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:
¨ Preliminary Proxy Statement
¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ 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. |
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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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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(2) | Form, Schedule or Registration Statement No.: |
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(4) | Date Filed: |
Dear Stockholder: | ||
I hope you will join Noble Energys Board of Directors, executive management team, employees and alumni at our 2014 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. | ||
Last year we redesigned our Proxy Statement to more effectively explain the matters to be addressed at our Annual Meeting. We received many positive | ||
comments on our effort, in particular on the summary at the beginning that provides highlights on detailed information contained elsewhere in the Proxy Statement. My fellow Board members and I are committed to finding ways to provide you with information about the Company in a manner that is easy to access and understand. |
We continue to enhance the Compensation Discussion and Analysis that begins on page 26 to better show how our executives compensation 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 14.
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 21, 2014
Houston, Texas
Charles D. Davidson |
Chairman of the Board and |
Chief Executive Officer |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Tuesday, April 22, 2014
The Annual Meeting of Stockholders of NOBLE ENERGY, INC. (the Company) will be held on Tuesday, April 22, 2014 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; and |
4. | 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 5, 2014 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 21, 2014
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.
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i
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.
2014 Annual Meeting of Stockholders
· |
Date and Time: |
Tuesday, April 22, 2014, 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 5, 2014 |
Voting Matters and Board Recommendations
Our Boards Recommendations |
||||
Election of Director Nominees (page 14)
|
FOR each Director Nominee |
|||
Ratification of Appointment of Independent Auditor (page 23) |
FOR | |||
Advisory Vote to Approve Executive Compensation (page 25) |
FOR |
Director Nominees (beginning on page 14)
The following table provides summary information about each director nominee. Our Board is not classified and each director stands for election annually.
Name | Age | Director Since |
Primary Occupation | Committee Memberships |
Other Public Company Boards | |||||
Jeffrey L. Berenson* | 63 | 2005 | President and Chief Executive Officer of Berenson & Company | C, CG | None | |||||
Michael A. Cawley* | 66 | 1995 | President and Manager of The Cawley Consulting Group, LLC | A, CG | Noble Corporation | |||||
Edward F. Cox* | 67 | 1984 | Chair of The New York Republican State Committee | C, CG, E | None | |||||
Charles D. Davidson | 64 | 2000 | Chairman and Chief Executive Officer of Noble Energy, Inc. | E | None | |||||
Thomas J. Edelman* | 63 | 2005 | Managing Partner of White Deer Energy | C, CG, E | Emerald Oil, Inc. PostRock Energy Corporation | |||||
Eric P. Grubman* | 56 | 2009 | Executive Vice President of the National Football League | A, CG | None | |||||
Kirby L. Hedrick* | 61 | 2002 | Former Executive Vice President of Phillips Petroleum Company | C, CG, E | None | |||||
Scott D. Urban* | 60 | 2007 | Partner in Edgewater Energy LLC | A, CG, E | Pioneer Energy Services Corporation |
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Name | Age | Director Since |
Primary Occupation | Committee Memberships |
Other Public Company Boards | |||||
William T. Van Kleef* | 62 | 2005 | Former Executive Vice President and Chief Operating Officer of Tesoro Corporation |
A, CG | Oil States International, Inc. | |||||
Molly K. Williamson* | 68 | 2013 | Scholar, Middle East Institute | C(1), CG, E | None | |||||
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*Independent Director.
(1) | Ms. Williamson was added to the Companys Compensation, Benefits and Stock Option Committee on January 28, 2014. |
A | Audit Committee |
C | Compensation, Benefits and Stock Option Committee |
CG | Corporate Governance and Nominating Committee |
E | Environment, Health and Safety Committee |
2013 Business Highlights (beginning on page 26)
2013 was another year of strong performance by the Company. Business highlights include:
· | Major projects were completed, with Tamar (offshore Israel) and Alen (offshore West Africa) beginning production ahead of schedule; |
· | Major projects were sanctioned at Big Bend (phase one of our Rio Grande development) and Gunflint (deepwater Gulf of Mexico); |
· | Exploration success was achieved, with announced discoveries at Karish and Tamar Southwest (offshore Israel) and Troubadour and Dantzler (deepwater Gulf of Mexico); |
· | Successful appraisal wells were drilled at Leviathan (offshore Israel), Gunflint and offshore Cyprus; |
· | Average daily production increased, the DJ Basin by 23% and Marcellus Shale by 60%; |
· | Year-end proved reserves increased 19% to 1.4 BBoe; and |
· | Acreage positions were enhanced, with a 50,000 acre exchange with another operator in the DJ Basin, a Marcellus Shale acquisition covering a 50% interest in approximately 90,000 acres and divestitures of non-core properties. |
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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 (CEO) from 2011 to 2013. 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) |
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.
Five-Year Total Stockholder Return
The following chart shows how a $100 investment in the Companys common stock on December 31, 2008 would have grown to over $290 on December 31, 2013, 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 new (2013) and former compensation peer groups over the same period, with dividends reinvested quarterly. As illustrated below, the Companys common stock outperformed both the S&P 500 Index and the Companys new and former compensation peer groups during this period.
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Comparison of Five-Year Cumulative Total Stockholder Return*
For more complete information regarding the Companys 2013 performance, please see the Companys Annual Report on Form 10-K.
Executive Compensation Highlights (beginning on page 29)
Our compensation program is designed to link compensation to performance. In 2013 we increased our emphasis on performance-based compensation, with 70% of our CEOs target compensation being performance-based. For purposes of the following chart:
| Annual bonus is based on operational and financial performance; |
| stock options are based on absolute stock price appreciation; and |
| performance shares are based on relative total shareholder return. |
For 2013:
· | Achievement of quantitative metrics (60% weighted) and qualitative goals (40% weighted) resulted in an above-target bonus payout; |
· | long-term incentive compensation continued to constitute a substantial portion of our executives compensation, with the Compensation, Benefits and Stock Option Committee considering total stockholder return, debt-adjusted per share production growth and reserve replacement in making grants of stock options and restricted stock; and |
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· | 25% of the target long-term incentive opportunity is tied to relative total stockholder return. |
Our Compensation Committee reviewed the aggregate estimated realizable pay of our CEO relative to CEOs of our peer group companies for the trailing three year period ending December 31, 2012, compared against three-year relative total shareholder return of our peer group companies. The estimated realizable value reflects the aggregate value of base salary, actual bonus paid, in-the-money value of stock options, value of restricted stock, an estimated value of outstanding performance awards, and dividends received or accrued as of December 31, 2012.
The following chart displays our CEOs targeted compensation for the years 2011 - 2013 compared to the potential realizable compensation as of December 31, 2013. Target bars represent the Compensation Committees target compensation decisions for years 2011, 2012, and 2013. Each years value is reflective of our CEOs annual base salary, target bonus opportunity and targeted equity value. Realizable bars for 2011, 2012, and 2013 represent each years base salary, actual bonus paid, in-the-money value of stock options, value of restricted stock, an estimated value of outstanding performance awards, and dividends received or accrued as of December 31, 2013. We believe this supplemental information is important since the vast majority of reported compensation is an incentive for future performance and will vary depending upon the Companys performance for the applicable year. As can be seen, the realizable compensation differs from the amounts shown in the 2013 Summary Compensation Table.
($ in thousands)
vi
Recent Enhancements to Compensation Program
· | On July 23, 2013, our Board adopted a policy that prohibits our executive officers and directors from pledging shares of Company stock awarded as compensation for service as an employee or director of the Company (including shares owned as a result of the exercise of compensatory stock options) as collateral for a loan or hedging such shares through a covered call, collar or other derivative transaction. (page 38) |
· | On July 22, 2013, our Compensation Committee adopted a policy by which it would allow the continued or accelerated vesting of equity benefits to employees retiring after attaining age 60 with 10 years of service who provide at least six months written notice of retirement and meet certain other requirements. (page 38) |
· | Free cash flow has been added as a performance measure under our 2014 Short-Term Incentive Plan, with the quantitative nondiscretionary component of the plan remaining at 60% of the total payout calculation and allocated 15% each to production, relative cash costs and relative total stockholder return and 7.5% each to discretionary cash flow and free cash flow. (page 36) |
· | An adjustment has been made to our 2014 compensation peer group to ensure that it continues to be relevant. (page 33) |
· | In the fall of 2013, our Compensation Committee approved the termination of our defined benefit plans, with plan liquidation anticipated by the end of calendar year 2015. (page 39) |
Important Date for 2015 Annual Meeting of Stockholders (page 13)
Stockholder proposals and nominees for director(s) to be submitted for inclusion in our 2015 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, 2014.
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1001 Noble Energy Way Houston, Texas 77070 |
PROXY STATEMENT March 21, 2014 |
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 2014 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 22, 2014, 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 1001 Noble Energy Way, Houston, Texas 77070. We are first mailing this Proxy Statement to our stockholders on or about March 24, 2014.
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 5, 2014, 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 5, 2014 there were 360,650,792 shares of common stock issued and outstanding.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2014 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 22, 2014.
The Companys Proxy Statement for the 2014 Annual Meeting of Stockholders, Annual Report to Stockholders for the fiscal year ended December 31, 2013 and Annual Report on Form 10-K for the fiscal year ended December 31, 2013 are available at https://materials.proxyvote.com/655044.
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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? |
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? |
2
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 2014 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. |
Directors in uncontested elections will be elected by a majority of the votes cast by the holders of the shares of our common stock voting in person or by proxy at the meeting. A majority of the votes cast means that the number of votes cast for a director nominee must exceed the number of votes cast against that director nominee. The proposals to ratify the appointment of the independent auditor and to approve executive compensation each require approval by holders of a majority of shares of our common stock represented in person or by proxy at the meeting. As an advisory vote, the proposal to approve executive compensation is not binding upon the Company. However, the Compensation Committee, which is responsible for overseeing the Companys executive compensation program, values the opinions expressed by stockholders and will consider the outcome of the vote when making future compensation decisions.
8. | What if I am a stockholder of record and do not specify a choice for a matter when returning a proxy? |
3
Questions and Answers |
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? |
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.
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Questions and Answers |
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, 2013 (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? |
19. | Where can I find definitions for capitalized terms, abbreviations and acronyms used in this Proxy Statement? |
We have attempted to include definitions for capitalized terms, abbreviations and acronyms at the place in this Proxy Statement where they are first used. We have also included a quick reference glossary beginning on page 64.
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Corporate Governance |
Corporate Governance
Our website contains a number of documents helpful to your understanding of our corporate governance practices:
· | Corporate Governance Guidelines, which include information regarding the Boards mission and director responsibilities, director qualifications and determination of director independence; |
· | Certificate of Incorporation; |
· | By-Laws; |
· | charters for each Board committee; and |
· | Code of Conduct and Code of Ethics for our Chief Executive Officer, and Senior Financial Officers, and information about how to report concerns about the Company. |
You may also obtain copies of these documents by contacting the Company Secretary. Instructions on how to communicate with the Companys directors are included in response to question 18 in the Questions and Answers section. (page 5)
The Board regularly reviews developments in corporate governance and updates its corporate governance documents and practices as it deems appropriate. Amendments to these documents will be promptly posted on our website.
Board Leadership Structure
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Corporate Governance |
Board and Committees
The following table summarizes the primary purposes of each committee.
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; |
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Corporate Governance |
Committee | Primary Purpose | |||
· |
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.
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The following table describes the current members of each committee and the number of meetings held during 2013.
Name | Audit(1) | Compensation(2) | Governance(3) | EH&S | ||||
Jeffrey L. Berenson* |
ü | ü | ||||||
Michael A. Cawley* |
ü | Chair | ||||||
Edward F. Cox* |
ü | ü | Chair | |||||
Charles D. Davidson |
ü | |||||||
Thomas J. Edelman* |
ü | ü | ü | |||||
Eric P. Grubman* |
ü | ü | ||||||
Kirby L. Hedrick* |
Chair | ü | ü | |||||
Scott D. Urban* |
ü | ü | ü | |||||
William T. Van Kleef* |
Chair | ü | ||||||
Molly K. Williamson* |
ü(4) | ü | ü | |||||
Number of Meetings |
5 | 8 | 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 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. |
(4) | Ms. Williamson was added to the Compensation Committee on January 28, 2014. |
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Corporate Governance |
Oversight of Risk Management
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Corporate Governance |
Codes of Business Conduct and Ethics
Independence and Related Person Transactions
Director Independence
Director | Description of Relationship | |
Jeffrey L. Berenson |
President and CEO of Berenson & Company, as well as a former director 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 $32,078 in 2013 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 2013. | |
Edward F. Cox |
Chair of the New York Republican State Committee. Received payments in 2013 totaling approximately $587,516 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. |
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Corporate Governance |
Director | Description of Relationship | |
Thomas J. Edelman |
Director of Berenson & Company, as well as managing partner of White Deer Energy, 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 2013. | |
Molly K. Williamson |
Scholar with the Middle East Institute, Director of the American Academy of Diplomacy and Director of the International Service Corps. |
After reviewing these transactions, relationships and arrangements, our Board affirmatively determined that no material relationship existed that would interfere with the ability of Messrs. Berenson, Cawley, Cox, Edelman, Grubman, Hedrick, Urban or Van Kleef or Ms. Williamson to exercise independent judgment and that each is independent for Board membership purposes. Our Board has also determined that all members of our Audit Committee, Compensation Committee and Governance Committee are independent under the applicable NYSE independence standards and SEC rules.
