DEF 14A of Devon Energy Corp/De
Filed Apr 25, 2024 · FY20230001104659-24-051304
Proxy Statement Table of Contents
| 55 | Pension Benefits | | 56 | Benefit Plans | | 56 | Defined Benefit Plan | | 56 | Normal Retirement | | 56 | Defined Contribution Plan — 401(k) Plan | | 57 | Nonqualified Deferred Compensation Plan | | 58 | Supplemental Contribution Restoration Plans | | 59 | Potential Payments Upon Termination or Change in Control | | 59 | Accrued Payments Upon Termination of Employment | | 59 | Rights Upon Termination for Death or Disability | | 59 | Rights Upon Termination Without Cause and Constructive Discharge | | 60 | Termination Following a Change in Control | | 60 | Payment Conditions | | 60 | Long-Term Incentive Awards | | 61 | Potential Payments Upon Termination or Change in Control Tables | | 62 | CEO Pay Ratio | | 63 | Pay Versus Performance Disclosure | | 67 | Equity Compensation Plan Information | | 68 | Our Stockholders | | 68 | Security Ownership of Certain Beneficial Owners and Management | | 68 | Security Ownership of Certain Beneficial Owners | | 69 | Security Ownership of Management | | 70 | Agenda Item 4. Stockholder Proposal | | 73 | Submission of Stockholder Proposals and Nominations | | 74 | Frequently Asked Questions About the Annual Meeting | | 78 | Other Matters | | 79 | Forward-Looking Statements | | A-1 | Appendix A. Explanation and Reconciliation of Non-GAAP Financial Measures |
AGENDA ITEM 1. ELECTION OF DIRECTORS
AGENDA ITEM 1. ELECTION OF DIRECTORS Our Board has nominated 11 directors for election at the Annual Meeting. Each Director will serve for a term ending at the next Annual Meeting and until his or her successor is duly elected and qualified, subject to such Director’s earlier death, disqualification, resignation, or removal. All nominees are currently Devon Directors. Within each nominee’s biography and the matrix on page 14, we have highlighted the notable skills and qualifications that contributed to his or her selection as a nominee to our Board. We have no reason to believe that any of the nominees for Director will be unable to serve if elected. However, if any of these nominees becomes unavailable, the persons named in the proxy intend to vote for any alternate designated by the current Board. Proxies cannot be voted for a greater number of persons than the nominees named.
AGENDA ITEM 1. ELECTION OF DIRECTORS
| Our Board of Directors recommends that stockholders vote “FOR” the election of the director nominees listed in the pages that follow. |
WHO WE ARE
WHO WE ARE
Our Nominees for Election
Our Nominees for Election
Our Nominees for Election
| Experience Human Capital Mgt./Comp. Finance/Capital Allocation Environmental Matters Corp. Governance/ Risk Mgt. Investment Mgt./ Stewardship Marketing/ Energy-Related Infrastructure | Barbara M. Baumann | Chair of the Board | AGE: 68 | DIRECTOR SINCE: 2014 | | | Barbara M. Baumann joined the Board in January 2014 and was appointed Board Chair in January 2023. She is president of Cross Creek Energy Corp., an energy advisory firm with investments in domestic oil and natural gas. She is currently on the board of National Fuel Gas Company and serves on the audit and financing committees. Baumann is a senior advisor for First Reserve Corp., a private equity firm focused on energy, and she serves as vice chair of the independent board of trustees of the Putnam Mutual Funds. Previously, Baumann served in various areas of finance and operations during an 18-year career with Amoco (later BP Amoco). Those roles included chief financial officer of Ecova Corp., Amoco’s wholly owned environmental-remediation unit, and vice president of Amoco’s San Juan Basin business unit. She earned a bachelor’s degree from Mount Holyoke College and a master’s in business administration from the Wharton School of the University of Pennsylvania. Qualifications Ms. Baumann brings to the Board her extensive knowledge of financial matters and the energy industry and her experience as an accomplished leader and business professional. Her insights on investor dynamics deepen our Board’s understanding of ESG-related initiatives. Principal occupation or employment: ■ President and Owner, Cross Creek Energy Corporation Certain other directorships: ■ National Fuel Gas Company. Serves on the audit and financing committees ■ Putnam Mutual Funds (vice chair, independent board of trustees) ■ First Reserve Corporation (senior advisor) ■ Previously served on the board of Buckeye Partners, L.P. until its acquisition in 2019 Devon Board Committees ■ Chair, Dividend ■ Audit (2014-2023) ■ Governance, Environmental, and Public Policy (2014-2023) Please refer to the Director Skills and Experience Matrix on page 14 for more information. | |
Our Nominees for Election
| Experience Human Capital Mgt./Comp. Engineering Education/ Experience Finance/Capital Allocation Technology or Cybersecurity Environmental Matters Corp. Governance/ Risk Mgt. Marketing/ Energy-Related Infrastructure | John E. Bethancourt | AGE: 72 | DIRECTOR SINCE: 2014 | | | John E. Bethancourt joined the board of directors in January 2014. He is a retired Chevron executive, serving most recently as executive vice president for technology and services, where he oversaw Chevron’s environmental, health and safety efforts, major project management, procurement, and mining operations. Bethancourt began his career with Getty Oil Co. in 1974 and joined Texaco Inc. through a 1984 merger. He earned a bachelor’s degree in petroleum engineering from Texas A&M University. Qualifications Mr. Bethancourt is an experienced and accomplished leader. His broad competencies in matters impacting the energy industry strengthen the collective capabilities of the Board. His experience in areas relating to human resources, environmental matters, and energy-related infrastructure has provided valuable perspectives for the Board. Principal occupation or employment: ■ Former Executive Vice President for Technology and Services, Chevron Certain other directorships: ■ Previously served on the board of trustees of the Texas A&M Foundation ■ Past director of the Society of Petroleum Engineers ■ Former director of the National Action Council for Minorities in Engineering, Inc. Devon Board Committees ■ Chair, Reserves ■ Compensation ■ Governance, Environmental, and Public Policy (2014-2018) Please refer to the Director Skills and Experience Matrix on page 14 for more information. | |
WHO WE ARE (cont.)
WHO WE ARE (cont.)
WHO WE ARE (cont.)
| Experience Human Capital Mgt./Comp. Finance/Capital Allocation Regulatory/Policy Matters Environmental Matters Corp. Governance/ Risk Mgt. Investment Mgt./ Stewardship | Ann G. Fox | AGE: 47 | DIRECTOR SINCE: 2019 | | | Ann G. Fox joined the board of directors in June 2019. She is president, chief executive officer, and a board member of Nine Energy Service, Inc. (Nine), a Houston-based oilfield services company. Fox joined Nine in 2013 and previously served as chief financial officer and vice president of strategic development. Prior to joining Nine, she worked for SCF Partners, a private-equity firm supporting the oilfield services and equipment industries. Fox also has experience as an investment banking analyst and as a Marine, where she served several tours of duty in Iraq on a team that reported directly to Gen. David Petraeus. She received a bachelor’s degree in diplomacy and security in world affairs from Georgetown University and a master’s in business administration from Harvard University. Fox currently serves on the board of the American Petroleum Institute, the board of advisors of Rice University’s Baker Institute, and the board of trustees of Groton School. Qualifications Ms. Fox brings to the Board her significant and unique career experiences, knowledge of the energy industry and capital markets, and perspective as a leader. Her recognition of upstream business and operational developments contributes to the Board’s overall performance. Principal occupation or employment: ■ President and Chief Executive Officer, Nine Energy Service, Inc. Certain other directorships: ■ Nine Energy Service, Inc. ■ American Petroleum Institute ■ Baker Institute (board of advisors) ■ Groton School Devon Board Committees ■ Compensation ■ Governance, Environmental, and Public Policy Please refer to the Director Skills and Experience Matrix on page 14 for more information. | |
WHO WE ARE (cont.)
| Experience Human Capital Mgt./Comp. Engineering Education/ Experience Finance/Capital Allocation Regulatory/Policy Matters Technology or Cybersecurity Environmental Matters Corp. Governance/ Risk Mgt. Marketing/ Energy-Related Infrastructure | Gennifer F. Kelly | AGE: 51 | DIRECTOR SINCE: 2023 | | | Gennifer F. Kelly joined the board of directors in January 2023. She is currently on the board of Delek Logistics, where she serves as chair of the technology committee and as a member of the conflicts and environmental, health and safety committees. Kelly has 25 years of oil and gas industry experience in both upstream and midstream sectors. She previously held the role of chief operating officer and SVP of Western Midstream Partners and vice president of marketing for Anadarko Petroleum Corporation. Prior to her role at Western Midstream, Kelly led operations transformation efforts, as well as strategic planning, portfolio management, and asset management teams for Anadarko. She holds a master’s degree in business administration and a bachelor’s degree in petroleum engineering from Louisiana State University. Qualifications Ms. Kelly brings to the Board her extensive knowledge of the energy industry, including strategic and regulatory matters. She is an experienced executive who has led significant corporate transformational efforts. She has a broad understanding of key matters considered by boards of directors of energy companies. Principal occupation or employment: ■ Former Chief Operating Officer and SVP of Western Midstream Partners Certain other directorships: ■ Delek Logistics Partners, LP. Serves on the conflicts, EHS, and technology committees ■ Lone Star College Foundation. Serves on the audit committee Devon Board Committees ■ Audit ■ Reserves Please refer to the Director Skills and Experience Matrix on page 14 for more information. | |
WHO WE ARE (cont.)
WHO WE ARE (cont.)
