Document
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
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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NOBLE ENERGY, INC.
(Exact name of Registrant as specified in its charter)
Payment of filing fee (check the appropriate box):
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Notice of 2018 Annual Meeting of Shareholders and Proxy Statement

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Tuesday, April 24, 2018
9:30 a.m. Central time
The St. Regis Houston
1919 Briar Oaks Lane
Houston, Texas 77027





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Dear Shareholder:
Please join Noble Energy’s Board of Directors, executive management team, employees and alumni at our 2018 Annual Meeting of Shareholders. The attached Notice of Annual Meeting of Shareholders and Proxy Statement will serve as your guide to the business to be conducted at the meeting.

This was a transformative year for Noble Energy as we sharpened our focus. We executed our plan, seized opportunities and accomplished what we set out to do – position the Company’s portfolio to deliver long-term sustainable shareholder value. While we have seen unprecedented shifts in energy industry dynamics over recent years, our corporate strategy and premier portfolio are built to adapt to such shifts and deliver strong returns.
I, along with our Board of Directors and executive team, am committed to providing you information about the Company in a manner that is easy to access and understand. Our Proxy Statement summarizes our business and executive compensation program with charts and graphics we believe aid in assessing our programs and progress. Also, we have continued to eliminate redundancy within the Proxy Statement to make it more reader-friendly.

The Compensation Discussion and Analysis that begins on page 27 describes our executive compensation program and shows the direct link between performance and executive compensation. Beginning on page 13, we provide the qualifications of our directors and why they are the right people to represent you.

Your vote is important to us and our business. I encourage you to sign and return your proxy card, or use telephone or Internet voting prior to the meeting to ensure your shares are represented and voted at the meeting. Instructions on how to vote begin on page 57.

I look forward to seeing you at the meeting. We appreciate your ongoing support as a shareholder of Noble Energy.

March 1, 2018
Houston, Texas
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David L. Stover
Chairman of the Board, President
and Chief Executive Officer




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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Tuesday, April 24, 2018
The Annual Meeting of Shareholders of NOBLE ENERGY, INC. (the “Company”) will be held on Tuesday, April 24, 2018 at 9:30 a.m. Central time at The St. Regis Houston, 1919 Briar Oaks Lane, Houston, Texas 77027, for the following purposes:

1.
to elect the nine nominees as members of the Board of Directors of the Company;
2.
to ratify the appointment of the independent auditor by the Company’s Audit Committee;
3.
to approve, in an advisory vote, executive compensation;
4.
to consider a shareholder proposal requesting a published assessment of various climate change scenarios on our portfolio, if properly presented at the meeting; and
5.
to transact such other business as may properly come before the meeting and any adjournment or postponement thereof.

The Board of Directors set February 23, 2018 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, and vote at the meeting and any adjournment or postponement thereof.

A complete list of shareholders 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 shareholders at the meeting.

March 1, 2018
Houston, Texas
By Order of the Board of Directors

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Aaron G. Carlson
Vice President, Deputy General Counsel
and Assistant Secretary

 
We urge each shareholder to promptly sign and return the enclosed proxy card or to use telephone or Internet voting, even if planning to attend the meeting in person. 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.
 





Table of Contents
 
 
 
 
 
Proxy Statement Summary
i
 
 
Executive Summary
ii
 
 
Corporate Governance
2
 
 
Ownership of Equity Securities of the Company
10
 
 
Election of Directors (Proposal 1)
12
 
 
2017 Director Compensation
19
 
 
Ratification of Appointment of Independent Auditor (Proposal 2)
21
 
 
Report of the Audit Committee
22
 
 
Advisory Vote to Approve Executive Compensation (Proposal 3)
23
 
 
Consideration of Proposal Regarding Climate Change (Proposal 4)
24
 
 
Compensation Discussion and Analysis
27
 
 
Report of the Compensation, Benefits and Stock Option Committee
42
 
 
Compensation Tables
43
 
 
Questions and Answers about the Meeting and Voting
57
 
 
Glossary
62
 
 
Appendix A — Non-GAAP Financial Measures
A-1
 
 
Appendix B — Executive Officers
B-1
 
 







PROXY STATEMENT SUMMARY

This summary highlights some of the information contained in the 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”. Please also see Glossary for defined terms.

2018 Annual Meeting of Shareholders
 Date and Time:
Tuesday, April 24, 2018, 9:30 a.m. Central time
 
 
 Place:
The St. Regis Houston
1919 Briar Oaks Lane
Houston, Texas 77027
 
 
 Record Date:
February 23, 2018

Voting Matters and Board Recommendations
 
Our Board’s Recommendations
Election of Directors
FOR each
Director Nominee
Ratification of Appointment of Independent Auditor
FOR
Advisory Vote to Approve Executive Compensation
FOR
Consideration of Shareholder Proposal Requesting a Published Assessment of Various Climate Change Scenarios on our Portfolio
AGAINST

Director Nominees

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*
67
 
2005
 
Chairman and Chief Executive
Officer of Berenson Holdings LLC
 
C, CG
 
None
Michael A. Cawley*
70
 
1995
 
President and Manager of The
Cawley Consulting Group, LLC
 
A, CG
 
None
Edward F. Cox*
71
 
1984
 
Former partner in the law firm of Patterson Belknap Webb & Tyler LLP
 
A, CG, E
 
None
James E. Craddock*
59
 
2015
 
Former Chairman and Chief Executive Officer of Rosetta Resources Inc.
 
C, CG, E
 
None
Thomas J. Edelman*
67
 
2005
 
A managing partner of White Deer Energy
 
C, CG, E
 
None
Holli C. Ladhani
47
 
2017
 
President and Chief Executive Officer of Select Energy Services, Inc.
 
E
 
Atlantic Power Corporation; Select Energy Services, Inc.
David L. Stover
60
 
2014
 
Chairman and Chief Executive Officer of Noble Energy, Inc.
 
E
 
None
Scott D. Urban*
64
 
2007
 
Partner in Edgewater Energy LLC
 
C, CG, E
 
Pioneer Energy
Services Corporation
William T. Van Kleef*
66
 
2005
 
Former Executive Vice President
and Chief Operating Officer of Tesoro Corporation
 
A, CG
 
Oil States
International, Inc.
* Independent director    A - Audit Committee    C - Compensation, Benefits and Stock Option Committee
CG - Corporate Governance and Nominating Committee     E - Environment, Health and Safety Committee


i



EXECUTIVE SUMMARY

2017 Business Highlights

2017 was a year of substantial progress in positioning the Company for long-term success in commodity price environments that are unpredictable. Among our accomplishments we:

Continued to improve the quality of our portfolio with critical strategic transactions
consolidated a 117,000 net acre position in the “core of the core” southern Delaware Basin through the Clayton Williams Energy, Inc. (“CWEI”) acquisition;
exited Marcellus upstream position with a $2.4 billion loss, but strategically redeployed sale proceeds to high return Delaware Basin assets through the CWEI acquisition and eliminated $595 million of CWEI debt;
generated over $900 million in cash proceeds from non-core asset divestitures, reducing balance sheet leverage and providing increased flexibility to focus on our highest return opportunities; and
sanctioned the Leviathan project with over 35% of the project complete at year-end 2017.

Demonstrated proven ability to execute with industry leading drilling and completion performance
executed on our highest return projects, generating an average project rate of return of over 60%;
delivered a year-over-year volume increase of approximately 7% (normalized for divestitures);
increased reserves by over 35% from onshore performance, Tamar update and Leviathan sanction;
demonstrated our operational proficiency with new drilling cost (dollars per foot) records and improved well performance; and
demonstrated peer leading safety and environmental performance with record low days away from work safety performance and recordable incident rate.

Maintained capital discipline and financial capacity
completed initial Noble Midstream Partners LP (“NBLX”) drop down valued at $270 million;
achieved $488 million free cash flow(1), excluding impact of NBLX, and exited the year with $4.4 billion in liquidity; and
reduced net debt of $858 million.

Our total shareholder return for 2017 was negative 22% and we ended the year at 9th out of 14 in our peer group. Notwithstanding total shareholder return (“TSR”), our Compensation Committee believes that the Company made substantial progress toward positioning the Company for long-term success, through the strengthening of our portfolio, sanctioning of Leviathan, improving capital performance and enhancing our longer-term outlook.

2017 Executive Compensation Highlights

Continued Focus on Pay for Performance

Our executive compensation program is described in our Compensation Discussion and Analysis and is designed to align executive pay with performance and to create long-term shareholder value through significant “at-risk” compensation. In 2017, we continued our emphasis on performance-based compensation with 64% of our CEO’s target compensation being performance-based as shown in the following chart.

(1) non-GAAP measure, see reconciliation in Appendix.





ii



Components of Compensation - CEO Mix


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Historical Comparison

Our direct linkage of pay with performance has been evident over recent years, as our mixed results in 2014 led our Compensation Committee to fund our Short-Term Incentive Plan (“STIP”) at 55% of target and reduce the award values under our Long-Term Incentive Plan (“LTIP”). Improved performance in 2015 and 2016 resulted in Compensation Committee decisions to fund our STIP at 125% and 140% of target respectively.

2017 was a year of operational, financial and safety outperformance, despite continued volatility in commodity prices. The year reflected substantial progress on our strategic objectives with the execution of several key transactions including our CWEI acquisition, Leviathan sanction and non-core divestitures. We exceeded the targets under our STIP quantitative component metrics for sales volumes, free cash flow, relative cash costs and drilling and completion rate of return. We also saw favorable results under the plan’s qualitative component metrics, including strategic initiatives, Environment, Health and Safety (“EH&S”) performance, weighted average program rate of return and reserve additions. Our Compensation Committee concluded that these results demonstrated significant progress toward positioning the Company to deliver future top-tier long-term stock performance and consequently approved 2017 STIP funding at 120% of target. Equity awards under our LTIP were approved in early 2018 at target value.

Looking forward, we continue to believe that our STIP design should focus on motivating the entire organization to achieve operational and financial results that take into account the Company’s strategy and the current business environment and that create shareholder value. For 2018, in response to valuable shareholder feedback, we continued to enhance and refine our STIP, considering the potential application of other returns or growth-based metrics. The program now includes onshore drilling and completion rate of return in the quantitative component, and return on average capital employed (“ROACE”), cash return on capital invested (“CROCI”) and cash flow per debt adjusted share growth in the qualitative component.

Performance versus Key Metrics

We believe that several key metrics are reflective of our positive results in 2017: safety performance, free cash flow, total U.S. Onshore sales volumes and total Company proved reserves. These metrics are among those considered by our Compensation Committee in determining payout under our STIP. As these metrics show, the Company has made substantial progress toward delivering near-term value and setting itself up for long-term success. We have included a chart reflecting five-year total shareholder return which compares our performance to that of the median of our peer group, with dividends reinvested quarterly. For the required chart showing our total shareholder return compared to our peer group based on weighted market capitalization, please see our Annual Report on Form 10-K.


iii



2017 Performance Charts

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       TRIR - Total recordable incident rate
    DWIR - Days without incident rate
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      *Excludes impact of Marcellus from all periods.
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*© 2017 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.
 
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     *Non-GAAP measure, see reconciliation in Appendix.
             (1) 2017 data excludes impact of NBLX free cash flow.
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Cash Return on Capital Invested
for 2017
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CROCI - Cash Return on Capital Invested, Noble versus peer group.    
For additional information about our 2017 performance, please see our Annual Report on Form 10-K.


iv



Target versus Realizable Compensation

The chart below illustrates how our executive compensation program delivers strong alignment with Company performance. In setting Mr. Stover’s compensation for the year, our Compensation Committee considered his tenure, scope of responsibilities and level of performance. The “Target” bars represent Mr. Stover’s base salary, target STIP opportunity and grant-date target value of LTIP awards for 2015, 2016 and 2017. The “Realizable” bars represent, as a percentage of target, the total of each year’s base salary paid, STIP earned and paid and LTIP award value as of December 31, 2017.
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Mr. Stover’s 2017 LTIP award had an intended grant-date target value of $7.75 million. Based on the Company’s stock price at December 31, 2017, the value of this award at that time was approximately $3.1 million.

By design, our executive compensation program will not deliver intended target value unless the stock price appreciates on an absolute basis, the Company meets or exceeds median industry stock performance and the Company meets or exceeds important financial and operating objectives.