Related Person Transactions
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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, 2013.
Ownership of Equity Securities of the Company
Directors and Named Executive Officers
The following table sets forth, as of March 5, 2014, 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 Owned(2) |
Shares Underlying Stock Options(3) |
Total | Percent of Class | ||||||||||||
Director |
||||||||||||||||
Jeffrey L. Berenson |
58,214 | 58,162 | 116,376 | * | ||||||||||||
Michael A. Cawley |
39,848 | 71,762 | 111,610 | * | ||||||||||||
Edward F. Cox |
46,966 | (4) | 51,762 | 98,728 | * | |||||||||||
Charles D. Davidson |
1,194,379 | (5) | 1,579,974 | 2,774,353 | * | |||||||||||
Thomas J. Edelman |
3,939,848 | (6) | 74,162 | 4,014,010 | 1.1% | |||||||||||
Eric P. Grubman |
18,316 | 42,010 | 60,326 | * | ||||||||||||
Kirby L. Hedrick |
97,026 | 71,762 | 168,788 | * | ||||||||||||
Scott D. Urban |
25,448 | 56,796 | 82,244 | * | ||||||||||||
William T. Van Kleef |
102,566 | 74,162 | 176,728 | * | ||||||||||||
Molly K. Williamson |
3,760 | 5,434 | 9,194 | * | ||||||||||||
Named Executive Officer (excluding any director named above) |
||||||||||||||||
Rodney D. Cook |
122,519 | 185,078 | 307,597 | * | ||||||||||||
Susan M. Cunningham |
147,375 | 488,650 | 636,025 | * | ||||||||||||
Kenneth M. Fisher |
135,044 | 229,662 | 364,706 | * | ||||||||||||
David L. Stover |
311,819 | 742,020 | 1,053,839 | * | ||||||||||||
All directors and Named Executive Officers as a group (14 persons) |
6,243,128 | 3,731,396 | 9,974,524 | 2.8% |
* | 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 restricted stock awards not currently vested, as follows: 1,604 shares held by each of Messrs. Berenson, Cawley, Cox, Edelman, Grubman, Hedrick, Urban and Van Kleef; Ms. Williamson 3,760 shares; Mr. Cook 34,444 shares; Ms. Cunningham 54,287 shares; Mr. Davidson 214,582 shares; Mr. Fisher 63,357 shares; and Mr. Stover 119,055 shares. |
(3) | Consists of shares not outstanding but subject to options that are currently exercisable or that will become exercisable on or before May 4, 2014. |
(4) | Includes 28,334 shares held by spouse. |
(5) | Includes 6,678 shares indirectly held in a qualified 401(k) Plan. |
(6) | Includes 1,334,000 shares held under deferred compensation plans. |
12
Corporate Governance |
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 our issued and outstanding common stock.
Name and Address | Number of Shares | Percent of Class |
||||||
FMR LLC 82 Devonshire Street Boston, MA 02109 |
53,918,413 (1) | 15.0% | ||||||
Capital World Investors 333 South Hope Street Los Angeles, CA 90071 |
26,703,000 (2) | 7.4% | ||||||
Blackrock, Inc. 40 East 52nd Street New York, NY 10022 |
21,897,346 (3) | 6.1% |
(1) | Based upon its Schedule 13G/A filed with the SEC on February 14, 2014 with respect to its beneficial ownership of our common stock. FMR LLC has sole voting power with respect to 194,435 shares and sole dispositive power with respect to 53,918,413 shares. |
(2) | Based upon its Schedule 13G/A filed with the SEC on February 13, 2014 with respect to its beneficial ownership of our common stock. Capital World Investors has sole voting power and sole dispositive power with respect to 26,703,000 shares. |
(3) | Based upon its Schedule 13G/A filed with the SEC on January 30, 2014 with respect to its beneficial ownership of our common stock. Blackrock, Inc. has sole voting power and sole dispositive power with respect to 18,774,381 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 2015 Annual Meeting of Stockholders, which is currently scheduled to be held on April 28, 2015, must be received by us at our office in Houston, Texas, addressed to our Secretary, no later than December 23, 2014.
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.
13
Election of Directors (Proposal 1) |
Election of Directors (Proposal 1)
As of the date of this Proxy Statement, our Board consists of ten directors, nine of whom are independent. The business experience of each nominee as well as the qualifications that led our Board to select each nominee for election to the Board is discussed below. All directors are elected annually to serve until the next annual meeting and until their successors are elected.
Election Process
Director Nominations
Director Qualifications
14
Election of Directors (Proposal 1) |
2014 Nominees for Director
Qualifications of 2014 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.
15
Director Nominee Biographies |
Jeffrey L. Berenson
Director since 2005 Age 63
Mr. Berenson is President and Chief Executive
Officer of Berenson & Company, a private investment banking |
Michael A. Cawley
Director since 1995 Age 66
Mr. Cawley has served as President and Manager of The Cawley Consulting Group, LLC since January 2012. He | |||||
firm in New York City that he co-founded 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 in May 2005. He previously served on 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 DJ Basin (Colorado) assets through his service as a director of Patina and since that time has had broad exposure to the Companys business through over eight years of service on our Board. |
previously served as President and Chief Executive Officer of The Samuel Roberts Noble Foundation, Inc. (Foundation) from February 1992 until his retirement in January 2012, after serving as Executive Vice President of the Foundation since January 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 business through over 18 years of service on our Board.
Strong Governance Experience worked as an attorney, and law firm partner, and for over 13 years has served as our Lead Independent Director and chair of our Governance Committee. |
16
Director Nominee Biographies |
Edward F. Cox
Director since 1984 Age 67
Mr. Cox is chair of the New York Republican State Committee (NYRSC) and was previously for more than five |
Charles D. Davidson
Director since 2000 Age 64
Mr. Davidson has served as our Chief Executive Officer since October 2000 and as Chairman of our Board since | |||||
years a partner in the law firm of 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 business through over 29 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. |
April 2001. In addition, he served as 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 production 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 company 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. |
17
Director Nominee Biographies |
Thomas J. Edelman
Director since 2005 Age 63
Mr. Edelman founded Patina and served as its Chairman and Chief Executive Officer from its formation in |
Eric P. Grubman
Director since 2009 Age 56
Mr. Grubman has served as Executive Vice President of the National Football League since 2004. He was | |||||
1996 through its merger with the Company in 2005. He co-founded 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 First Boston Corporation and, from 1975 through 1980 with Lehman Brothers Kuhn Loeb Incorporated. Mr. Edelman is currently Managing Partner of White Deer Energy, an energy private equity fund, and serves on the Board of Directors of Emerald Oil, Inc. and PostRock Energy Corporation. He previously served on the Board of Directors of BioFuel Energy Corp. Mr. Edelman 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 in May 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 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 and devoted a substantial portion of his career to the oil and gas industry.
Extensive Knowledge of Our Industry and Business has historical knowledge of the Companys DJ Basin assets through his service as founder, Chairman and CEO of Patina and since that time has had broad exposure to the Companys business through over eight years of service on our Board. |
responsible for Finance and Strategic Transactions 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, was partner and co-head of the Energy Group at Goldman Sachs from 1996 to 2000, and worked in its merger department from 1987 to 2000. Mr. Grubman served as an officer in the U.S. Navy from 1980 to 1985. He serves on the Board of Directors of the U.S. Naval Academy Foundation. He joined our Board in January 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 and as partner and co-head of the Energy Group at Goldman Sachs and has had broad exposure to the business through over five years of service on our Board. |
18
Director Nominee Biographies |
Kirby L. Hedrick
Director since 2002 Age 61
Mr. Hedrick served as Executive Vice President over upstream operations for Phillips Petroleum Company from 1997 |
Scott D. Urban
Director since 2007 Age 60
Mr. Urban served in executive management positions at Amoco and its successor, BP, from 1977 to 2005. | |||||
until his retirement in 2000. In that role, he was responsible for 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 Pet. Co. Norway; Manager, Corporate Planning from 1987 to 1989; Managing Director from 1990 to 1992, Phillips Pet. 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 in August 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 11 years of service on our Board. |
At the time of his retirement from BP in 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 in October 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, 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 six years of service on our Board. |
19
Director Nominee Biographies |
William T. Van Kleef
Director since 2005 Age 62
Mr. Van Kleef served in executive management positions at Tesoro Corporation (Tesoro) from 1993 to |
|
Molly K. Williamson
Director since 2013 Age 68
Ms. Williamson has served in a unique combination of senior executive policy positions in four cabinet departments | ||||
2005, most recently as Tesoros 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 in November 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 through over eight years of service on our Board. |
of the U.S. government. Her postings 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.
Ms. Williamson 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 Service 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 resumé of broad government service, with expertise in the geopolitics of the Middle East. |
20
Director Compensation |
2013 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
21
Director Compensation |
Director Compensation Summary
The table below sets forth certain information concerning the compensation earned in 2013 by our non-employee directors.
Name | Fees Earned or Paid in Cash ($)(1) |
Stock Awards ($)(2) |
Option Awards ($)(3) |
Total ($) |
||||||||||||
Jeffrey L. Berenson |
117,000 | 100,018 | 80,329 | 297,347 | ||||||||||||
Michael A. Cawley |
138,500 | 100,018 | 80,329 | 318,847 | ||||||||||||
Edward F. Cox |
132,500 | 100,018 | 80,329 | 312,847 | ||||||||||||
Thomas J. Edelman |
115,000 | 100,018 | 80,329 | 295,347 | ||||||||||||
Eric P. Grubman |
111,000 | 100,018 | 80,329 | 291,347 | ||||||||||||
Kirby L. Hedrick |
138,000 | 100,018 | 80,329 | 318,347 | ||||||||||||
Scott D. Urban |
117,000 | 100,018 | 80,329 | 297,347 | ||||||||||||
William T. Van Kleef |
124,000 | 100,018 | 80,329 | 304,347 | ||||||||||||
Molly K. Williamson |
81,880 | 125,026 | 98,355 | 305,261 |
(1) | Reflects annual retainer and meeting fees. |
(2) | Reflects the aggregate grant date fair value for restricted stock awarded in 2013 under our 2005 Plan, computed in accordance with FASB ASC Topic 718. Each non-employee director was granted 1,832 shares of restricted stock on February 1, 2013 that were unvested as of December 31, 2013. Ms. Williamson was granted 2,156 shares of restricted stock on March 14, 2013, the date she was first elected to our Board, that were unvested as of December 31, 2013. |
(3) | Reflects the aggregate grant date fair value for nonqualified stock options granted in 2013 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. Each non-employee director was granted 4,710 nonqualified stock options on February 1, 2013 that were unvested as of December 31, 2013. Ms. Williamson was granted 5,434 nonqualified stock options on March 14, 2013, the date she first was elected to our Board, that were unvested as of December 31, 2013. |
The following directors have option grants outstanding as of December 31, 2013: Mr. Berenson 58,162 shares; Mr. Cawley 71,762 shares; Mr. Cox 51,762 shares; Mr. Edelman 74,162 shares; Mr. Grubman 42,010 shares; Mr. Hedrick 91,762 shares; Mr. Urban 56,796 shares; Mr. Van Kleef 74,162 shares; and Ms. Williamson 5,434 shares.
22
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 2013 and 2012
2013 | % | 2012 | % | |||||||||||||||
Audit Fees(1) |
$ | 3,146,261 | 98.9 | $ | 2,145,382 | 95.5 | ||||||||||||
Audit Related Fees(2) |
| | 10,000 | 0.5 | ||||||||||||||
Tax Fees(3) |
34,524 | 1.1 | 90,490 | 4.0 | ||||||||||||||
All Other Fees |
| | | | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
$ | 3,180,785 | 100.0 | $ | 2,245,872 | 100.0 |
(1) | Audit fees consist of services rendered for the audit of the Companys annual financial statements, the audit of the effectiveness of the Companys internal controls over financial reporting, other audit consultation and reviews of the Companys quarterly financial statements. This category also includes amounts paid for the issuance of consents, foreign statutory audits and similar audit-related work. Fees for 2013 also include amounts paid for the issuance a comfort letter associated with a debt offering. |
(2) | Fees for 2012 are associated with the audit of our 401(k) Plan. |
(3) | Includes fees paid for tax-related consulting. |
Audit Committee Pre-Approval Policies and Procedures
23
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 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 28, 2014 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 five meetings during 2013, including regular meetings and a special meeting addressing the Form 10-K filing, earnings release and related matters.
Throughout 2013 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, 2013, as filed with the SEC.
