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This excerpt taken from the DVN DEF 14A filed Apr 24, 2009. Long-Term
Incentives
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 Company’s 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.
27
Commitment Runs Deep
Table of Contents
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 Company’s 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 Devon’s business. With the modification, the
Company’s 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. Long-Term
Incentives
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.
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