UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrantx☒
Filed by a Party other than the Registrant¨☐
Check the appropriate box:
| Preliminary Proxy Statement. |
| Confidential, for Use of the Commission only (as permitted by Rule 14a-6(e)(2)). |
| Definitive Proxy Statement. |
| Definitive Additional Materials. |
| Soliciting Material under § 240.14a-12. |
ENERGEN CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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| (2) | Aggregate number of securities to which transaction applies: |
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March 18, 201522, 2017
To Our Shareholders:
It is our pleasure to extend to you a cordial invitation to attend the Annual Meeting of Shareholders of Energen Corporation. The Annual Meeting will be held at the principal office of the Company in Birmingham, Alabama on Thursday, April 30, 2015,Wednesday, May 3, 2017, at 8:30 a.m., Central Daylight Time.
Details of the matters to be presented at this meeting are given in the Notice of the Annual Meeting and in the Proxy Statement that follow.
We hope that you will be able to attend this meeting so that we may have the opportunity of meeting with you and discussing the affairs of the Company. However, if you cannot attend, we would appreciate your submitting your proxy by telephone or by Internet, or by completing, signing and returning the enclosed proxy card as soon as convenient so that your stock may be voted.
Yours very truly,
Chairman of the Board
ENERGEN CORPORATION
Notice of Annual Meeting of Shareholders
To Be Held April 30, 2015May 3, 2017
| TIME AND DATE | 8:30 a.m., CDT, on | |
| PLACE | Energen Plaza 605 Richard Arrington Jr. Blvd. North Birmingham, Alabama 35203-2707 Directions to the Annual Meeting are available by calling Investor Relations at 1-800-654-3206. | |
| AGENDA | (1) To elect
(2) To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for
(3) To cast an advisory vote on the Company’s executive compensation (“Say-on-Pay” vote).
(4) To
(5)
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| RECORD DATE | You can vote if you were a shareholder of record of the Company on February | |
| PROXY VOTING | It is important that your shares be represented and voted at the Annual Meeting. You can vote your shares by submitting your instructions by telephone or by Internet, or by completing, signing and returning a proxy card. | |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD APRIL 30, 2015:MAY 3, 2017:
The Company’s Proxy Statement on Schedule 14A, form of proxy card and 20142016 annual report on Form 10-K are available at: www.annualmeeting.energen.com.www.annualmeeting.energen.com.
Birmingham, Alabama March | J. David Woodruff Secretary |
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ANNUAL MEETING OF SHAREHOLDERS
OF ENERGEN CORPORATION
April 30, 2015MAY 3, 2017
This summary highlights information contained elsewhere in this Proxy Statement. It does not include all of the information that you should consider and you should read the entire Proxy Statement before voting. In this Proxy Statement, Energen Corporation may also be referred to as “we”, “us”, “Energen” or the “Company”.
20152017 ANNUAL MEETINGOF STOCKHOLDERSHAREHOLDERS
| • Date and Time: | ||
| • Place: | Energen Plaza 605 Richard Arrington Jr. Blvd. North Birmingham, Alabama 35203-2707 | |
| • Record Date: | February | |
VOTING MATTERSAND BOARD RECOMMENDATIONS
Our Board’s Recommendations | ||
Election of Director Nominees (page | FOR each Director Nominee | |
Ratification of Appointment of Independent Auditor (page 20) | FOR | |
Advisory Vote to Approve Executive Compensation (page | FOR | |
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DIRECTOR NOMINEES (BEGINNINGON PAGE9)
The following table provides summary information about each Director nominee. Our Directors serve for three-year terms.terms, although Mr. Downes is being nominated to serve for a one-year term.
| Name | Age | Director Since | Primary Occupation | Committee Memberships | Other Public Boards | |||||||
William G. Hargett * | 65 | _ | Former Chairman, President and CEO of Houston Exploration Company | A** | None | |||||||
Alan A. Kleier* | 61 | _ | Vice President Mid-Continent Business Unit of Chevron | A** | None | |||||||
Stephen A. Snider* | 67 | 2000 | Former Chief Executive Officer of Exterran Holdings, Inc. | C, G | Dresser-Rand Group, Inc. Thermon Group Holdings, Inc. | |||||||
Gary C. Youngblood* | 71 | 2003 | Former President and Chief Executive Officer of Alabama Gas Corporation | G | None | |||||||
*Independent Director.
| Name | Age | Director Since | Primary Occupation | Committee Memberships | Other Public Company Boards | |||||||
Kenneth W. Dewey* | 63 | 2007 | Co-founder and director of Caymus Capital Partners | A**, C | N/A | |||||||
M. James Gorrie* | 54 | 2014 | Chief Executive Officer of Brasfield & Gorrie, LLC | A, G | ProAssurance Corporation | |||||||
James T. McManus, II | 58 | 2006 | Chairman, President and Chief Executive Officer of Energen | N/A | ||||||||
Laurence M. Downes* | 59 | N/A | Chairman, President and Chief Executive Officer of New Jersey Resources Corporation | ± | New Jersey Resources Corporation | |||||||
| A | Audit Committee |
| C | Compensation Committee |
| G | Governance |
* Independent Director or Director Nominee
** Messrs. Hargett and KleierChair of Committee
± Mr. Downes will serve on the Audit Committeeand Compensation Committees if elected to the Board.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
| 1. | WHYDID I RECEIVETHESE PROXY MATERIALS? |
We are providing these proxy materials in connection with the solicitation by the Board of Directors of Energen Corporation, an Alabama corporation, of proxies for use at the 20152017 Annual Meeting of Shareholders of the Company and at any adjournment or postponement of the Annual Meeting.
You are invited to attend our Annual Meeting on April 30, 2015,May 3, 2017, beginning at 8:30 a.m., CDT. The Annual Meeting will be held at our principal office, 605 Richard Arrington Jr. Blvd. North,
Birmingham, Alabama 35203-2707. You may call Investor Relations at 1-800-654-3206 for additional directions to the Annual Meeting location.
The Notice Regarding the Availability of Proxy Materials (“Notice of Internet Availability”), Proxy Statement and form of proxy or voting instruction card are being mailed or made available to shareholders beginning on or about March 18, 2015.22, 2017.
| 2. | WHAT ITEMS WILLBE VOTEDONATTHE ANNUAL MEETING? |
Shareholders will vote on fivefour items at the Annual Meeting:
| the election of |
| ratification of the appointment of PricewaterhouseCoopers LLP as Energen’s independent registered public accounting firm for |
| an advisory vote on Energen’s executive compensation; |
At the date this Proxy Statement went to press, we did not know of any other matters to be raised at the Annual Meeting.
| 3. | WHAT ARETHE BOARDOF DIRECTORS’ VOTING RECOMMENDATIONS? |
The Board of Directors recommends that you vote your shares:
| “FOR” election of each of the nominees to the Board of Directors; |
| “FOR” ratification of the appointment of PricewaterhouseCoopers LLP as Energen’s independent registered public accounting firm for |
| “FOR” the proposal regarding an advisory vote on executive compensation; |
| “ |
| 4. | WHOIS ENTITLEDTO VOTEATTHE ANNUAL MEETING? |
Holders of record of Energen common stock of record at the close of business on February 23, 201528, 2017 are entitled to receive this notice of Annual Meeting and Proxy Statement and to vote their shares at the Annual Meeting. As of that date, a total of
of 73,082,16097,187,767 shares of common stock were outstanding and entitled to vote. Each share of common stock is entitled to one vote on each matter properly brought before the Annual Meeting.
| 5. | WHAT ISTHE DIFFERENCE BETWEEN HOLDING SHARESASA SHAREHOLDEROF RECORDANDASA BENEFICIAL OWNER? |
If your shares are registered in your name with Energen’s transfer agent, Computershare, you are the “shareholder of record” of those shares. The Notice of Internet Availability and, if requested, Proxy Statement and any accompanying materials, have been provided directly to you by Energen.
If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of
those shares. The Notice of Internet Availability and, if requested, Proxy Statement and any accompanying materials, have been forwarded
to you by your broker, bank or other holder of record. As the beneficial owner, you have the right to direct your broker, bank or other holder of record how to vote your shares by using the voting instructions included on the Notice of Internet Availability or the form of proxy or by following your holder of record’s instructions for voting by telephone or on the Internet.
If you hold your shares as a participant in the Energen Corporation Employee Savings Plan, the proxy that you submit will provide your voting instructions to the plan trustee. If you do not submit a proxy, the plan trustee will vote your
plan shares in the same proportion as the
shares for which the trustee receives voting instructions from other participants in that plan.To allow sufficient time for the savings plan
trustees to tabulate the vote of the plan shares, your voting instructions must be received before the close of business on April 27, 2015.28, 2017.
| 6. | HOW DO I VOTE? |
Shareholders of record may vote using any of the following methods:
By mail
Complete, sign and date the accompanying proxy or voting instruction card and return it in the prepaid envelope. If you return your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by your proxy card as recommended by the Board of Directors.
If you do not have the prepaid envelope, please mail your completed proxy card to Energen Corporation,Proxy Services, c/o ProxyComputershare Investor Services, Computershare, P.O. Box 43101, Providence, RI 02940-5067.30202, College Station,TX 77842-9909.
By telephone or on the Internet
Shareholders of record can vote by calling the toll-free telephone number on the proxy card. Please have the proxy card handy when you call. Easy-to-follow voice prompts will allow you to vote your shares and confirm that your instructions have been properly recorded.
You may instruct the proxies how to vote by following the instructions listed on the Notice of Internet Availability or the proxy card to vote online. The website for Internet voting for shareholders of record is www.investorvote.com/EGN. As with telephone voting, you can confirm that your instructions have been properly recorded. If you vote on the Internet, you also can request electronic delivery of future proxy materials.
Telephone and Internet voting facilities for shareholders of record will be available 24 hours a day until 11:59p.m.59 p.m., Eastern Time, on April 29, 2015.
May 2, 2017.
If you vote by telephone or on the Internet, you do not have to return your proxy or voting instruction card.
Voting by beneficial owners
The Notice of Internet Availability and, if requested, Proxy Statement and any accompanying materials have been forwarded to you by your broker, bank or other holder of record. As the beneficial owner, you have the right to direct your broker, bank or other holder of record how to vote your shares by using the voting instructions included in the materials forwarded to you by the holder of record, which may be different from the instructions mailed to shareholders of record, or by following their instructions for voting by telephone or on the Internet. The availability of telephone and Internet voting for beneficial owners will depend on the voting processes of your broker, bank or other holder of record. We therefore recommend that you follow the voting instructions in the materials you receive.
In person at the Annual Meeting
Shareholders who attend the Annual Meeting may vote in person at the Meeting. You may also be represented by another person at the Annual Meeting by executing a proper proxy designating that person. If you are a beneficial owner of shares, you must obtain a legal proxy from your broker, bank or other holder of record and present it to the inspectors of election with your ballot to be able to vote at the Annual Meeting.
Please vote promptly
Your vote is important. You can save us the expense of a second mailing by voting promptly.
| 7. | WHAT CAN I DOIF I CHANGE MY MIND AFTER I VOTE? |
Shareholders of record
You can revoke your proxy at any time before it is exercised by:
| written notice to the Secretary of the Company; |
| timely delivery of a valid, later-dated proxy; or |
| voting by ballot at the Annual Meeting. |
Beneficial owners
If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or other holder of record.
Employee Savings Plan participants
If you hold shares in the Energen Corporation Employee Savings Plan, you can change your voting instructions for those shares by voting again by telephone or by Internet or by returning a later dated proxy card.To allow sufficient time for the savings plan trustees to tabulate the vote of the plan shares, if you hold shares in the Energen Corporation Employee Savings Plan, your voting instructions (or any change to such instructions) must be received before the close of business on April 27, 2015.28, 2017.
| 8. | WHAT ISA QUORUMFORTHE ANNUAL MEETING? |
The presence of the holders of a majority of the outstanding shares of common stock entitled to vote at the Annual Meeting, present in person or represented by proxy, is necessary to constitute a quorum. Abstentions are counted as present and entitled to vote for purposes of determining a quorum. Proxies relating to
shares held by
beneficial owners that are voted by brokers on some matters will be treated as shares present for determining the presence of a quorum, but will not be treated as shares entitled to vote at the Annual Meeting on those matters as to which authority to vote is withheld from the broker (i.e. broker non-votes).
| 9. | WHAT ISA BROKER NON-VOTE? |
If you are a beneficial owner whose shares are held of record by a broker, you must instruct the broker on how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. This is called a “broker non-vote.” In these cases, the broker can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under the rules of the New York Stock Exchange (NYSE). If you are a beneficial
owner whose shares are held of record by a broker,
your broker has discretionary voting authority under NYSE rules to vote your shares on the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm, even if the broker does not receive voting instructions from you. However, your broker does not have discretionary authority to vote on the election of Directors, the advisory approval of executive compensation or on anythe advisory approval of the frequency of shareholder proposalapproval of executive compensation without instructions from you, in which case a broker non-vote will occur and your shares will not be voted on these matters.
| 10. | WHAT ARETHE VOTING REQUIREMENTSTO ELECTTHE DIRECTORSANDTO APPROVE EACHOFTHE PROPOSALS DISCUSSEDINTHIS PROXY STATEMENT? |
| Proposal | Vote Required | Broker Discretionary Voting Allowed | ||
Election of Directors | Majority of Votes Cast | No | ||
Ratification of PricewaterhouseCoopers | Majority of Votes Cast | Yes | ||
Advisory Approval of Executive Compensation | Majority of Votes Cast | No | ||
Advisory Approval of Frequency of Shareholder | No |
If you abstain from voting or there is a broker non-vote on any matter, your abstention or broker non-vote will not affect the outcome of such vote, because abstentions and broker non-votes are not considered to be votes cast.
Election of Directors; Majority Vote Policy
Directors must be elected by a majority of the votes cast. This means that the number of votes cast “for” a Director nominee must exceed the number of votes cast “against” that nominee.
Abstentions and broker non-votes
are not counted as votes “for” or “against” a Director nominee.
Ratification of PricewaterhouseCoopers LLP
The votes cast “for” must exceed the votes cast “against” to approve the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm. Abstentions and broker non-votes are not counted as votes “for” or “against” this proposal.
Advisory Approval of Executive Compensation
The votes cast “for” must exceed the votes cast “against” to approve, on an advisory basis, the compensation of our named Executive Officers. Abstentions and broker non-votes are not counted as votes “for” or “against” this proposal.
Shareholder ProposalsAdvisory Approval of Frequency of Approval of Executive Compensation
The option that receives the highest number of votes cast “for” must exceedby the votes cast “against” to approve a shareholder proposal.shareholders will be the frequency for the advisory vote on executive compensation deemed approved by the shareholders. Abstentions and broker non-votes are not counted as votes “for” or “against” a shareholder proposal.for any of the options.
| 11. | HOW WILL MY SHARES BE VOTEDATTHE ANNUAL MEETING? |
At the Meeting, the proxy holders appointed by the Board of Directors (the persons named in the proxy card or, if applicable, their substitutes) will vote your shares as you instruct. If you sign your proxy card and return it without indicating how you would like to vote your shares, your shares will be voted as the Board of Directors recommends, which is:
| FOR |
| FORthe ratification of the appointment of PricewaterhouseCoopers LLP as our |
independent registered public accounting firm for the |
| FORthe approval, on an advisory basis, of the compensation of our Named Executive Officers; and |
| 12. | COULD OTHER MATTERS BE DECIDEDATTHE ANNUAL MEETING? |
At the date this Proxy Statement went to press, we did not know of any matters to be raised at the Annual Meeting other than those referred to in this Proxy Statement (see “Other Business”).Statement.