WHO WE ARE (cont.)
| Experience Human Capital Mgt./Comp. Finance/Capital Allocation Regulatory/Policy Matters Corp. Governance/ Risk Mgt. Investment Mgt./ Stewardship | Kelt Kindick | AGE: 69 | DIRECTOR SINCE: 2021 | | | Kelt Kindick joined the board of directors in January 2021 following Devon’s merger with WPX Energy, Inc. (WPX). Kindick became a member of WPX’s board of directors in 2013. In December 2012, Kindick retired from Bain & Company Inc., a management consulting firm, serving most recently as chief financial officer and partner. He joined Bain & Company in 1980, was elected partner in 1986, served as managing director of the firm’s Boston office from 1991 to 1996, and as chairman of the firm’s executive committee from 1998 to 1999. Kindick also served as chief financial officer of the Commonwealth of Massachusetts from 2003 to 2004. He received a bachelor’s degree from Franklin & Marshall College and a master’s in business administration from Harvard University. Qualifications Mr. Kindick brings to the Board his experience in strategic roles across a broad range of industries and in the public sector. His insights on governance, finance, and other key strategic matters enhance Board discussions. Principal occupation or employment: ■ Advisory Partner at Bain & Company (formerly Chief Financial Officer and Partner) Certain other directorships: ■ Previously served on WPX’s board of directors, including as lead director and chairman of its nominating, governance, environmental and public policy committee ■ Previously served on The Advisory Board Company’s board until its acquisition in 2017 Devon Board Committees ■ Chair, Governance, Environmental, and Public Policy ■ Compensation ■ Audit (2021-2023) ■ Dividend (2021-2023) ■ Lead Director (2021-2023) Please refer to the Director Skills and Experience Matrix on page 14 for more information. | |
WHO WE ARE (cont.)
| Experience Human Capital Mgt./Comp. Engineering Education/ Experience Finance/Capital Allocation Regulatory/Policy Matters Technology or Cybersecurity Corp. Governance/ Risk Mgt. Investment Mgt./ Stewardship Marketing/ Energy-Related Infrastructure | John Krenicki Jr. | AGE: 61 | DIRECTOR SINCE: 2018 | | | John Krenicki Jr. joined the board of directors in June 2018. He is vice chairman at the private-equity investment firm Clayton, Dubilier & Rice LLC (CD&R). He is chairman of three privately held entities controlled or jointly controlled by CD&R, which includes Cornerstone Building Brands Inc. Previously, Krenicki built a 29-year career at General Electric Co., where he served as vice chairman as well as president and CEO of GE Energy, among other executive positions. He has a master’s degree in management from Purdue University and a bachelor’s degree in mechanical engineering from the University of Connecticut. He also is a member of the National Petroleum Council. Qualifications Mr. Krenicki brings to the Board his extensive knowledge of the overall value chain in the energy industry and his experience as an executive, leader, and owner of a range of enterprises. His recognition of market dynamics and entrepreneurial change deepens the capabilities of the Board. Principal occupation or employment: ■ Vice Chairman at Clayton, Dubilier & Rice, LLC (CD&R) Certain other directorships: ■ Non-executive chairman of Brand Industrial Holdings, Inc. and Artera Services, which are privately held entities controlled by CD&R ■ Non-executive chairman of Cornerstone Building Brands, Inc., which was taken private by CD&R in 2022 Devon Board Committees ■ Audit ■ Reserves ■ Compensation (2018-2021) ■ Governance, Environmental, and Public Policy (2018-2021) Please refer to the Director Skills and Experience Matrix on page 14 for more information. | |
WHO WE ARE (cont.)
WHO WE ARE (cont.)
WHO WE ARE (cont.)
| Experience Human Capital Mgt./Comp. Engineering Education/ Experience Finance/Capital Allocation Regulatory/Policy Matters Environmental Matters Corp. Governance/ Risk Mgt. Investment Mgt./ Stewardship Marketing/ Energy-Related Infrastructure | Karl F. Kurz | AGE: 62 | DIRECTOR SINCE: 2021 | | | Karl F. Kurz joined the board of directors in January 2021 following Devon’s merger with WPX. Kurz became a member of WPX’s board of directors in 2014. He currently serves as non-executive chairman of American Water Works Company, Inc. Kurz is on the board of Texas Pacific Land Corporation, where he serves on the compensation committee. He also serves on the board and compensation committee of Royal Helium Ltd., a company listed on the TSX Venture Exchange. Previously, from 2009 until his retirement in 2012, Kurz served as managing director, co-head of the energy group and as a member of the investment committee at CCMP Capital Advisors LLC, a leading global private equity firm focused on energy investments. Prior to joining CCMP, he spent nine years with Anadarko Petroleum Corporation, most recently serving as chief operating officer responsible for overseeing the company’s global exploration and production, marketing, midstream, land, technology and service businesses. Kurz holds a bachelor’s of science, magna cum laude, in petroleum engineering from Texas A&M University, and he is a graduate of Harvard University’s Advanced Management Program. Qualifications Mr. Kurz brings to the Board his significant experience in the energy industry and expertise in petroleum engineering. He has served in leadership positions and provides candid perspectives on the Company and the industry. Principal occupation or employment: ■ Former Managing Director of CCMP Capital Advisors LLC and Chief Operating Officer of Anadarko Petroleum Corporation Certain other directorships: ■ American Water Works Company, Inc. Serves as non-executive chairman ■ Texas Pacific Land Corporation. Serves on the compensation committee ■ Royal Helium Ltd. Serves on the compensation committee ■ Previously served on WPX’s board of directors and its audit committee ■ Previously served on the board of SemGroup Corporation until its acquisition in 2019 Devon Board Committees ■ Compensation ■ Governance, Environmental, and Public Policy ■ Reserves Please refer to the Director Skills and Experience Matrix on page 14 for more information. | |
WHO WE ARE (cont.)
| Experience Human Capital Mgt./Comp. Engineering Education/ Experience Finance/Capital Allocation Regulatory/Policy Matters Corp. Governance/ Risk Mgt. Marketing/ Energy-Related Infrastructure | Michael N. Mears | AGE: 61 | DIRECTOR SINCE: 2023 | | | Michael N. Mears joined the board of directors in January 2023. He is currently on the board of Sempra, where he serves as chair of the corporate governance committee and as a member of the executive and safety, sustainability and technology committees. Mears was the chairman, president, and CEO of Magellan Midstream Partners from 2011 until his retirement in April 2022. He joined Magellan Midstream Partners in 2002 when the company was formed and was the company’s chief operating officer from 2008 to 2011. Prior to Magellan, Mears worked in a range of management positions for its predecessor company, Williams Pipeline Co. He holds a bachelor’s degree in chemical and petroleum refining engineering from the Colorado School of Mines. Qualifications Mr. Mears has significant leadership experience in the energy industry. As a former chief executive officer of a large corporation, he is able to provide perspectives on a broad range of issues that are important for a corporation with Devon’s scale and operations. His background in marketing and energy-related infrastructure adds valuable perspectives to the Board. Principal occupation or employment: ■ Former Chairman, President, and CEO of Magellan Midstream Partners Certain other directorships: ■ Sempra Energy. Serves on the corporate governance (chair), executive, and safety, sustainability and technology committees ■ Previously served on Magellan Midstream Partners’ board until his retirement in 2022 Devon Board Committees ■ Audit ■ Governance, Environmental, and Public Policy Please refer to the Director Skills and Experience Matrix on page 14 for more information. | |
WHO WE ARE (cont.)
WHO WE ARE (cont.)
WHO WE ARE (cont.)
| Experience Human Capital Mgt./Comp. Finance/Capital Allocation Regulatory/Policy Matters Environmental Matters Corp. Governance/ Risk Mgt. Marketing/ Energy-Related Infrastructure | Robert A. Mosbacher, Jr. | AGE: 72 | DIRECTOR SINCE: 2009 | | | Robert A. Mosbacher, Jr. was appointed to the board of directors in April 2009. Mosbacher previously served as a member of the board from 1999 until 2005, at which time he resigned to accept an appointment by the Bush administration to serve as president and chief executive officer of the Overseas Private Investment Corp., an independent agency of the U.S. government that supports private capital investment in emerging markets around the world. He is chairman of Mosbacher Energy Co., an independent oil and gas exploration and production company. He is chair of the Development Advisory Council for the U.S. International Development Finance Corporation, which supports investment in the developing world. Mosbacher also currently serves on the board of the National Archives Foundation. He has a bachelor’s degree in political science from Georgetown University and a law degree from Southern Methodist University. Qualifications Mr. Mosbacher brings to the Board his leadership experience in the energy industry, as well as in state and federal government. His strategic mindset and broad understanding of the Company provides important perspectives for the Board. Principal occupation or employment: ■ Chairman of Mosbacher Energy Company Certain other directorships: ■ Center for Global Development ■ Previously served as a director of Calpine Corporation from 2009 until the company was acquired in 2018 ■ Previously served as a member of Devon’s Board from 1999 until 2005 Devon Board Committees ■ Chair, Compensation ■ Governance, Environmental, and Public Policy ■ Reserves (2019-2021) ■ Lead Director (2015-2019) Please refer to the Director Skills and Experience Matrix on page 14 for more information. | |
WHO WE ARE (cont.)
| Experience Human Capital Mgt./Comp. Engineering Education/ Experience Finance/Capital Allocation Regulatory/Policy Matters Environmental Matters Corp. Governance/ Risk Mgt. Marketing/ Energy-Related Infrastructure | Richard E. Muncrief | AGE: 65 | DIRECTOR SINCE: 2021 | | | Richard E. Muncrief was appointed to the board of directors and elected president and chief executive officer of the company in January 2021 following Devon’s merger with WPX. Muncrief previously served as chief executive officer and chairman of the board of WPX. He became a member of WPX’s board of directors in 2014. Prior to joining WPX, he served as senior vice president, operations and resource development of Continental Resources, Inc. Muncrief was earlier employed from August 2008 through May 2009 by Resource Production Company, where he served as corporate business manager. From September 2007 to August 2008 he served as president, chief operating officer, and as a director of Quest Midstream Partners, LP. From 1980 to 2007, he served in various managerial capacities with ConocoPhillips and its predecessor companies, Burlington Resources, Meridian Oil, and El Paso Exploration. Muncrief holds a bachelor’s of science in petroleum engineering technology from Oklahoma State University, where he has also been recognized as a distinguished alumnus and is a member of the College of Engineering, Architecture & Technology Hall of Fame. He is currently on the board of directors of Williams Companies and serves on the compensation and management development committee and the environmental, health and safety committee. Muncrief also serves on the board of directors and the executive committee of the American Petroleum Institute. He is a past chairman and currently serves on the board of directors and the executive committee of the American Exploration & Production Council. Qualifications Mr. Muncrief is a proven leader in the energy industry. His understanding of WPX’s and the post-merger combined Company’s operations and assets provides valuable Board-level perspective. Principal occupation or employment: ■ President and Chief Executive Officer, Devon Energy Corporation Certain other directorships: ■ Williams Companies, Inc. Serves on compensation and management development committee and environmental, health, and safety committee ■ American Petroleum Institute (board of directors and the executive committee) ■ American Exploration & Production Council (board of directors and the executive committee) ■ Previously served as chairman of WPX’s board of directors Devon Board Committees ■ Dividend Please refer to the Director Skills and Experience Matrix on page 14 for more information. | |
WHO WE ARE (cont.)
