of the
| ☐ | 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 Pursuant to §240.14a-12 |
| ☒ | No fee required. |
| ☐ | Fee paid previously with preliminary |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
Notice of Annual Meeting of Stockholders
Date: Wednesday, May 8, 2024 Time: 10:00 a.m. Central Daylight Time / 11:00 a.m. Eastern Daylight Time Virtual Location: http://www.virtualshareholdermeeting.com/MUR2024 | ||||
The 2024 Annual Meeting of Stockholders of Murphy Oil Corporation, a Delaware corporation, will be held on Wednesday, May 8, 2024, at 10:00 a.m. CDT, in a virtual-only format via live webcast at http://www.virtualshareholdermeeting.com/MUR2024. The Proxy Statement is first sent to stockholders on or about March 21, 2024.
Matters to be voted on:
Election of |
Directors;
| 2 | Advisory vote to approve executive compensation; |
| 3 |
NOTICE OF2018ANNUAL MEETING OF STOCKHOLDERS & PROXY STATEMENTYOUR VOTE IS IMPORTANTPlease vote online, by mobile device, by telephone, or, if you receive your materials by mail, you can sign and return your proxy card.
NOTICE OF ANNUAL MEETING
AGENDA:
| Approval of the action of the Audit Committee of the Board of Directors in appointing KPMG LLP as the Company’s independent registered public accounting firm for |
Such other business as may properly come before the meeting. |
Record date:
Only stockholders of record at the close of business on March 12, 2018,11, 2024, the record date fixed by the Board of Directors of the Company, will be entitled to notice of and to vote at the meeting or any postponement or adjournment thereof. A list of all stockholders entitled to vote iswill be on file at the office of the Company, 300 Peach Street, El Dorado, Arkansas 71730.9805 Katy Freeway, G-200, Houston, Texas 77024, at least ten days before the meeting.
Your vote is very important to us and to our business. business:
Prior to the meeting, you may submit your vote and proxy by telephone, mobile device, the internet, or, if you received your materials by mail, you can sign and return your proxy card. Instructions on how to vote begincan be found on page 1.50.
E. Ted Botner
Executive Vice President, LawGeneral Counsel and Corporate Secretary
El Dorado, Arkansas
March 23, 2018
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Proposals to be Voted On
The following proposals will be voted on at the Annual Meeting of Stockholders.
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You may cast your vote in the following ways:
The 2018 Murphy Oil Corporation Annual Meeting will begin at 10:00 a.m. CDT on May 9, 2018,
at the South Arkansas Arts Center located at 110 East 5th Street in El Dorado, Arkansas 71730.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 9, 2018:8, 2024:
We have elected to take advantage of the U.S. Securities and Exchange Commission (the “SEC”) rules that allow us to furnish proxy materials to the Company’s stockholders via the internet. These rules allow us to provide information that the Company’s stockholders need while lowering the costs and accelerating the speed of delivery and reducing the environmental impact of the Annual Meeting. This Proxy Statement, along with the Company’s Annual Report to Stockholders, which includes the Company’s Form10-K report for the year ended December 31, 2017,2023, are available via the internet athttp://ir.murphyoilcorp.com/phoenix.zhtml?c=61237&p=proxy. www.proxydocs.com/MUR.
2024 PROXY STATEMENT i
Murphy Oil at a Glance
Our Social and Environmental Sustainability
 | Our People |
Competitive compensation and benefits along with an inclusive work environment help us to attract and retain talented people, the real strength of our Company.
A summary of employee benefits, which may vary by country, is listed below:
| · | Medical, dental, and vision care coverage |
| · | Birth/Adoption leave for mothers and fathers |
| · | Expanded mental health network of providers and coverage for behavioral health |
| · | Health Savings/Flexible Spending Accounts |
| · | 401(k) Savings Plan with Company match |
| · | Defined-Benefit Pension Plan for all eligible employees |
| · | Life and AD&D Insurance Benefits |
| · | Employee Assistance Program |
| · | Employee Educational Assistance |
| · | Employee Gift Matching (as outlined in the Compensation Discussion and Analysis) |
Each year we review our benefits package and enhance it, when appropriate. For example, in 2023, we added more fund choices to the 401(k) Savings Plan, along with providing numerous financial wellness education sessions. We have been recognized by the Greater Houston Partnership as a “Best Place for Working Parents” from 2022 to 2024, and named one of “America’s Most Responsible Companies 2024” by Newsweek.
We continue to build upon our diversity, equity and inclusion efforts focusing on (i) building strategic recruiting relationships, (ii) training and development opportunities, (iii) exploring partnerships with minority and women-owned businesses, (iv) employee engagement, and (v) participation in events hosted by external organizations. We have expanded our diversity disclosures in our Sustainability Report and have published our annual Equal Employment Opportunity (EEO-1) filings on our website.
 | Climate Change |
We understand that our industry, and the use of our products, create emissions – which raise climate change concerns. At the same time, access to affordable, reliable, secure energy is essential to improving the world’s quality of life and the functioning of the global economy. We believe that as the energy economy transitions under the Paris Agreement, oil and natural gas will continue to play a vital role in the long-term energy mix.
We are committed to reducing our greenhouse gas (GHG) emissions and focused on understanding and mitigating climate change risks. The Board of Directors actively oversees climate-related risks and opportunities, as well as the executive team in its assessment, agenda-setting and strategic initiatives. Established processes for performance and risk assessments are in place and are informed by experts from within and outside the organization, as well as by the executive team.
We are committed to communicating with transparency and reporting annually in our Sustainability Report in line with the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD) guidelines.
In 2023, the Company continued to make significant strides in our sustainability efforts:
| · | We achieved our lowest GHG emissions intensity since becoming an independent exploration and production company in 2013, and are on track to achieve 15-20% reduction by 2030 (from 2019 baseline) |
| · | We are on track to achieve zero routine flaring by 2030 |
| · | We achieved our lowest methane emissions intensity |
| · | We continued to secure third-party assurance of our Scope 1 and 2 GHG emissions, and to report our estimated Scope 3, Category 11 – Use of Sold Products emissions |
| · | We continued to publish our TCFD climate-related scenario analysis, including a net zero emissions by 2050 scenario |
| · | We achieved our second highest water recycling ratio in Company history |
Note: Unless otherwise specified, the information provided is at the total enterprise level, for assets under our operational control and for calendar year 2023
ii MURPHY OIL CORPORATION
 | Health, Safety & Environment | ||||
Charles H. Murphy, Jr. was a forerunner in the environmental awareness movement. His efforts helped lead to new standards and practices for the oil and natural gas industry and we strive to do the same today.
We established a Health, Safety and Environmental Committee of the Board of Directors in 1993 |
| · | Our worldwide Health, Safety and Environment Management System applies to every Murphy employee, contractor and partner |
| · | Safety metrics, including both employees and contractors, have been included in annual incentive plan performance metrics since 2008 |
| · | Environmental metrics have been included in annual incentive plan performance metrics since 2016 |
| · | We are a founding member of the API Environmental Partnership, launched in 2017, which is focused on reducing methane emissions |
| · | We strive to achieve top-quartile safety performance as measured against our peers. In 2023, we had zero work-related fatalities |
We monitor environmental performance and strive for continual improvement:
| · | Continuing to de-risk our assets through implementation of our detailed Asset Integrity Management Programs |
| · | Continuing to eliminate natural gas pneumatic instruments |
| · | Upgrading central processing facilities to add electric motor driven tank Vapor Recovery Units (VRUs) to eliminate continuous tank flaring |
| · | Adding natural gas pipeline infrastructure to legacy and future Murphy onshore developments to eliminate flaring and venting |
| · | Continuing to internally report GHG and methane emissions performance metrics monthly to increase visibility to operations and management |
 | Our Communities |
Working with Communities
| · | We communicate with community stakeholders to understand issues applicable to our operations and to mitigate potential risks |
| · | Opportunities to support local communities through: |
| - | Prioritization of local suppliers |
| - | Threshold investment targets for local content |
| - | Specifications for local companies or workers |
| - | Commitments to social investment programs |
| · | We actively seek to understand and respond to community feedback, concerns or grievances |
Committed to the Dignity and Rights of All People
| · | We have enacted a Human Rights Policy, Indigenous Rights Policy and Supplier Code of Conduct |
Investing in Our Communities
| · | Long time commitment with the El Dorado Promise Scholarship Program – through a $50 million commitment from the Company, more than 3,500 El Dorado, Arkansas students have received scholarships to 181 colleges and universities in 40 states |
| · | Numerous corporate citizenship programs, with Murphy employees enthusiastically volunteering their time and generously donating to their communities. In 2023, our employees’ exceptional voluntary contributions were honored with the United States President’s Volunteer Service Award by the Houston Food Bank for the second consecutive year. Additionally, the Spring Branch Independent School District in Houston recognized our commitment with their esteemed Good Neighbor Award |
| · | Also, in 2023, Murphy donated approximately $200,000 through its gift matching program for employees and non-employee directors. Over the last 20 years, Murphy and its employees contributed more than $15 million to benefit the United Way organization |
2024 PROXY STATEMENT iii
Murphy Oil at a Glance
Our 2023 Financial and Operational Highlights
Murphy closed another year of strong production and excellent execution in 2023 with the priorities of Delever, Execute, Explore, Return remaining at the forefront. By achieving our $500 million debt reduction goal for the year, we have fortified our balance sheet by reducing total debt by $1.7 billion since 2020. This has provided further strength to our longstanding quarterly dividend, which was increased in early 2024 to the 2016 level of $1.20 per share annualized, as well as initiating share repurchases in 2023 with $150 million, or 3.4 million, shares repurchased.
This debt reduction was accomplished through the successful execution of Murphy’s onshore well delivery program during the year, as well as steady operational achievements of above-forecast production offshore. Also in 2023, we extended our portfolio longevity with the sanctioning of the Lac Da Vang field development project in Vietnam. As a result of the team’s efforts, Murphy achieved total reserve replacement of 139% for the year.
Reviewing our exploration portfolio, Murphy was awarded five exploration blocks in the March 2023 Gulf of Mexico federal lease sale and named apparent high bidder on eight exploration blocks in the December 2023 federal lease sale. The Company also acquired working interests in the non-operated Zephyrus discovery in the Gulf of Mexico, as well as signed production sharing contracts on five exploration blocks in Côte d’Ivoire, including one block that holds a previous operator’s discovery. Murphy’s plans in 2024 include drilling exploration wells in the Gulf of Mexico and Vietnam, as well as advancing seismic reprocessing projects in the Gulf of Mexico and Côte d’Ivoire.
With our 2024 debt reduction goal of $300 million, we are on track to reach Murphy 3.0 of the capital allocation framework by year-end, with up to 50% of adjusted free cash flow1 allocated to the balance sheet and the remaining 50% of adjusted free cash flow1 allocated to shareholder returns. Shareholder returns remain at the forefront, and ongoing debt reduction has substantially improved the Company’s resiliency in this cyclical commodity business. Pairing balance sheet strength and operational excellence with a strong safety culture and an ongoing focus on protecting the environment, Murphy is positioned for long-term stability and success.
Highlights for 2023:
Delever
| · | Utilized proceeds from non-core divestiture to progress capital allocation framework |
| · | Achieved $500 MM debt reduction goal through senior notes redemption and partial tender |
| · | Advanced Murphy 2.0 of capital allocation framework with $1.7 BN of total debt reduction since year-end 2020 |
Execute
| · | Produced 186 MBOEPD with 98 MBOPD, or 52 percent, oil volumes |
| · | Initiated procurement for Lac Da Vang field development project in Vietnam with first oil forecast in 2026 |
| · | Acquired 8 percent working interest in the non-operated Zephyrus discovery in the Gulf of Mexico for $13 MM after closing adjustments |
| · | Achieved 139% total reserve replacement with 724 MMBOE proved reserves and ~11-year reserve life |
Explore
| · | Initiated new exploration focus area in Côte d’Ivoire |
| · | Drilled a discovery at operated Longclaw #1 exploration well in Gulf of Mexico |
| · | Awarded five exploration blocks in Gulf of Mexico Federal Lease Sale 259 and named apparent high bidder on eight exploration blocks in Gulf of Mexico Federal Lease Sale 261 |
Return
| · | Progressed Murphy 2.0 of capital allocation framework, with 75% of adjusted FCF1 allocated to debt reduction and 25% allocated to shareholder returns |
| · | Repurchased $150 MM, or 3.4 MM shares, at an average price of $43.96 / share in FY 2023 |
| 1 | Adjusted free cash flow is calculated as net cash provided by continuing operations activities before noncash working capital changes, less property additions and dry hole costs, acquisition of oil and natural gas properties, cash dividends paid, distributions to noncontrolling interest and other contractual payments |
iv MURPHY OIL CORPORATION
Financial
$1.7 BN Approximate net cash provided by continuing operations activities (including noncontrolling interest)
of free cash flow2,3, with the majority used to repay long-term debt, fund accretive acquisitions, increase longstanding dividend and
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When and where is the Annual Meeting?
The Company’s 61st Annual Meeting will be held at 10:00 a.m. CDT on Wednesday, May 9, 2018, at the South Arkansas Arts Center, located at 110 East 5th Street, in El Dorado, Arkansas 71730.
May I attend the meeting?
Attendance at the meeting is open to stockholders of record as of March 12, 2018, Company employees and certain guests. If you are a stockholder, regardless of the number of shares you hold, you may attend the meeting.
Who may vote?
You may vote if you were a holder of record of Murphy Oil Corporation common stock as of the close of business on March 12, 2018. Each share of common stock is entitled to one vote at the Annual Meeting. You may vote in person at the meeting, or by proxy via the methods explained on page 1 of this document.
Why should I vote?
Your vote is very important regardless of the amount of stock you hold. The Board strongly encourages you to exercise your right to vote as a stockholder of the Company.
Why did I receive a Notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials?
We are providing access to our proxy materials via the internet. As a result, we have sent a Notice of Internet Availability instead of a paper copy of the proxy materials to most of our stockholders. The Notice contains instructions on how to access the proxy materials via the internet and how to request a paper copy. In addition, the website provided in the Notice allows stockholders to request future proxy materials in printed form by mail or electronically by email. A stockholder’s election to receive proxy materials by mail or email will remain in effect until the stockholder terminates it.
Why didn’t I receive a Notice in the mail regarding the internet availability of proxy materials?
We are providing certain stockholders, including those who have previously requested paper copies of the proxy materials, with paper copies of the proxy materials instead of a Notice. If you would like to reduce the costs incurred by Murphy in mailing proxy materials and conserve natural resources, you can consent to receive all future proxy statements, proxy cards and annual reports electronically via email. To sign up for electronic delivery, please follow the instructions provided with your proxy materials and on your proxy card or voting instruction card. When prompted, indicate that you agree to receive or access stockholder communications electronically in the future.
May I vote my stock by filling out and returning the Notice?
No. Instructions on how to access the proxy materials and vote are in the email sent to you and on the Notice.
How can I access the proxy materials through the internet?