If you return your signed and completed proxy card or vote by telephone or on the Internet and other matters are properly presented at the Annual Meeting for consideration, the Proxy Committeeproxy holders appointed by the Board of Directors will have the discretion to vote for you on such matters.
| 13. | WHO WILL PAYFORTHE COSTOFTHIS PROXY SOLICITATION? |
Energen will pay the cost of soliciting proxies. Proxies may be solicited on our behalf by our Directors, officers or employees in person or by telephone, mail, electronic transmission and/or facsimile transmission. Copies of proxy materials will be supplied to brokers, dealers, banks and voting trustees, or their nominees, to
solicit proxies from beneficial owners, and we will reimburse these institutions for their reasonable expenses. We have engaged
Okapi Partners, LLC of New York to assist in the solicitation of proxies. We will pay Okapi a fee ofnot to exceed $7,500, plus reasonable expenses, for these services.
| 14. | WHO WILL COUNTTHE VOTES? |
Representatives of our transfer agent, Computershare, will tabulate the votes and act as inspectors of election.
| 15. | WHY DID I RECEIVEA “NOTICE REGARDINGTHE AVAILABILITYOF PROXY MATERIALS” BUT NO PROXY MATERIALS? |
We distribute our proxy materials to shareholders via the Internet under the “Notice and Access” approach permitted by rules of the SEC. This approach conserves natural resources and reduces our distribution costs, while providing a timely and convenient method
of accessing the materials and voting. On or about March 18, 2015,22, 2017, we mailed a “Notice Regarding the Availability of Proxy Materials” to shareholders, containing instructions on how to access the proxy materials on the Internet.
| 16. | CAN I ACCESSTHE NOTICEOF ANNUAL MEETING, PROXY STATEMENTANDTHE |
This Proxy Statement, the form of proxy card and the 20142016 Annual Report on Form 10-K are available at www.annualmeeting.energen.com.www.annualmeeting.energen.com. Securities and Exchange Commission (“SEC”) rules permit the Company to provide
shareholders with proxy materials electronically instead of in paper form, even if they have not made an election to receive the material electronically.
Our Board of Directors (or, the “Board”) has nominated fourthree Directors for election.election for three-year terms and one Director nominee for election for a one-year term. The Board is divided into three classes serving staggered three-year terms. The terms of twothree of the present Directors expire at this Annual Meeting: Stephen A. SniderKenneth W. Dewey, M. James Gorrie and Gary C. Youngblood. Judy M. Merritt, prior to her passing in October 2014, was also a member of the 2015 class.James T. McManus, II. Messrs. SniderDewey, Gorrie and YoungbloodMcManus have been nominated for re-election as Directors for terms expiring in 2018.2020. The Board also has nominated William G. Hargett and Alan A. KleierLaurence M. Downes to serve as DirectorsDirector for termsa term expiring in 2018. Stephen A. Snider is retiring from our Board effective as of the date of the Annual Meeting.
Our Board of Directors recommends that William G. Hargett, Alan A. Kleier, Stephen A. SniderKenneth W. Dewey, M. James Gorrie and Gary C. YoungbloodJames T. McManus, II be elected to serve in the class with terms expiring in 2020 and Laurence M. Downes be elected to serve in the class with a term expiring in 2018.Each nominee has agreed to be named in this Proxy Statement and to serve if elected. We expect each nominee for election as a Director to be able to serve if elected. Biographical data on these nominees and the other members of the Board of Directors is presented below under the caption “Governance of the Company.”
Unless you otherwise direct on the proxy form, the proxy holders intend to vote your shares in favor of the above listed nominees. To be elected, a nominee must receive a majority of the votes cast at the Annual Meeting in person or by proxy. If one or more of the nominees becomes unavailable for election or service as a Director, the proxy holders may vote your shares for one or more substitutes designated by the Board of Directors.
The members of our Board of Directors, including the four nominees for election, are identified below.
NOMINEESFOR ELECTIONAS DIRECTORSFOR THREE-YEAR TERMS EXPIRINGIN 2020
Name and Year First Became Director | Principal Occupation and Other Information | |
KENNETH W. DEWEY Director since 2007 | Mr. Dewey, 63, is a co-founder and board member of Caymus Capital Partners, a market-neutral energy equity fund manager. Mr. Dewey was aco-founder of Randall & Dewey, a full-service transaction advisory firm specializing in oil and gas mergers, acquisitions and divestments. Randall & Dewey provided marketing, transaction, evaluation and research services for clients ranging from small, privately held firms to integrated energy companies and major oil companies. Mr. Dewey served as Randall & Dewey’s Chief Financial Officer from 1989 until his 2006 retirement following the firm’s 2005 acquisition by Jefferies & Company. From 1978 to 1989, Mr. Dewey held a variety of positions with Amoco Corporation and its subsidiaries. Mr. Dewey is a graduate of Stanford University (A.B. economics) and Wharton School, University of Pennsylvania (M.B.A.). | |
M. JAMES GORRIE Director since 2014 | Mr. Gorrie, 54, is CEO of Brasfield & Gorrie, LLC, one of the largest privately held construction firms in the United States. It provides construction and construction management services for a wide variety of projects, including commercial, institutional, healthcare, industrial, and treatment plant construction. Mr. Gorrie joined Brasfield & Gorrie in 1984 and served in various roles prior to his election as President in 1994, a position which he held until 2015. He has served as CEO since his election to that position in 2011. Mr. Gorrie serves as a director of one other publicly traded company, ProAssurance Corporation. He is a graduate of Auburn University (B.S. building science). | |
JAMES T. MCMANUS, II Director since 2006 | Mr. McManus, 58, is Chairman of the Board, President and Chief Executive Officer of theCompany. He has been employed by Energen Corporation and its subsidiaries in various capacities since 1986. He was elected Executive Vice President and Chief Operating Officer of Energen Resources Corporation in October 1995 and President of Energen Resources in April 1997. He was elected President and Chief Operating Officer of the Company effective January 1, 2006, Chief Executive Officer effective July 1, 2007, and Chairman of the Board effective January 1, 2008. Prior to joining the Company, Mr. McManus worked for PricewaterhouseCoopers as a certified public accountant. Prior to its September 2016 acquisition, Mr. McManus served as a director of Questar Corporation. He is a graduate of the University of Alabama (B.S. accounting). | |
NOMINEE FOR ELECTION AS DIRECTORFORA ONE-YEAR TERM EXPIRINGIN 2018
Name | Principal Occupation and Other Information | |
LAURENCE M. DOWNES | Mr. Downes, 59, is Chairman of the Board, President and Chief Executive Officer of New Jersey Resources Corporation (NYSE:NJR), an energy services holding company with natural gas distribution, energy services, clean energy, and midstream assets. He has served as its Chairman since 1996 and as President and CEO since 1995. He is a Director and past Chairman of the American Gas Association, Trustee of the American Gas Foundation, and a member of the Board of Directors of the New Jersey Economic Development Authority. Prior to its September 2016 acquisition, Mr. Downes served as a director of Questar Corporation. Mr. Downes is a graduate of Iona College (B.B.A. Finance and M.B.A.). |
Name | Principal Occupation and Other Information | |
STEPHEN A. SNIDER Director since 2000 | Mr. Snider, 69, retired in 2009 as Chief Executive Officer and director of Exterran Holdings, Inc., a global natural gas compression services company, and also retired as Chief Executive Officer and director for the general partner of Exterran Partners, L.P., a domestic natural gas contract compression services business. Mr. Snider has over 30 years of experience in senior management of operating companies. He serves as a director of two other publicly traded companies – Tetra Technologies, Inc. and Thermon Group Holdings, Inc. He has within the past five years served as a director of Dresser Rand Group, Inc., and Seahawk Drilling Incorporated. Mr. Snider is a graduate of the University of Detroit (B.S. civil engineering) and the University of Colorado at Denver (M.B.A.). |
DIRECTORS WHOSE TERMS EXPIREIN2018
Name and Year First Became Director |
Principal Occupation and Other Information | |
WILLIAM G. HARGETT Director since 2015 | Mr. Hargett, | |
ALAN A. KLEIER Director since 2015 | Mr. Kleier, | |
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DIRECTORS WHOSE TERMS EXPIREIN 20162019
Name and Year First Became Director |
Principal Occupation and Other Information | |
T. MICHAEL GOODRICH Director since 2000 | Mr. Goodrich, | |
JAY GRINNEY Director since 2012 | Mr. Grinney, | |
FRANCES POWELL HAWES Director since 2013 | Ms. | |
DIRECTORS WHOSE TERMS EXPIREIN 2017
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Each of our Directors also serves as a Director of Energen Resources Corporation (“Energen Resources”), our principal subsidiary.
DIRECTOR SKILLSAND QUALIFICATIONS
Our Governance and Nominations Committee considers the qualifications and backgrounds of each of our Directors when nominated for service on our Board of Directors, and believes that each Director named above possesses skills and qualifications that enhance the quality of the Board as a whole. With respect to the four nominees, we note that:
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Mr. Kleier, retired Vice President of Chevron’s Mid-Continent Business Unit, has an engineering background and expertise, 36 years of industryDewey’s extensive experience with a major internationalevaluating oil and gas
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Our nominees’ respective business backgrounds are discussed above in more detail.
Our Governance and Nominations Committee identifies and evaluates Board candidates using one or more informal processes deemed appropriate for the circumstances. A determination of whether to pursue discussions with a particular individual is made after discussion by the Committee and may be preceded by formal or informal discussions involving one or more or all of the other Board members. Information considered by the Committee may include information provided by the candidate and one or more Committee or Board members. The Committee will also consider potential committee service by Board candidates at the time such candidates are evaluated for membership on the Board and, if the Board has vacancies on a particular committee or foresees such a vacancy, the Committee may be more likely to consider Board candidates with credentials and experience suitable for service on such committee. Board
candidates are expected to possess high personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the shareholders. They are also expected to have an inquisitive and objective perspective, practical wisdom, and good judgment. In addition to these fundamental characteristics, the Committee seeks to assemble and maintain a Board membership with a diverse
portfolio of expertise, education, and experience conducive to generating multiple perspectives on the business, community, and strategic issues and opportunities encountered or anticipated by the Company. Once appropriate candidates have been identified, the Committee recommends nominations to our Board.
During fall 2014, following the unexpected passing2016, in anticipation of Dr. Merritt, the Committee began its search to fill the vacancy left by Dr. Merritt and prepare for future Director retirements. Theretirements, the Committee reviewed its prior discussions of potential board candidates and
desired attributes. With respect to attributes, in addition to the characteristics described in the preceding paragraph, the Committee focused on oil and gas industry and public company experience. The Committee retainedselected a Director search firm to assist in identifying and evaluating candidates, including candidates previously identified by the Committee. With the assistance of the search firm, the Committee considered several candidatescandidate for further consideration and interviews and at the end of the process was pleased to recommend William G. Hargett and Alan A. KleierLaurence M. Downes for election to the Board at this Annual Meeting. Mr. HargettDownes first came to the attention of the Committee as a recommendation from the Company’s Chief Executive officer, and
Mr. Kleier first came to the attention of the Committee as a recommendation from a non-management Director.Board’s Chairman.
Our Governance and Nominations Committee has not adopted a policy or procedure for the consideration of Director candidates
recommended by shareholders. Our Board does not recall an instance in which a shareholder (other than a shareholder serving as an officer or Director) has recommended a
Director candidate; however, as stated in prior years, the Governance and Nominations Committee will consider timely shareholder recommendations. Our Company Bylaws contain detailed procedures for shareholders desiring to nominate, instead of recommend, a Director candidate. For this Annual Meeting, the Governance and Nominations Committee did not receive any Director candidate recommendations from shareholders holding at least 5% of our common stock.
In 2014,2016, our Board held 612 meetings and committees of the Board held 13 meetings. Each Director attended 75% or more of the aggregate of all meetings of the Board and the committees on which the Director served during 2014.2016. We encourage and expect our Board members to attend our Annual Meeting absent extenuating circumstances, but we do not have a formal policy requiring attendance. All of our Board members attended our Annual Meeting held in 2014.
2016.
Our Board has the following three committees, each with a written charter adopted by the Board and available on our website:
The following table summarizes the primary purpose and function of each committee.
| Committee | Primary Purpose and Function | |
Audit | • Assist the Board in fulfilling its responsibility to oversee the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence, and the performance of the Company’s internal audit function and independent auditors;
• appointment, compensation, retention, discharge and replacement of the Company’s independent auditors; and
• prepare a Committee report as required by the SEC to be included in the Company’s annual Proxy Statement.
| |
Governance & Nominations | • Review and advise the Board on general governance and structure issues, including corporate governance principles and guidelines applicable to the Company;
• lead the Board’s Director succession planning;
• review potential Board candidates and recommend Director nominations to the Board; and
• review and recommend non-employee Director compensation to the Board.
| |
|
|
| Committee | Primary Purpose and Function | |
Compensation | • Review and approve base salaries, corporate goals and objectives in relation to performance-based compensation, benefits, and equity awards. Evaluate the CEO’s performance based on these goals and objectives and, either as a committee or together with the other independent directors (as directed by the Board) determine and approve the CEO’s compensation level based on that evaluation;
• make recommendations to the Board with respect to non-CEO executive officer compensation, incentive compensation plans and equity-based plans that are subject to Board approval;
• produce an annual report on executive compensation as required by the SEC to be included in or incorporated by reference into the Company’s Proxy Statement or other applicable SEC filings; and
• under delegation from our Board, determine and approve our compensation philosophy, the compensation of our non-CEO executive officers and equity-based compensation applicable to non-executive officer employees. |
The table below provides membership and meeting information for each of the standing Board committees for 2014. If elected as Directors, Mr. Hargett and Mr. Kleier will serve on the Audit Committee.2016.
| Name | Audit | Compensation | Governance & Nominations | |||
Mr. Dewey* | C | M | ||||
Mr. Goodrich* | M | C | ||||
Mr. Gorrie (a)* | M | |||||
Mr. Grinney* | M | M | ||||
Ms. Powell Hawes* | M | |||||
Mr. McManus (b) | ||||||
Dr. Merritt (c)* | M | M | ||||
Mr. Snider* | C | M | ||||
Mr. Youngblood* | M | |||||
2014 Meetings | 5 | 6 | 2 |
| Name | Audit | Compensation | Governance & Nominations | |||
Dewey* | C | M | ||||
Goodrich* | M | C | ||||
Gorrie* | M | M | ||||
Grinney*(b) | M | C | ||||
Hargett* | M | |||||
Hawes* | M | M | ||||
Kleier* | M | |||||
McManus (a) | ||||||
Snider*(b) | M | M | ||||
Youngblood*(c) | M | |||||
2016 Meetings | 5 | 6 | 2 |
C: Chair M: Member *Independent Director
| (a) |
| Mr. McManus, as Chief Executive Officer of the Company, is not a member of any Committee. |
| (c) | Mr. Youngblood retired from the |
INDEPENDENCE DETERMINATIONS; RELATED PARTY TRANSACTIONS
Our Board of Directors has adopted independence standards consistent with the listing standards adopted by the NYSE. A Director will be considered “independent” and found to have no material relationship with the Company if:
(1) During the prior three years:
and
| (2) • | The Director is not a current partner or employee of a firm that is the Company’s internal or external auditor; |
In January 2015,February 2017, the Board of Directors reviewed the independence of its members and nominees. Based on this review andMr. Downes under the independence standards set forth above,above. The independence review did not identify any transactions, relationships or arrangements for consideration by the Board of Directorsand the Board determined that, none of the Director nominees and none of the current Directors, with the exception of Mr. McManus, have a material relationship with the Company other than in their capacities as memberseach of the Boardcurrent Directors and Mr. Downes is independent of Directors.the Company. Mr. McManus is not considered an independent Director due to his employment as Chief Executive Officer of the Company.
