| | PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS
DIRECTOR COMPENSATION The Compensation Committee is responsible for reviewing and making recommendations to the Board regarding all matters pertaining to director compensation. When deemed necessary, the Compensation Committee recommends to the Board modifications to the compensation of the non-employee directors. Directors who are employees of the Company receive no additional compensation for their duties as directors. During 2022, non-employee directors’ annual
The Compensation Committee periodically reviews the compensation included an annual retainer fee of $105,000 each for their service on the Company’s Board and its committees. The Lead Independent Director received an additional $40,000 annual retainer, the respective chairs of the Audit Committee andnon-employee directors taking into account, among other things, the compensation of directors at other comparable companies. The Compensation Committee each received an additional $20,000 annual retainer,has engaged F.W. Cook as its independent compensation consultant to annually review non-employee director compensation. After considering F.W. Cook’s review of non-employee director compensation and the GSRfactors described above, the Compensation Committee recommended the following non-employee director compensation for the 2023-2024 director term: 2023-2024 Annual Director Compensation | | Annual cash retainer | | | | | $ | 105,000 | | | | | Annual equity retainer | | | | | $ | 200,000 | | | | | Lead Independent Director | | | | | $ | 40,000 | | | | | Committee Chair(1) | | | | | $ | 20,000 | | |
(1)
The Governance and Social Responsibility Committee co-chairs split a $20,000the annual committee chair retainer. Directors who serve on committees (other than as chair) do not receive additional compensation for committee service. Directors do not receive compensation for attending Board or committee meetings. The annual equity retainer for this additional service.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 $200,000. TheBoard. Such restricted stock units are paidaccrue cash dividend equivalents in the amount of the cash dividend paid on our outstanding Common Stockcommon stock from the date of grant through the date the restrictions lapse. In 2022,2023, each non-employee director received 5,6848,177 restricted stock units.
In addition, non-employee directors are reimbursed for reasonable expenses incurred in connection with Board and committee related activities. Under the Coterra Energy Inc. Non-employee Director Deferred Compensation Plan, non-employee directors have the option of deferring all or a portion of their annual cash retainer, annual equity retainer, or a combination of both. If deferred, the annual cash retainer is issued as restricted stock units, the terms of which are substantially the same as those issued for the annual equity retainer, except the ultimate distribution of common stock is deferred until the non-employee director leaves the Board. In November 2022,2023, the Compensation Committee determined to keep non-employee director compensation unchanged for 2023.the 2024-2025 term.
Board members may participate
2023 Director Compensation Table | | Name | | | | Fees Earned
or Paid in
Cash
($) | | | | Stock
Awards
($)(1) | | | | Option
Awards
($) | | | | Non-Equity
Incentive Plan
Compensation
($) | | | | Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($) | | | | All Other
Compensation
($)(2) | | | | Total
($) | | | | Dorothy M. Ables | | | | | $ | 125,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 10,000 | | | | | | $ | 335,009 | | | | | Robert S. Boswell | | | | | $ | 145,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 345,009 | | | | | Amanda M. Brock | | | | | $ | 105,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 305,009 | | | | | Dan O. Dinges | | | | | $ | 105,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 305,009 | | | | | Paul N. Eckley | | | | | $ | 125,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 5,000 | | | | | | $ | 330,009 | | | | | Hans Helmerich | | | | | $ | 105,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 305,009 | | | | | Lisa A. Stewart | | | | | $ | 125,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 325,009 | | | | | Frances M. Vallejo | | | | | $ | 115,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 5,000 | | | | | | $ | 320,009 | | | | | Marcus A. Watts | | | | | $ | 115,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 2,500 | | | | | | $ | 317,509 | | |
(1)
The amounts in this column reflect the Non-employee Director Deferred Compensation Plan, which providesgrant date fair value with respect to restricted stock units granted to each non-employee director an opportunityon May 10, 2023 that are payable by the Company in shares of common stock and vest upon the earlier of May 1, 2024 or the date the non-employee director ceases to elect each year to take any, or all,be a director of the director’s annual cash retainer and additional feesCompany, calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codifications (“ASC”) Topic 718 for serving as lead independent director or as a committee chairthe fiscal year ended December 31, 2023. Assumptions used in the calculation of these amounts are included in Note 13 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The aggregate number of restricted stock units valuedheld by each non-employee director at the closing price of the Common StockDecember 31, 2023, including those issued on May 10, 2023, those that have vested but are not payable until the date specified insuch non-employee director ceases to be a director the 2014 Plan,Company, and those issued in lieu of a quarterlyannual cash payment of such amounts. The terms of the restricted stock units are substantially the sameor equity retainers is as those issued annually. All directors were also reimbursed for travel expenses incurred for attending Board and committee meetings. For more information on director compensation, see “Director Compensation Table” below.follows: Director Compensation Table
| Name | | Fees Earned
or Paid in
Cash
($) | | Stock
Awards
($)(1) | | Option
Awards
($) | | Non-Equity
Incentive Plan
Compensation
($) | | Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($) | | All Other
Compensation
($) | | 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 |
(1) | The amounts in this column reflect the grant date fair value with respect to restricted stock units granted to each non-employee director in June 2022 that are payable by the Company in shares of Common Stock and vest upon the earlier of April 3, 2023 or the date the non-employee director ceases to be a director of the Company, calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codifications (“ASC”) Topic 718 for the fiscal year ended December 31, 2022. Assumptions used in the calculation of these amounts are included in Note 13 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The aggregate number of restricted stock units held by each non-employee director at December 31, 2022, including those issued on June 1, 2022, those that have vested but are not payable until the date such non-employee director ceases to be a director the Company, and those issued in lieu of quarterly cash retainer and leadership fees is as follows: |
| | Name | | | | Total RSUs | | | | Dorothy M. Ables | 76,416 | | | | | 78,909 | | | | | Robert S. Boswell | 82,162 | | | | | 84,655 | | | | | Amanda M. Brock | 55,028 | | | | | 57,521 | | | | | Dan O. Dinges | | | | | | 8,177 | | | | | Paul N. Eckley | 5,684 | | | | | 8,177 | | | | | Hans Helmerich | 5,684 | | | | | 8,177 | | | | | Lisa A. Stewart | 5,684 | | | | | 8,177 | | | | | Frances M. Vallejo | 5,684 | | | | | 8,177 | | | | | Marcus A. Watts | 55,028 | | | | | 57,521 | | |
(2)
Amounts shown are payments by Coterra pursuant to its matching gift programs. Our matching gift programs are described in “Charitable Contributions” below. CHARITABLE CONTRIBUTIONS We maintain a matching gift program under which we match certain gifts by directors, officers and employees to eligible organizations that are tax exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. In addition, under the Coterra Energy Inc. Political Action Committee (the “PAC”) matching gift program we also match contributions to the PAC by directors, officers and employees with contributions to tax-exempt organizations selected by the contributor. Each matching gift program will match up to $5,000 per calendar year.
COTERRA• 2023 PROXY STATEMENT | 17 |
BOARD AND COMMITTEE GOVERNANCE PRINCIPAL SHAREHOLDERS
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 | % |
(1) | Based solely on a Schedule 13 G/A filed February 9, 2023 with the SEC by The Vanguard Group (100 Vanguard Blvd., Malvern, PA 19355), it has shared voting power over 1,115,391 of these shares, sole dispositive power over 87,680,134 of these shares and shared dispositive power over 3,290,935 of these shares. | | | (2) | Based solely on a Schedule 13 G/A filed February 6, 2023 with the SEC by Wellington Management Group LLP (280 Congress Street, Boston, MA 02210), it has shared voting power over 76,818,566 shares and shared dispositive power over all 81,311,345 shares. | | | (3) | Based solely on a Schedule 13 G/A filed January 25, 2023, with the SEC by BlackRock, Inc. (55 East 52nd Street, New York, NY 10055), it has sole voting power over 65,662,661 of these shares and sole dispositive power over all 69,806,470 shares. | | | (4) | Based solely on a Schedule 13 G/A filed February 6, 2023 with the SEC by State Street Corporation (State Street Financial Center, One Lincoln Street, Boston, MA 02111), it has shared voting power over 51,308,070 and shared dispositive power over 53,595,062 of these shares. | | | (5) | Based solely on a Schedule 13 G/A filed February 14, 2023, with the SEC by Aristotle Capital Management, LLC (11100 Santa Monica Blvd., Suite 1700, Los Angeles, CA 90025), it has sole voting power over 36,875,209 of these shares and sole dispositive power over all 41,257,693 shares. | | | (6) | There were 768,258,911 shares of Common Stock outstanding on February 15, 2023. |
COTERRA• 2023 PROXY STATEMENT | 18 |
DIRECTORS AND EXECUTIVE OFFICERS
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 | % |
(1) | Amounts shown include restricted stock units issued under the Company’s incentive plans as follows: | | • as to which restrictions lapse upon the holders’ retirement from the Board of Directors: Ms. Ables, 70,732; Mr. Boswell, 76,478; Ms. Brock, 49,344; Mr. Watts, 49,344; and “All directors and executive officers as a group,” 245,898
• as to which restrictions lapse upon the earlier of April 3, 2023 or the date the non-employee director ceases to be a director of the Company: 5,684 for each of Ms. Ables, Mr. Boswell, Ms. Brock, Mr. Eckley, Mr. Helmerich, Ms. Stewart, Ms. Vallejo, and Mr. Watts; and 45,472 for “All directors and executive officers as a group”
• as to which restrictions lapse upon January 31, 2025: Mr. Bell, 51,436; Mr. Clason, 34,291; and “All directors and executive officers as a group,” 82,580
• as to which restrictions lapse upon October 1, 2024: 27,099 for “All directors and executive officers as a group”
| (2) | There were 768,258,911 shares of Common Stock outstanding on February 15, 2023. | (3) | Includes 5,000 shares held by an immediate family member, with respect to which Ms. Ables has shared voting and investment power. | (4) | Includes 1,261,330 shares held in trust for the benefit of an immediate family member, with respect to which Mr. Dinges has shared voting and investment power. | (5) | Includes 45,967 shares owned by Mr. Helmerich’s wife; Mr. Helmerich disclaims beneficial ownership of the shares held by his wife. Also, includes 233,699 shares owned by 1993 Hans Helmerich Trust, of which Mr. Helmerich is the trustee; 44,409 shares owned by Helmerich Grandchildren LLC, of which Mr. Helmerich is the co-manager; 31,573 shares owned by Family Trust, of which Mr. Helmerich is the trustee; 121,145 shares owned by The Helmerich Trust, of which Mr. Helmerich is the co-trustee; 1,304,895 shares held by the Peggy Helmerich QTIP Trust, of which Mr. Helmerich is the trustee; and 40,146 shares held by Saddleridge, LLC, of which Mr. Helmerich owns 99 percent and his wife owns 1 percent. | (6) | Includes 5,700 shares held in an individual retirement account, with respect to which Ms. Stewart has sole voting and investment power. | (7) | Includes 845,318 shares of restricted stock subject to service-based vesting and 1,632,628 shares of Common Stock held in trust for the benefit of an immediate family member, with respect to which Mr. Jorden has shared voting and investment power. |
DELINQUENT SECTION 16(A) REPORTS
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.
COTERRA• 2023 PROXY STATEMENT | 19 |
POLICY ON RELATED PARTY TRANSACTIONS
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.
RELATED PARTY TRANSACTIONS
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.
COTERRA• 2023 PROXY STATEMENT | 20 |
CORPORATE GOVERNANCE MATTERS
| | | | |
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.
DIRECTOR NOMINATIONS AND QUALIFICATIONS
Nomination Process
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.
Board Composition Following the Merger
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.
Skills and Qualifications
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.
COTERRA• 2023 PROXY STATEMENT | 21 |
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.
DIRECTOR SKILLS AND EXPERIENCE | | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | |  | | | Public
Company
C-Suite | | Private
Company
C-Suite | | Exploration
&
Production | | Climate
Change | | Related
Industry | | Other
Public
Company
Boards | | Financial/
Accounting | | Cyber-
security | | Legal | | Operating/
Strategic
Responsibility | | EHS
Responsibility | Ables | |  | | | | | | | | | | | | | | | | | | | | | Boswell | |  | | | | | | | | | | | | | | | | | | | | | Brock | | | | | | | | | | | | | | | | | | | | | | | Dinges | | | | | | | | | | | | | | | | | | | | | | | Eckley | | | | | | | | | | | | | | | | | | | | | | | Helmerich | | | | | | | | | | | | | | | | | | | | | | | Jorden | | | | | | | | | | | | | | | | | | | | | | | Stewart | | | | | | | | | | | | | | | | | | | | | | | Vallejo | | | | | | | | | | | | | | | | | | | | | | | Watts | | | | | | | | | | | | | | | | | | | | | | |
COTERRA• 2023 PROXY STATEMENT | 22 |
Director IndependenceIndependence Standards 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
Independence Determinations Our Board, through its independence determinations, the Board considered all material relationships with each director,Governance and all transactions since the start of 2020 between the CompanySocial Responsibility Committee, annually reviews and each director nominee, members of their immediate families and entities associated with them.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
Under the standards described above and with input from the Governance and Social Responsibility Committee, the Board has determined that each director, with the exception of Mr. Jorden, our Chairman, Chief Executive Officer and President, and Mr. Dinges, our former Executive Chairman and Cabot’s former Chief Executive Officer, is independent. Further, the Board has determined that all members of the Company’s Board also serve as directors of other entities with which the Company does business. Each of these relationships is reviewed byAudit, Compensation and Governance and Social Responsibility Committees are independent. Matters Considered In making its recommendations to the Board, which examines the amount of business done byGovernance and Social Responsibility Committee specifically considered relationships that involved transactions between the Company and the othera company with which a director is affiliated, whether by virtue of serving as a director or an officer. Included in such review were transactions with entities and the gross revenue for eachat which of the other entities. This review is for each of the last three fiscal years for which financial data is available.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.
The Governance and Social Responsibility Committee also considered that eachthe following relationships where a director served as a director, and not an officer of the other companies involvedan entity with which we have done business in the applicable transactions with the Company.last three years: 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
on a pro-rata basis. The Board reviewed this transaction with Laramie and concluded: (i) the transaction is proper and not material when compared to Coterra’sour and Laramie’s respective consolidated gross revenues and anticipated revenues for the relevant periods; (ii) the transaction occurred in the ordinary course of business, at market rates and on arms’ length terms; (iii) the Board does not review or approve office leases or subleases; and (iv)(iii) Mr. Boswell’s relationship with Laramie does not interfere with his independent judgment as a director of Coterra. 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.
Related Person Transactions Policy on Related Person Transactions In
Our Governance and Social Responsibility Committee reviews our disclosure of related-party transactions in connection with its annual review of director independence. These procedures are not in writing but are documented through the meeting agendas and minutes of our Governance and Social Responsibility Committee, in each case with the Board madeassistance of our legal department. Our legal department is primarily responsible for (i) developing and implementing processes and controls to obtain information regarding our directors, executive officers, and significant stockholders with respect to related party transactions and (ii) then determining, based on the facts and circumstances, whether we or a subjective determinationrelated party has a direct or indirect interest in these transactions. On a periodic basis, the legal department reviews all transactions involving payments between the Company and any company that becausehas 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, including any such transactions involving their immediate family members. No Reportable Related Person Transactions Since January 1, 2023, there have been no transactions that are required to be reported as related party transactions pursuant to the applicable disclosure rules of the natureSEC in which (i) the Company or any of the transactions, the director’s relationship with the other entity andits subsidiaries was a participant, (ii) the amount involved no relationships exist that, in the opinionexceeded or will exceed $120,000, and (iii) any director, director nominee, executive officer, a greater than 5% beneficial owner of the Board, would impairCompany at the director’s independence. Further, the Board has determined that all memberstime of the Audit Committee, Compensation Committee and GSR Committee are independent.Director Orientation and Continuing Education
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.
indirect material interest. BOARD OF DIRECTORS’ LEADERSHIP STRUCTURE COTERRA• 2023 PROXY STATEMENT | 23 |
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.
Director Succession
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.
BOARD OF DIRECTORS LEADERSHIP STRUCTURE
Chairman of the Board:
Duties and Responsibilities | | | | Lead Independent Director:
Duties and Responsibilities | | | •Preside
Presides over Board meetings.meetings •Approve
Approves agenda for Board meetings with input from the Lead Director.Independent Director •Facilitate
Facilitates and participateparticipates in formal and informal communications with and among Directors.directors •Call
Calls special meetings of the Board.Board •Preside
Presides over shareholder meetings.stockholder meetings | | | | •Preside
Presides over all Board meetings at which the Chairman of the Board is not present.present •Solicit
Solicits agenda items from non-management directors, reviewreviews Board meeting agenda, and provideprovides input to the Chairman of the Board on agenda and Board meterials.materials •Call meetings of non-management Directors and, as appropriate, set the agenda.• Preside over all
Calls meetings of non-management directors and, as appropriate, sets the agenda •
Presides over allmeetings and executive sessions of non-management directors.directors •Act
Acts as liaison between the Chairman and the directors and facilitatefacilitates communication among the full Board.Board •Review shareholder
Reviews stockholder communications directed to the Board and taketakes appropriate action.action •Retain
Retains outside advisors and consultants, who report directly to the Board on Board-wide issues.issues | |
Chairman of the Board 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. COTERRA• 2023 PROXY STATEMENT | 24 |
Lead Independent DirectorThe 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.
BOARD MEETINGS AND COMMITTEES
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. BOARD’S OVERSIGHT OF RISK MANAGEMENT The Board has oversight responsibility for our enterprise risk management framework, which is designed to identify, assess, prioritize, address, manage, monitor and communicate risks across our operations, and foster a corporate culture of integrity and risk awareness. Our Board implements its risk oversight function both as a whole body and through delegation to Board committees, which meet regularly and report back to the Board. Consistent with this approach, one of the Board’s and Board committees’ primary responsibilities is overseeing and interacting with senior management with respect to key aspects of the Company’s business, including risk assessment and risk mitigation of the Company’s top risks. While the Board and its committees oversee risk management, management is responsible for managing risk. Throughout the year, the Board and the relevant Board committees receive updates from members of management responsible for various enterprise risk management issues and dedicate a portion of their meetings to reviewing and discussing specific risk topics in greater detail, including risks related to litigation, regulation, cybersecurity, safety, sustainability, human capital management, including diversity, equity and inclusion, and commodity prices. The Board receives updates through presentations, memos and other written materials, teleconferences, and other appropriate means of communication, with numerous opportunities for discussion and feedback, and continuously evaluates its approach in addressing top risks as circumstances evolve. The Board also receives periodic updates from external experts and advisers on which they servedtrends and conditions that were held duringmay impact our strategy and financial performance, including political issues, labor or oil and gas market trends, and digitalization. For example, the period thatAudit Committee assessed the directors served.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. In evaluating top risks, the Board and management consider short-, medium-, and long-term potential impacts on our business, financial condition, and results of operations, and considers the risk horizon when prioritizing our risk mitigation efforts. The Board recognizes that it expectsis neither possible nor prudent to eliminate all membersrisk. Therefore, our risk oversight processes and disclosure controls and procedures are designed to appropriately escalate key risks to the Board or the appropriate Board committee for their consideration.
The Board has tasked designated committees of the Board with oversight of Directorscertain categories of risk management, and the committees report to attend the Company’s annual meeting of shareholders. In 2022, all of the members of the Board attended the annual meeting.Committee Membership
regularly on these matters. Information on each of the Board’s standing committees as of the date hereof is discussed below. Information on Standing Committees of the Board The charters of Board committees can be found on the Company’sour website at www.coterra.com. The following is a summary of the composition of each of the standing committees during 20222023 and through the date of this proxy statement:
Committees | Committees | Independent? | | 2022 | Independent? | | | | 2023
Meetings | | Dinges | | JordenDinges | | Ables | | BoswellJorden | | Brock | | EckleyAbles | | Helmerich | | StewartBoswell | | Watts | | Brock | | | | Eckley | | | | Helmerich | | | | Stewart | | | | Watts | | | | Vallejo | | | | Audit | | | | | | Yes | | | | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Compensation | | | | | | Yes | | | | | | | 6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Environment, Health & Safety | | | | | | Yes | | | | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Governance & Social Responsibility | | | | | | Yes | | | | | | | 4 | | | | | |  | | | | | | | | | | - | |  | | | | | | | | | | | | | | | | | | | | | | | | | Audit | | Yes | | 4 | | | | | |  | |  | | | | | | | | | | | | | Compensation | | Yes | | 7 | | | | | | | | | | | | | | | | | | | | | Environment, Health & Safety | | Yes | | 4 | | | | | | | | | | | | | | | | | | | | | | Executive | | | | | | No | | 1 | | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ![[MISSING IMAGE: ic_comitchair-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_comitchair-pn.jpg) COMMITTEE CHAIR OR CO-CHAIRCOMMITTEE CHAIR OR CO-CHAIR | | | | MEMBER OF COMMITTEE |
Committee Responsibilities
Governance and Social Responsibility Committee
The function of the GSR Committee is to assist the Board in fulfilling its responsibility to the shareholders by:
• | Overseeing, and assisting the Board with, the Company’s efforts with respect to socially responsible operations, programs and initiatives not otherwise delegated to another committee of the Board and the reporting or public disclosure of such efforts by the Company; | • | Identifying qualified individuals to become Board members and assisting the Board in determining the composition of the Board and its committees; | • | Assessing Board and committee effectiveness; | • | Developing and implementing the Company’s corporate governance guidelines; and | • | Taking a leadership role in shaping the corporate governance of the Company. |
In accordance with its charter, the GSR Committee has adopted minimum criteria for Board membership, which are discussed in more detail at “Director Nominations and Qualifications” above.
COTERRA• 2023 PROXY STATEMENT | 25 |
![[MISSING IMAGE: ic_membercomm-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_membercomm-pn.jpg) MEMBER OF COMMITTEEAudit Committee The functionprimary purposes of the Audit Committee isare to assist the Board in overseeing: •
The integrity of our financial statements; •
Our compliance with legal and regulatory requirements; •
The independence, qualifications and performance of our independent auditors, including the compensation, retention and oversight of the work of the independent auditor; and •
The performance of our internal audit function. The Audit Committee’s duties and responsibilities include reviewing our annual process of estimating and reporting quantities of oil and gas reserves with management and our independent petroleum engineering consulting firm(s). Additionally, the Audit Committee is responsible for reviewing and discussing with management and our internal auditor our cybersecurity and information security risks, including the nature of threats, defense and detection capabilities, incident response plans and employee training activities, among others, as applicable. •
| The integrity of the financial statements of the Company; | • | The compliance by the Company with legal and regulatory requirements; | • | The independence, qualifications, performance and compensation of the Company’s independent auditors; and | • | The performance of the Company’s internal audit function. |
The Audit Committee Charter provides that the Audit Committee shall pre-approve all audit, review or attest engagements and permissible non-audit services, including the fees and terms thereof, to be performed by the independent auditors subject to, and in compliance with the de minimis exception for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, 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.
Compensation Committee The functionprimary purposes of the Compensation Committee isare to:
•
Review and approve corporate goals and objectives relevant to the Chief Executive Officer’s compensation, evaluate the Chief Executive Officer’s performance in light of those goals and objectives, and determine and approve, subject to ratification by the Board, the Chief Executive Officer’s compensation level based on this evaluation; •
Review, determine and approve the other executive officers’ compensation; •
Make recommendations to the Board with respect to incentive-based compensation and equity-based plans that are subject to approval by the Board; and •
Prepare certain disclosures under the Exchange Act. The Compensation Committee also reviews and makes recommendations to the Board with respect to succession planning and development of executive officers, as appropriate, as well as the compensation of non-employee directors. •
| Review and approve corporate goals and objectives relevant to the CEO’s compensation, evaluate the CEO’s performance in light of those goals and objectives, and determine, subject to ratification by the Board, the CEO’s compensation level based on this evaluation; | • | Provide counsel and oversight of the evaluation and compensation of management of the Company, including base salaries, incentive compensation and equity-based compensation; | • | Review and report to the Board on CEO and executive officer succession planning; | • | Discharge any duties imposed on the Compensation Committee by the Company’s incentive compensation and equity-based compensation plans, including making grants; | • | Evaluate the independence of, and retain or replace any compensation consultant engaged to assist in evaluating the compensation of the Company’s directors, CEO and other officers and to approve such consultant’s fees and other terms of retention; and | • | Review the annual compensation of the directors. |
Environment, Health & Safety CommitteeThe 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: •
Oversees our climate change and sustainability policies and programs, including reporting and public disclosure; •
Monitors environmental matters and trends in such matters that affect our activities and performance; •
Reviews our compliance with environmental, health and safety laws and regulations, including: ◦
management of and responses to 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. •
| Oversees the Company’s climate change and sustainability policies and programs and the reporting and public disclosure thereon; | • | Monitors environmental matters and trends in such matters that affect the Company’s activities and performance; | • | Reviews the Company’s compliance with environmental, health and safety laws and regulations, including: |
| • | management and responses to environmental releases | | • | safety incidents, statistics and outcomes and the Company’s responses | | • | the Company’s assessment of and responses to pending legislative and regulatory efforts | | • | initiatives and training designed to improve EHS performance |
• | Consults with the Board and internal and external advisors regarding the management of the Company’s EHS programs; and | • | Oversees and reviews all external disclosures regarding the Company’s EHS and sustainability data and programs. |
The 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. Governance and Social Responsibility Committee Executive Committee
The functionprimary purposes of the Governance and Social Responsibility Committee are to: •
Oversee and assist the Board with our efforts for socially responsible operations, programs and initiatives not otherwise delegated to another committee of the Board and the reporting or public disclosure of such efforts; •
Identify qualified individuals to become Board members (consistent with the criteria approved by the Board) and assist the Board in determining the composition of the Board and its committees, including by recommending to the Board director nominees for the next annual meeting of stockholders; •
Oversee the annual evaluation of the performance and effectiveness of the Board and its committees; •
Develop and recommend to the Board our Corporate Governance Guidelines; and
•
Take a leadership role in shaping our corporate governance. In accordance with its charter, the Governance and Social Responsibility Committee has adopted minimum criteria for Board membership, which are discussed in more detail at “Director Nominations and Qualifications” above. Our Governance and Social Responsibility Committee, in cooperation with our Compensation Committee, provides ultimate oversight over diversity, equity and inclusion. Executive Committee The Executive Committee is to exercise allexercises the power and authority of the Board of Directors in the event action is needed between regularly scheduled Board meetings and a meeting of the full Board is deemed unnecessary, except as limited by the Company’sour bylaws or applicable law. The Executive Committee did not meet during 2023. MEETINGS AND ATTENDANCE The Board of Directors met onceseven times during 20222023. All directors attended at least 75 percent of the meetings of the Board of Directors and of the committees on which they served that were held during the period that the directors served. We expect all members wereof our directors to attend the Company’s annual meeting of stockholders. In 2023, all of our directors attended the annual meeting. DIRECTOR ORIENTATION AND CONTINUING EDUCATION Each new director undergoes an orientation program upon joining the Board. The program adopted by the Company includes in-person meetings with the Chief Executive Officer and other key officers to discuss our 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 are invited 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. 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 attendance.COTERRA• 2023 PROXY STATEMENT | 26 |
BOARD’S OVERSIGHT OF RISK MANAGEMENT
Board of Directors | | • | Responsible for oversight of risk management, including operational, financial, reputational, climate change, cybersecurity, information technology and other risks | • | Regularly holds discussions regarding risks faced by the Company throughout the year | • | Hears a report from the Audit Committee Chair regarding the activities of the Audit Committee at each regular Board meeting | • | Oversees environmental, social and governance risks, policies and practices by hearing reports from the EHS Committee (which is devoted solely to health, safety and environmental oversight) and the GSR Committee at each regular quarterly meeting, and acts collectively as a Board to review risks in these areas |
| Audit Committee | | Environment,connection with one such continuing education program each year. Ms. Stewart, our former Lead Independent Director and current Chair of the Environmental, Health & Safety
Committee | | Governance and Social
Responsibility Committee | | | • Reviews with management and the Company’s internal auditors the Company’s major financial exposures and the steps management has taken to monitor and control those exposures
• Reviews at least annually the Company’s policies and guidelines concerning financial risk assessment and financial risk management, with the assistance of the internal auditors, KPMG LLP
• Reviews results of KPMG’s risk review and of the internal audit throughout the year
• Oversees the Company’s cybersecurity policies, practices and performance as they relate to financial risk exposures
| | • Oversees the Company’s climate change and sustainability policies and programs and provides recommendations on the related reporting and public disclosures
• Monitors and reviews environmental matters and trends that affect the Company’s activities and performance, including the efficient use of resources, energy sustainability, climate change, and environmental protection
• Oversees the Company’s environmental, health and safety policies, practices and performance, including reviewing incidents, responses and statistics, as well as training and initiatives designed to improve performance in these areas
| | • Oversees the Company’s policies, programs and initiatives that relate to issues of public concern, such as socially responsible business conduct, human rights, diversity, philanthropy, and community involvement
• Monitors the Company’s corporate reputation
• Supports the Company’s actions to be a good and welcome citizen in the communities in which it operates, while furthering the Company’s long-term business objectives
| |
Internal Auditor, KPMG LLP | • | Conducts a process of assessing major risks, including management interviews, and presents and discusses its conclusions with the Audit Committee to help identify areas of concern and develop the internal audit plan |
Management | • | Reports to the Board at least annually regarding its assessment of risks that could have a significant impact on the Company and possible mitigation strategies | • | Periodically presents to the Board an in-depth analysis of a top risk identified in the annual enterprise risk management process | • | Provides periodic reports to the Audit Committee on areas of potential exposure, including litigation, commodity price hedging, liquidity and capital resources, financial reporting and disclosures, and regulatory risks | • | Compiles reports for the Audit Committee regarding compliance with our Code of Business Conduct and Ethics |
COTERRA• 2023 PROXY STATEMENT | 27 |
Cybersecurity Risk Oversight
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.
Carnegie-Mellon University in 2023. CODE OF BUSINESS CONDUCT AND ETHICS 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.
STOCKHOLDER ENGAGEMENT We engage with our stockholders regularly throughout the year. The Governance and Social Responsibility Committee oversees our stockholder engagement program and receives regular reports from management on stockholder engagement and feedback. Our engagement program is designed to address questions and concerns, provide perspective on Company policies and practices, seek stockholder input and incorporate feedback, as appropriate. Our primary stockholder engagement opportunities in 2023 are identified below, and executive officers participated at all of the investor conferences and non-deal roadshows. 2023 Communication and Engagement Highlights ![[MISSING IMAGE: tb_23communi-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/tb_23communi-pn.jpg) In 2023, in addition to our regular stockholder engagement efforts, we conducted dedicated stockholder outreach efforts related to two stockholder proposals included in the proxy statement for the 2023 annual meeting of stockholders. We contacted our 25 largest stockholders representing 68.9 percent of outstanding shares, received responses from 10 stockholders representing 45.9 percent of outstanding shares, and held calls with the nine who requested engagement representing 45.3 percent of outstanding shares. Following the results of the stockholder vote at the 2023 annual meeting of stockholders, and as a result of feedback received from our stockholders with respect to such proposals, we included additional disclosure in our 2023 Sustainability Report regarding the reliability of methane emission disclosures and joined the Oil and Gas Methane Partnership 2.0 (“OGMP 2.0”). The OGMP 2.0 has a framework that is dedicated to achieving reliable methane emission measurement, reporting, and mitigation. As part of OGMP 2.0, we plan to submit our 2023 methane emission estimates through their framework in second quarter 2024.
