| | | Reason for Nomination Following his tenure at Cimarex as the Chief Executive Officer, President and Chief Executive Officer – 1995 to February 1999 
Robert Kelley
Age:68
Director Since:2003
Committee Memberships:Audit (Chairman) and Safety and Environmental Affairs
Term of Office Expires:2015
Business Experience:
Kellco Investments, Inc. (private investment company)
| - | President – April 2001 to present |
Noble Affiliates, Inc. (now Noble Energy Inc.)
| - | Chairman of the Board – 1992 to April 2001 | | - | President and CEO – 1986 to October 2000 |
Other Directorships:
• | OGE Energy Corporation | • | Smith International, Inc. (until 2010) |
P. Dexter Peacock
Age:72
Director Since:1998
Committee Memberships:Executive (Chairman), Compensation and Corporate Governance and Nominations
Position:Lead Director
Term of Office Expires:2015
Business Experience:
Andrews Kurth L.L.P., Houston, Texas
| - | Of Counsel – 1998 to present | | - | Partner – 1975 to 1997 | | - | Managing Partner – 1986 to 1991 |
Other Directorships:
Rowan Companies plc
W. Matt Ralls
Age:64
Director Since:2011
Committee Memberships:Corporate Governance and Nominations and Safety and Environmental Affairs
Term of Office Expires:2014 (Nominee for Director)
Business Experience:
Rowan Companies plc
| - | of Directors, Mr. Jorden was appointed Chief Executive Officer and President of Coterra in October 2021 in connection with the Merger. At Cimarex, he began serving as Vice President of Exploration when the company was formed in 2002 and subsequently was elevated in 2003 to Executive Vice President of Exploration, in 2011 to Chief Executive Officer and President and then Chairman of the Board in 2012. Prior to the formation of Cimarex, Mr. Jorden held multiple leadership roles at Key Production Company, Inc., Cimarex’s predecessor, which he joined in 1993 as Chief Geophysicist. Mr. Jorden brings to the Board nearly 40 years of experience in the oil and gas exploration and production industry, as well as a deep understanding of our business, operations, long-term strategy and goals. As Chairman of the Board since 2023, his service as a director continues to create an important link between management and the Board. | | | | - | 2013 to presentCAREER HIGHLIGHTS •
Coterra Energy Inc. –
Chairman—2023 – Current –
Chief Executive Officer and President—2021 – Current •
Cimarex Energy Co. –
Chairman—2012 – 2021 –
Chief Executive Officer and President—2011 – 2021 –
Executive Vice President—Exploration—2003 – 2011 –
Vice President—Exploration—2002 – 2003 | | | | CURRENT PUBLIC COMPANY BOARDS •
None | | | | -PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS •
Cimarex Energy Co. –
2011 – 2021 | |
| | LISA A. STEWART,
NACD.DC | | | | AGE: 66 | | | | DIRECTOR SINCE: 2021 | | | | Independent | | | | COMMITTEE MEMBERSHIPS: •
Audit •
Environment, Health & Safety (Chair) •
Executive | |
| | | Reason for Nomination Ms. Stewart was appointed in October 2021 in connection with the Merger, and has more than 40 years of experience in the oil and gas industry. Her executive experience includes roles at Sheridan Production Partners, El Paso Corporation and El Paso E&P, and Apache Corporation, spanning reservoir engineering, business development, land and environmental, health and safety, as well as extensive leadership roles. Ms. Stewart currently serves on the Board of Directors of the general partner of Western Midstream Partners, LP, a publicly traded master limited partnership formed to acquire, own, develop and operate midstream energy assets. Ms. Stewart also serves as a director of Jadestone Energy PLC, a publicly traded upstream oil and gas company in the Asia Pacific region that focuses on production and near-term development assets. In 2021, Ms. Stewart received the National Association of Corporate Directors Director Certification (NADC.DC), which is the premier director designation available in the United States. Ms. Stewart’s deep knowledge of the exploration and production and midstream segments of the oil and gas industry provides instrumental knowledge to our Board and makes Ms. Stewart a valuable contributor and member of the committees on which she serves. | | | | | | CAREER HIGHLIGHTS •
Sheridan Production Partners –
Executive Chairman—2006 – Current –
President and Chief Executive OfficerOfficer—
2016 – 2009 to 2013 |
Other Directorships:
| 2020 –
Chief Investment Officer—2006 – 2020 •
El Paso Corporation –
Executive Vice President—2004 – 2006 •
El Paso E&P –
President—2004 – 2006 •
Apache Corporation –
Executive Vice President and other various capacities—1984 – 2004 | Rowan Companies plc | | | CURRENT PUBLIC COMPANY BOARDS •
Western Midstream Partners, LP –
2020 – Current •
Jadestone Energy PLC –
2019 – Current | | | • | PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS •
Cimarex Energy Co. –
2015 – 2021 | | | | |
| | FRANCES M. VALLEJO,
NACD.DC | | | | AGE: 58 | | | | DIRECTOR SINCE: 2021 | | | | Independent | | | | COMMITTEE MEMBERSHIPS: •
Audit •
Governance and Social Responsibility (Co-Chair) | |
| | | Reason for Nomination Ms. Vallejo was appointed in October 2021 in connection with the Merger, and has over 35 years of experience in the oil and gas industry. With her extensive history of leadership roles in corporate planning, budgeting, and treasury at ConocoPhillips, Ms. Vallejo is well qualified to serve our Board. Additionally, Ms. Vallejo recently completed her service as a director of the general partner of Crestwood Equity Partners LP, a publicly traded master limited partnership that owned and operated oil and gas midstream assets located primarily in the Bakken Shale, Delaware Basin and Powder River Basin. She currently serves on the Executive Committee of the Colorado School of Mines Foundation and, until 2016, served as a member of the Board of Trustees of Colorado School of Mines. Her vast array of leadership roles and duties in the exploration and production and midstream segments of the oil and gas industry offers considerable value to the Board committees on which she serves. Ms. Vallejo earned the CERT Certificate in Cybersecurity Oversight issued by the CERT Division of the Software Engineering Institute at Carnegie Mellon University in 2023, and received the NACD.DC, the premier director designation in the United States, in 2021. | | | | | CAREER HIGHLIGHTS •
ConocoPhillips –
Vice President Corporate Planning and Development—2015 – 2016 •
ConocoPhillips –
Vice President and Treasurer—2008 – 2015 •
ConocoPhillips –
General Manager-Corporate Planning and Budgets, and other various positions— 1987 – 2008 | | | | CURRENT PUBLIC COMPANY BOARDS •
Expro Group Holdings N.V. –
2023 – Current | | | | PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS •
Crestwood Equity Partners LP –
2021 – 2023 •
Cimarex Energy Co. –
2017 – 2021 | |
| | MARCUS A. WATTS | | | | AGE: 65 | | | | DIRECTOR SINCE: 2017 | | | | Independent | | | | COMMITTEE MEMBERSHIPS: •
Compensation •
Governance and Social Responsibility (Co-Chair) | |
| | | Reason for Nomination Mr. Watts adds a wealth of legal, transactional, regulatory and management expertise from both the oil and gas industry and other industries to our Board. His diverse experience includes his service as a director of Complete Production Services until its merger with Superior Energy Services Inc.in 2012, as well as his previous experience at the law firm Locke Lord LLP as a lawyer advising companies on corporate, securities and governance issues, where he served as the Managing Partner of the Houston office and Vice Chairman of the firmwide Executive Committee. In addition, his experience includes service as the President of The Friedkin Group since 2011 and as a director of Service Corporation International since 2012. He has also been serving on the board of the Greater Houston Partnership since 2012 and is a former chairman of such organization. He served on the board of the Federal Reserve Bank of Dallas-Houston Branch from 2014 to 2019, including as Chairman from 2017 to 2019. Mr. Watts’ unique combination of legal and management expertise offers a fresh perspective to our Board, which is buttressed by his decades of experience both inside and outside of the oil and gas industry. This industry and management experience, as well as his legal and regulatory background, are particularly valuable to the Governance and Social Responsibility Committee he currently co-chairs. Mr. Watts holds a law degree from Harvard Law School and a B.S. degree in Mechanical Engineering from Texas A&M University. | | • | El Paso Pipeline Partners L.P. (until 2009) | CAREER HIGHLIGHTS •
The Friedkin Group –
President—2011 – Current •
Locke Lord LLP –
Managing Partner, Houston,
Vice-Chairman (Executive Committee)—1984 – 2010 | | | | CURRENT PUBLIC COMPANY BOARDS •
Service Corporation International –
2012 – Current | |
 -2014 Proxy Statement11
| | PUBLIC COMPANY BOARDS WITHIN THE PAST FIVE YEARS •
None | |
DIRECTOR COMPENSATION The following table reports beneficial ownershipCompensation 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 Common Stock by holders of more than five percentnon-employee directors. Directors who are employees of the Company’s Common Stock. Unless otherwise noted, all ownership information is based upon filings made by such persons withCompany receive no additional compensation for their duties as directors. The Compensation Committee periodically reviews the SEC.Name and Address of
Beneficial Owner | | Number of Shares
of Common Stock
Owned | | Percent of
Class | The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355 | | 29,438,269(1) | | 6.97% | BlackRock, Inc.
40 East 52ndStreet
New York, NY 10022 | | 29,212,480(2) | | 6.90% | FMR LLC
Mr. Edward C. Johnson 3d
82 Devonshire Street
Boston, MA 02109 | | 29,116,041(3) | | 6.90% | Neuberger Berman Group LLC
Neuberger Berman LLC
605 Third Avenue
New York, NY 10158 | | 22,596,660(4) | | 5.36% |
(1) | According to Amendment No. 3 to a Schedule 13G, dated February 6, 2014, filed with the Commission by The Vanguard Group, it has sole voting power over 694,622 of these shares, shared dispositive power over 643,022 of these shares and sole dispositive power over 28,795,247 of these shares. | | | (2) | According to Amendment No. 4 to a Schedule 13G, dated January 28, 2014, filed with the Commission by BlackRock, Inc., it has sole voting power over 24,502,606 shares and sole dispositive power over all 29,212,480 of these shares. | | | (3) | According to Amendment No. 2 to a Schedule 13G, dated February 13, 2014, filed with the Commission by FMR LLC and Mr. Edward C. Johnson 3d, FMR has sole voting power with respect to 1,665,630 of these shares and sole dispositive power over all 29,116,041 shares as a result of being a parent holding company or control person of several other entities in accordance with Rule 13d-1(b)(ii)(G). Mr. Edward C. Johnson 3d, together with members of his family, through direct or indirect ownership of voting common shares of FMR, may be deemed to form a controlling group with respect to FMR and may, therefore, be considered to be beneficial owners of the shares beneficially owned by FMR. | | | (4) | According to Amendment No. 6 to a Schedule 13G, dated February 12, 2014, filed with the Commission by Neuberger Berman Group LLC and Neuberger Berman LLC, it has shared voting power over 18,065,913 of these shares, no voting power over the remainder of these shares, and shared dispositive power over all of these shares. |
-2014 Proxy Statement12
compensation of the non-employee directors taking into account, among other things, the compensation of directors at other comparable companies. The Compensation Committee has engaged F.W. Cook as its independent compensation consultant to annually review non-employee director compensation. After considering F.W. Cook’s review of non-employee director compensation and the factors described above, the Compensation Committee recommended the following non-employee director compensation for the 2023-2024 director term: 2023-2024 Annual Director Compensation | | Annual cash retainer | | | | | $ | 105,000 | | | | | Annual equity retainer | | | | | $ | 200,000 | | | | | Lead Independent Director | | | | | $ | 40,000 | | | | | Committee Chair(1) | | | | | $ | 20,000 | | |
(1)
The Governance and Social Responsibility Committee co-chairs split the annual committee chair retainer. Directors and Executive Officerswho 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 following table reports,annual equity retainer was issued as an award of Februaryrestricted stock units under the Coterra Energy Inc. 2023 Equity Incentive Plan (the “2023 Plan”), the restrictions on which lapse on May 1, 2014, beneficial ownership of Common Stock by each2024 or the earlier date the non-employee director and nominee for director, by each named executive officer listedleaves the Board. Such restricted stock units accrue cash dividend equivalents in the “Summaryamount of the cash dividend paid on our outstanding common stock from the date of grant through the date the restrictions lapse. In 2023, each non-employee director received 8,177 restricted stock units. In addition, non-employee directors are reimbursed for reasonable expenses incurred in connection with Board and committee related activities. Under the Coterra Energy Inc. Non-employee Director Deferred Compensation Table” below and byPlan, non-employee directors have the option of deferring all directors, nominees and executive officersor a portion of their annual cash retainer, annual equity retainer, or a combination of both. If deferred, the annual cash retainer is issued as a group. Unless otherwise indicated,restricted stock units, the persons below have sole voting and investment powerterms of which are substantially the same as those issued for the annual equity retainer, except the ultimate distribution of common stock is deferred until the non-employee director leaves the Board. In November 2023, the Compensation Committee determined to keep non-employee director compensation unchanged for the 2024-2025 term.
2023 Director Compensation Table | | Name | | | | Fees Earned
or Paid in
Cash
($) | | | | Stock
Awards
($)(1) | | | | Option
Awards
($) | | | | Non-Equity
Incentive Plan
Compensation
($) | | | | Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($) | | | | All Other
Compensation
($)(2) | | | | Total
($) | | | | Dorothy M. Ables | | | | | $ | 125,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 10,000 | | | | | | $ | 335,009 | | | | | Robert S. Boswell | | | | | $ | 145,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 345,009 | | | | | Amanda M. Brock | | | | | $ | 105,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 305,009 | | | | | Dan O. Dinges | | | | | $ | 105,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 305,009 | | | | | Paul N. Eckley | | | | | $ | 125,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 5,000 | | | | | | $ | 330,009 | | | | | Hans Helmerich | | | | | $ | 105,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 305,009 | | | | | Lisa A. Stewart | | | | | $ | 125,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 325,009 | | | | | Frances M. Vallejo | | | | | $ | 115,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 5,000 | | | | | | $ | 320,009 | | | | | Marcus A. Watts | | | | | $ | 115,000 | | | | | | $ | 200,009 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 2,500 | | | | | | $ | 317,509 | | |
(1)
The amounts in this column reflect the grant date fair value with respect to restricted stock units granted to each non-employee director on May 10, 2023 that are payable by the Company in shares of Common Stock shown as beneficially owned by them.| Name of Beneficial Owner | | Number of Outstanding
Shares of Common
Stock Held | | Number of Shares of Common
Stock Beneficially Owned | | Percent of Class | | Rhys J. Best | | 10,000 | | | 85,356 | (1) | | * | | | James R. Gibbs | | 0 | | | 49,765 | (1) | | * | | | Robert L. Keiser | | 100,786 | | | 217,735 | (1) | | * | | | Robert Kelley | | 337,652 | | | 486,596 | (1) | | * | | | P. Dexter Peacock | | 231,040 | (8) | | 382,672 | (1) | | * | | | W. Matt Ralls | | 0 | | | 25,440 | (1) | | * | | | Dan O. Dinges | | 3,224,598 | | | 3,595,506 | (2)(3)(6) | | * | | | Scott C. Schroeder | | 1,246,386 | | | 1,384,266 | (2)(3)(7) | | * | | | Jeffrey W. Hutton | | 560,891 | | | 611,093 | (2)(3)(4) | | * | | | Phillip L. Stalnaker | | 189,742 | | | 224,056 | (2)(3)(4) | | * | | | G. Kevin Cunningham | | 44,896 | | | 88,740 | (2)(3)(4) | | * | | | All directors, nominees and executive officers as a group (17 individuals) | 7,878,081 | (1)(2)(3)(4)(5)(6)(7) | | 1.90% | |
* | Represents less than 1% of the outstanding Common Stock. | | | (1) | Includes the following restricted stock units held as of February 1, 2014, as to which the restrictions lapse upon the holders’ retirement from the Board of Directors: Mr. Best, 75,356; Mr. Gibbs, 49,765; Mr. Keiser, 116,949; Mr. Kelley, 148,944; Mr. Peacock, 151,632; and Mr. Ralls, 25,440; and all directors, nominees and executive officers ascommon stock and vest upon the earlier of May 1, 2024 or the date the non-employee director ceases to be a group, 568,086. No executive officers hold restricted stock units. | | | (2) | Includes the following stock appreciation rights that are exercisable on or before April 2, 2014: Mr. Dinges, 256,718; Mr. Schroeder, 94,450; Mr. Hutton, 34,744; Mr. Stalnaker, 23,222; Mr. Cunningham, 30,080; and all directors, nominees and executive officers as a group, 587,462. No directors or nominees hold stock appreciation rights. The SARs were granted prior to 2013 and vest ratably over a three-year period after grant and have a seven year term. For more information on the SARs, see footnote 1 to the “Outstanding Equity Awards at Fiscal Year-End 2013” table below. | | | (3) | Includes the following shares awarded pursuant to the hybrid performance share awards granted in 2011, 2012 and 2013 that vested in February 2014, as a result of 2013 operating results meeting the performance criteria established on the date of grant: Mr. Dinges, 114,190; Mr. Schroeder, 43,430; Mr. Hutton, 15,458; Mr. Stalnaker, 11,092; Mr. Cunningham, 13,764; and all directors, nominees and executive officers as a group, 236,742. No directors or director nominees hold hybrid performance shares. For more information on the hybrid performance shares see “Long-Term Incentives” in the “Compensation Discussion and Analysis” below. | | | (4) | Includes the following shares held in the Company’s Savings Investment Plan as of December 31, 2013 as to which the reporting person shares voting power with the trustee of the plan: Mr. Hutton, 6,724; Mr. Cunningham, 13,432; Mr. Stalnaker, 16,353; and all directors, nominees and executive officers as a group, 77,075. | | | (5) | Includes the following shares awarded in 2011 pursuant to employee performance awards that vested in February 2014, as a result of 2013 operating results meeting the performance criteria established on the date of grant: all directors, nominees and executive officers as a group, 17,280. | | | (6) | Includes 916,825 shares held in trust for the benefit of an immediate family member, with respect to which Mr. Dinges has shared voting and investment power. | | | (7) | Includes 9,480 shares held by immediate family members, with respect to which Mr. Schroeder has shared voting and investment power. | | | (8) | Includes 48,000 shares held by Mr. Peacock subject to a pledge to secure indebtedness as to which Mr. Peacock shares voting and investment power. |
-2014 Proxy Statement13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange ActCompany, calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codifications (“ASC”) Topic 718 for the fiscal year ended December 31, 2023. Assumptions used in the calculation of 1934 requiresthese amounts are included in Note 13 of the Notes to the Consolidated Financial Statements included in the Company’s executive officers and directorsAnnual Report on Form 10-K for the year ended December 31, 2023. The aggregate number of restricted stock units held by each non-employee director at December 31, 2023, including those issued on May 10, 2023, those that have vested but are not payable until the date such non-employee director ceases to file initial reports of ownership and reports of changes in ownership of Company 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 onbe a review of the copies of such reports furnished todirector the Company, and written representationsthose issued in lieu of annual cash or equity retainers is as follows:
| | Name | | | | Total RSUs | | | | Dorothy M. Ables | | | | | | 78,909 | | | | | Robert S. Boswell | | | | | | 84,655 | | | | | Amanda M. Brock | | | | | | 57,521 | | | | | Dan O. Dinges | | | | | | 8,177 | | | | | Paul N. Eckley | | | | | | 8,177 | | | | | Hans Helmerich | | | | | | 8,177 | | | | | Lisa A. Stewart | | | | | | 8,177 | | | | | Frances M. Vallejo | | | | | | 8,177 | | | | | Marcus A. Watts | | | | | | 57,521 | | |
(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 those reports accuratelyare tax exempt under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. In addition, under the Coterra Energy Inc. Political Action Committee (the “PAC”) matching gift program we also match contributions to the PAC by directors, officers and employees with contributions to tax-exempt organizations selected by the contributor. Each matching gift program will match up to $5,000 per calendar year.
BOARD AND COMMITTEE GOVERNANCE GOVERNANCE GUIDELINES Our Board has adopted Corporate Governance Guidelines to assist the Board and its committees in performing their duties to oversee the governance of the Company. Our Corporate Governance Guidelines outline the functions and responsibilities of the Board, director qualifications, and various processes and procedures designed to promote effective and responsive governance. The guidelines are reviewed annually and periodically revised to reflect all reportable transactionschanging regulatory requirements and holdings, all reports required by Section 16(a) were filed in 2013.CORPORATE GOVERNANCE MATTERS
best practices. All of our key corporate governance documents, including the Corporate Governance Guidelines, the charters of our Board committees, our Code of DirectorsBusiness Conduct and Ethics and our 2023 Sustainability Report, can be found on the Company’s website at www.coterra.com. Director IndependenceThe Company’s
Independence Standards Our 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 committeeAudit Committee and corporate governance and nominations committeethe 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 2011 between the CompanySocial Responsibility Committee, annually reviews and each director nominee, members of their immediate families or entities associated with them.The Board has adopted categorical standards to assist it in making independence determinations. A relationship falls within these categorical standards if it:
• | Is a type of relationship addressed in Section 303A.02 (b) of the NYSE Listed Company Manual, but under those rules does not preclude a determination of independence; | | | • | Is a type of relationship or transaction addressed in Item 404 of Regulation S-K, but under that regulation does not require disclosure; or | | | • | Consists of charitable contributions by the Company to an organization where a director is an executive officer and does not exceed the greater of $1 million or 2% of the organization’s gross revenue in any of the last three years. |
The Board of Directors has determined that each director’s relationship with the Company, with the exception of Mr. Dinges, the Chairman, President and Chief Executive Officer, falls within the categorical standards and that all directors, with the exception of Mr. Dinges, are independent. In making its subjective determination that each non-employee director is independent, 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 categorical standards noted above,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 at which of Mr. Boswell, Mr. Helmerich, Ms. Stewart and the gross revenue for eachMs. Vallejo serve or have served on boards of the other entities. This review is for each ofdirectors and with which we have done business in the last three fiscal years for which financial data is available. This review applied to Messrs. Best and Ralls. None of these relationships involved payments in excessyears. In each instance, the Board, with the recommendation of the greater of $1 million or 2% of the relevant entity’s consolidated gross revenue for 2011, 2012 or 2013. -2014 Proxy Statement14
Based on all of the foregoing, the Board made a subjective determinationGovernance and Social Responsibility Committee, determined that, because of the nature of the transaction, the director’s relationship withservice on the board of directors of the other entity, and/orand the amount involved, no relationships exist that, in the opinion of the Board, would impair the director’s independence. Further,
The Governance and Social Responsibility Committee also considered the following relationships where a director served as an officer of an entity with which we have done business in the last three years: Mr. Boswell is the Chairman of the Board and Chief Executive Officer of Directors has determined that all membersLaramie Energy, LLC (“Laramie”). On January 11, 2022, Cimarex, a subsidiary of the Audit Committee, Compensation CommitteeCompany, entered into a sub-lease of a portion of its office space in Denver, Colorado with Laramie. Cimarex no longer needs this office space. The sublease is for a term from March 1, 2022 through August 31, 2026, with rental payments to the 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 Corporateconcluded: (i) the transaction is proper and not material when compared to our and Laramie’s respective consolidated gross revenues and anticipated revenues for the relevant periods; (ii) the transaction occurred in the ordinary course of business, at market rates and on arms’ length terms; and (iii) Mr. Boswell’s relationship with Laramie does not interfere with his independent judgment as a director of Coterra. Ms. Brock is the Chief Executive Officer of Aris Water Solutions, Inc. (“Aris Water”), a publicly traded growth-oriented environmental infrastructure and solutions company that owns, operates and designs crucial water midstream assets across key unconventional U.S. basins, including the Permian Basin. Our 2023 payments to Aris Water represented less than 0.5 percent of Aris Water’s consolidated gross revenues for 2023. The Board reviewed these transactions and concluded: (i) the transactions are proper and not material when compared to both our total costs and Aris Water’s gross revenues; (ii) the transactions occurred in the ordinary course of business and at arms’ length; and (iii) Ms. Brock’s relationship with Aris Water does not interfere with her independent judgment as a director of Coterra. Related Person Transactions Policy on Related Person Transactions Our Governance and NominationsSocial Responsibility Committee reviews our disclosure of related-party transactions in connection with its annual review of director independence. These procedures are independent.Boardnot in writing but are documented through the meeting agendas and minutes of Directors Qualifications
Mr. Dinges was chosenour Governance and Social Responsibility Committee, in each case with the assistance of our legal department.
Our legal department is primarily responsible for (i) developing and implementing processes and controls to serveobtain information regarding our directors, executive officers, and significant stockholders with respect to related party transactions and (ii) then determining, based on the Board of Directors,facts and to leadcircumstances, whether we or a related 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 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, 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 SEC in which (i) the Company or any of its subsidiaries was a participant, (ii) the amount involved exceeded or will exceed $120,000, and (iii) any director, director nominee, executive officer, a greater than 5% beneficial owner of the Company at the time of the applicable transaction, or any of their immediate family members, had a direct or indirect material interest. BOARD OF DIRECTORS’ LEADERSHIP STRUCTURE | | Chairman of the Board:
Duties and Responsibilities | | | | Lead Independent Director:
Duties and Responsibilities | | | | •
Presides over Board meetings •
Approves agenda for Board meetings with input from the Lead Independent Director •
Facilitates and participates in formal and informal communications with and among directors •
Calls special meetings of the Board •
Presides over stockholder meetings | | | | •
Presides over all Board meetings at which the Chairman is not present •
Solicits agenda items from non-management directors, reviews Board meeting agenda, and provides input to the Chairman on agenda and Board materials •
Calls meetings of non-management directors and, as appropriate, sets the agenda •
Presides over meetings and executive sessions of non-management directors •
Acts as liaison between the Chairman and the directors and facilitates communication among the full Board •
Reviews stockholder communications directed to the Board and takes appropriate action •
Retains outside advisors and consultants, who report directly to the Board on Board-wide issues | |
Chairman of the Board The Board believes having a combined Chairman/Chief Executive Officer and a Lead Independent Director, who have the duties described above, best serve the interests of our stockholders because this structure provides an appropriate balance between strategy development and independent oversight of management. Mr. Jorden began serving as Chief Executive Officer and President of the Company effective October 1, 2021. The Board appointed Mr. Jorden as Chairman of the Board Presidenteffective January 1, 2023. Our Corporate Governance Guidelines contain strong checks and CEO, for his executive management experience atbalances regarding the Companyroles, or combined roles, of Chief Executive Officer and while at Noble Energy Inc., a publicly traded company involved inChairman. Those provisions include the oil and natural gas business. Mr. Best was chosen torequirement that only non-employee directors serve on the Board of Directors for his executive management experience at Lone Star Technologies, Inc., a former publicly traded company servicing the oil and natural gas industry, and for his banking and finance experience. Mr. Gibbs was selected to serve on the Board of Directors for his executive management experience at Frontier Oil Corporation, a publicly traded oil refining company. Mr. Keiser was selected to serve on the Board of Directors for his executive management experience at Kerr-McGee Corporation and Oryx Energy Company, both former publicly traded companies involved in the energy industry, and for his engineering background. Mr. Kelley was selected to serve on the Board of Directors for his executive management experience at Noble Energy Inc., and for his financial background as a Certified Public Accountant. Mr. Peacock was selected to serve on the Board of Directors for his business experience managing a large professional organization and for his legal experience at Andrews Kurth L.L.P representing energy companies in corporate law, securities matters and mergers and acquisitions. Mr. Ralls was selected to serve on the Board of Directors for his executive management and industry experience as the CEO and a director of Rowan Companies plc, a publicly traded provider of global offshore contract drilling services.Board of Directors Diversity
The Board of Directors encourages a diversity of backgrounds among its members; however, it does not have a formal diversity policy. 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. For more information on specific minimum qualifications that the Corporate Governance and Nominations Committee has established for board candidates see “Information on Standing Committeescommittees of the Board (other than the Executive Committee), and the requirement that a majority of Directors – Corporate Governance and Nominations Committee” below.
Boardthe directors be independent, as discussed above under “Director Independence.” All of Directors Leadership Structure
our directors, other than Mr. Dinges serves as the Chairman of the Board, President and Chief Executive Officer of the Company. We believe that our Board of Directors is best served by combining the roles of Chairman and CEO and that Mr. Dinges is highly qualified to serve in this role. The Chairman and CEO is responsible to the Board for the overall management and functioning of the Company. Jorden, are independent.
Lead Independent Director The Chairman is joined in the leadership of the Board by our Lead Independent Director, Mr. Peacock, who wasordinarily is nominated by the Governance and Social Responsibility Committee and elected by the non-managementnon-employee directors. Mr. Peacock has significant board experience and has served onPursuant to the Merger Agreement, the Company agreed that, until the Company’s 2024 annual meeting of stockholders, the Board since 1998 and as Lead Director since 2005. Mr. Peacock performs an important role inshall have a lead independent director who shall be (i) a continuing Cimarex director at any time when the leadershipChairman of the Board by presidingis a continuing Cabot director and (ii) a continuing Cabot director at executive sessions oftimes when the non-management directors at each regular Board meeting and setting the agenda for these sessions. Mr. Peacock also serves as a mentor to Mr. Dinges and as a liaison between Mr. Dinges and the other independent directors. Mr. Peacock’s longevity on the Board enhances this leadership role and provides for continuity among the non-employee directors. -2014 Proxy Statement15
In addition to the Lead Director, our Corporate Governance Guidelines also contain strong checks and balances regarding the combined role of CEO and Chairman. Those provisions include the inability of the CEO to serve on any committeesChairman of the Board other thanis a continuing Cimarex director. Pursuant to this arrangement, the Executive Committee,Board appointed Mr. Boswell, a continuing Cabot director, as only non-management directors may do so, andLead Independent Director effective January 1, 2023 concurrent with Mr. Jorden’s appointment as Chairman. Mr. Jorden is a continuing Cimarex director.
The Company believes that the requirement that a substantial majorityBoard’s leadership structure supports the risk oversight function of the directors beBoard, with the Chairman and Chief Executive Officer uniquely positioned to identify emerging risks, while the Lead Independent Director and Chairs of the Board’s Audit, Compensation, Governance and Social Responsibility, and Environment, Health & Safety Committees provide independent as discussed above under “Boardoversight of Directors Independence.” Allthe 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 our directors are independent, other than Mr. Dinges.integrity and risk awareness. Our Board of Directors has determined thatimplements its current leadership structure is appropriate. Therisk oversight function both as a whole body and through delegation to Board believes that Mr. Dinges, acting in his capacity as CEOcommittees, which meet regularly and report back to the Board. Consistent with this approach, one of the Company,Board’s and Board committees’ primary responsibilities is well positionedoverseeing and interacting with senior management with respect to facilitate communications with the Boardkey aspects of Directors about our business. Mr. Dinges has served in this capacity since May 2002, during which time the Company’s business, has undergone signification changes. Only oneincluding risk assessment and risk mitigation of the current independent directors, Mr. Peacock, the Lead Director, was serving at that time, so Mr. Dinges provides continuity and historical perspective to the Board. Under Mr. Dinges’ leadership, the Company has grown from a market capitalization of approximately $800 million with operations in onshore Texas and Louisiana Gulf Coast, the Rocky Mountains, the Anadarko Basin and Appalachia to an over $14 billion market capitalization company with most of its reserves in the Marcellus Shale area in northeast Pennsylvania. In addition, Mr. Dinges has the full confidence of the Board. For all these reasons,Company’s top risks. While the Board has determined that the most appropriate form of leadership for the Board of Directors currently is for the CEO, who is responsible for the day-to-day operations of the Company, to serve as Chairman, with strong and independent oversight by the Lead Director and the other non-management directors.Board of Directors Oversight of Risk
The Board of Directors considersits committees oversee risk oversight to be an integral part of its role, and discussions regarding risks faced by the Company are part of its meetings and deliberations throughout the year. Our Corporate Governance Guidelines provide that the Board is responsible for assessing major risks facing the Company and reviewing options for their mitigation. At the direction of the Board,management, management is responsible for implementing anmanaging risk. Throughout the year, the Board and the relevant Board committees receive updates from members of management responsible for various enterprise risk management processissues and reportingdedicate a portion of their meetings to the Board at least annually regarding its assessment ofreviewing and discussing specific risk topics in greater detail, including risks that could have a significant impact on the Companyrelated to litigation, regulation, cybersecurity, safety, sustainability, human capital management, including diversity, equity and the strategies for their mitigation. In this way, the Board is engaged in risk oversight at the enterprise level.
inclusion, and commodity prices. The Board isreceives 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 engaged in risk oversight through regular reportsreceives periodic updates from external experts and advisers on trends and conditions that may impact our strategy and financial performance, including political issues, labor or oil and gas market trends, and digitalization. For example, the Audit Committee. The Audit Committee is charged with reviewing with managementassessed the benefits of outsourcing our internal audit function and the Company’s internal auditors the Company’s major financial exposures and the steps management has taken to monitor and control those exposures. The Audit Committee receives periodic reports from management on these areas of potential exposure, including litigation, commodity price hedging, liquidity and capital resources, financial reporting and disclosures and regulatory risks, among others. The Audit Committee also receives reports from management regarding compliance with our Code of Business Conduct. The Audit Committee reviews at least annually the Company’s policies and guidelines concerning financial risk assessment and financial risk management, with the assistance of the Company’s internal auditors, KPMG LLP.selected KPMG LLP (“KPMG”) to provide these services. KPMG conducts aan annual process of assessing major risks, including management interviews, and presents and discusses its conclusions with the Audit Committee its conclusions regarding the Company’s major risks. From this process,and management to help identify areas of concern are identified and considered andto develop the internal audit plan is developed. Results of these reviews and audits are presented to theplan. The Audit Committee throughoutalso 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 year. At each regular Board meeting,and management consider short-, medium-, and long-term potential impacts on our business, financial condition, and results of operations, and considers the Audit Committee Chairman reportsrisk horizon when prioritizing our risk mitigation efforts. The Board recognizes that it is neither possible nor prudent to eliminate all risk. Therefore, our risk oversight processes and disclosure controls and procedures are designed to appropriately escalate key risks to the Board regardingor the activities of the Committee.appropriate Board committee for their consideration.
The Cabot Oil & Gas Corporation Corporate Governance Guidelines outline the functions and responsibilitiesBoard has tasked designated committees of the Board director qualifications,with oversight of certain categories of risk management, and various processes and procedures designed to ensure effective and responsive governance. The guidelines are reviewed annually and revised as appropriate to reflect changing regulatory requirements and best practices. The full text of the Corporate Governance Guidelines can be found on the Company’s website atwww.cabotog.comby choosing “About Cabot,” and then choosing “Governance.” -2014 Proxy Statement16
Code of Business Conduct
All employees, officers and directors are required to comply with the Company’s Code of Business Conduct to help ensure that the Company’s business is conducted in accordance with the highest standards of moral and ethical behavior. The Code of Business Conduct covers all areas of professional conduct, including conflicts of interest, customer relationships, insider trading, financial disclosure, intellectual property and confidential information, as well as requiring strict adherence to all laws and regulations applicablecommittees report to the Company’s business. Employees, officers and directors are required annually to reply to a Code of Conduct Questionnaire, which is designed to elicit information related to any known or possible violation of the Code. The full text of the Code of Business Conduct can be foundBoard regularly on the Company’s website atwww.cabotog.comby choosing “About Cabot,” and then choosing “Governance.” The Company will satisfy the requirement to disclose any amendments to or waivers from certain provisions of its Code of Business Conduct by posting such informationthese matters. Information on the website at that location.
Executive Sessions of the Board of Directors
The Board of Directors generally holds an executive session of the non-management and independent directors during each of its regularly scheduled meetings. The executive sessions are presided over by the Lead Director, Mr. Peacock.
Communications with the Board of Directors
The Company’s Board of Directors has a process for shareholders and other interested parties to send communications to the Board. Communications should be addressed to the “Board of Directors,” a specified committee of the Board, an individual director (including the Lead Director) or the “Non-management Directors” in care of:
Corporate Secretary and Managing Counsel
Corporate Legal Department
840 Gessner Road, Suite 1400
Houston, Texas 77024
(281)589-4890
(281)589-4808 (fax)
(Outside the U.S. or U.S. long distance-call collect)
Deidre.Shearer@cabotog.com (email)
All communications received as described above and intended for the Board of Directors, a committee of the Board of Directors, an individual director, or the non-management directors as a group will be relayed to the appropriate directors.
Annual Meeting Attendance
The Company’s policy is that it expects all members of the Board of Directors to attend the Company’s annual meeting of stockholders. In 2013, all of the members of the Board attended the annual meeting.
Board of Directors and Committee Meeting Attendance
The Board of Directors held six meetings during 2013. All directors attended 100% of the meetings of the Board of Directors and of the committees on which they served.
-2014 Proxy Statement17
Director Compensation
Directors who are employees of the Company receive no additional compensation for their duties as directors. During 2013, non-employee directors’ annual compensation included an annual retainer fee of $75,000 each, payable quarterly, for their service on the Company’s Board of Directors and its committees. The Lead Director received an additional $20,000 annual retainer, the Audit Committee Chairman and Compensation Committee Chairman received an additional $15,000 annual retainer and the remaining committee chairmen received an additional $10,000 annual retainer, each payable quarterly, for this additional service. Additionally, each non-employee director will receive $2,000 for each Board of Directors meeting attended in excess of six meetings per year. The directors did not receive additional meeting fees in 2013 because they did not attend in excess of six meetings.
In 2013, non-employee directors were also entitled to an annual award of restricted stock units under the 2004 Incentive Plan, the restrictions on which lapse the date the non-employee director leaves the Board of Directors, with a targeted award value at grant date of $200,000. In 2013, these directors each received 7,520 restricted stock units.
Beginning in 2013, Board members had the option of participating in the Director Non-Qualified Deferred Compensation Plan, which provides each non-employee director an opportunity to elect each year to take any, or all, of the director’s annual retainer and additional fees for serving as lead director or as a committee chairman in restricted stock units, valued at the closing price of the common stock on the date specified in the plan, for the quarterly retainer payment. The terms of the restricted stock units are the same as those issued annually.
All directors were reimbursed for travel expenses incurred for attending Board and committee meetings. Spouses of the directors were invited to attend the Board of Director strategy meeting during 2013 and travel expenses incurred by the spouses were reimbursed by the Company. For more information on director compensation, see “Director Compensation Table” below.
The table below summarizes the total compensation paid to each of the non-employee directorsBoard’s standing committees as of the Company for the fiscal year ended December 31, 2013. Shares and share pricesdate hereof is discussed in this proxy statement have been adjusted to reflect our two-for-one stock split, in the form of a stock dividend, effective as of August 14, 2013.
| Name | | Fees Earned or
Paid in Cash*
($) | | Stock Awards
($)(1) | | Option Awards
($) | | Non-Equity
Incentive Plan
Compensation
($) | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($) | | All Other
Compensation
($)(2) | | Total
($) | | Rhys J. Best | | $ | 86,875 | | | $ | 200,145 | | | - | | - | | - | | $ | 4,446 | | | $ | 291,466 | | | James R. Gibbs | | $ | 81,875 | | | $ | 200,145 | | | - | | - | | - | | $ | 5,319 | | | $ | 287,339 | | | Robert L. Keiser | | $ | 81,875 | | | $ | 200,145 | | | - | | - | | - | | $ | 6,866 | | | $ | 288,886 | | | Robert Kelley | | $ | 86,875 | | | $ | 200,145 | | | - | | - | | - | | $ | 10,745 | | | $ | 297,765 | | | P. Dexter Peacock | | $ | 92,500 | | | $ | 200,145 | | | - | | - | | - | | $ | 10,899 | | | $ | 303,544 | | | W. Matt Ralls | | $ | 72,500 | | | $ | 200,145 | | | - | | - | | - | | $ | 3,674 | | | $ | 276,319 | |
* | Restricted stock units were issued pursuant to the Company’s Non-Employee Director Deferred Compensation Plan in lieu of quarterly cash retainer and leadership fees totaling $42,500 each for Messrs. Gibbs and Keiser and $47,500 for Mr. Peacock. | | | (1) | The amounts in this column reflect the grant date fair value with respect to restricted stock units in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 for the fiscal year ended December 31, 2013. 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, 2013 (the “Form 10-K”). In February 2013, each non-employee director received a grant of 7,520 restricted stock units, with a grant date fair value of $200,145 based on the average of the high and low trading price of the Common Stock on the February 21, 2013 grant date. The restricted stock units vest on the grant date, but are not payable by the Company in shares of Common Stock until the date the non-employee director ceases to be a director of the Company. The aggregate number of stock awards outstanding at December 31, 2013 were as follows: |
-2014 Proxy Statement18
Name | | Stock Awards | Rhys J. Best | | | 75,356 | | James R. Gibbs | | | 49,199 | | Robert L. Keiser | | | 116,383 | | Robert Kelley | | | 148,944 | | P. Dexter Peacock | | | 150,999 | | W. Matt Ralls | | | 25,440 | |
(2) | The amounts in this column include for each director some or all of the following: | | | | • | Quarterly dividends paid on the restricted stock units. | | | | | • | Spouse travel to the September 2013 Board of Directors strategy meeting and related expenses. |
Director Retirement
It is the policy of the Board of Directors that directors of the Company retire at the annual meeting following a director’s 73rdbirthday. It is also the policy of the Board of Directors that a retiring CEO of the Company retires from service on the Board, unless a determination is otherwise made by the Board of Directors.
