def14a
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 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12 |
EOG Resources, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange
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offsetting fee was paid previously. Identify the previous filing
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Form, Schedule or Registration Statement No.: |
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EOG
RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
APRIL 28, 2010
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 2010 annual meeting of
stockholders (Annual Meeting) of EOG Resources, Inc.
(EOG) will be held in the Nautile meeting room of
the Doubletree Hotel at 400 Dallas Street, Houston, Texas, at
3:00 p.m., Houston time, on Wednesday, April 28, 2010,
for the following purposes:
1. To elect seven directors to hold office until the 2011
annual meeting of stockholders and until their respective
successors are duly elected and qualified;
2. To ratify the appointment by the Audit Committee of the
Board of Directors of Deloitte & Touche LLP,
independent public accountants, as our auditors for the year
ending December 31, 2010;
3. To approve an amendment to the EOG Resources, Inc. 2008
Omnibus Equity Compensation Plan to increase the number of
shares available for issuance under the plan and effect certain
other changes;
4. To approve an amendment to the EOG Resources, Inc.
Employee Stock Purchase Plan to increase the number of shares
available for purchase under the plan and to extend the term of
the plan;
5. To approve an amendment and restatement of the EOG
Resources, Inc. Executive Officer Annual Bonus Plan to extend
the term of the plan and effect certain other changes;
6. To consider three stockholder proposals, if properly
presented; and
7. To transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
Holders of record of our Common Stock at the close of business
on March 1, 2010 will be entitled to notice of, and to vote
at, the Annual Meeting and any adjournments thereof.
Stockholders who do not expect to attend the Annual Meeting are
encouraged to vote via the Internet, by phone or by returning a
signed proxy card.
By Order of the Board of Directors,
MICHAEL P. DONALDSON
Corporate Secretary
Houston, Texas
March 25, 2010
TABLE OF
CONTENTS
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A-1
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B-1
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C-1
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EOG
RESOURCES, INC.
PROXY STATEMENT
The enclosed form of proxy is solicited by the Board of
Directors (Board) of EOG Resources, Inc.
(EOG, we, us or
our) to be used at our 2010 annual meeting of
stockholders (Annual Meeting) to be held in the
Nautile meeting room of the Doubletree Hotel at 400 Dallas
Street, Houston, Texas, at 3:00 p.m., Houston time, on
Wednesday, April 28, 2010. This proxy statement and the
enclosed form of proxy will be first sent or given to our
stockholders on or about March 25, 2010.
Any stockholder giving a proxy may revoke it at any time
provided written notice of the revocation is received by our
Corporate Secretary before the proxy is voted; otherwise, if
received prior to or at the Annual Meeting, properly completed
proxies will be voted at the Annual Meeting in accordance with
the instructions specified on the proxy or, if no such
instructions are given, in accordance with the recommendations
of the Board described herein. Stockholders attending the Annual
Meeting may revoke their proxies and vote in person. If you
would like to attend the Annual Meeting and vote in person, you
may contact EOG at
(713) 651-6260
(Attention: Corporate Secretary) for directions to the Annual
Meeting.
Attendance at the Annual Meeting is limited to holders of record
of our Common Stock at the close of business on March 1,
2010 (Record Date) and EOGs guests. Admission
will be on a first-come, first-served basis. You will be asked
to present valid government-issued picture identification, such
as a drivers license or passport, in order to be admitted
into the Annual Meeting. If your shares are held in the name of
a bank, broker or other nominee and you plan to attend the
Annual Meeting, you must present proof of your ownership of our
Common Stock, such as a bank or brokerage account statement
indicating that you owned shares of our Common Stock at the
close of business on the Record Date, in order to be admitted.
For safety and security reasons, no cameras, recording equipment
or other electronic devices will be permitted in the Annual
Meeting. A written agenda and rules of procedure for the Annual
Meeting will be distributed to those persons in attendance at
the Annual Meeting.
Our 2009 annual report is being mailed with this proxy statement
to all stockholders entitled to vote at the Annual Meeting.
However, the annual report does not constitute a part of, and
shall not be deemed incorporated by reference into, this proxy
statement or the enclosed form of proxy.
In addition to solicitation by use of the mails, certain of our
officers and employees may solicit the return of proxies
personally or by telephone, electronic mail or facsimile. We
have also retained a third-party proxy solicitation firm,
Morrow & Co., LLC, to solicit proxies on behalf of the
Board, and expect to pay such firm approximately $7,500 for
their services, plus any reasonable
out-of-pocket
expenses incurred. The cost of any solicitation of proxies will
be borne by us. Arrangements may also be made with brokerage
firms and other custodians, nominees and fiduciaries for the
forwarding of material to, and solicitation of proxies from, the
beneficial owners of our Common Stock held of record at the
close of business on the Record Date by such persons. We will
reimburse such brokerage firms, custodians, nominees and
fiduciaries for the reasonable
out-of-pocket
expenses incurred by them in connection with any such activities.
Representatives of Broadridge Financial Solutions, Inc. will
tabulate the votes and act as inspector of election at the
Annual Meeting.
A complete list of stockholders entitled to vote at the Annual
Meeting will be available to view during the Annual Meeting. You
may also access this list at our principal executive offices,
for any purpose germane to the Annual Meeting, during ordinary
business hours, for a period of ten days prior to the Annual
Meeting.
The mailing address of our principal executive offices is 1111
Bagby, Sky Lobby 2, Houston, Texas 77002.
Important
Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Stockholders To Be Held on
April 28, 2010
Pursuant to United States Securities and Exchange Commission
(SEC) rules related to the Internet availability of
proxy materials, our proxy statement, the accompanying notice of
annual meeting of stockholders and form of proxy and our 2009
annual report are available via the Internet at
www.eogresources.com/investors/annreport.html and at
www.proxyvote.com.
VOTING
RIGHTS AND PRINCIPAL STOCKHOLDERS
Holders of record of our Common Stock at the close of business
on the Record Date will be entitled to one vote per share on all
matters properly presented at the Annual Meeting. At the close
of business on the Record Date, there were
252,587,447 shares of our Common Stock outstanding. Other
than our Common Stock, we have no other voting securities
currently outstanding.
Our stockholders do not have dissenters rights or similar
rights of appraisal with respect to the proposals described
herein and, moreover, do not have cumulative voting rights with
respect to the election of directors.
Stock
Ownership of Certain Beneficial Owners
The following table and accompanying footnotes set forth certain
information regarding the beneficial ownership of our Common
Stock by each person (including any group as that
term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (Exchange Act)) whom we
know, based on filings with the SEC, beneficially owned more
than five percent (5%) of our Common Stock as of
December 31, 2009.
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Name and Address
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Number of
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Percent of
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of Beneficial Owner
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Shares
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Class(a)
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Davis Selected Advisers, L.P.(b)
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23,719,514
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9.4
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2949 East Elvira Road, Suite 101
Tucson, AZ 85756
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BlackRock, Inc.(c)
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15,871,819
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6.3
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%
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40 East 52nd Street
New York, NY 10022
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T. Rowe Price Associates, Inc.(d)
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13,253,282
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5.2
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%
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100 E. Pratt Street
Baltimore, MD 21202
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Capital Research Global Investors(e)
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12,933,500
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5.1
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%
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333 South Hope Street
Los Angeles, CA 90071
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(a) |
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Based on 252,508,652 shares of our Common Stock outstanding
as of December 31, 2009. |
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Based on its Schedule 13G/A filed on February 12, 2010
with respect to its beneficial ownership of our Common Stock as
of December 31, 2009, Davis Selected Advisers, L.P. has
sole voting power with respect to 19,329,280 shares and
sole dispositive power with respect to 23,719,514 shares. |
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Based on its Schedule 13G filed on January 29, 2010
with respect to its beneficial ownership of our Common Stock as
of December 31, 2009, BlackRock, Inc. has sole voting power
and sole dispositive power with respect to
15,871,819 shares. |
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Based on its Schedule 13G filed on February 11, 2010
with respect to its beneficial ownership of our Common Stock as
of December 31, 2009, T. Rowe Price Associates, Inc. has
sole voting power with respect to 4,144,017 shares and sole
dispositive power with respect to 13,253,282 shares. |
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Based on its Schedule 13G filed on February 11, 2010
with respect to its beneficial ownership of our Common Stock as
of December 31, 2009, Capital Research Global Investors has
sole voting power with respect to 5,619,500 shares and sole
dispositive power with respect to 12,933,500 shares. |
Stock
Ownership of the Board and Management
The following table and accompanying footnotes set forth certain
information regarding the ownership of our Common Stock by
(1) each director and director nominee of EOG,
(2) each named executive officer of EOG named
in the Summary Compensation Table below and
(3) all directors and executive officers of EOG as a group,
in each case as of January 31, 2010.
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Stock
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Options
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and
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Stock-Settled
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Stock
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Restricted
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Appreciation
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Stock
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Shares
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Rights
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Units and
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Beneficially
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Exercisable
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Phantom
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Total
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Name
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Owned(a)
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by 4-1-10(b)
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Shares(c)
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Ownership(d)
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George A. Alcorn
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6,300
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42,000
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0
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48,300
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Charles R. Crisp
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8,650
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42,000
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4,514
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55,164
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James C. Day
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3,000
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0
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0
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3,000
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Timothy K. Driggers
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33,016
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9,635
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1,124
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43,775
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Robert K. Garrison
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92,524
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105,339
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7,051
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204,914
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Loren M. Leiker
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258,890
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213,853
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6,421
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479,164
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Mark G. Papa
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561,993
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585,684
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423,454
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1,571,131
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H. Leighton Steward
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75,467
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56,000
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7,518
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138,985
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Donald F. Textor
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23,000
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14,000
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17,188
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54,188
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Gary L. Thomas
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229,534
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433,853
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135,256
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798,643
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Frank G. Wisner
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3,000
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98,000
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12,950
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113,950
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All directors and executive officers as a group (12 in number)
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1,315,010
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1,601,317
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615,476
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3,531,803
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Includes (1) shares for which the person directly or
indirectly has sole or shared voting or investment power;
(2) shares held under the EOG Resources, Inc. Savings Plan
(Savings Plan) for which the participant has sole
voting and investment power; (3) shares of restricted stock
held under the EOG Resources, Inc. 1992 Stock Plan (as amended
and restated, 1992 Stock Plan) and the EOG
Resources, Inc. 2008 Omnibus Equity Compensation Plan (as
amended, 2008 Stock Plan) for which the participant
has sole voting power and no investment power until such shares
vest in accordance with the provisions of the 1992 Stock Plan
and the 2008 Stock Plan, respectively; and (4) shares of
our Common Stock that would be received upon the vesting of
restricted stock units on or before April 1, 2010. |
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The shares shown in this column, which are not reflected in the
adjacent column entitled Shares Beneficially
Owned, consist of (1) shares of our Common Stock that
would be received upon the exercise of stock options held by the
individuals shown that are exercisable on or before
April 1, 2010; and (2) shares of our Common Stock that
would be received upon the exercise of stock-settled stock
appreciation rights (SARs) held by the individuals
shown that are exercisable on or before April 1, 2010,
based on, for purposes of this table, the closing price of our
Common Stock on the New York Stock Exchange (NYSE)
of $90.42 per share on January 29, 2010, net of a number of
shares equal to the minimum statutory tax withholding
requirements with respect to such exercise (which shares would
be deemed forfeited in satisfaction of such taxes). The shares
shown in this column are beneficially owned under
Rule 13d-3
under the Exchange Act. |
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(c) |
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Includes (1) restricted stock units held under the 1992
Stock Plan and the 2008 Stock Plan vesting after April 1,
2010 for which the participant has no voting or investment power
until such units vest and are released as shares of our Common
Stock in accordance with the provisions of the 1992 Stock Plan
and the 2008 Stock Plan, respectively; and (2) phantom
shares held in the individuals phantom stock account under
the EOG Resources, Inc. 409A Deferred Compensation Plan
(formerly known as the EOG Resources, Inc. 1996 Deferral Plan)
(Deferral Plan) for which the individual has no
voting or investment power until such phantom shares are
released as shares of our Common Stock in accordance with the
provisions of the Deferral Plan and the individuals
deferral election. Because such units and shares will not vest
on or before April 1, 2010, the units and shares shown in
this column are not beneficially owned under
Rule 13d-3
under the Exchange Act. |
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None of our directors or executive officers beneficially owned,
as of January 31, 2010, more than 1% of the shares of our
Common Stock outstanding as of January 31, 2010. Based on
252,542,826 shares of our Common Stock outstanding as of
January 31, 2010, our directors and executive officers as a
group (12 in number) beneficially owned approximately 1.2% of
the shares of our Common Stock outstanding as of
January 31, 2010 and had total ownership of approximately
1.4% of the shares of our Common Stock outstanding as of
January 31, 2010. |
CORPORATE
GOVERNANCE
Board of
Directors
Director
Independence
The Board has affirmatively determined that six of our seven
current directors, namely Messrs. Alcorn, Crisp, Day,
Steward, Textor and Wisner, have no direct or indirect material
relationship with EOG and thus meet the criteria for
independence of Article III, Section 12 of our bylaws,
which are available on our website at
www.eogresources.com/about/corpgov.html, as well as the
independence requirements of the NYSE and the SEC.
In assessing director independence, the Board considered, among
other matters, the nature and extent of any business
relationships, including transactions conducted, between EOG and
each director and between EOG and any organization for which one
of our directors is a director or executive officer or with
which one of our directors is otherwise affiliated. Except with
respect to Mr. Papa, the Board determined that all such
relationships and transactions that it considered were not
material relationships or transactions with EOG and did not
impair the independence of our directors. The Board determined
that Mr. Papa is not independent because he is our Chief
Executive Officer (CEO).
Meetings
The Board held seven meetings during the year ended
December 31, 2009 (including one joint meeting of the Board
and the Compensation and Nominating and Governance Committees of
the Board and two joint meetings of the Board and the Audit
Committee of the Board).
Each director attended at least 75% of the total number of
meetings of the Board and Board committees on which the director
served. We encourage each director to attend our annual meeting
of stockholders. Except for Mr. Crisp, each director
attended our 2009 annual meeting of stockholders. Mr. Crisp
was unable to attend the 2009 annual meeting of stockholders due
to certain business commitments outside of the Houston, Texas
area.
Executive
Sessions of Non-Employee Directors
Our non-employee directors held six executive sessions during
the year ended December 31, 2009. Each of our non-employee
directors attended each of the executive sessions. Mr. Day
was appointed by the non-employee directors as the presiding
director for these sessions, and Mr. Crisp has been
appointed by the non-employee directors as the presiding
director for executive sessions in 2010.
4
Board
Leadership Structure
The Board does not have a policy on whether or not the roles of
Chairman of the Board and CEO should be separate or combined
and, if they are to be separate, whether the Chairman of the
Board should be selected from the non-employee directors or be
an employee. The directors serving on our Board possess
considerable professional and industry experience, significant
experience as directors of both public and private companies and
a unique knowledge of the challenges and opportunities that EOG
faces. As such, the Board believes that it is in the best
position to evaluate the needs of EOG and to determine how best
to organize EOGs leadership structure to meet those needs.
The Board believes that the most effective leadership structure
for EOG at the present time is for Mr. Papa to serve as
both Chairman of the Board and CEO.
This model has succeeded because it makes clear that the
Chairman of the Board and CEO is responsible for managing our
business, under the oversight and review of our Board. This
structure also enables our CEO to act as a bridge between
management and the Board, helping both to act with a common
purpose.
Mr. Papa has been our Chairman of the Board and CEO since
1999 and has been with EOG and its predecessor companies for
over 28 years. Over the past 10 years, our stock price
performance has significantly exceeded the performance of the
Standard & Poors 500 Index as well as the stock
price performance of substantially all of our peer group
companies, thus demonstrating, we believe, the effectiveness of
EOGs leadership structure.
The Board believes that there is already substantial independent
oversight of EOGs management and a strong counterbalancing
governance structure in place, as demonstrated by the following:
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We have an independent presiding
director: The presiding director is annually
elected by and from the independent directors of the Board. The
presiding director has clearly defined leadership authority and
responsibilities, which include presiding at all meetings of the
Board at which the Chairman of the Board is not present,
including executive sessions of the independent directors, and
serving as liaison between the Chairman of the Board and the
independent directors. Our presiding director is afforded direct
and complete access to the Chairman of the Board at any time as
such director deems necessary or appropriate, and is available
for direct communication with our stockholders as described
under Stockholder Communications with the Board
below.
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We have a substantial majority of independent
directors: Six out of the seven directors
meet the criteria for independence required by the NYSE, the SEC
and our bylaws; only Mr. Papa is deemed not independent.
Our Corporate Governance Guidelines also provide that at least
three-fifths of our directors must meet such independence
standards.
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Key committees are composed solely of independent
directors: Our Audit, Compensation and
Nominating and Governance Committees are each composed solely of
independent directors. Each of our independent directors serves
on each of the committees.
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Non-employee directors meet
regularly: Our non-employee directors
typically meet in executive session without our employee
director (Mr. Papa) at each regularly scheduled Board
meeting. Our non-employee directors held six executive sessions
during the year ended December 31, 2009. As noted above,
such executive sessions are chaired by the presiding director.
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We have annual director elections: Our
stockholders provide balance to the corporate governance process
in that each year each director is elected pursuant to the
majority voting provisions in our bylaws. Our stockholders may
also communicate directly with the presiding director or any
other director, as described under Stockholder
Communications with the Board below.
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Boards
Role in Risk Oversight
Our Board receives regular reports from Mr. Papa, our
Chairman of the Board and CEO, and other members of our senior
management who supervise various aspects of our business,
including operations, finance, compliance, investor relations
and safety and environmental matters, and also receives regular
reports from members of our senior management on risk management.
5
Committees
of the Board
Each committee of the Board identified below has a charter that
is available on our website at
www.eogresources.com/about/corpgov.html. Copies of the committee
charters are also available upon written request to our
Corporate Secretary.
Nominating
and Governance Committee
The Nominating and Governance Committee, which is composed
exclusively of independent directors, is responsible for
proposing qualified candidates to fill vacancies on the Board,
recommending director nominees (including chairpersons) for each
of our committees, developing and recommending appropriate
corporate governance guidelines and overseeing the
self-evaluation of the Board. The Nominating and Governance
Committee takes into account diversity in professional
experience, skills and background, and diversity in race and
gender, in considering individual director nominees and Board
committee appointments.
While there are no specific minimum requirements that the
Nominating and Governance Committee believes must be met by a
prospective director nominee (other than the general
requirements of our Corporate Governance Guidelines discussed
below with respect to director age, director independence and
director service on the boards of directors of other public
companies), the Nominating and Governance Committee does believe
that nominees for director should possess personal and
professional integrity, have good business judgment, have
relevant experience and skills and be willing and able to commit
the necessary time for Board and committee service.
Our Corporate Governance Guidelines, which are available at
www.eogresources.com/about/corpgov.html, mandate that:
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no director shall be eligible to stand for re-election after
having attained the age of 78, unless approved by the Board;
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at least three-fifths of our directors must meet the criteria
for independence required by the NYSE, the SEC and our
bylaws; and
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no non-employee director may serve on the board of directors of
more than four other public companies and our CEO may not serve
on the board of directors of more than two other public
companies.
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The Nominating and Governance Committee uses a variety of
methods for identifying and evaluating nominees for director. As
an alternative to term limits for directors, the Nominating and
Governance Committee reviews each directors continuation
on the Board every three years. The Nominating and Governance
Committee also regularly assesses the appropriate size of the
Board and whether any vacancies on the Board are expected due to
retirement or otherwise. In addition, the Nominating and
Governance Committee will consider various potential candidates
for director. Candidates may come to the attention of the
Nominating and Governance Committee through current Board
members, professional search firms, stockholders or other
persons. These candidates may be evaluated at regular or special
meetings of the Nominating and Governance Committee and may be
considered at any point during the year. In evaluating nominees,
the Nominating and Governance Committee seeks to achieve a
balance of knowledge, experience and capability on the Board.
In addition, the Nominating and Governance Committee will
consider nominees recommended by stockholders in accordance with
the procedures outlined under Stockholder Proposals and
Director Nominations Nominations for 2011 Annual
Meeting of Stockholders and for Any Special Meetings of
Stockholders below. The Nominating and Governance
Committee will evaluate such nominees according to the same
criteria, and in the same manner, as any other director nominee.
The Nominating and Governance Committee held five meetings
during the year ended December 31, 2009 (including one
joint meeting of the Board and the Compensation and Nominating
and Governance Committees). The Nominating and Governance
Committee currently is composed of Messrs. Wisner
(Chairman), Alcorn, Crisp, Day, Steward and Textor.
6
Audit
Committee
The Audit Committee, which is composed exclusively of
independent directors, has been established by the Board to
oversee our accounting and financial reporting processes and the
audits of our financial statements.
The Board has selected the members of the Audit Committee based
on the Boards determination that the members are
financially literate (as required by NYSE rules) and qualified
to monitor the performance of management and the independent
auditors and to monitor our disclosures so that our disclosures
fairly present our business, financial condition and results of
operations.
The Board has also determined that Mr. Textor, an
independent director since 2001 and the Chairman of our Audit
Committee since 2001, is an audit committee financial expert
because he has the following attributes: (i) an
understanding of generally accepted accounting principles in the
United States of America (GAAP) and financial
statements; (ii) the ability to assess the general
application of such principles in connection with the accounting
for estimates, accruals and reserves; (iii) experience
analyzing and evaluating financial statements that present a
breadth and level of complexity of accounting issues that are
generally comparable to the breadth and complexity of issues
that can reasonably be expected to be raised by our financial
statements; (iv) an understanding of internal control over
financial reporting; and (v) an understanding of audit
committee functions. Mr. Textor has acquired these
attributes by means of having held various positions that
provided relevant experience, as described in his biographical
information under Item 1. Election of Directors
below, and by having served as Chairman of our Audit Committee
since 2001.
The Audit Committee has the sole authority, at its discretion
and at our expense, to retain, compensate and terminate our
independent auditors and to review, as it deems appropriate, the
scope of our annual audits, our accounting policies and
reporting practices, our system of internal controls, our
compliance with policies regarding business conduct and other
matters. In addition, the Audit Committee has the authority, at
its discretion and at our expense, to retain special legal,
accounting or other advisors to advise the Audit Committee.
The Audit Committee met six times during the year ended
December 31, 2009 (including two joint meetings of the
Audit Committee and the Board), and is currently composed of
Messrs. Textor (Chairman), Alcorn, Crisp, Day, Steward and
Wisner.
Compensation
Committee
The Compensation Committee, which is composed exclusively of
independent directors, is responsible for the administration of
our stock plans and approval of compensation arrangements for
our executive officers and directors. Please refer to
Executive Compensation Compensation Discussion
and Analysis Compensation Committee Process
and Director Compensation and Stock Ownership
Guidelines below for a discussion of the Compensation
Committees procedures and processes for making executive
officer and director compensation determinations.
The Compensation Committee met five times during the year ended
December 31, 2009 (including one joint meeting of the Board
and the Compensation and Nominating and Governance Committees),
and is composed of Messrs. Alcorn (Chairman), Crisp, Day,
Steward, Textor and Wisner.
Stockholder
Communications with the Board
Pursuant to the process adopted by the Board, our stockholders
may communicate with members of the Board by submitting such
communications in writing to our Corporate Secretary, who, upon
receipt of any communication other than one that is clearly
marked Confidential, will note the date the
communication was received in a log established for that
purpose, open the communication, make a copy of it for our files
and promptly forward the communication to the director(s) to
whom it is addressed. Upon receipt of any communication that is
clearly marked Confidential, our Corporate Secretary
will not open the communication, but will note the date the
communication was received in a log established for that purpose
and promptly forward the communication to the director(s) to
whom it is addressed. Further information regarding this process
can be found on our website at
www.eogresources.com/about/corpgov.html.
7
Interested parties can communicate directly with the presiding
director for the executive sessions of the non-employee
directors, or the non-employee directors as a group, using the
same procedure outlined above for general stockholder
communications with the Board, except any such communication
should be addressed to the presiding director or to the
non-employee directors as a group, as appropriate.
Codes of
Conduct and Ethics and Corporate Governance Guidelines
Pursuant to NYSE and SEC rules, we have adopted a Code of
Business Conduct and Ethics (Code of Conduct) that
applies to all of our directors, officers and employees, and a
Code of Ethics for Senior Financial Officers (Code of
Ethics) that, along with our Code of Conduct, applies to
our principal executive officer, principal financial and
accounting officer and controllers.
You can access our Code of Conduct
and Code of Ethics on our website
at www.eogresources.com/about/corpgov.html, and any
stockholder who so requests may obtain a copy of our Code of
Conduct or Code of Ethics by submitting a written request to our
Corporate Secretary. We intend to disclose any amendments to our
Code of Conduct or Code of Ethics and any waivers with respect
to our Code of Conduct or Code of Ethics granted to our
principal executive officer, our principal financial and
accounting officer, any of our controllers or any of our other
employees performing similar functions on our website at
www.eogresources.com within four business days after the
amendment or waiver. In such case, the disclosure regarding the
amendment or waiver will remain available on our website for at
least 12 months after the initial disclosure. There have
been no waivers granted with respect to our Code of Conduct or
our Code of Ethics.
Moreover, we have adopted, pursuant to NYSE rules, Corporate
Governance Guidelines, which may be accessed on our website at
www.eogresources.com/about/corpgov.html. Any stockholder may
obtain a copy of our Corporate Governance Guidelines by
submitting a written request to our Corporate Secretary.
Compensation
Committee Interlocks and Insider Participation
Messrs. Alcorn, Crisp, Day, Steward, Textor and Wisner
serve as members of the Compensation Committee and none of them
is a current or former officer or employee of EOG. During the
year ended December 31, 2009, none of our executive
officers served as a director or member of the compensation
committee (or other committee of the board performing equivalent
functions) of another entity where an executive officer of such
entity served as a director of EOG or on our Boards
Compensation Committee.
8
REPORT OF
THE AUDIT COMMITTEE
In connection with the fiscal year 2009 audited financial
statements of EOG Resources, Inc. (EOG), the Audit
Committee of the Board of Directors of EOG (1) reviewed and
discussed the audited financial statements with EOGs
management; (2) discussed with EOGs independent
auditors the matters required to be discussed by Public Company
Accounting Oversight Board (PCAOB) AU
Section 380, Communication with Audit
Committees, and Securities and Exchange Commission
Regulation S-X,
Rule 2-07;
(3) received the written disclosures and the letter from
the independent auditors required by the applicable requirements
of the PCAOB regarding the independent auditors
communications with the Audit Committee concerning independence;
(4) discussed with the independent auditors the independent
auditors independence; and (5) considered whether the
provision of non-audit services by EOGs principal auditors
is compatible with maintaining auditor independence.
Based upon these reviews and discussions, the Audit Committee
has recommended to the Board of Directors, and the Board of
Directors has approved, that the audited financial statements
for fiscal year 2009 be included in EOGs Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009 for filing with
the Securities and Exchange Commission.
AUDIT COMMITTEE
Donald F. Textor, Chairman
George A. Alcorn
Charles R. Crisp
James C. Day
H. Leighton Steward
Frank G. Wisner
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
promulgated under the Securities Exchange Act of 1934, as
amended. Based on such review and discussions, the Compensation
Committee has recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in the proxy
statement relating to the 2010 Annual Meeting of Stockholders.
COMPENSATION COMMITTEE
George A. Alcorn, Chairman
Charles R. Crisp
James C. Day
H. Leighton Steward
Donald F. Textor
Frank G. Wisner
9
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Compensation
Committee
Compensation for our executive officers is administered by the
Compensation Committee of the Board (Committee). The
Committee is an independent committee of the Board currently
composed of our six non-employee directors. All of these
individuals meet the independence requirements of the NYSE and
our bylaws, qualify as Non-Employee Directors under
Rule 16b-3
under the Exchange Act and qualify as outside
directors as defined in Section 162(m) of the
Internal Revenue Code of 1986, as amended (Code).
The Committee is responsible for reviewing and establishing the
compensation, including annual base salary, bonus and long-term
incentive compensation, of our CEO and all of our other
executive officers and the annual bonus pool and annual
long-term incentive compensation pool for all of our employees.
The Committee has the sole authority, at its discretion and at
our expense, to retain compensation consultants and any legal,
accounting or other advisors it deems appropriate. It has been
the Committees practice not to use a compensation
consultant and none was used in reviewing, determining or
recommending the amount or form of our executive and director
compensation for 2009, except that our Human Resources
Department used Equilar, Inc. (Equilar) for the
purpose of compiling peer group executive and director
compensation data obtained from publicly available information.
As discussed in further detail below, the Committee reviews and
discusses this data prior to making compensation decisions to
ensure that EOGs compensation program remains competitive
in the oil and gas industry. The Committee has approved the
retention of Equilar for 2010.
In February 2010, the Committee and the Board approved an
amendment to the 2008 Stock Plan, subject to stockholder
approval at the Annual Meeting, which the Board recommends. If
approved, the number of shares of our Common Stock available for
future grant under the 2008 Stock Plan will be increased by an
additional 6,900,000 shares, of which 2,400,000 shares
may be full value awards, in order to allow us to
continue to attract, retain and reward high performers in our
company. The proposed amendment also provides that, in the event
of a potential change in control of EOG, all stock options and
SARs granted under the 2008 Stock Plan shall become vested and
fully exercisable, and all restrictions imposed on restricted
stock and restricted stock units granted under the 2008 Stock
Plan shall lapse, only upon the effective date of the change in
control, and not, as the 2008 Stock Plan currently provides,
merely upon (i) the issuance of a press release announcing
a pending stockholder vote or other transaction which, if
approved or consummated, would constitute a change in control of
EOG or (ii) the announcement or commencement of a tender
offer or exchange offer which, if consummated, would constitute
a change in control of EOG. If the proposed amendment is
approved at the Annual Meeting, this modification to the
accelerated vesting provisions under the 2008 Stock Plan would
apply only to grants of stock options/SARs and restricted
stock/restricted stock units made on or after April 28,
2010 (the date of the Annual Meeting) and not to grants made
prior to such date. The proposed amendment further provides that
an acquisition of our Common Stock that would otherwise
constitute a change in control of EOG will not constitute a
change in control of EOG if such acquisition is made by a
qualified institutional investor. The proposed
amendment to the 2008 Stock Plan is described under
Item 3. Approval of Amendment to the EOG Resources,
Inc. 2008 Omnibus Equity Compensation Plan and is attached
to this proxy statement as Appendix A.
In February 2010, the Committee and the Board also approved an
amendment to the EOG Resources, Inc. Employee Stock Purchase
Plan (ESPP), subject to stockholder approval at the
Annual Meeting, which the Board recommends. If approved, the
number of shares of our Common Stock available for issuance
pursuant to stock options granted to eligible employees under
the ESPP will be increased by an additional
1,000,000 shares and the term of the ESPP will be extended
to December 31, 2019, unless terminated earlier under its
terms or by EOG. The proposed amendment to the ESPP is described
under Item 4. Approval of Amendment to the EOG
Resources, Inc. Employee Stock Purchase Plan and is
attached to this proxy statement as Appendix B.
Also in February 2010, the Committee and the Board approved an
amendment and restatement of the EOG Resources, Inc. Executive
Officer Annual Bonus Plan, subject to stockholder approval at
the Annual Meeting, which the Board recommends. The proposed
amended and restated Executive Officer Annual Bonus Plan extends
the term of the plan to December 31, 2019, increases the
cap on the maximum individual bonus from $2 million to
10
$3 million, provides for the delivery of bonuses in cash or
stock and for the deferral of the receipt of bonus payouts in
accordance with the Deferral Plan and clarifies that the
performance goal necessary for the payment of bonuses is
positive adjusted non-GAAP net income available to common
stockholders, as reported in our year-end earnings release. The
proposed amended and restated Executive Officer Annual Bonus
Plan is described under Item 5. Approval of the EOG
Resources, Inc. Amended and Restated Executive Officer Annual
Bonus Plan and is attached to this proxy statement as
Appendix C. The current Executive Officer Annual Bonus
Plan, adopted by the Board in February 2001 and approved by
EOGs stockholders at our 2001 annual meeting of
stockholders, expires by its terms at the end of this year.
In this Compensation Discussion and Analysis section,
Named Officers means the individuals who served as
our principal executive officer or principal financial officer
during 2009, as well as the other individuals included in the
Summary Compensation Table below.
Compensation
Committee Process
Each component of EOGs compensation program is reviewed by
the Committee on an annual basis. Based on its analysis of the
peer group compensation data, the Committee determines the
compensation of our CEO during an executive session of the
Committee, at which our CEO is not present. Our CEO, who also
reviews the peer group compensation data, makes recommendations
to the Committee regarding the compensation of the other Named
Officers, which the Committee may, at its discretion, discuss in
executive session. The final determination as to the
compensation of the other Named Officers, however, is made
solely by the Committee. During each year, the Committee
periodically reviews our compensation program and determines
whether it continues to promote the compensation goals of EOG,
which goals include remaining competitive in our industry so
that we are able to retain and provide appropriate incentives to
our executive officers, including our CEO and the other Named
Officers. The Committee did not make any material changes to the
components of our compensation program for 2009 and does not
anticipate the need for any such changes for 2010. See
Components of Our Compensation Program below.
The Committee typically holds at least one meeting each quarter.
