SECURITIES AND EXCHANGE COMMISSION
Washington, DCD.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTIONProxy Statement Pursuant to Section 14(a) ofOF THE SECURITIES EXCHANGE ACT OFthe Securities Exchange Act of 1934
(Amendment (Amendment No. )
Check the appropriate box: ☐ Preliminary Proxy Statement ☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) ☒ Definitive Proxy Statement ☐ Definitive Additional Materials ☐ Soliciting Material under §240.14a-12 Coterra Energy Inc. |
COTERRA ENERGY INC.
(Name of Registrant as Specified inIn Its Charter)
| | | |
March 20, 2023
Dear Coterra Energy Inc. shareholders,
Our first full year as Coterra is in the books. We accomplished a tremendous amount during 2022 and enter 2023 well positioned as one of the premier independent oil and natural gas exploration and production (E&P) companies. After a volatile commodity year in 2022 and with uncertainty ahead, the core thesis of Coterra’s oil and natural gas assets—providing stable revenue at a low cost of supply—is more pertinent today than ever. Coterra has the quality and the flexibility to survive and thrive in today’s tumultuous world.
There were many changes in 2022 regarding the future of the hydrocarbon industry and the world’s growing demand for energy. Thought leaders have resoundingly concluded that oil and natural gas will need to be essential components of the world energy mix for many decades to come. Coterra has a deep inventory of future projects and stands ready to meet the challenge of providing affordable, secure supplies of oil and gas to the world, produced with one of the lowest carbon footprints in our sector.
Another change that occurred in 2022 was the emerging criticism of environmental, social and governance (ESG) investing. Critics contend that some ESG funds have strayed from a focus on value creation. Although we have watched this debate with interest, our commitment to our ESG principles is unwavering.
With respect to the “E” in ESG, lowering emissions is a top engineering priority at Coterra. Our best and brightest are focused on innovating new facility designs that are emission free. We eliminated routine flaring in 2021 and continue to drive emergency flaring downward. We focus on reducing the environmental footprint of our operations wherever possible. We continue to make remarkable progress in the use of recycled water, thereby dramatically lowering our need for fresh water. Our multi-year electrification program is a major driver in lowering our total emissions footprint. We are laser focused on the safety of our operations and continually reinforce this within our organization.
With regard to the “S” in ESG, we are responsible members of our communities wherever we operate. We speak frankly and truthfully to our communities, our employees, our vendors, our partners, and to you, our owners. We actively seek opportunities for community engagement throughout our geographic portfolio.
Finally, we are proud of the “G” in our approach to the business. Our Board of Directors operates with transparency and open access to any level of the organization. They are fully aware of what is on management’s worry list. Our Lead Independent Director and I have fluid communication around critical issues. We spend the company’s money as if it were our own.
Thank you for the trust you place in us. We are committed to excellence in everything we do.
Thomas E. Jorden
Chairman, Chief Executive Officer and President
May 4, 2023
8:00 a.m., Central Time
Hotel ZaZa Memorial City
9787 Katy Freeway
Houston TX, 77024
|
| MEETING INFORMATION | | | | DATE: | | | May 1, 2024 | |
| TIME: | | | 8:00 a.m., Central Time | | ||||
| PLACE: | | | Two Memorial City Plaza 820 Gessner Road, 1st Floor Live Oak Training Center, Suite 107 Houston, TX 77024 | | ||||
| RECORD DATE: | | | March 7, 2024 | |
RECORD DATE
Only holders
| Proposal | | | | Matter | | | | Board recommendation | | | | Page | |
| 1. | | | | The election of the 10 director nominees named in the attached proxy statement to our Board of Directors. | | | | FOR | | | | | |
| 2. | | | | To amend and restate the Restated Certificate of Incorporation of Coterra Energy Inc. to provide for exculpation of certain officers of the Company as permitted by amendments to Delaware law and to make certain non-substantive updates. | | | | FOR | | | | | |
| 3. | | | | A non-binding advisory vote to approve the compensation of our named executive officers. | | | | FOR | | | | | |
| 4. | | | | The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2024. | | | | FOR | | | | | |
| 5. | | | | To transact such other business as may properly come before the meeting or any adjournments or postponements thereof. | | | | | | | | | |
IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON:
| RECORD DATE | | ||||
| | Only holders of record of our common stock at the close of business on March 7, 2024 will be entitled to notice of and to vote at this year’s annual meeting. | | |||
| | VOTING PROCEDURES: | | |||
| | Please vote your shares as promptly as possible by one of the following methods, even if you plan to attend the annual meeting in person. | | |||
| | | | INTERNET | | |
| | Use the instructions on the proxy card or voting instruction form received from your broker or bank. | | |||
| | | | BY TELEPHONE | | |
| | Use the instructions on the proxy card or voting instruction form received from your broker or bank (if available). | | |||
| | | | BY MAIL | | |
| | Complete and return the enclosed proxy card or voting instruction form in the postage-paid envelope provided (for stockholders receiving paper copies only). | | |||
| | | | BY ATTENDING IN PERSON | | |
| | You may attend the annual meeting and vote in person. | |
| IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON: | | |||
| Registered | |
| MESSAGE FROM THE CHAIRMAN | | | |
| THOMAS E. JORDEN Chairman, Chief Executive Officer and President | | | | Dear Coterra Energy Inc. Stockholders, Thank you for |
your investment in Coterra and your interest in our annual meeting. Public companies file a tremendous amount of regulatory paperwork throughout the year. The annual proxy statement, however, is the only document solely designed to communicate with stockholders regarding corporate governance matters. These include Board composition and skills, executive officer goals and performance, and executive officer compensation. These rich and fulsome topics are worthy of thoughtful analysis and consideration, and we encourage you to read through the detail covered in the proxy statement. At Coterra, we do not believe in a “one size fits all” approach to corporate governance. We ask that you, Coterra has an outstanding Board of Directors. Individually, they bring amazing diversity of background, experience, and viewpoint. Our Board is highly engaged in operational, financial, cybersecurity, environmental, and governance oversight. As a group, our Board has developed a high degree of mutual trust. Challenges and disagreements are aired openly with everyone in the room. Our meetings are high energy and authentic. Furthermore, Board oversight is bolstered by a strong Lead Independent Director who facilitates separate sessions with the Healthy board dynamics can be defined by how boards handle bad news. It is incumbent upon each of our directors to avoid letting Board members become cheerleaders. Boards have a natural affinity toward supporting management, but boards must develop a discipline to challenge and seek to find gaps in | | ||||
| Our goal is consistent, profitable growth over time. We want the Coterra brand to stand for investment discipline, financial strength, and operational excellence second to none. | | | ||
| | |
| | | | | Our annual goals for the executive officers fall under three major categories—investment returns, operational execution, and environmental progress. We also exercise discretion on strategies related to improving the quality and duration of our inventory and advancing the role of digital innovation. Our goal is consistent, profitable growth over time. We want the Coterra brand to stand for investment discipline, financial strength, and operational excellence second to none. Finally, we always want our compensation to closely align with results, both on an individual and collective basis. We seek to hire the best talent for every role and ensure every employee quickly adopts our results driven mindset and commitment to accountability. We have a fantastic team that collaborates openly on critical issues. We insist upon open, challenging debate and a completely non-political culture. Coterra is a meritocracy. We work hard and strive for excellence in everything we do. In closing, we want to emphasize that we have worked hard in recent years to improve the readability of the Again, thank you THOMAS E. JORDEN Chairman, Chief Executive Officer and President March 20, 2024 | |
| TABLE OF CONTENTS | | | |
PROCEDURES: | | |||||
| | | | One Coterra | | |
Use the instructions on the proxy card or voting instruction form | Use the instructions on the proxy card or voting instruction form | | | Complete | You may also vote at the annual meeting by attending in person |
|
| PROXY SUMMARY | | | |
| ||
This summary highlights information described in other parts of this proxy statement and does not contain all of the information you should consider in voting. Please read the entire proxy statement before voting. For more complete information regarding our 20222023 operational and financial and operating performance, please review our Annual Report on Form 10-K for the fiscal year ended December 31, 2022,2023, which accompanies this proxy statement.
8:00 a.m. Central Time | 9787 Katy Freeway Houston, Texas 77024 | Shares Outstanding: 765,503,584 |
PROPOSAL | MATTER | BOARD VOTE RECOMMENDATION | PAGE REFERENCE |
1. | The election of the 10 director nominees named herein. | FOR | 9 |
2. | The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2023. | FOR | 64 |
3. | The approval, on an advisory basis, of executive compensation. | FOR | 66 |
4. | The approval, on an advisory basis, of the frequency of the advisory vote on executive compensation. | FOR “1 YEAR” | 67 |
5. | The approval of the Coterra Energy Inc. 2023 Equity Incentive Plan. | FOR | 68 |
6. | The shareholder proposal regarding a report on reliability of methane emission disclosures. | AGAINST | 75 |
7. | The shareholder proposal regarding a report on corporate climate lobbying. | AGAINST | 77 |
|
|
|
|
|
|
|
|
|
|
|
Coterra Energy Inc. is(“Coterra” or the result of the successful combination of Cabot Oil & Gas Corporation (“Cabot”“Company”) and Cimarex Energy Co. (“Cimarex”) on October 1, 2021 (the “Merger”), pursuant to the Agreement and Plan of Merger dated May 23, 2021 among Cabot, Double C Merger Sub, Inc. and Cimarex (the “Merger Agreement”). Coterra is a premier, diversified energy company with a strong free cash flow profile, well positioned to deliver superior and sustainable returns to shareholdersstockholders through commodity cycles. Coterra’s common stock trades on the New York Stock Exchange (the “NYSE”) under the ticker symbol “CTRA.” The Coterra name reflects two companies coming together, combining teams
In February and March 2022, the Compensation Committee adopted Coterra’s first post-Merger executive compensation program. The 2022 executive compensation program was 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:
The size of ourOur 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.
| • Eight of 10 director nominees are independent • Four of the five standing committees are fully composed of independent members with independent chairs • The Board is committed to seeking highly qualified women and individuals from minority groups to include in the pool of potential Board nominees and succession candidates • Executive sessions are led by an independent director in 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 financial sophistication and are audit committee financial experts under the SEC rules • Stock ownership guidelines for all executive officers and directors • Annual election of directors and majority voting provision • Board oversight of political contributions and annual disclosures of recipients and amounts contributed • Separate Board committee devoted entirely to environmental, health and safety matters | |
| 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 | |
| GOVERNANCE | | | |
| | | | | | | | | 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 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PROPOSAL 1 | | | ELECTION OF DIRECTORS | |
| | | DOROTHY M. ABLES Former Chief Administrative Officer of Spectra Energy Corp | | | | | | | HANS HELMERICH Chairman of the Board of Helmerich & Payne | | |||||||||||
AGE 66 | | | | YEARS SERVED 8 | | | | AGE 65 | | | | YEARS SERVED 3 | | |||||||||
OTHER CURRENT PUBLIC COMPANY BOARDS: 1 • Martin Marietta Materials, Inc. | | | | OTHER CURRENT PUBLIC COMPANY BOARDS: 1 • Helmerich & Payne, Inc. | | |||||||||||||||||
| | | ROBERT S. BOSWELL Lead Independent Director of Coterra; Chairman and | | | | | | | 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 meeting to serve, proxies received will be voted for substitute nominees to be designated by the Board 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.
| | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS |
|
Set forth below, as of March 1, 2023,Below is the biographical information and information regarding the business experience, qualifications and skills of each nominee selected for election as a director of the Company that led the Board to conclude that the director nominee is qualified to serve on our Board.Company. 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.
| | |
| AGE: 66
| |
| DIRECTOR SINCE:2015
| |
| Independent | |
| COMMITTEE MEMBERSHIPS: • Audit (Chair) • Governance and Social Responsibility | |
| ||||||
|
| |||||
| ||||||
Reason for Nomination Ms. Ables brings to the Board a depth of experience in the natural gas transportation and marketing aspects of our industry, | | |||||
| | CAREER HIGHLIGHTS • Spectra Energy Corp. – Chief Administrative Officer—2008 – 2017 – Vice President, Audit Services and Chief Ethics & 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 |
CURRENT PUBLIC COMPANY BOARDS • Martin Marietta Materials, Inc. – 2018 – Current | ||||||||||
COMPANY C-SUITE | PUBLIC COMPANY BOARDS WITHIN • None | & PRODUCTION | CHANGE | INDUSTRY EXPERIENCE | COMPANY BOARDS | ACCOUNTING EXPERTISE | SECURITY | STRATEGIC RESPONSIBILITY | RESPONSIBILITY |
| ROBERT S. BOSWELL | |
• Audit • Environment, Health &
Safety | | |
| POSITION: • Lead Independent Director (effective January 1, 2023) | |
| |||||||
|
| ||||||
| |||||||
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 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 | | ||||||
| | CAREER HIGHLIGHTS • Laramie Energy, LLC – Chairman of the Board and • 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 • None | |
| 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 | |
| |
COMPANY C-SUITE | COMPANY C-SUITE | & PRODUCTION | CHANGE | INDUSTRY EXPERIENCE | COMPANY BOARDS | ACCOUNTING EXPERTISE | SECURITY | STRATEGIC RESPONSIBILITY | RESPONSIBILITY |
| |||||
|
| ||||
| |||||
Ms. Brock |
COMPANY C-SUITE | COMPANY C-SUITE | CAREER HIGHLIGHTS • Aris Water Solutions, Inc. – Chief Executive Officer—2021 – Current – President and Chief Operating Officer— 2020 – 2021 – Chief Operating Officer—2018 – 2020 – Chief Commercial Officer—2018 – 2020 • Water Standard – Chief Executive Officer—2009 – 2017 | CHANGE | INDUSTRY EXPERIENCE | CURRENT PUBLIC COMPANY BOARDS • Aris Water Solutions, Inc. – 2021 – Current | ACCOUNTING EXPERTISE | ||||
| PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS • Macquarie Infrastructure Corporation – 2018 – 2022 | STRATEGIC RESPONSIBILITY | RESPONSIBILITY |
| DAN O. DINGES | |
• Executive
| | |
| POSITION: • Executive Chairman (October 1, 2021 to December 31, 2022) | |
| |||||||
|
| ||||||
| |||||||
Mr. Dinges served as | | ||||||
| | 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: 69 | |
| DIRECTOR SINCE:2021
| |
| Independent | |
| COMMITTEE MEMBERSHIPS: • Compensation (Chair) • Governance and Social Responsibility | |
| |||||||
|
| ||||||
| |||||||
Mr. Eckley was appointed in October 2021 in connection with the | | ||||||
| | CAREER HIGHLIGHTS • State Farm – Senior Vice President—1998 – 2020 – Vice President, Common Stocks—1995 – 1998 – Investment Officer—1990 – 1995 – Investment Analyst—1977 – 1990 | | | | CURRENT PUBLIC COMPANY BOARDS • None | |
| PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS • Cimarex Energy Co. – 2019 – 2021 | |
HANS HELMERICH | ||||||||||
COMPANY C-SUITE | COMPANY C-SUITE | & PRODUCTION | ||||||||
| CHANGE | INDUSTRY EXPERIENCE | ||||||||
| COMPANY BOARDS | ACCOUNTING EXPERTISE | ||||||||
| SECURITY | STRATEGIC RESPONSIBILITY | RESPONSIBILITY |
• Environment, Health and Safety | |
| |||||||
|
| ||||||
| |||||||
Mr. Helmerich was appointed in October 2021 in connection with the | | ||||||
| | CAREER HIGHLIGHTS • Helmerich & Payne, Inc. – Chief Executive Officer—1989 – 2014 – 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: 66 | |
| DIRECTOR SINCE:2021
| |
| COMMITTEE MEMBERSHIPS: • Executive
| |
| | Reason for Nomination Following his tenure at Cimarex as the Chief Executive Officer, President and | |||||||
| |||||||||
| |||||||||
of the Board of Directors, Mr. Jorden was appointed Chief Executive Officer and President of Coterra in October 2021 | | ||||||||
| | 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—Exploration—2003 – 2011 – Vice President—Exploration—2002 – 2003 |
CURRENT PUBLIC COMPANY BOARDS • None | ||||||||||
COMPANY C-SUITE | PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS • Cimarex Energy Co. – 2011 – 2021 | & PRODUCTION | CHANGE | INDUSTRY EXPERIENCE | COMPANY BOARDS | ACCOUNTING EXPERTISE | SECURITY | STRATEGIC RESPONSIBILITY | RESPONSIBILITY |
| LISA A. STEWART, NACD.DC | |
• Audit • Environment, Health & Safety (Chair)
• Executive | |
| |||||
|
| ||||
| |||||
Ms. Stewart was appointed in October 2021 in connection with the |
COMPANY C-SUITE | COMPANY C-SUITE | CAREER 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 | CHANGE | INDUSTRY EXPERIENCE | CURRENT PUBLIC COMPANY BOARDS • Western Midstream Partners, LP – 2020 – Current • Jadestone Energy PLC – 2019 – Current | ACCOUNTING EXPERTISE | SECURITY | |||||
| PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS • Cimarex Energy Co. – 2015 – 2021 | STRATEGIC RESPONSIBILITY | RESPONSIBILITY | | |
| FRANCES M. VALLEJO, NACD.DC | |
• Audit • Governance and Social Responsibility (Co-Chair) | |
| |||||||
|
| ||||||
| |||||||
Ms. Vallejo was appointed in October 2021 in connection with the | | ||||||
| | CAREER HIGHLIGHTS • ConocoPhillips – Vice President Corporate Planning and Development—2015 – 2016 – Vice President and Treasurer—2008 – 2015 – 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: 65 | |
| DIRECTOR SINCE:2017
| |
| Independent | |
| COMMITTEE MEMBERSHIPS: • Compensation • Governance and Social Responsibility (Co-Chair) | |
| |||||
|
| ||||
| |||||
Mr. Watts |
COMPANY C-SUITE | COMPANY C-SUITE | & PRODUCTION | CHANGE | INDUSTRY EXPERIENCE | COMPANY BOARDS | ACCOUNTING EXPERTISE | SECURITY | STRATEGIC RESPONSIBILITY | RESPONSIBILITY |
The Friedkin Group – President—2011 – Current • Locke Lord LLP – Managing Partner, Houston, Vice-Chairman (Executive Committee)—1984 – 2010 | | | CURRENT PUBLIC COMPANY BOARDS • Service Corporation International – 2012 – Current | |
|
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. During 2022, non-employee directors’ annual
| Annual cash retainer | | | | | $ | 105,000 | | |
| Annual equity retainer | | | | | $ | 200,000 | | |
| Lead Independent Director | | | | | $ | 40,000 | | |
| Committee Chair(1) | | | | | $ | 20,000 | | |
In 2022, non-employee directors were also entitled towas issued as an annual award of restricted stock units under the Cabot Oil & Gas Corporation 2014Coterra Energy Inc. 2023 Equity Incentive Plan (the “Prior Cabot“2023 Plan”), the restrictions on which lapse before the annual meeting of shareholders in the following yearon May 1, 2024 or the earlier date the non-employee director leaves the Board, with a targeted award value at grant date of $200,000. TheBoard. Such restricted stock units are paidaccrue cash dividend equivalents in the amount of the cash dividend paid on our outstanding Common Stockcommon stock from the date of grant through the date the restrictions lapse. In 2022,2023, each non-employee director received 5,6848,177 restricted stock units.
