PE Parsley Energy Inc

Executive Compensation Highlights

The Compensation Committee’s goal in designing and administering our executive compensation program is to ensure that it provides a competitive level of compensation to attract and retain talented executives, reward and encourage maximum corporate and individual performance, promote accountability and ensure that our executives’ interests are aligned with the interests of our stockholders. We believe that these compensation objectives are accomplished most effectively by linking a substantial majority of our executives’ compensation to the Company’s short- and long-term performance, as measured by financial, operational, and market-based metrics. We refer to this compensation as “at-risk” because it may be reduced in value or forfeited entirely depending on the applicable executive’s continued employment with the Company and the Company’s actual performance with respect to the applicable metric.

Notably, approximately 86.7% of our Chief Executive Officer’s 2019 target compensation was comprised of at-risk pay, while his guaranteed base salary comprised approximately 13.3% of his 2019 target compensation. Similarly, approximately 81.5% of our other named executive officers’ aggregate 2019 target compensation was comprised of at-risk pay, while their aggregate guaranteed base salaries comprised approximately 18.5% of their aggregate 2019 target compensation.

In evaluating, designing and implementing our executive compensation program, the Compensation Committee considers the latest industry trends and compensation best practices. The structure of our executive compensation program is designed to incorporate pay-for-performance principles along with other practices that discourage excessive payments or risk taking. The Company’s executive compensation and compensation-related governance policies and practices incorporate many best practices, including the following:

Safety, Sustainability and Corporate Responsibility Performance

Our commitment to safety, sustainability and corporate responsibility starts at the top with our Board and goes beyond operating responsibly and fulfilling strict regulatory standards. Key elements of our safety, sustainability and corporate responsibility performance include environmental stewardship, health and safety, and community engagement.

Stockholder Engagement

Our management regularly engages with our largest stockholders throughout the year to discuss the issues that matter most to them, including corporate governance, sustainability and compensation matters. During 2019, our management engaged with non-affiliated stockholders collectively representing more than a majority of the Company’s outstanding shares of common stock.

Our stockholder engagement process, as well as our regular review of governance and disclosure best practices, has led to a number of enhancements in recent years, including:

PARSLEY ENERGY, INC.

303 Colorado Street, Suite 3000

Austin, Texas 78701

PROXY STATEMENT

2020 ANNUAL MEETING OF STOCKHOLDERS

The Board of Directors (the “Board of Directors” or the “Board”) of Parsley Energy, Inc. (the “Company”) requests your proxy for the completely virtual 2020 Annual Meeting of Stockholders that will be held on May 21, 2020, at 8:00 a.m. Central Time (the “Annual Meeting”). Stockholders may attend the Annual Meeting online at the following address: www.virtualshareholdermeeting.com/PE2020. By granting the proxy, you authorize the persons named on the proxy to represent you and vote your shares at the Annual Meeting. Those persons will also be authorized to vote your shares to adjourn or recess the Annual Meeting from time to time and to vote your shares at any adjournment, recess or postponement of the Annual Meeting. In addition, to the extent that any other matters come properly before the Annual Meeting, the persons named on the proxy shall have the discretion to vote your shares on those matters in their judgment.

The Board has made this proxy statement (the “Proxy Statement”) and the accompanying Notice of 2020 Annual Meeting of Stockholders available on the Internet at www.proxyvote.com. Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy solicitation materials primarily via the Internet, rather than mailing paper copies of these materials to each stockholder. Beginning on April 6, 2020, we will mail to each stockholder as of the close of business on March 26, 2020 (the “Record Date”) a Notice of Internet Availability of Proxy Materials (the “Notice of Availability”) containing instructions on how to access our proxy materials, vote online or request electronic or printed copies of these materials.

Choosing to receive your future proxy materials by e-mail or to receive a single set of proxy materials per household will save the Company the cost of printing and mailing documents to you and will reduce the impact of the Company’s annual meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail in subsequent years in which you are a stockholder with instructions containing a link to those materials and a link to the proxy voting website. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.

About the Annual Meeting

Purpose of the Annual Meeting

The purpose of the Annual Meeting is for our stockholders to consider and act upon the proposals described in this Proxy Statement and any other matters that properly come before the Annual Meeting or any adjournment, recess or postponement thereof.

Admission to Annual Meeting

To be admitted to and participate in the Annual Meeting you will be required to visit www.virtualshareholdermeeting.com/PE2020 and enter the control number included on the Notice of Availability, on the proxy card received, or in the instructions that accompanied the proxy materials. Online check-in will begin at 7:45 a.m. Central Time. Please allow time for online check-in procedures. If you encounter difficulties accessing the virtual meeting during check-in or in the course of the Annual Meeting, please call (800) 586-1548 (U.S.) or (303) 562-9288 (International).

Proposals to be Voted Upon at the Annual Meeting

At the Annual Meeting, our stockholders will be asked to consider and vote upon the following three proposals:

In addition, any other matters that properly come before the Annual Meeting or any adjournment, recess or postponement thereof will be considered. Management is presently aware of no other business to come before the Annual Meeting.