COTERRA• 2023 PROXY STATEMENT | 28 |
| | PROPOSAL 2 | | | TO AMEND AND RESTATE THE RESTATED CERTIFICATE OF
INCORPORATION OF COTERRA ENERGY INC. | |
We are asking you to approve a proposal to amend and restate the Restated Certificate of Incorporation of Coterra Energy Inc. (the “Certificate of Incorporation”), in the form attached as Appendix A to this proxy statement (the “Amended and Restated Certificate of Incorporation”). The Amended and Restated Certificate of Incorporation would amend the Certificate of Incorporation to provide for exculpation of certain officers of the Company as permitted by Delaware law and to make certain non-substantive updates. The Board approved, subject to stockholder approval, and declared it advisable to recommend that stockholders approve, the Amended and Restated Certificate of Incorporation. Purpose and Effect of the Amended and Restated Certificate of Incorporation Effective August 1, 2022, Section 102(b)(7) of the General Corporation Law of the State of Delaware (the “DGCL”) was amended to authorize corporations to adopt a provision in their certificate of incorporation to eliminate or limit monetary liability of certain corporate officers for breach of the fiduciary duty of care. Previously, the DGCL allowed only exculpation of directors for breach of the fiduciary duty of care. As amended, Section 102(b)(7) of the DGCL authorizes corporations to provide for exculpation of the following officers: (i) the corporation’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer or chief accounting officer, (ii) “named executive officers” identified in the corporation’s SEC filings, and (iii) other individuals who have agreed to be identified as officers of the corporation. Section 102(b)(7) of the DGCL, as amended, only permits, and the Amended and Restated Certificate of Incorporation would only permit, the exculpation of certain officers in connection with direct claims brought by stockholders, including class actions, but would not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by the Company itself or for derivative claims brought by stockholders in the name of the Company. In addition, as is currently the case with directors under the Certificate of Incorporation, the Amended and Restated Certificate of Incorporation would not limit the liability of officers for any breach of the duty of loyalty to the Company or its stockholders, any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law and any transaction from which the officer derived an improper personal benefit. Article VII in the Certificate of Incorporation currently provides for the exculpation of directors but does not include a provision that allows for the exculpation of officers. Overview of the Amended and Restated Certificate of Incorporation As discussed above, Article VII in the Certificate of Incorporation currently provides for the exculpation of directors. This Proposal 2 requests that stockholders approve the Amended and Restated Certificate of Incorporation to extend the exculpation provision to certain of our officers as permitted by DGCL Section 102(b)(7), as amended, by adding a new paragraph to Article VII of the Certificate of Incorporation as follows: “An officer of the Corporation shall not be personally liable to the Corporation or its stockholder or stockholders for monetary damages for breach of fiduciary duty as an officer, except for liability (i) for any breach of the officer’s duty of loyalty to the Corporation or its stockholder or stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for any transaction from which the officer derived an improper personal benefit, or (iv) for any action by or in the right of the Corporation. If the GCL is amended after the date of filing of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of officers, then the liability of an officer of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the GCL as so amended. Any repeal or modification of this Article VII by the stockholder or stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of an officer of the Corporation existing at the time of such repeal or modification.” This Proposal 2 also requests that stockholders approve the Amended and Restated Certificate of Incorporation to make certain non-substantive updates. The text of the Amended and Restated Certificate of Incorporation is attached as Appendix A to this proxy statement. Modifications reflecting the extension of exculpation to certain officers of the Company as permitted by Delaware law and certain non-substantive updates are indicated by double underlining in Appendix A to this proxy statement. Reasons for the Amended and Restated Certificate of Incorporation The Board believes it is important to provide protection from certain liabilities and expenses that may discourage prospective or current officers from accepting or continuing service with corporations. As with directors, officers frequently must make decisions
in response to time-sensitive opportunities and challenges, which can create substantial risk of investigations, claims, actions, suits or proceedings seeking to impose liability on the basis of hindsight. This is especially the case in the current litigious environment where stockholder plaintiffs have employed a tactic of bringing certain claims against officers that would otherwise be exculpated if brought against directors to avoid dismissal of such claims. The Amended and Restated Certificate of Incorporation would align the protections for our officers with those protections currently afforded to our directors. In addition, the Board believes the Amended and Restated Certificate of Incorporation would better position the Company to attract top officer candidates. In the absence of this exculpatory protection, qualified officers might be deterred from serving as officers of the Company due to exposure to personal liability and the risk that substantial expense will be incurred in defending lawsuits, regardless of merit. The stockholders of many of our peers have already adopted exculpation clauses that limit the personal liability of officers in their certificates of incorporation and failing to adopt the Amended and Restated Certificate of Incorporation could impact our recruitment and retention of exceptional officer candidates who conclude that the potential exposure to liabilities, costs of defense and other risks of proceedings exceeds the benefits of serving as an officer of the Company. The Board also considered the narrow class and type of claims from which such officers would be exculpated from liability pursuant to DGCL Section 102(b)(7), as amended, the limited number of our officers that would be impacted, and the benefits the Board believes would accrue to the Company by providing exculpation in accordance with DGCL Section 102(b)(7), as amended, including the ability to further enable our officers to best exercise their business judgment in furtherance of stockholder interests. After weighing these considerations, upon the recommendation of the Governance and Social Responsibility Committee, the Board approved and declared it advisable to adopt, subject to stockholder approval, the Amended and Restated Certificate of Incorporation to provide for exculpation of certain officers of the Company as permitted by Delaware law and to make certain unrelated, non-substantive updates. Additional Information If Proposal 2 is not approved by our stockholders at the annual meeting, then the Amended and Restated Certificate of Incorporation will not be approved and will not be implemented or become effective. The vote on the Amended and Restated Certificate of Incorporation is binding. Approval of Proposal 2 will constitute approval of the Amended and Restated Certificate of Incorporation, as set forth in Appendix A to this proxy statement. Other than the addition of a new paragraph to Article VII of the Certificate of Incorporation as set forth above and certain non-substantive updates to the Certificate of Incorporation, in each case as set forth in Appendix A, the remainder of the Certificate of Incorporation will remain unchanged after effectiveness of the Amended and Restated Certificate of Incorporation. If Proposal 2 is approved, the Company intends to file the Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware as soon as practicable following stockholder approval, and the Amended and Restated Certificate of Incorporation will become effective at the time of that filing. The Board may, at any time prior to the effectiveness of the Amended and Restated Certificate of Incorporation, abandon the Amended and Restated Certificate of Incorporation without further action by the stockholders or the Board (even if the requisite stockholder vote is obtained). Required Vote Approval of the Amended and Restated Certificate of Incorporation will require the affirmative vote of a majority of the outstanding shares of common stock entitled to vote on the matter. Abstentions and broker non-votes will have the effect of votes against this matter. | | | | | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF COTERRA ENERGY INC. TO LIMIT THE LIABILITY OF CERTAIN OFFICERS AS PERMITTED BY DELAWARE LAW AND TO MAKE CERTAIN NON-SUBSTANTIVE UPDATES. | |
| | PROPOSAL 3 | | | TO APPROVE, BY NON-BINDING ADVISORY VOTE,
THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS | |
In accordance with Section 14A of the Exchange Act and the related rules of the SEC, the stockholders of the Company are entitled to cast an advisory vote at the annual meeting to approve the compensation of the Company’s named executive officers. The vote on this Proposal 3 is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers as described in this proxy statement. At the 2023 annual meeting, our stockholders approved our proposal to provide you this opportunity on an annual basis. As described more fully in the “Compensation Discussion and Analysis” section of this proxy statement, the Company’s executive compensation program is designed to: Align executive compensation with our business strategy; •
Encourage management to create sustained value for the stockholders while managing inherent business risks; •
Attract, retain, and engage talented executives; and •
Support a long-term performance-based culture throughout the Company. We urge you to read the “Compensation Discussion and Analysis” and “Compensation Tables” sections on pages 28 to 56 so that you have an understanding of our executive compensation philosophy, policies and practices. The stockholder vote on executive compensation is an advisory vote only, and it is not binding on the Company or the Board of Directors. Although the vote is non-binding, the Compensation Committee and the Board value the opinions of the stockholders and will consider the outcome of the vote when making future compensation decisions. The next say-on-pay vote will occur at the 2025 annual meeting of stockholders. Required Vote The advisory vote regarding the compensation of the named executive officers described in this Proposal 3 will be approved if holders of a majority of the voting power of the common stock present in person or represented by proxy at the annual meeting and entitled to vote on the proposal vote in favor of the proposal. Abstentions will have the same effect as votes against the proposal, but broker non-votes will not affect the outcome of the voting on the proposal. | | | | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPENSATION DISCUSSION AND ANALYSISPAID TO OUR NAMED EXECUTIVE OFFICERS. | | | | |
COMPENSATION DISCUSSION AND ANALYSIS EXECUTIVE SUMMARY
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:
following executive officers serving at the end of 2023: | | Thomas E. Jorden | | | | Chief Executive Officer and President | | Scott C. Schroeder | Shannon E. Young III | | | | Executive Vice President and Chief Financial Officer | | Dan O. Dinges | | Executive Chairman through December 31, 2022 (former Chairman, President & Chief Executive Officer prior to October 1, 2021) | | Stephen P. Bell | | | | Executive Vice President, President—Business Development | | Christopher Clason | Blake A. Sirgo | | | | Senior Vice President—Operations | | | | Kevin W. Smith | | | | Vice President and Chief Human ResourcesTechnology Officer | |
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.
BUSINESS CONTEXT One Coterra Over the last two years, we embarked on a transformative journey with a key theme: “One Coterra.” This theme served as the guiding principle for the successful integration of Cabot priortwo companies following the strategic merger of Cimarex and Cabot. During the subsequent integration, we have experienced planned executive transitions and implemented expected succession plans, with key leaders stepping into pivotal roles to drive our unified vision forward. In line with our commitment to fostering a cohesive and high-performing organization, we realigned the LTI program to reflect competitive market practices, ensuring that executives are aligned and motivated toward the common goal of “One Coterra.” Furthermore, recognizing the critical role of stability and continuity in executing our ambitious business plan, our Board of Directors renewed Mr. Jorden’s employment agreement and entered into an agreement with Mr. Bell memorializing certain future compensatory rights in consideration for Mr. Bell’s agreement to not terminate his employment for good reason under his legacy Cimarex severance compensation agreement. These strategic decisions underscore our commitment to the Merger“One Coterra” vision, ensuring strong leadership and this CD&A will sometimes referunified direction as we continue to them collectively as “legacy Cabot NEOs.”pursue our objective of exceeding stockholder expectations. Our proactive approach to these critical aspects of our business reinforces our dedication to long-term growth and value creation. DELIVERING VALUE TO STOCKHOLDERS Over the prior three years, we delivered substantial value to our stockholders, evidenced by a +90% total stockholder return (“TSR”) from the beginning of 2021 to the end of 2023, while maintaining market competitive Chief Executive Officer pay. (1)
Based on the total compensation paid to Mr. Jorden Mr. Bell and Mr. Clason were executive officers of Cimarex prioras reported in the Merger and this CD&A will sometimes refer to them collectively as “legacy Cimarex NEOs.”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.
COTERRASummary Compensation Table.• 2023 PROXY STATEMENT | 29 |
2022 Compensation Highlights
• | No salary or target bonus increases for the CEO and Executive Chairman. In February 2022, the Compensation Committee approved no salary or target bonus increases for the CEO and Executive Chairman and provided market-based adjustments for other NEOs who had not received salary increases since 2019. | • | CEO received 100 percent of his long-term incentive (“LTI”) equity awards in the form of relative Total Shareholder Return (“TSR”) Performance Awards. In order to align our CEO’s compensation with ongoing performance of the combined company, the Compensation Committee granted 100 percent of the long-term incentive awards in the form of PSUs. | • | Annual cash incentive bonus for NEOs were scored at 143percent of target; The Compensation Committee exercised negative discretion to decrease NEO STI awards ranging from 100 percent to 125 percent of target. In determining its discretion, the Compensation Committee considered Mr. Jorden’s annual review of the Company’s performance, including strong progress in integrating the legacy businesses and management teams, offset by the lack of progress to offset inflationary pressures, as well as share price performance and the overall macro-economic environment. Based on Mr. Jorden’s recommendation to the Compensation Committee, the net impact of these and other considerations was to exercise negative discretion and reduce the overall STI payout from 143 percent of target as calculated from the results of the 2022 STI goals to 125 percent of target. Following the Merger and during 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) was appropriate under the circumstances. | • | Change-in-control agreement for Executive Chairman and former CEO modified to eliminate tax gross-up provision.In response to the recommendation by a proxy advisory firm to vote against our 2022 say-on-pay proposal, the shareholder vote on executive compensation at the 2022 annual meeting of shareholders, and shareholder outreach, in order to align with governance best practices and respond to feedback from shareholders, the Company and Mr. Dinges agreed to eliminate the excise tax gross-up provision of his change-in-control agreement. No tax gross-up payments were made by the Company in connection with the Merger. | • | Engaged with shareholders to solicit feedback on executive pay programs. In connection with our 2022 annual meeting and on an ongoing basis throughout 2022, we engaged in shareholder outreach to understand our shareholders’ perspective on our executive compensation program. As a result, we eliminated Mr. Dinges’s excise tax gross-up provision and enhanced dislcoures concerning our compensation and governance matters. See “Aligning 2022 Compensation Program with Best Practices—Shareholder Outreach and Response” and “Potential Payments Upon Termination or Change in Control—Change-in-Control Agreements” below. |
ALIGNING 2022
OUR COMPENSATION PROGRAM WITH BEST PRACTICESPHILOSOPHY Our Pay is Aligned with Our Performance 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:
• | Aligned short-term incentive plan metrics with Coterra’s value proposition communicated to shareholders when seeking approval of the Merger |
| • | Focused incentives on return on invested capital, free cash flow, and ESG goals related to emissions reduction targets | | • | Reduced the overall maximum plan payout from 250 percent to 200 percent of target | | • | Removed the conditional multiplier from the short-term incentive calculation | | • | Granted at least half of the value of annual long-term incentives in the form of performance-based awards |
• | Added two broad market indices to executives’ long-term performance awards that are based on relative TSR, reflecting Coterra’s willingness to compete with investment dollars across industries | • | Capped relative TSR award payout at 100 percent of target if Coterra’s TSR is negative over the performance period | • | Increased rigor of long-term performance goals to require above median (55th percentile) relative TSR performance required to receive target payout | • | Adopted three-year cliff vest on time-based RSUs, strengthening retention and alignment with shareholders |
COTERRA• 2023 PROXY STATEMENT | 30 |
Shareholder Outreach and Response
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:
Who we contacted and engaged | | What we heard | | How we responded | • Contacted our 30 largest shareholders, representing 67 percent of our outstanding shares
• Received responses from nine shareholders, representing 33 percent of our outstanding shares
• Held calls with the five shareholders who requested engagement, representing 10 percent of our outstanding shares
| | • Limited concern about the one remaining tax gross up provision
• General agreement with our compensation approach to STI metrics
• Discussion of ESG matters used in compensation metrics and disclosures
| | • Removed remaining excise tax gross-up
• Enhanced disclosure concerning our use of ESG metrics
• Enhanced disclosure of ESG and human capital matters in our 2022 Sustainability Report
|
OVERVIEW OF OUR COMPENSATION PROGRAM
Philosophy and Objectives of Our Compensation Program
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 align executive compensation with our business strategy; •
To attract, retain, and engage talented executives; •
To encourage management to create sustained value for the stockholders while managing inherent business risks; and •
To support a long-term performance-based culture throughout the Company. ANNUAL SAY ON PAY ADVISORY VOTE •
| To align executive compensation with our business strategy; | • | To attract, retain, and engage talented executives; | • | To encourage management to create sustained value for the shareholders while managing inherent business risks; and | • | To support a long-term performance-based culture throughout the Company. |
We achieved these objectivesValue Stockholders’ Perspective on Executive Pay Programs At the 2023 annual meeting of stockholders, approximately 96 percent of the votes cast were in favor of our 2022 by:executive compensation programs. The Compensation Committee recognized the support received from our stockholders and viewed the results as a confirmation of our executive compensation programs and policies. The Compensation Committee will maintain the practice of assessing stockholder votes and feedback when developing our executive compensation programs. OUR COMPENSATION PRACTICES AND DESIGN • | Assigning in excess of 86 percent of NEO compensation to at-risk, performance-based incentive opportunities; | • | Tying incentive plan metrics and goals to shareholder value priorities; and | • | Having balanced, open and objective reviews of goals and performance. |
Our Executive Compensation Program Follows Best PracticesThe following practices and policies in place in 2022 ensured that our executives’ compensation was aligned with shareholders’ interests.
| | What we do: | |  | For 2022, added | | | | Include emissions reductionsreduction target metrics towithin the short-term incentive program | |  | Emphasis on long-term, | | | | Grant at least half of the value of annual LTI in the form of performance-based equity compensationawards | | | | | | | 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 | | | Substantial | | | | Maintain substantial stock ownership and retention requirements for executive officers and directors | | | Clawback | | | | Maintain a clawback policy | | | | | | | Hold an annual advisory “say-on-pay” vote | | | Only | | | | 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 February 2022,2023, other than pro-rata vesting for transitioning officers | |  | | | | | 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 excise tax gross-ups for executive officers after amendment of change in control agreement with former CEO and expiration of last agreement with tax gross-up provision without making any gross-up payments | | | No vesting of equity awards after retirement if competing with Company | | | | | No re-pricing or discounting of options or stock appreciation rights (“SARs”) | | | | | | | No performance metrics that would encourage excessive risk-taking | |
COTERRA• 2023 PROXY STATEMENT | 31Chief Executive Officer | | | Other Named Executive Officers | | | | | | | | |
ELEMENTS OF OUR COMPENSATION PROGRAM DESIGNED TO SUPPORT PAY AND PERFORMANCE ALIGNMENT
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 | | Purpose | | How We Determine AmountPurpose | | | | Determination
Considerations | | | | Base Salary | | | | Paid in cash throughout the year | | | | Compensate fairlycompetitively for position, experience, expertise and competencies.expertise | | | | Base salaries of executive officers, in theIn aggregate, are determined using the compensation peer group median for reference, taking into account the competitive environment, as well as the experience and accomplishmentsscope of each executive. | | | | 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 goals.contribution | | | | Annual cash incentive opportunitiesOpportunities are established as a percentage of base salary and are targeted to approximate average industry cash incentive percentage levels for comparable executive positions.positions as well as executive team alignment. Annual payout is determined by comparing actual performance during prior year to established performance metrics and goals. The Compensation Committee retains authority to exercise negative discretion in determining the total cash incentive pool. | | | | Long-Term Incentive Awards | | 60 percent- 100
| | 50 percent relative TSR performance shares payable in stock (and cash for achievement over target)
Granted in Q1 to align with business plan and performance period. Cliff vest three years from the grant date | | | | Promote alignment of executive decisions with shareholderstockholder interests through performance awards where value varies with Companybased on the Company’s stock performance relative to a peer group over a three-year performance period and the Company’s stock price at the end of that period. | | | | The value of performance-based equity awards is 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. | | | | | 0 percent-4050 percent time basedtime-based restricted share units payable in stock
Granted in Q1. Cliff vest three years from the grant date
| | | | Aligns interests of executives and shareholdersstockholders while promoting retention.retention | | | | 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. |
COTERRA• 2023 PROXY STATEMENT | 32 |
2023 PERFORMANCE-BASED COMPENSATION EXECUTIVE COMPENSATION
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.
2022 Committee Activity
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.
PEER GROUP
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):
Metric Selection Antero Resources Corporation | Annual Cash Incentive Bonus Program | EQT Corporation | | | Why the Metric is Important | | | | APA Corporation45% Economic Performance (PVI-10) | | | | Hess CorporationIncluding the economic performance of our annual drilling program reflects our commitment to stockholder value creation. By consistently monitoring and improving the PVI of our drilling program we ensure that our capital investments are optimized. | | | | Chesapeake Energy Corporation20% Annual Production Guidance | | | | Marathon Oil CorporationConsistently meeting or exceeding annual production guidance demonstrates credibility, operational excellence, and the quality of our assets. It provides confidence to investors that we can execute projects and effectively mitigate risk. | | | | Continental Resources, Inc.(1)20% Annual Budget Guidance | | | | Occidental Petroleum CorporationIncluding our capital budget reflects our commitment to financial discipline, operational efficiency, and responsible stewardship of stockholder capital. It reinforces our commitment to delivering on our promises. | | | | Devon Energy Corporation5% Green House Gas (“GHG”) Intensity
5% Methane Intensity
5% Flare Intensity | | | | Ovintiv Inc.Including reductions to GHG intensity, methane intensity, and flare intensity reflects our commitment to the responsible development of oil and natural gas. | |
| | Long-Term Incentive Program | | | | Why the Metric is Important | | | | Diamondback Energy, Inc.50% Relative TSR (3-year performance period) | | | | Pioneer Natural Resources CompanyRelative comparison of TSR versus peers over a three-year period provides alignment between executive pay and stockholder experience. | | | | EOG Resources, Inc.50% Time-Based RSUs (3-year cliff vesting) | | | | Increased weighting from 40 percent to 50 percent in 2023 to enhance and promote retention of executives. Providing full vesting on the third anniversary of grant provides greater alignment with long-term stockholders. | |
Our Incentive Program Payouts are Aligned with Performance Outcomes(1) | Continental Resources, Inc. was taken private in fourth quarter 2022 and was removed from both the Company’s Stock Performance Group and its compensation peer group. |
2022 COMPENSATION DECISIONS
Base Salary
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.
COTERRA•2023 PROXY STATEMENT | 33 |
| 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.
Annual Cash Incentive BonusThe 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.
2022 Bonus Opportunity
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 | |
2022 Performance Metrics and Goals
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:
COTERRAMetric Achievement• 2023 PROXY STATEMENT | 34 |
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% | | | | | | |
(1) | Achieve a good return on invested capital, rate of return (ROR) using “fully burdened” costs for drilling, completion, facilities, infrastructure, land and overhead costs (run at $55/oil and $2.75/gas). | (2) | Zero bonus contribution until Target goal is achieved. Target achievement delivers 100 percent bonus contribution. |
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.
Determination of 2022 Bonus Payout
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. 2024. 
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 $/foot was above our threshold allowable cost goal. The miss on cost performance was due to inflation. 0% 0%
COTERRA• 2023 PROXY STATEMENT | 35 |
| | | | | | Goals | | | | 2023 Results | | | | | | | | | | | | Metrics | | | | Weight | | | | Threshold
(50%) | | | | Target
(100%) | | | | Stretch
(200%) | | | | Financial/
Operational
Results | | | | Comments | | | | Funding | | | | Weighted
Funding | | | | Economic Performance (PVI-10)(1) | | | | | | | | The PVI-10 of our 2023 drilling program was 1.65, exceeding our target goal of 1.50 (fully burdened for drilling, completion, facilities, infrastructure, land, and overhead costs). This result was primarily driven by strong economic returns in the Permian Basin. | | | | 130% | | | | 59% | | | | Annual Production Guidance (MBOE/day) | | | | | | | | 2023 annual production exceeded the upper end of our stretch goal of 648 MBOE/Day. This result was due to operational efficiencies that allowed us to turn new wells to production faster and stronger well performance. | | | | 200% | | | | 40% | | | | Annual Budget Guidance (MM$) | | | | | | | | The 2023 annual budget was in line with our target goal of $2,100MM. Savings from cost deflation were offset by additional costs related to operational issues. | | | | 96% | | | | 19% | | | | Green House Gas Intensity (Metric Tons [MT] CO2e/MBOE) | | | | | | | | 2023 GHG intensity exceeded our stretch goal. This improvement was due to accelerating electric compressor installations. | | | | 200% | | | | 10% | | | | Methane Intensity (MT CH4/MT CH4) (%) | | | | | | | | 2023 methane intensity exceeded our stretch goal. This result was primarily due to instrument air installations. | | | | 200% | | | | 10% | | | | Flare Intensity (MMCF/MMCF) (%) | | | | | | | | 2023 flare intensity exceeded our stretch goal. We have continued to improve our flare management practices during curtailment events. | | | | 200% | | | | 10% | | | | TOTAL | | | | 100% | | | | TOTAL STI SCORE YTD | | | | | | | | 148% | |
(1)
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%
(1) | For 2022 annual cash incentive performance metric purposes, ROIC 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. ROIC is not calculated from Coterra’s financial statements and should be considered in addition to, and not as a substitute for, other financial measures prepared in accordance with GAAP. It is a present value index discounted at 10%, calculated by dividing the net present value of certain cash flows by the present value of capital investments plus a constant value. | (2) | Zero bonus contribution until target goal is achieved. Target achievement delivers 100 percent bonus contribution. | (3) | 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. |
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.
Relative TSR Performance Shares Our outstanding performance-based awards (awards granted in February 2022 and 2023) are based on actual achievement during 2022. In addition to these outcomes, the Compensation Committee considered Mr. Jorden’s annual review of the Company’s 2022 performance including strong progress in integrating the legacy businesses and management teams, offset by the lack of progress to offset inflationary pressures, as well as share priceRelative TSR performance and the overall macro-economic environment. Upon Mr. Jorden’s recommendation to the committee, the net impact of these and other considerations was to exercise negative discretion and reduce the overall STI payout from 143 percent of target as calculated from the results of the 2022 STI goals to 125 percent of target.2022 Bonus Considerations for Our CEO and Former Executive Chairman
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.
Long-Term Incentive Awards
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.
COTERRA• 2023 PROXY STATEMENT | 36 |
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% | | |
Negative TSR Performance Shares”Payout Cap at Target: If the Company’s TSR for the performance period is negative, then the “Performance Shares Earned,” as calculated in the above table, will not exceed 100 percent, regardless of the Company’s actual percentile ranking. Relative TSR Peers: Compensation peer companies plus two indices: the SPDR S&P Oil and Gas Exploration and Production ETF Index; and the “Grants of Plan-Based Awards” table below). The CEO’s 2022 long-term incentive opportunity was 100 percent performance shares because his 2021 LTI grants were delivered in the form of time-based awards as the combined company was merging annual LTI grant practices in 2021 and did not have an approved structure for the combined company in 2021.S&P 500 Industrials Index. 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 | |
TSR Performance Shares
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 2023 COMPENSATION DECISIONS The following summarizes the 2022 awards2023 compensation decisions and target compensation levels for each named executive officer, except Mr. Young, who commenced employment with the Company in July 2023 and in connection therewith (i) became eligible to participate in the Company’s annual cash incentive bonus program, with a target bonus equal to 100% of TSRhis base salary ($620,000), and (ii) received (a) a one-time restricted stock unit grant with a target grant value of $2,000,000, (b) a one-time performance shares, see the table “Grantsstock grant with a target grant value of Plan-Based Awards” below.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:
payment of $100,000. Payout Level | Thomas E. Jorden | Chief Executive Officer and President | Relative TSR Performance (Percentile Rank v. Peers) | | Performance Shares Earned | Maximum | | Greater than or equal to the 90th percentile | | 200% | Target | | 55th percentile | | 100% | Threshold | | Greater than or equal to the 30th percentile | | 50% | Less than Threshold | | Less than the 30th percentile | | 0% |
If
Mr. Jorden became our Chief Executive Officer and President in 2021 following the Company’s TSR for the Performance Period is negative, then the Performance Shares Earned,merger of Cimarex and Cabot and was appointed as calculated in the above table, shall not exceed 100 percentChairman of the Performance Shares, regardlessBoard effective January 1, 2023. The Compensation Committee made no changes to Mr. Jorden’s target compensation for 2023 based on competitive position to market and peer group. The Company renewed Mr. Jorden’s employment letter agreement effective October 2023, which included an increase in Mr. Jorden’s Base Salary and Target Bonus, effective January 1, 2024. Details of the Company’s actual percentile ranking interms of Mr. Jorden’s renewed employment letter agreement are provided at the Peer Group. For example: If (a) Company TSR for the Performance Period is -14 percent and (b) Company relative TSR performance is in the 75th percentile the Performance Shares Earned would be capped at 100 percent.Dividend Equivalents
At the same time that the Company delivers the Performance Shares Earned, the Company will pay to the NEO an amount in cash equal to the dividends that would have been paid on each shareend of Common Stock underlying the Performance Shares Earned had such share been outstanding from the date of grant until the date shares and cash, if applicable, are delivered to the NEO.
this section. | | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | | Base Salary | | | | | $ | 1,125 | | | | | | $ | 1,125 | | | | | 0% | | | | Target Bonus (% of Salary) | | | | 130% | | | | 130% | | | | 0% | | | | Target LTI Grant Value | | | | | $ | 10,000 | | | | | | $ | 10,000 | | | | | 0% | | | | Total Target Compensation | | | | | $ | 12,588 | | | | | | $ | 12,588 | | | | | 0% | |
Time-Based Restricted Stock Units
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
COTERRA• 2023 PROXY STATEMENT | 37 |
| | Stephen P. Bell | Executive Vice President—Business Development | |
Mr. Bell became our Executive Vice President—Business Development in 2021 following the merger of Cimarex and Cabot. 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.
In August 2023, the PlanCompany and RSUs issued to legacy Cimarex NEOs were made pursuant to the Prior Cimarex Plan to preserve shares available under the Prior Cabot Plan.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.