| Experience Human Capital Mgt./Comp. Finance/Capital Allocation Corp. Governance/ Risk Mgt. Investment Mgt./ Stewardship Marketing/ Energy-Related Infrastructure | Valerie M. Williams | AGE: 67 | DIRECTOR SINCE: 2021 | | | Valerie M. Williams joined the board of directors in January 2021 following Devon’s merger with WPX. Williams became a member of WPX’s board of directors in 2018. Williams is a member of the board of directors of Omnicom Group, Inc., a global advertising and public relations firm, where she serves on the audit and finance committees. She is also a member of the board of directors of DTE Energy, an electric and natural gas utility, where she serves as chair of the audit committee and as a member of the corporate governance committee. Williams is also a member of the independent board of trustees of certain Franklin Templeton funds. Williams began her career with Ernst & Young LLP in 1981 and has over 35 years of audit and public accounting experience serving numerous global companies. Prior to her retirement in 2016, Williams most recently served as the firm’s southwest region assurance managing partner, a position she assumed in 2006. She held several senior leadership positions at Ernst & Young and also served on several strategic committees, including the firm’s partner advisory council, inclusiveness council, audit innovation task force, and the diversity task force. She received a bachelor’s degree from the University of North Texas and a master’s in business administration from the University of Houston. Qualifications Ms. Williams brings to the Board her extensive experience as a certified public accountant, including 35 years at a premier accounting firm serving clients in the energy and technology sectors. She has strong leadership skills and experience with accounting and financial reporting matters at complex organizations. She has been designated an “audit committee financial expert” by Devon’s Board. Principal occupation or employment: ■ Former Southwest Region Assurance Managing Partner at Ernst & Young LLP Certain other directorships: ■ Omnicom Group, Inc. Serves on the audit and finance committees ■ DTE Energy. Serves on the audit committee (chair) and corporate governance committee ■ Franklin Templeton Funds (independent board of trustees) ■ Previously served on WPX’s board of directors and its audit committee Devon Board Committees ■ Chair, Audit ■ Reserves Please refer to the Director Skills and Experience Matrix on page 14 for more information. | |
WHO WE ARE (cont.)
WHO WE ARE (cont.)
Director Compensation
Director Compensation Director compensation is reviewed and determined annually by the Board acting upon the recommendation of the Compensation Committee. The Committee periodically obtains data on the director compensation of Devon’s principal competitors and other comparable companies. The Committee also engages an independent consultant (Meridian Compensation Partners, LLC) to supplement such data and provide additional information on director compensation and other compensation-related practices. Meridian is also retained by the Committee to advise on executive compensation. Aside from the foregoing, Meridian performs no other work for Devon. The standard arrangement for compensating our non-management Directors consists of cash and equity awards. Devon employees receive no additional compensation for serving as Directors. Non-management Directors are also eligible to participate in the Company’s charitable gift program subject to the same terms as employees. This program, which was established in 2022, matches contributions (up to $10,000 per year) made to charitable organizations by Directors and employees. Two changes in the amount of Director compensation went into effect in 2023. In connection with Ms. Baumann’s appointment as Devon’s Board Chair effective January 7, 2023, the Board approved additional compensation for Devon’s Board Chair (non-executive) in the amount of $175,000, with such amount divided equally (50%/50%) in the form of a cash retainer and equity award. In addition, effective June 7, 2023, the Board approved an increase of $5,000 in the additional annual retainers paid to the chairs of the Compensation and GEPP Committees. With each change, the amounts were recommended by the Compensation Committee following a review of peer and general market data and consideration of the respective responsibilities and time commitments associated with the roles.
Total Compensation for Non-Management Directors for 20231
| Name | Fees Earned or Paid in Cash ($) | Stock Awards2 ($) | Gift Matching Contribution ($) | Total ($) | | Barbara M. Baumann | 186,324 | 353,717 | 10,000 | 550,041 | | John E. Bethancourt | 115,000 | 230,030 | 10,000 | 355,030 | | Ann G. Fox | 100,000 | 230,030 | 10,000 | 340,030 | | Gennifer F. Kelly | 101,434 | 327,746 | 4,250 | 433,430 | | Kelt Kindick3 | 118,030 | 230,030 | 10,000 | 358,060 | | John Krenicki Jr. | 102,000 | 230,030 | 10,000 | 342,030 | | Karl Kurz | 100,000 | 230,030 | 10,000 | 340,030 | | Michael N. Mears | 101,434 | 327,746 | 5,000 | 434,180 | | Robert A. Mosbacher, Jr. | 117,830 | 230,030 | 10,000 | 357,860 | | Duane C. Radtke4 | 43,682 | — | — | 43,682 | | Valerie M. Williams | 125,000 | 230,030 | — | 355,030 |
Compensation Discussion and Analysis
| 46 | Compensation Process Background | | 46 | Role of the Committee | | 47 | Role of the Compensation Consultant | | 47 | Use of Peer Groups | | 47 | Tally Sheet Review | | 48 | Additional Benefits and Compensation Information | | 48 | Retirement Benefits | | 48 | Other Benefits | | 48 | Post-Termination or Change-in-Control Benefits | | 49 | Stock Ownership Guidelines | | 49 | Pledging and Hedging Guidelines | | 49 | Compensation Program and Risk-Taking | | 50 | Policy for Recovery of Compensation (Clawback Policy) |
Good Compensation Governance Practiced by Devon
| | Award Performance-Based LTI — The Company awards 60% of NEO LTI in the form of Performance Share Units (PSUs) tied to TSR. A 100% of target payout on PSUs requires TSR that exceeds the peer group median and positive TSR for the performance period is required for a payout of more than 100% of target. | | | Utilize a Quantitative Process for Performance Bonuses — The goals, their weightings, thresholds, and maximums are determined at the beginning of the year. At the end of the year, the Committee evaluates performance on the goals, assigning each a score between 0% and 200%. The total performance score is determined by multiplying each goal’s score by its weighting and aggregating. | | | Tie Realizable Pay Opportunities to Company Performance — The Committee regularly reviews the realizable pay of the President and CEO and other executive officers in light of Company performance. This has resulted in pay that aligns with Company performance. | | | Require Executives to Hold Devon Stock — Board-adopted guidelines establish minimum stock ownership levels for the executive officers. | | | Provide for Clawback of Compensation — Pursuant to a Board-adopted policy aligned with requirements under Dodd-Frank legislation and NYSE listing standards, the Company must claw back excess executive incentive compensation if the financial or operational measures on which they are based are later subject to restatement. | | | Dialog to Promote Continuous Improvement — On an annual basis, the Committee conducts in-depth, confidential, one-on-one interviews with each executive officer, which is a highly effective tool in the Committee’s oversight. |
Controversial Compensation Governance Not Practiced by Devon
| | Enter into Egregious Employment Agreements — The Company does not enter into contracts containing multi-year guarantees of salary increases or non-performance-based bonuses or equity compensation. | | | Allow Excessive Severance Benefits and/or Liberal Change-in-Control Payments — Employment agreements do not provide cash payments that exceed three times base salary plus target/average/last paid bonus; do not contain liberal change-in-control definitions; and, do not provide severance payments without job loss (i.e., no “single trigger” cash severance or equity vesting solely with a change-in-control). | | | Allow Risky Transactions in the Company’s Stock — Company policy prohibits the executives from engaging in short-term or speculative transactions or hedging or pledging Devon’s common stock. | | | Reprice or Replace Underwater Options — The Company does not reprice or replace underwater stock options. | | | Permit Abusive Perquisites Practices — Perquisites made available to the executives are limited. |
EXECUTIVE COMPENSATION (cont.)
EXECUTIVE COMPENSATION (cont.) ■ the competitive position of the executive’s base salary compared to similarly situated executives at Devon’s peer companies, as set forth on page 47; ■ the scope of responsibility, experience, and tenure of the executive and the executive’s potential to take on greater or different responsibilities; and ■ the Company’s cost structure. Based on the foregoing considerations, the Committee approved salary increases for all NEOs at its January 2023 meetings. During their decision-making process, the Committee noted that salary increases higher than the historical average were required to remain competitive with executives at Devon’s peer companies due to the current period of inflation. The Summary Compensation Table’s entries for “Salary” reflect the base salary received by the NEOs during 2023 from Devon. Those entries may be different than the rates listed below due to salary changes taking effect after the start of 2023.
Annual Performance Bonus
Annual Performance Bonus In awarding performance bonuses, the Committee uses a formula that establishes a performance-bonus target for each NEO based on a percentage of his base salary. In establishing performance-bonus targets, the Committee considers industry benchmarks for the relevant officer position as well as the scope of responsibility associated with the position. For 2023, performance-bonus targets for NEOs ranged from 80% to 130% of base salary rate, which is consistent with the performance-bonus range of the peer company executives of Devon’s peers as set forth on page 47. Performance-bonus payouts depend on the Company’s performance in relation to the structured and measurable goals approved by the Board at the beginning of the year and the individual executive’s contributions to the achievement of those goals. The goals were selected because they are critical to the Company’s near-term performance, its prospects for sustainable growth in returns, and the creation of long-term value for the Company and its stockholders. The table below provides detail on the Company’s performance on the goals set for 2023. As reflected in the table, the Board assigns a separate weighting to each performance measure in order to reflect the relative importance of those areas for the year. The Committee aggregates the weighted performance score for each measure to arrive at an overall Company performance score. The process for determining performance bonuses relies on Company performance measures and the application of set formulas to arrive at the bonus amounts. However, the Committee maintains the authority to adjust the amount of an executive’s performance bonus within the range of the bonus pool (0% to 200% of target) based upon individual contributions, market conditions, or other factors.