Recommendation of the Board

The Board recommends that you vote FOR the election to the Board of each of the director nominees named in this Proxy Statement (Proposal ONE); FOR the approval, on a non-binding advisory basis, of the Company’s named executive officer compensation for the fiscal year ended December 31, 2019 (Proposal TWO); and FOR the ratification of the appointment of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2020 (Proposal THREE).

About the Annual Meeting

The Annual Report and this Proxy Statement are available at www.proxyvote.com.

Voting at the Annual Meeting

The Company’s Class A common stock, par value $0.01 per share (the “Class A common stock”), and Class B common stock, par value $0.01 per share (the “Class B common stock,” and together with the Class A common stock, the “common stock”), are the only classes of securities that entitle holders to vote generally at meetings of the Company’s stockholders. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters presented at the Annual Meeting. Each share of common stock outstanding on the Record Date entitles the holder thereof to one vote at the Annual Meeting. Stockholders do not have cumulative voting rights with respect to the election of directors. Following the Annual Meeting, voting results will be tabulated and certified by the inspector of elections appointed by the Board and timely announced by the Company.

Stockholders of Record. If on the Record Date you hold shares of our common stock that are represented by stock certificates or registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered the stockholder of record with respect to those shares. Broadridge Financial Solutions (“Broadridge”) is sending the Notice of Availability regarding these proxy materials directly to you on our behalf. As a stockholder of record, you may vote virtually at the Annual Meeting or by proxy. Whether or not you plan to attend the Annual Meeting, you may vote by Internet or by telephone by following the instructions on the Notice of Availability. If you request printed copies of the proxy materials by mail, you may also vote by completing, signing and submitting your proxy card to the address shown. Whether or not you plan to attend the Annual Meeting, we urge you to vote by Internet, by telephone or by completing, signing and returning the proxy card you will receive upon request of printed materials. If you submit a signed proxy but do not give voting instructions as to how your shares should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use by (1) delivering a written notice of revocation addressed to Parsley Energy, Inc., Attn: General Counsel, 303 Colorado Street, Suite 3000, Austin, Texas 78701, (2) duly executing a proxy bearing a later date, (3) voting again by Internet or by telephone or (4) attending the Annual Meeting and voting virtually. Your last vote or proxy will be the vote or proxy that is counted. Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you vote or specifically so request.

Beneficial Owners through Brokers, Banks or Other Nominees. If on the Record Date you hold shares of our common stock in an account with a brokerage firm, bank or other nominee, then you are the beneficial owner of these shares and hold such shares in “street name,” and the Notice of Availability regarding these proxy materials will be forwarded to you by that broker, bank or other nominee. As a beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote the shares held in your account, and such broker, bank or other nominee will enclose or provide voting instructions for you to use in directing it how to vote your shares. The broker, bank or other nominee that holds your shares, however, is considered the stockholder of record for purposes of voting at the Annual Meeting. Please refer to the voting instruction form or other information provided by the stockholder of record to determine whether you may submit your vote by mail, telephone or electronically on the Internet before or during the Annual Meeting. Whether or not you plan to attend the Annual Meeting, we urge you to vote by following the voting instructions provided to you to ensure that your vote is counted. Beneficial stockholders may revoke any prior voting instructions by contacting the broker, bank or other nominee that holds their shares or by voting online during the meeting.

Broker Non-Votes. If you are a beneficial owner and do not give your broker, bank or other nominee instructions on how to vote, and your broker, bank or other nominee does not have discretionary power to vote your shares without your instruction, your shares will be treated as “broker non-votes.” Brokers, banks and other nominees have discretionary authority to vote on the ratification of our independent public accounting firm for clients who have not provided voting instructions. However, without voting instructions from their clients, they cannot vote on “non-routine” proposals, including the election of directors and the approval of the Company’s named executive officer compensation.

Multiple Notices of Availability. If you receive more than one Notice of Availability, it is because your shares are registered in more than one name or are registered in different accounts. Please follow the instructions on each Notice of Availability received to ensure that all of your shares are voted.

List of Stockholders Entitled to Vote. A list of stockholders entitled to vote at the Annual Meeting will be available for inspection during ordinary business hours for a period of ten days before the Annual Meeting at our offices located at 303 Colorado Street, Suite 3000, Austin, Texas 78701. If you want to inspect the stockholder list, please call our Legal department at (512) 220-7102 to schedule an appointment. The list will also be available for review during the Annual Meeting.

Quorum Requirement for the Annual Meeting

The presence at the Annual Meeting, whether virtually or by proxy, of the persons holding a majority of shares of common stock outstanding on the Record Date will constitute a quorum, permitting us to conduct our business at the Annual Meeting. On the Record Date, there were 377,578,206 shares of Class A common stock and 35,147,222 shares of Class B common stock outstanding, held by 47 and 38 stockholders of record, respectively. Therefore, a total of 206,362,715 shares of common stock (regardless of class) must be represented virtually or by proxy at the Annual Meeting for us to conduct business at the meeting. Shares that constitute abstentions (i.e., if you or your broker mark “ABSTAIN” on a proxy or voting instruction form, or if a stockholder of record attends the Annual Meeting but does not vote (either before or during the Annual Meeting)) and broker non-votes will be considered to be shares present at the meeting for purposes of establishing a quorum.