2018 Key Executive Compensation Actions

To ensure we continue to link pay to performance, our Compensation Committee:
revised Short-Term Incentive Plan metrics for 2018 to include a cash flow per debt adjusted share growth metric and two additional returns based metrics, return on average capital employed (“ROACE”) and cash return on capital invested (“CROCI”);
increased emphasis on performance shares to now reflect 50% of the total long-term incentive award; and
extended vesting period of restricted stock award for officers to three years.
Important Date for 2019 Annual Meeting of Shareholders

Shareholder proposals and nominees for director(s) to be submitted for inclusion in our 2019 Proxy Statement pursuant to our By-Laws or Rule 14a-8 of the Securities and Exchange Act of 1934, as amended (“Exchange Act”), must be received by us no later than November 1, 2018.

v



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1001 Noble Energy Way
 
PROXY STATEMENT
Houston, Texas 77070
 
March 1, 2018



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 2018 Annual Meeting of Shareholders (the “Annual Meeting”) of Noble Energy, Inc. (the “Company”). The meeting will be held at The St. Regis Houston, 1919 Briar Oaks Lane, Houston, Texas 77027 on April 24, 2018 at 9:30 a.m. Central 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 shareholders on or about March 1, 2018.

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 February 23, 2018, the record date, are entitled to notice of, and to vote at, the meeting and at any adjournment or postponement thereof. Each owner of record on the record date is entitled to one vote for each share of common stock held. On the record date, February 23, 2018, there were 492,191,992 shares of common stock issued and outstanding.




 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE 2018 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 24, 2018.

Our Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2017 are available at www.proxyvote.com.

 

1

 
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;
Certificate of Incorporation;
By-Laws;
Board committee charters; and
Code of Conduct 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.

Our Board regularly reviews developments in corporate governance and updates our corporate governance documents and practices as 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 Chief Executive Officer (“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 governance or management issues resulting from combining the two roles and, in this combined role, Mr. Stover has provided strategic, operational and technical expertise, vision and a proven ability to lead our Company.

Annual Review of Board Leadership Structure

Our Board recognizes that no single leadership structure is right for all companies 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 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 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;
presiding at all executive sessions of the independent directors and Board meetings at which the Chairman is not present;

2

 
Corporate Governance


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; and
facilitating communications among the other members of the Board.
Board and Committees

In 2017, our Board held 18 meetings and its committees held 19 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 2017, other than Ms. Ladhani who attended 60% of the meetings.(1) 

Our Board has the following four standing committees, each with a written charter adopted by the Board and available on our website:
Audit Committee;
Corporate Governance and Nominating (“Governance”) Committee;
Compensation, Benefits and Stock Option (“Compensation”) Committee; and
Environment, Health and Safety (“EH&S”) Committee.
(1) As a new member of our Board in the fourth quarter of 2017, the Company and Ms. Ladhani experienced scheduling conflicts with respect to certain meetings.


Primary Responsibilities

The primary responsibilities of each committee are summarized below. For more detail, see the committee charters on our website at www.nblenergy.com, under the heading “Corporate Governance.”
Committee
 
Key Oversight Responsibilities
Audit
 
Integrity of the Company’s financial statements
Disclosure and internal controls
Compliance with legal and regulatory requirements
Administration of the Company’s Code of Conduct
Independent auditor qualifications
Internal audit functions
Risk management

Governance
 
Corporate governance, including the Corporate Governance Guidelines
Director recruitment, retention and development
Board committee structure and membership
Annual Board and committee self-evaluation
Corporate political activities

Compensation
 
CEO and other executive officer compensation structure and amount
Performance evaluations for the CEO and other executive officers
Design and function of incentive compensation programs, including STIP and equity-based plans
Executive officer stock ownership guidelines
Compensation Discussion & Analysis
EH&S
 
EH&S policies and management systems
EH&S performance
Compliance with EH&S legal and regulatory requirements
Corporate social responsibility and climate policy





3

 
Corporate Governance


The following table lists the current members of each committee and the number of meetings held during 2017.
Name
 
Audit(1)
 
Compensation
 
Governance
 
EH&S
Jeffrey L. Berenson*
 
 
 
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Michael A. Cawley*
 
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Chair
 
 
Edward F. Cox*
 
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James E. Craddock*(2)
 
 
 
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Chair
Thomas J. Edelman*
 
 
 
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Kirby L. Hedrick*
 
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Holli C. Ladhani
 
 
 
 
 
 
 
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David L. Stover
 
 
 
 
 
 
 
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Scott D. Urban*
 
 
 
Chair
 
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William T. Van Kleef*
 
Chair
 
 
 
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Molly K. Williamson*
 
 
 
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Number of Meetings
 
5
 
6
 
5
 
3
*Independent Directors

(1)
Each member of our Audit Committee has been determined by the Board to be financially literate and meets the additional criteria for independence of audit committee members as set forth in Securities and Exchange Commission (“SEC”) rule 10A-3(b)(1). Mr. Van Kleef has been determined by the Board to be an audit committee financial expert.
(2)
Mr. Craddock was the CEO of Rosetta Resources Inc. (“Rosetta”) prior to its merger with the Company on July 20, 2015. Our Board has reviewed the applicable rules and regulations of the SEC and the standards and guidance of the New York Stock Exchange (“NYSE”) and concluded that Mr. Craddock is independent. As a prior employee of the acquired company, Rosetta, an entity previously unaffiliated with the Company, the NYSE allows a determination of independence since the termination of his employment with Rosetta occurred concurrently with the closing of the merger.

Compensation Committee Interlocks and Insider Participation

During fiscal year 2017, Messrs. Berenson, Cox, Craddock, Edelman, Hedrick, Urban and Ms. Williamson served as members of the Compensation Committee, with Messrs. Cox and Hedrick exiting and Mr. Urban joining the committee on April 25, 2017. None of the Compensation Committee members was an officer or employee of the Company or former officer of the Company or had any business relationship or conducted any business with the Company other than as described in the Related Person Transactions disclosure in this Proxy Statement. During fiscal year 2017, none of our executive officers served as a director or member of the Compensation Committee (or other committee of the board performing equivalent functions) of another entity where an executive officer of such entity served as a director of the Company or on our Compensation Committee.

Board Development and Succession Planning

Our Board plays a key role in the oversight of the Company’s business. We are committed to ensuring that it represents a diversity of qualifications, attributes, skills and experience necessary for our future. We recognize that our shareholders are interested in board tenure and diversity — areas of consideration in our Board succession planning. We know that the most successful boards, like their executive management team counterparts, have the collective chemistry, strength, agility and strategic perspective to meet the challenges of the fast-moving global business environment within which we operate. In our view, our current Board possesses these traits, and we have taken a number of steps to position it for our future.

4

 
Corporate Governance



First, we have placed a greater emphasis on understanding governance trends, with our Governance Committee holding periodic discussions on the topic based on information provided by inside and outside experts.

Second, consistent with this emphasis, we have expanded our outreach as part of our shareholder engagement program. In 2017, we requested meetings with 32 shareholders, representing approximately 71% of our outstanding stock. We also solicited feedback from representatives of the proxy advisory firms, Glass, Lewis & Co. (“Glass Lewis”) and Institutional Shareholder Services Inc. (“ISS”). These meetings were invaluable in providing validation of our practices in some areas, while identifying areas for improvement in others. In general, we received positive feedback on our continued efforts to enhance our public disclosures and our progress on Board refreshment. We also received suggestions on improving our efforts and disclosures on Board strategy, succession planning and climate change disclosure.

Third, we continue to focus on the importance of Board refreshment and, on April 25, 2017, the Board rotated committee members between the Compensation and Audit Committees to provide fresh perspectives on those committees. In addition, the Board underwent an evaluation process to identify the skills needed to enhance the strategic direction of the Board. The Company then engaged an independent director search firm to help identify prospective director candidates. In October 2017, the Board elected Ms. Holli C. Ladhani as a director. Her experience in executive leadership, together with her expertise in energy services and finance will be invaluable. Effective the date of the Annual Meeting of Shareholders, Mr. Hedrick, after 15 years of Board service, has decided not to stand for re-election at the 2018 Annual Meeting of Shareholders. The Governance Committee continues discussions to evaluate the skill-sets needed to maximize Board effectiveness and support the strategic direction of the Company.

Fourth, we have evolved our Board self-evaluation process to a more participative discussion conducted by an independent third-party interviewer. In the current environment, this discussion has included Board refreshment, communication with management and the Company’s competitive landscape.

Fifth, in early 2017, we amended our By-Laws to reduce the age at which a director would not stand for election from 75 to 72. We believe that this will facilitate a more orderly succession process that provides for the periodic infusion of new directors and the diversity of their perspectives. Effective the date of the 2018 Annual Meeting of Shareholders, Ms. Williamson will have reached mandatory retirement age of 72 and will not stand for re-election.

Finally, we have revisited our director compensation program to ensure its alignment with our compensation peer group, eliminating fees for regular meetings and continuing with reduced fees for specially called telephonic meetings. We increased our annual board member retainer, lead independent director retainer and chair retainers for three of our four committees. We believe that this change is consistent with overall peer company practices.
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.
 

5

 
Corporate Governance


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;
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; and
manages climate specific risk and opportunities, through our EH&S Committee that meets three times per year and reports regularly to the full Board.
Our Management
maintains committees responsible for enterprise risk management, compliance and ethics, disclosures and monitoring climate related risk to our business;
includes a dedicated Chief Compliance Officer; and
regularly reports to our Board or its committees on our risk management practices.
Our Independent External Consultants
audit our financial statements, internal control over financial reporting and oil and gas reserves;
help evaluate the adequacy of our risk management program;
assist in the implementation of program enhancements; and
help prepare the risk disclosures in our public filings.

Senior Leadership 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 forms the basis for ongoing leadership assignments.

Codes of Conduct

We have adopted a Code of Conduct 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. 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.
Shareholder Engagement


In 2015, we formalized a shareholder engagement program that provides for management’s annual engagement with some of our key shareholders to obtain feedback on our corporate governance practices. During 2017, we requested meetings with 32 shareholders, representing approximately 71% of our outstanding shares. We received feedback regarding board diversity, executive compensation metrics and climate change disclosure. Feedback was communicated to, and considered by, our Board and the Company continues to respond to shareholder feedback by working to improve its disclosures around governance and decisions in these areas.


6

 
Corporate Governance


Director Independence and Related Person Transactions

Director Independence

Our Governance Committee annually reviews the independence of our non-management directors and reports its findings to our Board. To assist in this review, our Board has adopted standards for director independence consistent with those of the NYSE and SEC. These independence standards are set forth in our Corporate Governance Guidelines, which are available on our Website under the heading “Corporate Governance.”

In making independence determinations, our Board considers relevant facts and circumstances, including transactions, relationships and arrangements between each director or any member of the director’s immediate family and the Company, our subsidiaries and affiliates. Transactions considered by the Board during 2017 through January 31, 2018 included:

Company royalty program payments to Mr. Cox of $1,111,965 and Mr. Cawley of $10,238;
payments to the following portfolio companies of White Deer Energy (“White Deer”), of which Mr. Edelman is a managing partner: $389,764 to Patriot Well Solutions LLC (“Patriot”), $649,298 to Flogistix LP (“Flogistix”), and $209,506 to O-Tex Holdings Inc., which in November 2017 merged with and into C&J Energy Services (“CJ Energy”);
payments in the form of charitable contributions totaling $620,970 to the Wildlife Conservation Society, of which Mr. Edelman is a member of the board of trustees;
payments of approximately $15,312,997 to Oil States International, Inc., of which Mr. Van Kleef is a director; and
payments of $24,768,788 to Select Energy Services, Inc. (“Select Energy”) and affiliated companies of which Ms. Ladhani is the President and Chief Executive Officer.

Under the NYSE Listing Standards, a director will not be considered independent if he/she is employed by a company that has, within the last three years, made or received payments from the Company, in excess of the greater of $1 million or 2% of such Company’s revenues. Ms. Ladhani was elected as the President and Chief Executive Officer of Select Energy on November 1, 2017, pursuant to the merger of Select Energy with Rockwater Energy Solutions, Inc. (“Rockwater”). During 2017, the Company made payments to Select Energy of approximately $24.8 million, which is in excess of 2% of Select Energy’s 2017 gross revenues. Effective October 26, 2017, the Board elected Ms. Ladhani as a director and has determined that she is not independent under the NYSE Listing Standards. Ms. Ladhani is a valuable member of the Board and adds over 17 years of experience in the broader energy industry, including CEO and CFO leadership, as well as financial expertise to our Board. The Company expects that its payments to Select Energy will be less than 2% of Select Energy’s revenues prospectively, given the consolidated size of Select Energy and Rockwater. The Board anticipates being able to reconsider her independence in 2021.