Annual Performance Bonus
| Measure | Threshold | Goal | Maximum | Outcome | Weight | Score5 | Weighted Score | | Free Cash Flow1 ($, Millions) | $2,500 | $3,250 | $4,250 | $2,781 | 25% | 69% | 17.25% | | Cash Return on Capital Employed1,2 (CROCE) | 25% | 35% | 60% | 42% | 25% | 126% | 31.50% | | Total Capital Expenditures1 ($, Millions) | $4,025 | $3,835 | $3,450 | $3,907 | 10% | 81% | 8.10% | | Total Oil and Gas Production (MBOE/day) | 620 | 653 | 718 | 658 | 10% | 107% | 10.70% | | ESG & Community Engagement3 | See Footnote 3 | | | | 15% | 70% | 10.50% | | Emissions Reduction4 | See Footnote 4 | | | | 15% | 150% | 22.50% | | 2023 Company Performance Score6 | See Footnote 5 | | | | | | 101% |
EXECUTIVE COMPENSATION (cont.)
| 1 These financial measures are not calculated in accordance with GAAP. Please refer to Appendix A for additional information regarding these financial measures, including reconciliations to their most directly comparable GAAP measure. | | 2 CROCE is a capital returns measure. A reconciliation of this goal to the Company’s financial statements can be found in Appendix A. | | 3 The Company’s “ESG & Community Engagement” goal is comprised of ESG goals (70% of total) and Community Engagement goals (30% of total). The ESG goals consisted of (i) SIF (Serious Incident & Fatality) Event Reduction, which included a goal of a SIF recordable incident rate of 0.05 for the number of recordable SIF events experienced per 200,000 employee hours worked and received a Company result of 0.08, failing to meet the goal, (ii) Reduction of Spill Rate, which included a goal to reduce spilled barrels to 29.50 barrels of liquid spilled per 1,000,000 barrels of liquid transported and received a Company result of 16.42, far surpassing the set goal, (iii) Utilization of SIF Learnings, which ensures that SIF events are investigated in a timely manner and SIF learnings are implemented throughout the Company to prevent future occurrences, and (iv) EHS Management System, which ensures that the Company is on track to meet leading indicators and integrate critical initiatives. | | The Community Engagement goals consisted of (i) Strategic Enhancement of STEM Education that included the goal of supporting 110,000 students and 2,700 teachers, which goal was exceeded by supporting over 120,000 students and 5,845 teachers and (ii) Increasing Employee Engagement through Community Programs, which goal was exceeded by having 897 employees participate in Devon’s matching programs, including Devon’s charitable match program and Give for Good charitable campaign. | | The score on the “ESG & Community Engagement” goal was 70% of target. | | 4 The “Emissions Reduction” Goal consisted of (i) Greenhouse Gas Intensity Reduction and (ii) Methane Emission Detection, each 50% of the total. The goal for Greenhouse Gas Intensity Reduction was a year-over-year reduction in Company-wide greenhouse gas intensity of 16.6. The Company achieved a reduction of 16.47, achieving its goal. Greenhouse gas intensity is calculated by Devon personnel based on data available at the time of the Committee’s meetings in January using methodologies under the Environmental Protection Agency (EPA) Greenhouse Gas Reporting Program (GHGRP). Later in the year, the Company finalizes and reports its greenhouse gas calculations to the EPA pursuant to the GHGRP reporting timeline, which results in the review and verification of Devon’s report by the EPA. The preliminary and final, verified calculations may differ. For Methane Emission Detection, the goal was a year-over-year reduction in methane detections intensity of 13.4%. The Company surpassed this goal, with a reduction to 10.8%. | | The score on the “Emissions Reduction” goal was 150% of target. | | 5 Outcomes that fall below the Threshold are scored at 0%; Outcomes between Threshold and Goal are scored between 50% and 100%; Outcomes between Goal and Maximum are scored between 100% and 200%; and Outcomes that exceed the Maximum are scored at 200%. | | 6 The sum of each measure’s weighted score was 100.55%. As was the case in prior years, the Committee rounded the sum of the weighted scores to the nearest whole percent, which resulted in the 2023 Company Performance Score of 101%. |
EXECUTIVE COMPENSATION (cont.)
The performance scorecard reflects overall positive results in the challenging commodity price environment of 2023. In particular, the Company outperformed its goals for “Cash Returned on Capital Employed,” “Total Oil and Gas Production,” and “Emissions Reduction”. The Committee noted that “Free Cash Flow” and “Total Capital Expenditures” were influenced by the impacts of commodity prices and inflation, and fell between the Company’s established threshold and target goal. The Committee awarded performance bonuses to the NEOs by multiplying salary rate, bonus target, the Company performance score and, as applicable, an adjustment for individual performance as follows: for Mr. Muncrief, $1,641,300 based on his salary of $1,250,000, 130% bonus target, and the 101% Company performance score; for Mr. Ritenour, $556,600 based on his salary of $680,300, 90% bonus target, the 101% Company performance score, and a 90% adjustment for individual performance; for Mr. Gaspar, $687,100 based on his salary of $680,300, 100% bonus target, and the 101% Company performance score; for Mr. Harris, $608,400 based on his salary of $669,300, 90% bonus target, and the 101% Company performance score; and for Mr. Cameron, $484,800 based on his salary of $600,000, 80% bonus target, and the 101% Company performance score. Please note that the Summary Compensation Table’s entries for Non-Equity Incentive Plan Compensation in 2023 reflect the annual performance bonuses provided above.
Long-Term Incentives
Long-Term Incentives A key element of Devon’s compensation program is to align pay and performance by rewarding executive officers for long-term strategic accomplishments and enhancement of long-term stockholder value through equity-based incentives that vest over an extended period of time. LTI compensation plays an essential role in attracting and retaining executive officers and aligns their interests with the long-term interests of Devon’s stockholders.
Restricted Stock Awards (RSAs)
Restricted Stock Awards (RSAs)
Restricted Stock Awards (RSAs)
| Purpose: Awards of RSAs foster long-term stock ownership, strengthen alignment with stockholders, and promote executive retention during the vesting period. | | Additional Details: Devon grants RSAs that vest ratably over four years, 25% on each anniversary of the grant date. |
Performance Share Units (PSUs)
Performance Share Units (PSUs)
Performance Share Units (PSUs)
| Purpose: | | Awards of PSUs encourage executives to make decisions and take actions that promote Company performance and long-term stockholder return. | | Additional Details: ■ Executives may earn between 0% and 200% of the shares underlying the grant based on the Company’s TSR relative to peer companies 1 over a three-year performance period (for 2023 grants, January 1, 2023 through December 31, 2025). ■ Payout will be determined as of the end of the performance period. The grid below further details the relationship between relative performance and payout levels. ■ Executives may earn the targeted number of shares (100%) only if the Company’s TSR outperforms that of at least half of peers (6th relative position or higher). ■ Without respect to Devon’s relative TSR position, executives may earn no more than the targeted number of shares (100%) if the Company’s TSR is negative during the performance period. |
PSU Payout Schedule
PSU Payout Schedule
PSU Payout Schedule
| Devon’s Relative TSR Position | 1st, 2nd | 3rd | 4th | 5th | 6th | 7th | 8th | 9th | 10th | 11th,12th | | % of Shares Earned | 200% | 175% | 150% | 125% | 100% | 88% | 75% | 63% | 50% | 0% |
PSU Payout Schedule
| 1 The peer companies used for comparison for the PSU grants were selected in January 2023 at the time the grant was approved. The peers are APA Corporation, Chesapeake Energy Corporation, ConocoPhillips, Coterra Energy Inc., Diamondback Energy, Inc., EOG Resources, Inc., Marathon Oil Corporation, Occidental Petroleum Corporation, Ovintiv Inc., Pioneer Natural Resources Company, and the S&P Midcap 400 Index. |
PSU Payout Schedule
At its January 2023 meetings, the Committee approved LTI grant values that were competitive with those most recently granted to similarly situated executives at peer companies. The Committee also determined that the pursuit of strategic Company goals and creation of stockholder value would again be promoted by linking 60% of the LTI awarded for the 2023 year to Company performance and 40% to long-term stock ownership, thereby strengthening the alignment between interests of executives and stockholders. Accordingly, the two types of LTI granted to NEOs were PSUs and time-based RSAs, respectively.
LTI Granted in 20231
LTI Granted in 20231
LTI Granted in 20231
| Executive | Item2 | Target Performance Share Units3 | Restricted Stock | Total | | Richard E. Muncrief | Share Number | 92,068 | 61,379 | 153,447 | | | Grant Value | $5,850 | $3,900 | $9,750 | | Jeffrey L. Ritenour | Share Number | 33,995 | 22,663 | 56,658 | | | Grant Value | $2,160 | $1,440 | $3,600 | | Clay M. Gaspar | Share Number | 37,772 | 25,181 | 62,953 | | | Grant Value | $2,400 | $1,600 | $4,000 | | David G. Harris | Share Number | 33,995 | 22,663 | 56,658 | | | Grant Value | $2,160 | $1,440 | $3,600 | | Dennis C. Cameron | Share Number | 23,608 | 15,739 | 39,347 | | | Grant Value | $1,500 | $1,000 | $2,500 |
LTI Granted in 20231
| 1 Dollar amounts shown in thousands. | | 2 For each NEO, the Committee first determines the total value of LTI to be awarded then divides the total value between 60% PSUs and 40% RSAs. | | 3 In accordance with applicable accounting requirements, Devon uses a different valuation method in the Summary Compensation Table (in this case, a Monte Carlo simulation) for PSUs than in this table. The Monte Carlo simulation for PSUs, when valued for purposes of inclusion in next year’s Summary Compensation Table as compensation for 2023, requires Devon to assign a higher value per unit than the closing price of the Company’s stock as of the grant approval date. |
LTI Granted in 20231
Additionally, at its January 2024 meetings, the Committee certified that the Company achieved the third highest TSR out of a 12-company peer group for the three-year period associated with the PSUs granted in February of 2021 with a performance period that ended December 31, 2023 when contemplating the 30 trading-day average beginning and ending prices outlined in the grant agreement. Pursuant to the grant’s applicable terms and conditions, including certain caps on the number of shares paid out, 142.4% of the grants’ target number of shares were deemed vested for each recipient. Further information about this grant is provided in the “Outstanding Equity Awards at Fiscal Year End” table on page 54.
