UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934

 

Filed by the Registrant þ

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

o  Preliminary Proxy Statement

o  Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ  Definitive Proxy Statement

o  Definitive Additional Materials

o  Soliciting Material Pursuant to § 240.14a-12

 

Newfield Exploration Company

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

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NEWFIELD EXPLORATION COMPANY
Houston, Texas

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

May 5, 2011

 

To the stockholders of Newfield Exploration Company:

 

Our 2011 annual meeting of stockholders will be held at 8:00 a.m., local time, on Thursday, May 5, 2011, in the Joe B. Foster Employee Communications Room, 4th Floor of our Houston office located at 363 N. Sam Houston Parkway E., Houston, Texas 77060, for the following purposes:

 

(1) to elect the 11 nominees for directors named in this Proxy Statement to serve until our 2012 annual meeting of stockholders;

 

(2) to approve the Newfield Exploration Company 2011 Omnibus Stock Plan;

 

(3) to approve the material terms of the performance criteria for performance awards under the 2011 Omnibus Stock Plan;

 

(4) to ratify, on a non-binding advisory basis, the appointment of PricewaterhouseCoopers LLP, an independent registered public accounting firm, as our independent auditors for the year ending December 31, 2011;

 

(5) to approve, on a non-binding advisory basis, the following “say on pay” resolution: “RESOLVED, that the compensation paid to Newfield’s named executive officers, as disclosed in the 2011 Proxy Statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED;”

 

(6) to approve, on a non-binding advisory basis, the frequency on which the stockholders will be provided a “say-on-pay” vote (with the opportunity to request a “say-on-pay” vote every year, every two years, or every three years, or abstain from voting on the matter completely); and

 

(7) to transact any other business that may properly come before the annual meeting or any adjournments or postponements of the annual meeting.

 

The close of business on March 9, 2011 has been fixed as the record date for the determination of stockholders entitled to receive notice of, and to vote at, the annual meeting or any adjournments or postponements of the meeting. This Notice, Proxy Statement and the form of proxy/voting instruction card are first being sent or made available to stockholders on or about March 23, 2011.

 

You are cordially invited to attend the meeting.

 

By order of the Board of Directors,

 

John D. Marziotti
Secretary

 

March 15, 2011

 

 

The notice of the meeting, this Proxy Statement and our 2010 Annual Report (which includes our Annual Report on Form 10-K for the year ended December 31, 2010) are available at: http://phx.corporate-ir.net/phoenix.zhtml?c=63798&p=proxy.

 

TABLE OF CONTENTS

 

 

NEWFIELD EXPLORATION COMPANY
363 N. Sam Houston Parkway E.
Suite 100
Houston, Texas 77060
(281) 847-6000
www.newfield.com

 

PROXY STATEMENT

 

For the 2011 Annual Meeting of Stockholders

 

This Proxy Statement is being furnished by Newfield Exploration Company (“we”, “us”, “Newfield” or the “Company”) in connection with a solicitation of proxies by our Board of Directors to be voted at our annual meeting of stockholders to be held on May 5, 2011. Whether or not you personally attend, it is important that your shares be represented and voted at the annual meeting. Most stockholders have a choice of voting over the Internet, by using a toll-free telephone number, or by completing a proxy card and mailing it in the postage-paid envelope provided. Check your proxy card or the information forwarded by your bank, broker, or other stockholder of record to determine the voting options available to you. This Proxy Statement and the accompanying proxy card were first mailed on or about March 23, 2011.

If the enclosed form of proxy card is signed and returned, it will be voted as specified in the proxy, or, if no vote is specified, it will be voted FOR all nominees presented in Proposal 1, FOR the proposal set forth in Proposal 2, FOR the proposal set forth in Proposal 3, FOR the proposal set forth in Proposal 4, FOR the proposal set forth in Proposal 5 and EVERY THREE YEARS for the question set forth in Proposal 6. If any matters that are not specifically set forth on the proxy card and in this Proxy Statement properly come to a vote at the meeting, the proxy holders will vote in accordance with their best judgment. At any time before it is exercised, you may revoke your proxy by timely delivery of written notice to our Secretary, by timely delivery of a properly executed, later-dated proxy (including an Internet or telephone vote), or by voting via ballot at the annual meeting. Voting in advance of the annual meeting will not limit your right to vote at the annual meeting if you decide to attend in person. If you are a beneficial owner, but your shares are registered in the name of a bank, broker, or other stockholder of record, the voting instructions form mailed to you with this Proxy Statement may not be used to vote in person at the annual meeting. Instead, to be able to vote in person at the annual meeting you must obtain, from the stockholder of record, a proxy in your name and present it at the meeting. See “Questions and Answers about the Meeting” in this Proxy Statement for an explanation of the term “stockholder of record”.

 

The proxy accompanying this Proxy Statement is being solicited by our Board of Directors. We will bear the entire cost of this solicitation, including the preparation, assembly, printing, and mailing of this Proxy Statement, the proxy, and any additional information furnished to stockholders. In addition to using the mail, proxies may be solicited by directors, executive officers, and other employees of Newfield Exploration Company or its subsidiaries, in person or by telephone. No additional compensation will be paid to our directors, executive officers, or other employees for these services. We will also request banks, brokers, and other stockholders of record to forward proxy materials, at our expense, to the beneficial owners of our common stock. We have retained Alliance Advisors to assist us with the solicitation of proxies for an estimated fee of approximately $6,000, plus expenses.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THE DELIVERY OF THIS PROXY STATEMENT SHALL, UNDER NO CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE OF THIS PROXY STATEMENT.

A proxy is your legal designation of another person, called a proxy holder, to vote the shares that you own. If you designate someone as your proxy holder in a written document, that document is called a proxy. We have designated John D. Marziotti, General Counsel and Secretary, Terry W. Rathert, Executive Vice President and Chief Financial Officer, and Brian L. Rickmers, Controller and Assistant Secretary, to act as proxy holders at the annual meeting as to all shares for which proxies are returned or voting instructions are provided by Internet or telephonic voting.

 

A proxy statement is a document that SEC regulations require us to give you when we ask you to sign a proxy card designating the proxy holders described above to vote on your behalf.

 

 

Newfield’s Board of Directors is soliciting your vote at our 2011 annual meeting of stockholders.

 

The purpose of the meeting is to:

 

 

The record date for the annual meeting is March 9, 2011. The record date is established by our Board of Directors as required by Delaware law. Stockholders of record at the close of business on the record date are entitled to receive notice of the annual meeting and to vote their shares at the meeting.

Only stockholders of record at the close of business on March 9, 2011, the record date for the meeting, are entitled to receive notice of and to vote at the meeting or any adjournments or postponements of the meeting. Stockholders are entitled to one vote for each share of our common stock that they owned as of the record date. Stockholders may not cumulate their votes in the election of directors. On the record date, we had 134,398,251 shares of our common stock outstanding.

The presence at the meeting, in person or by proxy, of the holders of a majority of our issued and outstanding shares of common stock entitled to vote will constitute a quorum at the meeting. Under Delaware law, abstentions are treated as present and entitled to vote and thus, will be counted in determining whether a quorum is present and will have the effect of a vote against a matter, except for the election of directors in which case an abstention will have no effect. In addition, broker non-votes (described below) will be considered present for quorum purposes but not considered entitled to vote on that matter.