Board members may participate
| Name | | | | Fees Earned or Paid in Cash ($) | | | | 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 | | |
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 ($) | All Other Compensation ($) | Total ($) | |||||||
Dorothy M. Ables | $125,000 | $200,000 | – | – | – | – | $325,000 | |||||||
Robert S. Boswell | $105,000 | $200,000 | – | – | – | – | $305,000 | |||||||
Amanda M. Brock | $105,000 | $200,000 | – | – | – | – | $305,000 | |||||||
Paul N. Eckley | $125,000 | $200,000 | – | – | – | – | $325,000 | |||||||
Hans Helmerich | $105,000 | $200,000 | – | – | – | – | $305,000 | |||||||
Lisa A. Stewart | $145,000 | $200,000 | – | – | – | – | $345,000 | |||||||
Frances M. Vallejo | $115,000 | $200,000 | – | – | – | – | $315,000 | |||||||
Marcus A. Watts | $115,000 | $200,000 | – | – | – | – | $315,000 |
| Name | | | | 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 | | |
| | | |
| |
The following table reports, as of February 15, 2023, beneficial ownership of the Company’s common stock (“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 Securities and Exchange Commission (“SEC”).
Name and Address of Beneficial Owner | Number of Shares of Common Stock Owned | Percent of Class(6) | ||||||
The Vanguard Group | 90,971,069 | (1) | 11.8 | % | ||||
Wellington Management Group LLP | 81,311,345 | (2) | 10.6 | % | ||||
BlackRock, Inc. | 69,806,470 | (3) | 9.1 | % | ||||
State Street Corporation | 53,687,695 | (4) | 7.0 | % | ||||
Aristotle Capital Management, LLC | 41,257,693 | (5) | 5.4 | % |
The following table reports, as of February 15, 2023, 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 showed as beneficially owned by them.
Name of Beneficial Owner | Number of Shares of Common Stock Owned(1) | Percent of Class | (2) | |||||
Dorothy M. Ables | 81,416 | (3) | * | |||||
Robert S. Boswell | 87,162 | * | ||||||
Amanda M. Brock | 55,028 | * | ||||||
Dan O. Dinges | 5,226,518 | (4) | * | |||||
Paul N. Eckley | 60,768 | * | ||||||
Hans Helmerich | 1,874,976 | (5) | * | |||||
Lisa A. Stewart | 92,869 | (6) | * | |||||
Frances M. Vallejo | 60,769 | * | ||||||
Marcus A. Watts | 55,028 | * | ||||||
Thomas E. Jorden | 2,477,946 | (7) | * | |||||
Scott C. Schroeder | 2,040,565 | * | ||||||
Stephen P. Bell | 351,436 | * | ||||||
Christopher H. Clason | 88,121 | * | ||||||
All directors and executive officers as a group (20 individuals) | 12,947,583 | (1)(2)(3)(4)(5)(6) | 1.7 | % |
| |
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s executive officers and directors to file initial reports of ownership and reports of changes in ownership of our common stock with the 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 a review of the copies of such reports furnished to the Company, and written representations that those reports accurately reflect all reportable transactions and holdings, all reports required by Section 16(a) were timely filed in 2022, except that the Company inadvertently omitted the 2022 annual director restricted stock unit awards that were granted to the following individuals on June 1, 2022, as described in the Company’s proxy statement for its 2022 annual meeting of shareholders: Dorothy M. Ables, Robert S. Boswell, Amanda M. Brock, Paul N. Eckley, Hans Helmerich, Lisa A. Stewart, Frances M. Vallejo, and Marcus A. Watts. Forms 5 reflecting such awards were timely filed in February 2023. The Company also inadvertently omitted two acquisitions made on March 30, 2022 by Hans Helmerich. Such transactions were included on Mr. Helmerich’s Form 5 filed on February 9, 2023.
Our legal staff is primarily responsible for developing and implementing processes and controls to obtain information regarding our directors, executive officers, and significant shareholders with respect to related party transactions and then determining, based on the facts and circumstances, whether we or a related party has a direct or indirect interest in these transactions. On a periodic basis, the legal team 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 with the information regarding such transactions.
Our GSR 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 GSR Committee, in each case with the assistance of our legal staff.
Several of our Board members serve as directors or executive officers of other organizations, including organizations with which the Company has commercial relationships. The Company does not believe that any director had a direct or indirect material interest in any such relationships during 2022 and through the date of this proxy statement.
| ||
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. Our Corporate Governance Guidelines outline the functions and responsibilities of the Board, director qualifications, and various processes and procedures designed to ensurepromote effective and responsive governance. The guidelines are reviewed annually and periodically revised as appropriate 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 20222023 Sustainability Report, can be found on the Company’s website at www.coterra.com.
Under its charter, the 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” below. 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.
Pursuant to the Merger Agreement, the Board consists of five members selected by Cabot and five members selected by Cimarex. Until the 2024 annual meeting of shareholders, 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 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 legacy Cimarex directors.
Whether nominated by a shareholder or through the activities of the GSR 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 or her fiduciary responsibilities to the Company’s shareholders, with no actual or perceived conflict of interest that would interfere with his or her responsibilities to or relationships with the Company’s shareholders, employees, suppliers, 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 or 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 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.
Company C-Suite | Company C-Suite | & Production | Change | Industry | Public Company Boards | Accounting | security | Strategic Responsibility | Responsibility | |||||||||||||
The Company’sOur Corporate Governance Guidelines require that at least a majority of the Company’sour directors be independent under the New York Stock Exchange (“NYSE”)NYSE listing standards and all other applicable legal requirements. Additionally, all members of the Audit Committee Compensation Committee and GSRthe Compensation Committee are required to be independent.independent by rules and regulations of the SEC, and all members 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 Company or management. In making
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 former Chief Executive Officer, is independent. In making its independence determination, the Board reviewed and discussed additionaldiscusses 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. The BoardFor 2023, such review included all known material relationships with each director and all transactions since the start of 2021 between the Company and each director nominee, members of their immediate families and entities associated with them. Each of such relationships and transactions was considered the transactions in the context 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. Some
Each of Ms. Ables, Mr. Boswell, Ms. Brock, Mr. Helmerich, Ms. Stewart and Ms. StewartVallejo serve or have served on boards of directors or as officers of companiesand with which we have done business in the last three years. When evaluating the independence of Ms. Ables, Mr. Boswell, Mr. Helmerich, and Ms. Stewart,In each instance, the Board, with the recommendation of the Governance and Social Responsibility Committee, determined that, because of the nature of the transactions, the applicable 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 such director’s independence.
Mr. Boswell is the Chairman of the Board and Chief 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 Laramie. This space isCimarex no longer needed by the Company as it integrates its management team at Coterra’s headquarters in Houston, Texas.needs this office space. The sublease is for a term from March 1, 2022 through August 31, 2026, with rental payments to the Company of approximately $405,000 per year increasing to approximately $450,000 per year, payable monthly
When determining the independence of Ms. Brock, the Board considered that Ms. Brock is the Chief Executive Officer of Aris Water Solutions, Inc. (“Aris Water”), a publicly-tradedpublicly 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. The Company’s 2022Our 2023 payments to Aris Water represented approximately oneless than 0.5 percent of Aris Water’s consolidated gross revenues for 2022.2023. The Board reviewed these transactions and concluded: (i) the transactions are proper and not material when compared to both the Company’sour 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 governing such transactions 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)(iii) Ms. Brock’s relationship with Aris Water does not interfere with her independent judgment as a director of Coterra.
In
Each new director appointed to fillapplicable transaction, or any of their immediate family members, had a vacancydirect or elected at the annual meeting of shareholders undergoes an orientation program immediately upon joining the Board. The program adopted by the Company includes in-person meetings with the Chair and the CEO and other key officers to discuss Company 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 board meeting materials and a briefing by the Corporate Secretary as to the legal requirements and obligations of Board membership. New directors will typically attend Board committee meetings for committees on which they do not serve for a period of time to familiarize themselves with the areas of responsibility of each committee.
All of our directors 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 former independent Lead Director and the Chair of the Environmental, Health & Safety Committee, and Ms. Vallejo, Co-Chair of the GSR Committee, received the National Association of Corporate Directors Director Certification (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.
Our GSR 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 GSR Committee to nominate qualified candidates for annual shareholder 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 engages in various director recruitment activities. The Board does not have a mandatory retirement policy.
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 directors • Calls special meetings of the Board • Presides over | | | | • Presides over all Board meetings at which the Chairman present • Solicits agenda items from non-management directors, materials •
Calls meetings of non-management directors and, as appropriate, sets the agenda • Presides over directors • Acts as liaison between the Chairman and the directors and Board • Reviews stockholder communications directed to the Board and action • Retains outside advisors and consultants, who report directly to the Board on Board-wide | |
The Board believes having a combined Chairman/CEOChief Executive Officer and a Lead Independent Director, who have the duties described above, best serve the interests of our shareholdersstockholders because this structure provides an appropriate balance between strategy development and independent oversight of management.
Mr. Dinges served as the Executive Chairman of the Board of the Company from the closing of the Merger with Cimarex on October 1, 2021 until the expiration of his term on December 31, 2022 in accordance with the Merger Agreement. He served as Chairman, President and Chief Executive Officer until the closing of the Merger on October 1, 2021.
Mr. Jorden began serving as Chief Executive Officer and President of the Company effective on the closing of the Merger on October 1, 2022. Following the expiration of Mr. Dinges’s term as Executive Chairman on December 31, 2022, the2021. 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 CEOChief Executive Officer and Chair.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 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.
The Chairman is joined in the leadership of the Board by our Lead Independent Director, who ordinarily is nominated by the GSRGovernance 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 shareholders,stockholders, the Board shall have a lead independent director who shall be (i) a continuing Cimarex director at any time when the ChairChairman of the Board is a continuing Cabot director and (ii) a continuing Cabot director at times thatwhen the ChairChairman of the Board is a continuing Cimarex director. Pursuant to this arrangement, Ms. Stewart served as the Lead Independent Director from the closing of the Merger on October 1, 2021 until December 31, 2022 when Mr. Jorden was elected as Chairman. Because Mr. Jorden is a continuing Cimarex director, the Board appointed Mr. Boswell, a continuing Cabot director, as Lead Independent Director effective January 1, 2023.2023 concurrent with Mr. BoswellJorden’s appointment as Chairman. Mr. Jorden is a continuing CabotCimarex director.
The Board of Directors held four regularly scheduled and five special meetings during 2022. All directors attended at least 75 percent ofCompany believes that the meetingsBoard’s leadership structure supports the risk oversight function of the Board, of Directorswith 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.
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 Company’s policy isAudit Committee also reviews with management and our internal auditors our major financial exposures and steps management has take to monitor and address such exposures.
regularly on these matters. Information on each of the Board’s standing committees as of the date hereof is discussed below.
Committees | | Independent? | | | | 2023 Meetings | | | | | | | | | | | 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 | |
The function of the GSR Committee is to assist the Board in fulfilling its responsibility to the shareholders by:
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.
The functionprimary purposes of the Audit Committee isare to assist the Board in overseeing:
• 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 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, as amended (the “Exchange Act”), and the applicable rules and regulations of the SEC. TheIn 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 pre-approvegrant 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.
The functionprimary purposes of the Compensation Committee isare to:
• 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. | |
The functionprimary purposes of the Environment, Health & Safety (“EHS”) Committee isare to assist the Board in providing risk oversight and support of the Company’sour policies, programs and initiatives on the environment, health and safety. Among other things, the EHSEnvironment, Health & Safety Committee:
• 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 environmental investigations, releases or remediations; ◦ our safety performance, including reports of incidents, statistics and legal actions or investigations, as well our responses to the same; ◦ our management of and 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 Board and internal 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 EHSEnvironment, Health & Safety 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 continuousregular basis and provides thea governance structure to ensureoversee that our programs are effective for providingand provide a safe working environment for our employees.
The functionprimary purposes of the Governance and Social Responsibility Committee are to:
|
|
|
Cybersecurity preparedness is an area of increasing focus for our Board, the Audit Committee, and our management team, particularly as our operations increasingly rely on digital technologies. The AuditMs. Vallejo, Co-Chair of the Governance and Social Responsibility Committee, receives a quarterly updatereceived the National Association of Corporate Directors Director Certification, 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. Ms. Vallejo also earned the CERT Certificate in Cyber-Risk Oversight from the Company’s Vice President – Information Technology regarding 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.
Every director, officer and employee of the Company and its subsidiaries is required to comply with the Company’sour Code of Business Conduct and Ethics, or Code of Conduct. The purpose of the Code of Conduct is a guideline that helps to promote honest and ethical conduct and compliance with the law. We provide Code of Conduct training at time of hire and on an annual basis thereafter, which training may include anti-harassment, anti-discrimination, inclusion, and workforce management training. Any suspected violations of applicable laws, rules or regulations, or the Code of Conduct, or any unethical business practices may be reported through use of the Company’sour confidential telephonic hotline at (877) 813-9101 or online at www.coterra.ethicspoint.com. The full text of the Code of Conduct can be found on the Company’s website at www.coterra.com.
Any waiver of the Code of Conduct for non-executive officers or employees may be granted by the Company’s Chief Executive Officer, General Counsel, Chief Financial Officer, or Chief Human Resources Officer. Any waiver of the Code of Conduct for directors or executive officers may be granted only by the Board of Directors or by the GSRGovernance and Social Responsibility Committee, subject to the disclosure and other provisions of the Securities Exchange Act, of 1934, as amended, the rules promulgated thereunder and the applicable rules of the NYSE. In caseIf 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,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 NYSE 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.
| PROPOSAL 2 | | | TO AMEND AND RESTATE THE RESTATED CERTIFICATE OF INCORPORATION OF COTERRA ENERGY INC. | |
| | | 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. | |
COMPENSATION | | | |
| PROPOSAL 3 | | | TO APPROVE, BY NON-BINDING ADVISORY VOTE, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS | |
| | | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPENSATION | |||
|
This Compensation Discussion and Analysis (“CD&A”) describes our compensation philosophy, objectives, policies and practices in place during 2022. Many of the decisions made by the Compensation Committee of the Board of Directors of the Company were the result 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”). The closing of the Merger in the fourth quarter of 2021 resulted in certain changes to the Company’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 Compensation Committee’s early 2023 executive compensation decisions.
This CD&A focuses on the compensation of our Chief Executive Officer,named executive officers. For 2023 our Chief Financial Officer, our three other most highly compensatednamed executive officers for 2022 (the “NEOs”), including our Executive Chairman through December 31, 2022 (who was formerly our Chairman, President and Chief Executive Officer prior toincluded the Merger), namely:
| Thomas E. Jorden | | | | Chief Executive Officer and President | |
Shannon E. Young III | | | | Executive Vice President and Chief Financial Officer | | |
Stephen P. Bell | | | | Executive Vice | | |
Blake A. Sirgo | | | | Senior Vice President—Operations | | |
| Kevin W. Smith | | | | Vice President and Chief | |
Mr. Dinges and Mr. Schroeder wereAdditionally, 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.
Our compensation plans and practices are designed to align the financial interests of our NEOs with the financial interests of our shareholders. To that end, we provide our NEOs with a competitive base salary, an annual cash bonus opportunity 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 2022 the level of at-risk pay for the NEOs ranged from 86 percent to 91 percent of the total annual compensation opportunity, with our CEO having the highest level of at-risk pay of the NEOs.