Role of the Compensation Consultant
Role of the Compensation Consultant For 2023, the Committee retained Meridian Compensation Partners, LLC (Compensation Consultant) as its independent compensation consultant. The Compensation Consultant evaluated the competitiveness of the Company’s program and reviewed the executive compensation program design. The Committee has the final authority to hire and terminate the Compensation Consultant, and the Committee annually evaluates the performance of the Compensation Consultant. In selecting its consultant, the Committee considers factors that could affect the Compensation Consultant’s independence, including whether the consultant provides services to the Company other than under its engagement by the Committee, and the other factors set forth in the Committee’s Charter. When reviewing the Compensation Consultant’s independence, the Company also considered the fact that Devon’s business represents only a very small portion of the Compensation Consultant’s overall revenue. Based on this review, the Committee determined that the Compensation Consultant had no conflicts of interest.
Use of Peer Groups
Use of Peer Groups Devon uses peer groups in two ways: (i) to compare TSR for the PSUs, as documented on page 44 and (ii) to compare executive compensation levels to our peers, as shown below. To successfully compete for executive talent, the Committee, working with the Compensation Consultant, annually compares the compensation of the executive officers to the compensation of similarly situated executives at peer companies with business operations focused on the exploration and production of oil and gas. In establishing a peer group, the Committee primarily seeks companies with asset and market values similar to the Company. The Committee also considers enterprise values, calculated as common equity value plus net long-term debt and preferred stock, and certain operational and financial measures indicative of size and scope. The Committee believes these metrics are appropriate for determining peers because they provide a reasonable point of reference for comparing executives with similar positions and responsibilities. The peer companies used in setting 2023 pay are listed below, as are the peer companies selected at the end of 2023 for use in 2024.
Use of Peer Groups
| Peer Company | 2023 | 2024 | | APA Corporation | ● | ● | | ConocoPhillips | ● | ● | | Continental Resources, Inc | ● | | | Coterra Energy Inc. | ● | ● | | Diamondback Energy, Inc. | ● | ● | | EOG Resources, Inc. | ● | ● | | Hess Corporation | ● | ● | | Marathon Oil Corporation | ● | ● | | Occidental Petroleum Corporation | ● | ● | | Ovintiv, Inc | ● | ● | | Pioneer Natural Resources Co. | ● | ● |
Use of Peer Groups
The Committee’s peer group analysis consists of all components of total direct compensation, including base salary, annual performance bonus, and long-term equity incentives. The Compensation Consultant collected and summarized compensation data from the proxy statements of the peer group companies and the Compensation Consultant’s proprietary databases. Additionally, the Compensation Consultant introduced reference points from similarly sized companies in the broader oil and gas industry as well as non-energy industries to bring further context to the Committee’s decision making.
Post-Termination or Change-in-Control Benefits
Post-Termination or Change-in-Control Benefits Devon maintains an employment agreement with each of the NEOs. These agreements do not guarantee continued employment, but they do place certain restrictions on the executives during and after their employment with the Company. Through these agreements, each NEO is provided certain additional compensation if employment is involuntarily terminated other than for “cause” or if the NEO voluntarily terminates employment for “good reason,” as those terms are defined in the relevant agreements. Also, in these situations, the applicable NEO fully vests in any unvested LTI awards subject to certain covenants and agreements and proration as described below. The agreements also provide certain benefits in the event of a termination within a two-year period following a change-in-control. The employment agreements do not include “gross-up” provisions that obligate the Company to pay an additional amount to the NEO if benefits under the agreement or any other Company arrangement are subject to the tax imposed on excess parachute payments by Section 4999 of the Internal Revenue Code. The Company’s award agreements for LTI granted to the NEOs provide that officers who meet certain years-of-service and age criteria are eligible to continue to vest as scheduled in outstanding awards following retirement subject to certain covenants and agreements. See page 59 for additional details.
Summary Compensation Table
Summary Compensation Table The following table and accompanying footnotes summarize the compensation earned, awarded, paid, or attributed to the NEOs for the years indicated below. The NEOs are the President and Chief Executive Officer, the Chief Financial Officer, and three other executive officers of the Company serving as of December 31, 2023. This table should be read together with the Compensation Discussion and Analysis (starting on page 37 of this Proxy Statement), which includes information about Company performance for 2023, the Company’s compensation philosophy and objectives, the programs and plans that underlie executive officer compensation opportunities, and the Committee’s process for awarding compensation.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($)1 | Stock Awards ($)2 | Non-Equity Incentive Plan Compensation ($)3 | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)4 | All Other Compensation ($)5 | Total ($) | | Richard E. Muncrief President and Chief Executive Officer | 2023 | 1,232,846 | 11,421,978 | 1,641,300 | 0 | 587,027 | 14,883,151 | | | 2022 | 1,132,577 | 10,404,927 | 2,442,100 | 0 | 545,173 | 14,524,777 | | | 2021 | 1,045,000 | 8,310,964 | 2,336,400 | 0 | 222,183 | 11,914,547 | | Jeffrey L. Ritenour Executive Vice President and Chief Financial Officer | 2023 | 674,362 | 4,217,399 | 556,600 | 24,719 | 247,109 | 5,720,189 | | | 2022 | 638,362 | 3,805,243 | 952,900 | 0 | 254,304 | 5,650,809 | | | 2021 | 620,000 | 2,374,583 | 987,700 | 0 | 253,316 | 4,235,599 | | Clay M. Gaspar Executive Vice President and Chief Operating Officer | 2023 | 674,362 | 4,685,973 | 687,100 | 0 | 290,219 | 6,337,654 | | | 2022 | 638,362 | 4,518,726 | 1,058,800 | 0 | 279,155 | 6,495,043 | | | 2021 | 589,000 | 3,609,362 | 1,097,400 | 0 | 124,210 | 5,419,972 | | David G. Harris Executive Vice President and Chief Corp. Development Officer | 2023 | 663,469 | 4,217,399 | 608,400 | 0 | 254,217 | 5,743,485 | | | 2022 | 628,108 | 3,805,243 | 937,600 | 0 | 250,059 | 5,621,010 | | | 2021 | 610,000 | 2,374,583 | 971,700 | 0 | 144,762 | 4,101,045 | | Dennis C. Cameron Executive Vice President and General Counsel | 2023 | 584,615 | 2,928,830 | 484,800 | 0 | 207,349 | 4,205,594 | | | 2022 | 496,154 | 2,378,276 | 660,000 | 0 | 192,956 | 3,727,386 | | | 2021 | 445,538 | 1,424,746 | 672,600 | 0 | 75,776 | 2,618,660 |
Summary Compensation Table
| 1 At its January 2023 meetings, the Committee increased Mr. Muncrief’s annual base salary rate to $1,250,000, Mr. Ritenour’s annual base salary rate to $680,300, Mr. Gaspar’s annual base salary rate to $680,300, Mr. Harris’s annual base salary rate to $669,300, and Mr. Cameron’s annual base salary rate to $600,000. These rates took effect on February 11, 2023. | | 2 The dollar amounts reported in this column represent the aggregate grant date fair values of the stock awards, as determined pursuant to FASB ASC Topic 718, excluding the effect of estimated forfeitures. The assumptions used to value stock awards are discussed in Note 4 — Share-Based Compensation of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. For restricted stock, values are based on the closing price of the Company’s common stock on the grant date. In valuing the PSU awards, the Company used a Monte Carlo simulation. The grant date fair value of the PSU awards was determined based on the vesting at target of the units awarded, which is the performance the Company believed was probable on the grant date. If a maximum, rather than target, number of shares is used to determine the maximum award opportunity for the NEOs for the 2023 PSU awards, the grant date value of the awards is as follows: Mr. Muncrief, $15,043,911; Mr. Ritenour, $5,554,783; Mr. Gaspar, $6,171,945; Mr. Harris, $5,554,783; and Mr. Cameron, $3,857,547. | | 3 This column reflects performance cash bonuses awarded to the NEOs. | | 4 The dollar amounts reported in this column reflect the aggregate change in the actuarial present value of each participating NEO’s accumulated benefits under the Company’s Defined Benefit Plan during the applicable year. The amounts shown for each year do not reflect payments made to the executives during the applicable year. None of the NEOs received above market or preferential earnings on deferred compensation in any of the reported years. Messrs. Muncrief, Gaspar, Harris, and Cameron joined the Company after Devon’s Defined Benefit Plan was closed to new participants in 2007. At the time the plans closed to new participants, Mr. Ritenour elected to freeze his participation in these plans and instead participate in the Company’s enhanced defined contribution plan. Under the Defined Benefit Plan, Mr. Ritenour continues to earn years of vesting service only. | | 5 Details for the amounts shown in this column for 2023 are reflected in the supplemental table immediately below. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following Grants of Plan-Based Awards table sets forth information concerning performance bonuses, restricted stock, and performance share units granted during 2023 for the NEOs as described below. The long-term incentive awards reflected below are the only equity-based incentives granted to the NEOs in the year.
Grants of Plan-Based Awards
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards1 | | | Estimated Future Payouts Under Equity Incentive Plan Awards2 | | | All Other Stock Awards: Number of Shares of Stock or Units (# shares) | Grant Date Fair Value of Stock Awards3 ($) | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (# shares) | Target (# shares) | Maximum (# shares) | | | | Richard E. Muncrief | 1/24/2023 | 812,500 | 1,625,000 | 3,250,000 | — | — | — | — | — | | | 2/10/2023 | — | — | — | — | — | — | 61,379 | 3,900,022 | | | 2/10/2023 | — | — | — | 46,034 | 92,068 | 184,136 | — | 7,521,956 | | Jeffrey L. Ritenour | 1/24/2023 | 306,135 | 612,270 | 1,224,540 | — | — | — | — | — | | | 2/10/2023 | — | — | — | — | — | — | 22,663 | 1,440,007 | | | 2/10/2023 | — | — | — | 16,998 | 33,995 | 67,990 | — | 2,777,392 | | Clay M. Gaspar | 1/24/2023 | 340,150 | 680,300 | 1,360,600 | — | — | — | — | — | | | 2/10/2023 | — | — | — | — | — | — | 25,181 | 1,600,001 | | | 2/10/2023 | — | — | — | 18,886 | 37,772 | 75,544 | — | 3,085,972 | | David G. Harris | 1/24/2023 | 301,185 | 602,370 | 1,204,740 | — | — | — | — | — | | | 2/10/2023 | — | — | — | — | — | — | 22,663 | 1,440,007 | | | 2/10/2023 | — | — | — | 16,998 | 33,995 | 67,990 | — | 2,777,392 | | Dennis C. Cameron | 1/24/2023 | 240,000 | 480,000 | 960,000 | — | — | — | — | — | | | 2/10/2023 | — | — | — | — | — | — | 15,739 | 1,000,056 | | | 2/10/2023 | — | — | — | 11,804 | 23,608 | 47,216 | — | 1,928,774 |
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table shows the outstanding equity awards held by the NEOs as of December 31, 2023.
