UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant ¨
Check the appropriate box:
þ Preliminary Proxy Statement
¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
¨ Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material Pursuant to §240.14a-12
Noble Energy, Inc.
(Name of Registrant as Specified in its Charter)
Payment of filing fee (check the appropriate box):
þ | No fee required. |
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¨ | Fee paid previously with preliminary materials. |
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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Dear Stockholder:
I hope you will join Noble Energys Board of Directors, executive management team, employees and alumni at our 2013 Annual Meeting of Stockholders. The attached Notice of Annual Meeting of Stockholders and Proxy Statement will | |
serve as your guide to the business to be conducted at the meeting. |
This years Proxy Statement has been redesigned to simplify and more effectively explain the matters to be addressed at our Annual Meeting. You will see several enhancements in how we present information to you about our Board nominees, corporate governance practices and executive compensation program. To begin with, we have included a summary starting on page iii that provides highlights of the detailed information contained elsewhere in the Proxy Statement. My fellow Board members and I feel that it is important to provide you with the information you are looking for about the Company in a way that is easy to access and understand.
We have enhanced the Compensation Discussion and Analysis that begins on page 34 to better show how our executives pay is linked to performance and more clearly explain our executive compensation program. You will also find detailed information about the qualifications of our director candidates, and why we believe they are the right people to represent you, starting on page 15.
Your vote is very important to us and our business. Prior to the meeting, I encourage you to sign and return your proxy card, or use telephone or Internet voting, so that your shares will be represented and voted at the meeting. Instructions on how to vote are found beginning on page 2.
I hope to see you at the meeting. Thank you for being a stockholder and for the trust you have shown in Noble Energy.
March , 2013
Charles D. Davidson
Chairman of the Board and
Chief Executive Officer
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Noble Energy, Inc. 2013 Proxy Statement
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Tuesday, April 23, 2013
The Annual Meeting of Stockholders of NOBLE ENERGY, INC. (the Company) will be held on Tuesday, April 23, 2013 at 9:30 a.m. local time at The Woodlands Waterway Marriott Hotel & Convention Center, 1601 Lake Robbins Drive, The Woodlands, Texas 77380, for the following purposes:
1. | To elect the ten nominees as members of the Board of Directors of the Company to serve until the next annual meeting of the Companys stockholders; |
2. | to ratify the appointment of the independent auditor by the Companys Audit Committee; |
3. | to approve, in a nonbinding advisory vote, the compensation of the Companys Named Executive Officers; |
4. | to approve an amendment and restatement of the Companys 1992 Stock Option and Restricted Stock Plan to increase the number of shares authorized for issuance under the plan from 31,000,000 to 35,800,000; |
5. | to approve an amendment to the Companys Certificate of Incorporation to establish Delaware as the exclusive forum for resolving derivative and certain other disputes; |
6. | to approve an amendment to the Companys By-Laws to (a) clarify that broker non-votes and abstentions count toward a quorum but are not considered a vote for or against a proposal, (b) allow the Board of Directors to fix separate record dates for determining stockholders entitled to notice of, and to vote at, meetings and (c) increase the age after which directors will not be eligible to be nominated for election from 70 to 75 years; and |
7. | to transact such other business as may properly come before the meeting and any adjournment or postponement of the meeting. |
The Board of Directors has set March 6, 2013 as the record date for the meeting. This means that holders of record of shares of common stock of the Company as of the close of business on that date are entitled to receive this notice of the meeting and vote at the meeting and any adjournment or postponement of the meeting.
A complete list of the stockholders will be available for examination at the offices of the Company in Houston, Texas during ordinary business hours for a period of 10 days prior to the meeting. This list will also be available to stockholders at the meeting.
March , 2013
Houston, Texas
By Order of the Board of Directors
Arnold J. Johnson
Senior Vice President, General Counsel and Secretary
We urge each stockholder to promptly sign and return the enclosed proxy card or to use telephone or Internet voting. See our Questions and Answers about the Meeting and Voting section for information about voting by telephone or Internet, how to revoke a proxy and how to vote shares in person.
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Noble Energy, Inc. 2013 Proxy Statement
PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in this Proxy Statement. It does not include all of the information that you should consider and you should read the entire Proxy Statement before voting. In this Proxy Statement, Noble Energy, Inc. may also be referred to as we, us, Noble Energy or the Company.
2013 Annual Meeting of Stockholders
· Date and Time: |
Tuesday, April 23, 2013, 9:30 a.m. local time | |
· Place: |
The Woodlands Waterway Marriott Hotel & Convention Center 1601 Lake Robbins Drive The Woodlands, Texas 77380 | |
· Record Date: |
March 6, 2013 |
Voting Matters and Board Recommendations
Our Boards Recommendations | ||||
Election of Director Nominees (page 15) |
FOR each Director Nominee | |||
Ratification of Appointment of Independent Auditor (page 24) |
FOR | |||
Advisory Vote to Approve Executive Compensation (page 26) |
FOR | |||
Approval of Amendment and Restatement of 1992 Stock Option and Restricted Stock Plan (page 27) |
FOR | |||
Approval of Amendment to Certificate of Incorporation (page 32) |
FOR | |||
Approval of Amendment to By-Laws (page 33) |
FOR |
2012 Business Highlights
We delivered significant growth in 2012. Expansion of our horizontal Niobrara and Marcellus Shale developments resulted in a 24% increase in Wattenberg (DJ Basin, Colorado) production and a fourfold increase in Marcellus Shale (Pennsylvania and West Virginia) production. We realized further production increase from major new developments at Aseng (offshore Equatorial Guinea) and Galapagos (deepwater Gulf of Mexico), which came on line in 2011 and 2012, respectively. We moved forward on our major development projects, each of which will yield significant new production in future years; discovered new resources at Big Bend in the deepwater Gulf of Mexico and Carla, offshore Equatorial Guinea; and farmed into new opportunities offshore the Falkland Islands and Sierra Leone. Finally, we enhanced our portfolio with selective divestitures of non-core, onshore U.S. and North Sea properties, and maintained our strong balance sheet.
2012 operational and financial highlights include:
· | Net income over $1.0 billion (including $965 million from continuing operations), as compared with $453 million (including $412 million from continuing operations) for 2011; |
· | total sales volumes from continuing operations of 239 MBoe/d, a 12% increase as compared with 2011; |
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Noble Energy, Inc. 2013 Proxy Statement
· | year-end proved reserves of 1.2 BBoe, a decrease of 2% from year-end 2011; |
· | increased DJ Basin total sales volumes to 77 MBoe/d net, with horizontal production contributing 28 MBoe/d net; and |
· | Marcellus Shale production grew to 92 MMcfe/d net, as compared with 19 MMcfe/d net in 2011. |
For more complete information regarding the Companys 2012 performance, please see the Companys Annual Report on Form 10-K.
Director Nominees (page 15)
The following table provides summary information about each director nominee. Each director stands for election annually.
Name | Age | Director Since |
Primary Occupation | Committee Memberships |
Other Public Company Boards | |||||
Jeffrey L. Berenson* | 62 | 2005 | President and Chief Executive Officer of Berenson & Company | C, CG | Epoch Holding Corporation | |||||
Michael A. Cawley* | 65 | 1995 | President and Manager of The Cawley Consulting Group, LLC | A, CG | Noble Corporation | |||||
Edward F. Cox* | 66 | 1984 | Chair of The New York Republican State Committee | C, CG, E | None | |||||
Charles D. Davidson | 63 | 2000 | Chairman and Chief Executive Officer of Noble Energy, Inc. | E | None | |||||
Thomas J. Edelman* | 62 | 2005 | Managing partner of White Deer Energy L.P. | C, CG, E | Emerald Oil, Inc.
Postrock Energy Corporation | |||||
Eric P. Grubman* |
55 | 2009 | Executive Vice President of the National Football League | A, CG | None | |||||
Kirby L. Hedrick* |
60 | 2002 | Former Executive Vice President of Phillips Petroleum Company | C, CG, E | None | |||||
Scott D. Urban* | 59 | 2007 | Partner in Edgewater Energy LLC | A, CG, E | Pioneer Energy Services Corporation | |||||
William T. Van Kleef* | 61 | 2005 | Former Executive Vice President and Chief Operating Officer of Tesoro Corporation | A, CG | Oil States International, Inc. | |||||
Molly K. Williamson* | 67 | 2013 | Scholar, Middle East Institute | | None |
*Independent Director
A | Audit Committee |
C | Compensation, Benefits and Stock Option Committee |
CG | Corporate Governance and Nominating Committee |
E | Environment, Health and Safety Committee |
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Noble Energy, Inc. 2013 Proxy Statement
Executive Compensation Highlights (page 26 and beginning on page 34)
Our compensation program is designed to link compensation strongly to performance through financial incentives that are tied to the Companys operational and financial results. The following illustrates the directional relationship between Company performance, based on several key metrics, and the total direct compensation (including salary, bonus, stock and option awards and non-equity incentive plan compensation) of our Chairman and Chief Executive Officer from 2010 to 2012. These key metrics production, relative controllable unit costs and discretionary cash flow were chosen because we believe that they correlate to long-term stockholder value.
Production (MBoe/d) |
Controllable Unit Costs (percentage relative to compensation peer group)
| |
|
| |
Discretionary Cash Flow(1) (Billions)
|
Chairman and CEO Total Direct Compensation (Millions)
| |
The following chart shows how a $100 investment in the Companys common stock on December 31, 2007 would have grown to $134.52 on December 31, 2012, with dividends reinvested quarterly, for those who wish to consider total stockholder return when evaluating executive compensation. The chart also compares the total stockholder return on the Companys common stock to the same investment in the S&P 500 Index and the Companys compensation peer group over the same period, with dividends reinvested quarterly. As illustrated below, the Companys common stock outperformed both the S&P 500 and the Companys compensation peer group median during this period.
(1) | Non-GAAP results. See Non-GAAP Financial Measures in Appendix A to this Proxy Statement for reconciliation to GAAP results. |
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Noble Energy, Inc. 2013 Proxy Statement
Comparison of Five-Year Cumulative Total Stockholder Return*
Enhancements to Compensation Program for 2013
We continue to seek ways to enhance our compensation program to ensure that it remains linked to Company performance, and are implementing a number of changes beginning in 2013:
· | Performance criteria are being applied to a portion of the restricted stock awarded under our Long-Term Incentive Plan, with vesting of that portion based on our total stockholder return relative to our compensation peer group for the three year period following the year of the award. (page 47) |
· | Relative stockholder return will also be added as a fourth performance measure under our Short-Term Incentive Plan, with the quantitative nondiscretionary component of the plan increasing from 36% to 60% of the total payout calculation and allocated 15% each to production, discretionary cash flow, relative controllable unit costs and relative total stockholder return. (page 46) |
· | Our Code of Business Conduct and Ethics has been amended to allow our Compensation Committee or Board to recoup or clawback compensation in cases involving restatement of financials or oil and gas reserves, or substantial code violations. (page 10) |
· | Adjustments have been made to our compensation peer group to ensure that it continues to be relevant. (beginning on page 41) |
Important Date for 2014 Annual Meeting of Stockholders (page 14)
· | Stockholder proposals and nominees for director(s) to be submitted for inclusion in our 2014 Proxy Statement pursuant to Rule 14a-8 under the Securities and Exchange Act of 1934, as amended (Exchange Act), must be received by us by December 23, 2013. |
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100 Glenborough Drive Suite 100 |
PROXY STATEMENT | |
Houston, Texas 77067-3610 | March , 2013 |
The Board of Directors of Noble Energy, Inc. (the Board) is providing you this Proxy Statement to solicit proxies on its behalf to be voted at the 2013 Annual Meeting of Stockholders of Noble Energy, Inc. (the Company). The meeting will be held at The Woodlands Waterway Marriott Hotel & Convention Center, 1601 Lake Robbins Drive, The Woodlands, Texas 77380 on April 23, 2013, at 9:30 a.m. local time. The proxies may also be voted at any adjournment or postponement of the meeting.
The mailing address of our principal executive offices is Noble Energy, Inc., 100 Glenborough Drive, Suite 100, Houston, Texas 77067-3610. We are first mailing this Proxy Statement to our stockholders on or about March , 2013.
All properly executed written proxies, and all properly completed proxies submitted by telephone or Internet, that are delivered pursuant to this solicitation will be voted at the meeting in accordance with the directions given in the proxy unless the proxy is revoked prior to completion of voting at the meeting.
Only owners of record of shares of common stock of the Company as of the close of business on March 6, 2013, the record date, are entitled to notice of, and to vote at, the meeting and at any adjournment or postponement of the meeting. Each owner of record on the record date is entitled to one vote for each share of common stock held. On March 6, 2013 there were 178,773,698 shares of common stock issued and outstanding.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE 2013 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 23, 2013.
The Companys Proxy Statement for the 2013 Annual Meeting of Stockholders, Annual Report to Stockholders for the fiscal year ended December 31, 2012 and Annual Report on Form 10-K for the fiscal year ended December 31, 2012 are available at https://materials.proxyvote.com/655044.
Noble Energy, Inc. 2013 Proxy Statement
1
Questions and Answers about the Meeting and Voting
1. | What is a Proxy Statement and what is a proxy? |
2. | What is the difference between holding shares as a stockholder of record and as a beneficial stockholder? |
If your shares are registered directly in your name with the Companys registrar and transfer agent, Wells Fargo Shareowner Services, you are considered a stockholder of record with respect to those shares. If your shares are held in a brokerage account or bank, you are considered the beneficial owner of those shares.
3. | What different methods can I use to vote? |
4. | What shares are included on the proxy card? |
5. | How do I attend the meeting in person? What do I need to bring? |
Noble Energy, Inc. 2013 Proxy Statement
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Questions and Answers |
6. | How can I vote at the meeting if I am a beneficial owner? |
7. | What are my voting choices for each of the proposals to be voted on at the 2013 Annual Meeting of Stockholders? |
Proposal | Voting choices and Board recommendations | |
Item 1: Election of Director Nominees |
Vote in favor of all nominees; vote in favor of specific nominees; vote against all nominees; vote against specific nominees; abstain from voting with respect to all nominees; or abstain from voting with respect to specific nominees. The Board recommends a vote FOR all nominees. | |
Item 2: Ratification of Appointment of Independent Auditor |
Vote in favor of the ratification; vote against the ratification; or abstain from voting on the ratification. The Board recommends a vote FOR the ratification. | |
Item 3: Advisory Proposal to Approve Executive Compensation |
Vote in favor of the advisory proposal; vote against the advisory proposal; or abstain from voting on the advisory proposal. The Board recommends a vote FOR the advisory proposal to approve executive compensation. | |
Item 4: Approval of Amendment and Restatement of 1992 Stock Option and Restricted Stock Plan (1992 Plan) |
Vote in favor of the amendment and restatement; vote against the amendment and restatement; or abstain from voting on the amendment and restatement. The Board recommends a vote FOR the amendment and restatement. | |
Item 5: Approval of Amendment to Certificate of Incorporation |
Vote in favor of amendment; vote against the amendment; or abstain from voting on the amendment. The Board recommends a vote FOR the amendment. | |
Item 6: Approval of Amendment to By-Laws |
Vote in favor of amendment; vote against the amendment; or abstain from voting on the amendment. The Board recommends a vote FOR the amendment. |
Noble Energy, Inc. 2013 Proxy Statement
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Questions and Answers |
8. | What if I am a stockholder of record and do not specify a choice for a matter when returning a proxy? |
9. | What if I am a beneficial owner and do not give voting instructions to my broker? |
10. | How are abstentions and broker non-votes counted? |
Abstentions and broker non-votes are included in determining whether a quorum is present, but will not be included in vote totals and will not affect the outcome of the vote on any matter.
11. | What can I do if I change my mind after I vote my shares? |
Noble Energy, Inc. 2013 Proxy Statement
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Questions and Answers |
12. | Are votes confidential? Who counts the votes? |
13. | When will the Company announce the voting results? |
We will announce the preliminary voting results at the Annual Meeting of Stockholders. The Company will report the final results on our website and in a Current Report on Form 8-K filed with the SEC.
14. | Does the Company have a policy about Directors attendance at the Annual Meeting of Stockholders? |
All of our directors are expected to attend each annual meeting of our stockholders. Attendance at our annual meeting will be considered by our Governance Committee in assessing each directors performance. Last year, all of our directors attended our Annual Meeting of Stockholders.
15. | Can I access the Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K on the Internet? |
The Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2012 (the Form 10-K) are available at https://materials.proxyvote.com/655044.
16. | How are proxies solicited and what is the cost? |
17. | How can I contact the Company Secretary? |
This Proxy Statement directs certain inquiries to the Company Secretary. The Company Secretary may be contacted at the address appearing on page 1 of this Proxy Statement or by calling (281) 872-3100.
18. | How can I communicate with the Board of Directors? |
Noble Energy, Inc. 2013 Proxy Statement
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Questions and Answers |
19. | Where can I find definitions for capitalized terms, abbreviations and acronyms used in this Proxy Statement? |
Noble Energy, Inc. 2013 Proxy Statement
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Corporate Governance |
Corporate Governance
Board Leadership Structure
Noble Energy, Inc. 2013 Proxy Statement
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Corporate Governance |
Board and Committees
Committee |
Primary Purpose | |
Audit |
Assist the Board in fulfilling its responsibility to oversee the integrity of the Companys financial statements, the Companys compliance with legal and regulatory requirements, the independent auditors qualifications and independence, and the performance of the Companys internal audit function and independent auditors; and prepare a Committee report as required by the SEC to be included in the Companys annual Proxy Statement. | |
Governance |
Take a leadership role in providing a focus on corporate governance to enable and enhance the Companys short and long-term performance; engage in appropriate identification, selection, retention and development of qualified directors consistent with criteria approved by the Board; develop, and recommend to the Board, a set of corporate governance principles or guidelines applicable to the Company; advise the Board with respect to the Boards composition, procedures and committees; oversee the evaluation of the Board and management; and oversee the Companys political activity. | |
Compensation |
Review and approve corporate goals and objectives in the areas of salary and bonus compensation, benefits, and equity-based compensation, as these areas relate to the CEO, evaluating the CEOs performance based on those goals and objectives and, either as a committee or together with the other independent directors (as directed by the Board) determine and approve the CEOs compensation level based on that evaluation; make recommendations to the Board with respect to non-CEO executive officer compensation, incentive compensation plans and equity-based plans that are subject to Board approval; produce an annual report on executive compensation as required by the SEC to be included in or incorporated by reference into the Companys Proxy Statement or other applicable SEC filings; and under delegation from our Board, determine and approve our compensation philosophy, the compensation of our non-CEO executive officers and equity-based compensation applicable to non-executive officer employees. | |
EH&S |
· Assist the Board in determining whether the Company has appropriate policies and management systems in place with respect to environment, health and safety and related matters; · monitor and review compliance with applicable EH&S laws, rules and regulations; and · serve as a forum for the review of Company strategy and initiatives in the area of corporate social responsibility. |
Noble Energy, Inc. 2013 Proxy Statement
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Corporate Governance |
The following table describes the current members of each committee and the number of meetings held during 2012.
Name |
Audit(1) | Compensation(2) | Governance(3) | EH&S | ||||
Jeffrey L. Berenson* |
x | x | ||||||
Michael A. Cawley* |
x | Chair | ||||||
Edward F. Cox* |
x | x | Chair | |||||
Charles D. Davidson |
x | |||||||
Thomas J. Edelman* |
x | x | x | |||||
Eric P. Grubman* |
x | x | ||||||
Kirby L. Hedrick* |
Chair | x | x | |||||
Scott D. Urban* |
x | x | x | |||||
William T. Van Kleef* |
Chair | x | ||||||
Number of Meetings |
6 | 6 | 5 | 3 |
* | Independent directors |
(1) | All members of our Audit Committee have been determined to meet the standards of independence required of audit committee members by the NYSE and applicable SEC rules and to be financially literate. Mr. Van Kleef has been determined to be a financial expert. |
(2) | All members of our Compensation Committee have been determined to meet the NYSE standards for independence, with each a Non-Employee Director as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (Exchange Act), and an outside director as defined for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (Internal Revenue Code). |
(3) | All members of our Governance Committee have been determined to meet the NYSE standards for independence. |
Oversight of Risk Management
Noble Energy, Inc. 2013 Proxy Statement
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Corporate Governance |
Codes of Business Conduct and Ethics
Noble Energy, Inc. 2013 Proxy Statement
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Corporate Governance |
Independence and Related Person Transactions
Noble Energy, Inc. 2013 Proxy Statement
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Corporate Governance |
Director | Description of Relationship | |
Jeffrey L. Berenson |
President and CEO of Berenson & Company, as well as a director and chair of the Compensation Committee of Epoch Holding Corporation, a holding company that provides investment management and advisory services. Mr. Berenson is a former director of Patina Oil & Gas Corporation, which we acquired by merger in May 2005. | |
Michael A. Cawley |
Former President, CEO and Trustee of The Samuel Roberts Noble Foundation, Inc. Mr. Cawley received payments totaling approximately $32,913 in 2012 attributable to his interests in certain oil and gas royalties that he purchased from the Company in the 1990s. Mr. Cawley is also a director and member of the Compensation Committee of Noble Corporation, a publicly-traded drilling company with which the Company conducted business in 2012. | |
Edward F. Cox |
Received payments in 2012 totaling approximately $459,915 attributable to his interests in certain oil and gas royalties and interests in two general partnerships that hold royalties and are managed by the Company. Mr. Cox purchased these interests from the Company in the 1980s and 1990s. Mr. Cox also holds the position of chair of the New York Republican State Committee. | |
Thomas J. Edelman |
Director of Berenson & Company, as well as managing partner of White Deer Energy LP, an energy private equity fund that owns oil service companies with which the Company has conducted business. Mr. Edelman is also a director of Emerald Oil, Inc. and Postrock Energy Corporation and is the former Chairman and CEO of Patina, which we acquired by merger in May 2005. | |
Eric P. Grubman |
Executive Vice President of the National Football League. | |
Kirby L. Hedrick |
Former Executive Vice President of Phillips Petroleum Company. | |
Scott D. Urban |
Former Group Vice President, Upstream, for several profit centers at BP. As a partner in Edgewater Energy LLC, an exploration and production consulting and private investment firm, he serves as a lead partner in a private equity company working in the Delaware Basin. Mr. Urban is also a director and chair of the Compensation Committee, and member of the Nominating and Corporate Governance Committee, of Pioneer Energy Services Corporation. | |
William T. Van Kleef | Director and chair of the Audit Committee of Oil States International, Inc., a publicly-traded company that provides specialty products and services to oil and gas drilling and production companies worldwide and with which the Company conducted business in 2012. |
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Corporate Governance |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of our common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. Directors, executive officers and more than 10% stockholders are required by SEC regulations to provide us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of the reports furnished to us and written representations that no other reports were required, all Section 16(a) filing requirements applicable to our directors, officers and more than 10% beneficial owners were complied with during the year ended December 31, 2012.
Ownership of Equity Securities of the Company
Directors and Named Executive Officers
The following table sets forth, as of March 6, 2013, the shares of common stock beneficially owned by each director, each Named Executive Officer listed in the Summary Compensation Table included in this Proxy Statement, and all directors and Named Executive Officers as a group.
Common Stock Beneficially Owned(1) | ||||||
Name | Number of Shares (2)(3) |
Percent of Class | ||||
Director |
||||||
Jeffrey L. Berenson |
55,031 | * | ||||
Michael A. Cawley |
63,648(4) | * | ||||
Edward F. Cox |
47,707(5) | * | ||||
Charles D. Davidson |
1,372,274(6) | * | ||||
Thomas J. Edelman |
2,024,148(7) | 1.1% | ||||
Eric P. Grubman |
27,006 | * | ||||
Kirby L. Hedrick |
81,237 | * | ||||
Scott D. Urban |
37,965 | * | ||||
William T. Van Kleef |
90,207 | * | ||||
Molly K. Williamson |
| | ||||
Named Executive Officer (excluding |
||||||
Rodney D. Cook |
135,954 | * | ||||
Susan M. Cunningham |
303,602 | * | ||||
Kenneth M. Fisher |
153,365 | * | ||||
David L. Stover |
472,525 | * | ||||
All directors and Named Executive Officers as a group (13 persons) |
4,864,669 | 2.7% |
* | Represents less than one percent of outstanding shares of common stock. |
(1) | Unless otherwise indicated, all shares are directly held with sole voting and investment power. |
(2) | Includes shares not outstanding but subject to options that are currently exercisable (or that will become exercisable on or before May 6, 2013), as follows: Mr. Berenson 26,726 shares; Mr. Cawley 43,526 shares; Mr. Cox 23,526 shares; Mr. Davidson 877,112 shares; Mr. Edelman 34,726 shares; Mr. Grubman 18,650 shares; Mr. Hedrick 43,526 shares; Mr. Urban 26,043 shares; Mr. Van Kleef 34,726 shares; Mr. Cook 66,476 shares; Ms. Cunningham 235,160 shares; Mr. Fisher 87,535 shares; and Mr. Stover 333,792 shares. |
Noble Energy, Inc. 2013 Proxy Statement
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Corporate Governance |
(3) | Includes restricted stock awards not currently vested, as follows: 916 shares held by each of Messrs. Berenson, Cawley, Cox, Edelman, Grubman, Hedrick, Urban and Van Kleef; Mr. Cook 27,614 shares; Ms. Cunningham 27,956 shares; Mr. Davidson 99,306 shares; Mr. Fisher 29,678 shares; and Mr. Stover 55,108 shares. |
(4) | Prior to his retirement on January 14, 2012, Mr. Cawley was one of 12 trustees of The Samuel Roberts Noble Foundation, Inc. The Foundation holds of record 947,166 shares of our common stock. As with other corporate action, the voting of the shares held by the Foundation requires a majority vote of its trustees at a meeting at which a quorum of trustees is present. Where there are more than three trustees of a company and a majority vote is required for corporate action, no individual trustee is deemed to have beneficial ownership of securities held by such company. Accordingly, the shares held of record by the Foundation are not reflected in Mr. Cawleys beneficial ownership of common stock. |
(5) | Includes 12,000 shares held by spouse. |
(6) | Includes 3,318 shares indirectly held in a qualified 401(k) Plan. |
(7) | Includes 787,300 shares held under deferred compensation plans. |
Security Ownership of Certain Beneficial Owners
Set forth in the table below is information about the number of shares held by persons we know to be the beneficial owners of more than 5% of the issued and outstanding common stock.