About the Annual Meeting

Required Votes

Election of Directors. Each director will be elected by a majority of votes cast by the holders of shares entitled to vote in the election of directors at the Annual Meeting; this means that the number of shares voted FOR a nominee must exceed the number of shares voted AGAINST that nominee. Abstentions and broker non-votes are not taken into account in determining the outcome of the election of directors. If any incumbent director is not elected because he or she does not receive a majority of the votes cast, he or she is required to immediately tender his or her resignation to the Board for consideration. The Nominating, Environmental, Social and Governance Committee will consider the resignation and make a recommendation to the Board on whether to accept or reject the director’s resignation or whether other action should be taken. The Board will then consider each tendered resignation and act on each, taking into account its fiduciary duties to the Company and the stockholders. Within 90 days from the date of the certification of the election results, the Company will publicly disclose the decision of the Board, and, if applicable, the Board’s reason for rejecting a tendered resignation. If the tendered resignation is not accepted by the Board, the director will continue to serve as a director until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. If the Board accepts the resignation, the Board may fill the vacancy in accordance with the Company’s bylaws or may decrease the size of the Board.

Approval of Named Executive Officer Compensation. Approval, on a non-binding advisory basis, of the Company’s named executive officer compensation for the fiscal year ended December 31, 2019 requires the affirmative vote of the holders of a majority of the shares of common stock present virtually or represented by proxy at the Annual Meeting and entitled to vote. Abstentions will have the effect of a vote against this proposal. Broker non-votes are not taken into account in determining the outcome of this proposal. This advisory vote on executive compensation is not binding on the Company, the Compensation Committee or the Board. However, the Compensation Committee and the Board will take the results of the vote into account when designing future executive compensation programs.

Ratification of our Independent Public Accounting Firm. Approval of the proposal to ratify the Audit Committee’s appointment of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2020 requires the affirmative vote of the holders of a majority of the shares of common stock present virtually or represented by proxy at the Annual Meeting and entitled to vote. Abstentions will have the effect of a vote against this proposal. Because brokers, banks and other nominees have discretionary authority to vote your shares on this proposal, there will be no broker non-votes on this proposal.

Solicitation of Proxies

Our Board has sent you this Proxy Statement in connection with the solicitation by the Board of proxies to be voted at the Annual Meeting. Our directors, officers and employees may solicit proxies via the Internet, by mail, personal interview or telephone. These directors, officers and employees will not receive any compensation for these services, but may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation. We will bear the cost of solicitation of proxies. This includes the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of our outstanding common stock.

Default Voting

A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly execute and submit a proxy, but do not provide any voting instructions, your shares will be voted FOR the election to the Board of each of the director nominees listed in Proposal ONE, FOR Proposal TWO, and FOR Proposal THREE.

If any other business properly comes before the stockholders for a vote at the Annual Meeting, your shares will be voted in accordance with the discretion of the holders of the proxy. The Board knows of no matters, other than those previously stated in this Proxy Statement, to be presented for consideration at the Annual Meeting.

In this Proxy Statement, the terms “the Company,” “we,” “us,” “our” and similar terms refer to Parsley Energy, Inc. and its subsidiaries.

Proposal One: Election of Directors

At the recommendation of the Nominating, Environmental, Social and Governance Committee, the Board has nominated the following individuals for election as Class III directors of the Company, to serve for three-year terms beginning at the Annual Meeting and expiring at the 2023 Annual Meeting of the Stockholders, and until either he or she is re-elected or his or her successor is elected and qualified or until his or her earlier death, resignation or removal:

Mr. A.R. Alameddine

Mr. Matt Gallagher

Ms. Karen Hughes

Messrs. Alameddine and Gallagher and Ms. Hughes are currently serving as directors of the Company. If Messrs. Alameddine and Gallagher and Ms. Hughes are elected to the Board, the size of the Board will remain at eleven members. Biographical information for each director nominee is contained in the “Directors and Executive Officers” section below.

The Board has no reason to believe that its director nominees will be unable or unwilling to serve if elected. If a director nominee becomes unable or unwilling to accept nomination or election, either the number of the Company’s directors will be reduced or the persons acting under the proxy will vote for the election of a substitute nominee that the Board recommends.

Vote Required

The election of each director in this Proposal ONE requires the vote of a majority of the votes cast by the holders of shares entitled to vote in the election of directors at the Annual Meeting; this means that the number of shares voted FOR a nominee must exceed the number of shares voted AGAINST that nominee. Neither abstentions nor broker non-votes will have any effect on the outcome of the election of directors.

Recommendation

The Board unanimously recommends that stockholders vote FOR the

election to the Board of each of the director nominees.

The Company’s Board currently consists of eleven members, and if the stockholders elect Messrs. Alameddine and Gallagher and Ms. Hughes to the Board, the Board will continue to consist of eleven members. The Company’s directors are divided into three classes serving staggered three-year terms. Each year, the directors of one class stand for re-election as their terms of office expire. Messrs. Alameddine and Gallagher and Ms. Hughes are designated as Class III directors, and, assuming the stockholders elect them to the Board as set forth in “Proposal ONE: Election of Directors” above, each will hold office until the 2023 Annual Meeting of Stockholders and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. Dr. Desai and Messrs. Brokmeyer, Sheffield and Kleckner are designated as Class I directors and their terms of office expire in 2021. Messrs. Browning, Smith, Windlinger and VanLoh are designated as Class II directors and their terms of office expire in 2022.