Your Notice or proxy card will contain instructions on how to view our proxy materials for the Annual Meeting via the internet. The Proxy Statement and Annual Report are also available athttp://ir.murphyoilcorp.com/phoenix.zhtml?c=61237&p=proxy.Operations
186,000 barrels of oil equivalent per day produced with ~98 thousand barrels of oil per day 724 MM barrels of oil equivalent of proved reserves, with 139% total reserve replacement and a reserve life index of approximately 11 years |
Onshore
Eagle Ford Shale
Continued realizing strong performance with wells producing at or above forecast | |||
Tupper Montney
| · | Continued realizing strong well performance with modifications to flowback, facility and wellhead equipment, and procedures |
| · | Achieved some of highest 30-day initial production (IP30) rates in Company history |
Exploration
Côte d’Ivoire
| · | Signed production sharing contracts for five exploration blocks |
| · | Includes undeveloped Paon discovery |
U.S. Gulf of Mexico
| · | Maintained high uptime across operated assets with safe operations and strong environmental performance |
Offshore Canada
| · |
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Vietnam
| · | Sanctioned the Lac Da Vang field development project, with first oil forecast in 2026 |
| 2 | Free cash flow is calculated as net cash provided by continuing operations activities (including noncontrolling interest) and before noncash working capital changes, less property additions and dry hole costs |
| 3 |
See Annex for reconciliations of non-GAAP financial measures to their most closely comparable GAAP metric |
2024 PROXY STATEMENT v
The affirmative vote of
Murphy Oil at a majorityGlance
Note: Unless otherwise noted, the financial and operating highlights and metrics discussed above exclude noncontrolling interest, thereby representing only the amounts attributable to Murphy
Forward-Looking Statements and Risks
This report contains forward-looking statements within the meaning of the shares presentPrivate Securities Litigation Reform Act of 1995. Forward-looking statements are generally identified through the inclusion of words such as “aim,” “anticipate,” “believe,” “drive,” “estimate,” “expect,” “expressed confidence,” “forecast,” “future,” “goal,” “guidance,” “intend,” “may,” “objective,” “outlook,” “plan,” “position,” “potential,” “project,” “seek,” “should,” “strategy,” “target,” “will” or variations of such words and other similar expressions. These statements, which express management’s current views concerning future events, results and plans, are subject to inherent risks, uncertainties and assumptions (many of which are beyond our control) and are not guarantees of performance. In particular, statements, express or implied, concerning the Company’s future operating results or activities and returns or the Company’s ability and decisions to replace or increase reserves, increase production, generate returns and rates of return, replace or increase drilling locations, reduce or otherwise control operating costs and expenditures, generate cash flows, pay down or refinance indebtedness, achieve, reach or otherwise meet initiatives, plans, goals, ambitions or targets with respect to emissions, safety matters or other ESG (environmental/social/governance) matters, make capital expenditures or pay and/or increase dividends or make share repurchases and other capital allocation decisions are forward-looking statements. Factors that could cause one or more of these future events, results or plans not to occur as implied by any forward-looking statement, which consequently could cause actual results or activities to differ materially from the expectations expressed or implied by such forward-looking statements, include, but are not limited to: macro conditions in personthe oil and gas industry, including supply/demand levels, actions taken by major oil exporters and the resulting impacts on commodity prices; geopolitical concerns; increased volatility or representeddeterioration in the success rate of our exploration programs or in our ability to maintain production rates and replace reserves; reduced customer demand for our products due to environmental, regulatory, technological or other reasons; adverse foreign exchange movements; political and regulatory instability in the markets where we do business; the impact on our operations or market of health pandemics such as COVID-19 and related government responses; other natural hazards impacting our operations or markets; any other deterioration in our business, markets or prospects; any failure to obtain necessary regulatory approvals; any inability to service or refinance our outstanding debt or to access debt markets at acceptable prices; or adverse developments in the U.S. or global capital markets, credit markets, banking system or economies in general, including inflation. For further discussion of factors that could cause one or more of these future events or results not to occur as implied by proxy at theany forward-looking statement, see Item 1A. Risk Factors in our most recent Annual Meeting is required for approval of matters presented at the meeting. Your proxy will be voted at the meeting unless you (i) revoke it at any time before the vote by filing a revocationReport on Form 10-K filed with the Corporate SecretaryU.S. Securities and Exchange Commission (“SEC”) and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K that we file, available from the SEC’s website and from Murphy Oil Corporation’s website at http://ir.murphyoilcorp.com. Investors and others should note that we may announce material information using SEC filings, press releases, public conference calls, webcasts and the investors page of our website. We may use these channels to distribute material information about the Company, (ii) duly execute a proxy card bearing a later date or (iii) appear atCompany; therefore, we encourage investors, the meetingmedia, business partners and voteothers interested in person. If you voted via the Internet, mobile device or telephone, you can change your vote with a timely and valid later vote or by voting by ballot at the meeting. Proxies returned to the Company, votes cast other than in person and written revocations will be disqualified if received after commencement of the meeting. If you elect to vote your proxy card or as directed on the Notice or vote by telephone, mobile device or internet as described in the telephone/mobile device/internet voting instructions on your proxy card or Notice, the Company will vote your shares as you direct. Your telephone/mobile device/internet vote authorizes the named proxies to vote your shares in the same manner as if you had marked, signed and returned your proxy card.
Votes cast by proxy or in person at the meeting will be counted by the persons appointed by the Company to act as Judgesreview the information we post on our website. The information on our website is not part of, Election for the meeting. and is not incorporated into, this report. Murphy Oil Corporation undertakes no duty to publicly update or revise any forward-looking statements.
vi MURPHY OIL CORPORATION
Table of Contents
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| Compensation Committee Report | 31 | |||
| Executive Compensation | 32 | |||
| Our Stockholders | 41 | |||
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Approval of Appointment of IndependentRegistered Public Accounting Firm | 45 | |||
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The Judgessolicitation of Election will treat shares represented by proxies that reflect abstentions as shares that are present and entitled to vote for purposes of determining the presence of a quorum. Abstentions do not constitute a vote “against” any matter. However, in accordance with NYSE rules, abstentions will have the effect of a vote counted “against” for our plans.
The Judges of Election will treat shares referred to as “brokernon-votes” (i.e., shares held by brokers or nominees as to which instructions have not been received from the beneficial owners or persons entitled to vote and that the broker or nominee does not have discretionary power to vote on as anon-routine matter) as shares that are present and entitled to vote on routine matters and for purposes of determining the presence of a quorum. The proposal to approve the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the current fiscal year should be considered a routine matter. However, for purposes of determining the outcome of anynon-routine matter as to which the broker does not have discretionary authority to vote, those shares will be treated as not present and not entitled to vote with respect to that matter (even though those shares are considered entitled to vote for quorum purposes and may be entitled to vote on other matters). Accordingly, brokernon-votes will be disregarded in the calculation of “votes cast” and will have no effect on the vote. Notably, the election of directors, the advisory vote to approve executive compensation, the approval of the proposed 2018 Stock Plan forNon-Employee Directors and the approval of the proposed 2018 Long-Term Incentive Plan should be considerednon-routine matters.
Unless specification to the contrary is made, the shares represented by the enclosed proxy will be voted FOR all the nominees for director, FOR the approval of the compensation of the Company’s Named Executive Officers, FOR the approval of the proposed 2018 Stock Plan forNon-Employee Directors, FOR the approval of the proposed 2018 Long-Term Incentive Plan and FOR the approval of the action of the Audit Committeeis made on behalf of the Board of Directors in appointing KPMG LLP asof Murphy Oil Corporation (the “Board”) for use at the Annual Meeting of Stockholders to be held on May 8, 2024. It is expected that this Proxy Statement and related materials will first be provided to stockholders on or about March 21, 2024. The complete mailing address of the Company’s independent registered public accounting firm for 2018.principal executive office is 9805 Katy Freeway, G-200, Houston, Texas 77024. References in this Proxy Statement to “we,” “us,” “our,” “the Company”, “Murphy Oil” and “Murphy” refer to Murphy Oil Corporation and its consolidated subsidiaries.
The expenses of printing and distributing proxy material, including expenses involved in forwarding materials to beneficial owners of stock, will be paid by the Company. The Company’s officers or employees, without additional compensation, may solicit the return of proxies from certain stockholders by telephone or other means.
2024 PROXY STATEMENT vii
2024 PROXY STATEMENT 1
Who We Are
On March 12, 2018, the record date for the meeting, the Company had 173,036,510 shares of Common Stock outstanding, all of one class and each share having one vote with respect to all matters to be voted on at the meeting. This amount does not include 22,027,336 shares of treasury stock. Information as to Common Stock ownership of certain beneficial owners and management is set forth in the tables on pages 15 and 16 (“Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management”).
2 MURPHY OIL CORPORATION
MICHELLE A. EARLEY Austin, Texas Age: 52 Director Since: 2021 | Board Committees · Finance · Health, Safety, Environment and Corporate Responsibility Other Public Company Directorships · Adams Resources & Energy, Inc., Houston, Texas Principal occupation or employment · Partner, O’Melveny & Meyers LLP, an international law firm, since April 2022 · Partner, Locke Lord LLP, from 2008 to April 2022 | Ms. Earley is currently a Partner at the law firm of O’Melveny & Meyers LLP, having joined the firm in April 2022. Ms. Earley was previously with the law firm of Locke Lord LLP, where she joined in 1998 and served as a Partner from 2008 until 2022. Ms. Earley has extensive experience in mergers and acquisitions, as well as securities regulation and offering matters and routinely advises boards of directors on corporate governance topics. She brings to the Board expertise in legal matters and corporate governance. She holds a bachelor’s degree from Texas A&M University and a law degree from Yale University. | ||||||||||||||
ROGER W. JENKINS Houston, Texas Age: 62 Director Since: 2013 | Board Committees · None Other Public Company Directorships · Noble Corporation plc, London, United Kingdom, until February 2021 Principal occupation or employment · Chief Executive Officer of the Company from August 2013; President of the Company from August 2013 through January 2024; President of Murphy Exploration & Production Company since June 2012 | Mr. Jenkins’ leadership as Chief Executive Officer of Murphy Oil Corporation allows him to provide the Board with his detailed perspective of the Company’s global operations. With a bachelor’s degree in Petroleum Engineering, a master’s degree in Business Administration and approximately 41 years of industry experience, he has played a critical leadership role in Murphy’s worldwide exploration and production operations, including the development of the Kikeh field in Malaysia and the Eagle Ford Shale in Texas. | ||||||||||||||
2024 PROXY STATEMENT 3
Who We Are
ELISABETH W. KELLER Cambridge, Massachusetts Age: 66 Director Since: 2016 | Board Committees · Audit · Health, Safety, Environment and Corporate Responsibility (Chair) · Nominating and Governance Other Public Company Directorships · None Principal occupation or employment · President, Inglewood Plantation, LLC, from 2014 to 2022, retired December 2022 | Ms. Keller served as the President of Inglewood Plantation, LLC and was responsible for the development of strategic vision and oversight of operations for the largest organic farm in Louisiana. She brings to the Board extensive knowledge in health and environmental issues, both domestically and internationally. | ||||||||||||||
JAMES V. KELLEY Little Rock, Arkansas Age: 74 Director Since: 2006 | Board Committees · Audit · Nominating and Governance (Chair) Other Public Company Directorships · None Principal occupation or employment · Retired, President and Chief Operating Officer, BancorpSouth, Inc., a NYSE bank holding company, since August 2014 | Mr. Kelley has extensive knowledge of capital markets and accounting issues. As former President and Chief Operating Officer of BancorpSouth, Inc., he understands the fundamentals and responsibilities of operating a large company. Among other qualifications, Mr. Kelley brings to the Board experience in banking, finance and accounting, as well as executive management. | ||||||||||||||
4 MURPHY OIL CORPORATION
R. MADISON MURPHY El Dorado, Arkansas Age: 66 Director Since: 1993 (Chair, 1994-2002) | Board Committees · Finance (Chair) · Health, Safety, Environment and Corporate Responsibility Other Public Company Directorships · Murphy USA Inc. (Chair), El Dorado, Arkansas Principal occupation or employment · President, The Murphy Foundation · Owner, The Sumac Company, LLC · Owner, Arc Vineyards · Owner, Presqu’ile Winery | Mr. Murphy served at Murphy Oil Corporation in several capacities from 1980 including as Vice President of Planning and Treasurer from 1988-1990; Chief Financial and Administrative Officer from 1990-1994; and Chair of the Board from 1994 to 2002. This background, along with his current membership on the Board of Directors of Murphy Oil and Chairmanship of Murphy USA, together with his past membership on the Board of Directors of BancorpSouth, Inc. (a NYSE bank holding company), and Deltic Timber Corporation, brings to the Board invaluable corporate leadership and financial expertise. | ||||||||||||||
JEFFREY W. NOLAN Little Rock, Arkansas Age: 55 Director Since: 2012 | Board Committees · Compensation · Finance · Nominating and Governance Other Public Company Directorships · None Principal occupation or employment · President and Chief Executive Officer, Loutre Land and Timber Company, a natural resources company with a focus on the acquisition, ownership and management of timberland and mineral properties, from 1998 until 2021, retired December 2021 · Chair of the Board of Directors, First Financial Bank, headquartered in EI Dorado, Arkansas, since 2015 | Mr. Nolan’s experience as President and Chief Executive Officer of a natural resources company, in addition to his former legal practice focused on business and corporate transactions, allows him to bring to the Board expertise in legal matters, corporate governance, corporate finance, acquisitions and divestitures and the management of mineral properties. | ||||||||||||||
2024 PROXY STATEMENT 5
Who We Are
Robert N. Ryan, Jr. Houston, Texas Age: 67 Director Since: 2019 | Board Committees · Audit · Compensation · Health, Safety, Environment and Corporate Responsibility Other Public Company Directorships · None Principal occupation or employment · Retired, Vice President, Chevron Corporation, an integrated energy company, since 2018 | Mr. Ryan has 43 years of experience in the energy industry including 15 years as Vice President - Global Exploration for Chevron from 2003 until his retirement in 2018. He brings to the Board extensive experience in worldwide exploration and portfolio management, and a broad knowledge of oil and natural gas operations and energy policy. His experience includes a position in the Office of Energy Efficiency and Renewable Energy at the U.S. Department of Energy. He holds degrees in geology. | ||||||||||||||
LAURA A. SUGG Montgomery, Texas Age: 63 Director Since: 2015 | Board Committees · Compensation (Chair) · Finance Other Public Company Directorships · Kinetik Holdings Inc., Houston, Texas · Public Service Enterprise Group Inc., Newark, New Jersey · Denbury Resources, Plano, Texas, until 2019 Principal occupation or employment · Retired, Senior Executive, ConocoPhillips, then an international, integrated energy company, since 2010 | Ms. Sugg’s broad background in capital allocation and accomplishments in the energy industry allow her to bring to the Board expertise in industry, operational and technical matters. Among other qualifications, she brings to the Board specific experience in executive leadership, human resources, compensation and financial matters. As a former leader at ConocoPhillips, Ms. Sugg has a proficient understanding of an oil and natural gas company’s challenges and opportunities. | ||||||||||||||
6 MURPHY OIL CORPORATION
How We Are Selected, Comprised and Evaluated
Diversity
The Board recognizes thatbelieves it is important for the Company’s directors to possess a diverse array of attributes, backgrounds, perspectives, skills, and skills, whether in terms of executive management leadership or educational achievement.achievements. When considering new candidates, the Nominating &and Governance Committee, with input from the Board, adopts criteria for Board membership which encourages a diversity of race, ethnicity, gender and national origin and takes into account these factors as well as other appropriateimportant characteristics, such as sound judgment, honesty,professional ethics, practical wisdom and integrity. In addition, theThe Nominating &and Governance Committee, when searching for nominees for directors, relies onincludes diverse candidates in the pool of nominees and any search firm engaged by the Committee is affirmatively instructed to seek diverse candidates. In addition, as stated in the Company’s Corporate Governance Guidelines, which state, “The“the Company endeavors to have a board representing diverse experience at the policy-making levels in business areas that are relevant to the Company’s global activities.”activities”. The goal is to assemble and maintain a Board comprised of individuals that not only bring to bear a wealth of business and/or technical expertise, but that also demonstrate a commitment to ethics in carrying out the Board’s responsibilities with respect to oversight of the Company’s operations.
The matrix below outlines the diverse set of skills and expertise represented on the Company’s Board:
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| Former CEO | ● | ● | ● | ● | ● | ||||||||||||||||
| Senior Management/Corporate Culture | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||
| Accounting/Audit | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||
| Finance/Banking | ● | ● | ● | ● | ● | ||||||||||||||||
| Corporate Governance | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||
| Law | ● | ● | ● | ||||||||||||||||||
| Government Relations/Public Policy | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||
| Industry | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||
| Operations | ● | ● | ● | ● | ● | ||||||||||||||||
| Environment, Health & Safety | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||
| Business Development & Corporate Strategy | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||||
| Human Capital/Compensation | ● | ● | ● | ● | ● | ● | ● | ||||||||||||||
| Board of Directors | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||
| Risk Management | ● | ● | ● | ● | ● | ||||||||||||||||
| International Business | ● | ● | ● | ● | ● | ● | |||||||||||||||
| Climate | ● | ● | ● | ||||||||||||||||||
| Cybersecurity | ● | ● | |||||||||||||||||||
2024 PROXY STATEMENT 7
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RACE/ETHNICITY | ||||||||||||||||||||||
African American | ● | |||||||||||||||||||||
Asian/Pacific Islander | ||||||||||||||||||||||
White/Caucasian | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||||||
Hispanic/Latino | ||||||||||||||||||||||
Native American | ||||||||||||||||||||||
GENDER | ||||||||||||||||||||||
Male | ● | ● | ● | ● | ● | ● | ● | |||||||||||||||
Female | ● | ● | ● | |||||||||||||||||||
BOARD TENURE | ||||||||||||||||||||||
Years | 30 | 9 | 3 | 7 | 17 | 30 | 11 | 4 | 8 | 10 | ||||||||||||
Age | 69 | 71 | 52 | 66 | 74 | 66 | 55 | 67 | 63 | 62 | ||||||||||||
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8 MURPHY OIL CORPORATION
Majority Voting
The Company’s belief in directors’ accountability is evident in the provision in our Corporate Governance Guidelines providing that an incumbent director who fails to receive a majority of votes cast for re-election shall tender a resignation to the Board. To the extent authorized by the proxies, the shares represented by the proxies will be voted in favor of the election of the twelveten nominees for director whose names are set forth herein. The Company’s Corporate Governance Guidelines provide that an incumbent director who fails to receive the required vote forre-election shall tender a resignation to the
board. If for any reason any of these nominees is not a candidate when the election occurs, the shares represented by such proxies will be voted for the election of the other nominees named and may be voted for any substituted nominees or the Board may reduce its size. However, management of the Company does not expect this to occur. All nominees were elected at the last Annual Meeting of Stockholders.
AllDirector and Nominee Independence
The Company’s belief in the importance of directors’ independence is reflected by the fact that all directors, other than Mr. Roger Jenkins, have been deemed independent by the Board based on the rules of the New York Stock Exchange (“NYSE”) and the standards of independence included in the Company’s Corporate Governance Guidelines. As part of its independence recommendation to the Board, the Nominating &and Governance Committee at its February meeting considered familial relationships (Mr. Deming, Mr. Murphy and Ms. Keller are first cousins).
