1 | | | | COTERRA• 2022 PROXY STATEMENT | 4 |
This proxy statement includes website addresses and references to additional materials found on those websites, which are provided for convenience only. Content on the websites, including content on our website, is not, and shall not be deemed to be, part of this proxy statement or incorporated herein or into any of our other filings with the Securities and Exchange Commission (the “SEC”). This proxy statement includes forward-looking statements within the meaning of federal securities laws. All statements, other than statements of historical fact, included in this report are forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our environmental, social and governance commitments and our future performance outcomes. The words “believe,” “plan,” “anticipate,” “expect” and similar expressions are also intended to identify forward-looking statements. We can provide no assurance that the forward-looking statements contained in this proxy statement will occur, and actual results may differ materially from those included in this report. Forward-looking statements are based on current expectations and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those included in this report. These risks and uncertainties include, but are not limited to, those described in “Risk Factors” in Item 1A of Part I of our Form 10-K for the year ended December 31, 2023 and those contained in our future reports filed with the SEC. Except to the extent required by applicable law, we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
This summary highlights information described in other parts of this Proxy Statementproxy statement and does not contain all of the information you should consider in voting. Please read the entire Proxy Statementproxy statement before voting. For more complete information regarding our 20212023 operational and financial and operating performance, please review our Annual Report on Form 10-K for the fiscal year ended December 31, 2021,2023, which accompanies this Proxy Statement.ANNUAL MEETING INFORMATIONproxy statement. ONE COTERRA Coterra Energy Inc. (“Coterra” or the “Company”) is a premier, diversified energy company with a strong free cash flow profile, well positioned to deliver superior and sustainable returns to stockholders through commodity cycles. Coterra’s common stock trades on the New York Stock Exchange (the “NYSE”) under the ticker symbol “CTRA.” GOVERNANCE AND BOARD HIGHLIGHTS Good corporate governance is rooted in ethics, integrity, accountability, and transparency. We have built our business on sound governance principles and practices. These principles and practices are the foundation of sustainable value creation, building stakeholder trust, and a responsible business culture. Our Board of Directors (the “Board of Directors” or “Board”) consists of 10 members, eight of whom are independent and four of whom are women. Each member of the Board brings a unique background and set of leadership skills that contributes to the diversity of our Board, including broad experience in leadership, finance, energy, exploration and production, climate change, operations and strategy, risk oversight, legal, regulatory, and cybersecurity matters. By leveraging our Board’s experience and good corporate governance practices, we aim to promote accountability and sound decision making, which ultimately helps to enhance our long-term success. Independent and Effective Board Oversight | | | | | | | | DATE AND TIME | PLACE | RECORD DATE | VOTING | | | | | April 29, 2022
8:00 a.m. Central Time | Hotel ZaZa Memorial City
9787 Katy Freeway
Houston, Texas 77024
Virtually at
www.virtualshareholdermeeting.com/CTRA2022 | March 8, 2022
Shares Outstanding:
810,978,794 | Only holders•
Eight of record10 director nominees are independent •
Four of our
common stock will be entitled the five standing committees are fully composed of independent members with independent chairs •
The Board is committed to notice ofseeking highly qualified women and individuals from minority groups to vote at the
Annual Meeting. |
VOTING METHODS
| METHOD | | INSTRUCTION | | IN PERSON OR VIRTUALLY | | you may attend the Annual Meeting and vote in person or, during the meeting, go to www.virtualshareholdermeeting.com/CTRA2022 to vote; | | | | | | BY INTERNET | | log onto www.proxyvote.com and use the instructions on the proxy card or voting instruction form received from your broker or bank; | | | | | | BY TELEPHONE | | dial 1.800.690.6903 and use the instructions on the proxy card or voting instruction form received from your broker or bank (if available); or | | | | | | BY MAIL | | complete and return the enclosed proxy card or voting instruction forminclude in the postage-paid envelope provided (for stockholders receiving paper copies only). |
MATTERS TO BE VOTED ON AND RECOMMENDATION
PROPOSAL | MATTER | BOARD VOTE RECOMMENDATION | PAGE REFERENCE | 1. | The election of the ten director candidates named herein. | FOR | 9 | 2. | Ratification of the appointment of the firm PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company for its 2022 fiscal year. | FOR | 65 | 3. | The approval on an advisory basis of executive compensation. | FOR | 67 |
COTERRA• 2022 PROXY STATEMENT | 5 |
pool of potential Board nominees and succession candidates
DIRECTOR NOMINEES
| | | | | | | | | | DAN O. DINGES
•
Executive Chairman of Coterra EnergyAge 68
Years Served 20
Other public company boards: 1
• None
| THOMAS E. JORDEN
Chief Executive Officer and President of Coterra
Age 65
Years Served <1
Other public company boards: None
| LISA A. STEWART
Lead Director Executive Chairman of Sheridan Production Partners
Age 64
Years Served <1
Other public company boards: 2
• Western Midstream Partners LP
• Jadestone Energy
| DOROTHY M. ABLES
Former Chief Administrative Officer of Spectra Energy Corp
Age 64
Years Served 6
Other public company boards: 1
• Martin Marietta Materials Inc.
| ROBERT S. BOSWELL
Chairman and CEO of Laramie Energy, LLC
Age 72
Years Served 6
Other public company boards: 1
• Enerflex Ltd. (Canadian)
| | | | | | | | | | | | | | | | AMANDA M. BROCK
CEO Aris Water
Age 61
Years Served 4
Other public company boards: 1
• Macquarie Infrastructure Corporation
• Aris Water
| PAUL N. ECKLEY
Former Senior Vice President – Investments of State Farm® Corporate Headquarters
Age 67
Years Served <1
Other public company boards: None
| HANS HELMERICH
Chairman of the Board of Helmerich & Payne
Age 63
Years Served <1
Other public company boards: 1
• Helmerich & Payne, Inc.
| FRANCES M. VALLEJO
Former Vice President for Corporate Planning and Development of ConocoPhillips
Age 57
Years Served <1
Other public company boards: 1
• Crestwood Energy Partners, LP
| MARCUS A. WATTS
President of The Friedkin Group
Age 64
Years Served 4
Other public company boards: 1
• Service Corporation International
|
| BOARD EXPERIENCE | |
COTERRA• 2022 PROXY STATEMENT | 6 |
GOVERNANCE HIGHLIGHTS
• Women hold 50% of independent Board seats and chair three of our four standing Board committees
• One member of our Board of Directors is member of a historically underrepresented group
• Recent Board refreshment from the merger with averagesessions are led by an independent director tenurein all Board and committee meetings
•
Annual Board and committee evaluations •
Orientation, continuing education and strategy programs for directors •
All current Audit Committee members meet the NYSE listing standards of three yearsfinancial sophistication and are audit committee financial experts under the SEC rules • Proxy access for stockholders• Rigorous stock
Stock ownership guidelines for all executive officers and directors •
Annual election of directors and majority voting provision • An independent lead director chairs executive sessions of independent directors at each regular Board meeting•
Board oversight of all political contributions and websiteannual disclosures of recipients and amounts contributed •
Separate Board committee devoted entirely to environmental, health and safety and matters • Annual Board and committee self-assessments
• Stockholders may act by written consent
• Director orientation and continuing education
• No poison pill
| |
2023 OPERATIONAL AND FINANCIAL AND OPERATIONAL HIGHLIGHTSAfter nearly
| Production | | | | 667 Mboed (thousand barrels of oil equivalent per day) | | | Cash Flow from Operations | | | | $3,658 million | | | Capital expenditures for drilling, completion and other fixed asset additions | | | | $2,089 million | | | Dividends Paid | | | | $895 million | | | Share Repurchases | | | | $418 million | | | Year-End Debt Balance | | | | $2,161 million | | | Market Capitalization(1) | | | | $19,668 million | |
(1)
Based on 751,847,432 shares of common stock outstanding and a decadeclosing per share price of rationalizing$26.16 as of February 21, 2024. STAKEHOLDER ENGAGEMENT We actively engage with key stakeholders across our business, including employees, stockholders, regulators, and communities where we operate. Open dialogue with our stakeholders helps us better understand and respond to emerging issues that may impact our business in the Company’s reserve portfolio, eliminating non-strategicshort- or long-term. Keeping our finger on the pulse of issues and lower-tier assets, the Company was successful in acquiring – through a merger of equalstopics that are important to our business strengthens our relationship with Cimarex Energy Co. (the “Merger”) – a complimentary strategic set of assets adding a mix of oil, liquidsstakeholders and natural gascontributes to the portfolio, making 2021 a milestone yearour success. At Coterra, we regularly engage with our employees and encourage open dialogue, which is fundamental to our strategy. Rather than conducting anonymous surveys, we often hold small group meetings for the Company. Coincidentemployees with senior managers, as well as with the Merger,Chief Executive Officer at least annually. Employees are given multiple lines of communication they can utilize if they have any concerns. We focus on providing multiple opportunities for leaders and employees to engage in thoughtful discussion around individual performance, prior year results, development opportunities, and career goals. In addition to these formal opportunities, our employees are encouraged to engage in regular discussions with their leaders regarding expectations and performance. Additionally, retaining our talent is a top priority, and employee turnover is tracked closely and discussed at least annually with our Chief Executive Officer and broader leadership. Executives and senior management from investor relations, sustainable engineering, and corporate secretary functions routinely engage with stockholders on a variety of topics, including corporate governance, executive compensation, human capital management, climate change and sustainability. When appropriate, our directors also make themselves available to meet with stockholders. During our 2023 engagement, we believe stockholders expressed strong support for Coterra. For more information, see “Stockholder Engagement” on page 24. We operate in an industry that is heavily regulated, and, therefore, we are deeply affected by the industry experiencedpolitical and legislative process. We strongly believe that Coterra’s long-term value to our stockholders is enhanced by a strengtheningbusiness environment that protects and supports the oil and gas industry’s ability to responsibly operate to provide important energy resources to consumers. Our trade associations are the primary way that we engage with regulators on policy. We also engage with the communities where we live and work. In 2023, Coterra launched the Community Action Group (“CAG”) initiative, a unique approach that strengthens our connection with communities. This initiative places emphasis on gathering input from both employees and community stakeholders to determine which organizations and projects we should support. The CAG has become an integral part of all commodity prices, creating momentum inour community relations strategy, ensuring that our community engagement efforts remain closely aligned with local needs. We also utilize our associations with groups like the second halfPermian Strategic Partnership and the Marcellus Shale Coalition to help us better understand the needs of the year that further enhanced results from 2020. Highlights and accomplishments for 2021 include the following:(1)• | Free Cash Flow:(2) Generated free cash flow of $1.083 billion on the strength of the acquired assets in the Merger and improved commodity prices. | • | Returns to Shareholders:Continuing the legacy of returning at least 50 percent of free cash flow to shareholders, the Company returned 60 percent of 2021’s free cash flow in the form of dividends – including an increased base dividend, supplemented with a variable dividend. | • | Reserves: As a result of both the Merger and our capital investment activity in 2021, our absolute reserves grew by 27 percent from the prior year and our reserves as of December 31, 2021 changed from 100 percent natural gas to approximately 86 percent natural gas and 14 percent oil and natural gas liquids. | • | Production: As a result of the Merger, absolute production increased 17 percent from 2020 levels to 167.1 MMBOE for the year. | • | Debt and Leverage:During the year the Company repaid $188 million in maturing long term debt. With the improvement in pricing, and taking into account the acquired debt from the Merger, the Company still experienced a reduction in our leverage ratio (net debt to EBITDAX)(2) from 1.38x in 2020 to .95x in 2021. | • | Sustainability: In 2021 the Company reduced greenhouse gas emissions, methane intensity and high-pressure flaring intensity from previous levels of both companies involved in the Merger, in its ongoing commitment to environmental, social and governance leadership. |
(1) | These results reflect nine months of Cabot Oil & Gas Corporation results and three months of the combined results following the effective time of the Merger. | (2) | Free cash flow and net debt to EBITDAX are not measures calculated in accordance with generally accepted accounting principles (GAAP). See Appendix A for additional information. |
COTERRA• 2022 PROXY STATEMENT | 7 | communities where we operate.
EXECUTIVE COMPENSATION HIGHLIGHTS
What we do: | | What we don’t do: | | For 2022, added emissions reductions target metric to the short-term incentive program (p.45) | | | No vesting periods of less than three years for equity awards issued in February 2022 | | Emphasis on long-term, performance-based equity compensation (p.30) | | | No hedging or pledging of company stock by executive officers or directors | | Short-term incentive compensation based on disclosed performance metrics (with payout caps), including operational, financial and returns metrics (p.40) | | | No excise tax gross-ups for executive officers appointed after 2010 | | Substantial stock ownership and retention requirements for executive officers and directors (p.49) | | | No vesting of equity awards after retirement if competing with Company | | Provide for “double trigger” cash payouts in change-in-control agreements (p.58) | | | No re-pricing or discounting of options or SARs | | Clawback policy (p.46) | | | No performance metrics that would encourage excessive risk-taking | | Hold annual advisory “say-on-pay” vote (p.67) | | | | | Only independent directors on Compensation Committee (p.23) | | | | | Use an independent compensation consultant (p.35) | | | |
ALIGNING 2022 COMPENSATION PROGRAM WITH BEST PRACTICES
In February and March 2022, the Committee adopted Coterra’s first post-Merger executive compensation program. The 2022 executive compensation program is designed to align with governance best practices, shareholder expectations and Coterra’s business strategy as a combined company. The highlights of the 2022 executive compensation program include the following:
Awarded 100% performance-based long-term incentives to the CEO
| • | Following Mr. Jorden’s December 2021 grant of time-based restricted stock units representing the legacy Cimarex annual award, the Committee approved 100% performance-based awards in February 2022 so that the average of Mr. Jorden’s 2021 and 2022 annual grants is at least 50% performance-based | | • | The Committee expects Mr. Jorden’s annual long-term incentive grants in 2023 and beyond to be consistent with the other NEOs’ 2022 grants, which consisted of 60% performance-based awards |
• | Added two broad market indices to executives’ long-term performance awards that are based on relative TSR, reflecting Coterra’s willingness to compete with investment dollars across industries | • | Capped relative TSR award payout at 100% of target if Coterra’s TSR is negative over the performance period | • | 55th percentile relative TSR performance required to receive target payout | • | Adopted three-year cliff vest on time-based RSUs, strengthening retention and alignment with shareholders | • | Aligned short-term incentive plan metrics with Coterra’s value proposition communicated to shareholders when seeking approval of the Merger |
| • | Focused incentives on return on invested capital, free cash flow, and ESG goals related to emissions reduction targets | | • | Reduced the overall maximum plan payout from 250% to 200% of target | | • | Removed the conditional multiplier from the short-term incentive calculation |
No salary increases for the CEO and Executive Chairman; market-based adjustments for other NEOs who had not received salary increases since 2019
COTERRA• 2022 PROXY STATEMENT | 8 |
PROPOSAL 1
ELECTION OF DIRECTORS
The size of our Board of Directors (the “Board of Directors” or “Board”) is currently set at ten10 members, each of whose term expires in 2022.at the 2024 annual meeting of stockholders. Accordingly, theour Board of Directors has nominated ten directors10 individuals to be elected athold office until the 2022 Annual Meeting.2025 annual meeting of stockholders. Each of the nominees is currently a director. Our Board and our Governance and Social Responsibility Committee believe that the broad range of attributes, qualifications, viewpoints, skills and experience of the director nominees enable them to effectively oversee our long-term business strategy and has been nominatedcontribute to hold office untilan effective and well-functioning Board. An overview of the expiration of his or her term in 2022Board demographics, attributes and until his or her successor shall have been elected and shall have qualified. Theskills is set forth below. For more detailed information about our director nominees, please see “Biographical Information Regarding Our Nominees” beginning on page 9 where you will find the business experience of each nominee as well as the qualifications that led our Board to select each nominee for election to the Board. Board is discussed below.The Demographics
DIRECTOR NOMINEE SKILLS AND EXPERIENCE MATRIX | | | | | | | | | ABLES | | | | BOSWELL | | | | BROCK | | | | DINGES | | | | ECKLEY | | | | HELMERICH | | | | JORDEN | | | | STEWART | | | | VALLEJO | | | | WATTS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PUBLIC COMPANY C-SUITE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PRIVATE COMPANY C-SUITE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | EXPLORATION & PRODUCTION | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CLIMATE CHANGE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | RELATED INDUSTRY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OTHER PUBLIC COMPANY BOARDS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | FINANCIAL/ ACCOUNTING | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CYBERSECURITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | LEGAL | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OPERATING/STRATEGIC RESPONSIBILITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | EHS RESPONSIBILITY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Board believes that the combination of the various qualifications, skillsSkills and experiences of the 2022 director nominees would contribute to an effective and well-functioning Board. Whether nominated by a shareholder or through the activities of the Committee,Experience DIRECTOR NOMINATIONS AND QUALIFICATIONS Nomination Process Under its charter, the Governance and Social Responsibility Committee seeks out and evaluates qualified candidates to serve as Board members to fill vacancies or for the additional needs of the Board, including by considering candidates recommended by stockholders and management. The Governance and Social Responsibility Committee identifies candidates through a number of methods, which may include the retention of professional executive search firms, use of publicly available director databases or referral services and recommendations made by incumbent directors. Stockholders who meet certain requirements specified in our bylaws may also nominate candidates for inclusion in our proxy materials for an annual meeting as described in “General Information” beginning on page 68. There are no differences in the manner in which the Governance and Social Responsibility Committee evaluates nominees for director based on whether the nominee is recommended by a stockholder or by incumbent directors. Any stockholder desiring to propose a candidate to the Board for consideration should submit such proposed candidate, including the proposed candidate’s qualifications, to: Coterra Energy Inc. Attn: Corporate Secretary 840 Gessner Road, Suite 1400 Houston, Texas 77024 OR Email: corporatesecretary@coterra.com Board Composition as a Result of the Merger On October 1, 2021, Cimarex Energy Co. (“GSR”Cimarex”), and Cabot Oil & Gas Corporation (“Cabot”) completed a merger transaction (the “Merger”) to form the Company. Pursuant to the terms of the agreement governing the Merger (the “Merger Agreement”), until the 2024 annual meeting of stockholders, if a vacancy on the Board results from the departure of a legacy Cabot director, the appointment or nomination of the individual to fill that vacancy must be approved by not less than a majority of the continuing legacy Cabot directors and, if the vacancy results from the departure of a legacy Cimarex director, the appointment or nomination of the individual to fill
that vacancy must be approved by not less than a majority of the continuing legacy Cimarex directors. Skills and Qualifications The Governance and Social Responsibility Committee seeks to select candidates who, regardless of how they are nominated, have:• | •
personal and professional integrity; •
held a position of leadership with a record of achievement in their field, with the interest and intellect to be able to address energy industry challenges and opportunities; •
the ability to think strategically and the insight to assist management in placing the Company in a competitive position within the energy industry; and •
the time to attend Board meetings and to deal with unexpected issues that arise relating to our business. The Board also encourages a diversity of backgrounds among its members. In February 2021, the Board formalized its commitment to diversity by amending the Governance and Social Responsibility Committee charter to add a commitment to include qualified racially, ethnically and gender diverse candidates in the initial candidate list for all director searches. DIRECTOR SUCCESSION Our Governance and Social Responsibility Committee engages in regular director succession planning as part of its duty to oversee the composition and effectiveness of the Board and its committees. Regular succession planning allows the Governance and Social Responsibility Committee to nominate qualified candidates for annual stockholder elections and to fill vacancies created upon the planned or unplanned departure of sitting directors or upon increasing the size of the Board. In its succession planning activities, the Governance and Social Responsibility Committee reviews annual Board and committee self-assessments, reviews a Board skills matrix of identified skills for each director and for the effective functioning of the Board, tracks director tenure and expected director departures and engages in various director recruitment activities. The Board does not have a mandatory retirement policy.
| PROPOSAL 1 | | | ELECTION OF DIRECTORS | |
Upon recommendation of the Governance and Social Responsibility Committee, the Board has nominated the 10 individuals named below to be elected at the 2024 annual meeting of stockholders. Each of the nominees is currently a director and, if elected, will hold office until the 2025 annual meeting of stockholders. | | | | | DOROTHY M. ABLES Former Chief Administrative Officer of Spectra Energy Corp | | | | | | | | HANS HELMERICH Chairman of the Board of Helmerich & Payne | | • | a record of achievement, and a position of leadership in his/ her field with the interest and intellect to be able to address energy industry challenges and opportunities;AGE 66 | | | | YEARS SERVED 8 | | | | AGE 65 | | | | YEARS SERVED 3 | | • | the ability to think strategically and the insight to assist management in placing the Company in a competitive position within the industry; andOTHER CURRENT PUBLIC COMPANY BOARDS: 1 • Martin Marietta Materials, Inc. | | | | OTHER CURRENT PUBLIC COMPANY BOARDS: 1 • Helmerich & Payne, Inc. | | • | the time to attend Board meetings | | | | ROBERT S. BOSWELL Lead Independent Director of Coterra; Chairman and the commitment to devote any reasonable required additional time to deal with Company business.Chief Executive Officer of Laramie Energy, LLC | | | | | | | | THOMAS E. JORDEN Chairman, Chief Executive Officer and President of Coterra Energy Inc. | | | AGE 74 | | | | YEARS SERVED 8 | | | | AGE 66 | | | | YEARS SERVED 3 | | | OTHER CURRENT PUBLIC COMPANY BOARDS: None | | | | OTHER CURRENT PUBLIC COMPANY BOARDS: None | | | | | | | AMANDA M. BROCK Chief Executive Officer of Aris Water Solutions, Inc. | | | | | | | | LISA A. STEWART Chairman of Sheridan Production Partners | | | AGE 63 | | | | YEARS SERVED 6 | | | | AGE 66 | | | | YEARS SERVED 3 | | | OTHER CURRENT PUBLIC COMPANY BOARDS: 1 • Aris Water Solutions, Inc. | | | | OTHER CURRENT PUBLIC COMPANY BOARDS: 2 • Western Midstream Partners, LP • Jadestone Energy PLC | | | | | | | DAN O. DINGES Former Executive Chairman of Coterra Energy Inc. | | | | | | | | FRANCES M. VALLEJO Former Vice President for Corporate Planning and Development of ConocoPhillips | | | AGE 70 | | | | YEARS SERVED 22 | | | | AGE 58 | | | | YEARS SERVED 3 | | | OTHER CURRENT PUBLIC COMPANY BOARDS: None | | | | OTHER CURRENT PUBLIC COMPANY BOARDS: 1 • Expro Group Holdings N.V. | | | | | | | PAUL N. ECKLEY Former Senior Vice President—Investments of State Farm Corporate Headquarters | | | | | | | | MARCUS A. WATTS President of The Friedkin Group | | | AGE 69 | | | | YEARS SERVED 3 | | | | AGE 65 | | | | YEARS SERVED 6 | | | OTHER CURRENT PUBLIC COMPANY BOARDS: None | | | | OTHER CURRENT PUBLIC COMPANY BOARDS: 1 • Service Corporation International | |
The Board and the GSR Committee believe that, individually and as a whole, the Board possesses the necessary qualifications, varied tenure and independence to provide effective oversight of the business and quality advice and counsel to the Company’s management.
The persons named in the enclosed form of proxy intend to vote such proxies FORthe election of each of the nominees for terms of one year. If any one of the nominees is not available at the time of the Annual Meetingannual meeting to serve, proxies received will be voted for substitute nominees to be designated by the Board of Directors or, in the event no such designation is made by the Board, proxies will be voted for a lesser number of nominees. In no event will the proxies be voted for more than the number of nominees set forth above. Required Vote The election of each of the 10 director nominees will require that each director nominee receive a majority of the votes cast (i.e., the number of shares voted for a director nominee must exceed the number of shares voted against that director nominee). Abstentions and broker non-votes will not affect the outcome of the voting on this proposal. | | | | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOUA VOTE FORTHE ELECTION OF EACH OF THE NOMINEES TO THE BOARD OF DIRECTORS.NOMINEES. | |
BIOGRAPHICAL INFORMATION REGARDING OUR NOMINEESSet forth below, as of March 1, 2022, for each nominee for election as a director of
Below is the Company, is biographical information and information regarding the business experience, qualifications and skills of each nominee selected for election as a director nominee that ledof the Board to conclude that the director nominee is qualified to serve on our Board. Mr. Dinges, Executive Chairman, andCompany. Mr. Jorden, our Chairman, Chief Executive Officer and President, and Mr. Dinges, our former Executive Chairman, are the only employees oremployee and former employeesemployee, respectively, of the Company on the Board. The Board and the Governance and Social Responsibility Committee believe that, individually and as a whole, the director nominees possess the qualifications, varied tenure and independence to provide effective oversight of Directors.COTERRA• 2022 PROXY STATEMENT | 9 | the business and quality advice and counsel to the Company’s management that will lead to optimal economic outcomes. | AGE: 66 | | | DIRECTOR SINCE: 2015 | | | Independent | | | COMMITTEE MEMBERSHIPS:
Age:64
Director
Since: 2015
Committee Memberships:
•Audit (Chair); •
Governance and Social Responsibility
| |
| DOROTHY M. ABLES | | | BUSINESS EXPERIENCE:
• Spectra Energy Corp
- Chief Administrative Officer – 2008 to 2017
- Vice President, Audit Services and Chief Ethics & Compliance Officer – 2007 to 2008
| • Duke Energy Corporation
- Vice President, Audit Services – 2004 to 2006
• Duke Energy Gas Transmission
- Senior Vice President and Chief Financial Officer – 1998 to 2004
| | OTHER DIRECTORSHIPS:
• Martin Marietta Materials Inc.
- November 2018 to present
| | | KEY SKILLS, ATTRIBUTES AND QUALIFICATIONS:
Reason for Nomination Ms. Ables brings to the Board a depth of experience in the natural gas transportation and marketing aspects of our industry, having served inas evidenced by her numerous leadership positions of leadership withat Spectra Energy CorpCorp. and its predecessor companiesDuke Energy for over 30 years, as well as extensive financial expertise to our Board. The Board considered Ms. Ables’25 years. Her extensive experience in the pipeline, processing and midstream business as adding valuebusinesses tie specifically to our stockholders at a time in our business whennatural gas transportation is crucial to our strategy. Ms. Ables’ financial expertise acquired through serving as Chief Financial Officer of Duke Energy Gas Transmission and later as Vice President of Audit Services of both Spectra Energy Corpoil and Duke Energy was also a key attribute leading to her appointment and to her February 2019 appointment as the Chair of our Audit Committee. Most recently, Ms. Ables gained executive experience as the Chief Administrative Officer of Spectra Energy Corp, from 2008 until her February 2017 retirement effective upon Spectra’s merger with Enbridge Inc. While serving in that role, Ms. Ables had responsibility for human resources, information technology, community relations and support services. Ms. Ables has prior governance experience gained from prior service on the Board of Directors of BJ Services, Inc. from July 2017 to October 2020 and the Board of Directors of Spectra Energy Corp’s publicly traded master limited partnership, Spectra Energy Partners, LP. Ms. Ables has served on the Board of Directors of Martin Marietta Materials Inc. since November 2018.natural gas marketing strategies. Ms. Ables is also very active in community and charitable endeavors, including serving on the Board of Directors of the Houston Methodist Hospital Foundation since May 2017 and the Board of Trustees of United Way of Greater Houston since April 2018, having also previously served from 2008 to April 20162016. Ms. Ables’ diverse background, including industry expertise and was re-appointed to the Board of Trustees in April 2018. This diversity of backgroundfinance, human resources, information technology and corporate governance experience, as well as her corporate leadership experience, make her a valuable contributor to our Board and to the Audit and Governance and Social Responsibility Committees of our Board. |
committees on which she serves. | | | | | | | | | PUBLIC
COMPANY
C-SUITE | PRIVATE
COMPANY
C-SUITE | EXPLORATION
CAREER HIGHLIGHTS •
Spectra Energy Corp. –
Chief Administrative Officer—2008 – 2017 •
Spectra Energy Corp. –
Vice President, Audit Services and Chief Ethics &
PRODUCTION Compliance Officer—2007 – 2008 •
Duke Energy Corporation –
Vice President, Audit Services—2004 – 2006 •
Duke Energy Gas Transmission –
Senior Vice President and Chief Financial Officer—1998 – 2004 | RELATED
INDUSTRY
EXPERIENCE | OTHER | | CURRENT PUBLIC COMPANY BOARDS •
Martin Marietta Materials, Inc. –
2018 – Current | FINANCIAL/
ACCOUNTING
EXPERTISE | | LEGALPUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS •
None | OPERATING/
STRATEGIC
RESPONSIBILITY | HSE
RESPONSIBILITY |
COTERRA• 2022 PROXY STATEMENT | 10 |
| AGE: 74 | | | DIRECTOR SINCE: 2015 | | | Independent | | | COMMITTEE MEMBERSHIPS:
Age:72
Director
Since: 2015
Committee Memberships:
Audit •
Environment, Health & Safety; AuditSafety
| | ROBERT S. BOSWELL | | | BUSINESS EXPERIENCE:
POSITION: • Laramie Energy LLC- Chairman of the Board and Chief Executive Officer – 2007 to present
• Laramie Energy I, LLC
- Chairman of the Board and Chief Executive Officer – 2004 to 2007
Lead Independent Director (effective January 1, 2023)
| • Forest Oil Corporation
- Chairman of the Board and Chief Executive Officer – 1989 to 2003 |
| OTHER DIRECTORSHIPS:
• Enerflex Ltd.
- 2011 to present | | | KEY SKILLS, ATTRIBUTES AND QUALIFICATIONS:
Reason for Nomination Mr. Boswell has management and operating experience as an executive in the upstream oil and gas industry and brings an extensive technical understanding of the development of oil and gas reserves, as well as financial expertise, to our Board. Mr. Boswell’s distinguished career includes serving as Chairman and Chief Executive Officer of exploration and production companies throughout the life cycle of capital-raising and the growth of reserves, production and profitability for over 30 years, including overseeing the turnaround of Forest Oil Corporation, a mid-sized public exploration and production company, andyears. His success with unconventional resource plays (including with the sale of Laramie Energy I, LLC, a private company whichthat he founded, for over $1 billion. Throughout his career, Mr. Boswell has successfully led a number of upstream companies through the life cycle of capital-raising: growing reserves, production and profitability through both acquisitions and development of existing properties, and sale or merger and acquisition transactions. His most recent success with private companies Laramie Energy I and his current venture, Laramie Energy LLC, operating in the Piceance Basin, has provided him with tremendous experience in unconventional resource plays, which is relevantbillion) brings important expertise to the Company’s operations in the Marcellus Shale. He also brings extensive financial expertise gained through both acting as Chief Financial Officer of public and private companies and supervising them as Chief Executive Officer.operations. Mr. Boswell is currently serving asthe immediate past chairman and a director of Enerflex Ltd., a Canadian public company that manufacturesthe Western Energy Alliance, and sells natural gas transmission and process equipment worldwide.serves on the executive board of the Colorado Oil & Gas Association. Mr. Boswell’s operations, management, technical and financial expertise are a tremendous asset to our Board and the committees on which he serves,serves. | | | | CAREER HIGHLIGHTS •
Laramie Energy, LLC –
Chairman of the Board and his operations experience is invaluable to his service onChief Executive Officer—2007 – Current •
Laramie Energy I, LLC –
Chairman of the Board and Chief Executive Officer—2004 – 2007 •
Forest Oil Corporation –
Chairman of the Board and Chief Executive Officer—1989 – 2003 | | | | CURRENT PUBLIC COMPANY BOARDS •
Laramie Energy, LLC –
2007 – Current | | | PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS •
Enerflex Ltd. –
2011 – 2022 | |
| AMANDA M. BROCK | | | AGE: 63 | | | DIRECTOR SINCE: 2017 | | | Independent | | | COMMITTEE MEMBERSHIPS: •
Compensation •
Environment, Health & Safety Committee. | |
| | | | | | | | | PUBLIC
COMPANY
C-SUITE | PRIVATE
COMPANY
C-SUITE | EXPLORATION
&
PRODUCTION | RELATED
INDUSTRY
EXPERIENCE | OTHER PUBLIC
COMPANY
BOARDS | FINANCIAL/
ACCOUNTING
EXPERTISE | LEGAL | OPERATING/
STRATEGIC
RESPONSIBILITY | HSE
RESPONSIBILITY |
COTERRA• 2022 PROXY STATEMENT | 11 |
| Reason for Nomination
Age:61
Director
Since: 2017
Committee Memberships:
• Compensation; Environment, Health & Safety
| | AMANDA M. BROCK | | | BUSINESS EXPERIENCE:
• Aris Water Solutions, Inc.
- Chief Executive Officer – September 2021 to present
- President and Chief Operating Officer – September 2020 to September 2021
- Chief Operating Officer – July 2018 to September 2020
| - Chief Commercial Officer – February 2018 to September 2020
• Water Standard
- Chief Executive Officer – 2009 to 2017
| | OTHER DIRECTORSHIPS:
• Aris Water Solutions, Inc.
– September 2021 to present
• Macquarie Infrastructure Corporation
– August 2018 to present
| | | KEY SKILLS, ATTRIBUTES AND QUALIFICATIONS:
Ms. Brock was appointedhas a wealth of experience in August 2017, adding to our Board her diverse experience and background, which she gained from her distinguished career building and managing global infrastructure businesses in the oil and gas, water and power industries. Ms. Brock is currently Chief Executive Officer of Aris Water Solutions, Inc., a publicly traded growth-oriented environmental infrastructure and solutions company that owns, operates and designs crucial water midstream assets across key unconventional U.S. basins. Ms. Brock joined Aris Water (formerly Solaris Midstream) in 2017 as the Senior Commercial Advisor and assumed the President and Chief Operating Officer positions in September 2020 and July 2018, respectively. Ms. Brock also served as Chief Commercial Officer of Solaris Midstream from February 2018 to September 2020. Prior to that, Ms. Brock served as Chief Executive Officer of Water Standard, a water treatment company focused on water-based enhanced oil recovery, recycling and reuse of water and produced water treatment from 2009. Prior to her appointment at Water Standard, Ms. Brock served as Executive Director and President, Americas, of Azurix, a global water treatment and services company and subsidiary of Enron Corp., from 1999 to 2002, and for Enron Corp. in various other capacities from 1991, including President of a division responsible for the management of power plants, related assets and joint ventures worldwide. Her expertise and depth of knowledge in the water management aspects of the oil and gas industry, as well as her global perspective, executive management and financial expertise, were consideredaids the Board in better understanding all aspects of our operations. Ms. Brock’s experience is widely recognized and acknowledged in the industry, as evidenced by our Board as key attributes leading to her appointment. Ms. Brock has received numerous professional awards throughout her career including(including being named one of the 25 most influential womenMost Influential Women in Energy by Hart Energy’s Oil and Gas Investor Magazine in 2020 being named one of the top 25 people globally in water and wastewater in 2016 by Water and Wastewater International, being named as a Houston Business Journal honoree for Women in Energy in 2016, and being inducted into the 2017 Greater Houston Women’s Hall of Fame.Fame). Ms. Brock alsocurrently serves as Chair of the Texas Business Hall of Fame. After completing her undergraduate studies in South Africa, Ms. Brock obtained her law degree from Louisiana State University, where she was a member of the Law Review, after completing her undergraduate studies in South Africa. |
COTERRA• 2022 PROXY STATEMENT | 12 |
Age:68
Director
Since: 2001
Committee Memberships:
• Executive
Position:
• Executive Chairman
| | DAN O. DINGES | | | | |
| BUSINESS EXPERIENCE:
CAREER HIGHLIGHTS • Cabot Oil & Gas Corporation-
Aris Water Solutions, Inc. –
Chief Executive ChairmanOfficer—2021 – October 2021 to present- Chairman, Current
•
Aris Water Solutions, Inc. –
President and Chief Operating Officer— 2020 – 2021 •
Aris Water Solutions, Inc. –
Chief Operating Officer—2018 – 2020 •
Aris Water Solutions, Inc. –
Chief Commercial Officer—2018 – 2020 •
Water Standard –
Chief Executive OfficerOfficer—2009 – May 20022017 | | | | CURRENT PUBLIC COMPANY BOARDS •
Aris Water Solutions, Inc. –
2021 – Current | | | PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS •
Macquarie Infrastructure Corporation –
2018 – 2022 | |
| DAN O. DINGES | | | AGE: 70 | | | DIRECTOR SINCE: 2001 | | | COMMITTEE MEMBERSHIPS: •
Executive | | | POSITION: •
Executive Chairman (October 1, 2021 to September 2021December 31, 2022) OTHER DIRECTORSHIPS:
• United States Steel Corporation – 2010 to 2021
KEY SKILLS, ATTRIBUTES AND QUALIFICATIONS:
| |
| | Reason for Nomination Mr. Dinges served as ourCabot’s Chief Executive Officer for the last 20 years until the completion of the merger with Cimarex Energy Co. on October 1, 2021,Merger and brings to the Board over 3738 years of executive management experience in the oil and gas exploration and production business, as well as a deep knowledge of our business, operations, culture, and long-term strategy and goals. Mr. Dinges joinedis currently serving as a director of Highpoint Midstream LLC, a private company in the Company in September 2001, after a successful 20-year career in various management positions with the predecessor to Noble Energy, Inc., and oversaw an era of tremendous growth for the Company. His steadfast leadership as Executive Chairmanmidstream sector of the Board provides the Board with extensive institutional knowledgeoil and continuity, as well creating a vital link between management and the Board.gas industry. Mr. Dinges also possesses a diversity of corporate governance experience, gained fromincluding his previous service on the Board of United States Steel Corporation and several charitable and industry organizations, including the American Petroleum Institute, since 2017,the American Exploration Production Council, since 2002, Spitzer Industries, Inc. (private(a private company) since 2006,, and Houston Methodist Hospital Research Institute from 2014 to January 2020.Institute. | | | | CAREER HIGHLIGHTS •
Coterra Energy lnc. –
Executive Chairman—2021 – 2022 •
Cabot Oil & Gas Corporation –
Chairman, President and Chief Executive Officer—2002 – 2021 | | | | CURRENT PUBLIC COMPANY BOARDS •
None | | | PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS •
United States Steel Corporation –
2010 – 2021 | |
Age:67
Director
Since:
| PAUL N. ECKLEY | | | AGE: 69 | | | DIRECTOR SINCE:2021 Committee Memberships:
| | | Independent | | | COMMITTEE MEMBERSHIPS: •
Compensation (Chair); •
Governance and Social Responsibility | |
| PAUL N. ECKLEY | | | | | | | |
| BUSINESS EXPERIENCE:
• State Farm
- Senior Vice President – 1998 to 2020
- Vice President, Common Stocks – 1995 to 1998
- Investment Officer – 1990 to 1995
- Investment Analyst – 1977 to 1990 Reason for NominationOTHER DIRECTORSHIPS:
• None
KEY SKILLS, ATTRIBUTES AND QUALIFICATIONS:
Mr. Eckley was appointed in October 2021 in connection with the consummationMerger. With a career spanning over 45 years, his extensive history of the Merger. Mr. Eckley has aleadership roles and wealth of experience in investments in public and private companies, including companies in the oil and gas industry, and extensive leadership roles that are key attributes that make him well qualifiedsuited to serve on our Board. He has had a distinguished career of over 43 years and has served in various capacities and most recently served as Senior Vice President – Investments at State Farm® Corporate Headquarters in Bloomington, Illinois until his retirement in 2020. With this experience, Mr. Eckley brings considerable value in his service as Chair of the Compensation Committee. Mr. Eckley also has previously served as Director of the Emerging Markets Growth Fund owned by the Capital Group, which included serving as Chairman of the Board. |
Mr. Eckley brings considerable value in his service as Chair of the Compensation Committee. | | | | | | | | | PUBLIC
COMPANY
C-SUITE | PRIVATE
COMPANY
C-SUITE | EXPLORATION
&
PRODUCTIONCAREER HIGHLIGHTS •
State Farm –
Senior Vice President—1998 – 2020 •
State Farm –
Vice President, Common Stocks—1995 – 1998 •
State Farm –
Investment Officer—1990 – 1995 •
State Farm –
Investment Analyst—1977 – 1990 | RELATED
INDUSTRY
EXPERIENCE | OTHER | | CURRENT PUBLIC COMPANY BOARDS •
None | FINANCIAL/
ACCOUNTING
EXPERTISE | | LEGALPUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS •
Cimarex Energy Co. –
2019 – 2021 | OPERATING/
STRATEGIC
RESPONSIBILITY | HSE
RESPONSIBILITY |
COTERRA• 2022 PROXY STATEMENT | 13 |
Age:63
Director
Since:
| AGE: 65 | | | DIRECTOR SINCE:2021 Committee Memberships:
| | | Independent | | | COMMITTEE MEMBERSHIPS: • Compensation;
Compensation •
Environment, Health and Safety | |
| HANS HELMERICH | | | | | | | |
| BUSINESS EXPERIENCE:
• Helmerich & Payne, Inc.
- Chief Executive Officer – 1989 to 2014
- President – 1989 to 2012 Reason for NominationOTHER DIRECTORSHIPS:
• Helmerich & Payne, Inc.
- 1987 to present
• Atwood Oceanics, Inc.
- 1989 to 2017
KEY SKILLS, ATTRIBUTES AND QUALIFICATIONS:
Mr. Helmerich was appointed in October 2021 in connection with the consummation of the Merger. Mr. Helmerich currently serves as Chairman of Helmerich & Payne, Inc. (“H&P”), a publicly held company primarily engagedHis extensive experience in contract drilling services for oil and gas exploration and production companies. H&P uses drilling rigs it designs and builds and is one ofcompanies, including his previous service at Helmerich & Payne, Inc. as the major land and offshore platform drilling companies in the world. Mr. Helmerich has had an extensive career with H&P, which includes serving as Chief Executive Officer and as President. Mr. Helmerich’s background with the drilling sector of the oil and gas business providesPresident, helps provide the Board with key insight into an aspect of Company’s business that represents a significant expenditure in the Company’s capital budget. His overoperations, and his more than 25 years of executive experience provideprovides a strong background for his service on the Board and on the Compensation Committee. Early in his career, he was responsible for Helmerich & Payne, Inc.’s oil and gas division’s exploration and production operations, which was spun-off to become Cimarex. In addition, hisMr. Helmerich’s current service as a Director and Chairman of H&P,the Board of Directors of Helmerich & Payne, Inc., and his former service as a Director of Atwood Oceanics, Inc. and Trustee of The Northwestern Mutual Life Insurance Company and Director of Atwood Oceanics, Inc. providesprovide him with additional experience and knowledge invaluable to his service on the Board. | | | | CAREER HIGHLIGHTS •
Helmerich & Payne, Inc. –
Chief Executive Officer—1989 – 2014 •
Helmerich & Payne, Inc. –
President—1987 – 2012 | | | | CURRENT PUBLIC COMPANY BOARDS •
Helmerich & Payne, Inc. –
1987 – Current | | | OTHER PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS •
Cimarex Energy Co. –
2002 – 2021 | |
Age:65
Director
Since:
| THOMAS E. JORDEN | | | AGE: 66 | | | DIRECTOR SINCE:2021 Committee Memberships:
| | | COMMITTEE MEMBERSHIPS: •
| |
| | Reason for Nomination Following his tenure at Cimarex as the Chief Executive Officer, President and Chairman of the Board of Directors, Mr. Jorden was appointed Chief Executive Officer and President | | THOMAS E. JORDEN | | | | | | | |
| BUSINESS EXPERIENCE:
• Cimarex Energy Co.
- Chief Executive Officer – 2011 to 2021
- Executive Vice President—Exploration – 2003 to 2011
- Vice President—Exploration – 2002 to 2003
OTHER DIRECTORSHIPS:
• None
KEY SKILLS, ATTRIBUTES AND QUALIFICATIONS:
Mr. Jorden was appointed of Coterra in October 2021 in connection with the consummation of the Merger. Mr. Jorden is the Chief Executive Officer and President of Coterra, following his tenure at Cimarex. At Cimarex, he began serving as Executive Vice President of Exploration when the company was formed in 2002. In2002 and subsequently was elevated in 2003 to Executive Vice President of Exploration, in 2011 he becameto Chief Executive Officer and President of Cimarex and then Chairman of the Board in 2012. Prior to the formation of Cimarex, Mr. Jorden held multiple leadership roles at Key Production Company, Inc. (“Key”), Cimarex’s predecessor. Hepredecessor, which he joined Key in 1993 as Chief GeophysicistGeophysicist. Mr. Jorden brings to the Board nearly 40 years of experience in the oil and went ongas exploration and production industry, as well as a deep understanding of our business, operations, long-term strategy and goals. As Chairman of the Board since 2023, his service as a director continues to become create an important link between management and the Board.
| | | | CAREER HIGHLIGHTS •
Coterra Energy Inc. –
Chairman—2023 – Current –
Chief Executive Officer and President—2021 – Current •
Cimarex Energy Co. –
Chairman—2012 – 2021 –
Chief Executive Officer and President—2011 – 2021 –
Executive Vice President of Exploration. Before joining Key, Mr. Jorden was with Union Pacific Resources and Superior Oil Company. |
President—Exploration—2003 – 2011 –
Vice President—Exploration—2002 – 2003 | | | | CURRENT PUBLIC COMPANY BOARDS •
None | | | | | PUBLIC
COMPANY
C-SUITE | PRIVATE
PUBLIC COMPANY
C-SUITE BOARDS WITHIN THE PAST FIVE YEARS •
Cimarex Energy Co. –
2011 – 2021 | EXPLORATION
&
PRODUCTION | RELATED
INDUSTRY
EXPERIENCE | OTHER PUBLIC
COMPANY
BOARDS | FINANCIAL/
ACCOUNTING
EXPERTISE | LEGAL | OPERATING/
STRATEGIC
RESPONSIBILITY | HSE
RESPONSIBILITY |
COTERRA• 2022 PROXY STATEMENT | 14 |
| LISA A. STEWART, NACD.DC | |
| AGE: 66 | | | DIRECTOR SINCE: 2021 | | | Independent | | | COMMITTEE MEMBERSHIPS:
Age:64
Director
Since: 2021
Committee Memberships:
Audit • Executive; Audit;
Environment, Health & Safety Position:
(Chair) Executive
| |
| LISA A. STEWART | | | BUSINESS EXPERIENCE:
• Sheridan Production Partners
- Executive Chairman – 2006 to present
- President and Chief Executive Officer – 2016 to 2020
- Chief Investment Officer – 2006 to 2020
• El Paso Corporation
- Executive Vice President – 2004 to 2006
| • El Paso E&P
- President – 2004 to 2006
• Apache Corporation
- Executive Vice President and various capacities – 1984 to 2004
| | OTHER DIRECTORSHIPS:
• Western Midstream Partners, LP
- 2020 to present
• Jadestone Energy
- 2019 to present
| • Talisman Energy, Inc.
