UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES
EXCHANGE ACT OF 1934
(Amendment No. )
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SCHLUMBERGER N.V. (SCHLUMBERGER LIMITED)
(Name of Registrant as Specified in Its Charter)
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Notice of 20202022 Annual General Meeting of Stockholders
April 1, 2020
10:00 a.m. Curaçao time
Avila Beach Hotel, Penstraat 130, Willemstad, Curaçao
ITEMS OF BUSINESS
ITEMS OF BUSINESS | |||
1. | Election of | ||
2. | |||
3. | |||
4. | Ratification of the appointment of |
Wednesday, April 6, 2022
10:00 a.m. Curaçao time
Curaçao Marriott Beach Resort, John F Kennedy Boulevard, 3, Piscadera Bay, Willemstad, Curaçao
RECORD DATE
February 12, 20209, 2022
HOW TO CAST YOUR VOTE
Please refer to the enclosed proxy materials or to the information forwarded by your bank, broker, or other nominee to see which voting methods are available to you. Stockholders with shares registered in their names with Schlumberger’s transfer agent may authorize a proxy:
BY INTERNET www.proxypush.com/SLB | BY TELEPHONE (866) 240-5191 | |||
BY MAIL Sign, date, and mail your proxy card |
If you are a beneficial holder of Schlumberger common stock, you should follow any instructions provided by your bank, broker, or other nominee. See “Meeting Information” in this proxy statement.
PROXY VOTING
Your vote is very important. Whether or not you plan to attend the annual general meeting in person, please (i) sign, date, and promptly return the enclosed proxy card in the enclosed envelope, or (ii) grant a proxy and give voting instructions by telephone or internet, so that you may be represented at the meeting. Voting instructions are provided on your proxy card or on the voting instruction form provided by your broker.
Brokers cannot vote foron Items 1 orand 2 without your instructions.
February 21, 2020IMPORTANT INFORMATION REGARDING MEETING ATTENDANCE
By orderDepending on the level of COVID-19 protocols in effect at the Board of Directors,
Alexander C. Juden
Secretary
Important Notice Regardingtime, your ability to attend the Availability of Proxy Materials for the2022 Annual General Meeting of Stockholders (“2022 AGM”) in person may be restricted or may require additional safeguards, which could include face coverings, proof of vaccination, proof of a negative COVID-19 test result within a specified number of days, and maintaining appropriate social distancing. Please review www.proxydocs.com/SLB for any updates to Be Held on April 1, 2020:the “Meeting Information” section of this proxy statement prior to traveling.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL GENERAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 6, 2022:
This proxy statement, along withNotice and Proxy Statement, our Annual Report on Form 10-K for the fiscal year ended December 31, 20192021, and our 20192021 Annual Report to Stockholders are each available free of charge on our website at http:https://investorcenter.slb.com.investorcenter.slb.com and www.proxydocs.com/SLB.
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General
This proxy statement is furnishedsummary highlights information contained elsewhere in connection with the solicitation by the Board of Directors (the “Board”) of Schlumberger Limited (Schlumberger N.V.) of proxies to be voted at its 2020 annual general meeting of stockholders, which will be held at the Avila Beach Hotel, Penstraat 130, Willemstad, Curaçao, on Wednesday, April 1, 2020 beginning at 10:00 a.m., Curaçao time, and at any postponement(s) or adjournment(s) thereof.
In this Proxy Statement, we may also refer to Schlumberger Limited and its subsidiaries as “we,” “our,” “the Company” or “Schlumberger.”
To be admitted to the meeting, stockholders of record and beneficial owners as of the close of business on the record date for the meeting, February 12, 2020, must present a passport or other government-issued identification bearing a photograph and, for beneficial owners, proof of ownership as of the record date, such as the Notice of Internet Availability, top half of the proxy card or voting instruction card that was sent to you with this proxy statement.
The mailing date of this proxy statement, is February 21, 2020. Business at the meeting will be conducted in accordance with the procedures determined by the Chairmanbut it does not contain all of the meeting and will be limited to matters properly broughtinformation that you should consider. You should read this entire proxy statement carefully before the meeting by or at the direction of our Board or by a stockholder.
Wevoting. In addition, we are providing our 20192021 Annual Report to Stockholders concurrently with this proxy statement. You should refer to its contents in considering agenda Item 3.
Proxy MaterialsAll references in this proxy statement to “the Company,” “Schlumberger,” “we,” or “our” are Availableto Schlumberger Limited (Schlumberger N.V.) and its subsidiaries.
Website references throughout this document are provided for convenience only, and the content on the Internetreferenced websites is not incorporated by reference into this document.
This year we are using an SEC rule that allows us to use the internet as the primary means of furnishing proxy materials to stockholders. We are sending a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”)statement is first being made available to our stockholders with instructions on how to access the proxy materials online or request a printed copy of the materials.about February 24, 2022.
Stockholders may follow
Our proxy materials are also availableThe 2022 AGM will be held at http://investorcenter.slb.com.
Record Date; Proxiesthe Curaçao Marriott Beach Resort, John F Kennedy Boulevard, 3, Piscadera Bay, Willemstad, Curaçao, on Wednesday, April 6, 2022 beginning at 10:00 a.m., Curaçao time.
Each stockholder of record at the close of business on the February 9, 2022 (the “record date February 12, 2020,”) is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on with respect to each share registered in thesuch stockholder’s name. A stockholder of record is a person or entity who heldIf your shares on that dateare registered in itsyour name onwith Schlumberger’s transfer agent, you may vote in person at the records2022 AGM, or you may authorize a proxy to vote your shares by one of Computershare Trust Company, N.A. (“Computershare”)the following methods:
BY INTERNET www.proxypush.com/SLB | BY TELEPHONE (866) 240-5191 | BY MAIL Sign, date, and mail your proxy card |
If you are a beneficial owner of Schlumberger common stock (i.e., Schlumberger’s stock transfer agent. Persons who heldyou hold your shares on the record date through a broker, bank, or other nominee are referred to as beneficial owners.nominee), you should follow the voting instructions provided by your bank, broker, or other nominee.
Shares cannotIf you plan to attend the 2022 AGM in person, see “Meeting Information” beginning on page 68 for the requirements for admission to the meeting. Whether or not you plan to attend the 2022 AGM in person, please (i) sign, date, and promptly return the enclosed proxy card in the enclosed envelope, or (ii) grant a proxy and give voting instructions by telephone or internet, so that you may be votedrepresented at the meeting unless the owner of record is present in person or is represented by proxy. Schlumberger is incorporated in Curaçao and, as required by Curaçao law, meetings of stockholders are held in Curaçao. Because many stockholders cannot personally attend the meeting, it is necessary that a large number be represented by proxy.meeting.
Shares Outstanding on Record DateVoting Matters
Item | Our Board’s Recommendation | Vote Required for Election / Approval | Page Reference (for more detail) | |||
1 | Election of 11 director nominees. | FOR each nominee | Majority of votes cast for the nominee | 11 | ||
2 | Advisory “say-on-pay” approval of our executive compensation. | FOR | Majority of votes cast | 30 | ||
3 | Approval of our consolidated balance sheet at December 31, 2021, our consolidated statement of income for the year ended December 31, 2021, and the declarations of dividends by our Board in 2021. | FOR | Majority of votes cast | 65 | ||
4 | Ratification of the appointment of PricewaterhouseCoopers LLP (“PwC”) as our independent auditor for 2022. | FOR | Majority of votes cast | 66 | ||
On February 12, 2020, there were 1,388,162,459 shares of Schlumberger common stock outstanding and entitled to vote.
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Quorum
2021 was an exceptional year for Schlumberger, in which we demonstrated the strength and agility of our emergent strategy—rooted in operational execution, superior returns, and capital discipline. After two years of extraordinary industry, market, and social uncertainty, the Schlumberger team delivered a year of remarkable financial results, surpassing all of our 2021 financial targets and closing the year with excellent momentum.
HoldersHighlights of at least one-halfour 2021 financial performance, reflecting the success of the outstanding shares entitling the holders thereof to vote at the meeting must be present in person or by proxy to constitute a quorum for the taking of any action at the meeting.
Abstentionsour returns-focused strategy and proxies submitted on your behalf by brokers, banks or other holders of record that do not indicate a vote because they do not have discretionary voting authority and have not received instructions from the beneficial owner of the shares as to how to vote on a proposal (so-called “broker non-votes”) will be considered as present for quorum purposes. If a quorum is not present at the meeting, the Board may call a second general meeting of stockholders, at which the quorum requirement will not apply.
Votes Required to Adopt Proposals
To be elected, director nominees must receive a majority of votes cast (the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee). Approval of each of the other matters on the agenda also requires the affirmative vote of the majority of votes cast.
Important Voting Information for Beneficial Owners
If your Schlumberger shares are held for you in street name (i.e.you own your shares through a brokerage, bank or other institutional account), you are considered the beneficial owner of those shares, but not the record holder. This means that you vote by providing instructions to your broker rather than directly to Schlumberger. Unless you provide specific voting instructions, your broker is not permitted to vote your shares on your behalf, except on Item 3 and Item 4.
Effect of Abstentions and Broker Non-Votes
Brokers holding shares must vote according to specific instructions they receive from the beneficial owners of those shares. If brokers do not receive specific instructions, brokers may in some cases vote the shares in their discretion. However, the New York Stock Exchange (the “NYSE”) precludes brokers from exercising voting discretion on other proposals without specific instructions from the beneficial owner, as follows:execution, include:
$4.925 billion | $2.997 billion |
Abstentions and broker non-votes are not considered as votes cast and will not be counted in determining the outcome of the vote on the election of directors or on any of the other proposals.
How to Vote
Stockholders with shares registered in their names with Computershare may authorize a proxy:
$22.9 billion | ||||
14% increase over 2020 | 110% increase over 2020 | H2 2021 revenue increased 18% | ||
Adjusted EBITDA Margin 21.5% | Net Debt Reduced by $2.8 billion | Earnings per Share (GAAP) $1.32 | ||
Expanded 320 basis points | Net debt to adjusted EBITDA Lowest net debt level since 2016 | Earnings per share, excluding | ||
The internet On the strength of these financial results, driven by excellent operational leverage as a result of our Performance Strategy and telephone voting facilities for stockholders of record will close at 11:59 p.m. Easternstrong working capital management, we were able to reduce our net debt to adjusted EBITDA ratio from 3.2x to 2.2x year-on-year. At the same time, on Tuesday, March 31, 2020. The internet we achieved double-digit pretax operating margins in North America—the highest levels since 2014—and telephone voting procedures have been designedwe expanded our international pretax operating margins to authenticate stockholders and to allow you to vote your shares and to confirm that your instructions have been properly recorded.the highest levels since 2018.
A numberThe success of banks2021 was built upon the continued growth of our strategic business pillars—strengthening our core, digital, and brokerage firms participatenew energy—to deliver high performance sustainably.
In our Core business, we fully operationalized our returns-focused strategy through our new Division and Basin organization and high-graded business portfolio, which have significantly increased our operating leverage. As a result of our differentiated capabilities, exceptional execution, and technology performance, we enhanced our market positions and won significant project awards during the year. With increased operating leverage and our outstanding customer performance, we ended the year marking six consecutive quarters of pretax segment operating margin expansion.
In Digital, we expanded market access and accelerated the adoption of our platform, which brings our customers AI capabilities and powerful digital tools to reduce cycle time, improve performance, and lower carbon intensity. We built partnerships to achieve comprehensive cloud access globally, collaborated with AI innovators to deploy machine-learning and AI solutions, and enabled digital operations through the automation of key workflows in programs thatwell construction and production operations.
In Schlumberger New Energy, we continued to advance the development of clean energy technologies and low-carbon projects. In 2021, we invested in stationary energy storage—expanding our total addressable market—and progressed our ventures in hydrogen, lithium, geoenergy, and a suite of carbon capture, utilization, and storage (“CCUS”) opportunities, including our bioenergy carbon capture and storage (“BECCS”) project.
2021 also permit beneficial stockholderssaw continued excellence in Safety and Service Quality, as we successfully navigated the challenges of the ongoing pandemic to direct their voteensure continued execution and performance for our customers. Our total recordable injury frequency showed a 31% improvement since 2019, and we also improved our automotive accident rate by 30% compared to 2019. Furthermore, our service quality performance was the internet or telephone. If you arebest on record, despite increasing activity coupled with ongoing pandemic and supply chain challenges.
This was also a beneficial owner whose shares are held in an account at pivotal year for Schlumberger’s commitment to Sustainability. We announced our comprehensive 2050 net-zero commitment inclusive of Scope 3 emissions—a bank or brokerage firm that participates in such a program, you may directfirst for the vote of those shares by the internet or telephone by following the instructionsenergy services sector—and we launched our Transition Technology* portfolio to focus on the voting form.decarbonization of oil and gas operations. In addition, Schlumberger earned an upgraded AA rating from MSCI, and won an ESG Top Performer award from Hart Energy, recognizing our sustainability efforts, our enhanced disclosures, and our commitment to apply our technologies and capabilities toward helping the world sustainably meet future energy demand.
All shares entitledIn summary, 2021 was a defining and transformative year for Schlumberger. We continued to votestrengthen our core portfolio, while also enhancing our sustainability leadership, advancing our digital journey, and represented by properly executed proxies received prior to the meeting and not revoked will be voted at the meeting in accordance with your instructions. If you are a stockholder with shares registered in your name with Computershare and you submit a properly executed proxy card but do not direct how to vote on each item, the persons named as proxies will vote as the Board recommends on each proposal.expanding our new energy portfolio.
By providing your voting instructions promptly, you may save usAs we enter 2022, Schlumberger is well prepared to seize the expensemultiyear growth cycle ahead of us. We have entered this cycle in a second mailing.position of strength, having reset our operating leverage, expanded peer-leading margins across multiple quarters, and aligned our technology and business portfolio with the new industry imperatives. We are truly excited about the outlook for Schlumberger—for continued financial outperformance, technology leadership, and growth opportunities in digital and clean energy innovation—to enable the world to unlock access to energy for the benefit of all.
Changing Your Vote or Revoking Your Proxy
(1) | Net income attributable to Schlumberger on a GAAP basis was $1.881 billion. Adjusted EBITDA reflects earnings before interest, taxes, depreciation and amortization, excluding charges and credits. For a reconciliation of adjusted EBITDA to net income attributable to Schlumberger on a GAAP basis, see Appendix A. |
(2) | Cash flow from operations was $4.651 billion. For a reconciliation of free cash flow to cash flow from operations, see Appendix A. |
If you are a stockholder of record, you can change your vote or revoke your proxy at any time by timely delivery of a properly executed, later-dated proxy (including an internet or telephone vote) or by voting by ballot at the meeting. If you hold shares through a broker, bank or other holder of record, you must follow the instructions of your broker, bank or other holder of record to change or revoke your voting instructions.
* | Mark of Schlumberger. |
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Peter Coleman Former Chief Executive Officer | Patrick de La Chevardière Former Chief Financial Officer | Miguel Galuccio Chairman and | Olivier Le Peuch Chief Executive Officer | |||
Samuel Leupold Former Chief Executive Officer | Tatiana Mitrova Fellow | Maria Moræus Hanssen Former Deputy Chief Executive Officer | Vanitha Narayanan Former Chairman and | |||
Mark Papa Former Chairman and | Jeff Sheets Former EVP and | Ulrich Spiesshofer Former President and |
Independent Chairman of the Board, separate from CEO No staggered board; all directors are elected annually Fully independent Audit, Compensation, and Nominating and Governance committees Newly formed New Energy and Innovation Committee, comprised solely of independent directors, to Regular executive sessions of non-employee directors Majority vote standard for uncontested director elections Annual performance evaluations of Board, its committees, and individual directors 100% Board attendance in 2021 | Director nominees reflect the gender, racial and ethnic, cultural and geographical diversity of our global operations, as well as diverse experience, skills, and tenure Demonstrated commitment to Board refreshment Proactive stockholder engagement No hedging or pledging of our stock by executives or directors Robust director stock ownership guidelines (5x annual cash retainer) and executive stock ownership guidelines No lobbying or making financial or in-kind contributions to political parties or candidates Comprehensive risk assessment process designed to identify and manage enterprise-wide risks |
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Our Board of Directors (the “Board”) is committed to thoughtful board refreshment and ongoing board succession planning. All of our director nominees joined the Board within the last five years, bringing diverse and evolving experience and leadership skills in areas that are strategically important to the Company. The chart below reflects some of the key skills and experience of the non-employee directors who joined the Board over the past three years, offering continuing expertise in our core industry and operations, while enhancing expertise in financial and capital management, sustainability, new energy, and digital technologies and transformation. For further information on each director nominee, see “Election of Directors” beginning on page 11 of this proxy statement.
Global Perspectives. The diversity of our workforce has long been one of Schlumberger’s greatest strengths. Our employees represent more than 160 nationalities and have experience in more than 120 countries. We recognize that diversity and inclusion are not just the right thing to do—they are essential to attracting the best talent from around the world and enabling creativity and innovation to drive business success.
As a global company focused on creating value for our customers, we believe it is critical for our people to communicate with our customers in their native languages and to share the values of the people in the countries where we work. Furthermore, our diverse workforce positions us to effectively deliver services and products that meet the unique expectations and requirements of our stakeholders, including our customers, suppliers and stockholders. We have continued to maintain a workforce nationality mix aligned to the revenue derived from the countries in which we work, as reflected in the charts below.
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In addition, our geographically diverse Board and 10-member executive team (as of December 31, 2021) collectively represented 15 nationalities across six continents, as reflected on the map below.
Gender. Gender balance is another important pillar of our diversity and inclusion strategy. We are committed to lead our industry in gender diversity and are on track to reach our interim milestone of having women comprise 25% of our salaried employee population by 2025. In 2021, we set our next milestone to continue our progress—for women to comprise 30% of our salaried employee population by 2030. This target includes executive roles and all other salaried positions.
As of December 31, 2021, women made up 30% of our executive team and approximately 22% of management-level roles. Approximately 18% of our total workforce and 23% of our salaried employee population were women at year-end 2021. Women also represented approximately 48% of our 2021 new hires for salaried roles with science, technology, engineering and mathematics (STEM) backgrounds. For the 2022 AGM, women represent 27% of our director nominees.
2021 WOMEN IN LEADERSHIP | |
27% | 30% |
Director Nominees | Executive Team |
22% | 48% |
Management-Level Roles | New STEM Hires |
Race and Ethnicity. As a truly global company with a rich legacy of national and cultural diversity, it is important that we do not limit our definitions of racial and ethnic diversity to the common classifications used in the United States, both for our executive team and for the Board. For further discussion regarding the racial and ethnic diversity of our Board, see “Election of Directors—Director Qualifications and Diversity” beginning on page 11 of this proxy statement.
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As more fully discussed in the “Compensation Discussion and Analysis” section of this proxy statement:
• | 25% Absolute FCF Margin Performance Share Units (“PSUs”): We replaced our previous free cash flow conversion rate metric, which was measured over a two-year period, with a metric that measures free cash flow margin over a three-year performance period. | |
• | 25% Relative TSR PSUs: We introduced PSUs based on a three-year relative TSR metric as a new element of our LTI program, and we set the target performance goal above median at the 60th percentile. | |
• | 25% Relative ROCE PSUs: We increased the rigor of the performance targets for our three-year ROCE (as defined below) metric by removing Weatherford from the ROCE comparator group, as Weatherford had underperformed the rest of the comparator group in recent years. | |
• | 25% Time-based RSUs: We introduced three-year, time-based restricted stock units (“RSUs”) as a new element of our LTI program, to promote stability and retention of our executive team. |
• | NEO Cash Compensation Structure Unchanged ─ We held base salaries flat for all NEOs, and we did not increase the target annual cash incentive opportunity, as a percentage of base pay, for any of our NEOs. We also continued to tie 70% of our NEOs’ target annual cash incentive opportunity to full-year adjusted EBITDA and cash flow generation goals to ensure our executives were focused on profitable, sustainable growth. | |
• | CEO Compensation Program Unchanged ─ The target value of our CEO’s 2021 total direct compensation places him at approximately the 50th percentile among CEOs in our general industry peer group. We did not increase any element of our CEO’s 2021 target total direct compensation as compared to 2020. For details regarding our CEO’s compensation, see “Compensation Discussion and Analysis—CEO Pay Summary” on page 34. | |
• | ESG Objectives for All NEOs ─ Every NEO had at least one strategic personal objective related to sustainability, new energy, or health, safety and environmental (“HSE”) goals. |
Below is a summary of some of our executive compensation best practices and policies.
WHAT WE DO | WHAT WE DON’T DO | |
At Risk Pay ─ A significant portion of our executives’ compensation is at risk, based on a mix of absolute and relative financial metrics. Performance-Based Cash Incentive Awards ─ At least 70% of our executives’ target annual cash incentive opportunity is based on achieving rigorous quantitative Company financial goals. Clawback Policy ─ Our compensation clawback policy and the terms of our LTI grants allow our Board to recover performance-based cash and equity awards in specified instances. Robust Stock Holding Requirements ─ Our CEO is required to own an amount of Schlumberger stock valued at six times (6x) his annual base salary; our EVPs must own at least three times (3x) their annual base salaries; and all other executive officers must own at least two times (2x) their annual base salaries. Mandatory Retention of Shares ─ Executives must retain 50% of the net shares they acquire upon the exercise of stock options and the vesting of PSUs and RSUs, until they achieve the required ownership level under our stock ownership guidelines. Annual Peer Compensation Review ─ We annually review all officer compensation opportunities against our peer groups. | No gross-ups on excise taxes. No repricing or exchanging options without stockholder approval. No hedging or pledging of Schlumberger stock by executive officers or directors. No LTI or annual cash incentive payouts if we fail to achieve preestablished minimum performance criteria. No excessive perquisites to our executive officers. No executive pension or insurance plans exclusively for executive officers. No change-in-control agreements, and no automatic acceleration of equity awards upon a change in control. PSUs and RSUs do not accrue or pay dividends or dividend equivalents or have voting rights prior to vesting. We do not dilute our stockholders with excessive employee equity grants. Our 2021 “burn rate,” or stock awards granted as a percentage of common shares outstanding, was only 0.58%. |
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This proxy statement includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current facts made in this document are forward-looking. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain, and actual results or outcomes could differ materially for a variety of reasons. Risks and uncertainties that could cause our actual results to differ significantly from management’s expectations are described in our 2021 Annual Report on Form 10-K.
Forward-looking and other statements in this proxy statement regarding our environmental, social, governance (“ESG”) and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the Securities and Exchange Commission (“SEC”). In addition, historical, current, and forward-looking ESG and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
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All ofour directors are elected annually at our annual general meeting of stockholders. Our stockholders are requested to elect nineWe recommend that you vote “FOR” each of the 11 director nominees, to the Board, eachbe elected to hold officeserve until the next annual general meeting of stockholders andour 2023 AGM (or until a director’s successor is elected and qualified or until a director’stheir death, resignation or removal.removal). Each of the nominees is nowcurrently a director and was previously elected by our stockholders at the 2019 annual general meeting of stockholders, except for Mr. Olivier Le Peuch, who was appointed by the Board to serve as a director effective August 1, 2019, and Messrs. Patrick de La Chevardière and Jeff W. Sheets, each of whom was appointed by the Board to serve as a director effective October 28, 2019, based upon the recommendations of the Nominating and Governance Committee of the Board.director.
Peter L.S. Currie, the Board’s lead independent director,Henri Seydoux will not stand for re-election at our annual general meeting of stockholders. Our Board extends gratitude to Mr. CurrieSeydoux for ninehis 13 years of service as a member of the Board. The Board expects to elect a successor lead independent director from among the independent directors elected at the 2020 annual general meeting. Nikolay Kudryavtsev and Indra Nooyi also will not stand for re-election at our annual general meeting of stockholders. Our Board extends gratitude to Dr. Kudryavtsev for 13 years of service and to Ms. Nooyi for five years of service as members of the Board.
All of the nominees for election have consented to being named in this proxy statement and to serve if elected. If any nominee is unable or unwilling to serve, the Board may designate a substitute nominee. If the Board designates a substitute nominee, proxies may be voted for that substitute nominee. The Board knows of no reason why any nominee willwould be unable or unwilling to serve if elected.
At the 2022 AGM, votes may not be cast for a greater number of persons than the number of director nominees named in this proxy statement. Shares represented by properly executed proxies will be voted, if authority to do so is not withheld, for the election of each of the nine11 nominees named below.
At our 2016 annual general meeting of stockholders, our stockholders voted to fix the number of directors constituting the Board at 12, as permitted under our Articles of Incorporation. However, because Mr. Currie, Dr. Kudryavtsev and Ms. Nooyi are not standing for re-election, only nine directors have been nominated for election at the 2020 annual general meeting of stockholders. The Board believes that it is advisable and in the best interest of our stockholders for the authorized number of directors constituting the Board to remain at 12. This will allow the Board to conduct a search for, and add, up to three additional directors prior to the 2021 annual general meeting.
At this annual general meeting, votes may not be cast for a greater number of persons than the number of director nominees named in this proxy statement.
Required Vote
Each director nominee must receive a majority of the votes cast to be elected.
If you hold your shares in street name, please be aware that brokers, banks and other holders of record do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker, bank or other holder of record how to vote on this proposal, they will deliver a non-vote on this proposal.“—Our Director Nominees” below.
The Board of Directors Recommends a VoteFOR |
The Board believes that each director nominee possesses the qualities and experience that the Nominating and Governance Committee believes that director nominees should possess, as described in detail belowhave the following characteristics:
• be persons of integrity and honesty,
• be able to exercise sound, mature and independent business judgment in the section entitled “Corporate Governance—Director Nominations” beginning on page 14. The Board seeks out, and the Board consistsbest interests of individuals whoseour stockholders as a whole,
• be recognized leaders in business or professional activity,
• have background and experience that will complement those of other Board members. Themembers,
• be willing and able to actively participate in Board and committee meetings and related activities,
• be able to work professionally and effectively with other Board members and Schlumberger management,
• be available to remain on the Board long enough to make an effective contribution, and
• have no material relationship with competitors, customers or other third parties that could present realistic possibilities of conflicts of interest or legal issues.
In the judgment of the Board, all director nominees for electionare able to execute their duties as members of the Board and to devote the necessary time and attention to the Board, together with biographical information furnishedCompany, as required by each of them and information regarding each nominee’s director qualifications, are set forth on the following pages.
Thereour Corporate Governance Guidelines. In addition, there are no family relationships among any executive officers and directors of the Company.
Board Diversity Policy
The Nominating and Governance Committee also supports the Company’s diversity ambitions that its Board should reflect the gender, racial and ethnic, cultural and geographical diversity of our global operations. The Board seeks out women and nationally, racially and ethnically diverse candidates to include in the pool of qualified candidates from which potential director nominees are chosen. As reflected in the summary chart on page 13, our 11 director nominees represent ten nationalities across five continents, and three directors are women.
Race and Ethnicity
Given our multinational footprint and culture, we endeavor to have a global perspective on diversity, including racial and ethnic diversity. This perspective includes respecting local legal requirements regarding the tracking and use of personal data pertaining to under-represented populations. Certain countries have data privacy laws prohibiting the collection or disclosure of race and ethnicity classification data, reflecting historical concerns that such data could be used to foster, rather than eliminate, discrimination. In addition, local definitions of race and ethnicity and related classifications, as well as the definition of under-represented groups, vary from country to country.
As a result, U.S.-centric racial and ethnic classifications as used for EEO-1 data collection purposes are applicable only to our three directors who are U.S. citizens. For our U.S. directors, we provide on page 13 race and ethnicity disclosures based on classifications commonly used in the United States. For all other directors, we asked if they wished to voluntarily disclose their ethnic or racial background and, if so, how they self-identify based on the classifications most relevant to their home countries. We provide self-identifications for non-U.S. directors in the summary chart on page 13. In keeping with international data privacy laws, we have not included racial or ethnic information for director nominees who did not authorize disclosure.
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Retirement Age
Under our Corporate Governance Guidelines, non-employee directors are eligible to be nominated or renominated to the Board up to their 70th birthday, and executive directors are eligible to be nominated or renominated up to their 65th birthday, after which directors may no longer be nominated or renominated to the Board. Our Board may waive this policy on a case-by-case basis on the recommendation of the Nominating and Governance Committee if it deems a waiver to be in the best interests of the Company.
Under the leadership of Mr. Papa, the Board’s independent Chairman, the Board has undergone significant refreshment and transition over the past several years. As discussed above under “Proxy Executive Summary—Board Refreshment,” five new directors joined the Board in 2020 and 2021, expanding our Board’s overall expertise in the areas of sustainability, new energy, and digital technologies and transformation. In addition, the average tenure of our director nominees is approximately two years. In light of these circumstances, and in order to allow for effective onboarding of the Board’s newest members, the Board waived the retirement age policy for Mr. Papa upon the recommendation of the Nominating and Governance Committee, because the Board believes that having Mr. Papa continue to serve as independent Chairman is in the best interests of our Company and our stockholders.
Summary of Director Nominee Skills and Characteristics
The chart on the following page summarizes the qualifications of our director nominees, including knowledge, skills, experiences and other attributes that the Board believes are relevant to their Board and committee service. Each director nominee possesses numerous other skills and experience not identified in the following chart, as further detailed in their biographies beginning on page 14 of this proxy statement. We believe our director nominees provide a well-rounded set of expertise to assist in effective oversight of Schlumberger management.
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Summary of Director Nominee Skills and Characteristics
Substantial Knowledge, Skills and Experience | ||||||||||||
Current or former chief executive officer | ||||||||||||
Energy industry and operations | ||||||||||||
Finance and accounting | ||||||||||||
Science, technology and engineering | ||||||||||||
Energy transition and sustainability | ||||||||||||
Digital innovation | ||||||||||||
Digital transformation | ||||||||||||
Information security | ||||||||||||
Strategy development & implementation | ||||||||||||
International business | ||||||||||||
Risk management | ||||||||||||
Economic modeling | ||||||||||||
Health, safety and environmental | ||||||||||||
Mergers and acquisitions | ||||||||||||
Academic relations | ||||||||||||
Government, regulatory & public policy | ||||||||||||
Demographics | ||||||||||||
Nationality | ||||||||||||
Argentina | ||||||||||||
Australia | ||||||||||||
France | ||||||||||||
Germany | ||||||||||||
Israel | ||||||||||||
Norway | ||||||||||||
Russia | ||||||||||||
Switzerland | ||||||||||||
United Kingdom | ||||||||||||
United States | ||||||||||||
Racial and Ethnicity Characteristics for U.S. Directors | ||||||||||||
Asian or Indian | ||||||||||||
Black or African American | ||||||||||||
Hispanic or Latino | ||||||||||||
Native American | ||||||||||||
White or Caucasian | ||||||||||||
Non-U.S. Directors Electing to Self-Identify Racial or Ethnicity Characteristics | ||||||||||||
White or Caucasian | ||||||||||||
Two or More Races or Ethnicities | ||||||||||||
Gender | M | M | M | M | M | F | F | F | M | M | M | |
Other Attributes | ||||||||||||
Independence | ||||||||||||
Tenure (in ~ years as of 2022 AGM) | <1 | 2 | 5 | 2 | 1 | 3 | 1 | <1 | 3 | 2 | <1 |
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The nominees for election to the Board, together with information regarding each nominee’s qualifications, are set forth below.
Peter Coleman,
Independent Director
Former CEO and Managing Director, Director since 2021 Age: 61 Other Current Public Boards • None Former Public Directorships • Woodside Petroleum Ltd. | Nationality Australia Board Committees • Nominating and Governance • Finance Other Experience and Education • MBA, Deakin University • Bachelor of Engineering, Monash University • Chair of the Australia-Korea Foundation |
PETER COLEMAN is the former Chief Executive Officer, Executive Director and Managing Director of Woodside Petroleum Ltd., Australia’s largest independent gas producer, having served in that role from 2011 until his retirement in June 2021. Prior to joining Woodside, Mr. Coleman spent 27 years with the ExxonMobil group in a variety of roles, including Vice President Asia Pacific from 2010 to 2011 and Vice President Americas from 2008 to 2010. Since 2012, he has been an adjunct professor of corporate strategy at the University of Western Australia Business School. He has also served as chairman of the board of Infinite Blue Energy, an Australian green hydrogen renewable energy company, since August 2021.
Relevant Skills and Expertise
Mr. Coleman brings to the Board decades of experience in the oil and gas industry, including as the former CEO and Chairman of Australia’s largest independent gas producer. The Board benefits from his expertise in strategic planning, as well as his extensive business experience in Australia and Asia, regions that are strategically important to the Company’s operations.
Patrick de La Chevardière,
Independent Director
Former Chief Financial Officer,
Director since 2019
Age:
Other Current Public • Michelin (Compagnie Générale des Établissements Michelin SCA)
Former Public Directorships • None |
France
Board Committees • Audit, Chair • Finance
Other Experience and Education •
• Diplôme d’Ingénieur, an engineering degree, École Centrale de Paris | |||
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PATRICK DE LA CHEVARDIÈRE is the former Chief Financial Officer of Total S.A., a French multinational integrated oil and gas company. He served as Total’s CFO and as a member of its executive committee from 2008 until his retirement in August 2019. Prior to that, he served in a variety of finance and operational roles with Total over his 37-year career, including as Deputy Chief Financial Officer from 2003 to 2008, Vice President, Asia for Refining & Marketing from 2000 to 2003, and Vice President, Operations and Subsidiaries from 1995 to 2000. Since June 2020, Mr. de La Chevardière has also served as a member and chairman of the audit committee of the supervisory board of Michelin, a French multinational tire manufacturer. He also previously served on the boards of directors of two other French-based public companies, Sanofi-Aventis and Compagnie Générale de Géophysique.
Relevant Skills and Expertise
Mr. de La Chevardière brings to the Board financial and industry experience as a former CFO of a large multinational oil and gas company. The Board benefits from his customer-focused perspective on the oilfield services industry, and from his experience across the entire oil and gas value chain, from exploration, operations, production, trading and marketing to refining and new energies.
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Miguel Galuccio,
Non-Executive Director
Chairman and Chief Executive Officer,
Director since 2017
Age:
Other Current Public • Vista Oil & Gas
Former Public Directorships Held During the Past • |
Argentina and United Kingdom
Board Committees • Finance, Chair
Other Experience and Education •
Bachelor of Science in Petroleum Engineering, • Schlumberger training and expertise • Latin America energy policy expertise | |||
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MIGUEL GALUCCIO is the Chairman and Chief Executive Officer of Vista Oil & Gas, an oil and gas company incorporated in Mexico, and has held that position since July 2017. From 2012 to 2016, he was the Chairman and Chief Executive Officer of YPF, Argentina’s national oil company. From 1999 to 2012, he was an employee of Schlumberger and held a number of international positions, his last being President, Schlumberger Production Management. Prior to his employment at Schlumberger, he served in various executive positions at YPF and its subsidiaries from 1994 to 1999, including YPF International.
Relevant Skills and Expertise
Mr. Galuccio brings to the Board leadership and operational expertise from his experience as former chairman and chief executive officer of Argentina’s national oil company, which under his leadership became the world’s largest producer of shale oil outside of North America. He has valuable insight into the domestic and international energy policies of Argentina, Mexico, Venezuela and Ecuador, as well as extensive experience negotiating with Schlumberger customers in Latin America, Russia and China. He also remains active in the oil and gas exploration and production industry as a chief executive officer of an oil and gas company.
Olivier Le Peuch,
Schlumberger Chief Executive Officer
Chief Executive Officer,
Director since 2019
Age:
Other Current Public •None
Former Public Directorships • None |
France
Board Committees • None
Other Experience and Education • Master’s Degree in Microelectronics, Bordeaux University of Science • Schlumberger training and expertise | |||
OLIVIER LE PEUCH has been the Chief Executive Officer and a director of Schlumberger since August 2019. He was the Company’s Chief Operating Officer from February 2019 to July 2019. Prior to that, he served in a variety of global management positions, including Executive Vice President, Reservoir and Infrastructure from May 2018 to February 2019, President of the Cameron Group from February 2017 to May 2018, President of Schlumberger Completions from 2014 to January 2017, and Vice President of Engineering, Manufacturing and Sustaining from 2010 to 2014. Earlier in his career, Mr. Le Peuch was GeoMarket Manager for the North Sea and President of Software Integrated Solutions. He has been with the Company since 1987 and began his career as an electrical engineer.
Relevant Skills and Expertise
Mr. Le Peuch brings to the Board a unique operational perspective and thorough knowledge of the Company’s operational activities worldwide as a result of his service in various global leadership positions in the Company. The Board believes that Mr. Le Peuch’s service as the Company’s Chief Executive Officer is an important link between management and the Board, enabling the Board to perform its oversight function with the benefit of his perspectives on the Company’s business and operations.
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Samuel Leupold,
Independent Director
Former Chief Executive Officer, Director since 2021 Age: 51 Other Current Public Boards • Enel SpA Former Public Directorships Held During the Past Five Years • None | Nationality Switzerland Board Committees • Audit • Finance • New Energy and Innovation Other Experience and Education • Master’s Degree in Mechanical Engineering, Swiss Federal Institute of • MBA, INSEAD (Fontainebleau) • Energy transition and | |||
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SAMUEL LEUPOLD is the former chief executive officer of Ørsted Wind Power A/S, the principal subsidiary of Ørsted AS, a Danish renewable energy company, where he led Ørsted Wind Power to become the world’s leading developer, operator and owner of offshore wind assets during his tenure from 2013 to March 2018. Since May 2019, Mr. Leupold has served as an independent senior advisor supporting international clients in the energy and infrastructure sectors through his consultancy firm, Leupold Advisory. In addition, since May 2020, Leupold has been an independent non-executive member of the board at Enel SpA, one of Europe’s largest utilities focused on sustainability and the energy transition.
Relevant Skills and Expertise
Mr. Leupold brings to the Board operational experience as the former chief executive officer of a renewable energy company, as well as significant experience in energy transition and sustainability. The Board benefits from his expertise on these issues as the Company seeks to implement its net-zero ambition and its strategy to deploy sustainable technologies to provide access to energy for the benefit of all.
Tatiana Mitrova,
Independent Director
Director since 2018
Age:
Other Current Public • PAO Novatek
Former Public Directorships Held During the Past • Unipro PJSC |
Russia and Israel
Board Committees • Audit • Finance
Other Experience and Education • PhD in Economics, Moscow State University • Senior Visiting Research Fellow at Oxford Institute for Energy Studies
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TATIANA MITROVA has served as a fellow at the Center on Global Energy Policy at the School of International and Public Affairs at Columbia University since May 2016. From February 2017 to December 2020, she served as Executive Director of the Energy Centre of the Moscow School of Management SKOLKOVO, a graduate business school, where she continues to serve as a professor. She has also been the Head of Research in the Oil and Gas Department in the Energy Research Institute of the Russian Academy of Sciences since 2011; a visiting professor at the Paris School of International Affairs, part of the Paris Institute of Political Studies, since 2014; and an assistant professor at the Gubkin Russian State University of Oil and Gas since 2008. Dr. Mitrova was a Visiting Researcher at the King Abdullah Petroleum Studies and Research Center from 2016 to April 2017. Dr. Mitrova has been a member of the board of directors of PAO Novatek, a Russian independent natural gas producer, since April 2020, and is chairman of its strategy committee and a member of its audit and compensation and nomination committees. She was previously a member of the board of directors of Unipro PJSC from 2014 to December 2017.
