UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by Registrant

Filed by a Party other than the Registrant

Check the appropriate box:
	Preliminary Proxy Statement
	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
	Definitive Proxy Statement
	Definitive Additional Materials
	Soliciting Material under § 240.14a-12

DIAMONDBACK ENERGY, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
	No fee required
	Fee paid previously with written preliminary materials
	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

About Diamondback

Diamondback is an independent oil and natural gas company headquartered in Midland, Texas focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas.

Core Values

Diamondback Energy and the culture we have developed are grounded in a unique set of core values that are adhered to throughout the entire organization. By establishing core values, we have set the bar extremely high for all of our employees in terms of how they operate and interact, both within the office and out in the field.

MESSAGE FROM OUR CHAIRMAN AND CEO

500 West Texas, Suite 1200100 Midland, Texas 79701

	Notice of Annual Meeting of Stockholders
TO BE HELD ON JUNE 9, 20228, 2023   11:30 a.m., local time   100 Oklahoma City Blvd120 N Robinson Ave   Oklahoma City, Oklahoma 7310973102				TO THE STOCKHOLDERS OF DIAMONDBACK ENERGY, INC.:   The Annual Meeting of Stockholders of Diamondback Energy, Inc. will be held on June 9, 20228, 2023 at 11:30 a.m., local time, at 100 Oklahoma City Blvd,120 N Robinson Ave, Oklahoma City, Oklahoma 73109,73102, for the following purposes:
				1.	To elect eightnine directors to serve until the Company’s 20232024 Annual Meeting of Stockholders;
				2.	To approve, on an advisory basis, the compensation paid to the Company’s named executive officers;
				3.	To approve amendments to the Company’s charter to remove the 66 2/3% supermajority vote requirements for the stockholders to approve certain amendments to the Company’s charter and to remove directors from office;
				4.	To approve amendments to the Company’s charter to provide that stockholders holding at least 25% of the voting power, determined on a net long basis, for at least one year, may call special meetings of stockholders;
				5.	To approve amendments to the Company’s charter to reflect new Delaware law provisions regarding officer exculpation;
				6.	To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2022;2023; and
				4.7.	To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.
			COVID-19 CONSIDERATIONS AND THE ANNUAL MEETING:
			We intend to hold the Annual Meeting in person. However, we are monitoring the public health, travel and business and social gathering concerns of our stockholders and employees in light of the ongoing COVID-19 pandemic, as well as any related restrictions and protocols from federal, state and local governments. We plan on taking any necessary and appropriate precautions with respect to attendance at and admission to the Annual Meeting. We may also determine it to be necessary or appropriate to hold a virtual annual meeting of stockholders by means of remote communication. We will announce any such alternative arrangements and provide detailed instructions as soon as practicable in advance of the meeting by press release and posting on our website at www.diamondbackenergy.com, as well as through an SEC filing. If you are planning to attend the Annual Meeting, please be sure to check our website for any updates in the days before the Annual Meeting. As always, we encourage you to vote your shares prior to the Annual Meeting.

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     2

We are providing access to our proxy materials, including this proxy statement and our 20212022 Annual Report to Stockholders,on Form 10-K, over the Internet. As a result, we are mailing to our stockholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of our proxy materials. The notice contains instructions on how to access those proxy materials over the Internet, as well as instructions on how to request a paper or email copy of our proxy materials. Those stockholders who request a paper copy of our proxy materials as provided in the Notice of Internet Availability will receive such proxy materials by mail. This electronic distribution process reduces the environmental impact and lowers the costs of printing and distributing our proxy materials.

Your vote is important. Please carefully consider the proposals and vote in one of these ways:

INTERNET		BY TELEPHONE		BY MAIL		ANNUAL MEETING
Follow the instructions on the Notice of Internet Availability of Proxy Materials or the proxy card to vote through the Internet		Follow the instructions on the proxy card to vote by phone		If you request to receive a paper copy of our proxy materials, mark, sign, date and promptly return the proxy card in the postage-paid envelope		Submit a ballot at the Annual Meeting

Only stockholders of record at the close of business on April 14, 202213, 2023 or their proxy holders may vote at the meeting.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 9, 2022.8, 2023. THIS PROXY STATEMENT AND THE COMPANY’S 20212022 ANNUAL REPORT TO STOCKHOLDERSON FORM 10-K ARE AVAILABLE AT WWW.ENVISIONREPORTS.COM/FANG.

By Order of the Board of Directors,

Matt Zmigrosky

Executive Vice President, General
Counsel
Chief Legal and Administrative Officer and Secretary

April 28, 202227, 2023

The Notice of Internet Availability of Proxy Materials is first being mailed to stockholders on April 28, 2022.27, 2023.

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     3

Table of Contents

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     4

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     5

	PROXY SUMMARY
	THE SUMMARY BELOW HIGHLIGHTS SELECTED INFORMATION IN THIS PROXY STATEMENT. PLEASE REVIEW THE ENTIRE PROXY STATEMENT BEFORE VOTING YOUR SHARES.

— VOTING MATTERS

Director Nominees

								Committee Memberships
Nominee		Age		Director Since		Independent		Audit		Compensation		Nominating and Corporate Governance		Safety, Sustainability and Corporate Responsibility		2021 Board and Committee Meeting Attendance Rate
Vincent K. Brooks		63		2020												100%
Michael P. Cross		70		2012												100%
David L. Houston		69		2012												100%
Stephanie K. Mains		54		2020												100%
Mark L. Plaumann		66		2012												100%
Travis D. Stice*		60		2012												100%
Melanie M. Trent**		57		2018												100%
Steven E. West		61		2011												100%

								Committee Memberships
Nominee		Age		Director Since		Independent		Audit		Compensation		Nominating and Corporate Governance		Safety, Sustainability and Corporate Responsibility		Other Current Public Boards
Vincent K. Brooks		64		2020												2
David L. Houston		70		2012												0
Rebecca A. Klein		58		2022												2
Stephanie K. Mains		55		2020												2
Mark L. Plaumann		67		2012												0
Travis D. Stice*		61		2012												1
Melanie M. Trent**		58		2018												2
Frank D. Tsuru		63		2022												0
Steven E. West		62		2011												1

Chair  Chairperson

*

Chairman of the Board

**

Lead Independent Director

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     6

Stockholder Outreach

As in the past, we conducted a robust stockholder outreach program during 20212022 and through the first quarter of 20222023 to solicit feedback on our executive compensation programs, environmental, social and corporate governance (ESG) matters, human capital, corporate responsibility and sustainability and other important issues.

2021

2022 and First Quarter 20222023 stockholder outreach highlights:

ESG Highlights

ESG Highlights

Diamondback embraces our opportunity to be a leader in safeguarding the environments in which we operate and live. Driven by our core values, Diamondback is laser focused on the safe and responsible development of our resources in the Permian Basin. Our approach to environmental, social and governance (ESG)ESG matters is evidenced through our commitment to protecting people, environmental responsibility, human capital, community and sound governance practices.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     7

Diamondback appreciates our social and environmental license to operate as a public oil and gas company in the United States, and acknowledges that it will continue to be largely influenced by our stockholders and the alignment of our ESG approach with their expectations. We regularly engage with our stockholders on ESG matters to ensure alignment. At its core, our environmental strategy recognizes and prepares us for the fact that the United States is transitioning to a lower carbon economy. While many of the foremost authorities on energy demand forecast that oil and gas will continue to account for a substantial portion of global energy demand well into the future, in even the most carbon constrained projections, we intend to continue adapting our behavior to integrate sustainability into our core, thus allowing for our continued success in the new energy economy.

As Diamondback’s ESG strategy evolves, management regularly interacts with the board and its committees, including its audit committee, compensation committee, nominating and corporate governance committee, compensation committee, and safety, sustainability and corporate responsibility committee. The safety, sustainability and corporate responsibility committee was formed in 2019 to (i) review Diamondback’s policies and performance regarding, and providesprovide guidance on, ESG matters, (ii) advise the board of directors and management on significant public issues that are pertinent to the Company and (iii) assist management in setting strategy, establishing goals and integrating ESG matters into strategic and tactical business activities across the Company.

In 2021,2022, Diamondback took a number of significant additional steps on its path to being an industry leader on ESG matters. First, we continued to include specific, measurable environmental and safety performance metrics in our short-term incentive compensation program that incentivize performance on key metrics, including flaring, greenhouse gas (GHG) emissions, recycled water usage, fluid spill control and safety.

Diamondback also released its fourthfifth annual Corporate Sustainability Report in September 2021,2022, which included content aligned to voluntary frameworks and standards maintained by the Sustainability Accounting Standards Board (SASB), Task Force on Climate-relatedClimate-Related Financial Disclosures (TCFD), Global Reporting Initiative (GRI), International Petroleum Industry Environmental Conservation Association (IPIECA) and the American Exploration and Production Council (AXPC). Our 20212022 Corporate Sustainability Report also included our Scope 1 and Scope 2 GHG emissions, an assessment of our portfolio under various low carbon scenarios as outlined by the International Energy Agency and a limited assurance attestation from our independent auditor. Further, Diamondback completed CDP Global’s

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     7

(CDP) water security and climate change questionnaires. Both the 20212022 Corporate Sustainability Report and a link to our CDP water security and climate change questionnaires can be found on our website under the tab “Sustainability.”

Diamondback continued its commitment to conducting its business in a manner that respects and promotes the fundamental rights and dignity of all people in accordance with its robust Human Rights Policy. A copy of Diamondback’s Human Rights Policy can be found on our website under the tab “Investors—Corporate Governance.”

In July 2022, Diamondback maintains a diverseadded Rebecca A. Klein and Frank D. Tsuru as independent directors to our board of directors, further enhancing and diversifying not only itsour board’s skills qualifications and perspectives,qualifications, but also itsthe ethnic and gender diversity since 2020, with 38% of itsour board of directors. With these additions, we have now added five diverse members to our board of directors since 2018, with 50% of our current board of directors and 56% of our director nominees being currently gender or ethnically diverse.

Building on our accomplishments in 2020, in February 2021 we announced significant enhancements to our commitment to ESG performance and disclosure, including Scope 1 GHG intensity and methane emission intensity reduction targets, as well as the implementation of our “Net Zero Now” initiative under which effective January 1, 2021, every hydrocarbon molecule we produce is anticipated to be produced with zero net Scope 1 GHG emissions. In addition, in September 2021, we announced our long-term goal to end routine flaring (as defined by the World Bank) by 2025 and our long-term target to source over 65% of our water used for drilling and completion operations from recycled sources by 2025. Building on these initiatives, in 2021, we achieved a reduction in flaring of our gross natural gas production of 49% as compared to 2020 (26% including our Permian Basin assets acquired in March 2021 in connection with our merger with QEP Resources, Inc. (QEP)).

For additional information regarding our commitment to ESG matters, please see “Corporate Responsibility and Sustainability” beginning on page 32.

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Performance Highlights

DIAMONDBACK ENERGY, INC.•October 2022, PROXY STATEMENT     8

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DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     9

Back to Contents

Compensation Highlights

Diamondback’s compensation program reflects our commitment to paying for performance and reflects appropriate governance practices that ensures alignment between successful execution of our strategy and the long-term interests of our stockholders.

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     10

ABOUT THE ANNUAL MEETING

Who is soliciting my vote?

The board of directors of Diamondback Energy, Inc., which we refer to as “Diamondback,” the “Company” and “we” in this proxy statement, is soliciting your vote at the 2022 Annual Meeting of Stockholders.

What am I voting on?

You are voting on:

How does the board of directors recommend that I vote my shares?

Unless you give other instructions on your proxy, the persons named as proxy holders on the proxy or proxy card will vote in accordance with the recommendations of our board of directors. The board of directors’ recommendation can be found with the description of each item in this proxy statement. In summary, the board of directors recommends a vote:

Who is entitled to vote?

You may vote if you were the record owner of our common stock as of the close of business on April 14, 2022. Each share of common stock is entitled to one vote. As of April 14, 2022, we had 177,550,589 shares of common stock outstanding and entitled to vote. There is no cumulative voting.

How many votes must be present to hold the meeting?

Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you properly grant your proxy by telephone, Internet or mail. In order for us to hold our meeting, holders of a majority of the voting power of our outstanding shares of common stock as of the close of business on April 14, 2022 must be present in person or by proxy at the meeting. This is referred to as a quorum. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the meeting.

What is a broker non-vote?

If a broker does not have discretion to vote shares held in street name on a particular proposal and does not receive instructions from the beneficial owner on how to vote those shares, the broker may not vote on that proposal. This is known as a broker non-vote. No broker may vote your shares without your specific instructions on any of the proposals to be considered at the Annual Meeting other than on the proposals that are considered to be “routine.” Under the rules of the New York Stock Exchange (NYSE), which apply to brokers regardless of whether an issuer is listed on the NYSE or The Nasdaq Stock Market LLC (Nasdaq), Proposal 3 relating to the ratification of our independent auditors is considered to be a “routine” matter. Accordingly, brokers will have discretionary authority to vote on Proposal 3, but will not have discretionary authority to vote on any other proposal at the Annual Meeting without your specific instructions.

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     11

How many votes are needed to approve each of the proposals?

Assuming the presence of a quorum, directors will be elected by the affirmative vote of a majority of the votes cast, in person or by proxy, which means that the number of shares voted “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee. Abstentions and broker non-votes will not be counted for voting purposes with respect to the re-election of directors. Stockholders may not cumulate their votes with respect to the re-election of directors. If any incumbent director is not elected because he or she does not receive a majority of the votes cast, he or she is required to immediately tender his or her resignation for consideration by our board of directors. Our board of directors will evaluate whether to accept or reject such resignation, or whether other action should be taken; provided, however, that the board will act on such resignation and publicly disclose its decision to accept or reject such resignation and the rationale behind such decision within 90 days from the date of the certification of the director election results. Unless you indicate otherwise, the persons named as your proxies will vote your shares “FOR” all the nominees for director named in Proposal 1.

Each of Proposals 2 and 3 requires the affirmative “FOR” vote of a majority of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Only votes for or against Proposal 2 will be counted as votes cast, and abstentions and broker non-votes will not be counted for voting purposes.

With respect to Proposal 3, abstentions will not be counted. As discussed above, brokers will have discretionary authority with respect to Proposal 3 and no broker non-votes are anticipated with respect to Proposal 3.

How do I vote?

You can vote either in person at the meeting or by proxy without attending the meeting.

To vote by proxy, you may vote by telephone or through the Internet by following the instructions included on the Notice of Internet Availability of Proxy Materials or proxy card, or, if you request to receive a paper copy of the proxy card, by returning a signed, dated and marked proxy card. If you are a registered holder or hold your shares in street name, votes submitted by Internet or telephone must be received by 1:00 a.m., Central Time, on June 9, 2022.

Even if you plan to attend the meeting, we encourage you to vote your shares by proxy. If you plan to vote in person at the Annual Meeting, and you hold your stock in street name, you must obtain a proxy from your broker and bring that proxy to the meeting. See also “How to attend the Annual Meeting and are there alternative remote arrangements for the Annual Meeting in light of COVID-19 concerns?” below.

May I change my vote?

Yes. You may change or revoke your vote at any time before the polls close at the Annual Meeting. You may do this by:

However, if your shares are held in street name by a broker or other nominee, you must contact your broker or such other nominee to change or revoke your proxy.

Who counts the votes?

We have hired Computershare Trust Company, N.A., our transfer agent, to count the votes represented by proxies cast by telephone, Internet, mail or ballot. Employees of Computershare Trust Company, N.A. will act as inspectors of election.

Will my vote be confidential?

Yes. As a matter of Company policy, proxies, ballots and voting tabulations that identify individual stockholders are treated as confidential. Only the tabulation agent and the inspectors of election have access to your vote. Directors and employees of the Company may see your vote only if there is a contested proxy solicitation, as required by law or in certain other special circumstances.

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     12

Will my shares be voted if I don’t provide my proxy and don’t attend the Annual Meeting?

If you do not provide a proxy or vote your shares held in your name, your shares will not be voted.

If you hold your shares in street name, your broker may be able to vote your shares for certain “routine” matters even if you do not provide the broker with voting instructions. As discussed above, the proposal relating to the ratification of Grant Thornton LLP as our independent auditors for 2022 is considered routine. For matters not considered “routine,” if you do not give your broker instructions on how to vote your shares, the broker may not vote on that proposal. This is a broker non-vote.

The proposals to elect directors, and to approve, on an advisory basis, the Company’s executive compensation are not considered routine. As a result, no broker may vote your shares on these proposals without your specific instructions.

How are votes counted?

In the election of directors contemplated by Proposal 1, you may vote “FOR,” “AGAINST” or “ABSTAIN” with respect to one or more of the nominees. For Proposals 2 and 3 you may vote “FOR,” “AGAINST” or “ABSTAIN.”

What if I submit my proxy but don’t indicate my vote on the proposals?

If you submit a proxy by telephone or Internet, or if you request a paper copy of our proxy materials and return a signed proxy card by mail, in each case without indicating your vote, your shares will be voted “FOR” the director nominees listed on the card, “FOR” approving, on an advisory basis, the Company’s executive compensation as described in this proxy statement, and “FOR” the ratification of Grant Thornton LLP as the Company’s independent auditors for 2022.

Could other matters be decided at the Annual Meeting?

We are not aware of any other matters that will be considered at the Annual Meeting. If any other matters arise at the Annual Meeting, the persons named in your proxies will vote in accordance with their best judgment.

Who can attend the meeting?

The Annual Meeting is open to all holders of our common stock.

What do I need to bring to attend the Annual Meeting?

You will need proof of ownership of our common stock to attend the meeting in person. If your shares are in the name of your broker or bank or other nominee, you will need to bring evidence of your stock ownership, such as your most recent brokerage statement. All stockholders will be required to present valid picture identification. IF YOU DO NOT HAVE VALID PICTURE IDENTIFICATION AND PROOF THAT YOU OWN SHARES OF OUR STOCK, YOU MAY NOT BE ADMITTED INTO THE MEETING.

How to attend the Annual Meeting and are there alternative remote arrangements for the Annual Meeting in light of COVID-19 concerns?

The Annual Meeting will be held at 100 Oklahoma City Blvd, Oklahoma City, Oklahoma 73109. From I-40, take exit 150A – Shields Blvd. Turn left (North) onto Shields Blvd. (which becomes E. K. Gaylord), then continue on to Shields Blvd./E. K. Gaylord to Oklahoma City Blvd. and turn left (West). The Omni Hotel is on the left (South) side at 100 Oklahoma City Blvd. Please note that there may be construction along this route and it is subject to detours.

For the safety of our stockholders and employees, we are monitoring the public health, travel and business and social gathering concerns of our stockholders and employees in light of the COVID-19 pandemic, as well as any related restrictions and protocols by federal, state and local governments. We may determine it to be necessary or appropriate to hold a virtual annual meeting of stockholders by means of remote communication.

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If we determine that it is necessary or appropriate to delay the Annual Meeting to a later date, change the location of the Annual Meeting or hold a virtual annual meeting of stockholders due to developments regarding the COVID-19 pandemic, we will announce any such alternative arrangements and provide instructions for the Annual Meeting as promptly as practicable in advance of the meeting, including how to demonstrate your ownership of our common stock as of April 14, 2022, the record date, for the Annual Meeting, login instructions and related details regarding attending the virtual annual meeting of stockholders.

How can I access the Company’s proxy materials and annual report electronically?

This proxy statement and the Company’s 2021 Annual Report to Stockholders are available at www.envisionreports.com/FANG.

Why did I receive a Notice of Internet Availability of Proxy Materials instead of a paper copy of the proxy materials?

We are providing access to our proxy materials, including this proxy statement and our 2021 Annual Report to Stockholders, over the Internet in accordance with the rules of the Securities and Exchange Commission, or the SEC. As a result, we are mailing to our stockholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of our proxy materials. Your Notice of Internet Availability of Proxy Materials contains instructions on how to access our proxy materials over the Internet, as well as instructions on how to request a paper copy of our proxy materials by mail.

Our proxy materials are also available at www.envisionreports.com/FANG.

How can I request a full set of proxy materials?

You may request, without charge, a full set of our proxy materials, including our 2021 Annual Report to Stockholders, for one year following the annual meeting of stockholders. If a broker or other nominee holds your shares of record, you may request a full set of our proxy materials by following the instructions contained in the Notice of Internet Availability of Proxy Materials that you received.

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     14

PROPOSAL 1 ELECTION OF DIRECTORS

—

— DIRECTOR NOMINATIONS

The board is committed to recruiting and nominating directors for election who will collectively provide the board with the necessary diversity of skills, backgrounds and experiences to meet the Company’s ongoing needs and support oversight of our business strategy and priorities, while maintaining institutional knowledge. In recommending candidates for election to the board, the nominating and corporate governance committee evaluates a candidate’s character, judgment, skill set, experience, independence, other time commitments and any other factors that the nominating and corporate governance committee deems relevant in light of the current needs of the board. The board believes that an important factor in its composition is diversity and as a result, have an experienced and diverse nominee slate.

To reflect the determination to keep our board diverse, the nominating and corporate governance committee seeks to include diverse candidates in all current or future director searches, including by affirmatively instructing any search firms retained to assist the committee in identifying director candidates to seek to include diverse candidates. In addition, in determining whether to recommend incumbent directors for re-election to the board, the nominating and corporate governance committee also reviews and considers the director’s board and committee meeting attendance, the level of support that the director’s nomination received at the most recent annual stockholders’ meeting, director tenure and the well-roundedness of the board as a whole.

In 2022,2023, the nominating and corporate governance committee recommended to the board, and the board approved, the nomination of Travis D. Stice, Vincent K. Brooks, Michael P. Cross, David L. Houston, Rebecca A. Klein, Stephanie K. Mains, Mark L. Plaumann, Melanie M. Trent, Frank D. Tsuru and Steven E. West to serve for a one-year term ending at the 20232024 Annual Meeting, but in any event, until his or her successor is elected and qualified, unless ended earlier due to his or her death, resignation, disqualification or removal from office. As previously reported, Michael P. Cross, who has been a member of the board for over a decade since the Company’s initial public offering and who currently also serves on the board’s Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Safety, Sustainability and Corporate Responsibility Committee, informed the Company of his decision to retire and not to stand for re-election at this Annual Meeting, and his term as a director and committee member will expire immediately after the Annual Meeting. All of thesethe director nominees, except for Mr. Stice, our Chairman of the Board and Chief Executive Officer, are independent under theThe Nasdaq Stock Market LLC (Nasdaq) listing standards and the applicable SEC rules, comprising a supermajorityand assuming all of independent directors currently serving onthese director nominees are elected by the stockholders at the Annual Meeting, approximately 89% of our board of directors will consist of independent directors.

About Director Nominees

OurMembers of our board of directors currently consists of eight members who are elected annually. In the event any nominee should be unavailable to serve at the time of the meeting, the proxies may be voted for a substitute nominee selected by the board.

Biographical information with respect to each of the nine director nominees, together with a list of competencies that contributed to the conclusion that such person should serve as a director, are presented below. An overview of the core competencies of each director nominee is featured in a skills matrix on page 20.18. Ages are as of April 14, 2022.13, 2023.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF THESE DIRECTORSTHE NINE NOMINEES FOR DIRECTOR LISTED BELOW.

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DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     1612

Age: 70 Director since: 2012   INDEPENDENT   Committees: •Audit •Compensation •Nominating and Corporate Governance •Safety, Sustainability and Corporate Responsibility
	MICHAEL P. CROSS DAVID L. HOUSTON Skills and Qualifications: •  Corporate Governance •  Finance/Capital Markets •  Financial Reporting/Accounting Experience •  Government, Legal & Regulatory •  Industry Background •Environmental, Health, Safety & Sustainability •  Executive Experience •  Executive Compensation •  Risk Management Mr. Cross has served as a director of the Company since October 2012. Mr. Cross is owner of Michael P. Cross, Inc., an independent oil and natural gas producer, and serves as its President, a position he has held since January 2007. Mr. Cross also currently serves as a director of Warren Equipment Company, a position he has held since 2002. Mr. Cross served as a member of the executive committee of the Oklahoma Energy Resources Board from February 2005 until March 2014, where he was a member of the executive committee from 2007 until 2014. Mr. Cross served as a member of the Board of Directors of the Oklahoma Independent Petroleum Association for over 18 years, and was inducted into its Wildcatters Hall of Honor. Mr. Cross served on the Board of Directors for OGE Enogex GP LLC from October 2007 to October 2008. Mr. Cross also served as Chief Executive Officer and President of Windsor Energy Resources, Inc. from December 2005 until December 2006. Mr. Cross served as President of Twister Gas Services, L.L.C., an oil and gas exploration, production and marketing company, from its inception in 1996 until June 2003 and served as President of its predecessor, Twister Transmission Company, from 1990 to 1996. Mr. Cross graduated from Oklahoma State University with a Bachelor of Science degree in Business Administration. We believe that Mr. Cross’s strong oil and gas background and executive management experience qualify him for service on our board of directors. In particular, we believe Mr. Cross’s strengths in the following core competencies provide value to our board of directors: Corporate Governance; Finance/Capital Markets; Financial Reporting/Accounting Experience; Government, Legal & Regulatory; Industry Background; Environmental, Health, Safety & Sustainability; Executive Experience; Executive Compensation; and Risk Management.

Age: 69 Director since: 2012 INDEPENDENT Committees: •  Audit •  Compensation •  Nominating and  Corporate Governance •Safety, Sustainability and Corporate Responsibility
		DAVID L. HOUSTON Skills and Qualifications: •  Corporate Governance •    M&A/Finance/Capital Markets •Financial Reporting/Accounting Experience •Industry Background •Executive Experience •Executive Compensation •Risk Management Mr. Houston has served as a director of the Company since October 2012. Since 1991, Mr. Houston has been the principal of Houston Financial, a firm providing wealth management services with a focus on the energy sector. Since 2000, Mr. Houston has managed a mineral trust with approximately 9,200 net acres in Oklahoma, Texas, Kansas and New Mexico, which includes responsibility for leasing and production matters. Mr. Houston served on the board of directors as the Chairman of the Board and a member of the executive committee of Deaconess Hospital, Oklahoma City, Oklahoma, from January 1993 until December 2008 and was involved in negotiating a merger for the hospital. Mr. Houston served as a director of Gulfport Energy Corporation, or Gulfport, from July 1998, and as Chairman of its Board from June 2013, in each case, until June 2020. Mr. Houston also served on Gulfport’s nominating and governance, audit and compensation committees. He served as a director of Bronco Drilling Company from May 2005 until December 2010 and was a member of its audit committee. Mr. Houston received a Bachelor of Science degree in business from Oklahoma State University and a graduate degree in banking from Louisiana State University. He is Chairman-Electthe Chairman of the Oklahoma State University Foundation and was recognized as a Top 100 Graduate of the Last 100 Years by the Oklahoma State University College of Business. In 2020, Mr. Houston was recognized as a Significant Sig by the Sigma Chi fraternity. We believe that Mr. Houston’s financial background and his executive management experience qualify him for service on our board of directors. In particular, we believe Mr. Houston’s strengths in the following core competencies provide value to our board of directors: Corporate Governance; M&A/Finance/Capital Markets; Financial Reporting/Accounting Experience; Industry Background; Executive Experience; Executive Compensation; and Risk Management.

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     1713

Age: 5455 Director since: 2020   INDEPENDENT   Committees: •Audit •Compensation   Other Current Public Company Directorships: •Gates Industrial Corporation plc •LCI Industries
	STEPHANIE K. MAINS Skills and Qualifications: •Corporate Governance •  M&A/Finance/Capital Markets •Financial Reporting/Accounting Experience •Industry Background •Executive Experience •Executive Compensation •Risk Management Ms. Mains has served as director of the Company since April 2020. Ms. Mains has over 30 years of experience across diverse industry segments, including aviation, energy, and transportation. Within the last 15 years, Ms. Mains has been building and expanding global businesses serving the oil and gas, utility, distributed power, and electrification spaces. In 2020, she held the interim CEO role for GE Power Conversion, a $1B advanced electrification and digital solutions business, leading the business to a profitable turnaround through COVID-19. From 2015-2019, she served as the President and CEO of Industrial Solutions, a GE and later ABB company. She led Industrial Solutions, a $2.7B GE business delivering technologies that distribute, protect and control electricity, through a transformation and divestiture to ABB. From 2013-2015, Ms. Mains served as President and CEO of GE Distributed Power Global Services, where she integrated and grew a $2.2B global business platform, servicing technologies that provide at the point of use power to the oil and gas, utilities, mining, and industrial segments. From 2006 until 2013, she held positions of increasing responsibility in GE Energy from General Manager to Vice President. During this time, she led the global build-out and transformation of a $4B service operation providing power equipment and services to utility and oil and gas customers. Prior to joining GE Energy, she spent 16 years across multiple GE businesses in financial and leadership positions, including CFO of GE Aviation Services- Contractual Services and Material Solutions, a $4B aviation material services business. Ms. Mains is currently the CEO of LSC Communications-MCL, a portfolio company of Atlas Holdings, LLC. She serves as a director and audit committee member of Gates Industrial Corporation plc (NYSE: GTES), a director, audit and compensation committee member of LCI Industries (NYSE: LCII), and is a member of the board of managers for Stryten Manufacturing, a privately held portfolio company of Atlas Holdings, LLC. Ms. Mains holds a B.B.A in Finance from the University of Kentucky. Ms. Mains qualifies as an independent director under the Nasdaq listing standards. We believe that Ms. Mains’ strong financial and executive management experience, knowledge of the energy, electrical infrastructure, aviation, and transportation industries, diverse background, and service on boards of other public companies qualifies her for service on our board of directors. In particular, we believe Ms. Mains’ strengths in the following core competencies provide value to our board of directors: Corporate Governance; M&A/Finance/Capital Markets; Financial Reporting/ Accounting Experience; Industry Background; Environmental, Health, Safety & Sustainability; Executive Experience; Executive Compensation; and Risk Management.

Age: 6667 Director since: 2012   INDEPENDENT   Committees: •Audit •Compensation •Nominating and Corporate Governance •Safety, Sustainability and Corporate Responsibility
	MARK L. PLAUMANN Skills and Qualifications: •Corporate Governance •  M&A/Finance/Capital Markets •Financial Reporting/Accounting Experience •Executive Experience •Executive Compensation •Risk Management Mr. Plaumann has served as a director of the Company since October 2012. He is currently a Managing Member of Greyhawke Capital Advisors LLC, or Greyhawke, which he co-founded in 1998. Prior to founding Greyhawke, Mr. Plaumann was a Senior Vice President of Wexford Capital. Mr. Plaumann was formerly a Managing Director of Alvarez & Marsal, Inc. and the President of American Healthcare Management, Inc. He also was Senior Manager at Ernst & Young LLP. Mr. Plaumann served as a director and audit committee chairman for ICx Technologies, Inc. from 2006 until 2010, served as a director and a member of the audit and compensation committees of Republic Airways Holdings, Inc. from 2002 until 2017 and currently serves as a director of several private entities. Mr. Plaumann served as a director, an audit committee chairman and a member of the conflicts committee of the general partner of Rhino Resource Partners LP, a coal operating company, from 2010 until 2016. Mr. Plaumann holds an M.B.A. and a B.A. in Business Administration from the University of Central Florida, where he currently serves on the Foundation Board and the Dean’s Advisory Board for the College of Business. We believe that Mr. Plaumann’s service on the boards of other public companies and his executive management experience, including previous experience as chairman of audit committees, qualifies him for service on our board of directors. In particular, we believe Mr. Plaumann’s strengths in the following core competencies provide value to our board of directors: Corporate Governance; M&A/Finance/Capital Markets; Financial Reporting/Accounting Experience; Executive Experience; Executive Compensation; and Risk Management.

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     1814

Age: 5758 Director since: 2018   INDEPENDENT   Committees: •Audit •Compensation •Nominating and Corporate Governance •Safety, Sustainability and Corporate Responsibility   Other Current Public Company Directorships: •Arcosa, Inc. •Noble Corporation  Hyliion Holdings Corp.
	MELANIE M. TRENT, LEAD INDEPENDENT DIRECTOR Skills and Qualifications: •Corporate Governance •  M&A/Finance/Capital Markets •Financial Reporting Experience •Government, Legal & Regulatory •Industry Background •Environmental, Health, Safety & Sustainability •Executive Experience •Executive Compensation •Risk Management Ms. Trent has served as a director of the Company since April 2018 and as our board’s lead independent director since October 2021. Ms. Trent previously served in various legal, administrative and compliance capacities for Rowan Companies plc (now known as Valaris plc), from 2005 until April 2017, including as Executive Vice President, General Counsel and Chief Administrative Officer from 2014 until April 2017, as Senior Vice President, Chief Administrative Officer and Company Secretary from 2011 until 2014, and as Vice President and Corporate Secretary from 2010 until 2011. Prior to her tenure at Rowan, Ms. Trent served in various legal, administrative and investor relations capacities for Reliant Energy, Incorporated, served as counsel at Compaq Computer Corporation and as an associate at Andrews Kurth LLP. She serves on the Board of Arcosa, Inc. (NYSE: ACA), a provider of infrastructure-related products and solutions, and serves on the Audit and Chairs the Governance and Sustainability Committees. SinceShe also serves of the Board of Hyliion Holdings Corp. (NYSE: HYLN), a provider of electrified powertrain solutions for Class 8 semi-trucks. From February 2021 through October 2022, Ms. Trent has also served on the board of directorsBoard of Noble Corporation (NYSE: NE), a leading offshore drilling contractor for the oil and gas industry, is a member of its Nominating, Governance and Sustainability Committee and the Chair of its Compensation Committee.industry. From January 2019 through October 2021, Ms. Trent served on the Board of Frank’s International N.V., a global tubular and oil and gas services company, which merged with Expro Group Holdings N.V in October 2021. During Ms. Trent’s tenure as a director of Frank’s International N.V., she was a member of the Audit and Compensation Committees and served as Chair of the Nominating & Governance Committee. Ms. Trent holds a Bachelor’s degree from Middlebury College and a Juris Doctorate degree from Georgetown University Law Center. We believe that Ms. Trent’s strong legal and executive management experience, diverse background and knowledge of oil and gas and energy industries qualify her for service on our board of directors. In particular, we believe Ms. Trent’s strengths in the following core competencies provide value to our board of directors: Corporate Governance; M&A/Finance/Capital Markets; Financial Reporting Experience; Government, Legal & Regulatory; Industry Background; Environmental, Health, Safety & Sustainability; Executive Experience; Executive Compensation; and Risk Management.

Age: 6163 Director since: 20112022   INDEPENDENT   Current Public Company Directorships:Committees: •Rattler Midstream LP  Compensation •  Viper Energy Partners LP
	STEVEN E. WEST FRANK D. TSURU Skills and Experience:Qualifications: •Corporate Governance •    M&A/Finance/Capital Markets •Financial Reporting/Accounting Experience •  Industry Background •  Executive Experience •Environmental, Health, Safety & Sustainability •  Executive Compensation •  Risk Management Mr. Tsuru has served as director of the Company since July 2022. Mr. Tsuru currently serves as Chief Executive Officer and as a member of the Board of Directors of Momentum Midstream, LLC, a privately held midstream company, which he cofounded in 2004. From 2016 through 2021, Mr. Tsuru served as the Chief Executive Officer and as a member of the Board of Directors of Indigo Natural Resources, LLC, which was acquired by Southwestern Energy Company in 2021. In 2002, Mr. Tsuru founded Aka Energy, which was a midstream company focused on acquiring midstream assets off of the Southern Ute Indian Tribe (SUIT) Reservation. Prior to that, Mr. Tsuru ran SUIT’s midstream company, Red Cedar Gathering, from 1995 to 2002. In 1990, Mr. Tsuru founded Southwestern Production, an upstream company focused on coal bed methane development in the San Juan Basin, which was sold to ConocoPhillips. He began his career as a drilling and production engineer for TXO Production Corp. in Denver, Colorado where he was part of the team that evaluated the company’s reserves and provided mergers and acquisitions support. Mr. Tsuru holds a Bachelor of Science degree in Petroleum Engineering from the University of Kansas. He serves on the Board of Trustees of KU Endowment. Mr. Tsuru also sits on the boards of the Boy Scouts of America and the Yellowstone Academy, a private Christian school. We believe that Mr. Tsuru’s strong executive management experience, knowledge of the oil and gas industry and diverse background qualifies him for service on our board of directors. In particular, we believe Mr. Tsuru’s strengths in the following core competencies provide value to our board of directors: M&A/Finance/Capital Markets; Environmental, Health, Safety & Sustainability; Industry Background; Executive Experience; Executive Compensation; and Risk Management.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     15

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     1916

Summary of Director Nominee Core Competencies

The breadth of experience and wide variety of skills, qualifications and viewpoints of the director nominees embody key competencies that our nominating and corporate governance committee considers valuable to effective oversight of the Company. The following chart illustrates how the current board members individually and collectively represent these core competencies. The lack of an indicator for a particular item does not mean that the director does not possess that qualification, skill or experience, as each director is expected to be knowledgeable in all of these areas. The indicator merely represents a core competency that the director nominee brings to our board. For more information about each director nominee, see the individual biographies set forth beginning on page 1612 above.

Stice

Brooks

Houston

Klein

Mains

Plaumann

Trent

Tsuru

West

Knowledge, Skills and Experience

Brooks

Cross

Houston

Mains

Plaumann

Trent

West

Corporate Governance Contributes to the board’s understanding of best practices in corporate governance matters.

Environmental, Health, Safety & Sustainability Contributes to the board’s oversight and understanding of environmental, health, safety and sustainability issues and their relationship to our business and strategy as we strive to provide the energy necessary for economic growth and social well-being,well- being, while securing a stable and healthy environment for the future.

M&A/Finance/Capital Markets Demonstrates experience in assessment and execution of strategic M&A and capital markets transactions and provides valuable insights into evaluating our capital structure, capital allocation and financial strategy.

Finance/Capital Markets Valuable in evaluating our financial statements, capital structure and financial strategy.

Financial Reporting/Accounting Experience Critical to the oversight of our financial statements, internal controls and financial reports.

Government, Legal & Regulatory Contributes to the board’s ability to guide us through government regulations, complex legal matters and public policy issues.

Industry Industry Background Offers pertinent background and knowledge to the board, providing valuable perspective on issues specific to our business, operations and strategy, including key performance indicators and the competitive environment.

Executive Experience Demonstrates leadership ability and provides valuable insights into operations and business strategy through a practical understanding of organizations, processes, strategy, risk management and the methods to drive change and growth.

Executive Compensation Contributes to the board’s ability to attract, motivate and retain executive talent.

Risk Management Contributes to the board’s oversight of the identification, assessment and prioritization of significant risks and ensures mitigation strategies are timely adopted.

Congressional Engagement; National Security and Cyber Defense and Protection Demonstrates experience with complex organizations with significant national security interests and risk, international relations and interactions, cyber defense and protection, congressional engagement and strategic planning.

Gender

Male

Female

Race/Ethnicity

African American or Black

Asian

Hispanic or Latinx

White

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     2017

Board Diversity Matrix

TheIn accordance with Nasdaq requirements, the information shown below in our Board Diversity Matrix is based on voluntary self-identification of each member of our current board of directors.

CURRENT BOARD DIVERSITY MATRIX (AS OF APRIL 14, 2022)13, 2023)

Total Number of Directors						8
		Female		Male		Non-Binary		Did Not Disclose Gender
Part I: Gender Identity
Directors		2		6		0		0
Part II: Demographic Background
African American or Black		0		1		0		0
Alaskan Native or Native American		0		0		0		0
Asian		0		0		0		0
Hispanic or Latinx		0		0		0		0
Native Hawaiian or Pacific Islander		0		0		0		0
White		2		5		0		0
Two or More Races or Ethnicities		0		0		0		0
LGBTQ+						0
Did Not Disclose Demographic Background						0
Directors who are Military Veterans: 1

Total Number of Directors	10(1)
	Female	Male	Non-Binary	Did Not Disclose Gender
Part I: Gender Identity
Directors	3	7	0	0
Part II: Demographic Background
African American or Black	0	1	0	0
Alaskan Native or Native American	0	0	0	0
Asian	0	1	0	0
Hispanic or Latinx	1	0	0	0
Native Hawaiian or Pacific Islander	0	0	0	0
White	3	5	0	0
Two or More Races or Ethnicities	1	0	0	0
LGBTQ+			0
Did Not Disclose Demographic Background			0
Directors who are Military Veterans (2):	1	1

 

(1)

Michael P. Cross has determined to retire and not to stand for re-election at this Annual Meeting, at which time his term as a director and committee member will expire. Immediately after this Annual Meeting, assuming that all director nominees are elected at this Annual Meeting, the total number of directors on the board will be nine, with approximately 56% total board diversity, 30% female directors and 30% ethnically diverse directors.

 

(1)	Board leadership roles defined as the Chairman of the Board, lead independent director and the chairpersons of the four board committees.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     2118

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CORPORATE GOVERNANCE MATTERS

 

—

— CORPORATE GOVERNANCE HIGHLIGHTS

 

We believe that effective corporate governance should include regular constructive discussions with our stockholders. We have a proactive stockholder engagement process that encourages feedback from our stockholders. This feedback helps shape our governance practices, which include:

 

	In 2020,2022, increased the size of the board of directors from eight to eight10 directors enhancing(with one director retiring and diversifyingnot standing for re-election at this Annual Meeting) and enhanced and diversified our board’s skills, qualifications and viewpoints
	Enhanced the gender and ethnic diversity of our board of directors, adding threefive diverse candidates since 2018, currently representing approximately 38%50% of our current board membershipof directors and 56% of our director nominees (three female directors and three ethnically diverse directors based on information self-identified by each director of the Company)
	Adopted proxy access bylaw provision
	Supermajority~89% of independent director nominees are independent under the Nasdaq listing standards and SEC rules
	Majority voting to elect directors (for uncontested elections)
	Mandatory resignation if a majority vote is not received (for uncontested elections)
	Emphasis on diversity in the nominating and corporate governance committee’s charter
	Declassified board of directors
	Active stockholder outreach with respect to corporate governance, other ESG topics and executive compensation
	Active board oversight of risk and risk management
	Implemented director overboarding policy limiting service on public company boards and audit committees
	Independent director meetings in executive sessions led by our lead independent director
	Commitment to social responsibility with respect to our people, community and environment
	Adopted Human Rights Policy to reinforce our commitment to conducting our business in a manner that respects and promotes the fundamental rights and dignity of all people
	Implemented our “Net Zero Now” initiative under which, effective January 1, 2021, every hydrocarbon molecule we produce is anticipated to be produced with zero net Scope 1 GHG emissions
	In 2021,2022, increased weighting of current environmental and safety performance metrics for determining annual STIincentive compensation from 15%20% to 20%25%
	Released fourthfifth annual Corporate Sustainability Report in September 2021,2022, which included an assessment of our current portfolio in various low carbon scenarios as outlined by the International Energy Agency
	Maintain active safety, sustainability and corporate responsibility committee of the board of directors
	Adopted Corporate Governance Guidelines as another step to reinforce our commitment to sound governance practices and policies
	Adopted a comprehensive executive incentive compensation clawback policy that allows for the recoupment and/or forfeiture of certain executive officer incentive compensation in the event of certain restatements
	Maintain rigorous stock ownership guidelines for non-employee directors and our executives
	In February 2022, increased the multiple of the annual base salary under our stock ownership and retention guidelines for our Chief Executive Officer from 5x to 6x, and for our President and Chief Financial Officer from 3x to 4x as a result of his promotion to the role of President
	Added both S&P 500 and the XOP Index as peers in our 2021 TSR performance peer group
	Adopted a Policy Governing Corporate Political Contributions and publicly disclosed Diamondback’s 2020, 2021 and 2022 corporate political contribution activityactivities on our website
	Received a first tierfirst-tier score of 84%85% for the 20212022 CPA-Zicklin Index of Corporate Political Accountability and Disclosure
	Annual performance evaluations of the board and its committees as part of their commitment to continuous improvement

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	Each director attended at least 80% of the 2022 board and committee self-assessmentsmeetings
	Each director attended 100% of the 2021 board and committee meetings
	All financially literate audit committee members and four of the fivesix members of the audit committee qualify as financial experts
	Included a Board of Directors’ proposal in this proxy statement to provide for the elimination of the 66 2/3% supermajority vote requirements in our charter
	Included a Board of Directors’ proposal in this proxy statement to provide for a right to call a special meeting by stockholders

 

For additional discussion of our stockholder engagement and actions that we have taken in response to stockholder feedback, see “Corporate Governance Matters—Stockholder Engagement” on page 30.29.

 

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     22

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—

— CORPORATE GOVERNANCE GUIDELINES

 

The board has adopted our Corporate Governance Guidelines as a way to reinforce its commitment to sound governance practices and policies. These Corporate Governance Guidelines include provisions concerning the following:

 

•	Role and responsibilities of the board and its committees;
•	Size of the board;
•	Selection, qualifications, independence, responsibilities tenure and compensationtenure of directors;
•	Director resignation process;
•	Selection of chairman of the board and lead independent director;
•	Limits on other public company directorships and audit committee service;
•	Board meetings and agendas;
•	Director access to management and advisors;
•	Executive sessions of independent directors;
•	Director orientation and continuing education;
•	Annual performance evaluations of the board and its committees;
•	Succession planning;
•	Director compensation;
•	Stockholder and third party communications with the board;
•	Board communications with third parties; and
•	Confidentiality.Confidentiality;
•	Code of Business Conduct and Ethics; and
•	Conflicts of interest.

 

Our Corporate Governance Guidelines can be found on our website at www.diamondbackenergy.com under the “Investors—Corporate Governance” caption. You may also obtain copies of the Corporate Governance Guidelines, at no charge to you, by writing to Corporate Secretary, Diamondback Energy, Inc., 500 West Texas Ave, Suite 1200,100, Midland, TX 79701.

 

CEO and Senior Management Succession Planning

 

Our board of directors recognizes that our Chief Executive Officer and senior management succession planning is a critical function of the board and an ongoing part of its responsibilities. The full board is responsible for overseeing Chief Executive Officer and senior management succession planning. Our compensation committee also plays a key role in senior management succession planning by periodically reviewing with our Chief Executive Officer our succession plan for members of senior management to ensure that we are effectively identifying, assessing, and developing the future leaders of our Company. In 2021, the board engaged talent consultants to assist with evaluating leadership skills of certain senior executives and advise on the structure of our executive team into the future. Further, in February 2022, the Company promoted Kaes Van’t Hof, then serving as Chief Financial Officer and Executive Vice President –Business Development, as the Company’s President and Chief Financial Officer, and promoted Daniel N. Wesson, then serving as Executive Vice President – Operations, as the Company’s Executive Vice President and Chief Operating Officer. These promotions are an example of our board of directors and compensation committee’s robust succession planning.