Mr. Deming, the independent ChairmanChair of the Board, serves as presiding director at regularly scheduled board meetings as well as at no less than three meetings solely fornon-employee directors. The meetings fornon-employee directors are held in conjunction with the regularly scheduled February, August and December board meetings,meetings. If the Company had a non-employee director that was not independent, at least one of which includesthese meetings would include only independentnon-employee directors.
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The Corporate Governance Guidelines provide that stockholders and other interested parties may send communications to the Board, specified individual directors and the independent directors as a group c/o the Corporate Secretary, Murphy Oil Corporation, P.O. Box 7000, El Dorado, Arkansas 71731-7000. All such communications will be kept confidential unless otherwise required by law and relayed to the specified director(s). The names of the Director nominees and certain information as to them, are as follows:
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Mr. Collins has extensive knowledge of international management and corporate development. As a prior President and Chief Executive Officer of Oceaneering International, Inc., he has substantial knowledge and experience in the oil and gas industry. Among other qualifications, Mr. Collins brings to the Board experience in field operations, executive management and finance.
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Mr. Cossé’s long service in several capacities with the Company has helped him gain a proficient understanding of many areas, including environmental laws and regulations. Among other qualifications, Mr. Cossé brings to the Board expertise in corporate governance, banking and securities laws and executive leadership.
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Mr. Deming’s experience as former President and Chief Executive Officer of Murphy Oil Corporation gives him insight into the Company’s challenges, opportunities and operations. Among other qualifications, Mr. Deming brings to the Board executive leadership skills and over 30 years’ experience in the oil and gas industry.
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Mr. Dickerson’s experience as the President and a director of Diamond Offshore Drilling, Inc. from March 1998 and as Chief Executive Officer from May 2008 until his retirement in March 2014 brings to the Board broad experience in leadership and financial matters. Among other qualifications, he brings to the Board expertise as a Certified Public Accountant and in international drilling operations.
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Mr. Jenkins’ leadership as President and Chief Executive Officer of Murphy Oil Corporation allows him to provide the Board with his detailed perspective of the Company’s global operations. With a Bachelor’s degree in Petroleum Engineering, a Master’s degree in Business Administration and over 30 years of industry experience, he has played a critical leadership role in Murphy’s worldwide exploration and production operations, including the development of the Kikeh field in Malaysia and the Eagle Ford Shale in South Texas.
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Ms. Keller is the President of Inglewood Plantation, LLC and is responsible for the development of strategic vision and oversight of operations of the largest organic farm in Louisiana. She brings to the Board extensive knowledge in health and environmental issues, both domestically and internationally.
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Mr. Kelley has extensive knowledge of capital markets and accounting issues. As former President and Chief Operating Officer of BancorpSouth, Inc., he understands the fundamentals and responsibilities of operating a large company. Among other qualifications, Mr. Kelley brings to the Board experience in banking, finance and accounting, as well as executive management.
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Mr. Mirosh, with his accomplishments in the chemical, natural gas, and investment industries, is able to provide the Board with dependable and insightful input in many areas. He brings to the Board experience in energy, regulatory and international law as well as skills in business development and corporate strategy.
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Mr. Murphy served as Chairman of the Board of Murphy Oil Corporation from 1994 to 2002. This background, along with his previous membership on the Board of Directors of Deltic Timber Corporation and current membership on the Board of Directors of Murphy USA Inc., brings to the Board and to the Audit Committee a unique business and financial perspective.
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Mr. Nolan’s experience as President and Chief Executive Officer of a natural resources company, in addition to his former legal practice focused on business and corporate transactions, allows him to bring to the Board expertise in legal matters, corporate governance, corporate finance, acquisitions and divestitures and the management of mineral properties.
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Mr. Schmale, as former Chief Operating Officer of Sempra Energy, brings to the Board the perspective of a corporate leader having faced external economic, social and governance issues. He also brings specific experience in financial matters from his prior service as Chief Financial Officer of Sempra Energy. He holds degrees in petroleum engineering and law, and has a vast knowledge in different fields concerning the oil industry.
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Ms. Sugg’s broad background in capital allocation and accomplishments in the energy industry allow her to bring to the Board expertise in industry, operational and technical matters. Among other qualifications, she brings to the Board specific experience in executive leadership, human resources, compensation and financial matters. As a former leader at ConocoPhillips, Ms. Sugg has a proficient understanding of an oil company’s challenges and opportunities.
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Board of Directors Skills and Expertise Matrix
The matrix below represents the diverse set of skills and expertise represented on the Company’s Board:
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COMPOSITION OF THE BOARD
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2024 PROXY STATEMENT 9
How We Are Organized and Operate
BOARD LEADERSHIP STRUCTUREBoard Leadership Structure/Separate Chair and CEO Positions
The positions of ChairmanChair of the Board and the Chief Executive Officer of the Company are held by two individuals. Mr. Deming serves as the ChairmanChair of the Board as a non-executive andan independent director. Mr. Jenkins is the Company’s President and Chief Executive Officer. Along with the ChairmanChair of the Board of Directors and the Chief Executive Officer, other directors bring different perspectives and roles to the Company’s management, oversight, and strategic development. The Company’s directors bring experience and expertise from both inside and outside the companyCompany and industry, while the Chief Executive Officer is most familiar with the Company’s business and industry, and most capable of leading the execution of the Company’s strategy. The Board believes that separating the roles of ChairmanChair and Chief Executive Officer is currently in the best interest of stockholders because it provides the appropriate balance between strategy development and independent oversight of management. The Board will, however, maintaindoes not believe that its flexibility to make this determination at any given pointrole in time to provide appropriaterisk oversight has been affected by the Board’s leadership for the Company.structure.
RISK MANAGEMENTRisk Management
The Board exercises risk management oversight and control both directly and indirectly, the latter through various Board Committees. The Board regularly reviews information regarding the Company’s credit, liquidity, and operations, including the risks associated with each.related risks. Further, the Company provides continuing education to our Board on topics that assist in the execution of their duties, including ESG matters. The Executive Compensation Committee is responsible for overseeing the management of risks relating to the Company’s executive compensation plans and arrangements.arrangements and the Company’s key human capital management strategies. The Audit Committee is responsible for oversight of certain risks, including financial, riskscybersecurity, information security, and the ethical conduct of the Company’s business, including the steps the Company has taken to monitor and mitigate these risks. In addition, the Company maintains property and casualty insurance coverage that may cover damages caused as a result of a cybersecurity event. The Finance Committee works in concert with the Audit Committee on certain aspects of risk management, including hedging and foreign exchange exposure. The Nominating &and Governance Committee, in its role of assessing the overall corporate governance structure of the Company and reviewing and maintaining the Company’s corporate governance guidelines, manages risks associated with the independence of the Board and potential conflicts of
interest. The Health, Safety, & EnvironmentalEnvironment and Corporate Responsibility Committee oversees management of risks associated with environmental, health and safety issues. While each committeeCommittee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports and by management about the known risks to the strategy and the business of the Company.
COMMITTEESFor more information on Board and Managerial oversight of ESG-focused responsibilities, see section titled “Board and Managerial Oversight of ESG Topics” in our 2023 Sustainability Report at www.murphyoilcorp.com/sustainability-report.
Committees
The standing committeesCommittees of the Board are the Executive Committee, the Audit Committee, the Executive Compensation Committee, the Nominating & GovernanceFinance Committee, the Health, Safety, Environment and Corporate Responsibility Committee, and the Health, Safety & EnvironmentalNominating and Governance Committee.
The Executive Committee, in accordance with the Company’sby-laws, is vested with the authority to exercise certain functions of the Board when the Board is not in session. The Executive Committee is also in charge of all financial accounting, legal and general administrative affairs of the Company, subject to any limitations prescribed by theby-laws or by the Board.
The Audit Committeehas the sole authority to appoint or replace the Company’s independent registered public accounting firm, which reports directly to the Audit Committee. The Audit Committee also assists the Board with its oversight of the integrity of the Company’s financial statements, the independent registered public accounting firm’s qualifications, independence and performance, the performance of the Company’s internal audit function, the compliance by the Company with legal and regulatory requirements, and the review of programs related to risk oversight, including cybersecurity, and compliance with the Company’s Code of Business Conduct and Ethics.
The Audit Committee meets with representatives of the independent registered public accounting firm and with members of the internal audit function for these purposes. TheIn February 2023, the Board has designated Neal E. SchmaleMr. Dickerson as its “Audit Committee Financial Expert” as defined in Item 407 ofRegulation S-K.
All of the members of the Audit Committee including Mr. Schmale are independent under the rules of the NYSE and the Company’s independence standards.
The Executive Compensation Committeeoversees the compensation of the Company’s executives and directors, and administers the Company’s annual incentive compensation plan, the long-term incentive plan and the stock plan fornon-employee directors. directors, administers the Company’s Compensation
10 MURPHY OIL CORPORATION
Recoupment Policy, and reviews the Company’s key human capital management strategies. The Compensation Discussion and Analysis section contains additional information about the Compensation Committee. In carrying out its duties, the Compensation Committee will have direct access independent compensation consultants to assist them.
All of the members of the Executive Compensation Committee are independent under the rules of the NYSE and the Company’s independence standards.
The Compensation Discussion and Analysis section contains additional information about the Executive Compensation Committee. In carrying out its duties, the Executive CompensationFinance Committee will have direct access to outside advisors, independent compensation consultants and others to assist them.
The Nominating & Governance Committee identifies and recommends potential Board members, recommends appointments to Board committees, oversees evaluation of the Board’s performance and reviews and assesses the Corporate Governance Guidelines of the Company. All of the members of the Nominating & Governance Committee are independent under the rules of the NYSE and the Company’s independence standards. Information regarding the process for evaluating and selecting potential director candidates, including those recommended by stockholders, is set out in the Company’s Corporate Governance Guidelines.
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Stockholders desiring to recommend candidates for membership on the Board for consideration by the Nominating & Governance Committee should address their recommendations to: Nominating & Governance Committee of assists the Board of Directors c/o Corporate Secretary, Murphy Oil Corporation, P.O. Box 7000, El Dorado, Arkansas 71731-7000. As a matteron matters relating to the financial strategy, liquidity position and financial policies and activities of policy, candidates recommended by stockholders are evaluatedthe Company. In addition, the Finance Committee reviews and makes recommendations with respect to the Company’s capital structure, major capital projects and any dividend or share repurchase programs. The Finance Committee also works in consultation with the Audit Committee on the same basis as candidates recommended by Board members, executive search firms or other sources.Company’s risk management strategy, including hedging and foreign exchange exposure.
The Health, Safety, & Environmental Environment and Corporate Responsibility Committeeassists the Board and management in monitoring compliance with applicable environmental, health and safety laws, rules and regulations as well as the Company’s Worldwide Health, Safety & Environmental Policy. Review of policies, proceduresresponse to laws and practices regarding securityregulations as part of the Company’s peoplebusiness strategy and property is also within the purview of this committee.operations. The Committee assists the Board on matters relating to the Company’s response to evolving public issues affecting the Company in the realm of health, safety, and the environment. Consideration of evolving matters regarding the climate, responsible business conduct, the community, and review of the Company’s sustainability reports and other ESG issues that could affect the Company’s business activities is also within the purview of this Committee. To supplement the expertise of the Committee (as well as the full Board) and assist the Committee in the discharge of its duties, the Company regularly brings in outside subject matter experts and also continuously briefs the Committee on current and developing issues relevant to the Company’s business. The Committee has benefittedbenefited from the Company’s involvement with groups such as the AmericanInternational Petroleum Institute (API)Industry Environmental Conservation Association (Ipieca) and sponsorship of initiatives like the Massachusetts Institute of Technology’s Joint Program on the Science and Policy of Global Change, which keeps abreast of emerging issues with respect to climate change.
ChartersThe Nominating and Governance Committee identifies and recommends potential Board members, recommends to the Board the slate of directors nominated for selection at the Audit, Executive Compensation,annual meeting, recommends appointments to Board Committees, oversees evaluation of the Board’s performance, and assesses and makes recommendations concerning the overall corporate governance structure of the Company, including proposed changes to the Corporate Governance Guidelines of the Company. The Committee also oversees the Company’s lobbying activities
and political spending, and reviews current and emerging governance trends, issues and concerns that may affect the Company’s business, operations, performance, or reputation. All of the members of the Nominating &and Governance Committee are independent under the rules of the NYSE and Health, Safety & Environmental Committees,the Company’s independence standards.
Information regarding the process for evaluating and selecting potential director candidates, including those recommended by stockholders, is set out in the Committee’s Charter and in the Company’s Corporate Governance Guidelines. Stockholders desiring to recommend Board candidates for consideration by the Nominating and Governance Committee should address their recommendations to: Nominating and Governance Committee of the Board of Directors, c/o Corporate Secretary, Murphy Oil Corporation, 9805 Katy Freeway, G-200, Houston, Texas 77024. As a matter of policy, candidates recommended by stockholders are evaluated on the same basis as candidates recommended by Board members, executive search firms or other sources.
Committee Charters
All Committee Charters, along with the Corporate Governance Guidelines, Code of Business Conduct and Ethics and the Code of Ethical Conduct for Executive Management, are available on the Company’s website,http:website: https://ir.murphyoilcorp.com/phoenix.zhtml?c=61237&p=irol-govHighlights.corporate-governance/governance-documents. The information on the website is not deemed part of this proxy statement and is not incorporated by reference.
BOARD AND COMMITTEE EVALUATIONS
The Board and Committee Evaluations
Our Board of Directors recognizes that a thorough evaluation process is an important element of corporate governance and enhances our Board’s effectiveness. Therefore, each committee conducts an annual self-evaluation. Each November,year, the Chair of the Board and the Chair of each Board Committee request that the directors are requested to provide their assessmentsassessment of the effectiveness of the full Board and each of the committees on which they serve. The Corporate Secretary is instructed by each Chair to manage the distribution and collection of the individual assessmentsassessment forms which is conducted electronically through a third-party vendor portal. Once each director submits the completed assessment(s) through the portal, the responses are organized and summarized by the Corporate Secretary and provided to each ChairmanChair for review and discussion withat the next scheduled meeting during executive session.
It should be noted that the Board and each Board Committee reviews the committees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2017, noneadequacy of its own performance through self-evaluation, but the Nominating and Governance Committee is charged with evaluating the adequacy of the membersentire process. Thus, each year, the Nominating and Governance Committee reviews and determines if the assessment forms stimulate a thoughtful evaluation about the Board and each Committee’s function and provides a forum for feedback on areas of the Executive Compensation Committee (i) was an officer or employee of the Company, (ii) was a former officer of the Company or (iii) had any relationship requiring disclosure by the Company under any paragraph of Item 404 of RegulationS-K.
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2024 PROXY STATEMENT 11
Meetings and Attendance
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MEETINGS AND ATTENDANCE
During 2017,2023, there were six meetings of the Board, eleven meetings of the Executive Committee, sixfive meetings of the Audit Committee, threefive meetings of the Executive Compensation Committee, threefour meetings of the Finance Committee, two meetings of the Nominating &and Governance Committee and twothree meetings of the Health, Safety, & EnvironmentalEnvironment and Corporate Responsibility Committee. All nominees’ attendance substantially exceeded 75% of the total number of meetings of the Board and committees on which they served. Attendance for Board and committee meetings averaged 99% for the full year. All the Board members attended the 20172023 Annual Meeting of Stockholders. As set forth in the Company’s Corporate Governance Guidelines, all Board members are expected to attend each Annual Meeting of Stockholders.
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| Audit | Compensation | Finance | Health, Safety, Environment and Corporate Responsibility | Nominating and Governance | ||||||||
Claiborne P. Deming | ||||||||||||
Lawrence R. Dickerson | C | M | ||||||||||
Michelle A. Earley | M | M | ||||||||||
Roger W. Jenkins | ||||||||||||
Elisabeth W. Keller | M | C | M | |||||||||
James V. Kelley | M | C | ||||||||||
R. Madison Murphy | C | M | ||||||||||
Jeffrey W. Nolan | M | M | M | |||||||||
Robert N. Ryan, Jr. | M | M | M | |||||||||
Laura A. Sugg | | |||||||||||
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C = Chair M = Member 
= Audit Committee Financial Expert
12 MURPHY OIL CORPORATION
How We Are Compensated
The Company’s standard arrangement for the compensation of non-employee directors divides remuneration into cash and equity components. This approach aligns the interests of directors and the stockholders they represent. The Company further targets total director compensation at a level near the 50th percentile of the competitive market (as determined by the Executiveour Compensation Committee’sCommittee (the “Committee”) together with its independent compensation consultant, Pay GovernanceMeridian Compensation Partners LLC (“Pay Governance”)Meridian”), enhancing the Company’s ability to retain and recruit qualified individuals.