At its first quarter meeting, the Committee reviews and
discusses our performance report regarding certain
pre-determined financial and operational goals with respect to
the prior year, evaluates achievement of pre-determined
individual performance goals set for our CEO and the other Named
Officers, certifies the achievement of the performance goal
under our current Executive Officer Annual Bonus Plan described
below, establishes the aggregate annual bonus pool for all
employees and sets performance goals to be considered in
determining the CEOs bonus for the next year. The
aggregate annual bonus pool consists of cash and restricted
stock/restricted stock units, out of which all employee bonuses
for the prior year are paid. The bonuses awarded to EOGs
executive officers, including our CEO and the other Named
Officers, are paid from this pool as well. Once the aggregate
annual bonus pool is determined, the Committee meets with our
CEO to evaluate and review the bonus awards with respect to the
other executive officers, including the other Named Officers, as
recommended by our CEO. The Committee then commences an
executive session, at which our CEO is not present, to determine
the bonus award to our CEO.
At its second quarter meeting, the Committee approves a list of
peer group companies selected for executive officer and director
compensation purposes and reviews and recommends any changes to
our non-employee director compensation program. At its third
quarter meeting, the Committee reviews the peer group
compensation data and considers annual base salary increases and
annual stock option/SAR
and/or
restricted stock/restricted stock unit grants for all executive
officers, including our CEO and the other Named Officers, and
the annual stock option/SAR and restricted stock/restricted
stock unit grant pool for all of our other employees. At its
fourth quarter meeting, the Committee typically addresses
administrative matters unrelated to executive compensation and
reviews our stock ownership guidelines for our executive
officers and our non-employee directors.
In addition, throughout the year, as necessary, the Committee
reviews and approves amendments to our stock plans and benefit
plans; reviews and approves employment, change of control and
severance agreements and amendments thereto; reviews and revises
stock grant vesting and termination provisions; reviews and
revises the amount available for grant under our CEOs
discretionary pool of stock options/SARs and discretionary pool
of restricted stock/restricted stock units; and takes any other
action it deems necessary or appropriate.
11
Objectives
of Our Compensation Program
Our executive compensation program is designed to attract and
retain a highly qualified and motivated management team and
appropriately reward individual executive officers for their
contributions to the achievement of EOGs key short-term
and long-term goals. The Committee is guided by the following
key principles in determining the compensation of our CEO and
other Named Officers:
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Competition Among Peers. The
Committee believes that our compensation program should reflect
the competitive recruiting and retention conditions in the oil
and gas industry, so that we can attract, motivate and retain
top industry talent.
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Accountability for Our
Performance. The Committee also
believes that our compensation program should be tied in part to
our financial and operational performance, so that our executive
officers are held accountable through their compensation for the
performance of EOG based on our achievement of certain
pre-determined financial and operational goals.
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Accountability for Individual
Performance. In addition, the
Committee believes that our compensation program should be tied
in part to the executive officers achievement of his
pre-determined individual performance goals, to encourage and
promote individual contributions to EOGs overall
performance.
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Alignment with Stockholder
Interests. Moreover, the Committee
believes that our compensation program should be tied in part to
our stock price performance through the grant of stock
options/SARs and restricted stock/restricted stock units, to
further align our executive officers interests with those
of our stockholders.
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A more detailed discussion of each of these key principles is
provided below.
Competition
Among Peers
In order to attract, motivate and retain talented executive
officers, we must ensure that our compensation program remains
competitive with the types and ranges of compensation paid by
our peer companies and other companies that we regard as having
similar lines of business. On an annual basis, the Committee
reviews and discusses compensation data setting forth the annual
base salary, non-equity incentive payments, long-term incentive
awards, perquisites and other compensation and benefits for our
CEO and our other Named Officers as compared to publicly
available compensation data for similarly situated executive
officers at our peer companies.
The Committee recognizes a peer group primarily composed of
companies included in the Standard & Poors 500
Oil & Gas Exploration & Production Index
(S&P Peer Group) that have lines of business
similar to those of EOG. The Committee may also recognize
certain companies not included in the S&P Peer Group but
that the Committee deems to be our peers due to
their similar lines of business and market capitalization.
EOGs peer group changes from time to time as a result of
fluctuation in company size, changes in the business lines of
our peers, acquisitions of peer companies by third parties,
developments in the oil and gas industry and other similar
factors. For 2009, the Committee approved the following list of
peer group companies:
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Anadarko Petroleum Corporation*
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Apache Corporation*
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Chesapeake Energy Corporation*
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Devon Energy Corporation*
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EnCana Corporation
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Noble Energy, Inc.*
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Pioneer Natural Resources Company*
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XTO Energy Inc.*
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When we refer to peers, peer group or
peer companies or similar phrases in this proxy
statement, we are referring to this list of companies, as it may
be updated by the Committee from time to time.
The Committee supports a practice of paying annual base salaries
that approximate the average of our peer group, taking into
consideration our market capitalization relative to our peer
companies, and annual non-equity incentive payments and
long-term incentive awards which may deliver above-average
compensation if our financial and operational results
and/or
stockholder returns exceed those of our peer companies.
In establishing the compensation of our CEO and other Named
Officers, the Committee reviews and considers the allocation of
total compensation (among annual base salary, bonus and equity
compensation components, including the total theoretical
compensation value considering actual realized stock option
gains and the value realized on restricted stock/restricted
stock unit vestings) of our peer companies. The Committee then
makes a subjective determination as to the appropriate
allocation of total compensation among the various components in
order to remain competitive in our industry with respect to the
recruiting and retention of executive officers. Generally, our
total compensation package is more heavily weighted toward
long-term compensation than our peer companies since the
Committee places significant value on the retention of our
executive officers over time.
Accountability
for Our Performance and Accountability for Individual
Performance
As further described below, substantially all of EOGs
employees, including our CEO and our other Named Officers, are
eligible to receive annual bonuses, payable in a combination of
cash and restricted stock/restricted stock units. To achieve the
goal of tying compensation to accountability for our
performance, the Committee considers EOGs achievement of
certain pre-determined financial and operational goals as well
as each executive officers achievement of pre-determined
individual performance goals in awarding annual bonuses.
This analysis is conducted on two levels. First, EOGs
performance is measured on a purely objective basis. At our 2001
annual meeting of stockholders, our stockholders, in connection
with their approval of our current Executive Officer Annual
Bonus Plan, established and approved the performance goal that
Net Income Available to Common, excluding
nonrecurring or extraordinary items and as reported in our
year-end earnings release (Net Income Available to Common
Stockholders), must be positive to permit payment of
bonuses under our Executive Officer Annual Bonus Plan. As noted
above, the proposed amended and restated Executive Officer
Annual Bonus Plan clarifies that the performance goal necessary
for the payment of bonuses is positive adjusted non-GAAP net
income available to common stockholders, as reported in our
year-end earnings release. If the proposed amended and restated
Executive Officer Annual Bonus Plan is approved at the Annual
Meeting, such performance goal will be the performance goal for
the payment of bonuses for 2010 and each subsequent year during
the term of the amended and restated Executive Officer Annual
Bonus Plan. If the Net Income Available to Common Stockholders
goal is not met for any given year, no bonuses will be paid to
our executive officers under our Executive Officer Annual Bonus
Plan for such year.
Second, if the Net Income Available to Common Stockholders goal
is met, the Committee will then consider EOGs achievement
of certain pre-determined financial and operational goals. These
additional performance goals are evaluated in a subjective
manner. The Committee and our CEO develop these goals in
connection with the formation of a company-wide annual operating
plan at the beginning of each year.
The specific performance goals, in addition to the Net Income
Available to Common Stockholders goal, established for 2009 were:
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achievement of an after-tax rate of return with respect to
capital
expenditures1
of 15%;
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1 The
calculation of our after-tax rate of return with respect to our
capital expenditure program for a particular year is based on
the estimated proved reserves (net to EOGs
interest) for all wells drilled or acquired during such year,
the estimated present value of the future net cash flows from
such reserves (for which we utilize certain assumptions
regarding future commodity prices and operating costs) and our
direct and indirect net costs incurred in drilling or acquiring
(as the case may be) such wells. As such, our after-tax rate of
return with respect to our capital expenditures for a particular
year cannot be calculated from our audited financial statements
for such year.
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achievement of 3% production volume growth;
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maintenance of a year-end net
debt-to-total
capitalization
ratio2 of
18% or less;
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achievement of top-three status among our peer companies
regarding forward cash flow per share multiple and achievement
of top-quartile absolute stock price performance relative to our
peer companies;
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achievement of unit cost targets relative to depreciation,
depletion and amortization (DD&A) expense
($1.97/Mcfe3),
lease operating expenses (LOE) and transportation
expenses ($1.14/Mcfe), general and administrative expenses
(G&A) ($0.33/Mcfe) and net interest expense
($0.11/Mcfe);
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|
|
|
aggregate capital expenditures of $3.1 billion or
less; and
|
|
|
|
achievement of other strategic and operational goals specific to
certain divisions and departments of EOG, each of which the
Committee believed, at the time the goals were set, would be
challenging, but which were reasonably achievable with
significant effort and skill.
|
Though management strives to accomplish all company performance
goals annually, the after-tax rate of return with respect to our
capital expenditures program goal is emphasized by the Committee
and our CEO as the most important of these goals. The Committee
considers the achievement of these performance goals in its
determination of the aggregate annual bonus pool, but it has the
discretion to weigh the achievement or lack of achievement of
the goals as the Committee deems appropriate. The Committee has
considered, and may continue in the future to consider, other
factors, such as commodity prices and their effect on the
achievement of the performance goals, and any other notable
accomplishments by EOG in determining whether EOG adequately met
its performance goals for the year. Additionally, the Committee
may deem overachievement in some areas to outweigh
underachievement in others. There is, however, no specific
numerical weighting assigned to each performance goal. As noted
above, the only performance goal that is outside of the
Committees subjective discretion is that Net Income
Available to Common Stockholders must be positive in the
immediately preceding year in order for bonuses to be paid to
our executive officers for such year.
At the Committees meeting in the first quarter of 2010,
the achievement of our 2009 goals was evaluated. The Committee
certified that the performance goal necessary for payment of
bonuses under our Executive Officer Annual Bonus Plan described
above was met for 2009. The Committee also determined that our
after-tax rate of return on our capital expenditures for 2009
significantly exceeded our 15% goal, which the Committee
acknowledged was impressive given the commodity price
environment in 2009. Moreover, the Committee determined that we
surpassed our production volume growth goal of 3% by delivering
6.5% growth over our 2008 production volumes, and further
determined that our year-end net
debt-to-total
capitalization ratio was 17%, which achieved our goal of 18% or
less. Relative to unit costs, the Committee determined that we
achieved our LOE and transportation expenses and G&A goals,
but that we did not achieve our DD&A or net interest
expense goals. The Committee further determined that, relative
to our peer companies, we ranked second with respect to forward
cash flow per share multiple and in the second quartile with
respect to absolute stock price performance. The Committee
acknowledged that although capital expenditures exceeded the
goal and original budget established in the first quarter of
2009, the increase had been authorized by the Board during the
year. The Committee also acknowledged our avoidance of
significant asset impairments and reserve write-downs in 2009.
In addition, the Committee determined that we achieved
operational and economic success in several major plays,
implemented a
first-of-its-kind
crude
oil-by-rail
transportation and pipeline system as well as natural gas
pipeline and processing facilities, and continued our strategic
shift toward a more balanced natural gas and liquids mix in our
North American production portfolio. The determinations of the
Committee were applied to all compensation components
2 For
purposes of computing this ratio, net debt is equal
to our aggregate long-term debt (including any current portion
of long-term debt) less our cash and cash equivalents, and
total capitalization is equal to our total
stockholders equity plus net debt.
3 Million
cubic feet equivalent of natural gas, crude oil and condensate
and natural gas liquids. Natural gas equivalents are determined
using a ratio of 6.0 thousand cubic feet of natural gas to
1.0 barrel of crude oil, condensate or natural gas liquids.
14
subject to the 2009 goals. In addition, at the Committees
meeting in the first quarter of 2010, our performance goals for
2010 were set.
The Committee further considers individual contributions to our
achievement of the goals identified above in allocating the
bonus pool among individual executive officers, as the Committee
believes it is important to recognize and reward significant
personal contributions that benefit EOG. As a result, the annual
base salary and bonus award to a particular executive officer
may fluctuate relative to the other executive officers from year
to year. In addition, the Committee considers contributions by
EOG employees involved in significant oil and gas discoveries.
Accordingly, in recognition of those management employees
responsible for identifying
and/or
executing significant new oil and gas exploration and
development projects, the Committee has from time to time
awarded restricted stock/restricted stock units to our
management employees, including certain of our Named Officers.
No such awards, however, were made in 2009.
The Committee annually evaluates the individual performance and
contributions of the executive officers in their particular
roles within EOG. At the beginning of each year, each executive
officer meets with our CEO to discuss and identify individual
performance goals for the upcoming year. Our CEO will present
his evaluation of the level of achievement of these goals to the
Committee the following year. In addition, our CEO gives each
executive officer performance feedback throughout the year and
conducts a formal performance review at the end of each year.
The Committee places significant emphasis on our CEOs
evaluation of the other executive officers in making
compensation decisions regarding the other executive officers,
particularly in awarding annual bonuses. Throughout the year,
the Committee may also consider any significant individual
contributions of the executive officers as described further
below.
The individual goals for executive officers are generally
specific to their functional areas within EOG. As executive
officers become more senior, however, some of their individual
goals tend to reflect the overall company performance goals to a
greater degree. The 2009 individual performance goals for
Mr. Thomas, our Senior Executive Vice President,
Operations, included achievement of the 3% production volume
growth, 15% after-tax rate of return on capital expenditures,
18% year-end net
debt-to-total
capitalization ratio, and DD&A expense and LOE and
transportation expense goals included in our overall company
performance goals described above, implementation of our crude
oil-by-rail
transportation and pipeline system and natural gas pipeline and
processing facilities and the continued pursuit of leading-edge
horizontal drilling and completions technology. For 2009, the
individual performance goals for Mr. Leiker, our Senior
Executive Vice President, Exploration, included achievement of
the 15% after-tax rate of return on capital expenditures and 18%
year-end net
debt-to-total
capitalization ratio goals included in our overall company
performance goals described above, leading the search for new
horizontal resource plays and the accomplishment of various
managerial and operational tasks. The individual performance
goals for 2009 for Mr. Garrison, our Executive Vice
President, Exploration, included achieving the established
production volume, unit cost, capital expenditure and rate of
return goals for designated North American divisions, mentoring
several division general managers, and providing expertise on
all major exploration initiatives. The 2009 individual
performance goals for Mr. Driggers, our Vice President and
Chief Financial Officer, included implementing an accounting
system to support our new crude
oil-by-rail
transportation and pipeline system and natural gas pipeline and
processing facilities, maintaining efficient control processes,
continuing to provide necessary information and support to our
Audit Committee, staying abreast of credit and financial markets
and the accomplishment of various managerial tasks. The 2010
individual goals for the Named Officers have been established.
At the Committees meeting in the first quarter of 2010,
Mr. Papa, our CEO, noted the specific contributions of
Messrs. Thomas, Leiker, Garrison and Driggers to the
achievement of EOGs overall company performance goals for
2009. Mr. Papa also discussed his assessment of the
achievement of each executive officers individual
performance goals. The Committee and Mr. Papa determined
that Messrs. Thomas, Leiker, Garrison and Driggers had met
or exceeded their individual performance goals for 2009.
The Committee considers the achievement of EOGs overall
company performance goals for a given year to be the individual
performance goals of our CEO for such year. For 2009, the
Committee determined that Mr. Papas individual
contribution to the achievement of EOGs 2009 overall
company performance goals was significant, and that
Mr. Papa therefore substantially achieved his individual
performance goals. At Mr. Papas request, the
15
Committee has not increased Mr. Papas annual base
salary since 2004 in order to prevent his annual base salary
from becoming further disproportionate in comparison to the rest
of our employees. To reward Mr. Papa for his individual
contributions to EOGs performance, in lieu of annual base
salary increases and to further provide incentives to
Mr. Papa and to retain Mr. Papa, the Committee may
provide for greater bonus awards and equity-based compensation
grants to Mr. Papa.
Alignment
with Stockholder Interests
The Committee also believes that it is in the best interests of
our stockholders for all of our executive officers to maintain a
certain level of ownership in EOG. Therefore, the Committee has
established stock ownership guidelines ranging from one times
base salary for Vice Presidents to up to five times base salary
for our CEO. Each Named Officer currently satisfies the
guidelines. We have no policies in place for hedging the
economic risks of stock ownership under these guidelines.
Compensation
Program Design
The Committee believes that appropriately balanced compensation
components contribute to our success and that the best
compensation philosophy is to put a substantial portion of the
total compensation package at risk by tying it to both our
financial and operational results and the performance of our
Common Stock. The mix of stock options/SARs and restricted
stock/restricted stock units in each executive officers
compensation package is evaluated annually and will vary from
time to time, as the Committee deems necessary to achieve a
balance between incentive compensation, through stock
options/SARs, and retention-directed compensation, through
restricted stock/restricted stock units.
Restricted stock/restricted stock unit grants generally vest
five years after the grant date, requiring the individual
receiving the grant to remain with EOG for five years in order
to receive any value from this component of his compensation. If
the Committee determines that an executive officer does not have
an unvested value in restricted stock/restricted stock units
sufficient to provide an incentive to remain at EOG, and if the
Committee has determined that the individual should receive
additional equity-based compensation, then the Committee will
typically grant more compensation in restricted stock/restricted
stock units than in stock options/SARs.
Additionally, the Committee uses post-termination compensation
and benefits as a significant component of the compensation
packages for our Named Officers to reward each executive officer
for his service to EOG on a long-term basis, to be competitive
among peer companies from a recruiting and retention standpoint
and to shift the focus of each executive officer to the
day-to-day
operations of EOG rather than job security concerns.
Consistent with the objectives described above, the compensation
package of our CEO and the other Named Officers consists of the
following components:
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Base Salary
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Bonus Cash (Non-Equity Incentive) and
Restricted Stock/Restricted Stock Units (Equity
Incentive)
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Stock Options/SARs
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Restricted Stock/Restricted Stock Units
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Post-Termination Compensation and Benefits
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Other Compensation and Benefits
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A more detailed discussion of each component of our compensation
program is provided below. The Committee does not use any
formulas to determine the amount of each component to be paid or
delivered. Rather, each component of our compensation program is
reviewed individually relative to the objectives of that
component. In addition, the Committee reviews the aggregate of
annual base salary and non-equity incentives and compares such
amounts to that of our peer companies.
The Committee also annually compares each Named Officers
total realized compensation, including stock option/SAR gains
and the value realized on restricted stock/restricted stock unit
vestings relative to three-year
16
stockholder returns, to that of similarly situated executive
officers at our peer companies to confirm that the size of the
annual stock option/SAR and restricted stock/restricted stock
unit grants is appropriate. Moreover, depending upon
availability of
up-to-date
publications, the Committee also considers published market
analyses and rankings in connection with its analysis of our
CEOs compensation package to aid in determining if his
compensation package is delivering rewards commensurate with our
stock performance. In 2009, the only published market analysis
considered by the Committee in addition to the peer group
compensation data compiled by Equilar was Forbes Special
Report on CEO Compensation.
We currently do not have any policies in place regarding the
adjustment or recovery of compensation payments or awards in the
event that we are required to restate our financial statements.
We believe that our accounting practices are conservative and,
moreover, we have not been required to restate our financial
statements at any time since becoming an independent company in
1999. Thus, the Committee has not deemed any adjustment or
recovery policies to be necessary.
Further, we currently do not have any policies in place
regarding the adjustment of compensation payments or awards due
to amounts potentially realizable from such awards. The
Committee follows the philosophy that stock options/SARs, for
example, are granted with an incentive purpose, as compared to
the retention purpose of restricted stock/restricted stock
units. The Committee will, however, consider the amount and
value of unvested restricted stock/restricted stock units, as
further detailed below, in deciding whether to award restricted
stock/restricted stock units instead of stock options/SARs as
the equity portion of a Named Officers compensation
package.
The Committee emphasizes the retention incentives provided by
restricted stock/restricted stock unit awards when evaluating
our compensation program, and our compensation program is
weighted in favor of long-term compensation over currently paid
compensation for this reason.
In general, the compensation program used with respect to our
Named Officers corresponds to that used with respect to other
employees of EOG. Substantially all of EOGs employees are
eligible for annual bonuses and annual equity grants as well as
most of the benefits available to the Named Officers described
under Components of Our Compensation Program
Other Compensation and Benefits below. Our CEOs
compensation package, however, is more substantial than that of
most employees, including the other Named Officers. The
Committee determined that this difference was acceptable based
on its comparison of the compensation packages awarded to the
chief executive officers of EOGs peer companies. At his
request, the Committee has not increased Mr. Papas
annual base salary since 2004. Instead, the Committee has
adjusted Mr. Papas compensation by allocating a
significant portion of his compensation to restricted stock
units that vest over time, which provide additional retention
incentives. As a result, Mr. Papa has received more
restricted stock units than the other Named Officers.
Components
of Our Compensation Program
The following discussion describes the components of our
compensation program and explains why we choose to pay each
component and how we determine the amount to be paid or
delivered. Except as described above with respect to grants of
stock options/SARs and restricted stock/restricted stock units,
decisions regarding an increase or other adjustment of a
particular component will not affect decisions regarding the
other components. The Committee views each component of our
compensation program as independent, since each component was
selected for a specific purpose.
Base
Salary
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Purpose: Base salary is used to attract
talented individuals and to reward individual performance.
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How amount is determined:
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Each Named Officer, other than Messrs. Garrison and
Driggers, has entered into an employment agreement with EOG that
provides for a minimum annual base salary during the term of the
agreement. The terms of each Named Officers employment
agreement are described under Employment Agreements
below.
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17
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The amount of annual base salary that is paid above the
specified minimum is determined by the Committee based upon a
review of the annual base salaries (adjusted for market
capitalization) of similarly situated executive officers of our
peer companies.
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Moreover, the annual base salaries of the Named Officers are
adjusted from time to time to account for fluctuations in the
average annual base salaries (adjusted for market
capitalization) of similarly situated executive officers of our
peer companies, to help ensure retention and to reward
individual performance and contributions.
|
The following table presents the adjustments to the annual base
salary of each of our Named Officers granted by the Committee at
its third quarter 2009 meeting. The adjustments to the annual
base salaries of Messrs. Leiker, Thomas, Garrison and
Driggers were less (on both a dollars basis and percentage
basis) than the adjustments granted in 2008 due to the decrease
in our net income in 2009 as compared to 2008, which decrease
was primarily due to significantly lower commodity prices in
2009 as compared to 2008.
2009
Salary Adjustments
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Base Salary
|
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|
|
|
|
|
Effective
|
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|
Previous
|
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September 1,
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Percent
|
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Base Salary
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2009
|
|
Increase
|
Name
|
|
($)
|
|
($)
|
|
(%)
|
|
Mark G. Papa(a)
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|
$
|
940,000
|
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|
$
|
940,000
|
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|
|
0
|
%
|
Loren M. Leiker(b)
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|
$
|
575,000
|
|
|
$
|
590,500
|
|
|
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2.7
|
%
|
Gary L. Thomas(b)
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$
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575,000
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|
|
$
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590,500
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|
|
|
2.7
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%
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Robert K. Garrison(c)
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$
|
345,000
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|
$
|
354,300
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|
|
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2.7
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%
|
Timothy K. Driggers(d)
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$
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330,000
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|
$
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340,000
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3.0
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%
|
|
|
|
(a) |
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At Mr. Papas request, Mr. Papas annual
base salary has not been increased since 2004 in order to
prevent his annual base salary from becoming further
disproportionate in comparison to the rest of our employees.
Instead, the Committee has adjusted Mr. Papas
compensation by allocating a significant portion of his
compensation to restricted stock units that vest over time. |
|
(b) |
|
The annual base salary increases were granted to reward
Messrs. Leiker and Thomas for their outstanding
performance, as the Committee determined that
Messrs. Leiker and Thomas were doing an excellent job of
running the
day-to-day
operations of EOG. |
|
(c) |
|
The Committee determined that Mr. Garrison was performing
well in his position of Executive Vice President, Exploration
and was contributing to the efforts of Messrs. Leiker and
Thomas. |
|
(d) |
|
The Committee determined that Mr. Driggers was doing an
excellent job overseeing our accounting and finance functions. |
Bonus
Cash (Non-Equity Incentive)
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|
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Purpose: Annual bonuses are paid to
reward each individuals contribution to the achievement of
our
pre-determined
financial and operational goals. Subject to the Committees
discretion, for annual bonuses equal to or greater than $5,000,
including that of each Named Officer (except our CEO), eighty
percent (80%) of each annual bonus award is typically paid in
cash and the remaining twenty percent (20%) is typically
delivered in restricted stock or, if the employee is
62 years old or older or will reach age 62 (our normal
retirement age) prior to the vesting of the restricted stock,
restricted stock units. The bonus award is allocated in this
manner to provide an incentive to all employees, including the
Named Officers, to remain at EOG, to place additional emphasis
on our long-term strategy and to increase our focus on improving
stockholder value.
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How amount is determined:
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A bonus target, which is payable in a combination of cash and
equity, is set for each Named Officer either in such executive
officers employment agreement or by the Committee, as
applicable, and ranges from
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18
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60% to 100% of annual base salary, as detailed in the table
below. The Committee may award bonuses above target levels to
reward above-average company performance, to maintain a
competitive position among our peer companies from a recruiting
and retention viewpoint and to reward individual performance and
contributions. Alternatively, if company or individual
performance is poor, the Committee may, in its discretion, award
bonuses below target levels or not award bonuses at all.
Achievement by EOG above or below target levels generally
affects all employees bonuses.
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For 2009, the Committee determined the aggregate bonus pool to
be 125% of target, based on overall company performance. This
represents a reduction of approximately 20% from the aggregate
bonus pool target percentage for 2008 due to the decrease in our
net income in 2009 as compared to 2008, which decrease was
primarily due to significantly lower commodity prices in 2009
versus 2008. Individual bonuses and award levels were then
determined and delivered out of the pool, as described under
Compensation Committee Process above. The Committee
awarded annual bonuses totaling $4,320,659 to our Named Officers
for 2009, which included a premium applied to the equity
component of the bonuses as further detailed in the table below.
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2009
Performance Bonus Awards
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|
Bonus
|
|
Cash Component
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|
Equity Component
|
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|
|
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|
|
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|
Target
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of Bonus
|
|
of Bonus
|
|
Total Bonus Value
|
|
|
Current
|
|
(% of
|
|
|
|
(% of
|
|
|
|
Premium
|
|
After-Premium
|
|
|
|
(% of
|
Name
|
|
Salary ($)
|
|
Salary)
|
|
($)
|
|
Salary)
|
|
($)
|
|
Applied
|
|
Value ($)(a)
|
|
($)
|
|
Salary)
|
|
Mark G. Papa
|
|
$
|
940,000
|
|
|
|
100
|
%
|
|
$
|
825,000
|
|
|
|
88
|
%
|
|
$
|
825,000
|
|
|
|
1.0
|
|
|
$
|
824,969
|
|
|
$
|
1,649,969
|
|
|
|
176%
|
|
Loren M. Leiker
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|
$
|
590,500
|
|
|
|
90
|
%
|
|
$
|
540,000
|
|
|
|
91
|
%
|
|
$
|
135,000
|
|
|
|
3.0
|
|
|
$
|
404,913
|
|
|
$
|
944,913
|
|
|
|
160%
|
|
Gary L. Thomas
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|
$
|
590,500
|
|
|
|
90
|
%
|
|
$
|
540,000
|
|
|
|
91
|
%
|
|
$
|
135,000
|
|
|
|
3.0
|
|
|
$
|
404,913
|
|
|
$
|
944,913
|
|
|
|
160%
|
|
Robert K. Garrison
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|
$
|
354,300
|
|
|
|
75
|
%
|
|
$
|
268,000
|
|
|
|
76
|
%
|
|
$
|
67,000
|
|
|
|
3.0
|
|
|
$
|
200,942
|
|
|
$
|
468,942
|
|
|
|
132%
|
|
Timothy K. Driggers
|
|
$
|
340,000
|
|
|
|
60
|
%
|
|
$
|
192,000
|
|
|
|
56
|
%
|
|
$
|
48,000
|
|
|
|
2.5
|
|
|
$
|
119,922
|
|
|
$
|
311,922
|
|
|
|
92%
|
|
|
|
|
(a) |
|
Reflects value delivered in restricted stock or restricted stock
units, as the case may be (rounded down to a whole share), based
on the closing price of our Common Stock on the NYSE on the date
of grant of $94.65 per share. |
|
|
|
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|
The Committee determined that Mr. Papas 2009 bonus
should be delivered with the same allocation between cash and
restricted stock units as his 2008 bonus, but reduced in amount
as compared to his 2008 bonus, consistent with the reduction in
the aggregate bonus pool for 2009 discussed above. Therefore,
Mr. Papas bonus was delivered 50% in cash and 50% in
restricted stock units, without any premium applied to the
equity component of his bonus award.
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|
In determining the actual bonus amount to be paid to each Named
Officer, the Committee considers the Net Income Available to
Common Stockholders goal set forth in our Executive Officer
Annual Bonus Plan and described under Objectives of Our
Compensation Program Accountability for Our
Performance and Accountability for Individual Performance
above, and the amount of annual bonus paid in previous years.
Our CEO reviews with the Committee each other Named
Officers performance relative to the individual
performance goals set by our CEO, following his discussions with
the respective Named Officer.
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|
Our current Executive Officer Annual Bonus Plan was approved by
our stockholders at our 2001 annual meeting of stockholders. The
performance goal necessary for payment of bonuses to our
executive officers under our current Executive Officer Annual
Bonus Plan is the achievement of positive Net Income Available
to Common Stockholders. This performance goal was achieved in
2009. As noted above, the proposed amended and restated
Executive Officer Annual Bonus Plan clarifies that the
performance goal necessary for the payment of bonuses is
positive adjusted non-GAAP net income available to common
stockholders, as reported in our year-end earnings release. If
the proposed amended and restated Executive Officer Annual Bonus
Plan is approved at the Annual Meeting, such performance goal
will be the performance goal for the payment of bonuses for 2010
and each subsequent year during the term of the amended and
restated Executive Officer Annual Bonus Plan.
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|
The Committee may adjust the bonus payable to a Named Officer
above or below the target percentage based on its subjective
evaluation of EOGs achievement of certain pre-determined
financial and
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19
|
|
|
|
|
operational goals. The Committee may also adjust the bonus
payable to a Named Officer above or below the target percentage
based on its subjective evaluation of the individual performance
and contributions of the Named Officer. See Objectives of
Our Compensation Program Accountability for Our
Performance and Accountability for Individual Performance
above for discussion regarding these performance goals for 2009.
The bonuses paid for 2009 for each Named Officer were above
their target percentage, but lower (on both a dollars basis and
percentage basis) than the bonuses paid for 2008, consistent
with the reduction in the aggregate bonus pool for 2009
discussed above.
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|
At the first Committee meeting of each year, management
presents, and the Committee reviews and discusses, a performance
report detailing our actual financial and operational results
from the prior year and how these results compare with the
performance goals set in the prior year. The Committee considers
the achievement of these goals in its determination of the
aggregate annual bonus pool, but it has the discretion to weigh
the achievement or lack of achievement of the pre-determined
goals as the Committee deems appropriate. The only goal that
must be achieved for the payment of bonuses to our executive
officers under our current Executive Officer Annual Bonus Plan
is positive Net Income Available to Common Stockholders.
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The current maximum individual bonus for which any employee,
including any Named Officer, is eligible during any calendar
year is $2 million in cash and equity combined. This
maximum is set forth in our current Executive Officer Annual
Bonus Plan. As noted above, the proposed amended and restated
Executive Officer Annual Bonus Plan increases the cap on the
maximum individual bonus from $2 million to
$3 million. If the proposed amended and restated Executive
Officer Annual Bonus Plan is approved at the Annual Meeting,
such cap on individual bonuses will apply to the payment of
bonuses for 2010 and each subsequent year during the term of the
amended and restated Executive Officer Annual Bonus Plan.
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Bonus
Restricted Stock/Restricted Stock Units (Equity
Incentive)
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Purpose: The Committee believes that
restricted stock/restricted stock units represent an award that
must effectively be re-earned over time due to the
five-year cliff vesting of such awards, and thus
provide a retention component to our compensation program.
Employees, including the Named Officers, who voluntarily
terminate their employment with EOG lose all of the benefit the
unvested restricted stock/restricted stock unit awards would
eventually provide, and employees, including the Named Officers,
who retire prior to age 62 lose all or part of the benefit
the unvested restricted stock/restricted stock unit awards would
eventually provide (see Potential Payments Upon
Termination of Employment or Change of Control
Payments Made Upon Retirement below). The Committee also
believes that providing a portion of the annual bonus in
restricted stock/restricted stock units puts additional emphasis
on our long-term strategy and increases focus on improving
stockholder value.
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How the number of shares of restricted stock/restricted
stock units is determined:
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As discussed above, subject to the Committees discretion,
for annual bonuses equal to or greater than $5,000, including
that of each Named Officer (except our CEO), twenty percent
(20%) of each employees annual bonus award is typically
delivered in restricted stock/restricted stock units with a
premium of up to three times the amount of such equity portion.
This premium, which is determined by the Committee on a
subjective basis, is applied to mitigate the risk of illiquidity
and future declines in our stock price and to compensate for the
five-year cliff vesting period of the restricted
stock/restricted stock units. A cliff vesting period
refers to a period, at the end of which the grant award vests in
its entirety. As part of its philosophy, the Committee views
higher restricted stock/restricted stock unit premiums as
providing a greater retention incentive.