The Board of Directors has determined that each member of the Audit Committee and Messrs. Hargett and Kleier meetmeets the independence standards required by applicable SEC regulations and NYSE listing standards, and the financial literacy and accounting or financial management requirements of the NYSE listing standards. The Board has also determined that Ms. Powell Hawes is an audit committee financial expert under the rules and regulations of the SEC.
The Board of Directors has determined that each member of the Compensation Committee and the Governance and Nominations Committee meets the independence requirements of applicable SEC regulations and NYSE listing standards.
In evaluating the independence of the Directors and nominees, the Board was not aware of, and did not consider, any relationships between a Director or Director nominee, or any family member of a Director or Director nominee, and the Company or any of its executive officers.
Although the Company does not have specific policies and procedures for the review, approval or ratification of Company transactions in which
any Director, executive officer or other related person will have a direct or indirect material interest, the Company does have conflict of interest disclosure requirements in its Business Conduct Guidelines and its Corporate Governance Guidelines. The Business Conduct Guidelines require each officer, employee and Director to notify the Company if he/she or a close family member has a financial interest in a transaction involving the Company. The Corporate Governance Guidelines further provide that
Directors are expected to disclose to the Board any potential conflicts of interest that they may have with respect to any matters under discussion and refrain from voting on such matters, if appropriate.
We rely on our Directors and executive officers to make advance disclosure to the Board of
Directors of transactions with the Company in which a Director or an executive officer will have a direct or indirect interest. Our Board of Directors would then evaluate and determine whether to approve any such proposed transaction. Failure to disclose such a transaction to our Board of Directors in advance and to seek approval from our Board prior to engaging in such a transaction would constitute a violation of our Company’s Business Conduct Guidelines. Our Directors and executive officers also complete an annual questionnaire that identifies or confirms the absence of any direct or indirect participation in any transaction with the Company.
BOARD LEADERSHIP STRUCTUREAND ROLEIN RISK OVERSIGHT
The Chairman of the Company’s Board of Directors is Mr. McManus, who also serves as the Company’s Chief Executive Officer. This combined Chairman-CEO leadership role has been used by the Company for many years except during brief succession transition periods. The Company has also always had a majority independent Board membership. Currently, Mr. McManus is the only non-independent member of the Board. Under our Corporate Governance Guidelines, our Board designates a leadLead Director for purposes of convening and chairing meetings of our non-management Directors. The role of leadLead Director is currently filled by Mr. Goodrich. Effective May 1, 2017, Mr. Dewey will succeed Mr. Goodrich as Lead Director. Based on many years of experience, the Board believes that this structure serves the Company well in providing
effective and efficient leadership with active independent oversight.
The Board exercises its risk oversight role through Board and Committee meetings. The Board has developed a matrix identifying key risks and specifying full Board or specific Committee oversight responsibility. The Governance and Nominations Committee is charged with coordinating periodic review, update and assessment of the matrix. As noted above, a majority of the Board members and all Committee members are independent. Risk oversight matters are discussed and reviewed in various ways: normal agenda items; presentations in response to Director requests; presentations initiated by management; and issues raised and discussed during the course of Board and Committee meetings. The Board has developed a matrix identifying key risks and specifying full Board or specific Committee oversight responsibility. The Governance and Nominations Committee is charged with coordinating periodic review, update and assessment of the matrix.
COMMUNICATIONWITHTHE BOARDOF DIRECTORS
Based on past experience, we expect to receive and respond to shareholder communications in a variety of ways. Our
Board does not want to limit this flexibility and has not implemented a defined process for shareholders to send communications to the
Board. Any shareholder or other interested person wishing to
communicate with a member of the Board may send correspondence to his or her attention at Energen Corporation, 605 Richard Arrington Jr. Blvd. North, Birmingham, Alabama 35203-2707. The names, titles and committee assignments of our officers and Directors, together with our mailing address and telephone number, can be
found on our website under the heading “Investor Relations” and subheading “Corporate Governance”
(www.energen.com). Also under that subheading, page 16 of our Business Conduct Guidelines details the procedure adopted by our Audit Committee for the handling
of inquiries and correspondence relating to errors, deficiencies and misrepresentations in accounting, internal control, and audit related matters. Such inquiries and correspondence are to be forwarded by our General Counsel to the Chairman of our Audit Committee.
The Company has a code of ethics, titled Business Conduct Guidelines, which is applicable to all of the Company’s employees, including the principal executive officer, the principal financial officer and the principal accounting officer. The Business Conduct Guidelines are also applicable to all of the
Directors of the Company. We intend to post amendments to or waivers from the Business Conduct Guidelines that are applicable to the Company’s Directors, principal executive officer, principal financial officer and principal accounting officer on our website.
AVAILABILITYOF CORPORATE GOVERNANCE DOCUMENTS.
Our corporate governance documents are available on our website under the heading “Investor Relations” and subheading “Corporate Governance” (www.energen.com). Our corporate governance documents include the following:
Shareholders also may obtain copies of these documents from us without charge by requesting such documents in writing or by telephone at the following address or telephone number:
J. David Woodruff
Energen Corporation
Attn: Corporate Secretary
605 Richard Arrington Jr. Blvd. North
Birmingham, Alabama 35203-2707
Phone: (205) 326-2700
COMPENSATION COMMITTEE PROCESS
The Compensation Committee is responsible for overseeing and administering the Company’s executive compensation program. The Compensation Committee establishes the salaries and other compensation of the executive officers of the Company, including the Chairman and CEO, the CFO, and other executive officers named in the Summary Compensation Table. In setting salaries and granting other forms of compensation, the Compensation Committee receives and considers information and recommendations
from the CEO and the Vice President of Human Resources.Administration. The Compensation Committee also reviews and considers reports and analysis provided by its executive compensation consultant, Pay Governance, LLC (“Pay Governance”). Pay Governance is engaged by
the Company at the direction of the Compensation Committee. The Compensation Committee conducted an assessment of the independence of Pay Governance utilizing the factors identified in Rule 10C-1 promulgated under the Securities
Exchange Act of 1934, as amended. Pay Governance did not identify any conflicts to be considered by the Compensation Committee as part of its independence analysis. Management meets with Pay Governance representatives and participates in most meetings between Pay Governance and the Compensation Committee. Pay Governance provides assessments of the competitiveness of the Company’s executive compensation
levels and practices relative to relevant executive labor markets and other assignments as required by the Compensation Committee. The
Compensation Committee regularly meets in executive sessions without management present. For a more detailed description of the Compensation Committee’s authority and
interaction with management and Pay Governance, see “Compensation Discussion and Analysis” beginning on page 2726 of this proxy statement.
COMPENSATION COMMITTEE INTERLOCKSAND INSIDER PARTICIPATION
None of the Directors serving on the Compensation Committee has served as an officer or employee of the Company or had a relationship with the Company that required consideration by our Board of Directors in connection with their review of Director
independence. No executive officer of the Company has served or serves on the compensation committee or board of any company that employed or employs any member of the Compensation Committee.
20142016 Director Compensation
| Name | Fees Earned Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($) | Total ($) | Fees Earned Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||||||
| (a) | (b) | (c)(1) | (d) | (e) | (f) | (g)(2) | (h) | (b) | (c)(1) | (d) | (e) | (f) | (g) | (h) | ||||||||||||||||||||||||||||
Dewey
|
| 88,500
|
|
| 105,805
|
|
| 1,607
|
|
| 195,912
|
|
| 88,500
|
|
| 98,003
|
| -
| -
| -
| -
|
| 186,503
|
| |||||||||||||||||
Goodrich
|
| 76,500
|
|
| 105,805
|
|
| 2,224
|
|
| 184,529
|
|
| 76,500
|
|
| 98,003
|
| -
| -
| -
| -
|
| 174,503
|
| |||||||||||||||||
Gorrie(3)
|
| 67,875
|
|
| -
|
|
| 1,854
|
|
| 61,854
|
| ||||||||||||||||||||||||||||||
Gorrie
|
| 72,000
|
|
| 98,003
|
| -
| -
| -
| -
|
| 170,003
|
| |||||||||||||||||||||||||||||
Grinney
|
| 76,500
|
|
| 105,805
|
|
| -
|
|
| 182,305
|
|
| 76,957
|
|
| 98,003
|
| -
| -
| -
| -
|
| 174,960
|
| |||||||||||||||||
Merritt (4)
|
| 62,500
|
|
| 105,805
|
|
| -
|
|
| 168,305
|
| ||||||||||||||||||||||||||||||
Hargett
|
| 70,500
|
|
| 98,003
|
| -
| -
| -
| -
|
| 168,503
|
| |||||||||||||||||||||||||||||
Powell Hawes
|
| 70,500
|
|
| 105,805
|
|
| 1,967
|
|
| 178,272
|
| ||||||||||||||||||||||||||||||
Hawes
|
| 73,500
|
|
| 98,003
|
| -
| -
| -
| -
|
| 171,503
|
| |||||||||||||||||||||||||||||
Kleier
|
| 70,500
|
|
| 98,003
|
| -
| -
| -
| -
|
| 168,503
|
| |||||||||||||||||||||||||||||
Snider
|
| 80,500
|
|
| 105,805
|
|
| 2,373
|
|
| 188,678
|
|
| 80,043
|
|
| 98,003
|
| -
| -
| -
| -
|
| 178,046
|
| |||||||||||||||||
Youngblood
|
| 64,500
|
|
| 105,805
|
|
| -
|
|
| 170,305
|
| ||||||||||||||||||||||||||||||
Youngblood(2)
|
| 21,798
|
|
| 98,003
|
| -
| -
| -
| -
|
| 119,801
|
| |||||||||||||||||||||||||||||
(1) The Stock Awards in column (c) reflect the January 2014 grant of 1480 unrestricted shares under the Company’s Directors Stock Plan with a grant date value of $71.49 per share. There were no stock awards outstanding at year-end.
| (1) | The Stock Awards in column (c) reflect the January 2016 grant of 2,830 shares under the Company’s Directors Stock Plan with a grant date value of $34.63 per share. There were no stock awards outstanding at year-end. |
(2) Column (g) reflects income tax reimbursements related to Company paid spousal travel expenses. The aggregate amount of perquisites and other personal benefits, or property, including Company paid spousal travel expenses was less than $10,000 for each Director.
| (2) | Mr. Gary C. Youngblood retired from the Board effective May 3, 2016. |
(3) Mr. Gorrie joined the Board of Directors effective January 1, 2014.
(4) Dr. Merritt served as a member of the Board until the date of her passing on October 19, 2014.
The Governance and Nominations Committee charter provides that:
At such times as it determines appropriate or as requested by the Board, the Committee will review and make recommendations with respect
to Director compensation. Such compensation is intended to be sufficient to attract and retain qualified candidates and may include a combination of cash and stock basedstock-based compensation.
Management discusses Director compensation with the Governance and Nominations Committee and makes recommendations on Director compensation that the Governance and Nominations Committee considers as part of its process in reviewing Director compensation. TheExcept as noted below, the current schedule of Director monthly cash retainer fees and meeting fees paidhas been in 2014 were approved by the Board effectiveeffect since January 1, 2014. The 20142016 share awards were issued pursuant to the Amended and Restated Directors Stock Plan. The Governance and Nominations Committee targeted a grant of shares that would equal approximately $100,000 in value to each non-employee Director based on share prices during the first ten trading days of January 2014.2016.
Non-employee Director Fees.
| - | Chair: $22,500 per year |
| - | Member: $10,500 per year |
| - | Chair: $16,000 per year |
| - | Member: $6,000 per year |
| - | Chair: $7,500 per year |
| - | Member: $4,500 per year |
No Director who is an employee of the Company is compensated for service as a member of the Board of Directors or any committee of the Board of Directors.
Share Awards and Deferred Compensation. Our Board has authority to make compensatory grants of stock, restricted stock and stock options to non-employee Directors pursuant to
the Amended and Restated Directors Stock Plan at such times and in such amounts as the Board may determine. Awards under the Amended and Restated Directors Stock Plan are in addition to the payment of monthly cash retainers and meeting fees. The plan also allows each non-employee Director to elect to have any part or all of the cash fees payable for services as a Director of the Company and its subsidiaries paid in shares of common stock.
The Governance and Nominations Committee administers the Amended and Restated Directors Stock Plan. Although the plan has no fixed duration, the Board of Directors or our shareholders may terminate the plan. Our Board of Directors also may amend the plan from time to time, but any amendment that materially increases the benefits accruing to participants, increases the number of shares of common stock that may be issued or materially modifies eligibility requirements would require the approval of our shareholders.
Under the Company’s 1997 Deferred Compensation Plan, members of the Board of Directors may elect to defer part or all of their Director compensation. The 1997 Deferred Compensation Plan is discussed below in greater detail under the caption “Compensation Discussion and Analysis —1997– 1997 Deferred Compensation Plan.”
Stock Ownership Guideline.The stock ownership expectation of non-employee Directors is 5,000 shares including share equivalents under the 1997 Deferred
Compensation Plan. New Directors are expected to reach this ownership target within five years of joining the Board of Directors.
Other. The Company reimburses Directors for travel, lodging, and related expenses incurred in attending Board and Committee meetings. These reimbursements include the expenses
incurred by the Directors’ spouses in accompanying the Directors at the invitation of the Company, along with taxes related to such payments. Directors previously had family coverage under the Company’s membership in a medical emergency travel assistance program, but such coverage was terminated during 2014.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors of the Company has selected the accounting firm of PricewaterhouseCoopers LLP to serve as the independent registered public accounting firm of the Company with respect to its operations for the year 2015.2017. While shareholder ratification of the appointment is not required, the Audit Committee has determined to seek input from the shareholders as part of the selection process. PricewaterhouseCoopers LLP has served as the Company’s independent registered public accounting firm for a number of years. If the appointment of PricewaterhouseCoopers LLP is not ratified by the shareholders, the matter of the
the appointment of an independent registered public accounting firm will be reconsidered by the Audit Committee.
The firm of PricewaterhouseCoopers LLP audited our financial statements for the fiscal year ended December 31, 2014,2016, and the Audit Committee plans to continue the services of this firm for the fiscal year ending December 31, 2015.2017. A representative of PricewaterhouseCoopers LLP will be present at the Annual Meeting, will have an opportunity to make a statement if he or she desires to do so, and will be available to respond to appropriate questions.