In February and March 2022, the Compensation Committee adopted Coterra’s first post-Merger executive compensation program. The 2022Our 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:
For 2019 through 2021, we have received over 94 percent support from shareholders on our say-on-pay vote. In 2022, we received 74 percent support from shareholders, and in response, we engaged with shareholders to solicit feedback:
|
|
|
Following the closing of the Merger on October 1, 2021, the Compensation Committee began to build an integrated and aligned set of compensation programs for Coterra NEOs. That integration continued into 2022. Based on requirements of the Merger Agreement, our NEOs continued to participate in some of their respective legacy company’s programs until full integration was completed in late 2022.
The Compensation Committee oversees an executive compensation program 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 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 achieved these objectivesValue Stockholders’ Perspective on Executive Pay Programs
The following practices and policies in place in 2022 ensured that our executives’ compensation was aligned with shareholders’ interests.
| What we do: | | ||||
| | | Include emissions | | ||
| | | Grant at least half of the value of annual LTI in the form of performance-based | | ||
| | | Relative TSR performance awards require above median performance for target payout and cap payout at target if TSR is negative over the performance period | | ||
| | | | Short-term incentive compensation based on disclosed performance metrics (with payout caps) including operational, financial and returns metrics | | |
| | | Provide for “double trigger” cash payouts in change-in-control agreements | | ||
| | | Maintain substantial stock ownership and retention requirements for executive officers and directors | | ||
| | | Maintain a clawback policy | | ||
| | | Hold an annual advisory “say-on-pay” vote | | ||
| | | Have only independent directors on Compensation Committee | | ||
| | | Use an independent compensation consultant | |
| What we don’t do: | | ||||
| | | No vesting periods of less than three years for equity awards issued in | | ||
| | | No payout above target on LTI performance shares if TSR is negative during performance period | | ||
| | | | No hedging or pledging of company stock by executive officers or directors | | |
| | | No | | ||
| | | No re-pricing or discounting of options or stock appreciation rights | | ||
| | | No performance metrics that would encourage excessive risk-taking | |
| | Other Named Executive Officers | | ||
| | | |
In 2022 we used various elements of executive compensation, with an emphasis on variable compensation and long-term incentives, a large portion of which is considered at-risk. The elements of executive compensation utilized in 2022 are presented in the table below and discussed in more detail later in the CD&A.
Element | | | | Form and Timing of Payout | | | | | | Determination Considerations | | |||
| Base Salary | | | | Paid in cash throughout the year | | | | Compensate | | | | | |
| Annual Cash Incentive Awards | | | | Paid in cash after the year has ended and performance has been measured | | | | Motivate and reward achievement of results against a set of business goals and individual | | | | | |
| Long-Term Incentive Awards | |
| | 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 | | | | The value of performance-based equity awards is 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 percent for top performance, with a payout cap at target in the event TSR is negative. | |
|
| | | | Aligns interests of executives and | | | | The value of time-based equity awards granted to executive officers, in aggregate, is generally targeted at competitive pay levels using the median of the peer group for reference, although individual and Company circumstances may influence the award amounts. |
|
We believe our executive compensation policies and programs effectively served the interests of the shareholders and the Company in 2022. TheOur Incentive Compensation Committee has worked 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.
At its February 2022 meeting and periodically throughout the year, the Compensation Committee referenced competitive market study data of the compensation peer group prepared by FW Cook, the Compensation Committee’s independent compensation consultant. Based on the data and the CEO’s recommendations with respect to the other officers, the requirements of the Merger Agreement that compensation opportunities not be reduced for one year after the October 1, 2021 closing of the Merger and the employment agreements entered into by Mr. Jorden and Mr. Dinges in connection with the Merger, the Compensation Committee determined 2022 salaries, bonus payouts for 2021 performance, and the 2022 annual grant of long-term incentive awards for the executive officers. A detailed discussion of each item of compensation can be found below under “2022 Compensation Decisions.”
Also at its February 2022 meeting, and prior to making any compensation decisions, the Compensation Committee reviewed a detailed analysis of equity awards and their retentive value for each NEO. Over the course of the year, the Compensation 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 2022 meeting, the Compensation Committee and the Board of Directors discussed and approved the 2022 performance criteria for the 2022 annual cash bonus plan.
In February 2022, the Compensation Committee approved a new compensation peer group to better reflect the size, operations and market of Coterra following the closing of the Merger. The Compensation Committee also approved a new performance peer group (the “StockPrograms Align Corporate Strategy Through Thoughtful Performance Group”) for the February 2022 relative TSR performance awards 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 Index and the S&P 500 Industrials Index. The new compensation peer group for 2022, is as follows (new peer companies in bold):
Annual Cash Incentive Bonus Program | | | Why the Metric is Important | | ||
| | | | | ||
| | | | | ||
| | | | | ||
| 5% Methane Intensity 5% Flare Intensity | | | | |
| Long-Term Incentive Program | | | | Why the Metric is Important | |
| | | | | ||
| | | | 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 |
The Compensation Committee believes base salary is a critical elementDetermination of executive compensation because it provides executives with a base level of income. In February 2022, base salary for all executive positions was reviewed by the Compensation Committee. Individual salaries in 2022 took into account our established salary practices 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; internal and external pay equity issues; and, with respect to Mr. Jorden and Mr. Dinges, their employment agreements entered into in connection to the Merger.
Name | Title | 2021 Base Salary | 2022 Base Salary | |||||||
Mr. Jorden | Chief Executive Officer and President | $ | 1,125,000 | $ | 1,125,000 | |||||
Mr. Schroeder | Executive Vice President and Chief Financial Officer | $ | 629,000 | $ | 667,000 | |||||
Mr. Dinges | Executive Chairman | $ | 1,100,000 | $ | 1,100,000 | |||||
Mr. Bell | Executive Vice President, Business Development | $ | 554,000 | $ | 554,000 | |||||
Mr. Clason | Senior Vice President, Chief Human Resources Officer | $ | 460,000 | $ | 483,000 |
Effective upon the closing of the Merger 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 was to 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” below.
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. 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. The calculation yields a potential overall bonus pool payout, stated as a percentage of target. The CEO makes recommendations to the Compensation 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 Compensation 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 Compensation Committee also retains discretion to take into account the effect on the bonus metrics of unanticipated factors, such as acquisitions and divestitures or changes in laws or regulations or their interpretation, which are not part of establishing the target metrics because the Company cannot budget for these events, when arriving at the approved total bonus pool. When acquisition or divestiture activity occurs, for example, the Compensation Committee assesses its impact and exercises discretion to adjust for the impact on the overall bonus pool. The Compensation Committee will determine the total bonus pool payout, but individual awards can vary from the payout, at the discretion of the Compensation Committee. The Compensation 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.
For 2022, the bonus opportunity for each NEO was as follows:
Executive | Title | Target Bonus (% of Salary) | Target Bonus Value | |||||||
Mr. Jorden | Chief Executive Officer and President | 130% | $ | 1,462,500 | ||||||
Mr. Schroeder | Executive Vice President and Chief Financial Officer | 110% | $ | 733,700 | ||||||
Mr. Dinges | Executive Chairman | 130% | $ | 1,430,000 | ||||||
Mr. Bell | Executive Vice President, Business Development | 100% | $ | 554,000 | ||||||
Mr. Clason | Senior Vice President, Chief Human Resources Officer | 100% | $ | 483,000 |
The 2022 bonus plan was designed by the Compensation Committee to incentivize desired outcomes for Company performance by using measurable, value-generating metrics, that when achieved at target or higher levels, are additive to shareholder value and returns. Over the last several years, the Compensation Committee adjusted the bonus plan metrics to reduce the emphasis on growth of production and reserves, which had been the core tenets in the industry for many years, and increase the focus on financial and returns metrics, as requested by the investment community. The 2022 bonus opportunity metrics and weighting for the NEOs were as follows:
Coterra 2022 Executive Annual Cash Incentive Performance Metrics
Metrics | ||||||||
Goals and Objectives | Weight | Threshold (50%) | Target (100%) | Max (200%) | ||||
ROIC(1) | 30% | 25% | 50% | 75% | ||||
Annual Production Guidance (MBOE/day)(2) | 25% | n/a | 615 | 630 | ||||
Free Cash Flow | 20% | $2,700MM | $2,950MM | $3,200MM | ||||
Drilling cost measured $/Foot | 10% | $909 | $891 | $873 | ||||
Green House Gas Intensity (Metric Tons [MT] CO2e/MBOE) | 5% | 6.679 | 5.942 | 5.204 | ||||
Methane Intensity (MT CH4/MT CH4)(%) | 5% | 0.042% | 0.038% | 0.033% | ||||
Flare Intensity (MMCF/MMCF)(%) | 5% | 0.146% | 0.131% | 0.118% | ||||
TOTAL | 100% |
In February 2022, the bonus metrics and performance goals were established with the target level of performance (100 percent) based on the operating budget approved in February by the Board of Directors. The performance goals for no payout (zero percent) and a payout at 200 percent of target for each metric were also created at that time.
The following table provides details of the level of achievement of the 20222023 annual cash incentive performance metrics reviewed and approved by the Compensation Committee on February 20, 2023.
Metrics 2022 Results Goals and Objectives Weight Threshold (50%) Target (100%) Max (200%) Financial/ Operational Results Comments Funding Weighted Funding ROIC(1) 2022 ROIC reached our target goal of 50% after tax rate of return (fully-burdened for all costs indicated) at $55/bbl and $2.75/mcf. This was primarily driven by strong well performance and partially offset by increasing capital costs due to inflation. 100% 30% Annual Production Guidance (MBOE/ day)(2) 2022 annual production exceeded the upper end of our max goal of 630 MBOE/day. This performance was driven by a combination of project timing and well productivity improvements. 200% 50% Free Cash Flow(3) 2022 annual free cash flow was above the max goal of $3.2 Billion. This was due to higher than forecasted commodity prices, partially offset by higher capital investments due to inflation. 200% 40% Drilling cost measured $/Foot 2022 total company average drilling cost $/foot was above our threshold allowable cost goal. The miss on cost performance was due to inflation. 0% 0%
| | | | | Goals | | | | 2023 Results | | | | | | | | | | ||||||||||||||||
| Metrics | | | | Weight | | | | Threshold (50%) | | | | Target (100%) | | | | Stretch (200%) | | | | Financial/ Operational Results | | | | Comments | | | | Funding | | | | Weighted Funding | |
| Economic Performance (PVI-10)(1) | | | | | | | The PVI-10 of our 2023 drilling program was 1.65, exceeding our target goal of 1.50 (fully burdened for drilling, completion, facilities, infrastructure, land, and overhead costs). This result was primarily driven by strong economic returns in the Permian Basin. | | | | 130% | | | | 59% | | |||||||||||||||||
| Annual Production Guidance (MBOE/day) | | | | | | | 2023 annual production exceeded the upper end of our stretch goal of 648 MBOE/Day. This result was due to operational efficiencies that allowed us to turn new wells to production faster and stronger well performance. | | | | 200% | | | | 40% | | |||||||||||||||||
| Annual Budget Guidance (MM$) | | | | | | | 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% | |
Metrics 2022 Results Goals and Objectives Weight Threshold (50%) Target (100%) Max (200%) Financial/ Operational Results Comments Funding Weighted Funding Green House Gas Intensity (Metric Tons [MT] CO2e/ MBOE) 2022 GHG intensity was between our target and max goals. This improvement was driven by electric compression installations and utilization of an electric hydraulic fracturing fleet instead of the usual diesel fleet. 167% 8% Methane Intensity (MT CH4/MT CH4) (%) 2022 methane intensity achieved our target goal. The main drivers of reduction were instrument air installations, well liquid unloading management practices, and combustion of gas when drilling out plugs. 100% 5% Flare Intensity (MMCF/MMCF)(%) 2022 flare intensity reduction was better than our max goal. This was driven by improved flare management practices around curtailment events. 200% 10% TOTAL 100% TOTAL STI SCORE YTD 143%
As noted in the table above, the short term incentive (“STI”)For 2023 annual cash incentive bonus payoutsperformance 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, NEOs were scoredother financial measures prepared in accordance with GAAP. It is a present value index discounted at 143 percent10%, calculated by dividing the net present value of target. In February 2023, the Compensation Committee approved the level of performance against the STI performance metrics approvedcertain cash flows by the Compensation Committeepresent value of capital investments plus a constant value.
Following the Merger and during fiscal year 2022, Mr. Jorden led a senior leadership review of the Company’s operations, organization, and assets as part of the integration process, which resulted in, among other things, the previously disclosed downward adjustment to our reserves estimates. Given the results of the reserves review, Mr. Jorden and Mr. Dinges asked the Committee to pay their respective 2022 bonuses at no more than target.
The Compensation Committee, after fulsome discussion with all independent directors in executive session, determined that paying their bonuses at target (rather than at 143 percent of target based on performance compared to the 2022 STI goals or 125 percent of target after the Compensation Committee’s exercise of negative discretion for the economic reasons noted in the previous section) was appropriate under the circumstances.
Our long-term equity incentive award program balances the short-term annual cash incentive program by focusing executive efforts on the activities and results that lead to long-term and sustainable shareholder value.
In February 2022, the Compensation Committee awarded 100 percent of the CEO’s and 60 percent of each other NEO’s long-term incentive opportunity in the form of performance shares payable solely on the basis of our total shareholder return (TSR) relative to our industry peer groupmeasured over a three-year performance period (see “—Long-Term Incentive Awards—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% | | |
In 2022, we awarded none of the CEO’s, and 40 percent of each other executive’s, long-term incentive value through time-based restricted shares (see “—Long-Term Incentive Awards—Time-Based Restricted Stock Units” and the “Grants of Plan-Based Awards” table below). The time-based shares vest 100 percent on the third anniversary.
Long-term incentives awardedPayout Form to the legacy Cabot NEOs in 2022 were granted under the Prior Cabot Plan and all long-term incentives awarded to the legacy Cimarex NEOs in 2022 were granted under the Amended and Restated Cimarex Energy Co. 2019 Equity Incentive Plan (the “Prior Cimarex Plan”).
For 2022, the Compensation Committee approved the following target LTI grant values for the NEOs:
NEO | 2022 PSU | 2022 RSU | 2022 Total LTI | |||||||||
Target Value | Target Value | Target Value | ||||||||||
Mr. Jorden | $ | 10,000,000 | $ | – | $ | 10,000,000 | ||||||
Mr. Schroeder | $ | 2,490,000 | $ | 1,660,000 | $ | 4,150,000 | ||||||
Mr. Dinges | $ | 2,700,000 | $ | 1,800,000 | $ | 4,500,000 | ||||||
Mr. Bell | $ | 1,800,000 | $ | 1,200,000 | $ | 3,000,000 | ||||||
Mr. Clason | $ | 1,200,000 | $ | 800,000 | $ | 2,000,000 |
Limit DilutionThe Compensation 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. The Compensation 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 :Compensation 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 percent of target are to be paid in the cash value of the shares. For additional information about
The Performance Shares Earned for such period,$2,000,000 and the Common Stock issued and(c) a one-time cash paid with respect to each Performance Share, shall be determined using the following scale:
Thomas E. Jorden | Chief Executive Officer and President | ||||
If
At the same time that the Company delivers the Performance Shares Earned, the Company will pay to the NEO an amount in cash equal to the dividends that would have been paid on each shareend of Common Stock underlying the Performance Shares Earned had such share been outstanding from the date of grant until the date shares and cash, if applicable, are delivered to the NEO.
| ($ 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% | |
In February 2022, the Compensation Committee awarded to NEOs and other officers time-based restricted stock units (“RSUs”) payable in common stock that vest January 31, 2025 provided that such recipients remain continuously employed by the Company from the date of grant through and including the vesting date. Our time-based awards that vest based on continuous employment and the passage of time promote
| Stephen P. Bell | Executive Vice President—Business Development | |
retention of executives. RSUs issued to legacy Cabot NEOsThe Compensation Committee increased his base salary in 2023 by 5 percent. No other changes were made pursuant to Mr. Bell’s target compensation for 2023.
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. For additional information about the 2022 time-based awards, see the table “Grants of Plan-Based Awards” below.
On May 23, 2021, Mr. DingesBell 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. Undermemorialized the terms of Mr. Bell’s 2024 and 2025 Target LTI Grant Value. Additional details about this agreement are provided at the Dinges Agreement, 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 | |
| ($ 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 | |
| ($ 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 | |
| ($ 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 | |
| ($ 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% | |
| | | | | 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 | | |
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 employedJorden’s base salary increased to $1,200,000 effective as the Company’s Presidentof January 1, 2024; beginning in 2024, Mr. Jorden’s target annual cash incentive increased to 140 percent of his base salary; and Chief Executive Officer and serves as a member of the board from the effective time of the Merger through the third anniversary thereof (October 1, 2024) 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, subjectcontinue to review annually for increase but not decrease, will be eligible for an annual cash incentive award with a target opportunity of 130 percent of his annual base salary, will be grantedreceive 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 favorableequal 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 percent of the other members of the Coterra board.