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As noted under Bonus Cash (Non-Equity
Incentive) above, as a result of the Committees
determination that Mr. Papas bonus for 2009 should be
delivered consistent with his 2008 bonus, a premium was not
applied to the restricted stock unit portion of
Mr. Papas 2009 bonus.
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The percentage of the annual bonus award to be delivered in
restricted stock/restricted stock units for ongoing retention
purposes is at the Committees sole discretion.
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20
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Terms of restricted stock/restricted stock units:
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Restricted stock/restricted stock units are awarded under our
2008 Stock Plan and, prior to May 8, 2008, the effective
date of the 2008 Stock Plan, were awarded under our 1992 Stock
Plan. All outstanding awards under the 1992 Stock Plan will
continue to be governed by the terms and conditions of the 1992
Stock Plan.
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Awards generally cliff vest five years from the date
of grant. Under our 2008 Stock Plan, except for grants to our
Canadian employees (which must vest by December 31 of the third
year following the year in which they are earned in
order to avoid adverse tax consequences to the employee), awards
of restricted stock/restricted stock units that vest more
favorably than one-third each year or that have total vesting
occurring in less than three years are limited to 5% of the
shares authorized under the 2008 Stock Plan. In addition, if we
accelerate the exercisability of any stock option/SAR or waive
the vesting period of any award under the 2008 Stock Plan other
than in connection with the death, disability or retirement of
the award holder or a change of control of EOG, then, under our
2008 Stock Plan, the shares of our Common Stock subject to such
acceleration or waiver will be deducted from the 5% limit
described above.
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Restricted stock units are granted instead of restricted stock
if the employee is 62 years old or older or will reach
age 62 prior to the grants vesting date in order to
avoid adverse tax consequences to the employee under the Code.
Age 62 is the age at which a retirement under
the terms of the 2008 Stock Plan does not require management
approval.
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Restricted stock is subject to transferability restrictions
during the applicable vesting period. Each recipient of
restricted stock otherwise has the rights of a stockholder of
EOG with respect to such shares of restricted stock during the
applicable vesting period, including the right to vote the
restricted stock. All dividends on unvested shares of restricted
stock are not paid, but are credited to such holder for the
future benefit of such holder. Upon the expiration of the
applicable vesting period, unrestricted (vested) shares are
delivered to the holder and all accumulated dividends
attributable to the vested shares are paid to the holder. Any
dividends on unvested restricted stock are forfeited in the same
manner and at the same time as the respective shares of
restricted stock to which they are attributable are forfeited.
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Restricted stock units are similar in nature to restricted
stock, except that in the case of a restricted stock unit, no
shares of our Common Stock are actually transferred to a holder
of a restricted stock unit until the expiration of the
applicable vesting period. Accordingly, a holder of a restricted
stock unit will not have the rights of a stockholder of EOG
until shares of our Common Stock are transferred to the holder.
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In accordance with the 2008 Stock Plan and the 1992 Stock Plan,
unvested restricted stock/restricted stock units shall vest or
be forfeited upon termination of employment, based on the
reasons for separation, as set forth in each grant agreement.
See Potential Payments Upon Termination of Employment or
Change of Control Table below and the footnotes thereto
for a discussion of the termination provisions with respect to
restricted stock/restricted stock unit grants made to our Named
Officers.
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Upon the date (1) a press release is issued announcing a
pending stockholder vote or other transaction which, if approved
or consummated, would constitute a change of control (as defined
in the 2008 Stock Plan or the 1992 Stock Plan, as appropriate)
of EOG or (2) a tender offer or exchange offer is publicly
announced or commenced which, if consummated, would constitute a
change of control (as defined in the 2008 Stock Plan or the 1992
Stock Plan, as appropriate) of EOG, all restrictions placed on
each unvested share of restricted stock or restricted stock unit
shall lapse. However, if the proposed amendment to the 2008
Stock Plan described above is approved at the Annual Meeting,
the restrictions placed on each unvested share of restricted
stock or restricted stock unit granted under the 2008 Stock Plan
on or after April 28, 2010 (the date of the Annual Meeting)
shall lapse only upon the effective date of the change of
control and not merely upon the announcement of the potential
change of control; this modification to the accelerated vesting
provisions under the 2008 Stock Plan would not apply to grants
made prior to April 28, 2010. See Item 3.
Approval of Amendment to the EOG Resources, Inc. 2008 Omnibus
Equity Compensation Plan below and the proposed amendment
to the 2008 Stock Plan attached to this proxy statement as
Appendix A.
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21
Stock
Options/SARs
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Purpose: Stock options
and/or SARs
are granted annually to align the Named Officers interests
with those of our stockholders and to reward our Named Officers
when stockholder value is increased.
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How the number of stock options/SARs is determined:
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Subject to the Committees discretion, we typically grant
stock options/SARs to substantially all of our employees on an
annual basis. In deciding whether to award stock options/SARs,
the Committee considers overall company performance and peer
group compensation data. Stock option/SAR grants to the Named
Officers are made from the pool approved for all employees. The
size of the pool is determined by reviewing (1) the current
stock options/SARs outstanding as a percentage of our total
shares outstanding and (2) the number of stock options/SARs
granted per year as a percentage of our total shares
outstanding, in each case versus that of our peer companies.
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The size of the individual grant to each Named Officer is
determined by reviewing the value of the grant of any stock
options/SARs and restricted stock/restricted stock units versus
the value of the total equity compensation package granted to
similarly situated executive officers by our peer companies and
by reviewing individual performance, the level of retention
incentives currently in place and previous years grants
(not including realized gains from those grants). In comparing
grants made to similarly situated executive officers by our peer
companies, the Committee considers our peers relative
stockholder returns to ours and adjusts the level of grants
accordingly.
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Under our 2008 Stock Plan, no individual shall be granted more
than 500,000 stock options or 500,000 SARs (in each case, plus
the unused limit from the prior year) in any calendar year.
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At its third quarter 2009 meeting, the Committee, in order to
provide additional retention incentives to Mr. Papa with an
equity instrument that does not involve elective decisions by
Mr. Papa to sell shares, did not award any stock options or
SARs to Mr. Papa, but instead determined that his annual
equity grant for 2009 should consist entirely of restricted
stock units. The annual equity grants for 2009 for the other
Named Officers consisted of a combination of SARs (as incentive
compensation) and restricted stock/restricted stock units (as
retention-directed compensation).
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Terms of stock options/SARs:
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Stock options/SARs are awarded under our 2008 Stock Plan and,
prior to the effective date of the 2008 Stock Plan, were awarded
under our 1992 Stock Plan. All outstanding awards under the 1992
Stock Plan will continue to be governed by the terms and
conditions of the 1992 Stock Plan.
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The Committees general practice is for stock options/SARs
granted under our 2008 Stock Plan and 1992 Stock Plan to vest in
25% increments over four years and have an exercise price equal
to the fair market value of our Common Stock on the date of
grant. Under our 2008 Stock Plan, if we accelerate the
exercisability of any stock option/SAR other than in connection
with the death, disability or retirement of the award holder or
a change of control of EOG, then, under our 2008 Stock Plan, the
shares of our Common Stock subject to such acceleration will be
deducted from the 5% limit under our 2008 Stock Plan described
above in the discussion of the terms of our restricted
stock/restricted stock units (see Bonus
Restricted Stock/Restricted Stock Units (Equity Incentive)
above).
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Stock options/SARs are generally exercisable for seven years
from the date of grant.
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Beginning with the 2006 annual grants, we began granting
stock-settled SARs (i.e., that are settled in shares of our
Common Stock) to our U.S. employees instead of traditional
non-qualified stock options to lessen the dilutive impact of the
grants on our stockholders.
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Grant dates for annual stock option/SAR grants are typically set
approximately two weeks after the date of the meeting of the
Committee to allow time to allocate the pool of stock
options/SARs to each employee. Grants for new hires and for
reward or retention purposes are made on the first business day
of the month following the date of hire or reward.
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In accordance with the 2008 Stock Plan and the 1992 Stock Plan,
unvested stock options/SARs shall vest and be fully exercisable
or be forfeited upon termination of employment, based on the
reasons for separation, as set forth in each grant agreement.
See Potential Payments Upon Termination of Employment or
Change of Control Table below and the footnotes thereto
for a discussion of the termination provisions with respect to
stock option/SAR grants made to our Named Officers.
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Upon the date (1) a press release is issued announcing a
pending stockholder vote or other transaction which, if approved
or consummated, would constitute a change of control (as defined
in the 2008 Stock Plan or the 1992 Stock Plan, as appropriate)
of EOG or (2) a tender offer or exchange offer is publicly
announced or commenced which, if consummated, would constitute a
change of control (as defined in the 2008 Stock Plan or the 1992
Stock Plan, as appropriate) of EOG, all unvested stock options
and SARs shall vest and become fully exercisable. However, if
the proposed amendment to the 2008 Stock Plan described above is
approved at the Annual Meeting, each unvested stock option or
SAR granted under the 2008 Stock Plan on or after April 28,
2010 (the date of the Annual Meeting) shall vest and become
fully exercisable only upon the effective date of the change of
control and not merely upon the announcement of the potential
change of control; this modification to the accelerated vesting
provisions under the 2008 Stock Plan would not apply to grants
made prior to April 28, 2010. See Item 3.
Approval of Amendment to the EOG Resources, Inc. 2008 Omnibus
Equity Compensation Plan below and the proposed amendment
to the 2008 Stock Plan attached to this proxy statement as
Appendix A.
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Restricted
Stock/Restricted Stock Units
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Purpose: Restricted stock/restricted
stock units are granted annually as a method of retention and to
further align the Named Officers interests with those of
our stockholders. Restricted stock/restricted stock units also
have been issued, and may be issued in the future, to the Named
Officers from time to time as an inducement to enter into
employment agreements or in recognition of significant
achievements, such as the discovery of significant natural gas
and crude oil reserves. As a retention mechanism, the Committee
will award restricted stock/restricted stock units on a merit
basis to maintain competitive compensation packages for valuable
employees, including the Named Officers.
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As noted above, the Committee believes restricted
stock/restricted stock units represent an award that must
effectively be re-earned over time due to the
five-year cliff vesting of such awards. Employees,
including the Named Officers, who voluntarily terminate their
employment with EOG lose all of the benefit the unvested
restricted stock/restricted stock unit awards would eventually
provide, and employees, including the Named Officers, who retire
prior to age 62 lose all or part of the benefit the
unvested restricted stock/restricted stock unit awards would
eventually provide (see Potential Payments Upon
Termination of Employment or Change of Control
Payments Made Upon Retirement below). Pursuant to this
philosophy, the Committee reviews annually the current amount
and value of unvested restricted stock/restricted stock units
held by each executive officer, including the Named Officers. If
the Committee determines that an executive officer does not have
an amount of unvested restricted stock/restricted stock units
sufficient to provide an incentive to remain at EOG, and if the
Committee has determined that the individual should receive
additional equity-based compensation, then the Committee will
typically grant more compensation in restricted stock/restricted
stock units than in stock options/SARs.
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How the number of shares of restricted stock/restricted
stock units is determined:
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Subject to the Committees discretion, we typically grant
restricted stock/restricted stock units to our key employees on
an annual basis. In deciding whether to award restricted
stock/restricted stock units, the Committee considers overall
company performance and peer group compensation data. Restricted
stock/restricted stock units grants to the Named Officers are
made from the pool approved for all employees. The size of the
pool is determined by reviewing (1) the current shares of
restricted stock/restricted stock units outstanding as a
percentage of our total shares outstanding and (2) the
number of shares of restricted stock/restricted stock units
granted per year as a percentage of our total shares
outstanding, in each case versus that of our peer companies.
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23
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The size of the individual grant to each Named Officer is
determined by reviewing the value of the grant of any restricted
stock/restricted stock units and stock options/SARs versus the
value of the total equity compensation package granted to
similarly situated executive officers by our peer companies and
by reviewing individual performance, the level of retention
incentives currently in place and previous years grants
(not including value realized from those grants). In comparing
grants made to similarly situated executive officers by our peer
companies, the Committee considers our peers relative
stockholder returns to ours and adjusts the level of grants
accordingly.
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In addition, the Committee reviews from time to time the
recruiting and retention conditions in the oil and gas industry
and considers if additional long-term incentive awards are
necessary for retention.
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The Committee also reviews from time to time current levels of
unvested restricted stock/restricted stock units for each of the
Named Officers to ensure that an adequate number of unvested
restricted stock/restricted stock units remain to promote the
retention purpose of the restricted stock/restricted stock unit
grants.
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As noted above, in order to provide additional retention
incentives to Mr. Papa, the Committee did not award any
stock options or SARs to Mr. Papa, but instead determined
that his annual equity grant for 2009 should consist entirely of
restricted stock units. The annual equity grants for 2009 for
the other Named Officers consisted of a combination of SARs (as
incentive compensation) and restricted stock/restricted stock
units (as retention-directed compensation).
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Terms of restricted stock/restricted stock units:
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Grant dates for annual restricted stock/restricted stock unit
grants are typically set approximately two weeks after the date
of the meeting of the Committee to allow time to allocate the
pool of restricted stock/restricted stock units to each
employee. Grants for new hires and for reward or retention
purposes are made on the first business day of the month
following the date of hire or reward.
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See Bonus Restricted Stock/Restricted Stock
Units (Equity Incentive) above for a summary of the other
terms of our restricted stock/restricted stock units.
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Post-Termination
Compensation and Benefits
The components of our post-termination compensation and
benefits, and the events that trigger those benefits, are
discussed under Potential Payments Upon Termination of
Employment or Change of Control below. Each Named Officer,
other than Mr. Garrison, has a change of control agreement
that provides benefits, in addition to our Change of Control
Severance Plan that applies to all employees, because the
Committee believes that the risk of job loss in connection with
a change of control is higher for executive officers and the
time necessary to secure appropriate new employment may be
longer. In the event of a change of control of EOG,
Mr. Garrison would be subject to the terms and conditions
of our Change of Control Severance Plan.
The Committee believes that these change of control benefits are
a retention device in a competitive market and believes that our
Named Officers should be compensated if they (1) are
involuntarily terminated (other than for cause) after a change
of control of EOG, (2) voluntarily terminate their
employment with EOG under circumstances that constitute good
reason or (3) other than with respect to Mr. Garrison,
terminate their employment with EOG for any reason during the
30-day
period beginning six months after a change of control of EOG,
which the Committee believes is sufficient time to determine if
there is potential for a long-term employment relationship with
the acquiring company.
Other
Compensation and Benefits
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To allow certain key employees, including the Named Officers, to
reduce their current compensation, thereby reducing current
taxable income, we maintain the Deferral Plan under which a
percentage of annual base salary, annual bonus and Savings Plan
refunds resulting from excess deferrals in our Savings
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24
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Plan described under Potential Payments Upon Termination
of Employment or Change of Control Payments Made
Upon Retirement Retirement Plans below may be
deferred to a later specified date.
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The Deferral Plan pays at-market mutual fund investment returns
or treats deferrals as if they were invested in our Common
Stock, based upon participant elections, and does not credit
above-market or preferential earnings. EOG does not guarantee
returns on deferrals or the principal amount of
participants deferrals.
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We may make contributions to the Deferral Plan on behalf of the
Named Officers in the event of a reduction in benefits under our
retirement plans due to either statutory
and/or plan
earnings limits or because the executive officer elects to defer
annual base salary into the Deferral Plan. These contributions
(Make-Whole Contributions) are intended to provide
the entire contribution amount to the executive officers
retirement accounts as if there were no statutory or other
limitations.
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Perquisite Allowances. Each Named
Officer, other than Messrs. Garrison and Driggers, receives
a perquisite allowance of 3% of his respective annual base
salary to be used for certain enumerated items;
Messrs. Garrison and Driggers each receive an annual
perquisite allowance of $2,600. The perquisite allowance is not
grossed up to account for income taxes. We provide a
perquisite allowance rather than pay for perquisites on an
individual basis to lessen the administrative burden of
documentation for individual items. Named Officers do not have
to submit reimbursement requests for the enumerated items and
are able to select among various perquisites as they believe
appropriate.
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Employee Stock Purchase Plan. Each
Named Officer has the opportunity to participate in the ESPP to
the same extent as all other employees. The ESPP allows
employees to purchase our Common Stock at a 15% discount to the
closing price of our Common Stock as of certain dates, with no
commission or fees, subject to certain limitations specified in
the ESPP. As discussed above, in February 2010, the Committee
and the Board approved an amendment to the ESPP to increase the
number of shares available for issuance pursuant to stock
options granted to eligible employees under the ESPP and to
extend the term of the ESPP to December 31, 2019, subject
to stockholder approval at the Annual Meeting, which the Board
recommends. Please see Item 4. Approval of Amendment
to the EOG Resources, Inc. Employee Stock Purchase Plan.
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Medical, Life, Disability and Retirement
Plans. Each Named Officer participates in the
same benefit plans available to all of our employees. We have no
executive officer medical, life or disability plans, nor do we
have supplemental retirement benefits for our executive
officers, other than the Make-Whole Contributions described
under Deferral Plan above.
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Sporting Event Tickets. We provide
tickets to local sporting events for use by all employees.
Executive officers, including the Named Officers, have first
priority over use of these tickets. These items are included in
the taxable income of the Named Officers based on their use, and
include gross ups to account for income taxes.
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Service Awards. Named Officers
participate in our service award program that recognizes years
of service provided to EOG to the same extent as all other
employees.
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Subsidized Parking. We offer subsidized
parking to all of our employees in Houston, Texas. Income is
imputed for the amount of the parking subsidy that exceeds the
maximum allowable as a nontaxable fringe benefit under the Code.
The imputed income does not include gross ups to
account for income taxes.
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Tax
and Accounting Considerations
In setting the components of our compensation program, the
Committee considers the impact of the following tax and
accounting provisions:
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Code
Section 162(m). Section 162(m) of
the Code generally disallows a tax deduction for a fiscal year
to public companies for compensation over $1 million paid
individually to the principal executive officer and the three
most highly compensated executive officers of a company (other
than the principal executive officer or the principal financial
officer), as reported in that companys most recent proxy
statement. Qualifying performance-based compensation is not
subject to the deduction limit if certain requirements are
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met. Historically, we have structured the key component of our
long-term incentive compensation in the form of stock option/SAR
grants that comply with the statute. Our Executive Officer
Annual Bonus Plan, discussed above, also complies with the
statute. The Committee is committed to preserving the
deductibility of compensation under Section 162(m) whenever
practicable, but does grant awards that are non-deductible, such
as restricted stock/restricted stock units, when it feels such
grants are in the best interests of EOG and our stockholders.
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Financial Accounting Standards Board Accounting Standards
Codification Topic 718, Stock Compensation
(ASC Topic 718). ASC Topic 718
requires a public company to measure the cost of employee
services received in exchange for an award of equity instruments
based on the grant date fair value of the award. Our equity
awards to the Named Officers are structured to comply with the
requirements of ASC Topic 718 to maintain the appropriate equity
accounting treatment.
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Code
Section 409A. Section 409A of the
Code provides that deferrals of compensation under a
nonqualified deferred compensation plan or arrangement are to be
included in an individuals current gross income to the
extent that such deferrals are not subject to a substantial risk
of forfeiture and have not previously been included in the
individuals gross income, unless certain requirements are
met. We structure our nonqualified deferred compensation plans
and arrangements, including our Deferral Plan, executive officer
employment agreements, change of control agreements, severance
plans and agreements, and incentive plans, each to the extent
they are subject to Section 409A, to be in compliance with
Section 409A. We do not currently grant any discounted
stock options to which Section 409A may apply.
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Code Section 280G and Code
Section 4999. We consider the impact of
Sections 280G and 4999 of the Code in determining our
post-termination compensation, and provide reimbursement for any
excise tax, interest and penalties incurred if payments or
benefits received due to a change of control of EOG would be
subject to an excise tax under Section 4999 of the Code.
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26
SUMMARY
COMPENSATION TABLE
The following table summarizes certain information regarding
compensation paid or accrued during 2009, 2008 and 2007 to the
Named Officers.
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Change in
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Pension Value
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and Nonqualified
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Stock
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Non-Equity
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Deferred
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Option/SAR
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Incentive Plan
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Compensation
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All Other
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Fiscal
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Salary
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Bonus
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Stock Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name and Principal Position
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Year
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($)(a)
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($)(b)
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($)(c)
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($)(d)
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($)(e)
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($)(f)
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($)(g)
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($)
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Mark G. Papa
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2009
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$
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976,154
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$
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10,525,571
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$
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825,000
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$
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386,977
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$
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12,713,702
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Chairman of the Board and
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2008
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940,000
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11,538,420
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|
|
1,000,000
|
|
|
|
|
|
|
|
395,842
|
|
|
|
13,874,262
|
|
Chief Executive Officer
|
|
|
2007
|
|
|
|
940,000
|
|
|
|
|
|
|
|
9,765,039
|
|
|
|
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
415,926
|
|
|
|
12,620,965
|
|
Loren M. Leiker
|
|
|
2009
|
|
|
$
|
602,481
|
|
|
|
|
|
|
$
|
3,661,235
|
|
|
$
|
458,475
|
|
|
$
|
540,000
|
|
|
|
|
|
|
$
|
202,603
|
|
|
$
|
5,464,794
|
|
Senior Executive Vice
|
|
|
2008
|
|
|
|
552,846
|
|
|
|
|
|
|
|
2,903,456
|
|
|
|
479,741
|
|
|
|
648,000
|
|
|
|
|
|
|
|
203,603
|
|
|
|
4,787,646
|
|
President, Exploration
|
|
|
2007
|
|
|
|
520,154
|
|
|
|
|
|
|
|
3,152,653
|
|
|
|
311,385
|
|
|
|
640,000
|
|
|
|
|
|
|
|
193,896
|
|
|
|
4,818,088
|
|
Gary L. Thomas
|
|
|
2009
|
|
|
$
|
602,481
|
|
|
|
|
|
|
$
|
3,661,235
|
|
|
$
|
458,475
|
|
|
$
|
540,000
|
|
|
|
|
|
|
$
|
200,440
|
|
|
$
|
5,462,631
|
|
Senior Executive Vice
|
|
|
2008
|
|
|
|
552,846
|
|
|
|
|
|
|
|
2,903,456
|
|
|
|
479,741
|
|
|
|
648,000
|
|
|
|
|
|
|
|
211,856
|
|
|
|
4,795,899
|
|
President, Operations
|
|
|
2007
|
|
|
|
520,154
|
|
|
|
|
|
|
|
3,152,653
|
|
|
|
311,385
|
|
|
|
640,000
|
|
|
|
|
|
|
|
195,883
|
|
|
|
4,820,075
|
|
Robert K. Garrison
|
|
|
2009
|
|
|
$
|
361,488
|
|
|
|
|
|
|
$
|
652,340
|
|
|
$
|
263,623
|
|
|
$
|
268,000
|
|
|
|
|
|
|
$
|
109,373
|
|
|
$
|
1,654,824
|
|
Executive Vice President,
|
|
|
2008
|
|
|
|
331,154
|
|
|
|
|
|
|
|
1,485,093
|
|
|
|
275,851
|
|
|
|
324,000
|
|
|
|
|
|
|
|
142,210
|
|
|
|
2,558,308
|
|
Exploration
|
|
|
2007
|
|
|
|
306,827
|
|
|
|
|
|
|
|
2,318,703
|
|
|
|
186,831
|
|
|
|
320,000
|
|
|
|
|
|
|
|
188,889
|
|
|
|
3,321,250
|
|
Timothy K. Driggers
|
|
|
2009
|
|
|
$
|
346,154
|
|
|
|
|
|
|
$
|
472,462
|
|
|
$
|
194,852
|
|
|
$
|
192,000
|
|
|
|
|
|
|
$
|
88,139
|
|
|
$
|
1,293,607
|
|
Vice President and
|
|
|
2008
|
|
|
|
316,154
|
|
|
|
|
|
|
|
318,832
|
|
|
|
203,890
|
|
|
|
232,000
|
|
|
|
|
|
|
|
72,179
|
|
|
|
1,143,055
|
|
Chief Financial Officer
|
|
|
2007
|
|
|
|
271,058
|
|
|
|
|
|
|
|
543,305
|
|
|
|
124,554
|
|
|
|
208,000
|
|
|
|
|
|
|
|
107,659
|
|
|
|
1,254,576
|
|
|
|
|
(a) |
|
Amounts represent annual base salary received by the Named
Officers. EOGs employees are paid on a bi-weekly basis and
generally receive twenty-six paychecks per calendar year. In
2009, EOG employees, including the Named Officers, received
twenty-seven paychecks due to the final payroll being processed
a day earlier due to the January 1, 2010 holiday. |
|
(b) |
|
Amounts are reported as Non-Equity Incentive Plan
Compensation since these cash amounts were awarded by the
Committee under the Executive Officer Annual Bonus Plan. These
awards are described in further detail under Compensation
Discussion and Analysis Components of Our
Compensation Program Bonus Cash
(Non-Equity Incentive) above. |
|
(c) |
|
Amounts represent the grant date fair value of restricted
stock/restricted stock unit awards under the terms of the 2008
Stock Plan based on the closing price of EOGs Common Stock
on the NYSE on the date of grant. Restricted stock/restricted
stock unit awards vest five years from the date of grant. |
|
(d) |
|
Amounts represent the grant date fair value of SAR awards under
the terms of the 2008 Stock Plan estimated using the
Hull-White II binomial option pricing model. |
|
(e) |
|
The total amount awarded for 2009 to each of the Named Officers
is as follows: Mr. Papa, $1,649,969; Mr. Leiker,
$944,913; Mr. Thomas, $944,913; Mr. Garrison,
$468,942; and Mr. Driggers, $311,922. Of the total amount
awarded, the following amount of the 2009 bonus award was
delivered in restricted stock/restricted stock units:
Mr. Papa, $824,969; Mr. Leiker, $404,913;
Mr. Thomas, $404,913; Mr. Garrison, $200,942; and
Mr. Driggers, $119,922. Since the grant of restricted
stock/restricted stock units constituting the equity component
of 2009 bonuses was made in 2010, no amount in respect of the
awards is included in the Stock Awards column for
2009 of the above table. |
|
|
|
The total amount awarded for 2008 to each of the Named Officers
is as follows: Mr. Papa, $1,999,971; Mr. Leiker,
$1,134,035; Mr. Thomas, $1,134,035; Mr. Garrison,
$567,040; and Mr. Driggers, $377,022. Of the total amount
awarded, the following amount of the 2008 bonus award was
delivered in restricted stock/restricted stock units:
Mr. Papa, $999,971; Mr. Leiker, $486,035;
Mr. Thomas, $486,035; Mr. Garrison, $243,040; and
Mr. Driggers, $145,022. Since the grant of restricted
stock/restricted stock units constituting the equity component
of 2008 bonuses was made in 2009, the grant date fair value of
the awards is included in the Stock Awards column
for 2009 of the above table. |
|
|
|
The total amount awarded for 2007 to each of the Named Officers
is as follows: Mr. Papa, $1,999,920; Mr. Leiker,
$1,120,006; Mr. Thomas, $1,120,006; Mr. Garrison,
$560,064; and Mr. Driggers, $338,111. Of the total amount
awarded, the following amount of the 2007 bonus award was
delivered in restricted stock/ |
27
|
|
|
|
|
restricted stock units: Mr. Papa, $499,920;
Mr. Leiker, $480,006; Mr. Thomas, $480,006;
Mr. Garrison, $240,064; and Mr. Driggers, $130,111.
Since the grant of restricted stock/restricted stock units for
the equity component of 2007 bonuses was made in 2008, the grant
date fair value of the awards is included in the Stock
Awards column for 2008 of the above table. |
|
(f) |
|
We maintain the Deferral Plan under which payment of annual base
salary, annual bonus and Savings Plan refunds resulting from
excess deferrals in our Savings Plan may be deferred to a later
specified date. Since the Deferral Plan does not credit
above-market or preferential earnings, no earnings have been
reported. |
|
(g) |
|
All Other Compensation for 2009 consists of: |
|
|
|
|
|
Matching contributions under the Savings Plan, our contributions
on behalf of each Named Officer to the Money Purchase Pension
Plan and our contributions on behalf of each Named Officer to
the Deferral Plan as follows: Mr. Papa, $326,423;
Mr. Leiker, $163,272; Mr. Thomas, $163,272;
Mr. Garrison, $90,673; and Mr. Driggers,
$78,023; and
|
|
|
|
Perquisites and other personal benefits consisting of
(1) cash perquisite allowances for each of the Named
Officers, including $29,285 for Mr. Papa; (2) flex
dollars provided to each of the Named Officers to be used to pay
for medical, dental, employee life and accidental death and
dismemberment coverage on a pre-tax basis; (3) use of
EOGs sporting event tickets by Messrs. Papa, Leiker,
Thomas and Garrison (including a
gross-up for
payment of taxes); (4) payments for vacation not taken in
2008 to Messrs. Papa, Leiker, Thomas and Garrison;
(5) reimbursement to Messrs. Papa and Leiker for
EOG-requested spouse travel (including a
gross-up for
payment of taxes); and (6) imputed income for each Named
Officer for the amount of our parking subsidy which exceeds the
maximum allowable as a nontaxable fringe benefit under the Code.
|
GRANTS OF
PLAN-BASED AWARDS TABLE
The following table summarizes certain information regarding
grants made to each of the Named Officers during 2009 under any
plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
Option/SAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Awards;
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards;
|
|
Number of
|
|
or Base
|
|
Grant Date
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
Estimated Future Payouts
|
|
Number of
|
|
Securities
|
|
Price of
|
|
Fair Value
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
Under Equity Incentive
|
|
Shares of
|
|
Underlying
|
|
Stock
|
|
of Stock
|
|
|
Approval
|
|
Grant
|
|
Plan Awards
|
|
Plan Awards
|
|
Stock or
|
|
Stock
|
|
Option/SAR
|
|
and Stock
|
|
|
Date
|
|
Date
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options/SARs
|
|
Awards
|
|
Option/SAR
|
Name
|
|
(a)
|
|
(b)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
(#)(c)
|
|
(#)(d)
|
|
($/Sh)
|
|
Awards($)(e)
|
|
Mark G. Papa
|
|
|
02/25/09
|
|
|
|
03/02/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.934
|
|
|
|
|
|
|
|
|
|
|
$
|
999,971
|
|
|
|
|
02/25/09
|
|
|
|
03/16/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4,614,000
|
|
|
|
|
09/02/09
|
|
|
|
09/18/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4,911,600
|
|
Loren M. Leiker
|
|
|
02/25/09
|
|
|
|
03/02/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,661
|
|
|
|
|
|
|
|
|
|
|
$
|
486,035
|
|
|
|
|
02/25/09
|
|
|
|
03/16/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
$
|
1,538,000
|
|
|
|
|
09/02/09
|
|
|
|
09/18/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
15,000
|
|
|
$
|
81.86
|
|
|
$
|
2,095,675
|
|
Gary L. Thomas
|
|
|
02/25/09
|
|
|
|
03/02/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,661
|
|
|
|
|
|
|
|
|
|
|
$
|
486,035
|
|
|
|
|
02/25/09
|
|
|
|
03/16/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
$
|
1,538,000
|
|
|
|
|
09/02/09
|
|
|
|
09/18/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
15,000
|
|
|
$
|
81.86
|
|
|
$
|
2,095,675
|
|
Robert K. Garrison
|
|
|
02/25/09
|
|
|
|
03/02/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,331
|
|
|
|
|
|
|
|
|
|
|
$
|
243,040
|
|
|
|
|
09/02/09
|
|
|
|
09/18/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
8,625
|
|
|
$
|
81.86
|
|
|
$
|
672,923
|
|
Timothy K. Driggers
|
|
|
02/25/09
|
|
|
|
03/02/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,181
|
|
|
|
|
|
|
|
|
|
|
$
|
145,022
|
|
|
|
|
09/02/09
|
|
|
|
09/18/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
6,375
|
|
|
$
|
81.86
|
|
|
$
|
522,292
|
|
|
|
|
(a), (b) |
|
Grant dates are set approximately two weeks after the date the
grants are approved by the Committee to allow time for
individual managers to allocate the approved pool to employees.
The Committee determines the grant amount for each Named Officer
to be granted on the same future grant date as other employees. |
|
|
|
The March 16, 2009 grants of restricted stock/restricted
stock units to Messrs. Papa, Leiker and Thomas were
approved on February 25, 2009 as an inducement to sign the
extension of their respective employment agreements, and were
effective on the date each said extension was executed,
March 16, 2009. |
28
|
|
|
(c) |
|
All restricted stock/restricted stock units granted
March 2, 2009 were in connection with the annual bonus for
2008. The bonus target (as a percentage of the Named
Officers annual base salary) for 2008 for each Named
Officer was as follows: Mr. Papa, 100%; Mr. Leiker,
90%; Mr. Thomas, 90%; Mr. Garrison, 75%; and
Mr. Driggers, 60%. The premium applied to the equity
component of each Named Officers bonus for 2008 was as
follows: Mr. Papa, 1.0; Mr. Leiker, 3.0;
Mr. Thomas, 3.0; Mr. Garrison, 3.0; and
Mr. Driggers, 2.5. As a result of a portion of each Named
Officers bonus for 2008 being delivered in restricted
stock/restricted stock units, the Named Officers received the
following shares of restricted stock/restricted stock units:
Mr. Papa, 21,934; Mr. Leiker, 3,554; Mr. Thomas,
3,554; Mr. Garrison, 1,777; and Mr. Driggers, 1,273.
