DEF 14A of Texas Pacific Land Corp
Filed Sep 24, 2024 · FY20230001104659-24-102208
Proposals to Be Voted On
| Pension Benefits | 68 | | Securities Authorized for Issuance under Equity Compensation Plans | 69 | | Pay Versus Performance Disclosure | 70 | | Directors’ Compensation | 74 | | REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS | 76 | | INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 77 | | INCORPORATION BY REFERENCE | 78 | | FORWARD-LOOKING STATEMENTS | 78 | | APPENDIX A | A-1 | | Annex A | A-A-1 | | Annex B | B-1 |
ABOUT THE ANNUAL MEETING
| BARBARA J. DUGANIER Director AGE: 66 DIRECTOR SINCE: January 2021 | Ms. Duganier has been a member of the Board since January 11, 2021. Ms. Duganier currently serves on the boards of CenterPoint Energy (NYSE: CNP), an electric transmission and distribution, natural gas distribution and energy services company, where she chairs the audit committee and serves on the governance, environmental and sustainability committee, and Arcadis NV (Euronext: ARCADIS) where she serves on the sustainability committee and the audit and risk committee. Ms. Duganier also serves on the boards of two private companies: McDermott International, Ltd. (since 2020), a fully integrated provider of engineering and construction solutions to the energy industry; and Pattern Energy Group LP (since 2020), a private renewable energy company focused on wind, solar, transmission and storage. Ms. Duganier previously served on the boards of the general partner of Buckeye Partners, L.P. (NYSE: BPL), a midstream oil and gas master limited partnership, where she chaired the audit committee until the company’s sale in November 2019; of Noble Energy (NASDAQ: NBL), an exploration and production company, until the company’s sale in October 2020; of West Monroe Partners, a management and technology consulting firm, where she was the lead independent director until the sale of the company in November 2021; and of MRC Global Inc. (NYSE: MRC) (2015-2024), an industrial distributor of pipes, valves and other related products and services to the energy industry, where, during her term, she chaired the ESG and enterprise risk committee and audit committee. From 2004 to 2013, Ms. Duganier was a Managing Director at Accenture, a multinational professional services company that provides services in strategy, consulting, digital technology, and operations. She held various leadership and management positions in Accenture’s outsourcing business, including Global Chief Strategy Officer and Global Growth and Offering Development Lead. A year prior to joining Accenture, she served as an independent consultant to Duke Energy North America. From 1979 to 2002, Ms. Duganier, who is a licensed certified public accountant in the State of Texas, worked at Arthur Andersen LLP, where she served as an auditor and financial consultant, as well as in various leadership and management roles, including Global Chief Financial Officer of Andersen Worldwide. Ms. Duganier is the former chairperson of the National Association of Corporate Directors Texas TriCities (NACD TTC) board of directors. Ms. Duganier holds the NACD Director Certification, is an NACD Leadership Fellow, and holds the CERT Cybersecurity Oversight Certification from Carnegie Mellon University. Ms. Duganier serves on and is the chair of the Compensation Committee and serves on the Audit Committee and the Strategic Acquisitions Committee. QUALIFICATIONS Ms. Duganier’s extensive executive experience overseeing large organizations, her diverse public company board experience (including in the energy industry), and her training and experience as a certified public accountant make her well-qualified to serve on the Board. |
ABOUT THE ANNUAL MEETING
| TYLER GLOVER President, CEO & Director AGE: 39 DIRECTOR SINCE: January 2021 | Mr. Glover has been a member of the Board and served as TPL’s President and Chief Executive Officer since January 11, 2021. Mr. Glover served as Chief Executive Officer, Co-General Agent and Secretary of the Trust from November 2016 to January 11, 2021. Mr. Glover also currently serves as President and Chief Executive Officer of Texas Pacific Water Resources LLC (“TPWR”), a wholly owned subsidiary of TPL, in which capacity he has acted since its formation in June 2017. Mr. Glover previously served as Assistant General Agent of the Trust from December 2014 to November 2016, and has over 10 years of energy services and land management experience. QUALIFICATIONS Mr. Glover’s qualifications to serve as a director include his extensive energy industry and land management expertise and his deep knowledge of TPL gained through his experience as an officer at the Company, including at the Trust. |
ABOUT THE ANNUAL MEETING
| KARL F. KURZ Director AGE: 63 DIRECTOR SINCE: April 2022 | Mr. Kurz has been a member of the Board since April 15, 2022. Mr. Kurz is currently a non-executive chairman of the board at American Water Works Co., Inc. (NYSE: AWK) and a member of the board at Devon Energy Corporation (NYSE: DVN) where he serves on the compensation committee and governance, environmental & public policy committee and chairs the reserves committee. Mr. Kurz previously served on the public company boards of SemGroup Corporation (NYSE: SEMG), Western Gas Partners LP (NYSE: WES), WPX Energy Inc. (NYSE: WPX) and Global Geophysical Services Inc. (NYSE: GGS). Mr. Kurz has served on multiple for profit and non-profit boards. Mr. Kurz also has extensive private equity experience that includes serving as an operating advisor at Ares Capital and a partner at CCMP Capital Advisors, where he focused on investments in the oil and gas upstream and midstream sectors. He spent nine years at Anadarko Petroleum Corporation, where he held roles as Chief Operating Officer, Senior Vice President of Northern America Operations and Vice President of Midstream and Marketing. Mr. Kurz serves on and is the chair of the Strategic Acquisitions Committee and serves on the Compensation Committee. QUALIFICATIONS Mr. Kurz’s qualifications to serve as a director include his extensive business experience, including as an accomplished senior oil and gas industry executive, and his public company board experience in the utility, energy and infrastructure space. |
ABOUT THE ANNUAL MEETING
| ROBERT ROOSA Director AGE: 54 DIRECTOR SINCE: November 2023 | Robert M. Roosa has been a member of the Board since November 10, 2023. Mr. Roosa is a Partner in Brigham Royalties, LLC (“Brigham Royalties”), and has served as its Chief Executive Officer since January 2023. Mr. Roosa previously served as President of Brigham Minerals, Inc. (NYSE: MNRL) (“Brigham”) from its inception in November 2012 and as its Chief Executive Officer from July 2017 until its acquisition by Sitio Royalties Corp. in December 2022. Mr. Roosa also served as a director of Brigham from May 2018 until 2022. Mr. Roosa served as the President of Anthem Ventures, LLC, a family office, between January 2012 and January 2017. Mr. Roosa held various roles, including Director of Finance and Investor Relations, while at Brigham Exploration Company from 2006 until its sale to Statoil ASA in December 2011. From 2000 to 2006, Mr. Roosa held a series of positions at Exxon Mobil Corporation (NYSE: XOM), an oil and gas company, in the Corporate Treasurer’s Department. Prior to 2000, Mr. Roosa worked for Cooper Industries, an electrical products manufacturing company, in its Corporate Controllers and Audit Groups and with the accounting firm Deloitte & Touche LLP in its audit function. Mr. Roosa graduated from Southern Methodist University with a Master of Business Administration and from the University of Texas at Austin with a Bachelor of Business Administration. Mr. Roosa serves on the Audit Committee, the Compensation Committee and the Strategic Acquisitions Committee. QUALIFICATIONS Mr. Roosa brings extensive knowledge of the mineral royalty acquisitions industry and executive experience to the Board. |