Name and Address of Beneficial Owner |
Number of Shares of Common Stock Beneficially Owned |
Percent of Class | ||||||
FMR LLC 82 Devonshire Street Boston, MA 02109 |
26,672,667 | (1) | 15.0% | |||||
Capital World Investors 333 South Hope Street Los Angeles, CA 90071 |
15,236,000 | (2) | 8.6% | |||||
Blackrock, Inc. 40 East 52nd Street New York, NY 10022 |
11,693,316(3) | 6.6% |
(1) | Based upon its Schedule 13G/A filed with the SEC on February 14, 2013 with respect to its beneficial ownership of our common stock. FMR LLC has sole voting power with respect to 59,465 shares and sole dispositive power with respect to 26,672,667 shares. |
(2) | Based upon its Schedule 13G/A filed with the SEC on February 13, 2013 with respect to its beneficial ownership of our common stock. Capital World Investors has sole voting power and sole dispositive power with respect to 15,236,000 shares. |
(3) | Based upon its Schedule 13G/A filed with the SEC on February 5, 2013 with respect to its beneficial ownership of our common stock. Blackrock, Inc. has sole voting power and sole dispositive power with respect to 11,693,316 shares. |
Stockholder Proposals and Other Matters
Stockholder proposals intended to be brought before the annual meeting of stockholders as an agenda item or to be included in our proxy statement relating to our 2014 annual meeting of stockholders, which is currently scheduled to be held on April 22, 2014, must be received by us at our office in Houston, Texas, addressed to our Secretary, no later than December 24, 2013.
Our Board does not intend to present any other matter at the annual meeting of stockholders and knows of no other matters that will be presented. However, if any other matter comes before the meeting, the persons named in the enclosed proxy intend to vote thereon in accordance with their best judgment.
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Election of Directors (Proposal 1) |
Election of Directors (Proposal 1)
Election Process
Director Nominations
Director Qualifications
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Election of Directors (Proposal 1) |
2013 Nominees for Director
Qualifications of 2013 Nominees for Director
In furtherance of the Director Qualifications discussed above, the following biographies highlight some categories of qualifications, attributes, skills and experience of each director nominee that led the Board to conclude that the director is qualified to serve on our Board.
Our Board recommends a vote FOR the election of each of the director nominees.
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Director Nominee Biographies |
Jeffrey L. Berenson
Director since 2005 Age 62
Mr. Berenson is President and Chief Executive Officer of Berenson & Company, a private investment banking firm in New York City that he co-founded |
Michael A. Cawley
Director since 1995 Age 65
Mr. Cawley has served as President and Manager of The Cawley Consulting Group, LLC since January 14, 2012. He previously served as President and Chief | |||||
in 1990. From 1978 until co-founding Berenson & Company, he was with Merrill Lynchs Mergers and Acquisitions department, becoming head of that department in 1986 and then co-head of its Merchant Banking unit in 1988. Mr. Berenson was appointed to the Board of Directors of Patina Oil & Gas Corporation (Patina) in December 2002 and joined our Board upon completion of our merger with Patina on May 16, 2005. He is also a member of the Board of Directors of Epoch Holding Corporation.
Specific Qualifications, Attributes, Skills and Experience
High Level of Financial Literacy has spent more than 35 years in the investment banking business.
Relevant Chief Executive Officer/President Experience serves as President and CEO of the private investment banking firm that he co-founded in 1990.
Extensive Knowledge of Our Industry and Business has historical knowledge of the Companys Rocky Mountain assets through his service as a director of Patina and since that time has had broad exposure to the Companys industry and business through over seven years of service on our Board. |
Executive Officer of The Samuel Roberts Noble Foundation, Inc. (Foundation) from February 1, 1992 until his retirement on January 14, 2012, after serving as Executive Vice President of the Foundation since January 1, 1991. Prior to 1991, Mr. Cawley was the President of Thompson, Cawley, Veazey & Burns, a professional corporation, attorneys at law. Mr. Cawley also served as a trustee of the Foundation from 1988 until his retirement and is a director of Noble Corporation. He has served on our Board since 1995 and has been our Lead Independent Director since 2001.
Specific Qualifications, Attributes, Skills and Experience
Relevant Chief Executive Officer/President Experience served as President and CEO of the Foundation for nearly 20 years and as President of Thompson, Cawley, Veazey & Burns, a professional corporation, attorneys at law.
Extensive Knowledge of Our Industry and Business has historical knowledge of, and broad exposure to, the Companys industry and business through over 17 years of service on our Board.
Strong Governance Experience worked as an attorney, and law firm partner, and for over 12 years has served as our Lead Independent director and chair of our Governance Committee. |
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Director Nominee Biographies |
Edward F. Cox
Director since 1984 Age 66
Mr. Cox is chair of the New York Republican State Committee (NYRSC) and was previously for more than five years a partner in the law firm of |
Charles D. Davidson
Director since 2000 Age 63
Mr. Davidson has served as our Chief Executive Officer since October 2000 and as Chairman of our Board since April 2001. In addition, he served as | |||||
Patterson Belknap Webb & Tyler LLP, New York, New York, serving as the chair of the firms corporate department and as a member of its management
committee. For more than five years he has been chair of the New York League of Conservation Voters Education Fund and, for more than five years prior to his election as NYRSC chair in 2009, was chair of the finance, community college and charter
school committees of the Trustees of The State University of New York and of the State University Construction Fund, and was a member of New Yorks merit selection constitutional Commission on Judicial Nomination. During the two years leading
up to his 2009 election as NYRSC chair, Mr. Cox served as the New York State Chair of Senator John McCains presidential campaign. He has served Presidents Nixon, Reagan and H. W. Bush in the international arena, has been a
member of the Council on Foreign Relations since 1993 and serves on the boards of the Foreign Policy Association, the Levin Institute (The State University of New York) and the American Ditchley Foundation. He has served on our Board since
1984.
Specific Qualifications, Attributes, Skills and Experience:
Broad International Exposure has served three U.S. presidents in the international arena.
Extensive Knowledge of Our Industry and Business has historical knowledge of, and broad exposure to, the Companys industry and business through over 28 years of service on our Board.
Governmental or Geopolitical Expertise serves as chair of the NYRSC and has served in a presidential campaign leadership role.
Strong Governance Experience worked as an attorney in private practice, chairing his firms corporate department. |
our President from October 2000 through April 2009. Prior to October 2000, he served as President and CEO of Vastar Resources, Inc. (Vastar) from March 1997 to September 2000 (Chairman from April 2000) and was a Vastar director from March 1994 to September 2000. From September 1993 to March 1997, he served as a Senior Vice President of Vastar. From 1972 to October 1993, he held various positions with ARCO.
Specific Qualifications, Attributes, Skills and Experience:
High Level of Financial Literacy has extensive exposure to the financial aspects of our business through his leadership of large independent oil and gas companies.
Relevant Chief Executive Officer/President Experience has served in President and CEO roles with Vastar and the Company.
Broad International Exposure has led the Companys exploration and development in the Eastern Mediterranean and West Africa, as well as other international locations.
Extensive Knowledge of Our Industry and Business has devoted a career to the oil and gas industry and overseen the Companys business since 2000.
Governmental or Geopolitical Expertise has government relations experience while at ARCO and through ongoing interaction with the U.S. government and host country governments in connection with the Companys operations.
Strong Governance Experience has served in Chairman of the Board and CEO roles with Vastar and the Company. |
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Director Nominee Biographies |
Thomas J. Edelman
Director since 2005 Age 62
Mr. Edelman founded Patina and served as its Chairman and CEO from its formation in 1996 through its merger with the Company in 2005. He co-founded |
Eric P. Grubman
Director since 2009 Age 55
Mr. Grubman has served as Executive Vice President of the National Football League since 2004. He was responsible for Finance and Strategic Transactions | |||||
Snyder Oil Corporation and was its President from 1981 through 1997. He served as Chairman and CEO and later as Chairman of Range Resources Corporation from 1988 through 2003. From 1980 to 1981, he was with The First Boston Corporation and from 1975 through 1980 with Lehman Brothers Kuhn Loeb Incorporated. Mr. Edelman is currently Managing Partner of White Deer Energy LP, an energy private equity fund, and serves on the Board of Directors of Emerald Oil, Inc. and Postrock Energy Corporation. He is also President of Lenox Hill Neighborhood House, a Trustee and Chair of the Investment Committee of The Hotchkiss School, a member of the Board of Directors of Georgetown University and a director of Berenson & Company. He joined our Board upon completion of our merger with Patina on May 16, 2005.
Specific Qualifications, Attributes, Skills and Experience:
High Level of Financial Literacy has extensive experience with investment banking and private equity funds, as well as the financial aspects of our business through leadership of large independent oil and gas companies.
Relevant Chief Executive Officer/President Experience has served as President and CEO of several independent oil and gas companies.
Extensive Knowledge of Our Industry and Business has historical knowledge of the Companys Rocky Mountain assets through his service as founder, Chairman and CEO of Patina and since that time has had broad exposure to the Companys industry and business through over seven years of service on our Board. |
from 2004 to 2006 and has served as the Leagues President of Business Ventures from 2006 to the present. Mr. Grubman served as Co-President of Constellation Energy Group, Inc. from 2000 to 2001 and partner and co-head of the Energy Group at Goldman Sachs from 1996 to 2000. He serves on the Board of Directors of the U.S. Naval Academy Foundation. He joined our Board on January 27, 2009.
Specific Qualifications, Attributes, Skills and Experience:
High Level of Financial Literacy has overseen finance and strategic transactions for the National Football League and previously served as co-head of the Energy Group at Goldman Sachs.
Relevant Chief Executive Officer/President Experience serves as Executive Vice President of the National Football League and previously served as Co-President of Constellation Energy Group, Inc.
Extensive Knowledge of Our Industry and Business has worked with the oil and gas industry while with Constellation Energy Group, Inc. and as partner and co-head of the energy group at Goldman Sachs, and has had broad exposure to the Companys business through over four years of service on our Board. |
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Director Nominee Biographies |
Kirby L. Hedrick
Director since 2002 Age 60
Mr. Hedrick served as Executive Vice President over upstream operations for Phillips Petroleum Company from 1997 until his retirement in 2000. In that role, |
Scott D. Urban
Director since 2007 Age 59
Mr. Urban served in executive management positions at Amoco and its successor, BP, from 1977 to 2005. At the time of his retirement from BP in | |||||
he was responsible for worldwide exploration and production and midstream gas gathering, processing and marketing, including activities in 22 countries. He had a varied 25-year career with Phillips, including serving as petroleum engineer from 1975 to 1984 on various onshore and offshore projects in the U.S., the North Sea, Indonesia and the west coast of Africa; Manager of Offshore Operations from 1985 to 1987, responsible for all greater Ekofisk offshore operations for Phillips Pct. Co. Norway; Manager, Corporate Planning from 1987 to 1989; Managing Director from 1990 to 1992, Phillips Pot. Co. UK with upstream and downstream responsibilities, including gas marketing; President and Chief Executive Officer at GPM Gas Co. from 1993 to 1994, responsible for Phillips gas gathering, processing and marketing in Texas, Oklahoma and New Mexico; and Senior Vice President, Refining, Marketing and Transportation from 1995 to 1997. He joined our Board on August 1, 2002.
Specific Qualifications, Attributes, Skills and Experience:
Relevant Chief Executive Officer/President Experience has served as Executive Vice President of a major international oil and gas company.
Broad International Exposure has led various onshore and offshore projects in the North Sea, Indonesia, the west coast of Africa, Norway and the UK.
Extensive Knowledge of Our Industry and Business has devoted a career to the oil and gas industry and has had broad exposure to the Companys business through over 10 years of service on our Board. |
2005, he was Group Vice President, Upstream for several profit centers including North America Gas, Alaska, Egypt and Middle East and, before that, Group Vice President, Upstream North Sea. He held various positions at Amoco including, at the time of its merger with BP, Group Vice President, Worldwide Exploration. Mr. Urban is also a partner in Edgewater Energy LLC, an investment consulting firm, and a member of the Board of Directors of Pioneer Energy Services Corporation. He joined our Board on October 23, 2007.
Specific Qualifications, Attributes, Skills and Experience:
Relevant Chief Executive Officer/President Experience has served as Group Vice President of a major international oil and gas company.
Broad International Exposure has led various onshore and offshore projects in Egypt, the Middle East and North Sea, with an emphasis on exploration.
Extensive Knowledge of Our Industry and Business has devoted a career to the oil and gas industry and has had broad exposure to the Companys business through over five years of service on our Board. |
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Director Nominee Biographies |
William T. Van Kleef
Director since 2005 Age 61
Mr. Van Kleef served in executive management positions at Tesoro Corporation (Tesoro) from 1993 to 2005, most recently as Tesoros |
Molly K. Williamson
Director since 2013 Age 67
Ms. Williamson has served in a unique combination of senior executive policy positions in four cabinet departments of the U.S. government. Her postings | |||||
Executive Vice President and Chief Operating Officer. During his tenure at Tesoro, he held various positions, including President, Tesoro Refining and Marketing, and Executive Vice President and Chief Financial Officer. Before joining Tesoro, Mr. Van Kleef, a Certified Public Accountant, served in various financial and accounting positions with Damson Oil from 1982 to 1991, most recently as Senior Vice President and Chief Financial Officer. Mr. Van Kleef is also a member of the Board of Directors of Oil States International, Inc. He joined our Board on November 11, 2005.
Specific Qualifications, Attributes, Skills and Experience:
High Level of Financial Literacy is a Certified Public Accountant, serving in various financial and accounting positions throughout his career.
Relevant Chief Executive Officer/President Experience has served as Executive Vice President and COO of a large refining and marketing company.
Extensive Knowledge of Our Industry and Business has had broad exposure to the Companys business and industry through over seven years of service on our Board and extensive experience in downstream operations through his tenure at Tesoro. |
included senior foreign policy advisor to the U.S. Secretary of Energy; Deputy Assistant Secretary in the Departments of State, Defense, and Commerce; U.S. interim ambassador to Bahrain; and Chief of Mission and Consul General in Jerusalem during the Madrid peace process which culminated in the Oslo Accords.
She is a scholar with the Middle East Institute, a consultant, frequent lecturer at Johns Hopkins University, and a member of the Boards of Directors of the American Foreign Service Association, American Academy of Diplomacy and International Services Corps. She is a former Foreign Service Officer, having served six U.S. presidents, achieving the rank of Career Minister. She joined our Board on March 14, 2013.
Specific Qualifications, Attributes, Skills and Experience:
Broad International Exposure has extensive experience in foreign policy and international affairs, serving six U.S. presidents.
Governmental or Geopolitical Expertise has a resume of broad government service, with expertise in the geopolitics of the Middle East. |
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Director Compensation |
2012 Director Compensation
Our director compensation program consists of two principal elements: (1) annual retainer and committee fees and (2) equity including stock options and restricted stock. Our Governance Committee reviews our director compensation program annually, based on information provided by our independent compensation consultant.
Annual Retainer and Committee Fees
Equity
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Director Compensation |
Director Compensation Summary
The table below sets forth certain information concerning the compensation earned in 2012 by our non-employee directors who served in 2012.
Name | Fees ($)(1) |
Stock ($)(2) |
Option ($)(3) |
Non-Equity Incentive Plan Compensation ($) |
Change in ($) |
All Other Compensation ($) |
Total ($) |
|||||||||||||||||||||
Jeffrey L. Berenson |
119,000 | 99,987 | 80,674 | | | | 299,661 | |||||||||||||||||||||
Michael A. Cawley |
146,500 | 99,987 | 80,674 | | | | 327,161 | |||||||||||||||||||||
Edward F. Cox |
134,500 | 99,987 | 80,674 | | | | 315,161 | |||||||||||||||||||||
Thomas J. Edelman |
125,000 | 99,987 | 80,674 | | | | 305,661 | |||||||||||||||||||||
Eric P. Grubman |
119,000 | 99,987 | 80,674 | | | | 299,661 | |||||||||||||||||||||
Kirby L. Hedrick |
140,000 | 99,987 | 80,674 | | | | 320,661 | |||||||||||||||||||||
Scott D. Urban |
125,000 | 99,987 | 80,674 | | | | 305,661 | |||||||||||||||||||||
William T. Van Kleef |
138,750 | 99,987 | 80,674 | | | | 319,411 |
(1) | Reflects annual retainer and meeting fees paid or earned by our non-employee directors in 2012. Each non-employee director earned the following: an annual retainer of $75,000 and $2,000 for each Board or committee meeting attended. Mr. Cawley received an additional $20,000 for serving as our Lead Independent Director. Messrs. Van Kleef and Hedrick each received an additional $15,000 for serving as Chair of our Audit Committee and our Compensation Committee, respectively. Messrs. Cox and Cawley each received an additional $7,500 for serving as Chair of our EH&S Committee and our Governance Committee, respectively. |
(2) | Reflects the aggregate grant date fair value for restricted stock awarded to our non-employee directors in 2012 under our 2005 Plan, computed in accordance with FASB ASC Topic 718. Restricted stock awarded to our non-employee directors in 2012 will vest on the one-year anniversary of the award date. The vesting of the restricted shares will accelerate in the event of a change of control of the Company. Each non-employee director received an award of 982 shares of restricted stock on February 1, 2012 that was unvested as of December 31, 2012. |
(3) | Reflects the aggregate grant date fair value for nonqualified stock options granted to our non-employee directors in 2012 under our 2005 Plan, computed in accordance with FASB ASC Topic 718. Options represent the right to purchase shares of common stock at a fixed price per share equal to fair market value on the date of grant. Our 2005 Plan defines fair market value as the closing price of our common stock on the NYSE on the date of grant. Options granted to our non-employee directors in 2012 will vest on the one-year anniversary of the grant date. The vesting of the options will accelerate in the event of a change of control of the Company. Vesting of these options is not contingent upon the satisfaction of any performance criteria, although none of the options may be exercised until the first anniversary (absent a change of control of the Company) or after the tenth anniversary of the date of grant. Each non-employee director received 2,514 nonqualified stock options on February 1, 2012 that were unvested as of December 31, 2012. The following directors have option grants outstanding as of December 31, 2012: Mr. Berenson 26,726; Mr. Cawley 43,526; Mr. Cox 23,526; Mr. Edelman 34,726; Mr. Grubman 18,650; Mr. Hedrick 43,526; Mr. Urban 26,043; and Mr. Van Kleef 34,726. |
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Ratification of Appointment of Independent Auditor (Proposal 2) |
Ratification of Appointment of Independent Auditor (Proposal 2)
Matters Relating to the Independent Auditor
Accounting Fees and Services for Fiscal Years 2012 and 2011
2012 | % | 2011 | % | |||||||||||||
Audit Fees(1) |
$ | 1,998,332 | 89.0 | $ | 2,007,838 | 73.6 | ||||||||||
Audit Related Fees(2) |
157,050 | 7.0 | 501,120 | 18.4 | ||||||||||||
Tax Fees(3) |
90,490 | 4.0 | 219,510 | 8.0 | ||||||||||||
All Other Fees |
| | | | ||||||||||||
|
|
|
|
|
|
|
|
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$ | 2,245,872 | 100.0 | $ | 2,728,468 | 100.0 | |||||||||||
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(1) | Services rendered in 2012 and 2011 include auditing our consolidated financial statements included in the Companys annual report filed on Form 10-K and our internal controls over financial reporting. Services also include quarterly reviews of our interim consolidated financial statements filed on Form 10-Q and audit consultation. |
(2) | Fees for 2011 include amounts paid for comfort letters associated with two debt offerings in 2011. The remainder of the fees for 2011 and all of the 2012 fees are fees associated with foreign statutory, domestic retirement and thrift plan audits and other similar audit-related work. |
(3) | Includes fees paid for tax consulting through December 31, 2012. |
Audit Committee Pre-Approval Policies and Procedures
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Report of the Audit Committee
To the Stockholders of
Noble Energy, Inc.:
The primary purpose of the Audit Committee of the Companys Board of Directors is to: (1) assist the Board of Directors in fulfilling its responsibility to oversee the integrity of the Companys consolidated financial statements, the Companys compliance with legal and regulatory requirements, the independent auditors qualifications and independence, and the performance of the Companys internal audit function and independent auditors and (2) prepare a committee report as required by the SEC to be included in the Companys annual Proxy Statement. The Audit Committees function is more fully described in its charter, which was adopted by the Audit Committee and the Board of Directors on March 4, 2004 and most recently amended on January 24, 2012 in connection with the Audit Committees annual review of its charter. A copy of the charter is available on our website and is also available in print to any stockholder who requests it. The Audit Committee held six meetings during 2012, including regular meetings and special meetings addressing the Form 10-K filing, earnings release and other matters.
Throughout 2012 and continuing to-date, the Audit Committee has been comprised entirely of independent directors, as defined and required by current NYSE listing standards and Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and as so determined by our Board of Directors. The Board of Directors also determined that Mr. Van Kleef is an audit committee financial expert as that term is defined in Item 401(h) of Regulation S-K.
Review and Discussion
The Audit Committee has reviewed and discussed the Companys audited financial statements with management. It has also discussed with KPMG LLP, the Companys independent auditor, the matters required to be discussed by Statement of Auditing Standards No. 61 (Communication with Audit Committees), as amended by SAS No. 90 (Audit Committee Communications). Additionally, KPMG LLP has provided to the Audit Committee the written disclosures required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountants communications with the Audit Committee concerning independence, and the committee discussed the auditors independence with management and the auditors.
The Audit Committee also has considered whether KPMG LLPs rendering of non-audit services to the Company is compatible with maintaining its independence. The Audit Committee has concluded that the rendering of the non-audit services by KPMG LLP has not impaired its independence.
Based on the Audit Committees discussions with management and the independent auditor, and its review of the representations of management and the report of KPMG LLP to the Audit Committee, the Audit Committee recommended to the Board of Directors the inclusion of the audited consolidated financial statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC.
January 28, 2013
Audit Committee
William T. Van Kleef, Chair
Michael A. Cawley
Eric P. Grubman
Scott D. Urban
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Advisory Vote to Approve Executive Compensation (Proposal 3) |
Advisory Vote to Approve Executive Compensation (Proposal 3)
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Approval of Amendment and Restatement of 1992 Plan (Proposal 4) |
Approval of Amendment and Restatement of 1992 Plan (Proposal 4)
Background and Purpose
Summary
The following summary describes briefly the principal features of the 1992 Plan and is qualified in its entirety by reference to the full text of the 1992 Plan (as amended to reflect the proposed plan amendment and restatement), which is provided as Appendix B to this Proxy Statement.
