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EOG » Topics » Payments Made Upon a Change of Control

This excerpt taken from the EOG DEF 14A filed Mar 25, 2009.
Payments Made Upon a Change of Control
 
In the event of a change of control of EOG, each Named Officer is entitled to benefits under the following plans and agreements. In addition to the payments described below, in each circumstance upon the announcement of a change of control and in accordance with the applicable plans and grant agreements, 100% of outstanding stock


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options/SARs will vest and be fully exercisable and all restrictions on restricted stock/restricted stock units will lapse.
 
Change of Control Agreements
 
Effective June 2005, each Named Officer, other than Mr. Garrison, entered into an Amended and Restated Change of Control Agreement. Under the Amended and Restated Change of Control Agreements, “change of control” is defined as:
 
  •  the acquisition by any person of beneficial ownership of 20% or more of either (A) the then-outstanding shares of our Common Stock or (B) the combined voting power of our then-outstanding voting securities (“Voting Securities”) entitled to vote generally in the election of directors; provided, however, that the following acquisitions will not constitute a change of control: (1) any acquisition directly from us, (2) any acquisition by us, (3) any acquisition by any employee benefit plan sponsored by us or our affiliates, (4) any acquisition by any corporation that complies with subclauses (A), (B) and (C) of the third bullet point below or (5) an acquisition by a Qualified Institutional Investor (as defined in the Amended and Restated Change of Control Agreement);
 
  •  individuals who constituted the Board as of May 3, 2005 (“Incumbent Director”) ceasing for any reason to constitute at least a majority of the Board, provided that any individual who becomes a director after May 3, 2005 shall be deemed to be an Incumbent Director if their election, or nomination for election by our stockholders, was approved by a vote of at least a majority of the then-Incumbent Directors (except in certain circumstances);
 
  •  consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of our assets or the acquisition of the assets or stock of another entity (“Business Combination”), other than a Business Combination (A) which would result in all or substantially all of the persons that were beneficial owners of our Common Stock and Voting Securities outstanding immediately prior to the Business Combination continuing to beneficially own more than 60% of the then-outstanding shares of Common Stock and the combined voting power of the then-outstanding Voting Securities, as the case may be, of the corporation resulting from such Business Combination, in substantially the same proportions as their ownership immediately prior to the Business Combination, (B) in which no person is or becomes the beneficial owner of 20% or more of the then-outstanding shares of our Common Stock or the combined voting power of our then-outstanding Voting Securities, except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of our Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or
 
  •  approval by our stockholders of a complete liquidation or dissolution of EOG.
 
Under the Amended and Restated Change of Control Agreements, if a Named Officer’s employment is terminated within two years after a change of control:
 
  •  by us for any reason (other than for cause or by reason of death, disability or retirement);
 
  •  by the Named Officer under circumstances defined in the agreement as “good reason”; or
 
  •  by the Named Officer for any reason during the 30-day period beginning six months after a change of control;
 
then, the Named Officer will receive:
 
  •  the Named Officer’s base salary and compensation for earned but unused vacation time accrued through the termination date but not previously paid to the Named Officer;
 
  •  a severance benefit of 2.99 times his annual base salary plus two times his target annual bonus, each as in effect immediately prior to the change of control or, if increased, immediately prior to the termination date, whichever is greater;


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  •  Money Purchase Pension Plan contributions and Savings Plan matching amounts that would have been made if the Named Officer had continued to be employed for three years following the date of termination and, in the case of the Savings Plan matching amounts, assuming that the Named Officer had continued to contribute to the Savings Plan during such three-year period at their then-current contribution level;
 
  •  up to three years of uninterrupted participation in our medical and dental plans from time to time then in effect;
 
  •  an additional three years of age and service credits for eligibility in our retiree medical coverage;
 
  •  outplacement services, not to exceed $50,000; and
 
  •  reimbursement for any excise tax, interest and penalties incurred if payments or benefits received due to a change of control would be subject to an excise tax under Section 4999 of the Code.
 
