UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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HALLIBURTON COMPANY
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Notice of Annual Meeting of Stockholders and20142017 Proxy Statement
Wednesday, May 21, 201417, 2017 at 9:00 a.m. Central Daylight Time
3000 N. Sam Houston Parkway East, Life Center - Auditorium, Houston, Texas 77032
Halliburton’s success is rooted in a sound strategy executed by a management team and a dedicated workforce that are never satisfied with the status quo. We are driven to provide execution certainty, deliver on our commitments, and find new ways to increase value for customers, for Halliburton, and for our stockholders.
At Halliburton, we take pride in being known as the execution company. We’ve earned this reputation by consistently delivering superior performance for our customers, employees, and stockholders. Success for our key stakeholders drives us and keeps us focused on executing to win.
In 2016, the industry underwent the sharpest and deepest decline in history. We responded to this downturn by successfully executing on our unconventionals strategy and structural cost initiatives, thereby strengthening our market position — an extraordinary achievement considering the headwinds we faced. I believe this deliberate approach allowed us to navigate through a very challenging market and emerge from the downturn in settingthe strongest position possible.
Looking at 2017, we have bold goals that stretchto increase our abilities,capabilities, drive our growth, and reflectmaximize the long-term prospects for our business. OverWe will continue our diligent cost control efforts, add capacity, and serve our customers by collaborating and engineering solutions to maximize their asset value. I am confident that, under the past three years, we grew our deepwater business at doubleguidance of your Board of Directors, your management team and your outstanding employees make Halliburton best equipped and positioned for success in the market rate, tripled the size of our mature fields business, extended our unconventionals leadership, and delivered superior returns relative to our major competitors. Following the same strategies, we intend to do it again over the next three years.forthcoming recovery.
We recognize the role stockholders play in our success. We greatly appreciateongoing success and gratefully acknowledge the confidence our stockholdersyou continue to showplace in Halliburton, and the exceptional contributions of our Board of Directors, management team, and employees.Halliburton.
I am pleased to invite you to attend the Annual Meeting of Stockholders of Halliburton Company. The meeting will be held on Wednesday, May 21, 201417, 2017, at 9:00 a.m. Central Daylight Time atTime. The location will be our corporate office at 3000 N. Sam Houston Parkway East, Life Center - Auditorium, Houston, Texas 77032.
Please refer to the proxy statement for detailed information on each of the proposals presented this year.
ItThe representation of your shares and your vote at the meeting is very important thatimportant. I encourage you to review the proxy materials and submit your shares are represented and voted at the meeting.vote today. If you attend the meeting, you may vote in person even if you have previously voted.
On behalf of the Board of Directors, thank you for your continued investment in Halliburton. We appreciate the continuing interestlook forward to greeting as many of our stockholders in the business of Halliburton, and we hope you will be able to attend theas possible at our Annual Meeting.
Sincerely,
David J. Lesar
Chairman of the Board President
and Chief Executive Officer
April 8, 20147, 2017
HALLIBURTON - | ii |
Proxy Statement Summary
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. Page references are supplied to help you find further information in this proxy statement.
Eligibility to Vote (page 2)
You can vote if you were a stockholder of record at the close of business on March 24, 2014.20, 2017.
How to Cast Your Vote (page 2)
You can vote by any of the following methods:
• | Internet |
• | Telephone until |
• | Completing, signing, and returning your proxy or voting instruction card before May |
• | In person, at the annual meeting: If you are a stockholder of record, we have a record of your ownership. If your shares are held in the name of a broker, nominee, or other intermediary, you must bring proof of ownership with you to the meeting. |
Auditors (page 19)
As a matter of good corporate governance, we are asking our stockholders to ratify the selection of KPMG LLP as our principal independent public accountants for 2014.2017.
Voting matters (pages 10, 19, 22, 49)51, 52)
Board Vote | Page Reference | |
Recommendation | (for more detail) | |
Election of Directors | FOR | 10 |
Ratification of the Selection of Auditors | FOR | 19 |
Advisory Approval of Executive Compensation | FOR | 22 |
FOR Every Year | 51 | |
Governance of the Company (page 3)
Corporate Governance
• | Corporate Governance Guidelines and Committee Charters |
• | Code of Business Conduct |
• | Related Persons Transactions Policy |
The Board of Directors and Standing Committees of Directors | |
• | Board Attendance |
• | Board Leadership |
• | Independent Committees |
• | Board Risk Oversight |
• | Stockholder Nominations of Directors |
• | Qualifications of Directors |
• | Evaluation of Board and Director Performance |
• | Process for the Selection of New Directors |
• | |
HALLIBURTON - |
Board Nominees (page 10)
Name | Age | Director since | Occupation | Independent (Yes/No) | Committee Memberships | Other Company Boards | Age | Director Since | Occupation | Independent (Yes/No) | Committee Memberships | Other Company Boards | ||||||||||||||
Abdulaziz F. Al Khayyal | 63 | 2014 | Retired Senior Vice President, Industrial Relations, Saudi Aramco | Yes | • Health, Safety and Environment • Nominating and Corporate Governance | • Marathon Petroleum Corporation | ||||||||||||||||||||
William E. Albrecht | 65 | 2016 | Non-Executive Chairman of the Board of California Resources Corporation | Yes | • Compensation • Health, Safety and Environment | • Rowan Companies plc | ||||||||||||||||||||
Alan M. Bennett | 63 | 2006 | Retired President and CEO of | Yes | • | Audit (Chair) | • | Fluor Corporation | 66 | 2006 | Retired President and CEO of H & R Block | Yes | • Audit (Chair) • Nominating and Corporate Governance | • Fluor Corporation • TJX Companies, Inc. | ||||||||||||
H & R Block | • | Nominating and Corporate Governance | • | TJX Companies, Inc. | ||||||||||||||||||||||
James R. Boyd | 67 | 2006 | Retired Chairman of the Board of | Yes | • | Audit | 70 | 2006 | Retired Chairman of the Board of Arch Coal, Inc. | Yes | • Audit • Compensation (Chair) | |||||||||||||||
Arch Coal, Inc. | • | Compensation (Chair) | ||||||||||||||||||||||||
Milton Carroll | 63 | 2006 | Executive Chairman of the Board | Yes | • | Compensation | • | Western Gas Holdings, LLC | 66 | 2006 | Executive Chairman of the Board of CenterPoint Energy, Inc. | Yes | • Compensation • Nominating and Corporate Governance | • Western Gas Holdings, LLC | ||||||||||||
of CenterPoint Energy, Inc. | • | Nominating and Corporate Governance | • | LyondellBasell Industries | ||||||||||||||||||||||
Nance K. Dicciani | 66 | 2009 | Retired President and CEO of | Yes | • | Audit | • | Rockwood. Holdings, Inc | 69 | 2009 | Non-Executive Chair of the Board of AgroFresh Solutions, Inc. | Yes | • Audit • Health, Safety and Environment
| • Praxair, Inc. • LyondellBasell Industries | ||||||||||||
Honeywell International | • | Health, Safety and | • | Praxair, Inc. | ||||||||||||||||||||||
Specialty Materials | Environment | • | LyondellBasell Industries | |||||||||||||||||||||||
Murry S. Gerber | 61 | 2012 | Retired Executive Chairman of the | Yes | • | Audit | • | BlackRock, Inc. | 64 | 2012 | Retired Executive Chairman of the Board of EQT Corporation | Yes | • Audit • Compensation | • BlackRock, Inc. • United States Steel Corporation | ||||||||||||
Board of EQT Corporation | • | Compensation | • | United States Steel Corporation | ||||||||||||||||||||||
José C. Grubisich | 57 | 2013 | Chief Executive Officer of Eldorado | Yes | • | Audit | • | Vallourec S.A. | 60 | 2013 | Chief Executive Officer of Eldorado Brasil Celulose | Yes | • Audit • Health, Safety and Environment | • Vallourec S.A. | ||||||||||||
Brasil Celulose | • | Health, Safety and Environment | ||||||||||||||||||||||||
Abdallah S. Jum’ah | 72 | 2010 | Retired President and Chief | Yes | • | Health, Safety and Environment | • | Saudi Investment Bank | ||||||||||||||||||
Executive Officer of Saudi Arabian Oil Company | • | Nominating and Corporate Governance | • | Zamil Industries | ||||||||||||||||||||||
David J. Lesar | 60 | 2000 | Chairman of the Board, President | No | • | Agrium, Inc. | ||||||||||||||||||||
(Chairman) | and CEO of Halliburton | |||||||||||||||||||||||||
David J. Lesar (Chairman) | 63 | 2000 | Chairman of the Board and CEO of Halliburton | No | ||||||||||||||||||||||
Robert A. Malone | 62 | 2009 | President and Chief Executive | Yes | • | Compensation | • | Peabody Energy Company | 65 | 2009 | Executive Chairman, President and Chief Executive Officer of First Sonora Bancshares, Inc. | Yes | • Compensation • Health, Safety and Environment (Chair) | • Peabody Energy Corporation • Teledyne Technologies Incorporated | ||||||||||||
Officer of The First National Bank of Sonora, Texas | • | Health, Safety and Environment (Chair) | ||||||||||||||||||||||||
J. Landis Martin (Lead Director) | 68 | 1998 | Founder of Platte River Equity | Yes | • | Health, Safety and Environment | • | Chairman of Crown Castle International Corporation | 71 | 1998 | Founder of Platte River Equity | Yes | • Health, Safety and Environment • Nominating and Corporate Governance | • Lead Director of Apartment Investment and Management Company • Chairman of Crown Castle International Corporation • Lead Director of Intrepid Potash, Inc. | ||||||||||||
• | Nominating and Corporate Governance | • | Lead Director of Apartment Investment and Management Company | |||||||||||||||||||||||
• | Lead Director of Intrepid Potash, Inc. | |||||||||||||||||||||||||
Jeffrey A. Miller | 53 | 2014 | President of Halliburton | No | • Atwood Oceanics, Inc. | |||||||||||||||||||||
Debra L. Reed | 57 | 2001 | Chairman of the Board and CEO of Sempra Energy | Yes | • | Nominating and Corporate Governance (Chair) | 60 | 2001 | Chairman of the Board and CEO of Sempra Energy | Yes | • Compensation • Nominating and Corporate Governance (Chair) | • Caterpillar Inc. | ||||||||||||||
• | Compensation |
Named Executive Officers (page 23)
Name | Age | Occupation | Since |
David J. Lesar | 60 | Chairman of the Board, President and Chief Executive Officer | 2000 |
Mark A. McCollum | 55 | Executive Vice President and Chief Financial Officer | 2008 |
James S. Brown | 59 | President - Western Hemisphere | 2008 |
Jeffrey A. Miller | 50 | Executive Vice President and Chief Operating Officer | 2012 |
Joe D. Rainey | 59 | President - Eastern Hemisphere | 2011 |
2013 Financial HighlightsFor 2016, our NEOs were:
(for more detail please see Form 10-K)
Name | Age | Occupation | Since | |||
David J. Lesar | 63 | Chairman of the Board and Chief Executive Officer | 2000 | |||
Mark A. McCollum(1)(2) | 58 | Executive Vice President and Chief Financial Officer | 2008 | |||
James S. Brown | 62 | President - Western Hemisphere | 2008 | |||
Jeffrey A. Miller | 53 | President | 2012 | |||
Joe D. Rainey | 60 | President - Eastern Hemisphere | 2011 | |||
Christian A. Garcia(1) | 53 | Retired Senior Vice President, Finance | 2015 |
(2) | |
HALLIBURTON - |
2016 Overview
(For more detail please see Form 10-K.)
As a result of the historic industry downturn, 2016 was a very challenging year for our business. The sustained headwinds, difficult market conditions, and depressed commodity prices during the performance year played an integral role in the decisions that the Compensation Committee, or Committee, made when establishing compensation opportunities in 2016 for the NEOs.
