| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Departure of Director
On March 5, 2019, Fredric G. Reynolds, a member of the Company’s Board of Directors (the “Board”), notified the Board that he will not stand forre-election as a director at the Company’s 2019 Annual Meeting of Stockholders due to his other professional commitments. His decision not to stand forre-election is not the result of any disagreement with management or the Board related to the Company’s operations, policies, or practices.
Annual Cash Incentive Plan
On March 5, 2019, the Compensation and Management Development Committee (the “Committee”) of the Board approved annual incentive targets under the Company’s Annual Cash Incentive Plan (the “Plan”) for all of the Company’s full-time employees worldwide, including the Company’s chief executive officer, chief financial officer and three other most highly compensated executive officers (the “Named Executive Officers”). The Plan is intended to promote alignment of pay and performance and an enhanced focus on creating long-term stockholder value.
Payout on awards is determined based on attainment ofpre-established enterprise level metrics and individual performance objectives. The following are the enterprise metrics, each withpre-established threshold, target and maximum performance goals:
| | • | | Environment, health and safety; |
| | • | | Exploration resource additions; |
| | • | | Controllable operated cash costs; |
| | • | | E&P capital and exploratory spend; |
| | • | | Cash return on capital employed; and |
The Committee establishes annual incentive targets for each Named Executive Officer based upon position, responsibilities and competitive practice.
Payout for the Named Executive Officers range from 0% to 175% of target based on attainment of thepre-established enterprise metrics. A multiplier may be applied to adjust the bonus down to 0% or up by an additional 25% (capped at 200%) of target based on individual performance compared with individual goalspre-established at the beginning of the fiscal year.
Long-Term Incentive Program
On March 5, 2019, the Committee approved the value of awards to the Named Executive Officers under the Company’s long-term incentive program for 2019, effective March 6, 2019. The long-term incentive mix for Mr. Hess for 2019 consists of performance share units (PSU), which account for 60% of the target value of his award under the program, and stock options, which account for the remaining 40% of the target value of his award under the program for 2019. As a result, 100% of the target value of Mr. Hess’ awards under the program will be performance-contingent. For the Company’s other Named Executive Officers, 80% of the target value of awards under the program for 2019 will be performance-contingent, with 60% in the form of PSUs, 20% in the form of stock options and the remaining 20% in the form of restricted stock. The Committee believes this mix of awards encourages sustained long-term performance and further supports alignment of the interests of senior management and stockholders.