As a result of the application of the premium to the equity
component of each Named Officers bonus for 2008, the Named
Officers received the following additional shares of restricted
stock/restricted stock units: Mr. Papa, 0; Mr. Leiker,
7,107; Mr. Thomas, 7,107; Mr. Garrison, 3,554; and
Mr. Driggers, 1,908. For a discussion of the restricted
stock/restricted stock units delivered as a portion of each
Named Officers bonus for 2008 and the application of, and
our rationale for, the premium applied to the equity component
of annual bonuses, see Compensation Discussion and
Analysis Components of Our Compensation
Program Bonus Restricted
Stock/Restricted Stock Units (Equity Incentive) above. |
|
|
|
The grant date fair value of the restricted stock/restricted
stock units granted March 2, 2009 plus the 2008 Non-Equity
Incentive Plan Compensation in the Summary Compensation
Table above represent the total value delivered for the
2008 annual bonus for each Named Officer. The current maximum
individual bonus (cash and equity combined) that any employee,
including the Named Officers, may receive annually is
$2 million. This cap is set forth in the current Executive
Officer Annual Bonus Plan. Restricted stock/restricted stock
units vest five years from the date of grant. For further
information, see Compensation Discussion and
Analysis Components of Our Compensation
Program Bonus Restricted
Stock/Restricted Stock Units (Equity Incentive)
Terms of restricted stock/restricted stock units above. |
|
(d) |
|
SARs awarded to the other Named Officers vest at the cumulative
rate of 25% per year, commencing on the first anniversary of the
date of grant. |
|
(e) |
|
The grant date fair value for the restricted stock/restricted
stock units granted (1) on March 2, 2009 was $45.59
per share, (2) on March 16, 2009 was $61.52 per share
and (3) on September 18, 2009 was $81.86 per share.
The grant date fair value of each stock option/SAR grant is
estimated using the Hull-White II binomial option pricing
model. We used the following assumptions for the SARs awarded to
the Named Officers on September 18, 2009: a dividend yield
of 0.7%, expected volatility of 41.25%, a risk-free interest
rate of 1.45% and a weighted-average expected life of
5.5 years. Based on the Hull-White II binomial option
pricing model, using the above assumptions, the value of the
SARs granted to the Named Officers was $30.565 per share. The
actual value, if any, a recipient may realize will depend on the
excess of our stock price over the exercise price on the date
the SARs are exercised. |
EMPLOYMENT
AGREEMENTS
Messrs. Papa, Leiker and Thomas have each entered into an
employment agreement with us. The material terms of the
employment agreements are described below, other than the
provisions regarding termination and compensation upon
termination, which are described under Potential Payments
Upon Termination of Employment or Change of Control below.
Mr. Papa, under his employment agreement effective
June 15, 2005, currently serves as our Chairman of the
Board and CEO at a minimum annual base salary of $940,000 and a
target annual bonus of 100% of his annual base salary. The bonus
may be delivered in a combination of cash
and/or
equity awards, as determined by the Committee. As a long-term
incentive, Mr. Papa is also eligible to receive grants
under our 2008 Stock Plan or such other equity compensation
plans established from time to time by us, consistent with
similarly situated executive officers. Effective March 16,
2009, the term of Mr. Papas employment agreement was
extended until May 31, 2012. As an inducement to sign the
extension, Mr. Papa was granted 75,000 restricted stock
units under our 2008 Stock Plan. After May 31, 2012, his
employment agreement will be automatically renewed annually for
successive one-year terms unless we or Mr. Papa provides a
120-day
notice of intent not to renew. In the event Mr. Papas
employment
29
agreement is not renewed pursuant to such notice and he remains
employed by EOG beyond the expiration of the term of his
employment agreement, including any renewals,
Mr. Papas employment shall convert to a
month-to-month
relationship terminable at any time by either EOG or
Mr. Papa for any reason.
Mr. Leiker, under his employment agreement effective
June 15, 2005, currently serves as our Senior Executive
Vice President, Exploration at an annual base salary of $590,500
and a target annual bonus of 90% of his annual base salary. The
bonus may be delivered in a combination of cash
and/or
equity awards, as determined by the Committee. As a long-term
incentive, Mr. Leiker is also eligible to receive grants
under our 2008 Stock Plan or such other equity compensation
plans established from time to time by us, consistent with
similarly situated executive officers. Effective March 16,
2009, the term of Mr. Leikers employment agreement
was extended until May 31, 2012 and the minimum annual base
salary set forth in his employment agreement was increased from
$445,000 to $575,000 (Mr. Leikers then-current annual
base salary). As an inducement to sign the extension,
Mr. Leiker was granted 25,000 shares of restricted
stock under our 2008 Stock Plan. After May 31, 2012, his
employment agreement will be automatically renewed annually for
successive one-year terms unless we or Mr. Leiker provides
a 120-day
notice of intent not to renew. In the event
Mr. Leikers employment agreement is not renewed
pursuant to such notice and he remains employed by EOG beyond
the expiration of the term of his employment agreement,
including any renewals, Mr. Leikers employment shall
convert to a
month-to-month
relationship terminable at any time by either EOG or
Mr. Leiker for any reason.
Mr. Thomas, under his employment agreement effective
June 15, 2005, currently serves as our Senior Executive
Vice President, Operations at an annual base salary of $590,500
and a target annual bonus of 90% of his annual base salary. The
bonus may be delivered in a combination of cash
and/or
equity awards, as determined by the Committee. As a long-term
incentive, Mr. Thomas is also eligible to receive grants
under our 2008 Stock Plan or such other equity compensation
plans established from time to time by us, consistent with
similarly situated executive officers. Effective March 16,
2009, the term of Mr. Thomass employment agreement
was extended until May 31, 2012 and the minimum annual base
salary set forth in his employment agreement was increased from
$445,000 to $575,000 (Mr. Thomass then-current annual
base salary). As an inducement to sign the extension,
Mr. Thomas was granted 25,000 restricted stock units under
our 2008 Stock Plan. After May 31, 2012, his employment
agreement will be automatically renewed annually for successive
one-year terms unless we or Mr. Thomas provides a
120-day
notice of intent not to renew. In the event
Mr. Thomass employment agreement is not renewed
pursuant to such notice and he remains employed by EOG beyond
the expiration of the term of his employment agreement,
including any renewals, Mr. Thomass employment shall
convert to a
month-to-month
relationship terminable at any time by either EOG or
Mr. Thomas for any reason.
The employment agreements of each of Messrs. Papa, Leiker
and Thomas contain confidentiality obligations that generally
specify, among other things, that all information, ideas,
concepts, improvements, discoveries and inventions that are
conceived, made, developed or acquired by the Named Officer
during their respective employment at EOG that relate to our
business, products or services are our sole and exclusive
property. In addition, as part of the consideration for the
compensation and benefits payable under the employment
agreements, the employment agreements each provide that the
Named Officer shall not compete with EOG in certain geographic
areas and markets for a period that extends until the earlier of
(1) the expiration of the term of the employment agreement
or (2) one year after the Named Officers employment
is terminated, other than as a result of a voluntary termination
by the Named Officer. If the Named Officer voluntarily
terminates his employment during the term of his employment
agreement, then his non-competition obligations extend for one
year following the termination. The extension to
Mr. Papas employment agreement described above also
contains an early termination provision that allows
Mr. Papa to retire at any time after he reaches
age 65, with the consent of our Board (which retirement
would be considered a voluntary termination under his employment
agreement), and that further provides, in such case, that his
non-competition obligations to EOG under his employment
agreement would expire immediately and we would have no further
obligations to Mr. Papa under his employment agreement.
30
MATERIAL
TERMS OF PLAN-BASED AWARDS
The vesting schedule of all stock options/SARs and restricted
stock/restricted stock units awarded to the Named Officers is
described under footnotes (c) and (d) to the
Grants of Plan-Based Awards Table above. In
accordance with the terms of our 2008 Stock Plan and 1992 Stock
Plan, no dividends or other distributions will be delivered on
unvested shares of restricted stock/restricted stock units, but
the value of any dividends or distributions declared on our
Common Stock will be credited by us to the account of the Named
Officer (with no interest) with respect to those unvested shares
or units. When a portion of the restricted stock/restricted
stock units vests, we will deliver the accumulated dividends or
distributions attributable to such portion to the respective
Named Officer in cash. The value of dividends and distributions
are forfeited under the same circumstances that the restricted
stock/restricted stock units are forfeited, as described under
Compensation Discussion and Analysis
Components of Our Compensation Program
Bonus Restricted Stock/Restricted Stock Units
(Equity Incentive) above. At no time during 2009 were any
outstanding awards re-priced or otherwise modified. Moreover,
there are no performance-based or market-based conditions
applicable to any of the awards described above, except to the
extent that restricted stock/restricted stock units are granted
as equity incentive compensation under the Executive Officer
Annual Bonus Plan.
SALARY
AND BONUS IN PROPORTION TO TOTAL COMPENSATION
The Committee reviews the aggregate of the annual base salary
and annual bonus for each of our Named Officers and compares
such totals to the corresponding amounts paid to similarly
situated executive officers of our peer companies (taking into
consideration their market capitalization compared to EOGs
market capitalization). Under our compensation program, the
value of the combined annual base salary and annual bonus for
each of our Named Officers is approximately 21% to 51% of their
total respective compensation, which is generally less than the
corresponding percentages of annual base salary and annual bonus
compensation paid to similarly situated executive officers of a
majority of our peer companies. The Committee has determined
that this weighted proportion is in the best interests of EOG
and our stockholders because it is consistent with the
Committees belief that our compensation program should be
tied in part to our stock price performance so as to align our
Named Officers interests with those of our stockholders.
31
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END TABLE
The following table summarizes certain information regarding
unexercised stock options/SARs and unvested shares of restricted
stock/restricted stock units outstanding as of December 31,
2009 (based on the closing price of our Common Stock on the NYSE
of $97.30 per share on such date) for each of the Named Officers.
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Stock Option/SAR Awards
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Stock Awards
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Equity
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Equity
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Incentive
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Equity
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Incentive
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Plan
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Incentive
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Plan Awards:
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Awards:
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Plan Awards:
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Market or
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Number of
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Number of
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Payout Value
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Number of
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Number of
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Securities
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Unearned
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of Unearned
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Securities
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Securities
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Underlying
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Number of
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Market Value
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Shares, Units
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Shares, Units
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Underlying
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Underlying
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Unexercised
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Stock
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Shares or
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of Shares or
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or Other
|
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or Other
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Unexercised
|
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Unexercised
|
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Unearned
|
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Option/SAR
|
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Stock
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Units of Stock
|
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Units of Stock
|
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Rights that
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Rights that
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Stock
|
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Stock
|
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Stock
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Exercise
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Option/SAR
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that Have
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that Have
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Have Not
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Have Not
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Options/SARs
|
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Options/SARs
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Options/SARs
|
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Price
|
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Expiration
|
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Not Vested
|
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Not Vested
|
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Vested
|
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Vested
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Name
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Exercisable (#)
|
|
Unexercisable (#)
|
|
(#)
|
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($)
|
|
Date
|
|
(#)
|
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($)
|
|
(#)
|
|
($)
|
|
Mark G. Papa
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300,000
|
|
|
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|
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|
|
|
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$
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19.50
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08/06/13
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438,780
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(e)
|
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$
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42,693,294
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|
|
|
|
|
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|
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|
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|
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165,000
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|
|
|
|
|
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|
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$
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62.98
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|
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08/15/12
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|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
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200,000
|
|
|
|
|
|
|
|
|
|
|
$
|
60.99
|
|
|
|
09/20/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loren M. Leiker
|
|
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20,000
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|
|
|
|
|
|
|
|
|
|
$
|
17.68
|
|
|
|
07/31/11
|
|
|
|
139,085
|
(f)
|
|
$
|
13,532,971
|
|
|
|
|
|
|
|
|
|
|
|
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48,000
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|
|
|
|
|
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|
|
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$
|
16.83
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|
08/07/12
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|
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|
|
|
|
|
|
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|
|
|
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|
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80,000
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|
|
|
|
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|
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|
|
$
|
19.50
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|
|
08/06/13
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|
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55,000
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|
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|
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$
|
62.98
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|
08/15/12
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|
|
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48,750
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|
|
|
16,250
|
(a)
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|
|
|
$
|
60.99
|
|
|
|
09/20/13
|
|
|
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|
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|
|
|
|
|
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|
|
|
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6,250
|
|
|
|
6,250
|
(b)
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$
|
73.83
|
|
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09/20/14
|
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|
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|
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3,750
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11,250
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(c)
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$
|
88.81
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09/17/15
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15,000
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(d)
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$
|
81.86
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09/18/16
|
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Gary L. Thomas
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48,000
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|
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$
|
16.41
|
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|
08/08/10
|
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139,085
|
(f)
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$
|
13,532,971
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100,000
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$
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17.68
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07/31/11
|
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120,000
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$
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16.83
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08/07/12
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100,000
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$
|
19.50
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|
08/06/13
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|
|
|
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|
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|
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|
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|
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55,000
|
|
|
|
|
|
|
|
|
|
|
$
|
62.98
|
|
|
|
08/15/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,750
|
|
|
|
16,250
|
(a)
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|
|
|
|
|
$
|
60.99
|
|
|
|
09/20/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,250
|
|
|
|
6,250
|
(b)
|
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|
|
|
$
|
73.83
|
|
|
|
09/20/14
|
|
|
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|
|
|
|
|
|
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|
|
|
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|
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|
|
|
3,750
|
|
|
|
11,250
|
(c)
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|
|
|
|
|
$
|
88.81
|
|
|
|
09/17/15
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(d)
|
|
|
|
|
|
$
|
81.86
|
|
|
|
09/18/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert K. Garrison
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
17.68
|
|
|
|
07/31/11
|
|
|
|
67,820
|
(g)
|
|
$
|
6,598,886
|
|
|
|
|
|
|
|
|
|
|
|
|
34,000
|
|
|
|
|
|
|
|
|
|
|
$
|
17.54
|
|
|
|
08/07/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,000
|
|
|
|
|
|
|
|
|
|
|
$
|
20.44
|
|
|
|
08/06/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
$
|
62.98
|
|
|
|
08/15/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
6,250
|
(a)
|
|
|
|
|
|
$
|
60.99
|
|
|
|
09/20/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
|
3,750
|
(b)
|
|
|
|
|
|
$
|
73.83
|
|
|
|
09/20/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,156
|
|
|
|
6,469
|
(c)
|
|
|
|
|
|
$
|
88.81
|
|
|
|
09/17/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,625
|
(d)
|
|
|
|
|
|
$
|
81.86
|
|
|
|
09/18/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy K. Driggers
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
$
|
62.98
|
|
|
|
08/15/12
|
|
|
|
23,078
|
(h)
|
|
$
|
2,245,489
|
|
|
|
|
|
|
|
|
|
|
|
|
11,250
|
|
|
|
3,750
|
(a)
|
|
|
|
|
|
$
|
60.99
|
|
|
|
09/20/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500
|
|
|
|
2,500
|
(b)
|
|
|
|
|
|
$
|
73.83
|
|
|
|
09/20/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,593
|
|
|
|
4,782
|
(c)
|
|
|
|
|
|
$
|
88.81
|
|
|
|
09/17/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,375
|
(d)
|
|
|
|
|
|
$
|
81.86
|
|
|
|
09/18/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
The unexercisable stock options/SARs vest one hundred percent
(100%) September 20, 2010. |
|
(b) |
|
The unexercisable stock options/SARs vest fifty percent (50%)
September 20, 2010 and fifty percent (50%)
September 20, 2011. |
|
(c) |
|
The unexercisable stock options/SARs vest in one-third
increments on September 17, 2010, September 17, 2011
and September 17, 2012. |
32
|
|
|
(d) |
|
The unexercisable stock options/SARs vest in twenty-five percent
(25%) increments on September 18, 2010, September 18,
2011, September 18, 2012 and September 18, 2013. |
|
(e) |
|
The unvested restricted stock units vest as follows:
24,857 units on March 11, 2010; 14,981 units on
March 8, 2011; 75,000 units on February 26, 2012;
12,916 units on March 6, 2012; 50,000 units on
September 20, 2012; 4,092 units on March 3, 2013;
50,000 units on April 17, 2013; 50,000 units on
September 17, 2013; 21,934 units on March 2,
2014; 75,000 units on March 16, 2014; and
60,000 units on September 18, 2014. Of the unvested
units, 78,780 units were granted in connection with annual
bonuses. |
|
(f) |
|
The unvested restricted stock/restricted stock units vest as
follows: 7,943 units on March 11, 2010;
6,421 units on March 8, 2011; 30,000 shares/units
on February 26, 2012; 6,798 shares/units on
March 6, 2012; 8,333 shares/units on
September 20, 2012; 3,929 shares/units on
March 3, 2013; 15,000 shares/units on April 17,
2013; 5,000 shares/units on September 17, 2013;
10,661 shares/units on March 2, 2014;
25,000 shares/units on March 16, 2014; and
20,000 shares/units on September 18, 2014. Of the
unvested shares/units, 35,752 shares/units were granted in
connection with annual bonuses. |
|
(g) |
|
The unvested restricted stock/restricted stock units vest as
follows: 4,586 units on March 11, 2010;
1,000 shares on August 15, 2010; 2,890 units on
March 8, 2011; 3,500 shares on September 20,
2011; 25,000 shares on February 26, 2012;
3,173 shares on March 6, 2012; 5,000 shares on
September 20, 2012; 1,965 shares on March 3,
2013; 7,500 shares on April 17, 2013;
2,875 shares on September 17, 2013; 5,331 shares
on March 2, 2014; and 5,000 shares on
September 18, 2014. Of the unvested shares/units,
17,945 shares/units were granted in connection with annual
bonuses. |
|
(h) |
|
The unvested restricted stock/restricted stock units vest as
follows: 1,071 units on March 11, 2010;
1,500 shares on August 15, 2010; 1,124 units on
March 8, 2011; 1,500 shares on December 4, 2011;
1,179 shares on March 6, 2012; 3,000 shares on
July 1, 2012; 3,333 shares on September 20, 2012;
1,065 shares on March 3, 2013; 2,125 shares on
September 17, 2013; 3,181 shares on March 2,
2014; and 4,000 shares on September 18, 2014. Of the
unvested shares/units, 7,620 shares/units were granted in
connection with annual bonuses. |
STOCK
OPTION/SAR EXERCISES AND
RESTRICTED STOCK/RESTRICTED STOCK UNITS VESTED TABLE
The following table summarizes certain information regarding
exercises of stock options/SARs and vesting of restricted
stock/restricted stock units during 2009 for each of the Named
Officers.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock/
|
|
|
Stock Option/SAR Awards
|
|
Restricted Stock Unit Awards
|
|
|
Number of Shares
|
|
|
|
Number of Shares
|
|
|
|
|
Acquired on
|
|
Value Realized
|
|
Acquired on
|
|
Value Realized
|
Name
|
|
Exercise (#)
|
|
on Exercise ($)
|
|
Vesting (#)
|
|
on Vesting ($)
|
|
Mark G. Papa
|
|
|
|
|
|
|
|
|
|
|
38,020
|
|
|
$
|
2,027,607
|
|
Loren M. Leiker
|
|
|
|
|
|
|
|
|
|
|
10,140
|
|
|
$
|
540,766
|
|
Gary L. Thomas
|
|
|
|
|
|
|
|
|
|
|
10,140
|
|
|
$
|
540,766
|
|
Robert K. Garrison
|
|
|
|
|
|
|
|
|
|
|
14,420
|
|
|
$
|
862,299
|
|
Timothy K. Driggers
|
|
|
|
|
|
|
|
|
|
|
3,846
|
|
|
$
|
251,747
|
|
PENSION
BENEFITS
We currently have no defined benefit pension plans covering any
of the Named Officers.
33
NONQUALIFIED
DEFERRED COMPENSATION TABLE
The following table provides certain information regarding the
deferral of compensation by our Named Officers under our
Deferral Plan. The Deferral Plan is our only defined
contribution plan that provides for the deferral of compensation
on a basis that is not tax-qualified.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
Executive
|
|
Registrant
|
|
Earnings
|
|
Aggregate
|
|
|
|
|
Contributions
|
|
Contributions
|
|
(Loss) in
|
|
Withdrawals/
|
|
Aggregate
|
|
|
in 2009
|
|
in 2009
|
|
2009
|
|
Distributions
|
|
Balance at 2009
|
Name
|
|
($)(a)
|
|
($)(b)
|
|
($)(c)
|
|
($)
|
|
Year End ($)(d)
|
|
Mark G. Papa
|
|
$
|
45,000
|
|
|
$
|
290,500
|
|
|
$
|
761,089
|
|
|
|
|
|
|
$
|
3,826,947
|
|
Loren M. Leiker
|
|
|
|
|
|
$
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124,427
|
|
|
$
|
660,828
|
|
|
|
|
|
|
$
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2,025,827
|
|
Gary L. Thomas
|
|
$
|
30,000
|
|
|
$
|
124,427
|
|
|
$
|
604,133
|
|
|
|
|
|
|
$
|
1,755,432
|
|
Robert K. Garrison
|
|
|
|
|
|
$
|
55,173
|
|
|
$
|
395,807
|
|
|
|
|
|
|
$
|
1,334,035
|
|
Timothy K. Driggers
|
|
$
|
13,000
|
|
|
$
|
29,400
|
|
|
$
|
44,682
|
|
|
|
|
|
|
$
|
250,656
|
|
|
|
|
(a) |
|
One hundred percent (100%) of these amounts are reported in the
Salary column (for 2009) of the Summary
Compensation Table above. The amount invested in a phantom
stock account for each of the Named Officers is: Mr. Papa,
$0; Mr. Leiker, $0; Mr. Thomas, $30,000;
Mr. Garrison, $0; and Mr. Driggers, $0. |
|
(b) |
|
One hundred percent (100%) of these amounts are reported in the
All Other Compensation column (for 2008) of the
Summary Compensation Table above. The amount
invested in a phantom stock account for each of the Named
Officers is: Mr. Papa, $0; Mr. Leiker, $0;
Mr. Thomas, $124,427; Mr. Garrison, $0; and
Mr. Driggers, $0. |
|
(c) |
|
Amounts included in this column do not include above-market or
preferential earnings (of which there were none) and,
accordingly, these amounts are not included in the Change
in Pension Value and Nonqualified Deferred Compensation
Earnings column (for 2009) of the Summary
Compensation Table above. |
|
(d) |
|
The amount of the aggregate balance as of December 31, 2009
that has been contributed by the Named Officer and shown as
compensation in the Summary Compensation Table for
previous years for each of the Named Officers is: Mr. Papa,
$996,375; Mr. Leiker, $1,041,875; Mr. Thomas,
$874,363; Mr. Garrison, $784,185; and Mr. Driggers,
$139,610. The amount of the aggregate balance as of
December 31, 2009 that has been contributed by EOG and
shown as compensation in the Summary Compensation
Table for previous years for each of the Named Officers
is: Mr. Papa, $1,765,751; Mr. Leiker, $677,970;
Mr. Thomas, $703,397; Mr. Garrison $222,210; and
Mr. Driggers, $81,784. The amount of the aggregate balance
as of December 31, 2009 invested in a phantom stock account
and shown as compensation in the Summary Compensation
Table for previous years for each of the Named Officers
is: Mr. Papa, $925,917 (9,516 shares);
Mr. Leiker, $0; Mr. Thomas, $397,276
(4,083 shares); Mr. Garrison, $404,212
(4,154 shares); and Mr. Driggers, $0. |
Under our Deferral Plan, each Named Officer can elect to defer
up to 50% of his annual base salary, up to 100% of the cash
portion of his annual bonus award
and/or
Savings Plan refunds resulting from excess deferrals in our
Savings Plan. Deferral elections are irrevocable and generally
must be made prior to the first day of the calendar year during
which the compensation would be earned.
Deferrals are invested into either (1) a flexible deferral
account, in which deferrals are treated as if they had been
invested into various investment funds as directed by the
participant and in which returns vary based on the performance
of the funds; or (2) a phantom stock account, in which
deferrals are treated as if they had purchased our Common Stock
at the closing price on the date such deferred compensation
would otherwise had been paid, and include reinvestment of
dividends.
Participants in the Deferral Plan may elect a lump-sum payout or
annual installment payout for up to 15 years following
their separation from service, disability or death. If a
participant elects to defer funds into a phantom stock account,
distributions will be made in shares of our Common Stock. A
participant may also elect to receive his account balance in a
lump sum upon a change of control of EOG (as defined in the
Deferral Plan).
34
A participant may receive an in-service distribution in the
following ways:
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|
|
|
|
through a special deferral account, under which distribution of
all or a part of a participants account balance can be
made over a period of one to five years beginning after the
first anniversary of the election; or
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|
|
|
through a hardship distribution, in which the Board committee
responsible for administering the plan (in its sole discretion)
grants the participants request for a distribution based
on unforeseeable circumstances causing urgent and severe
financial hardship for the participant.
|
POTENTIAL
PAYMENTS UPON TERMINATION OF EMPLOYMENT OR CHANGE OF
CONTROL
If a Named Officer is terminated other than as a result of a
change of control of EOG, the terms of his employment agreement,
if any, described below would govern any payments received. As
noted above, each of our Named Officers, other than
Messrs. Garrison and Driggers, has entered into an
employment agreement with us.
If a change of control of EOG occurs and a Named Officer is
terminated, the terms of each Named Officers Amended and
Restated Change of Control Agreement, along with our retention
bonus plan described under Payments Made Upon a Change of
Control Retention Bonus Plan below, govern any
payments received. Each of our Named Officers, other than
Mr. Garrison, has entered into an Amended and Restated
Change of Control Agreement with us. In a change of control
event, Mr. Garrison would be subject to the terms and
conditions of our Change of Control Severance Plan, which is
applicable to all of our employees.
Payments
Made Upon Termination Under Employment Agreements
The employment agreement for each Named Officer who has entered
into an employment agreement with EOG is generally described
under Employment Agreements above. The following
describes payments to be received under the employment
agreements in the event of termination of employment for the
specified reason. In each case, the Named Officer shall remain
entitled to receive any compensation and benefits earned and
accrued as of the termination date and as provided in the
applicable plan document. In accordance with the 2008 Stock Plan
and the 1992 Stock Plan, upon termination of employment,
unvested restricted stock/restricted stock units shall vest or
be forfeited, and unvested stock options/SARs shall vest and be
fully exercisable or be forfeited, based on the reasons for
termination, as set forth in each grant agreement.
Involuntary
Termination
Under each employment agreement, the following constitute an
involuntary termination:
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with respect to the CEO, termination at the discretion of the
Board, and with respect to the other Named Officers, termination
at the discretion of management, in each case for any reason
other than for cause and prior to the expiration of the term of
the agreement; or
|
|
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|
termination by the Named Officer as a result of a material
breach of the agreement by EOG that remains uncorrected for
30 days following written notice of such breach.
|
The Potential Payments Upon Termination of Employment or
Change of Control Table below describes payments to be
made under the employment agreements of Messrs. Papa,
Leiker and Thomas.
Voluntary
Termination
Each Named Officer has the right under his employment agreement
to terminate the agreement prior to the end of the term for any
reason. If the Named Officer chooses to terminate his employment
voluntarily, he will be entitled only to annual base salary and
any other compensation and benefits earned and payable through
the termination date. He will not be entitled to any bonus or
other incentive compensation not yet paid as of the termination
date.
35
Cause
If the Named Officer is terminated for cause, as determined by
the Board, he will be entitled only to annual base salary and
any other compensation and benefits earned and payable through
the termination date. He will not be entitled to any bonus or
other incentive compensation not yet paid as of the termination
date.
Incapacity
or Death
If the Named Officer becomes incapacitated or dies, he or his
estate, as the case may be, will be entitled only to annual base
salary and benefits earned and payable through the termination
date. He or his estate, as the case may be, will not be entitled
to any bonus or other incentive compensation not yet paid as of
the termination date. He or his estate, as the case may be, will
also receive benefits in accordance with any of our applicable
disability or life insurance plans to the same extent as any of
our employees.
Payments
Made Upon Termination Under EOG Resources, Inc. Severance Pay
Plan
Messrs. Garrison and Driggers are subject to the terms and
conditions of the EOG Resources, Inc. Severance Pay Plan
(Severance Pay Plan). The following describes
payments to be received under the Severance Pay Plan in the
event of termination of employment for the specified reason. In
accordance with the 2008 Stock Plan and the 1992 Stock Plan,
upon termination of employment, unvested restricted
stock/restricted stock units shall vest or be forfeited, and
unvested stock options/SARs shall vest and be fully exercisable
or be forfeited, based on the reasons for termination, as set
forth in each grant agreement.
Involuntary
Termination
Unless otherwise declared ineligible, employees who are
terminated by EOG other than for cause may receive lump-sum
severance payments. The amount of the lump-sum severance payment
will be determined by management, but may not exceed
52 weeks of base pay.
Voluntary
Termination
An employee who voluntarily terminates employment with EOG is
not eligible for severance pay.
Cause
Employees terminated for cause are not eligible for severance
pay. However, an employee may generally receive two weeks of
annual base salary if the employee returns to EOG a properly
executed waiver and release of claims following termination.
Incapacity
or Death
Termination of employment by reason of incapacity or death is
not covered by the Severance Pay Plan.
Payments
Made Upon Retirement
Retirement
at or After Age 62
Retirement is not addressed in any Named Officers
employment agreement. Thus, in the event a Named Officer retires
at or after age 62, he would be entitled to the same
benefits as any other of our retiring employees, including
benefits under our plans described under Retirement
Plans below. In addition, in accordance with the terms of
the applicable plan and grant agreements, upon any
employees retirement at or after age 62,
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|
all restrictions on restricted stock units lapse and the shares
are released six months after the retirement date; and
|
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|
|
all unvested stock options/SARs become vested and fully
exercisable on the date of retirement.
|
36
Early
Retirement and Involuntary Termination (Not for Cause) at or
After Age 55
Early retirement is also not addressed in any Named
Officers employment agreement. Thus, in the event a Named
Officer chooses to retire at or after age 55 but prior to
age 62 and the retirement is designated in writing by
management as a Company-approved retirement prior to
age 62, he would be entitled to the same benefits as
any other employee whose retirement was designated as a
Company-approved retirement prior to age 62,
including benefits under our plans described under
Retirement Plans below. Each Named Officer is
eligible for early retirement upon reaching the age of 55 and
completing five years of service with EOG. In order to be
designated a Company-approved retirement prior to
age 62, the employee must agree to enter into a
six-month non-competition agreement with us. In addition to
benefits under the plans described below and in accordance with
the terms of the applicable plan and grant agreements, upon any
employees Company-approved retirement at or after
age 55 but prior to age 62,
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|
|
for unvested grants of restricted stock/restricted stock units,
restrictions will lapse six months following the effective date
of an EOG-approved retirement on 20% of the restricted
stock/restricted stock units for each whole year that has passed
since the grant date; and
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|
|
all unvested stock options/SARs become vested and fully
exercisable six months following the effective date of an
EOG-approved retirement, in each case, provided that all
provisions of the employees non-competition agreement are
satisfied.
|
In the event a Named Officer is eligible for early retirement
but is involuntarily terminated by EOG other than for cause,
such termination will be treated as a Company-approved
retirement prior to age 62, in which case the Named
Officer must agree to enter into a six-month non-competition
agreement. Upon satisfactory completion of the six-month
non-competition period, the Named Officer will receive the
benefits described above as well as the severance benefits
described for such Named Officer in the Potential Payments
Upon Termination of Employment or Change of Control Table
below.
In the event a Named Officer elected retirement or early
retirement prior to the expiration of the term of his employment
agreement, it would be considered a Voluntary
Termination under his employment agreement. In the event
of a Voluntary Termination, the non-competition
obligations of each Named Officer subject to an employment
agreement will extend until one year following the date of the
termination. In accordance with our policy on
Company-approved retirement prior to age 62,
the Named Officers will receive the benefits described above
upon the satisfaction of the six-month non-competition agreement
entered into at the time of early retirement, but, to the extent
subject to an employment agreement, will remain subject to the
full term of the non-competition provision of their respective
employment agreement.
Retirement
Plans
We maintain our Savings Plan, a defined contribution plan that
qualifies under Section 401(a) of the Code, under which we
currently match 100% of an employees pre-tax contributions
up to 6% of the employees annual base salary, subject to
statutory limits.
We also maintain our Money Purchase Pension Plan, a
non-contributory, defined contribution plan that qualifies under
Section 401(a) of the Code, under which we contribute 3% to
9%, depending on an employees age and years of service
with EOG, of the employees annual base salary and bonus
(prior to the application of the premium discussed above under
Compensation Discussion and Analysis
Components of our Compensation Program
Bonus Restricted Stock/Restricted Stock Units
(Equity Incentive)), subject to certain statutory limits.
In 2009, the contribution percentage for each of the Named
Officers was 9%, except for Mr. Driggers for whom the
contribution percentage was 7%.
In addition, we may provide Make-Whole Contributions to the
Named Officers pursuant to the Deferral Plan.
Payments
Made Upon a Change of Control
In the event of a change of control of EOG, each Named Officer
is entitled to benefits under the following plans and
agreements. In addition to the payments described below, upon
the announcement of a potential change of control of EOG and in
accordance with the applicable plans and grant agreements, all
unvested stock options and
37
SARs will vest and be fully exercisable, and all restrictions on
unvested restricted stock and restricted stock units will lapse.