Relevant Skills and Expertise
Dr. Mitrova brings to the Board valuable expertise regarding energy market dynamics and the various factors affecting supply and demand for Schlumberger’s products and services, as well as expertise relating to sustainability, decarbonization and the new energy economy. The Board values Dr. Mitrova’s knowledge of Russian and Central Asian energy markets, as well as her ties to the academic community. Her global economic perspective provides insight into emerging markets and trends, and is useful for the development of the Company’s global business strategy.
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Maria Moræus Hanssen,
Independent Director
Director since
Age:
Other Current Public • Alfa Laval AB •
Former Public Directorships Held During the Past • |
Board Committees • New Energy and Innovation, Chair • Compensation • Nominating and Governance
Other Experience and Education • Former CEO of multiple E&P companies
•
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MARIA MORÆUS HANSSEN is the former Deputy CEO and Chief Operating Officer of Wintershall Dea GmbH, a German-based oil and gas producer, having served in that role from May 2019 to December 2019 following the merger between DEA Deutsche Erdoel AG (DEA) and Wintershall Holding GmbH. Prior to that, she served as CEO of DEA and chair of its management board from January 2018 until April 2019. Before joining DEA, she served as CEO of ENGIE E&P International SA and Head of the E&P Business Unit for the ENGIE Group in Paris from 2015 to December 2017. Ms. Moræus Hanssen served in various management and operations roles at Aker from 2008 to 2013, Statoil (now Equinor) from 2007 to 2008, and Norsk Hydro from 1992 to 2007. She has served on the boards of Scandinavian public companies Alfa Laval AB since April 2019 and Scatec Solar ASA since April 2020, and also serves in director and chair roles on various private company, municipal and non-profit boards. She previously served as deputy chairman and audit committee chair of Yara International from 2015 to May 2019.
Relevant Skills and Expertise
Ms. Moræus Hanssen brings to the Board leadership and operational expertise as the former CEO of several European E&P companies. The Board values her insight into the domestic and international energy policies of Norway, Germany, France and other countries that are strategically important to Schlumberger, as well as her experience addressing risks related to the energy transition.
Vanitha Narayanan,
Independent Director
Former Chairman and
Director since
Age:
Other Current Public • ReNew Power •
Former Public Directorships Held • |
United States of America
Board Committees •Compensation
•
Other Experience and Education •
MBA, University of Houston •
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VANITHA NARAYANAN is the former Chairman and Managing Director of IBM India, a subsidiary of IBM, a multinational technology corporation. Over her career spanning three decades at IBM, she held senior executive positions with responsibility for digital businesses in the United States, Asia-Pacific and India regions, including as Chairman of IBM India from January 2017 to March 2018 and Managing Director from 2013 to 2016. During her tenure, IBM India was one of IBM’s fastest-growing growth markets. Most recently, Ms. Narayanan served as Managing Director for a strategic telecommunications client of IBM’s from April 2018 until her retirement in 2020, leading a strategic 5G business partnership. Since August 2020, she has served as a director of ReNew Power, one of the largest renewable power companies in India, where she serves as a member of the audit committee. She has also been a director of HCL Technologies since July 2021, where she serves as a member of the nominating and remuneration committee.
Relevant Skills and Expertise
Ms. Narayanan brings to the Board a wealth of global leadership and technology experience, particularly in the Asia-Pacific and India geographies. The Board values Ms. Narayanan’s digital expertise leading global technology businesses, as the Company continues to implement its digital strategy.
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Mark Papa,
Independent Chairman of the Schlumberger Board
Director since
Age:
Other Current Public • None
Former Public Directorships Held During the Past • • |
United States of America
Board Committees •
Nominating and Governance, Chair
Other Experience and Education •Former chairman and CEO of two public oil and gas companies
• Bachelor of Science in •
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MARK PAPA is the former Chief Executive Officer and Chairman of the Board of Centennial Resource Development, Inc., an independent oil and natural gas producer, having served in that role from 2016 until his retirement in March 2020. From 2015 to December 2019, Mr. Papa served as an advisor to Riverstone Holdings, a private equity firm specializing in energy investments. Prior to that, Mr. Papa was Chairman and CEO of EOG Resources, an independent oil and gas company, from 1999 to 2013, and he served as a member of EOG’s board of directors from 1999 until 2014. He worked at EOG for 32 years in various management positions. Mr. Papa also served on the board of Oil States International, an international field services company, from 2001 to August 2018.
Relevant Skills and Expertise
Mr. Papa brings decades of experience in the oil and gas industry and a unique insight into the North American market. He is a pioneer in the U.S. shale oil industry and built EOG Resources into one of the most profitable U.S. shale companies. He provides the Board with key insights on the U.S. shale market and Schlumberger’s customers in North America. He also brings extensive leadership experience to the Board through his experience as CEO and chairman of multiple public companies. Mr. Papa has been involved in succession planning, compensation, employee management and the evaluation of acquisition opportunities, and provides the Board with valuable insight regarding the challenges and opportunities facing Schlumberger in these areas.
Jeff Sheets,
Independent Director
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Former EVP and Chief Financial Officer,
Director since 2019
Age:
Other Current Public •Enerplus Corporation •Westlake Chemical Corporation
Former Public Directorships Held During the Past • None |
United States of America
Board Committees •Compensation, Chair • Audit
Other Experience and Education •
MBA, University of Houston • Bachelor of Science in Chemical Engineering, Missouri University of Science and Technology | |||
JEFF SHEETS is the former EVP and Chief Financial Officer of ConocoPhillips Company, a public international oil and gas company, having served in that role from 2010 until his retirement in 2016. Prior to that, Mr. Sheets served at ConocoPhillips and its predecessor companies for more than 36 years in a variety of finance, engineering and strategic planning roles. Since December 2017, Mr. Sheets has served on the board of directors of Enerplus Corporation, a Canadian oil and gas company, where he chairs the audit and risk management committee and is a member of the compensation committee. He also has served since January 2018 on the board of directors of Westlake Chemical Corporation, an international manufacturer and supplier of petrochemicals and related products, where he chairs the nominating and governance committee and is a member of the audit, compensation and corporate risk committees. Mr. Sheets is a member of the Board of Trustees at the Missouri University of Science and Technology.
Relevant Skills and Expertise
Mr. Sheets brings to the Board strong financial and operational expertise as a former chief financial officer of a large upstream oil and gas company. The Board benefits greatly from Mr. Sheets’ expertise in developing and implementing corporate strategy in the oil and gas industry, his significant finance and mergers and acquisitions experience, and his experience as an independent director of two other public companies.
Governance Framework — Highlights
Relevant Skills and Expertise
Mr. Sheets brings to the Board Independence; Committees Structure
Majority Voting; Stockholder Rights
Executive Stock Ownership Guidelines
We have executive stock ownership guidelines, which are designed to align executivefinancial and stockholder interests. Foroperational expertise as a descriptionformer chief financial officer of the guidelines applicable to our executive officersa large upstream oil and other senior members of management, see “Compensation Discussiongas company. The Board benefits from Mr. Sheets’ expertise in developing and Analysis—Other Aspects of Our Executive Compensation Framework—Executive Stock Ownership Guidelines” on page 46.
Prohibition on Hedging or Pledging of Schlumberger Stock
Our directors and executive officers are prohibited from using any strategies or products (such as derivative securities or short-selling techniques) to hedge, directly or indirectly, against the potential changesimplementing corporate strategy in the value of Schlumberger common stock. In addition, our directorsoil and executive officers,gas industry, as well as his significant finance, capital management and other key employees, are prohibited from holding Schlumberger securities in a margin account or pledging Schlumberger securities as collateral for a loan. Our insider trading policy strongly discourages, but does not prohibit, other employees from engaging in speculative transactions, including hedging or other financial mechanisms, holding Schlumberger securities in a margin account or pledging Schlumberger securities.allocation, and mergers and acquisitions experience.
Policy Against Lobbying and Political Contributions
We have a strong culture of being politically neutral, and have a long-standing policy against lobbying or making financial or in-kind contributions to political parties or candidates, even when permitted by law. This policy, as set forth in our code of conduct, entitled The Blue Print and The Blue Print in Action (our “Code of Conduct”), prohibits the use of Company funds or assets for political purposes, including for contributions to any political party, candidate or committee, whether federal, state or local. In addition, the Company does not lobby. As a result of our policy of political neutrality, Schlumberger does not have a political action committee, nor does it contribute to any third-party political action committees or other political entities organized under Section 527 of the U.S. Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).
In 2019, the Center for Political Accountability, a non-profit, non-partisan organization, assessed our disclosure for its annual CPA-Zicklin Index of Corporate Political Disclosure and Accountability (“CPA-Zicklin Index”). The CPA-Zicklin Index measures the transparency, policies and practices of the Standard & Poor’s 500.
As a result of our enhanced disclosure regarding our prohibition on political lobbying and contributions, we achieved a perfect score of 100% in the 2019 CPA-Zicklin Index.
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Communication with Ulrich Spiesshofer,
Independent Director
Former President and CEO, Director since 2021 Age: 57 Other Current Public Boards • Infineon Technologies Former Public Directorships Held During the Past Five Years • None | Nationality Switzerland and Germany Board Committees • Compensation • New Energy and Innovation Other Experience and Education • PhD in Economics, Universität Stuttgart • Master’s Degree in Management and Engineering, Universität Stuttgart • Digital transformation, restructuring and portfolio management expertise |
ULRICH SPIESSHOFER is the former president and Chief Executive Officer of ABB Ltd., a multinational technology-focused corporation, having served in that role from 2013 to April 2019 and as an executive committee member of ABB from 2005 to April 2019. Under Dr. Spiesshofer’s leadership, ABB transformed into a global leader in digital industries and a respected technology company at the nexus of industrial products and services, robotics and software. Since June 2020, he has served as a senior advisor at The Blackstone Group L.P. (Blackstone), and in this capacity he has chaired the advisory board of Schenck Process since May 2021, has served as a director of TDI-USA Holdings LLC since December 2021, and has been named chair of the advisory board of Sabre Industries, all Blackstone portfolio companies. He has also served as a director of Infineon Technologies since February 2020, where he chairs the strategy and technology committee.
The Board recommends that stockholders
Relevant Skills and other interested parties initiate communications with the Board, the Chairman, the lead independent director or any Board committee by writing to our Corporate Secretary. This process assists the Board in reviewing and responding to communications by stockholders and other interested parties. The Board has instructed our Corporate Secretary to review correspondence directedExpertise
Dr. Spiesshofer brings to the Board (includingmore than 30 years of global leadership experience in industries ranging from oil and gas to the Chairman, the lead independent directorpower and anyelectrification to automation and digitalization. The Board committee)values his industrial sector expertise and at the Secretary’s discretion, to forward those items that he deems appropriate for the Board’s consideration. Communications can be sent to the following address:his business transformation experience leveraging digital technologies, products and services.
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We are committed to strong corporate governance, which we believe is critical to achieving our performance goals and to maintaining the trust and confidence of our stakeholders. Our governance practices include:
Independent Chairman of the Board, separate from CEO No staggered board; all directors are elected annually Fully independent Audit, Compensation, and Nominating and Governance committees Newly formed New Energy and Innovation Committee, comprised solely of independent directors, to oversee our energy transition investments and other innovation Regular executive sessions of non-employee directors Majority vote standard for uncontested director elections Annual performance evaluations of Board, its committees, and individual directors 100% Board attendance in 2021 | Director nominees reflect the gender, racial and ethnic, cultural and geographical diversity of our global operations, as well as diverse experience, skills, and tenure Demonstrated commitment to Board refreshment Proactive stockholder engagement No hedging or pledging of our stock by executives or directors Robust director stock ownership guidelines (5x annual cash retainer) and executive stock ownership guidelines No lobbying or making financial or in-kind contributions to political parties or candidates Comprehensive risk assessment process designed to identify and manage enterprise-wide risks |
Our relationship and on-going dialogue with our stockholders are important parts of our Board’s corporate governance commitment. Our Investor Relations, Environmental, Socialinvestor relations, sustainability, legal and Governance (“ESG”), Legal and Human Resourceshuman resources teams engage with stockholders throughout the year to seek their views on key matters, and tothen inform our managementBoard and our Boardmanagement about the issues and emerging governance trends that our stockholders tell us matter most to them. Our lead independent director and theThe chairs of our Compensation and Nominating and Corporate Governance Committeescommittees also participate in our engagement efforts when requested. These engagements routinely cover executive compensation, corporate governance, ESG,company strategy and performance, sustainability, human rights and other current and emerging issues.
We typically reach out to our largest institutional stockholders annually in the fall.at least annually. We then report the feedback we receive to our Board and its relevant committees, allowing the Board to better understand our stockholders’ priorities and perspectives. In addition, to this annual outreach, we may engage with our large institutional stockholders at other times in the year when we believe that there are appropriate topics to discuss. For more detail on our engagement with our stockholders in 2018 and 2019,advance of the 2021 AGM, see “Compensation Discussion and Analysis—Framework for Setting 2021 Executive Compensation—Responsiveness to Stockholder Engagement; 2019 Say-On-Pay Vote”Feedback” beginning on pages 26-27page 36 of this proxy statement.
2021 STOCKHOLDER ENGAGEMENT FACTS • Participated in 17 sell-side investor conferences • Held more than 400 buy-side investor meetings (primarily virtual) across more than 250 investor firms |
One of the Board’s key responsibilities is to evaluate and determine an appropriate board leadership structure to provide for independent oversight of management. The Board believes that there is no single, generally accepted board leadership structure that is appropriate for all companies, and that the right structure may vary for a single company as circumstances change. As a result, our independent directors, upon the recommendation of the Nominating and Governance GuidelinesCommittee, consider the Board’s leadership structure at least annually.
Since 2019, our independent directors have separated the roles of CEO and Chairman of the Board, to allow our CEO to focus on leading the Company’s complex international business operations, while the Chairman provides the Board experienced and independent leadership. Mr. Papa currently serves as independent Chairman of the Board, and in that role, sets the agenda for and leads all Board meetings and all executive sessions of the non-employee directors.
In considering its leadership structure, the Board also took into account that Schlumberger’s current governance practices provide for strong independent leadership, active participation by our independent directors and independent evaluation of, and communication with, many members of senior management. The Board believes that its risk oversight programs would be effective under a variety of board leadership frameworks and therefore do not materially affect the Board’s choice of leadership structure.
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The Board and its committees are actively involved in overseeing risk management for Schlumberger. The full Board routinely assesses the Company’s major risks and options for mitigation, in order to promote our stockholders’ and other stakeholders’ interests in Schlumberger’s long-term health, financial strength, and overall success. We believe that our Board composition provides the Company with robust and well-rounded experience to assist in effective oversight of Schlumberger management, as discussed on pages 12-13 of this proxy statement. In addition, the Board delegates to its committees responsibility for overseeing certain types of risk, as reflected in the chart below, and the committees in turn report regularly to the Board on activities in their respective areas of oversight.
Board of Directors • The full Board oversees assessment of major risks facing the Company, determining the extent to which such risks are applicable and, to the extent the Board deems it appropriate, evaluating options for their mitigation. The risks that the Board routinely considers relate to operational, financial, geopolitical, strategic, regulatory, competitive, and climate-related risks. • The full Board oversees risk management by the CEO and our senior management team, by reviewing major financial objectives, critical strategies, and long-term plans, including major allocations of capital, significant proposed business acquisitions and divestitures, operating performance, sustainability, and stockholder returns. | ||||||||||||||||||
Audit • Financial reporting and internal controls • Major financial risk exposures • Cybersecurity risks • Finance-related compliance allegations • Independent audit and internal audit | Compensation • Compensation philosophy and policy, including addressing: • Pay-for-performance linkage and alignment to stockholder interests • Retention risk • Management succession | Nominating and • Ethics and compliance risks, including trade compliance, anti-bribery, anti-money laundering, and human rights, and related allegations • Related person transactions • Board refreshment and succession • Sustainability program, including acute and chronic climate risks • Progress toward our net-zero ambition | Finance • Pension liabilities • Currency management, including non-U.S. currency fluctuation • Financial risks related to M&A and strategic transactions • Appropriate leverage and related commitments, including climate-related funding | New Energy and • Risks and opportunities of new energy markets for possible investment | ||||||||||||||
Senior Management | ||||||||||||||||||
Day-to-day responsibility for: | ||||||||||||||||||
• identifying, assessing, monitoring, and managing the major risks to the Company through our enterprise risk management operational process; | • implementing effective risk mitigation measures, response plans and controls; and | • integrating risk analysis into business decisions and performance objectives. | ||||||||||||||||
Our senior management team has developed a comprehensive strategic planning and enterprise risk management (“ERM”) process for identifying, assessing and managing risk. Through this process, we identify key risks through an annual corporate-level risk mapping exercise, which involves the CEO and other members of senior management, along with a bottom-up operational (field-level) risk assessment by the Company’s various geographies, businesses and functions. In 2021, the process also included a third-party assessment by an internationally recognized accounting firm, external risk surveys, and facilitated workshops with Schlumberger executives. Our executive leadership team and its ERM and Disclosure Committee report directly to our CEO and to the Board, and annually present to the Board a comprehensive report on risk identification, response and mitigation strategies.
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As a leading energy services company, we are committed to adheringbeing at the forefront of our industry’s shift toward more sustainable energy production—challenging not only ourselves, but also our customers, suppliers, and peers to sound principlespartner on delivering measurable social and environmental progress. This translates into making measurable strides to accelerate innovation in energy transition and achieving these goals in a way that contributes to energy access and economic development with both a global and local lens.
As part of corporate governancethis commitment, the Board and have adopted corporate governance guidelines thatits committees oversee the performance and management of various environmental, social and other sustainability issues, including our Board believes are consistentenergy transition strategy, emissions reduction targets, climate change, sustainability reporting, workforce health and safety, human rights, and ethics and compliance. For example:
• | The Board oversees the Company’s long- and short-term strategy, including the launch of our Transition Technology and emissions monitoring portfolios, which focus on decarbonizing our core businesses, as well as our new energy investments in low-carbon and carbon-neutral energy technologies. In addition, the full Board oversaw the decision to establish our comprehensive 2050 net-zero commitment inclusive of Scope 3 emissions, together with interim Scope 1, 2 and 3 emissions reduction milestones. | |
• | The Board also oversees the Company’s ERM process, as discussed on the previous page under “—Board Oversight of Risk Management”, and reviews major risks facing the Company, including acute and chronic climate risks and energy transition risks. We take a data-centric, scenario-based approach to managing climate and transition risk, and we use both the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations and Sustainability Accounting Standards Board (SASB) standards as disclosure frameworks and methodology guides. | |
• | The Nominating and Governance Committee oversees our sustainability programs, initiatives and activities, and receives quarterly updates from senior management on the progress we are making toward a low-carbon future. This committee also monitors and reviews the effectiveness of the Company’s Ethics and Compliance program, including our code of conduct and all significant compliance allegations. | |
• | The New Energy and Innovation Committee—newly formed in 2021—evaluates our Schlumberger New Energy and Transition Technology investments and the sustainability impacts of growth opportunities. | |
• | The Board’s other committees oversee sustainability-related topics within their respective areas of responsibility, such as incorporation of sustainability and diversity metrics into our incentive compensation programs (Compensation), the conduct of sustainability-related reviews by our internal audit team (Audit), and the development of our sustainable finance strategy, including financial instruments with rates linked to climate commitments (Finance). |
Our line management is directly responsible for the management and mitigation of the environmental impact of our operations, with our values,environmental management systems and that promotestandards being the effective functioningresponsibility of our Board, its committeesVice President of HSE, and our global sustainability strategy being the Company. Our Board periodically,responsibility of our Vice President of Sustainability. For details about our environmental management standard and how we manage environmental risk, see our annual Sustainability Report, available at least annually, reviews and revises, as appropriate, our Corporate Governance Guidelines to ensure that they reflect the Board’s corporate governance objectives and commitments. Our Corporate Governance Guidelines are on our website at https://www.slb.com/who-we-are/corporate-governance/guidelines.sustainability/reports.html.
Our Corporate Governance Guidelines provide that at least a majority of the Board must consist of independent directors. This standard reflectsdirectors, in accordance with the New York Stock Exchange (“NYSE corporate governance”) listing standards.
Our In addition, our Board has adopted director independence standards which can be found in Attachment A to our Corporate Governance Guidelines, and whichthat meet or exceed the independence requirements in the NYSE listing standards. standards, and which can be found in our Corporate Governance Guidelines.
Based on the review and recommendation by the Nominating and Governance Committee, the Board has determined that each current director and each director nominee listed above under “Election of Directors”Directors—Our Director Nominees” is “independent” under theNYSE listing standards of the NYSE and our director independence standards, except for Mr. Le Peuch, who is our CEO and therefore does not qualify as independent, and Messrs. Galuccio and Papa. Additionally, Ms. Maureen Kempston Darkes and Mr. Michael Marks were independent throughout the period in 2019Galuccio. The Board has also determined that each served on the Board.
In addition to the Board-level standards for director independence, each member of the Audit Committee meets the heightened independence standards required for audit committee members under the NYSE’sNYSE listing standards and the rules of the SEC rules, and that each member of the Compensation Committee meets the heightened independence standards for compensation committee members under NYSE listing standards.
Transactions Considered in Independence Determinations Additionally, Mr. Seydoux, who is not standing for reelection, is independent, and former directors Lubna Olayan and Leo Rafael Reif, who served on the board until April 2021, were independent during the period they served on our Board.
Our Board’s independence determinations included a review of transactions that occurred since the beginning of 20172019 with entities associated with our directors or members of their immediate family. In making its independence determinations, the Board considered that Ms. Kempston Darkes, Dr. Kudryavtsev, Mr. Marks, Dr. Mitrova, Ms. Nooyi, Ms. Olayan, Dr. Reif and Mr. Sheets eachall our independent directors serve or have served, as directors, executive officers, trustees, outside consultants or advisory board members at companies and universities that have had commercial business relationships with the Company, all of which wereCompany. All such relationships involved ordinary course commercial transactions involving significantlywith the Company that were less than the greater of $1 million or 1% of the other entity’s annual revenues.revenues during 2021, 2020 and 2019; except for transactions with Enerplus, where Mr. Sheets serves as a director, which involved ordinary course commercial transactions with the Company that were less than 2% of Enerplus’ annual revenues during those three years.
The Board also considered that the Company made charitable contributions in the form of educational grants of less than $120,000 per yearand sponsored research to certain academic and other institutions with which some of theour directors are affiliated,affiliated. Except for contributions to the Moscow School of Management SKOLKOVO, these charitable contributions were less than $120,000 per year. Our contributions to the Moscow School of Management SKOLKOVO, where Dr. Mitrova serves as well as the following charitable contributions:
a professor, were $500,000 annually for 2021, 2020 and 2019. No director received any personal benefit from any such charitable contributions.
We believe that Board tenure diversity is important and directors with many years of service provide the Board with a deep knowledge of our company, while newer directors lend fresh perspectives. The chart in this section reflects the Board tenure of our current director nominees.
Under our Corporate Governance Guidelines, non-executive directors are eligible to be nominated or renominated to the Board up to their 70thbirthday, and executive directors are eligible to be nominated or renominated up to their 65thbirthday, after which directors may no longer be nominated or renominated to the Board. Our Board may waive this policy on a case-by-case basis on the recommendation of the Nominating and Governance Committee if it deems a waiver to be in the best interest of the Company. The Board waived this policy for Mr. Papa upon the recommendation of the Nominating and Governance Committee because it believes that having Mr. Papa serve on the Board is in the best interest of our Company and our stockholders.
The Nominating and Governance Committee believes that director nominees should, in the judgment of the Board, be persons of integrity and honesty, be able to exercise sound, mature and independent business judgment in the best interests of our stockholders as a whole, be recognized leaders in business or professional activity, have background and experience that will complement those of other Board members, be able to actively participate in Board and committee meetings and related activities, be able to work professionally and effectively with other Board members and Schlumberger management, be available to remain on the Board long enough to make an effective contribution, and have no material relationship with competitors, customers or other third parties that could present realistic possibilities of conflict of interest or legal issues.
The Nominating and Governance Committee also promotes Schlumberger’s diversity policy that the Board should ensure that qualified candidates reflecting gender, cultural and geographical diversity are considered as potential director nominees. Schlumberger has approximately 105,000 employees worldwide, representing more than 170 nationalities, and values gender, cultural and geographical diversity in its directors as well. We also have a culture of recruiting, hiring and training where we operate, as described in our Code of Conduct. This culture also
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influences
Each year, the composition of our Board. Two of our nine director nominees are women. Of our nine director nominees, three are citizensBoard and its committees conduct rigorous self-evaluations in order to assess the overall functioning, performance and effectiveness of the United States of America, three are citizens of France, one is a citizen of Saudi Arabia, one is a dual citizen of both Russia and Israel, and one is a dual citizen of both ArgentinaBoard, its committees, and the United Kingdom.
Our geographically diverse Board also evidences our commitment to have directors who represent countries where Schlumberger operates. In addition, the exceptionally broad and diverse experience of our Board nominees is in keeping with the goal of having directors whose background and experience complement those of otherindividual non-employee directors. The Nominating and Governance Committee’sCommittee oversees this annual evaluation process. From time to time, these evaluations may be conducted using a third-party facilitator.
Initiate Evaluation Process | Collect Evaluation Data | Discuss Findings | Implement Feedback | |||
Upon the instruction of the Nominating and Governance Committee, self-assessment questionnaires are distributed to the full Board, each committee, and each director individually. The questionnaires seek anonymous, candid feedback from our directors on a variety of topics, including board composition and culture, committee effectiveness, strategic planning, risk management, peer evaluation, and succession planning. | After all directors have completed the written questionnaires, their responses are aggregated into summary reports for the Board, each of its committees, and the chair of the Nominating and Governance Committee. In 2021, all questionnaires were distributed and responses collected through a third-party platform. Periodically, the Nominating and Governance Committee has also used a third-party facilitator to conduct one-on-one interviews with Board members as part of this annual evaluation process. | Each October, findings from the evaluation process are reviewed and discussed in executive session at each quarterly committee meeting and the full Board meeting. Based on these discussions, the directors may recommend improvements to the Board’s structure, processes, policies, or composition, or other changes. In addition, the chair of the Nominating and Governance Committee may provide one-on-one feedback to individual directors as appropriate. | Finally, the Board, its committees, and (where appropriate) management work to implement the feedback from this evaluation process to improve Board performance and effectiveness. Following this process, the Nominating and Governance Committee annually reviews, and makes recommendations to the Board regarding, its process for evaluating the effectiveness of the Board, its committees and each individual director. |
Some examples of feedback implemented based on past Board evaluations processes include:
• | expanding the Board’s expertise in the areas of financial and capital management, sustainability, new energy, and digital technologies and transformation, as discussed above under “Proxy Executive Summary—Board Refreshment”; | |
• | retiring our former Science and Technology Committee, and launching our New Energy and Innovation Committee focused on identifying areas for growth in our new energy businesses, our emissions-reducing Transition Technologies portfolio, and our early stage investment and research and development programs; and | |
• | conducting cybersecurity training for the Audit Committee in January 2022. |
Our director orientation and continuing education programs are designed to support our directors in fulfilling their responsibilities as members of the Board. First, all new directors participate in Schlumberger’s director orientation program, to familiarize themselves with our business and operations, financial and performance strategies, controls and compliance systems, sustainability and HSE commitments, and industry dynamics. New directors also attend trainings with members of senior management focused on financial, industry- and committee-specific topics, as well as facility and well-site visits. For new and incumbent directors, regular continuing education programs help our Board stay current on industry, corporate governance, risk management, cybersecurity, and other developments relevant to their work as directors. These programs may include presentations from Schlumberger management or in-depth trainings developed by outside experts, as appropriate.
The Nominating and Governance Committee assists the Board in identifying qualified individuals to join as new members. The Board seeks out individuals whose background, experience and skills complement those of other Board members. As a result, in evaluating potential nominees, the Committee takes into account theirconsideration the Board’s current composition, the potential nominee’s ability to contribute to the Board’s diversity, the Company’s existing and anticipated business needs, and the general qualifications of the potential nominees, as discussed above under “Election of Directors—Director Qualifications and Diversity.”
The Nominating and Governance Committee annually reviews its effectiveness in balancing these considerations in the context of its consideration of director nominees.
One of the other goals of our Nominating and Governance Committee is to ensure that the nominees have experience, skills and other attributes that complement the whole of our Board as a governing body. We believe that our director nominees are able to provide a well-rounded set of expertise that will assist in effective oversight of management at Schlumberger. The following matrix identifies the primary skills, core competencies and other attributes that each director nominee brings to bear in their service to our Board and committees. Each director nominee possesses numerous other skills and competencies not identified below. We believe identifying primary skills is a more meaningful presentation of the key contributions and value that each director nominee brings to their service on the Board and to our stockholders. Further information on each director nominee, including some of their specific experiences, skills and other attributes, is set forth in the biographies beginning on page 7 of this proxy statement.
Applying the criteria above, the Nominating and Governance Committeealso recommends to the Board the number and names of persons to be proposed by the Board for election as directors at our annual general meeting of stockholders.AGM. In obtaining the names of possible director nominees, the Nominating and Governance Committee makes its own inquiries and will receivereceives suggestions from other directors and management. Consideration of new Board candidates typically involves a series of internal discussions, review of information regarding potential candidates, and interviews with selected candidates.
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From time to time, the Nominating and Governance Committee retains executive search and board advisory consulting firms to assist in identifying and evaluating potential nominees. To further our diversity policy, we request that any such firms retained by us include women and nationally, racially and ethnically diverse candidates in the proposals they present to us. During 2019,2021, the Nominating and Governance Committee, usedwith the servicesassistance of Spencer Stuart, a third-partyan executive search firm, for this purpose. Considerationevaluated a number of new Board candidates typically involves a series of internal discussions, review of information concerningpotential candidates and interviews with selected candidates. Spencer Stuart suggested bothrecommended each of Ms. Narayanan, Messrs. de La ChevardièreColeman and SheetsLeupold, and Dr. Spiesshofer as prospective Board candidates.members.
The Nominating and Governance Committee will also consider nominees recommended by stockholders who meet the eligibility requirements for submitting stockholder proposals for inclusion in the next proxy statement and submit their recommendations in writing to:
Chair, Nominating and Governance Committee,
c/o Secretary, Schlumberger Limited,
5599 San Felipe, 17thFloor,
Houston, Texas 77056.
Such recommendations must be submitted by the deadline for stockholder proposals referred to at the endunder “Other Information—2023 Annual General Meeting of Stockholders” on page 70 of this proxy statement. Unsolicited recommendations must contain all of the information that would be required in a proxy statement soliciting proxies for the election of the candidate as a director, a description of all direct or indirect arrangements or understandings between the recommending security holder and the candidate, all other companies to which the candidate is being recommended as a nominee for director, and a signed consent of the candidate to cooperate with reasonable background checks and personal interviews, and to serve as a member of our Board, if elected.
The Board has five standing committees: Audit, Compensation, Nominating and Governance, Finance, and New Energy and Innovation. Each member of the Audit, Compensation and Nominating and Governance committees meets the independence and other requirements of the NYSE listing standards and SEC rules (including the heightened requirements that apply to audit or compensation committee members, as applicable). In addition, each member of the Audit Committee is financially literate, and each of Messrs. de La Chevardière and Sheets qualifies as an “audit committee financial expert” under applicable SEC rules.
The Nominating and Governance Committee nominates for Board approval directors to serve on and chair the Board’s committees. The following table reflects the membership of the Board’s standing committees as of February 1, 2022.
Name of Director | Audit Committee | Compensation Committee | Nominating and Governance Committee | Finance Committee | New Energy and Innovation Committee |
Peter Coleman | |||||
Patrick de La Chevardière | Chair | ||||
Miguel Galuccio | Chair | ||||
Samuel Leupold | |||||
Tatiana Mitrova | |||||
Maria Moræus Hanssen | Chair | ||||
Vanitha Narayanan | |||||
Mark Papa* | Chair | ||||
Henri Seydoux(1) | |||||
Jeff Sheets | Chair | ||||
Ulrich Spiesshofer |
* | Independent Chairman of the Board. |
(1) | Not standing for reelection. |
Each committee operates under a written charter that sets forth the purposes, responsibilities and membership requirements of that committee. Each committee reviews the adequacy of its charter at least annually and recommends changes to the Board for approval. All committees also report regularly to the Board with respect to their activities. Committee charters are available on the Company’s website at https://www.slb.com/who-we-are/corporate-governance/.
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Although we had not received a stockholder proposal requesting a proxy access bylaw, we proactively adopted proxy access bylaw provisions in January 2017. These provisions permit a stockholder, or a group of up to 20 stockholders, owning at least 3% of our outstanding common stock, for at least three years, to include two director nominees, or 20% ofDuring 2021, the current Board, whichever is greater, in our proxy for the annual general meeting.
The Board recognizes that one of its key responsibilities is to evaluate and determine an appropriate board leadership structure to provide for independent oversight of management. The Board believes that there is no single, generally accepted board leadership structure that is appropriate for all companies, and that the right structure may vary for a single company as circumstances change. As such, our independent directors consider the Board’s leadership structure at least annually, and may modify this structure to best address the Company’s unique circumstances and advance the best interests of all stockholders, as and when appropriate.
Effective August 1, 2019, Mr. Paal Kibsgaard retired as our CEO and Chairman of the Board. He had held both of these roles since 2015. The Board appointed Mr. Le Peuch as CEO and elected him to be a member of the Board, effective upon Mr. Kibsgaard’s retirement. In connection with this change in the Board leadership, the Board examined the advantages and disadvantages of various board leadership structures in light of the Company’s executive and Board leadership and its governance priorities.
The independent members of the Board determined that, effective upon Mr. Kibsgaard’s retirement as a member of our Board in August 2019, the appointment of a non-executive Chairman of the Board would be an appropriate Board leadership structure at this time because it would allow our new CEO to focus on leading the Company’s complex international business operations, while providing the Board experienced leadership separate from our management. As a result, the independent members of the Board appointed Mr. Papa as our non-executive Chairman of the Board.
Although Mr. Papa is a non-executive member of the Board, the Board previously determined that he is not an “independent” director under the listing standards of the NYSE and our own director independence standards. For this reason, the Board determined in July 2019 that Mr. Currie, Chair of the Audit Committee and the Board’s lead independent director, should continue to serve as the Board’s lead independent director.
The Chairman of the Board and the lead independent director together set the agenda for all Board meetings, and the lead independent director sets the agenda for, and leads, all executive meetings of the non-executive directors, providing consolidated feedback, as appropriate, from those meetings to the Chairman. The lead independent director also has authority to call meetings of the Board in executive session; facilitates discussions, outside of scheduled Board meetings, among the independent directors on key issues as appropriate; and serves as a non-exclusive liaison with the Chairman and our CEO, in consultation with the other independent directors.
In considering its leadership structure, the Board also took into account that Schlumberger’s current governance practices provide for strong independent leadership, active participation by our independent directors and independent evaluation of, and communication with, many members of senior management. These governance practices are reflected in our Corporate Governance Guidelines and our committee charters, which are available on our website. The Board believes that its risk oversight programs, discussed immediately below, would be effective under a variety of board leadership frameworks and therefore do not materially affect the Board’s choice of leadership structure.
As discussed above under “Election of Directors,” Mr. Currie will not stand for re-election at our annual general meeting of stockholders. The Board expects to elect a successor lead independent director from among the independent directors elected at the 2020 annual general meeting.
The Board’s Role in Risk Oversight
As set forth in our Corporate Governance Guidelines, the Board routinely assesses major risks facing the Company and options for their mitigation, in order to promote the Company’s stockholders’ and other stakeholders’ interests in the long-term health and the overall success of the Company and its financial strength.
The full Board is actively involved in overseeing risk management for the Company. We believe that our Board composition provides the Company with robust experience in several areas of risk oversight. Several of our Board members, including Dr. Mitrova and Messrs. Galuccio, Le Peuch and Papa, have valuable experience in the regulatory, economic and commodity risks that are specific to our industry, while Drs. Kudryavtsev and Reif and Mr. Seydoux have valuable experience in science and technology issues. In addition, many members of our Board, including Dr. Reif, Messrs. Currie, de La Chevardière, Seydoux and Sheets, and Mses. Nooyi and Olayan, all provide expertise in general business governance, capital allocation, management and economic trends relevant to our business.
In addition, each of our Board committees considers the risks within its areas of responsibility. The Board and its committees exercise their risk oversight responsibilities in a variety of ways, including the following:
The Board also manages risk in part through its oversight of the Company’s Executive Risk Committee (the “ERC”), comprising more than half a dozen top executives of the Company from various functions, each of whom supervises day-to-day risk management throughout the Company. The ERC is not a committee of the Board. The ERC ensures that the Company identifies all potential material risks facing the Company and implements appropriate mitigation measures. The Company’s risk identification is performed annually at two levels: the ERC performs a corporate-level risk mapping exercise, which involves the CEO and several other members of senior management, and while maintaining oversight, delegates operational (field-level) risk assessment and management to the Company’s various GeoMarkets, Technologies and Functions and to its Research, Engineering, Manufacturing and Sustaining organization. To the extent that the ERC identifies recurring themes from the operational risk mapping exercises, they are acted on at the corporate level. Members of the ERC meet formally at least once a year, and more frequently on an ad hoc basis, to define and improve the risk mapping process, and to review and monitor the results of those exercises and those that have been delegated. The ERC reports directly to the CEO and to the full Board, and annually presents to the full Board a comprehensive report as to its risk mapping efforts for that year.
Meetings of the Board and Committees; Director Attendance
The Board and its committees met throughout 2019 on a set schedule, held special meetings, and acted by written consent from time to time, as appropriate. The Board held four regularly-scheduledregular meetings, and two specialeach including an executive session of non-employee directors led by the Board’s independent Chairman. In addition, the Board’s committees held 23 meetings in 2019. In addition, a special committee of the Board met at various times during the year in connection with CEO succession planning, as described under “—Board Responsibilities2021, which included five Audit Committee, four Compensation Committee, six Nominating and Committees—The Board’s Role in Succession Planning” on page 18. At each Board meeting, time is reserved for the independent directors to meet in executive session without the CEO present.Governance Committee, one Science and Technology Committee, one New Energy and Innovation Committee, and six Finance Committee meetings. Officers regularly attend Board meetings to present information on our business and strategy, and Board membersdirectors have worldwide access to our employees outside of Board meetings.
In addition, each of the Audit, Compensation, Nominating and Governance and Finance Committees held four regularly-scheduled quarterly meetings, and the Science and Technology Committee held one regularly-scheduled meeting, in 2019. Each of the Audit and Nominating and Governance Committees held one special meeting in 2019.
Each of our current directors attended at least 75% of the meetings of the Board and the committees on which he or she served in 2019 (held during the period he or she served).
