8-KLeadership ChangesExhibits & Filings

DEVON ENERGY CORP/DE 8-K Report, Executive Changes (Dec 7, 2011)

Filed December 7, 2011For Securities:DVN

Summary

Devon Energy Corporation (DVN) filed an 8-K on December 7, 2011, to report on the Compensation Committee's grant of new long-term incentive awards to key employees, including executive officers, effective December 1, 2011. These awards, distributed under the 2009 Long-Term Incentive Plan, consist of non-qualified stock options, Performance Restricted Stock (PRS), and Performance Share Units (PSUs), with each component representing approximately one-third of the total incentive value. The PRS awards are tied to achieving a confidential cash flow performance goal for the 2012 calendar year, with vesting occurring over four years if the goal is met. The PSU awards, however, are linked to relative Total Shareholder Return (TSR) performance against a peer group of 15 oil and gas companies over two- and three-year periods, with specific vesting percentages outlined based on the company's TSR ranking. Both award types include provisions for accelerated vesting in cases of change in control, death, or disability, and specific conditions for vesting upon termination of employment under certain circumstances.

Key Highlights

  • 1Devon Energy granted new Performance Restricted Stock (PRS) and Performance Share Unit (PSU) awards to key employees and officers on December 1, 2011.
  • 2These awards, alongside stock options, comprise the 2012 long-term incentive for participants, with each award type making up roughly one-third of the total.
  • 3PRS awards vest over four years, contingent on achieving a confidential cash flow performance goal for the 2012 fiscal year.
  • 4PSU awards are performance-based, tied to Devon's relative Total Shareholder Return (TSR) compared to a defined peer group over two and three-year performance periods.
  • 5Vesting for PSUs ranges from 0% to 200% of the target award, depending on the company's TSR ranking within the peer group.
  • 6Awards generally forfeit if performance goals are not met or if employment terminates before vesting, with exceptions for change in control, death, and disability.
  • 7Specific named executive officers, including the CEO John Richels and CFO Jeffrey A. Agosta, were granted PRS and PSU awards detailed in the filing.

Frequently Asked Questions

Devon Energy granted two new types of awards: Performance Restricted Stock (PRS) and Performance Share Units (PSUs). These, along with non-qualified stock options, form the 2012 long-term incentive package for key employees and executive officers.

PRS awards are contingent on achieving a specific cash flow performance goal for the 2012 performance period (January 1, 2012 - December 31, 2012). If the goal is attained and certified, the award vests over a four-year period, starting with 25% upon certification and the remainder in three equal annual installments.

PSU awards are earned based on Devon Energy's relative Total Shareholder Return (TSR) compared to a peer group of 15 oil and gas companies. 50% of the award is tied to a two-year performance period and the other 50% to a three-year period. Vesting levels range from 0% to 200% of the target award based on the company's TSR ranking within the peer group.

Generally, unvested portions of both PRS and PSU awards are forfeited upon termination of employment before the end of the performance period. However, there are specific provisions for vesting acceleration or continuation under circumstances such as death, disability, retirement under specified conditions, or termination with a severance payment and release of claims, as well as in the event of a change in control.