Directors and Executive Officers

Set forth below is biographical information about each of the Company’s directors, executive officers, and director nominees.

Bryan Sheffield		Biographical Information:   Bryan Sheffield has served as Executive Chairman of the Company since January 2019. Prior to this role, he served as the Company’s Chief Executive Officer from January 2017 until January 2019, when, pursuant to the Company’s succession plan adopted in January 2018, he was appointed Executive Chairman. Mr. Sheffield founded the Company in 2008 and led the Company’s growth since that time, including, prior to January 2017, as President and Chief Executive Officer, and since the Company’s founding, as Chairman of the Board. A third-generation oil executive, Mr. Sheffield began his oil and gas career at Pioneer Natural Resources Company, an oil and gas exploration and production company (“Pioneer”), where he accumulated operational expertise and deep knowledge of the Midland Basin resource base and operator landscape. His understanding of financial markets is enhanced by previous experience trading options and interest rate futures. Mr. Sheffield graduated from Southern Methodist University in 2001 with a Bachelor of Business Administration in Finance, serves on the board of directors of the Texas Economic Development Corporation and the Greater Austin Crime Commission, and is a member of the Texas Business Leadership Council.
Executive Chairman and Chairman of the Board   Age 42
Qualifications: We believe that Mr. Sheffield’s experience founding and leading the growth of the Company as our Chief Executive Officer qualifies him to serve on our Board.

Matt Gallagher		Biographical Information:   Matt Gallagher has served as President and Chief Executive Officer of the Company since January 2019. Mr. Gallagher previously served as the Company’s President and Chief Operating Officer from January 2017 until October 2018 and as the Company’s President from October 2018 until January 2019, when pursuant to the Company’s succession plan adopted in January 2018, he was appointed President and Chief Executive Officer. Mr. Gallagher was appointed to the Board concurrent with the adoption of such succession plan in January 2018.   Since joining the Company in 2010, Mr. Gallagher has overseen the Company’s engineering, operations and geoscience functions in positions of increasing responsibility, including Vice President—Engineering and Geoscience from December 2013 to April 2014, and Vice President—Chief Operating Officer from May 2014 through January 2017. Prior to joining the Company, Mr. Gallagher served as Investor Relations Supervisor for Pioneer from 2008 to 2010. From 2005 to 2008, Mr. Gallagher held a variety of engineering roles with Pioneer, including Gulf of Mexico Shelf Reservoir Engineer, Hugoton Reservoir Engineer and Spraberry Production and Operations Engineer. Mr. Gallagher has a Bachelor of Science in Petroleum Engineering from the Colorado School of Mines, serves on the board of directors of the Permian Basin Petroleum Association, the American Exploration and Production Council, and the Permian Strategic Partnership, and is a member of the Permian Basin Society of Petroleum Engineers and the West Texas Geological Society.
President, Chief Executive Officer and Director   Age 37
Qualifications: We believe that Mr. Gallagher’s extensive experience with the Company, including as President and Chief Operating Officer and, most recently, as Chief Executive Officer, qualifies him to serve on our Board.

A.R. Alameddine		Biographical Information:   A.R. Alameddine is the former Executive VP of Worldwide Negotiation Execution and Implementation at Pioneer, a position he held from 2005 until his retirement in 2008. He has served on our Board since December 2013. Mr. Alameddine joined Pioneer in 1997 and previously held the positions of VP of Domestic Business Development and later Executive VP of Worldwide Business Development. Before joining Pioneer, Mr. Alameddine spent 26 years with Mobil Exploration & Producing Company (“Mobil”), a subsidiary of Exxon Mobil Corporation, in various engineering and planning positions in the United States. In addition, he worked in Norway for three years on various North Sea projects including the development of the Statfjord Field and gas marketing. Prior to his retirement from Mobil in 1997, he was the Acquisition, Trade and Sales Manager, a position he had held since 1990. Mr. Alameddine graduated from Louisiana State University in 1971 with a Bachelor degree of Science in Petroleum Engineering.
Director   Age 72
Qualifications: We believe that Mr. Alameddine’s executive management experience in the oil and gas industry qualifies him for service on our Board.

Director Skills Matrix

Our directors have a diversity of experience that spans a broad range of industries in the public and not-for-profit sectors. They bring to our Board a wide variety of skills, qualifications, and viewpoints that strengthen the Board’s ability to carry out its oversight role on behalf of our stockholders. The table below summarizes certain key qualifications, skills and attributes that each director brings to the Board. The lack of a mark for a particular item does not mean the director does not possess that qualification or skill. However, a mark indicates a specific area of focus or expertise that the director brings to the Board. More details on each director’s qualifications, skills and attributes are included in the director biographies on the previous pages.