ABOUT THE ANNUAL MEETING
| MURRAY STAHL Director AGE: 70 DIRECTOR SINCE: January 2021 | Mr. Stahl has been a member of the Board since January 11, 2021. Mr. Stahl is the Chief Executive Officer, Chairman of the Board and Chief Investment Strategist of Horizon Kinetics Holding Corporation (OTC: HKHC), parent company to Horizon Kinetics Asset Management LLC, which he co-founded. He has over 30 years of investing experience and is responsible for overseeing Horizon Kinetics’ proprietary research and chairs the firm’s investment committee, which is responsible for portfolio management decisions across the entire firm. Horizon Kinetics’ investment portfolio includes a 6.8% voting position in LandBridge Company LLC (NYSE: LB) as of July 14, 2024. Mr. Stahl is also the Co-Portfolio Manager for a number of registered investment companies, private funds, and institutional separate accounts. Mr. Stahl is the Chairman and Chief Executive Officer of FRMO Corp. (OTC: FRMO) and has been a director since 2001. He is also Chief Investment Officer and a member of the board of RENN Fund, Inc. (NYSE: RCG) (since 2017), the Bermuda Stock Exchange, MSRH, LLC, and the Minneapolis Grain Exchange. He was a member of the board of Winland Electronics, Inc. (from 2015 to 2020) and IL&FS Securities Services Limited (from 2008 to 2020). Prior to co-founding Horizon Kinetics, Mr. Stahl spent 16 years at Bankers Trust Company (from 1978 to 1994) as a senior portfolio manager and research analyst. As a senior fund manager, he was responsible for investing the Utility Mutual Fund, along with three of the bank’s Common Trust Funds: The Special Opportunity Fund, The Utility Fund and The Tangible Assets Fund. He was also a member of the Equity Strategy Group and the Investment Strategy Group, which established asset allocation guidelines for the Private Bank. Mr. Stahl serves on the Nominating and Corporate Governance Committee and the Strategic Acquisitions Committee. QUALIFICATIONS Mr. Stahl’s qualifications to serve as a director include his over 30 years of investment experience, including in the energy and minerals space. |
ABOUT THE ANNUAL MEETING
| MARGUERITE WOUNG- CHAPMAN Director AGE: 59 DIRECTOR SINCE: November 2023 | Ms. Woung-Chapman has been a member of the Board since November 10, 2023. Ms. Woung-Chapman serves as a director of the General Partner of Summit Midstream Partners, LP (NYSE: SMLP), a limited partnership focused on developing, owning and operating midstream energy infrastructure assets located in unconventional resource basins, primarily shale formations, in the continental United States. She currently serves as chair of their nominating, governance and sustainability committee and as a member of their compensation committee. Ms. Woung-Chapman serves on the board of directors of Chord Energy Corporation (NASDAQ: CHRD) and serves on the compensation and human resources committee, and as chair of the nominating and governance committee. She was previously a member of the board directors of Oasis Petroleum, Inc. and chair of the board of directors and President of the Council of the Girl Scouts of San Jacinto Council. Ms. Woung-Chapman began her career as a corporate attorney with El Paso Corporation (including its predecessors) and during her tenure from 1991 until 2012, served as Vice President, Legal Shared Services, Corporate Secretary and Chief Governance Officer, among other positions. From 2012 to 2017, Ms. Woung-Chapman served in various capacities at EP Energy Corporation, a private company that subsequently became an NYSE-listed independent oil and gas exploration and production company, including, among others, Senior Vice President, Land Administration, General Counsel and Corporate Secretary. In 2018, Ms. Woung-Chapman served as Senior Vice President, General Counsel and Corporate Secretary of Energy XXI Gulf Coast, Inc., an independent exploration and production company that was engaged in the development, exploitation and acquisition of oil and natural gas properties in the U.S. Gulf Coast region until its acquisition by Cox Oil. Ms. Woung-Chapman holds a Bachelor of Science in Linguistics from Georgetown University and a J.D. from the Georgetown University Law Center. Ms. Woung-Chapman serves on the Audit Committee and the Nominating and Corporate Governance Committee. QUALIFICATIONS Ms. Woung-Chapman brings valuable expertise in all aspects of management and strategic direction of publicly traded energy companies with a unique combination of experience in corporate governance, regulatory, compliance, corporate and asset transactions, legal and business administration. |
ABOUT THE ANNUAL MEETING
| RHYS J. BEST Director, Chair AGE: 78 DIRECTOR SINCE: April 2022 | Mr. Best serves as non-executive Chair of the Board (the “Chair”) and has been a member of the Board since April 15, 2022. Mr. Best currently serves on the board of Arcosa Inc. (NYSE: ACA) (since 2018), where he serves as the non-executive Chairman of the Board. Mr. Best previously served on the board of Cabot Oil and Gas Corp. (from 2008 to 2021, including serving as Lead Director in 2021), his term ending after the company merged with Cimarex Energy in 2021 to form Coterra Energy (NYSE: CTRA). Mr. Best also previously served on the boards of Commercial Metals Company (NYSE: CMC) (from 2010 to 2022), Crosstex Energy, LP, an integrated, multi-commodity midstream enterprise (NASDAQ: XTEX) (from 2004 to 2014, including serving as Chairman of the Board from 2009 to 2014), MRC Global, Inc., a pipe, valve and fitting distribution business (NYSE: MRC) (from 2008 to 2022, including serving as Chairman of the Board from 2016 to 2022), Trinity Industries, Inc. (NYSE: TRN) (from 2005 to 2018), and Austin Industries, an employee-owned construction company (from 2007 to 2018, including serving as Chairman of the Board from 2013 to 2018). Mr. Best is the former Chairman, President and Chief Executive Officer of Lone Star Technologies, Inc., an energy services and supply company, a role he retired from in 2007 after the successful merger with United States Steel Company (NYSE: X). In 2014, Mr. Best was recognized as Director of the Year by the National Association of Corporate Directors. QUALIFICATIONS Mr. Best’s qualifications to serve as a director include his extensive business experience, including as a senior executive at leading companies in the oil and gas industry, and his public company board and corporate governance experience. |
ABOUT THE ANNUAL MEETING