From time to time between meetings, Board and committee members confer with each other and with management and independent consultants regarding relevant issues, and representatives of management may meet with suchthese consultants on behalf of the relevant committee.
In 2021, our directors attended 100% of the meetings of the Board and its committees on which they served.
The Board’s policy regarding director attendance at annual general meetings of stockholdersour AGM is that directors are welcome, but not required, to attend, and that the Company will make all appropriate arrangements for directors who choose to attend. No director attended our annual general meeting of stockholders in 2019.2021 AGM.
We have adopted Corporate Governance Guidelines that our Board Responsibilities
Thebelieves are consistent with our values, and that promote the effective functioning of our Board, overseesits committees and counsels the Company’s CEOCompany. At least annually, our Board reviews and, other members of the senior management team in managing in the long-term interests of the Company and our stockholders. The Board’s responsibilities include:
The Board’s Role in Succession Planning
As reflected inif appropriate, revises our Corporate Governance Guidelines to reflect the Board’s primary responsibilities include planning for CEO successioncorporate governance objectives and monitoring and advising on management’s succession planning for other senior executives. The Board’s goal is to have a long-term and continuing program for effective senior leadership development and succession.
In connection with our recent CEO transition, the Board formed a special committee, chaired by our lead independent director. The special committee met 21 times during 2018 and 2019 as part of its oversight and leadership of the process to identify the candidate with the appropriate skills, vision, and experience to lead Schlumberger into the future.
Board Committees
MEMBERS OF THE COMMITTEES OF OUR BOARD AS OF FEBRUARY 1, 2020
Audit Committee
The Audit Committee consists of five directors, each of whom meets the independence and other requirements of the NYSE’s listing standards and SEC rules (including the heightened requirements that apply to audit committee members). The Audit Committee assists the Board in its oversight of the accounting and financial reporting process of the Company, including the audit of the Company’s financial statements and the integrity of the Company’s financial statements, legal and regulatory compliance, the independent auditor’s qualifications, independence and performance, and the performance of the Company’s internal audit function.
The authority and responsibilities of the Audit Committee include the following:
The Company’s independent auditor is accountable to the Audit Committee. The Audit Committee pre-approves all engagements, including the fees and terms for the integrated audit of the Company’s consolidated financial statements.
The Board has determined that each Committee member has sufficient knowledge in financial and auditing matters to serve on the Committee. In addition, the Board has determined that each of Ms. Nooyi and Messrs. Currie, de La Chevardière and Sheets qualifies as an “audit committee financial expert” under applicable SEC rules. The Audit Committee operates pursuant to a written charter, which describes its authority and responsibilities in detail, and iscommitments. Our Corporate Governance Guidelines are available on the Company’sour website at https://www.slb.com/who-we-are/corporate-governance/audit-committee.guidelines.
Compensation Committee
The Compensation Committee consists of five directors, each of whom meets the independence requirements of the NYSE’s listing standards (including the heightened requirements that apply to compensation committee members). The Compensation Committee assists our Board in discharging its responsibilities with regard to executive compensation; periodically reviews non-executive directors’ compensation; oversees the Company’s general compensation philosophy, policy and programs; serves as the administrative committee under the Company’s stock plans; and prepares the annual compensation committee report required by the rules of the SEC.
The authority and responsibilities of the Compensation Committee include the following:
The Compensation Committee may delegate specific responsibilities to one or more individual committee members to the extent permitted by law, regulation, NYSE listing standards and Schlumberger’s governing documents. The design and day-to-day administration of all compensation and benefits plans and related policies, as applicable to executive officers and other salaried employees, are handled by teams of the Company’s human resources, finance and legal department employees. The Compensation Committee operates pursuant to a written charter, which describes its authority and responsibilities in detail, and is available on the Company’s website at https://www.slb.com/who-we-are/corporate-governance/compensation-committee.
Nominating and Governance Committee
The Nominating and Governance Committee consists of three directors, each of whom meets the independence requirements of the NYSE’s listing standards. The Nominating and Governance Committee assists the Board in identifying qualified individuals to become directors; nominates directors to serve on, and chair, committees; reviews corporate governance trends; develops and recommends to the Board a set of corporate governance guidelines and recommending any amendments; monitors and reviews the effectiveness of the Company’s Ethics and Compliance Program; oversees the Company’s corporate reputation, ESG and social responsibility strategies; and oversees the annual review of the Board’s performance.
The authority and responsibilities of the Nominating and Governance Committee include the following:
The Nominating and Governance Committee operates pursuant to a written charter, which describes its authority and responsibilities in detail, and is available on the Company’s website at https://www.slb.com/who-we-are/corporate-governance/nominating-and-governance-committee.
Finance Committee
The Finance Committee consists of six directors. The Finance Committee advises the Board and management of the Company on various capital allocation and capital structure matters, including dividends and stock repurchases, acquisitions and divestitures, financial and related risk management policies and the investment of funds. The Finance Committee operates pursuant to a written charter, which describes its authority and responsibilities in detail, and is available on the Company’s website at https://www.slb.com/who-we-are/corporate-governance/finance-committee.
Science and Technology Committee
The Science and Technology Committee consists of six directors. The Science and Technology Committee advises the Board and management on matters involving the Company’s research and development programs. The Science and Technology Committee operates pursuant to a written charter, which describes its authority and responsibilities in detail, and is available on the Company’s website at https://www.slb.com/who-we-are/corporate-governance/science-and-technology-committee.
Schlumberger hasWe have adopted a code of conduct entitled The Blue Print and The Blue Print in Action (together, our “Code of Conduct”), which applies to all of itsour directors, officers and employees. Together, these documents describe the purpose, ambition and mindsetOur Code of the Company and expectations for its employees. Both documents are locatedConduct is available on our website at https://www.slb.com/who-we-are/guiding-principles/our-code-of-conduct.our-code-of-conduct.
In 2007, theThe Board adoptedhas a written policy with respect togoverning the review, approval and ratification of “related person transactions” to document procedures pursuant to which such transactions are reviewed, approved or ratified.transactions.” Under SEC rules, “related persons” include any director, executive officer, director nominee, or greater than 5% stockholder of the Company since the beginning of the previous fiscal year, and their immediate family members. The policy applies to any transaction in which:
• | the Company is a participant; | |
• | any related person has a direct or indirect material interest; and | |
• | the amount involved exceeds |
but excludes any transaction that does not require disclosureunless excluded under Item 404(a) of SEC Regulation S-K.
The Nominating and Governance Committee with assistance from the Company’s Secretary and General Counsel, is responsible for reviewing and, where appropriate, approving or ratifying any related person transaction involving Schlumberger or its subsidiaries and any related persons. The Nominating and Governance Committee approves only those related person transactions that are in, or are not inconsistent with, the best interests of the Company and its stockholders.
SinceSchlumberger has an ongoing commercial relationship with Vista Oil and Gas (Vista), where Mr. Galuccio serves as chairman of the beginning of 2019, there were no related person transactions under the relevant standards.board and chief executive officer. In 2021, Schlumberger contracted with Vista to deliver ordinary course oilfield services and products, and Vista paid Schlumberger $133 million.
The Board recommends that stockholders and other interested parties initiate communications with the Board, the Chairman or any Board committee by writing to our Chief Legal Officer and Secretary. This process assists the Board in reviewing and responding to communications by stockholders and other interested parties. The Board has instructed our Chief Legal Officer and Secretary to review correspondence directed to the Board (including to the Chairman and any Board committee) and, at the Secretary’s discretion, to forward those items that she deems appropriate for the Board’s consideration. Communications can be sent to the following address: Schlumberger Limited, Attention: Chief Legal Officer and Secretary, 5599 San Felipe, 17th Floor, Houston, Texas 77056.
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Our Commitmentdirector compensation philosophy is to Stewardshipappropriately compensate our non-employee directors for the time, expertise and effort required to serve as a director of a large and complex global company, and to align the interests of our directors with those of our long-term stockholders. Directors who are employees of Schlumberger do not receive compensation for serving on the Board.
The energy industry is changing, and Schlumberger’s vision is to define and drive high performance, sustainably. Our core competence is to enable our customers to operate more safely, efficiently, effectively and in an environmentally responsible manner.Director Pay Components
Schlumberger has a long history of social and environmental leadership, including:Cash Compensation
Non-employee directors receive the following cash compensation:
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• | if the | |
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In line with stakeholder expectations,Equity Compensation
Schlumberger annually grants shares of our Global Stewardship program addresses:common stock valued at approximately $190,000 for each non-employee director, or $290,000 for the independent Board Chairman. The shares are valued based on our closing stock price on the last business day of April of the grant year.
For 2021, our directors received the following grants of our common stock effective May 3, 2021:
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To find out more aboutThe following table provides information on the compensation paid to our Global Stewardship program, see our annual Global Stewardship Report, which is available at www.slb.com/globalstewardship.non-employee directors in 2021.
To continuously strengthen and increase transparency around our ESG reporting efforts, we use key sustainability frameworks as main points of references, including:
Name | Fees Earned or Paid in Cash ($) | (1) | Stock Awards ($) | (2) | Total ($) | |
Peter Coleman(3) | 87,842 | 153,756 | 241,598 | |||
Patrick de La Chevardière | 142,500 | 198,217 | 340,717 | |||
Miguel Galuccio | 137,500 | 198,217 | 335,717 | |||
Samuel Leupold(4) | 119,949 | 204,960 | 324,909 | |||
Tatiana Mitrova | 140,000 | 198,217 | 338,217 | |||
Maria Moræus Hanssen(5) | 150,000 | 347,802 | 497,802 | |||
Vanitha Narayanan(6) | 48,914 | 105,197 | 154,111 | |||
Lubna Olayan(7) | 14,973 | — | 14,973 | |||
Mark Papa | 237,500 | 302,547 | 540,047 | |||
Leo Rafael Reif(7) | 16,005 | — | 16,005 | |||
Henri Seydoux | 142,500 | 198,217 | 340,717 | |||
Jeff Sheets | 145,000 | 198,217 | 343,217 | |||
Ulrich Spiesshofer(6) | 48,914 | 105,197 | 154,111 |
(1) | ||
(2) | ||
(3) | ||
(4) | ||
(5) | ||
(6) |
As part of our Global Stewardship program, we chose, at the corporate level, 11 of the 17 U.N. Sustainable Development Goals that we believe we can affect. In 2019, we began engaging our leadership teams across each of our GeoMarket regions to select Sustainable Development Goals to focus on by country, and to further develop local sustainability plans and objectives.
Our CEO, various of his direct reports, and other members of our management also have sustainability goals incorporated into their short-term incentive compensation opportunity for 2020.
Protecting the Environment and Addressing Climate Change
In December 2019, we became the first company in upstream E&P services to commit to setting a science-based target to reduce our greenhouse gas (“GHG”) emissions, as defined by the Science Based Targets initiative (“SBTi”). In line with SBTi’s defined criteria, we will define our GHG reduction target by 2021. Our science-based target will align with the goals of the U.N. Paris Agreement and will be calculated using expertise from our extensive scientific community. We have set an initial target to reduce GHG emissions from our fuel and power consumption by 30% by 2025. We will revise this target accordingly once our science-based target has been defined and approved. We are also examining opportunities to reduce our indirect GHG emissions from associated input and outputs of our operations.
Also in 2019, we complemented our well-established risk assessment program with a comprehensive climate risk assessment in a country that is representative of our operational activities. This project adopted TCFD’s recommendations related to the identification of opportunities and risks—both financial and physical—associated with climate change, including conducting scenario-based analyses in accordance with the U.N. Paris Agreement. After a detailed evaluation of our operations in the selected country, we identified both acute and chronic physical climate risks, as well as potential risks and opportunities associated with the energy transition. Findings from this project were communicated to Schlumberger management and our Board and are further shaping our internal climate strategy. For example, we launched a global sea-level rise assessment, which we expect to complete in 2020. We have expanded our climate assessment project and, as of January 2020, our operations in countries representing over 50% of our total 2019 revenue are participating in the program.
In addition, we offer a broad portfolio of technologies with a reduced environmental impact aimed at helping our customers in decreasing their environmental footprint; using cleaner chemistry and reducing waste; and increasing decarbonization elements throughout each phase of the oil and gas exploration and production process. Metrics tracked and supported by our Stewardship Tool include:
(7) | ||
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A Continued Focus on PeopleNon-employee directors who begin their Board, Board Chair, committee or committee chair service after the AGM receive a prorated amount of annual compensation. Schlumberger also reimburses non-employee directors for travel and other business expenses incurred in the performance of their services for Schlumberger.
People are at the core of everything we do. In support of the U.N. Sustainable Development Goals, our continued commitment to operationalize social sustainability spans across numerous programs focused on:Annual Director Pay Review
Our social sustainability goals include, by 2025, a 25% gender balance goal acrossCompensation Committee annually reviews our workforce,non-employee director compensation, and a 2:1 education engagements-to-employees ratio aimed at positively impactingperiodically recommends that the livesBoard approve updates to director pay. In 2021, the Committee’s director pay review took into account multiple factors including our director compensation philosophy, changes in market practices, the continued expansion of more than 200,000 children.director and committee chair responsibilities, consultations with the Committee’s independent compensation consultant, Pay Governance, and feedback received during our shareholder engagements. Based on that review, the Committee determined that no changes in non-employee director compensation were necessary for 2021. The Committee has not increased the directors’ annual cash retainer, committee chair or membership fees, or annual stock grant value since 2017 (except in connection with separating the Chairman and CEO roles in 2019).
We are committed to respecting human rights. We implementWhile the Committee is aware that other jurisdictions may have differing director compensation practices, the Committee believes it is in the best interests of the Company and our stockholders as a cross-functional leadership approach in our global operations that enables uswhole to align to market practice among NYSE-listed companies and companies with a large U.S. shareholder base. The Committee also believes that the interests of our business prioritiesnon-employee directors are most aligned with the interests of our stockholders when a significant portion of director compensation is paid through stock grants.
Director Stock Ownership Guidelines
The Board believes that ownership of Schlumberger stock by our directors aligns their interests with the interests of our stockholders, and our core values on human rights issues. We recognizeas a result, the increasing relevanceBoard has maintained stock ownership guidelines for its directors. In 2021, upon recommendation of the U.N. Guiding Principles, which are reflectedNominating and Governance Committee and the Compensation Committee, our Board revised our director stock ownership guidelines to require each non-employee director to hold a minimum dollar value of shares of Schlumberger common stock equal to five times (5x) that director’s annual cash retainer. The director has five years from appointment to meet this holding requirement. As of January 31, 2022, each of our non-employee directors was in our Human Rights Position Statement, our Code of Conduct, and our policies and procedures. During 2019, our key human rights activities included:
Key Stewardship Goals
compliance with these guidelines.
* Initial targetDirector Deferral Plan
Non-employee directors may elect to defer all or a portion of their annual stock or cash awards through the Schlumberger 2004 Stock and Deferral Plan for Non-Employee Directors (the “Directors Stock Plan”). When directors elect to defer their stock award, their deferred compensation account is credited with a number of “stock units.” Each stock unit is equal in value to a share of our common stock, but because it is not an actual share of our common stock it does not have any voting rights. When directors elect to defer their cash award, they may choose to invest such deferred cash compensation into either (i) Schlumberger common stock, (ii) money market equivalents, or (iii) an S&P 500 equivalent. Deferrals into a stock account are credited with dividend equivalents in the form of cash to be revised whenpaid at the time of vesting and deferrals into the cash account are credited with gains or losses based on the monthly performance of the various investment options described above. Following retirement from our science-based targetBoard and depending on the director’s election, a non-employee director may receive the deferred compensation on the date of the director’s retirement or a date that is defined and approved.one year following the date of the director’s retirement.
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Security Ownership by Management and Our Board
The following table sets forth information known to us with respect to beneficial ownership of our common stock as of January 31, 2022 by (i) each director and director nominee, (ii) each of the named executive officers and (iii) all executive officers (as defined in Rule 3b-7 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and directors as a group (the “D&O Group”).
The number of shares beneficially owned as of January 31, 2022 includes shares of common stock that the individual has the right to acquire within 60 days of January 31, 2022, including exercisable options to purchase common stock, as well as RSUs and PSUs that will vest within 60 days. The table below does not include the number of shares earned but not yet issued under our 2019 ROCE PSUs, because the Company will finally determine the number of shares earned after the applicable comparator companies disclose their full-year audited 2021 results, as described under “Compensation Discussion and Analysis—Elements of 2021 Total Direct Compensation—Long-Term Equity Incentive Awards—Payouts Under Prior LTI Awards—PSUs Vesting in 2022” on page 47 of this proxy statement. These same policies apply to the aggregate calculation for the D&O Group.
(1) | Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to |
(2) | Percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of the 1,413,019,316 shares of Schlumberger common stock outstanding on January 31, 2022, plus the number of shares of common stock that such person or group had the right to acquire on or within 60 days of January 31, 2022. |
(3) | Includes options to purchase 308,000 shares. |
(4) | Includes options to purchase 340,000 shares. |
(5) | Includes options to purchase 99,000 shares and 1,773 shares beneficially owned by Mr. Biguet’s children. |
(6) | Includes options to purchase 98,000 shares and 218 shares beneficially owned by Ms. Gharbi’s spouse. |
(7) | Includes options to purchase 129,000 shares. |
(8) | Includes options to purchase 1,480,957 shares, all of which are held by our executive officers. |
Schlumberger Limited2022 Proxy Statement | 28 |
Security Ownership by Certain Beneficial Owners
The following table sets forth information as of December 31, 2021 (except as otherwise noted) with respect to persons known by us to be the beneficial owners of more than 5% of our common stock, based solely on the information reported by such persons in their Schedule 13D and 13G filings with the SEC.
For each entity included in the table below, percentage ownership is calculated by dividing the number of shares reported as beneficially owned by such entity by the 1,413,019,316 shares of our common stock outstanding on January 31, 2022.
Beneficial Ownership of Common Stock | ||||||||
Name and Address | Number of Shares | Percentage of Class | ||||||
The Vanguard Group(1) | 119,850,812 | 8.5 | % | |||||
100 Vanguard Blvd. | ||||||||
Malvern, PA 19355 | ||||||||
BlackRock, Inc.(2) | 111,487,119 | 7.9 | % | |||||
55 East 52nd Street | ||||||||
New York, NY 10055 | ||||||||
State Street Corporation(3) | 92,164,506 | 6.5 | % | |||||
State Street Financial Center | ||||||||
One Lincoln Street | ||||||||
Boston, MA 02111 |
(1) | Based solely on a Statement on Schedule 13G/A filed on February 10, 2022. Such filing indicates that The Vanguard Group has shared voting power with respect to 2,205,290 shares, sole investment power with respect to 114,325,999 shares and shared investment power with respect to 5,524,813 shares. |
(2) | Based solely on a Statement on Schedule 13G/A filed on February 1, 2022. Such filing indicates that BlackRock, Inc. has sole voting power with respect to 96,704,481 shares and sole investment power with respect to 111,487,119 shares. |
(3) | Based solely on a Statement on Schedule 13G/A filed on February 14, 2022. Such filing indicates that State Street Corporation has shared voting power with respect to 84,453,128 shares and shared investment power with respect to 91,556,288 shares. |
WeDelinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our executive officers and directors, among others, to file an initial report of ownership of Schlumberger common stock on Form 3 and reports of changes in ownership on Form 4 or Form 5. Persons subject to Section 16 are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms that they file. The Company believes, based solely on a review of the copies of such forms in its possession and on written representations from reporting persons, that two transactions required to be reported under Section 16(a) were not timely reported during the fiscal year ended December 31, 2021. Two Form 4s required to be filed by Mr. Le Peuch in 2021 relating to shares acquired pursuant to a brokerage dividend reinvestment plan were not timely filed, but were filed on January 21, 2022.
Schlumberger Limited2022 Proxy Statement | 29 |
Our Board is asking our stockholdersyou to approve, on an advisory basis, the compensation of our executive compensationNEOs as reporteddisclosed in this proxy statement. As described below inThis item, which is provided pursuant to Section 14A of the “Compensation Discussion and Analysis” section of this proxy statement, theExchange Act, is commonly referred to as a “say-on-pay” resolution.
The Compensation Committee has structured our executive compensation program to achieve the following key objectives:
• | to attract, motivate and retain talented executive officers; |
• | to motivate |
• | to align the interests of our executive officers with those of |
We urge stockholders to readas described in the “Compensation Discussion and Analysis” beginning on page 25section of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives. We also urge stockholders to read the Summary Compensation Table and other related compensation tables and narrative, appearing on pages 49-63, which provide detailed information on the compensation of our named executive officers. Thestatement.
Our Compensation Committee and the Board believe that the policies and procedures articulated in the “Compensation Discussion and Analysis” are effective in achieving our goals, and that the compensation of our named executive officersNEOs as reported in this proxy statement has contributed to the Company’s short-term and long-term success.
In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as a matter of good corporate governance, Therefore, we are asking our stockholders to approve the compensation of our NEOs by voting “FOR” the following resolution on an advisory resolution at the 2020 annual general meeting of stockholders:basis:
RESOLVED, that the stockholders of Schlumberger Limited (the “Company”) approve, on an advisory basis, the compensation ofpaid to the Company’s named executive officers, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables notes and narrative in the Proxy Statement for the Company’s 2020 annual general meeting of stockholders.discussion, is hereby APPROVED on an advisory basis.
This advisory resolution, commonly referred to as a “say-on-pay” resolution,Although this vote is non-binding on our Board. Although non-binding, our Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program.
The Board has adopted a policy providing for anAlthough annual “say-on-pay” advisory vote. Unlessvotes are not required by our bylaws, the Board currently believes that having our stockholders provide annual feedback on our compensation practices provides for effective governance. As a result, the next “say-on-pay” advisory vote will occur in 2023, unless the Board modifies its policy on the frequency of holding “say-on-pay” advisory votes, the next “say-on-pay” advisory vote will occur in 2021.
Required Vote
A majority of the votes cast is required to approve this Item 2.
If you hold your shares in street name, please note that brokers, banks and holders of record do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker, bank or holder of record how to vote on this proposal, they will deliver a non-vote on this proposal.votes.
The Board of Directors Recommends a VoteFORItem 2. |
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with the Company’s management. Based on that review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE SCHLUMBERGER BOARD OF DIRECTORS
Jeff Sheets, Chair | Maria Moræus Hanssen | Vanitha Narayanan | Henri Seydoux | Ulrich Spiesshofer |
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This Compensation Discussion and Analysis (“CD&A”&A”) describes our compensation policies and practices as they relate to each person who served as our Chief Executive Officer or Chief Financial Officer in 2019, and the next three most highly compensatedfive named executive officers in 2019 (each an “NEO” or a “named executive officer”(“NEOs”): listed below:
Named Executive Officers | Title |
Olivier Le Peuch | Chief Executive Officer |
Stephane Biguet | Executive Vice President and Chief Financial Officer |
Khaled Al Mogharbel | Executive Vice President, |
Hinda Gharbi | Executive Vice President, |
The purpose of the CD&A is to explain the elements of our NEOs’ 2021 compensation; why the Compensation Committee selectedcriteria for selecting these elements; how the Compensation Committee determined the relative size of each element of compensation; the decisions theour Compensation Committee made with respect to the 20192021 compensation of theour NEOs; and the reasons for those decisions.
2019 was a year of transformational change and marked the beginning of an exciting new chapter for Schlumberger. In August 2019, Paal Kibsgaard, our then-CEO and Chairman of the Board, retired from both positions after eight years as CEO and four years as Chairman. Olivier Le Peuch, a 33-year veteran of the Company, then became our CEO and a member of our Board. Our Board also changed its leadership structure, splitting the roles of Chair and CEO, and electing a non-executive Chairman of the Board. Later in 2019, we announced that Simon Ayat was stepping down as our Executive Vice President and Chief Financial Officer in January 2020, and that Stephane Biguet, a 24-year Schlumberger veteran, would succeed Mr. Ayat in that role.
Following his appointment, our new CEO laid out his new strategic goals for the Company, with a determined focus on margins expansion, increased return on capital, and free cash flow generation. As a result, we initiated a new scale-to-fit strategy in our North America land operations, began exiting highly commoditized service offerings, removed structural costs to protect margins, and accelerated the deployment of our technology-access business models and our focus on asset-light operations.
Overall Company performance in 2019 was positive, particularly in the international markets, as we continued to capitalize on the strength of our international franchise. We generated $5.4 billion in cash flow from operations and $2.7 billion in free cash flow despite very challenging market conditions, including a sharp decline in North America revenue, driven by weakness in the land market.
Highlights of our 2019 performance include:
An integral part of our new strategy is our responsibility to all stakeholders, as well as the environment and the communities where we live and work. One way that we showed our commitment to environmental sustainability in 2019 was by becoming the first company in the upstream E&P services area to commit to setting a science-based target to reduce our GHG emissions. We believe that this is a necessary and important step to lead positive, measurable changes in GHG emissions within the industry to help reduce climate change.
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2021 was an exceptional year for Schlumberger, in which we demonstrated the strength and agility of our emergent strategy—rooted in operational execution, superior returns, and capital discipline. After two years of extraordinary industry, market, and social uncertainty, the Schlumberger team delivered a year of remarkable financial results, surpassing all of our 2021 financial targets and closing the year with excellent momentum.
Highlights of our 2021 financial performance, reflecting the success of our returns-focused strategy and execution, include:
Adjusted EBITDA(1) $4.925 billion | Free Cash Flow(2) $2.997 billion | Revenue $22.9 billion | ||
14% increase over 2020 | 110% increase over 2020 | H2 2021 revenue increased 18% over H2 2020, excluding impact of divestitures | ||
Adjusted EBITDA Margin 21.5% | Net Debt Reduced by $2.8 billion | Earnings per Share (GAAP) $1.32 | ||
Expanded 320 basis points year-on-year, achieving highest adjusted EBITDA margin level since 2018 | Net debt to adjusted EBITDA ratio of 2.2x Lowest net debt level since 2016 | Earnings per share, excluding charges and credits, was $1.28, an 88% increase over 2020 | ||
On the strength of these financial results, driven by excellent operational leverage as a result of our Performance Strategy and strong working capital management, we were able to reduce our net debt to adjusted EBITDA ratio from 3.2x to 2.2x year-on-year. At the same time, we achieved double-digit pretax operating margins in North America—the highest levels since 2014—and we expanded our international pretax operating margins to the highest levels since 2018.
The success of 2021 was built upon the continued growth of our strategic business pillars—strengthening our core, digital, and new energy—to deliver high performance sustainably.
In our Core business, we fully operationalized our returns-focused strategy through our new Division and Basin organization and high-graded business portfolio, which have significantly increased our operating leverage. As a result of our differentiated capabilities, exceptional execution, and technology performance, we enhanced our market positions and won significant project awards during the year. With increased operating leverage and our outstanding customer performance, we ended the year marking six consecutive quarters of pretax segment operating margin expansion.
In Digital, we expanded market access and accelerated the adoption of our platform, which brings our customers AI capabilities and powerful digital tools to reduce cycle time, improve performance, and lower carbon intensity. We built partnerships to achieve comprehensive cloud access globally, collaborated with AI innovators to deploy machine-learning and AI solutions, and enabled digital operations through the automation of key workflows in well construction and production operations.
In Schlumberger New Energy, we continued to advance the development of clean energy technologies and low-carbon projects. In 2021, we invested in stationary energy storage—expanding our total addressable market—and progressed our ventures in hydrogen, lithium, geoenergy, and a suite of CCUS opportunities, including our BECCS project.
2021 also saw continued excellence in Safety and Service Quality, as we successfully navigated the challenges of the ongoing pandemic to ensure continued execution and performance for our customers. Our total recordable injury frequency showed a 31% improvement since 2019, and we also improved our automotive accident rate by 30% compared to 2019. Furthermore, our service quality performance was the best on record, despite increasing activity coupled with ongoing pandemic and supply chain challenges.
This was also a pivotal year for Schlumberger’s commitment to Sustainability. We announced our comprehensive 2050 net-zero commitment inclusive of Scope 3 emissions—a first for the energy services sector—and we launched our Transition Technology portfolio to focus on the decarbonization of oil and gas operations. In addition, Schlumberger earned an upgraded AA rating from MSCI, and won an ESG Top Performer award from Hart Energy, recognizing our sustainability efforts, our enhanced disclosures, and our commitment to apply our technologies and capabilities toward helping the world sustainably meet future energy demand.
In summary, 2021 was a defining and transformative year for Schlumberger. We continued to strengthen our core portfolio, while also enhancing our sustainability leadership, advancing our digital journey, and expanding our new energy portfolio.
As we enter 2022, Schlumberger is well prepared to seize the multiyear growth cycle ahead of us. We have entered this cycle in a position of strength, having reset our operating leverage, expanded peer-leading margins across multiple quarters, and aligned our technology and business portfolio with the new industry imperatives. We are truly excited about the outlook for Schlumberger—for continued financial outperformance, technology leadership, and growth opportunities in digital and clean energy innovation—to enable the world to unlock access to energy for the benefit of all.
(1) | Net income attributable to Schlumberger on a GAAP basis was $1.881 billion. For a reconciliation of adjusted EBITDA to net income attributable to Schlumberger on a GAAP basis, see Appendix A. |
(2) | Cash flow from operations was $4.651 billion. For a reconciliation of free cash flow to cash flow from operations, see Appendix A. |
Schlumberger Limited2022 Proxy Statement | 32 |
In 2019, themaking decisions regarding 2021 executive compensation, our Compensation Committee continued to focus on strengthening the link between pay and performance; retaining and motivating our top executives through a year of great change and uncertainty; appropriately compensating them for improving on our effective deployment of capital, working capital management and cash flow generation; and promoting long-term stockholder value despite challenging industry conditions.on:
• | strengthening pay-for-performance alignment; |
• | motivating and incentivizing outperformance; |
• | maintaining stability and retaining our top talent through business cycles; and |
• | appropriately compensating our executives for effectively deploying capital, generating strong cash flow and creating long-term stockholder value. |
In this context, and as more fully discussed elsewhere in this CD&A, below are some key actions that our Compensationthe Committee took with respect to our NEOs’ 2019 compensation:2021 compensation.
• |
The 2021 LTI program consisted of four types of grants, equally weighted at target performance:
• | 25% Absolute FCF Margin PSUs: We replaced our previous free cash flow conversion rate metric, which was measured over a two-year period, with a metric that measures free cash flow margin over a three-year performance period, to |
• | 25% Relative TSR PSUs: We introduced PSUs based on a three-year relative |
• |
• |
As a result of this redesign, we reduced the maximum overall payout opportunity under our 2021 LTI program from 250% to 200%, in line with market practice for a more balanced and diversified LTI grant program.
• |
• | CEO Compensation Program Unchanged — The | |
Stockholder Engagement; 2019 Say-On-Pay Vote
Our Compensation Committee is committed to seeking and considering stockholder feedback in designing and managing our executive compensation program. We proactively engage with our stockholders regarding executive compensation and other corporate governance matters throughout the year, as discussed further in “Corporate Governance—Stockholder Engagement” on page 13. Our compensation program design for 2019 was largely developed and implemented in response to, and as a product of, discussions with our stockholders.
In 2018, we reached out twice to our stockholders. First, in advance of our 2018 annual general meeting, we contacted 20 of our largest stockholders, representing 47% of our outstanding stock, and met with 14 of them, representing 35% of our outstanding common stock, to seek their views on our executive compensation program. Later in the year, we reached out to 18 of our largest stockholders, representing 41% of our outstanding stock, and eight of these stockholders, representing 24% of our outstanding stock, accepted our request for a meeting. Senior members of our management team and, in several cases, our lead independent director and the chair of our Compensation Committee, engaged these stockholders in frank and productive discussions regarding our executive compensation program. In response to stockholder feedback, the Compensation Committee in January 2019 approved significant changes to our executive compensation program, which are reflected above under “—Overview of Compensation Decisions for 2019” and are also summarized in the chart below.
Following these stockholder engagement efforts, 95.8% of the votes cast at our 2019 annual general meeting of stockholders voted in favor of our executive compensation program.
Our Board and Compensation Committee recognize that continued, regular engagement with our stockholders is critical to maintaining the substantial stockholder support of our executive compensation program that they demonstrated at our 2019 annual general meeting, as well as to further align our executive compensation objectives with our stockholders’ priorities. As a result, in fall 2019, senior members of our management team reached out to 26 of our largest stockholders, representing 50% of our outstanding stock, to offer to discuss compensation matters and listen to their feedback. None of these stockholders requested a meeting with us, because, among other reasons, we had implemented changes to our compensation program design that addressed their concerns. We intend to continue to consider our stockholders’ priorities and recommendations with respect to our executive compensation program design and practices in 2020 and beyond.
Strategy-Focused Cash Incentive — We continued to |
Annual Cash Incentive Awards
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profitable, sustainable growth. As a result of our performance strategy: |
• | our 2021 adjusted EBITDA was $4.925 billion, representing a 14% increase over 2020, and resulting in a payout of 89% of the |
• | our 2021 cash flow generated was $3.000 billion, representing a 12% increase over 2020, and resulting in a payout of 100% of the maximum payout opportunity for the cash flow generation component of our 2021 cash incentive plan. |
• | ESG Objectives for All NEOs — Every NEO had at least one strategic personal objective related to sustainability, new energy, or HSE goals. |
• | No Profit-Sharing — Consistent with 2020, our |
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The following isBoard did not increase any element of the 2021 target total direct compensation of Mr. Le Peuch, our CEO, as compared to 2020. However, due to the timing of a summary2019 PSU grant (in lieu of some of our executivea 2020 grant) awarded to Mr. Le Peuch in connection with his CEO appointment, the Summary Compensation Table reflects an increase in his 2021 total reported compensation, best practices and policies.as explained in the chart below.
In August 2019, in connection with Mr. Le Peuch’s promotion to CEO, he received a PSU award with a target value of $10.5 million. This award was granted in lieu of a 2020 LTI award, and, as a result, Mr. Le Peuch’s total 2019 compensation, as shown in the Summary Compensation Table, reflects his target 2020 LTI award as well, while his 2020 compensation is unusually low. This is illustrated in the chart at below left entitled “CEO Pay, Reported”.
In order to better reflect our Compensation Committee’s annual compensation mix for our CEO, the chart at below right entitled “CEO Pay, As Adjusted” reflects his three-year total direct compensation, as adjusted to show the 2019 CEO promotion LTI grant subtracted from the 2019 column and added to the 2020 column, because that award was in lieu of his 2020 LTI target award.
CEO Pay, Reported | | CEO Pay, As Adjusted |
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(1) | “Other” reflects our CEO’s compensation included in the “Change in Pension Value & Nonqualified Deferred Compensation Earnings” and “All Other Compensation” columns in the Summary Compensation Table. |
Framework for Setting 2021 Executive Compensation in 2019
Executive Compensation Philosophy
Our executive compensation program is designed so that the higher an executive’s position in the Company, the greater the percentage of compensation that is “at risk” — that is, contingent on our financial performance, long-term stock price performance and individual performance. See “—Relative Size of Direct Compensation Elements” beginning on page 30. The Company believes that having a significant portion of our executives’ compensation at risk more closely aligns their interests with our long-term interests and those of our stockholders.
The table below sets out the elements of our NEOs’ 2019 total direct compensation; certain key features of each element; how we determine their size; and how each of these elements of compensation supports our business strategy.
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In setting our executives’ compensation, we believeour Compensation Committee believes that:
• | the pay of our | |
• | our | |
• | LTI awards should encourage the creation of long-term stockholder value, align our executives’ compensation with our stockholder returns, and incentivize our executives to achieve difficult but attainable strategic and financial goals that support our long-term performance and our leadership position in our industry; | |
• | our executive compensation structure should enable us to recruit, develop, motivate and retain top global talent, both in the short-term and long-term; and | |
• |
Promotion from within the Company is a key principle at Schlumberger, and all of our named executive officers have reached their current positions through career development within the Company. We view diversity of our workforce as both a very important part of our cultural philosophy and a business imperative, as it better enables us to serve clients anywhere in the world.
Relative Size of Direct Compensation Elements
| Schlumberger Limited2022 Proxy Statement | 34 |
Our 2021 executive compensation program consistsconsisted of three primary elements, comprising our executives’ total direct compensation:
LTI |
Within these elements, 75% of our executives’ 2021 target LTI equity awards and 100% of their annual cash incentive awards were performance-based. These elements allowhave allowed us to remain competitive and attract, retain and motivate top executive talent with current and potential future financial rewards.talent.
The Compensation Committee reviewschart below sets out the primary elements of our NEOs’ 2021 total direct compensation, throughout the year, to evaluate whether each element of direct compensation remains competitive with companies in Schlumberger’s two main executive compensation peer groups as described in “Other Aspects of Our Executive Compensation Framework—Peer Group Companies” below. The Compensation Committee relies on its own judgment in making these compensation decisions after its review of external market data of companies in our two main peer groups, including the size and mix of direct compensation for executives in those companies. The Compensation Committee seeks to achieve an appropriate balance between annual cash rewards, which encourage achievement of annual financial and non-financial objectives, and LTI awards, which encourage effective deployment of capital and the generation of cash flow to enable us to execute our strategy.
While external market data provide important guidance in making decisions on executive compensation, the Compensation Committee does not set compensation based on market data alone. When determining the size and mixcertain key features of each element, and how each of an NEO’s total directthese compensation the Compensation Committee also considers the following factors:elements supports our strategy.
KEY FEATURES | HOW THIS ELEMENT SUPPORTS OUR STRATEGY | PERFORMANCE- BASED? | AT RISK? | ||||
Free Cash Flow Margin PSUs (25%) | Absolute performance metric, based on our free cash flow margin over a three-year period | •Aligns with our publicly disclosed financial objective of achieving double-digit free cash flow margin • Encourages our NEOs to generate cash flow to allow for net debt reduction and strategic investments in line with external commitments | |||||
Return on Capital Employed PSUs (25%) | Relative performance metric, comparing our average annual ROCE to that of four key oilfield service competitors over a three-year period | •Measures the efficiency of our capital employed relative to key competitors, consistent with our strategic priorities • Motivates and rewards executives for relative outperformance on a key financial metric | |||||
Total Shareholder Return PSUs (25%) | Relative performance metric, comparing our cumulative TSR over a three-year period to that of eight companies of similar size and footprint in our industry | •Directly aligns executive LTI payouts with stockholder value creation • Uses a clear and objective metric to evaluate our performance against other comparable companies in our industry | |||||
Time-Based RSUs (25%) | “Cliff” vesting after three years, subject to continued employment | •Promotes stability and retention of our executive team through business cycles | |||||
Annual Cash Incentive Award | 70% based on achieving quantitative Company financial objectives, evenly split between adjusted EBITDA and cash flow generation targets 30% based on strategic personal objectives | • Adjusted EBITDA reflects the |
The charts below show the percentage of 2019 base salary, target annual cash incentive and LTI compensation established by the Compensation Committee for Mr. Kibsgaard—our former CEO—and for our other NEOs. As shown in the charts below, approximately 88% of Mr. Kibsgaard’s 2019 target total direct compensation was at risk, and approximately 86% of the 2019 target total direct compensation of our other NEOs was at risk.
earnings
• Cash flow generation is critical to achieving the Company’s net debt reduction goals • Personal objectives, detailed on pages 41-42, align to the Company’s strategic focus areas, including sustainability | |||||||
Base Salary | Only fixed compensation | • Provides a | |||||
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Our executive compensation program is designed so that the higher an executive’s position in the Company, the greater the percentage of compensation that is “at risk”. At-risk compensation refers to an executive’s LTI awards and annual cash incentive opportunity. We believe that having a significant portion of our executives’ compensation at risk more closely aligns their interests with Company interests and with the interests of our stockholders.