Directors can elect to defer their cash compensation into the Company’sNon-Qualified Deferred Compensation Plan forNon-Employee Directors (“NED DCP Plan”) which was approved by the Board of Directors on February 1, 2017.. Deferred amounts are deemed to be notionally invested through a fund in the Company’s Stock Fund.stock. The column below showing “Fees Earned or Paid in Cash” column in the 2023 Director Compensation Table on the next page includes any amounts that were voluntarily deferred tointo the NED DCP Plan. Mr. Mirosh (Canadian citizen) does not have the opportunityIn addition, beginning with cash compensation to deferbe paid in 2024, Directors can elect to receive their cash compensation in this manner.the form of deferred restricted stock units, which settle either on (1) termination of service from the Board or (2) a future date selected by the director at the time of their deferral election.
In 2017,For 2023, the cash component consisted of an annual retainer of $60,000, plus $2,000 for each Board or committee meeting attended.$85,000. Supplemental retainers were paid to the ChairmanChair of the Board ($115,000)140,000), Audit Committee ChairmanChair ($15,000)20,000), the Audit Committee Financial Expert ($10,000)7,000), other members of the Audit Committee ($7,500)5,000),
Finance Committee Chair ($20,000), other members of the Executive CompensationFinance Committee Chairman ($15,000)5,000), and the Chair of each other committee ($10,000)15,000). Further, in early 2023, the Board established an ad hoc committee to assist the Board in its review of key
strategic topics, including the Company’s capital structure, competitor analysis, and energy strategy. The committee met three times in 2023. The Chair of the committee, Mr. Ryan, was awarded a supplemental retainer of $15,000 for his service during this period. The Company also reimburses directors for reasonable travel, lodging and related expenses they incur in attending Board and committee meetings.
In 2017, Also, in 2023, the total equity compensation fornon-employee directors was increased tomaintained at a grant date fair value of $200,000 to bringkeep the total director compensation to a level near the 50th50th percentile of the Company’s peer group, (as determined by the Pay Governance) enhancing the Company’s ability to retain and recruit qualified individuals. Eachnon-employee director received 6,9354,740 time-based restricted stock units on February 1, 2017,2, 2023, which cliff vest after three years.one year.
Pursuant to the 2021 Stock Plan for Non-Employee Directors and the applicable award agreements thereunder, directors can elect to defer settlement of their restricted stock units. In 2023, Mr. Dickerson, Ms. Earley, Mr. Nolan and Ms. Sugg elected to defer settlement of their restricted stock units to either (1) termination of service from the Board or (2) on a future date selected by the director at the time of their deferral election.
Thenon-employee directors are eligible to participate in the matching charitable gift program on the same terms as U.S.-based Murphy employees. Under this program, an eligible person’s total charitable gifts of up to $12,500$7,500 per calendar year will qualify. The Company will contribute to qualified educational institutions and hospitals an amount equal to twice the amount (2 to 1) contributed by the eligible person. The Company will contributematch contributions to qualified welfare and cultural organizations an amount equal to (1 to 1) the contribution made by the eligible person. Those amounts are in the column below showing “All Other Compensation”.
2017 DIRECTOR COMPENSATION TABLE
2024 PROXY STATEMENT 13
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| All Other
| Total ($)
| |||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 Director Compensation Table | 2023 Director Compensation Table | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fees Earned or Paid in Cash ($) | Stock Awards1,2 ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings3 ($) | All Other Compensation4 ($) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Claiborne P. Deming | 219,017 | 200,006 | — | — | — | — | 419,023 | |||||||||||||||||||||||||||||||||||||||||||||||||
T. Jay Collins | 84,017 | 200,006 | — | — | — | — | 284,023 | |||||||||||||||||||||||||||||||||||||||||||||||||
Steven A. Cossé | 98,017 | 200,006 | — | — | — | 24,500 | 322,523 | |||||||||||||||||||||||||||||||||||||||||||||||||
Claiborne P. Deming | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Claiborne P. Deming | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Claiborne P. Deming | 225,011 | 5 | 200,028 | — | — | — | — | 425,039 | ||||||||||||||||||||||||||||||||||||||||||||||||
Lawrence R. Dickerson | 97,508 | 200,006 | — | — | — | 5,000 | 302,514 | |||||||||||||||||||||||||||||||||||||||||||||||||
Lawrence R. Dickerson | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lawrence R. Dickerson | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lawrence R. Dickerson | 117,000 | 200,028 | — | — | — | — | 317,028 | |||||||||||||||||||||||||||||||||||||||||||||||||
Michelle A. Earley | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michelle A. Earley | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michelle A. Earley | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michelle A. Earley | 90,000 | 200,028 | — | — | — | 515 | 290,543 | |||||||||||||||||||||||||||||||||||||||||||||||||
Elisabeth W. Keller | 74,000 | 200,006 | — | — | — | 6,030 | 280,036 | |||||||||||||||||||||||||||||||||||||||||||||||||
Elisabeth W. Keller | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Elisabeth W. Keller | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Elisabeth W. Keller | 105,011 | 200,028 | — | — | — | 1,000 | 306,039 | |||||||||||||||||||||||||||||||||||||||||||||||||
James V. Kelley | 110,017 | 200,006 | — | — | — | — | 310,023 | |||||||||||||||||||||||||||||||||||||||||||||||||
Walentin Mirosh | 88,267 | 200,006 | — | — | — | — | 288,273 | |||||||||||||||||||||||||||||||||||||||||||||||||
James V. Kelley | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
James V. Kelley | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
James V. Kelley | 105,011 | 200,028 | — | — | — | — | 305,039 | |||||||||||||||||||||||||||||||||||||||||||||||||
R. Madison Murphy | 128,517 | 200,006 | — | — | 12,043 | 25,000 | 365,566 | |||||||||||||||||||||||||||||||||||||||||||||||||
R. Madison Murphy | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R. Madison Murphy | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R. Madison Murphy | 110,011 | 200,028 | — | — | 15,353 | 15,000 | 340,392 | |||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey W. Nolan | 98,017 | 200,006 | — | — | — | 6,210 | 304,233 | |||||||||||||||||||||||||||||||||||||||||||||||||
Neal E. Schmale | 122,517 | 200,006 | — | — | — | 25,000 | 347,523 | |||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey W. Nolan | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey W. Nolan | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey W. Nolan | 90,000 | 200,028 | — | — | — | — | 290,028 | |||||||||||||||||||||||||||||||||||||||||||||||||
Robert N. Ryan, Jr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert N. Ryan, Jr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert N. Ryan, Jr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert N. Ryan, Jr. | 105,011 | 200,028 | — | — | — | 15,000 | 320,039 | |||||||||||||||||||||||||||||||||||||||||||||||||
Laura A. Sugg | 95,500 | 200,006 | — | — | — | — | 295,506 | |||||||||||||||||||||||||||||||||||||||||||||||||
Laura A. Sugg | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Laura A. Sugg | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Laura A. Sugg | 105,000 | 200,028 | — | — | — | 10,000 | 315,028 | |||||||||||||||||||||||||||||||||||||||||||||||||
Represents grant date fair value of time-based restricted stock units awarded in |
|
for the year ended December 31, 2023. |
Each non-employee director receives the same number of time-based restricted stock units as part of their annual compensation. Outstanding amounts listed below vary due to whether a director has elected to defer settlement of a restricted stock unit award. For further details regarding the number of shares of the Company’s common stock owned by all directors, please refer to the beneficial ownership table on page 42. At December 31, |
Restricted Stock Units | |||||
Claiborne P. Deming |
| 4,740 | |||
| |||||
|
| ||||
Lawrence R. Dickerson | 26,052 | ||||
Michelle A. Earley |
| 16,486 | |||
Elisabeth W. Keller |
| 4,740 | |||
James V. Kelley |
| 4,740 | |||
| |||||
R. Madison Murphy |
| 4,740 | |||
Jeffrey W. Nolan | 42,062 | ||||
Robert N. Ryan, Jr. |
| 4,740 | |||
| |||||
Laura A. Sugg |
| 42,062 | |||
The 1994 Retirement Plan forNon-Employee Directors was frozen on May 14, 2003. At that time, then current directors were vested based on their years of service, with no further benefits accruing and benefits being paid out according to the terms of the plan. Only Mr. Murphy continues to be eligible for benefits under the plan. |
| 4 | Total reflects matching charitable contributions the Company made on behalf of the directors for fiscal year 2023 pursuant to the Company’s Gift Matching Program. |
| 5 |
The director elected to defer payment of such amounts under the NED DCP Plan. |
As
14 MURPHY OIL CORPORATION
How You Can Communicate With Us
The Board values input from stockholders and other stakeholders and therefore provides a number of December 31, 2017,means for communication with the followingBoard. Stockholders are knownencouraged to communicate by voting on the Company to beitems in this proxy statement, by attending the beneficial owners of more than five percent ofannual meeting, by participating in the Company’s Common Stock (as of the date of such stockholder’s Schedule 13G filing with the SEC):
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The following table sets forth information, as of February 20, 2018, concerning the number of shares of Common Stock of the Company beneficially owned by all directors and nominees, each of the Named Executive Officers (as hereinafter defined), and directors and executive officers as a group.
| Name
| Personal
| Personal as
| Voting and
| Options
| Total
| Percent of
| ||||||||||||||||||
Claiborne P. Deming
|
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848,984
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1,639,538
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209,720
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—
|
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2,698,242
|
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1.56
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%
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T. Jay Collins
|
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10,599
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—
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—
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—
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10,599
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—
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Steven A. Cossé
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125,469
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—
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—
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—
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125,469
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—
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Lawrence R. Dickerson
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6,451
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—
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—
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—
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6,451
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—
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Elisabeth W. Keller
|
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209,909
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845,546
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200,000
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(3)
|
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—
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1,255,455
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—
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James V. Kelley
|
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44,488
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—
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—
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—
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44,488
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—
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Walentin Mirosh
|
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17,941
|
|
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—
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—
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—
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17,941
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|
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—
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R. Madison Murphy
|
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—
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|
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2,393,007
|
|
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1,590,053
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(4)
|
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—
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3,983,060
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(5)
|
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2.30
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%
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Jeffrey W. Nolan
|
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295,055
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283,252
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—
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—
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578,307
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—
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Neal E. Schmale
|
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60,250
|
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—
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—
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—
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60,250
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—
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Laura A. Sugg
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4,443
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—
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—
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—
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4,443
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—
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Roger W. Jenkins
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268,895
|
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—
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—
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803,609
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1,072,504
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—
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John W. Eckart
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88,923
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—
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—
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158,639
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247,562
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—
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Eugene T. Coleman
|
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37,547
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—
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—
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188,826
|
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226,373
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—
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Michael K. McFadyen
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77,675
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—
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—
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208,326
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286,001
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—
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Walter K. Compton
|
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78,838
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—
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—
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167,758
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246,596
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—
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Directors and executive officers as a group(6)
|
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2,333,456
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5,161,343
|
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1,999,773
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1,901,559
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11,396,131
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6.59
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%
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|
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company’s directors and executive officers and persons who beneficially own more than 10% of the Company’s Common Stock are required to report their ownership of the Company’s Common Stock andreaching out at any changes in that ownership to the Securities and Exchange Commission and the New York Stock Exchange. Specific due dates for these reports have been established and the Company is required to report in this Proxy Statement any failure to file by these dates. Based upon a review of the copies of the reports filed by the Company’s directors and executive officers pursuant to Section 16(a) of the Securities Exchange Act of 1934 and on representations from such reporting persons the Company believes that all such persons complied with all applicable filing requirements during fiscal 2017.
REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS AND CODE OF BUSINESS CONDUCT AND ETHICS
During 2017, the Company did not have any transactions with related persons required to be disclosed under Item 404(a) of RegulationS-K, and no such transactions are currently proposed.time via mail or email. The Nominating & Governance Committee reviews ordinary course of business transactions with related parties, including firms associated with directors and nominees for director. The Company’s management also monitors such transactions on an ongoing basis. Executive officers and directors are governed by the Company’s Code of Business Conduct and Ethics, which provides that waivers may only be granted by the Board and must be promptly disclosed to stockholders. No such waivers were granted or applied for in 2017. The Company’s Corporate Governance Guidelines requireprovide that allstockholders and other interested parties may send communications to the Board, specified individual directors recuse themselves from any discussionand the independent directors as a group c/o the Corporate Secretary, Murphy Oil Corporation, 9805 Katy Freeway, G-200, Houston, Texas 77024 or decision affecting their personal, business or professional interests.via email at corporatesecretary@murphyoilcorp.com. Items that are unrelated to a director’s duties and responsibilities as a Board member, such as junk mail, may be excluded by the Corporate Secretary.
16 MURPHY OIL CORPORATION
PROPOSAL 2
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“the Dodd-Frank Act”) enables the Company’s stockholders to vote to approve, on an advisory(non-binding) basis, the compensation of the Named Executive Officers as disclosed in this Proxy Statement in accordance with the SEC’s rules. The Company has determined to submit Named Executive Officer compensation to an advisory(non-binding) vote annually. At the 20172023 Annual Meeting, stockholders endorsed the compensation of the Company’s Named Executive Officers with over 97% of the votes cast supporting the proposal.
As described in detail under the heading “Compensation“Compensation Discussion and Analysis,,” the Company’s executive compensation programs are designed to attract, motivate, and retain the Named Executive Officers who are critical to the Company’s success. Under these programs, the Named Executive Officers are rewarded for the achievement of specific annual, long-term and strategic goals, corporate goals, and the realization of increased stockholder value. Please read the “Compensation“Compensation Discussion and Analysis”Analysis” along with the information in the compensation tables for additional details about the executive compensation programs, including information about the fiscal year 20172023 compensation of the Named Executive Officers.
Stockholders are asked to indicate their support for the Named Executive Officer compensation as described in this
proxy statement. This proposal, commonly known as a“say-on-pay”Say-on-Pay” proposal, gives stockholders the opportunity to express their views on the Named Executive Officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Named Executive Officers and the philosophy, policies and practices described in this proxy statement. Accordingly, stockholders are requested to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 20182024 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 20172023 Summary Compensation Table and the other related tables and disclosures.”
Thesay-on-paySay-on-Pay vote is advisory, and therefore not binding on the Company, the Executive Compensation Committee (the “Committee”) or the Board of Directors. The Board of Directors and the Executive Compensation Committee value the opinions of stockholders and to the extent there is a significant vote against the Named Executive Officer compensation as disclosed in this proxy statement, the Executive Compensation Committee will consider stockholders’ concerns and will evaluate whether any actions are necessary to address those concerns.
The Company has determined to submit Named Executive Officer compensation to an advisory (non-binding) vote annually. At the 2023 Annual Meeting, stockholders voted on an advisory basis regarding the frequency of Say-on-Pay votes and approved holding Say on Pay votes on an annual basis. The next advisory vote on our Named Executive Officer compensation will be held at our 2025 Annual Meeting of Stockholders.
2024 PROXY STATEMENT 17
Discussion and Analysis
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The Company’s standard arrangement for the compensation ofnon-employee directors divides remuneration into cash and equity components. This approach aligns the interests of directors and the stockholders they represent. The Company further targets total director compensation at a level near the 50th percentile of the competitive market (as determined by the Executive Compensation Committee’s (the “Committee”) independent compensation consultant, Pay Governance) enhancing the Company’s ability todoes more than attract, retain, and recruit qualified individuals. The Company believes this structure has been successful motivate. Pay decisions affect—and can reveal a lot about—a company’s fairness, honesty, and values; its time horizons and resilience; its creativity and willingness to continue in this vein, stockholders are asked to approve the 2018 Stock Planbe a leader; and ultimately how it goes about growing long-term value per share forNon-Employee Directors (the “2018 Plan”), which is substantially similar to the 2013 Stock Plan forNon-Employee Directors which expires in May, 2018. owners.
We believe that approving the 2018 Plan is necessary to allow the Company to continue to align the long-term financial interests of directors with those of the Company’s stockholders, to attract and retain those individuals by providing compensation opportunities that are competitive with other companies and provide incentives to those individuals who contribute significantly to the long-term performance and growth of the Company.
As a stockholder of the Company,hope you are invited to vote with respect to the 2018 Plan through the following resolution:
“RESOLVED,will agree that the Company’s stockholders approve the 2018 Plan.”
The following is a summary of the 2018 Plan which is qualified in its entirety by the full text of the 2018 Plan, a copy of which is included as Exhibit A to this Proxy Statement. The capitalized terms not otherwise defined in this summary have the meaning assigned to them in the 2018 Plan.
Summary of Plan Terms
Shares Subject to the 2018 Plan
The Shares of the Company to be issued under the 2018 Plan consist of authorized but unissued Shares or issued Shares that have been reacquired by the Company, including Shares acquired in the open market. Subject to adjustment made in connection with a merger, consolidation, reorganization or certain other events set forth in the 2018 Plan, the maximum number of Shares subject to awards which may be issued pursuant to the 2018 Plan will be 500,000 Shares. If any grants under the 2018 Plan are cancelled, forfeited, expire or terminate for any reason without Shares having been issued, the Shares subject to, but not delivered under, such grants may again become available for the grant of other awards under the 2018 Plan. Notwithstanding the foregoing, no Shares deliverable to the Company in full or partial payment of the purchase price for Stock Options may again become
available for the grant of other awards under the 2018 Plan.