Despite the deteriorated market conditions, volatile business, and regulatory landscape, our company persevered. The diligence of the senior leadership team and remarkable execution by our employees worldwide, combined with the rigorous goals set by the Committee to keep management focused on creating long-term value for our stockholders, drove solid results for the 2016 performance year:
• | We generated $15.9 billion of total company revenue, which was negatively impacted by lower activity levels and continued pricing pressure around the globe. We gained significant North America market share through the downturn by demonstrating to our customers the benefits of our efficiency and technology, coming out of the downturn with our highest North America market share in history. |
• | We continued to execute a structural global cost savings initiative to improve our operating results and mitigate the industry downturn primarily through headcount reductions and consolidations of facilities. |
• | We focused on operating cash flow execution, generating almost $1 billion of cash during the second half of 2016. This was driven by improved working capital metrics, including a significant reduction of days sales outstanding, as well as tax refunds collected from our carry back of net operating losses recognized in previous periods. |
• | We maintained our dividend rate throughout the year, paying approximately $620 million in dividends to our stockholders. |
• | We quickly adapted to market conditions by reducing our capital expenditures by over 60% from 2015. |
• | Our stock price improved dramatically, outperforming the S&P 500 index and our peers. |
Executive Compensation
Objectives (page 24)
Our executive compensation program is composed of base salary, short-term incentives, and long-term incentives and is designed to achieve the following objectives:
• | Provide a clear and direct relationship between executive pay and our performance on both a short-term and long-term basis; |
• | Emphasize operating performance drivers; |
• | Link executive pay to measures that drive stockholder value; |
• | Support our business strategies; and |
• | Maximize the return on our human resource investment. |
20132016 Executive Total Compensation Mix (page 25)26)
HALLIBURTON - 2017 Proxy Statement | v |
20132016 Executive Compensation Summary (page 36)38)
Name | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change In Pension Value and NQDC Earnings ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||
David J. Lesar | 1,630,000 | 0 | 4,793,714 | 2,381,533 | 10,180,804 | 155,196 | 1,723,967 | 20,865,214 | 1,630,000 | 0 | 3,704,968 | 1,933,767 | 7,892,090 | 405,647 | 2,280,441 | 17,846,913 | ||||||||||||||||
Mark A. McCollum | 732,000 | 0 | 1,230,066 | 611,358 | 2,679,877 | 22,366 | 470,366 | 5,746,033 | 800,250 | 0 | 985,136 | 513,315 | 2,182,439 | 81,686 | 619,222 | 5,182,048 | ||||||||||||||||
James S. Brown | 788,000 | 0 | 1,579,344 | 785,785 | 2,743,666 | 57,834 | 992,489 | 6,947,118 | 873,000 | 0 | 1,295,668 | 674,883 | 2,746,217 | 152,725 | 1,316,154 | 7,058,647 | ||||||||||||||||
Jeffrey A. Miller | 800,000 | 0 | 1,933,684 | 961,939 | 1,565,460 | 3,406 | 676,731 | 5,941,220 | 970,000 | 0 | 2,237,972 | 1,169,685 | 3,480,500 | 53,541 | 1,085,876 | 8,997,574 | ||||||||||||||||
Joe D. Rainey | 788,000 | 0 | 1,579,344 | 785,785 | 2,730,866 | 78,858 | 1,995,925 | 7,958,778 | 809,950 | 0 | 1,295,668 | 674,883 | 2,639,032 | 206,351 | 2,821,571 | 8,447,455 | ||||||||||||||||
Christian A. Garcia | 322,917 | 0 | 0 | 0 | 758,848 | 28,546 | 666,278 | 1,776,589 |
HALLIBURTON - | vi |
Notice of Annual Meeting of Stockholders to be held May 21, 2014
Notice of Annual Meeting of Stockholders to be held May 17, 2017 |
Halliburton Company, a Delaware corporation, will hold its Annual Meeting of Stockholders on Wednesday, May 21, 201417, 2017 at 9:00 a.m. Central Daylight Time at its corporate office at 3000 N. Sam Houston Parkway East, Life Center - Auditorium, Houston, Texas 77032. At the meeting, the stockholders will be asked to consider and act upon the matters discussed in the attached proxy statement as follows:
1. | To elect the | ||
2. | To consider and act upon a proposal to ratify the appointment of KPMG LLP as principal independent public accountants to examine the financial statements and books and records of Halliburton for the year ending December 31, | ||
3. | To consider and act upon advisory approval of our executive compensation. | ||
4. | To consider and act upon | ||
5. | To consider and act upon a proposal to amend and restate the Halliburton Company Stock and Incentive Plan. | ||
6. | To transact any other business that properly comes before the meeting or any adjournment or adjournments of the meeting. |
These items are fully described in the following pages, which are made a part of this Notice. The Board of Directors has set the close of business on Monday, March 24, 201420, 2017 as the record date for the determination of stockholders entitled to notice of and to vote at the meeting and at any adjournment of the meeting.
INTERNET AVAILABILITY OF PROXY MATERIALS
On or about April 8, 2014,7, 2017, we mailed our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our 20142017 proxy statement and 20132016 Annual Report on Form 10-K and how to vote online. The notice also provides instruction on how you can request a paper copy of these documents if you desire. If you received your annual materials via email, the email contains voting instructions and links to the proxy statement and Form 10-K on the Internet.
IF YOU PLAN TO ATTEND
Attendance at the meeting is limited to stockholders and one guest each. Admission will be on a first-come, first-served basis. Registration will begin at 8:00 a.m., and the meeting will begin at 9:00 a.m. Each stockholder holding stock in a brokerage account will need to bring a copy of a brokerage statement reflecting stock ownership as of the record date. Please note that you will be asked to present valid picture identification, such as a driver’s license or passport.
April 8, 20147, 2017
By order of the Board of Directors,
Christina M. IbrahimRobb L. Voyles
Executive Vice President, Interim Chief Financial Officer,
Secretary and Corporate SecretaryGeneral Counsel
You are urged to vote your shares as promptly as possible by following the voting instructions in the Notice of Internet Availability of Proxy Materials. |
We are providing these proxy materials to you in connection with the solicitation by the Board of Directors of Halliburton Company, or the Board, of proxies to be voted at our 20142017 Annual Meeting of Stockholders and at any adjournment or postponement of the meeting. By executing and returning the enclosed proxy, by following the enclosed voting instructions, or by voting via the Internet or by telephone, you authorize the persons named in the proxy to represent you and vote your shares on the matters described in the Notice of Annual Meeting.
The Notice of Internet Availability of Proxy Materials is being sent to stockholders on or about April 8, 2014.7, 2017. Our Annual Report on Form 10-K, including financial statements, for the fiscal year ended December 31, 20132016 accompanies this proxy statement. The Annual Report on Form 10-K shall not be considered as a part of the proxy solicitation material or as having been incorporated by reference.
Subject to space availability, all stockholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting, and each may be accompanied by one guest. Admission to the Annual Meeting will be on a first-come, first-served basis. Registration will begin at 8:00 a.m., and the Annual Meeting will begin at 9:00 a.m. Please note that we will ask you to present valid picture identification, such as a driver’s license or passport, when you check in at the registration desk.
If you hold your shares in “street name” (that is, through a broker or other nominee), you will need to bring a copy of a brokerage statement reflecting your stock ownership as of the record date.
You may not bring cameras, recording equipment, electronic devices, large bags, briefcases, or packages into the Annual Meeting.
If you attend the Annual Meeting, you may vote in person. If you are not present, you can only vote your shares if you have voted via the Internet, by telephone, or returned a properly executed proxy; in these cases, your shares will be voted as you specify. If you return a properly executed proxy and do not specify a vote, your shares will be voted in accordance with the recommendations of the Board. You may revoke the authorization given in your proxy at any time before the shares are voted at the Annual Meeting.
The record date for determination of the stockholders entitled to vote at the Annual Meeting is the close of business on March 24, 2014.20, 2017. Our common stock, par value $2.50 per share, is our only class of capital stock that is outstanding. As of March 24, 2014,20, 2017, there were 844,192,203867,247,450 shares of our common stock outstanding. Each of our outstanding sharesshare of common stock is entitled to one vote on each matter submitted to the stockholders for a vote at the Annual Meeting. We will keep a complete list of stockholders entitled to vote at our principal executive office for ten days before, and will also have the list available at, the Annual Meeting. Our principal executive office is located at 3000 N. Sam Houston Parkway East, Administration Building, Houston, Texas 77032.
Votes cast by proxy or in person at the Annual Meeting will be counted by the persons we appoint to act as election inspectors for the Annual Meeting. Except as set forth below, the affirmative vote of the majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the subject matter will be the act of the stockholders. Shares for which a stockholder has elected to abstain on a matter will count for purposes of determining the presence of a quorum and, except as set forth below, will have the effect of a vote against the matter.
Each Director shall be elected by the vote of the majority of the votes cast by holders of shares represented in person or by proxy and entitled to vote in the election of Directors, provided that if the number of nominees exceeds the number of Directors to be elected and anyall stockholder-proposed nominee hasnominees have not been withdrawn before the tenth (10th) day preceding the day we mail the Notice of Internet Availability of Proxy Materials to stockholders for the Annual Meeting, the Directors shall be elected by the vote of a plurality of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the election of Directors. A majority of the votes cast means that the number of shares voted “for” a Director must exceed the number of votes cast “against” that Director; we will not count abstentions. As a condition to being nominated by the Board for continued service as a Director, each Director nominee has signed and delivered to the Board an irrevocable letter of resignation limited to and conditioned on that Director failing to achieve a majority of the votes cast at an election where Directors are elected by majority vote. For any Director nominee who fails to be elected by a majority of votes cast, where Directors are elected by majority vote, his or her irrevocable letter of resignation will be deemed tendered on the date the election results are certified. Such resignation shall only be effective upon acceptance by the Board.
The election inspectors will treat broker non-vote shares, which are shares held in street name that cannot be voted by a broker on specific matters in the absence of instructions from the beneficial owner of the shares, as shares that are present and entitled to vote for purposes of determining the presence of a quorum. In determining the outcome of any matter for which the broker does not have discretionary authority to vote, however, those shares will not have any effect on that matter. A broker may be entitled to vote those shares on other matters.
In accordance with our confidential voting policy, no particular stockholder’s vote will be disclosed to our officers, Directors, or employees, except:
• | as necessary to meet legal requirements and to assert claims for and defend claims against us; |
• | when disclosure is voluntarily made or requested by the stockholder; |
• | when the stockholder writes comments on the proxy card; or |
• | in the event of a proxy solicitation not approved and recommended by the Board. |
The proxy solicitor, the election inspectors, and the tabulators of all proxies, ballots, and voting tabulations are independent and are not our employees.
HALLIBURTON - | 2 |
Corporate Governance Guidelines and Committee Charters
Our Board has long maintained a formal statement of its responsibilities and corporate governance guidelines to ensure effective governance in all areas of its responsibilities. Our corporate governance guidelines,Corporate Governance Guidelines, as revised in January 2013,December 2016, are attached as Appendix A to this proxy statement and are also available on our website atwww.halliburton.comby clicking on the tab “About Us,” and then the “Corporate Governance” link. The guidelines are reviewed periodically and revised as appropriate to reflect the dynamic and evolving processes relating to corporate governance, including the operation of the Board.
In order for our stockholders to understand how the Board conducts its affairs in all areas of its responsibility, the full text of the charters of our Audit; Compensation; Health, Safety and Environment; and Nominating and Corporate Governance Committees are also available on our website.
Except to the extent expressly stated otherwise, information contained on or accessible from our website or any other website is not incorporated by reference into and should not be considered part of this proxy statement.
Code of Business Conduct
Our Code of Business Conduct, which applies to all of our employees and Directors and serves as the code of ethics for our principal executive officer, principal financial officer, principal accounting officer or controller, and other persons performing similar functions, is available on our website. Any waivers to our Code of Business Conduct for our Directors or executive officers can only be made by our Audit Committee. There were no waivers of the Code of Business Conduct in 2013.2016.
Related Persons Transactions Policy
Our Board has adopted a written policy governing related persons transactions as part of the Board’s commitment to good governance and independent oversight. The policy covers transactions involving any of our Directors, executive officers, nominees for Director, or greater than 5% stockholders, or any immediate family member of the foregoing, among others.
The types of transactions covered by this policy are transactions, arrangements, or relationships, or any series of similar transactions, arrangements, or relationships, including any indebtedness or guarantee of indebtedness, in which (1) we or any of our subsidiaries were or will be a participant, (2) the aggregate amount involved exceeds $120,000 in any calendar year, and (3) any related person had, has, or will have a direct or indirect interest (other than solely as a result of being a director of, or holding less than a 10% beneficial ownership interest in, another entity).
Under the policy, we generally only enter into or ratify related persons transactions when the Board determines such transactions are in our best interests and the best interests of our stockholders. In determining whether to approve or ratify a related person transaction, the Board will consider the following factors and such other factors it deems appropriate:
• | whether the related person transaction is on terms comparable to terms generally available with an unaffiliated third party under the same or similar circumstances; |
• | the benefits of the transaction to us; |
• | the extent of the related person’s interest in the transaction; and |
• | whether there are alternative sources for the subject matter of the transaction. |
HALLIBURTON - 2017 Proxy Statement |
3 |
THE BOARD OF DIRECTORS AND STANDING COMMITTEES OF DIRECTORS
The Board has standing Audit; Compensation; Health, Safety and Environment; and Nominating and Corporate Governance Committees. Each of the standing committees arecommittee is comprised of non-employeenon-management Directors and, in the business judgment of the Board, all of the non-employeenon-management Directors are independent, after considering all relevant facts and circumstances, as well asincluding the independence standards set forth in our corporate governance guidelines.Corporate Governance Guidelines. Our corporate governance guidelinesCorporate Governance Guidelines are attached as Appendix A to this proxy statement and are also available on our website atwww.halliburton.com.
Our independence standards meet, and in some instances exceed, NYSE independence requirements. Our definition of independence standards and compliance with our independencethose standards is periodically reviewed by the Nominating and Corporate Governance Committee. In connection with its independence determination, the Board considered that during 2016, we provided services in the ordinary course of business to Sempra Energy, of which Ms. Reed is the Chairman and Chief Executive Officer. The Board concluded that the relationship was not material and did not affect the independence of Ms. Reed. There were no relevant transactions, relationships, or arrangements not disclosed in this proxy statement that were considered by the Board in making its determination as to the independence of the Directors.