Information on Standing Committees of the Board The charters of DirectorsBoard committees can be found on our website at www.coterra.com. The Boardfollowing is a summary of Directors has five standing committees: the Corporate Governance and Nominations Committee,composition of each of the Audit Committee, the Compensation Committee, the Safety and Environmental Affairs Committee and the Executive Committee. Membership on each committee during 2013 is as discussed below. All standing committees withduring 2023 and through the exceptiondate of the Executive Committee, are composed entirely of independent, non-employee directors. Corporate Governance and Nominations Committee.The Corporate Governance and Nominations Committee (the “CGN Committee”) is composed of three members: Messrs. Gibbs (Chairman), Peacock and Ralls. During 2013, the CGN Committee held three meetings. Each member of the CGN Committee satisfies the independence requirements of the NYSE listing standards. The CGN Committee Charter is available to shareholders on the Company’s website atwww.cabotog.comby choosing “About Cabot,” and then choosing “Governance.”
The CGN Committee will consider director candidates recommended by shareholders. Under its charter, the CGN 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. Any shareholder desiring to propose a nominee to the Board of Directors should submit such proposed nominee for consideration by the CGN Committee, including the proposed nominee’s qualifications, to Ms. Deidre L. Shearer, Corporate Secretary, Cabot Oil & Gas Corporation, 840 Gessner Road, Suite 1400, Houston, Texas 77024.
The CGN Committee seeks to select candidates who have personal and professional integrity, who have demonstrated exceptional ability and judgment and who shall 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 CGN Committee’s assessment 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 CGN Committee has adopted minimum criteria for Board membership that include (i) a strong commitment to his/her fiduciary responsibilities to the Company’s shareholders, with no actual or perceived conflict of interest that would interfere with his/her responsibilities to or relationships with the Company’s shareholders, employees, suppliers, and customers; (ii) the ability to think strategically and the insight to assist management in placing the Company in a competitive position within the industry; (iii) a record of achievement, and a position of leadership in his/ her field, with the interest and intellect to be able to address energy industry challenges and opportunities; and (iv) the time to attend Board meetings and the
-2014 Proxy Statement19
this proxy statement: | | Committees | | | | Independent? | | | | 2023
Meetings | | | | Dinges | | | | Jorden | | | | Ables | | | | Boswell | | | | Brock | | | | Eckley | | | | Helmerich | | | | Stewart | | | | Watts | | | | Vallejo | | | | Audit | | | | | | Yes | | | | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Compensation | | | | | | Yes | | | | | | | 6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Environment, Health & Safety | | | | | | Yes | | | | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Governance & Social Responsibility | | | | | | Yes | | | | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive | | | | | | No | | | | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
![[MISSING IMAGE: ic_comitchair-pn.jpg]](/files/PRE 14A/0001104659-24-032399/ic_comitchair-pn.jpg) COMMITTEE CHAIR OR CO-CHAIR![[MISSING IMAGE: ic_membercomm-pn.jpg]](/files/PRE 14A/0001104659-24-032399/ic_membercomm-pn.jpg) MEMBER OF COMMITTEEcommitment to devote any reasonable required additional time to deal with Company business.
The CGN Committee generally identifies nominees through recommendations made by incumbent directors. A resume is reviewed and, if merited, an interview follows. A qualified candidate identified by a shareholder follows the same process. There are no differences in the manner in which the CGN Committee evaluates nominees for director based on whether the nominee is recommended by a shareholder or the incumbent directors.
Audit Committee.The
Audit Committee is composed of three members: Messrs. Kelley (Chairman), Best and Keiser. During 2013, the Audit Committee held four meetings. Each member The primary purposes of the Audit Committee satisfiesare to assist the Board in overseeing: •
The integrity of our financial literacystatements; •
Our compliance with legal and regulatory requirements; •
The independence, requirementsqualifications and performance of our independent auditors, including the compensation, retention and oversight of the NYSE listing standards. work of the independent auditor; and •
The Board has determined that Mr. Kelley meetsperformance 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 requirementsAudit Committee is responsible for reviewing and discussing with management and our internal auditor our cybersecurity and information security risks, including the nature of an “audit committee financial expert”threats, defense and detection capabilities, incident response plans and employee training activities, among others, as defined by the Securities and Exchange Commission (the “SEC”). applicable. The Audit Committee Charter is available to shareholders on the Company’s website atwww.cabotog.comby choosing “About Cabot,” and then choosing “Governance.”The function ofprovides that the Audit Committee is to review and report to the Board of Directors with respect to various auditing and accounting matters, including overseeing the integrity of the financial statements of the Company, the compliance by the Company with legal and regulatory requirements, the selection, independence, qualifications, performance and compensation of the Company’s independent auditors and the performance of the Company’s internal audit function.
It is the policy of the Audit Committee toshall 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 deminimisexception for non-audit services described in Section 10A(i)(l)(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.
Compensation Committee.The Compensation Committee is composed of three members: Messrs. Best (Chairman), Gibbs and Peacock. During 2013, the Compensation Committee held four meetings.
Each member of the CompensationAudit 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 Charter is available to shareholders on the Company’s website atwww.cabotog.comby choosing “About Cabot,” and then choosing “Governance.” The functionprimary purposes of the Compensation Committee isare to:• | Review and approve corporate goals and objectives relevant to the CEO’s compensation, evaluate the CEO’s performance in light of those goals and objectives, and determine, subject to ratification by the Board, the CEO’s compensation level based on this evaluation. | | | • | Provide counsel and oversight of the evaluation and compensation of management of the Company, including base salaries, incentive compensation and equity-based compensation. | | | • | 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. | | | • | Review the annual compensation of the directors. |
•
Review and approve corporate goals and objectives relevant to the Chief Executive Officer’s compensation, evaluate the Chief Executive Officer’s performance in light of those goals and objectives, and determine and approve, subject to ratification by the Board, the Chief Executive Officer’s compensation level based on this evaluation; •
Review, determine and approve the other executive officers’ compensation; •
Make recommendations to the Board with respect to incentive-based compensation and equity-based plans that are subject to approval by the Board; and •
Prepare certain disclosures under the Exchange Act. The Compensation Committee also reviews and makes recommendations to the Board with respect to succession planning and development of executive officers, as appropriate, as well as the compensation of non-employee directors. Environment, Health & Safety and Environmental Affairs Committee.Committee The Safety and Environmental Affairs (“S&EA”) Committee is composed of three members: Messrs. Keiser (Chairman), Kelley and Ralls. The functionprimary purposes of the S&EAEnvironment, Health & Safety Committee isare to assist the Board in providing oversight and support of the Company’s safety and environmentalour policies, programs and initiatives.initiatives on the environment, health and safety. Among other things, the S&EA Committee reviewsEnvironment, 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 initiatives, trainingefforts likely to significantly affect our business; ◦
our projects and operations and initiatives and as needed, consultstraining 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 outsidethe Board and internal and external advisors regarding the management of our environmental, health and safety programs, including trends in environmental compliance and the Company’seconomic effect thereof; and •
Oversees and reviews all other external disclosures regarding our environmental, health and safety and environmental policies,sustainability data and programs and initiatives. During 2013,outcomes. The Environment, Health & Safety Committee also reviews comparisons of our safety performance with established benchmarks, such as the S&EABureau of Labor Statistics, American Exploration and Production Council and the Independent Producers EHS Managers Forum. This allows the Board to assess safety performance on a regular basis and provides a governance structure to oversee that our programs are effective and provide a safe working environment for our employees. Governance and Social Responsibility Committee held four meetings. The primary 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.Committee The Executive Committee is composed of three members: Messrs. Peacock (Chairman), Dinges and Gibbs. The function ofexercises the Executive Committee is to exercise all power and authority of the Board of Directors in the event action is needed between regularly scheduled Board Meetingsmeetings and a meeting of the full Board is deemed unnecessary, except as limited by the Company’s by-lawsour bylaws or applicable law. During 2013, there were noThe Executive Committee did not meet during 2023. MEETINGS AND ATTENDANCE The Board of Directors met seven times during 2023. All directors attended at least 75 percent of the meetings held. -2014 Proxy Statement20
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 of 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 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, and Ms. Vallejo, Co-Chair of the Governance and Social Responsibility Committee, received 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 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 our Code of Business Conduct and Ethics, or Code of Conduct. 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 our confidential 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 Governance and Social Responsibility Committee, subject to the disclosure and other provisions of the Exchange Act, the rules promulgated thereunder and the applicable rules of the NYSE. If a waiver is granted to a director or executive officer, the notice of the waiver shall be posted on the Company’s website, www.coterra.com, within four business days of the vote by the Board of Directors or shall be otherwise disclosed as required by applicable law or 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. ![[MISSING IMAGE: tb_commhighlights-pn.jpg]](/files/PRE 14A/0001104659-24-032399/tb_commhighlights-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.
| | PROPOSAL 2 | | | TO AMEND AND RESTATE THE RESTATED CERTIFICATE OF
INCORPORATION OF COTERRA ENERGY INC. | |
We are asking you to approve a proposal to amend and restate the Restated Certificate of Incorporation of Coterra Energy Inc. (the “Certificate of Incorporation”), in the form attached as Appendix A to this proxy statement (the “Amended and Restated Certificate of Incorporation”). The Amended and Restated Certificate of Incorporation would amend the Certificate of Incorporation to provide for exculpation of certain officers of the Company as permitted by Delaware law and to make certain non-substantive updates. The Board approved, subject to stockholder approval, and declared it advisable to recommend that stockholders approve, the Amended and Restated Certificate of Incorporation. Purpose and Effect of the Amended and Restated Certificate of Incorporation Effective August 1, 2022, Section 102(b)(7) of the General Corporation Law of the State of Delaware (the “DGCL”) was amended to authorize corporations to adopt a provision in their certificate of incorporation to eliminate or limit monetary liability of certain corporate officers for breach of the fiduciary duty of care. Previously, the DGCL allowed only exculpation of directors for breach of the fiduciary duty of care. As amended, Section 102(b)(7) of the DGCL authorizes corporations to provide for exculpation of the following officers: (i) the corporation’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer or chief accounting officer, (ii) “named executive officers” identified in the corporation’s SEC filings, and (iii) other individuals who have agreed to be identified as officers of the corporation. Section 102(b)(7) of the DGCL, as amended, only permits, and the Amended and Restated Certificate of Incorporation would only permit, the exculpation of certain officers in connection with direct claims brought by stockholders, including class actions, but would not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by the Company itself or for derivative claims brought by stockholders in the name of the Company. In addition, as is currently the case with directors under the Certificate of Incorporation, the Amended and Restated Certificate of Incorporation would not limit the liability of officers for any breach of the duty of loyalty to the Company or its stockholders, any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law and any transaction from which the officer derived an improper personal benefit. Article VII in the Certificate of Incorporation currently provides for the exculpation of directors but does not include a provision that allows for the exculpation of officers. Overview of the Amended and Restated Certificate of Incorporation As discussed above, Article VII in the Certificate of Incorporation currently provides for the exculpation of directors. This Proposal 2 requests that stockholders approve the Amended and Restated Certificate of Incorporation to extend the exculpation provision to certain of our officers as permitted by DGCL Section 102(b)(7), as amended, by adding a new paragraph to Article VII of the Certificate of Incorporation as follows: “An officer of the Corporation shall not be personally liable to the Corporation or its stockholder or stockholders for monetary damages for breach of fiduciary duty as an officer, except for liability (i) for any breach of the officer’s duty of loyalty to the Corporation or its stockholder or stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for any transaction from which the officer derived an improper personal benefit, or (iv) for any action by or in the right of the Corporation. If the GCL is amended after the date of filing of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of officers, then the liability of an officer of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the GCL as so amended. Any repeal or modification of this Article VII by the stockholder or stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of an officer of the Corporation existing at the time of such repeal or modification.” This Proposal 2 also requests that stockholders approve the Amended and Restated Certificate of Incorporation to make certain non-substantive updates. The text of the Amended and Restated Certificate of Incorporation is attached as Appendix A to this proxy statement. Modifications reflecting the extension of exculpation to certain officers of the Company as permitted by Delaware law and certain non-substantive updates are indicated by double underlining in Appendix A to this proxy statement. Reasons for the Amended and Restated Certificate of Incorporation The Board believes it is important to provide protection from certain liabilities and expenses that may discourage prospective or current officers from accepting or continuing service with corporations. As with directors, officers frequently must make decisions
in response to time-sensitive opportunities and challenges, which can create substantial risk of investigations, claims, actions, suits or proceedings seeking to impose liability on the basis of hindsight. This is especially the case in the current litigious environment where stockholder plaintiffs have employed a tactic of bringing certain claims against officers that would otherwise be exculpated if brought against directors to avoid dismissal of such claims. The Amended and Restated Certificate of Incorporation would align the protections for our officers with those protections currently afforded to our directors. In addition, the Board believes the Amended and Restated Certificate of Incorporation would better position the Company to attract top officer candidates. In the absence of this exculpatory protection, qualified officers might be deterred from serving as officers of the Company due to exposure to personal liability and the risk that substantial expense will be incurred in defending lawsuits, regardless of merit. The stockholders of many of our peers have already adopted exculpation clauses that limit the personal liability of officers in their certificates of incorporation and failing to adopt the Amended and Restated Certificate of Incorporation could impact our recruitment and retention of exceptional officer candidates who conclude that the potential exposure to liabilities, costs of defense and other risks of proceedings exceeds the benefits of serving as an officer of the Company. The Board also considered the narrow class and type of claims from which such officers would be exculpated from liability pursuant to DGCL Section 102(b)(7), as amended, the limited number of our officers that would be impacted, and the benefits the Board believes would accrue to the Company by providing exculpation in accordance with DGCL Section 102(b)(7), as amended, including the ability to further enable our officers to best exercise their business judgment in furtherance of stockholder interests. After weighing these considerations, upon the recommendation of the Governance and Social Responsibility Committee, the Board approved and declared it advisable to adopt, subject to stockholder approval, the Amended and Restated Certificate of Incorporation to provide for exculpation of certain officers of the Company as permitted by Delaware law and to make certain unrelated, non-substantive updates. Additional Information If Proposal 2 is not approved by our stockholders at the annual meeting, then the Amended and Restated Certificate of Incorporation will not be approved and will not be implemented or become effective. The vote on the Amended and Restated Certificate of Incorporation is binding. Approval of Proposal 2 will constitute approval of the Amended and Restated Certificate of Incorporation, as set forth in Appendix A to this proxy statement. Other than the addition of a new paragraph to Article VII of the Certificate of Incorporation as set forth above and certain non-substantive updates to the Certificate of Incorporation, in each case as set forth in Appendix A, the remainder of the Certificate of Incorporation will remain unchanged after effectiveness of the Amended and Restated Certificate of Incorporation. If Proposal 2 is approved, the Company intends to file the Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware as soon as practicable following stockholder approval, and the Amended and Restated Certificate of Incorporation will become effective at the time of that filing. The Board may, at any time prior to the effectiveness of the Amended and Restated Certificate of Incorporation, abandon the Amended and Restated Certificate of Incorporation without further action by the stockholders or the Board (even if the requisite stockholder vote is obtained). Required Vote Approval of the Amended and Restated Certificate of Incorporation will require the affirmative vote of a majority of the outstanding shares of common stock entitled to vote on the matter. Abstentions and broker non-votes will have the effect of votes against this matter. | | | | | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF COTERRA ENERGY INC. TO LIMIT THE LIABILITY OF CERTAIN OFFICERS AS PERMITTED BY DELAWARE LAW AND TO MAKE CERTAIN NON-SUBSTANTIVE UPDATES. | |
Back to Contents | PROPOSAL 3 | | | TO APPROVE, BY NON-BINDING ADVISORY VOTE,
THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS | |
In accordance with Section 14A of the Exchange Act and the related rules of the SEC, the stockholders of the Company are entitled to cast an advisory vote at the annual meeting to approve the compensation of the Company’s named executive officers. The vote on this Proposal 3 is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers as described in this proxy statement. At the 2023 annual meeting, our stockholders approved our proposal to provide you this opportunity on an annual basis. As described more fully in the “Compensation Discussion and Analysis” section of this proxy statement, the Company’s executive compensation program is designed to: •
Align executive compensation with our business strategy; •
Encourage management to create sustained value for the stockholders while managing inherent business risks; •
Attract, retain, and engage talented executives; and •
Support a long-term performance-based culture throughout the Company. We urge you to read the “Compensation Discussion and Analysis” and “Compensation Tables” sections on pages 28 to 56 so that you have an understanding of our executive compensation philosophy, policies and practices. The stockholder vote on executive compensation is an advisory vote only, and it is not binding on the Company or the Board of Directors. Although the vote is non-binding, the Compensation Committee and the Board value the opinions of the stockholders and will consider the outcome of the vote when making future compensation decisions. The next say-on-pay vote will occur at the 2025 annual meeting of stockholders. Required Vote The advisory vote regarding the compensation of the named executive officers described in this Proposal 3 will be approved if holders of a majority of the voting power of the common stock present in person or represented by proxy at the annual meeting and entitled to vote on the proposal vote in favor of the proposal. Abstentions will have the same effect as votes against the proposal, but broker non-votes will not affect the outcome of the voting on the proposal. | | | | | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS. | |
COMPENSATION DISCUSSION AND ANALYSISExecutive Summary
This Compensation Discussion and Analysis (“CD&A”) provides stockholders with an understanding ofdescribes our compensation philosophy, objectives, policies and practices in place during 2013, as well as the factors considered by our Compensation Committee of the Board of Directors in making compensation decisions for 2013. This CD&A focuses on2023 with respect to the compensation of our named executive officers. For 2023 our named executive officers included the following executive officers serving at the end of 2023: | | Thomas E. Jorden | | | | Chief Executive Officer and President | | | | Shannon E. Young III | | | | Executive Vice President and Chief Financial Officer | | | | Stephen P. Bell | | | | Executive Vice President—Business Development | | | | Blake A. Sirgo | | | | Senior Vice President—Operations | | | | Kevin W. Smith | | | | Vice President and Chief Technology Officer | |
Additionally, our named executive officers for 2023 include Scott C. Schroeder, our former Executive Officer, ourVice President and Chief Financial Officer, and Christopher H. Clason, our three other most highly compensated officers for 2013 (the “NEOs”), namely:Dan O. Dinges | Chairman, President & Chief Executive Officer | Scott C. Schroeder | Executive Vice President, Chief Financial Officer & Treasurer | Jeffrey W. Hutton | former Senior Vice President Marketing | G. Kevin Cunningham | Vice President & General Counsel | Phillip L. Stalnaker | Vice President & Regional Manager, North Region |
Our compensation plans and practices are designed to alignChief Human Resource Officer.
BUSINESS CONTEXT One Coterra Over the financial interests of the above NEOs with the financial interests of our shareholders. To that end,last two years, we provide our NEOsembarked on a transformative journey with a competitive base salary, an annual cash bonus opportunity based onkey theme: “One Coterra.” This theme served as the achievementguiding principle for the successful integration of specific goals alignedtwo 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 shareholder value creation and long-term incentives tiedkey leaders stepping into pivotal roles to total shareholder return over the long-term and annual cash flow attainment. For the NEOs, in 2013 the level of at-risk pay ranged from 75% to 88% of the total annual compensation opportunity, with the CEO having the highest level of at-risk pay.2013 Financial Highlights
drive our unified vision forward. In 2013, we continued to outperform most of our selected industry peer group described below and our own prior period operating results,line with our highest productioncommitment to fostering a cohesive and reserve levelshigh-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 company history, achieved with an investment program that added the reserves atexecuting our lowest finding cost in more than 20 years. In addition, we were able to further reduce our unit costs from 2012 levels, marking the fifth consecutive year of reduced unit costs. These achievements generated stock appreciation of 56% during 2013–in the top quartile of our peer group.2013 Compensation Highlights
Compensation outcomes aligned with these 2013 achievements include:
• | Due to our first-place ranking among our compensation peer group, performance shares granted to our executives in 2011 with vesting contingent upon our three-year total shareholder return (“TSR”) relative to our peers, vested at 200% of target. | | | • | Our performance target of achieving at least $100 million of operating cash flow in 2013 was met, resulting in the annual vesting of hybrid performance shares granted to executives over the last three years. | | | • | Operating and financial performance metrics set for the 2013 annual cash incentive awards to executives were exceeded, resulting in the awards being paid out in the range of 225% to 274% of target for the NEOs. |
At our most recent annual meeting in May 2013, over 96% of the votes cast on the item approved our NEO compensation practices. Due to this strong support, the Compensation Committee ofambitious 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 “One Coterra” vision, ensuring strong leadership and unified direction as we continue to 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 (“Committee”TSR”) determinedfrom the beginning of 2021 to continue our 2012 practices unchanged, except for the following enhancements putend of 2023, while maintaining market competitive Chief Executive Officer pay. (1)
Based on the total compensation paid to Mr. Jorden as reported in place for 2013:• | Increasing the performance-based portion of long-term incentive awards measured solely on three-year TSR from 40% to 60% and eliminating the use of stock appreciation rights (“SARs”) entirely; | • | Adopting a mandatory anti-hedging policy for all officers and directors; and | • | Back-loading the vesting schedule for hybrid performance shares to defer vesting of 50% of each grant until the third anniversary of the grant, in order to strengthen retention and the pay-for-performance alignment. |
-2014 Proxy Statement21
the Summary Compensation Table. Philosophy and Objectives of
OUR COMPENSATION PHILOSOPHY Our Compensation ProgramsThe Committee oversees anPay is Aligned with Our Performance
Our executive compensation program is designed to attract, retain, and engage highly qualified executives.executives and to capture value for stockholders. The primary objectives of our compensation programsprogram 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 We Value Stockholders’ Perspective on Executive Pay Programs At the 2023 annual meeting of stockholders, approximately 96 percent of the votes cast were in favor of our 2022 executive compensation programs. The Compensation Committee 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 Our Executive Compensation Program Follows Best Practices | | What we do: | | • | To encourage management to create sustained value for | | | | Include emissions reduction target metrics within the shareholders while managing inherent business risks;short-term incentive program | | • | To attract, retain, and engage talented executives; and | | | | Grant at least half of the value of annual LTI in the form of performance-based awards | | • | To support a long-term performance-based culture throughout | | | | Relative TSR performance awards require above median performance for target payout and cap payout at target if TSR is negative over the Company. |
We achieve these objectives by:
•performance period | Assigning the vast majority of NEO compensation to at-risk, performance-based incentive opportunities; | • | Tying | | | | Short-term incentive plancompensation based on disclosed performance metrics (with payout caps) including operational, financial and goals to shareholder value principles; andreturns metrics | | • | Having balanced, open and objective reviews of goals and performance. |
The Committee believes that each of these objectives carries an equal amount of importance in our compensation program.
CEO Compensation and Performance-Based Pay
We have maintained consistent and disciplined performance-based compensation programs for all of our executives. For many years, the Committee has awarded compensation opportunities to our CEO and other executives that require meaningful absolute and relative stock price and financial performance to deliver targeted realized compensation levels. The allocation of 2013 compensation among salary, short-term incentives and long-term incentives for our CEO and the other NEOs, on an average basis, reflects this guiding principle, as show below:
CEO | | OTHER EXECUTIVES | | Provide for “double trigger” cash payouts in change-in-control agreements | | | | | | | | Maintain substantial stock ownership and retention requirements for executive officers and directors | |  | |  | | | Maintain a clawback policy | |
In 2013, the Committee awarded 60% of each executive’s long-term incentive opportunity in the form of performance shares payable solely on the basis of our total shareholder return relative to our industry peer group over a three year performance period (“TSR performance shares”). The 2013 TSR performance share award was larger, relative to prior years’ awards, due to the elimination in 2013 of SARs, which had represented 20% of the executives’ long-term incentive opportunity since 2004. When the use of SARs was discontinued in 2013, the portion of the long-term incentive opportunity awarded in TSR performance shares increased from 40% to 60%. Our frequent top-quartile TSR performance has often generated above-target payments for executives from the TSR performance shares and
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| | | | | | Hold an annual advisory “say-on-pay” vote | | | | | | | | Have only independent directors on Compensation Committee | | | | | | | | Use an independent compensation consultant | |
Back to Contents | What we don’t do: | | | | | | | | No vesting periods of less than three years for equity awards issued in 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 tax gross-ups | | | | | | | | No re-pricing or discounting of options or stock appreciation rights | | | | | | | | No performance metrics that would encourage excessive risk-taking | |
added significant value to our shareholders. The CEO’s awards and the relative performance achieved for the most recently completed performance period, plus the current ranking for the two remaining unvested awards, are as follows:
CEO TSR PERFORMANCE SHARE AWARDS
| | | Target Value Awarded
(1) | | Peer Rank Achieved | | Percentage of Target
Achieved | | Award Earned or
Estimated Based on
Rank Achieved(2) | | Performance Period Achieved | | | | | | | | | | 2011-2013(3) | | $ | 1,782,401 | | | 1stof 15 | | | 200 | % | | $ | 13,497,129 | | | Performance Periods In Progress(4) | | | | | | | | | | | | | | | | 2012-2014 | | $ | 1,976,697 | | | 1stof 15 | | | 200 | % | | $ | 8,637,744 | | | 2013-2015 | | $ | 3,000,043 | | | 4thof 15 | | | 170 | % | | $ | 7,427,346 | |
(1) | Target value based on number of performance shares awarded multiplied by the closing stock price on date of grant. | (2) | Amounts are based on the percentage of target achieved and the appreciation in value of the underlying common stock. | (3) | This performance period ended December 31, 2013. The earned value is based on the average of the high and low trading prices of the Company’s common stock on that day, which was $38.61. | (4) | These performance periods are in progress; rank, target achieved and estimated awards are based on results and closing stock prices through December 31, 2013. Our closing stock price on December 31, 2013 was $38.76. |
In 2013, we awarded 40% of each executive’s long-term incentive value through hybrid performance shares that require threshold achievement based on a financial metric (see “Hybrid Performance Shares” below). The hybrid performance shares vest on a three year graduated schedule, with 25% of the award vesting on each of the first two anniversaries of the date of grant and 50% vesting on the third anniversary. To date, all of the CEO’s hybrid performance share awards have satisfied the required performance criteria at their scheduled vesting date.
Elements of
Our Compensation ProgramWe use various components of executive compensation, with an emphasis on variable compensation and long-term incentives. The components of executive compensation are presented in the table below and discussed in more detail later in this section of the proxy statement.
is Designed to Support our Compensation Philosophy Compensation Component | Chief Executive Officer | | | Other Named Executive Officers | | | | | | | | |
| | Element | | | | Form and Timing | | | | Purpose | | Competitive Positioning | | Determination
Considerations | | | | Base Salary | | Compensation | | Paid in cash throughout the year | | | | Compensate competitively for position, experience, expertise and competencies.expertise | | Base salaries are targeted to approximate | | In aggregate, determined using the compensation peer group median for reference, taking into account the competitive environment, as well as the experience and accomplishmentsscope of each executive. | | | | Annual Cash Incentive Awards | | | | Paid in cash incentive bonusafter the year has ended and performance has been measured | | Reward the
| | Motivate and reward achievement of annualresults against a set of business objectives, including:• Financial Goals (Unit Costs, Finding Costs)
• Operational Goals (specific objectives tied to Production Growthgoals and Reserve Growth)
• Individual objectives aligned with corporate strategy
• Committee evaluation of qualitative performance
individual contribution | | Annual bonus opportunities
| | Opportunities are established as a percentage of base salary and are targeted to matchapproximate average industry bonuscash incentive percentage levels for comparable executive positions.Realizing target bonus opportunities requires achieving key annual financialpositions as well as executive team alignment. Annual payout is determined by comparing actual performance during prior year to established performance metrics and operating goals aligned with long-term shareholder value creation.
|
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Compensation Component | | Purpose | | Competitive Positioning | Long-term Incentives | Long-Term Incentive Awards | Prominent part of total compensation to maintain alignment with shareholder value creation:
•
| | | 50 percent relative TSR performance Shares (earnedshares payable in stock (and cash for achievement over target) Granted in Q1 to align with business plan and vestedperformance period. Cliff vest three years from the grant date | | | | Promote alignment of executive decisions with stockholder interests through performance awards based on Total Shareholder Return versus peers)• Hybrid Performance Shares (time vested and tiedthe Company’s stock performance relative to operating cash flow results)
• Stock Ownership Guidelines
a peer group over a three-year performance period | | Long-term incentives are intended to promote long-term value creation for shareholders and to retain executives through extended vesting periods.
To place relatively greater emphasis on the importance of shareholder return performance, the
| | 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. | | | | 50 percent time-based restricted share units payable in stock Granted in Q1. Cliff vest three years from the grant date | | | | Aligns interests of executives and stockholders while promoting retention | | | | The value of time-based equity awards granted to executive officers, in aggregate, is generally targeted aboveat competitive pay levels using the median of the peer group for reference, although other individual and Company circumstances may influence the award amounts. | |
2023 PERFORMANCE-BASED COMPENSATION Our Incentive Compensation Programs Align Corporate Strategy Through Thoughtful Performance Metric Selection | | Annual Cash Incentive Bonus Program | | | | Why the Metric is Important | | Executive Benefits | 45% Economic Performance (PVI-10) | | | | Including the economic performance of our annual drilling program reflects our commitment to stockholder value creation. By consistently monitoring and Perquisitesimproving the PVI of our drilling program we ensure that our capital investments are optimized. | | Comprehensive programs to build financial security, manage personal financial risk and limit Company costs. | | Value of benefits and perquisites is generally targeted to be competitive with market levels and comprises a minor component of total compensation. | Total Compensation | 20% Annual Production Guidance | Designed | | | Consistently meeting or exceeding annual production guidance demonstrates credibility, operational excellence, and the quality of our assets. It provides confidence to attract, retain, aligninvestors that we can execute projects and engage highly qualified executives, while creating a strong connectioneffectively mitigate risk. | | | | 20% Annual Budget Guidance | | | | Including our capital budget reflects our commitment to financial discipline, operational efficiency, and operational performanceresponsible stewardship of stockholder capital. It reinforces our commitment to delivering on our promises. | | | | 5% Green House Gas (“GHG”) Intensity
5% Methane Intensity
5% Flare Intensity | | | | Including reductions to GHG intensity, methane intensity, and long-term shareholder value. | | Total compensation is highly correlated with Company and individual performance and is evaluated for its competitiveness when comparedflare intensity reflects our commitment to the peer group.responsible development of oil and natural gas. | |
In making compensation decisions,
| | Long-Term Incentive Program | | | | Why the Metric is Important | | | | 50% Relative TSR (3-year performance period) | | | | Relative comparison of TSR versus peers over a three-year period provides alignment between executive pay and stockholder experience. | | | | 50% Time-Based RSUs (3-year cliff vesting) | | | | Increased weighting from 40 percent to 50 percent in 2023 to enhance and promote retention of executives. Providing full vesting on the third anniversary of grant provides greater alignment with long-term stockholders. | |
Our Incentive Program Payouts are Aligned with Performance Outcomes Determination of 2023 Annual Cash Incentive Metric Achievement The following table provides details of the Committee includes comparisonslevel of each elementachievement of total compensation against a peer group of publicly-traded exploration and production companies. In that total, a greater weight is placed on long-term equity awards versus salary andthe 2023 annual cash incentive bonus to foster an environment where stock price appreciation over the long-term is a major executive focus. This focus in turn aligns the interests of the executives with those of the shareholders. The competitive market is determined by reference to the compensation practices of an industry peer group as set forth below.Industry Peer Group
The companies chosenperformance metrics reviewed and approved by the Compensation Committee for the peer group represent our direct competitors of similar size and scope in the exploration and production sector of the energy industry, and include several companies that compete in our core areas of operation for both business opportunities and executive talent. The peer group changes from time to time due to organic changes in the Company or its peers, business combinations, asset sales and other types of transactions that cause peer companies to no longer exist or to no longer be comparable. The Committee approves all revisions to the peer group. Based on 2013 year-end closing market prices, the market capitalization of companies in our industry peer group ranged from approximately $350 million to $26 billion. Our market capitalization at 2013 year-end was approximately $16.3 billion. In February 2014, the Committee approved the removal of Berry Petroleum Company and Plains Exploration & Production Company from the peer group because they were no longer in existence due to business combinations. The current peer group for the 2014 to 2016 performance cycle is as follows:
• Cimarex Energy Company | • QEP Resources Inc. | • Concho Resources Inc. | • Quicksilver Resources, Inc. | • EQT Corporation | • Range Resources Corporation | • Exco Resources Inc. | • Southwestern Energy Company | • Newfield Exploration Company | • SM Energy Company | • Noble Energy Inc. | • Ultra Petroleum Corp. | • Pioneer Natural Resources Company | • WPX Energy, Inc. |
-2014 Proxy Statement24
2024 PROXY STATEMENT31
2013 Committee Activity
During 2013 the Committee held three regular meetings, one in each of February, July and October. The Committee held a special meeting in early January 2014 for the purpose of certifying the results for the 2011 to 2013 TSR performance share awards that vested on December 31, 2013.
At the time the 2013 grants were made and periodically throughout the year, the Committee referenced the Fall 2012 competitive market study of the peer group by Meridian Compensation Partners, LLC (Meridian), the Committee’s independent compensation consultant. Based on the study and the CEO’s recommendations with respect to the other Company officers, the Committee determined 2013 salaries, bonus payouts for 2012 performance, certified the 2012 results for payouts of one-third of each of the hybrid performance shares granted from 2010 to 2012, and the annual grant of long-term incentive awards for our officers. A detailed discussion of each item of compensation can be found below under “Elements of Compensation.”
Also at the February 2013 meeting and prior to making any compensation decisions, the Committee reviewed a detailed analysis of wealth accumulation for each NEO for the period from 2002 to 2012. The Committee does not use tally sheets, but over the course of the year reviews each element of compensation for the NEOs, including elements of total direct compensation and payments upon severance or change of control, as well as other benefits and perquisites. Lastly, at the February 2013 meeting, the Committee and the Board of Directors approved the 2013 measurement criteria for the 2013 cash bonus plan.
During 2013, the Committee reviewed an analysis prepared by Meridian of 2012 executive compensation reported by our peer group. From the available 2012 survey information, the Committee evaluated its compensation decisions relative to our peer group. The Committee also reviewed an analysis prepared and presented by Meridian of current compensation issues and trends, including a 2013 competitive market study of executive compensation among the peer companies. This analysis is utilized in the Committee’s review of all components of compensation in the following February meeting.
TABLE OF CONTENTSElements of CompensationElements of In-Service Compensation
There are three major elements of the executive in-service compensation program:
| | | | | | 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) base salary, (2)
For 2023 annual cash incentive bonusperformance metric purposes, PVI-10 is not a measure calculated in accordance with generally accepted accounting principles (GAAP) and (3) long-term incentive equity awards. Company perquisites areis not based on any standardized methodology prescribed by GAAP. As a minor element of the executive compensation program. This design generally mirrors the pay practices of the explorationresult, it is not necessarily comparable to similarly titled measures presented by other companies. PVI-10 is not calculated from Coterra’s financial statements and production industry generallyshould be considered in addition to, and our selected industry peer group. Our compensation is intentionally weighted toward long-term equity-based compensation. Each element is described below.Mr. Dinges, our Chairman, President and Chief Executive Officer, hasnot as a significantly broader scope of responsibilities than thesubstitute for, other named executive officers. The differencefinancial measures prepared in compensation for Mr. Dinges described below primarily reflects these differing responsibilities and, except as described below, does not result from the application of different policies or decisionsaccordance with respect to Mr. Dinges.
Base Salary
The Committee believes base salaryGAAP. It is a critical elementpresent value index discounted at 10%, calculated by dividing the net present value of executive compensation because it provides executives with a base level of monthly income. The base salary of each executive, including the NEOs, is reviewed annuallycertain cash flows by the Committee. The CEO’s salary is established by the Committee (and ratified by the Boardpresent value of Directors)capital investments plus a constant value.
Relative TSR Performance Shares Our outstanding performance-based awards (awards granted in 2022 and the other executives’ salaries are established jointly by the CEO and the Committee. Base salary is targeted for all executive positions near the median level of the peer group. Individual salaries take into account our established salary policies and our current salary budget; the individual’s levels of responsibility, contribution and value to the Company; individual performance; prior relevant experience; breadth of knowledge and internal and external equity issues. Base salary increases from 2012 to 2013 for the NEOs ranged from approximately 5% to 18%. -2014 Proxy Statement25
| Name | | 2012 Base Salary | | 2013 Base Salary | | Mr. Dinges | | $700,000 | | $825,000 | | Mr. Schroeder | | $420,000 | | $450,000 | | Mr. Hutton | | $320,000 | | $340,000 | | Mr. Cunningham | | $320,000 | | $335,000 | | Mr. Stalnaker | | $275,000 | | $300,000 |
In 2013, the Committee reviewed two competitive market studies for compensation of the peer group, prepared by our independent consultant. The Committee noted that Mr. Dinges’ 2013 base salary of $825,000 was between the 25thand 50thpercentile of the industry peer group for the 2013 competitive data. The base salaries of the other NEOs generally matched the median of peers in total, although individual base salaries varied by position due to individual experience in each role and differences in peer organization management structures relative to ours. The Committee views these salary levels as consistent with its compensation philosophy, given the ongoing changes in peer compensation levels and the intention of delivering a relatively higher percentage of NEO compensation through long-term incentives. The Committee took no additional action to revise base salaries during the year.
In February 2014, in connection with Mr. Dinges’ performance evaluation and the results of the competitive market studies, Mr. Dinges’ base salary was increased approximately 9% to $900,000, which is slightly above the 50thpercentile of the industry peer group as measured in 2013. Base salaries for the NEOs increased from 4% to 7% for 2014 over 2013 levels.
Annual Cash Incentive Bonus
The annual cash incentive bonus opportunity is based upon our pay-for-performance philosophy. The opportunity provides the NEOs, as well as other executives and key employees, with an incentive in the form of an annual cash bonus to achieve overall business goals. The bonus opportunity is stated as a percentage of base salary and is set using the Committee’s philosophy to target bonus levels (as a percentage of base salary) consistent with the competitive market for executives in similar positions. Annual bonus opportunities2023) are based on specific goals that are of primary importance to the Company during the coming year and motivate executives to achieve those goals.
During 2013 the bonus opportunity for the NEOs was as follows:
| Executive | | Target Bonus
(as a % of Salary) | | Target Bonus
Value (100%) | | Mr. Dinges | | | 100 | % | | $ | 825,000 | | | Mr. Schroeder | | | 100 | % | | $ | 450,000 | | | Mr. Hutton | | | 70 | % | | $ | 238,000 | | | Mr. Cunningham | | | 70 | % | | $ | 234,500 | | | Mr. Stalnaker | | | 70 | % | | $ | 210,000 | |
The bonus measurement criteria for 2013 were unchanged from 2012. The measurement criteria were designed to emphasize value-generating metrics, to link related metrics together to take into account the interrelated impacts of such metrics on value creation, and to increase the overall payout potential for a breakout year, while reducing overall discretion. Also, the measurement criteria place a cap on the payment for performance for each metric at 275% of target payout, which allows for some additional benefit for above-range performance, but removes the potential of one metric creating a disproportionate payout. The overall plan has a target maximum award of 250% of target in the aggregate, but individual awards can vary, at the discretion of the Committee. The metrics, their weightings and the required levels of achievement for specified bonus awards are listed in the table below.
