DEVON ENERGY CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERSDirector Since: 2014
Committees
• Chair, Dividend
• Audit (2014-2023)
• Governance, Environmental, and Public Policy (2014-2023)
| | | Principal occupation or employment • President and Owner, Cross Creek Energy Corporation | | | Time | | 8:00 a.m. (Central time) on Wednesday, June 3, 2020
| | | Place | | Devon Energy Center Auditorium
333 W. Sheridan Avenue
Oklahoma City, Oklahoma 73102
We intend to hold our annual meeting in person. However, we are actively monitoring the coronavirus(COVID-19); we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state, and local governments may impose. In the event it is not possible or advisable to hold our annual meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Any alternative arrangements for the meeting will be publicly announced on the Company’s “Investors” webpage at www.devonenergy.com and filed with the SEC. If you are planning to attend our meeting, please check the webpage one week prior to the meeting date. As always, we encourage you to vote your shares prior to the annual meeting.
| | | Items of Business | | • Elect eleven directors for a term of one year;
• Ratify the appointment of the independent auditors for 2020;
• Approve, in an advisory vote, executive compensation; and
• Transact such other business as may properly come before the meeting or any adjournment of the meeting.
| | | Who Can Vote | | Stockholders of record at the close of business on April 6, 2020, are entitled to notice of and to vote at the meeting. You may examine a complete list of stockholders entitled to vote at the meeting during normal business hours for the ten days prior to the meeting at our offices and at the meeting.
| | | Voting by Proxy | | Please submit a proxy as soon as possible so that your shares can be voted at the meeting in accordance with your instructions. You may submit your proxy by:
• internet;
• telephone; or
• mail.
For specific information, please refer to the section entitled “Frequently Asked Questions About the Annual Meeting” beginning on page 86.
Certain other directorships • National Fuel Gas Company. Serves on the audit and financing committees • Putnam Mutual Funds (vice chair, independent board of trustees) • First Reserve Corporation (senior advisor) • Previously served on the board of Buckeye Partners, L.P. | | | Barbara M. Baumann joined the Board in January 2014 and was appointed Board Chair in January 2023. She is president of Cross Creek Energy Corp., an energy advisory firm with investments in domestic oil and natural gas. She is currently on the board of National Fuel Gas Company and serves on the audit and financing committees. Baumann is a senior advisor for First Reserve Corp., a private equity firm focused on energy, and she serves as vice chair of the independent board of trustees of the Putnam Mutual Funds. Previously, Baumann served in various areas of finance and operations during an 18-year career with Amoco (later BP Amoco). Those roles included chief financial officer of Ecova Corp., Amoco’s wholly owned environmental-remediation unit, and vice president of Amoco’s San Juan Basin business unit. She earned a bachelor’s degree from Mount Holyoke College and a master’s in business administration from the Wharton School of the University of Pennsylvania. Ms. Baumann brings to the Board her extensive knowledge of financial matters and the energy industry and her experience as an accomplished leader and business professional. Her insights on investor dynamics deepen our Board’s understanding on ESG-related initiatives. Please refer to the Director Skills and Experience Matrix on page 10 for more information. | | |
| | | | | | | | | | | | | | | | | Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on June 3, 2020:
Our 2020 Proxy Materials, including the 2020 Proxy Statement and Annual Report on
Form10-K for the year ended December 31, 2019, are available at
www.proxydocs.com/dvn.
BY ORDER OF THE BOARD OF DIRECTORS
Christopher J. Kirt
| | | | Age: 71 Director Since: 2014 Committees • Chair, Reserves • Compensation • Governance, Environmental, and Public Policy (2014-2018) | | | | Principal occupation or employment • Former Executive Vice President Corporate Governance for Technology and Secretary Oklahoma City, Oklahoma
April 22, 2020Services, Chevron
PROXY STATEMENT TABLE OF CONTENTSCertain other directorships
• Previously served on the board of trustees of the Texas A&M Foundation
DEVON AT A GLANCE• Past director of the Society of Petroleum Engineers
We are furnishing you this Proxy Statement in connection with the solicitation of proxies by our Board of Directors (Board) to be used at the Annual Meeting and any adjournment thereof. The Annual Meeting will be held on Wednesday, June 3, 2020, at 8:00 a.m. (Central time).
All references in this Proxy Statement to we, our, us, Devon, or the Company refer to Devon Energy Corporation.
The Gravity• Former director of the MomentNational Action Council for Minorities in Engineering, Inc.
| | | ItJohn E. Bethancourt joined the Board in January 2014. He is not businessa retired Chevron executive, serving most recently as usual at Devon. A health crisis is gripping many communities,executive vice president for technology and the global economy has been shuttered. We are concerned about the health of our employees and contractors, as well as our global citizens.
Devon prides itself on a work atmosphere built on optimism, teamwork, creativity, and resourcefulness. At a time of crisis, those fundamental values animate an organization that is working extraordinarily hard through unprecedented challenges. We are supporting our employees. We have an incident management team that is focused onservices, where he oversaw Chevron’s environmental, health and safety efforts, major project management, procurement and our management team frequently communicatesmining operations. Bethancourt began his career with our employees on developmentsGetty Oil Co. in 1974 and advice related toCOVID-19. We are also taking swift actions to manage our business. We are committed to drilling fewer wellsjoined Texaco Inc. through a 1984 merger. He earned a bachelor’s degree in petroleum engineering from Texas A&M University.
Mr. Bethancourt is an experienced and protecting our balance sheetaccomplished leader. His broad competencies in response to historically low oil prices. We will bounce back from this crisis. Our values give usmatters impacting the vitality to do so. We also know thatenergy industry strengthen the U.S. and global economies are resilient and needcollective capabilities of the affordable energy resource that we produce in order to recover.
Overview
Devon explores for, develops, and produces oil, natural gas, and natural gas liquidsBoard. His experience in areas relating to human resources, environmental matters, and energy-related infrastructure has provided valuable perspectives for the Board.
Please refer to the Director Skills and Experience Matrix on page 10 for more information. | | |
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ANN G.
FOX | | | | Age: 46 Director Since: 2019 Committees • Compensation • Governance, Environmental, and Public Policy | | | | Principal occupation or employment • President and Chief Executive Officer, Nine Energy Service, Inc. Certain other directorships • Nine Energy Service, Inc. • American Petroleum Institute • Baker Institute (board of advisors) • Groton School | | | Ann G. Fox joined the board of directors in June 2019. She is president, chief executive officer, and a board member of Nine Energy Service, Inc. (Nine), a Houston-based oilfield services company. Fox joined Nine in 2013 and previously served as chief financial officer and vice president of strategic development. Prior to joining Nine, she worked for SCF Partners, a private-equity firm supporting the oilfield services and equipment industries. Fox also has experience as an investment banking analyst and as a Marine, where she served several tours of duty in Iraq on a team that reported directly to Gen. David Petraeus. She received a bachelor’s degree in diplomacy and security in world affairs from Georgetown University and a master’s in business administration from Harvard University. Fox currently serves on the board of the American Petroleum Institute, the board of advisors of Rice University’s Baker Institute, and the board of trustees of Groton School. Ms. Fox brings to the Board her significant and unique career experiences, knowledge of the energy industry and capital markets, and perspective as a leader. Her recognition of upstream business and operational developments contributes to the Board’s overall performance. Please refer to the Director Skills and Experience Matrix on page 10 for more information. | | |
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GENNIFER F. KELLY | | | | Age: 50 Director Since: 2023 Committees • Audit • Reserves | | | | Principal occupation or employment • Former Chief Operating Officer and SVP of Western Midstream Partners Certain other directorships • Delek Logistics Partners, L. P. Serves on the conflicts, EHS, and technology committees • Lone Star College Foundation. Serves on the audit committee | | | Gennifer Kelly joined the board of directors in January 2023. She is currently on the board of Delek Logistics, where she serves as chair of the technology committee and as a member of the conflicts and environmental, health and safety committees. Kelly has 25 years of oil and gas industry has long been active onshoreexperience in both upstream and midstream sectors. She previously held the United States. We have a substantial portfoliorole of explorationchief operating officer and production assetsSVP of Western Midstream Partners and vice president of marketing for Anadarko Petroleum Corporation. Prior to her role at Western Midstream, Kelly led operations that provide stable, environmentally responsible production and a platform for future growth. As part of a focused development program, our drilling activity is concentrated in the Delaware Basin of southeast New Mexico, the Eagle Ford play in south Texas, the Powder River Basin in the Rockies, and the STACK play in west-central Oklahoma.
| | | | | Devon has built a world-class
U.S. oil portfolio
| | Devon has a disciplined
returns-driven strategy
| | | Premier acreage position in top basins
| | Plan designed to compete with top S&P 500 sectors | | | Achievingbest-in-class operating results
| | Focused on higher-margin oil production | | | Deep inventory of opportunities
| | Aggressively improving cost structure and maintaining a strong balance sheet
|
Financial and Operating Performance
During 2019, we furthered our transition to a U.S.oil-focused company. We sold our Canadian business, generating $2.6 billion in proceeds, and entered into an agreement to sell our largest natural gas asset, the Barnett Shale. Through this transition, we positioned the Company for oil production growth and improved price realizations and field-level margins. As we streamline our
DEVON AT A GLANCE (cont’d)
portfolio of U.S. oil assets, we are aggressively pursuing an improved cost structure to further expand margins. We have realized annualized cost savings by reducing well costs, production expenses, financing costs, and G&A expenses.
Commodity prices are uncertain and volatile, so we strive to maintain a strong balance sheet,transformation efforts, as well as adequate liquiditystrategic planning, portfolio management, and financial flexibility,asset management teams for Anadarko. She holds a master’s degree in orderbusiness administration and a bachelor’s degree in petroleum engineering from Louisiana State University.
Ms. Kelly brings to operate competitively in all commodity price cycles. Our capital allocation decisions are made with attention to these financial stewardship principles, as well as the prioritiesBoard her extensive knowledge of funding our core operations, protecting our credit ratings,the energy industry, including strategic and paying and growing our stockholder dividend. Sustainability Performance
Devonregulatory matters. She is committed to delivering results to our stakeholders in the right way. As a leading independent oil and natural gas company, that means producing energy to help meet global demand, while generating strong financial returns and long-term value for our stockholders. For Devon, it also means operating a safe, environmentally responsible, and ethical business in the field and in the office.
Based in Oklahoma City, we employ approximately 1,700 men and women in the U.S., operating under the motto: Commitment Runs Deep. We take this to heart and apply it to everyonean experienced executive who has led significant corporate transformational efforts. She has a stake in our success – investors, employees, and neighbors alike.broad understanding of key matters considered by boards of directors of energy companies.
Our employees’ knowledge, expertise, skills,Please refer to the Director Skills and creativity are the keys to Devon’s success. We look to our core values to build the workforce we need: we seek to hire the best people and expect them to do the right thing, deliver results, be a team player, and be a good neighbor. In return, we provide competitive compensation and benefits, including:Experience Matrix on page 10 for more information.
medical, dental, and vision health care coverage for all employees and their families;
health savings and dependent-care flexible spending accounts;
a 401(k) savings plan with a generous Devon match for contributions by U.S. employees;
education, training, health, and wellness programs;
maternity and parental leave for the birth or adoption of a child and an adoption assistance program; and
alternate work schedules, flexible work hours, part-time work options, and telecommuting support.
DEVON AT A GLANCE (cont’d)
At Devon, we encourage everyone to take the time and steps necessary to perform work safely. Our top priority is to maintain the health and safety of our employees, contractors, and the public.
We set challenging corporate goals each year to drive safety performance improvements.
We have an Environmental Health and Safety (EHS) Council with responsibility for setting strategy and ensuring implementation to continuously improve our safety systems.
In 2019, we further expanded our “Hearts and Minds” training, a leadership-focused, safety workshop designed to sharpen our focus on safety culture, stopwork-for-safety authority, strong communication and commitment to continuous improvement, integrity, positive attitude, and situational awareness.
We only work with approved contractors and vendors who complete our supplier qualification process and agree to meet policy, insurance, and health and safety requirements.
Our operational spending is overwhelmingly weighted to contractors earning our highest safety ratings.
To identify and reduce safety risks,employee-led teams perform audits of our operations. Our business units then develop and implement specific actions to address the audit findings, which are recorded and tracked in an ongoing effort to improve safety performance.
Being a good neighbor is a core value that drives Devon’s commitment to environmental stewardship. As a responsible oil and gas business, we share a fundamental respect for the environment and constantly strive to improve the overall quality of life in the communities where we live and work.
In June 2019, Devon took a significant step in its ESG efforts by establishing a target to reduce methane emissions for its oil and natural gas production. Devon has committed to achieve a methane-intensity rate of 0.28% or lower by 2025.
We reduced methane emissions by 20% over the 2016-2018 timeframe, the most recent period for which data is available.
In late 2018, we published a climate change assessment report that shows Devon’s assets are likely to be well-positioned to remain profitable, even in an aggressivelow-carbon scenario.
For our operations in the Delaware Basin, we have increased our volume of reused water tenfold since 2015.
We are keenly focused on preventing spills. In 2018, the most recent year for which data is available, we lost 0.0011% of barrels produced, continuing a multi-year trend.
In 2019, we ramped up our evaluations of new emissions-detection technologies, including optical gas imaging cameras, sensor-based continuous monitoring, facility flyovers, and even remote detection via satellite.
We have reported our greenhouse gas (GHG) emission reductions efforts to the CDP Climate Change Report for the past 15 years. Our 2019 score affirmed our industry leadership in this vital area.
Our score on the 2019 CDP Water Report, detailing our water conservation and protection investments and activities, also illuminates our industry leadership.
DEVON AT A GLANCE (cont’d)
We engage with our stakeholders daily to build relationships founded in trust and cooperation. We place a high priority on our commitment to work together to find solutions benefitting people and communities where we operate. Our culture of integrity and accountability extends to all our stakeholders, including our employees and their families, stockholders, neighbors, landowners, mineral-rights holders, policymakers, lawmakers, suppliers, vendors, and service companies.
In collaboration with expert local stakeholders, we integrate land use and biodiversity considerations into early planning and all operating phases for our wells.
We have formal processes to receive complaints in person, by phone or online, and to respond with the appropriate level of urgency.
As we seek to operate in a socially responsible way, part of that is supporting and strengthening safe and educated communities in areas where we operate. Our social investments ($6.2 million in 2019) target STEM (science, technology, engineering, and math) education, public safety, social services, and community vibrancy.
We have published a comprehensive Political Activity and Lobbying Report in each of the past three years in direct response to stockholder feedback. We expect to annually publish a report to make it easy for all stakeholders to see our expenditures for corporate political contributions.
We have published our Statement on Human Rights, which spells out our strong commitment to human rights principles and social progress.
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WHO WE AREKELT
Our Nominees for ElectionKINDICK
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BARBARA M. BAUMANN
| | | | Committees
• Chair, Governance
• Audit
Certain other directorships
• Ms. Baumann is on the board of National Fuel Gas Company and serves on the audit and financing committees. She is also a member of the independent board of trustees of Putnam Mutual Funds where she chairs the audit, compliance and distributions committee. In addition, she is a senior advisor for First Reserve Corporation, a private equity firm focused on energy. She previously served on the boards of Buckeye Partners, L.P.; Hat Creek Energy Corporation; Cody Resources Management, LLC; CVR Energy; SM Energy; and UNS Energy.
Principal occupation or employment
• President and Owner, Cross Creek Energy Corporation
Education
• Ms. Baumann earned a bachelor’s degree from Mount Holyoke College and a master’s in business administration from the Wharton School of the University of Pennsylvania.
| | | | Barbara M. Baumann is a former BP Amoco executive who currently serves as president and owner of Cross Creek Energy Corporation, an energy advisory firm with investments in the domestic oil and gas business. Prior to founding her own firm in 2003, Ms. Baumann was Executive Vice President of Associated Energy Managers, a private equity firm investing in small energy companies. Ms. Baumann began her18-year career with Amoco (later BP Amoco) in 1981. She served in various areas of finance and operations, including Chief Financial Officer of Ecova Corporation, Amoco’s wholly-owned environmental remediation business, and Vice President of Amoco’s San Juan Basin business unit.
Ms. Baumann brings to the Board her extensive knowledge of the energy industry and her experience as an accomplished leader and business professional.
| | | Age: 64
Director Since: 2014
| | | | | | | Age: 68 Director Since: 2021 Committees • Chair, Governance, Environmental, and Public Policy • Compensation • Audit (2021-2023) • Dividend (2021-2023) • Lead Director (2021-2023) | | | | Principal occupation or employment • Advisory Partner at Bain & Company (formerly Chief Financial Officer and Partner) Certain other directorships • Previously served on WPX’s board of directors, including as lead director and chairman of its nominating, governance, environmental and public policy committee • Previously served on The Advisory Board Company’s board until its acquisition in 2017 | | |
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JOHN E. BETHANCOURT
| | | | Committees
• Compensation
• Reserves
Certain other directorships
• Previously served on the board of trustees of the Texas A&M Foundation and is a past director of both the Society of Petroleum Engineers and the National Action Council for Minorities in Engineering, Inc.
Principal occupation or employment
• Former Executive Vice President for Technology and Services, Chevron
Education
• Mr. Bethancourt earned a bachelor’s degree in petroleum engineering from Texas A&M University.
| | | | John E. Bethancourt is a retired Chevron executive. He most recently served as Executive Vice President for Technology and Services where he was responsible for overseeing Chevron’s environmental, health and safety efforts, major project management, procurement, and mining operations. Mr. Bethancourt began his career in 1974 with Getty Oil Company and joined Texaco Inc. in 1984 when the two companies merged. During his career with Texaco and later Chevron, Mr. Bethancourt served in various executive leadership roles overseeing business development, worldwide production operations, and human resources.
Mr. Bethancourt brings to the Board his extensive knowledge of the energy industry and his experience as an accomplished leader and business professional.
| | | Age: 68
Director Since: 2014
| | | Kelt Kindick joined the board of directors in January 2021 following Devon’s merger with WPX. Kindick became a member of WPX’s board of directors in 2013. In December 2012, Kindick retired from Bain & Company Inc., a management consulting firm, serving most recently as chief financial officer and partner. He joined Bain & Company in 1980, was elected partner in 1986, served as managing director of the firm’s Boston office from 1991 to 1996, and as chairman of the firm’s executive committee from 1998 to 1999. Kindick also served as chief financial officer of the Commonwealth of Massachusetts from 2003 to 2004. He received a bachelor’s degree from Franklin & Marshall College and a master’s in business administration from Harvard Business School. Mr. Kindick brings to the Board his experience in strategic roles across a broad range of industries and in the public sector. His insights on governance, finance and other key strategic matters enhances Board discussions. Please refer to the Director Skills and Experience Matrix on page 10 for more information. | | |
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JOHN KRENICKI JR. | | | | Age: 60 Director Since: 2018 Committees • Audit • Reserves • Compensation (2018-2021) • Governance, Environmental, and Public Policy (2018-2021) | | | | Principal occupation or employment • Vice Chairman at Clayton, Dubilier & Rice, LLC (CD&R) Certain other directorships • Non-executive chairman of Brand Industrial Holdings, Inc., Artera Services, and Wilsonart International Holdings LLC., which are privately held entities controlled by CD&R • Non-executive chairman of Cornerstone Building Brands, Inc., which was taken private in a transaction with CD&R in 2022 | | |
John Krenicki Jr. joined the board of directors in June 2018. He is vice chairman at the private-equity investment firm CD&R and is chairman of four privately held entities controlled or jointly controlled by CD&R. Previously, Krenicki built a 29-year career at General Electric Co., where he served as vice chairman as well as president and CEO of GE Energy, among other executive positions. He has a master’s degree in management from Purdue University and a bachelor’s degree in mechanical engineering from the University of Connecticut. He also is a member of the National Petroleum Council.
WHO WE ARE (cont’d)Mr. Krenicki brings to the Board his extensive knowledge of the overall value chain in the energy industry and his experience as an executive, leader, and owner of a range of enterprises. His recognition of market dynamics and entrepreneurial change deepens the capabilities of the Board.
| | | | | | | | | Please refer to the Director Skills and Experience Matrix on page 10 for more information. | | | | | | | | | 
|
ANN G.
FOX
| | | | | | | | | | Certain other directorships
• Ms. Fox is on Nine Energy Service, Inc.’s board of directors. She also serves on the board of the Groton School and is a member of the HBS Alumni Board (Harvard Business School).
Principal occupation or employment
• President and Chief Executive Officer, Nine Energy Service, Inc.
Education
• Ms. Fox received a bachelor’s of science in diplomacy and security in world affairs from Georgetown University’s Walsh School of Foreign Service. She also earned a master’s of business administration from Harvard Business School.
| | | | Ms. Fox is President and Chief Executive Officer of Nine Energy Service, Inc. (Nine), a Houston-based oilfield services company with operations throughout the U.S. and Canada. She joined Nine in 2013 and served as Chief Financial Officer and Vice President of Strategic Development before she was named President and Chief Executive Officer in 2015. Prior to joining Nine, she worked for SCF Partners, a private-equity firm supporting the oilfield services and equipment industries. Her responsibilities at SCF Partners included evaluating and executing new investment opportunities and supporting ongoing portfolio initiatives. She also participated in the firm’s investor committee and held the position of managing director. Upon graduation from college, Ms. Fox joined the private sector as an investment banking analyst in New York then joined the Marines, where she served several tours of duty in Iraq on a team that reported directly to General David Petraeus.
Ms. Fox brings to the Board her significant and unique career experiences, knowledge of the energy industry and capital markets, and perspective as a leader.
| | | Age: 43
Director Since: 2019
| | | 
KARL F. KURZ | | | | Age: 61 Director Since: 2021 Committees • Compensation • Governance, Environmental, and Public Policy • Reserves | | | | Principal occupation or employment • Former Managing Director of CCMP Capital Advisors LLC and Chief Operating Officer of Anadarko Petroleum Corporation Certain other directorships • American Water Works Company, Inc. Serves as non- executive chairman • Texas Pacific Land Corporation. Serves on the compensation committee • Previously served on WPX’s board of directors and its audit committee • Previously served on the board of SemGroup Corporation | | | Karl F. Kurz joined the board of directors in January 2021 following Devon’s merger with WPX. Kurz became a member of WPX’s board of directors in 2014. He currently serves as non-executive chairman of American Water Works Company, Inc. Kurz is also on the board of Texas Pacific Land Corporation, where he serves on the compensation committee. Previously, from 2009 until his retirement in 2012, Kurz served as managing director, co-head of the energy group and member of the investment committee at CCMP Capital Advisors LLC, a leading global private equity firm focused on energy investments. Prior to joining CCMP, he spent nine years with Anadarko Petroleum Corporation, most recently serving as chief operating officer responsible for overseeing the company’s global exploration and production, marketing, midstream, land, technology, and service businesses. Kurz holds a bachelor’s of science, magna cum laude, in petroleum engineering from Texas A&M University, and he is a graduate of Harvard Business School’s Advanced Management Program. Mr. Kurz brings to the Board his significant experience in the energy industry and expertise in petroleum engineering. He has served in leadership positions and provides candid perspectives on the Company and the industry. Please refer to the Director Skills and Experience Matrix on page 10 for more information. | | |
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MICHAEL N. MEARS | | | | Age: 60 Director Since: 2023 Committees • Audit • Governance, Environmental, and Public Policy | | | | Principal occupation or employment • Former Chairman, President and CEO of Magellan Midstream Partners Certain other directorships • Sempra Energy. Serves on the corporate governance and safety, sustainability and technology committees • Previously served on Magellan Midstream Partners’ board until his retirement in 2022 | | | Michael Mears joined the board of directors in January 2023. He is currently on the board of Sempra where he serves on the corporate governance and safety, sustainability and technology committees. Mears was the chairman, president and CEO of Magellan Midstream Partners from 2011 until his retirement in April 2022. He joined Magellan Midstream Partners in 2002 when the company was formed and was the company’s chief operating officer from 2008 to 2011. Prior to Magellan, Mears worked in a range of management positions for its predecessor company, Williams Pipeline Co. He holds a bachelor’s degree in chemical and petroleum refining engineering from the Colorado School of Mines. Mr. Mears has significant leadership experience in the energy industry. As a former chief executive officer of a large corporation, he is able to provide perspectives on a broad range of issues that are important for a corporation with Devon’s scale and operations. His background in marketing and energy-related infrastructure adds valuable perspectives to the Board. Please refer to the Director Skills and Experience Matrix on page 10 for more information. | | |
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ROBERT A. MOSBACHER, JR. | | | | Age: 71 Director Since: 2009 Committees • Chair, Compensation • Governance, Environmental, and Public Policy • Reserves (2019-2021) • Lead Director (2015-2019) | | | | Principal occupation or employment • Chairman of Mosbacher Energy Company Certain other directorships • Center for Global Development • Previously served as a director of Calpine Corporation from 2009 until the company was acquired in 2018 • Previously served as a member of Devon’s Board from 1999 until 2005 | | |
WHO WE ARE (cont’d)Robert A. Mosbacher, Jr. was appointed to the board of directors in April 2009. Mosbacher previously served as a member of the board from 1999 until 2005, at which time he resigned to accept an appointment by the Bush administration to serve as president and chief executive officer of the Overseas Private Investment Corp., an independent agency of the U.S. government that supports private capital investment in emerging markets around the world. He is chairman of Mosbacher Energy Co., an independent oil and gas exploration and production company. He is chair of the Development Advisory Council for the U.S. International Development Finance Corporation, which supports investment in the developing world. Mosbacher also currently serves on the board of the National Archives Foundation. He has a bachelor’s degree in political science from Georgetown University and a law degree from Southern Methodist University.
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DAVID A.
HAGER
| | | | Certain other directorships
• Mr. Hager currently serves on the Board of the American Petroleum Institute. Mr. Hager previously served on the boards of the managing member and general partner of EnLink Midstream, LLC and EnLink Midstream Partners, LP, respectively, and on their compensation committees.
Principal occupation or employment
• President and Chief Executive Officer, Devon Energy Corporation
Education
• Mr. Hager has a bachelor’s degree in geophysics from Purdue University and a master’s degree in business administration from Southern Methodist University.
| | | | David A. Hager was elected by the Board of Directors
Mr. Mosbacher brings to the Board his leadership experience in the energy industry, as well as in state and federal government. His strategic mindset and broad understanding of the Company provides important perspectives for the Board. Please refer to the position of President and Chief Executive Officer on August 1, 2015. He joined the Company in March 2009 and held the position of Executive Vice President Exploration and Production from 2009 until 2013 and Chief Operating Officer from 2013 to 2015. Mr. Hager started in the oil and gas business as a geophysicist with Mobil Corp. He joined Sun Oil in 1981 and continued with Oryx Energy following its spin off from Sun Oil. During his tenure at Oryx, he managed new ventures and deepwater projects around the world. After Oryx merged with Kerr-McGee in 1999, Mr. Hager managed the company’s worldwide deepwater exploration and production operations and assumed responsibility for all exploration and production activities in 2003. He later served as Kerr-McGee’s Chief Operating Officer until it was acquired by Anadarko Corp. in 2006.
| | | Age: 63
Director Since: 2016
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ROBERT H. HENRY
| | | | Committees
• Audit
• Governance
Certain other directorships
• Mr. Henry is a life member of the National Conference of Commissioners on Uniform State Laws, and a member of the Council on Foreign Relations, the American Law Institute, and the William J. Holloway, Jr. American Inn of Court, Master of the Court. While a federal judge, Mr. Henry served as chair of the committee on International Relations of the Judicial Conference of the United States. He is a life and founding member of the Tenth Judicial Circuit’s Historical Society. Mr. Henry previously served on the board of LSB Industries, Inc.
Principal occupation or employment
• Attorney
Education
• Mr. Henry received his bachelor’s degree and juris doctorate from the University of Oklahoma. He has received honorary doctorate degrees from the University of Oklahoma, Oklahoma State University, the University of Tulsa, and Oklahoma City University.
| | | | Robert H. Henry is a legal and foreign relations scholar, public servant, and leader. He served as the President and Chief Executive Officer of Oklahoma City University from 2010 to 2018. Following his retirement from Oklahoma City University, Mr. Henry returned to the practice of law and serves as a mediator and arbitrator through FedArb and Phillips ADR Enterprises, P.C., leading alternative dispute resolution firms. Mr. Henry brings to the Board his experience and knowledge of the law, which enable him to provide valuable insights in the areas of governance and public policy.
Mr. Henry has had a distinguished career in public service. In 1994, President Bill Clinton appointed Mr. Henry to the United States Court of Appeals for the Tenth Circuit, where he served until June 2010, most recently as Chief Judge. Mr. Henry was elected andre-elected Attorney General of the State of Oklahoma from 1986 to 1991. He served in the Oklahoma House of Representatives from 1976 to 1986 where he was principal author of the 1986 Oklahoma General Corporation Act that moved Oklahoma law to the Delaware corporate law model.
Mr. Henry was Dean and Professor of Law at Oklahoma City University School of Law from 1991 to 1994. Mr. Henry also taught at the University of Oklahoma Honors College (Oxford Program), the University of Oklahoma College of Law, and Oklahoma Baptist University (Business Law) and served as Distinguished Judge in Residence at the University of Tulsa College of Law.
| | | Age: 67
Director Since: 2010
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MICHAEL M. KANOVSKY
| | | | Committees
• Chair, Reserves
• Audit
Certain other directorships
• Mr. Kanovsky previously served on the boards of Seven Generations Energy Ltd., Pure Technologies Ltd., TransAlta Corporation, ARC Resources Ltd., and Bonavista Energy Corporation. He also served as chairman of the board of Taro Industries and vice chairman of Precision Drilling, Inc. Heco-founded PowerLink Corporation, an electrical cogeneration company and former subsidiary of Northstar Energy Corporation, and served as its senior executive board chairman.
Principal occupation or employment
• Professional Engineer
Education
• Mr. Kanovsky received a bachelor’s degree in mechanical engineering from Queen’s University as well as a master’s degree in business administration from the Richard Ivey School of Business at Western University.
| | | | Michael Kanovsky is a Professional Engineer and has been involved with investment banking and oil and gas businesses for over 40 years. He has been President of Sky Energy Corporation since 1993. Mr. Kanovsky brings to the Board an extensive knowledge of the energy industry and finance, with a wealth of experience with Canadian assets and areas of operation.
In 1978, Mr. Kanovskyco-founded Canadian Northstar Corporation and its successor, Northstar Energy Corporation, where he was primarily responsible for strategic development, finance, and acquisitions until its acquisition by Devon Energy Corporation in 1998. In 1997, Mr. Kanovsky founded Bonavista Petroleum Ltd. Mr. Kanovsky has also held other executive positions, including Chief Executive Officer of Arrowstar Drilling and Vice President of Corporate Finance, Western Canada, for a large Canadian investment dealer.
| | | Age: 71
Director Since: 1999
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JOHN
KRENICKI JR.
| | | | Committees
• Compensation
• Governance
Certain other directorships
• Mr. Krenicki serves as chairman of Brand Industrial Holdings, Inc., PowerTeam Services, and Wilsonart International Holdings LLC., which are privately held entities controlled by Clayton, Dubilier & Rice, LLC. He also is lead director on the board of Cornerstone Building Brands, Inc. and serves as chairman of the nominating and corporate governance committee and executive committee and as a member of the compensation committee. He previously served as chairman of the board of ServiceMaster Global Holdings and CHC Group.
Principal occupation or employment
• Senior Operating Partner at Clayton, Dubilier & Rice, LLC
Education
• Mr. Krenicki earned a bachelor’s degree in mechanical engineering from the University of Connecticut and a master’s degree in management from Purdue University.
| | | | John Krenicki Jr. is a Senior Operating Partner at Clayton, Dubilier & Rice, LLC, a private investment firm. Mr. Krenicki is a former General Electric Company Vice Chairman and former President and CEO of GE Energy, GE Plastics, and GE Transportation. His most recent responsibilities included oversight of GE’s oil and gas, power and water, and energy management businesses.
Mr. Krenicki brings to the Board his extensive industrial and energy experience and his track record as an accomplished leader and strategic thinker.
| | | Age: 57
Director Since: 2018
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ROBERT A.
MOSBACHER, JR.
| | | | Committees
• Chair, Compensation
• Reserves
Certain other directorships
• Mr. Mosbacher serves on the board of the Center for Global Development. Mr. Mosbacher served as a director of Calpine Corporation from 2009 until the company was acquired in 2018. Mr. Mosbacher previously served as a member of Devon’s Board from 1999 until 2005.
Principal occupation or employment
• Chairman of Mosbacher Energy Company and Founder and Chairman of BizCorps.
Education
• Mr. Mosbacher received a bachelor’s degree in political science from Georgetown University and a juris doctorate degree from Southern Methodist University.
| | | | Robert A. Mosbacher, Jr. is an accomplished business leader with more than 30 years in the energy industry. He is chairman of Mosbacher Energy Company, an independent oil and gas exploration and production company. Mr. Mosbacher brings to the Board his extensive background in the energy industry, his leadership skills, and his economic development experience in global markets.
Mr. Mosbacher is founder and chairman of BizCorps, a Washington basednon-profit organization that places graduates of top business schools with entrepreneurs in emerging markets. In 2005, Mr. Mosbacher was appointedby President George W. Bush to theposition of President and Chief Executive Officer of the Overseas Private Investment Corporation, an independent agency of the U.S. government that supports private capital investment in emerging markets around the world. He served in that capacity until 2009. Mr. Mosbacher had a distinguished public service career that included serving as Chairman of the Board of the Texas Department of Human Services and as a staff member in the office of Senator Howard Baker of Tennessee.
| | | Age: 68
Director Since: 2009
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DUANE C.
RADTKE
| | | | Committees
• Reserves
Certain other directorships
• Mr. Radtke previously served as a director of Kris Energy Ltd. and was a member of the company’s compensation and nominating committees. He also previously served as lead director of Sabine Oil & Gas Corporation, as chairman of the American Exploration and Production Council, as a director of Smith International, Inc., and as a director of Consolidated Natural Gas Company.
Principal occupation or employment
• President and Chief Executive Officer, Valiant Exploration LLC
Education
• Mr. Radtke holds a bachelor’s degree in mining engineering from the University of Wisconsin.
| | | | Duane C. Radtke has over 45 years of experience in management, engineering, and business development in the energy industry. Mr. Radtke was named Vice Chair of Devon’s Board in late 2018 and became Chair in June 2019. He has been President and Chief Executive Officer of Valiant Exploration LLC since 2008. Mr. Radtke brings to the Board extensive knowledge of the energy business, including experience with the Company’s assets and operations.
Mr. Radtke served as the Chief Executive Officer and President of Dominion Exploration and Production, a subsidiary of Dominion Resources, Inc., from 2001 to 2007. During that period, he also served as Executive Vice President of Consolidated Natural Gas Company, a subsidiary of Dominion Resources, Inc. Prior to his tenure with Dominion Resources, Inc., Mr. Radtke was an executive with Santa Fe Snyder where he served in various capacities, including Executive Vice President of Production. Following Devon’s acquisition of Santa Fe Snyder in 2000, Mr. Radtke served as President of the Company’s international division until joining Dominion.
| | | Chair of the Board
Age: 71
Director Since: 2010
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KEITH O.
RATTIE
| | | | Committees
• Audit
• Reserves
Certain other directorships
• Mr. Rattie is a director of Valaris plc (f/k/a Ensco plc) and serves as chairman of the audit committee. He is also a director of Select Energy Services, Inc. and serves on the audit committee and as chairman of the nominating and governance committee. Mr. Rattie served on the board of Rockwater Energy Solutions, Inc. from 2011 until the company merged with Select Energy Services, Inc. in 2017.
Principal occupation or employment
• Former Chairman, President, and CEO, Questar Corporation
Education
• Mr. Rattie earned a bachelor’s of science degree in electrical engineering from the University of Washington and a master’s in business administration from St. Mary’s College.
| | | | Keith O. Rattie has more than 40 years of experience in the oil and gas industry. Mr. Rattie was President of Questar Corporation from 2001 until 2010 and Chief Executive Officer from 2002 until 2010. He also served on Questar Corporation’s board from 2001 until 2014, including as Chairman from 2003 until 2010 andNon-Executive Chairman from 2010 to 2012. Prior to his time with Questar Corporation, Mr. Rattie served as Vice President and Senior Vice President of Coastal Corporation, a diversified energy company. He also spent 19 years with Chevron Corporation in various engineering and management positions, including as General Manager of Chevron’s international gas unit.
Mr. Rattie brings to the Board his extensive experience in leadership positions in the energy industry and his ability to provide candid perspectives based on his knowledge of the oil and gas business.
| | | Age: 66
Director Since: 2019
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MARY P.
RICCIARDELLO
| | | | Committees
• Chair, Audit
• Governance
Certain other directorships
• Ms. Ricciardello recently became a member of the board of Eagle Materials Inc. where she serves on the audit committee. As of the date of this Proxy Statement, Ms. Ricciardello is also a member of the board of Noble Corporation plc where she serves as chairperson of the audit committee and as a member of the nominating and governance committee. However, she is not standing forre-election to Noble Corporation plc’s board this year, and her term as a director will expire at the company’s annual meeting, which is scheduled for May 21, 2020. Ms. Ricciardello also serves on the executive council of the National Association of Corporate Directors (NACD)Tri-Cities Chapter and received the NACD designation “Board Leadership Fellow”. She previously served on the boards of the managing member and general partner of EnLink Midstream, LLC and EnLink Midstream Partners, LP, respectively, and on their audit committees. Ms. Ricciardello was also previously a director of US Concrete and Midstates Petroleum Company. Ms. Ricciardello is an editorial advisor for the Journal of Accountancy.
Principal occupation or employment
• Former Senior Vice President and Chief Accounting Officer, Reliant Energy Inc.
Education
• Ms. Ricciardello holds a bachelor’s degree in business administration from the University of South Dakota and a master’s degree in business administration with an emphasis in finance from the University of Houston.
• In 2017, Ms. Ricciardello completed the NACD Cyber-Risk Oversight Program and earned the CERT* Certificate in Cybersecurity from Carnegie Mellon University.
| | | | Mary P. Ricciardello is a licensed Certified Public Accountant and a financial executive with over 30 years of experience in the energy industry. She brings to the Board her qualifications as a financial expert and her extensive experience in the energy industry and with respect to corporate finance and tax matters.
In 2002, Ms. Ricciardello retired after a20-year career with Reliant Energy Inc., a leading independent power producer and marketer. She served in various financial management positions with the company, including Comptroller, Vice President, and most recently Senior Vice President and Chief Accounting Officer.
| | | Age: 64
Director Since: 2007
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Director Skills and Experience Matrix on page 10 for more information. The Board is committed to maintaining a diverse and inclusive membership with varying experience, characteristics, and expertise that complement our business strategy. The matrix below provides a summary of certain key skills and experience of our
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RICHARD E. MUNCRIEF | | | | Age: 64 Director nominees. Our Director nominees, individually and as a group, possess numerous skills and experience that are highly relevant for an upstream energy company like Devon. Our Director nominees are strategic thinkers with high expectations for Devon’s performance and are attuned to the demands of proper Board oversight and good governance practices.Since: 2021 
Additional
• Dividend | | | | Principal occupation or employment • President and Chief Executive Officer, Devon Energy Corporation Certain other directorships • Williams Companies, Inc. Serves on compensation and management development and environmental, health, and safety committees • American Petroleum Institute (board of directors and the executive committee) • American Exploration & Production Council (board of directors and the executive committee) • Previously served as chairman of WPX’s board of directors | | | Richard E. Muncrief was appointed to the board of directors and elected president and chief executive officer of the company in January 2021 following Devon’s merger with WPX. Muncrief previously served as chief executive officer and chairman of the board of WPX. He became a member of WPX’s board of directors in 2014. Prior to joining WPX, he served as senior vice president, operations and resource development of Continental Resources, Inc. Muncrief was earlier employed from August 2008 through May 2009 by Resource Production Company where he served as corporate business manager. From September 2007 to August 2008 he served as president, chief operating officer, and as a director of Quest Midstream Partners, LP. From 1980 to 2007, he served in various managerial capacities with ConocoPhillips and its predecessor companies, Burlington Resources, Meridian Oil, and El Paso Exploration. Muncrief holds a bachelor’s of science in petroleum engineering technology from Oklahoma State University, where he has also been recognized as a distinguished alumnus and is a member of the College of Engineering, Architecture & Technology Hall of Fame. He is currently on the board of directors of Williams Companies and serves on the compensation and management development committee and the environmental, health, and safety committee. Muncrief also serves on the board of directors and the executive committee of the American Petroleum Institute. He is a past chairman and currently serves on the board of directors and the executive committee of the American Exploration & Production Council. Mr. Muncrief is a proven leader in the energy industry. His understanding of WPX’s and the post-Merger combined Company’s operations and assets provide valuable Board-level perspective. Please refer to the Director Skills and Experience Matrix on page 10 for more information. Six of our nominees have an educational background or work experience in petroleum engineering or other engineering professions.
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VALERIE M. WILLIAMS | | | | Age: 66 Director Since: 2021 Committees • Chair, Audit • Reserves | | | | Principal occupation or employment • Former Southwest Region Assurance Managing Partner at Ernst & Young LLP Certain other directorships • Omnicom Group, Inc. Serves on the audit and finance committees • DTE Energy. Serves on the corporate governance committee and audit committee (chair) • Franklin Templeton Funds (independent board of trustees) • Previously served on WPX’s board of directors and its audit committee | | | Valerie M. Williams joined the board of directors in January 2021 following Devon’s merger with WPX. Williams became a member of WPX’s board of directors in 2018. Williams is a member of the board of directors of Omnicom Group, Inc., a global advertising and public relations firm, where she serves on the audit and finance committees. She is also a member of the board of directors of DTE Energy, an electric and natural gas utility, where she serves as chair of the audit committee and as a member of the corporate governance committee. Williams is also a member of the independent board of trustees of Franklin Templeton funds. Williams began her career with Ernst & Young LLP in 1981 and has over 35 years of audit and public accounting experience serving numerous global companies. Prior to her retirement in 2016, Williams most recently served as the firm’s southwest region assurance managing partner, a position she assumed in 2006. She held several senior leadership positions at Ernst & Young and also served on several strategic committees, including the firm’s partner advisory council, inclusiveness council, audit innovation task force and the diversity task force. She received a bachelor’s degree from the University of North Texas and a master’s in business administration from the University of Houston. Ms. Williams brings to the Board her extensive experience as a certified public accountant, including 35 years at a premier accounting firm serving clients in the energy and technology sectors. She has strong leadership skills and experience with accounting and financial reporting matters at complex organizations. She has been designated an “audit committee financial expert” by Devon’s Board. Please refer to the Director Skills and Experience Matrix on page 10 for more information. | | |
Director Skills and Experience The Board is committed to maintaining a diverse and inclusive membership with varying experience, characteristics, and expertise that align with our business strategy. Our Director nominees, individually and as a group, have skills and experiences that are highly relevant for an upstream energy company like Devon. Fundamental skills and experiences of our Board nominees include strengths in the areas of: | • Prior service in senior leadership at a substantial business enterprise; • Experience with operations, development, or other principal functions of an energy company; • Effective communication skills, especially concerning strategy and analytical decision-making; • Acumen in the area of financial statements, cash flows, and other financial and accounting matters; and • Prior service on the board of a public company. |
The matrix below provides a summary of the background and certain other key skills and experiences of our Director nominees. | | | | | | | | | | | | | | | | | | | | | | | | Director Nominees | | 
Baumann | | 
Bethancourt | | 
Fox | | 
Kelly | | 
Kindick | | 
Krenicki | | 
Kurz | | 
Mears | | 
Mosbacher | | 
Muncrief | | 
Williams | Age | | 67 | | 71 | | 46 | | 50 | | 68 | | 60 | | 61 | | 60 | | 71 | | 64 | | 66 | Diversity | | p | | | | p | | p | | | | | | | | | | | | | | p | Key Skills and Experience | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Human Capital Mgt./Comp. | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | | | | | | | | | | | | Engineering Education/Experience | | | | ● | | | | ● | | | | ● | | ● | | ● | | | | ● | | | | | | | | | | | | | | | Finance/Capital Allocation | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | | | | | | | | | | | | Regulatory/Policy Matters | | | | | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | | | | | | | | | | | | | | Technology or Cybersecurity | | | | ● | | | | ● | | | | ● | | | | | | | | | | | | | | | | | | | | | | | Environmental Matters | | ● | | ● | | ● | | ● | | | | | | ● | | | | ● | | ● | | | | | | | | | | | | | | | Corp. Governance/Risk Mgt. | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | | | | | | | | | | | | Investment Management/Stewardship | | ● | | | | ● | | | | ● | | ● | | ● | | | | | | | | ● | | | | | | | | | | | | | Marketing/Energy-Related Infrastructure | | ● | | ● | | | | ● | | | | ● | | ● | | ● | | ● | | ● | | ● |
p = All four Directors are women. Ms. Williams is Black/African American.
| | | Tenure* The tenure of our Director nominees havereflects a balance of experience with technology or cybersecurity.and fresh perspectives. *Tenure calculated as of the date of this Proxy Statement. | | Diversity Our Director nominees voluntarily self-disclose their race, ethnicity, and gender. The aggregate of these disclosures is reflected in the diversity representation shown below. | 
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| | | | | Independence* Ten of Devon’s 11 Director nominees qualify as independent under NYSE standards and SEC regulations. *Independence reflected as of the date of this Proxy Statement. | | 
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Recent Board Appointments and Selection Process In early January 2023, the Board appointed Michael N. Mears and Gennifer F. Kelly to the Board. These appointments culminated a process that spanned several months and encompassed the steps described below. Review the Mix of Skills, Experience, and Characteristics of the Board in Light of Potential Departures At their meetings in June, Devon’s Board and Board Committees typically conduct self-evaluations and plan for the upcoming twelve months leading up to Devon’s next Annual Meeting. This evaluation considers the composition of the Board in relation to the strategic plan of the Company and other areas that are critical for the performance of the Board’s responsibilities. In June 2022, the Board identified likely near-term departures from the Board and asked the Governance, Environmental, and Public Policy (GEPP) Committee to begin a process to identify potential new Board members targeting certain skills, experience, and characteristics. Among other skills and competencies, the Board sought expertise in upstream oil and gas activities as well as energy infrastructure, particularly in light of potential Director retirements. Identify Board Candidates and Establish Resources to Assist in Search Process With Board searches, the GEPP Committee utilizes the expertise of a third-party search firm and considers potential candidates identified by other sources (e.g., other organizations that develop Board talent; referrals from stockholders, Directors, and management). Devon’s Corporate Governance Guidelines describe key
aspects of Devon’s Board recruitment. Baseline qualifications for a Board member include integrity and accountability, ability to exercise informed judgement, peer respect, and high performance standards. As with all of our Board searches, the GEPP Committee has a “Rooney Rule” policy under which it seeks to include and requires any search firm that it engages to endeavor to include, women and minority candidates in the pool from which the GEPP Committee selects potential Director candidates. Undertake In-Depth Review of Potential Board Candidates The GEPP Committee conducts a fulsome review of many potential Board candidates. From this initial screening, a preliminary group of potential candidates is identified, which leads to additional diligence on the candidates. The background of the candidates is reviewed for potential conflicts of interest. The Chair of the GEPP Committee and other Directors often meet with the candidates. The Chair of the GEPP Committee keeps the Board apprised of the status of the process. Focus Search and Perform Final Review Candidates interview with the Board. The interviews often occur in an in-person, small-group setting. The Board meets in executive session – with and without management Directors present – to discuss the candidates, arrive at a consensus on potential appointments, and consider potential Committee assignments for the candidates. A more rigorous diligence process is performed, including background checks, reference checks, and independence and related party transaction evaluation. Finalize Decision and Make Appointments The GEPP Committee reviews the results of final diligence on candidates, recommends appointments to the Board, and arrives at preliminary independence determinations and proposed Board Committee assignments for the candidates. The Board meets to review the GEPP Committee’s recommendation, approves the appointments, and takes other actions associated with appointments. Director Orientation and Continuing Education New Director Orientation Directors participate in orientation sessions as they join Devon’s Board. The sessions customarily involve providing written background materials on the Company that address business strategy, operations, performance, and corporate governance, as well as key functions at the Company such as finance, business development, human resources, EHS/ESG, marketing, supply chain, and legal and regulatory. Members of our executive leadership team meet with new Directors in a setting that provides an opportunity for open discussion. Other Directors often attend these sessions. The orientation sessions are tailored to the background and experience of the new Director. Shortly after their appointment to the Board in January, Michael Mears and Gennifer Kelly participated in an orientation session at our corporate offices in Oklahoma City. Over a two-day period, Mr. Mears and Ms. Kelly met with our executive leadership team and other senior executives, as well as our Board Chair. Director Continuing Education and Related Resources Board and Board Committee meetings serve as a critical avenue for our Directors to further their knowledge of topics impacting their core responsibilities as Directors. On-going dialogue between the Board and our executives guides the content of updates that the Board receives on a range of topics. Executives and subject
matter experts (both within and outside the Company) regularly present to the Board and often engage with the Board between meetings on emerging matters for the Company and the industry in general. Materials provided in advance of Board and Board Committee meetings also customarily include resources addressing emerging topics. Directors are encouraged to explore additional resources to stay informed of developments relating to their responsibilities. The Company provides access to respected organizations and programs for maintaining board knowledge and skills and periodically sends Directors a compendium of third-party resources that includes overviews of board and board committee best practices, emerging issues, and educational programs. The Board also from time-to-time identifies areas for continuing education, which has resulted in the Company covering the expenses associated with Director participation in continuing education programs.
AGENDA ITEM 1. ELECTION OF DIRECTORS Our Board has nominated 11 directors for election at the Annual Meeting. Each Director will serve for a term ending at the next Annual Meeting and until his or her successor is duly elected and qualified, subject to such Director’s earlier death, disqualification, resignation, or removal. All nominees are currently Devon Directors. Within each nominee’s biography and the matrix above, we have highlighted the notable skills and qualifications that contributed to his or her selection as a nominee to our Board. We have no reason to believe that any of the nominees for Director will be unable to serve if elected. However, if any of these nominees becomes unavailable, the persons named in the proxy intend to vote for any alternate designated by the current Board. Proxies cannot be voted for a greater number of persons than the nominees named. Our Board of Directors recommends that stockholders vote “FOR” the election of the director nominees listed above.
Eight of our nominees have experience in regulatory and policy matters.
Three of our nominees have an educational background or work experience with environmental matters.
All of our nominees have experience in corporate governance and risk management.
| | | | | TENURE
| | DIVERSITY
| | INDEPENDENCE
| The tenure of our Director nominees reflects a balance of experience and fresh perspectives.
| | We approached our Director nominees to voluntarily self-disclose their race, ethnicity and gender. Of the responses we received, three of our 11 Director nominees are considered diverse.
| | Nine of Devon’s 11 Director nominees qualify as independent under NYSE standards and SEC regulations.
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AGENDA ITEM 1.
ELECTION OF DIRECTORS
Our Board has nominated eleven directors for election at the Annual Meeting. Each Director will serve for a term ending at the next Annual Meeting and until his or her successor is duly elected and qualified, subject to such Director’s earlier death, disqualification, resignation or removal. All of the nominees are currently Devon Directors and were elected by stockholders at the 2019 Annual Meeting.
Within each nominee’s biography and the matrix above, we have highlighted the notable skills and qualifications that contributed to his or her selection as a nominee to our Board.