Merger-Related Compensation Decisions
Compensation Arrangements with Dan O. Dinges
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 | |
Mr. Dinges continuedSirgo became our Senior Vice President—Operations in October of 2022. As a result of the promotion to receive an annualhis current executive role, the Compensation Committee increased his base salary in 2023 by 5 percent and his LTI grant value by 35 percent. | | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | | Base Salary | | | | | $ | 435 | | | | | | $ | 456 | | | | | 5% | | | | Target Bonus (% of Salary) | | | | 100% | | | | 100% | | | | 0% | | | | Target LTI Grant Value | | | | | $ | 1,000 | | | | | | $ | 1,350 | | | | | 35% | | | | Total Target Compensation | | | | | $ | 1,870 | | | | | | $ | 2,262 | | | | | 21% | |
| | Kevin W. Smith | Vice President and Chief Technology Officer | |
Mr. Smith became our Vice President and Chief Technology Officer in 2021 following the merger of $1,100,000Cimarex and anCabot. The Compensation Committee increased his base salary in 2023 by 7.5 percent and increased his LTI grant value by 35 percent based on market competitiveness for his role. | | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | | Base Salary | | | | | $ | 400 | | | | | | $ | 430 | | | | | 7.5% | | | | Target Bonus (% of Salary) | | | | 100% | | | | 100% | | | | 0% | | | | Target LTI Grant Value | | | | | $ | 1,000 | | | | | | $ | 1,350 | | | | | 35% | | | | Total Target Compensation | | | | | $ | 1,800 | | | | | | $ | 2,210 | | | | | 23% | |
| | Scott C. Schroeder | Former Executive Vice President and Chief Financial Officer | |
Mr. Schroeder served as our Executive Vice President and Chief Financial Officer from the completion of the merger in 2021 until the appointment of his successor on July 6, 2023, at which time he transitioned to Special Advisor to the Chief Executive Officer. He retired effective September 30, 2023. The Compensation Committee increased his base salary in 2023 by 5 percent. No other changes were made to Mr. Schroeder’s target compensation for 2023. | | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | | Base Salary | | | | | $ | 667 | | | | | | $ | 700 | | | | | 5% | | | | Target Bonus (% of Salary) | | | | 110% | | | | 110% | | | | 0% | | | | Target LTI Grant Value | | | | | $ | 4,150 | | | | | | $ | 4,150 | | | | | 0% | | | | Total Target Compensation | | | | | $ | 5,551 | | | | | | $ | 5,620 | | | | | 1% | |
| | Christopher H. Clason | Former Senior Vice President and Chief Human Resource Officer | |
Mr. Clason served as our Senior Vice President and Chief Human Resource Officer from October 2021 following the merger of Cimarex and Cabot until the appointment of his successor on July 10, 2023, at which time he transitioned to Special Advisor to the Chief Executive Officer. Mr. Clason separated from the Company in September 2023. Additional details about the payments and benefits Mr. Clason received in connection with his separation are provided under “Change in Control and Severance Agreements and Other Termination Payments” below. The Compensation Committee increased his base salary in 2023 by 5 percent. No other changes were made to Mr. Clason’s target compensation for 2023. | | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | | Base Salary | | | | | $ | 483 | | | | | | $ | 507 | | | | | 5% | | | | Target Bonus (% of Salary) | | | | 100% | | | | 100% | | | | 0% | | | | Target LTI Grant Value | | | | | $ | 2,000 | | | | | | $ | 2,000 | | | | | 0% | | | | Total Target Compensation | | | | | $ | 2,966 | | | | | | $ | 3,014 | | | | | 2% | |
2023 Annual Cash Incentive Awards As noted in the table above under “Determination of Annual Cash Incentive Metric Achievement,” the Compensation Committee determined that the level of achievement for annual cash incentive award with a target opportunity of 130payouts was 148 percent of histarget. In addition to such outcome, the Compensation Committee considered Mr. Jorden’s recommendations to the Compensation Committee regarding each executive officer other than himself. After fulsome discussion with all independent directors in executive session, and notwithstanding the actual cash incentive metric achievement, the Compensation Committee approved the following annual base salary, justcash incentive awards for 2023: | | | | | | Target
(% of salary) | | | | Approved
(% of Target) | | | | Approved
($) | | | | Thomas E. Jorden | | | | | | 130% | | | | | | | 137% | | | | | | | 2,000,000 | | | | | Shannon E. Young III | | | | | | 100% | | | | | | | 126% | | | | | | | 780,000 | | | | | Stephen P. Bell | | | | | | 100% | | | | | | | 144% | | | | | | | 840,000 | | | | | Blake A. Sirgo | | | | | | 100% | | | | | | | 138% | | | | | | | 630,000 | | | | | Kevin W. Smith | | | | | | 100% | | | | | | | 145% | | | | | | | 625,000 | | |
Due to Mr. Schroeder’s retirement and Mr. Clason’s separation, in each case, on September 30, 2023, neither Mr. Schroeder nor Mr. Clason earned a 2023 cash incentive award. Renewed Employment Agreement with Mr. Jorden In September 2023, the Board of Directors presented Mr. Jorden with an extended employment letter agreement (as extended, the “Jorden Letter Agreement”) pursuant to which Mr. Jorden will remain as he received in his role as Chairman, President and Chief Executive Officer prior tothrough October of 2026. The Board believes that Mr. Jorden’s leadership through the closingmerger integration period has been exemplary and that, under his leadership, the performance of the Merger. His annual long-term incentive award opportunity, however, was reducedCompany has been strong with financial and operational results consistently exceeding expectations. Additionally, Mr. Jorden and the Board have spent considerable time reviewing and implementing succession plans for the roles from a grant date value of $9,000,000 in 2021 to a target grant date value of $4,500,000 in 2022, reflecting a reductionwhich several executive officers recently departed. The Board believes it is in the scopebest interest of his duties in his new role with Coterra. The letter agreement also providedstockholders to ensure that Mr. Dinges will also be provided employee benefitsJorden’s leadership remain uninterrupted both for operational continuity and perquisites no less favorableeffective executive succession. Pursuant to those provided to Coterra executive officers during the Dinges Employment Period. Effective on the closing date of the Merger, the Company’s bylaws were amended to provide that Mr. Dinges may not be removed from his position as Executive Chairman during the Dinges Employment Period without an affirmative vote of at least 75 percent of the other members of the Coterra board. The letter agreement provided that if Mr. Dinges was terminated prior to or on the Chairman Succession Date, he will be entitled to the termination benefits provided under his existing change-in-control agreement with the Company, and any outstanding Coterra equity awards will be treated in accordance with the retirement provisions of the equity award agreements. In addition to Mr. Dinges’s existing perpetual confidentiality covenant in his change-in-control agreement, he agreed to be subject to one-year post-termination non-competition and non-solicitation covenants pursuant to the Dinges Agreement. The Dinges 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. Mr. Dinges’s employment with the Company terminated on December 31, 2022 when his term as Executive Chair expired and Mr. Jorden was elected as Chairman of the Board and, as a result, Mr. Dinges was entitled to the termination benefits under his change-in-control agreement. See “Change-in-Control Agreements” below for a more complete discussion of Mr. Dinges’s post-termination benefits.Compensation Arrangements with Thomas E. Jorden
On May 23, 2021, Mr. Jorden entered into a letter agreement with Cabot (the “Jorden Letter Agreement”) with respect to the terms of his employment with the Company following the closing of the Merger. Under the terms of the Jorden Letter Agreement, Mr. Jorden is 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.
are discussed separately in “Potential Payments upon Termination or Change in Control” beginning on page 46 below. Subsequent to the Jorden Letter Agreement on June 29, 2021,with Mr. JordenBell
In August 2023, the Company and Mr. Bell entered into a sideletter agreement memorializing the terms of Mr. Bell’s annual long-term incentive awards for each of calendar years 2024 and 2025. In exchange for Mr. Bell’s waiver of the right to assert good reason under his legacy Cimarex severance compensation agreement, the letter agreement with CimarexMr. Bell provides that he will receive annual long-term incentive awards with a target grant date value equal to $4.5 million during each of calendar years 2024 and Cabot (the “Jorden Side Letter”). The Jorden Side Letter provided that, notwithstanding the preexisting terms applicable2025, subject to his Cimarex equitycontinued employment with the Company through the applicable grant date, except as discussed in “Potential Payments upon Termination or Change in Control” beginning on page 46 below. The awards or anythingare to the contrary containedbe granted in the Merger Agreement, Mr. Jorden’s outstanding Cimarex equityordinary course and on the same terms as the annual long-term incentive awards would not vestgranted to similarly situated executive officers at the effectiveapplicable grant date. The Company entered into the letter agreement with Mr. Bell because it values the continuity of Mr. Bell’s continued leadership, especially during a time of several other executive successions. Change in Control and Severance Agreements and Other Termination Payments The Compensation Committee generally views the Merger, which is referredpotential payments and benefits under change in control and severance agreements as a separate compensation element because such payments and benefits are not expected to as “single-trigger vesting.” Insteadbe paid in a particular year and serve a different purpose for the executive other than elements of single-trigger vesting, each such award was converted into a corresponding award withcompensation. Accordingly, those payments and benefits do not significantly affect decisions regarding other elements of compensation. The terms of the Company’s severance and compensation agreements are discussed separately in “Potential Payments upon Termination or Change in Control” beginning on page 46 below. COTERRA• 2023 PROXY STATEMENT | 38 |
respect to Coterra common stock, with the number of shares underlying each award adjusted based on the exchange ratio for the Merger, and if subject to performance-based vesting, determined with respect to the greater of the target level and the level determined or certified by the Cimarex board or the compensation committee based on the results achieved by Cimarex prior to the effective time of the Merger. The performance goals applicable to
Mr. Jorden’s Cimarex restricted stock awards subject to performance-based vesting were deemed satisfied at the effective time of the Merger at the same levels applicable to other performance-based Cimarex restricted stock awards. Each such award, once converted into a Coterra award, continued to be subject to the same service-based vesting terms as applied to the Cimarex award immediately prior to the effective time of the Merger.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.
HOW WE SET EXECUTIVE COMPENSATION Role of the MergerIndependent Compensation Consultant The Compensation Committee engages an independent executive compensation consultant to provide information and objective advice regarding executive and non-employee director compensation. For 2023, the Compensation Committee continued its engagement of F.W. Cook as its independent executive compensation consultant. The Compensation Committee reviewed F.W. Cook’s independence in accordance with the Jorden Side Letter, will vestsix factors established by the NYSE and found it to be independent and without conflicts of interest in full (with achievement of any applicable performance metrics determined based on actual performance as ofproviding services to the date of his termination of employment or the date of death or disability, as applicable). This vesting after both a change-in-control and a termination of employment is referred to as “double-trigger vesting.”Mr. Jorden remains subject to his existing perpetual confidentiality covenant and the one-year post-termination non-competition and non-solicitation covenants contained in his severance agreement.
Elements of Post-Termination Compensation
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.
Role of Executives in Establishing Compensation Our Chief Executive Officer proposes changes to evaluatecompensation for his direct reports, which the Compensation Committee considers when making decisions. The officer team proposes goals for incentive programs and integrateoffers performance data to aid the designsCompensation Committee in administering incentive compensation programs. The Compensation Committee has the ultimate say on all components of executive officer compensation. Our Chief Executive Officer does not recommend or participate in deliberations related to his own compensation. Role of Market Data F.W. Cook annually prepares a review of our executive officers’ compensation compared to similarly situated executive officers at peer companies, which is approved by the Compensation Committee. The number of publicly traded exploration and production companies has contracted because of M&A activity. As a result, the peer group includes twelve publicly traded exploration and production companies, with our market capitalization positioned at the 48th percentile at the time of approval. The peer group used by the Compensation Committee in evaluating the competitiveness of executive compensation and making 2023 compensation decisions consisted of the compensation programs enacted byfollowing companies. The peer group remained unchanged compared to 2022, other than the legacy Cabot and legacy Cimarex compensation committees, includingremoval of Continental Resources, which was taken private in the elementsfourth quarter of post-termination compensation offered by each. That evaluation and integration continued into 2022. Until we complete the full integration of those programs, our NEOs may continue to participate in some of their respective legacy company’s programs. The programs of both Cabot and Cimarex that were assumed or continued by | | 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 | |
RETIREMENT COMPENSATION AND OTHER BENEFITS Coterra after the effective time of the Merger are described below.Retirement Compensation��
Coterra Savings Investment Plan
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
The Coterra Energy Inc. Savings InvestmentDeferred Compensation Plan, andformerly known as the Cimarex 401(k) Plan was discontinued. Funds previously held in the Cimarex 401(k) Plan were moved into the Coterra Energy Inc. Savings Investment Plan.Cimarex 401(k) 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.
Cabot Deferred Compensation Plan,The nonqualified deferred compensation plan provides supplemental retirement income benefits for our NEOs,named executive officers, other officers and other key employees, through voluntary deferrals of salary bonus and certain long-term incentives.bonus. It also allows for the Company to provide itsthe full 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
COTERRA• 2023 PROXY STATEMENT | 39 |
Company in various mutual funds and other investment options selected by the officer at the time of deferral. For additional information about the deferred compensation plan, including the investment options and the manner of distributions, see “Nonqualified Deferred Compensation” tableon page 44 below. Cimarex Supplemental Savings Plan
Eligible legacy Cimarex 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.
Retiree Medical Coverage
The legacy Cabot NEOs are eligible for certain health benefits for retired employees, including their spouses, eligible dependents and surviving spouses. The health care plans are contributory with participants’ contributions adjusted annually. Employees become eligible for this benefit if they meet certain age and service requirements at retirement. All of the legacy Cabot NEOs were retirement eligible on December 31, 2022.
Personal Benefits and PerquisitesThe 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. Other Compensation PoliciesWe 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. Change-in-Controlplans and Severance Agreements
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.
qualifying retirement. 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.
COTERRA• 2023 PROXY STATEMENT | 40 |
Legacy Cabot Change-in-Control Agreements
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.
COTERRA• 2023 PROXY STATEMENT | 41 |
Legacy Cimarex Severance Compensation Agreements
Each of the legacy Cimarex NEOs, including Mr. Jorden, is party to a severance compensation agreement which provides for certain severance benefits upon a termination of employment by Coterra other than for “cause” or a termination by the executive officer for “good reason”, including severance benefits if the qualifying termination occurs within two 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”):
• | a pro-rated annual bonus for the number of days in the calendar year of termination through the date of termination, based on the average of the executive officer’s last two annual bonuses and paid in a lump sum at the same time that bonuses are paid to active employees; | • | an amount equal to the product of two times (three times for Mr. Jorden) the executive officer’s “annual average compensation” (meaning the sum of (1) the executive officer’s annual base salary received during the 24 months prior to his date of termination, disregarding any temporary reduction implemented by Cimarex in 2020, and (2) the amount of cash incentive awards received by the executive officer during the 24 months prior to the executive officer’s date of termination, divided by two); and | • | continued medical, dental, vision, disability and life insurance benefits for the executive officer and the executive officer’s dependents for 24 months (36 months for Mr. Jorden) following the date of termination as though the executive officer’s employment had not been terminated. |
In connection with the Merger, on May 23, 2021, Cimarex entered into amendments to the severance compensation agreements with each executive officer other than Mr. Jorden, to revise the definition of “good reason” under such agreements. The revised definition includes a material diminution of the executive officer’s duties or responsibilities, authorities, powers or functions; a material reduction in the executive officer’s long-term incentive compensation opportunity; or a required relocation of more than 50 miles from the executive officer’s principal place of business location (other than a relocation to the Midland, Texas or Tulsa, Oklahoma metropolitan areas in connection with a move of Cimarex’s corporate headquarters to such area).
The severance compensation agreements contain a Section 280G “best-net” cutback provision, which provides that, if the total payments to the executive officer under his severance compensation agreement would exceed the applicable threshold under Section 280G of the Code, then those payments will be reduced to the applicable threshold to avoid the imposition of the excise taxes under Section 4999 of the Code in the event such reduction would result in a better after-tax result for the executive officer. 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.
COTERRA• 2023 PROXY STATEMENT | 42 |
COMPENSATION GOVERNANCE Role of the Compensation Consultant
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.
Role of Executives in Establishing Compensation
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.
Meaningful Stock Ownership GuidelinesThe 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 | |
Non-employee directors are expected to hold stock having a market value or cost basis, whichever is greater, of at least five times the current annual cash retainer paid to nonmanagement directors. The Chief Executive Officer is expected to hold shares of the Company’s Common Stock with a market value or cost basis, whichever is greater, equal to a minimum of six times his or her annual base salary. All other executive officers who report to the CEO are expected to hold shares of the Company’s Common Stock with a market value or cost basis, whichever is greater, equal to a minimum of three times their annual base salary.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.
COTERRA• 2023 PROXY STATEMENT | 43 |
Clawback Policy 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.
Anti-Hedging PolicyWe have a policy prohibiting directors and officers from speculative trading in Company securities, including hedging transactions, short selling, and trading in put options, call options, swaps or collars. To our knowledge, all directors and executive officers are in compliance with the policy. The Company’s policy also requires that all employees provide notice and obtain pre-approval before engaging in hedging activities in our stock and any such request for approval will only be considered with a valid justification. Executive Compensation Business Risk ReviewThe ownership stake in the Company provided by our equity-based compensation, the extended vesting periods of these awards and our stock ownership guidelines are designed to align the interests of our NEOsnamed executive officers with our shareholders,stockholders, maximize performance and promote executive retention. Management reviews all incentive and equity programs. At the same time, the Compensation Committee believes, with the concurrence of our independent consultant, that our executive compensation program does not encourage management to take unreasonable risks related to the Company’s business. The factors that support this conclusion are our focus on long-term incentive compensation, our use of balanced long-term incentives, metric diversification, and capped opportunities in our annual bonus plan and long-term incentives, and our stock ownership guidelines.
Tax Deductibility of Executive Compensation Section 162(m) of the Internal Revenue Code 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. COTERRAits stockholders.• 2023 PROXY STATEMENT | 44 |
Compensation Committee Interlocks and Insider Participation
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.
COMPENSATION COMMITTEE 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. 2023.The Compensation Committee Paul N. Eckley (Chair)
Amanda M. Brock
Hans Helmerich
Marcus A. Watts February 20, 2023 COTERRA2024• 2023 PROXY STATEMENT | 45 |
Compensation Committee Interlocks and Insider Participation During the year ended December 31, 2023, the Compensation Committee was composed of the four independent directors listed above, none of whom is an employee or a current or former officer of the Company. Except as disclosed in “Governance—Board and Committee Governance—Director Independence” and “—Related Person Transactions” above, no member of the Compensation Committee has had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K under the Exchange Act. In addition, none of our executive officers served on the board of directors or compensation committee of any entity that had one or more of its executive officers serving on the Board or our Compensation Committee.
COMPENSATION TABLES SUMMARY COMPENSATION TABLEThe 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. 2023.| | Name and
Principal Position | | | | Year | | | | Salary
($) | | | | Bonus
($) | | | | Stock
Awards
($)(1) | | | | Option
Awards
($) | | | | Non-Equity
Incentive Plan
Compensation
($)(2) | | | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($) | | | | All Other
Compensation
($)(3) | | | | Total
($) | | | | Thomas E. Jorden
Chief Executive Officer
and President | | | | | | 2023 | | | | | | | 1,125,000 | | | | | | | — | | | | | | | 11,071,724 | | | | | | | — | | | | | | $ | 2,000,000 | | | | | | | — | | | | | | | 351,129 | | | | | | $ | 14,547,853 | | | | | | | 2022 | | | | | | | 1,103,366 | | | | | | | — | | | | | | | 12,554,661 | | | | | | | — | | | | | | | 1,462,500 | | | | | | | — | | | | | | | 182,870 | | | | | | | 15,303,397 | | | | | | | 2021 | | | | | | | 301,673 | | | | | | | — | | | | | | | 10,000,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 760,266 | | | | | | | 11,061,939 | | | | | Shannon E. Young III(4)
Executive Vice
President and Chief
Financial Officer | | | | | | 2023 | | | | | | | 290,923 | | | | | | | 100,000 | | | | | | | 4,579,816 | | | | | | | — | | | | | | | 780,000 | | | | | | | — | | | | | | | 60,215 | | | | | | | 5,810,953 | | | | | Stephen P. Bell
Executive Vice
President—Business
Development | | | | | | 2023 | | | | | | | 577,692 | | | | | | | — | | | | | | | 3,321,502 | | | | | | | — | | | | | | | 840,000 | | | | | | | — | | | | | | | 200,636 | | | | | | | 4,939,830 | | | | | | | 2022 | | | | | | | 543,346 | | | | | | | — | | | | | | | 3,459,843 | | | | | | | — | | | | | | | 690,000 | | | | | | | — | | | | | | | 80,250 | | | | | | | 4,773,439 | | | | | | | 2021 | | | | | | | 149,154 | | | | | | | — | | | | | | | 3,000,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 3,149,154 | | | | | Blake A. Sirgo(5)
Senior Vice President—
Operations | | | | | | 2023 | | | | | | | 452,769 | | | | | | | — | | | | | | | 1,494,694 | | | | | | | — | | | | | | | 630,000 | | | | | | | — | | | | | | | 160,124 | | | | | | | 2,737,587 | | | | | Kevin W. Smith(5)
Vice President—Chief
Technology Officer | | | | | | 2023 | | | | | | | 425,385 | | | | | | | — | | | | | | | 1,494,694 | | | | | | | — | | | | | | | 625,000 | | | | | | | — | | | | | | | 165,830 | | | | | | | 2,710,909 | | | | | Scott C. Schroeder
Former Executive Vice
President and Chief
Financial Officer | | | | | | 2023 | | | | | | | 533,385 | | | | | | | — | | | | | | | 4,594,752 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 273,927 | | | | | | | 5,402,064 | | | | | | | 2022 | | | | | | | 661,154 | | | | | | | — | | | | | | | 4,786,121 | | | | | | | — | | | | | | | 920,000 | | | | | | | — | | | | | | | 244,041 | | | | | | | 6,611,316 | | | | | | | 2021 | | | | | | | 629,009 | | | | | | | — | | | | | | | 4,910,751 | | | | | | | — | | | | | | | 1,210,825 | | | | | | | — | | | | | | | 5,433,674 | | | | | | | 12,184,259 | | | | | Christopher H. Clason(5)
Former Senior Vice
President and Chief
Human Resources Officer | | | | | | 2023 | | | | | | | 386,308 | | | | | | | — | | | | | | | 6,173,615 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 169,830 | | | | | | | 6,729,752 | | | | | | | 2022 | | | | | | | 470,173 | | | | | | | — | | | | | | | 2,306,569 | | | | | | | — | | | | | | | 600,000 | | | | | | | — | | | | | | | 82,005 | | | | | | | 3,458,747 | | |
(1)
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 |
(1) | 2022 salaries for legacy Cimarex NEOs are reduced by one week of pay due to a change in pay cycle midway through the calendar year. 2021 base salary data for legacy Cimarex NEOs includes base earnings from October 1, 2021 to December 31, 2021. | (2) | Annual performance-based cash bonuses paid for 2020, 2021 and 2022 are listed under the column “Non-Equity Incentive Plan Compensation.” | (3) | 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, with respect to restricted stock units, TSR and hybrid performance share awards for the relevant fiscal year in accordance with the FASB ASC Topic 718. The grant date fair value of the restricted stock units, and hybrid performance share awards was the closing stock trading price on the date of grant. The grant date fair values per share used to compute the amounts in this column are as follows: |
| | 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.
In addition, for Mr. Clason in 2023, this amount includes $3,959,280 in incremental fair value, calculated in accordance with SEC disclosure guidance, related to the August 2023 modification of certain of Mr. Clason’s outstanding equity awards in connection with Mr. Clason’s separation, which remain outstanding, subject to his compliance with certain restrictive covenants. Such amounts do not reflect new equity grants. (2)
The amounts in this column reflect cash incentive awards to the named executive officers. The 2023 cash incentive awards are discussed in detail above under “Compensation Discussion and Analysis.” Due to Mr. Schroeder’s retirement and Mr. Clason’s separation, in each case, on September 30, 2023, neither Mr. Schroeder nor Mr. Clason earned a 2023 cash incentive award. The amounts of Mr. Jorden’s and Mr. Bell’s 2021 annual bonus of $2,500,000 and $1,012,000, respectively, are not reflected in the table above given that they were determined by the legacy Cimarex compensation committee prior to the Merger. (3)
For all named executive officers, the amounts also include some or all of the following: •
Company contributions to retirement savings and deferred compensation plans; •
Premiums paid on executive term disability and life insurance; •
Company matching gifts to qualified non-profit charitable and educational organizations and other charitable contributions; •
Executive physical examination for the named executive officers; and •
Financial tax, and estate planning expenses. Amounts in this column do not include dividends paid on unvested restricted stock awards granted under the legacy Cimarex stock award agreement. The amount of dividends paid on unvested restricted stock awards in 2023 are: Mr. Jorden $1,560,870; Mr. Bell $231,735; Mr. Sirgo $57,185; Mr. Smith $57,185; and Mr. Clason $138,822. Additionally, amounts in this column do not include Mr. Clason’s cash severance payments or benefits as Mr. Clason was required to execute and not revoke a release of claims to receive such payments and benefits and, as a result, Mr. Clason did not become entitled to receive such payments and benefits until 2024. The incremental fair value of the modifications made to Mr. Clason’s equity awards in connection with his separation are reported in the “Stock Awards” column in accordance with SEC guidance. (4)
Mr. Young was appointed Executive Vice President and Chief Financial Officer in July 2023 and in connection therewith received a one-time cash payment of $100,000. (5)
Messrs. Sirgo and Smith became named executive officers for the first time in 2023 and Mr. Clason became a named executive officer for the first time in 2022. In accordance with SEC guidance, compensation prior to the applicable year in which they became named executive officers is not included in the table.
GRANTS OF PLAN-BASED AWARDS The table below reports all grants of plan-based awards made to our named executive officers during 2023. All grants prior to May 4, 2023 were made under the Prior Cabot Plan. All grants after May 4, 2023 were made under the 2023 Plan. | | | | | | | | | | Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards(1) | | | | Estimated Future Payouts Under
Equity Incentive Plan Awards(2) | | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(3) | | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) | | | | Exercise
or Base
Price Of
Option
Awards
($/Sh) | | | | Grant Date
Fair Value
of Stock
and Option
Awards
($)(4) | | | | Name | | | | Grant Date | | | | Threshold
($) | | | | Target
($) | | | | Maximum
($) | | | | Threshold
(#) | | | | Target
(#) | | | | Maximum
(#) | | | | | Thomas E. Jorden | | | | 02/21/2023 | | | | | | 0 | | | | | | | 1,462,500 | | | | | | | 2,925,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 217,391 | | | | | | | 434,782 | | | | | | | | | | | | | | | | | | | | | | 6,071,731 | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 217,391 | | | | | | | | | | | | | | | 4,999,993 | | | | | Shannon E. Young III | | | | 07/06/2023 | | | | | | 0 | | | | | | | 620,000 | | | | | | | 1,240,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 07/06/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 81,030 | | | | | | | 162,060 | | | | | | | | | | | | | | | | | | | | | | 2,568,651 | | | | | 07/06/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 81,030 | | | | | | | | | | | | | | | 2,011,165 | | | | | Stephen P. Bell | | | | 02/21/2023 | | | | | | 0 | | | | | | | 582,000 | | | | | | | 1,164,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 65,217 | | | | | | | 130,434 | | | | | | | | | | | | | | | | | | | | | | 1,821,511 | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 65,217 | | | | | | | | | | | | | | | 1,499,991 | | | | | Blake A. Sirgo | | | | 02/21/2023 | | | | | | | | | | | | | 456,000 | | | | | | | 912,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/21/2023 | | | | | | 0 | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 29,348 | | | | | | | 58,696 | | | | | | | | | | | | | | | | | | | | | | 819,690 | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 29,348 | | | | | | | | | | | | | | | 675,004 | | | | | Kevin W. Smith | | | | 02/21/2023 | | | | | | 0 | | | | | | | 430,000 | | | | | | | 860,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 29,348 | | | | | | | 58,696 | | | | | | | | | | | | | | | | | | | | | | 819,690 | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 29,348 | | | | | | | | | | | | | | | 675,004 | | | | | Scott C. Schroeder | | | | 02/21/2023 | | | | | | 0 | | | | | | | 770,000 | | | | | | | 1,540,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 90,217 | | | | | | | 180,434 | | | | | | | | | | | | | | | | | | | | | | 2,519,761 | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 90,217 | | | | | | | | | | | | | | | 2,074,991 | | | | | Christopher H. Clason | | | | 02/21/2023 | | | | | | 0 | | | | | | | 507,000 | | | | | | | 1,014,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | 43,478 | | | | | | | 86,956 | | | | | | | | | | | | | | | | | | | | | | 1,214,341 | | | | | 02/21/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 43,478 | | | | | | | | | | | | | | | 999,994 | | | | | 08/03/2023(5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,959,280 | | |
(1)
Amounts shown represent the target and maximum annual cash incentive bonus possible payouts on the date indicated. The maximum amount is 200 percent of the target amount. (2)
Amounts shown represent the target and maximum number of performance shares granted on the date indicated payable, if at all, on the basis of our TSR relative to our industry peer group over a three-year performance period. The maximum amount is 200 percent of the target amount and amounts earned in excess of 100 percent are to be paid in cash, rather than shares, based on the closing trading prices of a share of common stock on the last day of the performance period. (3)
Amounts shown represent time-based restricted stock units that vest January 31, 2026. (4)
Amounts shown reflect the aggregate grant date fair value of the TSR performance shares and time-based restricted stock units, as applicable, granted on the date indicated, as computed in accordance with ASC Topic 718. The TSR performance share awards were valued using a Monte Carlo model and the grant date fair value per share used for financial reporting purposes was $27.93 for shares granted on February 21, 2023 and $31.70 for shares granted on July 6, 2023. The grant date fair value per share of the time-based restricted stock units is based on the closing price of our common stock on the date of grant, or $23.00 for awards granted on February 21, 2023 and $24.82 for shares granted on July 6, 2023 (Mr. Young). Additional assumptions used in the Monte Carlo model for TSR performance shares and other assumptions used in the calculation of these amounts are included in Note 13 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the years shown. The Monte Carlo model values for the TSR performance share awards are used solely for financial reporting purposes and are not used by the Compensation Committee when determining grants. The Compensation Committee used the closing stock price on the date of grant to set the target TSR performance share awards for 2021 and 2022. Amountsyear ended December 31, 2023. (5)
This amount shown in this column forrow reflects the legacy Cimarex NEOsincremental fair value related to the modification of certain of Mr. Clason’s outstanding equity awards in connection with Mr. Clason’s separation, and does not reflect the grant date fair of the restricted stock awarded them in December 2021, which was $20.46, the closing price of the Common Stock on December 13, 2021, the date ofa new equity grant. COTERRA• 2023 PROXY STATEMENT | 46 |
(4) | The amounts in this column reflect cash incentive awards to the NEOs, which is discussed in detail above under “Annual Cash Incentive Bonus.” The amount of Mr. Jorden’s and Mr. Bell’s 2021 annual bonus award is not reflected in the table above given that it was determined by the legacy Cimarex compensation committee prior to the Merger. See Footnotes 6 and 7 to this Summary Compensation Table for additional information. | (5) | For 2022, amounts in this column for Mr. Dinges includes severance payments as outlined in his employment agreement and change in control agreement, as amended, which includes cash severance in the amount of $11,030,000, vesting of restricted shares units in the amount of $1,895,674, vesting of performance shares at target in the amount of $2,843,511, cost for continued benefits coverage in the amount of $48,374, outplacement services in the amount of $165,000, unused vacation in the amount of $103,655, interest in the amount of $260,213, and the 10 percent discretionary Company retirement contribution on base salary and bonus in respect of 2022 consistent with the Company’s practice of making such contributions with respect to legacy Cabot executive officers to terminate their change in control agreements in the amount of $960,000. These amounts became payable upon the termination of Mr. Dinges’s employment on December 31, 2022. See “Potential Payments Upon Termination or Change in Control—Change-in-Control Agreements” below for more information. | | For all NEOs, the amounts also include some or all of the following: |
| • | Premiums paid on executive term disability and life insurance; | | • | Club dues; | | • | Executive physical examination for the NEOs and their spouses; and | | • | Financial tax, and estate planning expenses. |
| For 2022, amounts in this column for Mr. Jorden include reimbursement for relocation from Cimarex’s headquarters in Denver, Colorado to Coterra headquarters in Houston, Texas in the amount of $27,899; and for Mr. Schroeder include club dues in the amount of $25,712. Amounts in this column do not include dividends accrued on unvested restricted stock awards granted under the legacy Cimarex stock award agreement. The amount of dividends paid in 2022 are: Mr. Jorden $5,348,244; Mr. Bell $493,179; and Mr. Clason $328,787. | (6) | Mr. Jorden was appointed Coterra’s CEO on October 1, 2021, at the effective time of the Merger, and thus his compensation information for 2021 reflects only the period from October 1, 2021, through December 31, 2021. The legacy Cimarex compensation committee set Mr. Jorden’s annual bonus award range in February 2021 with a target bonus equal to $1,318,750 and a maximum bonus potential equal to $2,637,500. In connection with the Merger, the legacy Cimarex compensation committee determined the level at which the bonus plan performance criteria were met on the latest practicable date before the closing of the Merger and approved a payout to Mr. Jorden in the amount of $2,500,000, which was paid by Coterra in March 2022. The amount of Mr. Jorden’s annual bonus award for 2021 is not reflected in the table above given that it was determined by the legacy Cimarex compensation committee prior to the Merger. | (7) | Mr. Bell was appointed Coterra’s Executive Vice President, Business Development on October 1, 2021, at the effective time of the Merger, and thus his compensation information for 2021 reflects only the period from October 1, 2021 through December 31, 2021. The legacy Cimarex compensation committee set Mr. Bell’s annual bonus award range in February 2021 with a target bonus equal to $554,000 and a maximum bonus potential equal to $1,108,000. In connection with the Merger, the legacy Cimarex compensation committee determined the level at which the bonus plan performance criteria were met on the latest practicable date before the closing of the Merger and approved a payout to Mr. Bell in the amount of $1,012,000, which was paid by Coterra in March 2022. The amount of Mr. Bell’s annual bonus award for 2021 is not reflected in the table above given that it was determined by the legacy Cimarex compensation committee prior to the Merger. |
COTERRA• 2023 PROXY STATEMENT | 47 |
GRANTS OF PLAN-BASED AWARDS
The table below reports all grants of plan-based awards made to our NEOs during 2022. All grants of awards to the legacy Cabot NEOs were made under the Prior Cabot Plan and all grants of awards to the legacy Cimarex NEOs were made under the Prior Cimarex Plan, which was assumed by the Company at the effective time of the Merger.
| | | | | Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under
Equity Incentive Plan Awards(2) | | All Other
Stock
Awards:
Number of | | All Other
Option
Awards:
Number of | | Exercise
or Base | | Grant Date
Fair Value | | Name | | Grant Date | | Threshold
($) | | 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 |
(1) | Amounts shown represent the target and maximum annual cash incentive bonus possible payouts on the date indicated. The maximum amount is 200 percent of the target amount. | (2) | Amounts shown represent the target and maximum number of performance shares granted on the date indicated payable, if at all, on the basis of our TSR relative to our industry peer group over a three-year performance period. The maximum amount is 200 percent of the target amount and amounts earned in excess of 100 percent are to be paid in cash, rather than shares, based on the closing trading prices of a share of Common Stock on the last day of the performance period. | (3) | Amounts shown represent time-based RSUs that vest January 31, 2025. | (4) | Amounts shown reflect the aggregate grant date fair value of the TSR performance shares and time-based RSUs, as applicable, granted on the date indicated, as computed in accordance with ASC Topic 718. The TSR performance share awards were valued using a Monte Carlo model and the grant date fair value per share used for financial reporting purposes was $29.29. The grant date fair value per share of the time-based RSUs is based on the closing price of our Common Stock on the date of grant. Additional assumptions used in the Monte Carlo model for TSR performance shares and other assumptions used in the calculation of these amounts are included in Note 13 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. |
COTERRA• 2023 PROXY STATEMENT | 48 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-ENDThe table below reports for each NEOnamed executive officer outstanding equity awards at December 31, 2022,2023, including, as applicable, their legacy Cimarex awards that were granted by Cimarex prior to the Merger and were assumed by Coterra and converted into Coterra awards on the effective time of the Merger. | | | | | | Stock Awards | | | | Name | | | | Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)(1) | | | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(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
($)(2) | | | | Thomas E. Jorden | | | | | | 706,150 | | | | | | | 18,020,948 | | | | | | | 1,292,048 | | | | | | | 32,973,065 | | | | | Shannon E. Young III | | | | | | 81,030 | | | | | | | 2,067,866 | | | | | | | 162,060 | | | | | | | 4,135,771 | | | | | Stephen P. Bell | | | | | | 263,281 | | | | | | | 6,718,931 | | | | | | | 284,742 | | | | | | | 7,266,616 | | | | | Blake A. Sirgo | | | | | | 95,369 | | | | | | | 2,433,817 | | | | | | | 110,132 | | | | | | | 2,810,569 | | | | | Kevin W. Smith | | | | | | 95,369 | | | | | | | 2,433,817 | | | | | | | 110,132 | | | | | | | 2,810,569 | | | | | Scott C. Schroeder | | | | | | 161,370 | | | | | | | 4,118,162 | | | | | | | 253,302 | | | | | | | 6,464,267 | | | | | Christopher H. Clason | | | | | | 84,134 | | | | | | | 2,147,100 | | | | | | | 163,742 | | | | | | | 4,178,696 | | |
(1)
| | | Option Awards | | Stock Awards | | Name | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | | Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) | | Option
Exercise
Price
($) | | 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 amounts in this column reflect shares of restricted stock units as follows: (1) | Market value is based on the closing price of Coterra’s Common Stock on December 31, 2022, of $24.57 per share. | (2) | The amounts in this column reflect performance share awards discussed in detail under “Compensation Discussion and Analysis—Long-Term Incentive Awards—TSR Performance Shares” and the “Grants of Plan-Based Awards” table, which vest after the end of the applicable performance period and based on the determination of the company’s achievement of the performance criteria by the compensation committee. The aggregate fair value of such TSR performance share awards was computed in accordance with ASC Topic 718 using a Monte Carlo model and the fair value per share used for financial reporting purposes was $23.93. Additional assumptions used in the Monte Carlo model for TSR performance shares and other assumptions used in the calculation of these amounts are included in Note 13 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. | (3) | The amount in this column reflects 845,318 restricted stock units that vest December 1, 2023 and 488,759 that vest December 1, 2024. | (4) | The amount in this column reflects 71,153 restricted stock units that vest January 31, 2025. | (5) | The amount in this column reflects 77,154 restricted stock units that vested following the termination of Mr. Dinges’s employment on December 31, 2022 and were distributed on January 17, 2023. | (6) | The amount in this column reflects 146,628 restricted stock units that vest as of December 1, 2024 and 51,436 restricted stock units that vest January 31, 2025. | (7) | The amount in this column reflects 97,752 restricted stock units that vest as of December 1, 2024 and 34,291 restricted stock units that vest January 31, 2025. |
•
as to which restrictions lapse December 1, 2024: Mr. Jorden 488,759; Mr. Bell 146,628; Mr. Sirgo 48,876; Mr. Smith 48,876; and Mr. Clason 38,030; •
as to which restrictions lapse on January 31, 2025: Mr. Bell 51,436; Mr. Sirgo 17,145; Mr. Smith 17,145; Mr. Schroeder 71,153; and Mr. Clason 15,669; and •
as to which restrictions lapse on January 31, 2026: Mr. Jorden 217,391; Mr. Young 81,030; Mr. Bell 65,217; Mr. Sirgo 29,348; Mr. Smith 29,348; Mr. Schroeder 90,217; and Mr. Clason 30,435. (2)
Market value is based on the closing price of our common stock on December 29, 2023 of $25.52 per share. (3)
The amounts in this column reflect performance share and performance stock unit awards, as applicable, assuming the maximum level of performance (200 percent of the target amount) is achieved, as follows: •
as to which the performance period ends January 31, 2025: Mr. Jorden 857,266; Mr. Bell 154,308; Mr. Sirgo 51,436; Mr. Smith 51,436; Mr. Schroeder 213,460; and Mr. Clason 102,872; and •
as to which the performance period ends January 31, 2026: Mr. Jorden 434,782; Mr. Young 162,060; Mr. Bell 130,434; Mr. Sirgo 58,696; Mr. Smith 58,696; Mr. Schroeder 39,842; and Mr. Clason 60,870. For awards granted in 2023, see “Compensation Discussion and Analysis—2023 Performance-Based Compensation” and the “Grants of Plan-Based Awards” table above for more information. The actual amount of these awards that will vest after the end of the applicable performance period will be based on the determination of the Company’s achievement of the performance criteria by the Compensation Committee.
