Michael Reger, the ousted CEO of Northern Oil & Gas, has settled a wrongful termination lawsuit against his former employer, agreeing to a cash payment of $750,000 and a stock award valued at just more than $3 million.
Reger, who co-founded Northern Oil and had been its CEO since 2007, was fired in August 2016 after federal regulators indicated they were pursuing him for a possible securities law violation in connection with another company, Dakota Plains Holdings.
When Minnetonka-based Northern Oil fired Reger, the company said it believed he was not entitled to any severance payment. Reger, who is in his early 40s, sued two days later, claiming he was due his full severance package.
Under that package, Reger would have been entitled to a payment of twice his annual salary — $1.5 million — if he were terminated without cause, according to filings with the U.S. Securities and Exchange Commission (SEC). He also would have been eligible for any pro rata performance bonus. Plus, at least 700,000 shares of stock granted to Reger in earlier years would have immediately vested if he were terminated without cause, SEC filings indicate.
As part of the settlement, Northern Oil granted Reger 3 million shares of its stock, which was trading at just more than $1 on Tuesday. The company agreed to grant Reger the title of “chairman emeritus,” an honorary designation with “no ongoing duties or powers,” according to an SEC filing. Also, Reger agreed to cooperate with Northern Oil and make himself available in regard to any legal proceedings against the company.
“I am pleased to have resolved my claims against Northern, and more importantly, I am honored to be named Northern’s ‘chairman emeritus,’ ” Reger said in a statement.
Northern Oil said in its statement that it is “pleased to have a resolution to this matter that it believes is in the best interests of the company and its shareholders.”
Northern Oil invests in oil leases and drilling projects in North Dakota and Montana. The company has been hurt in recent years by a decline in oil prices. Its stock traded at a high of nearly $32 in early 2011 and was at nearly $17 in 2014 before oil prices began to tank. Over the past year, Northern Oil’s stock price has ranged from $4 to 66 cents per share.
Reger was terminated within a week after he told Northern’s board that he had received a “Wells notice” from the SEC. The notice said SEC staff members had made a “preliminary determination” to institute an enforcement action against Reger in relation to a federal investigation of Dakota Plains. Reger co-founded and invested in Dakota Plains, a publicly traded oil and frac sand transportation business.
Within two months after Reger was axed by Northern Oil, the SEC announced that it had settled claims against him and that he had agreed to pay nearly $8 million. Reger consented to an SEC order finding that he received illicit payments and skirted public disclosure laws in connection with Dakota Plains’ initial public stock offering in 2012. As part of the settlement, Reger did not admit or deny the SEC’s findings.
Ryan Gilbertson, who co-founded both Dakota Plains and Northern Oil with Reger, has been accused by the SEC of multiple violations of securities laws in connection with Dakota Plains’ IPO. Gilbertson has denied any impropriety and is fighting the allegations. Dakota Plains filed Chapter 11 bankruptcy in December and sold off its assets.