We have no reason to believe that any of the nominees for Director will be unable to serve if elected. However, if any of these nominees becomes unavailable, the persons named in the proxy intend to vote for any alternate designated by the current Board. Proxies cannot be voted for a greater number of persons than the nominees named.
Our Board of Directors recommends that stockholders vote “FOR” the election of the director nominees listed above.
HOW WE ARE SELECTED, COMPRISED AND EVALUATED
GOVERNANCE COMMITTEE REPORT
The Governance Committee is currently comprised of four independent Directors and operates under a written charter approved by the Board of Directors. The Governance Committee Charter may be viewed atwww.devonenergy.com.
Corporate Governance
The Governance Committee plays a leadership role in shaping the Company’s corporate governance. It periodically reviews the Company’s corporate governance practices along with best practices followed by other companies to maintain a corporate governance framework for the Company that is effective and functional and that addresses the interests of the Company’s stakeholders. Highlights of our corporate governance framework are:
Annual Election of all Directors;
Majority Voting in Uncontested Elections;
HOW WE ARE SELECTED, COMPRISED, AND EVALUATED GOVERNANCE, ENVIRONMENTAL, AND PUBLIC POLICY COMMITTEE REPORT The GEPP Committee is currently comprised of five independent Directors and operates under a written charter approved by the Board. The GEPP Committee Charter and the other documents referenced in this report may be viewed at www.devonenergy.com. Below is a summary of key features of our corporate governance framework, including our approach to Board nominations. Corporate Governance The GEPP Committee plays a leadership role in shaping the Company’s corporate governance. It reviews the Company’s corporate governance practices along with best practices followed by other companies to maintain a corporate governance framework for the Company that is effective and functional and that addresses the interests of the Company’s stakeholders. | | | | | Highlights of Our Corporate Governance
Framework | | | | Principal Documents for Our Corporate Governance
Standards | | | | | | | | | • Annual election of Directors • Majority voting in uncontested elections • Independent Lead Director in the Eventevent the Chair of the Board is not Independent; Executive Sessions of Independent Directors;
Stockholder Right to Call a Special Meeting;
Board Participation in Succession Planning.
Additional corporate governance standards that have been approved by the Board are reflected in the:independent
• Executive sessions of independent Directors • Stockholder right to call a special meeting • Proxy access right • Board participation in succession planning | | | | • Corporate Governance Guidelines;Guidelines • Charters for each of the Board’s Committees;Committees • Code of Business Conduct and Ethics for all Directors, officers, and employees; andemployees • Code of Ethics for the CEO, CFOChief Executive Officer, Chief Financial Officer, and CAO.Chief Accounting Officer The standards reflected in these documents implement and strengthen the Company’s corporate governance practices. These documents and others related to corporate governance are available atwww.devonenergy.com.
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Board of Director Nominations The GEPP Committee is responsible for nominating qualified candidates to serve on the Board and reviewing their qualifications with the Board, taking into account the composition and skills of the entire Board and specifically ensuring a sufficient number of the members of the Board are financially literate. In alignment with the Board’s philosophy, the GEPP Committee assures that a diverse group of qualified candidates is in the pool from which the nominees for the Board are chosen. The GEPP Committee may, at its discretion, seek third-party resources to assist in the process and make final director candidate recommendations to the Board. The Board considered the experience, qualifications, attributes, and skills of each of the nominees for Director at the 2023 Annual Meeting. Our Corporate Governance Guidelines outline certain foundational qualifications for our nominees, as well as certain expectations of our Directors upon their election to the Board. Board of Director Nominations
The Governance Committee is responsible for nominating qualified candidates to serve on the Board of Directors and reviewing their qualifications with the Board, taking into account the composition and skills of the entire Board and specifically ensuring a sufficient number of the members of the Board are financially literate.
The Board takes reasonable steps to ensure that a diverse group of qualified candidates is in the pool from which the nominees for the Board are chosen. The Governance Committee may, at its discretion, seek third-party resources to assist in the process and make final director candidate recommendations to the Board. The Board considered the experience, qualifications, attributes, and
HOW WE ARE SELECTED, COMPRISED AND EVALUATED (cont’d)
GOVERNANCE, ENVIRONMENTAL, AND PUBLIC POLICY COMMITTEE REPORT (cont’d) | | | | | | | | skillsQualifications of eachOur Directors
| | | | Expectations of the nominees for DirectorOur Directors | | | | | | • Integrity and accountability • Informed judgment • Peer respect • High performance standards | | | | • Mandatory retirement at the 2020 Annual Meeting. As identified in our Corporate Governance Guidelines,Meeting immediately following the basic qualifications that the Governance Committee looks for in74th birthday of a Director include such factors as: integrity and accountability;
high performance standards.
Following a Director’s election to the Board, the Corporate Governance Guidelines provide for:
| • | | mandatory retirement at the Annual Meeting immediately following the 73rd birthday of a Director;
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ownership• Ownership of Devon common stock equal to five times the Director’s annual retainer to be reached by the end of a five-year period after their election along with a holding requirement for those who have yet to meet the ownership requirement;requirement
a recommendation• Recommendation that a Director not serve on more than fourthree public company boards in addition to serving on the Company’s Board;Board
a requirement that a nominee for Director in an uncontested election submit an offer of resignation to the Governance Committee within 90 days• Approval of the date of the election if the nominee fails to receive a greater number of votes cast “for” such nominee’s election than the votes cast “withheld” in such nominee’s election. The Governance Committee will then consider all of the relevant facts and circumstances and recommend to the full Board the action to be taken with respect to the offer to resign;
approval of the GovernanceGEPP Committee to serve as a director, officer, or employee of a competitor of the Company; andCompany
notification to• Requirement that a Director advise the Chair of the Board and the Chair of the GovernanceGEPP Committee upon the acceptancein advance of a directorship ofaccepting any invitation to serve on other public private, ornon-profitcompany boards or any assignment to the audit or compensation committees of the board of any public private, ornon-profit company.
The Governance Committee considers nominees recommended by stockholders and gives appropriate consideration in the same manner as given to other nominees. Stockholders who wish to submit recommendations for director nominees for election at our 2021 Annual Meetingcompany of Stockholders may do so by submittingwhich such nominee’s name in writing, in compliance withDirector is a member
• Requirement that a Director promptly advise the procedures required by our Bylaws, to the Governance Committee of the Board of Directors, Attention: Chair of the Board of Directors, c/o Officeand the Chair of the Corporate Secretary, Devon Energy Corporation, 333 W. Sheridan Avenue, Oklahoma City, Oklahoma 73102. Such a recommendation must be received between February 3, 2021, and March 5, 2021,GEPP Committee upon accepting service on private or non-profit boards |
The GEPP Committee considers nominees recommended by stockholders and gives appropriate consideration in the same manner as given to other nominees. Stockholders who wish to submit recommendations for director nominees for election at our 2024 Annual Meeting of Stockholders may do so by submitting such nominee’s name in writing, in compliance with the procedures required by our Bylaws, to the Governance, Environmental, and Public Policy Committee of the Board of Directors, Attention: Chair of the GEPP Committee, c/o Office of the Corporate Secretary, Devon Energy Corporation, 333 W. Sheridan Avenue, Oklahoma City, Oklahoma 73102. Such a recommendation must be received between February 8, 2024 and March 9, 2024, in order to be considered a timely notice. The stockholder’s notice must contain, among other things: all information that is required to be disclosed with respect to such person being nominated pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, including such person’s written consent to being named in the Proxy Statement as a nominee and to serving as a Director, if elected;
HOW WE ARE SELECTED, COMPRISED AND EVALUATED (cont’d)
the name and address of the stockholder giving the notice and the beneficial owner; the class and number of shares of our stock that are owned beneficially and of record by the stockholder giving the notice and the beneficial owner; whether and the extent to which any hedging or other similar transaction has been entered into by or on behalf of the stockholder or beneficial owner; a description of all arrangements or understandings between the stockholder giving the notice and any other person or persons (including their names) in connection with the nomination; a representation that the stockholder intends to appear in person or by proxy at the 2024 Annual Meeting to bring such business before the meeting; and an undertaking by the stockholder giving the notice to update the information required to be included in the notice.
GOVERNANCE, ENVIRONMENTAL, AND PUBLIC POLICY COMMITTEE REPORT (cont’d) With the Company’s fundamental corporate governance practices firmly in place and regularly evaluated, the GEPP Committee is prepared to respond quickly to new regulatory requirements and emerging best practices. The GEPP Committee intends to continue to require an annual evaluation of the effectiveness of the Board and its Committees to enable the Company to maintain corporate governance best practices. Governance, Environmental, and Public Policy Committee | | | | | | | | | 
Kelt Kindick, Chair | | 
Ann G. Fox | | 
Karl F. Kurz | | 
Michael N. Mears | | 
Robert A. Mosbacher, Jr. |
HOW WE ARE GOVERNED AND GOVERN Committees During 2022, the Board had four standing Committees: Audit, Compensation, GEPP, and Reserves. The Charters for our Committees are available on the Company’s website, www.devonenergy.com. Below we reflect each Committee’s current membership, core duties and responsibilities, recent activities, and key focus areas. | | | | | | | | | | | | | | | | | | | | | | | | | 
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| |  | |  | |  | | Baumann 1 | | Bethancourt | | Fox | | Kelly | | Kindick | | Krenicki | | Kurz | | Mears | | Mosbacher | | Muncrief 1 | | Williams 2 | | | | | | | | | | | | | Audit | | | | | | | | ✓ | | | | ✓ | | | | ✓ | | | | | |  | | | | | | | | | | | | | Compensation 3 | | | | ✓ | | ✓ | | | | ✓ | | | | ✓ | | | |  | | | | | | | | | | | | | | | | | GEPP | | | | | | ✓ | | | | | | | | ✓ | | ✓ | | ✓ | | | | | | | | | | | | | | | | | Reserves 3 | | | | | | | | ✓ | | | | ✓ | | ✓ | | | | | | | | ✓ |
| Committee Chair |
| 1 | Dividend Committee member. The Board maintains a dividend committee to assist with the namedeclaration and addresspayment of dividends on Devon’s common stock in accordance with the dividend policy of the stockholder givingCompany. |
| 2 | Audit committee financial expert. |
| 3 | Duane Radtke is a member of the noticeCompensation and Reserves Committees. He is retiring from the beneficial owner;Board at the Annual Meeting. |
Audit Committee Monitors the integrity of the Company’s financial statements and reporting system; Oversees the Company’s compliance with legal and regulatory requirements; Appoints the independent auditors and monitors their performance, qualifications, and independence; Oversees the Company’s internal audit function and reviews significant internal audit findings and management’s actions to address those findings; Reviews the Company’s financial and cybersecurity risk exposures and the steps management has taken to monitor and control such exposure; and Monitors the business practices and ethical standards of the Company. | | | | | | | | | RECENT ACTIVITIES AND KEY FOCUS AREAS | | | | | | | | | |
| | | • Reviewed and discussed the classaudit results prior to the filing of Devon’s 10-K for fiscal year-end 2022 and numbermet with the independent auditors concerning the results; • Reviewed and discussed the earnings materials and periodic reports for each quarter of sharesthe year; • Received reports and interacted with management about legal, regulatory, and tax matters, cybersecurity, environmental, social, and governance (ESG) matters, and other topical issues such as the SEC’s proposed climate-disclosures rule; and | | |
| | | • Met in executive session on a regular basis with the independent auditors and Devon personnel responsible for the Company’s internal audit function, financial reporting, and legal and regulatory compliance. Number of our stock that are owned beneficially and of record by the stockholder giving the notice and the beneficial owner;Meetings held in 2022: 8 | |
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HOW WE ARE GOVERNED AND GOVERN (cont’d) Compensation Committee Reviews and approves the Company’s compensation philosophy and strategy; Directs management to administer the annual compensation process in accordance with the stated compensation strategy of the Company and any requirements of the appropriate regulatory bodies; Reviews and approves the Company’s employee benefit and incentive programs; Annually reviews and determines total compensation for each management Director; Reviews and approves total compensation for the Company’s executive officers; Reviews with the President and CEO and advises the Board with regard to executive officer succession planning; Evaluates and recommends compensation or revisions to compensation for members of the Board; and Assesses and considers the independence of any advisor that provides advice to the Compensation Committee. | | | | | | | | | RECENT ACTIVITIES AND KEY FOCUS AREAS | | | | | | | | | |
| | | whether
• Reviewed and approved the extentpeer group used and approved in executive pay considerations and evaluated the Company’s performance on pre-set metrics to which any hedging ordetermine the 2022 bonus pool; • Analyzed financial, ESG, and other similar transaction has been entered into by or on behalfmetrics used in the incentive programs of energy companies; and | | | • Met separately and with the stockholder or beneficial owner;GEPP Committee in order to review and discuss with management Devon’s DEI metrics, including strategy and actions for improving Devon’s workforce DEI. Number of Meetings held in 2022: 9 | | | | | |
Governance, Environmental, and Public Policy (GEPP) Committee Identifies and recommends qualified individuals to become Board members; Evaluates and recommends nominees for election as directors at the annual stockholders’ meetings or for appointment between annual stockholders’ meetings; Develops, recommends, and reviews corporate governance guidelines for the Company; Reviews the Company’s policies and performance relating to the Company’s environmental, health, and safety efforts, and the Company’s approach to social responsibility; Reviews the Company’s performance and stakeholder engagement on key ESG matters; Advises the Board and management on significant public policy issues that are pertinent to the Company and its stakeholders; and Oversees management in setting strategy, establishing goals, and integrating sustainability into strategic and tactical business activities across the Company to create long-term stockholder value. a description of all arrangements or understandings between the stockholder giving the notice and any other person or persons (including their names) in connection with the nomination;
HOW WE ARE GOVERNED AND GOVERN (cont’d) | | | | | | | | | RECENT ACTIVITIES AND KEY FOCUS AREAS | | | | | | | | | |
| | | a representation• Oversaw the Director succession process that the stockholder intends to appear in person or by proxy at the 2021 Annual Meeting to bring such business before the meeting; and
an undertaking by the stockholder giving the notice to update the information required to be includedculminated in the notice.
With the Company’s fundamental corporate governance practices firmly in placeappointment of Gennifer Kelly and regularly evaluated, the Governance Committee is preparedMichael Mears to respond quickly to new regulatory requirements and emerging best practices. The Governance Committee intends to continue to require an annual evaluation of the effectiveness of the Board and its Committees to enable the Company to maintain corporate governance best practices.
Barbara M. Baumann, Chair
Robert H. Henry
John Krenicki Jr.
Mary P. Ricciardello
Practices for Considering Diversity
The Charter of the Governance Committee provides that the Committee shall periodically review the appropriate skills and characteristics of members of the Board in January 2023;
• Reviewed Devon’s performance on, and tactics for meeting, the contextCompany’s environmental targets announced in June 2021; • Received updates on policy matters impacting (or potentially impacting) Devon and discussed Devon’s and its trade associations’ engagement on such matters; | | |
| | | • Received Devon’s ESG reporting prior to publication, including Devon’s 2022 Sustainability Report, and engaged with management on the content of such reporting; and • With the then-current composition of the Board. This assessment includes the following factors: diversity (including diversity of skills, background,Compensation Committee, reviewed and experience); business and professional background; financial literacy and expertise; availability and commitment; independence; and other criteria that the Committee or the full Board finds relevant. When searching for new director nominees, the Committee,discussed with management Devon’s DEI metrics, as well as any third-party search firm that it engages, is committed to considering qualified candidatesstrategy and actions for improving Devon’s workforce DEI. Number of Meetings held in 2022: 7 | | | | | |
Reserves Committee Oversees an annual review and evaluation of the Company’s consolidated oil, natural gas, and natural gas liquids reserves; Oversees the integrity of the Company’s reserves evaluation and reporting system; Assesses the reserves disclosure for the Company’s compliance with legal and regulatory requirements related to its oil, natural gas, and natural gas liquids reserves; Reviews the qualifications and independence of the Company’s independent engineering consultants; Monitors the performance of the Company’s independent engineering consultants; and Monitors and evaluates the Company’s business practices and standards in relation to the preparation and disclosure of its oil, natural gas, and natural gas liquids reserves. | | | | | | | | | RECENT ACTIVITIES AND KEY FOCUS AREAS | | | | | | | | | |
| | | • Oversaw a diversitycomprehensive review of the capabilities, experience, and perspective, including diversity with respectquality of independent engineering consultants for purposes of selecting an independent engineering consultant for the year-end reserves evaluation, which culminated in the selection of a new independent engineering consultant for the Company for 2022; | | | • Met to areasreview and discuss the reserves evaluation results prior to the filing of expertise, gender, race, ethnicity, experience,Devon’s 10-K for fiscal year-end 2022; and geography. | | • Discussed Devon’s policies and approaches for booking and valuing reserves. Number of Meetings held in 2022: 3 | | | | | 20 | | Commitment Runs Deep |
HOW WE ARE GOVERNED AND GOVERN
Our Board of Directors met thirteen times in 2019.
HOW WE ARE GOVERNED AND GOVERN (cont’d) Our Board met ten times in 2022. All Directors attended at least 93% of the total meetings of the Board and the respective Committees on which they served. All Directors are expected to attend the Annual Meeting of Stockholders unless there are extenuating circumstances. All of our then-current Directors attended our 2022 Annual Meeting of Stockholders. Copies of the following governance documents are available at least 86% of the total meetings of the Board of Directors and the respective Committees on which they served. All of our Directors, with the exception of one of our newly elected Directors who had a scheduling conflict that predated his nomination, attended our 2019 Annual Meeting of Stockholders.
Copies of the following governance documents are available atwww.devonenergy.com and in print to any stockholder upon request:
| • Certificate of Incorporation; • Corporate Governance Guidelines; • Code of Business Conduct and Ethics; and • Code of Ethics for Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Chief Accounting Officer (CAO); and Anti-Corruption Policy and Procedures.
Amendments to and waivers from any provision of the Code of Ethics for the CEO, CFO, and CAO will be posted on our website.CAO.
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Amendments to and waivers from any provision of the Code of Ethics for the CEO, CFO, and CAO will be posted on our website. Director Independence Relevant Independence Standard The Company’s Corporate Governance Guidelines provide that a majority of the Board members must qualify as “independent” Directors in accordance with the listing standards of the New York Stock Exchange (“NYSE”) and the related disclosure requirements in the Securities and Exchange Commission (the “SEC”) Regulation S-K, Item 407(a). Additionally, (i) all of the members of the Audit Committee, the Compensation Committee, the GEPP Committee, and the Reserves Committee and (ii) at least one of the members of the Dividend Committee must be Directors determined by the Board to be independent according to applicable standards relating to board committee membership, including as set forth in the listing and other relevant standards for the Committee, Corporate Governance Guidelines, and relevant Committee Charters. Board Diligence Process In assessing independence, the Board reviews whether a Director has any material relationships with Devon or any of its subsidiaries. This review considers direct and indirect relationships of a Director and any member of the Director’s immediate family, including, as relevant, such Director’s or family member’s status as a partner, shareholder, or officer of an organization that has a relationship with Devon or any of its subsidiaries. The Board also takes into account other facts and circumstances that the Board deems relevant. Independence Determinations Based on its review and applicable standards, the Board has affirmatively determined that (i) each of the current Directors, with the exception of Richard E. Muncrief, is an independent Director and (ii) each member of the Audit Committee, Compensation Committee, GEPP Committee, and Reserves Committee, and at least one of the members of the Dividend Committee (Barbara M. Baumann), is independent. As a result of these determinations, 11 of the Board’s 12 current Directors and 10 of the Board’s 11 Director nominees are independent.
HOW WE ARE GOVERNED AND GOVERN (cont’d) Relationships Considered Pursuant to SEC regulations, for each director and nominee for director that is identified as independent, a company’s proxy statement must describe, by specific category or type, any transactions, relationships, or arrangements not disclosed as a related person transaction that were considered by a company’s board of directors under the applicable independence definitions in determining that the director is independent. The Board considered the following relationships in making its determination that all Directors (including the Director nominees), other than Mr. Muncrief, are independent. In each case, the transactions identified are routine, ordinary course transactions in which the relevant Director had no personal involvement and derived no direct personal benefit. | | | | | | | | | | | | | | | | | | | | Director/Nominee | | | | Organization | | | | Relationship | | | | Summary | | | 21 | | Commitment Runs Deep |
HOW WE ARE GOVERNED AND GOVERN (cont’d)
Committees
The Board of Directors has four standing Committees: Audit, Compensation, Governance, and Reserves. The Charters for these Committees are available on the Company’s website,www.devonenergy.com. The following table shows each Committee’s current membership and function and the number of meetings each Committee held in 2019:
2 | Audit Committee financial expert
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HOW WE ARE GOVERNED AND GOVERN (cont’d)
HOW WE ARE GOVERNED AND GOVERN (cont’d)
Director Independence
The Company’s Corporate Governance Guidelines provide that an independent director is a director who, as determined by the Board, meets the NYSE definition of independence. In making this determination, the Board considers transactions and relationships between each Director or any member of the Director’s immediate family and the Company, our subsidiaries, and our affiliates. The Board has affirmatively determined that each of the current Directors, with the exception of David A. Hager and Ann G. Fox (i) is an independent Director as defined by the standards for director independence established by applicable laws, rules, and listing standards, including, without limitation, the standards for independent directors established by the NYSE and the SEC, and (ii) has no material relationship with us that would interfere with the exercise of independent judgment.
In evaluating whether Ms. Fox is independent, the Board considered that Ms. Fox serves as Chief Executive Officer, President, and Secretary, and as a Director of
| | | | Nine Energy Service Inc. (Nine), which | | | | President/ CEO Director | | | | Nine provides services to Devon. Devon purchases services from Nine in the ordinary course of business,business. Devon represented under 1.0% of Nine’s revenues for 2022.1 | | | | | | | | | Gennifer F. Kelly | | | | Delek Logistics | | | | Director | | | | Delek provides services to Devon in the ordinary course of business. Devon represented under 1.0% of Delek’s revenues for 2022. | | | | | | | | | Karl F. Kurz | | | | Texas Pacific Land (TPL) | | | | Director | | | | TPL owns royalty interests and Ms. Foxprovides services to Devon in the ordinary course of business. Devon represented under 8.0% of TPL’s overall revenues for 2022, with services accounting for less than 1.0% of TPL’s revenues. | | | | | | | | | Michael N. Mears | | | | Sempra Energy | | | | Director | | | | Sempra purchases energy products from Devon. Devon represented under 1.0% of Sempra’s cost of goods sold, and Sempra represented under 1.0% of Devon’s revenues for 2022. | | | | | | | | | Valerie M. Williams | | | | DTE | | | | Director | | | | DTE purchases energy products from Devon. Devon represented under 1.0% of DTE’s cost of goods sold, and DTE represented under 1.0% of Devon’s revenues for 2022. |
| 1 | One of the categorical tests under the NYSE listing standards asks whether the director is not personally involved in such transactions. For 2019, Devon’sa current employee of a company that has made payments to, Nine amounted to approximately 2.3%or received payments from, the listed company in an amount which, in any of Nine’sthe last three fiscal years, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues. Accordingly, pursuant to NYSE standards, the Board did not determine that Ms. Fox is independent. Devon’s paymentsrevenues (the “NYSE revenue test”). Amounts paid by Devon to Nine represented less thanexceeded 2% of Nine’s consolidated gross revenues for the 2019 fiscal year. This meant that, due to the NYSE revenue test, the Board could not determine Ms. Fox to be independent in 2018 and 2017. The Board’s consideration2020, 2021, or 2022. However, in each of Mr. Rattie’s independence included the review of Mr. Rattie’s position as a Director of Select Energy Services, Inc. (Select), a third-party service provider for Devon. Select’s servicesthose years, amounts paid by Devon to Nine were provided in the ordinary course of business without any personal involvement by Mr. Rattie. Additionally, Devon’s payments to Select amounted to less than 2% of Select’s consolidated gross revenues during each of the last three fiscal years. Based on these factors,Nine’s revenues. In March 2023, the Board determined thatreviewed the services do not impair Mr. Rattie’s independence.
Related Person Transactions
The Company maintains a policy concerning “related person transactions” as defined by the SEC. Related persons include the Company’s directors and executive officers and their immediate family members and beneficial owners of more than five percent of the Company’s common stock.
The Board’s Audit Committee considers information about transactions involving related persons. If the transaction at issue involves a member of the Audit Committee, or a family member of a Committee member, then that member of the Committee would not participateDevon-Nine relationship in discussions. In the event the Committee concludes that a related person has a material interest in any Company transaction, the Committee then reviews the transaction to determine whether to approve or ratify it. Any transaction that meets the monetary threshold under the SEC rules and is determined to have a direct or indirect material benefit to a related party would be disclosed in accordance with SEC rules.
The son of Tony D. Vaughn, Devon’s Chief Operating Officer until September 2019, is employed by the Company as a Manager in Supply Chain. His total 2019 taxable compensation, including salary, bonus, and stock grants, was approximately $187,000. The compensation for Mr. Vaughn’s son was commensurateconnection with the compensation provideddiligence process described above and determined Ms. Fox to similarly situated employees of the Company and was determined in accordance with the Company’s standard human resources policies and procedures. Mr. Vaughn was not involved in the evaluation of his son’s performance or decision-making associated with his compensation.be independent.
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HOW WE ARE GOVERNED AND GOVERN (cont’d) Related Person Transactions The Board has approved a written policy (the “Policy”) to assist Devon in the collection and review of information regarding potential related person transactions and conflicts of interest. All Directors and executive officers are required to identify business and financial affiliations involving themselves or their immediate family members that could reasonably be expected to give rise to a reportable related person transaction. Based on this information, Devon staff review Devon’s records and makes follow-up inquiries as necessary to identify potentially reportable related person transactions. A report summarizing such transactions is provided to the Board’s Audit Committee. The Committee reviews reports and makes recommendations to the Board as to whether an identified transaction is required to be publicly disclosed as a related person transaction. If the transaction at issue involves a member of the Committee, or a family member of a Committee member, then that member of the Committee would not participate in discussions. In the event the Committee concludes that a related person has a material interest in any Company transaction, the Committee then reviews the transaction to determine whether to approve or ratify it. Any transaction that meets the monetary threshold under the SEC rules and is determined to have a direct or indirect material benefit to a related person would be disclosed in accordance with SEC rules. The Policy provides that certain categories of transactions are not deemed to involve a material interest. Those categories align with, and in many cases are more conservative than, the standards under applicable SEC rules. In early 2023, the Company performed its diligence for purposes of identifying potential related party transactions and provided its report to the Committee. Based on the Committee’s review and discussion, the Committee has not identified any transactions that qualify as related person transactions and require disclosure. Board Leadership Structure Following the closing of the Devon-WPX merger in early 2021, the Board appointed David A. Hager as Executive Chair (at that time, Devon’s CEO) and named Richard E. Muncrief (at that time, WPX’s President, CEO, and Board Chair) as President and CEO of the Company. This structure promoted the objective of ensuring continuity in leadership of the go-forward Company. In accordance with Devon’s Corporate Governance Guidelines, the Board designated Kelt Kindick as the Board’s independent Lead Director upon Mr. Hager’s appointment as Executive Chair. In September 2022, the Board announced that Mr. Hager would retire in early 2023 and Barbara Baumann would be his successor. Ms. Baumann is an independent Director. Although the Board has no fixed policy with respect to combining or separating the positions of Chair of the Board and CEO, Ms. Baumann’s appointment as Board Chair continues a Devon governance practice of separating the Chair and CEO roles that preceded the merger and recognizes that the Company’s stockholders are best served by Ms. Baumann’s leadership of the Board at this time. Ms. Baumann is skilled at developing open, substantive communication among members of the Board and between the Board and management. She also has extensive board and energy industry experience and has served in key roles on Devon’s Board. Until her appointment as Board Chair, Ms. Baumann chaired Devon’s GEPP Committee and served as a member of the Audit Committee, where she was one of Devon’s “audit committee financial experts.” As an independent Chair, Ms. Baumann fills certain duties performed by the Lead Director role that was vacated upon her appointment. She presides over executive sessions of the Board in which members of management are not present, as well as executive sessions in which only independent Directors are present. Ms. Baumann also works with Mr. Muncrief on Board agendas, items of discussion, and meeting materials and serves as a resource for fostering communication among the Board and management.
HOW WE ARE GOVERNED AND GOVERN (cont’d) Board and Committee Evaluations The Board maintains an annual review process that evaluates the effectiveness and performance of the Board, the Chair, the Lead Director (if applicable), and the Board Committees. The evaluations are reviewed and discussed by the GEPP Committee, which also annually considers how to maximize the effectiveness of the process. The full Board discusses the evaluations with and without management present. 
In recent years, the Lead Director has conducted one-on-one interviews with each Director as part of the process. Those interviews, as well as Board Committee self-evaluations, have in part been facilitated by written questionnaires that prompt a robust discussion. The Board, however, has not solicited written responses from Directors in order to preserve the confidentiality and candor of those discussions. Through the evaluation processes, Board members have provided feedback on a range of topics, including: Board and management succession planning; agendas and materials for Board meetings; the composition and structure of the Board and Board Committees; | • | | the cadence and substance of discussions of Devon’s strategy, including the consideration of low-carbon business ventures; |
Devon’s ESG program and target-setting for performance in the area; and the opportunity for outside speakers to present on certain topics at Board meetings. Devon’s Board and Board leadership consistently emphasize open communication among members of the Board with a view toward building alignment on highly effective corporate governance of the Company. Board Involvement in Risk Oversight The full Board has primary responsibility for risk oversight, which includes, among other things, determining whether the Company’s risk-management programs are appropriately designed and implemented in light of the Company’s material risks. To assist it in this role, the Board has delegated to four standing Board Committees certain matters relating to the risks inherent in the Committees’ respective areas of oversight, with each Committee regularly reporting to the full Board. Our management team is, in turn, responsible for executing the directives of the Board and those Committees with respect to the Company’s risk-management programs, including by overseeing and reporting on Devon’s day-to-day efforts to manage risk.
HOW WE ARE GOVERNED AND GOVERN (cont’d) Devon employs a variety of governance and analytical measures to identify and evaluate the risks to our business. We use an enterprise-wide risk-management framework that includes an annual analysis of the top risks to the Company. This analysis asks the Board, management, and certain internal subject matter experts to consider the likelihood that certain risks could result in an impact to the Company and to identify, among other things, the Company’s level of preparedness for those risks. The Board and management then use the results from this analysis and other exercises to determine and prioritize the material risks to our business. In addition to this annual review process, the Board also assesses developments as they evolve and considers the risk they pose to the Company. Management and other subject matter experts meet on a regular basis to review the risks to the Company and consider and develop means of mitigating those risks. For a more detailed discussion of the material risks of the Company, please see our Annual Report on Form 10-K for the year ended December 31, 2022 and our other filings with the SEC. Cybersecurity risk is an area of increasing focus for our Board, particularly as more and more of our operations rely on digital technologies. To mitigate this risk, Devon has adopted an information security program, which uses sophisticated technology and processes and is aligned with the National Institute of Standards and Technology Cybersecurity Framework for risk management. Our management team provides quarterly updates to the Audit Committee on activities and other developments impacting our digital security, which focus on, among other things, key security metrics for the Company such as the number and type of cyberattacks targeting the Company. The updates also frequently review cybersecurity assessments performed on Devon by third parties, some of which have been retained by the Company to consider Devon’s standing and readiness to address to certain risks. The full Board receives regular updates regarding the overall cybersecurity program and reports from the Committee. High-Level Oversight and Coordination of ESG Efforts The Company recognizes that ESG matters are important for Devon and Devon’s stakeholders. Following the closing of the Devon-WPX merger, Devon created a new executive position of vice president of EHS/ESG, as well as a manager-level position and other staffing for sustainability activity. The Company also proceeded with aggregating ESG programs and data of Devon and WPX. The Board and the GEPP Committee were apprised of Devon’s progress, with a view toward reviewing in advance the environmental targets that were announced in June 2021. The Board and management continue to support the Company’s ongoing efforts in this area. Devon’s Executive Committee, Board GEPP Committee, and the full Board receive regular updates on our ESG efforts and expect high performance in this area. Over the past year, oversight has included Devon’s activities in the following areas: Devon’s strategy for and third-party assessment of Devon’s performance on ESG matters; Devon’s progress on achieving the environmental targets established in June 2021; the tactics and associated budgets for attaining the environmental targets and other ESG objectives; | • | | an on-going assessment and discussion of Devon’s participation in ESG-related initiatives, which included the decision in 2022 to join OGMP 2.0; |
Devon’s community support efforts, including charitable contributions and participating in charitable projects; and management’s steps in furthering the Company’s carbon accounting systems and capabilities.
HOW TO COMMUNICATE WITH US The Board believes it is important to cast a wide net for input to inform its decision making and considers input from stockholders to be critical. Accordingly, the Board maintains a number of ways to receive feedback from stockholders and other stakeholders:
HOW WE ARE GOVERNED AND GOVERN (cont’d)
The son of David A. Hager, Devon’s President and Chief Executive Officer, was employed by the Company as a Professional in Evaluation and Planning for a portion of 2019. His total 2019 taxable compensation, including salary, bonus, and stock grants, was approximately $170,000. The compensation for Mr. Hager’s son was commensurate with the compensation provided to similarly situated employees of the Company and was determined in accordance with the Company’s standard human resources policies and procedures. Mr. Hager was not involved in the evaluation of his son’s performance or decision-making associated with his compensation.
Leadership Structure
As stated in the Company’s Corporate Governance Guidelines, the Board reserves the right to determine, from time to time, how to configure the leadership of the Board and the Company in the way that best serves the Company. The Board specifically reserves the right to vest the responsibilities of Chair of the Board and CEO in the same or in different individuals. The Board currently has no fixed policy with respect to combining or separating the positions of Chair of the Board and CEO.
From June 2016 until his retirement from the Board at Devon’s 2019 Annual Meeting, John Richels, Devon’s former President and CEO, served as Chair of the Board. Following the 2019 Annual Meeting, the Board appointed Duane C. Radtke, an independent director, to serve as Chair of the Board. Mr. Radtke, like his predecessor, believes in open, substantive communication among members of the Board and between the Board and Management, with a view toward consensus-building and alignment.
Lead Director
Until Mr. Radtke’s appointment as Chair of the Board, the Board had an independent Lead Director whose primary responsibility was to preside over the executive session of the Board meetings in which members of management do not participate. Robert A. Mosbacher, Jr. served as Lead Director from June 2015 to June 2019. In 2019, Mr. Mosbacher presided over one executive session of the Board. In the event the Board appoints anon-independent Chair of the Board in the future, the Board would expect to select a Lead Director in accordance with Devon’s Corporate Governance Guidelines.
Board Involvement in Risk Oversight
The full Board has primary responsibility for risk oversight, which includes, among other things, determining whether the Company’s risk-management programs are appropriately designed and implemented in light of the Company’s material risks. To assist it in this role, the Board has delegated to the four standing Board Committees certain matters relating to the risks inherent in the Committees’ respective areas of oversight, with each Committee regularly reporting to the full Board. Our management team is, in turn, responsible for executing the directives of the Board and its Committees with respect to the Company’s risk management programs, including by overseeing and reporting on Devon’sday-to-day efforts to manage risk.
Devon employs a variety of governance and analytical measures to identify and evaluate the risks to our business. We use an enterprise-wide risk management framework that includes an annual analysis of the top risks to the Company. This analysis asks the Board, management, and certain
HOW WE ARE GOVERNED AND GOVERN (cont’d)
internal subject matter experts to consider the likelihood that certain risks could result in an impact to the Company and to identify, among other things, the Company’s level of preparedness for those risks. The Board and management then use the results from this analysis and other exercises to determine and prioritize the material risks to our business. In addition to this annual review process, the Board also considers significant developments as they arise to assess the risk they pose to the Company. For example, the Board and management have been closely monitoring theCOVID-19 pandemic and its ongoing and potential impacts to the Company, including its effect on commodity prices and supply chains. For a more detailed discussion of the material risks of the Company, please see our Annual Report on Form10-K for the year ended December 31, 2019 and our other filings with the SEC.
Cybersecurity risk is an area of increasing focus for our Board, particularly as more and more of our operations rely on digital technologies. To mitigate this risk, Devon has adopted an information security program, which uses sophisticated technology and processes and is aligned with the National Institute of Standards and Technology Cybersecurity Framework for risk management. Our management team provides the Audit Committee and the full Board with regular updates regarding this program, as well as on trends in cyberattack activities and other developments impacting our digital security.
HOW TO COMMUNICATE WITH US
The Board believes it is important to cast a wide net for input to inform its decision making and considers input from stockholders to be critical. Accordingly, the Board maintains a number of ways to receive feedback from stockholders and other stakeholders.
Our Directors attend our Annual Meeting of Stockholders.Stockholders; | |
| • | | Our Directors participate in director education programs that include investors and investor commentary.commentary; | |
| • | | Our Directors listen to Devon’s quarterly conference calls with investors and receive reports with analyst commentary on the Company’s performance.performance; | |
| • | | Our Board receives updates on the communication received from the Company’s reporting helplines.helplines; and | |
| • | | Our Board values direct stockholder engagement with the Company, which is detailed below. Devon has a long-standing practice of engagement with our stockholders throughout the year with respect to corporate governance topics and our executive compensation program. Over the past year, Devon has continued to emphasize engagement with our stockholders, especially with respect to ESG matters. The Company has participated in numerousone-on-one meetings and telephone calls with investors who have a wide range of perspectives. Our Board receives frequent updates on these engagements and has been keen to hear specific input. We value the dialogue and feedback received from this engagement and, as a result, have been responsive by making meaningful changes to our programs and practices.
High-Level Oversight and Coordination of ESG Efforts
The Company recognizes that ESG matters are important for Devon and Devon’s stakeholders. In order to provide support for the Company’s ongoing efforts in this area, the Company formed an Environmental, Social, and Governance Steering Committee (the ESG Committee) in the fall of 2017. The ESG Committee is comprised of leaders for several key functions at the Company, including EHS, operations, legal, investor relations, government affairs, corporate governance, finance, human resources, and communications. The ESG Committee meets on a quarterly basis and more frequently as necessary. In addition, the ESG Committee frequently tasks internal subject matter experts and working groups with addressing discrete ESG matters. A copy of the ESG Committee’s charter is available on ourweb-site. Devon’s Executive Committee, Board Governance Committee, and the full Board receive regular updates on our ESG efforts and expect high performance in this area.
Affirmation of Our ESG Practices and Performance
Devon’s work on ESG matters has resulted in greater disclosure about the Company’s existing practices and prompted new and renewed actions by Devon. We makeESG-oriented materials available on our website, including the following: Devon’s 2019 Sustainability Report, Climate Change Assessment Report, Political Activity and Lobbying Report, and CDP Questionnaires.
Devon also regularly participates in many surveys and questionnaires, which has resulted in more transparency about Devon’s operations and improved the accuracy of Devon’s information included in those materials. Major third-party surveys on ESG matters validate our performance in this area: as of March 31, 2020, Sustainalytics and ISS each rank Devon’s ESG scores at the top of Devon’s peer group.
HOW TO COMMUNICATE WITH US (cont’d)
In June 2019, Devon announced a significant step in its ESG efforts by disclosing a target to reduce methane emissions for its oil and natural gas production. Setting this target signals Devon’s continuing proactive pursuit to reduce greenhouse gas emissions and reaffirms Devon’s commitment to protecting the environment. The importance of this target has been underscored by linking executive compensation to the Company’s progress toward achieving the target.
Contact Information for Communicating with Board Members
Any stockholder or other stakeholder may contact any of ourNon-Management Directors orNon-Management
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Devon has a long-standing practice of engagement with our stockholders throughout the year with respect to corporate governance, executive compensation, and other topics. Over the past year, Devon has continued to emphasize engagement with our stockholders, especially with respect to ESG matters. The Company has participated in numerous one-on-one meetings with investors who have a wide range of perspectives. Our Board receives frequent updates on these engagements and has been keen to hear specific input. We value the dialogue and feedback received from this engagement and, as a result, have been responsive by making meaningful changes to our programs and practices. Contact Information for Communicating with Board Members Any stockholder or other interested party may contact any of our Non-Management Directors or Non-Management Directors as a group, by: | • | | U.S. mail toNon-Management Directors, c/o Office of the Corporate Secretary, Devon Energy Corporation, 333 W. Sheridan Avenue, Oklahoma City, Oklahoma 73102; |
| • | | calling ourNon-Management Directors access line at (866)888-6179; or | • | | sending an email tononmanagement.directors@dvn.com.
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sending an email to nonmanagement.directors@dvn.com. A Management Director may be contacted by: U.S. mail to Management Directors, c/o Office of the Corporate Secretary, Devon Energy Corporation, 333 W. Sheridan Avenue, Oklahoma City, Oklahoma 73102; | • | | contacting the Office of the Corporate Secretary at (405)235-3611; or |
sending an email to CorporateSecretary@dvn.com. If requested, calls or correspondence remain anonymous and will be kept confidential to the extent possible. All such communications, other than advertisements or commercial solicitations, will be forwarded to the appropriate Director(s) for review.
| • | | sending an email toCorporateSecretary@dvn.com.
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All calls or correspondence are anonymous and kept confidential to the extent possible. All such communications, other than advertisements or commercial solicitations, will be forwarded to the appropriate Director(s) for review.
Director Compensation
Director compensation is reviewed and determined annually by the Board acting upon the recommendation of the Compensation for the Year Ended December 31, 2019 Under our Corporate Governance Guidelines,Non-Management Director compensation is determined annually by the Board of Directors acting upon the recommendation of the Governance Committee. The Committee periodically obtains data on the director compensation for Devon’s principal competitors and other comparable companies. The Committee also engages an independent consultant (Meridian Compensation Partners, LLC) to supplement such data and provide additional information on director compensation and other compensation-related practices. Meridian is also retained by the Committee to advise on executive compensation. Aside from the foregoing, Meridian performs no other work for Devon.
The standard arrangement for compensating our non-management Directors consists of cash and equity awards. Devon employees receive no additional compensation for serving as Directors. Non-management Directors are also eligible to participate in the Company’s charitable gift program subject to the same terms as employees. This program, which was established in 2022, matches contributions (up to $10,000 per year) made to charitable organizations by Directors and employees. Annual Retainers The annual cash retainers in effect for 2022 are set forth in the table below: | | | | | | Type of Fee | | Amount | | | | Annual Board Retainer | | $ | 100,000 | | | | Additional Annual Lead Director Retainer | | $ | 25,000 | | | | Additional Annual Retainer to the Chair of Audit Committee | | $ | 25,000 | | | | Additional Annual Retainer to the Chairs of Compensation, GEPP, and Reserves Committees | | $ | 15,000 | | | | Additional Annual Retainer to Audit Committee Members | | $ | 2,000 | |
Each Non-Management Director is reimbursed for reasonable expenses incurred while serving as a Director, which includes expenses associated with attending Board meetings and other functions arising from their responsibilities as a Director. The Committee reviewed the compensation of Devon’s Board Chair in advance of the retirement of David Hager, Devon’s Executive Chair until January 7, 2023, from the Board. The Committee recommended, and the Board approved, an annual retainer in the amount of $175,000 for Devon’s Board Chair, with such amount divided evenly (50/50) between equity and cash. The retainer is in addition to the base retainer for Board members. Barbara Baumann was appointed Devon’s Board Chair effective with Mr. Hager’s retirement. Equity Awards to Directors The Board compensates Directors in part through equity awards (LTI Awards) in order to align the Directors’ and stockholders’ interests in the long-term performance of the Company. During 2022, Directors were granted LTI Awards under our 2022 Long-Term Incentive Plan (the 2022 LTIP), having a value of $230,000. Equity awards to non-management Directors are granted immediately following each Annual Meeting. The shares underlying LTI Awards fully vest on the first anniversary of the date of grant subject to the conditions set forth in the 2022 LTIP and applicable grant agreements. Beginning with LTI Awards made following the 2023 Annual Meeting, non-management Directors have the option to receive LTI Awards as Restricted Stock Units with a deferred payment date rather than the standard Restricted Stock Awards that would otherwise be paid after one year. Cash dividends accrue on unvested shares. With Restricted Stock Awards, dividends are paid upon vesting. Restricted Stock Units provide optionality with respect to the form, and the timing of payment, of dividends.
Total Compensation for Non-Management Directors for 20221 The following table reflects the fees earned or paid to our Directors for Board service in 2022 and the stock awards granted to our Directors in 2022. | | | | | | | | | | | | | | | | | | Name | | Fees Earned or Paid
in Cash ($) | | | Stock Awards2
($) | | | Gift Matching
Contribution
($) | | | Total ($) | | | | | | | Barbara M. Baumann | | | 117,000 | | | | 230,049 | | | | — | | | | 347,049 | | | | | | | John E. Bethancourt | | | 115,000 | | | | 230,049 | | | | 10,000 | | | | 355,049 | | | | | | | Ann G. Fox | | | 100,000 | | | | 230,049 | | | | 10,000 | | | | 340,049 | | | | | | | Kelt Kindick | | | 125,000 | | | | 230,049 | | | | 9,500 | | | | 364,549 | | | | | | | John Krenicki Jr. | | | 102,000 | | | | 230,049 | | | | 10,000 | | | | 332,049 | | | | | | | Karl Kurz | | | 100,000 | | | | 230,049 | | | | — | | | | 330,049 | | | | | | | Robert A. Mosbacher, Jr. | | | 115,000 | | | | 230,049 | | | | — | | | | 345,049 | | | | | | | Duane C. Radtke | | | 100,000 | | | | 230,049 | | | | 2,500 | | | | 332,549 | | | | | | | Valerie M. Williams | | | 125,000 | | | | 230,049 | | | | — | | | | 355,049 | |
| 1 | Throughout 2022, David Hager served (i) as Executive Chair of the Board and (ii) as an executive officer of the Company. Because he was an employee of the Company, he received no additional compensation for serving as Directors. The standard arrangement for compensating our Directors consists of cash and equity awards. Annual Retainers and Meeting Fees
For 2019 the cash component of compensation for our Directors included retainers and meeting fees. The annual retainers and meeting fees in effect for 2019 were the same as those in effect atyear-end 2018. The following table reflects those amounts:
| | | | | | Type of Fee | | Amount | | | | Annual Retainer for the Chair of the Board | | $ | 100,000 | | | | Annual Board Retainer | | $ | 70,000 | | | | Additional Annual Retainer to the Chair of Audit Committee | | $ | 25,000 | | | | Additional Annual Retainer to the Chairs of Compensation, Governance and Reserves Committees | | $ | 15,000 | | | | Additional Annual Retainer to Audit Committee Members | | $ | 2,000 | | | | Fee for each Board or Committee Meeting attended in person | | $ | 2,000 | | | | Fee for each Board or Committee Meeting attended via telephone | | $ | 1,000 | |
EachNon-Management Director is reimbursed forout-of-pocket expenses incurred while servinghis services as a Director.
Equity Awards to Directors
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| 2 | The Board also elects to compensate Directorsdollar amounts reported in part through restricted stock awards (RSAs) in order to alignthis column represent the Directors’ and stockholders’ interests in the long-term performancegrant date fair values of the Company. During 2019, Directors were granted RSAs under our 2017 Long-Term Incentive Plan having a value of $230,000. Stock awards toNon-Management Directors are granted immediately following each Annual Meeting. These RSA shares will fully vest on the first anniversary of the date of grant subject to the Director’s continued service to the Company. Cash dividends will accrue on these shares of restricted stock until the shares vest, at which time the dividends will be paid.
Total Compensation forNon-Management Directors for 2019
The following table reflects the fees earned or paid to our Directors for Board service in 2019 and the stock awards grantedmade to all non-management Directors on June 8, 2022, computed in accordance with FASB ASC Topic 718. The assumptions used to value stock awards are discussed in Note 4 – Share-Based Compensation of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. As of December 31, 2022, each of the non-managementDirectors as of such date held an unvested stock award for 2,952 shares of Devon common stock. As noted in 2019.“Equity Awards to Directors” above, dividends on the awards are not paid until shares vest.
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Compensation Committee Interlocks and Insider Participation Throughout 2022, the Compensation Committee was solely comprised of independent Directors with no interlocking relationships as defined by the SEC. | | | | | | | | | | | | | | Name | | Fees Earned or Paid
in Cash ($) | | | Stock Awards1 ($) | | | Total ($) | | | | | | Barbara M. Baumann | | | 112,571 | | | | 230,008 | | | | 342,579 | | | | | | John E. Bethancourt | | | 104,000 | | | | 230,008 | | | | 334,008 | | | | | | Ann G. Fox2 | | | 53,883 | 3 | | | 230,008 | | | | 283,891 | | | | | | Robert H. Henry | | | 103,000 | | | | 230,008 | | | | 333,008 | | | | | | Michael M. Kanovsky | | | 121,000 | | | | 230,008 | | | | 351,008 | | | | | | John Krenicki Jr. | | | 105,000 | | | | 230,008 | | | | 335,008 | | | | | | Robert A. Mosbacher, Jr. | | | 129,714 | | | | 230,008 | | | | 359,722 | | | | | | Duane C. Radtke | | | 162,572 | | | | 230,008 | | | | 392,580 | | | | | | Keith O. Rattie2 | | | 60,976 | 3 | | | 230,008 | | | | 290,984 | | | | | | Mary P. Ricciardello | | | 131,000 | | | | 230,008 | | | | 361,008 | | | | | | John Richels4 | | | 64,524 | | | | — | | | | 64,524 | |
1 | The dollar amounts reported in this column represent the grant date fair values of the stock awards made to allNon-Management Directors on June 5, 2019, computed in accordance with FASB ASC Topic 718. The assumptions used to value stock awards are discussed inNote 4 – Share-Based Compensation of the Notes to Consolidated Financial Statements included in our Annual Report on Form10-K for the year ended December 31, 2019. As of December 31, 2019, (i) each of ourNon-Management Directors held an unvested stock award for 9,027 shares of Devon common stock and (ii) Mr. Henry, Mr. Kanovsky, Mr. Mosbacher, Mr. Radtke, and Ms. Ricciardello each held unexercised stock option awards for 3,000 shares of Devon common stock. No option awards have been made to Non-Management Directors since 2012.
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OUR CONTROLS AND COMPLIANCE 2 | Ms. Fox and Mr. Rattie were elected to Devon’s Board at Devon’s 2019 Annual Meeting of Stockholders on June 5, 2019.
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3 | Includes $5,000 for attendance at a new Director orientation program at the Company’s offices.
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AUDIT COMMITTEE REPORT 4 | Mr. Richels retired from the Board at Devon’s 2019 Annual Meeting of Stockholders.
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Changes in Director Compensation Structure and Amounts for 2020
At its fourth-quarter 2019 meeting, the Board, acting upon the recommendation of the Governance Committee, approved the following changes in Director compensation effective January 1, 2020: (1) the elimination of all meeting fees, (2) an increase in the annual Board retainer from $70,000 to $100,000, and (3) an increase in the annual retainer for the Chair of the Board from $100,000 to $150,000. On an annual basis, the Governance Committee obtains a report on the director compensation for Devon’s principal competitors and other comparable companies. This year’s report reflected that the overall compensation of Devon’s directors is near the median of Devon’s peer group for 2020. The report was considered as the Board reviewed director compensation at its fourth-quarter 2019 meeting and supported the changes approved by the Board.
Compensation Committee Interlocks and Insider Participation
Throughout 2019, the Compensation Committee was solely comprised of independent Directors with no interlocking relationships as defined by the SEC.