In no event will any individual director receive grants under the 2018 Plan in any calendar year with respect to Shares having an aggregate Fair Market Value (or in the case of stock options, the grant date value of such Stock Options as determined by the Committee) in excess of $750,000, as calculated at the time of grant.
Administration of the 2018 Plan
The 2018 Plan will be administered by a committee of the Board, designated by the Board and to be comprised of not less than two members of the Board (referred to in this section of the Proxy Statement as the “Committee”). Subject to the provisions of the 2018 Plan, the Committee will have sole and complete authority to construe and interpret the 2018 Plan, to establish, amend, and rescind the appropriate rules and regulations relating to the 2018 Plan, to determine the persons to whom and the time or times at which to grant awards, to administer the 2018 Plan and to take all such steps and make all such determinations in connection with the awards granted, as it may deem necessary or advisable to carry out the provisions and intent of the 2018 Plan.
Eligibility
Allnon-employee directors are eligible to receive awards under the 2018 Plan. Currently, the Company has elevennon-employee directors that will be eligible to receive awards under the 2018 Plan.
Types of Awards
The following types of awards may be made under the 2018 Plan. All of the awards described below are subject to the conditions, limitations, restrictions, exercise price, vesting and forfeiture provisions determined by the Committee, in its sole discretion, subject to such limitations as are provided in the 2018 Plan.
Non-qualified Stock Options
A Stock Option is a contractual right to purchase Shares at a future date at a specified exercise price. The per Share exercise price of a Stock Option will be determined by the Committee and may not be less than the Fair Market Value of a Share on the grant date. The exercise price of any Stock Option may be paid in Shares, cash, or a combination thereof, or other consideration, as determined by the Committee. Each Stock Option granted under the 2018 Plan will become exercisable and mature in three equal annual installments commencing on the first anniversary of the date of grant. Each Stock Option granted under the 2018 Plan will expire seven years from the date of grant.
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|
Restricted Stock and Restricted Stock Units
A Restricted Stock Award is an award of Shares that does not vest until after a specified period of time, or satisfaction of other vesting conditions as determined by the Committee. Restricted Stock Units (“RSUs”) are awards denominated in units of Shares under which the issuance of Shares is subject to such conditions and terms as the Committee deems appropriate. To the extent determined by the Committee, Restricted Stock and RSUs may be satisfied or settled in Shares, cash or a combination thereof. Participants in whose name Restricted Stock is granted shall be entitled to receive all dividends and other distributions paid with respect to those Shares, unless otherwise determined by the Committee. Shares underlying RSUs are entitled to dividends or dividend equivalents only to the extent, and in the form, provided by the Committee. In no event will dividends or dividend equivalents be paid on awards that remain subject to performance measures unless and until the underlying performance measures are met. The Committee may provide for the ability of Participants to elect to defer the settlement of, or mandate the settlement of, RSUs to such time as may be elected by the Participant or determined by the Committee. Unless otherwise determined by the Committee, Participants holding awards of Restricted Stock may exercise full voting rights during the Restricted Period.
Termination of Service and Change in Control
Termination of Membership on the Board of Directors Because of Retirement or Disability. If a Participant’s membership on the Board of Directors terminates because of Retirement or Disability, any Stock Option held by the Participant may be exercised, in whole or in part, to the extent not previously exercised, only during the period (i) beginning on the later of (A) one year after the date of grant of such Stock Option or (B) the date of termination of membership on the Board of Directors due to Retirement or Disability; and (ii) ending on and including the earlier of (A) the last day of the original exercise period remaining under the applicable award agreement or (B) the third anniversary of the date of termination of membership on the Board of Directors due to Retirement or Disability. In addition, the restrictions will be lifted on all Restricted Stock and RSUs held by the Participant; provided that the settlement of any vested Deferred Units will remain subject to the terms of the underlying award agreement and any applicable deferral election form.
Termination of Membership on the Board of Directors Because of Death. If a Participant’s membership on the Board of Directors terminates because of death, any Stock Option held by the Participant may be exercised, in whole or in part, to the extent not previously exercised, only during the period
(i) beginning on the date of death; and (ii) ending on and including the earlier of (A) the last day of the original exercise period remaining under the applicable award agreement or (B) the third anniversary of the date of death. In addition, the restrictions will be lifted on all Restricted Stock and RSUs held by the Participant; provided that the settlement of any vested Deferred Units will remain subject to the terms of the underlying award agreement and any applicable deferral election form.
Death After Termination of Membership on the Board of Directors Because of Retirement or Disability. If a Participant dies after the Participant’s membership on the Board of Directors has terminated because of Retirement or Disability, any Stock Option held by the Participant may be exercised, in whole or in part, to the extent not previously exercised, only during the period (i) beginning on the date of death; and (ii) ending on and including the earlier of (A) the last day of the original exercise period remaining under the applicable award agreement or (B) the third anniversary of the date of termination of membership on the Board of Directors due to Retirement or Disability.
Termination of Membership on the Board of Directors for Reasons other than Retirement, Disability, Death or a Change in Control. If a Participant’s membership on the Board of Directors terminates for any reason other than Retirement, Disability, death or a Change in Control, the Stock Options held by such Participant, to the extent not previously vested, shall be forfeited at the time of such termination of membership on the Board of Directors. In addition, the Restricted Stock and RSUs held by such Participant, to the extent not previously vested, will be forfeited at the time of such termination of membership on the Board of Directors; provided that any vested Deferred Units will not be forfeited but shall settle in accordance with the terms of the underlying award agreement and any applicable deferral election form
Change in Control.Upon the occurrence of a Change in Control, all outstanding awards under the 2018 Plan will become immediately vested, exercisable and nonforfeitable, and will remain vested, exercisable and nonforfeitable during their remaining terms.
Amendment and Termination
The Board of Directors may amend, alter, or discontinue the 2018 Plan at any time, but no amendment, alteration, or discontinuation may be made which would impair the rights of a Participant under an award previously granted, without the Participant’s consent, or which would cause the 2018 Plan not to continue to comply with Rule16b-3 under the Exchange Act, or any successor to such rule. Notwithstanding the above provisions, the Board of Directors will have broad authority to amend the 2018 Plan to take into account
|
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changes in applicable securities and tax laws and accounting rules, as well as other developments. The 2018 Plan expires by its terms five years following its approval.
U.S. Federal Income Tax Consequences
The following is a brief summary of the principal United States federal income tax consequences of transactions under the 2018 Plan, based on current United States federal income tax laws. This summary is not intended to be exhaustive, does not constitute tax advice and, among other things, does not describe state, local or foreign tax consequences, which may be substantially different.
Non-Qualified Stock Options
Generally, a Participant will not recognize taxable income on the grant or vesting of anon-qualified stock option. Upon the exercise of anon-qualified stock option, a Participant will recognize ordinary income in an amount equal to the difference between the market price of the Shares received on the date of exercise and the stock option cost (number of Shares purchased multiplied by the exercise price per Share). The Company will ordinarily be entitled to a deduction on the exercise date equal to the ordinary income recognized by the Participant upon exercise.
Restricted Stock
A Participant generally will not be taxed at the time a Restricted Stock Award is granted but will recognize taxable ordinary income when the Award vests or otherwise is no longer subject to a substantial risk of forfeiture. The amount of taxable income will be the market price of the Shares at that time.
Participants may elect to be taxed at the time of grant by making an election under Section 83(b) of the Internal Revenue Code within 30 days of the award date. If a Restricted Stock Award subject to the Section 83(b) election is subsequently canceled, no tax deduction will be allowed for the amount previously recognized as income, and no tax previously paid will be refunded. Unless a Participant makes a Section 83(b) election, dividends paid to a Participant on Shares of an unvested Restricted Stock Award will be taxable to the Participant as ordinary income. If the Participant made
a Section 83(b) election, the dividends will be taxable to the Participant as dividend income.
The Company will ordinarily be entitled to a deduction at the same time and in the same amounts as the ordinary income recognized by the Participant. Unless a Participant has made a Section 83(b) election, the Company will also be entitled to a tax deduction, for dividends paid on unvested Restricted Stock Awards.
Restricted Stock Units
A Participant will generally not recognize taxable income on a RSU Award until Shares (or cash) subject to the Award are distributed. The amount of ordinary income will be the market price of the Shares on the date of distribution (or the amount of cash distributed). Any dividend equivalents paid on unvested RSUs are taxable as ordinary income when paid to the Participant.
The Company will ordinarily be entitled to a tax deduction at the same time and in the same amounts as the ordinary income recognized by the Participant. The Company will also be entitled to a deduction on any dividend equivalent payments made to the Participant.
New Plan Benefits
The size of the grant each year is based on competitive data provided by a major compensation consulting firm and actual grant amounts are determined by the Committee after assessing this data. Grants under the 2013 Stock Plan forNon-Employee Directors totaled 1,753 shares in 2013; 45,492 shares in 2014; 48,665 shares in 2015; 86,055 shares in 2016; 83,220 shares in 2017; and 77,803 shares in 2018.
The following table sets forth the 2019 benefits or amounts projected to be received by or allocated to certain individuals and groups under the 2018 Plan. These pro forma figures are based on actual 2018 awards under the Company’s currentexecutive compensation program, fornon-employee directors; however, there is no assurance that the value to be realized by the individuals and groups will be at or near the indicated amounts.
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Restricted Stock Units | ||||||||
Dollar Value
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Number of
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Claiborne P. Deming
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| 200,024
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| 7,073
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T. Jay Collins
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| 200,024
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| 7,073
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Steven A. Cossé
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| 200,024
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| 7,073
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Lawrence R. Dickerson
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| 200,024
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| 7,073
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Elisabeth W. Keller
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| 200,024
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| 7,073
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James V. Kelley
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| 200,024
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| 7,073
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Walentin Mirosh
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| 200,024
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| 7,073
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R. Madison Murphy
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| 200,024
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| 7,073
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Jeffrey W. Nolan
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| 200,024
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| 7,073
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Neal E. Schmale
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| 200,024
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| 7,073
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Laura A. Sugg
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| 200,024
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| 7,073
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Non-Employee Director Group
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| 2,200,264
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| 77,803
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The full text of the proposed plan is attached as Exhibit A to this Proxy Statement and incorporated by reference.
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As noted in the Compensation Discussion and Analysis section of the Proxy Statement, the 2012 Long-Term Incentive Plan (the “2012 LTI Plan”) was approved by stockholders on May 9, 2012 and will expire by its terms in 2022. On February 7, 2018, the Board of Directors approved the 2018 Long-Term Incentive Plan (the “2018 LTIP”), subject to approval by stockholders at the 2018 Annual Meeting. The Board of Directors has determined that it is in the best interests of stockholders to consider at the Annual Meeting whether to adopt the 2018 LTIP to replace the 2012 LTI Plan for granting new equity incentive awards. No awards have been granted under the 2012 LTI Plan since March 12, 2018 and, if the 2018 LTIP is approved by stockholders, no further awards will be granted under the 2012 LTI Plan.
As of March 12, 2018, there were 210,512 shares available for grant under the 2013 Stock Plan forNon-Employee Directors. Also, set forth below is information regarding shares currently outstanding under the 2012 LTI Plan as of March 12, 2018. The Company made its annual award grant to employees during the first quarter of 2018 and those awards are included in the data below.
As of March 12, 2018:
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The 2018 LTIP has a10-year life so as to allow the Company to respond to changes in the competitive marketplace, regulatory actions, and changes to business strategy.
We believe that approving the 2018 LTIP is necessary in order to allow the Company to continue to align the long-term financial interests of its officers and other key employees with those of the Company’s stockholders, to attract and retain those individuals by providing compensation opportunities that are competitive with other companies and provide incentives to those individuals who contribute significantly to the long-term performance and growth of the Company. The terms of the Company’s equity compensation awards are designed to encourage participating employees to focus on the long-term success of the Company. If the 2018 LTIP is not approved, then based on historical usage of shares under our equity plans and a range of possible grant date fair values, we would expect that the remaining shares available for future grant under the 2012 LTI Plan would likely be sufficient to grant annual equity incentive awards through 2019, after which time we would lose an important compensation tool aligned with the long-term interests of the Company’s stockholders.
The Board of Directors believes that approval of the 2018 LTIP is in the best interest of our stockholders and supports this proposal.
As a stockholder of the Company, you are invited to vote with respect to the 2018 LTIP through the following resolution:
“RESOLVED, that the Company’s stockholders approve the 2018 LTIP.”
The following is a summary of the 2018 LTIP which is qualified in its entirety by the full text of the 2018 LTIP, a copy of which is included as Exhibit B to this Proxy Statement. The capitalized terms not otherwise defineddescribed in this summary have the meaning assigned to them in the 2018 LTIP.
Summary of Plan Terms
Shares Subject to the 2018 LTIP
The Shares of the Company to be issued under the 2018 LTIP consist of authorized but unissued Shares or issued Shares that have been reacquired by the Company, including Shares acquired in the open market. Subject to adjustment made in connection with a merger, consolidation, reorganization or certain other events set forth in the 2018 LTIP, the maximum number of Shares subject to Awards which may be issued pursuant to the 2018 LTIP will be 6,750,000 Shares except that, to better manage the burn rate, the annual number of Shares granted from that pool will not exceed 1% of the Shares issued and outstanding at the beginning of each fiscal year as reported in the Company’s financial statements.
The aggregate number of Shares subject to all Awards granted under the 2018 LTIP during any calendar year to any one Employee will not exceed 500,000 and the maximum aggregate actual cash payment to any Participant shall not exceed $5,000,000. Shares subject to Awards that have been canceled, expired, forfeited or otherwise not issued under an Award and Shares subject to Awards settled in cash shall not count as Shares issued under the 2018 LTIP. Notwithstanding the foregoing, Shares subject to an Award may not be made available for issuance under the 2018 LTIP if such Shares were not issued under the net settlement or net exercise of a Stock Appreciation Right (“SAR”), were used to pay the exercise price of an Option, were delivered to or withheld by the Company to pay the withholding taxes related to an Option or a SAR, or were repurchased on the open market with the proceeds of an Option exercise. The number of Shares that may be granted as full value awards (Awards other than Options and SARs) shall not exceed 50% of the total Shares available for grant (3,375,000 Shares).
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Administration of the 2018 LTIP
The 2018 LTIP will be administered by the Executive Compensation Committee of the Board of Directors (referred to in this section of the Proxy Statement as the “Committee”). In addition to any implied powers and duties that may be necessary or appropriate to carry out the provisions of the 2018 LTIP, the Committee will have all of the powers vested in it by the terms of the 2018 LTIP, including exclusive authority to select the employees to be granted Awards, to determine the type, size and terms of the Awards to be made to each employee selected, to determine the time when Awards will be granted, and to prescribe the form of the agreements embodying Awards made under the 2018 LTIP. The Committee is authorized to interpret the 2018 LTIP and the Awards granted, to establish, amend and rescind any rules and regulations relating to the 2018 LTIP, to make any other determinations which it believes necessary or advisable for the administration of the 2018 LTIP, and to correct any defect or supply any omission or reconcile any inconsistency in the 2018 LTIP or in any Award in the manner and to the extent the Committee deems desirable to carry it into effect.
Eligibility
Any employee of the Company, or a Subsidiary or affiliate that does not maintain a similar plan, who is an officer or who serves in any other key administration, professional, or technical capacity, and in the discretion of the Committee, any Employee who has made an unusual contribution, is eligible to receive Awards under the 2018 LTIP. The basis for participation in the 2018 LTIP is the Committee’s decision, in its sole discretion, that an Award to an eligible Participant will further the 2018 LTIP’s purposes. In exercising its discretion, the Committee will consider the purposes of the 2018 LTIP, which are to align the long-term financial interests of eligible employees with those of the Company’s stockholders, to attract and retain those individuals by providing compensation opportunities that are competitive with other companies and provide incentives to those individuals who contribute significantly to the long-term performance and growth of the Company. As of March 12, 2018, we expect that approximately 500 employees will be eligible to receive Awards under the 2018 LTIP.
Types of Awards
The following types of Awards may be made under the 2018 LTIP. All of the Awards described below are subject to the conditions, limitations, restrictions, exercise price, vesting and forfeiture provisions determined by the Committee, in its sole discretion, subject to such limitations as are provided in the 2018 LTIP. In addition, subject to the limitations provided in the 2018 LTIP and in accordance with applicable law, the Committee may accelerate or defer the vesting or payment of
Awards, cancel or modify outstanding Awards, and waive any conditions or restrictions imposed with respect to Awards or the Shares issued pursuant to Awards. As of February 28, 2018, the equity awards outstanding under our equity compensation plans were held by approximately 600 current and former employees.
Non-qualified Stock Options
An Option is a contractual right to purchase Shares at a future date at a specified exercise price. The per Share exercise price of an Option will be determined by the Committee and may not be less than the Fair Market Value of a Share on the grant date. The exercise price of any Option may be paid in Shares, cash, or a combination thereof, as determined by the Committee. Other than as provided in the 2018 LTIP with respect to certain changes in capitalization or other corporate transactions, the exercise price of an Option may not be reduced without stockholder approval. The dates on which Options become exercisable will be determined at the sole discretion of the Committee, provided that no Option will be exercisable more than seven years from the grant date. Options that are intended to qualify as incentive stock options must meet the requirements of Section 422 of the Internal Revenue Code. The maximum number of Shares that may be issued under the 2018 LTIP through incentive stock options is 1,000,000 Shares.
