Shareholders show support of Devon Energy's 2019 incentive pay program for top executives
Unofficial results from Devon Energy’s annual meeting this week show 61% of votes cast by shareholders supported a non-binding question that asked for an endorsement of 2019 performance-related stock awards the company made to its top executives.
Two proxy advisers had taken different spins on the proposal, with one recommending it be supported and the other recommending its rejection.
Institutional Shareholder Services' (ISS) recommended opposition prompted Devon to make multiple filings to address the issue with the U.S. Securities and Exchange Commission prior to the meeting.
ISS cited concerns with age credits that were granted under Devon’s pension plan to two named executive officers.
It also stated a belief Devon’s targeted goals created as part of its short-term incentive program for 2019 used less rigorous standards than what the company had used the previous year.
Company officials countered in their filings that Devon’s executive compensation program featured a “pay-for-performance” tie that is among the strongest used by its energy industry peers.
By design, it links strong relative total stockholder return (TSR) performance results to higher realizable pay through stock awards that vest over time.
The same system revokes parts or all of those awards when relative results aren’t good.
As for ISS’ concerns with the age-related credits, Devon indicated in its filings that credits it issued in September to Tony Vaughn, the company’s former chief operating officer, and to Lyndon Taylor, Devon’s chief legal and administrative officer, were unique and appropriate to each officer’s individual circumstances.
“Devon has not, and has no intent in the future, to make granting age credits a ‘practice,’ ” one of its filings stated.
As for less-rigorous standards, a filing made by the company disputed that analysis, as well.
Glass Lewis, another leading proxy adviser, endorsed the question.
Because of the COVID-19 pandemic, Devon held its annual meeting virtually on June 3.
Beyond the performance-related stock awards question, shareholders also were asked to approve the reelection of Devon’s 11 board members and to ratify its selection of KPMG LLP as its independent auditor.
Votes cast by shareholders supported both of those questions by margins of 96% and 95%, respectively, unofficial data released by the company after the meeting showed.