| DONALD G. COOK Director AGE: 78 DIRECTOR SINCE: January 2021 | General Cook has been a member of the Board since January 11, 2021. General Cook currently serves on the board of Cybernance, Inc. (since 2016). General Cook previously served on the boards of Crane Co. (NYSE: CR) (from 2005 to 2022), USAA Federal Savings Bank (from 2007 to 2018), U.S. Security Associates Inc., a Goldman Sachs portfolio company (from 2011 to 2018), and Hawker Beechcraft Inc., another Goldman Sachs portfolio company (from 2007 to 2014). General Cook served on the board of Burlington Northern Santa Fe Railroad for almost five years until it was sold to Berkshire Hathaway in 2010 in a transaction valued at $44 billion. He is a former senior consultant for Lockheed Martin Corporation. General Cook also serves as a senior advisor to Portage Point Partners and served as a senior advisor to Alvest, a private French aviation firm, from 2022 to 2023. In addition to his extensive corporate governance experience, General Cook was the former Chairman of the San Antonio advisory board of the NACD Texas TriCities Chapter, a group recognized as the authority on leading boardroom practices. General Cook had numerous command and high-level staff assignments during his 36-year career with the U.S. Air Force and retired as a four-star General. He commanded a flying training wing and two space wings, the 20th Air Force (the nation’s nuclear Intercontinental Ballistic Missile force) and was interim Commander of Air Combat Command during the September 11 attacks. General Cook served as the Chief of the Senate Liaison Office and on the staff of the House Armed Services Committee in the U.S. House of Representatives. Prior to his retirement from the Air Force in August 2005, General Cook’s culminating assignment was Commander, Air Education and Training Command at Randolph Air Force Base in Texas, where he was responsible for executing the $8 billion annual budget to recruit, train and educate Air Force personnel, safely implementing the 500,000-hour annual flying hour program and providing for the leadership, welfare, and oversight of 90,000 military and civilian personnel in the command. He was twice awarded the Distinguished Service Medal for exceptional leadership. General Cook serves on and is the chair of the Nominating and Corporate Governance Committee and serves on the Compensation Committee. QUALIFICATIONS General Cook’s qualifications to serve as a director include his extensive experience on multiple public company boards and with corporate governance and executive compensation, as well as his senior leadership experience resulting from his tenure of command in the U.S. Air Force. |
ABOUT THE ANNUAL MEETING
| DONNA E. EPPS Director AGE: 60 DIRECTOR SINCE: January 2021 | Ms. Epps has been a member of the Board since January 11, 2021. Ms. Epps currently serves on the board of Saia, Inc. (NASDAQ: SAIA) (since 2019), where she serves on the audit committee and the nominating and governance committee, and on the board of Texas Roadhouse, Inc. (NASDAQ: TXRH), where she serves as chair of the audit committee, and as a member of the nominating and governance committee and the compensation committee. Ms. Epps was with Deloitte LLP, a multinational professional services network, for over 30 years. Ms. Epps served as an attest Partner of Deloitte LLP from 1998 through 2003 and as a Risk and Financial Advisory Partner of Deloitte LLP from 2004 until her retirement in 2017. During her time at Deloitte LLP, Ms. Epps helped companies develop and implement proactive enterprise risk and compliance programs, focusing on value protection and creation, and provided attest services and financial advisory services in governance, risk and compliance matters to private and public companies across multiple industries. Ms. Epps is currently a licensed certified public accountant in the State of Texas and a member of the North Texas Chapter of the National Association of Corporate Directors Board. Ms. Epps has served as chair of the Girl Scouts of Northeast Texas Board since April 2021 and Treasurer and finance committee chair of Readers2Leaders in Dallas, Texas since 2019. Ms. Epps serves on and is the chair of the Audit Committee and serves on the Nominating and Corporate Governance Committee. QUALIFICATIONS Ms. Epps’s significant audit, governance, risk, and compliance experience as a provider of attest, financial advisory and other consulting services to private and public companies across multiple industries makes her well-qualified to serve on the Board. |
ABOUT THE ANNUAL MEETING
| ERIC L. OLIVER Director AGE: 65 DIRECTOR SINCE: January 2021 | Mr. Oliver has been a member of the Board since January 11, 2021. Mr. Oliver currently serves as the President of SoftVest Advisors, a registered investment adviser that acts as an investment manager for private fund clients. Mr. Oliver additionally serves as the President of HeartsBluff Music Partners, LLC and Carrizo Springs Music Partners, LLC, both of which are registered investment advisers pursuant to an umbrella registration filed by SoftVest Advisors. Previously, Mr. Oliver was President of Midland Map Company, LLC, a Permian Basin oil and gas lease and ownership map producer from 1997 until its sale in January of 2019 to Drilling-Info, and was Principal of Geologic Research Centers LLC, a log library providing geological data to the oil and gas industry with a library in Abilene, Texas, sold in 2019. Additionally, Mr. Oliver served on the board of Texas Mutual Insurance Company from 2009 until he retired in July 2021. He has also served as a director on the board of AMEN Properties, Inc. (OTC: AMEN) since July 2001 and was appointed Chairman of the Board in September 2002. AMEN Properties directly or indirectly owns certain oil and gas royalty and working interest properties. Mr. Oliver received a B.A. in Chemistry from Abilene Christian University in 1981. Mr. Oliver serves on the Audit Committee. QUALIFICATIONS Mr. Oliver’s qualifications to serve as a director include his experience as an oil and gas investor, with over 27 years of experience buying and selling mineral and royalty properties, and over 40 years of experience managing investments with an emphasis in the energy market. |
Stockholder Engagement Regarding Executive Compensation
| Stockholder Feedback | Compensation Committee Response | | Adjusted EBITDA Definition: Some investors expressed concern about the definition of Adjusted EBITDA used for our Adjusted EBITDA margin calculation, such as the inclusion of interest income and other non-operating or non-recurring items (e.g., legal expenses). | • Regular Evaluation: The Compensation Committee recognizes the challenges with using Adjusted EBITDA margin as an incentive metric and reduced the weight of this metric in the calculation of our executive officers’ annual cash bonus from 37.5% in 2023 to 25% for purposes of the 2024 annual incentive plan. The Compensation Committee will continue to evaluate the use of Adjusted EBITDA margin and other metrics when establishing the 2025 annual incentive plan. • Interest Income: The Compensation Committee includes interest income in calculating Adjusted EBITDA because (i) this approach aligns with TPL’s capital allocation strategy, (ii) the incentive goals established for Adjusted EBITDA margin include an assumed level of interest income and, therefore, its removal would have minimal impact and (iii) TPL is relatively unique in generating a significant amount of net interest income due to its lack of debt and, therefore, interest income is of heightened significance. The Compensation Committee continues to evaluate the use of Adjusted EBITDA margin as a short-term incentive metric. • Legal Expenses: After due consideration, the Compensation Committee determined to not adjust for TPL’s excess legal expenses when calculating Adjusted EBITDA because its adjustment in both the goal and actual results achieved under the 2023 annual incentive plan would have increased the annual cash bonuses earned by the management team even if interest income had been removed from the calculation. | | Return on Capital Metric: Preference for a return on capital metric in the incentive program. | • Ongoing