As illustrated below, approximately 90% of our CEO’s 2021 target total direct compensation was at risk, and approximately 83% of our other NEOs’ 2021 target total direct compensation was at risk.
CEO 2021 Target Pay Mix
| Other NEO 2021 Target Pay Mix
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Our Compensation Committee seeks to achieve an appropriate balance between LTI awards, which emphasize long-term stockholder value creation through efficient conversion of revenue into cash, effective deployment of capital, and total shareholder return, and annual cash rewards, which encourage achievement of near-term financial and non-financial objectives. Based on market data provided by Pay Governance LLC, theour Compensation Committee’s independent compensation consultant (“Pay Governance”Governance”), ourthe pay mix of our NEOs is generally more weighted toward LTI compensation thanwell-aligned with that of the companies in our two main executive compensation peer groups. The Compensation Committee may, at its discretion, modify an NEO’s mix of base pay, annual cash incentive and LTIs, or otherwise adjust an NEO’s total compensation, to best fit their specific circumstances. For example, the Compensation Committee may increase the size of an LTI award to an NEO if the aggregate career LTI awards granted do not adequately reflect the executive’s current position and level of responsibility within the Company, taking into account external market practices and the other factors described above.
In January 2019, the2021, our Compensation Committee concluded that, based on its review of the relative size of direct compensation elements of companies in our main executive compensation peer groups, groups—as well as internal factors, factors—the mix of base salary, target annual cash incentive and target LTI was appropriate for each of our NEOs.
In October 2019, the Compensation Committee reviewed internal pay equity following our CEO transition. Because our executive officers operate as a team, the Compensation Committee considers internal pay equity
The Competition for Our Executive Talent
A primary consideration of the Compensation Committee in overseeing our executive compensation program is the needdesign in recent years was largely developed and implemented in response to, motivate and retain what it considers to be the best executive talentas a product of, past discussions with our stockholders. For example, in the energy industry. We are the world’s largest oilfield services company and the only such company in the Standard & Poor’s (“S&P”) 100 Index. The Compensation Committee believes that delivering strong long-term stockholder returns and financial and operational results depends on our ability to attract, develop and retain the best talent globally. A highly competitive compensation package is critical to this objective.
In light of the foregoing, the Compensation Committee generally seeks to target total direct compensation for our NEOs between the 50thand 75thpercentiles of the Company’s two main executive compensation peer groups; however, the Compensation Committee may position an NEO who is new to a position at or below the 50thpercentile for a period of time. An NEO’s target total direct compensation depends on a variety of factors, including tenure in a particular position, individual and Company performance, and internal pay equity.
Our Compensation Committee believes that, for seasoned NEOs, the 50th to 75thpercentile range is appropriate to target because of Schlumberger’s leading position in the oilfield services industry; because competition for our executive talent in the oil and gas industry is exceptionally fierce; and because our executives are very highly sought after, not only by our direct oilfield service competitors but by other leading oil and gas and technology-focused companies.
In approving this target range and when setting compensation for 2019, the Compensation Committee considered that many current and former senior executive officers of leading companies in the energy industry have previously served as senior executives at Schlumberger.recent years:
In 2021, we redesigned our LTI program to more closely align the performance criteria with our long-term strategy and | ||||||
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Pay-for-Performance — Executive PayFollowing these program enhancements and Alignmentour proactive engagement with stockholders, our executive compensation program received the support of 95% of the votes cast at our 2021 AGM.
As part ofOur Board and Compensation Committee recognize that continued, regular engagement with our stockholders is critical to maintaining the Compensation Committee’s annual reviewsubstantial support of our executive compensation program demonstrated by our stockholders at our 2021 AGM. In advance of that meeting, we reached out to stockholders representing more than 50% of our outstanding common stock, to seek their views on our executive compensation program, as well as other corporate governance and sustainability topics. Stockholders representing approximately 11% of our outstanding common stock requested meetings to discuss our executive compensation, and our management team then reported on these discussions to our Compensation Committee. The feedback from these efforts indicated that our overall compensation program design is supported by our stockholders.
95% SUPPORT 2021 SAY-ON-PAY VOTE |
Our Compensation Committee used data from several distinct peer groups in July 2019evaluating and setting 2021 executive compensation, as summarized in the Committee directed Pay Governance to prepare a comparative pay-for-performance assessment against two sets of peer group companies:table below, and as further discussed throughout this CD&A.
Main Executive Compensation Peer Groups | Peer Groups for LTI Relative Performance Metrics | |||||||
Oil Industry | General Industry | TSR PSU Awards | ROCE PSU Awards | |||||
What type of companies are in this peer group? | 10 major oilfield services and E&P companies that are broadly comparable to Schlumberger in terms of revenue and market value. | 23 global advanced extractive, technology-driven manufacturing, and industrial engineering-focused companies with annual revenues, market valuations and global scopes that are similar to Schlumberger’s. | Eight companies of similar size and footprint in our industry, including all four companies in our ROCE comparator group and six of the companies in our oil industry peer group. | Four key oilfield services competitors: • Halliburton • Baker Hughes • TechnipFMC • NOV Inc. | ||||
What did the Committee use this peer group | Annual compensation reviews and peer benchmarking. | 2021 TSR PSU performance goals and measurements. | 2021 ROCE PSU performance goals and measurements. | |||||
Why do we use this peer group? | The Committee considers formal executive compensation survey data from both these peer groups when it reviews and sets our executive officers’ compensation. The general industry peer group comparisons are particularly relevant for non-operations positions, where skills and experience may be easily transferable to other industries outside oil and gas. | In evaluating our relative TSR performance, the Committee believes the most appropriate comparisons are against companies in the | In evaluating our relative ROCE performance, the Committee believes the most appropriate comparisons are against our key competitors in our industry. | |||||
Where to learn more? | For additional details about our main executive compensation peer groups, see “Other Aspects of Our Executive Compensation | |||||||
The purpose of the comparative assessment was to determine the degree of alignment between the total realizable compensation of our named executive officers from our 2019 proxy statement and our performance relative to these companies as measured by ROCE, free cash flow growth and TSR. We selected these metrics for their effectiveness in assessing long-term Company performance.
We assessed performance on a three- and five-year basis ending on December 31, 2018, because the Compensation Committee believes that alignment of pay and performance is more effectively assessed over the mid- and long-term. The Compensation Committee reviewed the total realizable compensation of Mr. Kibsgaard, our former CEO, against that of other CEOs (i) in our oil industry peer group and (ii) in our core competitor peer group. It then separately reviewed the total realizable compensation of our named executive officers from our 2019 proxy statement as a group against that of named executive officers at other companies comprising these two peer groups.
As a result of the assessment, the Committee determined that the total realizable compensation of our named executive officers from our 2019 proxy statement was generally aligned with performance, with especially strong alignment between their realizable compensation and free cash flow growth and ROCE performance over the five-year period.
For purposes of the Committee’s assessment, “total realizable compensation” for each period consisted of the following:
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Base salary is the fixed portion of an executive’s annual compensation, which providesproviding some stability of income since the other compensation elements are at risk. On appointment to an executive officer position,Our Compensation Committee annually reviews and approves the base salary is set at a level that is competitive with base salaries inlevels for our executive officers (other than the applicable peer compensation groups for that position, and takes into account other factors described below.
BaseCEO) after considering comparable salaries for each executive officer are compared annuallyexecutives with similar positionsresponsibilities in the applicableour main executive compensation peer groups. Base salary changes for executive officers, exceptgroups, comparisons to internal peer positions, recent Company performance, individual performance, business experience and potential, and the CEO, are recommended by the CEO and subject to approval by the CompensationCEO’s recommendations. The Committee taking into account:
The Compensation Committeeannually reviews the base salary of theour CEO in executive session and recommends his base salary to the non-executiveindependent members of ourthe Board for approval, based on the criteria described above. In addition to periodic reviews based on the factors described above, the Compensation Committee may adjust an executive officer’s base salary during the year if he or she is promoted or if there is a significant change in his or her responsibilities. In this situation, the CEO (in the case of executive officers other than himself) and the Compensation Committee carefully consider these new responsibilities, external pay practices, retention considerations and internal pay equity, as well as past performance and experience. Alternatively, an executive’s base salary can be frozen for a number of years until it falls in line with comparable positions in the applicable compensation peer groups.
Base Salary Decisions in 2019
Annual Base Salary Review
TheIn January 2021, our Compensation Committee reviewed the compensationbase salaries of each of our NEOs in January 2019. Upon review of comparative market dataline with the factors described above, and other relevant factors, the Compensation Committee determined to maintain the base salaries of Messrs. Le Peuch, Ayat, Al Mogharbel and Kibsgaard, as well as that of Ms. Gharbi,all NEOs at their then-current levels. Mr. Kibsgaard’s base salary was frozen from 2015 until his retirement, while Mr. Ayat’s base salary was frozen from 2011 until his retirement.levels for 2021.
NEO Promotions
In April 2019, the Compensation Committee approved the following base salary increases to the following NEOs, in connection with their promotions:
In July 2019, in connection with Mr. Le Peuch’s promotion to CEO, our Compensation Committee approved a further increase to his base salary from $1,000,000 to $1,400,000, which placed him at approximately the 50thpercentile of both the oil industry peer group and the general industry peer group.
Annual Cash Incentive Awards
The Company paysWe pay performance-based annual performance-based cash incentives to itsour executives to foster a results-driven, pay-for-performance culture and to align theirexecutives’ interests with those of our stockholders.
The Compensation Committee selects performance-based measures that it believes strike a balance between motivating an executive to increase near-term operating and financial results and driving profitable long-term Company growth and value for stockholders. Annual cash incentive awards are earned according to the achievement of financial and strategic operationalpersonal objectives. Our Compensation Committee selects performance measures that it believes support our strategy and strike a balance between motivating our executives to increase near-term financial and operating results and driving profitable long-term Company growth and value for stockholders.
For 2021, 70% of our NEOs’ target cash incentive opportunity was based on achieving quantitative Company financial objectives, and 30% was based on pre-established strategic personal objectives, consistent with our 2020 cash incentive plan. As reflected in the following chart, the 70% financial portion of the plan was evenly split between goals relating to adjusted EBITDA and cash flow generation.
2021 Cash Incentive Opportunity Mix
Weighted Payout Opportunity as a % of Target | |
Adjusted EBITDA(1) Goals | 0 – 243% |
Cash Flow Generation(2) Goals | 0 – 243% |
Strategic Personal Goals | 0 – 100% |
TOTAL: | 0 – 200% |
(1) | Adjusted EBITDA reflects earnings before interest, taxes, depreciation and amortization, excluding charges and credits. |
(2) | The calculation of cash flow generation is provided on page 40 of this proxy statement. |
The Committee determined to give the two financial metrics equal weighting in the 2021 cash incentive plan, by increasing the adjusted EBITDA component to 35% (from 30%) of the target opportunity and decreasing the cash flow generation component to 35% (from 40%) of the target opportunity, in order to balance these two key financial goals as described below. the Company enters a growth cycle.
The total maximum cash incentive payout for 2021 was 200% of target. The 2021 target cash incentive for our CEO was 150% of his base salary and for our other NEOs it was 100% of base salary, consistent with 2020. The weighted payout range for each metric is reflected in the table above.
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Our Compensation Committee reviewsconsidered the following in selecting adjusted EBITDA and approvescash flow generation as the absolute measures on which to base the 70% financial and other objectives applicable to the NEOs (and, in the caseportion of the CEO, recommends to the non-executive directors of the Board the financial objectives applicable to the CEO). The Compensation Committee believes that, with regardour NEOs’ annual cash incentive opportunity:
ADJUSTED EBITDA | CASH FLOW GENERATION | |||
WHY THIS METRIC? | • The Committee considers adjusted EBITDA to provide a good indicator of the quality of our earnings. • Investors and market analysts value the Company by reference to a multiple of adjusted EBITDA, so this metric aligns our NEOs’ 2021 compensation to a key market valuation method. • A portion of our line management’s 2021 cash incentive opportunity was tied to EBITDA performance goals, so this metric aligns executive compensation with line management. | • Cash flow generation is critical to achieving the Company’s objective to reduce net debt in line with our external commitments. • Cash flow generation also supports our pursuit of other strategies that enhance stockholder value, such as generating sufficient cash to support our dividend strategy, and making focused investments or acquisitions in the Company’s future growth areas, such as energy transition and digital. • The Committee also considers cash flow generation to be a good indicator of efficient capital management. |
In setting Company financial targets orand performance goals, as well as our NEOs’ keystrategic personal objectives, the Committee believes it is important to establish criteria that while difficult to achieveare realistic, yet still challenging in an uncertain global economy, are realistic.
Financial Objectives
As discussed above, based on stockholder feedbackeconomy. In addition, in 2018, the Compensation Committee approved new financial performance criteria and weightings for the NEOs’ 2019 target annual cash incentive in January 2019, with 30% of their 2019 target annual cash incentive opportunity being based on achievement of adjusted EPS targets and 40% on achievement of pre-established cash flow generation targets.
As a result, for our 2019 annual cash incentive program, the 70% quantitative financial component included two different metrics—adjusted EPS and cash flow generation—in addition to the 30% qualitative portion, as reflected in the following chart:
As shown in the above chart under “Payout Range,” an executive’s 2019 maximum annual cash incentive payment would equal 200% of target, consistent with the maximum payment opportunity for 2017 and 2018.
In 2018, one half of our NEOs’ target annual cash incentive opportunity was based on adjusted EPS targets, and 20% was based on revenue and pretax operating income (“PTOI”) targets, rather than cash flow generation targets. The Compensation Committee determined that it was appropriate to replace the 2018 revenue and PTOI goals with 2019establishing cash flow generation goals because it was consistent with Schlumberger’s stated commitment in early 2019 to meet itsfor the 2021 cash commitments in that year without increasing net debt. This metric also supports our goal to pursue opportunities that enhance stockholder value consistent with our CEO’s new strategy, such as reinvesting inincentive plan, the Company’s future growth, returning value to stockholders through dividends, reducing debt and other strategic initiatives.
The Committee also considered that the cash flow generationthese goals in the annual cash incentive portion of our NEOs’ compensation program differeddiffer substantially from the free cash flow conversionmargin goals contained in the LTI portion of our NEOs’ compensation program. This is because the annual cash incentive portion focuses solely on the absolute amount of cash generatedwe generate over a one-year period, whereasand takes into account, among other things, cash paid for acquisitions and investments, as well as cash proceeds generated from divestitures, none of which are taken into account in the free cash flow conversionmargin metric contained in our LTI awards. Our free cash flow margin PSU payout is based on the percentage ofcalculated as free cash flow converted from cumulative net incomedivided by revenue over a two-yearthree-year period. The Compensation Committee also determinedBecause free cash flow margin measures how efficiently we convert revenue into cash, it is a good indicator of the business’s ability to generate cash over the long term and, therefore, is a complementary metric to the cash flow generation metric in our annual cash incentive program.
In January 2021, upon review of market data indicating that it was appropriate to more heavily weight the financial portion of our NEO’s 2019NEOs’ target annual cash incentive opportunity toward cash flow generation targets instead of adjusted EPS targets.
The Compensation Committee further determined that it was appropriate in 2019 to continue to tie a significant portion—30%—of our NEOs’ annual cash incentive opportunity to the achievement of adjusted EPS goals, because adjusted EPS closely reflects stockholder value creation and aligns the interests of management with those of our stockholders.
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The Compensation Committee selected adjusted EPS and cash flow generation as the absolute measures upon which to base the financial portion of our NEOs’ annual cash incentive payout opportunity because they are the primary absolute bases on which we set our performance expectations for the year. We also believe that consistent adjusted EPS growth and cash flow generation lead to long-term stockholder value.
As a general matter, when considering the Company’s operating results for purposes of the financial portion of the annual cash incentive opportunity, the Compensation Committee may make adjustments for unusual or infrequent charges or gains, depending on the nature of the item, when it believes that our executives would be inappropriately penalized by, or would inappropriately benefit from, these items. For example, the Compensation Committee may exclude charges that arise from actions that management takes to proactively address events beyond its control, such as the industry downturn over the past few years, or to adjust for mergers, acquisitions and divestitures.
Key Personal Objectives
Our NEOs’ key personal objectives are approved early in the fiscal year. The Compensation Committee reviews and, subject to approval by the non-executive members of the Board, approves the key personal objectives of the CEO and assesses his performance against those objectives in determining a portion of his annual cash incentive award opportunity, taking into account performance for the just-completed fiscal year versus predefined commitments for the fiscal year; unforeseen financial, operational and strategic issues of the Company; and any other information it determines is relevant. The CEO reviews and approves the key personal objectives of the other NEOs, and assesses their performance against their pre-approved objectives in a similar way.
Each NEO’s annual cash incentive opportunity is tied to achievement of quantitative and qualitative goals that are specific to that NEO’s position, and may relate to:
2019 Annual Cash Incentive Results
Upon review of market data,competitively positioned, and taking into consideration internal pay equity, and that the target annual cash incentive opportunity of our NEOs was already positioned competitively from a market perspective, the Compensation Committee determined in January 2019 to leave the target annual cash incentive opportunity for all NEOs unchanged from 2018. In July 2019, the2020.
Adjusted EBITDA Targets and Results
Consistent with its 2020 process, in January 2021 our Compensation Committee approved an adjusted EBITDA performance matrix informed by market analysts’ consensus estimates of our full-year 2021 adjusted EBITDA as reported on Bloomberg prior to the Committee’s meeting (“EBITDA consensus”). The Committee set the minimum performance goal equal to then-current EBITDA consensus, a target performance goal based on our then-current internal forecast at 6% above EBITDA consensus, and a maximum performance goal at 15% above EBITDA consensus. The Committee believed that setting the target and maximum performance goals above EBITDA consensus would incentivize our executives to outperform market expectations. The following chart reflects our NEOs’ full-year adjusted EBITDA targets and corresponding potential payouts for 2021.
Performance Targets(1) | Potential Payout as a % of Target Opportunity(1) | Basis for Setting Performance Targets | |||||
Less than $4.35 billion | 0% | N/A | |||||
$4.35 billion | Minimum | 50% | Full-year 2021 consensus estimates in January 2021 | ||||
$4.60 billion | Target | 100% | Internal forecast: 6% above consensus estimates | ||||
$5.00 billion | Maximum | 243% | Set 9% above target performance goal and 15% above consensus estimates |
(1) | For adjusted EBITDA results between any two performance targets, payout is prorated. No cash incentive is earned if we do not achieve the minimum adjusted EBITDA target. |
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Our 2021 adjusted EBITDA was $4.925 billion, representing a 14% increase to Mr. Le Peuch’s target annualover 2020 and a 13% increase over full-year EBITDA consensus as of January 2021. Based on these results, and applying the payout matrix on page 39 immediately above, our Compensation Committee approved a payout of 89% of the maximum payout opportunity for the adjusted EBITDA component of our 2021 cash incentive opportunity from 100% to 150% when he was promoted to Chief Executive Officer. As a result, the 2019 target annual cash incentive opportunity was 150% of base salary for Mr. Kibsgaard and Mr. Le Peuch (effective August 2019), and 100% of base salary for our other NEOs (including Mr. Le Peuch through July 2019).plan.
2019 For a reconciliation of adjusted EBITDA to net income attributable to Schlumberger on a GAAP basis, see Appendix A. In approving the payout for 2021 adjusted EBITDA performance, the Committee reaffirmed its decision to calculate adjusted EBITDA results consistently with the Company’s presentation of adjusted EBITDA results in its 2021 earnings announcements and presentations to investors and with analysts’ calculation of their estimates.
Cash Flow Generation Targets and Results
The process used to set annual cash flow generation targets starts with a review of plans and projections following bottom-up planning from the field. Cash flow generation targets may increase or decrease year-over-year, taking into account:account, among other things, our operating and non-operating cash requirements, industry cycles, anticipated customer spending, activity growth potential, pricing, the introduction of new technology, strategic M&A activity, and commodity prices.
The following table reflects our NEOs’ full-year cash flow generation targets and corresponding potential payouts for 2021, as approved by our Compensation Committee in January 2021. The Committee believed the minimum performance goal would incentivize management to generate sufficient cash to cover the Company’s various 2021 cash commitments, including the full-year cash dividend payout amount, as well as our planned reduction of net debt. The Committee set the target performance goal using our internal full-year 2021 cash flow generation forecast, which included key investments in new energy and digital. The Committee believed the maximum performance goal—set 22% above the target goal—would incentivize management to generate additional cash to allow us to accelerate our net debt reduction.
Performance Targets(1) | of Target Opportunity(1) | Basis for Setting Performance Targets | |||||
Less than $1.80 billion | 0% | N/A | |||||
$1.80 billion | 50% | Intended to cover full-year 2021 cash commitments and planned net debt reduction | |||||
$2.30 billion | 100% | Internal full-year 2021 cash generation forecast | |||||
$2.80 billion | |||||||
Set 22% above target performance goal |
(1) | For cash flow generation results between any two performance targets, payout is prorated. No cash incentive is earned if we do not achieve the minimum cash flow generation target. |
The Committee recognized that the 2021 target performance goal was set below 2020’s cash flow generation result; however, in setting the performance goals in January 2021, the Committee believed this was appropriate taking into account:
Given the Company’s capital discipline and working capital management performance in 2021, including exceptional cash collections from customers in the fourth quarter, full-year cash flow generation exceeded the maximum performance goal. Our 2021 cash flow generated was $3.000 billion, representing a 12% increase over 2020. As a result, the Company was able to accelerate its deleveraging and reduce net debt by $2.8 billion during 2021. Based on the Company’s 2021 cash flow generation results, and applying the payout matrix above, our Compensation Committee approved a payout of 100% of the maximum payout opportunity for the cash flow generation component of our 2021 cash incentive plan.
In approving cash flow generation as a performance metric, to align our executives’ short-term incentive compensation with our publicly-stated goal of meeting all cash commitments in 2019 without increasing our net debt. The Committee also believed the metric should encourage management to pursue its strategy of divesting certain non-core businesses and assets while at the same time holding management accountable for investment and acquisition opportunities that it chose to pursue. However, theCompensation Committee believed that it was appropriate to exclude from any cash flow generation calculations acquisitions requiring cash investments and divestitures generating proceeds in excess of $500 million from our cash flow generation goals,million. This is because the Committee considered that such transactions would be enterprise-level transactions that should be evaluated and pursued independently, and should not be tied to short-termannual cash incentive payouts.
Based on the foregoing, and for purposes of the 2019 annual2021 cash incentive payouts, the Compensation Committee approved the following formulation for measuring our cash flow generation:
The Compensation Committee set the following full-year cash flow generation targetsfrom operations; less capital expenditures, investments in Asset Performance Solutions (“APS”), and corresponding payoutsmulticlient seismic data costs capitalized; less cash paid for 2019. In setting these goalsbusiness acquisitions and investments, net of cash acquired, provided that the purchase price for 2019, the Compensation Committee approved cash flow generation targets at levels that reflected an 11 percent increase over the 2018 cash flow generation of $2.52 billion.
For cash flow generation results between any two targets, payout is prorated. No cash incentive is earned if we do not achieve the threshold cash flow generation target.
Our 2019 cash flow generation was $3.39 billion. This resulted in a payout of 275%each of the individual transactions is less than $500 million; plus proceeds from the divestiture of businesses or assets, net of cash flow generation portiondivested, provided that the proceeds from each of the 2019 cash incentive opportunity.
individual transactions is less than $500 million. For a reconciliation of cash flow generation to cash flow from operations, see Appendix A.
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2019 Adjusted EPS Targets and Results
In 2019, the Compensation Committee changed the process for setting annual adjusted EPS targets. Rather than setting adjusted EPS targets based on the same process as it does for setting cash flow generation targets (as described above), the Compensation Committee at its January 2019 meeting approved an adjusted EPS performance matrix informed by market analysts’ consensus estimates of our 2019 adjusted EPS as reported on Bloomberg in late February 2019 (“EPS consensus”).
The Compensation Committee believed that this methodology—setting our 100% performance target equal to EPS consensus—would more accurately reflect our performance against stockholders’ and analysts’ expectations of Company performance in 2019. The Committee also believed that this methodology would allow our adjusted EPS performance goals to be informed by analysts’ consensus estimates as to our whole industry, because by late February most of our competitors and customers would have reported their full-year audited results for the prior year and provided forecasts for the current year.Strategic Personal Objectives
As a resultdiscussed above, 30% of this change, in late February 2019,our NEOs’ target 2021 cash incentive opportunity was tied to achieving quantitative and qualitative performance goals specific to their roles with the Compensation Committee approved the following full-year adjusted EPS targets and corresponding payouts for 2019 based on EPS consensus:Company. These may relate to:
2019 Adjusted EPS Performance Targets | % of Adjusted EPS Portion (Payout %) | |||||
Less than | $1.28 | 0% | ||||
$1.28 | 50% | |||||
$1.60 | 100% | |||||
$1.92 | 200% |
• | financial goals, such as profitability, revenue growth, capital management or cost reduction; | |
• | performance achievements, such as contract awards or operational reliability or HSE objectives; | |
• | non-financial, sustainability and ESG-related goals that are important to the Company’s strategy and reputation, such as GHG emissions reduction, people-related objectives including diversity and gender balance, and ethics and compliance; and | |
• | other business priorities, including energy transition services and technologies. |
For adjusted EPS results between any two targets, payout is prorated. No cash incentive is earned if we do not achieve2021, the threshold adjusted EPS target.
The new methodology described above resulted instrategic personal objectives established for our 2019 adjusted EPS performanceNEOs, and their achievements against those goals, being lower than our 2018 adjusted EPS goals, and a target performance goal that was slightly lower than our actual 2018 adjusted EPS. The Committee considered these factors in approving the new methodology and determined that the benefits of a more market-derived adjusted EPS matrix informed by analysts’ estimates, full-year 2018 industry data and customer and competitor forecasts for 2019 outweighed possible concerns that our 2019 adjusted EPS performance goals may superficially appear less rigorous compared to the prior year’s goals.
As in prior years, the Compensation Committee evaluated our performance based on adjusted EPS, consistent with the manner in which we present our results in earnings announcements and in presentations to investors. It is also consistent with how analysts present their estimates. In deciding to exclude the charges and credits set forth in Appendix A in calculating our adjusted EPS, the Compensation Committee considered that the charges were almost entirely noncash and were driven primarily by external market conditions. In addition, the Committee determined that the charges did not reflect Schlumberger’s operating trends.
Schlumberger’s 2019 adjusted EPS was $1.47, while 2019 loss per share on a GAAP basis was $7.32. For a reconciliation of adjusted EPS to loss per share on a GAAP basis, see Appendix A. Based on these results, the Compensation Committee approved a payout of 80% of target for 2019 for the adjusted EPS component of our NEOs’ annual cash incentive opportunity.
2019 Key Personal Objectives and Resultsas follows:
CATEGORY | ||||||||
GOAL | ACHIEVEMENT | |||||||
Achieve a specified percentage of | Mostly achieved. | |||||||
Sustainability | Establish industry-leading emissions reduction targets. Progress deployment of | |||||||
Mr. Le Peuch earned |
Stephane Biguet, Executive Vice President and Chief Financial Officer | ||||||
GOAL | ACHIEVEMENT | |||||
Achieved. | ||||||
Achieved. | ||||||
New Energy | Accelerate expansion of new energy portfolio, by establishing a specified number of carbon capture and sequestration partnerships and by achieving certain milestones in lithium and hydrogen ventures. | Mostly achieved. | ||||
Attract increased investments from new investors, existing institutional stockholders, and ESG-focused funds based on pre-established targets to broaden investor base. | Achieved. | |||||
Mr. Biguet earned 96% of his payout opportunity for |
Khaled Al Mogharbel, Executive Vice President, Geographies | ||||||
CATEGORY | ACHIEVEMENT | |||||
Production and Enhanced Recovery | Enter into a minimum number of performance contracts exceeding a specified contract value. | Achieved. | ||||
Core Growth | Achieve opportunity win volume growth and bookings exceeding a pre-established target. | Achieved. | ||||
International Growth | Achieve international revenue growth as a percentage exceeding that of specified peer companies. | Achieved. | ||||
HSE | Achieve total recordable injury frequency and automotive accident rate per million miles below a target threshold. | Achieved. | ||||
Mr. Al Mogharbel earned | ||||||
plan. |
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CATEGORY | ||||||
GOAL | ACHIEVEMENT | |||||
Mostly achieved. | ||||||
Production and Enhanced Recovery | Enter into a minimum number of performance contracts exceeding a specified contract value. | Achieved. | ||||
Achieved. | ||||||
Achieved. | ||||||
Ashok Belani, Executive Vice President, Schlumberger New Energy | ||||||||
GOAL | ACHIEVEMENT | |||||||
Achieved. | ||||||||
plan. |
Each January, our Compensation Committee reviews and, subject to approval by the Board’s independent directors, approves our CEO’s strategic personal objectives for that year. The Committee also annually assesses our CEO’s performance against his strategic personal objectives established for the prior year, to determine the appropriate payout for the 30% portion of his annual cash incentive opportunity tied to his personal objectives. The CEO reviews and approves the strategic personal objectives of the other NEOs and assesses their performance against their pre-approved objectives in a similar way. The Committee annually approves the aggregate annual cash incentive payouts for all executive officers, including the payout portion related to an executive’s strategic personal objectives.
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Long-Term Equity Incentive Awards
LTI awards are designed to give NEOs and other high-value employees a long-term stake in the Company, provide incentives forincentivize the creation of sustained stockholder value, act as long-term retention and motivation tools, and directly tiealign employee and stockholder interests over the long term.
Since 2017, theIn January 2021, our Compensation Committee has granted 100%approved changes to our LTI award mix. In reviewing the design of our executives’ annual LTI awards in the form of PSUs, with payouts contingent on achievement of both absolute and relative Company financial performance goals.
In January 2019, in response to stockholder feedback, we incorporated a three-year relative TSR modifier into all of our 2019 PSU awards, in order to better tie our executives’ compensation to the creation of stockholder value.
The Compensation Committee believes that our current2021 LTI program servesfor our executive officers, and considering feedback from our stockholders in 2019 and 2020, as well as the following objectives:Committee’s previous pay-for-performance assessments, the Committee determined that the program should:
• | ||
• | ||
• | incorporate total shareholder return in a more meaningful way; | |
• | more closely align PSU performance metrics with our | |
• |
No shares will vest underBased on these considerations, in January 2021, the PSUsCommittee awarded to our NEOs if we do not achieve pre-established thresholdexecutives a mix of LTI grants, with 75% of their target LTI opportunity awarded in the form of PSUs—with payout contingent on achieving absolute and relative Company performance levels. No dividends will accrue or be paid on any unvested PSUs duringgoals over three-year periods—and 25% awarded in the applicable performance periods.form of three-year, time-based RSUs. The Committee believes this diversified LTI grant program better balances the various compensation objectives set forth in this section.
In January 2019, our NEOs earned 171%considering the reduced risk of the target sharestime-based RSUs as a new component of our common stock upon vestingLTI program, the Committee also set the maximum overall payout opportunity under the 2021 LTI program at 200% of target—significantly lower than the three-year PSUs that were granted to our NEOs250% maximum under the 2020 LTI program, in 2016, and 250%line with market practice.
MAXIMUM LTI PAYOUT OPPORTUNITY REDUCED TO 200% |
Schlumberger Limited2022 Proxy Statement | 42 |
The 2021 LTI program consisted of thefour types of grants, equally weighted at target shares of our common stock upon vesting of the two-year PSUs that were granted in 2017. In January 2020, our NEOs earned 141% of the target shares of our common stock upon vesting of the three-year PSUs that were granted to our NEOs in 2017, and 250% of the target shares of our common stock upon vesting of the two-year PSUs that were granted in 2018. See “Payouts Under PSU Awards” beginning on page 41.performance:
2021 LTI Program
25% Free Cash Flow Margin PSUs | 25% TSR PSUs | |||
The Committee approved awards of PSUs that will vest, if at all, based on our absolute free cash flow margin over a three-year performance period (the “2021 FCF Margin PSUs” or “FCFM PSUs”). The Committee selected absolute free cash flow margin as a performance metric for our 2021 LTI program, replacing our previous two-year free cash flow conversion rate metric, because the new metric more closely aligns with our long-term strategy and publicly disclosed free cash flow margin objectives. | The Committee approved awards of PSUs that will vest, if at all, based on our relative TSR percentile rank as compared to the cumulative TSR results achieved by eight companies of similar size and footprint in our industry over a three-year performance period (the “2021 TSR PSUs”). The Committee set the target performance goal above median at the 60th percentile—requiring performance better than five of the eight comparators to achieve target payout. The Committee selected relative TSR as a performance metric for our 2021 LTI program in order to more directly align LTI payouts with stockholder value creation. | |||
25% ROCE PSUs | 25% Time-Based RSUs | |||
The Committee approved awards of PSUs that will vest, if at all, based on the average annual ROCE we achieve over a three-year performance period as compared to the average annual ROCE of our key oilfield services competitors together over the same period (the “2021 ROCE PSUs”). This PSU metric remains unchanged from the LTI grants awarded to our NEOs in 2020; however, for 2021, the Committee removed Weatherford International (Weatherford) from this PSU comparator group because it had underperformed the rest of the comparator group in recent years. | The Committee approved awards of three-year, time-based RSUs, to better secure the retention and stability of our executive team. While our executives had received 100% of their annual LTI grant in the form of PSUs since 2017, the Committee determined in 2021 that a more diversified LTI program better balances its objectives of: • aligning pay-for-performance and creating stockholder value; • motivating and incentivizing outperformance; and • maintaining stability and retention through business cycles. | |||
How We Determined the Value of 20192021 LTI Equity Awards
The value of an executive’s LTI grant increases with the level of an executive’s responsibility at the Company. For theour CEO and ourthe other NEOs, it is the largest element of their total direct compensation. In determining the value of LTI awards granted to our NEOs, theour Compensation Committee (in recommending approval bythat the Board ofapprove the CEO’s awards) and the CEO (in recommending awards for the other NEOs) first consider market data regarding the LTI value for the most comparable positions in the Company’sour main executive compensation peer groups, as well as several other factors, which may include:such as:
• | the Company’s financial and operating | |
• | the executive’s size and mix of | |
• | internal pay equity; | |
• | retention; | |
• | achievement of non-financial goals; | |
• | the | |
• | the level of competition for executives with comparable skills and experience; and | |
• | the total value and number of equity-based awards granted to | |
The Compensation Committee approved the target dollar value of annual LTI awards for our NEOs in 2019 at its January meeting, based on the relevant factors above.
LTI Grants to Our NEOs in 2019
Annual PSU Grants; TSR Modifier
In January 2019, the Compensation Committee decided to hold flat the 2019 target annual LTI grant values for all2021, our NEOs, based on its review of comparator peer group data and the market environment. The Compensation Committee approved (and in the case of Mr. Kibsgaard,Le Peuch, the non-executiveindependent members of the Board approved):
The Board also awards to the NEOs as reflected in the table on the following page. Based on its review of comparator peer group data, the Committee determined to hold annual target LTI grant values flat for Messrs. Le Peuch and Belani. In addition, based on comparator peer group data and internal pay equity considerations, the Committee approved an increase in Mr. Biguet’s annual target LTI dollar value from $2.5 million to $3.2 million. Lastly, based on internal pay equity considerations, as well as adjusted responsibilities following the Company’s 2020 restructuring, the Committee approved a three-year relative TSR modifier that appliesdecrease in Mr. Al Mogharbel’s annual target LTI dollar value from $3.72 million to all 2019 ROCE PSUs$3.5 million, and 2019 FCF Conversion PSUs. As a result, all of our NEOs’ 2019 PSUs are subjectan increase in Ms. Gharbi’s annual target LTI dollar value from $3.2 million to a three-year TSR performance metric and will vest, if at all, only after a three-year TSR performance period.
Under this modifier, the number of shares that our NEOs would earn will be reduced by 25 percentage points (e.g. from 100% of target to 75% of target) if our cumulative TSR during the three-year TSR performance period commencing in 2019 is in the bottom 33rdpercentile relative to the TSR of the individual companies comprising the OSX Index. This modifier will only reduce the number of shares earned under a PSU award, but will not increase the number of shares earned.$3.5 million.
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The following table details the target number of ROCE PSUs (at target) and FCF Conversion PSUsRSUs granted to our NEOs in January 20192021 and the estimated grant date fairtarget values of theour NEOs’ 20192021 and 2018 annual2020 LTI awards, as well as the year-over-year percentage change between the two amounts.
Name | Target Number of ROCE PSUs | Target Number of FCF Conversion PSUs | Target Value of 2019 Annual LTI Grants(1)(2) | Target Value of 2018 Annual LTI Grants(2) | % Change | |||||
O. Le Peuch | 44,800 | 44,800 | $3,200,000 | $3,200,000 | 0% | |||||
K. Al Mogharbel | 44,800 | 44,800 | $3,200,000 | $3,200,000 | 0% | |||||
P. Schorn | 44,800 | 44,800 | $3,200,000 | $3,200,000 | 0% | |||||
H. Gharbi | 44,800 | 44,800 | $3,200,000 | $3,200,000 | 0% | |||||
P. Kibsgaard | 168,000 | 168,000 | $12,000,000 | $12,000,000 | 0% | |||||
S. Ayat | 56,000 | 56,000 | $4,000,000 | $4,000,000 | 0% |
Name | Target Number of FCFM PSUs | Target Number of TSR PSUs | (1) | Target Number of ROCE PSUs | Number of RSUs | Target Value for 2021 LTI | (2) | Target Value for 2020 LTI | (3) | % Change | |||||||
O. Le Peuch | 110,290 | 96,440 | 110,290 | 110,290 | $10,500,000 | $10,500,000 | (4) | 0% | |||||||||
S. Biguet | 33,610 | 29,390 | 33,610 | 33,610 | $3,200,000 | $2,500,000 | 28% | ||||||||||
K. Al Mogharbel | 36,760 | 32,150 | 36,760 | 36,760 | $3,500,000 | $3,720,000 | (6)% | ||||||||||
H. Gharbi | 36,760 | 32,150 | 36,760 | 36,760 | $3,500,000 | $3,200,000 | 9% | ||||||||||
A. Belani | 37,820 | 33,060 | 37,820 | 37,820 | $3,600,000 | $3,600,000 | 0% |
(1) | |
(2) | The actual grant date fair value of each grant, computed in accordance with applicable accounting standards, is disclosed in the Grants of Plan-Based Awards |
NEO Promotions
The Compensation Committee approved the following PSU awards to certain NEOs in 2019 in connection with their promotions, each such award having terms identical to the grants made in January 2019:
(3) | ||
(4) | ||
Because the July 2019 PSU award represented Mr. Le Peuch’s estimated annual LTI target award in his new role as CEO, and in light of Mr. Le Peuch’s PSU award earlier in 2019 upon his appointment as Chief Operating Officer (described above), the Board determined that Mr. Le Peuch should not receive an annual LTI award in January 2020.