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Approval of Amendment and Restatement of 1992 Plan (Proposal 4) |
Stock Options and SARs
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Approval of Amendment and Restatement of 1992 Plan (Proposal 4) |
Amendment and Duration of the 1992 Plan
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Approval of Amendment and Restatement of 1992 Plan (Proposal 4) |
United States Federal Income Tax Consequences
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Approval of Amendment and Restatement of 1992 Plan (Proposal 4) |
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Approval of Amendment to Certificate of Incorporation (Proposal 5) |
Approval of Amendment to Certificate of Incorporation (Proposal 5)
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Approval of Amendment to By-Laws (Proposal 6) |
Approval of Amendment to By-Laws (Proposal 6)
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Compensation Discussion and Analysis |
Compensation Discussion and Analysis
Introduction
This Compensation Discussion and Analysis provides you with a detailed description of our executive compensation philosophy and program, the compensation decisions our Compensation Committee has made under that program and the factors considered in making those decisions. It focuses on the compensation of our Named Executive Officers for 2012, who were:
Name | Title | |
Charles D. Davidson |
Chairman and Chief Executive Officer | |
Kenneth M. Fisher |
Senior Vice President and Chief Financial Officer | |
David L. Stover |
President and Chief Operating Officer | |
Rodney D. Cook |
Senior Vice President International | |
Susan M. Cunningham |
Senior Vice President Exploration |
How Pay is Tied to Company Performance
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Compensation Discussion and Analysis |
Enhancements to Compensation Program for 2013
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Compensation Discussion and Analysis |
Relationship between Company Performance and Chairman and Chief Executive Officer Compensation
Our compensation program is designed to link compensation strongly to performance through financial incentives that are tied to the Companys operational and financial results. The following illustrates the directional relationship between Company performance, based on several key metrics, and the total direct compensation (including salary, bonus, stock and option awards and non-equity incentive plan compensation) of our Chairman and CEO from 2010 to 2012. These key metrics production, relative controllable unit costs and discretionary cash flow were chosen because we believe that they correlate to long-term stockholder value.
Production (MBoe/d) |
Controllable Unit Costs (percentage/tier relative to compensation peer group) | |
Discretionary Cash Flow(1) (Billions) |
Chairman and CEO Total Direct Compensation (Millions) | |
1 | Non-GAAP results. See Non-GAAP Financial Measures in Appendix A to this Proxy Statement for reconciliation to GAAP results. |
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Compensation Discussion and Analysis |
Five-Year Total Stockholder Return
Comparison of Five-Year Cumulative Total Stockholder Return*
Year Ended December 31, | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | ||||||||||||||||||
Noble Energy, Inc. |
$ | 100.00 | $ | 62.51 | $ | 91.55 | $ | 111.73 | $ | 123.62 | $ | 134.52 | ||||||||||||
S&P 500 |
$ | 100.00 | $ | 63.00 | $ | 79.67 | $ | 91.67 | $ | 93.61 | $ | 108.59 | ||||||||||||
Old Peer Group |
$ | 100.00 | $ | 62.91 | $ | 93.30 | $ | 105.49 | $ | 93.57 | $ | 93.54 | ||||||||||||
New Peer Group |
$ | 100.00 | $ | 61.52 | $ | 88.30 | $ | 100.19 | $ | 97.29 | $ | 99.08 |
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Compensation Discussion and Analysis |
Executive Compensation Practices
Below we highlight certain executive compensation practices, both what we do and what we dont do, to provide a better understanding of our compensation program.
What We Do
þ Pay for Performance - We tie pay to performance through financial incentives that are tied to the Companys operational and financial results. A substantial portion of executive pay is not guaranteed. We set clear operational and financial goals for corporate and business unit performance and differentiate based on individual achievement.
þ Review Tally Sheets - We review tally sheets for our executive officers prior to making annual executive compensation decisions.
þ Mitigate Undue Risk - We mitigate undue risk associated with compensation, including adopting a clawback provision, setting multiple performance measures and targets and maintaining robust Board and management processes to identify risks. We do not believe any of the Companys compensation programs create risks that are reasonably likely to have a material adverse impact on the Company.
þ Reasonable Post-Employment/Change in Control Provisions - We believe we have reasonable post-employment and change in control arrangements that are generally structured to apply to executive officers in the same manner as the broader employee population.
þ Modest Perquisites - We provide only modest perquisites that have a sound benefit to the Companys business.
þ Stock Ownership Guidelines - We have adopted stock ownership guidelines, which all Named Executive Officers exceed.
þ Regular Review of Share Utilization - We evaluate share utilization by reviewing overhang levels (dilutive impact of equity compensation on our stockholders) and annual run rates (the aggregate shares awarded as a percentage of total outstanding shares).
þ Independent Compensation Consulting Firm - Our Board and its committees benefit from the use of an independent compensation consulting firm that provides no other services to the Company.
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Compensation Discussion and Analysis |
What We Dont Do
x No Employment Contracts - We do not have employment contracts for the Chairman and CEO or other Named Executive Officers.
x No Inclusion of the Value of Equity Awards in Pension or Severance Calculations
x No Personal Aircraft Use
x No Separate Change in Control Agreements for Incoming Executive Officers (although Messrs. Davidson and Stover and Ms. Cunningham have pre-existing separate Change in Control Agreements).
x No Excise Tax Gross-Ups Upon Change in Control
x No Repricing Underwater Stock Options
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Compensation Discussion and Analysis |
Results of 2012 Advisory Vote to Approve Executive Compensation
Determining Executive Compensation
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Compensation Discussion and Analysis |
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Compensation Discussion and Analysis |
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Compensation Discussion and Analysis |
What We Pay and Why: Elements of Compensation
We have three elements of total direct compensation: base salary, our short-term incentive plan and our long-term incentive plan. The following table summarizes these three components, as well as our post-employment compensation programs.
Component | Base Salary | Short-Term Incentive Plan |
Long-Term Incentive Plan |
Post-Employment Compensation Programs | ||||
Type |
cash |
annual cash bonus |
annual stock |
qualified and | ||||
Purpose |
attract/retain high quality individuals deliver baseline cash compensation commensurate with experience and expertise in role |
motivate |
attract, retain and
align long-term |
retain
high provide financial security for unforeseen personal financial risks provide tax-efficient means to save for retirement | ||||
Structure |
market-based, |
performance-based |
equity grants of stock options
with 10 year terms and restricted stock vesting over |
plans and programs with broad eligibility |
Base Salary
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Compensation Discussion and Analysis |
Promotions or Changes in Role
Short-Term Incentive Plan
Our short-term incentive plan (STIP) is a performance-based annual incentive bonus plan that is payable in cash and available to all of our full-time employees, including our Named Executive Officers. It provides a performance-based incentive, beyond base salary, that is designed to motivate performance and compensate employees for the value of their annual contributions. In addition, given its annual nature and quantitative and qualitative components, the STIP has flexibility to respond to changing market conditions.
The target STIP bonus for an employee is the employees base salary at year-end multiplied by the percentage factor assigned to the employees salary classification. The target bonus percentage factors for our Named Executive Officers for 2012 were as follows:
Mr. Davidson | 110 | % | ||
Mr. Stover | 100 | % | ||
Mr. Fisher | 80 | % | ||
Ms. Cunningham | 75 | % | ||
Mr. Cook | 75 | % |
Payout under the plan may range from 0 to 2.5 times the aggregate target bonus pool for all employees. No Named Executive Officer received a STIP bonus in excess of 2.5 times such officers target bonus percentage factor for 2012.
In January of each year, our Compensation Committee approves annual STIP quantitative performance-based measures, including their relative weighting and specific targets. The measures, weighting and targets are communicated to our executive officers at that time. The 2012 quantitative measures weighting, targets and results were as follows:
Quantitative Measures (36% of total)
Measure | Weight | Target(1) | Result(1) | |||
Production |
14% | 254.2 MBoe/d | 250.1 MBoe/d | |||
Relative Controllable Unit Costs |
14% | 50th Percentile of Peers | 4th out of 15 | |||
Discretionary Cash Flow |
8% | $2.794 billion | $2.954 billion(2) |
(1) | The targets for 2012 were not adjusted for discontinued operations and other divestitures that occurred during the year. Consequently, results presented have not been adjusted to reflect the sale of our North Sea properties, sales of certain properties in the Permian Basin, the Mid-Continent area and Kansas, or any other divestitures that occurred during 2012. |
(2) | Non-GAAP result. The Company defines discretionary cash flow as net cash provided by operating activities before changes in working capital, cash exploration costs, current tax expense of earnings adjustments and certain other adjustments. |
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Compensation Discussion and Analysis |
Qualitative Measures (64% of total)
The Compensation Committee also considered the Companys results in the following financial and operational areas:
Measure | Result | |
Additions to proved oil and natural gas reserves | 121.3 MMBoe (net) added | |
Safety and environmental performance | Company record low incident rate (combined Company and contractor) | |
Financial controls | Balance sheet maintained, record liquidity of $5.4 billion | |
Regulatory compliance | Continued enhancement of compliance and ethics program | |
Progress on major projects | Tamar development (Israel) on target for 2013 start-up; Alen (West Africa), Marcellus Shale wet gas and Niobrara projects accelerated | |
Divestiture program | Over $1 billion proceeds received | |
Relative total stockholder return | 9%, 7th out of 15 among our compensation peer group |
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Compensation Discussion and Analysis |
Noble Energy, Inc. 2013 Proxy Statement
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Compensation Discussion and Analysis |
Noble Energy, Inc. 2013 Proxy Statement
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Compensation Discussion and Analysis |
2012 Compensation of CEO
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48
Compensation Discussion and Analysis |
On January 28, 2013, our Compensation Committee approved the following stock option grants and restricted stock awards under our 1992 Plan to our non-CEO Named Executive Officers:
Named Executive Officers | Stock Options | Shares of Restricted Stock | ||
Kenneth M. Fisher |
25,901 | 15,111 | ||
David L. Stover |
47,092 | 27,474 | ||
Susan M. Cunningham |
21,780 | 12,705 | ||
Rodney D. Cook |
21,191 | 12,363 |
In determining the level of these grants and awards, our Compensation Committee considered market data provided by our compensation consultant regarding our compensation program and appropriate long-term incentive grant levels in light of compensation peer group practices and our relative performance versus that group.
Post-Employment Compensation
Our post-employment compensation is provided under qualified and nonqualified defined benefit plans, qualified and nonqualified defined contribution plans, and either individual change of control agreements or, alternatively, a change of control plan. Through its various components, our post-employment compensation facilitates our efforts to retain individuals of high quality and support a long-standing internal culture of loyalty and dedication to our interests.
Qualified Defined Benefit Plan
Formula 1 |
Formula 2 | |
1.25% x final average monthly compensation x years of credited service (up to 30) + 0.50% x final average monthly compensation that exceeds Social Security covered compensation x years of credited service (up to 30) | 2% x final average monthly compensation x years of credited service (up to 20) |
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Compensation Discussion and Analysis |
Age of Participant |
Contribution Percentage for Portion of Basic Compensation Below the FICA Taxable Wage Base |
Contribution Percentage for Portion of Basic Compensation Above the FICA Taxable Wage Base | ||
Under 35 |
4% | 8% | ||
At least 35 but under 48 |
7% | 10% | ||
At least 48 |
9% | 12% |
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Compensation Discussion and Analysis |
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Compensation Discussion and Analysis |
Noble Energy, Inc. 2013 Proxy Statement
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Compensation Discussion and Analysis |
Tax and Accounting Considerations
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53
REPORT OF THE COMPENSATION, BENEFITS
AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
The following report of the Compensation, Benefits and Stock Option Committee of the Board of Directors shall not be deemed to be soliciting material or to be filed with the SEC or subject to the SECs proxy rules, except for the required disclosure in this Proxy Statement, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934 (Exchange Act), and the information shall not be deemed to be incorporated by reference into any filing made by the Company under the Securities Act of 1933 or the Exchange Act.
The Compensation, Benefits and Stock Option Committee has reviewed the Compensation Discussion and Analysis contained in this Proxy Statement and discussed this disclosure with management. Based on this review and discussions with management, the Compensation, Benefits and Stock Option Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2012 for filing with the SEC.
March 14, 2013. |
Compensation, Benefits and |
Stock Option Committee
Kirby L. Hedrick, Chair
Jeffrey L. Berenson
Edward F. Cox
Thomas J. Edelman
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Compensation Tables |
Summary Compensation Table
The following table sets forth summary information concerning the compensation earned by our Named Executive Officers during 2010, 2011 and 2012.
Name and Principal Position |
Year | Salary ($)(1) |
Bonus($) |
Stock Awards |
Option Awards ($)(3) |
Non-Equity Incentive Plan Compensation ($)(4) |
Change in Pension Value and Non- Qualified Deferred Compensation Earnings($)(5) |
All Other Compensation ($)(6) |
Total ($) |
|||||||||||||||||||||||||||
Charles D. Davidson |
2012 | 1,125,000 | | 3,750,031 | 3,025,060 | 2,165,625 | 2,102,110 | 78,703 | 12,246,529 | |||||||||||||||||||||||||||
Chairman and Chief |
2011 | 1,069,719 | | 3,500,030 | 2,864,040 | 1,856,250 | 2,123,823 | 78,059 | 11,491,921 | |||||||||||||||||||||||||||
Executive Officer |
2010 | 1,012,644 | | 3,249,970 | 2,650,346 | 1,855,000 | 1,494,043 | 70,539 | 10,332,542 | |||||||||||||||||||||||||||
Kenneth M. Fisher(7) |
2012 | 552,817 | | 1,149,955 | 927,690 | 789,919 | 997 | 111,896 | 3,533,274 | |||||||||||||||||||||||||||
Senior Vice President and |
2011 | 528,738 | | 999,970 | 818,327 | 763,440 | 518 | 104,417 | 3,215,410 | |||||||||||||||||||||||||||
Chief Financial Officer |
2010 | 495,192 | 500,000 | 826,516 | 674,014 | 790,000 | | 83,771 | 3,369,493 | |||||||||||||||||||||||||||
David L. Stover |
2012 | 679,930 | | 2,250,018 | 1,815,042 | 1,242,500 | 866,440 | 51,615 | 6,905,545 | |||||||||||||||||||||||||||
President and Chief |
2011 | 632,476 | | 1,799,964 | 1,472,953 | 1,081,363 | 886,629 | 54,428 | 5,927,813 | |||||||||||||||||||||||||||
Operating Officer |
2010 | 593,461 | | 1,716,032 | 1,399,375 | 1,200,000 | 527,382 | 24,023 | 5,460,274 | |||||||||||||||||||||||||||
Susan M. Cunningham |
2012 | 502,817 | | 1,324,984 | 1,068,854 | 675,588 | 624,323 | 250,501 | 4,447,067 | |||||||||||||||||||||||||||
Senior Vice President |
2011 | 478,738 | | 875,030 | 715,972 | 614,093 | 622,657 | 19,586 | 3,326,076 | |||||||||||||||||||||||||||
Exploration |
2010 | 437,769 | | 825,014 | 672,786 | 675,000 | 386,614 | 16,847 | 3,014,030 | |||||||||||||||||||||||||||
Rodney D. Cook |
2012 | 458,522 | | 1,324,984 | 1,068,854 | 623,620 | 1,107,771 | 25,052 | 4,608,803 | |||||||||||||||||||||||||||
Senior Vice President |
2011 | 429,486 | | 875,030 | 715,972 | 564,370 | 1,173,636 | 25,173 | 3,783,667 | |||||||||||||||||||||||||||
International |
2010 | 384,490 | | 639,091 | 521,173 | 700,000 | 747,129 | 23,670 | 3,015,553 |
(1) | Certain of our Named Executive Officers deferred a portion of their base salaries under our Deferred Compensation Plan: |
Name | Year | Percentage of Salary Deferred |
Amount Deferred ($) |
|||||||||
Charles D. Davidson |
2012 | 45 | % | 506,250 | ||||||||
2011 | 45 | % | 481,374 | |||||||||
2010 | 45 | % | 455,690 | |||||||||
Kenneth M. Fisher |
2012 | 4 | % | 22,113 | ||||||||
2011 | 3 | % | 15,862 | |||||||||
2010 | 0 | % | | |||||||||
David L. Stover |
2012 | 6 | % | 40,796 | ||||||||
2011 | 5 | % | 31,264 | |||||||||
2010 | 0 | % | | |||||||||
Rodney D. Cook |
2012 | 0 | % | | ||||||||
2011 | 0 | % | | |||||||||
2010 | 0 | % | |
(2) | Reflects the aggregate grant date fair value of restricted stock awarded under our 1992 Plan, which was computed in accordance with FASB ASC Topic 718. Shares awarded will vest according to the following schedule: 20% on the first anniversary of the award date; an additional 30% on the second anniversary of the award date; and the remaining 50% on the third anniversary of the award date. The vesting of these shares is not contingent upon the satisfaction of any performance goals. See the Grants of Plan-Based Awards table for information on restricted stock awarded in 2012. |
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Compensation Tables |
(3) | Reflects the aggregate grant date fair value of nonqualified stock options granted under our 1992 Plan. Options represent the right to purchase shares of common stock at a price per share equal to fair market value on the date of grant. Options will vest ratably over three years in equal installments on the first, second and third anniversaries of the date of grant. Vesting of these options is not contingent upon the satisfaction of any performance goals, although none of the options may be exercised before the first anniversary (absent a change of control of the Company) or after the tenth anniversary of the date of grant. See the Grants of Plan-Based Awards table for information on stock options granted in 2012. |
(4) | Reflects payments under our STIP based on the achievement of certain performance goals during the year indicated. STIP awards earned during the year indicated were paid or deferred in February of the following year, as follows: |
Name | Year | STIP Payout ($) |
||||||
Charles D. Davidson |
2012 | 2,165,625 | ||||||
2011 | 1,856,250 | |||||||
2010 | 1,855,000 | |||||||
Kenneth M. Fisher |
2012 | 789,919 | ||||||
2011 | 763,440 | |||||||
2010 | 790,000 | |||||||
David L. Stover |
2012 | 1,242,500 | ||||||
2011 | 1,081,363 | |||||||
2010 | 1,200,000 | |||||||
Susan M. Cunningham |
2012 | 675,588 | ||||||
2011 | 614,093 | |||||||
2010 | 675,000 | |||||||
Rodney D. Cook |
2012 | 623,620 | ||||||
2011 | 564,370 | |||||||
2010 | 700,000 |
(5) | Reflects during the year indicated: (a) the aggregate increase in actuarial present value of the Named Executive Officers benefits under our Retirement Plan and Restoration Plan; and (b) the above-market Deferred Compensation Plan earnings, as follows: |
Name | Year | Increase in Retirement and Restoration Plans($)(a) |
Deferred Compensation Above-Market Earnings($)(b) |
|||||||||
Charles D. Davidson |
2012 | 1,893,070 | 209,040 | |||||||||
2011 | 1,855,729 | 268,094 | ||||||||||
2010 | 1,324,713 | 169,330 | ||||||||||
Kenneth M. Fisher |
2012 | | 997 | |||||||||
2011 | | 518 | ||||||||||
2010 | | | ||||||||||
David L. Stover |
2012 | 848,025 | 18,415 | |||||||||
2011 | 863,759 | 22,870 | ||||||||||
2010 | 513,313 | 14,069 | ||||||||||
Susan M. Cunningham |
2012 | 624,323 | | |||||||||
2011 | 622,657 | | ||||||||||
2010 | 386,614 | | ||||||||||
Rodney D. Cook |
2012 | 1,102,420 | 5,351 | |||||||||
2011 | 1,167,383 | 6,253 | ||||||||||
2010 | 743,818 | 3,311 |
(a) | Beginning of year values for calculating the aggregate increase in actuarial present value reflect a 4.25% discount rate for the Retirement Plan and Restoration Plan; end of year values reflect a 3.75% discount rate for both plans. Present values are based on the same actuarial assumptions and measurement dates used to determine the pension benefit obligations disclosed in Note 14 to our consolidated financial statements included in our 2012 Annual Report on Form 10-K, except that for purposes of the present value calculations participants are assumed to work until age 65 and commence their benefits at that time. |
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Compensation Tables |
(b) | Above-market earnings in 2012 are based on the difference between the plan crediting rate of 5.06% and 120% of the annual long-term Applicable Federal Rate as of September 2011 (4.30%); earnings in 2011 are based on the difference between the plan crediting rate of 5.54% and 120% of the annual long-term Applicable Federal Rate as of September 2010 (4.41%); earnings in 2010 are based on the difference between the plan crediting rate of 6.11% and 120% of the annual long-term Applicable Federal Rate as of September 2009 (5.27%). |
(6) | All other compensation includes: |
Name | Year | Thrift Plan Matching Contributions ($) |
Deferred Compensation Plan Matching Contributions ($) |
Club Memberships ($) |
Insurance Premiums ($) |
Holiday Bonus ($) |
Physical Examinations ($) |
Profit
Sharing ($)(a) |
Temporary ($)(b) |
|||||||||||||||||||||||||||
Charles D. Davidson |
2012 | 15,000 | 52,500 | 9,174 | 1,872 | 157 | | | | |||||||||||||||||||||||||||
2011 | 14,700 | 49,483 | 9,110 | 1,872 | 157 | 2,150 | | | ||||||||||||||||||||||||||||
2010 | 14,700 | 46,059 | 7,391 | 2,232 | 157 | | | | ||||||||||||||||||||||||||||
Kenneth M. Fisher |
2012 | 15,000 | 18,169 | 11,178 | 1,872 | 157 | 2,485 | 63,035 | | |||||||||||||||||||||||||||
2011 | 14,700 | 17,024 | 9,832 | 1,872 | 157 | | 60,245 | | ||||||||||||||||||||||||||||
2010 | 14,700 | | 10,463 | 2,232 | 157 | | 56,219 | | ||||||||||||||||||||||||||||
David L. Stover |
2012 | 15,000 | 25,796 | 8,790 | 1,872 | 157 | | | | |||||||||||||||||||||||||||
2011 | 14,700 | 23,249 | 8,728 | 1,872 | 157 | 5,135 | | | ||||||||||||||||||||||||||||
2010 | 14,700 | | 6,934 | 2,232 | 157 | | | | ||||||||||||||||||||||||||||
Susan M. Cunningham |
2012 | 15,000 | | | 1,872 | 157 | | | 232,885 | |||||||||||||||||||||||||||
2011 | 14,700 | | | 1,794 | 157 | 2,935 | | | ||||||||||||||||||||||||||||
2010 | 14,700 | | | 1,990 | 157 | | | | ||||||||||||||||||||||||||||
Rodney D. Cook |
2012 | 15,000 | | 8,176 | 1,719 | 157 | | | | |||||||||||||||||||||||||||
2011 | 14,700 | | 8,119 | 1,610 | 157 | | | | ||||||||||||||||||||||||||||
2010 | 14,700 | | 7,065 | 1,748 | 157 | | | |
Also included in the value of other compensation in 2012 is $587 for the value of a tablet computer furnished to Ms. Cunningham. |
(a) | Mr. Fisher received Profit Sharing Plan contributions for 2012, 2011 and 2010 as of the last day of each calendar year. A portion of Mr. Fishers 2012 Profit Sharing contribution ($18,000) was deposited into Mr. Fishers Profit Sharing Plan contribution account in our Thrift Plan. The remaining portion of Mr. Fishers 2012 Profit Sharing Plan contribution ($45,035) was credited to Mr. Fishers account in our nonqualified Deferred Compensation Plan. A portion of Mr. Fishers 2011 Profit Sharing contribution ($17,800) was deposited into Mr. Fishers Profit Sharing Plan contribution account in our Thrift Plan. The remaining portion of Mr. Fishers 2011 Profit Sharing Plan contribution ($42,445) was credited to Mr. Fishers account in our nonqualified Deferred Compensation Plan. A portion of Mr. Fishers 2010 Profit Sharing contribution ($17,800) was deposited into Mr. Fishers Profit Sharing Plan contribution account in our Thrift Plan. The remaining portion of Mr. Fishers 2010 Profit Sharing Plan contribution ($38,419) was credited to Mr. Fishers account in our nonqualified Deferred Compensation Plan. |
(b) | In 2012, Ms. Cunningham began a temporary expatriate assignment in Israel. As part of the Companys expatriate assignment policy, the amounts in this column include the following compensation uplifts: expatriate assignment premium in the amount of $31,615, expatriate hardship pay in the amount of $42,154 and an expatriate location premium in the amount of $21,077. In addition, this amount also includes imputed income in the amount of $133,318 which represents federal income and FICA taxes paid on behalf of Ms. Cunningham as part of the Companys expatriate assignment tax equalization policy. Finally, this amount includes a short-term relocation allowance payment of $3,000 which was grossed up for federal income and FICA taxes in the amount of $1,721. |
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Compensation Tables |
As reflected in the table above, the salary received by each of our Named Executive Officers as a percentage of their respective total compensation during the year indicated was as follows: |
Name | Year | Percentage of Total Compensation |
||||||
Charles D. Davidson |
2012 | 9.2 | % | |||||
2011 | 9.3 | % | ||||||
2010 | 9.8 | % | ||||||
Kenneth M. Fisher |
2012 | 15.7 | % | |||||
2011 | 16.4 | % | ||||||
2010 | 14.7 | % | ||||||
David L. Stover |
2012 | 9.9 | % | |||||
2011 | 10.7 | % | ||||||
2010 | 10.9 | % | ||||||
Susan M. Cunningham |
2012 | 11.3 | % | |||||
2011 | 14.4 | % | ||||||
2010 | 14.5 | % | ||||||
Rodney D. Cook |
2012 | 10.0 | % | |||||
2011 | 11.4 | % | ||||||
2010 | 12.8 | % |
(7) | Mr. Fisher was appointed Senior Vice President and CFO of the Company effective November 16, 2009 and received two cash payments in the amount of $500,000 each pursuant to the terms of his compensation arrangement with the Company. The first payment was made on December 16, 2009 and the second payment was made on May 21, 2010. |
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Compensation Tables |
Grants of Plan-Based Awards
The table below sets forth information regarding grants of plan-based awards made to our Named Executive Officers during 2012.