The Audit Committee is currently comprised of four independent Directors. The Board and the Audit Committee believe that the Audit Committee’s current membership satisfies the rules of the NYSE and the SEC that govern audit committee composition, including the requirement that all audit committee members be independent, as that term is defined under the listing standards of the NYSE, and the requirement that at least one member of the Audit Committee is a financial expert. The Audit Committee operates under a written charter approved by the Board of Directors, which is available at www.devonenergy.com. The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the preparation of the financial statements and the establishment and maintenance of the system of internal controls. This system is designed to provide reasonable assurance regarding the achievement of objectives in the areas of reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations. For 2022, the Audit Committee performed the following key duties:
OUR CONTROLS AND COMPLIANCE
The Audit Committee is currently comprised of five independent Directors. The Board• Reviewed and discussed with management and the Audit Committee believe thatindependent auditors the Audit Committee’s current membership satisfies the rules of the NYSE and the SEC that govern audit committee composition, including the requirement that all audit committee members be independent, as that term is defined under the listing standards of the NYSE, and the requirement that at least one member of the Audit Committee is a financial expert. The Audit Committee operates under a written charter approved by the Board of Directors. The Audit Committee Charter is available atwww.devonenergy.com.
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the preparation of the financial statements and the establishment and maintenance of the system of internal controls. This system is designed to provide reasonable assurance regarding the achievement of objectives in the areas of reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations. In fulfilling its oversight responsibilities, the Audit Committee reviewed with management its internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight BoardPCAOB and the audited financial statements in the Company’s Annual Report. This review included a discussion ofReport on Form 10-K for the quality andyear ended December 31, 2022, that has been filed with the acceptability of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
In fulfilling its duties during 2019, the Audit Committee:SEC;
reviewed• Discussed with the independent auditors their opinion on the conformitymatters required to be discussed by the applicable requirements of the Company’s audited financial statements with U.S. generally accepted accounting principlesPCAOB and the effective operation of the Company’s internal controls over financial reporting;SEC;
reviewed with the independent auditors their judgment as to the quality and the acceptability of the Company’s accounting principles and other matters;
discussed with the independent auditors other matters under generally accepted auditing standards, including Auditing Standards No. 1301, Communications with Audit Committees;
discussed• Discussed with the independent auditors the auditors’ independence, including the matters in the written disclosures and the letter received from the independent auditors required by applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding the independent auditors’ communications with the Audit Committee concerning independence; and
discussed with• Considered whether the provision of non-audit services by the independent auditors the overall scope and plans for their audit; andis compatible with maintaining auditor independence.
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Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, that has been filed with the SEC. Audit Committee | | | | | | |  | |  | |  | |  | | Valerie M. Williams, Chair | | Gennifer F. Kelly | | John Krenicki Jr. | | Michael N. Mears |
AUDIT COMMITTEE REPORT (cont’d) Fees to Independent Auditor Under the terms of its Charter, the Audit Committee has the responsibility to approve the fees paid to the independent auditors. For the years ended December 31, 2021, and December 31, 2022, the following fees were paid to KPMG LLP: | | | | | | | | | | | | 2022 | | | 2021 | | | | | Audit fees1 | | $ | 3,550,000 | | | $ | 3,951,500 | | | | | Audit-related fees2 | | | 123,000 | | | | 135,000 | | | | | Tax fees3 | | | — | | | | 19,762 | | | | | All other fees | | | — | | | | — | | | | | Total | | $ | 3,673,000 | | | $ | 4,106,262 | |
| 1 | met withAudit fees included services for the independent auditors, with and without management present, to discuss the results of their audit and the overall qualityaudits of the Company’s financial reporting.
AUDIT COMMITTEE REPORT (cont’d)
Fees to Independent Auditor
Understatements and the termseffective operation of its Charter,internal controls over financial reporting.
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| 2 | Audit-related fees consisted principally of fees for audits of financial statements of certain of the Audit Committee has the responsibility to approve theCompany’s affiliates and subsidiaries. |
| 3 | Tax fees paid to the independent auditors. For the years ended December 31, 2018 and December 31, 2019, the following fees were paid to KPMG LLP: | | | | | | | | | | | | 2019 | | | 2018 | | | | | Audit fees1 | | $ | 3,185,000 | | | $ | 3,353,000 | | | | | Audit-related fees2 | | | 721,600 | | | | 284,500 | | | | | Tax fees3 | | | 27,600 | | | | 60,000 | | | | | All other fees | | | — | | | | — | | | | | Total | | $ | 3,934,200 | | | $ | 3,697,500 | |
1 | Audit fees included services for the audits of the Company’s financial statements and the effective operation of its internal controls over financial reporting.
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2 | Audit-related fees consisted principally of fees for audits of financial statements of certain of the Company’s affiliates and subsidiaries, including procedures related to the Company’s sale of its Barnett Shale assets.
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3 | Tax fees consisted of tax compliance and tax consulting fees.
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Audit CommitteePre-Approval Policies and Procedures
The Audit Committee haspre-approval policies and procedures related to the provision of audit andnon-audit services. Under these procedures, the Audit Committeepre-approves both the type of services to be provided by KPMG LLP and the estimated fees related to these services. During the approval process, the Audit Committee considers the impactan unclaimed property examination of the types of services and the related fees on the independence of the auditors. The services and fees must be deemed compatible with the maintenance of the auditors’ independence, including compliance with SEC rules and regulations.
All of the 2019 and 2018 audit andnon-audit services provided by KPMG LLP were approved by the Audit Committee. Thenon-audit services that were approved by the Audit Committee were also reviewed to ensure compatibility with maintaining the auditors’ independence, and the Audit Committee determined the auditors’ independence was not impaired.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, that the audited financial statements be included in the Company’s Annual Report on Form10-K for the year ended December 31, 2019 that has been filed with the SEC.
Mary P. Ricciardello, Chair
Barbara M. Baumann
Robert H. Henry
Michael M. Kanovsky
Keith O. Rattie
AGENDA ITEM 2.
RATIFICATION OF INDEPENDENT AUDITORS FOR 2020
The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent auditing firm retained to audit the Company’s financial statements. To carry out this responsibility, the Audit Committee engages in a comprehensive annual evaluation of the independent auditor’s qualifications, performance, and independence; considers whether the auditing firm should be rotated, including the advisability and potential impact of selecting a different independent registered public accounting firm and adopting a policy of regular rotation; and negotiates the audit fees associated with the Company’s retention of the independent auditing firm. The Audit Committee has appointed KPMG LLP (KPMG) to serve as our independent auditing firm for 2020.
In accordance with SEC rules and KPMG policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide service to our Company. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. The selectioncertain of the Company’s lead audit partner pursuant to this rotation policy involves a rigorous process, including interviews of potential audit partner candidates with the Audit Committee, which occurred in 2019 as Devon’s lead audit partner rotated off Devon’s audit team at the completion of Devon’s audit for the year-ended December 31, 2019.subsidiaries.
The Audit Committee and the Board believe that the continued retention of KPMG as our independent registered public accounting firm is in the best interest of the Company and our stockholders. In furtherance of its commitment to corporate governance practices, the Board is asking our stockholders to ratify the selection of KPMG as our independent registered public accounting firm for 2020. In the event that our stockholders fail to ratify the appointment of KPMG, the Audit Committee will consider the selection of a different independent auditing firm for 2021.
Representatives of KPMG will be present at the Annual Meeting to answer questions. They also will have the opportunity to make a statement if they desire to do so.
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Audit Committee Pre-Approval Policies and Procedures The Audit Committee has pre-approval policies and procedures related to the provision of audit and non-audit services. Under these procedures, the Audit Committee pre-approves both the type of services to be provided by KPMG LLP and the estimated fees related to these services. During the approval process, the Audit Committee considers the impact of the types of services and the related fees on the independence of the auditors. The services and fees must be deemed compatible with the maintenance of the auditors’ independence, including compliance with SEC rules and regulations. All of the 2022 and 2021 audit and non-audit services provided by KPMG LLP were approved by the Audit Committee. The non-audit services that were approved by the Audit Committee were also reviewed to ensure compatibility with maintaining the auditors’ independence, and the Audit Committee determined the auditors’ independence was not impaired. Audit Committee Financial Expertise The Board has determined that the Company has an audit committee financial expert (as defined by SEC regulations) serving on its Audit Committee, Ms. Williams. The Board has also determined, in accordance with NYSE listing standards, that all members of the Audit Committee are financially literate.
Our Board of Directors recommends that stockholders vote “FOR” the ratification of KPMG LLP as our independent auditors for 2020.
AGENDA ITEM 2. RATIFICATION OF INDEPENDENT AUDITORS FOR 2023 The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent auditing firm retained to audit the Company’s financial statements. To carry out this responsibility, the Audit Committee engages in a comprehensive annual evaluation of the independent auditor’s qualifications, performance, and independence; considers whether the auditing firm should be rotated, including the advisability and potential impact of selecting a different independent registered public accounting firm and adopting a policy of regular rotation; and negotiates the audit fees associated with the Company’s retention of the independent auditing firm. The Audit Committee has selected KPMG LLP (KPMG) to serve as our independent auditing firm for 2023. In accordance with SEC rules and KPMG policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide service to our Company. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. The selection of the Company’s lead audit partner pursuant to this rotation policy involves a rigorous process, including interviews of potential audit partner candidates with the Audit Committee. The Audit Committee and the Board believe that the continued retention of KPMG as our independent registered public accounting firm is in the best interest of the Company and our stockholders. In furtherance of its commitment to corporate governance practices, the Board is asking our stockholders to ratify the selection of KPMG as our independent registered public accounting firm for 2023. In the event that our stockholders fail to ratify the selection of KPMG, the Audit Committee will consider the selection of a different independent auditing firm for 2024. Representatives of KPMG will be present at the Annual Meeting to answer appropriate questions. They also will have the opportunity to make a statement if they desire to do so. Our Board of Directors recommends that stockholders vote “FOR” the ratification of KPMG LLP as our independent auditors for 2023.
RESERVES COMMITTEE REPORT
The Reserves Committee is currently comprised of five independent Directors and operates under a written charter approved by the Board of Directors. The Reserves Committee Charter is available atwww.devonenergy.com. The Reserves Committee oversees, on behalf of the Board, the integrity of the Company’s oil, natural gas, and natural gas liquids reserves data. Management and our independent engineering consultants have the primary responsibility for the preparation of the reserves reports. In connection with its oversight responsibilities, the Reserves Committee reviewed with management the internal procedures relating to the disclosure of reserves in the Company’s Annual Report on Form10-K for the year ended December
| | | | | | | 31 2019, having regard to industry practices and all applicable laws and regulations.In fulfilling its duties
| | Commitment Runs Deep |
RESERVES COMMITTEE REPORT The Reserves Committee is currently comprised of six independent Directors and operates under a written charter approved by the Board of Directors, which is available at www.devonenergy.com. The Reserves Committee oversees, on behalf of the Board, the integrity of the Company’s oil, natural gas, and natural gas liquids reserves data. Management and our independent engineering consultants have the primary responsibility for the preparation of the reserves reports. In connection with its oversight responsibilities, the Reserves Committee reviewed with management the internal procedures relating to the disclosure of reserves in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, having regard to industry practices and all applicable laws and regulations. For 2022, the Reserves Committee: | | | approved LaRoche Petroleum Consultants, Ltd.
• Approved DeGolyer & MacNaughton as the Company’s independent engineering consultant for the year ended December 31, 2019;2022; reviewed• Reviewed with the independent engineering consultant the scope of the annual review of the Company’s reserves;
met• Met with the independent engineering consultant, with and without management, to review and consider the evaluation of the reserves and any other matters of concern with respect to the evaluation of the reserves;
reviewed• Reviewed and approved any statement of reserves data or similar reserves information, and any report of the independent engineering consultants regarding such reserves to be filed with any securities regulatory authorities or to be disseminated to the public;
reviewed• Reviewed the internal procedures relating to the disclosure of reserves; and
reviewed• Reviewed the qualifications and independence of the independent engineering consultant prior to their appointment and throughout their engagement.
In reliance on the reviews and discussions referred to above, the Reserves Committee recommended to the Board, and the Board approved, that the reserves information be included in the Company’s Annual Report on Form10-K for the year ended December 31, 2019
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Based on the reviews and discussions referred to above, the Reserves Committee recommended to the Board that the reserves information be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, that has been filed with the SEC. Reserves Committee | | | | | | | | | | | 
Michael M. Kanovsky, Chair
John E. Bethancourt, Robert Mosbacher Jr.Chair
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Gennifer F. Kelly | |
John Krenicki Jr | | 
Karl F. Kurz | | 
Duane C. Radtke Keith O. Rattie
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Our Officers
Information concerning our executive officers is set forth below. Information concerning David A. Hager, our President and Chief Executive Officer, is set forth under the caption “Our Nominees for Election.”
Tana K. Cashion, Senior Vice President Human Resources
Ms. Tana K. Cashion, 48, began her career with Devon in 2005 and was appointed as Senior Vice President, Human Resources in March 2016. In her current role, Ms. Cashion oversees the Company’s human resources and corporate communications groups and is a member of the Company’s Executive Committee. Prior to her appointment as a Senior Vice President, Ms. Cashion held positions of increasing responsibility within the Company’s human resources group, including most recently as Vice President, Human Resources. During her career in human resources, Ms. Cashion has worked in the oil and gas, retail, wholesale, and tourism industries. She has a bachelor’s degree in political science from Pepperdine University and a master’s degree in business administration from the University of Oklahoma.
David G. Harris, Executive Vice President Exploration & Production
Mr. David G. Harris, 47, has been with Devon since 2007 and was appointed Executive Vice President, Exploration and Production in 2019. In his current position, he is responsible for all of Devon’s business units, as well as the land, technology, subsurface, and environmental, health and safety groups. He is also a member of the Company’s Executive Committee. Prior to his current position, Mr. Harris served in positions of increasing responsibility, including as Senior Vice President, Exploration and Production; Senior Vice President of Business Development; Vice President, Corporate Finance and Treasurer; and, Associate General Counsel. Prior to joining the Company, Mr. Harris was a partner in the Dallas office of Thompson & Knight LLP, specializing in corporate and securities matters. Mr. Harris holds a bachelor’s degree from the University of Tulsa and a law degree from the University of Oklahoma.
Jeffrey L. Ritenour, Executive Vice President and Chief Financial Officer
Mr. Ritenour, 46, was elected to the position of Executive Vice President and Chief Financial Officer in 2017. In his current position, Mr. Ritenour is responsible for Devon’ business development, strategic planning, marketing, supply chain, investor relations, accounting, tax, and corporate finance functions. He is also a member of the Company’s Executive Committee. Mr. Ritenour joined the Company in 2001 and has served in various other positions at Devon, including most recently as Senior Vice President Corporate Finance, Investor Relations and Treasurer. Prior to joining Devon, Mr. Ritenour was an auditor with the firm of Ernst and Young. He earned both a bachelor’s degree in accounting and a master’s degree in business administration from the University of Oklahoma. Mr. Ritenour previously served on the boards of the managing member and general partner of EnLink Midstream, LLC and EnLink Midstream Partners, LP, respectively.Valerie M. Williams
Our Officers Information concerning our executive officers is set forth below. Information concerning Richard E. Muncrief, our President and Chief Executive Officer, is set forth under the caption “Our Nominees for Election”. Dennis C. Cameron, Executive Vice President and General Counsel Mr. Cameron, 60, was appointed executive vice president and general counsel in January 2021 following Devon’s merger with WPX. He is responsible for the Devon’s legal and public and government affairs functions. Cameron most recently served as executive vice president and general counsel of WPX. He joined WPX in 2012, previously serving as senior vice president and general counsel, vice president and deputy general counsel and assistant general counsel. Cameron has over 25 years of legal experience. He began his career in 1987 at GableGotwals, a private, full service firm he was with until joining WPX. Cameron is a member of the Oklahoma, Texas, Tulsa County, and American Bar associations, as well as The Foundation for Natural Resources and Energy Law. He holds a bachelor’s degree in mechanical engineering and a law degree, both from the University of Oklahoma. Tana K. Cashion, Executive Vice President Human Resources and Administration Ms. Cashion, 51, was appointed to the position of executive vice president of human resources and administration in February 2022. Cashion is responsible for Devon’s human resources, corporate communications, community relations, and multiple administration functions. Cashion joined Devon in 2005 and has held roles of increasing responsibility, including vice president of human resources and most recently, senior vice president of human resources and administration. Before joining Devon, Cashion worked in the retail, wholesale, and tourism industries. She has a bachelor’s degree in political science from Pepperdine University and a master’s degree in business administration from the University of Oklahoma. Clay M. Gaspar, Executive Vice President and Chief Operating Officer Mr. Gaspar, 51, was appointed executive vice president and chief operating officer in January 2021 following Devon’s merger with WPX. He is responsible for Devon’s geosciences, reservoir, production, drilling, completions, facilities, field operations, environmental, health and safety, and ESG functions. Gaspar most recently served as president and chief operating officer of WPX and served on the company’s board of directors. He joined WPX in 2014, previously serving as senior vice president and chief operating officer and senior vice president of operations and resource development. Prior to joining WPX, he worked for Newfield Exploration, Anadarko Petroleum, and Mewbourne Oil serving in a number of technical and leadership roles. Gaspar is a registered professional engineer and a member of the Society of Petroleum Engineers. He holds a bachelor’s degree in petroleum engineering from Texas A&M University and a master’s degree in petroleum and geosciences engineering from the University of Texas. Lyndon C. Taylor, Executive Vice President and Chief Legal & Administrative Officer
Mr. Taylor, 61, has been with Devon since 2005 and currently serves as Executive Vice President and Chief Legal & Administrative Officer. In his current position Mr. Taylor oversees Devon’s legal functions, as well as the public and government affairs, corporate services, facilities, and community relations groups. He is also a member of Devon’s Executive Committee. Prior to his current position, Mr. Taylor served as Executive Vice President and General Counsel from 2007 to 2019 and as Deputy General Counsel from 2005 until 2007. Prior to joining Devon, Mr. Taylor was with Skadden, Arps, Slate, Meagher & Flom LLP for 20 years, most recently as managing partner of the energy practice in Houston. He is admitted to practice law in Oklahoma and Texas. Mr. Taylor earned a bachelor’s degree in industrial engineering from Oklahoma State University and a law degree from the University of Oklahoma. Mr. Taylor previously served on the boards of the managing member and general partner of EnLink Midstream, LLC and EnLink Midstream Partners, LP, respectively.
David G. Harris, Executive Vice President and Chief Corporate Development Officer Mr. Harris, 49, was appointed to the position of executive vice president and chief corporate development officer in January 2021. Harris is responsible for Devon’s business development, new ventures, subsurface, land, and technology functions. Prior to the WPX merger, he served as executive vice president of exploration and production responsible for all of Devon’s business units, as well as land, technology, subsurface, and environment, health and safety groups. He has previously served as senior vice president of exploration and production, senior vice president of business development, vice president of corporate finance and treasurer, and as associate general counsel. Harris has been with Devon since 2007. Prior to joining Devon, he was a partner in the Dallas office of Thompson & Knight LLP, specializing in corporate and securities matters. Harris holds a bachelor’s degree from the University of Tulsa and a law degree from the University of Oklahoma. Jeffrey L. Ritenour, Executive Vice President and Chief Financial Officer Mr. Ritenour, 49, was appointed to the position of executive vice president and chief financial officer in April 2017. Ritenour is responsible for Devon’s corporate finance, treasury, planning, reserves, accounting, tax, internal audit, investor relations, marketing, and supply chain functions. He has been with Devon since 2001, serving in various leadership roles, most recently as senior vice president of corporate finance, investor relations, and treasury. Before joining Devon, Ritenour was with Ernst & Young in Dallas. He holds a bachelor’s degree in accounting and a master’s degree in business administration, both from the University of Oklahoma.
AGENDA ITEM 3.
APPROVE, IN AN ADVISORY VOTE, EXECUTIVE COMPENSATION
AGENDA ITEM 3. APPROVE, IN AN ADVISORY VOTE, EXECUTIVE COMPENSATION In accordance with Section 14A of the Securities Exchange Act of 1934, we are asking our stockholders to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement. At the 2017 Annual Meeting, you approved our proposal to provide you with this opportunity on an annual basis. This vote is not intended to address any specific item of compensation, but rather our overall compensation policies and practices relating to our named executive officers as disclosed in our Compensation Discussion and Analysis, the Summary Compensation Table, and other related tables and narrative disclosure. Accordingly, we will ask our stockholders to vote “FOR” the following resolution at the 2023 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 2023 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2022 Summary Compensation Table and the other related tables and narrative disclosure.” This vote, normally called a “say-on-pay” vote, is advisory, and therefore not binding on the Company, the Compensation Committee, or the Board. The Board will, however, as it has in prior years, take into account the outcome of the vote when considering future compensation arrangements. Our Board of Directors recommends that stockholders vote “FOR” the approval, on an advisory basis, of the compensation of our named executive officers.
AGENDA ITEM 4. APPROVE, IN AN ADVISORY VOTE, THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION In accordance with Section 14A of the Securities Exchange Act of 1934, we are asking our stockholders to indicate how frequently we should seek an advisory vote on the compensation of our named executive officers, as disclosed pursuant to the SEC’s compensation disclosure rules, such as Agenda Item 3 included on page 35 of this Proxy Statement. By voting on this Agenda Item 4, stockholders may indicate whether they would prefer an advisory vote on named executive officer compensation once every one, two, or three years. After careful consideration of this proposal, the Board has determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternative for Devon and our stockholders, and therefore the Board recommends that you vote for a one-year interval for the advisory vote on executive compensation. In reaching this recommendation, the Board considered that an annual vote allows stockholders to provide frequent, ongoing input on our executive compensation program. Moreover, the Board believes that seeking annual input from its stockholders on its executive compensation program is a key component of Devon’s ongoing dialogue with stockholders on executive compensation and other corporate governance matters. Stockholders will not be voting to approve or disapprove the Board’s recommendation on this agenda item. Instead, you may cast your vote on the voting frequency by choosing among three frequency options – the option of one, two, or three years – or you may abstain from voting. Although this advisory vote on the frequency of the “say-on-pay” vote is non-binding, the Board and the Compensation Committee will take into account the outcome of the vote when considering the frequency of future advisory votes on executive compensation. The Board may decide that it is in the best interests of our stockholders and Devon to hold an advisory vote on executive compensation more or less frequently than the option receiving the highest number of votes from our stockholders. Our Board of Directors recommends a vote for the option of “ONE YEAR” as the frequency with which stockholders are asked to provide an advisory vote on executive compensation.
COMPENSATION DISCUSSION AND ANALYSIS | | | | | Introduction | | | 38 | | Purpose of Compensation Discussion and Analysis the | | | 38 | | Named Executive Officers | | | 38 | | Executive Summary | | | 38 | | Compensation Table,Philosophy and other related tables and narrative disclosure. Accordingly, we will ask our stockholders to vote “FOR” the following resolution at the 2020 Annual Meeting:Objectives | | | 38 | | “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 2020 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2019 Summary Compensation Table,2022 Company Performance Highlights and the other related tablesImpact on Compensation
| | | 39 | | Response to Stockholder Feedback | | | 40 | | What Devon Does and narrative disclosure.”Doesn’t Do | | | 40 | | This vote, normally called a“say-on-pay” vote, is advisory, and therefore not binding on theElements of 2022 Compensation
| | | 41 | | Overview of 2022 Pay Decisions | | | 41 | | Base Salary | | | 42 | | Annual Performance Bonus | | | 43 | | 2023 Company the Compensation Committee, or the Board. The Board will, however, as it has in prior years, take into account the outcome of the vote when considering future compensation arrangements.Performance Scorecard Our Board of Directors recommends that stockholders vote “FOR” the approval, on an advisory basis, of the compensation of our named executive officers.
| | | | | | | 45 | | 37 | | Commitment Runs Deep |
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COMPENSATION DISCUSSION AND ANALYSIS
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EXECUTIVE COMPENSATION (cont’d)
EXECUTIVE COMPENSATION (cont’d)
Introduction
Purpose of Compensation Discussion and Analysis
Introduction Purpose of Compensation Discussion and Analysis This Compensation Discussion and Analysis (CD&A) outlines Devon’s compensation philosophy and describes the material components of the Company’s executive compensation program for its named executive officers (NEOs). This CD&A also summarizes decisions the Compensation Committee of the Board of Directors (the Committee) made under the program for 2022. Additional information about the compensation of the NEOs is provided in the 2022 Summary Compensation Table and other tables that follow this CD&A. Named Executive Officers The NEOs for 2022 are the following individuals: | | | | Executive | | Position | Richard E. Muncrief | | President and Chief Executive Officer | Jeffrey L. Ritenour | | Executive Vice President and Chief Financial Officer | Clay M. Gaspar | | Executive Vice President and Chief Operating Officer | David G. Harris | | Executive Vice President and Chief Corporate Development Officer | Dennis C. Cameron | | Executive Vice President and General Counsel |
Executive Summary Compensation Philosophy and Objectives Devon was formed in 1971 and has been publicly held since 1988. Since 2010, the Company has successfully transitioned to a liquids-rich (oil and natural gas liquids), higher-margin, onshore North American production base and continues to transform its organizational structures and processes to allocate capital investments to the Company’s most promising assets. On January 7, 2021, Devon and WPX Energy, Inc completed an all-stock merger of equals (the Merger). WPX was an oil and gas exploration and production company with assets in the Delaware Basin in Texas and New Mexico and the Williston Basin in North Dakota. The Merger enhanced the scale of the Company’s operations and built a leading position in the Delaware Basin. Devon has delivered strong returns on its investments through a dynamic culture focused on innovation, safety, operational excellence, environmental stewardship, and social responsibility. The Company focuses its business on generating positive operating returns by managing a premier asset portfolio, delivering superior execution, and exercising discipline in capital allocation. Devon also maintains a strong commitment to financial strength and flexibility through all commodity price cycles, as reflected in the Company’s investment grade credit ratings. The success of Devon’s strategy is founded on a pay-for-performance compensation philosophy intended to motivate near- term operational and financial success as well as long-term stockholder value creation. The Committee utilizes a range of quantitative and strategic measures to evaluate performance, evolving the measures as appropriate. Additionally, the Committee considers Devon’s size and scope relative to its peer group when setting compensation. Overall, an executive officer’s total compensation is weighted in favor of long-term incentives to emphasize value creation and stockholder alignment. The objectives of Devon’s compensation program are to: motivate and reward executives to drive and achieve the Company’s goal of increasing stockholder value; allocate incentives for the achievement of near-term and long-term objectives, in a manner that motivates executives to take measured and appropriate risk; and attract and retain highly trained, experienced, and committed executives who have the skills, education, business acumen, and background to create value in a large and diversified oil and gas business.
EXECUTIVE COMPENSATION (cont’d) The primary components of Devon’s executive compensation program are base salary, a performance bonus, and long- term incentives (LTI). The Committee generally targets each component, as well as the aggregate of the components, at approximately the 50th percentile of the Company’s peer group. Individual compensation levels may vary from these targets based on performance, expertise, experience, responsibilities, or other factors unique to the individual’s role within the Company. The Committee also provides retirement and other benefits typical for Devon’s peer group. 2022 Company Performance Highlights and the Impact on Compensation In 2022, Devon marked its 51st anniversary in the oil and gas business and its 34th year as a public company. The successful, strategic Merger accelerated Devon’s transition to a cash-return business model and was matched by excellent performance on most of the Company’s financial and operational goals. Devon’s portfolio was further strengthened in 2022 following the completion of two acquisitions in the Williston Basin and Eagle Ford that were highly complementary to its existing positions in each basin. In addition, commodity prices strengthened in 2021 and continued to strengthen throughout the majority of 2022, which significantly improved the Company’s earnings and cash flow generation. The actions taken and leadership provided by the executives during 2022 led to strong operational and financial results for Devon. | | | | | The Company’s accomplishments in 2022 are illustrated by the following highlights: Operational and financial achievements • Devon’s 2022 oil production averaged 299 MBbls/d, which is a 3% increase from 2021; • the Company exited 2022 with $4.5 billion of liquidity, including $1.5 billion of cash; • Devon invested approximately $100 million in emissions reduction capital projects in 2022; • Devon generated $8.5 billion of operating cash flow in 2022, which is a 74% increase from prior year; and | | | | Operating Cash Flow of $8.5 Billion | • the Company completed approximately 65% of its authorized $2.0 billion share repurchase program, with 25.7 million of its common shares repurchased for $1.3 billion, or $50.90 per share, since the inception of the plan. | | | | | Total stockholder return • Devon’s high share price for 2022 was $79.40, an 80% increase from the end of 2021; • when incorporating reinvested dividends and the Company’s closing stock price of 2022, $61.51, Devon’s total shareholder return (TSR) for the year was 50.7%; • including variable dividends, Devon paid dividends of approximately $3.4 billion in 2022 and has declared $579 million of dividends to be paid in the first quarter of 2023, which is inclusive of an 11% increase to our fixed quarterly dividend to $0.20 per share; and | | | | 50.7% Shareholder Return & $3.4 Billion in Dividends | • for the three and five-year periods ending on December 31, 2022, Devon posted the highest and second highest TSR of the Company’s executive compensation program for its named executive officers (NEOs). This CD&A also summarizes decisions the Compensation Committee of the Board of Directors (the Committee) made under the program and the processes utilized and factors considered in making those decisions. In particular, this CD&A focuses on the decisions the Committee made during its January 2020 meetings at which the Committee evaluated the Company’s performance in 2019 as well as each executive officer’s performance for the year, including the performance of the business or organizational unit for which the officer was responsible in 2019. At its January 2020 meetings, the Committee considered Devon’s stock price performance on an absolute and relative basis through the end of 2019, as well as the Company’s financial, operational, environmental, and strategic achievements against its 2019 plan objectives. This review was performed in order to determine salary adjustments, cash bonuses, and long-term equity incentive (LTI) awards. After the Committee’s January 2020 meetings, stock prices declined across the oil and gas industry due to concerns over the potential economic impact of theCOVID-19 pandemic and the oil supply standoff between the Organization of the Petroleum Exporting Countries (OPEC) and Russia. Devon recognizes that these unprecedented impacts may continue to affect Devon’s stock price and the average stock price of its peer group, throughout 2020. As described herein, Devon’s executive compensation program consistently aligns realized compensation outcomes with the Company’s performance during the reviewed year. Next year’s CD&A will describe and discuss the steps taken to address the challenges facing the industry in 2020 and the impact on both awarded and realized compensation.respectively.
Throughout this 2020 Proxy Statement, the following points should be considered:
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The executive pay described herein is aligned with the Company’s 2019 performance and total stockholder return.
The pay decisions described in this document were made at the Committee’s January 2020 meetings, before stock prices declined across the oil and gas industry due to concerns over the potential economic impact of theCOVID-19 pandemic and the standoff between OPEC and Russia.
Devon’s executive compensation is highly aligned with stock price performance. Should the oil and gas industry continue to be challenged, it is likely to have a large impact on pay awarded for 2020 and pay realizable from prior awards.
Additional information about the compensation of the named executive officers is provided in the 2019 Summary Compensation Table (the SCT) and other compensation tables that follow this CD&A. Pursuant to SEC rules, the outcome of the Committee’s January 2020 decisions on base salaries for 2020 and LTI will appear in next year’s SCT while the performance bonus is shown in the“Non-Equity Incentive Plan Compensation” column of this year’s SCT.
EXECUTIVE COMPENSATION (cont’d) Response to Stockholder Feedback
EXECUTIVE COMPENSATION (cont’d)
Named Executive Officers
The named executive officers for 2019 are the following individuals:
| | | Executive | | Position | David A. Hager
| | President and Chief Executive Officer | Jeffrey L. Ritenour
| | Executive Vice President and Chief Financial Officer | Lyndon C. Taylor
| | Executive Vice President and Chief Legal & Administrative Officer | David G. Harris
| | Executive Vice President – Exploration & Production | Tana K. Cashion
| | Senior Vice President – Human Resources | Tony D. Vaughn
| | Former Chief Operating Officer |
Mr. David Harris was appointed Executive Vice President – Exploration & Production in September 2019. Ms. Tana Cashion was appointed as an executive officer in September 2019. Although prior to the end of 2019, Mr. Vaughn changed roles from an executive officer to a senior advisor, which is anon-executive officer position, SEC rules require Devon to include him as a named executive officer in this CD&A. The SCT and other tables that follow this CD&A reflect Mr. Vaughn’s compensation for 2019. Mr. Vaughn was not part of the Committee’s 2020year-end performance and pay decision-making processes. Therefore, minimal references are made to Mr. Vaughn’s compensation in the CD&A. Mr. Vaughn has announced his retirement as a senior advisor of the Company effective in the second quarter of 2020.
Executive Summary
Company Performance and Pay Alignment
Devon was formed in 1971 and has been publicly held since 1988. Since 2010, the Company has successfully transitioned to a liquids-rich (oil and natural gas liquids), higher-margin, onshore North American production base and continues to transform its organizational structures and processes to allocate capital investments to the Company’s most promising assets. In 2019, the Company took significant steps to complete its transformation to “New Devon” and focus exclusively on its resource-rich U.S. oil portfolio. These steps included a reduction in long-term debt, the strategic divestment of various assets, and the reduction andre-alignment of the Company’s workforce and overall cost structure. In June 2019, the Company completed the sale of substantially all of its oil and gas assets and operations in Canada for $2.6 billion. Thereafter, Devon entered into an agreement to sell its largest natural gas asset, the Barnett Shale. Devon’s strategic shift accelerated the Company’s ongoing transformation and resulted in above-target overall results for 2019, including a total stockholder return (TSR) placing Devon within the top third of performance within its 2019 peer group.
The Committee determined that “cash return on capital employed” and“all-in rate of return” will continue to be among the featured metrics used to determine cash bonuses for performance. The Company believes that returns measures, in particular cash return on capital employed, correlate with total stockholder returns over the medium to long-term.All-in rate of return provides the Company data on its capital allocation decisions and subsequent value creation. It is an asset-driven measure that focuses on the multi-year well-head rate of return (inclusive of the overhead costs associated with the business) of Devon’s drilling program. Since their inception as scorecard metrics, the Committee believes that the return measures have further aligned our employees with the goals of the Company and enhanced the focus of the entire organization.
EXECUTIVE COMPENSATION (cont’d)
The structure of the Company’s compensation program coupled with the Committee’s processes and decision-making ensure a strong tie between Company performance and executive pay. This is especially illustrated by the compensation outcomes for Devon’s executives over the last three years. The chart below, “Summary of President and CEO Pay,” highlights the relationship between TSR (which is measured by stock price changes and dividend payment value) and the realizable pay of Devon’s CEO based on thetarget-pay opportunity the Committee has awarded to him at the grant date. Additional comparative detail about the tie between Company performance and NEO pay may be found below in the sections titled “Snapshot Comparison of Compensation Decisions Made Following 2019 and 2018” and “Effect of Company Performance on President and CEO Realizable Pay” found on page 52.
| | | | | | | | | | | | | | | | | | | | | | | | | | | Summary of President and CEO Realizable Pay1 | | Year | | Total
Stockholder
Return for
the Year | | Salary Increase
Awarded Following
Year End | | Performance Bonus
Awarded, % of Target,
Following Year End | | Long-Term
Incentives
Awarded, % of Target,
Following Year End | | Realizable Pay Relative
to Target Measured at
Year End2 | 2019 | | | | +16.8 | % | | | | No salary increase | | | | | 150 | % | | | | 100 | % | | | | 27.9 | % | 2018 | | | | -45.1 | % | | | | No salary increase | | | | | 90 | % | | | | 100 | % | | | | -52.1 | % | 2017 | | | | -8.8 | % | | | | No salary increase | | | | | 115 | % | | | | 100 | % | | | | -14.4 | % |
1 | For a discussion of what constitutes “realizable pay” for this purpose, see the explanatory notes to the “President and CEO Realizable Pay” chart on page 53.
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2 | For additional detail on the percentages reflected in this column, see page 53 of this proxy statement for 2019, page 49 of the 2019 proxy statement for 2018, and page 49 of the 2018 proxy statement for 2017, in each case in the section titled “Effect of Company Performance on President and CEO Realizable Pay.”
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2019 Company Performance Highlights
Devon believes setting challenging annual performance goals is key to continuous improvement in the returns it achieves on its assets and capital investments. Although the commodity pricing challenges that impacted the industry in 2018 continued in 2019, the actions taken during the year led the Company to exceed its 2019 goals on many of its target metrics as a result of improved well performance and cost-reduction efforts. The Company took significant steps to monetize certain assets, reduce long-term debt, andre-align its overall cost structure. The following performance highlights provide further context for the Committee’s considerations with respect to executive compensation for 2019:
Operational and financial achievements
The Company successfully completed the sale of its Canadian business for $2.6 billion in June 2019 and entered into an agreement to sell its largest natural gas asset, the Barnett Shale;
Devon achieved more than 90% of the Company’s three-year $780 million cost reduction goal;
The Company successfully increased oil and gas production while using less resources by exceeding the 2019 oil and gas production goal of 139 million BOE by 5.8% while reducing capital expenditures by approximately 10% and drilling 10% more wells compared to 2018;
the Company further developed its reporting on ESG matters and proactively engaged with its internal and external stakeholders to improve ESG performance;
EXECUTIVE COMPENSATION (cont’d)
the Company retired $1.7 billion of senior notes, reducing annualized financing costs by $60 million;
Devon repurchased $4.8 billion of stock as part of its $5.8 billion share repurchase program, representing a reduction of nearly 30% in the total amount of outstanding stock since the program’s inception;
Devon successfully increased the combined Delaware Basin and Powder River Basin production over 60% in 2019 compared to 2018; and
the Company exited 2019 with $1.8 billion of cash, inclusive of $380 million restricted for discontinued operations, and $3.0 billion of available credit under its Senior Credit Facility, with no debt maturities until 2025.
Total stockholder return
Devon increased its quarterly common stock dividend 12.5% to $0.09 per share beginning in the second quarter of 2019; and
| • | | Devon had the 4th highest TSR when compared to its 14 peer companies.
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Compensation Philosophy and Objectives
Devon is committed to delivering strong returns on its investments through a highly engaged culture focused on innovation, safety, operational excellence, environmental stewardship, and social responsibility. The Company focuses its business on generating operating returns by managing a premier asset portfolio, delivering superior execution, and exercising discipline in Devon’s capital allocation. Devon also maintains a strong commitment to financial strength and flexibility through all commodity price cycles, as reflected in the Company’s investment grade credit ratings.
This strategy requires a compensation philosophy that recognizes near-term operational and financial success as well as decision-making that supports long-term value creation. For these reasons, the Committee utilizes a range of measures in its compensation program and, when appropriate, adds new goals year-over-year to motivate and reward executives for improved performance over the contemplated time horizon. Overall, the value of an executive officer’s total compensation is weighted in favor of long-term incentives in order to focus the officer’s efforts on the long-term performance of the Company and to encourage the executive to remain at the Company.
The objectives of Devon’s compensation program are to:
motivate and reward executives to drive and achieve the Company’s goal of increasing stockholder value;
allocate incentives for the achievement of near-term and long-term objectives, without motivating executives to take excessive risk; and
attract and retain highly trained, experienced, and committed executives who have the skills, education, business acumen, and background to lead a large and diversified oil and gas business.
The primary components of Devon’s executive compensation program consist of base salary, a performance bonus, and LTI. The Committee generally targets each component, as well as the aggregate of the components, at approximately the 50th percentile of the Company’s peer group.
EXECUTIVE COMPENSATION (cont’d)
Individual compensation levels may vary from these targets based on performance, expertise, experience, or other factors unique to the individual’s role within the Company. The Committee also provides retirement and other benefits typical for Devon’s peer group.
What Devon Does and Doesn’t Do
| | Good Compensation Governance Practiced by Devon | | • Award Performance-Based LTI—The Company awards half of named executive officer LTI in the form of performance share units tied to TSR. A 100% of target payout on performance share units requires TSR that exceeds the peer group median.
• Utilize a Quantitative Process for Performance Bonuses—In determining performance bonuses, the Committee assigns a score to the Company’s performance on goals set at the beginning of the year. The Committee then calculates a weighted score that determines the amount of any performance bonuses. Each year, the Committee recalibrates the goals to align with performance outcomes that the Committee desires for the year.
• Tie Realizable Pay Opportunities to Company Performance—The Committee regularly reviews the realizable pay of the President and CEO and other executive officers in light of Company performance. This has resulted in pay that aligns with Company performance.
• Require Executives to Hold Devon Stock—Board-adopted guidelines establish robust minimum stock ownership levels for the executive officers.
• Provide for Clawback of Compensation—Pursuant to a Board-adopted policy, the Committee may claw back performance bonuses and LTI if the Company restates its financial statements.
• Interview Executives—On an annual basis, the Committee conductsin-depth, confidential,one-on-one interviews with each executive officer, which is a highly effective tool in the Committee’s oversight of the executive compensation program.
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| | Controversial Compensation GovernanceNot Practiced by Devon | | ☒Enter into Egregious Employment Agreements—The Company does not enter into contracts containing multi-year guarantees of salary increases ornon-performance based bonuses or equity compensation.
☒Provide TaxGross-Ups—Employment agreements do not obligate the Company to make taxgross-up payments in the event of a change in control of the Company.
☒Allow Excessive Severance Benefits and/or LiberalChange-in-Control Payments—Employment agreements do not provide cash payments that exceed three times base salary plus target/average/last paid bonus; do not contain liberalchange-in-control definitions; and, do not provide severance payments without job loss (i.e., no “single trigger” cash severance or equity vesting with a change in control).
☒Allow Risky Transactions in the Company’s Stock—Company policy prohibits the executives from engaging in short-term or speculative transactions or hedging or pledging Devon’s common stock.
☒Reprice or Replace Underwater Options—The Company does not reprice or replace underwater stock options.
☒Permit Abusive Perquisites Practices—Perquisites made available to the executives are limited.
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EXECUTIVE COMPENSATION (cont’d)
Response to Stockholder Feedback
Devon conducts investor outreach throughout theeach year to ensure that management and the Board understand the compensation issues that matter to Devon’s stockholders. During 2019,2022, the Company contacted a majority of its 50 largest stockholders and had productive interactionscontact with many stockholders, both inside and outside of that group, including severalin-person meetings. The Committeemore than 600 investors or their representatives. Devon reviews the feedback resulting from these outreach efforts.its investors and implements changes, as appropriate. The Committee generally utilizes compensation metrics that the investor community considers most important in assessing the performance of the Company and considers such metrics in its compensation decisions, including its annual performance bonus calculation as set forth on page 43. In addition, Devon is disclosing its prospective 2023 scorecard (page 45) at the request of stockholders. Devon also considers the results of the most recent advisory vote on executive compensation by Devon’s stockholders,(say-on-pay vote), which for 20192022 reflected that approximately 94%95% of voting stockholders voted “for” Devon’s executive compensation in 2018. The chart set forth below highlights2021. With a clear majority of shareholder support for our executive compensation program, Devon did not make any material changes made overto the past few years. executive compensation program during the 2022 year. For a further description of Devon’s history of stockholder outreach, see prior Proxy Statements.
| | | | 95% Support in 2022 | | | | |
What Devon Does and Doesn’t Do | | | Good Compensation Governance Practiced by Devon | | • Award Performance-Based LTI—The Company awards 60% of NEO LTI in the form of Performance Share Units (PSUs) tied to TSR. A 100% of target payout on PSUs requires TSR that exceeds the peer group median and positive TSR for the performance period is required for a payout of more than 100% of target. • Utilize a Quantitative Process for Performance Bonuses—The goals, their weightings, thresholds, and maximums are determined at the beginning of the year. At the end of the year, the Committee evaluates performance on the goals, assigning each a score between 0% and 200%. The total performance score is determined by multiplying each goal’s score by its weighting and aggregating. • Tie Realizable Pay Opportunities to Company Performance—The Committee generally utilizes compensation metrics thatregularly reviews the investor community considers most important in valuing the Company, which traditionally have included measures like relative TSR and production growth. In addition to traditional measures, the Company reviews existing metrics in lightrealizable pay of developments in pay practices and has been responsive to investor input regarding the addition and deletion of various measures, as seen in the chart below. | | | | | Source for Detail | | Change in Compensation Practice | | | 2020 Proxy Statement | | • Devon strengthened the link between executive compensation and environmental stewardship by adopting a goal for improving Devon’s fugitive emissions performance and including that goal in the scorecard used to determine performance bonuses for 2019 performance.
• In light of the Company’s strategic transformation in 2019, the Committee selected a recalibrated peer group for 2020 that better aligns with Devon’s go-forward size and operations. This recalibration resulted in (i) the removal of several larger and operationally dissimilar oil and gas companies from the peer group and (ii) the addition of two companies of similar size and operations within the oil and gas exploration and production industry.
| | | 2019 Proxy Statement | | • No significant changes made.
| | | 2018 Proxy Statement | | • The scorecard used to determine bonuses for 2018 performance includes operational and financial measures that reflect the return on Devon’s investments.
• For 2018, “cash return on capital employed” and “all-in return on capital” metrics were added to the scorecard, oil and gas reserves additions were removed, and certain other measures were removed or de-emphasized.
| | | 2017 Proxy Statement | | • The long-term incentive plan approved by stockholders at the Company’s 2017 annual meeting (the 2017 LTIP) does not permit the payment of any dividends on restricted stock awards until the underlying shares vest.
• The 2017 LTIP provides that shares will not vest in the case of a change in control unless a job loss follows or the acquiring company fails to assume outstanding grants (i.e., no “single trigger” equity vesting with a change in control).
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EXECUTIVE COMPENSATION (cont’d)
Compensation Decisions for 2019
Overview of Pay Decisions
Devon’s executive compensation practices consistently result in apay-for-performance tie that is among the strongest in the Company’s peer group. An overwhelming majority of overall compensation is delivered through performance bonuses and LTI awards, each of which correlate with Company performance.
As illustrated below, compensation decisions made by the Committee during its January 2020 meetings resulted in awards heavily weighted toward TSR and achievement of other 2019 Company performance measures. Approximately 90% of the value of total direct compensation awarded to the President and CEO and an averageother executive officers in light of approximately 84% of total direct compensationCompany performance. This has resulted in pay that aligns with Company performance.
• Require Executives to Hold Devon Stock—Board-adopted guidelines establish minimum stock ownership levels for the other named executive officers was delivered throughofficers. • Provide for Clawback of Compensation—Pursuant to a Board-adopted policy, the Committee may claw back performance bonuses and LTI if the Company restates its financial statements. • Dialog to Promote Continuous Improvement—On an annual basis, the Committee conducts in-depth, confidential, one-on-one interviews with each executive officer, which is a highly effective tool in the Committee’s oversight. |
EXECUTIVE COMPENSATION (cont’d) | | | Controversial Compensation Governance Not Practiced by Devon | | ☒Enter into Egregious Employment Agreements—The Company does not enter into contracts containing multi- year guarantees of salary increases or non-performance-based bonuses or equity compensation. ☒Allow Excessive Severance Benefits and/or Liberal Change-in-Control Payments—Employment agreements do not provide cash payments that exceed three times base salary plus target/average/last paid bonus; do not contain liberal change-in-control definitions; and, do not provide severance payments without job loss (i.e., no “single trigger” cash severance or equity vesting solely with a change-in-control). ☒Allow Risky Transactions in the Company’s Stock—Company policy prohibits the executives from engaging in short-term or speculative transactions or hedging or pledging Devon’s common stock. ☒Reprice or Replace Underwater Options—The Company does not reprice or replace underwater stock options. ☒Permit Abusive Perquisites Practices—Perquisites made available to the executives are limited. |
Elements of 2022 Compensation Overview of 2022 Pay Decisions Most of the Company’s overall executive compensation is delivered through performance bonuses and LTI awards, each of which correlate with Company performance. The Committee considered incentive compensation for 2022 at two different times. At the January 2022 meetings, the Committee considered 2022 LTI grants and salary increases. At the Committee’s January 2023 meeting, the Committee considered the award of 2022 performance bonuses. As illustrated below, compensation decisions made by the Committee resulted in awards heavily weighted toward TSR and achievement of other 2022 Company performance measures. Approximately 91% of the value of total direct compensation awarded to the President and CEO, and an average of approximately 87% of the value of total direct compensation awarded to the other NEOs, was delivered through performance bonuses and LTI. 
Each year, the Committee refers to the following factors in considering any compensation decisions for the NEOs: 
Each year, the Committee refers to the following factors in considering any compensation decisions for the named executive officers:
| • | | Company performance in relation to goalspre-approved by the Committee and the Board, of Directors, including the Company’s TSR performance as compared to peers; |
each named executive officer’s
EXECUTIVE COMPENSATION (cont’d) each NEO’s individual performance during the year, including the performance of the business or organizational unit for which the officer is responsible; | • | | Devon’s pay-for-performancecompensation philosophy;philosophy and objectives (see section titled “Compensation Philosophy & Objectives” on page 38); |
input from the Compensation Consultant (see section titled “Role of Compensation Consultant” on page 48 for additional information); the Committee’s review of competitive market data provided by the Compensation Consultant; and the President and CEO’s recommendations with respect to the compensation of the other NEOs. The Committee regularly reviews the above-listed factors when considering compensation decisions and from time-to-time changes or supplements its analysis with other factors. Base Salary Base salary typically represents a smaller portion of total executive compensation than the combination of long-term incentives and performance bonus, which vary year-to-year based on performance. Competitive salaries, however, are vital to ensuring that the Company attracts and retains executives who have a combination of business acumen, significant industry experience, and length of service with the Company. In evaluating salary levels each year, the Committee generally considers the following factors: the competitive position of the executive’s base salary compared to similarly situated executives at Devon’s benchmark peer companies, as set forth on page 49; the scope of responsibility, experience, and tenure of the executive and the executive’s potential to take on greater or different responsibilities; and the Company’s cost structure. Based on the foregoing considerations, the Committee approved salary increases for all NEOs at its January 2022 meetings. The Summary Compensation Table’s entries for “Salary” reflect the base salary received by the NEOs during 2022 from Devon. Those entries may be different than the rates listed below due to salary changes taking effect after the start of 2022. | | | | | | | | | | | | | | Executive | | Annual Salary Rate in Effect
12/31/211 | | | 2022 Annual Salary
Rate Set at January
Meetings1 | | | % Change | | | | | | Richard E. Muncrief | | $ | 1,100.0 | | | $ | 1,138.5 | | | | 3.5 | % | | | | | Jeffrey L. Ritenour | | $ | 620.0 | | | $ | 641.7 | | | | 3.5 | % | | | | | Clay M. Gaspar | | $ | 620.0 | | | $ | 641.7 | | | | 3.5 | % | | | | | David G. Harris | | $ | 610.0 | | | $ | 631.4 | | | | 3.5 | % | | | | | Dennis C. Cameron | | $ | 4 75.0 | | | $ | 500.0 | | | | 5.3 | % |
1 Dollar amounts shown in thousands.
EXECUTIVE COMPENSATION (cont’d) Annual Performance Bonus In awarding performance bonuses, the Committee uses a formula that establishes a performance-bonus target for each NEO based on a percentage of his base salary. In establishing performance-bonus targets, the Committee considers industry benchmarks for the relevant officer position as well as the scope of responsibility associated with the position. For 2022, performance-bonus targets for NEOs ranged from 80% to 130% of base salary rate, which is consistent with the performance-bonus range of the peer company executives of Devon’s benchmark peers as set forth on page 49. Performance-bonus payouts depend on the Company’s performance in relation to the structured and measurable goals approved by the Board at the beginning of the year and the individual executive’s contributions to the achievement of those goals. The goals were selected because they are critical to the Company’s near-term performance, its prospects for sustainable growth in returns, and the creation of long-term value for the Company and its stockholders. The table below provides detail on the Company’s performance on the goals set for 2022. As reflected in the table, the Board assigns a separate weighting to each performance measure in order to reflect the relative importance of those areas for the year. The Committee aggregates the weighted performance score for each measure to arrive at an overall Company performance score. The process for determining performance bonuses relies on Company performance measures and the application of set formulas to arrive at the bonus amounts. However, the Committee maintains the authority to adjust the amount of an executive’s performance bonus within the range of the bonus pool (0% to 200% of target) based upon individual contributions, market conditions, or other factors. For 2022, the Committee adjusted the weighted score for the performance bonus down to emphasize the importance of continuous improvement in operational safety and performance within the “ESG & Community Engagement” goal. | | | | | | | | | | | | | | | | Measure | | Threshold | | Goal | | Maximum | | Outcome | | Weight | | Score5 | | Weighted
Score | | Free Cash Flow1 ($, Millions) | | $3,250 | | $4,000 | | $5,000 | | $5,986 | | 25% | | 200% | | 50.00% | | Cash Return on Capital Employed1,2 (CROCE) | | 25% | | 35% | | 60% | | 61% | | 25% | | 200% | | 50.00% | | Total Capital Expenditures1 ($, Millions) | | $2,860 | | $2,601 | | $2,340 | | $2,770 | | 10% | | 67% | | 6.70% | | Total Oil and Gas Production (MBOE/day) | | 570 | | 592 | | 660 | | 610 | | 10% | | 115% | | 11.50% | | ESG & Community Engagement3 | | See Footnote 3 | | 15% | | 160% | | 24.00% | | Emissions Reduction4 | | See Footnote 4 | | 15% | | 175% | | 26.25% | | Score Card Total, Before Adjustment | | 168.45% | | Score Card Total, After Adjustment | | 165.00% |
The Committee awarded performance bonuses commensurate with the superior overall performance of the Company reflected by results on the performance scorecard. The Company outperformed the targets on all 2022 goals for the performance scorecard, with the exception of results on “Total Capital Expenditures,” which was influenced by the impacts of inflation, and which fell between the Company’s established threshold and target goal. In assessing 2022 performance, the Committee scored the Company highest on its financial goals, “Free Cash Flow” and “Cash Returned on Capital Employed.” During their discussions, the Committee highlighted the Company’s performance on the new standalone “Emissions Reduction” goal. | 1 | confidential interviews conductedThe financial results considered by the Committee with each executive officer individually;when determining the performance bonuses were based on the Company’s best reasonable estimates available at that time. Although the actual results varied from such estimates in certain instances, none of the
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EXECUTIVE COMPENSATION (cont’d) | input from the Compensation Consultant (see section titled “Role of Compensation Consultant” on page 55variances were material in amount or significance. These financial measures are not calculated in accordance with GAAP. Please refer to Appendix A for additional information);information regarding these financial measures, including reconciliations to their most directly comparable GAAP measure.