However, if the proposed amendment to the 2008 Stock Plan
described above is approved at the Annual Meeting, the
restrictions placed on each unvested share of restricted stock
or restricted stock unit granted under the 2008 Stock Plan on or
after April 28, 2010 (the date of the Annual Meeting) shall
lapse, and each unvested stock option or SAR granted under the
2008 Stock Plan on or after April 28, 2010 (the date of the
Annual Meeting) shall vest and become fully exercisable, only
upon the effective date of the change of control and not merely
upon the announcement of the potential change of control; this
modification to the accelerated vesting provisions under the
2008 Stock Plan would not apply to grants made prior to
April 28, 2010. See Item 3. Approval of
Amendment to the EOG Resources, Inc. 2008 Omnibus Equity
Compensation Plan below and the proposed amendment to the
2008 Stock Plan attached to this proxy statement as
Appendix A.
Change
of Control Agreements
Effective June 2005, each Named Officer, other than
Mr. Garrison, entered into an Amended and Restated Change
of Control Agreement. Under the Amended and Restated Change of
Control Agreements, change of control is
defined as:
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the acquisition by any person of beneficial ownership of 20% or
more of either (A) the then-outstanding shares of our
Common Stock or (B) the combined voting power of our
then-outstanding voting securities (Voting
Securities) entitled to vote generally in the election of
directors; provided, however, that the following acquisitions
will not constitute a change of control: (1) any
acquisition directly from us, (2) any acquisition by us,
(3) any acquisition by any employee benefit plan sponsored
by us or our affiliates, (4) any acquisition by any
corporation that complies with subclauses (A), (B) and
(C) of the third bullet point below or (5) an
acquisition by a Qualified Institutional Investor (as defined in
each Amended and Restated Change of Control Agreement);
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individuals who constituted the Board as of May 3, 2005
(Incumbent Director) ceasing for any reason to
constitute at least a majority of the Board, provided that any
individual who becomes a director after May 3, 2005 shall
be deemed to be an Incumbent Director if their election, or
nomination for election by our stockholders, was approved by a
vote of at least a majority of the then-Incumbent Directors
(except in certain circumstances);
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consummation of a reorganization, merger, consolidation or sale
or other disposition of all or substantially all of our assets
or the acquisition of the assets or stock of another entity
(Business Combination), other than a Business
Combination (A) which would result in all or substantially
all of the persons that were beneficial owners of our Common
Stock and Voting Securities outstanding immediately prior to the
Business Combination continuing to beneficially own more than
60% of the then-outstanding shares of Common Stock and the
combined voting power of the then-outstanding Voting Securities,
as the case may be, of the corporation resulting from such
Business Combination, in substantially the same proportions as
their ownership immediately prior to the Business Combination,
(B) in which no person is or becomes the beneficial owner
of 20% or more of the then-outstanding shares of our Common
Stock or the combined voting power of our then-outstanding
Voting Securities, except to the extent that such ownership
existed prior to the Business Combination and (C) at least
a majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of our Board at the time of the execution of the initial
agreement or of the action of the Board providing for such
Business Combination; or
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approval by our stockholders of a complete liquidation or
dissolution of EOG.
|
Under the Amended and Restated Change of Control Agreements, if
a Named Officers employment is terminated within two years
after a change of control of EOG:
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by us for any reason (other than for cause or by reason of
death, disability or retirement);
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by the Named Officer under circumstances defined in the
agreement as good reason; or
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by the Named Officer for any reason during the
30-day
period beginning six months after a change of control of EOG;
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38
then, the Named Officer will receive:
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the Named Officers annual base salary and compensation for
earned but unused vacation time accrued through the termination
date but not previously paid to the Named Officer;
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a severance benefit of 2.99 times his annual base salary plus
two times his target annual bonus, each as in effect immediately
prior to the change of control or, if increased, immediately
prior to the termination date, whichever is greater;
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Money Purchase Pension Plan contributions and Savings Plan
matching amounts that would have been made if the Named Officer
had continued to be employed for three years following the date
of termination and, in the case of the Savings Plan matching
amounts, assuming that the Named Officer had continued to
contribute to the Savings Plan during such three-year period at
their then-current contribution level;
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up to three years of uninterrupted participation in our medical
and dental plans from time to time then in effect;
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an additional three years of age and service credits for
eligibility in our retiree medical coverage;
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outplacement services, not to exceed $50,000; and
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reimbursement for any excise tax, interest and penalties
incurred if payments or benefits received due to a change of
control would be subject to an excise tax under
Section 4999 of the Code.
|
If a Named Officers employment is terminated within two
years of a change of control of EOG for cause or as a result of
death, disability or retirement, the Named Officer will be
entitled only to annual base salary and any other compensation
and benefits earned and payable through the termination date.
Change
of Control Severance Plan
Mr. Garrison has not entered into a change of control
agreement with EOG. In the event of a change of control of EOG,
Mr. Garrison would be subject to the terms and conditions
of our Change of Control Severance Plan, which is applicable to
all employees that are classified either as a regular full-time
or regular part-time employee and not covered under an
individual change of control agreement or any collective
bargaining agreement with us or our affiliates. Pursuant to such
plan, an eligible employee who is involuntarily terminated on or
within two years after a change of control of EOG would receive
a severance payment equal to the greater of (A) six months
base pay or (B) the aggregate sum of (1) two weeks of
base pay per year of service or portion thereof, plus
(2) one month base pay for each $10,000 or portion thereof
of the employees annual base pay, plus (3) one month
of base pay for each five percent (5%) of the employees
annual target bonus award opportunity, if any, or portion
thereof under the bonus program in effect immediately prior to
the change of control or on the termination date, if greater.
Also pursuant to such plan, the aggregate present
value (as defined under Section 1274(b)(2) of the
Code) of such severance payment shall not exceed the lesser of
the following amounts: (A) 2.99 multiplied by the
base amount (as defined under
Section 280G(b)(3) of the Code) or (B) three times the
sum of (1) the eligible employees annual base pay and
(2) 100% of the eligible employees annual bonus
target award (if any) as in effect immediately prior to the
effective date of the change of control (or, if no annual bonus
target has been set for the year in which the change of control
occurs, the annual bonus target for the immediately prior year)
or, if increased, 100% of the eligible employees annual
bonus target award as in effect immediately prior to the
eligible employees last date of employment by reason of
such involuntary termination. Additionally, our Change of
Control Severance Plan provides for the reimbursement of any
excise tax, interest and penalties incurred if payments or
benefits received due to a change of control of EOG would be
subject to an excise tax under Section 4999 of the Code.
Retention
Bonus Plan
In order to ensure continuity of operations in the event of a
change of control of EOG, a retention bonus plan would become
effective and applicable to all eligible employees, including
our Named Officers. To be eligible to receive the retention
bonus, an employee must remain employed by us through the
effective date of the change of control (as defined in our
Change of Control Severance Plan) and be employed by the
acquiring company 180 days after the effective date of the
change of control or be involuntarily terminated (as defined in
our Change of Control
39
Severance Plan) by the acquiring company on or within
180 days after the effective date of the change of control.
Eligible employees would receive a bonus equal to the most
recent bonus they had received under our annual bonus program,
payable upon the earlier of 180 days after the effective
date of the change of control or upon such involuntary
termination.
Potential
Payments to Each Named Officer
The tables below reflect estimates of the amount of compensation
that would be paid to each Named Officer in the event of his
termination of employment as a result of each of the
circumstances described above and assume that any termination
was effective as of December 31, 2009. The actual amounts
to be paid can only be determined at the time of the Named
Officers actual termination.
POTENTIAL
PAYMENTS UPON TERMINATION OF EMPLOYMENT OR
CHANGE OF CONTROL TABLE(a)
Mark G. Papa
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
(Not for
|
|
Termination
|
|
Change of
|
|
Death or
|
|
Normal
|
|
Early
|
Executive Benefits and
|
|
Termination
|
|
Cause)
|
|
(For Cause)
|
|
Control
|
|
Disability
|
|
Retirement
|
|
Retirement
|
Payments Upon Termination
|
|
($)(b)
|
|
($)
|
|
($)(b)
|
|
($)
|
|
($)(c)
|
|
($)(d)
|
|
($)
|
|
Cash Severance
|
|
|
|
|
|
$
|
4,543,333
|
(f)
|
|
|
|
|
|
$
|
4,690,600
|
(g)
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options/SARs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock/Units
|
|
|
|
|
|
$
|
42,693,294
|
(h)
|
|
|
|
|
|
$
|
42,693,294
|
(i)
|
|
$
|
42,693,294
|
|
|
$
|
42,693,294
|
|
|
|
|
|
Health Benefits(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
35,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unused Vacation(k)
|
|
$
|
4,971
|
|
|
$
|
4,971
|
|
|
$
|
4,971
|
|
|
$
|
4,971
|
|
|
$
|
4,971
|
|
|
$
|
4,971
|
|
|
|
|
|
All Other(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
147,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
4,971
|
|
|
$
|
47,241,598
|
|
|
$
|
4,971
|
|
|
$
|
47,572,107
|
|
|
$
|
42,698,265
|
|
|
$
|
42,698,265
|
|
|
|
|
|
Loren
M. Leiker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
(Not for
|
|
Termination
|
|
Change of
|
|
Death or
|
|
Normal
|
|
Early
|
Executive Benefits and
|
|
Termination
|
|
Cause)
|
|
(For Cause)
|
|
Control
|
|
Disability
|
|
Retirement
|
|
Retirement
|
Payments Upon Termination
|
|
($)(b)
|
|
($)
|
|
($)(b)
|
|
($)
|
|
($)(c)
|
|
($)
|
|
($)(e)
|
|
Cash Severance
|
|
|
|
|
|
$
|
2,711,379
|
(m)
|
|
|
|
|
|
$
|
2,828,495
|
(g)
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options/SARs
|
|
|
|
|
|
$
|
1,063,838
|
(n)
|
|
|
|
|
|
$
|
1,063,838
|
(i)
|
|
$
|
1,063,838
|
|
|
|
|
|
|
$
|
1,063,838
|
|
Restricted Stock/Units
|
|
|
|
|
|
$
|
3,215,570
|
(n)
|
|
|
|
|
|
$
|
13,532,971
|
(i)
|
|
$
|
13,532,971
|
|
|
|
|
|
|
$
|
3,215,570
|
|
Health Benefits(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
47,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unused Vacation(k)
|
|
$
|
9,298
|
|
|
$
|
9,298
|
|
|
$
|
9,298
|
|
|
$
|
9,298
|
|
|
$
|
9,298
|
|
|
|
|
|
|
$
|
9,298
|
|
All Other(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
147,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
9,298
|
|
|
$
|
7,000,085
|
|
|
$
|
9,298
|
|
|
$
|
17,629,546
|
|
|
$
|
14,606,107
|
|
|
|
|
|
|
$
|
4,288,706
|
|
40
Gary
L. Thomas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
(Not for
|
|
Termination
|
|
Change of
|
|
Death or
|
|
Normal
|
|
Early
|
Executive Benefits and
|
|
Termination
|
|
Cause)
|
|
(For Cause)
|
|
Control
|
|
Disability
|
|
Retirement
|
|
Retirement
|
Payments Upon Termination
|
|
($)(b)
|
|
($)
|
|
($)(b)
|
|
($)
|
|
($)(c)
|
|
($)
|
|
($)(e)
|
|
Cash Severance
|
|
|
|
|
|
$
|
2,711,379
|
(m)
|
|
|
|
|
|
$
|
2,828,495
|
(g)
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options/SARs
|
|
|
|
|
|
$
|
1,063,838
|
(n)
|
|
|
|
|
|
$
|
1,063,838
|
(i)
|
|
$
|
1,063,838
|
|
|
|
|
|
|
$
|
1,063,838
|
|
Restricted Stock/Units
|
|
|
|
|
|
$
|
3,215,570
|
(n)
|
|
|
|
|
|
$
|
13,532,971
|
(i)
|
|
$
|
13,532,971
|
|
|
|
|
|
|
$
|
3,215,570
|
|
Health Benefits(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
22,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unused Vacation(k)
|
|
$
|
11,356
|
|
|
$
|
11,356
|
|
|
$
|
11,356
|
|
|
$
|
11,356
|
|
|
$
|
11,356
|
|
|
|
|
|
|
$
|
11,356
|
|
All Other(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
147,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
11,356
|
|
|
$
|
7,002,143
|
|
|
$
|
11,356
|
|
|
$
|
17,606,423
|
|
|
$
|
14,608,165
|
|
|
|
|
|
|
$
|
4,290,764
|
|
Robert
K. Garrison
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
(Not for
|
|
Termination
|
|
Change of
|
|
Death or
|
|
Normal
|
|
Early
|
Executive Benefits and
|
|
Termination
|
|
Cause)
|
|
(For Cause)
|
|
Control
|
|
Disability
|
|
Retirement
|
|
Retirement
|
Payments Upon Termination
|
|
($)
|
|
($)
|
|
($)(b)
|
|
($)
|
|
($)(c)
|
|
($)
|
|
($)(e)
|
|
Cash Severance
|
|
|
|
|
|
$
|
354,300
|
(o)
|
|
$
|
13,627
|
|
|
$
|
1,710,180
|
(p)
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options/SARs
|
|
|
|
|
|
$
|
503,042
|
(n)
|
|
|
|
|
|
$
|
503,042
|
(i)
|
|
$
|
503,042
|
|
|
|
|
|
|
$
|
503,042
|
|
Restricted Stock/Units
|
|
|
|
|
|
$
|
2,339,189
|
(n)
|
|
|
|
|
|
$
|
6,598,886
|
(i)
|
|
$
|
6,598,886
|
|
|
|
|
|
|
$
|
2,339,189
|
|
Health Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unused Vacation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
$
|
3,196,531
|
|
|
$
|
13,627
|
|
|
$
|
8,812,108
|
|
|
$
|
7,101,928
|
|
|
|
|
|
|
$
|
2,842,231
|
|
Timothy
K. Driggers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
(Not for
|
|
Termination
|
|
Change of
|
|
Death or
|
|
Normal
|
|
Early
|
Executive Benefits and
|
|
Termination
|
|
Cause)
|
|
(For Cause)
|
|
Control
|
|
Disability
|
|
Retirement
|
|
Retirement
|
Payments Upon Termination
|
|
($)
|
|
($)
|
|
($)(b)
|
|
($)
|
|
($)(c)
|
|
($)
|
|
($)
|
|
Cash Severance
|
|
|
|
|
|
$
|
340,000
|
(o)
|
|
$
|
13,077
|
|
|
$
|
1,424,600
|
(g)
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options/SARs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
333,867
|
(i)
|
|
$
|
333,867
|
|
|
|
|
|
|
|
|
|
Restricted Stock/Units
|
|
|
|
|
|
$
|
707,955
|
(q)
|
|
|
|
|
|
$
|
2,245,489
|
(i)
|
|
$
|
2,245,489
|
|
|
|
|
|
|
|
|
|
Health Benefits(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unused Vacation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
147,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
$
|
1,047,955
|
|
|
$
|
13,077
|
|
|
$
|
4,168,507
|
|
|
$
|
2,579,356
|
|
|
|
|
|
|
|
|
|
The following footnotes apply to all of our Named Officers:
|
|
|
(a) |
|
We engaged Ernst & Young (E&Y) to
determine if any portion of the payments described in this
Potential Payments Upon Termination of Employment or
Change of Control Table could potentially be subject to
excise tax for purposes of Code Sections 280G and 4999.
Based on the information provided by us and the calculations
performed by E&Y, none of the Named Officers exceeded their
respective safe harbor amounts, as defined in Code
Section 280G; thus, none of the payments are subject to
excise tax and no reimbursements are required. |
|
(b) |
|
No additional compensation is paid if the Named Officer
voluntarily terminates his employment or if the Named Officer is
involuntarily terminated for cause, with the exception of
Messrs. Garrison and Driggers, who |
41
|
|
|
|
|
would receive two weeks of annual base salary upon signing a
waiver and release of claims if terminated for cause in
accordance with the Severance Pay Plan. |
|
(c) |
|
In accordance with our 2008 Stock Plan, 1992 Stock Plan and the
related grant agreements, upon death or disability, 100% of
unvested stock options/SARs will vest and be fully exercisable
and all restrictions on restricted stock/restricted stock units
will lapse. The amounts represent the value of each Named
Officers unvested stock options/SARs and restricted
stock/restricted stock units as of December 31, 2009. |
|
(d) |
|
Of the Named Officers only Mr. Papa was of normal
retirement age (age 62 or older) as of December 31, 2009.
In accordance with the 2008 Stock Plan, the 1992 Stock Plan and
the related grant agreements, upon retirement, all restrictions
on restricted stock units will lapse six months after the
retirement date. The amount represents the value of
Mr. Papas unvested restricted stock units as of
December 31, 2009; however, the actual value of the
restricted stock units will be subject to market risk during the
six-month period. |
|
(e) |
|
In order to be designated a Company-approved retirement
prior to age 62, the employee must agree to enter into a
six-month non-competition agreement. In accordance with the 2008
Stock Plan, the 1992 Stock Plan and the related grant
agreements, upon satisfactory completion of the six-month
non-competition agreement, 100% of unvested stock options/SARs
will vest and be fully exercisable and the restrictions on 20%
of restricted stock/restricted stock units will lapse for each
whole year that has passed since the grant date. The above
presentation assumes that (1) all unvested stock
options/SARs vest and become fully exercisable and (2) the
Named Officer becomes entitled to all shares of restricted
stock/restricted stock units to which he would be entitled under
his grant agreements as of December 31, 2009. However, the
actual value of any stock options/SARs and restricted
stock/restricted stock units will be subject to market risk
during the six-month term of the non-competition agreement. The
number of stock options/SARs that will vest for each of the
Named Officers that are age 55 or greater and less than
age 62 is as follows: Mr. Leiker, 48,750;
Mr. Thomas, 48,750; and Mr. Garrison, 25,094. The
number of restricted stock/restricted stock units that will vest
for each of the Named Officers that are age 55 or greater
and less than age 62 is as follows: Mr. Leiker,
33,048; Mr. Thomas, 33,048; and Mr. Garrison, 24,041.
Mr. Driggers was not eligible for early retirement as of
December 31, 2009. |
|
(f) |
|
In accordance with Mr. Papas employment agreement,
this amount was calculated as the annual base salary and annual
bonus award he would have received from the date of termination
through the end of his employment agreement if his employment
had continued, as this amount is greater than two times the sum
of his then-current annual base salary of $940,000 and his
annual bonus award opportunity of $940,000. |
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(g) |
|
In accordance with the Named Officers Amended and Restated
Change of Control Agreement, this amount was calculated as 2.99
times his annual base salary plus two times his target annual
bonus. The annual base salary for each of the Named Officers is
as follows: Mr. Papa, $940,000; Mr. Leiker, $590,500;
Mr. Thomas, $590,500; and Mr. Driggers, $340,000. The
target annual bonus for each of the Named Officers is as
follows: Mr. Papa, $940,000; Mr. Leiker, $531,450;
Mr. Thomas, $531,450; and Mr. Driggers, $204,000. |
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(h) |
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Mr. Papa is eligible for normal retirement; therefore,
termination is treated as a retirement at or after
age 62. In accordance with the 2008 Stock Plan, the
1992 Stock Plan and the related grant agreements, upon
retirement, all restrictions on restricted stock units will
lapse six months after the retirement date. The amount
represents the value of Mr. Papas unvested restricted
stock units as of December 31, 2009; however, the actual
value of the restricted stock units will be subject to market
risk during the six-month period. |
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(i) |
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In accordance with the current 2008 Stock Plan, the 1992 Stock
Plan and the related grant agreements, upon the date a press
release is issued announcing a pending stockholder vote, tender
offer or other transaction which, if approved and consummated,
would constitute a change of control, 100% of unvested stock
options/SARs vest and become fully exercisable and all
restrictions on restricted stock/restricted stock units lapse,
regardless of whether the officer is terminated for any reason
or continues to be employed. The amounts represent the value of
each Named Officers unvested stock options/SARs and
restricted stock/restricted stock units as of December 31,
2009. |
42
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(j) |
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Health Benefits include the estimated value of (1) three
years participation in our medical and dental plans, based on
each Named Officers elections as of December 31, 2009
and (2) three years age and service credits under our
retiree medical insurance coverage. |
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(k) |
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Amount represents the portion of unused vacation as of
December 31, 2009 that will be paid to the Named Officer. |
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(l) |
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All Other includes (1) the estimated value of
the Money Purchase Pension Plan contributions and the Savings
Plan matching contributions, had the Named Officer continued to
be employed for three years based on the contribution rates as
of December 31, 2009, and (2) $50,000 in outplacement
services. |
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(m) |
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In accordance with the Named Officers employment
agreement, this amount is the annual base salary and annual
bonus award he would have received from the date of termination
through the end of the term of his employment agreement if his
employment had continued, as this amount is greater than the sum
of his then-current annual base salary and his annual award
bonus opportunity. The then-current annual base salary for each
of Messrs. Leiker and Thomas was $590,500. The annual bonus
award opportunity for each of Messrs. Leiker and Thomas was
$531,450. |
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(n) |
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The Named Officer is eligible for early retirement; therefore,
termination is treated as a Company-approved retirement
prior to age 62, in which the employee must agree to enter
into a six-month non-competition agreement. Upon satisfactory
completion of the six-month non-competition agreement, 100% of
unvested stock options/SARs will vest and be fully exercisable
and the restrictions on 20% of restricted stock/restricted stock
units will lapse for each whole year that has passed since the
grant date. The above presentation assumes that (1) all
unvested stock options/SARs vest and become fully exercisable
and (2) the Named Officer becomes entitled to all shares of
restricted stock/restricted stock units to which he would be
entitled under his grant agreements as of December 31,
2009. However, the actual value of any stock options/SARs and
restricted stock/restricted stock units will be subject to
market risk during the six-month term of the non-competition
agreement. The number of stock options/SARs that will vest and
become fully exercisable for Messrs. Leiker and Thomas is
48,750, and for Mr. Garrison is 25,094. The number of
restricted stock/restricted stock units for which the
restrictions will lapse for Messrs. Leiker and Thomas is
33,048, and for Mr. Garrison is 24,041. |
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(o) |
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In accordance with our Severance Pay Plan, this amount is
calculated as 52 weeks of base pay, the maximum benefit
paid for involuntary termination for other than performance
reasons, contingent upon the Named Officer signing a waiver and
release of claims. |
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(p) |
|
In accordance with the Change of Control Severance Plan, amount
is the aggregate sum of (1) two weeks of base pay per year
of service or portion thereof (15 times $13,627), plus
(2) one month of base pay for each $10,000 or portion
thereof of Mr. Garrisons annual base pay of $354,300
(36 times $29,525), plus (3) one month of base pay for each
five percent of Mr. Garrisons annual bonus award
opportunity, if any, or portion thereof under the bonus program
in effect immediately prior to the change of control (15 times
$29,525, based on Mr. Garrisons current bonus target
of 75%). This aggregate amount is greater than six months base
pay for Mr. Garrison, but under the cap described under
Payments Made Upon a Change of Control Change
of Control Severance Plan above. |
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(q) |
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Upon involuntary termination for other than performance reasons,
the restrictions on 20% of restricted stock/restricted stock
units will lapse for each whole year that has passed since the
grant date. The number of restricted stock/restricted stock
units for which the restrictions will lapse for
Mr. Driggers is 7,276. |
43
DIRECTOR
COMPENSATION AND STOCK OWNERSHIP GUIDELINES
The Compensation Committee is also responsible for determining
the compensation of our non-employee directors. In April 2009,
the Compensation Committee reviewed EOGs non-employee
director compensation program against the programs of our peer
group companies, specifically Anadarko Petroleum Corporation,
Apache Corporation, Chesapeake Energy Corporation, Devon Energy
Corporation, EnCana Corporation, Noble Energy, Inc., Pioneer
Natural Resources Company and XTO Energy Inc. The review
determined that EOGs non-employee director compensation
program was competitive with the programs of EOGs peer
companies with respect to cash and equity compensation. The
review determined that EOGs total non-employee director
compensation ranked slightly above the 75th percentile of
the peer group and, therefore, was in line with our target of
the 75th percentile.
Based on the results of the review, the Compensation Committee
determined that the annual cash retainer for each non-employee
director should remain at $140,000, and granted
2,000 shares of restricted stock and 5,000 SARs to each
non-employee director (as compared to an equity grant consisting
of 1,000 shares of restricted stock and 3,000 SARs in the
prior year), resulting in a total program value approximating
the 60th percentile of the peer group. The terms of the
restricted stock and SARs granted to our non-employee directors
are described in footnotes (b) and (c) to the
Director Compensation Table below. There are no
meeting, committee member or committee chair fees paid to any
director.
In accordance with our stock ownership guidelines for
non-employee directors (adopted by the Compensation Committee in
December 2009) and the terms of each non-employee
directors restricted stock grant agreements,
35 percent of the vested shares of our Common Stock
received annually for services as a director may be sold to
cover any tax obligation the non-employee director may incur as
a result of the vesting of such shares, and the remaining
65 percent of the vested shares must be held until the
non-employee director no longer serves on the Board.
Mr. Papa, as our CEO, is subject to the stock ownership
guidelines applicable to our executive officers and other
officers discussed above.
DIRECTOR
COMPENSATION TABLE
The following table summarizes certain information regarding
compensation paid or accrued during 2009 to each non-employee
director.
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Change in
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Pension
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Value and
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Fees
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Nonqualified
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Earned
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Stock
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Non-Equity
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Deferred
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or Paid in
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Cash
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name
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($)(a)
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($)(b)
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($)(c)
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($)
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($)
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($)(d)
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($)
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George A. Alcorn
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$
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140,000
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$
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144,080
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$
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146,035
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$
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3,711
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$
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433,826
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Charles R. Crisp
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$
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140,000
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$
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144,080
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$
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146,035
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$
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430,115
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James C. Day
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$
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140,000
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$
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144,080
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$
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146,035
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$
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430,115
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H. Leighton Steward
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$
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140,000
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$
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144,080
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$
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146,035
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$
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7,461
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$
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437,576
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Donald F. Textor
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$
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140,000
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$
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144,080
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$
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146,035
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$
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430,115
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Frank G. Wisner
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$
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140,000
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$
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144,080
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$
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146,035
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$
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430,115
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(a) |
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Non-employee directors can defer fees to a later specified date
by participating in the Deferral Plan. Under the Deferral Plan,
deferrals are invested into either (1) a flexible deferral
account, in which deferrals are treated as if they had been
invested into various investment funds as directed by the
participant and in which returns vary based on the performance
of the funds or (2) a phantom stock account, in which
deferrals are treated as if they had purchased our Common Stock
at the closing price on the date such deferred fee would
otherwise had been paid, and include reinvestment of dividends.
In 2009, four of the non-employee directors participated in the
Deferral Plan. |
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(b) |
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Non-employee directors participate in the 2008 Stock Plan, which
was approved by our stockholders at our 2008 annual meeting of
stockholders. Under the terms of the 2008 Stock Plan, each
non-employee director |
44
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received, upon re-election to the Board, 2,000 shares of
restricted stock on May 4, 2009 (based on the closing price
of our Common Stock on the NYSE of $72.04 per share on such
date). Restricted stock granted under the 2008 Stock Plan vests
100% after one year. Upon vesting and in accordance with our
stock ownership guidelines for non-employee directors discussed
above, thirty-five percent of the vested shares may be sold to
cover any tax obligation as a result of the vesting and
sixty-five percent of the vested shares must be held until the
director no longer serves on the Board. The market value of the
unvested restricted shares for each non-employee director as of
December 31, 2009 was $194,600 (based on the closing price
of our Common Stock on the NYSE of $97.30 per share on such
date). |
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(c) |
|
Under the terms of the 2008 Stock Plan, each non-employee
director received, upon re-election to the Board, 5,000 SARs at
an exercise price equal to the fair market value of our Common
Stock on May 4, 2009. SARs granted to our non-employee
directors under the 2008 Stock Plan vest 50% after one year, and
100% after two years, following the date of grant, and expire
seven years from the date of grant. The grant-date present value
of each SAR grant is estimated using the Hull-White II
binomial option pricing model. Based on the Hull-White II
binomial option pricing model, assuming a dividend yield of
0.8%, expected volatility of 46.8%, a risk-free interest rate of
1.3% and a weighted-average expected life of 5.6 years, the
value of the SARs granted on May 4, 2009 was $29.207 per
share. Following is the aggregate number of stock options/SARs
outstanding as of December 31, 2009 for each non-employee
director: Messrs. Alcorn and Crisp, 50,000 stock
options/SARs each; Mr. Day, 8,000 SARs; Mr. Steward,
64,000 stock options/SARs; Mr. Textor, 22,000 stock
options/SARs; and Mr. Wisner, 106,000 stock options/SARs. |
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(d) |
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All Other Compensation for Mr. Alcorn consists solely of
reimbursement for EOG-requested spouse travel, including a
gross-up for
payment of taxes. All Other Compensation for Mr. Steward
consists of reimbursement for EOG-requested spouse travel,
including a
gross-up for
payment of taxes, and our purchase of copies of
Mr. Stewards book which were distributed to certain
of our employees. |
RELATED
PARTY TRANSACTIONS
In March 2008, our Board adopted a written policy relating to
the review and approval of related party
transactions. Generally, under this policy and related SEC
regulations, (1) a related party transaction is
a transaction, or a material amendment to a transaction,
involving more than $120,000 between a related party
and EOG or one of its subsidiaries and (2) a related
party is (a) a director or executive officer of EOG,
(b) a beneficial owner of more than five percent (5%) of
our Common Stock, (c) an immediate family member of, or
person sharing the home of, an EOG director or executive officer
or beneficial owner of more than five percent (5%) of our Common
Stock or (d) an entity that is owned or controlled by any
of the foregoing persons or for which any of the foregoing
persons serves as an executive officer, general partner or
principal or in a similar capacity or position.
Consistent with the recommendations of the NYSE, our policy
requires the Audit Committee to review and approve (in the case
of a proposed transaction), or ratify (in the case of an
existing transaction), each related party transaction. In
reviewing and approving, or ratifying, as the case may be, any
related party transaction or material amendment to any such
transaction, the Audit Committee must satisfy itself that it has
been fully informed as to the related partys relationship
to EOG and interest in the transaction and as to the material
facts of the transaction, and must determine that the related
party transaction is in, or is not inconsistent with, the best
interests of EOG and our stockholders. In addition, at each
quarterly meeting of our Audit Committee, the members of the
Audit Committee are asked to confirm that they are not aware of
any related party transactions, other than any such transactions
previously disclosed in our proxy statements.
Prior to March 2008, we did not have specific procedures for the
review of, or standards for the approval or ratification of,
transactions with related persons, but instead reviewed such
transactions on a
case-by-case
basis.
Mr. Robert K. Garrison, our Executive Vice President,
Exploration, has a son, Matthew Garrison, who is employed by EOG
as a geologist in our Fort Worth, Texas office.
Mr. Matthew Garrison has been employed by EOG since
December 2006, prior to his father becoming an executive officer
of EOG. Mr. Robert Garrison did not participate in the
hiring of his son, and has not participated, and is not expected
in the future to participate, in performance evaluations or
compensation decisions regarding his son. Mr. Matthew
Garrisons total compensation for 2009 (consisting of his
annual base salary, bonus, stock-based compensation and other
perquisites for 2009 and
45
calculated in the same manner as his total compensation for 2008
(as described in the proxy statement for our 2009 annual meeting
of stockholders)) was less than $175,000. We believe that
Mr. Matthew Garrisons compensation and benefits are
commensurate with his qualifications, experience and
responsibilities and, moreover, comparable to the compensation
and benefits currently paid to geologists in the oil and gas
industry with similar qualifications, experience and
responsibilities. Pursuant to our related party transaction
policy, the Audit Committee has (1) satisfied itself that
it has been fully informed as to the material facts of
Mr. Matthew Garrisons employment relationship with
us, (2) determined that the employment relationship is in,
and is not inconsistent with, the best interests of us and our
stockholders and (3) approved and ratified our prior and
continued employment of Mr. Matthew Garrison.
In addition to our related party transaction policy, our Code of
Conduct prohibits transactions involving or benefiting a
director or executive officer (or a family member of a director
or executive officer) that may constitute a conflict of
interest, except as approved by the Board. Any waiver of our
Code of Conduct in favor of a director or executive officer
requires Board or Board committee approval and reporting under
applicable SEC and NYSE regulations, as more fully described
under Corporate Governance Codes of Conduct
and Ethics and Corporate Governance Guidelines above.
There have been no waivers granted with respect to our Code of
Conduct.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive
officers and directors and persons who beneficially own more
than 10% of our Common Stock to file reports of their ownership
of, and transactions in, our Common Stock with the SEC and to
furnish us with copies of the reports they file. Based upon our
review of the Section 16(a) filings that have been received
by us and inquiries made to our directors and executive
officers, we believe that all filings required to be made under
Section 16(a) during 2009 were timely made, except that
during 2009, Mr. Steward inadvertently failed to timely
file a Form 4 to report his December 2009 disposition of
shares of our Common Stock held indirectly through a family
limited liability company in connection with his sale of
interests in the limited liability company for estate and
financial planning purposes. This disposition was reported by
Mr. Steward on a Form 4 filed in March 2010. Pursuant
to SEC rules, we are not required to disclose in this proxy
statement any failure to timely file a Section 16(a) report
that has been previously disclosed by us in a prior proxy
statement.