Under NYSE Listing Standards, a director is not independent if he/she has been within the last three years an employee of the listed company. However, NYSE guidance clarifies that a former employee of an acquired company may still be considered independent if the employment relationship ended concurrent with a merger. Mr. Craddock’s employment with Rosetta ended concurrently with the Company’s merger with Rosetta on July 20, 2015. Mr. Craddock did not receive additional consideration subsequent to the merger, none of the Rosetta executives were retained by the Company and the acquired assets represent a small portion of the Company’s total asset portfolio. Therefore, after review of the NYSE guidance, as well as other facts and circumstances, the Company found, and continues to find, Mr. Craddock to be an independent director. Mr. Craddock brings valuable knowledge of our Delaware and Eagle Ford Shale assets, as well as CEO experience and a high level of financial literacy to our Board.

After reviewing these transactions, relationships and arrangements, on February 6, 2018 our Board determined that no material relationship existed that would interfere with the ability of Messrs. Berenson, Cawley, Cox,

7

 
Corporate Governance


Craddock, Edelman, Hedrick, Urban, 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, Compensation and Governance Committees are independent under the applicable NYSE independence standards and SEC rules.

Related Person Transactions

We review all relationships and transactions in which the Company and its 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 the 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 the amount and type of transaction;
the importance of the transaction to the related person;
the importance of the transaction to the Company;
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.

Mr. Edelman is a managing partner of White Deer, a private equity firm that invests in the oil and gas industry. White Deer manages funds that own equity interests in certain companies with which the Company conducts business. During fiscal year 2017 and through January 31, 2018 the Company made payments totaling:
$649,298 to Flogistix for the leasing of gas compression units. White Deer manages funds that own a 92.6% interest in Flogistix. Mr. Edelman has an estimated indirect pecuniary interest of 3.37% in Flogistix;
$389,764 to Patriot for coil tubing services. White Deer manages funds that hold a 92.7% interest in Patriot. Mr. Edelman has an estimated indirect pecuniary interest of 3.37% in Patriot; and
$209,506 to CJ Energy for pumping services. White Deer manages funds that hold a 4.1% interest in CJ Energy. Mr. Edelman has an estimated indirect pecuniary interest of 0.25% in CJ Energy.
Ms. Ladhani is the President and CEO of Select Energy, a public company that provides its customers with efficient and environmentally conscious water and chemical solutions to service the full life cycle of the well. During fiscal year 2017 and through January 31, 2018, the Company made payments totaling $24.8 million to Select Energy companies. In addition, a portfolio company of White Deer, Crescent Companies, LLC, merged into Rockwater in March 2017, that subsequently merged with Select Energy in November 2017. As a result, White Deer owns a 4.2% interest of Select Energy, and Mr. Edelman has an indirect pecuniary interest of 0.26% in Select Energy.


8

 
Corporate Governance


Based upon the review and recommendations of our Governance Committee and our Board, we believe these transactions were in our best interest and on terms no less favorable to us than we could have achieved with an unaffiliated party.

During fiscal year 2017 and through January 31, 2018, there were no other 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, 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% shareholders 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, 2017.


9

 
Corporate Governance


Ownership of Equity Securities of the Company
Directors and Named Executive Officers

The following table sets forth, as of February 23, 2018, the shares of our common stock and common units of NBLX beneficially owned by each director, each Named Executive Officer (“NEO”) listed in the Summary Compensation Table included in this Proxy Statement, and all directors and executive officers as a group.
 
Noble Energy, Inc. Common Stock Beneficially Owned(1)
Noble Midstream Partners LP(1)
Name
Number of
Shares (2)
Shares Underlying Stock Options (3)
Total
Percent of  Class
Number of Common Units Beneficially Owned
Percentage of Common Units Beneficially Owned
Director
 
 
 
 
 
 
 
Jeffrey L. Berenson
58,277


55,262

113,539

*
Michael A. Cawley
44,861


55,262

100,123

*
Edward F. Cox
72,404

(4) 
55,262

127,666

*
James E. Craddock
101,913


39,147

141,060

*
Thomas J. Edelman
3,359,352

(5) 
55,262

3,414,614

*
Kirby L. Hedrick
138,130


55,262

193,392

*
Holli C. Ladhani
21,858



21,858

*
David L. Stover
743,556


1,053,033

1,796,589

*
4,500
*
Scott D. Urban
39,186


55,262

94,448

*
William T. Van Kleef
106,304


55,262

161,566

*
Molly K. Williamson
20,273


32,236

52,509

*
Named Executive Officer (excluding any director named above)
 
 
 


 
 
 
Kenneth M. Fisher
218,804


453,532

672,336

*
12,500
*
Gary W. Willingham
200,005

(6) 
233,682

433,687

*
10,000
*
Charles J. Rimer
98,967

(7) 
188,624

287,591

*
John K. Elliott
102,602


141,113

243,715

*
Susan M. Cunningham (10)
108,124


415,926

524,050

*
Arnold J. Johnson (10)
103,754

(8) 
231,840

335,594

*
All directors and executive officers as a group (22 persons)
5,852,455

(9) 
3,780,380

9,632,835

1.96%
58,802
*
*
Represents less than one percent.
(1)
Unless otherwise indicated, all shares and units are directly held with sole voting and investment power.
(2)
Includes unvested restricted stock awards, as follows: 6,474 shares held by each of Messrs. Berenson, Cawley, Cox, Craddock, Edelman, Hedrick, Urban, Van Kleef and Ms. Ladhani and Ms. Williamson; Mr. Stover — 403,102 shares; Mr. Fisher — 105,683 shares; Mr. Willingham — 103,682 shares; Mr. Rimer — 59,119 shares Mr. Elliott — 57,781 shares; and other executive officers — 158,975 shares.
(3)
Consists of shares not outstanding but subject to options that are currently exercisable or that will become exercisable on or before April 24, 2018.
(4)
Includes 28,334 shares held by spouse.
(5)
Includes 400,000 shares held under deferred compensation plans.
(6)
Includes 11 shares indirectly held in a qualified 401(k) plan and 30,000 shares held indirectly in an IRA.
(7)
Includes 5,122 shares indirectly held in a qualified 401(k) plan.
(8)
Includes 5,783 shares indirectly held in a qualified 401(k) plan.
(9)
Includes 13,877 aggregate number of shares indirectly held in a qualified 401(k) plan.
(10)
Values for the restricted shares from the exit Form 4 filed upon Ms. Cunningham’s retirement and Mr. Johnson’s resignation, stock option information from Company records and common units in NBLX from the last Schedule 13D filed by the Company for holdings in NBLX.

10

 
Corporate Governance


Security Ownership of Certain Beneficial Owners

The following table sets forth, as of February 23, 2018, 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
55,773,221

(1) 
11.3%
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
51,019,310

(2) 
10.4%
Capital Research Global Investors
333 South Hope Street
Los Angeles, CA 90071
42,533,049

(3) 
8.6%
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
33,188,644

(4) 
6.7%
State Street Corporation
One Lincoln Street
Boston, MA 02111

26,278,348

(5) 
5.3%

(1)
Based upon its Schedule 13G/A filed with the SEC on February 14, 2018 with respect to its beneficial ownership of our common stock, Capital World Investors has sole voting power and sole dispositive power with respect to 55,773,221 shares. Beneficial ownership of these shares is disclaimed. Capital World Investors is a division of Capital Research Management Company.
(2)
Based upon its Schedule 13G/A filed with the SEC on February 9, 2018 with respect to its beneficial ownership of our common stock, The Vanguard Group has sole voting power with respect to 666,516 shares, shared voting power with respect to 115,239 shares, sole dispositive power with respect to 50,253,177 shares and shared dispositive power with respect to 766,133 shares.
(3)
Based upon its Schedule 13G/A filed with the SEC on February 14, 2018 with respect to its beneficial ownership of our common stock, Capital Research Global Investors has sole voting and sole dispositive power with respect to 42,533,049 shares. Beneficial ownership of these shares is disclaimed. Capital Research Global Investors is a division of Capital Research and Management Company.
(4)
Based upon its Schedule 13G/A filed with the SEC on January 25, 2018 with respect to its beneficial ownership of our common stock, BlackRock, Inc. has sole voting power with respect to 29,148,496 shares and sole dispositive power with respect to 33,188,644 shares.
(5)
Based upon its Schedule 13G filed with the SEC on February 14, 2018 with respect to its beneficial ownership of our common stock, State Street Corporation has sole voting power with respect to 0 shares, shared voting power with respect to 26,278,348 shares, sole dispositive power with respect to 0 shares and shared dispositive power with respect to 26,278,348 shares.

Shareholder Proposals and Other Matters

We have been notified by certain shareholders that they intend to present one proposal as set forth in this Proxy Statement at our 2018 Annual Meeting for action by the shareholders. Pursuant to Rule 14a-8(l)(1) of the Exchange Act, we will provide the address and number of shares of our common stock held by the proponents of that proposal promptly upon receipt of a written or oral request. Requests should be submitted to the Company Secretary.

 
Shareholder proposals intended to be brought before our 2019 Annual Meeting of Shareholders as an agenda item in accordance with our By-Laws or to be included in our Proxy Statement relating to that meeting pursuant to Rule 14a-8 of the Exchange Act, which is currently scheduled to be held on April 23, 2019, must be received by us at our office in Houston, Texas, addressed to our Company Secretary, no later than November 1, 2018.
 


11

 
Election of Directors (Proposal 1)


Election of Directors (Proposal 1)

Our Board is currently comprised of 11 directors. Our Board recommends the nine director nominees as presented below, seven of whom are independent. The business experience of each nominee, as well as the qualifications that led our Board to select them 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 and qualified.
Election Process

Our By-Laws provide that the number of directors shall be determined by the Board 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 shareholder vote, our Governance Committee will act to determine whether to accept the director’s resignation and will submit its recommendation for 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 Shareholders. Nominees may be suggested by directors, members of management, shareholders or, in some cases, by a third-party search firm.

Shareholders 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, between 120 and 150 days before the anniversary date of the mailing of the previous year’s proxy materials. Shareholder nominees for directors to be submitted for inclusion in our 2019 Proxy Statement must be received by us by November 1, 2018. Our Corporate Governance Guidelines specify the processes for evaluating nominees for director and the requirements for a shareholder recommendation for a director nominee.

In addition, our By-Laws permit certain qualifying shareholders to include director nominees in our Proxy Statement. This proxy access mechanism allows a shareholder or group of up to 25 shareholders owning at least 3% of the Company’s outstanding common stock continuously for at least three years to submit their own candidate for election to our Board. These nominees may not constitute more than 25% of our Board at any time. Proxy access nominations must be delivered to the Company between 120 and 150 days before the anniversary date of the mailing of the previous year’s proxy materials and satisfy certain other criteria specified in our By-Laws. For inclusion in our 2019 Proxy Statement, proxy access nominations must be received by us no later than November 1, 2018.
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

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Election of Directors (Proposal 1)


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 or private 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 business and affairs, 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 communicate effectively 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. The above criteria and guidelines, together with the section of the Company’s Corporate Governance Guidelines entitled “Director Qualification Standards,” constitute the policy of the Governance Committee regarding the recommendation of new nominees or the re-election of directors to the Company’s Board of Directors or its committees.
2018 Nominees for Director

Upon recommendation of the Governance Committee, our Board has nominated Jeffrey L. Berenson, Michael A. Cawley, Edward F. Cox, James E. Craddock, Thomas J. Edelman, Holli C. Ladhani, David L. Stover, Scott D. Urban and William T. Van Kleef for election as director.

Each of the director nominees currently serves on our Board and was elected by the shareholders at our 2017 Annual Meeting of Shareholders, with the exception of Holli C. Ladhani, who was elected on October 24, 2017 by our Board. If elected, each nominee will hold office until the 2019 Annual Meeting of Shareholders 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 2018 director nominees will contribute to an effective and well-functioning board. Our Board and the Governance Committee believe that, individually and as a whole, these director nominees possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to our Company’s management.
Qualifications of 2018 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 that shareholders vote FOR the election of each of the director nominees.


13

 
Director Nominee Biographies

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Jeffrey L. Berenson
 
Director since 2005 Age 67

Mr. Berenson is Chairman and Chief Executive Officer of Berenson Holdings LLC, a private investment banking firm in New York City that he co-founded in 1990. From 1978 until such co-founding, 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 previously served on the boards of directors of Epoch Holding Corporation and Patina Oil and Gas Corp. (“Patina”) and joined our Board upon completion of our merger with Patina in May 2005.

Qualifications, Attributes, Skills and Experience:

High Level of Financial Literacy — has been in the investment banking business since 1978 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 12 years of service on our Board.