Stock Appreciation Rights
SARs represent a contractual right to receive, in cash or other property (including Shares), an amount equal to the appreciation of a Share from the grant date based on the exercise price of the SAR (which may not be less than 100% of the Fair Market Value of a Share on the grant date), multiplied by the number of Shares subject to the SAR.
Restricted Stock and Restricted Stock Units
A Restricted Stock Award is an Award of outstanding Shares that does not vest until after a specified period of time, or satisfaction of other vesting conditions as determined by the Committee. Restricted Stock Units (“RSUs”) are Awards denominated in units of Shares under which the issuance of Shares (or the payment of cash based on the value of Shares) is subject to such conditions and terms as the Committee deems appropriate. To the extent determined by the Committee, Restricted Stock and RSUs may be satisfied or settled in Shares, cash or a combination thereof. Participants in whose name Restricted Stock is granted will be entitled to receive all dividends and other distributions paid with respect to those Shares, unless otherwise determined by the Committee. Shares underlying RSUs are entitled to dividends or dividend equivalents only to the extent, and in the form,
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provided by the Committee. Unless otherwise determined by the Committee, Participants holding Awards of Restricted Stock may exercise full voting rights during the Restricted Period.
Performance Units and Performance Shares
A Performance Share is an Award of outstanding Shares that does not vest until the satisfaction of performance criteria, and any other vesting conditions, specified by the Committee. Performance Shares are Awards denominated in units of Shares under which the issuance of Shares (or the payment of cash based on the value of Shares) is subject to the satisfaction of performance criteria, and any other vesting conditions, specified by the Committee. Performance criteria are based on the Company’s attainment of performance measures to be established by the Committee, in its sole discretion. Notwithstanding the satisfaction of any performance goals, to the extent specified in the Agreement, the Committee may reduce the number of Shares granted, issued, retainable or vested on the basis of any further considerations as determined by the Committee in its discretion. The settlement of Performance Units and Performance Shares may be in cash, Shares of equivalent value, or in some combination thereof, as set forth in the Agreement.
Other Stock-Based Incentives
The Committee is authorized to grant other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares.
Termination of Service and Change in Control
Except as otherwise determined by the Committee, in the event a Participant’s employment terminates by reason of Normal Termination (as defined below) or death, (i) any Options and SARs granted to such Participant which are then outstanding and vested may be exercised at the earlier of any time prior to the expiration of the term of the Options or SARs or within two (2) years after the date of termination, (ii) any shares of Restricted Stock or RSUs then outstanding and unvested will vest on the date of the Participant’s termination in apro-rated amount, and (iii) any Performance Shares or Performance Units then outstanding and unvested will remain eligible to vest at the conclusion of the applicable performance period. Unless otherwise determined by the Committee, in the event the employment of the Participant terminates for any reason other than Normal Termination or death, all unvested Awards will be forfeited and any options and SARs granted to such employee which are then outstanding will be canceled. For purposes of the 2018 LTIP, “Normal Termination” is defined as a termination of
employment (i) at normal retirement age as defined in the Retirement Plan of the Company, (ii) for total and permanent disability as defined in the Life Insurance Plan for employees of the Company, or (iii) with Company approval, and without being terminated for cause.
Unless the Committee determines otherwise, notwithstanding any other provision of the 2018 LTIP to the contrary, upon a Change in Control, all outstanding unvested Awards will vest (with any applicable performance measures deemed achieved at the target level of performance), become immediately exercisable or payable or will have all restrictions lifted as may apply to the type of Award.
Minimum Vesting Requirements
Subject to the specified treatment under the 2018 LTIP upon a termination of employment or a Change in Control, Awards will vest over a period of not less than one year following the grant date; provided, however, that the Committee may grant Awards that are not subject to this minimum vesting requirement with respect to 5% or less of the Shares available for issuance under the 2018 LTIP.
Amendment and Termination
The Board of Directors may amend, alter or discontinue the 2018 LTIP and the Committee may amend, or alter any Agreement or other document evidencing an Award made under the 2018 LTIP. However, no such action will be made which would impair the rights of the holder of an Award, without such holder’s consent, provided that no such consent will be required if the Committee determines in its sole discretion and prior to the date of any Change of Control that such amendment or alteration either is required or advisable in order for the Company, the 2018 LTIP or the Award to satisfy any law or regulation or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard. Stockholder approval is required to: (a) increase the maximum number of shares for which Awards may be granted; (b) reduce the price at which Options or SARs may be granted below the price provided for in the 2018 LTIP;(c) reduce the exercise price of outstanding Options or SARs; (d) extend the term of the 2018 LTIP; (e) change the class of persons eligible to participate in the 2018 LTIP; or (f) otherwise amend the 2018 LTIP in any manner requiring stockholder approval by law or under the applicable stock exchange listing requirements.
Clawback
Each Agreement will provide that a Participant whose negligent, intentional or gross misconduct contributes to the Company’s having to restate all or a portion of its financial
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statements, will immediately forfeit the Participant’s Awards, and the Participant shall be required to reimburse the Company in respect of any Shares issued or payments made under the 2018 LTIP in the period covered by such financial statements, as determined in each case, by the Committee in good faith. Any Awards granted under the 2018 LTIP (including any amounts or benefits arising from such Awards) may also be subject to any clawback or recoupment arrangements or policies the Company establishes from time to time.
U.S. Federal Income Tax Consequences
The following is a brief summary of the principal United States federal income tax consequences of transactions under the 2018 LTIP, based on current United States federal income tax laws. This summary is not intended to be exhaustive, does not constitute tax advice and, among other things, does not describe state, local or foreign tax consequences, which may be substantially different.
Non-Qualified Stock Options
Generally, a Participant will not recognize taxable income on the grant or vesting of anon-qualified stock option. Upon the exercise of anon-qualified stock option, a Participant will recognize ordinary income in an amount equal to the difference between the market price of the Shares received on the date of exercise and the Option cost (number of Shares purchased multiplied by the exercise price per Share). The Company will ordinarily be entitled to a deduction on the exercise date equal to the ordinary income recognized by the Participant upon exercise.
Incentive Stock Options
No taxable income is recognized by a Participant on the grant or vesting of an incentive stock option. If a Participant exercises an incentive stock option in accordance with its terms and does not dispose of the Shares acquired within two years after the date of the grant of the incentive stock option or within one year after the date of exercise, the Participant will be entitled to treat any gain related to the exercise of the incentive stock option as capital gain (instead of ordinary income). However, the excess of the market price over the exercise price of the Shares acquired is an item of adjustment in computing the alternative minimum tax of the Participant. In this case, the Company will not be entitled to a deduction by reason of the grant or exercise of the incentive stock option. If a Participant holds the Shares acquired for at least one year from the exercise date and does not sell or otherwise dispose of the Shares for at least two years from the grant date, the Participant’s gain or loss upon a subsequent sale will be long-term capital gain or loss equal to the difference between the amount realized on the sale and the Participant’s
basis in the Shares acquired. If a Participant sells or otherwise disposes of the Shares acquired without satisfying the required minimum holding periods, such “disqualifying disposition” will give rise to ordinary income equal to the excess of the market price of the Shares acquired on the exercise date (or, if less, the amount realized upon the disqualifying disposition) over the Participant’s tax basis in the Shares acquired. The Company will ordinarily be entitled to a deduction equal to the amount of the ordinary income resulting from a disqualifying disposition.
Stock Appreciation Rights
Generally, a Participant will not recognize taxable income upon the grant or vesting of a SAR, but will recognize ordinary income upon the exercise of a SAR in an amount equal to the cash amount received upon exercise (if the SAR is cash-settled) or the difference between the market price of the Shares received from the exercise of the SAR and the amount, if any, paid by the Participant in connection with the exercise of the SAR. The Participant will recognize ordinary income upon the exercise of a SAR regardless of whether the Shares acquired upon the exercise of the SAR are subject to further restrictions on sale or transferability. The Participant’s basis in the Shares will be equal to the ordinary income attributable to the exercise and the amount, if any, paid in connection with the exercise of the SAR. The Participant’s holding period for Shares acquired pursuant to the exercise of a SAR begins on the exercise date. Upon the exercise of a SAR, the Company will ordinarily be entitled to a deduction in the amount of the ordinary income recognized by the Participant.
Restricted Stock
A Participant generally will not be taxed at the time a Restricted Stock Award is granted but will recognize taxable ordinary income when the Award vests or otherwise is no longer subject to a substantial risk of forfeiture. The amount of taxable income will be the market price of the Shares at that time.
Participants may elect to be taxed at the time of grant by making an election under Section 83(b) of the Internal Revenue Code within 30 days of the award date. If a Restricted Stock Award subject to the Section 83(b) election is subsequently canceled, no tax deduction will be allowed for the amount previously recognized as income, and no tax previously paid will be refunded. Unless a Participant makes a Section 83(b) election, dividends paid to a Participant on Shares of an unvested Restricted Stock Award will be taxable to the Participant as ordinary income. If the Participant made a Section 83(b) election, the dividends will be taxable to the Participant as dividend income.
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The Company will ordinarily be entitled to a deduction at the same time and in the same amounts as the ordinary income recognized by the Participant. Unless a Participant has made a Section 83(b) election, the Company will also be entitled to a tax deduction, for dividends paid on unvested Restricted Stock Awards.
Restricted Stock Units
A Participant will generally not recognize taxable income on a RSU Award until Shares (or cash) subject to the Award are distributed. The amount of ordinary income will be the market price of the Shares on the date of distribution (or the amount of cash distributed). Any dividend equivalents paid on unvested RSUs are taxable as ordinary income when paid to the Participant.
The Company will ordinarily be entitled to a tax deduction at the same time and in the same amounts as the ordinary income recognized by the Participant. The Company will also be entitled to a deduction on any dividend equivalent payments made to the Participant.
New Plan Benefits
Any awards under the 2018 LTIP will be at the discretion of the Committee and future award amounts cannot be determined at this time.
The full text of the proposed plan is attached as Exhibit B to this Proxy Statement and incorporated by reference.
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Murphy Oil Corporation is an independent exploration and production (“E&P”) company with a portfolio of global offshore and North American onshore assets delivering high margin production. Murphy produces oil and natural gas in the United States, Canada and Malaysia. The Company’s long-term strategy as an independent E&P company is focused on the following key priorities that management believes will drive value for its stockholders: (1) develop differentiated perspectives in underexplored basins and plays; (2) continue to be a preferred partner to national oil companies and regional independents; (3) provide balance to the global offshore business by developing unconventional onshore plays in North America; (4) develop and produce fields in a safe, responsible, timely and cost effective manner; and (5) achieve and maintain a sustainable, profitable, high margin portfolio.
This Compensation Discussion and Analysis (“CD&A”) provides stockholders with an understanding, reflects this leadership and these values. Thank you to each of our major investors who provided thoughtful comments on this updated layout and content. We welcome feedback from all investors both on this, the Company’s compensation philosophy, objectives, policiesCD&A, and practices in place during 2017, as well as factors considered byother general matters, throughout the Executiveyear.
As Murphy’s Compensation Committee Chair, I want to share, on behalf of the Board of Directors (referred to in this CD&A as the “Committee”) in making compensation decisions for 2017. Forour committee and my fellow board colleagues that we value your reference, the Company’s CD&A is outlined in the following sections:investment and your support.
Laura A. Sugg
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This CD&A focuses18 MURPHY OIL CORPORATION
Pay at Murphy: The Key Facts Right Up Front
Who did we pay?
Murphy Oil Corporation provides employment to 725 people and we support many more jobs via our supply chains and community involvement. While all of our employees’ compensation is important to us, we are required by regulation to report on the compensation of the Company’s Named Executive Officers (“NEOs”) listed below, whose compensation is set forth in the Summary Compensation table and other compensation tables contained in the proxy statement.for 2023:
Officer(s) | Age | Years with Murphy | Shares owned outright1 | |||||||||
Roger W. Jenkins Chief Executive Officer2 | 62 | 22 | 1,148,086 | |||||||||
Thomas J. Mireles Executive Vice President and Chief Financial Officer | 51 | 18 | 141,842 | |||||||||
Eric M. Hambly President and Chief Operating Officer2 | 49 | 17 | 311,138 | |||||||||
E. Ted Botner Executive Vice President, General Counsel and Corporate Secretary2 | 59 | 22 | 184,184 | |||||||||
Daniel R. Hanchera Senior Vice President, Business Development | 66 | 16 | 80,464 | |||||||||
| 1 |
Shares of common stock of the Company beneficially owned as of February 20, 2024. For more information, see section titled “Our Stockholders”. |
| 2 | During 2023, Mr. Jenkins served as our President |
| Mr. Hambly served as our Executive Vice President, | |
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and Corporate Secretary. Mr. Hambly and Mr. Botner were promoted to the roles listed in this table effective February 1, 2024. In connection with Mr. Hambly assuming the role of President, Mr. Jenkins’ title was changed to Chief Executive Officer, effective February 1, 2024. |
The Company’s compensation plansDuring 2023, NEOs bought -0- shares in the open market and practices are designed to align the financial interests of the above NEOs with the financial interests of its stockholders. To that end, NEOs are provided with a competitive base salary, an annual cash bonus opportunity based on the achievement of specific goals aligned with stockholder value creation and long-term incentives.sold 14,500 shares.
What did we pay in 2023?
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THE COMPANY’S 2017 OPERATIONAL AND FINANCIAL HIGHLIGHTS
During fiscal year 2017, Murphy implemented a more comprehensive effort to build an even more dynamic exploration and production company. The Company continued to focus on delivering high-margin production from a diversified portfolio while continuing to reduce costs. This was achieved while funding the $976 million annual capital program and maintaining a competitive dividend yield from operating cash flows. The Company maintained approximately $1.0 billion cash and cash equivalents on the balance sheet over the course of 2017. Murphy achieved production of approximately 164 thousand barrels of oil equivalent per day and replaced 123% of total reserves with one year finding and development costs of $13.09 per barrel of oil equivalent. The Onshore business continued to increase itslow-breakeven well count and the exploration portfolio was replenished with strategic lower-risk, appropriate working interest opportunities. The Company believes that over the long-term, attaining its key strategic business objectives is fundamental to delivering total shareholder returns. Murphy’s specific achievements in 2017 include:
Kaybob Duvernay
Tupper Montney
U.S. Onshore
Offshore
Exploration
Financial
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IMPACT OF 2017 COMPANY PERFORMANCE ON EXECUTIVE COMPENSATION
Murphy has structured its cash and equity-based compensation program to position approximately 90% of the CEO’s and75%-80% of the other NEO’s target total direct compensation opportunity(“TTDC”)1 for each of our NEOs inat-risk compensation components tied to the achievement of short- and long-term performance criteria aligned with the Company’s business objectives. Actualat-risk compensation was lower than this targeted opportunity in 2017 due to reductions in long-term incentives received. In the judgment of the Committee, this reduced grant strategy fairly addressed the impact on the Company from the significant oil price collapse and still provided management with an opportunity to earn competitive long-term award values. Short-term incentives are paid in the form of annual cash bonus opportunities tied to the achievement of specific performance goals aligned with stockholder value creation. Long-term incentives combine performance-based restricted stock units (referred to in this CD&A as “PSUs” and time-based restricted stock units (referred to in this CD&A as “RSUs”) and stock options to provide a compensation opportunity aligned with the Company’s long-term stock performance, delivered through awards that are performance based in absolute and relative terms, while also encouraging retention. 2023 was:
| · | $9,314,500 for Roger W. Jenkins |
| · | $3,392,500 for Thomas J. Mireles |
| · | $3,474,200 for Eric M. Hambly |
| · | $2,183,620 for E. Ted Botner |
| · | $1,553,550 for Daniel R. Hanchera |
Each NEO’s TTDC was comprised of a base salary (cash), [target] cash-based Annual Incentive Plan (“AIP” or bonus) opportunity, [target] stock-based long-term incentive compensation (LTI) opportunity, each reflecting what is consistent with our goals and values stated above and each described in more detail in the pages that follow.
Murphy will celebrate its 74th anniversary in 2024, and it retains its founding family’s values, and its belief in the alignment of pay and sustainable performance:
CEO Compensation
Modest adjustments to 2023 target compensation: to better align pay to be competitive with the peer group used for benchmarking compensation:
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Mr. Jenkins’ received a 2.9% adjustment to his base salary, increasing his salary to $1,070,000. |
ACTIONS RELATED TO 2017 PERFORMANCE
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2015
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2016
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2017
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Year 1
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50.60%
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122.00%
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139.40%
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Year 2
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131.40%
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139.40%
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TBD
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Year 3
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138.20%
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TBD
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TBD
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Cumulative Years1-3
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101.10%
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TBD
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TBD
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Total
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105.33%
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TBD
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TBD
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remained unchanged. |
| · | His intended 2023 target LTI compensation opportunity did not materially change from 2022. The Committee granted Mr. Jenkins LTI compensation for 2023 with an intended targeted grant date value of $6,800,000, which was a 3% increase from his intended targeted grant date value of his annual LTI awards approved by the Committee for each of 2022, 2021 and 2020. |
| 1 | Includes base salary (cash), target cash-based annual incentive plan (AIP or Bonus) opportunity and target stock-based long-term incentive compensation (LTI) opportunity. |
Note: For more information on the “Committee’s Oversight and Processes” and “Factors Influencing Our Pay Designs and Decision Making”, see pages 29 and 30.
