John Spath
TALOS ENERGYAbout John Spath
John B. Spath is Executive Vice President and Head of Operations at Talos Energy, serving as principal operating officer since December 1, 2023. He holds a B.S. in Mechanical Engineering from the University of Louisiana at Lafayette and is a licensed Professional Engineer in Texas, with nearly three decades of offshore and deepwater drilling and operations experience across Marathon Oil, independent consulting, and Talos since 2013 . In 2024, Talos delivered record production of 92.6 Mboe/d, beat quarterly consensus on production, Adjusted EBITDA and Adjusted Free Cash Flow in all four quarters, paid down its credit facility to zero by year‑end, and reduced methane emissions by 10%; 2022–2024 TSR PSUs paid 0% and PVI PSUs paid 0%, evidencing pay-for-performance stringency .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Talos Energy | EVP & Head of Operations (principal operating officer) | Dec 2023–present | Leads upstream operations across production, drilling & completions, facilities/major projects, ARO, and supply chain . |
| Talos Energy | SVP Operations; SVP Drilling & Production Ops; VP Production Ops; Drilling Manager | 2013–2023 | Built and scaled deepwater GOM operations, overseeing multi‑discipline offshore execution and regulatory compliance . |
| Independent Consultant | Deepwater drilling & completion consultant (Mariner, Stone, Deep Gulf, Helix) | 2005–2012 | Delivered deepwater well delivery expertise to multiple operators . |
| Marathon Oil | Facilities Engineer; Production Foreman; Deepwater Drilling Engineer | 1998–2005 | Led offshore projects and deepwater drilling initiatives . |
| J. Ray McDermott | Process Engineer | 1995–1998 | Early engineering foundation in offshore projects . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Energy Education Council | Board of Directors | n/a | External industry/education engagement . |
| Ronald McDonald House | Charity Golf Tournament Chair | n/a | Community leadership . |
Fixed Compensation
| Item | 2024 | Notes |
|---|---|---|
| Base Salary ($) | 485,000 | Increased from $455,000 in 2023 to align role with peers . |
| Target Annual Incentive (% of salary) | 80% | Unchanged vs 2023 . |
| Actual AIP Payout ($) | 504,400 | Committee adjusted payout to 130% (vs 133.3% plan) due to procurement investigation related control weaknesses . |
| All Other Compensation ($) | 34,136 | Includes $4,436 Houston Petroleum Club fees and $9,000 leadership training; plus $20,700 401(k) match . |
Performance Compensation
2024 Annual Incentive Program (AIP) – Company Scorecard and Outcome
| Metric | Weight | Threshold | Target | Max | Actual | Weighted Payout |
|---|---|---|---|---|---|---|
| Adjusted Free Cash Flow Generation | 50% | $300MM | $400MM | $500MM | $447MM (AIP‑adjusted) | 73.4% . |
| Year-End Net Debt Balance | 10% | $1,350MM | $1,250MM | $1,150MM | $1,242MM (AIP‑adjusted) | 10.8% . |
| Average Daily Production (Mboe/d) | 20% | 88 | 93 | 96 | 90.8 (AIP‑adjusted) | 15.5% . |
| Safety (TRIR; SIFR hurdle) | 15% | <0.55 | <0.45 | <0.35 | TRIR 0.36, SIFR 0.03 | 28.5% . |
| Environmental (GHG; Methane hurdle) | 5% | 0.0% | (2.5)% | (5.0)% | GHG (1.2)%, Methane (10)% | 5.0% . |
| Total Company Payout | 100% | 133.3% . |
- Design notes (2024 vs 2023): doubled weighting on FCF (25%→50%), added net debt, replaced CCS metric with production, increased safety weight, reduced environmental weight, removed strategic metric weighting; rationale was deleveraging, integration focus, core E&P execution .