- 2009 to 2015
| | KEY SKILLS, ATTRIBUTES AND QUALIFICATIONS:
Reason for Nomination Ms. Stewart was appointed in October 2021 in connection with the consummation of the Merger. Ms. StewartMerger, and has nearlymore than 40 years of experience in the oil and gas industry, including inindustry. Her executive experience includes roles at Sheridan Production Partners, El Paso Corporation and El Paso E&P, and Apache Corporation, spanning reservoir engineering, business development, land and environmental, health and safety, (EH&S), andas well as extensive leadership roles. Ms. Stewart is the current Executive Chairman of Sheridan Production Partners, a privately-owned oil and gas operating company she founded in 2006. From its founding in until 2020, Ms. Stewart served as Chairman and Chief Investment Officer and for 14 years served as President and Chief Executive Officer. Prior to 2006, Ms. Stewart served as Executive Vice President of El Paso Corporation and President of El Paso E&P and in various capacities of Apache Corporation, including most recently as Executive Vice President, with responsibilities in Apache Corporation’s reservoir engineering, business development, land, EH&S, and corporate purchasing departments. Ms. Stewart currently serves on the Board of Directors of the general partner of Western Midstream Partners, LP, a publicly traded master limited partnership formed to acquire, own, develop and operate midstream energy assets. Ms. Stewart also serves as a Directordirector of Jadestone Energy anPLC, a publicly traded upstream oil and gas company in the Asia Pacific region whichthat focuses on production and near-term development assets. Jadestone Energy is headquartered in Singapore and is publicly traded on the Alternative Investment Market, a sub-market of the London Stock Exchange. Previously, Ms. Stewart served as a Director on the Board of Talisman Energy, Inc., a Canadian oil and gas exploration and production company traded publicly on the NYSE and the Toronto Stock Exchange until its acquisition in 2015. In 2021, Ms. Stewart received the National Association of Corporate Directors Director Certification (NADC.DC), which is the premier director designation available in the United States. This vast arrayMs. Stewart’s deep knowledge of leadership, rolesthe exploration and duties in the E&Pproduction and midstream segments of the oil and gas industry provideprovides instrumental knowledge to our Board and makes Ms. Stewart a valuable contributor and member of the Executive and Audit Committees and Chair of the Environment, Health & Safety Committee. |
committees on which she serves. | | | | | | | | | PUBLIC
COMPANY
C-SUITE | PRIVATE
COMPANY
C-SUITE | EXPLORATION
&
PRODUCTIONCAREER HIGHLIGHTS •
Sheridan Production Partners –
Executive Chairman—2006 – Current –
President and Chief Executive Officer— 2016 – 2020 –
Chief Investment Officer—2006 – 2020 •
El Paso Corporation –
Executive Vice President—2004 – 2006 •
El Paso E&P –
President—2004 – 2006 •
Apache Corporation –
Executive Vice President and other various capacities—1984 – 2004 | RELATED
INDUSTRY
EXPERIENCE | OTHER | | CURRENT PUBLIC COMPANY BOARDS •
Western Midstream Partners, LP –
2020 – Current •
Jadestone Energy PLC –
2019 – Current | FINANCIAL/
ACCOUNTING
EXPERTISE | LEGAL | | OPERATING/
STRATEGIC
RESPONSIBILITYPUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS •
Cimarex Energy Co. –
2015 – 2021 | HSE
RESPONSIBILITY | | | |
COTERRA• 2022 PROXY STATEMENT | 15 |
| FRANCES M. VALLEJO, NACD.DC | |
| AGE: 58 | | | DIRECTOR SINCE: 2021 | | | Independent | | | COMMITTEE MEMBERSHIPS:
Age:57
Director
Since: 2021
Committee Memberships:
Audit • Audit;
Governance and Social Responsibility (Co-Chair)
| |
| FRANCES M. VALLEJO | | | | | | | | | BUSINESS EXPERIENCE:
• ConocoPhillips
- Vice President Corporate Planning and Development – 2015 to 2016
- Vice President and Treasurer – 2008 to 2015
- General Manager-Corporate Planning and Budgets, and other various positions – 1987 to 2008 Reason for NominationOTHER DIRECTORSHIPS:
• Crestwood Equity Partners LP
- 2021 to present
KEY SKILLS, ATTRIBUTES AND QUALIFICATIONS:
Ms. Vallejo was appointed in October 2021 in connection with the consummation of the Merger. Ms. Vallejo’sMerger, and has over 3035 years of experience in the oil and gas industry andindustry. With her extensive history of leadership roles in corporate planning, budgeting, and treasury are key attributes that make herat ConocoPhillips, Ms. Vallejo is well qualified to serve our Board. Additionally, Ms. Vallejo is a former executive officer of ConocoPhillips, an independent exploration and production company. Beginning in 1987, Ms. Vallejo held various positions with both ConocoPhillips and Phillips Petroleum Company, which merged with Conoco Inc. to form ConocoPhillips in 2002. She served as Vice President Corporate Planning and Development from 2015 until 2016 and as Vice President and Treasurer from 2008 until 2015. Prior to 2008, she served as General Manager—Corporate Planning and Budgets, Vice President Upstream Planning & Portfolio Management, Assistant Treasurer, Manager Strategic Transactions, and in other geophysical, commercial, and finance roles. Since 2021, Ms. Vallejo has servedrecently completed her service as a director of the general partner of Crestwood Equity Partners LP, a publicly traded master limited partnership that ownsowned and operatesoperated oil and gas midstream assets located primarily in the Bakken Shale, Delaware Basin and Powder River Basin, Marcellus Shale and Barnett Shale. In 2021, Ms. Vallejo received the National Association of Corporate Directors Director Certification, which is the premier director designation available in the United States.Basin. She alsocurrently serves on the Executive Committee (fiduciary body) of the Colorado School of Mines Foundation. Ms. Vallejo formerly servedFoundation and, until 2016, served as a member of the Board of Trustees of Colorado School of Mines and she currently serves or has served on boards of other charitable associations. ThisMines. Her vast array of leadership roles and duties in the E&Pexploration and production and midstream segments of the oil and gas industry offers considerable value to the Board and her service as Co-Chaircommittees on which she serves. Ms. Vallejo earned the CERT Certificate in Cybersecurity Oversight issued by the CERT Division of the GovernanceSoftware Engineering Institute at Carnegie Mellon University in 2023, and Social Responsibility Committeereceived the NACD.DC, the premier director designation in the United States, in 2021. | | | | CAREER HIGHLIGHTS •
ConocoPhillips –
Vice President Corporate Planning and a member of the Audit Committee.Development—2015 – 2016 •
ConocoPhillips –
Vice President and Treasurer—2008 – 2015 •
ConocoPhillips –
General Manager-Corporate Planning and Budgets, and other various positions— 1987 – 2008 | | | | CURRENT PUBLIC COMPANY BOARDS •
Expro Group Holdings N.V. –
2023 – Current | | | PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS •
Crestwood Equity Partners LP –
2021 – 2023 •
Cimarex Energy Co. –
2017 – 2021 | |
Age:64
Director
Since:
| MARCUS A. WATTS | | | AGE: 65 | | | DIRECTOR SINCE:2017 Committee Memberships:
| | | Independent | | | COMMITTEE MEMBERSHIPS: •
Compensation •
Governance and Social Responsibility (Co-Chair); Compensation | |
| MARCUS A. WATTS | | | | | | | |
| BUSINESS EXPERIENCE:
• The Friedkin Group
- President – 2011 to present
• Locke Lord LLP – 1984 to 2010
- Managing Partner, Houston
- Vice-Chairman (Executive Committee) Reason for NominationOTHER DIRECTORSHIPS:
• Service Corporation International
- 2012 to present
KEY SKILLS, ATTRIBUTES AND QUALIFICATIONS:
Mr. Watts joined our Board in August 2017, addingadds a wealth of legal, transactional, regulatory and management expertise from both the oil and gas industry and other industries to our Board. Mr. Watts has served as President of The Friedkin Group, an umbrella company overseeing various business interests that are principally automotive-related, since 2011, after over 26 years of legalHis diverse experience with the international law firm of Locke Lord LLP. Inincludes his prior experience with Locke Lord LLP, Mr. Watts focused on corporate and securities law, governance and related matters and served as the Managing Partner of the Houston, Texas office and Vice-Chairman of the firm-wide Executive Committee. Mr. Watts’ combination of legal and management talent is unique on our Board and he offers a fresh perspective from an industry other than our own, as well as years of experience representing oil and gas companies in his private law practice. This industry experience, as well as his legal and regulatory background, is particularly valuable to our Governance and Social Responsibility Committee of the Board, which he Co-Chairs. Mr. Watts servedservice as a director of Complete Production Services until its merger with Superior Energy Services in 2012, as well as his previous experience at the law firm Locke Lord LLP as a lawyer advising companies on corporate, securities and currently serves ongovernance issues, where he served as the BoardManaging Partner of Directorsthe Houston office and Vice Chairman of the firmwide Executive Committee. In addition, his experience includes service as the President of The Friedkin Group since 2011 and as a director of Service Corporation International.International since 2012. He has also been serving on the board of the Greater Houston Partnership since 2012 and is a former chairman of such organization. He served on the boardsboard of the Federal Reserve Bank of Dallas-Houston Branch sincefrom 2014 to 2019, including as Chairman from 2017 to 2019. Mr. Watts’ unique combination of legal and management expertise offers a fresh perspective to our Board, which is buttressed by his decades of experience both inside and outside of the Greater Houston Partnership since 2012,oil and isgas industry. This industry and management experience, as well as his legal and regulatory background, are particularly valuable to the former Chairman of both organizations.Governance and Social Responsibility Committee he currently co-chairs. Mr. Watts holds a law degree from Harvard Law School and a B.S. degree in Mechanical Engineering from Texas A&M University. |
| | | | | | | | | PUBLIC
COMPANY
C-SUITE | PRIVATE
COMPANY
C-SUITE | EXPLORATION
&
PRODUCTIONCAREER HIGHLIGHTS •
The Friedkin Group –
President—2011 – Current •
Locke Lord LLP –
Managing Partner, Houston, Vice-Chairman (Executive Committee)—1984 – 2010 | RELATED
INDUSTRY
EXPERIENCE | OTHER | | CURRENT PUBLIC COMPANY BOARDS •
Service Corporation International –
2012 – Current | FINANCIAL/
ACCOUNTING
EXPERTISE | | LEGALPUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS •
None | OPERATING/
STRATEGIC
RESPONSIBILITY | HSE
RESPONSIBILITY |
DIRECTOR COMPENSATION The Compensation Committee is responsible for reviewing and making recommendations to the Board regarding all matters pertaining to director compensation. When deemed necessary, the Compensation Committee recommends to the Board modifications to the compensation of the non-employee directors. Directors who are employees of the Company receive no additional compensation for their duties as directors. The Compensation Committee periodically reviews the compensation of the non-employee directors taking into account, among other things, the compensation of directors at other comparable companies. The Compensation Committee has engaged F.W. Cook as its independent compensation consultant to annually review non-employee director compensation. After considering F.W. Cook’s review of non-employee director compensation and the factors described above, the Compensation Committee recommended the following non-employee director compensation for the 2023-2024 director term: 2023-2024 Annual Director Compensation | Annual cash retainer | | | | | $ | 105,000 | | | | Annual equity retainer | | | | | $ | 200,000 | | | | Lead Independent Director | | | | | $ | 40,000 | | | | Committee Chair(1) | | | | | $ | 20,000 | | |
(1)
The Governance and Social Responsibility Committee co-chairs split the annual committee chair retainer. Directors who serve on committees (other than as chair) do not receive additional compensation for committee service. Directors do not receive compensation for attending Board or committee meetings. The annual equity retainer was issued as an award of restricted stock units under the Coterra Energy Inc. 2023 Equity Incentive Plan (the “2023 Plan”), the restrictions on which lapse on May 1, 2024 or the earlier date the non-employee director leaves the Board. Such restricted stock units accrue cash dividend equivalents in the amount of the cash dividend paid on our outstanding common stock from the date of grant through the date the restrictions lapse. In 2023, each non-employee director received 8,177 restricted stock units. In addition, non-employee directors are reimbursed for reasonable expenses incurred in connection with Board and committee related activities. Under the Coterra Energy Inc. Non-employee Director Deferred Compensation Plan, non-employee directors have the option of deferring all or a portion of their annual cash retainer, annual equity retainer, or a combination of both. If deferred, the annual cash retainer is issued as restricted stock units, the terms of which are substantially the same as those issued for the annual equity retainer, except the ultimate distribution of common stock is deferred until the non-employee director leaves the Board. In November 2023, the Compensation Committee determined to keep non-employee director compensation unchanged for the 2024-2025 term.
2023 Director Compensation Table | Name | | | | Fees Earned or Paid in Cash ($) | | | | Stock Awards ($)(1) | | | | Option Awards ($) | | | | Non-Equity Incentive Plan Compensation ($) | | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | | | All Other Compensation ($)(2) | | | | Total ($) | | | Dorothy M. Ables | | | | | $ | 125,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 10,000 | | | | | | $ | 335,009 | | | | Robert S. Boswell | | | | | $ | 145,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 345,009 | | | | Amanda M. Brock | | | | | $ | 105,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 305,009 | | | | Dan O. Dinges | | | | | $ | 105,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 305,009 | | | | Paul N. Eckley | | | | | $ | 125,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 5,000 | | | | | | $ | 330,009 | | | | Hans Helmerich | | | | | $ | 105,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 305,009 | | | | Lisa A. Stewart | | | | | $ | 125,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 325,009 | | | | Frances M. Vallejo | | | | | $ | 115,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 5,000 | | | | | | $ | 320,009 | | | | Marcus A. Watts | | | | | $ | 115,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 2,500 | | | | | | $ | 317,509 | | |
(1)
The amounts in this column reflect the grant date fair value with respect to restricted stock units granted to each non-employee director on May 10, 2023 that are payable by the Company in shares of common stock and vest upon the earlier of May 1, 2024 or the date the non-employee director ceases to be a director of the Company, calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codifications (“ASC”) Topic 718 for the fiscal year ended December 31, 2023. Assumptions used in the calculation of these amounts are included in Note 13 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The aggregate number of restricted stock units held by each non-employee director at December 31, 2023, including those issued on May 10, 2023, those that have vested but are not payable until the date such non-employee director ceases to be a director the Company, and those issued in lieu of annual cash or equity retainers is as follows: COTERRA• 2022 PROXY STATEMENT | 16Name | | | | Total RSUs | | | Dorothy M. Ables | | | | | | 78,909 | | | | Robert S. Boswell | | | | | | 84,655 | | | | Amanda M. Brock | | | | | | 57,521 | | | | Dan O. Dinges | | | | | | 8,177 | | | | Paul N. Eckley | | | | | | 8,177 | | | | Hans Helmerich | | | | | | 8,177 | | | | Lisa A. Stewart | | | | | | 8,177 | | | | Frances M. Vallejo | | | | | | 8,177 | | | | Marcus A. Watts | | | | | | 57,521 | | |
(2)
Amounts shown are payments by Coterra pursuant to its matching gift programs. Our matching gift programs are described in “Charitable Contributions” below. CHARITABLE CONTRIBUTIONS We maintain a matching gift program under which we match certain gifts by directors, officers and employees to eligible organizations that are tax exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. In addition, under the Coterra Energy Inc. Political Action Committee (the “PAC”) matching gift program we also match contributions to the PAC by directors, officers and employees with contributions to tax-exempt organizations selected by the contributor. Each matching gift program will match up to $5,000 per calendar year.
BOARD AND COMMITTEE GOVERNANCE PRINCIPAL STOCKHOLDERS
The following table reports beneficial ownership
GOVERNANCE GUIDELINES Our Board has adopted Corporate Governance Guidelines to assist the Board and its committees in performing their duties to oversee the governance of the Company’s common stock (“Common Stock”) by holders of more than five percentCompany. Our Corporate Governance Guidelines outline the functions and responsibilities of the Board, director qualifications, and various processes and procedures designed to promote effective and responsive governance. The guidelines are reviewed annually and periodically revised to reflect changing regulatory requirements and best practices. All of our key corporate governance documents, including the Corporate Governance Guidelines, the charters of our Board committees, our Code of Business Conduct and Ethics and our 2023 Sustainability Report, can be found on the Company’s Common Stock aswebsite at www.coterra.com. Director Independence Independence Standards Our Corporate Governance Guidelines require that at least a majority of our directors be independent under the NYSE listing standards and all other applicable legal requirements. Additionally, all members of the dates reportedAudit Committee and the Compensation Committee are required to be independent by such holders. Unless otherwise noted,rules and regulations of the SEC, and all ownership information is based upon filings made by such personsmembers of the Governance and Social Responsibility Committee are required to be independent pursuant to the NYSE listing standards. The NYSE listing standards include objective tests that can disqualify a director from being treated as independent, as well as a subjective element, under which the Board must affirmatively determine that each independent director has no material relationship with the SecuritiesCompany or management. Independence Determinations Our Board, through its Governance and Exchange Commission (“SEC”).Name and Address of Beneficial Owner | | Number of Shares of Common Stock Owned | | | Percent of Class | | The Vanguard Group | | | 97,354,545 | (1) | | | 11.97 | % | Capital World Investors | | | 74,260,277 | (2) | | | 9.10 | % | BlackRock, Inc. | | | 67,851,412 | (3) | | | 8.30 | % | State Street Corporation | | | 54,572,539 | (4) | | | 6.71 | % | Aristotle Capital Management, LLC | | | 43,367,076 | (5) | | | 5.33 | % |
(1) | According to Amendment No. 12 to Schedule 13G, dated February 9, 2022, filedSocial Responsibility Committee, annually reviews and discusses information provided by the directors and the Company with regard to each director’s business and personal activities as they may relate to the Company and the Company’s management. For 2023, such review included all known material relationships with the SEC by The Vanguard Group (100 Vanguard Blvd., Malvern, PA 19355), it has shared voting power over 1,260,285 of these shares, sole dispositive power over 94,121,086 of these shares and shared dispositive power over 3,233,459 of these shares. | (2) | According to Amendment No. 2 to Schedule 13G, dated February 14, 2022, filed with the SEC by Capital World Investors (333 South Hope Street, 55th Floor, Los Angeles, CA 90071), it has sole voting power over all 74,260,277 shares and sole dispositive power over all 74,260,277 shares. | (3) | According to Amendment No. 12 to Schedule 13G, dated February 1, 2022, filed with the SEC by BlackRock, Inc. (55 East 52nd Street, New York, NY 10055), it has sole voting power over 60,399,526 of these shares and sole dispositive power over all 67,851,412 shares. | (4) | According to Schedule 13G, dated February 10, 2022, filed with the SEC by State Street Corporation (State Street Financial Center, One Lincoln Street, Boston, MA 02111), it has shared voting power over 51,624,983 and shared dispositive power over 54,566,359 of these shares. | (5) | According to Amendment No. 4 to Schedule 13G, dated February 14, 2022, filed with the SEC by Aristotle Capital Management, LLC (11100 Santa Monica Blvd., Suite 1700, Los Angeles, CA 90025), it has sole voting power over 38,893,012 of these shares and sole dispositive power over all 43,367,076 shares. |
COTERRA• 2022 PROXY STATEMENT | 17 |
DIRECTORS AND EXECUTIVE OFFICERS
The following table reports, as of January 28, 2022, beneficial ownership of Common Stock by each director and all transactions since the start of 2021 between the Company and each director nominee, for director, by each named executive officer listedmembers of their immediate families and entities associated with them. Each of such relationships and transactions was considered in the “Summarycontext of the NYSE’s objective listing standards, including the amount of business done by us and the other entities and the gross revenue for each of the other entities, and the additional standards established for members of audit committees, and the SEC, U.S. Internal Revenue Service and NYSE standards for compensation committee members.
Under the standards described above and with input from the Governance and Social Responsibility Committee, the Board has determined that each director, with the exception of Mr. Jorden, our Chairman, Chief Executive Officer and President, and Mr. Dinges, our former Executive Chairman and Cabot’s former Chief Executive Officer, is independent. Further, the Board has determined that all members of the Audit, Compensation Table” below and Governance and Social Responsibility Committees are independent. Matters Considered In making its recommendations to the Board, the Governance and Social Responsibility Committee specifically considered relationships that involved transactions between the Company and a company with which a director is affiliated, whether by all directors, nominees and executive officersvirtue of serving as a group. Unless otherwise indicated,director or an officer. Included in such review were transactions with entities at which of Mr. Boswell, Mr. Helmerich, Ms. Stewart and Ms. Vallejo serve or have served on boards of directors and with which we have done business in the persons belowlast three years. In each instance, the Board, with the recommendation of the Governance and Social Responsibility Committee, determined that, because of the nature of the transaction, the director’s service on the board of directors of the other entity, and the amount involved, no relationships exist that, in the opinion of the Board, would impair the director’s independence. The Governance and Social Responsibility Committee also considered the following relationships where a director served as an officer of an entity with which we have sole votingdone business in the last three years: Mr. Boswell is the Chairman of the Board and investment powerChief Executive Officer of Laramie Energy, LLC (“Laramie”). On January 11, 2022, Cimarex, a subsidiary of the Company, entered into a sub-lease of a portion of its office space in Denver, Colorado with respectLaramie. Cimarex no longer needs this office space. The sublease is for a term from March 1, 2022 through August 31, 2026, with rental payments to the sharesCompany of Common Stock showedapproximately $405,000 per year increasing to approximately $450,000 per year, payable monthly
on a pro-rata basis. The Board reviewed this transaction with Laramie and concluded: (i) the transaction is proper and not material when compared to our and Laramie’s respective consolidated gross revenues and anticipated revenues for the relevant periods; (ii) the transaction occurred in the ordinary course of business, at market rates and on arms’ length terms; and (iii) Mr. Boswell’s relationship with Laramie does not interfere with his independent judgment as beneficially owned by them.Name of Beneficial Owner | | Number of Shares of Common Stock Owned | | | Percent of Class | | Dorothy M. Ables | | | 75,732 | (1)(2) | | | * | | Robert S. Boswell | | | 86,478 | (2) | | | * | | Amanda M. Brock | | | 49,344 | (2) | | | * | | Paul N. Eckley | | | 55,084 | | | | * | | Hans Helmerich | | | 1,900,196 | (3) | | | * | | Lisa A. Stewart | | | 87,735 | (4) | | | * | | Frances M. Vallejo | | | 55,084 | | | | * | | Marcus A. Watts | | | 49,344 | (2) | | | * | | Dan O. Dinges | | | 5,180,046 | (5) | | | * | | Thomas E. Jorden | | | 1,172,111 | (6)(7) | | | * | | Scott C. Schroeder | | | 1,972,967 | | | | * | | Stephen P. Bell | | | 336,327 | | | | * | | Phillip L. Stalnaker | | | 425,439 | (7) | | | * | | Steven W. Lindeman | | | 309,327 | (7) | | | * | | Jeffrey W. Hutton | | | 389,149 | (7) | | | * | | All Directors, nominees and executive officers as a group (20 individuals) | | | 12,837,586 | (1)(2)(3)(4)(5)(6)(7) | | | 1.6 | %(8) |
* | Represents less than 1% of the outstanding Common Stock. | (1) | Includes 5,000 shares held by an immediate family member, with respect to which Ms. Ables has shared voting and investment power. | (2) | Includes the following restricted stock units held as of January 28, 2022, as to which the restrictions lapse upon the holders’ retirement from the Board of Directors: Ms. Ables, 70,732; Mr. Boswell, 81,478; Ms. Brock 49,344; and Mr. Watts, 49,344 and all directors, nominees and executive officers as a group, 250,898. No executive officers hold restricted stock units. | (3) | Includes 45,968 shares owned by Mr. Helmerich’s wife. Mr. Helmerich disclaims beneficial ownership of the shares held by his wife. Also includes 230,756 shares owned by 1993 Hans Helmerich Trust, of which Mr. Helmerich is the trustee, 44,410 shares owned by Helmerich Grandchildren LLC, of which Mr. Helmerich is the co-manager, 31,575 shares owned by Family Trust, of which Mr. Helmerich is the trustee, 147,396 shares owned by The Helmerich Trust, of which Mr. Helmerich is the co-trustee, 1,304,745 shares held by the Peggy Helmerich QTIP Trust, of which Mr. Helmerich is the trustee, and 40,146 shares held by Saddleridge, LLC, of which Mr. Helmerich owns 99% and his wife owns 1%. | (4) | Includes 5,700 shares held in an individual retirement account, with respect to which Ms. Stewart has sole voting and investment power. | (5) | Includes 1,261,330 shares held in trust for the benefit of an immediate family member, with respect to which Mr. Dinges has shared voting and investment power. | (6) | Includes 1,115,552 shares held in trust for the benefit of an immediate family member, with respect to which Mr. Jorden has shared voting and investment power. | (7) | Includes the following shares held in the Company’s Savings Investment Plan as of December 31, 2021, as to which the reporting person shares voting power with the trustee of the plan: Mr. Jorden, 56,559; Mr. Lindeman, 25,482; Mr. Stalnaker, 17,537; Mr. Hutton, 7,211; and all directors, nominees and executive officers as a group, 111,206. | (8) | There were 810,658,027 shares outstanding on January 28, 2022. |
POLICY ON RELATED PARTY TRANSACTIONS
a director of Coterra. Ms. Brock is the Chief Executive Officer of Aris Water Solutions, Inc. (“Aris Water”), a publicly traded growth-oriented environmental infrastructure and solutions company that owns, operates and designs crucial water midstream assets across key unconventional U.S. basins, including the Permian Basin. Our 2023 payments to Aris Water represented less than 0.5 percent of Aris Water’s consolidated gross revenues for 2023. The Board reviewed these transactions and concluded: (i) the transactions are proper and not material when compared to both our total costs and Aris Water’s gross revenues; (ii) the transactions occurred in the ordinary course of business and at arms’ length; and (iii) Ms. Brock’s relationship with Aris Water does not interfere with her independent judgment as a director of Coterra. Related Person Transactions Policy on Related Person Transactions Our Governance and Social Responsibility Committee reviews our disclosure of related-party transactions in connection with its annual review of director independence. These procedures are not in writing but are documented through the meeting agendas and minutes of our Governance and Social Responsibility Committee, in each case with the assistance of our legal department. Our legal staffdepartment is primarily responsible for (i) developing and implementing processes and controls to obtain information regarding our directors, executive officers, and significant stockholders with respect to related party transactions and (ii) then determining, based on the facts and circumstances, whether we or a related party has a directordirect or indirect interest in these transactions. On a periodic basis, the legal teamdepartment reviews all transactions involving payments between the Company and any company that has a Coterra executive officer or director as an officer or director. In addition, our directors and executive officers are required to notify us of any potential related party transactions, and provide us withincluding any such transactions involving their immediate family members. No Reportable Related Person Transactions Since January 1, 2023, there have been no transactions that are required to be reported as related party transactions pursuant to the information regarding such transactions.Our GSR Committee reviews ourapplicable disclosure rules of related-party transactionsthe SEC in connection with its annual review of director independence. These procedures are not in writing but are documented through the meeting agendas and minutes of our GSR Committee, in each case with the assistance of our legal staff.
COTERRA• 2022 PROXY STATEMENT | 18 |
RELATED PARTY TRANSACTIONS
Several of our Board members serve as directors or executive officers of other organizations, including organizations with which (i) the Company has commercial relationships. Theor any of its subsidiaries was a participant, (ii) the amount involved exceeded or will exceed $120,000, and (iii) any director, director nominee, executive officer, a greater than 5% beneficial owner of the Company does not believe thatat the time of the applicable transaction, or any directorof their immediate family members, had a direct or indirect material interestinterest.
BOARD OF DIRECTORS’ LEADERSHIP STRUCTURE | Chairman of the Board: Duties and Responsibilities | | | | Lead Independent Director: Duties and Responsibilities | | | •
Presides over Board meetings •
Approves agenda for Board meetings with input from the Lead Independent Director •
Facilitates and participates in formal and informal communications with and among directors •
Calls special meetings of the Board •
Presides over stockholder meetings | | | | •
Presides over all Board meetings at which the Chairman is not present •
Solicits agenda items from non-management directors, reviews Board meeting agenda, and provides input to the Chairman on agenda and Board materials •
Calls meetings of non-management directors and, as appropriate, sets the agenda •
Presides over meetings and executive sessions of non-management directors •
Acts as liaison between the Chairman and the directors and facilitates communication among the full Board •
Reviews stockholder communications directed to the Board and takes appropriate action •
Retains outside advisors and consultants, who report directly to the Board on Board-wide issues | |
Chairman of the Board The Board believes having a combined Chairman/Chief Executive Officer and a Lead Independent Director, who have the duties described above, best serve the interests of our stockholders because this structure provides an appropriate balance between strategy development and independent oversight of management. Mr. Jorden began serving as Chief Executive Officer and President of the Company effective October 1, 2021. The Board appointed Mr. Jorden as Chairman of the Board effective January 1, 2023. Our Corporate Governance Guidelines contain strong checks and balances regarding the roles, or combined roles, of Chief Executive Officer and Chairman. Those provisions include the requirement that only non-employee directors serve on committees of the Board (other than the Executive Committee), and the requirement that a majority of the directors be independent, as discussed above under “Director Independence.” All of our directors, other than Mr. Dinges and Mr. Jorden, are independent. Lead Independent Director The Chairman is joined in the leadership of the Board by our Lead Independent Director, who ordinarily is nominated by the Governance and Social Responsibility Committee and elected by the non-employee directors. Pursuant to the Merger Agreement, the Company agreed that, until the Company’s 2024 annual meeting of stockholders, the Board shall have a lead independent director who shall be (i) a continuing Cimarex director at any time when the Chairman of the Board is a continuing Cabot director and (ii) a continuing Cabot director at times when the Chairman of the Board is a continuing Cimarex director. Pursuant to this arrangement, the Board appointed Mr. Boswell, a continuing Cabot director, as Lead Independent Director effective January 1, 2023 concurrent with Mr. Jorden’s appointment as Chairman. Mr. Jorden is a continuing Cimarex director. The Company believes that the Board’s leadership structure supports the risk oversight function of the Board, with the Chairman and Chief Executive Officer uniquely positioned to identify emerging risks, while the Lead Independent Director and Chairs of the Board’s Audit, Compensation, Governance and Social Responsibility, and Environment, Health & Safety Committees provide independent oversight of the Company’s risk management programs. BOARD’S OVERSIGHT OF RISK MANAGEMENT The Board has oversight responsibility for our enterprise risk management framework, which is designed to identify, assess, prioritize, address, manage, monitor and communicate risks across our operations, and foster a corporate culture of integrity and risk awareness. Our Board implements its risk oversight function both as a whole body and through delegation to Board committees, which meet regularly and report back to the Board. Consistent with this approach, one of the Board’s and Board committees’ primary responsibilities is overseeing and interacting with senior management with respect to key aspects of the Company’s business, including risk assessment and risk mitigation of the Company’s top risks. While the Board and its committees oversee risk management, management is responsible for managing risk. Throughout the year, the Board and the relevant Board committees receive updates from members of management responsible for various enterprise risk management issues and dedicate a portion of their meetings to reviewing and discussing specific risk topics in greater detail, including risks related to litigation, regulation, cybersecurity, safety, sustainability, human capital management, including diversity, equity and inclusion, and commodity prices. The Board receives updates through presentations, memos and other written materials, teleconferences, and other appropriate means of communication, with numerous opportunities for discussion and feedback, and continuously evaluates its approach in addressing top risks as circumstances evolve. The Board also receives periodic updates from external experts and advisers on trends and conditions that may impact our strategy and financial performance, including political issues, labor or oil and gas market trends, and digitalization. For example, the Audit Committee assessed the benefits of outsourcing our internal audit function and selected KPMG LLP (“KPMG”) to provide these services. KPMG conducts an annual process of assessing major risks, including management interviews, and presents and discusses its conclusions with the Audit Committee and management to help identify areas of concern and to develop the internal audit plan. The Audit Committee also reviews with management and our internal auditors our major financial exposures and steps management has take to monitor and address such relationshipsexposures. In evaluating top risks, the Board and management consider short-, medium-, and long-term potential impacts on our business, financial condition, and results of operations, and considers the risk horizon when prioritizing our risk mitigation efforts. The Board recognizes that it is neither possible nor prudent to eliminate all risk. Therefore, our risk oversight processes and disclosure controls and procedures are designed to appropriately escalate key risks to the Board or the appropriate Board committee for their consideration.
The Board has tasked designated committees of the Board with oversight of certain categories of risk management, and the committees report to the Board regularly on these matters. Information on each of the Board’s standing committees as of the date hereof is discussed below. Information on Standing Committees of the Board The charters of Board committees can be found on our website at www.coterra.com. The following is a summary of the composition of each of the standing committees during 20212023 and through the date of this Proxy Statement.SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)proxy statement:
| Committees | | | | Independent? | | | | 2023 Meetings | | | | Dinges | | | | Jorden | | | | Ables | | | | Boswell | | | | Brock | | | | Eckley | | | | Helmerich | | | | Stewart | | | | Watts | | | | Vallejo | | | Audit | | | | | | Yes | | | | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Compensation | | | | | | Yes | | | | | | | 6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Environment, Health & Safety | | | | | | Yes | | | | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Governance & Social Responsibility | | | | | | Yes | | | | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive | | | | | | No | | | | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
COMMITTEE CHAIR OR CO-CHAIR MEMBER OF COMMITTEE Audit Committee The primary purposes of the Audit Committee are to assist the Board in overseeing: •
The integrity of our financial statements; •
Our compliance with legal and regulatory requirements; •
The independence, qualifications and performance of our independent auditors, including the compensation, retention and oversight of the work of the independent auditor; and •
The performance of our internal audit function. The Audit Committee’s duties and responsibilities include reviewing our annual process of estimating and reporting quantities of oil and gas reserves with management and our independent petroleum engineering consulting firm(s). Additionally, the Audit Committee is responsible for reviewing and discussing with management and our internal auditor our cybersecurity and information security risks, including the nature of threats, defense and detection capabilities, incident response plans and employee training activities, among others, as applicable. The Audit Committee Charter provides that the Audit Committee shall pre-approve all audit, review or attest engagements and permissible non-audit services, including the fees and terms thereof, to be performed by the independent auditors in compliance with the Securities Exchange Act of 1934, requiresas amended (the “Exchange Act”), and the Company’sapplicable rules and regulations of the SEC. In accordance with its charter, the Audit Committee has delegated to its Chair, and in the absence or unavailability of the Chair to each other member of the Audit Committee, the authority to grant pre-approvals of audit and permissible non-audit services to be performed by the independent auditors. Decisions of a member to pre-approve audit and permissible non-audit services must be reported to the full Audit Committee at its next scheduled meeting. Each member of the Audit Committee satisfies the financial literacy and independence requirements of the NYSE listing standards. The Board has also determined that each member of the Audit Committee meets the requirements of an “audit committee financial expert” as defined by the SEC.
Compensation Committee The primary purposes of the Compensation Committee are to: •
Review and approve corporate goals and objectives relevant to the Chief Executive Officer’s compensation, evaluate the Chief Executive Officer’s performance in light of those goals and objectives, and determine and approve, subject to ratification by the Board, the Chief Executive Officer’s compensation level based on this evaluation; •
Review, determine and approve the other executive officers’ compensation; •
Make recommendations to the Board with respect to incentive-based compensation and equity-based plans that are subject to approval by the Board; and •
Prepare certain disclosures under the Exchange Act. The Compensation Committee also reviews and makes recommendations to the Board with respect to succession planning and development of executive officers, as appropriate, as well as the compensation of non-employee directors. Environment, Health & Safety Committee The primary purposes of the Environment, Health & Safety Committee are to assist the Board in providing oversight and directorssupport of our policies, programs and initiatives on the environment, health and safety. Among other things, the Environment, Health & Safety Committee: •
Oversees our climate change and sustainability policies and programs, including reporting and public disclosure; •
Monitors environmental matters and trends in such matters that affect our activities and performance; •
Reviews our compliance with environmental, health and safety laws and regulations, including: ◦
management of and responses to file initialenvironmental investigations, releases or remediations; ◦
our safety performance, including reports of ownershipincidents, statistics and reportslegal actions or investigations, as well our responses to the same; ◦
our management of changes in ownership of Company Common Stockand responses to pending legislative and regulatory efforts likely to significantly affect our business; ◦
our projects and operations and initiatives and training designed to improve environmental, health and safety performance; and ◦
our efforts to gather data and communicate externally regarding our environmental, health and safety and sustainability initiatives and outcomes. •
Consults with the SECBoard and pursuantinternal and external advisors regarding the management of our environmental, health and safety programs, including trends in environmental compliance and the economic effect thereof; and •
Oversees and reviews all other external disclosures regarding our environmental, health and safety and sustainability data and programs and outcomes. The Environment, Health & Safety Committee also reviews comparisons of our safety performance with established benchmarks, such as the Bureau of Labor Statistics, American Exploration and Production Council and the Independent Producers EHS Managers Forum. This allows the Board to rules promulgated under Section 16(a), such individuals are required to furnish the Company with copies of Section 16(a) reports they file. Based solelyassess safety performance on a reviewregular basis and provides a governance structure to oversee that our programs are effective and provide a safe working environment for our employees. Governance and Social Responsibility Committee The primary purposes of the copiesGovernance and Social Responsibility Committee are to: •
Oversee and assist the Board with our efforts for socially responsible operations, programs and initiatives not otherwise delegated to another committee of the Board and the reporting or public disclosure of such reports furnishedefforts; •
Identify qualified individuals to become Board members (consistent with the Company,criteria approved by the Board) and written representations that those reports accurately reflect all reportable transactions and holdings, all reports required by Section 16(a) were timely filedassist the Board in 2021, except that a Form 3 and a Form 4 for eachdetermining the composition of Kevin Smith and Michael DeShazer were filed late due to administrative delays.CORPORATE GOVERNANCE MATTERS
| | | | |
Our Board of Directors has adopted Governance Guidelines to assist the Board and its committees, in performing their dutiesincluding by recommending to oversee the governanceBoard director nominees for the next annual meeting of stockholders;
•
Oversee the annual evaluation of the Company. Our Governance Guidelines outline the functionsperformance and responsibilitieseffectiveness of the Board director qualifications, and various processesits committees; •
Develop and procedures designed to ensure effective and responsive governance. The guidelines are reviewed annually and revised as appropriate to reflect changing regulatory requirements and best practices. All of our key corporate governance documents, including the Governance Guidelines, the charters of our Board committees, and our Code of Business Conduct, can be found on the Company’s website at www.coterra.com, under the “Corporate Governance” section of “Investors.” Our commitmentrecommend to the environmentBoard our Corporate Governance Guidelines; and the communities
•
Take a leadership role in which we operate can be found onshaping our website under “A Sustainable Future”.DIRECTOR NOMINATIONS AND QUALIFICATIONS
Nomination Process
Undercorporate governance.
In accordance with its charter, the Governance and Social Responsibility (“GSR”) Committee seeks out and evaluates qualified candidates to serve as Board members as necessary to fill vacancies or the additional needs of the Board, and considers candidates recommended by shareholders and management of the Company. The GSR Committee identifies nominees through a number of methods, which may include retention of professional executive search firms, use of publicly available director databases or referral services and recommendations made by incumbent directors. A resume is reviewed and, if merited, an interview follows. Any shareholder desiring to propose a nominee to the Board of Directors should submit such proposed nominee for consideration by the GSR Committee, including the proposed nominee’s qualifications, to: Corporate Secretary, Coterra Energy Inc., 840 Gessner Road, Suite 1400, Houston, Texas 77024. Shareholders who meet certain requirements specified in our bylaws may also nominate candidates for inclusion in our proxy materials for an annual meeting as described in “General Information.” There are no differences in the manner in which the GSR Committee evaluates nominees for director based on whether the nominee is recommended by a shareholder or the incumbent directors.Board Composition Following the Merger
Pursuant to the Merger Agreement, upon the closing of the Merger on October 1, 2021, the Board consisted of five members selected by Cabot and five members selected by Cimarex. As a result, Mr. Best, Mr. Delaney and Mr. Ralls resigned from the Board and Mr. Eckley, Mr. Jorden, Mr. Helmerich, Ms. Stewart and Ms. Vallejo, who were selected by Cimarex in accordance with the Merger Agreement, were appointed to the Board.
COTERRA• 2022 PROXY STATEMENT | 19 |
Skills and Qualifications
Whether nominated by a shareholder or through the activities of the Committee, the GSR Committee seeks to select candidates who have personal and professional integrity, who have demonstrated exceptional ability and judgment and who will be most effective, in conjunction with the other nominees and Board members, in collectively serving the long-term interests of the Company and its shareholders. The GSR Committee’s assessment of candidates will include, but not be limited to, considerations of character, judgment, diversity, age, expertise, industry experience, independence, other board commitments and the ability and willingness to devote the time and effort necessary to be an effective board member. The GSR Committee has adopted minimum criteria for Board membership, that include (i) a strong commitment to his/her fiduciary responsibilities to the Company’s shareholders, with no actual or perceived conflict of interest that would interfere with his/her responsibilities to or relationships with the Company’s shareholders, employees, suppliers,which are discussed in more detail at “Director Nominations and customers; (ii) the ability to think strategically and the insight to assist management in placing the Company in a competitive position within the industry; (iii) a record of achievement, and a position of leadership in his/her field, with the interest and intellect to be able to address energy industry challenges and opportunities; and (iv) the time to attend Board meetings and the commitment to devote any reasonable required additional time to deal with Company business.
The Board of Directors encourages a diversity of backgrounds, including with respect to race, gender and ethnic background, among its members. In February 2021, the Board formalized its commitment to diversity among its members by amending the GSR Committee charter to add a commitment to include qualified racially/ethnically and gender diverse candidates in the initial candidate list for all director searches. In this way, the Board has ensured that the nomination process will include diverse candidates for consideration each time it seeks to nominate a new director.
The Board considers candidates with significant direct or indirect energy industry experience that will provide the Board as a whole the talents, skills, diversity and expertise to serve the long-term interests of the Company and its shareholders. Specifically, the following are the key skills and qualifications considered in evaluating the director nominees and the Board composition as a whole:
DIRECTOR SKILLS | | | | | | | | | | | | | | | | | | | | | | Public
Company
C-Suite | | Private
Company
C-Suite | | Exploration
&
Production | | Related
Industry
Experience | | Other
Public
Company
Boards | | Financial/
Accounting
Expertise | | Legal | | Operating/
Strategic
Responsibility | | HSE
Responsibility | Ables | | | | | | | | | | | | | | | | | | | Boswell | | | | | | | | | | | | | | | | | | | Brock | | | | | | | | | | | | | | | | | | | Dinges | | | | | | | | | | | | | | | | | | | Eckley | | | | | | | | | | | | | | | | | | | Helmerich | | | | | | | | | | | | | | | | | | | Jorden | | | | | | | | | | | | | | | | | | | Stewart | | | | | | | | | | | | | | | | | | | Vallejo | | | | | | | | | | | | | | | | | | | Watts | | | | | | | | | | | | | | | | | | |
COTERRA• 2022 PROXY STATEMENT | 20 |
Director Independence
The Company’s Corporate Governance Guidelines require that at least a majority of the Company’s directors be independent under the New York Stock Exchange (“NYSE”) listing standards and all other applicable legal requirements. Additionally, all members of the Audit Committee, Compensation Committee andOur Governance and Social Responsibility Committee, are required to be independent. in cooperation with our Compensation Committee, provides ultimate oversight over diversity, equity and inclusion.
Executive Committee The NYSE listing standards include objective tests that can disqualify a director from being treated as independent, as well as a subjective element, under whichExecutive Committee exercises the power and authority of the Board must affirmatively determine that each independent director has no material relationship withof Directors in the Companyevent action is needed between regularly scheduled Board meetings and a meeting of the full Board is deemed unnecessary, except as limited by our bylaws or management. In making its independence determinations, the Board considered all material relationships with each director, and all transactions since the start of 2019 between the Company and each director nominee, members of their immediate families or entities associated with them.applicable law. The Executive Committee did not meet during 2023. MEETINGS AND ATTENDANCE The Board of Directors has determined that each director, with the exception of Mr. Dinges, the Executive Chairman, and Mr. Jorden, the Chief Executive Officer and President (“CEO”), is independent. In making its determination that each nonemployee director is independent, the Board reviewed and discussed additional information provided by themet seven times during 2023. All directors and the Company with regard to each director’s business and personal activities as they may relate to the Company and the Company’s management. The Board considered the transactions in the contextattended at least 75 percent of the NYSE’s objective listing standards, the additional standards established for membersmeetings of audit committees, and the SEC, U.S. Internal Revenue Service and NYSE standards for compensation committee members. Some members of the Company’s Board also serve as directors of other entities with which the Company does business. Each of these relationships is reviewed by the Board, which examines the amount of business done by the Company and the other entities and the gross revenue for each of the other entities. This review is for each of the last three fiscal years for which financial data is available.This review applied to Ms. Ables, Ms. Brock, Mr. Helmerich, and Mr. Boswell due to their service on boards of directors or as officers of companies with which we have done business in the last three years. When evaluating the independence of Ms. Ables and Mr. Helmerich, the Board considered that each director served as a director, and not an officer, of the other companies involved in the transactions.
When determining the independence of Ms. Brock, the Board considered that Ms. Brock is the Chief Executive Officer of Aris Water, a publicly-traded growth-oriented environmental infrastructure and solutions company that owns, operates and designs crucial water midstream assets across key unconventional U.S. basins, including the Permian Basin. Cimarex’s payments to Aris Water represented 1.1% of Aris Water’s consolidated gross revenues for 2021. The Board reviewed these transactions and concluded: (i) the transactions are proper and not material when compared to both Cimarex’s total costs and Aris Water’s gross revenues; (ii) the transactions occurred in the ordinary course of business and at arms’ length; (iii) the produced water disposal agreement was entered into before Cabot and Cimarex entered into the Merger Agreement and, as a result, was not reviewed or approved by the Board; and (v) Ms. Brock’s relationship with Aris Water does not interfere with her independent judgment as a director of Coterra.
Mr. Boswell is the Chairman of the Board and Chief Executive Officer of Laramie Energy, LLC (“Laramie”). On January 11, 2022, Cimarex entered into a sub-lease of a portion of its office space in Denver, Colorado with Laramie. This space is no longer needed by Cimarex as it integrates its management team with Coterra at Coterra’s headquarters in Houston, Texas. The sublease is for a term from March 1, 2022 through August 31, 2026, with rental payments to Cimarex of approximately $405,000 per year increasing to approximately $450,000 per year, payable monthly on a pro-rata basis. The Board reviewed this transaction with Laramie and concluded: (i) the transaction is proper and not material when compared to Coterra’s and Laramie’s consolidated gross revenues and anticipated revenues for the relevant periods; (ii) the transaction occurred in the ordinary course of business, at market rates and on arms’ length terms; (iii) the Board does not review or approve office leases or subleases; and (iv) Mr. Boswell’s relationships with Laramie does not interfere with his independent judgment as a director of Coterra.
In each case, the Board made a subjective determination that, because of the nature of the transactions, the director’s relationship with the other entity and/or the amount involved, no relationships exist that, in the opinion of the Board, would impair the director’s independence. Further, the Board of Directors has determined that all membersand of the Audit Committee, Compensation Committee and Governance and Social Responsibility Committee are independent.
Director Orientation and Continuing Education
Each new director appointedcommittees on which they served that were held during the period that the directors served.
We expect all of our directors to fill a vacancy or elected atattend the Company’s annual meeting of stockholdersstockholders. In 2023, all of our directors attended the annual meeting. DIRECTOR ORIENTATION AND CONTINUING EDUCATION Each new director undergoes an orientation program immediately upon joining the Board. The program adopted by the Company includes in-person meetings with the Chairman and the CEOChief Executive Officer and other key officers to discuss Companyour business and strategy, review of a comprehensive director handbook that encompasses all Board policies and procedures and corporate documents, access to the Board’s portal containing all past boardBoard meeting materials and a briefing by the Corporate Secretary as to the legal requirements and obligations of Board membership. New directors will typicallyare invited attend Board committee meetings for committees on which they do not serve for a period of time to familiarize themthemselves with the areas of responsibility of each committee.COTERRA• 2022 PROXY STATEMENT | 21 |
All of our directorsDirectors are encouraged to pursue continuing education opportunities for directors of public companies, generally, and the Company will reimburse directors for reasonable expenses incurred in connection with one such continuing education program each year. Ms. Stewart, our independentformer Lead Independent Director and current Chair of the Environmental, Health & Safety Committee, and Ms. Vallejo, Co-Chair of the GSRGovernance and Social Responsibility Committee, received the National Association of Corporate Directors Director Certification, (“NACD.DC”)or NACD.DC, in 2021. NACD.DC is the premier director designation available in the United States and consists of three components: study and education, an exam and ongoing professional development in the field of corporate governance.
Director Succession
Our GSR Committee engages Ms. Vallejo also earned the CERT Certificate in regular director succession planning as part of its duty to oversee the composition and effectiveness of the Board and its committees. Regular succession planning allows the GSR Committee to nominate qualified candidates for annual stockholder elections and to fill vacancies created upon the planned or unplanned departure of sitting directors or upon increasing the size of the Board to meet additional needs of the Board. In its succession planning activities, the GSR Committee reviews annual Board and committee self-assessments, reviews a Board skills matrix of identified skills for each director and for the effective functioning of the Board, tracks director tenure and expected director departures and engagesCyber-Risk Oversight from Carnegie-Mellon University in various director recruitment activities. The Board does not have a mandatory retirement policy.
BOARD OF DIRECTORS LEADERSHIP STRUCTURE
Executive Chairman
Mr. Dinges serves as the Executive Chairman of the Board of the Company. He served as Chairman, President and Chief Executive Officer until the merger of Coterra and Cimarex on October 1, 2021.
Mr. Jorden began serving as Chief Executive Officer and President of the Company effective on the closing of the merger with Cimarex on October 1, 2022. In accordance with the Merger Agreement, upon the expiration of Mr. Dinges’ term as Executive Chairman on December 31, 2022, the Board will determine the new Chairperson, who may be Mr. Dinges, or whether another Chairperson or combined Chairperson and CEO is appropriate.
Our Corporate Governance Guidelines contain strong checks and balances regarding the roles, or combined roles, of CEO and Chairperson. Those provisions include the requirement that only nonemployee directors serve on committees of the Board (other than the Executive Committee), and the requirement that a substantial majority of the directors be independent, as discussed above under “Director Independence.” All of our directors, other than Mr. Dinges and Mr. Jorden, are independent.
Independent Lead Director
The Chairman is joined in the leadership of the Board by our Lead Director, who ordinarily is nominated by the GSR Committee and elected by the nonemployee directors. Pursuant to the Merger Agreement, the Company agreed that, until the Company’s 2024 annual meeting of shareholders, the Board of Directors shall have a lead independent director who shall be (i) a continuing Cimarex director at any time when the Chairperson of the Board of Directors is a continuing Cabot director and (ii) a continuing Cabot director at times that the Chairperson of the Board is a continuing Cimarex director. Pursuant to this arrangement, Ms. Stewart has served as the Lead Director since the closing of the merger on October 1, 2021.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held four regular and eleven special meetings during 2021. All directors attended at least 75% of the meetings of the Board of Directors and of the committees on which they served that were held during the period that the directors served.
The Company’s policy is that it expects all members of the Board of Directors to attend, virtually or in person, the Company’s annual meeting of shareholders. In 2021, all of the continuing members of the Board attended the annual meeting.
COTERRA• 2022 PROXY STATEMENT | 22 |
Committee Membership
Information on each of the Board’s standing committees as of the date hereof is discussed below. The charters of Board committees can be found on the Company’s website at www.coterra.com, under the “Corporate Governance” section of “Investors.” The following is a summary of the composition of each of the standing committees before and after the completion of the Merger on October 1, 2021:
For the Period May 1, 2021 through September 30, 2021
Committees | | Independent? | | 2021
Meetings | | Dinges | | Ables | | Best | | Boswell | | Brock | | Delaney | | Ralls | | Watts | Governance & Social Responsibility | | Yes | | 3 | | | | | | | | | | | | | | | | | Audit | | Yes | | 3 | | | | | | | | | | | | | | | | | Compensation | | Yes | | 4 | | | | | | | | | | | | | | | | | Environment, Health & Safety | | Yes | | 3 | | | | | | | | | | | | | | | | | Executive | | No | | 0 | | | | | | | | | | | | | | | | |
For the Period October 1, 2021 through December 31, 2021
Committees | | Independent? | | 2021
Meetings | | Dinges | | Jorden | | Ables | | Boswell | | Brock | | Eckley | | Helmerich | | Stewart | | Watts | | Vallej | Governance & Social Responsibility | | Yes | | 1 | | | | | | | | | | | | | | | | - | | | | | Audit | | Yes | | 1 | | | | | | | | | | | | | | | | | | | | | Compensation | | Yes | | 2 | | | | | | | | | | | | | | | | | | | | | Environment, Health & Safety | | Yes | | 1 | | | | | | | | | | | | | | | | | | | | | Executive | | No | | 0 | | | | | | | | | | | | | | | | | | | | |
| COMMITTEE CHAIR OR CO-CHAIR | | MEMBER OF COMMITTEE |
Committee Responsibilities
Governance and Social Responsibility Committee
The function of the GSR Committee is to assist the Board in fulfilling its responsibility to the stockholders by:
• | Overseeing, and assisting the Board with, the Company’s efforts for socially responsible operations, programs and initiatives not otherwise delegated to another committee of the Board and the reporting or public disclosure of such efforts by the Company; | • | Identifying qualified individuals to become Board members and assisting the Board in determining the composition of the Board and its committees; | • | Assessing Board and committee effectiveness; | • | Developing and implementing the Company’s corporate governance guidelines; and | • | Taking a leadership role in shaping the corporate governance of the Company. |
In accordance with its charter, the GSR Committee has adopted minimum criteria for Board membership, which are discussed in more detail at “Director Nominations and Qualifications” above.
Audit Committee
The function of the Audit Committee is to assist the Board in overseeing:
• | The integrity of the financial statements of the Company; | • | The compliance by the Company with legal and regulatory requirements; |
COTERRA• 2022 PROXY STATEMENT | 23 |
• | The independence, qualifications, performance and compensation of the Company’s independent auditors; and | • | The performance of the Company’s internal audit function. |
The Audit Committee Charter provides that the Audit Committee shall pre-approve all audit, review or attest engagements and permissible non-audit services, including the fees and terms thereof, to be performed by the independent auditors, subject to, and in compliance with, the de minimis exception for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934 and the applicable rules and regulations of the SEC. The Audit Committee has delegated to each member of the Audit Committee authority to pre-approve permissible services to be performed by the independent auditors. Decisions of a member to pre-approve permissible services must be reported to the full Audit Committee at its next scheduled meeting.
Each member of the Audit Committee satisfies the financial literacy and independence requirements of the NYSE listing standards. The Board has determined that Ms. Ables meets the requirements of an “audit committee financial expert” as defined by the SEC.
Compensation Committee
The function of the Compensation Committee is to:
• | Review and approve corporate goals and objectives relevant to the CEO’s compensation, evaluate the CEO’s performance in light of those goals and objectives, and determine, subject to ratification by the Board, the CEO’s compensation level based on this evaluation; | • | Provide counsel and oversight of the evaluation and compensation of management of the Company, including base salaries, incentive compensation and equity-based compensation; | • | Review and report to the Board on CEO and executive officer succession planning; | • | Discharge any duties imposed on the Compensation Committee by the Company’s incentive compensation and equity-based compensation plans, including making grants; | • | Evaluate the independence of, and retain or replace any compensation consultant engaged to assist in evaluating the compensation of the Company’s directors, CEO and other officers and to approve such consultant’s fees and other terms of retention; and | • | Review the annual compensation of the directors. |
Environment, Health & Safety Committee
The function of the Environment, Health & Safety (“EHS”) Committee is to assist the Board in providing risk oversight and support of the Company’s policies, programs and initiatives on the environment, health and safety. Among other things, the EHS Committee:
• | Oversees the Company’s climate change and sustainability policies and programs and the reporting and public disclosure thereon; | • | Monitors environmental matters and trends in such matters that affect the Company’s activities and performance; | • | Reviews the Company’s compliance with environmental, health and safety laws and regulations, including: | | • | management and responses to environmental releases | | • | safety incidents, statistics and outcomes and the Company’s responses | | • | the Company’s assessment of and responses to pending legislative and regulatory efforts | | • | initiatives and training designed to improve EHS performance | • | Consults with the Board and internal and external advisors regarding the management of the Company’s EHS programs; and | • | Oversees and reviews all external disclosures regarding the Company’s EHS and sustainability data and programs. |
The EHS Committee also reviews comparisons of our safety performance with established benchmarks, such as the Bureau of Labor Statistics (BLS), American Exploration and Production Council (AXPC) and the Independent Producers EHS Managers Forum. This allows the Board to assess safety performance on a continuous basis and provides the governance structure to ensure our programs are effective for providing a safe working environment for our employees.