The New York Stock Exchange (NYSE) permits brokers to vote their customers’ stock held in street name on routine matters when the brokers have not received voting instructions from their customers. The NYSE does not, however, allow brokers to vote their customers’ stock held in street name on non-routine matters unless they have received voting instructions from their customers. In such cases, the uninstructed shares for which the broker is unable to vote are called “broker non-votes”. For purposes of determining the outcome of any proposal as to which the broker has physically indicated on the proxy that it does not have discretionary authority to vote, these shares will be treated as not present and not entitled to vote with respect to that proposal, even though those shares are considered entitled to vote for quorum purposes and may be entitled to vote on other questions.

The ratification of the independent auditor is a routine matter on which brokers may vote in their discretion on behalf of customers who have not provided voting instructions.

The election of directors, approval of the 2011 Omnibus Stock Plan, approval of the general performance criteria for performance awards under the 2011 Omnibus Stock Plan, approval of executive compensation and the vote on the frequency on which stockholders will vote on our executive compensation are all non-routine matters on which brokers are not allowed to vote unless they have received voting instructions from their customers.

Our Board recommends that you vote:

 

 

 

If any other matters are brought before the meeting, the proxy holders will vote as recommended by our Board. If no recommendation is given, the proxy holders will vote in their discretion.

For the vote on the election of the 11 director nominees to serve until the 2012 annual meeting, stockholders may:

 

 

Under our Bylaws, to be elected as a director, each of the 11 nominees named in this Proxy Statement for election as directors must receive a majority of the votes cast, which means that the number of shares voted “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee. Abstentions and broker non-votes will have no effect in determining whether the proposal has been approved.

In the vote on the approval of the Newfield Exploration Company 2011 Omnibus Stock Plan, stockholders may:

 

 

Under NYSE rules, the affirmative vote of a majority of the shares present and entitled to vote at the meeting is required for the approval of the 2011 Omnibus Stock Plan; provided that the total vote cast on the proposal represents over 50% in interest of all of our securities entitled to vote on the proposal. Broker non-votes will have no effect in determining whether this proposal has been approved. Abstentions will have the same effect as a vote “AGAINST” the 2011 Omnibus Stock Plan.

In the vote on the approval of the material terms of the performance goals for performance awards under the 2011 Omnibus Stock Plan, stockholders may:

 

 

 

Under NYSE rules, the affirmative vote of a majority of the shares present and entitled to vote at the meeting is required for the approval of the material terms of the performance goals for performance awards under our 2011 Omnibus Stock Plan; provided that the total vote cast on the proposal represents over 50% in interest of all of our securities entitled to vote on the proposal. Broker non-votes will have no effect in determining whether this proposal has been approved. Abstentions will have the same effect as a vote “AGAINST” the approval of the material terms of the performance criteria for performance awards under the 2011 Omnibus Stock Plan.

In the vote on the advisory (non-binding) ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2011 fiscal year, stockholders may:

 

 

The proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal 2011 requires the affirmative vote of a majority of the votes entitled to be cast by the shares of stock present in person or by proxy at the annual meeting and entitled to vote thereon. Abstentions will count as votes against the proposal. Broker non-votes will not occur in connection with this proposal (as it is a routine matter) and therefore have no effect in determining whether the proposal is approved.

In the vote on the advisory (non-binding) resolution to approve the compensation of the Company’s named executive officers, as discussed and disclosed in this Proxy Statement, stockholders may:

 

 

Under our Bylaws, the advisory resolution to approve the Company’s compensation for its named executive officers as set forth in this Proxy Statement will require the affirmative vote of a majority of the votes cast, which means that the number of shares voted “FOR” the proposal must exceed the number of votes cast “AGAINST” the proposal. This is an advisory vote, and as such is not binding on the Board. However, the Compensation & Management Development Committee will take the results of the vote into account when considering executive compensation. Abstentions and broker non-votes will have no effect in determining whether the proposal is approved.

Stockholders are invited to express their views on how frequently advisory votes on executive compensation, such as Proposal 5, will occur. Stockholders can advise the Board on whether such votes should occur:

 

 

The advisory proposal regarding how frequently advisory votes on executive compensation will occur requires a plurality of the votes cast for the three options presented at the annual meeting. In other words, the frequency option that receives the most affirmative votes of all the votes cast on Proposal 6 in person or by proxy at the meeting is the one that will be deemed approved by the stockholders. Abstentions and broker non-votes will have no effect in determining whether any frequency option in the proposal is approved.

 

This is an advisory vote, and as such is not binding on the Board. However, the Board will take the results of the vote into account when deciding when to call for the next advisory vote on executive compensation. A scheduling vote similar to this will occur at least once every six years. The Board recommends a vote for “EVERY THREE YEARS”. Stockholders are not being asked to approve or disapprove of the Board’s recommendation, but rather to indicate their own choice as among the frequency options.

Stockholders should specify their choice for each proposal described on the enclosed proxy. However, proxies that are signed and returned with no specific instructions given will be voted in accordance with the Board’s recommendations for proposals described in this proxy statement.

As described on the enclosed proxy card, proxies may be submitted:

 

 

If you submit a proxy by telephone, over the Internet or by returning a signed proxy card by mail, your shares will be voted as you indicate. If you sign your proxy card without indicating your vote, your shares will be voted in accordance with the recommendations of our Board.

 

Proxies submitted over the Internet or by telephone must be received by 11:59 p.m. Eastern Daylight Time on May 4, 2011.

 

If you hold your Newfield shares in a brokerage account, your ability to vote over the Internet or by telephone depends on your broker’s voting process. Please follow the directions on your proxy card or the voter instruction card from your broker carefully.

 

Even if you plan to attend the meeting, we encourage you to vote your shares by proxy. If you plan to vote in person at the meeting and you hold your Newfield stock in street name, you must obtain a proxy or voter instruction card from your broker and bring that proxy to the meeting.

 

For participants in our 401(k) Plan, the plan permits you to direct the plan trustee on how to vote the Newfield common stock allocated to your account. Your instructions to the plan trustee regarding how to vote

your plan shares will be delivered via the enclosed proxy card, which may be returned as described on the enclosed proxy card:

 

 

Your proxy for shares held in the 401(k) Plan must be received by 11:59 p.m. Eastern Daylight Time on May 3, 2011. The plan administrator will direct the trustee to vote shares as to which no instructions are received in proportion to voting directions received by the trustee from all plan participants who vote.

Yes. You may revoke or change a proxy before the vote is taken at the annual meeting by:

 

 

 

 

If your shares are held in our 401(k) Plan, you also may revoke or change your proxy by submitting another valid proxy by mail, telephone or over the Internet that is later dated and, if mailed, is properly signed. The new 401(k) Plan participant proxy must be received by 11:59 p.m. Eastern Daylight Time on May 3, 2011.

Yes. These documents are available at http://phx.corporate-ir.net/phoenix.zhtml?c=63798&p=proxy.

