8-KLeadership ChangesRegulation FDExhibits & Filings

EOG RESOURCES INC 8-K Report, Executive Changes (Oct 1, 2012)

Filed October 1, 2012For Securities:EOG

Summary

This EOG Resources Inc. 8-K filing from October 1, 2012, primarily details the compensation awarded to its executive officers, including restricted stock, restricted stock units (RSUs), stock appreciation rights (SARs), and a new element of performance units/shares. These awards are designed to incentivize long-term performance, with vesting periods ranging from four to five years and a new performance metric tied to Total Shareholder Return (TSR) relative to peer companies over a three-year period (2013-2015). The filing also provides an update on the company's derivative contracts for crude oil and natural gas as of October 1, 2012, outlining notional volumes and average prices for 2012, 2013, and extending into 2014 for natural gas, indicating a strategy to enhance revenue certainty. Key executive compensation elements include "cliff" vesting for restricted stock/RSUs after five years, with dividends credited and paid at vesting. SARs have a seven-year term and vest in 25% increments over four years, with an exercise price set at the closing stock price on the grant date. The new performance-based awards link executive payouts to EOG's TSR relative to its peers, with potential payouts ranging from 0% to 200% of the target amount based on performance. The derivative contract information suggests proactive risk management, particularly for crude oil, with significant volumes hedged through 2013.

Key Highlights

  • 1EOG Resources awarded long-term incentive compensation, including restricted stock/RSUs, SARs, and new performance-based units/shares to executive officers.
  • 2Restricted stock/RSUs vest "cliff" after five years, with dividends payable at vesting or forfeited if the award is forfeited.
  • 3Stock-settled SARs have a seven-year term and vest 25% annually over four years, with an exercise price of $112.42 (closing price on Sept 25, 2012).
  • 4A new performance metric for executive compensation is introduced, based on EOG's Total Shareholder Return (TSR) relative to peer companies over a three-year period (2013-2015).
  • 5Performance awards can range from 0% to 200% of the target based on TSR performance relative to peers, with vesting five years from grant.
  • 6EOG provided an updated summary of its crude oil derivative contracts as of October 1, 2012, covering volumes and prices through Q4 2012 and into 2013.
  • 7The company also updated its natural gas derivative contracts, showing significant hedging for 2012 and 2013, with options for counterparties to extend contracts into 2014.

Frequently Asked Questions

EOG Resources granted restricted stock, restricted stock units (RSUs), stock-settled stock appreciation rights (SARs), and a new component of performance units and/or performance stock to its executive officers.

The performance units and/or shares will be earned based on EOG's Total Shareholder Return (TSR) over a three-year period (January 2013 - December 2015) compared to the TSR of a specified group of peer companies. Achieving median TSR earns 100% of the award, while performance above or below median can result in earning between 0% and 200% of the award.

The filing provides a comprehensive summary of EOG's crude oil and natural gas derivative contracts as of October 1, 2012. This includes notional volumes and weighted average prices for different periods in 2012, 2013, and potential extensions into 2014, indicating the company's strategy to manage commodity price risk and enhance revenue certainty.

The restricted stock and RSUs are subject to 'cliff' vesting, meaning they vest in full five years from the date of grant. The SARs vest 25% on each of the first four anniversaries of the grant date.