2024 PROXY STATEMENT 19
The CEO recognized an increase in his total target direct compensation for fiscal year 2017 in consideration
Actual bonus paid at 105.4% of bothtarget: Based on the Company’s results for 2023 and individualthe AIP performance during the year. In February 2017, the Committee elected to hold the CEO’s base salary fixed at the level established at the end of fiscal year 2014 which was $1,300,000.metrics, Mr. Jenkins’ annual incentive award (cashactual cash bonus payable(payable in first quarter 2018) was paid at the level of $2,159,703,2024) totaled $1,522,503, which represents 123.06%105.4% of his target award opportunity, a level commensurate with thoseother AIP participants including non-executive employees.
Reported value of other plan participants. In February 2017,2023 equity grants differs from the Committee grantedintended target value: Despite the CEO long-term incentive compensation withCommittee’s approval of a $6,800,000 grant date fair value for Mr. Jenkins’ 2023 LTI award, representing a 3% increase over the previous three years, the reported value in the 2023 Summary Compensation Table (page 32) and Grants of $7,480,580. Plan-Based Awards Table (page 33) is $8,826,424. This discrepancy primarily arises from changes in share price and valuation methods mandated for SEC reporting under FASB ASC Topic 718. This variance stems from two main factors:
| · | Determining number of shares: The Committee-approved targeted grant date value was converted into restricted stock units and performance stock units by dividing it by the average high/low Murphy stock price on the grant date. |
| · | Accounting for performance units with total shareholder return (“TSR”) condition: SEC rules necessitate reporting the grant date fair value of Mr. Jenkins’ LTI awards using a Monte Carlo simulation method under FASB ASC Topic 718. This method differs from the Committee’s approach in setting intended targeted grant date values. As a result, reported values may deviate from approved grant date values. |
In aggregate, Mr. Jenkins’ total direct compensationTTDC for 20172023 was $10,940,283$9,314,500, which is a 62%an approximate 2.9% increase in total compensation from his 20162022 level of $6,766,910. In 2016, Mr. Jenkins’ long-term incentive compensation was granted significantly below target and in 2017, the Committee determined to address this matter to remain competitive with the Company’s peer group while also remaining compliant with the provisions of the 2012 LTI Plan.$9,044,000.
In February 2017, the Committee increased the base salaries for the other NEOs to bring these salaries closer to the 50th
percentile after two consecutive years in which the Company elected to keep executive base salaries fixed. This decision was based on both the CEO’s feedback as to each NEO’s performance and information provided by Pay Governance which indicated current base salary levels were below the target market positioning.
The Company values the feedback and insights that it receives from its stockholders through ongoing dialogue. At the 2017 Annual Meeting, a proposal seeking an advisory vote on executive compensation for the Company’s NEOs (see “Tabular Information for Named Executive Officers”) was submitted to stockholders. Stockholders endorsed the Company’s NEO compensation, with over 97% of the votes cast indicating approval.
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| Base Salary | ||||||
| Annual Incentive | Equity Incentives | |||||
Target Compensation | ✓ | Target opportunity | Approved LTI target value of awards granted during each year | |||
Realizable Compensation1 | ✓ | Actual bonus paid | Value of awards granted during each year based on year-end stock price |
| 1 | Realizable compensation for 2019, 2020 and 2021 includes the year-end value of performance units adjusted for actual performance over the full three-year performance period. |
Note: The amounts reflected above may differ from the amounts required to be reported by SEC rules and direct investors to see the Summary Compensation Table for additional information on the compensation amounts required to be reported for the NEOs for 2023 pursuant to SEC rules.
20 MURPHY OIL CORPORATION
What major pay changes did we make in 2023?
None. Our focus was on stability—no sudden, too frequent or troubling changes:
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| · | No novel new metrics or pay categories |
| · | No lowering of performance targets or use of discretion to increase realized amounts |
| · | No change to our pay or engagement calendars or practices |
Pay Elements: What We Do”Designed, Targeted and “What We Don’t Do”Paid
Murphy is committed to developing and implementing executive compensation and corporate governance policies which are directly aligned with the best interests of our stockholders. In this regard, we have adopted executive compensation practices which are considered to be “best practices” and which will ensure that we have put stockholder interests in the forefront. The following table lists the practices that Murphy has implemented which describe the best practices we have adopted as “What We Do” as well as a listing of practices identified as “What We Don’t Do” that we consider not to be aligned with our stockholders’ interests.2023 Compensation Structure
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| · | Annual bonus is tied to pre-determined financial and operational performance goals |
| · | LTIs are comprised of performance-based restricted stock units (“PSUs”) and time-based restricted stock units (“RSUs”) delivered via awards that are performance-based in both absolute and relative terms |
| · | In combination with base salary, our incentive compensation programs provide a majority of NEO compensation in a form that is at-risk and performance-based: |
| CEO | Other NEOs (Average) | |||||||
Portion of cash compensation (salary + target bonus) that is based on annual performance goals | 57 | % | 46 | % | ||||
Portion of TTDC that is tied to specific performance criteria | 70 | % | 59 | % | ||||
Portion of TTDC that is based directly on long-term growth in value per share | 73 | % | 61 | % | ||||
Portion of TTDC at risk for financial performance, stock price performance, and continued employment | 89 | % | 79 | % | ||||
2023 Peer Group
The Committee oversees and approvesAs recommended by Meridian, we use the compensation of the NEOs. The Committee currently consists of four members, all of whom have been determined by the Board to satisfy the heightened independence requirements of the NYSE and the Company’s categorical independence standards. The Nominating & Governance Committee recommends nominees for appointment to the Committee annually and as vacancies or newly created positions occur. Committee members are appointed and approved by the Board and may be removed by the Board at any time. Members of the Committee during 2017 were Neal E. Schmale (Chair), T. Jay Collins, Walentin Mirosh and Jeffrey W. Nolan.
The Committee reviews and approves corporate goals and objectives relevant to the CEO’s and other NEO’s compensation and evaluates the CEO’s performance in light of these goals and objectives. Any decisions regarding the CEO’s compensation are made solely by the Committee based on that evaluation. For NEOs other than the CEO, the Committee considers the performance evaluations made by the CEO and the recommendations of the CEO.
The Committee administers and makes recommendations to the Board with respect to the Company’s incentive and equity-based compensation plans, and it reviews and approves awards granted under such plans.
As set forth in its charter, which can be found on the Company’s websitehttp://ir.murphyoilcorp.com/phoenix.zhtml?c=61237&p=irol-govHighlights, the Committee has the sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of director, CEO or senior executive compensation and has the sole authority to approve the consultant’s fees and other retention terms. Advice and assistance from internal or external legal, accounting or other advisors is also available to the Committee. In 2017, the Committee again retained Pay Governance as an independent compensation consultant. All Pay Governance invoices were approved by the Committee’s Chair prior to payment. In its role as an advisor to the Committee, Pay Governance attended all three Committee meetings in 2017 and provided the Committee with objective and expert analyses, independent advice and information with respect to executive and director compensation. Pay Governance does not provide any other consulting services to the Committee or to the Company, other than those dealing with executive compensation and the compensation ofnon-employee directors. The Committee annually evaluates the performance and independence of Pay Governance. In 2017, Pay Governance delivered a letter to the Committee that provided full disclosure relating to Pay Governance’s relationship to the Company, taking into account the SEC’s Consultant Independence Factors and Pay Governance’s Independence Policy. The Committee has determined that there are no business or personal relationships between Pay Governance and the members of the Committee or the
Company’s executive officers that may create a conflict of interest impairing Pay Governance’s ability to provide independent objective advice to the Committee. Pay Governance provides the Committee with, among other things, an analysis of trends and compensation data for general industry, the oil and gas industry and a selectsame group of comparator peer companies within the oilfor 2023 compensation and gas industry. In 2017 the Committee used two separate peer groupsTSR assessments, except for adjustments due to mergers, acquisitions and bankruptcies, as follows:
| Valuation | Total Shareholder Return | Returns | ||||||||||||||||||||||
Company | Market Cap ($BN) | EV ($BN) | 1 Yr. | 3 Yr. | 10 Yr. | Dividend Yield | ||||||||||||||||||
APA Corporation (APA) | $ | 11.0 | $ | 17.7 | (21.2 | %) | 165.3 | % | (49.4 | %) | 2.8 | % | ||||||||||||
Callon Petroleum Company (CPE) | $ | 2.2 | $ | 4.1 | (12.6 | %) | 146.2 | % | (50.4 | %) | 0.0 | % | ||||||||||||
Coterra Energy, Inc. (CTRA) | $ | 19.2 | $ | 20.9 | 8.9 | % | 90.0 | % | (14.8 | %) | 4.6 | % | ||||||||||||
Devon Energy Corporation (DVN) | $ | 29.0 | $ | 34.9 | (21.9 | %) | 249.5 | % | 2.7 | % | 6.3 | % | ||||||||||||
Hess Corporation (HES) | $ | 44.3 | $ | 52.2 | 2.9 | % | 183.8 | % | 104.9 | % | 1.2 | % | ||||||||||||
Kosmos Energy Ltd. (KOS) | $ | 3.1 | $ | 5.3 | 5.5 | % | 185.5 | % | (37.1 | %) | 0.0 | % | ||||||||||||
Marathon Oil Corporation (MRO) | $ | 14.1 | $ | 19.4 | (9.3 | %) | 278.2 | % | (19.4 | %) | 1.8 | % | ||||||||||||
Matador Resources Company (MTDR) | $ | 6.8 | $ | 9.2 | 0.6 | % | 381.7 | % | 211.7 | % | 1.4 | % | ||||||||||||
Ovintiv Inc. (OVV) | $ | 12.0 | $ | 19.1 | (10.9 | %) | 225.5 | % | (40.1 | %) | 2.7 | % | ||||||||||||
Range Resources Corporation (RRC) | $ | 7.3 | $ | 9.0 | 23.0 | % | 361.9 | % | (62.1 | %) | 1.1 | % | ||||||||||||
SM Energy Company (SM) | $ | 4.5 | $ | 5.7 | 13.2 | % | 547.0 | % | (50.6 | %) | 1.9 | % | ||||||||||||
Southwestern Energy Company (SWN) | $ | 7.2 | $ | 11.5 | 12.0 | % | 119.8 | % | (83.3 | %) | 0.0 | % | ||||||||||||
Talos Energy, Inc. (TALO) | $ | 1.8 | $ | 3.0 | (24.6 | %) | 72.7 | % | N/A | 0.0 | % | |||||||||||||
Median | $ | 7.3 | $ | 11.5 | 0.6 | % | 185.5 | % | (38.6 | %) | 1.4 | % | ||||||||||||
Murphy Oil Corporation (MUR) | $ | 6.6 | $ | 8.8 | 1.9 | % | 279.6 | % | (7.5 | %) | 2.6 | % | ||||||||||||
Percentile | 33%ile | 33%ile | 55%ile | 75%ile | 77%ile | 74%ile | ||||||||||||||||||
22 MURPHY OIL CORPORATION
For reasons listed above in designing the compensation programs for the Company: the compensationsetting our 2023 peer group, we removed: PDC Energy, Inc. and CNX Resources Corporation. For purposes of calculating TSR metric performance for PSU awards, for merged or acquired companies, the TSR peer group.
The Committee annually engages Pay Governancewill continue to determine appropriate comparator companies for purposesbe tracked by the value of peer compensation analysis. In 2014, Pay Governance recommended a bifurcated approach resulting in the selection of one group for general compensation comparisons and a larger second group for the Total Shareholder Return (TSR) calculation. In 2015, Pay Governance recognized the Company’s mix of onshore, offshore, domestic and international operations and selected a group of companies with business and labor rationales similar to those of the Company for compensation benchmarking. Pay Governance further noted that the relatively small number of companies in that group, coupled with a wide divergence in market capitalization, could lead to distortions in the calculation of relative total shareholder return and recommended that a larger group of companies be utilized for this purpose. Pay Governance reaffirmed this bifurcated approach in 2016 and 2017 and the table below sets forth the two sets of peer groups for each of 2017 and 2018.successor company shares into which they were converted.
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In addition to comparator company information,these peers, the Committee uses Meridian and Mercer Human Resource ConsultingU.S. Energy 27 surveyCompensation Survey information to determine competitive market pay levels for the NEOs. The Committee also reviews a special analysis of the competitive pay levels of the Company’s compensation peer group in establishing pay levels for the CEO and NEOs.
The Committee generally takes action on compensation matters, including the grant of long-term incentive awards, at its meeting held in conjunction with the February Board meeting. The exercise price of stock options is based on the average of the high and the low market price for the Company’s shares on the date of grant. At this meeting the Committee also considers adjustments to NEO base salary, annual incentive bonus opportunities and grants of long-term incentive awards. The Committee also meets at other times during the year as necessary and, in 2017, met three times.
The Committee bases its executive compensation decisions on principles designed to align the interests of executives with those of stockholders. The Committee intends compensation to provide a direct link with the Company’s objectives, business strategies and financial results. In order to motivate, attract and retain key executives who are critical to its long-term success, the Company believes that its pay package should be competitive with others in the oil and gas industry. In addition, the Company believes that executives should be rewarded for both the short-term and long-term success of the Company and, conversely, be subject to a degree of downside risk in the event that the Company does not achieve its performance objectives. In order to promote the long-term, as well as short-term interests of the Company, and to more closely align the interests of its key employees to those of its stockholders, the Company uses a mix of short-term and long-term incentives in its compensation packages. Individuals in primary positions to influence the growth of stockholder wealth have larger portions of their total compensation delivered in the form of equity-based long-term incentives. To this end, executives have a compensation package which includes a base salary, participation in a cash-based annual incentive plan, participation in an equity-based long-term incentive plan and certain other compensation, including customary benefits as discussed in Section D of Elements of Compensation in this CD&A. In addition, the compensation package for the CEO includes limited personal use of Company aircraft. The Company believes that this combination of base salary, short-term incentives, long-term incentives and employee benefits provides the best balance between the need for the Company to provide executive compensation which is competitive in the marketplace and
therefore necessary for recruiting and retention, and the desire to have management’s interests, motivations and prosperity aligned with the interests of the Company’s stockholders.
As in the prior year, the Company had no employment agreements with the NEOs in effect in 2017. In connection with his appointment to President and CEO, Mr. Jenkins has a Severance Protection Agreement dated August 7, 2013. The Company had no other severance protection, change in control or termination agreements with the NEOs in effect in 2017. Under the terms of the Company’s incentive plans, in the event of a change in control, each NEO would retain his “earned” compensation and all outstanding equity awards held by each NEO would vest, become immediately exercisable or payable, or have all restrictions lifted as may apply to the type of the award. Entry into employment or other agreements with the NEOs may be considered from time to time.
At the Company’s Annual Meeting of stockholders held on May 10, 2017, the Company’s stockholders had the opportunity to cast an advisory vote (a“say-on-pay” proposal) to approve the compensation of the NEOs, as disclosed in the Proxy Statement for the meeting. Stockholders approved thesay-on-pay proposal by the affirmative vote of over 97% of the shares cast on that proposal. While the Committee believes this affirms stockholders’ support of the Company’s approach to executive compensation during 2016, and therefore did not materially change the overall approach to executive compensation in 2017, the Committee will continue to consider the outcome of the Company’ssay-on-pay votes when making future compensation decisions for the NEOs.
At the 2017 Annual Meeting, the Company’s stockholders had the opportunity to cast an advisory vote (a“say-on-frequency” proposal) on how often the Company should include asay-on-pay proposal in its proxy statements for future annual meetings. Stockholders had the choice of voting to have thesay-on-pay vote every year, every two years or every three years. The frequency receiving the highest number of votes was every year, which was consistent with the Board’s recommendation. In accordance with this vote, the Board decided to hold thesay-on-pay advisory vote every year.
TAX AND ACCOUNTING CONSIDERATIONS
Section 162(m) of the Code generally limits the tax deductibility of annual compensation paid by public companies to certain executive officers to $1 million. Prior to the enactment of the Tax Cuts and Jobs Act of 2017 (TCJA), Section 162(m) provided an exemption from this limitation for “qualified performance-based compensation.” However, the TCJA repealed the “qualified performance-based compensation” exemption, effective for taxable years beginning after December 31, 2017. The TCJA provides
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transition relief for certain contractual arrangements in place as of November 2, 2017; however, the scope of this transition relief is uncertain, and in the absence of any rulemaking at this time, the full impact of the TCJA’s changes to Section 162(m) of the Code on our executive compensation program is not yet known.