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| 2 | CROCE is a measure of the Committee’s own reviewCompany’s capital efficiency. A reconciliation of competitive market data; and the President and CEO’s recommendations with respectthis goal to the compensationCompany’s financial statements can be found in Appendix A.
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| 3 | The Company’s “ESG & Community Engagement” goal is comprised of ESG goals (70% of total) and Community Engagement goals (30% of total). The ESG goals consisted of (i) SIF (Serious Incident & Fatality) Event Reduction, which included a goal of a SIF recordable incident rate of 0.07 for the other named executive officers. The Committee regularly reviewsnumber of recordable SIF events experienced per 200,000 employee hours worked and received a Company result of 0.05, exceeding the above-listed factors when considering compensation decisionsgoal, (ii) Reduction of Spill Rate, which included a goal to reduce spilled barrels to 21.99 barrels of liquid spilled per 1,000,000 barrels of liquid transported and from timereceived a Company result of 29.67, falling below the set goal, (iii) Utilization of SIF Learnings, which ensures that SIF events are investigated in a timely manner and SIF learnings are implemented throughout the Company to time changes or supplements its analysis with other factors.
EXECUTIVE COMPENSATION (cont’d)
Base Salary
Base salary typically represents a smaller portion of executive pay than compensation elements that varyyear-to-year based on performance. Competitive salaries, however, are vital to ensuringprevent future occurrences, and (iv) EHS Management System, which ensures that the Company attractsis on track to meet leading indicators and retains executives who haveintegrate critical initiatives.
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| The Community Engagement goals consisted of (i) Strategic Enhancement of STEM Education that included the goal of supporting 500 classrooms, 50,000 students, and 1,000 teachers, which goal was exceeded by supporting over 1,900 classrooms, over 100,000 students, and over 2,500 teachers, (ii) Expansion of Reach of Diversity, Equity & Inclusion Charitable Programing that included the goal of cultivating partnerships with five new organizations, which goal was exceeded by reaching ten new organizations, and (iii) Increasing Employee Engagement through Community Programs, which goal was exceeded by having 125 employees participate in Devon’s charitable match program while maintaining participation rates in Devon’s Give for Good charitable campaign. |
| The score on the “ESG & Community Engagement” goal was 160% of target. |
| 4 | The “Emissions Reduction” Goal consisted of (i) Flaring Intensity Reduction and (ii) Enhanced Leak Detection Program, each 50% of the total. The goal for Flaring Intensity Reduction was to reduce the amount of gas flared to 0.75% of gross natural gas production or below. The Company achieved a combinationresult of business acumen, significant industry experience, and longevity with0.46% of gross natural gas production, exceeding the Company. In evaluating salary levels each year, the Committee generally considers0.75% goal. For Enhanced Leak Detection, Devon achieved the following factors:results on its sub-goals: (i) conducted optical gas imaging surveys at 100% of facilities (versus a goal of 100%), (ii) conducted semi-annual surveys at 100% of facilities (versus a goal of 100%), and (iii) installed continuous or near-continuous emissions detection and monitoring equipment on 31% of the Company’s production (versus a goal of 20%). |
| 5 | Outcomes that fall below the Threshold are scored at 0%; Outcomes between Threshold and Goal are scored between 50% and 100%; Outcomes between Goal and Maximum are scored between 100% and 200%; and Outcomes that exceed the Maximum are scored at 200%. |
The following table outlines the calculations made for the performance bonuses awarded to NEOs for 2022:1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive | | Annual Salary
Rate1 | | | | | | Bonus Target | | | | | | Adjusted
Company
Performance Score | | | | | | Performance
Bonus1 | | | | | | | | | | | Richard E. Muncrief | | $ | 1,138.5 | | |
| Multiplied
by |
| | | 130% | | |
| Multiplied
by |
| | | 165% | | | | Equals | | | $ | 2,442.1 | | Jeffrey L. Ritenour | | $ | 641.7 | | | | 90% | | | $ | 952.9 | | Clay M. Gaspar | | $ | 641.7 | | | | 100% | | | $ | 1,058.8 | | | | | | | | | | | David G. Harris | | $ | 631.4 | | | | | | | | 90% | | | | | | | | | | | | | | | $ | 937.6 | | | | | | | | | | | Dennis C. Cameron | | $ | 500.0 | | | | | | | | 80% | | | | | | | | | | | | | | | $ | 660.0 | |
| 1 | All dollar amounts in thousands. |
Please note that the Summary Compensation Table’s entries for Non-Equity Incentive Plan Compensation in 2022 reflect the annual performance bonuses listed under the column above titled “Performance Bonus.” The Committee did not make any individual adjustments for the 2022 NEO performance bonus amounts.
EXECUTIVE COMPENSATION (cont’d) 2023 Company Performance Scorecard For further transparency, Devon’s Board decided to proactively disclose a summary of the Company’s anticipated 2023 performance scorecard. The scorecard, summarized below, will be used to analyze Company performance for 2023 and to award executive performance bonuses. | | | | | | Measure | | Weight | | Free Cash Flow (FCF) | | | 25 | % | Cash Return on Capital Employed (CROCE) | | | 25 | % | Total Capital Expenditures | | | 10 | % | Total Oil & Gas Production | | | 10 | % | ESG & Community Engagement | | | 15 | % | Emissions Reduction | | | 15 | % |
Devon’s Board decided that using the same 2022 goals and weightings for the 2023 Company performance scorecard best promotes continued growth of shareholder returns. Performance thresholds, targets, and maximums will, for most or all goals, likely change from 2022 to 2023. Long-Term Incentives A key element of Devon’s compensation program is to align pay and performance by rewarding executive officers for long- term strategic accomplishments and enhancement of long-term stockholder value through equity-based incentives that vest over an extended period of time. LTI compensation plays an essential role in attracting and retaining executive officers and aligns their interests with the long-term interests of Devon’s stockholders.
EXECUTIVE COMPENSATION (cont’d) The following table describes the purpose and structure of the LTI granted to the NEOs at the Committee’s meetings to set 2022 executive compensation: | | Restricted Stock Awards (RSAs) | | Purpose: Awards of RSAs foster long-term stock ownership, strengthen alignment with stockholders, and promote executive retention during the competitive positionvesting period. | | Additional Details: Devon grants RSAs that vest ratably over four years, 25% on each anniversary of the executive’s base salary comparedgrant date. |
| | | | | | | | | | | | | | | | | | | | | | Performance Share Units (PSUs) | | Purpose: Awards of PSUs encourage executives to similarly situated executives at peer companies;make decisions and take actions that promote Company performance and long-term stockholder return. | | Additional Details: the scope of responsibility, experience,• Executives may earn between 0% and tenure200% of the executiveshares underlying the grant based on the Company’s TSR relative to peer companies1 over a three-year performance period (for 2022 grants, January 1, 2022 through December 31, 2024).
• Payout will be determined as of the end of the performance period. The grid below further details the relationship between relative performance and payout levels. • Executives may earn the targeted number of shares (100%) only if the Company’s TSR outperforms that of at least half of peers (6th relative position or higher). • Without respect to Devon’s relative TSR position, executives may earn no more than the targeted number of shares (100%) if the Company’s TSR is negative during the performance period. |
| | | | | | | | | | | | | | | | | | | | | | | PSU Payout Schedule | | | | | | | | | | | | | Devon’s Relative TSR Position | | 1st, 2nd | | 3rd | | 4th | | 5th | | 6th | | 7th | | 8th | | 9th | | 10th | | 11th,12th | | | | | | | | | | | | | % of Shares Earned | | 200% | | 175% | | 150% | | 125% | | 100% | | 88% | | 75% | | 63% | | 50% | | 0% |
| 1 | The peer companies used for comparison for the PSU grants selected in January 2022 at the time the grant was approved. The peers are APA Corporation, ConocoPhillips, Continental Resources, Inc., Coterra Energy Inc., Diamondback Energy, Inc., EOG Resources, Inc., Marathon Oil Corporation, Occidental Petroleum Corporation, Ovintiv Inc., Pioneer Natural Resources Company, and the executive’s potential to take on greater or different responsibilities; andS&P Midcap 400 Index. the Company’s cost structure.
Based on the foregoing considerations, with special consideration for competitive position, and taking into account that no increases were approved at the January 2019 meeting, the Committee determined in its January 2020 meetings that salary increases were appropriate in three cases. Please note that the SCT’s entries for “Salary” reflect the salaries received by the named executive officers during 2019. The footnotes that accompany this year’s SCT and the discussion of salaries in last year’s CD&A provide additional information on salaries in effect for 2019.
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At its January 2022 meetings, the Committee approved LTI grant values that approximated the competitive 50th percentile of the peer group applicable to each NEO. The Committee also determined that the pursuit of strategic Company goals and creation of stockholder value would again be promoted by linking 60% of the LTI awarded for the 2022 year to Company performance and 40% to long-term stock ownership, thereby strengthening the alignment between interests of executives and stockholders. Accordingly, the two types of LTI granted to NEOs were PSUs and time-based restricted stock awards (RSAs), respectively. | | | | | | | | | | | | | | Executive | | Annual
Salary in
Effect on
12/31/20191 | | | 2020
Annual Salary
Rate1 | | | %
Change | | | | | | David A. Hager | | $ | 1,275 | | | $ | 1,275 | | | | 0 | % | | | | | Jeffrey L. Ritenour | | $ | 600 | | | $ | 620 | | | | 3.3 | % | | | | | Lyndon C. Taylor | | $ | 650 | | | $ | 650 | | | | 0 | % | | | | | David G. Harris | | $ | 550 | | | $ | 610 | | | | 10.9 | % | | | | | Tana K. Cashion | | $ | 345 | | | $ | 375 | | | | 8.7 | % |
EXECUTIVE COMPENSATION (cont’d) LTI Granted in 20221 | | | | | | | | | | | | | | | | Executive | | Item2 | | Target
Performance Share
Units3 | | | Restricted
Stock | | | Total | | Richard E. Muncrief | | Shares | | | 100,537 | | | | 67,025 | | | | 167,562 | | | | Grant Value | | | $5,250 | | | | $3,500 | | | | $8,750 | | Jeffrey L. Ritenour | | Shares | | | 36,768 | | | | 24,512 | | | | 61,280 | | | | Grant Value | | | $1,920 | | | | $1,280 | | | | $3,200 | | Clay M. Gaspar | | Shares | | | 43,662 | | | | 29,108 | | | | 72,770 | | | | Grant Value | | | $2,280 | | | | $1,520 | | | | $3,800 | | David G. Harris | | Shares | | | 36,768 | | | | 24,512 | | | | 61,280 | | | | Grant Value | | | $1,920 | | | | $1,280 | | | | $3,200 | | Dennis C. Cameron | | Shares | | | 22,980 | | | | 15,320 | | | | 38,300 | | | | Grant Value | | | $1,200 | | | | $800 | | | | $2,000 | |
| 1 | Dollar amounts shown in thousands. |
| 2 | Annual Performance Cash Bonus
In awarding performance bonuses,For each NEO, the Committee utilizes a formula that establishes a performance-bonus target for each named executive officer based on a percentage of his or her base salary. In establishing performance-bonus targets,first determines the Committee considers industry benchmarks for the relevant officer position as well as the scope of responsibility associated with the position. For 2019, performance-bonus targets for named executive officers ranged from 50% to 135% of base salaries.
Performance-bonus payouts depend on the Company’s performance in relation to the structured and measurable goals approved by the Board at the beginning of the year and the individual executive’s contributions to achievement of those goals. The goals were selected because they are critical to the Company’s near-term performance, its prospects for sustainable growth in returns, and the creation of long-termtotal value for the Company and its stockholders.
The table below provides detail on the Company’s performance on the goals set for 2019. As reflected in the table, the Committee assigns a separate weighting to each performance measure in
EXECUTIVE COMPENSATION (cont’d)
order to reflect the relative importance of those areas for the year. The Committee aggregates the weighted performance score for each measure to arrive at an overall Company performance score.
For operational and financial goals, the Committee generally views (i) a 30% or greater shortfall from a goal as the threshold at which a score of no more than 25% may be assigned for the goal and (ii) a 30% or greater outperformance on a goal as maximizing performance such that a score of up to 200% could be assigned for the goal. Although the structure of the performance-bonus process relies on Company performance measures and the application of set formulas to arrive at performance-bonus amounts, the Committee maintains the authority to adjust the amount of an executive’s performance bonus within the range of the bonus pool (0% to 200% of target) based on individual contributions. The Committee made no such adjustments for 2019.
| | | | | | | | | | | | | | | | | | Measure | | Goal | | Outcome | | Weight | | | Score | | | Weighted Score | | | Cash Return on Capital Employed1 | | 20% | | 22% | | | 15 | % | | | 125 | % | | | 18.75 | % | | All-In Return on Capital1 | | 15% | | 24% | | | 15 | % | | | 200 | % | | | 30.00 | % | | Expenditures (millions) 2 | | Capital: $1,976; LOE+GPT: $830; Net G&A: $528 | | Capital: $1,935; LOE+GPT: $894; Net G&A: $475 | | | 15 | % | | | 125 | % | | | 18.75 | % | | Oil and Gas Production2 | | 302,000 BOE per day | | 323,000 BOE per day | | | 15 | % | | | 150 | % | | | 22.50 | % | Improve the Overall Value of Devon’s Risked Resource
Portfolio (million BOE) | | Test and move contingent resources: 150 Evaluate portfolio high grading opportunities: 1,000 | | Test and move contingent resources: 321 Evaluate portfolio high grading opportunities: >1,000 | | | 10 | % | | | 200 | % | | | 20.00 | % | | Total Stockholder Return3 | | Top half of the peer group on a1-year basis | | 1-year TSR ranked 4th out of 15 in relation to the peer group; 1 of only seven with positive TSR | | | 10 | % | | | 175 | % | | | 17.50 | % | | Environmental, Health, and Safety4 | | Continuously improve in environmental, health, and safety performance | | Met targets on Lost Spill Rate, fugitive emissions performance, Utilization of SIF Learnings, Implementation of Roadmap; missed target for Combined Recordable SIF rate | | | 10 | % | | | 75 | % | | | 7.50 | % |
EXECUTIVE COMPENSATION (cont’d)
| | | | | | | | | | | | | | | | | | Measure | | Goal | | Outcome | | Weight | | | Score | | | Weighted Score | | | Internal and External Stakeholder Alignment | | Increase stakeholder engagement, alignment, and support to maintain or improve the public policy and business environment in which Devon operates | | Further developed Devon’s reporting on ESG matters and proactively engaged with the Company’s internal and external stakeholders to improve ESG performance | | | 5 | % | | | 150 | % | | | 7.50 | % | | Learning & People | | Improve Devon’s ability to perform by advancing a culture of innovation, inclusion, technology, automation, and continuous improvement | | Refocused innovation culture efforts to promote successful company transformation; enhanced employee’s ability to contribute through inclusion and diversity efforts | | | 5 | % | | | 150 | % | | | 7.50 | % |
| | | 2019 Company Performance Total Weighted Score
| | 150% |
1 | Please refer to Appendix A for additional information about Cash Return on Capital Employed andAll-In Return on Capital, which arenon-GAAP financial measures.
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2 | Dollar amounts and production volumes reflect Devon’s total operations, including amounts presented in both continuing and discontinued operations.
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3 | For relative 2019 TSR measurement, the Company is ranked in relation to the following 14 peer companies: Anadarko Petroleum Corporation, Apache Corporation, Chesapeake Energy Corporation, Concho Resources Inc., ConocoPhillips, Continental Resources, Inc., Ovintiv, Inc. (f/k/a EnCana Corporation), EOG Resources, Inc., Hess Corporation, Marathon Oil Corporation, Murphy Oil Corporation, Noble Energy, Inc., Occidental Petroleum Corporation, and Pioneer Natural Resources Company. See page 55 for a discussion of the recalibrated 2020 peer group.
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4 | The Company’s “Environmental, Health and Safety” goals consisted of (i) combined recordable SIF rate, (ii) utilization of SIF learnings, (iii) fugitive emissions performance, (iv) lost spill rate, and (v) implementation of multi-year roadmap to improve EHS performance. The SIF rate records serious incidents or fatalities.
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The performance scorecard reflects that the Company posted positive results in the challenging commodity price environment of 2019. In particular, the Committee commended the Company’s performance on the implementation of its strategy to monetize various assets, reduce long-term debt, andre-align its overall cost structure. Devon’s strategic shift accelerated the Company’s ongoing transformation and resulted in strong overall results for 2019, including placing Devon within the top third of its 2019 peer group with respect to TSR performance. Additionally, the scorecard reflects that Devon took significant steps towards its transition to a U.S. oil company in 2019. The Committee also noted that the Company achieved four of its five performance goals on environmental, health, and safety measures, but did not meet its target goal reduction for recordable SIF events.
EXECUTIVE COMPENSATION (cont’d)
The following table outlines the calculations made for the bonuses awarded for 20191:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive | | 2019
Salary2 | | | | | | Performance
Bonus
Target | | | | | | Company
Performance
Score | | | | | | Process
Determined
Performance
Bonus
Amount | | | | | | | | | | | David A. Hager | | $ | 1,275 | | | | X | | | | 135% | | | | X | | | | 150% | | | | = | | | $ | 2,582 | | Jeffrey L. Ritenour | | $ | 600 | | | | 90% | | | $ | 810 | | Lyndon C. Taylor | | $ | 650 | | | | 90% | | | $ | 878 | | | | | | | | | | | David G. Harris | | $ | 550 | | | | | | | | 90% | | | | | | | | | | | | | | | $ | 743 | | | | | | | | | | | Tana K. Cashion | | $ | 345 | | | | | | | | 50% | | | | | | | | | | | | | | | $ | 259 | |
1 | All dollar amounts in thousands.
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2 | Annual base salary rate in effect as of December 31, 2019.
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Please note that the SCT’s entries forNon-Equity Incentive Plan Compensation in 2019 reflect the annual performance bonuses listed under the column above titled “Process Determined Performance Bonus Amount.”
The Committee did not make any individual adjustments for the 2019 NEO performance bonus amounts. However, upon further consideration of the duties associated with Ms. Cashion’s role, the Committee increased her bonus target to 60% applicable for any performance bonus paid for 2020.
Long-Term Incentives
A key element of Devon’s compensation program is to reward executive officers for long-term strategic accomplishments and enhancement of long-term stockholder value through equity-based incentives that vest over an extended period of time. LTI compensation plays an essential role in attracting and retaining executive officers and aligns their interests with the long-term interests of Devon’s stockholders.
At its January 2020 meetings, the Committee determined that the 2020 awards of LTI should generally continue the past practice of tracking a target at the 50th percentile compared to peers. In making this decision, the Committee considered the factors it generally references for compensation decisions and took into account the Company’s strong operational performance for the year and the Company’s progress on, and each executive’s leadership with respect to, the Company’s strategic objectives.
EXECUTIVE COMPENSATION (cont’d)
The table below details the awards made to named executive officers. The SCT in next year’s proxy statement will reflect the value of these grants as Stock Awards for 2020.
LTI Granted in 20201
| | | | | | | | | | | | | | | | | Executive | | Item2 | | | Restricted
Stock | | | Target Performance Share
Units3 | | | Total | | David A. Hager | | | Shares | | | | 188,554 | | | | 188,554 | | | | 377,108 | | | | | Value | | | $ | 4,250 | | | | $ 4,250 | | | $ | 8,500 | | Jeffrey L. Ritenour | | | Shares | | | | 55,457 | | | | 55,457 | | | | 110,914 | | | | | Value | | | $ | 1,250 | | | | $ 1,250 | | | $ | 2,500 | | Lyndon C. Taylor | | | Shares | | | | 55,457 | | | | 55,457 | | | | 110,914 | | | | | Value | | | $ | 1,250 | | | | $ 1,250 | | | $ | 2,500 | | David G. Harris | | | Shares | | | | 55,457 | | | | 55,457 | | | | 110,914 | | | | | Value | | | $ | 1,250 | | | | $ 1,250 | | | $ | 2,500 | | Tana K. Cashion | | | Shares | | | | 24,402 | | | | 24,402 | | | | 48,804 | | | | | Value | | | $ | 550 | | | | $ 550 | | | $ | 1,100 | |
1 Dollar amounts shown in thousands.
2 | For each named executive officer, the Committee first determines the total value of LTI to be awarded then divides the total value equally between restricted stock and performance share units (based on the closing price of the Company stock as of the grant effective date), rounding up to the next whole share if needed.
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3 | In accordance with applicable accounting requirements, Devon uses a different valuation method in the SCT (in this case, a Monte Carlo simulation) for performance share units than in this table. The Monte Carlo simulation for performance share units, when valued for purposes of inclusion in next year’s SCT as compensation for 2020, may require Devon to assign a higher or lower value per unit than the closing price of the Company’s stock as of the grant approval date.
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At its January 2020 meetings, the Committee made LTI grants for 2020. The Committee determined that the pursuit of strategic Company goals and creation of stockholder value would best be promoted by linking half the LTI awarded for the year to Company performance and half to long-term stock ownership thereby strengthening the alignment of interests of executives and stockholders. Accordingly, the two types of LTI granted to named executive officers were PSU and time-based restricted stock awards (RSA), respectively.
EXECUTIVE COMPENSATION (cont’d)
The following table describes the purpose and structure of the LTI granted to the named executive officers at the Committee’s meetings in January 2020:
| | | | | | | | | | | | | | | | Type of LTI Award | | | | Purpose | | | | Additional Background and Detail | | Performance Share Units (PSU) | | | | Awards of PSU grants encourage executives to make decisions and take actions that promote long-term stockholder return. | | | | • Executives may earn between 0% and 200% of the shares underlying the grant based on the Company’s TSR relative to peer companies1 over a three-year performance period (January 1, 2020 through December 31, 2022). • Payout will be determined as of the end of the performance period based on actual TSR performance over the period. The grid below further details the relationship between relative performance and payout levels. • If the Company’s TSR outperforms that of its peers, executives may earn the targeted number of shares (100%) or more. If the Company’s TSR is below median as compared to peers, executives earn fewer shares than targeted with the potential for no payout. | | | | | | | | Restricted Stock Awards (RSA) | | | | Awards of RSA foster long-term stock ownership and strengthen alignment with shareholders. | | | | • Ownership and alignment is promoted by a four-year vesting schedule that provides for only 25% of the shares underlying the RSA to vest on each anniversary of the grant date. | | | | | | | | | | | The Company’s TSR against its peers1 | | | | Payout percent of shares underlying grant | | | | | | | | | | 1-2 | | | | 200% | | | | | | | | | | 3 | | | | 175% | | | | | | | | | | 4 | | | | 150% | | | | | | | | | | 5 | | | | 125% | | | | | | | | | | 6 | | | | 100% | | | | | | | | | | 7 | | | | 88% | | | | | | | | | | 8 | | | | 75% | | | | | | | | | | 9 | | | | 63% | | | | | | | | | | 10 | | | | 50% | | | | | | | | | | 11-12 | | | | 0% |
1 | The peer companies used for comparison for the PSU grants are those in the recalibrated peer group for 2020, consisting of Apache Corporation, Chesapeake Energy Corporation, Cimarex Energy Co., Concho Resources Inc., Continental Resources, Inc., Ovintiv, Inc. (f/k/a EnCana Corporation), EOG Resources, Inc., Marathon Oil Corporation, Noble Energy, Inc., Pioneer Natural Resources Company, and WPX Energy, Inc.
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Additionally, at its January 2020 meetings, the Committee certified that the Company achieved the 11th highest TSR for the three-year period associated with the performance share units granted in the first quarter of 2017. Pursuant to the grant’s terms and conditions, 60% of the grants’ target number of shares vested for each named executive officer. Further information about this grant is provided in the “Outstanding Equity Awards at Fiscal Year End” table below and corresponding footnotes.
EXECUTIVE COMPENSATION (cont’d)
Snapshot Comparison of Compensation Decisions Made Following 2019 and 2018
Pursuant to the Company’s 2019 performance and pay cycle, the Committee, at its January 2020 meetings, considered salary adjustments, performance-bonus awards for 2019, and LTI grants. In accordance with SEC guidance, the base salary and LTI grants approved at the meetings will appear in next year’s SCT as compensation for 2020, while the performance bonuses are reported in this year’s SCT as compensation for 2019.
The table below illustrates the total direct compensation awarded by the Committee to the named executive officers in its January 2020value between 60% PSUs and 2019 meetings, respectively.
Comparison of Year-Over-Year Total Direct Pay Awarded1
Individual NEO Total Direct Pay Awarded
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive | | Meeting Year2 | | | Base
Salary Rate | | | Performance Cash Bonus3 | | | Value of
Annual LTI
Grant5 | | | Total Direct
Pay Awarded | | | Change
from Prior
Year6 | | | | $ | | | % of
Target4 | | | | | | | | | | | David A. Hager | | | 2020 | | | $ | 1,275 | | | $ | 2,582 | | | | 150 | % | | $ | 8,500 | | | $ | 12,357 | | | | +9.1 | % | | | | 2019 | | | $ | 1,275 | | | $ | 1,549 | | | | 90 | % | | $ | 8,500 | | | $ | 11,324 | | | | -3.7 | % | | | | | | | | | Jeffrey L. Ritenour | | | 2020 | | | $ | 620 | | | $ | 810 | | | | 150 | % | | $ | 2,500 | | | $ | 3,930 | | | | +9.6 | % | | | | 2019 | | | $ | 600 | | | $ | 486 | | | | 90 | % | | $ | 2,500 | | | $ | 3,586 | | | | +5.6 | % | | | | | | | | | Lyndon C. Taylor | | | 2020 | | | $ | 650 | | | $ | 878 | | | | 150 | % | | $ | 2,500 | | | $ | 4,028 | | | | +9.5 | % | | | | 2019 | | | $ | 650 | | | $ | 527 | | | | 90 | % | | $ | 2,500 | | | $ | 3,677 | | | | -3.2 | % | | | | | | | | | David G. Harris | | | 2020 | | | $ | 610 | | | $ | 743 | | | | 150 | % | | $ | 2,500 | | | $ | 3,853 | | | | N/A | | | | | | | | | | Tana K. Cashion | | | 2020 | | | $ | 375 | | | $ | 259 | | | | 150 | % | | $ | 1,100 | | | $ | 1,734 | | | | N/A | |
1 | All dollar amounts shown in thousands.
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2 | “Meeting Year” refers to the timing of the Committee’s decision to award or affirm the compensation component in the context of the prior year’s company performance and other factors. The applicable year may not align with the amounts shown in the SCT for the respective years due to SEC rules for presentation of data in the SCT as described above the table.
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3 | Performance-bonus targets are set as a percentage of base salary in effect as ofyear-end. Please refer to the section above titled “Annual Performance Cash Bonus” for additional information about the process for 2019.
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4 | Performance-bonus targets for the NEOs are as follows (expressed as a percentage ofyear-end base salary): Mr. Hager—135%; Mr. Ritenour—90%; Mr. Taylor—90%, Mr. Harris – 90%, Ms. Cashion – 50%
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5 | All amounts calculated using the face-value method (value divided by the closing price of the Company stock as of the grant effective date).
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6 | Mr. Harris and Ms. Cashion were not executive officers during the Committee’s January meeting decision-making process prior to 2020, so prior amounts and percent change are not applicable.
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Effect of Company Performance on President and CEO Realizable Pay
Changes in stock price and performance over the vesting or performance period of LTI cause the value ultimately received by the executive to differ from the target grant value. The measurement of realizable pay includes such changes when comparing pay received, or projected to be received, to the target pay granted. The chart illustrates the strong correlation between TSR performance and
EXECUTIVE COMPENSATION (cont’d)
President and CEO realizable pay. By design, strong relative and overall TSR performance results in higher realizable pay and weak relative and overall TSR performance results in lower realizable pay. Because shareholders may be interested in the actual compensation received by the CEO, Mr. Hager has elected to provide additional transparency by voluntarily disclosing the income reported on hisW-2 for each of the years listed.
President and CEO Realizable Pay1
1 | All dollar amounts shown in thousands.
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2 | W-2 Box 5 income is Medicare Wages reported in accordance with IRS requirements. For Mr. Hager these amounts include salary and bonus paid to him during the year before the subtraction of his elective deferrals into the Company’s defined contribution plans, contributions made into those plans by the Company, income achieved from the vesting of restricted stock and performance share units during the year, and other reportable compensation such as imputed income for Company-provided life insurance.
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Explanatory notes to “President and CEO Realizable Pay” chart
Amounts shown for each Target column reflect (i) base salary paid during the year, (ii) performance-bonus target for the year, and (iii) face value (shares multiplied by grant effective date closing price) of the restricted stock awards and performance share units granted at the beginning of the year.
Amounts shown for each Realizable column reflect (i) base salary paid during the year, (ii) the performance bonus awarded for the year through the Committee’s performance bonus determination
EXECUTIVE COMPENSATION (cont’d)
process, and (iii) the value of (a) the restricted stock awards based40% RSAs (based on the closing price of Devon’s commonthe Company stock as of 2019 year end without respect to interim vesting and (b) the performance share units based on a payout percentage for Devon’s position within the peer group for the relevant performance periodgrant effective date), rounding each up to December 31, 2019. Following year end, the performancenext whole share units grantedif needed.
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| 3 | In accordance with applicable accounting requirements, Devon uses a different valuation method in 2016 paid out at 0%the Summary Compensation Table (in this case, a Monte Carlo simulation) for PSUs than in this table. The Monte Carlo simulation for PSUs, when valued for purposes of target, the Performance Share Units grantedinclusion in 2017 paid out at 60% of target, and the performance share units granted in 2018 and 2019, respectively, were trending to pay out at 80% and 150% of target, respectively. “% TSR Change” covers, (i) for the first column, the period from December 31, 2015 to December 31, 2019, (ii) for the second column, the period from December 31, 2016 to December 31, 2019, (iii) for the third column, the period from December 31, 2017 to December 31, 2019 and (iv) for the fourth column, the period from December 31, 2018 to December 31, 2019.
“% Difference between Realizable and Target Pay” reflects the difference, expressednext year’s Summary Compensation Table as a percentage of Target, between Target and Realizable pay as of December 31, 2019 for each respective column.
“% Difference betweenW-2 and Target Pay” reflects the difference, expressed as a percentage of Target, between Target andW-2 pay as of December 31, 2019 for each respective column.
The chart above shows CEO realizable pay at 18.3% below target based upon Devon’s December 31, 2019 closing stock price of $25.97. As of March 31, 2020, Devon’s closing stock price was $6.91, which would result in CEO realizable pay at 58.7% below target.
Compensation Process Background
The Committee is responsible for and directs the process of reviewing and determining compensation for 2022, requires Devon to assign a higher value per unit than the named executive officers. The Committee retains an external compensation consultant to provide assistance with the process. The role of the Committee and the compensation consultant, which includes the development of a peer group the Committee uses for benchmarking and comparing the executive officers’ compensation, is further described in the following sections.
Role of the Committee
The Committee establishes the Company’s executive compensation philosophy and administers the overall executive compensation program. The Committee operates under a written charter approved by the Board of Directors, a copy of which is available at the Company’s website,www.devonenergy.com.
Every year, the Committee conducts an individual,in-depth, confidential interview with each executive officer to discuss the officer’s analysisclosing price of the Company’s overall performance for the year, performance within the officer’s area of responsibility, and any issues or concerns the officer may have regarding the Company’s operations and results. The Committee believes this is a highly effective tool in the Committee’s oversightstock as of the executive compensation process. In addition, the President and CEO discusses with the Committee his evaluation of each executive officer’s performance, development, and potential to take on greater or different responsibilities. The President and CEO also provides compensation recommendations to the Committee for all executive officers (other than himself).grant approval date.
The Committee considers the various factors described in this CD&A, including its interviews with executive officers and the President and CEO’s evaluations of each executive officer’s performance
EXECUTIVE COMPENSATION (cont’d)
and, in a closed session without the President and CEO present, the Committee sets the President and CEO’s compensation. The Committee then determines whether to approve the compensation recommendations provided by the President and CEO for the other executive officers.
Role of the Compensation Consultant
For 2019, the Committee retained Meridian Compensation Partners, LLC (Compensation Consultant) as its external compensation consultant. The Compensation Consultant evaluated the competitiveness
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Additionally, at its January 2023 meetings, the Committee certified that the Company achieved the highest TSR out of a 12-company peer group for the three-year period associated with the PSUs granted in February of 2020 with a performance period that ended December 31, 2022. Pursuant to the grant’s applicable terms and conditions, including certain caps on the number of shares paid out, 167.7% of the grants’ target number of shares were deemed vested for Messrs. Ritenour and Harris. Messrs. Muncrief, Gaspar, and Cameron were not recipients of this grant. Further information about this grant is provided in the “Outstanding Equity Awards at Fiscal Year End” table on page 57. Compensation Process Background The Committee is responsible for and directs the process of reviewing and determining compensation for the NEOs. The Committee retains an independent compensation consultant for guidance and expertise during the process. The role of the Committee and the compensation consultant, which includes the development of a peer group the Committee uses for benchmarking and comparing the executive officers’ compensation, is further described in the following sections. Role of the Committee The Committee establishes the Company’s executive compensation philosophy and administers the overall executive compensation program. The Committee operates under a written charter approved by the Board, a copy of which is available at the Company’s website, www.devonenergy.com. Every year, the Committee conducts an individual, in-depth, confidential interview with each executive officer to discuss the officer’s analysis of the Company’s overall performance for the year, performance within the officer’s area of responsibility, and any issues or concerns the officer may have regarding the Company’s program and reviewed the executive compensation program design. The Committee has the final authority to hire and terminate the Compensation Consultant, and the Committee annually evaluates the performance of the Compensation Consultant. In selecting its consultant, the Committee considers factors that could affect the consultant’s independence, including whether the consultant provides services to the Company other than under its engagement by the Committee, and the other factors set forth in the Committee’s charter. When reviewing the Compensation Consultant’s independence, the Company also considered the fact that Devon’s business represents only a very small portion of the Compensation Consultant’s overall revenue. Based on this review, the Committee determined that the Compensation Consultant had no conflicts of interest.
Use of Peer Groups
To successfully compete for executive talent, the Committee, working with the Compensation Consultant, annually compares the compensation of the executive officers to the compensation of similarly situated executives at peer companies with business operations focused on the exploration and production of oil and gas. In establishing a peer group, the Committee primarily seeks companies with asset and market values similar to the Company. The Committee also considers enterprise values, calculated as common equity valueplus net long-term debt and preferred stock, of the companies. The Committee believes these metrics are appropriate for determining peers because they provide a reasonable point of reference for comparing executives with similar positions and responsibilities.
In light of the Company’s strategic transformation in 2019, the Committee selected a recalibrated peer group for 2020 that better aligns with Devon’s current size and scope of operations. This recalibration resulted in (i) the removal of several larger and operationally dissimilar oil and gas companies from the peer group and (ii) the addition of two companies of similar size and operations within the oil and gas exploration and production industry. The approved peer group used in the Committee’s January 2020 compensation decision-making process consisted of the 12 companies listed below:
EXECUTIVE COMPENSATION (cont’d) operations and results. The Committee believes this is a highly effective tool in the Committee’s oversight. In addition, the President and CEO discusses with the Committee his evaluation of each executive officer’s performance, development, and potential to take on greater or different responsibilities. The President and CEO also provides compensation recommendations to the Committee for all NEOs (other than himself). The Committee considers the various factors described in this CD&A, including its interviews with NEOs and the President and CEO’s evaluations of each NEOs performance and, in a closed session without the President and CEO present, the Committee sets the President and CEO’s compensation. The Committee then determines whether to approve the compensation recommendations provided by the President and CEO for the other executive officers. Role of the Compensation Consultant For 2022, the Committee retained Meridian Compensation Partners, LLC (Compensation Consultant) as its independent compensation consultant. The Compensation Consultant evaluated the competitiveness of the Company’s program and reviewed the executive compensation program design. The Committee has the final authority to hire and terminate the Compensation Consultant, and the Committee annually evaluates the performance of the Compensation Consultant. In selecting its consultant, the Committee considers factors that could affect the consultant’s independence, including whether the consultant provides services to the Company other than under its engagement by the Committee, and the other factors set forth in the Committee’s Charter. When reviewing the Compensation Consultant’s independence, the Company also considered the fact that Devon’s business represents only a very small portion of the Compensation Consultant’s overall revenue. Based on this review, the Committee determined that the Compensation Consultant had no conflicts of interest. Use of Peer Groups Devon uses peers groups in two ways: (i) to compare TSR for the PSUs, as documented on page 46 and (ii) to benchmark executive compensation, as shown below. To successfully compete for executive talent, the Committee, working with the Compensation Consultant, annually compares the compensation of the executive officers to the compensation of similarly situated executives at peer companies with business operations focused on the exploration and production of oil and gas. In establishing a peer group, the Committee primarily seeks companies with asset and market values similar to the Company. The Committee also considers enterprise values, calculated as common equity value plus net long-term debt and preferred stock, and certain operational and financial measures indicative of size and scope. The Committee believes these metrics are appropriate for determining peers because they provide a reasonable point of reference for comparing executives with similar positions and responsibilities. The peer companies used in setting 2022 pay are listed below, as are the peer companies selected at the end of 2022 for use in 2023. Chesapeake Energy Corporation
Cimarex Energy Corporation
Concho Resources Inc.
Continental Resources, Inc.
Ovintiv, Inc (f/k/a EnCana Corporation)
EOG Resources, Inc.
EXECUTIVE COMPENSATION (cont’d) | | | | | | | | | Peer Company | | 2022 | | 2023 | | | | | APA Corporation | | p | | p | | | | | Cimarex Energy Corporation1 | | p | | | | | | | ConocoPhillips | | p | | p | | | | | Continental Resources, Inc | | p | | p | | | | | Coterra Energy Inc.1 | | | | p | | | | | Diamondback Energy, Inc. | | p | | p | | | | | EOG Resources, Inc. | | p | | p | | | | | Hess Corporation | | p | | p | | | | Marathon Oil Corporation | | p | | p | | | | Noble Energy, Inc.Occidental Petroleum Corporation
| | p | | p | | | | Ovintiv, Inc | | p | | p | | | | Pioneer Natural Resources CompanyCo. | | p | | p |
| 1 | WPXCimarex Energy Inc
The Committee’s peer group analysis consists of all components of total direct compensation, including base salary, annual performance bonus, and long-term equity incentives. TheCorporation was acquired after it made disclosures used for the competitive market assessment conducted by the Compensation Consultant collected and summarized compensation datain 2022. Coterra Energy, Inc. is the company that resulted from the proxy statements of the peer group companies and the Compensation Consultant’s proprietary databases.acquisition.
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The Committee’s peer group analysis consists of all components of total direct compensation, including base salary, annual performance bonus, and long-term equity incentives. The Compensation Consultant collected and summarized compensation data from the proxy statements of the peer group companies and the Compensation Consultant’s proprietary databases. Additionally, the Compensation Consultant introduced reference points from similarly sized companies in the broader oil and gas industry as well as non-energy industries to bring further context to the Committee’s decision making. Tally Sheet Review Prior to making compensation decisions, the Committee annually reviews tally sheets for executive officers that include all elements of compensation, including potential payments under various termination scenarios. Tally sheets allow the Committee to evaluate compensation elements individually and collectively. Please refer to the tables that follow this CD&A for additional information on the final compensation amounts determined for the 2022 year. Additional Benefits and Compensation Information Retirement Benefits Defined Benefit Plans Based on his hire date with the Company, Mr. Ritenour is the only NEO eligible to participate in the defined benefit plan maintained by the Company. Devon’s qualified Defined Benefit Plan provides annual retirement income based on a formula that considers the executive’s final average compensation, Social Security benefits, and years of credited service with the Company. In 2007, employees were given the choice to continue their accruals under the plan or become eligible for the 8% Company 401(k) contribution described below. Mr. Ritenour elected to have his benefit under the Defined Benefit Plan frozen and began to receive the enhanced 401(k) contribution in 2008.
EXECUTIVE COMPENSATION (cont’d)
Tally Sheet Review
Prior to making compensation decisions at its January meetings, the Committee annually reviews tally sheets for executive officers that include all elements of compensation, including potential payments under various termination scenarios. Tally sheets allow the Committee to evaluate compensation elements individually and collectively. Please refer to the tables that follow this CD&A for additional information.
Additional Benefits and Compensation Information
Retirement Benefits
Defined Benefit Plans
Based on their hire date with the Company, named executive officers may be eligible to participate in three defined benefit plans maintained by the Company. Devon’s qualified Defined Benefit Plan provides annual retirement income based on a formula that considers the executive’s final average compensation, Social Security benefits, and years of credited service with the Company. Additionally, the same group of named executive officers may participate in either of two nonqualified defined benefit plans, the Supplemental Retirement Income Plan (SRIP) or Benefit Restoration Plan (BRP), which are not subject to certain limitations imposed by the IRS. Such nonqualified plans are typical in the oil and gas industry.
Defined Contribution Plans
Named executive officers hired after Devon’s Defined Benefit Plan was closed to new participants in 2007 are eligible to
EXECUTIVE COMPENSATION (cont’d) Defined Contribution Plans All NEOs participate in a qualified 401(k) Plan that provides for a Company match of up to 6% of their earnings and a non- matching Company contribution of 8% of their compensation. Under the Supplemental Contribution Restoration Plans (SCRPs) the Company may make supplemental contributions that would otherwise be subject to limitations in the Internal Revenue Code based on the compensation of the executives. Nonqualified Deferred Compensation Plans Devon maintains a nonqualified Deferred Compensation Plan that allows eligible employees to defer cash compensation beyond the limits placed on the 401(k) Plan by the Internal Revenue Code and permits the Company to contribute a match to the extent that the match available under the qualified 401(k) Plan is limited. For additional information on the plans and the value of accumulated benefits for the NEOs under the various plans described in this “Retirement Benefits” section, please refer to the “Pension Benefits” section beginning on page 58 and the “Nonqualified Deferred Compensation Plan” section beginning on page 60. Other Benefits Details regarding the perquisites made available to Devon’s executives may be found in the “All Other Compensation” table on page 55. The perquisites for 2022 were: limited personal use of aircraft, as approved by the President and CEO; a reimbursement program for financial planning services; and | • | | a Company match, of up to 6% and a Company contribution$10,000, of upcharitable contributions made to 16% of their compensation. In lieu of participating in the SRIP or BRP, named executive officers who are not eligible for the Defined Benefit Plan may participate in additional nonqualified defined contribution plans. Under the Supplemental Contribution Restoration Plans (SCRPs) and the Supplemental Executive Retirement Plan (DC SERP), the Company may make supplemental contributions that would otherwise be subject to limitations in the Internal Revenue Code based on the compensation of the executives. Nonqualified Deferred Compensation Plans
Devon maintains a nonqualified Deferred Compensation Plan that allows eligible employees to defer cash compensation beyond the limits placed on the 401(k) Plannon-profit organization(s) by the Internal Revenue Code and permits the Company to contribute a match to the extent that the match available under the qualified 401(k) Plan is limited.executive.
For additional information on the plans and the value of accumulated benefits for the named executive officers under the various plans described in this “Retirement Benefits” section, please refer to the “Pension Benefits” section beginning on page 66 and the “Nonqualified Deferred Compensation Plan” section beginning on page 71.
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Post-Termination or Change-in-Control Benefits Devon maintains an employment agreement with each of the NEOs. These agreements do not guarantee continued employment, but they do place certain restrictions on the executives during and after their employment with the Company. Through these agreements, each NEO is provided certain additional compensation if employment is involuntarily terminated other than for “cause” or if the NEO voluntarily terminates employment for “good reason,” as those terms are defined in the relevant agreements. Also, in these situations, the applicable NEO fully vests in any unvested LTI awards subject to certain covenants and agreements and proration as described below. The agreements also provide certain benefits in the event of a termination within a two-year period following a change-in-control. The employment agreements do not include “gross-up” provisions that obligate the Company to pay an additional amount to the NEO if benefits under the agreement or any other Company arrangement are subject to the tax imposed on excess parachute payments by Section 4999 of the Internal Revenue Code. The Company’s award agreements for LTI granted to the NEOs provide that officers who meet certain years-of-service and age criteria are eligible to continue to vest as scheduled in outstanding awards following retirement subject to certain covenants and agreements. See page 64 for additional details. Other Benefits
The limited perquisites made available to Devon’s executives are listed in detail in the “All Other Compensation” table on page 61. Personal use of aircraft by executives on a limited basis is allowed as approved by the President and CEO. The Committee reviews and ratifies the personal use of aircraft on an annual basis. Such use has historically been minimal and there was no usage in 2019.
EXECUTIVE COMPENSATION (cont’d) The unvested shares underlying LTI awards are eligible for continued or accelerated vesting post termination in the case of a severance- related employment termination or a retirement. Such terminations occurring prior to the first anniversary of the grant date result in a pro-rata reduction in the number of shares eligible for continued or accelerated vesting post termination. Arrangements with post-termination and change-in-control benefits are typical in the oil and gas industry and necessary in order to compete for executive talent. Please refer to the “Potential Payments Upon Termination or Change-in-Control” section beginning on page 62 for detail on amounts that could be payable under certain scenarios and additional information on the Company’s employment agreements. Stock Ownership Guidelines Ownership of Devon’s stock by the executives aligns their interests with the interests of Devon’s stockholders. Accordingly, the Board maintains stock ownership guidelines that require each executive officer who has served in such capacity for at least five years to own shares of common stock at least equal in value to a multiple of his or her base salary. The guidelines establish the following minimum ownership levels:
EXECUTIVE COMPENSATION (cont’d)
Post-Termination orChange-in-Control Benefits
Devon maintains employment agreements with each of the named executive officers. These agreements provide each named executive officer certain additional compensation if employment is involuntarily terminated other than for “cause” or if the named executive officer voluntarily terminates employment for “good reason,” as those terms are defined in the relevant agreements. Also, in these situations, the applicable named executive officer fully vests in any unvested LTI awards subject to certain covenants and agreements and pro ration as described below. The agreements also provide certain benefits in the event of a termination within atwo-year period following a change in control.
The employment agreements do not include“gross-up” provisions that obligate the Company to pay an additional amount to the named executive officer if benefits under the employment agreement or any other Company arrangement are subject to the tax imposed on excess parachute payments by Section 4999 of the Internal Revenue Code. The Company’s award agreements for LTI granted to the named executive officers provide that officers who meet certainyears-of-service and age criteria are eligible to continue to vest as scheduled in outstanding awards following retirement subject to certain covenants and agreements.
The unvested shares underlying LTI awards granted prior to 2018 are eligible for continued or accelerated vesting post termination in the case of a severance-related employment termination or a retirement. For grants made in 2018 and after, such terminations occurring prior to the first anniversary of the grant date result in apro-rata reduction in the number of shares eligible for continued or accelerated vesting post termination.
Employment agreements and other arrangements with post-termination andchange-in-control benefits are typical in the oil and gas industry and necessary in order to compete for executive talent. Please refer to the “Potential Payments Upon Termination orChange-in-Control” section beginning on page 72 for detail on amounts that could be payable under certain scenarios and additional information on the Company’s employment agreements.
Stock | | | | Officer Title | | Share Ownership GuidelinesOwnership of Devon’s stock by the executives aligns their interests with the interests of Devon’s stockholders. Accordingly, the Board of Directors maintains stock ownership guidelines that require each executive officer who has served in such capacity for at least five years to own shares of common stock at least equal in value to a multiple of his or her base salary. The guidelines establish the following minimum ownership levels:
| | | Officer Title | | Share Ownership Requirement as Multiple of Base SalaryRequirement | | | President and CEO | | Six times base salary | | | Other Named Executive Officers | | Three times base salary | | | Other Named Executive Officers
|
The guidelines require an executive officer who has served in such capacity less than five years to maintain ownership of at least one-half of the shares of Devon common stock received through equity-based awards from the Company (net of taxes) until the officer meets his or her ownership requirement. Compliance with the ownership guidelines is determined at the end of each year. As of December 31, 2022, the NEOs held stock in excess of the levels required in the guidelines. The executives have historically maintained share ownership levels well above the Company’s guidelines. For purposes of calculating share ownership levels, the Board includes: | | Three times base salary |
The guidelines require an executive officer who has served in such capacity less than five years to maintain ownership of at leastone-half of the shares of Devon common stock received through equity-based awards from the Company (net of taxes) until the officer meets his or her ownership requirement.