 
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Michael A. Cawley
 
Director since 1995 Age 70

Mr. Cawley has served as President and Manager of The Cawley Consulting Group, LLC since January 2012. He previously served as a director of Noble Corporation Plc (“Noble Corporation”) from 2010 to 2017. In 2014, Noble Corporation effected a spin-off of Paragon Offshore plc, which subsequently filed for bankruptcy protection on February 14, 2016. Mr. Cawley also previously served as President and Chief Executive Officer of The Samuel Roberts Noble Foundation, Inc. (the “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 served as a trustee of the Foundation from 1988 until his retirement. He has served on our Board since 1995 and has been our Lead Independent Director since 2001.

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 22 years of service on our Board.

Strong Governance Experience — worked as an attorney and law firm partner, and for over 17 years has served as our Lead Independent Director and chair of our Governance Committee.

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Director Nominee Biographies

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Edward F. Cox
 
Director since 1984 Age 71

Mr. Cox is a retired partner of Patterson Belknap Webb & Tyler LLP, a law firm in New York City, having served as 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”) and as a member of the Republican National Committee. He was elected chair of the New York League of Conservation Voters Education Fund in 2004 and Secretary of the Economic Club of New York in 2013. He has served Presidents Nixon, Reagan and George H. W. Bush in the international arena, has been a member of the Council on Foreign Relations since 1993 and serves on the board of directors of the Foreign Policy Association of the American Ditchley Foundation. He has served on our Board since 1984.

Qualifications, Attributes, Skills and Experience:

Broad International Exposure — 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 33 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.

   


 

 
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James E. Craddock
 
Director since 2015 Age 59

Mr. Craddock served as the Chairman and Chief Executive Officer of Rosetta from February 2013 through July 2015, when Rosetta merged with the Company. He joined Rosetta in April 2008 as Vice President, Drilling and Production Operations, and was named a Senior Vice President in January 2011. From April 2006 to March 2008, Mr. Craddock was Chief Operating Officer for BPI Energy, Inc. (“BPI”), an exploration and production start-up company focused on coal bed methane development. On February 3, 2009, BPI filed for bankruptcy protection. Mr. Craddock began his industry career with Superior Oil Company in 1981 and then held a broad range of technical, operational and strategic roles with Burlington Resources Inc. (“Burlington”) and its predecessor companies for more than 20 years. At Burlington, he held a series of positions of increasing responsibility, most recently as Chief Engineer. Mr. Craddock currently serves as a director of Templar Energy LLC. He joined our Board upon completion of our merger with Rosetta in July 2015.

Qualifications, Attributes, Skills and Experience:

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

Relevant Chief Executive Officer/President Experience — served as President and CEO of Rosetta from 2013 through its merger with the Company in 2015 and since that time has had exposure to our business through over two years of service on our Board.

Extensive Knowledge of Our Industry and Business — has historical knowledge of our Delaware Basin and Eagle Ford Shale assets through his service as CEO of Rosetta.

15

 
Director Nominee Biographies

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=27
 
Thomas J. Edelman
 
Director since 2005 Age 67

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 Corterra Energy, LLC, Midstream Texas LLC, Global Petro Storage Limited, Quanah Panhandle, LLC and Riverside Energy Company LLC. He currently is trustee of the Wildlife Conservation Society and The Frick Collection, serves on the Advisory Council of Princeton University’s Department of Politics, is an Emeritus member of the Investment Committee of The Hotchkiss School and is Chairman Emeritus of Lenox Hill Neighborhood House. He joined our Board upon completion of our merger with Patina in May 2005.

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 — served as President and CEO of several independent oil and gas companies.

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 12 years of service on our Board.
 
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=52
 
Holli C. Ladhani
 
Director since 2017 Age 47

Ms. Ladhani is President and Chief Executive Officer of Select Energy. Prior to its merger with Select Energy, Ms. Ladhani served as Chairman, President and Chief Executive Officer of Rockwater since February 2017 and Chief Executive Officer since June 2015. Ms. Ladhani held various positions at Rockwater since its formation in 2011 including Executive Vice President, Chemical Technologies and Chief Financial Officer. Prior to joining Rockwater, Ms. Ladhani served as Executive Vice President and Chief Financial Officer of Dynegy Inc. (“Dynegy”) since November 2005. She previously held various positions with Dynegy, including Senior Vice President, Treasurer and Controller, from 2000 to 2005. In November 2011, subsequent to Ms. Ladhani’s departure from Dynegy, two Dynegy subsidiaries of which Ms. Ladhani had previously been an officer filed for bankruptcy protection. Prior to joining Dynegy, Ms. Ladhani held various positions with PricewaterhouseCoopers LLP from 1992 to 2000. Ms. Ladhani serves on the boards of directors of Select Energy, Atlantic Power Corporation, a North American independent power producer, and is a board member of Junior Achievement of Southeast Texas. She joined our Board in October 2017.

Qualifications, Attributes, Skills and Experience:

High Level of Financial Literacy has extensive exposure to the financial aspects of our business having served as CFO of Rockwater and Dynegy.

Relevant Chief Executive Officer/President Experience — serves as President and CEO of Select Energy and previously served as Chairman, President and CEO of Rockwater.

Extensive Knowledge of Our Industry and Business — has served in various positions within the broader energy industry since 2000.


16

 
Director Nominee Biographies

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=60
 
David L. Stover
 
Director since 2014 Age 60

Mr. Stover has served as President and Chief Executive Officer of Noble Energy since October 2014, and Chairman of the Board since April 2015, 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. (“BP”), Vastar Resources, Inc. (“Vastar”), and Atlantic Richfield Company (“ARCO”). He joined our Board in April 2014.

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 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.
 
 
 
 
 
 
 
 
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=61
 
Scott D. Urban
 
Director since 2007 Age 64

Mr. Urban served in executive management positions at Amoco Corp. (“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 has been a partner in Edgewater Energy LLC, an investment consulting firm, since 2010 and has served as a member of the board of directors of Pioneer Energy Services Corporation since 2008. He joined our Board in October 2007.

Qualifications, Attributes, Skills and Experience:

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

Broad International Exposure — 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 10 years of service on our Board.


17

 
Director Nominee Biographies

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=62
 
William T. Van Kleef
 
Director since 2005 Age 66

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 has also served as a member of the board of directors of Oil States International, Inc. since 2006. He joined our Board in November 2005.

Qualifications, Attributes, Skills and Experience:

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

Relevant Chief Executive Officer/President Experience — 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 12 years of service on our Board.





18

 
2017 Director Compensation

2017 Director Compensation

Our 2017 director compensation program consists of two principal elements: (1) an 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 2017, paid pro rata on a monthly basis, with adjustments approved by our Board at its October 24, 2017 meeting, effective as of November 1, 2017 and noted where applicable:
an annual retainer of $75,000 (increased to $85,000);
$2,000 for each Board or committee meeting attended (eliminated except for specially called meetings);
$1,000 for each Board or committee meeting attended telephonically (eliminated except for specially called meetings);
$7,500 as an annual fee for the chairs of the Governance and EH&S Committees (increased to $15,000 for the Governance chair and $10,000 for the EH&S chair);
$15,000 as an annual fee for the chairs of the Audit and Compensation Committees (increased to $25,000 for the Audit chair); and
$20,000 as an annual fee for the Lead Independent Director (increased to $25,000).
Non-employee directors are also entitled to participate in our Non-Employee Director Fee Deferral Plan under 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 Board service.
Equity

The 2015 Stock Plan for Non-Employee Directors of Noble Energy, Inc. (“2015 Plan”) provides for grants of stock options and awards of restricted stock to our non-employee directors, and was approved by shareholders on April 28, 2015.

Stock options were issued with an exercise price equal to the fair market value, as defined in the 2015 Plan, of our common stock on the date of grant and may be exercised beginning one year after the date of grant. They 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 stock options and restricted stock under the 2015 Plan is not contingent upon the satisfaction of any performance criteria and will accelerate upon a termination of Board membership following a change of control, as defined in the 2015 Plan.

Newly elected non-employee directors receive, on the date of initial election to our Board, an award with a total value of $250,000 to be allocated 100% to restricted shares. On October 24, 2017 our Board approved the grant of full value shares for annual equity and new hire grants, to replace the prior practice of granting one-half stock options and one-half restricted shares.

On January 30, 2018 our Board considered the Company’s 2017 positive results in an adverse business environment in making the 2018 awards based on the $200,000 target value, with 100% of the grant in restricted stock, resulting in 6,474 shares of restricted stock being awarded to each non-employee director, effective February 1, 2018.


19

 
2017 Director Compensation

Director Compensation Summary for 2017

The table below sets forth certain information concerning the compensation paid or earned in 2017 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
($)(4)
All Other
Compensation
($)
Total
($)
Jeffrey L. Berenson
112,666

99,992

99,994

312,652
Michael A. Cawley
141,249

99,992

99,994

341,235
Edward F. Cox
120,166

99,992

99,994

320,152
James E. Craddock
123,082

99,992

99,994

323,068
Thomas J. Edelman
115,666

99,992

99,994

315,652
Kirby L. Hedrick
122,666

99,992

99,994

322,652
Holli C. Ladhani
16,166

249,998


266,164
Scott D. Urban
127,666

99,992

99,994

327,652
William T. Van Kleef
130,332

99,992

99,994

330,318
Molly K. Williamson
117,666

99,992

99,994

4,839
322,491

(1)
Reflects annual retainer, committee chair, lead independent director and meeting fees paid or earned by our non-employee directors in 2017. During 2017, Ms. Williamson deferred 90% ($105,899) of her retainer and meeting fees under the Non-Employee Director Fee Deferral Plan.
(2)
Reflects the aggregate grant date fair value for restricted stock awarded to our non-employee directors computed in accordance with FASB ASC Topic 718. Restricted stock awarded will vest on the one-year anniversary of the award date. The vesting of the restricted shares will accelerate in the event of an involuntary termination of Board membership following a change of control. Each non-employee director received an award of 2,534 shares of restricted stock on February 1, 2017 that were unvested as of December 31, 2017. Ms. Ladhani received an award of 9,304 shares of restricted stock on October 26, 2017 upon her election to the Board.
(3)
Reflects the aggregate grant date fair value for non-qualified stock options granted to our non-employee directors, under our 2015 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 2015 Plan defines “fair market value” as the closing price of our common stock on the NYSE on the date of grant. Options granted in 2017 to our non-employee directors who are still members of the Board vested on the one-year anniversary of the grant date. The vesting of the options will accelerate in the event of an involuntary termination of Board membership following 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, except for Ms. Ladhani, received 7,541 non-qualified stock options on February 1, 2017 that were unvested as of December 31, 2017. The following directors have option grants outstanding as of December 31, 2017: Mr. Berenson — 53,657 shares; Mr. Cawley — 53,657 shares; Mr. Cox — 53,657 shares; Mr. Craddock — 31,606 shares; Mr. Edelman — 53,657 shares; Mr. Hedrick — 53,657 shares; Mr. Urban — 53,657 shares; Mr. Van Kleef — 53,657 shares; and Ms. Williamson — 24,695 shares.
(4)
Reflects above-market earnings under the Non-Employee Director Fee Deferral plan. Above-market earnings are based on the difference between the monthly plan crediting rate ranging from 3.75% to 4.50% and 120% of the monthly long-term applicable federal rate during 2017 (ranging from 2.96% to 3.34%).

20

 
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 2018. 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 shareholders.

Although action by our shareholders on this matter is not required, our Audit Committee believes that it is important to seek shareholder 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 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 shareholders 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 2017 and 2016
 
2017

%
 
2016

%
Audit Fees(1)
$
2,805,000

75.9
 
$
2,360,000

86.1
Audit-Related Fees(2)
890,000

24.1
 
380,000

13.9
Tax Fees

 

All Other Fees

 

Total Fees(3)
$
3,695,000

100.0
 
$
2,740,000

100.0
(1)
Services rendered in 2017 and 2016 include auditing our financial statements included in the Company’s Annual Report filed on Form 10-K and our internal controls over financial reporting and quarterly reviews of our interim financial statements filed on Form 10-Q.
(2)
Includes fees for audits of, and consents related to, comfort letters, foreign statutory audits, employee benefit plans, attest engagements and similar items.
(3)
The amounts of fees paid by NBLX to KPMG LLP, its independent auditor, were $1,059,500 for 2017 and $850,000 for 2016 and are not included in above table. See NBLX Annual Report on Form 10-K filed on February 20, 2018.

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.

All audit-related services, tax services and other services for 2017 set forth in the table above were pre-approved by the Audit Committee Chair or the Audit Committee, as provided above, which in either case determined that such services would not impair the independence of our auditor and are consistent with the SEC’s rules on auditor independence.

