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DVN » Topics » Purpose and Key Features of the Plan

This excerpt taken from the DVN DEF 14A filed Apr 24, 2009.
Purpose and Key Features of the Plan
 
The purpose of the 2009 plan is to create incentives designed to motivate selected employees to significantly contribute toward our growth and profitability. The shares under the 2009 plan will enable us to attract and retain experienced employees who, by their positions, abilities and diligence, are able to make important contributions to our success.
 
The plan is designed to provide flexibility to meet our needs over two to three years in a changing and competitive environment while attempting to minimize dilution to stockholders. We do not intend to use all incentive awards at all times for each participant but will selectively grant awards primarily to achieve long-term goals. Awards will
 
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Commitment Runs Deep

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be granted in such a way as to align the interests of participants with those of our stockholders. The plan is very similar to the 2005 plan with three exceptions:
 
  •  authorization of restricted stock units, which provide flexibility to grant equity to employees in some foreign jurisdictions tax-efficiently;
 
  •  the adjustment provision for awards other than stock options or appreciation rights that reduces the number of shares available for grant by 1.84 shares, compared to 2.2 shares under the 2005 plan, for each share awarded; and
 
  •  shares underlying grants made under prior Devon plans that are outstanding as of the effective date of the 2009 plan but subsequently cancelled or forfeited will revert to the 2009 plan and be available for future grant.
 
Key features of the new long-term incentive plan include:
 
  •  a prohibition against the repricing of stock options;
 
  •  a prohibition against granting options with an exercise price less than the fair market value of our common stock on the date of grant;
 
  •  a provision under which shares granted as awards other than stock options or appreciation rights will be subtracted from the total shares available for award as 1.84 shares for every one share granted;
 
  •  a maximum eight-year life for any award made under the plan; and
 
  •  the following award limits:
 
  •  the maximum number of shares that may be awarded in the form of options to an employee in any calendar year is 800,000;
 
  •  the maximum number of shares that may be awarded in the form of restricted stock awards, performance units, restricted stock units and Canadian restricted stock units to an employee in any calendar year is 400,000; and
 
  •  the Compensation Committee (composed entirely of independent Directors) administers the plan and the grant of options and restricted stock awards to the Company’s executive officers.
 
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