Executive Committee
The function of the Executive Committee is to exercise all power and authority of the Board of Directors in the event action is needed between regularly scheduled Board meetings and a meeting of the full Board is deemed unnecessary, except as limited by the Company’s bylaws or applicable law. The Executive Committee did not meet during 2021.
COTERRA• 2022 PROXY STATEMENT | 24 |
BOARD OF DIRECTORS OVERSIGHT OF RISK AND ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) MATTERS
Board of Directors | | • | Responsible for overall risk oversight | • | Regularly holds discussions regarding risks faced by the Company throughout the year | • | Hears a report from the Audit Committee Chair regarding the activities of the Committee at each regular Board meeting | • | Oversees environmental, social and governance risks, policies and practices by hearing reports from the Environment, Health & Safety Committee (which is devoted solely to health, safety and environmental oversight) and the Governance and Social Responsibility Committee at each regular quarterly meeting, and acts collectively as a Board to review risks in these areas |
| Audit Committee | | Environment, Health & Safety
Committee | | Governance and Social
Responsibility Committee | | | • Reviews with management and the Company’s internal auditors the Company’s major financial exposures and the steps management has taken to monitor and control those exposures
• Reviews at least annually the Company’s policies and guidelines concerning financial risk assessment and financial risk management, with the assistance of the internal auditors, KPMG LLP
• Reviews results of KPMG’s risk review and of the internal audit throughout the year
| | • Oversees the Company’s climate change and sustainability policies and programs and provides recommendations on the related reporting and public disclosures
• Monitors and reviews environmental matters and trends that affect the Company’s activities and performance, including the efficient use of resources, energy sustainability, climate change, and environmental protection
• Oversees the Company’s environmental, health and safety policies, practices and performance, including reviewing incidents, responses and statistics, as well as training and initiatives designed to improve performance in these areas
| | • Oversees the Company’s policies, programs and initiatives that relate to issues of public concern, such as socially responsible business conduct, human rights, diversity, philanthropy, and community involvement
• Monitors the Company’s corporate reputation
• Supports the Company’s actions to be a good and welcome citizen in the communities in which it operates, while furthering the Company’s long-term business objectives
| |
Internal Auditor, KPMG LLP | • | Conducts a process of assessing major risks, including management interviews, and presents and discusses its conclusions with the Audit Committee to help identify areas of concern and develop the internal audit plan | • | Reviews calculations of greenhouse gas emissions prior to publication of the Company’s emissions data in SASB report |
Management | • | Reports to the Board at least annually regarding its assessment of risks that could have a significant impact on the Company and possible mitigation strategies | • | Presents an in-depth analysis of one of the top risks identified in the annual enterprise risk management process at each regular quarterly meeting of the Board | • | Provides periodic reports to the Audit Committee on areas of potential exposure, including litigation, commodity price hedging, liquidity and capital resources, financial reporting and disclosures, and regulatory risks | • | Compiles reports for the Audit Committee regarding compliance with our Code of Business Conduct |
COTERRA• 2022 PROXY STATEMENT | 25 |
DIRECTOR COMPENSATION
Directors who are employees of the Company receive no additional compensation for their duties as directors. During 2020, nonemployee directors’ annual compensation included an annual retainer fee of $75,000 each, payable quarterly, for their service on the Company’s Board of Directors and its committees. The Lead Director received an additional $25,000 annual retainer, the Audit Committee Chairman and Compensation Committee Chairman each received an additional $20,000 annual retainer, and the remaining committee chairmen received an additional $15,000 annual retainer, each payable quarterly, for this additional service. Additionally, each nonemployee director will receive $2,000 for each Board of Directors meeting attended in excess of six in-person meetings per year. The directors did not receive additional meeting fees in 2021. Directors who previously served as directors of Cimarex and became directors of Coterra upon the closing of the Merger on October 1, 2021, did not receive any fees from Coterra in 2021.
In 2021, nonemployee directors were also entitled to an annual award of restricted stock units under the 2014 Incentive Plan, the restrictions on which lapse the date the nonemployee director leaves the Board of Directors, with a targeted award value at grant date of $230,000. The restricted stock units are paid cash dividend equivalents in the amount of the cash dividend paid on our outstanding Common Stock from the date of grant through the date the restrictions lapse. In 2021, these directors each received 12,380 restricted stock units. Because the directors who previously served on the Board of Cimarex received an equity award from Cimarex that vested upon the closing of the Merger, those directors did not receive an award of restricted stock units from Coterra in 2021.
Board members may participate in the Nonemployee Director Deferred Compensation Plan, which provides each nonemployee director an opportunity to elect each year to take any, or all, of the director’s annual cash retainer and additional fees for serving as lead director or as a committee chairman in restricted stock units, valued at the closing price of the Common Stock on the date specified in the plan, in lieu of a quarterly cash payment of such amounts. The terms of the restricted stock units are the same as those issued annually. All directors were also reimbursed for travel expenses incurred for attending Board and committee meetings. For more information on director compensation, see “Director Compensation Table” below.
Director Compensation Table
Name | | Fees Earned or Paid in Cash(1) ($) | | Stock Awards ($)(2) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | All Other Compensation ($) | | Total ($) | Dorothy M. Ables | | $ | 95,000 | | $ | 230,020 | | – | | – | | – | | – | | $ | 325,020 | Rhys J. Best(3) | | $ | 78,750 | | $ | 230,020 | | – | | – | | – | | – | | $ | 308,770 | Robert S. Boswell | | $ | 90,000 | | $ | 230,020 | | – | | – | | – | | – | | $ | 320,020 | Amanda M. Brock | | $ | 75,000 | | $ | 230,020 | | – | | – | | – | | – | | $ | 305,020 | Peter B. Delaney(3) | | $ | 56,250 | | $ | 230,020 | | – | | – | | – | | – | | $ | 286,270 | Paul N. Eckley(4) | | $ | 0 | | $ | 0 | | – | | – | | – | | – | | $ | – | Hans Helmerich(4) | | $ | 0 | | $ | 0 | | – | | – | | – | | – | | $ | – | Robert Kelley(5) | | $ | 52,500 | | $ | 230,020 | | – | | – | | – | | – | | $ | 282,520 | W. Matt Ralls(3) | | $ | 67,500 | | $ | 230,020 | | – | | – | | – | | – | | $ | 297,520 | Lisa A. Stewart(4) | | $ | 0 | | $ | 0 | | – | | – | | – | | – | | $ | – | Frances M. Vallejo(4) | | $ | 0 | | $ | 0 | | – | | – | | – | | – | | $ | – | Marcus A. Watts | | $ | 75,000 | | $ | 230,020 | | – | | – | | – | | – | | $ | 305,020 |
(1) | Restricted stock units were issued pursuant to the Company’s Nonemployee Director Deferred Compensation Plan in lieu of quarterly cash retainer and leadership fees totaling $45,000.00 for Mr. Boswell, $56,250 for Mr. Delaney and $52,500 for Mr. Kelley. |
COTERRA• 2022 PROXY STATEMENT | 26 |
(2) | The amounts in this column reflect the grant date fair value with respect to restricted stock units in accordance with Financial Accounting Standards Board (FASB”) Accounting Standards Codifications (“ASC”) Topic 718 for the fiscal year ended December 31, 2021. Assumptions used in the calculation of these amounts are included in Note 14 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “Form10-K”). In February 2021, each nonemployee director received a grant of 12,380 restricted stock units, with a grant date fair value of $230,020 based on the closing price of the Common Stock on the February 17, 2021 grant date. The restricted stock units vest on the grant date, but are not payable by the Company in shares of Common Stock until the date the nonemployee director ceases to be a director of the company. The aggregate number of restricted stock units outstanding at December 31, 2021, including those issued in lieu of quarterly cash retainer and leadership fees, held by each nonemployee director is as follows: |
Name | | Total RSUs | Dorothy M. Ables | | 70,732 | Rhys J. Best | | – | Robert S. Boswell | | 76,748 | Amanda M. Brock | | 49,344 | Peter B. Delaney | | – | Paul N. Eckley | | – | Hans Helmerich | | – | Robert Kelley | | – | W. Matt Ralls | | – | Lisa A. Stewart | | – | Frances M. Vallejo | | – | Marcus A. Watts | | 49,344 |
(3) | Messrs. Best, Delaney and Ralls retired from the Board on October 1, 2021, the effective time of the Merger. | (4) | Messrs. Eckley and Helmerich and Mmes. Stewart & Vallejo were appointed to the Board on October 1, 2021, the effective time of the Merger. Their compensation for 2021 was paid entirely by Cimarex and is, therefore, not reflected in this table. | (5) | Mr. Kelley retired from the board effective April 29, 2021. |
CODE OF BUSINESS CONDUCT AND CONFLICTS OF INTERESTAll employees, officersETHICS
Every director, officer and directors areemployee of the Company and its subsidiaries is required to comply with the Company’sour Code of Business Conduct to help ensure that the Company’s business is conducted in accordance with the highest standardsand Ethics, or Code of moral and ethical behavior.Conduct. The Code of Business Conduct covers all areasis a guideline that helps to promote honest and ethical conduct and compliance with the law. We provide Code of professional conduct, including conflictsConduct training at time of interest, customer relationships, insider trading, financial disclosure, intellectual propertyhire and confidential information, as well as requiring strict adherence to allon an annual basis thereafter, which training may include anti-harassment, anti-discrimination, inclusion, and workforce management training. Any suspected violations of applicable laws, andrules or regulations, applicable to the Company’s business. Employees, officers and directors are required annually to certify that they have read and understandor the Code of Business Conduct.Conduct, or any unethical business practices may be reported through use of our confidential hotline at (877) 813-9101 or online at www.coterra.ethicspoint.com. The full text of the Code of Business Conduct can be found on the Company’s website at www.coterra.com, under “Investors—Corporate Governance—Governance Documents.”Under our Code of Business Conduct, directors, officers and employees are required to avoid situations that present a potential conflict between their personal interests and the interests of the Company. The Code requires that, at all times, directors, officers and employees make a prompt disclosure the Company’s Senior Vice President—General Counsel, Chief Financial Officer, its Senior Vice President and Chief Human Resources Officer, his or her designee, or the presiding director of the Company’s Board of Directors, without regard to the usual lines of reporting. Alternatively, any suspected violations of applicable laws, rules or regulations, this Code, or unethical business practices may be reported through use of the Company’s confidential telephonic hotline at (877) 813-9101 or online at www.coterra.ethicspoint.com.
www.coterra.com. Any waiver of thisthe Code of Conduct for non-executive officers or employees may be granted by the Company’s Chief Executive Officer, Senior Vice President—General Counsel, Chief Financial Officer, or Senior Vice President and Chief Human Resources Officer. Any waiver of thisthe Code of Conduct for directors or executive officers may be granted only by the Board of Directors or by the Governance and Social Responsibility Committee, subject to the disclosure and other provisions of the Securities Exchange Act, of 1934, the rules promulgated there underthereunder and the applicable rules of the New York Stock Exchange. In caseNYSE. If a waiver is granted to a director or executive officer, the notice of the waiver shall be posted on the Company’s website, www.coterra.com, within four business days of the vote by the Board of Directors or shall be otherwise disclosed as required by applicable law or New York Stock ExchangeNYSE rules. Notices of waivers posted on the website shall remain there for a period of 12 months and shall be retained in our files as required by law. COTERRA• 2022 PROXY STATEMENT | 27 |
STOCKHOLDER ENGAGEMENT We engage with our stockholders regularly throughout the year. The Governance and Social Responsibility Committee oversees our stockholder engagement program and receives regular reports from management on stockholder engagement and feedback. Our engagement program is designed to address questions and concerns, provide perspective on Company policies and practices, seek stockholder input and incorporate feedback, as appropriate. Our primary stockholder engagement opportunities in 2023 are identified below, and executive officers participated at all of the investor conferences and non-deal roadshows. In 2023, in addition to our regular stockholder engagement efforts, we conducted dedicated stockholder outreach efforts related to two stockholder proposals included in the proxy statement for the 2023 annual meeting of stockholders. We contacted our 25 largest stockholders representing 68.9 percent of outstanding shares, received responses from 10 stockholders representing 45.9 percent of outstanding shares, and held calls with the nine who requested engagement representing 45.3 percent of outstanding shares. Following the results of the stockholder vote at the 2023 annual meeting of stockholders, and as a result of feedback received from our stockholders with respect to such proposals, we included additional disclosure in our 2023 Sustainability Report regarding the reliability of methane emission disclosures and joined the Oil and Gas Methane Partnership 2.0 (“OGMP 2.0”). The OGMP 2.0 has a framework that is dedicated to achieving reliable methane emission measurement, reporting, and mitigation. As part of OGMP 2.0, we plan to submit our 2023 methane emission estimates through their framework in second quarter 2024.
| PROPOSAL 2 | | | TO AMEND AND RESTATE THE RESTATED CERTIFICATE OF INCORPORATION OF COTERRA ENERGY INC. | |
We are asking you to approve a proposal to amend and restate the Restated Certificate of Incorporation of Coterra Energy Inc. (the “Certificate of Incorporation”), in the form attached as Appendix A to this proxy statement (the “Amended and Restated Certificate of Incorporation”). The Amended and Restated Certificate of Incorporation would amend the Certificate of Incorporation to provide for exculpation of certain officers of the Company as permitted by Delaware law and to make certain non-substantive updates. The Board approved, subject to stockholder approval, and declared it advisable to recommend that stockholders approve, the Amended and Restated Certificate of Incorporation. Purpose and Effect of the Amended and Restated Certificate of Incorporation Effective August 1, 2022, Section 102(b)(7) of the General Corporation Law of the State of Delaware (the “DGCL”) was amended to authorize corporations to adopt a provision in their certificate of incorporation to eliminate or limit monetary liability of certain corporate officers for breach of the fiduciary duty of care. Previously, the DGCL allowed only exculpation of directors for breach of the fiduciary duty of care. As amended, Section 102(b)(7) of the DGCL authorizes corporations to provide for exculpation of the following officers: (i) the corporation’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer or chief accounting officer, (ii) “named executive officers” identified in the corporation’s SEC filings, and (iii) other individuals who have agreed to be identified as officers of the corporation. Section 102(b)(7) of the DGCL, as amended, only permits, and the Amended and Restated Certificate of Incorporation would only permit, the exculpation of certain officers in connection with direct claims brought by stockholders, including class actions, but would not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by the Company itself or for derivative claims brought by stockholders in the name of the Company. In addition, as is currently the case with directors under the Certificate of Incorporation, the Amended and Restated Certificate of Incorporation would not limit the liability of officers for any breach of the duty of loyalty to the Company or its stockholders, any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law and any transaction from which the officer derived an improper personal benefit. Article VII in the Certificate of Incorporation currently provides for the exculpation of directors but does not include a provision that allows for the exculpation of officers. Overview of the Amended and Restated Certificate of Incorporation As discussed above, Article VII in the Certificate of Incorporation currently provides for the exculpation of directors. This Proposal 2 requests that stockholders approve the Amended and Restated Certificate of Incorporation to extend the exculpation provision to certain of our officers as permitted by DGCL Section 102(b)(7), as amended, by adding a new paragraph to Article VII of the Certificate of Incorporation as follows: “An officer of the Corporation shall not be personally liable to the Corporation or its stockholder or stockholders for monetary damages for breach of fiduciary duty as an officer, except for liability (i) for any breach of the officer’s duty of loyalty to the Corporation or its stockholder or stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for any transaction from which the officer derived an improper personal benefit, or (iv) for any action by or in the right of the Corporation. If the GCL is amended after the date of filing of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of officers, then the liability of an officer of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the GCL as so amended. Any repeal or modification of this Article VII by the stockholder or stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of an officer of the Corporation existing at the time of such repeal or modification.” This Proposal 2 also requests that stockholders approve the Amended and Restated Certificate of Incorporation to make certain non-substantive updates. The text of the Amended and Restated Certificate of Incorporation is attached as Appendix A to this proxy statement. Modifications reflecting the extension of exculpation to certain officers of the Company as permitted by Delaware law and certain non-substantive updates are indicated by double underlining in Appendix A to this proxy statement. Reasons for the Amended and Restated Certificate of Incorporation The Board believes it is important to provide protection from certain liabilities and expenses that may discourage prospective or current officers from accepting or continuing service with corporations. As with directors, officers frequently must make decisions
in response to time-sensitive opportunities and challenges, which can create substantial risk of investigations, claims, actions, suits or proceedings seeking to impose liability on the basis of hindsight. This is especially the case in the current litigious environment where stockholder plaintiffs have employed a tactic of bringing certain claims against officers that would otherwise be exculpated if brought against directors to avoid dismissal of such claims. The Amended and Restated Certificate of Incorporation would align the protections for our officers with those protections currently afforded to our directors. In addition, the Board believes the Amended and Restated Certificate of Incorporation would better position the Company to attract top officer candidates. In the absence of this exculpatory protection, qualified officers might be deterred from serving as officers of the Company due to exposure to personal liability and the risk that substantial expense will be incurred in defending lawsuits, regardless of merit. The stockholders of many of our peers have already adopted exculpation clauses that limit the personal liability of officers in their certificates of incorporation and failing to adopt the Amended and Restated Certificate of Incorporation could impact our recruitment and retention of exceptional officer candidates who conclude that the potential exposure to liabilities, costs of defense and other risks of proceedings exceeds the benefits of serving as an officer of the Company. The Board also considered the narrow class and type of claims from which such officers would be exculpated from liability pursuant to DGCL Section 102(b)(7), as amended, the limited number of our officers that would be impacted, and the benefits the Board believes would accrue to the Company by providing exculpation in accordance with DGCL Section 102(b)(7), as amended, including the ability to further enable our officers to best exercise their business judgment in furtherance of stockholder interests. After weighing these considerations, upon the recommendation of the Governance and Social Responsibility Committee, the Board approved and declared it advisable to adopt, subject to stockholder approval, the Amended and Restated Certificate of Incorporation to provide for exculpation of certain officers of the Company as permitted by Delaware law and to make certain unrelated, non-substantive updates. Additional Information If Proposal 2 is not approved by our stockholders at the annual meeting, then the Amended and Restated Certificate of Incorporation will not be approved and will not be implemented or become effective. The vote on the Amended and Restated Certificate of Incorporation is binding. Approval of Proposal 2 will constitute approval of the Amended and Restated Certificate of Incorporation, as set forth in Appendix A to this proxy statement. Other than the addition of a new paragraph to Article VII of the Certificate of Incorporation as set forth above and certain non-substantive updates to the Certificate of Incorporation, in each case as set forth in Appendix A, the remainder of the Certificate of Incorporation will remain unchanged after effectiveness of the Amended and Restated Certificate of Incorporation. If Proposal 2 is approved, the Company intends to file the Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware as soon as practicable following stockholder approval, and the Amended and Restated Certificate of Incorporation will become effective at the time of that filing. The Board may, at any time prior to the effectiveness of the Amended and Restated Certificate of Incorporation, abandon the Amended and Restated Certificate of Incorporation without further action by the stockholders or the Board (even if the requisite stockholder vote is obtained). Required Vote Approval of the Amended and Restated Certificate of Incorporation will require the affirmative vote of a majority of the outstanding shares of common stock entitled to vote on the matter. Abstentions and broker non-votes will have the effect of votes against this matter. | | | | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF COTERRA ENERGY INC. TO LIMIT THE LIABILITY OF CERTAIN OFFICERS AS PERMITTED BY DELAWARE LAW AND TO MAKE CERTAIN NON-SUBSTANTIVE UPDATES. | |
Back to Contents | PROPOSAL 3 | | | TO APPROVE, BY NON-BINDING ADVISORY VOTE, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS | |
In accordance with Section 14A of the Exchange Act and the related rules of the SEC, the stockholders of the Company are entitled to cast an advisory vote at the annual meeting to approve the compensation of the Company’s named executive officers. The vote on this Proposal 3 is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers as described in this proxy statement. At the 2023 annual meeting, our stockholders approved our proposal to provide you this opportunity on an annual basis. As described more fully in the “Compensation Discussion and Analysis” section of this proxy statement, the Company’s executive compensation program is designed to: •
Align executive compensation with our business strategy; •
Encourage management to create sustained value for the stockholders while managing inherent business risks; •
Attract, retain, and engage talented executives; and •
Support a long-term performance-based culture throughout the Company. We urge you to read the “Compensation Discussion and Analysis” and “Compensation Tables” sections on pages 28 to 56 so that you have an understanding of our executive compensation philosophy, policies and practices. The stockholder vote on executive compensation is an advisory vote only, and it is not binding on the Company or the Board of Directors. Although the vote is non-binding, the Compensation Committee and the Board value the opinions of the stockholders and will consider the outcome of the vote when making future compensation decisions. The next say-on-pay vote will occur at the 2025 annual meeting of stockholders. Required Vote The advisory vote regarding the compensation of the named executive officers described in this Proposal 3 will be approved if holders of a majority of the voting power of the common stock present in person or represented by proxy at the annual meeting and entitled to vote on the proposal vote in favor of the proposal. Abstentions will have the same effect as votes against the proposal, but broker non-votes will not affect the outcome of the voting on the proposal. | | | | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS. | |
COMPENSATION DISCUSSION AND ANALYSIS
| | | | |
COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis (“CD&A”) describes our compensation philosophy, objectives, policies and practices in place during 2021. Many of the decisions made by the Compensation Committee of the Board of Directors of the Company were made at the beginning of 2021, prior to negotiating and the closing of the merger with Cimarex Energy Co. (“Cimarex”) on October 1, 2021 (the “Merger”), pursuant to the Agreement and Plan of Merger among Cabot Oil & Gas Corporation (“Cabot”) Double C Merger Sub, Inc. and Cimarex, dated May 23, 2021 (the “Merger Agreement”). Many of the decisions made prior to the Merger were made by the Committee comprised of members who are different from the current composition of the Committee, and were reflective of annual compensation practices of legacy Cabot. The closing of the Merger in the fourth quarter of 2021 resulted in certain changes to those programs and this section discusses both the decisions made by the legacy Cabot Committee prior to the Merger and the effect the Merger had on certain elements of legacy Cabot’s compensation programs. This CD&A also discusses certain actions taken by our Committee after the Merger2023 with respect to the legacy Cimarex executive officers, as contemplated by the Merger Agreement, and certain legacy Cabot executive officers, as well as the Committee’s early 2022 executive compensation decisions.References in this discussion to the “Committee” refer to (1) the Compensation Committee as constituted before the Merger, with respect to determinations, decisions, conclusions and other actions taken by the Compensation Committee before the effective date of the Merger, and (2) the Compensation Committee as constituted after the Merger, with respect to determinations, decisions, conclusions and other actions taken by the Compensation Committee after the effective date of the Merger.
This CD&A focuses on the compensation of our Executive Chairman (who was formerlynamed executive officers. For 2023 our Chairman, President and Chief Executive Officer prior to the Merger), our Chief Executive Officer, our Chief Financial Officer, our three other most highly compensatednamed executive officers for 2021 and one additional former Cabotincluded the following executive officer (the “NEOs”),namely: officers serving at the end of 2023: Dan O. Dinges | | Executive Chairman (former Chairman, President & Chief Executive Officer) | Thomas E. Jorden | | | | Chief Executive Officer and President | | Scott C. Schroeder | Shannon E. Young III | | | | Executive Vice President &and Chief Financial Officer | | | Stephen P. Bell | | | | Executive Vice President, President—Business Development | | Steven W. Lindeman | Blake A. Sirgo | | | | Senior Vice President, Production and President—Operations | | Phillip L. Stalnaker | Kevin W. Smith | Senior | | | Vice President Marcellus Business Unit | Jeffrey W. Huttonand Chief Technology Officer | | Senior Vice President, Marketing |
Messrs. Dinges, Schroeder, Lindeman, Stalnaker and Hutton were
Additionally, our named executive officers for 2023 include Scott C. Schroeder, our former Executive Vice President and Chief Financial Officer, and Christopher H. Clason, our former Senior Vice President and Chief Human Resource Officer. BUSINESS CONTEXT One Coterra Over the last two years, we embarked on a transformative journey with a key theme: “One Coterra.” This theme served as the guiding principle for the successful integration of Cabot priortwo companies following the strategic merger of Cimarex and Cabot. During the subsequent integration, we have experienced planned executive transitions and implemented expected succession plans, with key leaders stepping into pivotal roles to drive our unified vision forward. In line with our commitment to fostering a cohesive and high-performing organization, we realigned the LTI program to reflect competitive market practices, ensuring that executives are aligned and motivated toward the common goal of “One Coterra.” Furthermore, recognizing the critical role of stability and continuity in executing our ambitious business plan, our Board of Directors renewed Mr. Jorden’s employment agreement and entered into an agreement with Mr. Bell memorializing certain future compensatory rights in consideration for Mr. Bell’s agreement to not terminate his employment for good reason under his legacy Cimarex severance compensation agreement. These strategic decisions underscore our commitment to the Merger“One Coterra” vision, ensuring strong leadership and this CD&A will sometimes referunified direction as we continue to them collectively as “legacy Cabot NEOs.” Messrs. Jorden and Bell were executive officerspursue our objective of Cimarex prior the Merger and this CD&A will sometimes referexceeding stockholder expectations. Our proactive approach to them collectively as “legacy Cimarex NEOs.”Our compensation plans and practices are designed to align the financial intereststhese critical aspects of our NEOs withbusiness reinforces our dedication to long-term growth and value creation.
DELIVERING VALUE TO STOCKHOLDERS Over the financial interestsprior three years, we delivered substantial value to our stockholders, evidenced by a +90% total stockholder return (“TSR”) from the beginning of our shareholders. To that2021 to the end we provide our NEOs with aof 2023, while maintaining market competitive base salary, an annual cash bonus opportunity basedChief Executive Officer pay. (1)
Based on the achievement of specific goals aligned with shareholder value creation and long-term incentives tied to long-term total shareholder return and annual cash flow attainment. In 2021 the level of at-risk pay for the legacy Cabot NEOs ranged from 82% to 92% of the total annual compensation opportunity, with our Executive Chairman, our former Chairman and CEO, having the highest level of at-risk pay of the legacy Cabot NEOs.COTERRA• 2022 PROXY STATEMENT | 28 |
2021 Financial and Operational Highlights
After nearly a decade of rationalizing the Company’s reserve portfolio, eliminating non-strategic and lower-tier assets, the Company was successful in acquiring – through a merger of equals with Cimarex Energy Co. (the “Merger”) – a complimentary strategic set of assets adding a mix of oil, liquids and natural gas to the portfolio, making 2021 a milestone year for the Company. Coincident with the Merger, the industry experienced a strengthening of all commodity prices, creating momentum in the second half of the year that further enhanced results from 2020. Highlights and accomplishments for 2021 include the following:(1)
• | Free Cash Flow:(2) Generated free cash flow of $1.083 billion on the strength of the acquired assets in the Merger and improved commodity prices. | • | Returns to Shareholders: Continuing the legacy of returning at least 50 percent of free cash flow to shareholders, the Company returned 60 percent of 2021’s free cash flow in the form of dividends – including an increased base dividend, supplemented with a variable dividend. | • | Reserves: As a result of both the Merger and our capital investment activity in 2021, our absolute reserves grew by 27 percent from the prior year and our reserves as of December 31, 2021 changed from 100 percent natural gas to approximately 86 percent natural gas and 14 percent oil and natural gas liquids. | • | Production: As a result of the Merger, absolute production increased 17 percent from 2020 levels to 167.1 MMBOE for the year. | • | Debt and Leverage: During the year the Company repaid $188 million in maturing long term debt. With the improvement in pricing, and taking into account the acquired debt from the Merger, the Company still experienced a reduction in our leverage ratio (net debt to EBITDAX)(2) from 1.38x in 2020 to .95x in 2021. | • | Sustainability: In 2021 the Company reduced greenhouse gas emissions, methane intensity and high-pressure flaring intensity from previous levels of both companies involved in the Merger, in its ongoing commitment to environmental, social and governance leadership. |
(1) | These results reflect nine months of Cabot Oil & Gas Corporation results and three months of the combined results following the effective time of the Merger. | (2) | Free cash flow and net debt to EBITDAX are not measures calculated in accordance with generally accepted accounting principles (GAAP). See Appendix A for additional information. |
2021 Compensation Highlights
• | No salary or target bonus increases for legacy CabotNEOs. When 2021 compensation decisions were made in February 2021, the Committee took into account both the Company’s strong 2020 operational and financial achievements, in the midst of the COVID-19 pandemic, as well as the countervailing market factors, including the lowest natural gas prices in our history and the prevailing investor sentiment concerning our sector, in deciding to award no 2021 base salary or target bonus increases to the legacy Cabot NEOs for the second year in a row. | • | Total Shareholder Return (“TSR”) Performance Awards for legacy Cabot NEOs vested at 100% of target per the Merger Agreement. Pursuant to the terms of the Merger Agreement, in connection with the closing of the Merger on October 1, 2021, TSR Performance Awards granted to legacy Cabot executives in February 2019, 2020 and 2021 accelerated and vested at 100% of target. | • | Annual cash incentive bonus for legacy Cabot NEOs were scored at 175% of target.Pursuant to the terms of the Merger Agreement, prior to the closing of the Merger, the Committee established the performance criteria achievement level for the legacy Cabot NEOs’ annual cash incentive bonuses, based on actual acheivement year-to-date and projected achievement through December 31, 2021. On this basis, of the six performance metrics for the 2021 annual cash incentive awards tracked, which tracked the Company’s budgeted levels approved in February 2021, the two finanical metrics exceeded 200% of target, two operational metrics slightly exceeded target and two operational metrics fell slightly below target levels. In addition to these outcomes, the Committee considered the Company’s historic achievement in safely and efficiently conducting our business in the face of the continuing global pandemic and the added demands of the Merger in awarding the strategic evaluation component of the annual cash incentive bonus. The result was that the Committee approved a payout to the legacy Cabot NEOs of 175% of target, subject to continued employment through the payment date. | • | Change-in-control payments for legacy Cabot NEOs terminated in return for compensatory contributions.As contemplated by the Merger Agreement and to provide continuity on the executive team after the Merger, the legacy Cabot NEOs other than Mr. Dinges entered into agreements with Cabot prior to the closing of the Merger terminating their existing change-in-control payments and agreeing not to compete with the Company for a period of eighteen months following their separation from the Company. In exchange, Messrs. Schroeder, Lindeman and Hutton received a cash contribution into their respective deferred compensation accounts and Mr. Stalnaker received a contribution into a new deferred compensation account established pursuant to a deferred compensation agreement with the Company. See the “—2021 Compensation Decisions—Merger-Related |
COTERRA• 2022 PROXY STATEMENT | 29 |
| Compensation Decisions—Termination of Legacy Cabot Change-in-control Agreements” section for additional detail on these contributions. Mr. Dinges’s change-in-control agreement remained in effect following the closing of the Merger. | • | Over 95% of shares voted approved executive compensation. At our most recent annual meeting in May 2021, over 95% of the votes cast supported our executive compensation practices. |
Our Pay for Performance Alignment
We have maintained consistent and disciplined performance-based compensation programs for all of our executives. The Committee has consistently awarded compensation opportunities to our former CEO and other legacy Cabot executives that require meaningful relative stock price and absolute financial performance to deliver targeted realized compensation levels. The allocation of 2021 compensation among salary, short-term incentives and long-term incentives for Mr. Dinges, our current Executive Chairman and former CEO, and the other legacy Cabot NEOs, on a weighted average basis, reflects this guiding principle, as shown below. The compensation of Mr. Jorden, our CEO effective as of October 1, 2021, is not included in the charts below because Mr. Jorden’s 2021 compensation was almost entirely decided by the legacy Cimarex compensation committee.
| EXECUTIVE CHAIRMAN | | OTHER LEGACY CABOT NEOs | | | | | | | | | | | | | | | | |
Long-Term Incentives
In 2021, the Committee awarded 65% of the former CEO’s and the CFO’s, and 60% of each other legacy Cabot executive’s, long-term incentive opportunity in the form of performance shares payable solely on the basis of our total shareholder return relative to our industry peer group over a three-year performance period (see “—Long-Term Incentive Awards—TSR Performance Shares” and the “Grants of Plan-Based Awards” table below). This metric directly aligns the interests of our management team with those of our shareholders, which alignment was further strengthened in 2021 by the addition of a “negative TSR modifier,” in response to shareholder input.
In 2021, we awarded 35% of the former CEO’s and the CFO’s, and 40% of each other legacy Cabot executive’s, long-term incentive value through hybrid performance shares that require threshold achievement based on a financial metric (see “—Long-Term Incentive Awards—Hybrid Performance Shares” and the “Grants of Plan-Based Awards” table below). The hybrid performance shares vest on a three-year graduated schedule, with 25% of the award vesting on each of the first two anniversaries of the date of grant and 50% vesting on the third anniversary.
Pursuant to the terms of the Merger Agreement, all outstanding, unvested long-term incentive awards held by the legacy Cabot NEOs were accelerated and vested upon the effective time of the Merger at the target level, as described in more detail in the “—Long-Term Incentive Awards—Determination of TSR Performance Shares and Hybrid Performance Shares Payout” section below.
Short-Term Incentive
In 2021, the Company’s short-term incentive program remained the same as 2020, with a continued emphasis on financial returns in the form of a free cash flow metric and a ROCE metric. The two operating metrics in the short-term incentive program – absolute production and reserves – are paired with related cost metrics, to incentivize a focus on returns on investment. There is also a strategic component to the short-term incentive program intended to provide the Committee with the ability to evaluate key influences on Company performance not taken into account in the other metrics. Utilizing these objective and subjective metrics, executives are rewarded in the short-term for performance intended to create long-term value for shareholders.
Pursuant to the terms of the Merger Agreement, the Committee scored the achievement of the 2021 short-term incentive metrics in September 2021, based on actual year-to-date performance and projected year-end performance. Bonus payments to the NEOs will occur in the first quarter of 2022, subject to continued employment through the date of payment.
COTERRA• 2022 PROXY STATEMENT | 30 |
Effects of Say on Pay and Shareholder Outreach
In setting 2021 executive compensation, the Committee considered the outcome of the say-on-pay vote at the three most recent annual meetings as strongly supportive of our pay practices and incentive programs. Those results were as follows:
• | 98% in favor of the 2018 annual meeting; | • | 97% in favor of the 2019 annual meeting; and | • | 95% in favor of the 2020 annual meeting. |
Furthermore, our shareholders have supported our compensation programs since the imposition of the say-on-pay vote, with approval rates of 95% or above since the first vote in 2011. As a result, the Committee concluded that the 2021 compensation paid to Mr. Jorden as reported in the legacy Cabot NEOs and our overall pay practices were well-aligned with shareholders’ interests and Company performance.
Summary Compensation Table.
OVERVIEWTABLE OF CONTENTSOUR COMPENSATION PROGRAMPhilosophy and Objectives of PHILOSOPHY
Our Compensation ProgramThis overview addresses the legacy Cabot programs in effect for 2021, except as otherwise noted. Following the closing of the Merger on October 1, 2021, the Committee began to evaluate and integrate the designs of the compensation programs enacted by the legacy Cabot and legacy Cimarex compensation committees and that evaluation and integration has continued into 2022. We expect the full integration of those programs to continue through 2022. As a result, our NEOs may continue to participate in some of their respective legacy company’s programs until full integrationPay is complete. In 2021 we also took action on executive compensation matters in connectionAligned with the Merger that are more fully discussed at “2021 Compensation Decisions—Merger-Related Compensation Decisions” below.
The Committee oversees anOur Performance
Our executive compensation program is designed to attract, retain, and engage highly qualified executives and to capture value for shareholders.stockholders. The primary objectives of our compensation program are:• | To align executive compensation with our business strategy; | • | To encourage management to create sustained value for the shareholders while managing inherent business risks; | • | To attract, retain, and engage talented executives; and | • | To support a long-term performance-based culture throughout the Company. | We achieved these objectives in 2021 by: | • | Assigning in excess of 80% of legacy Cabot NEO compensation to at-risk, performance-based incentive opportunities; | • | Tying incentive plan metrics and goals to shareholder value priorities; and | • | Having balanced, open and objective reviews of goals and performance. |
•
To align executive compensation with our business strategy; •
To attract, retain, and engage talented executives; •
To encourage management to create sustained value for the stockholders while managing inherent business risks; and •
To support a long-term performance-based culture throughout the Company. ANNUAL SAY ON PAY ADVISORY VOTE We Value Stockholders’ Perspective on Executive Pay Programs At the 2023 annual meeting of stockholders, approximately 96 percent of the votes cast were in favor of our 2022 executive compensation programs. The Compensation Committee believes that eachrecognized the support received from our stockholders and viewed the results as a confirmation of these objectives carried an equal amountour executive compensation programs and policies. The Compensation Committee will maintain the practice of importance inassessing stockholder votes and feedback when developing our 2021executive compensation program.programs. OUR COMPENSATION PRACTICES AND DESIGN Our Executive Compensation Program Follows Best PracticesThe following practices and policies in place in 2021 ensured that our executives’ compensation was aligned with shareholders’ interests.
Our Compensation Program is Designed to Support our Compensation Philosophy ELEMENTS OF OUR COMPENSATION PROGRAM
In 2021 we used various components of executive compensation, with an emphasis on variable compensation and long-term incentives, a large portion of which is considered at-risk. The components of executive compensation utilized in 2021, primarily for the legacy Cabot NEOs, are presented in the table below and discussed in more detail later in this section of the Proxy Statement.
Compensation
ComponentChief Executive Officer | | Form/Timing
of Payout | Other Named Executive Officers | Purpose | | How We Determine Amount | | | | | | |
| Element | | | | Form and Timing | | | | Purpose | | | | Determination Considerations | | | Base Salary | | | | Paid in cash throughout the year | | | | Compensate fairlycompetitively for position, experience, expertise and competencies.expertise | | Base salaries are targeted to approximate | | In aggregate, determined using the compensation peer group median for reference, taking into account the competitive environment, as well as the experience and accomplishmentsscope of each executive. Base salaries for the legacy Cimarex NEOs were determined based on prior levels for Mr. Bell, as required by the Merger Agreement, and for Mr. Jorden in accordance with the employment agreement entered into pursuant to the Merger Agreement. | | | Annual Cash Incentive BonusAwards | | | | Paid in cash after the year has ended and performance has been measured | | | | Motivate and reward performance achievement of results against a set of business goals and individual goals:• Financial goals (unit costs, finding costs, ROCE, free cash flow);
• Operational goals (specific objectives tied to absolute production and reserve targets);
• Discretionary objectives aligned with corporate strategy; and
• Qualitative performance evaluated by the Committee. contribution | | Annual bonus opportunities | | Opportunities are established as a percentage of base salary and are targeted to approximate average industry bonuscash incentive percentage levels for comparable executive positions.positions as well as executive team alignment. Annual payout is determined by comparing actual performance during prior year to established thresholdsperformance metrics and a strategic component.goals. The Compensation Committee retains authority to exercise negative discretion in determining the total bonuscash incentive pool. For 2021, payouts for NEOs were determined by their legacy compensation committees prior to the Merger. Legacy Cabot NEO payouts were based on year-to-date performance through September 2021 and based on performance projected through the end of 2021 and legacy Cimarex NEO payouts were based on performance through the Merger. | | | Long-Term IncentivesIncentive Awards | | 60%-65%
| | 50 percent relative TSR performance shares payable in stock (and cash for achievement over target) Granted in Q1 to align with business plan and performance period. Cliff vest three years from the grant date | | | | Promote alignment of executive decisions with shareholderstockholder interests through performance awards where value varies with Companybased on the Company’s stock performance relative to a peer group over a three-year performance period and the Company’s stock price at the end of that period. | | | | The value of performance-based equity awards is generally targeted at the 50th percentile of the peer group or greater, based on individual and Company circumstances including executives performing multiple roles and a smaller executive team than peers. Payout for TSR performance awards up to 200%200 percent for top performance, with a “negativepayout cap at target in the event TSR modifier” in place for the 2021 grants. In 2021, the achievement level for all unvested awards was target level, as determined by the legacy Cabot compensation committee prior to the Merger.is negative. | | | | 35%-40% hybrid performance shares
50 percent time-based restricted share units payable in stock Vest over
Granted in Q1. Cliff vest three years (25% / 25% / 50%)from the grant date | | Encourage | | Aligns interests of executives to achieve multi-year strategic and financial objectives. Annual vesting contingent upon operating cash flow exceeding $100 million.stockholders while promoting retention | | | | The value of time-based equity awards granted to executive officers, in aggregate, is generally targeted aboveat competitive pay levels using the median of the peer group for reference, although other individual and Company circumstances may influence the award amounts. | |
2023 PERFORMANCE-BASED COMPENSATION Our Incentive Compensation Programs Align Corporate Strategy Through Thoughtful Performance Metric Selection | Annual vesting at target level for achievementCash Incentive Bonus Program | | | | Why the Metric is Important | | | 45% Economic Performance (PVI-10) | | | | Including the economic performance of performance goal in prior yearour annual drilling program reflects our commitment to stockholder value creation. By consistently monitoring and no vesting if not achieved.
For 2021,improving the achievement level for all unvested awards was determined byPVI of our drilling program we ensure that our capital investments are optimized. | | | 20% Annual Production Guidance | | | | Consistently meeting or exceeding annual production guidance demonstrates credibility, operational excellence, and the legacy Cabot committee priorquality of our assets. It provides confidence to investors that we can execute projects and effectively mitigate risk. | | | 20% Annual Budget Guidance | | | | Including our capital budget reflects our commitment to financial discipline, operational efficiency, and responsible stewardship of stockholder capital. It reinforces our commitment to delivering on our promises. | | | 5% Green House Gas (“GHG”) Intensity 5% Methane Intensity 5% Flare Intensity | | | | Including reductions to GHG intensity, methane intensity, and flare intensity reflects our commitment to the Merger.responsible development of oil and natural gas. | |
COTERRA• 2022 PROXY STATEMENT | 32Long-Term Incentive Program | | | | Why the Metric is Important | | | 50% Relative TSR (3-year performance period) | | | | Relative comparison of TSR versus peers over a three-year period provides alignment between executive pay and stockholder experience. | | | 50% Time-Based RSUs (3-year cliff vesting) | | | | Increased weighting from 40 percent to 50 percent in 2023 to enhance and promote retention of executives. Providing full vesting on the third anniversary of grant provides greater alignment with long-term stockholders. | |
Our Incentive Program Payouts are Aligned with Performance Outcomes Compensation
Component | | Form/Timing
of Payout | | Purpose | | How We Determine Amount | | | Merger-related restricted stock awards to legacy Cimarex executives, including Messrs. Jorden and Bell, granted in December 2021 that cliff vest three years from the grant date and hybrid performance shares to Messrs. Stalnaker and Lindeman granted in December 2021 that cliff vest in October 2024 subject to the achievement of performance criteria | | The transition awards granted to the legacy Cimarex executives were provided for in the Merger Agreement because the legacy Cimarex executives did not receive equity awards in 2021 prior to the effective time of the Merger due to Cimarex’s practice of granting performance awards to executives, including Messrs. Jorden and Bell, in December of each year. The transition awards granted to Messrs. Stalnaker and Lindeman were granted to promote pay equity among the executive officer group. | | The value of the awards granted to the legacy Cimarex executives was equal to 2020 grant values by Cimarex to each executive, as provided in the Merger Agreement. The value of the awards granted to Messrs. Stalnaker and Lindeman was targeted to provide Messrs. Stalnaker and Lindeman with a similar 2021 long-term incentive grant date value, when also factoring in their pre-merger legacy Cabot 2021 long-term incentive awards, with the 2021 grant date long-term incentive value awarded to legacy Cimarex executives in an effort to integrate the compensation programs of the legacy companies. |
EXECUTIVE COMPENSATION
We believe our executive compensation policies and programs effectively served the interestsDetermination of the shareholders and the Company in 2021. The Committee has worked over the years to devise, manage and provide an executive compensation program that is designed to meet its intended objectives and contribute to the Company’s overall success. Following the effective time of the Merger, the Committee began to evaluate the design of the two legacy companies’ programs and expects to make some modifications to the programs described below for 2022 and beyond. 2023 Annual Cash Incentive Metric Achievement
The following discussion describes the programs in effect through September 30, 2021 and any actions taken in the fourth quartertable provides details of 2021 as a result of the Merger.2021 Committee Activity
During 2021, the Committee held three regular meetings, one in each of February, July and October, and three special meetings related to the Merger in June, September and December.
Annual Compensation Activity
At the time the 2021 awards granted in the first quarter were granted and periodically throughout the year, the Committee referenced the Fall 2020 competitive market study of the peer group by Meridian Compensation Partners, LLC (“Meridian”), the Committee’s independent compensation consultant at the time. Based on the study and the former CEO’s recommendations with respect to the other Company officers, the Committee determined 2021 salaries, bonus payouts for 2020 performance, certified the 2020 results for payouts of a portion of each of the hybrid performance shares granted from 2018 to 2020, and the 2021 annual grant of long-term incentive awards for the executive officers. A detailed discussion of each item of compensation can be found below under “2021 Compensation Decisions.”
Also at the February 2021 meeting, and prior to making any compensation decisions, the Committee reviewed a detailed analysis of equity awards and their retentive value for each legacy Cabot NEO. Over the course of the year, the Committee reviewed each element of compensation for the NEOs, including elements of total direct compensation and payments upon severance or change-in-control, as well as other benefits and perquisites. Lastly, at the February 2021 meeting, the Committee and the Board of Directors discussed and approved the 2021 performance criteria for the 2021 annual cash bonus plan.
During 2021, the Committee reviewed an analysis prepared by Meridian of 2020 executive compensation reported by our peer group. From the available 2020 survey information, the Committee evaluated its compensation decisions relative to our peer group. The Committee also reviewed an analysis prepared and presented by Meridian of current compensation issues and trends, including a 2021 competitive market study of executive compensation among our peer companies. This analysis, along with other data and reports, has historically been utilized in the Committee’s review of all components of compensation in the following February meeting.
COTERRA• 2022 PROXY STATEMENT | 33 |
Merger-Related Activity
In June 2021, the Committee met to consider and approve the terms of Mr. Jorden’s “side letter” relating to his Employment Agreement dated May 23, 2021. A detailed discussion of the terms of Mr. Jorden’s employment agreements can be found at “2021 Compensation Decisions—Merger-Related Compensation Decisions—Compensation Arrangements with Thomas E. Jorden” below. In September 2021, the Committee met to take action on several compensation matters set forth in the Merger Agreement, including (1) establishing the level of performanceachievement of the 20212023 annual cash bonus program, (2) establishing the level ofincentive performance of all outstanding TSR Performance Sharesmetrics reviewed and Hybrid Performance Shares, which vested on the closing of the Merger on October 1, 2021, and (3) approving certain compensatory arrangements for the legacy Cabot NEOs and other legacy Cabot officers with change-in-control agreements, in return for terminating their change-in-control payments and instituting new non-competition covenants. For a full discussion of the Merger-related compensation actions by the legacy Cabot Committee for the legacy Cabot NEOs, see “2021 Compensation Decisions—Merger-Related Compensation Decisions—Termination of Legacy Cabot Change-in-Control Agreements.” In December 2021, the Committee met to approve the 2021 grant of long-term incentive awards to the legacy Cimarex NEOs as provided in the Merger Agreement. At that time, the Committee also approved two long-term incentive awards for two legacy Cabot NEOs, Mr. Lindeman and Mr. Stalnaker, to promote pay equity among the executive officer group. For a full discussion of the December 2021 long-term incentive awards approved by the Compensation Committee see “Long-Term Incentive Awards—Merger-Related Long-Term Incentive Awards” below.
on February 20, 2024.
| | | | | Goals | | | | 2023 Results | | | | | | | | | | | Metrics | | | | Weight | | | | Threshold (50%) | | | | Target (100%) | | | | Stretch (200%) | | | | Financial/ Operational Results | | | | Comments | | | | Funding | | | | Weighted Funding | | | Economic Performance (PVI-10)(1) | | | | | | | | The PVI-10 of our 2023 drilling program was 1.65, exceeding our target goal of 1.50 (fully burdened for drilling, completion, facilities, infrastructure, land, and overhead costs). This result was primarily driven by strong economic returns in the Permian Basin. | | | | 130% | | | | 59% | | | Annual Production Guidance (MBOE/day) | | | | | | | | 2023 annual production exceeded the upper end of our stretch goal of 648 MBOE/Day. This result was due to operational efficiencies that allowed us to turn new wells to production faster and stronger well performance. | | | | 200% | | | | 40% | | | Annual Budget Guidance (MM$) | | | | | | | | The 2023 annual budget was in line with our target goal of $2,100MM. Savings from cost deflation were offset by additional costs related to operational issues. | | | | 96% | | | | 19% | | | Green House Gas Intensity (Metric Tons [MT] CO2e/MBOE) | | | | | | | | 2023 GHG intensity exceeded our stretch goal. This improvement was due to accelerating electric compressor installations. | | | | 200% | | | | 10% | | | Methane Intensity (MT CH4/MT CH4) (%) | | | | | | | | 2023 methane intensity exceeded our stretch goal. This result was primarily due to instrument air installations. | | | | 200% | | | | 10% | | | Flare Intensity (MMCF/MMCF) (%) | | | | | | | | 2023 flare intensity exceeded our stretch goal. We have continued to improve our flare management practices during curtailment events. | | | | 200% | | | | 10% | | | TOTAL | | | | 100% | | | | TOTAL STI SCORE YTD | | | | | | | | 148% | |
(1)
For 2023 annual cash incentive performance metric purposes, PVI-10 is not a measure calculated in accordance with generally accepted accounting principles (GAAP) and is not based on any standardized methodology prescribed by GAAP. As a result, it is not necessarily comparable to similarly titled measures presented by other companies. PVI-10 is not calculated from Coterra’s financial statements and should be considered in addition to, and not as a substitute for, other financial measures prepared in accordance with GAAP. It is a present value index discounted at 10%, calculated by dividing the net present value of certain cash flows by the present value of capital investments plus a constant value.