February 3, 2014
Audit Committee
William T. Van Kleef, Chair
Michael A. Cawley
Eric P. Grubman
Scott D. Urban
24
Advisory Vote to Approve Executive Compensation (Proposal 3) |
Advisory Vote to Approve Executive Compensation (Proposal 3)
25
Compensation Discussion and Analysis |
Compensation Discussion and Analysis
Introduction
This Compensation Discussion and Analysis provides you with a 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 2013, who were:
Name | Title | |
Charles D. Davidson |
Chairman and Chief Executive Officer | |
David L. Stover |
President and Chief Operating Officer | |
Kenneth M. Fisher |
Executive Vice President and Chief Financial Officer | |
Rodney D. Cook |
Senior Vice President and Advisor to the Chief Executive Officer and President | |
Susan M. Cunningham |
Senior Vice President, Gulf of Mexico, Africa and Frontier Ventures |
Biographical information for our Named Executive Officers, and other executive officers, is included in Appendix B to this Proxy Statement.
2013 Business Highlights
26
Compensation Discussion and Analysis |
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 2011 to 2013. 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) |
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. |
27
Compensation Discussion and Analysis |
Five-Year Total Stockholder Return
The following chart shows how a $100 investment in the Companys common stock on December 31, 2008 would have grown to over $290 on December 31, 2013, 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 new (2013) and former compensation peer groups over the same period, with dividends reinvested quarterly. As illustrated below, the Companys common stock outperformed both the S&P 500 Index and the Companys new and former compensation peer groups during this period.
Comparison of Five-Year Cumulative Total Stockholder Return*
For more complete information regarding the Companys 2013 performance, please see the Companys Annual Report on Form 10-K.
28
Compensation Discussion and Analysis |
2013 Executive Compensation Highlights
Our compensation program is designed to link compensation to performance. In 2013 we increased our emphasis on performance-based compensation, with 70% of our CEOs targeted compensation being performance-based. For purposes of the following chart:
| Annual bonuses are based on operational and financial performance; |
| stock options are based on absolute stock price appreciation; and |
| performance shares are based on relative total shareholder return. |
For 2013:
| Achievement of quantitative metrics (60% weighted) and qualitative goals (40% weighted) resulted in an above-target bonus payout; |
| long-term incentive compensation continued to constitute a substantial portion of our executives compensation, with the Compensation Committee considering total stockholder return, debt-adjusted per share production growth and reserve replacement in making grants of stock options and restricted stock; and |
| 25% of the target long-term incentive opportunity is tied to relative total stockholder return. |
Our Compensation Committee reviewed the aggregate estimated realizable pay of our CEO relative to CEOs of our peer group companies for the trailing three year period ending December 31, 2012, compared against three-year relative total stockholder return of our peer group companies. The estimated realizable value reflects the aggregate value of base salary, actual bonus paid, in-the-money value of stock options, value of restricted stock, an estimated value of outstanding performance awards, and dividends received or accrued as of December 31, 2012.
29
Compensation Discussion and Analysis |
The following chart displays our CEOs targeted compensation for the years 2011 - 2013 compared to the potential realizable compensation as of December 31, 2013. Target bars represent the Compensation Committees target compensation decisions for years 2011, 2012, and 2013. Each years value is reflective of our CEOs annual base salary, target bonus opportunity and targeted equity value. Realizable bars for 2011, 2012, and 2013 represent each years base salary, actual bonus paid, in-the-money value of stock options, value of restricted stock, an estimated value of outstanding performance awards, and dividends received or accrued as of December 31, 2013. We believe this supplemental information is important since the vast majority of reported compensation is an incentive for future performance and will vary depending upon the Companys performance for the applicable year. As can be seen, the realizable compensation differs from the amounts shown in the 2013 Summary Compensation Table.
($ in thousands)
Recent Enhancements to Compensation Program
| On July 23, 2013, our Board adopted a policy that prohibits our executive officers and directors from pledging shares of Company stock awarded as compensation for service as an employee or director of the Company (including shares owned as a result of the exercise of compensatory stock options) as collateral for a loan or hedging such shares through a covered call, collar or other derivative transaction. (page 38) |
| On July 22, 2013, our Compensation Committee adopted a policy by which it would allow the continued or accelerated vesting of equity benefits to employees retiring after attaining age 60 with 10 years of service who provide at least six months written notice of retirement and meet certain other requirements. (page 38) |
| Free cash flow has been added as a performance measure under our 2014 Short-Term Incentive Plan, with the quantitative nondiscretionary component of the plan remaining at 60% of the total payout calculation and allocated 15% each to production, relative cash costs and relative total stockholder return and 7.5% each to discretionary cash flow and free cash flow. (page 36) |
| An adjustment has been made to our 2014 compensation peer group to ensure that it continues to be relevant. (page 33) |
| In the fall of 2013, our Compensation Committee approved the termination of our defined benefit plans, with plan liquidation anticipated by the end of calendar year 2015. (page 39) |
30
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 align compensation with 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 Comparative Compensation Data - We review comparative compensation data for our executive officers prior to making annual executive compensation decisions.
þ Mitigate Undue Risk - We mitigate undue risk associated with compensation, including having 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 meet.
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 each year 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.
31
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 (although on May 1, 2013 we entered into separate Retention and Confidentiality Agreements with executive officers Rodney D. Cook and Ted D. Brown that provided for their continued employment until agreed dates in 2014, with them in return receiving continued vesting of previously awarded stock options and restricted stock, subject to certain conditions).
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
x No Pledging Shares of Company Stock Received as Compensation as Collateral for a Loan, or Hedging such Shares
Results of 2013 Advisory Vote to Approve Executive Compensation
At the 2013 Annual Meeting of Stockholders, we held our third annual advisory vote on executive compensation. Over 90% of the votes cast were in favor of this advisory proposal. The Compensation Committee considered this to be a favorable outcome and believes it conveyed our stockholders support of the Compensation Committees decisions and our executive compensation program. As a result, the Compensation Committee made no material changes in the structure of the program or pay for performance philosophy for 2013. The committee nonetheless continues to seek ways to enhance our executive compensation program to ensure it remains linked to Company performance and has implemented recent changes previously noted. At the 2014 Annual Meeting of Stockholders, we will again hold an annual advisory vote to approve executive compensation (page 25), and the Compensation Committee will continue to consider the results from this years and future advisory votes on executive compensation.
Determining Executive Compensation
32
Compensation Discussion and Analysis |
33
Compensation Discussion and Analysis |
What We Pay and Why: Elements of Compensation
Our compensation program is designed to attract and retain high quality employees. 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 non-qualified plans | ||||
Purpose |
deliver baseline cash compensation commensurate with experience and expertise in role |
motivate performance and compensate employees for annual contributions |
incentivize retention
align long-term interests of employees and stockholders |
incentivize retention by providing financial security in, and a tax-efficient means to save for, retirement | ||||
Structure |
market-based, considering salary range for job grade and responsibilities |
performance-based quantitative and qualitative factors |
equity grants of stock
|
plans and programs with broad eligibility |
34
Compensation Discussion and Analysis |
35
Compensation Discussion and Analysis |
Quantitative Measures (60% weighted)
Our Compensation Committee considered the Companys 2013 results against targets in the following four areas in arriving at the quantitative nondiscretionary STIP component:
Measure | Weight | Target | Result(1) | Factor | ||||
Production |
15% | 278.1 MBoe/d | 278.5 MBoe/d | 1.00 | ||||
Relative Controllable Unit Costs |
15% | 50th Percentile of Peers | 5th out of 15 | 1.64 | ||||
Discretionary Cash Flow |
15% | $3.4 billion | $3.526 billion(2) | 1.28 | ||||
Relative Total Stockholder Return |
15% | 50th Percentile of Peers | 7th out of 15 | 1.21 | ||||
Final quantitative nondiscretionary factor |
- | - | 1.28 |
(1) | The results for production and discretionary cash flow were adjusted to negate the impact of acquisitions and divestitures that occurred during the year. |
(2) | Non-GAAP financial measure. 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. |
Qualitative Measures (40% weighted)
The Compensation Committee also considered the Companys 2013 results in the following operational financial and other areas in arriving at the qualitative discretionary STIP component:
Measure | Result | |
Additions to proved oil and natural gas reserves |
369% replacement of production | |
Safety and environmental performance |
Company had record best lost time incident rate | |
Financial controls |
Balance sheet maintained, with credit facility extension and successful bond offering | |
Exploration success |
Israel and deepwater Gulf of Mexico discoveries, total resources discovered slightly under target due to Nicaragua dry hole | |
Strategic initiatives |
Successful start-ups of Tamar, Alen and the Companys new Houston headquarters, with various other transactions closed | |
Divestiture program |
Over $300 million in proceeds received | |
Relative total stockholder return |
One-year: 35%, 7th out of 15 among our compensation peer group Five-year: 191%, 4th out of 15 among our compensation peer group | |
Final qualitative discretionary factor |
1.82 |
36
Compensation Discussion and Analysis |
37
Compensation Discussion and Analysis |
38
Compensation Discussion and Analysis |
39
Compensation Discussion and Analysis |
40
Compensation Discussion and Analysis |
41
Compensation Discussion and Analysis |
42
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, 2013 for filing with the SEC.
March 12, 2014
Compensation, Benefits and
Stock Option Committee
Kirby L. Hedrick, Chair
Jeffrey L. Berenson
Edward F. Cox
Thomas J. Edelman
Molly K. Williamson
43
Compensation Tables |
Summary Compensation Table
The following table sets forth summary information concerning the compensation earned by our Named Executive Officers during 2011, 2012 and 2013.