Review of Return on Capital Metric: The Compensation Committee has incorporated a review of the returns on new capital invested as part of the strategic objectives portion of the 2024 annual incentive plan and intends to continue to evaluate return on capital metrics in the future. • TPL-Specific Considerations: The Compensation Committee also sees the advantages of a return on capital metric; however, the accounting for TPL’s assets may result in a distortion of traditional return on capital metrics. | | Commodity Prices: Concern about the impact of commodity prices on our incentive metrics, since they are outside of management’s control. | • Approach to Incentive Metrics: The Compensation Committee seeks to obtain an appropriate balance between aligning management pay outcomes with the interests of stockholders (regardless of financial impacts that are out of management’s control) and incentivizing management to improve areas that are under their control. Therefore, the Compensation Committee has used a mix of a relative metric (TSR) and an absolute metric (FCF) in the long-term incentive plan. • Collar on Commodity Price: The Compensation Committee has implemented a collar on TPL’s total commodity price realization in the calculation of financial results in the annual incentive plan, so that while management realizes some impact of realized commodity prices, the incentive outcomes are not overly influenced by the impact of changes in realized commodity prices. |
Board of Directors
Board of Directors The Board currently consists of ten (10) directors, nine (9) of whom — Mr. Best, Gen. Cook, Ms. Duganier, Ms. Epps, Mr. Kurz, Mr. Oliver, Mr. Roosa, Mr. Stahl and Ms. Woung-Chapman — are considered “independent” under the rules of the SEC and the NYSE. No director may be deemed independent unless the Board determines that he or she has no material relationship with TPL. Mr. Best serves as the Chair. In light of Mr. Best’s extensive experience in the energy industry and service on public company boards, the Board believes that he is well-positioned to serve as Chair. The Board meets at least quarterly, and the independent directors serving on the Board meet in executive session (i.e., without the presence of any non-independent directors and management) immediately following regularly scheduled Board meetings. Each executive session of the Board is chaired by the Chair, who is an independent director. During the fiscal year ended December 31, 2023 (the “Last Fiscal Year”), the Board met six (6) times and acted by written consent in lieu of holding a meeting one (1) time. All of the directors attended at least 75% of the total number of meetings held by the Board and of the committees on which they served during the Last Fiscal Year. While the Company does not have a policy requiring director attendance at annual meetings of stockholders, each director is expected to attend the Company’s annual meetings of stockholders. Each member of the Board attended our 2023 annual meeting of stockholders.
Board of Directors
| 38 | Texas Pacific Land Corporation | Proxy Statement |
Board of Directors
The Board has four standing committees, consisting of a Nominating and Corporate Governance Committee, an Audit Committee, a Compensation Committee, and a Strategic Acquisitions Committee. Membership of each committee as of the date of this Proxy Statement is shown in the following table.
Board of Directors
| Name | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | Strategic Acquisitions Committee | | Rhys J. Best | | | | | | Donald G. Cook | | • | ▲ | | | Barbara J. Duganier | • | ▲ | | • | | Donna E. Epps | ▲ | | • | | | Tyler Glover | | | | | | Karl F. Kurz | | • | | ▲ | | Eric L. Oliver | • | | | | | Robert Roosa | • | • | | • | | Murray Stahl | | | • | • | | Marguerite Woung-Chapman | • | | • | |
Board of Directors
▲ Chair • Member
Compensation Philosophy and Approach
Compensation Philosophy and Approach TPL’s 2023 executive compensation program design is intended to recruit and retain an executive team and to reward performance in achieving TPL’s goal of creating stockholder value. The 2023 executive compensation program consists principally of a salary, an annual cash bonus (sometimes referred to as awards under a non-equity incentive plan commencing in 2022), and share-based compensation. Base salaries provide our Named Executive Officers with a steady income stream that is not contingent on TPL’s performance. Differences in salary for the Named Executive Officers may reflect the differing responsibilities of their respective positions, the differing levels of experience and qualifications of the individuals, internal pay-equity considerations and individual performance. The annual cash bonus allows the Compensation Committee flexibility to recognize and reward each Named Executive Officer’s contributions to TPL’s performance in any given year. Salaries are reviewed annually, and salary adjustments and the amounts of annual cash
Role of the Independent Consultant
Role of the Independent Consultant Since 2021, the Compensation Committee has engaged Meridian as its independent compensation consultant to assist the Compensation Committee in fulfilling its responsibilities related to the oversight of TPL’s executive officer and non-employee director compensation. The Compensation Committee determined that Meridian was independent from management based upon the consideration of various relevant factors, including that Meridian did not provide any services to TPL except advisory services to the Compensation Committee, and that Meridian maintained, and adhered to, policies and procedures that were designed to prevent conflicts of interests. The independent compensation consultant advises the Compensation Committee in the development of pay strategies regarding our executive officers, including our Chief Executive Officer, and non-employee directors. The Compensation Committee reviews and discusses matters involving executive officer and non-employee director compensation. Following this review, the Compensation Committee makes a determination and/or recommendation to the Board, as applicable under the Compensation Committee’s Charter, regarding, among other things (a) the compensation of the Chief Executive Officer and the compensation of executive officers other than the Chief Executive Officer, in each case including salary, bonus, benefits, incentive awards and perquisites, and (b) compensation for TPL’s non-employee directors. Benchmarking Process
2023 Annual Incentive Targets
2023 Annual Incentive Targets Each of the Named Executive Officers is eligible to earn an annual cash bonus, based on the target bonus, which is expressed as a percentage of base salary and established based on references to market data as described above. The target bonuses as a percentage of base salary for our Named Executive Officers for 2023 were as follows:
2023 Annual Incentive Targets
| Named Executive Officer | 2023 Target Bonus as a % of Salary | | Tyler Glover | 110% | | Chris Steddum | 90% | | Micheal W. Dobbs | 75% |
2023 Annual Incentive Targets
Target bonuses as a percentage of base salary were unchanged from 2022. The Compensation Committee has established a structured annual incentive program, with goals tied to key metrics for the company, pursuant to which the bonuses discussed above are awarded. For 2023, the metrics included two financial metrics (Adjusted EBITDA margin and free cash flow (“FCF”) per fully diluted share), as well as several strategic objectives, as outlined below.