 

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     20

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Limits on Board Service and Audit Committee Service

 

Our Corporate Governance Guidelines establish the following limits on our directors may notserving on public company boards and audit committees:

Director Category	Limits on Public Company Boards and Audit Committee Service, including Diamondback
All Directors	Four Boards
Directors Who Serve as CEO of a Public Company	Two Boards
Directors Who Serve on Audit Committees	Three Audit Committees

Our Corporate Governance Guidelines provide that prior to accepting an invitation to serve on the board of directorsanother public company or other for-profit entity or accepting membership of more than four public companies, including our board of directors, at any given time. Also, a member of our audit committee may not simultaneously serve on the audit committee of more than threethe board of another public companies,company or other for-profit entity, a director must (i) provide timely notice to the chairperson of the nominating and corporate governance committee, with a copy to the Chairman of the Board, the lead independent director and the Corporate Secretary, and (ii) obtain approval from the nominating and corporate governance committee based upon its review of the opportunity in light of factors it deems relevant, including our audit committee, atpossible conflicts of interest, whether the opportunity would create any given time. Alllegal or regulatory issues, or conflict with any of our corporate governance policies, the director’s status as an independent director and any constraints on the director’s time that would detract from the director’s ability to serve the Company. The nominating and corporate governance committee reviews compliance with our director overboarding policy on an annual basis. All directors are currently in compliance with our director overboarding policy related to limits on board service and audit committee service.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     2321

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—

— DIRECTOR QUALIFICATIONS AND NOMINATION PROCESS

 

Skills and Qualifications We Seek in Directors

 

As provided by the nominating and corporate governance committee’s charter and our Corporate Governance Guidelines, our nominating and corporate governance committee identifies, evaluates and recommends to our board of directors candidates with the goal of creating a balance of knowledge, experience and diversity.

 

It is our policy that potential directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the interests of our stockholders. We also require that the members of our board of directors be able to dedicate the time and resources sufficient to ensure the diligent performance of their duties on our behalf, including attending all meetings of the board of directors and applicable committee meetings. We also require that at least a majority of our directors meet the standards of independence promulgated by Nasdaq and the SEC. For a discussion of the core competencies that each director brings to our board, see “Summary of Director Nominee Core Competencies” above on page 20.17.

 

Board Refreshment and Diversity

 

Our nominating and corporate governance committee is committed to continuous improvement and employs a rigorous process to ensure that the composition of the board is diverse, balanced and aligned with the evolving needs of the Company. The board ensures refreshment and continued effectiveness by evaluating the composition of the board on a periodic basis to ensure its composition reflects a range of talents, skills and expertise sufficient to provide sound and prudent guidance with respect to our operations and the interests of our stockholders. In particular, the board seeks to maintain a balance of experience in the areas of accounting and finance, management, leadership and oil and gas related industries as well as other core competencies discussed under “Summary of Director Nominee Core Competencies.”

 

Additionally, it is our policy that our nominating and corporate governance committee considers diversity in its evaluation of candidates for board membership. To this end, our board believes that diversity with respect to viewpoint, including such that is held by candidates of different gender, race, ethnicity, background, age, thought and tenure on our board (in connection with the consideration of the renomination of an existing director), should be an important factor in board composition. To reflect this policy and to ensure a competitive recruitment process, our nominating and corporate governance committee, in accordance with its charter, seeks to include diverse candidates in all director searches, taking into account diversity of gender, race, ethnicity, background, age, thought and tenure on our board (in connection with the consideration of the renomination of an existing director), including by affirmatively instructing any search firm retained to assist the nominating and corporate governance committee in identifying director candidates to seek to include diverse candidates from traditional and nontraditional candidate groups. In accordance with its charter, our nominating and corporate governance committee also ensures that diversity considerations are discussed in connection with each potential nominee, as well as on a periodic basis in connection with its periodic review of the composition of the board and the size of the board as a whole.

 

As part of our ongoing commitment to expand the range of talents, skills, expertise and diversity on our board, we have increased the size of our board of directors from five to eight10 over the course of the last fourfive years by adding the following threefive ethnically or gender diverse directors: Vincent K. Brooks, Rebecca A. Klein, Stephanie K. Mains, and Melanie M. Trent.Trent and Frank D. Tsuru. As a result of our significant board refreshment since 2018, we have enhanced and diversified the skill set of our board of directors in the areas of risk management across energy and other industries and the government sector, national security and cybersecurity, environmental and social responsibility, regulatory and legal compliance. In 2021, the Board appointed Ms. Mains as chairpersonCurrently, half of the compensation committee and General Brooks as chairperson of the nominating and corporate governance committee. Currently, our board of directors has twoleadership roles are held by female directors Ms. Trent, as lead independent director and chairperson of the safety, sustainability and corporate responsibility committee, and Ms. Mains, as chairperson of the compensation committee, serving inone board leadership roles. In addition, our board of directors hasrole is held by one ethnically diverse director, General Brooks, who, as chairperson of the nominating and corporate governance committee, is serving in a board leadership role.director. Overall, 75% of our board committees are chaired by gender or ethnically diverse directors.

 

How We Select our Director Nominees

 

The board is responsible for nominating directors and filling vacancies that may occur between annual meetings, based upon the recommendation of our nominating and corporate governance committee. The nominating and corporate governance committee considers the Company’s current needs and long-term and strategic plans to determine the skills, experience and characteristics needed by our board. The nominating and corporate governance committee then identifies, considers and recommends director candidates to the board in light of its commitment to board improvement, refreshment and diversity discussed above. Generally, the committee identifies candidates through the business and organizational contacts of our advisors, directors and management team and through the use of third-party search firms.

 

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     24

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The nominating and corporate governance committee, in accordance with its charter and our Corporate Governance Guidelines, takes into consideration the key qualifications and skills described above when evaluating candidates. The nominating and corporate governance committee also considers whether potential candidates will likely satisfy independence standards for service on the board and its committees and the number of public boards on which the candidate already serves.

 

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     22

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Stockholder Nomination of Candidates and Proxy Access

 

Under the Company’s bylaws, we provide proxy access, permitting a stockholder, or a group of up to 20 eligible stockholders, that has continuously owned for no less than three years at least 3% of our outstanding common stock, to nominate and include in our proxy materials up to the greater of two directors and 20% of the number of directors currently serving on the Company’s board, provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in our bylaws.

 

Stockholders who wish to submit a director nomination proposal, but who do not wish to have such nomination included in the Company’s proxy materials, must notify the Company in writing of the information required by the provisions of our bylaws dealing with such stockholder proposals.

 

See “Submission of Future Stockholder Proposals” on page 89101 for additional detail and deadlines regarding submitting director nominees.

 

Majority Voting

 

To be elected, a director must receive a majority of the votes cast with respect to that director at the meeting. Our bylaws and Corporate Governance Guidelines provide that if the number of shares voted “FOR” a nominee who is serving as a director (an incumbent) does not exceed the votes cast “AGAINST” that director, he or she will tender his or her resignation to the board. The board will evaluate whether to accept or reject such resignation, or whether other action should be taken. Within 90 days of the certification of the stockholder vote, the board is required to decide whether to accept the resignation and publicly disclose its rationale for the decision.

 

In a contested election, where the number of nominees exceeds the number of directors to be elected, the required vote would be a plurality of votes cast, which means that the directors receiving the largest number of “FOR” votes will be elected in such contested election.

 

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— DIRECTOR INDEPENDENCE

 

Our Corporate Governance Guidelines provide that a majority of the directorsboard of the boarddirectors must be “independent” in accordance with Nasdaq listing standards. Our board of directors has determined that each of Vincent K. Brooks, Michael P. Cross, David L. Houston, Rebecca A. Klein, Stephanie K. Mains, Mark L. Plaumann, Melanie M. Trent, Frank D. Tsuru and Steven E. West, and each of our director nominees, except for Travis D. Stice, meets the standards regarding independence set forth in the Nasdaq listing standards and the applicable SEC rules and is free of any relationship which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors of the Company.

 

Our board of directors has determined that each current member of the audit committee is independent for purposes of serving on such committee under the Nasdaq listing standards and the applicable SEC rules. In addition, our board of directors has determined that each current member of the audit committee is financially literate under the Nasdaq listing standards and that each of Mr. Plaumann, Mr. Cross, Mr. Houston and Ms. Mains qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d) of Regulation S-K. Immediately following Mr. Cross’ retirement at this Annual Meeting, the audit committee will consist of five independent directors and will have three audit committee financial experts.

 

Our board of directors has also determined that each member of the compensation committee and the nominating and corporate governance committee meets the independence requirements applicable to those committees under the Nasdaq rules. In addition, our board of directors determined that each member of our compensation committee is a “non-employee director” in accordance with Rule 16b-3 under the Securities Exchange Act of 1934, as amended (Exchange Act). Immediately following Mr. Cross’ retirement at this Annual Meeting, the compensation committee will consist of five independent directors, and the nominating and corporate governance committee will consist of four independent directors.

 

In addition, each member of the safety, sustainability and corporate responsibility committee is and, following Mr. Cross’ retirement at this Annual Meeting will continue to be, independent under the Nasdaq listing standards, although Nasdaq does not set independence standards for this committee.

 

Executive Sessions of Independent Directors

 

Our independent directors have the opportunity to meet in an executive session following each regularly scheduled meeting of the board of directors and its committees. Ms. Trent, our lead independent director, presides over executive sessions of the board of directors, and the committee chairpersons, each of whom is independent, preside over executive sessions of the committees. Our independent directors met in an executive session on threesix occasions in 2021.2022.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     2523

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— BOARD LEADERSHIP STRUCTURE

 

In February 2022, Mr. Stice assumed the role of Chairman of the Board and will remain in his current role as Chief Executive Officer of the Company. We believe the combined position of Chairman of the Board and Chief Executive Officer ensures that the Company presents its strategy to our stockholders, employees and other stakeholders with a single voice and allows Mr. Stice to coordinate the development, articulation and execution of such strategy at the board of directors and management levels. The current board leadership structure is also a key element of our succession strategy process. While our board of directors retains the authority to separate the positions of the Chairman of the Board and Chief Executive Officer if it deems appropriate in the future, our board of directors believes the combined role of Chairman of the Board and Chief Executive Officer is currently effective.

 

In accordance with our Corporate Governance Guidelines, if the positions of the Chairman of the Board and Chief Executive Officer are combined, or if the Chairman of the Board is otherwise not independent under Nasdaq listing standards, our board of directors is required to designate a lead independent director to complement the Chairman of the Board’s role and to serve as the principal liaison between our independent directors and the Chairman of the Board. In February 2022, our board of directors enhanced the role of our current lead independent director, Ms. Trent, to provide effective independent leadership to our board of directors through her clearly defined and robust set of responsibilities, which include the following:

 

•	the authority to preside at all meetings of our board at which the Chairman of the Board is not present;
•	the authority to call meetings of the independent directors, and chair all meetings of the independent directors, including executive sessions;
•	serving as the primary liaison between the Chairman of the Board/Chief Executive Officer and our independent directors;
•	coordinating the annual performance reviews of the Chairman of the Board and Chief Executive Officer;
•	providing input with respect to meeting schedules, agendas and the information furnished to our board to ensure our board has adequate time and information for discussion;
•	being available for consultation and direct communication with major stockholders, as appropriate; and
•	having such other duties as may be from time to time designed by our board.

 

Our board of directors believes that its current leadership structure, having a combined Chairman of the Board and Chief Executive Officer role and ana lead independent lead director, best serves the interests of our stockholders because it provides an appropriate balance between strategy development and independent oversight of management. Our board of directors regularly reevaluates the board’s leadership structure as part of its evaluation and refreshment process and also considers stockholder feedback on the topic.

 

We believe that our directors bring a broad range of leadership experience to the boardroom and regularly contribute to the thoughtful discussion involved in effectively overseeing the business and affairs of the Company. For example, Mr. West, former Chairman of the Board and a current member of our board of directors, will continue to provide invaluable support and guidance to our current Chairman of the Board and facilitate the Company’s succession planning. In addition, we believe that the atmosphere of our board is collegial, that all board members are well engaged in their responsibilities, and that all board members express their views and consider the opinions expressed by other directors. SevenNine of the eight10 current directors on our board are independent, and following the retirement of Mr. Cross who is not seeking re-election at the Annual Meeting, there will be eight out of nine independent directors, in each case under the Nasdaq listing standards and the applicable SEC rules.

 

We also believe that all of our independent directors have demonstrated leadership in business enterprises and other large organizations and are familiar with board processes. Our independent directors are involved in the leadership structure of our board by serving on our audit, compensation, nominating and corporate governance, compensation or safety, sustainability and corporate responsibility committees, each having a separate independent chairperson. Specifically, the chairchairperson of our audit committee oversees the accounting and financial reporting processes, as well as compliance with legal and regulatory requirements. The chairchairperson of our compensation committee oversees the annual performance evaluation of our Chief Executive Officer and our compensation policies and practices and their impact on risk and risk management. The chairchairperson of our nominating and corporate governance committee monitors matters such as the composition of the board and its committees, board performance and best practices in corporate governance. The chairchairperson of our safety, sustainability and corporate responsibility committee provides leadership with respect to best practices in the areas of environmental, safety, human capital, sustainability and corporate and social responsibility. As such, each committee chairchairperson provides independent leadership for purposes of many important functions delegated by our board of directors to such committee.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     2624

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— BOARD MEETINGS, COMMITTEES AND MEMBERSHIP

 

In 2021,2022, our board of directors met nine12 times, in person or, due to COVID-19 considerations, remotely via electronic or telephonic means. In addition to these meetings, the board of directors adopted resolutions by unanimous written consent. In 2021,2022, each director attended 100%at least 80% of the meetings of the board of directors and the meetings of the committees on which he or she served. To the extent a director was unable to attend a meeting in 2022, he or she met telephonically with the Chief Executive Officer to receive a report regarding the materials reviewed at the meeting.

 

Recognizing that director attendance at our Annual Meeting can provide our stockholders with an opportunity to communicate with directors about issues affecting the Company, we actively encourage our directors to attend the Annual Meeting of Stockholders. All eight of our then directors attended our 20212022 Annual Meeting of Stockholders in person.person or remotely via telephonic means. Ms. Klein and Mr. Tsuru joined our board of directors in July 2022 and, therefore, did not attend our 2022 Annual Meeting of Stockholders.

 

Board Committee Membership

 

The table below shows the membership of each of the board’s committees, as well as information about each committee’s principal functions.

 

Audit Committee

 

Members		Principal Functions		Number of Meetings in 2021 2022
Mark L. Plaumann* Vincent K. Brooks** Michael P. Cross Cross*** David L. Houston Stephanie K. Mains** Mains Melanie M. Trent		• Reviews and discusses with management, representatives of internal audit and the Company’s independent auditors the integrity of our accounting policies, internal controls, financial statements, accounting and auditing processes and risk management compliance, including cybersecurity risks. • Monitors and oversees our accounting, auditing and financial reporting processes generally, including the qualifications, independence and performance of the independent auditor. • Monitors our compliance with legal and regulatory requirements. • Establishes procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. • Reviews and approves related party transactions. • Appoints, determines compensation, evaluates and terminates our independent auditors. • Pre-approves audit and permissible non-audit services to be performed by the independent auditors. • Annually reviews and discusses the Company’s year-end reserves with management and Ryder Scott, the Company’s independent third party reserve auditor. • Prepares the report required by the SEC for the inclusion in our annual proxy statement. • Reviews and reassesses the adequacy of the audit committee charter on a periodic basis. • Inform our independent auditors of the audit committee’s understanding of significant relationships and transactions with related parties and review and discuss with our independent auditors the auditors’ evaluation of our identification of, accounting for and disclosure of our relationships and transactions with related parties, including any significant matters arising from the audit regarding our relationships and transactions with related parties. • Conducts a periodican annual performance evaluation of the committee.		Four

*	Committee Chairperson.
**	Ms. MainsGeneral Brooks was appointed to serve on the audit committee effective as of October 1, 2021.2022.
***	Mr. Cross has determined to retire and not to stand for re-election at this Annual Meeting, and his term as a director and committee member will expire immediately after this Annual Meeting.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     2725

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Compensation Committee

 

Members		Principal Functions		Number of Meetings in 2021 2022
Stephanie K. Mains* Michael P. Cross Cross** David L. Houston Mark L. Plaumann Melanie M. Trent Frank D. Tsuru***		• Oversees and administers our executive compensation policies, plans and practices and evaluates their impact on risk and risk management. • Periodically reviews the compensation plans and policies for employees generally. • Discharges the board of directors’ responsibilities relating to the compensation and evaluation of annual performance of our Chief Executive Officer and other executive officers. • Periodically reviews with the Chief Executive Officer our succession plan for other members of senior management. • Where appropriate or required, makes recommendations to our stockholders with respect to incentive compensation and equity-based plans. • Reviews, approves and administers our Executive Annual Incentive Compensation Plan, including the establishment of performance criteria and targets which provide for cash awards under such plan. • Reviews, approves and administers our equity-based compensation plans, including the grants of stock options, restricted awards and other equity awards under such plans. • Makes recommendations to our board of directors with respect to director compensation. • Periodically reviews the adequacy of our stock ownership guidelines for our Chief Executive Officer, other executive officers and directors, recommends any amendments of the stock ownership guidelines to our board of directors and annually monitors compliance with such guidelines. • Conducts a periodic performance evaluation of the committee. • Reviews disclosure related to executive compensation in our proxy statement. • Reviews and reassesses the adequacy of the compensation committee charter. • Advise the board of directors regarding the stockholder advisory vote on executive compensation and golden parachutes, including the frequency of such votes. • Administers our clawback policy, which includes the ability to amend, modify or terminate such policy. • Reviews and considers the stockholder advisory vote on executive compensation when determining policies and making decisions on executive compensation. • Has the sole authority to appoint, compensate and oversee work of any compensation consultant and other advisors with respect to executive compensation and assistance with other charter responsibilities and determines any conflict of interest with such compensation consultant.		OneThree

*	Committee Chairperson. Ms. Mains
**	Mr. Cross has determined to retire and not to stand for re-election at this Annual Meeting, and his term as a director and committee member will expire immediately after this Annual Meeting.
***	Mr. Tsuru was appointed to serve on the compensation committee effective as Committee Chairperson effectiveof October 1, 2021.2022.

 

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     26

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Nominating and Corporate Governance

Committee

 

Members		Principal Functions		Number of Meetings in 2021 2022
Vincent K. Brooks* Michael P. Cross Cross** David L. Houston Mark L. Plaumann Melanie M. Trent		• Assists the board of directors in developing criteria for, identifying and evaluating individuals qualified to serve as members of our board of directors. • Identifies and recommends director candidates to the board of directors to be submitted for election at the Annual Meeting and to fill any vacancies on the board of directors. • Conducts and oversees the self-evaluation of the board of directors and each of its committees and reporting such results to the board of directors. • Evaluates candidates for board of directors’ membership, including those recommended by stockholders of the Company. • Periodically reviews and makes recommendations regarding the composition and size of the board of directors and each of its committees. • Reviews and makes recommendations to the Boardboard of directors regarding significant stockholder concerns and stockholder proposals related to corporate governance matters. • Annually reviews and reassesses the adequacy of the Company’s Corporate Governance Guidelines and recommends any proposed changes to the board of directors for approval • Periodically reviews and reassesses the adequacy of the Company’s Certificate of Incorporation, Bylaws, Corporate Governance Guidelines and other corporate governance related documents and recommends any proposed changes to the board of directors for approval. • Conducts a periodican annual performance evaluation of the committee. • Reviews and reassesses the adequacy of the nominating and corporate governance committee charter on an annual basis and recommends any proposed changes to the board of directors for approval.		TwoThree

*	Committee Chairperson. General Brooks was appointed
**	Mr. Cross has determined to serve on the nominatingretire and corporate governancenot to stand for re-election at this Annual Meeting, and his term as a director and committee and as Committee Chairperson effective October 1, 2021.member will expire immediately after this Annual Meeting.

 

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     28

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Safety, Sustainability and Corporate Responsibility Committee

 

Members		Principal Functions		Number of Meetings in 2021 2022
Melanie M. Trent* Vincent K. Brooks Michael P. Cross Cross** David L. Houston Rebecca A. Klein*** Mark L. Plaumann		• •  Periodically reviews and discusses with management the Company’s strategy, policies, practices and practicespublic disclosures regarding environmental, safety and social responsibility, or ESG, matters, makes related recommendations to the board of directors and conducts any necessary investigations or studies. • •  Oversees management’s monitoring and adherence to the Company’s policies on ESG matters and the quality of the Company’s procedures and disclosure for identifying, assessing, monitoring and managing the principal environmental, health, safety, social, reputational and climate change-related risks in the Company’s business. • •  Reviews and advises the Board on (i) the establishment of appropriate targets and goals with respect to ESG matters for the Company and related public reporting; (ii) the evaluation of the Company’s performance with respect to the achievement of such goals and (iii) whether the Company should seek external assurance of its data with respect to ESG matters. • •  Considers and recommends to the Board regarding current and emerging political, social, environmental and climate change-related trends, major legislative and regulatory developments and other public policy issues that are reasonably likely to affect the business operations, performance or public image of the Company. • •  ReviewsAnnually reviews and discusses with management the Company’s (i) policies onand contributions related to corporate charitable and philanthropic activities, (ii) policies and expenditures related to public policy advocacy efforts, including political contributions directly from the Company and its political action committees, trade association memberships and lobbying activities, and (iii) human capital programs related to recruiting, retention, training and development, including policies promoting diversity, inclusion and human and workplace rights. • •  Reviews the Company’s annual Corporate Sustainability Report. • •  Conducts a periodican annual performance evaluation of the committee. • •  Reassesses and reports to the board of directors on the adequacy of the committee charter.		Two

*	Committee Chairperson.
**	Mr. Cross has determined to retire and not to stand for re-election at this Annual Meeting, and his term as a director and committee member will expire immediately after this Annual Meeting.
***	Ms. Klein was appointed to serve on the safety, sustainability and corporate responsibility committee effective as of October 1, 2022.

 

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     27

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Committee Charters

 

The charters for our audit committee, compensation committee, nominating and corporate governance committee and safety, sustainability and corporate responsibility committee can be found on our website at www.diamondbackenergy.com under the “Investors—Corporate Governance” caption. You may also obtain copies of these charters at no charge to you, by writing to Corporate Secretary, Diamondback Energy, Inc., 500 West Texas Ave, Suite 1200,100, Midland, TX 79701.

 

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— ANNUAL BOARD EVALUATION PROCESSAND COMMITTEE EVALUATIONS

 

The board is committed to continuous improvement with respect to its ability to carry out its responsibilities. In accordance with our Corporate Governance Guidelines, the board and each of its committees annually conduct self-evaluations relating to their performance.a comprehensive evaluation process. These self-evaluationsboard and committee evaluations are a critical tool in assessing the composition and effectiveness of the board and each of its committees and its directors and presents an opportunity to identify areas of strength and areas capable of improvement. Our nominating and corporate governance committee supervises theseoversees the annual board and committee evaluation process which is described in more detail below.

Our board and committee written evaluations which are conducted by outside counsel and include an assessment of, among other things:

cover the following topics:

•	the effectiveness of the board and committee structure;responsibilities and effectiveness;
•	board and committee size, structure and composition, including assessment of skills, experience, anddiversity, occupational and personal backgrounds;
•	whether the roles of the Chairman of the Board and Chief Executive Officer will be combined or separated, as part of our succession planning process or otherwise;
•	board culture and dynamics, including the effectiveness of discussion and debate at board and committee meetings;
•	strategic planning and oversight;
•	the quality of board and committee agendas and the appropriateness of meeting materials
•	access to resources, including management and outside advisors; and
•	board and individual committee priorities; and
•	the quality of communication between management and board members.performance.

 

The board considers the results of the evaluations to assess whether the board and its committees have the necessary diversity of skills, backgrounds and experiences to meet the Company’s needs and to further enhance the effectiveness of the board and its committees over time.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     2928

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— THE BOARD’S ROLE IN RISK OVERSIGHT

 

As an exploration and production company, we face a number of risks, including risks associated with supply of and demand for oil and natural gas, volatility of oil and natural gas prices, exploring for, developing, producing and delivering oil and natural gas, declining production, environmental and other government regulations and taxes, weather conditions, including hurricanes and freezing temperatures, that can affect oil and natural gas operations over a wide area, adequacy of our insurance coverage, political instability or armed conflict in oil and natural gas producing regions and the overall economic environment. Management is responsible for the day-to-day management of risks we face as a company, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.

 

Our board of directors believes that full and open communication between management and the board of directors is essential for effective risk management and oversight. Our board of directors meets regularly with our executive officers to discuss strategy and risks facing the Company. Our executive officers regularly attend our board meetings and are available to address any questions or concerns raised by the board on risk management-related and any other matters. Other members of our management team periodically attend the board meetings or are otherwise available to confer with our board to the extent their expertise is required to address risk management matters. Periodically, our board of directors receives presentations from senior management on strategic matters involving our operations. During such meetings, our board of directors also discusses strategies, key challenges, and risks and opportunities for the Company with senior management.

 

Committee Risk Oversight Responsibilities

 

While our board of directors is ultimately responsible for risk oversight at the Company, the board’s four committees assist the board in fulfilling its oversight responsibilities in certain areas of risk. The audit committee assists the board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements, and discusses policies with respect to risk assessment and risk management. Cybersecurity plays an integral role in our risk management strategy, and cybersecurity preparedness continues to be an area of increasing focus for our board, the audit committee and our management team. The audit committee receives a quarterly update from the Company’s Vice President of Information Technology regarding cybersecurity and information security risks, including the nature of threats, defense and detection capabilities, incident response plans and employee training activities, among others, as applicable. In addition, all employees are required to complete an annual cybersecurity training course. This training is complemented by ongoing security awareness messaging. The compensation committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The nominating and corporate governance committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks associated with the board’s organization, membership and structure and corporate governance. The safety, sustainability and corporate responsibility committee assists the board in fulfilling its oversight responsibility over management’s monitoring and adherence to the Company’s policies on ESG matters and the quality of the Company’s procedures for identifying, assessing, monitoring and managing the principal environmental, health, climate change, human capital, safety and social risks in the Company’s business. In response to stockholder feedback, the safety, sustainability and corporate responsibility committee amended its charter in September 2021 to include oversight of climate change-related risks and opportunities as part of its ESG oversight responsibilities as enumerated in the charter.

 

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— STOCKHOLDER ENGAGEMENT

 

We value the views of our stockholders and embrace active stockholder engagement as an important tenet of good governance. Because positive and ongoing dialogue builds informed relationships that promote transparency and accountability, members of senior management engage with our stockholders on a year-round basis, including proactive outreach as well as responsiveness to specific areas of focus. Information and feedback received through our engagement activities is shared with our board, which helps inform its decisions. In response to feedback obtained during our stockholder outreach efforts, the following past actions, some of which had already been independently considered for implementation by our board of directors or committees, were undertaken:

•	Our board of directors amended our bylaws to provide our stockholders with proxy access;
•	Our board of directors also previously amended our bylaws to provide for the majority vote requirement to elect directors to our board, which replaced the prior plurality voting standard applicable to our director election;

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     3029

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•	Our board of directors and the nominating and corporate governance committee approved enhancements to the nominating committee charter and director nomination process that focused on increasing the size of the board and number of independent directors, with a supermajority of the board currently being independent;
•	We increased the size and enhanced the ethnic and gender diversity and skill set of our board of directors, adding threefive diverse candidates between April 2018 and April 2020,July 2022, currently representing approximately 38%50% of our board membership;board of directors and 56% of our director nominees (three female directors and three ethnically diverse directors based on information self-identified by each director of the Company);
•	Our board of directors created the safety, sustainability and corporate responsibility committee focused on sound strategy and best policies and practices regarding environmental, safety, human capital and social responsibility matters;
•	Our board of directors adopted Corporate Governance Guidelines as an additional step to reinforce our commitment to prudent corporate governance practices and policies;
•	The compensation committee fully transitioned to three-year performance-based equity awards, with no two-year performance-based equity awards granted or vesting during 2019 or 2020since 2018 and no two-year performance-based awards contemplated in the future, and implemented double-trigger change of control provisions in Company equity awards granted since the beginning of 2018;
•	The compensation committee enhanced the disclosure of targets and goals for performance-based awards, the discussion of equity award process for our named executive officers and the underlying rationale for such awards;
•	The compensation committee added return on average capital employed and ESG goals among metrics for determining cash performance awards in 2020 and increased the weighting attributable to the ESG component of our STIannual incentive metrics to 20%25% for 2020;2022;
•	Our board of directors implemented and maintains rigorous stock ownership and retention guidelines for our non-employee directors in addition to the previously adopted stock ownership and retention guidelines for all of our executive officers, and in 2022 increased the ownership requirements for our most senior executive officers;
•	Our board of directors adopted a comprehensive executive incentive compensation clawback policy;
•	We released our fourthfifth annual Corporate Sustainability Report in September 2021,2022, which included additional enhancements such as content aligned to voluntary frameworks and standards maintained by the SASB, TCFD, GRI, IPIECA and the AXPC, disclosure of Scope 1 and 2 GHG emissions and limited assurance attestation from our independent auditor;
•	We adopted a Human Rights Policy; and
•	We adopted a Policy Governing Corporate Political Contributions.

 

During 20212022 and through the first quarter of 2022,2023, we continued our stockholder outreach efforts and solicited feedback on our executive compensation programs, corporate governance, human capital programs and strategies, corporate responsibility, ESG matters and other important issues. We initiated contact with stockholders representing over 63%approximately 60% of our outstanding shares as of June 30, 2021.2022. Our Chairman of the Board and Chief Executive Officer, President and Chief Financial Officer and other key members of Company senior management spoke with stockholders representing over 46%approximately 34% of our outstanding shares as of June 30, 2021,2022, including seven of our 10 largest stockholders. In addition, members of Company senior management attended 24approximately 20 virtual or in person investor conferences and hosted sevenapproximately 14 virtual or in person bus tours. We also had discussions of certain of these matters with other investors during investor presentation events and earnings and other investor calls throughout the year.

In response to stockholder feedback received in early 2022, we are committed to publishing our 2021 Equal Employment Opportunity (EEO-1) data as of December 31, 2021 in our 2022 Corporate Sustainability Report, which will be published on our website in the second half of 2022.2022:

 

•	We published for the first time our 2021 Equal Employment Opportunity (EEO-1) data as of December 31, 2021 in our 2022 Corporate Sustainability Report;
•	We publicly disclosed the gender, race and ethnicity of each identified member of our board of directors in the director skills matrix on page 18;
•	We publicly announced our commitment to reduce Scope 1 and Scope 2 GHG intensity by at least 50% from 2020 levels by 2030
•	We joined the United Nations-led Oil and Gas Methane Partnership 2.0, the flagship oil and gas reporting and mitigation program of the United Nations Environment Programme;
•	We included a board of directors’ proposal in this proxy statement to provide for the elimination of the 66 2/3% supermajority vote requirements in our charter; and
•	We included a board of directors’ proposal in this proxy statement to provide for a right to call a special meeting by stockholders.

These discussions have provided us an opportunity to further explore issues important to us and our stockholders, including corporate governance policies, human capital programs and strategies, executive compensation and corporate sustainability and environmental policies. In particular, we received constructive feedback that helped shape a number of executive compensation enhancements made for 20212022 and will assist us in further refining our corporate sustainability reports in the future. In 2021,2022, approximately 96%95% of votes cast

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by our stockholders were in favor of our say-on-pay proposal. Although this vote demonstrates substantial support of our executive compensation programs, representatives of our board and management team continued to undertake stockholder engagement efforts to, among other things, solicit stockholder input on our executive compensation structure and ensure ongoing stockholder support of our executive compensation programs. We look forward to continued engagement with stockholders throughout the year so that we can incorporate their ideas to further strengthen our executive compensation programs, continue our commitment to ESG matters, improve our disclosure practices and enhance our governance practices.

 

 

 

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     31

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— CODE OF BUSINESS CONDUCT AND ETHICS

 

Our board of directors previously adopted a Code of Business Conduct and Ethics designed for directors and employees to ensure clarity regarding our expectations, which code was further updated to reflect additional policies and enhancements in April 2022. Our Code of Business Conduct and Ethics embodies our commitment to conduct our businesses in accordance with our core values, all applicable laws, rules and regulations and the highest ethical standards. Our Code of Business Conduct and Ethics applies to all directors, executive officers, including the Chief Executive Officer, the Chief Financial Officer, principal accounting officer and controller and persons performing similar functions, and all other employees. Our Code of Business Conduct and Ethics covers various topics including, among others, public disclosure, conflicts of interest, equal employment, fair dealing, anti-discrimination, anti-harassment, confidentiality, data privacy, cybersecurity, intellectual property, political activity and contributions, environmental responsibility, human rights, health and safety, transactions with vendors and gifts and the limited process for waivers. Our Code of Business Conduct and Ethics is also focused on compliance with applicable laws, rules and regulations, governing, among others, insider trading, anti-trust, anti-corruption, anti-bribery, anti-money laundering, anti-boycott and export controls, and establishes reporting and complaint procedures, including an anonymous hotline, for any irregularities or violations, including with respect to accounting, internal control and auditing matters. Our Code of Business Conduct and Ethics is posted on our website under the “Investors-Corporate Governance” caption. You may also obtain copies of our Code of Business Conduct and Ethics at no charge to you, by writing to Corporate Secretary, Diamondback Energy, Inc., 500 West Texas Ave, Suite 1200,100, Midland, TX 79701.

 

—COMMUNICATIONS WITH THE BOARD

 

Individuals may communicate with our board of directors or individual directors by writing to Corporate Secretary, Diamondback Energy, Inc., 500 West Texas Ave, Suite 1200,100, Midland, TX 79701. Our Corporate Secretary will review all such correspondence and forward to our board of directors a summary of all such correspondence and copies of all correspondence that, in the opinion of our Corporate Secretary, relates to the functions of our board of directors or any committee thereof or that he otherwise determines requires their attention. Directors may review a log of all such correspondence received by us and request copies. Concerns relating to accounting, internal control over financial reporting or auditing matters will be immediately brought to the attention of the chairperson of the audit committee and handled in accordance with the audit committee procedures established with respect to such matters.

 

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— DIRECTOR COMPENSATION

 

Members of our board of directors who are also officers or employees of the Company do not receive compensation for their services as directors. Further details regarding our director compensation in 20212022 are set forth under the heading “Compensation Tables— 20212022 Director Compensation.”

 

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— CORPORATE RESPONSIBILITY AND SUSTAINABILITY

 

As an oil and gas company, we understand that we have the potential to make a uniquely positive impact in the world. We provide affordable, domestically produced energy that helps run our homes, businesses, transportation networks and other key components of our economy. As we continue to provide a critical product that contributes to economic growth and society, we view the connection between responsible operations and business success a fundamental necessity. We are committed to the safe and responsible development of our resources in the Permian Basin. We operate in the same areas in which a majority of our employees and their families live, and are dedicated to preserving and protecting the environment for the benefit of our stockholders, employees, our community and our community.other stakeholders. We have identified key areas of focus, including energy, emissions, waste and spills, water use, compliance, health and safety, training and education, human capital and community, and have described below certain of our efforts relating to these areas. We have also established the safety, sustainability and corporate responsibility committee of our board of directors that oversees, among other things, our management’s monitoring and adherence to our policies on ESG matters and the quality of our procedures for identifying, assessing, monitoring and managing the principal environmental, health, climate change, human capital, safety and social risks in our business and provides leadership with respect to best practices in environmental responsibility, sustainability and corporate and social responsibility.

 

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Commitment to Environmental Responsibility

 

We are committed to exploration, exploitation, acquisition and production of oil, natural gas and natural gas liquids in an environmentally responsible manner and in compliance with applicable federal, state and local laws, including laws regulating emissions of greenhouse gases, such as methane. We take actions beyond those required by law to reduce methane emissions and recycle an increasing percentage of water and make significant investments in infrastructure to reduce environmental impact. In keeping with that commitment, our overall approach includes these key activities:

 

•	Investing in and implementing the best available technology and innovative methods for drilling and completing wells, which has allowed us to achieve the same or improved results with less proppant, fewer wells and a greatly reduced environmental footprint;
•	Minimizing our environmental impact and improving safety for all stakeholders;
•	Joining the Oil & Gas Methane Partnership 2.0 (OGMP 2.0), the flagship oil and gas reporting and mitigation program of the United Nations Environment Programme;
•	Implementing our “Net Zero Now” initiative under which, effective January 1, 2021, every hydrocarbon molecule we produce is anticipated to be produced with zero net Scope 1 GHG emissions;
•	Purchased carbon credits to offset the remaining emissions to the extent our greenhouse gasGHG and methane intensity reduction efforts do not eliminate our Scope 1 GHG emissions;
•	Committed to reducing Scope 1 GHG intensity by at least 50% from 2019 levels by 2024;
•	Committed to reducing methane intensity by at least 70% from 2019 levels by 2024;
•	Committed to ending routine flaring (as defined by the World Bank) by 2025;
•	Committed to sourcing over 65% of our water used for drilling and completion operations from recycled sources by 2025;
•	Building on these initiatives, in 2021, we achieved a reduction in flaring of our gross natural gas production of 49% as comparedCommitted to reduce Scope 1 and Scope 2 GHG intensity by at least 50% from 2020 (26% including QEP Permian assets acquired in March 2021 in the QEP merger);levels by 2030;
•	Committed to implement continuous emission monitoring systems on Diamondback’s facilities to cover at least 90% of operated oil production by the end of 2023;
•	Motivating our executive andteam, senior management and all of our employees to strive to achieve measurable targets and goals with respect to flaring, water recycling, GHG emission intensity and produced liquids spills; increased the weighting of current environmental and safety performance metrics in the 20212022 short-term annual incentive compensation plan from 15%20% to 20%25%;

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•	Focusing on increased use of hydrocarbon gathering infrastructure, as well as sourced water disposal and produced-water recycling;
•	Minimizing use of potable water in our operations;
•	Safely transporting oil and gas and minimizing impacts from air emissions, flared gas and spills;
•	Maximizing fluid transportation via pipelines rather than diesel powered trucks;
•	As part of our flare reduction and mitigation strategy for non-routine flaring, we (i) restructured several contracts with our midstream counterparties to include (a) performance-based incentives to eliminate flaring and (b) penalties for flaring, (ii) shut-in production to avoid flaring, and (iii) negotiated downstream commitments and other offload arrangements;
•	Replaced natural gas-controlled pneumatic devices on some of our older tank batteries with air-controlled pneumatic devices when operationally feasible;feasible and pursued initiatives to install air-controlled pneumatic devices on new tank batteries;
•	Initiated quarterly drone flyover inspections of all tank batteries, increasedIncreased number of Forward Looking InfraRed (FLIR) cameras and commencedbrought to conclusion five continuous emissions monitoring pilot projects;
•	Held quarterly meetings with engineering staff and field personnel to review engineering design changes to help us better capture GHG emissions moving forward;
•	Continuing the electrification of combustion sources by eliminating some of our internal combustion engines and installing several electrical substation units for compression operations;
•	Continuing to upgrade large horizontal tank batteries with best available control technology to reduce tank-related emissions;
•	Continuing efforts to tie-in flare monitoring to our tank battery SCADA systems; and
•	Commenced runningContinued to grow our first drilling riginventory of wells drilled by rigs on electricity supplied directly from power lines instead of through a generator.

 

Commitment to Human Capital

 

Our strategy of operational excellence is achieved by our people through our disciplined and intended culture of clarity, efficiency, and inclusion. We have never been moreare extremely committed to our culture which is built upon the solid foundation of our five core values: leadership, integrity, excellence, people, and teamwork that are adhered to throughout our company.teamwork. We understand our performance success is based upon not just what we do, but how we do it. Therefore, we set a high bar for all of our employees in terms of how they operate and interact, both within the office and out in the field. We challenge them to ensure all people are treated with dignity and respect. The key elements of our human capital programs and strategies are described below.

 

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Oversight by Board of Directors

 

Our board of directors provides oversight of our human capital strategies with the assistance of its board committees, specifically the safety, sustainability, and corporate responsibility committee and the compensation committee. These committees receive regular updates from our executive leadership team, including our Executive Vice President and Chief Human Resources Officer, senior management and third-party consultants on human capital trends and other key human capital matters impacting our business, including our diversity and inclusion goals and progress,initiatives, recruiting, retention, training and development programs, policies and practices impacting our employees, succession planning, and our executive compensation program.

 

Our safety, sustainability, and corporate responsibility committee’s oversight role continues to evolve by driving transparency and accountability. For example, the safety, sustainability, and corporate responsibility committee was formed in 2019 and initially provided oversight of certain human capital programs such as the review and oversight of our policies and practices promoting health, safety, diversity, inclusion and human and workplace rights. During 2020, the safety, sustainability, and corporate responsibility committee adopted a Human Rights Policy, and in January 2022, the charter of the safety, sustainability, and corporate responsibility committee was expanded to include oversight of our human capital programs related to recruiting, retention, training, and development. We believe our board’s oversight of these matters helps the Company identify and mitigate exposure to human capital risks.

 

Commitment to Protecting People

 

Our organizational culture fosters teamwork and open dialogues about work practices, which includes putting safety first. Whether it is minimizing workplace incidents or preparing for the unexpected, we continue to make protecting our people a fundamental component of our corporate responsibility efforts. We maintain a formal health and safety program that includes employee training and new hire orientation on a variety of environmental and safety topics, including proper reporting. We also ensure our employees have all necessary

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equipment to operate safely. Employees undergo significant training and education each year to become knowledgeable on regulatory compliance, industry standards and innovative opportunities to effectively manage the challenges of developing our resources. In light of the nature of our work and the locations of some sites in and near communities, we also proactively prepare for the unexpected by developing emergency response plans to cover potentially hazardous situations.

 

For 2021,2022, we further demonstrated our commitment to safety by maintaining a performance metric in our annual incentive compensation scorecard that measures our total recordable incident rate. Our Health, Safety and Environmental organization currently has full-time, field-dedicated coordinators to monitor facilities and help prevent potential issues.

 

Maintaining a Disciplined Approach During the Covid-19 Pandemic

Our internal pandemic protocol, initiated in March 2020 and referred to internally as the E-Plan, continued to evolve during 2021 and in early 2022 in response to the ongoing COVID-19 pandemic. We have had zero incidents of workplace spread of COVID-19 to date and maintained our disciplined approach throughout the pandemic. Under close attention and guidance from our human resources team and other executive leaders, our safety and shared services teams continued to frequently update our employees and reinforce procedures designed to mitigate risks to our employees and enable our operations to continue safely and efficiently.

Our E-Plan protocol was updated frequently based on CDC guidance, various state and local information, and information from our advisors. It provided information to our employees on safety procedures, risk mitigation measures, social distancing guidelines and expectations on limiting work travel, office meetings, and visitors in the workplace. To ensure the safety of our employees, we also offered remote work opportunities during 2021 and into early 2022. As we navigated the challenges presented by the pandemic, our priorities remained protecting the health and safety of our employees and safely executing our operations. We continue to monitor the dynamic social impact and regulatory environment related to the pandemic.

Diversity, Inclusion, Recruiting and Retention

 

Fair, consistent and equitable treatment of our employees is core to how we manage our dedicated workforce. Our employment decisions are based on merit, qualifications, competencies, and contributions. We actively seek to attract and retain an increasingly diverse workforce and continue to cultivate an inclusive and respectful work environment. We deeply value the perspectives and experiences from our gender and ethnically diverse personnel and are proud of our team, rich in a range of ethnic, cultural and ideological backgrounds. As of December 31, 2021, approximately 29%2022, over 28% of our employees were women and twoone of sevenfive members (approximately 29%(20%) of our most senior executive leadership team are women. Also, over 25%33% of our employees self-identify as ethnic minorities as of December 31, 2021.2022.

 

	Workforce Gender Diversity

 

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The senior management team took various actions during 20212022 to ensure the diversity in our candidate pool and to broaden our outreach, particularly withinwith our college recruiting and internship programs. For example, weWe expanded our summer internship recruitment program to include a historically black university. Our internship program is an important talent pipeline for our engineering and geoscience roles within the Company. Through supporting various student organizations and having diverse interview teams for all intern interviews, we have demonstratedcontinued to demonstrate our desire and intention to ensure that diverse groups such as women and ethnically diverse students are included in our internship program.outreach efforts. We intend to continue this commitment in the future. These diverse candidates were able to connect with our recruiting team to learn more about our inclusive workforce and were encouraged to apply for open internship or future job opportunities. Throughout 2021, we educated managers on inclusive hiring practices as we filled positions across the organization, and we sent diverse teams to manage our career fair participation.

 

In addition, we focused on recruiting experienced hires to target and retainaugment top industry talent. We believe our historically low voluntary attrition rate is in part a result of our corporate culture focused on our core values, diversity and inclusion, teamwork and commitment to employee development and career advancement discussed in more detail below. Given the challenging labor market and increased competition for talent impacted by the COVID-19 pandemic,potential economic downturn and the high inflationary environment, our 20212022 overall turnover is higher than previous years at approximately 13%.

 

Continuing on our journey for sustainable diversity, equity and inclusion improvements and in response to stockholder feedback, we are committed to publishinghave publicly disclosed for the first time our 2021 Equal Employment Opportunity (EEO-1) data as of December 31, 2021 in our 2022 Corporate Sustainability Report, which will be published in the second half of 2022.Report.

 

Total Reward – Performance Based Compensation

 

We value results and believe in recognizing and rewarding performance. Our performance management process includes the “how” element of performance against each of our core values. And our comprehensive total reward compensation philosophy is rooted in a real-time market-based approach, where we reward and recognize value creation and cultural alignment. We participate in industry-specific benchmarking surveys ensuring comparison points against local markets in a comprehensive manner. Overall, our employee compensation programs consist of an annual base salary, a discretionary performance-based annual cash incentive award and a discretionary long-term equity incentive award. All of our employees are eligible for the discretionary short-term incentive and long-term equity incentive awards, which are based on both specific Company performance metrics and individual performance outcomes. These awards are a central part of ensuring that we competitively reward our employees in order to attract and retain top talent, as well as ensuring that their work efforts align with our stockholders by providing stock ownership opportunities for 100% of our employees.