If a Named Officer’s employment is terminated within two years of a change of control for cause or as a result of death, disability or retirement, the Named Officer will be entitled only to base salary and any other compensation and benefits earned and payable through the termination date.
 
Change of Control Severance Plan
 
Mr. Garrison has not entered into a change of control agreement with EOG. In the event of a change of control, Mr. Garrison would be subject to the terms and conditions of our Change of Control Severance Plan, which is applicable to all employees that are classified either as regular full-time or regular part-time employees and not covered under any collective bargaining agreement with us or our affiliates. Pursuant to such plan, an eligible employee who is involuntarily terminated on or within two years after a change of control would receive a severance payment equal to the greater of (A) six months base pay or (B) the aggregate sum of (1) two weeks of base pay per year of service or portion thereof, plus (2) one month base pay for each $10,000 or portion thereof of the employee’s annual base pay, plus (3) one month of base pay for each five percent (5%) of the employee’s annual target bonus award opportunity, if any, or portion thereof under the bonus program in effect immediately prior to the change of control or on the termination date, if greater. Also pursuant to such plan, the “aggregate present value” (as defined under Section 1274(b)(2) of the Code) of such severance payment shall not exceed the lesser of the following amounts: (A) 2.99 multiplied by the “base amount” (as defined under Section 280G(b)(3) of the Code) or (B) three times the sum of (1) the eligible employee’s annual base pay and (2) 100% of the eligible employee’s annual bonus target award (if any) as in effect immediately prior to the effective date of the change of control (or, if no annual bonus target has been set for the year in which the change of control occurs, the annual bonus target for the immediately prior year) or, if increased, 100% of the eligible employee’s annual bonus target award as in effect immediately prior to the eligible employee’s last date of employment by reason of such involuntary termination. Additionally, our Change of Control Severance Plan provides for the reimbursement of any excise tax, interest and penalties incurred if payments or benefits received due to a change of control would be subject to an excise tax under Section 4999 of the Code.
 
Retention Bonus Plan
 
In order to ensure continuity of operations in the event of a change of control, a retention bonus plan would become effective and applicable to all eligible employees, including our Named Officers. To be eligible to receive the retention bonus, an employee must remain employed by us through the effective date of the change of control and be employed by the acquiring company 180 days after the effective date of the change of control or be involuntarily terminated by the acquiring company on or within 180 days after the effective date of the change of control. Eligible employees would receive a bonus equal to the most recent bonus they had received under our annual bonus program, payable upon the earlier of 180 days after the effective date of the change of control or upon such involuntary termination.


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This excerpt taken from the EOG DEF 14A filed Apr 4, 2008.
Payments Made Upon a Change of Control
 
In the event of a change of control, each Named Officer is entitled to benefits under the following plans and agreements. In addition to the payments described below, in each circumstance upon the announcement of a change of control and in accordance with the applicable plans and grant agreements, 100% of outstanding stock options/SARs will vest and all restrictions on restricted stock/restricted stock units will lapse (as more fully described in the footnotes to the “Grants of Plan-Based Awards Table” above).


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Change of Control Agreements
 
Effective June 2005, each Named Officer, other than Mr. Garrison, entered into an Amended and Restated Change of Control Agreement, which supersedes his employment agreement, to the extent an employment agreement was in effect, upon a change of control. Under the Amended and Restated Change of Control Agreements, “change of control” is defined as:
 
  •  the acquisition by any person of 20% or more of either (A) the then-outstanding shares of our Common Stock or (B) the combined voting power of our then-outstanding voting securities entitled to vote generally in the election of directors; provided, however, that the following acquisitions will not constitute a change of control: (i) any acquisition directly from us, (ii) any acquisition by us, (iii) any acquisition by any employee benefit plan sponsored by us or our affiliate, (iv) any acquisition by any corporation that complies with subclauses (A), (B) and (C) of clause (3) below or (v) an acquisition by a Qualified Institutional Investor (as defined in the Amended and Restated Change of Control Agreement);
 
  •  individuals who constituted the Board as of May 3, 2005 ceasing for any reason to constitute at least a majority of the Board (except in certain circumstances);
 
  •  consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of our assets or the acquisition of the assets or stock of another entity (“Business Combination”), other than a Business Combination (A) which would result in our voting securities outstanding immediately prior to the merger continuing to represent at least 60% of the voting power of our securities outstanding immediately after the Business Combination, (B) in which no person is or becomes the beneficial owner of 20% or more of the combined voting power of our then-outstanding voting securities, except to the extent that such ownership existed prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of our Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or
 
  •  approval by our stockholders of a complete liquidation or dissolution of EOG.
 