46
ITEM 1.
ELECTION
OF DIRECTORS
At the Annual Meeting, seven directors are to be elected to hold
office until the 2011 annual meeting of stockholders and until
their respective successors have been duly elected and
qualified. All of the nominees are our current directors.
We believe that each of our directors possesses high standards
of personal and professional ethics, character, integrity and
values; an inquisitive and objective perspective; practical
wisdom; mature judgment; diversity in professional experience,
skills and background and a proven record of success in their
respective fields; and valuable knowledge of our business and of
the oil and gas industry. Moreover, each of our directors is
willing to devote sufficient time to discharging his duties and
responsibilities effectively, and is committed to serving EOG
and our stockholders. Set forth below is a brief description of
the specific experience, qualifications and skills attributable
to each of our directors that led the Board, as of the date of
this proxy statement, to its conclusion that the director should
serve as a director of EOG and, in the case of
Messrs. Alcorn, Crisp, Day, Steward, Textor and Wisner, as
a member of the Boards Audit, Compensation and Nominating
and Governance Committees. Director nominee ages set forth below
are as of February 28, 2010.
A majority of the votes cast in person or by proxy by the
holders of our Common Stock entitled to vote at the Annual
Meeting is required to elect a director. Under our bylaws,
(1) a majority of the votes cast means that the
number of shares voted for a directors
election exceeds 50% of the number of votes cast with respect to
that directors election and (2) votes cast shall
include votes to withhold authority (shown as
against on the enclosed form of proxy) and exclude
abstentions with respect to that directors election.
Therefore, abstentions and broker non-votes (which occur if a
broker or other nominee does not have discretionary authority
and has not received instructions with respect to a particular
director nominee within ten days of the Annual Meeting) will not
be counted in determining the number of votes cast with respect
to that directors election.
Pursuant to our Corporate Governance Guidelines, any nominee for
director who fails to receive a majority vote of our
stockholders at the Annual Meeting must promptly tender his or
her resignation to the Nominating and Governance Committee of
the Board. The Nominating and Governance Committee will evaluate
the resignation and make a recommendation to the Board, who will
then act on the tendered resignation and publicly disclose its
decision and rationale within 90 days following
certification of the stockholder vote.
Unless contrary instructions are given by the stockholder
delivering such proxy, it is the intention of the persons named
as agents and proxies in the enclosed form of proxy to vote such
proxy FOR the election of the nominees named herein.
Should any nominee become unavailable for election,
discretionary authority is conferred to vote for a substitute.
Pursuant to our bylaws, the Board has set the number of
directors that shall constitute the Board at seven. Proxies
cannot be voted for a greater number of persons than the number
of nominees named on the enclosed form of proxy, and
stockholders may not cumulate their votes in the election of
directors.
47
THE BOARD
OF DIRECTORS RECOMMENDS
VOTING FOR EACH OF THE NOMINEES LISTED
BELOW.
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GEORGE A. ALCORN, 77 Director since 2000
Mr. Alcorn has extensive leadership experience in the oil and gas industry, having served as President of Alcorn Exploration, Inc., an oil and natural gas exploration and production company, since 1982.
In addition, Mr. Alcorn has served as a director of Linn Energy, LLC, a publicly traded independent oil and gas development company, since 2006, where he serves as Chairman of the Nominating Committee and as a member of the Audit and Compensation Committees.
Mr. Alcorn is a member of the National Petroleum Council, a federally chartered and privately funded committee that supports the U.S. Department of Energy and advises the U.S. Secretary of Energy. Mr. Alcorn is also a past chairman of the Independent Petroleum Association of America and a founding member and past chairman of the Natural Gas Council.
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CHARLES R. CRISP, 62 Director since 2002
Mr. Crisp began his career in the oil and gas industry over 40 years ago with Conoco Inc. and has held senior management positions with numerous energy companies, including (i) Coral Energy, LLC, a subsidiary of Shell Oil Company, where he served as President and Chief Executive Officer from 1999 until his retirement in November 2000 and as President and Chief Operating Officer from 1998 to 1999; (ii) Houston Industries Incorporated, where he served as President of the power generation group from 1996 to 1998; and (iii) Tejas Gas Corporation, a major intrastate natural gas pipeline company, where he served as President, Chief Operating Officer and a director from 1988 to 1996.
Mr. Crisp has also accumulated over seven years of experience as a director of publicly traded energy companies. Mr. Crisp is currently a director of three other companies: (i) AGL Resources Inc., a natural gas distribution and marketing and energy services company, where he serves on the Compensation and Management Development Committee and Finance and Risk Management Committee; (ii) Intercontinental Exchange, Inc., an operator of regulated exchanges, trading platforms and clearing houses, where he serves on the Compensation Committee and previously served on the Audit Committee; and (iii) Targa Resources, Inc., a provider of midstream natural gas and natural gas liquids services, where he serves on the compensation committee.
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JAMES C. DAY, 66 Director since 2008
Mr. Day has extensive leadership experience serving as a member of senior management in various roles at Noble Corporation, including as Chairman of the Board from 1992 until his retirement in May 2007, Chief Executive Officer from 1984 until October 2006 and President from 1984 to 1999 and again from 2003 until February 2006. Noble Corporation is a publicly traded company and one of the worlds largest offshore drilling companies.
Mr. Day is also a director of Tidewater, Inc., a publicly traded workboat and compression services provider, where he serves on the Compensation and Nominating and Corporate Governance Committees, and of ONEOK, Inc., the publicly traded general partner of ONEOK Partners, a provider of natural gas gathering, processing, storage and transportation services, where he serves as the Chair of the Executive Compensation Committee and a member of the Executive Committee. From 1993 to May 2006, Mr. Day served as a director of Global Industries, Ltd., a publicly traded provider of offshore marine construction services, where he served as a member of the Nominating and Governance Committee, Audit Committee and Technical, Health, Safety, and Environment Committee.
Mr. Day is past chairman of the International Association of Drilling Contractors and the National Ocean Industries Association, and is an honorary director of the American Petroleum Institute and a Trustee of The Samuel Roberts Noble Foundation. Mr. Day has held numerous other leadership positions with various industry and civic associations throughout his career.
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MARK G. PAPA, 63 Director since 1998
Mr. Papa has served as EOGs Chairman of the Board and CEO for over 10 years, and has been with EOG and its predecessor companies for over 28 years. Prior to becoming EOGs Chairman of the Board and CEO, Mr. Papa served in other leadership positions at EOG, including President, CEO and director, President and Chief Operating Officer and President-North America Operations. Mr. Papa joined Belco Petroleum Corporation, a predecessor of EOG, in 1981.
Mr. Papa also serves as a director of Oil States International, Inc., a publicly traded oilfield service company, where he serves on the Compensation and Nominating and Corporate Governance Committees. From July 2003 to April 2005, Mr. Papa served as a director of the general partner of Magellan Midstream Partners LP, a pipeline and terminal company, where he served as Chairman of the Compensation Committee and as a member of the Audit and Conflicts Committees.
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H. LEIGHTON STEWARD, 75 Director since 2004
Mr. Steward has extensive experience in the oil and gas exploration and production industry, having served in various senior management roles with The Louisiana Land and Exploration Company, a publicly traded oil and gas exploration and production company, including President, Chief Operating Officer and, from 1989 until its acquisition by Burlington Resources, Inc. in 1997, Chairman of the Board and Chief Executive Officer. Mr. Steward subsequently served as Vice Chairman of Burlington Resources, a publicly traded oil and gas exploration, production and development company, until his retirement in 2000.
Mr. Steward is former Chairman of the U.S. Oil and Gas Association and the Natural Gas Supply Association, and is currently an honorary director of the American Petroleum Institute.
Mr. Steward is also currently an author-partner of Sugar Busters, LLC, a provider of seminars, books and products related to helping people follow a healthy and nutritious lifestyle, and Chairman of the non-profit foundations Plants Need CO2 and CO2 Is Green, providers of information related to carbon dioxides impact on the global climate and the plant and animal kingdoms.
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DONALD F. TEXTOR, 63 Director since 2001
Mr. Textor is currently Portfolio Manager for Dorset Management Corporation and Partner of Knott Partners Management LLC, each an investment management and advisory firm. Mr. Textor was previously employed by Goldman Sachs & Co., including as a partner and managing director until his retirement in March 2001 and including 21 years of experience as the firms senior security analyst for domestic oil and gas exploration and production companies.
Mr. Textor is also currently a director of Trilogy Energy Trust, a crude oil and natural gas-focused Canadian energy trust that actively acquires, develops, produces and sells natural gas, crude oil and natural gas liquids for the generation of monthly cash distributions to its unitholders, and is a director of its subsidiary, Trilogy Energy Ltd.
As a result of serving in these roles and serving as a member and the Chairman of our Audit Committee since 2001, Mr. Textor has accumulated significant leadership and financial reporting experience as well as extensive knowledge of the oil and gas exploration and production industry.
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FRANK G. WISNER, 71 Director since 1997
Mr. Wisner concluded his more than 35-year career with the U.S. State Department by serving as U.S. Ambassador to India from 1994 to 1997. Following his retirement as U.S. Ambassador to India, Mr. Wisner served as Vice Chairman, External Affairs of American International Group, Inc., a publicly traded international insurance and financial services company, from 1997 until his retirement in March 2009. Mr. Wisner has served as International Affairs Advisor with Patton Boggs LLP, a Washington, D.C.-based law firm, since 2009.
In addition to his extensive international and governmental affairs experience, Mr. Wisner has accumulated diverse business experience. Since 2001, Mr. Wisner has served as a director of Ethan Allen Interiors Inc., a publicly traded residential furniture company, where he serves as the Chair of the Nominations/Corporate Governance Committee. Mr. Wisner is also a director of Commercial International Bank, a leading Egyptian bank, and a director of Pangea3, an international provider of legal outsourcing services to international corporations and law firms.
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ITEM 2.
RATIFICATION
OF APPOINTMENT OF AUDITORS
General
For 2009 and 2008, we retained our principal auditors,
Deloitte & Touche LLP (Deloitte),
independent public accountants, to provide services in the
following categories and, in consideration of such services,
paid to Deloitte the following amounts:
Audit Fees. The aggregate fees billed for
professional services rendered by Deloitte for the audit of our
financial statements for the fiscal years ended
December 31, 2009 and December 31, 2008, and the
reviews of the financial statements included in our
Forms 10-Q
for such fiscal years, were $2,140,362 and $2,044,474,
respectively.
Audit-Related Fees. The aggregate fees billed
for the fiscal years ended December 31, 2009 and
December 31, 2008 for assurance and related services
rendered by Deloitte that were reasonably related to the
performance of the audit or review of our financial statements,
but not reportable as Audit Fees above, were $103,212 and
$324,863, respectively. Audit-Related Fees for 2009 were for
audits of our benefit plans. Audit-Related Fees for 2008 were
for (1) financial statement audit work relating to the
February 2008 sale of a majority of our assets and surrounding
acreage in the Appalachian Basin (a substantial portion of such
fees were reimbursed by the purchaser) and (2) audits of
our benefit plans.
Tax Fees. The aggregate fees billed for the
fiscal years ended December 31, 2009 and December 31,
2008 for tax compliance, tax advice and tax planning services
rendered by Deloitte were $159,039 and $38,780, respectively.
For 2009, such fees were for services rendered with respect to
our tax basis balance sheet and tax compliance services provided
to certain of our expatriate employees. For 2008, such fees were
for tax compliance services provided to certain of our
expatriate employees.
All Other Fees. The aggregate fees billed for
services rendered by Deloitte not reportable as Audit Fees,
Audit-Related Fees or Tax Fees above for the fiscal years ended
December 31, 2009 and December 31, 2008 were $185,472
and $169,830, respectively. All Other Fees for 2009 primarily
related to comfort letter work with respect to our May 2009
offering of our 5.625% Senior Notes due 2019 and our
December 2009 shelf registration statement filing with the SEC,
services rendered in connection with our 2009 acquisitions of
certain crude oil and natural gas properties and related assets
in the Fort Worth, Texas Barnett Shale and services
rendered in connection with certain financial statement
presentation matters. All Other Fees for 2008 primarily related
to comfort letter work with respect to our September 2008
offering of our 6.125% Senior Notes due 2013 and
6.875% Senior Notes due 2018, and services rendered with
respect to our Canadian subsidiary indebtedness.
Pre-Approval of Audit and Non-Audit
Services. The Audit Committee pre-approves all
audit and non-audit services provided to us by our independent
auditors at the first meeting of each calendar year and at
subsequent meetings as necessary. The non-audit services to be
provided are specified and shall not exceed a specified dollar
limit.
Management is directed to provide a report to the Audit
Committee at each meeting of the Audit Committee showing in
reasonable detail the services provided by the independent
auditors to us since the beginning of the calendar year, as well
as the then-estimated cost to-date of audit and non-audit
services.
During the course of a year, if additional non-audit services
are deemed to be appropriate or advisable, these services are
presented to the Audit Committee for pre-approval, subject to
the availability of the de minimus exception for
non-audit services set forth in Section 202 of the
Sarbanes-Oxley Act of 2002 (SOX) and in
Rule 2-01
of
Regulation S-X.
None of the services rendered by Deloitte for the years ended
December 31, 2009 and December 31, 2008 and reportable
as Audit-Related Fees, Tax Fees or All Other Fees above were
approved by the Audit Committee pursuant to such
de minimus exception.
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The Audit Committee has delegated to the Chairman of the Audit
Committee the authority to approve non-audit services provided
by the independent auditors to us pursuant to the
de minimus exception for non-audit services referred
to above and set forth in SOX Section 202 and in
Rule 2-01
of
Regulation S-X.
Ratification
of Appointment for 2010
The Audit Committee of the Board has appointed Deloitte to audit
our consolidated financial statements for the year ending
December 31, 2010, and such appointment has been approved
by the Board.
Ratification of this appointment shall be effective upon the
affirmative vote of the holders of a majority of the Common
Stock present or represented by proxy and entitled to vote at
the Annual Meeting. Abstentions with respect to the ratification
of this appointment will have the effect of a vote against
ratification of this appointment and broker non-votes (which
will occur if a broker or other nominee does not have
discretionary authority and has not received instructions with
respect to the ratification of this appointment within ten days
of the Annual Meeting) will not be counted in determining the
number of shares necessary for approval.
In the event the appointment of Deloitte is not ratified, the
Audit Committee will consider the appointment of other
independent auditors. A representative of Deloitte is expected
to be present at the Annual Meeting and will be available to
make a statement if such representative desires to do so and to
respond to appropriate questions.
THE BOARD
OF DIRECTORS RECOMMENDS VOTING FOR THIS
PROPOSAL.
ITEM 3.
APPROVAL
OF AMENDMENT TO THE
EOG RESOURCES, INC. 2008 OMNIBUS EQUITY COMPENSATION
PLAN
At the Annual Meeting, EOG stockholders will be asked to approve
an amendment to the 2008 Stock Plan (i) increasing the
number of shares of our Common Stock available for issuance
under the 2008 Stock Plan; (ii) providing that a change in
control under the terms of the 2008 Stock Plan will not occur
with respect to certain acquisitions by a qualified
institutional investor; (iii) eliminating the
acceleration of vesting of, and lapse of restrictions on, awards
granted under the 2008 Stock Plan on or after April 28,
2010 (the date of the Annual Meeting) upon the issuance of a
press release regarding a stockholder vote or other transaction,
or the commencement of a tender offer or exchange offer, which
in either case, if consummated, would constitute a change in
control of EOG; and (iv) providing that, unless an award
agreement provides otherwise, such accelerated vesting of, and
lapse of restrictions on, such awards will only occur upon the
effective date of a change in control of EOG.
In March 2008, the Board adopted the 2008 Stock Plan and, at our
2008 annual meeting of stockholders, our stockholders approved
the 2008 Stock Plan. The 2008 Stock Plan was subsequently
amended effective September 4, 2008 to limit to 5% of the
shares authorized under the 2008 Stock Plan certain awards not
granted or maintained in accordance with specified conditions
(as described further under Executive
Compensation Compensation Discussion and
Analysis Components of our Compensation
Program). The 2008 Stock Plan is maintained to provide
incentive opportunities for our directors and employees and to
align their interests with the interests of our stockholders.
The maximum aggregate number of shares of our Common Stock that
may currently be issued under the 2008 Stock Plan pursuant to
awards is 6,000,000 shares. Moreover, the aggregate number
of shares of our Common Stock granted under the 2008 Stock Plan
(i) as restricted stock, restricted stock units,
performance stock, performance units or other stock-based awards
cannot currently exceed 2,400,000 shares, (ii) as
incentive stock options cannot currently exceed
1,000,000 shares and (iii) as non-qualified stock
options or SARs cannot currently exceed 6,000,000 shares.
At December 31, 2009, 2,222,234 of the
6,000,000 shares of our Common Stock provided for under the
2008 Stock Plan remained available for grant.
In February 2010, the Compensation Committee and the Board
approved an amendment to the current 2008 Stock Plan, subject to
stockholder approval at the Annual Meeting, which the Board
recommends. One purpose of the proposed amendment is to increase
the number of shares available for future grant under the 2008
Stock Plan by
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an additional 6,900,000 shares, subject to appropriate
adjustments for any stock splits, stock dividends, or other
changes in the capitalization of EOG, in order to allow us to
continue to attract, retain and reward high performers in our
company. In addition, it is proposed that the maximum aggregate
number of shares of our Common Stock that may be granted under
the 2008 Stock Plan (i) as restricted stock, restricted
stock units, performance stock, performance units or other
stock-based awards (full value awards) be increased
by an additional 2,400,000 shares, (ii) as incentive
stock options be increased by an additional
1,000,000 shares and (iii) as non-qualified stock
options or SARs be increased by an additional
6,900,000 shares. As of March 1, 2010 (the Record
Date), the aggregate fair market value of the additional
6,900,000 shares of our Common Stock to be available for
future grant under the 2008 Stock Plan pursuant to the proposed
amendment was approximately $653,000,000, based on the closing
price per share of our Common Stock of $94.65 on the NYSE on
such date.
Another purpose of the proposed amendment is to permit a
qualified institutional investor (as defined in the
proposed amendment) to generally acquire beneficial ownership of
up to 15% of our Common Stock then-outstanding without the
acquisition being considered a change in control of EOG under
the terms of the 2008 Stock Plan. Finally, under the proposed
amendment, unless the Compensation Committee otherwise provides
in an agreement, a change in control of EOG would be required to
be effective prior to accelerating the vesting of, and lapse of
restrictions on, awards granted under the 2008 Stock Plan on or
after April 28, 2010 (the date of the Annual Meeting). This
modification to the accelerated vesting provisions under the
2008 Stock Plan would not apply to awards granted prior to
April 28, 2010; rather, as provided under the current terms
of the 2008 Stock Plan, unless the Compensation Committee
otherwise provides in an agreement, upon the date a press
release is issued announcing a pending stockholder vote or other
transaction which, if approved or consummated, would constitute
a change in control of EOG, or a tender offer or exchange offer
is publicly announced or commenced which, if consummated, would
constitute a change in control of EOG, the vesting of, and lapse
of restrictions on, awards granted under the 2008 Stock Plan
would be accelerated. The above-described provisions are set
forth in the proposed Second Amendment to EOG Resources, Inc.
2008 Omnibus Equity Compensation Plan, which is attached hereto
as Appendix A (the Second Amendment).
The following is a summary of the principal provisions of the
2008 Stock Plan, without giving effect to the Second Amendment.
The following summary does not purport to be a complete
description of the provisions of the current 2008 Stock Plan.
The 2008 Stock Plan is filed as Exhibit 10.1 to EOGs
Current Report on
Form 8-K
filed with the SEC on May 14, 2008 (the May 14,
2008
Form 8-K)
and the First Amendment to the 2008 Stock Plan is filed as
Exhibit 10.1 to EOGs Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2008 filed with the SEC
on November 3, 2008.
General Terms. Any employee or non-employee
director of EOG is eligible to receive awards under the 2008
Stock Plan. EOG currently has six non-employee directors and, as
of December 31, 2009, employed approximately
2,100 persons, including foreign national employees.
The 2008 Stock Plan, which has a term of 10 years (unless
terminated earlier), provides for awards of incentive stock
options, non-qualified stock options, SARs, restricted stock,
restricted stock units, performance stock, performance units and
other stock-based awards. The 2008 Stock Plan is administered by
the Compensation Committee of our Board. The Compensation
Committee has exclusive authority to select
and/or
approve the participants to whom awards under the 2008 Stock
Plan may be granted and to determine the type, size and terms
and conditions of each award, including, but not limited to,
vesting terms and exercise and transferability restrictions.
Each share of our Common Stock that is subject to a grant counts
as one share of Common Stock against the aggregate authorized
number of shares, currently 6,000,000. Generally, if a grant
awarded under the 2008 Stock Plan is forfeited or cancelled for
any reason, the shares allocable to the forfeited or cancelled
portion of the grant may again be subject to a grant awarded
under the 2008 Stock Plan. If shares are delivered to satisfy
the exercise price of any stock option grant or are used to
exercise a SAR, those shares will not again be available under
the 2008 Stock Plan. If any shares are withheld to satisfy tax
obligations associated with any grant, those shares will not
again be available under the 2008 Stock Plan.
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Grants awarded under the 2008 Stock Plan are non-transferable by
the recipient other than under a qualified domestic relations
court order or by will or under the laws of descent and
distribution, and are generally exercisable during the
recipients lifetime only by the recipient.
The Compensation Committee has the right to terminate, suspend
or amend the 2008 Stock Plan and any grant agreement under the
2008 Stock Plan at any time, provided, however, that no
termination, suspension or amendment shall materially and
adversely affect any grant previously awarded under the 2008
Stock Plan without the grant recipients written consent.
Moreover, the Compensation Committee may not amend the 2008
Stock Plan without stockholder approval to the extent such
approval is required by applicable law or the rules of the NYSE.
Stock Options. The provisions of the 2008
Stock Plan specific to stock options are set forth in
Article V of the 2008 Stock Plan (filed as
Exhibit 10.1 to the May 14, 2008
Form 8-K).
Consistent with prior grants, EOG expects that stock options
granted to its employees in the future under the 2008 Stock Plan
will generally vest in 25% increments over four years and may
not be exercised after the seventh anniversary of the date of
grant. EOGs form of agreement for stock option grants to
its employees, which is filed as Exhibit 10.2 to the
May 14, 2008
Form 8-K,
sets forth the foregoing terms and the circumstances under which
the unvested portion of a stock option grant will become 100%
vested and fully exercisable and also provides that
(i) stock options may be exercised only by the grant
recipient during the recipients lifetime and while the
recipient is employed by EOG, except under the circumstances
described in the grant agreement; (ii) if the
recipients employment with EOG terminates for any reason
other than under the circumstances described in the grant
agreement, the stock option grant will be canceled on the date
of termination of employment; (iii) to the extent that the
exercise of a stock option results in taxable income to the
recipient with respect to which EOG has a withholding
obligation, EOG may withhold an amount sufficient to satisfy
such withholding obligation; and (iv) a stock option grant
(to the extent vested) may be exercised in whole or in part
until it terminates.
SARs. The provisions of the 2008 Stock Plan
specific to SARs are set forth in Article VI of the 2008
Stock Plan (filed as Exhibit 10.1 to the May 14, 2008
Form 8-K).
Consistent with prior grants, EOG expects that SARs awarded to
its employees in the future under the 2008 Stock Plan will be
stock-settled SARs (i.e., settled, upon exercise, in shares of
our Common Stock (net of any required tax withholding) in lieu
of cash), will generally vest in 25% increments over four years
and may not be exercised after the seventh anniversary of the
date of grant. EOGs form of agreement for SAR grants to
its employees (filed as Exhibit 10.3 to the May 14,
2008
Form 8-K)
sets forth the foregoing terms and the circumstances under which
the unvested portion of a SAR grant will become 100% vested and
fully exercisable and also provides that (i) SARs may be
exercised only by the grant recipient during the
recipients lifetime and while the recipient is employed by
EOG, except under the circumstances described in the grant
agreement; (ii) if the recipients employment with EOG
terminates for any reason other than under the circumstances
described in the grant agreement, the SAR grant will be canceled
on the date of termination of employment; (iii) to the
extent that the exercise of a SAR results in taxable income to
the recipient with respect to which EOG has a withholding
obligation, EOG may withhold from the shares of our Common Stock
subject to the SAR grant an amount sufficient to satisfy such
withholding obligation; and (iv) a SAR grant (to the extent
vested) may be exercised in whole or in part until it terminates.
EOG expects that SARs awarded to its non-employee directors in
the future under the 2008 Stock Plan will also be stock-settled
SARs, will generally vest in 50% increments over two years and
may not be exercised after the seventh anniversary of the date
of grant. EOGs form of agreement for SAR grants to its
non-employee directors (filed as Exhibit 10.4 to the
May 14, 2008
Form 8-K)
sets forth the foregoing terms and also provides that
(i) SARs may be exercised only by the grant recipient
during the recipients lifetime and while the recipient
remains a member of the Board, except under the circumstances
described in the grant agreement; and (ii) a SAR grant (to
the extent vested) may be exercised in whole or in part until it
terminates.
Restricted Stock and Restricted Stock
Units. The provisions of the 2008 Stock Plan
specific to restricted stock and restricted stock units are set
forth in Articles VII and VIII, respectively, of the 2008
Stock Plan (filed as Exhibit 10.1 to the May 14, 2008
Form 8-K).
Consistent with prior grants, EOG expects that restricted stock
and restricted stock units awarded to its employees in the
future under the 2008 Stock Plan will generally
cliff vest five years from the date of grant.
EOGs forms of agreements for restricted stock and
restricted stock unit grants to its employees (filed as
Exhibits 10.5 and 10.6, respectively, to the May 14,
2008
Form 8-K)
set forth the foregoing
54
vesting period and also provide that (i) if the grant
recipients employment with EOG does not continue until the
five-year anniversary of the grant date, the grant of restricted
stock or restricted stock units (as the case may be) will
terminate and all shares of restricted stock or restricted stock
units (as the case may be) awarded shall be forfeited and
canceled, except as provided in the grant agreement; and
(ii) the recipient will have voting rights with respect to
the shares of our Common Stock represented by shares of
restricted stock, but will have no voting rights with respect to
the shares of our Common Stock represented by restricted stock
units until such time as the shares of our Common Stock are
issued to the recipient.
Consistent with prior grants, EOG expects that restricted stock
awarded to its non-employee directors in the future under the
2008 Stock Plan will generally cliff vest one year
from the date of grant. EOGs form of agreement for
restricted stock grants to its non-employee directors (filed as
Exhibit 10.7 to the May 14, 2008
Form 8-K),
sets forth the foregoing vesting period and also provides that:
(i) upon vesting of the restricted stock grant, 35% of the
vested shares may be sold by the recipient to cover any tax
obligation the recipient may incur as a result of the vesting
and 65% of the vested shares must be held until the recipient no
longer serves as a member of the Board, consistent with our
stock ownership guidelines for non-employee directors;
(ii) if the grant recipients membership on the Board
does not continue until the one-year anniversary of the grant
date, the grant of restricted stock will terminate and all
shares of restricted stock awarded shall be forfeited and
canceled, except as provided in the grant agreement; and
(iii) the recipient will have voting rights with respect to
the shares of our Common Stock represented by shares of
restricted stock.
Performance Stock Awards and Performance Unit
Awards. The provisions of the 2008 Stock Plan
specific to performance stock awards and performance unit awards
are set forth in Article IX of the 2008 Stock Plan (filed
as Exhibit 10.1 to the May 14, 2008
Form 8-K).
To date, the Committee has only granted performance stock awards
and performance unit awards in lieu of cash payments under our
Executive Officer Annual Bonus Plan, consistent with the
provisions of the 2008 Stock Plan.
Other Stock-Based Awards. The provisions of
the 2008 Stock Plan specific to other stock-based awards are set
forth in Article XI of the 2008 Stock Plan (filed as
Exhibit 10.1 to the May 14, 2008
Form 8-K).
The Compensation Committee has not previously granted other
stock-based awards under EOGs prior plans, but may grant
such awards in the future, consistent with the provisions of the
2008 Stock Plan.
Persons Residing Outside of the United
States. The provisions of the 2008 Stock Plan
specific to persons residing outside of the United States are
set forth in Section 16.15 of the 2008 Stock Plan (filed as
Exhibit 10.1 to the May 14, 2008
Form 8-K).
Pursuant to Section 16.15 of the 2008 Stock Plan, the
Compensation Committee, in its sole discretion, has the power
and authority to determine which persons employed outside the
United States are eligible to participate in the 2008 Stock
Plan, to amend or vary the terms and provisions of the 2008
Stock Plan and the terms and conditions of any award granted to
persons who reside outside the United States, to establish
subplans and modify exercise procedures and other terms and
procedures to the extent such actions may be necessary or
advisable and to take any action, before or after an award is
made, that it deems advisable to obtain or comply with any
necessary local government regulatory exemptions or approvals.
Notwithstanding the foregoing, the Compensation Committee may
not take any actions under the 2008 Stock Plan and may not grant
any awards under the 2008 Stock Plan that would violate the
Exchange Act, the Code, any securities law or governing statute
or any other applicable law.
Change in Control. The provisions of the 2008
Stock Plan specific to a change in control of EOG are primarily
set forth in Sections 2.6 and 13.1 of the 2008 Stock Plan
(filed as Exhibit 10.1 to the May 14, 2008
Form 8-K).
A change in control for purposes of the 2008 Stock
Plan is generally defined to include the acquisition by a person
of 20% or more of our then-outstanding voting power, specified
changes in a majority of our Board, a merger resulting in
existing EOG stockholders having less than 40% of the voting
power in the surviving company and a liquidation or dissolution
of our company. As discussed above, the proposed Second
Amendment provides that an acquisition of our Common Stock that
would otherwise constitute a change in control of EOG will not
constitute a change in control of EOG if such acquisition is
made by a qualified institutional investor (as
defined in the Second Amendment).
For any award granted under the 2008 Stock Plan, the
Compensation Committee may specify the effect of a change in
control of EOG upon that award. Under the current 2008 Stock
Plan, unless otherwise provided in an
55
award agreement or prohibited under applicable laws or
regulations, upon the date a press release is issued announcing
a pending stockholder vote or other transaction which, if
approved or consummated, would constitute a change in control,
or a tender offer or exchange offer is publicly announced or
commenced which, if consummated, would constitute a change in
control, (i) any and all outstanding stock options and SARs
become vested and fully exercisable, and (ii) the
restrictions on any and all restricted stock and restricted
stock units lapse. As discussed above, the proposed Second
Amendment provides that the acceleration of vesting and lapse of
restrictions on awards granted under the 2008 Stock Plan on or
after April 28, 2010 (the date of the Annual Meeting) shall
occur only upon the effective date of a change in control of EOG.
Code Section 162(m). Section 162(m)
of the Code generally disallows a tax deduction to public
companies for a fiscal year for compensation over
$1 million paid individually to a companys principal
executive officer and its other three highest paid executive
officers (other than the principal financial officer) as
determined on the last day of the fiscal year, unless the
compensation qualifies as performance-based compensation. The
requirements of Section 162(m) for performance-based
compensation include stockholder approval of the material terms
of the performance goals under which the compensation is paid.
The material terms include (1) the employees eligible to
receive compensation upon attainment of a goal, (2) the
business criteria on which the goals may be based, and
(3) the maximum amount payable to an employee upon
attainment of a goal. In addition, stockholder approval is
required if there is a change in the material terms of the plan
under which the compensation is granted; for example, an
increase in the shares available for issuance under the plan.
Recommendation
and Required Vote
The Board believes that the 2008 Stock Plan provides a valuable
benefit to EOG by enhancing its ability to attract and retain
highly qualified officers and employees. Accordingly, the Board
has recommended that the Second Amendment be submitted to the
stockholders at the Annual Meeting for their approval.
Our officers and other key employees have an interest in the
Second Amendment, since each may be a recipient of the awards
that may be granted in the future under the 2008 Stock Plan by
the Compensation Committee.
Approval of the Second Amendment shall be effective upon the
affirmative vote of the holders of a majority of the Common
Stock present or represented by proxy and entitled to vote at
the Annual Meeting. Abstentions with respect to the approval of
the Second Amendment will have the effect of a vote against this
proposal and broker non-votes (which will occur if a broker or
other nominee does not have discretionary authority and has not
received instructions with respect to the proposal within ten
days of the Annual Meeting) will not be counted in determining
the number of shares necessary for approval.
THE BOARD
OF DIRECTORS RECOMMENDS VOTING FOR THIS
PROPOSAL.
ITEM 4.
APPROVAL
OF AMENDMENT TO THE EOG RESOURCES, INC.
EMPLOYEE STOCK PURCHASE PLAN
At the Annual Meeting, EOG stockholders will also be asked to
approve an amendment to the EOG Resources, Inc. Employee Stock
Purchase Plan (the ESPP) to extend the term of the
ESPP and increase the number of shares of our Common Stock
available for issuance pursuant to stock options granted to
eligible employees under the ESPP.
In February 2001, the Board adopted the ESPP and, at our 2001
annual meeting of stockholders, our stockholders approved the
ESPP. The ESPP allows eligible employees to authorize payroll
deductions for the bi-annual purchase of shares of our Common
Stock at a discount.