21



 
Report of the Audit Committee
To the Shareholders 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 corporate audit and controls 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 24, 2017 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 shareholder who requests it. The Audit Committee held five meetings during 2017, including regular meetings and a special meeting addressing the Form 10-K filing, earnings release and related matters.

Throughout 2017 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(d)(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 by Auditing Standard No. 1301 (Communication with Audit Committees), as adopted by the Public Company Accounting Oversight Board. Additionally, KPMG 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's rendering of non-audit services to the Company is compatible with maintaining its independence. The Audit Committee has concluded that the rendering of non-audit services by KPMG 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 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, 2017, as filed with the SEC.


February 6, 2018




 
 
Audit Committee
William T. Van Kleef, Chair
Michael A. Cawley
Edward F. Cox
Kirby L. Hedrick

 



22

 
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 shareholders with the opportunity to vote to approve, on an 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 executive compensation program is designed to attract and retain high quality individuals and to link their compensation to performance. We describe this program, including how it links executive compensation to Company performance, in the Compensation Discussion and Analysis portion of this Proxy Statement. 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 action is necessary to address the concerns of shareholders.
Accordingly, we ask our shareholders to vote on the following resolution at our annual meeting:
RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 2018 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the 2017 Summary Compensation Table and the other related tables and disclosures.
Our Board recommends that shareholders vote FOR the approval of the compensation of our Named Executive Officers as disclosed in this Proxy Statement.



23

 
Consideration of Proposal Regarding Climate Change (Proposal 4)

Consideration of Proposal Regarding Climate Change (Proposal 4)

Presbyterian Church (USA), acting as primary filer on behalf of certain other shareholders (the “Proponent”) has notified us that it intends to present the following proposal at the annual meeting for action by our shareholders. The Proponent has furnished evidence of ownership of at least $2,000 in market value of the Company’s common stock for at least one year prior to the date the proposal was submitted. 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 shareholders. For the reasons following the proposal, our Board recommends a vote “Against” this shareholder proposal.

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

WHEREAS: Moody’s has warned that “Carbon transition poses significant risks for the oil and gas industry,” and Wood Mackenzie writes that “oil companies risk being left behind.”
Chief among these threats is the risk of peak demand for fossil fuels driven by technological innovation, regulation and changes in consumer behavior. The International Energy Agency forecasts that electrification of transport will play a critical role in achieving required greenhouse gas reductions, and Statoil has described electric cars as an “existential threat.”
The uncertainty around future demand growth in light of climate change has led competitors like ConocoPhillips to test capital planning decisions against multiple carbon-constrained scenarios to avoid the risk of stranded assets. Shell’s CEO has said that “we have to have projects that are resilient in a world where oil has peaked.”
Investors are increasingly focused on the need for robust climate change disclosure, including scenario analysis. In June 2017, the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures finalized its guidelines for reporting on climate risk, recommending that companies in the energy sector evaluate the potential impact of different scenarios, including a two degree Celsius scenario, on the organization’s businesses, strategy, and financial planning.
Investors representing over $25 trillion in assets publicly endorsed the Taskforce recommendations.
Noble admits in its financial filings that changes in “climate policy could have a significant impact on our operations and profitability” and that “we are currently in a period of increasing uncertainty.”
A recent analysis by CarbonTracker suggested that 30-40% of Noble’s future capital spending is potentially at risk in a low-carbon transition.
As long-term shareholders in Noble Energy, we would like to understand how our company is managing this uncertainty and planning for the risks and opportunities associated with climate change.
A two degree scenario analysis of Noble Energy’s future plans will generate a more complete picture of current and future risks and opportunities than business-as-usual planning. We are not asking the company to make predictions about the distant future. Scenario analysis simply allows a company to consider multiple potential futures, and design a strategy that is resilient in a world of increasing uncertainty. This report will help Noble identify both vulnerabilities and opportunities for its business, and reassure investors that Noble is poised to manage and take advantage of future regulatory, technological and market changes.
RESOLVED: Shareholders request that by 2019, Noble Energy publish, with board oversight, an assessment of the long-term portfolio impacts of scenarios consistent with the internationally recognized goal of limiting the global increase in temperature to two degrees Celsius. The assessment should outline the impacts of multiple, fluctuating demand and price scenarios on the company’s existing reserves and resource portfolio and explain how capital planning and business strategies incorporate analyses of the financial risks of a low-carbon transition. The report should be done at reasonable cost and omit proprietary information.

24

 
Consideration of Proposal Regarding Climate Change (Proposal 4)

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


Our shareholders considered and rejected substantially similar proposals in each of the last three years with the 2017 version receiving support from only 22.5% of the shares present and eligible to vote. We have continued to engage with the Proponent in an effort to better understand and respond to its views on climate change. We have hosted annual meetings with the Proponent over the last several years in our offices. While our meetings with the Proponent continue to be cordial and productive, our Board opposes the proposal for the reasons discussed below.

We believe that taking prudent, practical and cost-effective action to reduce greenhouse gas emissions is the right thing to do. We have made and will continue to make efforts to reduce greenhouse gas emissions and comply with environmental requirements across our operations. Several resources within the Company, including a multi-disciplined climate change task force, actively monitor climate-related issues and the associated risks and opportunities to our business. We publish an annual sustainability report that sets forth our policies and strategies relating to corporate sustainability, including a discussion of our performance and initiatives in reducing our impact on the environment. Corporate governance documents set out our EH&S Committee Charter, as adopted by our Board, and describe the purpose and engagement of this committee to assure Board oversight on climate-related risks and opportunities. The EH&S Committee regularly reports to our Board on existing and emerging regulatory requirements, adequacy of the Company’s processes and management systems for responding to climate-related risks and opportunities, and Company strategy and initiatives in the area of corporate social responsibility and climate policy. In our annual reports on Form 10-K and other public filings, we include disclosures regarding both the risks and the opportunities that may arise from the global response to climate change. Our most recent sustainability report, corporate governance documents and Annual Report on Form 10-K are available on our Website. We also report climate change risks and opportunities and greenhouse gas emission reduction activities 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.

We do not believe it would be in the best interest of our shareholders to expend significant resources preparing an additional report that is premised on speculative planning scenarios and assumptions and would possibly include information that, while not necessarily proprietary in nature, may be valuable to our competitors. We believe that the proposal would require us to engage in speculation on matters outside our control and far into the future, including the request to assess long-term impacts from “multiple, fluctuating demand and pricing scenarios on the Company’s existing reserves.” SEC regulations that mandate how reserves are valued and how risks related to those reserves must be disclosed require that undeveloped proved reserves must have a plan to be developed within the next five years. In contrast, the proposal would have us consider risks and opportunities related not only to undeveloped proved reserves, but unproved reserves and theoretical future reserves on a long-term horizon. The requested report would require considerable speculation about the future of not just oil, but all fossil fuels.

Our operations are subject to various federal, state, local and foreign host country laws and regulations relating to the protection of the environment and climate change. Many of these laws and regulations are subject to change as a result of political trends, changes in public policy and other developments. The Company has no unique expertise to assess the goals of policymakers with respect to climate change, both domestically and internationally, and what steps those policymakers may take to achieve those goals. We cannot predict with meaningful certainty what laws and regulations will be adopted, or amended, in response to climate change. Adding to the near-term uncertainty regarding the impact of climate change policy, the current administration and the Republican Congress have adopted policies aimed at increasing the production of domestic oil and natural gas resources and repealed or amended certain executive orders and regulatory policies that have restricted or adversely impacted development. 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.


25

 
Consideration of Proposal Regarding Climate Change (Proposal 4)

Preparing a 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 shareholders with commensurate value. An analysis based on the parameters set forth by the Proponent would also be speculative and risks confusing and misleading investors about our actual performance. We therefore do not believe that it would be in the best interest of our shareholders to expend significant resources engaging in such speculative projections.

For these reasons, our Board does not believe it would be in the best interest of our shareholders to prepare the report.

Our Board recommends that shareholders vote AGAINST this shareholder proposal.

26

 
Compensation Discussion and Analysis


Compensation Discussion and Analysis
Introduction

This Compensation Discussion and Analysis describes our executive compensation program, the 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 2017, who were:
Name
Title
David L. Stover
Chairman, President and Chief Executive Officer
Kenneth M. Fisher
Executive Vice President and Chief Financial Officer
Gary W. Willingham
Executive Vice President, Operations
Charles J. Rimer
Senior Vice President, Global Services
John K. Elliott
Senior Vice President, Eastern Mediterranean
Susan M. Cunningham (retired March 24, 2017)
Former Executive Vice President, EH&S Regulatory and New Frontiers
Arnold J. Johnson (resigned November 12, 2017)
Former 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.
2017 Executive Compensation Overview
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=22

27

 
Compensation Discussion and Analysis


2017 Overview of Operational & Financial Performance

2017 was a year of substantial progress in positioning the Company for long-term success in commodity price environments that are unpredictable. The Company maintained its relentless focus on cost discipline and capital allocation and executed on our highest return projects.  Our strong results continue to reflect the Company’s superior portfolio and differentiated execution with a focus on significantly enhancing our per unit cash margins and overall corporate returns.  We delivered on several key milestones, critical to executing our long-range plan, with the CWEI acquisition, Marcellus exit, U.S. Onshore non-core divestitures and Leviathan sanction.  Consistent with our pay for performance strategy, our Compensation Committee considered our strong 2017 operational and financial execution, against the backdrop of share price performance, in determining 2018 compensation actions.

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=17

      TRIR - Total recordable incident rate
   DWIR - Days without incident rate
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=11
      *Excludes impact of Marcellus from all periods.

 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=21
 
           *Non-GAAP measure, see reconciliation in Appendix.
            (1) 2017 Data excludes impact of NBLX free cash flow.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=12






28

 
Compensation Discussion and Analysis


CEO Target Versus Realizable Compensation

The “Target” bars represent Mr. Stover’s base salary, target STIP opportunity and grant-date target value of LTIP awards for 2015, 2016 and 2017. The “Realizable” bars represent, as a percentage of target, the total of each year’s base salary paid, STIP earned and paid and LTIP award value as of December 31, 2017.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=20
Mr. Stover’s 2017 LTIP award had an intended grant-date target value of $7.75 million. Based on the Company’s stock price at December 31, 2017, the value of this award at that time was approximately $3.1 million. By design, our executive compensation program will not deliver intended target value unless the stock price appreciates on an absolute basis, the Company meets or exceeds median industry stock performance and the Company meets or exceeds important financial and operating objectives.

2017 Named Executive Officer Total Target Compensation Mix

            CEO Mix                                    Other NEO Mix (Average)*
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=9   http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=53
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=56 Time-Base Restricted Stock
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=59 Short Term Incentive
 
* Other NEO Mix (Average) excludes values for Ms. Cunningham who retired and Mr. Johnson who resigned in 2017.
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=57 Stock Options
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=58 Base Salary
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12098813&doc=46 Performance Award
 


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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 executive compensation program.
 
What We Do
 
 
What We Don't Do
 
 
þ Pay for Performance, through having a majority of pay at risk, clear performance targets and individual differentiation.
þ Diversified Performance Metrics, including free cash flow, relative cash costs, absolute cash costs per Boe, onshore drill and complete rate of return, safety, program rate of return and absolute and relative shareholder return.
 þ Review Comparative Compensation Data, prior to making executive compensation decisions.
þ Reasonable Post-Employment/Change of Control Provisions, generally structured to apply to executive officers in the same manner as the broader employee population.
þ Mitigate Undue Risk, through robust Board oversight, audits of financial and operational outcomes prior to incentive plan payouts, and maintenance of clawback policy.
þ Minimal Perquisites.
þ Stock Ownership Guidelines, which all Named Executive Officers meet.
þ Regular Review of Share Utilization, including overhang levels (dilutive impact of equity compensation on our shareholders) and annual burn rates (the aggregate shares awarded each year as a percentage of total outstanding shares).
þ Independent Compensation Consulting Firm.
þ Double-Trigger Equity Vesting Acceleration.
 
 
ý No Employment Contracts.
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.
ý No Excise Tax Gross-Ups Upon Change of Control.
ý No Repricing of Underwater Stock Options.
ý No Liberal Recycling of Shares.
ý No Pledging Shares of Company Stock Received as Compensation as Collateral for a Loan, or Hedging such Shares.

