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This excerpt taken from the EOG DEF 14A filed Mar 30, 2006. Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the Internal Revenue Code, as amended, generally disallows a tax deduction to public companies for compensation over $1 million paid to the Chief Executive Officer and the four other most highly compensated executive officers of a company, as reported in that company’s proxy statement. Qualifying performance-based compensation is not subject to the deduction limit if certain requirements are met. Historically, the Company has structured the key component of its long-term incentives in the form of stock option grants that comply with the statute. The Company’s Executive Officer Annual Bonus Plan 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 and restricted stock units, when it feels such grants are in the best interest of the Company and its shareholders. In 2005, $2,146,235 of Mr. Papa’s compensation was not deductible.
COMPENSATION COMMITTEE George A. Alcorn (Chairman) 10 |
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