 

Health and Wellness

 

We also offer our employees robust health and wellness benefits, and employees do not pay any health insurance premiums for benefits such as medical, dental, vision and life insurance, resulting in a high level of enrollment by our employees. Further, we have a

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competitive Company match on 401(k) retirement savings, and employees are immediately vested in their contributions as well as the Company matching dollars. Our retirement savings plan allows employees to choose between pre-tax or post-tax (ROTH) contributions, so they may plan for retirement in the format which best meets individual financial objectives.

 

Our benefits program also includes health savings and flexible spending accounts, paid time off, education assistance, gym reimbursement, volunteer time off, extended time off, and paid maternity and paternity leave. We also offer our employees the opportunity to work a flex work schedule under which, during the standard two week pay period, an employee works a minimum of eight 9-hour days and two 4-hour days (Fridays). In 2022, we adopted a work from home policy which provides office-based employees a bank of days that they may utilize to work remotely.

 

Training and Development

 

Our inclusive training opportunities are designed to expand the professional knowledge of our team, and most offerings are provided across the organization to all employees at any level. We also provide on the job development and learning opportunities which allows our employees to apply and practice work activities with new knowledge and develop various skills. Our internal course offerings in 20212022 and through the first quarter of 20222023 included a wide array of topics such as extensive cybersecurity, safety and other compliance training sessions. Additionally, our new hires undergo training and education on our Code of Business Conduct and Ethics. Our employees also receive training on regulatory compliance, industry standards and innovative opportunities to effectively manage the challenges of developing our oil and gas resources and related environmental and social responsibility. We have also implemented development programs that are designed to facilitate learning and collaboration regarding leadership capabilities at all levels.

 

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Commitment to Community

 

Giving back to the communities where our employees live and in which we operate is part of our identity. We strongly believe these investments of time, money and compassion allow our employees to both experience and demonstrate the core values of our company.Company. We sponsor improvements in public education, participate in, and support, many community and national organizations and actively promote local groups who focus on the underserved and underprivileged. Below are a few examples of investments of time and money that we made in our communities during 2021:2022:

 

•	Obtained the Texas by Nature Dark Skies Initiative certification;
•	Planted 100 trees in Midland public parks in underserved areas with irrigation for long-term support;support.
•	Diamondback employees volunteered 619 hours in the community in 2022.
•	Continued virtual reading sessions with students with employee volunteers;volunteers at a local elementary school in both English and Spanish.
•	Partnered with a local secondary campus to create a tutoring program that supports students that have been identified as struggling in the subject areas of math and/or science.
•	Hosted a second annual Summer STEM camp at corporate offices for disadvantaged middle students;students.
•	Provided funding to several summer reading programs in Midland that specialize in helping disadvantaged children for the second consecutive year;year.
•	Contributed to the creation of the first bicycle recreation park in Midland, Harris Field;
•	Donated back to school kits and winter coats for every student at an underserved Oklahoma City Elementary School;School.
•	Sponsored the instruction of approximately 400200 Midland Independent School District students on Pre-SAT prep;prep.
•	Hosted 34rdth annual First Responders Appreciation Luncheon for hundreds of first responders;responders.
•	Donated approximately $1 million to local charities and philanthropy.
•	Donated approximately $2 million through the Permian Strategic Partnership (PSP). The PSP was formed in 2018 by 17 oil and gas companies to focus on making investments to help in building superior educational programs, accessible housing, a supportive healthcare system, safer roads and a more skilled workforce throughout the Permain Basin.
•	Received the Governor’s Corporate Volunteering ChampionOutstanding Philanthropic Business Award from the Texas One Star Foundation;Permian Basin Chaper of the Association of Fundraising Professionals.
•	Partnered with the Midland Education Foundation to host the Teacher Winter Wishes Spectacular. Educators across the city were invited to receive free teacher supplies, gift cards, and a chance to win big ticket door prizes. During this two-day event, we were able to serve approximately 1,000 educators.
•	Donated $528,000 to Opportunity Tribe to provide final funds to complete permanent home to serve at-risk students in the community.
•	Donated $540,000 to Safe Place to provide final funds to complete project which will help to protect those who find themselves in violent domestic situations.
•	Donated $250,000 to Manor Park to support the updated appearance of the assisted living environment for aging adults in our community.
•	Committed to donate $500,000$10 million to Midland Senior Life (Meals on Wheels) for the construction of a new meal preparation/distribution building; and
•	Committedsupport various non-profit entities to donate $2,500,000 to the Quality of Place Conservancy for a significant redesign of Hogan Park in Midland.address Ukraine humanitarian needs.

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Political Contributions and Activities

 

We are committed to transparency about the Company’s public policy advocacy efforts, political contributions and related activities. The safety, sustainability and corporate responsibility committee is responsible for reviewing and discussing with Company management our public policy advocacy efforts, and annually reviews the activities of our political action committees, and all political contributions made with corporate funds.funds and membership dues paid to 501(c)(6) U.S. based trade associations (including any portion of dues used for lobbying activities).

 

We published our first annual 20202022 Corporate Political ContributionContributions Disclosure Report in 2021.April 2023 on our website. In 2021,2022, the Center for Political Accountability assessed our political contribution disclosures for its annual CPA-Zicklin Index of Corporate Political Disclosure and Accountability and designated the Company a first-tier score of 84%approximately 85%. Also, we were recognized as one of the most improved companies for political contribution disclosures in 2021.

The Company updates the Corporate Political Contribution Disclosure Report annually, and we encourage you to review our 2021 report2022 Corporate Political Contributions Report and our Policy Governing Corporate Political Contributions and Activities, which are both available on our website under the “Investors—Corporate Governance” caption.

 

Moving Forward

 

We are proud of what we have been able to accomplish as a company and believe our achievements show a serious and growing commitment, demonstrating responsiveness to our evolving corporate responsibility. We are firmly resolved to live our core values of leadership, integrity, excellence, people and teamwork, and we will continue to strive for continuous improvement in the years ahead. As we enhance our corporate responsibility efforts and increase stockholder value, we look forward to providing periodic updates in future reports that detail both our challenges and successes.

 

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Highlights of our accomplishments with respect to ESG matters are below.

 

ENVIRONMENTAL
Emissions		• Engaged multiple third-party consultants to analyze and perform direct measurements of vent gasses on our petroleum storage tank emission-control systems and proactively identify, report and repair failures. •	Continue to invest in and implement upgraded equipment and new, low impact technology, including compressed instrument air systems, and combustion equipment designed to have the highest burn efficiency possible under normal operations.
		•	Continue our commitment to engineering and equipment designs that keep our gas in sealed, recoverable vessels to reduce the amount of gas that flashes in tanks.
		•	Increased inventory of batteries selling crude directly from vapor recovery towers, bypassing tanks and nearly eliminating tank emissions from those batteries.
		•	Over 50%85% of our crude oil production is currently covered by continuous emissions monitoring devices.
Water Management		•	Significantly increased use of recycled water in our production operations.
		•	Continued to enhance our tank battery design to include more efficient control technologies, including installing free water knockouts in place of gun barrels on all new tank battery locations.
		•	Continued to install produced water pipeline systems to increase recycle rates in all fields.
Spills and Spill Management		•	Continue focus on low spill rate, reducing total fluid spill rate per 1,000 Bbl produced fluids, achieving spill rate of below industry average. rate.
		•	Installed high-liquid-level alarms on all storage tanks as well as high-level “well-kill” systems.
		•	Investing in variable frequency drives to maintain pipeline operating pressures.
Climate Change		•	Committed to understanding the potential impact of growing alternative energy sources and the transition to a lower-carbon economy on our oil and gas portfolio and seek to factor changing conditions into our strategic plans, primarily through scenario planning to assess portfolio resilience over the long-term.
		•	Implemented our “Net Zero Now” initiative under which, effective January 1, 2021, every hydrocarbon molecule we produce is anticipated to be produced with zero net Scope 1 GHG emissions.
		•	Purchased carbon credits to offset the remaining emissions to the extent our GHG and methane intensity reduction targets do not eliminate our carbon footprint.
		•	Continue to search for innovative ways to implement cost-effective, appropriate steps to monitor, measure and reduce our energy use, waste and emissions.
SAFETY		•	We currently have full-time, field-dedicated coordinators within our Health, Safety and Environmental (HSE) organization to monitor facilities and help prevent potential issues.
		•	We have implemented a new cloud-based application that allows our employees to identify and immediately report incidents, potential hazards and near misses using a mobile device.
		•	We have an active safety, sustainability and corporate responsibility committee of our board of directors that oversees our policies on ESG matters and the quality of our procedures for identifying, assessing, monitoring and managing the principal environmental, health, safety and social risks in our business and provides leadership with respect to best practices in the areas of environmental, sustainability and corporate and social responsibility. • Took responsible safety actions to protect health and well-being of our employees in response to the COVID-19 pandemic.
COMMUNITY		• Commitment	Committed to donate $2,500,000$10 million to the Quality of Place Conservancy for a significant redesign of Hogan Park in Midland. support various non-profit entities to address Ukraine humanitarian needs.

 

Our 20212022 Corporate Sustainability Report can be found on our website under the “About—Sustainability”“Sustainability” caption.

 

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AUDIT COMMITTEE REPORT

 

The audit committee is responsible for providing independent, objective oversight for the integrity of the Company’s financial reporting process and internal control system. Other primary responsibilities of the audit committee include the review, oversight and appraisal of the qualifications, independence and audit performance of the Company’s independent registered public accounting firm and providing an open venue for communication among the independent registered public accounting firm, financial and senior management, our internal auditors and the board of directors of the Company. A more detailed description of the responsibilities of the audit committee is set forth in its written charter, which is posted on our website at www.diamondbackenergy.com. The following report summarizes certain of the audit committee’s activities with respect to its responsibilities during 2021.2022.

 

Review with Management and Independent Registered Public Accounting Firm

 

The audit committee has reviewed and discussed with management and Grant Thornton LLP, an independent registered public accounting firm, the audited consolidated financial statements of the Company for the year ended December 31, 2021.2022.

 

Controls and Procedures

 

The audit committee discussed with management and Grant Thornton LLP the quality and adequacy of the Company’s disclosure controls and procedures. The audit committee also reviewed and discussed with management and Grant Thornton LLP the Company’s system of internal control over financial reporting in compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

 

Discussions with Independent Auditing Firm

 

The audit committee has discussed with Grant Thornton LLP, independent auditors for the Company, the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees. The audit committee has received the written disclosures and the letter from Grant Thornton LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence and has discussed with that firm its independence from the Company.

 

Recommendation to the Board of Directors

 

Based on its review and discussions noted above, the audit committee recommended to the board of directors that the audited financial statements and management’s report on internal control over financial reporting be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.2022.

 

THE AUDIT COMMITTEE

 

Mark L. Plaumann, Chairperson

Vincent K. Brooks
Michael P. Cross

David L. Houston

Stephanie K. Mains

Melanie M. Trent

 

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EXECUTIVE OFFICERS

 

The following table sets forth the name, age and positions of each of our executive officers as of April 14, 2022.13, 2023.

 

Name	Age		Age		Position
Travis D. Stice	60		61		Chairman of the Board, Chief Executive Officer and Director
M. Kaes Van’t Hof	35		36		President and Chief Financial Officer
Teresa L. Dick	52		53		Executive Vice President, Chief Accounting Officer and Assistant Secretary
Thomas F. Hawkins	68Daniel N. Wesson		Executive Vice President—Special Projects
Jennifer Soliman	5239		Executive Vice President and Chief Human Resources Officer
Daniel N. Wesson	38		Executive Vice President and Chief Operating Officer
Matt Zmigrosky	43		44		Executive Vice President, General CounselChief Legal and Administrative Officer and Secretary

 

Biographical information for Mr. Stice is set forth in this proxy statement under the heading “Director Nominations—About Director Nominees.”

 

M. KAES VAN’T HOF.Mr. Van’t Hof has served as our President and Chief Financial Officer since February 2022. Prior to his current position with us, he served as our Chief Financial Officer and Executive Vice President of Business Development from March 2019 to February 2022, as Senior Vice President of Strategy and Corporate Development from January 2017 to February 2019 and as our Vice President of Strategy and Corporate Development since joining us in July 2016. Mr. Van’t Hof has served as President and director of the general partner of Viper since March 2017 and as President and director of the general partner of Rattler since July 2018.2017. Before joining Diamondback Viper and Rattler,Viper, Mr. Van’t Hof served as Chief Executive Officer for Bison Drilling and Field Services from September 2012 to June 2016. From August 2011 to August 2012, Mr. Van’t Hof was an analyst for Wexford Capital responsible for developing operating models and business plans, including for our initial public offering, and before that worked for the Investment Banking - Financial Institutions Group of Citigroup Global Markets, Inc. from February 2010 to July 2011. Mr. Van’t Hof was a professional tennis player from May 2008 to January 2010. Mr. Van’t Hof received a Bachelor of Science in Accounting and Business Administration from the University of Southern California.

 

TERESA L. DICK. Ms. Dick has served as our Executive Vice President and Chief Accounting Officer since March 2019. Ms. Dick served as our Executive Vice President and Chief Financial Officer from February 2017 to February 2019, as our Assistant Secretary since October 2012, as our Chief Financial Officer and Senior Vice President from November 2009 to February 2017 and as our Corporate Controller from November 2007 until November 2009. Ms. Dick has served as Chief Financial Officer, Executive Vice President and Assistant Secretary of the general partner of Viper since February 2017 and served as its Chief Financial Officer, Senior Vice President and Assistant Secretary from February 2014 to February 2017. Ms. Dick has also served as Chief Financial Officer, Executive Vice President and Assistant Secretary of the general partner of Rattler since July 2018. From June 2006 to November 2007, Ms. Dick held a key management position as the Controller/Tax Director at Hiland Partners, a publicly-traded midstream energy master limited partnership. Since March 2021, Ms. Dick has served as a director of The Bank7 Corp. (Nasdaq: BSVN) and is a member of the Audit and Nominating and Corporate Governance Committees. Ms. Dick has over 25 years of accounting experience, including over eight years of public company experience in both audit and tax areas. Ms. Dick received her Bachelor of Business Administration degree in Accounting from the University of Northern Colorado. Ms. Dick is a certified public accountant and a member of the American Institute of CPAs and the Council of Petroleum Accountants Societies.

 

THOMAS F. HAWKINS.Mr. Hawkins has served as our Executive Vice President—Special Projects since February 2022. Prior to his current position with us, Mr. Hawkins served as our Executive Vice President—Land from February 2019 to February 2022 and as Senior Vice President—Land from March 2017 until March 2019. Mr. Hawkins has also served as Executive Vice President—Land of the general partner of Viper since March 2019 and served as its Senior Vice President—Land from March 2017 to March 2019. Prior to his employment with us, Mr. Hawkins was an independent Consultant for Land Activities from July 2016 to February 2017. Mr. Hawkins has over 38 years of experience in the oil and gas industry. Mr. Hawkins spent seven years with Oasis Petroleum, Inc., an active oil and gas company in the Williston Basin, as its Senior Vice President of Land (or in similar capacities) from March 2009 until June 2016, retiring from that position. Prior to his tenure at Oasis Petroleum, Inc., Mr. Hawkins spent 31 years at ConocoPhillips and Burlington Resources (which ConocoPhillips acquired in 2006) in various operations and managerial positions in Land, Marketing, Planning and the Corporate Acquisitions and Divestitures group, retiring in February 2009. While at ConocoPhillips (Burlington Resources), Mr. Hawkins has worked in several major regions in the continental United States, including the San Juan Basin, the Williston Basin and the Austin Chalk/Wilcox Trends in South Texas. Mr. Hawkins holds a Bachelor of Business Administration degree in Finance from the University of Texas at El Paso.

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JENNIFER SOLIMAN.Ms. Soliman has served as our Executive Vice President and Chief Human Resources Officer since March 2019. Prior to her current position with us, Ms. Soliman served as our Senior Vice President and Chief Human Resources Officer from January 2018 until March 2019. Prior to joining us, Ms. Soliman served as Senior Vice President and Chief Human Resources Officer at Sunnova Energy Corporation from December 2015 to January 2018, and prior to that, served in various human resources leadership roles at Freedom Oil & Gas Ltd. (formerly, Maverick Drilling & Exploration Ltd.), Woodside USA and BP America, each an oil and gas company, and Koch Industries, Inc., a diversified industrial, including chemicals and refining. Ms. Soliman serves on the board of Jones Partners at the Rice Business School and previously served as a member of the United States Air Force Reserves. Ms. Soliman holds a Bachelor of Arts degree in Organizational Behavior from Rollins College and a Master of Business Administration degree from Rice University.

DANIEL N. WESSON. Mr. Wesson has served as our Executive Vice President and Chief Operating Officer since February 2022. Prior to his current position with us, Mr. Wesson served as our Executive Vice President of Operations from March 2020 to February 2022, and as Senior Vice President of Operations from February 2019 until March 2020. Mr. Wesson served as our Vice President of Operations from April 2017 to February 2019 and as our Completions Manager from January 2013 to April 2017. He joined us as an Operations Engineer in February 2012. Prior to joining us, Mr. Wesson served in various operations and engineering roles for BOPCO L.P. from 2010 to 2012 and ConocoPhillips from 2007 to 2010. Mr. Wesson received his Bachelor of Science degree in Mechanical Engineering from Louisiana State University and is a member of the Permian Basin Society of Petroleum Engineers.

 

MATT ZMIGROSKY. Mr. Zmigrosky has served as our Executive Vice President, Chief Legal and Administrative Officer and Secretary since February 2023. Prior to his current position with us, he served as our Executive Vice President, General Counsel and Secretary sincefrom February 2019.2019 to February 2023. Since February 2019, Mr. Zmigrosky has also served as Executive Vice President, General Counsel and Secretary of the general partnerspartner of each of Viper and Rattler.Viper. Before joining us and the general partnerspartner of Viper, and Rattler, Mr. Zmigrosky was in the private practice of law, most recently as a partner in the corporate section of Akin Gump Strauss Hauer & Feld LLP from October 2012 to February 2019, where he worked extensively with Diamondback and its subsidiaries. Mr. Zmigrosky holds a Bachelor of Science in Management degree in finance from Tulane University and a Juris Doctorate degree from Southern Methodist University Dedman School of Law.

 

DIAMONDBACK ENERGY, INC.•20222023 PROXY STATEMENT     4038

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COMPENSATION DISCUSSION AND ANALYSIS TABLE OF CONTENTS

TABLE OF CONTENTS

EXECUTIVE SUMMARY	39
EXECUTIVE SUMMARY	41
HIGHLIGHTS OF EXECUTIVE COMPENSATION BEST PRACTICES	4542
EXECUTIVE COMPENSATION POLICY AND OBJECTIVES	4643
COMPETITIVE BENCHMARKING	4744
20212022 COMPENSATION PROGRAM DESIGN AND STRUCTURE	4946
EXECUTIVE COMPENSATION PROGRAM ELEMENTS	5047
OTHER SIGNIFICANT COMPENSATION AND BENEFIT PLANS, POLICIES AND PRACTICES	5754
COMPENSATION COMMITTEE REPORT	6461
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION	6461

 

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— EXECUTIVE SUMMARY

 

This compensation discussion and analysis identifies Diamondback’s named executive officers (NEOs) for 2021,2022, describes the Company’s executive compensation program, including the objectives and rationale for each element of compensation, and presents the compensation outcomes for our NEOs relative to our 20212022 performance.

 

Named Executive Officers

 

For 2021,2022, our NEOs were:

 

(1)	In addition to his ongoing role as our Chief Executive Officer, Mr. Stice assumed the role of
TRAVIS D. STICE Chairman of the Board, effective February 21, 2022.
(2)Chief Executive Officer and Director	In addition to his ongoing role as our	KAES VAN’T HOF President and Chief Financial Officer		TERESA L. DICK Chief Accounting Officer, Executive Vice President and Assistant Secretary		DANIEL N. WESSON Executive Vice President and Chief Operating Officer		MATT ZMIGROSKY(1) Executive Vice President, Chief Legal and Administrative Officer and Secretary

(1)	Mr. Van’t HofZmigrosky was promoted to the role of Executive Vice President, Chief Legal and Administrative Officer and Secretary effective February 21, 2022.6, 2023.
(3)	Mr. Pantermuehl retired from the Company effective December 31, 2021.

 

Biographical information for each of our NEOs currently serving as our executive officers and other key executives of Diamondback can be found on page 39.38.

 

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2021

2022 and Q1 20222023 Operational and Financial Performance Highlights and Key Strategic Transactions

 

In 2020, Diamondback adapted its operations significantly to protect long-term stockholder value.2022 was a fantastic year for Diamondback. The Company’s sharpened focus in 2020 oncontinued commitment to capital discipline, efficient, low-cost execution and protectingESG leadership provided a foundation for Diamondback to deliver record results to its stockholders. Despite continued inflationary pressures, the Company successfully executed on our capital program, exceeded production expectations, accelerated our return of capital plan, further improved our balance sheet and cash flow positioned the Company to thrive as the industry began exiting the bottomgenerated record Free Cash Flow. Certain highlights of the cycle. In 2021, Diamondback continued to operate in a manner consistent with its belief that long-term stockholder value in our industry is created through consistent execution at the lowest cost structure. Despite continued challenges throughout 2021, including the ongoing COVID-19 global pandemic, navigating Winter Storm Uri, and inflationary pressures, Diamondback remained firmly committed to its strategy of capital discipline and efficient, low-cost execution. As commodity prices improved throughout 2021, Diamondback was uniquely positioned in September 2021 to accelerate its capital return program and authorize an up to $2.0 billion share repurchase program and commit to returning at least 50% of Diamondback’s Free Cash Flow to stockholders beginning in the fourth quarter of 2021. The fourth quarter of 2021 topped off a record year for the Company, and we remain well positioned to maintain our capital efficiency and low-cost execution focus through the cycle.Company’s achievements are summarized below.

 

STOCKHOLDER INITIATIVES	•	In September 2021, announced plansJune 2022, increased Diamondback’s return of capital commitment to return at least 50%75% of Diamondback’s FreeCash Flow (as defined and reconciled on Schedule A to this proxy statement) to stockholders beginning in the fourththird quarter of 20212022
	•	Initiated a Board approvedIncreased annual base dividend to $3.20 per share, representing 33% year over year growth
	•	Increased authorization under share repurchase program of up to $2.0$4 billion from $2 billion previously
	•	Increased fourth quarter 2021In 2022, repurchased nearly 8.7 million shares of Diamondback’s common stock dividend to $0.60for $1.1 billion (at aweighted average price of $126.19 per share, a 50% increase year over year on an annualized basisshare)
	•	Repurchased over $430 million of its common stock, reducing its share count byIn 2022, returned approximately 2.0% since initiating its stock repurchase program in September 2021
	•	Returned 67%$3.11 billion (or approximately 68%) of Free Cash Flow in Q4 2021 to stockholdersthrough a combination of our base and variable dividend and share repurchases and the Q4 2021 dividendrepurchase program
ESG COMMITMENT	•	Released our fourthfifth annual Corporate Sustainability Report in September 2021,2022, which included anassessment of our current portfolio in various low carbon scenarios as outlined by the International Energy Agency
	•	Announced initiative to reduce Scope 1 and Scope 2 GHG intensity by at least 50% from 2020 levelsby 2030
	•	Announced goal to implement continuous emission monitoring systems on our facilities to cover atleast 90% of operated oil production by the end of 2023
	•	Completed CDP’s water security and climate change questionnaires
	•	Increased the weighting of the environmental and safetyESG performance metrics in the 20212022 short-term annual incentivecompensation plan from 15%20% to 20%25%
	•	Adopted a Policy Governing Corporate Political Contributions andIn response to stockholder feedback, publicly disclosed Diamondback’sfor the first time our 2021 corporate political contribution activityEqual EmploymentOpportunity (EEO-1) data as of December 31, 2021 in our 2022 Corporate Sustainability Report, which was posted on our website in September 2022
	•	Adopted a clawback policy that allows for the recoupment and/or forfeiture of certain executive officerincentive compensation in the event of certain restatements
	•	Announced initiatives to reduce Scope 1 GHG intensity by at least 50% from 2019 levels by 2024Enhanced our Policy Governing Corporate Political Contributions and reduce methane intensity by at least 70% from 2019 levels by 2024publicly disclosed Diamondback’s2020, 2021 and 2022 corporate political contribution activity
	•	Announced “Net Zero Now” strategy under which, as$10 million commitment to support various non-profit entities supporting humanitarianefforts in Ukraine and surrounding countries in response to Russian invasion of January 1, 2021, every hydrocarbon produced by Diamondback is anticipated to be produced with zero net Scope 1 GHG emissionsUkraine
	•	Announced long-term goals to end routine flaring (as defined by the World Bank) by 2025 and long-term targets to source over 65% of our water used for drilling and completion operations from recycled sources by 2025
	•	Flared 1.00% (1.45% including QEP Permian assets acquired in the QEP merger) of gross natural production for the full year 2021, down 49% (26% including QEP Permian assets) from 2020
FINANCIAL STRENGTH	•	Generated full year 20212022 net cash provided by operating activities of $3.94$6.33 billion and Free Cash Flow (asof $4.59 billion
	•	Upgraded by Moody’s Investors Service in October 2022 and continue to maintain investment gradecredit ratings from all three major ratings agencies
	•	Added to the Nasdaq-100 Index, the top 100 largest domestic and international non-financial companieson the Nasdaq based on market capitalization
	•	At year-end 2022, achieved 40% reduction in net debt/adjusted EBITDA(2) versus year-end 2021
	•	No material debt maturities until 2026
PORTFOLIO STRENGTH	•	Increased our total proved reserves by 14%, with such reserves consisting of approximately 53% oil
	•	Increased our proved developed producing reserves by 17%, with such reserves representingapproximately 69% of our total proved reserves

(2)	Defined as consolidated total debt less cash and cash equivalents at year-end divided by consolidated adjusted EBITDA for the full year as defined and reconciled on Schedule A to this proxy statement) of $2.42 billion
	•	Upgraded by Moody’s Investors Service in November 2021 and now maintain investment grade credit ratings from all three major ratings agencies
	•	At year-end 2021, achieved 20% reduction in consolidated net debt versus first quarter 2021
	•	Following our March 2022 debt offering and note redemptions discussed below, have no material debt maturities until 2026
PORTFOLIO STRENGTH	•	Increased our total proved reserves by 36%, with such reserves consisting of approximately 52% oil
	•	Increased our proved developed producing reserves by 47%, with such reserves representing approximately 67% of our total proved reservesstatement.

 

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PORTFOLIO MANAGEMENT	•	In March 2021, completed the acquisition of QEP in an all-stock merger and the acquisition ofAcquired all leasehold interests and related assets of Guidon. These acquisitionsFireBird and Lario in accretive transactions thatcollectively added material Tier-183,000 net acres of Midland Basin inventory to our acreage portfolio, increasing our net acreage in the Northern Midland Basin by over 81,500 net acres
	•	In March 2021, completedCompleted the issuance of 0.900% senior notes due 2023, 3.125% senior notes due 2031 and 4.400% senior notes due 2051 in the aggregate principal amount of $2.2 billion, and used proceeds from the offering to complete tender offers for (i) approximately 97% of QEP’s senior notes that remained outstanding following the closingRattler Merger by acquiring all of the QEP merger discussed above and 46% of Diamondback’s outstanding 5.375% senior notes due 2025, with the remaining 54% of these notes redeemedpublicly held common units representing limitedpartner interests in Rattler not already owned by us in August 2021 with cash on hand and borrowings under our revolving credit facilityDiamondback or its subsidiaries
	•	In May 2021, signed a definitive agreement to divest the Williston Basin assets acquiredCompleted divestiture of 10% equity ownership in the QEP merger, which subsequently closedGray Oak crude oil pipeline for $180 millionresulting in October 2021an approximate 1.75x multiple on invested capital and resulted in netused the proceeds to partially fund the cash proceedsportion of $586 millionthe purchase price for the Lario Acquisition
	•	In June 2021, used internally generated cash flowSigned definitive agreements to divest approximately 19,000 net acres in Glasscock County and proceeds fromapproximately 4,900 net acres in Ward and Winkler counties for total consideration of $439 million, subject to closing adjustments, and increased non-core asset salessale target to redeem $191 million of 4.625% senior notes due 2021at least $1 billion by year-end 2023
	•	In October 2021, used internally generated cash flow and proceeds from the Williston Basin asset divestiture discussed above to redeem $650 million of 0.900% senior notes due 2023
	•	In December 2021, completed the sale of certain water midstream assets with a carrying value of approximately $160 million to Rattler in exchange for cash proceeds of approximately $160 million, subject to post-closing adjustments
	•	In March 2022, completed the issuance of $750 million of 4.250% senior notes due 2052, and usedthe proceeds from the offering and internally generated cash flow to redeem all of Diamondback’s outstanding 4.750% senior notes due 2025 and 2.875% senior notes due 2024 in the aggregate principal amount of $1.5 billion

Summary of Key Compensation Actions Related to 2021 Compensation

Actions Taken in February 2021

MAINTAINED FLAT TARGET CASH COMPENSATION AND REDUCED TARGETED VALUE OF LONG-TERM INCENTIVE AWARDS

Despite the Company’s resilience through 2020, considering continued uncertainty in the industry in early 2021, the Company’s overall performance in 2020 and the compensation committee’s evaluation of market data with input from representatives at Meridian Compensation Partners, LLC (Meridian), the compensation committee took the following actions in February 2021:

•	Held•	In October 2022, completed the issuance of $1.1 billion of 6.250% senior notes due 2033 and useda portion of the proceeds from the offering to redeem all base salaries flat in 2021 for our NEOs versus 2020. Maintained Mr. Stice’s base salary at current levelof Rattler’s outstanding 5.625% senior notes due 2025 and to pay the cash consideration of the purchase price for the second consecutive year. For more information, see “Executive Compensation Program Elements—Base Salary” beginning on page 51.FireBird Acquisition
•	Held all annual incentive award targets flat in 2021 for our NEOs versus 2020. For more information, see “Executive Compensation Program Elements—Performance-Based Annual Incentive Bonus” beginning on page 51.
•	Reduced Mr. Stice’s targeted valueIn December 2022, completed the issuance of his total LTI compensation award by 20% from 2020$650 million of 6.250% senior notes due 2053 and reduced the targeted valueused a portion of the total LTI compensation award for eachproceeds from the offering to pay the cash portion of the other NEOs by 10% from 2020. For more information regarding the Company’s 2021 LTI awards, see “Executive Compensation Program Elements—Long-Term Equity Incentive Compensation” beginning on page 54.

ENHANCED ANNUAL INCENTIVE PLAN STRUCTURE AND LONG-TERM INCENTIVE PLAN STRUCTURE

Representatives of the Company’s compensation committee and certain executive officers conducted a comprehensive engagement with 17 of our largest stockholders representing, at the time, 51% of our outstanding common stock in response to the Company’s 2020 say on pay results. In February 2021, the compensation committee made the following changes to the Company’s annual incentive plan and long-term incentive plan in response to the feedback received during those stockholder discussions:

•	Added a free cash flow per share performance metric to annual incentive plan scorecard with a 20% weighting;
•	Maintained a return on average capital employed metric in annual incentive plan scorecard with a 20% weighting;
•	Increased the weighting of the environmental and safety performance metrics in the annual incentive plan scorecard from 15% to 20%;
•	Reduced the aggregate weighting of costs and capital efficiency performance metrics in the annual incentive plan scorecard to 40% from 65% in 2020, while increasing the aggregate weighting of financial metrics and environmental and safety metrics to 60% from 35% in 2020;
•	Added the S&P 500 Index and SPDR S&P Oil and Gas E&P ETF Index to the Company’s TSR performance peer group; and
•	Maintained Absolute TSR Modifier that reduces payouts if absolute TSR performance is negative and has a multiplier if absolute TSR performancepurchase price for the performance period is greater than 15%.Lario Acquisition

 

For more information, see “Executive Compensation Program Elements—Performance-Based Annual Incentive Bonus” beginning on page 51 and “Executive Compensation Program Elements—Long-Term Equity Incentive Compensation” beginning on page 54.

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Actions Taken in February 2022

ACHIEVED ANNUAL INCENTIVE METRICS

The compensation committee certified the achievement of the short-term annual incentive plan performance metrics for 2021 and related payouts to the NEOs and other participating executives at 187% of target. The Company’s performance under the short-term annual incentive plan is discussed under “Executive Compensation Program Elements—Performance-Based Annual Incentive Bonus” beginning on page 51.

ACHIEVED LONG-TERM INCENTIVE METRICS

The compensation committee certified the vesting of the 2019 performance-based long-term equity awards at 100% of targeted payout based on the Company’s relative TSR performance at the 50^th percentile of the TSR performance peer group for the three-year period ended December 31, 2021. For more information regarding the Company’s TSR performance for the applicable performance period, see “Executive Compensation Program Elements—Vesting of 2019 Performance-Based Awards” beginning on page 56.

Stockholder Outreach and 20212022 “Say-On-Pay” Advisory Vote

 

The compensation committee carefully reviews our executive pay programs and focuses on emphasizing pay for performance in making annual compensation decisions. The compensation committee values the insight we receive from our stockholder outreach and from our annual say-on-pay advisory vote on executive compensation. Following the Company’s 2020 annual meeting of stockholders, representatives of the compensation committee and certain executive officers conducted a comprehensive engagement with stockholders representing, at the time, 51% of our outstanding common stock in response to the Company’s 2020 say on pay results, and the compensation committee incorporated significant stockholder feedback when designing the Company’s 2021 executive compensation program. In 2021,2022, approximately 96%95% of votes cast by our stockholders were in favor of our say-on-pay proposal. Although this vote demonstrates substantial support of our executive compensation programs, representatives of our board and management team continued to undertake stockholder engagement efforts to, among other things, solicit stockholder input on our executive compensation structure and ensure ongoing stockholder support of our executive compensation programs. During 2021,2022, we solicited feedback on our executive compensation programs, ESG matters and other important corporate governance issues. For a discussion of our stockholder engagement and actions that we have taken in response to stockholder feedback, see “Corporate Governance Matters—Stockholder Engagement” on page 30.29.

 

 

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—HIGHLIGHTS OF EXECUTIVE COMPENSATION BEST PRACTICES

 

The following highlights our commitment to the best compensation practices.

 

WHAT WE DO			WHAT WE DON’T DO
	We providestrive to pay for performance - The majority of ourexecutive officers’ compensation is long-term, “at risk” and is paid only if the Company achieves certain performance objectives, which are designed to increase the value of our stock.			No hedging of Company securities, including by enteringinto publicly traded options, puts, calls, and short sales or similar hedging transactions, by executive officers or directors.
	All of our performance-based equity awards granted since 2018 vest over athree-year performance period, subject to achieving a specified total stockholder return (TSR) measured against our TSR performance peer group and satisfaction of continuous service requirements.			No pledging of our common stock as collateral for a loanor holding of our common stock in margin accounts by our directors and executive officers, except in certain limited circumstances upon obtaining prior approval from a compliance officer.officers.
	All Diamondback equity awards granted in 2020 and thereaftermade under the EquityIncentive Plan contain double-trigger change of control provisions.			No tax gross-ups for executive officers.
	We require substantial stock ownership for our non-employeenon-employee directors and executive officers and they must maintain their applicable stock ownership levels for as long as they serve on our board or are employed by us.			No repricing of underwater stock options or stockappreciation rights.
	We devote significant time to analyzing and preparing forexecutive succession and related retention matters.			No severance compensation unless departing executiveofficers agree not to compete with us for a specified period of time after the end of their employment.
	We hold annual advisory “say-on-pay” votes.			No performance metrics that would encourage excessiverisk taking by our executive officers.
	We engage in active stockholder outreach with respect toexecutive compensation, corporate governance and other ESG matters.			No significant perquisites to our executive officers.
	We benchmark executive compensation against ourindustry peers.			No guaranteed annual bonuses
	Each member of our compensation committee meets theindependence requirements under SEC rules and Nasdaq listing standards.			No pension or supplemental retirement benefits to ourexecutive officers (other than under our broad-based 401(k) plan).
	We use an external, independent compensation consultantsconsultant who areis retained by, and reportreports directly to, the compensation committee to assist the Company with, among other things, conducting competitive benchmarking to align the Company’s compensation program with prevailing market practices.			No employment agreements with our NEOs and otherexecutive officers. All of such prior employment agreements (to the extent applicable) were replaced by the executive severance plan in February 2020 to provide a uniform framework for compensation and severance benefits that are consistent with market practices.
	We adopted a standalone clawback policy that providesfor the recoupment and/or forfeiture of certain executive officer incentive compensation in the event of financial errors that result in a restatement of financial statements (subject to revision in accordance with requirements of Nasdaq’s listing standards when finalized), in addition to the “clawback” provisions of our 2021 Amended and Restated Equity Incentive Plan.
	We utilize a balanced approach to compensation, which combines performance and time-based, short-term and long-term, and cash and equity compensation components.
	We benchmark executive compensation against our industry peers.

 

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—EXECUTIVE COMPENSATION POLICY AND OBJECTIVES

 

Executive Compensation Objectives

 

Our executive compensation philosophy is guided by several key principles described below:

 

Our Goals	•	Our goals are to attract, retain, and motivate our executive team and our organization todeliver results against our short-term and long-term objectives in a principled way, with prudent risk-taking, and alignment with our stockholders.
Pay for Performance	•	A majority of total compensation to our executive officers is at-risk performance-basedperformance-based compensation, including both long-term performance-based equity awards and short-term performance-based cash incentive awards.
	•	Our long-term equity awards include performance-based awards based on relativeTSR, as modified by an absolute TSR modifier. In 2021, the compensation committee revised theThe Company’s TSR performance peer group to includealso includes the S&P 500 and XOP Index to account for performance against the broader market.
	•	Annual cash incentive awards are based on rigorous operational, financial andenvironmental and safety performance metrics that are entirely quantitative and do not provide for the exercise of discretion by the compensation committee to increase the award payout. In 2021,2022, the compensation committee further increased focus on financial metrics (e.g., free cash flow per share and return on average capital employed) and environmental and safetyESG metrics in response to stockholder feedback.
	•	Our compensation structure motivates executives and our employees to deliveroutstanding financial performance and meet or exceed general and specific business, operational and individual objectives, and progress towards our long-term strategic goals.
Alignment with Stockholder Interests	•	We provide a majority of the total compensation to our executive officers in Companyequity, thus ensuring alignment of interests between our executives and our stockholders, and driving alignment of goals, efforts, and results throughout the organization.
Market-Based Competitive Compensationthat Attracts, Motivates and Retains Talent	•	Our compensation programs are competitive, with compensation and incentive levelsthat are relevant to the market and our industry, which enhances our ability to attract, motivate and retain knowledgeable and experienced senior management talent necessary to manage our complex organization and responsibly deliver energy to the marketplace.
Risk Management Principles	•	Our compensation committee consists entirely of independent directors who engage anexternal, independent compensation consultantsconsultant to assist in constructing an executive compensation program that aligns with good governance practices and prevailing market trends.

 

The Role of the Compensation Committee

 

Our compensation committee oversees and approves our executive compensation program and establishes our overall compensation philosophy and strategy. The compensation committee, with the assistance of its external, independent compensation consultant, determines the mix of compensation, both among short-term and long-term components and cash and equity components, to establish compensation that it believes is appropriate for each of our NEOs. Representatives of the compensation committee may also participate in the Company’s stockholder engagement efforts to, among other things, solicit stockholder input on our executive compensation structure and ensure ongoing stockholder support of our executive compensation programs. In making compensation decisions with respect to each element of compensation, the compensation committee considers numerous factors, including:

 

•	aligning the compensation of our executives with the performance of the Company on both a short-term and long-term basis;
•	achievement of individual and Company performance goals and other expectations relating to the executive’s position;
•	a comparison of the individual to other executives within the Company having similar levels of expertise and experience;
•	the individual’s role with us and the compensation paid to similar executives at comparable companies;
•	the individual’s particular background and circumstances, including training and prior relevant work experience and unique industry skills;
•	the demand for individuals with the individual’s specific expertise and experience;
•	succession planning and retention considerations; and
•	recommendationrecommendations from our CEOChief Executive Officer (but not with respect to his own compensation).

 

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The compensation committee seeks to design a total compensation package for our NEOs that drives performance, rewards contributions in support of our business strategies and attracts, motivates and retains high quality talent with the skills and competencies our industry requires. The compensation committee seeks to balance these goals by designing our compensation policies and programs to encourage and reward prudent business judgment over the long-term by offering both time-based and performance-based long-term incentive (LTI) awards, setting meaningful performance criteria and targets for incentive compensation, and offering competitive base salaries. The compensation committee believes that this combination should avoid encouraging executives and management-level employees to engage in excessive risk-taking, while at the same time promoting performance and retention.

 

The Role of Management

 

Each year, our Chief Executive Officer evaluates executive and Company performance for the prior year and recommends to the compensation committee the annual base salaries, annual incentive compensation plan target award percentages and long-term incentiveLTI awards under the Equity Incentive Plan for the executive officers, including the NEOs, other than himself. The Company’s Chief Human Resources Officerand Legal departments also assistsassist the compensation committee and its independent compensation consultant in gathering the information needed for their respective reviews of the Company’s executive compensation program. While the compensation committee considers our Chief Executive Officer’s evaluation of the other executive officersNEOs and his recommendations as to their compensation, the compensation committee ultimately determines the compensation of each NEO.

 

The compensation committee evaluates, in his absence, our Chief Executive Officer’s performance and compensation based on his leadership role, his individual performance and the Company’s performance measured against the metrics described in this compensation discussion and analysis, and his total compensation package is ultimately determined by the compensation committee.

 

The Role of the Compensation Consultant

 

Our compensation committee annually retains, at the Company’s expense, an external, independent compensation consultant to assist with executive and non-employee director compensation matters. In connection with its evaluation of executive compensation for 2021,2022, the compensation committee retained Meridian, as its independent compensation consultant.

 

The compensation committee reviewed the independence of Meridian during the applicable engagement period and determined that there were no conflicts of interest as a result of the compensation committee’s engagement of such consultant. The compensation committee continues to evaluate the independence of its compensation consultant on an ongoing basis. Meridian did not provide any services to the Company during 2022 other than related to executive and director compensation.

 

The compensation committee has sole authority to hire and terminate its independent compensation consultant, and the independent compensation consultant reports only to the compensation committee. From time to time, Meridian contacts the Company’s executive officers for information necessary to fulfill its assignment and prepares reports for and on behalf of the compensation committee that certain executive officers also receive.

 

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—COMPETITIVE BENCHMARKING

 

Role of Benchmarking in Determining Executive Compensation for 2021

2022

 

In general, the compensation committee uses competitive market compensation data provided by Meridian and discussions with the Chief Executive Officer to inform its decisions about overall compensation opportunities and specific compensation elements. The compensation committee considers these compensation elements and total compensation benchmarks of peer companies and the broader U.S. market. Next, the compensation committee applies judgment and discretion in establishing targeted pay levels, taking into account not only competitive market data, but also factors such as Company and individual performance, scope of responsibility, critical needs, skill sets, leadership potential, and succession planning.

 

Further, in considering changes to the 20212022 executive compensation packages, the compensation committee evaluated, among other things, aspects of executive compensation in general, market data and competitive analysis provided by Meridian, the Company’s 20202021 and multi-year performance, our executives’ individual contributions to such performance, compensation alignment with future performance and stockholder value creation, performance-qualified equity awards, retention considerations, market alternatives for our executives, input obtained from our stockholder outreach efforts and, with respect to our NEOs other than our Chief Executive Officer, our Chief Executive Officer’s recommendations. Our Chief Executive Officer provided recommendations to the compensation committee related to such other executive officers’ annual base salaries for 2021,2022, annual incentive compensation plan target award percentages and long-term incentiveLTI awards under the Equity Incentive Plan. The compensation committee also evaluated, in his absence, our Chief Executive Officer’s individual performance and compensation.

 

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Our 20212022 Benchmarking Compensation Peer Group

 

In structuring our compensation policies and programs, the compensation committee considers the compensation practices of peer companies consisting of independent oil and gas E&P companies and may also review compensation data from the oil and natural gas industry, any relevant compensation surveys and guidance from the compensation consultant. The compensation committee considers and may make changes to the companies included in our compensation peer group, primarily based on industry segment, and measures of size such as enterprise value, market capitalization, assets and revenues, after discussing such considerations with management and the compensation consultant.Meridian. Following discussions with Meridian and review of pertinent financial information, for 2022, the compensation committee removed NobleConcho Resources, Inc., Parsley Energy, Inc. from its compensation peer group following the acquisition of Nobleand WPX Energy, Inc. by Chevrondue to those entities having been acquired, and included Antero Resources Corporation, but otherwise maintained the same compensation peer group from 2020.EQT Corporation and Occidental Petroleum Corporation.

 

In its review of the compensation peer group for 2021,2022, the compensation committee considered pertinent financial measures for each company as provided by Meridian, including enterprise value and market capitalization as of December 20202021 and assets and revenue as of the quarter ended September 30, 2020,2021, as shown (in millions) in the table below:

 

		Enterprise Value				Market Capitalization				Assets				Revenue
Peer Group 50th Percentile		$	13,017			$	5,027			$	13,802			$	3,934
Diamondback Energy, Inc.		$	13,180			$	6,295			$	18,760			$	2,992

		Enterprise Value				Market Capitalization				Assets				Revenue
Peer Group 50th Percentile		$	19,562			$	15,777			$	18,326			$	6,700
Diamondback Energy, Inc.		$	26,991			$	19,540			$	22,639			$	5,255

 

The benchmarking compensation peer group used in Meridian’s study, which served as reference for making compensation decisions for 2021,2022, consisted of the following 12 companies.

 

APAAntero Resources Corporation	HessEQT Corporation
Cimarex Energy Co. (Now APA Corporation	Hess Corporation
Continental Resources, Inc.	Marathon Oil Corporation
Coterra Energy Inc.)	Marathon OilOccidental Petroleum Corporation
Concho Resources Inc.*	Ovintiv Inc.
Continental Resources, Inc.	Parsley Energy, Inc.*
Devon Energy Corporation	Ovintiv Inc.
EOG Resources, Inc.	Pioneer Natural Resources Company
EOG Resources, Inc.	WPX Energy, Inc.*

 

*	These companies were removed from the Company’s TSR performance peer group because the respective acquisition of each company closed prior to the date on which long-term incentive compensation awards were made to NEOs in March 2021.

Meridian provided competitive data for similarly situated executives at these compensation peer group companies, focusing on salary, annual incentive opportunity and LTI opportunity, and analyzing how these elements of compensation compare to the elements of compensation afforded to our executive officers, including the NEOs.

