8-KLeadership Changes

DEVON ENERGY CORP/DE 8-K Report, Executive Changes (Dec 3, 2021)

Filed December 3, 2021For Securities:DVN

Summary

Devon Energy Corp/DE (DVN) filed an 8-K on December 3, 2021, disclosing a board approval on December 1, 2021, to amend the terms of outstanding Converted Restricted Stock Units (RSUs). These RSUs originated from the merger with WPX Energy, Inc. The amendment grants holders, including former WPX directors and employees, the right to dividend equivalent rights (DERs) on their vested RSUs. This change aligns compensation practices with Devon's historical equity awards and aims to better align the interests of RSU holders with general shareholders by allowing participation in the company's dividend strategy. Notably, the company's President and CEO, Richard E. Muncrief, who previously led WPX, will receive approximately $1.46 million in cash for DERs related to dividends declared in 2021, in addition to future DERs on his Converted RSUs. Payment of these DERs is contingent upon the underlying RSUs vesting. This move is intended to foster a more unified approach to equity compensation and shareholder value alignment following the significant merger integration.

Key Highlights

  • 1Devon Energy amended terms for Converted RSUs, originally from WPX Energy merger, to include Dividend Equivalent Rights (DERs).
  • 2The amendment applies to former WPX directors and employees who received these Converted RSUs.
  • 3DERs will be paid only after the underlying Converted RSUs vest.
  • 4This change aligns compensation with Devon's other equity incentive awards, which typically include dividend rights.
  • 5The move is intended to align interests of RSU holders with common stockholders under Devon's dividend strategy.
  • 6CEO Richard E. Muncrief is entitled to approximately $1.46 million in cash for DERs on 2021 dividends, plus future DERs.
  • 7The amendment aims to provide a consistent equity compensation structure post-merger.

Frequently Asked Questions

Devon Energy's Board of Directors approved an amendment to its outstanding Converted Restricted Stock Units (RSUs) that were issued as part of the WPX Energy merger. This amendment grants holders of these Converted RSUs the right to receive dividend equivalent rights (DERs), meaning they will receive payments equivalent to dividends paid by Devon on the shares underlying their RSUs, provided those RSUs vest.

The primary beneficiaries are former WPX Energy directors and employees who hold the Converted RSUs. The amendment entitles them to DERs on any dividends previously declared by Devon since the merger in January 2021, as well as future dividends. However, payment of these DERs is contingent upon the underlying RSUs vesting according to their original terms.

As the former CEO of WPX Energy, Richard E. Muncrief holds a significant number of Converted RSUs. Under the amended terms, he is entitled to approximately $1.46 million in cash for DERs related to dividends declared by Devon in 2021. He will also receive DERs for any future dividends declared during the remaining vesting periods of his Converted RSUs.

Devon Energy is making this change to align the compensation practices for these specific RSUs with its other equity incentive awards, which historically have included dividend rights or DERs. Additionally, the company aims to better align the interests of the RSU holders with those of its general stockholders by allowing them to participate in the company's 'fixed plus variable' dividend strategy.