Summary
EOG Resources Inc. (EOG) filed an 8-K on September 29, 2017, disclosing the Compensation Committee's decision to grant long-term incentive awards to its named executive officers, effective September 25, 2017. These awards, consistent with previous years, include restricted stock/RSUs, performance units, and stock-settled stock appreciation rights (SARs), all issued under the company's 2008 Omnibus Equity Compensation Plan. The most significant change highlighted in this filing is the revision of vesting schedules for these incentive awards. The vesting periods for restricted stock/RSUs have been shortened from a five-year cliff to a three-year cliff. Performance units will now vest approximately 41 months from the grant date, rather than five years. SARs will also vest more rapidly, with 33%, 33%, and 34% vesting on the first three anniversaries of the grant date, compared to 25% increments over four years previously. Management stated these adjustments are intended to align EOG's compensation practices with industry peers, thereby enhancing its ability to attract, motivate, and retain top talent, and to maintain the retention component of its executive compensation program.
Key Highlights
- 1EOG Resources granted long-term incentive awards (restricted stock/RSUs, performance units, SARs) to named executive officers on September 25, 2017.
- 2The Compensation Committee revised vesting schedules for these awards to be more competitive with industry peers.
- 3Restricted Stock/RSUs now have a "cliff" vesting period of three years, down from five years.
- 4Performance Units will now vest approximately 41 months from the grant date, a reduction from five years.
- 5SARs will vest in three increments (33%, 33%, 34%) over the first three anniversaries of the grant date, faster than the previous four-year schedule.
- 6The company cited attraction, motivation, retention of talent, and maintaining a strong retention component as reasons for the revised vesting schedules.
- 7The exercise price for SARs was set at $96.29, the closing stock price on the grant date.