Name | Approval Date(1) |
Grant Date(1) |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
Estimated Future Payouts Under Equity Incentive Plan Awards |
All
Other Units (#) |
All Other Options (#) |
Exercise Awards |
Grant Date Fair Value of Stock and Option Awards ($)(5) |
||||||||||||||||||||||||||||||||||||||||||||
Units Granted |
Thres- hold ($) |
Target ($) |
Max ($) |
Thres- hold (#) |
Target (#) |
Max (#) |
||||||||||||||||||||||||||||||||||||||||||||||
Charles D. |
01/24/12 | 02/01/12 | | | | | | | | 36,830 | 94,268 | 101.82 | 6,775,091 | |||||||||||||||||||||||||||||||||||||||
Kenneth M. |
01/24/12 | 02/01/12 | | | | | | | | 11,294 | 28,909 | 101.82 | 2,077,645 | |||||||||||||||||||||||||||||||||||||||
David
L. |
01/24/12 | 02/01/12 | | | | | | | | 22,098 | 56,561 | 101.82 | 4,065,060 | |||||||||||||||||||||||||||||||||||||||
Susan
M. |
01/24/12 | 02/01/12 | | | | | | | | 13,013 | 33,308 | 101.82 | 2,393,838 | |||||||||||||||||||||||||||||||||||||||
Rodney |
01/24/12 | 02/01/12 | | | | | | | | 13,013 | 33,308 | 101.82 | 2,393,838 |
(1) | All grants were approved by our Compensation Committee, and were effective and priced on the date of grant. |
(2) | Represents the shares of restricted stock awarded under our 1992 Plan in 2012. The shares will vest according to the following schedule: 20% of the award will vest on the first anniversary of the award date; an additional 30% of the award will vest on the second anniversary of the award date; and the remaining 50% of the award will vest on the third anniversary of the award date. Dividends declared on shares of restricted stock are accrued during the three-year restricted period and will be paid upon vesting of restricted shares. |
(3) | Represents grants of nonqualified stock options under our 1992 Plan in 2012. Options represent the right to purchase shares of common stock at the price per share (equal to fair market value on the date of grant) indicated in the table. Options will vest ratably over three years in equal installments on the first, second and third anniversaries of the date of grant. |
(4) | Exercise price at fair market value was defined in our 1992 Plan, as amended and restated effective April 26, 2011, as the closing price of our common stock on the NYSE on the date of grant. The closing price of our common stock on February 1, 2012 was $101.82. |
(5) | Reflects aggregate grant date fair value of restricted stock awarded and nonqualified stock options granted to our Named Executive Officers on February 1, 2012 computed in accordance with FASB ASC Topic 718. Grant date fair value of stock options reported above is as follows: Mr. Davidson $3,025,060; Mr. Fisher $927,690; Mr. Stover $1,815,042; Ms. Cunningham $1,068,854; and Mr. Cook $1,068,854. Award date fair value of restricted stock reported above is as follows: Mr. Davidson $3,750,031; Mr. Fisher $1,149,955; Mr. Stover $2,250,018; Ms. Cunningham $1,324,984; and Mr. Cook $1,324,984. |
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Compensation Tables |
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information with respect to restricted stock and stock options held by our Named Executive Officers as of December 31, 2012.
Name | Number of Securities Underlying Unexercised Options (# Exercisable) |
Number of Securities Underlying Unexercised Options (# Unexercisable) |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
Option Exercise Price ($) |
Option Expiration Date |
Number of Shares or Units of Stock Held That Have Not Vested (#) |
Market Value of Shares or Units of Stock Held That Have Not Vested ($)(7) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||
Charles D. Davidson |
86,580 | 22.2325 | 2/1/2014 | 21,641 | (4) | 2,201,755 | ||||||||||||||||||||||||
58,852 | 29.8700 | 2/1/2015 | 30,972 | (5) | 3,151,091 | |||||||||||||||||||||||||
21,550 | 32.7925 | 5/16/2015 | 36,830 | (6) | 3,747,084 | |||||||||||||||||||||||||
12,000 | 41.4650 | 8/1/2015 | ||||||||||||||||||||||||||||
77,957 | 45.9400 | 2/1/2016 | ||||||||||||||||||||||||||||
164,118 | 53.4150 | 2/1/2017 | ||||||||||||||||||||||||||||
125,200 | 72.9400 | 2/1/2018 | ||||||||||||||||||||||||||||
130,490 | 50.2050 | 1/30/2019 | ||||||||||||||||||||||||||||
70,507 | 35,253 | (1) | 75.0900 | 2/01/2020 | ||||||||||||||||||||||||||
31,591 | 63,182 | (2) | 90.4050 | 2/01/2021 | ||||||||||||||||||||||||||
94,268 | (3) | 101.8200 | 2/01/2022 | |||||||||||||||||||||||||||
Kenneth M. Fisher |
32,949 | 67.4600 | 11/16/2019 | 5,504 | (4) | 559,977 | ||||||||||||||||||||||||
17,931 | 8,965 | (1) | 75.0900 | 2/01/2020 | 8,849 | (5) | 900,297 | |||||||||||||||||||||||
9,027 | 18,052 | (2) | 90.4050 | 2/01/2021 | 11,294 | (6) | 1,149,052 | |||||||||||||||||||||||
28,909 | (3) | 101.8200 | 2/01/2022 | |||||||||||||||||||||||||||
David L. Stover |
15,580 | 29.8700 | 2/1/2015 | 11,427 | (4) | 1,162,583 | ||||||||||||||||||||||||
8,000 | 41.4650 | 8/1/2015 | 15,928 | (5) | 1,620,515 | |||||||||||||||||||||||||
15,980 | 45.9400 | 2/1/2016 | 22,098 | (6) | 2,248,251 | |||||||||||||||||||||||||
48,610 | 53.4150 | 2/1/2017 | ||||||||||||||||||||||||||||
59,749 | 72.9400 | 2/1/2018 | ||||||||||||||||||||||||||||
72,710 | 50.2050 | 1/30/2019 | ||||||||||||||||||||||||||||
15,974 | 50.8000 | 3/18/2019 | ||||||||||||||||||||||||||||
37,227 | 18,614 | (1) | 75.0900 | 2/01/2020 | ||||||||||||||||||||||||||
16,247 | 32,494 | (2) | 90.4050 | 2/01/2021 | ||||||||||||||||||||||||||
56,561 | (3) | 101.8200 | 2/01/2022 | |||||||||||||||||||||||||||
Susan M. Cunningham |
16,800 | 17.6825 | 2/1/2013 | 5,494 | (4) | 558,960 | ||||||||||||||||||||||||
17,094 | 22.2325 | 2/1/2014 | 7,744 | (5) | 787,875 | |||||||||||||||||||||||||
15,580 | 29.8700 | 2/1/2015 | 13,013 | (6) | 1,323,943 | |||||||||||||||||||||||||
8,000 | 41.4650 | 8/1/2015 | ||||||||||||||||||||||||||||
15,980 | 45.9400 | 2/1/2016 | ||||||||||||||||||||||||||||
34,455 | 53.4150 | 2/1/2017 | ||||||||||||||||||||||||||||
29,622 | 72.9400 | 2/1/2018 | ||||||||||||||||||||||||||||
34,059 | 50.2050 | 1/30/2019 | ||||||||||||||||||||||||||||
26,624 | 50.8000 | 3/18/2019 | ||||||||||||||||||||||||||||
17,898 | 8,949 | (1) | 75.0900 | 2/01/2020 | ||||||||||||||||||||||||||
7,898 | 15,794 | (2) | 90.4050 | 2/01/2021 | ||||||||||||||||||||||||||
33,308 | (3) | 101.8200 | 2/01/2022 | |||||||||||||||||||||||||||
Rodney D. Cook |
18,780 | 72.9400 | 2/1/2018 | 4,256 | (4) | 433,005 | ||||||||||||||||||||||||
13,865 | 6,932 | (1) | 75.0900 | 2/01/2020 | 7,744 | (5) | 787,875 | |||||||||||||||||||||||
7,898 | 15,794 | (2) | 90.4050 | 2/01/2021 | 13,013 | (6) | 1,323,493 | |||||||||||||||||||||||
33,308 | (3) | 101.8200 | 2/01/2022 |
(1) | Stock options vested February 1, 2013. |
(2) | 50% of stock options vested February 1, 2013; and 50% of stock options vest February 1, 2014. |
(3) | 33 1/3% of stock options vested February 1, 2013; 33 1/3% of stock options vest February 1, 2014; and 33 1/3% of stock options vest February 1, 2015. |
(4) | Restricted stock vested February 1, 2013. |
(5) | 37.5% of restricted stock vested February 1, 2013; and 62.5% of restricted stock vests February 1, 2014. |
(6) | 20% of restricted stock vested February 1, 2013; 30% of restricted stock vests February 1, 2014; and 50% of restricted stock vests February 1, 2015. |
(7) | Market value based on December 31, 2012 closing price of $101.74. |
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Compensation Tables |
Stock Option Exercises and Stock Vesting
The following table sets forth certain information with respect to vesting of restricted stock and the exercise of stock options held by our Named Executive Officers during fiscal year 2012.
Option Awards | ||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting (#) |
Stock Awards Value Realized on Vesting ($)(1) |
||||||||||||
Charles D. Davidson |
150,000 | 12,654,805 | 45,081 | 4,537,175 | ||||||||||||
Kenneth M. Fisher |
| | 23,302 | 2,201,281 | ||||||||||||
David L. Stover |
21,821 | 1,776,172 | 27,362 | 2,751,113 | ||||||||||||
Susan M. Cunningham |
47,200 | 3,829,945 | 16,510 | 1,657,701 | ||||||||||||
Rodney D. Cook |
68,061 | 3,550,074 | 12,076 | 1,213,870 |
(1) | Shares of restricted stock awarded our Named Executive Officers on January 30, 2009, March 18, 2009, November 16, 2009, February 1, 2010 and February 1, 2011 vested on January 30, 2012, March 18, 2012, November 16, 2012 and February 1, 2012, respectively. Income was recognized on vesting based on the average of the high and low trading price of our common stock on those dates ($100.13 on January 30, 2012, $99.865 on March 18, 2012, $92.365 on November 16, 2012 and $101.25 on February 1, 2012). Dividends that accrued on the shares of restricted stock that vested on those dates during the restricted period were paid in 2012 as follows: Mr. Davidson $80,483; Mr. Fisher $50,013; Mr. Stover $50,739; Ms. Cunningham $32,020; and Mr. Cook $22,475. |
Pension Benefits
The amounts reported in the table below reflect the present value of accumulated benefits as of December 31, 2012 for the Named Executive Officers under our Retirement Plan and Restoration Plan. The estimates assume that benefits are received in the form of a ten-year certain and life annuity.
Name | Plan Name | Number of Years of Credited Service(1) |
Present Value of Accumulated Benefit ($)(2) |
Payments During Last Fiscal Year ($) |
||||||||||||
Charles D. Davidson |
Retirement Plan | 12 | 783,601 | | ||||||||||||
Restoration Plan | 12 | 8,961,695 | | |||||||||||||
David L. Stover |
Retirement Plan | 10 | 487,337 | | ||||||||||||
Restoration Plan | 10 | 2,686,816 | | |||||||||||||
Susan M. Cunningham |
Retirement Plan | 12 | 614,968 | | ||||||||||||
Restoration Plan | 12 | 2,031,832 | | |||||||||||||
Rodney D. Cook |
Retirement Plan | 32 | 1,161,084 | | ||||||||||||
Restoration Plan | 32 | 3,567,000 | |
(1) | The above Named Executive Officers are fully vested in their retirement benefits. Each is eligible for immediate commencement and can elect an unlimited lump sum option for his or her Retirement Plan benefit. For the Restoration Plan benefit, participants previously elected to receive their benefit as either an annuity or lump sum, and specified the timing for receipt of benefits. Each of the above Named Executive Officers elected to receive a lump sum from the Restoration Plan. Mr. Davidson and Ms. Cunningham elected to receive their Restoration Plan benefits upon separation of service and Messrs. |
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Compensation Tables |
Stover and Cook elected to receive their Restoration Plan benefits at the later of age 55 or separation of service. The following amounts would be payable to our Named Executive Officers from our Retirement Plan and Restoration Plan effective January 1, 2013: |
Name | Age at 12/31/2012 |
Retirement Plan Monthly Annuity ($) |
Retirement Lump Sum ($) |
Restoration Lump Sum ($) |
||||||||||||
Charles D. Davidson |
62.83 | 4,880 | 874,476 | 10,027,926 | ||||||||||||
David L. Stover |
55.17 | 2,811 | 577,005 | 3,259,369 | ||||||||||||
Susan M. Cunningham |
57.00 | 3,669 | 731,459 | 2,462,188 | ||||||||||||
Rodney D. Cook |
55.58 | 8,229 | 1,678,088 | 4,476,413 |
(2) | Represents the actuarial present value of the accumulated pension benefits as of December 31, 2012 under our Retirement Plan and Restoration Plan. Present values are based on the same actuarial assumptions and measurement dates used to calculate our benefit obligations disclosed in Note 14 to our consolidated financial statements included in our 2012 Annual Report on Form 10-K. |
Nonqualified Deferred Compensation Table
The following table sets forth certain information with respect to contributions made to our Deferred Compensation Plan by our Named Executive Officers during fiscal year 2012.
Name |
Executive Last FY ($)(1) |
Registrant Last FY ($)(2) |
Aggregate in Last FY ($)(4) |
Aggregate Withdrawals/ Distributions in Last FY ($) |
Aggregate Balance at Last FYE ($)(5) |
|||||||||||||||
Charles D. Davidson |
2,362,500 | 52,500 | (2) | 1,366,984 | | 28,272,076 | ||||||||||||||
Kenneth M. Fisher |
22,113 | 63,204 | (3) | 6,578 | | 208,240 | ||||||||||||||
David L. Stover |
257,068 | 25,796 | (2) | 120,479 | | 2,516,679 | ||||||||||||||
Susan M. Cunningham |
| | | | | |||||||||||||||
Rodney D. Cook |
112,874 | | 35,037 | | 723,545 |
(1) | Mr. Davidson deferred 100% ($1,856,250) of the STIP payment he earned in 2011 (otherwise paid in 2012) and 45% ($506,250) of base salary in 2012. Mr. Fisher deferred 4% ($22,113) of base salary in 2012. Mr. Stover deferred 20% ($216,273) of the STIP payment he earned in 2011 (otherwise paid in 2012) and 6% ($40,796) of base salary in 2012. Mr. Cook deferred 20% ($112,874) of the STIP payment he earned in 2011 (otherwise paid in 2012). |
(2) | Represents matching contributions of 100% of the first 6% of base salary deferred, to the extent not matched in our Thrift Plan. |
(3) | Represents matching contributions of 100% of the first 6% of base salary deferred, to the extent not matched in our Thrift Plan ($18,169) and the portion of Mr. Fishers 2012 Profit Sharing Plan contribution that could not be made to our Thrift Plan as a result of Internal Revenue Code limitations ($45,035). |
(4) | Interest is paid at the greater of either 125% of the 120-month rolling average of the 10-year Treasury Note, or the 120-month rolling average of the Prime Rate. Interest paid in 2012 is based on Prime Rate average of 5.06%, compounded monthly. |
(5) | All Named Executive Officers are 100% vested in these balances. |
The matching contributions and a portion of the interest earnings credited to the Deferred Compensation Plan accounts of our Named Executive Officers are reflected in the All Other Compensation and the Change in Pension Value columns of the Summary Compensation Table above, respectively.
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Compensation Tables |
Potential Payments and Benefits Upon Termination of Employment
The tables below estimate the amount of compensation payable to each of our Named Executive Officers upon voluntary and involuntary termination of employment, termination following a change of control and in the event of disability or death, in each case effective as of December 31, 2012. The actual amount of compensation payable to each of our Named Executive Officers can only be determined at the time of his or her separation from the Company. For purposes of this discussion with respect to the payment of compensation that is deferred compensation subject to Section 409A of the Internal Revenue Code, an individuals termination of employment should be interpreted to mean the date as of which the individual has a separation from service for the purposes of Section 409A.
Payments Made Upon Termination
Upon termination of employment for reasons other than disability, death or in connection with a change of control, each Named Executive Officer is entitled to receive amounts earned during his or her term of employment. Such amounts include:
| Amounts credited under our Deferred Compensation Plan; |
| unused vacation pay; and |
| amounts accrued and vested under our Retirement Plan and Restoration Plan. |
Payments Made Upon Retirement
In the event of the retirement of a Named Executive Officer, in addition to the items identified above, the Named Executive Officer:
| Will have until the earlier of (1) the fifth anniversary of his or her retirement date or (2) the expiration of the remainder of the outstanding ten-year option term, to exercise all stock options that are vested as of his or her retirement date; |
| may elect to continue to participate in our medical and dental plans at subsidized retiree rates until he or she reaches age 65 (continued coverage for medical and dental benefits for the Named Executive Officers dependents may also be elected at subsidized retiree rates); and |
| may continue to receive life insurance coverage until the attainment of age 65 at reduced premium rates. |
Payments Made Upon Death or Disability
In the event of the death or disability of a Named Executive Officer, in addition to the benefits listed under the headings Payments Made Upon Termination and Payments Made Upon Retirement above, the Named Executive Officer or his or her named beneficiary will receive benefits under our disability plan or payments under our life insurance plan, as appropriate.
Payments Made Upon a Change of Control
We have entered into change of control arrangements with each of our Named Executive Officers. If a Named Executive Officers employment is terminated within two years after a change of control of the Company, he or she may be entitled to receive certain severance benefits pursuant to the terms of his or her change of control arrangement. These benefits are described above more fully in this Proxy Statement under the heading Change of Control Arrangements.
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Compensation Tables |
Charles D. Davidson
The following table shows the potential payments to Mr. Davidson, Chairman and CEO, in the event of his termination of employment as of December 31, 2012.
Executive Benefits and Payments Upon Separation |
Voluntary 12/31/2012($) |
Involuntary Termination on 12/31/2012($) |
Involuntary Termination or in Connection With a |
Disability on 12/31/2012($) |
Death on 12/31/2012 ($) |
|||||||||||||||
Compensation: |
||||||||||||||||||||
Severance |
| | (6) | 9,221,035 | (7) | | | |||||||||||||
STIP Payments |
| (1) | | (1) | 1,237,500 | (7) | | (1) | 1,237,500 | (1) | ||||||||||
Stock Options |
| | 1,655,660 | (8) | | | ||||||||||||||
Restricted Stock |
| (2) | | (2) | 9,099,931 | (9) | 9,099,931 | (2) | 9,099,931 | (2) | ||||||||||
Benefits and Perquisites: |
||||||||||||||||||||
Retirement Plans |
| (3) | | (3) | | (3) | | (3) | | (3) | ||||||||||
Deferred Compensation Plan |
| (4) | | (4) | | (4) | | (4) | | (4) | ||||||||||
Health & Welfare Benefits |
| | 8,547 | (10) | | | ||||||||||||||
Disability Income |
| | | | (12) | | ||||||||||||||
Life Insurance Benefits |
| | | | 1,000,000 | (13) | ||||||||||||||
Accrued Vacation Pay |
| (5) | | (5) | | (5) | | (5) | | (5) | ||||||||||
Employment Services |
| | 15,000 | (11) | | | ||||||||||||||
TOTAL |
| | 21,237,673 | 9,099,931 | 11,337,431 |
(1) | Mr. Davidson would not be entitled to a STIP payment for 2012 in the event of his termination of employment on December 31, 2012, other than in the event of a change of control or death. Employees must be employed on the STIP payment date, which occurred in February 2013, in order to receive payment. |
(2) | All unvested shares of restricted stock will be forfeited as a result of Mr. Davidsons voluntary or involuntary termination of employment, unless the Board, in its discretion, takes action to accelerate the vesting of these shares. All unvested shares of restricted stock will vest in the event of termination of employment as a result of death or disability as follows: 2010 award 21,641 shares; 2011 award 30,972 shares; and 2012 award 36,830 shares. Value is based on the closing price of our common stock on December 31, 2012 ($101.74). |
(3) | Mr. Davidson would not be entitled to any additional benefit under our Retirement Plan or Restoration Plan in the event of his termination of employment other than the vested amount included in the table following Note 13. |
(4) | Mr. Davidson would not be entitled to any additional benefit under our Deferred Compensation Plan in the event of his termination of employment other than the vested amount included in the table following Note 13. |
(5) | Mr. Davidson is entitled to six weeks of paid vacation each calendar year. Unused vacation does not carry over from year to year. We have assumed for purposes of this table that Mr. Davidson used all of his vacation during 2012 and would therefore not be entitled to payment for any unused vacation in the event of his termination on December 31, 2012. In the event of termination during the year, all amounts of unused vacation would be paid based on Mr. Davidsons salary. |
(6) | Mr. Davidson is not a party to any agreement that provides for a severance payment absent termination of employment following a change of control. However, our Severance Benefit Plan provides for a severance payment in certain instances based upon years of completed service. If Mr. Davidson is entitled to a severance payment under the plan, he would receive two weeks of pay for every year of completed service, not to exceed 52 weeks or be less than 12 weeks, plus a prorated STIP payment based on his STIP target percentage (110%) for a total payment of $1,756,731. |
(7) | We entered into a Change of Control Agreement with Mr. Davidson that provides for severance benefits in the event that Mr. Davidsons employment terminates within two years after a change of control of the Company. Under Mr. Davidsons Change of Control Agreement, if Mr. Davidson is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability), he is entitled to receive a lump sum severance payment equal to 2.99 times his annual cash compensation. Cash compensation for purposes of calculating severance is the sum of annual base salary and the greater of target bonus for the current year and the average STIP paid or payable for the three years prior to the change of control. Mr. Davidson is also entitled to a prorated STIP payment based on his termination date in the year of the change of control. |
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Compensation Tables |
(8) | Vesting of stock options accelerates in the event of a change of control. Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2012 ($101.74) on all unvested stock options held by Mr. Davidson as of December 31, 2012. |
(9) | Vesting of restricted stock accelerates in the event of a change of control. Represents the value of all restricted stock held by Mr. Davidson on December 31, 2012 based on the closing price of our common stock on December 31, 2012 ($101.74). |
(10) | Mr. Davidsons Change of Control Agreement provides for continued medical, dental, life, AD&D, and LTD benefits for a period of 36 months following a change of control. The value reflected is the total estimated cost to us to provide these benefits. |
(11) | Mr. Davidsons Change of Control Agreement provides for reimbursement for reasonable fees up to $15,000 for out-placement employment services. |
(12) | Our LTD benefits are fully insured through Prudential. Eligibility for benefits is determined by Prudential only after the employees termination of employment because of a medical condition. Benefits pay at 66.67% of monthly income, capped at $15,000 per month. |
(13) | We provide group term life insurance coverage equal to two times base salary, capped at $1,000,000. |
In addition to the payments Mr. Davidson may receive upon the termination of his employment, he will continue to hold stock options that were vested immediately prior to his termination. Mr. Davidson also will be entitled to receive the vested balance of his contributions to our Deferred Compensation Plan. The table below shows the vested benefits that Mr. Davidson has accumulated as of December 31, 2012 and the benefits he will receive as a result of his termination of employment on that date. We refer to the combined amounts as the total walk-away value:
Voluntary Termination on 12/31/2012 ($)(1) |
Involuntary Termination on 12/31/2012 ($)(1) |
Involuntary Termination or Termination Without Cause in Connection With a Change of Control on 12/31/2012 ($) |
Disability on 12/31/2012 ($)(1) |
Death on 12/31/2012 ($) |
||||||||||||||||
Vested Benefits as of December 31, 2012: |
||||||||||||||||||||
Stock Options(2) |
38,171,232 | 38,171,232 | 38,171,232 | 38,171,232 | 38,171,232 | |||||||||||||||
Retirement Plans . |
10,902,402 | (3) | 10,902,402 | (3) | 10,902,402 | (3) | 8,394,898 | (4) | 5,808,093 | (5) | ||||||||||
Health & Welfare Benefits(6) |
1,328 | 1,328 | 1,328 | 1,328 | | |||||||||||||||
Deferred Compensation Plan(7) |
28,272,076 | 28,272,076 | 28,272,076 | 28,272,076 | 28,272,076 | |||||||||||||||
Total Vested Benefits |
77,347,038 | 77,347,038 | 77,347,038 | 74,839,534 | 72,251,401 | |||||||||||||||
Benefits and Payments Upon Separation: |
| | 21,237,673 | 9,099,931 | 11,337,431 | |||||||||||||||
Total Walk-Away Value |
77,347,038 | 77,347,038 | 99,584,711 | 83,939,465 | 83,588,832 |
(1) | Mr. Davidson was eligible for early retirement as of December 31, 2012. Upon his termination of employment he will be entitled to retiree benefits under all of our benefit plans. |
(2) | Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2012 ($101.74) on all stock options vested and exercisable as of December 31, 2012. |
(3) | Reflects the total lump sum payable to Mr. Davidson under our Retirement Plan and Restoration Plan as of January 1, 2013. Due to plan changes made effective January 1, 2008, all employees are eligible for immediate commencement of benefits upon separation from service and can elect a lump sum payment of their accrued Retirement Plan benefits. Based on a December 31, 2012 termination date, Mr. Davidsons monthly age 65 benefit from our Retirement Plan would be $5,352. If Mr. Davidson commences his retirement benefit immediately following termination of employment on December 31, 2012, his monthly Retirement Plan benefit, reduced for early commencement, would be $4,880. For the Restoration Plan benefit, participants previously elected to receive their benefit as either an annuity or lump sum, and elected specific timing of receiving their benefits. Mr. Davidson elected to receive a lump sum from the Restoration Plan upon separation of service. The lump sum payable to Mr. Davidson from our Restoration Plan based on a December 31, 2012 termination date is $10,027,926. Refer to Pension Benefits above for further disclosure of Mr. Davidsons vested Retirement Plan benefits. |
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(4) | In the event of Mr. Davidsons termination of employment due to permanent and total disability, his age 65 retirement benefits from our Retirement Plan and Restoration Plan will be calculated as if he had continued to work until age 65. The value reflected represents the actuarial present value of Mr. Davidsons age 65 benefits based on a disability date of December 31, 2012. The calculation is based on Mr. Davidsons final average compensation as of his date of disability. Upon commencement of his benefits at age 65, Mr. Davidsons monthly benefit from our Retirement Plan and Restoration Plan would be $72,305. In the event that Mr. Davidson elects to immediately commence his retirement benefits, the amounts payable will be as described in Note 2. Refer to Pension Benefits above for further disclosure of Mr. Davidsons vested Retirement Plan benefits. |
(5) | In the event of Mr. Davidsons death while an active employee, his named beneficiary is entitled to a death benefit under our Retirement Plan and Restoration Plan. The death benefit payable in the event of his death on December 31, 2012 is $5,808,093. This lump sum payment was calculated based on the 2013 Applicable Mortality Table published by the IRS in Notice 2008-85 and the November 2012 segment rates of 0.97% for the first five years, 3.50% for the next 15 years and 4.60% after 20 years as required by IRC Section 417(e). The accrued death benefit was reduced for early commencement. Refer to Pension Benefits above for further disclosure of Mr. Davidsons vested Retirement Plan benefits. |
(6) | Reflects the present value of expected future dental benefits that will be paid by the Company in connection with Mr. Davidsons participation in the dental plan as a retiree. Mr. Davidson does not currently participate in the medical plan; we have assumed he would not elect to participate in the medical plan as a retiree following termination of employment. Assumptions used for this calculation are the same assumptions used in determining the current pension obligation disclosed in Note 14 to our consolidated financial statements in the Form 10-K for the year ended December 31, 2012. |
(7) | Refer to Nonqualified Deferred Compensation Table above for further disclosure of Mr. Davidsons vested nonqualified deferred compensation benefits. |
Kenneth M. Fisher
The following table shows the potential payments to Mr. Fisher, Senior Vice President and CFO, in the event of his termination of employment as of December 31, 2012.