Outstanding Equity Awards at Fiscal Year End
| | Options Awards1 | | | | Stock Awards | | | | | | | | | | | | Equity Incentive Plan Awards: | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)2 | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)2 | | Richard E. Muncrief | 42,582 | | 41.53 | 3/3/2024 | 378,9914 | 17,168,292 | | | | | | | | | 88,6985 | 4,018,019 | | | | | | | | | 50,2697 | 2,277,186 | 50,2696 | 2,277,186 | | | | | | | 61,3799 | 2,780,469 | 46,0348 | 2,085,340 | | Jeffrey L. Ritenour | | | | | 13,8653 | 628,085 | | | | | | | | | 108,2834 | 4,905,220 | | | | | | | | | 25,3435 | 1,148,038 | | | | | | | | | 18,3847 | 832,795 | 18,3846 | 832,795 | | | | | | | 22,6639 | 1,026,634 | 16,9988 | 770,009 | | Clay M. Gaspar | | | | | 164,5914 | 7,455,972 | | | | | | | | | 38,5215 | 1,745,001 | | | | | | | | | 21,8317 | 988,944 | 21,8316 | 988,944 | | | | | | | 25,1819 | 1,140,699 | 18,8868 | 855,536 | | David G. Harris | | | | | 13,8653 | 628,085 | | | | | | | | | 108,2834 | 4,905,220 | | | | | | | | | 25,3435 | 1,148,038 | | | | | | | | | 18,3847 | 832,795 | 18,3846 | 832,795 | | | | | | | 22,6639 | 1,026,634 | 16,9988 | 770,009 | | Dennis C. Cameron | | | | | 64,9704 | 2,943,141 | | | | | | | | | 15,2065 | 688,832 | | | | | | | | | 11,4907 | 520,497 | 11,4906 | 520,497 | | | | | | | 15,7399 | 712,977 | 11,8048 | 534,721 |
Option Exercises and Stock Vested During 2023
Option Exercises and Stock Vested During 2023 The table below shows the number of shares of Devon’s common stock acquired during 2023 upon the vesting of stock awards granted to the NEOs in previous years. No options were exercised by the NEOs in 2023.
Option Exercises and Stock Vested During 2023
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)1 | | Richard E. Muncrief | 570,032 | 31,777,627 | | Jeffrey L. Ritenour | 137,955 | 8,765,661 | | Clay M. Gaspar | 247,555 | 13,800,477 | | David G. Harris | 131,568 | 8,359,831 | | Dennis C. Cameron | 92,580 | 5,168,818 |
Option Exercises and Stock Vested During 2023
| 1 The dollar amounts shown in this column are determined by multiplying the number of shares of common stock acquired upon vesting by the closing per-share market price of Devon’s common stock on the vesting date. |
Pension Benefits
Pension Benefits Devon maintains a tax qualified defined benefit retirement plan and related trust for certain employees (Defined Benefit Plan). Mr. Ritenour, the only NEO eligible to participate in the plan, elected to have his benefit under the Defined Benefit Plan frozen. Messrs. Muncrief, Gaspar, Harris, and Cameron joined the Company after the Defined Benefit Plan was closed to new participants in 2007. As a result, they are not eligible for a benefit under any of Devon’s defined retirement benefit plans.
Nonqualified Deferred Compensation1
Nonqualified Deferred Compensation1 The following table shows the contributions, earnings, distributions, and balances for 2023 under Devon’s nonqualified deferred compensation plan and supplemental contribution restoration plans, to the extent the respective NEO participates in such plans. Additional information regarding each plan is provided following the table.
Nonqualified Deferred Compensation1
| Name | Executive Contributions in Last Fiscal Year ($)1 | Company Contributions for Last Fiscal Year ($)2 | Aggregate Earnings in Last Fiscal Year ($)3,4 | Aggregate Distributions in Last Fiscal Year ($)5 | Aggregate Balance at Last Fiscal Year End ($)3,6 | | Richard E. Muncrief Deferred Compensation Plan Supplemental Contribution Restoration Plans (SCRPs) WPX Deferred Compensation Plan WPX Restoration Plan | | | | | | | | 734,989 | 200,697 | 33,512 | 0 | 2,214,250 | | | N/A | 270,296 | 53,099 | 0 | 640,045 | | | N/A | N/A | 161,923 | 0 | 4,852,211 | | | N/A | N/A | 62,736 | 0 | 1,295,226 | | Jeffrey L. Ritenour Deferred Compensation Plan Supplemental Contribution Restoration Plans (SCRPs) | | | | | | | | 381,160 | 77,836 | 144,313 | (2,132) | 1,094,721 | | | N/A | 106,481 | 41,913 | 0 | 328,330 | | Clay M. Gaspar Deferred Compensation Plan Supplemental Contribution Restoration Plans (SCRPs) WPX Deferred Compensation Plan WPX Restoration Plan | | | | | | | | 103,990 | 84,190 | 70,680 | 0 | 483,684 | | | N/A | 114,953 | 21,408 | 0 | 279,982 | | | N/A | N/A | 247,248 | 0 | 1,389,491 | | | N/A | N/A | 124,766 | 0 | 730,611 | | David G. Harris Deferred Compensation Plan Supplemental Contribution Restoration Plans (SCRPs) | | | | | | | | 96,064 | 76,264 | 49,158 | 0 | 477,100 | | | N/A | 104,386 | 35,346 | 0 | 310,220 | | Dennis C. Cameron Deferred Compensation Plan Supplemental Contribution Restoration Plans (SCRPs) WPX Deferred Compensation Plan WPX Restoration Plan | | | | | | | | 74,677 | 54,877 | 25,824 | 0 | 301,917 | | | N/A | 75,869 | 14,381 | 0 | 176,813 | | | N/A | N/A | 28,662 | 0 | 356,962 | | | N/A | N/A | 37,054 | 0 | 468,117 |
Nonqualified Deferred Compensation1
| “N/A” indicates the plan does not permit the participant or, as applicable, the Company to make contributions. | | 1 The amounts in this column are already included in, and are not in addition to, the amounts in the “Salary” or “Non-Equity Incentive Plan Compensation” columns in the Summary Compensation Table on page 52. | | 2 The amounts in this column are already included in, and are not in addition to, the amounts in the “All Other Compensation” column of the Summary Compensation Table on page 52. Company contributions are made in arrears during the first month following the fiscal quarter during which the contributions were earned. Company contributions earned by the NEOs during 2023 were deposited in April, July, and October 2023 and January 2024. | | 3 Messrs. Muncrief, Gaspar, and Cameron participate in the WPX Deferred Compensation Plan and the WPX Restoration Plan. No new contributions may be made to these plans after December 31, 2021. | | 4 Earnings reflect the returns produced by the investments selected by the applicable NEO. For the Devon Plans, the investment options available to the NEOs are the same options available under the Company’s 401(k) Plan. As of December 31, 2023, investment options consisted of the following (returns for 2023 noted in parentheses): PIMCO Stable Income-Class IV (2.40%); Global Low Volatility Fund (8.26%); US Equity Index Fund (26.06%); International Equity Index Fund (15.49%); TCW Core Fixed Income (5.60%); Fidelity Inflation Bond Index (3.78%); Vanguard Total Bond Market (5.72%); Vanguard Prime Money Market (5.09%). BlackRock LifePath Target-Date Funds (ten funds ranging from 11.14% to 21.63%). For the WPX Deferred Compensation Plan and the WPX Restoration Plan, the investment options are the same in each plan. As of December 31, 2023, investment options consisted of the following (returns for 2023 noted in parentheses): iShares Total US Stock Market Index (26.03%); iShares MSCI Total International Index (15.24%); Fidelity Inflation-Protected Bond Index (3.78%); PIMCO Short Asset Investment (5.66%); TCW Core Fixed Income (5.60%); Vanguard Total Bond Market Index (5.70%); Vanguard Federal Money Market (5.09%); and BlackRock LifePath Target-Date Funds (nine funds ranging from 11.47% to 21.66%). The Company does not guarantee a level of investment return. | | 5 In-service distributions (if any) are made in accordance with the elections made by the NEO at the time of enrollment in the plan. | | 6 For the referenced plans, the Aggregate Balance reflects the changes in the plan balance for the NEOs due to contributions (executive and Company), earnings, and distributions. The amounts previously reported in the Summary Compensation Table as compensation to the NEOs are as follows: Mr. Muncrief — $578,116; Mr. Ritenour — $1,125,284; Mr. Gaspar — $258,584; Mr. Harris — $586,292; and Mr. Cameron — $123,126. |
Nonqualified Deferred Compensation Plan
Nonqualified Deferred Compensation Plan The Nonqualified Deferred Compensation Plan is designed to allow each participating employee, including the NEOs, to contribute up to 70% of his or her base salary and up to 100% of his or her performance bonus and receive a Company match beyond the contribution limits prescribed by the Internal Revenue Service with regard to Devon’s 401(k) Plan. The Nonqualified Deferred Compensation Plan provides executives a tax-effective means to defer a portion of their cash compensation at a minimal cost to the Company. Unless otherwise distributed in accordance with the terms of a scheduled in-service withdrawal, a participant’s account is payable upon the earlier to occur of the participant’s separation from service, disability, change-in-control event, or death. Payment will be made in the form of a single lump sum unless the participant elects installment payments. In the case of a change-in-control event or death, distribution will be made within ninety days. If the participant experiences a separation from service, distribution will be made within ninety days unless the participant is a specified employee under section 409A of the Internal Revenue Code, in which case payment will be delayed for six months. A participant may elect to schedule an in-service withdrawal at least two years after the plan year in which deferrals were made in the form of a lump sum or quarterly installment payments over a period of one or more years. Payment will be made (or commence in the case of installments) within thirty days of the first business day of January in the year elected. However, in the event of death, disability, the occurrence of a change-in-control event or separation from service, payment of the participant’s account is determined without regard to any scheduled in-service withdrawal, which will be cancelled. Investments under the plan mirror those provided to participants under the Company’s 401(k) Plan. Participants are always fully vested in any deferrals made to the plan; vesting of employer contributions follows the four-year graded vesting schedule under the Company’s 401(k) Plan. Vesting is accelerated due to death, disability, retirement, or attainment of normal retirement age (all as defined under the Company’s 401(k) Plan). The WPX Deferred Compensation plan operated on substantially the same terms as the Devon plan prior to the 2021 merger of the companies. In the year of the Merger, contributions to the WPX plan ceased and NEO participants became participants in the Devon plan.
