Patrick Lytle

About Patrick Lytle

Patrick A. Lytle is Senior Vice President of Finance at SM Energy, appointed in March 2025. He joined SM Energy in 2007 and progressed through roles in FP&A and reporting, serving as Controller and Principal Accounting Officer beginning November 2018, and Vice President – Chief Accounting Officer and Controller starting April 2021. Lytle is a certified public accountant in Colorado; age 44. Company performance under his finance tenure includes a record-setting 2024 with record oil production and proved reserves, a 40% increase in gross drilling inventory, and reduced revolver balance to $68.5 million; LTIP absolute TSR achieved 28% annualized for the 2021–2024 period, with PSU payout at 1.69x, reflecting strong free cash flow and deleveraging focus .

Past Roles

External Roles

Fixed Compensation

• Program design: SM aligns executive pay with financial, operational, and sustainability metrics. Fixed base salaries targeted at market median; no employment contracts; minimal perquisites; no excise tax gross-ups .
• STIP target levels by role: Among NEOs, Senior Vice President targets were 75% of base salary in 2024 and 2023 (e.g., Knott). Lytle’s specific target was not disclosed .

Performance Compensation

• Structure: RSUs vest ratably over 3 years; PSUs pay 0–200% based on 3-year performance in adjusted free cash flow, absolute TSR, relative TSR, and sustainability, generally with strict thresholds and caps. 2024 grants had RSUs on July 1, 2024 and PSUs on October 1, 2024 to incorporate Uinta targets; sustainability sub-metrics include GHG intensity, safety, and spill performance .

Company STIP – 2024 Performance Metrics and Payout

Company LTIP – Performance Outcomes and Design

Multi-Year Program Signals

Equity Ownership & Alignment

• Ownership guidelines: Senior Vice Presidents and Vice Presidents must hold 1× annual base salary; Executive Vice Presidents 3×; CEO 5×; Directors 5× cash retainer. Unvested RSUs count; PSUs do not. Sales restricted until guidelines met; pre-clearance required .
• Hedging/pledging: Officers and directors are prohibited from hedging, holding in margin accounts, pledging company stock, or trading derivatives on SM shares .
• Section 16 compliance: All required ownership filings were timely in 2024 .

Employment Terms

• At-will employment; no written employment agreements for executives .
• Change-of-control protection: Double-trigger agreements at Vice President and above—benefits only if a qualifying change of control occurs and the executive is terminated without cause or resigns for good reason (including material diminution, pay/benefit reduction, or relocation >25 miles) within ~30 months. Designed to promote stability through industry M&A cycles; no excise tax gross-ups; benefits may be reduced to optimize after-tax outcomes .
• Equity acceleration: Upon a change-of-control termination, RSU restrictions lapse and RSUs pay immediately; PSUs vest at target and pay; options/SARs become immediately exercisable. If awards are assumed by a successor as “Alternative Awards,” acceleration may not apply; otherwise, performance awards convert to time-based and vest/pay at target .

Compensation Structure vs Performance Metrics

• STIP metrics emphasize adjusted EBITDAX-based cash flow, capital efficiency (F&D costs), reserve additions, production volume, cash operating costs, plus quantitative sustainability goals. TSR acts as a payout modifier for NEOs when absolute TSR is ≤–10% or ≥+10% .
• LTIP aligns to stockholder priorities via three-year absolute and relative TSR plus FCF and sustainability metrics; negative absolute TSR caps PSU payouts at target .

Risk Indicators & Red Flags

• Clawback: SEC/NYSE-compliant, mandatory recovery of incentive compensation after material accounting restatements, regardless of fault .
• No hedging/pledging and no tax gross-ups—reduces misalignment risk .
• Section 16 compliance and minimal perquisites indicate governance discipline .

Expertise & Qualifications

• CPA with deep SM Energy tenure across FP&A, reporting, and principal accounting roles; background as an audit manager enhances control environment and financial reporting rigor .

Performance & Track Record

• 2024 record results: record daily oil production and year-end proved reserves; gross drilling inventory +40%; revolver balance reduced to $68.5 million; capital return of $169 million via buybacks and $0.80 per-share annualized dividend (11% increase) .
• LTIP outcomes reflect sustained value creation (absolute TSR +28% annualized; FCF and leverage hitting caps) .

Equity Ownership Details (Program-Level)

Employment & Contracts

• Severance/change-of-control: Applies to VP+ (includes Lytle as SVP). Double-trigger; definitions of change-of-control and “good reason” summarized above. Accelerated vesting and cash payout mechanics documented in the equity plan and proxy .

Investment Implications

• Alignment: Ownership guidelines, clawback, and prohibition of hedging/pledging strengthen alignment; LTIP centered on FCF and TSR is consistent with investor priorities .
• Retention risk: Double-trigger CoC protection and clear equity vesting/assumption terms mitigate transactional retention risk; at-will structure with no guaranteed increases reduces fixed-cost creep .
• Trading signals: With hedging/pledging prohibited and timely Section 16 compliance, there are no disclosed red flags from insider mechanics. Specific Form 4 activity for Lytle is not disclosed in the proxy; monitor filings for any post-appointment equity grants or dispositions .
• Execution: Lytle’s audit and accounting background and long SM tenure support continued discipline in capital allocation and reporting as the company integrates Uinta Basin and pursues deleveraging and capital returns (buybacks/dividends) .