Executive Benefits and Payments Upon Separation |
Voluntary Termination on 12/31/2012($) |
Involuntary Termination on 12/31/2012($) |
Involuntary Termination or Termination Without Cause in Connection With a Change of Control on 12/31/2012 ($) |
Disability on 12/31/2012($) |
Death
on 12/31/2012($) |
|||||||||||||||
Compensation: |
||||||||||||||||||||
Severance |
| | (7) | 3,377,799 | (8) | | | |||||||||||||
STIP Payments |
| (1) | | (1) | 456,000 | (8) | | (1) | 456,000 | (1) | ||||||||||
Stock Options |
| | 443,537 | (9) | | | ||||||||||||||
Restricted Stock |
| (2) | | (2) | 2,609,326 | (10) | 2,609,326 | (2) | 2,609,326 | (2) | ||||||||||
Benefits and Perquisites: |
||||||||||||||||||||
Retirement Plans |
| (3) | | (3) | | (3) | | (3) | | (3) | ||||||||||
Deferred Compensation Plan |
| (4) | | (4) | | (4) | | (4) | | (4) | ||||||||||
Health & Welfare Benefits |
| (5) | | (5) | 49,418 | (11) | | (5) | | |||||||||||
Disability Income |
| | | | (13) | | ||||||||||||||
Life Insurance Benefits |
| | | | 1,000,000 | (14) | ||||||||||||||
Accrued Vacation Pay |
| (6) | | (6) | | (6) | | (6) | | (6) | ||||||||||
Employment Services |
| | 15,000 | (12) | | | ||||||||||||||
TOTAL |
| | 6,951,080 | 2,609,326 | 4,065,326 |
(1) | Mr. Fisher would not be entitled to a STIP payment for 2012 in the event of his termination of employment on December 31, 2012, other than in the event of a change of control or death. Employees must be employed on the STIP payment date, which occurred in February 2013, in order to receive payment. |
(2) | All unvested shares of restricted stock will be forfeited as a result of Mr. Fishers voluntary or involuntary termination of employment, unless the Board, in its discretion, takes action to accelerate the vesting of these shares. All unvested shares of restricted stock will vest in the event of termination of employment as a result of death or disability as follows: 2010 award 5,504 shares; 2011 award 8,849 shares; and 2012 award 11,294 shares. Value is based on the closing price of our common stock on December 31, 2012 ($101.74). |
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(3) | Mr. Fisher would not be entitled to any additional benefit under our Profit Sharing Plan in the event of his termination of employment other than the vested amount included in the table following Note 14. |
(4) | Mr. Fisher would not be entitled to any additional benefit under our Deferred Compensation Plan in the event of his termination of employment other than the vested amount included in the table following Note 14. |
(5) | Mr. Fisher would not be eligible to participate in our retiree medical and dental plans in the event of his termination of employment on December 31, 2012. |
(6) | Mr. Fisher is entitled to five weeks of paid vacation each calendar year. Unused vacation does not carry over from year to year. We have assumed for purposes of this table that Mr. Fisher used all of his vacation during 2012 and would therefore not be entitled to payment for any unused vacation in the event of his termination on December 31, 2012. In the event of termination during the year, all amounts of unused vacation would be paid based on Mr. Fishers salary. |
(7) | Mr. Fisher is not a party to any agreement that provides for a severance payment absent termination of employment following a change of control. However, our Severance Benefit Plan provides for a severance payment in certain instances based upon years of completed service. If Mr. Fisher is entitled to a severance payment under the plan, he would receive two weeks of pay for every year of completed service, not to exceed 52 weeks or be less than 12 weeks, plus a prorated STIP payment based on his STIP target percentage (80%) for a total payment of $587,538. |
(8) | Our Executive Change of Control Plan provides for severance benefits in the event that Mr. Fishers employment terminates within two years after a change of control of the Company. Under the plan, if Mr. Fisher is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability), he is entitled to receive a lump sum severance payment equal to 2.5 times his annual cash compensation. Cash compensation for purposes of calculating severance is the sum of annual base salary and the greater of target bonus for the current year and the average STIP paid or payable for the three years prior to the change of control. Mr. Fisher is also entitled to a prorated STIP payment based on his termination date in the year of the change of control. |
(9) | Vesting of stock options accelerates in the event of a change of control. Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2012 ($101.74) on all unvested stock options held by Mr. Fisher as of December 31, 2012. |
(10) | Vesting of restricted stock accelerates in the event of a change of control. Represents the value of all restricted stock held by Mr. Fisher on December 31, 2012 based on the closing price of our common stock on December 31, 2012 ($101.74). |
(11) | Our Executive Change of Control Plan provides for continued medical, dental, life, AD&D, and vision benefits for a period of 30 months following a change of control with Mr. Fisher continuing to pay the active premium for the 30 month period. The value reflected is the present value of the total estimated cost to us to provide these benefits. |
(12) | Our Executive Change of Control Plan provides for reimbursement for reasonable fees up to $15,000 for out-placement employment services. |
(13) | Our LTD benefits are fully insured through Prudential. Eligibility for benefits is determined by Prudential only after the employees termination of employment because of a medical condition. Benefits pay at 66.67% of monthly income, capped at $15,000 per month. |
(14) | We provide group term life insurance coverage equal to two times base salary, capped at $1,000,000. |
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Compensation Tables |
In addition to the payments Mr. Fisher may receive upon the termination of his employment, he will continue to hold stock options that were vested immediately prior to his termination. The table below shows the vested benefits that Mr. Fisher has accumulated as of December 31, 2012 and the benefits he will receive as a result of his termination of employment on that date. We refer to the combined amounts as the total walk-away value:
Voluntary Termination on 12/31/2012 ($) |
Involuntary Termination on 12/31/2012 ($) |
Involuntary Termination or Termination Without Cause in Connection With a Change of Control on 12/31/2012 ($) |
Disability on 12/31/2012 ($) |
Death on 12/31/2012 ($) |
||||||||||||||||
Vested Benefits as of December 31, 2012: |
||||||||||||||||||||
Stock Options(1) |
1,709,674 | 1,709,674 | 1,709,674 | 1,709,674 | 1,709,674 | |||||||||||||||
Retirement Plans . |
65,143 | 65,143 | 65,143 | 65,143 | 65,143 | |||||||||||||||
Health & Welfare Benefits |
| | | | | |||||||||||||||
Deferred Compensation Plan(2) |
208,240 | 208,240 | 208,240 | 208,240 | 208,240 | |||||||||||||||
Total Vested Benefits |
1,983,057 | 1,983,057 | 1,983,057 | 1,983,057 | 1,983,057 | |||||||||||||||
Benefits and Payments Upon Separation: |
| | 6,951,080 | 2,609,326 | 4,065,326 | |||||||||||||||
Total Walk-Away Value |
| | 8,934,137 | 4,592,383 | 6,048,383 |
(1) | Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2012 ($101.74) on all stock options vested and exercisable as of December 31, 2012. |
(2) | Refer to Nonqualified Deferred Compensation Table above for further disclosure of Mr. Fishers vested nonqualified deferred compensation benefits. |
David L. Stover
The following table shows the potential payments to Mr. Stover, President and COO, in the event of his termination of employment as of December 31, 2012.
Executive Benefits
and Payments Upon Separation |
Voluntary Termination on 12/31/2012 ($) |
Involuntary Termination on 12/31/2012 ($) |
Involuntary Termination or Termination Without Cause in Connection With a Change of Control on 12/31/2012 ($) |
Disability on 12/31/2012 ($) |
Death on 12/31/2012 ($) |
|||||||||||||||
Compensation: | ||||||||||||||||||||
Severance |
| | (6) | 4,711,553 | (7) | | | |||||||||||||
STIP Payments |
| (1) | | (1) | 710,000 | (7) | | (1) | 710,000 | (1) | ||||||||||
Stock Options |
| | 864,383 | (8) | | | ||||||||||||||
Restricted Stock |
| (2) | | (2) | 5,031,348 | (9) | 5,031,348 | (2) | 5,031,348 | (2) | ||||||||||
Benefits and Perquisites: | ||||||||||||||||||||
Retirement Plans |
| (3) | | (3) | | (3) | | (3) | | (3) | ||||||||||
Deferred Compensation Plan |
| (4) | | (4) | | (4) | | (4) | | (4) | ||||||||||
Health & Welfare Benefits |
| | 23,915 | (10) | | | ||||||||||||||
Disability Income |
| | | | (12) | | ||||||||||||||
Life Insurance Benefits |
| | | | 1,000,000 | (13) | ||||||||||||||
Accrued Vacation Pay |
| (5) | | (5) | | (6) | | (5) | | (5) | ||||||||||
Employment Services |
| | 15,000 | (12) | | | ||||||||||||||
TOTAL | | | 11,356,199 | 5,031,348 | 6,741,348 |
(1) | Mr. Stover would not be entitled to a STIP payment for 2012 in the event of his termination of employment on December 31, 2012, other than in the event of a change of control or death. Employees must be employed on the STIP payment date, which occurred in February 2013, in order to receive payment. |
(2) | All unvested shares of restricted stock will be forfeited as a result of Mr. Stovers voluntary or involuntary termination of employment, unless the Board, in its discretion, takes action to accelerate the vesting of these shares. All unvested shares of restricted stock will vest in the event of termination of employment as a result of death or disability as follows: 2010 award 11,427 shares; 2011 award 15,928 shares; and 2012 award 22,098 shares. Value is based on the closing price of our common stock on December 31, 2012 ($101.74). |
(3) | Mr. Stover would not be entitled to any additional benefit under our Retirement Plan or Restoration Plan in the event of his termination of employment other than the vested amount included in the table following Note 13. |
(4) | Mr. Stover would not be entitled to any additional benefit under our Deferred Compensation Plan in the event of his termination of employment other than the vested amount included in the table following Note 13. |
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Compensation Tables |
(5) | Mr. Stover is entitled to six weeks of paid vacation each calendar year. Unused vacation does not carry over from year to year. We have assumed for purposes of this table that Mr. Stover used all of his vacation during 2012 and would therefore not be entitled to payment for any unused vacation in the event of his termination on December 31, 2012. In the event of termination during the year, all amounts of unused vacation would be paid based on Mr. Stovers salary. |
(6) | Mr. Stover is not a party to any agreement that provides for a severance payment absent termination of employment following a change of control. However, our Severance Benefit Plan provides for a severance payment in certain instances based upon years of completed service. If Mr. Stover is entitled to a severance payment under the plan, he would receive two weeks of pay for every year of completed service, not to exceed 52 weeks or be less than 12 weeks, plus a prorated STIP payment based on his STIP target percentage (100%) for a total payment of $983,077. |
(7) | We entered into a Change of Control Agreement with Mr. Stover that provides for severance benefits in the event that Mr. Stovers employment terminates within two years after a change of control of the Company. Under Mr. Stovers Change of Control Agreement, if Mr. Stover is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability), he is entitled to receive a lump sum severance payment equal to 2.5 times his annual cash compensation. Cash compensation for purposes of calculating severance is the sum of annual base salary and the greater of target bonus for the current year and the average STIP paid or payable for the three years prior to the change of control. Mr. Stover is also entitled to a prorated STIP payment based on his termination date in the year of the change of control. |
(8) | Vesting of stock options accelerates in the event of a change of control. Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2012 ($101.74) on all unvested stock options held by Mr. Stover as of December 31, 2012. |
(9) | Vesting of restricted stock accelerates in the event of a change of control. Represents the value of all restricted stock held by Mr. Stover on December 31, 2012 based on the closing price of our common stock on December 31, 2012 ($101.74). |
(10) | Mr. Stovers Change of Control Agreement provides for continued medical, dental, life, AD&D, and LTD benefits for a period of 30 months following a change of control. The value reflected is the total estimated cost to us to provide these benefits. Mr. Stover is also entitled to continue his medical and dental coverage following this 30-month period as a participant in our retiree medical plan at subsidized premium rates as disclosed the table below. |
(11) | Mr. Stovers Change of Control Agreement provides for reimbursement for reasonable fees up to $15,000 for out-placement employment services. |
(12) | Our LTD benefits are fully insured through Prudential. Eligibility for benefits is determined by Prudential only after the employees termination of employment because of a medical condition. Benefits pay at 66.67% of monthly income, capped at $15,000 per month. |
(13) | We provide group term life insurance coverage equal to two times base salary, capped at $1,000,000. |
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Compensation Tables |
In addition to the payments Mr. Stover may receive upon the termination of his employment, he will continue to hold stock options that were vested immediately prior to his termination. Mr. Stover also will be entitled to receive the vested balance of his contributions to our Deferred Compensation Plan. The table below shows the vested benefits that Mr. Stover has accumulated as of December 31, 2012 and the benefits he will receive as a result of his termination of employment on that date. We refer to the combined amounts as the total walk-away value:
Voluntary 12/31/2012 ($)(1) |
Involuntary Termination on 12/31/2012 ($)(1) |
Involuntary Termination or in Connection With a |
Disability on 12/31/2012($)(1) |
Death on 12/31/2012($) |
||||||||||||||||
Vested Benefits as of December 31, 2012: |
||||||||||||||||||||
Stock Options(2) |
12,300,553 | 12,300,553 | 12,300,553 | 12,300,553 | 12,300,553 | |||||||||||||||
Retirement Plans . |
3,836,374 | (3) | 3,836,374 | (3) | 3,836,374 | (3) | 4,558,434 | (4) | 1,849,734 | (5) | ||||||||||
Health & Welfare Benefits (6) |
123,925 | 123,925 | 123,925 | 123,925 | | |||||||||||||||
Deferred Compensation Plan(7) |
2,516,679 | 2,516,679 | 2,516,679 | 2,516,679 | 2,516,679 | |||||||||||||||
Total Vested Benefits |
18,777,531 | 18,777,531 | 18,777,531 | 19,499,591 | 16,666,966 | |||||||||||||||
Benefits and Payments Upon Separation: |
| | 11,356,199 | 5,031,348 | 6,741,348 | |||||||||||||||
Total Walk-Away Value |
18,777,531 | 18,777,531 | 30,133,730 | 24,530,939 | 23,408,314 |
(1) | Mr. Stover was eligible for early retirement as of December 31, 2012. Upon his termination of employment he will be entitled to retiree benefits under all of our benefit plans. |
(2) | Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2012 ($101.74) on all stock options vested and exercisable as of December 31, 2012. |
(3) | Reflects the total lump sum payable to Mr. Stover under our Retirement Plan and Restoration Plan as of January 1, 2013. Due to plan changes made effective January 1, 2008, all employees are eligible for immediate commencement of benefits upon separation from service and can elect a lump sum payment of their accrued Retirement Plan benefits. Based on a December 31, 2012 termination date, Mr. Stovers monthly age 65 benefit from our Retirement Plan would be $4,780. If Mr. Stover commences his retirement benefit immediately following termination of employment on December 31, 2012, his monthly Retirement Plan benefit, reduced for early commencement, would be $2,811. For the Restoration Plan benefit, participants previously elected to receive their benefit as either an annuity or lump sum, and elected specific timing of receiving their benefits. Mr. Stover elected to receive a lump sum from the Restoration Plan at the later of attainment of age 55 or separation of service. Mr. Stovers Restoration Plan lump sum amount as of December 31, 2012 is $3,259,369. Refer to Pension Benefits above for further disclosure of Mr. Stovers vested Retirement Plan benefits. |
(4) | In the event of Mr. Stovers termination of employment due to permanent and total disability, his age 65 retirement benefits from our Retirement Plan and Restoration Plan will be calculated as if he had continued to work until age 65. The value reflected represents the actuarial present value of Mr. Stovers age 65 benefits based on a disability date of December 31, 2012. The calculation is based on Mr. Stovers final average compensation as of his date of disability. Upon commencement of his benefits at age 65, Mr. Stovers monthly benefit from our Retirement Plan and Restoration Plan would be $52,063. Refer to Pension Benefits above for further disclosure of Mr. Stovers vested Retirement Plan benefits. |
(5) | In the event of Mr. Stovers death while an active employee, his named beneficiary is entitled to a death benefit under the Retirement Plan and Restoration Plan. The death benefit payable in the event of Mr. Stovers death on December 31, 2012 is $1,849,734. This lump sum payment was calculated based on the 2013 Applicable Mortality Table published by the IRS in Notice 2008-85 and the November 2012 segment rates of 0.97% for the first five years, 3.50% for the next 15 years, and 4.60% after 20 years as required by IRC Section 417(e). The accrued death benefit was reduced for early commencement. Refer to Pension Benefits above for further disclosure of Mr. Stovers vested Retirement Plan benefits. |
(6) | Reflects the present value of expected future medical and dental benefits that will be paid by the Company in connection with Mr. Stovers participation in the medical and dental plans as a retiree. Assumptions used for this calculation are the same assumptions used in determining the current pension obligation disclosed in Note 14 to our consolidated financial statements in the Form 10-K for the year ended December 31, 2012. |
(7) | Refer to Nonqualified Deferred Compensation Table above for further disclosure of Mr. Stovers vested nonqualified deferred compensation benefits. |
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Compensation Tables |
Susan M. Cunningham
The following table shows the potential payments to Ms. Cunningham, Senior Vice President Exploration, in the event of her termination of employment as of December 31, 2012.