Yes. You can help us reduce future printing and mailing costs and the environmental impact of providing proxy materials by signing up to receive future Newfield stockholder communications electronically via email or the Internet. With electronic delivery, you will receive documents such as our Annual Report and Proxy Statement as soon as they are available, without waiting for them to arrive in the mail. Electronic delivery can also help us eliminate duplicate mailings. To sign up for electronic delivery of future stockholder communications, please follow the instructions on the proxy card to vote using the Internet (at www.proxyvote.com) and, when prompted, indicate that you agree to receive or access future stockholder communications electronically. Your electronic delivery enrollment will remain effective until cancelled.

We have adopted a procedure approved by the Securities and Exchange Commission known as “householding”. Under this procedure, multiple stockholders residing at the same address have the convenience of receiving a single copy of our Annual Report and Proxy Statement, unless they have notified us that they want to continue receiving multiple copies. This allows us to reduce the environmental impact of providing proxy materials as well as printing and mailing costs.

If you received a householded mailing this year and you would like to have additional copies of the Annual Report and/or Proxy Statement mailed to you, or you would like to revoke your consent to the householding of documents, please submit your request to Broadridge Financial Solutions, Inc. either by calling 1-800-542-1061 or by writing to Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York 11717. Broadridge will promptly deliver any additional copies requested. If you revoke your consent, you will begin to receive individual copies of future mailings within 30 days after we receive your revocation notice.

 

Unfortunately, householding for bank and brokerage accounts is limited to accounts within the same bank or brokerage firm. For example, if you and your spouse each have two accounts containing our common stock at two different brokerage firms, your household will receive two copies of our annual meeting materials — one from each brokerage firm. To reduce the number of duplicate sets of materials your household receives, you may wish to enroll some or all of your accounts in our electronic delivery program. See “Can I receive these materials electronically in the future?”

 

Alternatively, if you have previously revoked your consent to the householding of documents and would now like to receive a single copy of our Annual Report and Proxy Statement, you may submit such request to Broadridge as indicated above.

Some of the amounts set forth in this Proxy Statement in the disclosure regarding executive compensation are forward-looking statements within the meaning of the federal securities laws. These amounts include estimates of future amounts payable under awards, plans and agreements or the present value of future amounts, as well as the estimated value at December 31, 2010 of awards the vesting of which will depend on performance over future periods. Estimating future payments of this nature is necessarily subject to contingencies and uncertainties, many of which are difficult to predict. In order to estimate amounts that may be paid in the future, we had to make assumptions as to a number of variables, which may, and in many cases will, differ from future actual conditions. These variables include the price of our common stock, the date of termination of employment, final pay, interest rates, applicable tax rates and other assumptions. Accordingly, amounts and awards paid out in future periods may vary from the related estimates and values set forth in this Proxy Statement.

 

The Nominating & Corporate Governance Committee of our Board has nominated the 11 people named below for election as directors at our 2011 annual meeting of stockholders. If elected, each director will serve until our 2012 annual meeting of stockholders and thereafter until his or her successor has been elected and qualified, or until his or her earlier death, resignation or removal. Unless instructions to the contrary are given, all properly delivered proxies will be voted for the election of these 11 nominees as directors.

 

Our Bylaws require that each director receive a majority of the votes cast with respect to such director in uncontested elections (the number of shares voted “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee). All director nominees identified in the following list currently are serving on our Board. If our stockholders do not elect a nominee who is serving as a director, Delaware law provides that the director would continue to serve on the Board as a “holdover director”. Under our Bylaws, if a nominee who currently is serving as a director does not receive a sufficient number of votes for re-election, that director must submit an irrevocable resignation in writing to the Chairman of the Nominating & Corporate Governance Committee of our Board. The Nominating & Corporate Governance Committee must make a recommendation to our Board regarding whether to accept or reject the resignation, or whether other action should be taken. Our Board would then act on the Nominating & Corporate Governance Committee’s recommendation and, if the resignation is rejected, publicly disclose its decision and the rationale behind it within 90 days after the date that the election results were certified.

 

If any nominee is unable or unwilling to serve, the proxy holders will vote for such other person as may be nominated by the Nominating & Corporate Governance Committee. Alternatively, our Board may reduce the size of the Board. We have no reason to believe that any of the nominees will be unable or unwilling to serve if elected as a director.

 

Our Board is a collection of individuals with a variety of complimentary skills derived from their diverse backgrounds and experiences. Our Nominating & Corporate Governance Committee has nominated the 11 people named below for election as directors through a process that focuses on the make-up of our entire Board as a whole. See “Corporate Governance — Nominating & Corporate Governance Committee” for a description of the processes and guidelines used by the committee when considering director nominees. All of our director nominees currently serve on our Board, and our Board has determined that each of our nominees, other than Mr. Boothby (our President and Chief Executive Officer), is independent. The following

information, which is as of March 1, 2011, is furnished with respect to each of the nominees for election at our 2011 annual meeting:

 

The Board of Directors recommends a vote “FOR” each of the foregoing nominees to serve as a director.

The following table sets forth beneficial ownership information with respect to our common stock as of March 1, 2011 for (1) each person known by us to own beneficially more than 5% of our outstanding common stock, (2) each of our directors and nominees for director, (3) each of our named executive officers referenced in the Summary Compensation Table, and (4) all of our directors and executive officers as a group. Unless otherwise noted, each person listed below has sole voting and investment power with respect to the shares of our common stock listed below as beneficially owned by the person.

 

None of the shares beneficially owned by our executive officers or directors has been pledged as security for an obligation. Our insider trading policy prohibits our executive officers and directors from holding Newfield securities in a margin account or pledging Newfield securities as collateral for a loan.

 

 

 

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers and directors and persons who own more than 10% of our common stock to file reports of beneficial ownership and changes in ownership with the Securities and Exchange Commission (SEC). These persons are required by SEC rules to furnish us with copies of these reports. Based solely on our review of the copies of these reports received by us during fiscal year 2010 and representations from certain reporting persons that they have complied with the relevant filing requirements, we believe that all such filing requirements were complied with during the year ended December 31, 2010 or prior fiscal years.

Set forth below in question and answer format is a discussion about our corporate governance policies and practices and other matters relating to our Board and its committees.

Have you adopted corporate governance guidelines?

 

Yes. Our Board has formally adopted corporate governance guidelines that address matters such as director qualification standards, director responsibilities, Board committees, director access to management and independent advisors, director compensation, director orientation and continuing education, evaluation of our Chief Executive Officer, management succession and performance evaluations of our Board and its committees.

Have you adopted a code of ethics and conduct?

 

Yes. Our Board has formally adopted a Corporate Code of Business Conduct and Ethics applicable to our directors, officers and employees. Our Corporate Code includes a Financial Code of Ethics applicable to our Chief Executive Officer, Chief Financial Officer and Controller or Chief Accounting Officer.

 

How can I view or obtain copies of your corporate governance materials?

 

The guidelines and codes mentioned above, as well as the charters for the Audit Committee, Compensation & Management Development Committee and Nominating & Corporate Governance Committee of our Board, are available on our website for viewing and printing. Go to http://www.newfield.com and then to the “Corporate Governance — Overview” tab.

How many independent directors do you have? How do you determine whether a director is independent?