Board Attendance
During 2013,2016, the Board held nine7 meetings and met in Executive Session, without management present, on five5 occasions.
Committee meetings were held as follows:
Audit Committee | 9 |
Compensation Committee | 5 |
Health, Safety and Environment Committee | 5 |
Nominating and Corporate Governance Committee |
All members of the Board attended at least 93% of the total number of meetings of the Board and the committees on which he or she served during the last fiscal year.2016.
All of our Directors attended the 20132016 Annual Meeting, as required by our corporate governance guidelines.Corporate Governance Guidelines.
Board Leadership
Our By-laws provideBoard believes that the Board should have theit is important to maintain flexibility to determine the appropriate leadership of the Board, and whether the roles of Chairman and Chief Executive Officer should be combined or separate. AfterOur Corporate Governance Guidelines provide that the Board consider on an annual basis whether it is appropriate for the same individual to fill both of those roles. When making that determination, the Board considers issues such as industry and financial expertise, in-depth knowledge of Halliburton and its business, and succession planning. At its latest annual review, and discussion, ourthe Board has decided that a combined leadership role would currently best serve the needs of the Company and its stockholders. The
Our Corporate Governance Guidelines also provide that if the offices of Chairman of the Board believes that David J. Lesar, our current Chairman and Chief Executive Officer with his industry expertise, financial expertise, and in-depth knowledgeare held by the same person, the independent members of Halliburton and its business, is the correct personBoard will annually elect an independent Director to fill both roles.
Lead Independent Director
In order to help ensure independent Board leadership and oversight, theserve in a lead capacity. The Board has elected Mr.J. Landis Martin as our Lead Independent Director. Mr. Martin’s role and responsibilities are set forth in the Lead Independent Director Charter adopted by the Board and include presiding over the executive sessions of the non-employee Directors and executive sessions of the independentnon-management Directors. Mr. Martin also advises managementOur Lead Independent Director Charter is available on and approves the agenda items to be consideredour website at meetings of the Board.www.halliburton.com. With the exception of our Chairman and Chief Executive Officer, Mr. Lesar, and our President, Mr. Miller, the Board is composed of independent Directors. Our Lead Independent Director Charter can be found on our website atwww.halliburton.com.
HALLIBURTON - 2017 Proxy Statement | 4 |
Independent Committees
As a governance best practice, key committees of the Board are comprised solely of independent Directors. We have established processes for the effective oversight of critical issues entrusted to independent Directors, such as:
• | the integrity of our financial statements; |
• | CEO and senior management compensation; |
• | CEO and senior management succession planning; |
• | the election of our Lead Independent Director; |
• | membership of our |
• | Board, Committee, and Director evaluations; and |
• | nominations for Directors. |
The Board believes it has a strong governance structure in place to ensure independent oversight on behalf of all stockholders.
Board Risk Oversight
We have implemented an Enterprise Risk Management system to identify and analyze enterprise levelenterprise-level risks and their potential impact on us. At least annually, our Vice President and Treasurer reports to the Audit Committee of the Board receives a report on our processes with respect to risk assessment and risk management. Our executive officers are assigned responsibility for the various categories of risk, with the Chief Executive Officer being ultimately responsible to the Board for all risk categories. The responsibility of the Chief Executive Officer for all risk matters is consistent with his being primarily responsible for managing our day-to-day business.
Halliburton Board Leadership
• David J. Lesar is our Chairman and CEO • J. Landis Martin is our Lead Independent Director • 11 of our 13 Directors are independent • All members of the Audit; Compensation; Health, Safety and Environment; and Nominating and Corporate Governance Committees are independent. Our Board believes that continuing to combine the position of Chairman and CEO is in the best interests of the Company and our stockholders, and that our Lead Independent Director and the strong presence of engaged independent Directors ensures independent oversight. |
Members of the Committees of Our Board of Directors
Audit Committee | Compensation Committee | Health, Safety and Environment Committee | Nominating and Corporate Governance Committee | |||
Alan M. Bennett* | William E. Albrecht | Abdulaziz F. Al Khayyal | Abdulaziz F. Al Khayyal | |||
James R. Boyd | James R. Boyd* | William E. Albrecht | Alan M. Bennett | |||
Nance K. Dicciani | Milton Carroll | Nance K. Dicciani | Milton Carroll | |||
Murry S. Gerber | Murry S. Gerber | José C. Grubisich | J. Landis Martin | |||
José C. Grubisich | Robert A. Malone | Robert A. Malone* | Debra L. Reed* | |||
Debra L. Reed | J. Landis Martin |
* | Chair |
HALLIBURTON - 2017 Proxy Statement | 5 |
Audit Committee
The Audit Committee’s responsibilities include:
• | Recommending to the Board the appointment of the
The Board has determined that Alan M. Bennett, James R. Boyd, Nance K. Dicciani, Murry S. Gerber, and José C. Grubisich are independent under our Corporate Governance Guidelines and are “audit committee financial experts” as defined by the Securities and Exchange Commission, or SEC. A copy of the Audit Committee Charter is available on our website atwww.halliburton.com. Compensation Committee The Compensation Committee’s responsibilities include:
A copy of the Compensation Committee Charter is available on our website atwww.halliburton.com. Health, Safety and Environment Committee The Health, Safety and Environment Committee’s responsibilities include:
A copy of our Health, Safety and Environment Committee Charter is available on our website atwww.halliburton.com. Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee’s responsibilities include:
A copy of our Nominating and Corporate Governance Committee Charter is available on our website atwww.halliburton.com.
Stockholder Nominations of Directors
Our By-laws provide that stockholders may nominate persons for election to the Board at a meeting of stockholders. In September 2016, our Board of Directors amended our By-laws to implement proxy access for a meeting of stockholders following the 2017 Annual Meeting of Stockholders.
Stockholder nominations require written notice to the Corporate Secretary at the address of our principal executive offices set forth on page 2 of this proxy statement, and for the Annual Meeting of Stockholders in 2018, must be received not less than 90 days nor more than 120 days prior to the anniversary date of the 2017 Annual Meeting of Stockholders, or no later than February 16, 2018 and no earlier than January 17, 2018. The stockholder notice must contain, among other things, certain information relating to the stockholder and the proposed nominee as described in our By-laws. In addition, the proposed nominee may be required to furnish other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as a Director.
The proxy access provision permits up to 20 stockholders owning 3% or more of our outstanding common stock continuously for at least three years to nominate and include in our proxy materials for a meeting of stockholders up to two directors or 20% of the Board, whichever is greater, provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in the By-laws.
Our By-laws continue to provide that if a stockholder owning at least 1% of our issued and outstanding common stock continuously for at least one year as of the date the written notice of the nomination is submitted to us, proposes a nominee not submitted under the proxy access provision, our
Qualifications of Directors
Candidates nominated for election or reelection to the Board should possess the following qualifications:
The Nominating and Corporate Governance Committee is responsible for assessing the appropriate mix of skills and characteristics required of Board members in the context of the needs of the Board at a given point in time, and We value all types of diversity, including diversity of our Board. In evaluating the overall mix of qualifications for a potential nominee, the Committee and Board Evaluation of Board The Nominating and Corporate Governance Committee annually reviews and evaluates the The Nominating and Corporate Governance Committee annually reviews the individual performance
Process for the Selection of New Directors
The Board is responsible for filling vacancies on the Board. The Board has delegated to the Nominating and Corporate Governance Committee the duty of selecting and recommending
To foster better communication
Our Director of Business Conduct, an employee, reviews all
Information regarding these methods of communication is also on our website atwww.halliburton.com.
PROPOSAL NO. 1 ELECTION OF DIRECTORS
The The common stock represented by properly executed and returned proxies will be voted to elect the
Information about Nominees for Director
Mr. Al Khayyal is the retired Senior Vice President of Industrial Relations of Saudi Arabian Oil Company (Saudi Aramco) (the world’s largest producer of crude oil). Mr. Al Khayyal served as Senior Vice President of Industrial Relations of Saudi Aramco from 2007 to 2014 and served as a director of Saudi Aramco from 2004 to 2014. Mr. Al Khayyal is a director of Marathon Petroleum Corporation (since 2016). The Board determined that Mr. Al Khayyal should be nominated for election as a Director because of his exceptional oil and gas knowledge, including significant international business experience in the energy industry, and his executive experience with the world’s largest producer of crude oil.
Mr. Albrecht has been the Non-Executive Chairman of the Board of California Resources Corporation (a publicly traded oil and natural gas exploration and production company) since 2016. Mr. Albrecht served as Executive Chairman of the Board of California Resources Corporation from 2014 to 2016, Vice President of Occidental Petroleum Corporation from 2008 to 2014, President of Oxy Oil & Gas, Americas from 2012 to 2014, and President of Oxy Oil & Gas, USA from 2008 to 2012. Mr. Albrecht is a director of Rowan Companies plc (since 2015). The Board determined that Mr. Albrecht should be nominated for election as a Director because of his extensive experience in the domestic oil and natural gas industry and his executive experience with a public oil and gas exploration and production company.
Mr. Bennett is the retired President and Chief Executive Officer of H&R Block, Inc. (a tax and financial services provider). Mr. Bennett served as the President and Chief Executive Officer of H&R Block, Inc. from 2010 to 2011, the Interim Chief Executive Officer of H&R Block, Inc. from 2007 to 2008, and the Senior Vice President and Chief Financial Officer of Aetna, Inc. from 2001 to 2007. Mr. Bennett is a director of Fluor Corporation (since 2011) and TJX Companies, Inc. (since 2007), and is a former director of H&R Block, Inc. (2008-2011). The Board determined that Mr. Bennett should be nominated for election as a Director because of his financial expertise, ranging from internal audit to corporate controller to chief financial officer of a large, public company. He is a certified public accountant and also has chief executive officer experience.
Mr. Boyd is the retired Chairman of the Board of Arch Coal, Inc. (one of the largest United States coal producers). Mr. Boyd served as a director of Arch Coal, Inc. from 1990 to 2013, and as Chairman of the Board of Arch Coal, Inc. from 1998 to 2006. The Board determined that Mr. Boyd should be nominated for election as a Director because of his experience as
Mr. Carroll has been the Executive Chairman of the Board of CenterPoint Energy, Inc. (a public utility holding company) since
Ms. Dicciani
Mr. Gerber is the retired Executive Chairman of the Board of EQT Corporation (a leading producer of unconventional natural gas). Mr. Gerber served as the Executive Chairman of the Board of EQT Corporation from 2010 to 2011, the Chairman and Chief Executive Officer of EQT Corporation from 2000 to 2010, and the Chief Executive Officer and President of EQT Corporation from 1998 to 2007. Mr. Gerber is a director of BlackRock, Inc. (since 2000) and United States Steel Corporation (since 2012). The Board determined that Mr. Gerber should be nominated for election as a Director because of his executive leadership skills and his extensive business experience
Mr. Grubisich has been the Chief Executive Officer of Eldorado Brasil Celulose (a leader in the world cellulose market) since 2012. Previously, Mr. Grubisich served as President and Chief Executive Officer of ETH Bioenergia S.A. (an integrated producer of ethanol and electricity from biomass) from 2008 to 2012. Mr. Grubisich is a director of Vallourec S.A. (since 2012). The Board determined that Mr. Grubisich should be nominated for election as a Director because of his significant international business experience in Latin America and his executive leadership experience.
Mr.
Mr. Malone has been the Executive Chairman, President and Chief Executive Officer of First Sonora Bancshares, Inc. (a bank holding company) since 2014. Previously, Mr. Malone served as the President and Chief Executive Officer of The First National Bank of Sonora, Texas (a community
Mr. Martin is the founder of Platte River Equity
Mr. Miller has been our President and a Director since 2014. Mr. Miller was our Executive Vice President and Chief Operating Officer from 2012 to 2014. Mr. Miller also served as Senior Vice President Global Business Development and Marketing from 2011 to 2012. Mr. Miller is a director of Atwood Oceanics, Inc. (since 2013). The Board determined that Mr. Miller should be nominated for election as a Director because of his strong executive experience, and extensive expertise in global operations, business development, and marketing.
Ms. Reed has been the Chief Executive Officer of Sempra Energy (an energy infrastructure and regulated holding company) since 2011 and has served as Chairman of the Board of Sempra Energy since 2012. Previously, Ms. Reed was the Executive Vice President of Sempra Energy from 2010 to 2011, and the President and Chief Executive Officer of Southern California Gas Company, and San Diego Gas & Electric Company from 2006 to 2010. Ms. Reed is a director of Caterpillar Inc. (since 2015) and is a former director of Avery Dennison Corporation (2009-2011)
Directors’ Fees
All Audit - $20,000; Compensation -
Directors’ Equity Awards
Each
Additionally, when a
Directors may not sell, assign, pledge, otherwise transfer, or encumber restricted shares (which were previously granted to non-management Directors) or RSUs until the restrictions are removed. Restrictions on RSUs lapse 25% a year over four years of service with the applicable underlying shares of common stock distributed annually to the
During the restriction period, Directors have the right to (i) vote restricted shares, but not shares underlying RSUs, and (ii) receive dividends or dividend equivalents in cash on restricted shares and RSUs that are not subject to a deferral election. RSUs that are subject to a deferral election receive dividend equivalents under the Directors’ Deferred Compensation Plan.