Skills and Expertise

Accounting / Finance

X

X

X

X

X

X

Business Development / M&A

X

X

X

X

X

X

X

X

Communications / Public Policy / Government Relations

X

X

X

X

Corporate Governance / Public Co. Board Experience

X

X

X

X

X

X

Executive Leadership / Management

X

X

X

X

X

X

X

X

X

X

E&P Experience

X

X

X

X

X

X

X

X

Geology / Reservoir Engineering

X

X

X

X

X

X

Global Perspective

X

X

X

X

X

X

X

Health, Safety and Environmental Oversight

X

X

X

X

X

X

Human Resources / Compensation

X

X

X

X

X

X

X

X

X

Legal / Regulatory

X

X

Risk and/or Crisis Management

X

X

X

X

X

X

Strategic Planning

X

X

X

X

X

X

X

X

X

Corporate Governance

Overview

The Company is governed by the Board and its committees, which meet regularly throughout the year and perform a number of important functions for the Company and its stockholders. In discharging their responsibilities, our directors are guided by our governance-related policies, including our Corporate Governance Guidelines, which are described in more detail below and posted on the Company’s website at www.parsleyenergy.com.

We take our commitment to sound corporate governance principles and practices seriously because we believe they allow us to more consistently and effectively deliver long-term stockholder value as we aim to produce affordable and reliable energy in an efficient, safe and sustainable manner.

Meetings and Committees of Directors

The Board held nine meetings during 2019. During 2019, each of our incumbent directors attended at least 75% of the meetings of the Board and the meetings of the committees of the Board on which that director served (in each case, which were held during the period for which such incumbent director was a director).

Executive Sessions. The Board holds regular executive sessions in which the independent directors meet without any non-independent directors or members of management. The purpose of these executive sessions is to promote open and candid discussion among the independent directors. The Lead Director, Mr. Alameddine, presides at these meetings and provides the guidance and feedback of the non-employee directors to our management team.

The Board has four standing committees: the Audit Committee, the Compensation Committee, the Nominating, Environmental, Social and Governance Committee and the Reserves Committee.

The Board and each committee of the Board (other than the Reserves Committee) expect to meet a minimum of four times per year in 2020 and future years. The Reserves Committee expects to meet a minimum of two times per year in 2020 and future years.

Audit Committee. Responsibilities of the Audit Committee, which are set forth in the Audit Committee Charter that is posted on the Company’s website at www.parsleyenergy.com, include, among other duties, assisting the Board in fulfilling its oversight responsibilities regarding:

The members of the Audit Committee are Messrs. Browning, Smith and Windlinger and Dr. Desai, and Mr. Browning serves as the Chairperson. The Audit Committee held five meetings during 2019.

Compensation Committee. Responsibilities of the Compensation Committee, which are set forth in the Compensation Committee Charter that is posted on the Company’s website at www.parsleyenergy.com, include, among other duties, the responsibility to:

The Compensation Committee is delegated all authority of the Board as may be required or advisable to fulfill its purposes. The Compensation Committee may delegate to its Chairperson, any one of its members or any subcommittee it may form, the responsibility and authority for any particular matter, as it deems appropriate from time to time under the circumstances. Meetings may, at the discretion of the Compensation Committee, include members of the Company’s management, other members of the Board, consultants or advisors and such other persons as the Compensation Committee believes to be necessary or appropriate. The Compensation Committee consults with the Company’s Chief Executive Officer when evaluating the performance of, and setting the compensation for, the Company’s executive officers other than the Chief Executive Officer.

Corporate Governance

The Compensation Committee may, in its sole discretion, retain and determine funding for legal counsel, compensation consultants, as well as other experts and advisors (collectively, “Committee Advisors”), including the authority to retain, approve the fees payable to, amend the engagement with and terminate any Committee Advisor, as it deems necessary or appropriate to fulfill its responsibilities. The Compensation Committee assesses the independence of any Committee Advisor prior to retaining such Committee Advisor, and on an annual basis thereafter.

The members of the Compensation Committee are Messrs. Alameddine, Brokmeyer and Browning, Dr. Desai and Ms. Hughes, and Mr. Alameddine serves as the Chairperson. The Compensation Committee held five meetings during 2019.

Nominating, Environmental, Social and Governance Committee. Responsibilities of the Nominating, Environmental, Social and Governance Committee, which are set forth in the Nominating, Environmental, Social and Governance Committee Charter that is posted on the Company’s website at www.parsleyenergy.com, include, among other duties, the responsibility to:

Additional information regarding the functions performed by the Nominating, Environmental, Social and Governance Committee is set forth in the “Corporate Governance” and “Stockholder Proposals; Identification of Director Candidates” sections included herein.

The members of the Nominating, Environmental, Social and Governance Committee are Messrs. Alameddine, Smith and VanLoh, and Ms. Hughes, and Mr. Smith serves as the Chairperson. The Nominating, Environmental, Social and Governance Committee held four meetings during 2019.

Reserves Committee. The Board established the Reserves Committee in 2018. Messrs. Alameddine, Brokmeyer, Kleckner and Windlinger currently serve as members of the Reserves Committee and Mr. Brokmeyer serves as the Chairperson. The Reserves Committee assists the Board in fulfilling its oversight responsibilities with respect to the Company’s oil, natural gas and natural gas liquids reserve estimates. The Reserves Committee held three meetings during 2019. Additional information regarding the functions performed by the Reserves Committee is set forth in the Reserves Committee Charter that is posted on the Company’s website at www.parsleyenergy.com.

