All of our directors are elected to a single year term. As a result, the current term of all our directors expires at the 2020 Annual Meeting. Based on the recommendation received from the Governance and Nominating Committee, our Board of Directors proposes that each of the nominees, all of whom are currently serving as directors, be elected for a new term expiring at the 2021 annual meeting or when their successors are duly elected and qualified. Each of the nominees has agreed to serve if elected. If any one of them becomes unavailable to serve as a director, our Board may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by our Board. Our Board does not presently contemplate that any of the nominees will become unavailable for election. Mr. Anthony Dub, who served as a director since 1995, is not standing for re-election. The Company and our directors extend their sincere appreciation for his dedicated service as a member of Range’s Board.
Because it is an uncontested election of directors, each nominee must receive more votes “for” the nominee than votes cast “against” the nominee in order for the nominee to be elected to the Board of Directors. Under our by-laws, in the event a candidate for the Board does not receive more “for” votes than votes “against,” the candidate’s resignation from the Board will be considered by the Governance and Nominating Committee. A properly executed proxy marked “Abstain” with respect to the election of one or more of our directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether a quorum is present. Uninstructed shares are not entitled to vote on this proposal; therefore, broker non-votes will not affect the outcome of this proposal. Proxies cannot be voted for a greater number of persons than the number of nominees named. The reasons described at the end of each biographical summary for each nominee that discusses the skills, qualifications and attributes of such candidates, led the Governance and Nominating Committee to recommend such persons for election to the Board. In the event of a contested election of directors, a nominee would be required to receive a plurality of the votes of the holders of shares of our common stock present in person or by proxy and entitled to vote at the meeting. Under our by-laws, an “uncontested election” is an election in which the number of nominees for director is not greater than the number to be elected and a “contested election” is an election in which the number of nominees for director is greater than the number to be elected.
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The Board of Directors recommends a vote FOR all of the nominees
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Our Corporate Governance Guidelines contain criteria that apply to nominees recommended by the Governance and Nominating Committee for positions on our Board. Under these criteria, members of our Board should:
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have high professional and personal ethics and values;
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expertise and perspective needed to govern the business and support senior management;
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commit to enhancing stockholder value;
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interest and enthusiasm in Range and a commitment to become involved in its future;
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have sufficient time to carry out their duties and to provide insight and practical wisdom based on their experience and knowledge;
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ability to constructively participate in discussions, sound business judgment and sufficiently broad perspective to make meaningful contributions; and
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represent the interests of all stockholders.
Our Board prefers to have a reasonable number of directors who have experience within the oil and gas industry. Our Board has also adopted a policy with regard to the consideration of diversity in the selection of candidates for the Board of Directors and that policy has been included in the Governance and Nominating Committee’s charter.
In accordance with applicable laws, regulations, our Corporate Governance Principles and the rules of the New York Stock Exchange (“NYSE”), the Board must affirmatively determine the independence of each director and director nominee. The Governance and Nominating Committee considers all relevant facts and circumstances including, without limitation, transactions during the previous year between Range and the director directly, immediate family members of the director, organizations with which the director is affiliated, and the frequency and dollar amounts associated with these transactions. The Committee then makes a recommendation to the Board with respect to the independence of each director and director nominee. Based on these considerations, the Board determined the following directors are independent:
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Brenda A. Cline
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Greg G. Maxwell
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Margaret K. Dorman
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Steffen E. Palko
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James M. Funk
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Jeffrey L. Ventura*
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Steve D. Gray
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* As CEO of the Company, Mr. Ventura is not independent.
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BRENDA A. CLINE
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Independent Director
Age: 59
Director Since: 2015
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Board Committees:
• Audit (Chair)
• Governance
and Nominating
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Ms. Cline became a director in July 2015. Since 1993, Ms. Cline has served as Chief Financial Officer, Treasurer, and Secretary of the Kimbell Art Foundation, a private operating foundation that holds significant investments in oil and gas interests and owns and operates the Kimbell Art Museum, Fort Worth, Texas. From 1993 until 2013, Ms. Cline also served as a contract author for Thomson Reuters, Fort Worth, Texas. Before 1993, Ms. Cline was a Senior Manager with Ernst & Young LLP. Ms. Cline also serves on the board of certain non-profit entities including the Board of Trustees of Texas Christian University and the Pension Fund of the Christian Church. Ms. Cline is a certified public accountant. She received her Bachelor of Business Administration, Accounting degree, summa cum laude, from Texas Christian University.
Current Public Company Directorships: Tyler Technologies; American Beacon Funds; Cushing Funds
Public Company Directorships Within the Past Five Years: None
Key Attributes, Skills and Experience
Ms. Cline has extensive experience in a number of areas including accounting and finance. She serves as chair of the Company’s Audit Committee. Her experience as a current chief financial officer, her public accounting experience and her work as an independent board member are the primary factors in the Board having elected Ms. Cline as a Director of the Company and for the Governance and Nominating Committee’s recommendation that she be nominated for re-election to the Board.
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MARGARET K. DORMAN
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Independent Director
Age: 56
Director Since: 2019
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Board Committees:
• Audit
• Governance
and Nominating
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Margaret K. Dorman became a director in 2019, Ms. Dorman has 30 years of experience in the energy industry, largely focused in the oilfield service and equipment sector. In 2009, she retired as the Executive Vice President, Chief Financial Officer and Treasurer of Smith International, Inc. (now part of Schlumberger Limited) after spending more than a decade in that role. Previously, she held management positions at Landmark Graphics, prior to its acquisition by Halliburton Corporation, and Ernst & Young, LLP. Ms. Dorman received a Bachelor of Arts degree in Economics-Business from Hendrix College and is a certified public accountant.
Current Public Company Directorships: Equitrans Midstream Corporation
Public Company Directorships Within the Past Five Years: EQT Corporation
Key Attributes, Skills and Experience
Ms. Dorman has over ten years of executive level management in the energy industry. She was elected to the Board upon mutual approval of the Company and Sailing Stone Capital Partners, LLC in accordance with the Voting and Nomination Support Agreement dated July 9, 2018. Ms. Dorman brings a variety of accounting, financial and executive experience and perspective to the Board. Ms. Dorman's background and experience led the Board to select and appoint Ms. Dorman as a director in 2019 and for the Governance and Nominating Committee to nominate her for re-election to the Board.
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JAMES M. FUNK
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Independent Director
Age: 70
Director Since: 2008
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Board Committees:
• Governance and Nominating (Chair)
• Compensation
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Mr. Funk is an independent consultant and producer with over 40 years of experience in the energy industry. Mr. Funk served as Senior Vice President of Equitable Resources and President of Equitable Production Co. from June 2000 until December 2003. Previously, Mr. Funk was employed by Shell Oil Company for 23 years in senior management and technical positions. Mr. Funk has previously served on the boards of Westport Resources (2000 to 2004), and Matador Resources Company (2003 to 2008). Mr. Funk received a B.A. degree in Geology from Wittenberg University, a M.S. in Geology from the University of Connecticut, and a PhD in Geology from the University of Kansas. Mr. Funk is a Certified Petroleum Geologist.
Current Public Company Directorships: Superior Energy Services, Inc.
Public Company Directorships Within the Past Five Years: None
Key Attributes, Skills and Experience
Mr. Funk was selected to serve as a Director based on his strong technical experience in geology as well as his knowledge of the Appalachian basin where all of the Company’s current exploration is being conducted. He has significant technical expertise in unconventional oil and gas resources and knowledge of oil and gas exploration and development generally as well as reserves determination and reporting in particular as a result of his service at Shell and Equitable Production, one of the leading companies in the Appalachian basin, where he served as President. Mr. Funk has knowledge from his service with Equitable regarding the regulatory, political and environmental arenas in Pennsylvania, where all of the Company’s exploration is currently occurring, and he has a strong background in compensation policies and practices of oil and gas companies, including establishing energy industry-specific performance based compensation metrics. All of these skills and attributes were considered by the Board in originally selecting Mr. Funk to join the Board in December 2008 and led the Governance and Nominating Committee to nominate him for re-election to the Board.
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STEVE D. GRAY
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Independent Director
Age: 60
Director Since: 2018
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Board Committees:
• Compensation
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Steve Gray became a director in 2018. Mr. Gray served as a founder, director and Chief Executive Officer of RSP Permian Inc. from its inception in 2010 to 2018. When RSP Permian merged with Concho Resources Inc., he joined Concho’s Board of Directors and currently serves on the Reserves Committee. Prior to forming RSP Permian, Mr. Gray founded several successful oil and gas ventures spanning nearly 20 years in partnerships with Natural Gas Partners, an Irving, Texas based private equity company. Prior to going into business for himself, Mr. Gray spent 11 years employed in the oil and gas industry in various capacities as a petroleum engineer. Mr. Gray is on the Board of Directors of the Texas Tech Foundation. In addition, he is a member of the Petroleum Engineering Academy and serves on the Dean’s Advisory Council for the College of Engineering at Texas Tech University – the same institution from which he earned a Bachelor of Science in Petroleum Engineering. He is also a member of the Executive Advisory Council of the George W. Bush Presidential Center in Dallas, Texas.
Current Public Company Directorships: Concho Resources, Inc.
Public Company Directorships Within the Past Five Years: RSP Permian Inc.
Key Attributes, Skills and Experience
Mr. Gray was selected to serve as a Director based on his extensive experience as an oil and gas business executive who has over 30 years of experience in the industry. He was elected to the Board upon mutual approval of the Company and SailingStone Capital Partners, LLC in accordance with the Voting and Nomination Support Agreement dated July 9, 2018. Mr. Gray has held leadership positions in public oil and gas companies, including as CEO, which provides him invaluable board skills and experience. Mr. Gray’s background and experience led the Board to select and appoint Mr. Gray as a director in 2018 and for the Governance and Nominating Committee to nominate him for re-election to the Board.
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GREG G. MAXWELL
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Chairman of the Board
Age: 63
Director Since: 2015
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Board Committees:
• Audit
• Dividend (Chair)
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Mr. Maxwell became a director in September 2015. Mr. Maxwell served as executive vice president, finance, and chief financial officer for Phillips 66, a diversified energy manufacturing and logistics company until his retirement on December 31, 2015. Mr. Maxwell had over 37 years of experience in various financial roles within the petrochemical and oil and gas industries. Mr. Maxwell served as senior vice president, chief financial officer and controller for Chevron Phillips Chemical Company from 2003 until joining Phillips 66 in 2012. He joined Phillips Petroleum Company in 1978 and held various positions within the comptroller’s group including the corporate planning and development group, the corporate treasury department and downstream business units. He is a certified public accountant and a certified internal auditor. He earned a Bachelor of Accountancy degree from New Mexico State University in 1978.
Current Public Company Directorships: Jeld – Wen Holding, Inc.
Public Company Directorships Within the Past Five Years: DCP Midstream Partners; Phillips 66 Partners LP
Key Attributes, Skills and Experience
Mr. Maxwell’s background includes a significant amount of experience in public company finance and financial reporting and, as a result, he has significant experience with SEC filings required of public companies in the energy business. His wide and varied experience in the energy business, including Information Technology, have provided him with an understanding and insight concerning the risks faced by oil and gas companies. He currently serves as the Chairman of the Board. Mr. Maxwell’s corporate finance, accounting and financial reporting experience led the Governance and Nominating Committee to nominate him for re-election to the Board.
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STEFFEN E. PALKO
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Independent Director
Age: 69
Director Since: 2016
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Board Committees:
• Compensation (Chair)
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Mr. Palko was a co-founder of XTO Energy Inc., serving as President and Vice-Chairman from 1986 to 2005. XTO became the largest independent natural gas producer in the United States in 2009. Previously, Mr. Palko served as a trustee for the Fort Worth ISD school board, and assumed numerous educational leadership roles at the state and national levels, including chair of the National Assessment of Vocational Education for the United States Department of Education and Commissioner for the U.S. Department of Labor SCANS committee. Mr. Palko earned his Doctorate in Educational Leadership from Texas Christian University where he currently serves as an Associate Professor. He earned his Bachelor of Science in Electrical Engineering from the University of Texas at El Paso.
Current Public Company Directorships: None
Public Company Directorships Within the Past Five Years: None
Key Attributes, Skills and Experience
Mr. Palko was elected to the Board upon the mutual approval of the Company and SailingStone Capital Partners, LLC in accordance with the Voting and Nomination Support Agreement dated August 7, 2016 by and between the Company and SailingStone. Mr. Palko’s background and experience in the exploration and production business including his extensive technical background and his experience with XTO Energy led the Board to select and appoint Mr. Palko as a director and for the Governance and Nominating Committee to nominate him for re-election to the Board.
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JEFFREY L. VENTURA
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Age: 62
Director Since: 2005
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Board Committees:
• Dividend
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Mr. Ventura is the Company’s Chief Executive Officer and President, having joined Range in 2003 as Chief Operating Officer. Mr. Ventura was named President effective May, 2008, and Chief Executive Officer in January 2012. Previously, Mr. Ventura served as President and Chief Operating Officer of Matador Petroleum Corporation, which he joined in 1997. Prior to his service at Matador, Mr. Ventura spent eight years at Maxus Energy Corporation where he managed various engineering, exploration and development operations and was responsible for coordination of engineering technology. Previously, Mr. Ventura was with Tenneco Oil Exploration and Production, where he held various engineering and operating positions. Mr. Ventura earned a Bachelor of Science degree in Petroleum and Natural Gas Engineering from the Pennsylvania State University.
Current Public Company Directorships: None
Public Company Directorships Within the Past Five Years: None
Key Attributes, Skills and Experience
Mr. Ventura is a highly experienced oil and gas business executive who has a very deep technical understanding of the development of oil and gas reserves, particularly oil and gas reserves from unconventional resources. Additionally, Mr. Ventura has significant experience in the evaluation and reporting of oil and gas reserves, analysis of producing properties considered for divestiture and management and development of technical human resources. The Governance and Nominating Committee considers having the benefit of the technical management perspective provided to the Board from Mr. Ventura, a Pittsburgh native, highly desirable and beneficial to the long term growth and development of the Company because its exploration and development strategies, especially in the Marcellus Shale play, are important to stockholder value. The Governance and Nominating Committee also believes having the point of view of the Chief Executive Officer represented on the Board is in the best interest of the stockholders and therefore, the Governance and Nominating Committee nominated Mr. Ventura as a director for re-election to the Board.
The policy of our Governance and Nominating Committee is to consider stockholder nominations for director candidates as described below under “Identifying and Evaluating Board Nominees for Directors.” In evaluating such nominations and in evaluating the composition of the Board, our Governance and Nominating Committee seeks to achieve a balance of knowledge, experience and capability on our Board and to address the membership criteria set forth above under “Director Qualifications” including diversity. Any stockholder nominations proposed for consideration by our Governance and Nominating Committee should include the nominee’s name and qualifications for Board of Directors membership, meet the requirements set forth in our by-laws and should be addressed to: Corporate Secretary, Range Resources Corporation, 100 Throckmorton Street, Suite 1200, Fort Worth, Texas 76102.
Our Governance and Nominating Committee uses a variety of avenues to identify and evaluate director nominees. The Committee regularly assesses the appropriate size of our Board and whether any vacancies are expected due to retirement or otherwise. If vacancies are anticipated, or otherwise arise, our Governance and Nominating Committee considers various potential candidates for the Board. Candidates may come to the attention of the Committee through current Board members, stockholders or other persons. Candidates may be evaluated at regular or special meetings of the Committee and may be considered at any point during the year.
The Board ensures refreshment and continued effectiveness through evaluation, nomination and other policies, processes and practices. For example:
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The Governance and Nominating Committee annually reviews with the Board the qualifications for Board members and the composition of the Board as a whole.
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The Governance and Nominating Committee annually reviews each director's continuation on the Board and makes recommendations to the full Board.
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Each committee member performs an annual self-assessment and the Governance and Nominating Committee oversees an annual self-assessment of the full Board.
The Committee also considers any stockholder nominations for candidates for our Board. Following verification of the stockholder status of persons proposing candidates, recommendations are provided to and considered by our Governance and Nominating Committee at a regularly scheduled meeting, which is generally the first or second meeting before the issuance of the proxy statement for our annual meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials are forwarded to our Governance and Nominating Committee. Our Governance and Nominating Committee also reviews materials provided by other parties in connection with a nominee who is not
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proposed by a stockholder. In evaluating such nominations, our Governance and Nominating Committee seeks to achieve a balance of knowledge, experience and capability on our Board of Directors and evaluates the experience, skills, abilities and qualifications of each candidate and considers the diversity of the current members of the Board. Our Governance and Nominating Committee has in the past used a paid third-party to identify potential directors and if it does engage such third party, it is committed to having any such third party seek candidates from both traditional and non-traditional candidate pools, regardless of gender, ethnicity or national origin, as part of the Board’s commitment to consideration of diversity as described in the Company’s Corporate Governance Guidelines and the Committee’s charter. The Governance and Nominating Committee annually assesses the effectiveness of the Company’s diversity policy in connection with the selection of individual candidates for election or re-election to the Board.
In response to a stockholder proposal submitted to a vote of the Company’s stockholders in May 2015, the Company’s Board of Directors adopted provisions of the Company’s By-Laws to allow a stockholder or group of stockholders that meet certain criteria and requirements to nominate candidates for election to the Board and have such persons included in the Company’s proxy statement. The basic requirements to be met in order to submit a candidate for election to the Board utilizing proxy access are that a stockholder or group of stockholders comprised of no more than 20 unaffiliated stockholders must have owned at least 3% of the outstanding common stock of the Company for at least 3 years in order to submit a nominee. The maximum number of nominees is 20% of the Board or 2, whichever is greater. If you wish to utilize the Company’s proxy access process, you must submit the information required under the By-Laws to the Company not less than one hundred and twenty (120) days nor more than one hundred and fifty (150) days prior to the first anniversary of the date that the Company first distributed its proxy statement to stockholders for the previous year’s Annual Meeting (i.e. April 3, 2020). Copies of the Company’s By-laws are available on the Company’s website at www.rangeresources.com or upon request addressed to the Company’s Corporate Secretary. Any questions regarding the Company’s proxy access procedures may be directed to the Company’s Corporate Secretary.
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CORPORATE GOVERNANCE
We are committed to having sound and strong corporate governance principles. We believe having such principles and using them in the daily conduct of our business is essential to running our business efficiently and to maintaining our integrity in the marketplace and among the Company’s various constituents, including the public and you, our stockholders. The Board continually reviews evolving best practices in governance and seeks input from Range’s stockholders through our ongoing stockholder engagement program. Our website contains a number of documents, available free of charge, that are helpful to your understanding of our corporate governance practices, including:
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Corporate Governance Guidelines;
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Certificate of Incorporation;
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By-laws (including proxy access);
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Board Committee Charters;
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Code of Business Conduct and Ethics and information about how to report concerns;
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Background and Experience of our Board;
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Background and Experience of Senior Management; and
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Stock ownership guidelines.
A summary of key governance highlights are noted below:
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Director retirement age of 75
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Corporate governance guidelines
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Ability of stockholders to act by written consent
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Stockholders have the right to proxy access
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Ability of stockholders to call special meetings
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Board and Audit Committee risk oversight
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Majority voting for directors
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Compensation risk assessment
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Annual election of all directors
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Review of related party transactions
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Diverse board skills and experience
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Non-hedging and pledging policies
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Annual board, committee and director evaluations
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Clawback policy
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Stockholder outreach to 66% of outstanding shares before the 2020 Annual Meeting
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Management and director stock ownership guidelines
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Code of business conduct and ethics
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Executive sessions of independent directors held at each regularly scheduled Board Meeting.
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Chairman and CEO Roles. At different times in the Company’s history, the positions of chairman and chief executive officer have been split or combined as circumstances have warranted. The Board recognizes that no single leadership structure is right for all companies at all times. Accordingly, the Board may elect as Chairman any member of the Board, including the CEO. In July 2018, the Board elected Mr. Greg Maxwell, an independent Board member, to be Chairman of the Board in accordance with the Voting and Nomination Support Agreement between the Company and Sailingstone Capital Partners, LLC dated July 9, 2018. The Chairman of the Board presides at the Board meetings and meetings of stockholders and his responsibilities include, among other things:
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Call meetings of the independent directors and chair executive sessions of the Board at which no members of management are present;
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Approve the agendas for Board meetings;
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Propose a schedule of Board meetings and the information to be provided by management for Board consideration;
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Recommend the retention of consultants who report directly to the Board;
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Assist in assuring compliance with the Corporate Governance Guidelines and recommend revisions to the policies;
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Evaluate, along with the other independent directors, the performance of the Chief Executive Officer;
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Consult with Board members as to recommendations on membership and chairpersons of Board committees and discuss recommendations with the Corporate Governance and Nominating Committee;
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Communicate the views of the independent directors and the Board committees with respect to objectives set for management by the Board; and
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Serve as a liaison between the Board and Range’s stockholders.
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Attendance. The Board of Directors met twelve times in 2019. Each director attended at least 75% of the meetings held by the Board and the committees on which he or she served during the year. Directors are expected to attend all meetings of stockholders, the Board and the committees which they serve. All of our directors attended the 2019 Annual Meeting of Stockholders.
Executive Sessions of Non-Employee Directors. Non-employee directors ordinarily meet in executive session without management present at each regularly scheduled Board meetings and may meet at other times at the discretion of the Chairman or at the request of any non-employee director.
Review and Approval of Related Person Transactions. Our Governance and Nominating Committee Charter includes a provision regarding the review and approval of related person transactions. Our Governance and Nominating Committee is charged with reviewing transactions which would require disclosure under our filings under the Exchange Act, and related rules, as a related person transaction, and making a recommendation to our Board regarding the initial authorization or ratification of any such transaction. If our Board of Directors considers ratification of a related person transaction and determines not to ratify the transaction, management is required to make all reasonable efforts to cancel or annul such transaction.
In determining whether or not to recommend the approval or ratification of a related person transaction, our Governance and Nominating Committee will consider the relevant facts and circumstances including, if applicable:
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whether there is an appropriate business justification for the transaction;
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the benefits that accrue to us as a result of the transaction;
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the terms available to unrelated third parties entering into similar transactions;
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the impact of the transaction on a director’s independence (in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer);
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the availability of other sources for comparable products or services;
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whether it is a single transaction or a series of ongoing, related transactions; and
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whether entering into the transaction would be consistent with our Code of Business Conduct and Ethics.