Name and Principal Position |
Year | Salary ($)(1) |
Bonus($) |
Stock Awards ($)(2) |
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 |
2013 | 1,125,000 | | 3,787,477 | 2,951,607 | 1,856,250 | 4,219,830 | 79,472 | 14,019,636 | |||||||||||||||||||||||||||
Chairman and Chief |
2012 | 1,125,000 | | 3,750,031 | 3,025,060 | 2,165,625 | 2,102,110 | 78,703 | 12,246,529 | |||||||||||||||||||||||||||
Executive Officer |
2011 | 1,069,719 | | 3,500,030 | 2,864,040 | 1,856,250 | 2,123,823 | 78,059 | 11,491,921 | |||||||||||||||||||||||||||
David L. Stover |
2013 | 713,414 | | 2,061,191 | 1,606,308 | 1,102,500 | 2,455,659 | 56,511 | 7,995,583 | |||||||||||||||||||||||||||
President and Chief |
2012 | 679,930 | | 2,250,018 | 1,815,042 | 1,242,500 | 866,440 | 51,615 | 6,905,545 | |||||||||||||||||||||||||||
Operating Officer |
2011 | 632,476 | | 1,799,964 | 1,472,953 | 1,081,363 | 886,629 | 54,428 | 5,927,813 | |||||||||||||||||||||||||||
Kenneth M. Fisher |
2013 | 572,321 | | 1,133,678 | 883,483 | 788,449 | 5,116 | 113,574 | 3,496,621 | |||||||||||||||||||||||||||
Executive Vice President and |
2012 | 552,817 | | 1,149,955 | 927,690 | 789,919 | 997 | 111,896 | 3,533,274 | |||||||||||||||||||||||||||
Chief Financial Officer |
2011 | 528,738 | | 999,970 | 818,327 | 763,440 | 518 | 104,417 | 3,215,410 | |||||||||||||||||||||||||||
Susan M. Cunningham |
2013 | 522,048 | | 953,172 | 742,916 | 550,030 | 1,515,840 | 48,521 | 4,332,527 | |||||||||||||||||||||||||||
Senior Vice President, |
2012 | 502,817 | | 1,324,984 | 1,068,854 | 675,588 | 624,323 | 250,501 | 4,447,067 | |||||||||||||||||||||||||||
Gulf of Mexico, Africa and Frontier Ventures |
2011 | 478,738 | | 875,030 | 715,972 | 614,093 | 622,657 | 19,586 | 3,326,076 | |||||||||||||||||||||||||||
Rodney D. Cook |
2013 | 480,000 | 300,000 | 934,642 | 716,680 | 539,259 | 3,020,029 | 26,117 | 6,016,727 | |||||||||||||||||||||||||||
Senior Vice President |
2012 | 458,522 | | 1,324,984 | 1,068,854 | 623,620 | 1,107,771 | 25,052 | 4,608,803 | |||||||||||||||||||||||||||
and Advisor to the CEO and President |
2011 | 429,486 | | 875,030 | 715,972 | 564,370 | 1,173,636 | 25,173 | 3,783,667 |
(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 |
2013 | 45 | % | 506,250 | ||||||||
2012 | 45 | % | 506,250 | |||||||||
2011 | 45 | % | 481,374 | |||||||||
David L. Stover |
2013 | 6 | % | 42,805 | ||||||||
2012 | 6 | % | 40,796 | |||||||||
2011 | 5 | % | 31,264 | |||||||||
Kenneth M. Fisher |
2013 | 4 | % | 22,893 | ||||||||
2012 | 4 | % | 22,113 | |||||||||
2011 | 3 | % | 15,862 |
(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 in 2013 will vest according to the following schedule: 40% after year one and 60% after year two. Performance restricted stock awarded in 2013 will vest three years after the date of grant upon, and subject to a formula related to, the Companys achievement of certain levels of total stockholder return (TSR) relative to a pre-determined compensation peer group. Shares awarded in 2011 and 2012 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 2011 and 2012 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 2013. |
(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 2013. |
44
Compensation Tables |
(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($) |
||||||
Charles D. Davidson |
2013 | 1,856,250 | ||||||
2012 | 2,165,625 | |||||||
2011 | 1,856,250 | |||||||
David L. Stover |
2013 | 1,102,500 | ||||||
2012 | 1,242,500 | |||||||
2011 | 1,081,363 | |||||||
Kenneth M. Fisher |
2013 | 788,449 | ||||||
2012 | 789,919 | |||||||
2011 | 763,440 | |||||||
Susan M. Cunningham |
2013 | 550,030 | ||||||
2012 | 675,588 | |||||||
2011 | 614,093 | |||||||
Rodney D. Cook |
2013 | 539,259 | ||||||
2012 | 623,620 | |||||||
2011 | 564,370 |
(5) | Reflects during the year indicated: (a) the aggregate increase in actuarial present value of the Named Executive Officers benefits under our Retirement Plan and Restoration Plan; and (b) the above-market Deferred Compensation Plan earnings, as follows: |
Name | Year | Increase in Retirement and Restoration Plans ($)(a) |
Deferred Compensation Above-Market Earnings($)(b) |
|||||||||
Charles D. Davidson |
2013 | 3,510,498 | 709,332 | |||||||||
2012 | 1,893,070 | 209,040 | ||||||||||
2011 | 1,855,729 | 268,094 | ||||||||||
David L. Stover |
2013 | 2,391,405 | 64,254 | |||||||||
2012 | 848,025 | 18,415 | ||||||||||
2011 | 863,759 | 22,870 | ||||||||||
Kenneth M. Fisher |
2013 | | 5,116 | |||||||||
2012 | | 997 | ||||||||||
2011 | | 518 | ||||||||||
Susan M. Cunningham |
2013 | 1,515,840 | | |||||||||
2012 | 624,323 | | ||||||||||
2011 | 622,657 | | ||||||||||
Rodney D. Cook |
2013 | 2,999,969 | 20,060 | |||||||||
2012 | 1,102,420 | 5,351 | ||||||||||
2011 | 1,167,383 | 6,253 |
(a) | Beginning of year values for calculating the aggregate increase in actuarial present value reflect a 3.75% discount rate for the Retirement Plan and Restoration Plan; end of year values reflect a 3.25% discount rate for the Retirement Plan and a 3.00% discount rate for the Restoration Plan. Present values are based on the same actuarial assumptions and measurement dates used to determine the pension benefit obligations disclosed in Note 12 to our consolidated financial statements included in our 2013 Annual Report on Form 10-K, except that for years 2011 and 2012 for purposes of the present value calculations, participants are assumed to work until age 65 and commence their benefits at that time. |
Effective December 31, 2013, the Company adopted an amendment to the Retirement Plan to cease benefit accruals and to terminate the plan (see Pension Benefits section for more information). The Company anticipates that the Retirement Plan benefits will be distributed to the participants in 2015. Therefore, for 2013, the present value calculations assume that the participants will commence their benefit on December 31, 2015 (for Mr. Davidson it is assumed that he will commence his benefit on his 65th birthday in 2015). The following factors contributed to the 2013 increase (with the respective percentage that each factor contributed to the total increase for each named executive officer): (i) normal growth of benefit due to an additional year of benefit accrual (for Mr. Davidson 34%, for Mr. Stover 26%, for Ms. Cunningham 26% and for Mr. Cook 19%), (ii) lower discount rates used for the present value calculation (for Mr. Davidson 2%, for Mr. Stover 8%, for Ms. Cunningham 8% and for Mr. Cook 9%), (iii) the change in the definition of final average earnings in connection with the plan termination (for Mr. Davidson 64%, for Mr. Stover 30%, for Ms. Cunningham 26% and for Mr. Cook 29%), and (iv) due to the anticipated distribution of plan benefits in 2015, the present value calculation assumes that participants will commence their benefit on December 31, 2015 (as opposed to age 65) which includes the effect of capturing the value of pre-65 early retirement subsidies (these subsidies were not |
45
Compensation Tables |
reflected in the 2011 and 2012 increase since it was assumed that benefits commenced at age 65) and a shorter discounting period (for Mr. Davidson 0%, Mr. Stover 36%, for Ms. Cunningham 40% and for Mr. Cook 43%). Assuming the named executive officers commence their benefits at age 65, the 2013 increase would have been as follows: for Mr. Davidson, $3,510,498; for Mr. Stover, $1,538,835; for Ms. Cunningham, $902,771; and for Mr. Cook, $1,711,430). |
(b) | Above-market earnings in 2013 are based on the difference between the plan crediting rate of 4.90% and 120% of the annual long-term Applicable Federal Rate as of September 2012 (2.62%); earnings in 2012 are based on the difference between the plan crediting rate of 5.06% and 120% of the annual long-term Applicable Federal Rate as of September 2011 (4.30%); and earnings in 2011 are based on the difference between the plan crediting rate of 5.54% and 120% of the annual long-term Applicable Federal Rate as of September 2010 (4.41%). |
(6) | All other compensation includes: |
Name | Year | 401(k) Plan Matching Contributions ($) |
Deferred Compensation Plan Matching Contributions ($) |
Club Memberships ($) |
Insurance Premiums ($) |
Holiday Bonus ($) |
Physical Examinations ($) |
Profit Sharing Plan Contributions ($)(a) |
Temporary Expatriate Assignment Compensation ($)(b) |
|||||||||||||||||||||||||||
Charles D. Davidson |
2013 | 15,300 | 52,200 | 9,928 | 1,872 | 172 | | | | |||||||||||||||||||||||||||
2012 | 15,000 | 52,500 | 9,174 | 1,872 | 157 | | | | ||||||||||||||||||||||||||||
2011 | 14,700 | 49,483 | 9,110 | 1,872 | 157 | 2,150 | | | ||||||||||||||||||||||||||||
David L. Stover |
2013 | 15,300 | 27,505 | 9,512 | 1,872 | 172 | 2,150 | | | |||||||||||||||||||||||||||
2012 | 15,000 | 25,796 | 8,790 | 1,872 | 157 | | | | ||||||||||||||||||||||||||||
2011 | 14,700 | 23,249 | 8,728 | 1,872 | 157 | 5,135 | | | ||||||||||||||||||||||||||||
Kenneth M. Fisher |
2013 | 15,300 | 19,039 | 11,923 | 1,872 | 172 | | 65,268 | | |||||||||||||||||||||||||||
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 | | ||||||||||||||||||||||||||||
Susan M. Cunningham |
2013 | 15,300 | | | 1,872 | 172 | | | 30,600 | |||||||||||||||||||||||||||
2012 | 15,000 | | | 1,872 | 157 | | | 232,885 | ||||||||||||||||||||||||||||
2011 | 14,700 | | | 1,794 | 157 | 2,935 | | | ||||||||||||||||||||||||||||
Rodney D. Cook |
2013 | 15,300 | | 8,848 | 1,797 | 172 | | | | |||||||||||||||||||||||||||
2012 | 15,000 | | 8,176 | 1,719 | 157 | | | | ||||||||||||||||||||||||||||
2011 | 14,700 | | 8,119 | 1,610 | 157 | | | |
(a) | Mr. Fisher received Profit Sharing Plan contributions for 2013, 2012 and 2011 as of the last day of each calendar year. A portion of Mr. Fishers 2013 Profit Sharing contribution ($18,200) was deposited into Mr. Fishers Profit Sharing Plan contribution account in our 401(k) Plan. The remaining portion of Mr. Fishers 2013 Profit Sharing Plan contribution ($47,068) was credited to Mr. Fishers account in our nonqualified Deferred Compensation Plan. A portion of Mr. Fishers 2012 Profit Sharing contribution ($18,000) was deposited into Mr. Fishers Profit Sharing Plan contribution account in our 401(k) 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 401(k) 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. |
(b) | In 2013, Ms. Cunningham completed 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 $10,200, expatriate hardship pay in the amount of $13,600 and an expatriate location premium in the amount of $6,800. In 2012, Ms. Cunningham received the following compensation uplifts as part of the Companys expatriate assignment policy: 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, the 2012 amount 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 $1,721. |
46
Compensation Tables |
As reflected in the Summary Compensation Table above, the salary received by each of our Named Executive Officers as a percentage of their respective total compensation during the year indicated was as follows: |
Name | Year | Percentage of Total Compensation |
||||||
Charles D. Davidson |
2013 | 8.0 | % | |||||
2012 | 9.2 | % | ||||||
2011 | 9.3 | % | ||||||
David L. Stover |
2013 | 8.9 | % | |||||
2012 | 9.9 | % | ||||||
2011 | 10.7 | % | ||||||
Kenneth M. Fisher |
2013 | 16.4 | % | |||||
2012 | 15.7 | % | ||||||
2011 | 16.4 | % | ||||||
Susan M. Cunningham |
2013 | 12.1 | % | |||||
2012 | 11.3 | % | ||||||
2011 | 14.4 | % | ||||||
Rodney D. Cook |
2013 | 8.0 | % | |||||
2012 | 10.0 | % | ||||||
2011 | 11.4 | % |
Grants of Plan-Based Awards
The table below sets forth information regarding grants of plan-based awards made to our Named Executive Officers during 2013.
Name | Approval Date(1) |
Grant Date(1) |
Estimated Future
Payouts Under Non-Equity Incentive Plan Awards |
Estimated Future Payouts Under Equity Incentive Plan Awards (2) |
All Other Stock Awards: Number of Shares of Stock (#) (3) |
All Other Option Awards: Number of Securities Underlying Options (#) (4) |
Exercise or Base Price of Option Awards ($/Sh)(5) |
Grant Date Fair Value of Stock and Option Awards ($)(6) |
||||||||||||||||||||||||||||||||||||
Threshold ($) |
Target ($) |
Max ($) |
Threshold (#) |
Target (#) |
Max (#) |
|||||||||||||||||||||||||||||||||||||||
Charles D. Davidson |
1/26/2013 | 2/1/2013 | 1,237,500 | |||||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 16,828 | 33,656 | 67,312 | 1,950,028 | |||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 33,656 | 1,837,449 | |||||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 173,064 | 54.60 | 2,951,607 | ||||||||||||||||||||||||||||||||||||||||
David L. Stover |
1/26/2013 | 2/1/2013 | 713,414 | |||||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 9,158 | 18,316 | 36,632 | 1,061,229 | |||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 18,316 | 999,962 | |||||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 94,184 | 54.60 | 1,606,308 | ||||||||||||||||||||||||||||||||||||||||
Kenneth M. Fisher |
1/26/2013 | 2/1/2013 | 486,473 | |||||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 5,037 | 10,074 | 20,148 | 583,688 | |||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 10,074 | 549,990 | |||||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 51,802 | 54.60 | 883,483 | ||||||||||||||||||||||||||||||||||||||||
Susan M. Cunningham |
1/26/2013 | 2/1/2013 | 391,536 | |||||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 4,235 | 8,470 | 16,940 | 490,792 | |||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 8,470 | 462,420 | |||||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 43,560 | 54.60 | 742,916 | ||||||||||||||||||||||||||||||||||||||||
Rodney D. Cook |
1/26/2013 | 2/1/2013 | 360,000 | |||||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 4,121 | 8,242 | 16,484 | 477,541 | |||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 8,242 | 457,101 | |||||||||||||||||||||||||||||||||||||||||
1/26/2013 | 2/1/2013 | 42,382 | 54.60 | 716,680 |
(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 granted under our 1992 Plan in 2013. The shares will vest on February 1, 2016 if specified performance goals are met. Performance goals for determining vesting are described in the CD&A under the heading Long-Term Incentive Plan. |
47
Compensation Tables |
(3) | Represents the shares of restricted stock awarded under our 1992 Plan in 2013. The shares will vest according to the following schedule: 40% of the award will vest on the first anniversary of the award date and remaining 60% of the award will vest on the second anniversary of the award date. Dividends declared on shares of restricted stock are accrued during the two-year restricted period and will be paid upon vesting of restricted shares. |
(4) | Represents grants of nonqualified stock options under our 1992 Plan in 2013. 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. |
(5) | Exercise price at fair market value was defined in our 1992 Plan 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, 2013 was $54.60. |
(6) | Reflects grant date fair values of restricted stock and nonqualified stock options granted to our Named Executive Officers on February 1, 2013 computed in accordance with FASB ASC Topic 718. In connection with Mr. Cooks entry into a Retention and Confidentiality Agreement with the Company on May 1, 2013, his plan-based award fair values were adjusted in accordance with FASB ASC Topic 718. |
48
Compensation Tables |
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information with respect to restricted stock and stock options held by our Named Executive Officers as of December 31, 2013.
