Annual Reports

 
Quarterly Reports

 
8-K

 
Other

  • Form 4 (Dec 12, 2017)
  • Form 4 (Nov 30, 2017)
  • Form 4 (Nov 22, 2017)
  • Form 4 (Nov 17, 2017)
  • Form 4 (Nov 14, 2017)
  • EFFECT (Nov 6, 2017)
Noble Energy DEF 14A 2015
NBL-2015 Proxy DEF
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant
þ
Filed by a Party other than the Registrant
o
Check the appropriate box:
o
Preliminary Proxy Statement
o
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Pursuant to §240.14a-12
 

NOBLE ENERGY, INC.
(Exact name of Registrant as specified in its charter)
Payment of filing fee (check the appropriate box):
þ
No fee required.
o
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
(1) Title of each class of securities to which transaction applies:

 
(2) Aggregate number of securities to which transaction applies:

 
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

 
(4) Proposed maximum aggregate value of transaction:

 
(5) Total fee paid:

o
Fee paid previously with preliminary materials.
o
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
(1) Amount Previously Paid:

 
(2) Form, Schedule or Registration Statement No.:

 
(3) Filing Party:

 
(4) Date Filed:




Notice of 2015 Annual Meeting of Stockholders and Proxy Statement












Tuesday, April 28, 2015
9:30 a.m. local time
Four Seasons Hotel
1300 Lamar Street, Houston, Texas 77010




Dear Stockholder:
I hope you will join Noble Energy’s Board of Directors, executive management team, employees and alumni at our 2015 Annual Meeting of Stockholders. The attached Notice of Annual Meeting of Stockholders and Proxy Statement will serve as your guide to the business to be conducted at the meeting.

This will be my last annual meeting as Chairman, as I will be retiring on May 1, 2015. As I reflect on my time at Noble Energy, I am proud of the efforts of our Board of Directors and executive leadership to provide you with information about the Company in a manner that is easy to access and understand. Our proxy statement is a good example, providing a summary at the beginning that highlights detailed information contained elsewhere in the document and using charts and other graphic depictions where we feel they may be helpful to your understanding of our business.

The Compensation Discussion and Analysis that begins on page 44 provides insight on how our executives’ compensation is linked to performance and explains our executive compensation program. You will also find discussions of the qualifications of our director candidates, and why we believe they are the right people to represent you, starting on page 16.

Your vote is very important to us and our business. Prior to the meeting, I encourage you to sign and return your proxy card, or use telephone or Internet voting, so that your shares will be represented and voted at the meeting. Instructions on how to vote are found beginning on page 2.
I hope to see you at the meeting. Thank you for being a stockholder and for the wonderful support you have provided to me during my time at Noble Energy.

March 26, 2015
Houston, Texas
Charles D. Davidson
Chairman of the Board





NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Tuesday, April 28, 2015
The Annual Meeting of Stockholders of NOBLE ENERGY, INC. (the “Company”) will be held on Tuesday, April 28, 2015 at 9:30 a.m. local time at the Four Seasons Hotel, 1300 Lamar Street, Houston, Texas 77010, for the following purposes:

1.
To elect the ten nominees as members of the Board of Directors of the Company to serve until the next annual meeting of the Company’s stockholders;
2.
to ratify the appointment of the independent auditor by the Company’s Audit Committee;
3.
to approve, in a non-binding advisory vote, the compensation of the Company’s Named Executive Officers;
4.
to approve an amendment to the Company's Certificate of Incorporation to increase the number of authorized shares of common stock from 500 million to 1 billion;
5.
to approve an amendment and restatement of the Company's 1992 Stock Option and Restricted Stock Plan to increase the number of shares of common stock authorized for issuance under the plan from 71.6 million to 77.4 million;
6.
to approve a 2015 Stock Plan for Non-Employee Directors, replacing a substantially similar plan that expired under its own terms;
7.
to consider a stockholder proposal calling for the Company to amend its By-Laws to allow eligible stockholders to include their own nominees for director in the Company's proxy materials, if properly presented at the meeting;
8.
to consider a stockholder proposal calling for the Company to prepare a report outlining the impact climate change might have on its business plans, if properly presented at the meeting; and
9.
to transact such other business as may properly come before the meeting and any adjournment or postponement of the meeting.

The Board of Directors has set March 4, 2015 as the record date for the meeting. This means that holders of record of shares of the Company's common stock as of the close of business on that date are entitled to receive this notice of the meeting and vote at the meeting and any adjournment or postponement of the meeting.

A complete list of stockholders will be available for examination at our Company's offices in Houston, Texas during ordinary business hours for a period of 10 days prior to the meeting. This list will also be available to stockholders at the meeting.

March 26, 2015
Houston, Texas
By Order of the Board of Directors
Arnold J. Johnson
Senior Vice President, General Counsel
and Secretary
We urge each stockholder to promptly sign and return the enclosed proxy card or to use telephone or Internet voting. See our Questions and Answers about the Meeting and Voting section for information about voting by telephone or Internet, how to revoke a proxy and how to vote shares in person.

i



PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement. It does not include all of the information that you should consider and you should read the entire Proxy Statement before voting. In this Proxy Statement, Noble Energy, Inc. may also be referred to as “we”, “us”, “Noble Energy” or the “Company”.

2015 Annual Meeting of Stockholders

 Date and Time:
Tuesday, April 28, 2015, 9:30 a.m. local time
 
 
 Place:
Four Seasons Hotel
1300 Lamar Street
Houston, Texas 77010
 
 
 Record Date:
March 4, 2015

Voting Matters and Board Recommendations
 
Our Board’s Recommendations
Election of Director Nominees (page 16)
FOR each
Director Nominee
Ratification of Appointment of Independent Auditor (page 25)
FOR
Advisory Proposal to Approve Executive Compensation (page 27)
FOR
Approval of Amendment to Certificate of Incorporation to Increase the Number of Authorized Shares (page 28)
FOR
Approval of Amendment and Restatement of 1992 Plan to Increase the Number of Shares Authorized for Issuance (page 30)
FOR
Approval of 2015 Stock Plan for Non-Employee Directors (page 35)
FOR
Consideration of Stockholder Proposal Relating to Proxy Access (page 39)
AGAINST
Consideration of Stockholder Proposal Regarding Climate Change Reporting (page 42)
AGAINST

Director Nominees (beginning on page 16)

The following table provides summary information about each director nominee. Our Board is not classified and each director stands for election annually.

Name
Age
 
Director
Since
 
Primary Occupation
 
Committee
Memberships
 
Other Public
Company Boards
Jeffrey L. Berenson*
64
 
2005
 
Chairman and Chief Executive
Officer of Berenson & Company
 
C, CG
 
None
Michael A. Cawley*
67
 
1995
 
President and Manager of The
Cawley Consulting Group, LLC
 
A, CG
 
Noble Corporation
Edward F. Cox*
68
 
1984
 
Chair of The New York Republican
State Committee
 
C, CG, E
 
None
Thomas J. Edelman*
64
 
2005
 
A managing partner of White Deer Energy L.P.
 
C, CG, E
 
PostRock Energy Corporation
Eric P. Grubman*
57
 
2009
 
Executive Vice President of the
National Football League
 
A, CG
 
None

ii



Kirby L. Hedrick*
62
 
2002
 
Former Executive Vice President of Phillips Petroleum Company
 
C, CG, E
 
None
David L. Stover
57
 
2014
 
President and Chief Executive Officer of Noble Energy, Inc.
 
None
 
None
Scott D. Urban*
61
 
2007
 
Partner in Edgewater Energy LLC
 
A, CG, E
 
Pioneer Energy
Services Corporation
William T. Van Kleef*
63
 
2005
 
Former Executive Vice President
and Chief Operating Officer of Tesoro Corporation
 
A, CG
 
Oil States
International, Inc.
Molly K. Williamson*
69
 
2013
 
Scholar, Middle East Institute
 
C, CG, E
 
None
*Independent Director
A
Audit Committee
C
Compensation, Benefits and Stock Option Committee
CG
Corporate Governance and Nominating Committee
E
Environment, Health and Safety Committee

2014 Business Highlights (beginning on page 44)

2014 was a year of challenge for our Company and industry that ended with commodity market uncertainty that continues in 2015 and has resulted in a significant decline in the price of crude oil, as well as that of our common stock. Our results were mixed. Among our significant accomplishments, we:

Delivered record sales volumes of 289,000 barrels of oil equivalent ("Boe") per day, a 9% increase over 2013 or a 16% increase when normalized for divestitures;
produced record total revenue of $5.1 billion for the year;
successfully executed a $1.5 billion bond offering, preserving our strong balance sheet;
set a Company record best in Occupational Safety and Health Administration ("OSHA") recordable and lost time incident rates;
had exploration discoveries at Katmai (deepwater Gulf of Mexico), Normantown (Marcellus) and in Nevada;
completed a successful initial public offering ("IPO") of CONE midstream assets in the Marcellus shale area, resulting in $200 million in cash proceeds;
took a leadership role among our industry in an effort that resulted in the withdrawal of several anti-development ballot initiatives in Colorado;
progressed efforts to develop an important gas market in the Eastern Mediterranean;
concluded non-core asset divestitures that generated proceeds of approximately $321 million;
secured a new venture area through acquisition of an exploration block in Gabon; and
successfully carried out an executive succession plan in response to the announced retirement of our Chairman and Chief Executive Officer ("CEO"), Charles D. Davidson.
On the other hand, we fell short of our expectations in some areas as we:
Failed to meet certain targets we had set for the quantitative non-discretionary component of our Short Term Incentive Plan ("STIP");
despite the three discoveries noted above, added fewer exploration resources than we had planned; and
did not conclude all matters necessary to sanction our Leviathan project, offshore Israel.
As we enter 2015, we believe we are well positioned to meet the challenges of the current environment and continue to create value for our stockholders.


iii



The Chairman and CEO Compensation versus Key Metrics

Because Mr. Davidson served in the combined role of Chairman and CEO until David L. Stover was appointed CEO October 21, 2014, this Proxy Statement will focus on Mr. Davidson's compensation while making reference to Mr. Stover's compensation as appropriate. The following illustrates the directional relationship between Company performance, based on three key metrics, and the total direct compensation (including salary, bonus, stock and option awards and non-equity incentive plan compensation) of our Chairman and CEO from 2012 to 2014. These key metrics — production, relative controllable unit costs and discretionary cash flow — were chosen because they have been a part of the quantitative non-discretionary component of our STIP in the past and and we believe correlate to long-term stockholder value. Taking these metrics and other 2014 results into account, the total direct compensation of our Chairman and CEO decreased from 2013.

 
Controllable Unit Costs
(percentage relative
to compensation
peer group)

2014 costs lower than 50% of our
peers.
2013 costs lower than 67% of our
peers.
2012 costs lower than 73% of our
peers.





(1) Non-GAAP results. See “Non-GAAP Financial Measures” in Appendix A to this Proxy Statement for reconciliation to GAAP results.

iv



Five-Year Total Stockholder Return

The following chart shows how a $100 investment in our common stock on December 31, 2009 would have grown to over $139.00 on December 31, 2014, with dividends reinvested quarterly. The chart also compares the total stockholder return of our common stock to the same investment in the S&P 500 Index and our current (2014 - 2015) and former compensation peer groups over the same period, with dividends reinvested quarterly. As illustrated below, our common stock outperformed that of our new and former compensation peer groups during this period.

*Copyright© 2014 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.

For complete information about our 2014 performance, please see our Annual Report on Form 10-K.

Executive Compensation Highlights (beginning on page 46)

Our compensation program is designed to attract and retain high quality employees and to link their compensation to performance. In 2014 we continued our emphasis on performance-based compensation, with 70% of the compensation of our Chairman and CEO being performance-based. As seen in the following chart:

Annual bonus is based on performance;
stock options are based on absolute stock price appreciation; and
performance shares are based on relative total stockholder return.


v




 




Performance-based 70%
Other (30%)
 Target Bonus
 Base Salary
 Stock Options
 Time-based Shares
 Performance Shares
 

We believe that our compensation program continued to achieve its objectives in 2014. In a year of mixed results, our executives saw reduced performance-based compensation. Specifically:
Based on our performance relative to our quantitative and qualitative goals, our 2014 bonus pool was below target level; and
over 75% of pay was delivered in equity and aligned with stockholder interests.
Our Compensation Committee reviewed the aggregate estimated realizable pay of our Chairman and CEO relative to CEOs of our compensation peer group companies for the trailing three year period ending December 31, 2013, compared against the three-year total stockholder return of our compensation peer group companies. The estimated realizable value reflects the aggregate value of base salary, actual bonus paid, "in-the-money" value of stock options, value of restricted stock, an estimated value of outstanding performance awards, and dividends received or accrued as of December 31, 2013.

vi



Subsequent to the realizable comparison shown above, our stock price declined in 2014 along with others in our industry. The chart below updates the realizable compensation for our Chairman through December 31, 2014, in relation to the original target compensation opportunities the Compensation Committee awarded in 2012, 2013 and 2014.  
“Target” bars represent the committee's target compensation opportunities, to include annual base salary, target bonus opportunity and targeted equity value. “Realizable” bars represent each year's base salary paid, actual bonus earned and paid, and the prevailing value of equity-based awards as of December 31, 2014, using our closing stock price of $47.43. The prevailing equity values include the updated value of restricted shares awarded, the "in-the-money" value of stock options awarded, and an estimated value of outstanding performance awards, plus dividends received or accrued as of December 31, 2014.
The chart demonstrates how our program delivers strong alignment to stock price performance.

vii




Recent Enhancements to the Compensation Program
Changes were made for 2015 to the quantitative non-discretionary component of our STIP to reflect metrics and weighting to better align pay with performance in areas we believe best position us to meet the challenges of the current environment and continue to create value for our stockholders, with the component to remain weighted at 60% and allocated 15% each to free cash flow and relative total stockholder return and 10% each to production sales volumes, cash costs per unit of sales volumes and relative cash costs per unit of revenue.
Our Board revised our Stock Ownership Guidelines to establish a 3X base salary guideline for our executive vice presidents. (page 57)
Our Board approved a change in the calculation of the performance portion of future restricted stock awards upon change of control to provide for vesting on performance, versus at target. (page 57)
Our Board approved an additional change in the treatment of future awards and grants of stock options and restricted stock to include a double-trigger mechanism so that accelerated vesting will only occur upon termination without cause or for good reason in the event of change of control. (page 57)
In the fall of 2014 we notified our employees that we were discontinuing our retiree healthcare benefits as of January 1, 2015, transitioning benefits for pre-age 65 retirees under a defined contribution model and implementing a buyout of eligible pre-age 65 active employees. (page 62)
Important Date for 2016 Annual Meeting of Stockholders (page 15)
Stockholder proposals and nominees for director(s) to be submitted for inclusion in our 2016 Proxy Statement pursuant to our By-Laws and Rule 14a-8 under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), must be received by us by December 23, 2015.

viii




1001 Noble Energy Way
 
PROXY STATEMENT
Houston, Texas 77070
 
March 26, 2015



The Board of Directors of Noble Energy, Inc. (the “Board”) is providing you this Proxy Statement to solicit proxies on its behalf to be voted at the 2015 Annual Meeting of Stockholders of Noble Energy, Inc. (the “Company”). The meeting will be held at the Four Seasons Hotel, 1300 Lamar Street, Houston, Texas 77010 on April 28, 2015, at 9:30 a.m. local time. The proxies may also be voted at any adjournment or postponement of the meeting.

The mailing address of our principal executive offices is 1001 Noble Energy Way, Houston, Texas 77070. We are first mailing this Proxy Statement to our stockholders on or about March 27, 2015.

All properly executed written proxies, and all properly completed proxies submitted by telephone or Internet, that are delivered pursuant to this solicitation will be voted at the meeting in accordance with the directions given in the proxy unless the proxy is revoked prior to completion of voting at the meeting.

Only owners of record of shares of the Company's common stock as of the close of business on March 4, 2015, the record date, are entitled to notice of, and to vote at, the meeting and at any adjournment or postponement of the meeting. Each owner of record on the record date is entitled to one vote for each share of common stock held. On March 4, 2015 there were 387,845,980 shares of common stock issued and outstanding.


IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE 2015 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 28, 2015.

Our Proxy Statement for the 2015 Annual Meeting of Stockholders, Annual Report to Stockholders for the fiscal year ended December 31, 2014 and Annual Report on Form 10-K for the fiscal year ended December 31, 2014 are available at https://materials.proxyvote.com/655044.


1


Questions and Answers


Questions and Answers about the Meeting and Voting
1.    What is a Proxy Statement and what is a Proxy?

A proxy statement is a document that the regulations of the Securities and Exchange Commission (“SEC”) require us to give you when we ask you to sign a proxy designating individuals to vote on your behalf. A proxy is your legal designation of another person to vote the stock you own. That other person is called
 
a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. We have designated two of our officers as proxies for the 2015 Annual Meeting of Stockholders. These officers are David L. Stover and Kenneth M. Fisher.

2.    What is the difference between holding shares as a stockholder of record and as a beneficial stockholder?

If your shares are registered directly in your name with our registrar and transfer agent, Wells Fargo Shareowner Services, you are considered a stockholder of record with respect to those shares.
 
If your shares are held in a brokerage account or bank, you are considered the “beneficial owner” of those shares.

3.    What different methods can I use to vote?

By Written Proxy. All stockholders of record can vote by written proxy card. If you are a beneficial owner, you may request a written proxy card or a vote instruction form from your bank or broker.

By Telephone or Internet. All stockholders of record can also vote by touch-tone telephone from the U.S. using the toll-free telephone number on the proxy card, or through the Internet, using the procedures and instructions described on the proxy card. Beneficial owners may vote by telephone or Internet if their bank or broker makes those methods
 
available, in which case the bank or broker will include the instructions with the proxy materials. The telephone and Internet voting procedures are designed to authenticate stockholders’ identities, to allow stockholders to vote their shares and to confirm that their instructions have been recorded properly.
In Person. All stockholders of record may vote in person at the meeting. Beneficial owners may vote in person at the meeting if they have a legal proxy, as described in the response to question 6.