No related person transaction in an amount exceeding $120,000 occurred during 2019.
Code of Business Conduct and Ethics. We have a written Code of Business Conduct and Ethics which is applicable to all of our directors and employees including our principal executive officer and our principal financial officer. We intend to post amendments to and waivers, if any, from our code of ethics (to the extent applicable to our principal executive and financial officers and directors) on our website at www.rangeresources.com under the section titled “Corporate Governance.” The latest change to our Code of Business Conduct and Ethics was posted February 20, 2013. The Code of Business Conduct and Ethics was reviewed by our Board of Directors and our Governance and Nominating Committee in 2019.
A summary of the allocation of general risk oversight function among management, the Board and its Committees is as follows:
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The Board’s role in risk oversight recognizes the multifaceted nature of risk management. It is a control and compliance function, but it also involves strategic considerations in normal business decisions, finance, security, cybersecurity, safety, health and environmental concerns.
The Board has empowered its Committees with risk oversight responsibilities. However, the Board retains the oversight of environmental, health and safety issues and any related social concerns rather than delegating that responsibility to a committee of the Board. Each of the Committees meets regularly with management to review, as appropriate, compliance with existing policies and procedures and to discuss change or improvement that may be required or desirable.
The Audit Committee plays a central role in the Board’s oversight of internal risks, by evaluating the Company’s financial reporting, by supervising the internal audit function, interfacing with the independent auditor, regularly communicating with the Chief Financial Officer and other members of management, monitoring the Company’s compliance programs, including the Company’s third party anonymous hotline for the notification of compliance concerns, supervising the investigation of any alleged financial fraud, monitoring the Company’s internal risk forums and the Company’s enterprise risk management program (the responsibility for which the Audit Committee shares with the Board). The Compensation Committee considers the possible risk implications of the Company’s various compensation programs and plans and monitors the elements of such compensation programs so that risk in the behavior of the employees of the Company, including our NEOs, is considered in such policies and programs and do not incentivize excess risk taking. The Governance and Nominating Committee is responsible for the oversight of the Company’s governance processes and monitors those processes, including the Company’s Code of Business Conduct and Business Ethics, compliance function, Board Committee Charters and Board annual evaluations, to evaluate their effectiveness in avoiding the creation of risk to the Company and providing for proper and effective governance of the Company.
While the Board and its committees oversee risk management, Range management is responsible for managing risk. We have a robust enterprise risk management process for identifying, assessing and managing risk and monitoring risk mitigation strategies. Under the leadership of our Principal Accounting Officer, a committee of officers and senior managers work across the business to manage each enterprise level risk and to identify emerging risks.
Our commitment to acting responsibly and ethically guides our work each day, influencing every aspect of our operations from the boardroom to the well pad. We are committed to operating in a sustainable manner and proactively working with the communities where we operate to ensure that our team can deliver long-term, sustainable value to our stockholders, business partners and community members, all while protecting the environment and creating economic opportunity.
Range has maintained a constructive dialogue over the past years with many of our stockholders and other stakeholders as we continuously seek to be responsive to those who are interested in matters of corporate responsibility, which includes our public health and safety, as well as environmental stewardship and sustainability performance.
Our corporate sustainability ("CS") strategy is guided by the following five key tenets aimed at delivering long-term, sustainable value to our stockholders, business partners and community members:
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Safe & Responsible Operations: We uphold the highest standards when it comes to operating in a safe, compliant and ethical manner. Our goal is simple: Provide a safe workplace with zero safety incidents and seek to find ways to achieve net zero emissions. We work every day to achieve this critical business goal.
2.
Environmental Stewardship: We are committed stewards of the environment, leveraging new technologies to develop clean-burning natural gas to contribute to broader emission reduction goals and incorporating sustainable practices into our operations. We strive to meet or exceed both expectations and regulatory requirements and seek improvement to guidelines and procedures when we feel the standards are not high enough.
3.
Community Engagement: Our commitment to fostering thriving communities begins within the walls of our Company, starting with the safety and well-being of our employees and extending to the communities where we live, work and support.
4.
Economic Impact: Our resource development is a partnership, from creating jobs, partnering with local contractors, generating royalties for lessors, to providing significant tax revenues. Range works hard every day to create economic opportunities for our business regions, community members and stockholders.
5.
Corporate Governance: Range and its Board are committed to implementing sound, transparent corporate governance principles that strengthen confidence and trust with our stakeholders.
Our Board feels strongly that executing on these key tenets is important to our long-term sustainable growth. As a result, in 2020, 20% of our executive officers’ respective Annual Incentive Awards is tied to goals in the area of CS.
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Safe Responsible Operations
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Range upholds the highest standards when it comes to operating in a safe, compliant and ethical manner. We ensure each and every one of our employees understands the important roles they play in making safety one of our core values, a top priority.
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Range is open and proactive in our efforts to mitigate safety incidents and impacts. To measure and continuously improve the Company’s safety and environmental performance, Range uses a data-driven approach to track our progress against our broader safety goals. Range also compares this statistical data against OSHA’s criteria for determining rates for injuries and incidents that result in lost time or restricted duty. In addition, we evaluate our performance against industry peers and other industrial groups, ensuring we are constantly striving for top tier safety performance.
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The company maintains a robust outreach team that works with a variety of stakeholders, including citizens, nongovernmental organizations, local and state government officials, area school districts, and first responders to promote a safe operating environment in the communities where we work.
Environmental Stewardship
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As a dedicated steward of the environment, we focus on incorporating leading sustainability practices into every aspect of our business. Our commitment starts at the top of our organization, with strong board-level engagement and oversight, as well as dedicated reporting metrics on critical environmental, social and governance (ESG) driven matters across the business.
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Environmental Compliance is integral to everything we do. We have a team of experts who are responsible for guiding and overseeing the most basic to most complex operating functions of our business. This ensures we are constantly advancing the standards of environmental performance for ourselves and the industry.
•
At Range, we have a commitment to sustainable operations that keep our people and environment safe. This includes our goal of working toward achieving zero emissions across our operations through innovative emissions-reducing technologies and enhanced emission capture and control on site. Our commitment to water recycling and implementation of above-ground water storage and transfer facilities has reduced traffic and associated emissions with our operations, providing a positive impact on our air, water and community alike.
•
By returning to existing locations and expanding lateral well length, Range has been able to significantly reduce impacted surface use.
Community Engagement
•
Range has established civic engagement programs that are designed to have long-term positive impacts on organizations within our core operating footprint. The Range corporate partnership platform takes a long-term perspective and aims to build relationships with those who seek
RANGE
RESOURCES CORPORATION - 2020 Proxy Statement 21
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to enhance the standard of living in our community. This platform support through direct monetary investments, collaborations with our non-profit partners and a robust employee volunteerism program.
Corporate Governance
•
Key elements of Range’s corporate governance include Board succession planning, executive and independent leadership on the Board, Board self-evaluations, Board oversight of corporate responsibility and risk management processes and company-wide compliance with our Code of Business Conduct and Ethics and other company policies.
•
Other corporate governance highlights are set forth on page 18 of this Proxy Statement.
Economic Impact
We value local business partnerships and we are proud of our strong record of working with local businesses across our area of operation. We track our economic impact on our communities to ensure we continue to improve and build on opportunities to enhance the well-being and property of these local communities.
In second quarter of 2019, we published our Corporate Sustainability Report. The report, which can be found on our website under the “Responsibility” section, seeks to provide a comprehensive resource for interested parties. Below is a list of highlights showing achievements, goals and the positive impact we had on our communities:
•
Range actively works toward a goal of zero emissions across our operations, and we are proud of the meaningful progress that we continue to make towards this goal.
•
We have pioneered an industry leading water management and recycling program, as well as a water sharing program with other operators that helps to reduce well costs and fresh water consumption. The combination of these programs has allowed Range to effectively reuse over 150% of its own water production which includes other operators as well.
•
When it comes to safety, our goal is simple: zero safety incidents. Range’s corporate safety mission guides our employees to ensure they are upholding the highest standards of safety while on the job.
Our audit committee, compensation committee and governance and nominating committee are each composed of independent directors. The primary responsibilities of the committees are described below. From time to time, the Board delegates additional duties to the standing committees.
|
|
|
|
Audit Committee
|
Meetings in 2019: 6*
|
|
Members: Brenda A. Cline (Chair), Margaret K. Dorman, Anthony V. Dub**, Greg G. Maxwell
|
|
Primary Responsibilities
|
•
prepares the Audit Committee report for inclusion in the annual proxy statement;
•
annually reviews our Audit Committee charter and our Audit Committee’s performance;
•
appoints, evaluates and determines the compensation of our independent registered public accounting firm;
•
reviews and approves the scope of the annual audit; the audit fee and the financial statements;
•
reviews our disclosure controls and procedures;
•
supervises our internal audit functions;
•
reviews our corporate policies with respect to financial information and earnings guidance;
•
oversees any investigations into complaints concerning financial matters; and
•
reviews any risks that may have a significant impact on our financial statements.
The Audit Committee members are independent within the meaning of the listing standards of the NYSE, SEC regulations and our Corporate Governance Guidelines and are financially literate. The Board has determined that Ms. Cline is the “audit committee financial expert” within the meaning of the SEC’s regulations. In addition, the other members of the committee, Ms. Dorman and Mr. Maxwell also qualify as a “financial expert” under the applicable standards.
*
Including two in person meetings. The Committee met with the Company’s internal audit and independent auditor at all six meetings, with and without management present.
**
Through current board term.
|
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RESOURCES CORPORATION - 2020 Proxy Statement 22
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|
|
|
|
Compensation Committee
|
Meetings in 2019: 6
|
|
Members: Steffen E. Palko (Chair), Anthony V. Dub*, James M. Funk, Steve D. Gray
|
|
Primary Responsibilities
|
•
discharges our Board of Director’s responsibilities to compensation of our executives and directors;
•
produces an annual report on executive compensation for inclusion in our proxy statement;
•
provides oversight of our compensation structure, including our equity compensation plans and benefits programs;
•
reviews and provides guidance on our human resource programs;
•
provides guidance on succession planning for our senior management;
•
retains and approves the terms of the retention of any compensation consultants and other compensation experts;
•
evaluates human resources and compensation strategies and oversees our total incentive compensation program including considering the risks associated with such programs;
•
reviews and approves objectives relevant to executive officer compensation and evaluates performance;
•
determines the compensation of executive officers in accordance with those objectives;
•
approves and amends our incentive compensation and equity award or share-based payment program (subject to stockholder approval, if required);
•
recommends director compensation to our Board of Directors;
•
monitors director and executive stock ownership; and
•
annually evaluates its performance and its charter.
•
All of the members of our Compensation Committee are independent within the meaning of the listing standards of the NYSE, SEC regulations and our Corporate Governance Guidelines. The report of our Compensation Committee is included in this Proxy Statement. The Compensation Committee’s Charter was prepared by the Compensation Committee and approved by the Governance and Nominating Committee and the Board of Directors.
*
Through current board term.
|
|
|
|
|
Governance and Nominating Committee
|
Meetings in 2019: 3
|
|
Members: James M. Funk (Chair), Brenda A. Cline, Margaret K. Dorman
|
|
Primary Responsibilities
|
•
identifies individuals qualified to become directors (including receiving and considering stockholder suggested nominees) consistent with criteria approved by our Board of Directors;
•
oversees the organization of our Board of Directors to discharge our Board of Directors’ duties and responsibilities properly and efficiently;
•
reviews, when necessary, any potential related person transaction of our Company;
•
identifies best practices and recommends corporate governance principles to our Board, including giving proper attention and making effective responses to stockholder concerns regarding corporate governance;
•
annually assesses the size and composition of our Board of Directors including the diversity of the Board;
•
develops membership qualifications for our Board committees;
•
determines director independence;
•
monitors compliance with our Board of Directors and our Board committee membership criteria;
•
annually reviews and recommends directors for election to the Board;
•
reviews governance-related stockholder proposals and recommends our Board of Directors’ response; and
•
oversees the evaluation of our Board and management, including succession.
All of the members of the Governance and Nominating Committee are independent within the meaning of the listing standard of the NYSE, SEC regulations and our Corporate Governance Guidelines.
|
|
|
|
|
Dividend Committee
|
|
|
Members: Greg G. Maxwell (Chair), Jeffrey L. Ventura
|
|
Primary Responsibilities
|
•
The Dividend Committee is authorized to declare and set the record and payment dates of dividends in accordance with Board of Directors’ directives and established dividend policy.
|
RANGE
RESOURCES CORPORATION - 2020 Proxy Statement 23
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ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
As we do each year, and as required by Section 14A of the Exchange Act, we provide our stockholders with the opportunity to vote to approve, on an advisory basis, the compensation of our NEOs as disclosed in the Proxy Statement in accordance with the SEC’s compensation disclosure rules. The executive compensation program is described in the Compensation Discussion and Analysis section beginning on page 29 and the other tables and narrative disclosures in this Proxy Statement.
The executive compensation program for the NEOs includes many best-practice features that are intended to enhance the alignment of compensation with the interests of Range’s stockholders:
|
What We Do
|
|
|
Seek stockholder engagement and incorporate feedback
|
|
|
Maintain robust stock ownership goals for senior executives
|
|
|
Exercise negative discretion with declining Company performance
|
|
|
Engage an independent compensation consultant to advise the committee
|
|
|
Majority of NEO compensation is at risk and performance based, which links pay to performance
|
|
|
Offer minimal perquisites
|
|
|
All long-term incentive awards are payable in stock
|
|
|
Dedicate time to executive succession planning and leadership development each year
|
|
|
Financial performance metrics underlying long-term incentive awards are objective and aligned with stockholders’ interests
|
|
|
Compensation Peer Group reviewed annually
|
|
|
Perform annual say-on-pay advisory vote for stockholders
|
|
|
|
Executive Compensation Program Objectives
In 2019, the Compensation Committee continued to strive to develop a compensation program not only to be consistent with industry practice but also to attract and retain outstanding executives by providing incentives to reward them for superior performance that supports Range’s long-term strategic objectives.
The 2019 executive compensation program is expected to:
•
Be highly aligned with stockholder interests;
•
Preserve performance accountability through commodity cycles;
•
Build long-term share ownership;
•
Simplify the executive compensation program; and
•
Match or exceed prevailing governance standards for performance-based compensation.
We are therefore asking stockholders to vote on the following resolution:
RESOLVED, that the stockholders approve the compensation of the NEOs as disclosed in this Proxy Statement pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion and Analysis and the compensation tables.
As an advisory vote, the matter for which stockholders have the opportunity to vote under Proposal 2 is non-binding. Although the vote is non-binding, the Board of Directors and the Compensation Committee value the opinions of our stockholders and will carefully consider the outcome of the vote when making future compensation decisions for our NEOs.
If you own shares through a bank, broker or other holder of record, you must instruct them how to vote so that your vote can be counted on this proposal as uninstructed shares are not entitled to vote with regard to Proposal 2. The affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote is required to approve this Proposal 2.
|
|
The Board of Directors recommends a vote FOR Proposal 2
|
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 27
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EXECUTIVE COMPENSATION
As the independent Compensation Committee of Range Resources, our most important mandate is to structure our executive compensation programs to create close alignment with our stockholders' interests, while continuing to attract and retain talented executives to execute our strategy and create long-term value. Our compensation program is guided by the philosophy that our ability to provide sustainable value is driven by superior individual performance. We believe that a company must offer competitive compensation to attract and retain experienced, talented and motivated employees. In addition, we believe employees in leadership roles are motivated to perform at their highest levels when performance - based pay represents a significant portion of their compensation.
We understand the importance of assessing our corporate governance and compensation practices regularly. Since our 2019 Annual Meeting, we have reached out to stockholders representing 66% of shares outstanding and met with those that accepted our invitation.
During the fall 2019/ spring 2020, the following topics were the most prevalent items discussed amongst our stockholders:
•
Alignment between our strategy and our executive compensation practices;
•
Our approach to corporate citizenship and environmental responsibility; and
•
Board structure, diversity and refreshment.
We believe ongoing communication, dialogue and a sharing of individual perspectives with our stockholders allow our committee the ability to balance our compensation programs with our strategic plan. These discussions are key drivers in our compensation design and thought processes. We will continue to incorporate stockholder feedback into our future compensation planning.
We regularly seek feedback from our stockholders regarding our compensation practices. Over the course of the past year:
•
Prior to our 2019 Annual Meeting, we reached out to stockholders representing 60% of shares outstanding.
•
After our 2019 Annual Meeting, we reached out to stockholders representing 66% of shares outstanding. We considered our stockholder feedback and we identified opportunities to strengthen our compensation practices which is more fully discussed in "Stockholder Engagement and Responsiveness" beginning on page 33.
Steffen E. Palko, Chair
Anthony V. Dub
James M. Funk
Steve D. Gray
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 28
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This Compensation Discussion and Analysis (CD&A) describes the material elements, objectives and principals of Range’s executive compensation program, compensation decisions made in 2019 and 2020 (through the date of this proxy statement filing) and the factors the Compensation Committee considered in making those decisions.
For 2019, our named executive officers, or NEOs were:
|
Named Executive Officer
|
Officer Since
|
Title
|
|
Jeffrey L. Ventura
|
2003
|
President and Chief Executive Officer
|
|
Mark S. Scucchi
|
2012
|
Senior Vice President – Chief Financial Officer
|
|
Dennis L. Degner
|
2014
|
Senior Vice President – Chief Operating Officer
|
|
Alan W. Farquharson
|
2000
|
Senior Vice President – Reservoir Engineering & Economics
|
|
David P. Poole
|
2008
|
Senior Vice President – General Counsel and Corporate Secretary
|
The 2019 Compensation of these NEOs is explained in the following sections and in the compensation tables and related disclosures under “Executive Compensation Tables” (beginning on page 47) that follows this CD&A. This CD&A is divided into six sections:
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The executive compensation program for the NEOs includes many best practice features that are intended to enhance the alignment of compensation with the interests of Range’s stockholders:
|
What We Do
|
|
What We Don’t Do
|
|
|
Seek stockholder engagement and incorporate feedback
|
|
|
Grant annual cash bonuses or long-term incentive awards to executive officers that are not subject to clawback
|
|
|
Exercise negative discretion with declining stock performance
|
|
|
No individual change-in-control contracts
|
|
|
Majority of NEOs compensation is at risk and performance based, which links pay to performance
|
|
|
No backdating or repricing of stock options
|
|
|
All long-term incentive awards are payable in stock
|
|
|
No employment contracts
|
|
|
Financial performance metrics underlying long-term incentive awards are objective and aligned with stockholders’ interests
|
|
|
No accelerated vesting of equity awards in the event of a change-in-control without a qualifying termination under the Management CIC Plan
|
|
|
Perform annual say-on-pay advisory vote for stockholders
|
|
|
No margin, derivatives or speculative transactions, such as hedges, pledges and margin accounts
|
|
|
Maintain robust stock ownership goals for senior executives
|
|
|
No individual supplemental executive retirement arrangements
|
|
|
Engage an independent compensation consultant to advise the committee
|
|
|
No reward to executives for excessive, inappropriate or unnecessary risk-taking
|
|
|
Offer minimal perquisites
|
|
|
|
|
|
Dedicate time to executive succession planning and leadership development each year
|
|
|
|
|
|
Compensation Peer Group reviewed annually
|
|
|
|
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 30
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The Compensation Committee strives to develop a compensation program designed not only to be consistent with the industry practice but to also attract and retain executives by providing incentives to reward them for performance that supports Range’s long-term strategic objectives. Our compensation program has the following characteristics:
•
Be highly aligned with stockholder interests;
•
Preserve performance accountability in both strong and weak commodity price environments;
•
Build long-term share ownership;
•
Provide a consistent retention incentive; and
•
Match or exceed prevailing governance standards for performance-based compensation.
Principal Elements of Executive Compensation. We principally use three elements of executive compensation to carry out the design of our executive compensation program:
|
Element
|
Purpose
|
|
|
Retain executive team and, when appropriate, attract executives.
|
•
Annual Cash Incentive award
|
Reward executives for short-term financial and operational results.
|
•
Annual Long-Term Equity Incentive award
|
Focus executive efforts on activities and short-term results that lead to long-term stockholder value. Our restricted stock awards vest based on continued employment and the passage of time, which promotes retention. The remainder of the awards vest based on performance measures tied to either relative stock price performance or internal performance metrics which promotes the long-term interests of our stockholders and aligns executives’ interests with stockholders’ interests.
|
Compensation Program Emphasizes Performance
(1)
Amounts shown reflect salary paid in 2019, annual cash incentive award for 2019 which was paid in 2020 based on 2019 performance, the grant date fair value for Long-Term Incentive Awards granted in 2019 and other compensation as detailed on page 47.
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 31
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Our overarching business objective is to build stockholder value through returns focused development of natural gas and oil properties, measured on a per share debt-adjusted basis. Our strategy to achieve our business objective is to generate consistent cash flow from reserves and production through internally generated drilling projects coupled with occasional acquisitions and divestitures. In addition, we expect to limit capital spending to at or below cash flow. Our strategy requires us to make significant investments and financial commitments in technical staff, acreage, seismic data, drilling and completion technology and gathering and transportation arrangements to build drilling inventory and market our products. Our strategy has the following key elements:
•
Commit to environmental protection and worker and community safety;
•
Concentrate on our core operating area;
•
Focus on cost efficiency;
•
Maintain a multi-year drilling inventory;
•
Maintain a long-life reserve base with a low base decline rate;
•
Market our products to a large number of customers in different markets under a variety of commercial terms;
•
Maintain operational and financial flexibility; and
•
Provide employee equity-ownership and incentive compensation.
These elements are primarily anchored by our interests in the Marcellus Shale located in Pennsylvania. We also have natural gas, crude oil and condensate and NGL production activities in North Louisiana.