Directors’ Deferred Compensation Plan
The Directors’ Deferred Compensation Plan is a equivalent units (SEUs) under a stock equivalents account. If a
After a Director’s retirement, distributions under the plan are made to the Director in a single distribution or in annual installments over a 5- or 10-year period as elected by the Director. Distributions under the
Directors’ Stock Ownership Requirements
We have stock ownership requirements for all
Director Clawback Policy
Depending on the circumstances described above, the disinterested members of the Board, the disinterested members of the Compensation Committee, and/or the disinterested members of the Nominating and Corporate Governance Committee may be involved in
The policy also provides that, to the extent permitted by applicable law and not previously disclosed in a filing with the SEC, we will disclose in our proxy statement the circumstances of any recoupment arising under the policy or that there has not been any recoupment pursuant to the policy for the prior calendar year. There was no recoupment under the policy in
Charitable Contributions and Other Benefits
Matching Gift Programs
To further our support for charities, Directors may participate in the Halliburton Foundation’s matching gift programs for educational institutions, not-for-profit hospitals, and medical foundations. For each eligible contribution, the Halliburton Foundation makes a contribution of
Accidental Death and Dismemberment
We offer an optional accidental death and dismemberment policy for
Fees Earned or Paid In Cash.The amounts in this column represent retainer fees earned in fiscal year
Stock Awards.The amounts in the Stock Awards column reflect the grant date fair value of RSUs awarded in
The number of restricted shares, RSUs, and SEUs held at December 31,
Change in Pension Value and Nonqualified Deferred Compensation Earnings.None of the Directors had a change in pension value or nonqualified deferred compensation earnings that represented above market earnings in
All Other Compensation.This column includes compensation related to the matching gift programs under the Halliburton Foundation, the Accidental Death and Dismemberment program, dividends or dividend equivalents in cash on restricted shares or RSUs, and dividend equivalents associated with the Directors’ Deferred Compensation Plan.
Directors who participated in the matching gift programs under the Halliburton Foundation and the corresponding match provided by the Halliburton Foundation are: Mr. Bennett -
Directors who participated in the Accidental Death and Dismemberment program and incurred imputed income for the benefit amount of
Directors who received dividends or dividend equivalents in cash on restricted shares or RSUs held on Halliburton record dates are: Mr. Bennett -
Directors who received dividend equivalents attributable to their stock equivalents account under the Directors’ Deferred Compensation Plan are: Mr. Al Khayyal - $783; Mr. Bennett -
Directors who received dividend equivalents attributable to their deferred RSUs under the Directors’ Deferred Compensation Plan are: Mr. Al Khayyal - $6,564; Mr. Albrecht - $1,633; Mr. Bennett -
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our Directors and executive officers to file reports of holdings and transactions in Halliburton stock with the SEC and the NYSE. Based on our records and other information, we believe that in
Stock Ownership of Certain Beneficial Owners and Management
The following table sets forth beneficial ownership information about persons or groups that own or have the right to acquire more than 5% of our common stock, based on information contained in Schedules 13G filed with the SEC.
The following table sets forth information, as of March 6,
The Audit Committee is responsible for the appointment, compensation, retention, and oversight of the work of the principal independent public accountants retained to audit our financial statements. The Audit Committee and Board have approved the appointment of KPMG LLP as our principal independent public accountants to examine our financial statements for the year ending December 31,
KPMG began serving as our principal independent public accountants for the year ended December 31, 2002. The current appointment was made based on a careful review by the Audit Committee of KPMG’s qualification to continue to serve as independent public accountants for us, including the nature and extent of non-audit services performed by KPMG and other factors required to be considered when assessing KPMG’s independence from Halliburton and its management. In order to assure continued auditor independence, the Audit Committee periodically considers whether there should be a rotation of the principal independent public accountants. Further, in conjunction with the mandated rotation of the firm’s lead engagement partner, the Audit Committee and its Chairman are involved in the process for selecting KPMG’s new lead engagement partner. The Audit Committee and Board believe that the continued retention of KPMG to serve as our principal independent public accountants is in the best interests of Halliburton and our stockholders.
Representatives of KPMG are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions from stockholders.
The affirmative vote of the holders of a majority of the shares of our common stock represented at the Annual Meeting and entitled to vote on the matter is needed to approve the proposal.
If the stockholders do not ratify the selection of KPMG, the Board will reconsider the selection of independent public accountants.
The Board of Directors recommends a vote FOR ratification of the appointment of KPMG LLP as principal independent public accountants to examine our financial statements and books and records for the year ending December 31,
We operate under a written charter, a copy of which is available on Halliburton’s website atwww.halliburton.com. As required by the charter, we review and reassess the charter annually and recommend any changes to the Board for approval.
Halliburton’s management is responsible for preparing Halliburton’s financial statements and the principal independent public accountants are responsible for auditing those financial statements. The Audit Committee’s role is to provide oversight of management in carrying out management’s responsibility and to appoint, compensate, retain, and oversee the work of the principal independent public accountants. The Audit Committee is not providing any expert or special assurance as to Halliburton’s financial statements or any professional certification as to the principal independent public accountants’ work.
In fulfilling our oversight role for the year ended December 31,
we recommended to the Board that the audited financial statements be included in Halliburton’s Annual Report on Form 10-K for the fiscal year ended December 31,
THE AUDIT COMMITTEE Alan M. Bennett James R. Boyd Nance K. Dicciani Murry S. Gerber José C. Grubisich
During
Audit Fees
Audit fees represent the aggregate fees for professional services rendered by KPMG for the integrated audit of our annual financial statements for the fiscal years ended December 31,
Audit-Related Fees
Audit-related fees were incurred for assurance and related services that are traditionally performed by the independent auditor. These services primarily include
Tax Fees
The aggregate fees for tax services primarily consisted of international tax compliance and tax return services related to our expatriate employees.
Fee Approval Policies and Procedures
The Audit Committee has established a written policy that requires the approval by the Audit Committee of all services provided by KPMG as the principal independent public accountants that examine our financial statements and books and records and of all audit services provided by other independent public accountants. Prior to engaging KPMG for the annual audit, the Audit Committee reviews a Principal Independent Public Accountants Auditor Services Plan. KPMG then performs services throughout the year as approved by the Committee. KPMG reviews with the Committee, at least quarterly, a projection of KPMG’s fees for the year. Periodically, the Audit Committee approves revisions to the plan if the Committee determines changes are warranted. Our Audit Committee also considered whether KPMG’s
Pursuant to Section 14A of the Securities Exchange Act of 1934, our stockholders are being presented with the opportunity to vote to approve, on an advisory
As described in detail under Compensation Discussion and Analysis, our executive compensation programs are designed to attract, motivate, and retain our named executive officers, who are critical to our success. Under these programs, our named executive officers are rewarded for the achievement of specific annual, long-term and strategic goals, corporate goals, and the realization of increased stockholder
The Compensation Committee continually reviews the compensation programs for our named executive officers to ensure the programs achieve the desired goals of aligning our executive compensation structure with our stockholders’ interests and current market practices. We believe our executive compensation program achieves the following objectives identified in Compensation Discussion and Analysis:
We are asking our stockholders to indicate their support for our named executive officers’ compensation as described in this proxy statement and ask that our stockholders vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the compensation paid to Halliburton’s named executive officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion, is hereby approved.”
The say-on-pay vote is advisory and, therefore, not binding on us, the Compensation Committee or our Board. Our Board and our Compensation Committee value the opinions of our stockholders. To the extent there is any significant vote against the named executive officers’ compensation as disclosed in this proxy statement, the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
The Board of Directors recommends a vote FOR the approval, on an advisory basis, of the compensation of our named executive officers.
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
In this Compensation Discussion and Analysis, we review the objectives and elements of Halliburton’s executive compensation program and discuss the
For
As a result of the historic industry downturn, 2016 was a very challenging year for our business. The sustained headwinds, difficult market conditions, and depressed commodity prices during the performance year played an integral role in the decisions the Compensation Committee, or Committee, made when establishing compensation opportunities in 2016 for the NEOs. Despite the deteriorated market conditions, volatile business, and regulatory landscape, our company persevered. The diligence of the senior leadership team and remarkable execution by our employees worldwide, combined with the rigorous goals set by the Committee to keep management focused on creating long-term value for our stockholders, drove solid results for the 2016 performance year:
It is against this backdrop that the Committee made its compensation decisions for the 2016 performance year. During Even though base salaries had been reduced, then frozen, for twenty-one months, there were no annual incentive payouts for the NEOs in 2015, and significant reductions were made in management’s short-term incentive opportunities in 2016, we executed our strategy. The Committee believes that the ongoing commitment of our
The graph below depicts the outperformance of our common stock in 2016 relative to the market price of the S&P 500 and Philadelphia Oil Service (OSX) indices, in addition to the West Texas Intermediate (WTI) price of crude oil and the global rig count. Results of
In accordance with our
Halliburton’s Executive Compensation Objectives and Practices
Our executive compensation program is designed to achieve the following objectives:
Summary of our Executive Compensation Practices
Elements of our Executive Compensation Program for Fiscal
Halliburton’s executive compensation program is composed of base salary, short-term incentives, and long-term incentives, each of which is described below:
As illustrated below, the majority of our CEO’s and
Executive Compensation Procedures
Our compensation procedures guide the actions taken by the
These procedures are used to make the final determination of total compensation for our NEOs.
Our internal stock nomination process under the Halliburton Company Stock and Incentive Plan, or the Stock and Incentive Plan, ensures that all award grant dates are prospective and not retroactive. For NEOs, the grant date is the day the Committee determines annual compensation actions, generally in December of each year. However, awards may be approved by the Committee throughout the year as they determine, such as for retention or performance purposes. Exercise prices for stock options are set at the closing stock price on the date of the approved grant.
Role of the CEO in Setting Compensation
The following recommendations are made to the Committee for each NEO:
Retirement awards, which are calculated by an external actuary, under the Halliburton Company Supplemental Executive Retirement Plan, or SERP. Use of Independent Consultants and Advisors
The Committee engaged Pearl Meyer
These services are provided as requested by the Committee throughout the year. Pearl Meyer concluded that our compensation plans do not appear to present any material risks to the Company or its stockholders in the design or metrics of the plans or interaction between or administration of our incentive programs.
Executive Compensation Benchmarking
The companies comprising the comparator peer group are selected based on the following considerations:
Industry affiliation includes companies that are involved in the oil and natural gas and energy services industries. The comparator peer group is reviewed annually by the Committee to ensure relevance, with data provided to the Committee by the independent, external compensation consultant. The Committee targets between 20 and 25 companies for our comparator peer group.
Comparator Peer Group
The
The comparator peer group used for our
Analysis of Market Data
The market data is size adjusted by revenue as necessary so that it is comparable with our trailing 12 month revenue. We size adjust the total compensation benchmarking data because of variances in market capitalization and revenue size among the companies comprising our comparator peer group. These adjusted values are used as the basis of comparison of compensation between our executives and those of the comparator peer group.
Total executive compensation for each NEO is structured to target market competitive pay levels in base salary and short- and long-term incentive opportunities. We also place an emphasis on variable pay at risk, which enables this compensation structure to position actual pay above or below the 50thpercentile of our comparator peer group depending on performance.
A consistent pre-tax, present value methodology is used in assessing stock-based and other long-term incentive awards, including the Black-Scholes model used to value stock option grants.
The independent, external compensation consultant gathers and performs an analysis of market data for each NEO, comparing each of their individual components of compensation as well as total compensation to that of the comparator peer group. This competitive analysis consists of market data comparing each of the pay elements and total compensation at the 25th, 50th, and 75thpercentiles of the comparator peer group to current compensation for each of the NEOs.
Pay for Performance Analysis As part of the Compensation Committee’s review of our executive compensation program, the Committee reviews a one-, three-, and five-year pay for performance analysis against our comparator peer group. The review examines the degree of alignment between our CEO’s realizable compensation relative to the realizable compensation of CEOs in our comparator peer group and our Return on Capital Employed, or ROCE, compared to the ROCE of our comparator peer group. ROCE is calculated as follows:
Total realizable compensation consisted of the following:
This analysis demonstrated the following for the period ended December 31, 2015:
Based on the foregoing analysis, the Committee determined that our pay and performance are appropriately aligned. The Committee selected ROCE for this analysis because we believe it is the best indicator of long-term Company performance, while reinforcing the Company’s objective for sustained long-term performance and value creation. ROCE measures Company profitability as well as the efficiency by which we deploy capital. It is also a measure that is tracked and understood by our stockholders. The Compensation Committee believes that tying a part of our NEOs long-term incentive opportunity to the achievement of challenging ROCE targets will help to increase revenue and improve margins and maintain focus on cost control. We chose ROCE as a performance measure rather than total shareholder return, or TSR, due to the cyclical nature of our business and because we believe ROCE has a greater line of sight from our management team to impact our financial results.