2023 Annual (Short-Term) Incentive Program Summary
2023 Annual (Short-Term) Incentive Program Summary
2023 Annual (Short-Term) Incentive Program Summary
| Metric | Weight | Rationale | | Adjusted EBITDA Margin | 37.5% | TPL has one of the highest Adjusted EBITDA margins of any company in the oil and gas industry and maintaining high margins is a high priority for the management team. | | FCF per Fully Diluted Share | 37.5% | Generating FCF is a high priority for TPL, which enables greater returns to stockholders in the form of dividends and share repurchases. | | Strategic Objectives | 25% | These objectives were established based on key strategic priorities that are intended to promote long-term success, such as safety, ESG progress against goals/metrics, increasing use of TPL’s land, SLEM, and water services, and leveraging TPL’s land to explore other non-oil and gas revenue streams. |
2023 Annual (Short-Term) Incentive Program Summary
Goals for each of the 2023 metrics were established in early 2023, based on expectations for the year. The Threshold, Target, and Maximum level of performance for each financial metric are outlined below. At Threshold, Target, and Maximum performance levels, 50%, 100%, and 200% of the target bonus would be earned, respectively, for each metric.
2023 Annual (Short-Term) Incentive Program Summary
| Metric | Weighting | Threshold | Target | Maximum | Actual Results | | Adjusted EBITDA Margin | 37.5% | 80.5% | 84.0% | 86.5% | 85.7% | | FCF per fully diluted share | 37.5% | $37.00 | $48.00 | $60.00 | $54.05 |
2023 Annual (Short-Term) Incentive Program Summary
TPL’s performance against the pre-established financial goals can be heavily influenced by the impact of changes in commodity prices. To mitigate this impact, the Compensation Committee implemented a commodity adjustment calculation, which uses a collar on commodity prices. Within the collar range, no adjustment is made for commodity prices. If TPL’s total commodity price realization falls below or rises above the collar range, a floor or cap on prices is applied. This approach provides our management team with some exposure to commodity price fluctuations, in line with our stockholders, but limits the exposure. In 2023, the collar for TPL’s total commodity price realization ranged from $37.65 per Boe to $54.56 per Boe. Actual realizations of $42.58 per Boe were within the range of the collar for 2023, thus no adjustment to price per Boe was necessary for determining Adjusted EBITDA margin and FCF per fully diluted share. Based on final financial results, TPL exceeded the Target level on both of the financial metrics, earning 169% of target on the Adjusted EBITDA margin metric and 150% of target on the FCF per fully diluted share metric.
2023 Annual (Short-Term) Incentive Program Summary
| 54 | Texas Pacific Land Corporation | Proxy Statement |
2023 Annual (Short-Term) Incentive Program Summary
The Compensation Committee also established strategic objectives for the year which were intended to encourage our management team to take action to improve TPL’s long-term opportunities for success, but which did not directly impact financial results in 2023. These objectives are outlined below.
2023 Annual (Short-Term) Incentive Program Summary
| Strategic Objectives | Results | | Expansion of non-oil and gas revenues — increase contracted renewable megawatts (“MW”) on TPL surface | Contracted additional 510 MWs of renewable energy, representing a 307% increase in 2023 compared to 2022 | | Market share — maintain development capture rate above TPL’s acreage ownership share | Achieved lateral feet drilled market share of 15% above average ownership level | | Safety — maintain TRIR at or below industry average | No reported safety incidents; TRIR score of zero | | Zero produced water spills and maintain 100% safety training | Zero spills and 99% safety training achieved with the remaining training completed in February 2024 | | Environmental — maintain Scope 1 emission levels below 2021 levels | 2023 Scope 1 emissions declined 14% from 2021 levels due to lower fuel consumption as a direct result of electrification of water facilities |
2023 Annual (Short-Term) Incentive Program Summary
Given the challenging nature of the strategic objectives and the 2023 actual results, the Compensation Committee scored the strategic objectives at 125% of target. Based on the achievement of all three metrics, bonuses were earned at 151.1% of target for each of the Named Executive Officers, as outlined below:
2023 Annual (Short-Term) Incentive Program Summary
| Named Executive Officer | Actual Bonus for 2023 | | Tyler Glover | $1,412,785 | | Chris Steddum | $679,950 | | Micheal W. Dobbs | $475,965 |
2023 Annual (Short-Term) Incentive Program Summary
As part of its ongoing evaluation of the annual incentive program and after considering feedback from stockholders, the Compensation Committee determined to reduce the weight of Adjusted EBITDA margin in the calculation of the annual cash bonuses our executive officers are eligible to receive for 2024. As a result, the weighting of the metrics used for purposes of the 2024 annual incentive plan was adjusted as follows:
2023 Annual (Short-Term) Incentive Program Summary
| Metric | 2023 Weight | 2024 Weight | | Adjusted EBITDA Margin | 37.5% | 25% | | FCF per Fully Diluted Share | 37.5% | 50% | | Strategic Objectives | 25% | 25% |
2023 Long-Term Incentive Program
2023 Long-Term Incentive Program As part of the program redesign in 2022, the Compensation Committee implemented a long-term incentive program for key employees of TPL, including Named Executive Officers. The goals of the long-term incentive program include: • Align executives’ financial interests with stockholders. • Tie executive compensation with long-term performance. • Create a retention incentive through a substantial forfeitable balance with long-term vesting. Provide a competitive compensation program aligned with typical company practices.
2023 Long-Term Incentive Program
| Texas Pacific Land Corporation | Proxy Statement | 55 |
2023 Long-Term Incentive Program
To meet the objectives of the program, the Compensation Committee established a long-term incentive program for the Named Executive Officers that uses a combination of PSUs and RSUs. Each of the primary vehicles is summarized in the table below and described in more detail later in this section.