 

Our Board has affirmatively determined that 10 of our 11 current directors are independent, as that term is defined by NYSE rules. In making this determination, our Board considered various transactions and relationships between each director nominee or his or her immediate family and our Company and its subsidiaries. The purpose of this review by our Board was to determine whether any such relationships or transactions were material and, therefore, inconsistent with a determination that the director is independent. In the ordinary course of business during 2010, we entered into purchase and sale transactions for products and services with certain companies affiliated with members of our Board of Directors, as described below (amounts are shown net to our interest, where applicable):

 

 

In each case, the transactions were for less than 2% of the consolidated gross revenues of the director-affiliated company. See also “Interests of Management and Others in Certain Transactions”. We generally expect transactions of a similar nature to occur during 2011.

 

As a result of its review, our Board affirmatively determined, based on its understanding of such transactions and relationships, that all of our current directors are independent of our Company under the standards set forth by the NYSE, with the exception of Lee K. Boothby. Mr. Boothby currently serves as our Chairman of the Board, President and Chief Executive Officer. There are no family relationships between any of our directors or executive officers.

 

How many times did your Board meet last year?

 

Our Board met in person or by telephone conference five times during 2010.

Did any of your directors who served on your Board during 2010 attend fewer than 75% of the meetings of your Board and his or her assigned committees during 2010?

 

No.

 

Do you have a policy regarding director attendance at annual meetings of stockholders?

 

Yes. Directors are expected to attend the annual meetings of stockholders. All of our directors attended the 2010 annual meeting.

 

Do your non-management directors and independent directors meet in executive session?

 

Yes. Our non-management directors and independent directors meet in executive session on a regular basis — usually at each regularly scheduled meeting of our Board. All of our non-management directors are independent. Our corporate governance guidelines provide that our independent directors will meet in executive session at least annually and more frequently as needed at the call of one or more of our independent directors. Our corporate governance guidelines also provide that executive sessions will be presided over by our independent “Lead Director”. Philip J. Burguieres has served as our Lead Director since May 2010. If the Lead Director is not in attendance, these executive sessions will be presided over by such other person chosen by vote of the non-management or independent directors, as applicable.

 

How is your Board’s leadership structured?

 

We historically have combined the roles of Chairman of the Board and Chief Executive Officer, other than for periods of time after the retirement of a Chief Executive Officer. Mr. Trice retired as our Chief Executive Officer in May 2009, and agreed to continue to serve as our Chairman of the Board in a non-executive capacity for a transition period until our 2010 annual meeting. Lee K. Boothby was appointed to succeed Mr. Trice as Chief Executive Officer upon Mr. Trice’s retirement in May 2009. Thereafter, our Nominating & Corporate Governance Committee and the other independent members of our Board of Directors evaluated the appropriate leadership structure for our Company. As part of their evaluation, they considered our past leadership structures, the leadership structures of peer companies in our industry, corporate governance trends and Mr. Boothby’s development as our President and Chief Executive Officer. After considering all of these factors, our Nominating & Corporate Governance Committee recommended, and our Board of Directors approved, the appointment of Mr. Boothby to serve as our Chairman of the Board and Mr. Burguieres to serve as our independent Lead Director beginning May 7, 2010.

 

Our Chairman of the Board is responsible for ensuring the overall effectiveness of the Board. The Chairman generally:

 

 

Our independent Lead Director:

 

 

 

At this time, our Nominating & Corporate Governance Committee and Board believe that combining the role of CEO and Chairman continues to be appropriate for us in light of our historical success using this structure, the comparability of this leadership structure with those used at our peer companies, and Mr. Boothby’s performance as Chairman of the Board, President and Chief Executive Officer during 2010. The Board believes that having the Chief Executive Officer also serve as Chairman of the Board provides the Company with a clear leadership structure, provides the Board with valuable insight into the Company’s operations and strategies from management’s perspective and facilitates the flow of information between management and the Board. The Board also believes that this leadership structure ensures the appropriate level of independent oversight because:

 

 

Can interested parties communicate directly with your non-management directors?

 

Yes. We have established an Ethics Line, consisting of a website that facilitates submission of reports over the internet and toll-free numbers that can be used from all the countries in which we operate, so that investors, employees and any other interested parties can anonymously report through a third party any practices thought to be in violation of our corporate governance policies. The Ethics Line also can be used to make concerns known to our non-management or independent directors (individually or as a group), including our Lead Director, on a direct and confidential basis. The web address for our Ethics Line is www.newfieldexploration.ethicspoint.com and the telephone number for the Ethics Line in the United States, Guam, Puerto Rico and Canada is 1-866-843-8694. Additional information regarding the Ethics Line is available on our website at http://www.newfield.com under the tab “Corporate Governance — Overview”.

 

What is your Board of Directors’ role in risk oversight?

 

Management is responsible for implementing our financial and business strategies and assessing and managing the risks relating to our Company and its performance under those strategies on a daily basis. Our Board reviews, approves (where appropriate) and monitors our financial and business objectives, strategies, plans and major corporate actions, and assesses major risks relating to our Company and its performance and reviews options to mitigate and address such risks.

 

Our Board retains the primary responsibility for strategic and risk oversight. To assist the Board in discharging its oversight responsibilities, members of management report to the Board and its committees on areas of risk to our Company, and our Board committees consider specific areas of risks inherent in their respective areas of oversight and report to the full Board regarding their activities. For example, our Audit Committee discusses with management our major financial risk exposures and the steps management has taken to monitor and control such exposures. Our Compensation & Management Development Committee incorporates risk considerations, including the risk of loss of key personnel, as it evaluates the performance of our Chief Executive Officer and other executive officers, reviews management development and succession plans, and considers risks related to our compensation programs and policies. Our Nominating & Corporate Governance Committee focuses on issues relating to Board composition, leadership structures and corporate

governance matters. In addition to receiving reports from Board committees regarding the risks considered in their respective areas, to ensure that our Board has a broad view of our strategy and overall risk management process, the Board will specifically review our long-term strategic plans and the principal issues and risks that we may face, as well as the processes through which we manage risk, during at least one Board meeting per year. This enables the full Board to coordinate risk oversight, especially with respect to risk interrelationships. At this point, we believe that combining the roles of Chairman and Chief Executive Officer enhances the Board’s administration of its risk oversight function because, through his role as Chairman of the Board, our Chief Executive Officer is able to provide the Board with valuable insight into our risk profile and the options to mitigate and address our risks based on his experiences with the daily management of our business as our Chief Executive Officer.

 

How are your directors compensated?

 

Only non-employee directors are compensated for serving as directors. See “Non-Employee Director Compensation” beginning on page 24 for information about our non-employee director compensation.

Does your Board have any standing committees?

 

Yes. Our Board presently has the following significant standing committees:

 

 

Each of these committees is composed entirely of independent directors.

 

Has your Board adopted charters for each of these committees? If so, how can I view or obtain copies of them?

 

Yes. Our Board has adopted a charter for each of these committees along with corporate governance guidelines. The charters and guidelines are available on our website for viewing and printing. Go to http://www.newfield.com and then to the “Corporate Governance — Overview” tab.

What does the Audit Committee do?