Integration of Compensation Components, Plan Design, and Decision-Making
The Committee considers all elements of the executive compensation package for each NEO for the upcoming year in December. The Committee receives historical and prospective breakdowns of the total compensation components for each NEO as follows:
The Committee also reviews and considers our pay versus performance, as well as the results of the advisory vote on executive compensation held at the prior year’s annual
In making compensation decisions, each of the following compensation elements is reviewed separately and collectively:
Of these elements, all but base salary are variable and at risk of forfeiture. The Committee uses base salary as the primary reference point for determining the target value and actual value of each of the above elements of compensation, individually and in the aggregate, for each NEO. This assists the Committee in confirming that our compensation package for NEOs is appropriate and competitive
The Committee then considers the following when making final compensation determinations:
These factors are considered on an unweighted basis in making final pay decisions and to ensure internal equity among positions having similar scope and responsibility.
After considering these factors, the Committee then sets the final compensation opportunity for each NEO so that their actual total compensation is consistent with our executive compensation philosophy of paying at the 50thpercentile or higher for those years of superior performance and paying below the 50thpercentile when performance does not meet competitive standards. As noted, the Committee varied from its processes in 2016 by freezing already reduced base salaries and significantly lowering the annual incentive award opportunities for our NEOs.
The procedures used to set compensation for each of the NEOs are the same. Variations do exist in the amounts of compensation among the NEOs as a result of each NEO’s position and corresponding scope of responsibility, individual performance, length of time in the role, and differences in the competitive market pay levels for their positions.
Generally, in years when we achieve financial results substantially above or below expectations, actual compensation may fall outside the initial targets established by the Committee.
Determination of CEO and NEO Target Total Compensation
When determining target total compensation for
Each year,
The Board determined that Mr. Lesar met these objectives in
employees, investors, and customers, particularly following the announcement of the termination of the Baker Hughes acquisition (leadership and vision); Maintained unwavering commitment to our Health, Safety and Environment program and, once again, the Dow Jones Sustainability Index recognized Halliburton as best in class as it relates to the environment (leadership and vision); Continued to expose the next generation of management to the Board, further enhanced management/employee succession process, strengthened diversity initiatives, and focused senior management on talent development initiatives (development of management); Despite the significant headcount reduction, remained focused on the execution of our people processes as evidenced by our overall Human Capital Development process being ranked as best in class across all industries by the Dow Jones Sustainability Index (development of management); Maintained unwavering commitment to our Code of Business Conduct and continued to act in a role model capacity as it relates to ethical behavior (integrity); Communicated regularly with the members of the Board providing status reports and notification of issues of concern and provided unfettered access to management and subject matter experts (keeping the Board informed); and Continued to focus on strengthening our international business and outperforming our competitors (accomplishment of strategic objectives).
Other NEO compensation is determined similar to that of the CEO by evaluating each NEO’s performance and considering the market competitive pay levels of the comparator peer group for the NEO’s position.
Base Salary
The Committee generally targets base salaries at the median of the comparator peer group; however, the Committee also considers the following factors when setting base salary:
Level of responsibility; Experience in current role and equitable compensation relationships among internal peers; Performance and leadership; and External factors involving competitive positioning, general economic conditions, and marketplace compensation trends.
No specific formula is applied to determine the weight of each factor. Salary reviews are conducted annually to evaluate each executive; however, individual salaries are not necessarily adjusted each year. In order to manage fixed costs during the downturn, all of our NEOs base salaries were reduced on April 1, 2015. Mr. Lesar’s base salary was reduced 6.9% and all other NEOs’ base salaries were reduced 3%. These reductions continued for 2016, with the exception of Mr. Garcia whose 2016 base salary was increased to reflect his additional responsibilities as Senior Vice President of Finance and Acting Chief Financial Officer. The Committee approved base salaries for the NEOs during the time frames which are reflected in the table below:
The Committee established the Annual Performance Pay Plan to:
Reward executives and other key members of management for improving financial results that drive the creation of economic value for our stockholders; and Provide a means to connect individual cash compensation directly to our performance.
The Annual Performance Pay Plan provides for performance awards in accordance with the terms of the Stock and Incentive Plan.
The Annual Performance Pay Plan provides an incentive to our NEOs to
CVA is a financial measurement that demonstrates the amount of economic value added to our business. The formula for calculating CVA is as follows:
Cash Value Added (CVA) = Net Operating Profit After Taxes - Capital Charge |
Net Operating Profit After Taxes equals the sum of operating income plus interest income plus foreign currency gains (losses) plus other nonoperating income (expense), reduced by our income taxes. When determining actual CVA performance, we apply our effective income tax rate.
Capital Charge equals total assets (excluding deferred income tax assets) less total liabilities (excluding debt and deferred income tax liabilities) multiplied by a weighted average cost of capital percentage.
Cash Value Added is computed monthly and accumulated throughout the calendar year. Adjustments in the calculation of the CVA payout may, at times, be approved by the Committee and can include the treatment of unusual items that may have impacted our actual results.
At the beginning of each plan year, the Committee approves an incentive award schedule that equates given levels of CVA performance with varying reward opportunities paid in cash. The performance goals range from “Threshold” to “Target” to “Maximum.” Threshold reflects the minimum CVA performance level which must be achieved in order for awards to be earned and Maximum reflects the maximum level that can be earned.
These goals are based on our annual operating plan, as reviewed and approved by our Board, and are set at levels believed to be sufficient to meet or exceed stockholder expectations of our performance, as well as expectations of the relative performance to our competitors.
Given the cyclical nature of our business, our performance goals vary from year to year, which can similarly impact the difficulty in achieving these goals.
The Committee set the 20132016 performance goals for our NEOs based on company-wide consolidated CVA results, specifying when these goals were set that the impact of any Macondo well incident related charges would be excluded from the CVA calculation.results. Threshold CVA was based on 89%90% of planned operating income,Operating Income, Target CVA on 100% of planned operating income,Operating Income, and Maximum CVA on 111%110% of planned operating income. Operating Income. Net Operating Profit After Taxes was calculated excluding restructuring charges and Baker Hughes acquisition and integration-related expenses, as the impact of these items was unknown when the targets were set in February 2016. For the same reason, Net Invested Capital was calculated excluding cash.
The Committee set the 2016 performance levels for our NEOs based on the company-wide consolidated CVA targetsresults:
Metric | Threshold | Target | Maximum | Actual |
CVA | -$1,778 M | -$1,709 M | -$1,640 M | -$1,623 M |
The Committee has selected CVA as the sole financial measure upon which to base our Annual Performance Pay Plan because it is a key measure on which we set our performance expectations for 2013 were $185 million at Threshold, $494 million at Target,the year and $802 million at Maximum. Actual CVAwe believe it is a proven driver of value creation for 2013 was $630 million.stockholders of the Company.
The Committee considers other business performance factors, including health, safety, and environment and service quality, in determining the final payout amounts under the Annual Performance Pay Plan.
Individual incentive award opportunities are established as a percentage of base salary at the beginning of the plan year.year based on market competitive targets. The maximum amount a NEO can receive is limited to two times the target opportunity level. The level of achievement of annual CVA performance determines the dollar amount of incentive compensation payable to participants following completion of the plan year.
TheIn February 2016, in anticipation of a challenging year, the Committee exercised its discretion and reduced each of the NEO’s award opportunity below market median and set 2016 incentive award opportunities under the plan as follows:
Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||
NEO | Opportunity | Opportunity | Opportunity | Opportunity | Opportunity | |||||||
Mr. Lesar | 60% | 150% | 300% | 50% | 125% | 250% | ||||||
Mr. McCollum | 36% | 90% | 180% | 30% | 75% | 150% | ||||||
Mr. Brown | 40% | 100% | 200% | 34% | 85% | 170% | ||||||
Mr. Miller | 40% | 100% | 200% | 40% | 100% | 200% | ||||||
Mr. Rainey | 40% | 100% | 200% | 34% | 85% | 170% | ||||||
Mr. Garcia | 22.5% | 56.25% | 112.5% |
HALLIBURTON - 2017 Proxy Statement | 31 |
Threshold, Target,Although the CVA results produced a Maximum level payout, the NEOs’ awards were significantly less than they would have been if the Committee did not exercise its discretion to reduce the award opportunities. The table below shows: 1) what each NEO’s award payout would have been if base salaries had not been reduced and Maximum opportunity dollar amounts can be found inaward opportunities had been set at market competitive levels, rather than being reduced (“Hypothetical Award”); 2) the Grants of Plan-Based Awards in Fiscal 2013 table.actual awards paid; and 3) the difference between the two:
2016 Hypothetical Award | 2016 Actual Awards Paid | |||||||||||||
(Based on Unreduced Salaries and Opportunities) | (Based on Reduced Salaries and Opportunities) | Difference | ||||||||||||
(Actual Award | ||||||||||||||
As a % of Base | Hypothetical Award | Reduced | As a % of Base | minus Hypothetical | ||||||||||
NEO | Base Pay ($) | Salary | ($) | Base Pay ($) | Salary | Actual Award ($) | Award) ($) | |||||||
Mr. Lesar | 1,750,000 | 300% | 5,250,000 | 1,630,000 | 250% | 4,075,000 | (1,175,000) | |||||||
Mr. McCollum | 825,000 | 200% | 1,650,000 | 800,250 | 150% | 1,200,375 | (449,625) | |||||||
Mr. Brown | 900,000 | 220% | 1,980,000 | 873,000 | 170% | 1,484,100 | (495,900) | |||||||
Mr. Miller | 1,000,000 | 250% | 2,500,000 | 970,000 | 200% | 1,940,000 | (560,000) | |||||||
Mr. Rainey | 835,000 | 220% | 1,837,000 | 809,950 | 170% | 1,376,915 | (460,085) | |||||||
Mr. Garcia | 550,000 | 150% | 825,000 | 550,000 | 112.50% | 618,750 | (206,250) |
Over the past ten years, the Annual Performance Pay Plan achieved Maximum performance levels sixfive times, achieved Target performance level two times, and fell short of the Threshold performance level two times.three times, resulting in no payout, most recently in 2015.
Long-TermLong-term Incentives
The Committee established the Stock and Incentive Plan to achieve the following objectives:
Our Stock and Incentive Plan provides for a variety of cash and stock-based awards, including nonqualified and incentive stock options, restricted stock and units, performance shares and units, stock appreciation rights, and stock value equivalents. Under the Stock and Incentive Plan, the Committee may, at its discretion, select from among these types of awards to establish individual long-term incentive awards.
Long-term incentives represent the largest component of total executive compensation opportunity. We believe this at-risk based compensation ties executive pay closely to stockholders’ interests.
For 2013,2016, we used a combination of long-term incentive vehicles, including time-based restricted stock or restricted stock units, performance units, and nonqualified stock options. Except where there is a distinction to make between restricted stock and restricted stock units, this Compensation Discussion and Analysis refers to both restricted stock and restricted stock units as “restricted stock”. Operations-basedstock.” In 2016, our operations-based incentives in the form of performance units were targeted 40%to 50% of the long-term incentive value, another 40%35% was delivered through restricted stock, and the remaining 20%15% was delivered in stock options.
Using a mix of incentives allows us to provide a diversified yet balanced long-term incentive program that effectively addresses volatility in our industry and in the stock market, in addition to maintaining an incentive to meet performance goals. Value to be earned by a NEO from stock options and restricted stock are directly tied to our stock price performance and, therefore, directly to stockholder value. Additionally, restricted stock provides a significant retention incentive
while the Performance Unit Program motivates the NEOs to also focus on improving long-term returns on capital employed, measured on both absolute and relative bases.employed. The Committee modified the Performance Unit Program for the 2016 cycle, as described in the 2016 Cycle Performance Unit Program Opportunities for NEOs section below.
In determining the size of long-term incentive awards, the Committee first considers market data for comparable positions and then may adjust the awards upwards or downwards based on the Committee’s review of internal equity. This can result in positions of similar magnitude and pay receiving awards of varying size. The 20132016 restricted stock and stock option awards for each NEO were based primarily on market data and were targeted atto the 75thpercentile of our comparator peer group to recognize our NEOs for delivering strong performance in 2013.market median.
Restricted Stock and Stock Options
Our restricted stock and stock option awards are granted under the Stock and Incentive Plan and are listed in the Grants of Plan-Based Awards in Fiscal 20132016 table.
Restricted stock grants are generally subject to a graded vesting schedule of 20% per year over five years. However, different vesting schedules may be utilized at the discretion of the Committee. Shares of restricted stock receive dividend or dividend equivalent payments.
Stock option awards vest over a three-year graded vesting period with 33 ⅓% 1/3%of the grant vesting each year. All options are priced at the closing stock price on the date the grant is approved by the Committee.
The stock and option award columns in the Summary Compensation Table reflect the aggregate grant date fair value of the restricted stock and option awards for each NEO.NEO granted in December 2016.