Name | Number of Securities Underlying Unexercised Options (# Exercisable) |
Number of Securities Underlying Unexercised Options (# Unexercisable) |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
Option Exercise Price ($) |
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 ($)(7) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested #(8) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
|||||||||||||||||||||||||||
Charles D. Davidson |
155,914 | | | 22.97 | 2/1/2016 | 38,716 | (4) | 2,636,947 | | | ||||||||||||||||||||||||||
328,236 | | | 26.71 | 2/1/2017 | 58,928 | (5) | 4,013,586 | | | |||||||||||||||||||||||||||
250,400 | | | 36.47 | 2/1/2018 | 33,656 | (6) | 2,292,310 | 67,312 | 4,584,620 | |||||||||||||||||||||||||||
260,980 | | | 25.10 | 1/30/2019 | | | | | ||||||||||||||||||||||||||||
211,520 | | | 37.55 | 2/1/2020 | | | | | ||||||||||||||||||||||||||||
126,364 | 63,182 | (1) | | 45.20 | 2/1/2021 | | | | | |||||||||||||||||||||||||||
62,846 | 125,690 | (2) | | 50.91 | 2/1/2022 | | | | | |||||||||||||||||||||||||||
| 173,064 | (3) | | 54.60 | 2/1/2023 | | | | | |||||||||||||||||||||||||||
David L. Stover |
31,960 | | | 22.97 | 2/1/2016 | 19,910 | (4) | 1,356,070 | | | ||||||||||||||||||||||||||
97,220 | | | 26.71 | 2/1/2017 | 35,358 | (5) | 2,408,233 | | | |||||||||||||||||||||||||||
119,498 | | | 36.47 | 2/1/2018 | 18,316 | (6) | 1,247,503 | 36,632 | 2,495,006 | |||||||||||||||||||||||||||
145,420 | | | 25.10 | 1/30/2019 | | | | | ||||||||||||||||||||||||||||
31,948 | | | 25.40 | 3/18/2019 | | | | | ||||||||||||||||||||||||||||
111,682 | | | 37.55 | 2/1/2020 | | | | | ||||||||||||||||||||||||||||
64,988 | 32,494 | (1) | | 45.20 | 2/1/2021 | | | | | |||||||||||||||||||||||||||
37,708 | 75,414 | (2) | | 50.91 | 2/1/2022 | | | | | |||||||||||||||||||||||||||
| 94,184 | (3) | | 54.60 | 2/1/2023 | | | | | |||||||||||||||||||||||||||
Kenneth M. Fisher |
65,898 | | | 33.73 | 11/16/2019 | 11,062 | (4) | 753,433 | | | ||||||||||||||||||||||||||
53,792 | | | 37.55 | 2/1/2020 | 18,072 | (5) | 1,230,884 | | | |||||||||||||||||||||||||||
36,106 | 18,052 | (1) | | 45.20 | 2/1/2021 | 10,074 | (6) | 686,140 | 20,148 | 1,372,280 | ||||||||||||||||||||||||||
19,274 | 38,544 | (2) | | 50.91 | 2/1/2022 | | | | | |||||||||||||||||||||||||||
| 51,802 | (3) | | 54.60 | 2/1/2023 | | | | | |||||||||||||||||||||||||||
Susan M. Cunningham |
34,188 | | | 11.12 | 2/1/2014 | 9,680 | (4) | 659,305 | | | ||||||||||||||||||||||||||
31,160 | | | 14.94 | 2/1/2015 | 20,822 | (5) | 1,418,186 | | | |||||||||||||||||||||||||||
16,000 | | | 20.73 | 8/1/2015 | 8,470 | (6) | 576,892 | 16,940 | 1,153,783 | |||||||||||||||||||||||||||
31,960 | | | 22.97 | 2/1/2016 | | | | | ||||||||||||||||||||||||||||
68,910 | | | 26.71 | 2/1/2017 | | | | | ||||||||||||||||||||||||||||
59,244 | | | 36.47 | 2/1/2018 | | | | | ||||||||||||||||||||||||||||
68,118 | | | 25.10 | 1/30/2019 | | | | | ||||||||||||||||||||||||||||
53,248 | | | 25.40 | 3/18/2019 | | | | | ||||||||||||||||||||||||||||
53,694 | | | 37.55 | 2/1/2020 | | | | | ||||||||||||||||||||||||||||
31,590 | 15,794 | (1) | | 45.20 | 2/1/2021 | | | | | |||||||||||||||||||||||||||
22,208 | 44,408 | (2) | | 50.91 | 2/1/2022 | | | | | |||||||||||||||||||||||||||
| 43,560 | (3) | | 54.60 | 2/1/2023 | | | | | |||||||||||||||||||||||||||
Rodney D. Cook |
37,560 | | | 36.47 | 2/1/2018 | 9,680 | (4) | 659,305 | | | ||||||||||||||||||||||||||
41,594 | | | 37.55 | 2/1/2020 | 20,822 | (5) | 1,418,186 | | | |||||||||||||||||||||||||||
31,590 | 15,794 | (1) | | 45.20 | 2/1/2021 | 8,242 | (6) | 561,363 | 16,484 | 1,122,725 | ||||||||||||||||||||||||||
22,208 | 44,408 | (2) | | 50.91 | 2/1/2022 | | | | | |||||||||||||||||||||||||||
| 42,382 | (3) | | 54.60 | 2/1/2023 | | | | |
(1) | Stock options vested February 1, 2014. |
(2) | 50% of stock options vested February 1, 2014; and 50% of stock options vest February 1, 2015. |
(3) | 33 1/3% of stock options vested February 1, 2014; 33 1/3% of stock options vest February 1, 2015; and 33 1/3% of stock options vest February 1, 2016. |
(4) | Restricted stock vested February 1, 2014. |
(5) | 37.5% of restricted stock vested February 1, 2014; and 62.5% of restricted stock vests February 1, 2015. |
(6) | 40% of restricted stock vested February 1, 2014 and 60% of restricted stock vests February 1, 2015. |
(7) | Market value based on December 31, 2013 closing price of $68.11. |
(8) | Performance shares of restricted stock will vest December 31, 2016 upon, and subject to a formula related to, the Companys achievement of certain levels of total shareholder return relative to a pre-determined industry peer group, granted under the 1992 Plan. Performance goals for determining vesting are described in the CD&A under the heading Long-Term Incentive Plan. The amounts shown assume a maximum payout of 200%. |
49
Compensation Tables |
Stock Option Exercises and Stock Vesting
The table below sets forth certain information with respect to vesting of restricted stock and the exercise of stock options held by our Named Executive Officers during fiscal year 2013.
Option Awards | ||||||||||||||||
Name | Number of Shares Acquired on Exercise |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting |
Stock Awards Value Realized on Vesting ($)(1) |
||||||||||||
Charles D. Davidson |
357,964 | 16,833,871 | 81,242 | 4,416,618 | ||||||||||||
David L. Stover |
47,160 | 1,997,505 | 43,638 | 2,372,586 | ||||||||||||
Kenneth M. Fisher |
| | 22,160 | 1,204,841 | ||||||||||||
Susan M. Cunningham |
33,600 | 1,514,667 | 22,000 | 1,196,345 | ||||||||||||
Rodney D. Cook |
| | 19,524 | 1,061,867 |
(1) | Shares of restricted stock awarded our Named Executive Officers on February 1, 2010, February 1, 2011 and February 1, 2012 vested on February 1, 2013. Income was recognized on vesting based on the average of the high and low trading price of our common stock of $54.32 on February 1, 2013 for restricted stock awarded on February 1, 2010 and 2011. Based on the amended 1992 Plan, the shares of restricted stock vesting beginning in 2013 (i.e., the restricted stock awarded on February 1, 2012) will have income recognized on vesting based on the closing trading price of our common stock on those dates ($54.60 on February 1, 2013). Dividends that accrued on the shares of restricted stock that vested on those dates during the restricted period were paid in 2013 as follows: Mr. Davidson $79,151; Mr. Stover $42,003; Mr. Fisher $21,103; Ms. Cunningham $20,684; and Mr. Cook $17,676. |
Pension Benefits
The amounts reported in the table below reflect the present value of accumulated benefits as of December 31, 2013 for the Named Executive Officers under our Retirement Plan and Restoration Plan. The estimates assume that benefits are received in the form of a ten-year certain and life annuity. Effective December 31, 2013, the Company adopted an amendment to the Retirement Plan to cease benefit accruals and to terminate the plan. Certain other amendments were adopted related to final average earnings, early retirement subsidies and interest rates used for lump sum payments in order to transition active participants to the Companys defined contribution plan platform. The Company is in the process of obtaining approvals from certain governmental agencies to terminate and liquidate the Retirement Plan assets. Upon approval from these agencies, active and deferred vested participants will have the opportunity to receive the value of their Retirement Plan benefit in the form of a lump sum payment. We are also in the process of securing an insurance company to purchase an annuity contract to secure the accrued benefits of those participants who do not elect to receive a lump sum payment and for those participants who are receiving a monthly benefit from the Retirement Plan in the form of an annuity. We anticipate that the Retirement Plan will be completely liquidated by the end of the calendar year 2015.
Name | Plan Name | Number of Years of Credited Service (1) |
Present Value of Accumulated Benefit ($)(2) |
Payments During Last Fiscal Year($) |
||||||||||||
Charles D. Davidson |
Retirement Plan | 13 | 934,898 | | ||||||||||||
Restoration Plan | 13 | 12,320,896 | | |||||||||||||
David L. Stover |
Retirement Plan | 11 | 720,572 | | ||||||||||||
Restoration Plan | 11 | 4,844,986 | | |||||||||||||
Susan M. Cunningham |
Retirement Plan | 13 | 886,843 | | ||||||||||||
Restoration Plan | 13 | 3,275,797 | | |||||||||||||
Rodney D. Cook |
Retirement Plan | 33 | 1,673,692 | | ||||||||||||
Restoration Plan | 33 | 6,054,361 | |
50
Compensation Tables |
(1) | The above Named Executive Officers are fully vested in their retirement benefits. Each is eligible for immediate commencement and can elect an unlimited lump sum option for his or her Retirement Plan benefit. For the Restoration Plan benefit, participants previously elected to receive their benefit as either an annuity or lump sum, and specified the timing for receipt of benefits. Each of the above Named Executive Officers elected to receive a lump sum from the Restoration Plan. Mr. Davidson and Ms. Cunningham elected to receive their Restoration Plan benefits upon separation of service and Messrs. Stover and Cook elected to receive their Restoration Plan benefits at the later of age 55 or separation of service. The following amounts would be payable to our Named Executive Officers from our Retirement Plan and Restoration Plan effective January 1, 2014: |
Name | Age at 12/31/2013 |
Retirement Plan Monthly Annuity ($) |
Retirement Lump Sum ($) |
Restoration Plan Lump Sum ($) |
||||||||||||
Charles D. Davidson |
63.83 | 5,588 | 982,664 | 13,039,809 | ||||||||||||
David L. Stover |
56.17 | 3,476 | 703,112 | 4,805,123 | ||||||||||||
Susan M. Cunningham |
58.00 | 4,449 | 873,237 | 3,270,709 | ||||||||||||
Rodney D. Cook |
56.58 | 8,771 | 1,762,649 | 6,074,970 |
(2) | Represents the actuarial present value of the accumulated pension benefits as of December 31, 2013 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 12 to our consolidated financial statements included in our 2013 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 2013.
Name | Executive Contributions in Last FY ($)(1) |
Registrant Contributions in Last FY ($)(2) |
Aggregate Earnings in Last FY ($)(4) |
Aggregate Withdrawals/ Distributions in Last FY ($) |
Aggregate Balance at Last FY ($)(5) |
|||||||||||||||
Charles D. Davidson |
2,671,875 | 52,200 | 1,524,441 | | 32,520,593 | |||||||||||||||
David L. Stover |
291,305 | 27,505 | 138,089 | | 2,973,578 | |||||||||||||||
Kenneth M. Fisher |
22,893 | 66,107 | 10,995 | | 308,235 | |||||||||||||||
Susan M. Cunningham |
| | | | | |||||||||||||||
Rodney D. Cook |
155,905 | | 43,112 | | 922,562 |
(1) | Mr. Davidson deferred 100% ($2,165,625) of the STIP payment he earned in 2012 (otherwise paid in 2013) and 45% ($506,250) of base salary in 2013. Mr. Stover deferred 20% ($248,500) of the STIP payment he earned in 2012 (otherwise paid in 2013) and 6% ($42,805) of base salary in 2013. Mr. Fisher deferred 4% ($22,893) of base salary in 2013. Mr. Cook deferred 25% ($155,905) of the STIP payment he earned in 2012 (otherwise paid in 2013). |
(2) | Represents matching contributions of 100% of the first 6% of base salary deferred, to the extent not matched in our Noble Energy, Inc. 401(k) Plan and the portion of Mr. Fishers 2013 Profit Sharing Plan contribution that could not be made to our Noble Energy, Inc. 401(k) Plan as a result of Internal Revenue Code limitations ($47,068). |
(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 2013 is based on Prime Rate average of 4.90%, 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.
51
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, 2013. 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 be eligible to receive continued vesting of certain of his or her unvested equity awards pursuant to a policy adopted by our Compensation Committee in July 2013, provided that he or she satisfies certain conditions and obligations; |
| 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.
52
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, 2013.