Compliance with the ownership guidelines is determined as of December 31 each year. As of December 31, 2019, the named executive officers then subject to the guidelines held stock in excess
| (i) | EXECUTIVE COMPENSATION (cont’d)
of the levels required in the guidelines. The executives have historically maintained share ownership levels well above the Company’s guidelines. For purposes of calculating share ownership levels, the Board includes (i) shares owned directly by the officer and his or her immediate family members who share the same household,
|
| (ii) | shares owned beneficially by the officer and his or her immediate family members who share the same household, and |
| (iii) | unvested restricted stock for which any performance conditions have been met.stock. Hedging Guidelines
|
For additional detail on the stock owned by NEOs, please refer to “Security Ownership of Management” table on page 76. Pledging and Hedging Guidelines The Company also has a policy that prohibits Devon employees, officers, and directors from trading in Devon securities on a short-term basis, entering short sales, and buying or selling puts, calls, or similar instruments. The policy also discourages Devon employees, officers, and directors from placing standing or limit orders and prohibits executive officers and directors from pledging or hedging Devon stock, buying Devon stock on margin, or holding Devon stock in a margin account. The hedging prohibition covers any transaction that is designed to hedge or offset any decrease in the market value of Devon stock, including, but not limited to, prepaid variable forward contracts, equity swaps, collars, and exchange funds. The Company also has a policy that prohibits Devon employees, officers, and directors from trading in Devon securities on a short-term basis, entering short sales, and buying or selling puts, calls, or similar instruments. The policy also discourages Devon employees, officers, and directors from placing standing or limit orders and prohibits executive officers and directors from pledging or hedging Devon stock, buying Devon stock on margin, or holding Devon stock in a margin account. The hedging prohibition covers any transaction that is designed to hedge or offset any decrease in the market value of Devon stock, including, but not limited to, prepaid variable forward contracts, equity swaps, collars, and exchange funds.
For additional detail on the stock owned by the named executive officers, please refer to the Security Ownership of Management table on page 83.
Compensation Program and Risk-Taking
The Company’s executive compensation program is designed to provide executive officers incentives for the achievement of near-term and long-term objectives, without motivating them to take unnecessary
EXECUTIVE COMPENSATION (cont’d) Compensation Program and Risk-Taking The Company’s executive compensation program is designed to provide executive officers incentives for the achievement of near-term and long-term objectives, in a manner that motivates executives to take measured and appropriate risk. As part of its review of the impact of the Company’s executive compensation programs on the Company’s risk profile and risk management, the Committee noted the following factors that discourage the Company’s executives from taking unnecessary or excessive risk: the Company’s operating strategy and related compensation philosophy; | • | | the effective balance of Devon’s compensation program between cash and equity, near-term and long-term focus, corporate and individual performance, and financial andnon-financial performance; |
a multi-faceted approach to performance evaluation and compensation that does not reward an executive for engaging in risky behavior to achieve one objective to the detriment of other objectives; significant executive stock ownership pursuant to Devon’s stock ownership guidelines; and the Board’s annual risk assessment process. Based on this review, the Committee believes that the executive compensation programs do not encourage executives to take unnecessary or excessive risk. Policy for Recovery of Compensation (Clawback Policy) The Company has a policy concerning the recovery of bonuses, incentives, and equity-based compensation awarded to executive officers under certain circumstances (the Clawback Policy). In the event of a restatement of the Company’s financial statements that leads to a revision of one or more performance measures on which a bonus or other incentive compensation was based, the Committee may require reimbursement or forfeiture of all or a portion of any bonus or incentive compensation subject to the Clawback Policy. a multi-faceted approach to performance evaluation and compensation that does not reward an executive for engaging in risky behavior to achieve one objective to the detriment of other objectives;
EXECUTIVE COMPENSATION (cont’d) COMPENSATION COMMITTEE REPORT The Committee has reviewed and discussed the preceding Compensation Discussion and Analysis section with management and, based on such review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Proxy Statement. Compensation Committee | | | | | | | | | | | | | | | | | | | | | | significant executive stock ownership pursuant to Devon’s stock ownership guidelines; and
the Board’s annual risk assessment process.
Based on this review, the Committee believes that the executive compensation programs do not encourage executives to take unnecessary or excessive risk.Robert A.
Policy for Recovery of Compensation (Clawback Policy)
The Company has a policy concerning the recovery of bonuses, incentives, and equity-based compensation awarded to executive officers under certain circumstances (the Clawback Policy). In the event of a restatement of the Company’s financial statements that leads to a revision of one or more performance measures on which a bonus or other incentive compensation was based, the Committee may require reimbursement or forfeiture of all or a portion of any bonus or incentive compensation subject to the Clawback Policy.
EXECUTIVE COMPENSATION (cont’d)
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company has reviewed and discussed the preceding Compensation Discussion and Analysis section with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Proxy Statement.
Robert A. Mosbacher, Jr., Chair
John.
| | John E. Bethancourt | | Ann G. Fox | | Kelt Kindick | | Karl F. Kurz | | Duane C. Radtke |
John Krenicki Jr.
EXECUTIVE COMPENSATION (cont’d)
SUMMARY COMPENSATION TABLE
The following table and accompanying footnotes summarize the compensation earned, awarded, paid, or attributed to the named executive officers for the years indicated below. The named executive officers
EXECUTIVE COMPENSATION (cont’d) SUMMARY COMPENSATION TABLE The following table and accompanying footnotes summarize the compensation earned, awarded, paid, or attributed to the NEOs for the years indicated below. The NEOs are the President and Chief Executive Officer, the Chief Financial Officer, the Chief Financial Officer, and three other executive officers of the Company serving as of December 31, 2022. This table should be read together with the Compensation Discussion and Analysis (starting on page 37 of this Proxy Statement), which includes information about Company performance for 2022, the Company’s compensation philosophy and objectives, the programs and plans that underlie executive officer compensation opportunities, and the Committee’s process for awarding compensation. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary ($)1 | | | Stock
Awards
($)2 | | | Non-Equity
Incentive Plan
Compensation ($)3 | | | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)4 | | All Other
Compensation
($)5 | | | Total ($) | | | | | | | | | | | | | Richard E. Muncrief | |
| 2022
2021
|
| |
| 1,132,577
1,045,000 |
| |
| 10,404,927
8,310,964 |
| |
| 2,442,100
2,336,400 |
| | 0
0 | |
| 545,173
222,183 |
| |
| 14,524,777
11,914,547 |
| | | President and Chief | | | Executive Officer | | | | | | | | | | | | Jeffrey L. Ritenour | | | 2022 | | | | 638,362 | | | | 3,805,243 | | | | 952,900 | | | 0 | | | 254,304 | | | | 5,650,809 | | | | | | | | | | | | | Executive Vice President | | | 2021 | | | | 620,000 | | | | 2,374,583 | | | | 987,700 | | | 0 | | | 253,316 | | | | 4,235,599 | | | | | | | | | | | | | and Chief Financial Officer | | | 2020 | | | | 616,923 | | | | 2,796,697 | | | | 418,500 | | | 87,211 | | | 315,633 | | | | 4,234,964 | | | | | | | | | | | | | Clay M. Gaspar | |
| 2022
2021 |
| |
| 638,362
589,000 |
| |
| 4,518,726
3,609,362 |
| |
| 1,058,800
1,097,400 |
| | 0
0 | |
| 279,155
124,210 |
| |
| 6,495,043
5,419,972 |
| | | Executive Vice President | | | and Chief Operating Officer | | | | | | | | | | | | David G. Harris | | | 2022 | | | | 628,108 | | | | 3,805,243 | | | | 937,600 | | | 0 | | | 250,059 | | | | 5,621,010 | | | | | | | | | | | | | Executive Vice President and | | | 2021 | | | | 610,000 | | | | 2,374,583 | | | | 971,700 | | | 0 | | | 144,762 | | | | 4,101,045 | | | | | | | | | | | | | Chief Corporate Development Officer | | | 2020 | | | | 600,769 | | | | 2,796,697 | | | | 411,800 | | | 0 | | | 243,499 | | | | 4,052,765 | | | | | | | | | | | | | Dennis C. Cameron | |
| 2022
|
| |
| 496,154
|
| |
| 2,378,276
|
| |
| 660,000
|
| | 0
| |
| 192,956
|
| |
| 3,727,386
|
| | | Executive Vice President | | | | and General Counsel |
| 1 | At its January 2022 meetings, the Committee increased Mr. Muncrief’s annual base salary rate to $1,138,500, Mr. Ritenour’s annual base salary rate to $641,700, Mr. Gaspar’s annual base salary rate to $641,700, Mr. Harris’s annual base salary rate to $631,400, and Mr. Cameron’s annual base salary rate to $500,000. These rates took effect on February 12, 2022. |
| 2 | The dollar amounts reported in this column represent the aggregate grant date fair values of the stock awards, as determined pursuant to FASB ASC Topic 718, excluding the effect of estimated forfeitures. The assumptions used to value stock awards are discussed in Note 4 – Share-Based Compensation of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. For restricted stock, values are based on the closing price of the Company’s common stock on the grant date. In valuing the PSU awards, the Company used a Monte Carlo simulation. The grant date fair value of the PSU awards was determined based on the vesting at target of the units awarded, which is the performance the Company believed was probable on the grant date. If a maximum, rather than target, number of shares is used to determine the maximum award opportunity for the NEOs for the 2022 PSU awards, the grant date value of the awards is as follows: Mr. Muncrief, $13,809,762; Mr. Ritenour, $5,050,452; Mr. Gaspar, $5,997,412; Mr. Harris, $5,050,452; and Mr. Cameron, $3,156,533. |
| 3 | This column reflects performance bonuses awarded to the NEOs. |
| 4 | The dollar amounts reported in this column reflect the aggregate change in the actuarial present value of each participating NEO’s accumulated benefits under the Company’s Defined Benefit Plan during the applicable year. The amounts shown for each year do not reflect payments made to the executives during the applicable year. None of the NEOs received above market or preferential earnings on deferred compensation in any of the reported years. For Mr. Ritenour, the actuarial present value of his pension benefit decreased by $148,113 in 2022 due to a difference in the discount rate required to be used in the calculation of his benefit. Messrs. Muncrief, Gaspar, Harris, and Cameron joined the Company after Devon’s Defined Benefit Plan was closed to new participants in 2007. At the time the plan closed to new participants, Mr. Ritenour elected to freeze his participation in this plan and instead participate in the Company’s enhanced defined contribution plan. Under the Defined Benefit Plan, Mr. Ritenour continues to earn years of vesting service only. |
| 5 | Details for the amounts shown in this column for 2022 are reflected in the supplemental table immediately below. |
EXECUTIVE COMPENSATION (cont’d) The following supplemental table shows the components of “All Other Compensation” for 2022 in the Summary Compensation Table. | | | | | | | | | | | | | | | | | | Name | | Group
Term Life
Insurance
Premiums ($) | | 401(k) Plan
Employer
Match and
Retirement
Contribution ($) | | Deferred
Compensation
Plan Employer
Match ($) | | Defined
Contribution
Restoration
Plan and
Supplemental
Contribution
Plan Employer
Contribution ($) | | Other
Perquisites
($)1 | | Charitable
Match ($) | | Total ($) | | Richard E. Muncrief | | 7,524 | | 40,500 | | 189,839 | | 255,318 | | 51,992 | | — | | | 545,173 | | Jeffrey L. Ritenour | | 1,710 | | 40,500 | | 79,264 | | 107,885 | | 14,945 | | 10,000 | | | 254,304 | | Clay M. Gaspar | | 2,622 | | 40,500 | | 85,846 | | 116,661 | | 23,526 | | 10,000 | | | 279,155 | | David G. Harris | | 1,710 | | 40,500 | | 77,688 | | 105,785 | | 14,376 | | 10,000 | | | 250,059 | | Dennis C. Cameron | | 7,463 | | 40,500 | | 51,825 | | 71,300 | | 11,868 | | 10,000 | | | 192,956 | |
| 1 | The Company offers minimal perquisites to executives. Executives are eligible for financial planning services, an annual executive physical exam, and limited, pre-approved personal use of Company aircraft, which may include travel for any immediate family members of such NEO included on the trip. Mr. Muncrief’s perquisites included personal use of Company aircraft ($38,103), financial planning reimbursement ($7,952), and executive physical ($5,937). In addition to the charitable match, (i) Mr. Ritenour’s perquisites included financial planning reimbursement ($11,342) and executive physical ($3,603), (ii) Mr. Gaspar’s perquisites included personal use of Company aircraft ($11,658) and financial planning reimbursement ($11,868), (iii) Mr. Harris’s perquisites included financial planning reimbursement ($10,750) and executive physical ($3,626) and (iv) Mr. Cameron’s perquisites included financial planning reimbursement ($11,868). |
EXECUTIVE COMPENSATION (cont’d) GRANTS OF PLAN-BASED AWARDS The following Grants of Plan-Based Awards table sets forth information concerning performance bonuses, restricted stock, and performance share units granted during 2022 for the NEOs as described below. The long-term incentive awards reflected below are the only equity-based incentives granted to the NEOs in the year. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards1 | | | Estimated Future Payouts Under Equity Incentive Plan Awards2 | | | All Other
Stock
Awards:
Number of
Shares of
Stock or Units
(# shares) | | | Grant Date Fair
Value of
Stock Awards3 ($) | | Name | | Grant Date | | | Threshold
($) | | Target
($) | | | Maximum
($) | | | Threshold
(# shares) | | | Target
(# shares) | | | Maximum
(# shares) | | Richard E. Muncrief | | | 1/25/2022 | | | 740,050 | | | 1,480,100 | | | | 2,960,200 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | 2/10/2022 | | | - | | | - | | | | - | | | | - | | | | - | | | | - | | | | 67,025 | | | | 3,500,046 | | | | | 2/10/2022 | | | - | | | - | | | | - | | | | 50,269 | | | | 100,537 | | | | 201,074 | | | | - | | | | 6,904,881 | | Jeffrey L. Ritenour | | | 1/25/2022 | | | 288,750 | | | 577,500 | | | | 1,155,000 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | 2/10/2022 | | | - | | | - | | | | - | | | | - | | | | - | | | | - | | | | 24,512 | | | | 1,280,017 | | | | | 2/10/2022 | | | - | | | - | | | | - | | | | 18,384 | | | | 36,768 | | | | 73,536 | | | | - | | | | 2,525,226 | | Clay M. Gaspar | | | 1/25/2022 | | | 320,850 | | | 641,700 | | | | 1,283,400 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | 2/10/2022 | | | - | | | - | | | | - | | | | - | | | | - | | | | - | | | | 29,108 | | | | 1,520,020 | | | | | 2/10/2022 | | | - | | | - | | | | - | | | | 21,831 | | | | 43,662 | | | | 87,324 | | | | - | | | | 2,998,706 | | David G. Harris | | | 1/25/2022 | | | 284,150 | | | 568,300 | | | | 1,136,600 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | 2/10/2022 | | | - | | | - | | | | - | | | | - | | | | - | | | | - | | | | 24,512 | | | | 1,280,017 | | | | | 2/10/2022 | | | - | | | - | | | | - | | | | 18,384 | | | | 36,768 | | | | 73,536 | | | | - | | | | 2,525,226 | | Dennis C. Cameron | | | 1/25/2022 | | | 200,000 | | | 400,000 | | | | 800,000 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | 2/10/2022 | | | - | | | - | | | | - | | | | - | | | | - | | | | - | | | | 15,320 | | | | 800,010 | | | | | | 2/10/2022 | | | - | | | - | | | | - | | | | 11,490 | | | | 22,980 | | | | 45,960 | | | | - | | | | 1,578,266 | |
| 1 | The evaluation of the Company’s preset performance scorecard goals for the year may result in a bonus payment of zero. The amounts shown in the columns reflect a range of possible payouts for the performance bonus awards made on the dates indicated; “Threshold ($)” assumes achievement of Threshold results on each scorecard measure used to evaluate 2022 Company performance and “Maximum ($)” assumes achievement of Maximum results on each scorecard measure used to evaluate 2022 Company performance. Performance related to these awards was determined by the Committee following the end of the year and amounts were paid shortly thereafter. The awards were earned and paid at 165% of target levels; actual payouts under these awards are shown in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. Please refer to “Annual Performance Bonus” on page 43 for more information about 2022 performance bonus goal establishment, evaluation, and determination of actual payments to executives. |
| 2 | The evaluation of the Company’s performance for the period may result in a payout of zero shares. The amounts in the “Threshold,” “Target,” and “Maximum” columns reflect the range and midpoint of possible payouts for the PSU awards made on the dates indicated. All awards were made under the 2017 LTIP, prior to the adoption of the 2022 LTIP. The amounts reported for the table’s rightmost column represent the aggregate grant date fair values of the PSUs determined pursuant to FASB ASC Topic 718, excluding the effect of estimated forfeitures. The grant date fair value of the PSU awards was determined based on the vesting at target of the units awarded, which is the performance the Company believed was probable on the grant date. For more information, please see the discussion of “Long-Term Incentives” starting on page 45 of this Proxy Statement. Dividends on the awards are not paid until shares vest. As of December 31, 2022, the awards reflected in this table were trending at 125% of target payout. |
| 3 | The amounts reported in the table’s rightmost column reflect the value of the RSA made on the date indicated. The value is calculated using the face-value method (the closing price of the Company stock as of the grant date multiplied by the number of shares granted). The award was made under the 2017 LTIP, prior to the adoption of the 2022 LTIP. 25% of the shares granted vest on the anniversary of the grant date and 25% will vest on each of the 2nd, 3rd, and 4th anniversaries of the grant date. |
EXECUTIVE COMPENSATION (cont’d) OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END The following table shows the outstanding equity awards held by the NEOs as of December 31, 2022. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OptionAwards1 | | Stock Awards | | | | | | | | | | | | | | | | Equity Incentive Plan Awards: | | Name | | Number of
Securities
Underlying
Unexercised
Options
(#) Exercisable | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)2 | | Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#) | | Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)2 | | | | | | | | | | Richard E. Muncrief | | 42,582 | | - | | 41.53 | | 3/3/2024 | | 508,9275 | | 31,304,100 | | | | | | | | | | | | | | | | | | | | | | | | 133,0477 | | 8,183,721 | | 279,1146 | | 17,168,302 | | | | | | | | | | | | | | | | | | | | 67,0259 | | 4,122,708 | | 125,6718 | | 7,730,039 | | | | | | | | | | Jeffrey L. Ritenour | | - | | - | | - | | - | | 12,2843 | | 755,589 | | | | | | | | | | | | | | | | | | | | | | | | 93,0084 | | 5,720,922 | | | | | | | | | | | | | | | | | | | | | | | | 27,7295 | | 1,705,611 | | | | | | | | | | | | | | | | | | | | | | | | 38,0147 | | 2,338,241 | | 79,7476 | | 4,905,238 | | | | | | | | | | | | | | | | | | | | 24,5129 | | 1,507,733 | | 45,9608 | | 2,827,000 | | | | | | | | | | Clay M. Gaspar | | - | | - | | - | | - | | 221,0185 | | 13,594,817 | | | | | | | | | | | | | | | | | | | | | | | | 57,7817 | | 3,554,109 | | 121,2156 | | 7,455,935 | | | | | | | | | | | | | | | | | | | | 29,1089 | | 1,790,433 | | 54,5788 | | 3,357,062 | | | | | | | | | | David G. Harris | | - | | - | | - | | - | | 5,8973 | | 362,724 | | | | | | | | | | | | | | | | | | | | | | | | 93,0084 | | 5,720,922 | | | | | | | | | | | | | | | | | | | | | | | | 27,7295 | | 1,705,611 | | | | | | | | | | | | | | | | | | | | | | | | 38,0147 | | 2,338,241 | | 79,7476 | | 4,905,238 | | | | | | | | | | | | | | | | | | | | 24,5129 | | 1,507,733 | | 45,9608 | | 2,827,000 | | | | | | | | | | Dennis C. Cameron | | - | | - | | - | | - | | 81,1475 | | 4,991,352 | | | | | | | | | | | | | | | | | | | | | | | | 22,8097 | | 1,402,982 | | 47,8486 | | 2,943,130 | | | | | | | | | | | | | | | | | | | | | 15,3209 | | 942,333 | | 28,7258 | | 1,766,875 |
| 1 | The Option Awards were granted by WPX from the 2013 WPX Energy, Inc. Incentive Plan, as amended (the WPX Plan), and assumed by Devon upon the Merger. All awards are 100% vested. |
| 2 | Based on a stock price of $61.51, the last closing price of Devon’s common stock in 2022. |
| 3 | The rows reflect RSAs granted in 2019. With each grant, 25% of the shares vest (or vested) on each anniversary of the grant date (i.e., on February 10, 2020, February 10, 2021, February 10, 2022, and February 10, 2023). |
| 4 | For PSUs granted in 2020, the number of shares listed is based on the trending level of performance as of December 31, 2019, and2022 (167.7%) for the former Chief Operating Officer. This table should be read together withthree- year period from January 1, 2020 to December 31, 2022. At its January 2023 meeting, the Compensation Discussion and Analysis (starting on page 38 of this Proxy Statement), which includes information about Company performance for 2019,Committee determined that the Company’s compensation philosophyTSR for such period ranked 1st in the 12-member peer group, which could have provided for a payout of 200% of target. The grant’s value on the last day of the performance period was greater than the “Payout Value Limit” under the terms of the grant agreement, reducing the payout from 200% of target. After the end of 2022, the Committee certified a performance at 167.7% of target and objectives, the programs and plans that underlie executive officer compensation opportunities, and the Compensation Committee’s process for awarding compensation. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and
Principal Position | | Year | | | Salary
($)1 | | | Stock
Awards
($)2 | | | Non-Equity
Incentive
Plan
Compensation
($)3 | | | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)4 | | | All Other
Compensation
($)5 | | | Total
($) | | | | | | | | | | David A. Hager | | | 2019 | | | | 1,275,000 | | | | 8,999,522 | | | | 2,581,900 | | | | 0 | | | | 939,477 | | | | 13,795,899 | | | | | | | | | | President and Chief | | | 2018 | | | | 1,275,000 | | | | 8,553,492 | | | | 1,549,100 | | | | 0 | | | | 1,081,476 | | | | 12,459,068 | | | | | | | | | | Executive Officer | | | 2017 | | | | 1,275,000 | | | | 9,027,885 | | | | 1,979,400 | | | | 0 | | | | 1,166,691 | | | | 13,448,976 | | | | | | | | | | Jeffrey L. Ritenour | | | 2019 | | | | 600,000 | | | | 2,646,956 | | | | 810,000 | | | | 89,832 | | | | 240,630 | | | | 4,387,418 | | | | | | | | | | Executive Vice President | | | 2018 | | | | 597,115 | | | | 2,213,875 | | | | 486,000 | | | | 0 | | | | 263,998 | | | | 3,560,988 | | | | | | | | | | and Chief Financial Officer | | | 2017 | | | | 552,610 | | | | 2,001,879 | | | | 595,100 | | | | 42,356 | | | | 164,161 | | | | 3,356,106 | | | | | | | | | | Lyndon C. Taylor | | | 2019 | | | | 650,000 | | | | 2,646,956 | | | | 877,500 | | | | 3,986,246 | | | | 78,114 | | | | 8,238,816 | | | | | | | | | | Executive Vice President and | | | 2018 | | | | 647,115 | | | | 2,515,741 | | | | 526,500 | | | | 551,466 | | | | 85,165 | | | | 4,325,987 | | | | | | | | | | | Chief Legal & Admin. Officer | | | 2017 | | | | 625,000 | | | | 2,442,849 | | | | 646,900 | | | | 1,248,770 | | | | 84,382 | | | | 5,047,901 | | | | | | | | | | David G Harris | | | 2019 | | | | 435,154 | | | | 1,296,467 | | | | 742,500 | | | | 0 | | | | 132,405 | | | | 2,606,526 | | | | | | | | | | Executive Vice President | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Exploration & Production | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Tana K. Cashion | | | 2019 | | | | 345,000 | | | | 1,188,452 | | | | 258,800 | | | | 617,536 | | | | 32,652 | | | | 2,442,440 | | | | | | | | | | Senior Vice President | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Human Resources | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Tony D. Vaughn | | | 2019 | | | | 800,000 | | | | 3,705,718 | | | | 1,200,000 | | | | 5,048,097 | | | | 98,724 | | | | 10,852,539 | | | | | | | | | | Former Chief Operating | | | 2018 | | | | 800,000 | | | | 3,522,082 | | | | 720,000 | | | | 2,508,995 | | | | 110,724 | | | | 7,661,801 | | | | | | | | | | Officer | | | 2017 | | | | 793,077 | | | | 3,717,376 | | | | 920,000 | | | | 3,719,208 | | | | 143,909 | | | | 9,293,570 | |
1 | Mr. Hager’s annual base salary rate of $1,275,000 became effective upon his appointment as President and CEO in August 2015 and has not been subsequently changed. The Compensation Committee increased Mr. Ritenour’s annual base salary rate to $620,000 at its January 2020 meetings. The Compensation Committee increased Mr. Taylor’s annual base salary rate from $625,000 to $650,000 at its January 2019 meetings. Mr. Harris’s annual base salary rate increased from $400,000 to $550,000 upon his appointment as Executive Vice President in September 2019. The Compensation Committee increased Mr. Harris’s annual base salary rate to $610,000 at its January 2020 meetings. The Compensation Committee increased Ms. Cashion’s annual base salary rate to $375,000 at its January 2020 meetings. Mr. Vaughn’s annual base salary rate of $800,000 was set at the Compensation Committee’s January 2017 meetings and has not been subsequently changed.
|
2 | The dollar amounts reported in this column represent the aggregate grant date fair values of the stock awards made in 2019, as determined pursuant to FASB ASC Topic 718, excluding the effect of estimated forfeitures. The assumptions used to value stock awards are discussed in Note 4 – Share-Based Compensation of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form10-K for the year ended December 31, 2019. For restricted stock and performance restricted stock, values are based on the closing price of the Company’s common stock on the grant date. In valuing the performance share unit awards, the Company used a Monte Carlo simulation. The grant date fair value of the performance share unit awards was determined based on the vesting at target of the units awarded, which is the performance the
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EXECUTIVE COMPENSATION (cont’d)
| Company believed was probable on the grant date. If a maximum, rather than target, number of shares is used to determine the maximum award opportunity for the named executive officers for the 2019 performance share unit awards, the grant date value of the awards is as follows: Mr. Hager, $9,499,032; Mr. Ritenour, $2,793,873; Mr. Taylor, $2,793,873; Mr. Harris, $1,392,930; Ms. Cashion, $1,276,877; and Mr. Vaughn, $3,911,399.
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3 | This column reflects performance cash bonuses awarded to the named executive officers.
|
4 | The dollar amounts reported in this column reflect the aggregate change in the actuarial present value of each participating named executive officer’s accumulated benefits under the Company’s Defined Benefit Plan, Benefits Restoration Plan (BRP) and the Supplemental Retirement Income Plan (SRIP) during the applicable year. The amounts shown for each year do not reflect payments made to the executives during the applicable year. None of the named executive officers received above market or preferential earnings on deferred compensation in any of the reported years. Messrs. Hager and Harris joined the Company after Devon’s Defined Benefit Plan was closed to new participants in 2007. At the time the plans closed to new participants, Mr. Ritenour elected to freeze his participation in these plans and instead participate in the Company’s enhanced defined contribution plan. Under the Defined Benefit Plan, Mr. Ritenour continues to earn years of credited service only. During 2019 the Compensation Committee awarded Messrs. Taylor and Vaughn three extra years of age credit under the SRIP in recognition of their respective long service to the Company and to promote components of the Company’s executive succession plan in the short-term and longer-term (the 2019 Plan Amendment). The supplemental table immediately below provides further attribution to the components that changed each participant’s pension value in 2019, each component being responsible for the applicable percentage of the total Change in Pension Value shown in the Summary Compensation Table.earned shares were released on February 10, 2023.
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| | | | | | | | | | | | | | | | | | | | Jeffrey L.
Ritenour
($) | | | Lyndon C.
Taylor
($) | | | Tana K.
Cashion
($) | | | Tony D.
Vaughn
($) | | | | | | | “Early Retirement” Subsidy (described on page 68) | | | N/A | | | | 18.0 | % | | | N/A | | | | 22.8 | % | | | | | | Change in Age, Service, Eligible Pay | | | 10.2 | % | | | 20.5 | % | | | 36.6 | % | | | 11.5 | % | | | | | | Change in Mortality and other Assumptions | | | 0.3 | % | | | 0.4 | % | | | 0.2 | % | | | -2.4 | % | | | | | | 2019 Plan Amendment | | | N/A | | | | 25.4 | % | | | N/A | | | | 27.1 | % | | | | | | Change in Applicable Discount Rate | | | 89.5 | % | | | 35.7 | % | | | 63.2 | % | | | 40.9 | % | | | | | | Total | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % |
| 5 | The rows reflect RSAs granted in 2020. With each grant, 25% of the shares vest (or vested) on each anniversary of the grant date (i.e., on February 10, 2021, February 10, 2022, February 10, 2023, and February 10, 2024). For Messrs. Muncrief, Gaspar, and Cameron, the RSAs (i) relate to grants originally made by WPX which were assumed by Devon in connection with the Merger and (ii) provide that 33 1⁄3% of the shares vest (or vested) on each anniversary of the grant date (i.e. on March 1, 2021, March 1, 2022, and March 1, 2023). |
5 | Details for the amounts shown in this column for 2019 are reflected in the supplemental table immediately below.
|
The following supplemental table shows the components of “All Other Compensation” for 2019 in the SCT.
| | | | | | | | | | | | | | | | | | Name | | Group
Term Life
Insurance
Premiums
($) | | 401(k) Plan
Employer
Match and
Retirement
Contribution ($) | | Deferred
Compensation
Plan
Employer
Match
($) | | Defined
Contribution
Restoration
Plan and
Supplemental
Contribution
Plan
Employer
Contribution
($) | | Defined
Contribution
Supplemental
Executive
Plan
Employer
Contribution
($) | | Other
Perquisites
($)2 | | Total
($) | | David A. Hager | | 7,524 | | 37,000 | | 152,646 | | 242,9971 | | 499,310 | | — | | | 939,477 | | Jeffrey L. Ritenour | | 1,710 | | 37,000 | | 48,360 | | 153,5601 | | N/A | | — | | | 240,630 | | Lyndon C. Taylor | | 7,524 | | 16,800 | | 53,790 | | N/A | | N/A | | — | | | 78,114 | | David G. Harris | | 1,428 | | 37,000 | | 26,859 | | 67,1181 | | N/A | | — | | | 132,405 | | Tana K. Cashion | | 1,152 | | 16,800 | | 14,700 | | N/A | | N/A | | — | | | 32,652 | | Tony D. Vaughn | | 7,524 | | 16,800 | | 74,400 | | N/A | | N/A | | — | | | 98,724 | |
| “N/A” indicates the executive is not eligible for this program and no amount was paid, contributed, or accrued by the Company.
|
EXECUTIVE COMPENSATION (cont’d)
1 | Mr. Hager and Mr. Harris joined the Company after the Defined Benefit Plan was closed to new participants. Instead, they are eligible for and receive enhanced employer retirement contributions to the 401(k) plan and certainnon-qualified defined contribution arrangements. In 2007, Mr. Ritenour elected to freeze future pension benefit accruals and instead receive enhanced employer retirement contributions to the 401(k) plan and certainnon-qualified defined contribution arrangements.
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2 | Executives are eligible for limited,pre-approved personal use of Company aircraft, but none utilized it in 2019.
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EXECUTIVE COMPENSATION (cont’d)
EXECUTIVE COMPENSATION (cont’d) | 6 | GRANTS OF PLAN-BASED AWARDS
The following 2019 Grants of Plan-Based Awards table sets forth information concerning performance cash bonuses, restricted stock, and performance share unitsFor PSUs granted during 2019 for the named executive officers as described below. The long-term incentive awards reflected below are the only equity-based incentives granted to the named executive officers in the year.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts UnderNon-Equity Incentive Plan Awards1 | | | Estimated Future Payouts
Under Equity Incentive Plan
Awards | | | All Other
Stock
Awards:
Number of
Shares of
Stock or Units
(# shares) | | | Grant Date Fair
Value of
Stock Awards ($) | | Name | | Grant Date | | | Threshold
($) | | Target ($) | | | Maximum
($) | | | Threshold
(# shares) | | Target
(# shares) | | | Maximum
(# shares) | | David A. Hager | | | 1/29/2019 | | | 0 | | | 1,721,250 | | | | 3,442,500 | | | - | | | - | | | | - | | | | - | | | | - | | | | | 2/10/2019 | 2 | | - | | | - | | | | - | | | - | | | - | | | | - | | | | 167,060 | | | | 4,250,006 | | | | | 2/10/2019 | 3 | | - | | | - | | | | - | | | 0 | | | 167,060 | | | | 334,120 | | | | - | | | | 4,749,516 | | Jeffrey L. Ritenour | | | 1/29/2019 | | | 0 | | | 540,000 | | | | 1,080,000 | | | - | | | - | | | | - | | | | - | | | | - | | | | | 2/10/2019 | 2 | | - | | | - | | | | - | | | - | | | - | | | | - | | | | 49,136 | | | | 1,250,020 | | | | | 2/10/2019 | 3 | | - | | | - | | | | - | | | 0 | | | 49,136 | | | | 98,272 | | | | - | | | | 1,396,936 | | Lyndon C. Taylor | | | 1/29/2019 | | | 0 | | | 585,000 | | | | 1,170,000 | | | - | | | - | | | | - | | | | - | | | | - | | | | | 2/10/2019 | 2 | | - | | | - | | | | - | | | - | | | - | | | | - | | | | 49,136 | | | | 1,250,020 | | | | | 2/10/2019 | 3 | | - | | | - | | | | - | | | 0 | | | 49,136 | | | | 98,272 | | | | - | | | | 1,396,936 | | David G. Harris | | | 1/29/2019 | | | 0 | | | 495,000 | | | | 990,000 | | | - | | | - | | | | - | | | | - | | | | - | | | | | 2/10/2019 | 2 | | - | | | - | | | | - | | | - | | | - | | | | - | | | | 23,585 | | | | 600,002 | | | | | 2/10/2019 | 3 | | - | | | - | | | | - | | | 0 | | | 23,585 | | | | 47,170 | | | | - | | | | 696,465 | | Tana K. Cashion | | | 1/29/2019 | | | 0 | | | 172,500 | | | | 345,000 | | | - | | | - | | | | - | | | | - | | | | - | | | | | 2/10/2019 | 2 | | - | | | - | | | | - | | | - | | | - | | | | - | | | | 21,620 | | | | 550,013 | | | | | 2/10/2019 | 3 | | - | | | - | | | | - | | | 0 | | | 21,620 | | | | 43,240 | | | | - | | | | 638,439 | | Tony D. Vaughn | | | 1/29/2019 | | | 0 | | | 800,000 | | | | 1,600,000 | | | - | | | - | | | | - | | | | - | | | | - | | | | | 2/10/2019 | 2 | | - | | | - | | | | - | | | - | | | - | | | | - | | | | 68,790 | | | | 1,750,018 | | | | | | 2/10/2019 | 3 | | - | | | - | | | | - | | | 0 | | | 68,790 | | | | 137,580 | | | | - | | | | 1,955,700 | |
1 | The amounts shown in the column reflect a range of possible payouts for the performance cash bonus awards made on the dates indicated. Performance related to these awards was determined by the Compensation Committee following the end of the year and amounts were paid shortly thereafter. The awards were earned and paid at 150% of target levels; actual payouts under these awards are shown in theNon-Equity Incentive Plan Compensation column of the Summary Compensation Table. Please refer to the section titled “Annual Performance Cash Bonus” starting on page 46 for more information about 2019 performance cash bonuses, including how the Compensation Committee establishes performance bonus targets and performance goals and engages in a scoring process to determine actual payouts.
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2 | The amounts reported in the table’s rightmost column reflect the value of the restricted stock award made on the date indicated. The value is calculated using the face-value method (the closing price of the Company stock as of the grant date multiplied by the number of shares granted). The award was made under the 2017 LTIP. 25% of the shares granted vest on the anniversary of the grant date and 25% will vest on each of the 2nd, 3rd and 4th anniversaries of the grant date.
|
3 | The amounts in the Threshold, Target, and Maximum columns reflect the range and midpoint of possible payouts for the performance share unit awards made on the dates indicated. All awards were made under the 2017 LTIP. The amounts reported for the table’s rightmost column represent the aggregate grant date fair values of the performance share unit awards determined pursuant to FASB ASC Topic 718, excluding the effect of estimated forfeitures. The grant date fair value of the performance share unit awards was determined based on the vesting at target of the units awarded, which is the performance the Company believed was probable on the grant date. For more information, please see the discussion titled “Long-Term Incentives” starting on page 49 of this Proxy Statement. While that discussion specifically covers grants made in February 2020, the terms and conditions of those awards and the awards reflected in this table are substantially the same. Dividends on the awards are not paid until shares vest. As of December 31, 2019, the awards reflected in this table were trending at 150% of target payout.
|
EXECUTIVE COMPENSATION (cont’d)
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table shows2021, the number of shares covered by exercisable options and unvested restricted stock,listed is based on the trending level of performance restricted stock, and performance share awards held by the named executive officers as of December 31, 2019.2022 (200%) for the three-year period from January 1, 2021 to December 31, 2023. The actual number of shares paid out will be based on the Company’s relative TSR, as determined by the Committee following the period pursuant to the grid set forth on page 47 of Devon’s 2021 proxy statement, and may be subject to certain limitations set forth in the applicable grant agreements at the time of settlement.
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| | | | | | | | | | | | Stock Awards | Name | | Number of
Shares or
Units of
Stock
That
Have Not
Vested (#) | | Market
Value of
Shares or
Units of
Stock That Have Not
Vested ($)1 | | Equity Incentive Plan Awards: | | | Number of
Unearned
Shares, Units
or Other
Rights That Have Not
Vested (#) | | Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That Have Not Vested
($)1 | David A. Hager | | 36,8542 | | 957,098 | | — | | — | | | 46,7963 | | 1,215,292 | | 93,5924 | | 2,430,584 | | | 89,0877 | | 2,313,589 | | 118,7826 | | 3,084,769 | | | 167,0609 | | 4,338,548 | | 167,0608 | | 4,338,548 | Jeffrey L. Ritenour | | 5,6375 | | 146,393 | | — | | — | | | 6,6075 | | 171,584 | | 13,2134 | | 343,142 | | | 9,0823 | | 235,860 | | — | | — | | | 23,0587 | | 598,816 | | 30,7446 | | 798,422 | | | 49,1369 | | 1,276,062 | | 49,1368 | | 1,276,062 | Lyndon C. Taylor | | 9,9732 | | 258,999 | | — | | — | | | 12,6633 | | 328,858 | | 25,3254 | | 657,690 | | | 26,2027 | | 680,466 | | 34,9366 | | 907,288 | | | 49,1369 | | 1,276,062 | | 49,1368 | | 1,276,062 | David G. Harris | | 5,2035 | | 135,122 | | — | | — | | | 6,6075 | | 171,584 | | 13,2134 | | 343,142 | | | 12,5787 | | 326,651 | | 16,7706 | | 435,517 | | | 23,5859 | | 612,502 | | 23,5858 | | 612,502 | Tana K. Cashion | | 3,4695 | | 90,090 | | — | | — | | | 5,5065 | | 142,991 | | 11,0114 | | 285,956 | | | 11,5297 | | 299,408 | | 15,3726 | | 399,211 | | | 21,6209 | | 561,471 | | 21,6208 | | 561,471 | Tony D. Vaughn | | 13,0082 | | 337,818 | | — | | — | | | 19,2693 | | 500,416 | | 38,5384 | | 1,000,832 | | | 36,6847 | | 952,683 | | 48,9116 | | 1,270,218 | | | | 68,7909 | | 1,786,476 | | 68,7908 | | 1,786,476 |
| 7 | 1 | Based on a stock price of $25.97, the closing price of Devon’s common stock on December 31, 2019, which was the last trading day of the year.The rows reflect RSAs granted in 2021. With each grant, 25% of the shares vest (or vested) on each anniversary of the grant date (i.e., on February 10, 2022, February 10, 2023, February 10, 2024, and February 10, 2025).
|
2 | As established at the time of grant, performance restricted stock for 2016 was only earned if the Company achieved in 2016 either cash flow before balance sheet changes of at least $500 million or production of at least 175 million BOE. In January 2017, the Committee determined that each goal had been achieved. As a result, 25% of the shares granted vested on the first anniversary of the grant date, and 25% vested (or, with respect to tranches that have not vested, will vest in the future) on each of the 2nd, 3rd and 4th anniversaries of the grant date.
|
3 | As established at the time of grant, performance restricted stock for 2017 was only earned if the Company achieved cash flow before balance sheet changes of at least $700 million in 2017. In January 2018, the Committee determined that the
|
| 8 | EXECUTIVE COMPENSATION (cont’d)For PSUs granted in 2022, the number of shares listed is based on the trending level of performance as of December 31, 2022 (125%) for the three-year period from January 1, 2022 to December 31, 2024. The actual number of shares paid out will be based on the Company’s relative TSR, as determined by the Committee following the period pursuant to the grid set forth on page 46 of Devon’s 2022 proxy statement, and may be subject to certain limitations set forth in the applicable grant agreements at the time of settlement.
|
| 9 | The rows reflect RSAs granted in 2022. With each grant, 25% of the shares vest (or vested) on each anniversary of the grant date (i.e., on February 10, 2023, February 10, 2024, February 10, 2025, and February 10, 2026). | goal had been achieved. As a result, 25% of the shares vested on the first anniversary of the grant date, and 25% vested (or, with respect to tranches that have not vested, will vest in the future) on each of the 2nd, 3rd, and 4th anniversaries of the grant date.
|
4 | For performance share units granted in 2017, the number of shares listed is based on the target level of performance as compared to a peer group for the three-year period from January 1, 2017 to December 31, 2019. In January 2020, the Compensation Committee determined that the Company’s TSR for the period ranked 11th out of 15 when compared to the relevant peer group. Pursuant to the terms of the grant, which are further detailed on the grid set forth on page 47 of Devon’s 2017 proxy statement, the grant paid out at 60% of target.
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5 | The rows reflect restricted stock awards granted in 2016 and 2017 to Mr. Ritenour, Mr. Harris, and Ms. Cashion. With each grant, 25% of the shares vest on each anniversary of the grant date. Accordingly, portions of each grant have already vested prior to 2019. With respect to the remaining unvested shares reflected in the table, (i) the remaining 25% of the shares underlying the 2016 grant vested on March 1, 2020 and (ii) 25% of the shares underlying the 2017 grant vested on February 10, 2020 (i.e., the 3rd tranche of the grant), and the remaining shares will vest on February 10, 2021 (i.e., the 4th tranche of the grant).
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6 | For performance share units granted in 2018, the number of shares listed is based on the target level of performance for the three-year period from January 1, 2018 to December 31, 2020. The actual number of shares paid out will be based on the Company’s relative TSR, as determined by the Committee following the period pursuant to the grid set forth on page 47 of Devon’s 2018 proxy statement.
|
7 | The rows reflect restricted stock awards granted in 2018. With each grant, 25% of the shares vest (or vested) on each anniversary of the grant date (i.e., on February 10, 2019, February 10, 2020, February 10, 2021 and February 10, 2022).
|
8 | For performance share units granted in 2019, the number of shares listed is based on target level of performance for the three-year period from January 1, 2019 to December 31, 2021. The actual number of shares paid out will be based on the Company’s relative TSR, as determined by the Committee following the period pursuant to the grid set forth on page 47 of Devon’s 2019 proxy statement.
|
9 | The rows reflect restricted stock awards granted in 2019. With each grant, 25% of the shares vest (or vested) on each anniversary of the grant date (i.e., on February 10, 2020, February 10, 2021, February 10, 2022 and February 10, 2023).
|
OPTION EXERCISES AND STOCK VESTED DURING 2019
|
OPTION EXERCISES AND STOCK VESTED DURING 2022 The table below shows the number of shares of Devon’s common stock acquired during 2022 upon the exercise of stock options and the vesting of stock awards, each of which were granted to the NEOs in previous years. | | | | | | | | | | | | | | | | | | | | | | | | Options Awards | | Stock Awards | | Name | | Number of
Shares
Acquired
on Exercise (#) | | Value
Realized
on
Exercise
($)1 | | Number of
Shares
Acquired
on Vesting (#) | | Value
Realized on
Vesting
($)2 | Richard E. Muncrief | | 20,000 | | | | 507,800 | | | | | 492,582 | | | | | 28,831,832 | | Jeffrey L. Ritenour | | - | | | | - | | | | | 144,777 | | | | | 7,560,255 | | Clay M. Gaspar | | - | | | | - | | | | | 215,987 | | | | | 12,643,642 | | David G. Harris | | - | | | | - | | | | | 83,794 | | | | | 4,375,723 | | Dennis C. Cameron | | 18,206 | | | | 515,079 | | | | | 84,088 | | | | | 4,920,262 | |
| 1 | The dollar amounts shown in this column are determined by multiplying the number of options exercised by the difference between the per- share market price of underlying common stock at exercise and the per-share exercise price of the options. |
| 2 | The dollar amounts shown in this column are determined by multiplying the number of shares of common stock acquired upon vesting by the closing per-share market price of Devon’s common stock acquired during 2019 uponon the vesting of stock awards granted to the named executive officers in previous years. During 2019, no stock options were exercised by named executive officers. | | | | | | | | | | | | Stock Awards | | | Name | | Number of
Shares
Acquired
on Vesting (#) | | | Value
Realized on
Vesting ($)1 | | David A. Hager | | | 106,155 | | | | 2,859,048 | | Jeffrey L. Ritenour | | | 23,506 | | | | 651,194 | | Lyndon C. Taylor | | | 29,517 | | | | 797,881 | | David G. Harris | | | 14,843 | | | | 402,112 | | Tana K. Cashion | | | 10,922 | | | | 294,195 | | Tony D. Vaughn | | | 39,739 | | | | 1,072,223 | |
1 | The dollar amounts shown in this column are determined by multiplying the number of shares of common stock acquired upon vesting by the closingper-share market price of Devon’s common stock on the vesting date.
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|
PENSION BENEFITS Devon maintains a tax qualified defined benefit retirement plan and related trust for certain employees (Defined Benefit Plan). Mr. Ritenour, the only NEO eligible to participate in the plan, elected to have his benefit under the Defined Benefit Plan frozen. Messrs. Muncrief, Gaspar, Harris, and Cameron joined the Company after the Defined Benefit Plan was closed to new participants in 2007. As a result, they are not eligible for a benefit under any of Devon’s defined retirement benefit plans.
EXECUTIVE COMPENSATION (cont’d)
PENSION BENEFITS
Devon maintains the following defined benefit retirement plans:
a tax qualified defined benefit retirement plan and related trust for certain employees (Defined Benefit Plan);
a nonqualified Benefit Restoration Plan (BRP) that provides benefits that would be provided under the Defined Benefit Plan except for:
| – | | limitations imposed by the Internal Revenue Code, and
|
| – | | the exclusion of nonqualified deferred compensation in the definition of compensation; and
|
a nonqualified Supplemental Retirement Income Plan (SRIP) for a small group of executives that provides benefits similar to those provided by the BRP plus certain additional benefits.
The following table shows the estimated present value, as of December 31, 2022, of accumulated retirement benefits as provided to Mr. Ritenour under the Defined Benefit Plan. Please refer to the discussion titled “Benefit Plans” below for additional details on Devon’s defined benefit plans.
EXECUTIVE COMPENSATION (cont’d) | | | | | | | | | | | | | | | | | | | | | | | | Name | | Plan Name | | Number of Years
Credited Service
(#) | | Present Value of
Accumulated Benefit
($)1 | | Payments During
Last Fiscal Year
($) | | | | | | Jeffrey L. Ritenour | | Defined Benefit Plan | | | | 7 | | | | | 146,982 | | | | | 0 | |
| 1 | The present value of Mr. Ritenour’s accumulated benefits as of December 31, 2019, of accumulated retirement benefits as provided under the Defined Benefit Plan and the SRIP to the named executive officers. Please refer to the discussion titled “Benefit Plans” below for additional details on Devon’s defined benefit plans. | | | | | | | | | | | Name | | Plan Name | | Number of Years
Credited Service
(#) | | Present Value of
Accumulated Benefit
($)1 | | | Payments During
Last Fiscal Year
($) | David A. Hager2
| | Defined Benefit Plan SRIP
| | N/A
N/A
| | | N/A
N/A
| | | 0
0
| Jeffrey L. Ritenour3
| | Defined Benefit Plan SRIP
| | 7
7
| |
| 245,629
68,527
|
| | 0
0
| Lyndon C. Taylor4,5,6
| | Defined Benefit Plan SRIP
| | 14
19
| |
| 3,047,794
9,364,861
|
| | 0
0
| David G. Harris2
| | Defined Benefit Plan SRIP
| | N/A
N/A
| | | N/A
N/A
| | | 0
0
| Tana K. Cashion7
| | Defined Benefit Plan BRP
| | 15
15
| |
| 1,028,433
626,166
|
| | 0
0
| Tony D. Vaughn4,6
| | Defined Benefit Plan SRIP
| | 22
22
| |
| 3,117,824
15,849,013
|
| | 0
0
|
“N/A” | indicates the executive is not eligible for this program and no amount was paid, contributed, or accrued by the Company.
|
1 | The present value of each named executive officer’s accumulated benefits as of December 31, 2019 under the Defined Benefit Plan is calculated assuming 10% of participants would elect a single life annuity, 50% of participants would elect a lump sum, and 40% would elect a 100% joint and survivor annuity. For the BRP and SRIP, the calculations assume that 25% of participants would elect a single life annuity and 75% would elect a 100% joint and survivor annuity. With each plan, the calculations assume that each named executive officer would begin receiving payments at normal retirement age (age 65) and would be vested in those payments. The present value is calculated using theRP-2014 mortality table withMP-2019 improvement scale, and a discount rate of 3.23% for the Defined Benefit Plan, 3.25% for the BRP, and 3.11% for the SRIP. Nopre-retirement decrements were used in this calculation.
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2 | Messrs. Hager and Harris joined the Company after the Defined Benefit Plan was closed to new participants. As a result, they are not eligible for a benefit under any of Devon’s defined retirement benefit plans.
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EXECUTIVE COMPENSATION (cont’d)
3 | As of December 31, 2007, Mr. Ritenour voluntarily elected to freeze participation in the plans described in this table and instead participate in the Company’s enhanced defined contribution plan. Under these plans, Mr. Ritenour continues to earn credited years of service only.
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4 | Messrs. Taylor and Vaughn are eligible for early retirement under the Defined Benefit Plan and the SRIP. See the following “Defined Benefit Plan – Early Retirement” for a description of the eligibility requirements and benefits payable under Devon’s Defined Benefit Plan. See the following “Supplemental Retirement Income Plan” for a description of the eligibility requirements and benefits payable under Devon’s SRIP.
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5 | The value of Mr. Taylor’s SRIP benefits includes the effect of an additional service credit. As of December 31, 2019, the additional credited years of service increased the value of Mr. Taylor’s SRIP benefit by $2,813,642. On an infrequent basis, the Committee grants additional service and age credits under specific circumstances. The Committee granted the service credit in 2012 in recognition that Mr. Taylor joined Devonmid-career and would likely remain at the Company for the duration of his career. The service credit recognizes the value to the Company of his prior experience.
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6 | During 2019, the Compensation Committee awarded Messrs. Taylor and Vaughn three extra years of age credit under the SRIP in recognition of their respective long service to the Company and to promote components of the Company’s executive succession plan in the short-term and longer-term.
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7 | Ms. Cashion was a BRP participant during 2019. In 2020, the Compensation Committee authorized her participation in the SRIP.