-2014 Proxy Statement26
| | | 2013 Bonus Performance Goals (% of Target) | | | | Weighting | | 0% | | 100% | | 200% | | | Reserve Growth | | | 25 | % | | 11% | | 17% | | 23% | | | Finding Costs (per Mcfe) | | | 15 | % | | $1.15 | | $1.00 | | $0.85 | | | Production Growth | | | 25 | % | | 33% | | 43% | | 52% | | | Unit Costs (per Mcfe) | | | 15 | % | | $3.25 | | $3.00 | | $2.75 | | | Strategic Evaluation (Discretionary) | | | 20 | % | | | | | | | | | | | | | | | | | 100 | % | | | | | | | | | | | | |
At the start of each year the bonus criteria targets are established based on the operating budget approved by the Board of Directors. The payout ranges are created at this same time. Upon completion of each fiscal year, the CEO makes recommendations to the Committee for annual bonuses to be paid to each executive officer (other than the CEO) using the formula established for the program in that year. The Committee references both the CEO’s recommendations and the formulaic output in determining the bonuses to be paid to the NEOs other than the CEO. With respect to the strategic evaluation component, the Compensation Committee evaluates key influences on Company performance not otherwise considered through the metrics. These may include the management of capital spending, environmental and safety performance, net income performance, organizational leadership and other factors the Committee deems to have been important in the prior year’s performance. The Committee follows no formulaic structure relating to these factors. In general, the Committee expects to award the target 20% of the strategic evaluation component in years when the Company meets internal and external performance expectations with respect to these factors, although the strategic component can range from 0% to 55% in the weighting of the bonus awards calculation. Acquisitions and divestitures are not part of establishing the target metrics because the Company does not budget these activities. When acquisition or divestiture activity occurs, the Committee assesses its impact and exercises its discretion to adjust for the impact.
Additional parameters for the 2013 annual cash incentive bonus include a payout multiplier of 1.5 times for each of two grouped metrics if the grouped metrics both achieve target, subject to the 275% maximum payout per metric. The grouped metrics are (1) Reserve Growth and Finding Costs, and (2) Production Growth and Unit Costs. The Committee established the incentive on the grouped metrics to encourage a balanced approach to achieving operational goals and to discourage over-achievement of one metric in a manner that adversely affects the grouped metric. For example, undisciplined spending on a development program could help achieve the reserve growth metric at levels above target levels, but cause finding costs to increase to unacceptable levels. By grouping the reserve growth and finding costs metrics together, and using a payout multiplier of 1.5 for achieving target in both metrics, the Committee is rewarding efficiency in operations.
In 2013, actual performance under these metrics exceeded targets and budget metrics as follows:
| | | Actual Results | | Bonus Plan Target
(100%) | | Bonus Plan 200% | | Reserve Growth | | 41.9% | | | 17% | | | 23% | | | Finding Costs (per Mcfe) | | $0.55 | | | $1.00 | | | $0.85 | | | Production Growth | | 54.5% | | | 43% | | | 52% | | | Unit Costs (per Mcfe) | | $3.03 | | | $3.00 | | | $2.75 | |
Our proved reserves were in excess of 5.4 Tcfe, representing reserve growth of 41.9% in 2013. These reserves were added at a very efficient $0.55 per Mcfe. Production growth of 54.5% helped drive down unit costs to the lowest level in nine years. In reaching a conclusion on the strategic evaluation component, the Committee considered that our significant level of outperformance versus the measurement criteria was supported in fact by the corresponding substantial increase in our stock price during the year. The Committee found that the executive team had implemented effective strategies to realign the asset portfolio to maximize financial and operationalRelative TSR performance and to position the Company for continued long-term success. The Committee also found that the executives delivered focused operational performance to lower costs and improve safety. In light of these achievements, the Committee set an above-target score on the strategic evaluation component. The result of 2013
-2014 Proxy Statement27
performance against all the bonus metrics, including the strategic evaluation component, was that the total bonus award pool was approved at 225% of target, prior to adjustment for regional or individual performance.
Upon completion of each fiscal year, the Committee determines the CEO’s annual cash incentive bonus based on Company performance, the results of the bonus plan formula described above and the Board’s annual CEO performance evaluation. The independent directors of the Board discuss and ratify the CEO’s annual cash incentive bonus payment, considering the factors stated above and any factors relating to performance that were particularly significant in the year in question.
For 2013, the Committee noted in particular:
• | the Company’s best in class three-year total shareholder return; | | | • | the successful development of senior leadership to achieve the best results in our history, as evidenced by record production and reserve growth, as well as outstanding results compared to our compensation peer group; | | | • | the operational oversight and adjustments leading to value enhancement in both the North and South operating regions; and | | | • | continued strategic efforts to maximize total enterprise value. |
Based on this evaluation, the committee approved the CEO’s bonus payment for 2013 at 242% of target. The bonus payments for the other NEOs ranged from 225% to 274% of target.
Long-Term Incentives
In 2013, the Committee continued its practice established in 2007 of awarding two types of performance shares – TSR performance shares and hybrid performance shares – to provide long-term incentives to our NEOs, and discontinued the use of stock appreciation rights (“SARs”). The award allocation to NEOs in 2013 is designed to provide 60% of the targeted grant-date value from TSR performance shares and 40% from hybrid performance shares. This allocation is more heavily weighted toward performance-based awards than the average of our peer group, based on 2012 compensation data, as shown below.
CABOT | | COMPENSATION PEER GROUP | | | |  | |  |
The total size of the long-term incentive awards is based on a number of factors, including peer group and related industry competitive practice, which is used as a point of reference to gauge appropriate total compensation levels for a company of our size, business complexity and growth profile. The Committee does not typically consider prior period long-term incentive awards, such as the amount of equity previously granted and outstanding, or the number of shares owned, when determining annual long-term incentive awards.
All long-term incentives awarded in 2013 were made under the 2004 Incentive Plan, which was approved by our stockholders at the 2004 Annual Meeting of Stockholders and the performance goals of which were approved by our stockholders at the 2009 Annual Meeting of Stockholders.
TSR Performance Shares. The Committee believes performance shares based on the Company’s total shareholder return relative to that of its peers provides a strong link between the performance of the executive group and their pay, whereas other types of equity awards, such as stock options may not. The Committee also believes that a relative comparison of performance against peersmeasured over a three-year performance period using the following scale:
| | Payout Level | | | | Relative TSR Performance (Percentile Rank v. TSR Peers) | | | | Performance Shares Earned | | | | Maximum | | | | Greater than or equal to the 90th percentile | | | | | | 200% | | | | | Target | | | | 55th percentile | | | | | | 100% | | | | | Threshold | | | | Greater than or equal to the 30th percentile | | | | | | 50% | | | | | Less than Threshold | | | | Less than the 30th percentile | | | | | | 0% | | |
Negative TSR Payout Cap at Target: If the Company’s TSR for the performance period is negative, then the “Performance Shares Earned,” as opposedcalculated 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 S&P 500 Industrials Index. Payout Form to a single year, provides a better evaluation of how management performed under changing economic conditions. For these reasons, the Committee believes that our TSR performance share awards are a good measure of performance versus the peer group and appropriately link stock performance and compensation.Limit Dilution: To allow for payouts in excess of target without excessive dilution or the need to reserve shares in excess of -2014 Proxy Statement28
target, all payouts in excess of 100%100 percent of target are to be paid in the cash value of the shares,shares. 2023 COMPENSATION DECISIONS The following summarizes the 2023 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 his base salary ($620,000), and (ii) received (a) a one-time restricted stock unit grant with a target grant value of $2,000,000, (b) a one-time performance stock grant with a target grant value of $2,000,000 and (c) a one-time cash payment of $100,000. | | Thomas E. Jorden | Chief Executive Officer and President | |
Mr. Jorden became our Chief Executive Officer and President in 2021 following the merger of Cimarex and Cabot and was appointed as Chairman of the Board effective January 1, 2023. The Compensation Committee made no changes to Mr. Jorden’s target compensation for 2023 based on the averagecompetitive position to market and peer group. The Company renewed Mr. Jorden’s employment letter agreement effective October 2023, which included an increase in Mr. Jorden’s Base Salary and Target Bonus, effective January 1, 2024. Details of the highterms of Mr. Jorden’s renewed employment letter agreement are provided at the end of this section. | | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | | Base Salary | | | | | $ | 1,125 | | | | | | $ | 1,125 | | | | | 0% | | | | Target Bonus (% of Salary) | | | | 130% | | | | 130% | | | | 0% | | | | Target LTI Grant Value | | | | | $ | 10,000 | | | | | | $ | 10,000 | | | | | 0% | | | | Total Target Compensation | | | | | $ | 12,588 | | | | | | $ | 12,588 | | | | | 0% | |
| | 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 low trading prices of our common stock on the last day of the performance period. For additional information about the TSR performance shares, see the table “Grants of Plan-Based Awards” below.Hybrid Performance Shares. DueCabot.
The Compensation Committee increased his base salary in 2023 by 5 percent. No other changes were made to restricted stock share limitations under the 2004 Incentive Plan and Section 162(m) tax considerations, in 2013 the Committee again awarded hybrid performance shares instead of restricted stock. The hybrid performance shares vest over a three year period from the date of grant, with 25% vesting in each of the first two years and 50% vesting in the third year, provided the Company has $100 million or more operating cash flow in the fiscal year prior to the vesting date. Applying a cash flow threshold on share vesting allows these awards to remain fully tax deductible to the Company upon vesting. Hybrid performance shares also have less underlying volatility than do traditional performance shares, and therefore help manage attrition risk by creating a more sustained forfeitable stake in the Company. For additional information about the hybrid performance shares, see the table “Grants of Plan-Based Awards” below.Stock Appreciation Rights (SARs). No SARs were granted in 2013, but SARs were an integral part of the long-term incentive program from 2006 to 2012, and SARs granted previously to the NEOs remain outstanding. All SARs granted to date vest ratably over a three year period and have a seven-year term.
Personal Benefits and Perquisites
We provide the NEOs with perquisites and other personal benefits thatMr. Bell’s target compensation for 2023.
In August 2023, the Company and Mr. Bell entered into a letter agreement that memorialized the terms of Mr. Bell’s 2024 and 2025 Target LTI Grant Value. Additional details about this agreement are provided at the end of this section. | | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | | Base Salary | | | | | $ | 554 | | | | | | $ | 582 | | | | | 5% | | | | Target Bonus (% of Salary) | | | | 100% | | | | 100% | | | | 0% | | | | Target LTI Grant Value | | | | | $ | 3,000 | | | | | | $ | 3,000 | | | | | 0% | | | | Total Target Compensation | | | | | $ | 4,108 | | | | | | $ | 4,164 | | | | | 1% | |
| | Blake A. Sirgo | Senior Vice President—Operations | |
Mr. Sirgo became our Senior Vice President—Operations in October of 2022. As a result of the promotion to his current executive role, the Compensation Committee believeincreased his base salary in 2023 by 5 percent and his LTI grant value by 35 percent. | | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | | Base Salary | | | | | $ | 435 | | | | | | $ | 456 | | | | | 5% | | | | Target Bonus (% of Salary) | | | | 100% | | | | 100% | | | | 0% | | | | Target LTI Grant Value | | | | | $ | 1,000 | | | | | | $ | 1,350 | | | | | 35% | | | | Total Target Compensation | | | | | $ | 1,870 | | | | | | $ | 2,262 | | | | | 21% | |
| | Kevin W. Smith | Vice President and Chief Technology Officer | |
Mr. Smith became our Vice President and Chief Technology Officer in 2021 following the merger of Cimarex and Cabot. The Compensation Committee increased his base salary in 2023 by 7.5 percent and increased his LTI grant value by 35 percent based on market competitiveness for his role. | | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | | Base Salary | | | | | $ | 400 | | | | | | $ | 430 | | | | | 7.5% | | | | Target Bonus (% of Salary) | | | | 100% | | | | 100% | | | | 0% | | | | Target LTI Grant Value | | | | | $ | 1,000 | | | | | | $ | 1,350 | | | | | 35% | | | | Total Target Compensation | | | | | $ | 1,800 | | | | | | $ | 2,210 | | | | | 23% | |
| | Scott C. Schroeder | Former Executive Vice President and Chief Financial Officer | |
Mr. Schroeder served as our Executive Vice President and Chief Financial Officer from the completion of the merger in 2021 until the appointment of his successor on July 6, 2023, at which time he transitioned to Special Advisor to the Chief Executive Officer. He retired effective September 30, 2023. The Compensation Committee increased his base salary in 2023 by 5 percent. No other changes were made to Mr. Schroeder’s target compensation for 2023. | | ($ thousands) | | | | 2022 | | | | 2023 | | | | % Change | | | | Base Salary | | | | | $ | 667 | | | | | | $ | 700 | | | | | 5% | | | | Target Bonus (% of Salary) | | | | 110% | | | | 110% | | | | 0% | | | | Target LTI Grant Value | | | | | $ | 4,150 | | | | | | $ | 4,150 | | | | | 0% | | | | Total Target Compensation | | | | | $ | 5,551 | | | | | | $ | 5,620 | | | | | 1% | |
| | Christopher H. Clason | Former Senior Vice President and Chief Human Resource Officer | |
Mr. Clason served as our Senior Vice President and Chief Human Resource Officer from October 2021 following the merger of Cimarex and Cabot until the appointment of his successor on July 10, 2023, at which time he transitioned to Special Advisor to the Chief Executive Officer. Mr. Clason separated from the Company in September 2023. Additional details about the payments and benefits Mr. Clason received in connection with his separation are reasonableprovided under “Change in Control and consistent withSeverance 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 overall compensation program to better enable us to attract and retain superior employees for key positions. Thetable above under “Determination of Annual Cash Incentive Metric Achievement,” the Compensation Committee periodically reviewsdetermined that the level of perquisites and other personal benefits provided to the NEOs. In an effort to promote physical and financial health of the NEOs, they are provided with club membership dues, a Company-paid physical examinationachievement for the NEO and his or her spouse, a financial and tax planning stipend of up to $3,000 annually, life insurance, and spouse travel to certain business meetings. The NEOs are reimbursed for these expenses only if they are incurred. The aggregate cost to the Company of the perquisites and personal benefits described above for the NEOs for 2013 are included under “All Other Compensation” in the Summary Compensation Table below.Other Compensation
We offer all of our employees, including the NEOs, industry competitive benefits including medical and dental reimbursement, short-term and long-term disability plans, basic life and accident insurance and an employee assistance program. We offer a retirement program consisting of both qualified and non-qualified defined contribution savings plans. See “Elements of Post-Termination Compensation” below for further descriptions of these programs.
Impact of Regulatory Requirements
Our performance shares, both traditional and hybrid, are intended to constitute “qualified performance based compensation” as defined under Section 162(m) of the Internal Revenue Code. The effect of that qualification is that compensation paid to covered employees pursuant to the performance shares and the SARs should remain fully deductible. It is the Committee’s intent that the majority of long-term incentive awards and annual cash incentive bonuses will qualify under Section 162(m) and with respect to 2013 compensation, we believe that to be the case. However, a losspayouts was 148 percent of deductibility may occur from year to year and is not considered a material factor in setting compensation.
target. In addition to such outcome, the Compensation Committee considered Mr. Jorden’s recommendations to the Compensation Committee regarding each executive officer other than himself. After fulsome discussion with all independent directors in order to permitexecutive session, and notwithstanding the actual cash incentive metric achievement, the Compensation Committee approved the flexibility to use subjective and discretionary components in settingfollowing annual cash incentive awards withoutfor 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 Company’s lossBoard of deductionDirectors presented Mr. Jorden with an extended employment letter agreement (as extended, the “Jorden Letter Agreement”) pursuant to which Mr. Jorden will remain as Chief Executive Officer through October of 2026. The Board believes that Mr. Jorden’s leadership through the merger integration period has been exemplary and that, under Section 162(m), we use a “negative discretion” planhis leadership, the performance of the Company has been strong with financial and operational results consistently exceeding expectations. Additionally, Mr. Jorden and the Board have spent considerable time reviewing and implementing succession plans for the roles from which several executive officers to whom Section 162(m) might be applicable. Under this plan, the Committee sets one or more financial or operating performance targets earlyrecently departed. The Board believes it is in the yearbest interest of stockholders to createensure that Mr. Jorden’s leadership remain uninterrupted both for operational continuity and effective executive succession. Pursuant to the terms of the Jorden Letter Agreement, Mr. Jorden’s base salary increased to $1,200,000 effective as of January 1, 2024; beginning in 2024, Mr. Jorden’s target annual cash incentive increased to 140 percent of his base salary; and Mr. Jorden will continue to receive annual long-term incentive awards with a bonus pool intendedtarget grant date value equal to meet$10 million. The severance provisions of the requirementsJorden Employment Agreement remained unchanged and are discussed separately in “Potential Payments upon Termination or Change in Control” beginning on page 46 below. Letter Agreement with Mr. Bell In August 2023, the Company and Mr. Bell entered into a letter agreement memorializing the terms of Section 162(m)Mr. Bell’s annual long-term incentive awards for such executive officerseach of calendar years 2024 and reserves2025. In exchange for Mr. Bell’s waiver of the right to reduceassert good reason under his legacy Cimarex severance compensation agreement, the letter agreement with Mr. Bell provides that he will receive annual long-term incentive awards with a target grant date value equal to $4.5 million during each of calendar years 2024 and 2025, subject to his continued employment with the Company through the applicable grant date, except as discussed in “Potential Payments upon Termination or Change in Control” beginning on page 46 below. The awards are to be granted in the ordinary course and on the same terms as the annual long-term incentive awards granted to similarly situated executive officers at the applicable grant date. The Company entered into the letter agreement with Mr. Bell because it values the continuity of Mr. Bell’s continued leadership, especially during a time of several other executive successions. Change in Control and Severance Agreements and Other Termination Payments The Compensation Committee generally views the potential payments and benefits under change in control and severance agreements as a separate compensation element because such payments and benefits are not expected to be paid in a particular year and serve a different purpose for the executive other than elements of compensation. Accordingly, those payments and benefits do not significantly affect decisions regarding other elements of compensation. The terms of the Company’s severance and compensation agreements are discussed separately in “Potential Payments upon Termination or Change in Control” beginning on page 46 below.
Mr. Clason resigned for good reason under his legacy Cimarex severance compensation agreement during the change in control protection period. The Company and Mr. Clason agreed that his separation date would be September 30, 2023, which would provide the Company with continuity of critical human resources functions and facilitate the integration of Mr. Clason’s successor, who commenced employment on July 10, 2023. In August 2023, in recognition of Mr. Clason’s efforts to ensure a seamless transition of the human resources function and other key projects he completed or agreed to complete prior to his separation, the Company amended Mr. Clason’s 2021, 2022 and 2023 equity award agreements to provide that a portion of such awards that would otherwise setbe forfeited in connection with his separation, would instead remain outstanding and eligible to vest in accordance with their terms, subject to his compliance with certain restrictive covenants. Additional details regarding the cashpayments and benefits Mr. Clason received in connection with his separation are discussed separately in “Potential Payments upon Termination or Change in Control” beginning on page 46 below. HOW WE SET EXECUTIVE COMPENSATION Role of the Independent Compensation Consultant The Compensation Committee 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 six factors established by the NYSE and found it to be independent and without conflicts of interest in providing services to the Compensation Committee. F.W. Cook was engaged by 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 Chief Executive Officer proposes changes to compensation for his direct reports, which the Compensation Committee considers when making decisions. The officer team proposes goals for incentive amounts taking other factors into account.programs and offers performance data to aid the Compensation 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 Section 162(m) metrics are notpeer group includes twelve publicly traded exploration and production companies, with our market capitalization positioned at the primary metrics48th percentile at the time of approval. The peer group used by the Compensation Committee in determiningevaluating the relevant cash incentive awardscompetitiveness of executive compensation and making 2023 compensation decisions consisted of the following companies. The peer group remained unchanged compared to these executive officers. -2014 Proxy Statement29
2022, other than the removal of Continental Resources, which was taken private in the fourth quarter of 2022. | | 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 | |
36COTERRA ENERGY
Clawback Provisions
We have not adopted express “clawback” provisions with respect to compensation elements which would allow the Company to recoup paid compensation from designated officers in the event of a financial restatement.
RETIREMENT COMPENSATION AND OTHER BENEFITS Coterra Retirement Savings Plan The Committee has deferred taking action on clawbacks until such timeCoterra Energy Inc. Retirement Savings Plan, formerly known as the regulations are issued pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act in order to ensure our policy will comply with the regulations. The Committee will continue to consider the appropriateness of clawback provisions in future compensation decisions.Elements of Post-Termination Compensation
Cabot Oil & Gas Corporation Savings Investment Plan The savings investment plan (the “Coterra 401(k) Plan”), is a tax-qualified retirement savings plan, or 401(k) plan, in which all employees, including the NEOs,named executive officers, may participate. It allows participants to contribute the lesser of up to 50%100 percent of their annual salary, or the limit prescribed by the Internal Revenue Service, on a pre-tax basis. We match 100%100 percent of the first six percent of a participant’s eligible pre-tax contribution. Participants are 100% vested inIn addition, during 2023, the Company’s contributions after five years of service, vesting 20% per year.
During 2013, we continued the practice, established in 2011 after the termination of the pension plan, of contributing 9%Company contributed 10 percent of salary and bonus of all eligible employees, including all eligible NEOs,named executive officers, into the Coterra 401(k) planPlan (or into the non-qualifiednonqualified deferred compensation plan to the extent in excess of the qualified plan limits). Participants are 100%100 percent vested in the Company’s contributions after fivethree years of service, vesting 20% per33 percent in the first year, 66 percent in the second year and 100 percent in the third year. The 9% contribution isCompany’s contributions are approved annually by the Board of Directors and in October 2013, the Board approved continuation of the contribution for 2014.
Directors. Coterra Deferred Compensation Plan The non-qualified deferred compensation planCoterra Energy Inc. Deferred Compensation Plan, formerly known as the Cabot 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 6%10 percent match and 9% non-elective contribution when contributions of the matching amount cannot be made to ourthe Coterra 401(k) planPlan due to federal income tax limitations. The plan allows the officers to defer the receipt and taxation of income until retirement from the Company. We make no additional contributions to, nor do we pay in excess of market interest rates on, the deferred compensation plan. Amounts deferred by an officer under the deferred compensation plan are held and invested by the Company in various mutual funds and other investment options selected by the officer at the time of deferral. For additional information about the deferred compensation plan, including the investment options and the manner of distributions, see “Non-Qualified“Nonqualified Deferred Compensation” on page 44 below.Retiree Medical Coverage
NEOs
Personal Benefits and Perquisites The Compensation Committee periodically reviews the level of perquisites and other personal benefits provided to the named executive officers. In 2023 we provided the named executive officers with limited perquisites and other personal benefits that the Company and the Compensation Committee believe are eligiblereasonable, consistent with the overall compensation program, promote a healthy and productive workforce and provide protection to the organization. In 2023, the named executive officers were provided a Company-paid medical examination for the named executive officer, financial, tax and estate planning, supplemental life insurance to bridge certain healthcoverage limitations under our standard policies (consistent for all employees of two times annual earnings up to $1.5 million), and spouse travel to certain business meetings. The aggregate cost to the Company of the perquisites and personal benefits described above for retiredthe named executive officers for 2023 are included under “All Other Compensation” in the Summary Compensation Table below. Other Compensation Policies We offer all our employees, including 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.Change in Control Agreements
We have entered into change in control agreements with the NEOs and certain othernamed executive officers, that provide for cash payments and certain otherindustry competitive benefits in the event that the employee is actually or constructively terminated within two years of a change in control event. This program has been in place since 1995,
-2014 Proxy Statement30
with some modifications in 2001. At both of these time frames, many of the industry peer group and industry generally had in place some form of change-in-control program. When approving the plan in 1995 with minor modifications in 2001, the Committee reviewed data regarding similar plans within the peer group and the Company’s industry generally and applied its judgment to determine whether triggering events and benefit levels under these agreements were necessary to meet the Committee’s objectives of encouraging such employees to remain with the Company in the event of a change in control during circumstances suggesting a change in control might occur. The Committee believes this program is important in recruiting and retaining strong leadership and to encourage retention in these situations.
The cash payments include 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. Benefits include continued eligibility forincluding medical, dental and vision benefits, salary continuation for short-term leave of absences and long-term disability plans, basic life and accident insurance for three years, provided theand an employee pays the premiums, three years service credit inassistance program. We offer a retirement program consisting of both qualified and nonqualified defined contribution savings plans limited outplacement assistance and tax gross-up on excise taxes for agreements that were in place priorhave a retirement policy pursuant to 2010. In 2010, the Committee adopted a policy to exclude excise tax gross-up provisions for change in control agreements adopted after that date. The award agreements for thewhich certain equity awards also contain accelerated vesting immediately uponmay remain outstanding and eligible to vest following a change in control, subject, in the case of the traditional performance shares, to the achievement of the prescribed performance conditions as of the last day of the month immediately preceding the month in which the change in control event occurs.
The Committee generally views the potential payments and benefits under the change in control agreements as a separate compensation element because such payments and benefits are not expected to be paid in a particular year and serve a different purpose for the executive other than elements of compensation. Accordingly, those payments and benefits do not significantly affect decisions regarding other elements of compensation.
qualifying retirement.
COMPENSATION GOVERNANCE Meaningful Stock Ownership Guidelines The Corporate Governance and NominationsSocial Responsibility Committee and the Board of Directors have adopted the following stock ownership guidelines for our executive officers and directors. Under those guidelines, the Chief Executive Officer and the Chief Financial Officer are expected to hold 30% of the after-tax shares received upon the vesting or exercise of an equity award until such time as they have accumulated six times their base salary. All other Vice Presidents are expected to hold 30% of the after-tax shares received upon the vesting or exercise of an equity award until such time as they have accumulated three times their base salary. All of the NEOs have reached the required level of shareholdings under the stock ownership guidelines. | | 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 must hold 100% ofhave 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 until they ceasemay 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. Clawback Policy The Company has adopted a “clawback” policy that describes circumstances in which the Company will determine and recover erroneously awarded compensation received by current and former executive officers in connection with certain accounting restatements, regardless of fault or misconduct. Both cash and all types of equity compensation that are granted, earned or vested based wholly or in part upon the attainment of “financial reporting measures” that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures that are derived wholly or in part from such measures, are covered by the clawback policy. The Compensation Committee believes that this clawback policy furthers the interests of the Company and stockholders in preventing an executive from being unjustly enriched through a financial restatement. The 2023 Plan, the Cabot Oil & Gas Corporation 2014 Incentive Plan, or Prior Cabot Plan, and the legacy Cimarex incentive plans provide that any award made pursuant to such plan be subject to any applicable clawback policy, so by accepting any award under those plans, each executive has agreed to be a director.Anti-hedgingbound by the clawback policy.
Anti-Hedging PolicyIn October 2013, the Company adopted
We have a policy prohibiting directors and officers from speculative trading in Company securities, including hedging transactions, short selling, and trading in put options, call options, swaps or collars. The policy was effective immediately and toTo our knowledge, all directors and executive officers are in compliance with the policy.Conclusion
We believe these executive compensation policies
The Company’s policy also requires that all employees provide notice and programs effectively serve the interests of the shareholdersobtain pre-approval before engaging in hedging activities in our stock and the Company. The Committee has worked over the years to devise, manage and provide an executive compensation program that meets its intended objectives and contributes to the Company’s overall success. -2014 Proxy Statement31
Effects on Say on Pay Votes and Shareholder Outreach
In setting 2013 executive compensation, the Committeeany such request for approval will only be considered the outcome of the say-on-pay vote at the 2012 annual meeting, which reflected the approval of 95.24% of the shareholders who voted on the matter, as strongly supportive of our pay practices and programs. As a result, the Committee concluded that the 2013 compensation paid to our NEOs and our overall pay practices did not require substantial revision to address shareholder concerns. This conclusion was further affirmed at the 2013 annual meeting, with a say-on-pay vote reflecting the approval of 96.36% of the shares voted on the matter, and in input received from our top institutional shareholders in our regular outreach program during the period after the 2013 annual meeting. This continued positive support from both the annual say-on-pay vote and direct communications with shareholders was considered by the Committee in its decision not to make substantial changes to the program in setting 2014 executive compensation.
Compensation Consultant
The Committee employs the services of an executive compensation consultant. In 2013, the Committee engaged Meridian as its independent consultant, and Meridian has also been retained by the Committee for 2014. Meridian is responsible for preparing and presenting a comprehensive competitive market study of the compensation levels and practices for a group of industry peers. The Committee-approved industry peer group is listed and described in more detail above at “Industry Peer Group.” Meridian is also responsible for preparing and presenting an outside director compensation study using the same industry peer group. The Committee relies on Meridian for input on pay philosophy, current market trends, legal and regulatory considerations and prevalence of benefit and perquisite programs. A representative of Meridian attends all regular meetings of the Committee and participates in most executive sessions.
In October 2013, the Committee reviewed the independence of Meridian, and found it to be independent and without conflicts of interest in providing services to the Committee. In making such determination, the Committee considered the six factors established by the NYSE effective July 2013. Fees paid by the Company to Meridian account for less than 1% of Meridian’s total annual revenues. The Committee reviewed Meridian’s policies and procedures designed to prevent conflicts of interest. To the knowledge of Meridian, there are no personal relationships among Meridian partners, consultants or employees and members of the Committee or the Company’s management. To the knowledge of Meridian, none of the Meridian partners, consultants or employees providing services the Committee owns Company stock. Meridian works exclusively for the Committee and performs no services directly for management. Management does not retain the services of a compensation consultant.
Role of Executives in Establishing Compensation
The President and CEO, the Executive Vice President and CFO, and the Corporate Secretary and Managing Counsel each play a role in our compensation process. With the benefit of Meridian’s independent competitive market study, the CEO makes compensation recommendations to the Committee for our other officers, but not for his own compensation. The CEO considers internal pay equity issues, individual performance and Company performance in making his recommendations to the Committee. The Executive Vice President and CFO makes recommendations to the CEO for the officers who are his direct reports. The Human Resources Department provides the Committee survey data from a wider group of companies in the energy sector than the industry peer group described above, which the Committee uses for evaluation of non-executive compensation trends, and general administrative support implementing the Committee’s decisions. The executives listed above, together with the Corporate Secretary and Managing Counsel, prepare materials and agenda
-2014 Proxy Statement32
for the Committee meetings and also prepare the long-term equity plans as directed by the Committee for its review and consideration. Certain of the noted officers attend the Committee meetings; however, the officers are generally excused from the meetings to enable the Committee to meet privately in executive session, both with and without the compensation consultant also being present. The Committee has delegated to management authority to administer the long-term incentive plans in accordance with the terms and conditions of the shareholder approved plans, the specific award agreements and the specific individual awards approved by the Committee and, as needed, by the Board of Directors.
Executive Compensation Business Risk Review The ownership stake in the Company provided by our equity-based compensation, the extended vesting periods of these awards and our stock ownership guidelines are designed to align the interests of our NEOsnamed executive officers with our shareholders,stockholders, maximize performance and promote executive retention. Management reviews all incentive and equity programs. At the same time, the Compensation Committee believes, with the concurrence of our independent consultant, that as a result of our focus on long-term incentive compensation, our use of balanced long-term incentives, the metric diversification and capped opportunities in our annual bonus plan and long-term incentives, and our stock ownership guidelines, 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, balanced long-term incentives, metric diversification, capped opportunities in our annual bonus plan and long-term incentives, and our stock ownership guidelines.
Tax Deductibility of Executive Compensation Section 162(m) of the Internal Revenue Code of 1986, as amended, places a limit of $1.0 million on the amount of compensation that we may deduct in any one year with respect to compensation paid to each covered employee. While the Compensation Committee Reportconsiders the deductibility of compensation in its decision making, the Compensation Committee implements compensation programs that it believes are competitive and attract and retain talented management, which the Compensation Committee believes is in the best interests of the Company and its stockholders. COMPENSATION COMMITTEE REPORT The Compensation Committee of the Board of Directors has reviewed and discussed with management the abovepreceding Compensation Discussion and Analysis and, basedAnalysis. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The Compensation CommitteeRhys J. Best (Chairman)
James R. Gibbs
P. Dexter Peacock
-2014 Proxy Statement33
Paul N. Eckley (Chair)
Amanda M. Brock
Hans Helmerich
Marcus A. Watts
February 20, 2024 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.