Subject to adjustment as provided under the terms of the ESPP,
the maximum number of shares of our Common Stock which may be
issued pursuant to stock options granted to eligible employees
under the current ESPP may not exceed 1,000,000 shares
(previously adjusted from 500,000 shares in respect of our
two-for-one
stock split effected in March 2005). As of December 31,
2009, 38,602 shares of the 1,000,000 shares of our
56
Common Stock provided for under the current ESPP remained
available for issuance. The current ESPP will terminate by its
terms on July 1, 2011.
In February 2010, the Compensation Committee and the Board
approved an amendment to the ESPP, subject to stockholder
approval at the Annual Meeting, which the Board recommends. The
purposes of the amendment are to (i) increase the number of
shares of our Common Stock available for issuance pursuant to
stock options granted to eligible employees under the ESPP by an
additional 1,000,000 shares and (ii) extend the term
of the ESPP so that it will terminate on December 31, 2019,
unless terminated earlier under its terms or by EOG. As of
March 1, 2010 (the Record Date), the aggregate fair market
value of the additional 1,000,000 shares of our Common
Stock to be available for issuance pursuant to stock options
granted to eligible employees under the ESPP pursuant to the
proposed amendment was approximately $94,700,000, based on the
closing price per share of our Common Stock of $94.65 on the
NYSE on such date.
The Board believes that it is in the best interest of EOG to
encourage ownership of our Common Stock by our employees. We
believe that providing our employees an opportunity to hold an
equity interest in EOG helps them develop a stronger incentive
to work for the continued success of EOG and our subsidiaries.
For these reasons, the Board recommends the extension of the
term of the ESPP and the increase in the number of shares of our
Common Stock available for issuance under the ESPP as set forth
in the proposed amendment.
The following is a summary of the principal provisions of the
current ESPP. The following summary does not purport to be a
complete description of the provisions of the current ESPP; the
current ESPP is filed as Exhibit B to our definitive proxy
statement filed with the SEC on March 29, 2001 in
connection with our 2001 annual meeting of stockholders. The
proposed amendment to the ESPP is attached hereto as
Appendix B.
General. The ESPP is administered by the
Compensation Committee. The ESPP provides for the periodic grant
of stock options to all eligible employees to purchase shares of
our Common Stock. These stock options may be exercised on the
last day of the applicable offering period for which the stock
options were granted and only with funds accumulated through
payroll deductions of between 1% and 10% of an eligible
employees compensation. Except as may be otherwise
determined by the Compensation Committee and announced to
employees prior to an offering period, the maximum number of
shares of Common Stock for which each eligible employee may be
granted a stock option during an offering period will be
determined by dividing $12,500 by the fair market value of a
share of Common Stock on the first day of the offering period.
The price to be paid by eligible employees for each share of
Common Stock upon exercise of a stock option is the lesser of
(i) 85% of the fair market value on the date of grant of
the stock option or (ii) 85% of the fair market value on
the date of exercise of the stock option. Eligible employees
include any employee working more than 20 hours per week.
As of December 31, 2009, EOG had approximately
1,750 employees who were eligible to participate in the
ESPP.
Under the current ESPP, an aggregate of 1,000,000 shares of
our Common Stock (previously adjusted from 500,000 shares
in respect of our
two-for-one
stock split effected in March 2005) have been authorized
and reserved for purchase pursuant to stock options granted to
eligible employees. The offering periods are the six-month
periods commencing on January 1 and July 1 of each year.
Federal Tax Consequences. The ESPP and the
right of participants to make purchases under the ESPP are
intended to qualify under the provisions of Sections 421
and 423 of the Code. Under these provisions, no income will be
taxable to a participant until the shares of Common Stock
purchased under the ESPP are sold or otherwise disposed of. Upon
the sale of or other disposition of the shares, the participant
will generally be subject to tax. The amount and nature of the
tax will depend on how long the participant has held the shares.
If the participant sells or otherwise disposes of the shares
more than two years from the first day of the offering period
and more than one year from the date the shares are purchased by
the participant pursuant to his or her stock option under the
ESPP, the participant will recognize ordinary income in an
amount equal to the lesser of (i) the excess of the fair
market value of the shares at the time of such sale or other
disposition over the purchase price, or (ii) an amount
equal to 15% of the fair market value of the shares as of the
first day of the offering period. Any additional gain will be
treated as long-term capital gain.
If the shares are sold or otherwise disposed of before the
expiration of such holding period, the participant will
recognize ordinary income generally measured as the excess of
the fair market value of the shares on the date the
57
shares are purchased over the purchase price. Any additional
gain or loss on such sales or disposition will be long-term or
short-term capital gain or loss, depending how long the
participant has held the shares.
EOG is not entitled to a deduction for any amount taxed as
ordinary income or capital gain to a participant except to the
extent ordinary income is recognized by participants upon a sale
or disposition of shares before the expiration of the holding
period described above.
No withholding or payment of Federal Insurance Contributions Act
taxes (i.e., FICA taxes) or Federal Unemployment Tax Act taxes
(i.e., FUTA taxes) or withholding for federal income taxes is
required at the time a participants stock options are
exercised or at the time a participant disposes of some or all
of the shares of Common Stock purchased under the ESPP. EOG must
however provide a statement to participants which includes the
following information: (i) the date the stock option was
granted; (ii) the fair market value of our Common Stock on
the date the stock option was granted; (iii) the exercise
price per share; (iv) the date the stock option was
exercised by the participant and our Common Stock was purchased;
and (v) the fair market value of our Common Stock on the
date the stock option was exercised.
The foregoing is only a summary of the federal income tax
consequences to a participant and EOG with respect to the shares
of our Common Stock purchased under the ESPP. Reference should
be made to the applicable provisions of the Code for more
detailed information. In addition, this summary does not discuss
the tax consequences of a participants death or income tax
laws of any state or foreign country in which a participant may
reside.
Accounting Matters. Under GAAP, we must
expense the value of stock options granted under the ESPP
because the participant is offered a discount in excess of five
percent, and the stock option price is based on the lesser of
the stock price at the beginning or end of the offering period
(a look-back provision).
Recommendation
and Required Vote
The Board believes that it is in the best interest of EOG to
encourage ownership of our Common Stock by our employees, as it
helps our employees develop a stronger incentive to work for the
continued success of EOG and our subsidiaries. The Board
recommends the approval of the amendment to the ESPP extending
the term of the ESPP to December 31, 2019 and increasing
the shares of our Common Stock available for issuance under the
ESPP by 1,000,000 shares.
Our officers and other key employees have an interest in the
proposal to approve the amendment to the ESPP since each is
eligible to participate in the ESPP and receive stock options
granted under the ESPP.
Approval of the amendment to the ESPP shall be effective upon
the affirmative vote of the holders of a majority of the Common
Stock present or represented by proxy and entitled to vote at
the Annual Meeting. Abstentions with respect to the approval of
the amendment to the ESPP will have the effect of a vote against
this proposal and broker non-votes (which will occur if a broker
or other nominee does not have discretionary authority and has
not received instructions with respect to the proposal within
ten days of the Annual Meeting) will not be counted in
determining the number of shares necessary for approval.
THE BOARD
OF DIRECTORS RECOMMENDS VOTING FOR THIS
PROPOSAL.
ITEM 5.
APPROVAL
OF THE EOG RESOURCES, INC.
AMENDED AND RESTATED EXECUTIVE OFFICER ANNUAL BONUS
PLAN
Also at the Annual Meeting, EOG stockholders will be asked to
vote upon a proposal to approve an amendment and restatement of
the EOG Resources, Inc. Executive Officer Annual Bonus Plan
(EOGs current plan or the proposed amended and restated
plan, as indicated herein, the Bonus Plan).
In February 2010, the Compensation Committee and the Board
approved an amendment and restatement of the Bonus Plan to
extend the term of the Bonus Plan and effect certain other
changes described below, subject to
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stockholder approval at the Annual Meeting, which the Board
recommends. The current Bonus Plan, adopted by the Compensation
Committee and the Board in February 2001 and approved by our
stockholders at our 2001 annual meeting of stockholders, expires
by its terms at the end of this year.
Section 162(m) of the Code generally disallows a tax
deduction to public companies for a fiscal year for compensation
over $1 million paid individually to a companys
principal executive officer and the other three highest paid
executive officers (other than the principal financial officer)
as determined on the last day of the fiscal year, unless the
compensation qualifies as performance-based compensation. The
requirements of Section 162(m) for performance-based
compensation include stockholder approval of the material terms
of the performance goals under which the compensation is paid.
The material terms include (1) the employees eligible to
receive compensation upon attainment of a goal, (2) the
business criteria on which the goals may be based and
(3) the maximum amount payable to an employee upon
attainment of a goal.
While we do not design our compensation programs for tax
purposes and, under certain circumstances, our Board or the
Compensation Committee may determine it is in the best interests
of EOG and our stockholders to provide compensation to our
executive officers that may not be deductible pursuant to
Section 162(m), we nevertheless design our plans to be tax
efficient for EOG where possible to do so. Accordingly, the
Board believes that it is desirable and in the best interests of
EOG and our stockholders to provide an annual bonus plan and
that the annual bonuses paid to our executive officers be
deductible for federal income tax purposes.
For these reasons, the current Bonus Plan and the proposed
amended and restated Bonus Plan have been structured to satisfy
the requirements of Section 162(m) for performance-based
compensation. Below is a summary of the key provisions of the
proposed amended and restated Bonus Plan. Except as noted below,
the proposed amended and restated Bonus Plan is substantively
identical to our current Bonus Plan. See Appendix C for the
full text of the proposed amended and restated Bonus Plan. Our
current Bonus Plan is filed as Exhibit C to our definitive
proxy statement filed with the SEC on March 29, 2001 in
connection with our 2001 annual meeting of stockholders.
Eligibility. Eligibility under the amended and
restated Bonus Plan for a calendar year will be limited to those
employees of EOG who are covered employees for such
calendar year as defined for purposes of Section 162(m), or
may be covered employees, as determined by the Compensation
Committee, as of the close of such calendar year. A covered
employee under Section 162(m) includes EOGs CEO and
the other three highest paid officers (other than EOGs
chief financial officer). For fiscal year 2009, the covered
employees or potential covered employees consisted of EOGs
CEO and its other five executive officers.
Administration. The amended and restated Bonus
Plan will be administered by the Compensation Committee and will
operate on the basis of the calendar year. The Compensation
Committee will be authorized to interpret the amended and
restated Bonus Plan and from time to time may adopt such rules,
regulations, definitions and forms consistent with the
provisions of the amended and restated Bonus Plan as it may deem
advisable to carry out the amended and restated Bonus Plan.
Performance Goal. The performance goal
necessary for the payment of bonuses under the amended and
restated Bonus Plan will be the achievement of positive adjusted
non-GAAP net income available to common stockholders, as
reported in our year-end earnings release (versus the
performance goal under our current Bonus Plan of positive
Net Income Available to Common, excluding
nonrecurring or extraordinary items, as reported in our year-end
earnings release). Bonuses for a calendar year will only be paid
upon the attainment of the performance goal for the year, except
that, at the sole discretion of the Compensation Committee, all
or a portion of a bonus to a participant for a calendar year may
be payable upon the death or disability of the participant or
the change in ownership or control of EOG (each as determined
for purposes of Section 162(m)) even though the performance
goal for the calendar year is not or may not be attained. The
Compensation Committee will certify in writing prior to payment
of any bonuses under the amended and restated Bonus Plan that
the performance goal was met.
Maximum Individual Bonus. No bonus will be
paid pursuant to the amended and restated Bonus Plan to any
participant for any calendar year that is in excess of
$3 million; the current Bonus Plan limits the bonus paid to
any participant for any calendar year to $2 million. The
Compensation Committee may reduce the bonus payable to any
59
participant below the maximum amount based on such objective or
subjective criteria as the Compensation Committee deems
appropriate in its sole and absolute discretion.
Form of Payment. Bonuses awarded under the
amended and restated Bonus Plan will be paid in cash or, at the
discretion of the Compensation Committee and in lieu of cash
payments, in the form of performance stock or performance units
awarded under the terms of our 2008 Stock Plan or a successor
plan. The amended and restated Bonus Plan also provides for the
deferral of the receipt of bonus payouts pursuant to our
Deferral Plan.
Effective Date; Term. If approved by our
stockholders, the amended and restated Bonus Plan will be
effective January 1, 2010 and will have a term extending to
December 31, 2019.
Amendment and Termination. The Compensation
Committee may modify or terminate the amended and restated Bonus
Plan (if approved at the Annual Meeting) at any time without
prior notice to or the consent of participants; provided that,
without the approval of our stockholders, no such amendment will
be made that would change the class of employees eligible to
receive awards, increase the maximum individual bonus allowed,
change the stated performance goal or modify any other material
terms of the amended and restated Bonus Plan.
Recommendation
and Required Vote
The Board believes that the amended and restated Bonus Plan will
provide a valuable benefit to EOG by enhancing its ability to
attract and retain highly qualified executive officers. The
Board has recommended that the amended and restated Bonus Plan
be submitted to the stockholders at the Annual Meeting for their
approval.
Our executive officers have an interest in the proposal to adopt
the amended and restated Bonus Plan since each is an eligible
participant in the bonus awards that may be granted under the
amended and restated Bonus Plan by the Compensation Committee.
Approval of the amended and restated Bonus Plan shall be
effective upon the affirmative vote of the holders of a majority
of the Common Stock present or represented by proxy and entitled
to vote at the Annual Meeting. Abstentions with respect to the
approval of the amended and restated Bonus Plan will have the
effect of a vote against this proposal and broker non-votes
(which will occur if a broker or other nominee does not have
discretionary authority and has not received instructions with
respect to the proposal within ten days of the Annual Meeting)
will not be counted in determining the number of shares
necessary for approval.
THE BOARD
OF DIRECTORS RECOMMENDS VOTING FOR THIS
PROPOSAL.
60
ITEM 6.
STOCKHOLDER
PROPOSAL CONCERNING HYDRAULIC FRACTURING
EOG has received a stockholder proposal submitted by Green
Century Equity Fund (the Equity Fund), located at
114 State Street, Suite 200, Boston, MA 02109, and the
following co-filers:
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Catholic Health East (CHE), located at
3805 West Chester Pike, Suite 100, Newtown Square, PA
19073-2304;
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MMA Praxis Core Stock Fund (MMA), located at
c/o Mennonite
Mutual Aid, 1110 North Main Street, Post Office Box 483, Goshen,
IN 46527;
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the Benedictine Sisters of Mount St. Scholastica
(BSMSS), located at
801 S. 8th Street, Atchison, KS 66002;
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The Sustainability Group at Loring, Wolcott & Coolidge
(the Sustainability Group), located at 230 Congress
Street, 12th Floor, Boston, MA 02110; and
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Trinity Health (Trinity), located at
c/o Catherine
Rowan, Corporate Responsibility Consultant, 766 Brady Ave., Apt.
635, Bronx, NY 10462 (the Equity Fund and such co-filers,
collectively, the Proponents).
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The Equity Fund, CHE, MMA, BSMSS, the Sustainability Group and
Trinity owned 2,374 shares, 16,223 shares,
71,800 shares, 461 shares, 140,338 shares and
13,648 shares, respectively, of our Common Stock as of
November 19, 2009, November 17, 2009,
November 20, 2009, November 23, 2009,
November 20, 2009 and November 16, 2009, respectively.
EOG has been notified that the Equity Fund will, on behalf of
the Proponents, present the resolution set forth below at the
Annual Meeting for consideration by our stockholders. The
Proponents supporting statement for the resolution, along
with the Boards statement in opposition to the proposal,
is set forth below. In accordance with applicable SEC rules, the
Proponents resolution and supporting statement, for which
EOG accepts no responsibility, are set forth below exactly as
they were submitted by the Proponents. Proxies solicited on
behalf of the Board will be voted Against
this proposal unless stockholders specify a contrary choice in
their proxies.
The
Stockholder Proposal
Safer
Alternatives for Natural Gas Exploration and Development
EOG Resources, Inc. 2010
Whereas,
The U.S. Energy Information Administration estimates the
United States had 238 trillion cubic feet of natural gas
reserves in 2007. Onshore unconventional production
is estimated to increase by 45% between 2007 and 2030.
Unconventional production requires hydraulic
fracturing, which injects a mix of water, chemicals and
particles underground to create fractures through which gas can
flow for collection. A government-industry study estimates that
60-80% of
natural gas wells drilled in the next decade will require
hydraulic fracturing.
The Energy Policy Act of 2005 stripped EPA of authority to
regulate fracturing under the Safe Drinking Water Act. State
regulation is uneven and limited; as of May 2009, 21 of
31 states surveyed where drilling occurs did not have
specific regulations addressing fracturing and 17 did not
require companies to list fracturing chemicals they use.
There is virtually no public disclosure of chemicals used at
fracturing locations. One independent analysis of fluids used in
Colorado identified 174 chemicals of which over 70% are
associated with skin, eye or sensory organ effects, respiratory
effects and gastrointestinal or liver effects. Because of public
concern, in September 2009, some natural gas operators and
drillers began advocating greater disclosure.
Fracturing operations can have significant impacts on
surrounding communities including the potential for increased
incidents of toxic spills from waste water ponds, impacts to
local water quantity and quality, and degradation of air
quality. Government officials in Ohio, Pennsylvania and Colorado
have documented methane gas
61
in drinking water, linked to fracturing operations. Methane gas
in household drinking water supplies has caused explosions. In
Wyoming, the U.S. Environmental Protection Agency recently
found chemicals that are known to be used in fracturing in at
least three wells adjacent to drilling operations.
Media attention has increased exponentially. A search of the
Nexis Mega-News library on November 11, 2009 found 1807
articles mentioning hydraulic fracturing and
environment in the last two years, a 265 percent increase
over the prior three years.
In the proponents opinion, emerging technologies for
tracking chemical signatures from drilling
activities increase the potential for reputational damage and
vulnerability to litigation, and weak and uneven regulatory
controls and reported contamination incidents necessitate that,
to protect their own long-term financial interests, companies
must take measures above and beyond regulatory requirements to
reduce environmental hazards.
Therefore
be it resolved,
Shareholders request that the Board of Directors prepare a
report, within six months of the 2010 annual meeting at
reasonable cost and omitting proprietary information, on the
environmental impact of EOG Resources fracturing
operations and potential policies for the company to adopt,
above and beyond regulatory requirements, to reduce or eliminate
hazards to air, water, and soil quality from fracturing.
Supporting
Statement
Proponents believe the policies explored by the report should
include, among other things, the use of less toxic fracturing
fluids, recycling or reuse of waste fluids and other structural
or procedural strategies to reduce fracturing hazards.
Board
of Directors Statement In Opposition to Stockholder
Proposal
There have been no known hydraulic fracturing-related incidents
of groundwater contamination from any EOG operation and, based
on information that we consider reliable, there have been no
verified incidents of groundwater contamination from hydraulic
fracturing by other operators during the more than 60 years
this technology has been in use. EOG believes that its hydraulic
fracturing operations, which are subject to federal, state and
local laws and state oversight, pose minimal impact to the
environment and to human health. EOG has taken prudent steps,
through the use of technology and best practices, to further
minimize any associated risks. Therefore, either adopting
additional policies or procedures or preparing reports for
stockholders relating to EOGs hydraulic fracturing
operations is unnecessary and would serve no useful purpose.
The Board recommends that you vote Against this
stockholder proposal.
Hydraulic fracturing is a well-established reservoir stimulation
technique used throughout the oil and gas industry. After a well
has been drilled and is being completed, a mixture composed
primarily of water and sand or inert ceramic, sand-like grains,
with a small percentage of special purpose chemical additives
(which is highly diluted typically less than 1% by
volume), is pumped at a calculated rate and pressure into the
natural gas or crude oil-bearing rock. This generates carefully
designed, millimeter-thick cracks or fractures in the target
formation. The newly created fractures are propped open by the
sand, which allows the natural gas or crude oil to flow from
tight (low permeability) reservoirs into the well bore.
Hydraulic fracturing is generally used on crude oil and natural
gas formations found thousands of feet below any drinking water
aquifers and are typically separated from drinking water
aquifers by thousands of feet of impermeable protective rock
barrier.
Existing federal, state and local laws and state oversight, plus
technologies and best practices developed and adopted by the
crude oil and natural gas industry, address all aspects of
exploration and production operations, including hydraulic
fracturing.
Studies conducted by respected regulators and authorities,
including the U.S. Environmental Protection Agency, the
Ground Water Protection Council and The Interstate Oil and Gas
Compact Commission, which represents the governors of
37 states that produce the majority of U.S. natural
gas and crude oil, have verified that
62
hydraulic fracturing is safe and non-threatening to human health
and poses little or no risk to underground sources of drinking
water.
During a December 2009 hearing of the U.S. Senate Committee
on Environment and Public Works, three officials of the
U.S. Environmental Protection Agency testified that they
were not aware of any verified instances of groundwater
contamination caused by hydraulic fracturing.
In May 2009, a report by the Ground Water Protection Council, a
nonprofit organization of state ground water regulatory agencies
working toward the protection of the ground and drinking water
supplies in the United States, concluded that most additives
contained in fracture fluids, including sodium chloride,
potassium chloride, and diluted acids, present low to very low
risks to human health and the environment.
As part of its commitment to environmental stewardship, EOG
continuously evaluates all of its business practices, including
day-to-day
operations such as hydraulic fracturing, chemical additives in
fracture fluids, and the recycling and reuse of hydraulic
fracturing fluids.
In accordance with federal requirements, material safety data
sheets are maintained on every well-site location for every
chemical used in hydraulic fracturing. These records describe
the physical characteristics of each chemical contained in the
fracture fluid, as well as its composition and exposure limits,
potential health effects, personal protection information,
handling and storage precautions, and spill and emergency first
aid procedures. Regulators, among others, have access to such
data and such other information concerning the chemical
composition of fracture fluids necessary to protect and
safeguard human health and the environment. Moreover, the use of
the chemicals and the exploration and production activities
conducted by EOG are highly regulated by government agencies
charged with, among other things, the protection of the
environment and the health and safety of the public. Although
companies manufacturing
and/or
selling the additives in fracture fluids usually do not disclose
the exact combination of the additives for proprietary and
competitive reasons, the chemical additives most typically used
in fracture fluids are available to the public on internet
websites and in other publications sponsored by oil and gas
trade associations.
While the sand or ceramic grains used in hydraulic fracturing
remain underground in the rock formation to hold open the
fractures, a significant percentage of the water and additives
flow back through the well during the initial days of production
and are either recycled or properly and safely disposed of
through regulated facilities in accordance with federal and
state laws and regulations. A small percentage of additives are
highly diluted with water and the amount of each is adjusted
depending on the characteristics of the rock and the specifics
of each well design. In addition, other chemicals, making up a
small percentage of the water/sand/chemical mixture, appear at
levels well below what could constitute a threat to drinking
water and are mostly removed during the extraction process. The
balance remains safely contained within the fractured reservoir.
EOG is committed to safeguarding the environment and conducting
its business in a manner designed to comply with all applicable
environmental laws and regulations, and establishing responsible
standards where such laws or regulations do not exist.
Compliance with laws and regulations, as well as responding to
any changes in such laws and regulations and the adoption of
internal policies to meet or exceed applicable legal
requirements, is a complex, fundamental task dealt with by
EOGs management on a
day-to-day
basis.
EOG believes that its hydraulic fracturing operations pose
minimal impact to air, water and soil quality and to human
health and, moreover, that it has taken prudent steps to
minimize any environmental, litigation or reputational risks
related to hydraulic fracturing. Further, the preparation of a
report of the type requested by the proposal would cause EOG to
incur unnecessary expense and impose an administrative burden.
Therefore, either the adoption of additional policies or
procedures or the preparation of reports to stockholders by EOG
relating to hydraulic fracturing is unnecessary and would serve
no useful purpose.
THE BOARD OF DIRECTORS RECOMMENDS VOTING AGAINST
THIS PROPOSAL.
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ITEM 7.
STOCKHOLDER
PROPOSAL CONCERNING POST-EMPLOYMENT STOCK OWNERSHIP
REQUIREMENTS FOR EXECUTIVE OFFICERS
EOG has received a stockholder proposal submitted by the Miami
Fire Fighters Relief & Pension Fund (the
Pension Fund), located at 2980 N.W. South River
Drive, Miami, FL
33125-1146,
stating that it intends to present the resolution set forth
below at the Annual Meeting for consideration by our
stockholders. The Pension Funds supporting statement for
the resolution, along with the Boards statement in
opposition to the proposal, is set forth below. As of the close
of business on November 16, 2009, the Pension Fund owned
2,355 shares of our Common Stock. In accordance with
applicable SEC rules, the Pension Funds resolution and
supporting statement, for which EOG accepts no responsibility,
are set forth below exactly as they were submitted by the
Pension Fund. Proxies solicited on behalf of the Board will be
voted Against this proposal unless
stockholders specify a contrary choice in their proxies.
The
Stockholder Proposal
Resolved, that stockholders of EOG Resources Inc.
(Company) urge the Compensation Committee of the
Board of Directors (the Committee) to adopt a policy
requiring that senior executives retain a significant percentage
of shares acquired through equity compensation programs until
two years following the termination of their employment (through
retirement or otherwise), and to report to stockholders
regarding the policy before Company 2010 annual meeting of
stockholders. The stockholders recommend that the Committee not
adopt a percentage lower than 75% of net after-tax shares. The
policy should address the permissibility of transactions such as
hedging transactions which are not sales but reduce the risk of
loss to the executive.
SUPPORTING
STATEMENT
Equity-based compensation is an important component of senior
executive compensation at Company. According to the compensation
tables in the 2009 Proxy Statement, our CEO has been granted
options/SARs/stock awards on 984,866 shares of stock that
have not yet been exercised or not yet vested. The
Companys Compensation Committee has established stock
ownership guidelines for senior executives ranging from one
times base salary for vice presidents up to five times base
salary for our CEO ($940,000 base salary times five equals
$4.7 million), which are already satisfied
according to the 2009 Proxy Statement, the CEO in 2008 alone
exercised options/SARs/stock awards valued at $88,135,942.
However, the Company has no requirement that its executives
retain any of their shares following termination of employment.
A study of the Companys proxy statements for the past five
years shows that our CEO has exercised options on slightly more
than 2 million shares and acquired more than
460,000 shares pursuant to stock awards. Yet page 3 of
the 2009 proxy statements shows the CEOs total stock
ownership to be 1,372,407 shares. Obviously, many of the
shares the CEO has acquired have not been retained.
We believe requiring senior executives to hold a significant
portion of shares obtained through compensation plans after the
termination of employment would focus them on Company long-term
success and would better align their interests with those of
Company stockholders. In the context of the current financial
crisis, we believe it is imperative that companies reshape their
compensation policies and practices to discourage excessive
risk-taking and promote long-term, sustainable value creation. A
2002 report by a commission of The Conference Board endorsed the
idea of a holding requirement, stating that the long-term focus
promoted thereby may help prevent companies from
artificially propping up stock prices over the short-term to
cash out options and making other potentially negative
short-term decisions.
We believe the Companys current policy of owing stock that
is up to five times base salary for its senior executives does
not go far enough to ensure that equity compensation builds
executive ownership. We also view a retention requirement
approach as superior to a stock ownership guideline because a
guideline loses effectiveness once it has been satisfied.
We urge stockholders to vote for this proposal.
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Board
of Directors Statement In Opposition to Stockholder
Proposal
The proponents proposal references companies with a
short-term focus, an emphasis on short-term stock price
performance and a culture of excessive risk-taking. We believe
EOG has demonstrated a solid track record of business practices
that underscore its long-term focus. In addition, EOG emphasizes
long-term stock price performance and discourages inappropriate,
excessive risk-taking. Moreover, EOGs stock awards to its
executive officers, by way of the vesting provisions of the
awards, already contain, in effect, a post-retirement stock
ownership requirement. Therefore, we believe the proposal should
not apply to EOG. The Board recommends that you vote
Against this stockholder proposal.
During its
10-year
history as an independent public company, EOG has maintained a
conservative balance sheet, endeavored to provide transparent,
easy-to-read
public disclosures and avoided the use of complex or
exotic accounting practices and financing vehicles.
Moreover, we have historically maintained one of the lowest, if
not the lowest,
debt-to-total
capitalization ratios among our peer group companies, and have
largely grown organically through our exploration and
development activities rather than through potentially riskier
and dilutive
merger-and-acquisition
transactions.
In addition, over the last decade, EOGs stock price
performance has significantly exceeded the performance of the
Standard & Poors 500 Index as well as the stock
price performance of substantially all of our peer group
companies. We believe this further demonstrates the long-term
focus of our executive officers and the alignment of our
executive officers interests with those of our
stockholders. And while oil and gas exploration inherently
offers no guarantees of success, we have historically been
reluctant to pursue exploration projects that we felt would
involve excessive risk. This reluctance to take excessive risks
is evidenced by EOGs relatively immaterial impairment
charges (i.e., property value write-downs) over its
10-year
history.
Regarding the ownership of EOG stock by our executive officers,
it is noteworthy that grants of restricted stock and restricted
stock units (RSUs) to our executive officers are
each subject to a five-year cliff vesting period,
and that grants of stock appreciation rights (SARs)
to our executive officers vest over a four-year period, 25% each
year. Moreover, a significant portion of the annual bonuses
awarded to our executive officers is delivered in restricted
stock or RSUs (depending on the executive officers age);
such awards are subject to the same five-year cliff
vesting period and thus, we believe, must effectively be
re-earned over time. In addition to providing a
retention component to our compensation program, we believe the
vesting periods of our restricted stock, RSUs and SARs
incentivize our executive officers to have a long-term
perspective, focus on long-term stock price performance and
create long-term value for our company and stockholders.
In addition, EOGs stock awards to its executive officers
already contain, in effect, a post-retirement ownership
requirement. As disclosed in our prior proxy statements and this
proxy statement, upon an executive officers retirement
from EOG at or after age 62, the terms of the executive
officers grant agreements provide that the executive
officers unvested restricted stock and RSU awards will not
become 100% vested until six months after the retirement date.
Similarly, in the event an executive officer chooses to retire
at or after age 55 but prior to age 62 and the
retirement is designated in writing by EOG as a
Company-approved retirement prior to age 62,
the terms of the executive officers grant agreements
provide that the executive officers unvested restricted
stock and RSU awards and unvested stock options and SARs will
not become 100% vested until six months after the early
retirement date.
Thus, upon retirement, our executive officers are, in effect,
required to hold a portion of their restricted stock and RSU
awards and stock option and SAR awards for a period of six
months.
EOGs long-term focus was recently recognized by the
Harvard Business Review when it named EOGs Chairman of the
Board and Chief Executive Officer, Mark Papa, one of the best
performing CEOs in the world (The Best-Performing CEOs in
the World, Harvard Business Review, January - February
2010 Issue). Mr. Papa has held his current position since
1999 and has been with EOG and its predecessor companies for
over 28 years. The authors of the article ranked the CEOs
on three measures: country-adjusted total stockholder return,
industry-adjusted total stockholder return and change in market
capitalization (during the CEOs respective tenures as
CEO), based on their belief that CEOs should be measured on how
they handle the ups and downs of running businesses over
an extended period.
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The proposal references Mr. Papas compensation. At
Mr. Papas request, his annual base salary has not
increased since 2004. Instead, the Compensation Committee has
chosen to reward him for EOGs success and his individual
contributions to EOGs performance (and to ensure that his
compensation was competitive) by allocating a significant
portion of his total compensation to RSUs that vest over time
(the five-year cliff vesting period referenced
above). It is noteworthy that Mr. Papas annual base
salary is less than, and in most cases substantially less than,
the annual base salaries of the CEOs of the companies that EOG
considers peer companies for executive compensation purposes.
The proposal also references Mr. Papas 2008 stock
option exercises and related share sales. Such exercises and
sales were done for financial planning purposes and represented
a portion of Mr. Papas then-vested stock options and
SARs. As noted above, Mr. Papa receives a significant
portion of his total compensation in the form of EOG stock and
continues to hold a meaningful amount of EOG shares, RSUs, stock
options and SARs.
Unless the ownership restriction urged by this proposal is
implemented by each of our peer group companies and every other
company with which we compete for executive officer talent, the
implementation of such a restriction by EOG could significantly
impair our ability to retain and incentivize our executive
officers as well as our ability to compete in the competitive
marketplace for executive officer talent and thus, in turn,
could jeopardize EOGs long-term success. As a matter of
principle, we believe our executive officers, after leaving EOG
(whether as a result of retirement or otherwise), should have
the flexibility to manage their personal financial affairs as
they deem appropriate and free of restrictions such as those
urged by the proposal.
In summary, we believe EOG has demonstrated a solid track record
of business practices that underscore our long-term focus, our
emphasis on long-term stock price performance and our
discouragement of inappropriate, excessive risk-taking.
Therefore, we believe the proposal should not apply to EOG.
THE BOARD
OF DIRECTORS RECOMMENDS VOTING AGAINST THIS
PROPOSAL.
ITEM 8.
STOCKHOLDER
PROPOSAL CONCERNING ACCELERATED VESTING OF EXECUTIVE
OFFICER STOCK AWARDS UPON A TRIGGERING EVENT
EOG has received a stockholder proposal submitted on behalf of
Amalgamated Banks LongView LargeCap 500 Index Fund (the
Index Fund), located at 275 Seventh Avenue, New
York, NY 10001, for inclusion in this proxy statement and for
consideration by our stockholders at the Annual Meeting. The
Index Funds resolution and supporting statement, along
with the Boards statement in opposition to the proposal,
is set forth below. As of the time the proposal was submitted,
the Index Fund beneficially owned 58,585 shares of our
Common Stock. In accordance with applicable SEC rules, the Index
Funds resolution and supporting statement, for which EOG
accepts no responsibility, are set forth below exactly as they
were submitted by the Index Fund. Proxies solicited on behalf of
the Board will be voted Against this proposal
unless stockholders specify a contrary choice in their proxies.