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BENEFIT PLANS
Defined Benefit Plan
The Defined Benefit Plan is a qualified defined benefit retirement plan that provides benefits based upon employment service with Devon. Employees hired before October 1, 2007, became eligible to participate in the Defined Benefit Plan when they earned one year of service and attained the age of 21 years. Employees who were hired after September 30, 2007 are not eligible to participate in the Defined Benefit Plan. Each eligible employee who retires is entitled to receive monthly retirement income based upon their final average compensation and years of credited service, and the retirement income is reduced by Social Security benefits payable to the employee. Alternatively, an eligible employee may elect alump-sum payment at the time of retirement equivalent in amount to the present value of the calculated annuity stream. Final average compensation consists of the average of the highest three consecutive years’ compensation from salary and cash performance bonuses out of the last 10 years. The definition of compensation2022 under the Defined Benefit Plan is the same as the definition under the SRIPcalculated assuming 10% of participants would elect a single life annuity, 50% of participants would elect a lump sum, and the BRP, except40% would elect a 100% joint and survivor annuity. The calculation assumes that under the Defined Benefit Plan, nonqualified deferred compensation is excluded and the amount of compensation and pension benefits is limited by the Internal Revenue Code.
Contributions by employees are neither required nor permitted under the Defined Benefit Plan. Benefits are computed based on straight-life annuity amounts. Benefits under the Defined Benefit Plan are limited for certain highly compensated employees, including the named executive officers, in order to comply with certain requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code.
Normal Retirement
Employees, including certain of the named executive officers as described above, areMr. Ritenour would begin receiving payments at normal retirement age (age 65) or when eligible for normal retirementunreduced benefits, under the Defined Benefit Plan upon reaching age 65. Normal retirement benefits for the employees participating in the Defined Benefit Plan are equal to 65% of the participant’s final average compensation less any benefits due to the participant under Social
EXECUTIVE COMPENSATION (cont’d)
Security, multiplied by a fraction, the numerator of which is his or her credited years of service (up to a maximum of 25 years)if earlier, and the denominator of which is 25.
Early Retirement
Employees, including certain of the named executive officers as described above, are eligible for early retirement benefits under the Defined Benefit Plan after (i) attaining age 55 and (ii) earning at least 10 years of credited service. Early retirement benefits are equal to a percentage of the normal retirement income the participant would otherwise be entitled to if he or she had commenced benefits at age 65 depending on the participant’s age when he or she elects to begin receiving benefits. If an eligible participant commences benefits at age 55, he or she will receive 60% of the benefits he or she would have received had benefits commenced at age 65. The percentage increases by 5% for each year above age 55 (up to age 60) and 3% above age 60 (up to age 65) that an eligible participant delays the commencement of benefits.
Deferred Vested Pension
Participants in the Defined Benefit Plan are fully vested in their accrued benefits after five yearsthose payments. The present value is calculated using the Pri-2012 mortality table with MP-2021 improvement scale, and a discount rate of service. If the participant’s employment is terminated after attaining five years of service but before eligibility5.79% for early retirement, the participant is entitled to a deferred vested pension based on his or her accrued benefit on the date of termination. An unreduced deferred vested pension is payable at age 65. Alternatively, the participant may elect to receive a reduced benefit as early as age 55. The benefit payable prior to age 65 is a percentage of his or her normal retirement benefit based on his or her age at the time the benefit begins, as shown in the table below:
| | | Age at Election to Receive Deferred Vested Pension | | Percentage of Normal Retirement Income | | | 65 | | 100.00% | | | 64 | | 90.35% | | | 63 | | 81.88% | | | 62 | | 74.40% | | | 61 | | 67.79% | | | 60 | | 61.91% | | | 59 | | 56.68% | | | 58 | | 52.00% | | | 57 | | 47.80% | | | 56 | | 44.03% | | | 55 | | 40.63% |
If a participant is:
involuntarily terminated for any reason other than death or “cause,” is between the ages of 50 and 55, and has at least 10 years of credited service, or
involuntarily terminated for any reason other than “cause” within two years following a change in control and has at least 10 years of credited service regardless of the participant’s age,
EXECUTIVE COMPENSATION (cont’d)
then the participant may elect to have his or her benefits under the Defined Benefit Plan paid at any time on or after the age of 55 subject to the same percentage reduction in benefits as discussed in “Early Retirement” above.
Benefit Restoration Plan
The BRP is a nonqualified defined-benefit retirement plan, the purpose of which is to restore retirement benefits for certain selected key management and highly compensated employees because (i) their benefits under the Defined Benefit Plan are limited because of certain requirements of ERISA and the Internal Revenue Code or (ii) their final average compensation is reduced as a result of contributions into Devon’s Deferred Compensation Plan. Benefits under the BRP are equal to 65% of the executive’s final average compensation less any benefits due to the executive under Social Security, multiplied by a fraction, the numerator of which is his or her years of credited service (not to exceed 25) and the denominator of which is 25. The BRP benefit is reduced by the benefit that is otherwise payable under the Defined Benefit Plan. An employee must be selected by the Compensation Committee in order to be eligible for participation in the BRP. As noted below in the discussion of the SRIP, an executive will only receive benefits under the BRP if his or her benefits under the SRIP have been forfeited due to a termination for “cause” or the executive has not been selected to participate in the SRIP. The same early retirement reduction factors that apply under the Defined Benefit Plan are applicable under the BRP. Participants become vested in retirement benefits under the BRP at the same time as the participant becomes vested for retirement benefits under the Defined Benefit Plan.
Supplemental Retirement Income Plan
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BENEFIT PLANS Defined Benefit Plan The Defined Benefit Plan is a qualified defined benefit retirement plan that provides benefits based upon employment service with Devon. Each eligible employee who retires is entitled to receive monthly retirement income based upon their final average compensation and years of credited service, and the retirement income is reduced by Social Security benefits payable to the employee. Alternatively, an eligible employee may elect a lump-sum payment at the time of retirement equivalent to the present value of the calculated annuity stream. Final average compensation consists of the average of the highest three consecutive years’ compensation from salary and cash performance bonuses out of the last 10 years. The definition of compensation under the Defined Benefit Plan includes salary and annual performance bonus. Mr. Ritenour elected to have his benefit under the plan frozen at the end of 2007, and effective as of December 31, 2020, the Company’s Defined Benefit Plan was amended to discontinue further benefit accruals. Contributions by employees are neither required nor permitted under the Defined Benefit Plan. Benefits are computed based on straight-life annuity amounts. Benefits under the Defined Benefit Plan are limited for certain highly compensated employees, including the NEOs, in order to comply with certain requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. Normal Retirement Employees, including Mr. Ritenour, are eligible for normal retirement benefits under the Defined Benefit Plan upon reaching age 65. Normal retirement benefits for the employees participating in the Defined Benefit Plan are equal to 65% of the participant’s final average compensation less any benefits due to the participant under Social Security, multiplied by a fraction, the numerator of which is his or her credited years of service (up to a maximum of 25 years) and the denominator of which is 25. Defined Contribution Plan – 401(k) Plan The 401(k) Plan is a qualified defined contribution plan that provides for a Company-matching contribution of up to 6% of compensation and a non-matching company contribution of 8%.
EXECUTIVE COMPENSATION (cont’d) NONQUALIFIED DEFERRED COMPENSATION1 The following table shows the contributions, earnings, distributions, and balances for 2022 under Devon’s nonqualified deferred compensation plan and supplemental contribution restoration plans, to the extent the respective NEO participates in such plans. Additional information regarding each plan is provided following the table. | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Executive
Contributions in Last Fiscal Year
($)1 | | | Company
Contributions for Last Fiscal Year
($)2 | | | Aggregate
Earnings in Last
Fiscal Year
($)3,4 | | | Aggregate
Distributions in Last Fiscal Year
($)5 | | | Aggregate
Balance at Last
Fiscal Year End
($)3,6 | | | | Richard E. Muncrief | | | | | | | | | | | | | | | | | | | | | | | Deferred Compensation Plan | | | 927,435 | | | | 189,839 | | | | (134,074 | ) | | | 0 | | | | 1,245,052 | | | | Supplemental Contribution Restoration Plans (SCRPs) | | | N/A | | | | 255,318 | | | | (27,051 | ) | | | 0 | | | | 316,650 | | | | WPX Deferred Compensation Plan | | | N/A | | | | N/A | | | | (1,469,824 | ) | | | 0 | | | | 4,690,288 | | | | WPX Restoration Plan | | | N/A | | | | N/A | | | | 24,034 | | | | 0 | | | | 1,232,490 | | | | Jeffrey L. Ritenour | | | | | | | | | | | | | | | | | | | | | | | Deferred Compensation Plan | | | 296,310 | | | | 79,264 | | | | (68,284 | ) | | | (1,532 | ) | | | 494,049 | | | | Supplemental Contribution Restoration Plans (SCRPs) | | | N/A | | | | 107,885 | | | | (22,466 | ) | | | 0 | | | | 179,936 | | | | Clay M. Gaspar | | | | | | | | | | | | | | | | | | | | | | | Deferred Compensation Plan | | | 104,146 | | | | 85,846 | | | | (20,434 | ) | | | 0 | | | | 224,824 | | | | Supplemental Contribution Restoration Plans (SCRPs) | | | N/A | | | | 116,661 | | | | (11,485 | ) | | | 0 | | | | 143,621 | | | | WPX Deferred Compensation Plan | | | N/A | | | | N/A | | | | (254,911 | ) | | | 0 | | | | 1,142,243 | | | | WPX Restoration Plan | | | N/A | | | | N/A | | | | (157,880 | ) | | | 0 | | | | 605,845 | | | | David G. Harris | | | | | | | | | | | | | | | | | | | | | | | Deferred Compensation Plan | | | 95,989 | | | | 77,688 | | | | (28,654 | ) | | | 0 | | | | 255,614 | | | | Supplemental Contribution Restoration Plans (SCRPs) | | | N/A | | | | 105,785 | | | | (19,991 | ) | | | 0 | | | | 170,488 | | | | Dennis C. Cameron | | | | | | | | | | | | | | | | | | | | | | | Deferred Compensation Plan | | | 70,125 | | | | 51,825 | | | | (12,424 | ) | | | 0 | | | | 146,539 | | | | Supplemental Contribution Restoration Plans (SCRPs) | | | N/A | | | | 71,300 | | | | (6,090 | ) | | | 0 | | | | 86,563 | | | | WPX Deferred Compensation Plan | | | N/A | | | | N/A | | | | (7,930 | ) | | | 0 | | | | 328,300 | | | | | WPX Restoration Plan | | | N/A | | | | N/A | | | | (32,978 | ) | | | 0 | | | | 431,063 | |
“N/A” indicates the plan does not permit the participant or, as applicable, the Company to make contributions. | 1 | The SRIP is another nonqualified defined benefit retirement plan for a small groupamounts in this column are already included in, and are not in addition to, the amounts in the “Salary” or “Non-Equity Incentive Plan Compensation” columns in the Summary Compensation Table on page 54. |
EXECUTIVE COMPENSATION (cont’d) | 2 | The amounts in this column are already included in, and are not in addition to, the amounts in the “All Other Compensation” column of key executives, the purpose ofSummary Compensation Table on page 54. Company contributions are made in arrears during the first month following the fiscal quarter during which isthe contributions were earned. Company contributions earned by the NEOs during 2022 were deposited in April, July, and October 2022 and January 2023. |
| 3 | Messrs. Muncrief, Gaspar, and Cameron participate in the WPX Deferred Compensation Plan and the WPX Restoration Plan. No new contributions may be made to provide additional retirement benefits for those executives. An employee must bethese plans after December 31, 2021. |
| 4 | Earnings reflect the returns produced by the investments selected by the Compensation Committee in orderapplicable NEO. For the Devon Plans, the investment options available to be eligible for participation in the SRIP. Participants inNEOs are the SRIP become vested in the SRIP benefits after five years of service. If the executive is terminated for “cause,” as that term is defined in the executive’s employment agreement, then all benefitssame options available under the SRIP are forfeitedCompany’s 401(k) Plan. As of December 31, 2022, investment options consisted of the following (returns for 2022 noted in parentheses): PIMCO Stable Income-Class 1 (1.79%); Global Low Volatility Fund (-10.04%); US Equity Index Fund (-19.20%); International Equity Index Fund (-16.25%); TCW Core Fixed Income (-14.25%); Fidelity Inflation Bond Index (-12.05%); Vanguard Total Bond Market (-13.16%); Vanguard Prime Money Market (1.55%). BlackRock LifePath Target-Date Funds (nine funds ranging from -15.25% to -18.30%). For the WPX Deferred Compensation Plan and the executive would receive benefits underWPX Restoration Plan, the BRP. Ifinvestment options are the executive receives benefits under the SRIP, the executive is not eligible for benefits under the BRP. The SRIP provides for retirement income equal to 65%same in each plan. As of December 31, 2022, investment options consisted of the executive’s final average compensation less any benefits duefollowing (returns for 2022 noted in parentheses): iShares Total US Stock Market Index (-19.07%); iShares MSCI Total International Index (-16.39%); Fidelity Inflation-Protected Bond Index (-12.05%); PIMCO Short Asset Investment (0.57%); TCW Core Fixed Income (-14.25%); Vanguard Total Bond Market Index (-13.16%); Vanguard Federal Money Market (1.55%); BlackRock LifePath Target-Date Funds (nine funds ranging from – 15.77% to the participant under Social Security, multiplied by-18.33%). The Company does not guarantee a fraction, the numeratorlevel of which is the executive’s credited years of service (not to exceed 20) and the denominator of which is 20. The SRIP benefit is also reduced by the full benefits otherwise accrued under the Defined Benefit Plan.investment return.
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| 5 | The same early retirement reduction factors that apply under the Defined Benefit PlanIn-service distributions (if any) are applicable under the SRIP. Early retirement benefits are payable under the SRIP after attaining age 55 and earning at least 10 years of service or, if earlier, 20 years of service regardless of age. The early retirement benefit prior to age 55 is the actuarial equivalent of the age 55 early retirement benefit. In the event that a named executive officer is terminated without “cause” or terminates employment for “good reason,” as those terms are definedmade in Devon’s employment agreementsaccordance with the named executive officers, then the executive will be 100% vested in the accrued SRIP benefit. If achange-in-control event occurs, the executive will be 100% vested and the benefit will be an amount equal to the normal-retirement annuity payable immediately, unreduced for early
EXECUTIVE COMPENSATION (cont’d)
commencement, in a lump sum. Otherwise, the benefit will be paid monthly, pursuant to the annuity option selected by the executive. Additionally, the SRIP provides that if the executive is terminated without “cause” or terminates employment for “good reason” within 24 months of a change in control event, the executive will be entitled to an additional three years of service credit and age in determining benefits.
Defined Contribution Plan – 401(k) Plan
The 401(k) Plan is a qualified defined contribution plan that provides for a Company-matching contribution of up to 6% of compensation. For employees who are not accruing benefits in the Defined Benefit Plan, supplemental contributions areelections made by the Company based on yearsNEO at the time of benefit serviceenrollment in the plan.
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| 6 | For the referenced plans, the Aggregate Balance reflects the changes in the plan balance for the NEOs due to contributions (executive and Company), earnings, and distributions. The amounts previously reported in the Summary Compensation Table as a percentage of compensation. Nonqualified Deferred Compensation Plan
The Nonqualified Deferred Compensation Plan is designed to allow each participating employee, including the named executive officers, to contribute up to 50% of his or her base salary and up to 100% of his or her performance bonus and receive a Company match beyond the contribution limits prescribed by the IRS with regard to Devon’s 401(k) Plan. The Nonqualified Deferred Compensation Plan provides executives atax-effective means to defer a portion of their cash compensation at a minimal cost to the Company.NEOs are as follows: Mr. Muncrief – $132,960; Mr. Ritenour – $938,135; Mr. Gaspar – $56,077; and Mr. Harris – $402,819.
EXECUTIVE COMPENSATION (cont’d)
NONQUALIFIED DEFERRED COMPENSATION
The following table shows the contributions, earnings, distributions, and balances for 2019 under Devon’s nonqualified deferred compensation plan, supplemental contribution restoration plans, and supplemental executive retirement plans, to the extent the respective named executive officer participates in such plans. Additional information about the supplemental contribution restoration plans and supplemental executive retirement plan is provided following the table.
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Nonqualified Deferred Compensation Plan The Nonqualified Deferred Compensation Plan is designed to allow each participating employee, including the NEOs, to contribute up to 70% of his or her base salary and up to 100% of his or her performance bonus and receive a Company match beyond the contribution limits prescribed by the Internal Revenue Service with regard to Devon’s 401(k) Plan. The Nonqualified Deferred Compensation Plan provides executives a tax-effective means to defer a portion of their cash compensation at a minimal cost to the Company. Unless otherwise distributed in accordance with the terms of a scheduled in-service withdrawal, a participant’s account is payable upon the earlier to occur of the participant’s separation from service, disability, change-in- control event, or death. Payment will be made in the form of a single lump sum unless the participant elects installment payments. In the case of a change-in-control event or death, distribution will be made within ninety days. If the participant experiences a separation from service, distribution will be made within ninety days unless the participant is a specified employee in which case payment will be delayed for six months. A participant may elect to schedule an in-service withdrawal at least two years after the plan year in which deferrals were made in the form of a lump sum or quarterly installment payments over a period of one or more years. Payment will be made (or commence in the case of installments) within thirty days of the first business day of January in the year elected. However, in the event of death, disability, the occurrence of a change-in- control event or separation from service, payment of the participant’s account is determined without regard to any scheduled in-service withdrawal, which will be cancelled. Investments under the plan mirror those provided to participants under the Company’s 401(k) Plan. Participants are always fully vested in any deferrals made to the plan; vesting of employer contributions follows the four- year graded vesting schedule under the Company’s 401(k) Plan. Vesting is accelerated due to death, disability, retirement, or attainment of normal retirement age (all as defined under the Company’s 401(k) Plan). The WPX Deferred Compensation plan operated on substantially the same terms as the Devon plan prior to the 2021 merger of the companies. In the year of the Merger, contributions to the WPX plan ceased and NEO participants became participants in the Devon plan. | | | | | | | | | | | | | | | | | | | | | | Name | | Executive
Contributions in
Last Fiscal Year
($)1 | | | Company
Contributions for
Last Fiscal Year
($)2 | | | Aggregate
Earnings in Last
Fiscal Year ($)3 | | | Aggregate
Distributions in
Last Fiscal Year ($)4 | | | Aggregate
Balance at Last
Fiscal Year End
($)5 | | | | | | | | David A. Hager Deferred Compensation Plan | | | 642,275 | | | | 152,646 | | | | 1,478,719 | | | | 0 | | | | 7,695,557 | | Supplemental Contribution Restoration Plans (SCRPs) | | | N/A | | | | 242,997 | | | | 478,810 | | | | 0 | | | | 2,322,882 | | Supplemental Executive Retirement Plan (DC SERP) | | | N/A | | | | 499,310 | | | | 983,857 | | | | 0 | | | | 5,377,826 | | | | | | | | Jeffrey L. Ritenour Deferred Compensation Plan | | | 121,500 | | | | 48,360 | | | | 101,458 | | | | (87,894 | ) | | | 548,788 | | Supplemental Contribution Restoration Plans (SCRPs) | | | N/A | | | | 153,560 | | | | 165,904 | | | | 0 | | | | 1,045,649 | | | | | | | | Lyndon C. Taylor Deferred Compensation Plan | | | 117,650 | | | | 53,790 | | | | 721,981 | | | | 0 | | | | 3,597,600 | | | | | | | | David G. Harris Deferred Compensation Plan | | | 43,659 | | | | 26,859 | | | | 57,723 | | | | 0 | | | | 486,592 | | Supplemental Contribution Restoration Plans (SCRPs) | | | N/A | | | | 67,118 | | | | 53,179 | | | | 0 | | | | 381,797 | | | | | | | | Tana K. Cashion Deferred Compensation Plan | | | 15,750 | | | | 14,700 | | | | 42,897 | | | | 0 | | | | 225,799 | | | | | | | | Tony D. Vaughn Deferred Compensation Plan | | | 91,200 | | | | 74,400 | | | | 515,372 | | | | 0 | | | | 2,196,686 | |
“N/A” indicates the plan does not permit the participant to make contributions.
1 | The amounts in this column are already included in, and are not in addition to, the amounts in the Salary orNon-Equity Incentive Plan Compensation columns in the Summary Compensation Table on page 60.
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2 | The amounts in this column are already included in, and are not in addition to, the amounts in the in the All Other Compensation column of the Summary Compensation Table on page 60. Company contributions are made in arrears during the first month following the fiscal quarter during which the contributions were earned. Company contributions earned by the named executive officers during 2019 were deposited in April, July, and October 2019 and January 2020.
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3 | Earnings reflect the returns produced by the investments selected by the applicable named executive officer. The investment options available to the named executive officers are the same options available under the Company’s 401(k) Plan, except for the Devon stock fund. As of December 31, 2019, investment options consisted of the following (returns for 2019 noted in parentheses): PIMCO Stable Income – Class 1 (2.24%); Global Low Volatility Fund (21.48%); US Equity Index Fund (31.01%); International Equity Index Fund (21.79%); TCW Core Fixed Income – (8.75%); Fidelity Inflation Bond Index—(8.31); Vanguard Total Bond Market—(8.71); and Vanguard Prime Money Market (2.14). Blackrock LifePath Target-Date Funds (nine funds ranging from 15.64% to 26.66%). The Company does not guarantee a level of investment return.
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4 | In-service distributions (if any) are made in accordance with the elections made by the named executive officer at the time of enrollment in the plan.
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EXECUTIVE COMPENSATION (cont’d)
EXECUTIVE COMPENSATION (cont’d) 5 | For the referenced plans, the Aggregate Balance reflects the changes in the plan balance for the named executive officers due to contributions (executive and Company), earnings, and distributions. The amounts previously reported in the Summary Compensation Table as compensation to the named executive officers are as follows: Mr. Hager – $6,131,570; Mr. Ritenour – $352,903; Mr. Taylor – $346,913; and Mr. Vaughn – $474,528.
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Supplemental Contribution Restoration Plans
The Supplemental Contribution Restoration Plans (SCRPs) are two nonqualified supplemental defined contribution plans. The purpose of the SCRPs is to ensure that participants in the 401(k) Plan who are eligible to receive the supplemental contribution receive the full supplemental contribution despite the limitations imposed by the Internal Revenue Code. A contribution will be made by the Company in an amount equal to the difference between the supplemental contribution that the Company would have contributed under the 401(k) Plan in the absence of the Internal Revenue Code limitations and the actual amount contributed.
Supplemental Executive Retirement Plan
The Supplemental Executive Retirement Plan (DC SERP) is a nonqualified supplemental executive retirement plan that provides benefits in lieu of the SRIP to a small group of key executives who are not eligible to participate in the Defined Benefit Plan or the SRIP. Under the DC SERP, an executive is eligible to receive an annual contribution of a specified percentage of compensation. This contribution will be offset by supplemental contributions to the 401(k) Plan and contributions to the SCRPs. An employee must be selected by the Compensation Committee in order to be eligible for participation in the DC SERP. A participant in the DC SERP becomes 50% vested after five years of service and vests at the rate of 10% for each of the following five years. At age 62, a participant will be 100% vested with five years of participation. In the event of a change in control or a named executive officer is terminated without “cause” or terminates his or her employment for “good reason,” as those terms are defined in Devon’s employment agreements with the named executive officers, then the executive will be 100% vested in his or her DC SERP account. Additionally, the DC SERP provides that if the executive is terminated without “cause” or terminates his or her employment for “good reason” within 24 months following a change in control event, the executive will be entitled to an additional three years of contributions. For those additional three years of contribution, no contributions under the 401(k) Plan or the SCRPs will exist to apply as an offset because the executive will have terminated employment. A participant will be 100% vested in the event of death or disability. Payment of DC SERP accounts will be in the form of a lump sum payment.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Devon will be obligated to make certain payments to the named executive officers or potentially accelerate the vesting of their equity awards and retirement benefits upon termination of their employment or upon a change in control
Supplemental Contribution Restoration Plans The Supplemental Contribution Restoration Plans (SCRPs) are the Company’s two nonqualified supplemental defined contribution plans. The purpose of the SCRPs is to ensure that participants in the 401(k) Plan who are eligible to receive the supplemental contribution receive the full supplemental contribution despite the limitations imposed by the Internal Revenue Code. A contribution will be made by the Company in an amount equal to the difference between the supplemental contribution that the Company would have contributed under the 401(k) Plan in the absence of the Internal Revenue Code limitations and the actual amount contributed. Accounts under the SCRPs are payable upon the earlier to occur of a participant’s separation from service, disability, a change-in-control event, or death. Upon a participant’s death or a change-in-control event, a lump sum payment is made within ninety days. If a participant experiences a separation from service, the account is distributed in a lump sum within ninety days unless the participant is a specified employee in which case payment will be subject to a six-month delay. Investments under the SCRPs mirror those provided to participants under the Company’s 401(k) Plan. Vesting under the plans follows the four-year graded vesting schedule under the Company’s 401(k) Plan. Vesting is accelerated due to death, disability, retirement or attainment of normal retirement age (all as defined under the Company’s 401(k) Plan). The WPX Restoration plan operated on substantially the same terms as the Devon SCRPs prior to the Merger. In the year of the Merger, contributions to the WPX plan ceased and NEO participants became participants in the Devon plan. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL Devon will be obligated to make certain payments to the NEOs or potentially accelerate the vesting of their equity awards and retirement benefits upon termination of their employment or upon a change-in-control of the Company pursuant to the following plans or agreements: an “Employment Agreement” is applicable to the President and CEO and each of the Executive Vice Presidents, and a “Severance Agreement” is applicable to the Senior Vice President; the Defined Benefit Plan;
the Defined Benefit Plan, the Company’s Long-Term Incentive Plans (the Devon 2017 LTIP, the 2022 LTIP, and the WPX Plan). Please refer to the discussion in the sections immediately above for information about each of the applicable pension plans and nonqualified deferred compensation plans that the NEOs participate in and may be eligible to receive benefits from in the event of a termination of employment or a change-in-control. As specified below, the Employment Agreement with Devon’s NEOs provide the following rights to compensation in the event of employment termination.
EXECUTIVE COMPENSATION (cont’d)
EXECUTIVE COMPENSATION (cont’d) Accrued Payments Upon Termination of Employment Upon termination under the agreements, the NEO is entitled to receive the accrued amounts earned during his or her term of employment, including: | (i) | the BRP, the SRIP, the SCRPs or the DC SERP, depending on the circumstances of the executive officer’s termination;
the 2015 Long-Term Incentive Plan (the 2015 LTIP); and
the 2017 LTIP (the 2015 LTIP and 2017 LTIP may be referred to collectively as the LTIPs).
Please refer to the discussion in the sections immediately above for information about Devon’s Defined Benefit Plan, 401(k) Plan, Nonqualified Deferred Compensation Plan, the BRP, the SRIP, the SCRPs, and the DC SERP.
As specified below, the Employment Agreement and Severance Agreement with Devon’s named executive officers provide the following rights to compensation in the event of employment termination:
Accrued Payments Upon Termination of Employment
Upon termination under the agreements, the named executive officer is entitled to receive the accrued amounts earned during his or her term of employment, including: (i) any earned but unpaid salary through the date of termination,
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| (ii) any accrued but unused vacation pay, (iii) | the annual performance bonus amount only if the named executive officerNEO has been employed the entire year upon which such annual performance bonus is based, and (iv) |
| (iii) | amounts he or she is otherwise entitled to under Devon’s employee benefit plans (together, the “Accrued Amounts”).
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Rights Upon Termination for Death or Disability In addition to the Accrued Amounts, if the NEO’s employment terminates by reason of death or disability, the NEO is entitled to receive a pro rata share of any performance bonus for the performance period in which the day of termination occurs (based on the number of days worked in the performance period), payable at the same time it is payable to other participants in the performance bonus plan. Rights Upon Termination Without Cause and Constructive Discharge If the NEO’s employment is involuntarily terminated other than for “cause” or the NEO terminates for “good reason,” as those terms are defined in the employment agreements, then in addition to the Accrued Amounts, the NEO is entitled to the following: under the Employment Agreement, a lump sum cash payment equal to three times the aggregate annual compensation which is equal to the sum of: | ¡ | | the greater of (x) the NEO’s then-current annual base salary, or Disability In addition to(y) the Accrued Amounts, ifNEO’s annual base salary at any time during the named executive officer’s employment terminates by reason of death or disability,two years before the named executive officer is entitled to receive a pro rata share of any performance bonus for the performance period in which the day of termination occurs (based on the number of days worked in the performance period), payable at the same time it is payable to other participants in the performance bonus plan.date, and
Rights Upon Termination Without Cause and Constructive Discharge
If the named executive officer’s employment is involuntarily terminated other than for “cause” or the named executive officer terminates for “good reason,” as those terms are defined in the employment agreements, then in addition to the Accrued Amounts, the named executive officer is entitled to the following:
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| ¡ | | (i) under the Employment Agreement, a lump sum cash payment equal to three times the aggregate annual compensation of the named executive officer, and (ii) under the Severance Agreement, a lump sum cash payment equal to two times the aggregate annual compensation of the named executive officer. “Aggregate annual compensation” isan amount equal to the sum of:
| – | | the named executive officer’s annual base salary, andlargest annual performance bonus paid or payable to the NEO for the three consecutive calendar years prior to the date the NEO’s termination occurs,
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| – | | an amount equal to the largest annual performance bonus paid or payable to the named executive officer for the three consecutive calendar years prior to the date the named executive officer’s termination occurs;
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payment of a pro rata share of any bonus for the performance period in which the day of termination occurs (based on the number of days worked in the performance period),
EXECUTIVE COMPENSATION (cont’d)
payment of a pro rata share of any bonus for the performance period in which the day of termination occurs (based on the number of days worked in the performance period);
the same basic health and welfare benefits that the executive would otherwise be entitled to receive if the named executive officer were
the same basic health and welfare benefits that the executive would otherwise be entitled to receive if the NEO was a Devon employee for 18 months following termination, (Employment Agreement only); payment of an amount equal to 18 times the monthly COBRA premium, the same level of life insurance benefits that the NEO would otherwise be entitled to receive if the NEO was a Devon employee for three years following termination, and payment of a reasonable amount for outplacement services commensurate with the NEO’s title and position with the Company and other executives similarly situated in other companies in Devon’s peer group. Termination Following a Change-in-Control Under the agreements, if within 24 months following a change-in-control of the Company, the NEO: is terminated without “cause” by Devon, or
EXECUTIVE COMPENSATION (cont’d) terminates his or her employment with Devon for “good reason,” as each of those terms are defined in the agreements, then, in addition to the Accrued Amounts and the rights set forth above in the section titled “Rights Upon Termination Without Cause and Constructive Discharge,” three years of service and age shall be added to the NEO’s actual years of service and actual age when determining the NEO’s entitlement under the Company’s Retiree Medical Benefit Coverage. “Change-in-control” is defined as the date on which one of the following occurs: an entity or group acquires 30% or more of Devon’s outstanding voting securities, the incumbent Board ceases to constitute at least a majority of Devon’s Board, or a merger, reorganization or consolidation is consummated, after stockholder approval, unless | ¡ | | substantially all of the stockholders prior to the transaction continue to own more than 50% of the voting power after the transaction, |
| ¡ | | no person owns 30% or more of the combined voting securities, and |
| ¡ | | the incumbent Board constitutes at least a majority of the Board after the transaction. |
Payment Conditions The agreements require a NEO to execute a waiver agreement as a condition to receipt of the payments described in the sections “Rights Upon Termination Without Cause and Constructive Discharge” and “Termination Following a Change-in-Control” above. By executing the waiver, the NEO effectively releases Devon from any waivable claims. The agreements also include a non-disparagement provision and a non-solicitation provision covering employees of Devon and Devon’s affiliates that applies for 36 months following a NEO’s termination date under the Employment Agreement. Long-Term Incentive Awards Subject to the terms of the applicable LTIP under which an award is made, unvested portions of outstanding awards may be accelerated upon the retirement, disability, or termination of the NEO for an approved reason. Award agreements provide for automatic vesting upon the death of the NEO. The 2017 and 2022 LTIPs do not provide for the automatic acceleration of unvested portions of outstanding awards in the event of a change-in-control unless a job loss occurs or the acquiring company is not listed on a national securities exchange. The WPX Plan provided for acceleration of vesting of outstanding awards in the event of a job loss following a change-in-control. Devon award agreements provide that NEOs who meet certain years-of-service and age criteria are eligible to continue to vest as scheduled in outstanding awards following retirement subject to, among other things, annual execution of a confidentiality agreement that includes non-solicitation and non-competition covenants. Under the 2017 LTIP and 2022 LTIPs, employment terminations occurring prior to the first anniversary of the grant date may result in a pro rata reduction in the number of shares underlying the award depending on the circumstances of the termination pursuant to a formula that considers the number of days from the grant date to the termination date. PSUs that vest on an accelerated basis as a result of death will vest at the target award level. In the event of a change-in-control, treatment of PSUs is determined by whether an acquiring company assumes the awards.
EXECUTIVE COMPENSATION (cont’d) The following tables provide the estimated compensation and present value of benefits potentially payable to each NEO upon a termination of employment of the NEO. The benefit values shown do not include benefits that are broadly available to substantially all salaried employees. The amounts shown assume that a termination or change-in-control occurred on December 31, 2022. The actual amounts to be paid can only be determined at the time of an executive’s actual separation from the Company. The footnotes for each of the following tables are presented after the final table. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL1 Richard E. Muncrief | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Payments ($) | | Retirement/
Voluntary
Termination
($) | | Termination
Without Cause
($) | | Termination
With Cause
($) | | Disability
($) | | Death
($) | | Change in
Control - No Job Loss ($) | | Change in
Control - Job Loss ($) | | | | | | | | | Base Salary/
Performance Bonus2 | | | | 0 | | | | | 12,867 | | | | | 0 | | | | | 2,442 | | | | | 2,442 | | | | | 0 | | | | | 12,867 | | | | | | | | | | SCRPs6 | | | | 1,549 | | | | | 1,549 | | | | | 0 | | | | | 1,549 | | | | | 1,549 | | | | | 1,549 | | | | | 1,549 | | | | | | | | | | Accelerated Vesting of Restricted Stock3,8 | | | | 0 | | | | | 43,159 | | | | | 0 | | | | | 0 | | | | | 43,611 | | | | | 0 | | | | | 43,611 | | | | | | | | | | Performance Share Units4,8 | | | | 0 | | | | | 39,618 | | | | | 0 | | | | | 0 | | | | | 40,465 | | | | | 0 | | | | | 40,465 | | | | | | | | | | Other Benefits5 | | | | 0 | | | | | 87 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 87 | | | | | | | | | | Total7 | | | | 1,549 | | | | | 97,280 | | | | | 0 | | | | | 3,991 | | | | | 88,067 | | | | | 1,549 | | | | | 98,579 | |
Jeffrey L. Ritenour | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Payments ($) | | Retirement/
Voluntary
Termination
($) | | Termination
Without Cause
($) | | Termination
With Cause
($) | | Disability
($) | | Death
($) | | Change in
Control - No Job Loss ($) | | Change in
Control - Job Loss ($) | | | | | | | | | Base Salary/
Performance Bonus2 | | | | 0 | | | | | 5,841 | | | | | 0 | | | | | 953 | | | | | 953 | | | | | 0 | | | | | 5,841 | | | | | | | | | | SCRPs6 | | | | 180 | | | | | 180 | | | | | 0 | | | | | 180 | | | | | 180 | | | | | 180 | | | | | 180 | | | | | | | | | | Accelerated Vesting of Restricted Stock3,8 | | | | 0 | | | | | 6,142 | | | | | 0 | | | | | 0 | | | | | 6,307 | | | | | 0 | | | | | 6,307 | | | | | | | | | | Performance Share Units4,8 | | | | 0 | | | | | 17,591 | | | | | 0 | | | | | 0 | | | | | 17,901 | | | | | 0 | | | | | 17,901 | | | | | | | | | | Other Benefits5 | | | | 0 | | | | | 87 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 87 | | | | | | | | | | Total7 | | | | 180 | | | | | 29,841 | | | | | 0 | | | | | 1,133 | | | | | 25,341 | | | | | 180 | | | | | 30,316 | |
EXECUTIVE COMPENSATION (cont’d) Clay M. Gaspar | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Payments ($) | | Retirement/
Voluntary
Termination
($) | | Termination
Without Cause
($) | | Termination
With Cause
($) | | Disability
($) | | Death
($) | | Change in
Control - No Job Loss ($) | | Change in
Control - Job Loss ($) | | | | | | | | | Base Salary/ Performance Bonus2 | | | | 0 | | | | | 6,276 | | | | | 0 | | | | | 1,059 | | | | | 1,059 | | | | | 0 | | | | | 6,276 | | | | | | | | | | SCRPs6 | | | | 749 | | | | | 749 | | | | | 0 | | | | | 749 | | | | | 749 | | | | | 749 | | | | | 749 | | | | | | | | | | Accelerated Vesting of Restricted Stock3,8 | | | | 0 | | | | | 18,743 | | | | | 0 | | | | | 0 | | | | | 18,939 | | | | | 0 | | | | | 18,939 | | | | | | | | | | Performance Share Units4,8 | | | | 0 | | | | | 17,205 | | | | | 0 | | | | | 0 | | | | | 17,573 | | | | | 0 | | | | | 17,573 | | | | | | | | | | Other Benefits5 | | | | 0 | | | | | 90 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 90 | | | | | | | | | | Total7 | | | | 749 | | | | | 43,063 | | | | | 0 | | | | | 1,808 | | | | | 38,320 | | | | | 749 | | | | | 43,627 | |
David G. Harris | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Payments ($) | | Retirement/
Voluntary
Termination
($) | | Termination
Without Cause
($) | | Termination
With Cause
($) | | Disability
($) | | Death
($) | | Change in
Control - No Job Loss ($) | | Change in
Control - Job Loss ($) | | | | | | | | | Base Salary/Performance Bonus2 | | | | 0 | | | | | 5,747 | | | | | 0 | | | | | 938 | | | | | 938 | | | | | 0 | | | | | 5,747 | | | | | | | | | | SCRPs6 | | | | 170 | | | | | 170 | | | | | 0 | | | | | 170 | | | | | 170 | | | | | 170 | | | | | 170 | | | | | | | | | | Accelerated Vesting of Restricted Stock3,8 | | | | 0 | | | | | 5,749 | | | | | 0 | | | | | 0 | | | | | 5,914 | | | | | 0 | | | | | 5,914 | | | | | | | | | | Performance Share Units4,8 | | | | 0 | | | | | 17,591 | | | | | 0 | | | | | 0 | | | | | 17,901 | | | | | 0 | | | | | 17,901 | | | | | | | | | | Other Benefits5 | | | | 0 | | | | | 87 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 87 | | | | | | | | | | Total7 | | | | 170 | | | | | 29,344 | | | | | 0 | | | | | 1,108 | | | | | 24,923 | | | | | 170 | | | | | 29,819 | |
EXECUTIVE COMPENSATION (cont’d) Dennis C. Cameron | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Payments ($) | | Retirement/
Voluntary
Termination
($) | | Termination
Without Cause
($) | | Termination
With Cause
($) | | Disability
($) | | Death
($) | | Change in
Control - No Job Loss ($) | | Change in
Control - Job Loss ($) | | | | | | | | | Base Salary/ Performance Bonus2 | | | | 0 | | | | | 4,178 | | | | | 0 | | | | | 660 | | | | | 660 | | | | | 0 | | | | | 4,178 | | | | | | | | | | SCRPs6 | | | | 518 | | | | | 518 | | | | | 0 | | | | | 518 | | | | | 518 | | | | | 518 | | | | | 518 | | | | | | | | | | Accelerated Vesting of Restricted Stock3,8 | | | | 0 | | | | | 7,233 | | | | | 0 | | | | | 0 | | | | | 7,337 | | | | | 0 | | | | | 7,337 | | | | | | | | | | Performance Share Units4,8 | | | | 0 | | | | | 7,185 | | | | | 0 | | | | | 0 | | | | | 7,379 | | | | | 0 | | | | | 7,379 | | | | | | | | | | Other Benefits5 | | | | 0 | | | | | 87 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 96 | | | | | | | | | | Total7 | | | | 518 | | | | | 19,201 | | | | | 0 | | | | | 1,178 | | | | | 15,894 | | | | | 518 | | | | | 19,508 | |
| 1 | Values in thousands (except in footnotes). |
| 2 | The tables assume a December 31, 2022 employment termination. In such a scenario, each executive would be entitled to the performance bonus earned. |
| 3 | Values displayed for acceleration of vesting of restricted stock represent the 2022 year-end closing market price of Devon’s common stock, which was $61.51. |
| 4 | In the case of a without “cause” employment termination, performance share units remain outstanding for the duration of the performance period and thereafter pay out to the executive officer at the level earned based on the level of performance certified by the Committee. Values displayed represent the trending shares of outstanding grants multiplied by the 2022 year-end closing market price of Devon’s common stock, which was $61.51. |
| 5 | Executive officers are entitled to (i) the equivalent of 36 months of post-termination company-paid life insurance, coverage of $1,000,000, valued based on age; (ii) the equivalent of 18 months of continuing health benefits less applicable active employee premiums following termination without “cause” or following their termination in connection with a change in control; (iii) a payment in an amount equal to 18 times the monthly COBRA premium (Employment Agreement only); and payment of a reasonable amount for outplacement services commensuratefollowing termination without “cause” or following their termination in connection with the named executive officer’s title and position with the Company and other executives similarly situated in other companies in Devon’s peer group.
Termination Following a Change in Control
Under the agreements, if within 24 months following a change in controlcontrol; and (iv) outplacement services with a maximum value of $20,000. For Mr. Cameron, the amounts reported also include an enhancement in post-retirement medical benefits of approximately $8,112, upon a change in control.
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| 6 | The SCRPs are 100% vested for each NEO. Values for Messrs. Muncrief, Gaspar, and Cameron include account balances in the WPX Restoration Plan. |
| 7 | Devon’s nonqualified employee benefit plans, including the Deferred Compensation Plan, SCRPs, and employment agreements are subject, all or in part, to Section 409A of the Company, the named executive officer: is terminated without “cause” by Devon; or
terminates his or her employment with DevonInternal Revenue Code, which requires certain payments made under these plans and agreements to be delayed for “good reason,” as each of those terms are defined in the agreements;
then, in addition to the Accrued Amounts and the rights set forth above in the section titled “Rights Upon Termination Without Cause and Constructive Discharge,” (i) under the Employment Agreement, three years of service and age shall be added to the named executive officer’s actual years of service and actual age when determining the named executive officer’s entitlement under our Retiree Medical Benefit Coverage, and (ii) under the Severance Agreement, two years of service and age are added. The credit of additional years of age should not be construed to reduce or eliminate the executive’s right to coverage under the medical plan.
“Change in control” is defined as the date on which one of the following occurs:
an entity or group acquires 30% or more of Devon’s outstanding voting securities;
the incumbent Board ceases to constitute at least a majority of Devon’s Board; or
a merger, reorganization or consolidation is consummated, after stockholder approval, unless
| – | | substantially all of the stockholders prior to the transaction continue to own more than 50% of the voting power after the transaction;
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| – | | no person owns 30% or more of the combined voting securities; and
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| – | | the incumbent Board constitutes at least a majority of the Board after the transaction.
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Payment Conditions
The agreements require a named executive officer to execute a waiver agreement as a condition to receipt of the payments described in the sections “Rights Upon Termination Without Cause and Constructive Discharge” and “Termination Following a Change in Control” above. By executing the waiver, the named executive officer effectively releases Devon from any waivable claims. The agreements also include anon-disparagement provision and anon-solicitation provision covering employees of Devon and Devon’s affiliates that applies for (i) 36six months following a named executive officer’s termination date under the Employment Agreement and (ii) 24 months following a named executive officer’s termination date under the Severance Agreement.
EXECUTIVE COMPENSATION (cont’d)
Long-Term Incentive Awards
Subject to the terms of the applicable LTIP under which an award is made, unvested portions of outstanding awards may be accelerated upon the retirement, disability, or termination of employment.
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| 8 | In the named executive officer for an approved reason. Award agreements provide for automatic vesting upon the death of the named executive officer. Award agreements entered into under the 2015 LTIP do not provide for the automatic acceleration of unvested portions of outstanding awards in the eventcase of a change in control, unlessrestricted stock only vests if the change in control results in a job loss occursfor the NEO. For PSUs, shares only vest if change in control results in a job loss for the NEO or if the award is not assumed by the acquiring companyentity. The value shown anticipates that the award is assumed by the acquiring entity. If the award is not listedassumed by the acquiring entity, the PSUs vest at the target level but are pro-rated for the time of the performance period that has elapsed, which as of December 31, 2022 would be valued as follows: Mr. Muncrief, $12,972,931; Mr. Ritenour, $7,282,640; Mr. Gaspar, $5,633,988; Mr. Harris, $7,282,640; and Mr. Cameron, $2,341,727. |
EXECUTIVE COMPENSATION (cont’d) CEO PAY RATIO Section 953(B) of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires certain public companies to disclose the median pay of Company employees, the method of determining median employee pay (the median of the total annual compensation of all employees other than the CEO), and the ratio of CEO pay to median employee pay. Devon’s employees, which are all located in the U.S., are included in the calculation of median pay based on Devon’s employee population as of December 31, 2022. For CEO pay, Devon used the amount for 2022 reflected in the Summary Compensation Table for the Company’s current CEO (Richard E. Muncrief), which includes LTI granted in the year. In determining the median pay of employees, Devon at year end selected the median-paid employee by aggregating base pay, performance bonus, and LTI for the year. Once the median-paid employee was determined, the remaining compensation elements, such as Company retirement arrangement contributions, were added to the total in order to compare the same elements of compensation that are reflected for the current CEO within the Summary Compensation Table. Based on this methodology, CEO pay is $14.5 million, median employee pay is $180.6 thousand, and the ratio is 80:1.
