This excerpt taken from the DVN DEF 14A filed Apr 24, 2009.
For 2008, the Committee made grants of long-term incentive awards to named executive officers in the form of stock options and restricted stock that vest as described in the CD&A section titled Overview of Executive Compensation Elements Used in 2008. As was the case in 2007, approximately one-half of the total award value was granted in options, and one-half of the award value was granted in restricted stock. We continue to believe this combination promotes shareholder value creation as well as executive stock ownership and retention.
Benchmarking conducted in 2008 indicated that the value of long-term incentives awarded to the named executive officers in 2007 generally fell within the Companys market objective on an overall basis, with some shortfalls to target when measured on an individual basis. Individual long-term incentive opportunities ranged from below median to approximately the 75th percentile of peers.
Commitment Runs Deep
Based on the 2008 benchmarking results and other factors that it considers when making long-term incentive grant decisions (described in Long-Term Incentives under the Overview of Executive Compensation Elements in 2008 section of this CD&A), the Committee approved the following grants during its year-end meeting:
The number of shares underlying the long-term incentive grants awarded to each named executive officer was greater than that of the prior year. The Committee believed this decision was appropriate based on the long-term value created by the addition of significant production and reserve potential in emerging natural gas plays.
For additional detail on the Companys long-term incentive award grants in 2008, please refer to the Summary Compensation Table and the Grants of Plan-Based Awards Table.
In 2008, the Company, with the approval of the Committee, modified the equity-based long-term incentives for our senior executive officers, including the named executive officers. The new arrangements provide that each senior executive officer who meets certain years-of-service and age criteria may be selected upon retirement to continue to vest in outstanding equity-based grants in accordance with the vesting dates established in the original grants so long as he agrees to certain covenants to protect Devons business. With the modification, the Companys treatment of equity at retirement is now consistent with competitive practices for senior executives in our industry.
The modification results in earlier expense recognition when a senior executive officer meets the years-of-service and age criteria as existing grants must be expensed at that time rather than at a later date when the grants actually vest. At the time the modification was made, certain senior executive officers had already met the years-of-service and age criteria, which resulted in the recognition of approximately $27 million of equity-based compensation expense in the second quarter of 2008. This expense would have been recognized in future reporting periods if the modification had not been made and the senior executive officers had continued their employment with the Company.
This excerpt taken from the DVN DEF 14A filed Apr 27, 2007.
A key component of our compensation program is to reward executives for long-term strategic accomplishments and enhancement of longer-term stockholder value through equity-based long-term incentives, which include stock option grants and restricted stock awards. We believe that long-term incentive compensation plays an essential role in attracting and retaining executive officers and aligns their interests with the goal of maximizing stockholder value.
We have established long-term incentive target values for each level of responsibility within the Company, including the named executive officers. In determining the target value of long-term incentives to be awarded to our executives, the Committee considers comparable data from our peers, which is provided by the Compensation Consultant. The Committee also reviews with the Compensation Consultant the annual grant rates for equity-based awards (equity awards granted as a percentage of common shares outstanding) among peers and the general industry to ensure that the grants we make are competitive but not unduly dilutive to our stockholders.