Paul McKinney
RING ENERGYAbout Paul McKinney
Paul D. McKinney is Chairman of the Board and Chief Executive Officer of Ring Energy, Inc. (REI), serving since October 1, 2020; he is 66 and holds a B.S. in Petroleum Engineering from Louisiana Tech University (1983), with prior service in the U.S. Air Force and Air Force Reserves . He brings 41 years of oil and gas experience across Anadarko, Tristone Capital, Apache, Yuma Energy (which filed for bankruptcy in April 2020), and SandRidge Energy, along with technical authorship and board service at Pro-Ject Holdings . Under his leadership, REI delivered 2024 Net Income of $67.5MM, Adjusted EBITDA of $233.3MM, Adjusted Free Cash Flow of $43.6MM, production of 19,648 Boe/d, LOE of $10.89/Boe, and proved reserves of 134.2 MMBoe (PV-10 of $1.5B) . Pay-versus-performance highlights show 2024 TSR of 51.52 and CROCE of 15.9% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Anadarko Petroleum | Various roles culminating as VP Reservoir Engineering (Anadarko Canada) | 1983–2006 | Led reservoir engineering and development; foundational operator training . |
| Tristone Capital | VP & Director, A&D | 2006–2007 | Drove transactions expertise in acquisitions/divestitures . |
| Apache Corporation | Manager Corporate Reservoir Engineering; Region VP Gulf Coast Onshore | 2007–2013 | Managed advanced reservoir engineering; led Gulf Coast operations . |
| Yuma Energy | EVP & COO (2014–2017); President & COO (2017–2019); consultant (2014) | 2014–2019 | Operational leadership; company later filed bankruptcy (April 2020) . |
| SandRidge Energy | President, CEO & Director | Jan–Dec 2019 | Turnaround leadership at public E&P . |
| Ring Energy | Chairman & CEO | Oct 2020–present | Strategic acquisitions, capital discipline, FCF generation . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Pro-Ject Holdings, LLC | Director | 2017–2021 | Governance oversight at oilfield chemical services firm . |
| Technical Authorship | Co-authored “Advanced Reservoir Engineering”; SPE paper (SPE-75708-MS) | Various | Thought leadership in reservoir characterization . |
| U.S. Air Force/Reserves | Service | Early career | Discipline and leadership background . |
Fixed Compensation
| Year | Salary ($) | Target AIP ($) | Actual AIP Paid ($) | Equity Awards ($) |
|---|---|---|---|---|
| 2022 | 530,000 | — | 726,100 | 2,369,893 |
| 2023 | 569,167 | — | 569,167 | 2,604,595 |
| 2024 | 604,167 | 604,167 | 821,667 | 1,946,712 |
Additional detail:
- 2024 base salary rate increased from $575,000 to $610,000 effective March 1, 2024 (6% increase) .
Performance Compensation
Annual Incentive Plan (AIP) – 2024 outcomes
| Metric | Weighting | Threshold | Target | Max | Actual | Performance Factor | Funding Level |
|---|---|---|---|---|---|---|---|
| Net Boe Production (Sales) | 50% | 5,950,336 | 6,611,484 | 7,933,781 | 7,191,054 | 144% | 72% |
| IRR (%) | 25% | 24% | 47% | 71% | 60% | 155% | 39% |
| Net Lifting Costs ($/Boe) | 25% | $12.05 | $10.95 | $8.76 | $10.89 | 103% | 25% |
| Total | 100% | — | — | — | — | — | 136% |
| HSE Objectives Modifier | 100% | N/A | 100% | 200% | 100% | — | 100% |
| Total % of AIP Target Earned | — | — | — | — | — | — | 136% |
Design notes:
- AIP metrics emphasize production, returns (IRR), and cost control; payouts can range 0–200% of target, with an HSE modifier applied; 2024 pool funded at 136% .
Long-Term Incentives – 2024 awards and design
| Award Type | Shares/Units | Grant-Date Fair Value ($) | Vesting/Performance |
|---|---|---|---|
| RSUs (service-based) | 414,414 | 538,738 | 3 equal annual tranches starting first anniversary of grant . |
| PSUs (performance-based, target) | 621,622 | 1,407,974 | 3-year performance period; cliff vest Dec 31, 2026; 50% TSR, 50% CROCE; payout 0–200% . |
PSU frameworks:
- TSR grid combines absolute TSR bands (<0%, 0%, 10%, ≥25%) with relative TSR percentiles (25th–90th) to set payouts up to 200% (linear interpolation between points) .
- CROCE targets: for 2024 grants, thresholds at 10%, target 15%, stretch 18%, max 20% with payouts up to 200% (linear interpolation) .
- Historical PSU results (2012/2022 grant vesting in 2024): TSR paid 0%; CROCE paid 177% .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 1,992,218 shares; <1% of shares outstanding; includes 35,700 warrants ($0.80 strike, expiring Oct 29, 2025) . |
| Unvested RSUs at 12/31/2024 | 786,269 units; $1,069,326 market value (at $1.36/share) . |
| Unvested PSUs at 12/31/2024 | 1,243,244 target units; $1,690,812 market value (at $1.36/share) . |
| Insider trading policy | Prohibits hedging, pledging, and margin transactions; pre-clearance required; blackout periods enforced . |
| Ownership guidelines | CEO required ownership: 5x base salary; NEOs: 3x; 3 years to comply; hold two-thirds of net vested shares until compliant . |
RSU vesting schedule (selected upcoming vest dates and amounts for McKinney):
| Vesting Date | Shares |
|---|---|
| Feb 9, 2025 | 95,579 |
| Feb 13, 2025 | 138,138 |
| Feb 16, 2025 | 138,138 |
| Feb 13, 2026 | 138,138 |
| Feb 16, 2026 | 138,138 |
| Feb 13, 2027 | 138,138 |
| Total listed | 786,269 |
PSU vesting dates (subject to performance):
| Vesting Date | Units |
|---|---|
| Dec 31, 2025 | 621,622 |
| Dec 31, 2026 | 621,622 |
| Total | 1,243,244 |
Employment Terms
- Change-in-Control and Severance Benefit Plan (adopted March 6, 2024) replaces prior employment agreements and associated restrictive covenants; McKinney designated Tier 1 .
