production hurdles; became fully exercisable in March 2025 . |
| Hedging/pledging | Prohibited for directors/officers; no margin purchases or pledging allowed . |
| Ownership guidelines | Not disclosed in proxies. |
Insider selling pressure and lock-ups:
- Underwritten offering lock-up (Mar 24, 2025): Officers/directors (including Hanna) agreed to 90-day transfer restrictions; Company agreed to a post-offer issuance lock-up until Jun 22, 2025 . This temporarily reduces near-term selling capacity despite large in-the-money options.
Employment Terms
| Provision | Hanna Terms |
|---|---|
| Base/bonus targets | Base $550,000; target annual bonus 250% of salary; eligible for annual LTIP awards . |
| Severance (non-CoC) | Lump sum equal to 3x (base + target bonus + “amount payable” under LTIP for the year of termination) + up to 18 months COBRA subsidy; subject to release and restrictive covenants . |
| Severance (CoC) | If terminated without cause/for good reason within 12 months following CoC: 4x (base + target bonus + LTIP amount for the year) + COBRA subsidy . |
| Definitions | Good Reason/Cause and CoC defined in agreement (CoC includes >50% change in vote/equity, certain business combinations, liquidation) . |
| Equity treatment | Pro-rata vesting or acceleration as described in Performance Compensation (above) . |
Performance & Track Record Indicators (Company-level context)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Cumulative TSR – Value of $100 | $1.81 | $11.10 | $8.07 |
| Net Income (Loss) | $(13,418,814) | $(79,080,800) | $(40,912,000) |
- 2024 saw negative net income and low cumulative TSR, while executive bonuses were discretionary and significant equity was granted .
Board Governance (Hanna as Director)
- Board service: Director since 2023; President and inside director (not independent) .
- Committee roles: Audit (Thoresen chair; Abbas, Frommer, Lee), Compensation (Lee chair; Abbas, Frommer, Gray, Thoresen), Nominating & Governance (Abbas chair; Lee, Gray, Thoresen). Hanna is not listed on board committees .
- Board leadership: CEO and Chairman roles combined under Edward Kovalik; no designated Lead Independent Director noted (guidelines allow the role) .
- Independence: 5 of 7 directors independent; Hanna, as an employee, is not independent .
- Attendance: Board met 6x in 2024; no director attended fewer than 94% of meetings/committees served .
Director compensation:
- Employee directors (Kovalik, Hanna) receive no additional pay for board service; non-employee director pay for 2024 included $150k cash plus $100k RSUs, with one-time $50k cash for certain directors recognizing extraordinary effort .
Related Party Transactions & Governance Controls
- Overriding royalty interests (ORRI): Hanna and Edward Kovalik (and Paul Kessler) hold certain overriding royalty interests under assets acquired (Initial Genesis Assets); to mitigate conflicts, an independent board committee approves drilling programs quarterly .
- Non-compensatory options: Company assumed options in the Prairie LLC merger for Hanna, Kovalik, Kessler, and BOKA Energy LP; fully exercisable as of Mar 2025; potential future transfer to Series D PIPE investors if performance metrics unmet by May 3, 2026 (historical provision) .
- Related party review: Audit Committee reviews and must approve related-party transactions per policy .
Compensation Structure Analysis (Signals)
- Mix and discretion: 2024 included substantial discretionary cash bonuses ($550k) despite negative net income, indicating reliance on discretion vs. preset operating metrics .
- Equity tilt: Significant 2024 RSU/PSU grants (aggregate $2.75M grant-date value) with service-vested RSUs and TSR-based PSUs, aligning long-term incentives but introducing dilution and vesting overhang .
- Retention awards under consideration: The Compensation Committee is evaluating special time-based RSUs (≤3-year vest) for executives to reinforce retention after the transformative Bayswater Acquisition; would be in addition to annual awards, and designed with input from independent consultant Zayla .
- Clawback: LTIP and awards subject to the Company’s clawback policy and Dodd-Frank alignment .
- No pledging/hedging: Insider policy prohibits hedging/pledging and margin purchases—supports alignment and downside exposure .
Equity Ownership & Beneficial Holdings (Detail)
| Holder | Shares | % of Class | Notes |
|---|---|---|---|
| Gary C. Hanna | 3,513,253 | 7.23% | Includes 1,148,834 merger shares; 2,333,333 fully exercisable non-comp options; 31,086 RSUs vested . |
| Shares Outstanding (as of 4/8/2025) | 42,942,127 | — | Record date reference . |
Risk Indicators & Red Flags
- Discretionary bonuses despite negative results .
- Potential dilution and selling pressure: fully exercisable non-compensatory options ($0.25 strike) deep in the money, though 90-day lock-up from Mar 24, 2025 capped near-term liquidity .
- Related-party ORRI interests require ongoing independent oversight to avoid conflicts .
- CEO dual role as Chairman; no stated Lead Independent Director—monitor independence and oversight balance .
Investment Implications
- Alignment: Large personal stake (7.23%) and prohibitions on hedging/pledging are positives for alignment; PSUs tied to relative TSR can create market-linked incentives .
- Retention: Forthcoming special retention RSUs and existing time-based RSUs reduce near-term flight risk but increase guaranteed pay and dilution risk; expect incremental share issuance if LTIP share reserve is expanded (board proposed increase to 15,000,000 total) .
- Event protection and cost: Rich severance economics (3x–4x base+target bonus+LTIP component) and equity acceleration terms could increase transaction costs under change-in-control scenarios .
- Governance: Hanna is an inside director with no committee roles; combined CEO/Chair structure persists; independent-majority board and independent consultant usage partially mitigate concerns .
- Trading signals: The combination of fully exercisable deep-in-the-money options and the expiration of the 90-day lock-up post-offering could create episodic supply when windows open; monitor Form 4s post-lock-up .
Sources: Proxy statements and 8-K filings as cited.