TABLE OF CONTENTSINDUSTRY PEER GROUPIn the 2021 annual compensation cycle, we used one peer group for both compensation competitive analysis
Relative TSR Performance Shares Our outstanding performance-based awards (awards granted in 2022 and to measure the relative performance of our2023) are based on Relative TSR performance shares. The Committee chose these companies because they represented our direct competitors of similar size and scopemeasured over a three-year performance period using the following scale: | Payout Level | | | | Relative TSR Performance (Percentile Rank v. TSR Peers) | | | | Performance Shares Earned | | | Maximum | | | | Greater than or equal to the 90th percentile | | | | | | 200% | | | | Target | | | | 55th percentile | | | | | | 100% | | | | Threshold | | | | Greater than or equal to the 30th percentile | | | | | | 50% | | | | Less than Threshold | | | | Less than the 30th percentile | | | | | | 0% | | |
Negative TSR Payout Cap at Target: If the Company’s TSR for the performance period is negative, then the “Performance Shares Earned,” as calculated in the exploration and production sectorabove table, will not exceed 100 percent, regardless of the energy industry and included several companies that competed in our core areas of operation at the time for both business opportunities and executive talent. The peer group changes from time to time due to organic changes in the Company or its peers, business combinations, asset sales and other types of transactions that causeCompany’s actual percentile ranking. Relative TSR Peers: Compensation peer companies to no longer exist or to no longer be comparable. The Committee approves all revisions to the peer group.The peer group for the TSR performance cycle that began in 2021 is as follows (new peer companies in bold):
Antero Resources Corporation | EQT Corporation | Apache Corporation | Marathon Oil Corporation | CNX Resources Corporation | Murphy Oil Corporation | Cimarex Energy Co. | Ovintiv Inc. | Continental Resources, Inc. | Pioneer Natural Resources Company | Devon Energy Corporation | Range Resources Corporation | Diamondback Energy, Inc. | Southwestern Energy Company |
In February 2022, the Committee selected a new compensation peer group to better reflect the size, operations and market of Coterra following the closing of the Merger. The Committee also selected a new performance peer group for the February 2022 through January 2025 performance cycle comprised of the same companies that were selected for the compensation peer group plus two indices: the SPDR S&P Oil and Gas Exploration and Production ETF IndexIndex; and the S&P 500 Industrials Index.
Payout Form to Limit Dilution: To allow for payouts in excess of target without excessive dilution or the need to reserve shares in excess of target, all payouts in excess of 100 percent of target are to be paid in the cash value of the shares. 2023 COMPENSATION DECISIONS The newfollowing summarizes the 2023 compensation peer groupdecisions and target compensation levels for 2022, is as follows (new peer companieseach named executive officer, except Mr. Young, who commenced employment with the Company in bold):July 2023 and in connection therewith (i) became eligible to participate in the Company’s annual cash incentive bonus program, with a target bonus equal to 100% of his base salary ($620,000), and (ii) received (a) a one-time restricted stock unit grant with a target grant value of $2,000,000, (b) a one-time performance stock grant with a target grant value of $2,000,000 and (c) a one-time cash payment of $100,000. Antero Resources Corporation | EQT Corporation | APA CorporationThomas E. Jorden | Chief Executive Officer and President | Hess Corporation | Chesapeake Energy Corporation | Marathon Oil Corporation | Continental Resources, Inc. | Occidental Petroleum Corporation | Devon Energy Corporation | Ovintiv Inc. | Diamondback Energy, Inc. | Pioneer Natural Resources Company | EOG Resources | |
COTERRA• 2022 PROXY STATEMENT | 34 |
Mr. Jorden became our Chief Executive Officer and President in 2021 following the merger of Cimarex and Cabot and was appointed as Chairman of the Board effective January 1, 2023. The Compensation Committee made no changes to Mr. Jorden’s target compensation for 2023 based on competitive position to market and peer group. The Company renewed Mr. Jorden’s employment letter agreement effective October 2023, which included an increase in Mr. Jorden’s Base Salary and Target Bonus, effective January 1, 2024. Details of the terms of Mr. Jorden’s renewed employment letter agreement are provided at the end of this section. | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | Base Salary | | | | | $ | 1,125 | | | | | | $ | 1,125 | | | | | 0% | | | Target Bonus (% of Salary) | | | | 130% | | | | 130% | | | | 0% | | | Target LTI Grant Value | | | | | $ | 10,000 | | | | | | $ | 10,000 | | | | | 0% | | | Total Target Compensation | | | | | $ | 12,588 | | | | | | $ | 12,588 | | | | | 0% | |
Back to Contents | Stephen P. Bell | Executive Vice President—Business Development | |
Mr. Bell became our Executive Vice President—Business Development in 2021 following the merger of Cimarex and Cabot. The Compensation Committee increased his base salary in 2023 by 5 percent. No other changes were made to Mr. Bell’s target compensation for 2023. In August 2023, the Company and Mr. Bell entered into a letter agreement that memorialized the terms of Mr. Bell’s 2024 and 2025 Target LTI Grant Value. Additional details about this agreement are provided at the end of this section. | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | Base Salary | | | | | $ | 554 | | | | | | $ | 582 | | | | | 5% | | | Target Bonus (% of Salary) | | | | 100% | | | | 100% | | | | 0% | | | Target LTI Grant Value | | | | | $ | 3,000 | | | | | | $ | 3,000 | | | | | 0% | | | Total Target Compensation | | | | | $ | 4,108 | | | | | | $ | 4,164 | | | | | 1% | |
| Blake A. Sirgo | Senior Vice President—Operations | |
Mr. Sirgo became our Senior Vice President—Operations in October of 2022. As a result of the promotion to his current executive role, the Compensation Committee increased his base salary in 2023 by 5 percent and his LTI grant value by 35 percent. | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | Base Salary | | | | | $ | 435 | | | | | | $ | 456 | | | | | 5% | | | Target Bonus (% of Salary) | | | | 100% | | | | 100% | | | | 0% | | | Target LTI Grant Value | | | | | $ | 1,000 | | | | | | $ | 1,350 | | | | | 35% | | | Total Target Compensation | | | | | $ | 1,870 | | | | | | $ | 2,262 | | | | | 21% | |
| Kevin W. Smith | Vice President and Chief Technology Officer | |
Mr. Smith became our Vice President and Chief Technology Officer in 2021 following the merger of Cimarex and Cabot. The Compensation Committee increased his base salary in 2023 by 7.5 percent and increased his LTI grant value by 35 percent based on market competitiveness for his role. | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | Base Salary | | | | | $ | 400 | | | | | | $ | 430 | | | | | 7.5% | | | Target Bonus (% of Salary) | | | | 100% | | | | 100% | | | | 0% | | | Target LTI Grant Value | | | | | $ | 1,000 | | | | | | $ | 1,350 | | | | | 35% | | | Total Target Compensation | | | | | $ | 1,800 | | | | | | $ | 2,210 | | | | | 23% | |
| Scott C. Schroeder | Former Executive Vice President and Chief Financial Officer | |
Mr. Schroeder served as our Executive Vice President and Chief Financial Officer from the completion of the merger in 2021 until the appointment of his successor on July 6, 2023, at which time he transitioned to Special Advisor to the Chief Executive Officer. He retired effective September 30, 2023. The Compensation Committee increased his base salary in 2023 by 5 percent. No other changes were made to Mr. Schroeder’s target compensation for 2023. | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | Base Salary | | | | | $ | 667 | | | | | | $ | 700 | | | | | 5% | | | Target Bonus (% of Salary) | | | | 110% | | | | 110% | | | | 0% | | | Target LTI Grant Value | | | | | $ | 4,150 | | | | | | $ | 4,150 | | | | | 0% | | | Total Target Compensation | | | | | $ | 5,551 | | | | | | $ | 5,620 | | | | | 1% | |
| Christopher H. Clason | Former Senior Vice President and Chief Human Resource Officer | |
Mr. Clason served as our Senior Vice President and Chief Human Resource Officer from October 2021 following the merger of Cimarex and Cabot until the appointment of his successor on July 10, 2023, at which time he transitioned to Special Advisor to the Chief Executive Officer. Mr. Clason separated from the Company in September 2023. Additional details about the payments and benefits Mr. Clason received in connection with his separation are provided under “Change in Control and Severance Agreements and Other Termination Payments” below. The Compensation Committee increased his base salary in 2023 by 5 percent. No other changes were made to Mr. Clason’s target compensation for 2023. | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | Base Salary | | | | | $ | 483 | | | | | | $ | 507 | | | | | 5% | | | Target Bonus (% of Salary) | | | | 100% | | | | 100% | | | | 0% | | | Target LTI Grant Value | | | | | $ | 2,000 | | | | | | $ | 2,000 | | | | | 0% | | | Total Target Compensation | | | | | $ | 2,966 | | | | | | $ | 3,014 | | | | | 2% | |
2023 Annual Cash Incentive Awards As noted in the table above under “Determination of Annual Cash Incentive Metric Achievement,” the Compensation Committee determined that the level of achievement for annual cash incentive payouts was 148 percent of target. In addition to such outcome, the Compensation Committee considered Mr. Jorden’s recommendations to the Compensation Committee regarding each executive officer other than himself. After fulsome discussion with all independent directors in executive session, and notwithstanding the actual cash incentive metric achievement, the Compensation Committee approved the following annual cash incentive awards for 2023: | | | | | Target (% of salary) | | | | Approved (% of Target) | | | | Approved ($) | | | Thomas E. Jorden | | | | | | 130% | | | | | | | 137% | | | | | | | 2,000,000 | | | | Shannon E. Young III | | | | | | 100% | | | | | | | 126% | | | | | | | 780,000 | | | | Stephen P. Bell | | | | | | 100% | | | | | | | 144% | | | | | | | 840,000 | | | | Blake A. Sirgo | | | | | | 100% | | | | | | | 138% | | | | | | | 630,000 | | | | Kevin W. Smith | | | | | | 100% | | | | | | | 145% | | | | | | | 625,000 | | |
Due to Mr. Schroeder’s retirement and Mr. Clason’s separation, in each case, on September 30, 2023, neither Mr. Schroeder nor Mr. Clason earned a 2023 cash incentive award. Renewed Employment Agreement with Mr. Jorden In September 2023, the Board of Directors presented Mr. Jorden with an extended employment letter agreement (as extended, the “Jorden Letter Agreement”) pursuant to which Mr. Jorden will remain as Chief Executive Officer through October of 2026. The Board believes that Mr. Jorden’s leadership through the merger integration period has been exemplary and that, under his leadership, the performance of the Company has been strong with financial and operational results consistently exceeding expectations. Additionally, Mr. Jorden and the Board have spent considerable time reviewing and implementing succession plans for the roles from which several executive officers recently departed. The Board believes it is in the best interest of stockholders to ensure that Mr. Jorden’s leadership remain uninterrupted both for operational continuity and effective executive succession. Pursuant to the terms of the Jorden Letter Agreement, Mr. Jorden’s base salary increased to $1,200,000 effective as of January 1, 2024; beginning in 2024, Mr. Jorden’s target annual cash incentive increased to 140 percent of his base salary; and Mr. Jorden will continue to receive annual long-term incentive awards with a target grant date value equal to $10 million. The severance provisions of the Jorden Employment Agreement remained unchanged and are discussed separately in “Potential Payments upon Termination or Change in Control” beginning on page 46 below. Letter Agreement with Mr. Bell In August 2023, the Company and Mr. Bell entered into a letter agreement memorializing the terms of Mr. Bell’s annual long-term incentive awards for each of calendar years 2024 and 2025. In exchange for Mr. Bell’s waiver of the right to assert good reason under his legacy Cimarex severance compensation agreement, the letter agreement with Mr. Bell provides that he will receive annual long-term incentive awards with a target grant date value equal to $4.5 million during each of calendar years 2024 and 2025, subject to his continued employment with the Company through the applicable grant date, except as discussed in “Potential Payments upon Termination or Change in Control” beginning on page 46 below. The awards are to be granted in the ordinary course and on the same terms as the annual long-term incentive awards granted to similarly situated executive officers at the applicable grant date. The Company entered into the letter agreement with Mr. Bell because it values the continuity of Mr. Bell’s continued leadership, especially during a time of several other executive successions. Change in Control and Severance Agreements and Other Termination Payments The Compensation Committee generally views the potential payments and benefits under change in control and severance agreements as a separate compensation element because such payments and benefits are not expected to be paid in a particular year and serve a different purpose for the executive other than elements of compensation. Accordingly, those payments and benefits do not significantly affect decisions regarding other elements of compensation. The terms of the Company’s severance and compensation agreements are discussed separately in “Potential Payments upon Termination or Change in Control” beginning on page 46 below.
Mr. Clason resigned for good reason under his legacy Cimarex severance compensation agreement during the change in control protection period. The Company and Mr. Clason agreed that his separation date would be September 30, 2023, which would provide the Company with continuity of critical human resources functions and facilitate the integration of Mr. Clason’s successor, who commenced employment on July 10, 2023. In August 2023, in recognition of Mr. Clason’s efforts to ensure a seamless transition of the human resources function and other key projects he completed or agreed to complete prior to his separation, the Company amended Mr. Clason’s 2021, 2022 and 2023 equity award agreements to provide that a portion of such awards that would otherwise be forfeited in connection with his separation, would instead remain outstanding and eligible to vest in accordance with their terms, subject to his compliance with certain restrictive covenants. Additional details regarding the payments and benefits Mr. Clason received in connection with his separation are discussed separately in “Potential Payments upon Termination or Change in Control” beginning on page 46 below. HOW WE SET EXECUTIVE COMPENSATION Role of the Independent Compensation Consultant The Compensation Committee employs the services ofengages an independent executive compensation consultant. In October 2020,consultant to provide information and objective advice regarding executive and non-employee director compensation. For 2023, the Compensation Committee approved the continued its engagement of MeridianF.W. Cook as its independent consultant for 2021. Prior to this approval, theexecutive compensation consultant. The Compensation Committee reviewed Meridian’sF.W. Cook’s independence in accordance with the six factors established by the NYSE and found it to be independent and without conflicts of interest in providing services to the Compensation Committee. In 2021 MeridianF.W. Cook was responsible for preparing and presenting a comprehensive competitive market study ofengaged by the compensation levels and practices for a group of industry peers. The Committee-approved industry peer group is listed and described in more detail above at “Industry Peer Group.” Meridian was also responsible for preparing and presenting an outside director compensation study using the same industry peer group. In 2021, the Committee relied on Meridian for input on pay philosophy, current market trends, legal and regulatory considerations and prevalence of benefit and effective time of the Merger and participated in most executive sessions. Meridian worked exclusively for theCompensation Committee and performed no services directly for management. Management does not retain the services of a compensation consultant.In November 2021,
Role of Executives in Establishing Compensation Our Chief Executive Officer proposes changes to compensation for his direct reports, which the Compensation Committee engaged FW Cook as its independent executive compensation consultant in place of Meridian. Priorconsiders when making decisions. The officer team proposes goals for incentive programs and offers performance data to this engagement,aid the Committee reviewed FW Cooks’ independence, in accordance with the six factors established by the NYSE and found it to be independent and without conflicts of interest in providing services to the Committee. FW Cook assisted theCompensation Committee in the structure of the December 2021 long-termadministering incentive equity awards to legacy Cimarex NEOs and two additional grants to legacy Cabot NEOs for internal pay equity purposes. FW Cook also advised thecompensation programs. The Compensation Committee on executive and director compensation matters leading up to 2022 compensation decisions. FW Cook worked exclusively for the Committee and performed no services directly to management.ROLE OF EXECUTIVES IN ESTABLISHING COMPENSATION
Our former CEO, who, after the Merger serves as our Executive Chairman, made recommendations in February 2021, and as new officers were hired, to the Committee with respect to salary, bonus and long-term incentive awards for all other executive officers. In making recommendations, our former CEO considered input from Meridian’s independent competitive market study, internal pay equity issues, individual performance and Company performance. The former CEO’s recommendations were just one of the factors considered by the Committee, in conjunction with the other factors discussed in this CD&A, in setting compensation for all executive officers. The Executive Vice President and Chief Financial Officer (“CFO”), who was ultimately responsible for human resources administration in 2021 up until the effective time of the Merger, provided the Committee with survey data from a wider group of companies in the energy sector than the industry peer group described above, which the Committee used for evaluation of non-executive compensation trends, and general administrative support implementing the Committee’s decisions. The former CEO and the CFO also provided recommendations to the Committee regarding appropriate bonus metrics, taking into account current industry drivers and Company strategic objectives, as well as appropriate performance targets for each year. The CFO and his staff assisted the Committee in determining bonus payouts in September 2021 by providing the calculations of bonus metric achievement, which the Committee took into account in determininghas the ultimate bonus payout pool for 2021. The former CEO and the CFO, along with the former Vice President, Administration and Corporate Secretary, attended the Committee meetingssay on all components of executive officer compensation. Our Chief Executive Officer does not recommend or participate in 2021 through the effective timedeliberations related to his own compensation.
Role of the Merger; however, theMarket Data F.W. Cook annually prepares a review of our executive officers’ compensation compared to similarly situated executive officers were excused from the meetings to enable the Committee to meet privately in executive session, both with and without the compensation consultant also being present for the regular meetings. As directed by the Committee, the executives listed above prepared materials and agendas for the Committee meetings and prepared the long-term equity plans and award agreements. The terms of all award agreements and the specific individual awards for executives, however, were allat peer companies, which is approved by the CommitteeCompensation Committee. The number of publicly traded exploration and as needed,production companies has contracted because of M&A activity. As a result, the peer group includes twelve publicly traded exploration and production companies, with our market capitalization positioned at the 48th percentile at the time of approval. The peer group used by the BoardCompensation Committee in evaluating the competitiveness of Directors.At the effective timeexecutive compensation and making 2023 compensation decisions consisted of the Merger,following companies. The peer group remained unchanged compared to 2022, other than the CFO’s role in executive compensation became an advisory role to the Committee, primarily related to the legacy Cabot compensation practices and policies, and the newly-appointed CEO and the Senior Vice President and Chief Humanremoval of Continental Resources, Officer (“CHRO”) took a more active role with the Committee. Beginningwhich was taken private in the fourth quarter of 2021, the CEO assumed the primary role in making recommendations with respect to salary, bonus and long-term incentive awards for the executive officers for 2022, with considerable input from the CHRO on the design of the compensation programs for Coterra in 2022 and beyond. In December 2021, the CEO and the CHRO made recommendations to the Committee with regard to the amount and terms of the long-term incentive awards to be granted to the legacy Cimarex executive officers under the terms of the Merger Agreements and to two legacy Cabot executive officers. Those recommendations were one of the factors considered by the Committee, in conjunction with input from the Committee’s compensation consultant, FW Cook. 2022. COTERRA• 2022 PROXY STATEMENT | 35Antero Resources Corporation | | | | EQT Corporation | |
| APA Corporation | | | | Hess Corporation | | | Chesapeake Energy Corporation | | | | Marathon Oil Corporation | | | Devon Energy Corporation | | | | Occidental Petroleum Corporation | | | Diamondback Energy, Inc. | | | | Ovintiv Inc. | | | EOG Resources, Inc. | | | | Pioneer Natural Resources Company | |
RETIREMENT COMPENSATION DECISIONSAnnual Compensation Decisions
In February 2021, the Committee met to establish legacy Cabot executive compensation levels for the year. In setting those levels, the Committee took into account many macro-economic and industry factors, as well as specific attributes of Cabot’s 2020 performance and structure that impacted the relative value to the Company of the contributions made by the executive team. Among the factors specific to Cabot’s 2020 performance and structure considered by the Committee were:
• | the safety and efficiency with which the management team conducted operations during the first year of the global pandemic | • | the generation of $109 million in free cash flow(1) even with the lowest realized natural gas price in our history | • | the achievement of the lowest cost structure in the peer group | • | the achievement of $200 million in net income for the year | • | the return of 146% of free cash flow(1) to the shareholders | • | the achievement of the lowest debt levels in the peer group | • | the lowest General and Administrative costs and the smallest staff at all levels, including the executive level, of the peer group |
Among the countervailing macro-environmental factors recognized by the Committee in February 2021 were:
• | a lack of sustained winter weather fostering a continuation of the oversupplied natural gas market | • | the trend of negative shareholder returns for the industry as a whole (including Cabot) | • | uncertainty in the marketplace caused by the ongoing global pandemic | • | the challenged commodity price environment |
AND OTHER BENEFITS Coterra Retirement Savings Plan The Committee took note that the achievements of the executive team, which increased the Company’s competitiveness within the peer group, while exemplary, did not result in returns to the shareholders in the form of higher stock prices, due to the impact of the macro-economic and industry factors discussed above. In light of these competing forces, the Committee took a conservative approach in setting 2021 compensation levels for each of the elements of compensation discussed below, generally holding compensation opportunities flat to the prior year for the second year in a row. The Committee balanced the need to retain and reward excellent management performance with the need to align executive compensation with shareholder returns.In 2021, there were three major elements of the executive in-service compensation program: (1) base salary, (2) annual cash incentive bonus and (3) long-term incentive equity awards. Company perquisites are a minor element of the executive compensation program. This design generally mirrors the pay practices of the exploration and production industry generally and our selected industry peer group. Our compensation is intentionally weighted toward long-term equity-based compensation. Each element is described below.
Through September 30, 2021, Mr. Dinges, our former Chairman, President and CEO, had a significantly broader scope of responsibilities than the other legacy Cabot NEOs. The difference in compensation for Mr. Dinges described below primarily reflects these differing responsibilities and, except as described below, does not result from the application of different policies or decisions with respect to Mr. Dinges. Mr. Jorden’s 2021 compensation was determined by negotiation in connection with the Merger and is reflective of his years of tenureCoterra Energy Inc. Retirement Savings Plan, formerly known as the CEO of Cimarex Energy Co., and his expanded role with Coterra, as a larger, more diversified oil and gas producer.
Merger-Related Compensation Decisions
Compensation Arrangements with Dan O. Dinges
On May 23, 2021, Mr. Dinges entered into a letter agreement with Cabot (the “Dinges Agreement”) that is effective from the closing of the Merger on October 1, 2021, through the earlier of (1) December 31, 2022, or (2) the Chairman Succession Date (which is the date a new Chairman of the board is appointed) (the “Dinges Employment Period”). The Dinges Agreement provides that Mr. Dinges will be employed as Executive Chairman of the board and serve as a member of the board during the Dinges Employment Period. Under the terms of the Dinges Agreement, Mr. Dinges will continue to receive an annual base salary of $1,100,000 and an annual cash incentive award with a target opportunity of 130% of his annual base salary, just as he received in his role as Chairman, President and Chief Executive Officer prior to the closing of the Merger. His annual long-term incentive award opportunity, however, was reduced from a grant date value of $9,000,000 in 2021 to a target grant date value of $4,500,000 in 2022, reflecting a reduction in the scope of his duties in his new role with Coterra. Mr. Dinges will also be provided employee benefits and perquisites no less favorable to those provided
(1) | Free cash flow is not a measure calculated in accordance with generally accepted accounting principles (GAAP). See Appendix A for additional information. |
COTERRA• 2022 PROXY STATEMENT | 36 |
to Coterra executive officers during the Dinges Employment Period. Effective on the closing date of the Merger, the Company’s bylaws were amended to provide that Mr. Dinges may not be removed from his position as Executive Chairman during the Dinges Employment Period without an affirmative vote of at least 75% of the other members of the Coterra board. If Mr. Dinges’ is terminated prior to or on the Chairman Succession Date, he will be entitled to the termination benefits provided under his existing change-in-control agreement with the Company, and any outstanding Coterra equity awards will be treated in accordance with the retirement provisions of the equity award agreements. In addition to Mr. Dinges’ existing perpetual confidentiality covenant in his change-in-control agreement, he agreed to be subject to one-year post-termination non-competition and non-solicitation covenants pursuant to the Dinges Agreement. See “Change-in-Control Agreements” below for a more complete discussion of Mr. Dinges’ post-termination benefits.
Compensation Arrangements with Thomas E. Jorden
On May 23, 2021, Mr. Jorden entered into a letter agreement with Cabot (the “Jorden Letter Agreement”) with respect to the terms of his employment with the Company following the closing of the Merger. Under the terms of the Jorden Letter Agreement, Mr. Jorden is employed as the Company’s President and Chief Executive Officer and serves as a member of the board from the effective time of the Merger through the third anniversary thereof or upon his earlier termination of employment (the “Jorden Employment Period”). During the Jorden Employment Period, Mr. Jorden will receive a base salary of $1,125,000, will be eligible for an annual cash incentive award with a target opportunity of 130% of his annual base salary, will be granted annual long-term incentive awards with a target grant date value of $10,000,000, and was provided with relocation assistance and other employee benefits and perquisites no less favorable to those provided to other Coterra executive officers. Pursuant to the Jorden Letter Agreement, effective on the closing date of the Merger, the Company’s bylaws were amended to provide that Mr. Jorden may not be removed from his position as President and Chief Executive Officer or as a member of the board during the Jorden Employment Period without an affirmative vote of at least 75% of the other members of the Coterra board.
Mr. Jorden’s existing severance compensation agreement with Cimarex was assumed by Coterra and will remain in full force and effect during the Jorden Employment Period. The Jorden Letter Agreement also revised the definition of “good reason” under such agreement to also include a diminution of Mr. Jorden’s duties or responsibilities, authorities, powers or functions, the failure of the Coterra board to nominate him for election to the Coterra board, a reduction in his annual long-term incentive award opportunity as described above, or a required relocation to any location other than Houston, Texas. Upon the expiration of the Jorden Employment Period, if Mr. Jorden’s employment with Coterra is continuing, then he and Coterra will enter into a change-in-control agreement that is consistent with, and no less favorable than, the change-in-control agreements then applicable to other executive officers of Coterra.
Subsequent to the Jorden Letter Agreement, on June 29, 2021, Mr. Jorden entered into a side letter agreement with Cimarex and Cabot (the “Jorden Side Letter”). The Jorden Side Letter provided that, notwithstanding the preexisting terms applicable to his Cimarex equity awards or anything to the contrary contained in the Merger Agreement, Mr. Jorden’s outstanding Cimarex equity awards would not vest at the effective time of the Merger, which is referred to as “single-trigger vesting.” Instead of single-trigger vesting, each such award was converted into a corresponding award with respect to Coterra common stock, with the number of shares underlying each award adjusted based on the exchange ratio for the Merger, and if subject to performance-based vesting, determined with respect to the greater of the target level and the level determined or certified by the Cimarex board or the compensation committee based on the results achieved by Cimarex prior to the effective time of the Merger. The performance goals applicable to Mr. Jorden’s Cimarex restricted stock awards subject to performance-based vesting were deemed satisfied at the effective time of the Merger at the same levels applicable to other performance-based Cimarex restricted stock awards. Each such award, once converted into a Coterra award, continued to be subject to the same service-based vesting terms as applied to the Cimarex award immediately prior to the effective time of the Merger. See the “Outstanding Equity Awards at Fiscal Year-End 2021” table, the “2021 Option Exercises and Stock Vested” table and related footnotes for detailed information regarding the conversion of Mr. Jorden’s Cimarex equity awards into Coterra equity awards and the vesting of one of those awards according to its terms on December 1, 2021.
The Jorden side letter also provides that if Mr. Jorden’s employment is terminated by the Company without cause or by Mr. Jorden for good reason, or if Mr. Jorden dies or becomes disabled, in each case, during the Jorden Employment Period, his outstanding Coterra equity awards, including his Cimarex equity awards converted in the Merger in accordance with the Jorden Side Letter, will vest in full (with achievement of any applicable performance metrics determined based on actual performance as of the date of his termination of employment or the date of death or disability, as applicable). This vesting after both a change-in-control and a termination of employment is referred to as “double-trigger vesting.”
Mr. Jorden remains subject to his existing perpetual confidentiality covenant and the one-year post-termination non-competition and non-solicitation covenants contained in his severance agreement.
Termination of Legacy Cabot Change-in-Control Agreements
Each of the legacy Cabot NEOs was a party to a change-in-control agreement (the “change-in-control agreements”) that provided that in the event of a termination without “cause”
COTERRA• 2022 PROXY STATEMENT | 37 |
or a “constructive termination without cause” (as defined in the change-in-control agreements) within two years following a change in control of the Company each executive officer would be entitled to receive: (1) a lump-sum cash payment equal to three times the total of the executive officer’s base salary and the greater of target bonus or the highest actual bonus paid in the three fiscal years immediately preceding the termination or change in control, (2) accelerated vesting of all equity awards immediately upon a change in control, subject, in the case of the TSR performance shares, to the level of the Company’s TSR performance relative to its peers as of the last day of the month immediately preceding the month in which the change-in-control event occurs, (3) target bonus for the fiscal year of termination, prorated for the actual days served, (4) continued medical, dental and life insurance coverage for three years, and (5) reimbursement of expenses for outplacement assistance. The legacy Cabot change-in-control agreements entered into prior to 2010 also contained a Section 280G tax gross-up provision. The closing of the Merger on October 1, 2021, constituted a change in control under the change-in-control agreements, as amended.
In September 2021, the Cabot compensation committee met to consider compensation actions reserved to the Company under the Merger Agreement to lessen the potential impact of the change-in-control agreements on the continuity of the management team of the Company following the anticipated closing of the Merger, given that most of the NEOs would experience a “constructive termination,” as defined in the change-in-control agreements, triggering the payment of the benefits described in the preceding paragraph. The “constructive termination” event for each of the legacy Cabot NEOs was, in each case, an adverse change in their position or responsibilities or the principal departmental functions that report to the executive, as a result of the new Coterra management structure following the effective time of the Merger. The Committee also considered that each of the legacy Cabot NEOs were eligible to receive retirement benefits under legacy Cabot policies that were in place as of the effective time of the Merger, thereby increasing the risk of a loss of these key personnel.
In order to encourage continued service by the legacy Cabot NEOs for at least a transition period following the effective time of the Merger in furtherance of the integration efforts of the two legacy companies’ management teams, the Cabot compensation committee approved new letter agreements (the “Termination Letters”) with each of the legacy Cabot NEOs other than Mr. Dinges terminating the NEOs’ rights under their change-in-control agreements (other than those relating to Internal Revenue Code Sections 280G and 4999, if applicable, with respect to the Merger transaction only, and dispute resolution procedures) , and instituting additional non-competition and non-solicitation covenants for each NEO in favor of the Company, in return for a one-time payment. Pursuant to the Termination Letters, each of Messrs. Schroeder, Hutton and Lindeman received a contribution by the Company to his deferred compensation account under Cabot’s deferred compensation plan and Mr. Stalnaker received a contribution into a new deferred compensation account establish under a separate deferred compensation agreement with Cabot (the “Deferred Compensation Agreement”). As a result of the Termination Letters, the Company has no agreements for excise tax gross-ups payments for any executive for future changes in control, other than Mr. Dinges’ continuing change-in-control agreement, which remains in place unmodified. The Company also has no obligation to any legacy Cabot NEO for any payments on any future change in control.
The amount of the deferred compensation contributions to Messrs. Schroeder’s, Hutton’s and Lindeman’s deferred compensation accounts were $5,243,700, $3,131,700 and $3,131,700, respectively. The amount subject to Mr. Stalnaker’s Deferred Compensation Agreement was $3,131,700. All of such contributions and amounts were fully vested when made. Under the terms of the Cabot deferred compensation plan and the Deferred Compensation Agreement, such amounts may not be received by the NEOs until six months after separation from the Company.
Legacy Cimarex Severance Compensation Agreements
Legacy Cimarex NEOs are party to legacy Cimarex severance compensation agreements that provide for certain severance benefits upon a termination of employment other than for “cause” or a termination by the legacy Cimarex NEO for “good reason,” including severance benefits if the qualifying termination occurs within a specified time following a change in control. The Merger constituted a change in control under the legacy Cimarex severance compensation agreements. See the “—2021 Compensation Decisions—Merger-Related Compensation Decisions—Compensation Arrangements with Thomas E. Jorden,” “—Change-in-Control Agreements—Legacy Cimarex Severance Compensation Arrangements” and “Potential Payments Upon Termination or Change in Control—Severance Agreements” sections for a description of amendments made to the legacy Cimarex severance compensation agreements in connection with the Merger and for additional information on the benefits payable under these agreements.
2021 STI and LTI Payout Determinations
As provided in the Merger Agreement, the legacy Cabot compensation committee also determined the performance achieved under the 2021 cash bonus program and all outstanding TSR Performance Shares and Hybrid Performance Shares held by executive officers with a change-in-control agreement, which under the terms of the Merger Agreement were to be accelerated and fully-vested at the greater of actual performance through the latest practicable date prior to the effective time of the Merger or the target level of performance. See “—Annual Cash Incentive Bonus—Determination of 2021 Bonus Payout” for a discussion of the 2021 bonus payout and the “—Long-Term Incentive Awards—Determination of TSR Performance Shares and Hybrid Performance Shares Payout” for a discussion of the accelerated vesting of the outstanding TSR Performance Shares and Hybrid Performance Shares.
COTERRA• 2022 PROXY STATEMENT | 38 |
December 2021 Long-Term Incentive Grants
As provided in the Merger Agreement, the legacy Cimarex executives, including Messrs. Jorden and Bell, were entitled to receive on December 1, 2021, annual long-term incentive awards with a target grant date value not less than the target grant date value of the annual long-term incentive awards granted to such executives in 2020 by Cimarex. The Committee met on December 13, 2021, to consider the terms and such long-term incentive awards and approve the grants to these executives. Although the grant date values of the awards were established by the Merger Agreement and the Jorden Letter Agreement, in establishing the terms of the awards, the Committee considered vesting terms of the awards for the legacy Cimarex executives. At that time, the Committee also approved additional long-term incentive awards for two of the legacy Cabot NEOs, Messrs. Lindeman and Stalnaker, to strengthen pay equity among the Coterra executive team. For a description of the vesting terms for the December 13, 2021, awards, see below “—Long-Term Incentive Awards—Merger-Related Long-Term Incentive Awards”.
Base Salary
The Committee believes base salary is a critical element of executive compensation because it provides executives with a base level of monthly income. The base salary of each executive, including the NEOs, is reviewed and approved annually by the Committee. The former CEO’s 2021 salary was established by the Committee (and ratified by the Board of Directors) and the other legacy Cabot executives’ 2021 salaries were established jointly by the former CEO and the Committee. In 2021 base salary for all legacy Cabot executive positions was targeted near the median level of the peer group. Individual salaries in 2021 took into account our established salary policies and our current salary budget; the individual’s levels of responsibility, contribution and value to the Company; individual performance; prior relevant experience; breadth of knowledge; and internal and external pay equity issues. There were no base salary increases for the legacy Cabot NEOs in 2021 and none of the legacy Cabot NEOs had a change in their salary as a result of the Merger.
Name | Title | | 2020 Base Salary | | 2021 Base Salary | Mr. Dinges | Executive Chairman; Former Chairman, President and Chief Executive Officer | | $ | 1,100,000 | | $ | 1,100,000 | Mr. Jorden | Chief Executive Officer and President | | | – | | $ | 1,125,000 | Mr. Schroeder | Executive Vice President and Chief Financial Officer | | $ | 629,000 | | $ | 629,000 | Mr. Bell | Executive Vice President, Business Development | | | – | | $ | 554,000 | Mr. Hutton | Senior Vice President, Marketing | | $ | 445,000 | | $ | 445,000 | Mr. Stalnaker | Senior Vice President, Marcellus Business Unit | | $ | 445,000 | | $ | 445,000 | Mr. Lindeman | Senior Vice President, Production and Operations | | $ | 445,000 | | $ | 445,000 |
Mr. Jorden’s base salary listed above was established on October 1, 2021, pursuant to the Jorden Letter Agreement. See “Merger-Related Compensation Decisions—Compensation Arrangements with Thomas E. Jorden” above. Mr. Bell’s base salary listed above was the same as established by Cimarex for 2021, as provided in the Merger Agreement.
Effective on October 1, 2021, Mr. Dinges resigned as President and Chief Executive Officer and became the Executive Chairman of the Company, under the terms and base salary established in the Dinges Agreement. His base salary will remain the same as for his prior role for the duration of the Dinges Employment Period. See “Merger-Related Compensation Decisions—Compensation Arrangements with Dan O. Dinges” above.
Annual Cash Incentive Bonus
The annual cash incentive bonus opportunity provides the NEOs, as well as other executives and key employees, with an incentive in the form of an annual cash bonus to achieve overall business goals. The bonus opportunity is stated as a percentage of base salary and is set using the Committee’s philosophy to target bonus levels (as a percentage of base salary) consistent with the competitive market for executives in similar positions. Annual bonus opportunities are based on metrics and performance goals that are of primary importance to the Company during the coming year and motivate executives to achieve those goals.
Upon completion of each fiscal year, the level of achievement of each of the metrics established for the bonus plan for that year is calculated using the actual results for the bonus plan fiscal year and the Committee’s assessment of the strategic evaluation component. The calculation yields a potential overall bonus pool payout, stated as a percentage of target. The CEO makes recommendations to the Committee for annual bonuses to be paid to each executive officer (other than the CEO), based on the formulaic output for the total bonus pool, with individual performance adjustments recommended by the CEO. The Committee references both the CEO’s recommendations and the formula output in determining the bonuses to be paid to the NEOs other than the CEO. The Committee also retains discretion to take into account the effect on the bonus metrics of unanticipated factors, such as acquisitions and divestitures, which are not part of establishing the target metrics because the Company cannot budget these activities, when arriving at the approved total bonus pool. When acquisition or divestiture
COTERRA• 2022 PROXY STATEMENT | 39 |
activity occurs, for example, the Committee assesses its impact and exercises its discretion to adjust for the impact on the overall bonus pool. The Committee will determine the total bonus pool payout, but individual awards can vary from the payout, at the discretion of the Committee. The Committee will also take into account the formulaic output in determining the CEO’s bonus payout, along with Company and individual performance, as discussed further below.
2021 Bonus Opportunity
For 2021, the Committee did not increase the target bonus opportunity for any of the legacy Cabot NEOs over 2020 levels. During 2021, the bonus opportunity for the legacy Cabot NEOs was as follows:
| | | | Target | | | | | | | Bonus (% of | | Target Bonus | Executive | | Title | | Salary) | | Value | Mr. Dinges | | Executive Chairman (Former Chairman, President and Chief Executive Officer) | | | 130 | % | | $ | 1,430,000 | Mr. Schroeder | | Executive Vice President and Chief Financial Officer | | | 110 | % | | $ | 691,900 | Mr. Stalnaker | | Senior Vice President, Marcellus Business Unit | | | 80 | % | | $ | 356,000 | Mr. Lindeman | | Senior Vice President, Production and Operations | | | 80 | % | | $ | 356,000 | Mr. Hutton | | Senior Vice President, Marketing | | | 80 | % | | $ | 356,000 |
Mr. Jorden’s and Mr. Bell’s 2021 bonus opportunity was established by the legacy Cimarex compensation committee in accordance with the legacy Cimarex compensation practices and policies. Under the terms of the Merger Agreement and the achievement of Messrs. Jorden’s and Bell’s bonuses was determined by the legacy Cimarex compensation committee prior to the effective time of the Merger and paid by Coterra in 2022. See “Executive Compensation–Summary Compensation Table” below for the amounts paid by Coterra to Messrs. Jorden and Bell in satisfaction of their 2021 annual bonus.
2021 Performance Metrics and Goals
The 2021 bonus plan was designed by the Committee to incentivize desired outcomes for Company financial performance by using measurable, value-generating metrics, that when achieved at target or higher levels, are additive to shareholder value and returns. To motivate and reward good business judgment, certain key metrics are linked together, producing more fulsome and balanced decision-making. Over the last several years, the Committee adjusted the bonus plan metrics to reduce the emphasis on growth of production and reserves, which had been the core tenet in the industry for many years, and increase the focus on financial and returns metrics, as requested by the investment community. The 2021 bonus opportunity metrics and weighting for the legacy Cabot NEOs were as follows:
| Performance
Achievement
Range | X | Conditional Multiplier
of 1.5x | X | Weighting
Factor | = | Bonus Achievement
Range
(% of Target) | Absolute Reserves | 0-275% | | Applies if both metrics greater
than 100% achievement
(subject to 275% maximum) | | 10% | | 0–27.5% | Finding Cost | | | 15% | | 0–41.25% | Absolute Production | | Applies if both metrics greater
than 100% achievement
(subject to 275% maximum) | | 10% | | 0–27.5% | Unit Operating Cost | | | 15% | | 0–41.25% | Return on Capital
Employed (ROCE) | | Applies if both metrics greater
than 100% achievement
(subject to 275% maximum) | | 15% | | 0–41.25% | Free Cash Flow | | | 15% | | 0–41.25% | Strategic Evaluation | | | No multiplier | | 20% | | 0–55% | Total Bonus Achievement | | | | | | | 0–275% | | | | | | Maximum Bonus Payout 250% |
COTERRA• 2022 PROXY STATEMENT | 40 |
In February 2021, the bonus metrics and performance goals were established with the target level of performance (100%) based on the operating budget approved in February by the Cabot Board of Directors. The performance goals for no payout (0%) and a payout at 200% of target for each metric were also created at that time. The bonus plan placed a cap on the performance achievement for each metric at 275% of target, which allowed for some additional benefit for above-range performance but removed the potential of one metric creating a disproportionate payout. Additional parameters for the 2021 annual cash incentive bonus plan included a weighting multiplier of 1.5 times for each of two grouped metrics if actual performance on each of the grouped metrics was at target (100%) or above, up to the 275% maximum performance achievement per metric. The grouped metrics were: (1) Absolute Reserves and Finding Cost, (2) Absolute Production and Unit Operating Cost, and (3) Return on Capital Employed and Free Cash Flow. The legacy Cabot committee established the weighting multiplier on the grouped metrics to encourage a balanced approach to achieving operational goals and to discourage over-achievement of one metric in a manner that adversely affects the grouped metric. For example, excessive spending on a development program could help achieve the reserve metric at levels above target levels, but cause finding costs to increase to unacceptable levels. By grouping the reserve and finding costs metrics together and using a weighting multiplier of 1.5 for achieving target or above on both metrics, the legacy Cabot committee rewarded economic efficiency in operations.
With respect to the strategic evaluation metric, the legacy Cabot committee evaluated key influences on Company performance not taken into account in the other metrics. These may have included the management of capital spending, environmental and safety performance, net income performance, organizational leadership and other factors the Committee deemed to have been important in the prior year’s performance and may have varied from year to year. The Committee followed no set performance targets relating to these factors. In general, the Committee expected to award the target (100%) level of performance of the strategic evaluation metric in years when the Company met internal and external performance expectations with respect to these factors but could assign no achievement to this metric (0%) up to the maximum level of 275% of achievement of this metric. The strategic evaluation metric was not a grouped metric so there was no additional weighting multiplier of 1.5 times on this metric.
The 2021 bonus plan had a maximum award payout of 250% of target in the aggregate.
Determination of 2021 Bonus Payout
Pursuant to the terms of the Merger Agreement, in September 2021, prior to the closing of the Merger, the Committee determined the level of achievement of the 2021 bonus metrics for the legacy Cabot NEOs based on the actual performance for the year-to-date and projected performance through the end of 2021 assuming the continuation of the operating and financial strategy employed in the first three quarters of the year, along with the Committee’s assessment of the achievement to date of the strategic evaluation component. Projected performance under the bonus metrics, as forecast through the end of 2021, compared to the 2021 performance goals was as follows:
COTERRA• 2022 PROXY STATEMENT | 41 |
(1) | Each of the performance metrics were scored by the Committee in September 2021 by using actual performance year-to-date and projected performance through December 31, 2021, as provided in the Merger Agreement. When projecting performance through the end of the year for each metric, the Committee assumed that the pre-merger operating and financial practices and strategy of Cabot Oil & Gas Corporation continued through the end of the year and did not take into account any impacts of the Merger on those projected operating or financial results. | (2) | Finding costs for all sources are not measures calculated in accordance with generally accepted accounting principles (GAAP). The Company is unable to provide a reconciliation of the projected full-year finding costs for all sources, a forward-looking non-GAAP financial measure, to the most directly comparable GAAP financial measure without unreasonable efforts. This inability results from the inherent difficult in reconciling results of Cabot on a standalone, pre-merger basis to that of the Company post-merger. | (3) | ROCE is not a measure calculated in accordance with generally accepted accounting principles (GAAP). The Company is unable to provide a reconciliation of the projected full-year ROCE, a forward-looking non-GAAP financial measure, to the most directly comparable GAAP financial measure without unreasonable efforts. This inability results from the inherent difficult in reconciling results of Cabot on a standalone, pre-merger basis to that of the Company post-merger. | (4) | Free cash flow is not a measure calculated in accordance with generally accepted accounting principles (GAAP). The Company is unable to provide a reconciliation of the projected full-year free-cash flow, a forward-looking non-GAAP financial measure, to the most directly comparable GAAP financial measure without unreasonable efforts. This inability results from the inherent difficult in reconciling results of Cabot on a standalone, pre-merger basis to that of the Company post-merger. For a reconciliation of the actual full-year free cash flow to the nearest GAAP financial measure, see Appendix A. |
As depicted above, the results of the bonus metrics as of September 30, 2021, and for projected year-end 2021, were that the total proved reserve metric and finding cost metric fell just short of the target expectations, while the absolute production level and the total unit cost achieved target expectations. Due to the strength of the rising commodity prices throughout the year and the continued strong outlook for the remainder of 2021, the two financial metrics—free cash flow and return on capital employed—both exceeded the maximum performance levels established by the Committee of 200% of the target goal. Based solely on these six quantitative bonus metrics, the bonus payout would have been approximately 147% of target. For the strategic evaluation component of the bonus, the Committee considered management performance factors including management’s strategic decision to pursue and close the Merger with Cimarex and the extraordinary effort involved in achieving the business objectives while managing the transaction, along with the countervailing market influences for the industry, including supply and demand fundamentals. The result of this analysis was that the Committee awarded the strategy component at a level above target, but less than the 147% of target level calculated for the quantitative metrics, bringing the total bonus pool for all eligible employees to a 175% payout.
Former CEO 2021 Bonus Payout
The Committee determined Mr. Dinges’s 2021 annual cash incentive bonus based on actual Company performance, the results of the 2021 bonus plan formula described above and the Board’s annual CEO performance evaluation. The independent directors of the Board discuss and ratify the CEO’s annual cash incentive bonus payment, considering the factors stated above and any factors relating to performance that were particularly significant in the year in question. For 2021, the terms of the Merger Agreement provided for the Committee to determine the level of achievement for the 2021 bonus before the effective time of the Merger and paid out in the first quarter of 2022, on the usual schedule.
For 2021, the legacy Cabot committee noted in particular:
• | The extraordinary achievement of negotiating and signing the Merger Agreement with Cimarex and receiving approval of the transaction from the Cabot shareholders holding 99% of the outstanding Cabot common stock; | • | The prudent and effective action taken by the Company in response to the COVID-19 pandemic, which allowed the Company to safely carry out its business plan with no disruptions; | • | The Company’s repayment of current debt maturities totaling $188 million before the effective time of the Merger, delivering an under-leveraged balance sheet as part of the combination; and | • | Mr. Dinges’ leadership in the integration of the two legacy companies and the retention through the effective time of the Merger of all critical leadership personnel from legacy Cabot. |
The Committee evaluated these factors and concluded that Mr. Dinges’ leadership had provided the Company a solid foundation for 2021 and beyond and approved the former CEO’s bonus payout for 2021 at 175% of target. The bonus payout for the other legacy Cabot NEOs was also approved at 175% of target. See “Executive Compensation–Summary Compensation Table” below for actual bonuses paid to the legacy Cabot NEOs. In February 2022, the Committee certified these awards for payment.
Long-Term Incentive Awards
As part of its ordinary 2021 annual compensation practices, the Committee continued its established practice of awarding two types of performance shares—TSR performance shares and hybrid performance shares—to provide long-term incentives to the legacy Cabot NEOs.
The award allocation to the legacy Cabot NEOs in 2021 was designed to provide 60-65% of the targeted grant-date value from TSR performance shares and 35-40% from hybrid performance shares, which are time-vested, subject to a performance condition. The total size of each officer’s long-
COTERRA• 2022 PROXY STATEMENT | 42 |
term incentive awards was based on a number of factors, including peer group and related industry competitive practice, which was used as a point of reference to gauge appropriate total compensation levels for a company of Cabot’s size, business complexity and growth profile. The Committee did not typically consider prior period long-term incentive awards, such as the amount of equity previously granted and outstanding, or the number of shares owned, when determining annual long-term incentive awards. All long-term incentives awarded to the legacy Cabot NEOs in 2021 were granted under the 2014 Incentive Plan.
TSR Performance Shares
The Committee awarded performance shares based on the Company’s total shareholder return relative to that of its peers to provide a strong link between the performance of the executives and their pay, as opposed to other types of equity awards, such as stock options, that may not provide such link. The Committee also determined that a relative comparison of performance against peers over a three-year period, as opposed to a single year, provides a better evaluation of how management performed under changing economic conditions. For these reasons, the Committee determined that TSR performance share awards are a good measure of performance versus the peer group and appropriately link stock performance and compensation. To allow for payouts in excess of target without excessive dilution or the need to reserve shares in excess of target, all payouts in excess of 100% of target were to be paid in the cash value of the shares, based on the closing trading price of our Common Stock on the last day of the performance period and the 2021 TSR Performance Shares were subject to a “negative TSR” modifier that could reduce the number of each award’s earned performance shares if the Company’s actual TSR performance is negative over the three-year performance period and the base calculation indicates an above-target pay outcome. For additional information about the 2021 awards of TSR performance shares, see the table “Grants of Plan-Based Awards” below.
Hybrid Performance Shares
Due to restricted stock share limitations under the 2014 Incentive Plan and consistent with its focus on performance, in 2021 the Committee again awarded hybrid performance shares instead of restricted stock. The 2021 hybrid performance shares had a three-year performance period from the date of grant, with 25% vesting in each of the first two years and 50% vesting in the third year, provided the Company has $100 million or more operating cash flow in the fiscal year prior to the vesting date. Hybrid performance shares have less inherent risk of achieving the performance metric than the TSR performance shares and therefore enhance the overall retentive goals of the long-term incentive program. For additional information about the 2021 hybrid performance shares, see the table “Grants of Plan-Based Awards” below.
Determination of TSR Performance Shares and Hybrid Performance Shares Payout
Pursuant to the terms of the Merger Agreement, at the effective time of the Merger all outstanding long-term incentive awards held by legacy Cabot executive officers who were party to a change-in-control agreement with Cabot, which included the legacy Cabot NEOs, were accelerated at the greater of the target level of performance and the level determined or certified by the Committee based on the results achieved during the applicable performance period, with the applicable performance period deemed to end on the latest practicable date prior to the effective time of the Merger. The Committee met in September 2021 to certify the results of the awards, and as a result, at the effective time of the Merger and based on the terms of the Merger Agreement, all unvested TSR performance shares and Hybrid performance shares held by the legacy Cabot executive officers vested on October 1, 2021, at the target level.
Merger-Related Long-Term Incentive Awards
In December 2021, the Committee approved long-term incentive awards for legacy Cimarex NEOs and other legacy Cimarex officers as provided in the Merger Agreement and as consistent with the legacy Cimarex practice of granting long-term performance awards in December of each year. The values of the December 2021 awards to the legacy Cimarex executives were equal to December 2020 grant values for each executive made by Cimarex.
The Committee chose to structure all of the long-term incentive awards granted in December 2021 to legacy Cimarex officers, including the legacy Cimarex NEOs, in the form of time-based restricted stock with three-year cliff vesting on December 1, 2024. This form of award was selected for several reasons, including: (1) the December 1st timing of the award required by the Merger Agreement coming so soon after the closing of the Merger and before a new peer group or performance metrics for the combined company could be established; (2) the challenge of structuring an off-cycle award as a performance award with a performance period that may differ from the ongoing annual awards’ performance period or terms; (3) the transitory nature the award, being so close in time to the annual award grant, which would occur in February and which would include awards that were at least 50% performance-based, and (4) retention of key employees.
Pursuant to the terms of these award agreements, the awards will generally be forfeited if the legacy Cimarex NEOs are not continuously employed through the vesting date, except the awards will become fully vested upon a change in control of the Company or upon the termination of either of Messrs. Jorden’s or Bell’s employment due to their death or disability. Additionally, pursuant to the terms of Mr. Bell’s award agreement, if his employment with the company is terminated without cause or he resigns for good reason, Mr. Bell will vest in a prorated portion of his award based upon the number of days that have elapsed from December 1, 2021, through his
COTERRA• 2022 PROXY STATEMENT | 43 |
termination date, over the full vesting period. If Mr. Jorden’s employment is terminated for such reason during the Jorden Employment Period, these awards will vest in full pursuant to the terms of the Jorden Letter Agreement. See the “—2021 Compensation Decisions—Merger-Related Compensation Decisions—Compensation Arrangements with Thomas E. Jorden” for additional information on the accelerated vesting provisions under the Jorden Letter Agreement.