4.    What shares are included on the proxy card?

If you are a stockholder of record, you will receive only one proxy card for all the shares of common stock you hold in certificate form, in book-entry form and in any Company benefit plan. If you hold shares of common stock in any Company benefit plan and
 
do not vote your shares or specify your voting instructions on your proxy card, the administrators of the benefit plans will not vote your benefit plan shares.

5.    How do I attend the meeting in person? What do I need to bring?

You need to bring documentation showing that you owned common stock on the record date, March 4, 2015. You also need to bring a photo ID to gain admission. Please note that the use of cameras, recording equipment, cellular telephones, smartphones or other similar equipment or packages will not be allowed in the meeting room. If
 
you are a beneficial owner, bring the notice or voting instruction form you received from your bank, brokerage firm or other nominee for admission to the meeting. You may also bring your brokerage statement reflecting your ownership of common stock as of March 4, 2015 with you to the meeting. Please note that you will not be able to vote your


2


Questions and Answers


shares at the meeting without a legal proxy, as described in the response to question 6.

6.    How can I vote at the meeting if I am a beneficial owner?

You will need to ask your broker, bank or other intermediary to furnish you with a legal proxy. You will need to bring the legal proxy with you to the meeting and hand it in with a signed ballot that will be provided to you at the meeting. You will not be able to vote your shares at the meeting without a legal proxy. In time, you can follow the procedures described in the response to question 5 to gain admission to the meeting. However, you will not be
 
able to vote your shares at the meeting. Accordingly, we encourage you to vote your shares in advance, even if you intend to attend the meeting.

Please note that if you request a legal proxy, any previously executed proxy will be revoked and your vote will not be counted unless you appear at the meeting and vote in person or legally appoint another proxy to vote on your behalf.

7.    What are my voting choices for each of the proposals to be voted on at the 2015 Annual Meeting of Stockholders?
Proposal
 
Voting choices and Board recommendations
Item 1: Election of Director Nominees
 
   Vote in favor of all nominees;
   vote in favor of specific nominees;
   vote against all nominees;
   vote against specific nominees;
   abstain from voting with respect to all nominees; or
   abstain from voting with respect to specific nominees.
The Board recommends a vote FOR all nominees.
Item 2: Ratification of Appointment of Independent Auditor
 
   Vote in favor of the ratification;
   vote against the ratification; or
   abstain from voting on the ratification.
The Board recommends a vote FOR the ratification.
Item 3: Advisory Proposal to Approve Executive Compensation
 
   Vote in favor of the advisory proposal;
   vote against the advisory proposal; or
   abstain from voting on the advisory proposal.
The Board recommends a vote FOR the advisory proposal to approve executive compensation.
Item 4: Approval of Amendment to Certificate of Incorporation
 
   Vote in favor of the amendment;
   vote against the amendment; or
   abstain from voting on the amendment.
The Board recommends a vote FOR the amendment.

Item 5: Approval of Amendment and Restatement of 1992 Stock Plan to Increase the Number of Shares Authorized for Issuance
 
   Vote in favor of the amendment and restatement;
   vote against the amendment and restatement; or
   abstain from voting on the amendment and restatement.
The Board recommends a vote FOR the amendment and restatement.
Item 6: Approval of 2015 Stock Plan for Non-Employee Directors
 
   Vote in favor of the stock plan;
   vote against the stock plan; or
   abstain from voting on the stock plan.
The Board recommends a vote FOR the stock plan.
Item 7: Consideration of Stockholder Proposal Relating to Proxy Access
 
   Vote in favor of the proposal;
   vote against the proposal; or
   abstain from voting on the proposal.
The Board recommends a vote AGAINST the proposal.


3


Questions and Answers


Item 8: Consideration of Stockholder Proposal Relating to Climate Change Reporting
 
   Vote in favor of the proposal;
  vote against the proposal; or
   abstain from voting on the proposal.
The Board recommends a vote AGAINST the proposal.


Directors in uncontested elections will be elected by a majority of the votes cast by the holders of shares of our common stock voting in person or by proxy at the meeting. A majority of the votes cast means that the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that director nominee. The amendment to our Certificate of Incorporation requires approval by holders of a majority of our outstanding shares of common stock. Each of the remaining proposals require approval by holders of a majority of shares of our common stock represented in person or by proxy at the meeting. As an advisory vote, the proposal to approve executive compensation is not binding upon the Company. However, the Compensation Committee, which is responsible for overseeing our executive compensation program, values the opinions expressed by stockholders and will consider the outcome of the vote when making future compensation decisions.
8.    What if I am a stockholder of record and do not specify a choice for a matter when returning a proxy?

Stockholders should specify their choice for each matter on the proxy card. If no specific instructions are given, proxies which are signed and returned will be voted:

FOR the election of all director nominees as set forth in this Proxy Statement;
FOR the proposal to ratify the appointment of the independent auditor;
FOR the advisory proposal to approve executive compensation;
 
FOR the proposal to amend the Certificate of Incorporation;
FOR the proposal to amend and restate the 1992 Stock Plan;
FOR the proposal to approve the 2015 Stock Plan for Non-Employee Directors;
AGAINST the stockholder proposal relating to proxy access; and
AGAINST the stockholder proposal relating to climate change reporting.

9.    What if I am a beneficial owner and do not give voting instructions to my broker?

As a beneficial owner, in order to ensure your shares are voted in the way you would like, you must provide voting instructions to your bank, broker or other nominee by the deadline provided in the material you receive from your bank, broker or other nominee. If you do not provide voting instructions to your bank, broker or other nominee, whether your shares can be voted by such person depends on the type of item being considered for vote.

Discretionary Items. The ratification of the appointment of the independent auditor and the
 
amendment to the Certificate of Incorporation are discretionary items. Generally, brokers, banks and other nominees that do not receive voting instructions from beneficial owners may vote on these proposals in their discretion.

Non-discretionary Items. All remaining items are non-discretionary and may not be voted on by brokers, banks or other nominees who have not received specific voting instructions from beneficial owners.

10.    How are abstentions and broker non-votes counted?

Abstentions and broker non-votes are included in determining whether a quorum is present, but will not be considered as votes cast "for" or "against" or otherwise included in vote totals on any matters except the election

4


Questions and Answers


of directors. Abstentions and broker non-votes (except for discretionary items) will have the same effect as votes against the matter.
11.    What can I do if I change my mind after I vote my shares?

Stockholders can revoke a proxy prior to the completion of voting at the meeting by:

Giving written notice to the Company’s Secretary;
 
delivering a later-dated proxy; or
voting in person at the meeting (unless you are a beneficial owner without a legal proxy, as described in the response to question 6).

12.    Are votes confidential? Who counts the votes?

We will not disclose the votes of specific stockholders except:
As necessary to meet applicable legal requirements or to assert or defend claims for or against the Company;
in the case of a contested proxy solicitation;

 
if a stockholder makes a written comment on the proxy card or otherwise communicates his or her vote to management; or
to allow the independent inspector of election to certify the results of the vote.
We will continue to retain an independent inspector of election to tabulate the proxies and certify the results.

13.    When will the Company announce the voting results?

We will announce the preliminary voting results at the Annual Meeting of Stockholders and will report the final results on our website and in a Current Report on Form 8-K filed with the SEC.

14.    Does the Company have a policy about Directors’ attendance at the Annual Meeting of Stockholders?

All of our directors are expected to attend each annual meeting of our stockholders. Attendance at our annual meeting will be considered by our Governance Committee in assessing each director’s performance. Last year, all of our directors attended our Annual Meeting of Stockholders.
15.    Can I access the Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K on the Internet? 

The Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2014 (the “Form 10-K”) are available at https://materials.proxyvote.com/655044.

5


Questions and Answers


16.    How are proxies solicited and what is the cost?

We bear all expenses incurred in connection with the solicitation of proxies. We have engaged Okapi Partners LLC to assist with the solicitation of proxies for an estimated fee of $11,500 plus expenses. We will bear the reasonable expenses incurred by banks, brokerage firms, custodians, nominees and
 
fiduciaries in forwarding proxy material to beneficial owners. Our directors, officers and employees may also solicit proxies by mail, telephone and personal contact. They will not receive any additional compensation for these activities.

17.    How can I contact the Company Secretary?

This Proxy Statement directs certain inquiries to the Company Secretary. The Company Secretary may be contacted by writing to Noble Energy, Inc., Attn: Company Secretary, 1001 Noble Energy Way, Houston, Texas 77070 or by calling (281) 872-3100.
18.    How can I communicate with the Board of Directors?

You may contact any member of our Board, any Board committee or any chair of any such committee by mail, electronically or by calling our independent, toll-free compliance line. To communicate by mail with our Board, any individual director, or any group or committee of directors, correspondence should be addressed to our Board or any individual director or group or committee of directors by either name or title. All correspondence should be sent to the Company Secretary at the address shown in this Proxy Statement. To communicate with any of our directors electronically, stockholders should go to our website. Under the heading “About Us — Corporate Governance” you will find a link “Contact the Board” that may be used for writing an electronic
 
message to our Board, any individual director, or any group or committee of directors. In addition, stockholders may call our independent, toll-free compliance line listed on our website under the same link.

All stockholder communications properly received will be reviewed by the office of our General Counsel to determine whether the contents represent a message to our directors. Any contents that are not in the nature of advertising, promotion of a product or service, or patently offensive material will be forwarded promptly to the appropriate director or directors.


19.    Where can I find definitions for capitalized terms, abbreviations and acronyms used in this Proxy Statement?

We have attempted to include definitions for capitalized terms, abbreviations and acronyms at the place in this Proxy Statement where they are first used. We have also included a quick reference glossary beginning on page 89.

6


Corporate Governance


Corporate Governance

Our website contains a number of documents, available free of charge, that will be helpful to your understanding of our corporate governance practices:
Corporate Governance Guidelines, which include information regarding our Board’s mission and director responsibilities, director qualifications and determination of director independence;
Certificate of Incorporation;
By-Laws;
charters for each Board committee; and
Code of Business Conduct and Ethics and Code of Ethics for our Chief Executive and Senior Financial Officers, and information about how to report concerns.

You may also obtain copies of these documents by contacting the Company Secretary. Instructions on how to communicate with the Company’s Secretary and directors are included in the response to question 17 in the Questions and Answers section. (page 6)

Our Board regularly reviews developments in corporate governance and updates our corporate governance documents and practices as it deems necessary and appropriate. Amendments to these documents will be promptly posted on our website.
Board Leadership Structure

Chairman and Chief Executive Officer

Our Board has historically combined the role of chairman of the board with the role of CEO, maintaining a separate empowered lead independent director position to strengthen our governance structure. Our Board believes this provides an efficient and effective leadership model. Combining the two roles fosters clear accountability, effective decision-making and alignment on corporate strategy. We have not experienced any problematic governance or management issues resulting from our combining of the two roles and, in this combined role, Mr. Davidson provided strategic, operational and technical expertise, vision and a proven ability to lead our Company.

Currently, the roles are split as a result of Mr. Davidson's planned retirement on May 1, 2015 and Mr. Stover's appointment as CEO on October 21, 2014. A review will occur at our Board's annual organizational meeting, immediately following our 2015 Annual Meeting of Stockholders, to consider Mr. Stover's election as chairman — thus continuing our structure of combining the two roles.

Annual Review of Board Leadership Structure

Our Board recognizes that no single leadership structure is right for all companies and at all times
 
and that, depending on the circumstances, other leadership models, such as a separate independent chairman of the board, might be appropriate.

In addition to the review at our Board's annual organizational meeting, our Board will review, at least annually, the continued appropriateness of the combined chairman/CEO structure, as opposed to a split role or other structure. All such reviews will occur outside the presence of the Chairman and CEO, at a meeting of the Corporate Governance and Nominating Committee and/or at an executive session of the Board.

Lead Independent Director

Our Lead Independent Director, currently Michael A. Cawley, is elected annually by our Board and has authority described in our Corporate Governance Guidelines that generally includes:
Approving the scheduling of regular and, where feasible, special meetings of the Board to ensure that there is sufficient time for discussion of all agenda items;
consulting with the Chairman to establish, and approve, the agenda and scope of materials for each Board meeting;


7


Corporate Governance


presiding at all executive sessions of the independent directors and Board meetings at which the Chairman is not present;
serving as a liaison between the Chairman and the independent directors and coordinating the activities of such directors;
coordinating the agenda for, and moderating, sessions of the Board’s independent directors;
 
facilitating communications among the other members of the Board; and
consulting with the chairs of the Board committees and soliciting their participation to avoid diluting their authority or responsibilities.

Board and Committees

In 2014, our Board held 11 meetings and committees of the Board held 20 meetings. Each director attended 75% or more of the aggregate of all meetings of the Board and the committees on which the director served during 2014.

Our Board has the following four committees, each with a written charter adopted by the Board and available on our website:
 
Audit Committee;
Corporate Governance and Nominating Committee (“Governance Committee”);
Compensation, Benefits and Stock Option Committee (“Compensation Committee”); and
Environment, Health and Safety Committee (“EH&S Committee”).


The following table summarizes the primary purposes of each committee.
Committee
 
Primary Purposes
Audit
 
Assist the Board in fulfilling its responsibility to oversee the integrity of our financial statements, compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence, and the performance of our internal audit function and independent auditors; and
prepare a Committee report as required by the SEC to be included in our annual Proxy Statement.

Governance
 
Take a leadership role in providing a focus on corporate governance to enable and enhance our short- and long-term performance;
engage in appropriate identification, selection, retention and development of qualified directors consistent with criteria approved by the Board;
develop, and recommend to the Board, a set of corporate governance principles or guidelines applicable to the Company;
advise the Board with respect to the Board’s composition, procedures and committees;
oversee the evaluation of the Board and management; and
oversee our corporate political activity.

Compensation
 
Review and approve corporate goals and objectives in the areas of salary and bonus compensation, benefits, and equity-based compensation, as these areas relate to the CEO, evaluate the CEO’s performance based on those goals and objectives and, either as a committee or together with the other independent directors (as directed by the Board) determine and approve the CEO’s compensation level based on that evaluation;
make recommendations to the Board with respect to non-CEO executive officer compensation, incentive compensation plans and equity-based plans that are subject to Board approval;
produce an annual report on executive compensation as required by the SEC to be included, or incorporated by reference, in our Proxy Statement or other applicable SEC filings; and
under delegation from the Board, determine and approve our compensation philosophy, the compensation of our non-CEO executive officers and equity-based compensation applicable to non-executive officer employees.

EH&S
 
Assist the Board in determining whether we have appropriate policies and management systems in place with respect to environment, health and safety and related matters;
monitor and review compliance with applicable EH&S laws, rules and regulations; and
serve as a forum for the review of our strategy and initiatives in the area of corporate social responsibility.



8


Corporate Governance


The following table describes the current members of each committee and the number of meetings held during 2014.
Name
 
Audit(1) 
 
Compensation(2) 
 
Governance(3) 
 
EH&S
Jeffrey L. Berenson*
 
 
 
Ÿ
 
Ÿ
 
 
Michael A. Cawley*
 
Ÿ
 
 
 
Chair
 
 
Edward F. Cox*
 
 
 
Ÿ
 
Ÿ
 
Chair
Charles D. Davidson
 
 
 
 
 
 
 
Ÿ
Thomas J. Edelman*
 
 
 
Ÿ
 
Ÿ
 
Ÿ
Eric P. Grubman*
 
Ÿ
 
 
 
Ÿ
 
 
Kirby L. Hedrick*
 
 
 
Chair
 
Ÿ
 
Ÿ
David L. Stover
 
 
 
 
 
 
 
 
Scott D. Urban*
 
Ÿ
 
 
 
Ÿ
 
Ÿ
William T. Van Kleef*
 
Chair
 
 
 
Ÿ
 
 
Molly K. Williamson*
 
 
 
Ÿ
 
Ÿ
 
Ÿ
Number of Meetings
 
5
 
8
 
4
 
3

* Independent Directors
(1)
All members of our Audit Committee have been determined to meet the standards of independence required of audit committee members by the New York Stock Exchange ("NYSE") and applicable SEC rules and to be financially literate. Mr. Van Kleef has been determined to be a financial expert.
(2)
All members of our Compensation Committee have been determined to meet the NYSE standards for independence, with each a “Non-Employee Director” as defined in Rule 16b-3 under the Exchange Act, and an “outside director” as defined for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”). No member of our Compensation Committee is a current, or during 2014 was a former, officer or employee of our Company or any of its subsidiaries. During 2014, no member of the Compensation Committee had a relationship that must be described under the SEC rules relating to disclosure of related person transactions. In 2014, none of our executive officers served on the board of directors or compensation committee of any entity that had one or more of its executive officers serving on our Board or Compensation Committee.
(3)
All members of our Governance Committee have been determined to meet the NYSE standards for independence.