2024 Long-Term Incentive (LTI) Grants to John Spath
| Award Type | Grant Date | Shares/Units | Fair Value ($) | Vesting/Performance |
|---|---|---|---|---|
| Annual RSUs | 9/9/2024 | 58,640 | 636,244 | 1/3 each on Mar 5, 2025/2026/2027, cont. service . |
| Retention RSUs | 9/9/2024 | 42,322 | 459,194 | 1/3 each on Sep 9, 2025/2026/2027, cont. service (CEO transition retention) . |
| 2024 TSR PSUs (target) | 9/9/2024 | 58,640 | 685,502 | 3‑yr performance (Absolute & Relative TSR) 1/1/2024–12/31/2026; 0–200% payout . |
Performance program structure: hybrid absolute/relative TSR grid vs peer set (BRY, CRC, CRGY, HPK, KOS, MGY, MTDR, MUR, EGY, VTLE, XOP, WTI) . 2022–2024 PSU cycles paid 0% for both absolute TSR and PVI tranches; 2024 PSU relative TSR was tracking at 25% mid‑cycle (not final) .
2013–2023 promotions grant (on elevation to EVP, Dec 1, 2023): 961 RSUs (3‑yr ratable vest) and 1,922 PSUs at target (2023–2025 cycle) .
Equity Ownership & Alignment
| Component (as of 12/31/2024) | Quantity | Market/Calculated Value | Notes |
|---|---|---|---|
| Unvested RSUs | 116,515 | $1,131,361 | Valued at $9.71 close on 12/31/2024 . |
| Unearned PSUs (2023 and 2024 cycles) | 73,104 | $709,840 | Comprises threshold 2023 PSUs (TSR/PVI) + target 2024 PSUs; value at $9.71 . |
| Future RSU vesting tranches (illustrative) | See vesting table | — | Below schedule . |
| Anti‑hedging/Anti‑pledging | Prohibited | — | Company policy prohibits hedging and pledging by officers . |
| Ownership guidelines | In place | — | Executives subject to Stock Ownership Policy; individual status not disclosed . |
Vesting schedule detail (remaining as of 12/31/2024):
- RSUs (Annual): 58,640 unvested; vest Mar 5, 2025/2026/2027 .
- RSUs (Other): 10,073 vest Mar 5, 2025/2026; 4,839 vest Mar 5, 2025; 641 vest Dec 1, 2025/2026 .
- Retention RSUs: 42,322; vest Sep 9, 2025/2026/2027 .
- 2025 annual RSUs: 99,890 (granted Mar 10, 2025) vest Mar 10, 2026/2027/2028 .
Insider selling pressure: The RSU vesting cadence in March and September through 2028 suggests periodic supply; PSU outcomes are performance‑contingent through 12/31/2026, reducing near‑term forced selling risk if underperformance persists .
Options: No stock options disclosed for NEOs in 2024; equity mix is RSUs/PSUs .
Employment Terms
| Term | Provision | Evidence |
|---|---|---|
| Employment status | At‑will (via indemnification agreement context) | Agreement clarifies not an employment contract; at‑will status . |
| Severance Plan (Tier 2) | 1.5x (base + target bonus) cash; pro‑rata bonus; subsidized COBRA up to 18 months; partial equity acceleration per award terms | Plan summary and quantified benefits . |
| Spath: Termination without Cause (as of 12/31/2024) | $1,309,500 cash; $504,400 pro‑rata AIP; $23,877 COBRA; RSU accel $275,327; PSU accel $47,414; Total $2,160,518 | Quantification table . |
| Spath: CIC + Qualifying Sep | $1,746,000 cash; $504,400 pro‑rata AIP; $23,877 COBRA; RSU accel $1,131,361; PSU accel $454,428; Total $3,860,066 | Quantification table . |
| Change in control vesting | Double‑trigger; no single‑trigger CIC payments/vesting under LTIP | Governance practices . |
| Restrictive covenants | Confidentiality, non‑solicitation, non‑disparagement (participants bound) | Severance plan description . |
| Clawback | Policy maintained and administered by Compensation Committee | Governance overview . |
| Deferred comp / pension | No defined benefit pension; no nonqualified deferred comp plan | Executive comp tables footnotes . |
| Indemnification | Individual indemnification agreement (Dec 1, 2023) | 8‑K Exhibit 10.1 –. |
Compensation Structure Diagnostics
- Mix and risk: High equity mix via RSUs/PSUs; 2024 added retention RSUs equal to 100% of salary to stabilize leadership continuity during CEO transition (one‑time) . 2022–2024 PSU cycles paid 0%, showing downside risk; 2024 AIP emphasized FCF and deleveraging (60% financial weight) .