 

The primary purposes of the Audit Committee are to assist the Board in monitoring:

 

 

The Audit Committee also prepares a report each year in conformity with the rules of the SEC for inclusion in our annual proxy statement. The Audit Committee is responsible for appointing, retaining and terminating our independent auditors and also performs the specific functions set forth in its charter.

Who are the members of the Audit Committee?

 

The Audit Committee currently consists of J. Michael Lacey, Thomas G. Ricks, Juanita F. Romans, C. E. (Chuck) Shultz and J. Terry Strange, with Mr. Ricks serving as chairman. Each committee member is independent, under the standards set forth by the NYSE. Mr. Strange also serves on the audit committees of Group 1 Automotive, Inc., New Jersey Resources Corporation and SLM Corporation. Our Board has determined that such simultaneous service on these other audit committees and on our Audit Committee does not impair the ability of Mr. Strange to serve effectively on our Audit Committee.

 

Does the Audit Committee have an audit committee financial expert?

 

Yes. Our Board has determined that each of Messrs. Ricks and Strange meets the qualifications of an audit committee financial expert, as defined by SEC regulations. Our Board has determined that each of Messrs. Ricks and Strange is independent, under the standards set forth by the NYSE.

 

How many times did the Audit Committee meet last year?

 

The Audit Committee held seven meetings in person or by telephone conference during 2010.

What does the Compensation & Management Development Committee (C&MDC) do?

 

The primary purposes of the C&MDC are:

 

 

The C&MDC has authority to oversee the administration of compensation programs applicable to all of our employees, including executive officers, and also performs the specific functions set forth in its charter. The C&MDC may delegate some or all of its authority to subcommittees when it deems appropriate.

 

Who are the members of the C&MDC?

 

The C&MDC currently consists of Philip J. Burguieres, Pamela J. Gardner, John Randolph Kemp III, Joseph H. Netherland and Howard H. Newman, with Mr. Kemp serving as chairman. Each C&MDC member is independent, under the standards set forth by the NYSE.

 

How many times did the C&MDC meet last year?

 

The C&MDC held six meetings in person or by telephone conference during 2010.

 

What are the C&MDC’s processes and procedures for consideration and determination of executive compensation?

 

Executive compensation is reviewed at least annually by the C&MDC. The C&MDC generally makes its decisions regarding the annual compensation of our executive officers at its regularly scheduled meeting in February of each year. These decisions include adjustments to base salary, annual incentive cash awards and grants of long-term incentive awards. The C&MDC also makes compensation adjustments as necessary at other times during the year in the case of promotions, changes in employment status and for competitive purposes. The C&MDC may delegate some or all of its authority to subcommittees when it deems appropriate. See “Executive Compensation — Compensation Discussion and Analysis” beginning on page 28 for more

information regarding the C&MDC’s processes and procedures for consideration and determination of executive compensation.

What does the Nominating & Corporate Governance Committee (N&CGC) do?

 

The primary purposes of the N&CGC are:

 

 

The N&CGC also performs the specific functions set forth in its charter.

 

Who are the members of the N&CGC?

 

The N&CGC currently consists of Philip J. Burguieres, Pamela J. Gardner, John Randolph Kemp III, J. Michael Lacey, Joseph H. Netherland, Thomas G. Ricks, Juanita F. Romans and J. Terry Strange, with Mr. Burguieres serving as chairman. Each N&CGC member is independent, under the standards set forth by the NYSE.

 

How many times did the N&CGC meet last year?

 

The N&CGC held four meetings in person or by telephone conference during 2010.

 

What processes and guidelines does the N&CGC follow when considering a director nominee for a position on your Board?

 

Our Board is a collection of individuals with a variety of complimentary skills derived from their diverse backgrounds and experiences. Annually, the N&CGC considers director candidates and the advisability or need for any changes in the number of directors or composition of the Board and recommends any proposed changes to our Board for full discussion and approval. The N&CGC is responsible for identifying individuals qualified to become directors and for evaluating potential or suggested director nominees. The N&CGC has the authority to retain a search firm to help identify director candidates, with the functions of the firm determined by the N&CGC at the time.

 

Although the N&CGC has not established written criteria or a set of specific minimum qualifications, our corporate governance guidelines provide that an assessment of a potential director nominee will include a review of independence, background, ability, judgment, desired skills (such as industry knowledge or specific expertise, such as financial expertise), experience, diversity, legal requirements and other factors that are relevant in the context of the make-up and needs of our Board at the time. Our corporate governance guidelines also provide that a person must be age 71 or younger to be eligible for nomination as a director.

The N&CGC does not have a specific policy regarding diversity and believes that the backgrounds and qualifications of the directors, considered as a group, should provide a diverse mix of experiences, knowledge, attributes and abilities that will allow the Board to fulfill its responsibilities. The N&CGC conducts its assessment through committee discussions that generally focus on the make-up of the Board as a whole at the time, without assigning specific weights to particular experiences or qualifications. In addition, as part of their annual self evaluations, the N&CGC and the entire Board consider whether the Board as a whole possesses the right skills and background to address the issues facing our Company at the time. See “Election of Directors” beginning on page 9 of this Proxy Statement for information regarding each of our 11 nominees for election as a director.

 

Does the N&CGC consider candidates for your Board submitted by stockholders and, if so, what are the procedures for submitting such recommendations?

 

Yes. As provided in the N&CGC’s charter, it is the N&CGC’s policy to consider suggestions from many sources, including stockholders, regarding possible candidates for director. The N&CGC generally intends to use the same process to evaluate candidates recommended by stockholders as it uses to evaluate all other director candidates, as set forth in response to the previous question. However, if a candidate is recommended by a specific stockholder or a group of stockholders, the N&CGC would evaluate the candidate to assess whether the candidate could impartially represent the interests of all stockholders without unduly favoring the particular interests of the recommending stockholder or group of stockholders.

 

If a stockholder wants the N&CGC to consider a possible candidate for director, the name of the possible candidate, together with appropriate biographical information, should be submitted to the Chairman of the Nominating & Corporate Governance Committee, c/o John D. Marziotti, Secretary, Newfield Exploration Company, 363 N. Sam Houston Parkway E., Suite 100, Houston, Texas 77060. Stockholders who wish to propose a matter for action at a stockholders’ meeting, including the nomination of directors, must comply with the provisions of our Bylaws that are described in this Proxy Statement in the section entitled “Stockholder Proposals for 2012 Annual Meeting and Director Nominations”.

 

What are the N&CGC’s processes and procedures for consideration and determination of director compensation?

 

The N&CGC has the sole authority to approve the compensation structure for all of our non-employee directors. The N&CGC may delegate some or all of its authority to subcommittees when it deems appropriate.

 

Director compensation is reviewed at least annually by the N&CGC. The N&CGC seeks to set director compensation at an adequate level to compensate directors for their time and effort expended in satisfying their obligations to us without jeopardizing their independence.

 

In considering non-employee director compensation for the annual period beginning with the 2010 annual meeting, the N&CGC retained Longnecker & Associates to provide industry data regarding director compensation to assist the N&CGC with its evaluation of whether our non-employee director compensation is commensurate with peer companies in our industry and is adequate compensation for their service on our Board. As a result of the N&CGC’s evaluation, for the annual period beginning with our 2010 annual meeting, the committee revised non-employee director compensation as follows:

 

 

See “Non-Employee Director Compensation” below for a description of our non-employee director compensation programs. The N&CGC again considered non-employee director compensation for the period

beginning with the 2011 annual meeting and determined that the compensation should remain the same for the 2011/2012 service period.