The following table presents fees billed or expected to be billed for professional audit services rendered by PricewaterhouseCoopers LLP for the audit of the Company’s annual financial statements for the years ended December 31, 20142016 and December 31, 2013,2015, and fees billed for other services rendered by PricewaterhouseCoopers LLP during those periods.
| 2014 | 2013 | 2016 | 2015 | |||||||||||||||
(1) Audit fees | $1,993,834 | $1,836,000 | $1,292,000 | $1,448,000 | ||||||||||||||
| (2) Audit-related fees (a) | $1,546,892 | $217,000 | ||||||||||||||||
(3) Tax fees (b) | $74,000 | $96,000 | ||||||||||||||||
| (2) Audit-related fees(a) | $87,000 | $253,000 | ||||||||||||||||
(3) Tax fees(b) | $96,000 | $205,000 | ||||||||||||||||
(4) All other fees | $0 | $0 | $0 | $0 | ||||||||||||||
| (a) | Includes fees for audits of certain of the Company’s employee benefit plans, review of the application of accounting standards and internal control review. |
| (b) | Includes fees incurred in connection with the Company’s tax returns and review of certain tax matters. |
Our Audit Committee approved, directly or through our pre-approval process, one hundred
percent (100%) of the services provided by PricewaterhouseCoopers LLP during 2014,
2016, and concluded that the provision of such services by PricewaterhouseCoopers LLP was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.
Our Audit Committee pre-approved the engagement through June 30, 20152017 of the
independent auditors with respect to the following services: (i) services necessary to perform the audit or review of the Company’s financial statements; (ii) audit-related services such as employee benefit plan audits, due diligence related to mergers and acquisitions, accounting assistance and internal control reviews; and (iii) tax services including preparation and/or review of, and consultation and advice with respect to, tax returns and reports; claims for tax refund; tax planning
services; tax implications of changes in
accounting methods and applications for approval of such changes; tax basis studies; tax implications of mergers, acquisitions and divestitures; tax issues relating to payroll; tax issues relating to employee benefit plans; requests for technical advice from tax authorities and tax audits and appeals (not including representation before a tax court, district court or federal court of claims or a
comparable state or local court). In addition, the Chairman of the Audit Committee has been delegated the authority by the Audit Committee to pre-approve the engagement of the independent auditors for services not covered by the above authority. All such pre-approvals must be reported to the Audit Committee at the next committee meeting.
The affirmative vote of a majority of the votes cast at the Annual Meeting in person or by proxy by shareholders entitled to vote on the matter is required to ratify the appointment of
PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
20142016 AUDIT COMMITTEE REPORT
In compliance with the requirements of the NYSE, the Audit Committee has a formal written charter approved by the Board of Directors, a copy of which is available on our website under the heading “Investor Relations” and subheading “Corporate Governance” (www.energen.com). In connection with the performance of its responsibility under its charter, the Audit Committee has:
The Audit Committee has also considered whether the independent registered public accountants’ provision of non-audit services to the Company is compatible with maintaining their independence.
AUDIT COMMITTEE
Kenneth W. Dewey, Chair
M. James Gorrie
Jay Grinney
William G. Hargett
Frances Powell Hawes
Alan A. Kleier
The only persons known by the Company to be beneficial owners of more than five percent (5%) of the Company’s common stock are the following:
| Name and Address of Beneficial Owner | Number of Shares Beneficially Owned (1) | Percent of Class Beneficially Owned (1) | ||
BlackRock, Inc. (2) 40 East 52nd Street New York, NY 10022 | 4,978,588 | 6.8% | ||
State Street Corporation (3) State Street Financial Center One Lincoln Street Boston, MA 02111 | 4,070,197 | 5.6% | ||
The Vanguard Group (4) 100 Vanguard Blvd. Malvern, PA 19355 | 5,100,994 | 6.96% | ||
Wellington Management Group LLP (5) c/o Wellington Management Company LLP 280 Congress Street Boston, MA 02210 | 8,276,329 | 11.31% | ||
Boston Partners (6) One Beacon Street Boston, MA 02108 | 6,629,178 | 9.06% | ||
JPMorgan Chase & Co. (7) 270 Park Avenue New York, NY 10017 | 4,792,547 | 6.5% |
| Name and Address of Beneficial Owner | Number of Shares Beneficially Owned(1) | Percent of Class Beneficially Owned(1) | ||
Boston Partners(2) One Beacon Street Boston, MA 02108 | 8,995,989 | 9.27% | ||
JPMorgan Chase & Co.(3) 270 Park Avenue New York, NY 10017 | 9,174,996 | 9.4% | ||
Wellington Management Group LLP(4) c/o Wellington Management Company LLP 280 Congress Street Boston, MA 02210 | 6,448,781 | 6.64% | ||
BlackRock, Inc.(5) 55 East 52nd Street New York, NY 10055 | 8,944,318 | 9.2% | ||
The Vanguard Group(6) 100 Vanguard Blvd. Malvern, PA 19355 | 8,691,265 | 8.95% |
| (1) | Reflects shares reported on Schedule 13G as beneficially owned as of December 31, |
| (2) | In a Schedule 13G |
| In a Schedule 13G |
| (4) | In a Schedule 13G filed February 9, 2017, Wellington Management Group LLP, together with certain affiliated entities (“Wellington”), reported having shared power to vote 2,797,853 shares of common stock and shared power to dispose or direct the disposition of 6,448,781shares of common stock. All information in this footnote was obtained from the Schedule 13G filed by Wellington. |
| (5) | In a Schedule 13G filed January 24, 2017, BlackRock, Inc., together with certain affiliated entities (“BlackRock”), reported having sole power to vote 8,399,527 shares of common stock and sole power to dispose or direct the disposition of 8,944,318 shares of common stock. All information in this footnote was obtained from the Schedule 13G filed by BlackRock. |
| (6) | In a Schedule 13G filed February 9, 2017, The Vanguard Group, together with certain affiliated entities (“Vanguard”), reported having sole power to vote 57,000 shares of common stock, sole power to dispose or direct the disposition of 8,628,061 shares of common stock, shared power to vote 10,104 shares of common stock and shared power to dispose or direct the disposition of 63,204 shares of common stock. All information in this footnote was obtained from the Schedule 13G filed by Vanguard. |
DIRECTORSAND EXECUTIVE OFFICERS
As of February 25, 2015,28, 2017, our Directors Director nominees and executive officers beneficially owned shares of our common stock as described in the table below. Beneficial ownership includes shares that each person has the right to acquire within sixty (60) days of February 25, 2015.28, 2017. Except as we have noted below, each individual listed below has sole voting power and sole investment power with respect to shares they beneficially own, and has not pledged any of their shares of our common stock. The final column indicates common stock share equivalents held under the Energen Corporation Deferred Compensation Plan as of February 25, 2015. Company policy prohibits our officers and directorsDirectors from pledging our common stock or trading in derivatives of our common stock.
Name of Entity, Individual or Persons in Group | Number of Shares Beneficially Owned (1)(2) | Percent of Class Beneficially Owned (2) | Share Under Deferred Plan (3) | Number of Shares Beneficially Owned | Percent of Class Beneficially Owned(2) | Share Under Deferred Plan | Restricted Stock Units (4) | |||||||
Kenneth W. Dewey | 15,000 | * | 21,737 | 15,000 | * | 29,999 | - | |||||||
Laurence M. Downes | 5,025 | * | - | - | ||||||||||
David Godsey | 23,843 | * | 264 | 32,742 | * | 264 | 16,397 | |||||||
T. Michael Goodrich | 16,940 | * | 26,036 | 47,572 | * | - | - | |||||||
M. James Gorrie | 3,070 | * | 0 | 9,650 | * | - | - | |||||||
Jay Grinney | 2,500 | * | 8,542 | 2,500 | * | 16,323 | - | |||||||
William G. Hargett | 1,000 | * | 0 | 6,080 | * | - | - | |||||||
Frances Powell Hawes | 2,990 | * | 2,117 | 2,990 | * | 6,701 | - | |||||||
Alan A. Kleier | 500 | * | 0 | 1,000 | * | 4,580 | - | |||||||
James T. McManus, II | 310,412 | * | 0 | 347,340 | * | - | 125,107 | |||||||
Charles W. Porter, Jr. | 68,061 | * | 946 | 89,369 | * | 948 | 51,017 | |||||||
John S. Richardson | 165,568 | * | 3,065 | 194,273 | * | 500 | 56,199 | |||||||
Stephen A. Snider | 28,870 | * | 4,477 | 37,450 | * | 4,483 | - | |||||||
J. David Woodruff | 179,936 | * | 830 | 174,559 | * | 831 | 23,802 | |||||||
Gary C. Youngblood | 46,118 | * | 0 | |||||||||||
| All Directors, Director nominees and executive officers (17 persons) | 907,643 | 1.24% | 69,867 | |||||||||||
| All Directors and executive officers (15 persons) | 974,532 | 1.00% | 66,499 | 276,523 | ||||||||||
| * | Less than one percent. |
| (1) | The shares of common stock shown above include shares owned by spouses and children, as well as shares held in trust. The shares of common stock shown above for Messrs. Godsey, McManus, Porter, Richardson, Woodruff and the other executive officers of the Company include shares that are held for their respective accounts under the Energen Corporation Employee Savings Plan. Messrs. Godsey, McManus, Porter, Richardson, Woodruff and all Directors and executive officers as a group hold presently exercisable options to acquire |
| (2) | The number and percentage of common stock beneficially owned does not include |
| (3) | Represents shares of common stock credited to Company Stock Accounts under the Energen Corporation Deferred Compensation Plan. The value of Company Stock Accounts tracks the performance of the common |
| (4) | Represents shares of common stock issuable upon satisfaction of service period for restricted stock units. Restricted stock units have no voting rights. |
SECTION 16(A)16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers, Directors and persons who own more than 10% of our common stock, to file initial reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 within specified time frames with the SEC, and
to provide us with copies of all forms filed. We believe, based on a review of Forms 3, 4 and 5 furnished to us, that, during fiscal 2014,2016, our executive officers, Directors and 10% shareholders complied in full with all applicable Section 16(a) filing requirements.
COMPENSATION DISCUSSION AND ANALYSIS
Overview.The following discussion details how the Compensation Committee (“Compensation Committee”) of the Board of Directors of the Company determines compensation for the Company’s Chairman and CEO, the CFO, and the other executive officers named in the Summary Compensation Table (sometimes referred to as the “named executive officers” or the “NEOs”). The Company’s approach to executive compensation is guided by the following objectives:
| attract and retain highly qualified executives; |
| link a substantial portion of individual compensation to Company performance; and |
| align the interests of executives with the long-term interests of shareholders. |
The Compensation Committee attempts to structure compensation packages for the named executive officers such that, at target performance, a majority of an officer’s
compensation is delivered through incentive compensation, with a majority of total incentive compensation delivered through long-term incentive compensation. The Compensation Committee utilizes competitive data provided by the Company’s independent compensation consultant, input from the Chief Executive Officer regarding the performance of named executive officers other than him,himself, and consideration of internal equity to set total compensation ranges for each executive position and allocate compensation among salary, annual incentives and long-term incentives. The combination of salary, short-term incentives and long-term incentives is intended to compensate Company executives at approximately the 50th percentile of the market when the Company performs at a target level.
Compensation Practices.Energen’s executive compensation policies and practices include the following best practice features designed to align
compensation with performance and the long-termlong- term interests of shareholders.
| Energen Compensation Practices Include: | ||
✓ Annual cash incentive |
✓ Long-term incentives 100% equity-based ✓ Majority of long-term |
✓ Long-term incentive |
✓ Double-Trigger Change in ✓ Stock ownership guidelines for Executives and |
✓ Annual “Say on Pay” vote ✓ Limited perquisites are provided ✓ Transitioned away from defined benefit plans |
× Excise tax gross-up × Hedging of Energen Securities by Executives and × Pledging of Energen Securities by Executives and Directors |
Company Performance.The Company’s Permian Basin drillingDuring 2016, in response to challenging oil industry business conditions, the Company took aggressive steps to manage expenses and development program ledmaintain its liquidity. Approximately $930 million was raised from an equity offering and the sale of non-core assets. As compared to a 17 percent year-over-year increase inthe prior year, we reduced general and administrative expenses by approximately 36% and oil, natural gas liquids and natural gas liquids production and a 7 percent increase in proved reserves.
During 2014 the Company sold its utility subsidiary, Alabama Gas Corporation (“Alagasco”), in a $1.6 billion transaction, clarifying Energen as a pure-play oil and gas exploration and production company.
The Company’s adjusted net income of $2.05 per diluted share fell short of our $2.17 per diluted share performance target. The adjusted net income of $2.05 per diluted share, a non-GAAP measure, excludes the impact of (i) open mark-to-market gains and losses, (ii) non-cashexpenses by approximately 25%.
proved propertyThe Company had above target performance with respect to production, general and unproved leasehold impairments, (iii) changes in accounting principles or other provisions that materially affect reportedadministrative expenses, lease operating expenses, drillbit finding and development costs, and safety. See page 32 for a detail of the targets and results (iv) gains or losses (netfor each of earnings on sold production) on asset dispositions greater than five million dollars, and (v) unbudgeted reorganization costs. The Company’s 2014 GAAP net income was $7.75 per diluted share. (See “Non-GAAP Financial Measures” on Appendix B for explanation and reconciliation).the 2016 Annual Incentive Compensation Plan performance criteria.
Base Salary. The Compensation Committee’s objective of targeting compensation for named executive officers at the 50th percentile of the market translates into salary ranges for executives intended to approximate the median salaries for comparable positions in our peer companies. When making salary adjustments within the target ranges, the Compensation Committee considers competitive salary data, recommendations from the CEO and the Vice President of Human Resources,Administration, internal comparability considerations and the executive’s experience, tenure, and performance.
Annual Cash Incentives and Company Performance.Payment of annual cash incentive compensation is linked to the annual performance of the Company and its subsidiaries through performance factors established by the Compensation Committee at the beginning of each year. For 2014,2016, our actual performance relative to the applicable performance metrics established for our plan fell between thresholdtarget and target for Energen and above target for Energen Resources. These results were
maximum. This result is reflected in the incentive payments described below.
Long-Term Equity Compensation. In 2014, the Compensation Committee deliveredThe Committee’s practice is to make annual grants of long-term incentives to our executives using a combination of performance shares, restricted stock units and stock options.
Prior to 2013, the Committee used stock options as its primary long-term incentive. In
January 2013 and 2014, it granted a mix of performance shares (50%), restricted awards (25%) and stock options (25%)(percentages indicate estimated value allocation).equity incentives. In February 2015,2017, as in recent years, the Committee grantedannual grant was a mix of performance shares (60%) and restricted awards (40%), but did not grant stock options. (percentages indicate estimated value allocation).
Payout of performance shares is based on our total shareholder return performance relative to companies in the S&P Supercomposite Oil and Gas E&P Index. Although performancePerformance shares typically have a three-year award measurement period, as part ofperiod. For the 2013 transition, the Committee granted performance shares with a two-yearthree-year award period that endedending December 31, 2014. The Company’s2016, the Company had a total shareholder return of 37.7% for this two-year period-13%. Although negative, the return outperformed most of the companies in the index and placed it at the 91Company above the 80stth percentile resulting in a maximum payout.of the peer set. The operation of the plan is discussed in greater detail below.
Transaction Bonus. Following the Company’s successful $1.6 billion divestiture of its utility operations in September 2014, the Committee recommended and the Board used its discretionary authority to pay an aggregate of approximately $948,000 in cash bonuses to certain officers, including the following three named executive officers: McManus - $250,000, Porter - $171,200, and Woodruff - $110,700.