- Discretion and governance: 2024 AIP payouts for Spath and Moss reduced to 130% due to procurement investigation and material weaknesses identified and subsequently remediated (employee separated, controls enhanced) .
- Peer benchmarking: Compensation set against a curated E&P peer group; advisor support from Meridian (comp) and Cooley (legal) with independence affirmations – .
Performance & Track Record
| Indicator | 2024 Outcome | Implication |
|---|---|---|
| Operations | Record production 92.6 Mboe/d; Katmai West #2 drilled ~35% under budget, one month faster | Strong operational execution under Spath’s remit . |
| Financials | Beat consensus on production, Adjusted EBITDA, and Adjusted FCF all four quarters; credit facility fully repaid by year‑end 2024 | Capital discipline and deleveraging support incentive outcomes . |
| Safety/ESG | TRIR 0.36 with SIFR 0.03; methane reduced 10% | Safety and emissions goals achieved at/above targets . |
| Controls | Two 2024 material weaknesses remediated by year‑end | Reduces operational/financial reporting risk going forward . |
| LTIP performance | 2022–2024 TSR and PVI PSUs certified below threshold (0% payout) | Stringent pay‑for‑performance alignment . |
Compensation Committee & Say‑on‑Pay
- Committee composition and independence maintained; post‑2024 refresh planned (Sledge to chair Compensation post‑ASM) . Independent consultant Meridian and counsel Cooley retained; no conflicts found .
- Say‑on‑Pay support: >88% approval in 2024; annual frequency favored .
Equity Ownership & Vesting Detail (Spath)
| Category | Count | Remaining Vest Dates |
|---|---|---|
| RSUs – Annual (2024 cycle) | 58,640 | Mar 5, 2025; Mar 5, 2026; Mar 5, 2027 . |
| RSUs – Retention (2024) | 42,322 | Sep 9, 2025; Sep 9, 2026; Sep 9, 2027 . |
| RSUs – Other (2019–2023) | 10,073; 4,839; 641 | Mar 5, 2025/2026; Mar 5, 2025; Dec 1, 2025/2026 . |
| 2025 RSUs – Annual | 99,890 | Mar 10, 2026; Mar 10, 2027; Mar 10, 2028 . |
| PSUs – 2023 cycle | 14,464 | Perf end: Dec 31, 2025 (TSR/PVI tracked at 0% as of year‑end disclosure) . |
| PSUs – 2024 cycle | 58,640 | Perf end: Dec 31, 2026 (hybrid TSR grid) . |
Risk Indicators & Red Flags
- AIP downward discretion for Spath tied to internal investigation and control weaknesses (now remediated) .
- Anti‑hedging/anti‑pledging policy reduces misalignment risk; no stock options outstanding to reprice (no repricing disclosed) .
- High PSU rigor with 0% payouts in recent cycles mitigates windfalls; however, significant RSU vestings in spring/fall could create periodic selling windows .
Investment Implications
- Alignment: Spath’s pay program is tightly linked to cash generation, deleveraging, safety, and TSR; recent 0% PSU outcomes and discretionary AIP haircut underscore real downside when results or controls fall short .
- Retention risk: 2024 one‑time retention RSUs and substantial unvested equity through 2028 create strong stickiness during CEO transition—reducing near‑term flight risk, but raising calendar vest‑related supply in March/September cohorts .
- Execution leverage: 2024 record production, budget outperformance on Katmai, and balance sheet strengthening suggest positive operational leverage under Spath’s oversight; continued delivery vs AIP targets (FCF/Net Debt) will be key for bonus and relative TSR for PSU vesting into 2026 .
- Governance comfort: Prohibitions on hedging/pledging, an active clawback, independent advisors, and strong Say‑on‑Pay support (>88%) reduce governance overhangs; remediation of 2024 control weaknesses is a positive, but warrants monitoring .