Mr. Jorden’s$10 million. The 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 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 expirationprovisions of the Jorden Employment Period, if Mr. Jorden’s employment with Coterra is continuing, then heAgreement remained unchanged 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,with Mr. JordenBell
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
The Jorden side letter also provides that if Mr. Jorden’s employment is terminated by the Company without cause or by Mr. JordenClason resigned for good reason or if Mr. Jorden dies or becomes disabled, in each case,under his legacy Cimarex severance compensation agreement during the Jorden Employment Period,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 Coterra equity awards, includingand eligible to vest in accordance with their terms, subject to his Cimarex equity awards convertedcompliance 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.
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.
Following the closing of the Merger on October 1, 2021, Committee. F.W. Cook was engaged by the Compensation Committee beganand performed no services directly for management. Management does not retain the services of a compensation consultant.
| Antero 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 | |
��
The Coterra Energy Inc. Retirement Savings Investment Plan, formerly known as 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 50100 percent of their annual salary, or the limit prescribed by the Internal Revenue Service, on a pre-tax basis. We match 100 percent of the first six percent of a participant’s eligible pre-tax contribution. In addition, during 2023, the Company contributed 10 percent of salary and bonus of all eligible employees, including all named executive officers, into the Coterra 401(k) Plan (or into the nonqualified deferred compensation plan to the extent in excess of the qualified plan limits). Participants are 100 percent vested in the Company’s contributions after three years of service, vesting 33 percent in the first year, 66 percent in the second year and 100 percent in the third year.
During 2022, the Company contributed 10 percent of salary and bonus of all eligible legacy Cabot employees, including all legacy Cabot NEOs, into the Cabot 401(k) plan (or into the nonqualified deferred compensation plan to the extent in excess of the qualified plan limits). Participants are 100 percent vested in the contributions after three years of service, vesting 33 percent in the first year, 66 percent in the second year and 100 percent in the third year. The Company’s contribution iscontributions are approved annually by the Board of Directors.
Beginning on January 1, 2023, all Coterra employees, including legacy Cimarex employees, began participating in the renamedDeferred Compensation Plan
Upon 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. In 2022, Coterra matched dollar-for-dollar employee contributions to the Cimarex 401(k) Plan up to seven percent of the employee’s cash compensation, subject to limits imposed by the Internal Revenue Code. Beginning in July 2022, the Company changed the Company match to dollar-for-dollar up to six percent and contributed 10 percent of salary and bonus of all eligible legacy Cimarex employees, including all legacy Cimarex NEOs, into the Cimarex 401(k) plan. The Board is authorized to make profit-sharing contributions under the Cimarex 401(k) 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 six percent match and 10 percent 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.
Eligible legacy Cimarex 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 percent of the excess contributions up to 7 percent of a participant’s eligible compensation. A participant could also elect to have up to 50 percent of his or her base salary and up to 100 percent 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.
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, 2022.
The Compensation Committee periodically reviews the level of perquisites and other personal benefits provided to the NEOs.named executive officers. In 20222023 we provided the legacy Cabot NEOsnamed executive officers with limited perquisites and other personal benefits that the Company and the Compensation Committee believe are reasonable, and consistent with the overall compensation program, to better enable us to attractpromote a healthy and retain superior employees for key positions. In 2022, pursuantproductive workforce and provide protection to the terms oforganization. In 2023, the Merger Agreement, the legacy Cabot NEOsnamed executive officers were reimbursed for expenses incurred in connection with club membership dues,provided a Company-paid physicalmedical examination for the NEOnamed executive officer, financial, tax and his or her spouse, a financial and taxestate planning, stipendsupplemental life insurance to bridge certain coverage limitations under our standard policies (consistent for all employees of two times annual earnings up to $3,000 annually, life insurance,$1.5 million), and spouse travel to certain business meetings. Following the Merger, also pursuant to the terms 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, and insurance premiums. The aggregate cost to the Company of the perquisites and personal benefits described above for the NEOsnamed executive officers for 20222023 are included under “All Other Compensation” in the Summary Compensation Table below. As part of the integration of management teams following the Merger, executive perquisites and benefits will be combined in 2023 such that all Coterra NEOs and other officers are entitled to the same benefits.
We offer all our employees, including the NEOs,named executive officers, industry competitive benefits including medical, dental and vision benefits, salary continuation for short-term leave of absences 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.
The Compensation Committee generally views the potential paymentshave a retirement policy pursuant to which certain equity awards may remain outstanding and benefits under change-in-control and severance agreements aseligible to vest following 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 Compensation Committee and the Cimarex compensation committee, respectively, and are discussed separately below.
All legacy Cabot 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 other 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 for medical, dental and life insurance for three years, provided the executive pays the premiums, limited outplacement assistance and tax gross-up on excise taxes for agreements that were in place prior to 2010. In 2010, the Compensation 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 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.
When originally approving the change-in-control agreements, the Compensation 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 Compensation 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 Compensation 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 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 Compensation 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 agreed to terminate their change-in-control agreements in exchange for payments noted in the Summary Compensation Table as “Other Compensation” for 2021. The Compensation Committee believes that these arrangements 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 had continuing change-in-control benefits. In response to the recommendation by a proxy advisory firm to vote against our 2022 say-on-pay proposal and the shareholder vote on executive compensation at the 2022 annual meeting of shareholder, and shareholder outreach, Mr. Dinges entered into an amendment to his change-in-control agreement that eliminated the excise tax gross-up provision of the agreement. As consideration, the amendment provides that the change-in-control payment due to Mr. Dinges as a result of the termination of his employment as Executive Chairman on December 31, 2022 would accrue interest for the period from termination on December 31, 2022 until paid on or about July 24, 2023 based on the 6-month Treasury Bill rate posted to the Daily Treasury Par Yield Curve Rates section of the U.S. Department of the Treasury’s website on December 31, 2022. Mr. Dinges’s change-in-control agreement, as described, remained in full force and effect, and pursuant to the Dinges Agreement, he was entitled to receive his full change-in-control benefits following the termination of his employment as Executive Chair on December 31, 2022. See “Merger-Related Compensation Decisions—Compensation Arrangements with Dan O. Dinges” above.
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 years following a change-in-control. The Merger constituted a change-in-control under the severance compensation agreements. See the “Potential Payments Upon Termination or Change in Control—Severance Agreements” section 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. 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”):
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. The legacy Cimarex severance compensation agreements do not contain excise tax gross-up provisions. 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 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.
The Compensation Committee employs the services of an independent executive compensation consultant. In November 2021, the Compensation Committee engaged FW Cook as its independent executive compensation consultant. Prior to this engagement, the Compensation 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 Compensation Committee. FW Cook also advised the Compensation Committee on executive and director compensation matters leading up to 2022 compensation decisions. FW Cook worked exclusively for the Compensation Committee and performed no services directly for management. Management does not retain the services of a compensation consultant.
Our CEO made recommendations in February 2022, and as new officers were hired, to the Compensation Committee with respect to salary, bonus and long-term incentive awards for executive officers other than himself (with the exception of his recommendation to pay his bonus below the level calculated based on our 2022 STI metrics). In making recommendations, our CEO considered input from FW Cook’s independent competitive market study, internal pay equity issues, individual performance and Company performance. The CEO’s recommendations were just one of the factors considered by the Compensation Committee, in conjunction with the other factors discussed in this CD&A, in setting compensation for all executive officers. The Senior Vice President and Chief Human Resources Officer (“CHRO”), who was ultimately responsible for human resources administration in 2022, provided the Compensation Committee with survey data from a wider group of companies in the energy sector than the industry peer group described above, which the Compensation Committee used for evaluation of non-executive compensation trends, and general administrative support implementing the Compensation Committee’s decisions. The CEO and the CHRO also provided recommendations to the Compensation 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 CHRO and his staff assisted the Compensation Committee in determining bonus payouts in February 2023 by providing the calculations of bonus metric achievement, which the Compensation Committee took into account in determining the ultimate bonus payout pool for 2022. The CEO and the CHRO, along with the General Counsel, attended the Compensation Committee meetings in 2022 and February 2023. In addition, the Chief Financial Officer (“CFO”) attended meetings in an advisory role to the Compensation Committee, primarily related to the legacy Cabot compensation practices and policies. All the officers were excused from the meetings to enable the Compensation 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 Compensation Committee, the executives listed above prepared materials and agendas for the Compensation 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 all approved by the Compensation Committee and, as needed, by the Board.
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, non-employee
| 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 | |
Directors have five years from their initial election, and executive officers have 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 ownership minimum. No sales will be approved if such sale would cause the executive officer’s holdings to go below the minimum required shares except where necessary to pay income taxes related to equity awards.
The Company has adopted a “clawback” policy to allowthat describes circumstances in which the Company to recoup paidwill determine and recover erroneously awarded compensation fromreceived by current orand former executive officers in the eventconnection with certain accounting restatements, regardless of a material financial statement restatement if the executive’s intentional misconduct caused, in wholefault 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.misconduct. Both cash and all types of equity compensation including time-basedthat are granted, earned or vested based wholly or in part upon the attainment of “financial reporting measures” that are determined and performance-based awards,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 such measures, are covered by the clawback policy. The Compensation Committee believes that this clawback policy furthers the interests of the Company and shareholdersstockholders in preventing an executive from being unjustly enriched through misconduct that results in a financial restatement that harms all shareholders.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 thesuch 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 applicableclawback policy.
The NYSE has recently proposed rules to implement the clawback provisions of Section 954 of the Dodd-Frank Wall Street Consumer Protection Act. We will amend our policy to comply with the new NYSE rules when they are finalized. Among other changes, the new policy will require us to recoup compensation from executives in the circumstances contemplated by the rules regardless of whether the restatement resulted from the executive’s misconduct.
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.
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.
Section 162(m) of the Internal Revenue Code imposesof 1986, as amended, places a $1limit of $1.0 million limit on the amount of compensation that a public companywe may deduct forin any one year with respect to compensation paid to its principal executive officer, principal financial officer, any of its three other most highly compensated executive officers foreach covered employee. While 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 shareholders. We strive to take action, where possible and considered appropriate, to preserveCompensation Committee considers 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 byin 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 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 interestinterests of the Company and our shareholders. Accordingly, the Compensation Committee will continue to retain the discretion to pay compensation that is subject to the $1 million deductibility limit.
During 2022, the Compensation Committee was comprised of Mr. Eckley, Ms. Brock, Mr. Helmerich and Mr. Watts, none of whom is an employee or a current or former officer of the Company. Except as disclosed in “Corporate Governance Matters—Director Nominations and Qualifications—Director Independence” above, no member of the Compensation Committee has had any relationship with the Company requiring disclosure under Item 404 of Regulation S K under the Exchange Act and there are no matters relating to interlocks or insider participation that we are required to report.
The Compensation Committee has reviewed and discussed with management the preceding Compensation Discussion and Analysis. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statementproxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
The Compensation Committee
Paul N. Eckley (Chair)
Amanda M. Brock
Hans Helmerich
Marcus A. Watts
February 20, 2023
The table below summarizes the total compensation paid to or earned by each of our NEOsnamed executive officers for the year ended December 31, 2022. For additional information about non-equity incentive plan compensation, see “Annual Cash Incentive Bonus” above.
| Name and Principal Position | | | | Year | | | | Salary ($) | | | | 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 | | |
Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(5) | Total ($) | |||||||||
Thomas E. Jorden(6) Chief Executive Officer and President | 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 | ||||||||||
Scott C. Schroeder Executive Vice President and Chief Financial Officer | 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 | ||||||||||
2020 | 653,206 | – | 5,121,680 | – | 691,900 | – | 207,331 | 6,674,117 | ||||||||||
Dan O. Dinges Executive Chairman; Former Chairman, President and Chief Executive Officer | 2022 | 1,100,000 | 5,189,764 | 1,430,000 | 17,710,254 | 25,430,018 | ||||||||||||
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 | ||||||||||
Stephen P. Bell(7) Executive Vice President, Business Development | 2022 | 543,346 | 3,459,843 | – | 690,000 | 80,250 | 4,773,439 | |||||||||||
2021 | 149,154 | – | 3,000,000 | – | – | – | – | 3,149,154 | ||||||||||
Christopher H. Clason Senior Vice President and Chief Human Resources Officer | 2022 | 470,173 | 2,306,569 | 600,000 | 82,005 | 3,458,747 |
The amounts in this column reflect the grant date fair value with respect to restricted stock units and performance share awards for the relevant fiscal year in accordance with FASB ASC Topic 718. For performance-based awards, the grant date fair value, |
Grant Date | Grant Date Fair Value per Share (RSU) | Grant Date Fair Value per Share (Hybrid) | Grant Date Fair Value per Share (TSR) | ||||
February 19, 2020 | $15.60 | $22.33 | |||||
February 17, 2021 | $18.58 | $23.82 | |||||
February 28, 2022 | $23.33 | $29.29 |
The TSR performance shares, including the liability component for cash payments over 100 percent of target, werewas valued using a Monte Carlo model.model and was based on probable performance at the time of grant. Assumptions used in the Monte Carlo model for the TSR performance shareperformance-based awards, as well as additional information regarding accounting for performance-based awards, are included in Note 13 of the Notes to the Consolidated Financial Statements included in the Company’s 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 $2,000,000.
| | | | | | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | | Exercise or Base Price Of Option Awards ($/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 | | |
The table below reports all grants of plan-based awards made to our NEOs during 2022. All grants of awards to the legacy Cabot NEOs were made under the Prior Cabot Plan and all grants of awards to the legacy Cimarex NEOs were made under the Prior Cimarex Plan, which was assumed by the Company at the effective time of the Merger.
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 | All Other Option Awards: Number of | Exercise or Base | Grant Date Fair Value | |||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Shares of Stock or Units (#)(3) | Securities Underlying Options (#) | Price Of Option Awards ($/Sh) | of Stock and Option Awards ($)(4) | |||||||||||
Thomas E. Jorden | 02/28/2022 | 0 | 1,462,500 | 2,925,000 | ||||||||||||||||||
02/28/2022 | 0 | 428,633 | 857,266 | 12,554,661 | ||||||||||||||||||
Scott C. Schroeder | 02/28/2022 | 0 | 691,900 | 1,383,800 | ||||||||||||||||||
02/28/2022 | 0 | 106,730 | 213,460 | 3,126,121 | ||||||||||||||||||
02/28/2022 | 71,153 | 1,660,000 | ||||||||||||||||||||
Dan O. Dinges | 02/28/2022 | 0 | 1,430,000 | 2,860,000 | ||||||||||||||||||
02/28/2022 | 0 | 115,731 | 231,462 | 3,389,761 | ||||||||||||||||||
02/28/2022 | 77,154 | 1,800,003 | ||||||||||||||||||||
Stephen P. Bell | 02/28/2022 | 0 | 554,000 | 1,108,000 | ||||||||||||||||||
02/28/2022 | 0 | 77,154 | 154,308 | 2,259,841 | ||||||||||||||||||
02/28/2022 | 51,436 | 1,200,002 | ||||||||||||||||||||
Christopher H. Clason | 02/28/2022 | 0 | 460,000 | 920,000 | ||||||||||||||||||
02/28/2022 | 0 | 51,436 | 102,872 | 1,506,560 | ||||||||||||||||||
02/28/2022 | 34,291 | 800,009 |
The table below reports for each NEOnamed executive officer outstanding equity awards at December 31, 2022,2023, including, as applicable, their legacy Cimarex awards that were granted by Cimarex prior to the Merger and were assumed by Coterra and converted into Coterra awards on the effective time of the Merger.