9


Corporate Governance


Oversight of Risk Management


Our risk management program is overseen by our Board and its committees, with support from our management and external consultants.
Oversight of Risk Management
    The Board oversees risk management.
    Board committees, which meet regularly and report back to the Board, play significant roles in carrying out the risk oversight function.
    Our management is charged with managing risk through robust internal processes and controls.
    External consultants provide independent perspectives on our risk management program and assist in the implementation of enhancements.
Our Board
Includes enterprise risk management as an agenda item for regular Board meetings, with our Chairman consulting with our Lead Independent Director to define the topic and scope of each discussion; and
maintains other processes in support of our risk management effort, such as those by which our Board reviews and approves our capital budget and certain capital projects, hedging policy, new country entry, significant acquisitions and divestitures, equity and debt offerings and the delegation of authority to our management.
Our Audit Committee
Assists our Board in fulfilling its responsibility to oversee the integrity of our financial statements and our compliance with legal and regulatory requirements;
retains and interacts directly with our independent auditors of financial statements and oil and gas reserves; and
holds periodic reviews with our management to address financial and related disclosures, key legal and regulatory developments and possible enhancements to our Code of Business Conduct and Ethics.
Our Governance Committee
Annually reviews developments in the area of corporate governance and our Corporate Governance Guidelines in order to recommend appropriate actions to our Board;
 
reviews director independence, Board membership and committee assignments and makes adjustments in order to ensure that we have the appropriate director expertise to oversee our evolving business operations; and
oversees our corporate political activity.
Our EH&S Committee
Assists our Board in determining whether we have appropriate policies and management systems in place with respect to EH&S matters and monitoring and reviewing compliance with applicable EH&S laws, rules and regulations;
periodically reviews EH&S performance, our annual EH&S audit schedule, key EH&S legal and regulatory developments and trends; and
reviews and advises our Board on our initiatives in the area of corporate social responsibility.
Our Compensation Committee
Reviews our Proxy Statement Compensation Discussion and Analysis and discusses its disclosures with our management;
evaluates our CEO’s performance, considering input from our other independent directors on our risk management efforts and other criteria;
reviews our compensation program in an effort to ensure that it remains aligned with our compensation objectives and to address any potential risks that are reasonably likely to have a material adverse effect on the Company; and
monitors executive officer compliance with our stock ownership guidelines.
Our management
Maintains committees responsible for enterprise risk management, compliance and ethics, and disclosures;
includes a dedicated Chief Compliance Officer; and
regularly reports to our Board or its committees on our risk management practices.
Our external consultants
Audit our financial statements and oil and gas reserves;
help evaluate the adequacy of our risk management program;


10


Corporate Governance


assist in the implementation of program enhancements; and
help us prepare the risk disclosures in our public filings.

Succession planning

A key responsibility of our CEO and Board in the area of risk management is ensuring that an effective process is in place to provide continuity of leadership over the long-term. Each year, a review of senior leadership succession is conducted by our Board. During this review, the CEO and the independent directors discuss candidates for senior leadership positions, succession timing for those positions and development plans for the highest-potential candidates. This process ensures continuity of leadership over the long-term and forms the basis upon which we make ongoing leadership assignments.

 
Pursuant to our succession plan, our Board appointed Mr. Stover CEO on October 21, 2014, and several other adjustments were made to the composition of our senior leadership team.

In connection with our succession planning efforts, on May 1, 2013 we entered into Retention and Confidentiality Agreements with executive officers Rodney D. Cook and Ted D. Brown that generally provide for their continued employment until agreed dates in 2014 (Mr. Cook) and 2015 (Mr. Brown), with them in return receiving continued vesting of previously awarded stock options and restricted stock, subject to certain conditions including observance of certain confidentiality, non-competition and non-solicitation covenants. On August 14, 2014 we entered into a substantially similar agreement with Mr. Davidson that provides for his continued employment until his retirement on May 1, 2015.

Codes of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees and sets out our policy regarding laws and business conduct, contains other policies relevant to business conduct and sets out a process for reporting violations thereof. On January 28, 2014, our Board approved changes to our code to make
 
adjustments to its policy coverage and implement a more interactive format and structure.

We have also adopted a Code of Ethics for Chief Executive and Senior Financial Officers, violations of which are to be reported to our Audit Committee.

Independence and Related Person Transactions

Director Independence

Our Governance Committee annually reviews the independence of all of our non-management directors and reports its findings to our full Board. To assist in this review, our Board has adopted standards for director independence, which are consistent with the NYSE and SEC independence criteria. These independence standards are set forth in our Corporate Governance Guidelines, which are available on our website under the heading “About Us – Corporate Governance.”
 
In making independence determinations, our Board considers all relevant facts and circumstances. The following table contains a description of some of the transactions, relationships and arrangements considered by our Board on February 17, 2015 in confirming its determination that these directors are independent.


11


Corporate Governance


Director
  
Description of Relationship
Jeffrey L. Berenson
  
Chairman and CEO of Berenson & Company, as well as a former director of Epoch Holding Corporation, a holding company that provides investment management and advisory services. Mr. Berenson is a former director of Patina Oil & Gas Corporation ("Patina"), which we acquired by merger in May 2005.
Michael A. Cawley
  
Former President, CEO and Trustee of The Samuel Roberts Noble Foundation, Inc. Mr. Cawley received payments totaling approximately $30,899 in 2014 attributable to his interests in certain oil and gas royalties that he purchased from the Company in the 1990s. Mr. Cawley is also a director and chair of the Compensation Committee of Noble Corporation, a publicly-traded drilling company with which we have conducted business.
Edward F. Cox
  
Chair of the New York Republican State Committee. Received payments in 2014 totaling approximately $1,159,888 attributable to his interests in certain oil and gas royalties and interests in two general partnerships that hold royalties and are managed by the Company. Mr. Cox purchased these interests from the Company in the 1980s and 1990s.
Thomas J. Edelman
  
A managing partner of White Deer Energy, an energy private equity fund that owns interests in oil service companies with which we have conducted business. Mr. Edelman is a director of Berenson & Company and PostRock Energy Corporation and is the former Chairman and CEO of Patina, which we acquired by merger in May 2005.
Eric P. Grubman
  
Executive Vice President of the National Football League.
Kirby L. Hedrick
  
Former Executive Vice President of Phillips Petroleum Company.
Scott D. Urban
  
Former Group Vice President, Upstream, for several profit centers at BP. As a partner in Edgewater Energy LLC, an exploration and production consulting and private investment firm, he serves as a lead partner in a private equity company working in the Delaware Basin. Mr. Urban is also a director and chair of the Compensation Committee, and member of the Nominating and Governance Committee, of Pioneer Energy Services Corporation.
William T. Van Kleef
  
Director and chair of the Audit Committee of Oil States International, Inc., a publicly-traded
company that provides specialty products and services to oil and gas drilling and production
companies worldwide and with which we have conducted business.
Molly K. Williamson
 
Scholar with the Middle East Institute, Director of the American Academy of Diplomacy and Director of the International Executive Service Corps.

After reviewing these transactions, relationships and arrangements, our Board affirmatively determined that no material relationship existed that would interfere with the ability of Messrs. Berenson, Cawley, Cox, Edelman, Grubman, Hedrick, Urban or Van Kleef or Ms. Williamson to exercise independent judgment and that each is independent for Board membership purposes. Our Board has also determined that all members of our Audit Committee, Compensation Committee and Governance Committee are independent under the applicable NYSE independence standards and SEC rules.

Related Person Transactions

We review all relationships and transactions in which our Company and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. We have developed and implemented processes and controls to obtain information from our directors and executive officers with respect to related person transactions and for then determining, based on the facts and circumstances, whether our Company or a related person has a direct or indirect material interest in the transaction.

As required under SEC rules, transactions that are determined to be directly or indirectly material to our Company or a related person are disclosed in our annual Proxy Statement. In addition, our
 
Governance Committee or Board (if appropriate) reviews and approves or ratifies any related person transaction that is required to be disclosed. In the course of its review and approval or ratification of a disclosable related person transaction, consideration is given to:
The nature of the related person’s interest in the transaction;
the material terms of the transaction, including, without limitation, the amount and type of transaction;
the importance of the transaction to the related person;
the importance of the transaction to our Company;


12

Corporate Governance


whether the transaction would impair the judgment or ability of a director or executive officer to act in our best interest; and
any other matters deemed appropriate.
Any director who is a related person with respect to a transaction under review may not participate in the deliberations or vote respecting approval or ratification of the transaction; but that director may
 
be counted in determining the presence of a quorum at the meeting where the transaction is considered.

During fiscal year 2014, there were no transactions in excess of $120,000 between our Company and a related person in which the related person had a direct or indirect material interest.


Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of our common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. Directors, executive officers and more than 10% stockholders are required by SEC regulations to provide us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on a review of the copies of the reports furnished to us and written representations that no other reports were required, all Section 16(a) filing requirements applicable to our directors, officers and more than 10% beneficial owners were complied with during the year ended December 31, 2014.


13


Corporate Governance


Ownership of Equity Securities of the Company

Directors and Named Executive Officers

The following table sets forth, as of March 4, 2015, the shares of common stock beneficially owned by each director, each Named Executive Officer listed in the Summary Compensation Table included in this Proxy Statement, and all directors and Named Executive Officers as a group.
 
Common Stock Beneficially Owned(1)
Name
Number of
Shares (2)
 
Shares Underlying Stock Options (3)
Total
Percent of Class
Director
 
 
 
 
 
Jeffrey L. Berenson
66,185

 
55,773

121,958

*
Michael A. Cawley
41,419

 
55,773

97,192

*
Edward F. Cox
52,871

(4) 
55,773

108,644

*
Charles D. Davidson
1,208,151

(5) 
1,430,617

2,638,768

*
Thomas J. Edelman
3,984,391

(6) 
55,773

4,040,164

1.1%
Eric P. Grubman
19,887

 
46,021

65,908

*
Kirby L. Hedrick
118,597

 
55,773

174,370

*
David L. Stover
368,495

 
838,532

1,207,027

*
Scott D. Urban
27,019

 
60,807

87,826

*
William T. Van Kleef
94,137

 
78,173

172,310

 
Molly K. Williamson
5,331

 
9,445

14,776

*
Named Executive Officer (excluding any director named above)
 
 
 


 
Kenneth M. Fisher
152,163

 
280,574

432,737

*
Susan M. Cunningham
158,795

 
504,911

663,706

*
Ted D. Brown
153,996

 
178,999

332,995

*
Arnold J. Johnson
124,869

(7) 
268,085

392,954

*
All directors and Named Executive Officers as a group (15 persons)
6,576,306


3,975,029

10,551,335

2.9%

*
Represents less than one percent of outstanding shares of common stock.
(1)
Unless otherwise indicated, all shares are directly held with sole voting and investment power.
(2)
Includes restricted stock awards not currently vested, as follows: 1,571 shares held by each of Messrs. Berenson, Cawley, Cox, Edelman, Grubman, Hedrick, Urban, Van Kleef and Ms. Williamson; Mr. Davidson — 145,526 shares; Mr. Stover — 150,084 shares; Mr. Fisher — 67,900 shares; Ms. Cunningham — 53,656 shares; Mr. Brown — 39,174 shares; and Mr. Johnson — 38,296 shares.
(3)
Consists of shares not outstanding but subject to options that are currently exercisable or that will become exercisable on or before May 4, 2015.
(4)
Includes 28,334 shares held by spouse.
(5)
Includes 6,773 shares indirectly held in a qualified 401(k) plan.
(6)
Includes 68,572 shares held by spouse and 1,086,000 shares held under deferred compensation plans.
(7)
Includes 5,558 shares indirectly held in a qualified 401(k) plan.

14


Corporate Governance


Security Ownership of Certain Beneficial Owners

Set forth in the following table is information about the number of shares held by persons we know to be the beneficial owners of more than 5% of our issued and outstanding common stock.

Name and
Address of Beneficial Owner
Number of Shares
of Common Stock
Beneficially Owned
 
Percent of Class

Capital World Investors
333 South Hope Street
Los Angeles, CA 90071
44,311,750

(1) 
12.2
%
FMR LLC
245 Summer Street
Boston, MA 02210
43,589,301

(2) 
12.1
%
Blackrock, Inc.
40 East 52nd Street
New York, NY 10022
21,968,678

(3) 
6.1
%
The Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355
20,044,974

(4) 
5.5
%

(1)
Based upon its Schedule 13G/A filed with the SEC on February 13, 2015 with respect to its beneficial ownership of our common stock, Capital World Investors has sole voting power and sole dispositive power with respect to 44,311,750 shares.
(2)
Based upon its Schedule 13G/A filed with the SEC on February 13, 2015 with respect to its beneficial ownership of our common stock, FMR LLC has sole voting power with respect to 1,789,490 shares and sole dispositive power with respect to 43,589,301 shares.
(3)
Based upon its Schedule 13G/A filed with the SEC on February 9, 2015 with respect to its beneficial ownership of our common stock, Blackrock, Inc. has sole voting power with respect to 18,993,494 shares and sole dispositive power with respect to 21,968,678 shares.
(4)
Based on its Schedule 13G filed with the SEC on February 10, 2015 with respect to its beneficial ownership of our common stock, The Vanguard Group has sole voting power with respect to 617,317 shares, shared dispositive power with respect to 588,088 shares and sole dispositive power with respect to 19,456,886 shares.


Stockholder Proposals and Other Matters

We have been notified by certain stockholders that they intend to submit the proposals set forth below at our 2015 Annual Meeting for action by the stockholders. Pursuant to Rule 14a-8(l)(1) of the Exchange Act, we will provide the name, address and number of shares of our common stock held by the proponents of those proposals promptly upon receipt of a written or oral request. Requests should be submitted to the Company Secretary.

Stockholder proposals intended to be brought before our 2016 Annual Meeting of Stockholders as an agenda item or to be included in our Proxy Statement relating to that meeting, which is currently scheduled to be held on April 26, 2016, must be received by us at our office in Houston, Texas, addressed to our Secretary, no later than December 23, 2015.


15


Election of Directors (Proposal 1)


Election of Directors (Proposal 1)

As of the date of this Proxy Statement, our Board consists of eleven directors, nine of whom are independent. On April 15, 2014, Mr. Davidson announced his intention to retire effective May 1, 2015 and is not standing for re-election. The ten nominees, nine of whom are independent, are thus presented below. The business experience of each nominee as well as the qualifications that led our Board to select each nominee for election to the Board is discussed below. All directors are elected annually to serve until the next annual meeting and until their successors are elected.

Election Process

Our By-Laws provide that the number of directors shall be determined by the Board, which has set the number at 10 as of the date of our annual meeting on April 28, 2015; and that in an election where the number of nominees does not exceed the number of directors to be elected, each director must receive the majority of the votes cast with respect to that director.

Our Board will nominate candidates for election or re-election who agree to tender, promptly following the annual meeting, irrevocable resignations that will be effective upon (a) the failure to receive the required vote at the next annual meeting and (b) acceptance by the Board. In addition, our Board will fill director vacancies and new directorships only with
 
candidates who agree to tender the same form of resignation promptly following their appointment to the Board.

If an incumbent director fails to receive the required vote for re-election, then, within 90 days following certification of the stockholder vote, our Governance Committee will act to determine whether to accept the director’s resignation and will submit its recommendation for prompt consideration by our Board. The Board will promptly act on the resignation, taking into account the recommendation of the Governance Committee, and publicly disclose its decision and rationale.


Director Nominations

Our Governance Committee is responsible for identifying and evaluating nominees for director and for recommending to our Board a slate of nominees for election at each Annual Meeting of Stockholders. Nominees may be suggested by directors, members of management, stockholders or, in some cases, by a third-party firm.

Stockholders who wish the Governance Committee to consider their recommendations for nominees for the position of director should submit a recommendation in writing to the Governance
 
Committee, in care of the Company Secretary, at least 120 calendar days before the anniversary date of the immediately previous year’s annual meeting. Stockholder nominees for directors to be submitted for inclusion in our 2016 Proxy Statement must be received by us by December 23, 2015. Our Corporate Governance Guidelines specify the processes for evaluating nominees for director and the requirements for a stockholder recommendation for a director nominee.


Director Qualifications

Our Governance Committee believes that the minimum qualifications for serving as a director are that a nominee demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to our Board’s oversight of our business and affairs and have an impeccable record and reputation for honest and ethical conduct in both his or her professional and personal activities.
 
Nominees for director shall be those people who, after taking into account their skills, expertise, integrity, diversity, character, judgment, age, independence, corporate experience, length of service, potential conflicts of interest and commitments (including, among other things, service on the boards or comparable governing bodies of other public companies, private business


16


Election of Directors (Proposal 1)


companies, charities, civic bodies or similar organizations) and other qualities, are believed to enhance our Board’s ability to manage and direct, in an effective manner, our affairs and business, including, when applicable, to enhance the ability of the committees of our Board to fulfill their duties and to satisfy any independence requirements imposed by law, regulation or listing standards of the NYSE.

In general, nominees for director should have an understanding of the workings of large business organizations such as ours and senior level executive experience, as well as the ability to make independent, analytical judgments, the ability to be
 
an effective communicator and the ability and willingness to devote the time and effort to be an effective and contributing member of our Board. In addition, our Governance Committee will examine a candidate’s specific experiences and skills, time availability in light of other commitments, potential conflicts of interest and independence from management and our Company. It will also seek to have our Board represent a diversity of background, experience, gender and race. Our Governance Committee annually reviews its long-term plan for Board composition, giving consideration to the foregoing factors.


2015 Nominees for Director

Upon recommendation of the Governance Committee, our Board has nominated Jeffrey L. Berenson, Michael A. Cawley, Edward F. Cox, Thomas J. Edelman, Eric P. Grubman, Kirby L. Hedrick, David L. Stover, Scott D. Urban, William T. Van Kleef and Molly K. Williamson for election as director. All of the nominees are independent under NYSE corporate governance rules, except David L. Stover.

Each of the director nominees currently serves on our Board and was elected by the stockholders at the 2014 Annual Meeting of Stockholders. If elected, each nominee will hold office until the 2016 Annual Meeting of Stockholders and until his or her successor is elected and qualified. We have no reason to believe that any of the nominees will be
 
unable or unwilling to serve if elected. However, if any nominee should be unable for any reason or unwilling for good cause to serve, proxies may be voted for another person nominated as a substitute by our Board, or our Board may reduce the number of directors.

Our Board believes that the combination of the various qualifications, skills and experiences of the 2015 director nominees would contribute to an effective and well-functioning board. Our Board and the Governance Committee believe that, individually and as a whole, it possesses the necessary qualifications to provide effective oversight of the business and quality advice and counsel to our Company’s management.