•
Reduced total unit costs per mcfe in 2019 by greater than 14% compared to 2018 levels and more than 8% in 2018 compared to 2017 levels;
•
Spent 4% less than our initial 2019 capital budget of $756.0 million and spent 3% less than our original 2018 budget;
•
Reduced total debt by $667.6 million compared to year-end 2018;
•
Increased our bank's committed borrowing capacity from $2.0 billion to $2.4 billion;
•
Implemented innovative ways to enhance margins;
•
Produced 2.3 Bcfe per day in 2019 compared to 2.2 Bcfe per day in 2018 and 2.0 Bcfe per day in 2017 primarily attributable to the Marcellus Shale;
•
Increased proved reserves 120 Bcfe in 2019, despite asset sales, compared to an increase of 2.8 Tcfe in 2018, primarily attributable to the Marcellus Shale. In 2019, proved reserves were 54% proved developed reserves and 67% natural gas;
•
Published our first formal corporate sustainability report;
•
Continued with our innovative water recycling program;
•
Successfully tested and began utilizing an electric frac fleet in 2019;
•
Reduced emissions in 2019 compared to 2018 and increased the frequency of leak detection inspections;
•
30% reduction in contractor OSHA recordable injuries and 50% decrease in severity of employee injuries versus 2018;
•
15% reduction in number of preventable vehicle incidents in 2019; and
•
As of December 31, 2019, we had approximately $1.7 billion of liquidity.
•
Maintain capital efficiency;
•
Preserve liquidity and improve financial strength;
•
Focus on organic drilling opportunities through disciplined capital investments;
•
Improve operational efficiencies and efficiently utilize existing infrastructure;
•
Manage absolute debt; and
•
Attract and retain quality employees whose efforts are aligned with stockholders’ interests.
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 32
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Our relationship with our stockholders is an integral part of our corporate governance practices. In addition to our customary participation at industry and investor conferences, road shows and meetings, we held meetings to better understand the views of stockholders on a range of topics including executive compensation, governance practices and business strategy. The Compensation Committee and management continued our review of our compensation program with input from the Board’s independent compensation consultant. This review included direct engagement with our stockholders to ensure full understanding of their perspectives and their feedback was incorporated into the Compensation Committee’s deliberations and decisions in early 2020 and 2019.
Mr. Maxwell, our Chairman, Mr. Palko, the Chairman of our Compensation Committee, and either Mr. Funk, the Chairman of our Governance and Nominating Committee or Mr. Gray, led the stockholder outreach effort, joined by members of senior management. We reached out to stockholders representing approximately 60% of our outstanding shares over the last two compensation cycles; these investors were typically our larger stockholders. We held meetings with each stockholder who accepted our invitation to engage. During these conversations, stockholders were invited to provide direct feedback on our current compensation programs. We also spoke with proxy advisory firms that provide vote recommendations to gain insight into their views on our executive compensation programs and address their questions.
In these meetings, we discussed our strategy, corporate governance, executive compensation and our commitment to the environment. For the fall of 2019 and spring of 2020, the feedback received from our stockholders on these and other topics was generally positive.
The key themes from this year's stockholder engagement that we considered in our design were:
•
Stockholders expressed concerns about similar or the same metrics being used in our short-term and long-term incentives;
•
Stockholders appreciated the use of negative discretion given the challenges with stock performance;
•
Stockholders emphasized the need to monitor the level of CEO pay for year-over-year changes;
•
Stockholders asked the Compensation Committee to continue to review the compensation plan and disclosures for simplification;
•
Stockholders commended our changes to our compensation programs as being responsive to concerns previously expressed;
•
Stockholders applauded gender diversity, composition and refreshment of our Board;
•
Stockholders appreciated the opportunity to meet and the open discussion; and
•
Stockholders were interested in our combined leadership in sustainability initiatives and disclosures.
The following summarizes our response to the feedback we heard from our investors and the changes we made to our executive pay program over the past two compensation cycles.
Specific 2019/2020 changes to the compensation program include:
•
CEO total compensation for 2019 was 4% lower than 2018;
•
CEO base salary held flat for sixth consecutive year;
•
CEO long-term equity grant was voluntarily reduced 32% for 2020 compared to 2019;
•
Equity grants to all employees reduced 24% from target;
•
Added three new metrics to the short-term Annual Cash Incentive performance targets; and
•
Removed four metrics in the Annual Cash Incentive performance targets.
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Specific 2018/2019 changes to the compensation program include:
•
CEO total compensation for 2018 held flat compared to 2017;
•
CEO base salary flat for the fifth consecutive year;
•
Applied negative discretion of 23% ($454,000) to the 2018 Annual Cash Incentive for our CEO (paid in March 2019), below the formulaically determined award;
•
Increased the weighting of the qualitative measure addressing health, safety and environmental performance to 20%;
•
CEO Long-Term Incentive Equity Awards value granted declined 6% from 2018 to 2019;
•
Tightened existing Annual Cash Incentive Award performance targets;
•
CEO and CFO Long-Term Incentive grant mix remained at 60% Performance-Based Restricted Stock and 40% Time-Based Restricted Stock;
•
Added absolute reduction in debt as an Annual Cash Incentive metric; and
•
Increase the weighting of the subjective metric for environmental and safety performance.
Role of Independent Compensation Committee. The Compensation Committee is responsible for establishing and overseeing our executive compensation program and policies that are consistent with our overall compensation philosophy. In making such decisions, the Committee considers a variety of factors, including views expressed by stockholders and stockholder advisory groups, information provided by its independent compensation consultant, our CEO’s input, Peer Group data, each executive’s experience in the role, Company and individual performance, internal pay equity and any other information the Committee deems relevant in its discretion. The Committee is responsible for all compensation decisions involving our CEO and other executive officers.
Stockholder Outreach. The Committee considers the outcomes of the Company’s advisory stockholder vote on our executive compensation program and our stockholder outreach initiatives when making compensation decisions. To continue our focus on best practices, we enhanced our stockholder engagement program in the past few years to solicit specific valuable feedback from investors on executive compensation which we then share with the Committee and the Board. We contact a broad base of institutional investors and speak with those interested in meeting and sharing feedback with us.
We believe our incentive program changes have been highly responsive to the feedback received from our stockholders and serve to strengthen the alignment with our strategic objectives. We will continue our dialogue with stockholders on compensation issues as part of our ongoing engagement.
Role of Senior Management. Through our compensation cycle that ended March 2019, our CEO submitted recommendations to the Compensation Committee for adjustments to the salary, Annual Cash Incentives and Long-Term Equity Incentive awards payable to all NEO’s (except himself), Senior Vice Presidents and Vice Presidents. The Compensation Committee considers the recommendations of our CEO as only one factor, in addition to the other factors described in this CD&A, in setting our executive officer and other employee compensation. The CEO is not present during deliberations by the Compensation Committee regarding his own compensation. The Committee’s independent consultant provides analysis and recommendations for Mr. Ventura. At the request of the Compensation Committee, our CEO and our CFO attend certain meetings and working sessions of the Compensation Committee. Senior members of the human resources team and other members of senior management interact with the compensation consultant as necessary and prepare materials for each Compensation Committee meeting.
Role of Independent Compensation Consultants. For 2019, the Committee directly engaged Longnecker and Associates (“Longnecker”) as its independent compensation consultant to advise the Committee on executive compensation matters. Longnecker provided the Committee with information on industry trends, market practices and legislative issues. With the approval of the Compensation Committee, the Company also retained Alvarez and Marsal (or “A&M”) to provide valuation services related to the use of performance-based restricted stock awards based on TSR. In 2019, the Company paid Longnecker a total of $259,000 for consulting services related to executive and director compensation. The Company paid A&M a total of $50,000 for valuation services in 2019.
Longnecker interacted with several of our officers and employees as necessary. In addition, Longnecker may seek input and feedback from members of our management regarding its work product prior to presentation to the Committee to confirm that information is accurate or address other issues. We believe that a consultant provides an independent perspective to the Committee.
Competitive Positioning. In support of our compensation objectives and in order to determine an appropriate total value and mix of pay for executives, we reference the 25th, 50th and 75th percentiles of the Compensation Peer Group. These percentiles are reference points only; we do not automatically compensate each executive at these levels. Several variables, including individual and division performance, time employed in the position, annual Company performance and one-and three-year relative stock price performance influence the actual executive compensation decisions. We look at our individual NEO and total NEO Total Direct Compensation compared to individual NEO and total NEO Total Direct Compensation of companies in our Compensation Peer Group. Because not all of our NEO positions are directly comparable to NEO positions of other companies in our Compensation Peer Group, we believe that reviewing the aggregate total direct compensation of all NEOs provides an appropriate reference for comparative purposes and allows us to compare our total cost of management for all NEOs to our peers’ total cost of management.
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Role of Peer Companies. Peer Group benchmarking is one of several factors the Compensation Committee considers in setting pay. The Committee seeks to maintain a Peer Group that is generally similar to us with respect to business activity and specifically focuses on companies engaged in exploration for and production of oil and gas resources with Range having a market capitalization near the median of the Peer Group. The Compensation Committee reviews the composition of the Peer Group with advice from the independent compensation consultant in the first quarter of each calendar year and any additions or deletions are made to the Peer Group at that time. For 2020, the peer group was adjusted to continue to target the mid-point of the group. Each year, companies that are acquired or merged during the year are eliminated from that year’s Peer Group to the extent such acquisitions or mergers prevent the company from being an appropriate member of the Peer Group.
This chart describes the oil and gas exploration and production companies that have been included in the Peer Group in the last two years:
|
Company
|
Peer Group
|
|
2020
|
2019
|
|
Antero Resources Corporation
|
|
|
|
Cabot Oil & Gas Corporation
|
|
|
|
Chesapeake Energy Corporation
|
|
|
|
Cimarex Energy Co.
|
|
|
|
CNX Resources
|
|
|
|
Encana Corporation
|
-
|
|
|
EQT Corporation
|
|
|
|
Gulfport Energy Corporation
|
|
|
|
Matador Resources
|
|
-
|
|
Murphy Oil
|
|
|
|
Noble Energy, Inc.
|
-
|
|
|
Oasis Petroleum
|
|
|
|
PDC Energy Inc.
|
|
|
|
QEP Resources, Inc.
|
|
|
|
SM Energy Company
|
|
|
|
Southwestern Energy Company
|
|
|
|
Whiting Petroleum
|
|
-
|
|
WPX Energy
|
|
-
|
|
“
” denotes companies included in our Peer Group
|
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 35
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The majority of compensation for the NEOs is based on the long-term performance of Range. The elements of our 2019 executive compensation program are summarized in the table below and are described further under “Elements of Executive Compensation” on page 37.
|
|
Element
|
Objective
|
Form of
Payout
|
How Payout Value is
Calculated
|
2019 Decisions
|
|
FIXED
|
Base Salary
|
•
Provide a competitive level of fixed compensation to attract and retain employees.
|
Cash
|
Review of compensation surveys, publicly available peer company data, internal pay equity, individual responsibilities and performance assessment. Base salaries are reviewed annually and as circumstances warrant.
|
•
In 2019, our CEO salary remained unchanged.
•
All other NEOs salaries were increased.
|
|
|
Annual Cash Incentive
|
•
Motivate financial and operational performance over a one-year period.
•
Align executives with performance metrics that are critical to Range’s success.
|
Cash
|
Criteria and weighting pre-established by the Compensation Committee in March 2019. All seven performance criteria are internal company performance measures.
The Annual Cash Incentive award is described in more detail under “Elements of the 2019 Compensation Program-Annual Cash Incentive Awards” beginning on page 37.
|
For the Chief Executive Officer:
•
Target bonus % salary equal to 120%.
For
the other NEOs:
•
Target bonus % of salary equal to 72% of salary for Senior Vice Presidents.
•
Actual payment for 2019 performance was 179% of salary for our CEO and 107% of salary for Senior Vice Presidents.
|
|
VARIABLE OR AT-RISK
|
Long-Term Incentive – Performance-Based Total Stockholder Return (TSR) awards
|
•
Reward higher returns in Range common stock over a three-year performance period.
•
Align executives with the interests of stockholders.
|
Stock
|
A comparison of Range’s TSR to that of the peer group over a three-year performance period. In addition, if Range’s absolute TSR is negative for the period, payout of the award is capped at no more than target.
The terms and conditions of the TSR award are described in more detail under “Long-Term Incentive Program” beginning on page 40.
|
For the Chief Executive Officer and Chief Financial Officer:
•
The TSR award accounts for 30% of the target 2019 long-term incentive award value.
For the other NEOs:
•
The TSR award accounts for 20% of the target 2019 long-term incentive award value.
•
Actual grant for 2019 equaled target value.
|
|
|
Long-Term Incentive – Performance-Based – Production and Reserve Growth Per Share awards (Debt Adjusted)
|
•
Rewards performance annually over a three-year period.
•
Align executives interest with interests of stockholders
|
Stock
|
A comparison of reported production and year-end reserves (adjusted for price revisions), debt adjusted to a performance target.
The terms and conditions of this award is described in more detail under “Long-Term Incentive Program” beginning on page 40.
|
For Chief Executive Officer and Chief Financial Officer:
•
The award accounts for 30% of the target 2019 long-term incentive award value.
For other NEOs:
•
The award accounts for 20% of the target 2019 long-term incentive award value.
•
Actual grant for 2019 equaled target value.
|
|
|
Long-Term Incentive – Time-Based Restricted Stock
|
•
Provide a retention incentive that promotes sustained stock ownership
•
Tie ultimate value realized to performance of Range’s common stock
|
Stock
|
Generally vest in three tranches over a three-year period (30%, 30% 40%), subject to continued employment.
The terms and conditions of these awards are described in more detail under “Long-Term Incentive Program” beginning on page 40.
|
For the Chief Executive Officer and Chief Financial Officer:
•
The stock award accounts for 40% of the target 2019 long-term incentive award value.
For the other NEOs:
•
The stock award accounts for 60% of the target 2019 long-term incentive award value.
•
Actual grant for 2019 equaled target value.
|
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 36
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Base Salary
The Compensation Committee reviews base salaries on an annual basis, at the time of a promotion or changes in responsibilities and when market conditions warrant. Base salaries for our NEOs are targeted at the 50th percentile of the Peer Group adjusted for certain factors. Base salary is based on an evaluation of the following:
•
the complexity of their respective positions and specific technical experience required;
•
the base salaries of comparable positions at Peer Group companies;
•
competitive market conditions; and
•
internal pay equity among our senior executives.
Since 2018, salary adjustments are approved by the Compensation Committee in the first quarter of each year and take effect on the first payroll period after approval. The timing of these salary adjustments allows the Compensation Committee to consider the audited financial results of our Peer Group companies and allows for disclosure in our proxy our current compensation decisions. In March 2019, the Committee’s independent consultant reviewed the NEO’s base salaries compared to Peer Group data and broader market data and initially recommended a 3.5% increase in base salaries for each NEO. The compensation consultant noted that, in general, each NEO’s base salary was below the 50th percentile of the Peer Group. The compensation consultant noted maintaining alignment of base salary between 50th and 75th percentile of the Peer Group was more desirable. The Committee considered the recommendations of Longnecker and management and determined to not increase base salary for Mr. Ventura but approved base salary increases for the remaining NEOs. In February 2020, Longnecker reviewed the NEOs’ base salary compared to a peer group and various published survey sources and initially recommended an increase of 3.5%, noting the aggregate NEO salaries were lower than the 50th percentile. The Committee reviewed the comparisons to peers and broader market data and determined to not increase the base salary for Mr. Ventura but approved base salary increases for three of the four remaining NEOs. The Committee recommended, and the Board approved, the following base salaries effective February 2020.
|
|
|
|
Base Salary
|
|
|
|
As of
February 2020
|
As of
March 2019
|
As of
March 2018
|
|
Jeffrey L. Ventura
|
|
|
|
|
$
|
925,000
|
$
|
925,000
|
$
|
925,000
|
|
Mark S. Scucchi(1)
|
|
|
|
|
$
|
475,000
|
$
|
435,000
|
$
|
—
|
|
Dennis L. Degner(1)
|
|
|
|
|
$
|
475,000
|
$
|
400,000
|
$
|
—
|
|
David P. Poole
|
|
|
|
|
$
|
450,000
|
$
|
415,000
|
$
|
398,000
|
|
Alan W. Farquharson(1)
|
|
|
|
|
$
|
376,000
|
$
|
376,000
|
$
|
—
|
(1)
Mr. Scucchi, Mr. Degner and Mr. Farquharson were not NEOs as of March 2018.
|
Annual Cash Incentive Awards
The Annual cash bonus award is intended to compensate the NEOs based on the achievement of annual financial, operating and strategic goals. Its emphasizes team performance. We refer to cash awards as "Annual Cash Incentives." The Annual Cash Incentives are paid to our NEOs based on a formulaic application of certain performance criteria that are discussed more fully below.
The Annual Cash Incentives are subject to the negative discretion of the Compensation Committee. Annual Cash Incentives are determined without reference to Peer Group data, because each performance criteria has been pre-established by the Compensation Committee. The Annual Cash Incentive related to our 2019 performance was paid in February 2020 as detailed in the table below:
|
|
Annual Incentive Payout
|
|
Actual Payment
Achieved(1)
|
Actual Payout
for 2019
|
Difference
|
|
CEO
|
$
|
1,652,216
|
$
|
1,652,216
|
$
|
-
|
|
Senior Vice Presidents
|
$
|
2,472,431
|
$
|
2,472,431
|
$
|
-
|
(1)
Reflects the payout earned prior to negative discretion applied by the Compensation Committee.
|
The Compensation Committee develops the performance criteria to be used for the Annual Cash Incentives, reviews the performance criteria with the independent compensation consultants and then discusses the performance criteria with our CEO and CFO. The Committee then sets the criteria as well as the weighting and performance achievement levels necessary to calculate Annual Cash Incentives based upon payout percentages established for our NEOs. For 2019, the performance criteria were based upon either industry standards or our annual business plan (the “Annual Business Plan”). Our Annual Business Plan is a forecast of expected business results for the applicable fiscal year based upon certain assumptions made by our management. The Compensation Committee believes that the performance criteria, taken together, are strong objective indicators of the Company’s performance, thus similar factors are typically used in determining the Company’s performance relative to its Peer Group for setting total compensation and long-term incentive equity awards as described above. Target Annual Cash Incentives are determined as a percentage of each NEOs base salary. This target percentage is
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 37
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established through an analysis of compensation for comparable positions in the Peer Group and is intended to provide a competitive level of compensation if the Company achieves the performance criteria established by the Compensation Committee.
The performance criteria selected with respect to the Annual Cash Incentive awards for 2019 (which were paid in February 2020) are shown in the table below, together with the target levels of achievement with respect to each criterion. The payouts were achieved as described below. All seven of the performance criteria are internal performance measures.
|
|
Criterion
|
2019
Weighting
|
|
Unit of
Measurement
|
Actual for
2018
|
|
2019 Performance Levels
|
Actual for
2019
|
|
Payout%
Achieved(1)
|
|
|
Threshold
|
|
Target
|
|
Excellent
|
|
|
|
Debt/EBITDAX
|
10
|
%
|
$ Debt balance /Earnings
|
|
3.1x
|
|
|
3.1
|
x
|
|
2.8
|
x
|
|
2.5
|
x
|
|
3.5
|
x
|
0
|
%
|
|
|
Absolute decrease in debt
|
10
|
%
|
$ decrease
(millions)
|
|
—
|
|
|
$150
|
|
|
$425
|
|
|
$700
|
|
|
$668
|
|
226
|
%
|
|
|
Finding
& development
costs
|
15
|
%
|
$ per mcfe
|
$
|
0.24
|
|
$
|
0.50
|
|
$
|
0.40
|
|
$
|
0.30
|
|
$
|
0.51
|
|
0
|
%
|
|
|
Production growth
per share
(debt adjusted)
|
15
|
%
|
Percentage Increase
|
|
13
|
%
|
|
4
|
%
|
|
6
|
%
|
|
8
|
%
|
|
17
|
%
|
240
|
%
|
|
|
Reserves growth
per share (debt
adjusted)
|
15
|
%
|
Percentage Increase
(Decrease)
|
|
22
|
%
|
|
4
|
%
|
|
6
|
%
|
|
8
|
%
|
|
17
|
%
|
240
|
%
|
|
|
Drilling rate of
return
|
15
|
%
|
Percentage Increase
(Decrease)
|
|
49
|
%
|
|
20
|
%
|
|
25
|
%
|
|
30
|
%
|
|
34
|
%
|
240
|
%
|
|
|
Qualitative
|
20
|
%
|
Various HSE
|
|
Target
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Excellent
|
|
240
|
%
|
(1)
The Payout percentage achieved is shown for the CEO and is prorated for other officers.
|
Debt/EBITDAX. The first criterion the Compensation Committee selected for 2019 was Debt/EBITDAX. Debt/EBITDAX is calculated by adding back exploration expense, interest expense and depletion, depreciation and amortization expense to income before income taxes (adjusted for asset sales), excluding any non-cash revenues and expenses. The Compensation Committee selected this criterion to measure our ability to achieve the results targeted by our Annual Business Plan. The Compensation Committee determined that the Debt/EBITDAX measure was appropriate because it reflects the Company's strategic focus on further strengthening the balance sheet to provide resilience through challenging commodity prices. Improving leverage was also a key focus for our stockholders in recent years. Our Debt/EBITDAX target will fluctuate from year to year as commodity prices change. At times of higher prices, our Debt/EBITDAX target will be lower compared to times of lower commodity prices. The 2019 Debt/EBITDAX performance levels were based on the 2019 Annual Business Plan, which reflected a Debt/EBITDAX of 3.3X. Our actual 2019 Debt/EBITDAX totaled 3.5X resulting in a 0% payout which reflects the lower commodity price environment experienced in 2019 compared to the initial Business Plan.
Absolute decrease in debt. The second criterion the Compensation committee selected for 2019 was an absolute decrease in debt. The committee believed in the current commodity environment, focus on absolute debt reduction is important. While leverage, as measured by Debt/EBITDAX is commonly used by analysts and investors in comparing across companies, this metric puts the emphasis on the leverage component, or debt, that management has more control over as a commodity producer. During 2019, we reduced debt by $668 million, primarily through asset sales, improvements to our cost structure and by completing our 2019 operational plans for less than originally budgeted.