Executive Benefits and Payments Upon Separation |
Voluntary Termination on 12/31/2012($) |
Involuntary Termination on 12/31/2012($) |
Involuntary Termination or Termination Without Cause in Connection With a Change of Control on 12/31/2012 ($) |
Disability on 12/31/2012 ($) |
Death on 12/31/2012 ($) |
|||||||||||||||
Compensation: |
||||||||||||||||||||
Severance |
| | (6) | 2,937,234 | (7) | | | |||||||||||||
STIP Payments |
| (1) | | (1) | 390,000 | (7) | | (1) | 390,000 | (1) | ||||||||||
Stock Options |
| | 417,516 | (8) | | | ||||||||||||||
Restricted Stock |
| (2) | | (2) | 2,670,777 | (9) | 2,670,777 | (2) | 2,670,777 | (2) | ||||||||||
Benefits and Perquisites: |
||||||||||||||||||||
Retirement Plans |
| (3) | | (3) | | (3) | | (3) | | (3) | ||||||||||
Deferred Compensation Plan |
| (4) | | (4) | | (4) | | (4) | | (4) | ||||||||||
Health & Welfare Benefits |
| | 27,265 | (10) | | | ||||||||||||||
Disability Income |
| | | | (12) | | ||||||||||||||
Life Insurance Benefits |
| | | | 1,000,000 | (13) | ||||||||||||||
Accrued Vacation Pay |
| (5) | | (5) | | (5) | | (5) | | (5) | ||||||||||
Employment Services |
| | 15,000 | (11) | | | ||||||||||||||
TOTAL |
| | 6,457,792 | 2,670,777 | 4,060,777 |
(1) | Ms. Cunningham would not be entitled to a STIP payment for 2012 in the event of her termination of employment on December 31, 2012, other than in the event of a change of control or death. Employees must be employed on the STIP payment date, which occurred in February 2013, in order to receive payment. |
(2) | All unvested shares of restricted stock will be forfeited as a result of Ms. Cunninghams voluntary or involuntary termination of employment, unless the Board, in its discretion, takes action to accelerate the vesting of these shares. All unvested shares of restricted stock will vest in the event of termination of employment as a result of death or disability as follows: 2010 awards 5,494 shares; 2011 award 7,744 shares; and 2012 award 13,013 shares. Value is based on the closing price of our common stock on December 31, 2012 ($101.74). |
(3) | Ms. Cunningham would not be entitled to any additional benefit under our Retirement Plan or Restoration Plan in the event of her termination of employment other than the vested amount included in the table following Note 13. |
(4) | Ms. Cunningham would not be entitled to any additional benefit under our Deferred Compensation Plan in the event of her termination of employment other than the vested amount included in the table following Note 13. |
(5) | Ms. Cunningham is entitled to six weeks of paid vacation each calendar year. Unused vacation does not carry over from year to year. We have assumed for purposes of this table that Ms. Cunningham used all of her vacation during 2012 and would therefore not be entitled to payment for any unused vacation in the event of her termination on December 31, 2012. In the event of termination during the year, all amounts of unused vacation would be paid based on Ms. Cunninghams salary. |
(6) | Ms. Cunningham is not a party to any agreement that provides for a severance payment absent termination of employment following a change of control. However, our Severance Benefit Plan provides for a severance payment in certain instances based upon years of completed service. If Ms. Cunningham is entitled to a severance payment under the plan, she would receive two weeks of pay for every year of completed service, not to exceed 52 weeks or be less than 12 weeks, plus a prorated STIP payment based on her STIP target percentage (75%) for a total payment of $610,000. |
(7) | We entered into a Change of Control Agreement with Ms. Cunningham that provides for severance benefits in the event that Ms. Cunninghams employment terminates within two years after a change of control of the Company. Under Ms. Cunninghams Change of Control Agreement, if Ms. Cunningham is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability), she is entitled to receive a lump sum severance payment equal to 2.5 times her annual cash compensation. Cash compensation for purposes of calculating severance is the sum of annual base salary and the greater of target bonus for the current year and the average STIP paid or payable for the three years prior to the change of control. Ms. Cunningham is also entitled to a prorated STIP payment based on her termination date in the year of the change of control. |
(8) | Vesting of stock options accelerates in the event of a change of control. Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2012 ($101.74) on all unvested stock options held by Ms. Cunningham as of December 31, 2012. |
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Compensation Tables |
(9) | Vesting of restricted stock accelerates in the event of a change of control. Represents the value of all restricted stock held by Ms. Cunningham on December 31, 2012 based on the closing price of our common stock on December 31, 2012 ($101.74). |
(10) | Ms. Cunninghams Change of Control Agreement provides for continued medical, dental, life, AD&D, and LTD benefits for a period of 30 months following a change of control. The value reflected is the total estimated cost to us to provide these benefits. Ms. Cunningham is also entitled to continue her medical and dental coverage following this 30-month period as a participant in our retiree medical plan at subsidized premium rates as disclosed in the table below. |
(11) | Ms. Cunninghams Change of Control Agreement provides for reimbursement for reasonable fees up to $15,000 for out-placement employment services. |
(12) | Our LTD benefits are fully insured through Prudential. Eligibility for benefits is determined by Prudential only after the employees termination of employment because of a medical condition. Benefits pay at 66.67% of monthly income, capped at $15,000 per month. |
(13) | We provide group term life insurance coverage equal to two times base salary, capped at $1,000,000. |
In addition to the payments Ms. Cunningham may receive upon the termination of her employment, she will continue to hold stock options that were vested immediately prior to her termination. Ms. Cunningham also will be entitled to receive the vested balance of her contributions to our Deferred Compensation Plan. The table below shows the vested benefits that Ms. Cunningham has accumulated as of December 31, 2012 and the benefits she will receive as a result of her termination of employment on that date. We refer to the combined amounts as the total walk-away value:
Voluntary Termination on 12/31/2012 ($)(1) |
Involuntary Termination on 12/31/2012 ($)(1) |
Involuntary Termination or Termination Without Cause in Connection With a Change of Control on 12/31/2012 ($) |
Disability on 12/31/2012 ($)(1) |
Death
on 12/31/2012 ($) |
||||||||||||||||
Vested Benefits as of December 31, 2012: |
||||||||||||||||||||
Stock Options(2) |
11,461,000 | 11,461,000 | 11,461,000 | 11,461,000 | 11,461,000 | |||||||||||||||
Retirement Plans . |
3,193,647 | (3) | 3,193,647 | (3) | 3,193,647 | (3) | 3,538,490 | (4) | 1,494,062 | (5) | ||||||||||
Health & Welfare Benefits(6) |
85,062 | 85,062 | 85,062 | 85,062 | | |||||||||||||||
Deferred Compensation Plan |
| | | | | |||||||||||||||
Total Vested Benefits |
1,739,709 | 14,739,709 | 14,739,709 | 11,461,000 | 12,955,062 | |||||||||||||||
Benefits and Payments Upon Separation: |
| | 6,457,792 | 2,670,777 | 4,060,777 | |||||||||||||||
Total Walk-Away Value |
14,739,709 | 14,39,709 | 21,197,501 | 1,131,777 | 17,015,839 |
(1) | Ms. Cunningham was eligible for early retirement as of December 31, 2012. Upon her termination of employment she will be entitled to retiree benefits under all of our benefit plans. |
(2) | Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2012 ($101.74) on all stock options vested and exercisable as of December 31, 2012. |
(3) | Reflects the total lump sum payable to Ms. Cunningham under our Retirement Plan and Restoration Plan as of January 1, 2013. Due to plan changes made effective January 1, 2008, all employees are eligible for immediate commencement of benefits upon separation from service and can elect a lump sum payment of their accrued Retirement Plan benefits. Based on a December 31, 2012 termination date, Ms. Cunninghams monthly age 65 benefit from our Retirement Plan would be $5,842. If Ms. Cunningham commences her retirement benefit immediately following termination of employment on December 31, 2012, her monthly Retirement Plan benefit, reduced for early commencement, would be $3,669. For the Restoration Plan benefit, participants previously elected to receive their benefit as either an annuity or lump sum, and elected specific timing of receiving their benefits. Ms. Cunningham elected to receive a lump sum from the Restoration Plan upon separation of service. The lump sum payable to Ms. Cunningham from our Restoration Plan based on a December 31, 2012 termination date is $2,462,188. Refer to Pension Benefits, above for further disclosure of Ms. Cunninghams vested Retirement Plan benefits. |
(4) | In the event of Ms. Cunninghams termination of employment due to permanent and total disability, her age 65 retirement benefits from our Retirement Plan and Restoration Plan will be calculated as if she had continued to work until age 65. The value reflected represents the actuarial present value of Ms. Cunninghams age 65 benefits based on a disability date of December 31, 2012. The calculation is based on Ms. Cunninghams final average compensation as of her date of disability. Upon commencement of her benefits at age 65, Ms. Cunninghams monthly benefit from our Retirement Plan and Restoration Plan would be $34,419. In the event that Ms. Cunningham elects to immediately commence her retirement benefits, the amounts payable will be as described in Note 2 above. Refer to Pension Benefits above for further disclosure of Ms. Cunninghams vested Retirement Plan benefits. |
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Compensation Tables |
(5) | In the event of Ms. Cunninghams death while an active employee, her named beneficiary is entitled to a death benefit under our Retirement Plan and Restoration Plan. The death benefit payable in the event of her death on December 31, 2012 is $1,494,062. This lump sum payment was calculated based on the 2013 Applicable Mortality Table published by the IRS in Notice 2008-85 and the November 2012 segment rates of 0.97% for the first five years, 3.50% for the next 15 years and 4.60% after 20 years as required by the IRC Section 417(e). The accrued death benefit was reduced for early commencement. Refer to Pension Benefits above for further disclosure of Ms. Cunninghams vested Retirement Plan benefits. |
(6) | Reflects the present value of expected future medical and dental benefits that will be paid by the Company in connection with Ms. Cunninghams participation in the medical and dental plans as a retiree. Assumptions used for this calculation are the same assumptions used in determining the current pension obligation disclosed in Note 14 to our consolidated financial statements in the Form 10-K for the year ended December 31, 2012. |
Rodney D. Cook
The following table shows the potential payments to Mr. Cook, Senior Vice President International, in the event of his termination of employment as of December 31, 2012.
Executive Benefits and Payments Upon Separation |
Voluntary Termination on 12/31/2012($) |
Involuntary Termination on 12/31/2012($) |
Involuntary Termination or Termination Without Cause in Connection With a Change of Control on 12/31/2012 ($) |
Disability on 12/31/2012($) |
Death
on 12/31/2012 ($) |
|||||||||||||||
Compensation: |
||||||||||||||||||||
Severance |
| | (6) | 2,773,325 | (7) | | | |||||||||||||
STIP Payments |
| (1) | | (1) | 360,000 | (7) | | (1) | 360,000 | (1) | ||||||||||
Stock Options |
| | 363,763 | (8) | | | ||||||||||||||
Restricted Stock |
| (2) | | (2) | 2,544,823 | (9) | 2,544,823 | (2) | 2,544,823 | (2) | ||||||||||
Benefits and Perquisites: |
||||||||||||||||||||
Retirement Plans |
| (3) | | (3) | | (3) | | (3) | | (3) | ||||||||||
Deferred Compensation Plan |
| (4) | | (4) | | (4) | | (4) | | (4) | ||||||||||
Health & Welfare Benefits |
| | 21,806 | (10) | | | ||||||||||||||
Disability Income |
| | | | (12) | | ||||||||||||||
Life Insurance Benefits |
| | | | 960,000 | (13) | ||||||||||||||
Accrued Vacation Pay |
| (5) | | (5) | | (5) | | (5) | | (5) | ||||||||||
Employment Services |
| | 15,000 | (11) | | | ||||||||||||||
TOTAL |
| | 6,078,717 | 2,544,823 | 3,864,823 |
(1) | Mr. Cook would not be entitled to a STIP payment for 2012 in the event of his termination of employment on December 31, 2012, other than in the event of a change of control or death. Employees must be employed on the STIP payment date, which occurred in February 2013, in order to receive payment. |
(2) | All unvested shares of restricted stock will be forfeited as a result of Mr. Cooks voluntary or involuntary termination of employment, unless the Board, in its discretion, takes action to accelerate the vesting of these shares. All unvested shares of restricted stock will vest in the event of termination of employment as a result of death or disability as follows: 2010 awards 4,256 shares; 2011 award 7,744 shares; and 2012 award 13,013 shares. Value is based on the closing price of our common stock on December 31, 2012 ($101.74). |
(3) | Mr. Cook would not be entitled to any additional benefit under our Retirement Plan or Restoration Plans in the event of his termination of employment other than the vested amount included in the table following Note 13. |
(4) | Mr. Cook would not be entitled to any additional benefit under our Deferred Compensation Plan in the event of his termination of employment other than the vested amount included in the table following Note 13. |
(5) | Mr. Cook is entitled to six weeks of paid vacation each calendar year. Unused vacation does not carry over from year to year. We have assumed for purposes of this table that Mr. Cook used all of his vacation during 2012 and would therefore not be entitled to payment for any unused vacation in the event of his termination on December 31, 2012. In the event of termination during the year, all amounts of unused vacation would be paid based on Mr. Cooks salary. |
(6) | Mr. Cook is not a party to any agreement that provides for a severance payment absent termination of employment following a change of control. However, our Severance Benefit Plan provides for a severance payment in certain instances based upon years of completed service. If Mr. Cook is entitled to a severance payment under the plan, he would receive two weeks of pay for every year of completed service, not to exceed 52 weeks or be less than 12 weeks, plus a prorated STIP payment based on his STIP target percentage (75%) for a total payment of $840,000. |
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Compensation Tables |
(7) | Our Executive Change of Control Plan provides for severance benefits in the event that Mr. Cooks employment terminates within two years after a change of control of the Company. Under the plan, if Mr. Cook is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability), he is entitled to receive a lump sum severance payment equal to 2.5 times his annual cash compensation. Cash compensation for purposes of calculating severance is the sum of annual base salary and the greater of target bonus for the current year and the average STIP paid for the three years prior to the change of control. Mr. Cook is also entitled to a prorated STIP payment based on his termination date in the year of the change of control. |
(8) | Vesting of stock options accelerates in the event of a change of control. Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2012 ($101.74) on all unvested stock options held by Mr. Cook as of December 31, 2012. |
(9) | Vesting of restricted stock accelerates in the event of a change of control. Represents the value of all restricted stock held by Mr. Cook on December 31, 2012 based on the closing price of our common stock on December 31, 2012 ($101.74). |
(10) | Our Executive Change of Control Plan provides for continued medical, dental, life, AD&D, and vision benefits for a period of 30 months following a change of control with Mr. Cook continuing to pay the active premium for the 30 month period. The value reflected is the total estimated cost to us to provide these benefits. Mr. Cook is also entitled to continue his medical and dental coverage following this 30-month period as a participant in our retiree medical plan at subsidized premium rates as disclosed in the table below. |
(11) | Our Executive Change of Control Plan provides for reimbursement for reasonable fees up to $15,000 for out-placement employment services. |
(12) | Our LTD benefits are fully insured through Prudential. Eligibility for benefits is determined by Prudential only after the employees termination of employment because of a medical condition. Benefits pay at 66.67% of monthly income, capped at $15,000 per month. |
(13) | We provide group term life insurance coverage equal to two times base salary, capped at $1,000,000. |
In addition to the payments Mr. Cook may receive upon the termination of his employment, he will continue to hold stock options that were vested immediately prior to his termination. Mr. Cook also will be entitled to receive the vested balance of his contributions to our Deferred Compensation Plan. The table below shows the vested benefits that Mr. Cook has accumulated as of December 31, 2012 and the benefits he will receive as a result of his termination of employment on that date. We refer to the combined amounts as the total walk-away value:
Voluntary Termination on 12/31/2012($)(1) |
Involuntary Termination on 12/31/2012 ($)(1) |
Involuntary Termination or Termination Without Cause in Connection With a Change of Control on 12/31/2012 ($) |
Disability on 12/31/2012 ($)(1) |
Death on 12/31/2012 ($) |
||||||||||||||||
Vested Benefits as of December 31, 2012: |
||||||||||||||||||||
Stock Options(2) |
999,890 | 999,890 | 999,890 | 999,890 | 999,890 | |||||||||||||||
Retirement Plans . |
6,154,501 | (3) | 6,154,501 | (3) | 6,154,501 | (3) | 3,425,427 | (4) | 2,983,514 | (5) | ||||||||||
Health & Welfare Benefits(6) |
112,918 | 112,918 | 112,918 | 112,918 | | |||||||||||||||
Deferred Compensation Plan(7) |
723,545 | 723,545 | 723,545 | 723,545 | 723,545 | |||||||||||||||
Total Vested Benefits |
7,990,854 | 7,990,854 | 7,990,854 | 5,261,780 | 4,706,949 | |||||||||||||||
Benefits and Payments Upon Separation: |
| | 6,078,717 | 2,544,823 | 3,864,823 | |||||||||||||||
Total Walk-Away Value |
7,990,854 | 7,990,854 | 1,069,571 | 7,806,603 | 8,571,772 |
(1) | Mr. Cook was eligible for early retirement as of December 31, 2012. Upon his termination of employment he will be entitled to retiree benefits under all of our benefit plans. |
(2) | Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2012 ($101.74) on all stock options vested and exercisable as of December 31, 2012. |
(3) | Reflects the total lump sum payable to Mr. Cook under our Retirement Plan and Restoration Plan as of January 1, 2013. Due to plan changes made effective January 1, 2008, all employees are eligible for immediate commencement of benefits upon separation from service and can elect a lump sum payment of their accrued Retirement Plan benefits. Based on a December 31, 2012 termination date, Mr. Cooks monthly age 65 benefit from our Retirement Plan would be $18,687. If Mr. Cook commences his retirement benefits immediately following termination on December 31, 2012, his monthly Retirement Plan benefit, reduced for early commencement, would be $8,229. For the Restoration Plan benefit, participants previously elected to receive their benefit as either an annuity or lump sum, and elected specific timing of receiving their benefits. Mr. Cook elected to receive a lump sum |
Noble Energy, Inc. 2013 Proxy Statement
74
Compensation Tables |
payment from the Restoration Plan at the later of attainment of age 55 or separation of service. Mr. Cooks Restoration Plan lump sum amount as of December 31, 2012 is $4,476,413. Refer to Pension Benefits above for further disclosure of Mr. Cooks vested Retirement Plan benefits. |
(4) | In the event of Mr. Cooks termination of employment due to permanent and total disability, his age 65 retirement benefits from our Retirement Plan and Restoration Plan will be calculated as if he had continued to work until age 65. The value reflected represents the actuarial present value of Mr. Cooks age 65 benefits based on a disability date of December 31, 2012. The calculation is based on Mr. Cooks final average compensation as of his date of disability. Upon commencement of his benefits at age 65, Mr. Cooks monthly benefit from our Retirement Plan and Restoration Plan would be $38,529. In the event that Mr. Cook elects to immediately commence his retirement benefits, the amounts payable will be as described in Note 2. Refer to Pension Benefits above for further disclosure of Mr. Cooks vested Retirement Plan benefits |
(5) | In the event of Mr. Cooks death while an active employee, his named beneficiary is entitled to a death benefit under our Retirement Plan and Restoration Plan. The death benefit payable in the event of Mr. Cooks death on December 31, 2012 is $2,983,514. This lump sum payment was calculated based on the 2013 Applicable Mortality Table published by the IRS in Notice 2008-85 and the November 2012 segment rates of 0.97% for the first five years, 3.50% for the next 15 years, and 4.60% after 20 years, as required by IRC Section 471(e). The accrued death benefit was reduced for early commencement. Refer to Pension Benefits above for further disclosure of Mr. Cooks vested Retirement Plan benefits |
(6) | Reflects the present value of expected future medical and dental benefits that will be paid by the Company in connection with Mr. Cooks participation in the medical and dental plans as a retiree. Assumptions used for this calculation are the same assumptions used in determining the current pension obligation disclosed in Note 14 to our consolidated financial statements in the Form 10-K for the year ended December 31, 2012. |
(7) | Refer to Nonqualified Deferred Compensation Table above for further disclosure of Mr. Cooks vested nonqualified deferred compensation benefits. |
Noble Energy, Inc. 2013 Proxy Statement
75
Glossary |
Glossary
Terms, abbreviations and acronyms, as used in this Proxy Statement:
1992 Plan |
1992 Stock Option and Restricted Stock Plan | |
2005 Plan |
2005 Stock Plan for Non-Employee Directors of Noble Energy, Inc. | |
AD&D |
Accidental Death and Dismemberment | |
BBoe |
Billion barrels oil equivalent | |
Board |
Board of Directors of Noble Energy, Inc. | |
BOE |
Barrels oil equivalent. Natural gas is converted on the basis of six Mcf of gas per one barrel of oil equivalent. This ratio reflects an energy content equivalency and not a price or revenue equivalency. Given commodity price disparities, the price for a barrel of oil equivalent for natural gas is significantly less than the price for a barrel of oil. | |
CEO |
Chief Executive Officer | |
CFO |
Chief Financial Officer | |
Company (or we or us) |
Noble Energy, Inc. | |
Compensation Committee |
Compensation, Benefits and Stock Option Committee | |
COO |
Chief Operating Officer | |
EBITDA |
Earnings before interest, taxes, depreciation and amortization | |
EH&S Committee |
Environment, Health and Safety Committee | |
Exchange Act |
Securities and Exchange Act of 1934, as amended | |
Executive Change of Control Plan |
Change of Control Severance Plan for Executives | |
Fair Market Value |
The closing price of our common stock on the NYSE on the date of grant or, in the case of the option price, the date on which sales of common stock were made. | |
Form 10-K |
Annual Report on Form 10-K | |
Foundation |
The Samuel Roberts Noble Foundation, Inc. | |
GAAP |
Accounting principles generally accepted in the United States | |
Governance Committee |
Corporate Governance and Nominating Committee | |
Internal Revenue Code |
Internal Revenue Code of 1986, as amended | |
LTD |
Long-Term Disability | |
LTIP |
Long-Term Incentive Plan | |
MBoe/d |
Thousand barrels oil equivalent per day | |
Mcf |
Thousand cubic feet | |
Meridian |
Meridian Compensation Partners, LLC | |
MMBoe |
Million barrels oil equivalent | |
MMcfe |
Million cubic feet equivalent | |
MMcfe/d |
Million cubic feet equivalent per day | |
Named Executive Officers |
Noble Energys CEO, CFO and the three most highly compensated executive officers other than the CEO and CFO which, for 2012, were Charles D. Davidson, Kenneth M. Fisher, David L. Stover, Susan M. Cunningham and Rodney D. Cook | |
NYSE |
New York Stock Exchange |
Noble Energy, Inc. 2013 Proxy Statement
76
Glossary |
NYRSC |
New York Republican State Committee | |
Patina |
Patina Oil & Gas Corporation | |
Record Date |
March 6, 2013 | |
SAR |
Stock Appreciation Right | |
SEC |
United States Securities and Exchange Commission | |
Severance Benefit Plan |
An unfunded plan that provides for severance benefits to eligible employees | |
STIP |
Short-Term Incentive Plan | |
Total Shareholder Return |
Determined on the basis of the total investment performance that would have resulted at the end of the performance period from investing $100 in the common stock of the Company, using a beginning stock price and an ending stock price equal to the average closing price for the month of December immediately preceding the beginning of the performance period and the month of December immediately preceding the end of the performance period, respectively, and with all dividends reinvested | |
U.S. |
United States | |
Website |
Noble Energy, Inc. website found at www.nobleenergyinc.com |
Noble Energy, Inc. 2013 Proxy Statement
77
Appendix A |
Non-GAAP Financial Measure
This Proxy Statement includes discretionary cash flow, which is an important financial measure for the Company but is not a financial measure defined by accounting principles generally accepted in the United States (GAAP). The Companys management believes it is a useful tool for evaluating overall financial performance. In particular, discretionary cash flow is broadly used as an indicator of a companys ability to fund exploration and production activities and meet financial obligations. This measure should be reviewed in conjunction with the relevant GAAP financial measure. Discretionary cash flow is also commonly used as a basis to value and compare companies in the oil and gas industry.
The table below reconciles discretionary cash flow from continuing operations to net cash provided by operating activities for the Company for the year ended December 31, 2012.
Noble Energy, Inc.
Discretionary Cash Flow and Reconciliation to Operating Cash Flow
(in millions, unaudited)
Year Ended December 31, 2012 |
||||
Discretionary Cash Flow from Continuing Operations |
$ | 2,894 | ||
Reconciliation to Operating Cash Flows |
||||
Net changes in working capital |
134 | |||
Cash exploration costs |
(193 | ) | ||
Current tax expense of earnings adjustments |
| |||
Impact of discontinued operations |
82 | |||
Other adjustments |
16 | |||
Net Cash Provided by Operating Activities |
$ | 2,933 |
Noble Energy, Inc. 2013 Proxy Statement
Appendix B |
NOBLE ENERGY, INC.
1992 STOCK OPTION AND RESTRICTED STOCK PLAN
(As Amended and Restated Effective April 23, 2013)
Section 1. Purpose
The purpose of this Plan is to assist Noble Energy, Inc., a Delaware corporation, in attracting and retaining, as officers and key employees of the Company and its Affiliates, persons of training, experience and ability and to furnish additional incentive to such persons by encouraging them to become owners of Shares of the Companys capital stock, by granting to such persons Incentive Options, Nonqualified Options, Restricted Stock, or any combination of the foregoing.
Section 2. Definitions
Unless the context otherwise requires, the following words as used herein shall have the following meanings:
(a) Affiliate means any corporation or other type of entity in a chain of corporations or other entities in which each corporation or other entity has a controlling interest in another corporation or other entity in the chain, starting with the Company and ending with the corporation or other entity that has a controlling interest in the corporation or other entity for which the Employee provides direct services. For purposes of this Affiliate definition, the term controlling interest has the same meaning as provided in Treasury Regulation section 1.414(c)-2(b)(2)(i), except that the phrase at least 50 percent shall be used instead of the phrase at least 80 percent in each place the phrase at least 80 percent appears in Treasury Regulation section 1.414(c)-2(b)(2)(i).
(b) Agreement means the written agreement (i) between the Company and the Optionee evidencing the Option and any SARs that relate to such Option granted by the Company and the understanding of the parties with respect thereto or (ii) between the Company and a recipient of a Restricted Stock award, a Cash Award or a Performance Award evidencing the restrictions, terms and conditions applicable to such award and the understanding of the parties with respect thereto. In the event of any inconsistency between the Plan and an Agreement, the Plan shall govern.
(c) Board means the Board of Directors of the Company as the same may be constituted from time to time.
(d) Cash Award means an award for the payment of a cash bonus that has been awarded pursuant to Section 16 of the Plan.
(e) Code means the Internal Revenue Code of 1986, as amended.
(f) Committee means the Committee provided for in Section 3 of the Plan as the same may be constituted from time to time.
(g) Company means Noble Energy, Inc., a Delaware corporation.
(h) Corporate Transaction shall have the meaning as defined in Section 8 of the Plan.
(i) Disability means the termination of an employees employment with the Company or an Affiliate because of a medically determinable physical or mental impairment (i) that prevents the employee from performing his or her employment duties in a satisfactory manner and is expected either to result in death or to last for a continuous period of not less than twelve months as determined by the Committee, or (ii) for which the employee is eligible to receive disability income benefits under a long-term disability insurance plan maintained by the Company or an Affiliate.
(j) Exchange Act means the Securities Exchange Act of 1934, as amended.
Noble Energy, Inc. 2013 Proxy Statement
B-1
Appendix B |
(k) Fair Market Value means, except as provided in the next sentence with respect to grants and awards made prior to April 26, 2011, the closing sales price per Share on the New York Stock Exchange on the date in question (or if there was no reported sale on the New York Stock Exchange on such date, then on the last preceding day on which any reported sale occurred on the New York Stock Exchange). With respect to an Option or SAR that relates to such Option that was granted prior to April 26, 2011, or Shares of Restricted Stock that were awarded prior to April 26, 2011, the following shall apply: Fair Market Value means the fair market value per Share as determined by the Committee in good faith; provided, however, that if a Share is listed or admitted to trading on a securities exchange registered under the Exchange Act, the Fair Market Value per Share shall be the average of the reported high and low sales price on the date in question (or if there was no reported sale on such date, on the last preceding date on which any reported sale occurred) on the principal securities exchange on which such Share is listed or admitted to trading, or if a Share is not listed or admitted to trading on any such exchange but is listed as a national market security on the National Association of Securities Dealers, Inc. Automated Quotations System (NASDAQ) or any similar system then in use, the Fair Market Value per Share shall be the average of the reported high and low sales price on the date in question (or if there was no reported sale on such date, on the last preceding date on which any reported sale occurred) on such system, or if a Share is not listed or admitted to trading on any such exchange and is not listed as a national market security on NASDAQ but is quoted on NASDAQ or any similar system then in use, the Fair Market Value per Share shall be the average of the closing high bid and low asked quotations on such system for such Share on the date in question; and, provided further, that for purposes of valuing Shares to be made subject to Incentive Options, the Fair Market Value per Share shall be determined without regard to any restriction other than one which, by its terms, will never lapse.