Consistent with legacy Cimarex time-based restricted stock awards, dividends are paid on the awards to the legacy Cimarex officers when dividends are paid on the Company’s common stock.
Also in December 2021, the Committee approved long-term incentive awards for two legacy Cabot NEOs, Mr. Lindeman and Mr. Stalnaker, to promote pay equity among the executive officer group. The terms of the awards to Messrs. Lindeman and Stalnaker were established by the Committee to coincide with the hybrid performance shares granted to the legacy Cabot NEOs in 2021 and previous years, with the exception that the vesting schedule for the December awards was established as a three-year cliff vesting if the Company has an average of $100 million or more of operating cash flow per twelve-month period beginning each October 1st and ending each September 30th during the three year performance period ending September 30, 2024, which is the date of the last fiscal quarter end prior to three years from the December 12, 2021 grant date. These awards will become fully vested upon a change in control of the Company. Consistent with legacy Cabot equity awards, dividends are accrued and paid at the time that the awards vest and shares are delivered to the legacy Cabot NEOs.
The following table summarizes the awards approved in December 2021:
| | Number of | | | Restricted | | Grant Date Fair | Stock Award | Name | Value of Award | Shares | Stephen P. Bell | $ 3,000,000 | 146,628 | Thomas E. Jorden | $ 10,000,000 | 488,759 | Steven W. Lindeman | $ 750,000 | 36,657 | Philip L. Stalnaker | $ 750,000 | 36,657 |
The long-term incentive awards granted in December 2021 described above are the only unvested long-term incentive awards currently held by the NEOs other than Mr. Jorden, whose legacy Cimarex awards did not accelerate on the effective time of the Merger, as provided in the Jorden Side Letter. The Committee anticipates that all executive officers, including the NEOs, will receive annual long-term incentive awards in February 2022 and every year thereafter, with at least 50% of the value in performance-based awards.
The following chart illustrates how the two legacy companies merged their LTI grant practices following the Merger. Legacy Cimarex granted long-term incentive awards in December of each year and legacy Cabot granted long-term incentive awards in February of each year. While the December 2021 awards to legacy Cimarex executives were made under the combined company, the timing was consistent with legacy Cimarex awards and was not an additional award related to the Merger.
COTERRA• 2022 PROXY STATEMENT | 44 |
Personal Benefits and Perquisites
The Committee periodically reviews the level of perquisites and other personal benefits provided to the NEOs. In 2021 we provided the legacy Cabot NEOs with limited perquisites and other personal benefits that the Company and the Committee believe are reasonable and consistent with the overall compensation program to better enable us to attract and retain superior employees for key positions. In an effort to promote physical and financial health of the NEOs, in 2021 the legacy Cabot NEOs were reimbursed for expenses incurred in connection with club membership dues, a Company-paid physical examination for the NEO and his or her spouse, a financial and tax planning stipend of up to $3,000 annually, life insurance, and spouse travel to certain business meetings. Following the Merger, pursuant to the term of the Merger Agreement, the legacy Cimarex NEOs were provided with the same level of perquisites and other personal benefits provided to the legacy Cimarex NEOs under the Cimarex policies prior to the Merger, which included the provision of financial and estate planning services, annual medical examinations, reserved parking and insurance premiums. The aggregate cost to the Company of the perquisites and personal benefits described above for the NEOs for 2021 are included under “All Other Compensation” in the Summary Compensation Table below.
ALIGNING 2022 COMPENSATION PROGRAM WITH BEST PRACTICES
In February and March 2022, the Committee adopted Coterra’s first post-Merger executive compensation program. The 2022 executive compensation program is designed to align with governance best practices, shareholder expectations and Coterra’s business strategy as a combined company. The highlights of the 2022 executive compensation program include the following:
Awarded 100% performance-based long-term incentives to the CEO
| • | Following Mr. Jorden’s December 2021 grant of time-based restricted stock units representing the legacy Cimarex annual award, the Committee approved 100% performance-based awards in February 2022 so that the average of Mr. Jorden’s 2021 and 2022 annual grants is at least 50% performance-based | | • | The Committee expects Mr. Jorden’s annual long-term incentive grants in 2023 and beyond to be consistent with the other NEOs’ 2022 grants, which consisted of 60% performance-based awards |
• | Added two broad market indices to executives’ long-term performance awards that are based on relative TSR, reflecting Coterra’s willingness to compete with investment dollars across industries | • | Capped relative TSR award payout at 100% of target if Coterra’s TSR is negative over the performance period | • | 55th percentile relative TSR performance required to receive target payout | • | Adopted three-year cliff vest on time-based RSUs, strengthening retention and alignment with shareholders | • | Aligned short-term incentive plan metrics with Coterra’s value proposition communicated to shareholders when seeking approval of the Merger |
| • | Focused incentives on return on invested capital, free cash flow, and ESG goals related to emissions reduction targets | | • | Reduced the overall maximum plan payout from 250% to 200% of target | | • | Removed the conditional multiplier from the short-term incentive calculation |
No salary increases for the CEO and Executive Chairman; market-based adjustments for other NEOs who had not received salary increases since 2019
OTHER COMPENSATION POLICIES
We offer all our employees, including the NEOs, industry competitive benefits including medical and dental reimbursement, short-term and long-term disability plans, basic life and accident insurance and an employee assistance program. We offer a retirement program consisting of both qualified and nonqualified defined contribution savings plans. See “Elements of Post-Termination Compensation” below for further descriptions of these programs.
COTERRA• 2022 PROXY STATEMENT | 45 |
Impact of Regulatory Requirements
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the amount that a public company may deduct for compensation paid to its principal executive officer, principal financial officer, any of its three other most highly compensated executive officers for the taxable year (other than the principal executive officer or the principal financial officer) (collectively the “covered employees”). The group of covered employees also includes certain employees once considered a covered employee, who continue to receive compensation from the Company. For certain grandfathered arrangements in effect as of November 2, 2017, this limitation does not apply, for example to compensation that is paid only if the covered employees performance meets pre-established objective goals based on performance criteria approved by stockholders. We strive to take action, where possible and considered appropriate, to preserve the deductibility of compensation paid to our executive officers. However, other than certain grandfathered arrangements, compensation paid to our expanded group of covered employees will be subject to a $1 million annual deduction limitation. Although the deductibility of compensation is a consideration evaluated by the Committee, the Committee believes that the lost deduction on compensation payable in excess of the $1 million limitation is not material relative to the benefit of being able to attract and retain talented management. We have also awarded compensation that might not be fully tax deductible when such grants were nonetheless in the best interest of the Company and our stockholders. Accordingly, the Committee will continue to retain the discretion to pay compensation that is subject to the $1 million deductibility limit.
Clawback Policy
The Company has adopted a “clawback” policy to allow the Company to recoup paid compensation from current or former executive officers in the event of a material financial statement restatement if the executive’s intentional misconduct caused, in whole or in part, the restatement. The amount of compensation recouped would be that which the executive would not have received if the financials had been properly reported at the time of first public release or filing with the SEC. Both cash and all types of equity compensation are covered by the policy. Our 2014 Incentive Plan and the legacy Cimarex incentive plans provide that any award made pursuant to the plan be subject to any applicable clawback policy, so by accepting any award under those plans, each executive has agreed to be bound by the applicable policy. The Committee believes that this clawback policy furthers the interests of the Company and shareholders in preventing an executive from being unjustly enriched through misconduct that results in a financial restatement that harms all shareholders. The Committee will continue to monitor the actions of the SEC with regard to the proposed regulations implementing the clawback provisions of Section 954 of the Dodd-Frank Wall Street Consumer Protection Act and will take action to amend the policy to comply with any such regulations, as necessary, when they are finalized.
Elements of Post-Termination Compensation
Following the closing of the Merger on October 1, 2021, the Committee began to evaluate and integrate the designs of the compensation programs enacted by the legacy Cabot and legacy Cimarex compensation committees, including the elements of post-termination compensation offered by each. That evaluation and integration has continued into 2022. Until we complete the full integration of those programs, our NEOs may continue to participate in some of their respective legacy company’s programs. The programs of both Cabot and Cimarex that were assumed or continued by Coterra after the effective time of the Merger are described below.
Retirement Compensation
Cabot Savings Investment Plan
The Cabot Oil & Gas Corporation Savings Investment Plan (the “Cabot“Coterra 401(k) Plan”), is a tax-qualified retirement savings plan, or 401(k) plan, in which all legacy Cabot employees, including the legacy Cabot NEOs,named executive officers, may participate. It allows participants to contribute the lesser of up to 50%100 percent of their annual salary, or the limit prescribed by the Internal Revenue Service, on a pre-tax basis. We match 100%100 percent of the first six percent of a participant’s eligible pre-tax contribution. Participants are 100% vested in the Company’s contributions after three years of service, vesting 33% in the first year, 66% in the second year and 100% in the third year.
During 2021,In addition, during 2023, the Company contributed 10%10 percent of salary and bonus of all eligible legacy Cabot employees, including all legacy Cabot NEOs,named executive officers, into the CabotCoterra 401(k) planPlan (or into the nonqualified deferred compensation plan to the extent in excess of the qualified plan limits). Participants are 100%100 percent vested in the Company’s contributions after three years of service, vesting 33%33 percent in the first year, 66%66 percent in the second year and 100%100 percent in the third year. The Company’s contribution iscontributions are approved annually by the Board of Directors.
Cimarex 401(k)
Coterra Deferred Compensation PlanUpon
The Coterra Energy Inc. Deferred Compensation Plan, formerly known as the effective time of the Merger, Coterra assumed the Cimarex Energy Co. 401(k) defined contribution retirement plan (“Cimarex 401(k) Plan”). Legacy Cimarex employees, including the legacy Cimarex NEOs, are eligible to participate in the Cimarex 401(k) Plan. Coterra matches dollar-for-dollar employee contributions to the Cimarex 401(k) Plan up to 7% of the employee’s cash compensation, subject to limits imposed by the Internal Revenue Code. The Board is authorized to make profit-sharing contributions under the Cimarex 401(k) Plan. In December 2021, the Board determined that a 2021COTERRA• 2022 PROXY STATEMENT | 46 |
profit-sharing contribution in the amount of 4% of the 2021 gross pay, including overtime, of each legacy Cimarex employee that was an eligible participant under the Cimarex 401(k) Plan, subject to applicable federal income limitations.
Cabot Deferred Compensation Plan, The nonqualified deferred compensation plan provides supplemental retirement income benefits for our NEOs,named executive officers, other officers and other key employees, through voluntary deferrals of salary bonus and certain long-term incentives.bonus. It also allows for the Company to provide itsthe full six10 percent match and 10% non-elective contribution when contributions of the matching amount cannot be made to ourthe Coterra 401(k) planPlan due to federal income tax limitations. The plan allows the officers to defer the receipt and taxation of income until retirement from the Company. We make no additional contributions to, nor do we pay in excess of market interest rates on, the deferred compensation plan. Amounts deferred by an officer under the deferred compensation plan are held and invested by the Company in various mutual funds and other investment options selected by the officer at the time of deferral. For additional information about the deferred compensation plan, including the investment options and the manner of distributions, see “Nonqualified Deferred Compensation” tableon page 44 below.
Cimarex Supplemental Savings Plan
Eligible legacy Cimarex
Personal Benefits and Perquisites The Compensation Committee periodically reviews the level of perquisites and other personal benefits provided to the named executive officers. In 2023 we provided the named executive officers with limited perquisites and other personal benefits that the Company and the Compensation Committee believe are reasonable, consistent with the overall compensation program, promote a healthy and productive workforce and provide protection to the organization. In 2023, the named executive officers were provided a Company-paid medical examination for the named executive officer, financial, tax and estate planning, supplemental life insurance to bridge certain coverage limitations under our standard policies (consistent for all employees of two times annual earnings up to $1.5 million), and spouse travel to certain business meetings. The aggregate cost to the Company of the perquisites and personal benefits described above for the named executive officers for 2023 are included under “All Other Compensation” in the Summary Compensation Table below. Other Compensation Policies We offer all our employees, including the legacy Cimarex NEOs, who had so elected, were at the effective time of the Merger participating in the Cimarex Energy Co. Supplemental Savings Plan (“Cimarex SSP”). Under the terms of the Cimarex SSP, participants could make an elective contribution of an amount that exceeds the maximum amount permitted to be contributed to his or her account in the Cimarex 401(k) plan (an “excess contribution”), provided that the excess contribution did not exceed the dollar limitation on elective deferrals under the internal Revenue Code Section 402(g) in effect of January 1 of the calendar year of deferral (2021 limitation was $19,500). Cimarex matched 100% of the excess contributions up to 7% of a participant’s eligible compensation. A participant could also elect to have up to 50% of his or her base salary and up to 100% of his or her bonus withheld from his or her compensation. Cimarex did not match those contributions.In connection with the Merger, the Cimarex SSP was liquidated effective October 1, 2021 and all account balances distributed to the participants, including the legacy Cimarex NEOs, but the plan remained effective for elections through the end of 2021, including deferral elections for the 2021 bonuses paid by Coterra to the legacy Cimarex NEOs in March 2022.
Retiree Medical Coverage
The legacy Cabot NEOs are eligible for certain health benefits for retired employees, including their spouses, eligible dependents and surviving spouses. The health care plans are contributory with participants’ contributions adjusted annually. Employees become eligible for this benefit if they meet certain age and service requirements at retirement. All of the legacy Cabot NEOs were retirement eligible on December 31, 2021.
Change-in-Control and Severance Agreements
The Committee generally views the potential payments and benefits under change-in-control and severance agreements as a separate compensation element because such payments and benefits are not expected to be paid in a particular year and serve a different purpose for the executive other than elements of compensation. Accordingly, those payments and benefits do not significantly affect decisions regarding other elements of compensation.
The consummation of the Merger on October 1, 2021 constituted a “change-in-control” under the change-in-control agreements between Cabot and the legacy Cabot executives, including the legacy Cabot NEOs, and the severance compensation agreements between Cimarex and the legacy Cimarex NEOs, which severance compensation agreements were assumed by Coterra at the effective time of the Merger. The terms of these various agreements were determined by the Committee and the Cimarex compensation committees, respectively, and are discussed separately below.
Legacy Cabot Change-in-Control Agreements
All legacy Cabotnamed executive officers, including the legacy Cabot NEOs, entered into change-in-control agreements with Cabot upon their appointment as executive officers that provide for cash payments and certain otherindustry competitive benefits in the event that the executive is actually or constructively terminated within two years of a change-in-control event. The cash payments included three times the sum of base salary and the highest bonus paid in the last three years or targeted to be paid in the year of termination and payment of a target bonus for the fiscal year of termination, prorated for the actual days served. Benefits included continued eligibility forincluding medical, dental and vision benefits, salary continuation for short-term leave of absences and long-term disability plans, basic life and accident insurance for three years, provided the executive pays the premiums, limited outplacementand an employee assistance program. We offer a retirement program consisting of both qualified and tax gross-up on excise taxes for agreements that were in place priornonqualified defined contribution savings plans and have a retirement policy pursuant to 2010. In 2010, the Committee adopted a policy to exclude excise tax gross-up provisions for change-in-control agreements adopted after that date. The agreements also provided for accelerated vesting of allwhich certain equity awards immediately upon a change-in-control, subject, in the case of the TSR performance shares,may remain outstanding and eligible to the level of the Company’s TSR performance relative to its peers as of the last day of the month immediately preceding the month in which the change-in-control event occurs.
When originally approving the change-in-control agreements, the Committee reviewed data regarding similar plans within the peer group and the Company’s industry generally and applied its judgment to determine whether triggering events and benefit levels under these agreements were necessary to meet the Committee’s objectives of encouraging such employees to remain with the Company in the event of a change-in-control and during circumstances suggesting a change-in-control might occur. The Committee believes this program was important in recruiting and retaining strong leadership and in encouraging retention in these situations.
In May 2021, in conjunction with the execution of the Merger Agreement, the Cabot board approved a clarification to the
COTERRA• 2022 PROXY STATEMENT | 47 |
definition of “change-in-control” in the existing legacy Cabot executives’ change-in-control agreements to specifically include as a change-in-control event the legal structure of the Merger as provided in the Merger Agreement. The legacy Cabot Committee determined that this action was not an expansion of the NEO’s rights under the existing change-in-control agreements, but merely captured the intent of the Committee when originally adopting the change-in-control agreements to provide the legacy Cabot executives with those benefits in transactions such as the Merger when they would likely experience adverse changes in their positions and that the clarification was consistent with the terms of the Merger Agreement that contemplated that legacy Cabot executives would experience a change in control at the effective time of the Merger.
As contemplated by the Merger Agreement, in order to keep executive management of the Company focused on the ongoing success of the business and the integration efforts of the two legacy companies and to retain them for a minimum period following the effective time of the Merger, in September 2021 the legacy Cabot NEOs other than Mr. Dinges entered into the Termination Letters. See above “—Termination of Legacy Cabot Change-in-Control Agreements.” The Committee believes that these Termination Letters lessened the potential impact that the former change-in-control agreements may have had on the continuity of the management team of the Company following the Merger.
After the effective time of the Merger, none of the legacy Cabot executives other than Mr. Dinges have continuing change-in-control benefits. Mr. Dinges’ change-in-control agreement, as described above, remains in full force and effect, and pursuant to the Dinges Agreement, he will receive his full change-in-control benefits at the end of the Dinges Employment Period. See “Merger-Related Compensation Decisions—Compensation Arrangements with Dan O. Dinges” above.
Legacy Cimarex Severance Compensation Agreements
Each of the legacy Cimarex NEOs, including Mr. Jorden, is party to a severance compensation agreement which provides for certain severance benefits upon a termination of employment by Coterra other than for “cause” or a termination by the executive officer for “good reason”, including severance benefits if the qualifying termination occurs within two yearsvest following a change-in-control. The Merger constituted a change-in-control under the severance compensation agreements. The terms of the severance compensation agreements are reflective of compensation decisions of the legacy Cimarex compensation committee.
The severance compensation agreements provide for the following benefits upon a qualifying termination within two years following a change-in-control, or with respect to Mr. Jorden, during the Jorden Employment Period (as described above in “Merger-Related Compensation Decisions— Compensation Arrangements with Thomas E. Jorden”):
• | a pro-rated annual bonus for the number of days in the calendar year of termination through the date of termination, based on the average of the executive officer’s last two annual bonuses and paid in a lump sum at the same time that bonuses are paid to active employees; | • | an amount equal to the product of two times (three times for Mr. Jorden) the executive officer’s “annual average compensation” (meaning the sum of (1) the executive officer’s annual base salary received during the 24 months prior to his date of termination, disregarding any temporary reduction implemented by Cimarex in 2020, and (2) the amount of cash incentive awards received by the executive officer during the 24 months prior to the executive officer’s date of termination, divided by two); and | • | continued medical, dental, vision, disability and life insurance benefits for the executive officer and the executive officer’s dependents for 24 months (36 months for Mr. Jorden) following the date of termination as though the executive officer’s employment had not been terminated. |
In connection with the Merger, on May 23, 2021, Cimarex entered into amendments to the severance compensation agreements with each executive officer other than Mr. Jorden, to revise the definition of “good reason” under such agreements. The revised definition includes a material diminution of the executive officer’s duties or responsibilities, authorities, powers or functions; a material reduction in the executive officer’s long-term incentive compensation opportunity; or a required relocation of more than 50 miles from the executive officer’s principal place of business location (other than a relocation to the Midland, Texas or Tulsa, Oklahoma metropolitan areas in connection with a move of Cimarex’s corporate headquarters to such area).
The severance compensation agreements contain a Section 280G “best-net” cutback provision, which provides that, if the total payments to the executive officer under his severance compensation agreement would exceed the applicable threshold under Section 280G of the Code, then those payments will be reduced to the applicable threshold to avoid the imposition of the excise taxes under Section 4999 of the Code in the event such reduction would result in a better after-tax result for the executive officer. Because of the structure of the Merger, Section 280G did not apply to legacy Cimarex officers in connection with the Merger. The severance compensation agreements also contain perpetual confidentiality covenants and one-year post-termination non-competition and non-solicitation covenants.
In connection with the Merger, Mr. Jorden entered into the Jorden Letter Agreement and the Jorden Side Letter Agreement providing for the modifications to Mr. Jorden’s severance agreement. The Jorden Letter Agreement provides that Mr. Jorden’s severance compensation agreement will remain in full force and effect following the Merger, except that the length of the “change-in-control” period thereunder will be for the duration of the Jorden Employment Period. The Jorden Letter Agreement also revises the definition of “good reason” under such agreement to also include a diminution of Mr. Jorden’s duties or responsibilities authorities, powers
COTERRA• 2022 PROXY STATEMENT | 48 |
2024 PROXY STATEMENT37
or functions, the failure of the Coterra board to nominate him for election to the Coterra board, a reduction in his annual long-term incentive award opportunity contained in the Jorden Letter Agreement, or a required relocation to any location other than Houston, Texas. Upon the expiration of the Jorden Employment Period, if Mr. Jorden’s employment with Coterra is continuing, then he and Coterra will enter into a change-in-control agreement that is consistent with, and no less favorable than, the change-in-control agreements then applicable to other executive officers of Coterra. For a description of the other terms of the Jorden Letter Agreement and the Jorden Side Letter, see “Merger-Related Compensation Decisions— Compensation Arrangements with Thomas E. Jorden” above.
COMPENSATION GOVERNANCE Meaningful Stock Ownership Guidelines The GSRGovernance and Social Responsibility Committee and the Board of Directors have adopted the following stock ownership guidelines for our executive officers and directors. Under those guidelines, nonemployee | Role | | | | Stock Ownership Guideline | | | Chief Executive Officer | | | | 6× annual base salary | | | Other Executive Officers | | | | 3× annual base salary | | | Non-Employee Directors | | | | 5× annual cash retainer | |
Non-employee directors are expected to hold stock having a market value or cost basis, whichever is greater, of at leasthave five times the current annual cash retainer paid to nonmanagement directors. The Chief Executive Officer is expected to hold shares of the Company’s Common Stock with a market value or cost basis, whichever is greater, equal to a minimum of six times his or her annual base salary. All otheryears from their initial election, and executive officers who reporthave three years from their initial appointment to their position, to comply with these guidelines. Unvested restricted stock and unvested restricted stock units may be counted in calculating ownership, but options and unvested performance-based awards may not be counted toward the CEO are expected to hold shares of the Company’s Common Stock with a market value or cost basis, whichever is greater, equal to a minimum of three times their annual base salary.ownership minimum. No sales will be approved if such sale would cause the executive officer’s holdings to go below the minimum required shares. Executiveshares except where necessary to pay income taxes related to equity awards. Clawback Policy The Company has adopted a “clawback” policy that describes circumstances in which the Company will determine and recover erroneously awarded compensation received by current and former executive officers have three yearsin connection with certain accounting restatements, regardless of fault or misconduct. Both cash and all types of equity compensation that are granted, earned or vested based wholly or in part upon the attainment of “financial reporting measures” that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures that are derived wholly or in part from their datessuch measures, are covered by the clawback policy. The Compensation Committee believes that this clawback policy furthers the interests of electionthe Company and stockholders in preventing an executive from being unjustly enriched through a financial restatement. The 2023 Plan, the Cabot Oil & Gas Corporation 2014 Incentive Plan, or Prior Cabot Plan, and the legacy Cimarex incentive plans provide that any award made pursuant to comply with these requirements. Unvested restricted stock and unvested restricted stock units maysuch plan be counted in calculating ownership, but options and unvested performance based awards may notsubject to any applicable clawback policy, so by accepting any award under those plans, each executive has agreed to be counted towardbound by the ownership minimum.clawback policy. We have a policy prohibiting directors and officers from speculative trading in Company securities, including hedging transactions, short selling, and trading in put options, call options, swaps or collars. To our knowledge, all directors and executive officers are in compliance with the policy. The Company’s policy also requires that all employees provide notice and obtain pre-approval before engaging in hedging activities in our stock and any such request for approval will only be considered with a valid justification.EXECUTIVE COMPENSATION BUSINESS RISK REVIEW
Executive Compensation Business Risk Review The ownership stake in the Company provided by our equity-based compensation, the extended vesting periods of these awards and our stock ownership guidelines are designed to align the interests of our NEOsnamed executive officers with our shareholders,stockholders, maximize performance and promote executive retention. Management reviews all incentive and equity programs. At the same time, the Compensation Committee believes, with the concurrence of our independent consultant, that our executive compensation program does not encourage management to take unreasonable risks related to the Company’s business. The factors that support this conclusion are our focus on long-term incentive compensation, our use of balanced long-term incentives, metric diversification, and capped opportunities in our annual bonus plan and long-term incentives, and our stock ownership guidelines.
Tax Deductibility of Executive Compensation Section 162(m) of the Internal Revenue Code of 1986, as amended, places a limit of $1.0 million on the amount of compensation that we may deduct in any one year with respect to compensation paid to each covered employee. While the Compensation Committee considers the deductibility of compensation in its decision making, the Compensation Committee implements compensation programs that it believes are competitive and attract and retain talented management, which the Compensation Committee believes is in the best interests of the Board of Directors shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’s proxy rules, except for the required disclosure in this Proxy Statement, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934 (“Exchange Act”),Company and the information shall not be deemed to be incorporated by reference into any filing made by the company under the Securities Act of 1933 or the Exchange Act.its stockholders. COMPENSATION COMMITTEE REPORT The Compensation Committee of the Board of Directors has reviewed and discussed with management the abovepreceding Compensation Discussion and Analysis. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statementproxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for filing with the SEC.2023. The Compensation Committee Paul N. Eckley (Chair)
Amanda M. Brock
Hans Helmerich
Marcus A. Watts February 28, 2022COTERRA• 2022 PROXY STATEMENT | 49 |
Compensation Committee Interlocks and Insider Participation EXECUTIVE COMPENSATION
During the year ended December 31, 2023, the Compensation Committee was composed of the four independent directors listed above, none of whom is an employee or a current or former officer of the Company. Except as disclosed in “Governance—Board and Committee Governance—Director Independence” and “—Related Person Transactions” above, no member of the Compensation Committee has had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K under the Exchange Act. In addition, none of our executive officers served on the board of directors or compensation committee of any entity that had one or more of its executive officers serving on the Board or our Compensation Committee.
COMPENSATION TABLES SUMMARY COMPENSATION TABLE The table below summarizes the total compensation paid to or earned by each of our NEOsnamed executive officers for the year ended December 31, 2021. Cash bonus2023. | Name and Principal Position | | | | Year | | | | Salary ($) | | | | Bonus ($) | | | | Stock Awards ($)(1) | | | | Option Awards ($) | | | | Non-Equity Incentive Plan Compensation ($)(2) | | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | | | All Other Compensation ($)(3) | | | | Total ($) | | | Thomas E. Jorden Chief Executive Officer and President | | | | | | 2023 | | | | | | | 1,125,000 | | | | | | | — | | | | | | | 11,071,724 | | | | | | | — | | | | | | $ | 2,000,000 | | | | | | | — | | | | | | | 351,129 | | | | | | $ | 14,547,853 | | | | | | 2022 | | | | | | | 1,103,366 | | | | | | | — | | | | | | | 12,554,661 | | | | | | | — | | | | | | | 1,462,500 | | | | | | | — | | | | | | | 182,870 | | | | | | | 15,303,397 | | | | | | 2021 | | | | | | | 301,673 | | | | | | | — | | | | | | | 10,000,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 760,266 | | | | | | | 11,061,939 | | | | Shannon E. Young III(4) Executive Vice President and Chief Financial Officer | | | | | | 2023 | | | | | | | 290,923 | | | | | | | 100,000 | | | | | | | 4,579,816 | | | | | | | — | | | | | | | 780,000 | | | | | | | — | | | | | | | 60,215 | | | | | | | 5,810,953 | | | | Stephen P. Bell Executive Vice President—Business Development | | | | | | 2023 | | | | | | | 577,692 | | | | | | | — | | | | | | | 3,321,502 | | | | | | | — | | | | | | | 840,000 | | | | | | | — | | | | | | | 200,636 | | | | | | | 4,939,830 | | | | | | 2022 | | | | | | | 543,346 | | | | | | | — | | | | | | | 3,459,843 | | | | | | | — | | | | | | | 690,000 | | | | | | | — | | | | | | | 80,250 | | | | | | | 4,773,439 | | | | | | 2021 | | | | | | | 149,154 | | | | | | | — | | | | | | | 3,000,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 3,149,154 | | | | Blake A. Sirgo(5) Senior Vice President— Operations | | | | | | 2023 | | | | | | | 452,769 | | | | | | | — | | | | | | | 1,494,694 | | | | | | | — | | | | | | | 630,000 | | | | | | | — | | | | | | | 160,124 | | | | | | | 2,737,587 | | | | Kevin W. Smith(5) Vice President—Chief Technology Officer | | | | | | 2023 | | | | | | | 425,385 | | | | | | | — | | | | | | | 1,494,694 | | | | | | | — | | | | | | | 625,000 | | | | | | | — | | | | | | | 165,830 | | | | | | | 2,710,909 | | | | Scott C. Schroeder Former Executive Vice President and Chief Financial Officer | | | | | | 2023 | | | | | | | 533,385 | | | | | | | — | | | | | | | 4,594,752 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 273,927 | | | | | | | 5,402,064 | | | | | | 2022 | | | | | | | 661,154 | | | | | | | — | | | | | | | 4,786,121 | | | | | | | — | | | | | | | 920,000 | | | | | | | — | | | | | | | 244,041 | | | | | | | 6,611,316 | | | | | | 2021 | | | | | | | 629,009 | | | | | | | — | | | | | | | 4,910,751 | | | | | | | — | | | | | | | 1,210,825 | | | | | | | — | | | | | | | 5,433,674 | | | | | | | 12,184,259 | | | | Christopher H. Clason(5) Former Senior Vice President and Chief Human Resources Officer | | | | | | 2023 | | | | | | | 386,308 | | | | | | | — | | | | | | | 6,173,615 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 169,830 | | | | | | | 6,729,752 | | | | | | 2022 | | | | | | | 470,173 | | | | | | | — | | | | | | | 2,306,569 | | | | | | | — | | | | | | | 600,000 | | | | | | | — | | | | | | | 82,005 | | | | | | | 3,458,747 | | |
(1)
The amounts in this column reflect the grant date fair value with respect to restricted stock units and performance share awards for 2021the relevant fiscal year in accordance with FASB ASC Topic 718. For performance-based awards, the grant date fair value, including the liability component for cash payments over 100 percent of target, was valued using a Monte Carlo model and was based on probable performance paidat the time of grant. Assumptions used in the Monte Carlo model for the performance-based awards, as well as additional information regarding accounting for performance-based awards, are included in Note 13 of the Notes to the legacy Cabot NEOs underConsolidated Financial Statements included in the Company’s 2014 Incentive Plan,Annual Report on Form 10-K. The Monte Carlo model values are used solely for financial reporting purposes and are not used by the Compensation Committee when determining the number of shares underlying each award. When determining the number of shares underlying each performance-based award at target performance, the Compensation Committee divided the approved grant date value of the awards by the closing stock price on the date of grant. The grant date value of the 2023 performance-based awards, assuming maximum performance would have been as follows: Mr. Jorden $10,000,000; Mr. Young $4,000,000; Mr. Bell $3,000,000; Mr. Sirgo $1,350,000; Mr. Smith $1,350,000; Mr. Schroeder $4,150,000; and Mr. Clason $2,000,000. In addition, for Mr. Clason in 2023, this amount includes $3,959,280 in incremental fair value, calculated in accordance with SEC disclosure guidance, related to the August 2023 modification of certain of Mr. Clason’s outstanding equity awards in connection with Mr. Clason’s separation, which remain outstanding, subject to his compliance with certain restrictive covenants. Such amounts do not reflect new equity grants. (2)
The amounts in this column reflect cash incentive awards to the named executive officers. The 2023 cash incentive awards are listeddiscussed in detail above under “Compensation Discussion and Analysis.” Due to Mr. Schroeder’s retirement and Mr. Clason’s separation, in each case, on September 30, 2023, neither Mr. Schroeder nor Mr. Clason earned a 2023 cash incentive award. The amounts of Mr. Jorden’s and Mr. Bell’s 2021 annual bonus of $2,500,000 and $1,012,000, respectively, are is not reflected in the column titled “Non-Equity Incentive Plan Compensation,”table above given that they were determined by the Committee at its September 2021 meetinglegacy Cimarex compensation committee prior to the Merger. (3)
For all named executive officers, the amounts also include some or all of the following: •
Company contributions to retirement savings and deferred compensation plans; •
Premiums paid on executive term disability and life insurance; •
Company matching gifts to qualified non-profit charitable and educational organizations and other charitable contributions; •
Executive physical examination for the named executive officers; and •
Financial tax, and estate planning expenses. Amounts in this column do not include dividends paid on unvested restricted stock awards granted under the legacy Cimarex stock award agreement. The amount of dividends paid on unvested restricted stock awards in 2023 are: Mr. Jorden $1,560,870; Mr. Bell $231,735; Mr. Sirgo $57,185; Mr. Smith $57,185; and Mr. Clason $138,822. Additionally, amounts in this column do not include Mr. Clason’s cash severance payments or benefits as Mr. Clason was required to execute and not revoke a release of claims to receive such payments and benefits and, as a result, Mr. Clason did not become entitled to receive such payments and benefits until 2024. The incremental fair value of the modifications made to Mr. Clason’s equity awards in connection with his separation are reported in the “Stock Awards” column in accordance with the Merger AgreementSEC guidance. (4)
Mr. Young was appointed Executive Vice President and to the extent not deferred by the executive, were paid outChief Financial Officer in the first quarter of 2022. For additional information about non-equity incentive plan compensation, see “Annual Cash Incentive Bonus” above.Name and Principal Position | | Year | | Salary ($) | | Bonus ($)(1) | | | Stock Awards ($)(2) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($)(3) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | All Other Compensation ($)(4) | | Total ($) | Dan O. Dinges Executive Chairman; Former Chairman, President and Chief Executive Officer | | 2021 | | 1,100,006 | | – | | | 10,649,843 | | – | | 2,502,500 | | – | | 302,379 | | 14,554,728 | | 2020 | | 1,142,316 | | – | | | 11,267,676 | | – | | 1,430,000 | | – | | 354,714 | | 14,194,706 | | 2019 | | 1,090,392 | | – | | | 10,441,509 | | – | | 1,930,500 | | – | | 368,525 | | 13,830,926 | Thomas E. Jorden(5) Chief Executive Officer and President | | 2021 | | 301,673 | | – | | | 10,000,000 | | – | | – | | – | | 760,266 | | 11,061,939 | | 2020 | | – | | – | | | – | | – | | – | | – | | – | | – | | 2019 | | – | | – | | | – | | – | | – | | – | | – | | – | Scott C. Schroeder Executive Vice President and Chief Financial Officer | | 2021 | | 629,009 | | – | | | 4,910,751 | | – | | 1,210,825 | | – | | 5,433,674 | | 12,184,259 | | 2020 | | 653,206 | | – | | | 5,121,680 | | – | | 691,900 | | – | | 207,331 | | 6,674,117 | | 2019 | | 623,437 | | – | | | 4,746,113 | | – | | 934,065 | | – | | 212,467 | | 6,516,082 | Stephen P. Bell(6) Executive Vice President, Business Development | | 2021 | | 149,154 | | – | | | 3,000,000 | | – | | – | | – | | – | | 3,149,154 | | 2020 | | – | | – | | | – | | – | | – | | – | | – | | – | | 2019 | | – | | – | | | – | | – | | – | | – | | – | | – | Steven W. Lindeman Senior Vice President, Production and Operations | | 2021 | | 445,012 | | – | | | 2,211,524 | | – | | 623,000 | | – | | 3,237,915 | | 6,517,451 | | 2020 | | 462,132 | | – | | | 1,510,615 | | – | | 356,000 | | – | | 119,725 | | 2,448,472 | | 2019 | | 440,208 | | – | | | 1,406,618 | | – | | 480,600 | | – | | 125,550 | | 2,452,976 | Phillip L. Stalnaker Senior Vice President, Marcellus Business Unit | | 2021 | | 445,012 | | – | | | 2,211,524 | | – | | 623,000 | | – | | 3,217,581 | | 6,497,117 | | 2020 | | 462,132 | | – | | | 1,510,615 | | – | | 356,000 | | – | | 101,571 | | 2,430,318 | | 2019 | | 440,208 | | – | | | 1,406,618 | | – | | 480,600 | | – | | 105,816 | | 2,433,242 | Jeffrey W. Hutton Senior Vice President, Marketing | | 2021 | | 445,012 | | – | | | 1,461,524 | | – | | 623,000 | | – | | 3,255,463 | | 5,784,999 | | 2020 | | 462,132 | | – | | | 1,510,615 | | – | | 356,000 | | – | | 134,097 | | 2,462,844 | | 2019 | | 440,208 | | – | | | 1,406,618 | | – | | 480,600 | | – | | 132,487 | | 2,459,913 |
(1) | Cash bonuses paid to the legacy Cabot NEOs pursuant to the 2014 Incentive Plan for 2021, 2020July 2023 and 2019 annual performance are listed under the column “Non-Equity Incentive Plan Compensation.” | (2) | The amounts in this column for the legacy Cabot NEOs reflect the grant date fair value with respect to TSR and hybrid performance share awards, and for Messrs. Lindeman and Stalnaker, additional restricted stock awards, for the relevant fiscal year in accordance with the FASB ASC Topic 718. The grant date fair value of the hybrid performance share awards was the closing stock trading price on the date of grant. The grant date fair values per share used to compute the amounts in this column for the two types of performance shares are as follows: | | |
COTERRA• 2022 PROXY STATEMENT | 50 |
Grant Date | | Grant Date Fair Value per Share (Hybrid) | | Grant Date Fair Value per Share (TSR) | February 20, 2019 | | $24.95 | | $32.11 | February 19, 2020 | | $15.60 | | $22.33 | February 17, 2021 | | $18.58 | | $23.82 |
| | | The TSR performance shares, including the liability component for cash payments over 100% of target, were valued using a Monte Carlo model. Assumptions used in the Monte Carlo model for the TSR performance share awards, as well as additional information regarding accounting for performance share awards, are included in Note 13 of the Notes to the Consolidated Financial Statements included in the Company’s Form 10-K for the years shown. The Monte Carlo model values for the TSR performance share awards are used solely for financial reporting purposes and are not used by the Compensation Committee of our Board when determining grants. The Committee used the closing stock price on the date of grant to set the target TSR performance share awards for each of the legacy Cabot NEOs for 2021. The total target stock awards for 2021 at grant date as awarded by the Committee were as follows: Mr. Dinges, $9,000,000; Mr. Schroeder, $4,150,000; Mr. Hutton, $1,250,000; Mr. Stalnaker, $1,250,000; and Mr. Lindeman, $1,250,000. The total maximum stock awards for 2021 at grant date as awarded by the Committee were as follows: Mr. Dinges, $14,850,000; Mr. Schroeder, $6,640,000; Mr. Hutton, $2,000,000; Mr. Stalnaker, $2,000,000; and Mr. Lindeman: $2,000,000. Amounts in this column for the legacy Cimarex NEOs reflect the grant date fair of the restricted stock awarded them in December 2021, which was $20.46, the closing price of the Common Stock on December 13, 2021, the date of grant. The amounts in this column for the performance shares granted to Messrs. Lindeman and Stalnaker in December 2021 also represent the closing price of the Common Stock on December 13, 2021 of $20.46. See “December 2021 Transition Awards” below for more information about the December 2021 grants of restricted stock and performance shares. | (3) | The amounts in this column reflect cash incentive awards to the legacy Cabot NEOs under the 2014 Incentive Plan, which is discussed in detail above under “Annual Cash Incentive Bonus.” The amount of Messrs. Jorden’s and Bell’s annual bonus award is not reflected in the table above, given that it was determined by the legacy Cimarex compensation committee prior to the Merger. See Footnotes 5 and 6 to this Summary Compensation Table for additional information. | (4) | For the legacy Cabot NEOs, other than Mr. Dinges, the amounts in this column include (i) the one-time contributions made at the effective time of the Merger to their deferred compensation accounts in return for termination of their rights under their existing change-in-control agreements in the following amounts: $5,243,700 for Mr. Schroeder and $3,131,700 for each of Messrs. Lindeman, Stalnaker and Hutton; (ii) the Company’s matching contributions to the Savings Investment Plan (401(k) plan), which is discussed above under “Elements of Post-Termination Compensation-Savings Investment Plan” and for 2021, totaled $17,100 for each legacy Cabot NEO; and (iii) the 10% Company retirement contribution to the 401(k) plan or to the deferred compensation plan, to the extent in excess of the 401(k) plan limits, which, for 2021 totaled $253,001 for Mr. Dinges; $141,091 for Mr. Schroeder; $80,101 for Mr. Hutton; $59,186 for Mr. Stalnaker and $80,101 for Mr. Lindeman. For all NEOs, the amounts also include some or all of the following: |
| • | Premiums paid on executive term life insurance; | | • | Club dues; | | • | Executive physical examination for the NEOs and their spouses; and | | • | A financial and tax planning stipend of up to $3,000 per year. |
| For legacy Cimarex NEOs, the amounts in this column do not include dividends accrued on unvested restricted stock awards prior to the effective time of the Merger but paid after the effective time of the Merger. The amount in this column for Mr. Jorden includes reimbursement for relocation from Cimarex’s headquarters in Denver, Colorado to Coterra’s headquarters in Houston, Texas, in the amount of $742,440, insurance premiums paid on executive term life insurance in the amount of $16,806 and $1,020 for reserved parking, but does not include dividends on unvested restricted stock awards accrued and paid after the effective time of the Merger in the amount of $1,597,018. | (5) | Mr. Jorden was appointed Coterra’s CEO on October 1, 2021, at the effective time of the Merger and thus, his compensation information reflects only the period from October 1, 2021, through December 31, 2021. The legacy Cimarex compensation committee set Mr. Jorden’s annual bonus award range in February 2021 with a target bonus equal to $1,318,750 and a maximum bonus potential equal to $2,637,500. In connection with the Merger, the legacy Cimarex compensation committee determined the level at which the bonus plan performance criteria were met on the latest practicable date before the closing of the Merger and approved a payout to Mr. Jorden in the amount of $2,500,000, subject to continued employment, which was paid by Coterra in March 2022. The amount of Mr. Jorden’s annual bonus award, is not reflected in the table above, given that it was determined by the legacy Cimarex compensation committee prior to the Merger. | (6) | Mr. Bell was appointed Coterra’s Executive Vice President, Business Development on October 1, 2021, at the effective time of the Merger and thus, his compensation information reflects only the period from October 1, 2021 through December 31, 2021. The legacy Cimarex compensation committee set Mr. Bell’s annual bonus award range in February 2021 with a target bonus equal to $554,000 and a maximum bonus potential equal to $1,108,000. In connection with the Merger, the legacy Cimarex compensation committee determined the level at which the bonus plan performance criteria were met on the latest practicable date before the closing of the Merger and approved a payout to Mr. Bell in the amount of $1,012,000 subject to continued employment, which was paid by Coterra in March 2022. The amount of Mr. Bell’s annual bonus award is not reflected in the table above, given that it was determined by the legacy Cimarex compensation committee prior to the Merger. |
COTERRA• 2022 PROXY STATEMENT | 51 |
CEO PAY RATIO
The table below sets forth comparative information regarding:
• | the annual total compensation of our CEO, Mr. Jorden, for the year ended December 31, 2021, determined using the methodology described below; | • | the annual total compensation of our median employee for the year ended December 31, 2021, determined on the basis described below; and | • | a ratio comparison of those two amounts, each as determined in accordance with rules prescribed by the SEC. |
CEO Pay Ratio | | | | CEO annual total compensation (A) | $ | 11,966,969 | (1) | Median employee annual total compensation (B) | $ | 91,440 | | Ratio of (A) to (B) | | 131:1 | |
(1) | Determined based on the total compensation paid to Mr. Jorden as reported in the Summary Compensation Table, with adjustments as described below to reflect a full year of service at Coterra. |
CEO Annual Total Compensation
Because Mr. Jorden became our CEO in connection with the Merger, his total compensation reported in the Summary Compensation Table above is calculated based on payments from Coterra from the effective timetherewith received a one-time cash payment of the Merger, or October 1, 2021, through December 31, 2021. To provide a more accurate approximation of his total compensation for the year, his base salary reported in the “Salary” column of the Summary Compensation Table above has been annualized, as if he was employed by Coterra at that base salary for the entire year. We believe annualizing Mr. Jorden’s post-Merger base salary reflects the most accurate representation of his total compensation$100,000.
(5)
Messrs. Sirgo and the best basis for comparison to the annual compensation of our median employee.Median Employee
As permitted by the SEC rules, we are using the same median employee we identified in the “CEO Pay Ratio” section of our proxy statement for our 2021 annual meeting of shareholders and are omitting approximately 680 Cimarex employees thatSmith became employees of Coterra in connection with the Merger. We believe that, other than as a result of the Merger, there has been no change to our employee population or employee compensation arrangements that would result in a significant change to our pay ratio disclosure in this Proxy Statement. For purposes of identifying our median employee, we examined our employee population, excluding our CEO, as of December 31, 2020, as identified in the “CEO Pay Ratio” section of our proxy statement for our 2021 annual meeting of shareholders. In making that determination, and in using the same median employee for this Proxy Statement, we:
• | identified the median employee on December 31, 2020; | • | used total taxable earnings reported on each employees’ W-2, as determined from Coterra’s payroll records for the period from January 1, 2020 through December 31, 2020 as our consistently applied compensation measure; | • | included equity-based incentive compensation awards, but, because those awards are not widely distributed to our employees, those awards did not impact the determination of the median employee; | • | included all employees Coterra and its consolidated subsidiaries as of December 31, 2020, whether employed on a full-time, part-time or seasonal basis; | • | did not make any assumptions, adjustments, or estimates with respect to total taxable earnings; | • | did not annualize the compensation for any permanent employees that were not employed by us for all of 2020; and | • | did not use statistical sampling or include any cost of living adjustments. |
After identifying the median employee, based on the process described above, we calculated annual total compensation for that employee using the same methodology we used for determining total compensation for 2021 for our named executive officers as set forthfor the first time in 2023 and Mr. Clason became a named executive officer for the first time in 2022. In accordance with SEC guidance, compensation prior to the applicable year in which they became named executive officers is not included in the Summary Compensation Table.
We believe that the CEO pay ratio above is a reasonable estimate calculated in a manner consistent with rules prescribed by the SEC.