Qualifications of 2015 Nominees for Director

In furtherance of the Director Qualifications discussed above, the following biographies highlight some categories of qualifications, attributes, skills and experience of each director nominee that led our Board to conclude that the director is qualified to serve.

Our Board recommends a vote FOR the election of each of the director nominees.



17


Director Nominee Biographies

 
Jeffrey L. Berenson
 
Director since 2005 Age 64

Mr. Berenson is Chairman and Chief Executive Officer of Berenson & Company, a private investment banking firm in New York City that he co-founded in 1990. From 1978 until co-founding Berenson & Company, he was with Merrill Lynch’s Mergers and Acquisitions department, becoming head of that department in 1986 and then co-head of its Merchant Banking unit in 1988. Mr. Berenson was appointed to the Board of Directors of Patina in December 2002 and joined our Board upon completion of our merger with Patina in May 2005. He previously served on the Board of Directors of Epoch Holding Corporation.

Specific Qualifications, Attributes, Skills and Experience:

High Level of Financial Literacy — has spent more than 35 years in the investment banking business, and has a thorough understanding of the economic environment in which we operate.

Relevant Chief Executive Officer/President Experience — serves as Chairman and CEO of the private investment banking firm that he co-founded in 1990.

Extensive Knowledge of Our Industry and Business — has historical knowledge of our DJ Basin (Colorado) assets through his service as a director of Patina and since that time has had broad exposure to our business through over nine years of service on our Board.

 
 
Michael A. Cawley
 
Director since 1995 Age 67

Mr. Cawley has served as President and Manager of The Cawley Consulting Group, LLC since January 2012. He previously served as President and Chief Executive Officer of The Samuel Roberts Noble Foundation, Inc. (“Foundation”) from February 1992 until his retirement in January 2012, after serving as Executive Vice President of the Foundation since January 1991. Prior to 1991, Mr. Cawley was the President of Thompson and Cawley, a professional corporation, attorneys at law. Mr. Cawley also served as a trustee of the Foundation from 1988 until his retirement and is a director of Noble Corporation. He has served on our Board since 1995 and has been our Lead Independent Director since 2001.

Specific Qualifications, Attributes, Skills and Experience:

Relevant Chief Executive Officer/President Experience — served as President and CEO of the Foundation for nearly 20 years and as President of Thompson and Cawley, a professional corporation, attorneys at law.

Extensive Knowledge of Our Industry and Business — has historical knowledge of, and broad exposure to, our business through over 19 years of service on our Board.

Strong Governance Experience — worked as an attorney, and law firm partner, and for over 14 years has served as our Lead Independent Director and chair of our Governance Committee.


18


Director Nominee Biographies

 
Edward F. Cox
 
Director since 1984 Age 68

Mr. Cox is a retired partner in the law firm of Patterson Belknap Webb & Tyler LLP, New York, New York, having served as the chair of the firm’s corporate department and as a member of its management committee. He currently serves as chair of the New York Republican State Committee (“NYRSC”). For more than five years he has been chair of the New York League of Conservation Voters Education Fund and, for more than five years prior to his election as NYRSC chair in 2009, was chair of the finance, community college and charter school committees of the Trustees of The State University of New York and of The State University Construction Fund, and was a member of New York’s Merit Selection Constitutional Commission on Judicial Nomination. During the two years leading up to his 2009 election as NYRSC chair, Mr. Cox served as the New York State Chair of Senator John McCain’s presidential campaign. He has served Presidents Nixon, Reagan and H. W. Bush in the international arena, has been a member of the Council on Foreign Relations since 1993 and serves on the boards of the Foreign Policy Association and the American Ditchley Foundation. He has served on our Board since 1984.

Specific Qualifications, Attributes, Skills and Experience:

Broad International Exposure — has served three U.S. presidents in the international arena.

Extensive Knowledge of Our Industry and Business — has historical knowledge of, and broad exposure to, our business through over 30 years of service on our Board.

Governmental or Geopolitical Expertise — serves as chair of the NYRSC and has served in a presidential campaign leadership role.

Strong Governance Experience — worked as an attorney in private practice, chairing his firm’s corporate department.
 
 
Thomas J. Edelman
 
Director since 2005 Age 64

Mr. Edelman is a managing partner of White Deer Energy, an energy private equity fund. He founded Patina and served as its Chairman and Chief Executive Officer from its formation in 1996 through its merger with the Company in 2005. Mr. Edelman co-founded Snyder Oil Corporation and was its President from 1981 through 1997. He served as Chairman and CEO and later as Chairman of Range Resources Corporation from 1988 through 2003. From 1980 to 1981 he was with the First Boston Corporation and from 1975 through 1980 with Lehman Brothers Kuhn Loeb Incorporated. Mr. Edelman serves on the Boards of Directors of Berenson & Company and PostRock Energy Corporation, and previously served on the Boards of Directors of Emerald Oil, Inc. and BioFuel Energy Corporation. He currently chairs the Investment Committee and serves as a Trustee of The Hotchkiss School, is a Trustee of the Wildlife Conservation Society and Chairman Emeritus of Lenox Hill Neighborhood House. He joined our Board upon completion of our merger with Patina in May 2005.

Specific Qualifications, Attributes, Skills and Experience:

High Level of Financial Literacy — has extensive experience with investment banking and private equity funds, as well as financial aspects of our business through leadership of large independent oil and gas companies.

Relevant Chief Executive Officer/President Experience — has served as President and CEO of several independent oil and gas companies and devoted a substantial portion of his career to the oil and gas industry.

Extensive Knowledge of Our Industry and Business — has historical knowledge of our DJ Basin assets through his service as founder, Chairman and CEO of Patina and since that time has had broad exposure to our business through over nine years of service on our Board.


19


Director Nominee Biographies

 
Eric P. Grubman
 
Director since 2009 Age 57

Mr. Grubman has served as Executive Vice President of the National Football League since 2004. He was responsible for Finance and Strategic Transactions from 2004 to 2006 and has served as the League’s President of Business Ventures from 2006 to the present. Mr. Grubman served as Co-President of Constellation Energy Group, Inc. from 2000 to 2001, was partner and co-head of the Energy Group at Goldman Sachs from 1996 to 2000, and worked in its merger department from 1987 to 2000. He served as an officer in the U.S. Navy from 1980 to 1985. Mr. Grubman serves on the Board of Directors of the U.S. Naval Academy Foundation. He joined our Board in January 2009.

Specific Qualifications, Attributes, Skills and Experience:

High Level of Financial Literacy — has overseen finance and strategic transactions for the National Football League and previously served as co-head of the Energy Group at Goldman Sachs.

Relevant Chief Executive Officer/President Experience — serves as Executive Vice President of the National Football League and previously served as Co-President of Constellation Energy Group, Inc.

Extensive Knowledge of Our Industry and Business — has worked with the oil and gas industry while with Constellation Energy Group and as partner and co-head of the Energy Group at Goldman Sachs, has had broad exposure to our business through over six years of service on our Board.
 
 
Kirby L. Hedrick
 
Director since 2002 Age 62

Mr. Hedrick served as Executive Vice President over upstream operations for Phillips Petroleum Company from 1997 until his retirement in 2000. In that role, he was responsible for exploration and production and midstream gas gathering, processing and marketing, including activities in 22 countries. He had a varied 25-year career with Phillips, including serving as petroleum engineer from 1975 to 1984 on various onshore and offshore projects in the U.S., the North Sea, Indonesia and the west coast of Africa; Manager of Offshore Operations from 1985 to 1987, responsible for all greater Ekofisk offshore operations for Phillips Pet. Co. Norway; Manager, Corporate Planning from 1987 to 1989; Managing Director from 1990 to 1992, Phillips Pet. Co. UK with upstream and downstream responsibilities, including gas marketing; President and Chief Executive Officer at GPM Gas Co. from 1993 to 1994, responsible for Phillips’ gas gathering, processing and marketing in Texas, Oklahoma and New Mexico; and Senior Vice President, Refining, Marketing and Transportation from 1995 to 1997. He joined our Board in August 2002.

Specific Qualifications, Attributes, Skills and Experience:

Relevant Chief Executive Officer/President Experience — has served as Executive Vice President of a major international oil and gas company.

Broad International Exposure — has led various onshore and offshore projects in the North Sea, Indonesia, the west coast of Africa, Norway and the UK.

Extensive Knowledge of Our Industry and Business — has devoted a career to the oil and gas industry and has had broad exposure to our business through over 12 years of service on our Board.


20


Director Nominee Biographies

 
David L. Stover
 
Director since 2014 Age 57

Mr. Stover has served as President and Chief Executive Officer of Noble Energy, Inc. since October 21, 2014, previously as President and Chief Operating Officer since April 2009, and Executive Vice President and Chief Operating Officer since August 2006. He joined the Company in 2002 and has served in various other senior leadership capacities, including Senior Vice President of North America and Business Development and Vice President of Business Development. Prior to joining the Company, he held various positions with BP America, Inc., Vastar Resources, Inc. (“Vastar”), and ARCO. He joined our Board in April 2014.

Specific Qualifications, Attributes, Skills and Experience:

High Level of Financial Literacy has extensive exposure to the financial aspects of our business through his leadership roles in several oil and gas companies.

Broad International Exposure has led our exploration and production efforts in the Eastern Mediterranean and West Africa, as well as other international locations.

Extensive Knowledge of Our Industry and Business — has devoted a career to the oil and gas industry and overseen our operations since 2006.

Active in Community — serves in leadership roles in industry and community organizations in our Houston headquarters area.
 
 
Scott D. Urban
 
Director since 2007 Age 61

Mr. Urban served in executive management positions at Amoco and its successor, BP, from 1977 to 2005. At the time of his retirement from BP in 2005, he was Group Vice President, Upstream for several profit centers including North America Gas, Alaska, Egypt and Middle East and, before that, Group Vice President, Upstream North Sea. He held various positions at Amoco including, at the time of its merger with BP, Group Vice President, Worldwide Exploration. Mr. Urban is a partner in Edgewater Energy LLC, an investment consulting firm, and a member of the Board of Directors of Pioneer Energy Services Corporation. He joined our Board in October 2007.

Specific Qualifications, Attributes, Skills and Experience:

Relevant Chief Executive Officer/President Experience — has served as Group Vice President of a major international oil and gas company.

Broad International Exposure — having led various onshore and offshore projects in Egypt, Middle East and North Sea, with an emphasis on exploration.

Extensive Knowledge of Our Industry and Business — has devoted a career to the oil and gas industry and has had broad exposure to our business through over seven years of service on our Board.


21


Director Nominee Biographies

 
William T. Van Kleef
 
Director since 2005 Age 63

Mr. Van Kleef served in executive management positions at Tesoro Corporation (“Tesoro”) from 1993 to 2005, most recently as Tesoro’s Executive Vice President and Chief Operating Officer. During his tenure at Tesoro he held various positions, including President, Tesoro Refining and Marketing, and Executive Vice President and Chief Financial Officer. Before joining Tesoro, Mr. Van Kleef, a Certified Public Accountant, served in various financial and accounting positions with Damson Oil from 1982 to 1991, most recently as Senior Vice President and Chief Financial Officer. Mr. Van Kleef is also a member of the Board of Directors of Oil States International, Inc. He joined our Board in November 2005.

Specific Qualifications, Attributes, Skills and Experience:

High Level of Financial Literacy — is a Certified Public Accountant, serving in various financial and accounting positions throughout his career.

Relevant Chief Executive Officer/President Experience — has served as Executive Vice President and COO of a large refining and marketing company.

Extensive Knowledge of Our Industry and Business — has had broad exposure to our business through over nine years of service on our Board.
 
 
Molly K. Williamson
 
Director since 2013 Age 69

Ms. Williamson has served in a unique combination of senior executive policy positions in four cabinet departments of the U.S. government. Her postings included senior foreign policy advisor to the U.S. Secretary of Energy; Deputy Assistant Secretary in the Departments of State, Defense, and Commerce; U.S. interim ambassador to Bahrain; and Chief of Mission and Consul General in Jerusalem during the Madrid peace process which culminated in the Oslo Accords. Ms. Williamson is a scholar with the Middle East Institute, a consultant, frequent lecturer at Johns Hopkins University and a past member of the Board of Directors of the American Foreign Service Association, currently serving on the Boards of Directors of the American Academy of Diplomacy and International Executive Service Corps. She is a former Foreign Service Officer, having served six U.S. presidents, achieving the rank of Career Minister. She joined our Board in March 2013.

Specific Qualifications, Attributes, Skills and Experience:

Broad International Exposure — has extensive experience in foreign policy and international affairs, serving six U.S. presidents.

Governmental or Geopolitical Expertise — has a résumé of broad government service, with expertise in the geopolitics of the Middle East.




22


Director Compensation

2014 Director Compensation

Our director compensation program consists of two principal elements: (1) annual retainer and committee fees and (2) equity, including stock options and restricted stock. Our Governance Committee reviews our director compensation program annually, based on information provided by our independent compensation consultant.
Annual Retainer and Committee Fees

Non-employee directors received the following cash fees for 2014, paid pro rata on a monthly basis:
An annual retainer of $75,000;
$2,000 for each Board or committee meeting attended;
$7,500 as an annual fee for the chairs of the Governance Committee and EH&S Committee;
$15,000 as an annual fee for the chairs of the Audit Committee and Compensation Committee; and
 
$20,000 as an annual fee for the Lead Independent Director.
Non-employee directors are also entitled to participate in our Non-Employee Director Fee Deferral Plan by which all or a portion of their director fees may be deferred for future payment. We also reimburse directors for travel, lodging and related expenses they incur in attending Board and committee meetings and director continuing education programs relevant to their service on our Board.

Equity

The 2005 Stock Plan for Non-Employee Directors of Noble Energy, Inc. (“2005 Plan”) provides for grants of stock options and awards of restricted stock to our non-employee directors. The 2005 Plan will expire under its own terms on March 31, 2015. On January 27, 2015 our Board adopted a substantially similar 2015 Plan for Non-Employee Directors of Noble Energy, Inc. ("2015 Plan") as a replacement that is being recommended for stockholder approval, and discussed, under Proposal 6 of this Proxy Statement.

Options are issued with an exercise price equal to the fair market value, as defined in the 2005 Plan, of our common stock on the date of grant and may be exercised beginning one year after the date of grant. The options expire 10 years from the date of grant. Restricted stock is restricted for a period of one year from the date of award. The vesting of options and restricted stock under the 2005 Plan is not contingent upon the satisfaction of any performance criteria and will accelerate in the event of a change of control.

 
Newly elected non-employee directors receive, on the date of initial election to our Board, a grant and award with a total value of $250,000 to be allocated one-half to stock options and one half to restricted stock.

On December 5, 2011, our Board agreed to set annual equity grants and awards for non-employee directors at a total value of $200,000, with one-half of that value allocated to stock options and one half to restricted stock. On January 27, 2015, our Board agreed to reduce that value by $50,000, to a total value of $150,000, in consideration of the challenges of the current economic environment in which we operate. Accordingly, our Board has approved annual grants and awards to each non-employee director of 4,011 stock options and 1,604 shares of restricted stock effective January 31, 2014 (as February 1, 2014 fell on a Saturday) and 5,350 stock options and 1,571 shares of restricted stock, effective January 30, 2015 (as February 1, 2015 fell on a Sunday).


23

Director Compensation

Director Compensation Summary
The table below sets forth certain information concerning the compensation earned in 2014 by our non-employee directors.
Name
Fees
Earned
or Paid
in Cash
($)(1)
Stock
Awards
($)(2)
Option
Awards
($)(3)
Non-Equity
Incentive Plan
Compensation
($)
Change in
Pension Value
and
Non-qualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($)
Total
($)
Jeffrey L. Berenson
113,000
99,977
81,062
294,039
Michael A. Cawley
138,500
99,977
81,062
319,539
Edward F. Cox
128,500
99,977
81,062
309,539
Thomas J. Edelman
119,000
99,977
81,062
300,039
Eric P. Grubman
111,000
99,977
81,062
292,039
Kirby L. Hedrick
134,000
99,977
81,062
315,039
Scott D. Urban
115,000
99,977
81,062
296,039
William T. Van Kleef
126,000
99,977
81,062
307,039
Molly K. Williamson
119,000
99,977
81,062
300,039

(1)
Reflects annual retainer and meeting fees paid or earned by our non-employee directors in 2014. Each non-employee director earned the following: an annual retainer of $75,000 and $2,000 for each Board or committee meeting attended. Mr. Cawley received an additional $20,000 for serving as our Lead Independent Director. Messrs. Van Kleef and Hedrick each received an additional $15,000 for serving as Chair of our Audit Committee and our Compensation Committee, respectively. Messrs. Cox and Cawley each received an additional $7,500 for serving as Chair of our EH&S Committee and our Governance Committee, respectively.

(2)
Reflects the aggregate grant date fair value for restricted stock awarded to our non-employee directors in 2014 under our 2005 Plan, computed in accordance with FASB ASC Topic 718. Restricted stock awarded to our non-employee directors in 2014 will vest on the one-year anniversary of the award date. The vesting of the restricted shares will accelerate in the event of a change of control. Each non-employee director received an award of 1,604 shares of restricted stock on January 31, 2014 that was unvested as of December 31, 2014.

(3)
Reflects the aggregate grant date fair value for non-qualified stock options granted to our non-employee directors in 2014 under our 2005 Plan, computed in accordance with FASB ASC Topic 718. Options represent the right to purchase shares of common stock at a fixed price per share equal to fair market value on the date of grant. Our 2005 Plan defines “fair market value” as the closing price of our common stock on the NYSE on the date of grant. Options granted to our non-employee directors in 2014 will vest on the one-year anniversary of the grant date. The vesting of the options will accelerate in the event of a change of control. Vesting of these options is not contingent upon the satisfaction of any performance criteria, although none of the options may be exercised until the first anniversary (absent a change of control) or after the tenth anniversary of the date of grant. Each non-employee director received 4,011 non-qualified stock options on January 31, 2014 that were unvested as of December 31, 2014.