(l) Incentive Option means an Option that is intended to satisfy the requirements of Section 422(b) of the Code.
(m) Nonqualified Option means an Option that does not qualify as a statutory stock option under Section 422 or 423 of the Code.
(n) Non-Employee Director means a director of the Company who satisfies the definition thereof under Rule 16b-3 promulgated under the Exchange Act.
(o) Option means an option to purchase one or more Shares granted under and pursuant to the Plan. Such Option may be either an Incentive Option or a Nonqualified Option.
(p) Optionee means a person who has been granted an Option and who has executed an Agreement with the Company.
(q) Outside Director means a director of the Company who is an outside director within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder.
(r) Performance Award means any Restricted Stock award or Cash Award that has been designated at the time of award as a Performance Award in accordance with the provisions of Section 15 of the Plan.
(s) Plan means this Noble Energy, Inc. 1992 Stock Option and Restricted Stock Plan, as amended from time to time.
(t) Restricted Stock means Shares issued or transferred pursuant to Section 14 of the Plan.
(u) Retirement means a termination of employment with the Company or an Affiliate either (i) on a voluntary basis by a person who (A) is at least 55 years of age with five years of credited service with the Company or one or more Affiliates or (B) has at least 20 years of credited service with the Company or one or more Affiliates, immediately prior to such termination of employment or (ii) otherwise with the written consent of the Committee in its sole discretion.
(v) SARs means stock appreciation rights granted pursuant to Section 7 of the Plan.
B-2
Appendix B |
(w) Securities Act means the Securities Act of 1933, as amended.
(x) Share means a share of the Companys present common stock, par value $0.01 per share, and any share or shares of capital stock or other securities of the Company hereafter issued or issuable in respect of or in substitution or exchange for each such present share. Such Shares may be unissued or reacquired Shares, as the Board, in its sole and absolute discretion, shall from time to time determine.
Section 3. Administration
The Plan shall be administered by, and the decisions concerning the Plan shall be made solely by, a Committee of two or more directors of the Company, all of whom are both Non-Employee Directors and Outside Directors. Each member of the Committee shall be appointed by and shall serve at the pleasure of the Board. The Board shall have the sole continuing authority to appoint members of the Committee. In making grants or awards, the Committee shall take into consideration the contribution the person has made or may make to the success of the Company or its Affiliates and such other considerations as the Board may from time to time specify.
Except to the extent already appointed by the Board, the Committee shall elect one of its members as its chairman, and shall hold its meetings at such times and places as it may determine. A majority of the members of the Committee shall constitute a quorum. All decisions and determinations of the Committee shall be made by the majority vote or decision of the members present at any meeting at which a quorum is present; provided, however, that any decision or determination reduced to writing and signed by all members of the Committee shall be as fully effective as if it had been made by a majority vote or decision at a meeting duly called and held. The Committee may appoint a secretary (who need not be a member of the Committee) who shall keep minutes of its meetings. The Committee may make any rules and regulations for the conduct of its business that are not inconsistent with the express provisions of the Plan, the bylaws or certificate of incorporation of the Company or any resolutions of the Board.
All questions of interpretation or application of the Plan, or of a grant of an Option and any SARs that relate to such Option or of a Restricted Stock award, Cash Award or Performance Award, including questions of interpretation or application of an Agreement, shall be subject to the determination of the Committee, which determination shall be final and binding upon all parties.
Subject to the express provisions of the Plan, the Committee shall have the authority, in its sole and absolute discretion:
(a) to adopt, amend or rescind administrative and interpretive rules and regulations relating to the Plan;
(b) to construe the Plan;
(c) to make all other determinations necessary or advisable for administering the Plan;
(d) to determine the terms and provisions of the respective Agreements (which need not be identical), including provisions defining or otherwise relating to (i) the term and the period or periods and extent of exercisability of Options, (ii) the extent to which transfer restrictions shall apply to Shares issued upon exercise of Options or any SARs that relate to such Options, (iii) the effect of termination of employment upon the exercisability of Options, and (iv) the effect of approved leaves of absence upon the exercisability of Options;
(e) to accelerate, regardless of whether the Agreement so provides, (i) the time of exercisability of any Option and SAR that relates to such Option, (ii) the time of the lapsing of restrictions on any Restricted Stock award that is not a Performance Award, or (iii) the time of the lapsing of restrictions on or for the vesting or payment of any Cash Award that is not a Performance Award (provided that such acceleration does not subject the benefits payable under such Cash Award to the tax imposed by Section 409A of the Code);
(f) subject to Section 13 of the Plan, to amend any Agreement provided that such amendment does not (i) adversely affect the Optionee or awardee under such Agreement in a material way without the consent of such
B-3
Appendix B |
Optionee or awardee, or (ii) cause any benefit provided or payable under such Agreement that is intended to comply with or be exempt from Section 409A of the Code, or intended to be qualified performance-based compensation within the meaning of Treasury Regulation section 1.162-27(e), to fail to comply with or be exempt from Section 409A of the Code or to fail to be qualified performance-based compensation within the meaning of Treasury Regulation section 1.162-27(e), respectively;
(g) to construe the respective Agreements; and
(h) to exercise the powers conferred on the Committee under the Plan.
The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan in the manner and to the extent it shall deem expedient to carry it into effect, and it shall be the sole and final judge of such expediency. The determinations of the Committee on the matters referred to in this Section 3 shall be final and conclusive.
Section 4. Shares Subject to the Plan
(a) The total number of Shares available for grants or awards made under the Plan shall not exceed a maximum of 35,800,000 Shares in the aggregate (the Plan Share Limit). The total number of Shares that may be issued on or after April 26, 2011, pursuant to Incentive Options shall not exceed a maximum of 7,000,000 Shares in the aggregate. The total number of Shares for which Options and SARs may be granted, and which may be awarded as Restricted Stock, to any one person during any calendar year shall not exceed a maximum of 400,000 Shares in the aggregate. Each such maximum number of Shares shall be increased or decreased as provided in Section 17 of the Plan.
(b) At any time and from time to time after the Plan takes effect, the Committee, pursuant to the provisions herein set forth, may grant Options and any SARs that relate to such Options and award Restricted Stock until the maximum number of Shares shall be exhausted or the Plan shall be sooner terminated.
(c) For the purpose of determining the number of Shares available for grants or awards made under the Plan:
(i) with respect to grants or awards made under the Plan prior to April 26, 2011, each Share subject to an Option (whether with or without a related SAR), and each Share awarded as Restricted Stock, shall count against the Plan Share Limit as one (1) Share,
(ii) with respect to grants or awards made under the Plan on or after April 26, 2011, each Share subject to an Option (whether with or without a related SAR) shall count against the Plan Share Limit as one (1) Share, and each Share awarded as Restricted Stock shall count against the Plan Share Limit as 2.39 Shares,
(iii) Shares subject to Options (whether with or without related SARs) that expire or are terminated or forfeited prior to exercise, and Shares awarded as Restricted Stock that are forfeited, shall remain available for grants or awards made under the Plan and shall be added back to the number of Shares available for such grants or awards on the same numerical basis as previously counted against the Plan Share Limit, and
(iv) Shares tendered or withheld to satisfy an exercise price or tax withholding obligation pertaining to an Option, SAR or Restricted Stock shall not be available for grants or awards made under the Plan and shall not be added to the number of Shares available for such grants or awards.
Section 5. Eligibility
The persons who shall be eligible to receive grants of Options and any SARs that relate to such Options, and to receive Restricted Stock awards, Cash Awards or Performance Awards, shall be regular salaried officers or other employees of the Company or one or more of its Affiliates.
B-4
Appendix B |
Section 6. Grant of Options
(a) From time to time while the Plan is in effect, the Committee may, in its sole and absolute discretion, select from among the persons eligible to receive a grant of Options under the Plan (including persons who have already received such grants of Options) such one or more of them as in the opinion of the Committee should be granted Options. The Committee shall thereupon, likewise in its sole and absolute discretion, determine the number of Shares to be allotted for option to each person so selected.
(b) Each person so selected shall be granted an Option to purchase the number of Shares so allotted to him, upon such terms and conditions, consistent with the provisions of the Plan, as the Committee may specify. Each such person shall have a reasonable period of time, to be fixed by the Committee, within which to accept or reject the granted Option. Failure to accept within the period so fixed may be treated as a rejection.
(c) Each person who accepts an Option offered to him shall enter into an Agreement with the Company, in such form as the Committee may prescribe, setting forth the terms and conditions of the Option. Each Option Agreement shall contain such provisions (including, without limitation, restrictions or the removal of restrictions upon the exercise of the Option and any SARs that relate to such Option and the transfer of Shares thereby acquired) as the Committee shall deem advisable. In the event a person is granted both one or more Incentive Options and one or more Nonqualified Options, such grants shall be evidenced by separate Agreements, one for each Incentive Option grant and one for each Nonqualified Option grant. Unless a subsequent effective date of grant is specified by the Committee, the date on which the Committee approves the grant of an Option to a person, including the specification of the number of Shares to be subject to the Option, shall constitute the date on which the Option covered by such Agreement is granted. Such person shall be notified of his or her grant as soon as practicable following the Committees approval of such grant, but in no event shall an Optionee gain any rights in addition to those specified by the Committee in its grant, regardless of the time that may pass between the grant of the Option and the actual signing of the Agreement by the Company and the Optionee.
(d) At the time an Option is granted, the Committee may, in its sole and absolute discretion, designate such Option as an Incentive Option intended to qualify under Section 422(b) of the Code; provided, however, that Incentive Options may be granted only to employees of the Company or a parent corporation or a subsidiary corporation of the Company (which terms, for the purposes of this Section and any Incentive Option granted under the Plan, shall have the meanings set forth in Section 424(e) and (f) of the Code, respectively), and that Incentive Options may not be granted more than 10 years after March 17, 2011, the date the prior Plan restatement was adopted by the Board. Each Agreement relating to an Incentive Option shall contain such limitations and restrictions upon the exercise of the Incentive Option as shall be necessary for the Incentive Option to which such Agreement relates to constitute an incentive stock option, as defined in Section 422(b) of the Code. Any provision of the Plan to the contrary notwithstanding:
(i) no Incentive Option shall be granted to any person who, at the time such Incentive Option is granted, owns shares possessing more than 10 percent of the total combined voting power of all classes of shares of the Company or of its parent or subsidiary corporation (within the meaning of Section 422(b)(6) of the Code) unless the option price under such Incentive Option is at least 110 percent of the Fair Market Value of the Shares subject to the Incentive Option at the date of its grant and such Incentive Option is not exercisable after the expiration of five years from the date of its grant; and
(ii) to the extent that the aggregate Fair Market Value (determined as of the date the Incentive Option is granted) of the Shares subject to an Incentive Option granted to an Optionee and the aggregate Fair Market Value (determined as of the date the option is granted) of the shares of the Company and its parent and subsidiary corporations (or a predecessor corporation of the Company or any such parent or subsidiary corporation) subject to any other incentive stock option (within the meaning of Section 422(b) of the Code) of the Company and its parent and subsidiary corporations (or a predecessor corporation of the Company or any such parent or subsidiary corporation) granted to such Optionee, that may become exercisable for the first time during any calendar year, exceeds $100,000, such excess portion of the Option shall be treated as a Nonqualified Option.
B-5
Appendix B |
(e) Each Agreement that includes SARs in addition to an Option shall comply with the provisions of Section 7 of the Plan.
Section 7. Grant of SARs
The Committee may from time to time grant SARs in conjunction with all or any portion of any Option either (i) at the time of the initial Option grant (not including any subsequent modification that may be treated as a new grant of an Incentive Option for purposes of Section 424(h) of the Code) or (ii) with respect to Nonqualified Options, at any time after the initial Option grant while the Nonqualified Option is still outstanding. SARs shall not be granted other than in conjunction with an Option granted hereunder.
SARs granted hereunder shall comply with the following conditions and also with the terms of the Agreement governing the Option in conjunction with which they are granted:
(a) The SAR shall expire no later than the expiration of the underlying Option.
(b) Upon the exercise of an SAR, the Optionee shall be entitled to receive payment equal to the excess of the aggregate Fair Market Value of the Shares with respect to which the SAR is then being exercised (determined as of the date of such exercise) over the aggregate purchase price of such Shares as provided in the related Option. Payment may be made in Shares, valued at their Fair Market Value on the date of exercise, or in cash, or partly in Shares and partly in cash, as determined by the Committee in its sole and absolute discretion.
(c) SARs shall be exercisable (i) only at such time or times and only to the extent that the Option to which they relate shall be exercisable, (ii) only when the Fair Market Value of the Shares subject to the related Option exceeds the purchase price of the Shares as provided in the related Option, and (iii) only upon surrender of the related Option or any portion thereof with respect to the Shares for which the SARs are then being exercised.
(d) Upon exercise of an SAR, a corresponding number of Shares subject to option under the related Option shall be canceled. Such canceled Shares shall be charged against the Shares reserved for the Plan, as provided in Section 4 of the Plan, as if the Option had been exercised to such extent and shall not be available for future Option grants or Restricted Stock awards hereunder.
Section 8. Option Price
The option price for each Share covered by an Option shall not be less than the greater of (a) the par value of such Share or (b) the Fair Market Value of such Share at the time such Option is granted. Notwithstanding the preceding sentence, if the Company or an Affiliate agrees to substitute a new Option under the Plan for an old option, or to assume an old option, by reason of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization, or liquidation (any of such events being referred to herein as a Corporate Transaction), the option price of the Shares covered by each such new Option or assumed Option may be other than the Fair Market Value of the Shares at the time the Option is granted as determined by reference to a formula, established at the time of the Corporate Transaction, which will give effect to such substitution or assumption; provided, however, in no event shall:
(a) the excess of the aggregate Fair Market Value of the Shares subject to the Option immediately after the substitution or assumption over the aggregate option price of such Shares be more than the excess of the aggregate Fair Market Value of all Shares subject to the option immediately prior to the substitution or assumption over the aggregate option price of such Shares;
(b) in the case of an Incentive Option, the new Option or the assumption of the old option give the Optionee additional benefits that he would not have under the old option; or
(c) the ratio of the option price to the Fair Market Value of the stock subject to the Option immediately after the substitution or assumption be more favorable to the Optionee than the ratio of the option price to the Fair Market Value of the stock subject to the old option immediately prior to such substitution or assumption, on a Share by Share basis.
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Notwithstanding the above, the provisions of this Section 8 with respect to the option price in the event of a Corporate Transaction shall, in the case of an Incentive Option, be subject to the requirements of Section 424(a) of the Code and the Treasury regulations and other applicable guidance promulgated thereunder, and in the case of a Nonqualified Option, be subject to the requirements for stock rights exempt from the application of Section 409A of the Code. In the event of a conflict between the terms of this Section 8 and the above cited statutes, regulations and rulings, or in the event of an omission in this Section 8 of a provision required by said laws, the latter shall control in all respects and are hereby incorporated herein by reference as if set out at length.
Section 9. Option Period and Terms of Exercise
(a) Each Option shall be exercisable during such period of time as the Committee may specify, but in no event for longer than 10 years from the date when the Option is granted; provided, however, that, unless provided otherwise in an Agreement:
(i) All rights to exercise an Option and any SARs that relate to such Option shall, subject to the provisions of subsection (c) of this Section 9, terminate one year after the date the Optionee ceases to be employed by at least one of the employers in the group of employers consisting of the Company and its Affiliates, for any reason other than death, Disability or Retirement, except that, in the event of the termination of employment of the Optionee on account of (A) fraud or intentional misrepresentation, or (B) embezzlement, misappropriation or conversion of assets or opportunities of the Company or its Affiliates, the Option and any SARs that relate to such Option shall thereafter be null and void for all purposes. Employment shall not be deemed to have ceased by reason of the transfer of employment, without interruption of service, between or among the Company and any of its Affiliates.
(ii) If the Optionee ceases to be employed by at least one of the employers in the group of employers consisting of the Company and its Affiliates, by reason of his death, Disability or Retirement, all rights to exercise such Option and any SARs that relate to such Option shall, subject to the provisions of subsection (c) of this Section 9, terminate five years thereafter.
(b) If an Option is granted with a term shorter than 10 years, the Committee may extend the term of the Option and any SARs that relate to such Option, but for not more than 10 years from the date when the Option was originally granted.
(c) In no event may an Option or any SARs that relate to such Option be exercised after the expiration of the term thereof.
Section 10. Transferability of Options and SARs
Except as provided in this Section 10, no Option or any SARs that relate to an Option shall be (i) transferable otherwise than by will or the laws of descent and distribution, or (ii) exercisable during the lifetime of the Optionee by anyone other than the Optionee. A Nonqualified Option granted to an Optionee, and any SARs that relate to such Nonqualified Option, may be transferred by such Optionee to a permitted transferee (as defined below), provided that (i) there is no consideration for such transfer (other than receipt by the Optionee of interests in an entity that is a permitted transferee); (ii) the Optionee (or such Optionees estate or representative) shall remain obligated to satisfy all income or other tax withholding obligations associated with the exercise of such Nonqualified Option or SARs; (iii) the Optionee shall notify the Company in writing that such transfer has occurred and disclose to the Company the name and address of the permitted transferee and the relationship of the permitted transferee to the Optionee; and (iv) such transfer shall be effected pursuant to transfer documents in a form approved by the Committee. A permitted transferee may not further assign or transfer any such transferred Nonqualified Option or any SARs that relate to such Nonqualified Option otherwise than by will or the laws of descent and distribution. Following the transfer of an Nonqualified Option and any SARs that relate to such Nonqualified Option to a permitted transferee, such Nonqualified Option and SARs shall continue to be subject to the same terms and conditions that applied to them prior to their transfer by the Optionee, except that they shall be exercisable by the permitted transferee to whom such transfer was made rather than by the transferring Optionee. For the purposes of the Plan, the term permitted transferee means, with respect to an Optionee, (I) any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
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son-in-law, daughter-in-law, brother-in-law or sister-in-law of the Optionee, including adoptive relationships, (II) any person sharing the Optionees household (other than a tenant or an employee), (III) a trust in which the Optionee and/or persons described in clauses (I) and (II) above have more than fifty percent of the beneficial interest, (IV) a foundation in which the Optionee and/or persons described in clauses (I) and (II) above control the management of assets, and (V) any other entity in which the Optionee and/or persons described in clauses (I) and (II) above own more than fifty percent of the voting interests.
Section 11. Exercise of Options and SARs
(a) In the event of an Optionees death, any then exercisable portion of an Option that has been granted to such Optionee, and any SARs that relate to such Option, may be exercised, within the period ending with the earlier of the fifth anniversary of the date of the Optionees death or the date of the termination of such Option, by the duly authorized representative of the deceased Optionees estate or the permitted transferee to whom such Option and SARs have been transferred.
(b) At any time, and from time to time, during the period when any Option and any SARs that relate to such Option, or a portion thereof, are exercisable, such Option or SARs, or portion thereof, may be exercised in whole or in part; provided, however, that in an Agreement the Committee may require any Option or SAR that is partially exercised to be so exercised with respect to at least a stated minimum number of Shares.
(c) Each exercise of an Option, or a portion thereof, shall be evidenced by a notice in writing to the Company accompanied by payment in full of the option price of the Shares then being purchased. Payment in full shall mean payment of the full amount due: (i) in cash, (ii) by certified check or cashiers check, (iii) with Shares owned by the exercising Optionee or permitted transferee having a Fair Market Value at least equal to the aggregate option price payable in connection with such exercise, or (iv) by any combination of clauses (i) through (iii). If the exercising Optionee or permitted transferee chooses to remit Shares in payment of all or any portion of the option price, then (for purposes of payment of the option price) those Shares shall be deemed to have a cash value equal to their aggregate Fair Market Value determined as of the date the exercising Optionee or permitted transferee exercises such Option.
Notwithstanding anything contained herein to the contrary, at the request of an exercising Optionee or permitted transferee and to the extent permitted by applicable law, the Committee shall approve arrangements with a brokerage firm or firms under which any such brokerage firm shall, on behalf of the exercising Optionee or permitted transferee, make payment in full to the Company of the option price of the Shares then being purchased, and the Company, pursuant to an irrevocable notice in writing from the exercising Optionee or permitted transferee, shall make prompt delivery of one or more certificates for the appropriate number of Shares to such brokerage firm. Payment in full for purposes of the immediately preceding sentence shall mean payment of the full amount due, either in cash or by certified check or cashiers check.
(d) Each exercise of SARs, or a portion thereof, shall be evidenced by a notice in writing to the Company.
(e) Each Optionee must take whatever affirmative actions are required, in the opinion of the Committee, to enable the Company or appropriate Affiliate to satisfy its Federal income tax and FICA and any applicable state and local withholding obligations incurred as a result of such Optionees (or his or her permitted transferees) exercise of an Option granted to such Optionee or any SARs that relate to such Option. Upon the exercise of an Option or SARs requiring tax withholding, an exercising Optionee or permitted transferee may (i) direct the Company to withhold from the Shares to be issued to the exercising Optionee or permitted transferee the number of Shares (based upon the aggregate Fair Market Value of the Shares at the date of exercise) necessary to satisfy the Companys obligation to withhold taxes, (ii) deliver to the Company sufficient Shares (based upon the aggregate Fair Market Value of the Shares at the date of exercise) to satisfy the Companys tax withholding obligations, (iii) deliver sufficient cash to the Company to satisfy the Companys tax withholding obligations, or (iv) any combination of clauses (i) through (iii). In the event the Committee subsequently determines that the aggregate Fair Market Value (as determined above) of any Shares withheld as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then the Optionee to whom the Option and SARs in question were granted shall pay (or cause the permitted transferee to whom such Option and SARs were transferred to pay) to the Company, immediately upon the Committees request, the amount of that deficiency.
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(f) No Shares shall be issued upon exercise of an Option until full payment therefor has been made, and an exercising Optionee or permitted transferee shall have none of the rights of a shareholder until Shares are issued to him.
(g) Nothing herein or in any Agreement shall require the Company to issue any Shares upon exercise of an Option or SAR if such issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act or any similar or superseding statute or statutes, or any other applicable statute or regulation, as then in effect. Upon the exercise of an Option or SAR (as a result of which the exercising Optionee or permitted transferee receives Shares), or portion thereof, the exercising Optionee or permitted transferee shall give to the Company satisfactory evidence that he is acquiring such Shares for the purposes of investment only and not with a view to their distribution; provided, however, if or to the extent that the Shares delivered to the exercising Optionee or permitted transferee shall be included in a registration statement filed by the Company under the Securities Act, such investment representation shall be abrogated.
(h) An Optionee shall immediately notify the Company in writing of any disqualifying disposition (within the meaning of Section 421(b) of the Code) of Shares received upon the exercise of an Incentive Option.
Section 12. Delivery of Stock Certificates
As promptly as may be practicable after an Option or SAR (as a result of the exercise of which the exercising Optionee or permitted transferee is entitled to receive Shares), or a portion thereof, has been exercised as hereinabove provided, the Company shall make delivery of the appropriate number of Shares. In the event that an Optionee exercises both (i) an Incentive Option or SARs that relate to such Option (as a result of which the Optionee receives Shares), or a portion thereof, and (ii) a Nonqualified Option or SARs that relate to such Option (as a result of which the Optionee receives Shares), or a portion thereof, separately identifiable Shares shall be issued in certificate or book-entry form for the Shares subject to the Incentive Option and for the Shares subject to the Nonqualified Option.
Section 13. Modification of Options and SARs
Subject to the terms and conditions of and within the limitations of the Plan, the Committee may modify, extend or renew outstanding Options and any SARs that relate to such Options granted under the Plan. The Committee shall not have authority to accept the surrender or cancellation of any Options and any SARs that relate to such Options outstanding hereunder (to the extent not theretofore exercised) and grant new Options and any SARs that relate to such new Options hereunder in substitution therefor (to the extent not theretofore exercised) at an Option Price that is less than the Option Price of the Options surrendered or canceled. Nor shall the Committee have authority to accept the surrender or cancellation of any Option and any SARs that relate to such Option outstanding hereunder (to the extent not theretofore exercised) at a time at which the Fair Market Value of the Shares subject to the Option is less than the option price, in return for any cash or other consideration. Notwithstanding the foregoing provisions of this Section 13, no modification of an outstanding Option and any SARs that relate to such Option granted hereunder shall, without the consent of the Optionee, adversely affect the holder thereof in a material way, except as may be necessary, with respect to Incentive Options, to satisfy the requirements of Section 422(b) of the Code, or with respect to Nonqualified Options to satisfy the requirements for stock rights exempt from Section 409A of the Code.
Section 14. Restricted Stock
(a) The Committee may from time to time, in its sole and absolute discretion, award Shares of Restricted Stock to such persons as it shall select from among those persons who are eligible under Section 5 of the Plan to receive awards of Restricted Stock. Any award of Restricted Stock shall be made from Shares subject hereto as provided in Section 4 of the Plan.