In addition, in connection with our CEO transition, the Compensation Committee approved grants of RSUs to three of our senior operational executives. The purpose of these awards was to retain these key executives through the CEO transition. The awards represented only 25% of our key executives’ total reported compensation for 2019. They will vest only after three years, which provides senior executive stability to us and our shareholders.
The three NEOs received the following grants of RSUs in April 2019:
These RSUs will vest in April 2022, subject to the executive’s continued employment with us through the vesting date.
2019 ROCE PSUs:2021 Absolute FCF Margin PSUs — Performance Measures and Goals
In January 2019, the2021, our Compensation Committee set goals for the 2019new 2021 FCF Margin PSUs based on our absolute free cash flow margin over a three-year performance period (January 1, 2021 to December 31, 2023). At the end of the performance period, the Committee will certify our three-year cumulative absolute free cash flow margin and then determine the percentage of shares earned based on the graph below.
2021 FCF Margin PSU Payout Matrix
The number of 2021 FCF Margin PSUs that will vest and convert to shares as of the vesting date can range from 0% to 250% of target, depending on our absolute free cash flow margin performance, but in no event will payout relating to this metric exceed 250% of target. As illustrated in the graph above, no shares of our common stock will be earned if our free cash flow margin over the three-year performance period is less than 9.0%. In setting this minimum goal, the Committee considered that the Company’s three-year cumulative free cash flow margin, averaged from 2009 to 2020, was 8.6%. Therefore, the Company would need to exceed these historical margin results in order for any 2021 FCF Margin PSUs to vest.
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Free cash flow margin is calculated as free cash flow divided by revenue. Free cash flow margin measures how efficiently we convert revenue into cash, and is an indicator of capital efficiency. In selecting absolute free cash flow margin as the performance metric for 25% of our NEOs’ 2021 target LTI dollar value, the Committee considered that this metric was aligned with our capital allocation strategy and publicly disclosed financial objective of achieving double-digit free cash flow margin. The Committee also believes that tying a portion of our NEOs’ LTI payout to free cash flow margin encourages our executives to:
• | generate cash flow to allow for net debt reduction in line with our external commitments, | |
• | maintain capital discipline, | |
• | make key investments and capital expenditures in line with our stated strategy, including our energy transition strategy, and | |
• | increase the liquidity of the Company. |
The Committee also sought to maintain a mix of absolute (free cash flow margin) and relative (ROCE and TSR) metrics in our NEOs’ PSU awards, to effectively manage industry cycles.
For purposes of the 2021 FCF Margin PSUs, free cash flow represents cash flow from operations less capital expenditures, investments in APS projects, and multiclient seismic data costs capitalized. For a reconciliation of free cash flow to cash flow from operations, see Appendix A.
2021 Relative TSR PSUs — Performance Measures and Goals
In January 2021, our Compensation Committee set goals for the new 2021 TSR PSUs based on our relative TSR percentile rank, as compared to the cumulative TSR results achieved by eight companies of similar size and footprint in our industry over a three-year performance period (January 1, 2021 to December 31, 2023) (each, a “TSR comparator company”). At the end of the performance period, our Compensation Committee will certify the three-year, cumulative TSR results for us and for each TSR comparator company, based on the average of the last 20 trading days at the start and end of the performance period. The Committee will then determine our percentile rank relative to the TSR comparator companies, as well as the percentage of shares earned based on the table below.
Relative TSR Percentile Rank | % of Target Shares Earned (Payout %)(1) | |
Below 25th percentile | 0% | |
25th percentile | 25% | |
60th percentile | 100% | |
100th percentile (i.e. higher TSR than all TSR comparator companies) | 200% |
(1) | Number of shares determined by straight-line interpolation between performance levels. |
The number of 2021 TSR PSUs that will vest and convert to shares as of the vesting date can range from 0% to 200% of target, depending on our relative TSR performance, but in no event will payout relating to this metric exceed 200% of target. In setting the maximum payout opportunity for the 2021 TSR PSUs at 200%, which is below the maximum payout for the 2021 FCF Margin PSUs and 2021 ROCE PSUs, the Committee considered that management’s efforts would more directly affect free cash flow margin and ROCE, whereas management had less control over the Company’s TSR relative to that of the TSR comparator companies, due to external market and economic influences.
As illustrated by the table in this section, the Compensation Committee set the target performance goal above median at the 60th percentile—requiring performance better than five of the eight TSR comparator companies to achieve target payout. No shares of our common stock will be earned if our three-year, cumulative TSR is in the bottom 25th percentile rank as compared to that of the individual TSR comparator companies.
TARGET SET ABOVE MEDIAN RELATIVE TSR PERFORMANCE |
In selecting the TSR comparator companies for the 2021 TSR PSUs, the Committee focused on companies in the energy sector of generally similar revenue, market capitalization and footprint to Schlumberger. This is because the Committee believes that, in evaluating our relative TSR performance, the most appropriate comparisons are against companies in the energy sector affected by the same external factors as we are. The TSR comparator companies for the 2021 TSR PSUs are: Apache Corporation, Baker Hughes, ConocoPhillips, Halliburton, Hess Corporation, NOV Inc. (NOV), Occidental Petroleum, and TechnipFMC. Four of the TSR comparator companies are included in the ROCE comparator group for the 2021 ROCE PSUs, and six are included in our oil industry peer group, as discussed further under “—Other Aspects of Our Executive Compensation Program—Our Peer Group Companies” beginning on page 49 of this proxy statement. For purposes of calculating the vesting of the 2021 TSR PSUs, any TSR comparator company that is acquired will be removed from the percentile rankings, and any company that files for bankruptcy will be deemed to have achieved the lowest ranking three-year TSR result.
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2021 Relative ROCE PSUs — Performance Measures and Goals
In January 2021, our Compensation Committee set goals for the 2021 ROCE PSUs based on our average annual ROCE over a three-year performance period (January 1, 2021 to December 31, 2023), as compared to the average annual ROCE of the following oilfield services competitors, taken together over the same period: Halliburton, Baker Hughes, Weatherford, National Oilwell VarcoTechnipFMC and TechnipFMCNOV (collectively, the “ROCE“ROCE comparator group”group”). At the end of the performance period, the Committee will certify our average ROCE and that of the ROCE comparator group as a whole, and then determine the percentage of shares earned based on the graph below.
2021 Relative ROCE PSU Payout Matrix
The number of 2021 ROCE PSUs that will vest and convert to shares as of the vesting date can range from 0% to 250% of target, depending on our relative ROCE performance, but in no event will payout relating to this metric exceed 250% of target. As illustrated in the graph above, consistent with the ROCE PSUs granted in 2020:
• | If our average annual ROCE over the three-year performance period is four percentage points or more below the average of the ROCE comparator group, then no 2021 ROCE PSUs will vest and no shares will be earned. This is because our Compensation Committee believes our executives should not receive PSU payouts for significantly low relative ROCE performance. | |
• | If our average annual ROCE over the three-year performance period is equal to that of the average of the ROCE comparator group as a whole, then the 2021 ROCE PSUs will vest at 100% of target. If our average annual ROCE over that period is higher than that of the average of the ROCE comparator group as a whole, then the 2021 ROCE PSUs will vest between 101% and 250% of target, as shown by the solid line in the graph above. | |
• | In addition, if both (x) our absolute, single-year ROCE is greater than 10% in 2023, and (y) our single-year 2023 ROCE exceeds that of the average of the ROCE comparator group as a whole, then the 2021 ROCE PSUs will vest at an increased rate (up to a maximum of 250%), as shown by the dotted line in the graph above. |
ROCE is a measure of the efficiency of our capital employed, and is a comprehensive indicator of long-term Company and management performance. We selected a ROCE metric that is relative because it allows us to directly compare how we deploy our capital against key comparator companies in oilfield services. Furthermore, ROCE measures performance, measured in a way that is tracked and understood by many of our investors. This is also the metric that theOur Compensation Committee approved for the PSUs issuedhas based a portion of our NEOs’ LTI awards on a relative ROCE metric since 2016, because this metric allows us to directly compare how efficiently we deploy our NEOs in 2018.
Our selection of ROCE as a performance metric forcapital against our 2019 PSUs iskey oilfield services competitors. The Committee also consistent with our strategic priorities. The Compensation Committee believes that tying a partportion of our senior executives’ LTI paypayout to achieving our capital efficiency goals and comparing these results to that of keyour competitors in oilfield services will motivate our executives to continue to innovate. The Compensationfocus on performance, and result in increased revenue and improved margins. In selecting ROCE as the performance metric for 25% of our NEOs’ 2021 target LTI dollar value, the Committee also believesconsidered that improvements in efficiency through innovation will increase revenue and improve margins through our continued focus on pricing and cost control.
The ROCE performance period for the 2019 ROCE PSUs began on January 1, 2019 and ends on December 31, 2021. They are also subject to a three-year TSR performance period under the relative TSR modifier, over the same period.
Vesting of these PSUs will depend on our performance compared to average ROCE of our comparator group, as illustrated in the graph below. If our average annual ROCE over the three-year period is equal to that of our ROCE comparator group as a whole, then the 2019 ROCE PSUs will vest at 100% of target. The number of PSUs that will vest and convert to shares as of the vesting date can range from 0% to 250%. In no event will payout exceed 250%. If our ROCE achieved is less than or equal to six percentage points below the average of the ROCE comparator group, no 2019 ROCE PSUs will vest and no shares will be earned.
At the end of the ROCE and TSR performance periods, the Compensation Committee will certify our average ROCE and that of the ROCE comparator group as a whole. The Committee will then determine the percentage of shares earned based on the graph below, as adjusted for the three-year relative TSR modifier:
2019goals align executives’ potential ROCE PSU Payout Matrix
payouts with the Company’s goal of achieving absolute ROCE above the Company’s weighted average cost of capital.
We calculate ROCE as a ratio, the numerator of which is (a) income from continuing operations, excluding charges and credits plus (b) after-taxafter tax net interest expense, and the denominator of which is (x) stockholders’ equity, including non-controlling interests (average of beginning and end of each quarter in the year), plus (y) net debt (average of beginning and end of each quarter in the year). The Compensation Committee may adjust the Company’s income from continuing operations to take into account the effect of significant impacts or activities that are not representative of underlying business operations, such as acquisitions, divestitures, asset impairments and restructurings. Furthermore, the Compensation Committee evaluates, and may adjust for, the effect of acquisitions or divestments on a case-by-case basis for purposes of the ROCE calculation.
2019 FCF Conversion PSUs: Performance Measures and Goals
In January 2019, the Compensation Committee set goals for the 2019 FCF Conversion PSUs based on the percentage of our cumulative net income, excluding charges and credits, that we are able to convert to free cash flow over a two-year performance period.
The performance period for the FCF Conversion PSUs began on January 1, 2019 and ends on December 31, 2020. The Committee believed it was appropriate to set two-year FCF conversion performance goals due to the difficulty in setting meaningful cash flow performance targets over longer periods of time in our cyclical industry. The Compensation Committee set the target free cash flow conversion goal at 70%, which was the same as in 2018.
As stated previously, the 2019 FCF Conversion PSUs are also subject to a three-year TSR performance period under the relative TSR modifier, from January 1, 2019 to December 31, 2021.
Free cash flow is an important liquidity measure for the Company and is useful to investors and to management as a measure of the Company’s ability to generate cash. Our selection of free cash flow as a percentage of cumulative net income converted as the performance metric for the 2019 FCF Conversion PSUs is also part of our goal to better align executive compensation with stockholder returns and encourage our executives to maintain capital discipline through business cycles. Once business needs and obligations are met, this cash can be used to reinvest in the Company for future growth or to return to stockholders through dividend payments or share repurchases. The Compensation Committee believes that tying a part of our NEO’s LTI payout to our efficiency in converting cumulative net income to free cash flow incentivizes our executives to increase the liquidity of the Company.
For purposes of the 2019 FCF Conversion PSUs, free cash flow represents cash flow from operations, excluding charges and credits, less capital expenditures, investments in APS projects (formerly known as Schlumberger Production Management), and multiclient seismic data costs capitalized. The terms of these PSUs allow for cash payments made in the acquisition of baseline production and investments up to first production for APS projects to be excluded from the calculation of free cash flow. The purpose of these exclusions is to avoid creating a potential disincentive to appropriately invest in the APS business. However, in 2019, as part of our new strategy, we announced that we would no longer take equity positions in oil and gas assets. We also stated that we would not use cash to pay upfront costs of new projects. As a result, we do not anticipate any such exclusions to our free cash flow under our 2019 FCF Conversion PSUs.
The Compensation Committee has the discretion to adjustcap payouts on the Company’s income from continuing operations to take into account2021 ROCE PSUs at 100% of target in the effectevent of significant impacts or activities that are not representative of underlying business operations, such as acquisitions, divestitures,material asset impairments attributable to M&A transactions and restructurings. Furthermore, the Compensation Committee evaluates, and may adjust for, the effect of acquisitions or divestments on a case-by-case basis for purposes of the free cash flow calculations.other management decisions.
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VestingPayouts Under Prior LTI Awards
Stock Options
Prior to 2017, the Company had granted a significant portion of its LTI compensation to executives in the 2019 FCF Conversion PSUs requires us to convert no less than 50%form of stock options. As of December 31, 2021, all of our cumulative net incomeexecutives’ outstanding stock options were “underwater.”
PSUs Vesting in 2021
As previously disclosed in the proxy statement for our 2021 AGM, in January 2021 our Compensation Committee approved the relative ROCE results for the PSUs issued to free cash flowour NEOs in 2018. The relative ROCE PSUs issued in 2018 were earned at 134% of target, based on our average annual ROCE over the FCF conversionthree-year performance period being 173 basis points above the average annual ROCE of five key oilfield services competitors taken together over the same period. These competitors were Halliburton, Baker Hughes, TechnipFMC, Weatherford and NOV (the “prior ROCE comparator companies”). For additional details, see the Option Exercises and Stock Vested in 2021 table on page 58 of this proxy statement.
PSUs Vesting in 2022
In calculating this achievement, theJanuary 2019, our Compensation Committee will certify the cumulative free cash flow and net income generated by the Company over the two-year FCF conversion performance period. If the percentage of free cash flow conversion is less than or equalapproved PSU awards to 50%, no shares of our common stock will be earned.
The number of PSUs that will convertNEOs as follows, in each case subject to shares at the end of the performance period can range from 0% to 250%. In no event will payout exceed 250%. The percentage achieved will depend on our performance over the FCF conversion performance period as illustrated in the following table. At the end of the FCF conversion and TSR performance periods, the Compensation Committee will determine the number of shares earned based on the table below, as adjusted for thea three-year relative TSR modifier:
Cumulative Cash Converted to FCF | % of Target Shares Earned (Payout %)(1) |
Less than or equal to 50% | 0% |
60% | 50% |
70% | 100% |
90% | 200% |
Equal to or greater than 100% | 250% |
With respect to 50% of our NEOs’ 2019 target LTI dollar value, payout was conditioned based on the percentage of our cumulative net income, excluding charges and credits, converted to free cash flow from January 1, 2019 to December 31, 2020 (the “2019 FCF Conversion PSUs”). | ||
• | With respect to 50% of our NEOs’ 2019 target LTI dollar value, payout was conditioned based on our average annual ROCE achieved over a three-year performance period as compared to the |
Payouts Under PSU Awards
2019 Payouts Under 2016 ROCE PSUs
In January 2016,2021, the Compensation Committee granted PSUs to our NEOs and conditioned payout based on our average annual ROCE achieved over a three-year performance period as compared to the average annual ROCE of the ROCE comparator companies (the “2016 ROCE PSUs”).
In January 2019, the Compensation Committee approved the results for the 2016 ROCE PSUs relative to the performance criteria that the Compensation Committee had previously approved. Specifically, the Compensation Committee determined that, based on the then-available reported results of the ROCE comparator companies, the 2016 ROCE PSUs had been earned at 171% of target, based on Schlumberger’s annual average ROCE of 310 basis points above the average of the ROCE comparator group through September 30, 2018, which was at the time the most recent fiscal period end reported by all of the companies comprising the ROCE comparator group. Because the award agreements for the 2016 ROCE PSUs provide that the PSUs are earned and settled in common stock as soon as practicable following the end of the ROCE performance period, the Compensation Committee approved the issuance of 90% of the shares that the Compensation Committee determined had been earned under the 2016 ROCE PSUs for the period from January 2016 through September 2018, since most of the companies in the ROCE comparator group had not yet reported their 2018 audited results.
In March 2019, the Company issued the number of additional shares determined to have been earned upon the disclosure of all of the ROCE comparator companies’ full-year 2018 audited results based on achievement of the 171% of target.
2019 Payouts Under 2017 Free Cash Flow PSUs
In January 2017, the Compensation Committee granted PSUs to our NEOs and conditioned payout based on the cumulative free cash flow generated from January 1, 2017 to December 31, 2018, as a percentage of cumulative net income generated over that same period, excluding charges and credits (the “2017 FCF Conversion PSUs”).
In January 2019, the Compensation Committee determined that we achieved a cumulative free cash flow conversion rate of 133%166% for the two-year performance period applicable to the 2019 FCF Conversion PSUs, representing achievement of 250% of target, based on the Committee’s previously approved performance criteria. At the time, these PSUs remained subject to the TSR modifier, which would have caused payouts to be reduced by 25% if our three-year, cumulative TSR was in the bottom 33rd percentile rank as compared to the individual companies comprising the Philadelphia Oil Services Sector index as of January 2019. In January 2022, the Committee determined that the TSR modifier did not trigger a negative adjustment to the 2019 PSU payouts, because Schlumberger’s TSR ranked at the 89th percentile. As a result, in January 2022, our NEOs earned 250% of target under the 20172019 FCF Conversion PSUs. We issued the shares that were earned under the FCF Conversion PSUs in the form of restricted stock. These shares were subject to a mandatory one-year hold period, and were converted to non-restricted shares in January 2020.
2020 Payouts Under 2017 ROCE PSUs
In January 2017,2022, the Compensation Committee granted PSUs to our NEOs and conditioned payout based on our average annual ROCE achieved over a three-year performance period as compared to the average annual ROCE of the ROCE comparator companies (the “2017 ROCE PSUs”).
In January 2020, the Compensation Committeealso approved the results for the 20172019 ROCE PSUs relative tousing the Committee’s previously approved performance criteria that the Compensation Committee had previously approved.criteria. Specifically, the Compensation Committee determined that based on the then-available reported results of the ROCE comparator companies, the 20172019 ROCE PSUs had been earned at 141%182% of target, based on Schlumberger’s average annual average ROCE of 200being 327 basis points above the average of the prior ROCE comparator groupcompanies through September 30, 2019,the third quarter of 2021, which was at the time the mostthen-most recent fiscal period end reported by all of the companies comprising theprior ROCE comparator group.companies. Because not all the award agreements forprior ROCE comparator companies had reported their 2021 audited results as of January 2022, the 2017 ROCE PSUs provide that the PSUs are earned and settled in common stock as soon as practicable following the end of the ROCE performance period, the Compensation Committee approved thea preliminary issuance of 90% of the shares that the Compensation Committee determined had been earned under the 20172019 ROCE PSUs for the period from January 2017 through September 2019, since most of the companies in the ROCE comparator group had not yet reported their 2019 audited results.PSUs. Any additional shares finally determined to have been earned will be issued after all of the prior ROCE comparator companies disclose their full-year 20192021 audited results.
Unvested PSU Awards
In January 2020, our Compensation Committee approved PSU awards to our NEOs (other than the CEO), all of which are subject to a three-year relative TSR modifier and therefore remain unvested. At the end of all applicable performance periods, the Committee will determine the number of shares ultimately earned under these PSUs.
Officer Departure Guidelines
In 2020, our Compensation Committee approved guidelines covering, among other things, LTI vesting, salary, benefits and other compensation matters for officers departing the Company, either because they are eligible for retirement, early retirement or special retirement, or because they are involuntarily terminated (if not eligible for retirement). These guidelines are a non-binding framework for management’s reference in its executive succession planning, with flexibility as required by specific situations.
Under the guidelines, we may, at our discretion, enter into agreements with outgoing officers whereby they would remain employed by the Company during the agreement term and would receive annual cash payments that would generally be less than their pre-termination annual base salary. In addition, outgoing officers would receive a prorated cash incentive award payment with respect to the year of their departure. They would also receive benefits such as medical and insurance during the agreement term, and would continue to vest in previously granted LTI awards, but would not receive any new LTI awards during the term. In exchange, the outgoing officers would agree to be available to Schlumberger for 50% of their business time during the term, and agree to non-competition, non-solicitation, and non-disparagement covenants.
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2020 Payouts Under 2018 Free Cash Flow PSUs
Broadly Available Benefit Plans
We seek to provide benefit plans, such as medical coverage and life and disability insurance, on a country-by-country basis in line with market conditions. Where the local practice is considered to be less than the Schlumberger minimum standard, we generally offer the Schlumberger standard. Our NEOs are eligible for the same benefit plans provided to other employees, including medical coverage and life and disability insurance, as well as supplemental plans chosen and paid for by employees who wish to obtain additional coverage. There are no special insurance plans for our NEOs.
In January 2018,line with Schlumberger’s aim to encourage long-term careers with the Company and to promote retention, retirement plans are provided, where possible and according to local market practice, for all employees, including NEOs. For details regarding our pension plans and nonqualified deferred compensation plans, see “Executive Compensation Committee granted PSUsTables—Pension Benefits,” “—Nonqualified Deferred Compensation,” “—Potential Payments Upon Termination or Change in Control—Retirement Plans,” and “—Retiree Medical” and the accompanying narratives beginning on page 58 of this proxy statement.
Limited Perquisites
We provide only limited perquisites to our NEOs, and conditioned payout based onwhich are identified in the cumulative free cash flow generated from January 1, 2018footnotes to December 31, 2019, as a percentage of cumulative net income generated over that same period, excluding charges and credits (the “2018 FCF Conversion PSUs”).the Summary Compensation Table.
In January 2020, the Compensation Committee determined that we achieved cumulative free cash flow conversion of 129% for the two-year performance period, representing achievement of 250% of target, based on the Committee’s previously approved performance criteria. As a result, our
Agreements with Former NEOs
Schlumberger and Mr. Kibsgaard, our former Chairman and CEO,has entered into an agreement with Mr. Belani in connection with his decision to step down as Executive Vice President, Schlumberger New Energy, effective as of AugustApril 1, 2019 that provides for, among other things,2022 (the “Belani Agreement”). Under the Belani Agreement, Mr. Belani will serve as Senior Strategic Advisor to our CEO through March 31, 2024, to support certain paymentstechnology and innovation projects. Mr. Belani has also agreed to Mr. Kibsgaard in exchange forcertain restrictive covenants under the Belani Agreement, including three-year non-competition and non-solicitation covenants. Under the termsundertakings, as well as confidentiality and non-disparagement undertakings and a waiver and release of the agreement, Mr. Kibsgaard has agreed to provide certain services to Schlumberger as needed to secure an orderly CEO transition.claims.
UnderIn consideration for his services as Senior Strategic Advisor, the agreement,restrictive covenants, and the waiver and release, Mr. KibsgaardBelani will receive, paymentsfor a two-year period: (1) an annual cash payment equal to his current base salary; (2) continued participation in our health, welfare and benefits through July 31, 2022, consisting of (1) $2,000,000 per year, to be paid in accordance with the Company’s standard employee payroll practices; (2) medical and pension benefitsinsurance plans for which he is eligible as an employee; (3) continued accrual of benefits under our pension and (3) reimbursement for reasonable business expenses incurred in the normal course of performing his duties under the agreement. In addition, Mr. Kibsgaard received his annualprofit-sharing plans; and (4) a cash incentive award for his 2019 performance based on2022 prorated for the period worked until April 1, 2022, to be paid in early 2023 upon achievement of previously-establishedpreviously established personal and financial performance targets, and a paymenttargets. In addition, because Mr. Belani is eligible for accrued and unused vacationretirement under the terms of $113,702.our LTI award agreements, his outstanding LTI awards will continue to vest in accordance with the terms applicable to those grants.
As a high-technology energy services company, we believe that our greatest competitive strengths are our people and our intellectual property. Mr. KibsgaardBelani has extensive strategic, financialled Schlumberger New Energy and marketits portfolio of businesses in low-carbon and carbon-neutral energy technologies since its launch in 2020, and prior to that, served for over a decade as the Company’s Chief Technology Officer and Executive Vice President, Technology. He has critical knowledge about usour technology and our industry,innovation strategy, important relationships with our customers,Schlumberger New Energy’s strategic partners and joint ventures, and deep ties to the scientific community at Schlumberger.within Schlumberger and externally. Thus, our Boardthe Compensation Committee believed it to be in the best interest of the Company and our shareholdersstockholders to enter into an agreement with Mr. KibsgaardBelani to secure his continued support on key technology and innovation projects where his expertise and significant contacts will benefit the advancement of the Company's strategy. In addition, the Belani Agreement secures his covenant not to compete with us and prohibits him from soliciting key employees for a period of three years, and to prohibit him from soliciting key employees to leave us, while retaining him to provide services as needed foryears. If the CEO transition. Underundertakings in the terms of the agreement, if Mr. Kibsgaard breaches his non-competition covenant,Belani Agreement are breached, we may immediately stop payment of all cash amounts that would otherwise be due to him, andMr. Belani, all outstanding equity awards will be subject to cancellation. In addition, in the event of any such breach,cancellation, and we may require that Mr. Kibsgaard repay all paymentsrepayment of consideration previously paid or benefits receivedvested under the agreement.
In addition, Schlumberger and Mr. Ayat, our former CFO,has entered into an agreement with Ms. Gharbi in connection with her decision to step down as Executive Vice President, Services and Equipment, effective as of January 22, 2020 that provides for, among other things,May 1, 2022 (the “Gharbi Agreement”). Under the Gharbi Agreement, Ms. Gharbi agreed to certain payments to Mr. Ayat in exchange forrestrictive covenants, including three-year non-competition and non-solicitation covenants. Underundertakings, as well as confidentiality and non-disparagement undertakings and a waiver and release of claims. Ms. Gharbi has also agreed to provide certain services to the termsCompany during the term of the agreement, Mr. Ayat has agreed to devote 50%Gharbi Agreement.
In consideration for the restrictive covenants, the waiver and release, and the provision of his business time to Schlumberger as Senior Strategic Advisor to our CEOcertain services, Ms. Gharbi will receive: (1) for a two-year period.
Underthree-year period, continued accrual of benefits under our pension and profit-sharing plans based on her 2022 base salary; and (2) a cash incentive award for 2022 prorated for the agreement, Mr. Ayat will receive payments and benefits through January 21,period worked until May 1, 2022, consisting of (1) $1,000,000 per year, to be paid at target. In addition, the PSU and RSU awards previously granted to her in 2020 and 2021 will continue to vest in accordance with the Company’s standard employee payroll practices; (2) continued participation in Schlumberger’s health, welfare and insurance plans on a basis comparableterms applicable to those grants. Under the Gharbi Agreement, the PSU awards that of other U.S. employees; and (3) an award of PSUsMs. Gharbi received in January 2020 with a2022 are scheduled to vest at target LTI dollar value equal to 100% of Mr. Ayat’s aggregate PSU target dollar grant in January 2019, awarded on the same terms and conditions as the PSU grants to the Company’s NEOs in January 2020. In addition, Mr.Ayat received his annual cash incentive award for his 2019 performance based on achievement of previously-established personal and financial performance targets, and a payment for his accrued and unused vacation of $5,817.early 2025.
As in the case of the agreement betweenMs. Gharbi has extensive strategic knowledge about Schlumberger and Mr. Kibsgaard, our Boardindustry, as well as strong relationships with key customers and partners. Thus, the Compensation Committee believed it to be in the best interest of the Company and our shareholdersstockholders to enter into an agreement with Mr. AyatMs. Gharbi to secure hisher covenant not to compete with us and to prohibit her from soliciting key employees for a period of three years, and to prohibit him from soliciting key employees to leave us, while retaining his services for up to 50% of his business time to help foster an orderly CFO transition. Underyears. If the terms ofundertakings in the agreement, if Mr. Ayat breaches his non-competition covenant,Gharbi Agreement are breached, we may immediately stop payment of all cash amounts that would otherwise be due to him, andMs. Gharbi, all outstanding equity awards will be subject to cancellation. In addition, in the event of any such breach,cancellation, and we may require that Mr. Ayat repay all paymentsrepayment of consideration paid or benefits receivedvested under the agreement.
The agreements with Messrs. Kibsgaard and Ayat also contain other covenants. In connection with their agreements, each of Messrs. Kibsgaard and Ayat entered into a release and waiver.
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A primary consideration of our Compensation Committee in overseeing our executive compensation program is the need to motivate and retain what it considers to be the best executive talent in the energy industry. We are the world’s leading provider of technology to the global energy industry, and the Committee believes that delivering financial and operational outperformance and long-term stockholder returns depends on our ability to attract, develop and retain the best talent globally. A highly competitive compensation package is critical to this objective.
Peer Group CompaniesIn light of the foregoing, the Committee generally seeks to target total direct compensation for our NEOs between the 50th and 75th percentiles of our two main executive compensation peer groups; however, the Committee may position an NEO who is new to a position at or below the 50th percentile for a period of time. For example, the target value of our CEO’s 2021 total direct compensation places him at approximately the 50th percentile among CEOs in our general industry peer group. An NEO’s target total direct compensation depends on a variety of factors, including tenure in a particular position, individual and Company performance, and internal pay equity.
The Committee believes that the 50th to 75th percentile range is appropriate to target because of Schlumberger’s leading position in the oilfield services industry; because competition for our executive talent in the oil and gas industry is exceptionally fierce; and because our executives are very highly sought after, both by our direct oilfield services competitors and by other leading oil and gas, advanced extractive, technology-driven manufacturing, and engineering-focused companies.
In approving this target range and when setting compensation for 2021, the Committee considered that many current and former senior executives of leading companies in various industries have previously served in senior management at Schlumberger. Former members of senior Schlumberger management have either been, or are, senior executives at the following competitors, customers and other technology- and engineering-focused companies:
Baker Hughes* | TechnipFMC* | Weatherford | BAE Systems* | |||
(past Chairman and CEO, current CHRO and CLO, and other senior executives) | (current Chairman, CEO and CTO, and past Chairman, CEO and CHRO) | (past acting CEO and CFO, and other senior executives) | (current CEO, CFO and CHRO) | |||
Engie | Patterson-UTI Energy | CGG | BG Group | |||
(current CEO) | (current CEO) | (current CEO and CFO) | (past Chairman and COO) | |||
ConocoPhillips* | YPF | Kuwait Airlines | Technip Energies | |||
(past CTO) | (past CEO) | (current CEO) | (current CLO) | |||
Valaris | NESR | OilSERV | Wood | |||
(past CEO and CLO) | (current CEO, CFO and COO) | (current CFO) | (current senior executive) | |||
Expro | Nabors | Noble Corporation | NexTier Oilfield Solutions | |||
(current CEO, and past CEO and CFO) | �� | (current CFO and other senior executives) | (current CLO) | (current CEO, CFO, COO and other senior executives) | ||
Rio Tinto* | Flowserve | Borr Drilling | Archer | |||
(past CHRO) | (current CEO) | (current CEO and past CFO) | (current CEO and past CFO) | |||
Seadrill | ||||||
(past COO) |
CEO = Chief Executive Officer CFO = Chief Financial Officer COO = Chief Operating / Commercial Officer | CTO = Chief Technology Officer CLO = Chief Legal Officer / General Counsel CHRO = Chief Human Resources Officer | * Included in one of our main executive compensation peer groups |
Our Compensation Committee considers formal executive compensation survey data prepared by Pay Governance when it reviews and determines executive compensation. The Compensation Committee also reviews information on the executive compensation, practices at various “peer group” companiesand when considering changes to the Company’sour executive compensation program. To prepare for its executive compensation analysis, the Company’s executive compensation department works with Pay Governance to match Company positions and responsibilities against survey positions and responsibilities and to compile the annual compensationThe Committee considers data for each executive officer.
The Company hasthe companies comprising our two main executive compensation peer groups, the oil industry and general industry peer groups (our “main executive compensation peer groups”).: our oil industry peer group and our general industry peer group. The surveyCommittee believes these peer groups together provide the robust market data prepared by Pay Governance summarizenecessary to assess the compensation levelstalent markets available to our executive officers, both in the oil and practices ofgas sector and in other global advanced extractive, technology-driven manufacturing, and industrial engineering-focused sectors. General industry peer group comparisons are particularly relevant for non-operations positions, where skills and experience may be easily transferable to other industries. In addition, the evolving energy industry environment creates challenges in maintaining a robust peer group comprising solely oilfield services and upstream companies, given decreases in individual company scope, as well as bankruptcies and consolidations in recent cycles.
The Committee annually reviews the specific selection criteria for our main executive compensation peer groups, such as follows:competition for business or executive talent, revenue, market capitalization, and scope
The Compensation Committee’s selection criteria for companies comprising the main executive compensation peer groups include:
The Compensation Committee, with the assistance of international operations. Pay Governance annually reviews specific criteria and recommendations regardingrecommends for the Committee’s review the addition or removal of companies to add to or remove from these peer groups, based on the peer groups.Committee’s selection criteria. As a general matter, the CompanyCommittee selects suitable comparator companies such that the companies in each of our two main executive compensationthese peer groups, at the median, approximate Schlumberger’s estimated revenue in the then-current year and its then-current market capitalization. The Compensation Committee modifies theits peer group criteria as appropriate while seeking a satisfactory degree of stability, to provide a consistent basis for comparison.
Oil Industry Peer Group
The oil industry peer group comprises companies in the oil services industry, as well as E&P companies and integrated oil and gas companies, in each case with annual revenues between $6.4 billion and $127.5 billion. The broad revenue range is due to the limited number of peer companies in Schlumberger’s immediate revenue range, and the fact that all other oilfield service companies have lower revenue than Schlumberger. Because of Schlumberger’s significant international operations, this peer group includes non-U.S. energy and energy-related companies that also meet the criteria set forth above. Some members of this peer group frequently target Company executives for positions at the peer company. See “—The Competition for Our Executive Talent,” on pages 31-32.
TheIn July 2020, our Compensation Committee decideddirected Pay Governance to include E&P companies in this peer group based on a number of factors. First, because Schlumberger was significantly larger than all of its direct competitors in the oilfield services industry in terms of revenue and market capitalization, the Compensation Committee believed that the addition of E&P companies provided a more appropriate and complete comparator group. In addition, the Compensation Committee believed that the inclusion of E&P companies is appropriate because our executives have been hired by E&P companies in the past, and market consolidation has reduced the number of direct competitors in the oilfield services industry, thus increasing the prominence of E&P companies as competitors for executive talent.
In July 2018, the Compensation Committee reviewedre-assess the companies constitutingcomprising our two main executive compensation peer groups effectivein light of Schlumberger’s evolving business strategy and 2020 corporate reorganization. As a result of this assessment, the Committee reviewed and approved changes to these peer groups that it believes more appropriately reflect our strategy and address current and future executive talent markets. In selecting the companies for 2019inclusion in our main executive compensation decisions, basedpeer groups, the Committee focused on the criteria set forth above. At the time of its review, Schlumberger’s full-year 2018 revenue was forecast to be approximately $34 billion. Because Weatherford International Plc did not meet the strict revenue criterion set forth above forcompanies in countries with robust pay disclosure.
The companies comprising the oil industry peer group and the Compensation Committee approved the removal of Weatherford from this peer group.
As a result of the foregoing, Schlumberger was in the 67thpercentile of the oilgeneral industry peer group in terms of revenue, and in the 90theffective for 2021 compensation decisions are set forth below.
OIL INDUSTRY PEER GROUP | GENERAL INDUSTRY PEER GROUP | |
The oil industry peer group comprises ten companies in the energy sector, primarily in the oilfield services and equipment and upstream oil and gas industries, with 2019 revenues between $8.5 billion and $44.6 billion. Our Compensation Committee identified these companies as being broadly comparable to Schlumberger in terms of revenue and market value, and also competing with us for business or executive talent. Several members of this peer group frequently seek to recruit Schlumberger executives for their senior executive roles. See “—Competition for Our Executive Talent” on page 49. In July 2020, our Compensation Committee, applying the selection criteria above, approved the removal of seven companies from the oil industry peer group, effective for 2021 compensation decisions: Anadarko Petroleum, Chevron, Devon Energy, Eni SpA, Marathon Petroleum, Phillips 66, and Valero Energy. The purpose of these removals was to enhance the relevance of this peer group for Schlumberger, by eliminating very large integrated oil companies and those with a retail or downstream focus, as well as acquired companies. As a result of the foregoing, Schlumberger was positioned at the 58th percentile of the oil industry peer group in terms of 2019 revenue, and at the 66th percentile of this peer group in terms of market capitalization as of May 2020. | The general industry peer group comprises 23 global advanced extractive, technology-driven manufacturing, and industrial engineering-focused companies with annual revenues, market valuations and global scopes that are similar to Schlumberger’s. The companies in this peer group had 2019 revenues between $14.4 billion and $59.8 billion, non-U.S. annual revenue greater than 20% of consolidated revenue, and market capitalization generally greater than $8 billion. This peer group focuses on Schlumberger’s current and future executive talent markets beyond the oil and gas sector, given the competencies needed for the Company’s future success. It excludes pure technology companies, such as microprocessor manufacturers and software companies. In July 2020, our Compensation Committee, applying the selection criteria above, removed eight pure technology companies from the general industry peer group, effective for 2021 compensation decisions: Accenture, Cisco Systems, Hewlett Packard Enterprise, Intel, Oracle, QUALCOMM, SAP SE, and Texas Instruments. The Committee also removed three other companies that did not meet the revenue criteria above (Raytheon Technologies, Raytheon, and Fluor), and added four new companies, as identified by asterisks below. As a result of the foregoing, Schlumberger was positioned at the 36th percentile of this peer group in terms of both 2019 revenue and May 2020 market capitalization. |
Baker Hughes BHP Group ConocoPhillips EOG Resources Halliburton | Imperial Oil NOV Occidental Petroleum Suncor Energy TechnipFMC | 3M Company ABB Anglo American BAE Systems Caterpillar Compagnie de Saint-Gobain Deere & Company *Dow *DuPont *Eaton Emerson Electric Freeport-McMoRan | General Dynamics Honeywell HP Johnson Controls Koninklijke Philips Lockheed Martin LyondellBasell Rio Tinto Rolls-Royce Holdings Schneider Electric *Trane Technologies (formerly Ingersoll-Rand) |
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The following 18 companies constitute
Historically, our NEOs have not had ongoing employment or severance agreements during their service with us as executive officers, and they serve at the oil industry peer group effective for relevant 2019 compensation decisions:will of the Board. This enables the Company to terminate their employment using judgment as to the terms of any severance arrangement and based on specific circumstances at the time they cease being executive officers. Our NEOs do not have change in control agreements, and we do not enter into employment, severance or change-in-control agreements with newly hired executive officers. For details regarding our agreements with outgoing NEOs, see “—Elements of 2021 Total Direct Compensation—Agreements with Outgoing NEOs” on page 48.