 

Results of 2017 Say on Pay Vote and Shareholder Engagement


At the 2017 Annual Meeting of Shareholders, we held our seventh annual advisory vote on executive compensation. Our “say on pay” shareholder votes for 2016 and 2017 support our approach to executive compensation, at 95.4% and 97.4% favorability, respectively, of shares voted. Our Compensation Committee believes that these votes convey our shareholders’ strong support of its decisions and our executive compensation program. Consistent with prior years, in 2017 we completed a robust shareholder engagement program, designed to obtain shareholder feedback and respond to shareholder questions regarding our business strategy, executive

30

 
Compensation Discussion and Analysis


compensation, director independence and diversity and certain environmental, social and governance issues.  We received positive feedback on the structure of our executive compensation program. In response to valuable shareholder feedback, we continue to enhance the design of our incentive plan. For the 2018 plan year, we will be incorporating cash flow per debt adjusted share growth and two new returns based metrics, return on average capital employed (“ROACE”) and cash return on capital invested (“CROCI”), to more closely align with how the external investment community evaluates our success. We are also increasing the weight of our performance-based equity from 33% of total to 50% of total long-term equity awarded.

Determining Executive Compensation

Role of Compensation Committee
Our executive compensation program and policies are overseen by the independent directors of the Compensation Committee. In its oversight role, the Compensation Committee is responsible for making compensation decisions involving our CEO and other executive officers.

Role of Management
Because of our CEO’s direct knowledge of each executive officer’s performance and contributions, our Compensation Committee receives an assessment from our CEO on the individual performance and suggested compensation level of the other executive officers. The CEO is not present during deliberations by the Compensation Committee regarding his own compensation. All final compensation decisions regarding the compensation of executive officers are made in executive session by the Compensation Committee.

Role of Compensation Consultants
Our Compensation Committee may retain, at Company expense, independent consultants to assist it in executive compensation matters. The Compensation Committee meets with these consultants, within and outside the presence of management, to review findings based on market research and considers those findings in determining and adjusting our executive compensation program.

Our Compensation Committee continued to retain Meridian Compensation Partners, LLC (“Meridian”) as its independent consultant on executive compensation for 2017, after considering Meridian’s independence from our management and members of our Compensation Committee and the following compensation consultant traits:
    effective past performance;
    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; and
    maintains policies and procedures that prevent conflicts of interest.
In 2017, 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. Representatives of the compensation consultant participated in all regular meetings of the Compensation Committee, including executive sessions without management. The compensation consultant also provided consulting services to our Governance Committee in 2017 with respect to our non-employee director total compensation.

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Compensation Discussion and Analysis


Benchmarking Peer Group
Benchmark data from our peers is one of the many factors our Compensation Committee considers in determining executive pay. The Compensation Committee reviews the composition of the peer group annually to ensure that it remains relevant for comparative purposes.
There are a number of factors considered in determining our compensation peer group, such as similarity of operations, competition for talent, and relevant size measures including enterprise value, market capitalization, assets and revenue. Our Compensation Committee approved the following list of industry-specific companies, both larger and smaller than us, for our 2017 benchmarking peer group:
 
 
 
 
 
    Anadarko Petroleum Corp.
    Apache Corp.
    Cabot Oil & Gas Corp.
    Chesapeake Energy Corp.
    Continental Resources, Inc.
    Devon Energy Corp.
    EOG Resources, Inc.

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

 
 
 
 
 
All 13 peer companies identified also identify Noble Energy as their direct peer. We believe this peer group aligns with our business focus and is reflective of the current competitive market.
Benchmarking Process
Our Compensation Committee annually reviews our executive officers’ compensation relative to peers based on information provided by its independent compensation consultant. This information reflects both publicly available information and recently collected market data through Meridian’s North America Oil and Gas E&P Compensation Survey. We believe this information provides the Compensation Committee with a sufficient basis to understand the competitive executive compensation landscape.
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 those Named Executive Officers.


What We Pay and Why: Elements of 2017 Executive Compensation

We have three elements of total direct compensation for 2017, which include base salary, our STIP and our LTIP. By design, a significant portion of the overall compensation for our Named Executive Officers is performance-based, and the opportunity to realize value is largely dependent on both Company and individual performance. The following table summarizes these three elements, as well as our post-employment compensation programs:


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Compensation Discussion and Analysis


Compensation Element
 
Form of Compensation
 
Purpose
 
Structure
 
Base Salary
 
   Cash
 
   Deliver competitive cash compensation commensurate with role and expertise


 
   Market-based considering scope of responsibilities
 
Short-Term Incentive Plan (STIP)
 
   Annual cash bonus
 
  At-risk and variable compensation to incentivize achievement of Company performance goals and reward for annual contributions


 
   Performance-based quantitative and qualitative factors

 
Long-Term Incentive Plan (LTIP)

 
   Performance-based shares
   Stock options
   Time-based restricted shares
 
   Reward creation of long-term shareholder value
   Align long-term interests of employees and shareholders
  Encourage retention through continued service requirements
 
  Performance-based shares earned based on three-year relative total shareholder return
  Stock options vest over three years with 10-year term
  Restricted-shares vest over two years - extended to a three-year vesting period for 2018 grants and beyond
 
Post-Employment Compensation Programs
 
   Qualified and non-qualified plans
 
  Provide a tax-efficient means to build financial security for retirement
 
   Plans and programs with broad applicability

 

2017 Target Compensation of Named Executive Officers

The Compensation Committee determined 2017 compensation opportunities for our Named Executive Officers in January 2017. The following table provides the intended targeted value of each officers’ total direct compensation. The intended value differs somewhat from the required accounting values used in the Summary Compensation Table.

Name
2017 Base Salary
($)
2017 Target STIP Opportunity
($)
2017 Target LTIP Opportunity
($)(1)
2017 Target Total Direct Compensation
($)
David L. Stover
1,000,000
1,300,000
7,750,000
10,050,000
Kenneth M. Fisher
625,000
562,500
2,300,000
3,487,500
Gary W. Willingham
560,000
504,000
2,300,000
3,364,000
Charles J. Rimer
450,000
337,500
1,300,000
2,087,500
John K. Elliott
435,000
326,250
1,200,000
1,961,250
Susan M. Cunningham(2)
560,000
448,000
2,000,000
3,008,000
Arnold J. Johnson(2)
505,000
404,000
1,600,000
2,509,000
(1)
Equity values reflect the intended target LTIP opportunity, not the expense valuations shown in the Summary Compensation and Grants of Plan Based Awards tables.
(2)
Ms. Cunningham retired on March 24, 2017 and Mr. Johnson resigned on November 12, 2017, forfeiting their 2017 STIP and LTIP award opportunities, as well as other unvested restricted stock, stock options and performance shares.

We believe the awarded target total direct compensation is consistent with the objectives of our executive compensation program and provides an appropriate mix of fixed and performance-based compensation.




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Compensation Discussion and Analysis


Components of Compensation - CEO Mix                    Components of Compensation - NEO Mix*

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Percentages exclude amounts for Ms. Cunningham, who retired on March 24, 2017, and Mr. Johnson, who resigned on November 12, 2017.

Components of Compensation

Base Salary

The Compensation Committee considers the prevailing industry competitive salaries for each role, the complexity of the role at the Company, and an individual’s expertise, experience, and performance when determining base salary.

Short-Term Incentive Plan

Our STIP incentivizes and rewards employees for achievement of Company performance goals as well as individual performance during the year. The target for each quantitative measure and objective for each qualitative measure considers short-term financial, operational and strategic goals that drive shareholder value. We believe that they are aggressively set in light of these variables and require achievement of significant performance. Our Compensation Committee reviews information provided by management on actual results for each quantitative measure and qualitative objective. STIP payouts can range from 0% to 250% of the target opportunity.
Linking pay and performance is achieved by identifying metrics that are both a reflection of how management measures business success and how shareholders evaluate total Company performance.  For example, free cash flow and onshore drill and complete rate of return are our two-highest weighted quantitative metrics because they measure our capital discipline and efficiency at the core of our business. An overall program rate of return was included as a qualitative metric in 2017 and, along with TSR, aligns with how the investment community evaluates our performance. Inclusion of both metrics is indicative of our desire to utilize stringent metrics that hold each employee accountable for delivering business success and strong shareholder return.



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Compensation Discussion and Analysis


2017 Quantitative Measures (60% weighted)

Our Compensation Committee compared our 2017 results to targets in the following areas to arrive at the final quantitative weighted factor for our STIP:
Measure
Business Driver
Weight
Target
Result
Factor
Free Cash Flow(1)
Maintain financial capacity, strengthen balance sheet and create value by spending within cashflow
15%
$0 million(2)
$256 million(2)(3)
0.246
Onshore drill and complete rate of return
Deliver improved well performance, lower costs and higher capital efficiency. Motivate the organization to prioritize highest return opportunities.
15%
47.1%
61.7%(4)
0.261
Sales volume (production)
Deliver budgeted volumes in our core assets with focus on increasing liquids mix
10%
374.6 MBoe/d
381 MBoe/d
0.141
Cash cost per Boe
Continue focus on cost to maximize returns
10%
$6.93 per Boe
$6.94 per Boe(5)
0.099
Relative cash costs/revenue
Distinguish NBL as a low-cost, high performing operator relative to peers
10%
50th percentile of peers
6th out of 14
0.136
Final quantitative factor at 60% weighting 0.883
(1)
Non-GAAP financial measure, see reconciliation schedule at Appendix A.
(2)
Excludes impact of NBLX.
(3)
2017 free cash flow of $488 million, normalized for price impact.
(4)
Normalized for price impact.
(5)
Includes only lease operating expense and general and administrative costs for upstream Noble Energy and excludes NBLX.


2017 Qualitative Measures (40% weighted)

The Compensation Committee also compared our 2017 results to objectives in the following areas in arriving at the final qualitative assessment for our STIP:
Measure
Result
Strategic initiatives
Divested Marcellus with a loss, but strategically executed CWEI acquisition, accelerated CWEI development and eliminated CWEI debt. Accelerated value with non-core asset divestitures (DJ Basin and other Onshore) and focused capital on U.S. Onshore and Eastern Mediterranean. Sanctioned Leviathan project with over 35% complete by year-end.
     Improved type curve performance in DJ and Delaware Basins from enhanced completions
  Completed initial NBLX drop down valued at $270MM
   Restructured $1B of debt to extend maturity tower and reduce interest expense and outstanding debt
     Working to secure additional Leviathan gas contracts since sanction
EH&S performance
Continued industry leading safety performance with global record TRIR of 0.21 and U.S. Onshore record TRIR of 0.41.
Total shareholder return
Absolute shareholder return of -22% which is a relative rank of 9 out of 14 peer companies.
Weighted average program rate of return
Actual 2017 weighted average program rate of return was approximately 15 percentage points better than targeted. This improvement was driven by onshore well performance in the DJ Basin and the Permian.
Additions to proved oil and natural gas reserves / proved exploration performance
Record reserve additions of >900 MMBoe, more than offsetting Marcellus divest. Overall reserves increased by over 35% from Onshore performance, Tamar update and Leviathan sanction. Exploration unsuccessful in Suriname.
Final qualitative factor at 40% weighting 0.317
Overall Company Performance Factor 120%

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Compensation Discussion and Analysis


In considering the quantitative and qualitative factors shown above, our Compensation Committee reviewed:
execution on strategic initiatives;
Company and relative safety performance;
high return project execution delivering greater net asset value and enhanced long-term projections;
absolute and relative shareholder performance;
Marcellus loss on sale; and
reserve growth
and arrived at an overall Company performance factor of 120%.

2017 STIP Payout for Named Executive Officers

A cash payout under the plan based on our 2017 performance occurred in February 2018, with the breakdown by Named Executive Officer as follows:
 
Base Salary as of Dec. 31, 2017 ($)
Target STIP
(% of Salary)
Target STIP ($)
Actual STIP Paid for 2017 Performance ($)
Mr. Stover
1,000,000
 
130%
1,300,000
 
1,560,000
 
Mr. Fisher
625,000
 
90%
562,500
 
666,663
 
Mr. Willingham
560,000
 
90%
504,000
 
609,618
 
Mr. Rimer
450,000
 
75%
337,500
 
416,456
 
Mr. Elliott
435,000
 
75%
326,250
 
370,755
 
Ms. Cunningham(1)

 
80%

 

 
Mr. Johnson(1)

 
80%

 

 
(1)
Ms. Cunningham retired on March 24, 2017 and Mr. Johnson resigned on November 12, 2017 and, having no base salary as of December 31, 2017, forfeited their 2017 STIP and LTIP award opportunities, as well as other unvested restricted stock, stock options and performance shares.

Long-Term Incentive Compensation
The LTIP is designed to offer incentive compensation linked to share value and, thus, aligns with shareholder interest. The Committee typically awards long-term incentive opportunities effective February 1 of each year. The Committee divided the award value evenly between performance shares, time-based restricted stock and stock options.