| | | | | Stock Awards | | ||||||||||||||||||||||||
| Name | | | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(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 ($)(2) | | ||||||||||||
| Thomas E. Jorden | | | | | | 706,150 | | | | | | | 18,020,948 | | | | | | | 1,292,048 | | | | | | | 32,973,065 | | |
| Shannon E. Young III | | | | | | 81,030 | | | | | | | 2,067,866 | | | | | | | 162,060 | | | | | | | 4,135,771 | | |
| Stephen P. Bell | | | | | | 263,281 | | | | | | | 6,718,931 | | | | | | | 284,742 | | | | | | | 7,266,616 | | |
| Blake A. Sirgo | | | | | | 95,369 | | | | | | | 2,433,817 | | | | | | | 110,132 | | | | | | | 2,810,569 | | |
| Kevin W. Smith | | | | | | 95,369 | | | | | | | 2,433,817 | | | | | | | 110,132 | | | | | | | 2,810,569 | | |
| Scott C. Schroeder | | | | | | 161,370 | | | | | | | 4,118,162 | | | | | | | 253,302 | | | | | | | 6,464,267 | | |
| Christopher H. Clason | | | | | | 84,134 | | | | | | | 2,147,100 | | | | | | | 163,742 | | | | | | | 4,178,696 | | |
Option Awards | Stock Awards | ||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | ||||||||||
Thomas E. Jorden | 1,334,077 | (3) | 32,778,272 | 428,633 | 10,257,188 | ||||||||||||||
Scott C. Schroeder | 71,153 | (4) | 1,748,229 | 106,730 | 2,554,049 | ||||||||||||||
Dan O. Dinges | 77,154 | (5) | 1,895,674 | 115,731 | 2,769,443 | ||||||||||||||
Stephen P. Bell | 198,064 | (6) | 4,866,432 | 77,154 | 1,846,295 | ||||||||||||||
Christopher H. Clason | 132,043 | (7) | 3,244,296 | 51,436 | 1,230,863 |
The table below reports stock options that were exercised and performance shares that vested during 2022,2023, 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 ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||
Thomas E. Jorden | – | – | 813,812(1) | 22,322,863(2) | ||||
Scott C. Schroeder | – | – | – | – | ||||
Dan O. Dinges | – | – | – | – | ||||
Stephen P. Bell | – | – | – | – | ||||
Christopher H. Clason | – | – | – | – |
| | | Stock Awards | | ||||||||||||
| | | Number of Acquired on (#) | | | | Value Realized on Vesting ($) | | ||||||||
| Thomas E. Jorden | | | | | | 845,318(1) | | | | | | | 22,096,613(2) | | |
| Shannon E. Young III | | | | | | — | | | | | | | — | | |
| Stephen P. Bell | | | | | | — | | | | | | | — | | |
| Blake A. Sirgo | | | | | | — | | | | | | | — | | |
| Kevin W. Smith | | | | | | — | | | | | | | — | | |
| Scott C. Schroeder | | | | | | — | | | | | | | — | | |
| Christopher H. Clason | | | | | | 78,344(3) | | | | | | | 2,119,205(4) | | |
The table below reports NEOexecutive contributions, Company contributions, earnings, withdrawals/distributions and aggregate balances in the Company’s deferredCoterra Energy Inc. Deferred Compensation Plan for 2023. Name
Contributions
in Last FY
($)(1)
Contributions
in Last FY
($)(2)
Earnings
in Last FY
($)(3)
Withdrawals/
Distributions
($)
Balance
at Last FYE
($)(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
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 | $ | 110,336 | $ | 34,087 | $ | (9,704 | ) | $ | – | $ | 165,429 | |||||||||
Scott C. Schroeder | $ | – | $ | 164,998 | $ | 424,462 | $ | – | $ | 14,258,845 | ||||||||||
Dan O. Dinges | $ | – | $ | 338,050 | $ | (52,884 | ) | $ | – | $ | 17,887,536 | |||||||||
Stephen P. Bell | $ | – | $ | – | $ | 157 | $ | – | $ | 10,597 | ||||||||||
Christopher H. Clason | $ | 420,000 | $ | – | $ | (43,959 | ) | $ | – | $ | 405,887 |
| 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 | | |
Fund Name | Ticker | Rate of Return | Fund Name | Ticker | Rate of Return | |||||
Coterra Energy Inc. Common Stock | CTRA | 40.45% | Fidelity Mid Cap Index Fund | FSMDX | -17.28% | |||||
Carillon Scout Mid Cap Class R-6 | CSMUX | -17.18% | Fidelity 500 Index Fund | FXAIX | -18.13% | |||||
Davis NY Venture Fund Class Y | DNVYX | -17.27% | Fidelity Capital Appreciation Fund Class K | FCAKX | -21.11% | |||||
Fidelity Freedom K Income | FNSHX | -11.30% | Fidelity Global ex-US Index Fund | FSGGX | -15.74% | |||||
Fidelity Freedom K 2005 | FSNJX | -11.75% | Fidelity Government Money Market Fund Premium Fund | FZCXX | 1.11% | |||||
Fidelity Freedom K 2010 | FSNKX | -13.18% | Fidelity Diversified International Class K | FDIKX | -23.77% | |||||
Fidelity Freedom K 2015 | FSNLX | -14.53% | Fidelity Real Estate Index Fund | FSRNX | -26.12% | |||||
Fidelity Freedom K 2020 | FSNOX | -16.03% | Fidelity Small Cap Index Fund | FSSNX | -20.27% | |||||
Fidelity Freedom K 2025 | FSNPX | -16.62% | Fidelity US Bond Index Fund | FXNAX | -13.03% | |||||
Fidelity Freedom K 2030 | FSNQX | -16.86% | Glenmede Small Cap Equity Portfolio IS Class | GTSCX | -10.48% | |||||
Fidelity Freedom K 2035 | FSNUX | -17.56% | John Hancock Disciplined Value Fund Class R6 | JDVWX | -4.32% | |||||
Fidelity Freedom K 2040 | FSNVX | -18.14% | Oakmark Equity & Income Fund Investor Class | OAKBX | -12.92% | |||||
Fidelity Freedom K 2045 | FSNZX | -18.22% | T. Rowe Price Blue Chip Growth Fund I Class | TBCIX | -38.51% |
Fund Name | Ticker | Rate of Return | Fund Name | Ticker | Rate of Return | |||||
Fidelity Freedom K 2050 | FNSBX | -18.22% | Western Asset Core Bond Fund Class I | WACSX | -16.86% | |||||
Fidelity Freedom K 2055 | FNSDX | -18.20% | Oakmark Fund Investor Class | OAKMX | -13.36% | |||||
Fidelity Freedom K 2060 | FNSFX | -18.18% | ||||||||
Fidelity Freedom K 2065 | FFSDX | -18.20% |
Under the legacy Cimarex SSP,Energy Co. Supplemental Savings Plan, up to 50 percent of salary and 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 SPPEnergy 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 Mr.Messrs. Jorden Mr.and Bell, and Mr. Clason, made contributions to this plan after 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 Mr.Messrs. Jorden Mr.and Bell, and Mr. Clason, were eligible to participate in the legacy CabotCoterra Energy Inc. Deferred Compensation Plan. Distributions from the Cimarex SPPSupplemental Savings Plan are based on the executive’s election at the time of deferral.
For 2022, the investment Investment options under the legacy Cimarex SPPEnergy Co. Supplemental Savings Plan include a selection of mutual funds, index funds, and their respective ratesexchange-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 follow:
Fund Name | Ticker | Rate of Return | Fund Name | Ticker | Rate of Return | |||||
Vanguard Institutional Target Retirement Income Fund | VITRX | -12.74% | Vanguard Federal Money Market | VMFXX | 1.55% | |||||
Vanguard Institutional Target Retirement 2020 Fund | VITWX | -14.15% | Federated Government Obligations Premier | GOFXX | 1.56% | |||||
Vanguard Institutional Target Retirement 2025 Fund | VRIVX | -15.55% | Vanguard Wellington Fund | VWENX | -14.26% | |||||
Vanguard Institutional Target Retirement 2030 Fund | VTTWX | -16.27% | Vanguard Short-Term Investment Grade Fund | VFSUX | -5.75% | |||||
Vanguard Institutional Target Retirement 2035 Fund | VITFX | -16.62% | Vanguard Intermediate-Term Treasury Fund | VFIUX | -10.34% | |||||
Vanguard Institutional Target Retirement 2040 Fund | VIRSX | -16.98% | PIMCO Total Return | PTTRX | -14.09% | |||||
Vanguard Institutional Target Retirement 2045 Fund | VITLX | -17.36% | Vanguard Windsor II Fund | VWNAX | -13.14% | |||||
Vanguard Institutional Target Retirement 2050 Fund | VTRLX | -17.46% | William Blair Small Mid Cap Growth | WSMDX | -22.92% | |||||
Vanguard Institutional Target Retirement 2055 Fund | VIVLX | -17.46% | American Funds EuroPacific Growth Fund | RERGX | -22.72% | |||||
Vanguard Institutional Target Retirement 2060 Fund | VILVX | -17.46% | ||||||||
Vanguard Institutional Target Retirement 2065 Fund | VSXFX | -17.39% | ||||||||
Vanguard Total Bond Market Index | VBTIX | -13.15% | ||||||||
Vanguard Institutional Index Fund | VINIX | -18.14% | ||||||||
Vanguard Growth Index Fund | VIGIX | -33.14% | ||||||||
Vanguard Total International Stock Index | VTSNX | -15.98% | ||||||||
Vanguard Mid-Cap Index Institutional | VMCIX | -18.70% | ||||||||
Vanguard Small-Cap Index Fund | VSCIX | -17.60% |
As described above, Mr. Dinges is party to a change-in-controlJorden Employment Agreement
In the Dinges Change-in-Control Agreement, a “change in control” is generally defined to include:
The Dinges Change-in-Control Agreement provides that, in the event of 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 yearsterms of the change in control unless his termination is:
Additionally, the Dinges Agreement provides that in the event of any termination ofseverance payments and benefits to which Mr. Dinges’s employment by the Company prior to or upon the expiration of the Employment Period, Mr. Dinges shall receive the benefits payable under the Dinges Change-in-Control Agreement.
Benefits under the Dinges Change-in-Control Agreement generally include:
The Dinges Change-in-Control Agreement was amended in December 2022 to eliminate the requirement that the Company make Mr. Dinges “whole” for any excise tax applicable to payments to Mr. Dinges by the Company upon a change in control. As consideration, the amendment provides that the change-in-control payment due to Mr. Dinges as a result of the termination of his employment as Executive Chairman on December 31, 2022 would accrue interest for the period from termination on December 31, 2022 until paid on or about July 24, 2023 based on the 6-month Treasury Bill rate posted to the Daily Treasury Par Yield Curve Rates section of the U.S. Department of the Treasury’s website on December 31, 2022.
in certain circumstances. The Jorden Letter Agreement provides that Mr. Jorden, Mr. Bell and Mr. Clason are each party toJorden’s legacy Cimarex severance compensation agreements.
Inagreement will remain in full force and effect through October 1, 2026. Pursuant to the severance compensation agreements, a “change in control” is generally defined to include:
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:
TheJorden Letter Agreement and Mr. Jorden’s legacy Cimarex severance compensation agreements containagreement, upon a Section 280G “best-net” cutback provision, which provides that, if the total paymentstermination of Mr. Jorden’s employment other 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:
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 ofcalendar year through the date of termination as comparedand the denominator of which is 365.
The Jorden Letter Agreement further provides that,agreement, 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.
The award agreements for Mr. Jorden’s and Mr. Bell’s December 2021 long-termthe named 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 Mr. Jorden’s or Mr. Bell’sthe named executive officer’s employment due to death or disability. EachMr. 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 and Mr. Clason’sequity award agreements
For a more detailed discussion of the terms of these awards see above under “Grants of Plan-Based Awards.”
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, 2022. 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 30, 2022 of $24.57.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.
Executive Benefit and
Payments Upon Separation Voluntary
Resignation Retirement
Cause Termination
or “Good Reason”
Resignation(1) For Cause
Termination
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 $ 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 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 (2x or 3x) $ 2,187,383 $ 3,281,075 Multiple of Bonus (2x or 3x) $ 3,740,000 $ 5,610,000 Current Year Bonus (pro-rated) $ 1,870,000 $ 1,870,000 Long-Term Incentive Compensation Restricted Stock Vesting(3) $ 32,778,272 $ 32,778,272 $ 32,778,272 $ 32,778,272 Performance Share Vesting $ 10,531,513 $ 10,531,513 $ 10,531,513 $ 10,531,513 Benefits & Perquisites Payout of Deferred Compensation(4) $ 165,429 $ 165,429 $ 165,429 $ 165,429 $ 165,429 $ 165,429 $ 165,429 Health, Life, and Welfare Benefits Continuation $ 225,569 $ 338,354 Excise Tax & Gross-Up Outplacement Services Earned Vacation $ 81,941 $ 81,941 $ 81,941 $ 81,941 $ 81,941 $ 81,941 $ 81,941 Total $ 247,370 $ 247,370 $ 51,580,108 $ 247,370 $ 54,656,584 $ 43,557,155 $ 43,557,155 (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.(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.(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 “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• 2023 PROXY STATEMENT54
(1)
Scott C. Schroeder,
| 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 | | |
Executive Benefit and Payments Upon Separation | Voluntary Resignation | Retirement | Involuntary Not For Cause Termination or “Good Reason” Resignation(2) | For Cause Termination | Change In Control | Disability | Death | |||||||||||||||||||||
Compensation | ||||||||||||||||||||||||||||
Multiple of Salary (1.5x or 2x) | ||||||||||||||||||||||||||||
Multiple of Bonus (1.5x or 2x) | ||||||||||||||||||||||||||||
Current Year Bonus (pro-rated) | ||||||||||||||||||||||||||||
Long-Term Compensation | ||||||||||||||||||||||||||||
Restricted Stock Vesting | $ | 1,748,229 | $ | 1,748,229 | $ | 1,748,229 | $ | 1,748,229 | ||||||||||||||||||||
Performance Share Vesting | $ | 2,622,356 | $ | 2,622,356 | $ | 2,622,356 | $ | 2,622,356 | ||||||||||||||||||||
Benefits & Perquisites | ||||||||||||||||||||||||||||
Payout of Deferred Compensation | $ | 14,258,845 | $ | 14,258,845 | $ | 14,258,845 | $ | 14,258,845 | $ | 14,258,845 | $ | 14,258,845 | $ | 14,258,845 | ||||||||||||||
Health, Life, and Welfare Continuation | ||||||||||||||||||||||||||||
Excise Tax & Gross Up | ||||||||||||||||||||||||||||
Outplacement Services | ||||||||||||||||||||||||||||
Earned Vacation | $ | 51,960 | $ | 51,960 | $ | 51,960 | $ | 51,960 | $ | 51,960 | $ | 51,960 | $ | 51,960 | ||||||||||||||
Total | $ | 14,310,805 | $ | 18,681,390 | $ | 14,310,805 | $ | 14,310,805 | $ | 18,681,390 | $ | 18,681,390 | $ | 18,681,390 |
Dan O. Dinges, Executive Chairman
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 | 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 | $ | 1,430,000 | $ | 1,430,000 | ||||||||||||||||||||||||
Long-Term Incentive Compensation | ||||||||||||||||||||||||||||
Restricted Stock Vesting | $ | 1,895,674 | $ | 1,895,674 | $ | 1,895,674 | $ | 1,895,674 | $ | 1,895,674 | ||||||||||||||||||
Performance Share Vesting | $ | 2,843,511 | $ | 2,843,511 | $ | 2,843,511 | $ | 2,843,511 | $ | 2,843,511 | ||||||||||||||||||
Benefits & Perquisites | ||||||||||||||||||||||||||||
Payout of Deferred Compensation(2) | $ | 18,847,536 | $ | 18,847,536 | $ | 18,847,536 | $ | 18,847,536 | $ | 18,847,536 | $ | 18,847,536 | $ | 18,847,536 | ||||||||||||||
Health, Life, and Welfare Benefits Continuation | $ | 48,374 | $ | 48,374 | $ | 48,374 | ||||||||||||||||||||||
Excise Tax & Gross-Up | ||||||||||||||||||||||||||||
Outplacement Services | $ | 165,000 | $ | 165,000 | ||||||||||||||||||||||||
Earned Vacation | $ | 103,655 | $ | 103,655 | $ | 103,655 | $ | 103,655 | $ | 103,655 | $ | 103,655 | $ | 103,655 | ||||||||||||||
Other Interest Earned | $ | 260,213 | $ | 260,213 | ||||||||||||||||||||||||
Total | $ | 18,951,191 | $ | 23,738,750 | $ | 35,193,963 | $ | 18,951,191 | $ | 35,193,963 | $ | 23,690,376 | $ | 23,690,376 |
Stephen P. Bell, Executive Vice President—Business Development Executive Benefit and Payments
Upon Separation Voluntary
Resignation Retirement
Cause Termination
or “Good Reason”
Resignation(1) For Cause
Termination
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 $ 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
| 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 | | |
| 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 | | |
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 | $ | 824,175 | $ | 1,098,900 | ||||||||||||||||||||||||
Multiple of Bonus | $ | 1,149,000 | $ | 1,532,000 | ||||||||||||||||||||||||
Current Year Bonus | $ | 766,000 | $ | 766,000 | ||||||||||||||||||||||||
Long-Term Incentive Compensation | ||||||||||||||||||||||||||||
Restricted Stock Vesting(3) | $ | 1,661,681 | $ | 1,661,681 | $ | 4,866,432 | $ | 4,866,432 | $ | 4,866,432 | ||||||||||||||||||
Performance Share Vesting | $ | 576,493 | $ | 576,493 | $ | 1,895,674 | $ | 1,895,674 | $ | 1,895,674 | ||||||||||||||||||
Benefits & Perquisites | ||||||||||||||||||||||||||||
Payout of Deferred Compensation(4) | $ | 10,597 | $ | 10,597 | $ | 10,597 | $ | 10,597 | $ | 10,597 | $ | 10,597 | $ | 10,597 | ||||||||||||||
Health, Life, and Welfare Benefits Continuation | $ | 72,554 | $ | 96,738 | ||||||||||||||||||||||||
Excise Tax & Gross-Up | ||||||||||||||||||||||||||||
Outplacement Services | ||||||||||||||||||||||||||||
Earned Vacation | $ | 61,126 | $ | 61,126 | $ | 61,126 | $ | 61,126 | $ | 61,126 | $ | 61,126 | $ | 61,126 | ||||||||||||||
Total | $ | 71,723 | $ | 2,309,897 | $ | 5,121,626 | $ | 71,723 | $ | 10,327,467 | $ | 6,833,829 | $ | 6,833,829 |
| 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 | | | | | | | | | | | | | | | | | | | | | | |
InvoluntaryExecutive Benefit and Payments
Upon Separation Voluntary
Resignation Retirement
Not For Cause
Termination or
“Good Reason”
Resignation(1) For Cause Termination Change In Control(2) Disability Death Compensation Multiple of Salary $ 704,375 $ 939,167 Multiple of Bonus $ 1,080,000 $ 1,440,000 Current Year Bonus $ 640,000 $ 640,000 Long-Term Incentive Compensation Restricted Stock Vesting(3) $ 1,107,790 $ 1,107,790 $ 3,244,297 $ 3,244,297 $ 3,244,297 Performance Share Vesting $ 384,328 $ 384,328 $ 1,263,783 $ 1,263,783 $ 1,263,783 Benefits & Perquisites Payout of Deferred Compensation(4) $ 405,887 $ 405,887 $ 405,887 $ 405,887 $ 405,887 $ 405,887 $ 405,887 Health, Life, and Welfare Benefits Continuation $ 69,906 $ 93,209 Excise Tax & Gross-Up Outplacement Services Earned Vacation Total $ 405,887 $ 1,898,005 $ 4,392,286 $ 405,887 $ 8,026,343 $ 4,913,967 $ 4,913,967 (1)Pursuant to Mr. Clason’s legacy Cimarex severance compensation agreement, Mr. Clason 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.(2)Pursuant to Mr. Clason’s legacy Cimarex severance compensation agreement, if Mr. Clason is terminated without cause or for good reason within a specified time following a change in control, Mr. Clason 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.(3)For the equity awards granted to Mr. Clason in December 2021 and February 2022, receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Clason remains continuously employed through such date, except that (1) in the event of Mr. Clason 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, 2022 and February 28, 2022, respectively, and the date of his termination, over the full vesting period, and (2) the awards will fully vest upon a change in control of the Company or a termination of Mr. Clason 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 “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• 2023 PROXY STATEMENT58
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
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 $ 465,487 Health, Life, and Welfare Benefits Continuation $ 82,800 $ (7,434) Total $ 12,316,010
The following table sets forth comparative information regarding:
• 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.