Board Leadership

The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent and effective oversight of management. The Board understands that the optimal Board leadership structure may vary as circumstances warrant. Consistent with this understanding, the non-employee directors consider the Board’s leadership structure on an annual basis.

It is the responsibility of the Nominating, Environmental, Social and Governance Committee to identify, evaluate, and recommend to the Board director nominees for election at the annual meeting of stockholders, as well as to fill vacancies or additions on the Board that may occur between annual meetings. The Nominating, Environmental, Social and Governance Committee endeavors to recommend only director candidates who possess the highest personal values and integrity; who have experience and have exhibited achievements in one or more of the key professional, business, financial, legal and other challenges that face a U.S. independent oil and gas company; who exhibit sound judgment, intelligence, personal character, and the ability to make independent analytical inquiries; who demonstrate a willingness to devote adequate time to Board duties; and who are likely to be able to serve on the Board for a sustained period.

While the Board does not have a formal policy on diversity, the Nominating, Environmental, Social and Governance Committee endeavors to achieve an overall balance of diversity of experiences, skills, attributes and viewpoints among our directors. The Nominating, Environmental, Social and Governance Committee believes that appointing directors with a diverse range of expertise, backgrounds and skillsets fosters robust and insightful discussion amongst directors, and provides our management with an invaluable opportunity to learn from a variety of unique perspectives and experiences. The Nominating, Environmental, Social and Governance Committee regularly evaluates the composition of the Board and references a comprehensive director skills matrix that identifies directors’ and potential directors’ key qualifications, skills, attributes and diversity characteristics, and it believes that the Company has achieved a balance of diverse experiences, skills, attributes and viewpoints through the representation on the Board of members having experience in the oil and gas industry, accounting and investment analysis, strategic planning, legal and corporate governance, communications and public policy, and risk management, among other areas. The Nominating, Environmental, Social and Governance Committee does not discriminate based upon race, religion, sex, national origin, age, disability, citizenship or any other legally protected status.

In identifying potential director candidates, the Nominating, Environmental, Social and Governance Committee solicits recommendations from existing directors and senior management to be considered by the Nominating, Environmental, Social and

Corporate Governance

Governance Committee along with any recommendations that have been received from stockholders as discussed in more detail below. The Nominating, Environmental, Social and Governance Committee may also, in its discretion, retain, and pay fees to, a search firm to provide additional candidates.

The Board holds executive sessions on a regular basis, providing the independent directors with the opportunity to identify and evaluate issues facing us, and engage in a frank and candid dialogue without management being present. In January 2020, the Nominating, Environmental, Social and Governance Committee, in connection with its annual review of the efficacy of the Board’s leadership structure and Board committee composition, determined to recommend to the Board that Mr. Alameddine continue as the Board’s independent Lead Director. In January 2020, the Board adopted the recommendation of the Nominating, Environmental, Social and Governance Committee and Mr. Alameddine’s continued service as Lead Director of the Board was approved.

As Lead Director, Mr. Alameddine provides, in conjunction with the Chairman of the Board, leadership and guidance to the Board, and also:

Director Independence

The Company’s standards for determining director independence require the assessment of directors’ independence each year. A director cannot be considered independent unless the Board affirmatively determines that he or she does not have any relationship with management or the Company that may interfere with the exercise of his or her independent judgment, including any of the relationships that would disqualify the director from being independent under the rules of the New York Stock Exchange (“NYSE”).

Rather than adopting categorical standards, the Board assesses director independence on a case-by-case basis, in each case consistent with applicable legal requirements and the listing standards of the NYSE. After reviewing all relationships each director has with us, including the nature and extent of any business, employment or familial relationships between us and each director and/or any person or entity with which he or she is affiliated, the Board affirmatively determined that each of Messrs. Alameddine, Brokmeyer, Browning, Kleckner, Smith, VanLoh and Windlinger and Dr. Desai and Ms. Hughes are independent as defined by the current listing standards of the NYSE.

In connection with its assessment of the independence of each non-employee director, the Board also determined that (i) Messrs. Browning, Smith and Windlinger and Dr. Desai are independent as defined in Section 10A of the Exchange Act and under the standards set forth by the NYSE applicable to members of the Audit Committee and (ii) Messrs. Alameddine, Brokmeyer and Browning, Dr. Desai and Ms. Hughes are independent under the rules and regulations of the SEC and Section 16(b) of the Exchange Act and the standards set forth by the NYSE applicable to members of the Compensation Committee.

Financial Literacy of Audit Committee and Designation of Financial Experts

The Board evaluated each of the members of the Audit Committee for financial literacy and the attributes of a financial expert in January 2020. The Board determined that each of the Audit Committee members is financially literate and that the Chairperson of the Audit Committee, Mr. Browning, is an audit committee financial expert as defined by the SEC.