COTERRA• 2022 PROXY STATEMENT | 52 |
GRANTS OF PLAN-BASED AWARDS The table below reports all grants of plan-based awards made by Coterrato our named executive officers during 2021.2023. All grants of awardsprior to the legacy Cabot NEOsMay 4, 2023 were made under the Company’s 2014 Incentive Plan and allPrior Cabot Plan. All grants of awards to the legacy Cimarex NEOsafter May 4, 2023 were made under the Amended2023 Plan. | | | | | | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | | Exercise or Base Price Of Option Awards ($/Sh) | | | | Grant Date Fair Value of Stock and Option Awards ($)(4) | | | Name | | | | Grant Date | | | | Threshold ($) | | | | Target ($) | | | | Maximum ($) | | | | Threshold (#) | | | | Target (#) | | | | Maximum (#) | | | | Thomas E. Jorden | | | | 02/21/2023 | | | | | | 0 | | | | | | | 1,462,500 | | | | | | | 2,925,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 217,391 | | | | | | | 434,782 | | | | | | | | | | | | | | | | | | | | | | 6,071,731 | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 217,391 | | | | | | | | | | | | | | | 4,999,993 | | | | Shannon E. Young III | | | | 07/06/2023 | | | | | | 0 | | | | | | | 620,000 | | | | | | | 1,240,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 07/06/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 81,030 | | | | | | | 162,060 | | | | | | | | | | | | | | | | | | | | | | 2,568,651 | | | | 07/06/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 81,030 | | | | | | | | | | | | | | | 2,011,165 | | | | Stephen P. Bell | | | | 02/21/2023 | | | | | | 0 | | | | | | | 582,000 | | | | | | | 1,164,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 65,217 | | | | | | | 130,434 | | | | | | | | | | | | | | | | | | | | | | 1,821,511 | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 65,217 | | | | | | | | | | | | | | | 1,499,991 | | | | Blake A. Sirgo | | | | 02/21/2023 | | | | | | | | | | | | | 456,000 | | | | | | | 912,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/21/2023 | | | | | | 0 | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 29,348 | | | | | | | 58,696 | | | | | | | | | | | | | | | | | | | | | | 819,690 | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 29,348 | | | | | | | | | | | | | | | 675,004 | | | | Kevin W. Smith | | | | 02/21/2023 | | | | | | 0 | | | | | | | 430,000 | | | | | | | 860,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 29,348 | | | | | | | 58,696 | | | | | | | | | | | | | | | | | | | | | | 819,690 | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 29,348 | | | | | | | | | | | | | | | 675,004 | | | | Scott C. Schroeder | | | | 02/21/2023 | | | | | | 0 | | | | | | | 770,000 | | | | | | | 1,540,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 90,217 | | | | | | | 180,434 | | | | | | | | | | | | | | | | | | | | | | 2,519,761 | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 90,217 | | | | | | | | | | | | | | | 2,074,991 | | | | Christopher H. Clason | | | | 02/21/2023 | | | | | | 0 | | | | | | | 507,000 | | | | | | | 1,014,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 43,478 | | | | | | | 86,956 | | | | | | | | | | | | | | | | | | | | | | 1,214,341 | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 43,478 | | | | | | | | | | | | | | | 999,994 | | | | 08/03/2023(5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,959,280 | | |
(1)
Amounts shown represent the target and Restated Cimarex 2019 Equity Incentive Plan, which was assumed bymaximum annual cash incentive bonus possible payouts on the Company at the effective timedate indicated. The maximum amount is 200 percent of the Merger. | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under Equity Incentive Plan Awards | | All Other Stock Awards: Number of | | All Other Option Awards: Number of | | Exercise or Base | | Grant Date Fair Value | Name | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($)(1) | | Threshold (#) | | Target (#)(2) | | Maximum (#)(3) | | Shares of Stock or Units (#) | | Securities Underlying Options (#) | | Price Of Option Awards ($/Sh) | | of Stock and Option Awards ($)(4) | Dan O. Dinges | | 02/17/2021 | | 0 | | 1,430,000 | | 3,575,000 | | | | | | | | | | | | | | | | | 02/17/2021 | | | | | | | | 0 | | 314,855 | | 629,710 | | | | | | | | 7,499,846 | | | 02/17/2021 | | | | | | | | | | 169,537 | | | | | | | | | | 3,149,997 | Thomas E. Jorden | | 10/01/2021 | | 0 | | (5) | | (5) | | | | | | | | | | | | | | | | | 12/13/2021 | | | | | | | | | | 488,759 | | | | | | | | | | 10,000,000 | Scott C. Schroeder | | 02/17/2021 | | 0 | | 691,900 | | 1,729,750 | | | | | | | | | | | | | | | | | 02/17/2021 | | | | | | | | 0 | | 145,183 | | 290,366 | | | | | | | | 3,458,259 | | | 02/17/2021 | | | | | | | | | | 78,175 | | | | | | | | | | 1,452,492 | Stephen P. Bell | | 12/13/2021 | | | | (6) | | (6) | | | | 146,628 | | | | | | | | | | 3,000,000 | | | | | | | | | | | | | | | | | | | | | | | | Steven W. Lindeman | | 02/17/2021 | | 0 | | 356,000 | | 890,000 | | | | | | | | | | | | | | | | | 02/17/2021 | | | | | | | | 0 | | 40,366 | | 80,732 | | | | | | | | 961,518 | | | 02/17/2021 | | | | | | | | | | 26,911 | | | | | | | | | | 500,006 | | | 12/13/2021 | | | | | | | | | | 36,657 | | | | | | | | | | 750,000 | Phillip L. Stalnaker | | 02/17/2021 | | 0 | | 356,000 | | 890,000 | | | | | | | | | | | | | | | | | 02/17/2021 | | | | | | | | 0 | | 40,366 | | 80,732 | | | | | | | | 961,518 | | | 02/17/2021 | | | | | | | | | | 26,911 | | | | | | | | | | 500,006 | | | 12/13/2021 | | | | | | | | | | 36,657 | | | | | | | | | | 750,000 | Jeffrey W. Hutton | | 02/17/2021 | | 0 | | 356,000 | | 890,000 | | | | | | | | | | | | | | | | | 02/17/2021 | | | | | | | | 0 | | 40,366 | | 80,732 | | | | | | | | 961,518 | | | 02/17/2021 | | | | | | | | | | 26,911 | | | | | | | | | | 500,006 |
(1) | Amounts in this column represent a bonus payout of 250% of target. See discussion of the bonus payout factor applicable to the 2021 annual cash incentive bonus in the “Compensation Discussion and Analysis” above under “Annual Cash Incentive Bonus.” See also the actual bonus awards for 2021 in the “Non-Equity Incentive Plan Compensation” column of the “2021 Summary Compensation Table” above. | (2) | The first amount in this column for each legacy Cabot NEO represents 100% of TSR performance shares, which had a performance period from January 1, 2021 to December 31, 2023. The second amount in this column for each legacy Cabot NEO represents 100% of hybrid performance shares, which were scheduled to vest 25% on each of the first and second anniversaries of the date of grant and 50% on the third anniversary of the date of grant, provided the Company had $100 million or more operating cash flow in the fiscal year prior to the vesting date. Pursuant to the terms of the Merger Agreement, effective on the closing of the Merger on October 1, 2021, the unvested TSR performance shares and the unvested hybrid performance shares held by each legacy Cabot NEO vested at target. See the narrative to the table “Grants of Plan-Based Awards” below. The third amount in each column for the legacy Cabot NEOs represents 100% of performance shares granted in December 2021, whichtarget amount. (2)
Amounts shown represent the target and maximum number of performance shares granted on the date indicated payable, if at all, on the basis of our TSR relative to our industry peer group over a three-year performance period. The maximum amount is 200 percent of the target amount and amounts earned in excess of 100 percent are scheduled to vest on September 30, 2024. Amounts in this column for legacy Cimarex NEOs represent the shares of restricted stock awarded to the legacy Cimarex NEOs pursuant to the terms of the Merger Agreement in December 2021, which are scheduled to vest on December 1, 2024. Mr. Bell’s restricted shares will vest pro-rata if he leaves prior to December 1, 2024. See “—Long-Term Incentive Awards—Merger-Related Long-Term Incentive Awards” above and “—December 2021 Transition Awards” below for more information about these grants. | (3) | Amounts in this column represent 200% of the targeted TSR performance shares, although amounts earned in excess of 100% up to 200% were to be paid in cash, rather than shares, based on the closing trading prices of a share of Common Stock on the last day of the performance period. | (4) | The amounts in this column reflect the grant date fair value of the TSR performance shares and the hybrid performance shares, respectively, granted to the legacy Cabot NEOs in February 2021, as computed in accordance with ASC Topic 718. The TSR performance share awards were valued using a Monte Carlo model and the grant date fair value per share used for financial reporting purposes was $23.82. The hybrid performance share awards were valued using the Company’s closing stock trading price on the date of grant, which was $18.58. Additional assumptions used in the Monte Carlo model for TSR performance shares and other assumptions used in the calculation of these amounts, are included in Note 13 of the Notes to the Consolidated Financial Statements included in the Form 10-K for the period ended December 31, 2021. | (5) | Mr. Jorden’s annual bonus award range was granted by the legacy Cimarex compensation committee and is not reflected in this table. See Footnote 5 to the Summary Compensation Table for additional information. | (6) | Mr. Bell’s annual bonus award range was granted by the legacy Cimarex compensation committee and is not reflected in this table. See Footnote 6 to the Summary Compensation Table for additional information. |
COTERRA• 2022 PROXY STATEMENT | 53 |
TSR Performance Shares
The TSR performance shares awarded to legacy Cabot NEOs in 2021 had a three-year performance period, which commenced January 1, 2021, and was set to end December 31, 2023. Each TSR performance share represented the right to receive, after the end of the performance period, from 0% to 200% of a share of Common Stock (with amounts over 100% paid in cash), basedcommon stock on the Company’s performance. The performance criteria that determined the payout per performance share was the relative total shareholder return on the Company’s Common Stock as compared to the total shareholder return on the common equity of each company in a comparator group. For this purpose, total shareholder return was expressed as a percentage equal to common stock price appreciation as averaged for the first and last monthday of the performance period, plus dividends (on a cumulative reinvested basis). The comparator group consistedperiod.
(3)
Amounts shown represent time-based restricted stock units that vest January 31, 2026. (4)
Amounts shown reflect the aggregate grant date fair value of the companies listed above under “Industry Peer Group.” Prior to the issuance of shares of Common Stock in respect of a TSR performance share award, the participant had no right to vote or receive dividends on the shares.At the end of the performance period, the TSR performance shares and time-based restricted stock units, as applicable, granted on the date indicated, as computed in accordance with ASC Topic 718. The TSR performance share awards were to be paid invalued using a Monte Carlo model and the grant date fair value per share used for financial reporting purposes was $27.93 for shares granted on February 21, 2023 and $31.70 for shares granted on July 6, 2023. The grant date fair value per share of Common Stock and cashthe time-based restricted stock units is based on the relative rankingclosing price of the Company versus the comparator group for total shareholder return during the performance period using the following scale:
Company Relative Placement | Percent Performance Shares | Value Consideration | 1 (highest) | 200% | | 100% stock / 100% cash | 2 | 190% | | 100% stock / 90% cash | 3 | 175% | | 100% stock / 75% cash | 4 | 160% | | 100% stock / 60% cash | 5 | 145% | | 100% stock / 45% cash | 6 | 130% | | 100% stock / 30% cash | 7 | 115% | | 100% stock / 15% cash | 8 | 100% | | Stock | 9 | 85% | | Stock | 10 | 70% | | Stock | 11 | 55% | | Stock | 12 | 40% | | Stock | 13 | 25% | | Stock | 14 | 10% | | Stock | 15 (lowest) | 0% | | |
In the event of a relative ranking of 1 through 7, corresponding to a percentage payout above 100%, a share of TSR performanceour common stock entitled the participant to receive one full share of Common Stock with respect to the first 100% of the payout and the balance of the payout in cash, in an amount based on the fair market valuedate of a share of Common Stock atgrant, or $23.00 for awards granted on February 21, 2023 and $24.82 for shares granted on July 6, 2023 (Mr. Young). Additional assumptions used in the end of the performance period. The Committee certifies the Company’s relative placement and the resulting level of achievement of the performance share awards prior to the issuance of Common Stock and cash, if any.
Pursuant to the terms of the Merger Agreement, at the effective time of the Merger, the TSR performance shares awarded in 2021, as well as all other unvested TSR performance shares awarded in prior years, were to be vested at the greater of the target level of performance and the level determined or certified by the Committee based on the results achieved during the applicable performance period, with the performance period deemed to end on the latest practicable date prior to the effective time of the Merger and settled in shares of Common Stock and cash, if applicable, under the terms of the award agreements. In September 2021, The Committee certified the results of the outstanding unvestedMonte Carlo model for TSR performance shares and all unvested awards vested atother assumptions used in the target level and were settledcalculation of these amounts are included in shares of Coterra Common Stock.
Hybrid Performance Shares
The Hybrid Performance Shares awarded in 2021 were scheduled to vest 25% on eachNote 13 of the first two anniversaries ofNotes to the date of grant and 50% on the third anniversary of the date of grant, provided the Company had $100 million or more operating cash flowConsolidated Financial Statements included in the fiscalCompany’s Annual Report on Form 10-K for the year priorended December 31, 2023.
(5)
This amount shown in this row reflects the incremental fair value related to the vesting date. If the performance metric was not met in any given year, then the respective tranchemodification of hybrid performance shares would be forfeited. Prior to vesting, the participant had no right to vote or receive dividends on such shares, but the unvested shares accrued dividends that were to be paid on the shares that actually vested when they vested.Pursuant to the termscertain of the Merger Agreement, the Hybrid Performance Shares awarded in 2021, as well as all other unvested hybrid performance shares awarded in prior years, were to be vested as of the effective time of the Merger if
COTERRA• 2022 PROXY STATEMENT | 54 |
the cash flow performance measure was met, with the performance period deemed to end on the latest practicable date prior to the effective time of the Merger, and settled in shares of Common Stock under the terms of the award agreements. In September 2021, the Committee certified the cash flow performance measure and all unvested hybrid performance share awards vested at the target level and were settled in shares of Coterra Common Stock.
December 2021 Transition Awards
As provided in the Merger Agreement, legacy Cimarex executives, including Messrs. Jorden and Bell, were entitled to receive annual long-term incentiveMr. Clason’s outstanding equity awards in December 2021connection with Mr. Clason’s separation, and does not reflect a target grant date value not less than the target grant date value of the annual long-term incentive awards granted to such executives in 2020 by Cimarex. The Committee met on December 13, 2021 to consider the terms and such long-term incentive awards and approve the grants to these executives. Although the grant date values of the awards were established by the Merger Agreement and the Jorden Letter Agreement, in establishing the terms of these awards, the Committee considered vesting terms of the awards for the legacy Cimarex executives and determined that the legacy Cimarex executives should be granted time-based restricted stock awards, which are scheduled to vest, subject to their terms, on December 1, 2024. At that time, the Committee also approved additional long-term incentive awards for two of the legacy Cabot NEOs, Messrs. Lindeman and Stalnaker to strengthen paynew equity among the Coterra executive team. For a description of the vesting terms for the December 13, 2021, awards, see above “Long-Term Incentive Awards—Merger-Related Long-Term Incentive Awards”.
grant.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2021 The table below reports for each NEOnamed executive officer outstanding equity awards at December 31, 2021,2023, including, as applicable, their legacy Cimarex awards that were granted by Cimarex prior to the Merger and were assumed by Coterra and converted into Coterra awards on the effective time of the Merger. | | Option Awards | | Stock Awards | Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(1) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | Dan O. Dinges | | | | | | | | | | | | | | | | – | | – | Thomas E. Jorden | | | | | | | | | | | | | | | | 2,147,889 | | 40,809,891 | Scott C. Schroeder | | | | | | | | | | | | | | | | – | | – | Stephen P. Bell | | | | | | | | | | | | | | | | 146,628 | | 2,785,832 | Steven W. Lindeman | | | | | | | | | | | | | | | | 36,657 | | 696,483 | Phillip L. Stalnaker | | | | | | | | | | | | | | | | 36,657 | | 696,483 | Jeffrey W. Hutton | | | | | | | | | | | | | | | | – | | – |
(1) | The amounts in this column represent the December 2021 transition awards described in the “—December 2021 Transition Awards” narrative to the “2021 Grants of Plan-Based Awards” table and “—December 2021 Transition Awards” above. For Mr. Jorden, the amounts in this column also include his legacy Cimarex performance-based and time-based restricted stock awards that were assumed by our company and converted into Coterra restricted stock awards that vest as follows: 813,812 shares that vest in December 2022 and 845,318 shares that vest in December 2023. | (2) | Market value is based on the closing price of Coterra’s Common Stock on December 31, 2021, of $19.00 per share. |
COTERRA• 2022 PROXY STATEMENT | 55 |
| | | | | Stock Awards | | | Name | | | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | | | Thomas E. Jorden | | | | | | 706,150 | | | | | | | 18,020,948 | | | | | | | 1,292,048 | | | | | | | 32,973,065 | | | | Shannon E. Young III | | | | | | 81,030 | | | | | | | 2,067,866 | | | | | | | 162,060 | | | | | | | 4,135,771 | | | | Stephen P. Bell | | | | | | 263,281 | | | | | | | 6,718,931 | | | | | | | 284,742 | | | | | | | 7,266,616 | | | | Blake A. Sirgo | | | | | | 95,369 | | | | | | | 2,433,817 | | | | | | | 110,132 | | | | | | | 2,810,569 | | | | Kevin W. Smith | | | | | | 95,369 | | | | | | | 2,433,817 | | | | | | | 110,132 | | | | | | | 2,810,569 | | | | Scott C. Schroeder | | | | | | 161,370 | | | | | | | 4,118,162 | | | | | | | 253,302 | | | | | | | 6,464,267 | | | | Christopher H. Clason | | | | | | 84,134 | | | | | | | 2,147,100 | | | | | | | 163,742 | | | | | | | 4,178,696 | | |
The amounts in this column reflect shares of restricted stock units as follows: •
as to which restrictions lapse December 1, 2024: Mr. Jorden 488,759; Mr. Bell 146,628; Mr. Sirgo 48,876; Mr. Smith 48,876; and Mr. Clason 38,030; •
as to which restrictions lapse on January 31, 2025: Mr. Bell 51,436; Mr. Sirgo 17,145; Mr. Smith 17,145; Mr. Schroeder 71,153; and Mr. Clason 15,669; and •
as to which restrictions lapse on January 31, 2026: Mr. Jorden 217,391; Mr. Young 81,030; Mr. Bell 65,217; Mr. Sirgo 29,348; Mr. Smith 29,348; Mr. Schroeder 90,217; and Mr. Clason 30,435. (2)
Market value is based on the closing price of our common stock on December 29, 2023 of $25.52 per share. (3)
The amounts in this column reflect performance share and performance stock unit awards, as applicable, assuming the maximum level of performance (200 percent of the target amount) is achieved, as follows: •
as to which the performance period ends January 31, 2025: Mr. Jorden 857,266; Mr. Bell 154,308; Mr. Sirgo 51,436; Mr. Smith 51,436; Mr. Schroeder 213,460; and Mr. Clason 102,872; and •
as to which the performance period ends January 31, 2026: Mr. Jorden 434,782; Mr. Young 162,060; Mr. Bell 130,434; Mr. Sirgo 58,696; Mr. Smith 58,696; Mr. Schroeder 39,842; and Mr. Clason 60,870. For awards granted in 2023, see “Compensation Discussion and Analysis—2023 Performance-Based Compensation” and the “Grants of Plan-Based Awards” table above for more information. The actual amount of these awards that will vest after the end of the applicable performance period will be based on the determination of the Company’s achievement of the performance criteria by the Compensation Committee.
The table below reports stock options that were exercised and performance shares that vested during 2021,2023, including any legacy Cimarex awards that were granted by Cimarex prior to the Merger and were assumed by Coterra and converted into Coterra awards on the effective time of the Merger. | | Option Awards | | Stock Awards | Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($) | | Dan O. Dinges | | – | | – | | 1,439,157 | (1) | | 31,474,274 | (1)(2) | Thomas E. Jorden | | – | | – | | 337,142 | (3) | | 6,655,183 | (3)(2) | Scott C. Schroeder | | – | | – | | 657,029 | (1) | | 14,371,420 | (1)(2) | Stephen P. Bell | | – | | – | | 0 | | | 0 | | Steven W. Lindeman | | – | | – | | 196,089 | (1) | | 4,285,529 | (1)(2) | Phillip L. Stalnaker | | – | | – | | 196,089 | (1) | | 4,285,529 | (1)(2) | Jeffrey W. Hutton | | – | | – | | 196,089 | (1) | | 4,285,529 | (1)(2) |
(1) | Represents the number of shares and value realized for TSR performance shares and hybrid performance shares with performance periods ending December 31, 2021, 2022 and 2023, respectively, the vesting of which accelerated on October 1, 2021 pursuant to the terms of the Merger Agreement. See the “—Long-Term Incentive Awards—Determination of TSR Performance Shares and Hybrid Performance Shares Payout” section for additional detail. | | | | Stock Awards | | (2) | These values were determined by multiplying the numberName | | | | Number of shares that vested by Coterra’s closing priceShares Acquired on October 1, 2021 of $22.25, and do not indicate that there was a sale of these shares by the NEO.Vesting (#) | | | | Value Realized on Vesting ($) | | (3) | Represents the number of shares and value realized upon the vesting, after the effective time of the Merger, of a restricted stock award which was previously granted by Cimarex and converted on October 1, 2021, to a Coterra award with the same vesting period.Thomas E. Jorden | | | | | | 845,318(1) | | | | | | | 22,096,613(2) | | | | Shannon E. Young III | | | | | | — | | | | | | | — | | | | Stephen P. Bell | | | | | | — | | | | | | | — | | | | Blake A. Sirgo | | | | | | — | | | | | | | — | | | | Kevin W. Smith | | | | | | — | | | | | | | — | | | | Scott C. Schroeder | | | | | | — | | | | | | | — | | | | Christopher H. Clason | | | | | | 78,344(3) | | | | | | | 2,119,205(4) | | |
(1)
Represents the number of shares and value realized upon the vesting of a restricted stock award that was previously granted by Cimarex and converted on the closing of the Merger on October 1, 2021 to a Coterra award with the same vesting period. (2)
These values were determined by multiplying the number of shares that vested by our common stock closing price on December 1, 2023 of $26.14 and do not indicate that there was a sale of these shares by the named executive officer. (3)
Represents the number of shares and value realized upon the vesting of certain restricted stock awards in connection with Mr. Clason’s termination of employment on September 30, 2023. See “Compensation Discussion and Analysis—Change in Control and Severance Agreements and Other Termination Payments” on page 35 above and “Potential Payments upon Termination or Change in Control” beginning on page 46 below for more information. (4)
These values were determined by multiplying the number of shares that vested by our common stock closing price on September 29, 2023 (the last trading day prior to Mr. Clason’s separation) of $27.05 and do not indicate that there was a sale of these shares by the named executive officer.
NONQUALIFIED DEFERRED COMPENSATION The table below reports legacy Cabot NEOexecutive contributions, Company contributions, earnings, withdrawals/distributions and aggregate balances in the Company’s deferredCoterra Energy Inc. Deferred Compensation Plan for 2023. | Name | | | | Executive Contributions in Last FY ($)(1) | | | | Registrant Contributions in Last FY ($)(2) | | | | Aggregate Earnings in Last FY ($)(3) | | | | Aggregate Withdrawals/ Distributions ($) | | | | Aggregate Balance at Last FYE ($)(4) | | | Thomas E. Jorden | | | | | | 112,500 | | | | | | | 229,200 | | | | | | | 64,433 | | | | | | | — | | | | | | | 546,249 | | | | Shannon E. Young III | | | | | | — | | | | | | | 6,092 | | | | | | | 93 | | | | | | | — | | | | | | | 6,185 | | | | Stephen P. Bell | | | | | | — | | | | | | | 109,704 | | | | | | | 7,002 | | | | | | | — | | | | | | | 116,706 | | | | Blake A. Sirgo | | | | | | — | | | | | | | 75,740 | | | | | | | 16,448 | | | | | | | — | | | | | | | 119,607 | | | | Kevin W. Smith | | | | | | — | | | | | | | 73,839 | | | | | | | 10,400 | | | | | | | — | | | | | | | 84,239 | | | | Scott C. Schroeder | | | | | | — | | | | | | | 127,881 | | | | | | | 605,268 | | | | | | | (87,424) | | | | | | | 14,904,570 | | | | Christopher H. Clason | | | | | | — | | | | | | | 86,709 | | | | | | | (1,288) | | | | | | | (85,420) | | | | | | | 0 | | |
(1)
Amounts reported in this column are included in the Summary Compensation Table as salary and non-equity incentive plan compensation, planas applicable. (2)
Amounts reported in this column are included in the Summary Compensation Table as all other compensation. (3)
Amounts reported in this column are not included in the Summary Compensation Table. (4)
Reflects contributions by our named executive officers, contributions by Coterra, and earnings on balances prior to January 1, 2023; plus, contributions by our named executive officers, contributions by Coterra, and earnings for 2021.Name | | Executive Contributions in Last FY ($)(1) | | Registrant Contributions in Last FY ($)(2) | | Aggregate Earnings in Last FY ($)(3) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at Last FYE ($)(4) | Dan O. Dinges | | $ | 0 | | $ | 231,901 | | $ | 3,116,539 | | $ | 0 | | $ | 17,602,371 | Scott C. Schroeder | | $ | 0 | | $ | 5,354,691 | | $ | 1,542,925 | | $ | 0 | | $ | 13,669,385 | Steven W. Lindeman | | $ | 0 | | $ | 3,190,701 | | $ | 425,047 | | $ | 0 | | $ | 4,475,360 | Phillip L. Stalnaker | | $ | 209,152 | | $ | 3,169,786 | | $ | 498,578 | | $ | 0 | | $ | 5,777,143 | Jeffrey W. Hutton | | $ | 0 | | $ | 3,190,701 | | $ | 211 | | $ | 0 | | $ | 4,507,980 |
(1) | Amounts reported in this column are included in the Summary Compensation Table as salary and non-equity incentive plan compensation, as applicable. | (2) | Amounts reported in this column are included in the Summary Compensation Table as “all other compensation”. These amounts include the one-time contributions made at the effective time of the Merger to Messrs. Schroeder’s, Stalnaker’s, Lindeman’s and Hutton’s deferred compensation accounts in return for termination of their rights under their existing change-in-control agreements. See the “—2021 Compensation Decisions—Merger-Related Compensation Decision—Termination of Legacy Cabot Change-in-control Agreements” and “—Change-in-Control and Severance Agreements—Legacy Cabot Change-in-Control-Agreements” sections and Footnote 4 to the Summary Compensation Table for additional information. | (3) | Amounts reported in this column are not included in the Summary Compensation Table. | (4) | Of the aggregate deferred compensation balances in this column, the following amounts represent cumulative executive contributions for all years: Mr. Dinges, $4,833,437; Mr. Schroeder, $2,592,540; Mr. Lindeman, $2,875; Stalnaker, $979,085; and Mr. Hutton, $553,350. |
COTERRA• 2022 PROXY STATEMENT | 56 |
the year ended December 31, 2023, less any distributions (shown in the appropriate columns of this table, with amounts that are included in the Summary Compensation Table for 2023 shown in notes 1 and 2 above). The table below represents legacy Cimarex NEO contributions,reports, earnings, withdrawals/distributions and aggregate balances in the legacy Cimarex SSP from OctoberEnergy Co. Supplemental Savings Plan for 2023. | Name | | | | Executive Contributions in Last FY ($) | | | | Registrant Contributions in Last FY ($) | | | | Aggregate Earnings in Last FY ($)(1) | | | | Aggregate Withdrawals/ Distributions ($) | | | | Aggregate Balance at Last FYE ($)(2) | | | Thomas E. Jorden | | | | | | — | | | | | | | — | | | | | | | 4,320 | | | | | | | — | | | | | | | 29,634 | | | | Shannon E. Young III | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | Stephen P. Bell | | | | | | — | | | | | | | — | | | | | | | 909 | | | | | | | — | | | | | | | 11,507 | | | | Blake A. Sirgo | | | | | | — | | | | | | | — | | | | | | | 1,438 | | | | | | | — | | | | | | | 7,932 | | | | Kevin W. Smith | | | | | | — | | | | | | | — | | | | | | | 2,420 | | | | | | | — | | | | | | | 14,066 | | | | Scott C. Schroeder | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | Christopher H. Clason | | | | | | — | | | | | | | — | | | | | | | 59,600 | | | | | | | — | | | | | | | 465,487 | | |
(1)
Amounts reported in this column are not included in the Summary Compensation Table. (2)
Reflects contributions by our named executive officers, contributions by Coterra, and earnings on balances prior to January 1, 2021,2023; plus earnings for the effective time of the Merger, throughyear ended December 31, 2021. The Cimarex SSP has been frozen, effective January 1, 2022. For more information about2023, less any distributions (shown in the Cimarex SSP, see “Elementsappropriate columns of Post-Termination Compensation—Retirement Compensation—Cimarex Supplemental Savings Plan” above.Name | | Executive Contributions in Last FY ($)(1) | | | Registrant Contributions in Last FY ($) | | | Aggregate Earnings in Last FY ($)(2) | | | Aggregate Withdrawals/ Distributions ($)(3) | | | Aggregate Balance at Last FYE ($) | Thomas E. Jorden | | | $30,167 | | | $ | 0 | | | $ | 21,717 | | | | ($1,353,608 | ) | | | $30,711 | Stephen P. Bell | | | $10,441 | | | $ | 0 | | | $ | 8 | | | | ($1,054,804 | ) | | | $10,441 |
(1) | Amounts reported in this column are included in the Summary Compensation Table as salary and non-equity incentive plan compensation, as applicable. | (2) | Amounts reported in this column are not included in the Summary Compensation Table. | (3) | Distribution pursuant to the liquidation of account balances in the Cimarex Supplemental Savings Plan as of October 1, 2021 in connection with the Merger. The plan remains in effect for elections made in 2020 for the 2021 plan year. |
this table). Under the legacy CabotCoterra Energy Inc. Deferred Compensation Plan, up to 100%100 percent of salary and annual cash incentive bonus are permitted to be deferred into the deferred compensation plan, subject to payment of social security, Medicare, income taxes (on compensation not deferred) and employee benefit plan withholding requirements. Prior to June 1, 2008, TSR performance shares were permitted to be deferred into thesuch deferred compensation plan. The Company also makes contributions to make up for certain matching and profit-sharing contributions which, due to U.S. Internal Revenue Service limitations, cannot be contributed to the Company’s tax-qualifiedCoterra 401(k) plan.Plan. Earnings on the deferred balances are determined by the executive’s investment selections at the time of deferral. The Company holds deferred amounts and earnings thereon as corporate assets, which are invested as elected by the executive. For 2021, the investment options and their respective rates of return follow:Fund Name | Rate of Return | | Fund Name | Rate of Return | Coterra Energy Inc. Common Stock | 23.50 | % | | Fidelity® Mid Cap Index Fund | 22.56 | % | Carillon Scout Mid Cap Class R-6 | 15.99 | % | | Fidelity® 500 Index Fund | 28.69 | % | Davis NY Venture Fund Class Y | 12.78 | % | | Fidelity® Capital Appreciation Fund Class K | 24.34 | % | Fidelity Freedom® K 2005 | 3.97 | % | | Fidelity® Global Ex US Index Fund | 7.76 | % | Fidelity Freedom® K 2010 | 5.64 | % | | Fidelity® Government Money Market Fund | 0.01 | % | Fidelity Freedom® K 2015 | 7.81 | % | | Fidelity® Government Money Market Fund Premium Fund | 0.01 | % | Fidelity Freedom® K 2020 | 9.02 | % | | Fidelity® International Discovery Fund Class K | 11.26 | % | Fidelity Freedom® K 2025 | 10.17 | % | | Fidelity® Real Estate Index Fund | 40.66 | % | Fidelity Freedom® K 2030 | 11.53 | % | | Fidelity® Small Cap Index Fund | 14.72 | % | Fidelity Freedom® K 2035 | 14.42 | % | | Fidelity® U.S. Bond Index Fund | -1.79 | % | Fidelity Freedom® K 2040 | 16.52 | % | | Glenmede Small Cap Equity Portfolio IS Class | 29.10 | % | Fidelity Freedom® K 2045 | 16.60 | % | | John Hancock Disciplined Value Fund Class R6 | 30.24 | % | Fidelity Freedom® K 2050 | 16.58 | % | | Oakmark Equity & Income Fund Investor Class | 21.55 | % | Fidelity Freedom® K 2055 | 16.56 | % | | Oakmark Fund Investor Class | 34.20 | % | Fidelity Freedom® K 2060 | 16.60 | % | | T. Rowe Price Blue Chip Growth Fund I Class | 17.85 | % | Fidelity Freedom® K 2065 | 16.53 | % | | Western Asset Core Bond Fund Class I | -1.80 | % | Fidelity Freedom® K Income | 3.15 | % | | | | |
Distributions from the deferred compensation planCoterra Energy Inc. Deferred Compensation Plan are based on the executive’s election at the time of deferral. Distribution elections may be modified, provided that the modification is made at least one year prior to the original time elected and the new election is moved out at least five years past the original time-based distribution election. Distribution
elections can only be delayed not accelerated. Investment options under the Coterra Energy Inc. Deferred Compensation Plan include a selection of mutual funds, index funds, and exchange-traded funds, which in 2023 earned between a 3.24 percent and 40.56 percent rate of return. Under the legacy Cimarex Energy Co. Supplemental Savings Plan, up to 50%50 percent of salary and 100%100 percent of annual cash incentive bonus (subject to certain limitations) iswere permitted to be deferred into the supplemental savings plan, subject to payment of social security, Medicare, income taxes (on compensation not deferred) and employee benefit plan withholding requirements. In connection with the Merger, on October 26, 2021, the account balances as of September 30, 2021, were liquidated. The legacy Cimarex Energy Co. Supplemental Savings Plan was not terminated and remained effective for the deferral elections that had previously been made through the end of 2021 and therefore, some participants, including Messrs. Jorden and Bell, made contributions to this plan after COTERRA• 2022 PROXY STATEMENT | 57 |
October 1, 2021. However, no new deferral elections to the Cimarex Energy Co. Supplemental Plan were permitted after the Merger. Beginning with fiscal year 2022, certain legacy Cimarex employees designated by the Compensation Committee, including Messrs. Jorden and Bell, were eligible to participate in the legacy CabotCoterra Energy Inc. Deferred Compensation Plan. Distributions from the Cimarex Supplemental Savings Plan are based on the executive’s election at the time of deferral. Investment options under the legacy Cimarex Energy Co. Supplemental Savings Plan include a selection of mutual funds, index funds, and exchange-traded funds identical to those under the Coterra Energy Inc. Deferred Compensation Plan, which in 2023 earned between a 3.24 percent and 40.56 percent rate of return.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROLChange-in-Control Agreements
As described above,
Mr. Dinges is party to a change-in-controlJorden Employment Agreement In September 2023, Mr. Jorden entered into the Jorden Letter Agreement, which, together with Mr. Jorden’s legacy Cimarex severance compensation agreement, withsets forth the Company (the “Dinges Change-in-Control Agreement”).In the Dinges Change-in-Control Agreement, a “change in control” is generally defined to include:
• | any person or group becoming the beneficial owner of 35% or more of either the Company’s Common Stock or the combined voting power of the Company’s outstanding voting securities, with certain exceptions; | • | specified changes in a majority of the members of the Board of Directors; | • | a reorganization, merger or consolidation involving the Company or the issuances of shares of common stock of the Company, an acquisition by the Company of another entity, or sale or other disposition of substantially all of the Company’s assets being consummated, unless, following the transaction: |
| • | the persons who were the beneficial owners of the Company prior to the transaction continue to own at least 50% of the Common Stock or other securities entitled to vote in the election of directors of the resulting entity in substantially the same proportions as prior to the transaction, | | • | no individual or entity (other than an entity resulting from the transaction) beneficially owns 35% or more of the common equity or voting power of the entity resulting from the transaction, except to the extent that such ownership existed prior to the transaction, and | | • | at least a majority of the members of the Board of Directors of the entity resulting from the transaction were members of the Company’s Board at the time the transaction was approved or entered into; and |
a liquidation or dissolutionterms of the Company.
severance payments and benefits to which Mr. Jorden may become entitled upon a termination of his employment in certain circumstances. The Dinges Change-in-ControlJorden Letter Agreement provides that Mr. Jorden’s legacy Cimarex severance compensation agreement will remain in full force and effect through October 1, 2026. Pursuant to the event ofJorden Letter Agreement and Mr. Jorden’s legacy Cimarex severance compensation agreement, upon a change in control or upon an occurrence deemed to be in anticipation of a change in control, Mr. Dinges will receive certain benefits, provided that his employment is terminated within two years of the change in control unless his termination is: • | for cause; | • | voluntary on the part of the executive (but not a constructive termination without cause); or | • | due to death or disability. |
Additionally, the Dinges Agreement provides that in the event of any termination of Mr. Dinges’Jorden’s employment byother than for “cause” or resignation for “good reason,” subject to Mr. Jorden’s execution of a release of claims and compliance with one-year post-termination non-competition and non-solicitation (of employees and customers or clients), Mr. Jorden will become entitled to:
•
A lump sum cash payment equal to the Companyproduct of (1) the average annual bonus paid to Mr. Jorden for the two fiscal years prior to or upontermination and (2) a fraction, the expirationnumerator of which is the Employment Period, Mr. Dinges shall receivenumber of days in the benefits payable undercalendar year through the Dinges Change-in-Control Agreement.Benefits underdate of termination and the Dinges Change-in-Control Agreement generally include: denominator of which is 365. a lump-sum
•
thirty-six monthly cash paymentpayments equal, in the aggregate, to three times the sum of: | • | the executive’s base salary in effect immediately prior to the change in control or the executive’s termination, whichever is greater, and | | • | the greater of (1) the executive’s target bonus for the year ◦
Mr. Jorden’s annual base salary received during which the change in control occurred or, if greater, the year during which the executive’s termination occurred, or (2) the executive’s actual bonus paid in any of the three fiscal years immediately preceding the change in control or, if termination of employment occurs prior to a change in control, termination of employment; |
• | payment of a target bonus for the fiscal year of termination, prorated for the actual days served; | • | three years of continued medical, dental and life insurance coverage at the premium rate applicable to active executives; | • | outplacement assistance in an amount up to 15% of the executive’s base salary; and | • | accelerated vesting of all equity awards immediately upon a change in control, subject, in the case of the TSR performance shares, to the level of the Company’s TSR performance relative to its peers as of the last day of the month immediately preceding the month in which the change-in-control event occurs. |
The Dinges Change-in-Control Agreement provides that in the event that excise taxes apply to payments to Mr. Dinges by the Company upon a change in control, the Company will make an additional tax gross-up payment to Mr. Dinges in an amount necessary to leave the executive “whole,” as if no excise tax had applied.
As discussed in more detail above in the “—2021 Compensation Decisions—Merger-Related Compensation Decisions—Termination of Legacy Cabot Change-in-Control Agreements” and “—Change-in-Control and Severance Agreements—Legacy Cabot Change-in-Control-Agreements” sections, the legacy Cabot NEOs other than Mr. Dinges entered into letter agreements whereby each such NEO waived his or her rights24 months prior to the change-in-control payments provided for in date of termination, divided by two, and
◦
the existing change-in-control agreements and made additional non-competition and non-solicitation covenants in favoramount of Coterra, in exchange for a one-time payment in an amount equalcash incentive awards received by Mr. Jorden during the 24 months prior to the lump-sum cash payment provided in their existing change-in-control agreements.COTERRA• 2022 PROXY STATEMENT | 58 |
date of termination, divided by two; and Severance Agreements
Messrs. Jorden and Bell are each party to legacy Cimarex severance compensation agreements.
In the severance compensation agreements, a “change in control” is generally defined to include:
• | acquisition of 30% or more of the shares of the Company’s common stock or the combined voting power of voting securities of the Company; | • | specified changes in a majority of the members of the Board of Directors; | • | a reorganization, share exchange or merger unless, following the transaction: |
| • | the shareholders of the Company prior to the transaction continue to own at least 40% of the outstanding common stock and combined voting power of the resulting entity, or | | • | at least a majority of the members of the Board of Directors of the entity resulting from the transaction were members of the Company’s Board at the time of executing the agreement to reorganize or merge; and |
a liquidation or dissolution of the Company or a sale of substantially all of its assets.•
The Merger constituted a change in control under the severance compensation agreements.
The separation agreements provide that, in the event of a termination of employment by the Company other than for cause, death or disability, or a termination for good reason, the executive will receive certain benefits, with such benefits being enhanced if the termination occurs within two years following a change in control.
Benefits under the separation agreements generally include:
• | a pro-rated annual bonus for the number of days in the calendar year through the date of termination, | • | cash payments equal to 1.5 or 2 times (in the event the termination occurs outside of two years of a change in control) or 2 or 3 times (in the event the termination occurs within two years of a change in control) the sum of: |
| • | the executive’s annual base salary received during the 24 months prior to the date of termination and | | • | the amount of cash incentive awards received by the executive officer during the 24 months prior to the date of termination, divided by two; and |
continued medical, dental, vision, disability and life insurance benefits for the individual and his or her dependents 1.5 or 2 times (in the event the termination occurs outside of two years of a changefor 36 months following his termination. Except as otherwise provided in control) or 2 or 3 times (in the event the termination occurs within two years of a change in control). The legacy Cimarex severance compensation agreements contain a Section 280G “best-net” cutback provision, which provides that, if the total payments to the executive officer under his severance compensationan award agreement, would exceed the applicable threshold under Section 280G of the Code,then those payments will be reduced to the applicable threshold to avoid the imposition of the excise taxes under Section 4999 of the Code in the event such reduction would result in a better after-tax result for the executive officer.
The legacy Cimarex severance compensation agreements also provide that, in the event of a termination without cause or for good reason prior to a change in control, time-based equity awards will vest pro-rata based on the period of continuous service elapsed in the vesting period as of the date of termination as compared to the total duration of the vesting period and subject to compliance with certain non-solicitation covenants, a pro-rata portion of performance-based equity awards, based on the time employed during the performance period, shall remain outstanding and eligible to vest if and to the extent the performance metrics in the applicable award agreements are met.
The Jorden Letter Agreement further provides that, upon a termination without cause or for good reason, during Mr. Jorden’s Employment Period, or upon Mr. Jorden’s death or disability, all of his equity awards, including any legacy Cimarex equity awards that were converted into equity awards of the Company pursuant to the terms of the Merger Agreement, will vest in full.
full pursuant to the Jorden Letter Agreement. The Jorden Letter Agreement provides that, for purposes of Mr. Jorden’s legacy severance compensation agreement, “cause” means Mr. Jorden’s (1) willful and continued failure to perform substantially the executive’s duties, after a written demand for substantial performance is delivered; (2) willful engagement in misconduct materially and demonstrably injurious to the Company or an affiliate; or (3) business crime or felony involving moral turpitude of which the executive officer is convicted or pleads guilty; and “good reason” means (a) a diminution in Mr. Jorden’s duties, responsibilities, authorities powers and functions; (b) the failure to renominate Mr. Jorden to the Board; (c) a reduction in Mr. Jorden’s base salary, subject to limited exceptions; (d) a material reduction in Mr. Jorden’s target annual incentive opportunity or target long-term incentive opportunity; (e) a relocation of Mr. Jorden’s principal place of business to a place other than Houston, Texas; and (f) the Company’s breach of the Jorden Letter Agreement. Mr. Jorden’s legacy Cimarex severance compensation agreement contains a Section 280G “best-net” cutback provision, which provides that, if the total payments to the Mr. Jorden would receive pursuant to his legacy Cimarex severance and compensation agreement or otherwise would exceed the applicable threshold under Section 280G of the Code, then those payments will be reduced to the extent necessary to avoid the imposition of the excise taxes under Section 4999 of the Code in the event such reduction would result in a better after-tax result for the executive officer. Upon the expiration of the Jorden employment period, if Mr. Jorden’s employment with Coterra is continuing, then he and Coterra will enter into a change in control agreement that is consistent with, and no less favorable than, the change in control agreements then applicable to other executive officers of Coterra. For a description of the other terms of the Jorden Letter Agreement, see “Compensation Discussion and Analysis—Compensation Arrangements with Thomas E. Jorden” above. Coterra Severance Compensation Agreements Each of Messrs. Young, Sirgo, and Smith is party to a severance compensation agreement (“Coterra severance compensation agreement”) that provides for certain severance benefits upon a termination of employment by Coterra other than for “cause” or a termination by the executive officer for “good reason” (either, a “qualifying termination”), with such severance benefits being enhanced if the qualifying termination occurs within 18 months following a change in control (a “CIC termination”).
The severance compensation agreement provides for the following benefits upon a qualifying termination, subject to the executive officer’s execution and nonrevocation of a release of claims: •
a pro-rated annual bonus for the number of days in the calendar year of termination through the date of termination based on the executive officer’s target annual bonus in effect for the year of termination, paid in a lump sum at the same time that bonuses are paid to active employees; •
cash payments equal, in the aggregate, to 1.5 times (in the event the qualifying termination is not a CIC termination) or two times (in the event of a CIC termination) the sum of: ◦
the executive officer’s highest annualized base salary in effect during the 24 months prior to his or her date of termination, and ◦
the higher of (a) the average cash incentive award received by the executive officer and (b) the executive officer’s highest target annual bonus in effect, in the case of each of (a) and (b), during the 24 months prior to the executive officer’s date of termination, paid in equal monthly installments for 18 months (in the event the qualifying termination is not a CIC termination) or 24 months (in the event of a CIC termination); •
continued medical, dental, vision, disability and life insurance benefits for the executive officer and the executive officer’s dependents for up to 18 months (in the event the qualifying termination is not a CIC termination) or 24 months (in the event of a CIC termination) following the date of termination as though the executive officer’s employment had not been terminated; and •
except as otherwise provided in an award agreement, if the qualifying termination is not a CIC termination, a pro-rated portion (based on the period of the executive officer’s continuous service during the original vesting period) of the executive officer’s equity awards will (a) in the case of time-vested equity awards, be accelerated and (b) in the case of performance-vested equity awards, remain outstanding and eligible to vest to the extent the applicable performance measures are achieved at the end of the performance period. In the event of a CIC termination, the executive officer’s equity awards will be treated as set forth in the applicable equity incentive plan and award agreement. As in Mr. Jorden’s legacy Cimarex severance compensation agreement, the Coterra severance compensation agreements provide that the executive officer will be subject to one-year post-termination non-competition and non-solicitation (of both employees and clients or customers) restrictions and include Section 280G “best-net” cutback provisions. In the severance compensation agreements, a “change in control” is generally defined to include: •
acquisition of 30 percent or more of the shares of the Company’s common stock or the combined voting power of voting securities of the Company; •
specified changes in a majority of the members of the Board of Directors; •
a reorganization, share exchange or merger unless, following the transaction: ◦
the stockholders of the Company prior to the transaction continue to own more than 60 percent of the outstanding common stock and combined voting power of the resulting entity, and ◦
at least a majority of the members of the Board of Directors of the entity resulting from the transaction were members of the Company’s Board at the time of executing the agreement to reorganize or merge; •
a liquidation or dissolution of the Company; or •
a sale of all or substantially all of its assets, other than to a corporation of which either (i) more than 60 percent of the outstanding common stock and combined voting power is owned by stockholders of the Company or (ii) at least a majority of the members of the Board of Directors were members of the Company’s Board. In the severance compensation agreements, “cause” has the same meaning set forth in Mr. Jorden’s legacy Cimarex severance compensation agreement and “good reason” means (1) a reduction in the executive officer’s base salary; (2) a material reduction in the executive officer’s annual incentive compensation; (3) a required relocation of the executive officer’s principal place of business by more than 50 miles, other than a relocation to Houston, Texas; and (4) a material diminution in the scope of the executive officer’s duties or responsibilities.
Stephen Bell Severance Compensation Arrangement Mr. Bell is party to a legacy Cimarex severance compensation agreement that provides for certain severance benefits upon a qualifying termination, with such severance benefits being enhanced upon a CIC termination (which, for Mr. Bell, is a qualifying termination within two years following a change in control). Mr. Bell’s legacy Cimarex severance compensation agreement provides for the same cash payments and insurance continuation as Mr. Jorden’s legacy Cimarex severance compensation agreement, except that the multiple of Mr. Bell’s payments and duration of benefits continuation will be 1.5 times and 18 months, as applicable, in the event of the qualifying termination is not a CIC termination and 2 times and 24 months, as applicable, in the event of a CIC termination. Mr. Bell’s legacy Cimarex severance compensation agreement provides for the same treatment of his outstanding equity awards as is provided for in the Coterra severance compensation agreements and also includes a Section 280G “best-net” cutback provision. In Mr. Bell’s severance compensation agreement, “cause” has the same meaning set forth in Mr. Jorden’s legacy Cimarex severance compensation agreement and the Coterra severance compensation agreements, and “good reason” means (1) a material diminution in Mr. Bell’s duties or responsibilities, authorities, powers or functions; (2) a reduction of Mr. Bell’s base salary; (3) a material reduction in Mr. Bell’s annual incentive compensation opportunity or long-term incentive compensation opportunity; and (4) a required relocation of Mr. Bell’s principal place of business by more than 50 miles. Mr. Bell’s severance compensation agreement also utilizes the same definition of a “change in control” as the Coterra severance compensation agreements, except that the 60 percent threshold is 40 percent in Mr. Bell’ legacy Cimarex severance compensation agreement. Scott Schroeder and Christopher Clason Terminations On September 30, 2023, each of Mr. Schroeder and Mr. Clason separated from the Company. In connection with Mr. Schroeder’s retirement, pursuant to the legacy Cabot retirement policy and the applicable award agreements, equity awards granted to Mr. Schroeder remain outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to the satisfaction of any performance criteria, as if Mr. Schroeder had remained in continuous employment with the Company through the original vesting date of such awards. In connection with Mr. Clason’s separation, pursuant to the legacy Cimarex severance and compensation agreement to which he was party, Mr. Clason became eligible to receive cash severance payments and benefits that were subject to Mr. Clason’s execution of a release of claims and are detailed in the “Christopher H. Clason” table below. Mr. Clason began receiving such payments and benefits in 2024, following his execution of a release of claims. In addition, Mr. Clason received pro-rata vesting of certain equity awards and, as described in “Compensation Discussion and Analysis—Change in Control and Severance Agreements and Other Termination Payments” on page 35: (i) equity awards granted to Mr. Clason prior to February 21, 2023 that would have otherwise been forfeited remained outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to the satisfaction of any performance criteria, as if Mr. Clason had remained in continuous employment with the Company through the original vesting date of such awards and (ii) 70 percent of Mr. Clason’s equity awards granted on February 21, 2023 remain outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to satisfaction of any performance criteria as if Mr. Clason had remained in continuous employment with the Company through the original vesting date of such awards, with 30 percent being forfeited in connection with Mr. Clason’s separation. Any equity awards that were not accelerated or that do not otherwise remain outstanding and eligible to vest were forfeited. Pursuant to the legacy Cimarex severance and compensation agreement, Mr. Clason is subject to one-year post-termination non-competition and non-solicitation (of both employees and clients or customers) restrictions. While his legacy Cimarex severance and compensation agreement contained a Section 280G “best-net” cutback provision, because of the structure of the Merger, Section 280G did not apply to legacy Cimarex officers in connection with the Merger and no Section 280G “best-net” analysis was applied to Mr. Clason’s severance payments and benefits. The award agreements for Messrs. Lindeman and Stalnaker’s December 2021 long-term equity awards include provisions for the immediate vesting of all unvested awards upon a change in control.The award agreements for Messrs. Jorden’s and Bell’s December 2021 long-termnamed executive officer’s equity awards include provisions for the immediate vesting of all unvested awards upon a change in control or upon the termination of Messrs. Jorden’s or Bell’sthe named executive officer’s employment due to death or disability. Mr. Young’s award agreements entered into in connection with the commencement of his employment also provide for immediate vesting of all unvested awards upon his termination without cause or resignation for good reason. Additionally, the named executive officer’s February 2023 equity awards are eligible for retirement vesting pursuant to the Company’s retirement policy, which policy provides that, among other requirements and as determined by the Compensation Committee in accordance with such policy, where an employee (a) is at least 55 years old and (b) has at least five years of service, between 50 percent and 100 percent of each award may remain outstanding and eligible to vest pursuant to its regular vesting schedule. Mr. Bell’s equity award agreement agreements
further providesprovide for prorated vesting of his December 2021 and February 2022 long-term equity incentive awardawards upon his termination by(except for a termination for cause with respect to the Company without cause or resignation for good reason.For a more detailed discussion of the terms of these awards see above under “Grants of Plan-Based Awards.”