Terms of 2017 Awards
Type of Award
Vesting Criteria
Vesting Schedule
Performance Shares
•   Performance awards earned based on Company’s total shareholder return relative to its compensation benchmarking peers
•   Period begins on January 1 of year awarded and ends on December 31 of third year
Percentile Rank Payout
 90th or higher 200%
 75th or higher 150%
 50th or higher 100%
 25th or higher 50%
 Below 25th                             0%
•   if TSR between two levels, straight line interpolation used
•   if TSR is negative max payout is 100%
Restricted Shares
•   Time-based awards
•   40% after first year
•   Remaining 60% after second year
Stock Option
•   Awards that provide right to purchase common stock at grant date fair value for period of up to 10 years
•   Vest ratably over three years



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Compensation Discussion and Analysis


2017 Awards for Named Executive Officers
Our Compensation Committee considered scope of responsibilities, internal equity between Named Executive Officers and market comparisons in determining award values. The following table shows the intended equity award values for each Named Executive Officer:
 
Target Value of
Stock Options
($)
 
Target Value of Restricted Stock
 
Target Total Value
($)(1)
 
(Time-based)
($)
(Performance-based)
($)
Mr. Stover
2,583,334
 
2,583,333
 
2,583,333
 
7,750,000
 
Mr. Fisher
766,666
 
766,667
 
766,667
 
2,300,000
 
Mr. Willingham
766,666
 
766,667
 
766,667
 
2,300,000
 
Mr. Rimer
433,334
 
433,333
 
433,333
 
1,300,000
 
Mr. Elliott
400,000
 
400,000
 
400,000
 
1,200,000
 
Ms. Cunningham(2)
666,666
 
666,667
 
666,667
 
2,000,000
 
Mr. Johnson(2)
533,334
 
533,333
 
533,333
 
1,600,000
 
(1)
Equity values reflect the intended target LTIP opportunity, not the expense valuations shown in the Summary Compensation and Grants of Plan Based Awards tables.
(2)
Ms. Cunningham retired on March 24, 2017 and Mr. Johnson resigned on November 12, 2017, forfeiting their 2017 STIP and LTIP award opportunities, as well as other unvested restricted stock, stock options and performance shares.

Payout of 2015 Performance Award
Based on the Company’s formula for calculating TSR relative to peers (one month average on each end of the performance period), none of the 2015 performance shares vested.  The Company ranked 11th out of 14 industry peer companies in TSR performance.

Stock Ownership Guidelines
Our Board has adopted stock ownership guidelines for our officers and non-employee directors that are set out in our Corporate Governance Guidelines. We believe that these guidelines reinforce the alignment of the long-term interests of our executive officers, non-employee directors and shareholders and help discourage the taking of excessive business risks. Each officer listed below is expected to own shares with a value that is a multiple of the officer’s current base salary and each non-employee director is expected to own shares with a value that is a multiple of the director’s annual cash retainer, as follows:

Position
Multiple
Chief Executive Officer
6.0X base salary
Chief Financial Officer
3.0X base salary
Executive Vice President
3.0X base salary
Senior Vice President
2.5X base salary
Vice President
2.0X base salary
Non-Employee Director
5.0X annual cash retainer


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Compensation Discussion and Analysis


Holding Requirement
Individuals not meeting these guidelines within five years will be required to retain 50% of any net shares they subsequently acquire upon the vesting of restricted stock and/or the exercise of stock options until the required ownership multiple is met.
On December 4, 2017, our Compensation Committee and Governance Committee reviewed the holdings of our officers and non-employee directors, finding that all of our officers and non-employee directors were in compliance with the guidelines (or, in the case of recently elected officers or non-employee directors, were within the permitted time frame to come into compliance with the guidelines).

Compensation Clawback
Our Compensation Committee has adopted a policy that allows the Company, under certain circumstances (such as a restatement of financial or reserve reporting or material noncompliance with federal securities laws or the Company’s codes of conduct), to recoup incentive-based compensation from current or former executive officers. Our policy will be revised, if appropriate, to conform to any final listing standards that may be adopted by the NYSE under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Policy on Stock Hedging and Pledging
Our Board has adopted a policy that prohibits our executive officers and directors from pledging shares of Company stock awarded as compensation for service as an employee or director (including shares owned as a result of the exercise of compensatory stock options) as collateral for a loan or hedging such shares through a covered call, collar or other derivative transaction. Our policy will be revised, if appropriate, to conform to any final rules that may be adopted by the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Post-Employment Compensation
Our post-employment compensation is provided under qualified and non-qualified savings and retirement plans, a severance plan, and either individual change of control agreements or, alternatively, a change of control plan.

Qualified Defined Contribution Plan
Our qualified defined contribution plan (“401(k) Plan”) is a tax-qualified retirement savings plan generally available to our employees, including our Named Executive Officers. It allows participants to contribute the lesser of up to 50% of their basic compensation, or the limit prescribed by the Code. We match such contributions dollar-for-dollar up to 100% of the first six percent of a participant’s eligible compensation. Participants are 100% vested in the Company’s matching contributions after three years of service, vesting 34%, 67% and 100% following years one, two and three.
In addition, we make the following age-weighted contribution to the 401(k) Plan for each participant:
Age of Participant
Contribution Percentage (Below the FICA Taxable Wage
Base)
Contribution Percentage (Above the FICA Taxable Wage
Base)
Under 35
4%
8%
At least 35 but under 48
7%
10%
At least 48
9%
12%


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Compensation Discussion and Analysis


These contributions are cliff vested at 100% after three years of service. The contributions made to our 401(k) Plan by or for a participant are credited to accounts maintained for such participant under the plan. The amounts credited to a participant’s account are invested at the direction of the participant in various investment fund options available under the 401(k) Plan, including investment in shares of our common stock.

Non-qualified Deferred Compensation Plan
Our non-qualified deferred compensation plan (“Deferred Compensation Plan”) allows executive officers, and certain other employees, to save for retirement in a tax-effective manner. Under the Deferred Compensation Plan, participants are allowed to defer portions of their salary and bonus and to receive certain matching, age-weighted and transition contributions that would have been made to our 401(k) Plan if the 401(k) Plan had not been subject to the Internal Revenue Code of 1986, as amended (“Code”), compensation and contribution limitations. The Deferred Compensation Plan also provides account balances for those participants who elected to have the lump sum present value of their Restoration Plan benefits converted into an account balance under the Deferred Compensation Plan.
Under this unfunded program, a participant may elect to have his or her accounts credited annually with interest at a rate equal to the greater of 125% of the 120-month rolling average of 10-year U.S. Treasury notes or the 120-month rolling average of the prime rate as published in The Wall Street Journal or to have their accounts adjusted to reflect the results of an array of notional investment options.

Change of Control Arrangements
We have adopted change of control arrangements for our executive officers and certain other employees. A change of control could result in a material change in the leadership and direction of our Company, creating uncertainties among employees and executive officers in such areas as the continuity of management, continued employment opportunities, and our ability to execute existing programs. These arrangements are intended to preserve morale and productivity and encourage retention in the face of the disruptive impact of an actual or rumored change of control. Based on information provided by our compensation consultant, we believe that these arrangements are common practice and align our executive officer interests with those of our shareholders by enabling our executive officers to consider corporate transactions that are in the best interest of shareholders without undue concern over whether the transactions may jeopardize their continued employment.
The change of control arrangements include provisions regarding severance benefits that our executive officers and certain other employees may be entitled to receive if they are terminated within two years following a change of control. Under these arrangements, if a Named Executive Officer is terminated, including a constructive termination, for any reason (other than for cause, disability or death) within two years after a change of control, then we will pay or provide the following to that Named Executive Officer:
all unpaid salary and expenses;
a lump sum equal to a multiple of his or her annual cash compensation (made up of annual salary and bonus) ranging from 2.5 times to 2.99 times;
an amount equal to his or her pro rata target bonus for the then-current year;
life, disability, medical and dental insurance benefits, upon his or her written request, ranging among Named Executive Officers from 30 to 36 months or such shorter period until the executive obtains substantially equivalent coverage from a subsequent employer;
reimbursement for reasonable fees up to $15,000 for out-placement employment services; and
in some cases, continued vesting and exercise of stock options.

If we terminate the Named Executive Officer for cause, no benefit is payable to, or with respect to, that Named Executive Officer under our change of control arrangements. A termination for cause may only be made by the affirmative vote of a majority of the members of our Board.
In addition, stock options and restricted stock granted pursuant to our 1992 Plan prior to 2016 generally provide for accelerated vesting of all or a portion of the award upon a change of control of the Company. Stock options, restricted stock and cash awards granted under the 1992 Plan after 2015, and granted under the 2017 Plan generally provide for accelerated vesting of all or a portion of the award if the participant is terminated for reasons other than cause or resigns for good reason within two years following a change of control.

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Compensation Discussion and Analysis


Severance Benefit Plan
Our Severance Benefit Plan is an unfunded plan that provides for severance benefits to eligible employees, including our executive officers, in certain instances based upon years of completed service. The severance benefits are comprised of:
a cash payment of two weeks of base salary pay for every year of completed service (including partial years), with a minimum of 12 weeks of pay and a maximum of 52 weeks of pay;
a prorated STIP payment based on period of employment during the calendar year of termination;
six months of reduced-rate contributions under our medical and dental plans; and
12 weeks of coverage under our employee assistance plan.

Perquisites
We do not consider perquisites to be a material component of our executive compensation. In 2017, certain of our executive officers received minimal personal benefits that have a sound value to our business, such as club membership dues reimbursement and comprehensive physical examinations.

Other Compensation Matters

Health and Welfare Programs
We offer a number of other benefits to our executive officers pursuant to benefit programs that provide for broad-based employee participation. These benefit programs include medical, dental and vision insurance, long- and short-term disability insurance, life and accidental death and dismemberment insurance, health and dependent care flexible spending accounts, relocation/expatriate programs and services, educational assistance, employee assistance and certain other benefits.
In late 2014, we discontinued retiree healthcare benefits and implemented a buyout of eligible pre-age 65 active employees. Employees who retired prior to that time and were participating in retiree medical benefits were transitioned to a defined contribution model effective as of January 1, 2016.

Indemnification Agreements
We have entered into an indemnification agreement with each of our non-employee directors and our executive officers. These agreements provide for us to indemnify such persons against certain liabilities that may arise by reason of their status or service as directors or executive officers and to advance their expenses incurred as a result of a proceeding as to which they may be indemnified. We also cover such persons under a directors’ and officers’ liability insurance policy that we choose, in our discretion, to maintain. These indemnification agreements are intended to provide indemnification rights to the fullest extent permitted under applicable law and are in addition to any other rights the individual may have under our Certificate of Incorporation, By-Laws and applicable law. We believe these indemnification agreements enhance our ability to attract and retain knowledgeable and experienced executive officers and non-employee directors.

Tax and Accounting Considerations
Section 162(m) of the Code may limit our ability to deduct annual compensation in excess of $1,000,000 that is paid to our CEO and other Named Executive Officers. Pursuant to tax law changes effective in 2018, the CFO will be included in the executives whose compensation is subject to the limit imposed by Section 162(m), and the exception to Section 162(m)’s $1,000,000 limit for “performance-based compensation” has been eliminated, with the result that, except for “grandfathered” amounts, all taxable compensation paid to our CEO, CFO and other Named Executive Officers in 2018 will be subject to the $1,000,000 limit on deductibility. “Grandfathered” amounts that satisfy the “performance-based compensation” exception under prior law should include stock options granted under the 1992 Plan, so long as not materially modified in the future. “Grandfathered” amounts also may include performance-based restricted shares and related cash awards granted under the 1992 Plan, although provisions permitting the Committee to use discretion to scale back payments may cause such awards to lose “grandfathered” status. We anticipate future legal guidance will provide more clarity on the appropriate

40

 
Compensation Discussion and Analysis


treatment of these awards. All other taxable compensation paid to our Named Executive Officers, including all awards granted under the 2017 Plan in 2018 and future years, all salary and STIP payouts, time-vested restricted stock awards and time-vested cash awards, and certain payments provided for under our change of control arrangements are not exempt from the Section 162(m) deduction limit.
Although we consider tax deductibility in the design and administration of our executive compensation plans and program, we believe that our interests are best served by providing competitive levels of compensation to our Named Executive Officers even if it results in the non-deductibility of certain amounts of compensation under the Code.
Rules under GAAP determine the manner in which we account in our consolidated financial statements for grants of equity-based compensation to our employees. Our accounting policies for equity-based compensation are further discussed in Note 12 to our consolidated financial statements, included in our 2017 Annual Report on Form 10-K.