Oversight of Risk Management

The Board as a whole oversees the Company’s assessment of major risks and the measures taken to manage such risks. For example, the Board:

In light of recent events, the Board has specifically focused its risk management assessments on risks relating to the global outbreak of the coronavirus disease 2019 (or COVID-19), which has reduced demand for oil and natural gas because of significantly reduced global and national economic activity, and the recent actions of Saudi Arabia and Russia, which have resulted

Corporate Governance

in a substantial decrease in oil and natural gas prices. In particular, the Board assesses the current and anticipated future impacts of these events on the financial markets and worldwide economic activity. Based on such impacts, the Board monitors the risk to the Company of commodity price declines, lowered demand for oil and natural gas, decreased operational ability if the Company’s employees and/or contractors are unable to work or travel due to illness or other health concerns, limited ability to access the capital markets and other risks discussed under “Risk Factors” in the Company’s Annual Report, and the Company’s short- and long-term mitigation strategies.

The Board has also adopted a Whistleblower Policy that provides employees with the ability to submit confidential and anonymous complaints or concerns, including those relating to the Company’s accounting, internal controls, auditing matters and compliance with applicable laws, to the Audit Committee directly through a whistleblower hotline. The Company’s policy is not to take any adverse action, and to not tolerate any retaliation, against any person for submitting good faith reports.

In addition, the Committees of the Board oversee specific areas of risk:

Director Education

Our Board believes that director education is essential to the ability of our directors to fulfill their roles as directors. As such, the Board authorizes an annual director education budget (exclusive of travel and accommodation expenses, which are reimbursed by the Company) for each director to utilize for educational opportunities that he or she deems beneficial to his or her service on the Board. The Company also regularly provides directors with information regarding director educational opportunities. Continuing director education is also provided during Board and committee meetings and in other settings. During regular board meetings, directors receive updates from teams throughout the Company, including from the drilling and completions, production operations, reserves, geoscience, health, safety and environmental, land, marketing, business development, finance, investor relations, legal, human resources, and security and risk management teams.

Succession Planning

The Nominating, Environmental, Social and Governance Committee regularly meets to discuss the Company’s succession plan and to (i) identify, and periodically update, the qualities and characteristics necessary for an effective Chief Executive Officer and (ii) review the development and progression of potential candidates against these standards. In addition, the Nominating, Environmental, Social and Governance Committee regularly consults with the Chief Executive Officer on senior management succession planning and advises the Board with respect to the Company’s succession plan.

During 2018, following a deliberate and diligent process, the Nominating and Governance Committee (subsequently renamed the Nominating, Environmental, Social and Governance Committee) recommended to the Board, and the Board approved, a Chief Executive Officer succession plan. Pursuant to the succession plan, effective as of January 1, 2019, Mr. Sheffield stepped down from his position as our Chief Executive Officer and began serving as an officer of the Company in the role of Executive Chairman. Matt Gallagher, who previously served as our President and Chief Operating Officer, succeeded Mr. Sheffield as our Chief Executive Officer and was appointed President and Chief Executive Officer. Mr. Sheffield is expected to continue as Executive Chairman through December 31, 2020 or such other time as the Board may determine, at which time he will retire as an employee and officer of the Company but continue serving as Chairman of the Board, a non-employee director position.

In connection with the succession plan, the roles of Chairman of the Board and Chief Executive Officer were separated. We believe that separating these positions allows Mr. Gallagher to focus on our day-to-day business and operations and allows Mr. Sheffield to focus his energies on the Company’s strategic initiatives and leading the Board in its fundamental role of providing advice to and oversight of management. Mr. Sheffield remains involved in key matters, such as strategic transactions, the

Corporate Governance

preparation of the Company’s development plan and annual budget, representing the Company before key stakeholders and advising Mr. Gallagher and other members of the senior management team.

Stockholder Engagement

We value our relationship with our stockholders and regularly solicit feedback from them on corporate governance, sustainability, executive compensation and other important matters. Our management meets with our largest stockholders throughout the year to discuss the issues that matter most to them. During 2019, our management engaged with non-affiliate stockholders collectively representing more than a majority of the Company’s outstanding shares of common stock. We share the feedback received with our Board and its committees to enhance our governance practices and transparency of those practices to our stockholders. We review the voting results of our most recent annual meeting of stockholders, the stockholder feedback received through our engagement process, the governance and disclosure practices of our peers and other large companies, and current trends in governance as we consistently consider enhancements to our governance and disclosure practices.

Based on feedback received from our stockholder engagement process in recent years and our review, on an ongoing basis, of governance and disclosure best practices, our Company has:

Corporate Governance Guidelines

The Company’s Corporate Governance Guidelines cover the following subjects, among others:

The Corporate Governance Guidelines are posted on the Company’s website at www.parsleyenergy.com. The Corporate Governance Guidelines will be reviewed periodically and as necessary by the Company’s Nominating, Environmental, Social and Governance Committee, and any proposed additions to or amendments of the Corporate Governance Guidelines will be presented to the Board for its approval. The NYSE has adopted rules that require listed companies to adopt governance guidelines covering certain matters. The Company believes that the Corporate Governance Guidelines comply with the NYSE rules.

Corporate Governance

Proxy Access

The amended and restated bylaws of the Company permit a stockholder (or a group of up to 20 stockholders) owning 3% or more of the Company’s outstanding common stock continuously for at least three years, subject to certain limitations, to nominate and include in the Company’s proxy statement director candidates constituting up to the greater of two individuals or 20% of the Board, if the nominating stockholder(s) and the nominee(s) satisfy the requirements specified in the Company’s bylaws. For information regarding how to include a director nominee in the Company’s proxy materials for the 2021 Annual Meeting of Stockholders, please see the section of this Proxy Statement below entitled “Stockholder Proposals; Identification of Director Candidates.”