The
Stockholder Proposal
RESOLVED: The shareholders hereby ask the board of
directors of EOG Resources, Inc. to adopt a policy that there
shall be no accelerated vesting or removal of restrictions
involving equity awards to senior executives upon the occurrence
of a triggering event, although a pro rata vesting or
removal of restrictions under the terms of the applicable
agreement or plan is permitted up to the date of the triggering
event. This policy shall not affect any legal obligations that
may exist at the time of adoption of the requested policy.
SUPPORTING
STATEMENT
Under various employment agreements and plans, the
Companys senior executives will receive golden
parachute awards under specified circumstances, including
a change in control of the Company.
66
We support the concept of performance-based equity awards to
senior executives to the extent that such awards are tailored to
align the interests of senior executives with the interests of
shareholder. We also believe that severance payments may be
appropriate in some circumstances following a change of control.
We are concerned, however, that the Companys current
practices may permit accelerated vesting or removal of
restrictions on unearned equity awards at leavels that may have
nothing to do with performance.
To put the matter in context, CEO pay levels appear to be
excessive at EOG. The Corporate Library reported in August 2009
that Mr. Papa was among the ten highest paid CEOs in 2008,
based in part on his exercising options/SARs that resulted in a
$69.6 million gain. Risk Metrics Group calculated in 2009
that his pay was nearly twice that of the median peer group CEO
pay. Last years proxy statement disclosed that
Mr. Papas total compensation in 2008 exceeded the
total paid to the next four senior executives combined.
Moreover, much of his compensation is in the form of equity
awards, which are intended to vest over time. However, all
restrictions on unvested stock options/SARs and restricted stock
or restricted stock units are lifted in various circumstances
that may not involve his departure from the Company. One such
trigger is the mere announcement of a tender offer that could
lead to a change in control, even if the offer fails. According
to last years proxy statement, the value of such
accelerated vesting would exceed $20 million for
Mr. Papa.
The board has adopted a plan for pro rata vesting of
certain equity awards for senior executives other than
Mr. Papa in situations such as involuntary termination or
early retirement, but not for a change in control, death or
disability.
Even with this change, we believe that accelerated vesting is
not in the long-term interest of shareholders. The vesting of
equity awards over a period of time is intended to promote
long-term improvements in performance. The link between pay and
long-term performance can be severed if awards gain value on an
accelerated schedule that may or may be tied to performance.
We urge you to vote FOR this proposal.
Board
of Directors Statement In Opposition to Stockholder
Proposal
We believe that provisions providing for the accelerated vesting
of, and removal of restrictions involving, executive officer
equity awards upon a triggering event, such as a change of
control, are for the benefit of a company and its stockholders.
In fact, such provisions further the objectives of EOGs
executive compensation program. It is our view that adopting the
proposal could disadvantage EOG from a competitive standpoint
and, in turn, jeopardize its long-term performance and ability
to create and deliver maximum value to its stockholders. The
Board recommends that you vote Against this
stockholder proposal.
EOGs Compensation Committee, which is comprised of six
independent directors, oversees all aspects of EOGs
executive compensation program, including the compensation of
the CEO, and annually reviews each component of our executive
compensation program.
EOGs executive compensation program is designed to
attract, motivate and retain a highly qualified executive
management team and to appropriately reward our executive
officers for their contribution to the achievement of our
short-term and long-term goals and the creation and enhancement
of stockholder value.
In order to compete for executive officer talent, it is
imperative that EOG have the ability to:
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recruit, retain and properly incentivize talented,
high-performing executive personnel; and
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ensure the stability and continuity of EOGs executive
management and its objective input, free of distractions and
potential conflicts of interest, to EOGs Board in the
event of a potential change of control transaction.
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Accordingly, we believe that contractual agreements and benefit
plans for the benefit of key employees in the face of a change
of control event (such as a merger, reorganization or tender
offer) are necessary and important tools for companies in their
efforts to attract, motivate and retain talented,
high-performing executive personnel. We also
67
believe that such arrangements allow a companys executive
management to remain objective and focused on protecting
stockholders interests and maximizing stockholder value
during a potential change of control event.
Such arrangements may also enable a companys executive
management to avoid distractions and potential conflicts of
interest that could otherwise arise when the companys
board of directors is considering a potential change of control
transaction, thus providing stability, ensuring continuity of
executive management and keeping executive managements
objective input available to the board during such transaction.
For example, a companys executive management seeking new
employment while the companys board is negotiating a
change of control transaction could very well pose a distraction
and a potential conflict of interest to the companys goal
of protecting its stockholders interests and maximizing
stockholder value. From EOGs perspective, the risk of job
loss in connection with a change of control is higher for
executive officers and the time necessary to secure appropriate
new employment may be longer (as compared to a non-executive
employee). Both factors, we believe, are mitigated by
arrangements providing for accelerated vesting of, and removal
of restrictions involving, executive officer stock awards upon a
change of control.
Moreover, accelerated vesting of, and removal of restrictions
involving, executive officer equity awards upon a change of
control provide a companys executive officers with the
same opportunities as the companys stockholders. The
companys stockholders are free to sell their stock at the
time of the change of control and thereby realize, in full, the
value created at the time of the transaction. In the absence of
such arrangements or under a pro rata vesting arrangement as
advocated by the proposal, a companys executive officers
would not have the opportunity to realize the full value of
their equity awards over the terms of such awards and
participate with the companys stockholders in the value
created upon the change of control. We believe that the value
created at the time of a change of control transaction should be
attributed, at least in part, to the efforts and talents of the
companys executive officers.
Unless the prohibition urged by the proposal is implemented by
each of EOGs peer companies and each other company with
which EOG competes for executive officer talent, the proposal
could, as noted above, significantly disadvantage EOG from a
competitive standpoint and, in turn, jeopardize EOGs
long-term performance and ability to create and deliver maximum
value to its stockholders.
The proposal also references the alignment of the interests of a
companys executive officers with those of the
companys stockholders and with the creation of long-term
stockholder value. It is our view that EOGs executive
compensation program aligns the interests of our executive
officers with the interests of our stockholders, as demonstrated
by the Compensation Committees granting of stock
appreciation rights (SARs), which are subject to a
four-year vesting period, 25% each year,
and/or
restricted stock and restricted stock units (RSUs),
which are each subject to a five-year cliff vesting
period, as a significant part of each executive officers
annual compensation package. For example, a significant portion
of each executive officers annual bonus is delivered in
restricted stock or RSUs (depending on the executive
officers age), which portion, we believe, must effectively
be re-earned over time due to the five-year
cliff vesting period of such awards. In addition to
providing a retention component to our compensation program, we
believe the vesting periods of our restricted stock, RSUs and
SARs incentivize our executive officers to have a long-term
perspective, focus on long-term stock price performance and
create long-term value for our company and stockholders.
Moreover, over the past 10 years, EOGs stock price
performance has significantly exceeded the performance of the
Standard & Poors 500 Index as well as the stock
price performance of substantially all of EOGs peer
companies. In addition, the Harvard Business Review recently
recognized EOGs emphasis on long-term stock price
performance and maximizing stockholder value, as well as the
long-term focus of EOGs executive officers, when it named
EOGs Chairman of the Board and Chief Executive Officer,
Mark Papa, one of the best performing CEOs in the world
(The Best-Performing CEOs in the World, Harvard
Business Review, January-February 2010 Issue). The authors of
the article considered three measures: country-adjusted total
stockholder return, industry-adjusted total stockholder return
and change in market capitalization (during the CEOs
respective tenures as CEO), based on their belief that CEOs
should be measured on how they handle the ups and downs of
running businesses over an extended period. This further
demonstrates, we believe, the alignment of the interests of
EOGs executive officers with those of EOGs
stockholders and with the creation of long-term stockholder
value.
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The proposal further references Mr. Papas
compensation and his 2008 stock option exercises and related
share sales. Mr. Papa has served as EOGs Chairman and
CEO since 1999 and has been with EOG and its predecessor
companies for over 28 years. We believe
Mr. Papas compensation is appropriate given his
contributions to EOGs success, his performance as Chairman
and CEO and EOGs stock price performance noted above
during his tenure as Chairman and CEO.
At his request, Mr. Papas annual base salary has not
increased since 2004. Instead, the Compensation Committee has
chosen to reward him for EOGs success and his
contributions to EOGs performance (and to ensure that his
compensation was competitive) by allocating a significant
portion of his total compensation to RSUs, that, as noted above,
cliff vest after five years. Also, we believe it is
noteworthy that Mr. Papas annual base salary is less
than, and in most cases substantially less than, the annual base
salaries of the CEOs of the companies that EOG considers peer
companies for executive compensation purposes. Moreover,
Mr. Papas 2008 stock option exercises and related
share sales were done for financial planning purposes and
represented only a portion of his then-vested stock options and
SARs. Mr. Papa continues to hold a meaningful amount of EOG
shares, RSUs, stock options and SARs and thus, we believe, his
interests remain aligned with those of our stockholders.
Aside from the matters discussed above, we believe that the
proposal has fundamental flaws, in that it does not define or
otherwise clarify what is meant by critical terms, including the
terms triggering event and pro rata
vesting. As a result, the proposal is unclear and subject
to different interpretations as to which triggering events are
contemplated by the proposal; presumably a change of control
would be a triggering event and the proposal seems
to contemplate a change of control as such an event, but the
proposal is not clear as to whether other events, such as
disability, death and involuntarily termination, would be
triggering events; consequently, the proposal is
unclear regarding the circumstances under which accelerated
vesting of, and removal of restrictions involving, unvested
equity awards held by our executive officers would be prohibited
if the proposal were to be implemented. Likewise, the proposal
is unclear as to how pro rata vesting would be administered and
calculated if the proposal were to be implemented.
We believe that the current structure of EOGs executive
compensation program, including the provisions of EOGs
program providing for the accelerated vesting of, and removal of
restrictions involving, executive officer equity awards upon a
triggering event, is appropriate and effective, is consistent
with the compensation practices of our peer companies and is in
the best interest of EOG and its stockholders.
THE BOARD
OF DIRECTORS RECOMMENDS VOTING AGAINST THIS
PROPOSAL.
69
STOCKHOLDER
PROPOSALS AND DIRECTOR NOMINATIONS
Stockholders may propose matters to be presented at stockholder
meetings and may also nominate persons to be directors of EOG.
Formal procedures have been established for those proposals and
nominations.
Proposals
for 2011 Annual Meeting of Stockholders and 2011 Proxy
Materials
Proposals of holders of our Common Stock intended to be
presented at our 2011 annual meeting of stockholders and
included in our proxy statement and form of proxy relating to
such meeting pursuant to
Rule 14a-8
of Regulation 14A must be received by us, addressed to our
Corporate Secretary, at our principal executive offices, 1111
Bagby, Sky Lobby 2, Houston, Texas 77002, no later than
November 25, 2010.
Nominations
for 2011 Annual Meeting of Stockholders and for Any Special
Meetings of Stockholders
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors. Pursuant
to our bylaws, nominations of persons for election to our Board
may be made at a meeting of our stockholders:
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pursuant to our notice of the meeting;
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by or at the direction of the Board; or
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by any of our stockholders who is a stockholder of record at the
time of giving the notice discussed below and at the time of the
meeting, who shall be entitled to vote for the election of
directors at the meeting and who complies with the notice
requirements of Article II, Section 3 of our bylaws.
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Nominations by any of our stockholders shall be made pursuant to
timely notice in writing to our Corporate Secretary. To be
timely, notice given by a stockholder shall be delivered to our
Corporate Secretary at our principal executive offices at 1111
Bagby, Sky Lobby 2, Houston, Texas 77002, (1) with respect
to an election to be held at our 2011 annual meeting of
stockholders, no earlier than December 29, 2010 and no
later than January 28, 2011 and (2) with respect to an
election to be held at a special meeting of our stockholders for
the election of directors, not earlier than the close of
business on the 120th day, and not later than the close of
business on the later of the 90th day, prior to the date of
such special meeting or, if the first public announcement of the
date of such special meeting is less than 100 days prior to
the date of such special meeting, the 10th day following
the day on which public announcement is first made of the date
of the special meeting and of the nominees proposed by the Board
to be elected at such meeting.
The notice shall set forth the information required by
Article II, Section 3 of our bylaws, including, but
not limited to, (1) such stockholders name and
address, as such information appears on our books, (2) the
number of shares of our Common Stock which are directly or
indirectly beneficially owned by the stockholder, (3) all
other direct or indirect interests of such stockholder in our
Common Stock (including derivative and short
interests), (4) any arrangement pursuant to which such
stockholder has a right to vote any shares of our Common Stock,
(5) all information relating to such stockholders
director nominee that would be required to be disclosed in a
proxy statement in connection with solicitations of proxies for
election of directors in a contested election pursuant to
Section 14 of the Exchange Act (including such
nominees written consent to being named in the proxy
statement as a nominee and to serving as a director if elected)
and (6) a description of all direct and indirect
compensation and other material monetary agreements and
relationships between such stockholder and such proposed
nominee, including, without limitation, all information that
would be required to be disclosed pursuant to Item 404
promulgated under
Regulation S-K
if the stockholder making the nomination were the
registrant for purposes of such rule and the nominee
were a director or executive officer of such registrant.
In the event a person is validly designated as a nominee to the
Board and shall thereafter become unable or unwilling to stand
for election to the Board, the Board or the stockholder who
proposed such nominee, as the case may be, may designate a
substitute nominee.
Notwithstanding our bylaw provisions described above, a
stockholder shall also comply with all applicable requirements
of the Exchange Act and the related rules and regulations
thereunder with respect to the matters set forth in such bylaw
provisions.
70
Other
Stockholder Business for 2011 Annual Meeting of
Stockholders
For other business (other than director nominations) to be
brought before an annual meeting of stockholders by any of our
stockholders, the stockholder must have given timely notice, in
writing, to our Corporate Secretary of the business to be
brought before the annual meeting. To be timely with respect to
our 2011 annual meeting of stockholders, notice given by a
stockholder must be delivered to our Corporate Secretary at our
principal executive offices at 1111 Bagby, Sky Lobby 2, Houston,
Texas 77002, no earlier than December 29, 2010 and no later
than January 28, 2011.
The notice shall set forth the information required by
Article II, Section 3 of our bylaws, including, but
not limited to, (1) a brief description of the business
desired to be brought before the annual meeting, (2) the
reasons for conducting such business at the annual meeting,
(3) any material interest of such stockholder in such
business, (4) such stockholders name and address, as
such information appears on our books, (5) the number of
shares of our Common Stock which are directly or indirectly
beneficially owned by the stockholder, (6) all other direct
or indirect interests of such stockholder in our Common Stock
(including derivative and short interests) and
(7) any arrangement pursuant to which such stockholder has
a right to vote any shares of our Common Stock.
GENERAL
As of the date of this proxy statement, our management has no
knowledge of any business to be presented for consideration at
the Annual Meeting other than that described above. If any other
business should properly come before the Annual Meeting or any
adjournment thereof, it is intended that the shares represented
by proxies will be voted with respect thereto in accordance with
the judgment of the persons named as agents and proxies in the
enclosed form of proxy.
By Order of the Board of Directors,
MICHAEL P. DONALDSON
Corporate Secretary
Houston, Texas
March 25, 2010
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Appendix A
Second
Amendment to EOG Resources, Inc. 2008 Omnibus Equity
Compensation Plan
WHEREAS, EOG Resources, Inc. (the Company) has
heretofore adopted and maintains the EOG Resources, Inc. 2008
Omnibus Equity Compensation Plan (as amended by the First
Amendment to EOG Resources, Inc. 2008 Omnibus Equity
Compensation Plan, dated effective as of September 4, 2008,
the Plan); and
WHEREAS, the Company desires to amend the Plan, and the
Compensation Committee of the Board of Directors of the Company
and the stockholders of the Company, pursuant to
Section 15.1 of the Plan, have approved the proposed
amendments to the Plan set forth below;
NOW, THEREFORE, the Plan is amended as follows:
1. Clause (a) of Section 2.6 of the Plan is
hereby amended and restated in its entirety to provide as
follows:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended from time to time,
(the Exchange Act) (a Covered Person) of
Beneficial Ownership of 20% or more of either (i) the then
outstanding shares of the common stock of the Company (the
Outstanding Company Common Stock), or (ii) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the Outstanding Company Voting
Securities); provided, however, that for purposes of this
subsection (a) of this Section 2.6, the following
acquisitions shall not constitute a Change in Control of the
Company: (1) any acquisition of shares of the Company
directly from the Company, (2) any acquisition of shares of
the Company by the Company, (3) any acquisition of shares
of the Company by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any entity controlled
by the Company, (4) any acquisition of shares of the
Company by any corporation pursuant to a transaction which
complies with clauses (1), (2) and (3) of subsection
2.6(c) of this Section 2.6 or (5) an acquisition by a
Qualified Institutional Investor, but only for so long as such
investor remains a Qualified Institutional Investor; or
2. Sections 2.35, 2.36, 2.37, 2.38, 2.39, 2.40, 2.41,
2.42, 2.43, 2.44, 2.45 and 2.46 shall be renumbered as
Sections 2.36, 2.37, 2.38, 2.39, 2.40, 2.41, 2.42, 2.43,
2.44, 2.45, 2.46 and 2.47, respectively and a new
Section 2.35 shall be added to the Plan to provide as
follows:
2.35 Qualified Institutional Investor means, as
of any time of determination, a Person that is described in
Rule 13d-l(b)(1)
promulgated under the Exchange Act (as such Rule is in effect on
the date hereof) and is eligible to report (and, if such Person
is the Beneficial Owner of greater than 5% of the shares of
common stock of the Company, does in fact report) beneficial
ownership of common stock of the Company on Schedule 13G,
and such Person (i) is not required to file a
Schedule 13D (or any successor or comparable report) with
respect to its beneficial ownership of common stock of the
Company, and (ii) shall be the Beneficial Owner of less
than 15% of the Outstanding Company Common Stock; provided,
however, that a Person which would constitute a Qualified
Institutional Investor except for its failure to satisfy
clause (ii) of this definition shall nonetheless constitute
a Qualified Institutional Investor if (A) such Person or an
Affiliate of such Person shall have, as of December 31,
2004, reported beneficial ownership of greater than 5% of the
common stock of the Company for a period of two consecutive
years, (B) such Person shall be the Beneficial Owner of
less than 15% of the Outstanding Company Common Stock (including
in such calculation the holdings of all of such Persons
Affiliates and Associates (as defined in
Rule 12b-2
of the Exchange Act) other than those which, under published
interpretations of the Securities and Exchange Commission or its
Staff, are eligible to file separate reports on
Schedule 13G with respect to their beneficial ownership of
the common stock of the Company), and (C) such Person shall
be the Beneficial Owner of less than 30% of the Outstanding
Company Common Stock.
Solely for the purposes of the above definition of
Qualified Institutional Investor, a person shall be
deemed to be the Beneficial Owner of and shall be
deemed to beneficially own any securities
(i) which such Person or any of such Persons
Affiliates or Associates beneficially owns, directly or
indirectly; (ii) which such Person or any of such
Persons Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or
A-1
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights, warrants or options,
or otherwise; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Persons
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given
to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange
Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or
successor report); or (iii) which are beneficially owned,
directly or indirectly, by any other Person with which such
Person or any of such Persons Affiliates or Associates has
any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting
(except to the extent contemplated by the proviso to (ii)(B)
above) or disposing of any securities of the Company.
3. Section 4.2(a) of the Plan is hereby amended and
restated in its entirety to provide as follows:
4.2 Dedicated Shares; Maximum Awards.
(a) Number of Shares of Stock Dedicated under the Plan for
Awards.
(i) The aggregate number of shares of Stock with respect to
which Awards may be granted under the Plan is 12,900,000.
(ii) The aggregate number of shares of Stock with respect
to which Full Value Awards may be granted under the Plan is
4,800,000.
(iii) The aggregate number of shares with respect to which
ISOs may be granted under the Plan is 2,000,000.
4. Clauses (a) and (b) of Section 13.1 of
the Plan are hereby amended and restated in their entirety to
provide as follows:
(a) Any and all Options and SARs granted hereunder shall
become immediately vested and exercisable upon the effective
date of the Change in Control of the Company;
(b) any Period of Restriction and restrictions imposed on
Restricted Stock and Restricted Stock Units shall lapse upon the
effective date of the Change in Control of the Company;
[SIGNATURE
PAGE TO FOLLOW]
A-2
AS AMENDED HEREBY, the Plan is specifically ratified and
reaffirmed.
Dated effective as of January 1, 2010.
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ATTEST:
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EOG RESOURCES, INC.
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By:
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By:
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A-3
Appendix B
Amendment
to EOG Resources, Inc. Employee Stock Purchase Plan
WHEREAS, EOG Resources, Inc. (the Company) has
heretofore adopted and maintains the EOG Resources, Inc.
Employee Stock Purchase Plan (the Plan); and
WHEREAS, the Company desires to amend the Plan, and the Board of
Directors of the Company and the shareholders of the Company,
pursuant to Sections 1.4 and 9.2 of the Plan, have approved
the amendments to Section 1.1 and 1.2 of the Plan set forth
below;
NOW, THEREFORE, the Plan is amended as follows:
1. Section 1.1 of the Plan is hereby amended and
restated in its entirety to provide as follows:
1.1 Purpose. The purpose of this Plan is to provide
Employees of the Company and its Affiliates which adopt the Plan
with an opportunity to purchase Stock of the Company through
offerings of options at a discount and thus develop a stronger
incentive to work for the continued success of the Company and
its Affiliates. Therefore, this Plan is available to all
Employees of every Employer upon their fulfilling the
eligibility requirements of Section 3.1. Any Affiliate may
adopt it with the approval of the Committee by fulfilling the
requirements of Section 8.1. This Plan is sponsored by the
Company. Unless terminated by the Company earlier, the Plan will
terminate on December 31, 2019.
2. Section 1.2 of the Plan is hereby amended and
restated in its entirety to provide as follows:
1.2 Share Commitment. The aggregate number of Shares
authorized to be sold pursuant to Options granted under this
Plan is 2,000,000 Shares, subject to adjustment as provided
in this Section. Any Shares relating to Options that are
granted, but subsequently lapse, are canceled, or are otherwise
not exercised by the Exercise Date, shall be available for
future grants of Options.
In the event of any stock dividend,
split-up,
recapitalization, merger, consolidation, combination or exchange
of Shares, or the like, as a result of which shares shall be
issued in respect of the outstanding Shares, or the Shares shall
be changed into the same or a different number of the same or
another class of stock, the total number of Shares authorized to
be committed to this Plan, the number of Shares subject to each
outstanding Option and the Option Price applicable to each
Option shall be appropriately adjusted by the Committee.
[SIGNATURE
PAGE TO FOLLOW]
B-1
AS AMENDED HEREBY, the Plan is specifically ratified and
reaffirmed.
Dated effective as of January 1, 2010.
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ATTEST:
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EOG RESOURCES, INC.
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By:
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By:
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B-2
Appendix C
EOG
Resources, Inc. Amended and Restated Executive Officer Annual
Bonus Plan
I. Purpose of the Plan. The Amended and
Restated Executive Officer Annual Bonus Plan (the
Plan) of EOG Resources, Inc. (the
Company) is designed to enhance the Companys
ability to attract and retain highly qualified executives and
provide additional financial incentives to such executives to
promote the success of the Company.
II. Eligibility. Eligibility under this
Plan for a calendar year is limited to those employees of the
Company who are covered employees for such calendar
year as defined for purposes of Section 162(m) of the
Internal Revenue Code of 1986, as amended
(Section 162(m)), or such employees of the
Company who the Committee (as defined in Article III), in
its sole discretion, determines may be covered
employees as of the close of such calendar year.
III. Administration. The Plan shall be
administered by the Compensation Committee of the Board of
Directors comprised solely of two or more outside directors (the
Committee) and shall operate on the basis of the
calendar year. The Committee is authorized to interpret the Plan
and from time to time may adopt such rules, regulations,
definitions and forms consistent with the provisions of the Plan
as it may deem advisable to carry out the Plan.
IV. Performance Goal. Bonuses paid under
the Plan are intended to constitute qualified performance-based
compensation for purposes of Section 162(m). The
performance goal for a calendar year necessary for the payment
of bonuses under the Plan for the calendar year will be the
achievement of positive adjusted non-GAAP net income available
to common stockholders, as reported in the Companys
year-end earnings release. Bonuses for a calendar year under the
Plan shall be paid solely on account of the attainment of the
performance goal for the year, provided that, at the sole
discretion of the Committee, all or a portion of a bonus to a
Participant for a calendar year may be payable under the Plan
upon the death or disability of the Participant or the change of
ownership or control of the Company (each as determined for
purposes of Section 162(m)) even though the performance
goal for such calendar is not or may not be attained for the
calendar year of such death, disability or change of ownership
or control. The Committee will certify in writing prior to
payment of any bonuses under the Plan that the performance goal
was met.
V. Maximum Individual Bonus. In no event
shall a bonus paid pursuant to the Plan to any Participant for
any calendar year be in excess of three million dollars
($3,000,000). The Committee may decrease the bonus payable to
any Participant below the maximum amount based on such objective
or subjective criteria as the Committee deems appropriate in its
sole and absolute discretion.
VI. Form of Payment. Bonuses awarded
pursuant to the Plan to any Participant shall be paid in cash or
at the discretion of the Committee, in lieu of such cash
payments, in the form of performance stock or performance units
awarded under the terms of the Companys 2008 Omnibus
Equity Compensation Plan, or a successor plan. In addition, the
Committee may permit Participants to defer the receipt of the
payment of a Bonus awarded pursuant to the Plan under the
Companys 409A Deferral Plan (or a similar plan sponsored
by the Company, if any) in accordance with the terms of such
plan.
VII. Unfunded Nature of Plan. The Plan
shall constitute an unfunded, unsecured obligation of the
Company to make bonus payments from its general assets in
accordance with the provisions of the Plan. The establishment of
the Plan shall not be deemed to create a trust. No participant
shall have any security or other interest in any assets of the
Company.
VIII. Prohibition Against Assignment or
Encumbrance. No right, title, interest or benefit
hereunder shall ever be liable for or charged with any of the
torts or obligations of a Participant, or be subject to seizure
by any creditor of a Participant or any person claiming under a
Participant. No Participant nor any person claiming under a
Participant shall have the power to sell, transfer, pledge,
anticipate or dispose of any right, title, interest or benefit
hereunder in any manner until the same shall have been actually
distributed free and clear of the terms of the Plan. Plan Not an
Employment Contract. Nothing in the adoption or implementation
of the Plan shall confer on any
C-1
Participant any right to continued employment by the Company or
affect in any way the right of the Company to terminate a
Participants employment.
IX. Severability. In the event any
provision of the Plan shall be held invalid or illegal for any
reason, any illegality or invalidity shall not affect the
remaining parts of the Plan, but the Plan shall be construed and
enforced as if the illegal or invalid provision had never been
inserted, and the Company shall have the privilege and
opportunity to correct and remedy such questions of illegality
or invalidity by amendment as provided in the Plan.
X. Withholding of Taxes. The Company
shall have the right to deduct from any payment made under the
Plan any foreign, federal, state or local taxes required by law
to be withheld with respect to such payments.
XI. Applicable Law. The Plan shall be
governed and construed in accordance with the laws of the State
of Texas, except to the extent such laws are preempted by an
applicable federal law.
XII. Rights of Company. Nothing contained
in the Plan shall prevent the Company from adopting or
continuing in effect other compensation arrangements, which
arrangements may be either generally applicable or applicable
only in specific cases.
XIII. Effective Date. Upon approval by
the stockholders of the Company at the 2010 Annual Meeting of
Stockholders, the amendment and restatement of the Plan shall be
considered effective as of January 1, 2010.
XIV. Amendment and Termination of the
Plan. The Committee may modify or terminate the
Plan at any time without prior notice to or consent of
Participants or the stockholders of the Company; provided that,
without the approval of the stockholders of the Company, no such
amendment shall be made that would change the class of Employees
eligible to receive awards under the Plan, increase the maximum
individual bonus allowed under the Plan, change the stated
performance goal, or modify any other material terms of the Plan.
C-2
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EOG RESOURCES, INC. 1111 BAGBY
SKY LOBBY 2 HOUSTON,
TX 77002
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VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions
and for electronic delivery of information up until
11:59 P.M. Eastern Time on April 27, 2010. Have your
proxy card in hand when you access the web site and
then follow the instructions to obtain your records
and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by EOG
Resources, Inc. in mailing proxy materials, you can
consent to receive all future proxy statements, proxy
cards and annual reports electronically via e-mail or
the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using
the Internet and, when prompted, indicate that you
agree to receive or access proxy materials
electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time on
April 27, 2010. Have your proxy card in hand when you
call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in
the postage-paid envelope we have provided or return
it to EOG Resources, Inc., c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717.
VOTE IN PERSON
If you would like to attend the annual meeting and
vote in person, you may contact EOG Resources, Inc.
at (713) 651-6260 (Attention: Corporate Secretary)
for directions to the annual meeting. Please see the
proxy statement for annual meeting attendance
requirements.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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M20548-P87648
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KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN THIS PORTION ONLY
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EOG RESOURCES, INC.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE FOLLOWING PROPOSALS: |
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1: |
To elect seven directors of the
Company to hold office until the
2011 annual meeting of stockholders
and until their respective
successors are duly elected and
qualified. |
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Nominees: |
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For |
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Against |
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Abstain |
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For |
Against |
Abstain |
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1a. George A. Alcorn |
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2. To ratify the appointment by the Audit Committee of the Board of Directors of Deloitte & Touche LLP, independent
public accountants, as auditors for the Company for the
year ending December 31, 2010.
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1b. Charles R. Crisp |
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3. To approve an amendment to the EOG Resources, Inc.
2008 Omnibus Equity Compensation Plan to increase the
number of shares available for issuance under the plan
and effect certain other changes.
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1c. James C. Day |
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1d. Mark G. Papa |
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4. To approve an amendment to the EOG Resources, Inc.
Employee Stock Purchase Plan to increase the number of
shares available for purchase under the plan and to
extend the term of the plan.
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o |
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1e. H. Leighton Steward |
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5. To approve an amendment and restatement of the EOG
Resources, Inc. Executive Officer Annual Bonus Plan to
extend the term of the plan and effect certain other changes.
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1f. Donald F. Textor |
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1g. Frank G. Wisner |
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST THE FOLLOWING PROPOSALS: |
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6. Stockholder proposal concerning hydraulic fracturing, if
properly presented.
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7. Stockholder proposal concerning post-employment
stock ownership requirements for executive officers, if
properly presented. |
o |
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For address changes and/or comments, please check this box and write them on the back where indicated. |
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8. Stockholder proposal concerning accelerated vesting of
executive officer stock awards upon a triggering event, if
properly presented. |
o |
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Please indicate if you plan to attend this meeting. |
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Yes |
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No |
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IMPORTANT: Please date this proxy and sign exactly as your name appears above. If stock is held
jointly, each holder should sign. Executors, administrators, trustees, guardians, attorneys and
others signing in a representative capacity, please give your full titles. If a corporation, please
sign in full corporate name by president or other duly authorized officer. If a partnership, please
sign in partnership name by duly authorized person.
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint Owners) |
Date |
2010 Annual Meeting of Stockholders
Wednesday, April 28, 2010
3:00 P.M.
Doubletree Hotel
Nautile Meeting Room
400 Dallas Street
Houston, Texas
Important Notice Regarding the Availability of Proxy Materials for the 2010 Annual Meeting of
Stockholders To Be Held on April 28, 2010:
The Notice of Annual Meeting of Stockholders, 2010 Proxy Statement and 2009 Annual Report
are available at www.proxyvote.com and at www.eogresources.com/investors/annreport.html.
M20549-P87648
EOG RESOURCES, INC.
2010 ANNUAL MEETING OF STOCKHOLDERS
April 28, 2010
The enclosed form of proxy is solicited by the Board of Directors of EOG Resources, Inc.
The undersigned stockholder of EOG Resources, Inc., a Delaware corporation (the Company), by
signing this proxy, hereby revokes all prior proxies and appoints Frederick J. Plaeger, II and
Michael P. Donaldson with full power of substitution, as true and lawful agents and proxies to
represent the undersigned at the 2010 annual meeting of stockholders to be held on Wednesday, April
28, 2010, at 3:00 p.m., Houston time, and at any adjournments thereof, and to vote all the shares
of common stock of the Company held of record by the undersigned at the close of business on March
1, 2010. The Board of Directors recommends a vote FOR each of the nominees for directors, FOR
Items 2, 3, 4 and 5 and AGAINST Items 6, 7 and 8, as set forth on the reverse side.
SHARES REPRESENTED BY THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR EACH OF
THE NOMINEES FOR DIRECTORS, FOR ITEMS 2, 3, 4 AND 5, AGAINST ITEMS 6, 7 AND 8 AND, IN THE
DISCRETION OF THE AGENTS AND PROXIES, ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL
MEETING OR ANY ADJOURNMENT THEREOF.
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Do not return your proxy card if you are voting by Internet or telephone. |
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Address Change/Comments:
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(continued on other side)