The following directors have option grants outstanding as of December 31, 2014: Mr. Berenson — 62,173 shares; Mr. Cawley — 55,773 shares; Mr. Cox — 55,773 shares; Mr. Edelman — 78,173 shares; Mr. Grubman — 46,021 shares; Mr. Hedrick — 55,773 shares; Mr. Urban — 60,807 shares; Mr. Van Kleef — 78,173 shares; and Ms. Williamson — 9,445 shares.




24

Ratification of Appointment of Independent Auditor (Proposal 2)


Ratification of Appointment of Independent Auditor (Proposal 2)
The Audit Committee of our Board is directly responsible for the appointment, compensation, retention and oversight of the independent external audit firm retained to audit our financial statements. The Audit Committee has appointed KPMG LLP as our independent external auditor for 2015. KPMG has been retained as our external auditor continuously since May 2002.

The Audit Committee is responsible for the audit fee negotiations associated with our retention of KPMG. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent external audit firm.

In conjunction with the mandated rotation of the Audit Firm's lead engagement partner, the Audit Committee and its chairperson are directly involved in the selection of KPMG's new lead engagement
 
partner. The members of the Audit Committee and our Board believe that the continued retention of KPMG to serve as our independent external auditor is in our best interest and the best interest of our investors.

Although action by our stockholders on this matter is not required, our Audit Committee believes that it is important to seek stockholder ratification of this appointment in light of the critical role played by our independent auditor in maintaining the integrity of our financial controls and reporting. One or more representatives of KPMG LLP are expected to be present at our annual meeting and will be able to make a statement if they so desire and respond to appropriate questions.

Our Board recommends that stockholders vote FOR the ratification of the appointment of KPMG LLP as our independent auditor.


Matters Relating to the Independent Auditor

Accounting Fees and Services for Fiscal Years 2014 and 2013
 
2014

%
2013

%
Audit Fees(1)
$
3,379,362

100.0
$
3,146,261

98.9
Audit — Related Fees


Tax Fees(2)

34,524

1.1
All Other Fees


Total Fees
$
3,379,362

100.0
$
3,180,785

100.0
(1)
Audit fees consist of services for the audit of our annual financial statements, the audit of the effectiveness of our internal controls over financial reporting, other audit consultation and reviews of our quarterly financial statements. This category also includes amounts paid for the issuance of consents, foreign statutory audits and similar audit-related work. Fees also include amounts paid for the issuance of comfort letters associated with debt offerings during the fiscal years ended 2013 and 2014.
(2)
Includes fees paid for tax consulting.

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee approves all audit and non-audit services to be provided by our independent auditor prior to the receipt of such services. The Audit Committee Chair has the authority to pre-approve services of up to $50,000 rendered by our independent auditor. Any pre-approval of services by the Audit Committee Chair shall be reported to the Audit Committee at its next scheduled meeting.

25





Report of the Audit Committee
To the Stockholders of
Noble Energy, Inc.:

The primary purpose of the Audit Committee of the Company’s Board of Directors is to: (1) assist the Board of Directors in fulfilling its responsibility to oversee the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the Independent Auditor’s qualifications and independence, and the performance of the Company’s internal audit function and Independent Auditors and (2) prepare a committee report as required by the SEC to be included in the Company’s annual Proxy Statement. The Audit Committee’s function is more fully described in its charter, which was adopted by the Audit Committee and the Board of Directors on March 4, 2004 and most recently amended on January 27, 2015 in connection with the Audit Committee’s annual review of its charter. A copy of the charter is available on our website and is also available in print to any stockholder who requests it. The Audit Committee held five meetings during 2014, including regular meetings and a special meeting addressing the Form 10-K filing, earnings release and related matters.

Throughout 2014 and continuing to-date, the Audit Committee has been comprised entirely of independent directors, as defined and required by current NYSE listing standards and Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and as so determined by our Board of Directors. The Board of Directors also determined that Mr. Van Kleef is an “audit committee financial expert” as that term is defined in Item 407(a)(5) of Regulation S-K.

Review and Discussion

The Audit Committee has reviewed and discussed the Company’s audited financial statements with management. It has also discussed with KPMG LLP, the Company’s Independent Auditor, the matters required to be discussed under the rules adopted by the Public Company Accounting Oversight Board, including Auditing Standard No. 16 (Communication with Audit Committees). Additionally, KPMG LLP has provided to the Audit Committee the written disclosures required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and the committee discussed the auditors’ independence with management and the auditors.

The Audit Committee also has considered whether KPMG LLP’s rendering of any non-audit services to the Company is compatible with maintaining its independence. If any, the Audit Committee has concluded that rendering of non-audit services by KPMG LLP has not impaired its independence.

Based on the Audit Committee’s discussions with management and the Independent Auditor, and its review of the representations of management and the report of KPMG LLP to the Audit Committee, the Audit Committee recommended to the Board of Directors the inclusion of the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC.
February 17, 2015



Audit Committee
William T. Van Kleef, Chair
Michael A. Cawley
Eric P. Grubman
Scott D. Urban




26


Advisory Vote to Approve Executive Compensation (Proposal 3)


Advisory Vote to Approve Executive Compensation (Proposal 3)


As we do each year, and as required by Section 14A of the Exchange Act, we provide our stockholders with the opportunity to vote to approve, on a nonbinding advisory basis, the compensation of our Named Executive Officers as disclosed in this Proxy Statement in accordance with the SEC’s compensation disclosure rules.
Our compensation program is designed to attract and retain high quality employees and to link their compensation to performance. In doing so, we reward our Named Executive Officers for the achievement of short- and long-term operational and financial goals and the achievement of increased total stockholder return, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking.
We describe our executive compensation program, including how it links executive compensation to Company performance, in the Compensation Discussion and Analysis portion of this Proxy Statement beginning on page 44. We believe that our program continues to be appropriately designed to link compensation to performance.
The vote on this resolution is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our Named Executive Officers as disclosed in this Proxy
 
Statement in accordance with the SEC’s compensation disclosure rules. The vote is advisory, which means that it is not binding on our Company, Board or Compensation Committee. To the extent there is any significant vote against our Named Executive Officer compensation as disclosed in this Proxy Statement, our Compensation Committee will evaluate whether any actions are necessary to address the concerns of stockholders.
Accordingly, we ask our stockholders to vote on the following resolution at our annual meeting:
RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 2015 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2014 Summary Compensation Table and the other related tables and disclosure.
Our Board recommends that stockholders vote FOR the approval of the compensation of our Named Executive Officers as disclosed in this Proxy Statement.



27


Approval of Amendment to Certificate of Incorporation (Proposal 4)

Approval of Amendment to Certificate of Incorporation (Proposal 4)


Our Board has approved, subject to stockholder approval, an amendment to our Certificate of Incorporation to increase the number of authorized shares of our common stock from 500 million to 1 billion and directed that the amendment be submitted for approval by our stockholders at the 2015 Annual Meeting. Our Board believes that it is in our best interest and the best interest of our stockholders to increase the number of shares of common stock authorized for issuance by 500 million shares.

The proposed amendment would amend and restate the first grammatical paragraph of Article Fourth of our Certificate of Incorporation to read as follows:

FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is 1,004,000,000, consisting of (1) 4,000,000 shares of Preferred Stock, $1.00 par value (“Preferred Stock”), and (2)  1,000,000,000 shares of Common Stock, $0.01 par value (“Common Stock”).

A copy of the proposed amendment to our Certificate of Incorporation is attached to this Proxy Statement as Appendix C. The amendment, if approved, will have no effect on the four million shares of preferred stock we are authorized to issue. The holders of the additional shares of common stock authorized by the proposed amendment would have the same rights and privileges as the holders of shares of common stock currently authorized. The holders of common stock have no preemptive rights to purchase common stock or other securities, and our Board has no plans to grant such rights with respect to any such shares. In addition, under Delaware law, our stockholders are not entitled to dissenters’ or appraisal rights in connection with the proposed increase in the number of shares of common stock authorized for issuance.

Purposes and Effects of the Common Stock Amendment

As of March 4, 2015, 387,845,980 shares of common stock were issued and outstanding and 25,323,905 shares were reserved for issuance under our various employee and director benefit plans, leaving 86,830,115 shares of common stock unissued and unreserved. We desire to authorize
 

 
additional shares of common stock to ensure that enough shares will be available in the event our Board determines that it is necessary or appropriate to (i) permit future stock splits in the form of stock dividends, (ii) raise additional capital through the sale of equity securities, (iii) acquire another company or its assets, (iv) allow for grants and awards pursuant to our equity compensation plans and agreements, or (v) satisfy other corporate purposes. The availability of additional shares of common stock is particularly important in the event that our Board needs to undertake any of the foregoing actions on an expedited basis and does not have the time to seek stockholder approval in connection with the contemplated issuance of common stock.

The increase in authorized common stock will not have any immediate effect on the rights of existing stockholders. However, our Board will have the authority to issue authorized common stock without requiring future stockholder approval of such issuances, except as may be required by applicable law or the NYSE. In particular, the NYSE requires stockholder approval for (i) acquisition transactions where the issuance could increase the number of Company shares outstanding by 20% or more and (ii) any increase in shares reserved for issuance under equity compensation plans for Company employees. In such cases, further stockholder authorization will be solicited. To the extent that additional authorized shares are issued in the future, they may decrease the existing stockholders’ percentage equity ownership and, depending on the price at which they are issued, could be dilutive to our existing stockholders. The proposed amendment to our Certificate of Incorporation is not intended for the purposes of effecting an anti-takeover measure.

Over the past ten years we have issued common stock only in connection with our acquisition of Patina in May 2005, a two-for-one stock split in September 2005, a two-for-one stock split in April 2013, a public offering of common stock in March 2015, and pursuant to our equity compensation plans and agreements. Our one-year total stockholder return for 2014 was -30% and cumulative stockholder return for the past three fiscal years was 3%.


28


Approval of Amendment to Certificate of Incorporation (Proposal 4)

We do not have any current specific plans, proposals or arrangements, written or otherwise, to issue any of the newly available authorized shares of common stock for any purpose, including future acquisitions and/or financings.

The holders of common stock have no preemptive rights to purchase common stock or other securities, and our Board has no plans to grant such rights with respect to any such shares.

Required Vote

The affirmative vote of the holders of a majority of our outstanding shares of common stock is required for approval of the proposed amendment. Abstentions will have the same effect as votes against approval of the proposed amendment. Shares of our common stock represented by executed but unmarked proxies will be voted for the proposed amendment to our Certificate of Incorporation to increase the number of authorized shares of common stock.

 
The effective time of the proposed increase in our authorized common stock will be the time and on the date which the amendment to our Certificate of Incorporation is accepted for filing by and filed with the Delaware Secretary of State (or such later time and date as is specified in the certificate of amendment).

Our Board recommends that stockholders vote FOR the approval of the proposed amendment to our Certificate of Incorporation.



29


Approval of Amendment and Restatement of the 1992 Plan (Proposal 5)




Approval of Amendment and Restatement of the 1992 Plan (Proposal 5)

At the 2015 Annual Meeting, our stockholders are being asked to approve an amendment and restatement of the 1992 Plan that will increase the number of shares of common stock authorized for issuance under the plan from 71,600,000 shares to 77,400,000 shares (an increase of 5,800,000 shares), add a change of control vesting provision for grants and awards made after the 2015 Annual Meeting and further clarify the plan's share limit provision. Our Board approved this amendment on February 17, 2015, subject to stockholder approval at our annual meeting.

Background and Purpose

Our Board recommends approval of the amendment and restatement of the 1992 Plan. The proposed increase in the number of shares authorized for issuance under the plan would enable the continued use of the 1992 Plan for stock-based grants and awards consistent with the objectives of our compensation program.

The use of stock-based grants and awards under the 1992 Plan continues to be an important part of our compensation program. Of the 71,600,000 shares currently authorized for issuance under the plan, 9,120,794 shares remain available for future grant or award as of March 4, 2015. We do not believe that this leaves sufficient shares available for more than one additional year of grants and awards. By increasing the number of shares authorized for issuance under the 1992 Plan by 5,800,000, a total of 14,920,794 shares would be available. This increase would give us the flexibility to continue to responsibly address our future equity compensation needs.

As of the record date of March 4, 2015, there were a total of 387,845,980 shares of our common stock issued and outstanding. We had a total of 15,422,115 stock options outstanding with a weighted average exercise price of $44.90 and a weighted average remaining term of 6.5 years, and 2,938,367 shares of restricted stock outstanding, as of the record date. On that date the reported closing price per share of our common stock on the NYSE was $47.21.

 
If the proposed amendment and restatement is not approved by our stockholders, the 1992 Plan will remain in effect in its present form.

Summary

The following is a summary of the principal features of the 1992 Plan and is qualified in its entirety by reference to the full text of the 1992 Plan (as amended and restated), which is attached to this Proxy Statement as Appendix D. Capitalized terms not otherwise defined below have the meanings ascribed to them in the 1992 Plan.

General

Our 1992 Plan is an essential component of our compensation program and is designed to attract, retain and motivate high-quality employees by:

Providing competitive long-term incentive compensation opportunities;
rewarding outstanding achievement by those who can most directly affect our performance and instill a sense of business ownership; and
aligning the interests of our employees with those of our stockholders so as to maximize long-term stockholder value creation.

Shares Available for Grant or Award

The total number of shares of common stock currently available for grant or award under the 1992 Plan is 9,120,794. No more than 14,000,000 shares may be issued after April 26, 2011, pursuant to incentive options. The maximum number of shares of common stock for which options and stock appreciation rights (“SAR”) may be granted, and which may be awarded as restricted stock, to any one person during any calendar year is 800,000.

When determining the number of shares of common stock available for grants and awards made under the 1992 Plan, each share subject to an option is counted against the plan share limit as one share, and each share of common stock awarded as restricted stock is counted against the plan share limit as 2.39 shares.



30


Approval of Amendment and Restatement of the 1992 Plan (Proposal 5)




Shares of common stock covered by an option that expires or terminates prior to exercise and shares of restricted stock returned to us upon forfeiture are again available for grant or award. Shares of common stock tendered or withheld to satisfy an exercise price or tax withholding obligation for an option, SAR or restricted stock and shares of common stock we repurchase using option proceeds will not again be available for issuance under the 1992 Plan. Upon exercise of a SAR, a corresponding number of shares of common stock subject to option under the related option will be canceled and will not again be available for issuance under the plan.

Our 1992 Plan contains anti-dilution provisions that apply in the event of a stock dividend or a stock split, combination or exchange of our shares that results from a recapitalization, merger or other restructuring in which we are the surviving company. In that event, adjustments will be made in the maximum number of shares subject to the 1992 Plan and the number of shares and option prices under outstanding options.

Administration

Our 1992 Plan is administered by the Compensation Committee, which is and will be composed of our independent directors. Subject to the provisions of the 1992 Plan, the Compensation Committee has the authority to select the participants who will receive the grants and awards, to determine the type and terms of the grants and awards, and to interpret and administer the 1992 Plan. The Compensation Committee may delegate to our CEO the responsibility for limited non-officer inducement grants to the extent not inconsistent with applicable laws or regulations.

Eligibility

All of our regular salaried executive officers and other employees and those of our affiliates are eligible to participate in the 1992 Plan. As of March 4, 2015, all of our executive officers and approximately 950 other current employees participate in the 1992 Plan.

Fair Market Value and Option Exercise Price

The option exercise price may not be less than the fair market value of a share of common stock on the date of grant. The fair market value is the per share closing price of common stock on the applicable date, and if not a trading date, the closing price for
 
the preceding day on which sales of common stock were made.

Stock Options and SARs

Options granted under the 1992 Plan may be either incentive options or non-qualified options, or a combination. An option is exercisable at such times and upon such terms as the Compensation Committee determines; provided that no option may be exercisable more than 10 years after the date of grant. Upon exercise, a participant may pay the option exercise price of a stock option in cash (or equivalents), in shares of our common stock that they already own, or such other consideration as the Compensation Committee approves.

SARs may be granted as part of an option and generally will be subject to the same terms and exercisable to the same extent as the associated option. SARs are a right to receive a payment, in cash or shares of common stock or a combination (as determined by the Compensation Committee), equal to any excess of the fair market value (on the date of exercise) of a stated number of shares of common stock over the exercise price stated in the award agreement.

Restricted Stock

The Compensation Committee may award shares of common stock, subject to specific restrictions, to eligible individuals. The Compensation Committee will determine the nature and extent of the restrictions on the shares, the duration of the restrictions, and any circumstance of forfeiture. During the period of restriction, recipients will have the right to receive dividends and the right to vote the shares.

The Compensation Committee may waive any outstanding restrictions prior to the end of the restricted period. If the terms and conditions for the removal of the restrictions on the restricted stock are not satisfied, the restricted stock is forfeited and returned.

Cash Awards

Cash awards may be awarded by the Compensation Committee to eligible recipients. Any cash award would be in addition to any payments or grants under our short-term incentive plan. A cash award provides for the payment of a cash bonus upon the achievement of stated performance goals. The


31


Approval of Amendment and Restatement of the 1992 Plan (Proposal 5)




committee determines the terms, restrictions and limitations that apply to a cash award. The maximum amount that may be paid under all cash awards to any one person under the 1992 Plan during any one calendar year may not exceed $4,000,000.

Performance Awards

The Compensation Committee may grant performance awards to eligible individuals that are contingent upon the achievement of one or more performance measures. Performance awards may be settled in cash or stock, as determined by the committee.

The performance criteria that may be used consist of objective tests based on the following:

An amount or level of earnings or cash flow;
earnings or cash flow per share;
return on equity or assets;
return on capital or invested capital and other related financial measures;
cash flow or earnings before interest, taxes, depreciation and amortization (“EBITDA”);
revenues;
income, net income or operating income;
expenses or costs or expense levels or cost levels;
proceeds of sale or other disposition;
share price;
total stockholder return;
operating profit;
profit margin;
capital expenditures;
net borrowing, debt leverage levels, credit quality or debt ratings;
the accomplishment of mergers, acquisitions, dispositions, or similar business transactions;
economic value added;
individual business objectives;
growth in reserves or production;
finding and development costs; and/or
safety results.