(1) Determined based on the total compensation paid to Mr. Jorden as reported in the Summary Compensation Table. | |||||||||||||||||||||||||||||||||||||||||
CEO Pay Ratio | |||
CEO annual total compensation (A) | $ | 15,303,397 | (1) |
Median employee annual total compensation (B) | $ | 126,643 | |
Ratio of (A) to (B) | 121:1 |
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 CEO,Chief Executive Officer, as of December 31, 2022.2022, 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:
• 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 20222023 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.
The table below sets forth comparative information of the relationship between the “compensation actually paid” to our CEOChief 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 threefour 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 | | |
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: | ||||||||||||||||||||||||||||||||||||
Year | Post- Merger | Pre- Merger | Post- Merger | Pre- Merger | Total shareholder return | Peer group total shareholder return(5) | Net income (in millions) | Free Cash Flow (in millions) | ||||||||||||||||||||||||||||||||
2022 | $ | 15,303,397 | $ | 32,092,019 | $ | 10,068,380 | $ | 10,308,634 | $ | 166.86 | $ | 193.53 | $ | 4,065 | $ | 3,642 | ||||||||||||||||||||||||
2021 | $ | 11,061,939 | $ | 14,554,728 | $ | 6,097,986 | $ | 14,225,161 | $ | 6,826,596 | $ | 6,780,037 | $ | 118.13 | $ | 118.49 | $ | 1,158 | $ | 1,088 | ||||||||||||||||||||
2020 | $ | 14,194,706 | $ | 17,805,568 | $ | 3,503,938 | $ | 4,256,657 | $ | 95.66 | $ | 62.55 | $ | 201 | $ | 109 |
| 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 | | |
2022 | 2021 | 2020 | |||||||||||||||
Adjustment to Determine Compensation Actually Paid for CEO | Post-Merger | Pre-Merger | |||||||||||||||
Total reported in Summary Compensation Table (SCT) | $ | 15,303,397 | $ | 11,061,939 | $ | 14,554,728 | $ | 14,194,706 | |||||||||
Minus: Value of Stock & Option Awards Reported in SCT | $ | (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 | $ | 10,257,188 | $ | 9,286,421 | $ | - | $ | 12,760,574 | |||||||||
Plus: Change in FMV of Prior Year Awards that are Outstanding and Unvested | $ | 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: Change in FMV (from Prior Year-End) of Prior Year Awards that Vested this Year | $ | 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 | $ | 4,794,851 | $ | 1,988,025 | $ | - | $ | - | |||||||||
Minus: Prior Year FMV of Prior Year Awards that Failed to Vest this Year | $ | - | $ | - | $ | - | $ | - | |||||||||
Total Adjustments | $ | 16,788,622 | $ | (4,963,953) | $ | (329,567) | $ | 3,610,862 | |||||||||
“Compensation Actually Paid” | $ | 32,092,019 | $ | 6,097,986 | $ | 14,225,161 | $ | 17,805,568 |
| Year | | | | Non-CEO NEOs | |
| | | | Shannon E. Young III, Stephen P. Bell, Blake A. Sirgo, Kevin W. Smith, Scott C. Schroeder, and Christopher H. Clason | | |
| 2022 | | | | Scott C. Schroeder, Dan O. Dinges, Stephen P. Bell, and Christopher H. Clason | |
| 2021 | | | | Scott C. Schroeder, Stephen P. Bell, Steven W. Lindeman, Phillip L. Stalnaker and Jeffrey W. Hutton | |
| 2020 | | | | Scott C. Schroeder, Steven W. Lindeman, Phillip L. Stalnaker and Jeffrey W. Hutton |
|
Adjustment to Determine Compensation Actually Paid for NEOs | 2022 | 2021 | 2020 | ||||||||||
Total reported in Summary Compensation Table (SCT) | $ | 10,068,380 | $ | 6,826,596 | $ | 3,503,938 | |||||||
Minus: Value of Stock & Option Awards Reported in SCT | $ | (3,935,574) | $ | (2,759,065) | $ | (2,413,381) | |||||||
Plus: Year-End Value of Awards Granted in Fiscal Year that are Unvested and Outstanding | $ | 3,630,038 | $ | 847,510 | $ | 2,728,760 | |||||||
Plus: Change in FMV of Prior Year Awards that are Outstanding and Unvested | $ | 340,299 | $ | - | $ | 240,708 | |||||||
Plus: FMV of Awards Granted this Year and that Vested this Year | $ | - | $ | 1,913,978 | $ | - | |||||||
Plus: Change in FMV (from Prior Year-End) of Prior Year Awards that Vested this Year | $ | - | $ | (72,443) | $ | 196,632 | |||||||
Plus: Value of Dividends Paid on Stock Awards not Otherwise Reflected in Fair Value or Total Compensation | $ | 205,491 | $ | 23,461 | $ | - | |||||||
Minus: Prior Year FMV of Prior Year Awards that Failed to Vest this Year | $ | - | $ | - | $ | - | |||||||
Total Adjustments | $ | 240,254 | $ | (46,559) | $ | 752,719 | |||||||
“Compensation Actually Paid” | $ | 10,308,634 | $ | 6,780,037 | $ | 4,256,657 |
| 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 | | |
The following graphs illustrate the relationship between the pay and performance figures that are includedAs described in more detail in the pay versusCompensation Discussion and Analysis section, the Company’s Annual Cash Incentive Bonus Program is based on the achievement of performance table above. In addition, the first graph below further illustrates the relationship betweenmeasures intended to align executive compensation with Company total shareholder return and thatperformance; 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 Industry Peer Group by year. 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.
Alignment of CAP with Net Income
Company TSR (1)The 2020 compensation peer group was comprised of the following companies: Antero Resources Corporation, Apache Corporation, Chesapeake Energy Company, Cimarex Energy Company, Concho Resources Inc., Continental Resources Inc., Devon Energy Corporation, EQT Corporation, Marathon Oil Corporation, Murphy Oil Corporation, Noble Energy Inc., Ovintiv Inc., Pioneer Natural Resources Company, Range Resources Corporation, Southwestern Energy Company and WPX Energy, Inc. As of March 9, 2023, Cimarex Energy Company, Concho Resources Inc., Continental Resources, Inc., Noble Energy Inc., WPX Energy, Inc. were no longer publicly traded and were therefore excluded from the data shown.COTERRA• 2023 PROXY STATEMENT61
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.(2)The 2021 compensation peer group was comprised of the following companies: Antero Resources Corporation, Apache Corporation, CNX Resources Corporation, Cimarex Energy Company, Continental Resources Inc., Devon Energy Corporation, Diamondback Energy, Inc., EQT Corporation, Marathon Oil Corporation, Murphy Oil Corporation, Ovintiv Inc., Pioneer Natural Resources Company, Range Resources Corporation, and Southwestern Energy Company. As of March 9, 2023, Cimarex Energy Company and Continental Resources, Inc. were no longer publicly traded and were therefore excluded from the data shown.(3)The 2022 compensation peer group was comprised of the following companies: Antero Resources Corporation, Apache Corporation, Chesapeake Energy Corporation, CNX Resources Corporation, Continental Resources Inc., 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 9, 2023, Continental Resources, Inc. was no longer publicly traded and was therefore excluded from the data shown.& Free Cash Flow(1)$ millions (1)Free Cash Flow is defined as cash flow from operating activities excluding changes in assets and liabilities less cash paid for capital expenditures. 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.
The table below sets forth our most important performance measures used to link “Compensation Actually Paid”“compensation actually paid” for our NEOsnamed executive officers to company performance, over the fiscal year ending December 31, 2022.2023. Please see “Compensation Discussion and Analysis—Annual Cash2023 Performance-Based Compensation—Our Incentive Bonus—2022Compensation Programs Align Corporate Strategy Through Thoughtful Performance MetricsMetric Selection” and Goals” and “—Determination of 2022 Bonus Payout” Our Incentive Program Payouts are Aligned with Performance Outcomes”
2023 Most Important Performance Measures (unranked) | ||||||
| | | | |||
PVI-10 | | | | | ||
| Relative TSR | | | | | |
| Annual Production | | | | | |
We chose Free Cash Flow as our company selected measure for evaluating pay versus performance because it is a key metric in our short-term incentive determinations and can be reconciled to our audited financial statements. Free Cash Flow is defined as cash flow from operating activities excluding changes in assets and liabilities 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 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.
The following table provides information regarding the number of shares of common stock that may be issued under the Prior PlansCompany’s equity compensation plans as of December 31, 2022:
(a) | (b) | (c) | |||||||
Plan Category | 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 | 5,251,036 | (1) | $18.08 | (2) | 44,713,448 | (3) | |||
Equity compensation plans not approved by security holders | n/a | n/a | n/a | ||||||
Total | 5,251,036 | n/a | 44,713,448 |
| | | (a) | | | | (b) | | | | (c) | | |||||||||||
be Issued Upon Exercise of 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)) | | ||||||||||||||
| | | | | 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) | | |
| AUDIT MATTERS | | | |
PROPOSAL 4 | | | 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 2023.2024. 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 PricewaterhouseCoopers as the independent registered public accounting firm for the Company. A representative of PricewaterhouseCoopers is expected to be in attendance at the Annual Meeting.
See “Audit Committee Report” below for further information.
| | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FORRATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY FOR ITS | |
| 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 | | |
Fee Type* | 2022 | 2021 | ||||||
Audit Fees(1) | $ | 2,600,000 | $ | 2,600,000 | ||||
Audit Related Fees(2) | $ | 615,000 | $ | 500,000 | ||||
Tax Fees(3) | $ | 1,121,330 | $ | 1,068,145 | ||||
All Other Fees(4) | $ | 900 | $ | 900 |
| | | |
The Audit Committee is currently composed of four independent, non-employee directors. The Board has made a determination that each of the members of the Audit Committee satisfies the requirements of the NYSE listing standards as to independence, financial literacy and experience. The Board also determined that each of the members of the Audit Committee 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 which isand included on the Company’s website, www.coterra.com. The Audit Committee reviews its charter annually.
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.
The Audit Committee discussed with PricewaterhouseCoopers the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The Audit Committee has received and reviewed the written disclosures and the letter from PricewaterhouseCoopers required by applicable PCAOB requirements regarding such firm’s communications with the Audit Committee concerning independence and has discussed with PricewaterhouseCoopers such firm’s independence. These discussions included a review of all audit and non- audit services (including tax services) provided by PricewaterhouseCoopers to the Company.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022,2023, and filed with the SEC.
Audit Committee
Dorothy M. Ables, Chair
Robert S. Boswell
Lisa A. Stewart
Frances M. Vallejo
February 20, 2023
| SECURITY OWNERSHIP | | | |
In accordance with Section 14A of the Exchange Act and the related rules of the SEC, the shareholders of the Company are entitled to cast an advisory vote at the Annual Meeting to approve the compensation of the Company’s NEOs. 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 NEOs as described in this Proxy Statement. At the 2017 annual meeting, our shareholders 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:
We urge you to read the “Compensation Discussion and Analysis” section on pages 29 to 45 so that you have an understanding of our executive compensation philosophy, policies and practices and actions taken based on the 2022 say-on-pay vote results.
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. Subject to the outcome of the vote on Proposal 4, it is expected that the next say-on-pay vote will occur at the 2024 annual meeting of shareholders.
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.
As described in Proposal 3 above, shareholders are being provided the opportunity to cast an advisory vote on Coterra’s executive compensation program. This Proposal 4 affords shareholders the opportunity to cast an advisory vote on how often Coterra should include a say-on-pay vote (described in Proposal 3 above) in its proxy materials for future annual meetings of shareholders (or a special shareholder meeting for which Coterra must include executive compensation information in the proxy statement for that meeting). Under this Proposal 4, shareholders may vote to have the say-on-pay vote every year, every two years, or every three years, or may abstain from voting.
The Board has determined that an annual advisory vote on executive compensation will permit our shareholders to provide direct input on Coterra’s executive compensation philosophy, policies and practices as disclosed in the proxy statement each year. The Board also believes that an annual vote is consistent with our efforts to engage in an ongoing dialogue with our shareholders on executive compensation and corporate governance matters.
Because your vote is advisory, it will not be binding upon the Board. However, the Board values shareholders’ opinions, and the Compensation Committee will take into account the outcome of the vote when considering the frequency of advisory votes on executive compensation. The option approved by a majority of the shares present in person or represented by proxy and entitled to vote on this Proposal 4 will be deemed to be the option approved by the shareholders. If none of the three alternatives receives such majority approval, the Board will consider the option that receives the greatest number of votes to be the option recommended by shareholders. Neither broker non-votes nor abstentions will have an effect on the outcome of the voting on the proposal.
We are asking you to approve the Coterra Energy Inc. 2023 Equity Incentive Plan (the “2023 Plan”), an omnibus equity incentive plan that is intended to replace the existing Cabot Oil & Gas Corporation 2014 Incentive Plan (the “Prior Cabot Plan”) and the Cimarex Energy Co. 2019 Equity Incentive Plan (the “Prior Cimarex Plan,” and collectively with the Prior Cabot Plan, the “Prior Plans”). The 2023 Plan was approved by the Board of Directors on February 21, 2023, to be effective upon shareholder approval at the 2023 annual meeting of shareholders. After the effective date of the 2023 Plan, no awards may be granted under the Prior Plans. A copy of the 2023 Plan is attached to this proxy statement as Appendix A.
The key features of the 2023 Plan include the following:
The Compensation Committee and the Board believe that we must continue to offer a competitive equity incentive program in order to successfully attract, retain and motivate the best employees, directors, and consultants, without whom we cannot execute on our business goals or deliver value to our shareholders. We currently maintain the Prior Plans for these purposes. As of February 22, 2023, there were 8,298,973 and 35,249,401 shares available for grant under the Prior Cabot Plan and the Prior Cimarex Plan, respectively. The Prior Cabot Plan expires in 2024. The Prior Cimarex Plan may only be used to make awards to legacy Cimarex employees and may not be used to make awards to legacy Cabot employees or employees hired after the Merger. The 2023 Plan will be needed in order to make awards to these employees after the Prior Cabot Plan expires. If the shareholders approve the 2023 Plan at the annual meeting, there will be 22,950,000 shares available for grant under the 2023 Plan and no further awards will be granted under the Prior Plans. As set forth in the 2023 Plan, from February 21, 2023 until the Annual Meeting, the Company will not make new awards under the Prior Plans pursuant to which more than 200,000 shares are issuable. In the event the shareholders fail to approve the 2023 Plan, the Prior Plans will remain in effect with their respective share reserves described above.
The Prior Plans are the only equity-based plans under which we can currently grant equity awards. As of February 22, 2023, there were 527,631 shares subject to non-qualified stock options outstanding under the Prior Plans with a weighted average exercise price of $18.24 and weighted average remaining term of 2.5 years. In addition,following table reports, as of February 22, 2023, there were an additional 7,902,003 equity awards outstanding under the Prior Plans, comprised of 2,027,825 shares of restricted stock that have not vested and are subject to forfeiture, 3,816,195 shares covered by RSUs that have not vested, 245,898 director RSUs that have vested but have not yet settled into shares of common stock, and 1,812,085 shares representing the maximum number of shares of common stock subject to PSUs assuming the maximum payout is achieved. Other than the foregoing, no other awards under the Prior Plans were outstanding.
As of February 22, 2023, the total number of outstanding shares15, 2024, beneficial ownership of the Company’s common stock was 768,258,911.
The following summaryby holders of material terms of the 2023 Plan does not purport to be complete and is subject to and qualified in its entirety by the actual terms of the 2023 Plan. A copy of the 2023 Plan is provided as Appendix A to this proxy statement.
The purpose of the 2023 Plan is to promote the success of the Company and the interests of its shareholders by providing an additional means for the Company to attract, motivate, retain and reward directors, officers, employees and other eligible persons (including certain consultants and advisors).