 

In addition to reviewing peer compensation information and advice provided by Meridian in connection with establishing 20212022 executive compensation, the compensation committee also analyzed compensation information compiled by Meridian for 2925 industrial and manufacturing companies with financial measures, including enterprise value, market capitalization and revenues, comparable to Diamondback.

 

As described above, the compensation committee utilizes a substantially similar peer group to assess our relative TSR performance in the performance-based restricted stock unit awards granted to our NEOs, which generallyalso includes broader indexesthe S&P 500 and removes any companies that are acquired prior to the granting of performance awards.XOP Index.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     4845

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—

2021

—2022 COMPENSATION PROGRAM DESIGN AND STRUCTURE

 

During 2021,2022, the Company’s executive compensation program consisted of four primary components including both fixed and variable, at-risk elements, as shown below.

 

		Direct Compensation Element		Form of Compensation		Purposes and Alignment with Long-Term Stockholder Interests
FIXED		Base Salary		Cash		•	Provide a fixed level of compensation for performing applicable executive functions
						•	Based on level of responsibility, experience, individual performance, industry and market criteria and competition for talent
VARIABLE, AT RISK		Performance-Based Annual Short-Term Incentive Bonus		Cash		•	Reward short-term financial and operational performance over a one-year performance period
						•	Based on pre-established performance metrics and goals with minimum thresholds that must be met (and with payout caps).
						•	Performance measured against rigorous operational, financial and environmental and safetyESG performance metrics that are entirely quantitative and do not provide for the exercise of discretion by the compensation committee to increase the award payout
		Performance-Based Restricted Stock Unit Award  of LTI opportunity		Equity—PSUs with athree-year performance period		•	Align interests of our executives with our stock performance and long-term interests of our stockholders
						•	Based on (i) attainment of specific performance goals established by the compensation committee, (ii) our TSR, both (A) relative to our TSR performance peer group during the performance period (which now includes the S&P 500 and XOP Index to account for performance against the broader market) and (B) on an absolute basis, which may result in an adjustment up or down depending on performance and (iii) continuous service requirements
			Time-Based Restricted Stock Unit Award  of LTI opportunity			Equity (RSUs)Equity—RSUs		•	Provide a retention incentive, facilitate stock ownership and align our executives’ interest with long-term stockholder interests
						•	Vest in three approximately equal annual installments, with the first installment vesting on the date of grant and the remaining two installments vesting in March of each subsequent year, assuming continuous service

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     4946

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—

—EXECUTIVE COMPENSATION PROGRAM ELEMENTS

 

Our compensation committee determines the mix of compensation, both among short-term and long-term compensation and cash and non-cash compensation, to establish total compensation packages that it believes are appropriate for each of our NEOs. While emphasizing pay for performance, the compensation committee believes that the mix of base salary, performance-based annual incentive bonus awards based on pre-established financial, operational and operationalESG performance targets, performance-weightedperformance-based LTI equity awards, time-based LTI equity awards, and the other benefits that are available to our NEOs will accomplish our overall compensation objectives. We believe that these elements of compensation create competitive, retentive and compelling compensation opportunities.opportunities and also align our NEO’s interests with long-term stockholder interests.

 

2021 CEO PAY MIX(1)		AVERAGE NAMED EXECUTIVE OFFICER 2021 PAY MIX(1)

(1)

Each of these pay mix illustrations consists of the annual base salary, annual incentive bonus paid and the grant date fair value of the performance-based and time-based equity awards granted in 2022. These pay mix chartsillustrations exclude amounts listed in the column titled “All Other Compensation” in the Summary Compensation TablesTable set forth on page 65.”62.

 

Below is an illustration that compares CEO target compensation versus CEO realizable compensation for 2019-2021,2020-2022, in each case calculated as of December 31, 2021. The increase to realizable compensation for 2020 and 2021 results primarily from an increase in the realizable value of performance-based equity awards due to the Company’s significant outperformance in 2021 during which the Company’s common stock was the 8^th highest performing stock in the S&P 500 with a 127.5% return on stockholder investment. This correlation further exhibits the compensation committee’s commitment to designing an executive compensation program that is intended to align pay with performance.2022.

 

CEO TARGET VS REALIZABLE COMPENSATION 2019-2021⁽¹⁾

($ in thousands)

 

(1)

For purposes of this graph, “target compensation” consists of the annual base salary, target annual incentive bonus opportunity and the grant date fair value of the performance-based and time-based equity awards granted in each year presented.

(2)

For purposes of this graph, “realizable compensation” consists of the annual base salary earned for each year presented, the annual incentive bonus earned for each year presented and, with respect to time-based equity awards, the value of the shares underlying the applicable award (whether or not vested) based on the closing price per share of the Company’s common stock on the applicable date presented. With respect to performance-based equity awards granted in 2019, the value of realizable compensation presented represents the value of the total number of shares granted upon certification of the vesting percentage for such award calculated using the closing price per share of the Company’s common stock on the applicable date presented. With respect to performance-based equity awards granted in 20202021 and 2021,2022, the value of realizable compensation presented represents the value of the total number of shares that would have been granted if the performance period for the applicable award ended on December 31, 20212022 calculated using the closing price per share of the Company’s common stock on December 31, 2021. The CEO target versus realizable compensation for 2019 excludes a one-time restricted stock unit award granted under the RTLR LTIP. The grant date fair value of this one-time award was $2,195,434, and the realizable value of this award based on the closing price per unit of Rattler’s common units on December 31, 2021 was $1,300,575, or approximately 59% of the grant date fair value of such award.30, 2022.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     5047

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Pay for Performance Driven Compensation Structure

 

As illustrated above, the total direct compensation of our NEOs is heavily weighted towards variable, at-risk compensation that is tied to performance. Our Chief Executive Officer’s pay mix in 20212022 was 91%92% aligned with our stockholders’ interests and our other NEOs’ average pay mix was 90%89% aligned with our stockholders’ interests. The performance component of our Chief Executive Officer’s and our other NEOs’ pay mix for 2022 represented 72%70% and 70%67%, respectively, of such NEO’s total direct compensation.

 

The following describes each element of our executive compensation program, which we use to meet our compensation objectives discussed above.

 

Base Salary

The compensation committee evaluates our NEOs’ base salaries together with other components of their compensation to ensure equitable total compensation in line with our overall compensation philosophy and market practices in our compensation peer group, our industry in general, and considering other general industry benchmarks for executive roles which are not industry specific. In setting our NEOs’ base salaries and incentive targets for 2021,2022, the compensation committee considered, among other factors:

 

•	the market and compensation peer group data included in the study conducted by Meridian, the compensation committee’s independent compensation consultant for 2021,2022, discussed below;
	above;
•	the recommendations of our Chief Executive Officer with respect to the base salaries for other NEOs;
•	the complexity of the individual’s role within the Company;
•	the individuals’ expertise, experience, rarity of skill, and potential for advancement;
•	if the executive was promoted or identified in our succession planning; and
•	individual performance, leadership and contribution toward the Company’s achievement of certain financial, operational and operationalESG metrics discussed in this compensation discussion and analysis.

 

Base Salary

The compensation committee maintainedapproved an increase to our NEOs’ annual base salaries for 2021 at2022 as compared to 2021. Messrs. Stice and Zmigrosky and Ms. Dick each received base salary increases in 2022 due to Company and individual performance and competitive benchmarks. In February 2022, the same levels as 2020. Thecompensation committee approved the promotions of Mr. Van’t Hof to President and Chief Financial Officer and Mr. Wesson to Executive Vice President and Chief Operating Officer, and increased Messrs. Van’t Hof and Wesson’s 2022 base salaries by approximately 20% and 24%, respectively, to reflect individual and Company performance and competitive benchmarks for their new roles and additional responsibilities. Based on the foregoing considerations, the compensation committee set the following annual base salaries for our NEOs effective as of March 1, 2021.2022.

 

Named Executive Officer		2021 Base Salary				2020 Base Salary
Travis D. Stice		$	1,250,000			$	1,250,000
Kaes Van’t Hof		$	520,000			$	520,000
Teresa L. Dick		$	447,000			$	447,000
Russell D. Pantermuehl(1)		$	615,000			$	615,000
Matt Zmigrosky		$	520,000			$	520,000

Named Executive Officer		2022 Base Salary				2021 Base Salary				% of Increase
Travis D. Stice		$	1,350,000			$	1,250,000				8%
M. Kaes Van’t Hof		$	625,000			$	520,000				20%
Teresa L. Dick		$	475,000			$	447,000				6%
Daniel N. Wesson		$	560,000			$	450,000				24%
Matt Zmigrosky		$	550,000			$	520,000				6%

 

(1)	Mr. Pantermuehl retired from the Company effective December 31, 2021.

Performance-Based Annual Incentive Bonus

 

20212022 PERFORMANCE BONUS

 

Performance bonuses to our NEOs for 20212022 were granted under our Executive Annual Incentive Compensation Plan adopted by the compensation committee in February 2021 (the Annual Incentive Plan). The Annual Incentive Plan is designed to provide an incentive to our executive officers to contribute to the growth, profitability and increased value of the Company. The Annual Incentive Plan is focused on achievement of annual objectives and goals, determined at the beginning of each calendar year. Participants may earn a pre-determined percentage of base salary for the achievement of specified goals (performance targets). The payout opportunity varies for performance above and below the pre-established target performance levels. Performance factors for each award under the Annual Incentive Plan include criteria and objectives determined by the compensation committee used to measure the performance targets during the applicable performance period as a condition to the participant’s receipt of payment with respect to an award. For a more detailed description of the Annual Incentive Plan, see “Other Significant Compensation and Benefit Plans, Policies and Practices—Annual Incentive Plan” beginning on page 6057 of this proxy statement.

 

With respect to each annual performance period, the compensation committee specifies the performance factors and the performance target levels applicable to each award. Performance targets may include a level of performance below which no payment will be made and levels of performance at which specified percentages of the award will be paid as well as a maximum level of performance above which no additional award will be paid.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     5148

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Below is a simple illustration of the design of Diamondback’s 20212022 Performance Bonus:

 

 

For 2021,2022, the compensation committee did not change the NEO’s annual incentive target percentages from 2020.2021.

 

Since Diamondback went public in 2012, ourEach year, the compensation committee, has consistently beenadvised by its independent compensation consultant and informed by feedback received during the Company’s substantial stockholder engagement efforts, undertakes a thorough and rigorous process to review each element of the Company’s Annual Incentive Plan scorecard. The compensation committee’s desire to be proactive in implementing thoughtful changes to our compensation practices withhas allowed the intention of incentivizingcompensation committee to continually construct a scorecard that is directly responsive to stockholder feedback and is intended to incentivize our management team in ways that translate to stockholder value creation and encourage responsible governance practices. This strategy is reflected in the evolution of the scorecard over the last decade. For example,instance, we have not included a production or reserves growth metric in our scorecard for the Annual Incentive Plan after 2014. We added a return on average capital employed metric to our performance factors in the Annual Incentive Plan scorecard in 2018 and, in2018. In early 2020, the compensation committee took an additional step by adding specific, measurable environmental and safety performance targets to the scorecard for the Annual Incentive Plan. In 2021, primarily in response to significant stockholder feedback, the compensation committee included more performance factors focused on financial returns and increased the weighting of such performance factors while reducing the weighting of performance factors related to costs and capital efficiency.

 

When constructing the Annual Incentive Plan scorecard for 2021,2022, the compensation committee again reviewed significant data from its independent compensation consultant, incorporated significantstockholder feedback it received during our comprehensive stockholder engagement efforts in response to our 2020 say-on-pay results. For instance, during stockholder discussions, the Company consistently received feedback thatand reviewed the performance goals underfactors in light of the Company’s strategic objectives for 2022. The compensation committee also observed the positive trend of consistent stockholder support for the Company’s executive compensation programs, with stockholders voting to approve the Company’s say-on-pay proposal at a rate of at least 95% over the past 2 years. Accordingly, the framework for the 2022 Annual Incentive Plan should include more metrics focused on financial returns, specifically free cash flow generation. Additionally,scorecard was largely unchanged, with minimal exceptions as it relates to the compensation committee received feedback that the weighting of performance goals focused on generation of free cash flow, return on average capital employed and environmental and safety performance targets should be increased, while performance goals related to costsfactor in the scorecard. Accounting for stockholder feedback and capital efficiency should be reduced.

In addition to stockholder feedback,market trends, the compensation committee also considered other factors whenagreed to increase the weighting of the environmental and safety performance factor from 20% to 25%. Additionally, the committee increased the requirement to earn the maximum performance level on the environmental and safety performance factor by requiring all 5 metrics to be achieved in order to earn the maximum performance level .

When establishing the 2021 performance goals and2022 performance levels under the Annual Incentive Plan, including,the compensation committee reviewed, among other things,things:

•	our performance trends over a multi-year period;
•	our capital budget, business plan and annual guidance;
•	execution challenges expected due to perceived inflationary pressures;
•	the effects of potential merger and acquisition activity;
•	service and commodity markets;
•	capital requirements; and
•	the appropriateness and rigorousness of the target, threshold and maximum performance levels for each performance factor.

Specifically with respect to the performance targets for each metric comprising the environmental and safety performance factor, such performance targets were set for each metric taking into account multiple considerations, including a review of our performance trends, benchmarking considerations relative to peer performance over a multi-year period benchmarking considerations relativeand current progress toward Company-established targets with respect to our peers’ performance, our capital budget, business planflaring, GHG emission intensity and annual guidance, execution challenges ahead, service and commodity markets, capital requirements and the appropriateness and rigorousness of the target, threshold and maximum performance levels for each performance goal.water recycling.

 

Taking the foregoing into account, the performance goalsfactors and targetslevels listed in the table below were established by the compensation committee in March 2021.April 2022. The compensation committee set target performance levels that we believe were rigorous based on our historical performance, capital budget, business plan and annual guidance, were competitive with the metrics of the best operators in our compensation peer group in each respective category and were responsive to the callsfeedback from our stockholder base. stockholders.

The performance goals shown below align with how management views our success and how stockholders evaluate our financial, operating and ESG performance, both on a standalone basis and relative to our peers and the broader energy industry.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     5249

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In February 2022,2023, the compensation committee reviewed and certified the Company’s performance in relation to the pre-established performance goals and targets for 2021,2022, which are set forth below:

 

		Performance Levels(1)
Performance Factors			Threshold (50%)		Target (100%)		Maximum (200%)		2021 Weighting		% of Target		2021 % Earned
Capital Budget ($MM) Sum of 2021 cash capital expenditures (“CAPEX”) for operated drilling and completion (“D,C&E”), non-operated properties and capital workovers, operated midstream, infrastructure and environmental, pro forma for the QEP transaction (ties to cash flow statement).											200%		20%
PDP F&D Cost ($ / Boe) Sum of D,C&E well costs for wells brought to production in 2021 divided by the net EUR’s of those wells (as determined by reserve auditor on a 3-stream basis).											200%		40%
Controllable Cash Costs ($ / Boe) Sum of reported cash general and administrative expenses and reported lease operated expenses, divided by total barrels of oil equivalent production (“boe”). Excludes mearger integration and severance costs and ties to income statement.											72%		7%
Return on Average Capital Employed (%) Consolidated earnings before interest and taxes (“EBIT”) for 2021 divided by average total assets less average current liabilities for YE21 and YE20 (ties to balance sheet).											200%		40%
Pre-Dividend Free Cash Flow ($ / Share) Cash flow from operations prior to dividends and excluding working capital changes, less cash CAPEX for operated D,C&E, non-operated properties and capital workovers, midstream and infrastructure and environmental. Excludes acquisitions and equity method investments.											200%		40%
Environmental and Safety(2) Dependent on achieving specific targets for each of the following metrics: flaring, water recycling, GHG emission intensity, produced liquids spills and total recordable incident rate.											200%		40%
									100%				187%

	Performance Levels(1)
Performance Factors	Threshold (50%)	Target (100%)	Maximum (200%)	2022 Weighting	% of Target	2022 % Earned
Capital Budget ($MM)(2) Sum of 2022 cash capital expenditures (“CAPEX”) for operated drilling and completion (“D,C&E”), non-operated properties and capital workovers, operated midstream, infrastructure and environmental.					50%	5%
PDP F&D Cost ($ / Boe) Sum of D,C&E well costs for wells brought to production in 2022 divided by the net EUR’s of those wells.					159%	24%
Controllable Cash Costs ($ / Boe) Sum of reported cash general and administrative expenses and reported lease operated expenses, divided by total barrels of oil equivalent production (“boe”). Excludes merger integration and severance costs and ties to income statement.					58%	6%
Return on Average Capital Employed (%) Consolidated earnings before interest and taxes (“EBIT”) for 2022 divided by average total assets less average current liabilities for YE22 and YE21.					200%	40%
Pre-Dividend Free Cash Flow ($ / Share) Cash flow from operations prior to dividends and excluding working capital changes, less cash CAPEX for operated D,C&E, non-operated properties and capital workovers, midstream and infrastructure and environmental. Excludes acquisitions and equity method investments.					200%	40%
Environmental and Safety(3) Dependent on achieving specific targets for each of the following metrics: flaring, water recycling, GHG emission intensity, produced liquids spills and total recordable incident rate.					50%	13%
				100%		127%

(1)	No payouts are made in respect of a performance goal under the Annual Incentive Plan unless applicable threshold performance level for such performance goal is achieved.
(2)	Performance Factor evaluated excluding expected effect of FireBird Acquisition in Q4 2022.
(3)	See the table below for details regarding Environmental, Social and SafetyGovernance Performance Metrics and Company results.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     5350

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ENVIRONMENTAL, SOCIAL AND SAFETYGOVERNANCE METRICS AND PERFORMANCE

 

E&SESG Metric		Formula		Performance Target		2021 2022 Results		Commentary
Flaring Intensity		Gross mcf of flared production divided by gross mcf of natural gas production		< 1.00%1.0%		1.45%2.3%		The Company utilizes the American Exploration and Production Council (“AXPC”) definition to calculate flaring intensity. Excluding assets acquired from QEP and Guidon in early 2021, the Company’s flaring result for 2021 was 0.92%. The Company has set a long-term goal of eliminating routine flaring (as defined by the World Bank) by 2025.
GHG Emission Intensity		Scope 1 GHG emissions in metric tons of CO2e divided by gross MBOE produced		< 12.0010.7		9.58.0		The Company utilizes the AXPC definition to calculate GHG Emission Intensity. The Company has set a target of reducing Scope 1 GHG intensity by at least 50% from 2019 levels by 2024.
Produced Liquid Spills		Barrels of produced liquid spills not recovered divided by barrels of total produced liquids		< 0.01%0.001%		.001%0.0019%		The Company utilizes a modified AXPC definition to account for barrels recovered as the basis for calculating spills. The Company recognizes spills as defined by AXPC, net of volume recovered from secondary containment.
Recycled Water		Percentage of water used for drilling and completions operations sourced from recycled water		> 15.00%28.0%		29.1%41.0%		The Company utilizes the AXPC definition to calculate water recycle rate. The Company has set a 2025 target of > 65%.
Total Recordable Incident Rate (Company Employees only)		Recordable incidents per 200,000 man hours recorded		≤ .250.25		.250.68		The Company utilizes the same definition adopted by AXPC and OSHAthe Occupational Safety and Health Administration to calculate TRIR.

 

After applying the weighting established by the compensation committee to each performance factor, Diamondback achieved the short-term annual incentive plan performance goals at 187%127% of target.

 

As a result, the compensation committee authorized the following NEO payouts under the Annual Incentive Plan for 2021:2022:

 

20212022 SHORT-TERM INCENTIVE AWARD PAYOUTS TO NAMED EXECUTIVE OFFICERS

 

Named Executive Officer		Base Salary as of December 31,  2021			Target Bonus Percentage as a % of Base Salary			Target Bonus Amount			Actual Incentive Bonus Award			Actual Incentive Bonus as % of Target Bonus
Travis D. Stice		$	1,250,000			125%		$	1,562,500		$	2,921,875			187%
Kaes Van’t Hof		$	520,000			90%		$	468,000		$	875,160			187%
Teresa L. Dick		$	447,000			80%		$	357,600		$	668,712			187%
Russell D. Pantermuehl(1)		$	615,000			80%		$	492,000		$	920,040			187%
Matt Zmigrosky		$	520,000			80%		$	416,000		$	777,920			187%

Named Executive Officer		Base Salary as of December 31, 2022			Target Bonus Percentage as a % of Base Salary			Target Bonus Amount			Actual Incentive Bonus Award			Actual Incentive Bonus as % of Target Bonus
Travis D. Stice		$	1,350,000			125%		$	1,687,500		$	2,143,125			127%
M. Kaes Van’t Hof		$	625,000			90%		$	562,500		$	714,375			127%
Teresa L. Dick		$	475,000			80%		$	380,600		$	482,600			127%
Daniel N. Wesson		$	560,000			80%		$	448,000		$	568,960			127%
Matt Zmigrosky		$	550,000			80%		$	440,000		$	558,800			127%

 

(1)	Mr. Pantermuehl retired from the Company effective December 31, 2021.

Long-Term Equity Incentive Compensation

 

We believe providing our NEOs the opportunity to be awarded stock and stock-based awards offers the best approach to achieving our compensation goals and aligns the interests of our executive officers with those of our stockholders. To achieve this purpose, our board of directors adopted and our stockholders approved the 2021 Amended and Restated Equity Incentive Plan (Equity Incentive Plan). The purpose of the Equity Incentive Plan is to enable us, and our affiliates, to attract and retain the services of the types of executives, employees, consultants and directors who will contribute to our long-term success and to provide incentives that will be linked directly to increases in share value that will inure to the benefit of our stockholders. The Equity Incentive Plan provides a means by which eligible recipients of awards may be given an opportunity to benefit from increases in value of our common stock through the granting of equity awards. The terms of the Equity Incentive Plan are described in more detail below.

 

Each of our executives is eligible to participate in the Equity Incentive Plan or such other equity incentive plan or plans then in existence for the benefit of employees, and may in the discretion of the compensation committee receive an equity award in accordance with the terms of such plan or plans. The timing and amount of such equity awards, any target performance goals and the vesting terms of such awards are determined by the compensation committee in its sole discretion. If any of such executive’s employment terminates prior to any scheduled vesting date then, except as expressly provided in any existing or future equity award, the applicable executive shall forfeit all rights and interests in and to such unvested equity awards.

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     5451

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20212022 PERFORMANCE-BASED AND TIME-BASED AWARDS

 

In March 2021,2022, the compensation committee granted our NEOs three-year performance-based restricted stock units and time-based restricted stock units, in each case under the Equity Incentive Plan, in the amounts shown below. In 2021, the Committee reduced the targeted value of the total LTI award for each NEO based on various factors, including prevailing economic and industry conditions, Company performance in 2020 and a review of market data from its independent compensation consultant, among others. As the industry rebounded and the Company’s performance improved in 2021, the committee reversed those reductions and established 2022 Target LTI awards based on a review of market data from its independent compensation consultant, Company and individual performance, and the prevailing industry environment. Consistent with the compensation committee’s focus on giving more weight to the performance component of our executive compensation, the 20212022 performance-based equity award granted to each NEO represented 60% of the executive’s total 20212022 LTI award, with the time-based component of such award representing only 40% of the total 2022 LTI award. The compensation committee reduced the targeted value of the total LTI award for Mr. Stice by 20% compared to 2020 and reduced the targeted value of the total LTI award for each of the other NEOs by 10% compared to 2020.

 

		Performance-Based Restricted Stock Units(1)			PSU % of Total LTI Award			Time-Based Restricted Stock Units(2)			RSU % of Total LTI Award			Targeted Value of Total LTI Award(3)
Travis D. Stice			51,748			60%			34,499			40%		$	6,000,000
Kaes Van’t Hof			27,168			60%			18,112			40%		$	3,150,000
Teresa L. Dick			15,524			60%			10,350			40%		$	1,800,000
Russell Pantermuehl(4)			27,168			60%			18,112			40%		$	3,150,000
Matt Zmigrosky			12,420			60%			8,280			40%		$	1,440,000

		Performance-Based Restricted Stock Units(1)			PSU % of Total LTI Award			Time-Based Restricted Stock Units(2)			RSU % of Total LTI Award			Targeted Value of Total LTI Award(3)
Travis D. Stice			41,524			60%			27,683			40%		$	9,000,000
M. Kaes Van’t Hof			17,302			60%			11,535			40%		$	3,750,000
Teresa L. Dick			9,228			60%			6,152			40%		$	2,000,000
Daniel N. Wesson			10,381			60%			6,921			40%		$	2,250,000
Matt Zmigrosky			9,228			60%			6,152			40%		$	2,000,000

(1)	The three-year performance-based restricted stock units are for the performance period from January 1, 20212022 through December 31, 2023.2024. Each NEO is also entitled to dividend equivalent rights on such NEO’s unvested performance-based restricted stock units.units at target.
(2)	Time-based restricted stock units of which one-third of the award vested inon March 2021,1, 2022, with the remaining restricted stock units vesting in two substantially equal annual installments beginning inon March 2022.1, 2023. Each NEO is also entitled to dividend equivalent rights on such NEO’s unvested time-based restricted stock units.
(3)	The aggregate number of performance-based and time-based restricted stock units for each NEO for 20212022 was calculated by dividing the targeted value of the total LTI award for each NEO indicated in the table by $69.57$130.04 per share, representing the average closing price per share of our common stock on The Nasdaq Global Select Market for the five trading days immediately preceding the last trading day in February 2021,2022, and allocated 60% to the performance-based restricted stock units and 40% to the time-based restricted stock units.
(4)	Mr. Pantermuehl retired from the Company effective December 31, 2021.

 

The performance-based restricted stock units are subject to the satisfactionperformance of the relativeour total stockholder return performance conditions relative to our TSR performance peer group set forth in the table below for the applicable performance period. Additionally, the number of performance-based restricted stock units that would otherwise vest is further adjusted by the absolute TSR modifier illustrated below that reduces payouts upon negative performance period absolute TSR, and has a multiplier upon achieving anincreases payouts when the annualized performance period absolute TSR ofis greater than 15%. No awards vest if the relative total stockholder return (prior to any adjustment required by application of the absolute TSR modifier) falls below the 25^th percentile. The performance-based restricted stock units are also subject to satisfaction of continuous service requirements.

 

Relative Total Stockholder Return Percentile		Target Grant Vesting Percentage
<25th Percentile of Peer Group		0% of Target
Between 25th Percentile of Peer Group and up to but less than 75thPercentile of Peer Group		Straight line interpolation between 50% and 150% of Target
At or above 75th Percentile of Peer Group		200% of Target
Company Absolute Annualized Total Stockholder Return Percentage During Performance Period		Absolute TSR Modifier Applied to be Multiplied by the Target Grant Vesting Percentage
Below 0%		75%
Between 0% and 15%		100%
Above 15%		125%

 

Target grant vesting percentage is expressed as a percentage of the target number of performance-based restricted stock units granted and, after being adjusted by the applicable absolute TSR modifier, may result in a settlement up to a maximum grant equal to 250% of the target number of performance-based restricted stock units granted.

 

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These awards were designed to incentivize our NEOs to continue to contribute to the Company’s performance at the top of its TSR performance peer group, similar to the Company’s performance in prior periods. In addition, the time-based restricted stock unit awards were designed to promote retention of our NEOs who have been pursued not only by industry competitors but also by private equity groups.

 

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     55TSR PERFORMANCE PEER GROUP

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The 20212022 TSR performance peer group, which was approved by the compensation committee and used to determine the total stockholder return percentile in the 2022 performance-based restricted stock unit awards granted in 2021March 2022 to the NEOs, consisted of the following 11 members.members in addition to the Company.

 

APA Corporation		Marathon Oil Corporation
Cimarex Energy Co. (Now Continental Resources, Inc.		Ovintiv Inc.
Coterra Energy Inc.)		Ovintiv Inc.
Continental Resources, Inc.		Pioneer Natural Resources Company
Devon Energy Corporation		S&P 500 Index
EOG Resources, Inc.		SPDR S&P Oil and Gas E&P ETF Index (XOP Index)
Hess Corporation

 

VESTING OF 20192020 PERFORMANCE-BASED AWARDS

 

In February 2022,2023, the compensation committee certified the attainment of the pre-established performance goals with respect to performance-based restricted stock units granted to our NEOs in February 2019,March 2020, which awards were subject to the satisfaction of certain total stockholder return performance conditions relative to our TSR performance peer group for the performance period commencing on January 1, 20192020 and ending on December 31, 2021,2022, and continuous service requirements. The compensation committee certified that, based on publicly available information, (i) our total stockholder return for the above-referenced performance period was in the 50^th percentile of the TSR performance peer group, (ii) the total stockholder return percentile equated to a total target grant vesting percent of 100% of the target number of restricted stock units granted to the NEOs and (iii) the applicable performance target and other material terms of such performance-based restricted stock unit awards were achieved at such levels for the above-referenced performance period.information:

 

(i)	our total stockholder return for the above-referenced performance period was in the 38.4 percentile of the TSR performance peer group resulting in a target vesting percentage of 76.8%;
(ii)	the absolute annualized total stockholder return percentage for the above-referenced performance period was 68.93%, resulting in the application of an absolute TSR modifier of 125% and a resulting vesting percentage of 96% of the target number of restricted stock units granted to the NEOs; and
(iii)	the applicable performance target and other material terms of such performance-based restricted stock unit awards were achieved at such levels for the above-referenced performance period.

As in all prior years, we didacquired companies were not exclude acquired companiesexcluded from the relative comparison or otherwise adjustduring the performance period, and the total stockholder return of any company thatfor such companies was acquired duringmeasured assuming the performance period.period ended for each such company at the announcement of the applicable acquisition.

 

In connection with reaching these performance goals, each of the 20192020 performance-based restricted stock unit awards received by Messrs. Stice, Van’t Hof, PantermuehlWesson and Zmigrosky and Ms. Dick vested at 100%96% of the target, resulting in the issuance of the shares of the Company’s common stock underlying the 20192020 performance-based restricted stock units to these NEOs in March 20222023 as follows:

 

Named Executive Officer		2019 Performance-Based Restricted Stock Unit Award		Achieved TSR Percentile Rank		Actual Performance-Based Restricted Stock Units Granted		% of Target Vested
Travis D. Stice		49,436		50%		49,436		100%
Kaes Van’t Hof		23,070		50%		23,070		100%
Teresa L. Dick		13,183		50%		13,183		100%
Russell D. Pantermuehl(1)		23,070		50%		23,070		100%
Matt Zmigrosky		10,546		50%		10,546		100%

Named Executive Officer		2020 Performance-Based Restricted Stock Unit Award		Vesting Percentage After Application of Absolute TSR Modifier		Actual 2020 Performance-Based Restricted Stock Units Granted
Travis D. Stice		66,714		96%		64,045
M. Kaes Van’t Hof		31,133		96%		29,888
Teresa L. Dick		17,790		96%		17,078
Daniel N. Wesson		13,343		96%		12,809
Matt Zmigrosky		14,232		96%		13,663

 

(1)

Mr. Pantermuehl retired from the Company effective December 31, 2021, but remained eligible to receive the shares awarded upon vesting of the 2019 performance-based restricted stock unit awards under the terms of his post-employment consulting agreement with the Company, described in more detail below.

DIAMONDBACK ENERGY, INC.•20222023 PROXY STATEMENT     5653

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—

Conversion of 2019 Rattler Phantom Unit Awards into Restricted Stock Unit Awards

In August 2022, Diamondback completed the Rattler Merger by acquiring all of the publicly held common units representing limited partner interests in Rattler not already owned by Diamondback or its subsidiaries. The transaction did not constitute a change of control under the Rattler Long Term Incentive Plan or any awards made thereunder. In connection with the transaction, each Rattler Phantom Unit outstanding prior to the effective time of the merger was converted into a Diamondback time-based restricted stock unit award, as adjusted by the exchange ratio, with such Diamondback time-based restricted stock unit otherwise maintaining the same terms and conditions as were applicable to the corresponding Rattler Phantom Unit. However, each Diamondback NEO agreed to amend the terms of the Diamondback time-based restricted stock unit received by such NEO in exchange for such Rattler Phantom Units to replace all single trigger change of control provisions with double trigger change of control provisions that are consistent with awards made to such NEOs under the Equity Incentive Plan. As such, no outstanding Diamondback equity award held by an NEO contains any single trigger change of control provisions.

— OTHER SIGNIFICANT COMPENSATION AND BENEFIT PLANS, POLICIES AND PRACTICES

 

Senior Management Severance Plan

 

Effective February 20, 2020, we adopted the Diamondback Energy, Inc. Senior Management Severance Plan, which was amended and restated effective February 21, 2022 (as so amended and restated, the severance plan), to provide for adjustments to severance benefits in connection with certain executive promotions and related title changes, and havewe entered into a participation agreement thereunder with each of our NEOs. Pursuant to the participation agreements, the benefits under the severance plan replace any prior employment agreement with each of our NEOs. The severance plan also covers other eligible executives who are selected to participate and replaces any employment agreement they may have had. The severance plan provides a uniform framework for certain severance and change in control benefits that are consistent with market practices and is described in more detail below.

 

Payments and Benefits Unrelated to a Change in Control

 

In the event that the employment of a participating executive is terminated by us other than for “cause” (and not by reason of death or disability) or if the participant terminates his or her employment for “good reason” (in each case as defined in the severance plan), in addition to any accrued but unpaid base salary or unreimbursed business expenses payable in accordance with the requirements of applicable law, the participant is entitled to receive severance benefits consisting of:

 

(i)	an amount, if any, equal to the bonus that would be payable for services attributable to a completed prior year performance period that has not been paid under the terms of the Diamondback Energy, Inc. Executive Annual Incentive Compensation Plan or any successor annual cash incentive plan or program;
(ii)	a multiple of base salary continuation for a specified number of months (2x for 24 months for the Chief Executive Officer, 1x for 21 months for the President, 1x for 18 months for Executive Vice-Presidents,Vice Presidents, 1x for 15 months for Senior Vice-PresidentsVice Presidents and 1x for 12 months for Vice-Presidents)Vice Presidents);
(iii)	a pro-rated target annual cash bonus for the year of termination (based on the number of days employed during the year of termination);
(iv)	reimbursements for the cost of up to 18 months of premiums for COBRA group health continuation coverage; and
(v)	the vesting or forfeiture, as applicable, of each outstanding unvested equity-based compensation award granted by us or our affiliates in accordance with the terms of the applicable equity award agreement. Mr. Stice’s participation agreement includes terms that are intended to maintain certain benefits under his prior employment agreement and are consistent with prior public disclosure that require each equity award granted to Mr. Stice to become 100% vested upon an eligible termination, and in the case of outstanding performance-based equity awards to vest at the maximum level under the equity award agreement, and be settled within ten business days.

 

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Severance Benefits Related to a Change in Control

 

In the event that employment of a participant is terminated by us other than for “cause” (and not by reason of death or disability) or if the participant terminates his or her employment for “good reason,” in either case within the two year period (protection period) immediately following the consummation of a change in control (as defined in the severance plan), the participant will be entitled to the benefits described above, except that the salary continuation described in clause (ii) will be replaced by a lump sum cash payment equal to a multiple of the participant’s base salary plus such participant’s average bonus for the preceding three years (3.0x for the Chief Executive Officer, 2.75x for the President, 2.5x for Executive Vice-Presidents, 2.25x for Senior Vice-Presidents and 2.0x for Vice-Presidents).

 

Severance Benefits Related to Death or Disability

 

The severance plan also provides the same benefits described in clauses (i), (ii), (iii) and (iii)(v) (but not clause (iv)) in the event that a participant dies or becomes disabled (as defined in the severance plan) while employed by us. Mr. Stice’s participation agreement includes terms that are intended to maintain certain benefits under his prior employment agreement and are consistent with prior public disclosure that require the Company to pay 100 percent100% of the premiums to continue the group health plan continuation coverage under COBRA for Mr. Stice (in the event of his disability) and his spouse’s and any of his eligible dependents (in the event of his death or disability).

 

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Release and Restrictive Covenants

 

The payment of any benefits under the severance plan is conditioned on the participant’s (or if applicable, the participant’s personal representative’s or estate’s) execution of a waiver and general release of claims. The severance plan also includes certain covenants restricting (i) competition with Diamondback and its subsidiaries, (ii) solicitation or hire of employees or agents of Diamondback and its subsidiaries and (iii) interference with business relationships of Diamondback and its subsidiaries with third parties, which covenants apply, in each case, during the period of the participant’s employment with the Company and for a period of one year (or such shorter period described below) following termination of employment (collectively, the restricted period). If a participating executive terminates employment on a basis that is not eligible for severance benefits, the Company can elect to apply these restrictive covenants for a monthly period selected by the Company not to exceed 12 months and receive a waiver and release by payment of an amount equal to one-twelfth of the participant’s annualized base salary plus target annual bonus for each month the restrictive covenants will apply, and such amount will be paid on a pro-rated basis on a regularly scheduled payroll date during such restricted period following the termination date. Notwithstanding the foregoing restrictions, in the event the participant’s employment is terminated by the Company without cause or by the participant for good reason during the protection period or due to the participant’s death or disability, the restrictions on competition with Diamondback and its subsidiaries and on interference with their business relationships with third parties will end on the date of such participant’s termination of employment.

 

We believe that these severance benefits provide the same type of income transition protections that were provided to our executives under their prior employment agreements, offer letters or similar agreements. The severance plan’s provisions are intended to attract and retain qualified executives that could have job alternatives that may appear to them to be less risky absent these arrangements. We believe that the enhanced severance benefits resulting from terminations related to a change in control transaction are in the interest of our stockholders because they provide an incentive for executives to continue to help successfully execute such a transaction from its early stages through consummation. We also believe that these benefits provide important protection to our NEOs, are consistent with the prior employment protections and the practices of peer group companies and are appropriate for the attraction and retention of executive talent.

 

Benefits and Perquisites

 

Consistent with our compensation philosophy, our compensation committee provides benefits to our executives that are substantially the same as those currently being offered to our other employees, including health insurance, life and disability insurance and a 401(k) plan.

 

Under our 401(k) Plan, all employees and officers are eligible to participate and may elect to defer a portion of their compensation up to the statutorily prescribed limit. Each pay period we make a matching contribution to each employee’s deferral, not to exceed 10 percent of compensation. An employee’s interests in his or her deferrals and our matching contributions are, in each case, 100% vested when contributed. The 401(k) Plan is intended to qualify under Section 401(a) of the Internal Revenue Code.Code (Code). As such, matching contributions to the 401(k) Plan and earnings on those contributions are not taxable to the employee until distributed from the 401(k) Plan, and all timely made contributions are deductible by us for the year in which they are allocable.

 

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The Company purchases a certain number of hours of flight time through a private charter aircraft company. These hours are made available for business use to our executive officers and employees in accordance with the Company’s Aircraft Use Policy. The Company’s Aircraft Use Policy does not permit employees, including executive officers, to use these hours for personal use. In limited occasions when a personal guest accompanies an employee on a business-related flight, the Company follows the Internal Revenue Service rules and, where required, will impute income to the employee based on applicable Standard Industry Fare Level rates.

 

The Company covers the cost of a comprehensive annual physical for its NEOs.

Clawback Policy

 

The Company has adopted a “clawback” policy to allow the Company to recoup paid incentive based compensation from executive officers in the event the Company is required to restate its reported financial or operating results as a result of a covered executive’s misconduct or gross negligence. The amount of compensation recouped would be that which the executive would not have received if the financial statements had been properly reported at the time of first public release or filing with the SEC. All incentive compensation (cash and equity) is covered by the policy. In October 2022, the SEC adopted new Rule 10D-1 under the Exchange Act, which requires national securities exchanges, including Nasdaq, to establish listing standards relating to executive officer incentive compensation clawback and disclosure rules. The compensation committee continuesCompany intends to monitor the actionsdevelopment of the SECNasdaq’s final listing standards and will amend its existing clawback policy, as appropriate, in accordance with regard to the proposed regulations implementing the applicable clawback provisionsrequirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and, to the extent regulations are finalized, the compensation committee intends to take will take action to amend the policy to comply with any such regulations.Nasdaq’s final listing standards.

 

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Anti-Hedging and Anti-Pledging Policies

 

We have a policy prohibiting directors, executive officers and certain other designated employees from speculative trading in our securities, including hedging transactions, short selling, and trading in put options, call options, swaps or collars. In addition, we prohibit our directors and executive officers from holding our common stock in a margin account. To our knowledge, all such individuals are in compliance with the policy. Our policy is to also strongly discourage all other employees from engaging in hedging activities in our stock. Any such transaction requires notice and pre-approval, and will only be considered with a valid justification. We also have a policy prohibiting our directors, executive officers and certain other designated employees from pledging our securities as collateral for a loan, except in certain limited circumstances upon obtaining prior approval from a compliance officer.loan.

 

Stock Ownership and Retention Guidelines for Non-Employee Directors and Executive Officers

 

The compensation committee has adopted stock ownership and retention guidelines for our non-employee directors and executive officers who are classified as Vice President and above. These guidelines were adopted to encourage our non-employee directors and executives to have a meaningful stake in the Company, which encourages a focus on our long-term success, aligns directors’ and executives’ interests with the interests of our stockholders and further promotes our commitment to sound corporate governance.

 

Under the stock ownership and retention guidelines, each of our non-employee directors must own an amount of our common stock equal in value to a multiple of the base annual retainer and our executive officers must own an amount of our common stock equal in value to a multiple of his or her annual base salary, as set forth in the table below.

 

Position			Multiple of Base Annual Retainer/Annual Base Salary Required
Non-Employee Directors		5x
Chief Executive Officer(1)		6x
President(2)		4x
Executive Vice Presidents		3x
Senior Vice Presidents and Vice Presidents		2x

(1)	In February 2022, the Company’s board of directors approved an amendment to the stock ownership and retention guidelines to increase the multiple of the annual base salary of the Chief Executive Officer from 5x to 6x.
(2)	In February 2022, the Company’s board of directors approved an amendment to the stock ownership and retention guidelines to include a requirement for the President to hold an amount of our common stock equal in value to a 4x multiple of such President’s annual base salary.

 

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As of December 31, 2021,2022, the table below provides the minimum value of stock that each of our NEOs who currently serve as our executive officers must retain under our stock ownership and retention guidelines.

 

		2021 Base Salary				Multiple of Annual Base Salary Required			Minimum Value of Stock Required to Retain
Travis D. Stice(1)		$	1,250,000				5x		$	6,250,000
Kaes Van’t Hof(2)		$	520,000				3x		$	1,560,000
Teresa L. Dick		$	447,000				3x		$	1,341,000
Matt Zmigrosky		$	520,000				3x		$	1,560,000

		2022 Base Salary				Multiple of Annual Base Salary Required		Minimum Value of Stock Required to Retain
Travis D. Stice(1)		$	1,350,000			6x		$	8,100,000
M. Kaes Van’t Hof(2)		$	625,000			4x		$	2,500,000
Teresa L. Dick		$	475,000			3x		$	1,425,000
Daniel N. Wesson		$	560,000			3x		$	1,680,000
Matt Zmigrosky		$	550,000			3x		$	1,650,000

(1)	Effective February 21, 2022, Mr. Stice will beis required to hold a 6x multiple of his annual base salary subject to the compliance transition period under the stock ownership and retention guidelines. Although there is a compliance transition period for this increased requirement, Mr. Stice was in compliance with the updated guidelines as of December 31, 2022.
(2)	Effective February 21, 2022, Mr. Van’t Hof will beis required to hold a 4x multiple of his annual base salary subject to the compliance transition period under the stock ownership and retention guidelines. Although there is a compliance transition period for this increased requirement, Mr. Van’t Hof was in compliance with the updated guidelines as of December 31, 2022.

 

The compensation committee reviews compliance with the stock ownership and retention guidelines on an annual basis. As of December 31, 2021,2022, all of our NEOs were in compliance with the stock ownership and retention guidelines.

 

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Any participant who acquires shares of our common stock via the exercise of options or the vesting of restricted stock that is granted after the effective date of the guidelines, must retain 50% of the net shares acquired until the earlier of (i) the date such participant is determined to be in full compliance with the guidelines and (ii) the date such individual ceases to be a participant subject to the guidelines. Once the ownership requirement is met, the participant must continue to maintain the value amount in accordance with the guidelines.

 

Any participant subject to the guidelines who is not in compliance with the applicable guideline (subject to any compliance transition period) may be required to retain up to 100% of the net shares of our common stock acquired via the exercise of options or the vesting of restricted awards granted under our equity incentive programs until the applicable guideline has been met.

 

Participants generally are given a five-year transition period to come into full compliance with the guidelines. Participants are expected to make steady progress towards meeting the ownership levels specified in the guidelines with any stock awards or stock purchases made on or after the effective date of the guidelines. If an individual becomes subject to a greater ownership amount, due to a promotion, an increase in base salary or an increase in the base retainer, as applicable, the individual is expected to meet the higher ownership amount by the latest to occur of (i) the end of the original period; (ii) three (3) years from the effective date of the promotion, increase in base salary or increase in base retainer, as applicable; and (iii) such date as may be specified by the compensation committee. The compensation committee will evaluate whether exceptions should be made for any participant who, due to his or her unique financial circumstances, would incur a hardship by complying with the guidelines.

 

“Net shares” means the net number of shares received by the executive upon settlement after taking into account the sale or withholding of shares to pay any applicable taxes and/or option exercise price.

 

In addition to shares held outright, shares held directly or indirectly in trust, shares held by immediate family members residing in the same household, shares held in qualified plans (e.g., in a 401(k) plan), vested shares held in non-qualified plans, vested stock options (other than options that are underwater at the time of measurement) and unvested restricted stock subject to time-based (but not performance-based) vesting are all counted toward satisfaction of the ownership requirement. Restricted stock units that have vested, but not yet settled, shall be included as long as they do not remain subject to achievement of any performance goals. Stock options (whether vested or unvested) and unvested performance-based awards are not counted as shares owned for the purpose of calculating stock ownership under the guidelines.

 

Annual Incentive Plan

 

In February 2021, the compensation committee of our board of directors adopted the Executive Annual Incentive Compensation Plan (Annual Incentive Plan), replacing our prior 2014 Executive Annual Incentive Compensation Plan. The purpose of the Annual Incentive Plan is to provide an incentive to our executive officers and other selected employees to contribute to the growth, profitability and increased value of the Company. The Annual Incentive Plan is designed to focus on achievement of annual objectives and goals, determined at the beginning of each calendar year. Participants may earn a pre-determined percentage of base salary for the achievement of specified goals (performance targets). The payout opportunity varies for performance above and below the pre-established target performance levels. Performance factors for each award under the Annual Incentive Plan include criteria and objectives determined by the plan administrator used to measure the performance targets during the applicable performance period as a condition to the participant’s receipt of payment with respect to an award.