Each agreement for a performance award will explain (i) the maximum amount that may be earned in the form of cash or shares of common stock, as applicable, (ii) the performance goal or goals and level of achievement that will apply to the award, (iii) the performance period over which performance is measured, and (iv) other terms that the committee may determine that are not inconsistent with the 1992 Plan.
 
Prior to the payment of any compensation pursuant to a performance award, the Compensation Committee must determine and then certify in writing that the applicable performance goal or goals and other material terms of the award have been satisfied. The committee also has the authority to reduce, but not to increase, the amount payable in cash and the number of shares of common stock to be issued, retained or vested pursuant to a performance award.

Vesting of Grants and Awards Following Change of Control

A new change of control vesting provision is being added to the 1992 Plan effective with respect to grants and awards made on or after April 28, 2015. In the event of a change of control while the holder of the grant or award is employed by our Company or an affiliate followed by the termination of employment without cause or for good reason within the 24-month period following the change of control, each such grant or award will become immediately vested and fully exercisable upon such termination and any restrictions applicable to the grant or award will lapse on that date, provided that any performance award with performance-based vesting will vest upon such termination according to the performance achieved as measured through the date of termination of employment.

Amendment and Duration of the 1992 Plan

Our Board may at any time amend, suspend or terminate our 1992 Plan but may not, without the approval of our stockholders:

Increase the maximum number of shares subject to the 1992 Plan;
reduce the exercise price per share covered by options below the price specified in the 1992 Plan; or
permit the “re-pricing” of options and any SARs that relate to such new options, or permit the cancellation of “underwater” options and any SARs that relate to such options in return for cash or other consideration.

Additionally, our Board may not, without the consent of the recipient, amend or cancel any outstanding award in a manner that adversely affects the recipient in a material way.


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Approval of Amendment and Restatement of the 1992 Plan (Proposal 5)




United States Federal Income Tax Consequences

The following is a summary of the U.S. federal income tax consequences arising from grants and awards under the 1992 Plan. The tax consequences vary depending upon particular circumstances. The income tax laws, regulations and interpretations thereof change frequently. Participants should rely upon their own tax advisors for advice concerning the specific tax consequences applicable to them, including the applicability and effect of state, local, and foreign tax laws.

Non-qualified Options

A participant will not recognize taxable income upon the grant of a non-qualified stock option, but will have taxable income at the time of exercise equal to the excess of the fair market value of the shares on the date of exercise over the exercise price. We are entitled to a tax deduction for the same amount at the same time.

Incentive Options

A participant will not recognize taxable income upon the grant of an incentive stock option and also will not recognize income for federal income tax purposes at the time of exercise, but in some circumstances may be subject to alternative minimum tax as a result of the exercise. If the participant does not dispose of the shares acquired pursuant to an incentive stock option before the later of two years from the date of grant or one year from the date of exercise, any gain or loss realized on a subsequent disposition of the shares will be treated as a long-term capital gain or loss. Under these circumstances, we will not be entitled to any deduction for federal income tax purposes. If the participant fails to hold the shares for that period, the disposition is treated as disqualifying, requiring the participant to recognize taxable income equal to the excess of the fair market value on the exercise date over the exercise price (but in most cases not more than the gain realized on the disposition). Any additional amount realized upon the disposition is taxable as long-term or short-term capital gain. If a disqualifying disposition occurs, we will be entitled to a tax deduction equal to the ordinary income amount the participant recognizes.

 
SARs

A participant will not recognize taxable income upon the grant of a SAR. Upon the exercise of a SAR the participant must recognize taxable income equal to the amount of cash or the fair market value of the shares received on exercise, and we are entitled to a corresponding tax deduction in the same amount.

Restricted Stock

A participant will not recognize taxable income upon the receipt of an award of restricted stock (unless the participant elects to accelerate the income under Section 83(b) of the Internal Revenue Code). When the restrictions lapse, the participant will recognize taxable income in an amount equal to the excess of the fair market value of the shares at that time over the amount, if any, paid for the shares. We will be entitled to a corresponding tax deduction. Dividends on restricted stock accumulated during the restriction period that are paid to the participant at the end of the restricted period will also be compensation income to the participant and will be deductible as compensation expense by the Company.

Cash Awards

An individual who receives a cash award will recognize ordinary income subject to withholding for federal income tax purposes at the time the cash is received (or, if earlier, the date the cash is made available to the individual). We will be entitled to a deduction for the amount of the cash award at such time.

Performance Awards

A participant will not recognize taxable income upon the grant of a performance award, but will recognize taxable income at the time the award is paid equal to the amount of cash paid or the value of shares
delivered, and we will be entitled to a corresponding tax deduction.

Limitations on the Company’s Compensation Deduction

Section 162(m) of the Internal Revenue Code limits the deduction that we may take for compensation payable to certain of our officers to the extent that compensation paid to any such officer for the year exceeds $1,000,000, but not counting any compensation that is performance-based. The 1992


33


Approval of Amendment and Restatement of the 1992 Plan (Proposal 5)




Plan has been designed so that awards of non-qualified options, incentive options and SARs may qualify as performance-based compensation for this purpose. In addition, awards of restricted stock and cash awards that are designed to satisfy the requirements for performance awards are intended to qualify as performance-based compensation for this purpose.

Section 280G of the Internal Revenue Code limits deductions for compensation payable to certain individuals if the compensation constitutes an “excess parachute payment.” Accelerated vesting or payment of awards under the 1992 Plan upon a change of ownership or control could result in excess parachute payments. A disqualified individual receiving an excess parachute payment is subject to a 20% excise tax on the amount of the payment.

Our Board recommends that stockholders vote FOR the approval of the proposed amendment and restatement of our 1992 Plan.


34


Approval of 2015 Stock Plan for Non-Employee Directors (Proposal 6)


Approval of 2015 Stock Plan for Non-Employee Directors (Proposal 6)

Our Board has adopted the 2015 Stock Plan for Non-Employee Directors of Noble Energy, Inc. to replace the substantially similar 2005 Plan that will expire under its own terms on March 31, 2015, subject to the approval of the 2015 Plan by our stockholders at our annual meeting. The purpose of the 2015 Plan is to provide each non-employee director with an added incentive to continue in the service of our Company and a more direct interest in the future success of our operations by granting to such directors options to purchase shares of our common stock and awards of restricted shares of common stock.

The following is a summary of the principal features of the 2015 Plan and is qualified in its entirety by reference to the full text of the 2015 Plan, which is attached to this Proxy Statement as Appendix E. Capitalized terms not otherwise defined below have the meanings ascribed to them in the 2015 Plan.

General

The 2015 Plan authorizes the issuance of 708,996 shares of common stock remaining available for grant under the 2005 Plan immediately prior to its expiration on March 31, 2015, plus any shares allocable to the unexercised portion of any options under the 2005 Plan that expire after March 31, 2015. Any shares of common stock allocable to the unexercised portion of an option that expires or terminates will again be available for the purposes of the 2015 Plan. Except for shares of common stock allocable to the unexercised portion of an option under the 2005 Plan or the 2015 Plan that expires or terminates, no other shares of common stock will be added back to the shares available for issuance under the 2015 Plan. Shares of common stock we repurchase using options proceeds will not again be available for issuance under the 2015 Plan.

The 2015 Plan contains provisions for the adjustment of the number of shares of common stock to be granted, or available for grant under options and restricted stock awards, and for the adjustment of the shares subject to unexercised options, in the event of common stock splits or combinations, dividends payable in common stock or the occurrence of certain other events.

 
The 2015 Plan is administered by our Board and, subject to certain maximum annual grant limitations, is designed to allow the Board to determine the amount and the form of the grants to be made under the 2015 Plan from time to time in order to permit us to respond to market conditions and remain competitive in our non-employee director compensation practices. Under the 2015 Plan, our Board has the discretion to grant options and restricted stock awards to our non-employee directors and to determine the restrictions, terms and conditions applicable to such grants.

Stock Options

At any time our Board, in its discretion, may grant an option to any non-employee director provided that the aggregate number of shares of common stock that may be subject to options granted to a particular non-employee director during any calendar year, not exceed 22,400.

The price at which each share of common stock covered by an option may be purchased is the fair market value of such share on the date of the grant of such option. Each option will be exercisable from time to time over the period of time commencing one year from the date of the grant of such option and ending upon the expiration date specified for such option by our Board at the time of the grant of such option, which may not be exercised later than 10 years from the date of such grant. Each option granted to a non-employee director under the 2015 Plan will, however, become exercisable in full (i) upon the death of such non-employee director, (ii) upon the mandatory retirement of such non-employee director as a regular director because of age in accordance with Article III of our By-Laws, or (iii) in the event of a change of control followed by the involuntary termination of such non-employee director's membership on our Board, including a failure to re-nominate such director, for reasons other than a termination for cause within the 24-month period following the date of the change of control.

If a non-employee director’s service as a director terminates within the exercise period applicable to an option granted to such non-employee director, the non-employee director (or if such termination of service is by reason of death, the executor or


35


Approval of 2015 Stock Plan for Non-Employee Directors (Proposal 6)


administrator of the non-employee director’s estate or person who has acquired the option by bequest, inheritance or permitted transfer) may exercise such option, to the extent such option was exercisable at the time of such termination of service, for a period ending on the earlier of (i) the expiration of five years from such termination of service, or (ii) the expiration of the exercise period applicable to such option.

The options granted under the 2015 Plan are transferable only by will or the laws of descent and distribution or to a permitted transferee (as defined below). An option may be transferred to a permitted transferee if (i) there is no consideration for the transfer, (ii) the original optionee remains liable for all withholding obligations associated with the exercise of the option, (iii) the original optionee notifies us of the transfer and provides certain information with respect to the permitted transferee, and (iv) our Board approves the form of the transfer documents effectuating the transfer. The term “permitted transferee” means, with respect to an original optionee, (i) any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the original optionee, including adoptive relationships, (ii) any person sharing the original optionee’s household (other than a tenant or an employee), (iii) a trust in which the persons described in clauses (i) and (ii) above have more than 50% of the beneficial interest, (iv) a foundation in which the original optionee and/or persons described in clauses (i) and (ii) above control the management of assets, and (v) any other entity in which the original optionee and/or persons described in clauses (i) and (ii) above own more than 50% of the voting interests.

Restricted Stock Awards

At any time our Board in its discretion may grant restricted shares of common stock to any non-employee director, provided that the aggregate number of restricted shares of common stock that may be granted by our Board to a particular non-employee director during any calendar year, not exceed 9,600. Each grant of restricted shares of common stock under the 2015 Plan will be restricted for a period of at least one year from the date of such grant, and may not be sold, assigned, transferred, discounted, exchanged, pledged or otherwise encumbered or disposed of until all of the restrictions, terms and conditions applicable to such restricted shares have been satisfied. During the
 
restricted period, the non-employee director to whom the restricted shares of common stock have been granted will be the record owner of such shares and will have all of the rights of a stockholder with respect to such shares, including the right to vote and the right to receive dividends or other distributions made with or paid with respect to such shares.

Subject to the express provisions of the 2015 Plan, our Board in its discretion will determine the restrictions, terms and conditions that will apply to each grant of restricted shares of common stock granted pursuant to the 2015 Plan; provided, however, that the restrictions applicable to each such grant will terminate in the event of a change of control followed by the involuntary termination of such non-employee director's membership on our Board, including a failure to re-nominate such director, for reasons other than a termination for cause within the 24-month period following the date of the change of control, or if such non-employee director (i) dies or becomes disabled while a director, or (ii) retires as a regular director because of age in accordance with the mandatory retirement provisions of Article III of our By-Laws.

Amendment of the Plan

Our Board may at any time and from time to time amend, modify or suspend the 2015 Plan, provided that no such amendment, modification or suspension shall (1) adversely affect an option or restricted stock award theretofore granted to a non-employee director, or deprive a non-employee director of any shares of common stock such non-employee director has acquired or may acquire under such an option or restricted stock award, without his or her consent, or (2) be made without the approval of our stockholders if such amendment, modification or suspension would (i) expand the types of grants that may be made under the 2015 Plan, (ii) increase the total number of shares of common stock that may be granted under the 2015 Plan or decrease the exercise price of options granted or to be granted under the 2015 Plan (other than in accordance with the 2015 Plan’s anti-dilution provisions), (iii) materially expand the class of persons eligible to be granted options or restricted stock awards under the 2015 Plan, (iv) materially increase the benefits accruing to non-employee directors under the 2015 Plan, (v) extend the term of the 2015 Plan or the exercise period applicable to an option granted thereunder, or (vi) constitute a material revision of the 2015 Plan requiring


36


Approval of 2015 Stock Plan for Non-Employee Directors (Proposal 6)


stockholder approval under the NYSE Corporate Governance Listing Standards.

Termination

Unless previously terminated by our Board in its discretion, the 2015 Plan will terminate at the close of business on March 31, 2025, after which time no further grants may be made under the 2015 Plan.

United States Federal Income Tax Consequences

The following summary is based upon an analysis of the Internal Revenue Code as currently in effect, and existing laws, judicial decisions, administrative rulings, regulations and proposed regulations, all of which are subject to change. Moreover, the following is only a summary of United States federal income tax consequences and such consequences may be either more or less favorable than those described below depending on a taxpayer’s particular circumstances.

All options granted under the 2015 Plan are non-qualified options that are not entitled to special tax treatment under Section 422 of the Internal Revenue Code and are designed to be exempt from the requirements of Section 409A of the Internal Revenue Code. The 2015 Plan is not qualified under Section 401(a) of the Internal Revenue Code and is not subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended.

For federal income tax purposes, no income will be recognized by a non-employee director to whom an option is granted (an “optionee”) upon the grant of an option. Upon exercise of an option, the optionee will recognize ordinary income in an amount equal to the excess of the fair market value of the shares on the date of exercise over the option price of such shares. We will be entitled to a deduction equal to the amount of ordinary income recognized by the optionee at the time of such recognition by the optionee. The basis of the shares transferred to an optionee pursuant to exercise of an option is the price paid for such shares plus an amount equal to any income recognized by the optionee as a result of the exercise of such option. If the optionee thereafter sells shares acquired upon exercise of an option, any amount realized over the basis of such shares will constitute capital gain to such optionee for federal income tax purposes.

 
If the restrictions on the shares of common stock granted to a non-employee director (an “awardee”) are of a nature that the shares are both subject to a substantial risk of forfeiture and not freely transferable (within the meaning of Section 83 of the Internal Revenue Code), the awardee will not recognize income for federal income tax purposes at the time of the award unless the awardee elects, no later than thirty (30) days after the receipt of such shares, to include the fair market value of such shares on the date of the grant, less any amount paid for such shares, in gross income for the year of the grant pursuant to Section 83(b) of the Internal Revenue Code. In the absence of such an election, the awardee will be required to include in income for federal income tax purposes on the date the shares either become freely transferable or are no longer subject to a substantial risk of forfeiture (within the meaning of Section 83(b) of the Internal Revenue Code), the fair market value of the shares on such date, less any amount paid for the shares. We will be entitled to a deduction at the time of income recognition to the awardee in an amount equal to the amount the awardee is required to include in income with respect to the shares. If an Internal Revenue Code Section 83(b) election is made, no additional income will be recognized by the awardee upon the lapse of restrictions on the restricted shares of common stock, but if the shares are subsequently forfeited, the awardee may not deduct the income that was recognized pursuant to the Code Section 83(b) election at the time of the receipt of the shares.

Dividends on restricted shares of common stock that are paid to an awardee before the expiration of the restriction period will be additional compensation taxable as ordinary income to the awardee unless the awardee made an election under Internal Revenue Code Section 83(b) with respect to such shares. We will be entitled to a corresponding tax deduction equal to the dividends includible in the awardee’s income as compensation. If the awardee has made an Internal Revenue Code Section 83(b) election with respect to such shares, the dividends thereon will be treated as dividend income, rather than additional compensation, to the awardee.

If the restrictions on the shares of common stock granted to an awardee are not of a nature that the shares are both subject to a substantial risk of forfeiture and not freely transferable (within the meaning of Section 83 of the Internal Revenue Code), the awardee will recognize ordinary income for federal income tax purposes at the time of the transfer of the shares in an amount equal to the fair


37


Approval of 2015 Stock Plan for Non-Employee Directors (Proposal 6)


market value of the shares on the date of the transfer, less any amount paid therefor. We will be entitled to a deduction at that time in an amount equal to the amount the awardee is required to include in income with respect to the shares.

Vote Required and Board of Directors Recommendation

At the annual meeting, stockholders are being asked to approve the 2015 Plan. Such approval will require the affirmative vote of a majority of the votes cast on the proposal, provided that the total number of votes cast on the proposal represents over 50% of the common stock entitled to vote on the proposal.

Our Board recommends that stockholders vote FOR the approval of the 2015 Plan.


38


Consideration of Proposal Relating to Proxy Access (Proposal 7)


Consideration of Proposal Relating to Proxy Access (Proposal 7)

We have been notified by certain stockholders that they intend to submit the proposal set forth below at the annual meeting for action by our stockholders. Pursuant to Rule 14a-8(l)(1) of the Exchange Act, we will provide the name, address and number of shares of our common stock held by each of the stockholder proponents of the proposal promptly upon receipt of a written or oral request submitted to the Company Secretary. The proposal has been considered by our Board, which has concluded that its adoption would not be in our best interest or the best interest of our stockholders. For the reasons stated after the proposal, our Board recommends a vote “Against” this stockholder proposal.

This proposal and supporting statement are presented as received from the stockholder proponents in accordance with the rules of the SEC. The Board and the Company disclaim any responsibility for its content.