The Board or one or more committees consisting of directors appointed by the Board will administer the 2023 Plan. The Board intends to delegate general administrative authority for the 2023 Plan to the Compensation Committee, which is comprised of directors who qualify as independent under the rules promulgated by the SEC and NYSE. Except where prohibited by applicable law, a committee may delegate some or all of its authority with respect to the 2023 Plan to another committee of directors or to one or more officers of the Company. Award grants intended to be exempt under Rule 16b-3 promulgated under the Exchange Act must be duly and timely authorized by the Board or by a committee consisting solely of two or more independent directors. The appropriate acting body, be it the Board, a committee within its delegated authority, or an officer within his or her delegated authority, is referred to in this section as the Administrator.
The Administrator has broad authority under the 2023 Plan with respect to award grants including, without limitation, the authority:
Persons eligible to receive awards under the 2023 Plan include officers and employees of the Company or any of its subsidiaries, non-employee directors of the Company, and certain individual consultants who render bona fide services to the Company or any of its subsidiaries (other than services in connection with the offering or sale of securities or as a market maker or promoter of securities of the Company). As of March 1, 2023, there were approximately 1,200 employees, including officers, of the Company and its subsidiaries and nine non-employee directors of the Company who would potentially be eligible to receive awards under the 2023 Plan.
Subject to certain standard equitable adjustments as provided in the 2023 Plan and as described below, the number of shares of Company common stock authorized for issuance
pursuant to awards under the 2023 Plan is 22,950,000 shares; provided, however, that the number of shares of Company common stock authorized for issuance pursuant to awards of incentive stock options under the 2023 Plan is 12,000,000 shares. The 2023 Plan generally provides that shares issued in connection with awards that are granted by or become obligations of the Company through the assumption of awards (or in substitution for awards) in connection with an acquisition of another company will not count against the shares available for issuance under the 2023 Plan, except as may be required by the Administrator or applicable law or stock exchange rules.
Shares delivered under all awards issued pursuant to the 2023 Plan count against the share reserve on a 1:1 basis. Shares that are subject to or underlie awards that expire or for any reason are canceled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under the 2023 Plan are available for reissuance under the 2023 Plan at the same rate. However, the 2023 Plan prohibits liberal share recycling. Accordingly, shares tendered or withheld to satisfy the exercise price of options or tax withholding obligations applicable to all award types, and shares covering the portion of exercised stock-settled SARs (regardless of the number of shares actually delivered), count against the share limit in accordance with the share counting system described above.
Because awards under the 2023 Plan are granted in the discretion of the Board or a committee of the Board, the type, number, recipients and other terms of future awards cannot be determined at this time.
In no event will any adjustment be made to a stock option or stock appreciation right award under the 2023 Plan (by amendment, cancellation and regrant, exchange for other awards or cash or other means) that would constitute a repricing of the per share exercise or base price of the award, unless such adjustment is approved by the shareholders of the Company. Adjustments made in accordance with the 2023 Plan to reflect a stock split or similar event are not deemed to be a repricing.
The 2023 Plan requires a minimum one-year cliff vesting schedule for all equity-based awards under the 2023 Plan excluding substitution awards, shares delivered in lieu of fully vested cash awards, and awards to non-employee directors that vest on the earlier of the one year anniversary of the date of grant or the next annual meeting of shareholders that is at least 50 weeks after the prior annual meeting. This minimum vesting schedule will apply to at least 95five percent of the shares authorized for grant under the 2023 Plan. The foregoing restriction does not apply to the Administrator’s discretion to provide for accelerated exercisability or vesting of any award, including in cases of retirement, death, disability or a change in control, in the terms of the award or otherwise.
The 2023 Plan authorizes stock options, SARs, restricted stock, RSUs, PSUs and other forms of awards that may be granted or denominated in or otherwise determined by reference to the Company’s common stock, as well as cash awards. The 2023 Plan provides flexibility to offer competitive incentives and to tailor benefits to specific needs and circumstances. Awards may, in certain cases, be paid or settled in cash.
A stock option is a right to purchase shares of the Company’s common stock at a future date at a specified price per share (the “exercise price”). The per share exercise price of an option generally may not be less than the fair market value of a share of the Company’s common stock on the date of grant. On March 1, 2023, the last sale price of the Company’s common stock as reported on NYSE was $25.24 per share. The maximum term of an option issued pursuant to the 2023 Plan is 10 years from the date of grant. An option may be either an incentive stock option or a nonqualified stock option. Incentive stock options are taxed differently than nonqualified stock options and are subject to more restrictive terms under the Internal Revenue Code of 1986, as amended (the “Code”), and the 2023 Plan. Incentive stock options may be granted only to employees of the Company ordates 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% | | |
Based solely on a Schedule 13 G/A stock appreciation right isfiled February 9, 2024 with the right to receiveSEC 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.
Shares of restricted stock areThere were 751,847,432 shares of the Company’s common stock that are subject to forfeiture and to certain restrictions on sale, pledge, or other transfer by the recipient during a particular period of employment or service or until certain performance vesting conditions are satisfied (the “restricted period”). Subject to the restrictions provided in the applicable award agreement and the 2023 Plan, a participant receiving restricted stock, or the fair market value of all or a portion of the restricted stock in cash, may have all of the rights of a shareholder as to such shares, including the right to vote and the right to receive dividends.
A restricted stock unit represents the right to receive one share of the Company’s common stock, or the fair market value of one share of common stock in cash,outstanding on a specific future vesting or payment date. Subject to the restrictions providedFebruary 15, 2024.
| 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% | | |
A performance stock unit (“PSU”) is a performance-based award that entitles the recipient to receive sharesdirector of the Company’s common stock, or the fair market valueCompany: for each of some or all those shares in cash, based on attainment of one or more performance goals. Each PSU shall designate a target number of shares payable under the award, with the actual number of shares earned (if any) based on a formula set forth in the award agreement related to the attainment of one or more performance goals. Subject to the restrictions provided in the applicable award agreementMs. Ables, Mr. Boswell, Ms. Brock, Mr. Dinges, Mr. Eckley, Mr. Helmerich, Ms. Stewart, Ms. Vallejo, and the 2023 Plan, a participant receiving PSUs has no rightsMr. Watts 8,177; and for “All directors and executive officers as a shareholder until thegroup,” 73,593
Any performance goals (whether related to a PSU award or other award subject to performance-based vesting requirements) that are financial metrics may be determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), in accordance with accounting principles established
The Administrator, in its sole discretion, may grant cash awards, including without limitation discretionary awards, awards based on objective or subjective performance criteria, and awards subject to other vesting criteria.
The other types of awards that may be granted under the 2023 Plan include, without limitation, stock bonuses, and similar rights to purchase or acquire shares of the Company’s common stock, and similar securities with a value derived from the value of or related to the Company’s common stock or returns thereon.
This paragraph summarizes the treatment of awards in the event of a change in control, except as otherwise determined by the Administrator or as set forth in an award agreement (in which case the determination by the Administrator or the terms of the award agreement, as applicable, will control). In the event of a change in control (as defined in the 2023 Plan), the Administrator will provide for the assumption or substitution of all outstanding awards under the 2023 Plan by the surviving or acquiring company or parent thereof. All such assumed or substituted time-vested awards will continue to vest in accordance with their original vesting terms; provided, however, that in the event the participant is terminated without cause (as defined in the 2023 Plan) within 12 months following the change in control, any then unvested portion of the award will vest in full. In addition, the Administrator shall have full discretion to take whatever additional actions it deems necessary or appropriate, including but not limited to the following actions: (1) provide for the termination of outstanding awards; (2) provide for the cash-out and cancellation of any
award (or portion thereof); (3) provide that options and SARs will be cancelled and terminated without payment if the fair market value of one share of common stock as of the date of the change in control is less than the per share option exercise price or SAR grant price; and (4) take any other actions as the Administrator deems necessary or advisable in connection with such change of control transaction. The Administrator may take different actionsimmediate family member, with respect to different participants underwhich Ms. Ables has shared voting and investment power.
Awards under the 2023 Plan generally are not transferable by the recipient other than by will or the laws of descent and distribution, or pursuant to domestic relations orders, andan immediate family member, with respect to awards with exercise features, are generally exercisable duringwhich Mr. Dinges has shared voting and investment power.
As is customary in plans of this nature, the share limits and the number and kind of shares available under the 2023 Plan and any outstanding awards, as well as the exercise or purchase prices of awards, are subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, stock splits, stock dividends, or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the shareholders.
The 2023 Plan does not limit the authority of the Board or any committee to grant awards or authorize any other compensation, with or without reference to the Company’s common stock, under any other plan or authority.
By accepting awards and as a condition to the exercise of awards and the enjoyment of any benefits of the 2023 Plan, participants agree to be bound by the Company’s current clawback policy, as may be amended from time to time, as well as any future clawback policy adopted by the Company from time to time. The clawback provisions of the 2023 Plan specifically apply to time-based and performance-based awards. Participants may also be subject to restrictive covenants if so required by the Administrator in any award agreement.
The Administrator may amend or terminate the 2023 Plan at any time and in any manner. Shareholder approval for an amendment will be required only to the extent then required by applicable law or any applicable stock exchange rules or as required to preserve the intended tax consequences of the 2023 Plan. For example, shareholder approval is required for any proposed amendment to increase the maximum number of shares that may be delivered with respect to awards granted under the 2023 Plan. Adjustments as a result of stock splits or similar events will not, however, be considered amendments requiring shareholder approval. Unless terminated earlier by the Board, the authority to grant new awards under the 2023 Plan will terminate 10 years after the date on which the 2023 Plan was approved by the Board. Outstanding awards generally will continue following the expiration or termination of the 2023 Plan. Generally speaking, outstanding awards may be amended by the Administrator (except for a repricing), but the consent of the award holder is required if the amendment (or any plan amendment) materially and adversely affects the holder.
The following summary of the federal income tax consequences of awards under the 2023 Plan is based upon federal income tax laws in effect on the date of this proxy statement. This summary does not purport to be complete, and does not discuss state, local or non-U.S. tax consequences. The tax consequences of individual awards may vary depending upon the particular circumstances applicable to any individual participant.
The grant of a nonqualified stock option under the 2023 Plan will not result in any federal income tax consequences to the participant or to the Company. Upon exercise of a nonqualified stock option, the participant will recognize ordinary compensation income equal to the excess of the fair market value of theIncludes 2,050,616 shares of common stock atheld in trust for the timebenefit of exercise over the option exercise price. If the participant is an employee, this income is subjectimmediate family member, with respect to withholding for federal incomewhich Mr. Jorden has shared voting and employment tax purposes. The Company is entitledinvestment power.
The grant of an incentive stock option (or “ISO”) under the 2023 Plan will not result in any federal income tax consequences to the participant or to the Company. A participant recognizes no federal taxable income upon exercising an ISO (subject to the alternative minimum tax rules discussed below), and the Company receives no deduction at the time of exercise. In the event of a disposition of stock acquired upon exercise of an ISO, the tax consequences depend upon how long the participant has held the shares. If the participant does not dispose of the shares within two years after the ISO was granted, nor within one year after the ISO was exercised, the participant will recognize a long-term capital gain (or loss) equal to the difference between the sale price of the shares and the exercise price. The Company is not entitled to any deduction under these circumstances.
If the participant fails to satisfy either of the foregoing holding periods (referred to as a “disqualifying disposition”), he or she will recognize ordinary compensation income in the year of the disposition. The amount of ordinary compensation income generally is the lesser of (i) the difference between the amount realized on the disposition and the exercise price or (ii) the difference between the fair market value of the stock at the time of exercise and the exercise price. Such amount is not subject to withholding for federal income and employment tax purposes, even if the participant is an employee of the Company. Any gain in excess of the amount taxed as ordinary income will generally be treated as a short-term capital gain. The Company, in the year of the disqualifying disposition, is entitled to a deduction equal to the amount of ordinary compensation income recognized by the participant, subject to possible limitations imposed by the Code, including Section 162(m) thereof.
The “spread” under an ISO (i.e., the difference between the fair market value of the shares at exercise and the exercise price) is classified as an item of adjustment in the year of exercise for purposes of the alternative minimum tax. If a participant’s alternative minimum tax liability exceeds such participant’s regular income tax liability, the participant will owe the alternative minimum tax liability.
Restricted stock is generally taxable to the participant as ordinary compensation income on the date that the restrictions lapse (i.e. the date that the stock vests), in an amount equal to the excess of the fair market value of the shares on such date over the amount paid for such stock (if any). If the participant is an employee, this income is subject to withholding for federal income and employment tax purposes. The Company is entitled to an income tax deduction in the amount of the ordinary income recognized by the participant, subject to possible limitations imposed by the Code, including Section 162(m) thereof. Any gain or loss on the participant’s subsequent disposition of the shares will be treated as long-term or short-term capital gain or loss depending on the sales price and how long the stock has been held since the restrictions lapsed. The Company does not receive a tax deduction for any subsequent gain.
Participants receiving restricted stock awards may make an election under Section 83(b) of the Code (a “Section 83(b) Election”) to recognize as ordinary compensation income in the year that such restricted stock is granted in an amount equal to the excess of the fair market value on the date of the issuance of the stock over the amount paid for such stock. If the participant is an employee, this income is subject to withholding for federal income and employment tax purposes. If such an election is made, the recipient recognizes no further amounts of compensation income upon the lapse of any restrictions and any gain or loss on subsequent disposition will be long-term or short-term capital gain or loss to the recipient. However, if the stock is later forfeited, the participant will not be able to recover the tax previously paid pursuant to the Section 83(b) Election. The Section 83(b) Election must be made within 30 days from the time the restricted stock is issued. The Company is entitled to a deduction equal to the amount of income taken into account as a result of the Section 83(b) Election, subject to possible limitations imposed by the Code, including Section 162(m) thereof.
To the extent dividends are paid while the restrictions on the stock are in effect, any such dividends will be taxable to the participant as ordinary income (and will be treated as additional wages for federal income and employment tax withholding purposes, if the recipient is an employee) and will be deductible by the Company (subject to possible limitations imposed by the Code, including Section 162(m) thereof), unless the participant has made a Section 83(b) Election, in which case the dividends will generally be taxed at dividend rates and will not be deductible by the Company.
Other awards (such as RSUs and PSUs) are generally treated as ordinary compensation income as and when common stock or cash are paid to the participant upon vesting or settlement of such awards. If the participant is an employee, this income is subject to withholding for income and employment tax purposes. The Company is generally entitled to an income tax deduction equal to the amount of ordinary income recognized by the recipient, subject to possible limitations imposed by the Code, including Section 162(m) thereof.
Under Code Section 162(m), no deduction is generally allowed in any taxable year of the Company for compensation in excess of $1 million paid to the Company’s “covered employees.” A “covered employee” is any individual who has served at any time after December 31, 2016 as the Company’s chief executive officer, chief financial officer, or other executive officer whose compensation has been reported in a Company proxy statement, regardless of whether any such individual is still employed by the Company. The Company may be prohibited under Code Section 162(m) from deducting compensation paid pursuant to the 2023 Plan to its “covered employees.”
Section 409A of the Code provides certain requirements for the deferral and payment of deferred compensation arrangements. In the event that any award under the 2023 Plan is deemed to be a deferred compensation arrangement, and if such arrangement does not comply with Section 409A of the Code, the recipient of such award will recognize ordinary income once such award is vested, as opposed to at the time or times set forth above. In addition, the amount taxable will be subject to an additional 20 percent federal income tax along with other potential taxes and penalties. It is intended, although not guaranteed, that all awards issued under the 2023 Plan will either be exempt from or compliant with the requirements of Section 409A of the Code.
Because approval of the 2023 Plan will determine the number of shares available for issuance to the directors and executive officers of the Company, each of those persons has an interest in and may benefit from the approval of the 2023 Plan.
Approval of the 2023 Plan will require the affirmative vote of a majority of the shares present or represented at the annual meeting and entitled to vote on the matter. Abstentions will be counted as votes against this matter, and broker non-votes will have no effect on the vote on this matter.
We expect the following proposal to be presented at the annual meeting by a shareholder or a representative of such shareholder who is qualified under state law. We will provide the proponent’s name, address and the number of shares such proponent holds promptly upon a shareholder’s oral or written request. In accordance with the rules and regulations16(a) of the Exchange Act other than minor formattingrequires the Company’s executive officers and directors to file initial reports of ownership and reports of changes wein ownership of our common stock with the SEC and, pursuant to rules promulgated under Section 16(a), such individuals are reprintingrequired to furnish the proposal and supporting statement as it was submitted to us. Coterra is not responsible for the contentsCompany with copies of Section 16(a) reports they file. Based solely on a review of the shareholder proposal or supporting statement.
WHEREAS, methane is at least 80 times more potent than carbon dioxide over a 20-year period, meaning reducing emissions now can buy time to address the climate crisis.
In 2020, 32 percent of U.S. methane emissions from human activities came from natural gas and petroleum systems.(1)
Methane emissions can be quantified directly through measurement or indirectly through calculations and modelling. Estimates improve when direct measurement methodologies are used, when emissions are identified by source type and at a site or facility level, and then reconciled, as shown by the Oil and Gas Methane Partnership 2.0 (OGMP).(2)
The Environmental Protection Agency (EPA) methodology used to estimate methane emissions fails to capture many major leaks, wasting valuable product (worth $2 billion per year) and substantially underestimating emissions. Studies have found actual emissions to be 50 to 100 percent higher than reported emissions.(3) In certain basins, emissions are more than 10 times industry disclosed figures.(2) Therefore, oil and gas industry Scope 1 emissions may be significantly higher than reported.