 

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Plan Administration

 

The compensation committee serves as the plan administrator, with the authority, in its sole discretion, subject to the provisions of the Annual Incentive Plan to, among other things, grant awards, select participants, determine the terms, conditions, restrictions and performance criteria, including the performance factors and performance targets, relating to each award, the circumstances under which an award may be settled, cancelled, forfeited or surrendered and specify and make adjustments to the performance targets, including in recognition of unusual or non-recurring events effecting the Company or the financial statements of the Company or in response to changes in applicable laws, regulations or accounting principles.

 

With respect to each annual performance period, the compensation committee specifies the performance factors and the performance targets applicable to each award. Performance targets may include a level of performance below which no payment will be made and levels of performance at which specified percentages of the award will be paid as well as a maximum level of performance above which no additional award will be paid.

 

Performance Factors

 

The performance factors may include certain operational, financial, reserve, capital efficiency, cash flow measurements, working capital and components thereof, return on equity or average stockholders’ equity, return on assets, market share, stock price, earnings per share, earnings from continued operations, credit ratings, ESG factors and other criteria selected by the plan administrator. These performance factors may relate to the performance of the Company or the performance of a business unit, product line, territory or any combination thereof.

 

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Awards

 

All payments in respect of awards granted under the Annual Incentive Plan are made in cash, paid within a reasonable period after the end of the performance period and designed not to be deferred compensation within the meaning of Section 409 of the Internal Revenue Code (Code).

 

Termination of Employment

 

Unless otherwise provided by the compensation committee in connection with a specific termination of employment, if the employment of an NEO or other participant terminates for any reason prior to the payment of any award for any reason other than death or disability, no award will be payable to such participant for that performance period.

 

Change in Control Transactions

 

In the event of a change in control, as such term is defined in the Annual Incentive Plan, each NEO or other participant will be paid the target award amount (the mid-point of any specified range of potential award payment amounts or performance targets), based on the assumption that the performance target was attained at the target level for the entire performance period, payable within a specified period following the consummation of the change in control transaction.

 

Equity Incentive Plan

 

On April 6, 2021, our board of directors unanimously adopted, subject to stockholder approval, our 2021 Amended and Restated Equity Incentive Plan, amending and restating our 2019 Amended and Restated Equity Incentive Plan. On June 3, 2021, our stockholders approved the 2021 Amended and Restated Equity Incentive Plan, which, as so amended and restated, is referred to as the Equity Incentive Plan.

 

The Equity Incentive Plan became effective as of April 6, 2021, the date adopted by the compensation committee of our board of directors, and will remain in effect until April 6, 2031, unless otherwise terminated earlier by the board of directors.

 

Plan Administration

 

The Equity Incentive Plan is administered by the compensation committee of our board of directors. Among other responsibilities, the compensation committee selects individuals to receive awards, establishes the terms of awards, and takes whatever action it determines to be necessary or advisable in administering the Equity Incentive Plan. Our board of directors may amend, suspend or terminate the Equity Incentive Plan at any time, and the compensation committee may amend outstanding awards at any time. Amendments to the Equity Incentive Plan or awards will not be effective without stockholder approval if stockholder approval is required by applicable law or stock exchange requirements, and in the event any amendment may impair the rights of any participant, such participant must consent in writing.

 

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The compensation committee may grant awards under the Equity Incentive Plan to employees, consultants and directors of our Company and its affiliates; however, incentive stock options may be granted only to employees of our Company and its subsidiary corporations. Consultants do not receive awards pursuant to our current equity compensation program.

 

Share Reserve

 

Subject to adjustments for certain changes in corporate capitalization, the maximum number of shares of common stock authorized for issuance under awards granted under the Equity Incentive Plan (the “share reserve”) is 11,750,000 shares. All such shares are available for incentive stock options. Shares covered by awards that expire or otherwise terminate without having been exercised in full or that are forfeited or repurchased by us will again be available for future awards under the Equity Incentive Plan. However, shares used or withheld to satisfy the exercise price or tax withholding obligations will be counted against the share reserve and not be available for future awards under the Equity Incentive Plan. Additionally, awards settled in cash instead of shares are counted against the maximum share reserve in the same manner as if they were settled in shares of common stock.

 

Limitations on Awards

 

No participant may receive awards under the Equity Incentive Plan covering more than 1,000,000 shares in the aggregate during any calendar year. In addition, each non-employee director’s total annual compensation, including awards under the Equity Incentive Plan and cash paid under the Equity Incentive Plan or otherwise, is limited to $500,000.

 

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Types of Awards under the Equity Incentive Plan

 

STOCK OPTIONS

 

The compensation committee may grant incentive stock options intended to comply with Section 422 of the Code or “nonstatutory” stock options that are not intended to qualify as incentive stock options. Employees, directors and consultants may be granted nonstatutory stock options, but only employees may be granted incentive stock options.

 

RESTRICTED AWARDS

 

Restricted awards may be in the form of restricted stock awards or restricted stock units. A restricted stock award consists of shares of our common stock that generally are non-transferable and subject to forfeiture or other restrictions imposed by the compensation committee.

 

PERFORMANCE AWARDS

 

Performance awards entitle the recipient to vest in or acquire shares of common stock or in the right to receive a specified number of shares of common stock, a cash payment equal to the fair market value of a specified number of shares as of a specified date, or a combination of shares and cash, upon the attainment of specified performance goals. Performance awards may be granted independent of or in connection with the granting of any other award under the Equity Incentive Plan.

 

Performance goals are established by the compensation committee based on one or more business criteria that apply to the participant, a business unit, or us and our affiliates. Performance goals may be objective or subjective and established before 25% of the service period has elapsed, and in any event not later than 90 days after the beginning of the service period. Performance awards are non-transferable and generally terminate on a participant’s termination of service during the service period.

 

STOCK APPRECIATION RIGHTS

 

Stock appreciation rights may be granted independent of or in tandem with any option under the Equity Incentive Plan.

 

CAPITALIZATION ADJUSTMENTS

 

In the event of certain corporate events or changes in our common stock, the compensation committee will proportionally adjust awards, the number and class of shares available under the Equity Incentive Plan and the maximum number of shares that may be granted under awards to any participant in a calendar year as it determines to be appropriate.

 

CHANGE IN CONTROL AND OTHER CORPORATE TRANSACTIONS

 

In the event of a change in control transaction or other corporate transaction such as a dissolution or liquidation of our Company, or any corporate separation or division, the Equity Incentive Plan provides that all outstanding awards under the Equity Incentive Plan may be assumed, continued or substituted for by any surviving or acquiring entity (or its parent company), or may be cancelled either with or without consideration for the vested portion of the awards, all as determined by the compensation committee. If an award would be cancelled without payment of consideration to the extent vested, the participant may exercise the award in full or in part for a period of ten days.

 

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TAX WITHHOLDING

 

We may deduct or withhold, or require a participant to remit, an amount sufficient to satisfy any taxes required by law or regulation to be withheld with respect to any award under the Equity Incentive Plan. This includes the authority to withhold or receive shares of common stock and to make cash payments or require participants to make cash payments in satisfaction of participant tax obligations.

 

CLAWBACK OR RECOUPMENT

 

Awards granted under the Equity Incentive Plan are subject to the Company’s clawback policy, which allows us to recoup paid compensation from current and former executive officers in the event of a material financial statement restatement if the executive’s intentional misconduct caused, in whole or in part, the restatement.

 

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Effect of Our Compensation Policies and Practices on Risk and Risk Management

 

The compensation committee reviews the risks and rewards associated with our compensation policies and programs. We believe that such policies and programs encourage and reward prudent business judgment and avoid encouraging excessive risk-taking over the long-term. With respect to specific elements of compensation:

 

•	We believe that our programs balance short- and long-term incentives for our executive officers providing for an appropriate mix of fixed, discretionary and equity compensation that overall encourages long-term performance.
•	We believe that annual base salaries for our NEOs do not encourage excessive risk-taking as they are fixed amounts that are subject to discretionary increases by our compensation committee, based, among other factors, on annual performance evaluations. We also believe that such annual base salaries are set at reasonable levels, as compared to the base salaries of similarly situated individuals at our compensation peer group companies. The base salary represents a portion of our NEOs’ overall compensation potential and is balanced by the other elements of their overall compensation potential, which are tied to both performance and long-term service.
•	Our annual incentive bonuses are designed to award achievement of short-term performance-driven results. The payment and amounts of the 20212022 annual incentive bonuses were based, in part, upon meeting of certain performance criteria and targets established by the compensation committee for 2021,2022, as disclosed in more detail above. We believe the performance criteria and applicable targets were set at meaningful levels and do not encourage excessive risk taking. We also believe that performance criteria and targets established by the compensation committee for 20222023 were similarly designed to encourage performance, but not excessive risk taking.
•	Restricted stock units granted to our NEOs are subject to performance-based and time-based provisions. We award restricted stock units to promote performance and ensure that our executives have a continuing stake in the long-term success of the Company as the value of the award will depend on the stock price at and after the time of vesting. We believe that a mixture of performance-based and time-based equity awards represent a balanced approach to long-term equity compensation and do not encourage excessive risk taking that may be associated with the compensation approach focused solely on equity awards that vest strictly based on achieving certain targets. We also believe that the weight given by our compensation committee to performance-based equity awards, as compared to time-based equity awards, provide incentive to our NEOs to take appropriate amount of risk to drive the Company’s performance and enhance stockholder value.
•	Our NEOs are entitled to certain benefits that are payable upon the occurrence of their termination without “cause,” resignation for “good reason” or certain change in control transactions. See “Potential Payments upon Termination, Resignation or Change of Control for Fiscal Year 2021”2022” and “Other Significant Compensation and Benefit Plans, Policies and Practices—Senior Management Severance Plan” for more information.

 

Based on the foregoing, the compensation committee believes that the Company does not utilize compensation policies and programs creating risks that are reasonably likely to have a material adverse impact on the Company.

 

DIAMONDBACK ENERGY, INC.•20222023 PROXY STATEMENT     6360

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— COMPENSATION COMMITTEE REPORT

 

The compensation committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussion with management, the compensation committee recommended to the Board that the summary of Compensation Discussion and Analysis be included in this proxy statement.

 

Respectfully submitted by the compensation committee:COMPENSATION COMMITTEE

 

Stephanie K. Mains, Chairperson

Michael P. Cross

David L. Houston

Mark L. Plaumann

Melanie M. Trent
Frank D. Tsuru

 

—

— COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

The compensation committee of our board of directors currently consists of Stephanie K. Mains, Michael P. Cross, David L. Houston, Mark L. Plaumann, and Melanie M. Trent.Trent and Frank D. Tsuru, and immediately following Mr. Cross’ retirement as a director and committee member at this Annual Meeting, will consist of Ms. Mains, Mr. Houston, Mr. Plaumann, Ms. Trent and Mr. Tsuru, assuming these directors are re-elected at this Annual Meeting. No current member of our compensation committee has ever been an officer or employee of ours. None of our executive officers serves, or has served during the past fiscal year, as a member of the board of directors or compensation committee of any other company that has or had one or more executive officers serving as member of our board of directors or compensation committee.

 

DIAMONDBACK ENERGY, INC.•20222023 PROXY STATEMENT     6461

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COMPENSATION TABLES

 

—

— SUMMARY COMPENSATION TABLE

 

The following table provides information concerning compensation of our principal executive officer, principal financial officer, and our three other highest paid executive officers during 2021,2022, each identified as our NEO, for the fiscal years presented below, as applicable.

 

							Stock Awards ($)(1)									Non-Equity Incentive Plan				All Other
Name and Principal Position		Year		Salary ($)				Performance- based(2)				Time Vested				Compensation ($)(11)				Compensation ($)(12)				Total ($)(13)(14)
Travis D. Stice Chief Executive Officer		2021		$	1,250,000			$	6,782,093			$	2,541,196	(3)		$	2,921,875			$	344,831			$	13,839,995
		2020		$	1,250,000			$	4,549,228			$	2,757,512	(3)		$	1,562,500			$	425,374			$	10,544,614
		2019		$	1,178,366			$	6,783,608			$	5,649,103	(4)		$	2,265,625			$	172,954			$	16,049,655
Kaes Van’t Hof President and Chief Financial Officer		2021		$	520,000			$	3,560,638			$	1,334,130	(5)		$	875,160			$	953,546			$	7,243,474
		2020		$	520,000			$	2,122,959			$	1,286,872	(5)		$	468,000			$	1,292,895			$	5,690,726
		2019		$	488,182			$	4,912,149			$	24,487,162	(6)		$	678,600			$	497,411			$	31,063,504
Teresa L. Dick Executive Vice President, Chief Accounting Officer and Assistant Secretary		2021		$	447,000			$	2,034,575			$	762,381	(7)		$	668,712			$	167,434			$	4,080,102
		2020		$	447,000			$	1,213,100			$	735,320	(7)		$	357,600			$	161,993			$	2,915,013
		2019		$	434,334			$	1,808,971			$	2,018,821	(8)		$	518,520			$	69,406			$	4,850,052
Russell Pantermuehl Former Executive Vice President - Chief Engineer		2021		$	615,000			$	3,560,638			$	1,334,130	(9)		$	920,040			$	245,028			$	6,674,836
		2020		$	615,000			$	2,122,959			$	1,286,872	(9)		$	492,000			$	221,787			$	4,738,618
		2019		$	597,299			$	3,165,665			$	2,709,492	(9)		$	713,400			$	85,762			$	7,271,618
Matt Zmigrosky Executive Vice President, General Counsel and Secretary		2021		$	520,000			$	1,627,765			$	609,905	(10)		$	777,920			$	125,402			$	3,660,992
		2020		$	496,923			$	970,480			$	588,256	(10)		$	416,000			$	104,019			$	2,575,678
		2019		$	353,846			$	1,447,122			$	1,542,633	(10)		$	464,400			$	75,966			$	3,883,967

								Stock Awards($)(1)								Non-Equity Incentive Plan				All Other
Name and Principal Position		Year		Salary ($)				Performance- based(2)				Time Vested(3)				Compensation ($)(4)				Compensation ($)(5)(6)				Total ($)(7)(8)
Travis D. Stice Chief Executive Officer		2022		$	1,333,333			$	9,846,586			$	3,787,865			$	2,143,125			$	41,561			$	17,152,470
		2021		$	1,250,000			$	6,782,093			$	2,541,196			$	2,921,875			$	33,964			$	13,529,128
		2020		$	1,250,000			$	4,549,228			$	2,757,512			$	1,562,500			$	33,231			$	10,152,471
M. Kaes Van’t Hof President and Chief Financial Officer		2022		$	607,500			$	4,102,823			$	1,578,334			$	714,375			$	32,386			$	7,035,418
		2021		$	520,000			$	3,560,638			$	1,334,130			$	875,160			$	30,886			$	6,320,814
		2020		$	520,000			$	2,122,959			$	1,286,872			$	468,000			$	30,332			$	4,428,163
Teresa L. Dick Executive Vice President, Chief Accounting Officer and Assistant Secretary		2022		$	470,333			$	2,188,236			$	841,778			$	482,600			$	33,142			$	4,016,089
		2021		$	447,000			$	2,034,575			$	762,381			$	668,712			$	31,642			$	3,944,310
		2020		$	447,000			$	1,213,100			$	735,320			$	357,600			$	31,142			$	2,784,162
Daniel N. Wesson Executive Vice President and Chief Operating Officer		2022		$	541,667			$	2,461,647			$	947,000			$	568,960			$	32,386			$	4,551,660
		2021		$	450,000			$	1,525,932			$	571,749			$	673,200			$	30,886			$	3,251,767
		2020		$	434,616			$	909,859			$	551,490			$	360,000			$	30,386			$	2,286,351
Matt Zmigrosky Executive Vice President, Chief Legal and Administrative Officer and Secretary		2022		$	545,000			$	2,188,236			$	841,778			$	558,800			$	32,440			$	4,166,254
		2021		$	520,000			$	1,627,765			$	609,905			$	777,920			$	30,940			$	3,566,530
		2020		$	496,923			$	970,480			$	588,256			$	416,000			$	27,488			$	2,499,147

(1)	The amounts shown in the above table under Stock Awards reflect the grant date fair value of restricted stock units and/or phantom units granted in 2022, 2021 2020 and 2019,2020, respectively, determined in accordance with FASB ASC Topic 718. Dividend equivalent rights were factored into the grant date fair value amounts reported in the above table. Time-vested phantom units granted in 2022 exclude the phantom units granted under the Equity Incentive Plan on August 24, 2022 in connection with the conversion of the unvested Rattler phantom unit awards in the Rattler Merger (which restricted stock units are scheduled to vest in two remaining substantially equal annual installments beginning on May 28, 2023 and are subject to continuous service requirements). See Note 1310 to our consolidated financial statements for the fiscal year ended December 31, 2021,2022, included in our Annual Report on Form 10-K, filed with the SEC on February 24, 2022,23, 2023, regarding assumptions underlying valuations of equity awards for 2022, 2021 2020 and 2019.2020. Details regarding equity awards that were outstanding at December 31, 20212022 can be found in the tables entitled “Outstanding Equity Awards at Fiscal 20212022 Year-End under Diamondback’s Equity Incentive Plan,” and “Outstanding Equity Awards under the Viper LTIP at Fiscal 2021 Year-End” and “Outstanding Equity Awards under the Rattler LTIP at Fiscal 20212022 Year-End.”
(2)	Represents (i) the grant date fair value (calculated as discussed in Note 1 above) of the performance-based restricted stock units for each NEO granted under Diamondback’s Equity Incentive Plan for the applicable performance period, subject to the Company’s attainment of certain pre-established performance targets and the NEO’s continuous employment and (ii) in the case of Mr. Van’t Hof, the 2019employment. The Company utilized a Monte Carlo simulation to value also includes the $1,746,484 grant date fair value attributable to the performance-based restricted stock units that were granted in 2022 based on the probable performance outcome for the target amount of units on the grant date, consistent with the estimate of aggregate compensation cost to be recognized over the service period. Actual payouts for the performance-based restricted stock units granted in 2022 can range from zero percent up to a maximum equal to 250% of the target number of performance-based restricted stock units granted. If the maximum number of performance-based restricted stock units and the Company’s share price of $136.83 on the grant date is used to determine the value of the performance restricted stock awards granted in 2022 rather than the probable number of shares, the maximum performance-based award values would be $14,204,322 for Mr. Stice, $5,918,582 for Mr. Van’t Hof, under Diamondback’s Equity Incentive Plan on March 1, 2019 as part of a one-time retention award, subject to the achievement of the relative TSR over the three-year performance period beginning on January 1, 2019$3,156,668 for Ms. Dick, $3,551,081 for Mr. Wesson, and ending on December 31, 2021 and continuous employment, vesting and settling in five substantially equal annual installments beginning on March 1, 2025.$3,156,668 for Mr. Zmigrosky.
(3)	The aggregate grant date fair values for 2022, 2021 and 2020 for Mr. Sticeeach NEO are attributable to the time-based restricted stock units granted to Mr. Sticesuch NEO under Diamondback’s Equity Incentive Plan on March 1, 2022, March 1, 2021 and March 1, 2020, respectively, in each case vesting in three substantially equal annual installments beginning on the date of grant.
(4)	Of the aggregate grant date fair value of $5,649,103 for 2019 for Mr. Stice, (i) $3,453,669 is attributable to the time-based restricted stock units granted to Mr. Stice under Diamondback’s Equity Incentive Plan on March 1, 2019, vesting in three substantially equal annual installments beginning on the date of grant and (ii) $2,195,434 is attributable to the one-time, time-based phantom unit award granted to Mr. Stice under the Rattler LTIP in connection with the Rattler IPO on May 28, 2019, vesting in five annual installments beginning on May 28, 2020.
(5)	The aggregate grant date fair values for 2021 and 2020 for Mr. Van’t Hof are attributable to the time-based restricted stock units granted to Mr. Van’t Hof under Diamondback’s Equity Incentive Plan on March 1, 2021 and March 1, 2020, respectively, in each case vesting in three substantially equal annual installments beginning on the date of grant.
(6)	Of the aggregate grant date fair value of $24,487,162 for 2019 for Mr. Van’t Hof, (i) $1,611,775 is attributable to the time-based restricted stock units granted to Mr. Van’t Hof under Diamondback’s Equity Incentive Plan on March 1, 2019, vesting in three substantially equal annual installments beginning on the date of grant, (ii) $921,104 is attributable to the time-based restricted stock units granted to Mr. Van’t Hof as part of a one-time retention award under Diamondback’s Equity Incentive Plan, vesting in five equal annual installments beginning on March 1, 2025 and (iii) $21,954,283 is attributable to the one-time, time-based phantom unit award granted to Mr. Van’t Hof under the Rattler LTIP in connection with the Rattler IPO on May 28, 2019, vesting in five equal annual installments beginning on May 28, 2020.

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     65

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(7)	The aggregate grant date fair values for 2021 and 2020 for Ms. Dick are attributable to the time-based restricted stock units granted to Ms. Dick under Diamondback’s Equity Incentive Plan on March 1, 2021 and March 1, 2020, respectively, in each case vesting in three substantially equal annual installments beginning on the date of grant.
(8)	Of the aggregate grant date fair value of $2,018,821 for 2019 for Ms. Dick, (i) $921,104 is attributable to the time-based restricted stock units that were granted to Ms. Dick under Diamondback’s Equity Incentive Plan on March 1, 2019, vesting in three substantially equal annual installments beginning on the date of grant and (ii) $1,097,717 is attributable to the one-time, time-based phantom unit award granted to Ms. Dick under the Rattler LTIP in connection with the Rattler IPO on May 28, 2019, vesting in five equal annual installments beginning on May 28, 2020.
(9)	Mr. Pantermuehl retired from the Company effective December 31, 2021. The aggregate grant date fair values for 2021 and 2020 for Mr. Pantermuehl are attributable to the time-based restricted stock units granted to Mr. Pantermuehl under Diamondback’s Equity Incentive Plan on March 1, 2021 and March 1, 2020, respectively, in each case vesting in three substantially equal annual installments beginning on the date of grant. Of the aggregate grant date fair value of $2,709,492 for 2019 for Mr. Pantermuehl, (i) $1,611,775 is attributable to the time-based restricted stock units that were granted to Mr. Pantermuehl under Diamondback’s Equity Incentive Plan on March 1, 2019, vesting in three substantially equal annual installments beginning on the date of grant and (ii) $1,097,717 is attributable to the one-time, time-based phantom unit award granted to Mr. Pantermuehl under the Rattler LTIP in connection with the Rattler IPO on May 28, 2019, vesting in five equal annual installments beginning on May 28, 2020.
(10)	The aggregate grant date fair values for 2021 and 2020 for Mr. Zmigrosky are attributable to the time-based restricted stock units granted to Mr. Zmigrosky under Diamondback’s Equity Incentive Plan on March 1, 2021 and March 1, 2020, respectively in each case vesting in three substantially equal annual installments beginning on the date of grant. Of the aggregate grant date fair value of $1,542,633 for 2019 for Mr. Zmigrosky, (i) $736,883 is attributable to the time-based restricted stock units that were granted to Mr. Zmigrosky under Diamondback’s Equity Incentive Plan on March 1, 2019, vesting in three substantially equal annual installments beginning on the date of grant, (ii) $366,667 is attributable to the one-time, time-based phantom unit award granted to Mr. Zmigrosky under the Viper LTIP on March 1, 2019 in connection with his sign-on package to join Diamondback and its subsidiaries, including Viper, as Executive Vice President, General Counsel and Secretary effective February 1, 2019, vesting in three equal annual installments beginning on the date of grant and (iii) $439,083 is attributable to the one-time, time-based phantom unit award granted to Mr. Zmigrosky under the Rattler LTIP in connection with the Rattler IPO on Mary 28, 2019, vesting in five equal annual installments beginning on May 28, 2020.
(11)	The amounts shown reflect performance-based annual incentive bonuses granted under the Executive Annual Incentive Compensation Plan.

DIAMONDBACK ENERGY, INC.  •  2023 PROXY STATEMENT     62

(12)

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(5)	The following provides a detailed breakdown of the amounts for 20212022 under “All Other Compensation” in the Summary Compensation Table:

Name		Contributions to 401(k) Plan ($)		Life and Medical Insurance Premiums ($)		Dividend Equivalent Rights  ($)		Total ($)
Mr. Stice		29,000		4,964		310,867		344,831
Mr. Van’t Hof		29,000		1,886		922,660		953,546
Ms. Dick		29,000		2,642		135,792		167,434
Mr. Pantermuehl		29,000		4,964		211,064		245,028
Mr. Zmigrosky		29,000		1,940		94,462		125,402

Name		Contributions to 401(k) Plan ($)		Life and Medical Insurance Premiums ($)		Executive Physical Reimbursement ($)		Total ($)
Mr. Stice		30,500		4,964		6,097		41,561
Mr. Van’t Hof		30,500		1,886				32,386
Ms. Dick		30,500		2,642				33,142
Mr. Wesson		30,500		1,886				32,386
Mr. Zmigrosky		30,500		1,940				32,440

(13)(6)	For 2020 and 2021, amounts under “All Other Compensation” in the Summary Compensation Table were adjusted to remove amounts associated with the incorrect reporting of dividend equivalents with respect to restricted stock units.
(7)	Certain of our NEOs also performed services as executive officers and/or directors of the general partner of Viper, our publicly traded subsidiary, as set forth in more detail in their respective biographies above, and their time was allocated between managing our business and managing the business of Viper. During 2022, 2021 2020 and 2019,2020, no specific allocations were made by Viper for our executive officers’ services to Viper.
(14)(8)	During 2022, 2021 2020 and 2019,2020, Mr. Stice, Mr. Van’t Hof, Ms. Dick and Mr. Zmigrosky also performed services as executive officers and/or directors of the general partner of Rattler, which was our publicly traded subsidiary as set forth in more detail in their respective biographies above,until the Rattler Merger completed on August 24, 2022, and their time was allocated between managing our business and managing the business of Rattler. In accordance with the terms of Rattler’s limited partnership agreement, in 2022, 2021 2020 and 2019,2020, we were reimbursed for compensation related expenses attributable to the portion of the executive’s time allocated to providing services to Rattler.

 

DIAMONDBACK ENERGY, INC.•20222023 PROXY STATEMENT     6663

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2021

— 2022 GRANTS OF PLAN-BASED AWARDS UNDER DIAMONDBACK’S EQUITY INCENTIVE PLAN

 

				Estimated Future Payouts Under Non-Equity Incentive Plan Award(1)												Estimated Future Payouts Under Equity Incentive Plan Awards(2)												All Other Stock Awards: Number of				Grant Date Fair Value of Stock
Name		Grant Date		Threshold ($)				Target ($)				Maximum ($)				Threshold (#)				Target (#)				Maximum (#)				Shares of Stock or Units(3)				and Option Awards(4)
Travis D. Stice		3/1/2021		$	781,250			$	1,562,500			$	3,125,000
		3/1/2021															25,874				51,748				129,370				34,499			$	9,323,289
Kaes Van’t Hof		3/1/2021		$	234,000			$	468,000			$	936,000
		3/1/2021															13,584				27,168				67,920				18,112			$	4,894,768
Teresa L. Dick		3/1/2021		$	178,800			$	357,600			$	715,200
		3/1/2021															7,762				15,524				38,810				10,350			$	2,796,956
Russell Pantermuehl		3/1/2021		$	246,000			$	492,000			$	984,000
		3/1/2021															13,584				27,168				67,920				18,112			$	4,894,768
Matt Zmigrosky		3/1/2021		$	208,000			$	416,000			$	832,000
		3/1/2021															6,210				12,420				31,050				8,280			$	2,237,670

				Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)											Estimated Future Payouts Under Equity Incentive Plan Awards(2)													All Other Stock Awards: Number				Grant Date Fair Value
Name		Grant Date		Threshold ($)				Target ($)				Maximum ($)				Threshold (#)				Target (#)				Maximum (#)				of Shares of Stock or Units (3)(4) (#)				of Stock and Option Awards(5)
Travis D. Stice		3/1/2022		$	843,750			$	1,687,500			$	3,375,000
		3/1/2022															20,762				41,524				103,810							$	9,846,586
		3/1/2022																											27,683			$	3,787,865
M. Kaes Van’t Hof		3/1/2022		$	281,250			$	562,500			$	1,125,000
		3/1/2022															8,651				17,302				43,255							$	4,102,823
		3/1/2022																											11,535			$	1,578,334
Teresa L. Dick		3/1/2022		$	190,000			$	380,000			$	760,000
		3/1/2022															4,614				9,228				23,070							$	2,188,236
		3/1/2022																											6,152			$	841,778
Daniel N. Wesson		3/1/2022		$	224,000			$	448,000			$	896,000
		3/1/2022															5,191				10,381				25,953							$	2,461,647
		3/1/2022																											6,921			$	947,000
Matt Zmigrosky		3/1/2022		$	220,000			$	440,000			$	880,000
		3/1/2022															4,614				9,228				23,070							$	2,188,236
		3/1/2022																											6,152			$	841,778

(1)	Reflects performance-based annual incentive cash bonuses granted under the Annual Incentive Plan for 2021.2022. No non-equity incentive plan awards are paid under the Annual Incentive Plan for performance below the pre-determined thresholds.
(2)	For each NEO, these amounts represent the performance-based restricted stock units granted under the Equity Incentive Plan, which awards are subject to the satisfaction of certain relative TSR performance conditions compared to the Company’s TSR performance peer group for the three-year performance period commencing on January 1, 20212022 and ending on December 31, 2023,2024, as certified by the compensation committee, and continuous service requirements. The number of restricted stock units that will vest is based on the achievement of a pre-established threshold, target or maximum relative TSR goal, as compared to the Company’s peers, as modified by the absolute TSR modifier. The TSR is calculated over the performance period by dividing (1) the sum of (a) the cumulative value of dividends received during the performance period, assuming reinvestment, plus (b) the difference between the average stock price atfor the end and atfive trading days ending with the last day of the performance period compared to the average stock price for the five trading days ending immediately prior to the beginning of the performance period; by (2) the average stock price atfor the five trading days ending immediately prior to the beginning of the performance period. No awards vest if the relative TSR for the applicable performance period is below the threshold percentile. The absolute TSR modifier reduces payouts upon negative performance period TSR, pays at target upon achieving a performance period annual TSR of zero to 15%, and has a multiplierincreases payouts upon achieving a performance period annual TSR of greater than 15%.
(3)	Represents the time-based restricted stock units granted to each NEO under the Equity Incentive Plan on March 1, 2021,2022, vesting in three equal annual installments beginning on the date of grant. All of these awards are subject to continuous service requirements.
(4)	Excludes time-based restricted stock units under the Equity Incentive Plan that replaced Rattler phantom units granted under the Rattler LTIP in 2019 and, as described in “Compensation Discussion and Analysis,” converted into the Company’s restricted stock units under the Equity Incentive Plan on August 24, 2022 in connection with the Rattler Merger. Such restricted stock units will continue to vest on the same vesting schedule as the previously-granted Rattler phantom units (in two remaining substantially equal annual installments beginning on May 28, 2023, subject to continuous service requirements).
(5)	The amounts shown reflect the grant date fair value of restricted stock units granted, determined in accordance with FASB ASC Topic 718. See Note 1310 to our consolidated financial statements for the fiscal year ended December 31, 2021,2022, included in our Annual Report on Form 10-K, filed with the SEC on February 24, 2022,23, 2023, regarding assumptions underlying valuations of equity awards for 2021.2022.

 

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DIAMONDBACK ENERGY, INC.  •  2023 PROXY STATEMENT     64

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2021

— 2022 GRANTS OF PLAN-BASED AWARDS UNDER THE VIPER LTIP AND RATTLER LTIP

 

No awards were made to our NEOs by Viper our publicly traded subsidiary,or Rattler during the year ended December 31, 20212022 under the Viper LTIP or Rattler LTIP. Viper’s common units are listed on the NASDAQ Global Select Market under the symbol “VNOM.”

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     67

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—2021 GRANTS OF PLAN-BASED AWARDS UNDER THE RATTLER LTIP

No awards were made to our NEOs by Rattler, our publicly traded subsidiary, during the year ended December 31, 2021 under Following the Rattler LTIP.Merger completed on August 24, 2022, Rattler’s common units are listedno longer traded on theThe NASDAQ Global Select Market under the symbol “RTLR.”and Rattler is our wholly-owned subsidiary.

 

—

— OUTSTANDING EQUITY AWARDS AT FISCAL 20212022 YEAR-END UNDER DIAMONDBACK’S EQUITY INCENTIVE PLAN

 

The following table provides information concerning equity awards outstanding for our NEOs at December 31, 20212022 under Diamondback’s Equity Incentive Plan:

 

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 or Units of Stock That Have Not Vested				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Units of Stock That Have Not Vested(1)
Travis D. Stice
											98,872	(3)			$	10,663,345
			14,825	(2)			$	1,598,876			166,785	(4)			$	17,987,762
			22,999	(2)			$	2,480,442			129,370	(5)			$	13,952,555
Kaes Van’t Hof
											46,140	(3)			$	4,976,199
			6,918	(6)			$	746,106			77,833	(4)			$	8,394,289
			12,074	(6)			$	1,302,181			67,920	(5)			$	7,325,172
			8,790	(7)			$	948,002			26,366	(8)			$	2,843,573
Teresa L. Dick
											26,366	(3)			$	2,843,573
			3,953	(9)			$	426,331			44,475	(4)			$	4,796,629
			6,900	(9)			$	744,165			38,810	(5)			$	4,185,659
Russell Pantermuehl
											46,140	(3)			$	4,976,199
			6,918	(10)			$	746,106			77,833	(4)			$	8,394,289
			12,074	(10)			$	1,302,181			67,920	(5)			$	7,325,172
Matt Zmigrosky
											21,092	(3)			$	2,274,772
			3,162	(11)			$	341,022			35,580	(4)			$	3,837,303
			5,520	(11)			$	595,332			31,050	(5)			$	3,348,743

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     68

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 or Units of Stock That Have Not Vested				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Units of Stock That Have Not Vested(1)
Travis D. Stice											66,714	(3)			$	9,125,141
			11,499	(2)			$	1,572,833			51,748	(4)			$	7,078,091
			18,455	(2)			$	2,524,275			41,524	(5)			$	5,679,653
			5,166	(14)			$	706,605
M. Kaes Van’t Hof											31,133	(3)			$	4,258,372
			6,037	(6)			$	825,741			27,168	(4)			$	3,716,039
			7,690	(6)			$	1,051,838			17,302	(5)			$	2,366,568
			8,790	(7)			$	1,202,296
			13,183	(8)			$	1,803,171
			51,658	(14)			$	7,065,781
Teresa L. Dick											17,790	(3)			$	2,433,316
			3,450	(9)			$	471,891			15,524	(4)			$	2,123,373
			4,101	(9)			$	560,935			9,228	(5)			$	1,262,206
			2,583	(14)			$	353,303
Daniel N. Wesson			2,587	(10)			$	353,850			13,343	(4)			$	1,825,056
			4,614	(10)			$	631,103			11,643	(5)			$	1,592,530
			6,595	(11)			$	902,064			10,381	(12)			$	1,419,913
			9,887	(12)			$	1,352,344
			12,915	(14)			$	1,766,514
Matt Zmigrosky											14,232	(3)			$	1,946,653
			2,760	(13)			$	377,513			12,420	(4)			$	1,698,808
			4,101	(13)			$	560,935			9,228	(5)			$	1,262,206
			1,034	(14)			$	141,431

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(1)	Market value of shares or units that have not vested is based on the closing price of $107.85$136.78 per share of our common stock on the Nasdaq Global Select Market on December 31, 2021,30, 2022, which is the last trading day of 2021.2022.
(2)	The 14,82511,499 restricted stock units vested on March 1, 20222023 and, of the 22,99918,455 restricted stock units, 11,5009,228 vested on March 1, 20222023 and the remaining 11,4999,227 will vest on March 1, 2023.2024.

DIAMONDBACK ENERGY, INC.  •  2023 PROXY STATEMENT     65

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(3)	Reflects the maximum number of performance-based restricted stock units granted. These performance-based restricted stock units were granted under the Equity Incentive Plan subject to the satisfaction of certain relative TSR performance conditions as compared to our TSR performance peer group for the performance period commencing on January 1, 2019 and ending on December 31, 2021. All of these performance-based restricted stock units vested as of December 31, 2021 at 100% of target (rather than the maximum 200% reported in this table) upon certification by the compensation committee of attainment of the applicable performance conditions and settlement of these units on February 21, 2022.
(4)	Reflects the maximum number of performance-based restricted stock units granted. These performance-based restricted stock units were granted under the Equity Incentive Plan subject to the satisfaction of certain relative TSR performance conditions as compared to our TSR performance peer group for the performance period commencing on January 1, 2020 and ending on December 31, 2022. All of these performance-based restricted stock units vested as of December 31, 2022 as certifiedat 96% of target upon certification by the compensation committee and continuous service requirements. The number of restricted stock units that will vest is based on the achievementattainment of a pre-established threshold, target or maximum relative TSR goal, as compared to the Company’s peers, as modified by the absolute TSR modifier. The TSR is calculated over the performance period by dividing (1) the sum of (a) the cumulative value of dividends received during the performance period, assuming reinvestment, plus (b) the difference between the stock price at the end and at the beginning of the performance period; by (2) the stock price at the beginning of the performance period. No awards vest if the relative TSR for the applicable performance period is below the threshold percentile. The absolute TSR modifier reduces payouts upon negative performance period TSR, pays at target upon achieving a performance period annual TSRconditions and settlement of zero to 15%, and has a multiplier upon achieving a performance period annual TSR of greater than 15%.these units on February 6, 2023.
(5)(4)	Reflects the maximumtarget number of performance-based restricted stock units granted. These performance-based restricted stock units were granted under the Equity Incentive Plan subject to the satisfaction of certain relative TSR performance conditions as compared to our TSR performance peer group for the performance period commencing on January 1, 2021 and ending on December 31, 2023, as certified by the compensation committee, and continuous service requirements. The number of restricted stock units that will vest is based on the achievement of a pre-established threshold, target or maximum relative TSR goal, as compared to the Company’s peers, as modified by the absolute TSR modifier. The TSR is calculated over the performance period by dividing (1) the sum of (a) the cumulative value of dividends received during the performance period, assuming reinvestment, plus (b) the difference between the average stock price atfor the end and atfive trading days ending with the last day of the performance period compared to the average stock price for the five trading days ending immediately prior to the beginning of the performance period; by (2) the average stock price atfor the five trading days ending immediately prior to the beginning of the performance period. No awards vest if the relative TSR for the applicable performance period is below the threshold percentile. The absolute TSR modifier reduces payouts upon negative performance period TSR, pays at target upon achieving a performance period annual TSR of zero to 15%, and has a multiplierincreases payouts upon achieving a performance period annual TSR of greater than 15%.
(5)	Reflects the target number of performance-based restricted stock units granted. These performance-based restricted stock units were granted under the Equity Incentive Plan subject to the satisfaction of certain relative TSR performance conditions as compared to our TSR performance peer group for the performance period commencing on January 1, 2022 and ending on December 31, 2024, as certified by the compensation committee, and continuous service requirements. The number of restricted stock units that will vest is based on the achievement of a pre-established threshold, target or maximum relative TSR goal, as compared to the Company’s peers, as modified by the absolute TSR modifier. The TSR is calculated over the performance period by dividing (1) the sum of (a) the cumulative value of dividends received during the performance period, assuming reinvestment, plus (b) the difference between the average stock price for the five trading days ending with the last day of the performance period compared to the average stock price for the five trading days ending immediately prior to the beginning of the performance period; by (2) the average stock price for the five trading days ending immediately prior to the beginning of the performance period. No awards vest if the relative TSR for the applicable performance period is below the threshold percentile. The absolute TSR modifier reduces payouts upon negative performance period TSR, pays at target upon achieving a performance period annual TSR of zero to 15%, and increases payouts upon achieving a performance period annual TSR of greater than 15%.
(6)	The 6,9186,037 restricted stock units vested on March 1, 20222023 and, of the 12,0747,690 restricted stock units, 6,0373,845 vested on March 1, 20222023 and the remaining 6,0373,845 will vest on March 1, 2023.2024.
(7)	These time-based restricted stock units were granted to Mr. Van’t Hof on March 1, 2019 under the Equity Incentive Plan as part of a one-time retention award and will vest in five substantially equal annual installments beginning on March 1, 2025.
(8)	Reflects the maximumactual number of performance-based restricted stock units granted. These performance-based restricted stock units were granted to Mr. Van’t Hof under the Equity Incentive Plan as part of a one-time retention award subject to the satisfaction of certain relative TSR conditions as compared to our TSR performance peer group for the performance period commencing on January 1, 2019 and ending on December 31, 2021, as certified by the compensation committee, and continuous service requirements, vesting and settling in five substantially equal annual installments beginning on March 1, 2025. AllUpon the satisfaction of the performance criteria, all of these performance-based restricted stock units vestedwere converted to time-based restricted stock units as of December 31, 2021 atwith the number of shares determined based on achieving 100% of target (rather than the maximum 200% reported in this table) upon certification by the compensation committee of attainment of the applicable performance conditions and settlement of these units on February 21, 2022.
(9)	The 3,9533,450 restricted stock units vested on March 1, 20222023 and, of the 6,9004,101 restricted stock units 3,4502,051 vested on March 1, 20222023 and the remaining 3,4502,050 will vest on March 1, 2023.2024.
(10)	The 6,9182,587 restricted stock units vested on March 1, 20222023 and, of the 12,0744,614 restricted stock units, 6,0372,307 vested on March 1, 20222023 and the remaining 6,0372,307 will vest on March 1, 2023.2024.
(11)	These time-based restricted stock units were granted to Mr. Wesson on March 1, 2019 under the Equity Incentive Plan as part of a one-time retention award and will vest in five substantially equal annual installments beginning on March 1, 2025.
(12)	Reflects the actual number of performance-based restricted stock units granted. These performance-based restricted stock units were granted to Mr. Wesson under the Equity Incentive Plan as part of a one-time retention award subject to the satisfaction of certain relative TSR conditions as compared to our TSR performance peer group for the performance period commencing on January 1, 2019 and ending on December 31, 2021, as certified by the compensation committee, and continuous service requirements, vesting and settling in five substantially equal annual installments beginning on March 1, 2025. Upon the satisfaction of performance criteria, all of these performance-based restricted stock units were converted to time-based restricted stock units as of December 31, 2021 with the number of shares determined based on achieving 100% of target upon certification by the compensation committee of attainment of the applicable performance conditions on February 21, 2022.
(13)	The 3,1622,760 restricted stock units vested on March 1, 20222023 and, of the 5,5204,101 restricted stock units, 2,7602,051 vested on March 1, 20222023 and the remaining 2,7602,050 will vest on March 1, 2023.2024.
(14)	These time-based restricted stock units were granted to Messrs. Stice, Van’t Hof, Wesson, Zmigrosky and Ms. Dick on August 24, 2022 upon the conversion of the previously-granted Rattler phantom units in connection with the Rattler Merger and will continue to vest on the same vesting schedule as such Rattler phantom units (in two remaining substantially equal annual installments beginning on May 28, 2023, subject to continuous service requirements).

 

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DIAMONDBACK ENERGY, INC.  •  2023 PROXY STATEMENT     66

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— OUTSTANDING EQUITY AWARDS UNDER THE VIPER LTIP AND RATTLER LTIP AT FISCAL 20212022 YEAR-END

 

No equity awards under the Viper LTIP were outstanding for any of our NEOs at December 31, 2021.

DIAMONDBACK ENERGY, INC.•2022. In connection with the Rattler Merger completed on August 24, 2022, PROXY STATEMENT     69

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—OUTSTANDING EQUITY AWARDS UNDER THE RATTLERall unvested equity awards then-held by our NEOs under the Rattler LTIP AT FISCAL 2021 YEAR-END

The following table provides information concerningwere converted into our restricted stock units under Diamondback’s Equity Incentive Plan. As a result, no equity awards under the Rattler LTIP were outstanding for any of our NEOs at December 31, 2021:2022.

 

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)
Travis D. Stice			68,572	(2)		$	780,349
Kaes Van’t Hof			685,715	(2)		$	7,803,437
Teresa L. Dick			34,286	(2)		$	390,175
Russell Pantermuehl			34,286	(2)		$	390,175
Matt Zmigrosky			13,715	(2)		$	156,077

(1)	Market value of shares or units that have not vested is based on the closing price of $11.38 per share of our common stock on the Nasdaq Global Select Market on December 31, 2021, the last trading day of 2021.
(2)	These phantom units will vest in three remaining equal or substantially equal annual installments beginning on May 28, 2022.

—

— STOCK VESTED DURING FISCAL YEAR 20212022 UNDER DIAMONDBACK’S EQUITY INCENTIVE PLAN

 

The following table provides certain information for the NEOs with respect to the number of shares acquired upon the vesting of restricted stock awards under Diamondback’s Equity Incentive Plan during 2021:2022:

 

		Stock Awards
Name		Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($)(1)
Travis D. Stice			71,444			$	4,949,640
Kaes Van’t Hof			24,777			$	1,716,551
Teresa L. Dick			19,703			$	1,365,024
Russell Pantermuehl			35,218			$	2,439,903
Matt Zmigrosky			8,267			$	572,738

		Stock Awards
Name		Number of Shares Acquired on Vesting (#)			Value Realized on Vesting ($)(1)
Travis D. Stice			84,989			$	11,736,981
M. Kaes Van’t Hof			39,870			$	5,506,047
Teresa L. Dick			22,637			$	3,126,170
Daniel N. Wesson			13,791			$	1,904,537
Matt Zmigrosky			18,519			$	2,557,474

(1)

Value realized on vesting is based on the closing price per share of our common stock on the day prior to the vesting date on the Nasdaq Global Select Market. If the Nasdaq Global Select Market was closed on the day prior to the vesting date, the calculation was made using the opening price on the next day on which the market was open.

 

DIAMONDBACK ENERGY, INC.•20222023 PROXY STATEMENT     7067

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—

— PHANTOM UNITS VESTED UNDER THE VIPER LTIP DURING FISCAL YEAR 20212022

 

No phantom units vested for our NEOs under the Viper LTIP during the year ended December 31, 2022.

— PHANTOM UNITS VESTED UNDER THE RATTLER LTIP DURING FISCAL YEAR 2022

The following table provides certain information for the NEOs with respect to the number of shares acquired upon the vesting of phantom unit awards under the Viper LTIP during 2021:

		Stock Awards
Name		Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($)(1)
Matt Zmigrosky			3,668			$	57,514

(1)	Value realized on vesting is based on the closing price per common unit of Viper on the Nasdaq Global Select Market on the trading day prior to the vesting date.