- Double-trigger vesting for equity on change-in-control; no single-trigger severance; health benefits reimbursed per tier and scenario .
Potential payments (illustrative amounts as of 12/31/2024):
| Scenario (Tier 1 – CEO) | Cash Severance | Pro-Rated Target Bonus | Equity Acceleration | COBRA Reimbursement | Total |
|---|---|---|---|---|---|
| Termination by Company without Cause or by CEO for Good Reason | $2,440,000 | — | $2,760,138 | $50,720 | $5,250,858 |
| Termination within 6 months prior to / 24 months after a CIC (double-trigger) | $3,660,000 | — | $2,760,138 | $50,720 | $6,470,858 |
| Death or Disability | — | — | $2,760,138 | $25,360 | $2,785,498 |
Governance practices:
- Clawback policy adopted Nov 2023 (SEC 10D/NYSE American compliant) for incentive compensation over 3 prior years upon certain restatements .
- “What we don’t do”: no excise tax gross-ups, no single-trigger severance, no option repricing without shareholder approval, no hedging/pledging .
Board Governance
- Roles: McKinney serves as Chairman & CEO; the Board cites effectiveness of combined role balanced by Lead Independent Director, majority independent Board, and fully independent committees .
- Independence: McKinney is not independent; committee membership comprises only independent directors .
- Lead Independent Director responsibilities include presiding over sessions without the Chair, agenda planning, succession planning input, and shareholder engagement .
- Board activity: 11 meetings in 2024; no director attended fewer than 75% of Board and committee meetings .
Board committees (McKinney does not serve on any committee):
- Audit Committee: independent; financial expert members; six meetings in 2024 .
- Compensation Committee: independent; retained Meridian Compensation Partners as independent consultant; four meetings in 2024 .
- Nominating, Environmental, Social, and Governance Committee: independent; three meetings in 2024 .
Say-on-Pay & Compensation Peer Group
- Say-on-Pay: 2024 approval ~81%; Company seeks further improvement; 2022 approval was below a majority, prompting enhanced engagement with holders of 56% of shares in 2024 and 22% in 2025 .
- Peer group for compensation benchmarking includes Amplify Energy, Berry Corp., Gulfport Energy, HighPeak, Mach Natural Resources LP, Magnolia Oil & Gas, Riley Exploration Permian, SilverBow Resources, SM Energy, Talos Energy, Vital Energy, and W&T Offshore .
Performance & Track Record
- 2024 operational-financial highlights: Net Income $67.5MM, Adjusted EBITDA $233.3MM, Adjusted FCF $43.6MM, Net Cash from Ops $194.4MM; 43 wells drilled; debt reduced $40MM; proved reserves 134.2 MMBoe, PV-10 $1.5B .
- Pay vs performance (CEO CAP and Company metrics) evidences sensitivity to stock and operating performance (e.g., 2024 TSR 51.52; CROCE 15.9%) .
Compensation Structure Analysis
- Mix emphasizes at-risk pay: 83% of CEO target comp is incentive-based (PSUs 40%, RSUs 26%, target annual bonus 17%, base salary 17%) .
- Equity sizing: 2024 equity awards reduced by 41% via above-market grant pricing to minimize dilution and preserve plan shares .
- AIP remains formulaic with production/IRR/cost metrics; HSE modifier maintained; 2024 payouts at 136% reflect strong operational results .
- No options granted to NEOs in 2024; options repricing prohibited .
Risk Indicators & Red Flags
- Dual role (CEO + Chairman) can raise independence concerns; mitigated by Lead Independent Director structure and independent committees .
- Prior bankruptcy involvement (Yuma Energy) noted in biography .
- CFO transition: Travis T. Thomas resigned Sept 12, 2025; severance per CIC Plan; interim CFO appointed; Company emphasized continued debt reduction focus .
- Robust insider policy (no hedging/pledging) and SEC-compliant clawback reduce misalignment risks .
Equity Ownership & Director Roles
- Beneficial ownership by McKinney remains <1% with warrants expiring October 2025, limiting concentration risk while maintaining alignment .
- Board service: Joined REI Board October 2020; serves as Chair; Board committees are independent; Lead Independent Director facilitates oversight .
Investment Implications
- Alignment: High proportion of performance-based equity (PSUs tied to TSR and CROCE) and formulaic AIP metrics suggest strong pay-for-performance linkage; clawback and ownership guidelines further align interests .
- Retention and overhang: Significant unvested RSUs/PSUs and double-trigger CIC protections support retention but imply potential future supply as awards vest; CEO severance multiples (up to 3x base and target bonus in CIC) are market-consistent but represent tangible protection costs .
- Governance: Combined Chair/CEO role presents oversight risk; mitigants include Lead Independent Director, independent committees, and strong engagement after prior weak say-on-pay results (improved to ~81% in 2024) .
- Execution: 2024 results show disciplined operations and FCF generation, supporting incentive payouts and deleveraging; ongoing focus on cost control and capital efficiency remains central to compensation metrics and strategic commentary by McKinney .