COMPENSATIONSummary Compensation
TABLES SUMMARY COMPENSATION TABLE The table below summarizes the total compensation paid to or earned by each of the CEO, the CFO and the next three most highly compensatedour named executive officers (“NEOs”) for the fiscal year ended December 31, 2013. Cash bonus2023. | | Name and
Principal Position | | | | Year | | | | Salary
($) | | | | Bonus
($) | | | | Stock
Awards
($)(1) | | | | Option
Awards
($) | | | | Non-Equity
Incentive Plan
Compensation
($)(2) | | | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($) | | | | All Other
Compensation
($)(3) | | | | Total
($) | | | | Thomas E. Jorden
Chief Executive Officer
and President | | | | | | 2023 | | | | | | | 1,125,000 | | | | | | | — | | | | | | | 11,071,724 | | | | | | | — | | | | | | $ | 2,000,000 | | | | | | | — | | | | | | | 351,129 | | | | | | $ | 14,547,853 | | | | | | | 2022 | | | | | | | 1,103,366 | | | | | | | — | | | | | | | 12,554,661 | | | | | | | — | | | | | | | 1,462,500 | | | | | | | — | | | | | | | 182,870 | | | | | | | 15,303,397 | | | | | | | 2021 | | | | | | | 301,673 | | | | | | | — | | | | | | | 10,000,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 760,266 | | | | | | | 11,061,939 | | | | | Shannon E. Young III(4)
Executive Vice
President and Chief
Financial Officer | | | | | | 2023 | | | | | | | 290,923 | | | | | | | 100,000 | | | | | | | 4,579,816 | | | | | | | — | | | | | | | 780,000 | | | | | | | — | | | | | | | 60,215 | | | | | | | 5,810,953 | | | | | Stephen P. Bell
Executive Vice
President—Business
Development | | | | | | 2023 | | | | | | | 577,692 | | | | | | | — | | | | | | | 3,321,502 | | | | | | | — | | | | | | | 840,000 | | | | | | | — | | | | | | | 200,636 | | | | | | | 4,939,830 | | | | | | | 2022 | | | | | | | 543,346 | | | | | | | — | | | | | | | 3,459,843 | | | | | | | — | | | | | | | 690,000 | | | | | | | — | | | | | | | 80,250 | | | | | | | 4,773,439 | | | | | | | 2021 | | | | | | | 149,154 | | | | | | | — | | | | | | | 3,000,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 3,149,154 | | | | | Blake A. Sirgo(5)
Senior Vice President—
Operations | | | | | | 2023 | | | | | | | 452,769 | | | | | | | — | | | | | | | 1,494,694 | | | | | | | — | | | | | | | 630,000 | | | | | | | — | | | | | | | 160,124 | | | | | | | 2,737,587 | | | | | Kevin W. Smith(5)
Vice President—Chief
Technology Officer | | | | | | 2023 | | | | | | | 425,385 | | | | | | | — | | | | | | | 1,494,694 | | | | | | | — | | | | | | | 625,000 | | | | | | | — | | | | | | | 165,830 | | | | | | | 2,710,909 | | | | | Scott C. Schroeder
Former Executive Vice
President and Chief
Financial Officer | | | | | | 2023 | | | | | | | 533,385 | | | | | | | — | | | | | | | 4,594,752 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 273,927 | | | | | | | 5,402,064 | | | | | | | 2022 | | | | | | | 661,154 | | | | | | | — | | | | | | | 4,786,121 | | | | | | | — | | | | | | | 920,000 | | | | | | | — | | | | | | | 244,041 | | | | | | | 6,611,316 | | | | | | | 2021 | | | | | | | 629,009 | | | | | | | — | | | | | | | 4,910,751 | | | | | | | — | | | | | | | 1,210,825 | | | | | | | — | | | | | | | 5,433,674 | | | | | | | 12,184,259 | | | | | Christopher H. Clason(5)
Former Senior Vice
President and Chief
Human Resources Officer | | | | | | 2023 | | | | | | | 386,308 | | | | | | | — | | | | | | | 6,173,615 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 169,830 | | | | | | | 6,729,752 | | | | | | | 2022 | | | | | | | 470,173 | | | | | | | — | | | | | | | 2,306,569 | | | | | | | — | | | | | | | 600,000 | | | | | | | — | | | | | | | 82,005 | | | | | | | 3,458,747 | | |
(1)
The amounts paid underin 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, including the liability component for cash payments over 100 percent of target, was valued using a Monte Carlo model and was based on probable performance at the time of grant. Assumptions used in the Monte Carlo model for the performance-based awards, as well as additional information regarding accounting for performance-based awards, are included in Note 13 of the Notes to the Consolidated Financial Statements included in the Company’s 2004 Incentive Plan,Annual Report on Form 10-K. The Monte Carlo model values are used solely for financial reporting purposes and are not used by the Compensation Committee when determining the number of shares underlying each award. When determining the number of shares underlying each performance-based award at target performance, the Compensation Committee divided the approved grant date value of the awards by the closing stock price on the date of grant. The grant date value of the 2023 performance-based awards, assuming maximum performance would have been as follows: Mr. Jorden $10,000,000; Mr. Young $4,000,000; Mr. Bell $3,000,000; Mr. Sirgo $1,350,000; Mr. Smith $1,350,000; Mr. Schroeder $4,150,000; and Mr. Clason $2,000,000. In addition, for Mr. Clason in 2023, this amount includes $3,959,280 in incremental fair value, calculated in accordance with SEC disclosure guidance, related to the August 2023 modification of certain of Mr. Clason’s outstanding equity awards in connection with Mr. Clason’s separation, which remain outstanding, subject to his compliance with certain restrictive covenants. Such amounts do not reflect new equity grants. (2)
The amounts in this column reflect cash incentive awards to the named executive officers. The 2023 cash incentive awards are listeddiscussed in detail above under “Compensation Discussion and Analysis.” Due to Mr. Schroeder’s retirement and Mr. Clason’s separation, in each case, on September 30, 2023, neither Mr. Schroeder nor Mr. Clason earned a 2023 cash incentive award. The amounts of Mr. Jorden’s and Mr. Bell’s 2021 annual bonus of $2,500,000 and $1,012,000, respectively, are is not reflected in the column titled “Non-Equity Incentive Plan Compensation,”table above given that they were determined by the Committee at its February 19, 2014 meeting for 2013 performance and,legacy Cimarex compensation committee prior to the extent notMerger. (3)
For all named executive officers, the amounts also include some or all of the following: •
Company contributions to retirement savings and deferred bycompensation 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 were paid out shortly thereafter. For additional information about Non-Equity Incentive Plan Compensation, see “Annual cash incentive bonus” above. Sharesofficers; and share prices discussed •
Financial tax, and estate planning expenses. Amounts in this proxy statement have been adjustedcolumn 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 reflect our two-for-one stock split,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 form“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 $100,000. (5)
Messrs. Sirgo and Smith became named executive officers for the first time in 2023 and Mr. Clason became a stock dividend, effective as of August 14, 2013.Name and
Principal Position | | Year | | Salary
($) | | Bonus
($)(1) | | Stock
Awards
($)(2) | | Option
Awards
($)(3) | | Non-Equity
Incentive Plan
Compensation
($)(4) | | Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)(5) | | All Other
Compensation
($)(6) | | Total
($) | | Dan O. Dinges
Chairman, President and
Chief Executive Officer | | 2013 | | $ | 800,962 | | - | | $ | 6,045,748 | | | - | | $ | 2,000,000 | | | - | | $ | 266,154 | | $ | 9,112,864 | | | | 2012 | | $ | 678,205 | | - | | $ | 4,265,387 | | $ | 931,758 | | $ | 1,750,000 | | | - | | $ | 238,540 | | $ | 7,863,890 | | | | 2011 | | $ | 641,667 | | - | | $ | 3,715,993 | | $ | 854,895 | | $ | 1,625,000 | | $ | 18,270 | | $ | 200,032 | | $ | 7,055,857 | | Scott C. Schroeder
Executive Vice President,
Chief Financial Officer and Treasurer | | 2013 | | $ | 444,231 | | - | | $ | 2,599,587 | | | - | | $ | 1,112,500 | | | - | | $ | 173,144 | | $ | 4,329,462 | | | | 2012 | | $ | 405,256 | | - | | $ | 1,653,926 | | $ | 361,283 | | $ | 1,050,000 | | | - | | $ | 152,647 | | $ | 3,623,112 | | | | 2011 | | $ | 377,500 | | - | | $ | 1,336,063 | | $ | 307,377 | | $ | 855,000 | | $ | 44,279 | | $ | 122,234 | | $ | 3,042,453 | | Jeffrey W. Hutton
Senior Vice President,
Marketing | | 2013 | | $ | 336,154 | | - | | $ | 846,386 | | | - | | $ | 595,000 | | | - | | $ | 114,134 | | $ | 1,891,674 | | | | 2012 | | $ | 306,179 | | - | | $ | 548,399 | | $ | 119,797 | | $ | 580,000 | | | - | | $ | 88,157 | | $ | 1,642,532 | | | | 2011 | | $ | 272,167 | | - | | $ | 513,557 | | $ | 118,148 | | $ | 376,750 | | $ | 51,684 | | $ | 77,033 | | $ | 1,409,339 | | G. Kevin Cunningham
Vice President and
General Counsel | | 2013 | | $ | 332,115 | | - | | $ | 785,958 | | | - | | $ | 527,630 | | | - | | $ | 101,170 | | $ | 1,746,873 | | | | 2012 | | $ | 308,846 | | - | | $ | 548,399 | | $ | 119,797 | | $ | 475,000 | | | - | | $ | 99,862 | | $ | 1,551,904 | | | | 2011 | | $ | 286,667 | | - | | $ | 417,546 | | $ | 96,063 | | $ | 507,500 | | | - | | $ | 82,016 | | $ | 1,389,792 | | Phillip L. Stalnaker
Vice President
and Regional Manager,
North Region | | 2013 | | $ | 295,192 | | - | | $ | 785,958 | | | - | | $ | 575,000 | | | - | | $ | 89,540 | | $ | 1,745,690 | | | | 2012 | | $ | 266,378 | | - | | $ | 391,758 | | $ | 85,562 | | $ | 430,000 | | | - | | $ | 74,254 | | $ | 1,247,952 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-2014 Proxy Statement34
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. (1) | Cash bonuses paid pursuant to the 2004 Incentive Plan for 2013 annual performance are listed under the column “Non-Equity Incentive Plan Compensation.” | | | (2) | The amounts in this column reflect the grant date fair value with respect to both the TSR and the hybrid performance share awards for the relevant fiscal year in accordance with the FASB ASC Topic 718. The grant date fair value of the hybrid performance share awards was computed by using the average of the Company’s high and low stock trading price on the date of grant. The grant date fair values per share used to compute the amounts in this column for the hybrid performance shares are as follows: |
| Grant Date | | Grant Date Fair Value per Share | | Award Types Included | | February 17, 2011 | | $ | 10.19 | | | Hybrid Performance Shares | | February 16, 2012 | | $ | 17.59 | | | Hybrid Performance Shares | | February 21, 2013 | | $ | 26.62 | | | Hybrid Performance Shares |
| TSR performance shares granted on February 11, 2011, February 16, 2012 and February 21, 2013 were valued using a Monte Carlo model and the grant date fair values per share used for financial reporting purposes were $11.08, $20.69 and $35.89, respectively. Assumptions used in the Monte Carlo model for these grants, as well as additional information regarding accounting for performance share awards, are included in Notes 11, 12 or 13 of the Notes to the Consolidated Financial Statements included in the Company’s Form 10-K for the years shown. | | | (3) | The amounts in this column reflect the grant date fair value with respect to Stock Appreciation Rights (“SARs”) for the relevant fiscal year, in accordance with ASC Topic 718, using a Black-Scholes model. Assumptions used in the calculation of these amounts are included in Notes 11, 12 or 13 of the Notes to the Consolidated Financial Statements included in the Company’s Form 10-K for the years shown. SARs have not been repriced or otherwise materially modified. | | | (4) | The amounts in this column reflect cash incentive awards to the NEOs under the 2004 Incentive Plan, which is discussed in detail above under “Annual Cash Incentive Bonus.” | | | (5) | The amounts in this column for 2011 reflect the actuarial increase in the present value of the NEOs benefit under the Company’s pension plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. The pension plan was terminated in 2010. There are no amounts in this column for 2012 or 2013 because accrued benefits under the pension plan were distributed to the NEOs in June 2012. There were no above-market or preferential earnings on deferred compensation. | | | (6) | The amounts in this column include the Company’s matching contribution to the Savings Investment Plan (401(k) Plan), which is discussed above under “Elements of Post-Termination Compensation-Savings Investment Plan.” For 2013, such contribution totaled $15,300 for each NEO. The amounts also include the 9% Company retirement contribution to the 401(k) plan or to the deferred compensation plan, to the extent in excess of the 401(k) plan limits. Such contribution for 2013 totaled $211,386 for Mr. Dinges; $116,281 for Mr. Schroeder; $64,254 for Mr. Hutton; $54,440 for Mr. Cunningham and $43,804 for Mr. Stalnaker. The amounts also include for each NEO some or all of the following: |
| • | Premiums paid on executive term life insurance; | | • | Club dues; | | • | Executive physical examination for the NEOs and their spouses; | | • | A financial and tax planning stipend of up to $3,000 per year; and | | • | Spouse travel to certain business meetings. |
-2014 Proxy Statement35
GRANTS OF PLAN-BASED AWARDS The table below reports all grants of plan-based awards made to our named executive officers during 2013.2023. All grants of awardsprior to May 4, 2023 were made under the Company’s 2004 IncentivePrior Cabot Plan. SharesAll grants after May 4, 2023 were made under the 2023 Plan. | | | | | | | | | | Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards(1) | | | | Estimated Future Payouts Under
Equity Incentive Plan Awards(2) | | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(3) | | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) | | | | Exercise
or Base
Price Of
Option
Awards
($/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 share prices discussed in this proxy statement have been adjusted to reflect our two-for-one stock split, inmaximum annual cash incentive bonus possible payouts on the formdate indicated. The maximum amount is 200 percent of a stock dividend, effective asthe target amount. (2)
Amounts shown represent the target and maximum number of August 14, 2013.| | | | | | | | | | | | | | | | | | | | | All Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option | | | | | | | | | | | | | | | | | | | | | | | | | | All Other | | Awards: | | Exercise | | Grant Date | | | | | | | | | | | | | | | | | | | | | Stock | | Number of | | or Base | | Fair Value | | | | | | | | | | | | | | | Estimated Future Payouts | | Awards: | | Securities | | Price Of | | of Stock | | | | | | | Estimated Possible Payouts Under | | Under Equity Incentive Plan | | Number | | Underlying | | Option | | and Option | | | | | | | Non-Equity Incentive Plan Awards | | Awards | | of Shares | | Options | | Awards | | Awards | | | | | | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | | | | | | | | | | | Name | ‘ | Grant Date | | ($) | | ($) | | ($) (1) | | (#) | | (#) (2) | | (#) (1) | | (#) | | (#) | | ($/Sh) | | ($) (4) | | | Dan O. Dinges | | 02/21/2013 | | $0 | | $ | 825,000 | | $ | 2,062,500 | | | | | | | | | | | | | | | | | | | | 02/21/2013 | | | | | | | | | | 0 | | 112,720 | | 225,440 | | | | | | | | $ | 4,045,521 | | | | | 02/21/2013 | | | | | | | | | | | | 75,140 | | | | | | | | | | $ | 2,000,227 | | | Scott C. | | 02/21/2013 | | $0 | | $ | 450,000 | | $ | 1,125,000 | | | | | | | | | | | | | | | | | | Schroeder | | 02/21/2013 | | | | | | | | | | 0 | | 48,460 | | 96,920 | | | | | | | | $ | 1,739,229 | | | | | 02/21/2013 | | | | | | | | | | | | 32,320 | | | | | | | | | | $ | 860,358 | | | Jeffrey W. | | 02/21/2013 | | $0 | | $ | 238,000 | | $ | 595,000 | | | | | | | | | | | | | | | | | | Hutton | | 02/21/2013 | | | | | | | | | | 0 | | 15,780 | | 31,560 | | | | | | | | $ | 566,344 | | | | | 02/21/2013 | | | | | | | | | | | | 10,520 | | | | | | | | | | $ | 280,042 | | | G. Kevin | | 02/21/2013 | | $0 | | $ | 234,500 | | $ | 586,250 | | | | | | | | | | | | | | | | | | Cunningham | | 02/21/2013 | | | | | | | | | | 0 | | 14,660 | | 29,320 | | | | | | | | $ | 526,147 | | | | | 02/21/2013 | | | | | | | | | | | | 9,760 | | | | | | | | | | $ | 259,811 | | | Phillip L. | | 02/21/2013 | | $0 | | $ | 210,000 | | $ | 525,000 | | | | | | | | | | | | | | | | | | Stalnaker | | 02/21/2013 | | | | | | | | | | 0 | | 14,660 | | 29,320 | | | | | | | | $ | 526,147 | | | | | 02/21/2013 | | | | | | | | | | | | 9,760 | | | | | | | | | | $ | 259,811 | |
(1) | Amounts in this column represent a bonus payout of 250% of target. See discussion of the bonus factor applicable to the 2013 annual cash incentive bonus in the “Compensation Discussion and Analysis” above under “Annual Cash Incentive Bonus.” See also the actual bonus awards for 2013 in the “Non-Equity Incentive Plan Compensation” column of the “2013 Summary Compensation Table” above. | | | (2) | The first amount in this column for each NEO represents 100% of TSR performance shares, which will be paid out based on the relative total shareholder return on the Company’s stock over the three year period from January 1, 2013 to December 31, 2015, if the Company’s total shareholder return ranks 9thor higher out of its peer group of fifteen companies, including the Company. The second amount in this column for each NEO represents 100% of hybrid performance shares, which vest 25% on each of the first and second anniversaries of the date of grant and 50% on the third anniversary of the date of grant, provided the Company has $100 million or more operating cash flow in the fiscal year prior to the vesting date. | | | (3) | Amounts in this column represent 200% of the targeted TSR performance shares, although amounts earned in excess of 100% up to 200% are paid in cash, rather than shares, based on the average of the high and low trading prices of a share of Common Stock on the last day of the performance period. See discussion of the additional terms of the TSR performance shares below. | | | (4) | The amounts in this column reflect the grant date fair value of the TSR performance shares and the hybrid performance shares granted in 2013, 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 $35.89. The hybrid performance share awards were valued using the average of the Company’s high and low stock trading price on the date of grant, which was $26.62. 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 footnote 13 of the Notes to the Consolidated Financial Statements included in the Form 10-K. |
-2014 Proxy Statement36
TSR performance shares
The TSR performance shares awarded in 2013 havegranted 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, which commenced January 1, 2013 and ends December 31, 2015. Each TSR performance share represents the right to receive, after the endperiod. The maximum amount is 200 percent of the performance period, from 0%target amount and amounts earned in excess of 100 percent are to 200%be paid in cash, rather than shares, based on the closing trading prices of a share of Common Stock (with amounts over 100% paid in cash), based on the Company’s performance. The performance criteria that determines the payout per performance share is the relative total shareholder return on the Company’s Common Stock as compared to the total shareholder return on the common equity of each company in a comparator group. For this purpose, total shareholder return is expressed as a percentage equal to common stock price appreciation as averaged for the first and last month of the performance period, plus dividends (on a cumulative reinvested basis). The comparator group consists of the companies listed above under “Industry Peer Group.” If any member of the comparator group ceases to have publicly traded common stock or if as a result of other business transactions becomes incomparable, it may be removed from the comparator group and a replacement company added by the Compensation Committee, or the Committee may decide to reduce the peer group to the remaining companies.
After the end of the performance period, the Company will issue shares of Common Stock and pay cash in respect of each TSR performance share based on the relative ranking of the Company versus the comparator group for total shareholder return during the performance period using the following scale:
| Company Relative Placement | Percent Performance Shares | Value Consideration | | 1-2 (highest) | 200% | 100% stock / 100% cash | | 3 | 185% | 100% stock / 85% cash | | 4 | 170% | 100% stock / 70% cash | | 5 | 155% | 100% stock / 55% cash | | 6 | 140% | 100% stock / 40% cash | | 7 | 125% | 100% stock / 25% cash | | 8 | 110% | 100% stock / 10% cash | | 9 | 100% | stock | | 10 | 90% | stock | | 11 | 75% | stock | | 12 | 60% | stock | | 13 | 45% | stock | | 14 | 30% | stock | | 15 | 15% | stock | | 16-17 (lowest) | 0 | |
As noted above, in the event of a relative ranking of 1 through 8, corresponding to a percentage payout above 100%, a share of TSR performance stock will entitle the participant to receive one full share of Common Stock with respect to the first 100% of the payout and the balance of the payout in cash, in an amount based on the fair market value of a share of Common Stock at the end of the performance period. The Committee certifies the Company’s relative placement and the resulting level of achievement of the performance share awards prior to the issuance of Common Stock and cash, if any.
If a participant is not an employee on the last day of the performance period due to death, disability or retirement, Common Stock will be issued onperiod.
(3)
Amounts shown represent time-based restricted stock units that vest January 31, 2026. (4)
Amounts shown reflect the original performance period schedule and the levelaggregate grant date fair value of payout will be determined as with all other participants, except that (i) if the participant retires and thereafter accepts an offer of employment from a competitor at any time prior to the receipt of Common Stock, the participant will forfeit the right to receive such Common Stock and (ii) in the case of a retirement, the participant must be an employee on September 30thof the year the award is granted in order to continue vesting in the award. If a participant is not an employee on the date the Compensation Committee certifies the Company’s achievement level with respect to the TSR performance shares due to any other voluntary or involuntary termination, no Common Stock or cash will be issued in respect of the participant’s -2014 Proxy Statement37
TSR performance share award unless otherwise determined by the Compensation Committee. Prior to the issuance of shares of Common Stock in respect of a TSR performance share award, the participant will have no right to vote or receive dividendsand time-based restricted stock units, as applicable, granted on the shares.date indicated, as computed in accordance with ASC Topic 718. The TSR performance share award may not be assigned or transferred except by will orawards were valued using a Monte Carlo model and the laws of descentgrant date fair value per share used for financial reporting purposes was $27.93 for shares granted on February 21, 2023 and distribution. In the event of a Change In Control (as defined) all unvested TSR performance$31.70 for shares shall vest to the extent of actual performance asgranted on July 6, 2023. The grant date fair value per share of the Change In Control. Actual performance as of the Change In Controltime-based restricted stock units is based on the greaterclosing price of (i) total shareholder return through the end of the month prior to the Change In Control or (ii) total shareholder return through the end of the month prior to the Change In Control calculated using the value realized by shareholders in the Change In Control event. In the event the Company ceases to have publicly traded Common Stock as a result of a business combination or other extraordinary transaction, the performance period will be terminated effective upon the date of such cessation.
Hybrid performance shares
The hybrid performance shares awarded in 2013 vest 25%our common stock on each of the first two anniversaries of the date of grant, or $23.00 for awards granted on February 21, 2023 and 50%$24.82 for shares granted on the third anniversary of the date of grant, provided the Company has $100 million or more operating cash flowJuly 6, 2023 (Mr. Young). Additional assumptions used in the fiscal year prior to the vesting date. If the performance metric is not met in any given year, then the respective tranche of hybrid performance shares will be forfeited. Unvested hybrid performance shares will be forfeited if, during the three-year vesting period, the executive voluntarily leaves the Company. In the event of an involuntary termination by the Company, the Compensation Committee will determine whether the unvested hybrid performance shares will be forfeited. In the event of an employment termination due to death, disability or retirement, all unvested hybrid performance shares will vest in accordance with the original vesting schedule except that (i) if the participant retires and thereafter accepts an offer of employment from a competitor at any time prior to the receipt of hybrid performance shares, the participant will lose the right to receive such hybridMonte Carlo model for TSR performance shares and (ii)other assumptions used in the casecalculation of a retirement, the participant must be an employee on September 30ththese amounts are included in Note 13 of the yearNotes to the award is granted in order to continue vestingConsolidated Financial Statements included in the award. PriorCompany’s Annual Report on Form 10-K for the year ended December 31, 2023.
(5)
This amount shown in this row reflects the incremental fair value related to vesting, the participant has no right to vote or receive dividends on such shares. The hybrid performance shares may not be assigned or transferred except by will or the laws of descent and distribution. In the event of a Change In Control (as defined), the unvested hybrid performance shares will vest.In the event of any merger, reorganization, recapitalization, separation, liquidation, stock dividend, share combination or other change in the corporate structure of the Company affecting the performance shares, the number of performance shares will be equitably adjusted by the Compensation Committee to prevent dilution or enlargement of rights.
For additional information about the treatmentmodification of certain of Mr. Dinges’Clason’s outstanding equity awards in the event of an employment termination, see “Potential Payments Upon Termination or Change In Control” below.
-2014 Proxy Statement38
connection with Mr. Clason’s separation, and does not reflect a new equity grant.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The table below reports for each NEOnamed executive officer outstanding equity awards at December 31, 2013. Shares2023, including, as applicable, their legacy Cimarex awards that were granted by Cimarex prior to the Merger and share prices discussed in this proxy statement have been adjusted to reflect our two-for-one stock split, inwere assumed by Coterra and converted into Coterra awards on the formeffective time of a stock dividend, effective as of August 14, 2013.| | | Option Awards | | Stock Awards | | | | | | | | Name | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(1) | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(2) | | Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#) | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#) | | Market
Value of
Shares
or Units
of Stock
That
Have Not
Vested
($) | | Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#) (3) | | Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested
($) (4) | | Dan O. | | | 120,364 | | | | 60,184 | | | | - | | | $ | 10.19 | | | 2/17/2018 | | | | | | | | | | | | | | | | Dinges | | | 38,084 | | | | 76,172 | | | | - | | | $ | 17.59 | | | 2/16/2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | 224,146 | | | $ | 8,687,899 | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | 207,688 | | | $ | 8,049,987 | | | Scott C. | | | 43,276 | | | | 21,640 | | | | - | | | $ | 10.19 | | | 2/17/2018 | | | | | | | | | | | | | | | | Schroeder | | | 14,766 | | | | 29,536 | | | | - | | | $ | 17.59 | | | 2/16/2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | 91,666 | | | $ | 3,552,974 | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | 82,072 | | | $ | 3,181,111 | | | Jeffrey W. | | | 16,632 | | | | 8,320 | | | | - | | | $ | 10.19 | | | 2/17/2018 | | | | | | | | | | | | | | | | Hutton | | | 4,896 | | | | 9,794 | | | | - | | | $ | 17.59 | | | 2/16/2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | 30,106 | | | $ | 1,166,909 | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | 28,124 | | | $ | 1,090,086 | | | G. Kevin | | | 13,524 | | | | 6,764 | | | | - | | | $ | 10.19 | | | 2/17/2018 | | | | | | | | | | | | | | | | Cunningham | | | 4,896 | | | | 9,794 | | | | - | | | $ | 17.59 | | | 2/16/2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | 28,986 | | | $ | 1,123,497 | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | 25,860 | | | $ | 1,002,334 | | | Phillip L. | | | 10,816 | | | | 5,412 | | | | - | | | $ | 10.19 | | | 2/17/2018 | | | | | | | | | | | | | | | | Stalnaker | | | 3,496 | | | | 6,996 | | | | - | | | $ | 17.59 | | | 2/16/2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | 24,894 | | | $ | 964,891 | | | | | | | | | | | | | | - | | | | | | | | | | | | | | | | 21,824 | | | $ | 845,898 | |
(1) | Amounts in this column represent the exercisable portion of SARs granted in various years, all of which vest ratably on the first, second and third anniversaries of the date of grant and have a seven-year term. Unvested SARs will be forfeited and vested SARs must be exercised within 90 days if the executive voluntarily leaves the Company. In the event of an involuntary termination by the Company, the Compensation Committee may extend the exercise period for vested SARs from 90 days to 36 months. In the event of an employment termination due to death, disability or retirement, all SARs will vest except that (i) if the participant retires and thereafter accepts an offer of employment from a competitor at any time prior to the exercise of the SARs, the participant will lose the right to exercise any remaining SARs and the remaining SARs shall be forfeited and (ii) in the case of a retirement, the participant must be an employee on September 30thof the year the award is granted in order to continue vesting in the award. The SAR award may not be assigned or transferred except by will or the laws of descent and distribution. In the event of a Change In Control (as defined) all unvested SARs shall vest and remain exercisable throughout the term of the SAR, provided the Company’s stock is still trading on a national stock exchange. | (2) | Amounts in this column represent the unexercisable portion of SARs granted in various years, all of which vest ratably on the first, second and third year anniversaries of the date of grant and have a seven year term. | (3) | The first amount in this column for each NEO is TSR performance share awards. The terms and conditions of the TSR performance share awards are described in the narrative following the “2013 Grants of Plan-Based Awards” table above. The TSR performance shares vest, if at all, for each executive as follows (assuming 100% payout): |
-2014 Proxy Statement39
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 | | |
| Date | | Dan O. Dinges | | Scott C. Schroeder | | Jeffrey W. Hutton | | G. Kevin Cunningham | | Phillip L. Stalnaker | | 12/31/2014 | | | 111,426 | | | | 43,206 | | | | 14,326 | | | | 14,326 | | | | 10,234 | | | 12/31/2015 | | | 112,720 | | | | 48,460 | | | | 15,780 | | | | 14,660 | | | | 14,660 | |
The second amountamounts in this column for each NEOreflect shares of restricted stock units as follows: •
as to which restrictions lapse December 1, 2024: Mr. Jorden 488,759; Mr. Bell 146,628; Mr. Sirgo 48,876; Mr. Smith 48,876; and Mr. Clason 38,030; •
as to which restrictions lapse on January 31, 2025: Mr. Bell 51,436; Mr. Sirgo 17,145; Mr. Smith 17,145; Mr. Schroeder 71,153; and Mr. Clason 15,669; and •
as to which restrictions lapse on January 31, 2026: Mr. Jorden 217,391; Mr. Young 81,030; Mr. Bell 65,217; Mr. Sirgo 29,348; Mr. Smith 29,348; Mr. Schroeder 90,217; and Mr. Clason 30,435. (2)
Market value is hybridbased 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 shares. The termsshare and conditionsperformance stock unit awards, as applicable, assuming the maximum level of performance (200 percent of the hybridtarget amount) is achieved, as follows: •
as to which the performance shareperiod 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 are describedgranted in 2023, see “Compensation Discussion and Analysis—2023 Performance-Based Compensation” and the narrative following the “2013 Grants“Grants of Plan-Based Awards” table above.above for more information. The hybridactual amount of these awards that will vest after the end of the applicable performance shares vest, if at all, for each executive as follows:| Date | | Dan O. Dinges | | Scott C. Schroeder | | Jeffrey W. Hutton | | G. Kevin Cunningham | | Phillip L. Stalnaker | | 2/17/2014 | | | 58,264 | | | | 20,948 | | | | 8,052 | | | | 6,548 | | | | 5,240 | | | 2/16/2014 | | | 37,142 | | | | 14,402 | | | | 4,776 | | | | 4,776 | | | | 3,412 | | | 2/16/2015 | | | 37,142 | | | | 14,402 | | | | 4,776 | | | | 4,776 | | | | 3,412 | | | 2/21/2014 | | | 18,784 | | | | 8,080 | | | | 2,630 | | | | 2,440 | | | | 2,440 | | | 2/21/2015 | | | 18,786 | | | | 8,080 | | | | 2,630 | | | | 2,440 | | | | 2,440 | | | 2/21/2016 | | | 37,570 | | | | 16,160 | | | | 5,260 | | | | 4,880 | | | | 4,880 | |
(4) | Market value is based on the $38.76 per share closing price of the Company’s common stock on December 31, 2013. |
period will be based on the determination of the Company’s achievement of the performance criteria by the Compensation Committee.
STOCK VESTED The table below reports stock options that were exercised and performance shares that vested during 2013. Shares2023, including any legacy Cimarex awards that were granted by Cimarex prior to the Merger and share prices discussed in this proxy statement have been adjusted to reflect our two-for-one stock split, inwere assumed by Coterra and converted into Coterra awards on the formeffective time of the Merger. | | | | | | Stock Awards | | | | Name | | | | Number of Shares
Acquired on Vesting
(#) | | | | Value Realized on
Vesting
($) | | | | 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) | | |
(1)
Represents the number of shares and value realized upon the vesting of a restricted stock dividend, effective asaward that was previously granted by Cimarex and converted on the closing of August 14, 2013.| | | Option Awards | | Stock Awards | | Name | | Number of Shares
Acquired on Exercise
(#) | | Value Realized
on Exercise
($) (1) | | Number of Shares
Acquired on Vesting
(#) | | Value Realized
on Vesting
($) | | Dan O. Dinges | | | 468,280 | | | $ | 14,739,753 | | | | 323,930 | (2) | | $ | 10,827,598 | (2)(4) | | | | | | | | | | | | | - | | | $ | 6,748,565 | (3) | | Scott C. Schroeder | | | 289,480 | | | $ | 8,775,279 | | | | 118,342 | (2) | | $ | 3,944,277 | (2)(4) | | | | | | | | | | | | | - | | | $ | 2,426,407 | (3) | | Jeffrey W. Hutton | | | 121,920 | | | $ | 3,662,556 | | | | 54,292 | (2) | | $ | 1,462,755 | (2)(4) | | | | | | | | | | | | | - | | | $ | 932,663 | (3) | | G. Kevin Cunningham | | | 0 | | | $ | 0 | | | | 11,322 | (2) | | $ | 1,067,957 | (2)(4) | | | | | | | | | | | | | - | | | $ | 758,300 | (3) | | | | | | | | | | | | | 12,000 | (5) | | $ | 328,200 | (5) | | Phillip L. Stalnaker | | | 14,940 | | | $ | 414,809 | | | | 29,526 | (2) | | $ | 984,453 | (2)(4) | | | | | | | | | | | | | - | | | $ | 606,640 | (3) |
(1) | The amounts in this column relate to exercises of SARs and represent the difference between the closing price of the Company’s common stock on the dates of exercise and the exercise price of the SARs, times the number of shares of common stock underlying the SARs exercised. | (2) | Represents the number of shares and value realized for TSR performance shares, the performance period for which was January 1, 2011 through December 31, 2013 and which paid out at 200% of target upon the Compensation Committee’s certification of the results on January 2, 2014, and hybrid performance shares that vested in February 2013, upon the Compensation Committee’s certification of the performance metric of achieving at least $100 million of operating cash flow in 2012. | (3) | Represents the cash portion of the TSR performance share award for performance in excess of 100% of target. | (4) | These amounts represent the closing price of the Company’s common stock on the vesting dates times the number of shares acquired and do not indicate that there was a sale of these shares by the NEO. | (5) | These shares include 12,000 performance shares, the performance period for which was January 1, 2010 through December 31, 2012, that vested on February 20, 2013. The value realized is based on the closing price of the company’s common stock on the vesting date. |
-2014 Proxy Statement40
the Merger on October 1, 2021 to a Coterra award with the same vesting period. (2)
These values were determined by multiplying the number of shares that vested by our common stock closing price on December 1, 2023 of $26.14 and do not indicate that there was a sale of these shares by the named executive officer. (3)
Represents the number of shares and value realized upon the vesting of certain restricted stock awards in connection with Mr. Clason’s termination of employment on September 30, 2023. See “Compensation Discussion and Analysis—Change in Control and Severance Agreements and Other Termination Payments” on page 35 above and “Potential Payments upon Termination or Change in Control” beginning on page 46 below for more information. (4)
These values were determined by multiplying the number of shares that vested by our common stock closing price on September 29, 2023 (the last trading day prior to Mr. Clason’s separation) of $27.05 and do not indicate that there was a sale of these shares by the named executive officer.
NONQUALIFIED DEFERRED COMPENSATION The table below reports NEOexecutive contributions, Company contributions, earnings, withdrawals/distributions and aggregate balances in the Company’sCoterra Energy Inc. Deferred Compensation Plan for 2013.| Name | | Executive
Contributions in Last
FY ($) (1) | | Registrant
Contributions in Last
FY ($) (2) | | Aggregate Earnings in
Last FY ($) (3) | | Aggregate
Withdrawals/
Distributions ($) (4) | | Aggregate Balance at
Last FYE ($) (5) | | Dan O. Dinges | | $ | 0 | | | $ | 211,386 | | | $ | 4,629,578 | | | $ | 0 | | | $ | 14,213,824 | | | Scott C. Schroeder | | $ | 0 | | | $ | 116,281 | | | $ | 3,304,102 | | | $ | 0 | | | $ | 9,610,419 | | | Jeffrey W. Hutton | | $ | 0 | | | $ | 64,254 | | | $ | 82 | | | $ | 0 | | | $ | 814,660 | | | G. Kevin Cunningham | | $ | 0 | | | $ | 54,441 | | | $ | 13 | | | $ | 0 | | | $ | 147,094 | | | Phillip L. Stalnaker | | $ | 36,260 | | | $ | 43,804 | | | $ | 21,530 | | | $ | 0 | | | $ | 236,399 | |
(1) | 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, as 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) | Distribution pursuant to election by the NEO. | (5) | Of the aggregate deferred compensation, as 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 in this column, the following amounts are the total deferred amounts previously reported as compensation to the NEOs in prior years’ summary compensation tables, or would have been reported but for the executive not being an NEO in prior years, as salary, stock awards and non-equity incentive plan compensation, as applicable: |
| Dan O. Dinges | | $ | 4,833,437 | | | Scott C. Schroeder | | $ | 2,592,540 | | | Jeffrey W. Hutton | | $ | 553,350 | | | G. Kevin Cunningham | | $ | 0 | | | Phillip L. Stalnaker | | $ | 101,257 | |
Up to 100%January 1, 2023; plus, contributions by our named executive officers, contributions by Coterra, and earnings for 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
($) | | | | Registrant
Contributions
in Last FY
($) | | | | Aggregate
Earnings
in Last FY
($)(1) | | | | Aggregate
Withdrawals/
Distributions
($) | | | | Aggregate
Balance
at Last FYE
($)(2) | | | | Thomas E. Jorden | | | | | | — | | | | | | | — | | | | | | | 4,320 | | | | | | | — | | | | | | | 29,634 | | | | | Shannon E. Young III | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | Stephen P. Bell | | | | | | — | | | | | | | — | | | | | | | 909 | | | | | | | — | | | | | | | 11,507 | | | | | Blake A. Sirgo | | | | | | — | | | | | | | — | | | | | | | 1,438 | | | | | | | — | | | | | | | 7,932 | | | | | Kevin W. Smith | | | | | | — | | | | | | | — | | | | | | | 2,420 | | | | | | | — | | | | | | | 14,066 | | | | | Scott C. Schroeder | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | Christopher H. Clason | | | | | | — | | | | | | | — | | | | | | | 59,600 | | | | | | | — | | | | | | | 465,487 | | |
(1)
Amounts reported in this column are not included in the Summary Compensation Table. (2)
Reflects contributions by our named executive officers, contributions by Coterra, and earnings on balances prior to January 1, 2023; plus earnings for the year ended December 31, 2023, less any distributions (shown in the appropriate columns of this table). Under the Coterra 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,deferred compensation plan, subject to payment of Social Security,social security, Medicare, incomesincome 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 the Deferred Compensation Plan.such deferred compensation plan. The Company also makes contributions to make up for certain matching and profit-sharing contributions which, due to IRSU.S. Internal Revenue Service limitations, cannot be contributed to the Company’s tax-qualified savings investment plan (401(k) plan).Coterra 401(k) Plan. Earnings on the deferred balances are determined by the executive’s investment selections at the time of deferral. The Company holds deferred amounts and earnings thereon as corporate assets, which are invested as elected by the executive. For 2013, the investment options and their respective rates of return follow:| Fund Name | | Rate of Return | | Fund Name | | Rate of Return | | Fidelity Retirement Money Market | | | 0.01 | % | | FID Freedom K 2005 | | | 8.15 | % | | Fidelity Spartan U.S. Bond Index | | | -2.24 | % | | FID Freedom K 2010 | | | 11.20 | % | | Oakmark Equity & Income | | | 24.25 | % | | FID Freedom K 2015 | | | 11.96 | % | | Oakmark Fund I | | | 37.29 | % | | FID Freedom K 2020 | | | 13.35 | % | | Davis NY Venture | | | 34.88 | % | | FID Freedom K 2025 | | | 16.65 | % | | Spartan 500 Index | | | 32.33 | % | | FID Freedom K 2030 | | | 18.21 | % | | Fidelity Capital Appreciation K | | | 36.11 | % | | FID Freedom K 2035 | | | 20.86 | % | | Lord Abbett Mid Cap Stock | | | 30.76 | % | | FID Freedom K 2040 | | | 21.25 | % | | Calamos Growth Institution | | | 33.47 | % | | FID Freedom K 2045 | | | 21.84 | % | | Fidelity Small Cap Stock | | | 29.79 | % | | FID Freedom K 2050 | | | 22.08 | % | | Fidelity Int’l Discovery K | | | 25.15 | % | | FID Freedom K 2055 | | | 22.78 | % | | Cabot Oil & Gas Common Stock | | | 56.13 | % | | FID Freedom K Income | | | 4.60 | % | | FID Freedom K 2000 | | | 4.56 | % | | | | | | |
-2014 Proxy Statement41
Distributions from the Coterra 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.Potential Payments Upon Termination or Change Investment options under the Coterra Energy Inc. Deferred Compensation Plan include a selection of mutual funds, index funds, and exchange-traded funds, which in 2023 earned between a 3.24 percent and 40.56 percent rate of return.
Under the legacy Cimarex Energy Co. Supplemental Savings Plan, up to 50 percent of salary and 100 percent of annual cash incentive bonus (subject to certain limitations) were 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 ControlChange connection with the Merger, on October 26, 2021, the account balances as of September 30, 2021, were liquidated. The legacy Cimarex Energy Co. Supplemental Savings Plan was not terminated and remained effective for the deferral elections that had previously been made through the end of 2021 and therefore, some participants, including Messrs. Jorden and Bell, made contributions to this plan after October 1, 2021. However, no new deferral elections to the Cimarex Energy Co. Supplemental Plan were permitted after the Merger. Beginning with fiscal year 2022, certain legacy Cimarex employees designated by the Compensation Committee, including Messrs. Jorden and Bell, were eligible to participate in the Coterra Energy Inc. Deferred Compensation Plan. Distributions from the Cimarex Supplemental Savings Plan are based on the executive’s election at the time of deferral. Investment options under the legacy Cimarex Energy Co. Supplemental Savings Plan include a selection of mutual funds, index funds, and exchange-traded funds identical to those under the Coterra Energy Inc. Deferred Compensation Plan, which in 2023 earned between a 3.24 percent and 40.56 percent rate of return.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL Mr. Jorden Employment Agreement In Control BenefitsThe Company hasSeptember 2023, Mr. Jorden entered into the Jorden Letter Agreement, which, together with Mr. Jorden’s legacy Cimarex severance compensation agreement, sets forth the terms of the severance payments and benefits to which Mr. Jorden may become entitled upon a termination of his employment in certain circumstances. The Jorden Letter Agreement provides that Mr. Jorden’s legacy Cimarex severance compensation agreement will remain in full force and effect through October 1, 2026. Pursuant to the Jorden Letter Agreement and Mr. Jorden’s legacy Cimarex severance compensation agreement, upon a termination 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 product of (1) the average annual bonus paid to Mr. Jorden for the two fiscal years prior to termination and (2) 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. •
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 date of termination, divided by two, and ◦
the amount of cash incentive awards received by Mr. Jorden 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 for 36 months following his termination. Except as otherwise provided in an award agreement, upon a termination without cause or for good reason, 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 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 with each NEO and certainthen applicable to other executive officers of Coterra. For a description of the Company. 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 Committee believesseverance 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 these agreements encourage these executivesbonuses are paid to remain employed andactive employees; •
cash payments equal, in the aggregate, to carry out their duties with1.5 times (in the Company inevent the qualifying termination is not a CIC termination) or two times (in the event of a changeCIC termination) the sum of: ◦
the executive officer’s highest annualized base salary in controleffect 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 Companyexecutive 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 during circumstances suggesting(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 changeCIC termination, the executive officer’s equity awards will be treated as set forth in control might occur. The Committee believes this program is importantthe 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 maintaining strong leadership in those situations.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:• | any person or group becoming the beneficial owner of 35% or more of either the Company’s common stock or the combined voting power of the Company’s outstanding voting securities, with certain exceptions; | | | • | specified changes in a majority of the members of the Board of Directors; | | | • | a reorganization, merger or consolidation or sale or other disposition of substantially all of the Company’s assets being consummated, unless, following the transaction: | | | | | - | the persons who were the beneficial owners of the Company prior to the transaction continue to own at least 50% of the common stock or other securities entitled to vote in the election of directors of the resulting entity in substantially the same proportions as prior to the transaction, | | | | | - | no individual or entity (other than an entity resulting from the transaction) beneficially owns 35% or more of the common equity or voting power of the entity resulting from the transaction, except to the extent that such ownership existed prior to the transaction, and | | | | | - | at least a majority of the members of the Board of Directors of the entity resulting from the transaction were members of the Company’s Board at the time the transaction was approved or entered into; and | | | | • | a liquidation or dissolution of the Company. |
The
•
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, provide“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 changeCIC termination. Mr. Bell’s legacy Cimarex severance compensation agreement provides for the same treatment of his outstanding equity awards as is provided for in controlthe 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 upon an occurrence deemed to beresponsibilities, authorities, powers or functions; (2) a reduction of Mr. Bell’s base salary; (3) a material reduction in anticipationMr. 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“change in control,control” as the executives will receive certain benefits, providedCoterra severance compensation agreements, except that theirthe 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 is terminated within two yearswith the Company through the original vesting date of such event. The executive willawards. 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 thesecash severance payments and benefits unless termination is:• | for cause; | | | • | voluntary on the part of the executive (but not a constructive termination without cause); or | | | • | due to death or disability. |
Benefits underthat were subject to Mr. Clason’s execution of a release of claims and are detailed in the change“Christopher H. Clason” table below. Mr. Clason began receiving such payments and benefits in control agreements generally include:
2024, following his execution of a lump-sum cash payment equalrelease 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 three timesMr. 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 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; |
• | three years of continued medical, dental and life insurance coverage at the premium rate applicable to active executives; and | | | • | outplacement assistance in an amount up to 15% of the executive’s base salary. |
Beginningoriginal vesting schedule and subject to the satisfaction of any performance criteria, as if Mr. Clason had remained in 2010,continuous employment with the Company ceased entering into agreements containing tax gross-up paymentsthrough the original vesting date of such awards and (ii) 70 percent of Mr. Clason’s equity awards granted on paymentsFebruary 21, 2023 remain outstanding and eligible to executives byvest, 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 uponthrough 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 change in control. The agreements in place prior to that time with allSection 280G “best-net” cutback provision, because of the NEOs except Mr. Cunningham, who became an officer in September 2010, provide -2014 Proxy Statement42
that instructure of the event that excise taxesMerger, 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 to the executives by the Company upon a change in control, the Company will make an additional tax gross-up payment to the executive in an amount necessary to leave the executive “whole,” as if no excise tax had applied. No payments have been made to any of the NEOs under these agreements.
and benefits. Equity Award Agreements The award agreements for all of the NEOs’ long-termnamed executive officer’s equity awards also include provisions for the immediate vesting of all unvested awards upon the change in control event, as follows:• | payment with respect to traditional performance shares based on performance through the change in control event as more fully described above under “Grants of Plan-Based Awards;” | | | • | immediate vesting and exercisability of all of the executive’s stock options and SAR awards, with exercisability extended for the full term of the award; | | | • | immediate vesting and lapse of restrictions on any outstanding restricted stock grants; and | | | • | immediate vesting of any outstanding hybrid performance shares. |
For a more detailed discussion of the terms of these awards, see above under “Grants of Plan-Based Awards.”