HALLIBURTON - 2017 Proxy Statement | 32 |
2014 Cycle Performance UnitsUnit Program Payout for NEOs
The 2014 cycle Performance Unit Program provides NEOs and other selected executives with incentive opportunities based on our consolidated Return on Capital Employed, or ROCE, during a three-year performance periods.period. This program reinforces our objectives for sustained long-term performance and value creation. It also reinforces strategic planning processes and balances short- and long-term decision making.
The program measures ROCE on both an absolute and a relative basis to the results of our comparator peer group companies used for the Performance Unit Program. The three-year performance period aligns this measurement with our and our comparator peer group’s business cycles.
ROCE indicates the efficiency and profitability of our capital investments and is determined based on the ratio of earnings divided by average capital employed. The calculationformula for ROCE is as follows:set forth in the Pay for Performance Analysis section.
The comparator peer group used for the Performance Unit Program is comprised of oilfield equipment and service companies and domestic and international exploration and production companies. This comparator peer group is used for the Performance Unit Program because these companies represent the timing, cyclicality, and volatility of the oil and natural gas industry and provide an appropriate industry group to measure our relative performance against.
The comparator peer group, disclosed in our 2015 proxy statement, was used for the 20132014 cycle of the Performance Unit Program.
The 2014 cycle of the Performance Unit Program remains unchangedended on December 31, 2016. Both the absolute and relative performance measures established at the beginning of the cycle were approved by the Committee. The Committee decided to exclude any Baker Hughes acquisition and integration-related expenses from the comparator peer group used forcalculation because the 2012transaction and the associated costs were not anticipated when the targets were initially set in February 2014. The 2014 cycle of the Performance Unit Program and consists ofyielded an award paid at 75%, which is below the following companies:target opportunity level, as shown in the table below.
2014 Cycle - Performance Matrix
HAL 3-Year Average ROCE | Percentage of Target Incentive Paid | |||
Above 13% | 75% | 100% | 150% | 200% |
11% to 13% | 50% | 75% | 125% | 150% |
9% to < 11% | 0% | 50% | 100% | 125% |
Below 9% | 0% | 0% | 50% | 75% |
Absolute↑ | Less than | 25thto | 50thto | Above |
25th | 49th | 75th | 75th | |
Percentile | Percentile | Percentile | Percentile |
While we achieved average ROCE of 1.64% for the three-year period ending December 31, 2016, which was top quartile performance relative to our performance peers, the ROCE performance as measured on an absolute basis was below the rigorous threshold level of 9% established by the Committee for the 2014 cycle.
The NEOs received payments in 2017 as set forth in the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table and in the related narrative following the table.
The program allows for rewards to be paid in cash, stock, or a combination of cash and stock. Over the past ten years, the program has achieved maximumMaximum performance levels sixfive times, between maximum and target threeTarget levels four times, and below targetThreshold levels one time.time, in 2016.
2016 Cycle Performance Unit Program Opportunities for NEOs
The Committee modified the plan design and set the performance measures on an 100% relative ROCE basis for the 2016 cycle of the Performance Unit Program, with performance measured for the three-year period ending December 31, 2018. Our strategy is to deliver industry-leading returns on capital across the business cycle and making the performance measures 100% relative to the Performance Unit Program peer group is consistent with that strategy. The 2016 Performance Unit Program peer group was changed from the prior year peer group. Cameron International Corporation was removed for the 2016 cycle because it was acquired by another public company.
The performance peer group used for the 2016 Performance Unit Program consists of the following companies:
HALLIBURTON - |
2011 Cycle Performance Unit Program Payout for NEOs
The 2011 cycleAt the end of the three-year performance period, the average ROCE of the company and the Performance Unit Program endedpeer group will be calculated and percentiles will be determined. The table below details the Incentive Opportunity based on December 31, 2013. BothHalliburton’s performance relative to the absolute andComparator Peer Group. If Halliburton’s relative performance measures established atranking is below the beginning of25thpercentile, there will be no payment. If Halliburton’s relative performance ranking is between the cycle were approved by the Committee. The 2011 cycle required a three-year average ROCE above 13% to achieve the Maximum level on an absolute basis,25th, 50th, and a three-year average ROCE above the 75thpercentile ofpercentiles, the ROCE for our comparator peer group to achieve the Maximum level on a relative basis. The three-year average ROCE for our comparator peer group at the 75thpercentile was 10.01%. Our three-year average ROCE for the 2011 cycle was 15.25%. Because our results for this cycle were in excess of the Maximum levels on both an absolute basis and relative to our comparator peer group, the NEOs received payments in 2014 as set forth in the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table and in the related narrative following the table.payout will be adjusted accordingly.
2013 Cycle Performance Unit Program Opportunities for NEOs
Halliburton Ranking vs. Peer Group | 25th Percentile | 50th Percentile | 75th Percentile |
Incentive Opportunity as a % of Target | 25% | 100% | 200% |
Individual incentive opportunities are established based on market references and the NEO’s role within the organization. The Threshold, Target, and Maximum columns under the heading Estimated Future Payouts Under Non-Equity Incentive Plan Awards in the Grants of Plan-Based Awards in Fiscal 20132016 table indicate the potential payout for each NEO under the Performance Unit Program for the 20132016 cycle. The potential payouts are performance driven and completely at risk. Actual payout amounts, if any, will not be determined until the three yearthree-year cycle closes on December 31, 2015.2018.
Supplemental Executive Retirement Plan
The objective of the Supplemental Executive Retirement Plan, or SERP, is to provide a competitive level of pay replacement upon retirement. The current pay replacement target is 75% of final base salary at age 65 with 25 years of service.service, using the highest annual salary during the last three years of employment.
The material factors and guidelines considered in making an allocation include:
The calculation takes into account the following variables:
Several assumptions are made annually and include a base salary increase percentage, qualified and nonqualified plan contributions and investment earnings, and an annuity rate. These factors are reviewed and approved annually by the Committee in advance of calculating any awards.
To determine the annual benefit, external actuaries calculate the total lump sum retirement benefit needed at age 65 from all company retirement sources to produce an annual retirement benefit of 75% of final base salary.highest annual salary during the last three years of employment. Company retirement sources include any qualified benefit plans and contributions to nonqualified benefit plans. If the combination of these two sources does not yield a total retirementbalance that will meet the 75% objective, then contributions may be made annually through the SERP to bring the total benefit up to the targeted level.
To illustrate, assume $10 million is needed at age 65 to produce an annual retirement benefit equal to 75% of final base salary. The participant is projected to have $3 million in his qualified benefit plans at retirement and $4 million in his nonqualified retirement plans at retirement. Since the total of these two sources is $7 million, a shortfall of $3 million results. This is the amount needed to achieve the 75% pay replacement objective. Such shortfall may be offset through annual contributions to the SERP.
Participation in the SERP is limited to the direct reports of the CEO and other selected executives as recommended by the CEO and approved at the discretion of the Committee. However, participation one year does not guarantee future participation. In 2013,2016, the Committee authorized retirement allocations under the SERP to all NEOs as listed in the 20132016 Nonqualified Deferred Compensation table and as included in the All Other Compensation column in the Summary Compensation Table. The average annual amounts allocated over the history of participation are as follows: $396,348 for Mr. Lesar: $303,600;Lesar; $200,643 for Mr. McCollum: $154,455;McCollum; $584,222 for Mr. Brown: $419,333;Brown; $516,600 for Mr. Miller: $334,000;Miller; $484,286 for Mr. Rainey; and $221,000 for Mr. Rainey: $343,750.Garcia.
Messrs. Lesar, Brown, and RaineyAll of the NEOs are fully vested in their respective account balances. Balances for active and terminated participants earn interest at an annual rate of 5%. In 2009, the Committee approved a change to the vesting schedule of the SERP for awards made in 2009 and in future years. The new vesting schedule requires participants to be at least 55 years of age with 10 years of service with us or meet the Rule of 70 (age plus years of service equal 70 or more). This change was made to increase the retentive value of the plan. Messrs. McCollum and Miller do not meet the vesting requirements for awards made in 2009 and subsequent years.10%, respectively.
Other Executive Benefits and Policies
Retirement and Savings Plan
All NEOs participate in the Halliburton Retirement and Savings Plan, which is the defined contribution benefit plan available to all eligible U.S. employees. The matching contributionscontribution amounts we contributed on behalf of each NEO are included in the Supplemental Table: All Other Compensation.Compensation immediately following the Summary Compensation Table.
HALLIBURTON - 2017 Proxy Statement | 34 |
Elective Deferral Plan
All NEOs may participate in the Halliburton Elective Deferral Plan, which was established to provide highly compensated employees with an opportunity to defer earned base salary and incentive compensation in order to help meet retirement and other future income needs.
The Elective Deferral Plan is a nonqualified deferred compensation plan and participation is completely voluntary. Pre-tax deferrals of up to 75% of base salary and/or eligible incentive compensation are allowed each calendar year. Gains or losses are credited based upon the participant’s election from among 12 benchmark investment choices with varying degrees of risk.
In 2013,2016, none of our NEOs participated in this plan. Messrs. Lesar, Brown, and Rainey have account balances from participation in prior years. Messrs. McCollum, Miller, and MillerGarcia are not participants in the plan. Further details can be found in the 20132016 Nonqualified Deferred Compensation table.
Benefit Restoration Plan
The Halliburton Company Benefit Restoration Plan provides a vehicle to restore qualified plan benefits which are reduced as a result of limitations imposed under the Internal Revenue Code or due to participation in other plans we sponsor. It also serves to defer compensation that would otherwise be treated as excessive employee remuneration within the meaning of Section 162(m) of the Internal Revenue Code.
In 2013,2016, all NEOs received awards under this plan in the amounts included in the Supplemental Table: All Other Compensation and the 20132016 Nonqualified Deferred Compensation table.
Perquisites
Country club memberships are limited and provided on an as-needed basis for business purposes only. Messrs.Mr. Brown and Rainey had a club membershipsmembership in 2013.2016.
We do not provide cars to our NEOs. However, for security purposes and so that he can work while in transit to allow for the efficient use of Mr. Lesar’s time,him to meet customer and our needs, a company-leased car and part-time driver are provided for Mr. Lesar for the primary purpose of commuting to and from work.
A taxable benefit for executive financial planning is provided with the amount dependent on the NEO’s level within the company. This benefit does not include tax return preparation. It is paid, only if used, on a reimbursable basis.
We also provided for security at the personal residences of Messrs. Lesar, McCollum, Miller, and MillerGarcia during 2013.2016.
At the direction of theIn accordance with our Board Mr. Lesar, his spouse,approved security protocols, our CEO and President, and their spouses and children, use company aircraft for all travel. The only personal use of the company aircraft in 20132016 for other NEOs is for spousal and dependent travel on select business trips.
Mr. Rainey is an expatriate under our long-term expatriate business practice and as such receives certain assignment allowances including a goods and services differential and host country housing and utilities.
A differential is commonly paid to expatriates in assignment locations where the cost of goods and services is greater than the cost for the same goods and services in the expatriate’s home country. Differentials are determined by Mercer/ORC, Worldwide, a third-party consultant. As part of his expatriate assignment, Mr. Rainey also participates in our tax equalization program, which neutralizes the tax effect of the international assignment and approximates the tax obligation the expatriate would pay in his home country.
Specific amounts for the above mentionedabovementioned perquisites are detailed for each NEO in the Supplemental Table: All Other Compensation immediately following the Summary Compensation Table.Compensation.
Clawback Policy
We have a clawback policy under which we will seek to recoup incentive compensation in all appropriate cases paid to, awarded to, or credited for the benefit of any of our executive officers, which include all the NEOs, if and to the extent that:
• | The amount of incentive compensation was calculated based on the achievement of financial results that were subsequently reduced due to a restatement of our financial results; |
• | The officer engaged in fraudulent conduct that caused the need for the restatement; and |
• | The amount of incentive compensation that would have been awarded or paid to the officer, had our financial results been properly reported, would have been lower than the amount actually paid or awarded. |
Any such officer who receives incentive compensation based on the achievement of financial results that are subsequently the subject of a restatement will not be subject to recoupment unless the officer personally participates in the fraudulent conduct.
In addition, in January 2013 we amended theThe policy to providealso provides that we will seek to recoup incentive compensation in all appropriate cases paid to, awarded to, or credited for the benefit of any of our executive officers, which include all the NEOs, and certain other senior officers, if and to the extent that:
• | It is determined that, in connection with the performance of that officer’s duties, he or she substantially participated in a breach of
Depending on the officer and the circumstances described in the immediately preceding paragraph, the disinterested members of the Board, the disinterested members of the Compensation Committee, the disinterested members of the Nominating and Corporate Governance Committee, and/or the members of a management committee may be
involved in
The policy also provides that, to the extent permitted by applicable law and not previously disclosed in a filing with the SEC, we will disclose in our proxy statement the circumstances of any recoupment arising under the policy or that there has not been any recoupment pursuant to the policy for the prior calendar year. There was no recoupment under the policy in
Stock Ownership Requirements
We have stock ownership requirements for our executive officers, which include all the NEOs, to further align their interests with our stockholders.