(b) A Share of Restricted Stock shall be subject to such restrictions, terms and conditions, including forfeitures, if any, as may be determined by the Committee, which may include, without limitation, the rendition of services to the Company or its Affiliates for a specified time or the achievement of specific goals, and to the further restriction that no such Share may be sold, assigned, transferred, discounted, exchanged, pledged or otherwise encumbered or disposed of until the terms and conditions set by the Committee at the time of the award of the
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Restricted Stock have been satisfied. A Restricted Stock award may be a Performance Award or an award that is not a Performance Award. Each recipient of an award of Restricted Stock shall enter into an Agreement with the Company, in such form as the Committee shall prescribe, setting forth the restrictions, terms and conditions of such award.
If a person is awarded Shares of Restricted Stock, whether or not escrowed as provided below, the person shall be the record owner of such Shares and shall have all the rights of a shareholder with respect to such Shares (except to the extent that the escrow agreement, if any, or the Agreement specifically provides otherwise), including the right to vote and the right to receive dividends or other distributions made or paid with respect to such Shares. Any certificate or certificates representing Shares of Restricted Stock shall bear a legend similar to the following:
The shares represented by this certificate have been issued pursuant to the terms of the Noble Energy, Inc. 1992 Stock Option and Restricted Stock Plan and may not be sold, assigned, transferred, discounted, exchanged, pledged or otherwise encumbered or disposed of in any manner except as set forth in the terms of the agreement embodying the award of such shares dated , .
In order to enforce the restrictions, terms and conditions that may be applicable to a persons Shares of Restricted Stock, the Committee may require the person, upon the receipt of a certificate or certificates representing such Shares or the issuance of such Shares in book-entry form, or at any time thereafter, to deposit such certificate or certificates, together with stock powers and other instruments of transfer, appropriately endorsed in blank, with the Company or an escrow agent designated by the Company under an escrow agreement, or to enter into an escrow agreement pertaining to Shares issued in book-entry form, in such form as by the Committee shall prescribe.
After the satisfaction of the restrictions, terms and conditions set by the Committee at the time of an award of Restricted Stock to a person, the Share certificate legend set forth above and any similar evidence of a transfer restriction applicable to a Share issued in book-entry form shall be removed with respect to the number of Shares that are no longer subject to such restrictions, terms and conditions.
The Committee shall have the authority (and the Agreement evidencing an award of Restricted Stock may so provide) to cancel all or any portion of any outstanding restrictions prior to the expiration of such restrictions with respect to any or all of the Shares of Restricted Stock awarded to a person hereunder on such terms and conditions as the Committee may deem appropriate, provided that such cancellation does not cause any Shares of Restricted Stock that were awarded as a Performance Award to fail to be qualified performance-based compensation within the meaning of Treasury Regulation Section 1.162-27(e).
(c) Unless otherwise provided by the Committee in the Agreement pertaining to an award of Restricted Stock, if the a person to whom such Restricted Stock has been awarded ceases to be employed by at least one of the employers in the group of employers consisting of the Company and its Affiliates, for any reason, prior to the satisfaction of any terms and conditions of an award, any Restricted Stock remaining subject to restrictions shall thereupon be forfeited by the person and transferred to, and reacquired by, the Company or an Affiliate at no cost to the Company or the Affiliate; provided, however, if the cessation is due to the persons death, Disability or Retirement, the Committee may, in its sole and absolute discretion, deem that the terms and conditions have been met for all or part of such remaining portion (except such discretionary authority shall not extend to any Shares of Restricted Stock that were awarded as a Performance Award if such discretion would cause the award to fail to be qualified performance-based compensation within the meaning of Treasury Regulation Section 1.162-27(e)). In the event of such forfeiture, the person, or in the event of his death, his personal representative, shall forthwith deliver to the Secretary of the Company the certificates for the Shares of Restricted Stock remaining subject to such restrictions, accompanied by such instruments of transfer, if any, as may reasonably be required by the Secretary of the Company.
(d) In case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation and in which there is a reclassification or change (including a change to the right to receive cash or other property) of the Shares (other than a change in par value, or from par value to no par value, or as a result of a subdivision or combination, but including any change in such shares into two or more classes or series of shares), to the extent the Committee determines that such is necessary to reflect such corporate action, the
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Committee shall take such further actions, if any, as it determines to be appropriate to provide that Restricted Stock shall take the form of the kind and amount of shares of stock and other securities (including those of any new direct or indirect parent of the Company), property, cash or any combination thereof receivable upon such consolidation or merger.
Section 15. Performance Awards
(a) The Options and SARs granted pursuant to the Plan are granted under terms that are designed to provide for the payment of qualified performance-based compensation within the meaning of Treasury Regulation section 1.162-27(e). In addition, at the time of awarding any Restricted Stock award or Cash Award the Committee may, in its sole and absolute discretion, and subject to the limitations on Shares and amounts applicable thereto, designate such award to be a Performance Award that is intended to satisfy the requirements for the payment of qualified performance-based compensation within the meaning of Treasury Regulation section 1.162-27(e) (such requirements the 162(m) Requirements). The compensation payable under Performance Awards shall be provided or paid solely on account of the attainment of one or more pre-established, objective performance goals during a specified performance period that shall not be shorter than one year, and shall comply with the 162(m) Requirements.
(b) Each Agreement embodying a Performance Award shall set forth (i) the maximum amount that may be earned thereunder in the form of cash or Shares, as applicable, (ii) the performance goal or goals and level of achievement applicable to such Performance Award, (iii) the performance period over which performance is to be measured, and (iv) such other terms and conditions as the Committee may determine that are not inconsistent with the Plan or the 162(m) Requirements.
(c) The performance goal or goals for a Performance Award shall be established in writing by the Committee based on one or more performance goals as set forth in this Section 15 not later than 90 days after commencement of the performance period with respect to such award, provided that the outcome of the performance in respect of the goal or goals remains substantially uncertain as of such time. At the time of the award of a Performance Award, and to the extent permitted under Section 162(m) of the Code and the Treasury regulations and other guidance promulgated thereunder, the Committee may provide for the manner in which the performance goals will be measured in light of specified corporate transactions, extraordinary events, accounting changes and other similar occurrences.
(d) The performance goal or goals to be used for the purposes of Performance Awards may be described in terms of objectives that are related to the particular eligible employee to whom the award is being made, or objectives that are Company-wide or related to a subsidiary, division, department, region, function or business unit of the Company in which such person is employed or with respect to which such person performs services, and may consist of one or more or any combination of the following criteria: (a) an amount or level of earnings or cash flow, (b) earnings or cash flow per share (whether on a pre-tax, after-tax, operational or other basis), (c) return on equity or assets, (d) return on capital or invested capital and other related financial measures, (e) cash flow or EBITDA, (f) revenues, (g) income, net income or operating income, (h) expenses or costs or expense levels or cost levels (absolute or per unit), (i) proceeds of sale or other disposition, (j) share price, (k) total shareholder return, (l) operating profit, (m) profit margin, (n) capital expenditures, (o) net borrowing, debt leverage levels, credit quality or debt ratings, (p) the accomplishment of mergers, acquisitions, dispositions, or similar business transactions, (q) net asset value per share, (r) economic value added, (s) individual business objectives, (t) growth in reserves or production, (u) finding and development costs, and/or (v) safety results. The performance goals based on these performance measures may be made relative to the performance of peers or other business entities.
(e) Prior to the payment of any compensation pursuant to a Performance Award, the Committee shall certify in writing that the applicable performance goal or goals and other material terms of the Award have been satisfied. The Committee in its sole and absolute discretion shall have the authority to reduce, but not to increase, the amount payable in cash and the number of Shares to be issued, retained or vested pursuant to a Performance Award.
Section 16. Cash Awards
The Committee may, in its sole and absolute discretion, award Cash Awards to such persons as it shall select from among those persons who are eligible under Section 5 of the Plan to receive Cash Awards. A Cash Award shall provide
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for the payment of a cash bonus upon the achievement of specified performance goals. A Cash Award may be a Performance Award or an award that is not a Performance Award. The Committee shall specify the terms, conditions, restrictions and limitations that apply to a Cash Award (which need not be identical among the persons to whom such awards are made). Any provision of this Plan to the contrary notwithstanding, the maximum amount that may be paid under all Cash Awards awarded to any one person pursuant to this Plan during any one calendar year shall not exceed $4,000,000. The Committees authority and discretion to grant Cash Awards pursuant to this Plan is not intended to and does not replace, modify, limit or otherwise affect the ability of the Company and its Affiliates to pay or make grants of compensation under other programs and arrangements of the Company and its Affiliates, including without limitation the Companys annual short-term incentive plans.
Section 17. Changes in Companys Shares and Certain Corporate Transactions
If at any time while the Plan is in effect there shall be any increase or decrease in the number of issued and outstanding Shares of the Company effected without receipt of consideration therefor by the Company, through the declaration of a stock dividend or through any recapitalization or merger or otherwise in which the Company is the surviving corporation, resulting in a stock split-up, combination or exchange of Shares of the Company, then and in each such event:
(a) An appropriate adjustment shall be made in the maximum number of Shares then subject to being optioned or awarded as Restricted Stock under the Plan, to the end that the same proportion of the Companys issued and outstanding Shares shall continue to be subject to being so optioned and awarded;
(b) Appropriate adjustment shall be made in the number of Shares and the option price per Share thereof then subject to purchase pursuant to each Option previously granted and then outstanding, to the end that the same proportion of the Companys issued and outstanding Shares in each such instance shall remain subject to purchase at the same aggregate option price; and
(c) In the case of Incentive Options, any such adjustments shall in all respects satisfy the requirements of Section 424(a) of the Code and the Treasury regulations and other guidance promulgated thereunder. In the case of Nonqualified Options, any such adjustments shall in all respects satisfy the requirements applicable to stock rights that are exempt from the application of Section 409A of the Code.
Except as is otherwise expressly provided herein, the issue by the Company of shares of its capital stock of any class, or securities convertible into shares of capital stock of any class, either in connection with a direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of or option price of Shares then subject to outstanding Options granted under the Plan. Furthermore, the presence of outstanding Options granted under the Plan shall not affect in any manner the right or power of the Company to make, authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or other changes in the Companys capital structure or its business; (ii) any merger or consolidation of the Company; (iii) any issue by the Company of debt securities or preferred stock that would rank above the Shares subject to outstanding Options granted under the Plan; (iv) the dissolution or liquidation of the Company; (v) any sale, transfer or assignment of all or any part of the assets or business of the Company; or (vi) any other corporate act or proceeding, whether of a similar character or otherwise. All adjustments made pursuant to this Section 17 or any other provision of this Plan shall be made in a manner that satisfies the requirements for such adjustments under Sections 409A and 424 of the Code, as applicable, and the Treasury regulations and other guidance promulgated thereunder.
Section 18. Effective Date
The Plan was originally adopted by the Board on January 28, 1992, and has been amended by the Board and approved by the shareholders of the Company at various times thereafter. The amendment and restatement of the Plan was approved by the Board on January 28, 2013. This amendment and restatement of the Plan will become effective as of April 23, 2013, if it is approved by the shareholders of the Company by at least a majority of votes cast (including abstentions to the extent abstentions are counted as voting under applicable State law) at a duly held meeting of the shareholders of the Company to be held on April 23, 2013 at which a quorum representing a majority of outstanding
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Shares entitled to vote is, either in person or by proxy, present and voting on the Plan. If this amendment and restatement of the Plan is not so approved at such meeting, then the Noble Energy, Inc. 1992 Stock Option and Restricted Stock Plan as in effect immediately prior to such meeting shall remain in effect.
Section 19. Amendment, Suspension or Termination
The Board may at any time amend, suspend or terminate the Plan; provided, however, that after the shareholders have approved and ratified the Plan in accordance with Section 18 of the Plan, the Board may not, without approval of the shareholders of the Company, amend the Plan so as to (a) increase the maximum number of Shares subject thereto, as specified in Sections 4(a) and 17 of the Plan, (b) reduce the option price for Shares covered by Options granted hereunder below the price specified in Section 8 of the Plan, or (c) permit the re-pricing of Options and any SARs that relate to such new Options, or permit the cancellation of underwater Options and any SARs that relate to such Options in return for cash or other consideration, in contravention of Section 13 of the Plan; and provided further, that the Board may not, without the consent of the holder thereof, amend or cancel any outstanding Agreement in a manner that adversely affects the holder thereof in a material way.
Section 20. Requirements of Law
Notwithstanding anything contained herein or in any Agreement to the contrary, the Company shall not be required to sell or issue Shares under any Option or SAR if the issuance thereof would constitute a violation by the Optionee or the Company of any provision of any law or regulation of any governmental authority or any national securities exchange; and as a condition of any sale or issuance of Shares upon exercise of an Option or SAR, the Company may require such agreements or undertakings, if any, as the Company may deem necessary or advisable to assure compliance with any such law or regulation.
Section 21. General
(a) The proceeds received by the Company from the sale of Shares pursuant to Options shall be used for general corporate purposes.
(b) Nothing contained in the Plan or in any Agreement shall confer upon any Optionee or recipient of Restricted Stock the right to continue in the employ of the Company or any Affiliate, or interfere in any way with the rights of the Company or any Affiliate to terminate his employment at any time, with or without cause.
(c) Neither the members of the Board nor any member of the Committee shall be liable for any act, omission or determination taken or made in good faith with respect to the Plan or any Option and any SARs that relate to such Option granted hereunder or any Restricted Stock, Cash Award or Performance Award awarded hereunder; and the members of the Board and the Committee shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expenses (including counsel fees) arising therefrom to the full extent permitted by law and under any directors and officers liability or similar insurance coverage that may be in effect from time to time.
(d) Any payment of cash or any issuance or transfer of Shares to an exercising Optionee or permitted transferee, or to his legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such persons hereunder. The Committee may require an exercising Optionee or permitted transferee, legal representative, heir, legatee or distributee, as a condition precedent to such payment, to execute a release and receipt therefor in such form as it shall determine.
(e) Neither the Committee, the Board nor the Company guarantees the Shares from loss or depreciation.
(f) All expenses incident to the administration, termination or protection of the Plan, including, but not limited to, legal and accounting fees, shall be paid by the Company or its Affiliates.
(g) Records of the Company and its Affiliates regarding a persons period of employment, termination of employment and the reason therefor, leaves of absence, re-employment and other matters shall be conclusive for all purposes hereunder, unless determined by the Committee to be incorrect.
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(h) Any action required of the Company shall be by resolution of its Board or by a person authorized to act by resolution of the Board. Any action required of the Committee shall be by resolution of the Committee or by a person authorized to act by resolution of the Committee.
(i) If any provision of the Plan or any Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan or such Agreement, as the case may be, but such provision shall be fully severable and the Plan or such Agreement, as the case may be, shall be construed and enforced as if the illegal or invalid provision had never been included herein or therein.
(j) Whenever any notice is required or permitted hereunder, such notice must be in writing and personally delivered or sent by mail. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered on the date on which it is personally delivered, or, whether actually received or not, on the third business day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person who is to receive it at the address which such person has theretofore specified by written notice delivered in accordance herewith. The Company, an Optionee or a recipient of Restricted Stock may change, at any time and from time to time, by written notice to the other, the address that it or he had theretofore specified for receiving notices. Until changed in accordance herewith, the Company and each Optionee and recipient of Restricted Stock shall specify as its and his address for receiving notices the address set forth in the Agreement pertaining to the Shares to which such notice relates.
(k) Any person entitled to notice hereunder may waive such notice.
(l) The Plan shall be binding upon the Optionee or the recipient of Restricted Stock or a Cash Award, his or her heirs, legatees, distributees, legal representatives and permitted transferees, upon the Company, its successors and assigns, and upon the Committee, and its successors.
(m) The titles and headings of Sections and paragraphs are included for convenience of reference only and are not to be considered in the construction of the provisions hereof.
(n) All questions arising with respect to the provisions of the Plan shall be determined by application of the laws of the State of Texas except to the extent Texas law is preempted by Federal law.
(o) Words used in the masculine shall apply to the feminine where applicable, and wherever the context of the Plan dictates, the plural shall be read as the singular and the singular as the plural.
(p) The compensation payable by the Company to or with respect to an Optionee or awardee pursuant to this Plan is intended to be compensation that is not subject to the tax imposed by Section 409A of the Code, and the Plan and Agreements shall be administered and construed to the fullest extent possible to reflect and implement such intent; provided, however, that any provision of this Plan or an Agreement to the contrary notwithstanding, the Committee, the Company and its Affiliates and their respective directors, officers, employees and agents do not guarantee any particular tax treatment with respect to the compensation payable pursuant to the Plan or an Agreement, and shall not be responsible or liable for any such treatment.
(q) Except as provided in Section 10, no right or interest of an Optionee or an awardee under any Restricted Stock award, Cash Award or Performance Award may be assigned, transferred or alienated, in whole or in part, either directly or by operation of law (except, with respect to awards other than Incentive Options, pursuant to a qualified domestic relations order within the meaning of Section 414(p) of the Code or a similar domestic relations order under applicable foreign law), and no such right or interest shall be liable for or subject to any debt, obligation or liability of such Optionee or awardee.
(r) Any provision of this Plan to the contrary notwithstanding, any provision in this Plan setting forth a requirement for delivery of a written notice, agreement, consent, acknowledgement, or other documentation in writing, including a written signature, may be satisfied by electronic delivery of such notice, agreement, consent, acknowledgment, or other documentation, in a manner that the Committee has prescribed or that is otherwise acceptable to the Committee, provided that evidence of the intended recipients receipt of the electronic delivery is available to the Committee and that such delivery is not prohibited by applicable laws and regulations.
B-14
Appendix B |
Section 22. UK Sub-Plan
Any provision of this Plan to the contrary notwithstanding, the Committee may grant to the employees of the Company or one of its Affiliates whose compensation from the Company or such Affiliate is subject to taxation under the laws of the United Kingdom Options which (i) will terminate one year after the Optionees death, (ii) cannot be transferred to a permitted transferee pursuant to the provisions of Section 10, (iii) cannot be exercised using a means of payment other than cash or a certified check or cashiers check, and (iv) will not be adjusted pursuant to Section 17 without the approval of the Board of Inland Revenue of the United Kingdom.
IN WITNESS WHEREOF, this amendment and restatement of the Noble Energy, Inc. 1992 Stock Option and Restricted Stock Plan has been executed by the Company on this day of April, 2013, to be effective as provided in Section 18 above.
NOBLE ENERGY, INC. | ||
By: | ||
Charles D. Davidson | ||
Chairman and Chief Executive Officer |
B-15
Appendix C |
FORM
OF
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
NOBLE ENERGY, INC.
Pursuant to Section 242 of the General Corporate Law of the State of Delaware,
Noble Energy, Inc. (hereinafter called the Corporation) does hereby certify as follows:
FIRST: That the Corporations Certificate of Incorporation is hereby amended by adding a new Article THIRTEENTH as follows:
THIRTEENTH. Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporations stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, or (iv) any action asserting a claim governed by the internal affairs doctrine, shall be a state or federal court located within the state of Delaware, in all cases subject to the courts having personal jurisdiction over the indispensable parties named as defendants. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article THIRTEENTH.
The foregoing amendment was duly adopted in accordance with Sections 211, 222 and 242 of the General Corporate Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly executed in its corporate name this day of , 2013.
NOBLE ENERGY, INC. | ||
By: | ||
Name: | ||
Title: |
Appendix D |
AMENDMENT TO THE BY-LAWS
OF NOBLE ENERGY, INC.
The Board of Directors of Noble Energy, Inc. has unanimously approved and recommends your approval of the following amendment to the Companys By-Laws to (a) clarify that broker non-votes and abstentions count towards a quorum but are not considered a vote for or against a proposal, (b) allow the Board to fix separate record dates for determining stockholders entitled to notice of, and to vote at, meetings, and (c) increase the age after which directors will not be eligible to be nominated for election from 70 to 75 years.
Relating to Broker Non-Votes and Abstentions:
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 9. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting (other than the election of directors), unless the question is one upon which, by express provision of the statutes or of the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. For avoidance of doubt, abstentions and broker nonvotes are considered for purposes of establishing a quorum but are not considered as votes cast either for or against any question brought before such meeting. A nominee for director shall be elected to the Board of Directors if the votes cast for such nominees election exceed the votes cast against such nominees election; provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which (i) the Secretary of the Corporation receives a notice that a stockholder has nominated a person for election to the Board of Directors in compliance with the advance notice requirements for stockholder nominees for director set forth in Article III, Section 1(h) of these By-laws and (ii) such nomination has not been withdrawn by such stockholder on or prior to the tenth day preceding the date the Corporation first mails its notice of meeting for such meeting to the stockholders. If directors are to be elected by a plurality of the votes cast, stockholders shall not be permitted to vote against a nominee. For purposes of this Article II, Section 9 of these By-laws, a majority of votes cast shall mean that the number of votes cast for a directors election exceeds the number of votes cast against that directors election (with abstentions and broker nonvotes not counted as a vote cast either for or against that directors election). Where a separate vote by a class or classes is required, the affirmative vote of the majority of shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class.
D-1
Appendix D |
Relating to Dual Record Dates:
ARTICLE VII
FIXING RECORD DATE
Section 5(a). In order that the Corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty nor less than ten days before the date of such meeting. If the Board of Directors so fixes a date, such date shall also be the record date for
determining the stockholders entitled to vote at such meeting unless the Board of Directors determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If
no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of a meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting, and in such case shall also fix as the record date for the
stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of the stockholders entitled to vote at the adjourned meeting.
Relating to Director Mandatory Retirement Age:
ARTICLE III
DIRECTORS
Section 1.
(b). A person shall be eligible to be elected a regular Director until the annual meeting next
succeeding such persons 70th 75th birthday.
D-2
Shareowner Services P.O. Box 64945 St. Paul, MN 55164-0945 Address Change? Mark box, sign, and indicate changes below: COMPANY # TO VOTE BY INTERNET OR TELEPHONE, SEE REVERSE SIDE OF THIS PROXY CARD. The Board of Directors Recommends a Vote FOR Items 1 (all nominees), 2, 3, 4, 5 and 6. 1. Election of directors: FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN Jeffrey L. Berenson Michael A. Cawley Edward F. Cox Charles D. Davidson Thomas J. Edelman FOR AGAINST ABSTAIN Eric P. Grubman Kirby L. Hedrick Please fold here Do not separate Scott D. Urban William T. Van Kleef Molly K. Williamson To ratify the appointment of KPMG LLP as the Companys independent auditor. To approve, in a non-binding advisory vote, the compensation of the Companys named executive officers. To approve an amendment and restatement of the Companys 1992 Stock Option and Restricted Stock Plan to increase the number of shares authorized for issuance under the plan from 31,000,000 to 35,800,000 To approve an amendment to the Companys Certificate of Incorporation to establish Delaware as the exclusive forum for resolving derivative and certain other disputes. To approve an amendment to the Companys By-Laws to (a) clarify that broker non-votes and abstentions count toward a quorum but are not considered a vote for or against a proposal, (b) allow the Board of Directors to fix separate record dates for determining stockholders entitled to notice of, and to vote at, meetings, and (c) increase the age after which directors will not be eligible to be nominated for election from 70 to 75 years. For For For For For Against Against Against Against Against Abstain Abstain Abstain Abstain Abstain 7. To transact such other business as may properly come before the meeting and any adjournment or postponement of the meeting. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR ITEMS 1 (ALL NOMINEES), 2, 3, 4, 5 AND 6. Date Signature(s) in Box Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy.
NOBLE ENERGY, INC. ANNUAL MEETING OF STOCKHOLDERS Tuesday, April 23, 2013 9:30 a.m. Central Time The Woodlands Waterway Marriott Hotel & Convention Center 1601 Lake Robbins Drive The Woodlands, Texas 77380 Noble Energy, Inc. 100 Glenborough Drive, Suite 100 Houston, Texas 77067-3610 proxy This proxy is solicited by the Board of Directors for use at the Annual Meeting on April 23, 2013. The shares of stock you hold in your account will be voted as you specify on the reverse side. If no choice is specified, the proxy will be voted FOR Items 1 (all nominees), 2, 3, 4, 5 and 6. By signing the proxy, you revoke all prior proxies and appoint Charles D. Davidson and Kenneth M. Fisher, and each of them, with full power of substitution to vote your shares on the matters shown on the reverse side and any other matters which may come before the Annual Meeting and any adjournment or postponement thereof. Vote by Internet, Telephone or Mail 24 Hours a Day, 7 Days a Week Your phone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. INTERNET www.eproxy.com/nbl Use the Internet to vote your proxy until 12:00 noon (CT) on April 22, 2013. PHONE 1-800-560-1965 Use a touch-tone telephone to vote your proxy until 12:00 noon (CT) on April 22, 2013. MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope provided. If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card.