OPTION EXERCISES AND STOCK VESTED The table below reports stock options that were exercised and performance shares that vested during 2022,2023, including any legacy Cimarex awards that were granted by Cimarex prior to the Merger and were assumed by Coterra and converted into Coterra awards on the effective time of the Merger. | | | Option Awards | | Stock Awards | | Name | | Number of Shares
Acquired on Exercise
(#) | | Value Realized on
Exercise
($) | | 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 | | – | | – | | – | | – |
(1) | Represents the number of shares and value realized upon the vesting of a restricted stock award that was previously granted by Cimarex and converted on the closing of the Merger on October 1, 2021 to a Coterra award with the same vesting period. | | | | Stock Awards | | (2) | These values were determined by multiplying the numberName | | | | Number of shares that vested by Coterra’s closing priceShares
Acquired on December 1, 2022 of $27.43 and do not indicate that there was a sale of these shares by the NEO.Vesting
(#) | | | | Value Realized on
Vesting
($) | | | | 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) | | |
COTERRA• 2023 PROXY STATEMENT | 49 |
Represents the number of shares and value realized upon the vesting of a restricted stock award that was previously granted by Cimarex and converted on the closing of the Merger on October 1, 2021 to a Coterra award with the same vesting period. (2)
These values were determined by multiplying the number of shares that vested by our common stock closing price on December 1, 2023 of $26.14 and do not indicate that there was a sale of these shares by the named executive officer. (3)
Represents the number of shares and value realized upon the vesting of certain restricted stock awards in connection with Mr. Clason’s termination of employment on September 30, 2023. See “Compensation Discussion and Analysis—Change in Control and Severance Agreements and Other Termination Payments” on page 35 above and “Potential Payments upon Termination or Change in Control” beginning on page 46 below for more information. (4)
These values were determined by multiplying the number of shares that vested by our common stock closing price on September 29, 2023 (the last trading day prior to Mr. Clason’s separation) of $27.05 and do not indicate that there was a sale of these shares by the named executive officer.
NONQUALIFIED DEFERRED COMPENSATIONThe table below reports NEOexecutive contributions, Company contributions, earnings, withdrawals/distributions and aggregate balances in the Company’s deferredCoterra Energy Inc. Deferred Compensation Plan for 2023.| | Name | | | | Executive
Contributions
in Last FY
($)(1) | | | | Registrant
Contributions
in Last FY
($)(2) | | | | Aggregate
Earnings
in Last FY
($)(3) | | | | Aggregate
Withdrawals/
Distributions
($) | | | | Aggregate
Balance
at Last FYE
($)(4) | | | | Thomas E. Jorden | | | | | | 112,500 | | | | | | | 229,200 | | | | | | | 64,433 | | | | | | | — | | | | | | | 546,249 | | | | | Shannon E. Young III | | | | | | — | | | | | | | 6,092 | | | | | | | 93 | | | | | | | — | | | | | | | 6,185 | | | | | Stephen P. Bell | | | | | | — | | | | | | | 109,704 | | | | | | | 7,002 | | | | | | | — | | | | | | | 116,706 | | | | | Blake A. Sirgo | | | | | | — | | | | | | | 75,740 | | | | | | | 16,448 | | | | | | | — | | | | | | | 119,607 | | | | | Kevin W. Smith | | | | | | — | | | | | | | 73,839 | | | | | | | 10,400 | | | | | | | — | | | | | | | 84,239 | | | | | Scott C. Schroeder | | | | | | — | | | | | | | 127,881 | | | | | | | 605,268 | | | | | | | (87,424) | | | | | | | 14,904,570 | | | | | Christopher H. Clason | | | | | | — | | | | | | | 86,709 | | | | | | | (1,288) | | | | | | | (85,420) | | | | | | | 0 | | |
(1)
Amounts reported in this column are included in the Summary Compensation Table as salary and non-equity incentive plan compensation, plansas applicable. (2)
Amounts reported in this column are included in the Summary Compensation Table as all other compensation. (3)
Amounts reported in this column are not included in the Summary Compensation Table. (4)
Reflects contributions by our named executive officers, contributions by Coterra, and earnings on balances prior to January 1, 2023; plus, contributions by our named executive officers, contributions by Coterra, and earnings for 2022.the year ended December 31, 2023, less any distributions (shown in the appropriate columns of this table, with amounts that are included in the Summary Compensation Table for 2023 shown in notes 1 and 2 above). The table below reports, earnings, withdrawals/distributions and aggregate balances in the legacy Cimarex Energy Co. Supplemental Savings Plan for 2023. | Name | | Executive
Contributions
in Last FY
($)(1) | | | Registrant
Contributions
in Last FY
($)(2) | | | Aggregate
Earnings
in Last FY
($)(3) | | | Aggregate
Withdrawals/
Distributions
($) | | | Aggregate
Balance
at Last FYE
($)(4) | | | Thomas E. Jorden | | $ | 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 | | |
(1) | Amounts reported in this column are included in the Summary Compensation Table as salary and non-equity incentive plan compensation, as applicable. | (2) | Amounts reported in this column are included in the Summary Compensation Table as “all other compensation.” The amounts for Mr. Dinges include the 10 percent discretionary Company retirement contribution on base salary and bonus in respect of 2022 to be made to his deferred compensation account on amounts payable pursuant to his change in control agreement consistent with the Company’s practice of making such contributions with respect to payments made to legacy Cabot executive officers to terminate their change in control agreements. See “—Change-in-Control and Severance Agreements—Legacy Cabot Change-in-Control-Agreements” and Footnote 5 to the Summary Compensation Table for additional information. | (3) | Amounts reported in this column are not included in the Summary Compensation Table. | (4) | Of the aggregate deferred compensation balances in this column, the following amounts represent cumulative executive contributions for all years: Mr. Jorden, $141,047; Mr. Schroeder, $948,693; Mr. Dinges, $4,915,818; Mr. Bell, $10,441; and Mr. Clason, $449,847. |
(1)
Amounts reported in this column are not included in the Summary Compensation Table. (2)
Reflects contributions by our named executive officers, contributions by Coterra, and earnings on balances prior to January 1, 2023; plus earnings for the year ended December 31, 2023, less any distributions (shown in the appropriate columns of this table). Under the legacy CabotCoterra Energy Inc. Deferred Compensation Plan, up to 100 percent of salary and annual cash incentive bonus are permitted to be deferred into the deferred compensation plan, subject to payment of social security, Medicare, income taxes (on compensation not deferred) and employee benefit plan withholding requirements. Prior to June 1, 2008, TSR performance shares were permitted to be deferred into such deferred compensation plan. The Company also makes contributions to make up for certain matching and profit-sharing contributions which, due to U.S. Internal Revenue Service limitations, cannot be contributed to the Company’s tax-qualifiedCoterra 401(k) plan.Plan. Earnings on the deferred balances are determined by the executive’s investment selections at the time of deferral. The Company holds deferred amounts and earnings thereon as corporate assets, which are invested as elected by the executive. Distributions from the legacy CabotCoterra Energy Inc. Deferred Compensation Plan are based on the executive’s election at the time of deferral. Distribution elections may be modified, provided that the modification is made at least one year prior to the original time elected and the new election is moved out at least five years past the original time-based distribution election. Distribution
elections can only be delayed not accelerated. For 2022, the investmentInvestment options under the legacy CabotCoterra Energy Inc. Deferred Compensation Plan include a selection of mutual funds, index funds, and their respective ratesexchange-traded funds, 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 | | 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% |
COTERRAreturn.• 2023 PROXY STATEMENT | 50 |
| 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:
return. | 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% | | | | | | |
COTERRA• 2023 PROXY STATEMENT | 51 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROLChange-in-Control Agreements
As described above, Mr. Dinges is party to a change-in-controlJorden Employment Agreement
In September 2023, Mr. Jorden entered into the Jorden Letter Agreement, which, together with Mr. Jorden’s legacy Cimarex severance compensation agreement, withsets forth the Company (the “Dinges Change-in-Control Agreement”).In the Dinges Change-in-Control Agreement, a “change in control” is generally defined to include:
• | any person or group becoming the beneficial owner of 35 percent or more of either the Company’s Common Stock or the combined voting power of the Company’s outstanding voting securities, with certain exceptions; | • | specified changes in a majority of the members of the Board of Directors; | • | a reorganization, merger or consolidation involving the Company or the issuances of shares of common stock of the Company, an acquisition by the Company of another entity, or sale or other disposition of substantially all of the Company’s assets being consummated, unless, following the transaction: | | • | the persons who were the beneficial owners of the Company prior to the transaction continue to own at least 50 percent of the Common Stock or other securities entitled to vote in the election of directors of the resulting entity in substantially the same proportions as prior to the transaction, | | • | no individual or entity (other than an entity resulting from the transaction) beneficially owns 35 percent or more of the common equity or voting power of the entity resulting from the transaction, except to the extent that such ownership existed prior to the transaction, and | | • | at least a majority of the members of the Board of Directors of the entity resulting from the transaction were members of the Company’s Board at the time the transaction was approved or entered into; and | • | a liquidation or dissolution of the Company. |
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:
• | for cause; | • | voluntary on the part of the executive (but not a constructive termination without cause); or | • | due to death or disability. |
Additionally, the Dinges Agreement provides that in the event of any termination 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:
• | a lump-sum cash payment equal to three times the sum of: | | • | the executive’s base salary in effect immediately prior to the change in control or the executive’s termination, whichever is greater, and | | • | the greater of (1) the executive’s target bonus for the year during which the change in control occurred or, if greater, the year during which the executive’s termination occurred, or (2) the executive’s actual bonus paid in any of the three fiscal years immediately preceding the change in control or, if termination of employment occurs prior to a change in control, termination of employment; | • | payment of a target bonus for the fiscal year of termination, prorated for the actual days served; | • | three years of continued medical, dental and life insurance coverage at the premium rate applicable to active executives; | • | outplacement assistance in an amount up to 15 percent of the executive’s base salary; and | • | accelerated vesting of all equity awards immediatelyJorden may become entitled upon a change in control, subject, in the case of the TSR performance shares, to the level of the Company’s TSR performance relative to its peers as of the last day of the month immediately preceding the month in which the change-in-control event occurs. |
The Dinges Change-in-Control Agreement 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.
COTERRA• 2023 PROXY STATEMENT | 52 |
Severance Agreements
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:
• | acquisition of 30 percent or more of the shares of the Company’s common stock or the combined voting power of voting securities of the Company; | • | specified changes in a majority of the members of the Board of Directors; | • | a reorganization, share exchange or merger unless, following the transaction: | | • | the shareholders of the Company prior to the transaction continue to own at least 40 percent of the outstanding common stock and combined voting power of the resulting entity, or | | • | at least a majority of the members of the Board of Directors of the entity resulting from the transaction were members of the Company’s Board at the time of executing the agreement to reorganize or merge; and | • | a liquidation or dissolution of the Company or a sale of substantially all of its assets. |
The Merger constituted a change in control under the severance compensation agreements.
The separation agreements provide that, in the event of a termination of employment by the Company other than for cause, death or disability, or a termination for good reason, the executive will receive certain benefits, with such benefits being enhanced if the termination occurs within two years following a change in control.
Benefits under the separation agreements generally include:
• | a pro-rated annual bonus for the number of days in the calendar year through the date of termination, | • | cash payments equal to 1.5 or 2 times (in the event the termination occurs outside of two years of a change in control) or 2 or 3 times (in the event the termination occurs within two years of a change in control) the sum of: | | • | the executive’s annual base salary received during the 24 months prior to the date of termination and | | • | the amount of cash incentive awards received by the executive officer during the 24 months prior to the date of termination, divided by two; and | • | continued medical, dental, vision, disability and life insurance benefits for the individual and his or her dependents 1.5 or 2 times (in the event the termination occurs outside of two years of a change in control) or 2 or 3 times (in the event the termination occurs within two years of a change in control). |
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:
•
A lump sum cash payment equal to the executive officer under his severance compensation agreement would exceedproduct of (1) the applicable threshold under Section 280Gaverage annual bonus paid to Mr. Jorden for the two fiscal years prior to termination and (2) a fraction, the numerator of which is the Code, then those payments will be reduced to the applicable threshold to avoid the impositionnumber of the excise taxes under Section 4999 of the Codedays 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.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.
•
thirty-six monthly cash payments equal, in the aggregate, to three times the sum of: ◦
Mr. Jorden’s annual base salary received during the 24 months prior to the total durationdate of termination, divided by two, and ◦
the vesting period and subject to compliance with certain non-solicitation covenants, a pro-rata portionamount of performance-based equitycash incentive awards based on the time employedreceived by Mr. Jorden during the performance period, shall remain outstanding and eligible to vest if and24 months prior to the extentdate of termination, divided by two; and •
continued medical, dental, vision, disability and life insurance benefits for the performance metricsindividual and his or her dependents for 36 months following his termination. Except as otherwise provided in the applicablean award agreements are met.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.
full pursuant to the Jorden Letter Agreement. The Jorden Letter Agreement provides that, for purposes of Mr. Jorden’s legacy severance compensation agreement, “cause” means Mr. Jorden’s (1) willful and continued failure to perform substantially the executive’s duties, after a written demand for substantial performance is delivered; (2) willful engagement in misconduct materially and demonstrably injurious to the Company or an affiliate; or (3) business crime or felony involving moral turpitude of which the executive officer is convicted or pleads guilty; and “good reason” means (a) a diminution in Mr. Jorden’s duties, responsibilities, authorities powers and functions; (b) the failure to renominate Mr. Jorden to the Board; (c) a reduction in Mr. Jorden’s base salary, subject to limited exceptions; (d) a material reduction in Mr. Jorden’s target annual incentive opportunity or target long-term incentive opportunity; (e) a relocation of Mr. Jorden’s principal place of business to a place other than Houston, Texas; and (f) the Company’s breach of the Jorden Letter Agreement. Mr. Jorden’s legacy Cimarex severance compensation agreement contains a Section 280G “best-net” cutback provision, which provides that, if the total payments to the Mr. Jorden would receive pursuant to his legacy Cimarex severance and compensation agreement or otherwise would exceed the applicable threshold under Section 280G of the Code, then those payments will be reduced to the extent necessary to avoid the imposition of the excise taxes under Section 4999 of the Code in the event such reduction would result in a better after-tax result for the executive officer. Upon the expiration of the Jorden employment period, if Mr. Jorden’s employment with Coterra is continuing, then he and Coterra will enter into a change in control agreement that is consistent with, and no less favorable than, the change in control agreements then applicable to other executive officers of Coterra. For a description of the other terms of the Jorden Letter Agreement, see “Compensation Discussion and Analysis—Compensation Arrangements with Thomas E. Jorden” above. Coterra Severance Compensation Agreements Each of Messrs. Young, Sirgo, and Smith is party to a severance compensation agreement (“Coterra severance compensation agreement”) that provides for certain severance benefits upon a termination of employment by Coterra other than for “cause” or a termination by the executive officer for “good reason” (either, a “qualifying termination”), with such severance benefits being enhanced if the qualifying termination occurs within 18 months following a change in control (a “CIC termination”).
The severance compensation agreement provides for the following benefits upon a qualifying termination, subject to the executive officer’s execution and nonrevocation of a release of claims: •
a pro-rated annual bonus for the number of days in the calendar year of termination through the date of termination based on the executive officer’s target annual bonus in effect for the year of termination, paid in a lump sum at the same time that bonuses are paid to active employees; •
cash payments equal, in the aggregate, to 1.5 times (in the event the qualifying termination is not a CIC termination) or two times (in the event of a CIC termination) the sum of: ◦
the executive officer’s highest annualized base salary in effect during the 24 months prior to his or her date of termination, and ◦
the higher of (a) the average cash incentive award received by the executive officer and (b) the executive officer’s highest target annual bonus in effect, in the case of each of (a) and (b), during the 24 months prior to the executive officer’s date of termination, paid in equal monthly installments for 18 months (in the event the qualifying termination is not a CIC termination) or 24 months (in the event of a CIC termination); •
continued medical, dental, vision, disability and life insurance benefits for the executive officer and the executive officer’s dependents for up to 18 months (in the event the qualifying termination is not a CIC termination) or 24 months (in the event of a CIC termination) following the date of termination as though the executive officer’s employment had not been terminated; and •
except as otherwise provided in an award agreement, if the qualifying termination is not a CIC termination, a pro-rated portion (based on the period of the executive officer’s continuous service during the original vesting period) of the executive officer’s equity awards will (a) in the case of time-vested equity awards, be accelerated and (b) in the case of performance-vested equity awards, remain outstanding and eligible to vest to the extent the applicable performance measures are achieved at the end of the performance period. In the event of a CIC termination, the executive officer’s equity awards will be treated as set forth in the applicable equity incentive plan and award agreement. As in Mr. Jorden’s legacy Cimarex severance compensation agreement, the Coterra severance compensation agreements provide that the executive officer will be subject to one-year post-termination non-competition and non-solicitation (of both employees and clients or customers) restrictions and include Section 280G “best-net” cutback provisions. In the severance compensation agreements, a “change in control” is generally defined to include: •
acquisition of 30 percent or more of the shares of the Company’s common stock or the combined voting power of voting securities of the Company; •
specified changes in a majority of the members of the Board of Directors; •
a reorganization, share exchange or merger unless, following the transaction: ◦
the stockholders of the Company prior to the transaction continue to own more than 60 percent of the outstanding common stock and combined voting power of the resulting entity, and ◦
at least a majority of the members of the Board of Directors of the entity resulting from the transaction were members of the Company’s Board at the time of executing the agreement to reorganize or merge; •
a liquidation or dissolution of the Company; or •
a sale of all or substantially all of its assets, other than to a corporation of which either (i) more than 60 percent of the outstanding common stock and combined voting power is owned by stockholders of the Company or (ii) at least a majority of the members of the Board of Directors were members of the Company’s Board. In the severance compensation agreements, “cause” has the same meaning set forth in Mr. Jorden’s legacy Cimarex severance compensation agreement and “good reason” means (1) a reduction in the executive officer’s base salary; (2) a material reduction in the executive officer’s annual incentive compensation; (3) a required relocation of the executive officer’s principal place of business by more than 50 miles, other than a relocation to Houston, Texas; and (4) a material diminution in the scope of the executive officer’s duties or responsibilities.
Stephen Bell Severance Compensation Arrangement Mr. Bell is party to a legacy Cimarex severance compensation agreement that provides for certain severance benefits upon a qualifying termination, with such severance benefits being enhanced upon a CIC termination (which, for Mr. Bell, is a qualifying termination within two years following a change in control). Mr. Bell’s legacy Cimarex severance compensation agreement provides for the same cash payments and insurance continuation as Mr. Jorden’s legacy Cimarex severance compensation agreement, except that the multiple of Mr. Bell’s payments and duration of benefits continuation will be 1.5 times and 18 months, as applicable, in the event of the qualifying termination is not a CIC termination and 2 times and 24 months, as applicable, in the event of a CIC termination. Mr. Bell’s legacy Cimarex severance compensation agreement provides for the same treatment of his outstanding equity awards as is provided for in the Coterra severance compensation agreements and also includes a Section 280G “best-net” cutback provision. In Mr. Bell’s severance compensation agreement, “cause” has the same meaning set forth in Mr. Jorden’s legacy Cimarex severance compensation agreement and the Coterra severance compensation agreements, and “good reason” means (1) a material diminution in Mr. Bell’s duties or responsibilities, authorities, powers or functions; (2) a reduction of Mr. Bell’s base salary; (3) a material reduction in Mr. Bell’s annual incentive compensation opportunity or long-term incentive compensation opportunity; and (4) a required relocation of Mr. Bell’s principal place of business by more than 50 miles. Mr. Bell’s severance compensation agreement also utilizes the same definition of a “change in control” as the Coterra severance compensation agreements, except that the 60 percent threshold is 40 percent in Mr. Bell’ legacy Cimarex severance compensation agreement. Scott Schroeder and Christopher Clason Terminations On September 30, 2023, each of Mr. Schroeder and Mr. Clason separated from the Company. In connection with Mr. Schroeder’s retirement, pursuant to the legacy Cabot retirement policy and the applicable award agreements, equity awards granted to Mr. Schroeder remain outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to the satisfaction of any performance criteria, as if Mr. Schroeder had remained in continuous employment with the Company through the original vesting date of such awards. In connection with Mr. Clason’s separation, pursuant to the legacy Cimarex severance and compensation agreement to which he was party, Mr. Clason became eligible to receive cash severance payments and benefits that were subject to Mr. Clason’s execution of a release of claims and are detailed in the “Christopher H. Clason” table below. Mr. Clason began receiving such payments and benefits in 2024, following his execution of a release of claims. In addition, Mr. Clason received pro-rata vesting of certain equity awards and, as described in “Compensation Discussion and Analysis—Change in Control and Severance Agreements and Other Termination Payments” on page 35: (i) equity awards granted to Mr. Clason prior to February 21, 2023 that would have otherwise been forfeited remained outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to the satisfaction of any performance criteria, as if Mr. Clason had remained in continuous employment with the Company through the original vesting date of such awards and (ii) 70 percent of Mr. Clason’s equity awards granted on February 21, 2023 remain outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to satisfaction of any performance criteria as if Mr. Clason had remained in continuous employment with the Company through the original vesting date of such awards, with 30 percent being forfeited in connection with Mr. Clason’s separation. Any equity awards that were not accelerated or that do not otherwise remain outstanding and eligible to vest were forfeited. Pursuant to the legacy Cimarex severance and compensation agreement, Mr. Clason is subject to one-year post-termination non-competition and non-solicitation (of both employees and clients or customers) restrictions. While his legacy Cimarex severance and compensation agreement contained a Section 280G “best-net” cutback provision, because of the structure of the Merger, Section 280G did not apply to legacy Cimarex officers in connection with the Merger and no Section 280G “best-net” analysis was applied to Mr. Clason’s severance payments and benefits. Equity Award Agreements 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
further provide for prorated vesting of his December 2021 and February 2022 long-term equity incentive awards upon his termination by(except for a termination for cause with respect to the Company without cause or resignation for good reason.For a more detailed discussion of the terms of these awards see above under “Grants of Plan-Based Awards.”
COTERRAgranted in December 2021).• 2023 PROXY STATEMENT | 53 |
Potential Payments to NEOsNamed Executive Officers The tables below reflect the compensation payable to each NEOnamed executive officer upon a voluntary resignation, retirement, involuntary not-for-cause termination, for cause termination, termination following a change-in-control,change in control, and in the event of disability or death of the executive. The table reflectstables reflect the amounts that would have been paid to each NEOnamed executive officer assuming the event occurred on December 31, 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.