General Industry Peer Group
The Compensation Committee considers data from the general industry peer group as it deems necessary or advisable to the extent that data from the first peer group may not exist, or may be insufficient, for some executive officer positions. The second group is also particularly relevant for non-operations positions, where the skills and experience may be easily transferable to other industries outside the oil and gas industry.
The general industry peer group provides data from large companies with significant international operations, and supplements the compensation data from the oil industry peer group, whose companies are closer to Schlumberger in industry type but have widely varying revenue sizes. The general industry peer group:
In July 2018, the Compensation Committee, applying the selection criteria set forth above, approved the removal of 14 life sciences and pharmaceutical companies from the general industry peer group, effective for 2019 compensation decisions, to more closely align this peer group with companies in industries more similar to Schlumberger’s. The 14 life sciences and pharmaceutical companies removed were Abbott Laboratories, AbbVie, AstraZeneca, Bayer, Eli Lilly and Co., Gilead Sciences, GlaxoSmithKline, Medtronic, Merck & Co, Novartis, Pfizer, Roche Holding, Sanofi and Thermo Fisher Scientific. In addition, BASF SE was removed from this peer group because its annual revenue exceeded the criterion described above. The Compensation Committee also approved the addition of one company—DowDupont—as a result of the merger of Dow Chemical and E.I. DuPont de Nemours, each of which had been included in the general industry peer group for 2018 executive compensation decisions.
As a result of the foregoing, Schlumberger was positioned at the 58th percentile of the general industry peer group in terms of revenue, and the 68thpercentile of that peer group in terms of market capitalization.
The following 30 companies constitute the general industry peer group effective for relevant 2019 compensation decisions:
Role of the Independent Executive Compensation Consultant
The Compensation Committee has retained Pay Governance as its independent consultant with respect to executive compensation matters. Pay Governance reports only to, and acts solely at the direction of, the Compensation Committee. Schlumberger’s management does not direct or oversee the activities of Pay Governance with respect to the Company’s executive compensation program. Pay Governance prepares compensation surveys for review by the Compensation Committee at its October meeting. One of the purposes of the October meeting is to assess compensation decisions made in January of that year in light of comparative data to date; another purpose of the October meeting is to prepare for the annual executive officer compensation review the following January.
Pay Governance works with the Company’s executive compensation department to compare compensation opportunities of the Company’s executive officers with compensation opportunities for comparable positions at companies included in the compensation surveys conducted by Pay Governance at the direction of the Compensation Committee. Pay Governance and the Company’s executive compensation department also compile annual compensation data for each executive officer. The Compensation Committee has also instructed Pay Governance to prepare an analysis of each named executive officer’s compensation. The Compensation Committee has also retained Pay Governance as an independent consulting firm with respect to non-employee director compensation matters. Pay Governance prepares an analysis of competitive non-employee director compensation levels and market trends using the same two main peer groups as those used in the executive compensation review.
The Compensation Committee has assessed the independence of Pay Governance pursuant to SEC rules and has concluded that its work did not raise any conflict of interest that would prevent Pay Governance from independently representing the Compensation Committee.
Procedure for Determining Executive Compensation; Role of Management
The Compensation Committee evaluates all elements of executive officer compensation each January, after a review of the achievement of financial and personal objectives with respect to the prior year’s results. The purpose is to determine whether any changes in an officer’s compensation may be appropriate. The CEO does not participate in the Compensation Committee’s deliberations regarding his own compensation. At the Compensation Committee’s request, the CEO reviews with the Compensation Committee the performance of the other executive officers, but no other named executive officer has any input in executive compensation decisions. The Compensation Committee gives substantial weight to the CEO’s evaluations and recommendations because he is particularly able to assess the other executive officers’ performance and contributions to the Company. Our Vice President of Human of Resources assists the CEO in developing the executive officers’ performance reviews and reviewing market compensation data to determine compensation recommendations for our executives. The Compensation Committee independently determines each executive officer’s mix of total direct compensation based on the factors described in “Compensation Discussion and Analysis—Framework for Setting Executive Compensation in 2019—Relative Size of Direct Compensation Elements.” Early in the calendar year, financial and personal objectives for each executive officer are determined for that year. The Compensation Committee may, however, review and adjust compensation at other times as the result of new appointments or promotions during the year.
The following table summarizes the approximate timing of significant executive compensation events:
Long-Term Equity Awards — Granting Process
The Compensation Committee is responsible for granting long-term equity-based compensation under our omnibus stock incentive plans. The Compensation Committee approves a preliminary budget for equity-based grants for the following year at each October meeting. Management determines the allocation for groups within the Company and individual recommendations are made by the heads of the groups and approved by the CEO. The Compensation Committee approves all equity-based awards, including executive officer awards, which are recommended by the CEO, except for his own. Awards for executive officers other than the CEO are granted by the Compensation Committee and discussed with the Board. Awards for the CEO are granted by the Compensation Committee following approval by the full Board.
In addition to considering the value of each equity-based award, management and the Compensation Committee also consider the overall potential stockholder dilution impact and “burn rate,” which is the rate at which awards are granted as a percentage of common shares outstanding. Each year, the Compensation Committee reviews a budgeted grant date value of equity-based awards to our executives and other eligible employees and makes a recommendation to the Board for approval. This review and recommendation process includes an analysis of potential dilution levels and burn rates resulting from the potential grant of such awards. The Compensation Committee and management use this analysis regarding dilution levels and burn rates as an additional factor in approving long-term equity awards.
The regular Board and Compensation Committee meeting schedule is set at least a year in advance with Board meetings held quarterly, generally in mid-January, April, July and October. The timing of these committee meetings is not determined by any of the Company’s executive officers and is usually two days in advance of the Company’s announcement of earnings. The Compensation Committee usually sets the equity award grant date as the day of the Compensation Committee meeting. The Company does not time the release of material non-public information for the purpose of affecting the values of executive compensation. At the time equity grant decisions are made, the Compensation Committee is aware of the earnings results and takes them into account, but it does not adjust the size or the mix of grants to reflect possible market reaction.
Annual grants of equity-based awards to the NEOs, other senior executive officers and the rest of the Company’s eligible employees are made at the January meeting of the Compensation Committee. However, specific grants may be made at other regular meetings, to recognize the promotion of an employee, a change in responsibility or a specific achievement, or to achieve other key compensation objectives. The exercise price for all stock options granted to executive officers and other employees is the average of the high and low trading prices of the Schlumberger common stock on the NYSE on the date of grant, which has been Schlumberger’s practice for many years. The Board and the Compensation Committee have the discretion to grant equity awards with different vesting schedules as they deem appropriate or necessary.
Executive Stock Ownership Guidelines
The Compensation Committee and managementstrongly believe strongly in linking executive long-term rewards to stockholder value. In 2019, our Board, upon recommendation of the Nominating and Governance Committee and the Compensation Committee, adopted revisedOur executive stock ownership guidelines applicable torequire our executive officers and other key position holders.
Senior executives are required to hold the numbersa minimum dollar value of Schlumberger common shares equal to the multiple of base salaryas set forth below:
Title | Stock Ownership Multiple |
Chief Executive Officer | 6x base salary |
Executive Vice Presidents | 3x base salary |
Executive | 2x base salary |
1x base salary |
All executives subject to the guidelines must retain 50% of the net shares acquiredthey acquire upon the exercise of stock options and after the vesting of PSUs and RSUs, after payment of applicable taxes, until they achieve the required ownership level.
The guidelines provide that executives have five years to satisfy the ownership requirements. After the five-year period, executives who have not met their minimum stock ownership requirement must retain 100% of the net shares acquiredthey acquire upon stock option exercises and any PSU and RSU vesting until they achieve their required ownership level. Stock ownership for the purpose of these guidelines does not include shares underlying vested or unvested stock options, unvested RSUs or unvested PSUs.
As of DecemberJanuary 31, 2019,2022, all of our then-serving NEOs were in compliance with our stock ownership guidelines.
No Employment Agreements with Current Executive Officers
Historically, our named executive officers have not had employment, severance or change-in-control agreements with the Company, and serve at the will of the Board. This enables the Company to terminate their employment using judgment as to the terms of any severance arrangement and based on specific circumstances at the time they cease being executive officers. We do not enter into employment, severance or change-in-control agreements with any newly-hired executive officers.
Retirement Benefits
In line with Schlumberger’s aim to encourage long-term careers with the Company and to promote retention, retirement plans are provided, where possible, for all employees, including named executive officers, according to local market practice. Schlumberger considers long-term benefit plans to be an important element of the total compensation package. The pension plans provide for lifetime benefits for certain employees upon retirement after a specified number of years of service and take into account local practice with respect to retirement ages. They are designed to complement but not be a substitute for local government plans, which may vary considerably in terms of the replacement income they provide, and other Company sponsored savings plans. Employees may participate in multiple retirement plans in the course of their career with the Company or its subsidiaries, in which case they become entitled to a benefit from each plan based upon the benefits earned during the years of service related to each plan. The qualified plans are funded through cash contributions made by the Company and its subsidiaries based on actuarial valuations and/or regulatory requirements.
Some of the Schlumberger U.S. retirement plans are non-qualified plans that provide an eligible employee with additional retirement savings opportunities that cannot be achieved with tax-qualified plans due to limits on annual compensation that can be taken into account or annual benefits that can be provided under qualified plans.
Officers and other employees in the United States whose compensation exceeds the qualified plan limits are eligible to participate in non-qualified excess benefit programs for 401(k), profit-sharing and pension. Employees and executive officers assigned outside the United States are entitled to participate in the applicable plans of the country where they are assigned, including supplemental plans where available.
Retirement Practices
The CompanyOur Board has a practice of phased retirement, which, at the discretion of the Company, may be offered to certain executive officers from time to time. This practice involves entering into an agreement whereby the individual ceases being an executive officer and relinquishes primary responsibilities. He or she remains an employee and generally receives lesser salary over time for reduced responsibilities and reduced working time. The arrangements are typically in place for an average of two years, as agreed at the start of the term. The purpose is to allow the outgoing executive officer to support the incoming executive officer for a period of time to provide for a smooth succession and to provide resources to the Company in particular areas of expertise while agreeing not to join a competitor during the employment period. In these circumstances, the Company maintains pension contributions and other benefits such as medical and insurance, and the executive officer continues to vest in previously-granted LTI awards. During this period, however, the executive officer generally is no longer eligible for additional equity incentive compensation or, once his or her work time is reduced, for an annual cash incentive opportunity.
Other Benefits
Schlumberger seeks to provide benefit plans, such as medical coverage and life and disability insurance, on a country-by-country basis in line with market conditions. Where the local practice is considered to be less than the Schlumberger minimum standard, the Company generally offers the Schlumberger standard. Our named executive officers are eligible for the same benefit plans provided to other employees, including medical coverage and life and disability insurance as well as supplemental plans chosen and paid for by employees who wish additional coverage. There are no special insurance plans for our named executive officers.
Limited Perquisites
Schlumberger provides only limited perquisites to its named executive officers, which are identified in the narrative notes to the Summary Compensation Table.
Recoupment of Performance-Based Cash and Equity Awards (Clawback)
In January 2019, our Board, upon the recommendation of the Compensation Committee, adopted a revisedclawback policy regarding recoupment ofto recoup performance-based incentive compensation, whether paid in the form of equity or cash, in the event of specified restatements of financial results. Under the revisedthis policy, if financial results are restated due to fraud or other intentional misconduct, theour Compensation Committee will review any performance-based or incentive compensation paid to executive officers who are found to be personally responsible for the fraud or other intentional misconduct that caused, in whole or in part, the need for the restatement. Based on that review, the Committee will take suchany actions as it deems appropriate or necessary, including recoupment of any amounts paid in excess of the amounts that would have been paid based on the restated financial results. In addition, our performance-based equityPSU awards and any shares of stock that are issued as a result ofupon the vesting of thesePSU awards are subject to recoupment under the terms of those awards.
Our executive officers and directors are prohibited from using any strategies or products (such as derivative securities or short-selling techniques) to hedge, directly or indirectly, against potential changes in the value of Schlumberger common stock. In addition, our executive officers and directors, as well as certain other key employees, are prohibited from holding Schlumberger securities in a margin account or pledging Schlumberger securities as collateral for a loan. Our insider trading policy strongly discourages, but does not prohibit, other employees from engaging in speculative transactions, including hedging or other financial mechanisms, holding Schlumberger securities in a margin account or pledging Schlumberger securities.
Schlumberger Limited2022 Proxy Statement | 51 |
Compensation Committee Review
Our Compensation Committee reviews the elements of our NEOs’ total direct compensation throughout the year, to evaluate whether each element remains competitive with the companies in our two main executive compensation peer groups. In making compensation decisions, the Committee relies on its own judgment after reviewing external market data, and also considers the following factors:
• | the executive’s scope of responsibilities, as well as leadership, management and technical expertise, growth potential, and position in our reporting structure; | |
• | overall Company and individual performance; | |
• | retention needs; | |
• | the recommendations of our CEO (except with respect to his own compensation); and | |
• | internal pay equity. |
Each January, the Committee evaluates all elements of executive officer compensation, after reviewing the prior year’s results and the achievement of Company financial objectives and each officer’s strategic personal objectives. The purpose of this annual evaluation is to determine whether any changes in an officer’s compensation may be appropriate. The CEO does not participate in the Committee’s deliberations regarding his own compensation. At the Committee’s request, the CEO reviews with the Committee the performance of the other executive officers, but no other NEO has any input in executive compensation decisions. Our Compensation Committee gives substantial weight to the CEO’s evaluations and recommendations because he is particularly able to assess the other executive officers’ performance and contributions to Schlumberger. Our Vice President of Human Resources assists the CEO in developing the other executives’ performance reviews and reviewing external market data to determine the CEO’s executive compensation recommendations.
The following table summarizes the approximate timing of significant annual executive compensation events:
EVENT | TIMING | |
Establish Company financial objectives and CEO strategic personal objectives | January of each year with respect to the current year | |
Review and approve the peer group companies used for compensation benchmarking | July of each year for compensation in the following year | |
Pay Governance provides analysis for our Compensation Committee to evaluate year-to-date compensation decisions in light of year-to-date comparative data, and to prepare for the annual executive officer compensation review in January | October of each year for compensation in the following year | |
Evaluate Company and executive performance (achievement of objectives established in previous year) and recommend annual cash incentive payout based on those results | Results approved in January of each year for annual cash incentive compensation with respect to the prior year. The annual cash incentive earned for the prior year is paid in February of the current year | |
Review and recommend executive base salaries and determine equity-based grants | January of each year for base salaries for that year and for equity-based grants |
Equity Grant Practices
Our Compensation Committee is responsible for granting long-term equity-based compensation under our omnibus stock incentive plans. The Committee approves a preliminary budget for equity-based grants for the following year at each October meeting. Awards for the CEO are granted by the Committee following approval by the independent members of the Board. Awards for executive officers other than the CEO are granted by the Committee and discussed with the Board. Management determines the allocation of equity-based grants for other groups within the Company and individual recommendations are made by the heads of the groups and approved by the CEO. In addition to considering the value of each equity-based award, management and the Committee also consider, as an additional factor in approving long-term equity awards, the overall potential stockholder dilution impact and “burn rate,” which is the rate at which awards are granted as a percentage of common shares outstanding.
The regular Board and Compensation Committee meeting schedule is set at least a year in advance, with meetings held quarterly in mid-January, mid-April, mid-July and mid-October. Annual grants of equity-based awards to our NEOs and other executives, as well as to other eligible employees, are made at the Committee’s January meeting. Additionally, specific grants may be made at other Committee meetings to recognize an employee’s promotion, change in responsibility or specific achievement, or to achieve other key compensation objectives, such as retention. Generally, the Committee sets the grant date for equity awards as the Committee meeting date, which is usually two days in advance of the Company’s announcement of earnings. The Company does not time the release of material non-public information for the purpose of affecting the values of equity grants. At the time equity grant decisions are made, our Compensation Committee is aware of the earnings results, but it does not adjust the size or the mix of grants to reflect possible market reaction.
In addition, PSUs and RSUs do not accrue or pay dividends or dividend equivalents prior to vesting.
Schlumberger Limited2022 Proxy Statement | 52 |
Independent Compensation Consultant
Our Compensation Committee has retained Pay Governance as its independent consultant with respect to executive compensation matters, as well as non-employee director compensation matters. Pay Governance works with Schlumberger’s Human Resources department to compile annual compensation data for each executive officer, and to compare the compensation opportunities of our executive officers with those at comparable roles at companies in our main executive compensation peer groups. Pay Governance also annually prepares an analysis of competitive non-employee director compensation levels and market trends using the same two main peer groups as are used for the annual executive officer compensation review.
Pay Governance reports only to, and acts solely at the direction of, our Compensation Committee. The Committee has assessed the independence of Pay Governance pursuant to SEC rules and has concluded that its work did not raise any conflict of interest that would prevent Pay Governance from independently representing our Compensation Committee.
Section 162(m) of the Internal Revenue Code limits the amount of compensation that may be deducted per covered employee, including each of our NEOs, to $1 million per taxable year. Following the enactment of the Tax Cuts and Jobs Act, beginning with the 2018 calendar year, this $1 million annual limitation applies to all compensation paid to any individual who is the Chief Executive Officer, Chief Financial Officer or one of the other three most highly compensated executive officers for 2017 or any subsequent calendar year. There is no longer any exception to this limitation for qualified performance-based compensation (as there was for periods prior to 2018). Thus, it is expected that compensation deductions for any covered individual will be subject to a $1 million annual deduction limitation (other than for certain compensation that satisfies requirements for grandfathering under the new law).limitation. Although the deductibility of compensation is a consideration evaluated by theour Compensation Committee, the Compensation Committee believes that the lost deduction on compensation payable in excess of the $1 million limitation for the named executive officersour NEOs is not material relative to the benefit of being able to attract and retain talented management. Accordingly, the Compensation Committee will continue to retain the discretion to payapprove executive compensation that it believes is notbest for Schlumberger without regard to whether the compensation is fully deductible.
The Compensation Committee has reviewed and discussed with the Company’s management the Compensation Discussion and Analysis included in this proxy statement. Based on that review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
| Schlumberger Limited |
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The following table sets forth information regarding the total compensation paid by the Companyto our NEOs for fiscal years 2021, 2020 and its subsidiaries for the fiscal year ended December 31, 2019 to each of our NEOs.2019.
Name | Year | Salary ($) | Bonus ($) | (4) | Stock Awards ($) | (5) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | (4) | Change in Pension Value & Nonqualified Deferred Compensation Earnings ($) | (6) | All Other Compensation ($) | (7) | Total ($) | ||||||||||||||
Olivier Le Peuch(1) | 2019 | 1,147,500 | N/A | 14,515,858 | — | 2,360,250 | 981,058 | 112,504 | (8) | 19,117,170 | ||||||||||||||||||
Chief Executive Officer | 2018 | 764,167 | N/A | 3,200,205 | — | 266,007 | 288,375 | 119,025 | 4,637,779 | |||||||||||||||||||
2017 | 683,333 | N/A | 4,717,540 | 316,950 | 840,000 | 877,867 | 61,287 | 7,496,977 | ||||||||||||||||||||
Khaled Al Mogharbel | 2019 | 895,000 | N/A | 5,770,142 | — | 1,423,050 | 327,754 | 211,550 | (9) | 8,627,496 | ||||||||||||||||||
Executive Vice | 2018 | 834,167 | N/A | 3,200,205 | — | 315,399 | (116,122 | ) | 284,222 | 4,517,871 | ||||||||||||||||||
President, Operations | 2017 | 770,000 | N/A | 4,406,252 | — | 1,063,755 | 195,703 | 244,757 | 6,680,467 | |||||||||||||||||||
Patrick Schorn | 2019 | 840,000 | N/A | 4,729,651 | — | 1,377,600 | 1,858,283 | 101,182 | (10) | 8,906,716 | ||||||||||||||||||
Executive Vice | ||||||||||||||||||||||||||||
President, Wells | ||||||||||||||||||||||||||||
Hinda Gharbi | 2019 | 764,167 | N/A | 4,729,651 | — | 1,176,800 | 623,734 | 186,226 | (11) | 7,480,578 | ||||||||||||||||||
Executive Vice President, | ||||||||||||||||||||||||||||
Reservoir and Infrastructure | ||||||||||||||||||||||||||||
Paal Kibsgaard(2) | 2019 | 2,000,000 | N/A | 11,998,560 | — | 4,920,000 | 3,172,244 | 156,356 | (12) | 22,247,160 | ||||||||||||||||||
Former Chairman and | 2018 | 2,000,000 | N/A | 11,998,751 | — | 1,132,500 | 1,014,077 | 53,872 | 16,199,200 | |||||||||||||||||||
Chief Executive Officer | 2017 | 2,000,000 | N/A | 11,998,506 | — | 4,275,000 | 2,344,577 | 141,257 | 20,759,340 | |||||||||||||||||||
Simon Ayat(3) | 2019 | 1,000,000 | N/A | 3,999,520 | — | 1,640,000 | 863,630 | 40,743 | (13) | 7,543,893 | ||||||||||||||||||
Former Executive | 2018 | 1,000,000 | N/A | 3,994,767 | — | 358,100 | 163,106 | 72,045 | 5,588,018 | |||||||||||||||||||
Vice President and | 2017 | 1,000,000 | N/A | 5,206,165 | — | 1,401,500 | 745,143 | 105,875 | 8,458,683 | |||||||||||||||||||
Chief Financial Officer |
Name | Year | Salary ($) | (2) | Stock Awards ($) | (3) | Non-Equity Incentive Plan Compensation ($) | (4) | Change in Pension Value & Nonqualified Deferred Compensation Earnings ($) | (5) | All Other Compensation ($) | (6) | Total ($) | ||||||||||||||||
Olivier Le Peuch(1) | 2021 | 1,400,000 | 10,499,803 | 3,916,100 | 802,703 | 176,896 | 16,795,502 | |||||||||||||||||||||
Chief Executive Officer | 2020 | 1,383,846 | — | 2,251,200 | 1,844,619 | 170,419 | 5,650,084 | |||||||||||||||||||||
2019 | 1,147,500 | 14,515,858 | 2,360,250 | 981,058 | 112,504 | 19,117,170 | ||||||||||||||||||||||
Stephane Biguet | 2021 | 770,000 | 3,199,750 | 1,458,400 | 462,189 | 127,749 | 6,018,088 | |||||||||||||||||||||
Executive Vice President | 2020 | 755,193 | 2,499,742 | 837,000 | 767,587 | 119,081 | 4,978,603 | |||||||||||||||||||||
and Chief Financial Officer | ||||||||||||||||||||||||||||
Khaled Al Mogharbel | 2021 | 900,000 | 3,499,787 | 1,715,850 | (96,053 | ) | 244,569 | 6,264,153 | ||||||||||||||||||||
Executive Vice President, | 2020 | 889,615 | 3,719,674 | 1,045,800 | 297,898 | 262,956 | 6,215,943 | |||||||||||||||||||||
Geographies | 2019 | 895,000 | 5,770,142 | 1,423,050 | 327,754 | 211,550 | 8,627,496 | |||||||||||||||||||||
Hinda Gharbi | 2021 | 850,000 | 3,499,787 | 1,599,300 | 558,053 | 289,299 | 6,796,494 | |||||||||||||||||||||
Executive Vice President, | 2020 | 808,500 | 3,199,854 | 932,650 | 1,072,011 | 156,943 | 6,169,958 | |||||||||||||||||||||
Services and Equipment | 2019 | 764,167 | 4,729,651 | 1,176,800 | 623,734 | 186,226 | 7,480,578 | |||||||||||||||||||||
Ashok Belani | 2021 | 900,000 | 3,600,241 | 1,670,850 | 11,685 | 58,374 | 6,241,150 | |||||||||||||||||||||
Executive Vice President, | 2020 | 889,615 | 3,599,918 | 1,045,800 | 1,205,590 | 70,968 | 6,811,891 | |||||||||||||||||||||
Schlumberger New Energy | 2019 | 900,000 | 3,599,568 | 1,476,000 | 968,224 | 37,209 | 6,981,001 |
(1) | |
(2) | |
(3) | |
Includes the value of PSU | |
The value of each NEO’s 2021 LTI grants at the applicable grant date, assuming achievement of the applicable maximum performance level for | |
Annual cash incentive awards paid to our NEOs are reflected in the “Non-Equity Incentive Plan Compensation” column; as such, we excluded the “Bonus” column. | |
(5) | The changes in pension value reported in this column represent the increase or decrease in the actuarial present value of |
All of the perquisites included in the column “All Other Compensation” and described in | |
The amount disclosed for Mr. Le Peuch consists | |
The amount disclosed for Mr. Biguet consists of: (a) unfunded credits to the SLB Restoration Savings Plan ($39,510), (b) contributions to the Schlumberger 401(k) Plan ($8,700), and (c) the following perquisites: vacation travel allowance ($12,179), financial planning services ($13,000) and housing allowance ($54,360). | |
The amount disclosed for Mr. Al Mogharbel consists of: (a) unfunded credits to the SLB Restoration Savings Plan ($99,348), (b) contributions to the Schlumberger 401(k) Plan ($17,400), and (c) the following perquisites: vacation travel allowance ($36,821), financial planning services ($13,000) and children’s education ($78,000). | |
The amount disclosed for Ms. Gharbi consists of: (a) unfunded credits to the SLB Restoration Savings Plan ($32,030), (b) contributions to the Schlumberger 401(k) Plan ($8,700), and (c) the following perquisites: vacation travel allowance ($15,687), vacation payout ($40,681), children’s education ($27,329), housing allowance ($47,399), and relocation assistance ($117,473). | |
The amount disclosed for Mr. Belani consists of: (a) unfunded credits to the SLB Restoration Savings Plan ($49,674), and (b) contributions to the Schlumberger 401(k) Plan ($8,700). |
Unfunded credits to the Schlumberger Restoration Savings Plan | $ | 33,492 | ||
Contributions to Schlumberger 401(k) Plan | 8,400 | |||
Perquisites: | ||||
Vacation Travel Allowance | 13,740 | |||
Housing Allowance | 56,872 | |||
TOTAL | $ | 112,504 | ||
(9) | The amount disclosed for Mr. Al Mogharbel consists of the following: | |||
Unfunded credits to the Schlumberger Restoration Savings Plan | $ | 55,709 | ||
Contributions to Schlumberger 401(k) Plan | 16,800 | |||
Perquisites: | ||||
Vacation Travel Allowance | 61,042 | |||
Children’s Education | 78,000 | |||
TOTAL | $ | 211,550 | ||
(10) | The amount disclosed for Mr. Schorn consists of the following: | |||
Perquisites: | ||||
Expatriate Tax Preparation | $ | 1,349 | ||
Vacation Travel Allowance | 8,084 | |||
Housing Allowance | 76,336 | |||
Vacation Payout | 15,413 | |||
TOTAL | $ | 101,182 | ||
(11) | The amount disclosed for Ms. Gharbi consists of the following: | |||
Unfunded credits to the Schlumberger Restoration Savings Plan | $ | 21,081 | ||
Contributions to Schlumberger 401(k) Plan | 8,400 | |||
Perquisites: | ||||
Expatriate Tax Preparation | 1,551 | |||
Vacation Travel Allowance | 40,012 | |||
Children’s Education | 73,694 | |||
Relocation Fees and Costs | 41,488 | |||
TOTAL | $ | 186,226 | ||
(12) | The amount disclosed for Mr. Kibsgaard consists of the following: | |||
Perquisites: | ||||
Housing Allowance | $ | 42,654 | ||
Vacation Payout | 113,702 | |||
TOTAL | $ | 156,356 | ||
(13) | The amount disclosed for Mr. Ayat consists of the following: | |||
Unfunded credits to the Schlumberger Restoration Savings Plan | $ | 32,343 | ||
Contributions to Schlumberger 401(k) Plan | 8,400 | |||
TOTAL | $ | 40,743 |
| Schlumberger Limited |
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The following table provides additional information about stock awardsregarding cash incentive and other incentive planPSU and RSU awards granted to our NEOs in 2019.2021.
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2) | Estimated Possible Payouts Under Equity Incentive Plan Awards(3) | All Other Stock Awards: | All Other Option Awards: | Exercise | Full Grant Date Fair Value | ||||||||||||||||||||
Name | Award Type(1) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Number of Shares of Stock or Units (#) | Number of Securities Underlying Options (#) | or Base Price of Option Awards ($/Sh) | of Stock and Option Awards ($) | (4) | ||||||||||||
O. Le Peuch | 263,157 | 689,575 | 1,490,972 | ||||||||||||||||||||||
FCFC PSU | 1/16/19 | 44,800 | 112,000 | 1,599,808 | |||||||||||||||||||||
ROCE PSU | 1/16/19 | 44,800 | 112,000 | 1,599,808 | |||||||||||||||||||||
FCFC PSU | 4/17/19 | 9,770 | 24,425 | 408,093 | |||||||||||||||||||||
ROCE PSU | 4/17/19 | 9,770 | 24,425 | 408,093 | |||||||||||||||||||||
FCFC PSU | 8/1/19 | 154,640 | 386,600 | 5,250,028 | |||||||||||||||||||||
ROCE PSU | 8/1/19 | 154,640 | 386,600 | 5,250,028 | |||||||||||||||||||||
K. Al Mogharbel | 315,935 | 827,875 | 1,790,000 | ||||||||||||||||||||||
FCFC PSU | 1/16/19 | 44,800 | 112,000 | 1,599,808 | |||||||||||||||||||||
ROCE PSU | 1/16/19 | 44,800 | 112,000 | 1,599,808 | |||||||||||||||||||||
FCFC PSU | 4/17/19 | 6,350 | 15,875 | 265,240 | |||||||||||||||||||||
ROCE PSU | 4/17/19 | 6,350 | 15,875 | 265,240 | |||||||||||||||||||||
3-year RSU | 4/17/19 | 48,840 | 2,040,047 | ||||||||||||||||||||||
P. Schorn | 296,520 | 777,000 | 1,680,000 | ||||||||||||||||||||||
FCFC PSU | 1/16/19 | 44,800 | 112,000 | 1,599,808 | |||||||||||||||||||||
ROCE PSU | 1/16/19 | 44,800 | 112,000 | 1,599,808 | |||||||||||||||||||||
3-year RSU | 4/17/19 | 36,630 | 1,530,035 | ||||||||||||||||||||||
H. Gharbi | 269,751 | 706,854 | 1,528,333 | ||||||||||||||||||||||
FCFC PSU | 1/16/19 | 44,800 | 112,000 | 1,599,808 | |||||||||||||||||||||
ROCE PSU | 1/16/19 | 44,800 | 112,000 | 1,599,808 | |||||||||||||||||||||
3-year RSU | 4/17/19 | 36,630 | 1,530,035 | ||||||||||||||||||||||
P. Kibsgaard | 1,059,000 | 2,775,000 | 6,000,000 | ||||||||||||||||||||||
FCFC PSU | 1/16/19 | 168,000 | 420,000 | 5,999,280 | |||||||||||||||||||||
ROCE PSU | 1/16/19 | 168,000 | 420,000 | 5,999,280 | |||||||||||||||||||||
S. Ayat | 353,000 | 925,000 | 2,000,000 | ||||||||||||||||||||||
FCFC PSU | 1/16/19 | 56,000 | 140,000 | 1,999,760 | |||||||||||||||||||||
ROCE PSU | 1/16/19 | 56,000 | 140,000 | 1,999,760 |
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2) | Estimated Possible Payouts Under Equity Incentive Plan Awards(3) | All Other Awards | (4) | Grant Date Awards | |||||||||||||||||||
Name | Award Type | (1) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | (5) | |||||||||||||
O. Le Peuch | 741,300 | 1,942,500 | 4,202,100 | ||||||||||||||||||||
FCFM PSU | 1/20/21 | 55,145 | 110,290 | 275,725 | 2,624,902 | ||||||||||||||||||
ROCE PSU | 1/20/21 | 1 | 110,290 | 275,725 | 2,627,902 | ||||||||||||||||||
3-year RSU | 1/20/21 | 110,290 | 2,624,902 | ||||||||||||||||||||
TSR PSU | 2/3/21 | 24,110 | 96,440 | 192,880 | 2,625,097 | ||||||||||||||||||
S. Biguet | 271,810 | 712,250 | 1,627,010 | ||||||||||||||||||||
FCFM PSU | 1/20/21 | 16,805 | 33,610 | 84,025 | 799,918 | ||||||||||||||||||
ROCE PSU | 1/20/21 | 1 | 33,610 | 84,025 | 799,918 | ||||||||||||||||||
3-year RSU | 1/20/21 | 33,610 | 799,918 | ||||||||||||||||||||
TSR PSU | 2/3/21 | 7,348 | 29,390 | 58,780 | 799,996 | ||||||||||||||||||
K. Al Mogharbel | 317,700 | 832,500 | 1,800,900 | ||||||||||||||||||||
FCFM PSU | 1/20/21 | 18,380 | 36,760 | 91,900 | 874,888 | ||||||||||||||||||
ROCE PSU | 1/20/21 | 1 | 36,760 | 91,900 | 874,888 | ||||||||||||||||||
3-year RSU | 1/20/21 | 36,760 | 874,888 | ||||||||||||||||||||
TSR PSU | 2/3/21 | 8,038 | 32,150 | 64,300 | 875,123 | ||||||||||||||||||
H. Gharbi | 300,050 | 786,250 | 1,700,850 | ||||||||||||||||||||
FCFM PSU | 1/20/21 | 18,380 | 36,760 | 91,900 | 874,888 | ||||||||||||||||||
ROCE PSU | 1/20/21 | 1 | 36,760 | 91,900 | 874,888 | ||||||||||||||||||
3-year RSU | 1/20/21 | 36,760 | 874,888 | ||||||||||||||||||||
TSR PSU | 2/3/21 | 8,038 | 32,150 | 64,300 | 875,123 | ||||||||||||||||||
A. Belani | 317,700 | 832,500 | 1,800,900 | ||||||||||||||||||||
FCFM PSU | 1/20/21 | 18,910 | 37,820 | 94,550 | 900,116 | ||||||||||||||||||
ROCE PSU | 1/20/21 | 1 | 37,820 | 94,550 | 900,116 | ||||||||||||||||||
3-year RSU | 1/20/21 | 37,820 | 900,116 | ||||||||||||||||||||
TSR PSU | 2/3/21 | 8,265 | 33,060 | 66,120 | 899,893 |
(1) | All |
(2) | These columns show the possible cash incentive payouts for each NEO for fiscal year |
(3) | Relates to |
(4) | Relates to RSUs, all of which will vest on January 20, 2024, subject to continued employment with the |
With respect to PSU awards, this column reflects the grant date fair value for such PSUs at target. We calculated the grant date fair value of each PSU award by multiplying the number of PSUs at target by the applicable grant date fair values for the PSUs: (i) $23.80 for the Free Cash Flow Margin PSUs and ROCE PSUs issued to our NEOs in January 2021; and (ii) $27.22 for the TSR PSUs issued to our NEOs in February 2021. With respect to RSU awards, we calculated the grant date fair value by multiplying the number of RSUs by the grant date fair value of $23.80. |
| Schlumberger Limited |
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The following table provides additional information regarding outstanding and unexercised stock options and other outstanding equityPSU and RSU awards for each of our NEOs as of December 31, 2019.2021.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Option/ PSU/RSU Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | (1) | Number of Securities Underlying Unexercised Option Unexercisable (#) | (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | (2) | Equity Incentive Plan Awards Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | (2) | Option/ PSU/RSU Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | (1) | Number of Securities Underlying Unexercised Options Unexercisable (#) | (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | (2) | ||||||||||||||||||||||||||||||||||
O. Le Peuch | 1/21/2010 | 15,000 | — | 68.505 | 1/21/2020 | 1/19/2012 | 30,000 | — | 72.110 | 1/19/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
7/22/2010 | 30,000 | — | 61.070 | 7/22/2020 | 4/18/2013 | 30,000 | — | 70.925 | 4/18/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1/20/2011 | 27,000 | — | 83.885 | 1/20/2021 | 4/16/2014 | 30,000 | — | 100.555 | 4/16/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1/19/2012 | 30,000 | — | 72.110 | 1/19/2022 | 4/16/2015 | 24,000 | — | 91.740 | 4/16/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||
4/18/2013 | 30,000 | — | 70.925 | 4/18/2023 | 4/20/2016 | 30,000 | — | 80.525 | 4/20/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||
4/16/2014 | 30,000 | — | 100.555 | 4/16/2024 | 1/19/2017 | 12,000 | 3,000 | 87.380 | 1/19/2027 | |||||||||||||||||||||||||||||||||||||||||||||||||||
4/16/2015 | 19,200 | 4,800 | 91.740 | 4/16/2025 | 1/16/2019 | 89,600 | (3) | 2,683,520 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
4/20/2016 | 18,000 | 12,000 | 80.525 | 4/20/2026 | 4/17/2019 | 19,540 | (3) | 585,223 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/19/2017 | 6,000 | 9,000 | 87.380 | 1/19/2027 | 8/1/2019 | 309,280 | (3) | 9,262,936 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/20/2021 | 110,290 | (4) | 3,303,186 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/20/2021 | 110,290 | (5) | 3,303,186 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/20/2021 | 110,290 | (6) | 3,303,186 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/3/2021 | 96,440 | (7) | 2,888,378 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
S. Biguet | 1/19/2012 | 15,000 | — | 72.110 | 1/19/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/19/2017 | 3,800 | (3) | 152,760 | 4/18/2013 | 20,000 | — | 70.925 | 4/18/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
4/20/2017 | 22,400 | (4) | 900,480 | 10/17/2013 | 20,000 | — | 91.280 | 10/17/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
10/18/2017 | 20,000 | (5) | 804,000 | 1/16/2014 | 13,000 | — | 88.765 | 1/16/2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2018 | 22,400 | (6) | 900,480 | 1/15/2015 | 18,000 | — | 77.795 | 1/15/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2018 | 21,900 | (7) | 880,380 | 1/21/2016 | 28,000 | — | 61.920 | 1/21/2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2019 | 44,800 | (8) | 1,800,960 | 1/16/2019 | 42,000 | (3) | 1,257,900 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2019 | 44,800 | (9) | 1,800,960 | 1/15/2020 | 75,980 | (8) | 2,275,601 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/17/2019 | 9,770 | (8) | 392,754 | 1/20/2021 | 33,610 | (4) | 1,006,620 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/17/2019 | 9,770 | (9) | 392,754 | 1/20/2021 | 33,610 | (5) | 1,006,620 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
8/1/2019 | 154,640 | (8) | 6,216,528 | 1/20/2021 | 33,610 | (6) | 1,006,620 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
8/1/2019 | 154,640 | (9) | 6,216,528 | 2/3/2021 | 29,390 | (7) | 880,231 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
K. Al Mogharbel | 1/19/2012 | 15,000 | — | 72.110 | 1/19/2022 | 1/19/2012 | 15,000 | — | 72.110 | 1/19/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
4/18/2013 | 20,000 | — | 70.925 | 4/18/2023 | 4/18/2013 | 20,000 | — | 70.925 | 4/18/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
7/18/2013 | 50,000 | — | 78.305 | 7/18/2023 | 7/18/2013 | 50,000 | — | 78.305 | 7/18/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2014 | 53,000 | — | 88.765 | 1/16/2024 | 1/16/2014 | 53,000 | — | 88.765 | 1/16/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1/15/2015 | 56,800 | 14,200 | 77.795 | 1/15/2025 | 1/15/2015 | 71,000 | — | 77.795 | 1/15/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1/21/2016 | 68,400 | 45,600 | 61.920 | 1/21/2026 | 1/21/2016 | 114,000 | — | 61.920 | 1/21/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1/19/2017 | 19,600 | (4) | 787,920 | 1/16/2019 | 89,600 | (3) | 2,683,520 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
10/18/2017 | 20,000 | (5) | 804,000 | 4/17/2019 | 12,700 | (3) | 380,365 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2018 | 22,400 | (6) | 900,480 | 4/17/2019 | 48,840 | (9) | 1,462,758 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2018 | 21,900 | (7) | 880,380 | 1/15/2020 | 113,060 | (8) | 3,386,147 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2019 | 44,800 | (8) | 1,800,960 | 1/20/2021 | 36,760 | (4) | 1,100,962 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2019 | 44,800 | (9) | 1,800,960 | 1/20/2021 | 36,760 | (5) | 1,100,962 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/17/2019 | 6,350 | (8) | 255,270 | 1/20/2021 | 36,760 | (6) | 1,100,962 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/17/2019 | 6,350 | (9) | 255,270 | 2/3/2021 | 32,150 | (7) | 962,893 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/17/2019 | 48,840 | (10) | 1,963,368 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
P. Schorn | 1/21/2010 | 6,000 | — | 68.505 | 1/21/2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/20/2011 | 45,000 | — | 83.885 | 1/20/2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/19/2012 | 62,000 | — | 72.110 | 1/19/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2013 | 50,000 | — | 73.250 | 1/17/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2014 | 53,000 | — | 88.765 | 1/16/2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/15/2015 | 56,800 | 14,200 | 77.795 | 1/15/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/21/2016 | 68,400 | 45,600 | 61.920 | 1/21/2026 |
| Schlumberger Limited |
| |
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Option/ PSU/RSU Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | (1) | Number of Securities Underlying Unexercised Option Unexercisable (#) | (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | (2) | Equity Incentive Plan Awards Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | (2) | Option/ PSU/RSU Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | (1) | Number of Securities Underlying Unexercised Options Unexercisable (#) | (1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | (2) | ||||||||||||||||||||||||||||||||||
1/19/2017 | 19,600 | (4) | 787,920 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10/18/2017 | 20,000 | (5) | 804,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2018 | 22,400 | (6) | 900,480 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2018 | 21,900 | (7) | 880,380 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2019 | 44,800 | (8) | 1,800,960 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2019 | 44,800 | (9) | 1,800,960 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/17/2019 | 36,630 | (10) | 1,472,526 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
H. Gharbi | 1/21/2010 | 15,000 | — | 68.505 | 1/21/2020 | 1/19/2012 | 20,000 | — | 72.110 | 1/19/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
7/22/2010 | 20,000 | — | 61.070 | 7/22/2020 | 4/18/2013 | 20,000 | — | 70.925 | 4/18/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1/19/2012 | 20,000 | — | 72.110 | 1/19/2022 | 4/16/2014 | 24,000 | — | 100.555 | 4/16/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||
4/18/2013 | 20,000 | — | 70.925 | 4/18/2023 | 4/16/2015 | 24,000 | — | 91.740 | 4/16/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||
4/16/2014 | 24,000 | — | 100.555 | 4/16/2024 | 4/20/2016 | 30,000 | — | 80.525 | 4/20/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||
4/16/2015 | 19,200 | 4,800 | 91.740 | 4/16/2025 | 1/19/2017 | 1,500 | (10) | 44,925 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
4/20/2016 | 18,000 | 12,000 | 80.525 | 4/20/2026 | 1/16/2019 | 89,600 | (3) | 2,683,520 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/19/2017 | 7,500 | (3) | 301,500 | 4/17/2019 | 36,630 | (9) | 1,097,069 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
7/19/2017 | 25,800 | (4) | 1,037,160 | 1/15/2020 | 97,260 | (8) | 2,912,937 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
10/18/2017 | 20,000 | (5) | 804,000 | 1/20/2021 | 36,760 | (4) | 1,100,962 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2018 | 22,400 | (6) | 900,480 | 1/20/2021 | 36,760 | (5) | 1,100,962 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2018 | 21,900 | (7) | 880,380 | 1/20/2021 | 36,760 | (6) | 1,100,962 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2019 | 44,800 | (8) | 1,800,960 | 2/3/2021 | 32,150 | (7) | 962,893 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2019 | 44,800 | (9) | 1,800,960 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/17/2019 | 36,630 | (10) | 1,472,526 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
P. Kibsgaard | 1/21/2010 | 9,400 | — | 68.505 | 1/21/2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
A. Belani | 1/19/2012 | 127,000 | — | 72.110 | 1/19/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/4/2010 | 12,800 | — | 63.760 | 2/4/2020 | 1/17/2013 | 72,000 | — | 73.250 | 1/17/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1/20/2011 | 138,000 | — | 83.885 | 1/20/2021 | 1/16/2014 | 60,000 | — | 88.765 | 1/16/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||
7/21/2011 | 125,000 | — | 89.995 | 7/21/2021 | 1/15/2015 | 80,000 | — | 77.795 | 1/15/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1/19/2012 | 257,400 | — | 72.110 | 1/19/2022 | 1/21/2016 | 128,000 | — | 61.920 | 1/21/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2013 | 184,800 | — | 73.250 | 1/17/2023 | 1/16/2019 | 100,800 | (3) | 3,018,960 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2014 | 199,000 | — | 88.765 | 1/16/2024 | 1/15/2020 | 109,420 | (8) | 3,277,129 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/15/2015 | 212,800 | 53,200 | 77.795 | 1/15/2025 | 1/20/2021 | 37,820 | (4) | 1,132,709 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/21/2016 | 255,600 | 170,400 | 61.920 | 1/21/2026 | 1/20/2021 | 37,820 | (5) | 1,132,709 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/19/2017 | 73,600 | (4) | 2,958,720 | 1/20/2021 | 37,820 | (6) | 1,132,709 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2018 | 84,100 | (6) | 3,380,820 | 2/3/2021 | 33,060 | (7) | 990,147 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2018 | 82,000 | (7) | 3,296,400 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2019 | 168,000 | (8) | 6,753,600 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2019 | 168,000 | (9) | 6,753,600 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
S. Ayat | 1/21/2010 | 95,000 | — | 68.505 | 1/21/2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/20/2011 | 188,000 | — | 83.885 | 1/20/2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/19/2012 | 137,000 | — | 72.110 | 1/19/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2013 | 80,000 | — | 73.250 | 1/17/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2014 | 66,000 | — | 88.765 | 1/16/2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/15/2015 | 71,200 | 17,800 | 77.795 | 1/15/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/21/2016 | 85,200 | 56,800 | 61.920 | 1/21/2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/19/2017 | 24,500 | (4) | 984,900 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10/18/2017 | 20,000 | (5) | 804,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2018 | 28,000 | (6) | 1,125,600 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/17/2018 | 27,300 | (7) | 1,097,460 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2019 | 56,000 | (8) | 2,251,200 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/16/2019 | 56,000 | (9) | 2,251,200 |
(1) | Stock options granted prior to April 2013 vested ratably over five years, except for options granted to employees in France, which vested all at once |
(2) | Market value equal to the product of (x) |
(3) | Reflects the target number of |
(4) | Reflects the target number of FCF Margin PSUs that were issued in January 2021 and that will vest, if at all, in January 2024, subject to the achievement of performance conditions. |
(5) | Reflects the target number of ROCE PSUs that were issued in January |
Reflects the number of three-year RSUs that were issued in | |
(7) | Reflects the target number of |
(8) | Reflects the target number of free cash flow conversion PSUs and ROCE PSUs that were issued in January |
(9) | |
Reflects the number of three-year RSUs that were issued in April 2019 and that will vest on April 17, 2022, subject to continued employment with the | |
(10) | In January 2017, the Company issued 7,500 RSUs to Ms. Gharbi, of which 4,500 RSUs vested on January 19, 2020, 1,500 RSUs vested on January 19, 2021, and 1,500 RSUs vested on January 19, 2022. |
| Schlumberger Limited |
| |
The following table sets forth certain information with respect to stock options exercised and PSUs and RSUs that vested during 2019 for our NEOs.