COTERRA• 2022 PROXY STATEMENT | 59 |
granted in December 2021). Potential Payments to NEOs Named Executive Officers The tables below reflect the compensation payable to each NEOnamed executive officer upon a voluntary resignation, retirement, involuntary not-for-cause termination, for cause termination, termination following a change-in-control,change in control, and in the event of disability or death of the executive. The table reflectstables reflect the amounts that would have been paid to each NEOnamed executive officer assuming the event occurred on December 31, 2021. The value2023, except for Messrs. Schroeder and Clason, whose tables reflect the amounts paid to each of any accelerated long-term incentive awards was computed using the closing price of the Company’s Common Stock on December 31, 2021 of $19.00.Messrs. Schroeder and Clason, respectively, in connection with their respective separations. The actual amounts of any compensation to be paid out can only be determined at the time of such executive’s separation from the Company. Dan O. Dinges, Executive Chairman
Executive Benefit and Payments Upon Separation | | Voluntary Resignation | | | Retirement | | | Involuntary Not For Cause Termination(1) | | | For Cause Termination | | | Change In Control | | | Disability | | | Death | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (3x) | | | – | | | | – | | | $ | 3,300,000 | | | | – | | | $ | 3,300,000 | | | | – | | | | – | | Multiple of Bonus (3x) | | | – | | | | – | | | $ | 6,300,000 | | | | – | | | $ | 6,300,000 | | | | – | | | | – | | Current Year Bonus | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Long-Term Incentive Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance Share Vesting | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(2) | | $ | 17,602,371 | | | $ | 17,602,371 | | | $ | 17,602,371 | | | $ | 17,602,371 | | | $ | 17,602,371 | | | $ | 17,602,371 | | | $ | 17,602,371 | | Health, Life, and Welfare Benefits Continuation | | | – | | | | – | | | $ | 77,962 | | | | – | | | $ | 77,962 | | | | – | | | | – | | Excise Tax & Gross-Up | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Outplacement Services | | | – | | | | – | | | $ | 165,000 | | | | – | | | $ | 165,000 | | | | – | | | | – | | Earned Vacation | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | Total | | $ | 17,602,371 | | | $ | 17,602,371 | | | $ | 27,445,333 | | | $ | 17,602,371 | | | $ | 27,445,333 | | | $ | 17,602,371 | | | $ | 17,602,371 | |
(1) | Pursuant to the terms of the Dinges Agreement, upon certain terminations of employment within two years following a change in control, or a termination of employment prior to the end of the Dinges Employment Period, Mr. Dinges is generally entitled to the benefits set forth in the Change-in-Control Agreement, which include (1) a lump-sum cash payment equal to (x) three times the sum of his base salary and (y) the greater of his target bonus or actual annual bonus paid in three prior years, (2) three years of continued medical, dental and life insurance coverage, and (3) outplacement assistance. As of December 31, 2021, Mr. Dinges did not hold any unvested equity awards. | (2) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “2021 Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon the NEO’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination. |
COTERRA• 2022 PROXY STATEMENT | 60 |
Thomas E. Jorden,Chief Executive Officer and PresidentExecutive Benefit and Payments Upon Separation | | Voluntary Resignation | | | Involuntary Not For Cause Termination or “Good Reason” Resignation(1) | | | For Cause Termination | | | Change In Control(2) | | | Disability | | | Death | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (2x or 3x) | | | – | | | $ | 2,250,000 | | | | – | | | $ | 3,375,000 | | | | – | | | | – | | Multiple of Bonus (2x or 3x) | | | – | | | $ | 2,925,000 | | | | – | | | $ | 4,387,500 | | | | – | | | | – | | Current Year Bonus (pro-rated) | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Long-Term Incentive Compensation | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting(3) | | | – | | | $ | 40,809,891 | | | | – | | | $ | 40,809,891 | | | $ | 40,809,891 | | | $ | 40,809,891 | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(4) | | $ | 30,711 | | | $ | 30,711 | | | $ | 30,711 | | | $ | 30,711 | | | $ | 30,711 | | | $ | 30,711 | | Health, Life, and Welfare Benefits Continuation | | | – | | | $ | 67,223 | | | | – | | | $ | 100,835 | | | | – | | | | – | | Excise Tax & Gross-Up | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Outplacement Services | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Earned Vacation | | $ | 105,470 | | | $ | 105,470 | | | $ | 105,470 | | | $ | 105,470 | | | $ | 105,470 | | | $ | 105,470 | | Total | | $ | 136,181 | | | $ | 46,242,542 | | | $ | 136,181 | | | $ | 48,863,654 | | | $ | 40,946,072 | | | $ | 40,946,072 | |
(1) | Pursuant to Mr. Jorden’s legacy Cimarex severance compensation agreement, Mr. Jorden is entitled to payments equal to (1) two times the sum of (a) the average of his annual base salary received during the 24 months prior to his termination and (b) the average of his cash incentive awards received during the 24 months prior to his termination; (2) a pro-rated bonus for the calendar year of termination, based on the average of the last two annual bonuses paid to him; and (3) 24 months of continued medical, dental, vision disability and life insurance benefits. Because the 2021 bonus amounts were scored by the legacy Cimarex compensation committee, the table assumes that if Mr. Jorden had terminated his employment on December 31, 2021, he would not receive the pro-rated bonus, as such amount would have already been earned. The Merger constituted a change in control under Mr. Jorden’s legacy Cimarex severance compensation agreement but for illustrative purposes, this column assumes that no change in control has occurred to highlight the difference in separation benefits Mr. Jorden would receive if he were to be terminated without cause or resign for good reason outside of a change in control and those he would receive were such a termination to occur in connection with a change in control. However, if Mr. Jorden had actually been terminated without cause or resign for good reason, in each case, as of December 31, 2021, because the Merger constituted a change in control under his legacy Cimarex severance compensation agreement and because December 31, 2021 would have fallen within the period during which his termination would have been deemed to occur in connection with a change in control, he would have been entitled to the amounts set forth in the change in control column. | (2) | Pursuant to Mr. Jorden’s legacy Cimarex severance compensation agreement, if Mr. Jorden is terminated without cause or for good reason within a specified time following a change in control, Mr. Jorden is entitled to payments equal to (1) three times the sum of (a) the average of his annual base salary received during the 24 months prior to his termination and (b) the average of his cash incentive awards received during the 24 months prior to his termination; (2) a pro-rated bonus for the calendar year of termination, based on the average of the last two annual bonuses paid to him; and (3) 36 months of continued medical, dental, vision disability and life insurance benefits. Because the 2021 bonus amounts were scored by the legacy Cimarex compensation committee, the table assumes that if Mr. Jorden had terminated his employment on December 31, 2021, he would not receive the pro-rated bonus, as such amount would have already been earned. | (3) | Pursuant to the Jorden Letter Agreement, if Mr. Jorden’s employment is terminated without cause or for good reason, or due to Mr. Jorden’s death or disability, his outstanding equity awards will vest in full. | (4) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “2021 Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon the NEO’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination. |
COTERRA• 2022 PROXY STATEMENT | 61 |
| Executive Benefit and Payments Upon Separation | | | | Voluntary Resignation | | | | Retirement | | | | Involuntary Not For Cause Termination or “Good Reason” Resignation(1) | | | | For Cause Termination | | | | Change In Control(1) | | | | Disability | | | | Death | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (3x) | | | | | | | | | | | | | | | | | | | $ | 3,375,000 | | | | | | | | | | | | | $ | 3,375,000 | | | | | | | | | | | | | | | | | | Multiple of Bonus (3x) | | | | | | | | | | | | | | | | | | | $ | 5,943,750 | | | | | | | | | | | | | $ | 5,943,750 | | | | | | | | | | | | | | | | | | Bonus Payment | | | | | | | | | | | | | | | | | | | $ | 1,981,250 | | | | | | | | | | | | | $ | 1,981,250 | | | | | | | | | | | | | | | | | | Long-Term Incentive Compensation(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | | | | $ | 5,547,818 | | | | | | $ | 12,473,130 | | | | | | | | | | | | | $ | 18,020,948 | | | | | | $ | 18,020,948 | | | | | | $ | 18,020,948 | | | | Performance Share Vesting | | | | | | | | | | | | $ | 11,095,637 | | | | | | | | | | | | | | | | | | | | $ | 32,973,065 | | | | | | $ | 32,973,065 | | | | | | $ | 32,973,065 | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(3) | | | | | $ | 575,883 | | | | | | $ | 575,883 | | | | | | $ | 575,883 | | | | | | $ | 575,883 | | | | | | $ | 575,883 | | | | | | $ | 575,883 | | | | | | $ | 575,883 | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | $ | 225,324 | | | | | | | | | | | | | $ | 225,324 | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | $ | 46,249 | | | | | | $ | 46,249 | | | | | | $ | 46,249 | | | | | | $ | 46,249 | | | | | | $ | 46,249 | | | | | | $ | 46,249 | | | | | | $ | 46,249 | | | | Total | | | | | $ | 622,132 | | | | | | $ | 17,265,587 | | | | | | $ | 24,620,586 | | | | | | $ | 622,132 | | | | | | $ | 63,141,469 | | | | | | $ | 51,616,145 | | | | | | $ | 51,616,145 | | |
Scott C. Schroeder,
Pursuant to the Jorden Letter Agreement, if Mr. Jorden is terminated without cause or for good reason, including in connection with a change of control, Mr. Jorden is entitled to (a) monthly installment payments over 36 months that, in the aggregate, equal three times the sum of (i) his annual base salary received during the 24 months prior to the date of termination, divided by two and (ii) the amount of cash incentive awards received by Mr. Jorden during the 24 months prior to the date of termination, divided by two; (b) a lump sum cash payment equal to the product of the average annual bonus paid to Mr. Jorden for the two fiscal years prior to termination and (ii) a fraction, the numerator of which is the number of days in the calendar year through the date of termination and the denominator of which is 365; and (c) 36 months of continued medical, dental, vision disability and life insurance benefits. (2)
Upon a change in control, or if Mr. Jorden’s employment is terminated due to Mr. Jorden’s death or disability, his outstanding equity awards will vest in full. Additionally, if Mr. Jorden’s employment is terminated without cause or for good reason, the time-based equity awards granted to Mr. Jorden in 2021 would become fully vested and assuming that (a) Mr. Jorden had given timely notice of his intent to retire from the Company on December 31, 2023 and (b) such notice was acknowledged and accepted in writing by the Chair of the Compensation Committee or its respective designee, 100 percent of the equity awards granted to Mr. Jorden in February 2023 would have remained outstanding until the regularly scheduled vesting date in accordance with the Company’s retirement policy. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. (3)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Jorden under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Jorden’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Shannon E. Young III, Executive Vice President and Chief Financial Officer | Executive Benefit and Payments Upon Separation | | | | Voluntary Resignation | | | | Retirement | | | | Involuntary Not For Cause Termination or “Good Reason” Resignation(1) | | | | For Cause Termination | | | | Change In Control(2) | | | | Disability | | | | Death | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 930,000 | | | | | | | | | | | | | $ | 1,240,000 | | | | | | | | | | | | | | | | | | Multiple of Bonus (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 930,000 | | | | | | | | | | | | | $ | 1,240,000 | | | | | | | | | | | | | | | | | | Pro Rata Bonus | | | | | | | | | | | | | | | | | | | $ | 620,000 | | | | | | | | | | | | | $ | 620,000 | | | | | | | | | | | | | | | | | | Long-Term Compensation(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | | | | | | | | | | | $ | 2,067,886 | | | | | | | | | | | | | $ | 2,067,886 | | | | | | $ | 2,067,886 | | | | | | $ | 2,067,886 | | | | Performance Share Vesting | | | | | | | | | | | | | | | | | | | $ | 4,135,771 | | | | | | | | | | | | | $ | 4,137,771 | | | | | | $ | 4,137,771 | | | | | | $ | 4,137,771 | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(4) | | | | | $ | 6,185 | | | | | | $ | 6,185 | | | | | | $ | 6,185 | | | | | | $ | 6,185 | | | | | | $ | 6,185 | | | | | | $ | 6,185 | | | | | | $ | 6,185 | | | | Health, Life, and Welfare Continuation | | | | | | | | | | | | | | | | | | | $ | 48,365 | | | | | | | | | | | | | $ | 64,486 | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | $ | 29,799 | | | | | | $ | 29,799 | | | | | | $ | 29,799 | | | | | | $ | 29,799 | | | | | | $ | 29,799 | | | | | | $ | 29,799 | | | | | | $ | 29,799 | | | | Total | | | | | $ | 35,984 | | | | | | $ | 35,984 | | | | | | $ | 8,768,006 | | | | | | $ | 35,984 | | | | | | $ | 9,406,127 | | | | | | $ | 6,241,640 | | | | | | $ | 6,241,640 | | |
(1)Executive Benefit and Payments Upon Separation | | Voluntary Resignation | | | Involuntary Not For Cause Termination | | | For Cause Termination | | | Change In Control | | | Disability | | | Death | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(2) | | $ | 13,669,385 | | | $ | 13,669,385 | | | $ | 13,669,385 | | | $ | 13,669,385 | | | $ | 13,669,385 | | | $ | 13,669,385 | | Health, Life, and Welfare Benefits Continuation | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Excise Tax & Gross-Up | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Outplacement Services | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Earned Vacation | | $ | 41,856 | | | $ | 41,856 | | | $ | 41,856 | | | $ | 41,856 | | | $ | 41,856 | | | $ | 41,856 | | Total | | $ | 13,711,241 | | | $ | 13,711,241 | | | $ | 13,711,241 | | | $ | 13,711,241 | | | $ | 13,711,241 | | | $ | 13,711,241 | |
(1) | As discussed above in the “–2021 Compensation Decisions–Merger-Related Compensation Decision–Termination of Legacy Cabot Change-in-Control Agreements” and “–Change-in-Control and Severance Agreements–Legacy Cabot Change-in-Control-Agreements” sections, in connection with the Merger Mr. Schroeder waived his change-in-control agreement in exchange for a one-time payment to his deferred compensation account and therefore is not entitled to any severance compensation or benefits in connection with a termination of his employment. | (2) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “2021 Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon the NEO’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination. |
Pursuant to Mr. Young’s Coterra severance compensation agreement, if Mr. Young is terminated without cause or for good reason not in connection with a change in control, Mr. Young is entitled to (a) monthly installment payments over 18 months that, in the aggregate, equal one-and-a-half times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination; and (3) 18 months of continued medical, dental, vision disability and life insurance benefits. (2)
Pursuant to Mr. Young’s Coterra severance compensation agreement, if Mr. Young is terminated without cause or for good reason within 18 months following a change in control, Mr. Young is entitled to (a) monthly installment payments over 24 months that, in the aggregate, equal two times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination. (3)
For the equity awards granted to Mr. Young in July 2023, receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Young remains continuously employed through such date, except that, pursuant to the terms of the award agreements, the awards will fully vest upon a change in control of the Company or a termination of Mr. Young’s employment without cause or for good reason or due to his death or disability. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. (4)
Amount in this row represent earned compensation voluntarily deferred by Mr. Young under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Young’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Stephen P. Bell, Executive Vice President—Business Development | Executive Benefit and Payments Upon Separation | | | | Voluntary Resignation | | | | Retirement | | | | Involuntary Not For Cause Termination or “Good Reason” Resignation(1) | | | | For Cause Termination | | | | Change In Control(2) | | | | Disability | | | | Death | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 852,000 | | | | | | | | | | | | | $ | 1,136,000 | | | | | | | | | | | | | | | | | | Multiple of Bonus (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 1,276,500 | | | | | | | | | | | | | $ | 1,702,000 | | | | | | | | | | | | | | | | | | Bonus Payment | | | | | | | | | | | | | | | | | | | $ | 851,000 | | | | | | | | | | | | | $ | 851,000 | | | | | | | | | | | | | | | | | | Long-Term Incentive Compensation(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | $ | 3,383,648 | | | | | | $ | 5,047,986 | | | | | | $ | 3,383,648 | | | | | | $ | 834,340 | | | | | | $ | 6,718,932 | | | | | | $ | 6,718,932 | | | | | | $ | 6,718,932 | | | | Performance Share Vesting | | | | | $ | 2,503,019 | | | | | | $ | 5,831,695 | | | | | | $ | 2,503,019 | | | | | | $ | 2,503,019 | | | | | | $ | 7,266,616 | | | | | | $ | 7,266,616 | | | | | | $ | 7,266,616 | | | | 2024 LTIP Grant Date Fair Value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 4,500,000 | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(4) | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | $ | 77,381 | | | | | | | | | | | | | $ | 103,175 | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | Total | | | | | $ | 6,082,034 | | | | | | $ | 11,075,048 | | | | | | $ | 9,138,915 | | | | | | $ | 3,532,726 | | | | | | $ | 17,973,089 | | | | | | $ | 14,180,915 | | | | | | $ | 18,680,915 | | |
(1)
Pursuant to Mr. Bell’s legacy Cimarex severance compensation agreement, if Mr. Bell is terminated without cause or for good reason not in connection with a change in control, Mr. Bell is entitled to (a) monthly installment payments over 18 months that, in the aggregate, equal one-and-a-half times the sum of (i) annual base salary received during the 24 months prior to the date of termination, divided by two and (ii) the amount of cash incentive awards received by Mr. Bell during the 24 months prior to the date of termination, divided by two; (b) a lump sum cash payment equal to the product of (i) the average annual bonus paid to Mr. Bell for the two fiscal years prior to termination and (ii) a fraction, the numerator of which is the number of days in the calendar year through the date of termination and the denominator of which is 365; and (c) 18 months of continued medical, dental, vision disability and life insurance benefits. (2)
Pursuant to Mr. Bell’s legacy Cimarex severance compensation agreement, if Mr. Bell is terminated without cause or for good reason within 24 months following a change in control, Mr. Bell is entitled to (a) monthly installment payments over 24 months that, in the aggregate, equal two times the sum of (i) annual base salary received during the 24 months prior to the date of termination, divided by two and (ii) the amount of cash incentive awards received by Mr. Bell during the 24 months prior to the date of termination, divided by two; (b) a lump sum cash payment equal to the product of (i) the average annual bonus paid to Mr. Bell for the two fiscal years prior to termination and (ii) a fraction, the numerator of which is the number of days in the calendar year through the date of termination and the denominator of which is 365; and (c) 24 months of continued medical, dental, vision disability and life insurance benefits. (3)
For the equity awards granted to Mr. Bell in December 2021, February 2022 and February 2023, receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Bell remains continuously employed through such date, except that (a) with respect to the time-based awards granted to Mr. Bell in December 2021 and February 2022, in the event of Mr. Bell’s termination (except for a termination for cause with respect to the awards granted in December 2021), the award will vest pro-rata based on the number of days that elapsed between December 1, 2021 and February 28, 2022, respectively, and the date of his termination, over the full vesting period, (b) with respect to the performance-based awards granted to Mr. Bell in February 2022, in the event of Mr. Bell’s termination, a pro-rata portion (based on the number of days that elapsed between February 2022 and the date of his termination over the performance period) will remain outstanding and eligible to vest, and (c) all awards will fully vest upon a change in control of the Company or a termination of Mr. Bell’s employment due to his death or disability. Additionally, assuming that (x) Mr. Bell had given timely notice of his intent to retire from the Company on December 31, 2023 and (y) such notice was acknowledged and accepted in writing by the Chief Executive Officer or the Chair of the Compensation Committee or his respective designee, 100 percent of the equity awards granted to Mr. Bell in February 2023 would have remained outstanding until the regularly scheduled vesting date in accordance with the Company’s retirement policy. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. Pursuant to the August 2023 letter agreement with Mr. Bell, in the unfortunate event of Mr. Bell’s death prior to the date the 2024 long-term incentive award is granted, the Company will pay to Mr. Bell’s estate a lump sum cash payment of $4.5 million (less taxes). (4)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Bell under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Bell’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Blake A. Sirgo, Senior Vice President—Operations | Executive Benefit and Payments Upon Separation | | | | Voluntary Resignation | | | | Retirement | | | | Involuntary Not For Cause Termination or “Good Reason” Resignation(1) | | | | For Cause Termination | | | | Change In Control(2) | | | | Disability | | | | Death | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 684,000 | | | | | | | | | | | | | $ | 912,000 | | | | | | | | | | | | | | | | | | Multiple of Bonus (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 888,000 | | | | | | | | | | | | | $ | 1,184,000 | | | | | | | | | | | | | | | | | | Pro Rata Bonus | | | | | | | | | | | | | | | | | | | $ | 456,000 | | | | | | | | | | | | | $ | 456,000 | | | | | | | | | | | | | | | | | | Long-Term Incentive Compensation(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | | | | | | | | | | | $ | 1,127,877 | | | | | | | | | | | | | $ | 2,433,817 | | | | | | $ | 2,433,817 | | | | | | $ | 2,433,817 | | | | Performance Share Vesting | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,810,569 | | | | | | $ | 2,810,569 | | | | | | $ | 2,810,569 | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(4) | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | $ | 55,088 | | | | | | | | | | | | | $ | 73,451 | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | Total | | | | | $ | 177,523 | | | | | | $ | 177,523 | | | | | | $ | 3,388,489 | | | | | | $ | 177,523 | | | | | | $ | 8,047,361 | | | | | | $ | 5,421,910 | | | | | | $ | 5,421,910 | | |
(1)
Pursuant to Mr. Sirgo’s Coterra severance compensation agreement, if Mr. Sirgo is terminated without cause or for good reason not in connection with a change in control, Mr. Sirgo is entitled to (a) monthly installment payments over 18 months that, in the aggregate, equal one-and-a-half times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination; and (c) 18 months of continued medical, dental, vision disability and life insurance benefits. (2)
Pursuant to Mr. Sirgo’s Coterra severance compensation agreement, if Mr. Sirgo is terminated without cause or for good reason within 18 months following a change in control, Mr. Sirgo is entitled to (a) monthly installment payments over 24 months that, in the aggregate, equal two times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (ii) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination; and (c) 24 months of continued medical, dental, vision disability and life insurance benefits. (3)
For the equity awards granted to Mr. Sirgo in December 2021, February 2022, and February 2023 receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Sirgo remains continuously employed through such date, except that (a) in the event of Mr. Sirgo’s termination by the Company not for cause or resignation for good reason, the December 2021 and February 2022 time-based awards will vest pro-rata based on the period of Mr. Sirgo’s continuous service elapsed over the full vesting period, and (b) all awards will fully vest upon a change in control of the Company or a termination of Mr. Sirgo’s employment due to his death or disability. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. (4)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Sirgo under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Sirgo’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Kevin W. Smith, Vice President—Chief Technology Officer | Executive Benefit and Payments Upon Separation | | | | Voluntary Resignation | | | | Retirement | | | | Involuntary Not For Cause Termination or “Good Reason” Resignation(1) | | | | For Cause Termination | | | | Change In Control(2) | | | | Disability | | | | Death | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 645,000 | | | | | | | | | | | | | $ | 860,000 | | | | | | | | | | | | | | | | | | Multiple of Bonus (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 825,000 | | | | | | | | | | | | | $ | 1,100,000 | | | | | | | | | | | | | | | | | | Pro Rata Bonus | | | | | | | | | | | | | | | | | | | $ | 430,000 | | | | | | | | | | | | | $ | 430,000 | | | | | | | | | | | | | | | | | | Long-Term Incentive Compensation(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | | | | | | | | | | | $ | 1,127,877 | | | | | | | | | | | | | $ | 2,433,817 | | | | | | $ | 2,433,817 | | | | | | $ | 2,433,817 | | | | Performance Share Vesting | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,810,569 | | | | | | $ | 2,810,569 | | | | | | $ | 2,810,569 | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(4) | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | $ | 51,534 | | | | | | | | | | | | | $ | 68,712 | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | Total | | | | | $ | 137,602 | | | | | | $ | 137,602 | | | | | | $ | 3,217,013 | | | | | | $ | 137,602 | | | | | | $ | 7,840,700 | | | | | | $ | 5,381,988 | | | | | | $ | 5,381,988 | | |
(1)
Pursuant to Mr. Smith’s Coterra severance compensation agreement, if Mr. Smith is terminated without cause or for good reason not in connection with a change in control, Mr. Smith is entitled to (a) monthly installment payments for 18 months that, in the aggregate, equal one-and-a-half times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination; and (c) 18 months of continued medical, dental, vision disability and life insurance benefits. (2)
Pursuant to Mr. Smith’s Coterra severance compensation agreement, if Mr. Smith is terminated without cause or for good reason within 18 months following a change in control, Mr. Smith is entitled to (a) monthly installment payments over 24 months that, in the aggregate, equal two times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated bonus for the calendar year of termination, based on the average of the last two annual bonuses paid to him; and (c) 24 months of continued medical, dental, vision disability and life insurance benefits. (3)
For the equity awards granted to Mr. Smith in December 2021, February 2022, and February 2023 receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Smith remains continuously employed through such date, except that (a) in the event of Mr. Smith’s termination by the Company not for cause or resignation for good reason, the December 2021 and February 2022 time-based awards will vest pro-rata based on the period of Mr. Smith’s continuous service elapsed over the full vesting period, and (b) all awards will fully vest upon a change in control of the Company or a termination of Mr. Smith’s employment due to his death or disability. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. (4)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Smith under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Smith’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Scott C. Schroeder, Former Executive Vice President Business DevelopmentExecutive Benefit and Payments Upon Separation | | Involuntary Not For Cause Termination or “Good Reason” Resignation(1) | | | For Cause Termination | | | Change In Control(2) | | | Disability | | | Death | | Compensation | | | | | | | | | | | | | | | | | | | | | Multiple of Salary | | $ | 831,000 | | | | – | | | $ | 1,108,000 | | | | – | | | | – | | Multiple of Bonus | | $ | 831,000 | | | | – | | | $ | 1,108,000 | | | | – | | | | – | | Current Year Bonus | | | – | | | | – | | | | – | | | | – | | | | – | | Long-Term Incentive Compensation | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting(3) | | $ | 45,794 | | | | – | | | $ | 2,785,832 | | | $ | 2,785,832 | | | $ | 2,785,832 | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(4) | | $ | 10,441 | | | $ | 10,441 | | | $ | 10,441 | | | $ | 10,441 | | | $ | 10,441 | | Health, Life, and Welfare Benefits Continuation | | $ | 20,273 | | | | – | | | $ | 27,031 | | | | – | | | | – | | Excise Tax & Gross-Up | | | – | | | | – | | | | – | | | | – | | | | – | | Outplacement Services | | | – | | | | – | | | | – | | | | – | | | | – | | Earned Vacation | | $ | 63,924 | | | $ | 63,924 | | | $ | 63,924 | | | $ | 63,924 | | | $ | 63,924 | | Total | | $ | 1,802,432 | | | $ | 74,365 | | | $ | 5,103,228 | | | $ | 2,860,197 | | | $ | 2,860,197 | |
and Chief Financial Officer As described above, Mr. Schroeder retired from the Company effective September 30, 2023. The table below reflects the compensation paid to Mr. Schroeder in connection with his retirement. | Executive Benefit and Payments Upon Separation | | | | Voluntary Resignation | | | | Retirement | | | | Involuntary Not For Cause Termination or “Good Reason” Resignation | | | | For Cause Termination | | | | Change In Control | | | | Disability | | | | Death | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Bonus | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Current Year Bonus (pro-rated) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Compensation(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | $ | 4,365,059 | | | | | | | | | | | | | | | | | | | | | | | | Performance Share Vesting | | | | | | | | | $ | 6,851,819 | | | | | | | | | | | | | | | | | | | | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(2) | | | | | | | | | $ | 14,904,570 | | | | | | | | | | | | | | | | | | | | | | | | Health, Life, and Welfare Continuation(3) | | | | | | | | | $ | 140,688 | | | | | | | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | | | | | $ | 62,428 | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | $ | 26,324,564 | | | | | | | | | | | | | | | | | | | | | | |
(1)
In connection with Mr. Schroeder’s retirement, pursuant to the legacy Cabot retirement policy and the applicable award agreements, equity awards granted to Mr. Schroeder remain outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to the satisfaction of any performance criteria, as if Mr. Schroeder had remained in continuous employment with the Company through the original vesting date of such awards. Performance share awards granted to Mr. Schroeder in February 2023 will vest pro-rata based on the number of days that elapsed between February 21, 2023 and the date of his retirement; all other outstanding equity awards as of the date of Mr. Schroeder’s retirement will be determined without proration. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on September 29, 2023 (the last trading day prior to Mr. Schroeder’s retirement) of $27.05 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. The value of these awards that remained outstanding following Mr. Schroeder’s retirement as of December 31, 2023 are included in the “Outstanding Equity Awards Table at Fiscal Year-End” above. (2)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Schroeder under the terms of the Coterra Energy Inc. Deferred Compensation Plan. For more information, see “Nonqualified Deferred Compensation” above. Payment of the deferred compensation is based upon Mr. Schroeder’s election at the time of deferral. (3)
Mr. Schroeder and his eligible dependents are entitled to receive certain health benefit coverage. Such health benefit coverage is a contributory plan with participants’ contributions adjusted annually.
Christopher H. Clason, Former Senior Vice President and Chief Human Resources Officer As described above, Mr. Clason separated from the Company effective September 30, 2023. The table below reflects the compensation paid to Mr. Clason in connection with his separation. | Executive Benefit and Payments Upon Separation | | | | Voluntary Resignation | | | | Retirement | | | | Involuntary Not For Cause Termination or “Good Reason” Resignation | | | | For Cause Termination | | | | Change In Control(1) | | | | Disability | | | | Death | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary | | | | | | | | | | | | | | | | | | | | | $ | 972,385 | | | | | | | | | | | | Multiple of Bonus | | | | | | | | | | | | | | | | | | | | | $ | 1,440,000 | | | | | | | | | | | | Bonus Payment | | | | | | | | | | | | | | | | | | | | | $ | 538,521 | | | | | | | | | | | | Long-Term Incentive Compensation(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | | | | | | | | | | | | | $ | 4,395,030 | | | | | | | | | | | | Performance Share Vesting | | | | | | | | | | | | | | | | | | | | | $ | 4,429,221 | | | | | | | | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(3) | | | | | | | | | | | | | | | | | | | | | $ | 465,487 | | | | | | | | | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | | | $ | 82,800 | | | | | | | | | | | | Earned Vacation(4) | | | | | | | | | | | | | | | | | | | | | $ | (7,434) | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | | | | | $ | 12,316,010 | | | | | | | | | | |
(1)
Pursuant to Mr. Clason’s legacy Cimarex severance compensation agreement, because Mr. Clason underwent a termination for good reason within 24 months following a change in control, Mr. Clason became entitled to (a) two times the sum of (i) the average of his annual base salary received during the 24 months prior to his termination and (ii) the average of his cash incentive awards received during the 24 months prior to his termination; (b) a pro-rated bonus for the calendar year of termination, based on the average of the last two annual bonuses paid to him; and (c) 24 months of continued medical, dental, vision disability and life insurance benefits. The payments described in subclauses (a) and (b) will be paid in monthly installments over the 24-month period following Mr. Clason’s termination, and the payment described in subclause (2) was paid at the time of Mr. Clason’s termination. (2)
In connection with Mr. Clason’s separation, his time-based awards granted prior to February 21, 2023 vested pro-rata and a pro-rata portion of his performance-based awards granted prior to February 21, 2023 remained outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to the satisfaction of any performance criteria, in each case with such pro-rata portion based on the number of days that elapsed between December 1, 2022 and February 28, 2022, as applicable, and the date of his termination, over the full vesting period. In addition to the pro-rata vesting that occurred in connection with Mr. Clason’s separation as described above, (a) the portion of the equity awards granted to Mr. Clason prior to February 21, 2023 that would have otherwise been forfeited remain outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to the satisfaction of any performance criteria, as if Mr. Clason had remained in continuous employment with the Company through the original vesting date of such awards and (b) 70 percent of Mr. Clason’s equity awards granted on February 21, 2023 remain outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to satisfaction of any performance criteria as if Mr. Clason had remained in continuous employment with the Company through the original vesting date of such awards, with 30 percent forfeited in connection with Mr. Clason’s separation. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on September 29, 2023 (the last trading day prior to Mr. Clason’s separation) of $27.05 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. The value of these awards that remained outstanding following Mr. Clason’s separation as of December 31, 2023 are included in the “Outstanding Equity Awards Table at Fiscal Year-End” above. (3)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Clason under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. In the case of Mr. Clason’s separation from the Company, payment of the deferred compensation is in a lump sum six months from the date of termination. (4)
Mr. Clason had a negative vacation balance upon termination, therefore his final pay check was reduced by this amount.
PAY RATIO DISCLOSURE The following table sets forth comparative information regarding: •
the annual total compensation of our Chief Executive Officer, Mr. Jorden, for the year ended December 31, 2023, determined using the methodology described below; •
the annual total compensation of our median employee for the year ended December 31, 2023, determined on the basis described below; and •
a ratio comparison of those two amounts, each as determined in accordance with rules prescribed by the SEC. | CEO Pay Ratio | | | | | | | | | | CEO annual total compensation (A) | | | | | $ | 14,547,853(1) | | | | Median employee annual total compensation (B) | | | | | $ | 157,111 | | | | Ratio of (A) to (B) | | | | | | 93:1 | | |
(1)
Determined based on the total compensation paid to Mr. Jorden as reported in the Summary Compensation Table. Median Employee As permitted by SEC rules, we are using the same median employee identified in the “Pay Ratio Disclosure” section of our proxy statement for the 2023 annual meeting of stockholders. We believe that there has been no change in our employee population or employee compensation arrangements that we reasonably believe would significantly impact our pay ratio disclosure. For purposes of identifying our median employee, as permitted by the SEC rules, we examined our employee population, excluding our Chief Executive Officer, as of December 31, 2022, as described in the “Pay Ratio Disclosure” section of our proxy statement for the 2023 annual meeting of stockholders. In making that determination, and in using the same median employee for this proxy statement we: •
identified the median employee on December 31, 2022; •
used total base salary earnings as determined from Coterra’s payroll records for the period from January 1, 2022 through December 31, 2022 as our consistently applied compensation measure; •
did not include bonus-based incentive amounts, because those amounts are not distributed to all of our employees and have an impact on the determination of the median employee; •
did not include equity-based incentive compensation awards because those awards are not widely distributed to our employees and have an impact on the determination of the median employee; •
included all employees of Coterra and its consolidated subsidiaries as of December 31, 2022 employed on a full-time basis; •
did not make any assumptions, adjustments, or estimates with respect to total base salary earnings; •
did not annualize the compensation for any full-time employees that were not employed by us for all of 2022; and •
did not use statistical sampling or include any cost of living adjustments. After identifying the median employee based on the process described above we calculated annual total compensation for that employee using the same methodology we used for determining total compensation for 2023 for our named executive officers as set forth in the Summary Compensation Table. We believe that the CEO pay ratio above is a reasonable estimate calculated in a manner consistent with rules prescribed by the SEC.
PAY VERSUS PERFORMANCE DISCLOSURE The table below sets forth comparative information of the relationship between the “compensation actually paid” to our Chief Executive Officer and other named executive officers (computed in the manner required by SEC rules as described below), and certain financial performance measures over the last four fiscal years. | | | | | Summary Compensation Table Total for CEO(1) | | | | Compensation Actually Paid to CEO(2) | | | | Average Summary Compensation Table Total for Non-CEO NEOs(3) | | | | Average Compensation Actually Paid to Non-CEO NEOs(3)(4) | | | | Value of Initial Fixed $100 Investment Based on: | | | | Net Income (in millions) | | | Year | | | | Post- Merger CEO | | | | Pre- Merger CEO | | | | Post- Merger CEO | | | | Pre- Merger CEO | | | | Total Stockholder Return | | | | Peer Group Total Stockholder Return(5) | | | | 2023 | | | | | $ | 14,547,853 | | | | | | | — | | | | | | $ | 20,356,332 | | | | | | | — | | | | | | $ | 4,721,849 | | | | | | $ | 4,203,696 | | | | | | $ | 181.70 | | | | | | $ | 188.13 | | | | | | $ | 1,625 | | | | 2022 | | | | | $ | 15,303,397 | | | | | | | — | | | | | | $ | 32,092,019 | | | | | | | — | | | | | | $ | 10,068,380 | | | | | | $ | 10,308,634 | | | | | | $ | 166.86 | | | | | | $ | 194.48 | | | | | | $ | 4,065 | | | | 2021 | | | | | $ | 11,061,939 | | | | | | $ | 14,554,728 | | | | | | $ | 6,097,986 | | | | | | $ | 14,225,161 | | | | | | $ | 6,826,596 | | | | | | $ | 6,780,037 | | | | | | $ | 118.13 | | | | | | $ | 119.07 | | | | | | $ | 1,158 | | | | 2020 | | | | | | — | | | | | | $ | 14,194,706 | | | | | | | — | | | | | | $ | 17,805,568 | | | | | | $ | 3,503,938 | | | | | | $ | 4,256,657 | | | | | | $ | 95.66 | | | | | | $ | 62.86 | | | | | | $ | 201 | | |
(1)
Reflects the summary compensation table total compensation of (a) our current Chief Executive Officer, Thomas E. Jorden, from his appointment on October 1, 2021 to present (in the Post-Merger CEO column) and (b) Cabot’s Chief Executive Officer, Dan O. Dinges, for prior periods (in the Pre-Merger CEO column). (2)
The dollar amounts reported in this column represent the amount of “compensation actually paid” to Mr. Jorden (in the Post-Merger CEO column) and Mr. Dinges (in the Pre-Merger CEO column), respectively, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Jorden or Mr. Dinges, respectively, during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Jorden’s and Mr. Dinges’s respective total compensation for each year to determine the compensation actually paid: | Adjustment to Determine Compensation Actually Paid for CEO | | | | 2023 | | | | 2022 | | | | 2021 | | | | 2020 | | | Post-Merger CEO | | | | Pre-Merger CEO | | | | Total reported in Summary Compensation Table (SCT) | | | | | $ | 14,547,853 | | | | | | $ | 15,303,397 | | | | | | $ | 11,061,939 | | | | | | $ | 14,554,728 | | | | | | $ | 14,194,706 | | | | Minus: Value of Stock & Option Awards Reported in SCT | | | | | $ | (11,071,724) | | | | | | $ | (12,554,661) | | | | | | $ | (10,000,000) | | | | | | $ | (10,649,843) | | | | | | $ | (11,267,676) | | | | Plus: Year-End Value of Awards Granted in Fiscal Year that are Unvested and Outstanding | | | | | $ | 12,289,113 | | | | | | $ | 10,257,188 | | | | | | $ | 9,286,421 | | | | | | $ | — | | | | | | $ | 12,760,574 | | | | Plus/Minus: Change in FMV of Prior Year Awards that are Outstanding and Unvested | | | | | $ | 1,703,070 | | | | | | $ | 7,430,809 | | | | | | $ | (5,392,173) | | | | | | $ | — | | | | | | $ | 1,161,681 | | | | Plus: FMV of Awards Granted this Year and that Vested this Year | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 10,901,242 | | | | | | $ | — | | | | Plus/Minus: Change in FMV (from Prior Year-End) of Prior Year Awards that Vested this Year | | | | | $ | 1,327,149 | | | | | | $ | 6,860,435 | | | | | | $ | (846,226) | | | | | | $ | (580,966) | | | | | | $ | 956,283 | | | | Plus: Value of Dividends Paid on Stock Awards not Otherwise Reflected in Fair Value or Total Compensation | | | | | $ | 1,560,870 | | | | | | $ | 4,794,851 | | | | | | $ | 1,988,025 | | | | | | $ | — | | | | | | $ | — | | | | Minus: Prior Year FMV of Prior Year Awards that Failed to Vest this Year | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | Total Adjustments | | | | | $ | 5,808,479 | | | | | | $ | 16,788,622 | | | | | | $ | (4,963,953) | | | | | | $ | (329,567) | | | | | | $ | 3,610,862 | | | | “Compensation Actually Paid” | | | | | $ | 20,356,332 | | | | | | $ | 32,092,019 | | | | | | $ | 6,097,986 | | | | | | $ | 14,225,161 | | | | | | $ | 17,805,568 | | |
(3)
The non-CEO named executive officers included in this column are: (1) | Pursuant to Mr. Bell’s legacy Cimarex severance compensation agreement, Mr. Bell is entitled to payments equal to (1) one-and-a-half times the sum of (a) the average of his annual base salary received during the 24 months prior to his termination and (b) the average of his cash incentive awards received during the 24 months prior to his termination; (2) a pro-rated bonus for the calendar year of termination, based on the average of the last two annual bonuses paid to him; and (3) 18 months of continued medical, dental, vision disability and life insurance benefits. Because the 2021 bonus /amounts were scored by the legacy Cimarex compensation committee, the table assumes that if Mr. Bell had terminated his employment on December 31, 2021, he would not receive the pro-rated bonus, as such amount would have already been earned. The Merger constituted a change in control under Mr. Bell’s legacy Cimarex severance compensation agreement but for illustrative purposes, this column assumes that no change in control has occurred to highlight the difference in separation benefits Mr. Bell would receive if he were to be terminated without cause or resign for good reason outside of a change in control and those he would receive were such a termination to occur in connection with a change in control. However, if Mr. Bell had actually been terminated without cause or resign for good reason, in each case, as of December 31, 2021, because the Merger constituted a change in control under his legacy Cimarex severance compensation agreement and because December 31, 2021 would have fallen within the period during which his termination would have been deemed to occur in connection with a change in control, he would have been entitled to the amounts set forth in the change in control column.Year | | | | Non-CEO NEOs | | (2) | Pursuant to Mr. Bell’s legacy Cimarex severance compensation agreement, if Mr.2023 | | | | Shannon E. Young III, Stephen P. Bell, is terminated without cause or for good reason within a specified time following a change in control, Mr.Blake A. Sirgo, Kevin W. Smith, Scott C. Schroeder, and Christopher H. Clason | | | 2022 | | | | Scott C. Schroeder, Dan O. Dinges, Stephen P. Bell, is entitled to payments equal to (1) two times the sum of (a) the average of his annual base salary received during the 24 months prior to his termination and (b) the average of his cash incentive awards received during the 24 months prior to his termination; (2) a pro-rated bonus for the calendar year of termination, based on the average of the last two annual bonuses paid to him;Christopher H. Clason | | | 2021 | | | | Scott C. Schroeder, Stephen P. Bell, Steven W. Lindeman, Phillip L. Stalnaker and (3) 24 months of continued medical, dental, vision disabilityJeffrey W. Hutton | | | 2020 | | | | Scott C. Schroeder, Steven W. Lindeman, Phillip L. Stalnaker and life insurance benefits. Because the 2021 bonus amounts were scored by the legacy Cimarex compensation committee, the table assumes that if Mr. Bell had terminated his employment on December 31, 2021, he would not receive the pro-rated bonus, as such amount would have already been earned.Jeffrey W. Hutton | |
(4)
The dollar amounts reported in this column represent the amount of “compensation actually paid” to the Company’s named executive officers as a group (excluding Mr. Jorden and Mr. Dinges, where applicable) as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to such named executive officers as a group during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the average total compensation for named executive officers as a group (excluding Mr. Jorden and Mr. Dinges, where applicable): | Adjustment to Determine Compensation Actually Paid for NEOs | | | | 2023 | | | | 2022 | | | | 2021 | | | | 2020 | | | Total reported in Summary Compensation Table (SCT) | | | | | $ | 4,721,849 | | | | | | $ | 10,068,380 | | | | | | $ | 6,826,596 | | | | | | $ | 3,503,938 | | | | Minus: Value of Stock & Option Awards Reported in SCT | | | | | $ | (3,609,845) | | | | | | $ | (3,935,574) | | | | | | $ | (2,759,065) | | | | | | $ | (2,413,381) | | | | Plus: Year-End Value of Awards Granted in Fiscal Year that are Unvested and Outstanding | | | | | $ | 2,757,427 | | | | | | $ | 3,630,038 | | | | | | $ | 847,510 | | | | | | $ | 2,728,760 | | | | Plus/Minus: Change in FMV of Prior Year Awards that are Outstanding and Unvested | | | | | $ | 233,773 | | | | | | $ | 340,299 | | | | | | $ | — | | | | | | $ | 240,708 | | | | Plus: FMV of Awards Granted this Year and that Vested this Year | | | | | $ | — | | | | | | $ | — | | | | | | $ | 1,913,978 | | | | | | $ | — | | | | Plus/Minus: Change in FMV (from Prior Year-End) of Prior Year Awards that Vested this Year | | | | | $ | 32,382 | | | | | | $ | — | | | | | | $ | (72,443) | | | | | | $ | 196,632 | | | | Plus: Value of Dividends Paid on Stock Awards not Otherwise Reflected in Fair Value or Total Compensation | | | | | $ | 68,111 | | | | | | $ | 205,491 | | | | | | $ | 23,461 | | | | | | $ | — | | | | Minus: Prior Year FMV of Prior Year Awards that Failed to Vest this Year | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | Total Adjustments | | | | | $ | (518,153) | | | | | | $ | 240,254 | | | | | | $ | (46,559) | | | | | | $ | 752,719 | | | | “Compensation Actually Paid” | | | | | $ | 4,203,696 | | | | | | $ | 10,308,634 | | | | | | $ | 6,780,037 | | | | | | $ | 4,256,657 | | |
(5)
The amounts reported in this column represent the value of an initial $100 investment in the Company’s 2023 compensation peer group. See the “Company TSR vs Peer TSR & Alignment of CAP with Company TSR” graph and related footnotes under “Relationship Between Compensation Actually Paid and Performance Measures” below for more information. Relationship Between Compensation Actually Paid and Performance Measures As described in more detail in the Compensation Discussion and Analysis section, the Company’s Annual Cash Incentive Bonus Program is based on the achievement of performance measures intended to align executive compensation with Company performance; however, none of these performance measures would be considered a “financial performance measure” as defined in Item 402(v) of Regulation S-K. Additionally, while 50% of the Company’s Long-Term Incentive Program is based on relative TSR, performance is measured over a three-year period and, pursuant to SEC guidance, the Company-Selected Measure cannot be measured over a multi-year period. As a result, we do not have a Company-Selected Measure to reflect in the table above or graphs below. As noted above, “compensation actually paid” for purposes of the tabular disclosure and the following graphs was calculated in accordance with SEC rules and does not fully represent the actual final amount of compensation earned by or actually paid to our named executive officers during the applicable years.
This graph illustrates the relationship between the “compenstion actually paid” for purposes of the tabular disclosure, the Company’s total stockholder return, and the total stockholder return of the 2023 compensation peer group by year. Company TSR vs Peer TSR & Alignment of CAP with Company TSR (1)
The 2023 compensation peer group was composed of the following companies: Antero Resources Corporation, APA Corporation, Chesapeake Energy Corporation, Devon Energy Corporation, Diamondback Energy, Inc., EOG Resources, Inc., EQT Corporation, Hess Corporation, Marathon Oil Corporation, Occidental Petroleum Corporation, Ovintiv Inc., and Pioneer Natural Resources Company. As of March 7, 2024, Continental Resources, Inc. was no longer publicly traded and was therefore excluded from the data shown. After the removal of companies that are no longer publicly traded, the 2022 compensation peer group and the 2023 compensation peer group are made up of the same companies. This graph illustrates the relationship between the “compenstion actually paid” for purposes of the tabular disclosure and Net Income by year. Alignment of CAP with Net Income $ millions Performance Measures The table below sets forth our most important performance measures used to link “compensation actually paid” for our named executive officers to company performance, over the fiscal year ending December 31, 2023. Please see “Compensation Discussion and Analysis—2023 Performance-Based Compensation—Our Incentive Compensation Programs Align Corporate Strategy Through Thoughtful Performance Metric Selection” and “—Our Incentive Program Payouts are Aligned with Performance Outcomes”
for further information regarding these performance measures and their function in our executive compensation program. The performance measures included in this table are not ranked by relative importance. COTERRA• 2022 PROXY STATEMENT | 622023 Most Important Performance Measures (unranked) | | | | | | | PVI-10 | | | | | | | Relative TSR | | | | | | | Annual Production | | | | | |
EQUITY COMPENSATION PLAN INFORMATION The following table provides information regarding the number of shares of common stock that may be issued under the Company’s equity compensation plans as of December 31, 2023: | Plan Category | | | | (a) | | | | (b) | | | | (c) | | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | | | | 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 | | | | | | 7,421,198(1) | | | | | | $ | 15.66(2) | | | | | | | 27,823,920(3) | | | | Equity compensation plans not approved by security holders | | | | | | n/a | | | | | | | n/a | | | | | | | n/a | | | | Total | | | | | | 7,421,198 | | | | | | | n/a | | | | | | | 27,823,920(3) | | |
(1)
This amount includes 5,024,915 shares covered by restricted stock units that have not vested, 245,898 director restricted stock units that have vested but have not yet settled into shares of common stock, 73,593 director restricted stock units as to which restrictions lapse upon the earlier of May 4, 2024 or the date the holder ceases to be a director of the Company, 304,883 shares subject to non-qualified stock options, and 1,771,909 shares representing the maximum number of shares subject to PSUs assuming the maximum payout is achieved. (2)
This is the weighted average exercise price of 304,883 non-qualified stock options outstanding under the legacy Cimarex incentive plans. As of December 31, 2023, such stock options had a weighted average life of 2.1 years. (3)
Includes 21,128,063 shares that are available under the 2023 Plan, 2,820,997 shares that are currently outstanding under the Prior Cabot Plan, and 3,874,860 shares that are currently outstanding under the legacy Cimarex incentive plans.
PROPOSAL 4 (3) | For the equity awards granted to Mr. Bell in December 2021, receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Bell remains continuously employed through such date, except that (1) in the event of Mr. Bell’s termination by the Company not for cause or resignation for good reason, the award will vest pro-rata based on the number of days that elapsed between December 1, 2021 and the date of his termination, over the full vesting period, and (2) the award will fully vest upon a change in control of the Company or a termination of Mr. Bell’s employment due to his death or disability. | (4) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “2021 Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon the NEO’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination. |
Steven W. Lindeman, Senior Vice President, Production and Operations(1)
Executive Benefit and Payments Upon Separation | | Retirement | | | Involuntary Not For Cause Termination | | | For Cause Termination | | | Change In Control | | | Disability | | | Death | | Long-Term Incentive Compensation | | | | | | | | | | | | | | | | | | | | | | | | | Performance Share Vesting(2) | | $ | 696,483 | | | | – | | | | – | | | $ | 696,483 | | | $ | 696,483 | | | $ | 696,483 | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(3) | | $ | 4,475,360 | | | $ | 4,475,360 | | | $ | 4,475,360 | | | $ | 4,475,360 | | | $ | 4,475,360 | | | $ | 4,475,360 | | Health, Life, and Welfare Benefits Continuation | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Excise Tax & Gross-Up | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Outplacement Services | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Earned Vacation | | $ | 29,180 | | | $ | 29,180 | | | $ | 29,180 | | | $ | 29,180 | | | $ | 29,180 | | | $ | 29,180 | | Total | | $ | 5,201,023 | | | $ | 4,504,540 | | | $ | 4,504,540 | | | $ | 5,201,023 | | | $ | 5,201,023 | | | $ | 5,201,023 | |
(1) | As discussed above in the “–2021 Compensation Decisions–Merger-Related Compensation Decision–Termination of Legacy Cabot Change-in-Control Agreements” and “–Change-in-Control and Severance Agreements–Legacy Cabot Change-in-Control-Agreements” sections, in connection with the Merger Mr. Lindeman waived his change-in-control agreement in exchange for a one-time payment to his deferred compensation account and therefore is not entitled to any severance compensation or benefits in connection with a termination of his employment. | (2)APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | For the equity awards granted to Mr. Lindeman in December 2021 to promote pay equity among the executive officer group, receipt of the full payout will occur at the original vesting date set forth in the award agreement only if the relevant operating income targets are achieved, except in the case of a change in control, in which case full payout will be made immediately upon the change in control. | (3) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “2021 Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon the NEO’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination. |
Phillip L. Stalnaker, Senior Vice President, Marcellus Business Unit(1)
Executive Benefit and Payments Upon Separation | | Retirement | | | Involuntary Not For Cause Termination | | | For Cause Termination | | | Change In Control | | | Disability | | | Death | | Long-Term Incentive Compensation | | | | | | | | | | | | | | | | | | | | | | | | | Performance Share Vesting(2) | | $ | 696,483 | | | | – | | | | – | | | $ | 696,483 | | | $ | 696,483 | | | $ | 696,483 | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(3) | | $ | 5,777,143 | | | $ | 5,777,143 | | | $ | 5,777,143 | | | $ | 5,777,143 | | | $ | 5,777,143 | | | $ | 5,777,143 | | Health, Life, and Welfare Benefits Continuation | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Excise Tax & Gross-Up | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Outplacement Services | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Earned Vacation | | $ | 14,636 | | | $ | 14,636 | | | $ | 14,636 | | | $ | 14,636 | | | $ | 14,636 | | | $ | 14,636 | | Total | | $ | 6,488,262 | | | $ | 5,791,779 | | | $ | 5,791,779 | | | $ | 6,488,262 | | | $ | 6,488,262 | | | $ | 6,488,262 | |
(1) | As discussed above in the “–2021 Compensation Decisions–Merger-Related Compensation Decision–Termination of Legacy Cabot Change-in-Control Agreements” and “–Change-in-Control and Severance Agreements–Legacy Cabot Change-in-Control-Agreements” sections, in connection with the Merger Mr. Stalnaker waived his change-in-control agreement in exchange for a one-time payment to his deferred compensation account and therefore is not entitled to any severance compensation or benefits in connection with a termination of his employment. | (2) | For the equity awards granted to Mr. Stalnaker in December 2021 to promote pay equity among the executive officer group, receipt of the full payout will occur at the original vesting date set forth in the award agreement only if the relevant operating income targets are achieved, except in the case of a change in control, in which case full payout will be made immediately upon the change in control. | (3) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “2021 Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon the NEO’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination. |
COTERRA• 2022 PROXY STATEMENT | 63 |
Jeffrey W. Hutton, Senior Vice President, Marketing(1)
Executive Benefit and Payments Upon Separation | | Involuntary Not For Cause Termination | | | For Cause Termination | | | Change In Control | | | Disability | | | Death | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(2) | | $ | 4,507,980 | | | $ | 4,507,980 | | | $ | 4,507,980 | | | $ | 4,507,980 | | | $ | 4,507,980 | | Health, Life, and Welfare Benefits Continuation | | | – | | | | – | | | | – | | | | – | | | | – | | Excise Tax & Gross-Up | | | – | | | | – | | | | – | | | | – | | | | – | | Outplacement Services | | | – | | | | – | | | | – | | | | – | | | | – | | Earned Vacation | | $ | 81,172 | | | $ | 81,172 | | | $ | 81,172 | | | $ | 81,172 | | | $ | 81,172 | | Total | | $ | 4,589,152 | | | $ | 4,589,152 | | | $ | 4,589,152 | | | $ | 4,589,152 | | | $ | 4,589,152 | |
(1) | As discussed above in the “–2021 Compensation Decisions–Merger-Related Compensation Decision–Termination of Legacy Cabot Change-in-Control Agreements” and “–Change-in-Control and Severance Agreements–Legacy Cabot Change-in-Control-Agreements” sections, in connection with the Merger Mr. Hutton waived his change-in-control agreement in exchange for a one-time payment to his deferred compensation account and therefore is not entitled to any severance compensation or benefits in connection with a termination of his employment. | (2) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “2021 Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon the NEO’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination. |
COTERRA• 2022 PROXY STATEMENT | 64 |
PROPOSAL 2
APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has approved and recommended the appointment of PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as the independent registered public accounting firm to examine the Company’s financial statements for 2022.2024. The persons named in the accompanying proxy will vote in accordance with the choice specified thereon, or, if no choice is properly indicated, in favor of the ratification of the firm PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company. A representative of PricewaterhouseCoopers LLP is not expected to be in attendance at the Annual Meeting. annual meeting. See “Audit Committee Report” abovebelow for further information. Required Vote The ratification of the appointment of PricewaterhouseCoopers as our independent registered public accounting firm for 2024 will be approved if holders of a majority of the voting power of the common stock present in person or represented by proxy at the annual meeting and entitled to vote on the proposal vote in favor of the proposal. Abstentions will have the same effect as votes against the proposal. No broker non-votes are expected with respect to Proposal 4. | | | | THE BOARD OF DIRECTORS UNANIMOUSLYRECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE APPOINTMENT OF THE FIRM OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY FOR ITS 20222024 FISCAL YEAR. | |
Fees Billed by Independent Registered Public Accounting Firm for Services in 20212023 and 2020Fee Type* | | 2021 | | | 2020 | Audit Fees(1) | | $ | 2,600,000 | | | $ | 1,795,000 | Audit Related Fees(2) | | $ | 500,000 | | | | – | Tax Fees(3) | | $ | 1,068,145 | | | $ | 1,492,446 | All Other Fees(4) | | $ | 900 | | | $ | 4,500 |
* | No pre-approved requirements were waived under the de minimis exception. | (1) | Consists of fees associated with the audits of our consolidated financial statements and reviews of our quarterly condensed consolidated financial statements within such years. | (2) | Consists of fees associated with SEC registration statements and other documents filed with the SEC or issued in connection with securities offerings; e.g. comfort letters and consents. | (3) | Consists of federal and state tax compliance and tax planning advice. | (4) | Consists of fees associated with an accounting research software license and reference materials. |
COTERRA• 2022 PROXY STATEMENT | 65 | 2022 | Fee Type* | | | | 2023 | | | | 2022 | | | Audit Fees(1) | | | | | $ | 2,400,000 | | | | | | $ | 2,600,000 | | | | Audit Related Fees(2) | | | | | $ | 100,000 | | | | | | $ | 615,000 | | | | Tax Fees(3) | | | | | $ | 2,232,326 | | | | | | $ | 1,121,330 | | | | All Other Fees(4) | | | | | $ | 1,000 | | | | | | $ | 900 | | |
*
No pre-approved requirements were waived under the de minimis exception. (1)
Consists of fees associated with the audits of our consolidated financial statements and reviews of our quarterly condensed consolidated financial statements within such years. (2)
For 2022, consists of fees associated with SEC registration statements and other documents filed with the SEC or issued in connection with securities offerings; e.g. comfort letters and consents. Also includes services related to a pre-implementation review related to the system conversion activities associated with Cimarex’s financial data. For 2023, consists of fees associated with services related to a gap assessment relative to the SEC’s proposed climate rules. (3)
Consists of federal and state tax compliance and tax planning advice. (4)
Consists of fees associated with a software license for a financial reporting disclosure checklist.