CEO Pay Ratio
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO. For our 2017 calculation, we calculated our median employee under the final adopted CEO pay ratio rules. We have not recalculated CEO pay ratio for 2015 and 2016 under the final CEO pay ratio rules.
The pay ratio calculated by the Company is a reasonable estimate calculated in accordance with SEC rules and methods for disclosure. Due to estimates, assumptions, adjustments and statistical sampling permitted under the rules, pay ratio disclosures may involve a degree of imprecision and may not be consistent with the methodologies incorporated by other companies.
Year
Mr. Stover Total Compensation ($)
Median Employee Total Compensation ($)
Pay Ratio of CEO Compensation to Median Employee
2017
11,262,048

127,488
88:1
2017 CEO Pay Ratio Methodology
To identify the median of the total annual compensation of all our employees, we took the following steps:
We utilized a determination date of October 1, 2017, a date within the last three months of the 2017 fiscal year, to enable us to make an identification in a reasonably efficient and economical manner.
Our employee population consisted of 2,219 out of 2,285 employees, including full-time, part-time and temporary employees.
We excluded 66 employees from our employee population that were added in the CWEI acquisition that closed in April 2017.
We annualized approximately 286 employees who did not work for the full 12-month period.
Foreign salaries were converted to U.S. dollars at the average exchange rate over the 12-month period.
No cost of living adjustments were utilized in the compensation calculation.
To identify the median employee, we compared the amount of annualized base salary and cash incentive bonus for each employee as reflected in our internal records.
Once the median employee was identified, the total compensation per the chart above was calculated under the same methodology as required by the summary compensation table disclosed elsewhere in this Proxy Statement. Mr. Stover’s total compensation was calculated under the same methodology.

41




REPORT OF THE COMPENSATION, BENEFITS
AND STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION


The following report of the Compensation, Benefits and Stock Option Committee of the Board of Directors shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’s proxy rules, except for the required disclosure in this Proxy Statement, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934 (“Exchange Act”), and the information shall not be deemed to be incorporated by reference into any filing made by the Company under the Securities Act of 1933 or the Exchange Act.

The Compensation, Benefits and Stock Option Committee has reviewed the Compensation Discussion and Analysis contained in this Proxy Statement and discussed this disclosure with management. Based on this review and discussions with management, the Compensation, Benefits and Stock Option Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 for filing with the SEC.

February 27, 2018

Compensation, Benefits and
Stock Option Committee

Scott D. Urban, Chair
Jeffrey L. Berenson
James E. Craddock
Thomas J. Edelman
Molly K. Williamson



42

 
Compensation Tables

Compensation Tables

Summary Compensation Table

The following table sets forth summary information concerning the compensation earned by our Named Executive Officers during 2015, 2016 and 2017.
Name and
Principal Position
Year    
Salary
($)(1)
Bonus ($)(2)
Stock  
Awards  
($)(3)  
Option
Awards
($)(4)
Non-Equity
Incentive Plan
Compensation
($)(5)
Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings
($)(6)
All Other
Compensation
($)(7)
Total
($)
David L. Stover
Chairman, President and Chief Executive Officer
2017
994,231


5,758,478

2,583,326

1,560,000

78,105

287,908

11,262,048

2016
950,000


5,104,499

2,295,831

1,463,000

53,634

270,718

10,137,682

2015
950,000


2,411,406

2,250,000

1,306,300

39,270

296,178

7,253,154

Kenneth M. Fisher
Executive Vice President and Chief Financial Officer
2017
623,269


1,708,887

766,653

666,663

7,016

136,053

3,908,541

2016
610,000


1,689,725

759,995

728,642

4,899

124,997

3,918,258

2015
610,000


864,075

806,248

656,500

4,066

163,973

3,104,862

Gary W. Willingham
Executive Vice President, Operations
2017
553,077


1,708,887

766,653

609,618

159

137,575

3,775,969

2016
500,000


1,548,883

696,658

613,409

111

122,450

3,481,511

2015
500,000


683,257

637,504

517,600

92

145,832

2,484,285

Charles J. Rimer
Senior Vice President, Global Services
2017
447,117


965,889

433,324

416,456

7,681

135,669

2,406,136

 
 
 
 
 








John K. Elliott
Senior Vice President, Eastern Mediterranean
2017
433,846

100,000

985,428

399,988

370,755

3,294

70,085

2,363,396

 
 
 
 
 








Susan M. Cunningham(8)
Former Executive Vice President, EHSR & New Frontiers
2017
150,769


1,485,996

666,660


52,228

62,081

2,417,734

2016
560,000


1,408,103

633,331

529,034

49,238

120,900

3,300,606

2015
560,000


683,257

637,504

517,300

17,087

152,225

2,567,373

Arnold J. Johnson(8) Former Senior Vice President, General Counsel and Secretary
2017
453,558

50,000

1,188,780

533,330


81,465

165,250

2,472,383

2016
480,000


1,126,484

506,667

505,904

56,996

118,175

2,794,226

2015
480,000


502,338

468,745

445,800

47,375

144,346

2,088,604



43

 
Compensation Tables


(1)
Certain of our Named Executive Officers deferred a portion of their base salaries under our Deferred Compensation Plan:
 
Year
Percentage of
Salary Deferred
Amount
Deferred ($)
David L. Stover
2017
5%
49,712

2016
5%
47,500

2015
5%
47,500

Kenneth M. Fisher
2017
6%
37,396

2016
6%
36,600

2015
5%
30,500

Gary W. Willingham
2017
5%
27,654

2016
5%
25,000

2015
5%
25,000

Charles J. Rimer
2017
4%
17,885

Arnold J. Johnson
2017
4%
20,085

2016
3%
14,400

2015
3%
14,400


(2)
Reflects discretionary project based bonus. Mr. Elliott received a $100,000 cash bonus and Mr. Johnson received a $50,000 cash bonus for the completion of the Leviathan sanction.
(3)
Reflects the aggregate grant date fair value of restricted stock awarded under our 1992 Plan, which was computed in accordance with FASB ASC Topic 718. Restricted shares awarded will vest according to the following schedule: 40% after year one and 60% after year two for Mr. Stover and 80% after year one and 20% after year two for Mr. Fisher, Ms. Cunningham, Mr. Willingham and Mr. Johnson for 2016 grants. Phantom unit cash awards granted to non-CEO officers in 2016 will vest 100% after year two. Restricted awards granted in 2017 vest 40% after year one and 60% after year two. Performance restricted stock and related phantom units awarded will vest three years after the date of grant upon, and subject to a formula related to, our achievement of certain levels of total shareholder return relative to a pre-determined compensation peer group. 2017 stock award value for Mr. Elliott also includes $100,000 restricted stock award of 2,860 restricted shares that will vest 20% on first anniversary, 30% on second anniversary and 50% on third anniversary of award date of March 24, 2017. See the Grants of Plan-Based Awards table for information on restricted stock awarded in 2017.
(4)
Reflects the aggregate grant date fair value of non-qualified stock options granted under our 1992 Plan. Options represent the right to purchase shares of common stock at a price per share equal to fair market value on the date of grant. Options will vest ratably over three years in equal installments on the first, second and third anniversaries of the date of grant. Vesting of these options is not contingent upon the satisfaction of any performance goals, although none of the options may be exercised before the first anniversary (absent a change of control) or after the tenth anniversary of the date of grant. See the Grants of Plan-Based Awards table for information on stock options granted in 2017.
(5)
Reflects payments under our STIP based on the achievement of certain performance goals during the year indicated. STIP awards earned during the year indicated were paid or deferred in February of the following year.

44

 
Compensation Tables


(6)
Reflects during year indicated the above-market Deferred Compensation Plan earnings. The above-market earnings in 2017 are based on the difference between the plan crediting rate of 4.07% and 120% of the annual long-term Applicable Federal Rate as of September 2016 (2.28%); earnings in 2016 are based on the difference between the plan crediting rate of 4.49% and 120% of the annual long-term Applicable Federal Rate as of September 2015 (3.16%); and earnings in 2015 are based on the difference between the plan crediting rate of 4.72% and 120% of the annual long-term Applicable Federal Rate as of September 2014 (3.57%).
 
Year
Deferred Compensation
Above-Market Earnings ($)
David L. Stover
2017
78,105

2016
53,634

2015
39,270

Kenneth M. Fisher
2017
7,016

2016
4,899

2015
4,066

Gary W. Willingham
2017
159

2016
111

2015
92

Charles J. Rimer
2017
7,681

John K. Elliott
2017
3,294

Susan M. Cunningham
2017
52,228

2016
49,238

2015
17,087

Arnold J. Johnson
2017
81,465

2016
56,996

2015
47,375


(7)    All other compensation includes:
 
Year
401(k)
Matching
Contrib.
($)
401(k)
Retirement Savings
Contrib.
($)
Deferred
Comp. Plan Registrant Contrib.
($)(a)
401(k)
Transition
Contrib.
($)
Club
Dues
($)
Physical
Exam
($)
Retiree Medical Cash Payment
($)(b)
COLA ($)(c)
Vacation Pay Out ($)(d)
Accrued Dividends
($)(e)
David L. Stover
2017
16,200

19,800

198,800


9,512





43,596

2016
15,900

19,100

189,445


9,512

2,090





34,671

2015
15,900

19,100

189,445


9,512

2,150

36,000



24,071

Kenneth M. Fisher
2017
16,200

19,800

72,372


16,799

2,150




8,732

2016
15,900

19,100

71,245


11,923





6,829

2015
15,900

19,100

71,245


11,923


36,000



9,805

Gary W. Willingham
2017
16,200

19,800

92,923







8,652

2016
15,900

19,100

81,445







6,005

2015
15,900

19,100

81,445




22,500



6,887

Charles J. Rimer
2017
16,200

19,800

67,492





27,264


4,913

John K. Elliott
2017
16,200

19,800

28,446







5,639

Susan M. Cunningham
2017
10,484

17,152

2,119

8,364





23,962


2016
15,900

19,100

78,145



2,150




5,605

2015
15,900

19,100

78,145




31,500



7,580

Arnold J. Johnson
2017
16,200

19,800

80,692






48,558


2016
15,900

19,100

76,645



2,150




4,380

2015
15,900

19,100

76,645




27,000



5,701


45

 
Compensation Tables

(a)    The following amounts were credited to the NEO’s Non-Qualified Deferred Compensation Plan Account:
 
Year
Matching Contribution ($)
Retirement Savings Contribution ($)
Transition Contribution ($)
Total Deferred Compensation Plan Registrant Contributions
($)
David L. Stover
2017
43,454

95,692

59,654

198,800

2016
41,100

91,345

57,000

189,445

2015
41,100

91,345

57,000

189,445

Kenneth M. Fisher
2017
21,196

51,176


72,372

2016
20,700

50,545


71,245

2015
20,700

50,545


71,245

Gary W. Willingham
2017
16,985

42,753

33,185

92,923

2016
14,100

37,345

30,000

81,445

2015
14,100

37,345

30,000

81,445

Charles J. Rimer
2017
10,627

30,038

26,827

67,492

John K. Elliott
2017

28,446


28,446

Susan M. Cunningham
2017


2,119

2,119

2016

44,545

33,600

78,145

2015

44,545

33,600

78,145

Arnold J. Johnson
2017
13,927

36,638

30,127

80,692

2016
12,900

34,945

28,800

76,645

2015
12,900

34,945

28,800

76,645

(b)
In November 2014, we announced the termination of our pre-65 retiree medical insurance program. As part of the termination, active employees who would have been eligible for retiree medical benefits during the next 10 years were eligible to receive a one-time cash payment. Amounts in this column represent the one-time cash payment received by the Named Executive Officer.
(c)
Mr. Rimer receives a monthly cost of living adjustment (COLA) for his move from Texas to Denver, Colorado. The policy pays a monthly COLA: Year 1 - 10%; Year 2 - 8%; Year 3 - 6%; Year 4 - 4%; Year 5 - 2%; Year 6 - 0%. In 2017, he was in Year 3.
(d)
Due to Ms. Cunningham’s retirement and Mr. Johnson’s resignation, they received a vacation payout for unused vacation for 2017.
(e)
Dividends are credited on unvested restricted awards.

(8)
Ms. Cunningham retired on March 24, 2017 and Mr. Johnson resigned on November 12, 2017; therefore, there are no values associated with the actual non-equity incentive compensation earned for 2017.

Salary as a Percentage of Total Compensation

As reflected in the Summary Compensation Table above, the salary received by each of our Named Executive Officers as a percentage of their respective total compensation during the year indicated was as follows:
 
Percentage of Total Compensation
2017
2016
2015
David L. Stover
8.8%
9.4%
13.1%
Kenneth M. Fisher
15.9%
15.6%
19.6%
Gary W. Willingham
14.6%
14.4%