CEO Employment Agreement
In addition to a change in control agreement, we haveor upon the termination of the named executive officer’s employment due to death or disability. Mr. Young’s award agreements entered into anin connection with the commencement of his employment agreement with Mr. Dinges. Underalso provide for immediate vesting of all unvested awards upon his termination without cause or resignation for good reason. Additionally, the terms of Mr. Dinges’ employment agreement, innamed executive officer’s February 2023 equity awards are eligible for retirement vesting pursuant to the event of a change in control, Mr. Dinges will receive the more generous of the benefitsCompany’s retirement policy, which policy provides that, among other requirements and payments, as determined onby the Compensation Committee in accordance with such policy, where an employee (a) is at least 55 years old and (b) has at least five years of service, between 50 percent and 100 percent of each award may remain outstanding and eligible to vest pursuant to its regular vesting schedule. Mr. Bell’s equity award agreements
further provide for prorated vesting of his December 2021 and February 2022 long-term equity incentive awards upon his termination (except for a benefit-by-benefit basis, under either his change in control agreement or his employment agreement, but not both. The employment agreement provides that if Mr. Dinges terminates his employment for good reason (as defined) or if the Company terminates his employment other thantermination for cause (as defined), Mr. Dinges will receive:• | a lump-sum cash payment equal to two times his annual base salary plus two times his annual target bonus; | | | • | a 24-month continuation of medical and life insurance programs at the premium rate applicable to active executives; | | | • | full vesting of all of his restricted stock awards; | | | • | full vesting of all of his stock option awards and SAR awards, with exercisability extending for 36 months following termination (or the expiration of the original term, if earlier); and | | | • | full vesting of all of his performance shares, subject to the payout provisions in the underlying award agreements. |
with respect to the awards granted in December 2021). Potential Payments to NEOsNamed Executive Officers The tables below reflect the compensation payable to each NEOnamed executive officer upon a voluntary termination,resignation, retirement, involuntary not-for-cause termination, for cause termination, termination following a change in control, and in the event of disability or death of the executive. The tables reflect the amounts that would have been paid to each named executive officer assuming the event occurred on December 31, 2023, except for Messrs. Schroeder and Clason, whose tables reflect the amounts paid to each of 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. -2014 Proxy Statement43
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 | | |
(1)
Pursuant to the Jorden Letter Agreement, if Mr. Jorden is terminated without cause or for good reason, including in connection with a change of control, Mr. Jorden is entitled to (a) monthly installment payments over 36 months that, in the aggregate, equal three times the sum of (i) his annual base salary received during the 24 months prior to the date of termination, divided by two and (ii) the amount of cash incentive awards received by Mr. Jorden during the 24 months prior to the date of termination, divided by two; (b) a lump sum cash payment equal to the product of the average annual bonus paid to Mr. Jorden for the two fiscal years prior to termination and (ii) a fraction, the numerator of which is the number of days in the calendar year through the date of termination and the denominator of which is 365; and (c) 36 months of continued medical, dental, vision disability and life insurance benefits. (2)
Upon a change in control, or if Mr. Jorden’s employment is terminated due to Mr. Jorden’s death or disability, his outstanding equity awards will vest in full. Additionally, if Mr. Jorden’s employment is terminated without cause or for good reason, the time-based equity awards granted to Mr. Jorden in 2021 would become fully vested and assuming that (a) Mr. Jorden had given timely notice of his intent to retire from the Company on December 31, 2023 and (b) such notice was acknowledged and accepted in writing by the Chair of the Compensation Committee or its respective designee, 100 percent of the equity awards granted to Mr. Jorden in February 2023 would have remained outstanding until the regularly scheduled vesting date in accordance with the Company’s retirement policy. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. (3)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Jorden under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Jorden’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Shannon E. Young III, Executive Vice President and Chief Financial Officer | | Executive Benefit and
Payments Upon Separation | | | | Voluntary
Resignation | | | | Retirement | | | | Involuntary Not For
Cause Termination
or “Good Reason”
Resignation(1) | | | | For Cause
Termination | | | | Change In
Control(2) | | | | Disability | | | | Death | | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 930,000 | | | | | | | | | | | | | $ | 1,240,000 | | | | | | | | | | | | | | | | | | | Multiple of Bonus (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 930,000 | | | | | | | | | | | | | $ | 1,240,000 | | | | | | | | | | | | | | | | | | | Pro Rata Bonus | | | | | | | | | | | | | | | | | | | $ | 620,000 | | | | | | | | | | | | | $ | 620,000 | | | | | | | | | | | | | | | | | | | Long-Term Compensation(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | | | | | | | | | | | $ | 2,067,886 | | | | | | | | | | | | | $ | 2,067,886 | | | | | | $ | 2,067,886 | | | | | | $ | 2,067,886 | | | | | Performance Share Vesting | | | | | | | | | | | | | | | | | | | $ | 4,135,771 | | | | | | | | | | | | | $ | 4,137,771 | | | | | | $ | 4,137,771 | | | | | | $ | 4,137,771 | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(4) | | | | | $ | 6,185 | | | | | | $ | 6,185 | | | | | | $ | 6,185 | | | | | | $ | 6,185 | | | | | | $ | 6,185 | | | | | | $ | 6,185 | | | | | | $ | 6,185 | | | | | Health, Life, and Welfare Continuation | | | | | | | | | | | | | | | | | | | $ | 48,365 | | | | | | | | | | | | | $ | 64,486 | | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | $ | 29,799 | | | | | | $ | 29,799 | | | | | | $ | 29,799 | | | | | | $ | 29,799 | | | | | | $ | 29,799 | | | | | | $ | 29,799 | | | | | | $ | 29,799 | | | | | Total | | | | | $ | 35,984 | | | | | | $ | 35,984 | | | | | | $ | 8,768,006 | | | | | | $ | 35,984 | | | | | | $ | 9,406,127 | | | | | | $ | 6,241,640 | | | | | | $ | 6,241,640 | | |
(1)
Pursuant to Mr. Young’s Coterra severance compensation agreement, if Mr. Young is terminated without cause or for good reason not in connection with a change in control, Mr. Young is entitled to (a) monthly installment payments over 18 months that, in the aggregate, equal one-and-a-half times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination; and (3) 18 months of continued medical, dental, vision disability and life insurance benefits. (2)
Pursuant to Mr. Young’s Coterra severance compensation agreement, if Mr. Young is terminated without cause or for good reason within 18 months following a change in control, Mr. Young is entitled to (a) monthly installment payments over 24 months that, in the aggregate, equal two times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination. (3)
For the equity awards granted to Mr. Young in July 2023, receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Young remains continuously employed through such date, except that, pursuant to the terms of the award agreements, the awards will fully vest upon a change in control of the Company or a termination of Mr. Young’s employment without cause or for good reason or due to his death or disability. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. (4)
Amount in this row represent earned compensation voluntarily deferred by Mr. Young under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Young’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Stephen P. Bell, Executive Vice President—Business Development | | Executive Benefit and Payments
Upon Separation | | | | Voluntary
Resignation | | | | Retirement | | | | Involuntary Not For
Cause Termination
or “Good Reason”
Resignation(1) | | | | For Cause
Termination | | | | Change In
Control(2) | | | | Disability | | | | Death | | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 852,000 | | | | | | | | | | | | | $ | 1,136,000 | | | | | | | | | | | | | | | | | | | Multiple of Bonus (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 1,276,500 | | | | | | | | | | | | | $ | 1,702,000 | | | | | | | | | | | | | | | | | | | Bonus Payment | | | | | | | | | | | | | | | | | | | $ | 851,000 | | | | | | | | | | | | | $ | 851,000 | | | | | | | | | | | | | | | | | | | Long-Term Incentive Compensation(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | $ | 3,383,648 | | | | | | $ | 5,047,986 | | | | | | $ | 3,383,648 | | | | | | $ | 834,340 | | | | | | $ | 6,718,932 | | | | | | $ | 6,718,932 | | | | | | $ | 6,718,932 | | | | | Performance Share Vesting | | | | | $ | 2,503,019 | | | | | | $ | 5,831,695 | | | | | | $ | 2,503,019 | | | | | | $ | 2,503,019 | | | | | | $ | 7,266,616 | | | | | | $ | 7,266,616 | | | | | | $ | 7,266,616 | | | | | 2024 LTIP Grant Date Fair Value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 4,500,000 | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(4) | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | | $ | 128,213 | | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | $ | 77,381 | | | | | | | | | | | | | $ | 103,175 | | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | | $ | 67,154 | | | | | Total | | | | | $ | 6,082,034 | | | | | | $ | 11,075,048 | | | | | | $ | 9,138,915 | | | | | | $ | 3,532,726 | | | | | | $ | 17,973,089 | | | | | | $ | 14,180,915 | | | | | | $ | 18,680,915 | | |
(1)
Pursuant to Mr. Bell’s legacy Cimarex severance compensation agreement, if Mr. Bell is terminated without cause or for good reason not in connection with a change in control, Mr. Bell is entitled to (a) monthly installment payments over 18 months that, in the aggregate, equal one-and-a-half times the sum of (i) annual base salary received during the 24 months prior to the date of termination, divided by two and (ii) the amount of cash incentive awards received by Mr. Bell during the 24 months prior to the date of termination, divided by two; (b) a lump sum cash payment equal to the product of (i) the average annual bonus paid to Mr. Bell for the two fiscal years prior to termination and (ii) a fraction, the numerator of which is the number of days in the calendar year through the date of termination and the denominator of which is 365; and (c) 18 months of continued medical, dental, vision disability and life insurance benefits. (2)
Pursuant to Mr. Bell’s legacy Cimarex severance compensation agreement, if Mr. Bell is terminated without cause or for good reason within 24 months following a change in control, Mr. Bell is entitled to (a) monthly installment payments over 24 months that, in the aggregate, equal two times the sum of (i) annual base salary received during the 24 months prior to the date of termination, divided by two and (ii) the amount of cash incentive awards received by Mr. Bell during the 24 months prior to the date of termination, divided by two; (b) a lump sum cash payment equal to the product of (i) the average annual bonus paid to Mr. Bell for the two fiscal years prior to termination and (ii) a fraction, the numerator of which is the number of days in the calendar year through the date of termination and the denominator of which is 365; and (c) 24 months of continued medical, dental, vision disability and life insurance benefits. (3)
For the equity awards granted to Mr. Bell in December 2021, February 2022 and February 2023, receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Bell remains continuously employed through such date, except that (a) with respect to the time-based awards granted to Mr. Bell in December 2021 and February 2022, in the event of Mr. Bell’s termination (except for a termination for cause with respect to the awards granted in December 2021), the award will vest pro-rata based on the number of days that elapsed between December 1, 2021 and February 28, 2022, respectively, and the date of his termination, over the full vesting period, (b) with respect to the performance-based awards granted to Mr. Bell in February 2022, in the event of Mr. Bell’s termination, a pro-rata portion (based on the number of days that elapsed between February 2022 and the date of his termination over the performance period) will remain outstanding and eligible to vest, and (c) all awards will fully vest upon a change in control of the Company or a termination of Mr. Bell’s employment due to his death or disability. Additionally, assuming that (x) Mr. Bell had given timely notice of his intent to retire from the Company on December 31, 2023 and (y) such notice was acknowledged and accepted in writing by the Chief Executive Officer or the Chair of the Compensation Committee or his respective designee, 100 percent of the equity awards granted to Mr. Bell in February 2023 would have remained outstanding until the regularly scheduled vesting date in accordance with the Company’s retirement policy. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. Pursuant to the August 2023 letter agreement with Mr. Bell, in the unfortunate event of Mr. Bell’s death prior to the date the 2024 long-term incentive award is granted, the Company will pay to Mr. Bell’s estate a lump sum cash payment of $4.5 million (less taxes). (4)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Bell under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Bell’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Blake A. Sirgo, Senior Vice President—Operations | | Executive Benefit and
Payments Upon Separation | | | | Voluntary
Resignation | | | | Retirement | | | | Involuntary Not For
Cause Termination
or “Good Reason”
Resignation(1) | | | | For Cause
Termination | | | | Change In
Control(2) | | | | Disability | | | | Death | | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 684,000 | | | | | | | | | | | | | $ | 912,000 | | | | | | | | | | | | | | | | | | | Multiple of Bonus (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 888,000 | | | | | | | | | | | | | $ | 1,184,000 | | | | | | | | | | | | | | | | | | | Pro Rata Bonus | | | | | | | | | | | | | | | | | | | $ | 456,000 | | | | | | | | | | | | | $ | 456,000 | | | | | | | | | | | | | | | | | | | Long-Term Incentive Compensation(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | | | | | | | | | | | $ | 1,127,877 | | | | | | | | | | | | | $ | 2,433,817 | | | | | | $ | 2,433,817 | | | | | | $ | 2,433,817 | | | | | Performance Share Vesting | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,810,569 | | | | | | $ | 2,810,569 | | | | | | $ | 2,810,569 | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(4) | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | | $ | 127,539 | | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | $ | 55,088 | | | | | | | | | | | | | $ | 73,451 | | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | | $ | 49,985 | | | | | Total | | | | | $ | 177,523 | | | | | | $ | 177,523 | | | | | | $ | 3,388,489 | | | | | | $ | 177,523 | | | | | | $ | 8,047,361 | | | | | | $ | 5,421,910 | | | | | | $ | 5,421,910 | | |
(1)
Pursuant to Mr. Sirgo’s Coterra severance compensation agreement, if Mr. Sirgo is terminated without cause or for good reason not in connection with a change in control, Mr. Sirgo is entitled to (a) monthly installment payments over 18 months that, in the aggregate, equal one-and-a-half times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination; and (c) 18 months of continued medical, dental, vision disability and life insurance benefits. (2)
Pursuant to Mr. Sirgo’s Coterra severance compensation agreement, if Mr. Sirgo is terminated without cause or for good reason within 18 months following a change in control, Mr. Sirgo is entitled to (a) monthly installment payments over 24 months that, in the aggregate, equal two times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (ii) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination; and (c) 24 months of continued medical, dental, vision disability and life insurance benefits. (3)
For the equity awards granted to Mr. Sirgo in December 2021, February 2022, and February 2023 receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Sirgo remains continuously employed through such date, except that (a) in the event of Mr. Sirgo’s termination by the Company not for cause or resignation for good reason, the December 2021 and February 2022 time-based awards will vest pro-rata based on the period of Mr. Sirgo’s continuous service elapsed over the full vesting period, and (b) all awards will fully vest upon a change in control of the Company or a termination of Mr. Sirgo’s employment due to his death or disability. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. (4)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Sirgo under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Sirgo’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Kevin W. Smith, Vice President—Chief Technology Officer | | Executive Benefit and
Payments Upon Separation | | | | Voluntary
Resignation | | | | Retirement | | | | Involuntary Not For
Cause Termination
or “Good Reason”
Resignation(1) | | | | For Cause
Termination | | | | Change In
Control(2) | | | | Disability | | | | Death | | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 645,000 | | | | | | | | | | | | | $ | 860,000 | | | | | | | | | | | | | | | | | | | Multiple of Bonus (1.5x or 2x) | | | | | | | | | | | | | | | | | | | $ | 825,000 | | | | | | | | | | | | | $ | 1,100,000 | | | | | | | | | | | | | | | | | | | Pro Rata Bonus | | | | | | | | | | | | | | | | | | | $ | 430,000 | | | | | | | | | | | | | $ | 430,000 | | | | | | | | | | | | | | | | | | | Long-Term Incentive Compensation(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | | | | | | | | | | | $ | 1,127,877 | | | | | | | | | | | | | $ | 2,433,817 | | | | | | $ | 2,433,817 | | | | | | $ | 2,433,817 | | | | | Performance Share Vesting | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,810,569 | | | | | | $ | 2,810,569 | | | | | | $ | 2,810,569 | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(4) | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | | $ | 98,305 | | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | $ | 51,534 | | | | | | | | | | | | | $ | 68,712 | | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | | $ | 39,297 | | | | | Total | | | | | $ | 137,602 | | | | | | $ | 137,602 | | | | | | $ | 3,217,013 | | | | | | $ | 137,602 | | | | | | $ | 7,840,700 | | | | | | $ | 5,381,988 | | | | | | $ | 5,381,988 | | |
(1)
Pursuant to Mr. Smith’s Coterra severance compensation agreement, if Mr. Smith is terminated without cause or for good reason not in connection with a change in control, Mr. Smith is entitled to (a) monthly installment payments for 18 months that, in the aggregate, equal one-and-a-half times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated target bonus for the calendar year of termination; and (c) 18 months of continued medical, dental, vision disability and life insurance benefits. (2)
Pursuant to Mr. Smith’s Coterra severance compensation agreement, if Mr. Smith is terminated without cause or for good reason within 18 months following a change in control, Mr. Smith is entitled to (a) monthly installment payments over 24 months that, in the aggregate, equal two times the sum of (i) his highest annualized base salary in effect during the 24 months prior to his termination and (ii) the higher of (1) the average of his cash incentive awards received during the 24 months prior to his termination or (2) his highest target annual incentive compensation in effect during the 24 months prior to his termination; (b) a pro-rated bonus for the calendar year of termination, based on the average of the last two annual bonuses paid to him; and (c) 24 months of continued medical, dental, vision disability and life insurance benefits. (3)
For the equity awards granted to Mr. Smith in December 2021, February 2022, and February 2023 receipt of the full payout will occur at the original vesting date set forth in the award agreement only if Mr. Smith remains continuously employed through such date, except that (a) in the event of Mr. Smith’s termination by the Company not for cause or resignation for good reason, the December 2021 and February 2022 time-based awards will vest pro-rata based on the period of Mr. Smith’s continuous service elapsed over the full vesting period, and (b) all awards will fully vest upon a change in control of the Company or a termination of Mr. Smith’s employment due to his death or disability. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on December 29, 2023 (the last trading day of the year) of $25.52 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. (4)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Smith under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. For termination of employment due to retirement, payment of the deferred compensation is based upon Mr. Smith’s election at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months from the date of termination.
Scott C. Schroeder, Former Executive Vice President and Chief Financial Officer As described above, Mr. Schroeder retired from the Company effective September 30, 2023. The table below reflects the compensation paid to Mr. Schroeder in connection with his retirement. | | Executive Benefit and
Payments Upon Separation | | | | Voluntary
Resignation | | | | Retirement | | | | Involuntary Not For
Cause Termination
or “Good Reason”
Resignation | | | | For Cause
Termination | | | | Change In
Control | | | | Disability | | | | Death | | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Bonus | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Current Year Bonus (pro-rated) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-Term Compensation(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | $ | 4,365,059 | | | | | | | | | | | | | | | | | | | | | | | | | Performance Share Vesting | | | | | | | | | $ | 6,851,819 | | | | | | | | | | | | | | | | | | | | | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(2) | | | | | | | | | $ | 14,904,570 | | | | | | | | | | | | | | | | | | | | | | | | | Health, Life, and Welfare Continuation(3) | | | | | | | | | $ | 140,688 | | | | | | | | | | | | | | | | | | | | | | | | | Earned Vacation | | | | | | | | | $ | 62,428 | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | $ | 26,324,564 | | | | | | | | | | | | | | | | | | | | | | |
(1)
In connection with Mr. Schroeder’s retirement, pursuant to the legacy Cabot retirement policy and the applicable award agreements, equity awards granted to Mr. Schroeder remain outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to the satisfaction of any performance criteria, as if Mr. Schroeder had remained in continuous employment with the Company through the original vesting date of such awards. Performance share awards granted to Mr. Schroeder in February 2023 will vest pro-rata based on the number of days that elapsed between February 21, 2023 and the date of his retirement; all other outstanding equity awards as of the date of Mr. Schroeder’s retirement will be determined without proration. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on September 29, 2023 (the last trading day prior to Mr. Schroeder’s retirement) of $27.05 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. The value of these awards that remained outstanding following Mr. Schroeder’s retirement as of December 31, 2023 are included in the “Outstanding Equity Awards Table at Fiscal Year-End” above. (2)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Schroeder under the terms of the Coterra Energy Inc. Deferred Compensation Plan. For more information, see “Nonqualified Deferred Compensation” above. Payment of the deferred compensation is based upon Mr. Schroeder’s election at the time of deferral. (3)
Mr. Schroeder and his eligible dependents are entitled to receive certain health benefit coverage. Such health benefit coverage is a contributory plan with participants’ contributions adjusted annually.
Christopher H. Clason, Former Senior Vice President and Chief Human Resources Officer As described above, Mr. Clason separated from the Company effective September 30, 2023. The table below reflects the compensation paid to Mr. Clason in connection with his separation. | | Executive Benefit and
Payments Upon Separation | | | | Voluntary
Resignation | | | | Retirement | | | | Involuntary Not For
Cause Termination
or “Good Reason”
Resignation | | | | For Cause
Termination | | | | Change In
Control(1) | | | | Disability | | | | Death | | | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary | | | | | | | | | | | | | | | | | | | | | $ | 972,385 | | | | | | | | | | | | | Multiple of Bonus | | | | | | | | | | | | | | | | | | | | | $ | 1,440,000 | | | | | | | | | | | | | Bonus Payment | | | | | | | | | | | | | | | | | | | | | $ | 538,521 | | | | | | | | | | | | | Long-Term Incentive Compensation(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Vesting | | | | | | | | | | | | | | | | | | | | | $ | 4,395,030 | | | | | | | | | | | | | Performance Share Vesting | | | | | | | | | | | | | | | | | | | | | $ | 4,429,221 | | | | | | | | | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(3) | | | | | | | | | | | | | | | | | | | | | $ | 465,487 | | | | | | | | | | | | | Health, Life, and Welfare Benefits Continuation | | | | | | | | | | | | | | | | | | | | | $ | 82,800 | | | | | | | | | | | | | Earned Vacation(4) | | | | | | | | | | | | | | | | | | | | | $ | (7,434) | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | | | | | $ | 12,316,010 | | | | | | | | | | |
(1)
Pursuant to Mr. Clason’s legacy Cimarex severance compensation agreement, because Mr. Clason underwent a termination for good reason within 24 months following a change in control, Mr. Clason became entitled to (a) two times the sum of (i) the average of his annual base salary received during the 24 months prior to his termination and (ii) the average of his cash incentive awards received during the 24 months prior to his termination; (b) a pro-rated bonus for the calendar year of termination, based on the average of the last two annual bonuses paid to him; and (c) 24 months of continued medical, dental, vision disability and life insurance benefits. The payments described in subclauses (a) and (b) will be paid in monthly installments over the 24-month period following Mr. Clason’s termination, and the payment described in subclause (2) was paid at the time of Mr. Clason’s termination. (2)
In connection with Mr. Clason’s separation, his time-based awards granted prior to February 21, 2023 vested pro-rata and a pro-rata portion of his performance-based awards granted prior to February 21, 2023 remained outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to the satisfaction of any performance criteria, in each case with such pro-rata portion based on the number of days that elapsed between December 1, 2022 and February 28, 2022, as applicable, and the date of his termination, over the full vesting period. In addition to the pro-rata vesting that occurred in connection with Mr. Clason’s separation as described above, (a) the portion of the equity awards granted to Mr. Clason prior to February 21, 2023 that would have otherwise been forfeited remain outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to the satisfaction of any performance criteria, as if Mr. Clason had remained in continuous employment with the Company through the original vesting date of such awards and (b) 70 percent of Mr. Clason’s equity awards granted on February 21, 2023 remain outstanding and eligible to vest, if at all, in accordance with the original vesting schedule and subject to satisfaction of any performance criteria as if Mr. Clason had remained in continuous employment with the Company through the original vesting date of such awards, with 30 percent forfeited in connection with Mr. Clason’s separation. The values of the long-term incentive awards reported in this table were computed using the closing price of the Company’s common stock on September 29, 2023 (the last trading day prior to Mr. Clason’s separation) of $27.05 and the values of performance-based long-term incentive awards assume the maximum level of achievement of performance goals. However, the value actually realized would depend upon the value of the Company’s common stock at the time such awards became vested and, if applicable, the level at which the applicable performance goals were achieved. The value of these awards that remained outstanding following Mr. Clason’s separation as of December 31, 2023 are included in the “Outstanding Equity Awards Table at Fiscal Year-End” above. (3)
Amounts in this row represent earned compensation voluntarily deferred by Mr. Clason under the terms of the deferred compensation plan. For more information, see “Nonqualified Deferred Compensation” above. In the case of Mr. Clason’s separation from the Company, payment of the deferred compensation is in a lump sum six months from the date of termination. (4)
Mr. Clason had a negative vacation balance upon termination, therefore his final pay check was reduced by this amount.
PAY RATIO DISCLOSURE The following table sets forth comparative information regarding: •
the annual total compensation of our Chief Executive Officer, Mr. Jorden, for the year ended December 31, 2023, determined using the methodology described below; •
the annual total compensation of our median employee for the year ended December 31, 2023, determined on the basis described below; and •
a ratio comparison of those two amounts, each as determined in accordance with rules prescribed by the SEC. | | CEO Pay Ratio | | | | | | | | | | | CEO annual total compensation (A) | | | | | $ | 14,547,853(1) | | | | | Median employee annual total compensation (B) | | | | | $ | 157,111 | | | | | Ratio of (A) to (B) | | | | | | 93:1 | | |
(1)
Determined based on the total compensation paid to Mr. Jorden as reported in the Summary Compensation Table. Median Employee As permitted by SEC rules, we are using the same median employee identified in the “Pay Ratio Disclosure” section of our proxy statement for the 2023 annual meeting of stockholders. We believe that there has been no change in our employee population or employee compensation arrangements that we reasonably believe would significantly impact our pay ratio disclosure. For purposes of identifying our median employee, as permitted by the SEC rules, we examined our employee population, excluding our Chief Executive Officer, as of December 31, 2022, as described in the “Pay Ratio Disclosure” section of our proxy statement for the 2023 annual meeting of stockholders. In making that determination, and in using the same median employee for this proxy statement we: •
identified the median employee on December 31, 2022; •
used total base salary earnings as determined from Coterra’s payroll records for the period from January 1, 2022 through December 31, 2022 as our consistently applied compensation measure; •
did not include bonus-based incentive amounts, because those amounts are not distributed to all of our employees and have an impact on the determination of the median employee; •
did not include equity-based incentive compensation awards because those awards are not widely distributed to our employees and have an impact on the determination of the median employee; •
included all employees of Coterra and its consolidated subsidiaries as of December 31, 2022 employed on a full-time basis; •
did not make any assumptions, adjustments, or estimates with respect to total base salary earnings; •
did not annualize the compensation for any full-time employees that were not employed by us for all of 2022; and •
did not use statistical sampling or include any cost of living adjustments. After identifying the median employee based on the process described above we calculated annual total compensation for that employee using the same methodology we used for determining total compensation for 2023 for our named executive officers as set forth in the Summary Compensation Table. We believe that the CEO pay ratio above is a reasonable estimate calculated in a manner consistent with rules prescribed by the SEC.
PAY VERSUS PERFORMANCE DISCLOSURE The table below sets forth comparative information of the relationship between the “compensation actually paid” to our Chief Executive Officer and other named executive officers (computed in the manner required by SEC rules as described below), and certain financial performance measures over the last four fiscal years. | | | | | | Summary Compensation
Table Total for CEO(1) | | | | Compensation
Actually Paid to
CEO(2) | | | | Average Summary
Compensation Table Total
for Non-CEO
NEOs(3) | | | | Average Compensation
Actually Paid to
Non-CEO NEOs(3)(4) | | | | Value of Initial Fixed $100
Investment Based on: | | | | Net Income
(in millions) | | | | Year | | | | Post-
Merger CEO | | | | Pre-
Merger CEO | | | | Post-
Merger CEO | | | | Pre-
Merger CEO | | | | Total
Stockholder
Return | | | | Peer
Group Total
Stockholder
Return(5) | | | | | 2023 | | | | | $ | 14,547,853 | | | | | | | — | | | | | | $ | 20,356,332 | | | | | | | — | | | | | | $ | 4,721,849 | | | | | | $ | 4,203,696 | | | | | | $ | 181.70 | | | | | | $ | 188.13 | | | | | | $ | 1,625 | | | | | 2022 | | | | | $ | 15,303,397 | | | | | | | — | | | | | | $ | 32,092,019 | | | | | | | — | | | | | | $ | 10,068,380 | | | | | | $ | 10,308,634 | | | | | | $ | 166.86 | | | | | | $ | 194.48 | | | | | | $ | 4,065 | | | | | 2021 | | | | | $ | 11,061,939 | | | | | | $ | 14,554,728 | | | | | | $ | 6,097,986 | | | | | | $ | 14,225,161 | | | | | | $ | 6,826,596 | | | | | | $ | 6,780,037 | | | | | | $ | 118.13 | | | | | | $ | 119.07 | | | | | | $ | 1,158 | | | | | 2020 | | | | | | — | | | | | | $ | 14,194,706 | | | | | | | — | | | | | | $ | 17,805,568 | | | | | | $ | 3,503,938 | | | | | | $ | 4,256,657 | | | | | | $ | 95.66 | | | | | | $ | 62.86 | | | | | | $ | 201 | | |
(1)
Reflects the summary compensation table total compensation of (a) our current Chief Executive Officer, Thomas E. Jorden, from his appointment on October 1, 2021 to present (in the Post-Merger CEO column) and (b) Cabot’s Chief Executive Officer, Dan O. Dinges, for prior periods (in the Pre-Merger CEO column). (2)
The dollar amounts reported in this column represent the amount of “compensation actually paid” to Mr. Jorden (in the Post-Merger CEO column) and Mr. Dinges (in the Pre-Merger CEO column), respectively, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Jorden or Mr. Dinges, respectively, during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Jorden’s and Mr. Dinges’s respective total compensation for each year to determine the compensation actually paid: | | Adjustment to Determine Compensation Actually Paid for CEO | | | | 2023 | | | | 2022 | | | | 2021 | | | | 2020 | | | | Post-Merger CEO | | | | Pre-Merger CEO | | | | | Total reported in Summary Compensation Table (SCT) | | | | | $ | 14,547,853 | | | | | | $ | 15,303,397 | | | | | | $ | 11,061,939 | | | | | | $ | 14,554,728 | | | | | | $ | 14,194,706 | | | | | Minus: Value of Stock & Option Awards Reported in SCT | | | | | $ | (11,071,724) | | | | | | $ | (12,554,661) | | | | | | $ | (10,000,000) | | | | | | $ | (10,649,843) | | | | | | $ | (11,267,676) | | | | | Plus: Year-End Value of Awards Granted in Fiscal Year that are Unvested and Outstanding | | | | | $ | 12,289,113 | | | | | | $ | 10,257,188 | | | | | | $ | 9,286,421 | | | | | | $ | — | | | | | | $ | 12,760,574 | | | | | Plus/Minus: Change in FMV of Prior Year Awards that are Outstanding and Unvested | | | | | $ | 1,703,070 | | | | | | $ | 7,430,809 | | | | | | $ | (5,392,173) | | | | | | $ | — | | | | | | $ | 1,161,681 | | | | | Plus: FMV of Awards Granted this Year and that Vested this Year | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 10,901,242 | | | | | | $ | — | | | | | Plus/Minus: Change in FMV (from Prior Year-End) of Prior Year Awards that Vested this Year | | | | | $ | 1,327,149 | | | | | | $ | 6,860,435 | | | | | | $ | (846,226) | | | | | | $ | (580,966) | | | | | | $ | 956,283 | | | | | Plus: Value of Dividends Paid on Stock Awards not Otherwise Reflected in Fair Value or Total Compensation | | | | | $ | 1,560,870 | | | | | | $ | 4,794,851 | | | | | | $ | 1,988,025 | | | | | | $ | — | | | | | | $ | — | | | | | Minus: Prior Year FMV of Prior Year Awards that Failed to Vest this Year | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | Total Adjustments | | | | | $ | 5,808,479 | | | | | | $ | 16,788,622 | | | | | | $ | (4,963,953) | | | | | | $ | (329,567) | | | | | | $ | 3,610,862 | | | | | “Compensation Actually Paid” | | | | | $ | 20,356,332 | | | | | | $ | 32,092,019 | | | | | | $ | 6,097,986 | | | | | | $ | 14,225,161 | | | | | | $ | 17,805,568 | | |
(3)
The non-CEO named executive officers included in this column are: | | Year | | | | Non-CEO NEOs | | | | 2023 | | | | 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 | |
(4)
The dollar amounts reported in this column represent the amount of “compensation actually paid” to the Company’s named executive officers as a group (excluding Mr. Jorden and Mr. Dinges, where applicable) as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to such named executive officers as a group during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the average total compensation for named executive officers as a group (excluding Mr. Jorden and Mr. Dinges, where applicable): | | Adjustment to Determine Compensation Actually Paid for NEOs | | | | 2023 | | | | 2022 | | | | 2021 | | | | 2020 | | | | Total reported in Summary Compensation Table (SCT) | | | | | $ | 4,721,849 | | | | | | $ | 10,068,380 | | | | | | $ | 6,826,596 | | | | | | $ | 3,503,938 | | | | | Minus: Value of Stock & Option Awards Reported in SCT | | | | | $ | (3,609,845) | | | | | | $ | (3,935,574) | | | | | | $ | (2,759,065) | | | | | | $ | (2,413,381) | | | | | Plus: Year-End Value of Awards Granted in Fiscal Year that are Unvested and Outstanding | | | | | $ | 2,757,427 | | | | | | $ | 3,630,038 | | | | | | $ | 847,510 | | | | | | $ | 2,728,760 | | | | | Plus/Minus: Change in FMV of Prior Year Awards that are Outstanding and Unvested | | | | | $ | 233,773 | | | | | | $ | 340,299 | | | | | | $ | — | | | | | | $ | 240,708 | | | | | Plus: FMV of Awards Granted this Year and that Vested this Year | | | | | $ | — | | | | | | $ | — | | | | | | $ | 1,913,978 | | | | | | $ | — | | | | | Plus/Minus: Change in FMV (from Prior Year-End) of Prior Year Awards that Vested this Year | | | | | $ | 32,382 | | | | | | $ | — | | | | | | $ | (72,443) | | | | | | $ | 196,632 | | | | | Plus: Value of Dividends Paid on Stock Awards not Otherwise Reflected in Fair Value or Total Compensation | | | | | $ | 68,111 | | | | | | $ | 205,491 | | | | | | $ | 23,461 | | | | | | $ | — | | | | | Minus: Prior Year FMV of Prior Year Awards that Failed to Vest this Year | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | Total Adjustments | | | | | $ | (518,153) | | | | | | $ | 240,254 | | | | | | $ | (46,559) | | | | | | $ | 752,719 | | | | | “Compensation Actually Paid” | | | | | $ | 4,203,696 | | | | | | $ | 10,308,634 | | | | | | $ | 6,780,037 | | | | | | $ | 4,256,657 | | |
(5)
The amounts reported in this column represent the value of an initial $100 investment in the Company’s 2023 compensation peer group. See the “Company TSR vs Peer TSR & Alignment of CAP with Company TSR” graph and related footnotes under “Relationship Between Compensation Actually Paid and Performance Measures” below for more information. Relationship Between Compensation Actually Paid and Performance Measures As described in more detail in the Compensation Discussion and Analysis section, the Company’s Annual Cash Incentive Bonus Program is based on the achievement of performance measures intended to align executive compensation with Company performance; however, none of these performance measures would be considered a “financial performance measure” as defined in Item 402(v) of Regulation S-K. Additionally, while 50% of the Company’s Long-Term Incentive Program is based on relative TSR, performance is measured over a three-year period and, pursuant to SEC guidance, the Company-Selected Measure cannot be measured over a multi-year period. As a result, we do not have a Company-Selected Measure to reflect in the table above or graphs below. As noted above, “compensation actually paid” for purposes of the tabular disclosure and the following graphs was calculated in accordance with SEC rules and does not fully represent the actual final amount of compensation earned by or actually paid to our named executive officers during the applicable years.