The Company’s executive compensation program is designed to serve the Company
and its shareholders by aligning executive compensation with shareholder interests and by encouraging and rewarding management initiatives that will benefit the Company, its shareholders and employees over the long-term. Specifically, the executive compensation program seeks to:
| attract and retain highly qualified executives; |
| link a substantial portion of individual |
compensation to Company performance; and |
| align the interests of executives with the long-term interests of shareholders. |
The Company’s executive compensation program includes base salary, annual cash incentive awards, long-term equity basedequity-based incentive opportunities and retirement benefits. In the case of a change in control, we also provide severance compensation for qualified terminations related to the change in control.
The Compensation Committee believes that each of these components is a factor in the attraction, retention and motivation of qualified executives. The annual cash and long-term equity incentives link each executive’s compensation to corporate performance, with the annual cash incentives keyed to short-term financial and operational objectives and the long-term equity incentives providing alignment with shareholder returns.
The combination of salary, short-term cash and long-term equity incentives is intended to compensate Company executives at approximately the 50th percentile of the market when the Company performs at a target level; above median when the Company performs above target; and below median for below-target performance. Target performance represents the performance expectations of the Compensation Committee as measured by the
performance metrics set by the Compensation Committee for the Annual Incentive Compensation Plan and the relative total shareholder return performance target associated with our use of long-term performance shares. The allocation between the various elements of the compensation package is intended to emphasize incentive compensation while remaining in line with market allocations for similar positions in comparable companies. As shown in the chart below, a majority of 20142016 target compensation iswas represented by incentive compensation and a majority of the incentive compensation iswas represented by long-term equity incentive compensation. The allocation to incentive compensation increases with position seniority since we believe that the compensation of our most senior executives should be linked most closely to Company performance.
Allocation of Target Compensation by Percentage
ADMINISTRATIONOF EXECUTIVE COMPENSATION ROLESAND RESPONSIBILITIES
Role of the Compensation Committee: The Compensation Committee oversees and administers the Company’s executive compensation program. It establishes the salaries and other compensation of the executive officers of the Company, including the named executive officers. On an annual basis, the Committee
conducts performance evaluations of the CEO whichthat include obtaining written input from each of the independent members of the Board of Directors. As noted below, the Committee then meets with the CEO to discuss his performance. Each member of the Compensation Committee is an independent Director.
Role of Management:In evaluating compensation, the Compensation Committee receives and considers information and recommendations from the CEO and the Vice President of Human Resources.Administration. On an annual basis, the Compensation Committee meets with the CEO to discuss his performance and the CEO provides the Compensation Committee with his evaluation of the performance of the other executive officers in connection with the annual compensation review of those officers.
Role of the Compensation Consultant:The Compensation Committee also reviews and considers reports and analysis provided by its independent executive compensation consultant, Pay Governance. Pay Governance is engaged by the Company at the direction of the Compensation Committee. The Compensation Committee determined Pay Governance to be independent following consideration of the factors identified in Rule 10C-1(b)(4) promulgated under the Exchange Act. Management meets with Pay Governance representatives and participates in most meetings between Pay Governance and the Compensation Committee.
Pay Governance provides assessments of the competitiveness of the Company’s executive compensation levels and practices relative to
relevant executive labor markets and other assignments as requested by the Compensation Committee. Specifically, during 2014,2016, Pay Governance assisted the Compensation Committee and the Company in the following areas:
| providing information on general trends in executive compensation; |
| providing prevalence and plan design information on various types of incentive plans; |
| providing compensation analyses of the competitiveness of the compensation of the Company’s executive positions, including an assessment of our pay and performance relative to peers; and |
| preparing estimates of the benefits to be received by each named executive officer in the event of a change in control. |
Pay Governance does not make specific recommendations on individual pay levels, but rather provides competitive data for review and use by the Compensation Committee and Company. The Compensation Committee uses the Pay Governance-provided data and analysis for general reference purposes.
Each year, the Compensation Committee examines the competitive salary data provided by Pay Governance to determine base salary ranges for the Company’s executive officers, including the named executive officers. The Compensation Committee also reviews the market data provided by Pay Governance to assess the total compensation levels that would place Company executives at approximately the 50th percentile of the market, assuming the Company meets target performance objectives. In accordance with its practice in prior years, the Compensation Committee reviewed compensation data and analyses provided by Pay Governance in preparation for the 2014 compensation review.setting 2016 compensation. The information provided by Pay Governance utilized compensation data and analysisanalyses from fivetwo reference points: (1) Custom Peer Group – 27 companies representing a mix of22 oil and gas diversified companies with regulated gas operations, and pure-play gas utility companies
selected to approximate Energen’s business mix (which at the time included utility operations); (2) Oil & Gas – 23 companies from Towers Watson’s 2013 CDB General Industry Executive Compensation Survey; (3) Energy Sector – 95size adjusted companies from the 20132014 Energy Sector Mercer Total Compensation Survey; (4) Utility Industry – 56 utility focused companies from Towers Watson’s 2013 CDB Survey Energy Services Executive Compensation Survey; and (5) Broader
General Industry – general industry data from Towers Watson’s 2013 CDB General Industry Executive Compensation Survey. Companies included in the Custom Peer Group data base, Utility Industry data base, Oil & Gas data base, and the Energy Sector data base are listed on Appendix A. The Compensation Committee has not requested a listing of the companies inselected by Pay Governance from the Towers Watson’s 2013 CDB General Industry Executive Compensation Survey that includes over 400 companies.Mercer survey.
Energen’sDuring 2016, the Company successfully responded to a challenging oil industry business environment. Oil prices, which had declined significantly during 2015, continued their decline
into 2016 with West Texas Intermediate trading in the mid-$20 range by February. The Company took aggressive steps to manage expenses and maintain its liquidity. We raised
approximately $380 million from an equity offering plus approximately $552 million from the sale of non-core assets. As compared to the prior year, we reduced general and administrative expenses by approximately 36% and reduced oil, natural gas liquids and natural gas liquids (NGL) production increased 17 percent in 2014 asexpenses by approximately 25%. We ended the Company continued to grow throughyear with a strong balance sheet, an attractive Permian Basin portfolio of properties, an active drilling in the Permian Basin ledprogram, and 2016
reserve additions that replaced production by a new Wolfcamp shale development program in the Midland Basin. Production in the Permian Basin increased 22 percent from the prior year. Companywide, production in 2014 grew 10 percent to a record 25.7 million barrels of oil equivalent (MMBOE)almost 300%.
Active drilling in the Permian Basin also led toThe Company exceeded performance targets for production, general and administrative expenses, lease operating expenses, drillbit finding and development costs, and safety. See page 32 for a 7 percent increase in Energen’s proved reserves in 2014. Proved reserves at December 31, 2014, totaled a record 372.7 MMBOE, with oil and NGL reserves representing approximately 68 percent.
Energen’s transformation to a pure-play oil and gas exploration and production company was completed in September 2014 with the saledetail of the Company’s natural gas utility, Alabama Gas Corporation. The transaction, valued at $1.6 billion, closed within five monthstargets and results for each of the signing of a definitive stock purchase agreement in April. The sale of the utility clarified Energen’s corporate structure and
enhanced its financial capacity to pursue the drilling and development of its Permian and San Juan oil basin properties.
As detailed below in the2016 Annual Cash Incentives discussion, our net income fell short of target. Adjusted net income (a non-GAAP measure) was $2.05 per diluted share, and compared with our target net income of $2.17 per diluted share. The target income shortfall largely reflects lower realized oil and NGL prices, partially offset by higher production volumes. For purposes of measuringIncentive Compensation Plan performance for annual cash incentives, net income is adjusted to exclude the impact of (i) open mark-to-market gains and losses, (ii) non-cash proved property and unproved leasehold impairments, (iii) changes in accounting principles or other provisions that materially affect reported results, (iv) gains or losses (net of earnings on sold production) on asset dispositions greater than five million dollars, and (v) unbudgeted reorganization costs. Energen’s 2014 GAAP net income was $7.75 per diluted share. (See “Non-GAAP Financial Measures” on Appendix B for explanation and reconciliation.)criteria.
As discussed above, the Compensation Committee attempts to provide competitive salaries. In setting 2014 salaries,During 2015, the Compensation Committee reviewed competitive salary data for each position. Competitive salary data was intended to
approximate the median salary of similar positions with comparable companies.companies and it approved salary adjustments for 2016. In approving salary adjustments,early 2016, however, in light of deteriorating oil and gas industry economic conditions, the Compensation Committee consideredacted to hold base salaries at 2015 levels. When reviewing salaries, the Compensation Committee considers competitive salary data, recommendations from the CEO and the Vice President of
Human Resources,Administration, internal comparability considerations and the executive’s years of experience and performanceperformance.
The differences in amounts of compensation awarded to the named executive officers reflect differences in the competitive market data for
the positions held by the executives as well as internal comparability. From an internal comparability perspective, Mr. McManus holds the position with the greatest corporate responsibility and thus has the highest compensation among the named executive officers.
Annual Incentive Compensation Plan (AICP). In order to link compensation to the Company’s annual performance, officers are eligible each year for cash incentive awards under the AICP. Awards are based upon attaining performance objectives approved by the Compensation Committee. Objectives are
In March 2016, the Compensation Committee established a baseline AICP performance hurdle for our named executive officers. In order to earn a cash incentive award under the AICP for the 2016 fiscal year, Adjusted EBITDAX (defined below) for the 2016 fiscal year must be equal to at least $50.0 million. If Adjusted EBITDAX was at least $50.0 million, the bonus pool would be funded at the corporatemaximum cash incentive level for Energen and at the subsidiary level for Energen Resources and, prior to its divestiture, Alagasco.each named executive officer. The Compensation Committee may apply negative discretion in
For 2014, earned annualdetermining actual cash incentives were calculated by applying Companyusing the objectives and business unit performance factors to each officer’sset forth below, individual performance and such other matters as the Compensation Committee deems appropriate. As defined by the Compensation Committee, “EBITDAX” means net income of the Company, plus interest, taxes, depreciation, accretion, impairment and exploration expenses. “Adjusted EBITDAX” means EBITDAX excluding the impact of (i) open mark-to-market gains and losses, (ii) changes in accounting principles or other provisions that materially affect reported results, (iii) gains or losses (net of severance payments) on asset dispositions with proceeds greater than $5 million, and (iv) EBITDAX on properties held for sale as of March 14, 2016, and/or sold properties with proceeds greater than $5 million for the fiscal year.
For 2016, the maximum cash incentive opportunity was 200% of the named executive’s target incentive opportunity. The target incentive opportunities are set each yearopportunity (expressed as a percentage of base salary. For 2014, the named executive officers had the following target incentive opportunities:salary).
| Named Executive Officer | Target Incentive (as a % of salary) | |
McManus | ||
Porter | | |
Richardson | | |
Godsey | | |
Woodruff | |
The applicable portionsUpon satisfaction of targetthe AICP performance hurdle, the maximum individual cash incentive opportunities subject to Company and business unit performance factors wereis calculated as follows:
| Base Salary | x | Target Incentive Multiplier Percentage | x | 200% | = | Maximum Individual Cash Incentive |
Business Unit Allocation Factor2016 AICP Performance Hurdle. Adjusted EBITDAX for 2016 equaled $300.2 million (See “Non-GAAP Financial Measures” on Appendix B for explanation and reconciliation). Since the Company exceeded the AICP performance hurdle for the 2016 fiscal year, the maximum cash incentive for each named executive officer was available for AICP cash incentive awards.
| Energen | Energen Resources | Alagasco | ||||
McManus | 80% | 10% | 10% | |||
Porter | 80% | 10% | 10% | |||
Richardson | 25% | 75% | - | |||
Godsey | 25% | 75% | - | |||
Woodruff | 80% | 10% | 10% |
AtFollowing satisfaction of the time that it set the Business Unit Allocation Factors,AICP performance hurdle, the Compensation Committee calculates earned AICP incentives using the following formula –base salary xtarget incentive multiplier xperformance factor score +/- individual performance (if any). For example, Mr. McManus’s 2016 AICP incentive was aware that Alagasco might be divested during 2014 and the Compensation Committee provided that, in the eventcalculated as follows:
Calculation of a divestiture, the incentive allocations to Alagasco would be scored at target for the portion of the year prior to divestiture and measured by Energen performance for the remainder of the year. The closing of the divestiture of Alagasco occurred September 2, 2014.McManus’s Actual AICP Incentive
| Base Salary | X | Target Incentive Multiplier | X | Performance Factor Score | = | Actual Incentive | ||||||||||||||||||
| $884,000 | X | 110% | X | 1.432 | = | $1,392,477 | ||||||||||||||||||
Performance Factors and 20142016 Results:The Compensation Committee applied the performance targets and ranges shown below in determining final cash incentive payments under the AICP for each named executive officer. The Compensation Committee applies these additional performance factors for each named executive officer following satisfaction of the AICP performance hurdle as an exercise of the Compensation Committee’s negative discretion. Performance targets and ranges, as well as actual 20142016 results, were as follows:
| Performance Factor
| ||||||||
Threshold | Target | Maximum | 2014 Actual | |||||
Energen | 0.50 | 1.00 | 2.00 | 0.86 | ||||
Energen Resources | 0.50 | 1.00 | 2.00 | 1.07 | ||||
Alagasco | 0.75 | 1.00 | 1.25 | 1.00 | ||||
Threshold Target Maximum 2016 Actual Performance Factor 0.50 1.00 2.00 1.432
The performance factor scores were calculated based on the following criteria, results and weights:
Threshold | Target | Maximum | 2014 Result | 2014 | Weight | |||||||
Energen | ||||||||||||
Adjusted Earnings per share | $1.74 | $2.17 | $2.60 | $2.05 | 0.86 | 100% | ||||||
Energen Resources | ||||||||||||
Adjusted Net Income (millions) | $127 | $159 | $191 | $149 | 0.85 | 70% | ||||||
Total Production (excluding acquisitions and divestitures) MMBOE | 23.6 | 24.9 | 26.1 | 25.7 | 1.67 | 5% | ||||||
Operating Cost per BOE (excluding severance tax) | $12.15 | $11.46 | $10.77 | $11.72 | 0.81 | 5% | ||||||
Exploitation– percentage production replacement (excluding acquisitions and divestitures) | 50% | 100% | 150% | 213% | 2.00 | 10% | ||||||
Safety-Percentage of industry Average | 150% | 100% | 50% | 1.53 | 10% | |||||||
Vehicle Frequency (40%) | 150% | 100% | 50% | 42% | ||||||||
DART Rate (20%) | 150% | 100% | 50% | 84% | ||||||||
Lost Time (20%) | 150% | 100% | 50% | 118% | ||||||||
Recordable Incident Rate (20%) | 150% | 100% | 50% | 75% | ||||||||
Total Weighted Score | 1.07 | |||||||||||
Alagasco
Alagasco’s target factors are not included because, due to the divestiture, the Alagasco performance factor scores were all included at target, as explained above.