Executive Benefits and Payments Upon Separation |
Voluntary 12/31/2013 ($) |
Involuntary 12/31/2013 ($) |
Involuntary Termination or Termination Without Cause in Connection With a Change of Control on 12/31/2013 ($) |
Disability on 12/31/2013 ($) |
Death on 12/31/2013 ($) |
|||||||||||||||
Compensation: |
||||||||||||||||||||
Severance |
| | (6) | 9,222,281 | (7) | | | |||||||||||||
STIP Payments |
| (1) | | (1) | 1,237,500 | (7) | | (1) | 1,237,500 | (1) | ||||||||||
Stock Options |
| | 5,948,170 | (8) | | | ||||||||||||||
Restricted Stock |
| (2) | | (2) | 11,384,969 | (9) | 11,384,969 | (2) | 11,384,969 | (2) | ||||||||||
Benefits and Perquisites: |
||||||||||||||||||||
Retirement Plans |
| (3) | | (3) | | (3) | | (3) | | (3) | ||||||||||
Deferred Compensation Plan |
| (4) | | (4) | | (4) | | (4) | | (4) | ||||||||||
Health & Welfare Benefits |
| | 9,869 | (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 |
| | 27,817,789 | 11,384,969 | 13,622,469 |
(1) | Mr. Davidson would not be entitled to a STIP payment for 2013 in the event of his termination of employment on December 31, 2013, 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 2014, 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: 2011 award 38,716 shares; 2012 award 58,928 shares; and 2013 award 67,312 shares. Value is based on the closing price of our common stock on December 31, 2013 ($68.11) and includes dividends paid on such shares. |
(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 2013 and would therefore not be entitled to payment for any unused vacation in the event of his termination on December 31, 2013. 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 $1,800,000. |
(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. |
(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, 2013 ($68.11) on all unvested stock options held by Mr. Davidson as of December 31, 2013. |
53
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 Mr. Davidson on December 31, 2013 based on the closing price of our common stock on December 31, 2013 ($68.11) and includes dividends paid on such shares. |
(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 $1,000,000. |
In addition to the payments Mr. Davidson may receive upon the termination of his employment, he will continue to hold stock options that were vested immediately prior to his termination. In the event Mr. Davidson elects to retire from the Company, he will be eligible to receive continued vesting of certain of his unvested equity awards pursuant to a policy adopted by our Compensation Committee in July 2013, provided that he satisfies certain conditions and obligations. Mr. Davidson also will be entitled to receive the vested balance of his contributions to our Deferred Compensation Plan. The table below shows the vested benefits that Mr. Davidson has accumulated as of December 31, 2013 and the benefits he will receive as a result of his termination of employment on that date. We refer to the combined amounts as the total walk-away value:
Voluntary Termination on 12/31/2013 ($)(1) |
Involuntary Termination on 12/31/2013 ($)(1) |
Involuntary Termination or Termination Without Cause in Connection With a Change of Control on 12/31/2013 ($) |
Disability on 12/31/2013 ($)(1) |
Death on 12/31/2013 ($) |
||||||||||||||||
Vested Benefits as of December 31, 2013: |
||||||||||||||||||||
Stock Options (2) |
50,215,246 | 50,215,246 | 50,215,246 | 50,215,246 | 50,215,246 | |||||||||||||||
Retirement Plans |
14,022,473 | (3) | 14,022,473 | (3) | 14,022,473 | (3) | 14,022,473 | (4) | 8,178,244 | (5) | ||||||||||
Health & Welfare Benefits (6) |
1,046 | 1,046 | 1,046 | 1,046 | | |||||||||||||||
Deferred Compensation Plan (7) |
32,520,593 | 32,520,593 | 32,520,593 | 32,520,593 | 32,520,593 | |||||||||||||||
Total Vested Benefits |
96,759,358 | 96,759,358 | 96,759,358 | 96,759,358 | 90,914,083 | |||||||||||||||
Benefits and Payments Upon Separation: |
| | 27,817,789 | 11,384,969 | 13,622,469 | |||||||||||||||
Total Walk-Away Value |
96,759,358 | 96,759,358 | 124,577,147 | 108,144,327 | 104,536,552 |
(1) | Mr. Davidson was eligible for early retirement as of December 31, 2013. 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, 2013 ($68.11) on all stock options vested and exercisable as of December 31, 2013. |
(3) | Reflects the total lump sum payable to Mr. Davidson under our Retirement Plan and Restoration Plan as of January 1, 2014. 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, 2013 termination date, Mr. Davidsons monthly age 65 benefit from our Retirement Plan would be $5,631. If Mr. Davidson commences his retirement benefit immediately following termination of employment on December 31, 2013, his monthly Retirement Plan benefit, reduced for early commencement, would be $5,588. 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, 2013 termination date is $13,039,809. Refer to Pension Benefits above for further disclosure of Mr. Davidsons vested Retirement Plan benefits. |
(4) | Reflects the total lump sum payable to Mr. Davidson under our Retirement Plan and Restoration Plan in the event of Mr. Davidsons termination of employment due to permanent and total disability. Effective December 31, 2013, the Retirement Plan was terminated and the disability benefits were discontinued for employees becoming disabled on or after January 1, 2014. The value reflected represents the actuarial present value of Mr. Davidsons age 65 benefits based on a disability date of December 31, 2013. The calculation is based on Mr. Davidsons final average compensation as of his date of disability. In the event that Mr. Davidson elects to immediately commence his retirement benefits, the amounts payable will be as described in Note 3. 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, 2013 is $8,178,244. This lump sum payment was calculated based on the 2013 Applicable Mortality Table published by the IRS in Notice 2008-85 and the November 2012 segment rates of 0.97% for the first five years, 3.50% for the next 15 years and 4.60% after 20 years as required by Internal Revenue Code Section 417(e). The accrued death benefit was reduced for early commencement. Refer to Pension Benefits above for further disclosure of Mr. Davidsons vested Retirement Plan benefits. |
54
Compensation Tables |
(6) | Reflects the present value of expected future dental benefits that will be paid by the Company in connection with Mr. Davidsons participation in the dental plan as a retiree. Mr. Davidson does not currently participate in the medical plan; we have assumed he would not elect to participate in the medical plan as a retiree following termination of employment. Assumptions used for this calculation are the same assumptions used in determining the current pension obligation disclosed in Note 12 to our consolidated financial statements in the Form 10-K for the year ended December 31, 2013. |
(7) | Refer to Nonqualified Deferred Compensation Table above for further disclosure of Mr. Davidsons vested nonqualified deferred compensation benefits. |
David L. Stover
The following table shows the potential payments to Mr. Stover, President and COO, in the event of his termination of employment as of December 31, 2013.
Executive Benefits and Payments Upon Separation |
Voluntary 12/31/2013 ($) |
Involuntary 12/31/2013 ($) |
Involuntary Termination or Termination Without Cause |
Disability on 12/31/2013 ($) |
Death on 12/31/2013 ($) |
|||||||||||||||
Compensation: |
||||||||||||||||||||
Severance |
| | (6) | 4,692,803 | (7) | | | |||||||||||||
STIP Payments |
| (1) | | (1) | 735,000 | (7) | | (1) | 735,000 | (1) | ||||||||||
Stock Options |
| | 3,314,374 | (8) | | | ||||||||||||||
Restricted Stock |
| (2) | | (2) | 6,342,505 | (9) | 6,342,505 | (2) | 6,342,505 | (2) | ||||||||||
Benefits and Perquisites: |
||||||||||||||||||||
Retirement Plans |
| (3) | | (3) | | (3) | | (3) | | (3) | ||||||||||
Deferred Compensation Plan |
| (4) | | (4) | | (4) | | (4) | | (4) | ||||||||||
Health & Welfare Benefits |
| | 23,781 | (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 |
| | 15,123,463 | 6,342,505 | 8,077,505 |
(1) | Mr. Stover would not be entitled to a STIP payment for 2013 in the event of his termination of employment on December 31, 2013, 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 2014, 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: 2011 award 19,910 shares; 2012 award 35,358 shares; and 2013 award 36,632 shares. Value is based on the closing price of our common stock on December 31, 2013 ($68.11) and includes dividends paid on such shares. |
(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. |
(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 2013 and would therefore not be entitled to payment for any unused vacation in the event of his termination on December 31, 2013. 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 $1,045,962. |
(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. |
55
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, 2013 ($68.11) on all unvested stock options held by Mr. Stover as of December 31, 2013. |
(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, 2013 based on the closing price of our common stock on December 31, 2013 ($68.11) and includes dividends paid on such shares. |
(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 $1,000,000. |
In addition to the payments Mr. Stover may receive upon the termination of his employment, he will continue to hold stock options that were vested immediately prior to his termination. In the event Mr. Stover elects to retire from the Company, he will be eligible to receive continued vesting of certain of his unvested equity awards pursuant to a policy adopted by our Compensation Committee in July 2013, provided that he satisfies certain conditions and obligations. Mr. Stover also will be entitled to receive the vested balance of his contributions to our Deferred Compensation Plan. The table below shows the vested benefits that Mr. Stover has accumulated as of December 31, 2013 and the benefits he will receive as a result of his termination of employment on that date. We refer to the combined amounts as the total walk-away value:
Voluntary Termination on 12/31/2013 ($)(1) |
Involuntary Termination on 12/31/2013 ($)(1) |
Involuntary Termination or Termination Without Cause in Connection With a Change of Control on 12/31/2013 ($) |
Disability on 12/31/2013 ($)(1) |
Death on 12/31/2013 ($) |
||||||||||||||||
Vested Benefits as of December 31, 2013: |
||||||||||||||||||||
Stock Options (2) |
22,418,242 | 22,418,242 | 22,418,242 | 22,418,242 | 22,418,242 | |||||||||||||||
Retirement Plans |
5,508,235 | (3) | 5,508,235 | (3) | 5,508,235 | (3) | 5,508,235 | (4) | 2,944,316 | (5) | ||||||||||
Health & Welfare Benefits (6) |
141,254 | 141,254 | 141,254 | 141,254 | | |||||||||||||||
Deferred Compensation Plan (7) |
2,973,578 | 2,973,578 | 2,973,578 | 2,973,578 | 2,973,578 | |||||||||||||||
Total Vested Benefits |
31,041,309 | 31,041,309 | 31,041,309 | 31,041,309 | 28,336,136 | |||||||||||||||
Benefits and Payments Upon Separation: |
| | 15,123,463 | 6,342,505 | 8,077,505 | |||||||||||||||
Total Walk-Away Value |
31,041,309 | 31,041,309 | 46,164,772 | 37,383,814 | 36,413,641 |
(1) | Mr. Stover was eligible for early retirement as of December 31, 2013. 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, 2013 ($68.11) on all stock options vested and exercisable as of December 31, 2013. |
(3) | Reflects the total lump sum payable to Mr. Stover under our Retirement Plan and Restoration Plan as of January 1, 2014. 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, 2013 termination date, Mr. Stovers monthly age 65 benefit from our Retirement Plan would be $4,675. If Mr. Stover commences his retirement benefit immediately following termination of employment on December 31, 2013, his monthly Retirement Plan benefit, reduced for early commencement, would be $3,476. 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, 2013 is $4,805,123. Refer to Pension Benefits above for further disclosure of Mr. Stovers vested Retirement Plan benefits. |
(4) | Reflects the total lump sum payable to Mr. Stover under our Retirement Plan and Restoration Plan in the event of Mr. Stovers termination of employment due to permanent and total disability. Effective December 31, 2013, the Retirement Plan was terminated and the disability benefits were discontinued for employees becoming disabled on or after January 1, 2014. The value reflected represents the actuarial present value of Mr. Stovers age 65 benefits based on a disability date of December 31, 2013. The calculation is based on Mr. Stovers final average compensation as of his date of disability. In the event that Mr. Stover elects to immediately commence his retirement benefits, the amounts payable will be as described in Note 3. Refer to Pension Benefits above for further disclosure of Mr. Stovers vested Retirement Plan benefits. |
56
Compensation Tables |
(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, 2013 is $2,944,316. This lump sum payment was calculated based on the 2013 Applicable Mortality Table published by the IRS in Notice 2008-85 and the November 2012 segment rates of 0.97% for the first five years, 3.50% for the next 15 years, and 4.60% after 20 years as required by Internal Revenue Code Section 417(e). The accrued death benefit was reduced for early commencement. Refer to Pension Benefits above for further disclosure of Mr. Stovers vested Retirement Plan benefits. |
(6) | Reflects the present value of expected future medical and dental benefits that will be paid by the Company in connection with Mr. Stovers participation in the medical and dental plans as a retiree. Assumptions used for this calculation are the same assumptions used in determining the current pension obligation disclosed in Note 12 to our consolidated financial statements in the Form 10-K for the year ended December 31, 2013. |
(7) | Refer to Nonqualified Deferred Compensation Table above for further disclosure of Mr. Stovers vested nonqualified deferred compensation benefits. |
Kenneth M. Fisher
The following table shows the potential payments to Mr. Fisher, Executive Vice President and CFO, in the event of his termination of employment as of December 31, 2013.