Finding and development costs. The third criterion the Compensation Committee selected for 2019 was finding and development costs. This metric was selected to support our strategic focus on improving corporate returns. A key measurement in evaluating the competitiveness and resiliency of an upstream producer like Range, is our cost to find and develop proved reserves. The Committee has made these targets more stringent each year which incentivizes management to become increasingly efficient in developing oil and gas reserves and stay amongst the best in the industry for finding and development costs. The Compensation Committee specified that, in determining our finding and development costs, only cash costs incurred in connection with exploration and development would be used and the costs of acquisitions would be excluded because the Board approves each material acquisition. In determining the reserve additions for this calculation, any reserve revisions for changes in commodity prices between years are excluded, but any performance related reserve revisions are included. In setting the performance levels (i.e., threshold, target and excellent) for finding and development costs, the Compensation Committee considers historical finding and development costs of the Peer Group. Our historical finding and development costs has continued to improve over the years as management continues to focus on the efficient development of our reserve base and adding new reserves at a cost that is much lower than the industry average. Our 2019 finding and development costs performance, as compared with the targets was not achieved with lower capital budgets and reductions in reserves due to the proved undeveloped SEC five-year rule.
Production and reserve growth per share (debt-adjusted). The fourth and fifth criteria the Compensation Committee selected for 2019 were production growth per share and reserves growth per share (debt-adjusted). The Compensation Committee believes measuring production and reserves on a per-share debt adjusted basis is a useful proxy for an upstream producer's ability to generate long-term stockholder value. Many of our largest stockholders believe these metrics measure long-term performance which is why these measures are also used within our long-term incentive program. Production and reserves used in the calculation of these criteria are based on reported production and year-end reserves, adjusted for price revisions. The calculation is debt adjusted to ensure that per share growth was not achieved solely by increasing leverage. Debt-adjusted shares represent current shares outstanding plus the quotient of total debt at year-end
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 38
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divided by the weighted average share price. The targets for production and reserve growth per share are determined annually based upon the capital budget approved by our board of directors and is tied directly to the amount of capital budgeted and spent on drilling and completion activities. In addition, the Peer Group debt adjusted per share growth rates for the prior year are used to benchmark capital efficiency and set the proposed targets. We achieved the 2019 performance in production growth per share, with well performance in line with expectations and spending better than expected. Our reserve growth per share performance in 2019 was achieved through developing our inventory and improving our well costs per foot primarily through longer laterals.
In our most recent outreach with stockholders, concerns were voiced over our reliance on the same metrics for both our short and long-term incentives. While the measurement periods and form of payout is different, the Compensation Committee decided to replace these two metrics in the Annual Cash Incentive calculation for 2020.
Drilling rate of return. The sixth criterion the Compensation Committee selected for 2019 was drilling rate of return. This metric supports our focus on improving corporate returns. The Compensation Committee added drilling rate of return in 2017 to encourage a balanced approach to operational goals and encourage efficiency of capital spending. This metric continues to encourage focus on reducing drilling costs particularly in response to the continued weak commodity price environment. The drilling rate of return is measured based on actual capital expenditures and the year-end proved reserves estimates of drilling results. Commodity prices effective on the first day of the year are used in the calculation. The target is set based on our expectation of capital allocation and capital efficiency for the year and our prior year drilling results. The performance target was achieved in 2019 by achieving our 2019 drilling plan for less than budgeted as a result of lower well costs.
Qualitative measure. The seventh criterion the Compensation Committee selected for 2019 was a qualitative measure which includes elements of environmental, health and safety performance. Range continues to be committed to ensuring it provides a safe work place and instilling a culture of safety and environmental responsibility at every level of our organization. Priorities include elements of safety performance, emissions and water management and corporate citizenship. We focus on transparency around HSE and encourage reporting of all incidents involving our employees and contractors (including near misses) and we have used examples of incidents reported as a vehicle to educate our employees and contractors to improve our HSE practices. There are also quantitative measures used here such as reductions in emissions, number of spills, auto accidents and leak detection inspections.
In addition to selecting the performance criteria, the Compensation Committee determined, after consultation with Longnecker, the respective performance payout percentages for each of our NEOs. In determining these payout percentages, the Compensation Committee attempted to ensure that the payouts provided appropriate incentives to each of our senior executives. For 2019, the annual incentive payout percentage was a weighted average of the payout percentage for each category using the percentages set forth below in the table. When actual results achieved fall between the performance levels, the percentile performance used to determine the payout percentage is proportionately adjusted between the performance levels. For 2019, the Compensation Committee awarded bonuses based on the formulaically determined award as shown in the table below:
|
|
Threshold
|
Annual Cash Incentive Payout % of Salary
|
|
|
Target
|
|
Excellent
|
|
Payout %
Achieved(1)
|
|
Actual
Payment %
For 2019(2)
|
|
|
CEO
|
60
|
%
|
120
|
%
|
240
|
%
|
179
|
%
|
179
|
%
|
|
Senior Vice Presidents
|
36
|
%
|
72
|
%
|
144
|
%
|
107
|
%
|
107
|
%
|
(1)
Reflects the payout percentage prior to any negative discretion applied by the Compensation Committee.
(2)
Reflects the payout percentage after negative discretion was applied by the Compensation Committee, if any.
|
The following table sets forth the total amount of cash paid to our NEOs for 2019 performance (paid in February 2020), for 2018 performance (paid in March 2019) and for 2017 performance (paid in March 2018).
|
|
Annual Cash Incentive Earned
|
|
2019
|
2018
|
2017
|
|
Jeffrey L. Ventura
|
$
|
1,652,216
|
$
|
1,500,000
|
$
|
1,000,000
|
|
Mark S. Scucchi(1)
|
$
|
466,193
|
$
|
436,248
|
$
|
—
|
|
Dennis L. Degner(1)
|
$
|
466,193
|
$
|
400,000
|
$
|
—
|
|
David P. Poole
|
$
|
444,759
|
$
|
418,378
|
$
|
250,000
|
|
Alan W. Farquharson(1)
|
$
|
402,962
|
$
|
—
|
$
|
—
|
(1)
Mr. Farquharson was not an NEO in 2018 or 2017. Mr. Scucchi and Mr. Degner were not NEOs in 2017.
|
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 39
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The 2020 performance criteria, weighting and target levels of achievement with respect to each of the 2020 criterion are shown in the table below.
|
|
Criterion
|
Weighting
|
|
Unit of
Measurement
|
2020 Performance Levels
|
|
Threshold
|
|
Target
|
|
Excellent
|
|
|
|
|
Absolute Debt Reduction
|
15
|
%
|
$ decrease
(millions)
|
$
|
150
|
|
$
|
500
|
|
$
|
900
|
|
|
|
Cash Unit Costs
|
15
|
%
|
$ per mcfe
|
$
|
2.05
|
|
$
|
2.00
|
|
$
|
1.95
|
|
|
|
|
Drilling and Completion Cost per foot
|
15
|
%
|
$ per foot
|
$
|
650
|
|
$
|
625
|
|
$
|
600
|
|
|
|
Drilling rate of return
|
15
|
%
|
Percentage
Increase
|
|
25
|
%
|
|
30
|
%
|
|
35
|
%
|
|
|
Qualitative measure(1)
|
20
|
%
|
Various HSE
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Discretionary(2)
|
20
|
%
|
Various
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
This measure includes environmental, health and safety performance.
(2)
This measure will include factors of Company performance not otherwise considered by the objective performance measures including promotion of operational efficiencies, active portfolio management, succession planning and talent development, long-term strategic goals and other factors determined by the Committee.
|
Long-Term Equity Incentive Program
The following table sets forth the value of long-term incentives granted to our NEOs for the last three years.
|
|
Long-Term Equity Incentive
|
|
|
2020
|
|
2019
|
|
2018
|
|
Jeffrey L. Ventura
|
$
|
3,923,000
|
$
|
5,749,992
|
$
|
6,137,133
|
|
Mark S. Scucchi
|
$
|
2,052,000
|
$
|
2,199,991
|
$
|
421,857
|
|
Dennis L. Degner
|
$
|
2,280,000
|
$
|
1,300,002
|
$
|
1,143,317
|
|
David P. Poole
|
$
|
1,368,000
|
$
|
1,815,071
|
$
|
1,686,171
|
|
Alan W. Farquharson(1)
|
$
|
836,000
|
$
|
1,101,727
|
$
|
—
|
(1)
Mr. Farquharson was not an NEO in 2018.
|
The 2019 Long-Term Equity Incentive program consists of Performance-Based Restricted Stock Awards and Time-Based Restricted Stock Awards. We grant long-term equity-based compensation to substantially all of our employees to promote a company wide ownership and entrepreneurialism.
•
Performance-Based TSR Stock Units (“TSR-PSUs”). The Committee believes that a performance unit program based on TSR relative to peer companies aligns pay and Company performance. The industry peers selected for each performance cycle generally match the industry peers comprising the prevailing Peer Group used for compensation benchmarking. TSR is determined using the average stock price of each company at the beginning of the performance period based on the average closing price in a 10 day
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 40
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period prior to and ending at the close of business on the date of grant and at the end of the performance period using the 10 day period prior to and ending on the 3 year anniversary date of the grant date. Reinvestment of dividends is assumed. If the TSR at the end of the performance period is negative, the payout percentage is capped at 100% regardless of ranking. The TSR-PSUs award is denominated in performance stock units (PSUs), each of which is equivalent to one share of common stock.
2019 TSR – PSUs. In March 2019, the Committee awarded the NEOs performance units that will vest based on relative TSR for the three-year performance period ending March 2022. The value of each underlying unit tracks the price of a share of our common stock. The percentage of units earned ranges from 0% to 200% of the units granted with no payout for being in the bottom 37.5%. When the award is settled, NEOs will receive dividend equivalents paid in shares equal to the number of units granted, multiplied by the payout percentage. Dividend equivalents accrue and are paid based on performance at the end of the performance period. Earned awards are paid in stock shortly after the completion of the performance period. A table illustrating the potential payouts based on relative and absolute TSR performance for the TSR-PSUs granted in 2019 is set forth below:
2019 TSR-PSUs. The performance units granted in March 2019 have a performance end date of March 2022 with a target payout percentages at the median performance compared to 16 peer companies.
2018 TSR-PSUs. The performance units granted in March 2018 have a performance end date of March 2021 with target payout percentages at the median performance compared to 15 peer companies.
2017 TSR-PSUs. The performance units granted in May 2017 have a performance end date of May 2020 with target payout percentages at the median performance compared to 21 peer companies.
2016 TSR-PSUs. The performance units granted in May 2016 had a performance period end date of May 2019. For the performance period, we ranked 20 out of 20 companies and the Committee determined the final payout was 0% of the award.
TSR-PSUs Payouts Demonstrate Alignment with Stockholders
Payout values of TSR-PSUs awards have declined as compared to grant date fair value, as shown below ($ in thousands):
These graphics emphasize the realizable value of Mr. Ventura’s TSR-PSUs are significantly aligned with stockholder value. Values for this illustration for 2017, 2018 and 2019 were determined with the following inputs:
•
Our closing stock price as of March 27, 2020 was $2.17; and
•
Our rank in our TSR peer group and the corresponding payout percentage as measured under our performance unit program: 30% for 2017, 0% for 2018 and 0% for 2019.
•
Performance – Based Reserves and Production Growth Per Share (Debt Adjusted). In 2017, the Committee added Production and Reserves Growth per share to the long-term incentive program, calculated on an absolute basis and debt-adjusted. This metric measures our ability to increase production and reserves without commensurate increase in debt or shares outstanding. The use of a debt adjusted measure mitigates the risk that management increases reserves and production by increasing the drilling budget using debt imprudently.
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 41
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2019 PSUs – PGPS/RGPS. The performance period began January 1, 2019 and ends December 31, 2021. The number of shares earned at the end of the three-year period will be determined as follows, based on the annual payout percentages over the three year period: (i) 1/3 of the award is based on 2019 targets; (ii) 1/3 of the award will be based on performance targets to be established for 2020 and (iii) 1/3 of the award will be based on performance to be established for 2021. For each year, a minimum performance level has been or will be established. For performance at the minimum level, shares will be forfeited and will not carry over to any future period. Performance is measured relative to a target determined by the Compensation Committee. The table below summarizes these grants in 2019.
|
Performance Metric
|
Production Growth Per Share (PGPS)
|
Reserves Growth Per Share (RGPS)
|
|
Performance Period
|
3 years
|
3 years
|
|
Form of Payout
|
Stock
|
Stock
|
|
Performance basis
|
Debt-adjusted production growth per
share – absolute basis
|
Debt adjusted reserve growth per
share – absolute basis
|
|
Minimum Payout
|
0%
|
0%
|
|
Performance Resulting in Minimum Payout
|
PGPS of less than 4%
|
RGPS of less than 4%
|
|
Target Payout
|
100%
|
100%
|
|
Performance Resulting in Target Payout
|
PGPS of greater than or equal to 6%
|
RGPS of greater than or equal to 6%
|
|
Maximum Payout
|
200%
|
200%
|
|
Performance Resulting in Maximum Payout
|
PGPS of greater than or equal to 8%
|
RGPS of greater than or equal to 8%
|
2018 PSUs-PGPS/RGPS. The performance units granted in March 2018 have a performance end date of December 31, 2020.
2017 PSUs-PGPS/RGPS. The performance units granted in May 2017 had a performance end date of December 31, 2019. For these awards, the final payout was 100% for PGPS and 150% for RGPS.
•
Time-Based Restricted Stock. The Committee awards restricted stock for diversification of the long-term incentive award mix, for consistent alignment between executives and stockholders and for retention purposes. Restricted stock awards are made according to our normal annual grant schedule and generally vest over three years (30%, 30% and 40%). Prior to vesting, restricted stock recipients have the right to vote and receive dividends on the restricted shares.
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 42
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The Compensation Committee engaged Longnecker to assist with the analysis of the actual delivery of compensation verses the performance of the Company. The following changes have been made for 2020:
•
CEO Long-Term Incentive grant was voluntarily reduced by approximately 32% in light of the continued lower commodity price environment;
•
Our CEO Long-Term Incentive grant mix was 46% Time-Based Restricted Stock and 54% Performance-Based Restricted Stock; our CFO and COO Long-Term Incentive grant mix was 40% Time-Based Restricted Stock and 60% Performance-Based Restricted Stock; all other NEO's grant mix were 100% Time-Based Restricted Stock;
•
Target Annual Cash Incentive Payouts were set at 120% for our CEO; 100% for our CFO and COO; 75% for our Senior Vice Presidents;
•
Added three new Annual Cash Incentive performance targets to better align with the current commodity cycle and incorporate invester feedback;
•
Revised the calculation of debt-adjusted per share used in the Long-Term Incentive program for production and reserves to focus on debt reduction and not growth;
•
Removed four performance targets previously used in the Annual Cash Incentive calculation;
•
Determined for the sixth year in a row not to increase CEO base salary; and
•
The Committee accepted a voluntary reduction in the CEO Long-term Incentive Award, which aligns with stockholder expectations, when compared to amounts granted in 2019, as detailed below:
|
|
Long-Term Incentive
Grant in March 2019 (1)
|
Long-Term Incentive
Grant in February 2020
|
|
Jeffrey L. Ventura
|
$
|
5,749,992
|
$
|
3,923,000
|
|
Mark S. Scucchi
|
$
|
2,199,991
|
$
|
2,052,000
|
|
Dennis L. Degner
|
$
|
1,300,002
|
$
|
2,280,000
|
|
David P. Poole
|
$
|
1,815,071
|
$
|
1,368,000
|
|
Alan W. Farquharson
|
$
|
1,101,727
|
$
|
836,000
|
(1)
Based on summary compensation table.
|
The table below illustrates the potential payouts based on relative and absolute TSR performance for the TSR-PSUs granted in February 2020:
|
|
|
Range’s Rank Among
Peer Companies
|
Percentage of
TSR-PSUs Earned
|
|
|
|
Maximum
|
1
|
200.0%
|
|
|
|
|
2
|
187.5%
|
|
|
|
|
3
|
175.0%
|
|
|
|
|
4
|
162.5%
|
|
|
|
|
5
|
150.0%
|
|
|
|
|
6
|
137.5%
|
|
|
|
|
7
|
125.0%
|
|
|
|
|
8
|
112.5%
|
|
|
|
Target
|
9
|
100.0%
|
|
|
|
|
10
|
75.0%
|
|
|
|
|
11
|
50.0%
|
|
|
|
|
12
|
0.0%
|
|
|
|
|
13
|
0.0%
|
|
|
|
|
14
|
0.0%
|
|
|
|
|
15
|
0.0%
|
|
|
|
|
16
|
0.0%
|
|
|
|
Minimum
|
17
|
0.0%
|
|
The table below illustrates potential payouts for Performance-Based Reserves and Production Per Share (Debt Adjusted) for grants in February 2020:
|
Performance Metric
|
Production Per Share (PGPS)
|
Reserves Per Share (RGPS)
|
|
Performance Period
|
3 years
|
3 years
|
|
Form of Payout
|
Stock
|
Stock
|
|
Performance basis
|
Debt-adjusted production per
share – absolute basis
|
Debt adjusted reserve per
share – absolute basis
|
|
Minimum Payout
|
0%
|
0%
|
|
Performance Resulting in Minimum Payout
|
PGPS of less than 0%
|
RGPS of less than 0%
|
|
Target Payout
|
100%
|
100%
|
|
Performance Resulting in Target Payout
|
PGPS of greater than or equal to 3%
|
RGPS of greater than or equal to 3%
|
|
Maximum Payout
|
200%
|
200%
|
|
Performance Resulting in Maximum Payout
|
PGPS of greater than or equal to 10%
|
RGPS of greater than or equal to 10%
|
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 43
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Deferred Compensation Plan
Members of management and our directors are entitled to participate in our deferred compensation plan. Currently we have one active deferred compensation plan (the “Active Deferred Compensation Plan”) and we have a second deferred compensation plan in which participation was frozen at the end of 2004 (the “Frozen Deferred Compensation Plan”). These deferred compensation plans are described in greater detail in the section of this Proxy Statement entitled “Non-Qualified Deferred Compensation Plans.” Under the Active Deferred Compensation Plan, employee participants may defer a dollar amount or percentage amount of their base salary and/or annual bonus. Non-employee directors may defer a dollar amount or percentage of their annual fees and/or their annual equity award. Currently, we match the voluntary deferrals of the employee participants, up to 10% of their base salary. Employee participants can elect to have the match paid in cash or stock (the “Match Award”). The Compensation Committee considers the matching contributions, whether paid in cash or by stock, as additional cash compensation in calculating the total compensation for each NEO. We understand that the matching component of the Active Deferred Compensation Plan is not common among the Peer Group. However, the matching component is a significant component to our compensation practices because we do not provide any pension or retirement benefits other than the 401(k) Plan. In fourth quarter 2017, we implemented a post-retirement benefit plan to assist in providing health care to officers who are active employees and have met certain age and service requirements up until the time they are eligible for Medicare. See “Other Benefits” below for additional information.
In addition, when our NEOs receive Time-Based Restricted Stock Awards as described above, we contribute the awards to the Active Deferred Compensation Plan on our NEOs behalf, and such contributions constitute unvested discretionary contributions. The investment tracking options are described in greater detail in the section of this Proxy Statement entitled “Non-Qualified Deferred Compensation Plans”. Performance Units, when awarded, are not placed into the Active Deferred Compensation Plan.
401(k) Plan
The Company sponsors a 401(k) Plan which is a tax-qualified retirement savings plan pursuant to which all of our full-time and part-time employees are eligible to contribute the lesser of up to 75% of their annual salary or the limit prescribed by law to the 401(k) Plan on a before-tax basis. In addition, participants age 50 or over may contribute additional before-tax amounts up to the annual catch-up contribution limit determined by the IRS and any participant may contribute rollover amounts from certain other qualified plans. Participants may also receive matching contributions, payable in cash, in an amount equal to 100% of their before-tax contributions to the 401(k) Plan up to a maximum matching contribution of 6% of their base salaries and cash bonus. The Company has adopted an auto-enrollment process for new employees which results in the employees participating in the 401(k) plan unless they determine not to participate.
The Compensation Committee considers the dollar value of the 401(k) matching contributions as additional cash compensation in calculating total compensation for purposes of determining the amount of long-term equity incentive compensation to award to each NEO.
Participants are 100% vested in all contributions to the 401(k) Plan. In addition to the other investment options available under the 401(k) Plan, participants may invest all or a portion of their 401(k) Plan account in our common stock. The 401(k) Plan investment options for 2019 are listed in the section of this Proxy Statement entitled “Non-Qualified Deferred Compensation Plans.”
Other Benefits
We provide certain other limited personal benefits that the Compensation Committee has determined are reasonable and consistent with our overall compensation philosophy. The Compensation Committee believes that these benefits are consistent with those provided to executive officers of our Peer Group companies, are an important retention factor and are in accordance with general compensation practices in our industry. Moreover, the Compensation Committee considers the cost and value of any such benefits as additional cash compensation when calculating the total cash compensation for purposes of determining the performance adjusted amount of long-term equity incentive compensation to award to our NEOs. We offer medical, dental, vision and life insurance and disability benefits to all eligible employees. We also provide our NEOs with the following benefits: (i) supplemental disability plans and (ii) reimbursement for approved spousal travel expenses related to Company business. We only provide club membership dues reimbursement and reimbursement of certain expenses to certain of our executives to the extent such membership dues and expenses are related to the conduct of our business. The Compensation Committee believes these particular benefits help our executives to network and foster relationships in the oil and gas industry and community that are valuable and important to our Company. Any executive must reimburse us for any personal club use or use by a member of his family.
Effective fourth quarter 2017 to facilitate an orderly management succession process, we implemented a post-retirement benefit plan to assist in providing health care to officers who are active employees (including their spouses) and have met certain age and service requirements. These benefits are not funded in advance and are provided up to age 65 or on the date they become eligible for Medicare, subject to various cost-sharing features. In combination with the implementation of this succession plan enhancement, certain officers that qualify for the post-retirement benefit plan were also immediately vested in all equity grants (excluding any involuntary termination for cause). Effective October 2018, officers who qualify for the new post-retirement health care plan are required to provide reasonable notice of retirement and, beginning in 2019, are fully vested after one year of service following the grant date.