Threshold | Target | Maximum | 2016 | 2016 Score | Weight | |||||||||||||||||||
Total Production (excluding acquisitions and divestitures and held for sale properties) MMBOE | 17.9 | 19.9 | 21.9 | 20.6 | 1.35 | 30% | ||||||||||||||||||
Manage General & Administrative Expenses (excluding SERP, Pension & severances) | $98 | $89 | $80 | $87.4 | 1.18 | 30% | ||||||||||||||||||
Control base LOE (including M&T; excluding production and ad valorem taxes, acquisitions and divestitures and held for sale properties) | | $10.67 per BOE | | | $9.70 per BOE | | | $8.73 per BOE | | $7.86 | 2.00 | 15% | ||||||||||||
Drillbit finding & development cost per BOE | | $9.00 per BOE | | | $7.50 per BOE | | | $6.00 per BOE | | $7.17 | 1.22 | 15% | ||||||||||||
Safety-Percentage of Industry Average | ||||||||||||||||||||||||
DART Case Rate (20%) | 150% | 100% | 50% | 0.0% | 2.00 | 2% | ||||||||||||||||||
Lost Time Incidence Rate (20%) | 150% | 100% | 50% | 43.75% | 2.00 | 2% | ||||||||||||||||||
Frequency Rate (40%) | 150% | 100% | 50% | 0.0% | 2.00 | 4% | ||||||||||||||||||
Recordable Incident Rate (20%) | 150% | 100% | 50% | 71.43% | 1.57 | 2% | ||||||||||||||||||
Total Weighted Score | 1.432 | |||||||||||||||||||||||
Based on the performance criteria and the 20142016 results detailed above, the named executive officers received AICP incentive payments in January 2015February 2017 as reflected in the table below (also reflected in the column (g) 20142016 disclosure in the Summary Compensation Table). The table also reflects the maximum annual incentive amounts and the amounts that would have been paid to each named executive officer at target performance.
| Named Executive Officer | AICP Target ($) | AICP Actual ($) | Actual as | |||
McManus | 837,000 | 745,293 | 89% | |||
Porter | 342,400 | 304,884 | 89% | |||
Richardson | 392,700 | 399,867 | 102% | |||
Godsey | 240,500 | 244,889 | 102% | |||
Woodruff | 221.400 | 197,142 | 89% |
Earned AICP incentives are calculated by the following formula for each business unit - base salary xtarget incentive opportunity xbusiness unit allocation factor xbusiness unit performance factor. No incentives are paid unless Energen achieves its threshold earnings per share. If a subsidiary does not
| Named Executive Officer | AICP Target Annual Incentive ($) | AICP Maximum ($) | AICP Actual ($) | Actual as Percent of Target (%) | ||||
McManus | 972,400 | 1,944,800 | 1,392,477 | 143% | ||||
Porter | 416,700 | 833,400 | 596,714 | 143% | ||||
Richardson | 459,000 | 918,000 | 657,288 | 143% | ||||
Godsey | 288,750 | 577,500 | 413,490 | 143% | ||||
Woodruff | 247,000 | 494,000 | 353,704 | 143% |
achieve its threshold income performance factor, no incentive is paid with respect to that subsidiary. The minimum score for the other subsidiary performance factors is the threshold score. For example, Mr. McManus’s 2014 AICP incentive was calculated as follows:
Calculation of McManus Actual AICP Incentive
| Business Unit | Base Salary | Target Incentive Opportunity | Business Unit Target Allocator | Business Unit Performance Factor | Actual Incentive | |||||
Energen | $837,000 | 100% | 80% | 0.86 | $575,856 | |||||
Energen Resources | $837,000 | 100% | 10% | 1.07 | $ 89,643 | |||||
Alagasco target(1) | $837,000 | 100% | 6.7% | 1.00 | $ 55,803 | |||||
Alagasco-Energen(1) | $837,000 | 100% | 3.3% | 0.86 | $ 23,991 | |||||
TOTAL | $745,293 |
Discretionary Authority Applicable to Cash Incentive Awards.The Annual Incentive Compensation Plan provides the Compensation Committee withhas the discretion to decrease but not increase, an earned incentive by up to 25%100%. This discretion allows the Compensation Committee to reduce an individual payout for any reason, including poorsub-standard individual performance. Such discretion was not utilized with respect to 2016 AICP payments, other than by use of the performance factor score described above.
The Compensation Committee’s negative discretion does not apply to plans other than the Annual Incentive Compensation Plan. Such discretion was not utilized with respect to 2014 payments.
In addition to performance-based awards, the Board of Directors has the inherent authority, in its absolute discretion, to award cash bonuses to suchtosuch employees and in such amounts as it determines. As discussed below, suchSuch discretion was usednot utilized in 2014 to provide transaction bonuses to certain officers in connection with the divestiture of Alagasco.
2016Transaction Bonus.. As discussed above under Company Performance, during 2014 Energen sold its natural gas utility, Alabama Gas Corporation. This reflected a strategic decision by the Board to transform Energen to a pure-play oil and gas exploration and production company. In size, complexity and nature, this was an out-of-the-ordinary
transaction for the Company involving successful coordination of state and federal regulatory approvals; refinancings of Energen and Alagasco debt; and the separation of longtime shared human resources, financial, tax, information technology and other corporate services, systems and facilities. The $1.6 billion transaction closed on September 2, 2014, less than five months after the signing of a definitive sale agreement.
Following completion of the divestiture, in September 2014, the Compensation Committee recommended - and the Board used its discretionary authority to pay - an aggregate of approximately $948,000 in cash bonuses to certain officers, including the following three named executive officers: McManus - $250,000, Porter - $171,200, and Woodruff - $110,700. Early in 2014 when the Committee set Annual Incentive Compensation Plan objectives, it did not include divestiture transaction incentives. As a result, the Board retained full flexibility to evaluate and determine whether to pay transaction-related bonuses. In light of the very successful and timely execution of the Alagasco sale, the Committee and Board determined that it was appropriate to award bonuses to recognize the efforts and leadership of key contributors to the transaction.
LONG-TERM EQUITY INCENTIVE COMPENSATION
Stock Incentive Plan. The Stock Incentive Plan is intended to align officer compensation with long-term company performance and changes in shareholder value. It provides for the grant of performance shares, restricted stock, restricted stock units and stock options. The Compensation Committee normally makes awards during its first meeting of the year. In 2014 and recent years this occurred during January. In 2015,2016, the Compensation Committee made awards during February and expects to continue making awards in February during future years. The Compensation Committee also retains the
authority to make awards at other times of the year. Equity grants for 20142016 are reflected in the table under “Executive Compensation – Grants of Plan-Based Awards.”Awards” on page 41.
In 2014,2016, the Compensation Committee delivered long-term incentives using a combination of performance shares and restricted stock units and stock options providing a balanced program with measures that incentivize and reward relative performance as well as absolute performance.
The following table summarizes the 2016 target equity award opportunity. Differences from the equity award values reported in the Summary Compensation Table on page 39 are due to:
2016 Target Equity Incentive Opportunity and Equity Compensation Mix
Named Executive Officer | Target Long-Term Incentive Multiplier (as a multiple of salary) | Performance Shares as % of the Award | Restricted Stock Units as % of the Award | |||
McManus | 5.65 | 60 | 40 | |||
Porter | 4.40 | 60 | 40 | |||
Richardson | 4.40 | 60 | 40 | |||
Godsey | 1.70 | 60 | 40 | |||
Woodruff | 2.50 | 60 | 40 |
Performance Shares.A performance share is the value equivalent of one share of our common stock. An award of performance shares becomes payable if the Compensation
Committee determines that all conditions of payment have been satisfied at the end of the applicable award period. The standard performance share award period is three years.
For example, the performance shares granted in January 2014February 2016 have an award period beginning January 1, 2014,2016, and ending December 31, 2016.2018. Payout of the performance shares will be based on Energen’s total shareholder return (“TSR”) relative to companies (“peer companies”) included in the S&P Supercomposite Oil and Gas E&P index as constituted on the first day of the applicable award period.
The following table reflects 2016 performance share award payout percentages at various performance levels:
Energen TSR Percentile Ranking Relative to S&P Supercomposite E&P Index | % of Performance Shares Payable | |||
90th or > | 200 | |||
50th | 100 | |||
25th | 25 | |||
Below 25th | 0 | |||
For grants madeperformance levels falling between the values shown in 2013 and 2014, the threshold goalabove table, percentages will be met if the Company’s total shareholder return percentile ranking relative to the peer companies is at
least 35th(25th for 2015 grants), the target goaldetermined by interpolation. TSR will be met ifmeasured in accordance with the Company’s total shareholder return percentile ranking relative to the peer companies is 50th, and the maximum goal will be met if the Company’s total shareholder return percentile ranking relative to the peer companies is 80th (90th for 2015 grants) at the end of the respective award period. If performance is below threshold, no portion of the performance shares will be paid. Threshold performance results in payment of 25% of the performance shares, target performance results in payment of 100% of the performance shares and maximum performance results in payment of 200% of the performance shares.following rules:
| (a) | TSR will be measured for Energen and the peer companies based on the average closing price for the 20 trading days prior to the beginning and end of the applicable award period. |
| (b) | If a peer company is acquired prior to the end of the applicable award period, it will be excluded from the calculation. |
| (c) | Peer companies that enter into bankruptcy during the applicable award period will be counted as the lowest ranking companies. |
Restricted Awards.The Stock Incentive Plan also provides for the grant of restricted stock and restricted stock units. No shares of restricted stock may be sold, and restricted stock units do not pay out, until the restrictions on such shares or units have lapsed or been removed. The Compensation Committee establishes the terms and conditions upon which the restrictions on each award shall lapse, which terms and conditions may include a required period of service or individual or corporate performance conditions. The restricted stock unit grants made in January 2014February 2016 have a three-year service period condition, vesting in January 2017.February 2019. As described below under Changes for 2017, in February 2017, the Compensation Committee determined to move to ratable
vesting for restricted stock units, with restrictions on the 2017 restricted stock unit grants lapsing in annual one-third increments as is common among our peers. The Committee expects to continue to use ratable vesting in future years.
Stock Options.The stock option provisions of the Stock Incentive Plan provide for the grant of non-qualified stock options, incentive stock options and stock appreciation rights or a combination thereof to officers and key employees, all as determined by the Compensation Committee. The Company’s stock options typically vest ratably over three years and expire after 10 years. The Compensation Committee has not placed performance conditions, other than employment vesting periods, on grants of stock options as it believes that the option itself is performance-based. The Compensation Committee has not utilized the stock appreciation right feature in recent years.years, no stock options have been granted since 2014 and all outstanding options have vested.
OWNERSHIP GUIDELINES/ANTI-HEDGINGAND PLEDGING
The Company has the following suggested stock ownership guidelines for officers: CEO and Chairman (McManus) -– 5 times base salary; CFO (Porter), COO (Richardson), and General Counsel (Woodruff) -– 3 times base salary; and
SVP (Godsey) -– 2 times base salary. The Company’s other officers have ownership guidelines of 1 or 2 times base salary depending on position. For purposes of the guidelines, stock ownership includes (1) shares owned
directly by the executive and immediate family members, (2) share holdingsshareholdings in the Company’s 401(k) plan, and (3) deferred compensation shares and (4) unvested restricted stock and restricted stock units subject to service-based vesting.shares. It is expected
that an officer will not sell or otherwise transfer shares of Company common stock if the officer does not meet the ownership guidelines or if the sale or transfer would cause the officer to not meet the ownership guidelines, excepting shares sold or
withheld for taxes on equity awards. As of December 31, 2014,2016, each of our named executive officers maintained ownership exceeding the guidelines. The guidelines have not been a factor in the Compensation Committee’s recent compensation decisions. In addition, the Company has policies that prohibit employees and directors from hedging or entering into pledging transactions utilizing Company common stock.
1997 DEFERRED COMPENSATION PLAN
The Company also provides a program that allows our Directors and officers to defer receipt of compensation. Amounts deferred by a participant under the Deferred Compensation Plan are credited to one of two separate accounts maintained for a participant, a Company stock account or an investment account. The value of a participant’s Company stock account tracks the performance of our common stock, including reinvestment of dividends.dividends (if any). At distribution, the participant’s Company stock account is payable in the form of shares of Company common stock. The value of a participant’s investment account tracks the performance of selected mutual funds offered by The Vanguard Group, Inc. All of the mutual funds utilized to track performance under the Deferred Compensation Plan are also investment options for employees under the Company’s generally available Employee Savings Plan. At distribution, the participant’s investment
participant’s investment account is payable in cash. The Deferred Compensation Plan is primarily designed as a financial planning and savings tool for participants. It does, however, include a Company contribution provision for officers that mirrors the Company match and supplemental contribution provisions of the Employee Savings Plan. The Company has established trusts and has funded the trusts, and presently plans to continue funding the trusts, in a manner that generally tracks participants’ accounts under the Deferred Compensation Plan. Although there is generally no requirement that the trusts be so funded or invested, if a change in control of the Company occurs, the trusts must be funded in an amount equal to the aggregate value of the participants’ accounts at the time of the change of control. While intended for payment of benefits under the Deferred Compensation Plan, the trusts’ assets remain subject to the claims of our creditors.
RETIREMENT INCOME PLANAND RETIREMENTSUPPLEMENTAL AGREEMENTS
The Energen Corporation Retirement Income Plan, a defined benefit plan, covers our officers along with substantially all of our salaried employees. During 2014, our Board took action to (1) exclude from participation employees
hired by the Company on or after November 1, 2014, (2) freeze the accrual of benefits under the plan for all participants, effective December 31, 2014, and (3) terminate the Retirement Income Plan, effective January 31,
2015. Prior to the amendment and restatement of the Retirement Income Plan, our officers would have received benefits under the plan based on years of service at retirement and on “Final Earnings,” the average base compensation for the highest 60 consecutive months out of the final 120 months of employment. (Average base compensation includes base salary only, and does not include bonus payments, payments in the form of contributions to other benefit plans or any other form of payment such as annual or long-term incentives.) The Retirement Income Plan provides that affected participants are fully vested in their accrued benefits upon plan termination. Plan participants may elect to receive an immediate benefit upon plan termination, including a lump sum distribution, or may defer benefit commencement to a later date. Certain of our officers would be eligible for a special early retirement window benefit if certain conditions based on age and years of service are met. Section 415 of the Internal Revenue Code of 1986, as amended (the “Code”), imposes limits on benefits payable to an employee under the plan.
We havepreviously had entered into Executive Retirement Supplement Agreements (“Supplemental Agreements”) with certain officers, including each of the named executive officers other than Mr. Godsey. In October 2014, our Board approved termination of the Supplemental Agreements as of December 31, 2014, and provided for distribution of the corresponding benefits in accordance with applicable law. Benefit accruals under the Supplemental Agreements (which were not subject to the payment restrictions under Section 409A of the Internal Revenue Code) were paid as soon as practicable following termination of the Supplemental
Agreements. Benefit accruals that were subject to Code Section 409A could not be paid within 12 months of the date the Board of Directors took action to terminate the Supplemental Agreements (other than payments that would be payable under the terms of the Supplemental Agreements if the action to terminate had not occurred), but all such accruals had to be paid within 24 months of the same date.