—PHANTOM UNITS VESTED UNDER THE RATTLER LTIP DURING FISCAL YEAR 2021

The following table provides certain information for the NEOs with respect to the number of sharesunits acquired upon the vesting of phantom unit awards under the Rattler LTIP during 2021:2022 prior to the Rattler Merger and the conversion of outstanding phantom units into time-based restricted stock units.

 

		Stock Awards
Name		Number of Shares Acquired on Vesting (#)				Value Realized  on Vesting ($)(1)
Travis D. Stice			22,857			$	244,570
Kaes Van’t Hof			228,571			$	2,445,710
Teresa L. Dick			11,429			$	122,290
Russell Pantermuehl			11,429			$	122,290
Matt Zmigrosky			4,571			$	48,910

		Phantom Unit Awards
Name		Number of Units Acquired on Vesting (#)			Value Realized on Vesting ($)(1)
Travis D. Stice			22,857			$	392,455
M. Kaes Van’t Hof			228,572			$	3,924,581
Teresa L. Dick			11,428			$	196,219
Daniel N. Wesson			57,143			$	981,145
Matt Zmigrosky			4,572			$	78,501

(1)	Value realized on vesting is based on the closing price per common unit of Rattler on the Nasdaq Global Select Market on the trading day prior to the vesting date.

 

—PAY RATIO DISCLOSURE

Pursuant to Item 402(u) of Regulation S-K, we are disclosing the pay ratio and supporting information comparing the median of the annual total compensation of our employees (including full-time, part-time, seasonal and temporary employees) other than Mr. Stice, our Chief Executive Officer, and the annual total compensation of our Chief Executive Officer. The pay ratio is calculated in a manner consistent with Item 402(u) of Regulation S-K. For the year ended December 31, 2021, our last completed fiscal year:

•	The median of the annual total compensation of all of our employees, other than our Chief Executive Officer, is $108,354.
•	The annual total compensation of our Chief Executive Officer is $13,839,995.

Based on this information, the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all other employees is 128 to 1. To identify the median employee for 2021 (the 2021 Median Employee), we reviewed our employee population as of December 31, 2021. For 2021, we used wages reported in Box 1 of IRS Form W-2 during the 12-month period ending on December 31, 2021, as a consistently applied compensation measure. We did not annualize the wages for new employees or employees on unpaid leave of absence who were employed for less than the full fiscal year, or make cost of living adjustments. Based on this methodology, we identified an employee whose compensation was at the median of the employee data.

DIAMONDBACK ENERGY, INC.•20222023 PROXY STATEMENT     7168

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Once we identified the 2021 Median Employee, we calculated the annual total compensation using the rules applicable to the Summary Compensation Table. With respect to the annual total compensation of our Chief Executive Officer we used the amount reported in the “Total” column for 2021 in the Summary Compensation Table on page 65.

The pay ratio rules provide companies with flexibility to select the methodology and assumptions used to identify the median employee, calculate the median employee’s compensation and estimate the pay ratio. As a result, our methodology may differ from those used by other companies, including those within our industry.

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— POTENTIAL PAYMENTS UPON TERMINATION, RESIGNATION OR CHANGE OF CONTROL FOR FISCAL YEAR 20212022

 

The following tables provide information regarding potential payments to each of our NEOs in connection with certain termination events, including a termination related to a change of control of the Company, as of December 31, 20212022 under the terms of the Diamondback Energy, Inc. Senior Management Severance Plan. These severance plan arrangements with our NEOs are described in more detail under “Benefit Plans—“Other Significant Compensation and Benefit Plans, Policies and Practices—Senior Management Severance Plan” above.

 

		Termination Without Cause or Resignation for Good Reason(1)(2)
Name		Base Salary				Annual Incentive  Bonus				COBRA Reimbursement				RSUs and Phantom  Units(3)				Total
Travis D. Stice		$	5,000,000	(4)		$	1,562,500	(6)		$	20,966	(8)		$	47,463,330	(9)		$	54,046,796
Kaes Van’t Hof		$	780,000	(5)		$	468,000	(7)		$	29,986	(8)		$	—			$	1,277,986
Teresa L. Dick		$	670,500	(5)		$	357,600	(7)		$	20,966	(8)		$	—			$	1,049,066
Matt Zmigrosky		$	780,000	(5)		$	416,000	(7)		$	30,796	(8)		$	—			$	1,226,796
		Change of Control/No Termination
Name		Base Salary				Annual Incentive Bonus(7)				COBRA Reimbursement				RSUs and Phantom Units(3)				Total
Travis D. Stice		$	—			$	1,562,500	(6)		$	—			$	6,112,022	(9)		$	7,674,522
Kaes Van’t Hof		$	—			$	468,000	(7)		$	—			$	7,803,437	(10)		$	8,271,437
Teresa L. Dick		$	—			$	357,600	(7)		$	—			$	390,175	(10)		$	747,775
Matt Zmigrosky		$	—			$	416,000	(7)		$	—			$	156,077	(10)		$	572,077
		Change of Control/Qualifying Termination(1)(11)
Name						Lump Sum Cash Severance Payment				COBRA Reimbursement				RSUs and Phantom  Units(3)				Total
Travis D. Stice						$	12,062,500	(12)		$	20,966	(8)		$	47,463,330	(9)(14)		$	59,546,796
Kaes Van’t Hof						$	3,452,800	(13)		$	30,796	(8)		$	20,997,374	(10)		$	24,480,970
Teresa L. Dick						$	2,762,460	(13)		$	20,966	(8)		$	6,575,372	(10)		$	9,358,798
Matt Zmigrosky						$	3,097,933	(13)		$	30,796	(8)		$	5,104,235	(10)		$	8,232,964
		Termination upon Death or Disability(1)(15)
Name		Base Salary				Annual Incentive  Bonus				COBRA Reimbursement				RSUs and Phantom Units(3)				Total
Travis D. Stice		$	5,000,000	(4)		$	1,562,500	(6)		$	20,966	(16)		$	47,463,330	(9)(14)		$	54,046,796
Kaes Van’t Hof		$	780,000	(5)		$	468,000	(7)		$	—			$	20,997,374	(17)		$	22,245,374
Teresa L. Dick		$	670,500	(5)		$	357,600	(7)		$	—			$	6,575,372	(17)		$	7,603,472
Matt Zmigrosky		$	780,000	(5)		$	416,000	(7)		$	—			$	5,104,235	(17)		$	6,300,235

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     72

		Termination Without Cause or Resignation for Good Reason(1)(2)
Name		Base Salary				Annual Incentive Bonus				COBRA Reimbursement				Restricted Stock Units(3)					Total
Travis D. Stice		$	5,400,000	(4)		$	1,687,500	(7)		$	27,955	(9)		$	59,510,926	(10)		$	66,626,381
M. Kaes Van’t Hof		$	1,093,750	(5)		$	562,500	(8)		$	35,928	(9)		$	—			$	1,692,178
Teresa L. Dick		$	712,500	(6)		$	380,000	(8)		$	20,966	(9)		$	—			$	1,113,466
Daniel N. Wesson		$	840,000	(6)		$	448,000	(8)		$	30,796	(9)		$	—			$	1,318,796
Matt Zmigrosky		$	825,000	(6)		$	440,000	(8)		$	30,796	(9)		$	—			$	1,295,796
		Change of Control/No Termination
Name		Base Salary				Annual Incentive Bonus(7)				COBRA Reimbursement				Restricted Stock Units(3)					Total
Travis D. Stice		$	—			$	1,687,500	(7)		$	—			$	—			$	1,687,500
M. Kaes Van’t Hof		$	—			$	562,500	(8)		$	—			$	—			$	562,500
Teresa L. Dick		$	—			$	380,000	(8)		$	—			$	—			$	380,000
Daniel N. Wesson		$	—			$	448,000	(8)		$	—			$	—			$	448,000
Matt Zmigrosky		$	—			$	440,000	(8)		$	—			$	—			$	440,000
		Change of Control/Qualifying Termination(1)(12)
Name						Lump Sum Cash Severance Payment				COBRA Reimbursement				Restricted Stock Units(3)					Total
Travis D. Stice						$	12,365,000	(13)		$	27,955	(9)		$	59,910,926	(10)		$	71,903,882
M. Kaes Van’t Hof						$	4,167,324	(14)		$	35,928	(9)		$	22,289,806	(11)		$	26,493,058
Teresa L. Dick						$	2,824,927	(15)		$	20,966	(9)		$	7,205,023	(11)		$	10,050,916
Daniel N. Wesson						$	3,183,133	(15)		$	30,796	(9)		$	8,941,309	(11)		$	12,155,238
Matt Zmigrosky						$	3,275,600	(15)		$	30,796	(9)		$	5,987,545	(11)		$	9,293,941
		Termination upon Death or Disability(1)(16)
Name		Base Salary				Annual Incentive Bonus				COBRA Reimbursement				Restricted Stock Units(3)					Total
Travis D. Stice		$	5,400,000	(4)		$	1,687,500	(7)		$	27,955	(17)		$	59,510,926	(10)		$	66,626,381
M. Kaes Van’t Hof		$	1,093,750	(5)		$	562,500	(8)		$	—			$	22,289,806	(18)		$	23,946,056
Teresa L. Dick		$	712,500	(6)		$	380,000	(8)		$	—			$	7,205,023	(18)		$	8,297,523
Daniel N. Wesson		$	840,000	(6)		$	448,000	(8)		$	—			$	8,941,309	(18)		$	10,229,309
Matt Zmigrosky		$	825,000	(6)		$	440,000	(8)		$	—			$	5,987,545	(18)		$	7,252,545

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(1)

The payment of any amounts or provision of any benefits to each NEO under the severance plan is subject to (i) such NEO’s (or, if applicable, his or her representative’s or estate’s) execution, within forty five (45)45 days following receipt (or such shorter period as set forth in such release), of a waiver and general release of claims, and such waiver and general release of claims becoming effective and irrevocable in accordance with its terms within sixty (60)60 days following such NEO’s termination date and (ii) certain non-competition and non-solicitation obligations.

DIAMONDBACK ENERGY, INC.  •  2023 PROXY STATEMENT     69

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(2)	Represents the amounts payable to each NEO under the severance plan and the applicable NEO participation agreement, under which, in the event we terminate such NEO’s employment with us other than for “cause” (and not by reason of death or disability), or if such NEO terminates his or her employment with us for “good reason,” he or she will be entitled to receive (i) an amount, if any, equal to the bonus that would be payable for services attributable to a completed prior year performance period that has not been paid under the terms of the Annual Incentive Plan, (ii) a multiple of base salary continuation (2x for 24 months for Mr. Stice, 1x for 21 months for Mr. Van’t Hof and 1x for 18 months for each other NEO), (iii) a target annual cash bonus for the year of termination (pro-rated, if applicable based on the number of days employed during the year of termination), (iv) reimbursement for the cost of up to 18 months of premiums for COBRA group health continuation coverage and (v) the vesting or forfeiture (as applicable) of each outstanding unvested equity-based compensation award granted by us or our affiliates in accordance with the terms of the applicable equity award agreement. Effective February 21, 2022, Mr. Van’t Hof’s base salary continuation is equal to a multiple of 1x for 21 months.
(3)	The value of restricted stock units was calculated based on the closing price of our common stock of $107.85$136.78 per share on December 31, 2021. The value30, 2022, which is the last trading day of phantom units was calculated based on the closing price of Rattler’s common units of $11.38 per unit on December 31, 2021.2022.
(4)	Represents an amount equal to the base salary continuation of 2x for 24 months for Mr. Stice.
(5)	Represents an amount equal to the base salary continuation of 1x for 21 months for Mr. Van’t Hof.
(6)	Represents an amount equal to the base salary continuation of 1x for 18 months for each of Mr. Van’t Hof, Ms. Dick, Mr. Wesson and Mr. Zmigrosky. Effective February 21, 2022, Mr. Van’t Hof’s base salary continuation is equal to a multiple of 1x for 21 months.
(6)(7)	Represents an amount equal to the target bonus under the Annual Incentive Plan for Mr. Stice, representing 125% of his annual base salary.
(7)(8)	Represents an amount equal to the target bonus under the Annual Incentive Plan for each of these NEOs, representing (i) 90% of the annual base salary for Mr. Van’t Hof and (ii) 80% of the applicable annual base salary for each of Ms. Dick, Mr. Wesson and Mr. Zmigrosky.
(8)(9)	Represents reimbursement for the cost of up to 18 months of premiums for COBRA group health continuation coverage.
(9)(10)	Mr. Stice’s participation agreement includes terms that are intended to maintain certain benefits under his prior employment agreement and require each equity award granted to Mr. Stice to become 100% vested upon an eligible termination, and in the case of outstanding performance-based equity awards to vest at the maximum level under the equity award agreement and be settled within ten business days.
(10)(11)	The restricted stock units granted under Diamondback’s Equity Incentive Plan to each of Mr. Van’t Hof, Ms. Dick, Mr. Wesson and Mr. Zmigrosky that remained unvested as of December 31, 20212022 have double-trigger provisions and will vest upon (i) qualifying termination without cause within 24 months of the occurrence of the change in control of the Company or (ii) upon such executive officer’s death or disability. Under the terms of the phantom unit awards granted under the Viper LTIP and the Rattler LTIP prior to 2020, each such phantom unit award will vest immediately upon a change in control of Viper or Rattler, as applicable, or a change in control of Diamondback.
(11)(12)	Represents the amounts payable to each NEO under the severance plan and the applicable NEO participation agreement, under which, in the event that the employment of an NEO is terminated by us other than for “cause” (and not by reason of death of disability), or if such NEO terminates his or her employment with us for “good reason,” in each case within the two-year period immediately following a change in control (as defined in the severance plan), he or she will be entitled to receive (i) an amount, if any, equal to the bonus that would be payable for services attributable to a completed prior year performance period that has not been paid under the terms of the Annual Incentive Plan, (ii) a lump sum cash payment equal to a multiple of the participant’s base salary plus such participant’s average bonus for the preceding three years (3x for Mr. Stice, 2.75x for Mr. Van’t Hof and 2.5x for each other NEO), (iii) a target annual cash bonus for the year of termination (pro-rated, if applicable based on the number of days employed during the year of termination), (iv) reimbursements for the cost of up to 18 months of premiums for COBRA group health continuation coverage and (v) the vesting or forfeiture (as applicable) of each outstanding unvested equity-based compensation award granted by us or our affiliates in accordance with the terms of the applicable equity award agreement.
(12)(13)	Represents a lump sum cash payment equal to 3x Mr. Stice’s base salary plus Mr. Stice’s average bonus for the preceding three years ended December 31, 20212022 and a target annual cash bonus for the year of termination.
(13)(14)	Represents a lump sum cash payment equal to 2.75x Mr. Van’t Hof’s base salary plus Mr. Van’t Hof’s average bonus for the preceding three years ended December 31, 2022 and a target annual cash bonus for the year of termination.
(15)	For each of Mr. Van’t Hof, Ms. Dick, Mr. Wesson and Mr. Zmigrosky, represents a lump sum cash payment equal to 2.5x such NEO’s base salary plus such NEO’s average bonus for the preceding three years ended December 31, 20212022 and a target annual cash bonus for the year of termination. Effective February 21, 2022, Mr. Van’t Hof’s lump sum cash payment is equal to 2.75x of Mr. Van’t Hof’s base salary plus his average bonus for the preceding three years and a target annual cash bonus for the year of termination.
(14)(16)	Under the terms of the applicable award agreement with Mr. Stice, restricted stock units granted under Diamondback’s Equity Incentive Plan prior to 2020 will vest at a maximum level immediately (a) upon the sale, transfer or conveyance of substantially all of our assets, (b) if there is a significant change to the composition of our board of directors, (c) we adopt a plan of dissolution or liquidation, (d) in the event that more than 50% of the combined voting power of our then outstanding stock is controlled by one or more parties that is not us or (e) upon such executive officer’s death or disability. Under the terms of the phantom unit awards granted under the Viper LTIP and the Rattler LTIP prior to 2020, each such phantom unit award will vest upon a change in control of Viper or Rattler, as applicable, or a change in control of Diamondback, or upon such NEO’s death or disability.
(15)	In the event that an NEO dies or becomes disabled while employed by us, such NEO will be entitled to (i) an amount, if any, equal to the bonus that would be payable for services attributable to a completed prior year performance period that has not been paid under the terms of the Annual Incentive Plan, (ii) a multiple of base salary continuation (2x for 24 months for Mr. Stice, 1x for 21 months for Mr. Van’t Hof and 1x for 18 months of each other NEO) and (iii) a target annual cash bonus for the year of termination (pro-rated, if applicable based on the number of days employed during the year of termination). Effective February 21, 2022, Mr. Van’t Hof’s base salary continuation is equal to a multiple of 1x for 21 months.
(16)(17)	Represents reimbursements for the cost of up to 18 months of premiums for COBRA group health continuation coverage to Mr. Stice’s spouse and any eligible dependents, as provided by the terms of Mr. Stice’s participation agreement under the severance plan.
(17)(18)	Under the terms of the applicable award agreement, upon such NEO’s death or disability the number of performance-based restricted stock units the officer is entitled to is not determined until the end of the performance period and is settled at the same time it would have had the officer remained employed. For purposes of calculating the number of performance-based restricted stock units that such NEO would be entitled to upon his or her death or disability, the Company assumed that the performance conditions were satisfied at target.

 

DIAMONDBACK ENERGY, INC.•20222023 PROXY STATEMENT     7370

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— PAY RATIO DISCLOSURE

Retirement

Pursuant to Item 402(u) of FormerRegulation S-K, we are disclosing the pay ratio and supporting information comparing the median of the annual total compensation of our employees (including full-time, part-time, seasonal and temporary employees) other than Mr. Stice, our Chief Executive Officer, and the annual total compensation of our Chief Executive Officer. The pay ratio is calculated in a manner consistent with Item 402(u) of Regulation S-K. For the year ended December 31, 2022, our last completed fiscal year:

•	The median of the annual total compensation of all of our employees, other than our Chief Executive Officer, is $120,991.
•	The annual total compensation of our Chief Executive Officer is $17,152,470.
•	The ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all other employees is 142 to 1.

To identify the median employee for 2022 (the 2022 Median Employee), we reviewed our employee population as of December 31, 2022. For 2022, we used wages reported in Box 1 of IRS Form W-2 during the 12-month period ending on December 31, 2022, as a consistently applied compensation measure. We did not annualize the wages for new employees or employees on unpaid leave of absence who were employed for less than the full fiscal year, or make cost of living adjustments. Based on this methodology, we identified an employee whose compensation was at the median of the employee data.

Once we identified the 2022 Median Employee, we calculated the annual total compensation using the rules applicable to the Summary Compensation Table. With respect to the annual total compensation of our Chief Executive Officer we used the amount reported in the “Total” column for 2022 in the Summary Compensation Table on page 62.

The pay ratio rules provide companies with flexibility to select the methodology and assumptions used to identify the median employee, calculate the median employee’s compensation and estimate the pay ratio. As a result, our methodology may differ from those used by other companies, including those within our industry, and may not be comparable to pay ratios reported by other companies.

— PAY VERSUS PERFORMANCE DISCLOSURE

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid to our CEO, who is referred to in the table below as our PEO, and our other named executive officers, who are referred to in the table below as our Non-PEO NEOs, and certain financial performance of the Company. For further information concerning Company’s pay for performance philosophy and how the Company’s aligns executive compensation with the Company’s performance, refer to “Compensation Discussion and Analysis.”

 

														Value of Initial Fixed $100 Investment Based On:
Year		Summary Compensation Table Total for PEO(1)				Compensation Actually Paid to PEO(2)				Average Summary Compensation Table Total for Non-PEO NEOs(3)				Average Compensation Actually Paid to Non-PEO NEOs(4)				Total Shareholder Return(5)				Peer Group Total Shareholder Return(6)				Net Income (Loss) (in millions)(7)				Return on Average Capital Employed (“ROACE”)(8)
2022		$	17,152,470			$	19,146,286			$	4,942,355			$	7,154,630			$	166.41			$	201.17			$	4,562				25.6%
2021		$	13,529,128			$	24,998,355			$	5,073,857			$	9,988,565			$	122.81			$	128.00			$	2,276				15.7%
2020		$	10,152,471			$	33,687			$	3,512,243			$	(2,684,214	)		$	54.00			$	63.64			$	(4,672	)			4.5%

(1)	The dollar amounts reported are the amounts of total compensation reported in our Summary Compensation Table.

DIAMONDBACK ENERGY, INC.  •  2023 PROXY STATEMENT     71

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(2)	The dollar amounts reported represent the amount of “compensation actually paid”, as computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid during the applicable year. In accordance with SEC rules, the following adjustments were made to total compensation to determine the compensation actually paid:

Year		Reported Summary Compensation Table Total for PEO				Deductions: Reported Value of Equity Awards(a)				Additions: Equity Award Adjustments(b)				Compensation Actually Paid to PEO
2022		$	17,152,470			$	13,634,451			$	15,628,267			$	19,146,286
2021		$	13,529,128			$	9,323,289			$	20,792,516			$	24,998,355
2020		$	10,152,471			$	7,306,740			$	(2,812,044	)		$	33,687

	(a)	The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” columns in the Summary Compensation Table for the applicable year.
	(b)	The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:

Year		Year End Fair Value of Current Year Equity Awards that Remain Unvested at Year-End				Change in Fair Value of Equity Awards Granted in Prior Years that are Unvested at Year-End				Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year				Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year				Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year				Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value				Total Equity Award Adjustments
2022		$	7,085,036			$	3,076,336			$	1,274,387			$	2,424,112			$	—			$	1,768,396			$	15,628,267
2021		$	8,725,605			$	9,360,053			$	796,720			$	1,599,271			$	—			$	310,867			$	20,792,516
2020		$	4,150,613			$	(7,029,183	)		$	919,212			$	(1,244,829	)		$	—			$	392,143			$	(2,812,044	)

(3)

The dollar amounts reported represent the average of the amounts reported for our Non-PEO NEOs as a group in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of our Non-PEO NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2022, Mr. Van’t Hof, Ms. Dick, Mr. Wesson and Mr. Zmigrosky; (ii) for 2021, Mr. Van’t Hof, Ms. Dick, Mr. Pantermuehl and Mr. Zmigrosky; and (iii) for 2020, Mr. Van’t Hof, Ms. Dick, Mr. Pantermuehl and Mr. Wesson.

(4)

The dollar amounts reported represent the average amount of “compensation actually paid” to our Non-PEO NEOs, as computed in accordance with SEC rules. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to our Non-PEO NEOs during the applicable year. In accordance with the SEC rules, the following adjustments were made to average total compensation for our Non-PEO NEOs for each year to determine the compensation actually paid, using the same methodology described above in Note 2:

Year		Average Reported Summary Compensation Table Total for Non-PEO NEOs				Deductions: Average Reported Value of Equity Awards				Additions: Average Equity Award Adjustments(a)				Average Compensation Actually Paid to Non- PEO NEOs
2022		$	4,942,355			$	3,787,458			$	5,999,733			$	7,154,630
2021		$	5,073,857			$	3,706,041			$	8,620,749			$	9,988,565
2020		$	3,512,243			$	2,557,358			$	(3,639,099	)		$	(2,684,214	)

DIAMONDBACK ENERGY, INC.  •  2023 PROXY STATEMENT     72

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(a)	The amounts deducted or added in calculating the total average equity award adjustments are as follows:

Year		Year End Fair Value of Current Year Equity Awards that Remain Unvested at Year-End				Change in Fair Value of Equity Awards Granted in Prior Years that are Unvested at Year-End				Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year				Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year				Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year				Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value				Total Average Equity Award Adjustments
2022		$	1,968,114			$	1,792,264			$	354,020			$	1,076,240			$	—			$	809,095			$	5,999,733
2021		$	3,468,438			$	3,971,326			$	316,714			$	523,277			$	—			$	340,994			$	8,620,749
2020		$	1,452,709			$	(4,913,332	)		$	321,734			$	(982,699	)		$	—			$	482,489			$	(3,639,099	)

(5)	Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period.
(6)	Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at December 31, 2019. The peer group used for this purpose in 2022 consists of the following companies and indices: APA Corporation, Continental Resources, Inc., Coterra Energy, Inc., Devon Energy Corporation, EOG Resources, Inc., Hess Corporation, Marathon Oil Corporation, Ovintiv Inc. and Pioneer Natural Resources Company. The peer group used for this purpose in 2021 consists of the following companies and indices: APA Corporation, Cimarex Energy Co. (now Coterra Energy, Inc.), Continental Resources, Inc., Devon Energy Corporation, EOG Resources, Inc., Hess Corporation, Marathon Oil Corporation, Ovintiv Inc. and Pioneer Natural Resources Company. The peer group used for this purpose in 2020 consists of the following companies and indices: APA Corporation, Cimarex Energy Co. (now Coterra Energy, Inc.), Continental Resources, Inc. Concho Resources Inc., Devon Energy Corporation, EOG Resources, Inc., Hess Corporation, Marathon Oil Corporation, Noble Energy, Inc., Ovintiv Inc., Parsley Energy, Inc., Pioneer Natural Resources Company, WPX Energy, Inc., XOP, and SPX.
(7)	The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year.
(8)	ROACE (%) is a non-GAAP financial measure. See Schedule A for the definition of this non-GAAP financial measure and its reconciliation to the most directly comparable GAAP measure, and for other important financial information.

Financial Performance Measure

As previously announceddescribed in greater detail in “Compensation – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. The metrics that the Company uses for both our long-term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our stockholders. The most important financial performance measures used by the Company on November 30, 2021, Russell Pantermuehl, former Executive Vice President – Chief Engineerto link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows:

	•	ROACE
	•	Free Cash Flow Per Share (as defined and reconciled in Schedule A to this proxy statement)
	•	PDP F&D Cost (as defined in “Compensation Discussion and Analysis – Performance-Based Annual Incentive Bonus” above)
	•	Relative Total Stockholder Return (as modified by an absolute TSR modifier) (as discussed in “Compensation Discussion and Analysis—Long-Term Equity Incentive Compensation—2022 Performance-Based and Time-Based Awards”)

DIAMONDBACK ENERGY, INC.  •  2023 PROXY STATEMENT     73

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Analysis of the Company, retired effective December 31, 2021. UnderInformation Presented in the terms of the Company’s severance plan asPay Versus Performance Table

As described in more detail underin the heading “Other Significant Compensationsection “Compensation Discussion and Benefit Plans, PoliciesAnalysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, not all of those Company measures are presented in the Pay versus Performance table consistent with SEC rules. Moreover, the Company generally seeks to incentivize long-term performance, and Practices—Senior Management Severance Plan” beginning on page 57 of this proxy statement, participants intherefore does not specifically align the Company’s performance measures with compensation that plan, including Mr. Pantermuehl, are not entitled to any retirement benefits.

In connection with Mr. Pantermuehl’s retirement, Diamondback and Mr. Pantermuehl have agreed that, following his retirement, Mr. Pantermuehl will serve as a consultant to Diamondback from January 1, 2022 through December 31, 2022 (Consulting Period) under the terms and conditions of that certain Transition and Consulting Agreement, entered into by Diamondback and Mr. Pantermuehl as of December 31, 2021 (Consulting Agreement). During the Consulting Period, Diamondback will pay Mr. Pantermuehl a consulting fee of $4,000 per month for his services as a consultant and will reimburse Mr. Pantermuehl’s reasonable expenses incurred in connection with his performance of consulting dutiesis actually paid (as computed in accordance with Diamondback’s expense reimbursement policy.SEC rules) for a particular year. In addition, duringaccordance with SEC rules, the Consulting Period, anyCompany is providing the following descriptions of Mr. Pantermuehl’s unvested equity awards outstandingthe relationships between information presented in the Pay versus Performance table.

Compensation Actually Paid, Cumulative TSR and Peer Group TSR

PAY VS. PERFORMANCE: TOTAL SHAREHOLDER RETURN

TOTAL SHAREHOLDER RETURN: COMPANY VS. PEER GROUP

DIAMONDBACK ENERGY, INC.  •  2023 PROXY STATEMENT     74

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Compensation Actually Paid and Net Income

PAY VS. PERFORMANCE: NET INCOME ($MM)

Compensation Actually Paid and ROACE

PAY VS. PERFORMANCE: ROACE (%)

All information provided above under Diamondback’s and its affiliates’ equity incentive plans as of December 31, 2021the “Pay Versus Performance” heading will continue to vest on regular vesting dates andnot be subject to any dividend or distribution equivalent rights contemplated by the applicable award agreement, with the remaining unvested equity awardsdeemed to be forfeited followingincorporated by reference in any filing of our Company under the expirationSecurities Act of 1933, as amended, whether made before or after the Consulting Period. Mr. Pantermuehl will be eligible to receive an annual cash incentive bonus with respect to his performance as an officerdate hereof and irrespective of any general incorporation language in 2021. The annual incentive bonus for 2021 received by Mr. Pantermuehl in February 2022 upon certification by the compensation committee of the attainment of the applicable performance targets was $920,040. The value of Mr. Pantermuehl’s unvested equity awards outstanding as of December 31, 2021 that will continue to vest during the Consulting Period was $4,884,941, of which $4,754,891 related to unvested Diamondback equity awards and $130,050 related to unvested Rattler equity awards.any such filing.

 

—

DIAMONDBACK ENERGY, INC.  •  2023 PROXY STATEMENT     75

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2021

— 2022 EQUITY COMPENSATION PLAN INFORMATION

 

The following table sets forth, as of December 31, 2021,2022, certain information with respect to all compensation plans under which equity securities are authorized for issuance.

 

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)(2)				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders(1)			2,204,258			$	0.00				5,741,794
Equity compensation plans not approved by security holders(3)			136,879			$	0.00				8,591,015
Equity compensation plans not approved by security holders(4)			1,737,525			$	0.00				12,696,146
Equity compensation plans not approved by security holders(5)			9,301			$	92.71				—
Equity compensation plans not approved by security holders(6)			18,004			$	0.00				—

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)(2)				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders(1)			1,730,166			$	0.00				5,530,261
Equity compensation plans not approved by security holders(3)			113,494			$	0.00				8,535,945
Equity compensation plans not approved by security holders(4)			4,161			$	0.00				—

 

(1)	Refers to the Equity Incentive Plan and assumes that awards of restricted stock units will vest at maximum levels.
(2)	The weighted average exercise price does not take into account restricted stock units because they have no exercise price.
(3)	Refers to the phantom units of Viper (settled in Viper common units), granted under the Viper LTIP that was approved by Viper’s unitholders.
(4)	Refers to the phantom units of Rattler (settled in Rattler common units), granted under the Rattler LTIP that was approved by Rattler’s unitholders.
(5)	Refers to Energen equity incentive plan assumed by Diamondback in connection with the merger with Energen, under which 9,301 options to purchase shares of Diamondback common stock remained outstanding as of December 31, 2021.
(6)	Refers to the QEP Resources, Inc. 2018 Long-Term Incentive Plan assumed by Diamondback in connection with the merger with QEP, under which 18,0044,161 restricted stock awards remained outstanding as of December 31, 2021.2022.

 

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     74

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—2021

— 2022 DIRECTOR COMPENSATION

 

Our non-employee directors receive a combination of cash and equity compensation designed to attract and retain qualified candidates to serve on our board of directors. In setting non-employee director compensation, our board of directors considers the significant amount of time that directors spend in fulfilling their duties to the Company and our stockholders as well as the skill level required by our non-employee directors. The compensation committee is responsible for determining the type and amount of compensation for our non-employee directors. The compensation committee engaged Meridian, as its independent compensation consultant, to assist in the annual review of non-employee director compensation with a view to provide a pay program that compensates non-employee directors near the median of our peers by providing benchmark compensation data and recommendations for non-employee director compensation program design. Employee directors are not separately compensated for their service on the Board. In 2021, the compensation committee did not make any changes to theThe 2022 non-employee director compensation program.program was modified to include an Annual Retainer for the Former Chairman of the Board in the amount of $120,000.

 

The following table contains information with respect to 20212022 compensation of our non-employee directors who served in such capacity during that year, except that the 20212022 compensation of Mr. Stice, our Chairman of the Board and Chief Executive Officer, is disclosed in the 2021, 2020 and 2019 Summary Compensation Table above.

 

Name		Fees Earned or Paid in Cash ($)(1)				Stock Awards ($)(2)				All Other Compensation ($)(3)				Total ($)
Steven E. West(4)		$	200,000			$	210,676			$	4,685			$	415,361
Michael P. Cross		$	112,500			$	210,676			$	4,685			$	327,861
David L. Houston		$	112,500			$	210,676			$	4,685			$	327,861
Mark L. Plaumann		$	115,000			$	210,676			$	4,685			$	330,361
Melanie M. Trent		$	115,000			$	210,676			$	4,685			$	330,361
Vincent K. Brooks		$	88,750			$	210,676			$	4,685			$	304,111
Stephanie K. Mains		$	90,000			$	210,676			$	4,685			$	305,361

DIAMONDBACK ENERGY, INC.  •  2023 PROXY STATEMENT     76

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Name		Fees Earned or Paid in Cash ($)(1)				Stock Awards ($)(2)				Total ($)
Vincent K. Brooks		$	102,500			$	201,075			$	303,575
Michael P. Cross(3)		$	105,000			$	201,075			$	306,075
David L. Houston		$	105,000			$	201,075			$	306,075
Rebecca A. Klein		$	39,946			$	133,608			$	173,554
Stephanie K. Mains		$	105,000			$	201,075			$	306,075
Mark L. Plaumann		$	115,000			$	201,075			$	316,075
Melanie M. Trent		$	115,000			$	201,075			$	316,075
Frank D. Tsuru		$	39,946			$	133,608			$	173,554
Steven E. West(4)		$	200,000			$	201,075			$	401,075

 

(1)	Of these amounts, $50,000,$25,000, $26,250, $26,250, $26,250, $28,750, $28,750 $28,750, $28,750, $21,250 and $21,250$50,000 were payments made in December 20202021 to Mr. West,General Brooks, Mr. Cross, Mr. Houston, Ms. Mains, Mr. Plaumann, Ms. Trent General Brooks and Ms. Mains,Mr. West, respectively, for services to be performed in the first quarter of 2021.2022. Excluded from these amounts were payments of $50,000,$27,500, $26,250, $26,250, $21,250, $26,250, $28,750, $28,750, $25,000$21,250 and $26,250$50,000 made in December 20212022 to Mr. West,General Brooks, Mr. Cross, Mr. Houston, Ms. Klein, Ms. Mains, Mr. Plaumann, Ms. Trent, General BrooksMr. Tsuru and Ms. Mains,Mr. West, respectively, for services to be performed in the first quarter of 2022.2023.
(2)	The amounts shown reflect the grant date fair value of restricted stock units granted, determined in accordance with FASB ASC Topic 718. See Note 1310 to our consolidated financial statements for the fiscal year ended December 31, 2021,2022, included in our Annual Report on Form 10-K, filed with the SEC on February 24, 2022,23, 2023, regarding assumptions underlying valuations of equity awards for 2021. Each2022. Except for Ms. Klein and Mr. Tsuru, each non-employee director was awarded 2,4351,274 restricted stock units in 2021,on June 9, 2022, which will vest on the earlier of the one-year anniversary of the date of grant and the date of the 2023 annual meeting of stockholders. Ms. Klein and Mr. Tsuru were each appointed to our Board effective July 7, 2022. Accordingly, Ms. Klein and Mr. Tsuru were each awarded a prorated annual restricted stock unit award consisting of 1,168 restricted stock units on July 11, 2022, which will vest on the earlier of June 9, 2023 and the date of the 2023 annual meeting of stockholders. Except for General Brooks and Mr. West, each of the other non-employee directors elected to defer the receipt of the vested restricted stock units granted in 20212022 until separation from service as a non-employee director of the Company. No additional equity awards were received by our non-employee directors to date in 2022.2023. Dividend equivalent rights are not reflected in the aggregate grant date fair value of the restricted stock unit awards.
(3)	The amounts shown reflect cash payments made in 2021Mr. Cross has determined to retire and not to stand for dividend equivalent rights on unvested restricted stock units.re-election at this Annual Meeting, and his term as a director and committee member will expire immediately after this Annual Meeting.
(4)	Excludes the compensation awarded to Mr. West for his services as (i) a director and Chairman of the Board of the general partner of Viper in 2021,2022, which consisted of (a) $60,000 in cash and (b) a grant of 5,5133,907 phantom units on July 12, 2021,11, 2022, with the grant date fair value of $100,833,$100,254, and a vesting date of July 12, 2022, and (c) cash payments made in 2021 for dividend equivalent rights on unvested Viper restricted stock units in the amount of $7,803 for a total compensation of $168,63611, 2023, and (ii) a director and Chairman of the Board of the general partner of Rattler in 2021,2022, which consisted of (a) $75,000$37,500 in cash and (b) a grant of 9,256 phantom units on July 12, 2021, with the grant date fair value of $99,965 and a vesting date of July 12, 2022, and (c) cash payments made in 2021 for dividend equivalent rights on unvested Rattler4,108 restricted stock units granted in the amountconversion of $9,032 for a total compensation of $183,997.Rattler phantom units into Diamondback restricted stock units, which will vest on May 28, 2023.

 

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     75

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Director Compensation

 

The table below describes the non-employee director compensation program for 2021.2022. The annual chairretainer for the former chairman of the board, and the director, committee chair and committee member retainers are payable quarterly in advance to each non-employee director. Under our director compensation program, our non-employee directors may annually elect to defer payment of up to 100% of his or her annual grant of restricted stock units and any related dividend equivalent rights until separateseparation from service as a non-employee director of the Company. A deferral election may be made on a form provided by the compensation committee during the election period established by the compensation committee, which shall end no later than December 31 of the calendar year prior to the award date. Our non-employee directors are also reimbursed for customary expenses incurred while attending meetings of the Board and its committees.

 

DIAMONDBACK ENERGY, INC.  •  2023 PROXY STATEMENT     77

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	Type of Fee		Amount ($)
Annual Director Retainer			80,000
	Annual ChairRetainer for the Former Chairman of the Board Retainer(1)			120,000
Annual Audit Committee Chair Retainer			20,000
Annual Audit Committee Member Retainer			10,000
Annual Other Committee Chair Retainer			15,000
Annual Other Committee Member Retainer			5,000
	Annual Restricted Stock Unit Award(2)			200,000

 

(1)

In February 2022, Mr. Stice assumed the role of Chairman of the Board in addition to his ongoing role as Chief Executive Officer. As an employee directorEffective April 1, 2022, Mr. West, as former Chairman of the Company,Board, received an additional annual retainer of $120,000, to be paid quarterly, as compensation for providing support and guidance to Mr. Stice and to facilitate the Company’s succession plans. Mr. Stice will not receive the Annual Chair of the Board Retainer, the Annual Director Retainer or the Annual Restricted Stock Unit Award. As an employee director, Mr. Stice does not serve on any of the Board committees.

(2)

During 2021,2022, we provided our non-employee directors with equity compensation under our equity incentive plan valued at $200,000. The number of restricted stock units awarded to each non-employee director in 20212022 equaled $200,000 divided by $82.15$157.02 (the average closing price of a share of our common stock for the five trading days immediately preceding the date of grant). The annual grant of restricted stock units is generally made to our non-employee directors at the close of business on the date of each annual meeting of our stockholders. On June 3, 2021,9, 2022, except for Ms. Klein and Mr. Tsuru, each non-employee director was granted 2,4351,274 restricted stock units which will vest on the earlier of the first anniversary of the date of grantJune 9, 2023 and the date of the 2023 annual meeting of stockholders. Ms. Klein and Mr. Tsuru were appointed to our Board effective July 7, 2022. Accordingly, Ms. Klein and Mr. Tsuru were each awarded a prorated annual restricted stock unit award consisting of 1,168 restricted stock units on July 11, 2022, which will vest on the earlier of June 9, 2023 and the date of the 2023 annual meeting of stockholders.

 

Director Stock Ownership Guidelines

 

The compensation committee has adopted stock ownership and retention guidelines for our non-employee directors. The stock ownership guidelines for our executive officers who are classified as Vice President and above and described in the “Compensation Discussion and Analysis” above. The stock ownership guidelines for our non-employee directors were adopted to encourage our non-employee directors to have a meaningful stake in the Company, which encourages a focus on our long-term success, aligns directors’ interests with the interests of our stockholders and further promotes our commitment to sound corporate governance.

 

Under their stock ownership guidelines, each of our non-employee directors must own an amount of our common stock equal in value to five times of the base annual retainer for non-employee directors. Stock options (whether vested or unvested) and unvested performance-based awards are not counted as shares owned for the purpose of calculating stock ownership under the guidelines.

 

The determination of a non-employee director’s stock ownership requirement will be calculated on an annual measurement date specified by the compensation committee based on the current base retainer of such non-employee director on the measurement date. For purposes of the stock ownership and retention guidelines, the term “base retainer” means the base annual cash retainer that each non-employee director receives for his or her service on our board of directors, which does not include any fees that any non-employee director receives for his or her service as a chairperson of our board of directors, Chairman Emeritus (or similar role or title), lead independent director, a member of a committee of our board of directors or a chairperson of a committee of our board of directors.

 

The compensation committee reviews compliance with the stock ownership and retention guidelines on an annual basis. As of December 31, 2021,2022, all of our non-employee directors were in compliance with the stock ownership and retention guidelines.

 

DIAMONDBACK ENERGY, INC.•20222023 PROXY STATEMENT     7678

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STOCK OWNERSHIP

 

—

— HOLDINGS OF MAJOR STOCKHOLDERS

 

The following table sets forth certain information regarding the beneficial ownership as of April 1, 20222023 of shares of our common stock by each person or entity known to us to be a beneficial owner of 5% or more of our common stock.

 

MAJOR STOCKHOLDER TABLE

 

Name and Address of Beneficial Owner(1)		Amount and Nature of Beneficial Ownership				Percent of Class
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355			20,662,136	(2)			11.6	%
BlackRock, Inc. 55 East 52nd Street New York, NY 10055			13,938,631	(3)			7.9	%
State Street Corporation One Lincoln Street Boston, MA 02111			11,211,655	(4)			6.3	%
The Blackstone Group Inc. 345 Park Avenue New York, NY 10154			10,590,033	(5)			6.0	%

Name and Address of Beneficial Owner(1)		Amount and Nature of Beneficial Ownership		Percent of Class
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355		21,419,163	(2)	11.79%
BlackRock, Inc. 55 East 52nd Street New York, NY 10055		16,005,236	(3)	8.81%
State Street Corporation One Lincoln Street Boston, MA 02111		11,570,839	(4)	6.37%
FMR LLC 245 Summer Street Boston, MA 02210		9,291,620	(5)	5.12%

(1)	Beneficial ownership is determined in accordance with SEC rules. The percentage of shares beneficially owned is based on 177,550,589181,604,781 shares of common stock outstanding as of April 1, 2022.2023.
(2)	Based solely on Schedule 13G/A filed with the SEC on February 9, 20222023 by The Vanguard Group (“Vanguard”). Vanguard reported beneficial ownership of 21,419,163 shares of common stock, as well as sole dispositive power over 19,958,16020,711,793 shares of common stock, shared voting power over 282,462252,259 shares of common stock and shared dispositive power over 703,976707,370 shares of common stock of the aggregate amount beneficially owned reported herein.
(3)	Based solely on Schedule 13G13G/A filed with the SEC on February 8, 2022January 27, 2023 by BlackRock, Inc. (“BlackRock”). BlackRock reported beneficial ownership of 13,938,63116,005,236 shares of common stock. Nostock, as well as sole or shared voting power over 14,813,918 shares of common stock and no sole or shared dispositive power was reported by BlackRock.over 16,005,236 shares of common stock. The following subsidiaries of BlackRock, Inc. hold shares of our common stock reported on the Schedule 13G:13G/A: BlackRock Life Limited, BlackRock International Limited, Aperio Group, LLC, BlackRock Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, FutureAdvisor, Inc., BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors, BlackRock Asset Management North Asia Limited, BlackRock (Singapore) Limited and BlackRock Fund Managers Ltd. No one person’s interest in the common stock is more than five percent of the total outstanding shares of common stock.
(4)	Based solely on Schedule 13G/A filed with the SEC on February 10, 20221, 2023 by State Street Corporation (“State Street”). State Street reported beneficial ownership of 11,211,65511,570,839 shares of common stock, as well as shared voting power over 10,594,55511,083,252 shares of common stock and shared dispositive power over 11,173,35611,544,551 shares of common stock. No sole voting power and no sole dispositive power was reported by State Street. The Schedule 13G/A further indicates that the following subsidiaries of State Street beneficially own securities reported on the Schedule 13G/A: SSGA Funds Management, Inc., State Street Global Advisors Limited, State Street Global Advisors Ltd, State Street Global Advisors, Australia Limited, State Street Global Advisors (Japan) Co., Ltd., State Street Global Advisors Asia Limited, State Street Global Advisors Singapore Limited, State Street Global Advisors Europe Limited, and State Street Global Advisors Trust Company and State Street Saudi Arabia Financial Solutions Company.
(5)	Based solely on Schedule 13G filed with the SEC on February 9, 2023 by FMR LLC (“FMR”). FMR reported beneficial ownership of 9,291,620 shares of common stock. The following subsidiaries of FMR hold shares of our common stock reported on the Schedule 13G: Crosby Advisors LLC, FIAM LLC, Fidelity Institutional Asset Management Trust Company, Fidelity Management Trust Company and Strategic Advisers LLC.