Companies that do not manage methane emissions jeopardize the oil and gas industry’s broader decarbonization efforts, and risk their reputation and license to operate, as investors, regulators and civil society are setting expectations to address this issue.
In 2021, investors managing more than $6.23 trillion supported strong federal methane regulations. The U.S. joined the Global Methane Pledge, committing to using best available inventory methodologies to quantify methane emissions. Companies across the world, including ConocoPhillips, Devon and Pioneer, have joined the OGMP, committing to improving methane data quality and consistency.(4)
According to EPA data, predecessor organizations to Coterra Energy (“Coterra”), Cabot Oil & Gas and Cimarex Energy, ranked 96th and 52nd in methane intensity among U.S. top 100 oil and gas producers, with intensities of 0.02 percent and 0.13 percent, respectively.(5) However, given the limitations of EPA’s methodology, this ranking lacks credibility.
RESOLVED, shareholders request that Coterra issue a report analysing a critical climate change concern, the reliability of its methane emission disclosures. The report should:
The report should be made public, omit proprietary information, and be prepared expeditiously at reasonable cost.
At management’s discretion, we recommend that the report:
| |
| |
|
| GENERAL INFORMATION | | | |
Coterra is proud of the strides it has made in the multi-year reductions of its greenhouse gas emissions, including methane. Coterra strives to deliver meaningful emissions reductions and publicly discloses its results. The company’s strategic and business planning considers the value of these projects in the context of the company’s overall approach to climate change risk management. From 2019 to 2021, our team drove a 77 percent reduction in methane intensity. We are proud of the results to date and are excited for the initiatives we have in place to further advance our ESG performance and public disclosure. However, because we disagree with certain of the statements described in this Proposal 6 we are recommending that shareholders vote against the shareholder proposal to report on the reliability of methane emission disclosures in this format.
We are actively testing, and in some cases employing, advanced methane detection and measurement technologies to improve our understanding of our actual methane emissions to assist us in identifying and mitigating our largest emissions sources. Many of these actions go beyond what is required by federal and state regulations. For example, in a study utilizing continuous methane-emissions monitoring technology, Coterra compared the measured methane emissions from a tankless facility to a conventional facility. The results of that seven-month-long study showed approximately 96 percent less measured methane emissions from the tankless facility. Coterra is utilizing the tankless facility design on new facilities in our liquid-rich areas of operation, and retrofitting certain legacy facilities when technically and economically feasible. We aim to integrate our “bottom-up” emission factor-based inventories with direct measurement to quantify our total methane emissions across all of our assets. Since 2019, we have tested 11 various methane monitoring technologies to enhance our leak detection and repair (LDAR) programs as well as to directly measure our site level emissions. We will continue to capture opportunities by investing in projects and technologies to reduce our greenhouse gas (GHG) emissions including methane, as well as other actions.
Coterra tracks Scope 1 and 2 total greenhouse gas emissions inclusive of methane. Data is tracked and reported on anabsolute basis and as an intensity relative to production. Coterra’s Scope 1 GHG emissions for calendar year 2021 were verified by a third-party auditor, and future years are expected to be third-party verified. No material discrepancies were identified supporting Coterra’s GHG emissions disclosed to the EPA. Our ongoing analysis of our near real-time emissions data enables us to track methane emissions by each categorical source to identify equipment and emission sources with the most potential for emissions reduction opportunities, promptly repair leaks leading to emissions, and inform future facilities’ designs to mitigate future emissions. These and other efforts to reduce emissions are described in our Corporate Sustainability Report and we do not believe further disclosures would be appropriate at this time for the reasons described in this response.
Due to the current early state and evolving nature of direct measurement and emission factor-based inventory reconciliation practices related to methane emissions, Coterra does not believe it is yet possible to make additional assertions with a high degree of accuracy related to discrepancies between direct measurement and emission factor-based inventories. We are continuously evaluating the technologies to understand the best option to scale across our assets, enabling us to reconcile inventories to actual measurements of methane emissions. We are also actively working with our measurement technology partners and evaluating frameworks designed to reconcile direct measurement to emission factor-based inventories, and we intend to disclose results of those efforts once we gain the confidence that those initiatives will provide meaningful information to our stakeholders. Coterra expects a portfolio of solutions will ultimately play a significant role in reducing our emissions.
We are recommending that shareholders vote against Proposal 6.
The vote regarding the shareholder proposal to report on the reliability of methane emission disclosures described in thisProposal 6 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.
We expect the following proposal to be presented at the annual meeting by a shareholder or a representative of such shareholder who is qualified under state law. We will provide the proponent’s name, address and the number of shares such proponent holds promptly upon a shareholder’s oral or written request. In accordance with the rules and regulations of the Exchange Act, other than minor formatting changes, we are reprinting the proposal and supporting statement as it was submitted to us. Coterra is not responsible for the contents of the shareholder proposal or supporting statement.
WHEREAS: United Nations Climate Change asserts that greenhouse gas emissions must decline by 45 percent from 2010 levels by 2030 to limit global warming to 1.5 degrees Celsius. If that goal is not met, even more rapid reductions, at greater cost, will be required to compensate for the slow start on the path to global net zero emissions.(1)
Even with the recent passage of the Inflation Reduction Act, critical gaps remain between Nationally Determined Contributions set by the U.S. government and the actions required to prevent the worst effects of climate change. Domestically and internationally, companies have an important and constructive role to play in enabling policymakers to close these gaps.
Corporate lobbying that is inconsistent with the Paris Agreement presents increasingly material risks to companies and their shareholders, as delays in emissions reductions undermine political stability, damage infrastructure, impair access to finance and insurance, and exacerbate health risks and costs. Further, companies face increasing reputational risks from consumers, investors, and other stakeholders if they appear to delay or block effective climate policy.
Of particular concern are trade associations and other politically active organizations that say they speak for business but too often present forceful obstacles to addressing the climate crisis.
Proponents appreciate that Coterra’s Sustainability Report discloses its memberships in trade associations and the amounts paid to each used for lobbying. This is an important first step in bringing transparency to their policy engagement.
Proponents believe that enhancing this with reporting on the alignment of the company’s lobbying with the internationally agreed goals of the Paris Agreement would fill an important gap. The Global Standard on Responsible Climate Lobbying, backed by investors and networks representing $130 trillion in assets, provides reporting guidelines, particularly in regards to evaluating and mitigating misalignment on climate policies.(2)
RESOLVED: Shareholders request that the Board of Directors conduct an evaluation and issue a report (at reasonable cost, omitting confidential or proprietary information) describing if, and how, Coterra Energy’s lobbying and policy influence activities (both direct and indirect through trade associations, coalitions, alliances, and other organizations) align with the goal of the Paris Agreement to limit average global warming to well below 2°C above pre-industrial levels, and to pursue efforts to limit temperature increase to 1.5°C, and how Coterra plans to mitigate the risks presented by any misalignment.
In evaluating the degree of alignment, Coterra should consider not only its policy positions and those of organizations of which it is a member, but also the actual lobbying and policy influence activities, such as comment submissions, with regard to climate provisions of key international, federal and state legislation and regulation.
The proponents believe this request is consistent with the investor expectations described in the Global Standard on Responsible Climate Lobbying, and that this Standard is a useful resource for implementation.(3)
Our Board believes that our existing disclosures on lobbying, trade association, and political engagement, in combination with our stated goals and multi-year reductions in greenhouse gas emissions, provides the information needed by our shareholders and other stakeholders to understand the scope of the Company’s political activities, including as it relates to our positions on climate change. As a result, our Board believes that publishing an additional report narrowly focused on climate-related lobbying activities through trade associations, coalitions, alliances, and other organizations to align with the
Paris Agreement would not provide additional meaningful information and may obfuscate our broader emissions goals and political efforts that should be viewed on a holistic basis. Therefore, the Board recommends a vote against Proposal 7.
We have an ongoing track record of innovation in environmental stewardship and sustainable practices. We employ a multidisciplinary, company-wide Enterprise Risk Management (ERM) process for integrating risk management throughout our business that includes identifying, evaluating and addressing risks and opportunities on a regular basis. Climate change risks and opportunities are integrated into this process. We also identify and assess climate-related risks as part of our overall sustainable business strategy. Unfortunately, sustainability means different things to different people. At Coterra, we share the concerns of governments and the public about climate change risks, but we believe actions speak louder than words. In 2022, methane emissions intensity was one of three climate metrics added to Coterra’s executive short-term incentive targets, along with greenhouse gas intensity and total flare intensity. And as previously stated, from 2019 to 2021, our team drove a 43 percent reduction in Scope 1 greenhouse gas emissions intensity, a 77 percent reduction in methane intensity, and a 70 percent reduction in flare intensity. Coterra is committed to managing the transition and physical risks related to climate change.
We strongly believe that Coterra’s long-term value to our shareholders is enhanced by a business environment that protects and supports the oil and gas industry’s ability to responsibly operate to provide important energy resources to consumers. From time to time, Coterra supports organizations that are active in the public-policy and political-engagement processes and occasionally makes contributions to organizations that engage in political activity in support of our industry or the business community as a whole. We are also members of business and industry trade groups that engage in educational and collaborative initiatives regarding issues that affect our industry. Some of these associations also engage in lobbying activities that seek to promote legislative solutions that are sound and responsible and, in our judgment, appropriately advance not only Coterra’s business, but the goals and interests of our industry. We respect the independence of trade associations to shape their own policy agendas and positions, and our participation does not represent an endorsement or an organizations entire agenda or the views of its leaders or other members.
We are committed to the highest ethical standards in our business. These high standards permeate the Coterra culture as we strive to provide transparency to our stakeholders including employees, shareholders, business partners, regulators and the communities in which we work. Corporate political contributions, if any, in furtherance of this interest are made only if consistent with our Political Contributions and Activities policy within our Code of Business Conduct and Ethics, approved by the Chief Executive Officer and reviewed by our Board of Directors’ Governance and Social Responsibility Committee. Our Chief Executive Officer approves Coterra’s participation in, and levels of contributions to, all business and trade associations and social welfare organizations. Coterra publicly discloses political contributions as required by law, and the total non-deductible, lobbying related portion of dues paid to all business and trade associations and 501(c)(4) organizations, as reported to us by those organizations, is included in Coterra’s 2022 Sustainability Report.
We are recommending that shareholders vote against Proposal 7.
The vote regarding the shareholder proposal to report on corporate climate lobbying in line with Paris Agreement described in this Proposal 7 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.
This proxy statement is furnished in connection with the solicitation by the Board of Directors of Coterra Energy Inc. of proxies for use at its 20232024 annual meeting of shareholders,stockholders, to be held at the Hotel ZaZaTwo Memorial City, 9787 Katy Freeway,Plaza, 820 Gessner Road, 1st Floor, Live Oak Training Room, Suite 107, Houston, Texas 77024 on Thursday,Wednesday, May 4, 2023,1, 2024, at 8:00 a.m. Central Time, or any adjournment or postponement thereof. The purposes of the meeting are set forth in the accompanying Notice of Annual Meeting of ShareholdersStockholders 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 seven proposals assuming both shareholder proposals are properly presented.
Only holders of record of the Company’s Common Stockcommon stock as of the close of business on March 9, 2023,7, 2024, are entitled to vote at the annual meeting. As of that date, the Company had outstanding and entitled to vote 765,503,584751,289,673 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.
At the annual meeting, shareholdersstockholders will be asked to consider and act upon the following matters discussed in this proxy statement. Proxies delivered by record shareholdersstockholders 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 | | | | BOARD RECOMMENDATION | | ||||
| PROPOSAL 1 | | | | The election of the 10 director | | | | FOR | |
| PROPOSAL 2 | | | | The approval of the Amended and Restated Certificate of 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 | | ||||
| ||||||||||
On or about March 20, 2023,2024, we mailed a notice to our shareholdersstockholders (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 shareholdersstockholders who elected to receive paper copies have received these materials by U.S. mail. In either case, you may vote your shares:
If your shares are registered directly in your name with Coterra’s registrar and transfer agent, Equiniti Trust Company, you are a shareholderstockholder 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 shareholderstockholder 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.
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 NYSE precludes brokers from exercising voting discretion on certain proposals it considers “non-routine” without specific instructions from the beneficial owner. Under NYSE rules, atAt our annual meeting, under NYSE rules 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 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.”
We must have a quorum to conduct the meeting. A quorum is the presence at the annual meeting, in person or represented by proxy, of the holders of a majority of the voting power of the capital stock issued and outstanding and entitled to vote thereat as of the record date. Because there were 765,503,584751,289,673 shares of Common Stockcommon stock outstanding on March 9, 2023,7, 2024, the record date, the quorum for the annual meeting requires the presence at the meeting in person or by proxy of the holders of at least 382,751,793375,644,837 shares. Broker non-votes, abstentions and withhold-authority votes count for purposes of determining a quorum.
For each matter to be presented at the Annual Meeting,annual meeting, you may choose to vote “FOR,”“AGAINST” “AGAINST” or “ABSTAIN, except“ABSTAIN.” For Proposals 2, 3 and 4, abstentions will have the effect of a vote against the proposal, while for Proposal 1 abstentions will have no effect. Although failure of a beneficial owner to provide voting instructions will automatically result in a broker non-vote with regard to the non-routine proposals (Proposals 1, 2 and 3), broker non-votes will have no impact on Proposals 1 or 3. No broker non-votes are expected with respect to proposal 4, as to which you may choose “1 YEAR,” “2 YEARS,” “3 YEARS” or “ABSTAIN.” ThereProposal 4. A broker non-vote will be no broker non-votes onhave the effect of a vote against Proposal 2. Broker non-votes count as votes “FOR” the ratification of the appointment of our independent registered public accounting firm, but do not count for voting and will not affect the outcome on any of the other proposals.
PROPOSAL | | | | YOUR BOARD’S RECOMMENDATION | | | | VOTE REQUIRED | | |
| No. | | | 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 | | |
| No. | | |
| | | | Proposal 2 | | |
| 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
| |
| No. 4—The ratification of the | |||||||||
| ||||||||||
FOR | ||||||||||
|
We do not know of any matters to be presented at the annual meeting other than those listed above. However, if any other matters properly come before the 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.
No action is proposed at the annual meeting for which the laws of the state of Delaware or our bylaws provide a right of our stockholders to dissent and obtain appraisal of or payment for such stockholder’s common stock.
ShareholdersStockholders attending the annual 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 meeting and at any adjournment or postponement thereof. You may revoke your proxy at any time prior to the annual meeting by a written communication to the Corporate Secretary of the Company, or by a duly executed proxy bearing a later date.
We will announce the preliminary voting results at the 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.
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 $15,000$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 statement is being delivered to shareholdersstockholders residing at the same address, unless the shareholdersstockholders have notified the Company of their desires to receive multiple copies of the proxy statement.
Coterra Energy Inc.
Attn: Corporate Secretary or Investor Relations
840 Gessner Road, Suite 1400
Houston, Texas 77024
Email (Investor Relations): IR@coterra.com
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. Shareholders
You can address communications to the Board 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
840 Gessner Road, Suite 1400
Houston, Texas 77024
OR
Phone: (281) 589-4600
Fax: (281) 589-4910
OR
Email: corporatesecretary@coterra.com
All communications received as described above will be relayed to the appropriate directors.
You may send any shareholderstockholder proposal intended for inclusion in the proxy statement for the 20242025 annual meeting of shareholdersstockholders of the Company and otherwise eligible to: Coterra Energy Inc., Corporate Secretary, 840 Gessner Road, Suite 1400, Houston, Texas 77024. A notice of shareholderstockholder proposal to be presented at the 20242025 annual meeting of shareholdersstockholders must be received by November 21, 2023.
The bylaws of the Company require timely advance written notice of shareholderstockholder nominations of director candidates (other than proxy access nominations, which are discussed below) and of any other business to be presented by a shareholderstockholder at an annual meeting of shareholders.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 20242025 annual meeting, of shareholders is currently February 4, 2024.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.
The bylaws of the Company currently permit any shareholderstockholder or group of not more than 20 shareholdersstockholders that have continuously held at least three percent of our outstanding Common Stockcommon stock for at least three years to nominate candidates for up to 20 percent of the available Board seats and have such candidates included in the proxy statement for the 20242025 annual meeting of shareholdersstockholders 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 20242025 annual meeting, of shareholders is currentlysuch advance written notice must be submitted in compliance with our bylaws no later than November 20, 2024 and no earlier than October 21, 2023.2024. To be valid, a notice must set forth certain information specified in the bylaws and the shareholderstockholder or group of shareholdersstockholders providing such a notice must comply with the eligibility and other requirements specified in the bylaws.
By Order of the Board of Directors,
MarcusMARCUS G. Bolinder
BOLINDER
Corporate Secretary
March 20, 2023
| APPENDIX A | | | AMENDED AND RESTATED CERTIFICATE OF INCORPORTATION OF COTERRA ENERGY INC. | |
APPROVED BY THE COMPANY’S STOCKHOLDERS ON MAY [4], 2023
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
|
| |||
| |||
| |||
| |||
| |||
| |||
| |||
| |||
| |||
| |||
| |||
| |||
| |||
| |||
|
| ||||
| ||||
| ||||||
| |||