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 44
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Change in Control Arrangements
There are no employment agreements currently in effect between us and any employee. None of our employees are covered under any general severance plan. In the event an executive terminates employment, any severance benefits payable would be determined by the Compensation Committee at its discretion, unless such termination occurred following a change in control, in which case severance may be payable pursuant to the Range Resources Corporation Amended and Restated Executive Change in Control Severance Benefit Plan (the “Management CIC Plan”).
The Management CIC Plan was adopted in March 2005. Pursuant to the Management CIC Plan, all our corporate officers and certain other employees selected by the Compensation Committee (the “Management Group”) may be entitled to receive certain payments and benefits if there is a “Change in Control” of the Company and a member of the Management Group is terminated other than for “Cause” or resigns for “Good Reason” within the “Protection Period.” The terms Change in Control, Cause, Good Reason, and Protection Period, as used in the Management CIC Plan, are defined in the section of this Proxy Statement entitled “Potential Payments upon Termination and Change in Control.” If a member of the Management Group is terminated without Cause or resigns for Good Reason within the Protection Period, that participant will receive:
•
a lump sum payment equal to (i) the participant’s “benefit multiple” multiplied by (ii) the sum of (A) the average of the bonuses paid or awarded to the participant for the three prior fiscal years or the individual's current year target bonus, whichever is higher, plus (B) the participant’s base salary; and
•
for a period of years equal to the participant’s “benefit multiple,” continued participation in any medical, dental, life, disability, and any other insurance arrangement for the participant (and, if applicable, the participant’s spouse and eligible children) in which such person(s) were participating immediately prior to (i) the date of the participant’s termination as determined under the Management CIC Plan, or, if greater, (ii) the occurrence of the Change in Control.
The “benefit multiples” applicable to the NEOs in 2019 were as follows: Mr. Ventura – three; Mr. Scucchi – two; Mr. Degner – two, Mr. Poole – two and Mr. Farquharson - two. In early 2020, based on proxy voting guidelines we received from a large stockholder, the benefit multiples were increased to three times for all Senior Vice Presidents. In addition, any non-vested equity based compensation awards held by each participant vest upon the occurrence of a Change in Control. A more detailed description of these provisions is provided in the section of this Proxy Statement entitled “Potential Payments upon Termination and Change in Control.”
Risk Assessment of Compensation Policies and Practices
Although the majority of the executive compensation program pay is performance-based, the Compensation Committee believes the program does not encourage unnecessary or excessive risk-taking. The Compensation Committee believes that any potential risk of the executive compensation program influencing behavior that could be inconsistent with the overall interests of Range and its stockholders is mitigated by several factors, including:
•
Program elements use both annual and longer-term performance periods;
•
Use of a transparent, external performance metric, TSR, for a large portion of the long-term incentive program opportunity;
•
Relative nature of the TSR performance measure, which minimizes the impact that volatile commodity prices have on Range’s TSR award;
•
Forfeiture and recoupment provisions for awards in the event of violations of Range’s Code of Business Conduct;
•
Payouts of long-term incentive awards that are 100% in stock rather than cash; and
•
Meaningful stock ownership guidelines for executives that encourage a long-term perspective.
Impact of Prior Equity Awards on Current Awards – No Repricing or Cash Buyouts
Each year, the Compensation Committee grants long-term equity incentive awards based on the prior year’s relative performance of the Company to the Peer Group and generally applies a three-year vesting to such awards for retention purposes. Because the equity grants are determined annually based on the Company’s actual performance for the year for which the compensation is being paid, the Compensation Committee does not feel it is appropriate to consider past awards and adjust compensation (including long-term equity awards). Likewise, the Committee has a practice that it does not compensate employees with additional amounts of pay if the value of prior grants of long-term equity awards is lower than valued at the time of the grant, thus the Committee does not re-price equity awards or pay cash buy outs for equity awards that are not “in the money.” In this way, the Committee believes that the actual performance of the Company directly affects the employee’s compensation actually received from the equity award. The Committee’s philosophy in this regard is the same with the use of Performance Units, including the fact that such awards are intentionally designed such that the payout varies between 0% to 200% of the number of shares initially awarded.
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 45
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Tax Deductibility of Compensation
The Tax Cuts and Jobs Act of 2017 that was signed into law in December 2017, expands the definition of what types of compensation are subject to the $1,000,000 limitation under Section 162(m) to include performance-based compensation and includes the CFO as a covered employee. In addition, the new rule expands the definition of a “covered employee” to include any individuals who have previously been a covered employee for any years after December 31, 2016. Thus, once an individual is identified as one of the top 5 covered employees, the $1,000,000 deduction limitation applies to compensation paid to that individual, even after the individual no longer holds that position or has separated from service.
Financial Restatement/Clawback Policy
The Board of Directors’ policy is that the Compensation Committee, to the extent permitted by governing law, retains the sole and absolute authority to make retroactive adjustments to any cash or equity-based incentive compensation paid to our executives where the payment of such amounts was predicated upon the achievement of certain financial results that were subsequently the subject of a restatement. Where applicable, we will seek to recover (or “clawback”) any amount determined to have been inappropriately received by an individual.
Grant Timing
The Compensation Committee does not time, nor has the Compensation Committee in the past timed, equity grants in coordination with the release of material non-public information. Instead, we grant equity at the time or times dictated by our normal compensation process as developed by the Compensation Committee. Beginning in 2018, this process was accelerated to allow for disclosure in the current year proxy statement.
None of our employees have attempted to time long-term equity incentive award grants by making grant recommendations to the Compensation Committee. Certain executives are authorized to make requests to the Compensation Committee regarding awards for new personnel as part of the hiring process, to existing employees who are promoted or where market conditions could reduce our ability to retain key employees. However, these are market driven occurrences and not timing issues, and such executives only provide recommendations that may or may not be approved by the Compensation Committee.
Stock Ownership Requirements for Executive Officers
Each officer listed below is expected to own a number of our shares with a value that is a multiple of the officer’s current base salary:
|
Position
|
Multiple
|
|
Chief Executive Officer
|
5.0 x base salary
|
|
Senior Vice President
|
3.0 x base salary
|
Unless the officer has achieved the required level of share ownership, the officer is required to retain an amount equal to 50% of the net shares received as a result of any equity awards granted to the officer by the Company until he or she is in compliance with the stock ownership policy. An officer must continue to retain shares in the amount required for as long as the officer is subject to the policy. As of the date of this proxy, none of the senior officers satisfy the ownership requirement and are currently required to retain a minimum of 50% of each vested stock award. The requirement to retain 50% was established to allow limited sales as necessary to satisfy tax withholding obligations.
Trading in the Company’s Stock Derivatives and Pledging Limitation
It is our policy that directors and all officers, including our NEOs, may not purchase or sell options on our common stock, nor engage in short sales with respect to our common stock. Trading by officers and directors in puts, calls, straddles, equity swaps or other derivative securities that are directly linked to our common stock is also prohibited.
Pledging of Company equity to secure any new credit is prohibited. As of the date of this proxy, no NEOs or directors have any pledged Company equity.
SEEK AUTHORIZATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UNDER THE 2019 EQUITY-BASED COMPENSATION PLAN
At the 2020 Annual Meeting, our stockholders are being asked to approve an Amended and Restated 2019 Equity-Based Compensation Plan (the "2019 Equity Plan") that will increase the number of shares of common stock authorized for issurance under the plan from 8,000,000 to 11,000,000 (an increase of 3,000,000 shares). Our Board approved the amendment, subject to stockholder approval at the Meeting.
The affirmative vote of a majority of the shares of our common stock represented at the meeting in person or by proxy and entitled to vote on the proposal at the meeting is required to approve this amendment.
|
|
The Board of Directors recommends a vote FOR Proposal 4
|
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 62
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Our Board recommends approval of the Amended and Restated 2019 Equity-Based Compensation Plan ("the 2019 Equity Plan") to increase the number of shares authorized for issurance under the plan. The proposed increase to would enable the continued use of the 2019 Equity Plan for stock-based grants and awards consistent with the objectives of our compensation program.
The use of stock-based grants and awards under the 2019 Equity Plan continues to be an important part of our compensation program. Of the 8,000,000 shares currently authorized for issuance under the plan, 3,539,517 shares remain available for future grant or award as of March 27, 2020. We do not believe this leaves sufficient shares available for more than one additional year of grants and awards.
By increasing the number of shares authorized for issuance under the 2019 Equity Plan by 3,000,000 shares, a total of 6,539,517 would be available for future issuance under the 2019 Equity Plan.
The purpose of the 2019 Equity Plan is to attract and retain employees, directors and consultants to provide an incentive for these individuals to achieve long-range performance goals. The following discussion summarizes the material terms of the 2019 Equity Plan. This discussion does not purport to be complete and is qualified in its entirety by reference to the 2019 Equity Plan, a copy of which is attached hereto as Exhibit A.
Administration
The 2019 Equity Plan would be administered by our Compensation Committee, which is composed entirely of non-employee directors within the meaning of Rule 16b-3. Subject to the provision of the 2019 Equity Plan, in its capacity as the 2019 Equity Plan’s administrator, the Compensation Committee would be authorized to do all things that it determines to be necessary or appropriate in connection with the administration of the 2019 Equity Plan. All decisions, determinations and interpretations by the Compensation Committee regarding the 2019 Equity Plan and awards granted under the 2019 Equity Plan would be final and binding on all participants and other person claiming rights under the 2019 Equity Plan or an award under the 2019 Equity Plan. The Compensation Committee may authorize a delegate to make grants under the 2019 Equity Plan to any participants other than insiders and covered employees. Furthermore, the Compensation Committee, as a condition to making any grant under the 2019 Equity Plan, shall have the right to require the employee or director to execute an agreement which makes the employee or director subject to non-competition provisions and other restrictive covenants or conditions which run in favor of the Company.
Participants
Any person who is a current full time employee of our Company or of a subsidiary, parent or affiliate of our Company would be eligible to receive an award under the 2019 Equity Plan. In addition, non-employee directors would be eligible to receive an award under the 2019 Equity Plan. As of January 1, 2020, we had 655 full time employees.
Types of Awards
The 2019 Equity Plan provides for the following categories of awards:
•
Stock Options. The Compensation Committee may grant options to purchase shares of common stock that are incentive stock options (“ISOs”), which are eligible for the special tax treatment described below. No option may have an exercise price that is less than the fair market value of the common stock on the date of grant or a term of more than ten years. An ISO shall comply with the provisions of Section 422 of the Code.
•
Stock Appreciation Rights (“SARs”). SARs may be awarded in connection with or separate from an option. A SAR is the right to receive an amount equal to the excess of the fair market value of one share of stock on the date of exercise or settlement over the grant price of the SAR as determined by the Compensation Committee. SARs awarded in connection with an option will entitle the holder, upon exercise or settlement, to surrender the related option or portion thereof relating to the number of shares for which the SAR is exercised or settled. SARs granted independently of an option will be exercisable or settled as the Compensation Committee determines but the term of a SAR will not exceed ten years. SARs may be paid in cash, stock or combination of cash and stock, as the Compensation Committee provides in the award agreement governing the SAR.
•
Restricted Stock. A Restricted Stock Award is a grant of shares of stock subject to a risk of forfeiture, restrictions on transferability and any other restrictions imposed by the Compensation Committee in its discretion. Except to the extent restricted under the terms of the 2019 Equity Plan and any award agreement relating to the Restricted Stock, a participant granted Restricted Stock shall have all of the rights of a stockholder, including the right to vote the Restricted Stock and the right to receive dividends. The Committee may require or permit a participant to elect any cash dividends paid on a share of Restricted Stock be automatically reinvested in additional shares of Restricted Stock.
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 63
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•
Phantom Stock Award. Phantom Stock Awards grant the right to receive Stock, cash or a combination thereof at the end of a specified deferral period. The Compensation Committee may subject Phantom Stock rights to restrictions (which may include a risk of forfeiture) to be specified in the award agreement which may lapse at such times determined by the Compensation Committee. Phantom Stock may be satisfied by delivery of stock, cash equal to the fair market value of the specified number of shares of stock covered by the Phantom Stock or any combination thereof determined by the Compensation Committee at the date of grant or thereafter.
•
Bonus Stock and Awards in Lieu of Company Obligations. The Compensation Committee is authorized to grant stock as a bonus or to grant stock or other awards in lieu of obligations to pay cash or deliver other property under the 2019 Equity Plan or under other plan or compensatory arrangements, subject to any applicable provision under Section 16 of the Exchange Act. The Compensation Committee will determine any terms and conditions applicable to grants of stock or other awards, including performance criteria associated with an award.
•
Performance and Annual Incentive Awards. The Compensation Committee may designate that certain awards under the 2019 Equity Plan constitute “performance” awards or grant separate cash bonus Annual Incentive Awards as performance awards. A performance award is any award the grant, exercise or settlement of which is subject to one or more performance standards. Additionally, performance award also means an Annual Incentive Award granted to the chief executive officer or any other person designated by the Compensation Committee, at the time of grant of the performance award, as likely to be one of the next four highest paid officers of the Company (a “Covered Employee”). One or more business criteria may be used by the Compensation Committee, determined on an absolute or relative basis or as compared to the performance of a published or special index. The grant, exercise and/or settlement of Performance Awards may also be contingent upon individual performance goals established by the Committee.
•
Other Awards. Participants may be granted, subject to applicable legal limitations and the terms of the 2019 Equity Plan and its purposes, other awards related to stock. Such awards may include, but are not limited to, convertible or exchangeable debt securities, other rights convertible or exchangeable into stock, purchase rights for stock, awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee. The Committee shall determine the terms and condition of such awards.
Stock Dividends and Stock Splits
If our common stock is subdivided or combined into a greater or smaller number of shares or if we issue any shares of common stock as a stock dividend, the number of shares of our common stock thereafter deliverable upon the exercise of an outstanding option or upon issuance under another type of award shall be appropriately increased or decreased proportionately and appropriate adjustments shall be made in the per share purchase price and performance goals applicable to performance-based awards, if any, to reflect such subdivision, combination or stock dividend.
Other Dividends
Dividends (other than stock dividends as described above) may accrue but are not payable prior to the time and only to the extent that, the underlying shares have vested or restrictions or rights to reacquire shares subject to awards have lapsed.
Corporate Transactions
Change in Control. Upon a Change in Control, all awards outstanding as of the effective time of the Change in Control shall become immediately fully vested and/or exercisable and shall no longer be subject to substantial risk of forfeiture or restrictions on transferability, other than those imposed by applicable legislative or regulatory requirements; provided however, with respect to any such compensation that is subject to Section 409A of the Code, the payment of such award shall be accelerated only upon a “change of control event” as defined in Section 409A of the Code and the Treasury regulations thereunder. With respect to Performance Awards, in the event of a Change in Control, the number of Performance Awards that shall vest and shall no longer be subject to a substantial risk of forfeiture shall be determined as follows: the Committee shall (i) shorten the performance period to end on the date of the Change in Control; (ii) adjust the applicable performance goals with respect to each such shortened performance period; and (iii) determine the Performance Awards that shall vest based on the extent to which the applicable performance goals with respect to each shortened performance period have been met. In addition, upon a Change in Control, the Compensation Committee may, in its discretion effect one or more of the following alternatives with respect to options; (i) accelerate the exercisability of the options to be exercised before a specified date, after which unexercised options will terminate, (ii) require the mandatory surrender to and repurchase by the Company of all outstanding options, (iii) provide that the number and class of shares of stock covered by an award previously granted be adjusted so that such award will thereafter cover the number and class of shares of stock or other securities or property (including without limitation, cash) to which the holder would have been entitled pursuant to the terms of the transaction if the holder had held shares of stock subject to the award, or (iv) make such adjustments to the options deemed appropriate by the Compensation Committee (including no adjustment). The Compensation Committee will make such changes as it deems appropriate in the number and price of shares of stock or other consideration subject to other awards.
Amendment and Termination
The 2019 Equity Plan may be amended by our stockholders. It may also be amended by our Board of Directors without the consent of stockholders or Participants, except that any amendment or alteration to this plan, including any increase in any share limitation, shall be subject to the approval of the Company’s stockholders not later than the annual meeting next following such Board action if such stockholder approval is required by any federal or state law or regulation or the rules of any stock exchange or automated quotation system on which the stock may then be listed or quoted.
RANGE RESOURCES CORPORATION - 2020 Proxy Statement 64
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Duration of the 2019 Equity Plan
The 2019 Equity Plan became effective upon approval of the plan by vote of our stockholders, which was May 15, 2019.
Federal Income Tax Consequences
Incentive Stock Options. An optionee does not realize taxable income upon the grant or exercise of an ISO, under the 2019 Plan. If no disposition of shares issued to an optionee pursuant to the exercise of an ISO is made by the optionee within two years from the date of grant or within one year from the date of exercise, then (a) upon sale of such shares, any amount realized in excess of the option price (the amount paid for the shares) is taxed to the optionee as a long-term capital gain and any loss sustained will be a long-term capital loss and (b) no deduction is allowed for the Company for federal income tax purposes. The exercise of ISOs gives rise to an adjustment in computing alternative minimum taxable income that may result in alternative minimum tax liability for the optionee.
If shares of common stock acquired upon the exercise of an ISO are disposed of prior to the expiration of the two-year and one-year holding periods described above, referred to as a disqualifying disposition, then (a) the optionee realizes ordinary compensation income (subject to the withholding by the Company) in the year of disposition in an amount equal to the excess of the fair market value of the shares at exercise (or, if less, the amount realized on a sale of such shares) over the option price thereof and (b) the Company is entitled to deduct this amount. Any further gain realized is taxed as a capital gain, which will be long-term if the shares were held for more than one year following exercise and does not result in any deduction to the Company. A disqualifying disposition in the year of exercise will generally avoid the alternative minimum tax consequences of the exercise of an ISO.
Restricted Stock. Awards of restricted stock that are non-transferable and subject to forfeiture are generally not taxable to the recipient until the shares vest. When the shares vest, the recipient realizes ordinary compensation income (subject to the withholding by the Company) equal to the difference between the amount paid for the shares and their fair market value at the time of vesting and we are entitled to a corresponding deduction. The tax is payable for the year in which the vesting occurs, regardless of whether the shares are sold at that time. Upon subsequent disposition of the shares, any appreciation or depreciation is treated as short-term or long-term capital gain or loss, depending on the length of time the recipient has held the shares after the date on which the shares vested.
SARs. Participants will not realize taxable income upon the grant of a SAR. Upon the exercise of the SAR, a participant will recognize ordinary compensation income (subject to the withholding by the Company) in an amount equal to the excess of (i) the amount of cash and fair market value of the stock received, over (ii) the exercise price (if any) paid. A participant will generally have a tax basis in any shares of stock received pursuant to the exercise of a SAR that equals the fair market value of such shares on the date of exercise.
Internal Revenue Code Section 162(m) Limitation on Deductibility of Certain Equity Awards
After the enactment of the Tax Cuts and Jobs Act of 2017, United States tax law generally does not allow publicly-held companies to obtain tax deductions for compensation of more than $1.0 million paid in any year to any of the chief executive officer, the chief financial officer and the next three highest paid executive officers, each of which are treated as a covered employee under Section 162 (m) of the U.S. Internal Revenue Code of 1986, as amended, for any year beginning after December 31, 2016 (each, a “covered employee”). As a result, Range will not be entitled to a compensation deduction with respect to awards under the 2019 Equity Plan to a covered employee to the extent the aggregate amount payable results in total compensation in excess of the $1.0 million limit.
New Plan Benefits Table
The issuance of any awards under the 2019 Equity Plan will be at the discretion of our Compensation Committee. Therefore, it is not possible to determine the amount or form of any award that will be granted to any individual in the future.
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OTHER BUSINESS
The Company knows of no other business that will be presented for consideration at the meeting, but should any other matters be properly brought before the meeting, it is intended that the persons named in the accompanying proxy will vote such proxy at their discretion with regard to such matters.
STOCKHOLDER PROPOSALS FOR 2021 ANNUAL MEETING
Any stockholder desiring to present a stockholder proposal at our 2021 annual meeting and to have the proposal included in our proxy statement must send it to our Corporate Secretary at 100 Throckmorton Street, Suite 1200, Fort Worth, Texas 76102 so that it is received on or before December 6, 2020. All such proposals should be in compliance with the SEC regulations and our by-laws. We will only include in the proxy materials those stockholder proposals that we receive before the deadline and that are proper for stockholder action.
In addition, in accordance with our by-laws, any stockholder entitled to vote at our 2021 annual meeting of stockholders may propose business (other than proposals to be included in our proxy statement and proxy as discussed in the preceding paragraph) to be included on the agenda of, and properly presented for action at, the 2021 annual meeting only if written notice of such stockholder’s intent is given in accordance with the requirements of our by-laws. Such proposals must be submitted in writing and addressed to the attention of our Corporate Secretary at 100 Throckmorton Street, Suite 1200, Fort Worth, Texas 76102, no later than February 11, 2021 and no earlier than January 12, 2021. Pursuant to Rule 14a-4(c) of the Exchange Act, our Board of Directors may exercise discretionary voting authority under proxies solicited by it with respect to any matter properly presented by a stockholder at the 2021 annual meeting that the stockholder does not seek to have included in our proxy statement if (except as described in the following sentence) the proxy statement discloses the nature of the matter and how our Board of Directors intends to exercise its discretion to vote on such matter, unless we are notified of the proposal on or before February 11, 2021, and the stockholder satisfies the other requirements of Rule 14a-4(c)(2). If we first receive notice of such matter after February 11, 2021, and the matter nonetheless is permitted to be presented at the 2021 annual meeting, our Board of Directors may exercise discretionary voting authority with respect to any such matter without including any discussion of the matter in the proxy statement for the 2021 annual meeting. We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with the requirements described above and other applicable requirements.
By Order of the Board of Directors
David P. Poole
Corporate Secretary
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FREQUENTLY ASKED QUESTIONS AND ANSWERS
We are providing these materials in connection with the solicitation by Range’s Board of Directors of proxies to be voted at our 2020 Annual Meeting and at any adjournment or postponement of the Meeting.
The Meeting will take place on May 13, 2020, beginning at 8:00 a.m., Central Time, at The Worthington Renaissance Hotel, Bur Oak Room, 200 Main Street, Fort Worth, Texas.
If your shares are registered directly in your name with Range’s registrar and transfer agent, Computershare Investor Services LLC, you are a stockholder of record with respect to these shares. If, as is more typical, your shares are held in a brokerage account or by your bank, broker or other third party, you are the beneficial owner of these shares.