Executive Benefits and Payments Upon Separation |
Voluntary Termination on 12/31/2013 ($) |
Involuntary Termination on 12/31/2013 ($) |
Involuntary Termination or Termination Without Cause in Connection With a Change of Control on 12/31/2013 ($) |
Disability on 12/31/2013 ($) |
Death on 12/31/2013 ($) |
|||||||||||||||
Compensation: | ||||||||||||||||||||
Severance |
| | (7) | 3,419,006 | (8) | | | |||||||||||||
STIP Payments |
| (1) | | (1) | 498,950 | (8) | | (1) | 498,950 | (1) | ||||||||||
Stock Options |
| | 1,776,587 | (9) | | | ||||||||||||||
Restricted Stock |
| (2) | | (2) | 3,401,136 | (10) | 3,401,136 | (2) | 3,401,136 | (2) | ||||||||||
Benefits and Perquisites: | ||||||||||||||||||||
Retirement Plans |
| (3) | | (3) | | (3) | | (3) | | (3) | ||||||||||
Deferred Compensation Plan |
| (4) | | (4) | | (4) | | (4) | | (4) | ||||||||||
Health & Welfare Benefits |
| (5) | | (5) | 53,170 | (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 | | | 9,163,849 | 3,401,136 | 4,900,086 |
(1) | Mr. Fisher would not be entitled to a STIP payment for 2013 in the event of his termination of employment on December 31, 2013, 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 2014, 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: 2011 award 11,062 shares; 2012 award 18,072 shares; and 2013 award 20,148 shares. Value is based on the closing price of our common stock on December 31, 2013 ($68.11) and includes dividends paid on such shares. |
(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, 2013. |
(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 2013 and would therefore not be entitled to payment for any unused vacation in the event of his termination on December 31, 2013. In the event of termination during the year, all amounts of unused vacation would be paid based on Mr. Fishers salary. |
57
Compensation Tables |
(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 (85%) for a total payment of $634,412. |
(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, 2013 ($68.11) on all unvested stock options held by Mr. Fisher as of December 31, 2013. |
(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, 2013 based on the closing price of our common stock on December 31, 2013 ($68.11) and includes dividends paid on such shares. |
(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 $1,000,000. |
In addition to the payments Mr. Fisher may receive upon the termination of his employment, he will continue to hold stock options that were vested immediately prior to his termination. In the event Mr. Fisher elects to retire from the Company, he will be eligible to receive continued vesting of certain of his unvested equity awards pursuant to a policy adopted by our Compensation Committee in July 2013, provided that he satisfies certain conditions and obligations. The table below shows the vested benefits that Mr. Fisher has accumulated as of December 31, 2013 and the benefits he will receive as a result of his termination of employment on that date. We refer to the combined amounts as the total walk-away value:
Voluntary Termination on 12/31/2013 ($) |
Involuntary Termination on 12/31/2013 ($) |
Involuntary Termination or |
Disability on 12/31/2013 ($) |
Death on 12/31/2013 ($) |
||||||||||||||||
Vested Benefits as of December 31, 2013: |
||||||||||||||||||||
Stock Options (1) |
5,068,337 | 5,068,337 | 5,068,337 | 5,068,337 | 5,068,337 | |||||||||||||||
Retirement Plans |
104,423 | 104,423 | 104,423 | 104,423 | 104,423 | |||||||||||||||
Health & Welfare Benefits |
| | | | | |||||||||||||||
Deferred Compensation Plan (2) |
308,235 | 308,235 | 308,235 | 308,235 | 308,235 | |||||||||||||||
Total Vested Benefits |
5,480,995 | 5,480,995 | 5,480,995 | 5,480,995 | 5,480,995 | |||||||||||||||
Benefits and Payments Upon Separation: |
| | 9,163,849 | 3,401,136 | 4,900,086 | |||||||||||||||
Total Walk-Away Value |
5,480,995 | 5,480,995 | 14,644,844 | 8,882,131 | 10,381,081 |
(1) | Represents the difference between the exercise price of each stock option and the closing price of our common stock on December 31, 2013 ($68.11) on all stock options vested and exercisable as of December 31, 2013. |
(2) | Refer to Nonqualified Deferred Compensation Table above for further disclosure of Mr. Fishers vested nonqualified deferred compensation benefits. |
58
Compensation Tables |
Susan M. Cunningham
The following table shows the potential payments to Ms. Cunningham, Senior Vice President Gulf of Mexico, Africa and Frontier Ventures, in the event of her termination of employment as of December 31, 2013.
Executive Benefits and Payments Upon Separation |
Voluntary Termination on 12/31/2013 ($) |
Involuntary Termination on 12/31/2013 ($) |
Involuntary Termination or Termination Without Cause |
Disability on 12/31/2013 ($) |
Death on 12/31/2013 ($) |
|||||||||||||||
Compensation: |
||||||||||||||||||||
Severance |
| | (6) | 2,870,593 | (7) | | | |||||||||||||
STIP Payments |
| (1) | | (1) | 401,250 | (7) | | (1) | 401,250 | (1) | ||||||||||
Stock Options |
| | 1,714,332 | (8) | | | ||||||||||||||
Restricted Stock |
| (2) | | (2) | 3,274,881 | (9) | 3,274,881 | (2) | 3,274,881 | (2) | ||||||||||
Benefits and Perquisites: |
||||||||||||||||||||
Retirement Plans |
| (3) | | (3) | | (3) | | (3) | | (3) | ||||||||||
Deferred Compensation Plan |
| (4) | | (4) | | (4) | | (4) | | (4) | ||||||||||
Health & Welfare Benefits |
| | 27,129 | (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 |
| | 8,303,185 | 3,274,881 | 4,676,131 |
(1) | Ms. Cunningham would not be entitled to a STIP payment for 2013 in the event of her termination of employment on December 31, 2013, 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 2014, 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: 2011 award9,680 shares; 2012 award 20,822 shares; and 2013 award 16,940 shares. Value is based on the closing price of our common stock on December 31, 2013 ($68.11) and includes dividends paid on such shares. |
(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 2013 and would therefore not be entitled to payment for any unused vacation in the event of her termination on December 31, 2013. 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 $648,173. |
(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, 2013 ($68.11) on all unvested stock options held by Ms. Cunningham as of December 31, 2013. |
(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, 2013 based on the closing price of our common stock on December 31, 2013 ($68.11) and includes dividends paid on such shares. |
59
Compensation Tables |
(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 $1,000,000. |
In addition to the payments Ms. Cunningham may receive upon the termination of her employment, she will continue to hold stock options that were vested immediately prior to her termination. In the event Ms. Cunningham elects to retire from the Company, she will be eligible to receive continued vesting of certain of her unvested equity awards pursuant to a policy adopted by our Compensation Committee in July 2013, provided that she satisfies certain conditions and obligations relating to her retirement. Ms. Cunningham also will be entitled to receive the vested balance of her contributions to our Deferred Compensation Plan. The table below shows the vested benefits that Ms. Cunningham has accumulated as of December 31, 2013 and the benefits she will receive as a result of her termination of employment on that date. We refer to the combined amounts as the total walk-away value:
Voluntary Termination on 12/31/2013 ($)(1) |
Involuntary Termination on 12/31/2013 ($)(1) |
Involuntary Termination or Termination Without Cause in Connection With a Change of Control on 12/31/2013 ($) |
Disability on 12/31/2013 ($)(1) |
Death on 12/31/2013 ($) |
||||||||||||||||
Vested Benefits as of December 31, 2013: |
||||||||||||||||||||
Stock Options (2) |
18,484,264 | 18,484,264 | 18,484,264 | 18,484,264 | 18,484,264 | |||||||||||||||
Retirement Plans |
4,143,946 | (3) | 4,143,946 | (3) | 4,143,946 | (3) | 4,143,946 | (4) | 2,137,807 | (5) | ||||||||||
Health & Welfare Benefits (6) |
92,902 | 92,902 | 92,902 | 92,902 | | |||||||||||||||
Deferred Compensation Plan |
| | | | | |||||||||||||||
Total Vested Benefits |
22,721,112 | 22,721,112 | 22,721,112 | 22,721,112 | 20,622,071 | |||||||||||||||
Benefits and Payments Upon Separation: |
| | 8,303,185 | 3,274,881 | 4,676,131 | |||||||||||||||
Total Walk-Away Value |
22,721,112 | 22,721,112 | 31,024,297 | 25,995,993 | 25,298,202 |
(1) | Ms. Cunningham was eligible for early retirement as of December 31, 2013. 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, 2013 ($68.11) on all stock options vested and exercisable as of December 31, 2013. |
(3) | Reflects the total lump sum payable to Ms. Cunningham under our Retirement Plan and Restoration Plan as of January 1, 2014. 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, 2013 termination date, Ms. Cunninghams monthly age 65 benefit from our Retirement Plan would be $5,419. If Ms. Cunningham commences her retirement benefit immediately following termination of employment on December 31, 2013, her monthly Retirement Plan benefit, reduced for early commencement, would be $4,449. 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, 2013 termination date is $3,270,709. Refer to Pension Benefits, above for further disclosure of Ms. Cunninghams vested Retirement Plan benefits. |
(4) | Reflects the total lump sum payable to Ms. Cunningham under our Retirement Plan and Restoration Plan in the event of Ms. Cunninghams termination of employment due to permanent and total disability. Effective December 31, 2013, the Retirement Plan was terminated and the disability benefits were discontinued for employees becoming disabled on or after January 1, 2014. The value reflected represents the actuarial present value of Ms. Cunninghams age 65 benefits based on a disability date of December 31, 2013. The calculation is based on Ms. Cunninghams final average compensation as of her date of disability. In the event that Ms. Cunningham elects to immediately commence her retirement benefits, the amounts payable will be as described in Note 3. Refer to Pension Benefits above for further disclosure of Ms. Cunninghams vested Retirement Plan benefits. |
(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, 2013 is $2,137,807. This lump sum payment was calculated based on the 2013 Applicable Mortality Table published by the IRS in Notice 2008-85 and the November 2012 segment rates of 0.97% for the first five years, 3.50% for the next 15 years and 4.60% after 20 years as required by the Internal Revenue Code Section 417(e). The accrued death benefit was reduced for early commencement. Refer to Pension Benefits above for further disclosure of Ms. Cunninghams vested Retirement Plan benefits. |
60
Compensation Tables |
(6) | Reflects the present value of expected future medical and dental benefits that will be paid by the Company in connection with Ms. Cunninghams participation in the medical and dental plans as a retiree. Assumptions used for this calculation are the same assumptions used in determining the current pension obligation disclosed in Note 12 to our consolidated financial statements in the Form 10-K for the year ended December 31, 2013. |
Rodney D. Cook
The following table shows the potential payments to Mr. Cook, Senior Vice President and Advisor to the CEO and President, in the event of his termination of employment as of December 31, 2013.