Only non-employee directors are compensated for serving as directors. Currently, Mr. Boothby, our Chairman of the Board, President and Chief Executive Officer, is the only Board member who is an employee of ours, and his compensation as an employee is included in the Summary Compensation Table of the Proxy Statement. Mr. Trice previously served as our President and Chief Executive Officer and retired as an employee of ours on May 31, 2009. Mr. Trice’s compensation for his service as a non-employee director during fiscal year 2010 (after his May 31, 2009 retirement) is reflected in the table below.

 

The following table contains information about our non-employee directors’ fiscal year 2010 compensation.

 

 

 

 

Cash Fees.  For purposes of annual fees for non-employee directors, an annual period begins on the date of our annual meeting of stockholders and ends on the date of our next annual meeting. For the annual period ending on our May 7, 2010 annual meeting, our non-employee directors were paid the following cash fees:

 

 

Non-employee directors also are reimbursed for out-of-pocket expenses incurred to attend Board and committee meetings. Mr. Boothby, as our President and Chief Executive Officer, is not eligible to receive compensation for his service as a director. Although he did not receive compensation for his service as a director while he served as our President and Chief Executive Officer, when Mr. Trice retired as our employee on May 31, 2009, he became eligible to receive the above-described cash fees as a non-employee director.

 

Restricted Stock Awards.  Annual restricted stock awards are granted pursuant to our non-employee director restricted stock plan. Each non-employee director who is in office immediately after an annual meeting of stockholders is granted restricted shares with a specified market value. The number of restricted shares granted is determined by dividing that market value by the closing sales price of our common stock on the date of the annual meeting. In addition, each non-employee director who is appointed by our Board (not in connection with an annual meeting of stockholders) is granted restricted shares with the same market value as used for the previous annual meeting, with the number of restricted shares determined by dividing the market value by the closing sales price of our common stock on the date of appointment. With respect to grants made on the date of our 2009 annual meeting of stockholders, the market value of the award to non-employee directors was $100,000. With respect to each annual meeting after our 2009 annual meeting, the Nominating & Corporate Governance Committee of our Board will determine the market value of the award by resolution in advance of the meeting. If the Chairman of the Board is a non-employee director, the award amount may be greater than the award amount for the other non-employee directors. If a non-employee director Chairman of the Board is appointed not in connection with an annual meeting, the award amount will be determined by the Nominating & Corporate Governance Committee on the date of appointment. Restrictions on shares granted pursuant to the plan generally lapse on the day before the first annual meeting of stockholders after the date of grant.

 

An aggregate of 200,000 restricted shares were initially available for issuance pursuant to our non-employee director restricted stock plan. As of March 1, 2011, there were 137,277 restricted shares available for grant and 62,723 restricted shares outstanding under our non-employee director restricted stock plan. If there are insufficient shares remaining under the plan to grant restricted shares as provided in the plan, then the non-employee directors entitled to a grant will share pro rata in the shares available for grant under the plan. Mr. Boothby is a current employee of our Company and Mr. Trice was an employee of our Company until his May 31, 2009 retirement and, as a result, they are not eligible to receive a grant under our non-employee director restricted stock plan.

In considering non-employee director compensation for the annual period beginning with the 2010 annual meeting, the Nominating & Corporate Governance Committee retained Longnecker & Associates to provide the committee with industry data regarding director compensation to assist the committee with its evaluation

of whether our non-employee director compensation is commensurate with peer companies in our industry and is adequate compensation for their service on our Board. Longnecker & Associates used the same peer group for the non-employee director compensation as they used for the executive compensation research discussed in “Compensation Discussion & Analysis” of the Proxy Statement. As a result of the committee’s evaluation, for the annual period beginning with our May 7, 2010 annual meeting, the committee made the following changes to our non-employee director compensation program:

 

 

The changes are designed to: simplify the overall non-employee director compensation program by removing the meeting attendance fees; provide a level of total compensation that approximates the 50th percentile of non-employee director compensation at our peer companies; and further align director compensation with Company performance by increasing the portion of total compensation that is provided through an annual equity award rather than annual cash fees. The Nominating & Corporate Governance Committee considered non-employee director compensation for the period beginning with the 2011 annual meeting and determined that the compensation should remain the same for the 2011/2012 service period.

The Audit Committee of the Newfield Board of Directors currently consists of the five directors whose names appear below. Each member of the committee is “independent” as defined in the NYSE’s listing standards. The primary purposes of the committee are to assist the Board in monitoring:

 

 

The committee is responsible for appointing, retaining and terminating Newfield’s independent auditors and also performs the specific functions set forth in its charter, which is available on our website. Go to http://www.newfield.com and then to the “Corporate Governance — Overview” tab.

 

The committee held seven meetings in person or by telephone conference during 2010. The meetings were designed to facilitate and encourage communication between the Audit Committee and Newfield’s internal auditors and independent auditors.

 

The committee has reviewed and discussed with Newfield’s management and PricewaterhouseCoopers LLP, Newfield’s independent auditors, the audited financial statements of Newfield included in its Annual Report on Form 10-K for the year ended December 31, 2010.

 

The committee also has discussed with Newfield’s independent auditors the matters required to be discussed by the Statement on Auditing Standards No. 114 (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The committee has received and reviewed the written disclosures and the letter from PricewaterhouseCoopers LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditors’ communications with the committee concerning independence, and has discussed with PricewaterhouseCoopers LLP such independent auditors’ independence. The committee also has considered whether the

provision of non-audit services to Newfield by PricewaterhouseCoopers LLP is compatible with maintaining their independence.

 

Based on the review and discussions referred to above, the committee recommended to Newfield’s Board of Directors that the audited financial statements be included in Newfield’s Annual Report on Form 10-K for the year ended December 31, 2010 filed with the SEC.

 

This report is submitted on behalf of the Audit Committee.

 

Thomas G. Ricks, Chairman
J. Michael Lacey
Juanita F. Romans
C. E. (Chuck) Shultz
J. Terry Strange

 

The foregoing Audit Committee Report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

The Compensation & Management Development Committee of the Newfield Board of Directors currently consists of the five directors whose names appear below. The Compensation & Management Development Committee has reviewed and discussed with Newfield’s management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K included in this Proxy Statement. Based on this review and discussion, the Compensation & Management Development Committee recommended to the Board of Directors of Newfield that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

This report is submitted on behalf of the Compensation & Management Development Committee.

 

John Randolph Kemp III, Chairman
Philip J. Burguieres
Pamela J. Gardner
Joseph H. Netherland
Howard H. Newman

 

The foregoing Compensation & Management Development Committee Report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

Executive Summary

 

We are guided by our founding business principles and believe these principles are the basis for our success. These founding principles are:

 

 

Our compensation programs for all employees, including our executives, are based on these principles and implemented through our “goal-oriented pay for performance” model. We believe in setting challenging individual and Company-wide goals and rewarding our executives and employees for performance measured against these goals.

