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This excerpt taken from the EOG DEF 14A filed Mar 25, 2009. 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 officer’s
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 major 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:
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
Table of Contents
component. In addition, the Committee reviews the aggregate of
base salary and non-equity incentives and compares such amounts
to that of our peer companies.
The Committee also compares each Named Officer’s total
realized compensation annually, including stock option/SAR gains
and the value realized on restricted stock/restricted stock unit
vestings relative to three-year 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
CEO’s compensation package to aid in determining if his
compensation package is delivering rewards commensurate with our
stock performance. In 2008, 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 an employee’s 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 the
Named Officers corresponds to that used with respect to other
employees of EOG. Substantially all of EOG’s 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 CEO’s
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 EOG’s peer companies. At his
request, the Committee has not increased Mr. Papa’s
base salary since 2004. Instead, the Committee has adjusted
Mr. Papa’s 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.
This excerpt taken from the EOG DEF 14A filed Apr 4, 2008. 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, 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 officer’s
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 their 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 major 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 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 elements:
A more detailed discussion of each element of our compensation
program is provided below. The Committee does not use any
formulas to determine the amount of each element to be paid.
Rather, each element of our compensation program is reviewed
individually relative to the objectives of that element. In
addition, the Committee reviews the aggregate of base salary and
non-equity incentives and compares such amounts to that of our
peer companies.
The Committee also compares each Named Officer’s total
realized compensation annually, including stock option/SAR gains
relative to three-year stockholder returns, to that of similarly
positioned 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,
such as Forbes’ 2007 rankings of CEO
performance-versus-pay, in connection with its analysis of our
CEO’s compensation package to aid in determining if his
compensation package is delivering rewards commensurate with our
stock performance. In 2007, the only published market analysis
considered by the Committee in addition to the peer group data
compiled by our Human Resources Department was Forbes’ 2007
rankings of CEO performance-versus-pay.
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 an employee’s 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 the
Named Officers corresponds to that used with respect to other
employees of EOG. The majority of EOG’s employees are
eligible for annual bonuses and annual equity grants as well as
most of the benefits available to the Named Officers described
under “Other Compensation and Benefits” below. Our
CEO’s 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 CEOs of EOG’s peer companies. At his request, the
Committee has not raised Mr. Papa’s base salary in
four years. Instead, the Committee has adjusted
Mr. Papa’s compensation by allocating a significant
portion of his compensation to equity awards 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.
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