Because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the meeting unless you obtain a proxy from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the meeting. Your broker, trustee or nominee has enclosed or provided voting instructions for you to use in directing the broker, trustee or nominee how to vote your shares.
If you are a stockholder of record, you will receive only one proxy card for all the shares you hold of record in certificate form and in book-entry form.
If you are a Range employee, you will receive a proxy or voting instruction card for all the shares you may hold in the Range 401(k) Plan. Your proxy card will serve as a voting instruction card for the Plan trustee. If you do not specify your voting instructions on the proxy card, the Plan trustee will vote your shares in the same proportion as it votes shares for which it did receive timely instructions. To allow sufficient time for voting by the trustee, your voting instructions must be received no later than 11:59 p.m., Eastern Time, on May 10, 2020.
Voting In Person. Shares held in your name as the stockholder of record may be voted in person at the Meeting. Shares held beneficially in street name may be voted in person only if you obtain a proxy from the broker, trustee or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the Meeting, we recommend that you also submit your proxy or voting instructions so that your vote will be counted if you later decide not to attend the Meeting.
By Written Proxy. All stockholders of record can vote by written proxy card. If you are a stockholder of record and receive a notice regarding the availability of proxy materials, you may request a written proxy card by following the instructions included in the notice. If you are a beneficial owner, you may request a written proxy card or a voting instruction form from your bank, broker or other nominee.
By Telephone or Internet. All stockholders of record can vote by calling the toll-free telephone number on the proxy card. Please have your proxy card when you call. Voice prompts will direct you on how to vote your shares and will confirm that your voting instructions have been recorded properly.
Stockholders of record may also vote by accessing the website noted on the proxy card. Please have your proxy card when you go to the website.
Beneficial owners may vote by telephone or Internet if their bank, broker or other nominee makes those methods available, in which case the bank, broker or other nominee will include the instructions with the proxy materials.
Default Voting. A proxy that is properly completed and returned will be voted at the Meeting in accordance with the instructions on the proxy. If you properly complete and return a proxy but do not indicate any voting instructions, your shares will be voted in the manner recommended by the Board on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Meeting. If we propose to adjourn the Meeting, proxy holders will vote all shares for which they have voting authority in favor of adjournment. Our Board knows of no matters other than those stated in the Notice of Annual Meeting of Stockholders and described in the Proxy Statement to be presented for consideration at the Meeting.
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Proposal
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Voting Choices and Board
Recommendation
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Voting Standard
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Proposal 1.
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Election of Directors
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•
vote in favor of all nominees;
•
vote in favor of specific nominees;
•
vote against all nominees;
•
vote against specific nominees;
•
abstain from voting with respect to all nominees; or
•
abstain from voting with respect to specific nominees.
The Board recommends a vote FOR each of the nominees.
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Majority of votes cast (as defined in our by-laws)
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Proposal 2.
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Advisory Vote to Approve Executive Compensation
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•
vote in favor of the advisory proposal;
•
vote against the advisory proposal; or
•
abstain from voting on the advisory proposal.
The Board recommends a vote FOR the advisory proposal to approve executive compensation.
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Majority of shares present and entitled to vote
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Proposal 3.
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Ratification of the Appointment
of Ernst & Young LLP
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•
vote in favor of the ratification;
•
vote against the ratification; or
•
abstain from voting on the ratification.
The Board recommends a vote FOR the ratification.
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Majority of shares present and entitled to vote
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Proposal 4.
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Seek authorization to increase the number of shares of common stock issuable under the 2019 Equity Based Compensation Plan
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•
vote in favor of the proposal;
•
vote against the proposal; or
•
abstain from voting on the proposal.
The Board recommends a vote FOR the proposal.
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Majority of shares present and entitled to vote
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As a beneficial owner, in order to ensure your shares are voted in the way you would like, you must provide voting instructions to your bank, broker or other nominee by the deadline provided in the materials you receive from your bank, broker or other nominee. If you do not provide voting instructions to your bank, broker or other nominee, whether your shares can be voted by such person depends on the type of item being considered to vote.
Non-Discretionary Items. The election of directors, the advisory vote to approve executive compensation and the proposal to increase the number of shares authorized under the 2019 Equity Plan, are non-discretionary items and may not be voted on by brokers, banks or other nominees who have not received specific voting instructions from beneficial owners.
Discretionary Items. The ratification of the appointment of Ernst & Young LLP as Independent Auditors is a discretionary item. Generally, banks, brokers and other nominees that do not receive voting instructions from beneficial owners may vote on the proposal at their discretion.
Proposal 1. Election of Directors. If you abstain from voting in the election of directors, you have not cast a vote and the abstention will not be counted in determining the outcome of the election. Broker non-votes are not considered a vote cast under our by-laws and will have no effect on the outcome of the election of directors.
Proposal 2. Advisory Vote to Approve Executive Compensation. If you abstain from voting on the advisory vote to approve executive compensation, you are considered present and entitled to vote, and your shares are considered in the calculation of whether Proposal 2 received the affirmative vote of a majority of shares present and entitled to vote. The effect of an abstention is a vote against Proposal 2. Broker non-votes will have no effect on the outcome of Proposal 2 because broker non-votes are not entitled to vote and are not considered in the calculation of a majority of shares present and entitled to vote.
Proposal 3. Ratification of Appointment of Ernst & Young LLP as Independent Auditors. If you abstain from voting on the ratification of Ernst & Young LLP as Range’s independent auditors, you are considered present and entitled to vote, and your shares are considered in the calculation of whether Proposal 3 received the affirmative vote of a majority of shares present and entitled to vote. The effect of an
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abstention is a vote against Proposal 3. Because Proposal 3 is a routine matter on which a broker has discretionary authority, no broker non-votes likely will result from this Proposal.
Proposal 4. Seek authorization to increase the number of shares of common stock issuable under the 2019 Equity-Based Compensation Plan. If you abstain from voting, you are considered present and entitled to vote and your shares are considered in the calculation of whether Proposal 4 received the affirmative vote of a majority to vote. The effect of an abstention is a vote against Proposal 4. Broker non-votes will have no effect on the outcome of Proposal 4 because broker non-votes are not entitled to vote and are not considered in the calculation of a majority of shares present and entitled to vote.
You may revoke your proxy prior to the completion of voting by:
•
Giving written notice to Range’s Corporate Secretary;
•
Delivering a valid, later-dated proxy or a later-dated vote by telephone or on the Internet in a timely manner; or
•
Voting by ballot at the annual meeting after written notice of revocation has been delivered to our Corporate Secretary.
If you hold your shares in a brokerage account or by other nominee and deliver voting instructions to the record holder of those shares, you may only revoke the voting of those shares in accordance with your instruction if the record holder revokes the original proxy as directed above and either resubmits a proxy reflecting your voting instructions or delivers to you a legal proxy giving you the right to vote the shares.
We are distributing our proxy materials to certain stockholders via the Internet under the “notice and access” approach permitted by the Securities and Exchange Commission (the “SEC”). On or about April 3, 2020, we will mail to certain of our stockholders a notice of Internet availability of proxy materials with instructions explaining how to access our proxy statement and annual report and how to vote online. If you receive a notice of Internet availability by mail, you will not receive a printed copy of the proxy materials in the mail unless you request them by following the instructions for requesting such materials included in the notice of Internet availability.
Even if you do not participate in “notice and access,” the Notice of Annual Meeting and Proxy Statement are available on the Internet at www. proxyvote.com.
The individuals named as proxies will tabulate the votes and act as inspector of election.
We will announce the preliminary voting results at the Annual Meeting of Stockholders. Range will report the final results in a Current Report on Form 8-K filed with the SEC within a few days after the meeting.
We bear all expenses incurred in connection with the solicitation of proxies. We hired MacKenzie Partners, Inc. to assist with the solicitation of proxies for an estimated fee of $15,000.00 plus expenses. We will reimburse brokers, fiduciaries and custodians for their costs in forwarding proxy materials to beneficial owners of Common Stock.
Our directors, officers and employees also may solicit proxies by mail, telephone and personal contact. They will not receive any additional compensation for these activities.
As permitted by the Exchange Act, only one copy of this Proxy Statement is being delivered to stockholders residing at the same address, unless the stockholders have notified Range of their desires to receive multiple copies of the Proxy Statement. This is known as “householding.”
Upon oral or written request, we will promptly deliver a separate copy of the Proxy Statement to any stockholder residing at an address to which only one copy was mailed. Direct requests for additional copies of the Proxy Statement for the current year or future years to our Corporate Secretary, 100 Throckmorton Street, Suite 1200, Fort Worth, Texas 76102 or our Investor Relations team at (817) 869-4267.
Stockholders of record residing at the same address and currently receiving multiple copies of the Proxy Statement may contact our registrar and transfer agent, Computershare, to request a single copy be mailed in the future.
Beneficial owners should contact their broker or bank.
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If you are a beneficial owner and want to vote your shares at the Meeting, you will need to ask your bank, broker or other nominee to furnish you with a legal proxy, bring the legal proxy with you to the Meeting and hand it in with a signed ballot that will be provided to you at the Meeting. You will not be able to vote your shares at the Meeting without a legal proxy. If you do not have a legal proxy, you can still attend the Meeting. We encourage you to vote your shares in advance, even if you intend to attend the Meeting. Please note that if you request a legal proxy, any previously executed proxy will be revoked, and your vote will not be counted unless you appear at the Meeting and vote in person or legally appoint another proxy to vote on your behalf.
Our Corporate Governance Guidelines, Board Committee Charters, By-laws and Code of Business Conduct and Code of Ethics are available under the Corporate Governance section of our website at www.rangeresources.com and are available in printed form upon request by any stockholder. Our SEC filings are also posted on our website and, upon request, we will mail free of charge a copy of the Form 10-K to any stockholder. Direct such requests to our Investor Relations team at (817) 869-4267.
Range’s Board of Directors welcomes contact from stockholders or others with an interest in the Company. Interested parties may communicate with the Chairman of our Board of Directors by submitting correspondence to the Corporate Secretary at Range Resources Corporation, 100 Throckmorton Street, Suite 1200, Fort Worth, Texas 76102, Attention: Chairman of the Board. Any confidential matters intended only for the Chairman may be submitted in a separately enclosed envelope marked “confidential.” Similarly, any correspondence to individual Board members or the Board as a whole can be submitted to the same address and such correspondence will be forwarded to the Board member(s) to whom the correspondence is addressed.
A proposal to be acted upon at the 2021 Annual Meeting of Stockholders will only be acted upon:
•
If the proposal is to be included in the proxy statement, pursuant to Rule 14a-8 under the Exchange Act, the proposal is received by our Corporate Secretary on or before December 6, 2020 and the proposal meets the requirements of the applicable rules of the SEC and the requirements of our by-laws.
•
If the proposal is not to be included in the proxy statement according to our by-laws, the proposal is submitted in writing to our Corporate Secretary no earlier than January 12, 2021 and no later than February 11, 2021, and such proposal is, under Delaware General Corporation Law, an appropriate subject for stockholder action, and the notice relating to such proposal meets the requirement of our by-laws.
In response to a stockholder proposal submitted to a vote of the Company’s stockholders in May 2015, the Company’s Board of Directors adopted new provisions of the Company’s by-laws to allow a stockholder or group of stockholders that meet certain criteria and requirements to nominate candidates for election to the Board and have such persons included in the Company’s proxy statement. If you wish to do so, you must submit the required information to the Company not less than one hundred and twenty (120) days nor more than one hundred and fifty (150) days prior to the first anniversary of the date that the Company first distributed its proxy statement to stockholders for the previous year’s Annual Meeting (i.e. April 3 for this proxy statement). Copies of the Company’s by-laws are available on the Company’s website at www.rangeresources.com or upon request addressed to the Company’s Corporate Secretary.
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RANGE RESOURCES CORPORATION
AMENDED AND RESTATED
2019 EQUITY-BASED COMPENSATION PLAN
(EFFECTIVE MAY __, 2020)
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The purpose of the Range Resources Corporation Amended and Restated 2019 Equity-Based Compensation Plan (the “Plan”) is to provide a means through which Range Resources Corporation, a Delaware corporation (the “Company”), and its subsidiaries may attract and retain able persons as employees, directors and consultants of the Company and to provide a means whereby those persons upon whom the responsibilities of the successful administration and management of the Company rest, and whose present and potential contributions to the welfare of the Company are of importance, can acquire and maintain stock ownership, or awards the value of which is tied to the performance of the Company’s stock, thereby strengthening their concern for the welfare of the Company and their desire to remain in its employ. A further purpose of this Plan is to provide such employees and directors with additional incentive and reward opportunities designed to enhance the profitable growth of the Company. Accordingly, this Plan primarily provides for granting Incentive Stock Options, options which do not constitute Incentive Stock Options, Restricted Stock Awards, Restricted Stock Units, Stock Appreciation Rights, Phantom Stock Awards, Performance Awards, or any other equity-based award or combination of equity-based awards, as is best suited to the circumstances of the particular individual as provided herein.
For purposes of this Plan, the following terms shall be defined as set forth below, in addition to such terms defined in Section 1 hereof:
(a)
“Acquiring Person” means (i) any Person other than the Company, any Subsidiary, any employee benefit plan of the Company or any Subsidiary or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company, and (ii) all members of a group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934) of which any Person described in clause (i) is a member with respect to the Company’s securities.
(b)
“Annual Incentive Award” means a conditional right granted to a Participant under Section 8(b) hereof to receive a cash payment, Stock or other Award, unless otherwise determined by the Committee, after the end of a specified fiscal year.
(c)
“Award” means any Option, SAR (including Limited SAR), Restricted Stock Award, Phantom Stock Award, Stock granted as a bonus or in lieu of another award, Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual Incentive Award, together with any other right or interest granted to a Participant under this Plan.
(d)
“Beneficiary” means one or more persons, trusts or other entities which have been designated by a Participant in his or her most recent written beneficiary designation filed with the Committee to receive the benefits specified under this Plan upon such Participant’s death or to which Awards or other rights are transferred if and to the extent permitted under Section 10(a) hereof. If, upon a Participant’s death, there is no designated Beneficiary or surviving designated Beneficiary, then the term Beneficiary means the persons, trusts or other entities entitled by will or the laws of descent and distribution to receive such benefits.
(e)
“Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 under the Exchange Act and any successor to such Rule.
(f)
“Board” means the Company’s Board of Directors.
(g)
“Business Day” means any day other than a Saturday, a Sunday, or a day on which banking institutions in the state of Texas are authorized or obligated by law or executive order to close.
(h)
“Change in Control” means the occurrence of any of the following events:
(i)
Change in Board Composition. Persons who constitute the members of the Board as of the date hereof (the “Incumbent Directors”), cease for any reason to constitute at least a majority of members of the Board; provided that any Person becoming a director of the Company subsequent to the date hereof shall be considered an Incumbent Director if such Person’s appointment, election or nomination was approved by a vote of at least 50% of the Incumbent Directors; but provided, further, that any such Person whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Board or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director;
(ii)
Business Combination. Consummation of (x) a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company, whether in one or a series of related transactions, or (y) the acquisition of assets or stock of another entity by the Company (either, a “Business Combination”), excluding, however, any Business Combination pursuant to which:
(A)
Persons who were the beneficial owners, respectively, of the then outstanding shares of common stock, par value $0.01 per share, of the Company (the “Outstanding Stock”) and the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of the Company (the “Outstanding Company Voting Securities”) immediately prior to such Business Combination beneficially own, upon consummation of such Business Combination, directly or indirectly, more than 50% of the then outstanding shares of common stock (or similar securities or interests in the case of an entity other than a corporation) and more than 50% of the combined voting power of the then outstanding securities (or interests) entitled to vote generally in the election of directors (or in the selection of any other similar governing body in the case of an entity other than a corporation) of the Surviving Corporation (as defined below) in substantially the same proportions as their ownership of the Outstanding Company Common
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Stock and Outstanding Company Voting Securities immediately prior to such Business Combination;
(B)
no Person (other than the Company, any Subsidiary, any employee benefit plan of the Company or any Subsidiary or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company) or group (within the meaning of Rule 13d-5 promulgated under the Exchange Act) (“Group”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) (“Beneficial Owner”) of 35% or more of either (x) the then outstanding shares of common stock (or similar securities or interests in the case of an entity other than a corporation) of the Surviving Corporation, or (y) the combined voting power of the then outstanding securities (or interests) entitled to vote generally in the election of directors (or in the selection of any other similar governing body in the case of an entity other than a corporation) of the Surviving Corporation; and
(C)
individuals who were Incumbent Directors at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination constitute at least a majority of the members of the board of directors (or of any similar governing body in the case of an entity other than a corporation) of the Surviving Corporation; where, for purposes of this clause (ii), the term “Surviving Corporation” means the entity resulting from a Business Combination or, if such entity is a direct or indirect Subsidiary of another entity, the entity that is the ultimate parent of the entity resulting from such Business Combination.
(iii)
Stock Acquisition. Any Person (other than the Company, any Subsidiary, any employee benefit plan of the Company or any Subsidiary or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary of the Company) or Group becomes the Beneficial Owner of 35% or more of either (x) the Outstanding Stock or (y) the Outstanding Company Voting Securities; provided, however, that for purposes of this Section 2(h)(iii), no Change in Control shall be deemed to have occurred as a result of the following acquisitions: (A) any acquisition directly from the Company; or (B) any acquisition by a Person pursuant to a Business Combination which complies with clauses (A), (B) and (C) of Section 2(h)(ii); or
(iv)
Liquidation. Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company (or, if no such approval is required, the consummation of such a liquidation or dissolution).
(i)
“Change in Control Price” means the amount determined in clause (i), (ii), (iii), (iv) or (v), whichever is applicable, as follows: (i) the per share price offered to holders of the same class of Stock of the Company in any merger or consolidation, (ii) the per share value of the Stock immediately before the Change in Control (without regard to assets sold in the Change in Control and assuming the Company has received the consideration paid for the assets) in the case of a sale of the assets, (iii) the amount distributed per share of Stock in a dissolution transaction, (iv) the price per share offered to holders of the same class of Stock of the Company in any tender offer or exchange offer whereby a Change in Control takes place, or (v) if such Change in Control occurs other than pursuant to a tender or exchange offer, the fair market value per share of the shares into which such Options being surrendered are exercisable, as determined by the Committee as of the date determined by the Committee to be the date of cancellation and surrender of such Options. In the event that the consideration offered to stockholders of the Company in any transaction described in the foregoing sentence or Section 9(c) consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash.
(j)
“Code” means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions and regulations thereto.
(k)
“Committee” means a committee of two or more directors designated by the Board to administer this Plan; provided, however, that, unless otherwise determined by the Board, the Committee shall consist solely of two or more directors, each of whom shall be a “nonemployee director” within the meaning of Rule 16b-3 under the Exchange Act.
(l)
“Dividend Equivalent” means a right, granted to a Participant, either as a component of another Award or as a separate Award, to receive cash, Stock, other Awards or other property equal in value to dividends paid with respect to a specified number of shares of Stock, or other periodic payments. Dividend Equivalents granted as a component of another Award shall be subject to restrictions and a risk of forfeiture to the same extent as the other Award.
(m)
“Effective Date” means May __, 2020.
(n)
“Eligible Person” means all officers and employees of the Company or of any Subsidiary, and other persons who provide services to the Company or any of its Subsidiaries, including directors of the Company. An employee on leave of absence may be considered as still in the employ of the Company or a Subsidiary for purposes of eligibility for participation in this Plan.
(o)
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, including rules thereunder and successor provisions and rules thereto.
(p)
“Executive Officer” means an executive officer of the Company as defined under the Exchange Act.
(q)
“Fair Market Value” means, for a particular day:
(i)
if shares of Stock of the same class are listed or admitted to unlisted trading privileges on any national or regional securities exchange at the date of determining the Fair Market Value, then the last reported sale price, regular way, on the composite tape of that exchange on that business day or, if no such sale takes place on that business day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to unlisted trading privileges on that securities exchange or, if no such closing prices are available for that day, the last reported sale price, regular way, on the composite tape of that exchange on the last business day before the date in question; or
(ii)
if shares of Stock of the same class are not listed or admitted to unlisted trading privileges as provided in subparagraph (i) and if sales prices for shares of Stock of the same class in the over-the-counter market are reported by the National Association of Securities Dealers, Inc. Automated Quotations, Inc. (“NASDAQ”) National Market System as of the date of determining the Fair Market Value, then the last reported sales price so reported on that business day or, if no such sale takes place on that business day, the average
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of the high bid and low asked prices so reported or, if no such prices are available for that day, the last reported sale price so reported on the last business day before the date in question; or
(iii)
if shares of Stock of the same class are not listed or admitted to unlisted trading privileges as provided in subparagraph (i) and sales prices for shares of Stock of the same class are not reported by the NASDAQ National Market System (or a similar system then in use) as provided in subparagraph (ii), and if bid and asked prices for shares of Stock of the same class in the over-the-counter market are reported by NASDAQ (or, if not so reported, by the National Quotation Bureau Incorporated) as of the date of determining the Fair Market Value, then the average of the high bid and low asked prices on that business day or, if no such prices are available for that day, the average of the high bid and low asked prices on the last business day before the date in question; or
(iv)
if shares of Stock of the same class are not listed or admitted to unlisted trading privileges as provided in subparagraph (i) and sales prices or bid and asked prices therefor are not reported by NASDAQ (or the National Quotation Bureau Incorporated) as provided in subparagraph (ii) or subparagraph (iii) as of the date of determining the Fair Market Value, then the value determined in good faith by the Committee, which determination shall be conclusive for all purposes; or
(v)
if shares of Stock of the same class are listed or admitted to unlisted trading privileges as provided in subparagraph (i) or sales prices or bid and asked prices therefor are reported by NASDAQ (or the National Quotation Bureau Incorporated) as provided in subparagraph (ii) or subparagraph (iii) as of the date of determining the Fair Market Value, but the volume of trading is so low that the Board of Directors determines in good faith that such prices are not indicative of the fair value of the Stock, then the value determined in good faith by the Committee, which determination shall be conclusive for all purposes notwithstanding the provisions of subparagraphs (i), (ii) or (iii).
