A shareholder activist will challenge Denver-based PDC Energy Inc. in an effort to change the way the oil producer pays its executives, part of a broader push by investors to force U.S. energy producers to focus more on profitability than growth.

Kimmeridge Energy Management Co., based in New York and Denver, last month disclosed a 5.1 percent stake in PDC. Kimmeridge planned to put forth a slate of directors as soon as Thursday to challenge the three board members whose terms expire this year, according to people familiar with the matter.

PDC’s chief executive, Barton Brookman, is among those up for re-election.

When it disclosed its stake, Kimmeridge said it wants the company to align executive compensation more with shareholder returns than production growth. The firm also said it planned to advocate for a dividend, exploration of potential deals with rivals and a reduction of administrative costs at PDC, which has a market value of about $2.5 billion.

PDC, which drills in Colorado as well as in West Texas fields that it bought from Kimmeridge in 2016 for about $1.6 billion, said it was “open to the views and opinions of all shareholders. We take constructive suggestions seriously, and regularly review the company’s portfolio, strategy and structure to drive value creation.”

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Kimmeridge’s urgings are an example of a wider push by investors to wean shale drillers from the growth-at-all-costs mentality that has swamped commodity markets and produced piddly returns for shareholders over the past several years.

The SPDR S&P Oil & Gas Exploration & Production exchange-traded fund, which tracks the performance of more than 60 U.S. producers including PDC, has lost 59 percent over the past five years. In the same period, the S&P 500 stock index has gained 48 percent. PDC shares, meanwhile, have fallen 39 percent.

Investors blame compensation structures that reward executives for boosting output and adding reserves with little regard for commodity prices. Such pay plans encourage executives to drill wells even if doing so is uneconomic. The practice stems from the shale boom’s early days, when companies raced to exploit newly viable drilling fields.

By late 2014, most of the shale fields had been spoken for and oil prices began their five-year slump, dropping to levels that made many new wells unprofitable. Still, producers have largely continued to pay executives to produce more oil and gas than they did the year before.

PDC’s average daily production, for example, has more than quadrupled since the end of 2014, though that ramp-up has failed to lift its shares.

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PDC has based an unspecified portion of Brookman’s past bonuses on whether the company tops year-over-year production-growth targets, according to securities filings. PDC last week proposed adding two new metrics to its pay formula that it said would help measure how efficiently it operates. 

In 2017, Brookman received compensation valued at $5.8 million, according to a securities filing. His 2018 compensation is to be disclosed in a forthcoming filing.

In response to flagging stocks, investors have all but shut off the infusions of capital that have sustained the shale boom, and there have been shareholder revolts across the oil patch. In the past year or so, Energen Corp., EQT Corp. and Hess Corp. have each made concessions to activist investors to stave off proxy fights.

In a note sent to clients earlier this week, UBS analyst Lloyd Byrne said shareholder pressure on exploration-and-production companies was “as poignant as I’ve seen in 25 years covering energy.”

Byrne said one thing that could help draw general investors back to energy stocks is to tie executive pay directly to shareholder returns and financial performance.

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