Potential Payments Upon Termination or Change-In-Control
Potential Payments Upon Termination or Change-In-Control Devon will be obligated to make certain payments to the NEOs or potentially accelerate the vesting of their equity awards and retirement benefits upon termination of their employment or upon a change-in-control of the Company pursuant to the following plans or agreements: ■ an “Employment Agreement” is applicable to the President and CEO and each of the Executive Vice Presidents, ■ the Defined Benefit Plan, ■ the 401(k) Plan, ■ the SCRPs, ■ the Nonqualified Deferred Compensation Plan, and ■ the Company’s Long-Term Incentive Plans (the Devon 2017 Long-Term Incentive Plan, as amended (the 2017 LTIP), the 2022 LTIP, and the WPX Plan). Please refer to the discussion in the sections immediately above for information about each of the applicable pension plans and nonqualified deferred compensation plans that the NEOs participate in and may be eligible to receive benefits from in the event of a termination of employment or a change-in-control. As specified below, the Employment Agreement with Devon’s NEOs provide the following rights to compensation in the event of employment termination.
Accrued Payments Upon Termination of Employment
Accrued Payments Upon Termination of Employment Upon termination under the agreements, the NEO is entitled to receive the accrued amounts earned during his or her term of employment, including: (i) any earned but unpaid salary through the date of termination, (ii) the annual performance bonus amount only if the NEO has been employed the entire year upon which such annual performance bonus is based, and (iii) amounts he or she is otherwise entitled to under Devon’s employee benefit plans (together, the “Accrued Amounts”).
Potential Payments Upon Termination Or Change-In-Control1
Potential Payments Upon Termination Or Change-In-Control1
CEO Pay Ratio
CEO Pay Ratio Section 953(B) of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires certain public companies to disclose the median pay of Company employees, the method of determining median employee pay (the median of the total annual compensation of all employees other than the CEO), and the ratio of CEO pay to median employee pay. Devon’s employees, which are all located in the U.S., are included in the calculation of median pay based on Devon’s employee population as of December 31, 2023. For CEO pay, Devon used the amount for 2023 reflected in the Summary Compensation Table for the Company’s current CEO (Richard E. Muncrief), which includes LTI granted in the year. In determining the median pay of employees, Devon at year end selected the median-paid employee by aggregating base pay, performance bonus, and LTI for the year. Once the median-paid employee was determined, the remaining compensation elements, such as Company retirement arrangement contributions, were added to the total in order to compare the same elements of compensation that are reflected for the current CEO within the Summary Compensation Table. Based on this methodology, CEO pay is $14.9 million, median employee pay is $175.3 thousand, and the ratio is 85:1.
Pay Versus Performance Disclosure
Pay Versus Performance Disclosure As required by Item 402(v) of Regulation S-K, we are providing the following information regarding the relationship between executive compensation and our financial performance for each of the last four completed calendar years. “Compensation actually paid” includes payments made to executives during the applicable year such as salary, performance bonus, and various benefits. The SEC’s valuation methods for this section emphasize the changes in fair value of equity awards under applicable financial accounting standards, and as such, references to “compensation actually paid” below reflects the change in equity award values on the applicable calculation dates and does not necessarily reflect what our NEOs received year-to-year by grant, vesting, or exercise. The three PvP tables below, along with three PvP charts and their respective footnotes, are Devon’s disclosure under the applicable regulation.
PvP Table 1: Named Executive Officer “Compensation Actually Paid”1,10
PvP Table 1: Named Executive Officer “Compensation Actually Paid”1,10
PvP Table 1: Named Executive Officer “Compensation Actually Paid”1,10
| Year | SCT Total CEO2,4 | “Compensation Actually Paid” to CEO3,4 | Average SCT Total for Other NEOs2,5 | Average “Compensation Actually Paid” to Other NEOs3,5 | Value of a $100 Investment in Devon Based on Cumulative TSR6,10 | Value of a $100 Investment in the Peer Group Based on Cumulative TSR6,7,10 | Post-Tax Net Income8,10 | CROCE9,10 | | 2023 | $14,883 | $814 | $5,502 | $1,204 | $226 | $152 | $3.737B | 42% | | 2022 | $14,525 | $41,216 | $5,374 | $12,292 | $285 | $143 | $6.031B | 62% | | 2021-Muncrief | $11,915 | $48,059 | $4,596 | $15,151 | $191 | $121 | $2.808B | 39% | | 2021-Hager | $3,391 | $32,289 | | | | | | | | 2020 | $13,355 | $4,514 | $4,536 | $1,594 | $65 | $58 | $(2.688B) | 27% |
PvP Table 1: Named Executive Officer “Compensation Actually Paid”1,10
| 1 Dollar amounts are shown in thousands, except where otherwise indicated. Amounts in parentheses are negative. References to our CEO are also references to our principal executive officer (“PEO”) for purposes of this section. | | 2 “SCT Total” is the Summary Compensation Table’s total for the applicable year. | | 3 The calculation for “Compensation Actually Paid” is shown in “PvP Table 3”. | | 4 The CEO for each year is as follows: 2023: Richard E. Muncrief 2022: Richard E. Muncrief 2021: Richard E. Muncrief, from January 7th to the end of the year; David A. Hager, from January 1st to 6th. After January 6th, Mr. Hager assumed the position of Executive Chair of the Board of Directors until his retirement in early 2023. 2020: David A. Hager | | 5 The other NEOs for each year are as follows: 2023: Dennis C. Cameron, Clay M. Gaspar, David G. Harris, and Jeffrey L. Ritenour. 2022: Dennis C. Cameron, Clay M. Gaspar, David G. Harris, and Jeffrey L. Ritenour. 2021: Tana K. Cashion, Clay M. Gaspar, David G. Harris, Jeffrey L. Ritenour, and Lyndon C. Taylor. 2020: Tana K. Cashion, David G. Harris, Jeffrey L. Ritenour, and Lyndon C. Taylor. | | 6 “TSR” is Total Shareholder Return including reinvested dividends. It is a measure of finance performance indicating the growth or decline in an investment’s value over a specified period. For 2023, “Cumulative TSR” is measured from the last trading day of 2019 to the last trading day of 2023; for 2022, the range is the last trading day of 2019 to the last trading day of 2022; for 2021, the range is the last trading day of 2019 to the last trading day of 2021; and for 2020, the range is the last trading day of 2019 to the last trading day of 2020. For Devon, Cumulative TSR for 2023, 2022, 2021, and 2020 was 226%, 185%, 91%, and -35%, respectively. For the Peer Group, Cumulative TSR was 152%, 43%, 21%, and -42% for the same periods. | | 7 The 2022 and 2023 peer group was the SPDR S&P Oil & Gas Exploration & Production ETF (Symbol: XOP). The 2021 peer group was comprised of APA Corporation, ConocoPhillips, Continental Resources, Diamondback Energy, Inc., EOG Resources, Inc., Marathon Oil Corporation, Ovintiv, Inc., Pioneer Natural Resources Company, and the S&P Midcap 400 Index. Cimarex Energy Co. is excluded from this Cumulative TSR calculation due to its subsequent acquisition, and the S&P Midcap 400 is excluded due to incomparability on a market capitalized basis. The 2020 peer group was comprised of APA Corporation, Chesapeake Energy Corporation, Cimarex Energy Co, Continental Resources, Inc., EOG Resources, Inc., Marathon Oil Corporation, Occidental Petroleum Corporation, Ovintiv, Inc., and Pioneer Natural Resources Company. Chesapeake Energy Corporation is excluded from this Cumulative TSR calculation due to the impact of their subsequent bankruptcy filing, and Cimarex Energy Co. is excluded due to the company’s subsequent acquisition. | | 8 Post-Tax Net Income is disclosed in the Comprehensive Statements of Consolidated Earnings of Devon’s annual report as “Comprehensive earnings (loss) attributable to Devon.” |
EXECUTIVE COMPENSATION (cont.)