For purposes of valuing Incentive Stock Options, the Fair Market Value of Stock shall be determined without regard to any restriction other than one that, by its terms, will never lapse. Notwithstanding the foregoing, in the case of an Award that is a Limited SAR, the “Fair Market Value” shall equal the Change in Control Price.
(r)
“Incentive Stock Option” or “ISO” means any Option intended to be and designated as an incentive stock option within the meaning of section 422 of the Code or any successor provision thereto.
(s)
“Limited SAR” means a right granted to a Participant under Section 6(c) hereof that may only be exercised or settled in connection with a Change in Control or other event as specified by the Committee may be granted on such terms, not inconsistent with Section 6(c), as the Committee may determine.
(t)
“Option” means a right, granted to a Participant under Section 6(b) hereof, to purchase Stock or other Awards at a specified price during specified time periods.
(u)
“Other Stock-Based Awards” means Awards granted to a Participant under Section 6(h) hereof.
(v)
“Participant” means a person who has been granted an Award under this Plan which remains outstanding, including a person who is no longer an Eligible Person.
(w)
“Performance Award” means a right, granted to a Participant under Section 8 hereof, to receive Awards based upon performance criteria specified by the Committee.
(x)
“Person” shall mean any individual, group, partnership, limited liability company, corporation, association, trust, or other entity or organization.
(y)
“Phantom Stock” means a right, granted to a Participant under Section 6(e) hereof, to receive Stock, cash or a combination thereof at the end of a specified deferral period.
(z)
“Qualified Member” means a member of the Committee who is a “Non-Employee Director” within the meaning of Rule 16b-3(b)(3).
(aa)
“Restricted Stock” means Stock granted to a Participant under Section 6(d) hereof, that is subject to certain restrictions and to a risk of forfeiture.
(bb)
“Rule 16b-3” means Rule 16b-3, promulgated by the Securities and Exchange Commission under section 16 of the Exchange Act, as from time to time in effect and applicable to this Plan and Participants.
(cc)
“Securities Act” means the Securities Act of 1933 and the rules and regulations promulgated thereunder, or any successor law, as it may be amended from time to time.
(dd)
“Stock” means the Company’s Common Stock, par value $.01 per share, and such other securities as may be substituted (or resubstituted) for Stock pursuant to Section 9.
(ee)
“Stock Appreciation Rights” or “SAR” means a right granted to a Participant under Section 6(c) hereof.
(ff)
“Subsidiary” means any corporation or other entity of which a majority of the combined voting power of the outstanding Voting Securities is owned, directly or indirectly, by the Company.
(gg)
“Voting Securities” means with respect to any Person any securities or interests that vote generally in the election of directors, in the admission of general partners or members, or in the selection of any other similar governing body of such Person.
(a)
Authority of the Committee. This Plan shall be administered by the Committee except to the extent the Board elects, in order to comply with Rule 16b-3 or for any other reason, to administer this Plan, in which case references herein to the “Committee” shall be deemed to include references to the “Board.” Subject to the express provisions of the Plan and Rule 16b-3, the Committee shall have the authority, in its sole and absolute discretion, to (i) adopt, amend, and rescind administrative and interpretive rules and regulations relating to the Plan; (ii) determine the Eligible Persons to whom, and the time or times at which, Awards shall be granted; (iii) determine the amount of cash and the number of shares of Stock, Stock Appreciation Rights, Phantom Stock Rights, or Restricted Stock Awards, or any combination thereof, that shall be the subject of each Award; (iv) determine the terms and provisions of each Award agreement (which need not be identical), including provisions defining or otherwise relating to (A) the term and the period or periods and extent of exercisability of the Options, (B) the extent to which the transferability of shares of
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Stock issued or transferred pursuant to any Award is restricted, (C) the effect of termination of employment of a Participant on the Award, and (D) the effect of approved leaves of absence (consistent with any applicable regulations of the Internal Revenue Service); (v) subject to the provisions of Section 5(b), accelerate the time of exercisability of any Option that has been granted; (vi) construe the respective Award agreements and the Plan; (vii) make determinations of the Fair Market Value of the Stock pursuant to the Plan; (viii) delegate its duties under the Plan to such agents as it may appoint from time to time, provided that the Committee may not delegate its duties with respect to making Awards to, or otherwise with respect to Awards granted to, Eligible Persons who are subject to section 16(b) of the Exchange Act; (ix) subject to ratification by the Board, terminate, modify, or amend the Plan; and (x) make all other determinations, perform all other acts, and exercise all other powers and authority necessary or advisable for administering the Plan, including the delegation of those ministerial acts and responsibilities as the Committee deems appropriate. Subject to Rule 16b-3, the Committee may correct any defect, supply any omission, or reconcile any inconsistency in the Plan, in any Award, or in any Award agreement in the manner and to the extent it deems necessary or desirable to carry the Plan into effect, and the Committee shall be the sole and final judge of that necessity or desirability. In no event may the Board or the Committee: (i) reprice underwater Options by canceling and regranting Options or by lowering the exercise price, except for adjustments pursuant to Section 9 hereof; (ii) conduct a cash buyout of any underwater Options; (iii) replace an underwater Option with another Award; or (iv) take any other action that would be treated as a repricing under generally accepted accounting principles. The determinations of the Committee on the matters referred to in this Section 3(a) shall be final and conclusive.
(b)
Manner of Exercise of Committee Authority. At any time that a member of the Committee is not a Qualified Member, any action of the Committee relating to an Award granted or to be granted to a Participant who is then subject to section 16 of the Exchange Act in respect of the Company may be taken either (i) by a subcommittee, designated by the Committee, composed solely of two or more Qualified Members, or (ii) by the Committee but with each such member who is not a Qualified Member abstaining or recusing himself or herself from such action; provided, however, that, upon such abstention or recusal, the Committee remains composed solely of two or more Qualified Members. Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such non-Qualified Member(s), shall be the action of the Committee for purposes of this Plan. Any action of the Committee shall be final, conclusive and binding on all persons, including the Company, its subsidiaries, stockholders, Participants, Beneficiaries, and transferees under Section 10(a) hereof or other persons claiming rights from or through a Participant. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to officers or managers of the Company or any Subsidiary, or committees thereof, the authority, subject to such terms as the Committee shall determine, to perform such functions, including administrative functions, as the Committee may determine, to the extent that such delegation will not result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to section 16 of the Exchange Act in respect of the Company. The Committee may appoint agents to assist it in administering this Plan.
(c)
Limitation of Liability. The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or employee of the Company or a Subsidiary, the Company’s legal counsel, independent auditors, consultants or any other agents assisting in the administration of this Plan. Members of the Committee and any officer or employee of the Company or a Subsidiary acting at the direction or on behalf of the Committee shall not be personally liable for any action or determination taken or made in good faith with respect to this Plan, and shall, to the fullest extent permitted by law, be indemnified and held harmless by the Company with respect to any such action or determination.
(a)
Overall Number of Shares Available for Delivery. Subject to adjustment in a manner consistent with any adjustment made pursuant to Section 9, the total number of shares of Stock reserved and available for delivery in connection with Awards under this Plan shall not exceed the sum of 11,000,000. The maximum number of shares of Stock that may be subject to Incentive Stock Option treatment is 11,000,000.
(b)
Application of Limitation to Grants of Awards. No Award may be granted if (i)(A) the number of shares of Stock to be delivered in connection with such Award or, (B) in the case of an Award relating to shares of Stock but settleable only in cash (such as cash-only SARs), the number of shares to which such Award relates exceeds (ii) the number of shares of Stock remaining available under this Plan minus the number of shares of Stock issuable in settlement of or relating to then-outstanding Awards. The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the number of shares of Stock actually delivered differs from the number of shares previously counted in connection with an Award.
(c)
Availability of Shares Not Delivered under Awards. Shares of Stock subject to an Award under this Plan that expire or are canceled, forfeited or otherwise terminated without a delivery of shares to the Participant will again be available for Awards under this Plan, provided that shares of Stock subject to an Award shall not be again made available for issuance or delivery under this Plan if such shares are (i) tendered or withheld in payment of any exercise or purchase price of an Award or taxes relating to any Award, or (ii) covered by an Award that is settled in cash or in a manner such that some or all of the shares of Stock by the Award are not issued.
(d)
Stock Offered. The shares to be delivered under the Plan shall be made available from (i) authorized but unissued shares of Stock, (ii) Stock held in the treasury of the Company, or (iii) previously issued shares of Stock reacquired by the Company, including shares purchased on the open market, in each situation as the Board or the Committee may determine from time to time at its sole option.
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(a)
Minimum Vesting Requirement. All Awards that are designated to be settled in shares of Stock shall be subject to a minimum vesting requirement of at least one year from the date the Award was granted, and no portion of any such Award may vest or become exercisable earlier than the first anniversary of the date such Award was granted; provided, that the Committee may, in its discretion, provide for full or partial acceleration of the vesting provisions of any Award based on circumstances the Committee deems to be necessary or appropriate. The foregoing minimum vesting requirement shall not apply: (i) with respect to 400,000 shares of stock as a “Carve-Out Exception” (i.e., 5% of 8 million shares), or (ii) to the vesting of an Award that is accelerated as a result of a Change in Control or a Participant’s death or disability.
(a)
General. Awards may be granted on the terms and conditions set forth in this Section 6. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 10(c)), such additional terms and conditions, not inconsistent with the provisions of this Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of employment by the Participant and terms permitting a Participant to make elections relating to his or her Award. subject to the provisions of Section 5(b), The Committee shall retain full power and discretion to accelerate, waive or modify, at any time, any term or condition of an Award that is not mandatory under this Plan. Except in cases in which the Committee is authorized to require other forms of consideration under this Plan, or to the extent other forms of consideration must be paid to satisfy the requirements of the Delaware General Corporation Law, no consideration other than services may be required for the grant (but not the exercise) of any Award.
(b)
Options. The Committee is authorized to grant Options to Participants on the following terms and conditions:
(i)
Exercise Price. Each Option agreement shall state the exercise price per share of Stock (the “Exercise Price”); provided, however, that the Exercise Price per share of Stock subject to an Option shall not be less than 100% of the Fair Market Value per share of the Stock on the date of grant of the Option; provided, however, with respect to an Incentive Stock Option, in the case of an individual who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Corporation or its parent or any Subsidiary, the Exercise Price shall not be less than 110% of the Fair Market Value per share of the Stock on the date of grant.
(ii)
Time and Method of Exercise. The Committee shall determine the time or times at which or the circumstances under which an Option may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the methods by which such exercise price may be paid or deemed to be paid, the form of such payment, including without limitation cash, Stock, other Awards or awards granted under other plans of the Company or any Subsidiary, or other property (including notes or other contractual obligations of Participants to make payment on a deferred basis), and the methods by or forms in which Stock will be delivered or deemed to be delivered to Participants, including, but not limited to, the delivery of Restricted Stock subject to Section 6(d). In the case of an exercise whereby the Exercise Price is paid with Stock, such Stock shall be valued as of the date of exercise.
(iii)
ISOs. The terms of any ISO granted under this Plan shall comply in all respects with the provisions of section 422 of the Code. Anything in this Plan to the contrary notwithstanding, no term of this Plan relating to ISOs (including any SAR in tandem therewith) shall be interpreted, amended or altered, nor shall any discretion or authority granted under this Plan be exercised, so as to disqualify either this Plan or any ISO under section 422 of the Code, unless the Participant has first requested the change that will result in such disqualification. ISOs shall not be granted more than ten years after the earlier of the adoption of this Plan or the approval of this Plan by the Company’s stockholders. Notwithstanding the foregoing, the Fair Market Value of shares of Stock subject to an ISO and the aggregate Fair Market Value of shares of stock of any parent or Subsidiary corporation (within the meaning of sections 424(e) and (f) of the Code) subject to any other incentive stock option (within the meaning of section 422 of the Code)) of the Company or a parent or Subsidiary corporation (within the meaning of sections 424(e) and (f) of the Code) that first becomes purchasable by a Participant in any calendar year may not (with respect to that Participant) exceed $100,000, or such other amount as may be prescribed under section 422 of the Code or applicable regulations or rulings from time to time. As used in the previous sentence, Fair Market Value shall be determined as of the date the incentive stock options is granted. Failure to comply with this provision shall not impair the enforceability or exercisability of any Option, but shall cause the excess amount of shares to be reclassified in accordance with the Code.
(iv)
No Reload Options. No Option granted under this Plan shall contain any provision entitling the Participant to the automatic grant of additional Options in connection with any exercise of the original Option.
(c)
Stock Appreciation Rights. The Committee is authorized to grant SARs to Participants on the following terms and conditions:
(i)
Right to Payment. An SAR shall confer on the Participant to whom it is granted a right to receive, upon exercise or settlement thereof, the excess of (A) the Fair Market Value of one share of Stock on the date of exercise or settlement over (B) the grant price of the SAR as determined by the Committee.
(ii)
Rights Related to Options. A Stock Appreciation Right granted pursuant to an Option shall entitle a Participant, upon exercise or settlement, to surrender that Option or any portion thereof, to the extent unexercised, and to receive payment of an amount computed pursuant to Subsection 6(c)(ii)(B). That Option shall then cease to be exercisable or
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settleable to the extent surrendered. Stock Appreciation Rights granted in connection with an Option shall be subject to the terms of the Award agreement governing the Option, which shall comply with the following provisions in addition to those applicable to Options:
(A)
A Stock Appreciation Right granted in connection with an Option shall be exercisable or settleable only at such time or times and only to the extent that the related Option is exercisable and shall not be transferable except to the extent that the related Option is transferable.
(B)
Upon the exercise or settlement of a Stock Appreciation Right related to an Option, a Participant shall be entitled to receive payment from the Company of an amount determined by multiplying:
(1)
the difference obtained by subtracting the exercise price of a share of Stock specified in the related Option from the Fair Market Value of a share of Stock on the date of exercise or settlement of the Stock Appreciation Right, by
(2)
the number of shares as to which that Stock Appreciation Right has been exercised or settled.
(iii)
Right Without Option. A Stock Appreciation Right granted independent of an Option shall be exercisable or settleable as determined by the Committee and set forth in the Award agreement governing the Stock Appreciation Right, which Award agreement shall comply with the following provisions:
(A)
Each Award agreement shall state the total number of shares of Stock to which the Stock Appreciation Right relates.
(B)
Each Award agreement shall state the time the Stock Appreciation Right will be settled or the time or periods in which the right to exercise the Stock Appreciation Right or a portion thereof shall vest and the number of shares of Stock for which the right to exercise the Stock Appreciation Right shall vest at each such time or period.
(C)
Each Award agreement shall state the date at which the Stock Appreciation Rights shall expire if not previously exercised or settled.
(D)
Each Stock Appreciation Right shall entitle a participant, upon exercise or settlement thereof, to receive payment of an amount determined by multiplying:
(1)
the difference obtained by subtracting the Fair Market Value of a share of Stock on the date of grant of the Stock Appreciation Right from the Fair Market Value of a share of Stock on the date of exercise or settlement of that Stock Appreciation Right, by
(2)
the number of shares as to which the Stock Appreciation Right has been exercised or settled.
(iv)
Terms. The Committee shall determine at the date of grant or thereafter, the time or times at which and the circumstances under which an SAR may be exercised or settled in whole or in part (including based on achievement of performance goals and/or future service requirements), the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which Stock will be delivered or deemed to be delivered to Participants, whether or not an SAR shall be in tandem or in combination with any other Award, and any other terms and conditions of any SAR. SARs and Limited SARs may be either freestanding or in tandem with other Awards.
(v)
No Reload SARs. No SAR granted under this Plan shall contain any provision entitling the Participant to the automatic grant of additional SARs in connection with any exercise of the original SAR.
(d)
Restricted Stock. The Committee is authorized to grant Restricted Stock to Participants on the following terms and conditions:
(i)
Grant and Restrictions. Restricted Stock shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments or otherwise, as the Committee may determine at the date of grant or thereafter. Except to the extent restricted under the terms of this Plan and any Award agreement relating to the Restricted Stock, a Participant granted Restricted Stock shall have all of the rights of a stockholder, including the right to vote the Restricted Stock and the right to receive dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the Committee). During the restricted period applicable to the Restricted Stock, the Restricted Stock may not be sold, transferred, pledged, hypothecated, margined or otherwise encumbered by the Participant.
(ii)
Forfeiture. Except as otherwise determined by the Committee, upon termination of employment during the applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited and reacquired by the Company; provided that the Committee may provide, by rule or regulation or in any Award agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Stock shall be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Restricted Stock.
(iii)
Certificates for Stock. Restricted Stock granted under this Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock, that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.
(iv)
Dividends and Splits. Any dividend payments or distributions declared or paid on Restricted Stock shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such dividend payment or distribution has been made. The Committee may require or permit a Participant to elect that any cash dividends paid on a share of Restricted Stock be automatically reinvested in additional shares of Restricted Stock or applied to the purchase of additional Awards under this Plan, which shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock.
(e)
Phantom Stock. The Committee is authorized to grant Phantom Stock to Participants, which are rights to receive Stock, cash, or a combination thereof at the end of a specified deferral period, subject to the following terms and conditions:
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(i)
Award and Restrictions. Satisfaction of an Award of Phantom Stock shall occur upon expiration of the deferral period specified for such Phantom Stock by the Committee (or, if permitted by the Committee, as elected by the Participant). In addition, Phantom Stock shall be subject to such restrictions (which may include a risk of forfeiture) as the Committee may impose, if any, which restrictions may lapse at the expiration of the deferral period or at earlier specified times (including based on achievement of performance goals and/or future service requirements), separately or in combination, in installments or otherwise, as the Committee may determine. Phantom Stock may be satisfied by delivery of Stock, cash equal to the Fair Market Value of the specified number of shares of Stock covered by the Phantom Stock, or a combination thereof, as determined by the Committee at the date of grant or thereafter.
(ii)
Forfeiture. Except as otherwise determined by the Committee, upon termination of employment during the applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award agreement evidencing the Phantom Stock), all Phantom Stock that is at that time subject to deferral (other than a deferral at the election of the Participant) shall be forfeited; provided that the Committee may provide, by rule or regulation or in any Award agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Phantom Stock shall be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Phantom Stock.
(iii)
Dividend Equivalents. Unless otherwise determined by the Committee at date of grant, Dividend Equivalents on the specified number of shares of Stock covered by an Award of Phantom Stock shall be deferred with respect to such Phantom Stock and the amount or value thereof automatically deemed reinvested in additional Phantom Stock, other Awards or other investment vehicles, as the Committee shall determine or permit the Participant to elect.
(f)
Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu of obligations to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, provided that, in the case of Participants subject to section 16 of the Exchange Act, the amount of such grants remains within the discretion of the Committee to the extent necessary to ensure that acquisitions of Stock or other Awards are exempt from liability under section 16(b) of the Exchange Act. Stock or Awards granted hereunder shall be subject to such other terms as shall be determined by the Committee. In the case of any grant of Stock to an officer of the Company or a Subsidiary in lieu of salary or other cash compensation, the number of shares granted in place of such compensation shall be reasonable, as determined by the Committee. Notwithstanding anything in this Section 6(f) to the contrary, the number of shares of Stock granted as a bonus, when aggregated with the number of shares of Stock delivered pursuant to other Awards granted pursuant to Section 6(h), may not exceed 10% of the aggregate number of shares of Stock authorized under Section 4(a) for Awards under the Plan.
(g)
Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to a Participant, entitling the Participant to receive cash, Stock, other Awards, or other property equal in value to dividends paid with respect to a specified number of shares of Stock, or other periodic payments. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award. The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Stock, Awards, or other investment vehicles, and subject to such restrictions on transferability and risks of forfeiture, as the Committee may specify.
(h)
Other Awards. The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock, as deemed by the Committee to be consistent with the purposes of this Plan, including without limitation convertible or exchangeable debt securities, other rights convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and Awards valued by reference to the book value of Stock or the value of securities of or the performance of specified subsidiaries. The Committee shall determine the terms and conditions of such Awards. Stock delivered pursuant to an Award in the nature of a purchase right granted under this Section 6(h) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Stock, other Awards, or other property, as the Committee shall determine. Cash awards, as an element of or supplement to any other Award under this Plan, may also be granted pursuant to this Section 6(h). In addition, the Committee may grant Performance Awards and Annual Incentive Awards pursuant to Section 8 hereof that are not necessarily denominated, payable, or valued in or otherwise related to Stock. Notwithstanding anything in this Section 6(h) to the contrary, the number of shares of Stock that may be delivered pursuant to Awards granted pursuant to this Section 6(h), when aggregated with the number of shares of Stock granted as a bonus pursuant to Section 6(f), may not exceed 10% of the aggregate number of shares of Stock authorized under Section 4(a) for Awards under the Plan.
(a)
Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under this Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under another plan of the Company, any Subsidiary, or any business entity to be acquired by the Company or a Subsidiary, or any other right of a Participant to receive payment from the Company or any Subsidiary; provided, however, the Committee shall not grant Options with reload features. Such additional, tandem and substitute or exchange Awards may be granted at any time. If an Award is granted in substitution or exchange for another Award, the Committee shall require the surrender of such other Award in consideration for the grant of the new Award. In addition, Awards may be granted in lieu of cash
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compensation, including in lieu of cash amounts payable under other plans of the Company or any Subsidiary, in which the value of Stock subject to the Award is equivalent in value to the cash compensation (for example, Phantom Stock or Restricted Stock), or in which the exercise price, grant price or purchase price of the Award in the nature of a right that may be exercised is equal to the Fair Market Value of the underlying Stock minus the value of the cash compensation surrendered (for example, Options granted with an exercise price “discounted” by the amount of the cash compensation surrendered).
(b)
Term of Awards. The term of each Award shall be for such period as may be determined by the Committee; provided that in no event shall the term of any Option or SAR exceed a period of ten years (or such shorter term as may be required in respect of an ISO under section 422 of the Code).