Option Awards | Stock Awards | |||||||
Name (a) | Number of Shares Acquired on Exercise (#) (b) | Value Realized on Exercise ($) (c) | Number of Shares Acquired on Vesting (#) (d) | Value Realized on Vesting ($) (e) | ||||
O. Le Peuch | 15,000 | 92,327 | 68,600 | 2,973,015 | ||||
K. Al Mogharbel | 1,600 | 5,432 | 111,906 | 4,828,590 | ||||
P. Schorn | — | — | 111,906 | 4,828,590 | ||||
H. Gharbi | 1,200 | 3,654 | 72,500 | 3,131,275 | ||||
P. Kibsgaard | — | — | 362,891 | 15,929,762 | ||||
S. Ayat | — | — | 121,047 | 5,313,584 |
Stock Awards (Columns (d) and (e))
The following table provides details of theadditional information regarding stock options that were exercised and PSU and RSU awards that vested and value realized in 2019.during 2021 for our NEOs.
Option Awards | Stock Awards | |||||||||||||||||||
Name | Grant Date | Release Date | Number of Shares | Stock Price on Release Date ($) | Value Realized on Release ($) | Description | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||
O. Le Peuch | 4/20/2016 | 4/18/2019 | 4,100 | 47.195 | 193,500 | Shares underlying vested RSUs | — | — | 30,464 | 748,944 | ||||||||||
7/20/2016 | 7/19/2019 | 10,000 | 38.315 | 383,150 | Shares underlying vested RSUs | |||||||||||||||
4/20/2017 | 1/18/2019 | 54,500 | 43.970 | 2,396,365 | Shares underlying vested PSUs | |||||||||||||||
S. Biguet | — | — | 14,280 | 351,066 | ||||||||||||||||
K. Al Mogharbel | 1/21/2016 | 1/18/2019 | 44,015 | 43.970 | 1,935,340 | Shares underlying vested PSUs | — | — | 30,464 | 748,944 | ||||||||||
1/21/2016 | 3/12/2019 | 4,891 | 42.520 | 207,965 | Shares underlying vested PSUs | |||||||||||||||
7/20/2016 | 7/19/2019 | 15,000 | 38.315 | 574,725 | Shares underlying vested RSUs | |||||||||||||||
1/19/2017 | 1/18/2019 | 48,000 | 43.970 | 2,110,560 | Shares underlying vested PSUs | |||||||||||||||
P. Schorn | 1/21/2016 | 1/18/2019 | 44,015 | 43.970 | 1,935,340 | Shares underlying vested PSUs | ||||||||||||||
1/21/2016 | 3/12/2019 | 4,891 | 42.520 | 207,965 | Shares underlying vested PSUs | |||||||||||||||
7/20/2016 | 7/19/2019 | 15,000 | 38.315 | 574,725 | Shares underlying vested RSUs | |||||||||||||||
1/19/2017 | 1/18/2019 | 48,000 | 43.970 | 2,110,560 | Shares underlying vested PSUs | |||||||||||||||
H. Gharbi | 7/20/2016 | 7/19/2019 | 10,000 | 38.315 | 383,150 | Shares underlying vested RSUs | — | — | 31,964 | 787,209 | ||||||||||
7/19/2017 | 1/18/2019 | 62,500 | 43.970 | 2,748,125 | Shares underlying vested PSUs | |||||||||||||||
P. Kibsgaard | 1/21/2016 | 1/18/2019 | 164,827 | 43.970 | 7,247,443 | Shares underlying vested PSUs | ||||||||||||||
1/21/2016 | 3/12/2019 | 18,314 | 42.520 | 778,711 | Shares underlying vested PSUs | |||||||||||||||
1/19/2017 | 1/18/2019 | 179,750 | 43.970 | 7,903,608 | Shares underlying vested PSUs | |||||||||||||||
S. Ayat | 1/21/2016 | 1/18/2019 | 54,942 | 43.970 | 2,415,800 | Shares underlying vested PSUs | ||||||||||||||
1/21/2016 | 3/12/2019 | 6,105 | 42.520 | 259,585 | Shares underlying vested PSUs | |||||||||||||||
1/19/2017 | 1/18/2019 | 60,000 | 43.970 | 2,638,200 | Shares underlying vested PSUs | |||||||||||||||
A. Belani | — | — | 34,272 | 842,561 |
We maintain the following pension plans for our named executive officersNEOs and other employees whichwho began employment with the Company when new hires were eligible to participate. These plans provide for lifetime pensions upon retirement, based on years of service:
• | Schlumberger Technology Corporation Pension Plan (“STC Pension Plan”); | |
• | Schlumberger Technology Corporation Supplementary Benefit Plan (“STC Supplementary Plan”); | |
• | Schlumberger Limited Supplementary Benefit Plan (“SLB Supplementary Plan”); | |
• | Schlumberger Pension Plan for U.S. Taxpayers Employed Abroad (“SLB USAB Pension Plan”); and | |
• | Schlumberger International Staff Pension Plan (“ |
The following table and narrative disclosure set forth certainthe discussion below provide information with respect toregarding pension benefits payable to our named executive officers.NEOs.
Name | Plan Name | Number of Years of Credited Service (#) | (1) | Present Value of Accumulated Benefits ($) | (2) | Payments During Last Fiscal Year | Plan Name | Number of Years of Credited Service (#) | (1) | Present Value of Accumulated Benefits ($) | (2) | Payments During Last Fiscal Year | ||||||||
O. Le Peuch | STC Pension Plan | 9.75 | 745,179 | — | STC Pension Plan | 11.75 | 943,174 | — | ||||||||||||
STC Supplementary Plan | 7.25 | 1,438,592 | — | STC Supplementary Plan | 7.25 | 1,429,288 | — | |||||||||||||
SLB Supplementary Plan | 1.00 | 396,337 | — | SLB Supplementary Plan | 3.00 | 2,799,428 | — | |||||||||||||
SLB International Staff Pension Plan | 6.50 | 2,694,348 | — | International Staff Pension Plan | 6.50 | 2,749,888 | — | |||||||||||||
S. Biguet | STC Pension Plan | 7.41 | 569,844 | — | ||||||||||||||||
SLB Supplementary Plan | 5.00 | 1,650,096 | — | |||||||||||||||||
International Staff Pension Plan | 3.70 | 250,113 | — | |||||||||||||||||
K. Al Mogharbel | SLB International Staff Pension Plan | 16.20 | 1,639,791 | — | International Staff Pension Plan | 16.20 | 1,841,636 | — | ||||||||||||
P. Schorn | STC Pension Plan | 10.59 | 699,706 | — | ||||||||||||||||
H. Gharbi | STC Pension Plan | 5.76 | 450,015 | — | ||||||||||||||||
SLB Supplementary Plan | 2.50 | 1,231,438 | — | |||||||||||||||||
International Staff Pension Plan | 10.30 | 1,846,298 | — | |||||||||||||||||
A. Belani | STC Pension Plan | 19.33 | 1,455,742 | — | ||||||||||||||||
STC Supplementary Plan | 8.67 | 1,108,094 | — | STC Supplementary Plan | 2.58 | 130,062 | — | |||||||||||||
SLB Supplementary Plan | 4.33 | 2,674,536 | — | SLB Supplementary Plan | 16.75 | 6,543,957 | — | |||||||||||||
SLB USAB Pension Plan | 4.33 | 532,775 | — | International Staff Pension Plan | 10.00 | 655,691 | — | |||||||||||||
SLB International Staff Pension Plan | 12.50 | 2,336,849 | — | |||||||||||||||||
H. Gharbi | STC Pension Plan | 4.26 | 220,077 | — | ||||||||||||||||
SLB Supplementary Plan | 1.00 | 224,828 | — | |||||||||||||||||
SLB International Staff Pension Plan | 9.80 | 1,452,778 | — | |||||||||||||||||
P. Kibsgaard | STC Pension Plan | 16.75 | 1,117,624 | — | ||||||||||||||||
STC Supplementary Plan | 4.25 | 422,435 | — | |||||||||||||||||
SLB Supplementary Plan | 11.75 | 11,677,957 | — | |||||||||||||||||
SLB International Staff Pension Plan | 3.20 | 393,540 | — | |||||||||||||||||
S. Ayat | STC Pension Plan | 14.00 | 1,058,240 | — | ||||||||||||||||
STC Supplementary Plan | 0.50 | 5,297 | — | |||||||||||||||||
SLB Supplementary Plan | 13.25 | 5,694,314 | — | |||||||||||||||||
SLB International Staff Pension Plan | 10.60 | 846,759 | — |
(1) | |
(2) | The present value of accumulated benefits is calculated using the Pri-2012 amount-weighted mortality tables with |
| Schlumberger Limited |
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Tax-Qualified Pension Plans
The STC Pension Plan and the SLB USAB Pension Plan are U.S. tax-qualified pension plans. The SLB USAB Pension Plan, the material terms of which are described below, has similar, but not identical, terms to the STC Pension Plan. EmployeesEligible employees may participate in any oneeither of these plans during the course of their careers with Schlumberger, in which case they become entitled to a pension from each suchthe applicable plan based upon the benefits accrued during the years of service related to such plan. These plans are funded through cash contributions made by the Company and its subsidiaries based on actuarial valuations and regulatory requirements. Benefits under these plans are based on an employee’s admissible compensation (generally base salary and cash incentive) for each year in which an employee participates in the plan, and the employee’s length of service with Schlumberger.
Since January 1, 1989, the benefit earned under the STC Pension Plan has been 1.5% of admissible compensation for service prior to the employee’s completion of 15 years of active service and 2%2.0% of admissible compensation for service after completion of 15 years of active service. Since 2009, the benefit earned underUnder the SLB USAB Pension Plan, the benefit earned in 2009 is 3.2% of admissible compensation, and after 2009 the benefit earned has been equal to 3.5% of admissible compensation for all service.compensation. Normal retirement under these plans is at age 65; however, early retirement with a reduced benefit is possible at age 55 or as early as age 50 with 20 years of service. Mr. SchornBiguet and Mr. KibsgaardMs. Gharbi are eligible for early retirement with a reduced pension. Additionally, under the “rule of 85,”85” applicable to the STC Pension Plan, an employee or executive officer who terminates employment after age 55 and whose combined age and service is 85 or more, is eligible for retirement with an unreduced pension. Mr.Messrs. Le Peuch and Mr. AyatBelani are eligible for retirement with an unreduced pension under the rule of 85. The benefits are usually paid as a lifetime annuity.
In 2004, we amended the STC Pension Plan to generally provide that employees hired on or after October 1, 2004 would not be eligible to participate. Newly-hiredNewly hired employees are eligible to participate in an enhanced defined contribution plan, which provides a Company matching contribution depending on an employee’s 401(k) contribution, andas well as a Company discretionary profit sharing contribution based on the profitability of the Company in a given year.
Schlumberger Supplementary Benefit Plans—Nonqualified Pension
The SLB Supplementary Plan and the STC Supplementary Plan each provide non-tax-qualified pension benefits. Each of these plans, which have substantially identical terms, provides an eligible employee with benefits equal to the benefits that the employee is unable to receive under the applicable qualified pension plan due to the Internal Revenue Code limits on (i)(1) annual compensation that can be taken into account under qualified plans and (ii)(2) annual benefits that can be provided under qualified plans.
The retirement ageeligibility rules under nonqualified pension plans isare the same as under the tax-qualified pension plans. These benefits are subject to forfeiture if the employee leaves the Company or its subsidiaries before the age of 50 with five years of service, engages in certain dishonest acts or has violated a confidentiality arrangement involving the Company or its affiliates. Mr. Le Peuch and Mr. Ayat are eligible for retirement with an unreduced pension under the rule of 85, described above. Nonqualified plan reducedReduced benefits are paid to an employee upon separation from service, provided the employee has attained the age of 55, or if earlier, the age of 50 with 20 years of service. Messrs. Le Peuch and Belani are eligible for retirement with an unreduced pension under the rule of 85, described above. Mr. Biguet and Ms. Gharbi are eligible for early retirement with a reduced pension. Payment is made as a joint and survivor annuity, if married; otherwise, payment is made as a life-only annuity. Payment to key employees is delayed six months following separation from service. These nonqualified plan benefits are payable in cash from the Company’s general assets and are intended to qualify as “excess benefit plans” exempt from certain requirements of Title I of the Employee Retirement Income Security Act of 1974 (ERISA).1974.
International Staff Pension Plan
Recognizing the need to maintain a high degree of mobility for certain of the Company’s employees who otherwise would be unable to accumulate any meaningful pension because they are required to work in many different countries, the Company maintains the SLB International Staff Pension Plan for such employees. All of the Company’s named executive officersNEOs have either been in the SLB International Staff Pension Plan at some time during their career prior to becoming an executive officer or are in the plan because of their current assignment. This plan provides for a lifetime annuity upon retirement based on a specified number of years of service. The plan is funded through cash contributions made by the Company or its subsidiaries, alongtogether with mandatory contributions by employees.
Prior to January 2010, benefits under this plan were based on a participant’s admissible compensation (base salary, geographical or rotational coefficient, as applicable, and cash incentive) for each year in which the employee participated in the plan and the employee’s length of service. The benefit earned up to December 31,year-end 2009 is 2.4% of admissible compensation prior to completion of 15 years of service, and 3.2% of admissible compensation for each year of service after 15 years. Following the completion of 20 years of service, the benefit earned with respect to the first 15 years of service is increased to 3.2%. Benefits are payable upon normal retirement age, at or after age 55, or upon early retirement with a reduction, at or after age 50 with 20 years of service. Mr.With respect to pension rights accrued prior to 2010, Messrs. Le Peuch and Mr. AyatBelani are eligible for normal retirement with no reduction. Mr. Schornreduction, and Mr. KibsgaardMessrs. Biguet and Al Mogharbel and Ms. Gharbi are eligible for early retirement with a reduced pension.
Since January 1, 2010, the benefit earned has been equal to 3.5% of admissible compensation regardless of an employee’s years of service. Benefits earned on or after this date are payable upon normal retirement age, at or after age 60, or upon early retirement with a reduction, at or after age 55 with a reduced pension. With respect to pension rights accrued in 2010 or later, Messrs. Biguet and Al Mogharbel and Ms. Gharbi will become eligible for normal retirement upon reaching age 60 and early retirement upon reaching age 55.
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The following table and narrative disclosure set forth certainthe discussion below provide information with respect toregarding nonqualified deferred compensation payable to theour NEOs.
Name | Plan Name | Executive Contributions in Last FY ($) | (1) | Company Contributions in Last FY ($) | (2) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | (3) | Plan Name | Executive Contributions in Last FY ($) | (1) | Company Contributions in Last FY ($) | (2) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | (3) | ||||||||||||
O. Le Peuch | SLB Supplementary Plan | — | — | 15,716 | — | 94,286 | SLB Supplementary Plan | — | — | 10,347 | — | 116,306 | ||||||||||||||||||
International Staff Profit Sharing Plan | — | — | 184,658 | — | 1,697,145 | |||||||||||||||||||||||||
SLB Restoration Savings Plan | 1,008,360 | 100,836 | 203,821 | — | 3,537,186 | |||||||||||||||||||||||||
S. Biguet | SLB Supplementary Plan | — | — | 72 | — | 18,423 | ||||||||||||||||||||||||
SLB Restoration Savings Plan | 334,918 | 33,492 | 72,150 | �� | — | 1,120,588 | International Staff Profit Sharing Plan | — | — | 54,121 | — | 497,414 | ||||||||||||||||||
International Staff Plan | — | — | 234,904 | — | 1,306,540 | SLB Restoration Savings Plan | 368,760 | 39,510 | 164,814 | — | 1,115,086 | |||||||||||||||||||
K. Al Mogharbel | SLB Supplementary Plan | — | — | 28,266 | — | 148,433 | SLB Supplementary Plan | — | — | 22,961 | — | 191,089 | ||||||||||||||||||
SLB Restoration Savings Plan | 232,119 | 55,709 | 117,308 | — | 1,564,125 | International Staff Profit Sharing Plan | — | — | 92,607 | — | 851,124 | |||||||||||||||||||
International Staff Plan | — | — | 117,805 | — | 655,235 | SLB Restoration Savings Plan | 165,580 | 99,348 | 342,430 | — | 2,724,472 | |||||||||||||||||||
P. Schorn | STC Supplementary Plan | — | — | 62,007 | — | 502,515 | ||||||||||||||||||||||||
H. Gharbi | International Staff Profit Sharing Plan | — | — | 87,572 | — | 804,854 | ||||||||||||||||||||||||
SLB Restoration Savings Plan | 64,059 | 32,030 | 80,988 | — | 392,471 | |||||||||||||||||||||||||
A. Belani | SLB Supplementary Plan | — | — | 53,725 | — | 838,459 | ||||||||||||||||||||||||
STC Restoration Savings Plan | — | — | 88,049 | — | 896,511 | International Staff Profit Sharing Plan | — | — | 166,381 | — | 1,523,275 | |||||||||||||||||||
International Staff Plan | — | — | 58,482 | — | 325,275 | SLB Restoration Savings Plan | 99,348 | 49,674 | 63,376 | — | 3,565,424 | |||||||||||||||||||
H. Gharbi | SLB Restoration Savings Plan | 42,161 | 21,081 | 25,547 | — | 67,709 | ||||||||||||||||||||||||
International Staff Plan | — | — | 111,401 | — | 619,614 | |||||||||||||||||||||||||
P. Kibsgaard | SLB Supplementary Plan | — | — | 234,845 | — | 1,408,930 | ||||||||||||||||||||||||
SLB Restoration Savings Plan | — | — | 4,227 | — | 95,630 | |||||||||||||||||||||||||
International Staff Plan | — | — | 30,736 | — | 170,952 | |||||||||||||||||||||||||
S. Ayat | SLB Supplementary Plan | — | — | 108,305 | — | 784,897 | ||||||||||||||||||||||||
SLB Restoration Savings Plan | 323,430 | 32,343 | 460,804 | — | 3,606,106 | |||||||||||||||||||||||||
International Staff Plan | — | — | 345,260 | — | 1,953,421 |
(1) | |
(2) | |
(3) |
SLB Supplementary Benefit Plan—Non-QualifiedPlans—Nonqualified Profit Sharing
The SLB Supplementary Plan provides certain non-tax-qualified defined contribution benefits for eligible employees, including named executive officers.our NEOs. Schlumberger Technology Corporation, an indirect wholly-ownedwholly owned subsidiary of Schlumberger Limited, maintains the STC Supplementary Plan with substantially identical terms.
The SLB Supplementary Plan and the STC Supplementary Plan provide an eligible employee with discretionary Company profit sharing contributions that are not permissible under the applicable tax-qualified plan due to Internal Revenue Code limits on (1) annual compensation that can be taken into account under the qualified plan and (2) annual benefits that can be provided under the qualified plan. These nonqualified plan benefits are credited with earnings and losses as if they were invested in the qualified plan, with the samebased on employee investment elections as the qualified plan.elections. An employee forfeits all rights under the non-qualifiednonqualified plans if the employee terminates employment before completing four years of service, engages in certain dishonest acts or has violated a confidentiality arrangement involving the Company or its affiliates. These nonqualified plan benefits are paid in a lump-sum payment following the end of the year in which the employee terminates active service, or the employee can elect to receive payment in installments of five or ten years following the termination of service. If the employee dies before full payment of these benefits, the unpaid benefits are paid in a lump sum to the beneficiaries designated under the applicable qualified plan. Payment to key employees is delayed six months following separation from service.
SLB International Staff Profit Sharing Plan
Schlumberger maintains the SLB International Staff Profit Sharing Plan, which provides for an annual employer contribution based on admissible compensation (base salary, geographical or rotational coefficient, as applicable, and cash incentive). Amounts allocated to the participants’ accounts share in investment gains and/or losses of the trust fund and are generally distributed in a lump sum upon the satisfaction of certain conditions on termination of employment or, upon the employee’s election, may be converted to additional pension rights under the International Staff Pension Plan. Benefits earned under the SLB International Staff Profit-Sharing Plan will be forfeited upon a determination by the SLB International Staff Profit-Sharing Plan’s administrator that the employee’s separation from service was due to circumstances of fraud or misconduct detrimental to the Company, an affiliate or any customer.
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SLB Restoration Savings PlanPlans
The SLB Restoration Savings Plan, a non-qualifiednonqualified deferred compensation plan, provides certain defined contribution benefits for the named executive officersour NEOs and other eligible employees. The SLB Restoration Savings Plan allows an eligible employee to defer compensation (and receive an associated employer match) that the employee cannot defer under the applicable tax-qualified plan because of Internal Revenue Code limits on the amount of compensation that can be taken into account. Schlumberger Technology Corporation maintains the STC Restoration Savings Plan with substantially identical terms.
An eligible employee may elect in advance to defer a percentage (from 1% to 50%) of his or heradmissible compensation (generally base salary and cash incentive) over the Internal Revenue Code annual compensation limits. The election cannot be changed during the year. The Company makes an annual matching contributioncontributions with respect to each employee’s deferrals for a year, if the employee is still employed by the Company or an affiliate on the last day of the year.deferrals. For employees who participate in a Schlumberger pension plan, the amount of the matching contribution is equal to one-half50% of the first 6% deferred by the employee in profitable years.employee. For employees who do not participate in a Schlumberger pension plan, the matching contribution is 100% of the first 6% deferred by the employee. The match is made each payroll period and is not contingent on profitability of the Company. Employees’ accounts are credited with earnings calculated to mirror the earnings of the relevant funds under the Schlumberger Master Profit Sharing Trust as chosen by the employee.based on their investment elections. If the employee is eligible for the SLB Savings and Profit Sharing Plan, matching contributions and related earnings vest based on the employee’s years of service, as follows:
2 years | 33 |
3 years | 66 |
4 years | 100% vested |
If the employee is eligible for the SLB Savings and Profit Sharing Plan for U.S. Taxpayers Employed Abroad, matching contributions and related earnings vest based on the employee’s years of service, as follows:
2 years | 20% vested |
3 years | 40% vested |
4 years | 60% vested |
5 years | 80% vested |
6 years | 100% vested |
An employee’s account fully vests on his or her death, his or herthe employee’s 60thbirthday or plan termination. An employee’s vested account balance is paid in a single lump sum (subject to tax withholding) following the participant’s death, qualifying disability, retirement or other qualifying termination of employment or, subject to certain limitations, the employee can elect to receive payment in installments of five or ten years following the termination of employment. However, an employee forfeits all benefits under the plan if a determination is made that the employee has engaged in certain dishonest acts or violated a confidentiality arrangement involving Schlumberger or its affiliates. Payment to key employees is delayed six months following separation from service.
SLB International Staff Profit-Sharing Plan
Schlumberger maintains the SLB International Staff Profit-Sharing Plan, which provides for an annual employer contribution based on admissible compensation (base salary, geographical or rotational coefficient, as applicable, and cash incentive). Amounts allocated to the participants’ accounts share in investment gains and/or losses of the trust fund and are generally distributed in a lump sum upon the satisfaction of certain conditions on termination of employment. Benefits earned under the SLB International Staff Profit-Sharing Plan will be forfeited upon a determination by the SLB International Staff Profit-Sharing Plan’s administrator that the employee’s separation from service was due to circumstances of fraud or misconduct detrimental to the Company, an affiliate or any customer.
Pay Ratio of CEO to Median Employee
In accordance with SEC rules, we are providing the ratio of the total compensation of Mr. Kibsgaard, our former CEO, to the annual total compensation of our median employee. Based on the methodology described below, our former CEO’s total compensation for the full year 2019 was 313 times that of our median employee.
We had two CEOs during 2019. For purposes of the CEO pay ratio calculation, we used the total compensation paid to Mr. Kibsgaard, our CEO on October 1, 2017, our median employee identification date, for the full year 2019. Pursuant to Mr. Kibsgaard’s agreement with the Company as described in “Compensation Discussion and Analysis—Agreements with Former NEOs” on page 42, Mr. Kibsgaard’s compensation with respect to the five-month period following his retirement was consistent with his compensation for the seven-month period in 2019 in which he served as CEO; therefore, we determined that Mr. Kibsgaard’s annualized 2019 compensation equaled his actual total compensation for the full year 2019 as reported in the “Total” column of our 2019 Summary Compensation Table included in this proxy statement: $22,247,160.
In 2019, we used the same median employee identified for purposes of our 2018 CEO pay ratio disclosure, as permitted under SEC rules, because we believe the changes to our employee population and compensation arrangements in 2019 have not significantly impacted our pay ratio disclosure. Our 2019 and 2018 median employee was in the same pay grade and in a similar position to the median employee that we had identified as of October 1, 2017, but was not the same employee as was used in 2017, because the 2017 median employee was promoted in 2018.
As in 2018, our median employee for 2019 was a full-time, salaried employee working in Colombia as a Field Engineer. We calculated all of the elements of that employee’s compensation for 2019 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. We then converted the total compensation of the median employee using a blended exchange rate representing the average exchange rate from January 1, 2019 to December 31, 2019, resulting in an exchange rate of 3,293 Colombian Pesos to each U.S. dollar. The resulting 2019 total compensation of our median employee was $71,021.
The pay ratio set forth above is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources systems of record and the methodology described above. Because the SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio that we report above, as other companies may have different employment and compensation practices, different types of workforce, and operate in different countries, and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
No Additional Payments Upon Termination or Change in Control
Our named executive officersNEOs generally receive the same benefits as our other employees. As is the case with our other compensation arrangements, any differences are generally due to local (country-specific) requirements. In line with this practice, our currently serving namedNEOs historically have not had ongoing employment or severance agreements during their service with us as executive officersofficers. Nor do notour NEOs have employment agreements, “golden parachutes” or change in control agreements.agreements or “golden parachutes”. The Company’s executive officers serve at the will of the Board, which enables the Company to terminate their employment using judgment as to the terms of any severance arrangement and based on specific circumstances at the time they cease being executive officers. For details regarding our agreements with outgoing NEOs, see “Compensation Discussion and Analysis—Elements of 2021 Total Direct Compensation—Agreements with Outgoing NEOs” on page 48.
All employees who receive equity awards, including our NEOs, are subject to the same terms and conditions in the event of a termination or change in control, except for certain stock options that were assumed in connection with our acquisition of Cameron, none of which are held by the NEOs.
Termination of Employment
PSUs and RSUs
Under our 2017 Incentive Plan and the Company’s standard form of PSU and RSU award agreements, PSUs and RSUs are treated as follows upon the holder’s termination of employment with the Company prior to the applicable vesting date:
• | If the holder’s employment terminates on account of death or disability, the target number of PSUs will immediately vest, and all unvested RSUs will immediately vest in full. | |
• | If the holder’s employment terminates on account of retirement or, with Compensation Committee approval, early retirement or special retirement, the holder will vest in PSUs on the regularly scheduled vesting dates, with the number of PSUs determined as if the holder’s employment had not been terminated. | |
• | If the holder’s employment terminates on account of retirement or, with Compensation Committee approval, early retirement, the holder will vest in RSUs on the regularly scheduled vesting dates. | |
• | If an individual terminates employment for another reason, no additional vesting is provided and the individual will automatically forfeit all outstanding PSUs and RSUs without any additional consideration on the part of the Company. |
Schlumberger Limited2022 Proxy Statement | 61 |
For these purposes, “retirement,” “early retirement,” “special retirement” and “disability” have the meanings assigned to such terms in the applicable award agreements. The applicable date of “retirement,” “early retirement” or “special retirement” takes into consideration the completion of any active employment period, including employment pursuant to the Company’s officer departure guidelines described on page 47 of this proxy statement.
Stock Options
This section summarizes the consequences for our NEOs and other employees under our omnibus incentive plans and standard form of stock option award agreement in the event an option holder’s employment terminates.
Reason for Termination of Employment | Vesting | Post-Employment Exercise Period | ||
Voluntary termination with consent of the Company or termination by the Company other than for cause | No additional vesting | Exercisable (to the extent exercisable at termination) at any time within three months after termination. | ||
Termination by the Company for cause | None | Vested and unvested options forfeited immediately. | ||
Special Retirement | No additional vesting | Exercisable (to the extent exercisable at termination) at any time during the 60-month period after termination due to retirement or during the remainder of the option period, whichever is shorter. | ||
Death or Disability | Full immediate vesting | Exercisable at any time during the 60-month period after termination due to death or disability or during the remainder of the option period, whichever is shorter. |
Notwithstanding the vesting and exercisability provisions described above, an option holder may forfeit his or herthe right to exercise stock options, and may have certain prior option exercises rescinded, if he or shethe option holder engages in “detrimental activity” within one year after termination of employment (or five years after termination of employment in the event of retirement or disability).
If an option holder dies following termination of employment, but during the period in which he or she would otherwise be able to exercise the option, then the person entitled under the option holder’s will or by the applicable laws of descent and distribution will be entitled to exercise an outstanding option until the earlier of (i) 60 months following the date of his or her termination of employment or (ii) the expiration of the original term. Death following termination of employment will not result in any additional vesting, so that the option will be exercisable to the extent provided in the matrix above based on the circumstances of his or her termination of employment.
PSUs
This section summarizes the consequences for NEOs holding PSUs granted under the Company’s 2010 Omnibus Stock Incentive Plan, 2013 Omnibus Stock Incentive Plan and 2017 Omnibus Stock Incentive Plan and subject to the Company’s standard form of ROCE PSU award or FCF Conversion PSU award, as applicable, in the event the PSU holder’s employment terminates.
2019 and 2020 FCF Conversion PSUs; ROCE PSUs
FCF Conversion PSUs granted in 2019 and 2020 and all ROCE PSUs are treated as follows upon the holder’s termination of employment with the Company and its subsidiaries prior to the vesting date (i.e., the third anniversary of the grant date).
2017 and 2018 FCF Conversion PSUs
FCF Conversion PSUs granted in 2017 and 2018 are treated as follows upon the holder’s termination of employment with the Company and its subsidiaries prior to the conversion date (the second anniversary of the grant date, when such FCF Conversion PSUs are converted, if at all, into shares of restricted stock based on performance) or the vesting date (the first anniversary of the date that restricted shares are received following the conversion date).
For these purposes,“retirement,” “early retirement,” “special retirement” and “disability” have the meanings assigned to such terms in the applicable award agreements.