Each of our named executive officers, with the exception of Mr. Godsey, had sufficient service with the Company to have earned vested benefits under the Supplemental Agreements. The benefits paid during 2016 under the
Supplemental Agreements for each of the Company’s named executive officers are reflected in the table under “Executive Compensation – Pension Benefits in 2016.” No benefits remained to be paid at December 31, 2016. Each Supplemental Agreement providesprovided that the employee willwould receive a supplemental retirement benefit equal to the difference between 60% of the employee’s monthly compensation and the employee’s monthly retirement benefit under the Energen
Corporation Retirement Income Plan (including Social Security benefit)., which Retirement Income Plan was terminated effective January 31, 2015. An officer’s compensation will
would be determined based on a formula taking into account the average of the highest 36 consecutive months of base salary during the five years prior to severance plus the average of the three highest annual incentive awards for the ten full fiscal years prior to the earlier of (1) severance or (2) the officer’s 61st birthday. In October 2014, our Board approved termination of the Supplemental Agreements as of December 31, 2014, and provided for distribution of the corresponding benefits in accordance with applicable law. Benefit accruals under the Supplemental Agreements (which are not subject to the payment restrictions under Section 409A of the Internal Revenue Code) were paid as soon as practicable following termination of the Supplemental Agreements. Benefit accruals that are subject to Code Section 409A may not be paid within 12 months of the date the Board of Directors took action to terminate the Supplemental Agreements (other than payments that would be payable under the terms of the Supplemental Agreements if the action to terminate had not occurred), but all such accruals must be paid within 24 months of the same date.
Each of our named executive officers, with the exception of Mr. Godsey, has sufficient service with the Company to have earned vested benefits under the Retirement Income Plan and the Supplemental Agreements. The benefits accumulated as of December 31, 2014 under the Retirement Income Plan and the Supplemental Agreements for each of the Company’s named executive officers are reflected in the table under “Executive Compensation – Pension Benefits in 2014.”
SEVERANCE COMPENSATION AGREEMENTSAND CHANGEIN CONTROL
We have entered into Severance Compensation Agreements with certain officers including Messrs. McManus, Porter, Richardson, Woodruff and Godsey. We designed these agreements to retain the executives and provide continuity of management in the event of any actual or threatened change in control of the Company. The agreements are “double-trigger” agreements meaning that benefits are payable
only if a change in control occursand the executive’s employment is terminated or constructively terminated. Each agreement provides that if, during a base period following the occurrence of a change in control of the Company, the employee’s employment is terminated in a qualified termination, then we will pay the employee an amount equal to a percentage of the employee’s (a) annual base salary in effect immediately prior to the change
in control, plus (b) the employee’s highest annual cash bonus compensation for the three fiscal years immediately prior to the fiscal year during which the change in control occurs.
Our Severance Compensation Agreements define a “change in control” as any of the following events:
| any “person,” as defined in the Exchange Act, acquires 30 percent or more of our voting securities; |
| a majority of our Directors are replaced in certain circumstances, including: |
| ¡ | a majority of such Directors are replaced such that a majority of our current Directors does not approve their election or nomination for election; or |
| ¡ | Directors are replaced by an individual or individuals whose initial assumption of office occurs as a result of an actual or threatened election contest; or |
| consummation of certain mergers, or a liquidation or sale of our assets. |
In addition, transactions involving the transfer of 80 percent or more of the voting securities or substantially all the assets of a subsidiary would constitute a change in control for the officers of that subsidiary. If the subsidiary is the Company’s largest subsidiary (currently Energen Resources), then such a transaction is also a change in control for the officers of Energen Corporation.
For purposes of the Severance Compensation Agreements, (1) the term “qualified termination” means a termination (a) by the Company other than for cause or (b) by the employee for good reason, or (c) by written agreement to such effect between the employee and the Company, (2) the term “cause” generally means failure to substantially perform duties, misconduct injurious to the Company or conviction of a felony, and (3) the term “good reason” generally means a material diminution in the authority, duties, responsibilities, or benefits of the employee’s job.
Continuity of management and retention during transition periods is encouraged by providing severance benefits in the event of loss of employment following a change in control. The percentage payable and base period varies by executive and ranges from 100% with a one-year base period to 300% with a three-year base period. The 100%, 200% and 300% multiples reflect consideration of the executive’s level of corporate responsibility, specialized skills, and availability of other comparable job opportunities. A higher multiple reflects a higher importance of retention. Thus, officers with higher levels of corporate responsibility or specialized skill or knowledge may have higher multiples. Officers who, due to senior responsibilities or specialized skills, may have fewer comparable alternative employment opportunities also have higher multiples to provide compensation during a
longer job search. All named executive officers except Mr. Godsey have a 300% multiple and three-year base period. Mr. Godsey has a 200% multiple and two-year base period. The Severance Compensation Agreements also provide for the continuance of certain insurance and other employee benefits for a period of twenty-four months following any such termination of employment.
In February 2017, our Severance Compensation Agreements were amended to remove the Code Section 4999 excise tax gross-up provision that had remained in Severance Compensation Agreements entered into in 2007, and earlier, which includeincluding the agreementsSeverance Compensation Agreements with Messrs. McManus, Porter, Richardson and Woodruff, include a tax gross-up provision that provides that, in the event the executive receives compensation subject to the tax imposed by Section 4999Woodruff. Each of the Code, the executive shall be entitled to receive an additional payment in an amount necessary to put the executive in the same after-tax position as if such tax had not been imposed unless the tax would not apply if the payments under the Severance Compensation Agreement were reduced by up to 10% of the amount subject to the tax, in which case such a reduction is made.our Severance Compensation Agreements that have been entered into since 2007, including with Mr. Godsey, do not includenow includes a best net provision which reduces severance compensation if such reduction will result in a greater after tax gross-up provision andvalue to the Compensation Committee does not expect to include such a provision in future agreements.executive.
Our Annual Incentive Compensation Plan provides that upon a change in control and
termination of a participant’s employment, the participant will receive a pro rata incentive based on target performance and the number of days of employment during the Plan year.
The Company’s Stock Incentive Plan includes change in control provisions which, like the similar provisions in the Severance Agreements, are “double trigger” meaning that, in the event of a Company change in control, early vesting or payment occurs only if a change in control occursand the executive’s employment is terminated or constructively terminated. As discussed above, a change in control of a subsidiary constitutes a change in
control for the officers of that subsidiary. In the event of a subsidiary change in control, for purposes of the Stock Incentive Plan, a subsidiary officer has a termination of employment unless he or she continues to be employed by the Company or one of its remaining subsidiaries.
For a description of the potential benefits payable to the Company’s named executive officers upon a termination or change in control effective as of December 31, 2014,2016, refer to the discussion and tabular disclosure included under “Executive Compensation – Potential Payments Upon Termination or Change in Control” on page 47.45.
RESULTSOF 20142016 ADVISORY VOTEON EXECUTIVE COMPENSATION
At the 20142016 Annual Meeting, the Advisory Vote on Executive Compensation generated 97.7%95% of votes cast in favor of the Company’s executive compensation. As part of its 20152017 executive
compensation discussions, the
Compensation Committee reviewed the advisory vote result and considered it to be supportive of the Company’s compensation practices.
For 2015,2017, the basic structure of the Company’s executive compensation program remains unchanged with the exception of the termination of the Retirement Income Plan and the Supplemental Agreements described above.unchanged. The Compensation Committee has established threshold, target and maximum performance factors for potential awards2017 annual cash incentives under the Annual Incentive Compensation Plan that are consistent with the Company’s compensation philosophy and goals. With respectFor 2017, the Committee plans to continue using a “plan within a plan” design which provides the Committee with greater discretion and control in evaluating performance and approving incentive payments while maintaining tax deductibility.
Stock Incentive Plan grants made in February 20152017 included performance shares and restricted stock units, but did not include stock options, with the estimated value
allocated approximately 60% to performance shares and 40% to restricted stock units. As in prior years, payout of the 20152017 performance share grants will be based on the Company’s
total shareholder return relative to the S&P Supercomposite Oil and Gas E&P Index as constituted on the first day of the applicable three-year award period. Threshold and maximum performance for the 2015 grants
Restrictions on restricted stock units granted in February 2017 will be percentile rankings of 25th and 90th, respectively (in prior years, threshold and maximum were 35th and 80th, respectively).lapse in annual one-third increments. The Compensation Committee considered these changesCommittee’s prior practice was to grant restricted stock units with three-year cliff vesting. The change to ratable vesting was made after discussion with the Committee’s compensation consultant and consideration of peer company practice.
The Compensation Committee’s usual practice has been to make annual salary adjustments to be appropriate ineffective as of the beginning of each calendar year. In light of Energen’s transformation to a pure playthen current oil and gas exploration company.industry economic conditions, in January 2016, the Committee acted to freeze base salaries for the Company’s officers, including Mr. McManus. The 2016 salaries of Mr. McManus and the other officers remained unchanged from 2015.
As part of its consideration of executive compensation for 2017, the Compensation Committee approved executive salary adjustments consistent with the policies discussed above. Effective January 1, 2015,2017, Mr. McManus’s salary was increased to $884,000 reflecting a market adjustment consistent with the policies discussed above.$902,000. Mr. McManus has served as the Company’s President and Chief Executive Officer since July 2007.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and based on that review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
COMPENSATION COMMITTEE:
Stephen A. Snider,Jay Grinney, Chair
Kenneth W. Dewey
T. Michael Goodrich
Jay GrinneyStephen A. Snider
The following table sets forth the information required by Item 402 of Regulation S-K promulgated by the SEC. The amounts shown represent the compensation paid to our named executive officers for each fiscal year noted in the table, for services rendered to us. For a more complete discussion of the elements of compensation included in this table, please refer to the discussion reflected in “Compensation Discussion and Analysis” beginning on page 2726 of this Proxy Statement.
Name and Principal Position | Year | Salary ($) | Bonus ($)
| Stock ($)(1)(2) | Option Awards ($)(1) | Non- Equity sation Earnings ($)(3) | Change in ($)(4)(5) | All Other Compensation ($)(6) | Total ($) | |||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
McManus, II, |
| 2014
|
| 837,000 | 250,000 | 3,025,561 | 1,016,091 | 745,293 | - | 83,865 | 5,957,810 | |||||||||||||||||||||||||
|
| 2013
|
| 805,000 | - | 4,370,603 | 809,876 | 788,578 | - | 87,174 | 6,861,231 | ||||||||||||||||||||||||||
|
| 2012
|
| 775,000 | 127,348 | - | 2,423,008 | 412,378 | 3,303,947 | 64,071 | 7,105,752 | ||||||||||||||||||||||||||
Porter, Jr., |
| 2014
|
| 428,000 | 171,200 | 928,255 | 311,734 | 304,884 | 171,734 | 34,781 | 2,350,588 | |||||||||||||||||||||||||
|
| 2013
|
| 400,000 | - | 1,085,840 | 201,219 | 293,880 | - | 31,780 | 2,012,719 | ||||||||||||||||||||||||||
|
| 2012
|
| 380,000 | 40,587 | - | 613,813 | 131,429 | 1,203,330 | 39,826 | 2,408,985 | ||||||||||||||||||||||||||
Richardson,
|
| 2014
|
| 462,000 | - | 1,113,306 | 373,848 | 399,867 | 592,818 | 47,850 | 2,989,689 | |||||||||||||||||||||||||
|
| 2013
|
| 440,000 | - | 1,343,771 | 249,000 | 342,304 | - | 42,425 | 2,417,500 | ||||||||||||||||||||||||||
|
| 2012
|
| 420,000 | 155,642 | - | 809,755 | 40,438 | 1,646,828 | 50,060 | 3,122,723 | ||||||||||||||||||||||||||
Godsey,
| 2014 | 370,000 | - | 416,104 | 139,698 | 244,889 | 62,010 | 37,440 | 1,270,141 | |||||||||||||||||||||||||||
Woodruff, J. |
| 2014
|
| 369,000 | 110,700 | 355,636 | 119,433 | 197,142 | 315,181 | 38,569 | 1,505,661 | |||||||||||||||||||||||||
|
| 2013
|
| 355,000 | - | 409,598 | 75,920 | 173,879 | - | 34,028 | 1,048,425 | ||||||||||||||||||||||||||
|
| 2012
|
| 340,000 | 27,934 | - | 301,185 | 90,457 | 1,006,339 | 42,666 | 1,808,581 | ||||||||||||||||||||||||||
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock ($)(1)(2) | Option ($)(1) | Non- Equity sation Earnings ($)(3) | Change in ($) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||
McManus, II, James T. |
| 2016
|
| 884,000 | - | 2,644,138 | - | 1,392,477 | - | 64,719 | 4,985,334 | |||||||||||||||||||||
|
| 2015
|
| 884,000 | - | 5,499,904 | - | 1,415,814 | - | 97,104 | 7,896,822 | ||||||||||||||||||||||
|
| 2014
|
| 837,000 | 250,000 | 3,025,561 | 1,016,091 | 745,293 | - | 83,865 | 5,957,810 | ||||||||||||||||||||||
Porter, Jr., Charles W. |
| 2016
|
| 463,000 | - | 1,078,492 | - | 596,714 | - | 33,415 | 2,171,621 | |||||||||||||||||||||
|
| 2015
|
| 463,000 | - | 2,243,216 | - | 606,715 | - | 52,242 | 3,365,173 | ||||||||||||||||||||||
|
| 2014
|
| 428,000 | 171,200 | 928,255 | 311,734 | 304,884 | 171,734 | 34,781 | 2,350,588 | ||||||||||||||||||||||
Richardson, John S.
|
| 2016
|
| 510,000 | - | 1,188,000 | - | 657,288 | - | 36,917 | 2,392,205 | |||||||||||||||||||||
|
| 2015
|
| 510,000 | - | 2,470,908 | - | 668,304 | - | 66,617 | 3,715,829 | ||||||||||||||||||||||
|
| 2014
|
| 462,000 | - | 1,113,306 | 373,848 | 399,867 | 592,818 | 47,850 | 2,989,689 | ||||||||||||||||||||||
Godsey, David
|
| 2016
|
| 385,000 | - | 346,515 | - | 413,490 | - | 27,603 | 1,172,608 | |||||||||||||||||||||
|
| 2015
|
| 385,000 | - | 720,584 | - | 420,420 | - | 56,333 | 1,582,337 | ||||||||||||||||||||||
|
| 2014
|
| 370,000 | - | 416,104 | 139,698 | 244,889 | 62,010 | 37,440 | 1,270,141 | ||||||||||||||||||||||
Woodruff, J. David |
| 2016
|
| 380,000 | - | 502,931 | - | 353,704 | - | 27,230 | 1,263,865 | |||||||||||||||||||||
|
| 2015
|
| 380,000 | - | 1,045,947 | - | 359,632 | - | 42,188 | 1,827,767 | ||||||||||||||||||||||
|
| 2014
|
| 369,000 | 110,700 | 355,636 | 119,433 | 197,142 | 315,181 | 38,569 | 1,505,661 | ||||||||||||||||||||||
| (1) | The amounts in |
| (2) | Column (e), Stock Awards, includes restricted stock and performance share awards. |
| (3) | The amounts in column (g) reflect Annual Incentive Compensation payouts as discussed on pages |
| (4) | The amounts |
| Defined Contributions ($) | Spousal Travel Tax ($) | |||
McManus | 70,996 | 4,245 | ||
Porter | 27,717 | 2,402 | ||
Richardson | 39,172 | 2,670 | ||
Godsey | 31,362 | 1,259 | ||
Woodruff | 31,307 | 2,215 |
| Defined Contributions ($) | Spousal Travel Tax ($) | |||
McManus | 63,740 | - | ||
Porter | 32,866 | - | ||
Richardson | 36,313 | - | ||
Godsey | 27,146 | - | ||
Woodruff | 26,780 | - |
The following table sets forth information with respect to annual cash incentives and long-term equity incentives to our named executive officers. For a more complete discussion of the awards, please refer to the discussion of these incentives contained in “Compensation Discussion and Analysis,” beginning on page 2726 of this Proxy Statement.