Executive Benefits and Payments Upon Separation |
Voluntary Termination on 12/31/2013 ($) |
Involuntary Termination on 12/31/2013 ($) |
Involuntary Termination or Termination Without Cause |
Disability on 12/31/2013($) |
Death
on 12/31/2013 ($) |
|||||||||||||||
Compensation: |
||||||||||||||||||||
Severance |
| | (6) | 2,639,374 | (7) | | | |||||||||||||
STIP Payments |
| (1) | | (1) | 360,000 | (7) | | (1) | 360,000 | (1) | ||||||||||
Stock Options |
| | 1,698,411 | (8) | | | ||||||||||||||
Restricted Stock |
| (2) | | (2) | 3,243,575 | (9) | 3,243,575 | (2) | 3,243,575 | (2) | ||||||||||
Benefits and Perquisites: |
||||||||||||||||||||
Retirement Plans |
| (3) | | (3) | | (3) | | (3) | | (3) | ||||||||||
Deferred Compensation Plan |
| (4) | | (4) | | (4) | | (4) | | (4) | ||||||||||
Health & Welfare Benefits |
| | 21,663 | (10) | | | ||||||||||||||
Disability Income |
| | | | (12) | | ||||||||||||||
Life Insurance Benefits |
| | | | 960,000 | (13) | ||||||||||||||
Accrued Vacation Pay |
| (5) | | (5) | | (5) | | (5) | | (5) | ||||||||||
Employment Services |
| | 15,000 | (11) | | | ||||||||||||||
TOTAL |
| | 7,978,023 | 3,243,575 | 4,563,575 |
(1) | Mr. Cook would not be entitled to a STIP payment for 2013 in the event of his termination of employment on December 31, 2013, 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 2014, 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: 2011 award 9,680 shares; 2012 award 20,822 shares; and 2013 award 16,484 shares. Value is based on the closing price of our common stock on December 31, 2013 ($68.11) and includes dividends paid on such shares. |
(3) | Mr. Cook 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. 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 2013 and would therefore not be entitled to payment for any unused vacation in the event of his termination on December 31, 2013. 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. |
(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, 2013 ($68.11) on all unvested stock options held by Mr. Cook as of December 31, 2013. |
61
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 Mr. Cook on December 31, 2013 based on the closing price of our common stock on December 31, 2013 ($68.11) and includes dividends paid on such shares. |
(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 $1,000,000. |
In addition to the payments Mr. Cook may receive upon the termination of his employment, he will continue to hold stock options that were vested immediately prior to his termination. Mr. Cook is eligible to receive continued vesting of certain of his unvested equity awards pursuant to the terms of his Retention and Confidentiality Agreement, provided that he satisfies certain conditions and obligations under the terms of that agreement. Mr. Cook also will be entitled to receive the vested balance of his contributions to our Deferred Compensation Plan. The table below shows the vested benefits that Mr. Cook has accumulated as of December 31, 2013 and the benefits he will receive as a result of his termination of employment on that date. We refer to the combined amounts as the total walk-away value:
Voluntary Termination on 12/31/2013 ($)(1) |
Involuntary Termination on |
Involuntary Termination or Termination Without Cause |
Disability on 12/31/2013 ($)(1) |
Death on 12/31/2013 ($) |
||||||||||||||||
Vested Benefits as of December 31, 2013: |
||||||||||||||||||||
Stock Options (2) |
3,565,345 | 3,565,345 | 3,565,345 | 3,565,345 | 3,565,345 | |||||||||||||||
Retirement Plans |
7,837,619(3) | 7,837,619(3) | 7,837,619(3) | 7,837,619(4) | 4,209,660(5) | |||||||||||||||
Health & Welfare Benefits (6) |
127,767 | 127,767 | 127,767 | 127,767 | | |||||||||||||||
Deferred Compensation Plan (7) |
922,562 | 922,562 | 922,562 | 922,562 | 922,562 | |||||||||||||||
Total Vested Benefits |
12,453,293 | 12,453,293 | 12,453,293 | 12,453,293 | 8,697,567 | |||||||||||||||
Benefits and Payments Upon Separation: |
| | 7,978,023 | 3,243,575 | 4,563,575 | |||||||||||||||
Total Walk-Away Value |
12,453,293 | 12,453,293 | 20,431,316 | 15,696,868 | 13,261,142 |
(1) | Mr. Cook was eligible for early retirement as of December 31, 2013. 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, 2013 ($68.11) on all stock options vested and exercisable as of December 31, 2013. |
(3) | Reflects the total lump sum payable to Mr. Cook under our Retirement Plan and Restoration Plan as of January 1, 2014. 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, 2013 termination date, Mr. Cooks monthly age 65 benefit from our Retirement Plan would be $10,012. If Mr. Cook commences his retirement benefits immediately following termination on December 31, 2013, his monthly Retirement Plan benefit, reduced for early commencement, would be $8,771. 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 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, 2013 is $6,074,970. Refer to Pension Benefits above for further disclosure of Mr. Cooks vested Retirement Plan benefits. |
(4) | Reflects the total lump sum payable to Mr. Cook under our Retirement Plan and Restoration Plan in the event of Mr. Cooks termination of employment due to permanent and total disability. Effective December 31, 2013, the Retirement Plan was terminated and the disability benefits were discontinued for employees becoming disabled on or after January 1, 2014. The value reflected represents the actuarial present value of Mr. Cooks age 65 benefits based on a disability date of December 31, 2013. The calculation is based on Mr. Cooks final average compensation as of his date of disability. In the event that Mr. Cook elects to immediately commence his retirement benefits, the amounts payable will be as described in Note 3. 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, 2013 is |
62
Compensation Tables |
$4,209,660. 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 Internal Revenue Code 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 12 to our consolidated financial statements in the Form 10-K for the year ended December 31, 2013. |
(7) | Refer to Nonqualified Deferred Compensation Table above for further disclosure of Mr. Cooks vested nonqualified deferred compensation benefits. |
63
Glossary |
Glossary
Terms, abbreviations and acronyms, as used in this Proxy Statement:
401(k) Plan |
Noble Energy qualified defined contribution plan | |
1992 Plan |
Noble Energy, Inc. 1992 Stock Option and Restricted Stock Plan | |
2005 Plan |
Noble Energy, Inc. 2005 Stock Plan for Non-Employee Directors | |
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. | |
CD&A |
Compensation Discussion and Analysis included in Proxy Statement | |
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 | |
Deferred Compensation Plan |
Noble Energy nonqualified deferred compensation plan | |
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 |
64
Glossary |
Named Executive Officers |
Noble Energys CEO, CFO and the three most highly compensated executive officers other than the CEO and CFO which, for 2013, were Charles D. Davidson, Kenneth M. Fisher, David L. Stover, Susan M. Cunningham and Rodney D. Cook | |
NYSE |
New York Stock Exchange | |
NYRSC |
New York Republican State Committee | |
Patina |
Patina Oil & Gas Corporation | |
Record Date |
March 5, 2014 | |
Restoration Plan |
Noble Energy nonqualified defined benefit plan | |
Retirement Plan |
Noble Energy qualified defined benefit plan | |
Tesoro |
Tesoro Corporation | |
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 Stockholder 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 | |
Vastar |
Vastar Resources, Inc. | |
Website |
Noble Energy, Inc. website found at www.nobleenergyinc.com |
65
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, 2013.
Noble Energy, Inc.
Discretionary Cash Flow and Reconciliation to Operating Cash Flow
(in millions, unaudited)
Year Ended December 31, 2013 |
||||
Discretionary Cash Flow from Continuing Operations |
$ | 3,436 | ||
Reconciliation to Operating Cash Flows |
||||
Net changes in working capital |
(291 | ) | ||
Cash exploration costs |
(236 | ) | ||
Current tax expense of earnings adjustments |
(5 | ) | ||
Impact of discontinued operations |
11 | |||
Other adjustments |
22 | |||
Net Cash Provided by Operating Activities |
$ | 2,937 |
A-1
Appendix B |
Executive Officers
Name | Age | Title | ||
Charles D. Davidson |
64 | Chairman and Chief Executive Officer | ||
David L. Stover |
56 | President and Chief Operating Officer | ||
Kenneth M. Fisher |
52 | Executive Vice President and Chief Financial Officer | ||
Ted D. Brown |
58 | Senior Vice President and Advisor to the Chief Executive Officer and President | ||
Rodney D. Cook* |
56 | Senior Vice President and Advisor to the Chief Executive Officer and President | ||
Susan M. Cunningham |
58 | Senior Vice President, Gulf of Mexico, West Africa and Frontier Ventures | ||
J. Keith Elliott |
56 | Senior Vice President, Eastern Mediterranean | ||
Arnold J. Johnson |
58 | Senior Vice President, General Counsel and Secretary | ||
John T. Lewis |
57 | Senior Vice President, Corporate Development | ||
Michael W. Putnam |
57 | Vice President, Exploration and Geoscience | ||
Charles J. Rimer |
55 | Senior Vice President, Global Operations and EHS&R | ||
A. Lee Robison |
55 | Senior Vice President, Human Resources and Administrative | ||
Gary W. Willingham |
49 | Senior Vice President, U.S. Onshore |
* | Mr. Cook has announced plans to retire from the Company on March 31, 2014. |
Charles D. Davidson (see page 17 of Director Nominee Biographies).
David L. Stover was elected President and Chief Operating Officer in April 2009, previously serving as Executive Vice President and Chief Operating Officer from August 2006. Mr. Stover joined the Company in 2002 and has served in various senior management capacities, including Senior Vice President of North America and Business Development and Vice President of Business Development. Prior to joining the Company, he held various positions with BP America, Inc., Vastar Resources, Inc. (Vastar), and ARCO.
Kenneth M. Fisher was elected Executive Vice President and Chief Financial Officer in April 2014, previously serving as Senior Vice President and Chief Financial Officer from November 2009. Before joining the Company, Mr. Fisher served as Executive Vice President of Finance for Upstream Americas for Shell from July 2009 to November 2009 and served as Director of Strategy & Business Development for Royal Dutch Shell plc in The Hague from August 2007 to July 2009. Prior to joining Shell in 2002, Mr. Fisher held senior finance positions within business units of General Electric Company.
Ted D. Brown is Senior Vice President, currently serving as Advisor to the CEO and President since April 2013. He was elected Senior Vice President in April 2008, responsible for the Northern Region of our North America division. Mr. Brown joined the Company upon our acquisition of Patina in May 2005. Prior to joining Patina in July 2004, Mr. Brown held various positions with Williams and Barrett Resources, Union Pacific Resources and Amoco Production Company.
Rodney D. Cook is Senior Vice President, currently serving as Advisor to the CEO and President since April 2013, a position he will hold until his retirement on March 31, 2014. He was elected Senior Vice President in April 2008, responsible for the International division. Mr. Cook joined the Company in 1980 and has served in various capacities, including Vice President, Southern Region of our North America division, Manager of our West Africa and Middle East Business Unit and Operations Manager of the International division. Prior to joining the Company in 1980, Mr. Cook held various positions with Texas Pacific Oil.
Susan M. Cunningham was elected Senior Vice President in April 2001 and is currently responsible for operations in the Gulf of Mexico and West Africa, as well as Frontier Ventures. Ms. Cunningham joined the Company in April 2001 and previously served as Senior Vice President for Exploration and Geoscience until April 2013. Before joining the Company, Ms. Cunningham held various exploration and development positions with Texaco, Statoil, and Amoco.
J. Keith Elliott was elected Senior Vice President in April 2013 and is currently responsible for Eastern Mediterranean operations. He previously served as Vice President of Global Drilling, Major Projects and Supply Chain from 2012 and as Vice President of Major Projects from 2009. Prior to joining the Company, Mr. Elliott held various positions with BP Exploration.
B-1
Appendix B |
Arnold J. Johnson was elected Senior Vice President, General Counsel and Secretary in July 2008, and is currently responsible for Corporate Affairs. He previously served as Vice President, General Counsel and Secretary from February 2004 and as Associate General Counsel and Assistant Secretary from January 2001. Prior to joining the Company, he held various positions with BP America, Vastar and ARCO.
John T. Lewis was elected Senior Vice President in April 2013 and is currently responsible for Corporate Development. He previously served as Vice President of the Southern Region of our North America division from 2008 and was Director of Asset Development and Reserves from 2006. Prior to joining the Company, he held various positions with BP America, Vastar and ARCO.
Michael W. Putnam was elected Vice President in April 2013 and is currently responsible for Exploration and Geoscience. He previously served as Director of North America Exploration, business unit manager for the deepwater Gulf of Mexico and geophysical manager from 1987. Prior to joining the Company, he served in various positions with Cities Service Oil and Gas.
Charles J. Rimer was elected Senior Vice President in April 2013 and is currently responsible for Environment, Health and Safety Regulation, major projects, supply chain management and drilling. He previously served as Vice President of Operations Services from 2012 and managed the Companys international West Africa, non-operated and new ventures division from 2002. Prior to joining the Company, he held various positions at ARCO, Vastar and Aspect Resources.
A. Lee Robison was elected Senior Vice President in April 2013 and is currently responsible for Human Resources and Administration. She previously served as Vice President from October 2007 and Director of Human Resources from May 2002. Prior to joining the Company, she held various positions with BP America, Vastar and ARCO.
Gary W. Willingham was elected Senior Vice President in April 2013 and is currently responsible for U.S. onshore operations. He previously served as Vice President of Strategic Planning, Environmental Analysis and Reserves. Prior to joining the Company, he held various positions at BP America, Vastar and ARCO.
B-2
The Board of Directors Recommends a Vote FOR Items 1 (all nominees), 2 and 3. 1. Election of directors: FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN 01 Jeffrey L. Berenson 06 Eric P. Grubman 02 Michael A. Cawley 07 Kirby L. Hedrick 03 Edward F. Cox 08 Scott D. Urban 04 Charles D. Davidson 09 William T. Van Kleef 05 Thomas J. Edelman 10 Molly K. Williamson 2. To ratify the appointment of KPMG LLP as the Companys independent auditor. For Against Abstain 3. To approve, in a non-binding advisory vote, the compensation of the Companys named executive officers. For Against Abstain 4. 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 AND 3. Date Signature(s) in Box Please sign exactly as your name(s) appears on the Proxy. If held in joint tenancy, all persons should sign. Trustees, adminis trators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy. Please fold here Do not separate TO VOTE BY INTERNET OR TELEPHONE, SEE REVERSE SIDE OF THIS PROXY CARD. Address Change? Mark box, sign, and indicate changes below: Shareowner Services P.O. Box 64945 St. Paul, MN 55164-0945
NOBLE ENERGY, INC. ANNUAL MEETING OF STOCKHOLDERS Tuesday, April 22, 2014 9:30 a.m. local time The Woodlands Waterway Marriott Hotel & Convention Center 1601 Lake Robbins Drive The Woodlands, Texas 77380 Noble Energy, Inc. 1001 Noble Energy Way Houston, Texas 77070 proxy This proxy is solicited by the Board of Directors for use at the Annual Meeting on April 22, 2014. 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 and 3. 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 PHONE MAIL www.proxypush.com/nbl 1-866-883-3382 Mark, sign and date your proxy Use the Internet to vote your proxy Use a touch-tone telephone to card and return it in the until 12:00 noon (CT) on vote your proxy until 12:00 noon (CT) postage-paid envelope provided. April 21, 2014. on April 21, 2014. If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card.