This graph illustrates the relationship between the “compenstion actually paid” for purposes of the tabular disclosure, the Company’s total stockholder return, and the total stockholder return of the 2023 compensation peer group by year. Company TSR vs Peer TSR & Alignment of CAP with
Company TSR (1)
The 2023 compensation peer group was composed of the following companies: Antero Resources Corporation, APA Corporation, Chesapeake Energy Corporation, Devon Energy Corporation, Diamondback Energy, Inc., EOG Resources, Inc., EQT Corporation, Hess Corporation, Marathon Oil Corporation, Occidental Petroleum Corporation, Ovintiv Inc., and Pioneer Natural Resources Company. As of March 7, 2024, Continental Resources, Inc. was no longer publicly traded and was therefore excluded from the data shown. After the removal of companies that are no longer publicly traded, the 2022 compensation peer group and the 2023 compensation peer group are made up of the same companies. This graph illustrates the relationship between the “compenstion actually paid” for purposes of the tabular disclosure and Net Income by year. Alignment of CAP with Net Income $ millions Performance Measures The table below sets forth our most important performance measures used to link “compensation actually paid” for our named executive officers to company performance, over the fiscal year ending December 31, 2023. Please see “Compensation Discussion and Analysis—2023 Performance-Based Compensation—Our Incentive Compensation Programs Align Corporate Strategy Through Thoughtful Performance Metric Selection” and “—Our Incentive Program Payouts are Aligned with Performance Outcomes”
for further information regarding these performance measures and their function in our executive compensation program. The performance measures included in this table are not ranked by relative importance. DAN O. DINGES, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
| | | Voluntary | | | | | | Involuntary | | | | | | | | | | | | Termination | | | | | | Not For | | | | Change In | | | | | | Executive Benefit and | | for Good | | Voluntary | | Retirement | | Cause | | For Cause | | Control | | | | | | Payments Upon Separation | | Reason | | Termination | | (1) | | Termination | | Termination | | (2) | | Disability | | Death | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (0x, 2x or 3x) | | $ | 1,650,000 | | | | - | | | | - | | | $ | 1,650,000 | | | | - | | | $ | 2,475,000 | | | | - | | | | - | | | Multiple of Bonus (-x, 2x or 3x) | | $ | 1,650,000 | | | | - | | | | - | | | $ | 1,650,000 | | | | - | | | $ | 5,250,000 | | | | - | | | | - | | | Long-Term Incentive Compensation | | | | | | | | | | | | | | | | | | | | | | | | Performance Share Vesting(3) | | $ | 16,737,886 | | | | - | | | $ | 16,737,886 | | | $ | 16,737,886 | | | | - | | | $ | 16,737,886 | | | $ | 16,737,886 | | | $ | 16,737,886 | | | Stock Appreciation Rights Vesting(4) | | $ | 3,332,018 | | | | - | | | $ | 3,332,018 | | | $ | 3,332,018 | | | | - | | | $ | 3,332,018 | | | $ | 3,332,018 | | | $ | 3,332,018 | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(5) | | $ | 14,213,824 | | | $ | 14,213,824 | | | $ | 14,213,824 | | | $ | 14,213,824 | | | $ | 14,213,824 | | | $ | 14,213,824 | | | $ | 14,213,824 | | | $ | 14,213,824 | | | Health, Life, and Welfare Benefits Continuation | | $ | 30,414 | | | | - | | | | - | | | $ | 30,414 | | | | - | | | $ | 45,621 | | | | - | | | | - | | | Excise Tax & Gross-Up | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Outplacement Services | | | - | | | | - | | | | - | | | | - | | | | - | | | | 123,750 | | | | - | | | | - | | | Earned Vacation | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Total | | $ | 37,614,142 | | | $ | 14,213,824 | | | $ | 34,283,728 | | | $ | 37,614,142 | | | $ | 14,213,824 | | | $ | 42,178,099 | | | $ | 34,283,728 | | | $ | 34,283,728 | |
(1) | Mr. Dinges was retirement eligible on December 31, 2013. | | | | (2) | Amounts in this column representing accelerated vestings of long-term incentive compensation will occur immediately upon the change in control event, pursuant to the terms of the awards.PVI-10 | | | | | | (3) | The amounts set forth in this row represent a payout at achievement of 100% of pre-established performance objectives. Under normal conditions, the actual payout of theRelative TSR performance awards will occur at the end of the relevant performance period, and may be higher or lower than 100% (up to a maximum of 200%) depending on the Company’s actual Total Shareholder Return ranking for the performance period. However, in the event of a change in control, the performance period will be shortened and payout will occur immediately following the change in control based on the greater of (i) Total Shareholder Return through the end of the month prior to the change in control, or (ii) Total Shareholder Return through the end of the month prior to the change in control using the value realized by shareholders in the change in control event. For hybrid performance shares, receipt of the full payout will occur at the original vesting dates set forth in the award agreements only if the relevant operating income targets are achieved, except in the case of a change in control, in which case full payout will be made immediately upon the change in control. These values were computed using the closing price of the Company’s common stock on December 31, 2013 of $38.76. | | | | | | (4) | The value of the SARs was computed using the difference between the closing price of the Company’s common stock on December 31, 2013 of $38.76 and the grant price of the SARs, which was the average of the high and low prices of the Company’s common stock on the dates of grant of the SARs. | (5)Annual Production | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “2013 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. | | | | |
-2014 Proxy Statement44
2024 PROXY STATEMENT61
SCOTT C. SCHROEDER, EXECUTIVE VICE PRESIDENT, CFO AND TREASURER
| | | | | | | Involuntary | | | | Change In | | | | | | Executive Benefit and Payments | | Voluntary | | Retirement | | Not For Cause | | For Cause | | Control | | | | | | Upon Separation | | Termination | | (1) | | Termination | | Termination | | (2) | | Disability | | Death | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (0x or 3x) | | | - | | | | - | | | | - | | | | - | | | $ | 1,350,000 | | | | - | | | | - | | | Multiple of Bonus (0x or 3x) | | | - | | | | - | | | | - | | | | - | | | $ | 3,150,000 | | | | - | | | | - | | | Long-Term Incentive Compensation | | | | | | | | | | | | | | | | | | | | | Performance Share Vesting(3) | | | - | | | | - | | | | - | | | | - | | | $ | 6,734,085 | | | $ | 6,734,085 | | | $ | 6,734,085 | | | Stock Appreciation Rights Vesting(4) | | | - | | | | - | | | | - | | | | - | | | $ | 1,243,532 | | | $ | 1,243,532 | | | $ | 1,243,532 | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(5) | | $ | 9,610,418 | | | $ | 9,610,418 | | | $ | 9,610,418 | | | $ | 9,610,418 | | | $ | 9,610,418 | | | $ | 9,610,418 | | | $ | 9,610,418 | | | Health, Life, and Welfare Benefits Continuation | | | - | | | | - | | | | - | | | | - | | | $ | 80,279 | | | | - | | | | - | | | Excise Tax & Gross-Up | | | - | | | | - | | | | - | | | | - | | | $ | 5,418,828 | | | | - | | | | - | | | Outplacement Services | | | - | | | | - | | | | - | | | | - | | | $ | 67,500 | | | | - | | | | - | | | Earned Vacation | | $ | 35,697 | | | $ | 35,697 | | | $ | 35,697 | | | $ | 35,697 | | | $ | 35,697 | | | $ | 35,697 | | | $ | 35,697 | | | Total | | $ | 9,646,115 | | | $ | 9,646,115 | | | $ | 9,646,115 | | | $ | 9,646,115 | | | $ | 27,690,339 | | | $ | 17,623,732 | | | $ | 17,623,732 | |
(1) | Mr. Schroeder was not retirement eligible on December 31, 2013. | (2) | Amounts in this column representing accelerated vestings of long-term incentive compensation will occur immediately upon the change in control event, pursuant to the terms of the awards. | (3) | The amounts set forth in this row represent a payout at achievement of 100% of pre-established performance objectives. Under normal conditions, the actual payout of the TSR performance awards will occur at the end of the relevant performance period, and may be higher or lower than 100% (up to a maximum of 200%) depending on the Company’s actual Total Shareholder Return ranking for the performance period. However, in the event of a change in control, the performance period will be shortened and payout will occur immediately following the change in control based on the greater of (i) Total Shareholder Return through the end of the month prior to the change in control, or (ii) Total Shareholder Return through the end of the month prior to the change in control using the value realized by shareholders in the change in control event. For hybrid performance shares, receipt of the full payout will occur at the original vesting dates set forth in the award agreements only if the relevant operating income targets are achieved, except in the case of a change in control, in which case full payout will be made immediately upon the change in control. These values were computed using the closing price of the Company’s common stock on December 31, 2013 of $38.76. | (4) | The value of the SARs was computed using the difference between the closing price of the Company’s common stock on December 31, 2013 of $38.76 and the grant price of the SARs, which was the average of the high and low prices of the Company’s common stock on the dates of grant of the SARs. | (5) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “2013 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. |
-2014 Proxy Statement45
JEFFREY W. HUTTON, SENIOR VICE PRESIDENT, MARKETING
| | | | | | | Involuntary | | | | Change In | | | | | | Executive Benefit and Payments | | Voluntary | | Retirement | | Not For Cause | | For Cause | | Control | | | | | | Upon Separation | | Termination | | (1) | | Termination | | Termination | | (2) | | Disability | | Death | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (0x or 3x) | | | - | | | | - | | | | - | | | | - | | | $ | 1,020,000 | | | | - | | | | - | | | Multiple of Bonus (0x or 3x) | | | - | | | | - | | | | - | | | | - | | | $ | 1,740,000 | | | | - | | | | - | | | Long-Term Incentive Compensation | | | | | | | | | | | | | | | | | | | | | Performance Share Vesting(3) | | | - | | | $ | 2,256,995 | | | | - | | | | - | | | $ | 2,256,995 | | | $ | 2,256,995 | | | $ | 2,256,995 | | | Stock Appreciation Rights Vesting(4) | | | - | | | $ | 445,041 | | | | - | | | | - | | | $ | 445,041 | | | $ | 445,041 | | | $ | 445,041 | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(5) | | $ | 814,660 | | | $ | 814,660 | | | $ | 814,660 | | | $ | 814,660 | | | $ | 814,660 | | | $ | 814,660 | | | $ | 814,660 | | | Health, Life, and Welfare Benefits Continuation | | | - | | | | - | | | | - | | | | - | | | $ | 35,733 | | | | - | | | | - | | | Excise Tax & Gross-Up | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Outplacement Services | | | - | | | | - | | | | - | | | | - | | | $ | 51,000 | | | | - | | | | - | | | Earned Vacation | | $ | 21,740 | | | $ | 21,740 | | | $ | 21,740 | | | $ | 21,740 | | | $ | 21,740 | | | $ | 21,740 | | | $ | 21,740 | | | Total | | $ | 836,400 | | | $ | 3,538,436 | | | $ | 836,400 | | | $ | 836,400 | | | $ | 6,385,169 | | | $ | 3,538,436 | | | $ | 3,538,436 | |
(1) | Mr. Hutton was retirement eligible on December 31, 2013. | (2) | Amounts in this column representing accelerated vestings of long-term incentive compensation will occur immediately upon the change in control event, pursuant to the terms of the awards. | (3) | The amounts set forth in this row represent a payout at achievement of 100% of pre-established performance objectives. Under normal conditions, the actual payout of the TSR performance awards will occur at the end of the relevant performance period, and may be higher or lower than 100% (up to a maximum of 200%) depending on the Company’s actual Total Shareholder Return ranking for the performance period. However, in the event of a change in control, the performance period will be shortened and payout will occur immediately following the change in control based on the greater of (i) Total Shareholder Return through the end of the month prior to the change in control, or (ii) Total Shareholder Return through the end of the month prior to the change in control using the value realized by shareholders in the change in control event. For hybrid performance shares, receipt of the full payout will occur at the original vesting dates set forth in the award agreements only if the relevant operating income targets are achieved, except in the case of a change in control, in which case full payout will be made immediately upon the change in control. These values were computed using the closing price of the Company’s common stock on December 31, 2013 of $38.76. | (4) | The value of the SARs was computed using the difference between the closing price of the Company’s common stock on December 31, 2013 of $38.76 and the grant price of the SARs, which was the average of the high and low prices of the Company’s common stock on the dates of grant of the SARs. | (5) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “2013 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. |
-2014 Proxy Statement46
G. KEVIN CUNNINGHAM, VICE PRESIDENT AND GENERAL COUNSEL
| | | | | | | Involuntary | | | | Change In | | | | | | Executive Benefit and Payments | | Voluntary | | Retirement | | Not For Cause | | For Cause | | Control | | | | | | Upon Separation | | Termination | | (1) | | Termination | | Termination | | (2) | | Disability | | Death | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (0x or 3x) | | | - | | | | - | | | | - | | | | - | | | $ | 1,005,000 | | | | - | | | | - | | | Multiple of Bonus (0x or 3x) | | | - | | | | - | | | | - | | | | - | | | $ | 1,522,500 | | | | - | | | | - | | | Long-Term Incentive Compensation | | | | | | | | | | | | | | | | | | | | | Performance Share Vesting(3) | | | - | | | | - | | | | - | | | | - | | | $ | 2,125,831 | | | $ | 2,125,831 | | | $ | 2,125,831 | | | Stock Appreciation Rights Vesting(4) | | | - | | | | - | | | | - | | | | - | | | $ | 400,586 | | | $ | 400,586 | | | $ | 400,586 | | | Restricted Stock Vesting | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(5) | | $ | 147,094 | | | $ | 147,094 | | | $ | 147,094 | | | $ | 147,094 | | | $ | 147,094 | | | $ | 147,094 | | | $ | 147,094 | | | Health, Life, and Welfare Benefits Continuation | | | - | | | | - | | | | - | | | | - | | | $ | 38,529 | | | | - | | | | - | | | Excise Tax & Gross-Up | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | Outplacement Services | | | - | | | | - | | | | - | | | | - | | | $ | 50,250 | | | | - | | | | - | | | Earned Vacation | | $ | 161 | | | $ | 161 | | | $ | 161 | | | $ | 161 | | | $ | 161 | | | $ | 161 | | | $ | 161 | | | Total | | $ | 147,255 | | | $ | 147,255 | | | $ | 147,255 | | | $ | 147,255 | | | $ | 5,289,951 | | | $ | 2,673,672 | | | $ | 2,673,672 | |
(1) | Mr. Cunningham was not retirement eligible on December 31, 2013. | (2) | Amounts in this column representing accelerated vestings of long-term incentive compensation will occur immediately upon the change in control event, pursuant to the terms of the awards. | (3) | The amounts set forth in this row represent a payout at achievement of 100% of pre-established performance objectives. Under normal conditions, the actual payout of the TSR performance awards will occur at the end of the relevant performance period, and may be higher or lower than 100% (up to a maximum of 200%) depending on the Company’s actual Total Shareholder Return ranking for the performance period. However, in the event of a change in control, the performance period will be shortened and payout will occur immediately following the change in control based on the greater of (i) Total Shareholder Return through the end of the month prior to the change in control, or (ii) Total Shareholder Return through the end of the month prior to the change in control using the value realized by shareholders in the change in control event. For hybrid performance shares, receipt of the full payout will occur at the original vesting dates set forth in the award agreements only if the relevant operating income targets are achieved, except in the case of a change in control, in which case full payout will be made immediately upon the change in control. These values were computed using the closing price of the Company’s common stock on December 31, 2013 of $38.76. | (4) | The value of the SARs was computed using the difference between the closing price of the Company’s common stock on December 31, 2013 of $38.76 and the grant price of the SARs, which was the average of the high and low prices of the Company’s common stock on the dates of grant of the SARs. | (5) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “2013 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. |
-2014 Proxy Statement47
PHILLIP L. STALNAKER, VICE PRESIDENT AND REGIONAL MANAGER, NORTH REGION
| | | | | | | Involuntary | | | | Change In | | | | | | Executive Benefit and Payments | | Voluntary | | Retirement | | Not For Cause | | For Cause | | Control | | | | | | Upon Separation | | Termination | | (1) | | Termination | | Termination | | (2) | | Disability | | Death | | Compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Multiple of Salary (0x or 3x) | | | - | | | | - | | | | - | | | | - | | | $ | 900,000 | | | | - | | | | - | | | Multiple of Bonus (0x or 3x) | | | - | | | | - | | | | - | | | | - | | | $ | 1,290,000 | | | | - | | | | - | | | Long-Term Incentive Compensation | | | | | | | | | | | | | | | | | | | | | Performance Share Vesting(3) | | | - | | | | - | | | | - | | | | - | | | $ | 1,810,789 | | | $ | 1,810,789 | | | $ | 1,810,789 | | | Stock Appreciation Rights Vesting(4) | | | - | | | | - | | | | - | | | | - | | | $ | 302,726 | | | $ | 302,726 | | | $ | 302,726 | | | Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | Payout of Deferred Compensation(5) | | $ | 236,399 | | | $ | 236,399 | | | $ | 236,399 | | | $ | 236,399 | | | $ | 236,399 | | | $ | 236,399 | | | $ | 236,399 | | | Health, Life, and Welfare Benefits Continuation | | | - | | | | - | | | | - | | | | - | | | $ | 81,208 | | | | - | | | | - | | | Excise Tax & Gross-Up | | | - | | | | - | | | | - | | | | - | | | $ | 2,201,864 | | | | - | | | | - | | | Outplacement Services | | | - | | | | - | | | | - | | | | - | | | $ | 45,000 | | | | - | | | | - | | | Earned Vacation | | $ | 7,716 | | | $ | 7,716 | | | $ | 7,716 | | | $ | 7,716 | | | $ | 7,716 | | | $ | 7,716 | | | $ | 7,716 | | | Total | | $ | 244,115 | | | $ | 244,115 | | | $ | 244,115 | | | $ | 244,115 | | | $ | 6,875,702 | | | $ | 2,357,630 | | | $ | 2,357,630 | |
(1) | Mr. Stalnaker was not retirement eligible on December 31, 2013. | (2) | Amounts in this column representing accelerated vestings of long-term incentive compensation will occur immediately upon the change in control event, pursuant to the terms of the awards. | (3) | The amounts set forth in this row represent a payout at achievement of 100% of pre-established performance objectives. Under normal conditions, the actual payout of the TSR performance awards will occur at the end of the relevant performance period, and may be higher or lower than 100% (up to a maximum of 200%) depending on the Company’s actual Total Shareholder Return ranking for the performance period. However, in the event of a change in control, the performance period will be shortened and payout will occur immediately following the change in control based on the greater of (i) Total Shareholder Return through the end of the month prior to the change in control, or (ii) Total Shareholder Return through the end of the month prior to the change in control using the value realized by shareholders in the change in control event. For hybrid performance shares, receipt of the full payout will occur at the original vesting dates set forth in the award agreements only if the relevant operating income targets are achieved, except in the case of a change in control, in which case full payout will be made immediately upon the change in control. These values were computed using the closing price of the Company’s common stock on December 31, 2013 of $38.76. | (4) | The value of the SARs was computed using the difference between the closing price of the Company’s common stock on December 31, 2013 of $38.76 and the grant price of the SARs, which was the average of the high and low prices of the Company’s common stock on the dates of grant of the SARs. | (5) | Amounts in this row represent earned compensation voluntarily deferred by the NEO under the terms of the deferred compensation plan. For more information, see “2013 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. |
-2014 Proxy Statement48
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2013 regarding the number of shares of Common Stockcommon stock that may be issued under the Company’s 2004 Incentive equity compensation plans as of December 31, 2023: | | Plan Category | | | | (a) | | | | (b) | | | | (c) | | | | Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights | | | | Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights | | | | Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities Reflected
in Column (a)) | | | | Equity compensation plans approved by security holders | | | | | | 7,421,198(1) | | | | | | $ | 15.66(2) | | | | | | | 27,823,920(3) | | | | | Equity compensation plans not approved by security holders | | | | | | n/a | | | | | | | n/a | | | | | | | n/a | | | | | Total | | | | | | 7,421,198 | | | | | | | n/a | | | | | | | 27,823,920(3) | | |
(1)
This amount includes 5,024,915 shares covered by restricted stock units that have not vested, 245,898 director restricted stock units that have vested but have not yet settled into shares of common stock, 73,593 director restricted stock units as to which restrictions lapse upon the earlier of May 4, 2024 or the date the holder ceases to be a director of the Company, 304,883 shares subject to non-qualified stock options, and 1,771,909 shares representing the maximum number of shares subject to PSUs assuming the maximum payout is achieved. (2)
This is the only equity compensation plan with awards outstanding. The 2004 Incentiveweighted 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, was approved by stockholders. The table does not include information regarding2,820,997 shares that are currently outstanding under the 2014 IncentivePrior Cabot Plan, which was approved by our Board of Directors in February 2014, subject to stockholder approval atand 3,874,860 shares that are currently outstanding under the Annual Meeting. Shares and share prices discussed in this proxy statement have been adjusted to reflect our two-for-one stock split, in the form of a stock dividend, effective as of August 14, 2013.| Plan Category | | (a)
Number of securities to
be issued upon exercise of
outstanding options, warrants
and rights | | (b)
Weighted-average exercise
price of outstanding options,
warrants and rights | | (c)
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a)) | | Equity compensation plans approved by security holders | | | 4,202,963 | (1) | | $ | 12.63 | (2) | | | 1,731,635 | (3) | | Equity compensation plans not approved by security holders | | | n/a | | | | n/a | | | | n/a | | | Total | | | 4,202,963 | (1) | | $ | 12.63 | (2) | | | 1,731,635 | (3) |
(1) | Includes: 667,764 SARs to be settled in common stock, which vest, if at all, in 2014 and 2015; 1,657,980 employee performance shares, the performance periods of which end on December 31, 2013, 2014 and 2015; 860,686 TSR performance shares awarded to executive officers, the performance periods of which end on December 31, 2013, 2014 and 2015; 450,212 hybrid performance shares awarded to executive officers, which vest, if at all, in 2014, 2015, and 2016; and 566,321 restricted stock units awarded to the non-employee directors, the restrictions on which lapse upon a non-employee director’s departure from the Board of Directors. Of the 860,686 TSR performance shares included, 370,784 shares had a performance period that ended on December 31, 2013 and were certified by the Compensation Committee and vested on January 2, 2014. As a result, the portion of these 370,784 shares granted to the NEOs were included as vested in the “2013 Option Exercises and Stock Vested” table earlier in this proxy statement and were not included as outstanding in the “Outstanding Equity Awards at Fiscal Year-End 2013” table earlier in this proxy statement. | (2) | Price is only with respect to the 667,764 SARs outstanding because all other outstanding awards were issued without an exercise price. The outstanding SARs have a weighted average remaining term of 4.3 years. | (3) | Includes: 27,806 shares of restricted stock, the restrictions on which lapse on various dates in 2014, 2015 and 2016; and 1,703,829 shares that are available for future grants under the 2004 Incentive Plan. On April 29, 2014, the 2004 Incentive Plan expires and no additional shares may be granted under that plan. |
-2014 Proxy Statement 49
legacy Cimarex incentive plans.
Back to Contents | PROPOSAL 4 | | | APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM | |
The Audit Committee has approved and recommended the appointment of PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as the independent registered public accounting firm to examine the Company’s financial statements for 2024. The persons named in the accompanying proxy will vote in accordance with the choice specified thereon, or, if no choice is properly indicated, in favor of the ratification of PricewaterhouseCoopers as the independent registered public accounting firm for the Company. A representative of PricewaterhouseCoopers is expected to be in attendance at the annual meeting. See “Audit Committee Report” below for further information. 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 FOR RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY FOR ITS 2024 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.
The Audit Committee is currently composed of threefour independent, non-employee directors. The Board of Directors has made a determination that each of the members of the Audit Committee satisfysatisfies the requirements of the NYSE listing standards as to independence, financial literacy and experience. The Board also determined that oneeach of the members of the Audit Committee Mr. Kelley, is an “audit committee financial expert” as defined by rules of the SEC. The responsibilities of the Audit Committee are set forth in the Audit Committee Charter, as amended from time to time by the Board of Directors, which isand included on the Company’s website, atwww.cabotog.com. www.coterra.com. The Audit Committee reviews its charter annually. The function of the Audit Committee is to review and report to the Board of Directors with respect to various auditing and accounting matters, including overseeing the integrity of the financial statements of the Company, the compliance by the Company with legal and regulatory requirements, the selection, independence, qualifications, performance and compensation of the Company’s independent registered public accounting firm and the performance of the Company’s internal audit function. The Audit Committee also reviews its charter annually. This is a report on the Audit Committee’s activities relating to 2013.2023. Review of Audited Financial Statements with Management The Audit Committee reviewed and discussed the audited financial statements and management’s discussion and analysis of the Company’s financial condition and results of operations with the management of the Company.
Review of Financial Statements and Other Matters with Independent Registered Public Accounting Firm The Audit Committee discussed with the independent registered public accounting firmPricewaterhouseCoopers the matters required to be discussed as described in Statement on Auditing Standardsby the applicable requirements of the Public Company Accounting Oversight Board (“SAS”PCAOB”) No. 16 - Communication with Audit Committees.and the SEC. The Audit Committee has received and reviewed the written disclosures and the letter from PricewaterhouseCoopers LLP (“PWC”), the Company’s independent registered public accounting firm, required by applicable Public Company Accounting Oversight BoardPCAOB requirements regarding thesuch firm’s communications with the Audit Committee concerning independence and has discussed with PWC the independent registered public accountingPricewaterhouseCoopers such firm’s independence. These discussions included a review of all audit and non-auditnon- audit services (including tax services) provided by PWCPricewaterhouseCoopers to the Company.
Recommendation that Financial Statements be Included in the Annual Report Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20132023, and filed with the SEC.
Dorothy M. Ables, Chair
Robert Kelley (Chairman)
Rhys J. Best
Robert L. Keiser -2014 Proxy Statement50
S. Boswell
Lisa A. Stewart
Frances M. Vallejo February 20, 2024
PRINCIPAL STOCKHOLDERS The following table reports, as of February 15, 2024, beneficial ownership of the Company’s common stock by holders of more than five percent of the Company’s common stock as of the dates reported by such holders. Unless otherwise noted, all ownership information is based upon filings made by such persons with the SEC. | | Name and Address of Beneficial Owner | | | | Number of Shares
of Common Stock
Owned | | | | Percent of
Class(6) | | | | The Vanguard Group | | | | | | 87,926,567(1) | | | | | | | 11.69% | | | | | BlackRock, Inc. | | | | | | 60,876,106(2) | | | | | | | 8.1% | | | | | Wellington Management Group LLP | | | | | | 54,564,359(3) | | | | | | | 7.25% | | | | | State Street Corporation | | | | | | 48,945,657(4) | | | | | | | 6.51% | | | | | Aristotle Capital Management, LLC | | | | | | 36,447,580 | | | | | | | 4.85% | | |
(1)
Based solely on a Schedule 13 G/A filed February 13, 2024 with the SEC by The Vanguard Group (100 Vanguard Blvd., Malvern, PA 19355), it has shared voting power over 959,073 of these shares, sole dispositive power over 84,704,216 of these shares and shared dispositive power over 3,222,351 of these shares. (2)
Based solely on a Schedule 14 G/A filed January 25, 2024, with the SEC by BlackRock, Inc. (50 Hudson Yards, New York, NY 10001), it has sole voting power over 57,347,488 of these shares and sole dispositive power over all 60,876,106 shares. (3)
Based solely on a Schedule 13 G/A filed February 9, 2024 with the SEC by Wellington Management Group LLP (280 Congress Street, Boston, MA 02210), it has shared voting power over 53,457,556 shares and shared dispositive power over all 54,564,359 shares. (4)
Based solely on a Schedule 13 G/A filed January 29, 2024 with the SEC by State Street Corporation (State Street Financial Center, One Congress Street, Suite 1, Boston, MA 02114-2016), it has shared voting power over 37,781,281 and shared dispositive power over 48,918,239 of these shares. (5)
Based solely on a Schedule 13 G/A filed February 14, 2024, with the SEC by Aristotle Capital Management, LLC (11100 Santa Monica Blvd., Suite 1700, Los Angeles, CA 90025), it has sole voting power over 33,963,244 of these shares and sole dispositive power over all 36,447,580 shares. (6)
There were 751,847,432 shares of common stock outstanding on February 15, 2024.
DIRECTORS AND EXECUTIVE OFFICERS The following table reports, as of February 15, 2024, beneficial ownership of common stock by each director and nominee for director, by each named executive officer listed in the “Summary Compensation Table” below and by all directors, nominees and executive officers as a group. Unless otherwise indicated and pursuant to applicable community property laws, the persons below have sole voting and investment power with respect to the shares of common stock shown as beneficially owned by them. Back to Contents | Name of Beneficial Owner | | | | Number of Shares
of Common Stock
Owned(1) | | | | Percent of
Class(2) | | | | Dorothy M. Ables | | | | | | 89,593(3) | | | | | | | * | | | | | Robert S. Boswell | | | | | | 95,339 | | | | | | | * | | | | | Amanda M. Brock | | | | | | 63,205 | | | | | | | * | | | | | Dan O. Dinges | | | | | | 4,413,722(4) | | | | | | | * | | | | | Paul N. Eckley | | | | | | 68,945 | | | | | | | * | | | | | Hans Helmerich | | | | | | 1,853,153(5) | | | | | | | * | | | | | Lisa A. Stewart | | | | | | 101,596(6) | | | | | | | * | | | | | Frances M. Vallejo | | | | | | 68,945(7) | | | | | | | * | | | | | Marcus A. Watts | | | | | | 63,205 | | | | | | | * | | | | | Thomas E. Jorden | | | | | | 2,756,766(8) | | | | | | | * | | | | | Shannon E. Young III | | | | | | 81,030 | | | | | | | * | | | | | Stephen P. Bell | | | | | | 563,281 | | | | | | | * | | | | | Blake A. Sirgo | | | | | | 141,128 | | | | | | | * | | | | | Kevin W. Smith | | | | | | 95,369 | | | | | | | * | | | | | Scott C. Schroeder | | | | | | 1,800,171 | | | | | | | * | | | | | Christopher H. Clason | | | | | | 187,577 | | | | | | | * | | | | | All directors and executive officers as a group (21 individuals) | | | | | | 12,987,006(3)(4)(5)(6)(7)(8)(9) | | | | | | | 1.7% | | |
(1)
Amounts shown include restricted stock units issued under the Company’s incentive plans as follows: •
as to which restrictions lapse upon the holders’ retirement from the Board of Directors: Ms. Ables, 70,732; Mr. Boswell, 76,478; Ms. Brock, 49,344; Mr. Watts, 49,344; and “All directors and executive officers as a group,” 245,898 •
as to which restrictions lapse upon the earlier of May 4, 2024 or the date the non-employee director ceases to be a director of the Company: for each of Ms. Ables, Mr. Boswell, Ms. Brock, Mr. Dinges, Mr. Eckley, Mr. Helmerich, Ms. Stewart, Ms. Vallejo, and Mr. Watts 8,177; and for “All directors and executive officers as a group,” 73,593 •
as to which restrictions lapse upon January 31, 2026: Mr. Jorden, 217,391; Mr. Bell, 65,217; Mr. Young, 81,030; Mr. Sirgo, 29,348; Mr. Smith, 29,348; Mr. Schroeder, 90,217; Mr. Clason, 30,435; and for “All directors and executive officers as a group,” 714,344 •
as to which restrictions lapse upon January 31, 2025: Mr. Bell, 51,436; Mr. Sirgo, 17,145; Mr. Smith, 17,145; Mr. Schroeder, 71,153; Mr. Clason, 15,669; and for “All directors and executive officers as a group,” 256,196 •
as to which restrictions lapse upon December 1, 2024: Mr. Jorden, 488,759; Mr. Bell, 146,628; Mr. Sirgo, 48,876; Mr. Smith 48,876; Mr. Clason, 30,030; for “All directors and executive officers as a group,” 847,144 (2)
There were 751,847,432 shares of common stock outstanding on February 15, 2024. (3)
Includes 5,000 shares held by an immediate family member, with respect to which Ms. Ables has shared voting and investment power. (4)
Includes 1,261,330 shares held in trust for the benefit of an immediate family member, with respect to which Mr. Dinges has shared voting and investment power. (5)
Includes 45,967 shares owned by Mr. Helmerich’s wife; Mr. Helmerich disclaims beneficial ownership of the shares held by his wife. Also, includes 233,699 shares owned by 1993 Hans Helmerich Trust, of which Mr. Helmerich is the trustee; 44,409 shares owned by Helmerich Grandchildren LLC, of which Mr. Helmerich is the co-manager; 31,573 shares owned by Family Trust, of which Mr. Helmerich is the trustee; 91,145 shares owned by The Helmerich Trust, of which Mr. Helmerich is the co-trustee; 1,304,895 shares held by the Peggy Helmerich QTIP Trust, of which Mr. Helmerich is the trustee; and 40,146 shares held by Saddleridge, LLC, of which Mr. Helmerich owns 99 percent and his wife owns 1 percent. (6)
Includes 5,700 shares held in an individual retirement account. (7)
Includes 60,768 shares to which Mrs.Vallejo has shared voting and investment power. (8)
Includes 2,050,616 shares of common stock held in trust for the benefit of an immediate family member, with respect to which Mr. Jorden has shared voting and investment power. (9)
Includes 20,000 restricted stock units as to which restrictions lapse upon April 11, 2025.
DELINQUENT SECTION 16(a) REPORTS Section 16(a) of the Exchange Act 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 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.
| | GENERAL INFORMATION | | | | |
FEES BILLED BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR SERVICES IN 2013 AND 2012
| Fee Type* | | 2013 | | | 2012 | | | Audit Fees | | $ | 1,525,000 | | | $ | 1,561,000 | | | Audit Related Fees(1) | | $ | 80,185 | | | | - | | | Tax Fees(2) | | $ | 600,002 | | | $ | 257,256 | | | All Other Fees(3) | | $ | 1,919 | | | $ | 1,919 | |
* | No pre-approved requirements were waived under the de minimis exception. | (1) | Consists of audit-related fees associated with the divestiture of certain oil and gas properties during 2013. The Company was reimbursed for these fees by the purchaser of the properties. | (2) | Consists of federal, state and sales tax planning, audit support, compliance, advice, and return preparation. | (3) | Consists of an accounting research software license. |
PROPOSAL 2 | APPOINTMENT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM |
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 2024 annual meeting of stockholders, to be held at Two Memorial Plaza, 820 Gessner Road, 1st Floor, Live Oak Training Room, Suite 107, Houston, Texas 77024 on Wednesday, May 1, 2024, at 8:00 a.m. Central Time, or any adjournment or postponement thereof. The Audit Committee has approved and recommendedpurposes of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm to examine the Company’s financial statements for 2014. The persons namedmeeting are set forth in the accompanying Notice of Annual Meeting of Stockholders and information about the Company’s governance and executive compensation is set forth elsewhere in this proxy willstatement. Please review these materials carefully before casting your vote. We are asking that you vote in accordance with the choice specified thereon, or, if no choiceon four proposals. Who is properly indicated, in favorentitled to vote? Only holders of record of the ratification of PricewaterhouseCoopers LLPCompany’s common stock as the independent registered public accounting firm for the Company. A representative of PricewaterhouseCoopers LLP is not expected to be in attendance at the Annual Meeting.See “Audit Committee Report” above for further information.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE APPOINTMENT OF THE FIRM OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY FOR ITS 2014 FISCAL YEAR.
PROPOSAL 3 | TO APPROVE, BY NON-BINDING ADVISORY VOTE, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS |
The shareholders of the Companyclose of business on March 7, 2024, are entitled to vote at the Annual Meetingannual meeting. As of that date, the Company had outstanding [ ] shares of common stock. Each share of common stock is entitled to approve the compensationone vote per share. There is no provision for cumulative voting. We will maintain for a period of the Company’s NEOs, as disclosed in this Proxy Statement. The shareholder vote on executive compensation is an advisory vote only, and it is not bindingten days ending 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.
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 design and outcomes with business strategy; | | | • | Encourage management to create sustained value for the shareholders while managing inherent business risks; | | | • | Attract, retain, and engage talented executives; and |
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Support a performance-based culture throughout the Company.
The executive compensation program seeks to align executive compensation with shareholder value on an annual and long-term basis through a combination of base pay, annual cash incentive bonus and long-term equity award incentives. The annual cash incentive bonus is based on Company-wide performance for year-over-year oil and natural gas reserve and production growth, along with absolute levels for finding costs and unit production costs. For 2013, the aggregate bonus award pool forday before the annual cash incentive bonus was 225%meeting date at our principal executive office a complete list of the target bonus.
In addition, in 2013 long-term incentive awards were comprised of (i) TSR performance shares, which are based on total shareholder return relative to an industry peer group over a three-year performance period, and (ii) hybrid performance shares, which are based on annual operating cash flow and vest over a three year period.
At-risk compensation for the Chief Executive Officer in 2013 was targeted at 89% and for the other NEOs was targeted at an average of 81%. The Company also has several governance programs in place to align executive compensation with shareholder interests. These programs include: an annual advisory vote on executive compensation, stock ownership guidelines, an anti-hedging policy, limited perquisites and the use of wealth accumulation spreadsheets. For information on the Company’s 2013 operational and financial accomplishments, see “Compensation Discussion and Analysis” above.
The advisory vote regarding the compensation of the NEOs described in this Proposal 3 will be approved if a majority of the shares present in person or by proxy at the meeting andstockholders 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, stockholders will be asked to consider and act upon the following matters discussed in this proxy statement. Proxies delivered by record stockholders without voting instructions marked will be voted in accordance with the recommendations of the Board. Proxies will be voted in the best judgment of the proxy holders on any other matters that may properly come before the meeting. | | PROPOSAL | | | | BOARD
RECOMMENDATION | | | | PROPOSAL 1 | | | | The election of the 10 director nominees 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 2024. | | | | FOR | |
How do I vote? On or about March [ ], 2024, we mailed to our stockholders (other than those who have elected to receive paper copies) a notice advising them that our materials for this meeting are available on the proposalinternet. Certain other stockholders who elected to receive paper copies have received these materials by U.S. mail. In either case, you may vote your shares: •
In person: you may vote in favor ofperson at the proposal. Abstentions will haveannual meeting; •
By internet: use the same effect as votes against the proposal, but broker non-votes will not effect the outcome of the votinginstructions on the proposal.THE BOARDproxy card or voting instruction form received from your broker or bank up to 11:59 p.m. Eastern Time on April 30, 2024;
•
By telephone: use the instructions on the proxy card or voting instruction form received from your broker or bank (if available) up to 11:59 p.m. Eastern Time on April 30, 2024; or •
By mail: by completing and returning the enclosed proxy card or voting instruction form in the postage-paid envelope provided (for those receiving paper copies only).
How do I attend the annual meeting in person? Registered stockholders will be asked to present a valid government-issued photo identification. If your shares are held in the name of Directors has approved and declared advisable, and is recommendingyour broker, bank or other nominee, you must bring to the stockholders for approval atmeeting 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 Annual Meeting, an amendment to Article IV ofnominee indicating that you beneficially owned the Company’s Certificate of Incorporation, as amended, which sets forth the terms of the Company’s authorized capital stock. Article IV currently authorizes 480,000,000 shares of Common Stock, as well as 5,000,000 shares of Preferred Stock, par value $.10 per share. The proposed amendment would increase the authorized Common Stock to 960,000,000 shares of Common Stock. The authorized shares of Preferred Stock would remain 5,000,000. If adopted by the stockholders, this amendment would become effective upon filing of an appropriate Certificate of Amendment with the Secretary of State of the State of Delaware. The proposed amendment to Article IV of the Certificate of Incorporation would replace the first sentence of the Article with the following:The aggregate number of shares of all classes of stock which the Company shall have authority to issue is 965,000,000, divided into 5,000,000 shares of Preferred Stock, par value $.10 per share (“Preferred Stock”), and 960,000,000 shares of Common Stock, par value $.10 per share (the “Common Stock”).
The additional shares of Common Stock authorized by the proposed amendment, if and when issued, would have the same rights and privileges as the shares of Common Stock currently authorized. The Common Stock has no preemptive rights to purchase Common Stock or other securities. In addition, under Delaware law, our stockholders are not entitled to dissenters’ or appraisal rights in connection with the proposed increase in the number of shares of Common Stock authorized for issuance.
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Historical Stock Issuance
As of December 31, 2013, we had issued approximately 422,015,000 shares of common stock, over 92% of which (389,477,333 shares) have been issued since December 31, 2003. Of the shares issued during this ten-year period, over 90% have been issued as a result of stock splits, which are not dilutive to stockholders, as indicated in the chart below.
SHARES ISSUED SINCE DECEMBER 31, 2003 (389,477,333 SHARES)
Most recently, we issued 210,979,760 shares of Common Stock in connection with our August 2013 two-for-one stock split. As of February 1, 2014, 416,620,608 shares of Common Stock were issued and outstanding and 3,859,985 were reserved for issuance under the 2004 Incentive Plan. As a result, only approximately 60 million shares are available for issuance for future purposes and the Board of Directors deems it advisable to increase our authorized Common Stock. The additional Common Stock to be authorized would be available for possible stock dividends or splits, future financing and acquisition transactions, employee benefit plans and other corporate purposes. Having such shares available for issuance in the future would give the Company greater flexibility and allow shares of Common Stock to be issued without the expense and delay of a stockholders’ meeting. The additional shares of Common Stock would be available for issuance without further action by the stockholders unless such action is required by applicable law or the rules of any stock exchange on which the Common Stock may be listed. The New York Stock Exchange, on which the Common Stock is listed, currently requires stockholder approval as a prerequisite to listing shares in certain instances, including in connection with acquisition transactions where the present or potential issuance of shares could result in an increase in the number of shares of common stock outstanding of at least 20%.
We have no present arrangements, commitments, understandings or pending negotiations for the issuance of additional shares of newly authorized Common Stock.
We have has not proposed the increase in the authorized number of shares of Common Stock with the intention of using the additional shares for anti-takeover purposes, although we could theoretically use the additional shares to make more difficult or to discourage an attempt to acquire control of the Company. We are not aware of any pending or threatened efforts to acquire control of the Company.
Approval of the proposal to increase the number of authorized shares of Common Stock by amending the Company’s Certificate of Incorporation requires the affirmative vote of a majority of the shares outstanding on the record date and entitled to vote. Votes may be cast FOR or AGAINSTfor voting.
What is the proposal, and stockholders may also ABSTAIN from voting on the proposal. Becausedifference between holding shares represented by abstentions or broker non-votes are considered outstanding, abstentions and broker non-votes will have the same effect as a vote AGAINST the proposal.THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTEFOR APPROVAL OF THE PROPOSED AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION.
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PROPOSAL 5 | APPROVAL OF THE 2014 INCENTIVE PLAN |
We are asking our stockholders to approve the Cabot Oil & Gas Corporation 2014 Incentive Plan (the “2014 Plan”). Our Boardstockholder of Directors approved the 2014 Plan, subject to stockholder approval, on February 20, 2014, to replace our 2004 Incentive Plan (the “2004 Plan”), which expires on April 29, 2014, ten years after its initial approval by our stockholders. After that date, no additional awards may be granted under the 2004 Plan. The 2014 Plan is summarized belowrecord and the full text of the 2014 Plan is attached to this proxy statement as Appendix A.
Reason for the Proposal
The 2014 Plan is intended to replace our 2004 Plan and is needed to continue our equity compensation program. As of December 31, 2013, there were 1,703,829 shares of common stock remaining available for grant under the 2004 Plan, none of which will (i) be granted after the Annual Meeting or (ii) become available for grant under our 2014 Plan. Any previously granted awards that are outstanding under the 2004 Plan will remain outstanding in accordance with their terms. As of December 31, 2013 there were 4,230,769 shares of common stock subject to outstanding awards under the 2004 Plan.
If the 2014 Plan is approved by the stockholders, the Company will have 18 million shares of common stock available for future equity awards. If the 2014 Plan is not approved by the stockholders, we will not be able to fund our long-term incentive program and the Company may be required to increase significantly the cash component of our executive compensation program in order to remain competitive and adequately compensate our employees. Such a drastic change in our long-term incentive program could cause significant misalignment between executive and stockholder interests.
We believe that incentive awards are critical to attracting, retaining and engaging highly qualified employees and to aligning their financial interests with the financial interests of our stockholders. Our Board recommends that stockholders approve the 2014 Plan to allow us to continue to provide such incentives.
Stockholder approval of the 2014 Plan will also constitute approval for purposes of satisfying the stockholder approval requirements (i) under Section 162(m) of the Internal Revenue Code of 1986, as amended, or the rules and regulations thereunder, so that the Compensation Committee has the discretion to grant equity- and cash-based awards in the future under the 2014 Plan that meet the requirements of “performance-based compensation” under Section 162(m) and (ii) under Section 422 of the Internal Revenue Code so that the Compensation Committee may grant incentive stock options, or ISOs.