Name
| Grant Date
| Meeting
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2)
| Estimated Future Payouts Under Equity Incentive Plan Awards
| All Other
| All Other Option Securities
| Exercise
| Grant Date Fair
| Grant Date
| Meeting
| Estimated Future Payouts Under
| Estimated Future Payouts Under
| All Other
| Grant
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($)
| Target ($)
| Maximum
| Threshold (#)
| Target
| Maximum (#)
| Threshold ($)(3)
| Target ($)
| Maximum
| Threshold (#)
| Target
| Maximum (#)
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
McManus | 1/22/14 | 1/21/14 | 439,425 | 837,000 | 1,611,225 | 5,421 | 21,684 | 43,368 | 14,235 | 36,855 | 72.39 | 4,041,652 | 3/14/16 | 3/14/16 | 486,200 | 972,400 | 1,944,800 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
McManus | 2/9/16 | 2/8/16 | 12,441 | 49,764 | 99,528 | 56,500 | 2,644,138 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/22/14 | 1/21/14 | 179,760 | 342,400 | 659,120 | 1,663 | 6,653 | 13,306 | 4,367 | 11,307 | 72.39 | 1,239,989 | 3/14/16 | 3/14/16 | 208,350 | 416,700 | 833,400 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Porter | 2/9/16 | 2/8/16 | 5,075 | 20,298 | 40,596 | 23,045 | 1,078,492 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/22/14 | 1/21/14 | 196,350 | 392,700 | 785,400 | 1,995 | 7,979 | 15,958 | 5,238 | 13,560 | 72.39 | 1,487,154 | 3/14/16 | 3/14/16 | 229,500 | 459,000 | 918,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Richardson | 2/9/16 | 2/8/16 | 5,590 | 22,359 | 44,718 | 25,385 | 1,188,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/22/14 | 1/21/14 | 120,250 | 240,500 | 481,000 | 746 | 2,982 | 5,964 | 1,958 | 5,067 | 72.39 | 555,802 | 3/14/16 | 3/14/16 | 144,375 | 288,750 | 577,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Godsey | 2/9/16 | 2/8/16 | 1,631 | 6,522 | 13,044 | 7,404 | 346,515 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/22/14 | 1/21/14 | 116,235 | 221,400 | 426,195 | 637 | 2,549 | 5,098 | 1,673 | 4,332 | 72.39 | 475,069 | 3/14/16 | 3/14/16 | 123,500 | 247,000 | 494,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Woodruff | 2/9/16 | 2/8/16 | 2,366 | 9,465 | 18,930 | 10,747 | 502,931 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | The Compensation Committee generally sets award amounts at a meeting that occurs the day prior to the grant date. |
| (2) | Columns (c) – (e) reflect the annual cash incentive payout values for each named executive officer for |
| (3) | The threshold amounts in this column assume that the baseline AICP performance hurdle established by the Compensation Committee was met. |
| (4) | Payment of performance share awards will be based on the Company’s total shareholder return (TSR) relative to companies in the S&P Supercomposite E&P Index as comprised on the first day of the applicable award period (the “peer companies”). Columns (f) – (h) reflect the payment of performance share awards for each named executive officer if the threshold, target or maximum goals are met. The threshold goal will be met if the Company’s TSR percentile ranking relative to the peer companies is at least |
| These performance shares have a three-year award period ending December 31, |
| These restricted stock units granted |
| (7) | Column |
OUTSTANDING EQUITY AWARDSAT FISCAL YEAR-END
The following table sets forth information with respect to outstanding equity awards held by our named executive officers as of December 31, 2014.2016. This table includes unexercised and unvested option awards and unvested restricted stock and performance share awards. Each equity grant is shown separately for each named executive officer. The vesting schedule for each grant is shown following this table. For additional information about the outstanding equity awards, see the description of long-term incentive compensation in “Compensation Discussion and Analysis” beginning on page 27.26.
Option Awards
| Stock Awards
| Option Awards
| Stock Awards
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Number of Securities (#) Exercisable | Number of (#) Unexercisable | Equity (#) N/A | Option ($) | Option Expiration Date | Number (#) | Market Value Stock That ($) | Equity (#) | Equity Market or Rights That ($) | Grant Date | Number of Securities (#) Exercisable | Number of (#) Unexercisable | Equity (#) N/A | Option ($) | Option Expiration Date | Number (#) | Market Value ($) | Equity (#) | Equity ($) | ||||||||||||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||||||||||||||||||||||||||||||||||||||||
| McManus | 1/25/12 | 70,968 | 42,984(1) | 54.11 | 1/24/2022 | 1/25/12 | 113,952 | 54.11 | 1/24/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/24/13 | 16,204 | 32,408(2) | 48.36 | 1/23/2023 | 16,722(4) | 1,066,195 | 58,302(7) | 3,717,336 | 1/24/13 | 48,612 | 48.36 | 1/23/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/22/14 | 36,855(3) | 72.39 | 1/21/2024 | 14,235(5) | 907,624 | 43,368(8) | 2,765,144 | 1/22/14 | 24,570 | 12,285(1) | 72.39 | 1/21/2024 | 14,235 | (2) | 820,932 | |||||||||||||||||||||||||||||||||||||||||||||||||||
McManus | 2/10/15 | 33,054 | (3) | 1,906,224 | 79,734 | (5) | 4,598,260 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/9/16 | 56,500 | (4) | 3,258,355 | 49,764 | (6) | 2,869,890 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/26/11 | 12,045 | 54.99 | 1/25/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/12 | 16,333 | 54.11 | 1/24/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/26/11 | 12,045 | 54.99 | 1/25/2021 | 1/24/13 | 12,078 | 48.36 | 1/23/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Porter | 1/25/12 | 5,444 | 10,889(1) | 54.11 | 1/24/2022 | 1/22/14 | 7,538 | 3,769(1) | 72.39 | 1/21/2024 | 4,367 | (2) | 251,845 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/24/13 | 4,026 | 8,052(2) | 48.36 | 1/23/2023 | 4,155(4) | 264,923 | 14,484(7) | 923,500 | 2/10/15 | 13,482 | (3) | 777,507 | 32,520 | (5) | 1,875,428 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/22/14 | 11,307(3) | 72.39 | 1/21/2024 | 4,367(5) | 278,440 | 13,306(8) | 848,391 | 2/9/16 | 23,045 | (4) | 1,329,005 | 20,298 | (6) | 1,170,586 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/23/08 | 21,275 | 60.56 | 1/22/2018 | 1/23/08 | 21,275 | 60.56 | 1/22/2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Richardson | 1/26/11 | 31,317 | 54.99 | 1/25/2021 | 1/26/11 | 31,317 | 54.99 | 1/25/2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/12 | 23,730 | 14,365(1) | 54.11 | 1/24/2022 | 1/25/12 | 38,095 | 54.11 | 1/24/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/24/13 | 4,982 | 9,964(2) | 48.36 | 1/23/2023 | 5,141(4) | 327,790 | 17,926(7) | 1,142,962 | 1/24/13 | 14,946 | 48.36 | 1/23/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/22/14 | 13,560(3) | 72.39 | 1/21/2024 | 5,238(5) | 333,975 | 15,958(8) | 1,017,482 | 1/22/14 | 9,040 | 4,520(1) | 72.39 | 1/21/2024 | 5,238 | (2) | 302,075 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/10/15 | 14,851 | (3) | 856,457 | 35,820 | (5) | 2,065,739 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Richardson | 2/9/16 | 25,385 | (4) | 1,463,953 | 22,359 | (6) | 1,289,444 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/24/13 | 5,097 | 48.36 | 1/23/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/12/12 | 11,115(6) | 708,692 | 1/22/14 | 3,378 | 1,689(1) | 72.39 | 1/21/2024 | 1,958 | (2) | 112,918 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/24/13 | 1,699 | 3,398(2) | 48.36 | 1/23/2023 | 1,753(4) | 111,771 | 6,110(7) | 389,574 | 2/10/15 | 4,331 | (3) | 249,769 | 10,446 | (5) | 602,421 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/22/14 | 5,067(3) | 72.39 | 1/21/2024 | 1,958(5) | 124,842 | 5,964(8) | 380,265 | 2/9/16 | 7,404 | (4) | 426,989 | 6,522 | (6) | 376,124 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/24/07 | 13,855 | 46.45 | 1/23/2017 | 1/23/08 | 12,100 | 60.56 | 1/22/2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/23/08 | 12,100 | 60.56 | 1/22/2018 | 1/28/09 | 7,281 | 29.79 | 1/27/2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Woodruff | 1/28/09 | 7,281 | 29.79 | 1/27/2019 | 1/27/10 | 15,468 | 46.69 | 1/26/2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/27/10 | 15,468 | 46.69 | 1/26/2020 | 1/26/11 | 14,789 | 54.99 | 1/25/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/26/11 | 14,789 | 54.99 | 1/25/2021 | 1/25/12 | 16,029 | 54.11 | 1/24/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/12 | 10,686 | 5,343(1) | 54.11 | 1/24/2022 | 1/24/13 | 4,557 | 48.36 | 1/23/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/24/13 | 1,519 | 3,038(2) | 48.36 | 1/23/2023 | 1,567(4) | 99,912 | 5,464(7) | 348,385 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/22/14 | 4,332(3) | 72.39 | 1/21/2024 | 1,673(5) | 106,670 | 5,098(8) | 325,048 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Woodruff | 1/22/14 | 2,888 | 1,444(1) | 72.39 | 1/21/2024 | 1,673 | (2) | 96,482 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/10/15 | 6,287 | (3) | 362,571 | 15,162 | (5) | 874,393 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/9/16 | 10,747 | (4) | 619,780 | 9,465 | (6) | 545,847 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting Dates:
| (1) | These options vest |
| These restricted stock units vest January 22, 2017. |
| These restricted stock units vest February 9, 2019. |
| (5) | These performance shares have a three-year award period that ends December 31, |
| These performance shares have a three-year award period that ends December 31, |
OPTION EXERCISESAND STOCK VESTEDIN 20142016
The following table provides information, for the named executive officers, on (1) stock option exercises during 2014,2016, including the number of shares acquired upon exercise and the value realized and (2) the number of shares acquired upon the vesting of stock awards and the value realized, each before payment of any applicable withholding tax and broker commissions.
| Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | Number of Shares Acquired on Exercise (#) | Value on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value on Vesting ($) | ||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (b) | (c) | (d) | (e)(1) | ||||||||||||||||
McManus | 172,767 | 5,472,600 | 60,458 | 3,993,855 | - | - | 60,090 | 2,825,612 | ||||||||||||||||
Porter | 60,101 | 2,126,494 | 15,020 | 992,221 | - | - | 17,461 | 839,354 | ||||||||||||||||
Richardson | 31,091 | 1,108,852 | 18,588 | 1,227,923 | - | - | 21,099 | 1,011,109 | ||||||||||||||||
Godsey | - | - | 8,214 | 542,617 | - | - | 7,717 | 373,122 | ||||||||||||||||
Woodruff | 14,000 | 837,885 | 5,666 | 374,296 | 13,855 | 136,195 | 6,665 | 320,881 | ||||||||||||||||
| (1) | Value is the amount determined as of the Compensation Committee’s approval of the vesting of the shares. The same value is utilized for tax purposes. |
The Energen Corporation Retirement Income Plan, a defined benefit plan, covers our officers along with substantially all of our salaried employees. During 2014, the Board of Directors took action to (1) exclude from participation employees hired by the Company on or after November 1, 2014, (2) freeze the accrual of benefits under the plan for all participants, effective December 31, 2014, and (3) terminate the Retirement Income Plan, effective January 31, 2015. Prior to the amendment and restatement of the Retirement Income Plan, our officers would have received benefits under the plan based on years of service at retirement and on “Final Earnings,” the average base compensation for the highest 60 consecutive months out of the final 120
months of employment. (Average base compensation includes base salary only, and does not include bonus payments, payments in the form of contributions to other benefit plans or any other form of payment such as annual or long-term incentives.) The plan provides that affected participants are fully vested in their accrued benefits upon plan termination. Plan participants may elect to receive an immediate benefit upon plan termination, including a lump sum distribution, or may defer benefit commencement to a later date. Certain of our officers, would be eligible for a special early retirement window benefit if certain conditions based on age and years of service are met. Section 415including each of the Code imposes limits on benefits payablenamed executive officers, were party to an employee under the plan.
We have entered into Executive Retirement Supplement Agreements (“Supplemental Agreements”) with certain officers, including each of the named executive officers. Each Supplemental Agreement provideswhich provided that the employee willwould receive a supplemental retirement benefit equal to the difference between 60% of the employee’s monthly compensation and the employee’s monthly retirement benefit under the Energen Corporation Retirement Income Plan (including Social Security benefit). Generally, an employee’s compensation will be determined based on a formula taking into account the average of the highest 36 consecutive months of base salary during the five years prior to severance plus the average of the three highest annual incentive awards for the ten full fiscal years prior to the earlier of (1) severance or (2) the officer’s 61st birthday., which Retirement
Income Plan was terminated effective January 31, 2015. In October 2014, our Board of Directors approved termination of the Supplemental Agreements as of December 31, 2014, and to provide for a distribution of the corresponding benefits in accordance with applicable law. Benefit accruals under the Supplemental Agreements (which arewere not subject to the
payment restrictions under Section 409A of the Internal Revenue Code) were paid as soon as practicable following termination of the
Supplemental Agreements. Benefit accruals that arewere subject to Code Section 409A maycould not be paid within 12 months of the date the Board of Directors took action to terminate the Supplemental Agreements (other than payments that would be payable under the terms of the Supplemental Agreements if the action to terminate had not occurred), but all such accruals musthad to be paid within 24 months of the same date.
Each of our named executive officers except Mr. Godsey hashad sufficient service with the
Company to have earned vested benefits under the Retirement Income Plan and the Supplemental Agreements.Agreements as of their termination dates. The table below sets forth information on the pension benefitsbenefit payments for each of the named executive officers under eachthe Supplemental Agreements during 2016, and the remaining value of the Company’s pension plans as ofaccumulated benefit at December 31, 2014.2016. As noted above, both the Retirement Income Plan and the Supplemental Agreements have been terminated and no further benefits shallwill accrue thereunder.
Name
| Plan Name
| Number of (#)
| Present Value of ($)(1)
| Payments During ($)
| ||||
| (a) | (b) | (c) | (d) | (e) | ||||
McManus | Retirement Income Plan | 29 | 2,025,500 | - | ||||
SERP | 29 | 9,316,403 | - | |||||
Porter | Retirement Income Plan | 25 | 875,665 | - | ||||
SERP | 25 | 2,499,339 | - | |||||
Richardson | Retirement Income Plan | 29 | 1,745,822 | - | ||||
SERP | 29 | 4,259,191 | - | |||||
Godsey | Retirement Income Plan | 2 | 112,222 | - | ||||
SERP | N/A | N/A | N/A | |||||
Woodruff | Retirement Income Plan | 29 | 2,256,644 | - | ||||
SERP | 29 | 2,690,935 | - |