The Committee takes into consideration the accounting and tax implications of compensation and benefit programs, including with respect to the tax deductibility of compensation paid under Section 162(m) of the Code. The 2017 Annual Incentive Plan (the “2017 Plan”) and the 2012 Long-Term Incentive Plan (the “2012 LTI Plan”) were intended, prior to the repeal of the “qualified performance-based compensation” exception, to provide the Committee the ability to grant performance-based compensation that was deductible under Section 162(m) of the Internal Revenue Code. The Committee has not adopted a policy requiring compensation to be tax deductible to maintain flexibility in structuring executive compensation to attract highly qualified executive talent and to further our business goals and compensation philosophy.
In order to monitor the risk associated with executive compensation, in October 2017, the Committee reviewed a report from Pay Governance assessing the risks arising from the Company’s compensation policies and practices. The Committee agreed with the report’s findings that these risks were within the Committee’s ability to effectively monitor and manage and the programs do not encourage unnecessary or excessive risk-taking and do not create risks that are reasonably likely to have a material adverse effect on the Company.
The Company’s executive compensation program includes a base salary, participation in an annual cash-based incentive plan, long-term incentive compensation, employee benefits and limited perquisites. The Committee believes that a majority of an executive officer’s total direct compensation opportunity (which includes base salary, annual and long-term incentive opportunities) should be performance-based. The Committee determines an executive’s total direct compensation opportunity based on compensation peer company information and survey data provided by Pay Governance to ensure the program is competitive with the compensation peer group in order to attract and retain talented executives.
The elements of the Company’s executive compensation program are outlined in more detail herein.
The objectives of the base salary component of compensation include:
Our starting point is the median, or 50th percentile of |
| · | We adjust this target both higher and lower based on each NEO’s duties and responsibilities, prior experience, job performance, company performance, job and company tenure, and marketplace trends |
In February 2023, the Committee approved these adjustments in each NEO’s base salary from the 2022 base. These adjustments, as well as information regarding each NEO’s base salary over the last five fiscal years, are set forth in the table below. Our CEO’s base salary continues to remain below pre-pandemic levels:
| 2023 | 2022 | 2021 | April 2020 | February 2020 | 2019 | |||||||||||||||||||
Roger W. Jenkins | $ | 1,070,000 | $ | 1,040,000 | $ | 1,000,000 | $ | 866,125 | $ | 1,332,500 | $ | 1,332,500 | ||||||||||||
Thomas J. Mireles | $ | 575,000 | $ | 500,000 | $ | 400,000 | $ | 323,825 | $ | 431,766 | $ | 423,300 | ||||||||||||
Eric M. Hambly | $ | 618,000 | $ | 600,000 | $ | 575,000 | $ | 490,000 | $ | 550,515 | $ | 514,500 | ||||||||||||
E. Ted Botner | $ | 490,900 | $ | 467,500 | $ | 425,000 | $ | 375,000 | $ | 418,620 | $ | 410,410 | ||||||||||||
Daniel R. Hanchera | $ | 430,600 | $ | 418,000 | $ | 400,000 | $ | 314,085 | $ | 418,779 | $ | 410,568 | ||||||||||||
Annual Incentive Plan or Bonus
| · | AIPs are designed to |
Our starting point for each NEO’s AIP is the 50th percentile of |
The Company targetsCommittee maintained the median (“50th percentile”) of competitive market pay levels for the base salary of the NEOs. The Company targets the 50th percentile because it believes that it allows the organization to recruit, attract, and retain qualified management talent having the requisite skills and competencies to manage the Company and to deliver additional value for stockholders. In practice, some executives are paid above or below the 50th percentile because of their individual job performance, time in the position, and/or tenure with the Company, and in some cases, potential for advancement. Executives’ salaries are ultimately determined based on the market pay levels, as well as a combination of experience, duties and responsibilities, individual performance, Company performance, general economic conditions and marketplace compensation trends. The Committee made adjustments to the base salaries of the NEOs in 2017 as follows:
Named Executive Officer
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2016 Base Salary
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2017 Base Salary
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Adjustment for 2017
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Roger W. Jenkins
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John W. Eckart*
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Eugene T. Coleman
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Michael K. McFadyen**
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Walter K. Compton
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| 541,000
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The objectives of the Company’s2023 annual incentive program are:target for each NEO at the same percentage as 2022:
Roger W. Jenkins | 135 | % | ||
Thomas J. Mireles | 90 | % | ||
Eric M. Hambly | 90 | % | ||
E. Ted Botner | 80 | % | ||
Daniel R. Hanchera | 75 | % | ||
2024 PROXY STATEMENT 23
For 2023, the AIP’s performance metrics and weightings were:
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FINANCIAL |
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AIP Free Cash Flow (FCF)2The Committee targets the 50th percentile of competitive market pay levels for its annual target incentive
compensation because the Committee believes it allows the Company to motivate its executives. Executives have the opportunity to be compensated above the median of market pay levels when the Company has above market performance based on established performance measures. In February 2017, the Committee reviewed an analysis of the top executives prepared by Pay Governance. For 2017, the target bonus percentages of the Company’s NEOs were at the median of the competitive market and no adjustments were made to the target bonus percentage amount.
The 2017 Plan provides the Committee with a list of performance criteria to be used for determination of performance-based awards.
For 2017, the performance criteria utilized by the Committee included a mixture of a safety performance metric, an environmental performance metric, financial metrics, and operating metrics designed to work across the Company.
Lease Operating Expense (LOE)/BOE3 General and Administrative (G&A) Expense4 | 25 25 15 15 | % % % % | These financial goals focus on cost management, financial discipline and encourage employees to manage costs relative to gross margins and the commodity price environment. | |||
SUSTAINABILITY
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Spill Rate | Inclusion of a spill metric reflects the Company’s commitment to environmentally sound | |||||
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| 1 | ROACE is calculated by dividing the Company’s EBITDA for fiscal year 2023 by the sum of the opening plus closing Capital Employed (total equity + total long-term debt + total short-term debt) divided by two (EBITDA/ACE). EBITDA and ACE may be adjusted for items which affect the representation of EBITDA to underlying performance, e.g. unrealized mark to market movements on commodity hedging. |
AIP Free Cash Flow, for the purpose of compensation, is an internal management metric and is calculated as “accrual basis” operating cash flow less “value of work done” capital expenditures and may be adjusted for certain items to ensure fair comparability to target. |
| 3 | A barrel of oil equivalent (BOE) is a term used to summarize the amount of energy that is equivalent to the amount of energy found in one barrel of crude oil. One barrel of oil is generally deemed to have the same amount of energy content as 6,000 cubic feet of natural gas. |
General and Administrative Expense is a |
| 5 | Individual metrics are evenly weighted. |
| 6 | Defined as the combined number of incidents for both contractors and employees worldwide per 200,000 work hours. The lower the result, the better the performance. |
| 7 | Defined as the hydrocarbon spill volume, as defined under International Association of Oil & Gas Producers (IOGP), greater than one barrel per million BOEs produced. Like TRIR, the lower the spill rate, the better our environmental performance. |
PERFORMANCE TARGETS AND GOAL-SETTING PROCESS
The Company maintains its annual incentive program for NEOs and other executives and key employees under the Company’s Annual Incentive Plan (the “2023 AIP”). The Committee considered several factors in setting target performance levels for performance metrics under the 2023 AIP, including the operational and macroeconomic environment in which we operated during 2023. Specifically, target performance metrics were calibrated based upon the following considerations:
| · | Commodity price environment: The estimated impact of lower oil and natural |
With respect
| · | Macroeconomic environment: The estimated impact of inflation on the Company’s business in 2023, due to which the oil and gas industry, and hence the Company, observed higher costs for goods and services used in exploration and production operations. |
| · | Strategic and operating plan for 2023: Target performance metrics were also determined following an assessment of the Company’s planned activities for the year. These activities for 2023 included an increased focus on production from offshore assets which have a higher LOE cost than onshore assets due to the higher expense of platform facilities. |
Considering these factors and to ensure that our 2023 AIP continued to appropriately incentivize our executives to maximize shareholder value, the NEOs,Committee determined it was appropriate to set 2023 AIP performance targets for G&A expense at $175 million and LOE/BOE at $10.94. The 2023 targets for these metrics were more rigorous than the 2022 metrics, given the significant impact of inflationary pressures in 2023 and our planned focus on more capital-intensive offshore assets for the year.
24 MURPHY OIL CORPORATION
The Committee set the GHG emissions performance target for 2023 at the same challenging level as the 2022 target reflecting our continued commitment to achieve our long-term climate goals.
The following table summarizes the performance metrics, respective weighting of performance metrics, threshold, target and maximum performance levels and weighted performance scores based on actual performance, used in determining their respectiveeach NEO’s annual incentive awardsaward for 2017. The targets2023. Based on the Company’s 2023 performance versus the goals originally established in February 2023, the 2023 AIP generated a payout of 105.4% of target for performance metrics were primarily based on historical data, budgets and forecasts. Under the terms of the 2017 Plan, achievement of 100% of the target rate results in the payment of 100% of individual target awards. For NEOs, achievement of the minimum of the performance range results in the payment of 62.5% of individual target awards and achievement of the maximum results in the payment of 250% of individual target awards, in each case subject to a discretionaryNEOs.
| 2023 AIP Metrics and Results | ||||||||||||||||||||||||||||
Metric | Weighting | Threshold | Target | Maximum | Actual Result | Payout Achieved | Weighted Payout | |||||||||||||||||||||
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EBITDA/ACE | 25 | % | 24.0 | % | 29.5 | % | 35.1 | % | 28.3 | % | 89 | % | 22.3 | % | ||||||||||||||
AIP Free Cash Flow | 25 | % | $ | 755 MM | $ | 1,115 MM | $ | 1,475 MM | $ | 1,027.8 | 88 | % | 22.0 | % | ||||||||||||||
G&A | 15 | % | $ | 184 MM | $ | 175 MM | $ | 166 MM | $ | 171.9 | 134 | % | 20.2 | % | ||||||||||||||
LOE/BOE | 15 | % | $ | 12.03 | $ | 10.94 | $ | 9.85 | $ | 10.94 | 100 | % | 15.0 | % | ||||||||||||||
SUSTAINABILITY1 | 20 | %1 |
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TRIR |
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| 0.41 | 0.33 | 0.00 | 0.28 | 115 | % | 7.7 | % | |||||||||||||||||
Spill Rate (bbls per MMBOE) |
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| 4.0 | 2.3 | 0.0 | 3.2 | 74 | % | 4.9 | % | |||||||||||||||||
GHG Emissions Intensity |
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| 14,000 | 12,250 | 10,600 | 10,435 | 200 | % | 13.3 | % | |||||||||||||||||
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Individual metrics are evenly weighted. |
downward adjustment by the Committee of up to 100%. Upward adjustments are not permitted for NEOs and no awards are payable if performance falls below the minimum.
| 2017 AIP Metrics and Results | ||||||||||||||||||||||||||||
| Metric | Threshold | Target | Maximum | Actual Results | Payout Achieved (%) | Weighting | Result | |||||||||||||||||||||
TRIR
|
| 0.40
|
|
| 0.28
|
|
| 0.00
|
|
| 0.40
|
|
| 62.55
| %
|
| 7.50%
|
|
| 4.69%
|
| |||||||
Spill Rate
|
| 0.20
|
|
| 0.13
|
|
| 0.00
|
|
| 0.05
|
|
| 201.92
| %
|
| 7.50%
|
|
| 15.14%
|
| |||||||
EBITDA/BOE
|
| $ 18.54
|
|
| $ 19.52
|
|
| $ 21,47
|
|
| $ 19.52
|
|
| 125.00
| %
|
| 15.00%
|
|
| 18.75%
|
| |||||||
LOE/BOE
|
| $ 9.69
|
|
| $ 9.23
|
|
| $ 8.31
|
|
| $ 7.89
|
|
| 250.00
| %
|
| 15.00%
|
|
| 37.50%
|
| |||||||
Reserves Replacement
|
| 75.00
| %
|
| 100.00
| %
|
| 140.00
| %
|
| 113.00
| %
|
| 165.63
| %
|
| 25.00%
|
|
| 41.41%
|
| |||||||
Production Target (BOEPD)
|
| 148,101
|
|
| 164,557
|
|
| 197,468
|
|
| 163,536
|
|
| 121.12
| %
|
| 30.00%
|
|
| 36.34%
|
| |||||||
Total
|
| 153.83%
|
| |||||||||||||||||||||||||
The Committee exercised its negative discretion in adjusting annual cash payments under the2023 AIP for NEOs for 2017 bonuses, which were payable in the first quarter of 2018. These downward adjustments included an across-the-board cut by 12% to 20% for all earned awards to the NEOs bringing NEO payouts to a level commensurate with those of other plan participants, even though the Company met or exceeded four of the six 2017 operational, safety and strategic performance goals. Mr. Eckart and Mr. Coleman received a small reduction than other NEOs based on the feedback of the CEO as to their performance during 2017. Actual payouts are set forth in the table below:
| Named Executive Officer | 2017 Base Salary Earnings | Target Bonus as a Percentage of Base Salary Earnings* | Target Bonus Award (Base Salary Earnings Multiplied by Target Bonus Percentage) | EarnedAward (153.83% of Target) | Negative Discretion Applied | Actual Amount Awarded | ||||||||||||||||
Roger W. Jenkins
|
| $1,300,015
|
| 135%
|
| $1,755,020
|
|
| $2,699,747
|
|
| 20%
|
|
| $2,159,703
|
| ||||||
John W. Eckart
|
| $ 562,227
|
| 85%
|
| $ 477,893
|
|
| $ 735,143
|
|
| 12%
|
|
| $ 646,905
|
| ||||||
Eugene T. Coleman
|
| $ 574,888
|
| 75%
|
| $ 431,166
|
|
| $ 663,263
|
|
| 12%
|
|
| $ 583,652
|
| ||||||
Michael K. McFadyen*
|
| $ 461,334
|
| 75%
|
| $ 346,001
|
|
| $ 532,253
|
|
| 20%
|
|
| $ 425,789
|
| ||||||
Walter K. Compton
|
| $ 555,884
|
| 65%
|
| $ 361,325
|
|
| $ 555,825
|
|
| 20%
|
|
| $ 444,646
|
| ||||||
Named Executive Officer | 2023 Base Salary | Target Bonus as a Percentage of Base Salary | Target Bonus Award (Base Salary Multiplied by Target Bonus Percentage) | Earned Award (105.4% of Target) | ||||||||||||
Roger W. Jenkins | $ | 1,070,000 | 135 | % | $ | 1,444,500 | $ | 1,522,503 | ||||||||
Thomas J. Mireles | $ | 575,000 | 90 | % | $ | 517,500 | $ | 545,445 | ||||||||
Eric M. Hambly | $ | 618,000 | 90 | % | $ | 556,200 | $ | 586,235 | ||||||||
E. Ted Botner | $ | 490,900 | 80 | % | $ | 392,720 | $ | 413,927 | ||||||||
Daniel R. Hanchera | $ | 430,600 | 75 | % | $ | 322,950 | $ | 340,389 | ||||||||
2024 PROXY STATEMENT 25
Long-term Incentive Compensation
The objectives
Plan and grant amounts. Our 2020 Long-Term Incentive Plan (“2020 LTI Plan”) enables us to adapt to changing opportunities and circumstances by authorizing a variety of the Company’s long-term incentive program include:LTI awards including, in addition to our RSUs and PSUs:
stock options |
stock appreciation rights |
performance shares |
phantom units |
dividend equivalents |
Long-term incentive NEO compensation for 2017 included the grant of stock options, RSUs and PSUs under the Company’s 2012 LTI Plan. Stock options are designed to align the
interests of executives with the performance of the Company over the long term. The exercise or grant price of stock options equals the average of the high and the low of the Company’s common stock on the date of the grant. Stock options are inherently performance-based because option holders realize no economic benefit unless the Company’s stock price increases in value subsequent to the grant date. This aligns the optionees’ interests with that of stockholders. The vesting of PSUs is based upon the Company’s TSR relative to that of the TSR peer group (as described above).
On January 31, 2017, the Committee granted equity awards pursuant to the 2012 LTI Plan to each of the NEOs at that time. The value was split 54% in PSUs, 17% in stock options and 29% in RSUs on an expected value basis the 2017 award allocation was based upon the 50th percentile competitive market practice and the reduction of the number of stock options available to remain compliant under the 2012 LTI Plan. The Committee believes these awards are effective and appropriate methods of equity
| · | other stock-based incentives |
The goal of our LTI program is to align management and directors with owners to grow long-term value per share.
The Company granted 908,380 shares as full value awards in 2023; this was 0.59% of our shares outstanding. This leaves 2,115,598 shares available for future awards as of December 31, 2023, under the 2020 LTI Plan.
| 2023 | 2022 | 2021 | 2020 | 2019 | ||||||||||||||||
PSUs granted | 409,160 | 595,700 | 1,156,800 | 999,700 | 957,600 | |||||||||||||||
RSUs granted | 499,220 | 343,400 | 385,600 | 340,600 | 327,900 | |||||||||||||||
Total shares granted | 908,380 | 939,100 | 1,542,400 | 1,340,300 | 1,285,500 | |||||||||||||||
Our starting point for annual LTI grants is the mid-range of competitive market pay | |||