Key Changes from 2004 Plan
The Board believes that the 2004 Plan has been effective in attracting and retaining highly qualified employees and non-employee directors and has provided incentives that align the economic interests of participants with those of our shareholders. The 2014 Plan retains most of the material terms of the 2004
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Plan, with certain changes to better align our plan with current trends related to plan design and corporate governance, as illustrated by the table below:
| | 2004 Plan | | 2014 Plan | Authorized Shares | | 20,400,000 (adjusted for stock splits) | | 18,000,000 | Definition of Fair MarketValue | | Generally, average of highest and lowest reported sales prices on a trading day | | Generally, closing sales price on a trading day | Available shares from priorplans | | Shares reserved but not subject to awards under prior plans available for awards under 2004 Plan | | No use of shares from prior plans | Repricing of Options andSARS | | Prohibited with respect to options, but silent as to SARs (no SARs were ever repriced) | | Expressly prohibited with respect to options and SARs | Plan-level limits for certaintypes of awards | | Contains limits on number of shares used for stock awards that are non performance-based and for incentive stock options | | Contains limit on number of shares used for awards of incentive stock options | Dividends;Dividend Equivalents | | Available on all types of awardsCould be paid on unvested awards | | Not available for stock options or SARsCan be paid only on vested awards | Clawbacks | | Not expressly addressed | | All awards will be subject to any clawback policy we adopt | Expiration protection forOptions or SARs | | Not expressly addressed | | Extends term of outstanding stock options or SARs for additional 30 days if expires during trading blackout period under Company insider trading policy | | | | | | | | | | Automatic exercise of stock options and SARs if the exercise price is less than the fair market value at expiration |
Best Practice Features of the 2014 Plan
• | No Repricing of Options or SARs.Prohibits repricing, replacement and regranting of stock options and SARs at lower prices unless approved by our stockholders. | • | No Discounted Options or SARs.Stock options and SARs may not be granted with an exercise price below the closing price of our Common Stock on the NYSE on the date of grant. | • | No Dividends on Options or SARs.Dividends and dividend equivalents may not be paid or accrued on unvested stock options or SARs. | • | Limited terms for Options and SARs.Stock options and SARs granted under the 2014 Plan are limited to 10 year terms. | • | Awards may be subject to future clawback or recoupment.All awards granted under the 2014 Plan will be subject to any clawback policy we have or adopt. | • | No Transferability.Awards generally may not be transferred, except by will or the laws of descent and distribution, unless approved by the Compensation Committee. | • | No “Evergreen” Provision.Shares authorized for issuance under the 2014 Plan will not be automatically replenished. Any additional shares to be issued over and above the amount for which we are seeking authorization must be approved by the stockholders. |
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• | No Automatic Grants. There are no automatic grants to new participants or “reload” grants when outstanding awards are exercise, expire or are forfeited. | • | No Tax Gross-ups.Participants do not receive taxgross-ups under the 2014 Plan. |
Key Historical Stock Usage Data
The Compensation Committee, which administers the 2004 Plan and will administer the 2014 Plan, if approved, believes it is important to strike a balance between stockholder concerns regarding the potential dilutive effect of equity awards and the ability to attract, retain and engage employees whose contributions are critical to the Company’s long-term success. As shown in the chart below, the Company’s three-year average annual burn rate under the 2004 Plan is 0.35%, which is well below the Institutional Shareholder Services (ISS) 2013 mean burn rate and ISS burn rate cap for Russell 3000 companies in our industry of 2.18% and 4.57%, respectively.
Number of Shares Requested
In determining the number of shares to make available under the 2014 Plan, the Compensation Committee considered the key historical stock usage data under the 2004 Plan described above, the advice of Meridian Compensation Partners, LLP, its independent compensation consultant, and the estimated cost and dilution of the 2014 Plan. The Compensation Committee also considered the input of several of our largest stockholders as provided by published equity plan approval guidelines and in direct conversations between members of management and the stockholders. The Compensation Committee also considered many factors that affect the number of shares required for long-term incentive equity awards, such as changes in stock price over the life of the plan, the number of participants in the program and the size of awards to each participant. Considering all of these factors, the Compensation Committee determined that 18 million shares is a prudent amount to satisfy the long-term incentive goals of the 2014 Plan and also meet the expectations of the stockholders for minimal levels of dilution. None of the shares remaining available for grant
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under the 2004 Plan would be available for issuance under the 2014 Plan.
If the 2014 Plan is approved, the total dilution from all outstanding awards under the 2004 Plan as of December 31, 2013 and the 18 million shares requested for issuance under the 2014 Plan would be approximately 5.29% of the weighted average common shares outstanding as of December 31, 2013.
Section 162(m) of the Code
The 2014 Plan has been structured in a manner such that awards granted under it can satisfy the requirements for “performance-based” compensation within the meaning of Section 162(m) of the Internal Revenue Code; however, there can be no guarantee that amounts payable under the 2014 Plan will be treated as qualified “performance-based” compensation under Section 162(m). In general, under Section 162(m), in order for the Company to be able to deduct compensation in excess of $1,000,000 paid in any one year to the Company’s chief executive officer or any of the Company’s three other most highly compensated executive officers (other than the Company’s chief financial officer), such compensation must qualify as “performance-based.” One of the requirements of “performance-based” compensation for purposes of Section 162(m) is that the material terms of the performance goals under which compensation may be paid be disclosed to and approved by the Company’s shareholders every five years. For purposes of Section 162(m), the material terms include (i) the individuals eligible to receive compensation, (ii) a description of the business criteria on which the performance goal is based, and (iii) the maximum amount of compensation that can be paid to an individual under the performance goal. With respect to the various types of awards under the 2014 Plan, each of these aspects is discussed below, and shareholder approval of the 2014 Plan will be deemed to constitute approval of each of these aspects of the 2014 Plan for purposes of the approval requirements of Section 162(m).
Summary of the 2014 Plan
The following summary of certain major features of the 2014 Plan is subject to the specific provisions contained in the full text of the 2014 Plan, which is attached to this proxy statement as Appendix A.
Purpose of the 2014 Incentive Plan
The 2014 Plan is intended to continue the success of the 2004 Plan in contributing to the Company’s ability to attract and retain talented employees, consultants and directors and to reward them for making contributions to the success of the Company, all while aligning the interests of the Company’s employees, consultants and directors to the interests of stockholders. The 2014 Plan is intended to provide a means to pay annual cash incentive compensation as well as long-term equity incentive compensation to our employees, consultants and directors. The 2014 Plan provides for the grant to the Company’s employees and consultants of stock options, stock appreciation rights, stock awards, which may include restricted stock or restricted stock units, performance awards and cash awards. See “Employee Awards” below. The 2014 Plan also provides for the grant of stock option and stock awards to nonemployee directors, as described below under “Nonemployee Director Awards.”
Types of Awards
The 2014 Plan provides for the grant of any or all of the following types of awards:
• | stock options, including incentive stock options and non-qualified stock options; | • | stock appreciation rights, either independent of, or in connection with, stock options; |
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• | restricted stock; | | | • | restricted stock units; | | | • | performance awards; and | | | • | cash awards. |
Awards may be granted singly, in combination, or in tandem as determined by the Compensation Committee.
Eligibility
Employees, including executive officers, and consultants of the Company and its subsidiaries are eligible to be considered for awards under the 2014 Plan. All nonemployee directors are also eligible to be considered for awards under the 2014 Plan.
We currently have approximately 684 employees and six nonemployee directors. Approximately 200 employees and all directors are currently eligible to receive awards under the 2004 Plan.
Shares Subject to the Plan
A total of 18 million shares of Common Stock may be issued under the 2014 Plan. Under the 2014 Plan, no more than 10 million shares of Common Stock may be issued pursuant to incentive stock options. Shares of Common Stock will be made available either from authorized but unissued shares or from treasury shares that have been issued but reacquired by the Company. Shares subject to awards under the 2014 Plan that are forfeited, terminated, expire unexercised, settled in cash, withheld to satisfy tax obligations or otherwise lapse will become available for future awards under the 2014 Plan. In addition, shares tendered to satisfy the purchase price of an award or satisfy tax withholding obligations under the 2014 Plan will become available for future awards under the 2014 Plan. Shares delivered in settlement, assumption, or substitution of awards granted by another entity as a resultbeneficial owner?
If your shares are registered directly in your name with Coterra’s registrar and transfer agent, Equiniti Trust Company, you are a stockholder of an acquisition or under an acquired entity’s plan will not reduce the number of shares available under the 2014 Plan to the extent allowed under the rules of the New York Stock Exchange.The Board of Directors may make appropriate adjustments in the number of shares available under the 2014 Plan to reflect any stock split, stock dividend, recapitalization, reorganization, consolidation, merger, combination or exchange of shares, distribution to stockholders (including cash dividends that the Board of Directors determines are not in ordinary course of business but excluding normal cash dividends) or other similar event.
Administration
The Board of Directors has designated the Compensation Committee to administer all employee and consultant awards under the 2014 Plan. The Compensation Committee has the discretion to determine the employees and consultants who will be granted awards, the sizes and types of such awards, and the terms and conditions of such awards, subject to the limitations set forth in the 2014 Plan. In addition, the Compensation Committee has full and final authority to interpret the 2014 Plan and may, from time to time, adopt rules and regulations in order to carry out the terms of the 2014 Plan.
Subject to certain restrictions contained in the 2014 Plan, the Compensation Committee has the discretion to extend the exercisability of an award, accelerate the vesting or exercisability of an award, or otherwise amend the award in a manner that is not materially adverse to, or is consented to by, the recipient of the award, except that no stock option or stock appreciation right may be repriced without stockholder approval.
The Board of Directors administers all director awards under the 2014 Plan and has the same powers, duties, and authorityrecord with respect to director
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awards asthese shares. If your shares are held in a brokerage account or by your bank, broker or other third party, you are the Compensation Committee retains with respect to employee awards. Tobeneficial owner of these shares. Because a beneficial owner is not the extent allowed by applicable law,stockholder of record, you may not vote these shares in person at the Board of Directorsannual meeting unless you obtain a proxy from the broker, trustee or the Compensation Committee may delegate to another subcommittee of the Board of Directors or to the Company’s Chief Executive Officer and/or another executive officer the authority to grant awards out of a specified pool of cash ornominee that holds your shares undergiving you the 2014 Plan. The Board of Directors or the Compensation Committee may also delegate to the Chief Executive Officer and to other employees its administrative duties under the 2014 Plan (excluding its granting authority).
Employee Awards
At the discretion of the Compensation Committee, employees may be granted awards under the 2014 Plan in the form of stock options, stock appreciation rights, stock awards, cash awards or performance awards. Such awards may be granted singly, in combination, or in tandem.
Stock Options
The 2014 Plan provides for the granting to employees of incentive stock options, which are intended to comply with Section 422 of the Internal Revenue Code, and non-qualified stock options.
A stock option is a right to purchase a specified number of shares of Common Stock at a specified grant price. All stock options granted under the 2014 Plan must have an exercise price per share that is not less than the fair market value (as defined in the 2014 Plan) of the Common Stock on the date of grant (and must also be greater than the par value of the Common Stock). All stock options granted under the 2014 Plan must have a term of no more than ten years. However, if the term of a non-qualified stock option expires when trading of the Common Stock is prohibited by law or by the Company’s insider trading policy, then the term of such non-qualified stock option will expire on the 30thday after the expiration of such prohibition. The grant price, number of shares, terms and conditions of exercise, whether a stock option is intended to qualify as an incentive stock option under the Internal Revenue Code, and other terms of a stock option grant will be fixed by the Compensation Committee as of the grant date.
However, stock options may not include provisions that “reload” the option upon exercise, and, without stockholder approval, stock options may not be repriced, including by means of a substitute award with an exercise price that is less than the exercise price of the original stock option or payment of cash to that effect.
The exercise price of any stock option must be paid in full at or before the time the stock is delivered to the optionee. The price may be paid in cash or, if permitted by the Compensation Committee and elected by the participant, by means of tendering (either by actual delivery or by attestation) previously owned shares of Common Stock or shares issued pursuant to an award under the 2014 Plan. Unless otherwise provided in the applicable award agreement, upon the expiration of the term of the stock option if the stock option remains unexercised and the exercise price is less than the fair market value of a share of Common Stock, then the stock option will automatically be exercised by means of a cashless exercise method approved by the Compensation Committee. Dividends and/or dividend equivalents will not be paid with respect to any stock options.
Stock Appreciation Rights
The 2014 Plan also provides for the granting of stock appreciation rights, or SARs, to employees. A SAR is a right to receive a payment, in cash or Common Stock, equal to the excess of the fair market value of a specified number of shares of the Common Stock over a specified grant price. A SAR may be granted to the holder of a stock option with respect to all or a portion ofvote 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 Common Stock subject to such stock option (a “tandem” SAR) or may be granted separately. The holder of a tandem SAR may elect to exercise either the stock option or the SAR, butthose shares. If brokers do not both. If the term of a SAR expires when trading of the Common Stock is prohibited by law or by the Company’s insider trading policy, then the term of such SAR will expire on the 30thday after the expiration of such -2014 Proxy Statement59
prohibition. Unless otherwise provided in the applicable award agreement, upon the expiration of the term of the SAR if the SAR remains unexercised and the exercise price is less than the fair market value of a share of Common Stock, then the SAR will be automatically exercised. All SARs granted under the 2014 Plan must have a grant price per share that is not less than the fair market value (as defined in the 2014 Plan) of a share of Common Stock on the date of grant and a term of no more than ten years. SARs may not include provisions that “reload” the SARs upon exercise and, without stockholder approval, SARs may not be repriced, including by means of a substitute award with an exercise price that is less than the original SAR or payment of cash to that effect. Dividends and/or dividend equivalents will not be paid with respect to any SARs.
Stock Awards
The 2014 Plan also provides for the granting of stock awards, stock units, restricted stock and restricted stock units to employees that consist of grants of Common Stock or units denominated in Common Stock. The terms, conditions and limitations applicable to any stock award will be decided by the Compensation Committee. At the discretion of the Compensation Committee, the terms of a stock award may include rights to receive dividends or dividend equivalents, provided that no dividends or dividend equivalents may be paid on unvested stock awards. Dividends or dividend equivalentsspecific instructions, brokers may in some cases vote such shares in their discretion if they so choose. However, the NYSE precludes brokers from exercising voting discretion of the Compensation Committee, be accumulated on unvested stock awards and paid to the participants at the time such stock awards vest.
Cash Awards
The 2014 Plan also provides for the granting of cash awards to employees. The terms, conditions and limitations applicable to any cash awards granted pursuant to the 2014 Plan will be determined by the Compensation Committee.
Performance Awards
At the discretion of the Compensation Committee, any of the above-described employee awards may be made in the form of a performance award. A performance award is an award that is subject to the attainment of one or more future performance goals and that may or may not be intended to meet the requirements for “qualified performance-based compensation” under Section 162(m) of the Code. The terms, conditions and limitations applicable to any performance award are decided by the Compensation Committee.
In making awards intended to meet the standards of qualified performance-based compensation exemptproposals it considers “non-routine” without specific instructions from the deduction limitations set forth in Section 162(m) of the Code, the Compensation Committee may base a performance goal that may be applied to the employee, one or more business units, divisions or geographic regions of the Company, the Company as a whole, or by comparison to a peer group of companies, andbeneficial owner. At our annual meeting, under NYSE rules brokers will include one or more of the following:
• | revenue | | | • | net income | | | • | net income per share | | | • | stock price | | | • | market share | | | • | earnings per share | | | • | other earnings measures | | | • | return on equity | | | • | return on assets | | | • | return on net assets | | | • | costs | | | • | stockholder value | | | • | EBIT | | | • | EBITDA | | | • | funds from operations | | | • | cash flow | | | • | cash flow from operations | | | • | increase in cash flow | | | • | increase in cash flow from operations | | | • | increase in cash flow return | | | • | net cash flow | | | • | net cash flow before financing activities | | | • | other cash flow measures | | | • | economic value added | | | • | total stockholder return |
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• | return on investment | | | • | return on capital | | | • | return on invested capital | | | • | operating income | | | • | operating margin | | | • | after-tax operating income | | | • | debt reduction | | | • | internal rate of return | | | • | capital efficiency | | | • | reserve additions | | | • | proceeds from dispositions | | | • | production volumes | | | • | increase in production | | | • | reserve replacement measures | | | • | finding and development costs | | | • | total market value | | | • | petroleum reserve measures | | | • | safety and environmental performance measures |
Performance goals need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses. The Compensation Committee may provide that any such performance award may include or exclude any of the following events that occurs during a performance period: (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary items and/or nonrecurring, unusual or special items as described in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders, Form 10-K or Form 10-Q for the applicable period, (f) acquisitions or divestitures, (g) foreign exchange gains and losses and (h) hedging activities.
Employee Award Limitations
Under the 2014 Plan, no employee may be granted during any calendar year:
• | stock options and/or SARs covering more than 5,000,000 shares of Common Stock; | | | • | stock awards covering more than 2,000,000 shares of Common Stock; or | | | • | cash awards (including performance awards) in respect of any calendar year having a value determined on the grant date in excess of $20,000,000. |
Consultant Award
The Compensation Committee may make non-qualified stock options, stock appreciation rights, stock awards, performance awards or cash awards available under the 2014 Plan to a consultant providing services to the Company or one of its subsidiaries.
Nonemployee Director Awards
At the discretion of the Board of Directors, nonemployee directors may be granted awards under the 2014 Plan in the form of stock options or stock awards. These discretionary awards to directors may be granted singly, in combination, or in tandem. No nonemployee director may be granted discretionary awards consisting of stock options or stock awards covering or relating to more than 84,000 shares of Common Stock during any calendar year.
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Deferred Payment
At the discretion of the Compensation Committee, amounts payable in respect of awards granted under the 2014 Plan may be deferred. Any deferred payment may be forfeited if and to the extent that the terms of the applicable award so provide.
Amendment, Modification, and Termination
The Board of Directors may amend, modify, suspend, or terminate the 2014 Plan at any time for the purpose of addressing changes in legal requirements or for other purposes permitted by law. However, no amendment will be effective prior to approval by stockholders of the Company if such approval is required by law or the requirements of the exchange on which the Common Stock is listed. Furthermore, without the prior approval of stockholders of the Company, stock options and stock appreciation rights issued under the 2014 Plan will not be repriced.
Term
If the 2014 Plan is approved at the Annual Meeting:
• | the 2014 Plan will be effective as of the date of the approval; | | | • | no awards will be made under the 2014 Plan ten years or more after such approval; and | | | • | no further awards will be granted under the 2004 Incentive Plan. |
Federal Income Tax Consequences
The following is a brief summary of the federal income tax aspects of awards that may be made under the 2014 Plan based on existing U.S. federal income tax laws. This summary is general in nature and does not address issues related to the tax circumstances of any particular participant. This summary is not complete and does not attempt to describe any state, local or non-U.S. tax consequences.
Stock Options and SARs.Participants will not realize taxable income upon the grant of a non-qualified stock option or SAR. Upon the exercise of a non-qualified stock option or SAR, the participant will recognize ordinary income (subject, in the case of employees, to withholding) in an amount equal to the excess of: the fair market value on the date of exercise of the Common Stock received (plus the amount of any cash received) over the exercise price paid upon the exercise of the non-qualified stock option or SAR. The participant will generally have a tax basis in any shares of Common Stock received on the exercise of a SAR, or on the cash exercise of a non-qualified stock option, that equals the fair market value of such shares on the date of exercise. Subject to the discussion under “Certain Tax Code Limitations on Deductibility” below, the Company will be entitled to a deduction for U.S. federal income tax purposes that corresponds as to timing and amount with the compensation income recognized by the participant.
Employees will not have taxable income upon the grant of an incentive stock option. Upon the exercise of an incentive stock option, the employee will not have taxable income, although the excess of the fair market value of the shares of Common Stock received upon exercise of the incentive stock option over the exercise price will increase the alternative minimum taxable income of the employee, which may cause such employee to incur alternative minimum tax. The payment of any alternative minimum tax attributable to the exercise of an incentive stock option would be allowed as a credit against the employee’s regular tax liability in a later year to the extent the employee’s regular tax liability is in excess of the alternative minimum tax for that year.
Upon the disposition of stock received in connection with the exercise of an incentive stock option that has been held for the requisite holding period
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(generally, at least two years from the date of grant and one year from the date of exercise of the incentive stock option), the employee will generally recognize capital gain or loss equal to the difference between the amount received in the disposition and the exercise price paid by the employee for the stock. However, if an employee disposes of stock that has not been held for the requisite holding period, the employee will recognize ordinary income in the year of the disqualifying disposition to the extent that the fair market value of the stock at the time of exercise of the incentive stock option (or, if less, the amount realized in the case of an arm’s-length disqualifying disposition to an unrelated party) exceeds the exercise price paid by the employee for such stock. The employee would also recognize capital gain (or, depending on the holding period, additional ordinary income) to the extent the amount realized in the disqualifying disposition exceeds the fair market value of the stock on the exercise date. If the exercise price paid for the stock exceeds the amount realized in the disqualifying disposition (in the case of an arm’s-length disposition to an unrelated party), such excess would ordinarily constitute a capital loss.
The Company will generally not be entitled to any federal income tax deduction upon the grant or exercise of an incentive stock option, unless the employee makes a disqualifying disposition of the stock. If an employee makes such a disqualifying disposition, the Company will then, subject to the discussion below under “Certain Tax Code Limitations on Deductibility,” be entitled to a tax deduction that corresponds as to timing and amount with the compensation income recognized by the employee under the rules described in the preceding paragraph.
Cash Awards; Stock Unit Awards; Stock Awards.An employee will recognize ordinary compensation income upon receipt of cash pursuant to a cash award or performance award or, if earlier, at the time such cash is otherwise made available for the employee to draw upon it. An employee will not have taxable income upon the grant of a stock award in the form of units denominated in Common Stock but rather will generally recognize ordinary compensation income at the time the employee receives Common Stock or cash in satisfaction of such stock unit award in an amount equal to the then fair market value of the Common Stock or cash received. In general, a participant will recognize ordinary compensation income as a result of the receipt of Common Stock pursuant to a stock award or performance award in an amount equal to the fair market value of the Common Stock when such stock is received; provided, however, that if the stock is not transferable and is subject to a substantial risk of forfeiture when received, the participant will recognize ordinary compensation income in an amount equal to the fair market value of the Common Stock when it first becomes transferable or is no longer subject to a substantial risk of forfeiture, unless the participant makes an election to be taxed on the fair market value of the Common Stock when such stock is received.
An employee will be subject to withholding for federal, and generally for state and local, income taxes at the time the employee recognizes income under the rules described above with respect to Common Stock or cash received pursuant to a cash award, performance award, stock award or stock unit award. The tax basis of a participant in the Common Stock received will equal the amount recognized by the employee as compensation income under the rules described in the preceding paragraph, and the employee’s holding period in such shares will commence on the date income is so recognized.
Subject to the discussion under “Certain Tax Code Limitations on Deductibility” below, the Company will be entitled to a deduction for U.S. federal income tax purposes that corresponds as to timing and amount with the compensation income recognized by the participant under the foregoing rules.
Certain Tax Code Limitations on Deductibility.Section 162(m) of the Code provides that certain compensation received in any year by a “covered employee” in excess of $1,000,000 is non-deductible by the Company for federal income tax purposes. Section 162(m) provides an exception, however, for “performance-based compensation.” The 2014 Plan permits the Compensation Committee to structure grants and awards made under the 2014 Plan to “covered employees” as performance-based compensation that is exempt from the limitation of Section 162(m) of the Code. However, the Compensation Committee may award compensation that is or may become non-deductible, and expects to consider whether it believes such grants are in the Company’s best interest, balancing tax efficiency with long-term strategic objectives.
Code Section 409A.Section 409A of the Code generally provides that any deferred compensation arrangement must satisfy specific requirements, both in operation and in form, regarding (i) the timing of payment, (ii) the election of deferrals and (iii) restrictions on the acceleration of payment. Failure to comply with Section 409A may result in
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the early taxation (plus interest) to the participant of deferred compensation and the imposition of a 20% tax on the participant of the deferred amounts included in the participant’s income. The Company intends to structure awards under the 2014 Plan in a manner that is designed to be exempt from or comply with Section 409A.
Plan Benefits
Because awards under the 2014 Plan are granted at the discretion of the Compensation Committee, it is not possible for the Company to determine the amount of awards that may be granted to the named executive officers or to any of the other plan participants if the plan is approved by stockholders. No awards or grants have been made under the 2014 Plan that are contingent on stockholder approval of the 2014 Plan.
Required Vote and Recommendation of the Board of Directors
The affirmative vote of holders of a majority of the shares present in person or by proxy at the meeting and entitled to vote on the proposal is required for approval of the material terms of performance goals under the 2014 Plan.Brokers do not have discretion to vote absent an instruction from the beneficial owner only on this proposalroutine matters (specifically Proposal 4, ratification of appointment of auditor), and cannot vote absent an instruction from the beneficial owner on any of the “non-routine” proposals to be presented at our annual meeting (specifically, Proposals 1, 2 or 3) without instruction. Ifinstructions from the beneficial owner.
As a result, if you do not instruct your broker how to vote on this proposal,Proposals 1, 2 or 3, your broker cannot vote for you on such proposals. Failure of a beneficial owner to provide voting instructions with regard to Proposals 1, 2 or 3 will deliverresult in a non-vote on this proposal. Abstentions“broker non-vote” for such shares. Broker non-votes will have the same 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 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 capital stock issued and outstanding and entitled to vote thereat as of the record date. Because there were [ ] shares of common stock outstanding on March 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 [ ] shares. Broker non-votes, abstentions and withhold-authority votes count for purposes of determining a quorum.
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, you may choose to vote “FOR,” “AGAINST” or “ABSTAIN.” For Proposals 2, 3 and 4, abstentions will have the effect of a vote against the proposal, butwhile 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. A broker non-vote will have the effect of a vote against Proposal 2. | | PROPOSAL | | | | YOUR BOARD’S
RECOMMENDATION | | | | VOTE REQUIRED | | | | No. 1—The election of the 10 director nominees named herein. | | | | FOR | | | | Each director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a director nominee must exceed the number of shares voted AGAINST that director nominee) will be elected. | | | | No. 2—The approval of the Amended and Restated Certificate of Incorporation of Coterra Energy Inc. | | | | FOR | | | | Proposal 2 shall be decided by the affirmative vote of a majority of the outstanding shares of common stock entitled to vote on such proposal. | | | | No. 3—The approval, on an advisory basis, of executive compensation. | | | | FOR | | | | Proposals 3 and 4 shall be decided by the affirmative vote of holders of a majority of the voting power of the common stock present in person or represented by proxy at the annual meeting and entitled to vote on such proposal. | | | | No. 4—The ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2024. | | | | FOR | | |
How will my shares be voted on other matters raised at the meeting? We do not affectknow of any matters to be presented at the outcomeannual meeting other than those listed above. However, if any other matters properly come before the annual meeting, the proxies will be voted in the discretion of the votingproxy holder. The persons named on the proposal.THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTEFOR THE ADOPTION OF THE 2014 PLAN.
PROPOSAL 6 SHAREHOLDER PROPOSAL
ComptrollerCompany’s form of proxy are members of Coterra’s management.
What can I do if I change my mind after I vote my shares? Stockholders attending the City of New York, John C. Liu, as custodian and trustee ofannual 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 New York City Employees’ Retirement System, the New York City Fire Department Pension Fund, the New York City Teachers’ Retirement System, and the New York City Police Pension Fund and as custodian of the New York City Board of Education Retirement System (the “Systems”), has notified us that it intends to present the following proposalspecifications thereon at the Annual Meeting. The proponent has furnished evidence of ownership by the Systems ofannual meeting and at least $2,000 in market value of the Company’s common stock forany adjournment or postponement thereof. You may revoke your proxy at least one yearany time prior to the date the proposal was submitted. The proponent’s proposal is quoted verbatim below.The Company is not responsible for the contents of this proposal or the supporting statement and recommends that you voteAGAINST the following shareholder proposal for the reasons set forth in the Company’s opposition statement following the proposal.RESOLVED:that the shareholders of Cabot Oil & Gas (“Cabot” or the “Company”) hereby request that the Company provideannual meeting by a report, updated semiannually disclosing the Company’s:
1. | Policies and procedures for making, with corporate funds or assets, contributions and expenditures (direct or indirect) to (a) participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office, or (b) influence the general public, or any segment thereof, with respect to an election or referendum. | | | 2. | Monetary and non-monetary contributions and expenditures (direct and indirect) used in the manner described in section 1 above, including: | | |
| a. | The identity of the recipient as well as the amount paid to each; and | | | | | b. | The title(s) of the person(s) in the Company responsible for decision-making. |
The report shall be presentedwritten communication to the board of directors or relevant board committee and posted on the Company’s website.
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STOCKHOLDER SUPPORTING STATEMENT
As long-term shareholders of Cabot, we support transparency and accountability in corporate spending on political activities. These include any activities considered intervention in any political campaign under the Internal Revenue Code, such as direct and indirect contributions to political candidates, parties, or organizations; independent expenditures; or electioneering communications on behalf of federal, state or local candidates.
Disclosure is in the best interest of the company and its shareholders and critical for compliance with federal ethics laws. Moreover, the Supreme Court’sCitizens Uniteddecision recognized the importance of political spending disclosure for shareholders when it said, “[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.” Gaps in transparency and accountability may expose the company to reputational and business risks that could threaten long-term shareholder value.
Cabot contributed at least $108,600 in corporate funds since the 2002 election cycle. (CQ: http://moneyline.cq.com and National Institute on Money in State Politics: http://followthemoney.org)
However, relying on publicly available data does not provide a complete picture of the Company’s political spending. For example, the Company’s payments to trade associations used for political activities are undisclosed and unknown. In some cases, even management does not know how trade associations use their company’s money politically. The proposal asks the Company to disclose all of its political spending, including payments to trade associations and other tax exempt organizations used for political purposes. This would bring our Company in line with a growing number of leading companies, including Exelon, ConocoPhillips, and Noble Energy that support political disclosure and accountability and present this information on their websites.
The Company’s Board and its shareholders need comprehensive disclosure to be able to fully evaluate the political use of corporate assets. We urge your support for this critical governance reform.
CABOT’S STATEMENT IN OPPOSITION TO PROPOSAL 6
The Board of Directors has carefully considered this proposal and believes that approval of the proposed resolution is not in the best interest of Cabot or our shareholders. The Board has approved a Policy on Political Contributions and Activities, which is contained in our Code of Business Conduct found on our website atwww.cabotog.com/about-cabot/governance. As a result of this policy and the additional information discussed below, the Board believes that the requested report is an unnecessary and unproductive use of the Company’s, and ultimately the shareholders’, resources.
We operate in an industry that is heavily regulated and as such, deeply affected by the political and legislative process. We strongly believe that Cabot’s long-term value to our shareholders is enhanced by a business environment that protects and supports the oil and gas industry. While our primary focus in this area is on compliance with state and federal laws governing our activities, rather than on active participation in the political or legislative process, from time to time Cabot supports organizations that are active in the public policy and political engagement processes as they affect the exploration, production and transportation of natural gas and oil. In so doing, Cabot strictly adheres to our Policy on Political Contributions and Activities, referenced above, and to all U.S. and state laws and regulations that govern political engagement for U.S. public companies.
As evidenced by publicly-available filings referenced in the proponent’s own statement in support of the proposal, Cabot’s political contributions originating from corporate funds over the last ten years arede minimusin amount, as are political contributions originating from the Cabot Oil & Gas Political Action Committee (“PAC”), which is funded through voluntary contributions by eligible Cabot employees. For example, in 2013, Cabot’s political contributions totaled $25,000. As we discussed with the proponent after receiving their proposal and prior to filing this proxy statement, our Board believes the shareholders as a whole would not benefit from Company resources and time being spent on reporting these minor expenditures that could only be considered immaterial by reasonable investors.
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Consistent with our policy, we are also members of business and industry trade groups that engage in educational initiatives regarding issues that affect our industry. Some of these associations also engage in lobbying activities that seek to promote legislative solutions that, in our judgment, are sound and responsible and appropriately advance not only Cabot’s business, but the goals and interests of our industry as a whole. A list of our business and trade association memberships can be found on our website atwww.cabotog.com/social-responsibility/environment-safety. Our Chairman of the Board and CEO approves the Company’s participation in, and levels of contributions to, all business and trade associations.
Since the primary reason for membership in trade associations is to further business goals and initiatives, and not to fund political activities, the Board believes it is not necessary to report all payments to such associations, as requested by the proponent. A few of the trade associations in which we participate have notified us that a small portion of our dues paid in 2013 may be classified as non-deductible lobbying expenses to us because of the use to which the association puts the funds. Once again, Cabot’s participation in the political process indirectly through trade associations isde minimusin amount and could only be considered immaterial by reasonable investors. The total non-deductible portion of our dues paid to all business and trade associations in which we participated in 2013, as reported to us by those associations, was less than $110,000.
For the reasons stated above, and the fact that this information is already summarized on our website atwww.cabotog.com/about-cabot/governance, the Board believes that requesting the Company to provide the additional disclosure in a report outlined in the proposal would result in unnecessary and unproductive use of the Company’s time and resources.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTEAGAINST APPROVAL OF THE SHAREHOLDER PROPOSAL.
CONFLICT OF INTEREST AND RELATED PERSON POLICIES
Under our Code of Business Conduct, directors, officers and employees are required to avoid situations that present a potential conflict between their personal interests and the interests of the Company. The Code requires that, at all times, directors, officers and employees make a prompt disclosure in writing to the Company’s Corporate Secretary of any fact or circumstance that may involve an actual or potential conflict of interest, as well as any information necessary to determine the existence or likely development of conflicts of interest. This specifically includes any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest. This requirement includes situations that create even the appearance of a conflict of interest.
For executive officers of the Company other than the CEO, the Corporate Secretary reviews the written disclosure described above with the CEO, and a determination is made whether to approve the transaction resulting in the conflict of interest or potential conflict of interest. The CEO and the Corporate Secretary may refer the matter to our Board of Directors as circumstances require. If the transaction involves the CEO or a member of the Board of Directors, the matter is referred to the full Board of Directors for review and approval. In each case the standard applied in approving the transaction is the best interests of the Company without regard to the interests of the individual officer or director involved in the transaction. These procedures for reviewing and approving conflict of interest transactions are based on the Company’s past practice and are not contained in any written policy.
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Mineral and Royalty Interest Plan
In 2006, we implemented a Mineral, Royalty and Overriding Royalty Interest Plan (“Plan”), under which we may offer to a number of our employees, including our executive officers, the opportunity to purchase a portion of the mineral, participating and non-participating royalty and overriding royalty interests acquired by the Company from time to time for cash at a price determined using the same cost basis as we acquired such interests. In accordance with the Plan, the Company makes all determinations with respect to the acquisition, exploration, development, maintenance and operation of any property subject to an interest under the Plan using the same criteria (or criteria less favorable to the property subject to an interest) as it would use were such property not subject to such an interest (that is, the Company will not favor properties subject to interests under the Plan over properties not subject to such interests when allocating Company resources in the acquisition, exploration, development, maintenance and operation of its properties).
In 2006, we offered to 73 participants, including ten officers, whose participation was approved by the Compensation Committee, the opportunity to purchase an aggregate of $2.3 million of the mineral, royalty and overriding royalty interests acquired by the Company in the McCampbell Field, located in Aransas Pass, Texas. Interests were offered to the key professional employees in the region in which the interest was located and to management level employees in the other regions and the corporate office. Participants were offered an interest commensurate with their level of responsibility and their income. Each participant was offered an interest in the same property. Each of the officers participating in the Plan, including each NEO other than Mr. Cunningham who was not employed at the time, purchased interests in the field. No individual officer purchased in excess of $115,000 of the interests offered.
In 2010, we offered to 85 participants, including ten officers, whose participation was approved by the Compensation Committee, the opportunity to purchase an aggregate of $1.4 million of the mineral, royalty and overriding royalty interests acquired by the Company from Guardian Oil & Gas, Inc. and located in Shelby, San Augustine and Nacogdoches Counties, Texas. Similar to the McCampbell Field, interests were offered to key professional employees in the region in which the interest was located and to management level employees in the other region and the corporate office. Participants were offered an interest commensurate with their level of responsibility and their income. Each participant was offered an interest in the same property. Each of the officers participating in the Plan, including each NEO, purchased interests in the field. No individual officer purchased in excess of $102,000 of the interest offered.
In 2012, we offered to 66 participants, including 11 officers, whose participation was approved by the Compensation Committee, the opportunity to purchase an aggregate of approximately $608,000 of the mineral, royalty and overriding royalty interests acquired by the Company from the period of October 2011 to July 2012, located in Frio, Atascosa and McMullen counties, Texas, in the Buckhorn operating area. All of the properties are operated by the Company. Similar to the previous offerings, interests were offered to key professional employees in the region in which the interest was located and to management level employees in the other region and the corporate office. Participants were offered an interest commensurate with their level of responsibility and their income. Each participant was offered an interest in the same property. Each of the officers participating in the Plan, including each NEO, purchased interests in the field. No individual officer purchased in excess of $44,000 of the interest offered.
No interests were offered under the Plan to participants in 2013.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2013, no member of the Compensation Committee was an officer or employee of the Company, or any of its subsidiaries, or formerly an officerby 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 four business days of the Company or any of its subsidiaries. During 2013,meeting. How are proxies solicited, and what is the Company had no compensation committee interlocks.FUTURE STOCKHOLDER PROPOSALS
Any stockholder proposal intended for inclusion in thecost?
The accompanying proxy statement for the 2015 Annual Meeting of Stockholders of the Company, and otherwise eligible, should be sent to Ms. Deidre L. Shearer, Corporate Secretary and Managing Counsel, Cabot Oil & Gas Corporation, 840 Gessner Road, Suite 1400, Houston, Texas 77024 and must be receivedis being solicited by November 20, 2014.The by-laws of the Company require timely advance written notice of stockholder nominations of director candidates and of any other business to be presented by a stockholder at an annual meeting of stockholders.
To be timely, the by-laws 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 for the 2015 Annual Meeting of Stockholders is currently January 31, 2015. To be valid, a notice must set forth certain information specified in the by-laws.
SOLICITATION OF PROXIES
our Board. The cost of soliciting proxies in the enclosed form will be borne by the Company. In addition to solicitation by mail, officers, employees or agents of the Company may solicit proxies personally. Alliance Advisors LLC will assist with the solicitation of proxies for a fee of $16,500 plus out-of-pocket expenses. The Company may request banks and brokers or other similar agents or fiduciaries to transmit the proxy material to the beneficial owners for their voting instructions and will reimburse them for their expenses in so doing. AST Phoenix Advisors has been retained What is householding? As permitted by the SEC rules, only one copy of this proxy statement is being delivered to assiststockholders residing at the same address, unless the stockholders 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 stockholder residing at an address to which only one copy was mailed. You may direct requests for additional copies for the current year or future years to our Corporate Secretary or our Investor Relations team at the following physical address, phone number or email address: Coterra Energy Inc.
Attn: Corporate Secretary or Investor Relations
840 Gessner Road, Suite 1400
Houston, Texas 77024 OR Phone: (281) 589-4600 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. 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 the following physical address or phone number to request a single copy be mailed in the solicitationfuture: 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 proxiesDirectors 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” in care of: Coterra Energy Inc.
Attn: Corporate Secretary
840 Gessner Road, Suite 1400
Houston, Texas 77024 OR Phone: (281) 589-4600 OR Email: corporatesecretary@coterra.com All communications received as described above will be relayed to the appropriate directors. How do I submit a stockholder proposal for action at a fee estimated not to exceed $10,000, plus expenses. -2014 Proxy Statement68
the 2025 annual meeting of stockholders? MISCELLANEOUS
The Company’s management does not knowYou may send any stockholder proposal intended for inclusion in the proxy statement for the 2025 annual meeting of any mattersstockholders of the Company and otherwise eligible to: Coterra Energy Inc., Corporate Secretary, 840 Gessner Road, Suite 1400, Houston, Texas 77024. A notice of stockholder proposal to be presented at the Annual Meeting2025 annual meeting of stockholders must be received by [ ], 2024.