Thomas E. Jorden,Chief Executive Officer and President | | Executive Benefit and
Payments Upon Separation | | | | Voluntary
Resignation | | | | Retirement | | | | Involuntary Not For
Cause Termination
or “Good Reason”
Resignation(1) | | | | For Cause
Termination | | | | Change In
Control(1) | | | | Disability | | | | Death | | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (3x) | | | | | | | | | | | | | | | | | | | $ | 3,375,000 | | | | | | | | | | | | | $ | 3,375,000 | | | | | | | | | | | | | | | | | | | Multiple of Bonus (3x) | | | | | | | | | | | | | | | | | | | $ | 5,943,750 | | | | | | | | | | | | | $ | 5,943,750 | | | | | | | | | | | | | | | | | | | Bonus Payment | | | | | | | | | | | | | | | | | | | $ | 1,981,250 | | | | | | | | | | | | | $ | 1,981,250 | | | | | | | | | | | | | | | | | | | Long-Term Incentive Compensation(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | | | | $ | 5,547,818 | | | | | | $ | 12,473,130 | | | | | | | | | | | | | $ | 18,020,948 | | | | | | $ | 18,020,948 | | | | | | $ | 18,020,948 | | | | | Performance Share Vesting | | | | | | | | | | | | $ | 11,095,637 | | | | | | | | | | | | | | | | | | | | $ | 32,973,065 | | | | | | $ | 32,973,065 | | | | | | $ | 32,973,065 | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(3) | | | | | $ | 575,883 | | | | | | $ | 575,883 | | | | | | $ | 575,883 | | | | | | $ | 575,883 | | | | | | $ | 575,883 | | | | | | $ | 575,883 | | | | | | $ | 575,883 | | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | $ | 225,324 | | | | | | | | | | | | | $ | 225,324 | | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | $ | 46,249 | | | | | | $ | 46,249 | | | | | | $ | 46,249 | | | | | | $ | 46,249 | | | | | | $ | 46,249 | | | | | | $ | 46,249 | | | | | | $ | 46,249 | | | | | Total | | | | | $ | 622,132 | | | | | | $ | 17,265,587 | | | | | | $ | 24,620,586 | | | | | | $ | 622,132 | | | | | | $ | 63,141,469 | | | | | | $ | 51,616,145 | | | | | | $ | 51,616,145 | | |
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 STATEMENT | 54 |
Pursuant to the Jorden Letter Agreement, if Mr. Jorden is terminated without cause or for good reason, including in connection with a change of control, Mr. Jorden is entitled to (a) monthly installment payments over 36 months that, in the aggregate, equal three times the sum of (i) his annual base salary received during the 24 months prior to the date of termination, divided by two and (ii) the amount of cash incentive awards received by Mr. Jorden during the 24 months prior to the date of termination, divided by two; (b) a lump sum cash payment equal to the product of the average annual bonus paid to Mr. Jorden for the two fiscal years prior to termination and (ii) a fraction, the numerator of which is the number of days in the calendar year through the date of termination and the denominator of which is 365; and (c) 36 months of continued medical, dental, vision disability and life insurance benefits. (2)
Upon a change in control, or if Mr. Jorden’s employment is terminated due to Mr. Jorden’s death or disability, his outstanding equity awards will vest in full. Additionally, if Mr. Jorden’s employment is terminated without cause or for good reason, the time-based equity awards granted to Mr. Jorden in 2021 would become fully vested and assuming that (a) Mr. Jorden had given timely notice of his intent to retire from the Company on December 31, 2023 and (b) such notice was acknowledged and accepted in writing by the Chair of the Compensation Committee or its respective designee, 100 percent of the equity awards granted to Mr. Jorden in February 2023 would have remained outstanding until the regularly scheduled vesting date in accordance with the Company’s retirement policy. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. (3)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Jorden under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Jorden’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Scott C. Schroeder,
Shannon E. Young III, Executive Vice President and Chief Financial Officer(1) | | 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 | |
(1) | As discussed above in the “Compensation Discussion & Analysis—2022 Compensation Decisions—Elements of Post-Termination Compensation—Change-in-Control and Severance Agreements—Legacy Cabot Change-in-Control-Agreements” sections, in connection with the Merger Mr. Schroeder waived his change-in-control agreement in exchange for a one-time payment to his deferred compensation account and therefore is not entitled to any severance compensation or benefits in connection with a termination of his employment. | (2) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “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 STATEMENT | 55 |
Pursuant to Mr. Young’s Coterra severance compensation agreement, if Mr. Young is terminated without cause or for good reason not in connection with a change in control, Mr. Young is entitled to (a) monthly installment payments over 18 months that, in the aggregate, equal one-and-a-half times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination; and (3) 18 months of continued medical, dental, vision disability and life insurance benefits. (2)
Pursuant to Mr. Young’s Coterra severance compensation agreement, if Mr. Young is terminated without cause or for good reason within 18 months following a change in control, Mr. Young is entitled to (a) monthly installment payments over 24 months that, in the aggregate, equal two times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination. (3)
For the equity awards granted to Mr. Young in July 2023, receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Young remains continuously employed through such date, except that, pursuant to the terms of the award agreements, the awards will fully vest upon a change in control of the Company or a termination of Mr. Young’s employment without cause or for good reason or due to his death or disability. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. (4)
Amount in this row represent earned compensation voluntarily deferred by Mr. Young under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Young’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
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 | |
(1) | Pursuant to the terms of the Dinges Agreement, as amended, upon certain terminations of employment within two years following a change in control, or a termination of employment prior to the end of the Dinges Employment Period, Mr. Dinges is generally entitled to the benefits set forth in the Change-in-Control Agreement, which include (1) a lump-sum cash payment equal to (x) three times the sum of his base salary and (y) the greater of his target bonus or actual annual bonus paid in three prior years, (2) a 10 percent discretionary Company retirement contribution on base salary and bonus in respect of 2022 consistent with the Company’s practice of making such contributions with respect to payments made to legacy Cabot executive officers to terminate their change in control agreements, (3) three years of continued medical, dental and life insurance coverage, (4) outplacement assistance, and (5) interest. | (2) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “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 STATEMENT | 56 |
Stephen P. Bell, Executive Vice President—Business Development| | Executive Benefit and Payments
Upon Separation | | | | Voluntary
Resignation | | | | Retirement | | | | Involuntary Not For
Cause Termination
or “Good Reason”
Resignation(1) | | | | For Cause
Termination | | | | Change In
Control(2) | | | | Disability | | | | Death | | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 852,000 | | | | | | | | | | | | | $ | 1,136,000 | | | | | | | | | | | | | | | | | | | Multiple of Bonus (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 1,276,500 | | | | | | | | | | | | | $ | 1,702,000 | | | | | | | | | | | | | | | | | | | Bonus Payment | | | | | | | | | | | | | | | | | | | $ | 851,000 | | | | | | | | | | | | | $ | 851,000 | | | | | | | | | | | | | | | | | | | Long-Term Incentive Compensation(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | $ | 3,383,648 | | | | | | $ | 5,047,986 | | | | | | $ | 3,383,648 | | | | | | $ | 834,340 | | | | | | $ | 6,718,932 | | | | | | $ | 6,718,932 | | | | | | $ | 6,718,932 | | | | | Performance Share Vesting | | | | | $ | 2,503,019 | | | | | | $ | 5,831,695 | | | | | | $ | 2,503,019 | | | | | | $ | 2,503,019 | | | | | | $ | 7,266,616 | | | | | | $ | 7,266,616 | | | | | | $ | 7,266,616 | | | | | 2024 LTIP Grant Date Fair Value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 4,500,000 | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(4) | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | $ | 77,381 | | | | | | | | | | | | | $ | 103,175 | | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | Total | | | | | $ | 6,082,034 | | | | | | $ | 11,075,048 | | | | | | $ | 9,138,915 | | | | | | $ | 3,532,726 | | | | | | $ | 17,973,089 | | | | | | $ | 14,180,915 | | | | | | $ | 18,680,915 | | |
(1)
Pursuant to Mr. Bell’s legacy Cimarex severance compensation agreement, if Mr. Bell is terminated without cause or for good reason not in connection with a change in control, Mr. Bell is entitled to (a) monthly installment payments over 18 months that, in the aggregate, equal one-and-a-half times the sum of (i) annual base salary received during the 24 months prior to the date of termination, divided by two and (ii) the amount of cash incentive awards received by Mr. Bell during the 24 months prior to the date of termination, divided by two; (b) a lump sum cash payment equal to the product of (i) the average annual bonus paid to Mr. Bell for the two fiscal years prior to termination and (ii) a fraction, the numerator of which is the number of days in the calendar year through the date of termination and the denominator of which is 365; and (c) 18 months of continued medical, dental, vision disability and life insurance benefits. (2)
Pursuant to Mr. Bell’s legacy Cimarex severance compensation agreement, if Mr. Bell is terminated without cause or for good reason within 24 months following a change in control, Mr. Bell is entitled to (a) monthly installment payments over 24 months that, in the aggregate, equal two times the sum of (i) annual base salary received during the 24 months prior to the date of termination, divided by two and (ii) the amount of cash incentive awards received by Mr. Bell during the 24 months prior to the date of termination, divided by two; (b) a lump sum cash payment equal to the product of (i) the average annual bonus paid to Mr. Bell for the two fiscal years prior to termination and (ii) a fraction, the numerator of which is the number of days in the calendar year through the date of termination and the denominator of which is 365; and (c) 24 months of continued medical, dental, vision disability and life insurance benefits. (3)
For the equity awards granted to Mr. Bell in December 2021, February 2022 and February 2023, receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Bell remains continuously employed through such date, except that (a) with respect to the time-based awards granted to Mr. Bell in December 2021 and February 2022, in the event of Mr. Bell’s termination (except for a termination for cause with respect to the awards granted in December 2021), the award will vest pro-rata based on the number of days that elapsed between December 1, 2021 and February 28, 2022, respectively, and the date of his termination, over the full vesting period, (b) with respect to the performance-based awards granted to Mr. Bell in February 2022, in the event of Mr. Bell’s termination, a pro-rata portion (based on the number of days that elapsed between February 2022 and the date of his termination over the performance period) will remain outstanding and eligible to vest, and (c) all awards will fully vest upon a change in control of the Company or a termination of Mr. Bell’s employment due to his death or disability. Additionally, assuming that (x) Mr. Bell had given timely notice of his intent to retire from the Company on December 31, 2023 and (y) such notice was acknowledged and accepted in writing by the Chief Executive Officer or the Chair of the Compensation Committee or his respective designee, 100 percent of the equity awards granted to Mr. Bell in February 2023 would have remained outstanding until the regularly scheduled vesting date in accordance with the Company’s retirement policy. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. Pursuant to the August 2023 letter agreement with Mr. Bell, in the unfortunate event of Mr. Bell’s death prior to the date the 2024 long-term incentive award is granted, the Company will pay to Mr. Bell’s estate a lump sum cash payment of $4.5 million (less taxes). (4)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Bell under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Bell’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Blake A. Sirgo, Senior Vice President—Operations | | Executive Benefit and
Payments Upon Separation | | | | Voluntary
Resignation | | | | Retirement | | | | Involuntary Not For
Cause Termination
or “Good Reason”
Resignation(1) | | | | For Cause
Termination | | | | Change In
Control(2) | | | | Disability | | | | Death | | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 684,000 | | | | | | | | | | | | | $ | 912,000 | | | | | | | | | | | | | | | | | | | Multiple of Bonus (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 888,000 | | | | | | | | | | | | | $ | 1,184,000 | | | | | | | | | | | | | | | | | | | Pro Rata Bonus | | | | | | | | | | | | | | | | | | | $ | 456,000 | | | | | | | | | | | | | $ | 456,000 | | | | | | | | | | | | | | | | | | | Long-Term Incentive Compensation(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | | | | | | | | | | | $ | 1,127,877 | | | | | | | | | | | | | $ | 2,433,817 | | | | | | $ | 2,433,817 | | | | | | $ | 2,433,817 | | | | | Performance Share Vesting | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,810,569 | | | | | | $ | 2,810,569 | | | | | | $ | 2,810,569 | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(4) | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | $ | 55,088 | | | | | | | | | | | | | $ | 73,451 | | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | Total | | | | | $ | 177,523 | | | | | | $ | 177,523 | | | | | | $ | 3,388,489 | | | | | | $ | 177,523 | | | | | | $ | 8,047,361 | | | | | | $ | 5,421,910 | | | | | | $ | 5,421,910 | | |
(1)
Pursuant to Mr. Sirgo’s Coterra severance compensation agreement, if Mr. Sirgo is terminated without cause or for good reason not in connection with a change in control, Mr. Sirgo is entitled to (a) monthly installment payments over 18 months that, in the aggregate, equal one-and-a-half times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination; and (c) 18 months of continued medical, dental, vision disability and life insurance benefits. (2)
Pursuant to Mr. Sirgo’s Coterra severance compensation agreement, if Mr. Sirgo is terminated without cause or for good reason within 18 months following a change in control, Mr. Sirgo is entitled to (a) monthly installment payments over 24 months that, in the aggregate, equal two times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (ii) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination; and (c) 24 months of continued medical, dental, vision disability and life insurance benefits. (3)
For the equity awards granted to Mr. Sirgo in December 2021, February 2022, and February 2023 receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Sirgo remains continuously employed through such date, except that (a) in the event of Mr. Sirgo’s termination by the Company not for cause or resignation for good reason, the December 2021 and February 2022 time-based awards will vest pro-rata based on the period of Mr. Sirgo’s continuous service elapsed over the full vesting period, and (b) all awards will fully vest upon a change in control of the Company or a termination of Mr. Sirgo’s employment due to his death or disability. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. (4)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Sirgo under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Sirgo’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Kevin W. Smith, Vice President—Chief Technology Officer | | Executive Benefit and
Payments Upon Separation | | | | Voluntary
Resignation | | | | Retirement | | | | Involuntary Not For
Cause Termination
or “Good Reason”
Resignation(1) | | | | For Cause
Termination | | | | Change In
Control(2) | | | | Disability | | | | Death | | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 645,000 | | | | | | | | | | | | | $ | 860,000 | | | | | | | | | | | | | | | | | | | Multiple of Bonus (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 825,000 | | | | | | | | | | | | | $ | 1,100,000 | | | | | | | | | | | | | | | | | | | Pro Rata Bonus | | | | | | | | | | | | | | | | | | | $ | 430,000 | | | | | | | | | | | | | $ | 430,000 | | | | | | | | | | | | | | | | | | | Long-Term Incentive Compensation(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | | | | | | | | | | | $ | 1,127,877 | | | | | | | | | | | | | $ | 2,433,817 | | | | | | $ | 2,433,817 | | | | | | $ | 2,433,817 | | | | | Performance Share Vesting | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,810,569 | | | | | | $ | 2,810,569 | | | | | | $ | 2,810,569 | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(4) | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | $ | 51,534 | | | | | | | | | | | | | $ | 68,712 | | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | Total | | | | | $ | 137,602 | | | | | | $ | 137,602 | | | | | | $ | 3,217,013 | | | | | | $ | 137,602 | | | | | | $ | 7,840,700 | | | | | | $ | 5,381,988 | | | | | | $ | 5,381,988 | | |
(1)
Pursuant to Mr. Smith’s Coterra severance compensation agreement, if Mr. Smith is terminated without cause or for good reason not in connection with a change in control, Mr. Smith is entitled to (a) monthly installment payments for 18 months that, in the aggregate, equal one-and-a-half times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination; and (c) 18 months of continued medical, dental, vision disability and life insurance benefits. (2)
Pursuant to Mr. Smith’s Coterra severance compensation agreement, if Mr. Smith is terminated without cause or for good reason within 18 months following a change in control, Mr. Smith is entitled to (a) monthly installment payments over 24 months that, in the aggregate, equal two times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated bonus for the calendar year of termination, based on the average of the last two annual bonuses paid to him; and (c) 24 months of continued medical, dental, vision disability and life insurance benefits. (3)
For the equity awards granted to Mr. Smith in December 2021, February 2022, and February 2023 receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Smith remains continuously employed through such date, except that (a) in the event of Mr. Smith’s termination by the Company not for cause or resignation for good reason, the December 2021 and February 2022 time-based awards will vest pro-rata based on the period of Mr. Smith’s continuous service elapsed over the full vesting period, and (b) all awards will fully vest upon a change in control of the Company or a termination of Mr. Smith’s employment due to his death or disability. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. (4)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Smith under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Smith’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Scott C. Schroeder, Former Executive Vice President Business DevelopmentExecutive Benefit and Payments
Upon Separation | | 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 | |
(1) | Pursuant to Mr. Bell’s legacy Cimarex severance compensation agreement, Mr. Bell is entitled to payments equal to (1) one-and-a-half times the sum of (a) the average of his annual base salary received during the 24 months prior to his termination and (b) the average of his cash incentive awards received during the 24 months prior to his termination; (2) a pro-rated bonus for the calendar year of termination, based on the average of the last two annual bonuses paid to him; and (3) 18 months of continued medical, dental, vision disability and life insurance benefits. | (2) | Pursuant to Mr. Bell’s legacy Cimarex severance compensation agreement, if Mr. Bell is terminated without cause or for good reason within a specified time following a change in control, Mr. Bell is entitled to payments equal to (1) two times the sum of (a) the average of his annual base salary received during the 24 months prior to his termination and (b) the average of his cash incentive awards received during the 24 months prior to his termination; (2) a pro-rated bonus for the calendar year of termination, based on the average of the last two annual bonuses paid to him; and (3) 24 months of continued medical, dental, vision disability and life insurance benefits. | (3) | For the equity awards granted to Mr. Bell 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. Bell remains continuously employed through such date, except that (1) in the event of Mr. Bell’s termination by the Company not for cause or resignation for good reason, the award will vest pro-rata based on the number of days that elapsed between December 1, 2021 and 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. Bell’s employment due to his death or disability. | (4) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “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. |
COTERRAand Chief Financial Officer• 2023 PROXY STATEMENT | 57 |
As described above, Mr. Schroeder retired from the Company effective September 30, 2023. The table below reflects the compensation paid to Mr. Schroeder in connection with his retirement. | | Executive Benefit and
Payments Upon Separation | | | | Voluntary
Resignation | | | | Retirement | | | | Involuntary Not For
Cause Termination
or “Good Reason”
Resignation | | | | For Cause
Termination | | | | Change In
Control | | | | Disability | | | | Death | | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Bonus | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Current Year Bonus (pro-rated) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Compensation(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | $ | 4,365,059 | | | | | | | | | | | | | | | | | | | | | | | | | Performance Share Vesting | | | | | | | | | $ | 6,851,819 | | | | | | | | | | | | | | | | | | | | | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(2) | | | | | | | | | $ | 14,904,570 | | | | | | | | | | | | | | | | | | | | | | | | | Health, Life, and Welfare Continuation(3) | | | | | | | | | $ | 140,688 | | | | | | | | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | | | | | $ | 62,428 | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | $ | 26,324,564 | | | | | | | | | | | | | | | | | | | | | | |
(1)
In connection with Mr. Schroeder’s retirement, pursuant to the legacy Cabot retirement policy and the applicable award agreements, equity awards granted to Mr. Schroeder remain outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to the satisfaction of any performance criteria, as if Mr. Schroeder had remained in continuous employment with the Company through the original vesting date of such awards. Performance share awards granted to Mr. Schroeder in February 2023 will vest pro-rata based on the number of days that elapsed between February 21, 2023 and the date of his retirement; all other outstanding equity awards as of the date of Mr. Schroeder’s retirement will be determined without proration. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on September 29, 2023 (the last trading day prior to Mr. Schroeder’s retirement) of $27.05 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. The value of these awards that remained outstanding following Mr. Schroeder’s retirement as of December 31, 2023 are included in the “Outstanding Equity Awards Table at Fiscal Year-End” above. (2)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Schroeder under the terms of the Coterra Energy Inc. Deferred Compensation Plan. For more information, see “Nonqualified Deferred Compensation” above. Payment of the deferred compensation is based upon Mr. Schroeder’s election at the time of deferral. (3)
Mr. Schroeder and his eligible dependents are entitled to receive certain health benefit coverage. Such health benefit coverage is a contributory plan with participants’ contributions adjusted annually.
Christopher H. Clason, Former Senior Vice President and Chief Human Resources OfficerExecutive 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 | | | | | | | | | | $ | 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 STATEMENT | 58 |
As described above, Mr. Clason separated from the Company effective September 30, 2023. The table below reflects the compensation paid to Mr. Clason in connection with his separation. | | Executive Benefit and
Payments Upon Separation | | | | Voluntary
Resignation | | | | Retirement | | | | Involuntary Not For
Cause Termination
or “Good Reason”
Resignation | | | | For Cause
Termination | | | | Change In
Control(1) | | | | Disability | | | | Death | | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary | | | | | | | | | | | | | | | | | | | | | $ | 972,385 | | | | | | | | | | | | | Multiple of Bonus | | | | | | | | | | | | | | | | | | | | | $ | 1,440,000 | | | | | | | | | | | | | Bonus Payment | | | | | | | | | | | | | | | | | | | | | $ | 538,521 | | | | | | | | | | | | | Long-Term Incentive Compensation(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | | | | | | | | | | | | | $ | 4,395,030 | | | | | | | | | | | | | Performance Share Vesting | | | | | | | | | | | | | | | | | | | | | $ | 4,429,221 | | | | | | | | | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(3) | | | | | | | | | | | | | | | | | | | | | $ | 465,487 | | | | | | | | | | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | | | $ | 82,800 | | | | | | | | | | | | | Earned Vacation(4) | | | | | | | | | | | | | | | | | | | | | $ | (7,434) | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | | | | | $ | 12,316,010 | | | | | | | | | | |
(1)
Pursuant to Mr. Clason’s legacy Cimarex severance compensation agreement, because Mr. Clason underwent a termination for good reason within 24 months following a change in control, Mr. Clason became entitled to (a) two times the sum of (i) the average of his annual base salary received during the 24 months prior to his termination and (ii) the average of his cash incentive awards received during the 24 months prior to his termination; (b) a pro-rated bonus for the calendar year of termination, based on the average of the last two annual bonuses paid to him; and (c) 24 months of continued medical, dental, vision disability and life insurance benefits. The payments described in subclauses (a) and (b) will be paid in monthly installments over the 24-month period following Mr. Clason’s termination, and the payment described in subclause (2) was paid at the time of Mr. Clason’s termination. (2)
In connection with Mr. Clason’s separation, his time-based awards granted prior to February 21, 2023 vested pro-rata and a pro-rata portion of his performance-based awards granted prior to February 21, 2023 remained outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to the satisfaction of any performance criteria, in each case with such pro-rata portion based on the number of days that elapsed between December 1, 2022 and February 28, 2022, as applicable, and the date of his termination, over the full vesting period. In addition to the pro-rata vesting that occurred in connection with Mr. Clason’s separation as described above, (a) the portion of the equity awards granted to Mr. Clason prior to February 21, 2023 that would have otherwise been forfeited remain outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to the satisfaction of any performance criteria, as if Mr. Clason had remained in continuous employment with the Company through the original vesting date of such awards and (b) 70 percent of Mr. Clason’s equity awards granted on February 21, 2023 remain outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to satisfaction of any performance criteria as if Mr. Clason had remained in continuous employment with the Company through the original vesting date of such awards, with 30 percent forfeited in connection with Mr. Clason’s separation. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on September 29, 2023 (the last trading day prior to Mr. Clason’s separation) of $27.05 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. The value of these awards that remained outstanding following Mr. Clason’s separation as of December 31, 2023 are included in the “Outstanding Equity Awards Table at Fiscal Year-End” above. (3)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Clason under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. In the case of Mr. Clason’s separation from the Company, payment of the deferred compensation is in a lump sum six months from the date of termination. (4)
Mr. Clason had a negative vacation balance upon termination, therefore his final pay check was reduced by this amount.
PAY RATIO DISCLOSUREThe following table sets forth comparative information regarding: •
the annual total compensation of our Chief Executive Officer, Mr. Jorden, for the year ended December 31, 2023, determined using the methodology described below; •
the annual total compensation of our median employee for the year ended December 31, 2023, determined on the basis described below; and •
a ratio comparison of those two amounts, each as determined in accordance with rules prescribed by the SEC. | | CEO Pay Ratio | | | | | | | | | | | CEO annual total compensation (A) | | | | | $ | 14,547,853(1) | | | | | Median employee annual total compensation (B) | | | | | $ | 157,111 | | | | | Ratio of (A) to (B) | | | | | | 93:1 | | |
(1)
Determined based on the total compensation paid to Mr. Jorden as reported in the Summary Compensation Table. •
| the annual total compensation of our CEO, Mr. Jorden, for the year ended December 31, 2022, determined using the methodology described below; | • | the annual total compensation of our median employee for the year ended December 31, 2022, determined on the basis described below; and | • | a ratio comparison of those two amounts, each as determined in accordance with rules prescribed by the SEC. |
| CEO Pay Ratio | | | | CEO annual total compensation (A) | $ | 15,303,397 | (1) | | Median employee annual total compensation (B) | $ | 126,643 | | | Ratio of (A) to (B) | | 121:1 | |
(1) | Determined based on the total compensation paid to Mr. Jorden as reported in the Summary Compensation Table. |
Median EmployeeAs 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: •
identified the median employee on December 31, 2022; •
used total base salary earnings as determined from Coterra’s payroll records for the period from January 1, 2022 through December 31, 2022 as our consistently applied compensation measure; •
did not include bonus-based incentive amounts, because those amounts are not distributed to all of our employees and have an impact on the determination of the median employee; •
did not include equity-based incentive compensation awards because those awards are not widely distributed to our employees and have an impact on the determination of the median employee; •
included all employees of Coterra and its consolidated subsidiaries as of December 31, 2022 employed on a full-time basis; •
did not make any assumptions, adjustments, or estimates with respect to total base salary earnings; •
did not annualize the compensation for any full-time employees that were not employed by us for all of 2022; and •
did not use statistical sampling or include any cost of living adjustments. •
| 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 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. COTERRA• 2023 PROXY STATEMENT | 59 |
PAY VERSUS PERFORMANCE DISCLOSURE 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 | | |
(1)
| | | 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 | |
Reflects the summary compensation table total compensation of (a) our current Chief Executive Officer, Thomas E. Jorden, from his appointment on October 1, 2021 to present (in the Post-Merger CEO column) and (b) Cabot’s Chief Executive Officer, Dan O. Dinges, for prior periods (in the Pre-Merger CEO column). (2)
The dollar amounts reported in this column represent the amount of “compensation actually paid” to Mr. Jorden (in the Post-Merger CEO column) and Mr. Dinges (in the Pre-Merger CEO column), respectively, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Jorden or Mr. Dinges, respectively, during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Jorden’s and Mr. Dinges’s respective total compensation for each year to determine the compensation actually paid: | | Adjustment to Determine Compensation Actually Paid for CEO | | | | 2023 | | | | 2022 | | | | 2021 | | | | 2020 | | | | Post-Merger CEO | | | | Pre-Merger CEO | | | | | Total reported in Summary Compensation Table (SCT) | | | | | $ | 14,547,853 | | | | | | $ | 15,303,397 | | | | | | $ | 11,061,939 | | | | | | $ | 14,554,728 | | | | | | $ | 14,194,706 | | | | | Minus: Value of Stock & Option Awards Reported in SCT | | | | | $ | (11,071,724) | | | | | | $ | (12,554,661) | | | | | | $ | (10,000,000) | | | | | | $ | (10,649,843) | | | | | | $ | (11,267,676) | | | | | Plus: Year-End Value of Awards Granted in Fiscal Year that are Unvested and Outstanding | | | | | $ | 12,289,113 | | | | | | $ | 10,257,188 | | | | | | $ | 9,286,421 | | | | | | $ | — | | | | | | $ | 12,760,574 | | | | | Plus/Minus: Change in FMV of Prior Year Awards that are Outstanding and Unvested | | | | | $ | 1,703,070 | | | | | | $ | 7,430,809 | | | | | | $ | (5,392,173) | | | | | | $ | — | | | | | | $ | 1,161,681 | | | | | Plus: FMV of Awards Granted this Year and that Vested this Year | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 10,901,242 | | | | | | $ | — | | | | | Plus/Minus: Change in FMV (from Prior Year-End) of Prior Year Awards that Vested this Year | | | | | $ | 1,327,149 | | | | | | $ | 6,860,435 | | | | | | $ | (846,226) | | | | | | $ | (580,966) | | | | | | $ | 956,283 | | | | | Plus: Value of Dividends Paid on Stock Awards not Otherwise Reflected in Fair Value or Total Compensation | | | | | $ | 1,560,870 | | | | | | $ | 4,794,851 | | | | | | $ | 1,988,025 | | | | | | $ | — | | | | | | $ | — | | | | | Minus: Prior Year FMV of Prior Year Awards that Failed to Vest this Year | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | Total Adjustments | | | | | $ | 5,808,479 | | | | | | $ | 16,788,622 | | | | | | $ | (4,963,953) | | | | | | $ | (329,567) | | | | | | $ | 3,610,862 | | | | | “Compensation Actually Paid” | | | | | $ | 20,356,332 | | | | | | $ | 32,092,019 | | | | | | $ | 6,097,986 | | | | | | $ | 14,225,161 | | | | | | $ | 17,805,568 | | |
(3)
The non-CEO named executive officers included in this column are: (1) | Reflects the summary compensation table total compensation of (a) our current CEO, Thomas E. Jorden, from his appointment on October 1, 2021 to present and (b) our former CEO, Dan O. Dinges, for prior periods. | (2) | The dollar amounts reported in this column represent the amount of “Compensation Actually Paid” to Mr. Jorden (post-Merger) and Mr. Dinges (pre-Merger), respectively, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Jorden or Mr. Dinges, respectively, during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Jorden’s and Mr. Dinges’s respective total compensation for each year to determine the compensation actually paid: |
| | | | 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 | |
(3) | The non-CEO NEOs included in this column are: |
| | Year | | | | Non-CEO NEOs | | | | 20222023 | | | | 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 |
COTERRA• 2023 PROXY STATEMENT | 60 |
(4) | The dollar amounts reported in this column represent the amount of “Compensation Actually Paid” to the Company’s NEOs as a group (excluding Mr. Jorden and Mr. Dinges, where applicable) as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to such NEOs as a group during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the average total compensation for the NEOs as a group (excluding Mr. Jorden and Mr. Dinges, where applicable) for each year to determine the compensation actually paid using the same methodology described above in footnote(4): |
(4)
| | 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 | |
The dollar amounts reported in this column represent the amount of “compensation actually paid” to the Company’s named executive officers as a group (excluding Mr. Jorden and Mr. Dinges, where applicable) as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to such named executive officers as a group during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the average total compensation for named executive officers as a group (excluding Mr. Jorden and Mr. Dinges, where applicable): | | (5) | The amounts reported in this column represent the value of an initial $100 investment in the Company’s 2022 compensation peer group. See the “Company TSR vs Peer TSR & Alignment of CAP with Company TSR” graph and related footnotes under “Relationship Between Compensation Actually Paid and Performance Measures” below for more information. |
| | Adjustment to Determine Compensation Actually Paid for NEOs | | | | 2023 | | | | 2022 | | | | 2021 | | | | 2020 | | | | Total reported in Summary Compensation Table (SCT) | | | | | $ | 4,721,849 | | | | | | $ | 10,068,380 | | | | | | $ | 6,826,596 | | | | | | $ | 3,503,938 | | | | | Minus: Value of Stock & Option Awards Reported in SCT | | | | | $ | (3,609,845) | | | | | | $ | (3,935,574) | | | | | | $ | (2,759,065) | | | | | | $ | (2,413,381) | | | | | Plus: Year-End Value of Awards Granted in Fiscal Year that are Unvested and Outstanding | | | | | $ | 2,757,427 | | | | | | $ | 3,630,038 | | | | | | $ | 847,510 | | | | | | $ | 2,728,760 | | | | | Plus/Minus: Change in FMV of Prior Year Awards that are Outstanding and Unvested | | | | | $ | 233,773 | | | | | | $ | 340,299 | | | | | | $ | — | | | | | | $ | 240,708 | | | | | Plus: FMV of Awards Granted this Year and that Vested this Year | | | | | $ | — | | | | | | $ | — | | | | | | $ | 1,913,978 | | | | | | $ | — | | | | | Plus/Minus: Change in FMV (from Prior Year-End) of Prior Year Awards that Vested this Year | | | | | $ | 32,382 | | | | | | $ | — | | | | | | $ | (72,443) | | | | | | $ | 196,632 | | | | | Plus: Value of Dividends Paid on Stock Awards not Otherwise Reflected in Fair Value or Total Compensation | | | | | $ | 68,111 | | | | | | $ | 205,491 | | | | | | $ | 23,461 | | | | | | $ | — | | | | | Minus: Prior Year FMV of Prior Year Awards that Failed to Vest this Year | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | Total Adjustments | | | | | $ | (518,153) | | | | | | $ | 240,254 | | | | | | $ | (46,559) | | | | | | $ | 752,719 | | | | | “Compensation Actually Paid” | | | | | $ | 4,203,696 | | | | | | $ | 10,308,634 | | | | | | $ | 6,780,037 | | | | | | $ | 4,256,657 | | |
(5)
The amounts reported in this column represent the value of an initial $100 investment in the Company’s 2023 compensation peer group. See the “Company TSR vs Peer TSR & Alignment of CAP with Company TSR” graph and related footnotes under “Relationship Between Compensation Actually Paid and Performance Measures” below for more information. Relationship Between Compensation Actually Paid and Performance Measures 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.
As noted above, “compensation actually paid” for purposes of the tabular disclosure and the following graphs werewas calculated in accordance with SEC rules and dodoes not fully represent the actual final amount of compensation earned by or actually paid to our NEOsnamed executive officers during the applicable years.
This graph illustrates the relationship between the “compenstion actually paid” for purposes of the tabular disclosure, the Company’s total stockholder return, and the total stockholder return of the 2023 compensation peer group by year. Company TSR vs Peer TSR & Alignment of CAP with Company TSR 
(1) | The 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 STATEMENT | 61 |
(1)
The 2023 compensation peer group was composed of the following companies: Antero Resources Corporation, APA Corporation, Chesapeake Energy Corporation, Devon Energy Corporation, Diamondback Energy, Inc., EOG Resources, Inc., EQT Corporation, Hess Corporation, Marathon Oil Corporation, Occidental Petroleum Corporation, Ovintiv Inc., and Pioneer Natural Resources Company. As of March 7, 2024, Continental Resources, Inc. was no longer publicly traded and was therefore excluded from the data shown. After the removal of companies that are no longer publicly traded, the 2022 compensation peer group and the 2023 compensation peer group are made up of the same companies. This graph illustrates the relationship between the “compenstion actually paid” for purposes of the tabular disclosure and Net Income by year. (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. |
Alignment of CAP with Net Income & Free Cash Flow(1)
(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. |
Performance Measures
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”
for further information regarding these performance measures and their function in our executive compensation program. The performance measures included in this table are not ranked by relative importance.
2022 | 2023 Most Important Performance Measures (unranked) | ROIC | | | | | Free Cash Flow | 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.
COTERRA• 2023 PROXY STATEMENT | 62 |
EQUITY COMPENSATION PLAN INFORMATIONThe 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 | |
2023: (1) | This amount includes 3,233,616 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, 536,609 shares subject to non-qualified stock options, and 1,234,913 shares representing the maximum number of shares subject to PSUs assuming the maximum payout is achieved.Plan Category | | | | (a) | | | | (b) | | | | (c) | | (2) | This is the weighted average exercise priceNumber of 536,609 non-qualified stock options outstanding under the Prior Plans. As Securities to
be Issued Upon Exercise
of December 31, 2022, such stock options had a weighted average lifeOutstanding Options,
Warrants and Rights | | | | Weighted-Average
Exercise Price of 2.6 years.
Outstanding Options,
Warrants and Rights | | | | Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities Reflected
in Column (a)) | | (3) | Includes 9,509,196 shares that are available for future grants under the Prior Cabot Plan and 35,204,252 shares that are available for future grants to legacy Cimarex employees only under the Prior Cimarex Plan.Equity compensation plans approved by security holders | | | | | | 7,421,198(1) | | | | | | $ | 15.66(2) | | | | | | | 27,823,920(3) | | | | | Equity compensation plans not approved by security holders | | | | | | n/a | | | | | | | n/a | | | | | | | n/a | | | | | Total | | | | | | 7,421,198 | | | | | | | n/a | | | | | | | 27,823,920(3) | | |
(1)
This amount includes 5,024,915 shares covered by restricted stock units that have not vested, 245,898 director restricted stock units that have vested but have not yet settled into shares of common stock, 73,593 director restricted stock units as to which restrictions lapse upon the earlier of May 4, 2024 or the date the holder ceases to be a director of the Company, 304,883 shares subject to non-qualified stock options, and 1,771,909 shares representing the maximum number of shares subject to PSUs assuming the maximum payout is achieved. (2)
This is the weighted average exercise price of 304,883 non-qualified stock options outstanding under the legacy Cimarex incentive plans. As of December 31, 2023, such stock options had a weighted average life of 2.1 years. (3)
Includes 21,128,063 shares that are available under the 2023 Plan, 2,820,997 shares that are currently outstanding under the Prior Cabot Plan, and 3,874,860 shares that are currently outstanding under the legacy Cimarex incentive plans.
COTERRA• 2023 PROXY STATEMENT | 63 |
Back to Contents | PROPOSAL 4 | | | APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM | |
PROPOSAL 2
APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has approved and recommended the appointment of PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as the independent registered public accounting firm to examine the Company’s financial statements for 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. annual meeting.See “Audit Committee Report” below for further information. Required Vote The ratification of the appointment of PricewaterhouseCoopers as our independent registered public accounting firm for 2024 will be approved if holders of a majority of the voting power of the common stock present in person or represented by proxy at the annual meeting and entitled to vote on the proposal vote in favor of the proposal. Abstentions will have the same effect as votes against the proposal. No broker non-votes are expected with respect to Proposal 4.  | | | | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FORRATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY FOR ITS 20232024 FISCAL YEAR. | |
Fees Billed by Independent Registered Public Accounting Firm for Services in 2023 and 2022 | | Fee Type* | | | | 2023 | | | | 2022 | | | | Audit Fees(1) | | | | | $ | 2,400,000 | | | | | | $ | 2,600,000 | | | | | Audit Related Fees(2) | | | | | $ | 100,000 | | | | | | $ | 615,000 | | | | | Tax Fees(3) | | | | | $ | 2,232,326 | | | | | | $ | 1,121,330 | | | | | All Other Fees(4) | | | | | $ | 1,000 | | | | | | $ | 900 | | |
*
No pre-approved requirements were waived under the de minimis exception. (1)
Consists of fees associated with the audits of our consolidated financial statements and reviews of our quarterly condensed consolidated financial statements within such years. (2)
For 2022, consists of fees associated with SEC registration statements and other documents filed with the SEC or issued in connection with securities offerings; e.g. comfort letters and consents. Also includes services related to a pre-implementation review related to the system conversion activities associated with Cimarex’s financial data. For 2023, consists of fees associated with services related to a gap assessment relative to the SEC’s proposed climate rules. (3)
Consists of federal and state tax compliance and tax planning advice. (4)
Consists of fees associated with a software license for a financial reporting disclosure checklist.