RESOLVED: Shareholders of Noble Energy, Inc. (the “Company”) ask the board of directors (the “Board”) to adopt, and present for shareholder approval, a “proxy access” bylaw. Such a bylaw shall require the Company to include in proxy materials prepared for a shareholder meeting at which directors are to be elected the name, Disclosure and Statement (as defined herein) of any person nominated for election to the board by a shareholder or group (the “Nominator”) that meets the criteria established below. The Company shall allow shareholders to vote on such nominee on the Company’s proxy card.

The number of shareholder-nominated candidates appearing in proxy materials shall not exceed one quarter of the directors then serving. This bylaw, which shall supplement existing rights under Company bylaws, should provide that a Nominator must:

a)
have beneficially owned 3% or more of the Company’s outstanding common stock continuously for at least three years before submitting the nomination;
b)
give the Company, within the time period identified in its bylaws, written notice of the information required by the bylaws and any Securities and Exchange Commission rules
 
about (i) the nominee, including consent to being named in the proxy materials and to serving as director if elected; and (ii) the Nominator, including proof it owns the required shares (the “Disclosure”); and
c)
certify that (i) it will assume liability stemming from any legal or regulatory violation arising out of the Nominator’s communications with the company shareholders, including the Disclosure and Statement; (ii) it will comply with all applicable laws and regulations if it uses soliciting material other than the Company’s proxy materials; and (iii) to the best of its knowledge, the required shares were acquired in the ordinary course of business and not to change or influence control at the Company.

The Nominator may submit with the Disclosure a statement not exceeding 500 words in support of the nominee (the “Statement”). The Board shall adopt procedures for promptly resolving disputes over whether notice of a nomination was timely, whether the Disclosure and Statement satisfy the bylaw and applicable federal regulations, and the priority to be given to multiple nominations exceeding the one-quarter limit.

Supporting Statement

We believe proxy access is a fundamental shareholder right that will make directors more accountable and contribute to increased shareholder value. The CFA Institute 2014 assessment of pertinent academic studies and the use of proxy access in other markets similarly concluded that proxy access:

Would “benefit both the markets and corporate boardrooms, with little cost or disruption.”
Has the potential to raise overall U.S. market capitalization by up to $140.3 billion if adopted market-wide. (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1)

The proposed bylaw terms enjoy strong investor support - votes for similar shareholder proposals averaged 55% through September 2014 - and similar bylaws have been adopted by companies of various sizes across industries, including


39


Consideration of Proposal Relating to Proxy Access (Proposal 7)


Chesapeake Energy, Hewlett Packard, Western Union and Verizon.

We urge shareholders to vote for FOR this proposal.

Our Board recommends that stockholders vote AGAINST the approval of this proposal for the following reasons:

Our Board recommends that you vote against this proposal because it advances a solution for a problem that does not exist at our Company, does not take into account the effective voice our stockholders already have, and would introduce an unnecessary and potentially expensive and destabilizing dynamic into the Board election process. In the end, proxy access as advanced by this proposal could limit our Board’s ability to serve the long-term interest of all our stockholders.

Our current governance structure ensures Board accountability and provides our stockholders with meaningful access to our Board.

Our Board believes that the need for “proxy access” should be evaluated in the context of our overall corporate governance practices. We have several mechanisms that protect the rights of all our stockholders, including:
Annual, non-staggered director elections;
majority vote standard for uncontested director elections;
a board comprised of more than 80% independent directors (expected to be 90% following our annual meeting);
an empowered Lead Independent Director;
no poison pill; and
stockholder rights to call special meetings.

In addition, our stockholders have the right to:
propose director nominees to our Governance Committee;
communicate directly with any director (including our Lead Independent Director), any Board committee or the full Board;
nominate directors pursuant to our By-Laws and solicit proxies for director nominees under SEC proxy rules; and
submit proposals for presentation at an annual meeting and for inclusion in our proxy
 
statement, subject to certain conditions and SEC rules.    

Our corporate governance policies and practices already provide our stockholders with meaningful ways to voice their opinions and ensure Board accountability to our stockholders. These policies and practices also strike an appropriate balance, enabling our Board to oversee our business effectively and efficiently in order to serve the long-term benefit of our stockholders.

The proposal would undermine the important role of the independent Governance Committee.

Allowing our stockholders to nominate competing candidates for director in our Proxy Statement would seriously undercut the role of the independent Governance Committee and our Board in one of the most crucial elements of corporate governance, the election of directors. An effective board of directors is composed of individuals with complementary skills and experiences needed to provide the appropriate oversight role in light of our strategic priorities and the scope and complexity of our business. Our independent Governance Committee and our Board are best situated to assess the particular qualifications of potential director nominees and determine whether they will contribute to an effective and well-rounded board that operates openly and collaboratively and represents the interests of all our stockholders, not just those with special interests.

As part of its evaluation of each candidate, the Governance Committee takes into account how that candidate’s background, experience, qualifications, attributes and skills may complement, supplement or duplicate those of other prospective candidates. Proxy access would bypass this process by placing directly into nomination candidates who may fail to meet the independence or other qualifications established by our Board or who may fail to contribute to the mix of needed perspectives.

The election of a stockholder nominee, particularly one representing a narrow interest, risks disrupting our Board and preventing it from effectively promoting the long-term interests of our stockholders. A director that does not fit into the mix of skills and experience the Board seeks would at best fail to contribute to the work of our Board and would at worst create tensions that disrupt its effective functioning, particularly if the director advocates for narrow interests that are not shared by all our stockholders.


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Consideration of Proposal Relating to Proxy Access (Proposal 7)


The proposal would create an uneven playing field and increase our costs.

In the absence of proxy access, the playing field is leveled, as the stockholder seeking to elect its own nominee to our Board would, like our Company, need to undertake the expense of soliciting proxies on the nominee’s behalf. Although avoiding this expense has been cited as a justification for proxy access, there is no reason why stockholders holding 3% of our outstanding stock (which as of the record date represents approximately $550 million worth of shares) should not, if they have a legitimate interest in sitting on our Board, bear the expense of soliciting proxies.

With proxy access, contested director elections could become routine, creating an uneven playing field in which we bear substantial expense while the stockholder nominee need expend few resources to promote its candidacy. We already bear the expense of filing and distributing proxy materials which would contain the stockholder nominee. Our Board is likely to feel compelled to undertake an additional and expensive campaign to inform our stockholders of the reasons the stockholder nominee should not be elected.

The proposal could have a number of other significant adverse consequences.

Allowing stockholders to use our proxy materials for contested director elections will not improve our corporate governance. Rather, proxy access could harm our Company, our Board and our stockholders by:

Significantly Disrupting Company and Board Operations. With proxy access, contested director elections could become routine. Divisive proxy contests would regularly and substantially disrupt company affairs and the effective functioning of our Board. We would be compelled to devote significant financial resources in support of our Board-nominated candidates, and our management and directors would be required to divert their time from managing and overseeing our business to supporting Board director nominees.
Encouraging Short-Term Focus. Our Board believes that dealing with contested elections every year would not only be highly distracting to the Board and management, but could also
 
encourage a short-term focus to the management of our business that would not be in the interest of our stockholders. Encouraging a short-term focus and distracting our Board and management from their responsibilities are high costs to pay for a regime for which there is not a demonstrated need.
Increasing the Influence of Special Interest Groups. Proxy access allows stockholders with a special interest to use the proxy access process to promote a specific agenda rather than the interests of all our stockholders, which could politicize the Board election process at virtually no cost to the proponent. The election of a stockholder-nominated director via the proposed proxy access process, particularly one representing a narrow interest, risks disrupting our Board and preventing it from effectively promoting the long-term interests of all our stockholders.
Balkanizing the Board of Directors. The election of stockholder-nominated directors could create factions on our Board, leading to dissension and delay and thereby precluding its ability to function effectively. A politicized board cannot effectively serve the best interests of all our stockholders.
Discouraging Highly Qualified Director Candidates from Serving. The prospect of routinely standing for election in a contested situation would deter highly qualified individuals from Board service. Such prospect also may cause our incumbent directors to become excessively risk averse, thereby impairing their ability to provide sound and prudent guidance with respect to all of our operations and interests.

Our Board believes that the current measures we employ for the evaluation, nomination and election of Directors have led to a board that is responsive to stockholder input and consistently promotes a strategy of long-term value creation. Disruption of our Board’s functioning could adversely affect the pursuit of our long-term strategy and put stockholder value at risk. For the foregoing reasons, we believe that this proposal is unnecessary, involves the risk of considerable harm to our Company, and is not in the best interest of all our stockholders.

Our Board recommends that our stockholders vote AGAINST this stockholder proposal.




41


Consideration of Proposal Relating to Climate Change Reporting (Proposal 8)

Consideration of Proposal Relating to Climate Change Reporting (Proposal 8)

We have been notified by a stockholder that it intends to submit the proposal set forth below at the annual meeting for action by our stockholders. Pursuant to Rule 14a-8(l)(1) of the Exchange Act, we will provide the name, address and number of shares of our common stock held by the stockholder proponent of the proposal promptly upon receipt of a written or oral request submitted to the Company Secretary. The proposal has been considered by our Board, which has concluded that its adoption would not be in our best interest or the best interest of our stockholders. For the reasons stated after the proposal, our Board recommends a vote “Against” this stockholder proposal.

The proposal and supporting statement are presented as received from the stockholder proponent in accordance with the rules of the SEC. The Board and the Company disclaim any responsibility for its content.

WHEREAS: Recognizing the risks of climate change, nearly all nations signed the Cancun Agreement proclaiming, "the increase in global temperature should be below 2 degrees Celsius." In light of this goal, the International Energy Agency (lEA) has developed scenarios to help policymakers and market participants understand potential energy demand futures. Oil demand would need to begin to decline starting in 2020 under IEA's 450 scenario (referring to 450 parts per million of CO2 in the atmosphere) consistent with policymakers' 2 degree target. According to HSBC, the equity valuation of oil producers could drop by 40-60 percent under such a low emissions scenario.

Oil demand is already being affected by policies related to air quality, fuel efficiency, and lower-carbon energy. Analysts from Citi, Deutsche Bank and Statoil, among others, predict that global oil demand could peak in the next 10-15 years. Any global action to address climate change will only accelerate these trends.

Industry production costs have risen significantly in recent years, leaving many companies vulnerable to any downturn in demand. Carbon Tracker estimates that projects with economic "breakevens" exceeding $95/barrel are clearly in excess of the requirements for global fossil fuel investment in a 2 degree scenario, and that there is an estimated $1.1
 
trillion of capex earmarked for high cost projects out to 2025 needing a price of over $95 to generate an economic return, raising the risk of stranded, or unprofitable, resources.

We recognize the importance of the oil and gas sector in providing future energy needs. However, we are concerned that Noble Energy's current business strategy may not be sufficiently sustainable given the changing nature of demand, emerging technologies, and policy interventions aimed at limiting global temperatures.

Investors require additional information on how Noble is preparing for market conditions in which demand growth for oil and gas is reduced due to a combination of factors.

RESOLVED: Shareholders request that Noble Energy prepare a report by September 2015, omitting proprietary information and prepared at reasonable cost, on whether the company's short- and long-term business plans align with the global goal of limiting global warming to below 2 degrees, including an analysis of the impact that such a policy would have upon demand for and pricing of the company's products and options for aligning company goals with such policy, demand, and pricing trends.

Supporting Statement

We recommend the report include:

A discussion of how the global goal of limiting warming to no more than 2 degrees is factored into the company's business planning;
A scenario analysis that considers a range of low-carbon and low-demand scenarios; including the lEA's 450 Scenario;
An assessment of different capital allocation strategies in the face of low-demand scenarios.
The Board of Directors' role in overseeing capital allocation and climate risk reduction strategies.


42


Consideration of Proposal Relating to Climate Change Reporting (Proposal 8)

Our Board recommends that stockholders vote AGAINST the approval of this proposal for the following reasons:

Our Board recommends that you vote against this proposal. We do not believe it would be in our best interest or the best interest of our stockholders to expend significant corporate resources preparing a report that is premised on speculative assumptions. Furthermore, we already report to our stockholders the risks and opportunities associated with legislation, regulation and international accords responding to climate change, as well as our own efforts to reduce our greenhouse gas emissions.

We publish an annual sustainability report that sets forth our policies and strategy relating to corporate sustainability, including a discussion of our performance and initiatives in reducing our impact on the environment through the management of greenhouse gas emissions. In our annual reports on Form 10-K and other public filings, we include disclosures regarding both the risks and opportunities that may arise from the global response to climate change. Our most recent annual sustainability report and annual report on Form 10-K are available on our website at www.nobleenergyinc.com. We also annually report climate change risks and opportunities to the Carbon Disclosure Project. As part of this disclosure, for each identified risk, we describe potential financial implications, methods used to manage these risks and the associated costs.

 
Preparing an additional report on the impact of a presupposed global response to climate change as requested by the proponent would require the allocation of significant corporate resources without providing our stockholders with commensurate value. An analysis of short- and long-term financial and operational risks to our business based on the parameters set forth by the proponent, including the assumption that the global demand for oil would begin to decline starting in 2020, would be speculative and risks confusing and misleading investors about our actual performance and prospects.

Our operations are subject to various federal, state, local, and foreign host country laws and regulations relating to the protection of the environment. Many of these laws and regulations are subject to change as a result of political trends, changes in public policy and other developments. We cannot predict with any meaningful certainty what laws and regulations will be adopted or amended in response to global climate change. Consequently, we are not in a position to assess how they would impact our business plan. In sum, the proposal calls for a report that would be principally based on speculative assumptions about a legislative and regulatory environment that is inherently unpredictable.

For these reasons, our Board does not believe that it would be in our best interest or the best interest of our stockholders to expend the significant corporate resources necessary to prepare the requested report.

Our Board recommends that our stockholders vote AGAINST this stockholder proposal.


43


Compensation Discussion and Analysis


Compensation Discussion and Analysis

Introduction

This Compensation Discussion and Analysis provides you with a description of our executive compensation philosophy and program, the compensation decisions our Compensation Committee has made under that program and the factors considered in making those decisions. It focuses on the compensation of our Named Executive Officers for 2014, who were:
Name
Title
Charles D. Davidson (retiring May 1, 2015)
Chairman (also CEO until October 21, 2014)
David L. Stover
President and CEO (CEO as of October 21, 2014)
Kenneth M. Fisher
Executive Vice President and Chief Financial Officer
Susan M. Cunningham
Executive Vice President, Environment, Health and Safety Regulatory ("EHSR") and New Frontiers
Ted D. Brown (retired January 31, 2015)
Senior Vice President, Advisor to the CEO
Arnold J. Johnson
Senior Vice President, General Counsel and Secretary

Biographical information for our Named Executive Officers, and other executive officers under the Exchange Act, is included in Appendix B to this Proxy Statement.
2014 Business Highlights

Our compensation program is designed to attract and retain high quality employees and to link their compensation to performance. 2014 was a year of challenge for us and our industry that ended with commodity market uncertainty that continues in 2015 and has resulted in a significant decline in the price of crude oil, as well as that of our common stock. Our results were mixed. Among our significant accomplishments, we:

Delivered record sales volumes of 289,000 Boe per day, a 9% increase over 2013 or a 16% increase when normalized for divestitures;
produced record total revenue of $5.1 billion for the year;
successfully executed a $1.5 billion bond offering, preserving our strong balance sheet;
set a Company record best in OSHA recordable and lost time incident rates;
had exploration discoveries at Katmai (deepwater Gulf of Mexico), Normantown (Marcellus) and in Nevada;
completed a successful IPO of CONE midstream assets in the Marcellus shale area, resulting in $200 million in cash proceeds;
 
took a leadership role among our industry in an effort that resulted in the withdrawal of several anti-development ballot initiatives in Colorado;
progressed efforts to develop an important gas market in the Eastern Mediterranean;
concluded non-core asset divestitures that generated proceeds of approximately $321 million;
secured a new venture area through acquisition of an exploration block in Gabon; and
successfully carried out an executive transition plan in response to the announced retirement of our Chairman and CEO, Charles D. Davidson.
On the other hand, we fell short of our expectations in some areas as we:
Failed to meet certain targets we had set for the quantitative non-discretionary component of our STIP;
despite the three discoveries noted above, added fewer exploration resources than we had planned; and
did not conclude all matters necessary to sanction our Leviathan project, offshore Israel.



44


Compensation Discussion and Analysis


Total stockholder return for 2014 was -30%, ranking eleventh in total stockholder return among our 14 company compensation peer group for that period. Our cumulative stockholder return for the past three fiscal years was 3%.

As we enter 2015, we believe we are well positioned to meet the challenges of the current environment and continue to create value for our stockholders.

The Chairman and CEO Compensation Versus Key Metrics

Because Mr. Davidson served in the combined role of Chairman and CEO until David L. Stover was appointed CEO October 21, 2014, this Proxy Statement will focus on Mr. Davidson's compensation while making reference to Mr. Stover's compensation as appropriate.The following illustrates the directional relationship between our performance, based on three key metrics, and the total direct compensation (including salary, bonus, stock and option awards and non-equity incentive plan compensation) of our Chairman and CEO from 2012 to 2014. These key metrics — production, relative controllable unit costs and discretionary cash flow — were chosen because they have been a part of the quantitative non-discretionary component of our STIP in the past and we believe correlate to long-term stockholder value. Taking these metrics and other 2014 results into account, the total direct compensation of our Chairman and CEO decreased from 2013.

 
Controllable Unit Costs
(percentage relative
to compensation
peer group)

2014 costs lower than 50% of our
peers.
2013 costs lower than 67% of our
peers.
2012 costs lower than 73% of our
peers.



(1) Non-GAAP results. See “Non-GAAP Financial Measures” in Appendix A to this Proxy Statement for reconciliation to GAAP results.