 

In 2010, our executive leadership team led Newfield to deliver top-quartile operational results and performance as compared to its peers. A few of our 2010 performance highlights, all accomplished in a time of significant market and global economic challenges impacting the oil and gas industry, include:

 

 

We believe these achievements were in part driven by the strong leadership of our executive team and their focus on “Team Newfield”, along with the strength, commitment and drive of our employees.

 

As described below, the Compensation & Management Development Committee, or C&MDC, regularly reviews our executive compensation philosophy and programs to ensure that they provide appropriate incentives and rewards in line with our goal-oriented pay-for-performance objectives. In 2009, the C&MDC performed a detailed compensation analysis and initiated a restructuring of our executive compensation programs in order to (i) better align the interests of our executives with the interests of our stockholders, (ii) retain and attract top level talent and (iii) implement a pay-for-performance compensation system that executives understand and can adjust and grow with the Company. The C&MDC believes these changes

provide proper incentives and reasonable rewards based upon the performance and contributions made by our executives, which is ultimately tied to the return achieved for our stockholders.

 

We believe that our executive compensation program operated effectively in 2010. More details about 2010 compensation for our named executive officers appear in the discussion below and the tables that follow.

 

Compensation Overview and Objectives

 

The cornerstone of our compensation program for our executives and all employees, regardless of level, is “goal-oriented pay for performance.” We measure performance against goals and peers at individual, business unit and corporate levels. We design our compensation program to attract, retain and motivate key employees and encourage growth in long-term stockholder value. The oil and gas industry has experienced extremely variable conditions in recent years. Despite the adverse economic conditions that began during the second half of 2008, the competition for geoscientists, petroleum engineers and other talented employees has remained strong and has increased as the economy improves. We believe it is imperative that we maintain highly competitive compensation programs to attract and retain quality personnel and to reward our personnel for performance.

 

Prior to 2010, to achieve our objectives, our annual compensation program for executives primarily included base salary, current and long-term cash awards under our performance-based incentive compensation plan and grants of long-term incentive awards. Base salaries for most of our executive officers historically had been set below the median for comparable positions at peer companies, and we used our incentive plan cash awards to keep our officers’ current cash compensation competitive, reward performance (using current cash awards) and provide a retention incentive (using long-term cash awards). As a result, our executive officers’ total annual compensation included a larger total cash component (base salaries plus current and long-term cash awards) and a smaller equity component compared to compensation at our peer companies. In addition, the form of long-term incentive awards granted to executives varied between time-vesting awards, which were used to create retention incentives, and performance-based vesting awards, which were used to reward progress on our pay-for-performance objectives. The combination of these past awards provided a performance incentive for stock price appreciation on both an absolute basis and relative to our industry peers, and created meaningful ownership stakes for our executive officers, aligning their interests with our stockholders.

 

Over the past several years, our Company has evolved into a larger and stronger company with a diversified portfolio of assets capable of sustained growth. We have expanded from approximately 230 employees at the end of 1999 to almost 1350 employees at the end of February 2011. In recognition of the changes in our Company, the C&MDC began a comprehensive assessment of our executive officer compensation programs in mid-2009 and for all employees in 2010. The C&MDC retained Hewitt Associates LLC to assist the committee with its assessment. In 2010, Hewitt spun off a portion of its executive compensation practice into a separate, independent entity named Meridian Compensation Partners, LLC (collectively referred to herein as Meridian), who the C&MDC retained as its independent advisor effective October 2010. The C&MDC also asked management to reassess our executive officer compensation programs and suggest improvements.

 

In light of the C&MDC’s review and assessment, our executive officers’ annual compensation has been restructured beginning in 2010 as illustrated in the graphics below to focus on the following:

 

 

 

 

 

The goal of the C&MDC’s comprehensive assessment was to evaluate our overall compensation structure and make changes as necessary to (1) maintain its “pay for performance” philosophy, (2) ensure that our program structure could be applied consistently over many years as the Company continues to grow, (3) provide a balanced performance orientation for both short-term and long-term performance, (4) enable talent attraction and retention in the future and (5) closely align the interests of our executives with those of our stockholders. See “Elements of our Compensation Program” below for a discussion of each element of our compensation programs.

Elements of our Compensation Program

 

The following elements made up the fiscal 2010 compensation program for our executive officers, including our named executive officers:

 

Base Salary.  The C&MDC believes that a competitive base salary is necessary to provide a fixed level of income to compensate executives for their level of responsibility, relative expertise and experience. Historically, base salaries for most of our executive officers were below the median for comparable positions within our industry. The C&MDC generally increased executive base salaries in February 2010 and 2011 to be more competitive with salaries for comparable positions within our industry.

 

Annual Incentive Bonus.  In addition to providing a reward for our Company’s performance and profitability, the C&MDC believes in granting discretionary annual cash incentive awards to our named executive officers (and employees) in order to reward individual performance that contributed to the performance of our Company and to provide an incentive for continued performance.

 

Annual incentive compensation awards for periods prior to 2010, including awards made to our executives, were made under our 2003 Incentive Compensation Plan. That plan provided for the creation of an award pool that was equal to 5% of our adjusted net income (as defined in the plan). Awards under the 2003 Incentive Compensation Plan could have both a current and a long-term component. The long-term cash awards were paid in four annual installments consisting of 25% of the long-term award, plus interest. Annual current awards generally were set to bring total annual cash compensation to a competitive level for comparable positions within our industry as justified by performance.

 

For the period beginning January 1, 2010, our Board of Directors, with the recommendation of the C&MDC, approved a new annual cash incentive compensation plan for all employees, the 2011 Annual Incentive Plan. Under the 2011 Annual Incentive Plan, the C&MDC determines the annual award pool for all employees (other than the executives) based upon a number of factors, including the Company’s performance against stated performance goals and in comparison with peer companies in our industry. All employees are eligible if employed on October 1 and December 31 of the performance period. Annual incentive bonus for the 2010 performance period for all non-executive employees were granted pursuant to the 2011 Annual Incentive Plan. Similarly, the C&MDC approved a separate bonus pool for executives based on similar factors, including the Company’s performance against stated performance goals and in comparison with peer companies in our industry.

 

For additional information regarding specific awards to our named executive officers, see “Compensation Decisions — Annual Incentive Bonus” below and “Summary Compensation Table” and “Nonqualified Deferred Compensation” beginning on pages 42 and 50, respectively, of this Proxy Statement.