How do I nominate a director or present other items for action at the 2025 annual meeting of stockholders? The bylaws of the Company require timely advance written notice of stockholder nominations of director candidates (other than thoseproxy access nominations, which are discussed below) and of any other business to be presented by a stockholder at an annual meeting of stockholders. To be timely, the bylaws require advance written notice be delivered to the Company’s Secretary at the principal executive offices of the Company not later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, 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). For the 2025 annual meeting, such advance written notice must be submitted in compliance with our bylaws no later than January 31, 2025 and no earlier than January 1, 2025. To be valid, a notice must set forth in the Notice of Annual Meeting of Stockholders. However, if any other matters properly come before the Annual Meeting, the persons named in the enclosed proxy intend to vote the shares to which the proxy relates on such matters in accordance with their best judgment unless otherwisecertain information specified in the proxy.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 2025 annual meeting of stockholders using a proxy access nomination? The bylaws of the Company currently permit any stockholder or group of not more than 20 stockholders that have continuously held at least three percent of our outstanding common 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 2025 annual meeting of stockholders 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 120th day, nor earlier than the close of business on the 150th day, prior to the anniversary of the date on which the Company first mailed proxy materials for the preceding year’s annual meeting. For the 2025 annual meeting, such advance written notice must be submitted in compliance with our bylaws no later than November [ ], 2024 and no earlier than October [ ], 2024. To be valid, a notice must set forth certain information specified in the bylaws and the stockholder or group of stockholders providing such a notice must comply with the eligibility and other requirements specified in the bylaws. In addition to satisfying the foregoing requirements under our bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees for the 2025 annual meeting of stockholders must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 2, 2025. By Order of the Board of Directors,
Deidre L. Shearer
MARCUS G. BOLINDER
Corporate Secretary and Managing Counsel
March 20, 2014
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[ ], 2024
| | APPENDIX A | | | AMENDED AND RESTATED CERTIFICATE OF INCORPORTATION OF
COTERRA ENERGY INC. | |
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
of
COTERRA ENERGY INC. CABOT OIL & GAS CORPORATION 2014 INCENTIVE PLAN
(As Established Effective as
Coterra Energy Inc., a corporation organized and existing under and by virtue of February 20, 2014)the General Corporation Law of the State of Delaware (the “Corporation” or the “Company”), does hereby certifycertifies that: 1. ObjectivesThe Cabot Oil & Gasname of the Corporation 2014 Incentive Plan (the “Plan”) is designed to attract and retain nonemployee directors, employees and consultants and reward them for making contributions toCoterra Energy Inc. 2. The name under which the success ofCorporation was originally incorporated was Cabot Oil & Gas Corporation and its Subsidiaries (as hereinafter defined). These objectives are to be accomplished by making awards under the Plan and thereby providing Participants (as hereinafter defined) with a proprietary interest in the growth and performancedate of filing of the Company.2. Definitions
As used herein,Corporation’s original Certificate of Incorporation with the terms set forth below shall haveSecretary of State of the following respective meanings:
“Award” means an Employee Award, a Director Award, or a Consultant Award.
“Award Agreement” means the document (in written or electronic form) communicating the terms, conditions and limitations applicable to an Award.State of Delaware was December 14, 1989.
3. The Committee may, in its discretion, require that the Participant execute such Award Agreement, or may provide for procedures through which Award Agreements are made effective without execution. Any Participant who is granted an Award and who does not affirmatively reject the applicable Award Agreement shall be deemed to have accepted the terms of Award as embodied in the Award Agreement.“Board” means the Board of Directors of the Company.
“Cash Award” means an Award denominated in cash.
“Code” means the Internal Revenue CodeCorporation
has duly adopted thisa Restated Certificate of 1986, as amended.“Committee” means such committee of the Board as is designated by the Board to administer the Plan, provided that such committee is comprised entirely of Nonemployee Directors.
“Common Stock” means the Common Stock, par value $.10 per share, of the Company.
“Company” means Cabot Oil & Gas Corporation, a Delaware corporation, or any successor thereto.
“Consultant” means a person other than an Employee or a Nonemployee Director providing bona fide services to the Company or any of its Subsidiaries as a consultant or advisor, as applicable, provided that such person is a natural person and that such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for any securities of the Company.
“Consultant Award” means the grant of any Nonqualified Stock Option, SAR, Stock Award, Performance Award or Cash Award, whether granted singly, in combination or in tandem, to a Consultant pursuant to such applicable terms, conditions and limitations as may be established in order to fulfill the objectives of the Plan.
“Director” means an individual serving as a member of the Board.
“Director Award” means the grant of any Nonqualified Stock Option or Stock Award, whether granted singly, in combination, or in tandem, to a Nonemployee Director pursuant to such applicable terms, conditions, and limitations as may be established in order to fulfill the objectives of the Plan.
“Employee” means any person who is receiving remuneration for personal services (or could be receiving remuneration except for an authorized leave of absence) as an employee of the Company or any of its Subsidiaries.
“Employee Award” means the grant of any form of Stock Option, Stock Appreciation Right, Stock Award, Performance Award or Cash Award, whether granted singly, in combination or in tandem, to an Employee pursuant to any applicable terms, conditions and limitations as the Committee may establish in order to fulfill the objectives of the Plan.
“Fair Market Value” of a share of Common Stock means, as of a particular date, (i)(A) if the shares of Common Stock are listed on a national securities exchange, the last reported sales price per share of the Common Stock on the consolidated transaction reporting system for the principal national securities
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exchange on which shares of Common Stock are listed on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, or, at the discretion of the Committee, the price prevailing on the exchange at the time of exercise or other relevant event (as determined under procedures established by the Committee), (B) if the shares of Common Stock are not so listed but are quoted by the NASDAQ Global Select Market, the last reported sales price per share of Common Stock reported on the consolidated transaction reporting system for the NASDAQ Global Select Market, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported or, at the discretion of the Committee, the price prevailing on the NASDAQ Global Select Market at the time of exercise or other relevant event, (C) if the shares of Common Stock are not so listed or quoted, the average of the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, as reported by the NASDAQ Global Select Market, or, if not reported by the NASDAQ Global Select Market, by the OTC Market Group, or (D) if the shares of Common Stock are not publicly traded, the most recent value determined by an independent appraiser appointed by the Company for such purpose, or (ii) if applicable, the price per share as determined in accordance with the procedures of a third party administrator retained by the Company to administer the Plan and as approved by the Committee.
“Incentive Stock Option” or “ISO” means a Stock Option that is intended to comply with Section 422 of the Code.
“Nonemployee Director” means an individual serving as a member of the Board who is not an Employee.
“Nonqualified Stock Option” means a Stock Option that is not an Incentive Stock Option.
“Participant” means an Employee, Nonemployee Director, or Consultant to whom an Award has been made under this Plan.
“Performance Award” means an Award made pursuant to this Plan that is subject to the attainment in the future of one or more Performance Goals.
“Performance Goal” means one or more standards established by the Committee to determine in whole or in part whether a Performance Award shall be earned.
“Prior Plan” means the Cabot Oil & Gas Corporation 2004 Incentive Plan, and any other stock incentive plans of the Company under which awards are outstanding or under which shares have been reserved but not yet used.
“Qualified Performance Award” means a Performance Award made to a Participant who is an Employee that is intended to qualify as qualified performance-based compensation under Section 162(m) of the Code, as described in Paragraph 7(a)(v)(B) of the Plan.
“Restricted Stock” means Common Stock that is restricted or subject to forfeiture provisions.
“Restricted Stock Unit” means a Stock Unit that is restricted or subject to forfeiture provisions.
“Restriction Period” means a period of time beginning as of the date of grant of an Award of Restricted Stock or Restricted Stock Units and ending as of the date upon which the Common Stock subject to such Award is no longer restricted or subject to forfeiture provisions.
“Stock Award” means an Award consisting of Common Stock or Stock Units, including the award of Restricted Stock or Restricted Stock Units.
“Stock Appreciation Right” or “SAR” means the right to receive a payment, in cash or Common Stock, equal to the excess of the Fair Market Value or other specified valuation of a number of shares of Common Stock on the date the stock appreciation right is exercised over a specific strike price, in each case as determined by the Committee.
“Stock Based Awards Limitations” means the limitations applied to any awards granted hereunder as described in Paragraphs 7(b)(i) and (ii) and Paragraph 8(b) of the Plan.
“Stock Option” means a right to purchase a specified number of shares of Common Stock at a specified exercise price, which right may be an Incentive Stock Option or a Nonqualified Stock Option.
“Stock Unit” means a unit evidencing the right to receive in specified circumstances one share of Common Stock (as determined by the Committee or the Board), which, in the discretion of the Committee, may be restricted or subject to forfeiture provisions.
“Subsidiary” means (i) in the case of a corporation, any corporation of which the Company directly or indirectly owns shares representing 50% or more of the combined voting power of the shares of all classes or series of capital stock of such corporation which have the right to vote generally on matters submitted toIncorporation without a vote of the stockholders of such corporation, (ii) in the case of a partnership or other business entity not organized as a corporation, any such business entity of which the Company directly or
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indirectly owns 50% or more of the voting, capital or profits interests (whether in the form of partnership interests, membership interests or otherwise), and (iii) any other corporation, partnership or other entity that is a “subsidiary” of the Company within the meaning of Rule 405 promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended.
3. Eligibility
(a) | Employees. Employees and individuals who have agreed to become Employees are eligible for an Employee Award under this Plan. | | | (b) | Directors. Nonemployee Directors are eligible for the grant of Director Awards under this Plan. | | | (c) | Consultants. Consultants are eligible for the grant of Consultant Awards under this Plan. |
4. Common Stock Available for Awards
Subject to the provisions of Paragraph 15 hereof, there shall be available for Awards granted wholly or partly in Common Stock (including rights or options which may be exercised for or settled in Common Stock) during the term of this Plan an aggregate of 18,000,000 shares of Common Stock. No more than 10,000,000 shares of Common Stock will be used for Incentive Stock Options. The Board and the appropriate officers of the Company are authorized to take from time to time whatever actions are necessary, and to file required documents with governmental authorities and stock exchanges and transaction reporting systems, to make shares of Common Stock available for issuance pursuant to Awards. Common Stock related to Awards under this Plan that are forfeited or terminated, expire unexercised, are settled in cash in lieu of Stock or in a manner such that all or some of the shares covered by an Award are not issued to a Participant, or are exchanged for Awards that do not involve Common Stock, shall immediately become available for Awards hereunder. If the purchase price of any Award granted under the Plan is satisfied by tendering shares of Common Stock to the Company, or if the tax withholding obligation resulting from the settlement of any such Option or other Award is satisfied by tendering or withholding shares of Common Stock, only the number of shares of Common Stock issued net of the shares of Common Stock tendered or withheld shall be deemed delivered for purposes of determining usage of shares against the maximum number of shares of Common Stock available for delivery under the Plan or any sub limit set forth above. Shares of Common Stock delivered under the Plan as an Award or in settlement of an Award issued or made (a) upon the assumption, substitution, conversion or replacement of outstanding awards under a plan or arrangement of an entity acquired in a merger or other acquisition or (b) as a post-transaction grant under such a plan or arrangement of an acquired entity shall not reduce or be counted against the maximum number of shares of Common Stock available for delivery under the Plan, to the extent that the exemption for transactions in connection with mergers and acquisitions from the stockholder approval requirements of the New York Stock Exchange for equity compensation plans applies. The Committee may from time to time adopt and observe such rules and procedures concerning the counting of shares against the Plan maximum or any sub limit as it may deem appropriate, including rules more restrictive than those set forth above to the extent necessary to satisfy the requirements of any national stock exchange on which the Common Stock is listed or any applicable regulatory requirement.
5. Administration
(a) | This Plan shall be administered by the Committee except as otherwise provided herein. | | | (b) | Subject to the provisions hereof, the Committee shall have full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Committee shall also have full and exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper. The Committee may, |
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| in its discretion, provide for the extension of the exercisability of an Employee Award or Consultant Award, accelerate the vesting or exercisability of an Employee Award or Consultant Award, eliminate or make less restrictive any restrictions applicable to an Employee Award or Consultant Award, waive any restriction or other provision of this Plan (insofar as such provision related to Employee Awards or Consultant Awards) or an Employee Award or Consultant Award or otherwise amend or modify an Employee Award or Consultant Award in any manner that is either (i) not materially adverse to the Participant to whom such an Employee Award or Consultant Award was granted or (ii) consented to by such Participant.Notwithstanding anything herein to the contrary, except as expressly provided by the adjustment provisions of Paragraph 15, without the approval of the Company’s stockholders, Stock Options and SARs issued under the Plan will not be (i) repriced, replaced, or regranted through cancellation or by decreasing the exercise price of a previously granted Stock Option or SAR or (ii) canceled in exchange for cash or other Awards or Stock Options or SARs with an exercise price that is less than the exercise price of the original StockOptions or SARs.The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee deems necessary or desirable to further the Plan purposes. Any decision of the Committee in the interpretation and administration of this Plan shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned. No member of the Committee or officer of the Company to whom it has delegated authority in accordance with the provisions of Paragraph 6 of this Plan shall be liable for anything done or omitted to be done by him or her, by any member of the Committee or by any officer of the Company in connection with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute. The Committee shall establish the vesting schedule, if any, for each Award. | | | (c) | The Board shall have the same powers, duties, and authority to administer the Plan with respect to Director Awards as the Committee retains with respect to Employee Awards and Consultant Awards. |
6. Delegation of Authority
Following the authorization of a pool of cash or shares of Common Stock to be available for Awards, the Board or the Committee may authorize the Chief Executive Officer and/or another executive officer of the Company, if and to the extent permitted by applicable law, rule or regulation, or a subcommittee of members of the Board, to grant individual Employee Awards from such pool pursuant to such conditions or limitations as the Board or the Committee may establish. The Board or Committee may also delegate to the Chief Executive Officer and to other employees of the Company its administrative duties under this Plan (excluding its granting authority) pursuant to such conditions or limitations as the Committee may establish. The Board or Committee may engage or authorize the engagement of a third party administrator to carry out administrative functions under the Plan.
7. Employee Awards and Consultant Awards
(a) | The Committee (or other committee to whom such authority is delegated under Paragraph 6 above) shall determine the type or types of Employee Awards to be made under this Plan and shall designate from time to time Employees who are to be recipients of such Awards. Each Employee Award made hereunder may, in the discretion of the Committee, be embodied in an Award Agreement, which shall contain such terms, conditions, performance requirements and limitations as shall be determined by the Committee in its sole discretion and shall, if required by the Committee, be signed by the Participant to whom the Employee Award is granted and signed for and on behalf of the Company. Employee Awards may consist of those listed in this Paragraph 7 and may be granted singly, in combination or in tandem. Employee Awards may also be granted in combination or in tandem with, in replacement of (subject to Paragraph 12), or as alternatives to, grants or rights under this Plan or any other employee |
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| plan of the Company or any of its Subsidiaries, including the plan of any acquired entity. An Employee Award may provide for the grant or issuance of additional, replacement or alternative Employee Awards upon the occurrence of specified events. All or part of an Employee Award may be subject to conditions established by the Committee, which may include, but are not limited to, continuous service with the Company and its Subsidiaries, achievement of specific business objectives, items referenced to in clause (v) below, and other comparable measurements of performance. |
| (i) | Stock Option.An Employee Award may consist of a right to purchase a specified number of shares of Common Stock at a specified price that is not less than the greater of (i) the Fair Market Value of the Common Stock on the date of grant and (ii) the par value of the Common Stock on the date of grant. A Stock Option may be in the form of an Incentive Stock Option or a Nonqualified Stock Option. The term of the Stock Option shall extend no more than 10 years after the date of grant;provided, however, if the term of a Nonqualified Stock Option (but not an Incentive Stock Option) expires when trading in the Common Stock is prohibited by law or the Company’s insider trading policy, then the term of such Nonqualified Stock Option shall expire on the 30thday after the expiration of such prohibition. Unless otherwise provided in the applicable Award Agreement, upon the expiration of the term of a Stock Option (as extended, if applicable, by the previous sentence) if the Stock Option remains unexercised and the exercise price is less than the Fair Market Value of a share of Common Stock, then the Stock Option shall automatically be exercised by means of a cashless exercise method approved by the Committee. Stock Options may not include provisions that “reload” the Stock Option upon exercise. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Stock Options awarded to Employees pursuant to this Plan, including the exercise price, the term of the Stock Options, the number of shares subject to the Stock Option and the date or dates upon which they become exercisable, shall be determined by the Committee. | | | | | (ii) | Stock Appreciation Right. An Employee Award may consist of a right to receive a payment, in cash or Common Stock, equal to the excess of the Fair Market Value or other specified valuation of a specified number of shares of Common Stock on the date the Stock Appreciation Right is exercised over a specified strike price (which may be no less than the Fair Market Value of the Common Stock on the date of grant) as set forth in the applicable Award Agreement. The holder of a tandem SAR may elect to exercise either the option or the SAR, but not both. The exercise period for an SAR shall extend no more than 10 years after the date of grant;provided, however, if the term of an SAR expires when trading in the Common Stock is prohibited by law or the Company’s insider trading policy, then the term of such SAR shall expire on the 30thday after the expiration of such prohibition. Unless otherwise provided in the applicable Award Agreement, upon the expiration of the term of a SAR (as extended, if applicable, by the previous sentence) if the SAR remains unexercised and the exercise price is less than the Fair Market Value of a share of Common Stock then the SAR will be automatically exercised. SARs may not include provisions that “reload” the SAR upon exercise. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any SARs awarded to Employees pursuant to this Plan, including the exercise price, the term of any SARs and the date or dates upon which they become exercisable, shall be determined by the Committee. | | | | | (iii) | Stock Award. An Employee Award may be in the form of a Stock Award. The terms, conditions and limitations applicable to any Stock Awards granted pursuant to this Plan shall be determined by the Committee, subject to the limitations set forth below. | | | | | (iv) | Cash Award. An Employee Award may be in the form of a Cash Award. The terms, conditions and limitations applicable to any Cash Awards granted pursuant to this Plan shall be determined by the Committee. | | | | | (v) | Performance Award. Without limiting the type or number of Awards that may be made under the other provisions of this Plan, an Award may be in the form of a Performance Award. The terms, conditions and limitations applicable to any Performance Awards granted to Participants pursuant to this Plan shall be determined by the Committee, subject to the limitations set forth below. | | | The Committee shall set Performance Goals |
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| | in its discretion which, depending on the extent to which they are met, will determine the value and/or amount of Performance Awards that will be paid out to the Participant and/or the portion of an Award that may be exercised. | | | | | (A) | Nonqualified Performance Awards. Performance Awards granted to Employees that are not intended to qualify as qualified performance-based compensation under Section 162(m) of the Code, or that are Stock Options or SARs, shall be based on achievement of such goals and be subject to such terms, conditions and restrictions as the Committee or its delegate shall determine. | | | | | (B) | Qualified Performance Awards. Performance Awards granted to Employees under the Plan that are intended to qualify as Qualified Performance Awards shall be paid, vested or otherwise deliverable solely on account of the attainment of one or more pre-established, objective Performance Goals established by the Committee prior to the earlier to occur of (x) 90 days after the commencement of the period of service to which the Performance Goal relates and (y) the lapse of 25% of the period of service (as scheduled in good faith at the time the goal is established), and in any event while the outcome is substantially uncertain. A Performance Goal is objective if a third party having knowledge of the relevant facts could determine whether the goal is met. Such a Performance Goal may be based on one or more business criteria that apply to the Employee, one or more business units, divisions or geographic regions of the Company, the Company as a whole, or, if desired by the Committee, by comparison to a peer group of companies, and shall include one or more of the following: revenue, net income, net income per share, stock price, market share, earnings per share, other earnings measures, return on equity, return on assets, return on net assets, costs, stockholder value, EBIT, EBITDA, funds from operations, cash flow, cash flow from operations, increase in cash flow, increase in cash flow from operations, increase in cash flow return, net cash flow, net cash flow before financing activities, other cash flow measures, economic value added, total stockholder return, return on capital, return on invested capital, return on investment, operating income, operating margin, after-tax operating income, debt reduction, internal rate of return, capital efficiency, reserve additions, proceeds from dispositions, production volumes, increase in production, reserve replacement measures, finding and development costs, total market value, petroleum reserve measures and safety and environmental performance measures. Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). In interpreting Plan provisions applicable to Performance Goals and Qualified Performance Awards, it is the intent of the Plan to conform with the standards of Section 162(m) of the Code and Treasury Regulation § 1.162-27(e) (2)(i), as to grants to those Employees whose compensation is, or is likely to be, subject to Section 162(m) or the Code, and the Committee in establishing such goals and interpreting the Plan shall be guided by such provisions. Prior to the payment of any compensation based on the achievement of Performance Goals applicable to Qualified Performance Awards, the Committee must certify in writing that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied. For this purpose, approved minutes of the Committee meeting in which the certification is made shall be treated as such written certification. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Qualified Performance Awards made pursuant to this Plan shall be determined by the Committee. The Committee may provide in any such Performance Award that any evaluation of performance may include or exclude any of the following events that occurs during a Performance Period: (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary items as described in FASB ASC Topic No. 360 and/or nonrecurring, unusual or special items as described in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders, Form 10-K or Form 10-Q for the applicable |
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| | period, (f) acquisitions or divestitures, (g) foreign exchange gains and losses and (h) settlement of hedging activities. The amount of cash or shares payable or vested pursuant to Awards that are intended to be Qualified Performance Awards may not be adjusted upward; provided, however, that the Committee may retain the discretion to adjust the amount of cash or shares payable or vested pursuant to such Qualified Performance Awards downward, either on a formula or discretionary basis or any combination, as the Committee determines. |
(b) | Notwithstanding anything to the contrary contained in this Plan, the following limitations shall apply to any Awards made hereunder: |
| (i) | no Participant may be granted, during any calendar year, Awards consisting of Stock Options or Stock Appreciation Rights (including Stock Options and SARs that are granted as Performance Awards) that are exercisable for more than 5,000,000 shares of Common Stock; | | | | | (ii) | no Participant may be granted, during any calendar year, Stock Awards (including Stock Awards that are granted as Performance Awards) covering or relating to more than 2,000,000 shares of Common Stock (the limitation set forth in this clause (ii), together with the limitation set forth in clause (i) above, | | | | | (iii) | no Participant may be granted Employee Awards consisting of cash (including Cash Awards that are granted as Performance Awards) in respect of any calendar year having a value determined on the date of grant in excess of $20,000,000. |
A Participant may be granted Awards in combination such that portions of the Award are subject to differing limitations set out in the clauses of this Paragraph 7(b), in which event each portion of the combination Award is subject only to a single appropriate limitation in clauses (i), (ii) or (iii). For example, if a Participant is granted a Performance Award that is in part a Stock Award and in part a Cash Award, then the Stock Award shall be subject only to the limitation in clause (ii) and the Cash Award shall be subject only to the limitation in clause (iii).
(c) | Subject to Paragraph 7(d), the Committee shall have the sole responsibility and authority to determine the type or types of Consultant Awards to be made under this Plan and the terms, conditions and limitations applicable to such Awards. | | | (d) | Stock Awards, other than those awards which are subject to specific grant limitations under the Plan, shall be in lieu of, and have a Fair Market Value on the date of grant equal to, other compensation that the Company would otherwise have awarded to the Participant. |
8. Director Awards
(a) | The Board may grant Director Awards to Nonemployee Directors of the Company from time to time in accordance with this Paragraph 8. Director Awards may consist of those listed in this Paragraph 8 and may be granted singly, in combination or in tandem. Each Director Award may, in the discretion of the Board, be embodied in an Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Board in its sole discretion and, if required by the Board, shall be signed by the Participant to whom the Director Award is granted and signed for and on behalf of the Company. |
| (i) | Stock Options.A Director Award may consist of a right to purchase a specified number of shares of Common Stock at a specified price that is not less than the greater of (i) the Fair Market Value of the Common Stock on the date of grant and (ii) the par value of the Common Stock on the date of grant. A Stock Option granted as a Director Award may not be in the form of an Incentive Stock Option. The term of the Stock Option shall extend no more than 10 years after the date of grant; provided, however, if the term of a Stock Option expires when trading in the Common Stock is prohibited by law or the Company’s insider trading policy, then the term of such Stock Option shall expire on the 30thday after the expiration of such prohibition. Unless otherwise provided in the applicable Award Agreement, upon the expiration of the term of a Stock Option (as extended, if applicable, by the previous sentence) if the Stock Option remains unexercised and the exercise price is less than the Fair Market Value of a share of Common Stock, then the |
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| | Stock Option shall automatically be exercised by means of a cashless exercise method approved by the Committee. Stock Options may not include provisions that “reload” the Stock Option upon exercise. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Stock Options awarded to Nonemployee Directors pursuant to this Plan, including the strike price, the term of the Stock Options, the number of share subject to the Stock Option (subject to Paragraph 8(b)) and the date or dates upon which they become exercisable, shall be determined by the Board. | | | | | (ii) | Stock Awards. A Director Award may be in the form of a Stock Award. Any terms, conditions and limitations applicable to any Stock Awards granted to a Nonemployee Director pursuant to this Plan, including but not limited to rights to dividend equivalents, shall be determined by the Board. |
(b) | No Participant may be granted, during any calendar year, Director Awards consisting of Stock Awards or Stock Options covering or relating to more than 84,000 shares of Common Stock. | | | (c) | At the discretion of the Board, Director Awards may be settled by a cash payment in an amount that the Board shall determine in its sole discretion is equal to the fair market value of such Director Awards. |
9. Payment of Awards
(a) | General. Payment of Awards may be made in the form of cash or Common Stock or combinations thereof and may include such restrictions as the Committee shall determine, including in the case of Common Stock, restrictions on transfer and forfeiture provisions. If such payment is made in the form of Restricted Stock, the Committee shall specify whether the underlying shares are to be issued at the beginning or end of the Restriction Period. In the event that shares of Restricted Stock are to be issued at the beginning of the Restriction Period, the certificates evidencing such shares (to the extent that such shares are so evidenced) shall contain appropriate legends and restrictions that describe the terms and conditions of the restrictions applicable thereto. In the event that shares of Restricted Stock are to be issued at the end of the Restriction Period, the right to receive such shares shall be evidenced by book entry registration or in such other manner as the Committee may determine. | | | (b) | Deferral. With the approval of the Committee, amounts payable in respect of Awards may be deferred, either in the form of installments or a future lump sum payment. The Committee may permit selected Participants to elect to defer payments of some or all types of Awards in accordance with procedures established by the Committee or the Board. Any deferred payment, whether elected by the Participant or specified by the Award Agreement or by the Committee, may be forfeited if and to the extent that the Award Agreement so provides. | | | (c) | Dividends, Earnings and Interest. Dividends or dividend equivalent rights may be extended to and made part of any Stock Award, subject to such terms, conditions and restrictions as the Committee may establish; provided, however, that no such dividends or dividend equivalents shall be paid with respect to unvested Stock Awards, including Stock Awards subject to Performance Goals, but may, in the discretion of the Committee, be accrued and paid to the Participant at the time that such Stock Award vests. The Committee may also establish rules and procedures for the crediting of interest or other earnings on deferred cash payments. Dividends and/or dividend equivalents shall not be paid with respect to any Stock Options or SARs. | | | (d) | Substitution of Awards. Subject to Paragraphs 12 and 15, at the discretion of the Committee, a Participant who is an Employee or Consultant may be offered an election to substitute an Employee Award or Consultant Award for another Employee Award or Consultant Award or Employee Awards or Consultant Awards of the same or different type. | | | (e) | Cash-out of Awards. At the discretion of the Committee, an Award that is a Stock Option or Stock Appreciation Right may be settled by a cash payment equal to the difference between the Fair Market Value per share of Common Stock on the date of exercise and the exercise price of the Award, multiplied by the number of shares with respect to which the Award is exercised. |
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10. Stock Option Exercise
The price at which shares of Common Stock may be purchased under a Stock Option shall be paid in full at the time of exercise in cash or, if permitted by the Committee and elected by the optionee, the optionee may purchase such shares by means of tendering Common Stock or surrendering another Award, including Restricted Stock, valued at Fair Market Value on the date of exercise, or any combination thereof.
The Committee shall determine acceptable methods for Participants who are Employees or Consultants to tender Common Stock or other Employee Awards or Consultant Awards to exercise a Stock Option as it deems appropriate. If permitted by the Committee, payment may be made by successive exercises by the Participant or by a net exercise or cashless exercise procedures. The Committee may provide for procedures to permit the exercise or purchase of such Awards by use of the proceeds to be received from the sale of Common Stock issuable pursuant to an Award. The Committee may adopt additional rules and procedures regarding the exercise of Options from time to time, provided that such rules and procedures are not inconsistent with the provisions of this Paragraph 10.
An optionee desiring to pay the exercise price of a Stock Option by tendering Common Stock using the method of attestation may, subject to any such conditions and in compliance with any such procedures as the Committee may adopt, do so by attesting to the ownership of Common Stock of the requisite value in which case the Company shall issue or otherwise deliver to the optionee upon such exercise a number of shares of Common Stock subject to the Stock Option equal to the result obtained by dividing (a) the excess of the aggregate Fair Market Value of the shares of Common Stock subject to the Stock Option for which the Stock Option (or portion thereof) is being exercised over the exercise price payable in respect of such exercise by (b) the Fair Market Value per share of Common Stock subject to the Stock Option, and the optionee may retain the shares of Common Stock the ownership of which is attested.
11. Taxes
The Company or its designated third party administrator shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or shares of Common Stock under this Plan, an appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment of taxes or other amounts required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes;provided, however, that, unless otherwise determined by the Committee in response to a change in accounting rules, the number of shares of Common Stock withheld for payment of required withholding taxes must equal no more than the required minimum withholding taxes. The Committee may also permit withholding to be satisfied by the transfer to the Company of shares of Common Stock theretofore owned by the holder of the Employee Award with respect to which withholding is required. If shares of Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair Market Value when the tax withholding is required to be made.
12. Amendment, Modification, Suspension or Termination
The Board may amend, modify, suspend or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law except that (i) no amendment or alteration that would materially and adversely affect the rights of any Participant under any Award previously granted to such Participant shall be made without such Participant’s consent and (ii) no amendment or alteration shall be effective prior to approval by the Company’s stockholders to the extent such approval is required by applicable legal requirements or applicable requirements of the securities exchange on which the Company’s Common Stock is listed.Notwithstanding anything herein to the contrary, except as expressly provided by the adjustment provisions of Paragraph 15, without the approval of the Company’s stockholders, Stock Options and SARs issued under the Plan will not
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be (i) repriced, replaced, or regranted through cancellation or by decreasing the exercise price of a previously granted Stock Option or SAR or (ii) canceled in exchange for cash or other Awardsor Stock Options or SARs with an exercise price that is less than the exercise price of the original Stock Options or SARs.
13. Termination of Employment
Upon the termination of employment by a Participant, any unexercised, deferred or unpaid Awards shall be treated as provided in the specific Award Agreement evidencing the Award. In the event of such a termination, the Committee may, in its discretion, provide for the extension of the exercisability of an Award, accelerate the vesting or exercisability of an Award, eliminate or make less restrictive any restrictions contained in an Award, waive any restriction or other provision of this Plan or an Award or otherwise amend or modify the Award in any manner that is either (i) not materially adverse to such Participant or (ii) consented to by such Participant.
14. Assignability
Unless otherwise determined by the Committee and provided in the Award Agreement or the terms of an Award, no Award or any other benefit under this Plan shall be assignable or otherwise transferable except by will, by beneficiary designation or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder. In the event that a beneficiary designation conflicts with an assignment by will, the beneficiary designation will prevail. The Committee may prescribe and include in applicable Award Agreements or the terms of an Award other restrictions on transfer. Any attempted assignment of an Award or any other benefit under this Plan in violation of this Paragraph 14 shall be null and void.
15. Adjustments
(a) | The existence of outstanding Awards shall not affect in any manner the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the Common Stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above. | | | (b) | In the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, then (i) the number of shares of Common Stock reserved under this Plan and the number of shares of Common Stock available for issuance pursuant to specific types of Awards as described in Paragraph 4, (ii) the number of shares of Common Stock covered by outstanding Awards in the form of Common Stock or units denominated in Common Stock, (iii) the exercise price or other price in respect of such Awards, (iv) the appropriate Fair Market Value and other price determinations for such Awards, and (v) the Stock Based Awards Limitations shall each be proportionately adjusted by the Committee as appropriate to reflect such transaction. In the event of any other recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, the adoption by the Company of any plan of exchange affecting the Common Stock or any distribution to holders of Common Stock of securities or property (including cash dividends that the Committee determines are not in the ordinary course of business but excluding normal cash dividends or dividends payable in Common Stock), the Committee shall make appropriate adjustments to (i) the number of shares of |
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| Common Stock reserved under this Plan and the number of shares of Common Stock available for issuance pursuant to specific types of Awards as described in Paragraph 4, (ii) the number and kind of shares of Common Stock covered by outstanding Awards in the form of Common Stock or units denominated in Common Stock, (iii) the exercise price or other price in respect of such Awards, (iv) the appropriate Fair Market Value and other price determinations for such Awards, and (v) the Stock Based Awards Limitations to reflect such transaction; provided that such adjustments shall only be such as are necessary to maintain the proportionate interest of the holders of the Awards and preserve, without increasing, the value of such Awards. | | | (c) | In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee may make such adjustments to Awards or other provisions for the disposition of Awards as it deems equitable, and shall be authorized, in its discretion, (i) to provide for the substitution of a new Award or other arrangement (which, if applicable, may be exercisable for such property or stock as the Committee determines) for an Award or the assumption of the Award, regardless of whether in a transaction to which Section 424(a) of the Code applies, (ii) to provide, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, the Award and, if the transaction is a cash merger, provide for the termination of any portion of the Award that remains unexercised at the time of such transaction, or (iii) to cancel any such Awards and to deliver to the Participants cash in an amount that the Committee shall determine in its sole discretion is equal to the Fair Market Value of such Awards on the date of such event, which in the case of Stock Options or SARs shall be the excess (if any) of the Fair Market Value of Common Stock on such date over the exercise or strike price of such Award. | | | (d) | No adjustment or substitution pursuant to this Paragraph 15 shall be made in a manner that results in noncompliance with the requirements of Section 409A of the Code, to the extent applicable. |
16. Restrictions
No Common Stock or other form of payment shall be issued with respect to any Award unless the Company shall be satisfied based on the advice of its counsel that such issuance will be in compliance with applicable federal and state securities laws. Certificates evidencing shares of Common Stock delivered under this Plan (to the extent that such shares are evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation and any applicable federal or state securities law. The Committee may cause a legend or legends to be placed upon any such certificates to make appropriate reference to such restrictions.
17. Unfunded Plan
This Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants under this Plan, any such accounts shall be used merely as a bookkeeping convenience, including bookkeeping accounts established by a third party administrator retained by the Company to administer the Plan. The Company shall not be required to segregate any assets for purposes of this Plan or Awards hereunder, nor shall the Company nor the Board nor the Committee be deemed to be a trustee of any benefit under this Plan. Any liability or obligation of the Company to any Participant with respect to a an Award under this Plan shall be based solely upon any contractual obligations that may be created by this Plan and any Award Agreement or terms of the Award, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by this Plan.
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18. Right to Continued Service or Employment
Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment or other service relationship at any time, or confer upon any Participant any right to continue in the capacity in which he or she is employed or otherwise serves the Company.
19. Successors
All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
20. Governing Law
This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall be governed by and construed in accordance with Section 245 of the lawsGeneral Corporation Law of the State of Delaware.
21. Effective DateDelaware
. This Restated Certificate of Incorporation only restates and Termintegrates and does not further amend the provisions of Planon October 1, 2021. 4. The Plan willBoard 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 CompanyCorporation for approval attheir approval; and the 2014 annual meetingCorporation’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
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 if approved,(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 effectivefixed by the Board of Directors as ofsenior to, or on a parity with, the datepowers, preferences and rights of such approval. No Award shall be made under the Plan ten yearsoutstanding series, or more after such approval. Asany of the date of stockholder approval of this Plan, no further awards shall be made under the Prior Plans,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 outstanding awards granted under the Prior Plansrequirements, 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 continuebe entitled to receive such dividends, if any, as may be outstandingdeclared 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 subjectdistributed among the holders of shares pro rata in accordance with the number of shares of such stock held by each such holder.
(2) Liquidation. After distribution in full of the preferential amount, if any, to be distributed to the appropriate termsholders of Preferred Stock in the event of voluntary or involuntary liquidation, distribution or sale of assets, dissolution or winding-up of the Prior Plan under which such award was granted and as are in effect asCompany, the holders of the date this Plan is effective.22. Clawback
ToCommon Stock shall be entitled to receive all the extentremaining 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 applicable law, this Certificate of Incorporation or any applicable securities exchange listing standards,the provisions of the resolution or resolutions as otherwise determinedmay be adopted by the Committee, Awards and amounts paid or payableBoard of Directors pursuant to or withSection I of this Article IV, each holder of Common Stock shall have one vote in respect to Awardsof 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 clawback policy implementedBy-Laws adopted by the Company,stockholders; provided, however, that no By-Laws thereafter adopted by the stockholders shall invalidate any prior act of the directors which clawback policywould 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 providebe amended or replaced, or (iv) for forfeiture, repurchase and/or recoupmentany transaction from which the director derived an improper personal benefit. If the GCL is amended after the date of Awards and amounts paid or payable pursuant to or with respect to Awards. Notwithstanding any provisionfiling of this PlanCertificate of Incorporation to authorize corporate action further eliminating or any Award Agreementlimiting the personal liability of directors, then the liability of a director of the Corporation, in addition to the contrary,limitation on personal liability provided herein, shall be limited to the Companyfullest 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 withoutto amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the consent of any Participant, to adopt any such clawback policiesmanner now or hereafter prescribed by statute, and procedures, including such policies and procedures applicableall rights conferred upon stockholders herein are granted subject to this Planreservation. [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]](/files/PRE 14A/0001104659-24-032399/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 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 Award Agreement with retroactive effect.23. Section 409A
(a) | Awards made under this Plan are intended to comply with or be exempt from Section 409A of the Code, and ambiguous provisions hereof, if any, shall be construed and interpreted in a manner consistent with such intent. No payment, benefit or consideration shall be substituted for an Award if such action would result in the imposition of taxes under Section 409A of the Code. Notwithstanding anything in this Plan to the contrary, if any Plan provision or Award |
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| under this Plan would result in the imposition of an additional tax under Section 409A of the Code, that Plan provision or Award shall be reformed, to the extent permissible under Section 409A of the Code, to avoid imposition of the additional tax, and no such action shall be deemed to adversely affect the Participant’s rights to an Award. | | | (b) | Unless the Committee provides otherwise in an Award Agreement, each Restricted Stock Unit (including a Restricted Stock Unit that is a Performance Award) or Cash Award (or portion thereof if the Award is subject to a vesting schedule) shall be settled no later than the 15th day of the third month after the end of the first calendar year in which the Award (or such portion thereof) is no longer subject to a “substantial risk of forfeiture” within the meaning of Section 409A of the Code. If the Committee determines that a Restricted Stock Unit (including a Restricted Stock Unit that is a Performance Award) or Cash Award is intended to be subject to Section 409A of the Code, the applicable Award Agreement shall include terms that are designed to satisfy the requirements of Section 409A of the Code. | | | (c) | If the Participant is identified by the Company as a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code on the date on which the Participant has a “separation from service” (other than due to death) within the meaning of Treasury Regulation § 1.409A-1(h), any Award payable or settled on account of a separation from service that is deferred compensation subject to Section 409A of the Code shall be paid or settled on the earliest of (1) the first business day following the expiration of six months from the Participant’s separation from service, (2) the date of the Participant’s death, or (3) such earlier date as complies with the requirements of Section 409A of the Code. |
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TO VOTE, MARK BLOCKS BELOWadjournment 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 BLUE OR BLACK INK AS FOLLOWS: 
KEEP THIS PORTION FOR YOUR RECORDS | DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary,
please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or
partnership, please sign in full corporate or partnership name, by authorized officer.
| | | | | | | | | | | | | SHARES
CUSIP #
SEQUENCE # | Signature [PLEASE SIGN WITHIN BOX] | Date | JOB # | Signature (Joint Owners) | Date | | |
ImportantTHE ENVELOPE PROVIDED. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Form 10-K, Notice & Proxy Statement is/are available atwww.proxyvote.com.
| CABOT OIL & GAS CORPORATION
Annual Meeting of Stockholders
May 1, 2014 8:00 AM
This proxy is solicited by the Board of Directors
| |
The stockholder(s) hereby appoint(s) Scott C. Schroeder and Deidre L. Shearer, or either of them, as proxies, each with the power to appoint his or her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of CABOT OIL & GAS CORPORATION that the stockholder(s) is/are entitled to vote at the Annual Meeting of stockholder(s) to be held at 08:00 AM, CDT on 5/1/2014, at 840 Gessner Road, Suite 1400 Houston, TX 77024,May 1, 2024:The Proxy Statement, 2023 Form 10-K, and any adjournment or postponement thereof.
This proxy, when properly executed, will be voted2023 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 manner directed herein. If no such direction is made, thisattached proxy will be voted in accordance with thestatement to our Board of Directors’ recommendations.
(IfDirectors.
![[MISSING IMAGE: px_24coterraproxy01pg02-bw.jpg]](/files/PRE 14A/0001104659-24-032399/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 corresponding boxbox.) ☐ 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 reverse side.)ContinuedInternet: 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 to be signed on reverse side
date your proxy card, then detach it, and return it in the postage-paid envelope provided.
0000858470 3 2023-01-01 2023-12-31
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