2023 Long-Term Incentive Program
| Vehicle | Weight | Rationale | | PSUs Tied to Relative Total Stockholder Return (“RTSR”) against the SPDR S&P Oil & Gas Exploration & Production ETF (“XOP”) Index | 25% | Earned if TPL performs well against a broad group of energy companies included in the XOP index. The maximum amount can only be earned if TPL is in the top 10% of this index. | | PSUs Tied to Three-Year Cumulative FCF per Fully Diluted Share | 25% | Earned if TPL meets pre-established goals for generating FCF over the three-year performance period. Generating FCF enables greater returns to stockholders in the form of dividends and share repurchases. | | Time-Based Restricted Stock Units (RSUs) | 50% | Increases alignment between executives’ interests and stockholders through share ownership of our executive team. Encourages continuity of the management team due to long-term (three-year) vesting provisions. |
Performance Share Units (PSUs)
Performance Share Units (PSUs) PSUs made up 50% of our Named Executive Officers’ long-term incentive compensation for 2023. The Compensation Committee believes that PSUs create alignment between our executive officers and our long-term performance as measured by RTSR against a broad energy industry index (50% of PSUs) and the generation of free cash flow per fully diluted share over a three-year period (50% of PSUs). These awards vest, if at all, at the end of a three-year performance period. The PSUs tied to RTSR (the “RTSR PSUs”) are intended to measure the performance of TPL’s stock against a broad set of energy industry companies included in the XOP index. Measuring RTSR against this group helps mitigate the impact of commodity price swings on the other measurements of our performance. While TPL does not have any direct peers, the broad XOP index comprises many of our customers and other companies that are similarly impacted by fluctuations in commodity prices. The RTSR PSUs can be earned between 0% and 200% of the target number of shares based on our RTSR percentile ranking against the constituents of the XOP index as follows:
Performance Share Units (PSUs)
| Percentile Rank | Shares Earned as a % of Target(1) | | 90th or above | 200% | | 70th | 150% | | 50th | 100% | | 25th | 25% | | < 25th | —% |
Performance Share Units (PSUs)
(1) Payouts are interpolated between the points in the table. RTSR is measured using an average closing price at the beginning and end of the performance period. In the case of the 2023 awards, the average closing price over the month of January 2026 will be compared against the average closing price over the month of January 2023, assuming reinvestment of dividends from February 1, 2023 to January 31, 2026. The remaining 50% of PSUs (the “FCF PSUs”) measure our cumulative FCF per diluted share against our initial targets over a three-year period. If the Company is able to outperform and generate greater FCF, it will help enable an increase in returns to stockholders through dividends and share repurchases. By measuring FCF on a per share basis, it requires our management team to ensure any dilution to our stockholders results in sufficiently greater FCF on an absolute basis.
Performance Share Units (PSUs)
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Performance Share Units (PSUs)
The FCF PSUs can be earned between 0% and 200% of the target number of shares based on cumulative FCF per diluted share as follows(1):
Performance Share Units (PSUs)
| Performance Level | Cumulative 3 Year FCF/Diluted Share | Shares Earned as a % of Target(2) | | Maximum | $65.00/Share | 200% | | Target | $51.67/Share | 100% | | Threshold | $38.33/Share | 25% | | Below Threshold | <$38.33/Share | —% |
Performance Share Units (PSUs)
(1) All share and share price amounts reflect the three-for-one stock split effected March 26,2024. (2) Payouts are interpolated between the points in the table.
Restricted Stock Units (RSUs)
Restricted Stock Units (RSUs) RSUs made up the other 50% of our Named Executive Officers’ long-term incentive compensation for 2023. Regular grants of RSUs are intended to help build an ownership stake in TPL, thereby further aligning the interests of executives with the interests of TPL stockholders. The RSUs serve as a retention tool by creating a substantial forfeitable stake in the Company. The RSUs vest based on continued service to TPL in one-third increments per year, beginning on the first anniversary of the grant date.
2023 Long-Term Incentive Grants
2023 Long-Term Incentive Grants In early 2023, the Compensation Committee established target long-term incentive grant levels for each of its Named Executive Officers based on a review of market data from the Reference Group and consideration of other factors such as experience and expertise, individual and company performance, and potential competitive opportunities for each of our Named Executive Officers. The target long-term incentive grant levels were established as a percentage of salary and converted into a number of units based on the stock price on the grant date. The February 2023 awards are summarized in the table below(1):
2023 Long-Term Incentive Grants
| Name | Base Salary | Target LTI as % of Base Salary | Target LTI Dollar Amount(2) | Number of PSUs (at Target) | Number of RSUs | | Tyler Glover | $850,000 | 400% | $3,400,000 | 2,652 | 2,652 | | Chris Steddum | $500,000 | 325% | $1,625,000 | 1,272 | 1,269 | | Micheal W. Dobbs | $420,000 | 250% | $1,050,000 | 822 | 819 |
2023 Long-Term Incentive Grants
(1) All share amounts reflect the three-for-one stock split effected on March 26, 2024. (2) The Target LTI Dollar Amount does not match the accounting values in the Summary Compensation Table as the accounting value of the RTSR PSUs is based on a Monte Carlo valuation.
Employment Agreements
Employment Agreements The Company has entered into an employment agreement with each Named Executive Officer following approval from the Compensation Committee. These employment agreements provide for minimum levels of compensation and provide severance protections for the officer upon a termination of employment without Cause or for Good Reason (each as defined in the applicable agreement). These agreements help match competitive practices and also include certain restrictive covenants designed to protect the Company. The provisions of these agreements are summarized under the section titled “Employment Agreements” below.
Accounting and Tax Considerations
Accounting and Tax Considerations In setting the components of our executive compensation program, the Compensation Committee considers the impact of the following tax and accounting provisions: • Code Section 162(m). Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), generally disallows a tax deduction by public companies for compensation over $1 million paid individually to covered employees, as defined in the Code. Tax deductibility is only one factor considered by the Compensation Committee in making compensation decisions that are in the best interest of TPL and our stockholders. • Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Stock Compensation” (“ASC Topic 718”). ASC Topic 718 requires a public company to measure the cost of employee services received in exchange for an award of equity based on the grant date fair value of the award. Our equity awards to the Named Executives Officers (and to our other employees) are structured in a manner that is intended to maintain the appropriate accounting treatment. • Code Section 409A. Section 409A of the Code provides that deferrals of compensation under a nonqualified deferred compensation plan or arrangement are to be included in an individual’s current gross income to the extent that such deferrals are not subject to a substantial risk of forfeiture and have not previously been included in the individual’s gross income, unless certain requirements are met. We structure our stock plans, change of control agreements, severance plans and agreements and other incentive plans and agreements, each to the extent they are subject to Section 409A, to be in compliance with Section 409A. • Code Sections 280G and 4999. The change of control benefits in our Named Executive Officers’ employment agreements provide that, upon a change of control, we will either (i) reduce the amount of severance benefits otherwise payable to the executive officer so that such severance benefits will not be subject to excise tax for purposes Sections 280G and 4999 of the Code or (ii) pay the full amount of severance benefits to the executive officer (but with no tax “gross-up”), whichever produces the better after-tax result for the executive officer (often referred to as the “best-of-net” approach).