Change in Control
Stock Options
Pursuant to Schlumberger’sUnder our omnibus incentive plans, and standard form of stock option award agreement (other than awards issued under the 2010 Omnibus Stock Incentive Plan, the 2013 Omnibus Stock Incentive Plan and the 2017 Omnibus Stock Incentive Plan), in the event of any reorganization, merger or consolidation wherein Schlumberger is not the surviving corporation, or upon the liquidation or dissolution of Schlumberger, all outstanding stock option awards will, unless alternate provisions are made by Schlumberger in connection with the reorganization, merger or consolidation for the assumption of such awards, become fully exercisable and vested, and all holders will be permitted to exercise their options for 30 days prior to the cancellation of the awards as of the effective date of such event. Under our 2010 Omnibus Stock Incentive Plan, our 2013 Omnibus Stock Incentive Plan and 2017 Omnibus Stock Incentive Plan, the Compensation Committee retains the discretion to adjust outstanding awards in the event of corporate transactions and outstanding options may be, but are not required to be, accelerated upon such a transaction.
The following table sets forth the intrinsic value of the unvested stock options held by each NEO as of December 31, 2019 that would become vested upon the occurrence of death, disability or a change in control in which Schlumberger is not the surviving entity and alternative provisions are not made for the assumption of awards, as described in the preceding paragraphs. Due to the number of factors that affect the nature and amount of any benefits provided upon these events, any amounts actually paid or distributed may be different. Factors that could affect these amounts include the time during the year of any such event and the price of Schlumberger common stock.
If Schlumberger merges or consolidates with another entity and is the surviving entity, then a holder of stock options granted pursuant to Schlumberger’s stock options plans will be entitled to receive, upon exercise or vesting, in lieu of the number of shares with respect to which the award is exercisable or vested, the number and class of shares of stock or other securities that the holder would have been entitled to receive under the terms of such merger or consolidation if, immediately prior to such event, such holder had been the holder of record of the number of shares of Schlumberger common stock equal to the number of shares as to which such award is then exercisable or vested.
PSUs and RSUs
Under our 2010 Omnibus Stock Incentive Plan, 2013 Omnibus Stock Incentive Plan and 2017 Omnibus Stock Incentive Plan, in the event of a merger, consolidation, acquisition of property or stock, separation, spinoff, reorganization or liquidation (each a “Corporate Transaction”), our Board may, in its sole discretion, (1) provide for the accelerationsubstitution of thea new award (or other arrangement) for or assumption of any award, (2) provide for accelerated vesting of any awards, including RSUs and PSUs, or (2)(3) decide to cancel any awards including RSUs and PSUs, and deliver cash to the holders cash in an amount that our Board determines in its sole discretion is equal to the fair market value of such awards on the date of such event. However, no current agreement with respect to theour outstanding RSUs, PSUs and PSUsstock options currently provides for any definitive special treatment upon such a merger, consolidation, acquisition of property or stock, separation, spinoff, reorganization or liquidation.Corporate Transaction.
The following table sets forth the value of the unvested RSUs and PSUs (at target) and the intrinsic value of the unvested PSUs at targetstock options held by each NEO atas of December 31, 20192021, that would become vested upon the occurrence of a merger, consolidation, acquisition of property or stock, separation, spinoff, reorganization or liquidationCorporate Transaction, assuming that the Board elects to accelerate the vesting of RSUs, PSUs and PSUsstock options as provided in the previous paragraph. Due to the various factors that could affect the nature and amount of any benefits provided upon these events, any amounts actually paid or distributed may be different. Factors that could affect these amounts include the time during the year of any such event, the price of Schlumberger common stock and achievement by the Company of theany relevant performance metric.
Upon Corporate Transaction | ||||||
Name | PSUs (at Target) ($) | (1) | Intrinsic Value of Unvested Options ($) | (2) | ||
O. Le Peuch | 25,329,614 | — | ||||
S. Biguet | 7,433,590 | — | ||||
K. Al Mogharbel | 12,178,569 | |||||
H. Gharbi | 11,004,229 | — | ||||
— |
(1) | Calculated |
(2) | Reflects that the closing price of Schlumberger common stock on December 31, 2021 ($29.95) was lower than the exercise price of all stock options held by our NEOs as of that date. |
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Retirement Plans
Schlumberger’sThe Company’s pension plans and non-qualifiednonqualified deferred compensation plans include the same terms and conditions for all participating employees in the event of a termination or change in control. The SLB and STC Restoration Savings Plans provide for accelerated payment of vested account balances within 30 days following a change in control as defined under Internal Revenue Code section 409A. Other than the SchlumbergerSLB and STC Restoration Savings Plan,Plans, none of Schlumberger’s non-qualifiedour nonqualified plans provide for the accelerated payment of benefits upon a change in control. For more information on these plans, see the Pension Benefits for Fiscal Year 2019 table and accompanying narrativediscussion beginning on page 58 above and the Nonqualified Deferred Compensation for Fiscal Year 2019 table and accompanying narrativediscussion beginning on page 60 above.
The following table sets forth the amounts as of December 31, 20192021 of benefit payments that would be accelerated under the SchlumbergerSLB Restoration Savings Plan upon a change in control.
Name | Amount ($) | ||
O. Le Peuch | 3,537,186 | ||
S. Biguet | 1,115,086 | ||
K. Al Mogharbel | |||
H. Gharbi | 392,471 | ||
Retiree Medical
Subject to satisfying certain age, service and contribution requirements, most U.S. employees, including NEOs in the United States, are eligible to participate in a retiree medical program. Generally, this program provides comprehensive medical, prescription drug and vision benefits for retirees and their dependents until attaining age 65. Historically, for Schlumberger employees who turned age 40 prior to 2014,65, and excluding those employees who became Schlumberger employees as a result of the Smith acquisition, retiree medical benefits continue beyond age 65, at which time Medicare becomes primary and the Schlumberger plan becomes secondary, paying eligible charges after Medicare has paid. However, effective April 1, 2015, participants who reach age 65 no longer continue in Schlumberger medical coveragethen after reaching age 65 but instead receive an annual contribution to a health reimbursement arrangement that can be used to purchase Medicare supplemental coverage and pay other tax-deductible expenses.
Agreements with Former NEOs
See “Compensation Discussion and Analysis—Agreements with Former NEOs” on page 42 for details regarding our agreements with Messrs. Kibsgaard and Ayat.
Director Compensation in Fiscal Year 2019
Our director compensation philosophy is to appropriately compensate our non-employee directors for the time, expertise and effort required to serve as a director of a large and complex global company and to align the interests of our directors with those of our long-term stockholders.
Annual payments are made after the non-employee directors are elected by stockholders. Non-employee directors who begin their Board, Board Chair, committee or committee chair service other than immediately following the annual general meeting of stockholders receive a prorated amount of annual compensation. Directors who are employees of Schlumberger do not receive compensation for serving on the Board.
Director Pay Components
Non-employee directors receive an annual cash retainer of $115,000 plus an additional annual fee of $10,000 for membership on a committee. The chair of each committee receives an additional annual fee of $20,000 in lieu of the additional annual fee of $10,000 for committee membership. In August 2019, Mr. Papa began receiving an additional $100,000 annually, reflecting his additional responsibilities as the Board’s non-executive Chairman. Mr. Currie has also earned an additional $50,000 annually, reflecting his additional responsibilities as the Board’s lead independent director.
Additionally, Schlumberger’s practice is to grant each newly-appointed or elected non-employee director (including non-employee directors re-elected at the annual general meeting) shares of Schlumberger common stock valued at approximately $190,000 (or $290,000 for the non-executive Chairman of the Board) each April.
2019 Director Pay Review
Our Compensation Committee annually reviews and periodically recommends updates to our non-employee director compensation program to our Board for approval. The Committee’s recommendation takes into account our director compensation philosophy, changes in market practices, and consultation with the Committee’s independent compensation consultant, Pay Governance. In 2019, the Committee reviewed non-employee director compensation taking into account multiple factors including director pay practices at publicly-traded companies and continued expansion of director and independent committee chair responsibilities. Based on that review, the Committee determined that no changes in non-employee director compensation were necessary for 2019 (other than the additional cash retainer and stock award to the non-executive Chairman of the Board, each effective August 2019).
Director Deferral Plan
Non-employee directors may elect to defer all or a portion of their annual stock or cash awards through the Schlumberger 2004 Stock and Deferral Plan for Non-Employee Directors (the “Directors Stock Plan”). When directors elect to defer their stock award, their deferred compensation account is credited with a number of “stock units.” Each stock unit is equal in value to a share of our common stock, but because it is not an actual share of our common stock it does not have any voting rights. When directors elect to defer their cash award, they may choose to invest such deferred cash compensation into either (i) Schlumberger common stock, (ii) money market equivalents, or (iii) an S&P 500 equivalent. Deferrals into a stock account are credited with dividend equivalents in the form of cash to be paid at the time of vesting and deferrals into the cash account are credited with gains or losses based on the monthly performance of the various investment options described above. Following retirement from our Board and depending on the director’s election, a non-employee director may receive the deferred compensation on the date of the director’s retirement or a date that is one year following the date of the director’s retirement.
Although our Directors Stock Plan provides that annual stock awards to non-employee directors may be in the form of shares of common stock, shares of restricted common stock or restricted stock units, our practice has been to issue only shares of common stock. Our directors have never received restricted common stock or restricted stock units as director compensation.
The following table provides information on the compensation paid to our non-employee directors in 2019.
Name | Fees Earned or Paid in Cash ($) | (1) | Stock Awards ($) | (2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value & Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | (3) | |||||||
Peter L.S. Currie | 195,000 | 184,180 | — | — | — | 20,185 | (4) | 399,365 | |||||||||
Patrick de La Chevardière(5) | 35,045 | — | (5) | — | — | — | — | 35,045 | |||||||||
Miguel Galuccio | 145,000 | 184,180 | — | — | — | — | 329,180 | ||||||||||
V. Maureen Kempston Darkes(6) | 13,050 | — | — | — | — | — | 13,050 | ||||||||||
Nikolay Kudryavtsev | 145,000 | 184,180 | — | — | — | 20,298 | (4) | 349,478 | |||||||||
Michael E. Marks(6) | 11,250 | — | — | — | — | — | 11,250 | ||||||||||
Tatiana A. Mitrova | 132,500 | 184,180 | — | — | — | — | 316,680 | ||||||||||
Indra K. Nooyi | 145,000 | 184,180 | — | — | — | — | 329,180 | ||||||||||
Lubna S. Olayan | 142,500 | 184,180 | — | — | — | — | 326,680 | ||||||||||
Mark G. Papa(7) | 207,569 | (8) | 258,774 | — | — | — | — | 466,343 | |||||||||
Leo Rafael Reif | 155,000 | 184,180 | — | — | — | 18,085 | (4) | 357,265 | |||||||||
Jeff W. Sheets(5) | 35,045 | — | (5) | — | — | — | — | 35,045 | |||||||||
Henri Seydoux | 145,000 | 184,180 | — | — | — | — | 329,180 |
Director Stock Ownership Guidelines
The Board believes that ownership of Schlumberger stock by Board members aligns their interests with the interests of our stockholders. Accordingly, the Board has established a guideline that each non-employee Board member must, within five years of joining the Board, own at least 10,000 shares of Schlumberger common stock. As of December 31, 2019, each of our non-employee director nominees who has been a Board member for at least five years was in compliance with these stock ownership guidelines.
The table below sets forth the following information as of December 31, 20192021 for all equity compensation plans approved and not approved by our stockholders.
Plan category | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights | (b) Weighted-average exercise price of such outstanding options, warrants and rights | (1) | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights | (b) Weighted-average exercise price of such outstanding options, warrants and rights ($) | (1) | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||||
Equity compensation plans approved by security holders | 44,125,341 | (2) | 76.12 | 46,629,195 | (2) | 40,372,599 | 69.05 | 62,965,520 | (2) | ||||||||||
Equity compensation plans not approved by security holders(3) | 2,143,535 | 65.96 | — | 1,974,556 | 66.92 | — | |||||||||||||
TOTAL | 46,268,876 | (2) | 75.65 | 46,629,195 | (2) | 42,347,155 | 68.95 | 62,965,520 | (2) |
(1) | The weighted average price does not take into account |
(2) | Includes |
(3) |
Equity compensation plans approved by Schlumbergerour stockholders include the Directors Stock Plan; the 2017 Schlumberger Omnibus Stock Incentive Plan, as amended and restated; the 2017 Incentive Plan; the 2013 Schlumberger Omnibus Stock Incentive Plan, as amended and restated; the 2010 Schlumberger Omnibus Stock Incentive Plan, as amended and restated;restated (the “2010 Incentive Plan”); the French Sub Plan under the 2010, 2013 and 2017 Schlumberger Omnibus Stock Incentive Plans, as amended and restated; the Schlumberger Discounted Stock Purchase Plan, as amended;amended and restated; the Schlumberger 2008 Stock Incentive Plan, as amended and restated;restated (the “2008 Incentive Plan”); and the Schlumberger 2005 Stock Incentive Plan, as amended and restated; andrestated (the “2005 Incentive Plan”). There are no securities issuable under the Schlumberger 2001 Stock Option2010 Incentive Plan, as amended and restated.the 2008 Incentive Plan or the 2005 Incentive Plan, other than shares of our common stock issuable upon the exercise of stock options currently outstanding.
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Following completionBased on the methodology described below, our CEO’s 2021 total compensation was 254 times that of our median employee.
For 2021, we used the same median employee that we had identified as of October 2020. There have been no changes in our employee population or our compensation arrangements in 2021 that we believe would result in a material change in our pay ratio disclosure or our median employee. As in 2020, our median employee was a full-time, salaried employee working in Nigeria as a technical sales professional. To calculate that employee’s total compensation, we first calculated all of the audit procedures performedelements of the employee’s compensation for 2021, and then converted this total compensation amount to U.S. dollars using a blended exchange rate representing the average exchange rate during 2021 (i.e. 397 Nigerian Naira to one U.S. dollar). The resulting 2021 total compensation of our median employee was $66,138. Our CEO’s total compensation for 2021 was $16,795,502 (as reflected in the Summary Compensation Table).
Our pay ratio is affected by PricewaterhouseCoopers LLP,many factors, and may not be comparable to the Company’s independent registered public accounting firm, we are submittingpay ratios reported by other companies, even in the oilfield services and energy industries. For example, the following for approval byfactors may affect the comparability of our stockholders, as required by Curaçao law:pay ratio:
• | our | |
• | varied methodologies for calculating total compensation for both the median employee and our | |
• |
These items are included in our 2019 Annual Report to Stockholders, which is provided concurrently with this proxy statement. Stockholders should refer to these items in considering this agenda item.
Required Vote
A majority of the votes cast is required for the approval of the financial results as set forth in the financial statements and of the declaration of dividends by the Board as reflected in our 2019 Annual Report to Stockholders.
Brokers have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker may vote on this proposal in its discretion.
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Following completion of the audit procedures performed by PwC, we are asking you to approve the following financial statements that are included in our 2021 Annual Report to Stockholders:
• | our consolidated balance sheet at December 31, 2021; | |
• | our consolidated statement of income for the year ended December 31, 2021; and | |
• | the declarations of dividends by our Board in 2021. |
Stockholders should refer to our 2021 Annual Report to Stockholders in considering this agenda item.
The Board of Directors Recommends a Vote FORItem 3. |
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PricewaterhouseCoopers LLPPwC has been selected by the Audit Committee as the independent registered public accounting firm to audit the annual financial statements of the Company for the year ending December 31, 2020.2022. Although ratification is not required by our bylaws or otherwise, as a matter of good corporate governance, we are asking our stockholdersyou to ratify, on an advisory basis, the appointment of PricewaterhouseCoopers LLPPwC as our independent auditor for the year ending December 31, 2020.2022. If the appointment is not ratified, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm.
A representative of PricewaterhouseCoopers LLPPwC is expected to attend our 2020 annual general meeting of stockholders,2022 AGM, and will be available to respond to appropriate questions.
The Board of Directors Recommends a Vote FORItem 4. |
Fees Paid to PricewaterhouseCoopers LLPPwC
PricewaterhouseCoopers LLPPwC has billed the Company and its subsidiaries the fees set forth in the table below for:
• | the audit of the Company’s | |
• | the other services described below that were billed in |
Year Ended December 31, | Year Ended December 31, | |||||||||||||||
(in thousands) | 2019 | 2018 | ||||||||||||||
(Stated in thousands) | 2021 | 2020 | ||||||||||||||
Audit Fees(1) | $ | 14,376 | $ | 13,982 | $ | 12,250 | $ | 12,969 | ||||||||
Audit-Related Fees(2) | 469 | 430 | 534 | 495 | ||||||||||||
Tax Fees(3) | 2,701 | 3,613 | 1,560 | 2,199 | ||||||||||||
All Other Fees(4) | 51 | 81 | — | 43 | ||||||||||||
TOTAL | $ | 17,597 | $ | 18,106 | $ | 14,344 | $ | 15,706 |
(1) | Includes fees for statutory audits. |
(2) | Consists of fees for employee benefit plan audits and other audit-related items. |
(3) | Consists of fees for tax compliance, tax planning and other |
(4) | Consists of fees for |
The Audit Committee considers the provision of services by PricewaterhouseCoopers LLPPwC not related to the audit of the Company’s annual financial statements and reviews of the Company’s interim financial statements when evaluating PricewaterhouseCoopers LLP’sPwC’s independence.
Audit Committee’s Pre-Approval Policy and Procedures
The Audit Committee pre-approveshas a policy to pre-approve all services provided to the Company and its subsidiaries by Schlumberger’s independent registered public accounting firm. The Audit Committee has adopted a schedule for annual approval of the audit and related audit plan, as well as approval of other anticipated audit-related services; anticipated tax compliance, tax planning and tax advisory services; and other anticipated services. In addition, the Audit Committee (or an authorized committee member acting under delegated authority of the committee) will consider any proposed services not approved as part of this annual process. During 2019For 2021 and 2018, all2020, audit and non-audit services were pre-approved by the Audit Committee.
Required VoteStockholder Feedback
A majorityAt our 2021 AGM, the proposal to ratify the appointment of PwC as our independent auditor for 2021 received the support of 95% of the votes cast is required to approvecast. In selecting PwC as the Company’s independent auditor for 2022, the Audit Committee considered this Item 4.
Brokers have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will vote on this proposal in its discretion.substantial support of our stockholders, as well as PwC’s substantial experience auditing the Company’s complex global accounts and the regulatory requirement that the PwC lead engagement partner rotate every five years.
2021 AUDITOR RATIFICATION VOTE |
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During 2019,2021, the Audit Committee periodically reviewed and discussed the Company’s consolidated financial statements with Company management and PricewaterhouseCoopers LLP,PwC, the Company’s independent registered public accounting firm, including matters raised by the independent registered public accounting firm pursuant to applicable Public Company Accounting Oversight Board (“PCAOB”PCAOB”) requirements. The Audit Committee also discussed with Company management and PricewaterhouseCoopers LLPPwC the evaluation of the Company’s reporting and internal controls undertaken in connection with certifications made by the Company’s Chief Executive Officer and Chief Financial Officer in the Company’s periodic SEC filings pursuant to the Sarbanes-Oxley Act of 2002. The Audit Committee also reviewed and discussed such other matters as it deemed appropriate, including the Company’s compliance with Section 404 and other relevant provisions of the Sarbanes-Oxley Act of 2002 and rules adopted or proposed to be adopted by the SEC and the NYSE. The Audit Committee also reviewed with PricewaterhouseCoopers LLPPwC the matters required to be discussed by the independent registered public accounting firm with the Audit Committee under applicable requirements of the PCAOB and the SEC.
PricewaterhouseCoopers LLPPwC provided the Audit Committee with the required PCAOB disclosures and letters concerning its independence with respect to the Company, and the Committee discussed PricewaterhouseCoopers LLP’sPwC’s independence with them.
Based on the foregoing reviews and discussions, the Audit Committee recommended that the Board include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019,2021, as filed with the SEC on January 22, 2020.26, 2022.
SUBMITTED BY THE AUDIT COMMITTEE OF THE SCHLUMBERGER BOARD OF DIRECTORS
Tatiana | Jeff |
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This proxy statement is furnished in connection with the solicitation by the Schlumberger Board of Directors of proxies to be voted at Schlumberger’s 2022 AGM, which will be held at the Curaçao Marriott Beach Resort, John F Kennedy Boulevard, 3, Piscadera Bay, Willemstad, Curaçao, on Wednesday, April 6, 2022 beginning at 10:00 a.m., Curaçao time, and at any postponement(s) or adjournment(s) thereof.
To be admitted to the meeting, stockholders of record and beneficial owners as of the close of business on February 9, 2022 must present a passport or other government-issued identification with a photograph and, for beneficial owners, proof of ownership as of February 9, 2022, such as the Notice of Internet Availability (defined below), and/or the top half of the proxy card or voting instruction card that was sent to you with this proxy statement.
In addition, depending on the level of COVID-19 protocols in effect at the time, your ability to attend the 2022 AGM in person may be restricted or may require additional safeguards, which could include face coverings, proof of vaccination, proof of a negative COVID-19 test result within a specified number of days, and maintaining appropriate social distancing. Please review www.proxydocs.com/SLB for any updates prior to traveling.
The mailing date of this proxy statement is February 24, 2022. The Chairperson of the meeting will determine the procedures for conducting the meeting and will limit the meeting to those matters properly brought by or at the direction of our Board or by a stockholder.
Internet Availability of Proxy Materials
This year we are using the internet as the primary means of furnishing proxy materials to stockholders. We are sending a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) to our stockholders with instructions on how to access the proxy materials online or request a printed copy of the materials. Stockholders may follow the instructions in the Notice of Internet Availability to elect to receive future proxy materials in print by mail or electronically by email. We encourage stockholders to take advantage of the availability of the proxy materials online to help reduce the environmental impact of our AGMs. Our proxy materials are also available at https://investorcenter.slb.com, as well as at www.proxydocs.com/SLB.
Record Date
Each stockholder of record at the close of business on the record date, February 9, 2022, is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on with respect to each share registered in the stockholder’s name. A stockholder of record is a person or entity who held shares on the record date registered in the shareholder’s name on the records of Computershare Trust Company, N.A. (“Computershare”), Schlumberger’s stock transfer agent. On the record date, February 9, 2022, there were 1,413,133,986 shares of Schlumberger common stock outstanding and entitled to vote. Persons who held shares on the record date through a broker, bank, or other nominee are referred to as beneficial owners.
Proxies
Shares cannot be voted at the meeting unless the owner of record is present in person or is represented by proxy. Schlumberger is incorporated in Curaçao and, in accordance with Curaçao law, meetings of stockholders are held in Curaçao. Because many stockholders cannot personally attend the meeting, it is necessary that a large number be represented by proxy.
Quorum
Holders of at least one-half of the outstanding shares entitled to vote at the meeting must be present in person or represented by proxy to constitute a quorum for the taking of any action at the meeting. Abstentions and proxies submitted on your behalf by brokers, banks, or other holders of record that do not indicate a vote because they do not have discretionary voting authority and have not received instructions from the beneficial owner of the shares as to how to vote on a proposal (so-called “broker non-votes”) will be considered as present for quorum purposes. If a quorum is not present at the meeting, the Board may call a second general meeting of stockholders, at which the quorum requirement will not apply.
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Votes Required to Adopt Proposals
To be elected, director nominees must receive a majority of the votes cast, which means the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee. Approval of each of the other matters on the agenda also requires the affirmative vote of the majority of the votes cast.
Important Voting Information for Beneficial Owners
If your Schlumberger shares are held for you in street name (i.e., you own your shares through a brokerage, bank, or other institutional account), you are considered the beneficial owner of those shares, but not the record holder. This means that you vote by providing instructions to your broker rather than directly to Schlumberger. Unless you provide specific voting instructions, your broker is not permitted to vote your shares on your behalf, except on Item 3 and Item 4.
Effect of Abstentions and Broker Non-Votes
Brokers holding shares must vote according to specific instructions they receive from the beneficial owners of those shares. If brokers do not receive specific instructions, brokers may in some cases vote the shares in their discretion. However, the NYSE precludes brokers from exercising voting discretion on certain proposals without specific instructions from the beneficial owner, as follows:
• | Discretionary Items. Under NYSE rules, brokers may vote on both Item 3 (approval of financial statements and dividends) and Item 4 (ratification of appointment of independent auditors for 2022) in their discretion if they have not received voting instructions from the beneficial owners. | |
• | Nondiscretionary Items. Brokers, banks, or other holders of record cannot vote on Item 1 (election of directors) and Item 2 (advisory vote to approve executive compensation) unless the beneficial owners direct them how to vote the shares. Therefore, if your shares are held in street name and you do not direct your broker, bank, or other holder of record how to vote on the election of directors or the advisory resolution to approve our executive compensation, your shares will not be voted on those matters. |
Abstentions and broker non-votes will be considered as present for quorum purposes, but they are not considered as votes cast and will not be counted in determining the outcome of the vote on the election of directors or on any of the other proposals.
How to Cast Your Vote
Stockholders with shares registered in their names with Computershare may authorize a proxy:
BY INTERNET www.proxypush.com/SLB | BY TELEPHONE (866) 240-5191 | BY MAIL Sign, date, and mail your proxy card |
The internet and telephone voting facilities for stockholders of record will close at 11:59 p.m. Eastern time on Tuesday, April 5, 2022. The internet and telephone voting procedures have been designed to authenticate stockholders and to allow you to vote your shares and to confirm that your instructions have been properly recorded.
Many banks and brokerage firms participate in programs that also permit beneficial owners to direct their vote by the internet or telephone. If you are a beneficial owner whose shares are held in an account at a bank or brokerage firm that participates in such a program, you may direct the vote of those shares by the internet or telephone by following the instructions on any voting instruction form or electronic voting instructions that you receive from your bank or brokerage firm.
All shares entitled to vote and represented by properly executed proxies received prior to the meeting and not revoked will be voted at the meeting in accordance with your instructions. If you are a stockholder with shares registered in your name with Computershare and you submit a properly executed proxy card but do not direct how to vote on each item, the persons named as proxies will vote as the Board recommends on each proposal.
Changing Your Vote or Revoking Your Proxy
If you are a stockholder of record, you can change your vote or revoke your proxy at any time by timely delivering a properly executed, later-dated proxy (including an internet or telephone vote by April 5, 2022) or by voting by ballot at the meeting. If you hold shares through a broker, bank, or other holder of record, you must follow the instructions of your broker, bank, or other holder of record to change or revoke your voting instructions.
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2023 Annual General Meeting of Stockholders
Security Ownership by Certain Beneficial Owners
The following table sets forth information asWe intend to file a proxy statement and WHITE proxy card with the SEC in connection with the Board’s solicitation of December 31, 2019 (except as otherwise noted) with respect to persons known by us to be the beneficial owners of more than 5%proxies for our 2023 AGM. Stockholders may obtain a copy of our common stock, based solely on the information reported by such persons in their Schedule 13D2023 proxy statement (and any amendments and 13G filingssupplements thereto) and other documents as and when filed with the SEC.
For each entity included inSEC without charge from the table below, percentage ownership is calculated by dividing the number of shares reported as beneficially owned by such entity by the 1,387,980,608 shares of our common stock outstanding on January 31, 2020.
Beneficial Ownership of Common Stock | |||
Name and Address | Number of Shares | Percentage of Class | |
The Vanguard Group(1) | 114,027,924 | 8.2% | |
100 Vanguard Blvd. Malvern, PA 19355 | |||
BlackRock, Inc.(2) | 91,439,070 | 6.6% | |
55 East 52nd Street New York, NY 10055 |
Security Ownership by Management
The following table sets forth information known to us with respect to beneficial ownership of our common stock as of January 31, 2020 by (i) each director and director nominee, (ii) each of the named executive officers and (iii) all directors and executive officers as a group.
Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. Except as indicated in the footnotes to the table below and subject to applicable community property laws, to our knowledge the persons named in the table below have sole voting and investment power with respect to the securities listed. None of the shares are subject to any pledge.
The number of shares beneficially owned by each person or group as of January 31, 2020 includes shares of common stock that such person or group has the right to acquire within 60 days of January 31, 2020, including upon the exercise of options to purchase common stock or the vesting of RSUs or PSUs. References to options in the footnotes to the table below include only options outstanding as of January 31, 2020 that are currently exercisable or that become exercisable within 60 days of January 31, 2020. References to any restricted stock, RSUs or PSUs in the footnotes to the table below include only restricted stock, RSUs and PSUs outstanding as of January 31, 2020 and that are currently vested or that will vest within 60 days of January 31, 2020. The table below excludes the number of shares that have been earned under our 2017 ROCE PSUs but not yet finally determined, as described in “Compensation Discussion and Analysis—Payouts Under PSU Awards—2020 Payouts Under 2017 ROCE PSUs,” on page 41 above.
For each individual and group included in the table below, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of the 1,387,980,608 shares of common stock outstanding on January 31, 2020, plus the number of shares of common stock that such person or group had the right to acquire on or within 60 days of January 31, 2020.
As of January 31, 2020, no director, director nominee or named executive officer owned more than 1% of the outstanding shares of Schlumberger’s common stock. All directors and executive officers as a group owned less than 1% of the outstanding shares of our common stock as of January 31, 2020.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our executive officers and directors, among others, to file an initial report of ownership of Schlumberger common stock on Form 3 and reports of changes in ownership on Form 4 or Form 5. Persons subject to Section 16 are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms that they file. The Company believes, based solely on a review of the copies of such forms in its possession and on written representations from reporting persons, that two transactions required to be filed under Section 16(a) were not timely filed during the fiscal year ended December 31, 2019 or prior fiscal years. Two Form 4s required to be filed by Mr. Le Peuch relating to the vesting of RSUs were not timely filed, but were filed on January 22, 2020.
Stockholder Proposals for our 2021 Annual General MeetingSEC’s website at www.sec.gov.
In order for a stockholder proposal to be considered for inclusion in the proxy statement for the 2021 annual general meeting of stockholdersour 2023 AGM pursuant to Exchange Act Rule 14a-8, or for director nominations to be included pursuant to the Company’s proxy access bylaw provisions, such proposals or notice of nominations must be received by the Secretary of the Company, 5599 San Felipe, 17thFloor, Houston, Texas 77056, no later than October 24, 2020,27, 2022, and, in the case of a proxy access nomination, no earlier than September 24, 2020.27, 2022.
For stockholder proposals to be introduced for consideration at our 2021 annual general meeting of stockholders2023 AGM other than pursuant to Rule 14a-8 and for stockholder candidates to be nominated for election as directors other than pursuant to our proxy access bylaw provisions, notice generally (unless the date of our 2021 annual general meeting is moved as stated in our bylaws) must be delivered to the Secretary of the Company at our executive offices in Houston, Texas, not later than 120 days nor earlier than 150 days before the first anniversary of the date of the 2020 annual general meeting of stockholders.2022 AGM. Accordingly, any such notice must be received no earlier than November 2, 2020,7, 2022, and no later than December 2, 2020,7, 2022, and must otherwise satisfy the requirements of our bylaws. Under the rules of the Exchange Act, we may use discretionary authority to vote with respect to any proposal not included in our proxy materials that is presented by a stockholder in person at the 2021 annual general meeting of stockholders2023 AGM if the stockholder making the proposal has not given notice to us by December 2, 2020.7, 2022.
Annual Report
Stockholders may obtain a copy of our most recent Form 10-K filed with the SEC, including financial statements and schedules, without charge by writing to our Investor Relations Department, 5599 San Felipe, 17th Floor, Houston, Texas 77056, or by calling (713) 375-3535.
Proxy Solicitation Costs
The Company will pay the cost of furnishing proxy materials to all stockholders and of soliciting proxies by mail and telephone. We have retained D.F. King & Co., Inc. and its affiliate to assist in the solicitation of proxies for a fee estimated at $20,200 plus reasonable expenses. Directors, officers and employees of the Company may also solicit proxies for no additional compensation. We will reimburse brokerage firms, fiduciaries, and custodians for their reasonable expenses in forwarding the solicitation material to beneficial owners.
Other Matters
Stockholders may obtain a copy of our most recent Form 10-K filed with the SEC, including financial statements and schedules, without charge by writing to our Investor Relations Department, 5599 San Felipe, 17th Floor, Houston, Texas 77056, or by calling (713) 375-3535.
The Company will pay the cost of furnishing proxy material to all stockholders and of soliciting proxies by mail and telephone. We have retained D. F. King & Co., Inc. to assist in the solicitation of proxies for a fee estimated at $15,500 plus reasonable expenses. Directors, officers and employeesAs of the Company may also solicit proxies for no additional compensation. We will reimburse brokerage firms, fiduciaries and custodians for their reasonable expenses in forwarding the solicitation material to beneficial owners.
The Board knowsdate of this proxy statement, we know of no other matter tobusiness that will be presented at the meeting.meeting other than the matters described in this proxy statement. If any additional matter ismatters are properly presented at the meeting, we intend to vote the enclosed proxy in accordance with the discretion of the persons named in the proxy.
Please sign, date, and return the accompanying proxy in the enclosed envelope at your earliest convenience.
By order of the Board of Directors,
Alexander C. Juden
Dianne B. Ralston
Chief Legal Officer and Secretary
Houston, Texas
February 21, 202024, 2022
| Schlumberger Limited |
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Reconciliation of Non-GAAP Financial Measures
Our 2020This proxy statement includes non-GAAP financial measures. Net income, excluding charges and credits,measures, including free cash flow, free cash flow margin, cash flow generation, adjusted EBITDA, earnings per share, excluding charges and credits, free cash flow and cash flow generation are non-GAAP financial measures. Thesenet income, excluding charges and credits. Certain of these measures are used by management inas performance metrics when determining certain incentive compensation.
The followingcompensation for our executive officers. Below is a reconciliation of these non-GAAP financial measures to the comparable GAAP measures. Management believes that the exclusion of charges and credits from certain non-GAAP financial measures enables it to evaluate more effectively Schlumberger’s operations period-over-period and to identify operating trends that could otherwise be masked by the excluded items.
The non-GAAP financial measures should be considered in addition to, not as a substitute for, or superior to, other measures of financial performance prepared in accordance with GAAP.
(Stated in millions, except per share amounts) | ||||||||||||||||||||
Twelve Months 2019 | ||||||||||||||||||||
Pretax | Tax | Noncont. Interests | Net | Diluted EPS* | ||||||||||||||||
Schlumberger net income (loss) (GAAP basis) | $ | (10,418 | ) | $ | (311 | ) | $ | 30 | $ | (10,137 | ) | $ | (7.32 | ) | ||||||
Fourth Quarter | ||||||||||||||||||||
North America restructuring | 225 | 51 | — | 174 | 0.13 | |||||||||||||||
Other restructuring | 104 | (33 | ) | — | 137 | 0.10 | ||||||||||||||
Workforce reductions | 68 | 8 | — | 60 | 0.04 | |||||||||||||||
Pension settlement accounting | 37 | 8 | — | 29 | 0.02 | |||||||||||||||
Repurchase of bonds | 22 | 5 | — | 17 | 0.01 | |||||||||||||||
Gain on formation of Sensia | (247 | ) | (42 | ) | — | (205 | ) | (0.15 | ) | |||||||||||
Third Quarter | ||||||||||||||||||||
Goodwill impairment | 8,828 | 43 | — | 8,785 | 6.34 | |||||||||||||||
North America pressure pumping | 1,575 | 344 | — | 1,231 | 0.89 | |||||||||||||||
Intangible assets impairment | 1,085 | 248 | — | 837 | 0.60 | |||||||||||||||
Other North America-related | 310 | 53 | — | 257 | 0.19 | |||||||||||||||
Asset Performance Solutions | 294 | — | — | 294 | 0.21 | |||||||||||||||
Equity-method investments | 231 | 12 | — | 219 | 0.16 | |||||||||||||||
Argentina | 127 | — | — | 127 | 0.09 | |||||||||||||||
Other | 242 | 13 | — | 229 | 0.17 | |||||||||||||||
Schlumberger net income, excluding charges and credits | $ | 2,483 | $ | 399 | $ | 30 | $ | 2,054 | $ | 1.47 |
(Stated in millions) | (Stated in millions) | |||||||||||
Periods Ended December 31, | Twelve Months 2019 | Twelve Months 2018 | Twelve Months 2021 | |||||||||
Cash flow from operations | $ | 5,431 | $ | 5,713 | $ | 4,651 | ||||||
Capital expenditures | (1,724 | ) | (2,160 | ) | (1,141 | ) | ||||||
APS investments | (781 | ) | (981 | ) | (474 | ) | ||||||
Multiclient seismic data capitalized | (231 | ) | (100 | ) | (39 | ) | ||||||
Free cash flow | $ | 2,695 | $ | 2,472 | $ | 2,997 | ||||||
Net proceeds from formation of Sensia joint venture and from asset divestiture | 586 | — | ||||||||||
Business acquisitions and investments, net of cash acquired plus debt assumed | (23 | ) | (292 | ) | (103 | ) | ||||||
Cash paid for severance | 128 | 340 | ||||||||||
Proceeds from sale of Liberty shares | 109 | |||||||||||
Other, net | (3 | ) | ||||||||||
Cash flow generation | $ | 3,386 | $ | 2,520 | $ | 3,000 |
Free cash flow represents cash flow from operations less capital expenditures, APS investments and multiclient seismic data costs capitalized. Management believes that free cash flow is an important liquidity measure for the Company and that it is useful to investors and management as a measure of Schlumberger’s ability to generate cash. Free cash flow does not represent the residual cash flow available for discretionary expenditures. Free cash flow is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, cash flow from operations.
(Stated in millions) | ||||
Periods Ended December 31, | Twelve Months 2021 | |||
Net income attributable to Schlumberger | $ | 1,881 | ||
Net income attributable to noncontrolling interests | 47 | |||
Tax expense | 446 | |||
Income before taxes | $ | 2,374 | ||
Charges and credits: | ||||
Gain on sale of Liberty shares | (28 | ) | ||
Early repayment of bonds | 10 | |||
Unrealized gain on marketable securities | (47 | ) | ||
Depreciation and amortization | 2,120 | |||
Interest expense | 529 | |||
Interest income | (33 | ) | ||
Adjusted EBITDA | $ | 4,925 |
Adjusted EBITDA represents income before taxes excluding charges and credits, depreciation and amortization, interest expense, and interest income. Management believes that adjusted EBITDA is an important profitability measure for Schlumberger and that it allows investors and management to more efficiently evaluate Schlumberger’s operations period over period and to identify operating trends that could otherwise be masked. Adjusted EBITDA should be considered in addition to, not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP.
| Schlumberger Limited |
| A-1 |
(Stated in millions, except per share amounts) | ||||||||||||||||||||
Twelve Months 2021 | ||||||||||||||||||||
Pretax | Tax | Noncont. Interests | Net | Diluted EPS | ||||||||||||||||
Schlumberger net income (GAAP basis) | $ | 2,374 | $ | 446 | $ | 47 | $ | 1,881 | $ | 1.32 | ||||||||||
Gain on sale of Liberty shares | (28 | ) | (4 | ) | — | (24 | ) | (0.02 | ) | |||||||||||
Early repayment of bonds | 10 | — | — | 10 | 0.01 | |||||||||||||||
Unrealized gain on marketable securities | (47 | ) | (11 | ) | — | (36 | ) | (0.03 | ) | |||||||||||
Schlumberger net income, excluding charges and credits | $ | 2,309 | $ | 431 | $ | 47 | $ | 1,831 | $ | 1.28 |
Schlumberger Limited2022 Proxy Statement | A-2 |