| 9 Cash Return on Capital Employed (CROCE) is an important financial measure used by the Company to link “compensation actually paid” to Company performance because of the importance of capital efficiency to successful operations in the oil and gas exploration and production industry. In Devon’s annual performance scorecard published in the “Annual Performance Bonus” section of this and prior Proxy Statements, CROCE was weighted as the joint-highest measure of performance on preset annual goals. The Company’s other important financial measures used to link “compensation actually paid” to Company performance are used to calculate Devon’s Annual Performance Bonus and can be found on page 42. | | 10 The PvP Charts below illustrate the relationship between various performance measures and “Compensation Actually Paid.” |
PvP Table 2: Other Measures important in Linking Performance to “Compensation Actually Paid”
PvP Table 2: Other Measures important in Linking Performance to “Compensation Actually Paid”
PvP Table 2: Other Measures important in Linking Performance to “Compensation Actually Paid”
| Other Important Measures1 | | | | | | Free Cash Flow (FCF) | Emissions Reduction | ESG & Community Engagement | Total Oil & Gas Production | Total Capital Expenditures |
PvP Table 2: Other Measures important in Linking Performance to “Compensation Actually Paid”
| 1 These are the measures, in addition to CROCE, used to determine 2023 NEO performance bonuses. For more information on measures used to determine performance bonuses, see section “Annual Performance Bonus” in this Proxy Statement and similar disclosures in prior Proxy Statements. |
PvP Table 3: Converting Summary Compensation Table Total to “Compensation Actually Paid”1,2,3
PvP Table 3: Converting Summary Compensation Table Total to “Compensation Actually Paid”1,2,3
PvP Table 3: Converting Summary Compensation Table Total to “Compensation Actually Paid”1,2,3
| | | | Subtract (-) | Subtract (-) | Add (+) | Add (+) | Equals (=) | | Year | Executive | SCT Total Compensation | Fair Value of Stock-Based Awards Granted During the Year | Change in Pension Value for the Year | The difference in the fair value from start to end of the year for all stock awards outstanding4 | Pension Service Cost and Cost of Additional Pension Benefits Due to Plan Amendment | “Compensation Actually Paid” | | 2023 | CEO | $14,883 | $11,422 | $0 | $(2,647) | $0 | $814 | | | Other NEO Average | $5,502 | $4,012 | $6 | $(279) | $0 | $1,204 | | 2022 | CEO | $14,525 | $10,405 | $0 | $37,096 | $0 | $41,216 | | | Other NEO Average | $5,374 | $3,717 | $0 | $10,635 | $0 | $12,292 | | 2021 | CEO-Muncrief | $11,915 | $8,311 | $0 | $44,455 | $0 | $48,059 | | | CEO-Hager | $3,391 | $712 | $0 | $29,610 | $0 | $32,289 | | | Other NEO Average | $4,596 | $1,881 | $0 | $12,436 | $0 | $15,151 | | 2020 | CEO | $13,355 | $9,509 | $0 | $668 | $0 | $4,514 | | | Other NEO Average | $4,536 | $2,405 | $1,038 | $501 | $0 | $1,594 |
PvP Table 3: Converting Summary Compensation Table Total to “Compensation Actually Paid”1,2,3
| 1 Dollar amounts are shown in thousands, except where otherwise indicated. Amounts in parentheses are negative. References to our CEO are also references to our PEO for purposes of this section. | | 2 The CEO for each year is as follows: | | 2023: Richard E. Muncrief | | 2022: Richard E. Muncrief | | 2021: Richard E. Muncrief, from January 7th to the end of the year; David A. Hager, from January 1st to 6th. After January 6th, Mr. Hager assumed the position of Executive Chair of the Board of Directors until his retirement in early 2023. | | 2020: David A. Hager | | 3 The other NEOs for each year are as follows: | | 2023: Dennis C. Cameron, Clay M. Gaspar, David G. Harris, and Jeffrey L. Ritenour. | | 2022: Dennis C. Cameron, Clay M. Gaspar, David G. Harris, and Jeffrey L. Ritenour. | | 2021: Tana K. Cashion, Clay M. Gaspar, David G. Harris, Jeffrey L. Ritenour, and Lyndon C. Taylor. | | 2020: Tana K. Cashion, David G. Harris, Jeffrey L. Ritenour, and Lyndon C. Taylor. |
PvP Charts: Relationship Between Performance Measures and “Compensation Actually Paid”
PvP Charts: Relationship Between Performance Measures and “Compensation Actually Paid” The following charts illustrate the relationship between “Compensation Actually Paid” and performance on the measures identified in PvP Table 1 above.
AGENDA ITEM 4. STOCKHOLDER PROPOSAL FOR BYLAW AMENDMENT: STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION
AGENDA ITEM 4. STOCKHOLDER PROPOSAL FOR BYLAW AMENDMENT: STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION The Company has been notified by Mr. John Chevedden that the following proposal is to be presented for consideration at the Annual Meeting. This proposal will be voted on if it is properly presented at the Annual Meeting. The Company will provide to any stockholder, promptly upon receipt of the stockholder’s written or oral request, Mr. Chevedden’s address and the number of shares of the Company’s common stock held by Mr. Chevedden. The Board of Directors unanimously recommends a vote AGAINST the adoption of this stockholder proposal. The Company is not responsible for the content of this stockholder proposal, including the supporting statement and the checkmark graphic.
Stockholder Proposal for Bylaw Amendment: Stockholder Approval of Director Compensation
Stockholder Proposal for Bylaw Amendment: Stockholder Approval of Director Compensation The Bylaws of Devon Energy Corporation are amended as follows: Article III Section 9. is deleted and replaced in its entirety as follows: Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors. The Board shall not have any authority to fix the compensation of directors. The compensation of directors the Corporation pays shall be fixed at $1 in a fiscal year; provided, however, the Corporation may pay, grant, or award compensation greater than $1 in a fiscal year if such compensation has been (1) disclosed to stockholders in advance of the fiscal year in which the Corporation will pay, grant, or award such compensation; (2) submitted to an approval vote of stockholders at an annual or special meeting of stockholders in advance of the fiscal year in which the Corporation will pay, grant, or award such disclosed compensation; and (3) approved by a majority of stockholder votes present in person or represented by proxies and entitled to vote cast in favor of the disclosed annual compensation at an annual or special meeting of stockholders in advance of the fiscal year in which the Corporation will pay, grant, or award such compensation, which majority shall include only stockholder votes of stockholders that are not directors of the Corporation. No such compensation shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.
AGENDA ITEM 4. STOCKHOLDER PROPOSAL FOR BYLAW AMENDMENT: STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION (cont.)
AGENDA ITEM 4. STOCKHOLDER PROPOSAL FOR BYLAW AMENDMENT: STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION (cont.) Opposition Statement of the Company: The Board has carefully reviewed the stockholder proposal and, for the reasons described below, recommends that you vote “AGAINST” it. Our Board engages in sound corporate governance practices for its director compensation program that have enabled the Company to attract and retain highly qualified directors Our Board believes it is vital to maintain a director compensation program that attracts and retains highly qualified directors and aligns the long-term interests of our Board and stockholders. Our Board also recognizes it is important to provide the Company’s stockholders with fulsome disclosures of (i) the Board’s processes for determining director compensation and (ii) the amount and form of compensation earned by our Directors. This Proxy Statement reflects that our Board continues to engage in sound corporate governance practices with director compensation. Some of those practices are highlighted below. Our Board’s Compensation Committee is responsible for annually reviewing and recommending the compensation for the non-employee Directors of our Board. Compensation is reviewed and approved by our Board following the recommendation of the Compensation Committee. As part of its ordinary course processes for director compensation, the Compensation Committee periodically obtains data on the director compensation for Devon’s principal competitors and other comparable companies. The Compensation Committee also engages an independent consultant to supplement the data and provide additional information on director compensation and other compensation-related practices. These processes have resulted in director compensation that we believe is competitive, reasonable, and appropriate for the Company. Devon’s director compensation is within market norms and is heavily weighted toward equity in the Company. Our Directors keenly focus on enhancing stockholder value over the long-term and, therefore, the Board requires that each Director hold Devon stock worth a minimum of $500,000. That ensures that our Directors—like our stockholders—share a significant stake in the performance of the Company. Simply put, our Directors have high standards and expect strong performance from themselves and the Company. Our Board believes that our director compensation program has enhanced the ability of the Company to attract and retain highly qualified Directors. As further discussed in the “Director Skills and Experience” section beginning on page 14, Devon’s Board is composed of Directors who individually and collectively possess significant experience and expertise in areas that are highly relevant for a large upstream exploration and production company with many different business, operational, financial, and strategic matters that require Director attention. Furthermore, the Board actively reviews the performance and the mix of skills and experience of the Board in light of the strategic direction of the Company. This has resulted in a Board with a range of service tenures, which balances experience with fresh perspective. Our Directors are elected annually and have consistently received high voting support from our stockholders. At our 2023 Annual Meeting of Stockholders, our Directors received on average approximately 96% approval from our stockholders. Our Board also (i) maintains a number of means for stockholders to provide feedback and (ii) receives frequent updates on the Company’s stockholder engagement efforts. With a strong director compensation program, an annual vote on our Directors, and a variety of methods to communicate with the Company and provide feedback to the Board, we believe that the stockholder proposal is unnecessary and, worse, potentially harms the Company. The stockholder proposal, if approved, would inject significant distraction, expense, and upheaval into Devon’s corporate governance and impair the Company’s ability to attract and retain highly qualified directors Our Board believes that effective board-level strategic decision-making and risk management practices require focus and a long-term outlook. As reflected in this Proxy Statement, our Board has several significant priorities that demand attention throughout the year—delivering returns to our stockholders; maintaining a strong balance sheet; promoting high operational execution; reviewing the strategic landscape for assets; protecting human safety and health; advancing our sustainability program; and cultivating a corporate culture that values performance and one another—to name a few. Additional stockholder meetings require time and attention, as annual and special stockholder meetings involve a host of workflows. For each stockholder meeting, the Company must prepare, print, and distribute disclosure documents to stockholders, solicit proxies, hold the meeting, and tabulate votes, among other things. The Board is involved in several aspects of these workflows, including the review of certain disclosure documents and approval of certain other matters
AGENDA ITEM 4. STOCKHOLDER PROPOSAL FOR BYLAW AMENDMENT: STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION (cont.)
AGENDA ITEM 4. STOCKHOLDER PROPOSAL FOR BYLAW AMENDMENT: STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION (cont.) related to the meeting. Our Board’s calendar is typically dense. In 2023 alone, Devon’s Board and Board Committees met 36 times. The stockholder proposal could, therefore, lead to significant additional expense and hours of work without a beneficial upside. The Board believes that the stockholder proposal is punitive; limiting director compensation to $1 in a year is intended to humiliate. Accordingly, we believe that prospective board candidates would have good reason to be wary of serving at a company that is subject to such a noxious condition for compensation. Adoption of the proposal would lead to constant (i) uncertainty about whether our Directors will be compensated for their services and (ii) distraction from the core duties and responsibilities of the Board, which is to address the Company’s significant priorities and ultimately generate long-term value for stockholders. We believe that adoption of the proposal would inevitably risk departures from the Board; most people do not choose to perform work for free that is intense, time-consuming, and potentially subject to liability and public scrutiny. Because the proposal (if adopted) has no sunset, the Company could encounter ongoing difficulties in attracting new Directors. The Company competes for director talent. Since the Company’s competitors do not have severe impediments for director compensation, we believe that the Company would be at a competitive disadvantage if this proposal is adopted. Distraction, uncertainty, and upheaval are not a formula for maintaining a high-functioning, high-quality board. Devon’s director compensation program is the product of sound corporate governance practices. We believe that our Board compensation is competitive and reasonable. As a result, the Company is able to attract, retain, and motivate directors to serve on our Board who are dedicated to the interests of the Company’s stockholders. We strongly recommend that stockholders vote “Against” this proposal.
AGENDA ITEM 4. STOCKHOLDER PROPOSAL FOR BYLAW AMENDMENT: STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION (cont.)
| For the foregoing reasons, the Company’s Board of Directors recommends that stockholders vote “AGAINST” the proposal for Bylaw Amendment: Stockholder Approval of Director Compensation. |