AUDIT COMMITTEE REPORT The Audit Committee is currently composed of four independent, nonemployeenon-employee directors. The Board of Directors has made a determination that each of the members of the Audit Committee satisfysatisfies the requirements of the NYSE listing standards as to independence, financial literacy and experience. The Board also determined that at least oneeach of the members of the Audit Committee Ms. Ables, is an “audit committee financial expert” as defined by rules of the SEC. The responsibilities of the Audit Committee are set forth in the Audit Committee Charter, as amended from time to time by the Board of Directors, which isand included on the Company’s website. website, www.coterra.com. The Audit Committee reviews its charter annually. The function of the Audit Committee is to review and report to the Board of Directors with respect to various auditing and accounting matters, including overseeing the integrity of the financial statements of the Company, the compliance by the Company with legal and regulatory requirements, the selection, independence, qualifications, performance and compensation of the Company’s independent registered public accounting firm and the performance of the Company’s internal audit function. The Audit Committee also reviews its charter annually. This is a report on the Audit Committee’s activities relating to 2021.REVIEW OF AUDITED FINANCIAL STATEMENTS WITH MANAGEMENT
2023. Review of Audited Financial Statements with Management The Audit Committee reviewed and discussed the audited financial statements and management’s discussion and analysis of the Company’s financial condition and results of operations with the management of the Company.REVIEW OF FINANCIAL STATEMENTS AND OTHER MATTERS WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Review of Financial Statements and Other Matters with Independent Registered Public Accounting Firm The Audit Committee discussed with the independent registered public accounting firmPricewaterhouseCoopers the matters required to be discussed as described in Statement on Auditing Standardsby the applicable requirements of the Public Company Accounting Oversight Board (“SAS”PCAOB”) No. 16 -Communication with Audit Committees.and the SEC. The Audit Committee has received and reviewed the written disclosures and the letter from PricewaterhouseCoopers LLP (“PWC”), the Company’s independent registered public accounting firm, required by applicable Public Company Accounting Oversight BoardPCAOB requirements regarding thesuch firm’s communications with the Audit Committee concerning independence and has discussed with PWC the independent registered public accountingPricewaterhouseCoopers such firm’s independence. These discussions included a review of all audit and non-auditnon- audit services (including tax services) provided by PWCPricewaterhouseCoopers to the Company.RECOMMENDATION THAT FINANCIAL STATEMENTS BE INCLUDED IN THE ANNUAL REPORT
Recommendation that Financial Statements be Included in the Annual Report Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20212023, and filed with the SEC.
Dorothy M. Ables, Chair
Robert S. Boswell
Lisa A. Stewart Frances M. Vallejo
February 18, 2022COTERRA• 2022 PROXY STATEMENT | 66 | 20, 2024
PRINCIPAL STOCKHOLDERS The following table reports, as of February 15, 2024, beneficial ownership of the Company’s common stock by holders of more than five percent of the Company’s common stock as of the dates reported by such holders. Unless otherwise noted, all ownership information is based upon filings made by such persons with the SEC. | Name and Address of Beneficial Owner | | | | Number of Shares of Common Stock Owned | | | | Percent of Class(6) | | | The Vanguard Group | | | | | | 87,926,567(1) | | | | | | | 11.69% | | | | BlackRock, Inc. | | | | | | 60,876,106(2) | | | | | | | 8.1% | | | | Wellington Management Group LLP | | | | | | 54,564,359(3) | | | | | | | 7.25% | | | | State Street Corporation | | | | | | 48,945,657(4) | | | | | | | 6.51% | | | | Aristotle Capital Management, LLC | | | | | | 36,447,580 | | | | | | | 4.85% | | |
(1)
Based solely on a Schedule 13 G/A filed February 13, 2024 with the SEC by The Vanguard Group (100 Vanguard Blvd., Malvern, PA 19355), it has shared voting power over 959,073 of these shares, sole dispositive power over 84,704,216 of these shares and shared dispositive power over 3,222,351 of these shares. (2)
Based solely on a Schedule 14 G/A filed January 25, 2024, with the SEC by BlackRock, Inc. (50 Hudson Yards, New York, NY 10001), it has sole voting power over 57,347,488 of these shares and sole dispositive power over all 60,876,106 shares. (3)
Based solely on a Schedule 13 G/A filed February 9, 2024 with the SEC by Wellington Management Group LLP (280 Congress Street, Boston, MA 02210), it has shared voting power over 53,457,556 shares and shared dispositive power over all 54,564,359 shares. (4)
Based solely on a Schedule 13 G/A filed January 29, 2024 with the SEC by State Street Corporation (State Street Financial Center, One Congress Street, Suite 1, Boston, MA 02114-2016), it has shared voting power over 37,781,281 and shared dispositive power over 48,918,239 of these shares. (5)
Based solely on a Schedule 13 G/A filed February 14, 2024, with the SEC by Aristotle Capital Management, LLC (11100 Santa Monica Blvd., Suite 1700, Los Angeles, CA 90025), it has sole voting power over 33,963,244 of these shares and sole dispositive power over all 36,447,580 shares. (6)
There were 751,847,432 shares of common stock outstanding on February 15, 2024.
DIRECTORS AND EXECUTIVE OFFICERS The following table reports, as of February 15, 2024, beneficial ownership of common stock by each director and nominee for director, by each named executive officer listed in the “Summary Compensation Table” below and by all directors, nominees and executive officers as a group. Unless otherwise indicated and pursuant to applicable community property laws, the persons below have sole voting and investment power with respect to the shares of common stock shown as beneficially owned by them. Back to Contents | Name of Beneficial Owner | | | | Number of Shares of Common Stock Owned(1) | | | | Percent of Class(2) | | | Dorothy M. Ables | | | | | | 89,593(3) | | | | | | | * | | | | Robert S. Boswell | | | | | | 95,339 | | | | | | | * | | | | Amanda M. Brock | | | | | | 63,205 | | | | | | | * | | | | Dan O. Dinges | | | | | | 4,413,722(4) | | | | | | | * | | | | Paul N. Eckley | | | | | | 68,945 | | | | | | | * | | | | Hans Helmerich | | | | | | 1,853,153(5) | | | | | | | * | | | | Lisa A. Stewart | | | | | | 101,596(6) | | | | | | | * | | | | Frances M. Vallejo | | | | | | 68,945(7) | | | | | | | * | | | | Marcus A. Watts | | | | | | 63,205 | | | | | | | * | | | | Thomas E. Jorden | | | | | | 2,756,766(8) | | | | | | | * | | | | Shannon E. Young III | | | | | | 81,030 | | | | | | | * | | | | Stephen P. Bell | | | | | | 563,281 | | | | | | | * | | | | Blake A. Sirgo | | | | | | 141,128 | | | | | | | * | | | | Kevin W. Smith | | | | | | 95,369 | | | | | | | * | | | | Scott C. Schroeder | | | | | | 1,800,171 | | | | | | | * | | | | Christopher H. Clason | | | | | | 187,577 | | | | | | | * | | | | All directors and executive officers as a group (21 individuals) | | | | | | 12,987,006(3)(4)(5)(6)(7)(8)(9) | | | | | | | 1.7% | | |
(1)
Amounts shown include restricted stock units issued under the Company’s incentive plans as follows: •
as to which restrictions lapse upon the holders’ retirement from the Board of Directors: Ms. Ables, 70,732; Mr. Boswell, 76,478; Ms. Brock, 49,344; Mr. Watts, 49,344; and “All directors and executive officers as a group,” 245,898 •
as to which restrictions lapse upon the earlier of May 4, 2024 or the date the non-employee director ceases to be a director of the Company: for each of Ms. Ables, Mr. Boswell, Ms. Brock, Mr. Dinges, Mr. Eckley, Mr. Helmerich, Ms. Stewart, Ms. Vallejo, and Mr. Watts 8,177; and for “All directors and executive officers as a group,” 73,593 •
as to which restrictions lapse upon January 31, 2026: Mr. Jorden, 217,391; Mr. Bell, 65,217; Mr. Young, 81,030; Mr. Sirgo, 29,348; Mr. Smith, 29,348; Mr. Schroeder, 90,217; Mr. Clason, 30,435; and for “All directors and executive officers as a group,” 714,344 •
as to which restrictions lapse upon January 31, 2025: Mr. Bell, 51,436; Mr. Sirgo, 17,145; Mr. Smith, 17,145; Mr. Schroeder, 71,153; Mr. Clason, 15,669; and for “All directors and executive officers as a group,” 256,196 •
as to which restrictions lapse upon December 1, 2024: Mr. Jorden, 488,759; Mr. Bell, 146,628; Mr. Sirgo, 48,876; Mr. Smith 48,876; Mr. Clason, 30,030; for “All directors and executive officers as a group,” 847,144 (2)
There were 751,847,432 shares of common stock outstanding on February 15, 2024. (3)
Includes 5,000 shares held by an immediate family member, with respect to which Ms. Ables has shared voting and investment power. (4)
Includes 1,261,330 shares held in trust for the benefit of an immediate family member, with respect to which Mr. Dinges has shared voting and investment power. (5)
Includes 45,967 shares owned by Mr. Helmerich’s wife; Mr. Helmerich disclaims beneficial ownership of the shares held by his wife. Also, includes 233,699 shares owned by 1993 Hans Helmerich Trust, of which Mr. Helmerich is the trustee; 44,409 shares owned by Helmerich Grandchildren LLC, of which Mr. Helmerich is the co-manager; 31,573 shares owned by Family Trust, of which Mr. Helmerich is the trustee; 91,145 shares owned by The Helmerich Trust, of which Mr. Helmerich is the co-trustee; 1,304,895 shares held by the Peggy Helmerich QTIP Trust, of which Mr. Helmerich is the trustee; and 40,146 shares held by Saddleridge, LLC, of which Mr. Helmerich owns 99 percent and his wife owns 1 percent. (6)
Includes 5,700 shares held in an individual retirement account. (7)
Includes 60,768 shares to which Mrs.Vallejo has shared voting and investment power. (8)
Includes 2,050,616 shares of common stock held in trust for the benefit of an immediate family member, with respect to which Mr. Jorden has shared voting and investment power. (9)
Includes 20,000 restricted stock units as to which restrictions lapse upon April 11, 2025.
PROPOSAL 3TO APPROVE, BY NON-BINDING ADVISORY VOTE,
THE COMPENSATIONTABLE OF OUR NAMED EXECUTIVE
OFFICERSCONTENTSDELINQUENT SECTION 16(a) REPORTS In accordance with
Section 14A16(a) of the Exchange Act and the related rules of the SEC, the shareholders of the Company are entitled to cast an annual advisory vote at the Annual Meeting to approve the compensation of the Company’s NEOs, as disclosed in this Proxy Statement. The shareholder vote on executive compensation is an advisory vote only, and it is not binding on the Company or the Board of Directors. Although the vote is non-binding, the Compensation Committee and the Board value the opinions of the shareholders and will consider the outcome of the vote when making future compensation decisions. It is expected that the next say on pay vote will occur at the 2023 annual meeting of stockholders.As described more fully in the Compensation Discussion and Analysis section of this Proxy Statement,requires the Company’s executive compensation program is designed to:
• | Align executive compensation with our business strategy; | • | Encourage management to create sustained value for the shareholders while managing inherent business risks; | • | Attract, retain, and engage talented executives; and | • | Support a long-term performance-based culture throughout the Company. |
The executive compensation program seeksofficers and directors to align executive compensationfile initial reports of ownership and reports of changes in ownership of our common stock with shareholder valuethe SEC and, pursuant to rules promulgated under Section 16(a), such individuals are required to furnish the Company with copies of Section 16(a) reports they file. Based solely on an annual and long-term basis through a combinationreview of base pay, annual cash incentive bonus and long-term equity award incentives. The annual cash incentive bonus is based on Company-wide performance for financial returns, measured by ROCE and free cash flow, along with absolute levelsthe copies of production and reserves, paired with finding costs and unit costs, and a discretionary strategic component. For 2021, the aggregate bonus award pool for the annual cash incentive bonus paidsuch reports furnished to the legacy Cabot NEOs was 175% of the target bonus, which included the award of the discretionary strategic evaluation metricCompany, and written representations that those reports accurately reflect all reportable transactions and holdings, all reports required by Section 16(a) were timely filed in part for the Company’s achievement of issuing its first sustainability report.
In addition, in 2021 long-term incentive awards granted to the legacy Cabot NEOs were comprised of (i) TSR performance shares, which are based on total shareholder return relative to an industry peer group over2023, except that a three-year performance period, and (ii) hybrid performance shares, which are based on annual operating cash flow and vest over a three-year period.
At-risk compensationForm 3 for Mr. Dinges, our Executive Chairman and former Chief Executive Officer,Hlavinka in 2021 was targeted at 92% and for the other legacy Cabot NEOs was targeted at an average of 87%. The 2021 compensation of our legacy Cimarex NEOs, including Mr. Jorden, our Chief Executive Officer, was established by the Cimarex Compensation Committee prior to the Merger and was paid by Coterra from October 1, 2021 through December 31, 2021. For2022 inadvertently omitted two Table II holdings. Such holdings were included on a discussion of Mr. Jorden’s compensation arrangement with Coterra, see “Compensation Discussion and Analysis—2021 Compensation Decisions--Merger-Related Compensation Decisions—Compensation Arrangements with Thomas E. Jorden” above.
The Company also has several governance programs in place to align executive compensation with shareholder interests. These programs include: an annual advisory voteForm 5 filed on executive compensation, stock ownership guidelines, a clawback policy, an anti-hedging policy, limited perquisites and the use of wealth accumulation spreadsheets. For information on the Company’s 2021 operational and financial accomplishments, see “Compensation Discussion and Analysis” above.
The advisory vote regarding the compensation of the NEOs described in this Proposal 3 will be approved if a majority of the shares present in person or by proxy at the meeting and entitled to vote on the proposal vote in favor of the proposal. Abstentions will have the same effect as votes against the proposal, but broker non-votes will not affect the outcome of the voting on the proposal.
| THE BOARD OF DIRECTORS UNANIMOUSLYRECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS. |
COTERRA• 2022 PROXY STATEMENT | 67 | February 15, 2024.
Why did I receive these proxy materials? This Proxy Statementproxy statement is furnished in connection with the solicitation by the Board of Directors of Coterra Energy Inc. (the “Company”) of proxies for use at its 2022 Annual Meeting2024 annual meeting of Stockholders,stockholders, to be held at the Hotel Zaza, HoustonTwo Memorial City, 9787 Katy Freeway,Plaza, 820 Gessner Road, 1st Floor, Live Oak Training Room, Suite 107, Houston, Texas 77024 on Friday, April 29, 2022,Wednesday, May 1, 2024, at 8:00 a.m. Central Time, and simultaneously, virtually at www.virtualshareholdermeeting.com/CTRA2022, or any adjournment or postponement thereof (the “Annual Meeting”).thereof. The purposes of the meeting and information about the Company’s governance and executive compensation, are set forth in the accompanying Notice of Annual Meeting of Stockholders.Stockholders and information about the Company’s governance and executive compensation is set forth elsewhere in this proxy statement. Please review these materials carefully before casting your vote. We are asking that you vote on threefour proposals. Only holders of record of the Company’s Common Stockcommon stock as of the close of business on March 8, 2022,7, 2024, are entitled to vote at the Annual Meeting.annual meeting. As of that date, the Company had outstanding and entitled to vote 810,978,794[ ] shares of Common Stock.common stock. Each share of Common Stockcommon stock is entitled to one vote per share. There is no provision for cumulative voting. We will maintain for a period of ten days ending on the day before the annual meeting date at our principal executive office a complete list of stockholders entitled to vote at the annual meeting, which list shall be open to the examination by any stockholder for any purpose germane to the annual meeting during ordinary business hours. What am I being asked to vote on, and what are the recommendations of the Board? At the Annual Meeting,annual meeting, stockholders will be asked to consider and act upon the following matters discussed in the attachedthis proxy statement. Proxies delivered by record stockholders without voting instructions marked will be voted in accordance with the recommendations of the Board. Proxies will be voted in the best judgment of the proxy holders on any other matters that may properly come before the meeting. PROPOSAL | PROPOSAL | | | | BOARD
RECOMMENDATION | | | PROPOSAL 1 | | | | The election of tenthe 10 director candidatesnominees named herein. | | | | FOR | | | PROPOSAL 2 | | Ratification | | The approval of the appointmentAmended and Restated Certificate of the firm PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company for its 2022 fiscal year.Incorporation of Coterra Energy Inc. | | | | FOR | | | PROPOSAL 3 | | | | The approval, on an advisory basis, of executive compensation. | | | | FOR | | | PROPOSAL 4 | | | | The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2024. | | | | FOR | |
On or about March 18, 2022,[ ], 2024, we mailed a notice to our stockholders (other than those who have not elected otherwiseto receive paper copies) a notice advising them that our materials for this meeting are available on the internet. Certain other stockholders who elected to receive paper copies have received these materials by U.S. mail. In either case, you may vote your shares:• | In person or virtually: you may vote in person at the Annual Meeting or virtually, during the Annual Meeting, at www.virtualshareholdermeeting.com/CTRA2022; | • | By internet: log onto www.proxyvote.com and use the instructions on the proxy card or voting instruction form received from your broker or bank; | • | By telephone: dial 1.800.690.6903 and use the instructions on the proxy card or voting instruction form received from your broker or bank (if available); or | • | By mail: by completing and returning the enclosed proxy card or voting instruction form in the postage-paid envelope provided (for those receiving paper copies only). |
COTERRA• 2022 PROXY STATEMENT | 68 |
In person: you may vote in person at the annual meeting; •
By internet: use the instructions on the proxy card or voting instruction form received from your broker or bank up to 11:59 p.m. Eastern Time on April 30, 2024; •
By telephone: use the instructions on the proxy card or voting instruction form received from your broker or bank (if available) up to 11:59 p.m. Eastern Time on April 30, 2024; or •
By mail: by completing and returning the enclosed proxy card or voting instruction form in the postage-paid envelope provided (for those receiving paper copies only).
How do I attend the annual meeting in person?• | Registered stockholders will be asked to present a valid government-issued photo identification. If your shares are held in the name of your broker, bank or other nominee, you must bring to the meeting a valid government-issued photo identification and an account statement or letter (and a legal proxy if you wish to vote your shares) from the nominee indicating that you beneficially owned the shares on the record date for voting. | • | We ask that you follow recommended guidance, mandates and applicable executive orders from federal and state authorities regarding COVID-19.We will require all attendees to comply with the Company’s policies in place at the time of the meeting, which may include a temperature check, completing a health check questionnaire, wearing a mask and maintaining six-foot social distance.If you are not feeling well, have had close contact (defined as being within six feet for 15 minutes or more without facial covering) with someone who has tested positive for COVID-19,or think you may have been exposed to COVID-19, we ask that you vote by proxy for the meeting. |
How do I attend the meeting virtually?
To participate in the Annual Meeting virtually via the Internet, you must visit www.virtualshareholdermeeting.com/CTRA2022. You will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials, your proxy card or the instructions that accompanied your proxy materials. Stockholders who attend the Annual Meeting virtually via the Internet will have the opportunity to participate fully in the meeting on an equal basis with those who attend in person.
If you do not have your 16-digit control number and attend the meeting online, you will be able to listen to the meeting only —a valid government-issued photo identification and an account statement or letter (and a legal proxy if you will not be ablewish to vote or submit questions duringyour shares) from the meeting.
A summary ofnominee indicating that you beneficially owned the information you need to attendshares on the Annual Meeting online is provided below:
• | Instructions on how to attend and participate via the Internet, including how to demonstrate proof of Common Stock ownership, are posted at www.virtualshareholdermeeting.com/CTRA2022. | • | Please have your 16-digit control number to enter the Annual Meeting. | • | Stockholders may submit questions while attending the Annual Meeting via the Internet. |
record date for voting. What is the difference between holding shares as a stockholder of record and as a beneficial owner? If your shares are registered directly in your name with Coterra’s registrar and transfer agent, Equiniti Trust Company, you are a stockholder of record with respect to these shares. If as is more typical, your shares are held in a brokerage account or by your bank, broker or other third party, you are the beneficial owner of these shares. Because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the annual meeting unless you obtain a proxy from the broker, trustee or nominee that holds your shares giving you the right to vote the shares at the annual meeting. Your broker, trustee or nominee has enclosed or provided voting instructions for you to use in directing the broker, trustee or nominee how to vote your shares. What if I hold my shares through a broker and do not give voting instructions to my broker? 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 thesuch shares in their discretion.discretion if they so choose. However, the New York Stock Exchange (the “NYSE”)NYSE precludes brokers from exercising voting discretion on certain proposals it considers “non-routine” without specific instructions from the beneficial owner. UnderAt our annual meeting, under NYSE rules at our Annual Meeting brokers will have discretion to vote absent an instruction from the beneficial owner only on routine matters (specifically Proposal 2 (ratification4, ratification of appointment of auditor). Brokers, and cannot vote absent an instruction from the beneficial owner on any of the other“non-routine” proposals to be presented at our Annual Meetingannual meeting (specifically, Proposals 1, 2 or 3) without instructions from the beneficial owners. Ifowner. As a result, if you do not instruct your broker how to vote on each of the other proposals,Proposals 1, 2 or 3, your broker will notcannot vote for you. Your sharesyou on such proposals. Failure of a beneficial owner to provide voting instructions with regard to Proposals 1, 2 or 3 will be consideredresult in a “broker non-votes.”non-vote” for such shares. Broker non-votes will have the effect of votes against Proposal 2, while broker non-votes will have no impact on Proposals 1 or 3. No broker non-votes are expected with respect to Proposal 4. What constitutes a quorum of shareholders?stockholders? We must have a quorum to conduct the meeting. A quorum is the presence at the Annual Meeting, presentannual meeting, in person or represented by proxy, of the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat as of the record date. Because there were 810,978,794[ ] shares of Common Stockcommon stock outstanding on March 8, 2022,7, 2024, the record date, the quorum for the Annual Meetingannual meeting requires the presence at the meeting in person or by proxy of the holders of at least 405,489,398[ ] shares. Broker non-votes, abstentions and withhold-authority votes COUNTcount for purposes of determining a quorum. COTERRA• 2022 PROXY STATEMENT | 69 |
What are my voting options and what is the voting requirement for each of the proposals? For each matter to be presented at the Annual Meeting,annual meeting, you may choose to vote “for,“FOR,” “against”“AGAINST” or “abstain.“ABSTAIN.”Proposal No. 1 – Election of Directors: The affirmative vote of For Proposals 2, 3 and 4, abstentions will have the holderseffect of a majorityvote against the proposal, while for Proposal 1 abstentions will have no effect. Although failure of the votes cast on a nominee is required forbeneficial owner to provide voting instructions will automatically result in a director to be elected. Any nominee who receives a greater number of votes cast “for” his or her election than votes “against” his or her election will be electedbroker non-vote with regard to the Board. Shares not represented in person or by proxy at the Annual Meeting, abstentionsnon-routine proposals (Proposals 1, 2 and 3), broker non-votes will have no effectimpact on the election of directors.
Proposals 1 or 3. No broker non-votes are expected with respect to Proposal No. 2 – Ratification of Independent Registered Public Accounting Firm:The affirmative vote of holders of a majority of the shares properly represented at the meeting, either in person or by proxy, on Proposal No. 2 is required to ratify the appointment of the firm PricewaterhouseCoopers LLP as our independent registered public accounting firm. Therefore, abstentions4. A broker non-vote will have the same effect asof a vote “against.” Brokers generally have discretionary authority to vote on the ratification of our independent registered public accounting firm. Therefore, we do not expect any broker non-votes on this proposal. against Proposal No. 3 – An Advisory Vote to Approve Our Executive Compensation: Because Proposal No. 3 is an advisory vote, there is no minimum vote that constitutes approval of this proposal. We will consider this proposal approved if a majority of the votes properly cast are “for” this proposal. Therefore, abstentions will have the same effect as a vote “against” this proposal. Broker non-votes will have no effect on the outcome of this proposal. 2. | PROPOSAL | | | | YOUR BOARD’S RECOMMENDATION | | | | VOTE REQUIRED | | | No. 1—The election of the 10 director nominees named herein. | | | | FOR | | | | Each director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a director nominee must exceed the number of shares voted AGAINST that director nominee) will be elected. | | | No. 2—The approval of the Amended and Restated Certificate of Incorporation of Coterra Energy Inc. | | | | FOR | | | | Proposal 2 shall be decided by the affirmative vote of a majority of the outstanding shares of common stock entitled to vote on such proposal. | | | No. 3—The approval, on an advisory basis, of executive compensation. | | | | FOR | | | | Proposals 3 and 4 shall be decided by the affirmative vote of holders of a majority of the voting power of the common stock present in person or represented by proxy at the annual meeting and entitled to vote on such proposal. | | | No. 4—The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2024. | | | | FOR | | |
How will my shares be voted on other matters raised at the meeting? We do not know of any matters to be presented at the Annual Meetingannual meeting other than those listed above. However, if any other matters properly come before the Annual Meeting,annual meeting, the persons named on yourproxies will be voted in the discretion of the proxy card or voting instruction form from your broker will vote in accordance with their best judgment.holder. The persons named on the Company’s form of proxy are members of Coterra’s management. What can I do if I change my mind after I vote my shares? Stockholders attending the Annual Meetingannual meeting in person or virtually may vote their shares even though they have already executed a proxy. Properly executed proxies not revoked will be voted in accordance with the specifications thereon at the Annual Meetingannual meeting and at any adjournment or postponement thereof. You may revoke your proxy at any time prior to the Annual Meetingannual meeting by a written communication to the Corporate Secretary of the Company, or by a duly executed proxy bearing a later date. When will Coterra announce the voting results? We will announce the preliminary voting results at the Annual Meeting of Stockholders.annual meeting. We will report the final results in a Current Report on Form 8-K filed with the SEC within a fewfour business days of the meeting. How are proxies solicited, and what is the cost? The accompanying proxy is being solicited by our Board. The cost of soliciting proxies in the enclosed form will be borne by the Company. In addition to solicitation by mail, officers, employees or agents of the Company may solicit proxies personally. Alliance Advisors LLC will assist with the solicitation of proxies for a fee of $16,500 plus out-of-pocket expenses. The Company may request banks and brokers or other similar agents or fiduciaries to transmit the proxy material to the beneficial owners for their voting instructions and will reimburse them for their expenses in so doing. As permitted by the SEC rules, only one copy of this Proxy Statementproxy statement is being delivered to stockholders residing at the same address, unless the stockholders have notified the Company of their desires to receive multiple copies of the Proxy Statement. proxy statement.
This is known as “householding.” This procedure reduces the environmental impact of our annual meetings and reduces the Company’s printing and mailing costs. Upon oral or written request, we will promptly deliver a separate copy of the Proxy Statementproxy statement to any stockholder residing at an address to which only one copy was mailed. You may direct requests for additional copies for the current year or future years to our Corporate Secretary or our Investor Relations team at the following physical address, phone number or email address: Coterra Energy Inc.
Attn: Corporate Secretary or Investor Relations
840 Gessner Road, Suite 1400
Houston, Texas 77024
OR Phone: (281) 589-4600
Fax: (281) 589-4910
OR Email (Corporate Secretary): Deidre.Shearer@coterra.com corporatesecretary@coterra.com Email (Investor Relations): IR@coterra.comCOTERRA• 2022 PROXY STATEMENT | 70 |
You may direct requests for additional copies of the proxy statement for the current year or future years to our Corporate Secretary or our Investor Relations team. Stockholders of record residing at the same address and currently receiving multiple copies of the Proxy Statementproxy statement may contact our registrar and transfer agent, Equiniti Trust Company, at EQ Shareowner Services, P.O. Box 64874, St. Paul, Minnesota 55164-0874,the following physical address or 1-800-401-1957,phone number to request a single copy be mailed in the future. future: EQ Shareowner Services P.O. Box 64874 St. Paul, Minnesota 55164-0874 OR Phone: 1-800-401-1957 Beneficial owners should contact their broker or bank. How can I communicate with Coterra’s Board of Directors or individual directors? You can address communications to the “BoardBoard of Directors,” a specified committee of the Board, an individual director (including the Lead Independent Director) or the “Non-management Directors”directors” in care of: Coterra Energy Inc. Attn: Corporate Secretary
Corporate Legal Department
840 Gessner Road, Suite 1400
Houston, Texas 77024
Phone: (281) 589-4600 Fax: (281) 589-4910Email: Deidre.Shearer@coterra.comcorporatesecretary@coterra.com All communications received as described above will be relayed to the appropriate directors. How do I submit a stockholder proposal for action at the 2023 Annual Meeting2025 annual meeting of Stockholders?stockholders? You may send any stockholder proposal intended for inclusion in the proxy statement for the 2023 Annual Meeting2025 annual meeting of Stockholdersstockholders of the Company and otherwise eligible to: Coterra Energy Inc., Corporate Secretary, 840 Gessner Road, Suite 1400, Houston, Texas 77024. A notice of stockholder proposal to be presented at the 2023 Annual Meeting2025 annual meeting of Stockholdersstockholders must be received by November 18, 2022.[ ], 2024.
How do I nominate a director or present other items for action at the 2023 Annual Meeting2025 annual meeting of Stockholders?stockholders? The bylaws of the Company require timely advance written notice of stockholder nominations of director candidates (other than proxy access nominations, which are discussed below) and of any other business to be presented by a stockholder at an annual meeting of stockholders. To be timely, the bylaws require advance written notice be delivered to the Company’s Secretary at the principal executive offices of the Company not later than the close of business on the 90thday, nor earlier than the close of business on the 120thday, prior to the anniversary of the preceding year’s annual meeting (with certain exceptions if the date of the annual meeting is different by more than specified amounts from the anniversary date). The deadline for submission forFor the 2023 Annual Meeting of Stockholders is currently February 3, 2023.2025 annual meeting, such advance written notice must be submitted in compliance with our bylaws no later than January 31, 2025 and no earlier than January 1, 2025. To be valid, a notice must set forth certain information specified in the bylaws. You also must attend the meeting and present the nomination or other item of business. How do I nominate a director for inclusion in the Company’s proxy statement for the 2023 Annual Meeting2025 annual meeting of Stockholders?stockholders using a proxy access nomination? The bylaws of the Company currently permit any stockholder or group of not more than 20 stockholders that have continuously held at least 3%three percent of our outstanding Common Stockcommon stock for at least three years to nominate candidates for up to 20%20 percent of the available Board seats and have such candidates included in the proxy statement for the 2023 Annual Meeting2025 annual meeting of Stockholdersstockholders of the Company. To be timely, the bylaws require advance written notice to be delivered to the Company’s Corporate Secretary at the principal executive offices of the Company not later than the close of business on the 120thday, nor earlier than the close of business on the 150thday, prior to the anniversary of the date on which the Company first mailed proxy materials for the preceding year’s annual meeting. The deadline for submission forFor the 2023 Annual Meeting of Stockholders is currently2025 annual meeting, such advance written notice must be submitted in compliance with our bylaws no later than November 18, 2022.[ ], 2024 and no earlier than October [ ], 2024. To be valid, a notice must set forth certain information specified in the bylaws and the stockholder or group of stockholders providing such a notice must comply with the eligibility and other requirements specified in the bylaws. In addition to satisfying the foregoing requirements under our bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees for the 2025 annual meeting of stockholders must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 2, 2025. By Order of the Board of Directors,
Deidre L. Shearer
Vice President,
and MARCUS G. BOLINDER Corporate Secretary
March 18, 2022COTERRA• 2022 PROXY STATEMENT | 71 | [ ], 2024
| APPENDIX A | | | AMENDED AND RESTATED CERTIFICATE OF INCORPORTATION OF COTERRA ENERGY INC. | |
APPENDIX A
EXPLANATIONAMENDED AND RECONCILIATION RESTATED CERTIFICATE OF
NON-GAAP FINANCIAL MEASURESINCORPORATION of COTERRA ENERGY INC. Coterra Energy Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation” or the “Company”), does hereby certifycertifies that: RECONCILIATION OF DISCRETIONARY CASH FLOW AND FREE CASH FLOW
Discretionary Cash Flow
1. The name of the Corporation is defined Coterra Energy Inc. 2. The name under which the Corporation was originally incorporated was Cabot Oil & Gas Corporation and the date of filing of the Corporation’s original Certificate of Incorporation with the Secretary of State of the State of Delaware was December 14, 1989. 3. The Board of Directors of the Corporation has duly adopted thisa Restated Certificate of Incorporation without a vote of the stockholders in accordance with Section 245 of the General Corporation Law of the State of Delaware. This Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions ofon October 1, 2021. 4. The Board of Directors of the Corporation duly adopted resolutions proposing the amendment and restatement of the Restated Certificate of Incorporation, declaring its advisability, and directing that it be submitted to the stockholders of the Corporation for their approval; and the Corporation’s stockholders duly adopted such amendment and restatement, all in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware. 5. Therefore, the Corporation’s Restated Certificate of Incorporation as cash flow from operating activities excluding changesheretoforeis hereby amended and supplemented, and there is no discrepancy between the provisions of therestated in assetsaccordance with Sections 242 and liabilities. Discretionary Cash Flow245 of the General Corporation Law of the State of Delaware to read in its entirety as set forth below. References to this “Certificate of Incorporation as heretofore amended and supplemented and the provisions of this” herein refer to this Amended and Restated Certificate of Incorporation. 4. The text of the Corporation’s Certificate of Incorporation as heretofore amended and supplemented is widely acceptedhereby restated to read as a financial indicatorherein set forth in full. ARTICLE I The name of an oilthe corporation is Coterra Energy Inc. (the “Corporation”). ARTICLE II The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. ARTICLE III The nature of the business to be conducted and gas company’s abilitythe purposes to generate available cash to internally fund exploration and development activities, return capital to shareholders through dividends and share repurchases, and service debt and is usedbe promoted by the Company’s managementCorporation are to engage in any lawful act or activity for that purpose. Discretionary Cash Flowwhich corporations may be organized under the General Corporation Law of the State of Delaware (the “GCL”). ARTICLE IV The aggregate number of shares of all classes of stock which the Company shall have authority to issue is presented based on1,805,000,000, divided into 5,000,000 shares of Preferred Stock, par value $.100.10 per share (“Preferred Stock”), and 1,800,000,000 shares of Common Stock, par value $.100.10 per share (the “Common Stock”). The following is a statement of the Company’s belief that this non-GAAP measuredesignations and the powers, preferences and rights, and the qualifications, limitations or restrictions thereof, of the classes of stock of the Corporation: SECTION I. PREFERRED STOCK Shares of Preferred Stock may be issued from time to time in one or more series as from time to time may be determined by the Board of Directors. Each series shall be distinctly designated. The Board of Directors of the Corporation is useful informationhereby expressly granted
authority to investors when comparingfix, by resolution or resolutions adopted prior to the Company’s cash flows withissuance of any shares of each particular series of Preferred Stock, the cash flowsdesignation, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, if any, of other companies that usesuch series, including, but without limiting the full costgenerality of the foregoing, the following: (1) the designation of, and the number of shares of Preferred Stock which shall constitute, the series, which number may be increased (except as otherwise fixed by the Board of Directors) or decreased (but not below the number of shares thereof then outstanding) from time to time by action of the Board of Directors; (2) the rate and times at which (or the method of accountingdetermination thereof), and the terms and conditions upon which, dividends, if any, on shares of the series shall be paid, the nature of any preferences or the relative rights of priority of such dividends to the dividends payable on any other class or classes of stock of the Corporation or on any series of Preferred Stock of the Corporation, and a statement whether such dividends shall be cumulative; (3) whether shares of the series shall be convertible into or exchangeable for oilshares of capital stock or other securities or property of the Corporation or of any other corporation or entity, and, gas producing activitiesif so, the terms and conditions of such conversion or haveexchange, including any provisions for the adjustment of the conversion or exchange rate in such events as the Board of Directors shall determine; (4) whether shares of the series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount and type of consideration payable in case of redemption, which amount may vary under different financingconditions and capital structuresat different redemption dates; (5) the rights, if any, of the holders of shares of the series upon voluntary or tax rates. Discretionary Cash Flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating activitiesinvoluntary liquidation, merger, consolidation, distribution or net income, as defined by GAAP, or as a measure of liquidity.Free Cash Flow is defined as Discretionary Cash Flow less cash paid for capital expenditures. Free Cash Flow is an indicator of a company’s ability to generate cash flow after spending the money required to maintain or expand its asset base, and is used by the Company’s management for that purpose. Free Cash Flow is presented based on the Company’s belief that this non-GAAP measure is useful information to investors when comparing the Company’s cash flows with the cash flows of other companies. Free Cash Flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flow from operating activities or net income, as defined by GAAP, or as a measure of liquidity.
| Three Months Ended December 31, | | Twelve Months Ended December 31, | (In millions) | 2021 | | 2020 | | 2021 | | 2020 | | Cash flow from operating activities | $ | 953 | | $ | 307 | | $ | 1,667 | | $ | 778 | | Changes in assets and liabilities | | 73 | | | (88 | ) | | 144 | | | (93) | | Discretionary cash flow | | 1,026 | | | 219 | | | 1,811 | | | 685 | | Cash paid for capital expenditures | | (268 | ) | | (98 | ) | | (728) | | | (576) | | Free cash flow | $ | 758 | | $ | 121 | | $ | 1,083 | | $ | 109 | |
COTERRA• 2022 PROXY STATEMENT | A-1 |
RECONCILIATION OF EBITDAX
EBITDAX is defined as net income plus interest expense, other expense, income tax expense and benefit, depreciation, depletion, and amortization (including impairments), exploration expense, gain and loss on sale of assets, non-cash gaindissolution or winding up of the Corporation;
(6) whether shares of the series shall have a sinking fund or purchase account for the redemption or purchase of shares of the series, and lossif so, the terms, conditions and amount of such sinking fund or purchase account; (7) whether shares of the series shall have voting rights in addition to the voting rights provided by law, which may, without limiting the generality of the foregoing, include (a) the right to more or less than one vote per share on derivative instruments, stock-based compensation expenseany or all matters voted upon by the Corporation’s stockholders and merger-related expense. EBITDAX is presented(b) the right to vote, as a series by itself or together with other series of Preferred Stock or together with all series of Preferred Stock as a class or with the Common Stock as a class, upon such matters, under such circumstances and upon such conditions as the Board of Directors may fix, including, without limitation, the right, voting as a series by itself or together with other series of Preferred Stock or together with all series of Preferred Stock as a class, to elect one or more directors of the Corporation in the event there shall have been a default in the payment of dividends on any one or more series of Preferred Stock or under such other circumstances and upon such conditions as the Board of Directors may determine; and (8) any other powers, preferences and relative, participating, optional or other rights, and qualifications, limitations or restrictions of shares of that series. The relative powers, preferences and rights of each series of Preferred Stock in relation to the powers, preferences and rights of each other series of Preferred Stock shall, in each case, be as fixed from time to time by the Board of Directors in the resolution or resolutions adopted pursuant to authority granted in this Section I, and the consent, by class or series vote or otherwise, of the holders of Preferred Stock of such of the series of the Preferred Stock as are from time to time outstanding shall not be required for the issuance by the Board of Directors of any other series of Preferred Stock whether the powers, preferences and rights of such other series shall be fixed by the Board of Directors as senior to, or on a parity with, the powers, preferences and rights of such outstanding series, or any of them; provided, however, that the Board of Directors may provide in such resolution or resolutions adopted with respect to any series of Preferred Stock that the consent of the holders of a majority (or such greater proportion as shall be therein fixed) of the outstanding shares of such series voting thereon shall be required for the issuance of any or all other series of Preferred Stock. SECTION II. COMMON STOCK (1) Dividends. After the requirements with respect to preferential dividends on Preferred Stock, if any, shall have been met and after the Company shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts and subject further to any other conditions which may be fixed in accordance with the provisions of this Certificate of Incorporation, then, but not otherwise, the holders of Common Stock shall be entitled to receive such dividends, if any, as may be declared from time to time by the Board of Directors on the Company’s beliefCommon Stock, which dividends shall be paid out of assets legally available for payment of dividends and shall be distributed among the holders of shares pro rata in accordance with the number of shares of such stock held by each such holder.
(2) Liquidation. After distribution in full of the preferential amount, if any, to be distributed to the holders of Preferred Stock in the event of voluntary or involuntary liquidation, distribution or sale of assets, dissolution or winding-up of the Company, the holders of the Common Stock shall be entitled to receive all the remaining assets of the Company, tangible and intangible, of whatever kind available for distribution to stockholders, which assets shall be distributed pro rata in accordance with the number of shares of such stock held by each such holder. (3) Voting. Except as may otherwise be required by law, this Certificate of Incorporation or the provisions of the resolution or resolutions as may be adopted by the Board of Directors pursuant to Section I of this Article IV, each holder of Common Stock shall have one vote in respect of each share of Common Stock held by such holder on each matter voted upon by the stockholders. Cumulative voting of shares of Common Stock is prohibited. ARTICLE V The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders: (1) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. (2) The directors shall have concurrent power with the stockholders to make, alter, amend, change, add to or repeal the By-Laws of the Corporation. (3) The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-Laws so provide. (4) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the statutes of Delaware, this Certificate of Incorporation and any By-Laws adopted by the stockholders; provided, however, that no By-Laws thereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted. ARTICLE VI Reserved. ARTICLE VII A director of the Corporation shall not be personally liable to the Corporation or its stockholder or stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholder or stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the GCL, as the same exists or hereafter may be amended or replaced, or (iv) for any transaction from which the director derived an improper personal benefit. If the GCL is amended after the date of filing of this non-GAAP measureCertificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the GCL as so amended. Any repeal or modification of this Article IXVII by the stockholder or stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. An officer of the Corporation shall not be personally liable to the Corporation or its stockholder or stockholders for monetary damages for breach of fiduciary duty as an officer, except for liability (i) for any breach of the officer’s duty of loyalty to the Corporation or its stockholder or stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for any transaction from which the officer derived an improper personal benefit, or (iv) for any action by or in the right of the Corporation. If the GCL is useful informationamended after the date of filing of this Certificate of Incorporation to investors when evaluatingauthorize corporate action further eliminating or limiting the Company’s abilitypersonal liability of officers, then the liability of an officer of the Corporation, in addition to internally fund explorationthe limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the GCL as so amended. Any repeal or modification of this Article VII by the stockholder or stockholders of the Corporation shall be prospective only, and development activitiesshall not adversely affect any limitation on the personal liability of an officer of the Corporation existing at the time of such repeal or modification. ARTICLE VIII The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. [Signature page follows]
IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been executed by an authorized officer of the Corporation as of day of this 1st day of October, 2021 , 2024. COTERRA ENERGY INC. By: Scott C. SchroederShannon E. Young III Executive Vice President and Chief Financial Officer
PROXY COTERRA ENERGY INC.ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 1, 2024THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSThe undersigned hereby makes, constitutes, and appoints Shannon E. Young III, Adam M. Vela and Marcus G. Bolinder, and each of them (with the power of substitution), proxies for the undersigned to represent and to servicevote, as designated below, all shares of Common Stock of Coterra Energy Inc. held of record by the undersigned on March 7, 2024 at the 2024 annual meeting of stockholders to be held on May 1, 2024 at 8:00 a.m. CST at Two Memorial City Plaza, 820 Gessner Road, 1st Floor, Live Oak Training Center, Suite 107, Houston, TX 77024 or incur debt without regardany adjournment or postponement thereof.This proxy, when properly executed, will be voted as directed herein. If no direction is made, this proxy will be voted “FOR” each director nominee in Proposal 1, and “FOR” Proposals 2, 3, and 4. The proxies named above also will vote in their discretion upon such other business as may properly come before the annual meeting or any adjournment thereof, including procedural matters and matters relating to financialthe conduct of the annual meeting.You are encouraged to specify your choices by marking the appropriate boxes on the reverse side. The proxies cannot vote your shares unless you sign and return this card or capital structure. vote by telephone or Internet as described below before the annual meeting.Voting by telephone or Internet eliminates the need to return this proxy card. Your vote authorizes the proxies named above to vote your shares to the same extent as if you had marked, signed, dated, and returned the proxy card. Before voting, read the proxy statement and proxy voting instructions.Thank you for voting.(Continued and to be marked, dated, and signed on the other side) PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held May 1, 2024:The Company’s management uses EBITDAXProxy Statement, 2023 Form 10-K, and 2023 Annual Report are available at: http://www.viewproxy.com/CoterraEnergy/2024 Please mark your votes like this ☒The Board of Directors recommends a vote “FOR” each director nominee in Proposal 1, and “FOR” Proposals 2, 3, and 4.Proposal 1. The election of the 10 director nominees named in the attached proxy statement to our Board of Directors.
Please indicate if you plan to attend this meeting ☐Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) ☐ Proposal 2. To amend and restate the Restated Certificate of Incorporation of Coterra Energy Inc. to provide for that purpose. EBITDAX is not a measureexculpation of financial performance under GAAPcertain officers of the Company as permitted by amendments to Delaware law and should not be consideredto make certain non-substantive updates.FOR ☐AGAINST ☐ABSTAIN ☐Proposal 3. A non-binding advisory vote to approve the compensation of our named executive officers.FOR ☐AGAINST ☐ABSTAIN ☐Proposal 4. The ratification of the appointment of PricewaterhouseCoopers LLP as an alternativeour independent registered public accounting firm for 2024.FOR ☐AGAINST ☐ABSTAIN ☐Note: To transact such other business as may properly come before the meeting or any adjournments or postponements thereof.In their discretion, the proxies are authorized to cash flows from operating activitiesvote upon such other business as may properly come before the annual meeting or net income, as definedany adjournment thereof, including procedural matters and matters relating to the conduct of the annual meeting. PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. PROXY VOTING INSTRUCTIONSPlease have your 11-digit control number ready when voting by GAAP,Internet or as a measure of liquidity. | | Three Months Ended December 31, | | Twelve Months Ended December 31, | (In millions) | | 2021 | | 2020 | | 2021 | | 2020 | | Net income | | $ | 939 | | $ | 131 | | $ | 1,158 | | $ | 201 | | Plus (less): | | | | | | | | | | | | — | | Interest expense, net | | | 24 | | | 11 | | | 62 | | | 54 | | Income tax expense | | | 276 | | | 21 | | | 344 | | | 41 | | Depreciation, depletion and amortization | | | 410 | | | 97 | | | 693 | | | 391 | | Exploration | | | 9 | | | 5 | | | 18 | | | 15 | | Loss on sale of assets | | | 2 | | | — | | | 2 | | | — | | Non-cash (gain) loss on derivative instruments | | | (451) | | | (42) | | | (210) | | | (26) | | Stock-based compensation | | | 31 | | | 7 | | | 57 | | | 43 | | Merger-Related expense | | | 26 | | | — | | | 72 | | | — | | EBITDAX | | $ | 1,266 | | $ | 230 | | $ | 2,196 | | $ | 719 | |
COTERRA• 2022 PROXY STATEMENT | A-2 |
Telephone. INTERNET TELEPHONE MAILVote Your Proxy on the Internet: Go to www.aalvote.com/CTRAVote Your Proxy by Phone: Call 1-(866)-804-9616Vote Your Proxy by Mail:Have your proxy card available when you access the above website. Follow the prompts to vote your shares.Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call.Follow the voting instructions to vote your shares.Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided.
RECONCILIATION OF NET DEBT TO EBITDAX
Net debt to EBITDAX is defined as net debt divided by trailing twelve month EBITDAX. Net debt to EBITDAX is a non-GAAP measure which the Company’s management believes is useful to investors when assessing the Company’s credit position and leverage.
(In millions) | | December 31, 2021 | | December 31, 2020 | | Net debt | | $ | 2,089 | | | $ | 994 | | EBITDAX (Twelve months ended December 31) | | | 2,196 | | | | 719 | | Net debt to EBITDAX | | | 0.95 | x | | | 1.38 | x |
COTERRA• 2022 PROXY STATEMENT | A-3 |
0000858470 3 2023-01-01 2023-12-31
| | | | | |
|