Under the Amended and Restated Change of Control Agreements, if a Named Officer’s employment is terminated:
 
  •  by the acquiring company for any reason following a change of control (other than for cause or by reason of death or disability);
 
  •  by the Named Officer under circumstances defined in the agreement as “good reason;” or
 
  •  by the Named Officer for any reason during the 30 day period beginning six months after a change of control; then, the Named Officer will receive:
 
  •  the Named Officer’s base salary and compensation for earned but unused vacation time accrued through the termination date but not previously paid to the Named Officer;
 
  •  a severance benefit of 2.99 times his annual base salary plus two times his target annual bonus, each as in effect prior to the change of control or, if increased, on the date of termination, whichever is greater;
 
  •  Money Purchase Pension Plan contributions and Savings Plan matching amounts that would have been made if the Named Officer had continued to be employed for three years;
 
  •  three years of uninterrupted participation in our medical and dental plans;
 
  •  an additional three years of age and service credits for eligibility in our retiree medical coverage;
 
  •  outplacement services, not to exceed $50,000; and
 
  •  reimbursement for any excise tax, interest and penalties incurred if payments or benefits received due to a change of control would be subject to an excise tax under Section 4999 of the Code.


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If a Named Officer is terminated, following a change of control, for cause or as a result of death, disability or retirement, the Named Officer will be entitled only to salary and any other compensation and benefits earned and payable through the termination date.
 
Change of Control Severance Plan
 
Mr. Garrison has not entered into a change of control agreement with EOG. In a change of control event, Mr. Garrison would be subject to the terms and conditions of our Change of Control Severance Plan, which is applicable to all employees. Pursuant to such plan, an eligible employee who is involuntarily terminated in connection with such change of control would receive a severance payment equal to the greater of (a) six months base pay or (b) the aggregate sum of (i) two weeks of base pay per year of service or portion thereof, plus (ii) one month base pay for each $10,000 or portion thereof of the employee’s annual base pay, plus (iii) one month of base pay for each five percent of the employee’s annual bonus award opportunity, if any, or portion thereof under the bonus program in effect immediately prior to the change of control. Also pursuant to such plan, the “aggregate present value” (as defined under Section 1274(b)(2) of the Code) of such severance payment shall not exceed the lesser of the following amounts: (i) 2.99 multiplied by the “base amount” (as defined under Section 280G(b)(3) of the Code) or (ii) three times the sum of (a) the eligible employee’s annual base pay and (b) 100% of the eligible employee’s annual bonus target award (if any) as in effect immediately prior to the effective date of the change of control (or, if no annual bonus target has been set for the year in which the change of control occurs, the annual bonus target for the immediately prior year) or, if increased, 100% of the eligible employee’s annual bonus target award as in effect immediately prior to the eligible employee’s last date of employment by reason of such involuntary termination. Additionally, our Change of Control Severance Plan provides for the reimbursement of any excise tax, interest and penalties incurred if payments or benefits received due to a change of control would be subject to an excise tax under Section 4999 of the Code.
 
Retention Bonus Plan
 
In order to ensure continuity of operations in the event of a change of control, as defined above, a retention bonus plan would become effective and applicable to all eligible employees, including our Named Officers. To be eligible to receive the retention bonus, an employee must remain employed by us through the effective date of the change of control and be employed by the acquiring company 180 days after the effective date of the change of control or be involuntarily terminated by the acquiring company on or within 180 days after the effective date of the change of control. Eligible employees would receive a bonus equal to the most recent bonus they had received under our annual bonus program, payable upon the earlier of 180 days after the effective date of the change of control or upon such involuntary termination.
 