FEES BILLED BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR SERVICES IN 2022 AND 2021
| 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 | |
* | No pre-approved requirements were waived under the de minimis exception. | (1) | Consists of fees associated with the audits of our consolidated financial statements and reviews of our quarterly condensed consolidated financial statements within such years. | (2) | Consists of fees associated with SEC registration statements and other documents filed with the SEC or issued in connection with securities offerings; e.g. comfort letters and consents. Also includes services related to a pre-implementation review related to the system conversion activities associated with Cimarex’s financial data. | (3) | Consists of federal and state tax compliance and tax planning advice. | (4) | Consists of fees associated with an accounting research software license and reference materials. |
COTERRA• 2023 PROXY STATEMENT | 64 |
AUDIT COMMITTEE REPORT
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 function of the Audit Committee is to review and report to the Board with respect to various auditing and accounting matters, including overseeing the integrity of the financial statements of the Company, the compliance by the Company with legal and regulatory requirements, the selection, independence, qualifications, performance and compensation of the Company’s independent registered public accounting firm and the performance of the Company’s internal audit function. This is a report on the Audit Committee’s activities relating to 2022.2023. Review of Audited Financial Statements with Management REVIEW OF AUDITED FINANCIAL STATEMENTS WITH MANAGEMENT
The Audit Committee reviewed and discussed the audited financial statements and management’s discussion and analysis of the Company’s financial condition and results of operations with the management of the Company.
Review of Financial Statements and Other Matters with Independent Registered Public Accounting Firm REVIEW OF FINANCIAL STATEMENTS AND OTHER MATTERS WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee discussed with 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.
Recommendation that Financial Statements be Included in the Annual Report RECOMMENDATION THAT FINANCIAL STATEMENTS BE INCLUDED IN THE ANNUAL REPORT
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board 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 2024
COTERRA• 2023 PROXY STATEMENT | 65 |
PRINCIPAL STOCKHOLDERS PROPOSAL 3
TO APPROVE, BY NON-BINDING ADVISORY VOTE,
THE COMPENSATION OF OUR NAMED EXECUTIVE
OFFICERS
In accordance with Section 14A of the Exchange Act and the related rules of the SEC, the 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:
• | Align executive compensation with our business strategy; | • | Encourage management to create sustained value for the shareholders while managing inherent business risks; | • | Attract, retain, and engage talented executives; and | • | Support a long-term performance-based culture throughout the Company. |
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.
| THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS. |
COTERRA• 2023 PROXY STATEMENT | 66 |
PROPOSAL 4
TO APPROVE, BY NON-BINDING ADVISORY VOTE,
THE FREQUENCY OF THE ADVISORY VOTE ON
EXECUTIVE COMPENSATION
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.
| THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR 1 YEAR. |
COTERRA• 2023 PROXY STATEMENT | 67 |
PROPOSAL 5
TO APPROVE THE COTERRA ENERGY INC.
2023 EQUITY INCENTIVE PLAN
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:
• | A reserve of 22,950,000 shares of our common stock that may be issued pursuant to awards under the 2023 Plan; | • | Shares delivered pursuant to awards under the 2023 Plan are counted against the share reserve on a 1:1 basis; | • | A term that expires on February 21, 2033; | • | Permitted awards include, but are not limited to, options, stock appreciation rights (sometimes referred to as “SARs”), restricted stock, restricted stock units (sometimes referred to as “RSUs”), performance stock units (sometimes referred to as “PSUs”), and other cash and stock-based awards; | • | No direct or indirect repricing of options or stock appreciation rights without shareholder approval; | • | Stringent share recycling provisions that prohibit recycling of shares used as consideration for tax withholding as applicable to all award types or as consideration for option exercises, along with full counting of all shares subject to stock-settled stock appreciation rights; | • | A minimum one-year vesting schedule on all equity-based awards 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 (applicable to at least 95 percent of the shares authorized for issuance so that up to 5 percent of the authorized shares may be issued pursuant to exceptions to the minimum one-year vesting); | • | No automatic single trigger vesting upon a change in control and no excise-tax gross-ups on equity awards; | • | Robust transfer restrictions; and | • | Awards are subject to the Company’s clawback policy, as further described in the CD&A section of this proxy statement. |
REASONS FOR ADOPTING THE 2023 PLAN
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.
COTERRA• 2023 PROXY STATEMENT | 68 |
OUTSTANDING AWARDS UNDER THE PRIOR PLANS
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.
DESCRIPTION OF THE 2023 PLAN
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.
Purpose of the 2023 Plan
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:
• | To select participants and determine the type(s) of award(s) that they are to receive; | • | To determine the number of shares that are to be subject to awards and the terms and conditions of awards, including the price (if any) to be paid for the shares or the award; | • | To cancel, modify, or waive the Company’s rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding awards, subject to any required consents, and subject to the repricing prohibition described below; | • | To accelerate or extend the vesting or exercisability or extend the term of any or all outstanding awards subject to any required consents; | • | Subject to the other provisions of the 2023 Plan, to make certain adjustments to outstanding awards and authorize the conversion, succession or substitution of awards; and | • | To allow the purchase price of awards or shares of the Company’s common stock to be paid in the form of cash, check, or electronic funds transfer, by the delivery of already-owned shares of the Company’s common stock or by a reduction of the number of shares deliverable pursuant to the awards, by services rendered by the recipient of the awards, by notice of third party payment or by cashless exercise, on such terms as the Administrator may authorize, or any other form permitted by law. |
Eligibility
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.
Authorized Shares
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
COTERRA• 2023 PROXY STATEMENT | 69 |
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.
Awards Under the 2023 Plan
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.
No Repricing
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.
Minimum Vesting Schedule
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.
Types of Awards
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.
Stock Options
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% | | |
(1)
Based solely on a subsidiary. Neither dividends nor dividend equivalent amounts may accrue or be paidSchedule 13 G/A filed February 13, 2024 with the SEC by The Vanguard Group (100 Vanguard Blvd., Malvern, PA 19355), it has shared voting power over 959,073 of these shares, sole dispositive power over 84,704,216 of these shares and shared dispositive power over 3,222,351 of these shares. (2)
Based solely on stock options undera Schedule 14 G/A filed January 25, 2024, with the 2023 Plan.SEC by BlackRock, Inc. (50 Hudson Yards, New York, NY 10001), it has sole voting power over 57,347,488 of these shares and sole dispositive power over all 60,876,106 shares. (3)
Stock Appreciation Rights
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. (4)
Based solely on a payment in cash, common stock or any combination thereof,Schedule 13 G/A filed January 29, 2024 with the SEC by State Street Corporation (State Street Financial Center, One Congress Street, Suite 1, Boston, MA 02114-2016), it has shared voting power over 37,781,281 and shared dispositive power over 48,918,239 of an amount equal tothese shares. (5)
Based solely on a Schedule 13 G/A filed February 14, 2024, with the excessSEC by Aristotle Capital Management, LLC (11100 Santa Monica Blvd., Suite 1700, Los Angeles, CA 90025), it has sole voting power over 33,963,244 of the fair market value of a share of the Company’s common stock on the date of exercise of the stock appreciation rightthese shares and sole dispositive power over the base price of the stock appreciation right. The base price is established by the Administrator at the time of grant of the stock appreciation right and cannot be less than the fair market value of a share of the Company’s common stock on the date of grant. Stock appreciation rights may be granted in connection with other awards or independently. The maximum term of a stock appreciation right issued pursuant to the 2023 Plan is 10 years from the date of grant. Neither dividends nor dividend equivalent amounts may accrue or be paid on stock appreciation rights under the 2023 Plan.COTERRAall 36,447,580 shares.• 2023 PROXY STATEMENT | 70 |
(6)
Restricted Stock
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.
Restricted Stock Units
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.
DIRECTORS AND EXECUTIVE OFFICERS The following table reports, as of February 15, 2024, beneficial ownership of common stock by each director and nominee for director, by each named executive officer listed in the applicable award agreement“Summary Compensation Table” below and the 2023 Plan, a participant receiving RSUs has no rightsby all directors, nominees and executive officers as a shareholdergroup. Unless otherwise indicated and pursuant to applicable community property laws, the persons below have sole voting and investment power with respect to the RSUs until the shares of common stock areshown as beneficially owned by them. | | Name of Beneficial Owner | | | | Number of Shares
of Common Stock
Owned(1) | | | | Percent of
Class(2) | | | | Dorothy M. Ables | | | | | | 89,593(3) | | | | | | | * | | | | | Robert S. Boswell | | | | | | 95,339 | | | | | | | * | | | | | Amanda M. Brock | | | | | | 63,205 | | | | | | | * | | | | | Dan O. Dinges | | | | | | 4,413,722(4) | | | | | | | * | | | | | Paul N. Eckley | | | | | | 68,945 | | | | | | | * | | | | | Hans Helmerich | | | | | | 1,853,153(5) | | | | | | | * | | | | | Lisa A. Stewart | | | | | | 101,596(6) | | | | | | | * | | | | | Frances M. Vallejo | | | | | | 68,945(7) | | | | | | | * | | | | | Marcus A. Watts | | | | | | 63,205 | | | | | | | * | | | | | Thomas E. Jorden | | | | | | 2,756,766(8) | | | | | | | * | | | | | Shannon E. Young III | | | | | | 81,030 | | | | | | | * | | | | | Stephen P. Bell | | | | | | 563,281 | | | | | | | * | | | | | Blake A. Sirgo | | | | | | 141,128 | | | | | | | * | | | | | Kevin W. Smith | | | | | | 95,369 | | | | | | | * | | | | | Scott C. Schroeder | | | | | | 1,800,171 | | | | | | | * | | | | | Christopher H. Clason | | | | | | 187,577 | | | | | | | * | | | | | All directors and executive officers as a group (21 individuals) | | | | | | 12,987,006(3)(4)(5)(6)(7)(8)(9) | | | | | | | 1.7% | | |
(1)
Amounts shown include restricted stock units issued under the Company’s incentive plans as follows: •
as to which restrictions lapse upon the participant. RSUs mayholders’ retirement from the Board of Directors: Ms. Ables, 70,732; Mr. Boswell, 76,478; Ms. Brock, 49,344; Mr. Watts, 49,344; and “All directors and executive officers as a group,” 245,898 •
as to which restrictions lapse upon the earlier of May 4, 2024 or the date the non-employee director ceases to be settled in cash if so provided in the applicable award agreement.Performance Stock Units
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
•
as to which restrictions lapse upon January 31, 2026: Mr. Jorden, 217,391; Mr. Bell, 65,217; Mr. Young, 81,030; Mr. Sirgo, 29,348; Mr. Smith, 29,348; Mr. Schroeder, 90,217; Mr. Clason, 30,435; and for “All directors and executive officers as a group,” 714,344 •
as to which restrictions lapse upon January 31, 2025: Mr. Bell, 51,436; Mr. Sirgo, 17,145; Mr. Smith, 17,145; Mr. Schroeder, 71,153; Mr. Clason, 15,669; and for “All directors and executive officers as a group,” 256,196 •
as to which restrictions lapse upon December 1, 2024: Mr. Jorden, 488,759; Mr. Bell, 146,628; Mr. Sirgo, 48,876; Mr. Smith 48,876; Mr. Clason, 30,030; for “All directors and executive officers as a group,” 847,144 (2)
There were 751,847,432 shares of common stock are issued to the participant. PSUs may be settled in cash if so provided in the applicable award agreement.outstanding on February 15, 2024. (3)
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
Includes 5,000 shares held by the International Accounting Standards Board (“IASB Principles”), or may be adjusted when established to include or exclude any items otherwise includable or excludable under GAAP or under IASB Principles. Such performance goals also may be based solely by reference to the Company’s performance or the performance of a subsidiary, division, business segment or business unit of the Company or a subsidiary, or based upon performance relative to performance of other companies or upon comparisons of any of the indicators of performance relative to performance of other companies. In assessing performance, the Administrator may provide for exclusion of the impact of an event or occurrence which the Administrator determines should appropriately be excluded, including (a) restructurings, discontinued operations, extraordinary items, and other unusual, infrequently occurring or non-recurring charges or events, (b) asset write-downs, (c) litigation or claim judgments or settlements, (d) acquisitions or divestitures, (e) reorganization or change in the corporate structure or capital structure of the Company, (f) an event either not directly related to the operations of the Company, subsidiary, division, business segment or business unit or not within the reasonable control of management, (g) foreign exchange gains and losses, (h) a change in the fiscal year of the Company, (i) the refinancing or repurchase of bank loans or debt securities, (j), unbudgeted capital expenditures, (k) the issuance or repurchase of equity securities and other changes in the number of outstanding shares, (l) conversion of some or all of convertible securities to common stock, (m) any business interruption event, (n) the cumulative effects of tax or accounting changes in accordance with GAAP, or (o) the effect of changes in other laws or regulatory rules affecting reported results.Cash Awards
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.
Other Awards
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.
Change In Control
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
COTERRA• 2023 PROXY STATEMENT | 71 |
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.
(4)
Includes 1,261,330 shares held in trust for the 2023 Plan, different awards under the 2023 Plan, and different portionsbenefit of awards granted under the 2023 Plan.Transferability of Awards
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.
(5)
Includes 45,967 shares owned by Mr. Helmerich’s wife; Mr. Helmerich disclaims beneficial ownership of the recipient’s lifetime onlyshares held by his wife. Also, includes 233,699 shares owned by 1993 Hans Helmerich Trust, of which Mr. Helmerich is the trustee; 44,409 shares owned by Helmerich Grandchildren LLC, of which Mr. Helmerich is the co-manager; 31,573 shares owned by Family Trust, of which Mr. Helmerich is the trustee; 91,145 shares owned by The Helmerich Trust, of which Mr. Helmerich is the co-trustee; 1,304,895 shares held by the recipient. Any amounts payable orPeggy Helmerich QTIP Trust, of which Mr. Helmerich is the trustee; and 40,146 shares issuable pursuantheld by Saddleridge, LLC, of which Mr. Helmerich owns 99 percent and his wife owns 1 percent. (6)
Includes 5,700 shares held in an individual retirement account. (7)
Includes 60,768 shares to an award generally will be paid only to the recipient or the recipient’s beneficiary or representative. The Administratorwhich Mrs.Vallejo has discretion, however, to establish written conditionsshared voting and procedures for the transfer of awards to other persons or entities, as long as such transfers comply with applicable federal and state securities laws and provided that any such transfers are not for consideration.investment power. (8)
Adjustments
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.
No Limit on Other Authority
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.
Clawback Policy and Restrictive Covenants
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.
Termination of, or Changes to, the 2023 Plan
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.
Certain Federal Tax Consequences
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.
Nonqualified Stock Options
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.
(9)
Includes 20,000 restricted stock units as to an income tax deduction in the amount of the 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 proceeds received and whether the shares are held for more than one year following exercise. The Company does not receive a tax deduction for any subsequent capital gain.COTERRAwhich restrictions lapse upon April 11, 2025.• 2023 PROXY STATEMENT | 72 |
DELINQUENT SECTION 16(a) REPORTS Incentive Stock Options
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
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
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.
COTERRA• 2023 PROXY STATEMENT | 73 |
Section 162(m) of the Internal Revenue Code
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 Internal Revenue Code
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.
Interested Parties
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.
Required Vote
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.
| THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE 2023 COTERRA ENERGY INC. EQUITY INCENTIVE PLAN. |
COTERRA• 2023 PROXY STATEMENT | 74 |
PROPOSAL 6
SHAREHOLDER PROPOSAL
REGARDING A REPORT ON RELIABILITY OF
METHANE EMISSION DISCLOSURES
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.
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 2023, except that a Form 3 for Mr. Hlavinka in 2022 inadvertently omitted two Table II holdings. Such holdings were included on a Form 5 filed on February 15, 2024.
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:
• | summarize the outcome of any Coterra efforts to directly measure methane emissions, using recognized frameworks such as OGMP; | • | explain whether there is likely to be a material difference between direct measurement results and Company’s reported methane emissions; | • | assess the degree to which any differences would alter estimates of the Company’s Scope 1 emissions. |
The report should be made public, omit proprietary information, and be prepared expeditiously at reasonable cost.
Supporting Statement
At management’s discretion, we recommend that the report:
• | Describe the types of source- and site-level measurements used; | • | Provide an explanation of the difference between the Company’s estimated methane emissions and their own or third-party direct measurements, by site or region; | • | Describe any effort to improve emission estimates over time, consistent with frameworks such as OGMP; and | • | Describe any efforts to validate emissions estimates and disclosure through third-party audit or evaluation. |
(1) | https://www.epa.gov/ghgemissions/overview-greenhouse-gases
| (2) | https://business.edf.org/files/Investors-Guide-to-the-OGMP_09.17.21_FINAL.pdf | (3) | https://www.seas.harvard.edu/news/2021/03/oil-and-natural-gas-production-emit-more-methane-previously-thought, https://www.nature.com/articles/s41467-021-25017-4 | (4) | http://ogmpartnership.com/partners
| (5) | https://www.ceres.org/resources/reports/benchmarking-methane-and-other-ghg-emissions-oil-natural-gas-production-united
|
COTERRA• 2023 PROXY STATEMENT | 75 |
BOARD OF DIRECTORS’ RESPONSE
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 actively pursue strategic actions to manage and reduce climate risks.
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.
Through innovation and technology, we are committed to reducing the amount of greenhouse gases we release related to our operations.
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.
The technology available to monitor methane emissions is developing and evolving.
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.
Required vote
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.
| THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE SHAREHOLDER PROPOSAL TO REPORT ON THE RELIABILITY OF METHANE EMISSION DISCLOSURES. |
COTERRA• 2023 PROXY STATEMENT | 76 |
PROPOSAL 7
SHAREHOLDER PROPOSAL
REGARDING A REPORT ON CORPORATE CLIMATE
LOBBYING
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.
Supporting Statement
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)
BOARD OF DIRECTORS’ RESPONSE
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
(1) | https://unfccc.int/news/updated-ndc-synthesis-report-worrying-trends-confirmed | (2) | https://climate-lobbying.com/ | (3) | https://climate-lobbying.com/wp-content/uploads/2022/03/2022_global-standard-responsible-climatelobbying_APPENDIX.pdf |
COTERRA• 2023 PROXY STATEMENT | 77 |
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.
Coterra is committed to responsible and transparent environmental, social and governance practices.
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 operate in an industry that is heavily regulated and, therefore, we are deeply affected by the political and legislative process.
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.
Coterra provides extensive public disclosure about our participation in the political process.
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.
Required vote
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.
| THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE SHAREHOLDER PROPOSAL TO REPORT ON CORPORATE CLIMATE LOBBYING IN LINE WITH PARIS AGREEMENT. |
COTERRA• 2023 PROXY STATEMENT | 78 |
GENERAL INFORMATION
Why did I receive these proxy materials?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. four proposals.Who is entitled to vote?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. We will maintain for a period of ten days ending on the day before the annual meeting date at our principal executive office a complete list of stockholders entitled to vote at the annual meeting, which list shall be open to the examination by any stockholder for any purpose germane to the annual meeting during ordinary business hours.What am I being asked to vote on, and what are the recommendations of the Board?At the annual meeting, 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 candidatesnominees named herein. | | | | 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 2023.2024. | | FOR | PROPOSAL 3 | | The approval, on an advisory basis, of executive compensation.FOR | | FOR | PROPOSAL 4 | | The approval, on an advisory basis, on the frequency of advisory votes on executive compensation. | | FOR “1 YEAR” | PROPOSAL 5 | | The approval of the Coterra Energy Inc. 2023 Equity Incentive Plan. | | FOR | PROPOSAL 6 | | The shareholder proposal regarding a report on reliability of methane emission disclosures. | | AGAINST | PROPOSAL 7 | | The shareholder proposal regarding a report on corporate climate lobbying. | | AGAINST |
How do I vote?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: • | In person:you may vote in person at the annual meeting; | • | By internet:use the instructions on the proxy card or voting instruction form received from your broker or bank; |
COTERRA• 2023 PROXY STATEMENT | 79 |
In person: you may vote in person at the annual meeting; •
By internet: use the instructions on the proxy card or voting instruction form received from your broker or bank up to 11:59 p.m. Eastern Time on April 30, 2024; •
By telephone: use the instructions on the proxy card or voting instruction form received from your broker or bank (if available) up to 11:59 p.m. Eastern Time on April 30, 2024; or •
By mail: by completing and returning the enclosed proxy card or voting instruction form in the postage-paid envelope provided (for those receiving paper copies only).
•
| By telephone:use the instructions on the proxy card or voting instruction form received from your broker or bank (if available); or | • | By mail:by completing and returning the enclosed proxy card or voting instruction form in the postage-paid envelope provided (for those receiving paper copies only). |
How do I attend the annual meeting in person?Registered stockholders will be asked to present a valid government-issued photo identification. If your shares are held in the name of your broker, bank or other nominee, you must bring to the meeting a valid government-issued photo identification and an account statement or letter (and a legal proxy if you wish to vote your shares) from the nominee indicating that you beneficially owned the shares on the record date for voting. • | Registered shareholders will be asked to present a valid government-issued photo identification. If your shares are held in the name of your broker, bank or other nominee, you must bring to the meeting a valid government-issued photo identification and an account statement or letter (and a legal proxy if you wish to vote your shares) from the nominee indicating that you beneficially owned the shares on the record date for voting. | • | We ask that you follow recommended guidance, mandates and applicable executive orders from federal and state authorities regarding COVID-19. We will require all attendees to comply with the Company’s policies in place at the time of the annual meeting, which may include a temperature check, completing a health check questionnaire, wearing a mask and maintaining six-foot social distance. If you are not feeling well, have had close contact (defined as being within six feet for 15 minutes or more without facial covering) with someone who has tested positive for COVID-19, or think you may have been exposed to COVID-19, we ask that you vote by proxy for the annual meeting. |
What is the difference between holding shares as a shareholderstockholder of record and as a beneficial owner?If your shares are registered directly in your name with Coterra’s registrar and transfer agent, Equiniti Trust Company, you are a 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. What if I hold my shares through a broker and do not give voting instructions to my broker?Brokers holding shares must vote according to specific instructions they receive from the beneficial owners of those shares. If brokers do not receive specific instructions, brokers may in some cases vote thesuch shares in their discretion.discretion if they so choose. However, the 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.” non-vote” for such shares. Broker non-votes will have the effect of votes against Proposal 2, while broker non-votes will have no impact on Proposals 1 or 3. No broker non-votes are expected with respect to Proposal 4.What constitutes a quorum of shareholders?stockholders?We must have a quorum to conduct the meeting. A quorum is the presence at the annual meeting, 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. COTERRA• 2023 PROXY STATEMENT | 80 |
What are my voting options and what is the voting requirement for each of the proposals? For each matter to be presented at the Annual Meeting,annual meeting, you may choose to vote “FOR,”“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 | PROPOSAL | | | | YOUR BOARD’S
RECOMMENDATION | | | | VOTE REQUIRED | | | | No. 1 – 1—The election of the 10 director nomineesnamed herein. | | FOR | | FOR | | | | Each director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a director nominee must exceed the number of shares voted AGAINST that director nominee, excluding abstentions)nominee) will be elected. | | | | No. 2 – 2—The ratificationapproval of the appointmentAmended and Restated Certificate of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2023.Incorporation of Coterra Energy Inc. | | FOR | | ProposalsFOR
| | | | Proposal 2 3, 5, 6 and 7 shall be decided by the affirmative vote of a majority of the outstanding shares of common stock entitled to vote on such proposal. | | | | No. 3—The approval, on an advisory basis, of executive compensation. | | | | FOR | | | | Proposals 3 and 4 shall be decided by the affirmative vote of holders of a majority of the voting power of the Common Stockcommon stock present in person or represented by proxy at the annual meeting and entitled to vote on such proposal.For Proposal 4, the option approved by a majority
| | | | No. 4—The ratification of the Common Stock present in person or represented by proxy and entitled to vote on such proposal will be deemed to be the option approved by the shareholders. If noneappointment of the three alternatives receives majority approval, the Board will consider the option that receives the greatest number of votes to be the option recommended by shareholders. | No. 3 – The approval, on an advisory basis, of executive compensation.PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2024. | | FOR | | No. 4 – The approval, on an advisory basis, of the frequency of the advisory vote on executive compensation. | FOR | FOR “1 YEAR” | | No. 5 – The approval of the Coterra Energy Inc. 2023 Equity Incentive Plan. | | FOR | | No. 6 – The shareholder proposal regarding a report on reliability of methane emission disclosures. | | AGAINST | | No. 7 – The shareholder proposal regarding a report on corporate climate lobbying. | | AGAINST | |
How will my shares be voted on other matters raised at the meeting?We do not know of any matters to be presented at the annual 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. Do I have dissenters’ or appraisal rights with respect to any actions to be taken at the annual meeting?
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.
What can I do if I change my mind after I vote my shares?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.
When will Coterra announce the voting results?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. COTERRA• 2023 PROXY STATEMENT | 81 |
How are proxies solicited, and what is the cost?The accompanying proxy is being solicited by our Board. The cost of soliciting proxies in the enclosed form will be borne by the Company. In addition to solicitation by mail, officers, employees or agents of the Company may solicit proxies personally. Alliance Advisors LLC will assist with the solicitation of proxies for a fee of $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. What is householding?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.
This is known as “householding.” This procedure reduces the environmental impact of our annual meetings and reduces the Company’s printing and mailing costs. Upon oral or written request, we will promptly deliver a separate copy of the proxy statement to any shareholderstockholder residing at an address to which only one copy was mailed. You may direct requests for additional copies for the current year or future years to our Corporate Secretary or our Investor Relations team at the following physical address, phone number or email address: Coterra Energy Inc.
Attn: Corporate Secretary or Investor Relations
840 Gessner Road, Suite 1400
Houston, Texas 77024
OR Phone: (281) 589-4600 OR Email (Corporate Secretary): corporatesecretary@coterra.com
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 Stockholders of record residing at the same address and currently receiving multiple copies of the proxy statement may contact our registrar and transfer agent, Equiniti Trust Company, at EQ Shareowner Services, P.O. Box 64874, St. Paul, Minnesota 55164-0874,the following physical address or 1-800-401-1957,phone number to request a single copy be mailed in the future. future: EQ Shareowner Services
P.O. Box 64874
St. Paul, Minnesota 55164-0874 OR Phone: 1-800-401-1957 Beneficial owners should contact their broker or bank. How can I communicate with Coterra’s Board of Directors or individual directors?You can address communications to the 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 OR
Phone: (281) 589-4600 OR Fax: (281) 589-4910
OR
Email: corporatesecretary@coterra.com All communications received as described above will be relayed to the appropriate directors. How do I submit a shareholderstockholder proposal for action at the 20242025 annual meeting of shareholders?stockholders?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. 20, 2024. COTERRA• 2023 PROXY STATEMENT | 82 |
How do I nominate a director or present other items for action at the 20242025 annual meeting of shareholders?stockholders? 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. How do I nominate a director for inclusion in the Company’s proxy statement for the 20242025 annual meeting of shareholdersstockholders using a proxy access nomination?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. In addition to satisfying the foregoing requirements under our bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees for the 2025 annual meeting of stockholders must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 2, 2025. By Order of the Board of Directors, 
MarcusMARCUS G. Bolinder
BOLINDER
Corporate Secretary
March 20, 2023
2024
COTERRA• 2023 PROXY STATEMENT | 83 |
| | APPENDIX A | | | AMENDED AND RESTATED CERTIFICATE OF INCORPORTATION OF
COTERRA ENERGY INC. | |
APPENDIX A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
of
COTERRA ENERGY INC.Coterra Energy Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation” or the “Company”), does hereby certifycertifies that: 1. The name of the Corporation is Coterra Energy Inc. 2. The name under which the Corporation was originally incorporated was Cabot Oil & Gas Corporation and the date of filing of the Corporation’s original Certificate of Incorporation with the Secretary of State of the State of Delaware was December 14, 1989. 3. The Board of Directors of the Corporation has duly adopted thisa Restated Certificate of Incorporation without a vote of the stockholders in accordance with Section 245 of the General Corporation Law of the State of Delaware. This Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions ofon October 1, 2021. 4. The Board of Directors of the Corporation duly adopted resolutions proposing the amendment and restatement of the Restated Certificate of Incorporation, declaring its advisability, and directing that it be submitted to the stockholders of the Corporation for their approval; and the Corporation’s stockholders duly adopted such amendment and restatement, all in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware. 5. Therefore, the Corporation’s Restated Certificate of Incorporation as heretoforeis hereby amended and supplemented, and there is no discrepancy between the provisions of therestated in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware to read in its entirety as set forth below. References to this “Certificate of Incorporation as heretofore amended and supplemented and the provisions of this” herein refer to this Amended and Restated Certificate of Incorporation. 4. The text of the Corporation’s Certificate of Incorporation as heretofore amended and supplemented is hereby restated to read as herein set forth in full. ARTICLE I The name of the corporation is Coterra Energy Inc. (the “Corporation”). ARTICLE II The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. ARTICLE III The nature of the business to be conducted and the purposes to be promoted by the Corporation are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “GCL”). ARTICLE IV The aggregate number of shares of all classes of stock which the Company shall have authority to issue is 1,805,000,000, divided into 5,000,000 shares of Preferred Stock, par value $.100.10 per share (“Preferred Stock”), and 1,800,000,000 shares of Common Stock, par value $.100.10 per share (the “Common Stock”). The following is a statement of the designations and the powers, preferences and rights, and the qualifications, limitations or restrictions thereof, of the classes of stock of the Corporation: SECTION I. PREFERRED STOCK Shares of Preferred Stock may be issued from time to time in one or more series as from time to time may be determined by the Board of Directors. Each series shall be distinctly designated. The Board of Directors of the Corporation is hereby expressly granted 2024 PROXY STATEMENTA-12023 EQUITY INCENTIVE PLAN
authority to fix, by resolution or resolutions adopted prior to the issuance of any shares of each particular series of Preferred Stock, the designation, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, if any, of such series, including, but without limiting the generality of the foregoing, the following: (1) the designation of, and the number of shares of Preferred Stock which shall constitute, the series, which number may be increased (except as otherwise fixed by the Board of Directors) or decreased (but not below the number of shares thereof then outstanding) from time to time by action of the Board of Directors; (2) the rate and times at which (or the method of determination thereof), and the terms and conditions upon which, dividends, if any, on shares of the series shall be paid, the nature of any preferences or the relative rights of priority of such dividends to the dividends payable on any other class or classes of stock of the Corporation or on any series of Preferred Stock of the Corporation, and a statement whether such dividends shall be cumulative; (3) whether shares of the series shall be convertible into or exchangeable for shares of capital stock or other securities or property of the Corporation or of any other corporation or entity, and, if so, the terms and conditions of such conversion or exchange, including any provisions for the adjustment of the conversion or exchange rate in such events as the Board of Directors shall determine; (4) whether shares of the series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount and type of consideration payable in case of redemption, which amount may vary under different conditions and at different redemption dates; (5) the rights, if any, of the holders of shares of the series upon voluntary or involuntary liquidation, merger, consolidation, distribution or sale of assets, dissolution or winding up of the Corporation; (6) whether shares of the series shall have a sinking fund or purchase account for the redemption or purchase of shares of the series, and if so, the terms, conditions and amount of such sinking fund or purchase account; (7) whether shares of the series shall have voting rights in addition to the voting rights provided by law, which may, without limiting the generality of the foregoing, include (a) the right to more or less than one vote per share on any or all matters voted upon by the Corporation’s stockholders and (b) the right to vote, as a series by itself or together with other series of Preferred Stock or together with all series of Preferred Stock as a class or with the Common Stock as a class, upon such matters, under such circumstances and upon such conditions as the Board of Directors may fix, including, without limitation, the right, voting as a series by itself or together with other series of Preferred Stock or together with all series of Preferred Stock as a class, to elect one or more directors of the Corporation in the event there shall have been a default in the payment of dividends on any one or more series of Preferred Stock or under such other circumstances and upon such conditions as the Board of Directors may determine; and (8) any other powers, preferences and relative, participating, optional or other rights, and qualifications, limitations or restrictions of shares of that series. The relative powers, preferences and rights of each series of Preferred Stock in relation to the powers, preferences and rights of each other series of Preferred Stock shall, in each case, be as fixed from time to time by the Board of Directors in the resolution or resolutions adopted pursuant to authority granted in this Section I, and the consent, by class or series vote or otherwise, of the holders of Preferred Stock of such of the series of the Preferred Stock as are from time to time outstanding shall not be required for the issuance by the Board of Directors of any other series of Preferred Stock whether the powers, preferences and rights of such other series shall be fixed by the Board of Directors as senior to, or on a parity with, the powers, preferences and rights of such outstanding series, or any of them; provided, however, that the Board of Directors may provide in such resolution or resolutions adopted with respect to any series of Preferred Stock that the consent of the holders of a majority (or such greater proportion as shall be therein fixed) of the outstanding shares of such series voting thereon shall be required for the issuance of any or all other series of Preferred Stock. SECTION II. COMMON STOCK (1) Dividends. After the requirements with respect to preferential dividends on Preferred Stock, if any, shall have been met and after the Company shall have complied with all the requirements, if any, with respect to the setting aside of sums as sinking funds or redemption or purchase accounts and subject further to any other conditions which may be fixed in accordance with the provisions of this Certificate of Incorporation, then, but not otherwise, the holders of Common Stock shall be entitled to receive such dividends, if any, as may be declared from time to time by the Board of Directors on the Common Stock, which dividends shall be paid out of assets legally available for payment of dividends and shall be distributed among the holders of shares pro rata in accordance with the number of shares of such stock held by each such holder.