After the five-year stock ownership period, as described above, executive officers who have not met their minimum ownership requirement must retain 100% of the net shares acquired upon restricted stock vesting until they achieve their required ownership level. During this time period, any stock option exercises must be an exercise and hold. As of December 31,
Hedging and Pledging Our executive officers are prohibited from hedging activities related to Halliburton securities and the pledging of Halliburton securities, except that hedging activities in connection with or related to a bona fide charitable donation may be approved in advance at the sole discretion of the General Counsel. Elements of Post-Termination Compensation and Benefits
Termination events that trigger payments and benefits include normal or early retirement,
Impact of Regulatory Requirements on Compensation
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation paid to the CEO or any of the four other most highly compensated officers to the extent the compensation exceeds $1 million in any year. Qualifying performance-based compensation is not subject to this limit if certain requirements are met.
Our policy is to utilize available tax deductions whenever appropriate and consistent with our compensation philosophy. When designing and implementing executive compensation programs, we consider all relevant factors, including tax deductibility of compensation. Accordingly, we have attempted to preserve the federal tax deductibility of compensation in excess of $1 million a year to the extent doing so is consistent with our executive compensation objectives; however, we may from time to time pay compensation to our executives that may not be fully deductible.
Our Stock and Incentive Plan enables qualification of stock options, stock appreciation rights, and performance share awards as well as short- and long-term cash performance plans under Section 162(m).
To the extent required by Section 304 of the Sarbanes-Oxley Act of 2002, we will make retroactive adjustments to any cash or equity-based incentive compensation paid to the CEO and CFO where the payment was predicated upon the achievement of certain financial results that were subsequently the subject of restatement. When and where applicable, we will seek to recover any amount determined to have been inappropriately received by the CEO and CFO.
We have reviewed and discussed the Compensation Discussion and Analysis with Company management and, based on such review and
THE COMPENSATION COMMITTEE William E. Albrecht James R. Boyd Milton Carroll Murry S. Gerber Robert A. Malone Debra L. Reed
The following tables set forth information regarding the CEO, CFO, and our three other most highly compensated executive officers at Halliburton, and a retired executive for the fiscal year ended December 31,
Salary. Stock Option Awards. Non-Equity Incentive Plan
about these programs can be found in the Compensation Discussion and Analysis under Short-term (Annual) Incentives for the Halliburton Annual Performance Pay Plan and under Long-term Incentives—2014 Cycle Performance
The Threshold, Target, and Maximum amounts for the
The
The
The amounts paid to the NEOs for the Change in Pension Value and NQDC Earnings. Halliburton Company Supplemental Executive Retirement Plan Above-Market
NEOs earned above-market earnings for their balances associated with the Halliburton Company Supplemental Executive Retirement Plan as follows: Halliburton Company Benefit Restoration Plan Above-Market
NEOs earned above-market earnings for their balances associated with the Halliburton Company Benefit Restoration Plan as follows: Halliburton Company Elective Deferral Plan Above-Market
Messrs.Lesar, Brown, and Rainey earned above-market earnings for balances associated with the Halliburton Company Elective Deferral Plan as follows:
All Other
Supplemental Table: All Other Compensation
The following table details the components of the All Other Compensation column of the Summary Compensation Table for
Financial Halliburton Halliburton Giving Halliburton Political Action Restricted Stock Halliburton Retirement and Savings Plan Employer 2016.
Halliburton Company Benefit Restoration Halliburton Company Supplemental Executive Retirement All
GRANTS OF PLAN-BASED AWARDS IN FISCAL
The following table represents amounts associated with the
As indicated by footnote (1), the opportunities for each NEO under the
As indicated by footnote (2), the opportunities for each NEO under the
All restricted stock and nonqualified stock option awards are granted under the Stock and Incentive Plan. The awards listed under All Other Stock Awards: Number of Shares of Stock or Units and under All Other Option Awards: Number of Securities Underlying Options were awarded to each NEO on the date indicated by the Compensation Committee. The annual restricted stock grants awarded to the NEOs in
Nonqualified stock options granted in
The Estimated Future Payouts Under Equity Incentive Plan Awards columns have been omitted because awards under the Performance Unit Program and Halliburton Annual Performance Pay Plan are expected to be paid in cash and are disclosed under Estimated Future Payouts Under Non-Equity Incentive Plan Awards.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table represents outstanding stock option and restricted stock awards for our NEOs as of December 31,
The nonqualified stock option awards listed under Option Awards include outstanding awards, exercisable and unexercisable, as of December 31,
The restricted stock awards under Stock Awards are the number of shares not vested as of December 31,
The Equity Incentive Plan Awards columns are omitted as we do not utilize this type of award at this time.
The narratives under the Summary Compensation Table and the Grants of Plan-Based Awards in Fiscal
The following table represents stock options exercised and restricted shares that vested during fiscal year
The value realized for vested restricted stock awards was determined by multiplying the fair market value of the shares (closing price of our common stock on the NYSE on the vesting date) by the number of shares that vested. Shares vested on various dates throughout the year; therefore, the value listed represents the aggregate value of all shares that vested for each NEO in
The
Halliburton Company Supplemental Executive Retirement
Allocations under the SERP can be made once a year and are approved by the Compensation Committee at their discretion. The material factors and guidelines considered in making an allocation include:
SERP amounts shown in the Registrant Contributions in Last Fiscal Year column are included in the Summary Compensation Table under All Other Compensation.
Halliburton Company Benefit Restoration
In accordance with the plan document, participants earn monthly interest at the 120% AFR rate, provided the interest rate shall be no less than 6% per annum or greater than 10% per annum. Because the 120% AFR rate was below the 6% minimum interest threshold, plan participants earned interest at an annual rate of 6% in
Benefit Restoration amounts shown in the Registrant Contributions in Last Fiscal Year column are included in the Summary Compensation Table under All Other Compensation.
Halliburton Company Elective Deferral Participants may elect to defer up to 75% of their annual base salary and up to 75% of their incentive compensation into the plan. Deferral elections must be made on an annual basis, including the type and timing of distribution. Plan earnings are based on the NEO’s choice of up to 12 investment options with varying degrees of risk, including the risk of loss. Investment options may be changed by the NEO daily. The amounts shown in the Aggregate Earnings in Last Fiscal Year column reflect the aggregate of all gains and losses on outstanding balances in
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
Employment Contracts
Messrs. Lesar, McCollum, Brown, Miller, and Rainey have employment agreements with us. Under the terms of Mr. Lesar’s agreement, a termination for cause is a termination for (i) gross negligence or willful misconduct in the performance of his duties and responsibilities, or (ii) a conviction of a felony. In the event we terminate Mr. Lesar for any reason other than termination for cause, we are obligated to pay Mr. Lesar a severance payment equal to (i) the value of any restricted shares that are forfeited because of termination, and (ii) five times his annual base salary.
Under the terms of the agreements with Messrs. McCollum, Brown, Miller, and Rainey, the reasons for termination of employment (other than death) are defined as follows:
If the employment of Messrs. McCollum
As noted, Mr. McCollum voluntarily terminated employment with us on March 7, 2017. If the employment of Messrs. Miller or Rainey terminates for any reason other than death, retirement (either at age 65 or voluntarily prior to age 65), permanent disability, voluntary termination, or termination for cause,
Change-In-Control Arrangements
We do not maintain individual change-in-control agreements or provide for excise tax gross-ups on any payments associated with a change-in-control. Some of our compensation plans, however, contain change-in-control provisions, which could result in payment of specific benefits.
Under the Stock and Incentive Plan, in the event of a change-in-control, the following will occur automatically:
Under the Annual Performance Pay Plan:
Under the Performance Unit Program:
Under the Employee Stock Purchase Plan, in the event of a change-in-control, unless the successor corporation assumes or substitutes new stock purchase rights:
POST-TERMINATION OR CHANGE-IN-CONTROL PAYMENTS
The following tables and narratives represent the impact of certain termination events or a change-in-control on each element of compensation for NEOs as of December 31,
Early
Early Retirement (Without Approval).The following actions will occur for a NEO’s various elements of compensation:
Early Retirement (With Approval).The following actions will occur for a NEO’s various elements of compensation:
Normal
Termination (For Cause).Should we terminate the NEO for cause, such as violating
Termination (Without Cause).Should a NEO with an employment agreement be terminated without cause by us, such as termination at our convenience, then the provisions of the NEO’s employment agreement related to severance payments, annual performance pay plan (if applicable), and lapsing of stock restrictions would apply. In the case of Messrs. McCollum, Brown, Miller, and Rainey, payments for these items are conditioned on a release agreement being executed by the NEO. The following actions will occur for the NEO’s various elements of compensation:
EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain information, as of December 31,
SEC rules implementing the Dodd-Frank Act provide for a vote at least every six years by our stockholders to determine how frequently we should submit to our stockholders an advisory vote on the compensation of our named executive officers. This proposal was last submitted to stockholder at our 2011 Annual Meeting and the vote was in favor of an annual advisory vote on executive compensation. In response, our Board adopted an annual vote. Our Board of Directors has determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternative for Halliburton and, therefore, our Board of Directors recommends that you vote to approve our practice of having an annual advisory vote on executive compensation. Our Board of Directors presently believes that providing stockholders with an advisory resolution on executive compensation every year enhances stockholder communication by providing another avenue to obtain information on investor sentiment about our executive compensation philosophy, policies, and practices. We understand that our stockholders may have different views as to the appropriate frequency for the advisory vote, and our Board of Directors will take the outcome of the vote into consideration in determining with what frequency to hold future advisory votes on executive compensation. You may cast your vote on your preferred voting frequency by choosing the option of one year, two years, or three years or abstain from voting when you vote in response to the resolution set forth below: “RESOLVED, that the option of every one year, two years, or three years that receives the highest number of votes cast for this resolution will be the frequency preferred by stockholders for Halliburton to hold a stockholder vote to approve the compensation of Halliburton’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion.” The option of one year, two years, or three years that receives the highest number of votes cast by stockholders will be the frequency for the advisory vote on executive compensation that has been selected by stockholders. However, this vote is advisory and not binding on the Board of Directors or Halliburton. The Board may decide that it is in the best interests of our stockholders and Halliburton to hold an advisory vote on executive compensation more or less frequently than the option approved by our stockholders. The Board of Directors recommends a vote FOR the option of holding the advisory vote on executive compensation once every year. † † † † † † † † †
Introduction The Halliburton Company Stock and Incentive Plan was last approved by stockholders at the 2015 annual meeting and reserved 28,966,834 shares for issuance thereunder.
The
General In order to give Halliburton the flexibility to responsibly address its future equity compensation needs, Halliburton is requesting that stockholders approve the amendment and restatement which adds 19,000,000 shares to the Stock and Incentive Plan. The
If the amendment and restatement of the Stock and Incentive Plan is approved by stockholders, the aggregate number of shares of Halliburton common stock that will be available for issuance under the Stock and
The
In each of the situations above, such shares are no longer available for awards under the Stock and Incentive Plan. For example, shares withheld from an award to satisfy tax withholding obligations are no longer available for awards under the Stock and Incentive Plan, and a stock appreciation right or option will be counted in full against the number of shares available for issuance under the Stock and Incentive Plan, regardless of whether a net settlement occurs resulting in a fewer number of shares issued than are covered by the stock appreciation right or option. The number of stock option shares or stock appreciation rights, singly or in combination, together with shares or share equivalents under performance awards granted to any individual who is an employee in any one calendar year, shall not in the aggregate exceed 1,000,000. The cash value determined as of the date of grant of any performance award not denominated in common stock granted to any individual who is an employee for any one calendar year shall not exceed $30,000,000. The amendment and restatement of the Stock and Incentive Plan provides that no non-management director may receive awards in any one calendar year with a fair market value determined as of the date of grant in excess of $600,000. In the event of any recapitalization, reorganization, merger, consolidation, combination, exchange, stock dividend, stock split, extraordinary dividend or divestiture (including a spin-off), or any other change in the corporate structure or shares of common stock occurring after the date of the grant of an award, the Compensation Committee shall make appropriate adjustments to the number and price of shares of common stock or other consideration subject to such awards and the award limits set forth in the preceding paragraph. THE STOCK AND INCENTIVE PLAN Types of Awards The Stock and Incentive Plan provides for the grant of any or all of the following types of awards:
Any stock option granted in the form of an incentive stock option must satisfy the requirements of Section 422 of the Internal Revenue Code. Awards may be made to the same person on more than one occasion and may be granted singly, in combination, or in tandem as determined by the Compensation Committee. To date, only awards of nonqualified stock options, restricted stock, restricted stock units, and cash-based performance awards have been made under the Stock and Incentive Plan. Term The Stock and Incentive Plan has an indefinite term.