 

DIAMONDBACK ENERGY, INC.•20222023 PROXY STATEMENT     7779

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(5)

Based solely on Schedule 13G/A jointly filed with the SEC on February 11, 2022 by Guidon Operating LLC, BCP GEMS Holdings LLC, Guidon Energy L.L.C., Guidon FinanceCo LLC, Guidon Energy MidCo II LLC, Guidon Energy MidCo LLC, Guidon Energy Holdings LP, Guidon Energy Holdings GP LLC, BX Guidon Topco LLC, Blackstone Management Associates VI L.L.C., Blackstone Energy Management Associates II L.L.C., BMA VII L.L.C., Blackstone EMA II L.L.C., Blackstone Holdings III L.P., Blackstone Holdings III GP L.P., Blackstone Holdings III GP Management L.L.C., Blackstone Inc., Blackstone Group Management L.L.C. and Steven A. Schwarzman (collectively, the “Blackstone reporting persons”). Guidon Operating LLC, BCP GEMS Holding LLC and Guidon Energy L.L.C. are together referred to herein as the “Blackstone Funds”. Guidon Operating LLC maintains sole voting and dispositive power with respect to 783,353 shares of common stock reported herein. Guidon FinanceCo LLC is the managing member of Guidon Operating LLC. Guidon Energy MidCo II LLC is the managing member of Guidon FinanceCo LLC. Guidon Energy MidCo LLC is the managing member of Guidon Energy MidCo II LLC. Guidon Energy Holdings LP is the managing member of Guidon Energy MidCo LLC and directly holds 783,353 shares of common stock reported herein. Guidon Energy Holdings GP LLC is the general partner of Guidon Energy Holdings LP. Guidon Energy L.L.C. is the sole member of BCP GEMS Holdings LLC. The sole member of Guidon Energy L.L.C. is BX Guidon Topco LLC. The controlling membership interests of Guidon Energy Holdings GP LLC and BX Guidon Topco LLC are held by Blackstone Management Associates VI L.L.C. and Blackstone Energy Management Associates II L.L.C. BMA VI L.L.C. is the sole member of Blackstone Management Associates VI L.L.C. Blackstone EMA II L.L.C. is the sole member of Blackstone Energy Management Associates II L.L.C. Blackstone Holdings III L.P. is the managing member of each of BMA VI L.L.C. and Blackstone EMA II L.L.C. Blackstone Holdings III GP L.P. is the general partner of Blackstone Holdings III L.P. Blackstone Holdings III GP Management L.L.C. is the general partner of Blackstone Holdings III GP L.P. Blackstone Inc. is the sole member of Blackstone Holdings III GP Management L.L.C. The sole holder of the Series II preferred stock of Blackstone Inc. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly-owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. Each Blackstone reporting person may be deemed to beneficially own the shares of common stock beneficially owned by the Blackstone Funds or indirectly controlled by it or him. Each such Blackstone reporting person expressly disclaims beneficial ownership of such securities in excess of its or his pecuniary interest therein.

—

— HOLDINGS OF OFFICERS AND DIRECTORS

 

The following table sets forth certain information regarding the beneficial ownership as of April 1, 20222023 of shares of our common stock by each of our directors, by each named executive officer and by all directors and executive officers as a group.

 

Name of Beneficial Owner(1)		Amount and Nature of Beneficial Ownership(10)(11)			Percent of Class
Travis D. Stice(2)			428,543		454,862		*
M. Kaes Van’t Hof(3)			56,817		110,255		*
Teresa L. Dick(4)			52,257		66,560		*
Russell PantermuehlDaniel N. Wesson(5)			104,427		43,621		*
Matt Zmigrosky(6)			16,459		28,356		*
Steven E. WestVincent K. Brooks(7)			3,756		5,400		*
Michael P. Cross(7)(8)			9,829		12,264		*
David L. Houston(7)			14,329		16,764		*
Rebecca A. Klein(10)		0		—
Stephanie K. Mains(7)		5,400		*
Mark L. Plaumann(7)(9)			14,929		17,364		*
Melanie M. Trent(7)			6,369		8,804		*
Frank D. Tsuru(10)		0		—
Vincent K. BrooksSteven E. West(7)			2,965		10,299		*
Stephanie K. Mains(7)			2,965				*
Directors and Executive Officers as a Group (15(14 persons)			748,856		779,913		*

��

*	Less than 1%.

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     78

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(1)	Beneficial ownership is determined in accordance with SEC rules. In computing percentage ownership of each person, (i) shares of common stock subject to options held by that person that are exercisable as of April 1, 20222023 and (ii) shares of common stock subject to options or restricted stock units held by that person that are exercisable or vesting within 60 days of April 1, 2022,2023, are all deemed to be beneficially owned. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. The percentage of shares beneficially owned is based on 177,550,589181,604,781 shares of common stock outstanding as of April 1, 2022.2023. Unless otherwise indicated, all amounts exclude shares issuable upon the exercise of outstanding options and vesting of restricted stock units that are not exercisable and/or vested as of April 1, 20222023 or within 60 days of April 1, 2022.2023. Except as noted, each stockholder in the above table is believed to have sole voting and sole investment power with respect to the common stock beneficially held.
(2)	All of these shares are held by Stice Investments, Ltd., which is managed by Stice Management, LLC, its general partner. Mr. Stice and his spouse hold 100% of the membership interests in Stice Management, LLC, of which Mr. Stice is the manager. Excludes (i) 11,4999,227 restricted stock units that are scheduled to vest on March 1, 2023 and2024, (ii) 18,45518,004 restricted stock units granted on March 1, 20222023 that are scheduled to vest in two remaining substantially equal annual installments beginning on March 1, 2024 and (iii) 5,166 restricted stock units granted on August 24, 2022 that are scheduled to vest in two remaining substantially equal annual installments beginning on May 28, 2023. Also excludes (i) 66,714 performance-based restricted stock units awarded to Mr. Stice on March 1, 2020 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three-year performance period ending on December 31, 2022, (ii) 51,748 performance-based restricted stock units awarded to Mr. Stice on March 1, 2021 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three yearsthree-year performance period ending on December 31, 2023, and (iii)(ii) 41,524 performance-based restricted stock units awarded to Mr. Stice on March 1, 2022 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three yearsthree-year performance period ending on December 31, 2024.2024 and (iii) 40,509 performance-based restricted stock units awarded to Mr. Stice on March 1, 2023 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three-year performance period ending on December 31, 2025.
(3)	Excludes (i) 6,0373,845 restricted stock units, that are scheduled to vest on March 1, 2023,2024, (ii) 7,6908,096 restricted stock units granted on March 1, 20222023 that are scheduled to vest in two remaining substantially equal annual installments beginning on March 1, 2023,2024, (iii) 8,790 restricted stock units that are scheduled to vest in five equal annual installments beginning on March 1, 2025, (iv) 51,658 restricted stock units granted on August 24, 2022 that are scheduled to vest in two remaining substantially equal annual installments beginning on May 28, 2023, (v) 13,183 performance-based restricted stock units awarded to Mr. Van’t Hof on March 1, 2019 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three-year performance period ending on December 31, 2021 and are scheduled to vest in five equal annual installments beginning on March 1, 2025, (v) 31,133 performance-based restricted stock units awarded to Mr. Van’t Hof on March 1, 2020 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three-year performance period ending on December 31, 2022, (vi) 27,168 performance-based restricted stock units awarded to Mr. Van’t Hof on March 1, 2021 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three yearsthree-year performance period ending on December 31, 2023, and (vii) 17,302 performance-based restricted stock units awarded to Mr. Van’t Hof on March 1, 2022 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three yearsthree-year performance period ending on December 31, 2024.2024 and (viii) 18,218 performance-based restricted stock units awarded to Mr. Van’t Hof on March 1, 2023 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three-year performance period ending on December 31, 2025.

DIAMONDBACK ENERGY, INC.  •  2023 PROXY STATEMENT     80

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(4)	Excludes (i) 3,4502,050 restricted stock units that are scheduled to vest on March 1, 2023 and2024, (ii) 4,1014,096 restricted stock units granted on March 1, 2023 that are scheduled to vest in two remaining substantially equal annual installments beginning on March 1, 2024 and (iii) 2,583 restricted stock units granted on August 24, 2022 that are scheduled to vest in two remaining substantially equal annual installments beginning on May 28, 2023. Also excludes (i) 17,79015,524 performance-based restricted stock units awarded to Ms. Dick on March 1, 2020,2021, which awards are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three-year performance period ending on December 31, 2022,2023, (ii) 15,524 performance-based restricted stock units awarded to Ms. Dick on March 1, 2021 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three years performance period ending on December 31, 2023, and (iii) 9,228 performance-based restricted stock units awarded to Ms. Dick on March 1, 2022 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three yearsthree-year performance period ending on December 31, 2024.
(5)	Mr. Pantermuehl retired from the Company effective December 31, 2021. All amounts in the table for Mr. Pantermuehl are as of December 31, 2021. Excludes 6,918 restricted stock units that are scheduled to vest on March 1, 20222024, and (ii) 12,074 restricted stock units that are scheduled to vest in two remaining substantially equal annual installments beginning on March 1, 2022. Also excludes (i) 31,133(iii) 9,216 performance-based restricted stock units awarded to Mr. PantermuehlMs. Dick on March 1, 20202023 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three-year performance period ending on December 31, 2022 and (ii) 27,168 performance-based restricted stock units awarded to Mr. Pantermuehl on March 1, 2021 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three years performance period ending on December 31, 2023.2025.
(6)(5)	Excludes (i) 2,7602,307 restricted stock units that are scheduled to vest on March 1, 2024 (ii) 5,906 restricted stock units granted on March 1, 2023 and (ii) 4,101that are scheduled to vest in two remaining substantially equal annual installments beginning on March 1, 2024, (iii) 6,595 restricted stock units that are scheduled to vest in two approximatelyfive equal annual installments beginning on March 1, 2023. Also excludes (i) 14,2322025, (iv) 12,915 restricted stock units granted on August 24, 2022 that are scheduled to vest in two remaining substantially equal annual installments beginning on May 28, 2023, (v) 9,887 performance-based restricted stock units awarded to Mr. ZmigroskyWesson on March 1, 20202019 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three-year performance period ending on December 31, 2021 and are scheduled to vest in five equal annual installments beginning on March 1, 2025, (vi) 11,643 performance-based restricted stock units awarded to Mr. Wesson on March 1, 2021 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three-year performance period ending on December 31, 2023, (vii) 10,381 performance-based restricted stock units awarded to Mr. Wesson on March 1, 2022 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three-year performance period ending on December 31, 2024, and (viii) 13,289 performance-based restricted stock units awarded to Mr. Wesson on March 1, 2023 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three-year performance period ending on December 31, 2025.
(6)	Excludes (i) 2,050 restricted stock units that are scheduled to vest on March 1, 2024, (ii) 4,762 restricted stock units granted on March 1, 2023 that are scheduled to vest in two approximately equal annual installments beginning on March 1, 2024 and (iii) 1,034 restricted stock units granted on August 24, 2022 that are scheduled to vest in two remaining substantially equal annual installments beginning on May 28, 2023. Also excludes (i) 12,420 performance-based restricted stock units awarded to Mr. Zmigrosky on March 1, 2021 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three yearsthree-year performance period ending on December 31, 2023, and (iii)(ii) 9,228 performance-based restricted stock units awarded to Mr. Zmigrosky on March 1, 2022 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three yearsthree-year performance period ending on December 31, 2024.2024 and (iii) 10,717 performance-based restricted stock units awarded to Mr. Zmigrosky on March 1, 2023 that are subject to the satisfaction of certain stockholder return performance conditions relative to Diamondback’s TSR performance peer group during the three-year performance period ending on December 31, 2025.
(7)	Excludes 2,4351,274 restricted stock units, which will vest on the earlier of June 3, 20229, 2023 and the date of the 20222023 annual meeting of stockholders.
(8)	These shares are held by the Michael P. Cross Revocable Trust dated 7-21-14, of which Mr. Cross is a co-trustee. Mr. Cross has determined to retire and not to stand for re-election at this Annual Meeting, and his term as a director and committee member will expire immediately after this Annual Meeting.
(9)	These shares are held by Greyhawke Capital Advisors LLC (“Greyhawke”) of which Mr. Plaumann is the managing member. Mr. Plaumann holds a 50% ownership interest in Greyhawke and may be deemed to have a pecuniary interest in these securities.
(10)	Excludes 1,168 restricted stock units, which will vest on the earlier of June 9, 2023 and the date of the 2023 annual meeting of stockholders.
(11)	In addition to the Company common stock reported in the table, as of January 31, 2022,February 1, 2023, our directors and named executive officers beneficially owned common units of Viper Energy Partners LP, or Viper, as follows: Mr. Stice – 106,169; Mr. Van’t Hof – 35,362; Ms. Dick – 11,540; Mr. PantermuehlWesson – 48,487;2,500; and Mr. Zmigrosky – 4,253. As of January 31, 2022,February 1, 2023, Mr. West beneficially owned 72,77718,290 common units of Viper, which number excludes 5,5133,907 unvested phantom units that will vest on July 12, 2022.11, 2023. As of January 31, 2022,February 1, 2023, we owned 731,500 of the total units outstanding of Viper, or 1%. As of February 18, 2022,17, 2023, there were 76,966,20372,677,022 common units of Viper outstanding and 90,709,946 Class B units of Viper outstanding. Our directors and executive officers individually and as a group own less than 1% of Viper’s outstanding common units as of February 18, 2022.
(11)	In addition to the Company common stock reported in the table, as of January 31, 2022, our directors and named executive officers beneficially owned common units of Rattler Midstream LP, or Rattler, as follows: Mr. Stice – 118,419; Mr. Van’t Hof – 268,256; Ms. Dick – 20,749; Mr. Pantermuehl – 43,862; and Mr. Zmigrosky – 8,568. These numbers exclude 68,572, 685,715, 34,286, 34,286 and 13,715 phantom units held by Mr. Stice, Mr. Van’t Hof, Ms. Dick, Mr. Pantermuehl and Mr. Zmigrosky, respectively, that will vest, in each case, in three remaining equal or substantially equal annual installments beginning on May 28, 2022. The common units and phantom units reported for Mr. Stice are held by Stice Investments, Ltd., which is managed by Stice Management, LLC, its general partner. Mr. Stice and his spouse hold 100% of the membership interests in Stice Management, LLC, of which Mr. Stice is the manager. As of January 31, 2022, Mr. West beneficially owned 27,100 common units of Rattler; which number excludes 9,256 phantom units that will vest on July 12, 2022. As of February 18, 2022, there were 38,139,805 common units of Rattler outstanding and 107,815,152 Class B units of Rattler outstanding. Our directors and executive officers individually and as a group owned less than 1% of Rattler’s outstanding common units as of February 18, 2022.17, 2023.

 

DIAMONDBACK ENERGY, INC.•20222023 PROXY STATEMENT     7981

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STOCK PERFORMANCE GRAPH

 

Since our initial public offering in October of 2012, our executive management has been focused not only on achieving peer-leading operational performance and cost structure in the Permian Basin, but also on creating superior stockholder value. Diamondback achieved record results in 2021,2022, generating full year 20212022 net cash provided by operating activities of $2.94$6.33 billion and Free Cash Flow (as defined and reconciled on Schedule A to this proxy statement) of $2.42$4.59 billion, which the Company used to reduce debt and accelerate its return of capital to stockholders. Since completing the acquisition of QEP in March 2021, Diamondback redeemed $1.3 billion of gross bond debt and increased its base dividend by 50% to the current annual run-rate of $2.40 per share. Additionally, the Company repurchased over $430 million of its common stock, reducing its share count by approximately 2.0% since initiating its stock repurchase program in September 2021. Our commitment to creating superior stockholder returns is also reflected in the design of our executive compensation program, which includes grants of long-term equity awards to our NEOs and other executives and senior management that are measured by TSR, as compared to the TSR of peer group companies, and our 2020 and 2021 performance-based equity awards are measured by the relative TSR as modified by an absolute TSR modifier, which reduces payouts upon negative performance period Diamondback TSR and increases payouts if Diamondback TSR exceeds 15%.

 

Historically, our cumulative total stockholder return was not only consistently and substantially above our proxy peer groups, but also consistently and substantially above the applicable industry index and S&P 500 index in each year following our initial public offering. The following performance graph comparesincludes a comparison of our cumulative total stockholder return from the first trading date following our IPO through December 31, 2021,2022, with the average performance of our 20212022 proxy peer groups identified in the “Compensation Discussion and Analysis,” the Standard & Poor’s 500 Stock Index, a broad market index, or the S&P 500 Index, and the SPDR S&P Oil & Gas Exploration and Production ETF, or XOP Index. The graph assumes an investment of $100 on such date, and that all dividends were reinvested and are weighted on a market capitalization basis.reinvested.

 

COMPARATIVE CUMULATIVE TOTAL STOCKHOLDER RETURN

 

		10/12/12				12/31/13				12/31/14				12/31/15				12/30/16				12/29/17				12/31/18				12/31/19				12/31/20				12/31/21				12/30/22
Diamondback Energy, Inc.		$	100.00			$	302.18			$	341.60			$	382.29			$	577.49			$	721.43			$	531.34			$	536.20			$	289.52			$	658.49			$	892.28
2021 Proxy Peer Group		$	100.00			$	134.62			$	119.81			$	86.28			$	125.73			$	122.65			$	90.55			$	99.79			$	78.99			$	133.61			$	182.42
2021 Proxy Peer – Energy Group		$	100.00			$	135.86			$	119.84			$	82.14			$	125.91			$	118.82			$	82.82			$	87.67			$	58.76			$	110.90			$	177.59
2022 Proxy Peer Group		$	100.00			$	134.92			$	116.10			$	80.07			$	114.76			$	116.03			$	90.57			$	99.13			$	80.17			$	130.37			$	178.03
2022 Proxy Peer – Energy Group		$	100.00			$	136.24			$	115.30			$	74.55			$	112.50			$	110.72			$	82.85			$	86.86			$	60.19			$	109.47			$	172.70
2023 Proxy Peer Group		$	100.00			$	133.99			$	120.95			$	88.67			$	118.42			$	122.76			$	99.42			$	115.03			$	104.63			$	156.20			$	191.60
2023 Proxy Peer – Energy Group		$	100.00			$	135.37			$	117.52			$	76.55			$	110.17			$	107.72			$	80.42			$	86.79			$	62.52			$	108.69			$	172.70
XOP		$	100.00			$	125.19			$	88.34			$	56.75			$	78.47			$	71.04			$	51.08			$	46.26			$	29.46			$	49.13			$	71.40
S&P 500		$	100.00			$	132.85			$	151.01			$	153.08			$	171.37			$	208.77			$	199.59			$	262.41			$	310.66			$	399.75			$	327.29

DIAMONDBACK ENERGY, INC.•20222023 PROXY STATEMENT     8082

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			10/12/12				12/31/13				12/31/14				12/31/15				12/30/16				12/29/17				12/31/18				12/31/19				12/31/20				12/31/21
Diamondback Energy, Inc.		$	100.00			$	302.06			$	341.60			$	382.29			$	577.49			$	721.43			$	531.34			$	536.20			$	289.52			$	658.49
2020 Proxy Peer Group		$	100.00			$	133.49			$	110.95			$	80.44			$	125.82			$	118.29			$	80.85			$	86.42			$	59.85			$	110.90
2021 Proxy Peer Group		$	100.00			$	134.62			$	119.81			$	86.28			$	125.73			$	122.65			$	90.55			$	99.80			$	79.00			$	133.61
2021 Proxy Peer – Energy Group		$	100.00			$	135.86			$	119.84			$	82.14			$	125.91			$	118.82			$	82.82			$	87.67			$	58.76			$	110.90
2022 Proxy Peer Group		$	100.00			$	134.92			$	116.10			$	80.07			$	114.76			$	116.03			$	90.58			$	99.13			$	80.18			$	130.38
2022 Proxy Peer – Energy Group		$	100.00			$	136.24			$	115.30			$	74.55			$	112.50			$	110.72			$	82.85			$	86.86			$	60.19			$	109.47
XOP		$	100.00			$	125.19			$	88.34			$	56.75			$	78.47			$	71.04			$	51.08			$	46.26			$	29.46			$	49.13
S&P 500		$	100.00			$	132.85			$	151.03			$	153.10			$	171.40			$	208.81			$	199.64			$	262.48			$	310.74			$	399.85

The following performance graph includes a comparison of our cumulative total stockholder return during the five-year period beginning on December 29, 2017, the last trading before the beginning of our fifth preceding fiscal year, through December 31, 2022, with the average performance of our 2022 proxy peer groups identified in the “Compensation Discussion and Analysis,” the S&P 500 Index and the XOP Index. The graph assumes an investment of $100 on December 29, 2017, and that all dividends were reinvested.

 

COMPARATIVE CUMULATIVE TOTAL STOCKHOLDER RETURN

Date		12/29/17				12/31/18				12/31/19				12/31/20				12/31/21				12/30/22
Diamondback Energy, Inc.		$	100.00			$	73.65			$	74.32			$	40.13			$	91.28			$	123.68
2021 Proxy Peers		$	100.00			$	71.50			$	78.14			$	57.27			$	106.86			$	160.74
2021 Proxy Peers - Energy		$	100.00			$	68.77			$	74.30			$	48.86			$	101.00			$	169.91
2022 Proxy Peers		$	100.00			$	74.05			$	79.83			$	59.77			$	103.86			$	155.10
2022 Proxy Peers - Energy		$	100.00			$	71.89			$	76.36			$	51.91			$	97.98			$	161.71
2023 Proxy Peers		$	100.00			$	75.84			$	85.36			$	70.49			$	113.47			$	155.25
2023 Proxy Peers - Energy		$	100.00			$	71.40			$	77.80			$	54.54			$	99.50			$	161.71
XOP		$	100.00			$	71.91			$	65.12			$	41.47			$	69.16			$	100.51
S&P 500		$	100.00			$	95.61			$	125.70			$	148.81			$	191.48			$	156.77

DIAMONDBACK ENERGY, INC.•20222023 PROXY STATEMENT     8183

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

—

— REVIEW AND APPROVAL OF RELATED PARTY TRANSACTIONS

 

Our board of directors has adopted a written policy regarding related party transactions. Under the policy, the audit committee reviews and approves all relationships and transactions in which we and our directors, director nominees and executive officers and their immediate family members, as well as holders of more than 5% of any class of our voting securities and their immediate family members, have a direct or indirect material interest. The policy provides that, the following do not create a material direct or indirect interest on behalf of the related party and are therefore not related party transactions:

 

	•	a transaction involving compensation of directors;
	•	a transaction involving compensation of an executive officer or involving an employment agreement, severance arrangement, change in control provision or agreement or special supplemental benefit of an executive officer;
	•	a transaction with a related party involving less than $120,000;
	•	a transaction in which the interest of the related party arises solely from the ownership of a class of our equity securities and all holders of that class receive the same benefit on a pro rata basis;
	•	a transaction involving indemnification payments and payments under directors and officers indemnification insurance policies made pursuant to our certificate of incorporation or bylaws or pursuant to any policy, agreement or instrument of the Company or to which the Company is bound; and
	•	a transaction in which the interest of the related party arises solely from indebtedness of a 5% stockholder or an “immediate family member” of a 5% stockholder.

 

The policy supplements the conflict of interest provisions in our Code of Business Conduct and Ethics.

 

Although our management believes that the terms of the related party transactions described below are reasonable, it is possible that we could have negotiated more favorable terms for such transactions with unrelated third parties.

 

—

— VIPER ENERGY PARTNERS LP

 

Viper is a publicly traded Delaware limited partnership, the common units of which are listed on the Nasdaq Global Market under the symbol “VNOM.” We control the general partner of Viper and, as of December 31, 2021,2022, owned approximately 54%56% of all of the outstanding common units in Viper.

 

Payments from Viper under its Partnership Agreement

 

Under the terms of Viper’s partnership agreement, Viper is required to reimburse its general partner for all direct and indirect expenses incurred or paid on its behalf and all other expenses allocable to Viper or otherwise incurred by its general partner, which we control, in connection with operating Viper’s business. The partnership agreement does not set a limit on the amount of expenses for which the general partner and its affiliates may be reimbursed. These expenses include salary, bonus, incentive compensation and other amounts paid to persons who perform services for Viper or on its behalf and expenses allocated to the general partner by its affiliates. The general partner is entitled to determine the expenses that are allocable to Viper. During the year ended December 31, 2021,2022, the general partner received reimbursements from Viper’s reimbursementsViper of $3.7 million.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     8284

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Distributions paid to us by Viper

 

We are entitled to receive our pro rata portion of the distributions Viper makes in respect of its common units, distributions Viper’s subsidiary Viper Energy Partners LLC makes in respect of its common units and preferred cash distributions equal to 8% per annum payable quarterly on the $1.0 million capital contribution we made to Viper. During the year ended December 31, 2021,2022, we received such distributions in the aggregate amount of $100.7$234.1 million.

 

Tax Sharing Agreement

 

On June 23, 2014, in connection with the closing of the Viper IPO, we entered into a tax sharing agreement with Viper pursuant toin which Viper is required to reimburse us for its share of state and local income and other taxes borne by us as a result of Viper’s results being included in a combined or consolidated tax return filed by us with respect to taxable periods including or beginning on the closing date of the Viper IPO. The amount of any such reimbursement is limited to the tax that Viper would have paid had it not been included in a combined group with us. We may use our tax attributes to cause our combined or consolidated group, of which Viper may be a member for this purpose, to owe no tax. However, Viper would nevertheless reimburse us for the tax it would have owed had the attributes not been available or used for Viper’s benefit, even though we had no cash expense for that period. For the year ended December 31, 2021,2022, Viper accrued $0.3recognized $0.9 million of state income tax expense for its share of Texas marginpayable under the tax for which the Partnership’s results are included in a combined tax return filed by Diamondback.sharing agreement.

 

Viper-Lease Bonus

 

During the year ended December 31, 2021,2022, we paid Viper (i) $1.3$23.4 million in lease bonus payments for twoseven new leases and (ii) $0.6 million in surface use charges and right of way easements related to properties that we lease from Viper.

 

—RATTLER MIDSTREAM LP

Rattler is a publicly traded Delaware limited partnership, the common units of which are listed on the Nasdaq Global Market under the symbol “RTLR.” We control the general partner of Rattler and, as of December 31, 2021, owned approximately 74% of all of the outstanding common units in Rattler.

Payments from Rattler under its Partnership Agreement

Under the terms of Rattler’s partnership agreement, Rattler is required to reimburse its general partner for all direct and indirect expenses incurred or paid on its behalf and all other expenses allocable to Rattler or otherwise incurred by its general partner, which we control, in connection with operating Rattler’s business. The partnership agreement does not set a limit on the amount of expenses for which the general partner and its affiliates may be reimbursed. These expenses include salary, bonus, incentive compensation and other amounts paid to persons who perform services for Rattler or on its behalf and expenses allocated to the general partner by its affiliates. The general partner is entitled to determine the expenses that are allocable to Rattler. During the year ended December 31, 2021, the general partner received from Rattler reimbursements of $0.7 million.

Payments from Rattler under its Services and Secondment Agreement

Under the terms of Rattler’s services and secondment agreement, Rattler is required to reimburse us for the cost of the seconded employees and contractors, including their wages and benefits. During the year ended December 31, 2021, we received from Rattler reimbursements of $7.7 million.

Distributions paid to us by Rattler

We are entitled to receive our pro rata portion of the distributions Rattler makes in respect of its common units, distributions Rattler’s subsidiary Rattler Midstream Operating LLC, or Rattler LLC, makes in respect of its common units and preferred cash distributions equal to 8% per annum payable quarterly on the $1.0 million capital contribution we made to Rattler. During the year ended December 31, 2021, we received such distributions in the aggregate amount of $97.1 million.

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     8385

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Tax Sharing Agreement

On May 28, 2019, in connection with the closing of the Rattler IPO, Rattler LLC entered into a tax sharing agreement with us. Pursuant to this tax sharing agreement, Rattler LLC reimburses us for its share of state and local income and other taxes borne by us as a result of Rattler LLC’s results being included in a combined or consolidated tax return filed by us with respect to taxable periods including or beginning on May 28, 2019. The amount of any such reimbursement is limited to the tax Rattler LLC would have paid had it not been included in a combined group with us. We may use our tax attributes to cause our combined or consolidated group, of which Rattler LLC may be a member for this purpose, to owe less or no tax. In such a situation, Rattler LLC agreed to reimburse us for the tax Rattler LLC would have owed had the tax attributes not been available or used for Rattler LLC’s benefit, even though we had no cash tax expense for that period.

For the year ended December 31, 2021, Rattler accrued state income tax expense of $1.3 million for its share of Texas margin tax for which Rattler’s share of Rattler LLC’s results are included in a combined tax return filed by us.

Drop Down Transaction and Commercial Agreements with Rattler

On December 1, 2021, we completed the sale of certain water midstream assets to Rattler in exchange for cash proceeds of approximately $160 million, subject to post-closing adjustments, in a drop down transaction. The midstream assets consist primarily of produced water gathering and disposal systems, produced water recycling facilities, and sourced water gathering and storage assets acquired by the Company through the Guidon acquisition and the QEP merger with a carrying value of approximately $160 million, subject to post-closing adjustments. We and Rattler also amended our commercial agreements covering produced water gathering and disposal and sourced water gathering services to add certain of our leasehold acreage to Rattler’s dedication. See Item 13 of Rattler’s Annual Report on Form 10-K, filed with the SEC on February 24, 2022, regarding revenues and expenses incurred under various commercial agreements between Rattler and us.

DIAMONDBACK ENERGY, INC.•2022 PROXY STATEMENT     84

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PROPOSAL 2   APPROVE, ON AN ADVISORY BASIS, THE COMPANY’S EXECUTIVE COMPENSATION

 

In accordance with Section 14A of the Exchange Act, our board of directors is providing our stockholders with a non-binding advisory vote on the Company’s executive compensation as reported in this proxy statement, or “say on pay” vote. The Company’s stockholders are being asked to vote on the following resolution:

 

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.”

 

While the vote on executive compensation is non-binding and solely advisory in nature, our board of directors and the compensation committee will review and consider the “say on pay” voting results when making future decisions regarding our executive compensation program. Our stockholders have a “say on pay” vote each year. The next “say on pay” vote will take place at our 20232024 Annual Meeting.

 

Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” section of this proxy statement, which discusses in detail the Company’s compensation policy and compensation arrangements which the Company believes are appropriate and reasonably consistent with market practice and with the long-term interests of the Company and its stockholders. In furtherance of the Company’s goals and objectives, the compensation committee, among other things, ensures that the Company’s executive compensation arrangements (i) do not incentivize executives to take unnecessary risks, (ii) do not include excessive change in control provisions, (iii) offer performance-based compensation, consisting of cash compensation with performance goals tied to our Company’s performance and performance-based equity awards, based on total stockholder return relative to the peer group and (iv) include long-term vesting provisions in the awards of time-based restricted stock units retain key executive talent and to encourage executives to focus on long-term performance, in each case to motivate our executives to contribute to the growth, profitability and increased value of the Company.

 

—

— BOARD VOTING RECOMMENDATION

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPANY’S EXECUTIVE COMPENSATION AS REPORTED IN THIS PROXY STATEMENT.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     8586

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PROPOSAL 3   APPROVE AMENDMENTS TO THE COMPANY’S CHARTER TO REMOVE THE 66 2/3% SUPERMAJORITY VOTE REQUIREMENTS FOR THE STOCKHOLDERS TO APPROVE CERTAIN AMENDMENTS TO THE COMPANY’S CHARTER AND TO REMOVE DIRECTORS FROM OFFICE

— WHAT AM I VOTING ON?

You are voting on a proposal to approve amendments to the Company’s amended and restated certificate of incorporation (Charter) to remove the 66 2/3% supermajority vote requirements for the stockholders to approve certain amendments to the Company’s Charter and to remove directors from office.

The Charter currently requires the affirmative vote of at least 66 2/3% of the voting power of all then outstanding shares of the Company’s capital stock entitled to vote generally in the election of directors, voting together as a single class (the “66 2/3% Supermajority Vote”), to amend the following Charter provisions:

	•	Section 4.3(b), which covers the Board’s ability to declare dividends;
	•	Article V, which addresses related party transactions and the waiver of the corporate opportunity doctrine with respect to certain original stockholders and non-employee directors;
	•	Article VI, which describes the powers and structure of the Board;
	•	Article VII, which addresses adoption, amendment and repeal of the bylaws; and
	•	Article VIII, which denies stockholders the right to act by written consent and provides the method for calling special meetings of the stockholders.

In addition, the Charter currently requires the 66 2/3% Supermajority Vote to remove directors outside of the annual meeting process or amend or repeal the bylaws.

If approved by the requisite stockholder vote at the Annual Meeting, Proposal 3 will:

•

remove all of the 66 2/3% Supermajority Vote requirements from the Charter, and make the entire Charter amendable by a majority of the voting power of all then outstanding shares of the Company’s capital stock entitled to vote generally in the election of directors, voting together as a single class (the “Majority Vote”); and

•

reduce the required stockholder vote for removal of directors or for adoption, amendment or repeal of the bylaws by the stockholders to the Majority Vote.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     87

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In the same Proposal 3, the Board also proposes to amend Section 5.2 of the Charter dealing with corporate opportunities to remove certain outdated references to and protections for the benefit of certain original stockholders of the Corporation (DB Energy Holdings LLC and Gulfport Energy Corporation).

This Proposal 3 is independent of, and is not conditioned on, the approval of Proposal 4 (ability of stockholders to call a special meeting) or Proposal 5 (officer exculpation). Your vote on Proposal 4 or Proposal 5 will not affect whether this Proposal 3 is approved or vice versa.

— WHAT VOTE IS REQUIRED FOR APPROVAL?

Proposal 3 requires at least the affirmative 66 2/3% Supermajority Vote to be approved at the Annual Meeting.

— WHAT IS THE BOARD’S RATIONALE FOR APPROVAL?

The 66 2/3% Supermajority Vote provisions in the Charter relate to fundamental elements of the Company’s corporate governance and similar supermajority voting provisions can be found in the constituent documents of many publicly-traded companies. Such heightened voting thresholds generally are intended to protect the Company and its stockholders by reducing the likelihood of hostile third parties taking actions that may be inconsistent with the best interests of, or otherwise be harmful to the Company, its stockholders and other stakeholders, but such thresholds also limit the ability of the Company to take action that would be preferred by holders of a majority of its outstanding capital stock. The nominating and corporate governance committee and the Board carefully considered the advantages and disadvantages of maintaining the 66 2/3% Supermajority Vote requirements in the Charter. After carefully reviewing these considerations together with significant feedback from stockholders, the nominating and corporate governance committee determined, and the Board agreed, that it is in the best interest of the Company and its stockholders to eliminate these Supermajority Vote requirements, reducing them to the Majority Vote requirements. The Board concluded that elimination of these Supermajority Vote provisions and their replacement with the Majority Vote requirements will both enhance the Company’s corporate governance practices and be an effective way to maintain and enhance the accountability of the Company and the Board to the Company’s stockholders.

Accordingly, the Board, upon the recommendation of the nominating and corporate governance committee, has unanimously determined that it is in the best interests of the Company and its stockholders to amend the Charter to eliminate the current Supermajority Vote requirements, and has unanimously approved, and is recommending that the Company’s stockholders approve, the amendments to the Charter to eliminate such 66 2/3% Supermajority Vote requirements, including with respect to the removal of directors, reducing such voting requirements to the Majority Vote.

Complete Text of Proposed Amendments to the Charter

The general description of the proposed amendments to the Charter contemplated by this Proposal 3 is qualified in its entirety by reference to the text of the proposed amendments to the Charter, which is provided as Appendix A to this proxy statement. Proposed additions are double-underlined, and proposed deletions are stricken through.

Conforming Changes to the Bylaws

Consistent with the current provisions of the Charter, the bylaws also currently include the 66 2/3% Supermajority Vote requirement for the stockholders to adopt, amend, alter or repeal the bylaws. If Proposal 3 is approved by the requisite vote of stockholders at the Annual Meeting, the Board intends to similarly remove the related 66 2/3% Supermajority Vote standards from the bylaws to align the bylaws with the proposed amendments to the Charter.

— WHAT DOES THE BOARD OF DIRECTORS RECOMMEND?

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY’S STOCKHOLDERS VOTE “FOR” THE APPROVAL OF AMENDMENTS TO THE COMPANY’S CHARTER TO REMOVE THE 66 2/3% SUPERMAJORITY VOTE REQUIREMENTS TO APPROVE CERTAIN AMENDMENTS TO THE COMPANY’S CHARTER AND TO REMOVE DIRECTORS FROM OFFICE.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     88

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PROPOSAL 4 APPROVE AMENDMENTS TO THE COMPANY’S CHARTER TO PROVIDE THAT STOCKHOLDERS HOLDING AT LEAST 25% OF THE VOTING POWER, DETERMINED ON A NET LONG BASIS, FOR AT LEAST ONE YEAR, MAY CALL SPECIAL MEETINGS OF STOCKHOLDERS

— WHAT AM I VOTING ON?

You are voting on a proposal to approve amendments to the Company’s Charter to provide that stockholders holding at least 25% of the voting power, determined on a net long basis, for at least one year, may call special meetings of stockholders.

The Charter currently prohibits stockholders from calling a special meeting of the stockholders.

The Board has unanimously approved, and recommends that the Company’s stockholders approve, amendments to the Charter to allow a special meeting of the Company’s stockholders to be called by the Chairman of the Board or the Board following a proper request from one or more stockholders of the Company (acting on their own behalf and not by assigning or delegating their rights to any other person or entity) that together have continuously held, for their own accounts, beneficial ownership of at least a 25% aggregate “net long position” in the issued and outstanding voting stock of the Company entitled to vote generally in the election of directors (the “requisite percent”), if such stockholders have continuously held the requisite percent for at least one year and complied with certain procedural and other related requirements in the bylaws. For purposes of determining the requisite percent, “net long position” will be determined with respect to each requesting stockholder by subtracting such stockholder’s short position from such stockholder’s long position, based on Rule 14e-4 under the Exchange Act (as such Rule is amended from time to time or, if applicable, any successor Rule) and the bylaws.

This Proposal 4 is independent of, and is not conditioned on, the approval of Proposal 3 (supermajority voting requirements) or Proposal 5 (officer exculpation). Your vote on Proposal 3 or Proposal 5 will not affect whether this Proposal 4 is approved or vice versa.

— WHAT VOTE IS REQUIRED FOR APPROVAL?

Proposal 4 requires at least the affirmative 66 2/3% Supermajority Vote to be approved at the Annual Meeting.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     89

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— WHAT IS THE BOARD’S RATIONALE FOR APPROVAL?

The Board recognizes that providing stockholders the ability to request special meetings is viewed by some stockholders as a helpful additional governance mechanism. Conducting a special meeting, however, could impose significant costs, both administrative and operational, and the Board and management must devote significant time and attention to preparing for a special meeting, which takes their time and attention away from their primary focus of overseeing and operating the Company’s business. Therefore, special meetings should ideally only be called to discuss critical, time-sensitive issues that cannot be delayed until the Company’s next annual meeting and convened only when a broad base of stockholders supports calling the special meeting.

To balance these considerations, the Board believes that a small percentage of stockholders should not be able to force the call of a special meeting and advance narrow interests not shared by many stockholders, and that a threshold of 25% of the voting power, determined on a net long basis, sets an appropriate level of ownership to ensure that critical matters important to holders of a significant amount of Company capital stock may be considered by the stockholders on a time-sensitive basis, while still adequately protecting the long-term interest of the Company. The Board also believes that by including a one-year holding period as part of the requisite percent requirement, it is striking an appropriate balance between enhancing the rights of stockholders and avoiding the costs and distractions associated with the calling of a special meeting. A combination of a one-year holding period and the 25% requisite percent threshold also minimizes the risk of frequent meeting requests, especially those potentially covering agenda items relevant to particular narrow constituencies as opposed to stockholders generally. The Board therefore believes that these parameters are appropriate and reflect the best interest of stockholders.

The nominating and corporate governance committee and the Board carefully considered the advantages and disadvantages of implementing the amendments to the Charter to afford the Company’s stockholders the right to request a special meeting. After carefully reviewing these considerations, the nominating and corporate governance committee determined, and the Board agreed, that it is in the best interest of the Company and its stockholders to provide the Company’s stockholders with a special meeting right as contemplated by Proposal 4, and has unanimously approved, and is recommending that the Company’s stockholders approve, the amendments to the Charter contemplated by Proposal 4.

Complete Text of Proposed Amendments to the Charter

The general description of the proposed amendments to the Charter contemplated by this Proposal 4 is qualified in its entirety by reference to the text of the proposed amendments to the Charter, which is provided as Appendix A to this proxy statement. Proposed additions are double-underlined, and proposed deletions are stricken through.

Conforming Changes to the Bylaws

The bylaws currently do not provide for stockholders’ right to request or call a special meeting. If Proposal 4 is approved by the requisite vote of the stockholders at the Annual Meeting, the Board intends to amend the bylaws, consistent with Proposal 4, to provide stockholders holding the requisite percent the right to request a special meeting if those stockholders have held their shares continuously for at least one year and complied with certain procedural and other related requirements in the bylaws. The procedural and related requirements to be included in the amended bylaws are intended to facilitate the Company and stockholders receiving appropriate information about the special meeting and to ensure, among other things, that the special meeting is not duplicative of matters that were, or, in the near term, could be covered at an annual meeting. In particular, the Bylaw amendments would provide, among other things, that: (i) any such request by a stockholder or stockholders to call a special meeting must be in proper form specified by the bylaws and accompanied by proof of ownership of the requisite percent; (ii) specify the matter or matters to be acted upon at such special meeting, each of which must be a proper subject for stockholder action under applicable law; (iii) state the reasons for conducting such business at a special meeting of stockholders; (iv) provide specified information with respect to each stockholder requesting a special meeting and applicable beneficial owners and (v) provide certain other information required by the bylaws, including to comply with the Delaware law, the proxy rules and other rules and regulations of the Securities and Exchange Commission. The bylaws would also provide that neither the Chairman of the Board nor the Board will be required to call a special stockholder meeting if (i) the special meeting request relates to an item of business that is not a proper subject for stockholder action under applicable law, (ii) a similar item was presented at any meeting of stockholders held within 120 calendar days prior to the receipt by the Company of the special meeting request, (iii) a similar item is included in the Company’s notice as an item of business to be brought before a stockholder meeting that has been called but not yet held, or (iv) the special meeting request is received by the Company during the period commencing 90 calendar days prior to the first anniversary of the preceding year’s annual meeting of stockholders. The Board believes these procedures and related requirements will help protect stockholders’ interests and are not unduly burdensome. The Board intends to adopt these amendments to the bylaws upon stockholder approval, and the implementation, of Proposal 4.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     90

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— WHAT DOES THE BOARD OF DIRECTORS RECOMMEND?

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF AMENDMENTS TO THE COMPANY’S CHARTER TO PROVIDE THAT STOCKHOLDERS HOLDING AT LEAST 25% OF THE VOTING POWER, DETERMINED ON A NET LONG BASIS, FOR AT LEAST ONE YEAR, MAY CALL SPECIAL MEETINGS OF STOCKHOLDERS.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     91

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PROPOSAL 5 APPROVE AMENDMENTS TO THE COMPANY’S CHARTER TO REFLECT NEW DELAWARE LAW PROVISIONS REGARDING OFFICER EXCULPATION

— WHAT AM I VOTING ON?

You are voting on a proposal to approve amendments to the Company’s Charter to reflect new Delaware law provisions regarding officer exculpation.

In August 2022, Section 102(b)(7) of the Delaware General Corporation Law (the “DGCL”) was amended to permit Delaware corporations to limit or eliminate the personal liability of an officer for monetary damages for certain breaches of fiduciary duty as an officer involving breaches of the duty of care. Historically, only directors could be so exculpated. The DGCL, as amended, does not permit officers to be exculpated for breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, any transaction in which the officer derived an improper personal benefit or for any action brought by or in the right of the corporation, such as derivative claims.

Currently Section 9.1 of the Charter provides solely for director exculpation from monetary damages for certain breaches of fiduciary duty as a director, such as the duty of care, to the fullest extent permitted by Delaware law. The protections extended to officers under Section 102(b)(7) of the DGCL, as amended, are not, however, identical to current director protections. The primary distinction is that corporations may not eliminate or limit liability of officers for claims brought by or on behalf of the corporation, including shareholder derivative claims. In contrast, corporations may exculpate directors for breaches of the duty of care however those claims are asserted, whether directly or derivatively. This structure means that the Board will retain its authority to assert the Company’s claims against any officer of the Company in the event of such officer’s breach of the duty of care (or, if the Board does not bring such a claim, a stockholder may do so derivatively). If Proposal 5 is approved by the requisite vote of the Company’s stockholders at the Annual Meeting, the Charter will be amended to extend such exculpation to officers of the Company to the fullest extent permitted by Delaware law, in strict compliance with Section 102(b)(7) of the DGCL, as amended.

This Proposal 5 is independent of, and is not conditioned on, the approval of Proposal 3 (supermajority voting requirements) or Proposal 4 (ability of stockholders to call a special meeting). Your vote on Proposal 3 or Proposal 4 will not affect whether this Proposal 5 is approved or vice versa.

— WHAT VOTE IS REQUIRED FOR APPROVAL?

Proposal 5 requires at least the affirmative Majority Vote to be approved at the Annual Meeting.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     92

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— WHAT IS THE BOARD’S RATIONALE FOR APPROVAL?

Frequently, directors and officers must make decisions in response to time-sensitive opportunities and challenges, which can create substantial risk of investigations, claims, actions, suits or proceedings seeking to impose liability on the basis of hindsight, especially in the current litigious environment and regardless of merit. Limiting concern about personal risk would empower both directors and officers to best exercise their business judgment in furtherance of stockholder interests. Furthermore, the Company expects its peers to adopt exculpation clauses that limit the personal liability of officers in their certificates of incorporation and failing to adopt the amendments contemplated by Proposal 5 could impact the Company’s recruitment and retention of exceptional officer candidates that conclude that the potential exposure to liabilities, costs of defense and other risks of proceedings exceeds the benefits of serving as an officer of the Company.

The nominating and corporate governance committee and the Board carefully considered the advantages and disadvantages of amending the Charter to extend exculpation of personal liability for monetary damages for certain breaches of the duty of care to officers of the Company, as permitted and in compliance with the DGCL, as amended, in addition to the existing exculpation provisions for the benefit of directors. After carefully reviewing these considerations, and taking into account the narrow class and type of claims that the officers would be exculpated from liability for, the nominating and corporate governance committee determined, and the Board agreed, that it is in the best interest of the Company and its stockholders to extend such exculpation to officers of the Company, strictly within the parameters of the DGCL, as amended. The Board concluded that officer exculpation will more closely align the protections already available to directors with those now available to officers, creating a balance with respect to their functions in such capacities on behalf of the Company, will limit the potential for certain costly and distracting litigation against officers, regardless of merit, when such claims cannot be pursued against directors, and will facilitate recruitment and retention of the most qualified officers of the Company. Further, the proposed amendments will not affect any other traditional checks against officers, as claims may still be brought against them for breach of the fiduciary duty of loyalty or actions taken in bad faith, and the Board and stockholders bringing suits derivatively on behalf of the corporation may still bring fiduciary claims against officers.