ADOPTED BY(2) Liquidation. After distribution in full of the preferential amount, if any, to be distributed to the holders of Preferred Stock in the event of voluntary or involuntary liquidation, distribution or sale of assets, dissolution or winding-up of the Company, the holders of the Common Stock shall be entitled to receive all the remaining assets of the Company, tangible and intangible, of whatever kind available for distribution to stockholders, which assets shall be distributed pro rata in accordance with the number of shares of such stock held by each such holder. (3) Voting. Except as may otherwise be required by law, this Certificate of Incorporation or the provisions of the resolution or resolutions as may be adopted by the Board of Directors pursuant to Section I of this Article IV, each holder of Common Stock shall have one vote in respect of each share of Common Stock held by such holder on each matter voted upon by the stockholders. Cumulative voting of shares of Common Stock is prohibited. ARTICLE V The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders: (1) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. (2) The directors shall have concurrent power with the stockholders to make, alter, amend, change, add to or repeal the By-Laws of the Corporation. (3) The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the By-Laws of the Corporation. Election of directors need not be by written ballot unless the By-Laws so provide. (4) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the statutes of Delaware, this Certificate of Incorporation and any By-Laws adopted by the stockholders; provided, however, that no By-Laws thereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted. ARTICLE VI Reserved. ARTICLE VII A director of the Corporation shall not be personally liable to the Corporation or its stockholder or stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholder or stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the GCL, as the same exists or hereafter may be amended or replaced, or (iv) for any transaction from which the director derived an improper personal benefit. If the GCL is amended after the date of filing of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the GCL as so amended. Any repeal or modification of this Article IXVII by the stockholder or stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. An officer of the Corporation shall not be personally liable to the Corporation or its stockholder or stockholders for monetary damages for breach of fiduciary duty as an officer, except for liability (i) for any breach of the officer’s duty of loyalty to the Corporation or its stockholder or stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for any transaction from which the officer derived an improper personal benefit, or (iv) for any action by or in the right of the Corporation. If the GCL is amended after the date of filing of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of officers, then the liability of an officer of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the GCL as so amended. Any repeal or modification of this Article VII by the stockholder or stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of an officer of the Corporation existing at the time of such repeal or modification. ARTICLE VIII The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. [Signature page follows]
IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been executed by an authorized officer of the Corporation as of day of this 1st day of October, 2021 , 2024. COTERRA ENERGY INC. By: Scott C. SchroederShannon E. Young III Executive Vice President and Chief Financial Officer
![[MISSING IMAGE: px_24coterraproxy01pg01-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/px_24coterraproxy01pg01-bw.jpg) PROXY COTERRA ENERGY INC.ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 1, 2024THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS ON FEBRUARY 21,DIRECTORSThe undersigned hereby makes, constitutes, and appoints Shannon E. Young III, Adam M. Vela and Marcus G. Bolinder, and each of them (with the power of substitution), proxies for the undersigned to represent and to vote, as designated below, all shares of Common Stock of Coterra Energy Inc. held of record by the undersigned on March 7, 2024 at the 2024 annual meeting of stockholders to be held on May 1, 2024 at 8:00 a.m. CST at Two Memorial City Plaza, 820 Gessner Road, 1st Floor, Live Oak Training Center, Suite 107, Houston, TX 77024 or any adjournment or postponement thereof.This proxy, when properly executed, will be voted as directed herein. If no direction is made, this proxy will be voted “FOR” each director nominee in Proposal 1, and “FOR” Proposals 2, 3, and 4. The proxies named above also will vote in their discretion upon such other business as may properly come before the annual meeting or any adjournment thereof, including procedural matters and matters relating to the conduct of the annual meeting.You are encouraged to specify your choices by marking the appropriate boxes on the reverse side. The proxies cannot vote your shares unless you sign and return this card or vote by telephone or Internet as described below before the annual meeting.Voting by telephone or Internet eliminates the need to return this proxy card. Your vote authorizes the proxies named above to vote your shares to the same extent as if you had marked, signed, dated, and returned the proxy card. Before voting, read the proxy statement and proxy voting instructions.Thank you for voting.(Continued and to be marked, dated, and signed on the other side) PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held May 1, 2024:The Proxy Statement, 2023 Form 10-K, and 2023 Annual Report are available at: http://www.viewproxy.com/CoterraEnergy/2024 Please mark your votes like this ☒The Board of Directors recommends a vote “FOR” each director nominee in Proposal 1, and “FOR” Proposals 2, 3, and 4.Proposal 1. The election of the 10 director nominees named in the attached proxy statement to our Board of Directors. APPROVED BY THE COMPANY’S STOCKHOLDERS ON MAY [4], 2023
1. | ESTABLISHMENT AND PURPOSE OF PLAN | | Coterra Energy Inc., a Delaware corporation (the “Company”), hereby establishes the Coterra Energy Inc. 2023 Equity Incentive Plan (the “Plan”) as set forth in this document. The purpose of the Plan is to promote the success of the Company and to increase stockholder value by providing an additional means to attract, motivate, retain and reward selected employees, non-employee directors, and other eligible persons through the grant of equity and cash Awards (as defined below) that align the interests of Plan participants with the interests of the Company’s stockholders. The Plan is intended to replace the Cabot Oil & Gas Corporation 2014 Incentive Plan (the “Prior Cabot Plan”) and the Cimarex Energy Co. Amended and Restated 2019 Equity Incentive Plan (the “Prior Cimarex Plan,” and together with the Prior Cabot Plan, the “Prior Plans”), subject to stockholder approval of the Plan. After the effective date of the Plan, no awards may be granted under the Prior Plans. From the date of approval of the Plan by the Company’s Board of Directors through the date of the Company’s 2023 annual meeting of stockholders, new awards under the Prior Plans may be made only to the extent the number of shares of Common Stock issuable pursuant to such awards does not exceed an aggregate of 200,000. | | | 2. | DEFINITIONS | | 2.1 | Defined Terms. Whenever used in the Plan, the following capitalized terms shall have the meanings set forth below: | | | (a) | “Administrator” shall mean the Board or one or more committees appointed by the Board (or appointed by another committee within that committee’s delegated authority) to administer all or certain aspects of the Plan, as set forth in Section 3. | | | (b) | “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations promulgated under the Exchange Act. | | | (c) | “Award” shall mean a grant under the Plan of an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Stock Unit, Other Stock-Based Award or cash. | | | (d) | “Award Agreement” shall mean a written or electronic agreement or document evidencing the grant of an Award under the Plan and containing the terms and conditions of such Award, as determined by the Administrator. | | | (e) | “Board” shall mean the board of directors of the Company. | | | (f) | “Cause” shall mean, with respect to any Participant, as determined by the Administrator and unless otherwise provided in an applicable agreement between the Participant and the Company or an Affiliate, (i) gross negligence or willful misconduct in connection with performance of duties; (ii) conviction of a criminal offense (other than minor traffic offenses); or (iii) material breach of any term of any employment, consulting or other services, confidentiality, intellectual property or non-competition agreement, if any, between the Participant and the Company or an Affiliate. Any determination by the Administrator whether an event constituting Cause has occurred will be final, binding and conclusive. | | | (g) | “Change in Control” shall mean and shall be deemed to have occurred upon the occurrence of any one of the following: | | | | (1) | the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30 percent or more of either (i) the then outstanding shares of Common Stock (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (1), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction described in clauses (i) and (ii) of subsection (3) below; |
COTERRA• 2023 PROXY STATEMENT | A-1 |
| | | (2) | during any period of 12 months beginning after the Effective Date, individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director at the beginning of such 12-month period, whose election, appointment or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; | | | | (3) | the closing of a reorganization, share exchange or merger (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 60 percent of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including a corporation which as a result of such transaction will own the Company through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be and (ii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination or were elected, appointed or nominated by the Board; or | | | | (4) | the closing of (i) a complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 60 percent of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, and (B) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of the Company or were elected, appointed or nominated by the Board.
If required for compliance with Section 409A of the Code, in no event will a Change in Control be deemed to have occurred if the transaction is not also a “change in ownership or effective control of” the Company or a “change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5).
| | | (h) | “Code” shall mean the Internal Revenue Code of 1986, as amended.
| | | (i) | “Common Stock” shall mean the common stock of the Company, par value $0.10 per share, and such other securities or property as may become the subject of Awards under the Plan pursuant to an adjustment made under Section 8.1.
| | | (j) | “Company” shall mean Coterra Energy Inc., a Delaware corporation.
| | | (k) | “Disability” shall mean, unless otherwise provided in an employment, consulting or other services agreement, if any, or Award Agreement between the Participant and the Company or an Affiliate, the Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.
| | | (l) | “Effective Date” shall mean the date on which the Plan is approved by the stockholders of the Company. | | | (m) | “Eligible Person” shall have the meaning set forth in Section 5.
| | | (n) | “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
| | | (o) | “Fair Market Value” shall mean, unless otherwise determined by the Committee, the fair market value of a share of Common Stock as of a particular date, determined as follows: (i) the closing sale price reported for such share of
|
COTERRA• 2023 PROXY STATEMENT | A-2 |
![[MISSING IMAGE: px_24coterraproxy01pg02-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/px_24coterraproxy01pg02-bw.jpg) Please indicate if you plan to attend this meeting ☐Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) ☐ Proposal 2. To amend and restate the Restated Certificate of Incorporation of Coterra Energy Inc. to provide for exculpation of certain officers of the Company as permitted by amendments to Delaware law and to make certain non-substantive updates.FOR ☐AGAINST ☐ABSTAIN ☐Proposal 3. A non-binding advisory vote to approve the compensation of our named executive officers.FOR ☐AGAINST ☐ABSTAIN ☐Proposal 4. The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2024.FOR ☐AGAINST ☐ABSTAIN ☐Note: To transact such other business as may properly come before the meeting or any adjournments or postponements thereof.In their discretion, the proxies are authorized to vote upon such other business as may properly come before the annual meeting or any adjournment thereof, including procedural matters and matters relating to the conduct of the annual meeting. PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. PROXY VOTING INSTRUCTIONSPlease have your 11-digit control number ready when voting by Internet or Telephone. INTERNET TELEPHONE MAILVote Your Proxy on the Internet: Go to www.aalvote.com/CTRAVote Your Proxy by Phone: Call 1-(866)-804-9616Vote Your Proxy by Mail:Have your proxy card available when you access the above website. Follow the prompts to vote your shares.Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call.Follow the voting instructions to vote your shares.Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. | | | Common Stock on the national securities exchange or national market system on which such stock is principally traded, or if no sale of shares of Common Stock is reported for such trading day, on the most recent day on which a sale was reported, or (ii) if the shares of Common Stock are not then listed on a national securities exchange or national market system, or the value of such shares is not otherwise determinable, such value as determined by the Committee in good faith in its sole discretion consistent with the requirements under Section 409A of the Code. | | | (p) | “Incentive Stock Option” or “ISO” shall mean an incentive stock option within the meaning of Section 422 of the Code. | | | (q) | “Non-Qualified Stock Option” or “NSO” shall mean an Option other than an Incentive Stock Option. | | | (r) | “Option” shall mean a compensatory stock option granted pursuant to Section 6.1.1.
| | | (s) | “Other-Stock Based Award” shall mean a stock-based Award issued pursuant to Section 6.1.7.
| | | (t) | “Participant” shall mean any Eligible Person that has been issued an Award under the Plan.
| | | (u) | “Performance Stock Unit” or “PSU” shall mean a performance stock unit Award issued pursuant to Section 6.1.5.
| | | (v) | “Plan” shall have the meaning set forth in Section 1.
| | | (w) | “Restricted Stock” shall mean shares of forfeitable Common Stock issued pursuant to Section 6.1.3. | | | (x) | “Restricted Stock Unit” or “RSU” shall mean a restricted stock unit issued pursuant to Section 6.1.4.
| | | (y) | “Section 409A” shall mean section 409A of the Code and related Treasury regulations and pronouncements thereunder.
| | | (z) | “Securities Act” shall mean the Securities Act of 1933, as amended.
| | | (aa) | “Share Limit” shall have the meaning set forth in Section 4.1.
| | | (bb) | “Stock Appreciation Right” or “SAR” shall mean a stock appreciation right granted pursuant to Section 6.1.2.
| | | (cc) | “Subsidiary” shall mean any corporation or other entity controlled by the Company directly or indirectly though one or more intermediaries. | | | (dd) | “Substitute Awards” shall mean Awards granted or shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.
| | 2.2
| Construction. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural. Unless the context otherwise requires, whenever the words “including,” “include” or “includes” are used herein, they shall be deemed to be followed by the phrase “without limitation.” | 3. | PLAN ADMINISTRATION
| | 3.1 | Plan Administrator. The Plan shall be administered by, and all Awards under the Plan shall be authorized by, the Administrator. Any committee appointed by the Board to act as the Administrator shall be comprised solely of one or more directors or such other number of directors as may be required under applicable law. A committee may delegate some or all of its authority to another committee so constituted. The Board or a committee comprised solely of directors may also delegate, to the extent permitted by applicable law, to one or more officers of the Company, its powers under the Plan (a) to determine the Eligible Persons who will receive grants of Awards under the Plan, and (b) to determine the number of shares subject to, and the other terms and conditions of, such Awards. The Board may delegate different levels of authority to different committees with administrative and grant authority under the Plan. Unless otherwise provided in the bylaws of the Company or the applicable charter of any Administrator: (a) a majority of the members of the acting Administrator shall constitute a quorum, and (b) the affirmative vote of a majority of the members present assuming the presence of a quorum or the unanimous written consent of the members of the Administrator shall constitute due authorization of an action by the acting Administrator.
Award grants, and transactions in or involving Awards, intended to be exempt under Rule 16b-3 promulgated under the Exchange Act, must be duly and timely authorized by the Board or a committee consisting solely of two or more non-employee directors (as this requirement is applied under Rule 16b-3 promulgated under the Exchange Act). To the extent required by any applicable stock exchange, the Plan shall be administered by a committee composed entirely of independent directors (as defined by the rules of the applicable stock exchange). Awards granted to non-employee directors shall not be subject to the discretion of any officer or employee of the Company and shall be administered exclusively by the Board or a committee consisting solely of independent directors.
| | 3.2 | Powers of the Administrator. Subject to the express provisions of the Plan, the Administrator is authorized and empowered to do all things necessary or desirable in connection with the authorization of Awards and the administration
|
COTERRA• 2023 PROXY STATEMENT | A-3 |
| | of the Plan (in the case of a committee or delegation to one or more officers, within the authority delegated to that committee or person(s)), including the authority to: | | | (a) | determine eligibility and, from among those persons determined to be eligible, the particular Eligible Persons who will receive Awards under the Plan; | | | (b) | grant Awards to Eligible Persons, determine the price at which securities will be offered or Awarded and the number of securities to be offered or Awarded to any of such persons, determine the other specific terms and conditions of such Awards consistent with the express limits of the Plan, establish the installments (if any) in which such Awards shall become exercisable or shall vest (which may include, without limitation, performance, time-based schedules or any combination thereof), or determine that no delayed exercisability or vesting is required, establish any applicable performance targets, and establish the events of termination or reversion of such Awards; | | | (c) | approve the forms of Award agreements (which need not be identical either as to type of Award or among Participants); | | | (d) | construe and interpret the Plan and any Award Agreements defining the rights and obligations of the Company, its Subsidiaries, and Participants under the Plan, further define the terms used in the Plan, and prescribe, amend and rescind rules and regulations relating to the administration of the Plan or the Awards granted under the Plan; | | | (e) | cancel, modify, or waive the Company’s rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding Awards, subject to any required consent under Section 10.5.5; | | | (f) | accelerate or extend the vesting or exercisability or extend the term of any or all such outstanding Awards (in the case of Options or Stock Appreciation Rights, within the maximum ten-year term of such Awards) in such circumstances as the Administrator may deem appropriate (including in connection with a termination of employment or services or other events of a personal nature) subject to any required consent under Section 10.5.5; | | | (g) | adjust the number of shares of Common Stock subject to any Award, adjust the price of any or all outstanding Awards or otherwise change previously imposed terms and conditions, in such circumstances as the Administrator may deem appropriate, in each case subject to compliance with applicable stock exchange requirements, Sections 4 and 10.5.5, and provided that in no case (except due to an adjustment contemplated by Section 8) shall the terms of any outstanding Awards be amended (by amendment, cancellation and regrant, or other means) to reduce the per share exercise or base price of any outstanding Option or Stock Appreciation Right or other Award granted under the Plan, or be exchanged for cash, other Awards or Option or Stock Appreciation Rights with an exercise price that is less than the per share exercise price of the original Option or Stock Appreciation Rights, in any other manner that would be treated as a repricing under the rules and regulations of the principal securities exchange on which the shares of Common Stock are traded, in any such case without stockholder approval, and further provided that any adjustment or change in terms made pursuant to this Section 3.2(g) shall be made in a manner that, in the good faith determination of the Administrator will not likely result in the imposition of additional taxes or interest under Section 409A of the Code; | | | (h) | determine the date of grant of an Award, which may be a designated date after but not before the date of the Administrator’s action (unless otherwise designated by the Administrator, the date of grant of an Award shall be the date upon which the Administrator took the action granting an Award); | | | (i) | determine whether, and the extent to which, adjustments are required pursuant to Section 8 and authorize the termination, conversion, substitution, acceleration or succession of Awards upon the occurrence of an event of the type described in Section 8; | | | (j) | acquire or settle rights under Awards in cash, stock of equivalent value, or other consideration, subject to the provision of the Plan; and | | | (k) | determine the Fair Market Value of the Common Stock or Awards under the Plan from time to time and the manner in which such value will be determined. | | 3.3 | Binding Determinations.Any action taken by, or inaction of, the Company, any Subsidiary, or the Administrator relating or pursuant to the Plan and within its authority hereunder or under applicable law shall be within the absolute discretion of that entity or body and shall be conclusive and binding upon all persons. Neither the Board, the Administrator, nor any Board committee, nor any member thereof or person acting at the direction thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan (or any Award made under the Plan), and all such persons shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including legal fees) arising or resulting therefrom to the fullest extent permitted by law. The foregoing right of indemnification shall be in addition to any right of indemnification set forth in the Company’s certificate of incorporation and bylaws, as the same may be amended from time to time, or under any directors and officers liability insurance coverage or written indemnification agreement with the Company that may be in effect from time to time. |
COTERRA• 2023 PROXY STATEMENT | A-4 |
| 3.4 | Reliance on Experts.In making any determination or in taking or not taking any action under the Plan, the Administrator may obtain and may rely upon the advice of experts, including professional advisors to the Company. The Administrator shall not be liable for any such action or determination taken or made or omitted in good faith based upon such advice. | | 3.5 | Delegation of Non-Discretionary Functions.In addition to the ability to delegate certain grant authority to officers of the Company as set forth in Section 3.1, the Administrator may also delegate ministerial, non-discretionary functions to individuals who are officers or employees of the Company or any of its Subsidiaries or to third parties. | | | | | | 4. | SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMIT | | 4.1 | Shares of Common Stock Subject to the Plan; Share Limit.Subject to adjustment as provided in Sections 4.2 and 8.1, the maximum number of shares of Common Stock available for issuance under the Plan (the “Share Limit”) will be equal to 22,950,000 shares of Common Stock. Subject to adjustment as provided in Section 8.1, 12,000,000 shares of Common Stock shall be available under the Plan for issuance as Incentive Stock Options. Common Stock issued under the Plan shall be either authorized but unissued shares or, to the extent permitted by applicable law, shares of Common Stock that have been reacquired by the Company or any Subsidiary. | | 4.2 | Counting of Shares.The Administrator may adopt reasonable counting procedures to ensure appropriate counting and to avoid double counting (as, for example, in the case of tandem or substitute Awards) as it may deem necessary or desirable in its sole discretion. For each share delivered pursuant to an Award, the number of shares available for issuance under the Plan shall be reduced by one share. Shares shall be counted against those reserved to the extent shares have been delivered pursuant to an Award and are no longer subject to a substantial risk of forfeiture. Accordingly, to the extent that an Award under the Plan, in whole or in part, is canceled, expired, forfeited, settled in cash, or otherwise terminated without delivery of shares to the Participant, the shares retained by or returned to the Company will not be deemed to have been delivered under the Plan, as applicable, and will be deemed to remain available under the Plan in the same amount as they otherwise would have counted against the Share Limit. Notwithstanding the foregoing, shares that are withheld from such an Award or separately surrendered by the Participant in payment of the exercise price or taxes relating to such an Award, and the total number of shares subject to the exercised portion of a stock-settled SAR (regardless of the actual lesser of number shares delivered to the Participant), shall be deemed to have been issued hereunder and shall reduce the number of shares remaining available for issuance under the Plan. | | 4.3 | Reservation of Shares; No Fractional Shares.The Company shall at all times reserve a number of shares of Common Stock sufficient to cover the Company’s obligations and contingent obligations to deliver shares with respect to Awards then outstanding under the Plan. No fractional shares shall be delivered under the Plan. The Administrator may pay cash in lieu of any fractional shares in settlements of Awards under the Plan. | 5. | ELIGIBILITY | | 5.1 | Eligible Persons. The Administrator may grant Awards under the Plan only to those persons that the Administrator determines to be Eligible Persons. An “Eligible Person” is any person who is either: (a) an officer (whether or not a director) or employee of the Company or one of its Subsidiaries; (b) a non-employee director of the Company or one of its Subsidiaries; or (c) an individual consultant who renders bona fide services (other than services in connection with the offering or sale of securities of the Company or one of its Subsidiaries in a capital-raising transaction or as a market maker or promoter of securities of the Company or one of its Subsidiaries) to the Company or one of its Subsidiaries and who is selected to participate in the Plan by the Administrator; provided, however, that a person who is otherwise an Eligible Person under clause (c) above may participate in the Plan only if such participation would not adversely affect either the Company’s eligibility to use Form S-8 to register under the Securities Act, the offering and sale of shares issuable under the Plan by the Company, or the Company’s compliance with any other applicable laws. | | 5.2 | Participation. The Administrator shall, in its sole and absolute discretion, select from among the Eligible Employees those individuals who shall receive Awards and become Participants under the Plan. There is no right of any Eligible Person to receive an Award under the Plan, and the Administrator has absolute discretion to treat Eligible Employees differently from one another under the Plan. Receipt of an Award by a Participant shall not create the right to receive future Awards under the Plan, but a Participant who has been granted an Award may, if otherwise eligible, be granted additional Awards if the Administrator shall so determine. | 6. | AWARDS | | 6.1 | Type and Form of Awards. The Administrator shall determine the type or types of Awards to be made to each selected Eligible Person. Awards may be granted singly, in combination or in tandem. Awards also may be made in combination or in tandem with, in replacement of, as alternatives to, or as the payment form for grants or rights under any other employee or compensation plan of the Company or one of its Subsidiaries. The types of Awards that may be granted under the Plan are: |
COTERRA• 2023 PROXY STATEMENT | A-5 |
| | 6.1.1 | Stock Options. An Option is the grant of a right to purchase a specified number of shares of Common Stock during a specified period at a fixed exercise price as determined by the Administrator. | | | | (a) | General Option Provisions. Options may only be granted to Eligible Persons for whom the Company would be deemed to be an “eligible issuer of service recipient stock,” as defined in Treasury Regulation 1.409A-1(b)(5)(iii)(E). An Option may be intended to be an Incentive Stock Option or a Nonqualified Stock Option. The Award agreement for an Option will indicate if the Option is intended as an ISO; otherwise it will be deemed to be a Nonqualified Stock Option. The maximum term of each Option (ISO or NSO) shall be ten (10) years. The per share exercise price for each Option shall be not less than 100 percent of the Fair Market Value of a share of Common Stock on the date of grant of the Option. Each Option shall become exercisable at such times and under such conditions and shall be subject to such other terms as may be determined by the Administrator in its discretion. When an Option is exercised, the exercise price for the shares to be purchased shall be paid in full in cash or such other method permitted by the Administrator consistent with Section 6.4. In no event may dividends or dividend equivalents be paid or accrue with respect to any Award of Options. | | | | (b) | Additional Rules Applicable to ISOs. Notwithstanding the general option rules set forth in subsection (a), above, the following rules shall apply to options intended to qualify as ISOs. ISOs may only be granted to employees of the Company or one of its subsidiaries (for this purpose, the term “subsidiary” is used as defined in Section 424(f) of the Code, which generally requires an unbroken chain of ownership of at least 50 percent of the total combined voting power of all classes of stock of each subsidiary in the chain beginning with the Company and ending with the subsidiary in question). To the extent that the aggregate Fair Market Value (determined at the time of grant of the applicable option) of stock with respect to which ISOs first become exercisable by a Participant in any calendar year exceeds $100,000, taking into account both Common Stock subject to ISOs under the Plan and stock subject to ISOs under all other plans of the Company or one of its Subsidiaries (or any parent or predecessor corporation to the extent required by and within the meaning of Section 422 of the Code and the regulations promulgated thereunder), such options shall be treated as Nonqualified Stock Options. In reducing the number of options treated as ISOs to meet the $100,000 limit, the most recently granted options shall be reduced first. To the extent a reduction of simultaneously granted options is necessary to meet the $100,000 limit, the Administrator may, in the manner and to the extent permitted by law, designate which shares of Common Stock are to be treated as shares acquired pursuant to the exercise of an ISO. There shall be imposed in any Award agreement relating to ISOs such other terms and conditions as from time to time are required in order that the option be an “incentive stock option” as that term is defined in Section 422 of the Code. No ISO may be granted to any person who, at the time the option is granted, owns (or is deemed to own under Section 424(d) of the Code) shares of outstanding Common Stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company, unless the exercise price of such option is at least 110 percent of the Fair Market Value of the stock subject to the option and such option by its terms is not exercisable after the expiration of five years from the date such option is granted. | | | 6.1.2 | Stock Appreciation Rights. A Stock Appreciation Right or “SAR” is an Award that entitles the Participant to receive, upon exercise of the SAR, a payment in cash or Common Stock or any combination thereof, equal to (or having a Fair Market Value equal to) the product of (x) number of SARs being exercised multiplied by (y) the excess of (i) the Fair Market Value of a share of Common Stock on the date the SAR is exercised, over (ii) the “base price” applicable to the SAR. SARs may only be granted to Eligible Persons for whom the Company would be deemed to be an “eligible issuer of service recipient stock,” as defined in Treasury Regulation 1.409A-1(b)(5)(iii)(E). The base price of the SAR shall be determined by the Administrator but shall be not less than the Fair Market Value of the Company’s Common Stock on the date of grant. The maximum term of a SAR shall be ten (10) years. SARs shall become exercisable at such times and under such conditions and shall be subject to such other terms as may be determined by the Administrator in its discretion consistent with the terms and conditions of the Plan. In no event may dividends or dividend equivalents be paid or accrue with respect to any Award of SARs. | | | 6.1.3 | Restricted Stock. | | | | (a) | General Restricted Stock Provisions. Restricted Stock is Common Stock subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Administrator may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance goals or future service requirements), in such installments or otherwise, as the Administrator may determine at the date of grant or thereafter. Except to the extent restricted under the terms of the Plan and the applicable Award Agreement relating to the Restricted Stock, a Participant granted Restricted Stock shall have all of the rights of a stockholder of the Company, including the right to vote the Restricted Stock and the right to receive dividends thereon (subject to the provisions of Section 6.1.3(c) below). |
COTERRA• 2023 PROXY STATEMENT | A-6 |
| | | (b) | Certificates for Shares. Shares of Restricted Stock granted under the Plan may be evidenced in such manner as the Administrator shall determine. If certificates representing Restricted Stock are registered in the name of the Participant, the Administrator may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock, that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock. The Administrator may require that shares of Restricted Stock are held in escrow until all restrictions lapse. | | | | (c) | Dividends and Splits. As a condition to the grant of an Award of Restricted Stock, any stock distributed in connection with a stock split or stock dividend, and any other property, other than cash, distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such dividend or distribution was made. | | | 6.1.4 | Restricted Stock Units. | | | | (a) | Grant of Restricted Stock Units. A restricted stock unit, or “RSU”, represents the right to receive from the Company on the respective scheduled vesting or payment date for such RSU, one share of Common Stock or, if specified in the applicable Award agreement, the Fair Market Value of one share of Common Stock paid in cash. The vesting or payment of an Award of RSUs may be subject to the attainment of specified performance goals or targets, forfeitability provisions and such other terms and conditions as the Administrator may determine, subject to the provisions of the Plan. | | | | (b) | Rights as a Stockholder. Subject to the restrictions imposed under the terms and conditions of the Plan and the applicable Award Agreement, each Participant receiving RSUs shall have no rights as a stockholder of the Company with respect to such RSUs until such time as shares of Common Stock are issued to the Participant. In the event an RSU is settled in cash, the Participant receiving RSUs shall never receive stockholder rights with respect to such Award. No shares of Common Stock shall be issued at the time a RSU is granted, and the Company will not be required to set aside a fund for the payment of any such Award. | | | 6.1.5 | Performance Stock Units. | | | | (a) | Grant of Performance Stock Units. A Performance Stock Unit, or “PSU,” is a performance-based Award that entitles the Participant to receive shares of Common Stock or, if specified in the Award Agreement, the Fair Market Value of such shares of Common Stock paid in cash, based on the attainment of one or more performance goals. Each Award of PSUs shall designate a target number of PSUs covered by the Award, with the actual number of shares of Common Stock earned (if any) to be based on a formula set forth in the Award Agreement related to the attainment of one or more performance goals set forth in the Award Agreement. | | | | (b) | Rights as a Stockholder. Subject to the restrictions imposed under the terms and conditions of the Plan and the applicable Award Agreement, each Participant receiving PSUs shall have no rights as a stockholder of the Company with respect to such PSUs until such time as shares of Common Stock are issued to the Participant. In the event a PSU is settled in cash, the Participant receiving PSUs shall never receive stockholder rights with respect to such Award. No shares of Common Stock shall be issued at the time a PSU is granted, and the Company will not be required to set aside a fund for the payment of any such Award. | | | | (c) | Other Terms Related to Performance-Based Awards. Any performance goals that are financial metrics may be determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), in accordance with accounting principles established by the International Accounting Standards Board (“IASB Principles”), or may be adjusted when established to include or exclude any items otherwise includable or excludable under GAAP or under IASB Principles. Such performance goals also may be based solely by reference to the Company’s performance or the performance of a Subsidiary, division, business segment or business unit of the Company or a Subsidiary, or based upon performance relative to performance of other companies or upon comparisons of any of the indicators of performance relative to performance of other companies. The Administrator may provide for exclusion of the impact of an event or occurrence which the Administrator determines should appropriately be excluded, including (a) restructurings, discontinued operations, extraordinary items, and other unusual, infrequently occurring or non-recurring charges or events, (b) asset write-downs, (c) litigation or claim judgments or settlements, (d) acquisitions or divestitures, (e) reorganization or change in the corporate structure or capital structure of the Company, (f) an event either not directly related to the operations of the Company, Subsidiary, division, business segment or business unit or not within the reasonable control of management, (g) foreign exchange gains and losses, (h) a change in the fiscal year of the Company, (i) the refinancing or repurchase of bank loans or debt securities, (j), unbudgeted capital expenditures, (k) the issuance or repurchase of equity securities and other changes in the number of outstanding shares, (l) conversion of some or all of |
COTERRA• 2023 PROXY STATEMENT | A-7 |