Administration The Board has appointed the Compensation Committee to administer the Stock and Incentive Plan. Subject to the terms of the Stock and Incentive Plan, and to any approvals and other authority as the Board may reserve to itself from time to time, the Compensation Committee, consistent with the terms of the Stock and Incentive Plan, will have authority to:
Eligibility A broad group of our employees and employees of our affiliates are eligible to participate in the Stock and Incentive Plan. The selection of participants from eligible employees is within the discretion of the Compensation Committee. Non-management directors are eligible to participate in the Stock and Incentive Plan. As of January 1, 2017, approximately 13,000 employees (including employees and executive officers) and 11 non-management directors were eligible for awards under the Stock and Incentive Plan as determined by the Compensation Committee. Stock Options Under the Stock and Incentive Plan, the Compensation Committee may grant awards in the form of stock options to purchase shares of common stock. The Compensation Committee will determine the number of shares subject to an option, the manner and time of the option’s exercise, and the exercise price per share of stock subject to the option. Options may not become exercisable in less than three years from the date of grant, provided that options may become exercisable in equal installments over the three-year period after the grant date. The term of an option may not exceed ten years. We do not receive any consideration for granting stock options. The exercise price of a stock option will not be less than the fair market value of the common stock on the date the option is granted. Repricing of stock options and reloading of stock options are prohibited unless prior stockholder approval is obtained. The Compensation Committee will designate each option as a nonqualified or an incentive stock option. The option exercise price may, at the discretion of the Compensation Committee, be paid by a participant in cash, shares of common stock, or a combination of cash and common stock. Except as set forth below with regard to specific corporate changes, no option will be exercisable within six months of the date of grant. Stock Appreciation Rights The Stock and Incentive Plan also authorizes the Compensation Committee to grant stock appreciation rights either independent of, or in connection with, a stock option. The exercise price of a stock appreciation right will not be less than the fair market value of the common stock on the date the stock appreciation right is granted. If granted with a stock option, exercise of stock appreciation rights will result in the surrender of the right to purchase the shares under the option as to which the stock appreciation rights were exercised. Upon exercising a stock appreciation right, the holder receives for each share for which the stock appreciation right is exercised, an amount equal to the difference between the exercise price and the fair market value of the common stock on the date of exercise. Payment of that amount may be made in shares of common stock, cash, or a combination of cash and common stock, as determined by the Compensation Committee. Stock appreciation rights may not become exercisable in less than three years from the date of grant, provided that stock appreciation rights may become exercisable in equal installments over the three-year period after the grant date. The term of a stock appreciation right grant may not exceed ten years. Repricing of stock appreciation rights and reloading of stock appreciation rights are prohibited unless prior stockholder approval is obtained. We do not receive any consideration for granting stock appreciation rights.
Restricted Stock The Stock and Incentive Plan provides that shares of common stock subject to specific restrictions may be awarded to eligible individuals as determined by the Compensation Committee. The Compensation Committee will determine the nature and extent of the restrictions on the shares, the duration of the restrictions, and any circumstance under which restricted shares will be forfeited. The restriction period may not be less than three years from the date of grant, provided that shares of restricted stock may vest in equal installments over the three-year period after the grant date. During the period of restriction, recipients will have the right to receive dividends and the right to vote the shares. Restricted Stock Units The Stock and Incentive Plan authorizes the Compensation Committee to grant restricted stock units. A restricted stock unit is a unit evidencing the right to receive one share of common stock or an equivalent cash value equal to the fair market value of a share of common stock. The Compensation Committee will determine the nature and extent of the restrictions on the restricted stock units, the duration of the restrictions, and any circumstance under which restricted stock units will be forfeited. The restriction period may not be less than three years from the date of grant, provided that restricted stock units may vest in equal installments over the three-year period after the grant date. The Compensation Committee may provide for the payment of dividend equivalents during the period of restriction, but recipients will not have the right to receive actual dividends or to vote the shares underlying the restricted stock units. Performance Awards The Stock and Incentive Plan permits the Compensation Committee to grant performance awards to eligible individuals. Performance awards are awards that are contingent on the achievement of one or more performance measures. Such performance measures may be established and administered in accordance with the requirements of Section 162(m) of the Internal Revenue Code. Performance awards may be settled in cash or stock, as determined by the Compensation Committee. The number of shares or share equivalents under performance awards, singly or in combination, together with the number of stock option shares or stock appreciation rights, granted to any individual in any one calendar year, shall not in the aggregate exceed 1,000,000. The cash value (determined as of the date of grant) of any performance award that is not denominated in stock granted to any one participant in a calendar year may not exceed $30,000,000. The performance criteria that may be used by the Compensation Committee in granting performance awards consist of objective tests based on the following:
The Compensation Committee may select one criterion or multiple criteria for measuring performance. The measurement may be based on our overall corporate performance, based on subsidiary or business unit performance, or based on comparative performance with other companies or other external measures of selected performance criteria. The Compensation Committee will also determine the length of time over which performance will be measured and the effect of a recipient’s death, disability, retirement, or other termination of service during the performance period.
Stock Value Equivalent Awards The Stock and Incentive Plan permits the Compensation Committee to grant stock value equivalent awards to eligible individuals. Stock value equivalent awards are rights to receive the fair market value of a specified number of shares of common stock, or the appreciation in the fair market value of the shares, over a specified period of time, pursuant to a vesting schedule, all as determined by the Compensation Committee. Payment of the vested portion of a stock value equivalent award shall be made in cash, based on the fair market value of the common stock on the payment date. The Compensation Committee will also determine the effect of a recipient’s death, disability, retirement, or other termination of service during the applicable period. Amendment The Stock and Incentive Plan provides that the Board may at any time terminate or amend the Stock and Incentive Plan. However, the Board may not, without approval of the stockholders, amend the Stock and Incentive Plan to effect a “material revision” of the Stock and Incentive Plan, where a “material revision” includes, but is not limited to, a revision that:
No amendment or termination of the Stock and Incentive Plan shall, without the consent of the optionee or participant, alter or impair rights under any options or other awards previously granted. The summary of the Stock and Incentive Plan provided above is a summary of the principal features of the Stock and Incentive Plan. This summary, however, does not purport to be a complete description of all of the provisions of the Stock and Incentive Plan. It is qualified in its entirety by references to the full text of the Stock and Incentive Plan. A copy of the Stock and Incentive Plan can be found in Appendix B to this proxy statement. Change-in-Control In the event of a corporate change, unless an award document otherwise provides, as of the corporate change effective date, the following will occur automatically:
Plan Benefits All awards to directors, executive officers, and employees are made at the discretion of the Compensation Committee. Therefore, the benefits and amounts that will be received or allocated under the Stock and Incentive Plan, as amended and restated, are not determinable at this time. Federal Income Tax Treatment The following summarizes the current U.S. federal income tax consequences generally arising for awards under the Stock and Incentive Plan. A participant who is granted an incentive stock option does not realize any taxable income at the time of the grant or at the time of exercise, but in some circumstances may be subject to an alternative
minimum tax as a result of the exercise. Similarly, we are not entitled to any deduction at the time of grant or at the time of exercise. If the participant makes no disposition of the shares acquired pursuant to an incentive stock option before the later of two years from the date of grant and one year from the date of exercise, any gain or loss realized on a subsequent disposition of the shares will be treated as a long-term capital gain or loss. Under these circumstances, we will not be entitled to any deduction for federal income tax purposes. If the participant fails to hold the shares for that period, the disposal is treated as a disqualifying disposition. The gain on the disposition is ordinary income to the participant to the extent of the difference between the option price and the fair market value on the exercise date. Any excess is long-term or short-term capital gain, depending on the holding period. Under these circumstances, we will be entitled to a tax deduction equal to the ordinary income amount the participant recognizes in a disqualifying disposition. A participant who is granted a nonqualified stock option does not have taxable income at the time of grant, but does have taxable income at the time of exercise. The income equals the difference between the exercise price of the shares and the market value of the shares on the date of exercise. We are entitled to a corresponding tax deduction for the same amount. The grant of a stock appreciation right will produce no U.S. federal tax consequences for the participant or us. The exercise of a stock appreciation right results in taxable income to the participant, equal to the difference between the exercise price of the shares and the market price of the shares on the date of exercise, and a corresponding tax deduction to us. A participant who has been granted an award of restricted shares of common stock or an award of restricted stock units will not realize taxable income at the time of the grant. When the restrictions lapse, the participant will recognize taxable income in an amount equal to the excess of the fair market value of the shares or cash received at that time over the amount, if any, paid for the shares. We will be entitled to a corresponding tax deduction. Dividends on restricted stock and dividend equivalents, if any, on restricted stock units paid to the participant during the restriction period will also be compensation income to the participant and will be deductible as compensation expense by us. A participant who has been granted a performance award will not realize taxable income at the time of the grant, and we will not be entitled to a tax deduction at that time. A participant will realize ordinary income at the time the award is paid equal to the amount of cash paid or the value of shares delivered, and we will be entitled to a corresponding tax deduction. The grant of a stock value equivalent award produces no U.S. federal income tax consequences for the participant or us. The payment of a stock value equivalent award results in taxable income to the participant equal to the amount of the payment received, valued with reference to the fair market value of the common stock on the payment date. We are entitled to a corresponding tax deduction for the same amount. We may deduct any taxes required by law to be withheld in connection with any award. Section 409A of the Internal Revenue Code generally provides that any deferred compensation arrangement which does not meet specific requirements regarding (i) timing of payouts, (ii) advance election of deferrals, or (iii) restrictions on acceleration of payouts, will result in immediate taxation of any amounts deferred to the extent not subject to a substantial risk of forfeiture. Failure to comply with Section 409A may result in the early taxation (plus interest) to the holder of deferred compensation and the imposition of a 20% penalty on the holder on such deferred amounts included in the holder’s income. In general, to avoid a Section 409A violation, amounts deferred may only be paid out on separation from service, disability, death, a change-in-control, an unforeseen emergency (other than death), each as defined under Section 409A, or at a specified time. Furthermore, the election to defer generally must be made in the calendar year prior to performance of services, and any provision for accelerated payout, other than for the reasons specified above, may cause the amounts deferred to be subject to early taxation and to the imposition of the excise tax. Based on current guidance, we expect that we will be able to structure future awards in a manner that complies with Section 409A. General/Vote Required The closing price of our common stock on March 20, 2017, as traded on the NYSE, was $50.64 per share. The affirmative vote of the holders of a majority of the shares of Halliburton’s common stock represented at the Annual Meeting and entitled to vote on the matter is needed to approve the proposal. The Board of Directors recommends a vote FOR the approval of the proposed amendment and restatement of the Halliburton Company Stock and Incentive Plan. † † † † † † † † †
Involvement in Certain Legal Proceedings There are no legal proceedings to which any of our Directors, or executive officers, or any associate of any of our Directors or executive officers, is a party adverse to us or has a material interest adverse to us. Advance Notice Procedures Under our By-laws, no business, including nominations of a person for election as a director, may be brought before an Annual Meeting unless it is specified in the notice of the Annual Meeting or is otherwise brought before the Annual Meeting by or at the direction of the Board or by a stockholder who meets the requirements specified in our By-laws and has delivered notice to us (containing the information specified in the By-laws). To be timely, a stockholder’s notice for matters to be brought before the Annual Meeting of Stockholders in Proxy Solicitation Costs We are soliciting the proxies accompanying this proxy statement, and we will bear the cost of soliciting those proxies. We have retained Stockholder Proposals for the Stockholders interested in submitting a proposal for inclusion in the proxy materials for the Annual Meeting of Stockholders in
As of the date of this proxy statement, we know of no business that will be presented for consideration at the Annual Meeting other than the matters described in this proxy statement. If any other matters should properly come before the Annual Meeting for action by stockholders, it is intended that proxies will be voted on those matters in accordance with the judgment of the person or persons voting the proxies.
By Authority of the Board of Directors,
Executive Vice President, Interim Chief Financial Officer, Secretary and April
Corporate Governance Guidelines
Revised effective as of
The Board of Directors of Halliburton Company (the “Company”) has adopted these Guidelines to assist it in the exercise of its responsibilities. These Guidelines
The
Board Structure
Halliburton Company Stock and Incentive Plan As Amended and Restated February 8, 2017
The purpose of the Halliburton Company Stock and Incentive Plan (the “Plan”) is to provide a means whereby Halliburton Company, a Delaware corporation (the “Company”), and its Subsidiaries may attract, motivate and retain highly competent employees and to provide a means whereby selected employees can acquire and maintain stock ownership and receive cash awards, thereby strengthening their concern for the long-term welfare of the Company. The Plan is also intended to provide employees with additional incentive and reward opportunities designed to enhance the profitable growth of the Company over the long-term. A further purpose of the Plan is to allow awards under the Plan to Non-management Directors in order to enhance the Company’s ability to attract and retain highly qualified Directors. Accordingly, the Plan provides for granting Incentive Stock Options, Options which do not constitute Incentive Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Unit Awards, Performance Awards, Stock Value Equivalent Awards, or any combination of the foregoing, as is best suited to the circumstances of the particular employee or Non-management Director as provided herein. The Plan was established February 18, 1993 as the Halliburton Company 1993 Stock and Incentive Plan, has been
DIRECTIONS TO THE HALLIBURTON ANNUAL MEETING OF STOCKHOLDERS
The Halliburton North Belt Facility is located on the North Sam Houston Parkway (Beltway 8 Tollway) south feeder between Aldine Westfield and JFK Boulevard.
3000 N. Sam Houston Parkway East
The main entrance to the North Belt facility will be on your right, about halfway between Aldine Westfield and JFK Blvd.
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