45


Compensation Discussion and Analysis


Five-Year Total Stockholder Return

The following chart shows how a $100 investment in our common stock on December 31, 2009 would have grown to over $139.00 on December 31, 2014, with dividends reinvested quarterly. The chart also compares the total stockholder return of our common stock to the same investment in the S&P 500 Index and our current (2014 - 2015) and former compensation peer groups over the same period, with dividends reinvested quarterly. As illustrated below, our common stock outperformed that of our new and former compensation peer groups during this period.

*Copyright© 2014 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.

For complete information about our 2014 performance, please see our Annual Report on Form 10-K.

Executive Compensation Highlights

Our compensation program is designed to attract and retain high quality employees and to link their compensation to performance. In 2014 we continued our emphasis on performance-based compensation, with 70% of the compensation of our Chairman and CEO being performance-based. As seen in the following chart:

Annual bonus is based on performance;
stock options are based on absolute stock price appreciation; and
performance shares are based on relative total stockholder return.

46


Compensation Discussion and Analysis








Performance-based 70%
Other (30%)
 Target Bonus
 Base Salary
 Stock Options
 Time-based Shares
 Performance Shares
 
We believe that our compensation program continued to achieve its objective in 2014. In a year of mixed results, our executive officers saw reduced performance-based compensation. Specifically:
Based on our performance relative to our quantitative and qualitative goals, our 2014 bonus pool was below target level; and
over 75% of pay was delivered in equity and aligned with stockholder interests.


47


Compensation Discussion and Analysis


Our Compensation Committee reviewed the aggregate estimated realizable pay of our CEO relative to CEOs of our compensation peer group companies for the trailing three year period ending December 31, 2013, compared against the three-year total stockholder return of our compensation peer group companies. The estimated realizable value reflects the aggregate value of base salary, actual bonus paid, "in-the-money" value of stock options, value of restricted stock, an estimated value of outstanding performance awards, and dividends received or accrued as of December 31, 2013.

Subsequent to the realizable comparison shown above, our stock price declined in 2014 along with others in our industry. The chart below updates the realizable compensation for our Chairman through December 31, 2014, in relation to the original target compensation opportunities the Compensation Committee awarded in 2012, 2013 and 2014.  

“Target” bars represent the committee's target compensation opportunities, to include annual base salary, target bonus opportunity and targeted equity value. “Realizable” bars represent each year's base salary paid, actual bonus earned and paid, and the prevailing value of equity-based awards as of December 31, 2014, using our closing stock price of $47.43. The prevailing equity values include the updated value of restricted shares awarded, the "in-the-money" value of stock options awarded, and an estimated value of outstanding performance awards, plus dividends received or accrued as of December 31, 2014.
The chart demonstrates how our program delivers strong alignment to stock price performance.

48


Compensation Discussion and Analysis


Recent Enhancements to the Compensation Program

Changes were made for 2015 to the quantitative non-discretionary component of our STIP to reflect metrics and weighting to better align pay with performance in areas we believe best position our Company to meet the challenges of the current environment and continue to create value for our stockholders, with the component to remain weighted at 60% and allocated 15% each to free cash flow and relative total stockholder return and 10% each to production sales volumes, cash costs per unit of sales volumes and relative cash costs per unit of revenue.

Our Board revised our Stock Ownership Guidelines to establish a 3X base salary guideline for our executive vice presidents.

Our Board approved a change in the calculation of the performance portion of future restricted stock awards upon change of control to provide for vesting on performance, versus at target.

Our Board approved an additional change in the treatment of future awards and grants of stock options and restricted stock to include a double-trigger mechanism so that accelerated vesting will only occur upon termination without cause or for good reason in the event of change of control.

In the fall of 2014 we notified our employees that we were discontinuing our retiree healthcare benefits as of January 1, 2015, transitioning benefits for pre-age 65 retirees under a defined contribution model and implementing a buyout of eligible pre-age 65 active employees.

49


Compensation Discussion and Analysis


Executive Compensation Practices

Below we highlight certain executive compensation practices, both what we do and what we don’t do, to provide a better understanding of our compensation program.

What We Do
þ Pay for Performance - We align compensation with performance through financial incentives that are tied to our results. A substantial portion of executive pay is not guaranteed. We set clear operational and financial goals for corporate and business unit performance and differentiate based on individual achievement.
þ Review Comparative Compensation Data - We review comparative compensation data for our executive officers prior to making annual executive compensation decisions.
þ Mitigate Undue Risk - We mitigate undue risk associated with compensation, including having a clawback provision, setting multiple performance measures and targets and maintaining robust Board and management processes to identify risks. We do not believe any of our compensation programs create risks that are reasonably likely to have a material adverse impact.
þ Reasonable Post-Employment/Change of Control Provisions - We believe we have reasonable post-employment and change of control arrangements that are generally structured to apply to executive officers in the same manner as the broader employee population.
þ Modest Perquisites - We provide only modest perquisites that have a sound value to our business.
þ Stock Ownership Guidelines - We have adopted stock ownership guidelines, which all Named Executive Officers meet.
þ Regular Review of Share Utilization - We evaluate share utilization by reviewing overhang levels (dilutive impact of equity compensation on our stockholders) and annual run rates (the aggregate shares awarded each year as a percentage of total outstanding shares).
þ Independent Compensation Consulting Firm - Our Board and its committees benefit from the use of an independent compensation consulting firm that provides no other services to our Company.

þ Vesting of Performance Shares Upon Change of Control - For restricted stock included as a part of the annual award beginning in 2016, we will vest performance-based shares based on performance, versus at target, in the event of a change of control.

þ Double-Trigger Equity Vesting Acceleration - For restricted stock and stock options included as a part of the annual award and grant beginning in 2016, we will include a double-trigger mechanism so that accelerated vesting will only occur upon termination without cause or for good reason in the event of a change of control.




50


Compensation Discussion and Analysis


What We Don’t Do
ý No Employment Contracts - We do not have employment contracts for the CEO or other Named Executive Officers.
ý No Inclusion of the Value of Equity Awards in Pension or Severance Calculations
ý No Personal Aircraft Use
ý No Separate Change of Control Agreements for Incoming Executive Officers (although Messrs. Davidson and Johnson and Ms. Cunningham have pre-existing separate Change of Control Agreements).
ý No Excise Tax Gross-Ups Upon Change of Control
ý No Repricing Underwater Stock Options
ý No Recycling of Shares Under the 1992 Plan or the 2005 Plan
ý No Pledging Shares of Company Stock Received as Compensation as Collateral for a Loan, or Hedging such Shares



Results of 2014 Advisory Vote to Approve Executive Compensation
At the 2014 Annual Meeting of Stockholders, we held our fourth annual advisory vote on executive compensation. Over 90% of the votes cast were in favor of this advisory proposal. The Compensation Committee considered this to be a favorable outcome and believes it conveyed our stockholders’ support of the Compensation Committee’s decisions and our executive compensation program. As a result, the Compensation Committee made no material changes in the structure of the program or pay for performance philosophy for 2014. The committee nonetheless continues to seek ways to enhance our executive compensation program to ensure it remains linked to our performance and has implemented the changes previously noted for 2014. At the 2015 Annual Meeting of Stockholders, we will again hold an annual advisory vote to approve executive compensation (page 27), and the Compensation Committee will continue to consider the results from this year’s and future advisory votes on executive compensation.
Determining Executive Compensation

Role of Compensation Committee

As discussed in “Corporate Governance – Board and Committees” on page 8, our executive compensation program is overseen by our Compensation Committee, with input from our management and outside compensation consultant. In its oversight role the committee is responsible for making compensation decisions involving our CEO and other executive officers and evaluating CEO and Company performance for compensatory purposes.

Role of Management

Our CEO and our Senior Vice President of Human Resources and Administration provide input to the
 
committee with respect to executive compensation, key job responsibilities, performance objectives and compensation trends. We believe these individuals are best qualified to support the committee in these areas given their understanding of our business and personnel, compensation program and competitive environment. Our Compensation Committee is not obligated to accept management’s recommendations with respect to executive compensation matters, and meets in executive session to discuss such matters outside of the presence of our management. During 2014, the committee held five executive sessions.



51


Compensation Discussion and Analysis


Role of Independent Compensation Consultants

Our Compensation Committee may retain, at our expense, independent compensation consultants it deems advisable to assist it in executive compensation matters. The committee meets with the compensation consultants, within and outside the presence of our management, to review findings based on market research regarding executive compensation and considers those findings in determining and making adjustments to our executive compensation program.

Our Compensation Committee continued to retain Meridian Compensation Partners, LLC (“Meridian”) as its independent consultant on executive compensation for 2014, after considering all factors relevant to Meridian’s independence from our management and members of our Compensation Committee. The committee considered a number of traits in making this decision.

Compensation Consultant Traits
    Effective past performance
    Provides services to our Board and its committees, not our management
    Familiar with our executive compensation program and the programs of our compensation peer group
    Offers a comprehensive range of services associated strictly with executive compensation
    No conflicts of interest
    Maintains policies and procedures designed to avoid conflicts of interest

In 2014 the compensation consultant was responsible for reviewing our executive compensation program and providing comparative market data and trends on compensation practices and programs based on an analysis of our peer companies and other factors. Representatives of the compensation consultant participated in all regular scheduled meetings of the committee, including executive sessions without management, and provided input on prevailing trends. The compensation consultant also provided consulting services to our Governance Committee in 2014 in reviewing our non-employee director total compensation. A breakdown of fees paid to the compensation consultant for fiscal years 2014 and 2013 is set out below.
 
 
2014
%
2013
%
Executive Compensation Fees
$
183,208

88
$
140,747

85
Director Compensation Fees
24,983

12
24,838

15
Total
$
208,191

100
$
165,585

100

Compensation Considerations

Compensation Benchmarking

When making compensation decisions, we also benchmark the compensation of our CEO and other executive officers relative to that paid to similarly situated executives at companies that we consider to be our peers. Our Compensation Committee maintains a compensation peer group of companies, which consists of larger and smaller publicly-traded oil and gas exploration and production companies that have similar operating and financial characteristics to ours. Our Compensation Committee, with the assistance of our CEO and the compensation consultant, reviews the composition of the peer group annually to ensure that companies remain relevant for comparative purposes.

There are a number of factors considered in determining our compensation peer group, such as base and similarity of operations, relevant market valuation, stock exchange membership, business profile, production and reserves and the identity and operations of companies that consider us to be one of their peers. Taking these factors into account, our Compensation Committee approved the following compensation peer group for 2014, and has approved continuing with the same compensation peer group for 2015, to be considered along with our Company for comparison purposes:
    Anadarko Petroleum Corp.
    Apache Corp.
    Cabot Oil & Gas Corp.
    Chesapeake Energy Corp.
    Continental Resources, Inc.
    Devon Energy Corp.
    EOG Resources, Inc.

    Hess Corp.
    Marathon Corp.
    Murphy Oil Corp.
    Pioneer Natural Resources Co.
    Range Resources Corp.
    Southwestern Energy Co.


Use of Compensation Data

Over the course of the year, our Compensation Committee analyzes the comparative total compensation of our executive officers. To facilitate this analysis, our CEO and our Senior Vice President of Human Resources and Administration work with


52


Compensation Discussion and Analysis


the compensation consultant to provide the committee with comparative compensation data that include base salaries, short-term incentive opportunities, and long-term incentive opportunities. They also provide separate summary information on post-employment compensation trends, benefits and other relevant factors. This information reflects recent publicly available information and other market data. We believe that it provides our Compensation Committee with a sufficient basis to analyze the comparative total compensation of our executive officers.

Internal Pay Equity

We believe that our executive compensation program should be internally consistent and equitable. In its review of total compensation, our Compensation Committee considers the relationship between our CEO’s total compensation and that of our other Named Executive Officers, as well as the consistency and equity among all non-CEO executive officers. For 2014, the committee concluded that our CEO’s compensation was reasonable compared to that of our other Named Executive Officers, recognizing the CEO’s broad responsibility and accountability for Company strategy and operations, compliance and controls and investor and government relations.

Our Compensation Committee likewise found that the 2014 total compensation of each of our remaining Named Executive Officers was internally consistent and equitable in light of their respective roles, responsibilities and reporting relationships.

 
CEO Pay Ratio

Our Compensation Committee recognizes that executive compensation is an evolving area. We are still awaiting final rules to be adopted to implement certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 relating to compensation clawbacks, hedging transactions, pay ratio and pay for performance disclosures. In the absence of final rules, our Board has adopted a compensation clawback policy and a policy with respect to the hedging and pledging of our stock, which are discussed elsewhere in this Proxy Statement. We have also elected to disclose an estimate of the ratio between the pay of our CEO and the median for all of our other employees.

Mr. Davidson, who was both Chairman and CEO until Mr. Stover was appointed CEO on October 21, 2014, had 2014 annual total direct compensation of $8,479,814, while Mr. Stover's was $4,901,031, as reflected in the Summary Compensation Table included in this Proxy Statement. We estimate that the median of the annual total direct compensation for all of our employees, excluding our CEO, was $103,500 for 2014. As a result, we estimate that Mr. Davidson's 2014 annual total direct compensation was approximately 82 times that of the median annual total direct compensation for all of our other employees and Mr. Stover's 2014 annual total direct compensation was approximately 47 times that of the median annual total direct compensation for all of our other employees.

The foregoing estimate may not be reflective of the pay ratio information required under rules, if any, that ultimately are adopted by the SEC.


What We Pay and Why: Elements of Compensation

Our compensation program is designed to attract and retain high quality employees and to link their compensation to performance. We have three elements of total direct compensation: base salary, our short-term incentive plan and our long-term incentive plan. The following table summarizes these three components, as well as our post-employment compensation programs.


53


Compensation Discussion and Analysis


Component
 
Base Salary
 
Short-Term Incentive
Plan
 
Long-Term Incentive
Plan
 
Post-Employment
Compensation
Programs
Type
 
  cash
 
  annual cash bonus
 
  annual stock option grant, time-based restricted shares and performance-based shares
 
  qualified and non-qualified plans
Purpose
 
  deliver baseline cash compensation commensurate with experience and expertise in role
 
  motivate performance and compensate employees for annual contributions
 
  incentivize retention through long-term compensation opportunities
  align long-term interests of employees and stockholders
 
  incentivize retention by providing financial security in, and a tax-efficient means to save for, retirement
Structure
 
  market-based, considering salary
range for job grade and responsibilities
 
  performance-based quantitative and qualitative factors
 
  stock options with 10 year term-vesting over three years, time-based restricted shares vesting 40% in year one and 60% in year two, and performance-based shares vesting after three years based on relative total stockholder return
 
  plans and programs with broad eligibility

Base Salary

Base salary adjustments for our Named Executive Officers are individually determined by the Compensation Committee after consideration of:
Breadth, scope and complexity of the role;
fairness (employees with similar responsibilities, experience and historical performance are treated comparably);
current compensation; and
individual performance.
We do not set the base salary of any employee, including any Named Executive Officer, at a certain multiple of the salary of another employee. There are two situations that may warrant a change to base salary: annual market adjustments and changes in role.

2014 Adjustments

Adjustments in base salary for certain of our Named Executive Officers were approved by our Compensation Committee on October 20, 2014, to be effective November 1, 2014, as follows:

Mr. Davidson, who is retiring May 1, 2015, received no increase;
 
Mr. Stover received a 29.3% increase (to $950,000) in light of additional responsibilities resulting from his appointment as CEO on October 21, 2014;
Mr. Fisher received a 3.9% increase (to $610,000), in light of his responsibility over our finance organization;
Ms. Cunningham received a 4.7% increase (to $560,000) in light of her broadened responsibilities over global exploration, new ventures and environment, health & safety;
Mr. Brown, who retired January 31, 2015, received no increase; and
Mr. Johnson received a 7.9% increase (to $480,000) in light of his broadened responsibilities over our corporate affairs functions including global security.

Short-Term Incentive Plan

Our short-term incentive plan (“STIP”) is available to all of our full-time employees, including our Named Executive Officers. The target STIP bonus for an employee is the employee’s base salary at year-end multiplied by the percentage factor assigned to the employee’s salary classification. The target bonus percentage factors for our Named Executive Officers for 2014 were as follows:


54


Compensation Discussion and Analysis


Mr. Davidson
110
%
Mr. Stover
110
%
Mr. Fisher
85
%
Ms. Cunningham
80
%
Mr. Brown
75
%
Mr. Johnson
75
%

These target bonus percentage factors were unchanged from 2013 for Messrs. Davidson, Fisher and Brown. For 2014, Mr. Stover's 2013 target of 100% was increased in light of additional responsibilities resulting from his appointment as CEO on October 21, 2014. Ms. Cunningham's 2013 target of 75% was increased in light of her broadened responsibilities over global exploration, new ventures and environment, health and safety. Mr. Johnson's 2013 target of 65% was increased in light of his broadened responsibilities over our corporate affairs functions including global security.

Payout under the plan may range from 0 to 2.5 times the aggregate target bonus pool for all employees. No Named Executive Officer received a STIP bonus in excess of 2.5 times such officer’s target bonus percentage factor for 2014.

At the beginning of each year, typically in January, our Compensation Committee approves annual STIP quantitative performance-based measures, including their relative weighting and specific targets. The measures, weighting and targets are communicated to our executive officers at that time.

Our Compensation Committee approves the target for each quantitative measure after considering prior year results, the Board-approved budget, planned
 
projects and capital spending plans for the upcoming year. Our Compensation Committee also considers that the achievement of those targets can be significantly affected by availability of labor and equipment, acquisitions and sales, weather, product demand and pricing, competition, regulatory changes and other industry conditions that cannot be determined with certainty at the time the targets are set. We believe that our targets are set aggressively in light of these variables and require achievement of significant performance.

The targets for the annual STIP quantitative measures may include certain adjustments that are not normally included in publicly reported results. In addition, the effects of any significant acquisitions or divestitures are taken into account when considering performance against the production and discretionary cash flow targets.

Payout curves were approved for each quantitative measure at the time targets were set, ranging from a factor of 0 to