| | | | convertible securities to common stock, (m) any business interruption event, (n) the cumulative effects of tax or accounting changes in accordance with GAAP, or (o) the effect of changes in other laws or regulatory rules affecting reported results. | | | 6.1.6 | Cash Awards. The Administrator may, from time to time, subject to the provisions of the Plan and such other terms and conditions as it may determine, grant cash bonuses (including discretionary Awards, Awards based on objective or subjective performance criteria, Awards subject to other vesting criteria or Awards granted consistent with Section 6.1.7 below). Cash Awards shall be Awarded in such amount and at such times during the term of the Plan as the Administrator shall determine. | | | 6.1.7 | Other Awards.The other types of Awards that may be granted under the Plan include: (a) stock bonuses or similar rights to purchase or acquire shares, whether at a fixed or variable price or ratio related to the Common Stock (subject to compliance with applicable laws), upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or any combination thereof; or (b) any similar securities or rights with a value derived from the value of or related to the Common Stock or returns thereon. | | 6.2 | Award Agreements.Each Award (other than cash Awards described in Section 6.1.6) shall be evidenced by a written or electronic Award Agreement in the form approved by the Administrator and, if required by the Administrator, executed or accepted by the recipient of the Award. The Administrator may authorize any officer of the Company (other than the particular Award recipient) to execute any or all Award Agreements on behalf of the Company (electronically or otherwise). The Award agreement shall set forth the material terms and conditions of the Award as established by the Administrator consistent with the express limitations of the Plan. | | 6.3 | Deferrals and Settlements.Except as otherwise set forth herein, payment of Awards may be in the form of cash, Common Stock, other Awards or combinations thereof as the Administrator shall determine, and with such restrictions as it may impose. The Administrator may also require or permit Participants to elect to defer the issuance of shares of Common Stock or the settlement of Awards in cash under such sub-plans, rules or procedures as it may establish under the Plan. The Administrator may also provide that deferred settlements include the payment or crediting of interest or other earnings on the deferral amounts, or the payment or crediting of dividend equivalents where the deferred amounts are denominated in shares. All mandatory or elective deferrals of the issuance of shares of Common Stock or the settlement of cash Awards shall be structured in a manner that is intended to comply with the requirements of Section 409A of the Code. | | 6.4 | Consideration for Common Stock or Awards.The purchase price for any Award granted under the Plan or the Common Stock to be delivered pursuant to an Award, as applicable, may be paid by means of any lawful consideration as determined by the Administrator and subject to compliance with applicable laws, including one or a combination of the following methods: | | | | (a) | services rendered by the recipient of such Award; | | | | (b) | cash, check payable to the order of the Company, or electronic funds transfer; | | | | (c) | third-party payment in such manner as may be authorized by the Administrator; | | | | (d) | the delivery of previously owned shares of Common Stock that are fully vested and unencumbered;
| | | | (e) | by a reduction in the number of shares otherwise deliverable pursuant to the Award; or
| | | | (f) | subject to such procedures as the Administrator may adopt, pursuant to a “cashless exercise” with a third party who provides financing for the purposes of (or who otherwise facilitates) the purchase or exercise of Awards. | | | In the event that the Administrator allows a Participant to exercise an Award by delivering shares of Common Stock previously owned by such Participant and unless otherwise expressly provided by the Administrator, any shares delivered which were initially acquired by the Participant from the Company (upon exercise of an Option or otherwise) must have been owned by the Participant for such period as may be required by the Administrator in order to avoid adverse accounting treatment. Shares of Common Stock used to satisfy the exercise price of an Option shall be valued at their Fair Market Value on the date of exercise. The Company will not be obligated to deliver any shares unless and until it receives full payment of the exercise or purchase price therefor and any related withholding obligations under Section 9.1, and any other conditions to exercise or purchase, as established from time to time by the Administrator have been satisfied. Unless otherwise expressly provided in the applicable Award Agreement, the Administrator may at any time eliminate or limit a Participant’s ability to pay the purchase or exercise price of any Award by any method other than cash payment to the Company. | | 6.5 | Minimum Vesting Schedule.Except as provided below, all equity-based Awards granted under the Plan shall have a minimum one year cliff vesting schedule meaning that no portion of any Award may be scheduled to vest prior to one year after the date of grant of such Award (excluding, for this purpose, any (i) Substitute Awards, (ii) shares delivered in lieu of fully vested cash Awards and (iii) Awards to non-employee directors that vest on the earlier of the |
COTERRA• 2023 PROXY STATEMENT | A-8 |
| | one year anniversary of the date of grant or the next annual meeting of stockholders which is at least 50 weeks after the immediately preceding year’s annual meeting). Notwithstanding the foregoing, up to five percent (5 percent) of the total number of shares of Common Stock authorized by the Board and the stockholders for issuance under the Plan (subject to adjustment under Section 8.1) may be granted pursuant to Awards not subject to the minimum vesting schedule described above; and, provided further, for the avoidance of doubt, that 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 Administrator may adopt reasonable counting procedures to determine whether the five percent (5 percent) limit in the preceding sentence has been attained. The Administrator may also apply reasonable rules and rounding conventions to determine whether an Award complies with the above-referenced minimum vesting schedule. | | 6.6 | Transfer Restrictions. | | | 6.6.1 | Limitations on Exercise and Transfer. Unless otherwise expressly provided in (or pursuant to) this Section 6.6, by applicable law or by the Award agreement, as the same may be amended, (a) all Awards are non-transferable and shall not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge; (b) Awards shall be exercised only by the Participant; and (c) amounts payable or shares issuable pursuant to any Award shall be delivered only to (or for the account of) the Participant. | | | 6.6.2 | Exceptions. The Administrator may permit Awards to be exercised by and paid to, or otherwise transferred to, other persons or entities pursuant to such conditions and procedures, including limitations on subsequent transfers, as the Administrator may, in its sole discretion, establish in writing (provided that any such transfer of Awards are not for consideration and provided further that any such transfers of ISOs shall be limited to the extent permitted under the federal tax laws governing ISOs). Any permitted transfer shall be subject to compliance with applicable federal and state securities laws. | | | 6.6.3 | Further Exceptions to Limits on Transfer. The exercise and transfer restrictions in Section 6.6.1 shall not apply to:
| | | | (a) | transfers to the Company, | | | | (b) | the designation of a beneficiary to receive benefits in the event of the Participant’s death or, if the Participant has died, transfers to or exercise by the Participant’s beneficiary, or, in the absence of a validly designated beneficiary, transfers by will or the laws of descent and distribution, | | | | (c) | subject to any applicable limitations on ISOs, transfers to a family member (or former family member) pursuant to a domestic relations order if approved or ratified by the Administrator, | | | | (d) | subject to any applicable limitations on ISOs, if the Participant has suffered a Disability, permitted transfers or exercises on behalf of the Participant by his or her legal representative, or | | | | (e) | the authorization by the Administrator of “cashless exercise” procedures with third parties who provide financing for the purpose of (or who otherwise facilitate) the exercise of Awards consistent with applicable laws and the express authorization of the Administrator. | | 6.7 | International Awards. One or more Awards may be granted to Eligible Persons who provide services to the Company or one of its Subsidiaries outside of the United States. Any Awards granted to such persons may, if deemed necessary or advisable by the Administrator, be granted pursuant to the terms and conditions of any applicable sub-plans, if any, appended to the Plan and approved by the Administrator. | 7. | EFFECT OF TERMINATION OF SERVICE ON AWARDS | | 7.1 | Termination of Employment. | | | 7.1.1 | Administrator Determination.The Administrator shall establish the effect of a termination of employment or service on the rights and benefits under each Award under the Plan and in so doing may make distinctions based upon, inter alia, the cause of termination and type of Award. If the Participant is not an employee of the Company or one of its Subsidiaries and provides other services to the Company or one of its Subsidiaries, the Administrator shall be the sole judge for purposes of this Plan (unless a contract or the Award agreement otherwise provides) of whether the Participant continues to render services to the Company or one of its Subsidiaries and the date, if any, upon which such services shall be deemed to have terminated. | | | 7.1.2 | Stock Options and SARs.For Awards of Options or SARs, unless the Award Agreement provides otherwise, the exercise period of such Options or SARs shall expire: (1) three months after the last day that the Participant is employed by or provides services to the Company or a Subsidiary (provided however, that in the event of the Participant’s death during this period, those persons entitled to exercise the Option or SAR pursuant to the laws of descent and distribution shall have one year following the date of death within which to exercise such Option or SAR); (2) in the case of a Participant whose termination of employment is due to death or Disability (as defined in the applicable Award agreement), 12 months after the last day that the Participant is employed | | | | | | | |
COTERRA• 2023 PROXY STATEMENT | A-9 |
| | | by or provides services to the Company or a Subsidiary; and (3)immediately upon a Participant’s termination for Cause. The Administrator will, in its absolute discretion, determine the effect of all matters and questions relating to a termination of employment, including the question of whether a leave of absence constitutes a termination of employment and whether a Participant’s termination is for Cause. | | | 7.1.3 | Other Awards. For all other Awards issued under the Plan, unless the Award Agreement provides otherwise, the portion of such Awards that are unvested at the time that a Participant’s employment or service is terminated shall be forfeited and reacquired by the Company; provided however, the Administrator may provide, by rule or regulation or in any Award agreement, or may determine in any individual case, that such forfeiture requirement shall be waived in whole or in part. | | 7.2 | Events Not Deemed Terminations of Service. Unless the express policy of the Company or one of its Subsidiaries, or the Administrator, otherwise provides, the employment relationship shall not be considered terminated in the case of (a) sick leave, (b) military leave, or (c) any other paid or unpaid leave of absence authorized by the Company or one of its Subsidiaries, or the Administrator; provided that unless reemployment upon the expiration of such leave is guaranteed by contract or law, such leave is for a period of not more than 3 months. In the case of any employee of the Company or one of its Subsidiaries on an approved leave of absence, continued vesting of the Award while on leave from the employ of the Company or one of its Subsidiaries may be suspended until the employee returns to service, unless the Administrator otherwise provides or applicable law otherwise requires. In no event shall an Award be exercised after the expiration of the term set forth in the Award Agreement. | | 7.3 | Effect of Change of Subsidiary Status. For purposes of the Plan and any Award, if an entity ceases to be a Subsidiary of the Company, a termination of employment or service shall be deemed to have occurred with respect to each Eligible Person in respect of such Subsidiary who does not continue as an Eligible Person in respect of the Company or another Subsidiary that continues as such after giving effect to the transaction or other event giving rise to the change in status. | 8. | ADJUSTMENTS; ACCELERATION | | 8.1 | Adjustments.In the event of (a) any reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split, (b) any merger, arrangement, combination, consolidation, or other reorganization, (c) any spin-off, split-up, or similar extraordinary dividend distribution in respect of the Common Stock (whether in the form of securities or property), (d) any exchange of Common Stock or other securities of the Company, or (e) any similar unusual or extraordinary corporate event or transaction affecting the Common Stock, the Administrator shall in such manner, to such extent and at such time as it deems appropriate and equitable in the circumstances (but subject to compliance with applicable laws and stock exchange requirements) proportionately adjust any or all of (1) the number and type of shares of Common Stock (or other securities) that thereafter may be made the subject of Awards (including the Share Limit and the limit on the number of Incentive Stock Options issuable under the Plan), (2) the number, amount and type of shares of Common Stock (or other securities or property) subject to any or all outstanding Awards, (3) the grant, purchase, or exercise price (which term includes the base price of any SAR or similar right) of any or all outstanding Awards, and (4) the securities, cash or other property deliverable upon exercise or payment of any outstanding Awards. Any adjustment made pursuant to this Section 8.1 shall be made in a manner that, in the good faith determination of the Administrator, will not likely result in the imposition of additional taxes or interest under Section 409A of the Code. With respect to any Award of an ISO, the Administrator may make an adjustment that causes the option to cease to qualify as an ISO without the consent of the affected Participant. | | | | | | | 8.2 | Change in Control.This Section 8.2 sets forth 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, shall control). In the event of a Change in Control, the Administrator shall provide for the assumption or substitution of all outstanding Awards by the surviving or acquiring company or parent thereof, in a manner designed to comply with Section 409A of the Code. All such assumed or substituted time-vested Awards shall continue to vest in accordance with their original vesting terms; provided, however, that in the event the Participant is terminated without Cause within 12 months following the Change in Control, any then unvested portion of the Award shall vest in full. All such assumed or substituted performance-vested Awards shall be measured on the date of the Change in Control to determine the portion thereof that is earned based on performance through the Change in Control, and the earned portion shall thereafter vest at the same time or times as the award was originally scheduled to vest, except that such vesting shall be based on the Participant’s continued service with the surviving or acquiring company or parent thereof; provided, however, that in the event the Participant is terminated without Cause within 12 months following the Change in Control, any then unvested portion of the Award shall vest in full. In the event the surviving or acquiring company does not assume the outstanding Awards or substitute similar stock awards for those outstanding under the Plan as of the Change in Control, then (a) the vesting of all Awards shall be accelerated in full immediately prior to such Change in Control, with all performance goals or other vesting criteria applicable to any performance-based Awards deemed achieved based on performance measured through |
COTERRA• 2023 PROXY STATEMENT | A-10 |
| | the date of the Change in Control, and (b) such outstanding Awards shall terminate or be payable in cash or property (determined by the Administrator in its sole discretion) upon the occurrence of the Change in Control in a manner designed to comply with Code Section 409A, and such payment may be subject to any escrow, earn-out or other contingent or deferred payment arrangement that is contemplated by the Change in Control. The Administrator shall have the authority to take additional actions it deems necessary or advisable in connection with the Change in Control transaction, and may take different actions with respect to different Participants under the Plan, different Awards under the Plan, and different portions of Awards granted under the Plan. Without limitation of the generality of the foregoing, the Administrator shall have full discretion to: (i) provide for the termination of any Award upon the occurrence of the Change in Control, (ii) provide for the cash out and cancellation of any Award (or portion thereof) immediately prior to such Change in Control, which cash out may (in a manner designed to comply with Code Section 409A) be subject to any escrow, earn-out or other contingent or deferred payment arrangement that is contemplated by such Change in Control, (iii) provide that in the event of a Change in Control of the Company, Options and SARs outstanding as of the date of the Change in Control shall 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 (iv) take any other actions as the Administrator deems necessary or advisable in connection with such Change in Control transaction. | 9. | TAX PROVISIONS | | 9.1 | Tax Withholding. Upon any exercise, vesting, or payment of any Award, the Company or one of its Subsidiaries shall have the right at its option to:
| | | (a) | require the Participant (or the Participant’s personal representative or beneficiary, as the case may be) to pay or provide for payment of at least the minimum amount of any taxes which the Company or one of its Subsidiaries may be required to withhold with respect to such Award event or payment; or | | | (b) | deduct from any amount otherwise payable in cash to the Participant (or the Participant’s personal representative or beneficiary, as the case may be) the minimum amount of any taxes which the Company or one of its Subsidiaries may be required to withhold with respect to such cash payment. | | | | In any case where a tax is required to be withheld in connection with the delivery of shares of Common Stock under the Plan, the Administrator may in its sole discretion (subject to Section 10.1) grant to the Participant the right to elect, pursuant to such rules and subject to such conditions as the Administrator may establish, to have the Company reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of shares, valued in a consistent manner at their Fair Market Value or at the sales price in accordance with authorized procedures for cashless exercises, necessary to satisfy the applicable withholding obligation on exercise, vesting or payment, not in excess of the maximum statutory rates in the Participant’s applicable jurisdictions. | | 9.2 | Requirement of Notification of Code Section 83(b) Election. If any Participant shall make an election under Code Section 83(b) (to include in gross income in the year of transfer the amounts specified in Code Section 83(b)) or under a similar provisions of the laws of a jurisdiction outside the United States, such Participant shall notify the Company of such election within ten (10) days after filing notice of the election with the Internal Revenue Service or other government authority, in addition to any filing and notification required pursuant to regulations issued under Code Section 83(b) or other applicable provision. | | 9.3 | Requirement of Notification of Disqualifying Disposition. If any Participant shall make any disposition of shares of Common Stock delivered pursuant to the exercise of an ISO under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition within ten (10) days thereof. | 10. | OTHER PROVISIONS | | 10.1 | Compliance with Laws. The Plan, the granting and vesting of Awards under the Plan, the offer, issuance and delivery of shares of Common Stock, the payment of money under the Plan or under Awards are subject to compliance with all applicable federal and state laws, rules and regulations and to such approvals by any applicable stock exchange listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. The person acquiring any securities under the Plan will, if requested by the Company or one of its Subsidiaries, provide such assurances and representations to the Company or one of its Subsidiaries as the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements. | | 10.2 | Future Awards/Other Rights. No person shall have any claim or rights to be granted an Award (or additional Awards, as the case may be) under the Plan, subject to any express contractual rights (set forth in a document other than the Plan) to the contrary. |
COTERRA• 2023 PROXY STATEMENT | A-11 |
| 10.3 | No Employment/Service Contract. Nothing contained in the Plan (or in any other documents under the Plan or in any Award) shall confer upon any Eligible Person or other Participant any right to continue in the employ or other service of the Company or one of its Subsidiaries, constitute any contract or agreement of employment or other service or affect an employee’s status as an employee at will, nor shall interfere in any way with the right of the Company or one of its Subsidiaries to change a person’s compensation or other benefits, or to terminate his or her employment or other service, with or without cause. Nothing in this Section 10.3, however, is intended to adversely affect any express independent right of such person under a separate employment or service contract other than an Award agreement. | | 10.4 | Plan Not Funded. Awards payable under the Plan shall be payable in shares of Common Stock or from the general assets of the Company, and no special or separate reserve, fund or deposit shall be made to assure payment of such Awards. No Participant, beneficiary or other person shall have any right, title or interest in any fund or in any specific asset (including shares of Common Stock, except as expressly otherwise provided) of the Company or one of its Subsidiaries by reason of any Award hereunder. Neither the provisions of the Plan (or of any related documents), nor the creation or adoption of the Plan, nor any action taken pursuant to the provisions of the Plan shall create, or be construed to create, a trust of any kind or a fiduciary relationship between the Company or one of its Subsidiaries and any Participant, beneficiary or other person. To the extent that a Participant, beneficiary or other person acquires a right to receive payment pursuant to any Award hereunder, such right shall be no greater than the right of any unsecured general creditor of the Company. | | 10.5 | Effective Date, Termination and Suspension, Amendments. | | | 10.5.1 | Effective Date and Termination. The Plan was approved by the Board and shall become effective upon approval by the stockholders of the Company (the “Effective Date”). Unless earlier terminated by the Board, the Plan shall terminate at the close of business ten years after the date on which it was approved by the Board. After the termination of the Plan either upon such stated expiration date or its earlier termination by the Board, no additional Awards may be granted under the Plan, but previously granted Awards (and the authority of the Administrator with respect thereto, including the authority to amend such Awards) shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of the Plan. | | | 10.5.2 | Board Authorization. The Board may, at any time, terminate or, from time to time, amend, modify or suspend the Plan, in whole or in part. No Awards may be granted during any period that the Board suspends the Plan. | | | 10.5.3 | Stockholder Approval. To the extent then required by applicable law or any applicable stock exchange rule or required to preserve the intended tax consequences of the Plan, or deemed necessary or advisable by the Board, the Plan and any amendment to the Plan shall be subject to approval by the stockholders of the Company. | | | 10.5.4 | Amendments to Awards. Without limiting any other express authority of the Administrator under (but subject to) the express limits of the Plan, the Administrator by agreement or resolution may waive conditions of or limitations on Awards to Participants that the Administrator in the prior exercise of its discretion has imposed, without the consent of a Participant, and (subject to the requirements of Sections 3.2 and 10.5.5) may make other changes to the terms and conditions of Awards. Any amendment or other action that would constitute a repricing of an Award is subject to the limitations and stockholder approval requirements set forth in Section 3.2(g). | | | 10.5.5 | Limitations on Amendments to Plan and Awards. No amendment, suspension or termination of the Plan or change of or affecting any outstanding Award shall, without written consent of the Participant, affect in any manner materially adverse to the Participant any rights or benefits of the Participant or obligations of the Company under any Award granted under the Plan. Changes, settlements and other actions contemplated by Section 8 shall not be deemed to constitute changes or amendments for purposes of this Section 10.5.5. | | 10.6 | Privileges of Stock Ownership. Except as otherwise expressly authorized by the Administrator or the Plan, a Participant shall not be entitled to any privilege of stock ownership as to any shares of Common Stock not actually delivered to and held of record by the Participant. Except as expressly provided herein, no adjustment will be made for dividends or other rights as a stockholder of the Company for which a record date is prior to such date of delivery. | | 10.7 | Governing Law; Construction; Severability. | | | 10.7.1 | Choice of Law. The Plan, the Awards, all documents evidencing Awards and all other related documents shall be governed by, and construed in accordance with, the laws of the State of Delaware. | | | 10.7.2 | Severability. If a court of competent jurisdiction holds any provision of the Plan invalid and unenforceable, the remaining provisions of the Plan shall continue in effect and the Plan shall be construed and enforced without regard to the illegal or invalid provision. |
COTERRA• 2023 PROXY STATEMENT | A-12 |
| | 10.7.3 | Plan Construction. | | | | (a) | Rule 16b-3. It is the intent of the Company that the Awards and transactions permitted by Awards be interpreted in a manner that, in the case of Participants who are or may be subject to Section 16 of the Exchange Act, qualify, to the maximum extent compatible with the express terms of the Award, for exemption from matching liability under Rule 16b-3 promulgated under the Exchange Act. Notwithstanding the foregoing, the Company shall have no liability to any Participant for Section 16 consequences of Awards or events under Awards if an Award or event does not so qualify. | | | | (b) | Compliance with Section 409A of the Code. The Board intends that, except as may be otherwise determined by the Administrator, any Awards under the Plan will be either exempt from or satisfy the requirements of Section 409A to avoid the imposition of any taxes, including additional income or penalty taxes, thereunder. If the Administrator determines that an Award, Award Agreement, acceleration, adjustment to the terms of an Award, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a Participant’s Award to violate Section 409A, unless the Administrator expressly determines otherwise, such Award, Award Agreement, payment, acceleration, adjustment, distribution, deferral election, transaction or other action or arrangement shall not be undertaken and the related provisions of the Plan or Award Agreement will be deemed modified or, if necessary, rescinded in order to comply with the requirements of Section 409A to the extent determined by the Administrator without the consent of or notice to the Participant. Notwithstanding the foregoing, neither the Company nor the Administrator shall have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Participant under Section 409A. Should any payments made in accordance with the Plan to a “specified employee” (as defined under Section 409A) be determined to be payments from a nonqualified deferred compensation plan and are payable in connection with a Participant’s “separation from service” (as defined under Section 409A), that are not exempt from Section 409A as a short-term deferral or otherwise, these payments, to the extent otherwise payable within six (6) months after the Participant’s separation from service, and to the extent necessary to avoid the imposition of taxes under Section 409A of the Code, will be paid in a lump sum on the earlier of the date that is six (6) months and one day after the Participant’s date of separation from service or the date of the Participant’s death. For purposes of Section 409A, the payments to be made to a Participant in accordance with the Plan shall be treated as a right to a series of separate payments. | | | | (c) | No Guarantee of Favorable Tax Treatment. Although the Company intends that Awards under the Plan will be exempt from, or will comply with, the requirements of Section 409A of the Code, the Company does not warrant that any Award under the Plan will qualify for favorable tax treatment under Section 409A of the Code or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Participant for any tax, interest or penalties the Participant might owe as a result of the grant, holding, vesting, exercise or payment of any Award under the Plan. | | 10.8 | Captions. Captions and headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. | | 10.9 | Stock-Based Awards in Substitution for Stock Options or Awards Granted by Other Corporation. Awards may be granted to Eligible Persons in substitution for or in connection with an assumption of employee stock options, stock appreciation right, restricted stock or other stock-based awards granted by other entities to persons who are or who will become Eligible Persons in respect of the Company or one of its Subsidiaries, in connection with a distribution, arrangement, business combination, merger or other reorganization by or with the granting entity or an affiliated entity, or the acquisition by the Company or one of its Subsidiaries, directly or indirectly, of all or a substantial part of the stock or assets of the employing entity. The Awards so granted need not comply with other specific terms of the Plan, provided the Awards reflect only adjustments giving effect to the assumption or substitution consistent with the conversion applicable to the Common Stock in the transaction and any change in the issuer of the security. Any shares that are delivered and any Awards that are granted by, or become obligations of, the Company, as a result of the assumption by the Company of, or in substitution for, outstanding Awards previously granted by an acquired company (or previously granted by a predecessor employer (or direct or indirect parent thereof) in the case of persons that become employed by the Company or one of its Subsidiaries in connection with a business or asset acquisition or similar transaction) shall not be counted against the Share Limit or other limits on the number of shares available for issuance under the Plan, except as may otherwise be provided by the Administrator at the time of such assumption or substitution or as may be required to comply with the requirements of any applicable stock exchange. |
COTERRA• 2023 PROXY STATEMENT | A-13 |
| 10.10 | Non-Exclusivity of Plan. Nothing in the Plan shall limit or be deemed to limit the authority of the Board or the Administrator to grant Awards or authorize any other compensation, with or without reference to the Common Stock, under any other plan or authority. | | 10.11 | No Corporate Action Restriction. The existence of the Plan, the Award agreements and the Awards granted hereunder shall not limit, affect or restrict in any way the right or power of the Board or the stockholders of the Company to make or authorize: (a) any adjustment, recapitalization, reorganization or other change in the capital structure or business of the Company or any Subsidiary, (b) any merger, arrangement, business combination, amalgamation, consolidation or change in the ownership of the Company or any Subsidiary, (c) any issue of bonds, debentures, capital, preferred or prior preference stock ahead of or affecting the capital stock (or the rights thereof) of the Company or any Subsidiary, (d) any dissolution or liquidation of the Company or any Subsidiary, (e) any sale or transfer of all or any part of the assets or business of the Company or any Subsidiary, or (f) any other corporate act or proceeding by the Company or any Subsidiary. No Participant, beneficiary or any other person shall have any claim under any Award or Award Agreement against any member of the Board or the Administrator, or the Company or any employees, officers or agents of the Company or any Subsidiary, as a result of any such action. | | 10.12 | Other Company Benefit and Compensation Programs. Payments and other benefits received by a Participant under an Award made pursuant to the Plan shall not be deemed a part of a Participant’s compensation for purposes of the determination of benefits under any other employee welfare or benefit plans or arrangements, if any, provided by the Company or any Subsidiary, except where the Administrator expressly otherwise provides or authorizes in writing or except as otherwise specifically set forth in the terms and conditions of such other employee welfare or benefit plan or arrangement. Awards under the Plan may be made in addition to, in combination with, as alternatives to or in payment of grants, Awards or commitments under any other plans or arrangements of the Company or its Subsidiaries. | | 10.13 | Restrictive Covenants, Cause Forfeiture and Clawback Policy. | | | 10.13.1 | Restrictive Covenants. The Company may retain the right in an Award Agreement to cause a forfeiture of the gain realized by a Participant on account of actions taken by the Participant in violation or breach of or in conflict with any non-competition agreement, any agreement prohibiting solicitation of employees of the Company or any Affiliate thereof or any confidentiality obligation of post-employment cooperation agreement with respect to the Company or any Affiliate, to the extent specified in such Award Agreement applicable to the Participant. | | | 10.13.2 | Annulment upon Termination for Cause. The Administrator may annul an Award if the Participant is an employee of the Company or an Affiliate thereof and is terminated for Cause as defined in the applicable Award Agreement or in the Plan. | | | 10.13.3 | Awards Subject to Clawback. Notwithstanding any other provision of the Plan to the contrary, any Award granted or amount payable or paid under the Plan, including time-based and performance-based Awards, shall be subject to the terms of the Company’s current clawback policy, as may be amended from time to time, and any other compensation recoupment policy then applicable, if any, of the Company, to the extent the policy applies to such award or amount. By accepting an Award or the payment of any amount under the Plan, each Participant agrees and consents to the Company’s application, implementation and enforcement of (a) any such policy (including the Company’s current clawback policy) and (b) any provision of applicable law or stock exchange rule relating to cancellation, rescission, payback or recoupment of compensation and expressly agrees that the Company may take such actions as are permitted under the policy or applicable law without further consent or action being required by such Participant. To the extent that the terms of the Plan and the policy or applicable law or stock exchange rule conflict, then the terms of the policy or applicable law or stock exchange rule shall prevail. | | | | As adopted by the Board of Directors of Coterra Energy Inc. on February 21, 2023. |
COTERRA• 2023 PROXY STATEMENT | A-14 |
0000858470 3 2020-01-01 2022-12-312023-01-01 2023-12-31 |
![[MISSING IMAGE: cv_ofc-4clr.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/cv_ofc-4clr.jpg)
![[MISSING IMAGE: ic_roundtick-pn.gif]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_roundtick-pn.gif)
![[MISSING IMAGE: sg_marcusgbolinder-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/sg_marcusgbolinder-bw.jpg)
![[MISSING IMAGE: ic_internet-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_internet-bw.jpg)
![[MISSING IMAGE: ic_telephone-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_telephone-bw.jpg)
![[MISSING IMAGE: ic_mail-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_mail-bw.jpg)
![[MISSING IMAGE: ic_person-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_person-bw.jpg)
![[MISSING IMAGE: ph_thomasejorden-4clr.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ph_thomasejorden-4clr.jpg)
![[MISSING IMAGE: sg_thomasejorden-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/sg_thomasejorden-bw.jpg)
![[MISSING IMAGE: pc_boardhighlights-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/pc_boardhighlights-pn.jpg)
![[MISSING IMAGE: ph_dorothyables-4clr.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ph_dorothyables-4clr.jpg)
![[MISSING IMAGE: ph_robertboswel-4clr.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ph_robertboswel-4clr.jpg)
![[MISSING IMAGE: ph_amandabrock-4clr.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ph_amandabrock-4clr.jpg)
![[MISSING IMAGE: ph_dandinges-4clr.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ph_dandinges-4clr.jpg)
![[MISSING IMAGE: ph_pauleckley-4clr.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ph_pauleckley-4clr.jpg)
![[MISSING IMAGE: ph_hanshelmerich-4clr.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ph_hanshelmerich-4clr.jpg)
![[MISSING IMAGE: ph_thomasjorden-4clr.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ph_thomasjorden-4clr.jpg)
![[MISSING IMAGE: ph_lisastewart-4clr.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ph_lisastewart-4clr.jpg)
![[MISSING IMAGE: ph_francesvallejo-4clr.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ph_francesvallejo-4clr.jpg)
![[MISSING IMAGE: ph_marcuswatts-4clr.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ph_marcuswatts-4clr.jpg)
![[MISSING IMAGE: ic_publiccompany-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_publiccompany-pn.jpg)
![[MISSING IMAGE: ic_privatecompany-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_privatecompany-pn.jpg)
![[MISSING IMAGE: ic_explorationprod-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_explorationprod-pn.jpg)
![[MISSING IMAGE: ic_climatechange-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_climatechange-pn.jpg)
![[MISSING IMAGE: ic_relatedindustry-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_relatedindustry-pn.jpg)
![[MISSING IMAGE: ic_otherpubli-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_otherpubli-pn.jpg)
![[MISSING IMAGE: ic_roundtick-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_roundtick-pn.jpg)
![[MISSING IMAGE: ic_financialacco-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_financialacco-pn.jpg)
![[MISSING IMAGE: ic_cybersecurity-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_cybersecurity-pn.jpg)
![[MISSING IMAGE: ic_legal-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_legal-pn.jpg)
![[MISSING IMAGE: ic_operatingstrateg-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_operatingstrateg-pn.jpg)
![[MISSING IMAGE: ic_ehsresponsibility-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_ehsresponsibility-pn.jpg)
![[MISSING IMAGE: fc_directornom-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/fc_directornom-pn.jpg)
![[MISSING IMAGE: ic_proposaltick-pn.gif]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_proposaltick-pn.gif)
![[MISSING IMAGE: bc_priceceopay-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/bc_priceceopay-pn.jpg)
![[MISSING IMAGE: ic_wedo-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_wedo-pn.jpg)
![[MISSING IMAGE: ic_dontdo-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/ic_dontdo-pn.jpg)
![[MISSING IMAGE: pc_chiefexecu-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/pc_chiefexecu-pn.jpg)
![[MISSING IMAGE: pc_otherneos-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/pc_otherneos-pn.jpg)
![[MISSING IMAGE: bc_roic-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/bc_roic-pn.jpg)
![[MISSING IMAGE: bc_mobeday-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/bc_mobeday-pn.jpg)
![[MISSING IMAGE: bc_cashflow-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/bc_cashflow-pn.jpg)
![[MISSING IMAGE: bc_greenhouse-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/bc_greenhouse-pn.jpg)
![[MISSING IMAGE: bc_methane-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/bc_methane-pn.jpg)
![[MISSING IMAGE: bc_flare-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/bc_flare-pn.jpg)
![[MISSING IMAGE: lc_capneoceo-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/lc_capneoceo-pn.jpg)
![[MISSING IMAGE: lc_capvsnetincome-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/lc_capvsnetincome-pn.jpg)
![[MISSING IMAGE: cv_obc-4clr.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-036565/cv_obc-4clr.jpg)