Other Compensation-Related Policies
| Name and Position | Year | Salary | Bonus(1) | Stock Awards(2) | Non-Equity Incentive Plan Compensation(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) | All Other Compensation(5)(6) | Total | | Tyler Glover President and Chief Executive Officer | 2023 | $850,000 | $— | $3,771,255(9) | $1,412,785 | $40,477 | $34,200 | $6,108,717 | | | 2022 | $850,000 | $— | $3,766,469 | $1,636,250 | $— | $32,700 | $6,285,419 | | | 2021 | $850,000 | $2,550,000 | $1,500,848 | $— | $37,183 | $31,800 | $4,969,831 | | Chris Steddum Chief Financial Officer(7) | 2023 | $500,000 | $— | $1,806,913(9) | $679,950 | $26,724 | $19,800 | $3,033,387 | | | 2022 | $475,000 | $— | $1,554,798 | $748,125 | $— | $18,300 | $2,796,223 | | | 2021 | $464,769 | $1,068,750 | $900,008 | $— | $32,017 | $17,400 | $2,482,944 | | Micheal W. Dobbs Senior Vice President, Secretary and General Counsel(8) | 2023 | $420,000 | $— | $1,166,994(9) | $475,965 | $31,869 | $19,800 | $2,114,628 | | | 2022 | $400,000 | $— | $957,084 | $525,000 | $24,285 | $18,000 | $1,924,369 | | | 2021 | $400,000 | $600,000 | $500,700 | $— | $— | $12,000 | $1,512,700 |
Other Compensation-Related Policies
| | Outstanding Equity Awards at December 31, 2023 | | | | | | | Stock Awards | | | | | | Name | Award Type | Number of Shares or Units of Stock that have Not Vested (#)(2) | Market Value of Shares or Units of Stock that have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have Not Vested ($)(4) | | Tyler Glover | | | | | | | | RSU | 5,154 | $2,701,469 | | | | | RTSR PSU | | | 3,201(5) | $1,677,804 | | | FCF PSU | | | 5,076(6) | $2,660,585 | | Chris Steddum | | | | | | | | RSU | 2,301 | $1,206,069 | | | | | RTSR PSU | | | 1,410(5) | $739,052 | | | FCF PSU | | | 2,184(6) | $1,144,744 | | Micheal W. Dobbs | | | | | | | | RSU | 1,455 | $762,638 | | | | | RTSR PSU | | | 888(5) | $465,445 | | | FCF PSU | | | 1,365(6) | $715,465 |
Mr. Glover
Mr. Glover On October 13, 2023, the Company entered into an amended and restated employment agreement with Mr. Glover, its President and Chief Executive Officer (the “Glover Agreement”). The Glover Agreement became effective as of October 13, 2023 and replaced and superseded the Company’s prior employment agreement with Mr. Glover that became effective on January 1, 2022 (“Prior Glover Agreement”). The term of the Glover Agreement ends on December 31, 2026, with automatic one (1) year extensions unless notice not to renew is given at least 120 days prior to the relevant end date. Under the Glover Agreement, Mr. Glover receives a base salary of $850,000 per annum, subject to annual review, and is eligible for an annual cash bonus (“Bonus”) with a target value of at least 100% of such base salary for achievement of specified performance targets. Mr. Glover is also eligible to receive annual long-term incentive awards under the Company’s 2021 Plan (“LTI Awards”) as determined by the Board or Compensation Committee, the target amount of which, when added to Mr. Glover’s target Bonus for the year, will be at least 300% of his base salary for the relevant year. Prior to the effective date of the Glover Agreement, in accordance with the terms of the Prior Glover Agreement,
Mr. Glover
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Mr. Glover
Mr. Glover was entitled to a base salary of $850,000, a Bonus with a target value of at least 100% of base salary, and LTI Awards, the target amount of which, when added to the target Bonus, would be at least 300% of base salary. The Glover Agreement provides for payment of severance benefits if Mr. Glover’s employment is terminated by the Company without cause or by Mr. Glover for good reason, provided that Mr. Glover executes a general waiver and release of claims and complies with the restrictive covenants described below. The severance benefits include (i) accrued but unpaid Bonuses, (ii) LTI Award benefits to the extent provided for pursuant to the underlying award and plan documents, (iii) a pro rata Bonus for the year of termination, (iv) monthly payments for up to 18 months of COBRA premiums for continued group health, dental and vision coverage for Mr. Glover and his dependents, and (v) an amount equal to two times the greater of (A) the average of his base salary and Bonus for the preceding three years, or (B) his base salary and target Bonus for the year of termination. If Mr. Glover’s employment is terminated by the Company without cause or by Mr. Glover for good reason within 24 months following a change in control of the Company as defined in the Glover Agreement, then, in lieu of the amount specified in clause (v) of the preceding sentence, Mr. Glover will be entitled to an amount (“Glover CIC Severance Amount”) equal to 2.99 times the greater of (a) the average of his base salary and Bonus for the three years preceding the year in which the change in control occurs, and (b) his base salary and target Bonus for the year in which the change in control occurs. In addition, Mr. Glover will be entitled to (x) a payment equal to the value of his restrictive covenants, which payment shall offset an equal amount of the Glover CIC Severance Amount; (y) 12 months of outplacement services paid for by the Company (not to exceed $30,000); and (z) 12 months of financial planning services paid for by the Company (not to exceed $30,000). If Mr. Glover’s employment terminates due to death or disability, he or his estate will be entitled to the benefits described in clauses (i), (ii) and (iii) above. Mr. Glover will also be entitled to payment of accrued but unpaid salary, accrued but unused vacation, unsubsidized COBRA benefits, and unreimbursed business expenses, following termination of employment for any reason. The Glover Agreement provides that Mr. Glover is entitled to participate in all benefit plans provided to the Company’s executives of like status from time to time in accordance with the applicable plan, policy or practices of the Company. It also provides for four weeks of annual paid vacation, reimbursement of business expenses, and indemnification rights. The Glover Agreement contains restrictive covenants prohibiting Mr. Glover from disclosing the Company’s confidential information at any time, from competing with the Company in specified counties where the Company does business during his employment, subject to certain exceptions, and for one year thereafter (or six months thereafter if he terminates his employment voluntarily without good reason), and from soliciting the Company’s clients, suppliers and business partners during his employment and for one year thereafter.
Pay Versus Performance Table
Pay Versus Performance Table
Pay Versus Performance Table
| | | | Average Summary Comp Table Total for Non- PEO NEOs | | Value of Initial Fixed $100 Investment Based on:(4) | | | Company Selected Performance Measure(5) | | Year(1) | Summary Compensation Table Total for PEO | CAP to PEO(2) | | Average CAP to Non-PEO NEOs(3) | Total Shareholder Return | Total Shareholder Return Peer Group | Net Income (in thousands) | Adjusted EBITDA (in thousands) | | 2023 | $6,108,717 | $1,447,226 | $2,574,008 | $919,568 | $187 | $220 | $405,645 | $541,442 | | 2022 | $6,285,419 | $12,407,635 | $2,360,296 | $4,614,097 | $277 | $212 | $446,362 | $591,814 | | 2021 | $4,969,831 | $5,004,081 | $1,498,091 | $1,529,156 | $145 | $146 | $269,980 | $387,980 | | 2020 | $3,006,666 | $2,982,168 | $1,506,222 | $1,484,318 | $N/A | $N/A | $176,049 | $239,107 |
Pay Versus Performance Table
For 2023 and 2022, our PEO was Tyler Glover and our non-PEO NEOs were Chris Steddum and Micheal Dobbs. For 2021, our PEO was Tyler Glover and our non-PEO NEOs were Robert Packer (who retired effective May 31, 2021), Chris Steddum and Micheal Dobbs. For 2020, our PEO was Tyler Glover and our non-PEO NEOs were Robert Packer, Chris Steddum and Micheal Dobbs.