Classified Board Structure

In consultation with the Board, the Nominating, Environmental, Social and Governance Committee has determined that a classified board structure continues to be appropriate for the Company at this time. A classified board provides for stability, continuity and experience within our Board. In our industry in particular, long-term focus is critical. The long time horizons required for successful exploration, development and production of oil and natural gas resources make it vital that we have a Board that understands the nature and implications of these processes and has the ability to oversee the development and implementation of long-term strategies informed by an in-depth knowledge of the Company’s business and operations. A classified board structure helps promote the continuity and stability of leadership required to navigate a challenging economic environment while resisting the pressure to focus on short-term results at the expense of the Company’s long-term value and success. In this regard, we believe that a three-year term for each of our directors enhances director independence from both management and stockholder special interest groups.

Communications with the Board of Directors

Stockholders or other interested parties can contact any director, any committee of the Board or our non-employee directors as a group, by writing to them c/o General Counsel, Parsley Energy, Inc., 303 Colorado Street, Suite 3000, Austin, Texas 78701. Comments or complaints relating to the Company’s accounting, internal accounting controls or auditing matters will also be referred to members of the Audit Committee.

Attendance at Annual Meetings

The Board encourages all directors to attend the Annual Meeting, if practicable. Seven of our nine then-serving directors attended the 2019 Annual Meeting of Stockholders in person. The other two then-serving directors participated in the meeting telephonically.

Fourth Amended and Restated Limited Liability Company Agreement of Parsley Energy, LLC

The Company is a holding company and is the sole managing member of Parsley Energy, LLC (“Parsley LLC”). As of March 30, 2019, the Company’s sole material asset consisted of 377,578,206 units representing membership interests in Parsley LLC (“PE Units”). Pursuant to the Fourth Amended and Restated Limited Liability Company Agreement of Parsley LLC (the “Parsley LLC Agreement”), holders of PE Units (other than the Company) generally have the right to exchange their PE Units (and a corresponding number of shares of Class B common stock) for shares of Class A common stock at an exchange ratio of one share of Class A common stock for each PE Unit (and corresponding share of Class B common stock) exchanged (subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications), or, if either we or Parsley LLC so elects, cash.

Proposal Two: Non-Binding Advisory Vote on the Company’s Named Executive Officer Compensation

The Dodd-Frank Act enables our stockholders to vote to approve, on a non-binding advisory basis, the Company’s named executive officer compensation for the fiscal year ended December 31, 2019, as disclosed in this Proxy Statement pursuant to the SEC’s compensation disclosure rules (commonly referred to as a “Say-on-Pay” vote).

As described in detail in the “Compensation Discussion and Analysis” section below, we strive to maintain competitive pay practices within our industry while appropriately motivating our named executive officers to ensure that our stockholders receive maximum returns and security for their investment. We accomplish this by linking our executive compensation to several measures of the Company’s short- and long-term performance. Further, the vast majority of our named executive officers’ compensation is at-risk (in 2019, approximately 86.7% for our Chief Executive Officer and, in aggregate, approximately 81.5% for our other named executive officers). We have worked extensively and deliberately to develop an effective compensation program for our named executive officers that helps us to deliver long-term sustainable growth to our stockholders. In an effort to achieve these goals, we have implemented a number of best practices which are described in the “Compensation Discussion and Analysis” section beginning on page 20, which contains additional details about our executive compensation program, including information about the compensation of our named executive officers during 2019.

The Compensation Committee and our Board have determined that the Company’s named executive officer compensation program is aligned with our business strategy, focused on long-term value creation for our stockholders and intended to deliver pay relative to our performance, while providing the opportunity for our named executive officers to earn levels of compensation competitive with the level of compensation paid by companies with which we compete for executive talent. Therefore, the Board recommends that you vote FOR the approval, on a non-binding advisory basis, of the Company’s named executive officer compensation as disclosed pursuant to the SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table and the other executive compensation-related tables and disclosure included this Proxy Statement).

Vote Required

Approval, on a non-binding advisory basis, of Proposal TWO requires the affirmative vote of the holders of a majority of the shares of common stock present virtually or represented by proxy at the Annual Meeting and entitled to vote. Votes cast FOR or AGAINST and abstentions with respect to this Proposal TWO will be counted as shares entitled to vote on the Proposal. For these purposes, broker non-votes are not treated as entitled to vote and will have no impact on the outcome of this vote. Abstentions will have the effect of a vote AGAINST the Proposal. This advisory vote on executive compensation is not binding on the company, the Compensation Committee or the Board. However, the Compensation Committee and the Board value our stockholders’ opinions with respect to our named executive officer compensation program and will take into account the result of this vote when evaluating future compensation programs for our named executive officers.

Recommendation

The Board unanimously recommends that stockholders vote FOR the

approval, on a non-binding advisory basis, of the Company’s Named

Executive Officer compensation for the fiscal year ended December 31, 2019

pursuant to the compensation disclosure rules of the SEC.