This excerpt taken from the EOG DEF 14A filed Mar 29, 2007.

Payments Made Upon a Change of Control

     In the event of a change of control, each Named Officer is entitled to benefits under the following plans and agreements. In addition to the payments described below, in each circumstance upon the announcement of a change of control and in accordance with the applicable plans and grant agreements, 100% of outstanding stock options/SARs will vest and all restrictions on restricted stock/units will lapse (as more fully described in the footnotes to the “Grants of Plan Based Awards Table” on page 15 of this Proxy Statement).

     Change of Control Agreements

     On June 15, 2005, each Named Officer entered into an Amended and Restated Change of Control Agreement, which supersedes his Employment Agreement upon a change of control. Change of control is defined as:

      1.      

The acquisition by any person of 20% or more of either (A) the then-outstanding shares of our common stock or (B) the combined voting power of our then-outstanding voting securities entitled to vote generally in the election of directors; provided, however, that the following acquisitions will not constitute a Change of Control: (i) any acquisition directly from us, (ii) any acquisition by us, (iii) any acquisition by any employee benefit plan sponsored by us or our affiliate, (iv) any acquisition by any corporation that complies with subclauses (A), (B) and (C) of clause (3) below or (v) an acquisition by a Qualified Institutional Investor (as defined in the agreement);

 
2.

Individuals who constituted the Board of Directors of EOG as of May 3, 2005 ceasing for any reason to constitute at least a majority of the board (except in certain circumstances);

 
3.

Consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of our assets or the acquisition of the assets or stock of another entity (Business Combination), other than a Business Combination (A) which would result in our voting securities outstanding immediately prior to the merger continuing to represent at least 60% of the voting power of our securities outstanding immediately after the Business Combination, (B) in which no person is or becomes the beneficial owner of 20% or more of the combined voting power of the then-outstanding voting securities, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of our Board of Directors at the time of the execution of the initial agreement or of the action of the Board of Directors providing for such Business Combination; or

 
4.

Approval by our shareholders of a complete liquidation or dissolution.

Under the change of control agreements, if a Named Officer’s employment is terminated:

      1.      

by the acquiring company for any reason following a change of control (other than for cause or by reason of death or disability),

 

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       2.       

by the officer under circumstances defined in the agreement as “good reason,” or

 
3.

by the officer for any reason during the 30 day period beginning six months after a change of control; then, the officer will receive:

 
a)

a minimum severance benefit of 2.99 times his annual base salary plus two times his target annual bonus, each as in effect prior to the change of control or if increased, on the date of termination, whichever is greater;

 
b)

the Money Purchase Pension Plan contributions and Savings Plan matching amounts that would have been made if the officer had continued to be employed for three years,

 
       c)       

uninterrupted participation for three years in our medical and dental plans,

 
d)

three years age and service credit for eligibility for our retiree medical coverage,

 
e)

outplacement services not to exceed $50,000, and

 
f)

reimbursement for any excise tax, interest and penalties incurred if payments or benefits received due to a change of control would be subject to an excise tax under Section 4999 of the Code.

     If a Named Officer is terminated following a change of control for cause or as a result of death, disability or retirement, the officer will be entitled only to salary and any other compensation and benefits earned and payable through the termination date.

     Retention Bonus Plan

     In order to ensure continuity of operations in the event of a change of control, as defined above, a retention bonus plan would become effective and applicable to all eligible employees, including our Named Officers. To be eligible to receive the retention bonus, an employee must remain employed by us through the effective date of the change of control and be employed by the acquiring company 180 days after the effective date of the change of control, or be involuntarily terminated by the acquiring company on or within 180 days after the effective date. Eligible employees would receive a bonus equal to the most recent bonus they had received under our annual bonus program, payable upon the earlier of 180 days after the effective date of the change of control or upon severance.

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EXCERPTS ON THIS PAGE:

DEF 14A
Mar 25, 2009
DEF 14A
Apr 4, 2008
DEF 14A
Mar 29, 2007

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