(c)
Form and Timing of Payment under Awards; Deferrals. Subject to the terms of this Plan and any applicable Award agreement, payments to be made by the Company or a Subsidiary upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee shall determine, including without limitation cash, Stock, other Awards or other property, and may be made in a single payment or transfer, or, with respect to an Award that is not an Option or SAR, in installments or on a deferred basis. The settlement of any Award under this Plan may be accelerated, and cash paid in lieu of Stock in connection with such settlement, in the discretion of the Committee or upon occurrence of one or more specified events (in addition to a Change in Control), except to the extent such acceleration would trigger the additional tax under Section 409A of the Code. Installment or deferred payments with respect to Awards other than Options or SARs may be required by the Committee (subject to Section 10(c) of this Plan, including the consent provisions thereof in the case of any deferral of an outstanding Award not provided for in the original Award agreement) or permitted at the election of the Participant on terms and conditions established by the Committee. However, any installment and deferred payment, whether required by the Committee or elected by a Participant, that is not a “short-term deferral,” for purposes of Section 409A of the Code, shall be allowed only as is provided in a separate deferred compensation plan adopted by the Company that complies with Section 409A of the Code. Payment obligations with respect to such installment or deferred payment shall be transferred to such separate deferred compensation plan and thereafter shall be subject to the terms of such deferred compensation plan. This Plan shall not be operated in a manner that results in it constituting an “employee benefit plan” for purposes of section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.
(d)
Exemptions from Section 16(b) Liability. It is the intent of the Company that the grant of any Awards to or other transaction by a Participant who is subject to section 16 of the Exchange Act shall be exempt from section 16 pursuant to an applicable exemption (except for transactions acknowledged in writing to be non-exempt by such Participant). Accordingly, if any provision of this Plan or any Award agreement does not comply with the requirements of Rule 16b-3 as then applicable to any such transaction, such provision shall be construed or deemed amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 so that such Participant shall avoid liability under section 16(b).
(e)
Non-Competition Agreement. Each Participant to whom an Award is granted under this Plan may be required to agree in writing as a condition to the granting of such Award not to engage in conduct in competition with the Company or any of its subsidiaries for a period after the termination of such Participant’s employment with the Company and its subsidiaries as determined by the Committee.
(a)
Performance Conditions. The right of a Participant to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance conditions as may be specified by the Committee. The Committee may use such business criteria and individual performance criteria as set forth in Section 8(a)(i) and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to reduce or increase the amounts payable under any Award subject to performance conditions.
(i)
Business and Individual Performance Criteria.
(A)
Business Criteria. One or more of the following business criteria for the Company, on a consolidated basis, and/or for specified subsidiaries or business or geographical units of the Company (except with respect to the total stockholder return and earnings per share criteria), may be used by the Committee in establishing performance goals for such Performance Awards: (1) earnings per share; (2) increase in revenues; (3) increase in cash flow; (4) increase in cash flow return; (5) return on net assets, return on assets, return on investment, return on capital, or return on equity; (6) economic value added; (7) operating margin or contribution margin; (8) net income; net income per share; pretax earnings; pretax earnings before interest, depreciation and amortization and exploration expense; pretax operating earnings after interest expense and before incentives, service fees, and extraordinary or special items; or operating income; (9) total stockholder return; (10) debt reduction; (11) finding and development costs; (12) production growth; or production growth per share; (13) cash flow; or cash flow per share; (14) reserve replacement; or reserves per share growth; and (15) any of the above goals determined on an absolute or relative basis or as compared to the performance of a published or special index deemed applicable by the Committee including, but not limited to, the Standard & Poor’s 500 Stock Index or a group of comparable companies.
(B)
Individual Performance Criteria. The grant, exercise and/or settlement of Performance Awards may also be contingent upon individual performance goals established by the Committee.
(ii)
Performance Period; Timing for Establishing Performance Goals. Achievement of performance goals in respect of such Performance Awards shall be measured over a performance period of up to ten years, as specified by the Committee.
(iii)
Performance Award Pool. The Committee may establish a Performance Award pool, which shall be an unfunded pool, for purposes of measuring performance of the Company in
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connection with Performance Awards. The amount of such Performance Award pool may be based upon the achievement of a performance goal or goals based on one or more of the criteria set forth in Section 8(a)(i) hereof during the given performance period, as specified by the Committee. The Committee may specify the amount of the Performance Award pool as a percentage of any of such criteria, a percentage thereof in excess of a threshold amount, or as another amount which need not bear a strictly mathematical relationship to such criteria.
(iv)
Settlement of Performance Awards; Other Terms. After the end of each performance period, the Committee shall determine the amount, if any, of (A) the Performance Award pool, and the maximum amount of potential Performance Award payable to each Participant in the Performance Award pool, or (B) the amount of potential Performance Award otherwise payable to each Participant. Settlement of such Performance Awards shall be in cash, Stock, other Awards or other property, in the discretion of the Committee. The Committee may, in its discretion, reduce or increase the amount of a settlement otherwise to be made in connection with such Performance Awards. The Committee shall specify the circumstances in which such Performance Awards shall be paid or forfeited in the event of termination of employment by the Participant prior to the end of a performance period or settlement of Performance Awards.
(b)
Annual Incentive Awards Granted to Designated Covered Employees. The Committee may grant an Annual Incentive Award to any Eligible Person. The grant, exercise and/or settlement of such Annual Incentive Award may be contingent upon achievement of preestablished performance goals and other terms set forth in this Section 8(b).
(i)
Annual Incentive Award Pool. The Committee may establish an Annual Incentive Award pool, which shall be an unfunded pool, for purposes of measuring performance of the Company in connection with Annual Incentive Awards. The amount of such Annual Incentive Award pool shall be based upon the achievement of a performance goal or goals based on one or more of the business criteria set forth in Section 8(a)(i) hereof during the given performance period. The Committee may specify the amount of the Annual Incentive Award pool as a percentage of any of such business criteria, a percentage thereof in excess of a threshold amount, or as another amount which need not bear a strictly mathematical relationship to such business criteria.
(ii)
Potential Annual Incentive Awards. The Committee shall determine the Eligible Persons who will potentially receive Annual Incentive Awards, and the amounts potentially payable thereunder, for that fiscal year, either out of an Annual Incentive Award pool established under Section 8(b)(i) hereof or as individual Annual Incentive Awards. The amount potentially payable shall be based on such criteria as shall be established by the Committee.
(iii)
Payout of Annual Incentive Awards. After the end of each fiscal year, the Committee shall determine the amount, if any, of (A) the Annual Incentive Award pool, and the maximum amount of potential Annual Incentive Award payable to each Participant in the Annual Incentive Award pool, or (B) the amount of potential Annual Incentive Award otherwise payable to each Participant. The Committee may, in its discretion, determine that the amount payable to any Participant as a final Annual Incentive Award shall be increased or reduced from the amount of his or her potential Annual Incentive Award, including a determination to make no final Award whatsoever. The Committee shall specify the circumstances in which an Annual Incentive Award shall be paid or forfeited in the event of termination of employment by the Participant prior to the end of a fiscal year or settlement of such Annual Incentive Award.
(a)
Existence of Plans and Awards. The existence of this Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities ahead of or affecting Stock or the rights thereof, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.
(b)
Subdivision or Consolidation of Shares. The terms of an Award and the number of shares of Stock authorized pursuant to Section 4 for issuance under the Plan shall be subject to adjustment from time to time, in accordance with the following provisions:
(i)
If at any time, or from time to time, the Company shall subdivide as a whole (by reclassification, by a Stock split, by the issuance of a distribution on Stock payable in Stock, or otherwise) the number of shares of Stock then outstanding into a greater number of shares of Stock, then (A) the maximum number of shares of Stock available for the Plan as provided in Section 4 shall be increased proportionately, and the kind of shares or other securities available for the Plan shall be appropriately adjusted, (B) the number of shares of Stock (or other kind of shares or securities) that may be acquired under any Award shall be increased proportionately, and (C) the price (including the exercise price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Awards shall be reduced proportionately, without changing the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject to restrictions.
(ii)
If at any time, or from time to time, the Company shall consolidate as a whole (by reclassification, reverse Stock split, or otherwise) the number of shares of Stock then outstanding into a lesser number of shares of Stock, (A) the maximum number of shares of Stock available for the Plan as provided in Section 4 shall be decreased proportionately, and the kind of shares or other securities available for the Plan shall be appropriately adjusted, (B) the number of shares of Stock (or other kind of shares or securities) that may be acquired under any Award shall be decreased proportionately, and (C) the price (including the exercise price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Awards shall be increased proportionately, without changing the aggregate
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purchase price or value as to which outstanding Awards remain exercisable or subject to restrictions.
(iii)
Whenever the number of shares of Stock subject to outstanding Awards and the price for each share of Stock subject to outstanding Awards are required to be adjusted as provided in this Section 9(b), the Committee shall promptly prepare a notice setting forth, in reasonable detail, the event requiring adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the change in price and the number of shares of Stock, other securities, cash, or property purchasable subject to each Award after giving effect to the adjustments. The Committee shall promptly give each Participant such a notice.
(iv)
Adjustments under Subsections 9(b)(i) and (ii) shall be made by the Committee, and its determination as to what adjustments shall be made and the extent thereof shall be final, binding, and conclusive. No fractional interest shall be issued under the Plan on account of any such adjustments.
(c)
Corporate Restructuring. If the Company recapitalizes, reclassifies its capital stock, or otherwise changes its capital structure (a “recapitalization”), the number and class of shares of Stock covered by an Option theretofore granted shall be adjusted so that such Option shall thereafter cover the number and class of shares of stock and securities to which the holder would have been entitled pursuant to the terms of the recapitalization if, immediately prior to the recapitalization, the holder had been the holder of record of the number of shares of Stock then covered by such Option and the share limitations provided in Section 4 shall be adjusted in a manner consistent with the recapitalization. Upon a Change in Control, all Awards outstanding as of the effective time of the Change in Control, other than Performance Awards, shall become immediately fully vested and/or exercisable and shall no longer be subject to a substantial risk of forfeiture or restrictions on transferability, other than those imposed by applicable legislative or regulatory requirements. With respect to Performance Awards, in the event of a Change in Control, the number of Performance Awards that shall vest and shall no longer be subject to a substantial risk of forfeiture or restrictions on transferability, other than those imposed by applicable legislative or regulatory requirements shall be determined as follows: the Committee shall (i) shorten the performance period to end on the date of the Change in Control, (ii) adjust the applicable performance goals as appropriate based on the shortened performance period, and (iii) determine the Performance Awards that shall vest based on the extent to which the applicable performance goals with respect to each such shortened performance period have been met. Notwithstanding the foregoing, with respect to any such compensation that is subject to Section 409A of the Code, the payment of such Award shall be accelerated only upon a “change of control event,” as defined in Section 409A of the Code and the Treasury regulations thereunder.
In addition, upon a Change in Control, the Committee, acting in its sole discretion without the consent or approval of any holder, may effect one or more of the following alternatives, which may vary among individual holders and which may vary among Options held by any individual holder: (1) accelerate the time at which Options then outstanding may be exercised so that such Options may be exercised in full for a limited period of time on or before a specified date (before or after such Change in Control) fixed by the Committee, after which specified date all unexercised Options and all rights of holders thereunder shall terminate, (2) require the mandatory surrender to the Company by selected holders of some or all of the outstanding Options held by such holders (irrespective of whether such Options are then exercisable under the provisions of this Plan) as of a date, before or after such Change in Control, specified by the Committee, in which event the Committee shall thereupon cancel such Options and pay to each holder an amount of cash per share equal to the excess, if any, of the Change in Control Price subject to such Option over the exercise price(s) under such Options for such shares, (3) provide that the number and class of shares of Stock covered by an Award theretofore granted shall be adjusted so that such Award shall thereafter cover the number and class of shares of Stock or other securities or property (including, without limitation, cash) to which the holder would have been entitled pursuant to the terms of the agreement of merger, consolidation, sale of assets, or dissolution, if the holder had been the holder of record of the number of shares of Stock covered by the Award, or (4) make such adjustments to Options then outstanding as the Committee deems appropriate to reflect such Change in Control (provided, however, that the Committee may determine in its sole discretion that no adjustment is necessary to Options then outstanding).
(d)
Non-Option Awards. In the event of changes in the outstanding Stock by reason of recapitalization, reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in capitalization occurring after the date of the grant of any Award and not otherwise provided for by this Section 9, any outstanding Awards and any agreements evidencing such Awards shall be subject to adjustment by the Committee at its discretion as to the number and price of shares of Stock or other consideration subject to such Awards. In the event of any such change in the outstanding Stock, the aggregate number of shares available under this Plan may be appropriately adjusted by the Committee, whose determination shall be conclusive.
(e)
Additional Issuances. Except as hereinbefore expressly provided, the issuance by the Company of shares of stock of any class or securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to Awards theretofore granted or the purchase price per share, if applicable.
(i)
Permitted Transferees. The Committee may, in its discretion, permit a Participant to transfer all or any portion of an Option, Stock Appreciation Right, Phantom Stock Award or Restricted Stock Award (if such Restricted Stock Award does not require the transfer of consideration by the Participant or the holder other than usual and customary service) after the Company’s initial registration of the Stock
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under section 12(b) or 12(g) of the Exchange Act, or authorize all or a portion of such Awards to be granted to an Eligible Person to be on terms which permit transfer by such Participant; provided that, in either case the transferee or transferees must be any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, in each case with respect to the Participant, any person sharing the Participant’s household (other than a tenant or employee of the Company), a trust in which these persons have more than fifty percent of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent of the voting interests (collectively, “Permitted Transferees”); provided further that, (X) there may be no consideration for any such transfer and (Y) subsequent transfers of Awards transferred as provided above shall be prohibited except subsequent transfers back to the original holder of the Award and transfers to other Permitted Transferees of the original holder. Agreements evidencing Awards with respect to which such transferability is authorized at the time of grant must be approved by the Committee, and must expressly provide for transferability in a manner consistent with this Subsection 10(a)(i).
(ii)
Qualified Domestic Relations Orders. An Option, Stock Appreciation Right, Phantom Stock Award or Restricted Stock Award (if such Restricted Stock Award does not require the transfer of consideration by the Participant or the holder other than usual and customary service) after the Company’s initial registration of the Stock under section 12(b) or 12(g) of the Exchange Act, may be transferred, to a Permitted Transferee, pursuant to a domestic relations order entered or approved by a court of competent jurisdiction upon delivery to the Company of written notice of such transfer and a certified copy of such order.
(iii)
Other Transfers. Except as expressly permitted by Subsections 10(a)(i) and 10(a)(ii), Awards shall not be transferable other than by will or the laws of descent and distribution except that in the Committee’s discretion a Stock Appreciation Right, Phantom Stock Award (if such Stock Appreciation Right or Phantom Stock Award is not exercisable for Stock and not subject to the Participant’s or holder’s discretion as to the timing or method of payment) or Restricted Stock Award (if such Restricted Stock Award does not require the transfer of consideration by the Participant or the holder other than usual and customary service) may be transferable, however, not for consideration. Notwithstanding anything to the contrary in this Section 10, an Incentive Stock Option shall not be transferable other than by will or the laws of descent and distribution.
(iv)
Effect of Transfer. Following the transfer of any Award as contemplated by Subsections 10(a)(i), 10(a)(ii) and 10(a)(iii), (A) such Award shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that the term “Participant” shall be deemed to refer to the Permitted Transferee, the recipient under a qualified domestic relations order, the estate or heirs of a deceased Participant, or other transferee, as applicable, to the extent appropriate to enable the Participant to exercise the transferred Award in accordance with the terms of this Plan and applicable law and (B) the provisions of the Award relating to exercisability hereof shall continue to be applied with respect to the original Participant and, following the occurrence of any such events described therein the Awards shall be exercisable by the Permitted Transferee, the recipient under a qualified domestic relations order, the estate or heirs of a deceased Participant, or other transferee, as applicable, only to the extent and for the periods that would have been applicable in the absence of the transfer.
(v)
Procedures and Restrictions. Any Participant desiring to transfer an Award as permitted under Subsections 10(a)(i), 10(a)(ii) or 10(a)(iii) shall make application therefor in the manner and time specified by the Committee and shall comply with such other requirements as the Committee may require to assure compliance with all applicable securities laws. The Committee shall not give permission for such a transfer if (A) it would give rise to short-swing liability under section 16(b) of the Exchange Act or (B) it may not be made in compliance with all applicable federal, state and foreign securities laws.
(vi)
Registration. To the extent the issuance to any Permitted Transferee of any shares of Stock issuable pursuant to Awards transferred as permitted in this Section 10(a) is not registered pursuant to the effective registration statement of the Company generally covering the shares to be issued pursuant to this Plan to initial holders of Awards, the Company shall not have any obligation to register the issuance of any such shares of Stock to any such transferee.
(b)
Taxes. The Company and any Subsidiary is authorized to withhold from any Award granted, or any payment relating to an Award under this Plan, including from a distribution of Stock, amounts of withholding and other taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Participant’s tax obligations, either on a mandatory or elective basis in the discretion of the Committee.
(c)
Changes to this Plan and Awards. The Board may amend, alter, suspend, discontinue or terminate this Plan or the Committee’s authority to grant Awards under this Plan without the consent of stockholders or Participants, except that any amendment or alteration to this Plan, including any increase in any share limitation, shall be subject to the approval of the Company’s stockholders not later than the annual meeting next following such Board action if such stockholder approval is required by any federal or state law or regulation or the rules of any stock exchange or automated quotation system on which the Stock may then be listed or quoted, and the Board may otherwise, in its discretion, determine to submit other such changes to this Plan to stockholders for approval; provided that, without the consent of an affected Participant, no such Board action may materially and adversely affect the rights of such Participant under any previously granted and outstanding Award. Subject to the provisions of Section 5(b), the Committee may waive any conditions or rights under, or amend, alter, suspend, discontinue or terminate any Award theretofore granted and any Award agreement relating thereto, except as otherwise provided in this Plan; provided that, without the consent of an affected Participant, no such Committee action may materially and adversely affect the rights of such Participant under such Award.
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(d)
Limitation on Rights Conferred Under Plan. Neither this Plan nor any action taken hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the Company or a Subsidiary, (ii) interfering in any way with the right of the Company or a Subsidiary to terminate any Eligible Person’s or Participant’s employment or service at any time, (iii) giving an Eligible Person or Participant any claim to be granted any Award under this Plan or to be treated uniformly with other Participants and employees, or (iv) conferring on a Participant any of the rights of a stockholder of the Company unless and until the Participant is duly issued or transferred shares of Stock in accordance with the terms of an Award.
(e)
Unfunded Status of Awards. This Plan is intended to constitute an “unfunded” plan for certain incentive awards.
(f)
Nonexclusivity of this Plan. Neither the adoption of this Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may deem desirable. Nothing contained in this Plan shall be construed to prevent the Company or any Subsidiary from taking any corporate action which is deemed by the Company or such Subsidiary to be appropriate or in its best interest, whether or not such action would have an adverse effect on this Plan or any Award made under this Plan. No employee, beneficiary or other person shall have any claim against the Company or any Subsidiary as a result of any such action.
(g)
Payments in the Event of Forfeitures; Fractional Shares. Unless otherwise determined by the Committee, in the event of a forfeiture of an Award with respect to which a Participant paid cash or other consideration to the Company in exchange for such Award, the Participant shall be repaid the amount of such cash or other consideration. No fractional shares of Stock shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
(h)
Severability. If any provision of this Plan is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and the Plan shall be construed and enforced as if the illegal or invalid provision had never been included herein. If any of the terms or provisions of this Plan or any Award agreement conflict with the requirements of Rule 16b-3 (as those terms or provisions are applied to Eligible Persons who are subject to section 16(b) of the Exchange Act) or section 422 of the Code (with respect to Incentive Stock Options), then those conflicting terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of Rule 16b-3 (unless the Board or the Committee, as appropriate, has expressly determined that the Plan or such Award should not comply with Rule 16b-3) or section 422 of the Code. With respect to Incentive Stock Options, if this Plan does not contain any provision required to be included herein under section 422 of the Code, that provision shall be deemed to be incorporated herein with the same force and effect as if that provision had been set out at length herein; provided, further, that, to the extent any Option that is intended to qualify as an Incentive Stock Option cannot so qualify, that Option (to that extent) shall be deemed an Option not subject to section 422 of the Code for all purposes of the Plan.
(i)
Governing Law. All questions arising with respect to the provisions of the Plan and Awards shall be determined by application of the laws of the State of Texas, without giving effect to any conflict of law provisions thereof, except to the extent Texas law is preempted by federal law. The obligation of the Company to sell and deliver Stock hereunder is subject to applicable federal and state laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Stock.
(j)
Conditions to Delivery of Stock. Nothing herein or in any Award granted hereunder or any Award agreement shall require the Company to issue any shares with respect to any Award if that issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act or any similar or superseding statute or statutes, any other applicable statute or regulation, or the rules of any applicable securities exchange or securities association, as then in effect. At the time of any exercise of an Option or Stock Appreciation Right, or at the time of any grant of a Restricted Stock Award, the Company may, as a condition precedent to the exercise of such Option or Stock Appreciation Right or vesting of any Restricted Stock Award, require from the Participant (or in the event of his death, his legal representatives, heirs, legatees, or distributees) such written representations, if any, concerning the holder’s intentions with regard to the retention or disposition of the shares of Stock being acquired pursuant to the Award and such written covenants and agreements, if any, as to the manner of disposal of such shares as, in the opinion of counsel to the Company, may be necessary to ensure that any disposition by that holder (or in the event of the holder’s death, his legal representatives, heirs, legatees, or distributees) will not involve a violation of the Securities Act or any similar or superseding statute or statutes, any other applicable state or federal statute or regulation, or any rule of any applicable securities exchange or securities association, as then in effect. No Option or Stock Appreciation Right shall be exercisable and no restriction on any Restricted Stock Award shall lapse with respect to a Participant unless and until the holder thereof shall have paid cash or property to, or performed services for, the Company or any of its Subsidiaries that the Committee believes is equal to or greater in value than the par value of the Stock subject to such Award.
(k)
Plan Effective Date and Stockholder Approval. This Plan was originally effective as of May 15, 2019. This Amended and Restated plan shall become effective upon approval of the stockholders at the annual meeting occurring May 13, 2020.
IN WITNESS WHEREOF, the Company has caused this Range Resources Corporation Amended and Restated 2019 Equity-Based Compensation Plan to be executed May __, 2020.
RANGE RESOURCES CORPORATION
By: ____________________________________________
Name:
Title:
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