Pay Versus Performance Table
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Pay Versus Performance Table
Amounts reported in this column are based on total compensation reported for our PEO in the Summary Compensation Table for the indicated fiscal years and adjusted as shown in the table below. Fair value of equity awards was computed in accordance with the Company’s methodology used for financial reporting purposes.
Pay Versus Performance Table
| | | 2023 | 2022 | 2021 | 2020 | | | Total Compensation as reported in the Summary Compensation Table (“SCT”) | $6,108,717 | $6,285,419 | $4,969,831 | $3,006,666 | | Subtract | Pension values reported in SCT for covered fiscal year | (40,477) | — | (37,183) | (85,166) | | Subtract | Fair value of equity awards granted during covered fiscal year | (3,771,255) | (3,766,469) | (1,500,848) | — | | Add | Pension value attributable to covered fiscal year’s service and any change in pension value attributable to plan amendments made in the covered year | 36,158 | 72,506 | 74,886 | 60,668 | | Add | Fair value at year end of equity awards granted in covered fiscal year and that are unvested at end of such covered fiscal year | 2,654,572 | 8,489,088 | 1,497,395 | — | | Add | Fair value of equity awards granted in covered fiscal year that vested during such covered fiscal year — valued on date of vesting | — | — | — | — | | Add | Dividends or other earnings paid on stock awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year | 34,912 | 23,008 | — | — | | Add/(Subtract) | Change in fair value from end of prior fiscal year to end of covered fiscal year for awards made in prior fiscal years that were unvested at end of current fiscal year | (3,030,040) | 525,773 | — | — | | Add/(Subtract) | Change in fair value from end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during covered fiscal year | (545,362) | 778,310 | — | — | | Subtract | Fair value of awards forfeited in current fiscal year determined at end of prior fiscal year | — | — | — | — | | Equals | CAP to PEO | $1,447,226 | $12,407,635 | $5,004,081 | $2,982,168 |
Pay Versus Performance Table
(3) Amounts reported in this column are based on the average of the total compensation reported for our non-PEO NEOs in the Summary Compensation Table for the indicated fiscal years and adjusted as shown in the table below. Fair value of equity awards was computed in accordance with the Company’s methodology used for financial reporting purposes.
Pay Versus Performance Table
| | | 2023 | 2022 | 2021 | 2020 | | | Total Compensation as reported in the SCT | $2,574,008 | $2,360,296 | $1,498,091 | $1,506,222 | | Subtract | Pension values reported in SCT for covered fiscal year | (29,297) | (12,143) | (16,731) | (43,255) | | Subtract | Fair value of equity awards granted during covered fiscal year | (1,486,954) | (1,255,941) | (466,903) | — |
Pay Versus Performance Table
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Pay Versus Performance Table
| | | 2023 | 2022 | 2021 | 2020 | | Add | Pension value attributable to covered fiscal year’s service and any change in pension value attributable to plan amendments made in the covered year | 42,616 | 71,825 | 48,870 | 21,351 | | Add | Fair value at year end of equity awards granted in covered fiscal year and that are unvested at end of such covered fiscal year — valued at year-end | 1,046,443 | 2,830,787 | 465,829 | — | | Add | Fair value of equity awards granted in covered fiscal year that vested during such covered fiscal year — valued on date of vesting | — | — | — | — | | Add | Dividends or other earnings paid on stock awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year | 14,512 | 10,736 | — | — | | Add/ (Subtract) | Change in fair value from end of prior fiscal year to end of covered fiscal year for awards made in prior fiscal years that were unvested at end of current fiscal year | (1,010,650) | 245,361 | — | — | | Add/ (Subtract) | Change in fair value from end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during covered fiscal year | (231,111) | 363,176 | — | — | | Subtract | Fair value of awards forfeited in current fiscal year determined at end of prior fiscal year | — | — | — | — | | Equals | Average CAP to non-PEO NEOs | $919,568 | $4,614,097 | $1,529,156 | $1,484,318 |
Pay Versus Performance Table
(4) The total shareholder return represents the cumulative total return from January 11, 2021 (the date of our Corporate Reorganization) through December 31, 2023, 2022 and 2021, respectively. The peer group used is the XOP index. (5) In accordance with SEC rules, the Company is required to include in the Pay Versus Performance table the “most important” financial performance measure (as determined by the Company) used to link compensation actually paid to our executive officers to company performance for the most recently completed fiscal year. The Company determined Adjusted EBITDA, which is used as a basis to determine a metric included in our incentive program, meets this requirement and therefore, we have included this performance measure in the Pay Versus Performance table. We define Adjusted EBITDA as earnings before interest expense, taxes, depreciation, depletion and amortization, employee share-based compensation, severance costs and conversion costs related to our corporate reorganization.
Description of the Relationship Between Compensation Actually Paid to our Named Executive Officers and Company Performance
Description of the Relationship Between Compensation Actually Paid to our Named Executive Officers and Company Performance The charts below describe the relationship between CAP to our PEO and other non-PEO NEOs (as disclosed in the Pay Versus Performance Table above) and our financial and stock performance for the indicated years. The following chart compares CAP versus Company Total Shareholder Return (“TSR”) and XOP TSR:
Description of the Relationship Between Compensation Actually Paid to our Named Executive Officers and Company Performance
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Description of the Relationship Between Compensation Actually Paid to our Named Executive Officers and Company Performance
The following chart compares CAP versus Net Income: The following chart compares CAP versus Adjusted EBITDA:
Company’s Most Important Financial Performance Measures
| Name | Fees Earned or Paid in Cash(1) | Stock Awards(2)(3) | Total | | John R. Norris III (retired Nov. 2023)(4) | $133,519 | $126,588 | $260,107 | | David E. Barry (retired Nov. 2023)(4) | $133,519 | $126,588 | $260,107 | | Rhys J. Best | $142,808 | $126,588 | $269,396 | | Donald G. Cook | $142,000 | $126,588 | $268,588 | | Barbara J. Duganier | $152,000 | $126,588 | $278,588 | | Donna E. Epps | $157,000 | $126,588 | $283,588 | | Karl F. Kurz | $130,000 | $126,588 | $256,588 | | Eric L. Oliver | $115,000 | $126,588 | $241,588 | | Robert Roosa(5) | $17,808 | $18,051 | $35,859 | | Murray Stahl | $115,000 | $126,588 | $241,588 | | Marguerite Woung-Chapman(5) | $17,808 | $18,051 | $35,859 |