EXECUTIVE COMPENSATION (cont’d) PAY VERSUS PERFORMANCE DISCLOSURE As required by Item 402(v) of RegulationS-K, we are providing the following information regarding the relationship between executive compensation and our financial performance for each of the last three completed calendar years. “Compensation actually paid” includes payments made to executives during the applicable year such as salary, performance bonus, and various benefits. The SEC’s valuation methods for this section emphasize the changes in fair value of equity awards under applicable financial accounting standards, and as such, references to “compensation actually paid” below reflects the change in equity award values on the applicable calculation dates and does not necessarily reflect what our NEOs receivedThis is highlighted by the 2020 values in the Pay Versus Performance (PvP) Tables 1 and Table 2 below, where the “compensation actually paid” numbers are negative. The three PvP tablesbelow , along with three PvP charts and their respective footnotes, are Devon’s disclosure to the new SEC requirements. PvP Table 1: Named Executive Officer “Compensation Actually Paid”1,10 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year | | SCT Total
CEO2,4 | | | “Compensation
Actually Paid”
to CEO3,4 | | | Average SCT
Total for Other
NEOs2,5 | | | Average
“Compensation
Actually Paid”
to Other
NEOs3,5 | | | Value of a
$100
Investment
in Devon
Based on
Cumulative
TSR6,10 | | | Value of a
$100
Investment
in the Peer
Group
Based on
Cumulative
TSR6,7,10 | | | Post-Tax
Net Income8,10 | | | CROCE 9,10 | | | 2022 | | $ | 14,531 | | | $ | 30,817 | | | $ | 5,379 | | | $ | 8,670 | | | $ | 285 | | | $ | 143 | | | $ | 6.031B | | | | 62 | % | | 2021-Muncrief | | $ | 11,915 | | | $ | 39,748 | | | $ | 4,596 | | | $ | 12,245 | | | $ | 191 | | | $ | 121 | | | $ | 2.808B | | | | 39 | % | | 2021-Hager | | | $3,391 | | | $ | 31,575 | | | 2020 | | $ | 13,355 | | | | ($4,994 | ) | | $ | 4,536 | | | | ($444 | ) | | $ | 65 | | | $ | 58 | | | ($ | 2.688B | ) | | | 27 | % |
| 1 | Dollar amounts are shown in thousands, except where otherwise indicated. Amounts in parentheses are negative. References to our CEO are also references to our principal executive officer (“PEO”) for purposes of this section. |
| 2 | “SCT Total” is the Summary Compensation Table’s total for the applicable year. |
| 3 | The calculation for “Compensation Actually Paid” is shown in “PvP Table 3”. |
| 4 | The CEO for each year is as follows: |
| 2022: Richard E. Muncrief |
| 2021: Richard E. Muncrief, from January 7th to the end of the year; David A. Hager, from January 1st to 6th . After January 6th , Mr. Hager assumed the position of Executive Chair of the Board of Directors until his retirement in early 2023. |
| 5 | The other NEOs for each year are as follows: |
| 2022: Dennis C. Cameron, Clay M. Gaspar, David G. Harris, and Jeffrey L. Ritenour. |
| 2021: Tana K. Cashion, Clay M. Gaspar, David G. Harris, Jeffrey L. Ritenour, and Lyndon C. Taylor. |
| 2020: Tana K. Cashion, David G. Harris, Jeffrey L. Ritenour, and Lyndon C. Taylor. |
| 6 | “TSR” is Total Shareholder Return including reinvested dividends. It is a measure of finance performance indicating the growth or decline in an investment’s value over a specified period. For 2022, “Cumulative TSR” is measured from the last trading day of 2019 to the last trading day of 2022; for 2021, the range is the last trading day of 2019 to the last trading day of 2021; and for 2020, the range is the last trading day of 2019 to the last trading day of 2020. For Devon, Cumulative TSR for 2022, 2021, and 2020 was 185%, 91%, and-35%, respectively. For the Peer Group, Cumulative TSR was 43%, 21%, and-42% for the same periods. |
EXECUTIVE COMPENSATION (cont’d) | 7 | The 2022 peer group is the SPDR S&P Oil & Gas Exploration & Production ETF (Symbol: XOP). The 2021 peer group is comprised of APA Corporation, ConocoPhillips, Continental Resources, Diamondback Energy, Inc., EOG Resources, Inc., Marathon Oil Corporation, Ovintiv, Inc., Pioneer Natural Resources Company, and the S&P Midcap 400 Index. Cimarex Energy Co. is excluded from this Cumulative TSR calculation due to its subsequent acquisition, and the S&P Midcap 400 is excluded due to incomparability on a national securities exchange. This treatmentmarket capitalized basis. The 2020 peer group was comprised of acceleration was incorporatedAPA Corporation, Chesapeake Energy Corporation, Cimarex Energy Co, Continental Resources, Inc., EOG Resources, Inc., Marathon Oil Corporation, Occidental Petroleum Corporation, Ovintiv, Inc., and Pioneer Natural Resources Company. Chesapeake Energy Corporation is excluded from this Cumulative TSR calculation due to the impact of their subsequent bankruptcy filing, and Cimarex Energy Co. is excluded due to the company’s subsequent acquisition. |
| 8 | Post-Tax Net Income is disclosed in the 2017 LTIP. Award agreements provide that named executive officers who meet certainyears-of-serviceComprehensive Statements of Consolidated Earnings of Devon’s annual report as “Comprehensive earnings (loss) attributable to Devon. |
| 9 | Cash Return on Capital Employed (CROCE) is an important financial measure used by the Company to link “compensation actually paid” to Company performance because of the importance of capital efficiency to successful operations in the oil and age criteriagas exploration and production industry. In Devon’s annual performance scorecard published in the “Annual Performance Bonus” section of this Proxy Statement (and the same section title in the 2021 and 2020 proxy statements), CROCE was weighted as the joint-highest measure of performance on preset annual goals. The Company’s other important financial measures used to link “compensation actually paid” to Company performance are eligibleused to continuecalculate Devon’s Annual Performance Bonus and can be found on page 43. |
| 10 | The PvP Charts below illustrate the relationship between various performance measures and “Compensation Actually Paid.” |
PvP Table 2: Other Measures important in Linking Performance to “Compensation Actually Paid” | | | | | | | | | | Other Important Measures 1 | | | | | | Free Cash Flow
(FCF) | | Emissions Reduction | | ESG & Community Engagement | | Total Oil & Gas Production | | Total Capital Expenditures |
| 1 | These are the measures, in addition to vestCROCE, used to determine 2022 NEO performance bonuses. For more information on measures used to determine performance bonuses, see section “Annual Performance Bonus” in this Proxy Statement and similar disclosures in prior proxy statements. |
PvP Table 3: Converting Summary Compensation Table Total to “Compensation Actually Paid”1,2 ,3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Subtract (-) | | | | Subtract (-) | | | | Add (+) | | | | Add (+) | | | | Equals (=) | | | Year | | Executive | | | SCT Total
Compensation |
| |
| Fair Value of
Stock-Based
Awards Granted
During the Year |
| |
| Change in
Pension Value
for the Year |
| |
| The difference
in the fair value
from start to
end of the year
for all stock
awards
outstanding4 |
| |
| Pension Service
Cost and Cost
of Additional
Pension
Benefits Due to
Plan
Amendment |
| | | “Compensation Actually Paid” | | | 2022 | | CEO | | | $14,531 | | | | $10,405 | | | | $0 | | | | $26,691 | | | | $0 | | | | $30,817 | | | | Other NEO Average | | | $5,379 | | | | $3,717 | | | | $0 | | | | $7,008 | | | | $0 | | | | $8,670 | | | 2021 | | CEO-Muncrief | | | $11,915 | | | | $8,311 | | | | $0 | | | | $36,144 | | | | $0 | | | | $39,748 | | | | CEO-Hager | | | $3,391 | | | | $712 | | | | $0 | | | | $28,897 | | | | $0 | | | | $31,575 | | | | Other NEO Average | | | $4,596 | | | | $1,881 | | | | $0 | | | | $9,530 | | | | $0 | | | | $12,245 | | | 2020 | | CEO | | | $13,355 | | | | $9,509 | | | | $0 | | | | ($8,840 | ) | | | $0 | | | | ($4,994 | ) | | | Other NEO Average | | | $4,536 | | | | $2,405 | | | | $1,038 | | | | ($1,904 | ) | | | $368 | | | | ($444 | ) |
EXECUTIVE COMPENSATION (cont’d) | 1 | Dollar amounts are shown in thousands, except where otherwise indicated. Amounts in parentheses are negative. References to our CEO are also references to our PEO for purposes of this section. |
| 2 | The CEO for each year is as scheduled in outstanding awards following retirement subject to, among other things, annual execution of a confidentiality agreement that includesnon-solicitation andnon-competition covenants. Under the 2017 LTIP, employment terminations occurring prior follows: |
| 2022: Richard E. Muncrief |
| 2021: Richard E. Muncrief, from January 7th to the first anniversaryend of the grant date may resultyear; David A. Hager, from January 1st to 6th . After January 6th , Mr. Hager assumed the position of Executive Chair of the Board of Directors until his retirement in apro-rata reductionearly 2023. |
| 3 | The other NEOs for each year are as follows: |
| 2022: Dennis C. Cameron, Clay M. Gaspar, David G. Harris, and Jeffrey L. Ritenour. |
| 2021: Tana K. Cashion, Clay M. Gaspar, David G. Harris, Jeffrey L. Ritenour, and Lyndon C. Taylor. |
| 2020: Tana K. Cashion, David G. Harris, Jeffrey L. Ritenour, and Lyndon C. Taylor. |
| 4 | The process for determining the change in fair value under applicable financial accounting standards for stock-based compensation for this exhibit is substantially similar to that used for determining accounting value at the time of grant. For RSAs, the fair value is determined by multiplying the Fair Market Value of the underlying stock by the number of shares underlyinggranted. For the award depending oninterim calculations in this table, the circumstancesproduct of the termination pursuant to a formula that considersshares outstanding multiplied by the numberstock price at the beginning of daysthe year (or at grant) is subtracted from the same calculation at the end of the year (or at vest). To determine grant date value of PSUs, a Monte-Carlo simulation assimilating 10,000 potential outcomes is used. The Monte-Carlo simulation was rerun at the beginning and end of the year covered by this disclosure to create the interim valuations required. The table below reconciles the change in fair value of outstanding stock-based compensation awards for the period covered by this disclosure; amounts are shown in thousands. No awards were forfeited by NEOs during this period. Dividend equivalents earned on grants are included in the fair value of the awards and no other payments were made. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Items Added (Subtracted) to
Determine Change in Fair
Value | | | 2022 | | | | 2021 | | | | 2020 | | | | | CEO | | |
| Other
NEO
Average |
| | | CEO -
Muncrief |
| | | CEO -
Hager |
| |
| Other
NEO
Average |
| | | CEO | | |
| Other
NEO
Average |
| | Grant Date Fair Value – Awards Made During Year | | | ($10,405 | ) | | | ($3,627 | ) | | | ($8,311 | ) | | | ($712 | ) | | | ($2,351 | ) | | | ($9,509 | ) | | | ($2,405 | ) | | Year End Fair Value – Awards Made During Year | | | $13,005 | | | | $4,533 | | | | $18,136 | | | | $1,555 | | | | $5,130 | | | | $7,572 | | | | $1,915 | | | Change in Fair Value – Awards Outstanding During Year | | | $15,003 | | | | $4,105 | | | | $24,292 | | | | $17,015 | | | | $5,653 | | | | ($4,435 | ) | | | ($935 | ) | | Change in Fair Value – Awards Vesting During Year | | | $9,088 | | | | $1,997 | | | | $2,027 | | | | $11,040 | | | | $1,653 | | | | ($2,469 | ) | | | ($479 | ) | | Total Change in Fair Value | | | $26,691 | | | | $7,008 | | | | $36,144 | | | | $28,897 | | | | $9,530 | | | | ($8,840 | ) | | | ($1,904 | ) |
EXECUTIVE COMPENSATION (cont’d) PvP Charts: Relationship Between Performance Measures and “Compensation Actually Paid” The following charts illustrate the relationship between “Compensation Actually Paid” and performance on the measures identified in PvP Table 1 above. Total Shareholder Return and “Compensation Actually Paid”1,2,3,4 Cash Return on Capital Employed (CROCE) and “Compensation Actually Paid”1,2,3,5
EXECUTIVE COMPENSATION (cont’d) Post-Tax Net Income and “Compensation Actually Paid”1,2,3,6 | 1 | All dollar amounts shown in thousands unless otherwise labeled. |
| 2 | The CEO for each year is as follows: |
| 2022: Richard E. Muncrief |
| 2021: Richard E. Muncrief, from January 7th to the termination date.end of the year; David A. Hager, from January 1st to 6th . After January 6th , Mr. Hager assumed the position of Executive Chair of the Board of Directors until his retirement in early 2023. |
| 3 | The other NEOs for each year are as follows: |
| 2022: Dennis C. Cameron, Clay M. Gaspar, David G. Harris, and Jeffrey L. Ritenour. |
| 2021: Tana K. Cashion, Clay M. Gaspar, David G. Harris, Jeffrey L. Ritenour, and Lyndon C. Taylor. |
| 2020: Tana K. Cashion, David G. Harris, Jeffrey L. Ritenour, and Lyndon C. Taylor. |
| 4 | TSR, including reinvested dividends, is the performance measure on which the stock-based compensation component of “Compensation Actually Paid” is based. |
| 5 | CROCE is an important financial measure used by the Company to link “compensation actually paid” to Company performance because of the importance of capital efficiency to successful operations in the oil and gas exploration and production industry. In Devon’s annual performance scorecard published in the “Annual Performance Bonus” section of this Proxy Statement (and the same section title in the 2021 and 2020 proxy statements), CROCE was weighted the joint-highest measure of performance on preset annual goals. The calculation for CROCE can be found in Appendix A to this document. |
| 6 | Post-Tax Net Income is a measure of profitability. These numbers are reported as “Comprehensive earnings (loss) attributable to Devon” in the Company’s annual Consolidated Statements of Comprehensive Earnings. During the period covered by this disclosure, Devon did not tie any compensation plans or programs directly to this measure. |
EXECUTIVE COMPENSATION (cont’d) EQUITY COMPENSATION PLAN INFORMATION The following table sets forth information about Devon’s common stock as of December 31, 2022, that may be issued under Devon’s equity compensation plans: | | | | | | | | Plan Category | | Number of
Securities
to be Issued Upon
Exercise of
Outstanding
Options,
Warrants, and Rights
(a) | | Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants, and Rights
(b) | | Number of Securities
Remaining available for Future
Issuance under Equity
Compensation Plans
(excluding Securities reflect
in Column (a)) | Equity compensation plans
approved by security holders | | 2,727,026 1 | | $40.23 2 | | 40,038,245 | Equity compensation plans
not approved by security holders | | 0 | | 0 | | 0 | | Total | | 2,727,026 1 | | $40.23 2 | | 40,038,245 |
| 1 | Represents 51,254 outstanding options, 1,841,259 outstanding performance share units, that vest on an accelerated basis as a resultand 834,513 outstanding restricted stock units. Shares for performance share units are included assuming target payout but may be paid out at greater or lesser amounts, or not at all, according to the achievement of a change in control or death will vest atperformance goals. Devon assumed and became the target award level.The following tables provide the estimated compensation and present value of benefits potentially payable to each named executive officer upon a termination of employmentadministrator of the named executive officer. The benefit values shown do not include benefits that are broadly available to substantially all salaried employees. The amounts shown assume that a termination or change in control occurred on December 31, 2019. The actual amounts to be paid can only be determinedWPX Plan at the time of an executive’s actual separation from the Company. The footnotes for eachclosing of the following tables are presented afterMerger in January 2021. Of the final table. 2,727,026 shares reflected in column (a), 834,513 and 51,254 represent outstanding restricted stock units and options, respectively, granted under the WPX Plan.
|
| 2 | The Employment Agreements and Severance Agreements, as applicable, betweenweighted-average exercise price only applies to stock options. |
| 3 | Represents shares available for issuance pursuant to awards under the Company and each of the named executive officers do not include taxgross-up payment obligations2022 LTIP, which may be in the eventform of a change in control of the Company.
EXECUTIVE COMPENSATION (cont’d)
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL1
David A. Hager
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Payments ($) | | Retirement/ Voluntary Termination
($) | | Termination Without Cause ($) | | Termination With Cause
($) | | Disability
($) | | Death
($) | | Change in Control - No Job Loss ($) | | Change in Control - Job
Loss ($) | | | | | | | | | Base Salary/Performance Bonus2 | | | | 0 | | | | | 13,120 | | | | | 0 | | | | | 2,582 | | | | | 2,582 | | | | | 0 | | | | | 13,120 | | | | | | | | | | DC SERP10 | | | | 5,378 | | | | | 5,378 | | | | | 0 | | | | | 5,378 | | | | | 5,378 | | | | | 5,378 | | | | | 7,805 | | | | | | | | | | SCRPs11 | | | | 2,323 | | | | | 2,323 | | | | | 0 | | | | | 2,323 | | | | | 2,323 | | | | | 2,323 | | | | | 2,323 | | | | | | | | | | Accelerated Vesting of Restricted Stock7,13 | | | | 0 | | | | | 8,349 | | | | | 0 | | | | | 0 | | | | | 8,825 | | | | | 0 | | | | | 8,825 | | | | | | | | | | Performance Share Units8,13 | | | | 0 | | | | | 9,378 | | | | | 0 | | | | | 0 | | | | | 9,854 | | | | | 0 | | | | | 9,854 | | | | | | | | | | Other Benefits9 | | | | 0 | | | | | 97 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 0 | | | | | 100 | | | | | | | | | | Total12 | | | | 7,701 | | | | | 38,645 | | | | | 0 | | | | | 10,283 | | | | | 28,962 | | | | | 7,701 | | | | | 42,027 | |
Jeffrey L. Ritenour
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Payments ($) | | Retirement/ Voluntary Termination
($) | | | Termination Without Cause ($) | | | Termination With Cause
($) | | | Disability
($) | | | Death
($) | | | Change in Control - No Job Loss ($) | | | Change in
Control - Job
Loss ($) | | | | | | | | | | Base Salary/Performance Bonus2 | | | 0 | | | | 4,395 | | | | 0 | | | | 810 | | | | 810 | | | | 0 | | | | 4,395 | | | | | | | | | | SCRPs11 | | | 1,046 | | | | 1,046 | | | | 0 | | | | 1,046 | | | | 1,046 | | | | 1,046 | | | | 1,046 | | | | | | | | | | SRIP3,4,5,6 | | | 46 | | | | 46 | | | | 0 | | | | 46 | | | | 64 | | | | 156 | | | | 156 | | | | | | | | | | BRP3,4 | | | 0 | | | | 0 | | | | 1 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | Accelerated Vesting of Restricted Stock7,13 | | | 0 | | | | 2,289 | | | | 0 | | | | 0 | | | | 2,429 | | | | 0 | | | | 2,429 | | | | | | | | | | Performance Share Units8,13 | | | 0 | | | | 2,278 | | | | 0 | | | | 0 | | | | 2,418 | | | | 0 | | | | 2,418 | | | | | | | | | | Other Benefits9 | | | 0 | | | | 78 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 78 | | | | | | | | | | Total12 | | | 1,092 | | | | 10,132 | | | | 1 | | | | 1,902 | | | | 6,767 | | | | 1,202 | | | | 10,522 | |
EXECUTIVE COMPENSATION (cont’d)
Lyndon C. Taylor
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and Payments ($) | | Retirement/ Voluntary Termination
($) | | | Termination
Without Cause
($) | | | Termination With Cause
($) | | | Disability
($) | | | Death
($) | | | Change in Control - No Job Loss ($) | | | Change in Control - Job Loss ($) | | | | | | | | | | Base Salary/Performance Bonus2 | | | 0 | | | | 4,778 | | | | 0 | | | | 878 | | | | 878 | | | | 0 | | | | 4,778 | | | | | | | | | | SRIP3,4,5,6 | | | 9,701 | | | | 9,701 | | | | 0 | | | | 9,701 | | | | 8,914 | | | | 8,795 | | | | 9,093 | | | | | | | | | | BRP3,4 | | | 0 | | | | 0 | | | | 3,565 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | Accelerated Vesting of Restricted Stock7,13 | | | 0 | | | | 2,405 | | | | 0 | | | | 0 | | | | 2,544 | | | | 0 | | | | 2,544 | | | | | | | | | | Performance Share Units8,13 | | | 0 | | | | 2,701 | | | | 0 | | | | 0 | | | | 2,841 | | | | 0 | | | | 2,841 | | | | | | | | | | Other Benefits9 | | | 0 | | | | 97 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 103 | | | | | | | | | | Total12 | | | 9,701 | | | | 19,682 | | | | 3,565 | | | | 10,579 | | | | 15,177 | | | | 8,795 | | | | 19,359 | |
David G. Harris
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and
Payments ($) | | Retirement/
Voluntary
Termination
($) | | | Termination
Without Cause
($) | | | Termination
With Cause
($) | | | Disability
($) | | | Death
($) | | | Change in
Control - No
Job Loss ($) | | | Change in
Control - Job
Loss ($) | | | | | | | | | | Base Salary/Performance Bonus2 | | | 0 | | | | 3,479 | | | | 0 | | | | 743 | | | | 743 | | | | 0 | | | | 3,479 | | | | | | | | | | SCRPs11 | | | 382 | | | | 382 | | | | 0 | | | | 382 | | | | 382 | | | | 382 | | | | 382 | | | | | | | | | | SRIP3,4,5,6 | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | BRP3,4 | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | Accelerated Vesting of Restricted Stock7,13 | | | 0 | | | | 1,179 | | | | 0 | | | | 0 | | | | 1,246 | | | | 0 | | | | 1,246 | | | | | | | | | | Performance Share Units8,13 | | | 0 | | | | 1,324 | | | | 0 | | | | 0 | | | | 1,391 | | | | 0 | | | | 1,391 | | | | | | | | | | Other Benefits9 | | | 0 | | | | 78 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 78 | | | | | | | | | | Total12 | | | 382 | | | | 6,442 | | | | 0 | | | | 1,125 | | | | 3,762 | | | | 382 | | | | 6,576 | |
EXECUTIVE COMPENSATION (cont’d)
Tana K. Cashion
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and
Payments ($) | | Retirement/
Voluntary
Termination
($) | | | Termination
Without Cause
($) | | | Termination
With Cause
($) | | | Disability
($) | | | Death
($) | | | Change in
Control - No
Job Loss ($) | | | Change in
Control - Job
Loss ($) | | | | | | | | | | Base Salary/Performance Bonus2 | | | 0 | | | | 1,399 | | | | 0 | | | | 259 | | | | 259 | | | | 0 | | | | 1,399 | | | | | | | | | | BRP3,4 | | | 436 | | | | 436 | | | | 436 | | | | 436 | | | | 593 | | | | 0 | | | | 0 | | | | | | | | | | Accelerated Vesting of Restricted Stock7,13 | | | 0 | | | | 1,032 | | | | 0 | | | | 0 | | | | 1,094 | | | | 0 | | | | 1,094 | | | | | | | | | | Performance Share Units8,13 | | | 0 | | | | 1,185 | | | | 0 | | | | 0 | | | | 1,247 | | | | 0 | | | | 1,247 | | | | | | | | | | Other Benefits9 | | | 0 | | | | 20 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 56 | | | | | | | | | | Total12 | | | 436 | | | | 4,072 | | | | 436 | | | | 695 | | | | 3,193 | | | | 0 | | | | 3,796 | |
Tony D. Vaughn
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Benefits and
Payments ($) | | Retirement/
Voluntary
Termination
($) | | | Termination
Without Cause
($) | | | Termination
With Cause
($) | | | Disability
($) | | | Death
($) | | | Change in
Control - No
Job Loss ($) | | | Change in
Control - Job
Loss ($) | | | | | | | | | | Base Salary/Performance Bonus2 | | | 0 | | | | 8,040 | | | | 0 | | | | 1,200 | | | | 1,200 | | | | 0 | | | | 8,040 | | | | | | | | | | SRIP3,4,5,6 | | | 16,209 | | | | 16,209 | | | | 0 | | | | 16,209 | | | | 14,422 | | | | 14,909 | | | | 15,077 | | | | | | | | | | BRP3,4 | | | 0 | | | | 0 | | | | 12,233 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | Accelerated Vesting of Restricted Stock7,13 | | | 0 | | | | 3,382 | | | | 0 | | | | 0 | | | | 3,577 | | | | 0 | | | | 3,577 | | | | | | | | | | Performance Share Units8,13 | | | 0 | | | | 3,862 | | | | 0 | | | | 0 | | | | 4,058 | | | | 0 | | | | 4,058 | | | | | | | | | | Other Benefits9 | | | 0 | | | | 81 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 82 | | | | | | | | | | Total12 | | | 16,209 | | | | 31,574 | | | | 12,233 | | | | 17,409 | | | | 23,257 | | | | 14,909 | | | | 30,834 | |
1 | Values in thousands (except in footnotes).
|
2 | The tables assume a December 31, 2019 employment termination. In such a scenario, each executive would be entitled to the cash incentive performance bonus earned for the year, which for 2019 is 150% of target. Accordingly, the amounts shown include the 2019Non-Equity Incentive Plan Compensation disclosed in the Summary Compensation Table on page 60.
|
3 | Participants are vested in their benefits under the SRIP after five years of service. Benefits under the SRIP and the BRP are mutually exclusive; participants will not receive a benefit under the SRIP if they are receiving a benefit under the BRP, and vice versa. Participants forfeit their benefits under the SRIP if they are terminated for “cause” and instead receive benefits under the BRP. Benefits paid under the SRIP or the BRP are reduced by any amounts payable under the Defined Benefit Plan so that there is no duplication of benefits. Messrs. Hager and Harris do not participate in the SRIP or BRP. Until 2020, Ms. Cashion did not participate in the SRIP.
|
EXECUTIVE COMPENSATION (cont’d)
4 | The values shown for the SRIP and the BRP benefits for each named executive officer are the present values as of December 31, 2019 of the benefits that would be payable under the SRIP or BRP as of each executive’s earliest possible benefit commencement date. Except in the case of a change in control where the benefit is paid as a lump sum and in the case of benefits payable to a beneficiary upon death as a monthly single life annuity, the calculations assume that 25% of participants would elect the SRIP and BRP benefits in the form of a single life annuity and 75% of participants would elect a 100% joint and survivor annuity. All other assumptions are the same as those used to determine the present value of benefits disclosed in the Pension Benefits Table.
|
5 | Under the SRIP, a participating named executive officer would receive credit for an additional three years of service and an additional three years of age when determining his or her SRIP benefit if, within 24 months following a change in control, the officer is terminated without “cause” or terminates his or her employment for “good reason.” All benefits under the SRIP are payable as a lump sum payment within 90 days following a change in control where the lump sum payment is the present value of the unreduced accrued benefit payable immediately. The lump sum amount shown is based on the lump sum rate in effect for payments beginning January 2020.
|
6 | Participants are immediately vested in the SRIP accrued benefit upon death. The benefit is payable to a participant’s beneficiary at the date the participant would have reached age 55 with 10 years of service, reduced by subsidized early retirement factors and assumes that the participant had elected a 100% joint and survivor pension.
|
7 | Values displayed for acceleration of vesting of restricted stock represent the 2019year-end closing market price of Devon’s common stock, which was $25.97 per share.
|
8 | In the case of a without “cause” employment termination, performance share units remain outstanding for the duration of the performance period and thereafter pay out to the executive officer at the level earned based on the level of performance certified by the Compensation Committee. Values displayed represent the target shares of outstanding grants multiplied by the 2019year-end closing market price of Devon’s common stock, which was $25.97.
|
9 | Under the employment agreements, executive officers are entitled to (i) 36 months of post-termination company-paid life insurance, coverage of $1,000,000, valued based on age, (ii) the equivalent of 18 months of continuing health benefits less applicable active employee premiums following termination without “cause” or following their termination in connection with a change in control, (iii) a payment in an amount equal to 18 times the monthly COBRA premium following termination without “cause” or following their termination in connection with a change in control, and (iv) outplacement services with a maximum value of $20,000. For Messrs. Hager, Vaughn, and Taylor, the amounts reported also include an enhancement in post-retirement medical benefits of approximately $2,970, $854, and $6,710, respectively, upon a change in control. Under Ms. Cashion’s severance agreement, the amounts for (i) and (iii) above, respectively, are 24 months and 6 times the monthly COBRA premium and only applicable in the case of a termination following a change in control.
|
10 | Mr. Hager participates in the DC SERP in lieu of participating in the SRIP. Under the DC SERP, an executive is entitled to an additional three years of contributions by the Company if, within 24 months following a change in control, he is terminated without “cause” or terminates his employment for “good reason.”
|
11 | Messrs. Hager’s, Ritenour’s, and Harris’s benefits under the SCRPs would become 100% vested upon a change in control.
|
12 | Devon’s nonqualified employee benefit plans, including the SRIP, the BRP, the Deferred Compensation Plan, the DC SERP, and the SCRPs, and employment agreements and severance agreements are subject, all or in part, to Section 409A of the Internal Revenue Code, which requires certain payments made under these plans and agreements to be delayed for six months following termination of employment.
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13 | In the case of a change in control, restricted stock only vests if the change in control results in a job loss for the named executive officer. For performance share units, shares only vest if a change in control results in a job loss for the named executive officer or if the award is not assumed by the acquiring entity. The value shown anticipates that the award is assumed by the acquiring entity. If the award is not assumed by the acquiring entity, the performance share units vest at the target level but arepro-rated for the time of the performance period that has elapsed, which as of December 31, 2019 would be valued as follows: Mr. Hager, $5,933,279; Mr. Ritenour, $1,300,777; Mr. Taylor, $1,687,903; Mr. Harris, $837,654; Ms. Cashion, $739,253; and Mr. Vaughn, $2,443,136.
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EXECUTIVE COMPENSATION (cont’d)
CEO PAY RATIO
Section 953(B) of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires certain public companies to disclose the median pay of Company employees, the method of determining median employee pay (the median of the total annual compensation of all employees otherstock options, restricted stock awards, restricted stock units, performance units, or stock appreciation rights. Other than the CEO), and the ratio of CEO pay to median employee pay. Devon’s employees, which are all located2022 LTIP, no new awards will be made under any other Devon long-term incentive plan in the U.S., are included in the calculation of median pay based on Devon’s employee populationeffect as of December 31, 2019.
For CEO pay,2022. Under the 2022 LTIP, any shares granted as stock options or stock appreciation rights count against the number of securities available for future issuance under the 2022 LTIP as one share for each share granted. With respect to any other awards under the 2022 LTIP, any shares granted count against the number of securities available for future issuance under the 2022 LTIP as 1.74 shares for each share granted. The 2022 LTIP also provides that shares covered by awards under any Devon usedlong-term incentive plans that are forfeited, cancelled, or expire after the amount for 2019 reflected in the Summary Compensation Table (SCT), which includes LTI granted in the year. In determining the median pay of employees, Devon replicated the componentseffective date of the SCT with respect to 2019 for all employees. Based on this methodology, CEO pay is $13.8 million, median employee pay is $164.1 thousand, and the ratio is 84:1. The amounts reported in the Summary Compensation Table as compensation2022 LTIP are added to the CEO vary from target pay, realizable pay, and actual compensation as reported onshares available for issuance under the CEO’sW-2. For more information about target pay, realizable pay, and actual compensation, see pages 52-53.
2022 LTIP. |
As compared to the pay ratios published by Devon’s peers in 2019 proxy statements, Devon’s 84:1 CEO pay ratio was smaller than 75% of its peer companies.
EXECUTIVE COMPENSATION (cont’d)
OUR STOCKHOLDERS EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information about Devon’s common stock as of December 31, 2019, that may be issued under Devon’s equity compensation plans:
| | | | | | | | | | | | | | Plan Category | | Number of
Securities To be Issued Upon Exercise of
Outstanding
Options, Warrants and Rights (a) | | | Weighted-Average Exercise Price of Outstanding
Options, Warrants and Rights (b) | | | Number of Securities
Remaining Available For Future
Issuance Under Equity
Compensation Plans (Excluding Securities Reflected
In Column (a))1 (c) | | Equity compensation plans
approved by security holders | | | 18,000 | 2 | | | 60.09 | 3 | | | 32,226,192 | | Equity compensation plans
not approved by security holders | | | 0 | | | | 0 | | | | 0 | | Total | | | 18,000 | 2 | | | 60.09 | 3 | | | 32,226,192 | |
1 | Represents shares available for issuance pursuant to awards under the 2017 LTIP, which may be in the form of stock options, restricted stock awards, restricted stock units, Canadian restricted stock units, performance units, or stock appreciation rights. No new awards will be made under any other Devon long-term incentive plan in effect as of December 31, 2019. Under the 2017 LTIP, any shares granted as stock options or stock appreciation rights count against the number of securities available for future issuance under the 2017 LTIP as one share for each share granted. With respect to any other awards under the 2017 LTIP, any shares granted count against the number of securities available for future issuance under the 2017 LTIP as 2.3 shares for each share granted. The 2017 LTIP also provides that shares covered by awards under any Devon long-term incentive plans that are forfeited, cancelled, or expire after the effective date of the 2017 LTIP are added to the shares available for issuance under the 2017 LTIP.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 2 | The total reflects 18,000 shares issuable pursuant to outstanding stock options.
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Security Ownership of Certain Beneficial Owners 3 | The weighted-average exercise price only applies to stock options.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth the only persons known to the Company to be the owners of more than five percent of the outstanding shares of the Company’s common stock as of December 31, 2019, based on the information available as of March 31, 2020,
The following table sets forth the only persons known to the Company to be the owners of more than five percent of the outstanding shares of the Company’s common stock as of December 31, 2022 (unless an earlier date is noted), based on the information available as of March 31, 2023, according to reports filed with the SEC: | | | | | | | | | | | | | | Common Stock | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class1 | | | | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | | | | 45,397,381 | 2 | | | | 11.86 | % | | | | BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | | | | 29,843,172 | 3 | | | | 7.80 | % | | | | Invesco Ltd. 1555 Peachtree Street NE, Suite 1800 Atlanta, GA 30309 | | | | 24,447,689 | 4 | | | | 6.39 | % | | | | State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111 | | | | 21,707,880 | 5 | | | | 5.67 | % |
| | | | | | | | | | | | | Common Stock | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class1 | | | | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | | | | 77,845,552 | 2 | | | | [ | •]% | | | | BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | | | | 56,828,011 | 3 | | | | [ | •]% | | | | State Street Corporation State Street Financial Center One Lincoln Street Boston, MA 02111 | | | | 43,147,852 | 4 | | | | [ | •]% |
| 1 | Percentage calculated using the Company’s outstanding share count as of April 10, 2023. |
| 2 | Information based on a Schedule 13G/A filed with the SEC on February 9, 2023. That filing indicates that The Vanguard Group has sole voting power as to none of the shares, shared voting power as to 937,604 shares, sole dispositive power as to 75,122,510 shares, and shared dispositive power as to 2,723,042 shares. |
| 3 | Information based on a Schedule 13G/A filed with the SEC on January 25, 2023. That filing indicates that BlackRock, Inc. has sole voting power as to 52,261,322 shares, shared voting power as to none of the shares, sole dispositive power as to 56,828,011 shares, and shared dispositive power as to none of the shares. |
| 4 | Information based on a Schedule 13G/A filed with the SEC on February 6, 2023. That filing indicates that State Street Corporation has sole voting power as to none of the shares, shared voting power as to 40,902,890 shares, sole dispositive power as to none of the shares, and shared dispositive power as to 43,019,375 shares. |
1 | Percentage calculated using the Company’s outstanding share count as of March 31, 2020.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (cont’d) 2 | Pursuant to a Schedule 13G/A filed with the SEC on February 12, 2020, The Vanguard Group stated that it had sole voting power as to 585,066 shares, shared voting power as to 122,855 shares, sole dispositive power as to 44,732,734 shares, and shared dispositive power as to 664,647 shares as of December 31, 2019.
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3 | Pursuant to a Schedule 13G/A filed with the SEC on February 5, 2020, BlackRock, Inc. stated that it had sole voting power as to 25,647,070 shares and sole dispositive power as to 29,843,172 shares as of December 31, 2019.
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4 | Pursuant to a Schedule 13G/A filed with the SEC on February 11, 2020, Invesco Ltd. stated that it had sole voting power as to 22,918,193 shares and sole dispositive power as to 24,447,689 shares as of December 31, 2019.
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5 | Pursuant to a Schedule 13G filed with the SEC on February 13, 2020, State Street Corporation stated that it had shared voting power as to 19,814,161 shares and shared dispositive power as to 21,688,072 shares as of December 31, 2019.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (cont’d)
Security Ownership of Management
Security Ownership of Management The following table sets forth as of March 31, 2023, the number and percentage of shares of our common stock beneficially owned by each of our named executive officers, Directors, and Director nominees and by all our executive officers, Directors, and Director nominees as a group. Unless otherwise noted, the persons named below have sole voting and investment power of their respective beneficially owned shares. | | | | | | | | | Common Stock | | Name of Beneficial Owner | | Amount and Nature of
Beneficial Ownership1 | | | Percent of Class | | | | Richard E. Muncrief* | | | 1,958,050 | 2 | | ** | | | | Clay M. Gaspar | | | 671,207 | 3 | | ** | | | | Jeffrey L. Ritenour | | | 340,847 | | | ** | | | | David G. Harris | | | 258,498 | 4 | | ** | | | | Dennis C. Cameron | | | 226,710 | | | ** | | | | John E. Bethancourt* | | | 95,610 | 5 | | ** | | | | Tana K. Cashion | | | 89,063 | | | ** | | | | Duane C. Radtke* | | | 78,473 | | | ** | | | | Barbara M. Baumann* | | | 76,636 | | | ** | | | | Robert A. Mosbacher, Jr.* | | | 73,944 | | | ** | | | | Karl F. Kurz* | | | 71,930 | | | ** | | | | Kelt Kindick* | | | 65,258 | 6 | | ** | | | | John Krenicki Jr.* | | | 44,166 | | | ** | | | | Valerie M. Williams* | | | 29,649 | | | ** | | | | Ann G. Fox* | | | 26,858 | | | ** | | | | Gennifer F. Kelly* | | | 1,624 | | | ** | | | | Michael N. Mears* | | | 1,624 | | | ** | | | | All of our Directors and executive officers as of March 31, 2020 the number and percentage of shares of our common stock beneficially owned by each of our named executive officers, Directors, and Director nominees and by all our executive officers, Directors, and Director nominees2023, as a group. Unless otherwise noted, the persons named below have sole voting, sole investment power, or both.group (17 persons) | | | | | | | | | | | | | Common Stock | Name of Beneficial Owner | | Amount and Nature of
Beneficial Ownership1
| | Percent of
Class
| | | | David A. Hager*
| | | | 812,158 | | | ** | | | | | Jeffrey L. Ritenour
| | | | 236,655 | 2 | | ** | | | | | Michael M. Kanovsky*
| | | | 169,517 | 3 | | ** | | | | | Lyndon C. Taylor
| | | | 151,615 | | | ** | | | | | David G. Harris
| | | | 121,093 | 4 | | ** | | | | | Tana K. Cashion
| | | | 70,233 | | | ** | | | | | John E. Bethancourt*
| | | | 65,496 | | | ** | | | | | Mary P. Ricciardello*
| | | | 54,221 | 5 | | ** | | | | | Duane C. Radtke*
| | | | 52,465 | 6 | | ** | | | | | Robert A. Mosbacher, Jr.*
| | | | 47,936 | | | 4,082,647 | 7 | | ** | | | | | Barbara M. Baumann*
| | | | 47,046 | | | ** | | | | | Robert H. Henry*
| | | | 33,382 | 8 | | ** | | | | | Keith O. Rattie*
| | | | 29,027 | | | ** | | | | | John Krenicki Jr.*
| | | | 15,751 | | | ** | | | | | Ann G. Fox*
| | | | 9,027 | | | ** | | | | | Tony D. Vaughn
| | | | 359,299 | 9 | | ** | | | | | All of our executive officers, Directors, and Director nominees as of March 31, 2020, as a group (16 persons)
| | | | 2,274,921 | 10 | | ** | |
| 1 | For purposes of this table, shares beneficially owned include shares of common stock (including unvested shares of restricted stock granted under the 2017 and 2022 LTIP with respect to which executive officers and Directors have voting power) as well as shares of common stock that can be acquired through the exercise of stock options within 60 days of March 31, 2023. In addition, amounts include restricted stock units held subject to the terms of the WPX Plan by certain Directors over which such individuals have no voting or investment power, as follows: Mr. Kurz, 16,017; and Ms. Williams, 25,651. |
| 2 | Includes (i) 42,582 shares that are deemed beneficially owned pursuant to stock options held by Mr. Muncrief and (ii) 153,430 shares held in a foundation in which Mr. Muncrief shares voting and investment control. |
| 3 | Includes 194,175 shares held through a trust of which Mr. Gaspar’s spouse is the sole trustee. |
| 4 | Includes 14,717 shares held through trusts in which Mr. Harris shares voting and investment control. |
| 5 | Includes 941 shares held through a trust in which Mr. Bethancourt shares voting and investment control. |
| 6 | Includes 42,590 shares owned by a trust of which Mr. Kindick’s spouse is both the sole trustee and the sole beneficiary. |
| 7 | Includes 42,582 shares that are deemed beneficially owned pursuant to stock options held by Mr. Muncrief, as well as 41,668 restricted stock units held by certain Directors subject to the terms of the WPX Plan. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that Devon’s Directors, executive officers, and 10% stockholders file with the SEC reports concerning their ownership, and changes in their ownership, of Devon equity securities. Based solely upon a review of Forms 3, 4, and 5, and amendments thereto, furnished to us during and with respect to our most recently completed fiscal year, and any written representations of reporting persons, we believe the reporting persons timely filed all reports required by Section 16(a) during 2022.
AGENDA ITEM 5. APPROVE AN AMENDMENT TO THE COMPANY’S BYLAWS TO DESIGNATE THE EXCLUSIVE FORUM FOR THE ADJUDICATION OF CERTAIN LEGAL MATTERS The Board unanimously recommends that stockholders approve an amendment to the Company’s Bylaws (the “Exclusive Forum Amendment”) designating the exclusive forums in which certain claims against the Company may be brought. The Exclusive Forum Amendment provides: (i) the Court of Chancery in the state of Delaware (the “Delaware Court of Chancery”) (or, if and only if the Delaware Court of Chancery does not have jurisdiction, the Superior Court of the State of Delaware, or, if the Superior Court of the State of Delaware does not have jurisdiction, the United States District Court for the District of Delaware, in each case, subject to that court having personal jurisdiction over the indispensable parties named defendants therein) will be the exclusive forum for certain actions involving Devon unless we consent in writing to an alternative forum. Specifically, the Delaware Court of Chancery would be the exclusive forum for (a) any derivative actions or proceedings brought on behalf of Devon; (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, stockholder, other employee or agent of Devon to Devon or our stockholders; (c) any action against Devon arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”) or as to which the DGCL confers jurisdiction on the Delaware Court of Chancery; or (d) any action against Devon or any director, officer, other employee or agent of Devon asserting a claim governed by the internal affairs doctrine, including, without limitation, any action to interpret, apply, enforce or determine the validity of the Certificate of Incorporation or our Bylaws (as they shall be amended from time to time); and (ii) the federal district courts of the United States of America shall serve as the sole and exclusive jurisdiction for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933 (the “Securities Act”), unless we consent in writing to an alternative forum. The description of the Exclusive Forum Amendment is qualified in its entirety by the full text of the Exclusive Forum Amendment attached to this Proxy Statement as Appendix B. The Company believes that the Exclusive Forum Amendment will reduce the risk that the Company could become subject to duplicative litigation in multiple forums, the risk of premature and abusive discovery in state courts that are not subject to federal rules for claims under the Securities Act, and the risk that the outcome of cases in multiple forums could be inconsistent, even though each forum purports to follow Delaware law or federal securities law. Any of these outcomes could expose the Company to increased expenses or losses. Discussion of the Purposes of this Amendment The Board believes that the Exclusive Forum Amendment is in the best interest of the Company and the Company’s stockholders for a variety of reasons. The legal actions involving the Company’s internal corporate affairs that are subject to the exclusive forum proposed by the Exclusive Forum Amendment can continue to be asserted but would need to be brought in the forum widely regarded as the preeminent U.S. court for corporate law and related business disputes. Having a designated forum is intended to help provide a streamlined, efficient and organized process for resolution of these disputes. The Exclusive Forum Amendment helps to avoid the procedural and substantive problems and expense associated with navigating multiple lawsuits, including derivative suits brought on behalf of the Company, across multiple jurisdictions on matters relating to the corporate law of Delaware that would be expected to govern many such disputes. The ability for plaintiffs to litigate claims governed by Delaware law in state courts outside the State of Delaware may mean that claims are brought in jurisdictions that do not apply Delaware law in the same manner as the courts of Delaware. Even if jurisdictions outside of Delaware seek to apply Delaware law in a manner
AGENDA ITEM 5. APPROVE AN AMENDMENT TO THE COMPANY’S BYLAWS TO DESIGNATE THE EXCLUSIVE FORUM FOR THE ADJUDICATION OF CERTAIN LEGAL MATTERS (cont’d) consistent with the Delaware courts, the outcomes of those cases could be inconsistent with each other and with the manner in which the Delaware courts would decide those cases. In addition, the Board considered the fact that the Delaware courts are widely regarded as the leading courts for the determination of corporate law disputes in terms of precedent, experience and focus. The specialized Delaware Court of Chancery’s considerable expertise has led to the development of a substantial and influential body of case law interpreting the Delaware General Corporation Law. The Company expects this will provide the Company and the Company’s stockholders with more consistency and predictability regarding the outcome of corporate disputes, which can reduce the time, cost and uncertainty of litigation for all parties. The Delaware Court of Chancery additionally employs procedures that can provide relatively expeditious decisions, potentially limiting the time, cost and uncertainty of protracted litigation for all parties. In providing for Delaware courts as the exclusive forum for certain actions, the Exclusive Forum Amendment is intended to avoid the added costs, the unpredictability and the risk of inconsistent outcomes (even though each court may purport to follow Delaware law) that could arise when duplicative internal corporate claims proceed in different courts. The Board also believes that designating the federal district courts of the United States of America as the exclusive forum for claims brought under the Securities Act promotes many of the same benefits to the Company and the Company’s stockholders as discussed with respect to the exclusive forum provision for certain Delaware law claims and would likely reduce litigation costs resulting from burdensome discovery allowed by state courts earlier than would be permitted in federal district courts. Plaintiffs increasingly file Securities Act claims in state courts, and companies are forced to defend suits in both federal and state courts, which is costly, inefficient, and unpredictable. Requiring Securities Act litigation to be brought only in federal courts has many benefits for the Company and its stockholders: Federal district courts have considerable expertise in matters arising under the Securities Act, which provides greater predictability regarding the outcome of these disputes; Securities Act claims in federal court are subject to the heightened pleading standards of the Private Securities Litigation Reform Act; and A motion to dismiss in federal district court invokes an automatic stay of discovery during the pendency of the motion, thereby reducing abusive discovery practices in many state courts that involve significant costs even before a court determines there may be a valid claim. In addition, adoption of the Exclusive Forum Amendment would reduce the risk that the Company could be involved in duplicative litigation in more than one forum, as well as the risk of inconsistent outcomes of cases in multiple forums. This Exclusive Forum Amendment is not being proposed in anticipation of any specific litigation or transaction. Under the Exclusive Forum Amendment, the Company would retain the ability to consent to an alternative forum in appropriate circumstances where it determines that its interests and those of the Company’s stockholders are best served by permitting a particular lawsuit to proceed in a forum other than the courts designated by the Exclusive Forum Amendment. The Exclusive Forum Amendment would regulate only the forum in which the Company’s stockholders may pursue certain claims; it would not restrict the ability of the Company’s stockholders to bring such claims, and it would not affect the remedies available if such claims were ultimately successful. Moreover, the Exclusive Forum Amendment would not specify the federal district courts in any particular state as the exclusive forum for Securities Act claims, so a plaintiff could select, on the basis of convenience or for other reasons, the federal district courts in any state as the forum for any such claim. In reaching its conclusion to recommend that stockholders approve the Exclusive Forum Amendment, the Board considered that the exclusive forum provisions contemplated by the Exclusive Forum Amendment may in some
AGENDA ITEM 5. APPROVE AN AMENDMENT TO THE COMPANY’S BYLAWS TO DESIGNATE THE EXCLUSIVE FORUM FOR THE ADJUDICATION OF CERTAIN LEGAL MATTERS (cont’d) instances impose additional litigation costs on plaintiffs in pursuing certain claims, particularly if a plaintiff does not reside in or near the State of Delaware. The Board also weighed the possibility that an exclusive forum provision may limit a plaintiff’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or the Company’s directors, officers or other employees, which such plaintiffs may claim limits their ability to enforce certain rights. The Board believes that the benefits of the Exclusive Forum Amendment to the Company and the Company’s stockholders far outweigh these potential drawbacks. Exclusive Forum Amendment Although the Board could amend the Company’s Bylaws to include the Exclusive Forum Amendment without obtaining stockholder approval, the Board determined that it would be consistent with the Board’s commitment to strong corporate governance practices for the Company’s stockholders to have the opportunity to consider and act upon the Exclusive Forum Amendment. Effectiveness of the Exclusive Forum Amendment If approved by the Company’s stockholders at the Annual Meeting, the Exclusive Forum Amendment will be immediately effective. If the Exclusive Forum Amendment is not approved by the Company’s stockholders at the Annual Meeting, the Board will continue to consider whether the Amendment is in the best interests of the Company and the Company’s stockholders and may conduct further outreach to the Company’s stockholders on the subject of exclusive forum provisions. The Company’s Board of Directors recommends that stockholders vote “FOR” the amendment to the Company’s Bylaws to designate the exclusive forum for the adjudication of certain legal matters.
AGENDA ITEM 6. APPROVE AMENDMENTS TO THE CERTIFICATE OF INCORPORATION TO ADOPT LIMITATIONS ON THE LIABILITY OF OFFICERS SIMILAR TO THOSE THAT ALREADY EXIST FOR DIRECTORS The Board unanimously recommends that the Company’s stockholders approve an amendment (the “Exculpation Amendment”) to the Company’s Restated Certificate of Incorporation (the “Certificate of Incorporation”) that would implement new Delaware law provisions that allow exculpation of officers similar to the exculpation provisions that already exist for directors. Background The Delaware General Corporation Law (“DGCL”) permits Delaware corporations to limit the personal liability of directors for monetary damages associated with breaches of the duty of care in limited circumstances, and the Company’s Certificate of Incorporation has always included those limitations. That protection did not extend to corporate officers under the DGCL or the Certificate of Incorporation. Consequently, stockholder plaintiffs in recent years have persuaded courts to impose the same fiduciary duties on officers that directors have, thereby exploiting the absence of the same protections for officers in order to prolong litigation and extract larger settlements from defendant corporations. This has resulted in increased litigation and insurance costs for companies, which harms stockholders. Effective August 1, 2022, the Delaware legislature amended the DGCL to correct this inconsistent treatment between directors and officers. The DGCL now allows Delaware corporations to amend their certificates of incorporation, subject to stockholder approval, to limit the personal liability of certain officers for monetary damages associated with breaches of the fiduciary duty of care (but not the fiduciary duty of loyalty) in limited circumstances. As provided in the new Delaware legislation, if the Company’s Exculpation Amendment is adopted, the Company’s Certificate of Incorporation will permit officer exculpation only for direct claims brought by stockholders for breach of an officer’s fiduciary duty of care, including class actions, but would not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by the Company itself or for derivative claims brought by stockholders in the name of the Company. The Exculpation Amendment would not apply to breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. These limitations are similar to those already in the Company’s Certificate of Incorporation for directors. The primary reason to adopt the Exculpation Amendment is to strike a balance between stockholders’ interest in officer accountability and stockholders’ interest in the Company’s ability to attract and retain quality officers to the Company and to reduce litigation and insurance costs associated with lawsuits. Discussion of the Purposes of this Amendment The Board and the GEPP Committee of the Board believe: there is a need for officers to be protected from the risk of financial ruin as a result of an unintentional misstep; the Exculpation Amendment is carefully drafted, consistent with the new Delaware law, to protect officers without limiting their liability for claims by the Company or for breaches of their duty of loyalty; the Exculpation Amendment would help the Company to attract and retain the most qualified officers; the Exculpation Amendment would not materially and negatively affect stockholder rights; and the Exculpation Amendment could reduce litigation and insurance costs associated with frivolous lawsuits.
AGENDA ITEM 6. APPROVE AMENDMENTS TO THE CERTIFICATE OF INCORPORATION TO ADOPT LIMITATIONS ON THE LIABILITY OF OFFICERS SIMILAR TO THOSE THAT ALREADY EXIST FOR DIRECTORS (cont’d) Thus, the GEPP Committee recommended to the Board, and the Board recommends to the Company’s stockholders, the adoption of the Exculpation Amendment. Directors and officers must often make decisions in response to time-sensitive opportunities and challenges. The existence of aggressive plaintiffs’ attorneys and governmental enforcers can create substantial risk of investigations, claims, actions, suits or proceedings seeking to impose liability on the Company and its directors and officers, regardless of ultimate merit. Limiting concerns about personal risk for ordinary failures of care (but not loyalty) empowers both directors and officers to exercise their business judgment in furtherance of stockholder interests. Because the Company expects many or most of its peers to adopt exculpation clauses that limit the personal liability of officers in their governing documents, the Company’s ability to recruit and retain exceptional officer candidates could be adversely affected if the Company does not adopt the Exculpation Amendment because those candidates and of ficers may conclude that the higher exposure to personal liabilities at the Company is not as attractive as working at a company that provides these protections. The Board believes that adopting the Exculpation Amendment would potentially reduce litigation and insurance costs associated with lawsuits (many of which may be frivolous), better position the Company to attract top officer candidates and retain the Company’s current officers and enable the officers to exercise their business judgment in furtherance of the interests of the stockholders without the potential for distraction posed by the risk of personal liability. This Exculpation Amendment will also better align the protections available to the Company’s officers with those already available to the Company’s directors. In view of the above considerations, the Company’s Board has unanimously determined to provide for the exculpation of officers as proposed. Proposed Exculpation Amendment The Board is asking the Company’s stockholders to approve the amendment to the Certificate of Incorporation. The proposed amendment to the Certificate of Incorporation is attached hereto as Appendix C, with additions marked in bold, underlined text and deletions indicated by strike-out text. Effectiveness of the Exculpation Amendment If the Exculpation Amendment is approved by the Company’s stockholders, the Exculpation Amendment will become effective upon the filing of a Certificate of Amendment with the Delaware Secretary of State. This filing is expected to occur shortly after the Annual Meeting. If the Exculpation Amendment is not approved by the Company’s stockholders, the Certificate of Incorporation will not be amended, and no exculpation will be provided for the Company’s officers. The Company’s officers will nevertheless retain their existing rights under indemnification agreements and insurance policies. The Company’s Board of Directors recommends that stockholders vote “FOR” the amendments to theCertificate of Incorporation to adopt limitations on theliability of officers similar to those that already existfor directors.