Accordingly, the Board, upon the recommendation of the nominating and corporate governance committee, has unanimously determined that it is in the best interests of the Company and its stockholders to amend the Charter to extend exculpation for monetary damages for certain breaches of fiduciary duty, such as the duty of care, to the officers of the Company, to the fullest extent permitted by Delaware law, in strict compliance Section 102(b)(7) of the DGCL, as amended, and has unanimously approved, and recommended that the Company’s stockholders approve, such amendments to the Charter.

Complete Text of Proposed Amendments to the Charter

The general description of the proposed amendments to the Charter contemplated by this Proposal 5 is qualified in its entirety by reference to the text of the proposed amendments to the Charter, which is provided as Appendix A to this proxy statement. Proposed additions are double-underlined, and proposed deletions are stricken through.

— WHAT DOES THE BOARD OF DIRECTORS RECOMMEND?

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF AMENDMENTS TO THE COMPANY’S CHARTER TO REFLECT NEW DELAWARE LAW PROVISIONS REGARDING OFFICER EXCULPATION.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     93

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PROPOSAL 6 RATIFY THE APPOINTMENT OF OUR INDEPENDENT AUDITORS

 

—

— WHAT AM I VOTING ON?

 

You are voting on a proposal to ratify the appointment of Grant Thornton LLP, or Grant Thornton, as our independent auditors for fiscal year 2022.2023. The audit committee has appointed Grant Thornton to serve as independent auditors.

 

—

— WHAT SERVICES DO THE INDEPENDENT AUDITORS PROVIDE?

 

Audit services of Grant Thornton for fiscal 2021year 2022 included an audit of our consolidated financial statements and services related to periodic filings made with the SEC. Additionally, Grant Thornton provided certain services related to the consolidated quarterly reports and annual and other periodic reports, registration statements and comfort letters and other services as described below.

 

—

— HOW MUCH WERE THE INDEPENDENT AUDITORS PAID IN 20212022 AND 2020?2021?

 

The following table summarizes the aggregate fees of Grant Thornton for professional services:

 

			2021			2020
Audit fees(1)(2)		$	1,863,635		$	1,469,288
Audit related fees(3)			115,500			—
Tax fees(4)			—			—
All other fees(5)			—			—
		$	1,979,135		$	1,469,288

		2022			2021
Audit fees(1)(2)		$	1,859,620		$	1,863,635
Audit related fees(3)			34,125			115,500
Tax fees(4)			—			—
All other fees(5)			—			—
		$	1,893,745		$	1,979,135

(1)	Audit fees represent aggregate fees for audit services, which relate to the fiscal year consolidated audit, quarterly reviews, registration statements, and comfort letters.
(2)	Represents fees for the audit of our annual financial statements and internal controls, review of our quarterly financial statements, and professional audit services provided in connection with our regulatory filings. For 2022, the amount includes audit fees related to Rattler Midstream LP of $74,200, and audit  fees related to Viper Energy Partners LP of $386,400. For 2021, the amount includes audit fees related to Rattler Midstream LP of $401,885, and audit fees related to Viper Energy Partners LP of $330,750.
(3)	RepresentsFor 2022, the amount represents fees of $34,125 for a limited assurance attestation review for Diamondback Energy, Inc.’s 2022 Corporate Sustainability Report. For 2021, the amount represents fees of $84,000 for an acquired business audit required pursuant to Regulation S-X, Rule 3-05 incurred by Viper  Energy Partners LP and fees of $31,500 for a limited assurance attestation review for Diamondback Energy, Inc.’s 2021 Corporate Sustainability Report.
(4)	Tax fees represent aggregate fees for tax services, consisting of tax return compliance, tax advice and tax planning.
(5)	All other fees represent aggregate fees for all other services.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     8694

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—

— DOES THE AUDIT COMMITTEE APPROVE THE SERVICES PROVIDED BY GRANT THORNTON?

 

It is our audit committee’s policy to pre-approve all audit, audit related and permissible non-audit services rendered to us by our independent auditor. Consistent with such policy, all of the fees listed above that we incurred for services rendered by Grant Thornton subsequent to our initial public offering in October 2012 and the formation of our audit committee were pre-approved by our audit committee.

 

—

— WILL A REPRESENTATIVE OF GRANT THORNTON BE PRESENT AT THE MEETING?

 

Yes, one or more representatives of Grant Thornton will be present at the meeting. The representatives will have an opportunity to make a statement if they desire and will be available to respond to appropriate questions from the stockholders.

 

—

— WHAT VOTE IS REQUIRED TO APPROVE THIS PROPOSAL?

 

Stockholder ratification of the appointment of our independent auditors is not required by the Company’s bylaws or otherwise. However, we are submitting this proposal to the stockholders as a matter of good corporate practice. Approval of this proposal requires the affirmative vote of a majority of the votes cast on the proposal. If the appointment of Grant Thornton is not ratified, the audit committee will reconsider the appointment. Even if the appointment is ratified, the audit committee in its discretion may direct the appointment of a different independent audit firm at any time during the year if it is determined that such change would be in best interests of the Company and its stockholders.

 

—

— HAS GRANT THORNTON ALWAYS SERVED AS DIAMONDBACK’S INDEPENDENT AUDITORS?

 

Grant Thornton has served as our independent auditors since 2011.2009.

 

—

— WHAT DOES THE BOARD OF DIRECTORS RECOMMEND?

 

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OFGRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR 2022.2023.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     8795

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SOLICITATION BY BOARD; EXPENSES OF SOLICITATIONFREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING

 

Who is soliciting my vote?

The board of directors of Diamondback Energy, Inc., which we refer to as “Diamondback,” the “Company” and “we” in this proxy statement, is soliciting your vote at the 2023 Annual Meeting of Stockholders.

What am I voting on, what are the voting options and how does the board of directors recommend that I vote my shares?

Brief Description of Proposal			Voting Options		Board’s Recommendation
1.	Election of Directors		FOR, AGAINST or ABSTAIN (for each director nominee)		FOR each nominee
2.	Approval, on an Advisory Basis, the Company’s Executive Compensation		FOR, AGAINST or ABSTAIN		FOR
3.	Approve amendments to the Company’s charter to remove the 66 2/3% supermajority vote requirements for the stockholders to approve certain amendments to the Company’s charter and to remove directors from office		FOR, AGAINST or ABSTAIN		FOR
4.	Approve amendments to the Company’s charter to provide that stockholders holding at least 25% of the voting power, determined on a net long basis, for at least one year, may call special meetings of stockholders		FOR, AGAINST or ABSTAIN		FOR
5.	Approve amendments to the Company’s charter to reflect new Delaware law provisions regarding officer exculpation		FOR, AGAINST or ABSTAIN		FOR
6.	Ratify the appointment of our independent auditors		FOR, AGAINST or ABSTAIN		FOR

Who is entitled to vote?

You may vote if you were the record owner of our common stock as of the close of business on April 13, 2023. Each share of common stock is entitled to one vote. As of April 13, 2023, we had 181,423,481 shares of common stock outstanding and entitled to vote. There is no cumulative voting.

How many votes must be present to hold the meeting?

Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you properly grant your proxy by telephone, Internet or mail. In order for us to hold our meeting, holders of a majority of the voting power of our outstanding shares of common stock as of the close of business on April 13, 2023 must be present in person or by proxy at the meeting. This is referred to as a quorum. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the meeting.

What is a broker non-vote?

If a broker does not have discretion to vote shares held in street name on a particular proposal and does not receive instructions from the beneficial owner on how to vote those shares, the broker may not vote on that proposal. This is known as a broker non-vote. No broker may vote your shares without your specific instructions on any of the proposals to be considered at the Annual Meeting other than on the proposals that are considered to be “routine.” Under the rules of the New York Stock Exchange (NYSE), which apply to brokers regardless of whether an issuer is listed on the NYSE or Nasdaq, Proposal 6 relating to the ratification of our independent auditors is considered to be a “routine” matter. Accordingly, brokers will have discretionary authority to vote on Proposal 6 but will not have discretionary authority to vote on Proposals 1 through 5 at the Annual Meeting without your specific instructions.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     96

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How many votes are needed to approve each of the proposals, and what are the effects of abstentions, broker non-votes and unmarked, signed proxy cards?

Brief Description of Proposal			Vote Required to Adopt the Proposal		Effect of Abstentions		Effect of Broker-Non Votes		Unmarked/Signed Proxy Cards
1.	Election of Directors		Directors will be elected by the affirmative vote of a majority of the votes cast, in person or by proxy, which means that the number of shares voted “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee.(1)		None		None		FOR each nominee
2.	Approval, on an Advisory Basis, the Company’s Executive Compensation		Majority of the votes cast by the stockholders present in person or represented by proxy		None		None		FOR
3.	Approve amendments to the Company’s charter to remove the 66 2/3% supermajority vote requirements for the stockholders to approve certain amendments to the Company’s charter and to remove directors from office		The affirmative vote of 66 2/3% of the outstanding shares of our common stock entitled to vote thereon		Treated as votes AGAINST		Treated as votes AGAINST		FOR
4.	Approve amendments to the Company’s charter to provide that stockholders holding at least 25% of the voting power, determined on a net long basis, for at least one year, may call special meetings of stockholders		The affirmative vote of 66 2/3% of the outstanding shares of our common stock entitled to vote thereon		Treated as votes AGAINST		Treated as votes AGAINST		FOR
5.	Approve amendments to the Company’s charter to reflect new Delaware law provisions regarding officer exculpation		The affirmative vote of a majority of the outstanding shares of our common stock entitled to vote thereon		Treated as votes AGAINST		Treated as votes AGAINST		FOR
6.	Ratify the appointment of our independent auditors		Majority of the votes cast by the stockholders present in person or represented by proxy		None		Not applicable		FOR

(1)

If any incumbent director is not elected because he or she does not receive a majority of the votes cast, he or she is required to immediately tender his or her resignation for consideration by our board of directors. Our board of directors will evaluate whether to accept or reject such resignation, or whether other action should be taken; provided, however, that the board will act on such resignation and publicly disclose its decision to accept or reject such resignation and the rationale behind such decision within 90 days from the date of the certification of the director election results.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     97

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How do I vote?

You can vote either in person at the meeting or by proxy without attending the meeting.

To vote by proxy, you may vote by telephone or through the Internet by following the instructions included on the Notice of Internet Availability of Proxy Materials or proxy card, or, if you request to receive a paper copy of the proxy card, by returning a signed, dated and marked proxy card. If you are a registered holder or hold your shares in street name, votes submitted by Internet or telephone must be received by 1:00 a.m., Central Time, on June 8, 2023.

Even if you plan to attend the meeting, we encourage you to vote your shares by proxy. If you plan to vote in person at the Annual Meeting, and you hold your stock in street name, you must obtain a proxy from your broker and bring that proxy to the meeting. See also “How to attend the Annual Meeting?” below.

May I change my vote?

Yes, if you are a registered stockholder. You may change or revoke your vote at any time before the polls close at the Annual Meeting. You may do this by:

•	If you voted by telephone or the internet, access the method you used and follow the instructions given for revoking a proxy;
•	If you mailed a signed proxy card, then mail a new valid proxy card bearing a later date and return it to us prior to the Annual Meeting;
•	Submitting another valid proxy bearing a later date and returning it to us prior to the meeting;
•	Sending our Corporate Secretary a written document revoking your earlier proxy; or
•	Voting again at the Annual Meeting.

However, if you are a beneficial owner and your shares are held in street name by a broker or other nominee, you must contact your broker or such other nominee to change or revoke your proxy.

Who counts the votes?

We have engaged Computershare Trust Company, N.A., our transfer agent, to count the votes represented by proxies cast by telephone, Internet, mail or ballot. An employee of Computershare Trust Company, N.A. will act as our Inspector of Elections.

How are proxies being solicited and who pays the related expenses?

Our board of directors has sent you this proxy statement. Our directors, officers and employees may solicit proxies by mail, by telephone or in person. Those persons will receive no additional compensation for any solicitation activities. We will request banking institutions, brokerage firms, custodians, trustees, nominees and fiduciaries to forward solicitation materials to the beneficial owners of common stock held of record by those entities, and we will, upon the request of those record holders, reimburse reasonable forwarding expenses. We have engaged Georgeson LLC (Georgeson) to assist in the distribution of proxy materials and the solicitation of votes. The Company will pay Georgeson a base fee of $25,500, plus customary costs and expenses, for these services and has agreed to indemnify Georgeson against certain liabilities in connection with its engagement. We will pay the costs of preparing, printing, assembling and mailing the proxy material used in the solicitation of proxies.

 

Will my vote be confidential?

Yes. As a matter of Company policy, proxies, ballots and voting tabulations that identify individual stockholders are treated as confidential. Only the tabulation agent and the inspector of elections have access to your vote. Directors and employees of the Company may see your vote only if there is a contested proxy solicitation, as required by law or in certain other special circumstances.

Where can I find the voting results of the Annual Meeting?

We will report the voting results on a Current Report on Form 8-K which will be filed with the SEC no later than four business days after the Annual Meeting.

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     8898

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SUBMISSION OF FUTURE STOCKHOLDER PROPOSALS

Will my shares be voted if I don’t provide my proxy and don’t attend the Annual Meeting?

 

Under SEC rules,If you do not provide a stockholder who intendsproxy or vote your shares held in your name, your shares will not be voted.

If you hold your shares in street name, your broker may be able to presentvote your shares for certain “routine” matters even if you do not provide the broker with voting instructions. As discussed above, Proposal 6 relating to the ratification of Grant Thornton LLP as our independent auditors for 2023 is considered routine. For matters not considered “routine,” if you do not give your broker instructions on how to vote your shares, the broker may not vote on that proposal. This is a proposal,broker non-vote.

Proposals 1 through 5 are not considered routine. As a result, no broker may vote your shares on these proposals without your specific instructions.

Could other than director nominations,matters be decided at the 2023Annual Meeting?

We are not aware of any other matters that will be considered at the Annual Meeting. If any other matters are properly presented to be considered and voted on at the Annual Meeting, of Stockholders and who wishes the proposalpersons named in your proxies will vote in accordance with their best judgment. Discretionary authority to bevote on other matters is included in the proxy statement for that meeting must submitproxy.

Who can attend the proposal in writingmeeting?

The Annual Meeting is only open to our Corporate Secretary. The proposal must comply with the requirements set forth in our bylaws and must be received no later than December 29, 2022.

Our proxy access bylaw provisions permit a stockholder, or a group of up to 20 eligible stockholders, that has continuously owned for no less than three years at least 3%holders of our outstandingcommon stock as of the record date, April 13, 2023.

What do I need to bring to attend the Annual Meeting?

You will need proof of ownership of our common stock to nominateattend the meeting in person. If your shares are in the name of your broker or bank or other nominee, you will need to bring evidence of your stock ownership, such as your most recent brokerage statement. All stockholders will be required to present valid picture identification. IF YOU DO NOT HAVE VALID PICTURE IDENTIFICATION AND PROOF THAT YOU OWN SHARES OF OUR STOCK AS OF THE RECORD DATE, YOU MAY NOT BE ADMITTED INTO THE MEETING.

How to attend the Annual Meeting?

The Annual Meeting will be held at 120 N Robinson Ave, Oklahoma City, Oklahoma 73102. From I-40, take exit 150A – Shields Blvd. Turn left (North) onto Shields Blvd. (which becomes E. K. Gaylord), then continue on Shields Blvd./E. K. Gaylord to Reno Ave. and include inturn left (West). Continue to S. Robinson Ave./Ron Norick Blvd. and turn right (North). At Main Street, use the left lane to continue on S. Robinson Ave. The National is on the right at the corner of S. Robinson Ave. and Park Ave.

How can I access the Company’s proxy materials and annual report electronically?

This proxy statement and the Company’s 2022 Annual Report on Form 10-K are available at www.envisionreports.com/FANG.

Why did I receive a Notice of Internet Availability of Proxy Materials instead of a paper copy of the proxy materials?

We are providing access to our proxy materials, up toincluding this proxy statement and our 2022 Annual Report on Form 10-K, over the greater of two directors and 20%Internet in accordance with the rules of the numberSecurities and Exchange Commission, or the SEC. As a result, we are mailing to our stockholders a Notice of directors currently serving on the Company’s board, provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in our bylaws. Subject to compliance with other applicable requirements specified in the proxy access provisionsInternet Availability of Proxy Materials instead of a paper copy of our bylaws, stockholder director nominations for inclusion inproxy materials. Your Notice of Internet Availability of Proxy Materials contains instructions on how to access our proxy materials forover the 2023 Annual Meeting of Stockholders must be received between November 29, 2022 and December 29, 2022.

Stockholders who wishInternet, as well as instructions on how to proposerequest a matter for action at the 2023 Annual Meeting, including the nomination of directors, but who do not wish to have the proposal or nomination included in the proxy statement, must notify the Company in writing of the information required by the provisions of our bylaws dealing with stockholder proposals. The notice must be delivered to our Corporate Secretary between February 9, 2023 and March 11, 2023. You can obtain apaper copy of our bylawsproxy materials by writing the Corporate Secretarymail.

Our proxy materials are also available at the address below.www.envisionreports.com/FANG.

 

In addition to satisfying the foregoing requirements under our Bylaws and comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 10, 2023.

All written proposals should be directed to Corporate Secretary, Diamondback Energy, Inc., 500 West Texas Ave, Suite 1200, Midland, TX 79701.

The board of directors is responsible for selecting and recommending director candidates and will consider nominees recommended by stockholders. If you wish to have the board of directors consider a nominee for director, you must send a written notice to our Corporate Secretary at the address provided above and include the information required by our bylaws and discussed on page 25 of this proxy statement.

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     8999

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AVAILABILITY OF FORM 10-K AND ANNUAL REPORT TO STOCKHOLDERS

How can I request a full set of proxy materials?

 

SEC rules require us to provide an Annual Report to Stockholders who receive thisYou may request, without charge, a full set of our proxy statement. Additional copies of the 2021 Annual Report to Stockholders, along with copies ofmaterials, including our 2022 Annual Report on Form 10-K, for one year following the fiscal years ended December 31, 2020 and 2019, including the financial statements and the financial statement schedules, are available without charge to stockholders upon writtenannual meeting of stockholders. If a broker or other nominee holds your shares of record, you may request to Corporate Secretary, Diamondback Energy, Inc., 500 West Texas Ave, Suite 1200, Midland, TX 79701 or via the Internet at http://ir.diamondbackenergy.com/financials.cfm. We will furnish the exhibits to our Annual Report on Form 10-K upon paymenta full set of our copying and mailing expenses.proxy materials by following the instructions contained in the Notice of Internet Availability of Proxy Materials that you received.

 

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HOUSEHOLDINGWhat is householding?

 

The SEC permits a single set of Notice of Internet Availability of Proxy Materials or annual reports and proxy statements to be sent to any household at which two or more stockholders reside if they appear to be members of the same family. Each stockholder continues to receive a separate proxy card, if a proxy card is provided. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces our mailing and printing expenses.

 

If you and other residents at your mailing address own shares of our common stock, you may have only received one Notice of Internet Availability of Proxy Materials or Annual Report and proxy statement, unless we have received contrary instructions from you. If you would like to receive your own set of Notice of Internet Availability of Proxy Materials or the annual report and proxy statement this year or in future years, follow the instructions described below. We will promptly send a separate copy of the Notice of Internet Availability of Proxy Materials or Annual Report and proxy statement, as applicable. Similarly, if you share an address with another Diamondback stockholder and together both of you would like to receive in the future only a single Notice of Internet Availability of Proxy Materials or annual report and proxy statement, follow these instructions:

 

•	If your shares of our common stock are registered in your own name, please contact our transfer agent, Computershare Trust Company, N.A., and inform them of your request by calling their toll-free number: (800) 962-4284 or by mail: Computershare Trust Company, N.A., 250 Royall Street, Canton, MA 02021.
•	If a broker or other nominee holds your shares, please contact your broker or nominee.

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     90100

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OTHER MATTERSSUBMISSION OF FUTURE STOCKHOLDER PROPOSALS

 

Other BusinessUnder SEC rules, a stockholder who intends to present a proposal, other than director nominations, at the 2024 Annual Meeting of Stockholders and who wishes the proposal to be included in the proxy statement for that meeting must submit the proposal in writing to our Corporate Secretary. The proposal must comply with the requirements set forth in our bylaws and must be received no later than December 29, 2023.

 

Our proxy access bylaw provisions permit a stockholder, or a group of up to 20 eligible stockholders, that has continuously owned for no less than three years at least 3% of our outstanding common stock, to nominate and include in our proxy materials up to the greater of two directors and 20% of the number of directors currently serving on the Company’s board, provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in our bylaws. Subject to compliance with other applicable requirements specified in the proxy access provisions of our bylaws, stockholder director nominations for inclusion in our proxy materials for the 2024 Annual Meeting of Stockholders must be received between November 29, 2023 and December 29, 2023.

Stockholders who wish to propose a matter for action at the 2024 Annual Meeting of Stockholders, including the nomination of directors, but who do not wish to have the proposal or nomination included in the proxy statement, must notify the Company in writing of the information required by the provisions of our bylaws dealing with stockholder proposals. The notice must be delivered to our Corporate Secretary between February 9, 2024 and March 10, 2024. You can obtain a copy of our bylaws by writing the Corporate Secretary at the address below.

In addition to satisfying the foregoing requirements under our Bylaws and comply with the SEC’s universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 9, 2024.

All written proposals should be directed to Corporate Secretary, Diamondback Energy, Inc., 500 West Texas Ave, Suite 100, Midland, TX 79701.

The board of directors doesis responsible for selecting and recommending director candidates and will consider nominees recommended by stockholders. If you wish to have the board of directors consider a nominee for director, you must send a written notice to our Corporate Secretary at the address provided above and include the information required by our bylaws and discussed on page 23 of this proxy statement.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     101

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OTHER MATTERS

Delinquent Section 16(a) Reports

Based solely on the review of Forms 3 and 4 and amendments thereto furnished to Diamondback during 2022, including those reports filed on behalf of our directors and Section 16 officers pursuant to powers of attorney, no person subject to Section 16 of the Securities Exchange Act of 1934, as amended, failed to file on a timely basis during 2022, with the exception of three Form 4s that, due to an administrative error, were not intend to present any other items of business other than those stated intimely filed for the Noticefollowing Section 16 officers: Daniel N. Wesson, Executive Vice President and Chief Operating Officer, Thomas F. Hawkins, Executive Vice President — Special Projects and Jennifer Soliman, former Executive Vice President and Chief Human Resources Officer.

Availability of Annual MeetingReport on Form 10-K

SEC rules require us to provide an Annual Report on Form 10-K to Stockholders who receive this proxy statement. Additional copies of Stockholders. If other mattersthe 2022 Annual Report on Form 10-K, including the financial statements and the financial statement schedules, are properly brought beforeavailable without charge to stockholders upon written request to Corporate Secretary, Diamondback Energy, Inc., 500 West Texas Ave, Suite 100, Midland, TX 79701 or via the meeting,Internet at https://ir.diamondbackenergy.com/investors/financial-information. We will furnish the persons named as your proxies will vote the shares represented by it in accordance with their best judgment. Discretionary authorityexhibits to voteour 2022 Annual Report on other matters is included in the proxy.Form 10-K upon payment of our copying and mailing expenses.

 

Forward-Looking Statements

 

This proxy statement contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which involve risks, uncertainties, and assumptions. All statements, other than statements of historical fact, including statements regarding Diamondback’s: future performance; business strategy; future operations and plans and objectives of management (including plans for future cash flow from operations and for executing environmental strategies) are forward-looking statements. When used in this proxy statement, the words “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “guidance,” “intend,” “may,” “model,” “outlook,” “plan,” “positioned,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” and similar expressions (including the negative of such terms) as they relate to Diamondback are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Although Diamondback believes that the expectations and assumptions reflected in its forward-looking statements are reasonable as and when made, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond Diamondback’s control. In addition, some of our sustainability goals, in particular those related to environmental matters, are based on our current expectations that may turn out to be inaccurate. Accordingly, forward-looking statements are not guarantees of future performance and Diamondback’s actual outcomes could differ materially from what Diamondback has expressed in its forward-looking statements.

 

Factors that could cause the outcomes to differ materially include (but are not limited to) the following: changes in supply and demand levels for oil, natural gas, and natural gas liquids, and the resulting impact on the price for those commodities; the impact of public health crises, including epidemic or pandemic diseases such as the COVID-19 pandemic, and any related company or government policies or actions; actions taken by the members of OPEC and other oil producing countries affecting the production and pricing of oil, as well as other domestic and global political, economic, or diplomatic developments;developments, including any impact of the ongoing war in Ukraine on the global energy markets and geopolitical stability; concerns over a potential economic slowdown or recession; inflationary pressures; rising interest rates and their impact on the cost of capital regional supply and demand factors, including delays, curtailment delays or interruptions of production, or governmental orders, rules or regulations that impose production limits; federal and state legislative and regulatory initiatives relating to hydraulic fracturing, including the effect of existing and future laws and governmental regulations; and the risks and other factors disclosed in Diamondback’s filings with the Securities and Exchange Commission, including its Forms 10-K, 10-Q and 8-K, which can be obtained free of charge on the Securities and Exchange Commission’s web site at http://www.sec.gov. Given these risks and uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements.

 

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     102

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In light of these factors, the events anticipated by Diamondback’s forward-looking statements may not occur at the time anticipated or at all. Moreover, Diamondback operates in a very competitive and rapidly changing environment and new risks emerge from time to time. Diamondback cannot predict all risks, nor can it assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those anticipated by any forward-looking statements it may make. Accordingly, you should not place undue reliance on any forward-looking statements made in this proxy statement. All forward-looking statements speak only as of the date of this proxy statement or, if earlier, as of the date they were made. Diamondback does not intend to, and disclaims any obligation to, update or revise any forward-looking statements unless required by applicable law.

 

No reports, documents or websites that are cited or referred to in this proxy statement shall be deemed to form part of, or to be incorporated by reference into, this proxy statement.

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     91103

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SCHEDULE A NON-GAAP RECONCILIATIONS

SCHEDULE A

 

— RECONCILIATION OF OPERATING CASH FLOW TO FREE CASH FLOW

 

Free Cash Flow is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Free Cash Flow as cash flow from operating activities before changes in working capital in excess of cash capital expenditures. The Company believes that Free Cash Flow is useful to investors as it provides a measure to compare both cash flow from operating activities and additions to oil and natural gas properties across periods on a consistent basis. Operating cash flow before working capital changes, which is a non-GAAP financial measure, represents net cash provided by operating activities as determined under GAAP without regard to changes in operating assets and liabilities. The Company believes operating cash flow before working capital changes is an accepted measure of an oil and natural gas company’s ability to generate cash used to fund exploration, development and acquisition activities and service debt or pay dividends.

 

These measures should not be considered as an alternative to, or more meaningful than, net cash provided by operating activities as an indicator of operating performance. The Company’s computation of operating cash flow before working capital changes and Free Cash Flow may not be comparable to other similarly titled measures of other companies.

 

The following table presents a non-GAAP reconciliation of net cash provided by operating activities, a GAAP financial measure, to Free Cash Flow.Flow, a non-GAAP financial measure.

 

DIAMONDBACK ENERGY, INC.

NON-GAAP RECONCILIATION OF FREE CASH FLOW

(IN MILLIONS)

 

		Year Ended December 31,
		2021				2020
Net cash provided by operating activities		$	3,944			$	2,118
Less: Working Capital Changes			36				97
Operating cash flow before working capital changes			3,908				2,021
Less:
Drilling, completions and non-operated additions to oil and natural gas properties			1,334				1,611
Infrastructure additions to oil and natural gas properties			123				108
Additions to midstream assets			30				140
Total Cash CAPEX			1,487				1,859
Free Cash Flow		$	2,421			$	162

		Year Ended December 31,
		2022				2021
Net cash provided by operating activities (GAAP)		$	6,325			$	3,944
Less: Working Capital Changes			(199	)			36
Operating cash flow before working capital changes (Non-GAAP)			6,524				3,908
Less:
Drilling, completions and infrastructure additions to oil and natural gas properties			1,854				1,457
Additions to midstream assets			84				30
Total Cash CAPEX			1,938				1,487
Free Cash Flow (Non-GAAP)		$	4,586			$	2,421

 

DIAMONDBACK ENERGY, INC.  •  20222023 PROXY STATEMENT     92104

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— ADJUSTED EBITDA AND ROACE

Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDA as net income (loss) attributable to Diamondback Energy, Inc., plus net income (loss) attributable to non-controlling interest (“net income (loss)”) before non-cash (gain) loss on derivative instruments, net, interest expense, net, depreciation, depletion, amortization and accretion, depreciation and interest expense related to equity method investments, impairment and abandonments related to equity method investments, (gain) loss on sale of equity method investments, (gain) loss on extinguishment of debt, non-cash equity-based compensation expense, capitalized equity-based compensation expense, merger and integration expense, other non-cash transactions and provision for (benefit from) income taxes, if any. Adjusted EBITDA is not a measure of net income as determined by United States generally accepted accounting principles (“GAAP”). Management believes Adjusted EBITDA is useful because the measure allows it to more effectively evaluate the Company’s operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. The Company adds the items listed above to net income (loss) to determine Adjusted EBITDA because these amounts can vary substantially from company to company within its industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of the Company’s operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets. The Company’s computation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies or to such measure in our credit facility or any of our other contracts.

Return on Average Capital Employed, or ROACE, is a supplemental non-GAAP financial measure that is used by management to measure profitability after factoring in the amount of capital used in the Company’s operations. The Company defines ROACE as consolidated Adjusted EBITDA less depreciation, depletion, amortization and accretion (“Adjusted EBIT”), divided by the sum of the average total assets less average current liabilities (“capital employed”) for the current year and prior year. ROACE should not be considered as an alternative to, or more meaningful than, net income as determined in accordance with GAAP or as an indicator of the Company’s operating performance or liquidity.

The following table presents a non-GAAP reconciliation of Net income (loss) attributable to Diamondback Energy, Inc., a GAAP Measure, to Adjusted EBITDA, a non-GAAP financial measure, and the further reconciliation to ROACE, an additional non-GAAP financial measure.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     105

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APPENDIX A SECONDAMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF DIAMONDBACK ENERGY, INC.

—

ARTICLE I

NAME

The name of the corporation is Diamondback Energy, Inc. (the “Corporation”).

—

ARTICLE II

PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).

—

ARTICLE III

REGISTERED AGENT

The street address of the registered office of the Corporation in the State of Delaware is 2711 Centerville Road, Suite 400251 Little Falls Drive, County of New Castle, City of Wilmington, Delaware 19808 and the name of the Corporation’s registered agent at such address is Corporation Service Company.

—

ARTICLE IV

CAPITALIZATION

Section 4.1 Authorized Capital Stock. The total number of shares of capital stock that the Corporation is authorized to issue is 110,000,000410,000,000 shares, divided into two classes consisting of 100,000,000400,000,000 shares of common stock, par value $0.01 per share (“Common Stock”), and 10,000,000 shares of preferred stock, par value $0.01 per share (“Preferred Stock”).

Section 4.2 Preferred Stock

(a)

Shares of Preferred Stock may be issued in one or more series from time to time with each such series to consist of such number of shares and to have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issuance of such series adopted by the board of directors of the Corporation (the “Board”) and included in a certificate of designations (a “Preferred Stock Designation”) filed pursuant to the DGCL, and the Board is hereby expressly vested with the authority, to the full extent now or hereafter provided by law, to adopt any such resolution or resolutions.

(b)

Subject to the rights of the holders of any series of Preferred Stock pursuant to the terms of this Second Amended and Restated Certificate of Incorporation (this “Certificate”) (including any Preferred Stock Designation), the number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock, without a vote of the holders of the Preferred Stock, or any series thereof, irrespective of the provisions of Section 242(b)(2) of the DGCL, unless a vote of any such holders of Preferred Stock is required pursuant to another provision of this Certificate (including any Preferred Stock Designation).

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     106

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Section 4.3 Common Stock

(a)

Each holder of shares of Common Stock, as such, shall be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote. Except as otherwise required by law or this Certificate (including any Preferred Stock Designation), at any annual or special meeting of the stockholders the Common Stock shall have the exclusive right to vote for the election of directors and on all other matters properly submitted to a vote of the stockholders. Notwithstanding the foregoing, except as otherwise required by law or this Certificate (including a Preferred Stock Designation), holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate (including any amendment to any Preferred Stock Designation) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate (including any Preferred Stock Designation) or pursuant to the DGCL.

(b)

Subject to the rights of the holders of Preferred Stock, the holders of shares of Common Stock shall be entitled to receive such dividends and other distributions (payable in cash, property or capital stock of the Corporation) when, as and if declared thereon by the Board from time to time out of any assets or funds of the Corporation legally available therefor and shall share equally on a per share basis in such dividends and distributions.

(c)

In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation, and subject to the rights of the holders of Preferred Stock in respect thereof, the holders of shares of Common Stock shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of Common Stock held by them.

—

ARTICLE V

RELATED PARTY TRANSACTIONS AND CORPORATE OPPORTUNITIES

The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and the same are in furtherance of and not in limitation of the powers conferred by law:

Section 5.1 Related Party Transactions. No contract or other transaction of the Corporation with any other person, firm, corporation or other entity in which the Corporation has an interest, shall be affected or invalidated by the fact that any one or more of the directors or officers of the Corporation, individually or jointly with others, may be a party to or may be interested in any contract or transaction so long as the contract or other transaction is approved by the Board in accordance with the DGCL. Each person who may become a director or officer of the Corporation is hereby relieved from any liability that might otherwise arise by reason of his or her contracting with the Corporation for the benefit of himself or herself or any firm or corporation in which he or she may be in any way interested.

Section 5.2 Corporate Opportunities.

(a)

In recognition and anticipation that (i) certain directors, principals, officers, employees and/or other representatives of DB Energy Holdings LLC and Gulfport Energy Corporation (together, the “Original Stockholders”) and their respective Affiliates (as defined below) may serve as directors or officers of the Corporation, (ii) the Original Stockholders and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, and (iii) members of the Board who are not employees or officers of the Corporation (“Non-Employee Directors”) and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, the provisions of this Section 5.2 are set forth to regulate and define the conduct of certain affairs of the Corporation with respect to certain classes or categories of business opportunities as they may involve the Original Stockholders, the Non-Employee Directors or their respective Affiliates and the powers, rights, duties and liabilities of the Corporation and its directors, officers and stockholders in connection therewith.

(b)

None of (i) any Original Stockholder or any of its Affiliates or (ii) anyNo Non-Employee Director or his or her Affiliates (thesuchPersons (as defined below) identified in (i) and (ii) above being referred to, collectively, as “Identified Persons” and, individually, as an “Identified Person”) shall have any duty to refrain from directly or indirectly (x) engaging in a corporate opportunity in the same or similar business activities or lines of business in which the Corporation or any of its Affiliates now engages or proposes to engage or (y) otherwise competing with the Corporation, and, to the fullest extent permitted by the DGCL, no Identified Person shall (A) be deemed to have acted in bad faith or in a manner inconsistent with the best interests of the Corporation or its stockholders or to have acted in a manner inconsistent with or opposed to any fiduciary duty to the Corporation or its

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     107

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stockholders or (B) be liable to the Corporation or its stockholders for breach of any fiduciary duty, in each case, by reason of the fact that such Identified Person engages in any such activities. The Corporation hereby renounces any interest or expectancy in, or in being offered an opportunity to participate in, any business opportunity which may be a corporate opportunity for an Identified Person and the Corporation or any of its Affiliates, except as provided in paragraph (c) of this Section 5.2. In the event that any Identified Person acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for itself or himself and the Corporation or any of its Affiliates, such Identified Person shall have no duty to communicate or offer such transaction or other business opportunity to the Corporation or any of its Affiliates and, to the fullest extent permitted by the DGCL, shall not (A) be deemed to have acted in bad faith or in a manner inconsistent with the best interests of the Corporation or its stockholders or to have acted in a manner inconsistent with or opposed to any fiduciary duty to the Corporation or its stockholders or (B) be liable to the Corporation or its stockholders for breach of any fiduciary duty as a stockholder, director or officer of the Corporation, in each case, by reason of the fact that such Identified Person pursues or acquires such corporate opportunity for itself or himself, or offers or directs such corporate opportunity to another Person.

(c)

The Corporation does not renounce its interest in any corporate opportunity offered to any Non-Employee Director (including any Non-Employee Director who serves as an officer of this Corporation) if such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the Corporation and the provisions of Section 5.2(b) shall not apply to any such corporate opportunity.

(d)

In addition to and notwithstanding the foregoing provisions of this Section 5.2, a corporate opportunity shall not be deemed to be a potential corporate opportunity for the Corporation if it is a business opportunity that the Corporation is not financially able or contractually permitted or legally able to undertake, or that is, from its nature, not in the line of the Corporation’s business or is of no practical advantage to it or that is one in which the Corporation has no interest or reasonable expectancy.

(e)

For purposes of this Section 5.2, (i) “Affiliate” shall mean (A) in respect of an Original Stockholder, any Person that, directly or indirectly, is controlled by such Original Stockholder, controls such Original Stockholder or is under common control with such Original Stockholder and shall include any principal, member, director, partner, shareholder, officer, employee or other representative of any of the foregoing (other than the Corporation and any entity that is controlled by the Corporation), (B) in respect of a Non-Employee Director, any Person that, directly or indirectly, is controlled by such Non-Employee Director (other than the Corporation and any entity that is controlled by the Corporation) and (CB) in respect of the Corporation, any Person that, directly or indirectly, is controlled by the Corporation; and (ii) “Person” shall mean any individual, corporation, general or limited partnership, limited liability company, joint venture, trust, association or any other entity.

(f)

To the fullest extent permitted by law, any Person purchasing or otherwise acquiring any interest in any shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Section 5.2.

—

ARTICLE VI

BOARD OF DIRECTORS

Section 6.1 Board Powers. The business and affairs of the Corporation shall be managed by, or under the direction of, the Board. In addition to the powers and authority expressly conferred upon the Board by statute, this Certificate or the Bylaws of the Corporation, as amended or restated from time to time (“Bylaws”), the Board is hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the DGCL, this Certificate and any Bylaws adopted by the stockholders; provided, however, that no Bylaws hereafter adopted by the stockholders shall invalidate any prior act of the Board that would have been valid if such Bylaws had not been adopted.

Section 6.2 Number, Election and Term.

(a)

The number of directors constituting the Board shall be not fewer than five (5) nor more than thirteen (13). Subject to the previous sentence, the precise number of directors of the Corporation, other than those who may be elected by the holders of one or more series of Preferred Stock voting separately by class or series, shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the Whole Board. For purposes of this Certificate, “Whole Board” shall mean the total number of directors the Corporation would have if there were no vacancies.

(b)

Subject to Section 6.5, a director shall hold office until the annual meeting for the year in which his or her term expires and until his or her successor has been elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal.

(c)

Unless and except to the extent that the Bylaws shall so require, the election of directors need not be by written ballot.

Section 6.3 Newly Created Directorships and Vacancies. Subject to Section 6.5, newly created directorships resulting from an increase in the number of directors and any vacancies on the Board resulting from death, resignation, retirement, disqualification,

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     108

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removal or other cause may be filled solely by a majority vote of the directors then in office, even if less than a quorum, or by a sole remaining director (and not by stockholders), and any director so chosen shall hold office for the remainder of the full term of the class of directors to which the new directorship was added or in which the vacancy occurred and until his or her successor has been elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal.

Section 6.4 Removal. Subject to Section 6.5, any or all of the directors may be removed from office at any time, but onlywith or without cause, by the affirmative vote of the holders of at least a 66⅔%majority of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class and acting at a meeting of the stockholders called and held in accordance with the DGCL, this Certificate and the Bylaws.

Section 6.5 Preferred Stock – Directors. Notwithstanding any other provision of this Article VI, and except as otherwise required by law, whenever the holders of one or more series of Preferred Stock shall have the right, voting separately by class or series, to elect one or more directors, the term of office, the filling of vacancies, the removal from office and other features of such directorships shall be governed by the terms of such series of Preferred Stock as set forth in this Certificate (including any Preferred Stock Designation) and such directors shall not be included in any of the classes created pursuant to this Article VI unless expressly provided by such terms.

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ARTICLE VII

BYLAWS

In furtherance and not in limitation of the powers conferred upon it by law, the Board shall have the power to adopt, amend, alter or repeal the Bylaws. The affirmative vote of a majority of the Whole Board shall be required to adopt, amend, alter or repeal the Bylaws. The Bylaws also may be adopted, amended, altered or repealed by the stockholders; provided, however, that in addition to any vote of the holders of any class or series of capital stock of the Corporation required by law or by this Certificate (including any Preferred Stock Designation), the affirmative vote of the holders of at least 66⅔%a majority of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders to adopt, amend, alter or repeal the Bylaws.

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ARTICLE VIII

MEETINGS OF STOCKHOLDERS

Section 8.1 No Action by Written Consent. Except as otherwise expressly provided by the terms of any series of Preferred Stock permitting the holders of such series of Preferred Stock to act by written consent, any action required or permitted to be taken by stockholders of the Corporation must be effected at a duly called annual or special meeting of the stockholders, unless the Board approves in advance of the taking of such action by means of written consent of the stockholders.

Section 8.2 Special Meetings. Except as otherwise required by law or the terms of any one or more series of Preferred Stock, special meetings of stockholders of the Corporation may be called only(i) at any time by the Chairman of the Board, Chief Executive Officer, or the Board pursuant to a resolution adopted by a majority of the Whole Board, and the ability of the stockholders to call a special meeting is hereby specifically denied.(ii) by the Chairman of the Board or the Board following receipt by the Secretary of the Corporation of the written request (which request shall comply with the requirements and procedures set forth in the Bylaws) of one or more stockholders of the Corporation (acting on their own behalf and not by assigning or delegating their rights to any other person or entity) that together have continuously held, for their own accounts, beneficial ownership of at least 25% aggregate “net long position” in the issued and outstanding voting stock of the Corporation entitled to vote generally in the election of directors (the “requisite percent”) for at least one year prior to the date such request is delivered to the Corporation and at the special meeting date. For purpose of determining the requisite percent, “net long position” shall be determined with respect to each requesting stockholder by subtracting such stockholder’s short position from such stockholder’s long position, based on Rule 14e-4 under the Securities Exchange Act of 1934 (as such Rule is amended from time to time or, if applicable, any successor Rule) and the Bylaws. Special meetings of stockholders of the Corporation may not be called by any person or persons other than those specified in this Section 8.2.

Section 8.3 Advance Notice. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws.

DIAMONDBACK ENERGY, INC.•2023 PROXY STATEMENT     109

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ARTICLE IX

LIMITATION OF DIRECTOR LIABILITY; INDEMNIFICATION AND ADVANCEMENT OF EXPENSES

Section 9.1 Limitation of Director and Officer Liability. To the fullest extent that the DGCL or any other law of the State of Delaware as the same exists or is hereafter amended permits the limitation or elimination of the liability of directors or officers, no person who is or was a director or officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director or officer, as applicable. Any repeal or amendment of this Section 9.1 by the stockholders of the Corporation or by changes in law, or the adoption of any other provision of this Certificate inconsistent with this Section 9.1 will, unless otherwise required by law, be prospective only (except to the extent such amendment or change in law permits the Corporation to further limit or eliminate the liability of directors or officers) and shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such repeal or amendment or adoption of such inconsistent provision with respect to acts or omissions occurring prior to such repeal or amendment or adoption of such inconsistent provision.

Section 9.2 Indemnification and Advancement of Expenses.

(a)

To the fullest extent permitted by applicable law, as the same exists or may hereafter be amended, the Corporation shall indemnify and hold harmless each person who is or was made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”) by reason of the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, other enterprise or nonprofit entity, including service with respect to an employee benefit plan (an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, or in any other capacity while serving as a director, officer, employee or agent, against all expenses, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection with such proceeding. The right to indemnification conferred by this Section 9.2 shall include the right to be paid by the Corporation the expenses incurred in defending or otherwise participating in any such proceeding in advance of its final disposition; provided, however, that, if the DGCL requires, an advancement of expenses shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of the indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that the indemnitee is not entitled to be indemnified for the expenses under this Section 9.2 or otherwise. The rights to indemnification and advancement of expenses conferred by this Section 9.2 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators. Notwithstanding the foregoing provisions of this Section 9.2, except for proceedings to enforce rights to indemnification and advancement of expenses, the Corporation shall indemnify and advance expenses to an indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board.

(b)

The rights to indemnification and advancement of expenses conferred on any indemnitee by this Section 9.2 shall not be exclusive of any other rights that any indemnitee may have or hereafter acquire under law, this Certificate, the Bylaws, an agreement, vote of stockholders or disinterested directors, or otherwise.

(c)

Any repeal or amendment of this Section 9.2 by the stockholders of the Corporation or by changes in law, or the adoption of any other provision of this Certificate inconsistent with this Section 9.2, shall, unless otherwise required by law, be prospective only (except to the extent such amendment or change in law permits the Corporation to provide broader indemnification rights on a retroactive basis than permitted prior thereto), and shall not in any way diminish or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent provision in respect of any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.

(d)

This Section 9.2 shall not limit the right of the Corporation, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses to persons other than indemnitees.

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ARTICLE X

AMENDMENT OF CERTIFICATE OF INCORPORATION

The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate (including any Preferred Stock Designation), in the manner now or hereafter prescribed by this Certificate and the DGCL; and, except as set forth in Article IX, all rights, preferences and privileges herein conferred upon stockholders, directors, officers or any other persons by and pursuant to this Certificate in its present form or as hereafter amended are granted subject to the right reserved in this Article X; provided, however, that, notwithstanding any other provision of this Certificate, and in addition to any other vote that may be required by law or any Preferred Stock Designation, the affirmative vote of the holders of at least 66⅔% of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter or repeal, or adopt any provision as part of this Certificate inconsistent with the purpose and intent of, Section 4.3(b), Article V, Article VI, Article VII, Article VIII or this Article X..

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ARTICLE XI

SECTION 203

The Corporation shall not be governed by the provisions of Section 203 of the DGCL.

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ARTICLE XII

CHOICE OF FORUM

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation; (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders; (iii) any action asserting a claim against the Corporation arising pursuant to any provision of the DGCL, this Certificate or Bylaws; or (iv) any action asserting a claim against the Corporation governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in share of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article XII.

IN WITNESS WHEREOF, Diamondback Energy, Inc. has caused this Second Amended and Restated Certificate of Incorporation to be executed as of [_______________], 2023.

	DIAMONDBACK ENERGY, INC.
	By:_____________________________________________
	Name:__________________________________________
	Title:____________________________________________

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