AGENDA ITEM 7. STOCKHOLDER PROPOSAL TO REFORM THE NEAR IMPOSSIBLE SPECIAL SHAREHOLDER MEETING REQUIREMENTS The Company has been notified by Mr. John Chevedden that the following proposal is to be presented for consideration at the Annual Meeting. This proposal will be voted on if it is properly presented at the Annual Meeting. The Company will provide to any stockholder, promptly upon receipt of the stockholders’s written or oral request, the name and address of the proponent of this proposal and the number of shares of the Company’s common stock held by the proponent of this proposal. The Board of Directors unanimously recommends a vote AGAINST the adoption of this stockholder proposal. The Company is not responsible for the content of this stockholder proposal, including the supporting statement and the checkmark graphic. Proposal 7 — Reform the Near Impossible Special Shareholder Meeting Requirements 
Shareholders ask our board to take the steps necessary to amend the appropriate company governing documents to give the owners of a combined 10% of our outstanding common stock the power to call a special shareholder meeting. This includes that each share shall have an equal right per share to formally participate in the calling for a special shareholder meeting to the fullest extent possible. The current Devon Energy right to call for a special shareholder meeting is like a bait and switch right. The bait is the 25% figure which seems somewhat favorable. However it goes downhill fast from here. Only non-street name shares have a right to call a special shareholder meeting. Thus if one makes the reasonable estimate that 50% of Devon Energy stock is non-street name stock, it means that our current requirement that 25% of shares are needed to call for a special shareholder meeting translates into 50% of this one category of stock and all other Devon Energy shares are 100% excluded. The next downhill bump is that all shares not owned for one full continuous year are 100% excluded. Thus the owners of such 50% of Devon Energy stock could determine that they own 65% of the exclusive category of Devon Energy stock that can call a special shareholder meeting if they include the shares that are owned for less than a full continuous year. Thus a somewhat favorable figure of 25% can translate into a steeply unfavorable 65% of shares to call a special shareholder meeting. The 10% figure, that gives each share an equal right to formally participate in calling for a special shareholder meeting, is also reasonable because the laws of some states mandate that 10% of shares be able to call a special shareholder meeting without the Devon type strings attached. Another sign that a 10% of shares is reasonable is that some companies that have a 25% figure then allow the 10% figure to apply to one shareholder who owns 10% of shares. Calling for a special shareholder meeting is hardly ever used by shareholders but the main point of the right to call for a special shareholder meeting is that it gives shareholders at least significant standing to engage effectively with management. Devon management professes to be strongly in favor of shareholder engagement. Devon management will have an incentive to genuinely engage with shareholders, instead of stonewalling, if shareholders seeking engagement have a realistic Plan B option of calling a special shareholder meeting. Please vote yes: Reform the Near Impossible Special Shareholder Meeting Requirements — Proposal 7
AGENDA ITEM 7. STOCKHOLDER PROPOSAL TO REFORM THE NEAR IMPOSSIBLE SPECIAL SHAREHOLDER MEETING REQUIREMENTS (cont’d) Opposition Statement of the Company: The Company’s stockholders already have the right to call special meetings. The Company’s Board is committed to having strong corporate governance practices in place to ensure that the Company is responsive to stockholder concerns. Among many other stockholder rights, the Company’s Certificate of Incorporation already allows record holders of an aggregate of at least 25% of the voting power of the Company’s outstanding shares to call a special meeting, in addition to requiring holders to have continuously owned the shares for at least one year. Under the Company’s Certificate of Incorporation, stockholders are also permitted to aggregate their holdings to reach the special meeting threshold, and there is no aggregation cap. This right reflects a balanced approach to enhancing stockholder rights while protecting the interests of all stockholders. The existing special meeting right is common among S&P 500 Companies. The Company’s existing special stockholder meeting provisions are consistent with good governance practices at large publicly-traded companies. Approximately 29% of S&P 500 companies do not grant stockholders the right to call a special meeting at all. Among the approximately 71% of companies in the S&P 500 that grant stockholders a special meeting right, the most common ownership requirement is that the meeting be requested by holders of at least 25% of the voting power—the standard the Company already has. There does not appear to be much support for changing this. Of the over 110 proposals to adopt or amend special meeting provisions submitted for annual meetings held in 2022, fewer than 10 received support from a majority of shareholders, and more than half of those were at companies that did not already have the right for stockholders to call a special meeting at all. The Company’s Board believes that the current threshold to call a special meeting provides stockholders with assurance that a reasonable number of stockholders consider a matter important enough to warrant a special meeting. In particular, reducing the threshold to 10%, as proposed, could cause the Company to spend substantial time and resources on a special meeting even if holders of up to 90% of the Company’s shares do not want a special meeting. Reducing the threshold to call a special meeting to 10% would effectively allow such holders to call a special meeting at any time, regardless of the desires of the Company’s other stockholders. If the proposal were adopted, a small minority of stockholders—sometimes a single stockholder—with potentially narrow, short-term interests, could call an unlimited number of special meetings, without regard to how direct costs and other burdens might affect the Company’s future success or the interests of the vast majority of stockholders. Preparing for, and holding, a special meeting is time-consuming and expensive. A company must pay to prepare, print, and distribute disclosure documents to stockholders, solicit proxies, hold the meeting, and tabulate votes, among other things. Moreover, holding a special meeting at the request of such a small minority of stockholders has the potential to injure the Company, as special meetings demand significant attention from the Board and senior management and disrupt normal business operations. As a result, the Company believes special meetings should be limited to when there are urgent and important strategic matters or profound fiduciary concerns. The Company’s existing 25% threshold helps avoid waste of Company and stockholder resources on addressing narrow or special interests.
AGENDA ITEM 7. STOCKHOLDER PROPOSAL TO REFORM THE NEAR IMPOSSIBLE SPECIAL SHAREHOLDER MEETING REQUIREMENTS (cont’d) The Company’s stockholders can be assured that their right to be apprised of, and vote on, significant matters is protected not only by their existing right to call special meetings but also by state law and other regulations. The Company is incorporated in Delaware. Delaware law requires that major corporate actions, such as a merger or sale of all or substantially all of the Company’s assets, be approved by its stockholders. The Company is also listed on the NYSE, which requires, among other things, that listed companies obtain stockholder approval for issuances of equity representing more than 20% of an issuer’s voting power as well as equity compensation plans and significant issuances of equity to related parties. The Company’s Board strongly believes that the current threshold is a reasonable and meaningful threshold affording stockholders a significant right and is part of an entire suite of rights that the Company provides to its stockholders. We have established multiple governance mechanisms to ensure meaningful stockholder engagement and participation, as well as to assure accountability of the Board and management to stockholders. In addition to the existing right of stockholders to call a special meeting, the Board has in place robust corporate governance policies that provide stockholders with a means to communicate their priorities to the Board and management. Although the proponent dismisses or ignores these rights, they are meaningful opportunities for stockholders to voice their concerns and to motivate management to engage with stockholders. These rights include: Annual election of all directors; A board comprised of a majority of independent directors (11 of 12 directors are independent); A majority voting standard for the election of directors in uncontested elections with a director resignation policy; | • | | Annual votes on the advisory “say-on-pay” vote on executive compensation; |
1 | For purposes of this table, shares beneficially owned include shares of common stock (including unvested shares of restricted stock with respect to which executive officers
In addition to proxy access, a policy of considering director candidates recommended by stockholders; and Directors have voting power) as well as shares of common stock that can be acquired through the exercise of stock options within 60 days of March 31, 2020. |
2 | Includes 236,500 shares owned by Mr. Ritenour and 155 shares held in the Devon Energy Incentive Savings Plan.
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3 | Includes 29,832 shares owned by Mr. Kanovsky, 136,685 shares held indirectly through a family-owned entity in which Mr. Kanovsky shares voting and investment power, and 3,000 shares that are deemed beneficially owned pursuant to stock options held by Mr. Kanovsky.
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4 | Includes 106,376 shares owned by Mr. Harris and 14,717 held indirectly through trusts in which Mr. Harris shares voting and investment control.
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5 | Includes 51,221 shares owned by Ms. Ricciardello and 3,000 shares that are deemed beneficially owned pursuant to stock options held by Ms. Ricciardello.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (cont’d)
6 | Includes 49,465 shares owned by Mr. Radtke and 3,000 shares that are deemed beneficially owned pursuant to stock options held by Mr. Radtke.
No supermajority voting provisions, including with respect to amending the Company’s Bylaws. Devon engages with its investors substantively and frequently. Devon regularly engages with investors and makes forums to do so widely available. In 2022 alone, Devon interacted with investors hundreds of times in meetings and by email and telephone. Management regularly reports to the Board on these interactions and the Company has responded to such feedback in the past. Devon does not make a practice of, in the words of the proponent, “stonewalling” investors. Instead, Devon’s level of engagement and transparency with investors has been recognized and appreciated. A more complete review of the Company’s governance policies and practices can be found on page 15 of this Proxy Statement.
7 | Includes 44,936 shares owned by Mr. Mosbacher and 3,000 shares that are deemed beneficially owned pursuant to stock options held by Mr. Mosbacher.
AGENDA ITEM 7. STOCKHOLDER PROPOSAL TO REFORM THE NEAR IMPOSSIBLE SPECIAL SHAREHOLDER MEETING REQUIREMENTS (cont’d) We also maintain strong and effective practices that reflect the Company’s ongoing commitment to corporate governance, including: |
8 | Includes 30,382 shares owned by Mr. Henry and 3,000 shares that are deemed beneficially owned pursuant to stock options held by Mr. Henry.
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Independent Chair of the Board, separate from the CEO; 9 | In September 2019, Mr. Vaughn changed roles with the Company from an executive officer to a senior advisor, which is anon-executive officer position.
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Independent committee chairs; 10 | Includes 15,000 shares that are deemed beneficially owned pursuant to stock options held by Directors.
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No restrictions on directors’ access to management or employees; Annual Board and committee self-evaluations; Prohibition on hedging and pledging of Company stock by directors and executive officers; Stock ownership requirements whereby directors must own equal to five times the Director’s annual retainer by the end of a five-year period after election and a holding requirement for those who have yet to meet such requirements; Clawback Policy allowing the Company to require reimbursement or forfeiture of all or a portion of any bonus or incentive compensation subject to the Clawback Policy; Active Board refreshment, with eight new directors joining since 2018; A Governance, Environmental, and Public Policy Committee that periodically reviews the Company’s corporate governance practices along with best practices followed by other companies to maintain a corporate governance framework for the Company that is effective and functional and that addresses the interests of the Company’s stakeholders; and A consistent program of contacting and meeting with the Company’s stockholders on a range of topics, including the Company’s governance practices. The Company’s existing governance policies and practices, including the right of the Company’s stockholders to call special meetings, already provide the Company’s stockholders with a significant ability to raise important matters with the Board and senior management and demonstrate the Company’s continuing commitment to effective corporate governance. Accordingly, the Board believes that this stockholder proposal is not in the best interests of the Company and its stockholders, and for the reasons described above, the Board recommends that stockholders vote against this proposal. For the foregoing reasons, the Company’s Board of Directors recommends that stockholders vote “AGAINST” the proposal to Reform the Near Impossible Special Shareholder Meeting Requirements.
SUBMISSION OF STOCKHOLDER PROPOSALS AND NOMINATIONS
Proposals for Inclusion in our 2021 Proxy Statement
SEC rules permit stockholders to submit proposals to be included in our Proxy Statement if the stockholder and the proposal satisfy the requirements specified in Rule14a-8
SUBMISSION OF STOCKHOLDER PROPOSALS AND NOMINATIONS Proposals for Inclusion in Our 2024 Proxy Statement SEC rules permit stockholders to submit proposals to be included in our Proxy Statement if the stockholder and the proposal satisfy the requirements specified in Rule 14a-8 under the Securities Exchange Act of 1934. For a stockholder proposal to be considered for inclusion in our Proxy Statement for the 2024 Annual Meeting of Stockholders, the proposal must be received at the address provided below by December [ ], 2023. Director Nominations for Inclusion in Our 2024 Proxy Statement (Proxy Access) Our proxy-access bylaw permits a stockholder (or a group of up to 20 stockholders) owning 3% or more of the voting power of the Company’s outstanding common stock continuously for at least three years to nominate and include in the Company’s Proxy Statement director candidates constituting up to the greater of two individuals or 20% of the Board, if the nominating stockholder(s) and the nominee(s) satisfy the requirements specified in our Bylaws. For the 2024 Annual Meeting of Stockholders, notice of a proxy-access nomination must be received at the address provided below no later than December [ ], 2023, and no earlier than November [ ], 2023. Proposals and Nominations to Be Brought before Our 2024 Annual Meeting But Not for Inclusion in Our 2024 Proxy Statement Our Bylaws permit a stockholder to propose items of business and nominate director candidates that are not intended to be included in our Proxy Statement if the stockholder complies with the procedures set forth in our Bylaws. For the 2024 Annual Meeting of Stockholders, notice of such proposals or nominations must be received at the address provided below no later than March 9, 2024, and no earlier than February 8, 2024. If the Company moves the 2024 Annual Meeting of Stockholders to a date that is more than 30 days before or after the date which is the one-year anniversary of this year’s Annual Meeting date (i.e., June 7, 2024), the Company must receive notice of such proposals no earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 70th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Stockholder Proxy Solicitation for Nominees (the SEC’s Universal Proxy Rule) Any stockholder who intends to solicit proxies in support of any director nominee must comply with the content requirements of Rule 14a-19 under the Securities Exchange Act of 1934 (the SEC’s universal proxy rule) at the time it complies with the earlier of the deadlines in the advance notice provisions of our Bylaws and SEC Rule 14a-19. For the 2024 Annual Meeting of Stockholders, if a stockholder intends to solicit proxies in support of any director nominees submitted under the advance notice provisions of our Bylaws, such stockholder must also provide proper written notice that sets forth all the information required under SEC Rule 14a-19 that must be received at the address provided below no later than March 9, 2024 and no earlier than February 8, 2024. If the Company moves the 2024 Annual Meeting of Stockholders to a date that is more than 30 days before or after the date which is the one-year anniversary of this year’s Annual Meeting date (i.e., June 7, 2024), the Company must receive notice of such proposals no earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 70th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made.
SUBMISSION OF STOCKHOLDER PROPOSALS AND NOMINATIONS (cont’d) Address for Submission of Notices and Additional Information All stockholder nominations of individuals for election as directors or proposals of other items of business to be considered by stockholders at the 2024 Annual Meeting of Stockholders (whether or not intended for inclusion in our Proxy Statement) must be submitted in writing to our Corporate Secretary at 333 W. Sheridan Avenue, Oklahoma City, Oklahoma 73102, or by email to CorporateSecretary@dvn.com. In addition, both the proxy access and the advance notice provisions of our Bylaws require a stockholder’s notice of a nomination or other item of business to include certain information. Director nominees must also meet certain eligibility requirements. Any stockholder considering introducing a nomination or other item of business should carefully review our Bylaws.
FREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING What are the Board of Directors’ voting recommendations? | • | | For the election of the 11 Director nominees named in this Proxy Statement for the 2021 Annual Meeting of Stockholders, the proposal must be receiveda term expiring at the address provided below by December 23, 2020.next Annual Meeting; |
| • | | Director Nominations for Inclusion in our 2021 Proxy Statement (Proxy Access)
Our proxy-access bylaw permits a stockholder (or a group of up to 20 stockholders) owning 3% or moreFor the ratification of the Company’s outstanding common stock continuouslyappointment of our independent auditors for at least three years2023;
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| • | | For the approval, on an advisory basis, of executive compensation; |
| • | | For the option of one year as the frequency for the advisory vote on executive compensation; |
| • | | For the approval of an amendment to nominate and include in the Company’s Proxy Statement director candidates constituting upBylaws to designate the exclusive forum for the adjudication of certain legal matters; |
| • | | For the approval of amendments to the greaterCertificate of two individuals or 20%Incorporation to adopt limitations on the liability of the Board, if the nominating stockholder(s)officers similar to those that already exist for directors; and the nominee(s) satisfy the requirements specified in our Bylaws. For the 2021 Annual Meeting of Stockholders, notice of a proxy-access nomination must be received at the address provided below no later than December 23, 2020 and no earlier than November 23, 2020. |
| • | | Other Proposals or Nominations to be brought before our 2021 Annual Meeting
Our Bylaws permit a stockholder to propose items of business and nominate director candidates that are not intended to be included in our Proxy Statement if Against the stockholder complies with the proceduresproposal set forth in our Bylaws. For the 2021 Annual Meeting of Stockholders, notice of such proposals or nominations must be received at the address provided below no later than March 5, 2021 and no earlier than February 3, 2021.
If the Company moves the 2021 Annual Meeting of Stockholders to a date that is more than 30 days before or after the date which is theone-year anniversary of this year’s Annual Meeting date (i.e., June 3, 2021), the Company must receive notice of such proposals no earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 70th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made.
Address for Submission of Notices and Additional Information
All stockholder nominations of individuals for election as directors or proposals of other items of business to be considered by stockholders at the 2021 Annual Meeting of Stockholders (whether or not intended for inclusion in our Proxy Statement) must be submitted in writing to our Corporate Secretary at 333 W. Sheridan Avenue, Oklahoma City, Oklahoma 73102, or by email toCorporateSecretary@dvn.com.Statement.
In addition, both the proxy access and the advance notice provisions of our bylaws require a stockholder’s notice of a nomination or other item of business to include certain information. Director nominees must also meet certain eligibility requirements. Any stockholder considering introducing a nomination or other item of business should carefully review our Bylaws.
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Who is entitled to vote? Stockholders as of the close of business on April 10, 2023 (the Record Date) are eligible to vote their shares at the Annual Meeting. As of the Record Date, there were [ ] shares of our common stock outstanding. Each share of common stock is entitled to one vote at the Annual Meeting. Stockholders do not have the right to cumulative voting in the election of Directors. How do I vote? You may:
FREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING
What are the Board of Directors’ voting recommendations?
| • | | For the election of the eleven Director nominees named in this Proxy Statement for a term expiring at the next Annual Meeting of Stockholders;
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| • | | For the ratification of the appointment of our independent auditors for 2020; and
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| • | | For the approval, on an advisory basis, of executive compensation.
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Who is entitled to vote?
Stockholders as of the close of business on April 6, 2020 (the Record Date) are eligible to vote their shares at the Annual Meeting. As of the Record Date, there were 382,743,231 shares of our common stock outstanding. Each share of common stock is entitled to one vote at the Annual Meeting.
How do I vote?
You may:
attend
Attend the Annual Meeting and vote in person; or | • | | dialDial the toll-free number listed1-800-690-6903 (listed on the Proxy Card or Voting Instruction Form.Form). Easy-to-follow voice prompts allow you to vote your shares and confirm that your voting instructions have been properly recorded. Telephone voting will be available 24 hours a day and will close at 11:59 p.m. Eastern time on June 2, 2020;6, 2023; or
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| • | | go to the websiteGo to the website www.proxyvote.com and follow the instructions and confirm that your voting instructions have been properly recorded. If you vote using the website, you can request electronic delivery of future proxy materials. Internet voting will be available 24 hours a day and will close at 11:59 p.m. (Eastern time) on June 6, 2023; or
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| | a day and will close at 11:59 p.m. (Eastern time) on June 2, 2020; or
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| • | | ifIf you elected to receive a paper copy of your proxy materials, mark your selections on the Proxy Card or Voting Instruction Form, date and sign it, and return the card or form in thepre-addressed, postage-paid envelope provided.
Why did I receive a Notice Regarding the Internet Availability of Proxy Materials in the mail instead of a full set of proxy materials?
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Why did I receive a Notice Regarding the Internet Availability of Proxy Materials in the mail instead of a full set of proxy materials? SEC rules allow companies to furnish proxy materials over the Internet. Commencing on or about April [ ], 2023, we have mailed a Notice of Internet Availability of Proxy Materials (the Notice) to most of our stockholders instead of a paper copy of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the Notice. In addition, stockholders may request to receive 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. SEC rules allow companies to furnish proxy materials over the Internet. We have sent a Notice of Internet Availability of Proxy Materials (the Notice) to most of our stockholders instead of a paper copy of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the Notice. In addition, stockholders may request to receive 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.
FREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING (cont’d) Why did I receive paper copies of proxy materials?
We are providing paper copies of the proxy materials instead of the Notice to certain stockholders, including those who have previously requested to receive them. If you prefer to no longer receive printed proxy materials, you may consent to receive all future proxy materials electronically via email. To sign up for electronic delivery, please follow the instructions provided in your proxy materials. When prompted, indicate that you agree to receive or access stockholder communications electronically in the future.
FREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING (cont’d)
How do I vote the shares held in my Devon 401(k) Plan account?
If you are a participant in the Devon Energy Corporation Incentive Savings Plan (the 401(k) Plan), you have the right to direct Fidelity Management Trust Company (the 401(k) Plan Trustee) regarding how to vote the shares attributable to your individual account. To provide your direction, please follow the instructions you received via email or on the Voting Instruction Form that you received from Broadridge Financial Solutions, Inc. (Broadridge).
The 401(k) Plan Trustee will vote your shares in the 401(k) Plan account in accordance with your instructions.If instructions are notreceived by May 31, 2020, the shares credited to your account will not be voted.
Will each stockholder in our household receive proxy materials?
Generally, no. We try to provide only one set of proxy materials to be delivered to multiple stockholders sharing an address unless you have given us other instructions. Any stockholder at a shared address may request delivery of single or multiple copies of proxy materials for future meetings or an additional copy of the proxy materials for this meeting by contacting Broadridge at1-866-540-7095.
Who will be admitted to the Annual Meeting?
Why did I receive paper copies of proxy materials? We are providing paper copies of the proxy materials instead of the Notice to certain stockholders, including those who have previously requested to receive them. If you prefer to no longer receive printed proxy materials, you may consent to receive all future proxy materials electronically via email. To sign up for electronic delivery, please follow the instructions provided in your proxy materials. When prompted, indicate that you agree to receive or access stockholder communications electronically in the future. Will each stockholder in our household receive proxy materials? Generally, no. We try to provide only one set of proxy materials to be delivered to multiple stockholders sharing an address unless you have given us other instructions. Any stockholder at a shared address may request delivery of single or multiple copies of proxy materials for future meetings or an additional copy of the proxy materials for this meeting, which shall be promptly delivered, by contacting Broadridge at 1-866-540- 7095 or our Corporate Secretary at the telephone number or address provided below. Who will be admitted to the Annual Meeting? Admission to the Annual Meeting will be limited to our stockholders of record, persons holding proxies from our stockholders, beneficial owners of our common stock, and our employees. If your shares are registered in your name, we will verify your ownership at the meeting in our list of stockholders as of the Record Date. If your shares are held through a broker, bank, or other nominee, you must bring proof of your ownership of the shares. This proof could consist of, for example, a bank or brokerage firm account statement or a letter from your bank or broker confirming your ownership as of the Record Date. If I vote via telephone or the Internet or by mailing my Proxy Card, may I still attend the Annual Meeting? Yes. You will need the control number located on your proxy card or Notice of Internet Availability of Proxy Materials to attend the meeting. What if I want to change my vote? You may revoke your proxy before it is voted by submitting a new proxy with a later date (by mail, telephone, or Internet), by voting at the Annual Meeting, or by filing a written revocation with our Corporate Secretary. Your attendance at the Annual Meeting will not automatically revoke your proxy. Who will count the votes? Broadridge will tabulate the votes. What constitutes a quorum? A majority of the voting power of the outstanding shares of our common stock entitled to vote generally in the election of Directors, present at the meeting or represented by proxy, constitutes a quorum. If you vote by telephone or Internet or by returning your Proxy Card, you will be considered part of the quorum. Broadridge,
FREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING (cont’d) the Inspector of Election, will treat shares represented by a properly executed proxy as present at the meeting. Abstentions, withheld votes, and broker non-votes will be counted for purposes of determining a quorum. A broker non-vote occurs when a broker or nominee holding shares for a beneficial owner submits a proxy but does not vote on a particular proposal because the broker or nominee does not have discretionary voting power for that item and has not received instructions from the beneficial owner. How many votes will be required to approve a proposal? How will you treat withheld votes, abstentions and broker non-votes? The following table identifies the voting standard and the effect of withheld votes, broker non-votes, and abstentions for each item of business at the Annual Meeting. | | | | | | | | | | | | | | | Item | | | | Voting Standard | | Effect of Withheld Votes, Broker Non- Votes and Abstentions | | Board’s Recommendation | | | | | | | 1 | | Election of Directors | | Votes cast “for” must exceed the votes cast “withheld” Resignation Policy1 applies if votes cast “withheld” exceed votes cast “for” | | Withheld votes will have the effect of a vote “against” Broker non-votes will have
no effect | | FOR each director nominee nominated herein | | | | | | | 2 | | Ratify the selection of the independent auditors for 2023 | | The affirmative vote of the majority of shares present in person or by proxy and entitled to
vote on the subject matter | | Abstentions will have the effect of a vote “against” Broker non-votes will have
no effect | | FOR | | | | | | | 3 | | Approve, in an advisory vote, executive compensation | | The affirmative vote of the majority of shares present in person or by proxy and entitled to
vote on the subject matter | | Abstentions will have the effect of a vote “against” Broker non-votes will have no effect | | FOR | | | | | | | 4 | | Approve, in an advisory vote, the frequency of the advisory vote on executive compensation | | The affirmative vote of the majority of shares present in person or by proxy and entitled to
vote on the subject matter If none of the frequency options receives a majority vote, the option receiving the greatest number of votes | | Abstentions will have the effect of a vote “against” Broker non-votes will have
no effect | | ONE YEAR | | | | | | | 5 | | Approve an amendment to the Company’s Bylaws to designate
the exclusive forum for the adjudication of certain legal matters | | The affirmative vote of the holders of a majority
of the combined voting power of the outstanding shares of our common stock voting together as a single class | | Abstentions and our employees. If your shares are registered in your name, webroker non-votes will verify your ownership athave the meeting in our listeffect of stockholders asa vote “against” | | FOR | | | | | | | 6 | | Approve amendments to the Company’s Certificate of Incorporation to adopt limitations
on the liability of
officers similar to those that
already exist for directors | | The affirmative vote of the Record Date. If your shares are held throughholders of abroker, bank or other nominee, you must bring proof of your ownership majority
of the shares. This proof could consist of, for example, a bank or brokerage firm account statement or a letter from your bank or broker confirming your ownership ascombined voting power of the Record Date.
If Ioutstanding shares of our common stock voting together as a single class
| | Abstentions and broker non-votes will have the effect of a vote via telephone or“against” | | FOR | | | | | | | 7 | | Consider and vote upon the Internet or by mailing mystockholder proposal set
forth in this Proxy Card, may I still attend the Annual Meeting?Yes.
WhatStatement, if I want to change my vote?
You may revoke your proxy before it is voted by submitting a new proxy with a later date (by mail, telephone or Internet), by votingproperly presented at the Annual Meeting or by filing a written revocation with our Corporate Secretary. Your attendance at
| | The affirmative vote of the Annual Meeting will not automatically revoke your proxy.Who will count the votes?
Broadridge will tabulate the votes.
What constitutes a quorum?
A majority of the shares entitled to vote, present in person or represented by proxy constitutes a quorum. If you vote by telephone or Internet or by returning your Proxy Card, you will be considered part of the quorum. Broadridge, the Inspector of Election, will treat shares represented by a properly executed proxy as present at the meeting. Abstentions and brokernon-votes will be counted for purposes of determining a quorum. A brokernon-vote occurs when a nominee holding shares for a beneficial owner submits a proxy but does not entitled to
vote on the subject matter
| | Abstentions will have the effect of a particular proposal because the nominee does not have discretionary voting power for that item and has not received instructions from the beneficial owner.vote “against”
FREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING (cont’d)Broker non-votes will have
no effect
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How many votes will be required to approve a proposal?
For the election of Directors, a nominee for Director in an uncontested election shall be elected if the votes cast “for” such nominee’s election exceed the votes “withheld” in such nominee’s election. Any nominee for Director in a contested election shall be elected by a plurality of the votes cast.
| 1 | Our Corporate Governance Guidelines and Bylaws contain a director resignation policy which provides that any nominee for Director in an uncontested election who fails to receive a greater number of votes cast “for” such nominee’s election than the votes cast “withheld” in such nominee’s election shall tender his or her written offer of resignation to the GovernanceGEPP Committee of the Board of Directors within 90 days from the date of the election. The GovernanceGEPP Committee will consider all of the relevant facts and circumstances and recommend to the Board the action to be taken with respect to such offer of resignation. With respect to all other matters, the affirmative vote of the holders of a majority of the total number of votes represented at the Annual Meeting is required to take the action.
Shares cannot be voted at the Annual Meeting unless the holder of record is present in person or by proxy.
Can brokers who hold shares in street name vote those shares if they have received no instructions?
Under the rules of the New York Stock Exchange (the NYSE), brokers may not vote the shares held by them in street name for their customers and for which they have not received instructions, except with respect to a routine matter. The only matter to be voted on at the Annual Meeting that is considered routine for
these purposes is the ratification of the appointment of the independent auditors. This means that brokers may not vote your shares on any other matter if you have not given instructions as to how to vote. Please be sure to give voting instructions to your broker so that your vote will be counted.
How will you treat abstentions and brokernon-votes?
We will:
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count abstentions and brokernon-votes for purposes of determining the presence of a quorum at the Annual Meeting;
FREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING (cont’d) consider neither abstentions nor brokernon-votes for the election of Directors;
treat abstentions as votes not cast but as shares represented at the Annual Meeting for determining results on actions requiring a majority of shares present and entitled to vote at the Annual Meeting; and
not consider brokernon-votes for determining actions requiring a majority of shares present and entitled to vote at the Annual Meeting.
Who pays the solicitation expenses?
We will bear the cost of solicitation of proxies. Proxies may be solicited by mail or personally by our Directors, officers, or employees, none of whom will receive additional compensation for such solicitation. We have retained D.F. King & Co. to assist in the solicitation of proxies at an estimated cost of $10,500 plus reasonable expenses. Those holding shares of common stock of record for the benefit of others, or nominee holders, are being asked to distribute proxy soliciting materials to, and request voting instructions from, the beneficial owners of such shares. We will reimburse nominee holders for their reasonableout-of-pocket expenses.
FREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING (cont’d)
Where can I find the voting results of the Annual Meeting?
We will announce preliminary voting results at the Annual Meeting. Final voting results will be included in a Form8-K that will be filed with the SEC within four business days after the Annual Meeting. You may obtain a copy of the Form8-K and other reports free of charge atwww.devonenergy.com, or by contacting us at (405)235-3611 orCorporateSecretary@dvn.com, or by accessing the SEC’s website atwww.sec.gov.
Will the Company’s independent auditors be available at the Annual Meeting to respond to questions?
Yes. The Audit Committee of the Board of Directors has approved KPMG LLP to serve as our independent auditors for the year ending December 31, 2020. Representatives of KPMG LLP will be present at the Annual Meeting. They will have an opportunity to make a statement, if they desire to do so, and will be available to respond to stockholder questions.
How will I receive Notice of a Virtual Annual Meeting?
If we elect to host a virtual Annual Meeting instead of anin-person Annual Meeting, we will issue a press release and make a filing with the SEC.
How will a virtual Annual Meeting be conducted?
All relevant details will be contained in the press release and the filing with the SEC.
Where can I contact the Company?
What happens if I do not give specific voting instructions? All properly executed proxies, unless revoked as described above, will be voted at the Annual Meeting in accordance with your instructions on your proxy. If a properly executed proxy gives no specific instructions, your shares will be voted in the manner recommended by the Board of Directors on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting. Can brokers who hold shares in street name vote those shares if they have received no instructions? Under the rules of the New York Stock Exchange (the NYSE), brokers may not vote the shares held by them in street name for their customers and for which they have not received instructions, except with respect to a routine matter. The only matter to be voted on at the Annual Meeting that is considered routine for these purposes is the ratification of the appointment of the independent auditors. This means that brokers may not vote your shares on any other matter if you have not given instructions as to how to vote. Please be sure to give voting instructions to your broker so that your vote will be counted. Who pays the solicitation expenses? We will bear the cost of solicitation of proxies. Proxies may be solicited by mail or personally by our Directors, officers, or employees, none of whom will receive additional compensation for such solicitation. We have retained D.F. King & Co. to assist in the solicitation of proxies at an estimated cost of $12,000 plus reasonable expenses. Those holding shares of common stock of record for the benefit of others, or nominee holders, are being asked to distribute proxy soliciting materials to, and request voting instructions from, the beneficial owners of such shares. We will reimburse nominee holders for their reasonable out-of-pocket expenses. Where can I find the voting results of the Annual Meeting? We will announce preliminary voting results at the Annual Meeting. Final voting results will be included in a Form 8-K that will be filed with the SEC within four business days after the Annual Meeting. You may obtain a copy of the Form 8-K and other reports free of charge at www.devonenergy.com, or by contacting us at (405) 235-3611 or CorporateSecretary@dvn.com or by accessing the SEC’s website at www.sec.gov. Will the Company’s independent auditors be available at the Annual Meeting to respond to questions? Yes. The Audit Committee of the Board of Directors has approved KPMG LLP to serve as our independent auditors for the year ending December 31, 2023. Representatives of KPMG LLP will be present at the Annual Meeting. They will have an opportunity to make a statement, if they desire to do so, and will be available to respond to stockholder questions. Where can I contact the Company? Our contact information is: Corporate Secretary Devon Energy Corporation 333 W. Sheridan Avenue Oklahoma City, Oklahoma 73102 (405)235-3611 | | | | | | | 8992 | | Commitment Runs Deep |
Our Board of Directors knows of no other matters to come before the meeting other than as set forth herein and in the accompanying Notice of Annual Meeting of Stockholders. However, if any other matters should properly come before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote such proxies as they deem advisable in accordance with their best judgment. Your cooperation in giving this matter your immediate attention and in returning your proxy promptly will be appreciated. | | | | | | | | BY ORDER OF THE BOARD OF DIRECTORS | | | Oklahoma City, Oklahoma April 22, 2020[ ], 2023 | | 
Christopher J. Kirt Vice President Corporate Governance and Secretary |
| | | | | | | 9093 | | Commitment Runs Deep |
AppendixFORWARD-LOOKING STATEMENTS
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS This Proxy Statements includes “forward-looking statements” within the meaning of the federal securities laws. Such statements include those concerning strategic plans, our expectations and objectives for future operations, as well as other future events or conditions, and are often identified by use of the words and phrases “expects,” “believes,” “will,” “would,” “could,” “continue,” “may,” “aims,” “likely to be,” “intends,” “forecasts,” “projections,” “estimates,” “plans,” “expectations,” “targets,” “opportunities,” “potential,” “anticipates,” “outlook” and other similar terminology. All statements, other than statements of historical facts, included in this Proxy Statement that address activities, events or developments that Devon expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control. Consequently, actual future results could differ materially and adversely from our expectations due to a number of factors, including, but not limited to: the volatility of oil, gas and natural gas liquids prices; uncertainties inherent in estimating oil, gas and natural gas liquids reserves; the extent to which we are successful in acquiring and discovering additional reserves; the uncertainties, costs and risks involved in our operations; risks related to our hedging activities; our limited control over third parties who operate some of our oil and gas properties; midstream capacity constraints and potential interruptions in production, including from limits to the build out of midstream infrastructure; competition for assets, materials, people and capital; regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to federal lands, environmental matters and seismicity; risks related to regulatory, social and market efforts to address climate change; governmental interventions in energy markets; | • | | risks relating to the COVID-19 pandemic or other future pandemics; |
counterparty credit risks; risks relating to our indebtedness; the extent to which insurance covers any losses we may experience; risks related to stockholder activism; our ability to successfully complete mergers, acquisitions and divestitures; our ability to pay dividends and make share repurchases; and | • | | any of the other risks and uncertainties discussed in Devon’s 2022 Annual Report on Form 10-K (the “2022 Form 10-K”) or other SEC filings. |
The forward-looking statements included in this Proxy Statement speak only as of the date of this Proxy Statement, represent management’s current reasonable expectations as of the date of this Proxy Statement and are subject to the risks and uncertainties identified above as well as those described in the 2022 Form 10-K
FORWARD-LOOKING STATEMENTS (cont’d) and in other documents we file from time to time with the SEC. We cannot guarantee the accuracy of our forward- looking statements, and readers are urged to carefully review and consider the various disclosures made in the 2022 Form 10-K and in other documents we file from time to time with the SEC. All subsequent written and oral forward-looking statements attributable to Devon, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements above. We do not undertake, and expressly disclaim, any duty to update or revise our forward-looking statements based on new information, future events, or otherwise.
APPENDIX A Explanation and Reconciliation ofNon-GAAP Financial MeasuresEXPLANATION AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
This Proxy Statement includes thenon-GAAP financial measures of “Free Cash Flow,” “Capital Expenditures” and “Cash Return on Capital Employed” and“All-In Asset Rate of Return.Employed.” These measures were used as components of the Company’s performance scorecard for purposes of determining the performance cash bonuses for 2019.2022. Non-GAAP measures are not alternatives to GAAP measures, and you should not considernon-GAAPnon- GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. Set forth below is additional information regarding both of these measures. Note that the financial measures considered by the Committee when determining the performance cash bonuses for 2022 were based on the Company’s best reasonable estimates available at the time of the applicable Committee meeting in January 2023. Although the actual results varied from such estimates in certain instances, none of the variances were material in amount or significance. Free Cash Flow and Adjusted Capital Expenditures For purposes of determining the Company’s performance cash bonuses for 2022, Free Cash Flow means total operating cash flow adjusted for balance sheet changes less total Adjusted Capital Expenditures. The Adjusted Capital Expenditure amount represents accrued capital less the RimRock and Validus acquisitions. A detailed reconciliation of Free Cash Flow and Adjusted Capital Expenditures is provided below. | | | | | | (dollar amounts in millions) | | 2022 | | | | Cash flow from operating activities (GAAP) | | $ | 8,530 | | | | Changes in assets and liabilities, net | | | 226 | | | | | | | | | Cash flow from operating activities before B/S changes (Non-GAAP) | | | 8,756 | | | | Capital expenditures (accrued) (GAAP) | | | (5,301) | | | | RimRock and Validus acquisitions | | | 2,531 | | | | | | | | | Adjusted capital expenditures (accrued) (Non-GAAP) | | | (2,770) | | | | | | | | | Free Cash Flow (Non-GAAP) | | $ | 5,986 | | | | | | |
APPENDIX A EXPLANATION AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (cont’d) Cash Return on Capital Employed We define Cash Return on Capital Employed, or CROCE, as the quotient of an adjusted cash flow metric over the average capital employed. The adjusted cash flow metric is the sum of cash flow from operating activities, adjusted for balance sheet changes,plusafter-tax net financing costs and certain tax benefits.costs. Average capital employed is the average of the capital employed as of the beginning and ending of the relevant period, with capital employed calculated as the sum of short and long-term debtplusstockholders’ equity attributable to Devonlesscash and cash equivalents. A detailed calculation of Cash Return on Capital Employed is provided below, which includes reconciliations to the most directly comparable GAAP measures. | | | | | (dollar(dollar amounts in millions)
| | 2019
2022 | | | | Cash Return on Capital Employed (CROCE)(Non-GAAP) | | | | | | | Cash flow from operating activities (GAAP) | | $
| 2,043
$ 8,530 | | | | Changes in assets and liabilities, net | | | 82
226 | | | | | | | Cash flow from operating activities before balance sheetB/S changes(Non-GAAP) | | | 8,756 | | | | | 2,125
| | | | Net financing costs (GAAP) | | | 309 | | | | Noncash net premium and issuance cost amortization | | | 41 | | | | | | | | | Adjusted net financing costs (Non-GAAP) | | | 350 | | | | Tax benefit imputed (based on 23%) | | | (81) | | | | | | | | | After-tax net financing costs (Non-GAAP) | | | 269 | | | | | | | | | Adjusted cash flow (Non-GAAP)(1) — (a) | | | 9,025 | | | | | | | | | Total capitalization - beginning balance: | | | | | | | Short and long-term debt (GAAP) | | | $ 6,482 | | | | Total stockholders’ equity attributable to Devon (GAAP) | | | 9,262 | | | | Cash, cash equivalents and restricted cash (GAAP) | | | (2,271) | | | | | | | | | Total capitalization - beginning balance (Non-GAAP) | | | 13,473 | | | | Total capitalization — ending balance: | | | | | | | Short and long-term debt (GAAP) | | | 6,440 | | | | Total stockholders’ equity attributable to Devon (GAAP) | | | 11,167 | | | | Cash, cash equivalents and restricted cash (GAAP) | | | (1,454) | | | | | | | | | Total capitalization - ending balance (Non-GAAP) | | | 16,153 | | | | | | | | | Average total capitalization (Non-GAAP)(2) — (b) | | $ | 14,813 | | | | | | | Total net financing costs (GAAP)
| | | 250
| | Tax benefit imputed (based on 28%)
| | | (70)
| | | | | | | After-tax net financing costsCROCE (Non-GAAP)
| | | 180
| | | | | | | Adjusted cash flow(Non-GAAP)(1) - — (a)
| | $
| 2,305
| | | | | | | Total capitalization - beginning balance:
| | | | | Short and long-term debt (GAAP)
| | $
| 5,947
| | Total stockholders’ equity attributable to Devon (GAAP)
| | | 9,186
| | Less: cash, cash equivalents and restricted cash (GAAP)
| | | (2,414)
| | | | | | | Total capitalization - beginning balance(Non-GAAP)
| | $
| 12,719
| | Total capitalization - ending balance:
| | | | | Short and long-term debt (GAAP)
| | $
| 4,294
| | Total stockholders’ equity attributable to Devon (GAAP)
| | | 5,802
| | Less: cash, cash equivalents and restricted cash (GAAP)
| | | (1,844)
| | | | | | | Total capitalization - ending balance(Non-GAAP)
| | $
| 8,252
| | | | | | | Average total capitalization(Non-GAAP)(2) - / (b)
| | $
| 10,486
| | | 61% | | | | | CROCE(Non-GAAP) - (a) / (b)
| | | 22%
| | | | | | |
| (1) | Sum of cash flow from operating activities before balance sheet changes, andafter-tax net financing costs. |
| (2) | Average of the beginning and ending total capitalization balances. |
| | | | | | | A-1A-2 | | Commitment Runs Deep |
Appendix AAPPENDIX B
Explanation and Reconciliation ofNon-GAAP Financial Measures (cont’d)AMENDMENT TO THE COMPANY’S BYLAWS
ARTICLE VI All-In Asset RateSection 6. Exclusive Forum for Adjudication of Return
All-In Asset RateDisputes. Unless the Corporation consents in writing to the selection of Return is generally intended to serve as a measurementan alternative forum, the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the internal rateCorporation, (b) any action asserting a claim of return on capital investment overbreach of atwo-year period, after burdening for general and administrative expense and certain corporate costs. This measurement is based upon, among fiduciary duty owed by any director, officer, other things, the estimated future volumes and cash flows of wells brought online after the commencementemployee or agent or stockholder of thetwo-year period, an assumed flat commodity price environment for purposes of calculating revenues and losses or gains on hedges and the estimated production expenses (such as lease operating expense and certain taxes) associated with the wells brought online after the commencement of thetwo-year period. Because this metric pertains Corporation to the estimated performanceCorporation or the Corporation’s stockholders, (c) any action against the Corporation arising pursuant to any provision of specific wellsthe Delaware General Corporation Law or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware, or (d) any action against the Corporation or any director, officer, other employee or agent of the Corporation asserting a claim governed by the internal affairs doctrine, including, without limitation, any action to interpret, apply, enforce or determine the validity of the Certificate of Incorporation of the Corporation or these Bylaws (as they shall be amended from time to time), shall be the Court of Chancery of the State of Delaware (or if the Court of Chancery does not have jurisdiction, the Superior Court of the State of Delaware, or, if the Superior Court of the State of Delaware does not have jurisdiction, the United States District Court for the District of Delaware, in each case, subject to that court having personal jurisdiction over the indispensable parties named defendants therein), in each case subject to such Court of Chancery (or if the Court of Chancery does not have jurisdiction, the Superior Court of the State of Delaware, or, if the Superior Court of the State of Delaware does not have jurisdiction, the United States District Court for the District of Delaware, in each case, subject to that court having personal jurisdiction over the indispensable parties named defendants therein) having personal jurisdiction over the indispensable parties named as defendants therein. Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the sole and includes numerous assumptions, it cannotexclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be calculated from our consolidated financial statements.deemed to have notice of and consented to the provisions of this Section 6.
| | | | | | | A-2B-1 | | Commitment Runs Deep |
AMENDMENTS TO THE COMPANY’S CERTIFICATE OF INCORPORATION Article VIII Limitation of Liability A director or officer of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporation Law as the same exists or may hereafter be amendedfor liability (i) for any breach of the director or officer’s duty of loyalty to the Corporation or its stockholders, (ii) for any act or omission not in good faith or which involves intentional misconduct or a knowing violation of law, (iii) with respect to any director, under Section 174 of the General Corporation Law, (iv) for any transaction from which the director or officer derived an improper personal benefit, or (v) with respect to any officer, in any action by or in the right of the Corporation. In addition to the circumstances in which a director or officer of the Corporation is not personally liable as set forth in the preceding sentence, a director or officer of the Corporation shall not be liable to the fullest extent permitted by any amendment to the General Corporate Law hereafter enacted that further limits or permits the Corporation to limit the liability of a director or officer. Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a director or officer of the Corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification.
Devon Energy Corporation
DEVON ENERGY CORPORATION 333 W. Sheridan Avenue Oklahoma City,SHERIDAN AVE. OKLAHOMA CITY, OK 73102
(405)235-3611
devonenergy.com
SCAN TO VIEW MATERIALS & VOTE VOTE BY INTERNET - INTERNET—www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time the day before the meeting date.on June 6, 2023. Have your Proxy Cardproxy card in hand when you access the web site and follow the instructions. DEVON ENERGY CORPORATION 333 W. SHERIDAN AVE. VOTE BY PHONE - 1-800-690-6903 OKLAHOMA CITY, OK 73102 Use any touch-tone telephoneinstructions to transmitobtain your records and to create an electronic voting instructions. Vote by 11:59 p.m. Eastern Time the day before the meeting date. Have your Proxy Card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your Proxy Card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy materialsstatements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE—1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on June 6, 2023. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D10296-P31916-Z76155V11274-P85875 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY DEVON ENERGY CORPORATION For Withhold For All To withhold authority to vote for any individual All All Except nominee(s), mark For All Except and write the The Board of Directors recommends a vote FOR“FOR” the nominees number(s) of the nominee(s) on the line below. listed in Agenda Item 1. 1. Election of Directors ! ! ! Nominees: 01) Barbara M. Baumann 07) John Krenicki Jr.Karl F. Kurz 02) John E. Bethancourt 08) Robert A. Mosbacher Jr.Michael N. Mears 03) Ann G. Fox 09) Duane C. RadtkeRobert A. Mosbacher, Jr. 04) David A. HagerGennifer F. Kelly 10) Keith O. RattieRichard E. Muncrief 05) Robert H. HenryKelt Kindick 11) Mary P. RicciardelloValerie M. Williams 06) Michael M. KanovskyJohn Krenicki Jr. The Board of Directors recommends a vote FOR“FOR” Agenda Item 2. For Against Abstain 2. Ratify the appointmentselection of the Company'sCompany’s Independent Auditors for 2020. ! ! !2023. The Board of Directors recommends a vote FOR“FOR” Agenda Item 3. 3. Advisory Vote to Approve Executive Compensation. ! ! !The Board of Directors recommends a vote for “ONE YEAR” for Agenda Item 4. 4. Advisory Vote on the Frequency of an Advisory Vote on Executive Compensation. The Board of Directors recommends a vote “FOR” Agenda Item 5. 5. Approve an Amendment to the Company’s Bylaws to Designate the Exclusive Forum for the adjudication of certain legal matters. For All Withhold All Except For All For Against Abstain For Against Abstain 1 Year 2 Years 3 Years Abstain For Against Abstain To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends a vote “FOR” Agenda For Against Abstain Item 6. 6. Approval of Amendments to the Certificate of Incorporation to Adopt Limitations on the Liability of Officers similar to those that already exist for Directors. The Board of Directors recommends a vote “AGAINST” For Against Abstain Agenda Item 7. 7. Stockholder Proposal to Reform the Near Impossible Special Shareholder Meeting Requirements. 8. OTHER MATTERS For address changes and/or comments, please check this box and write ! them on the back where indicated. Please indicate if you plan to attend this meeting. ! ! Yes NoTHIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED AS THE BOARD OF DIRECTORS RECOMMENDS. Please sign exactly as your name appears above, indicating your official position or representative capacity, if applicable. If shares are held jointly, each owner should sign. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) DateVOTE BY INTERNET - www.proxyvote.com UseTrustees, administrators, etc. should include their title and authority. Corporations should provide the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time the day before the meeting date. Have your Proxy Card in hand when you access the web site and follow the instructions. DEVON ENERGY CORPORATION 333 W. SHERIDAN AVE. VOTE BY PHONE - 1-800-690-6903 OKLAHOMA CITY, OK 73102 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time the day before the meeting date. Have your Proxy Card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your Proxy Card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy materials electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D10296-P31916-Z76155 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DEVON ENERGY CORPORATION For Withhold For All To withhold authority to vote for any individual All All Except nominee(s), mark For All Except and write the The Board of Directors recommends a vote FOR the nominees number(s)full name of the nominee(s) oncorporation and the line below. listed in Agenda Item 1. 1. Election of Directors ! ! ! Nominees: 01) Barbara M. Baumann 07) John Krenicki Jr. 02) John E. Bethancourt 08) Robert A. Mosbacher Jr. 03) Ann G. Fox 09) Duane C. Radtke 04) David A. Hager 10) Keith O. Rattie 05) Robert H. Henry 11) Mary P. Ricciardello 06) Michael M. Kanovsky The Board of Directors recommends a vote FOR Agenda Item 2. For Against Abstain 2. Ratify the appointmenttitle of the Company's Independent Auditors for 2020. ! ! ! The Board of Directors recommends a vote FOR Agenda Item 3. 3. Advisory Vote to Approve Executive Compensation. ! ! ! 4. OTHER MATTERS For address changes and/or comments, please check this box and write ! them onauthorized officer signing the back where indicated. Please indicate if you plan to attend this meeting. ! ! Yes No Please sign exactly as your name appears above, indicating your official position or representative capacity, if applicable. If shares are held jointly, each owner should sign.proxy. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting The following proxy materials are available at www.proxyvote.com: • Notice and Proxy Statement • Annual Report on Form 10-K D10297-P31916-Z76155 DEVON ENERGY CORPORATION PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned stockholder of Devon Energy Corporation, a Delaware corporation, hereby nominates and appoints David A. HagerRichard E. Muncrief and Christopher J. Kirt, with full power of substitution, as true and lawful agents and proxies to represent the undersigned and vote all shares of common stock of Devon Energy Corporation owned by the undersigned in all matters coming before the Annual Meeting of Stockholders (or any adjournment thereof) of Devon Energy Corporation to be held at the Devon Energy Center Auditorium, 333 W. Sheridan Ave., Oklahoma City, Oklahoma, on Wednesday, June 3, 20207, 2023 at 8:00 a.m. local time.Central Time. The Board of Directors recommends a vote FOR“FOR” Agenda Items 1, 2 and 3, for “ONE YEAR” for Agenda Item 4, “FOR” Agenda Items 5 and 6, and “AGAINST” Agenda Item 7 as set forth on the reverse side. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER SPECIFIED ON THE REVERSE SIDE BY THE STOCKHOLDER. TO THE EXTENT CONTRARY SPECIFICATIONS ARE NOT GIVEN, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. BY SIGNING THIS PROXY, THE UNDERSIGNED STOCKHOLDER REVOKES ANY PRIOR PROXIES EXECUTED BY THE UNDERSIGNED. Do not return your Proxy Card if you are voting by telephone or Internet. Address Changes/Comments: _______________________________________________________________________________ ________________________________________________________________________________________________________ (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) TO BE SIGNED ON REVERSE SIDEImportant Notice Regarding the Availability of Proxy Materials for the Annual Meeting The following proxy materials are available at www.proxyvote.com: • Notice and Proxy Statement • Annual Report on Form 10-K D10297-P31916-Z76155 DEVON ENERGY CORPORATION PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned stockholder of Devon Energy Corporation, a Delaware corporation, hereby nominates and appoints David A. Hager and Christopher J. Kirt, with full power of substitution, as true and lawful agents and proxies to represent the undersigned and vote all shares of common stock of Devon Energy Corporation owned by the undersigned in all matters coming before the Annual Meeting of Stockholders (or any adjournment thereof) of Devon Energy Corporation to be held at the Devon Energy Center Auditorium, 333 W. Sheridan Ave., Oklahoma City, Oklahoma, on Wednesday, June 3, 2020 at 8:00 a.m. local time. The Board of Directors recommends a vote FOR Agenda Items 1, 2, and 3 as set forth on the reverse side. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER SPECIFIED ON THE REVERSE SIDE BY THE STOCKHOLDER. TO THE EXTENT CONTRARY SPECIFICATIONS ARE NOT GIVEN, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. Do not return your Proxy Card if you are voting by telephone or Internet. Address Changes/Comments: _______________________________________________________________________________ ________________________________________________________________________________________________________ (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) TO BE SIGNED ON REVERSE SIDE |
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