 

Long-Term Incentive Awards.  We provide discretionary long-term equity-based compensation and incentives to our executive officers through different types of awards, as determined by the C&MDC during its annual compensation review. Long-term incentives through equity awards that vest over a three-year period are designed to provide a retention incentive for our executive officers, and equity awards with the potential to vest based on our stock price performance relative to our peers over a five-year period are designed to more directly align our officers’ interests with stockholder return and provide an incentive to consistently improve performance over a longer-term performance horizon. The ratio of time-vesting to performance-based equity awards varies by officer, based on the officer’s ability to influence overall corporate results. For example, the equity awards for Messrs. Boothby, Rathert and Packer, our most senior executive officers, are more heavily weighted towards performance-based vesting, with 50% of the estimated fair value of their annual equity awards being in the form of performance-based awards. No less than 25% of the estimated fair value of the annual equity awards to each of our other officers will be in the form of performance-based awards. The C&MDC provides both time-vesting and performance-based vesting long-term incentive awards to balance the retention incentive provided by the time-vesting awards with the strong tie to relative long-term stockholder return provided by the performance-based awards. At the same time, the mix of our executive officers’ total annual compensation has shifted towards a percentage increase in favor of equity compensation. For information regarding the specific long-term incentive awards to our named executive officers, see “Compensation Decisions — Long-term Incentive Awards” below and “Summary Compensation Table,” “Grants of Plan-Based Equity Awards in 2010” and “Outstanding Equity Awards at December 31, 2010” beginning on pages 42, 44 and 46, respectively, of this Proxy Statement.

In February 2009, the C&MDC and our Board approved a new omnibus stock plan for our employees, including our named executive officers, the 2009 Omnibus Stock Plan, which was approved by our stockholders at our 2009 annual meeting. The 2009 Omnibus Stock Plan is substantially the same as our previous omnibus plans, but we added several additional stockholder-friendly features, such as:

 

 

Our previous omnibus stock plans terminated upon approval of the 2009 Omnibus Stock Plan, such that new grants can no longer be made under our previous omnibus stock plans.

 

Similarly, we are asking stockholders to approve a new 2011 Omnibus Stock Plan at the upcoming annual meeting of stockholders, which will be for our employees, including our named executive officers, and our non-employee directors. The 2011 Plan also includes the stockholder-friendly features described above. See “Approval of the Newfield Exploration Company 2011 Omnibus Stock Plan” beginning on page 59 of this Proxy Statement for a description of the terms of the new plan.

 

Change of Control Severance Plan and Agreements.  None of our named executive officers has an employment contract; however, we have entered into change of control severance agreements with our named executive officers under our Change of Control Severance Plan. The change of control severance agreements generally provide certain payments to the named executive officers if their employment is terminated during a two or three-year protected period after a change of control (depending on the officer). The agreements provide our named executive officers, whose jobs generally would be at the greatest risk in a change of control, with a greater level of financial security in a change of control. This additional security helps ensure that these officers remain focused on our performance and the continued creation of stockholder value throughout the change of control transaction rather than on the potential uncertainties associated with their own employment. The potential payments to our named executive officers upon a termination of employment or a change of control, as well as other information regarding the change of control definition and other material terms of the agreements, are disclosed under “Potential Payments Upon Termination or Change of Control” beginning on page 51 of this Proxy Statement.

 

Employee Stock Purchase Plan. In February 2010, the C&MDC and our Board approved an employee stock purchase plan for our employees, including our named executive officers, which the stockholders approved at our 2010 annual meeting. We believe that, by providing our employees with an opportunity to purchase our common stock at a discount through an employee stock purchase plan, we further incent them to work for our continued success. In addition, we believe that executive ownership of our stock helps to align executive interests with our stockholders.

 

Savings/Deferred Compensation Plans.  Our 401(k) Plan and Deferred Compensation Plan for highly compensated employees allow an eligible executive to defer up to 90% of his or her salary and all of his or her bonus on an annual basis. We believe that providing our 401(k) Plan and Deferred Compensation Plan offers secure and tax-advantaged vehicles for executives to save effectively for retirement and build financial security. We make a matching contribution for up to 8% of the executive’s base salary. Account balances under the 401(k) Plan and the Deferred Compensation Plan can be invested in substantially the same

investment options, at the direction of the participant. For additional information regarding our Deferred Compensation Plan, see “Nonqualified Deferred Compensation” beginning on page 50 of this Proxy Statement.

 

Benefits and Perquisites.  Our named executive officers are eligible to participate in the benefit plans generally available to all of our U.S. employees, which include health, dental, life insurance, and disability plans. Consistent with our philosophy of emphasizing performance-based pay, our executive compensation program provides limited benefits and perquisites. In fiscal 2010, other than relocation assistance for certain executives, the only perquisite provided to our named executive officers was reimbursement for club dues, which we believe encourages the wellness and business development of our executives. For additional information regarding the nature of these benefits, see the All Other Compensation Table in footnote 6 to the Summary Compensation Table on page 44 of this Proxy Statement.

 

Stock Ownership.  We do not have stock ownership requirements or stock holding guidelines for our executive officers. The C&MDC periodically considers the appropriateness of adopting such guidelines as part of its ongoing comprehensive assessment of our executive compensation programs. All of our executive officers receive a significant amount of their total compensation in the form of grants of long-term incentive awards. Based on beneficial ownership as of March 1, 2011, as set forth under “Security Ownership of Certain Beneficial Owners and Management” beginning on page 15 of this Proxy Statement, and the March 1, 2011 closing price of our common stock, Messrs. Boothby, Rathert, Packer, Dunn and Schneider beneficially own shares of our common stock valued between nine and 33 times their respective base salaries. Our employees and directors are prohibited from trading in any derivatives related to our stock, subject to limited exceptions for long-term “hedging” transactions by our officers and directors that are approved in advance by our Board. None of our officers and directors has entered into hedging transactions involving our stock. In addition, our insider trading policy prohibits our executive officers and directors from holding Newfield securities in a margin account or pledging Newfield securities as collateral for a loan.

 

Financial Restatements.  Our Board currently has not adopted a formal policy regarding the effects of a financial restatement on prior awards. The C&MDC is investigating implementing such a policy and expects to adopt a formal policy once final rules related to claw-back policies are adopted by the SEC and the NYSE in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

Tax Deductibility Considerations.  Section 162(m) of the Internal Revenue Code of 1986, as amended, generally disallows a tax deduction to a public company for compensation paid to its chief executive officer or any of its four other most highly compensated executive officers to the extent that the compensation of any of these officers exceeds $1 million in any calendar year. Qualifying performance-based compensation is not subject to the deduction limit. The C&MDC’s primary goal is to design compensation strategies that it believes further the best interests of our Company and our stockholders, and meet the compensation objectives described above. The performance-based restricted stock awards that the C&MDC began granting to executive officers in 2010 are designed to qualify as performance-based compensation for purposes of section 162(m). No other components of our compensation awarded in 2010 currently qualify as performance-based compensation for purposes of section 162(m).

 

Evaluation Process, Including the Role of Consultants, Peer Comparisons and Officers

 

The C&MDC oversees the administration of the compensation programs applicable to our employees, including our executive officers. The C&MDC generally makes its decisions regarding the annual compensation of our executive officers at its regularly scheduled meeting in February of each year. These decisions include adjustments to base salary, grants of annual incentive bonus and grants of long-term incentive awards. The C&MDC also makes compensation adjustments as necessary at other times during the year in the case of promotions, changes in employment status and for competitive purposes.

 

Each year for the February Board meeting, our Chief Executive Officer prepares an evaluation of each of the other executive officers, and makes compensation recommendations to the C&MDC. During 2010, the C&MDC retained Hewitt Associates as its consultant through September, then engaged Meridian Compensation Partners LLC as its consultant beginning in October to assist the C&MDC in compensation matters.

Meridian reports exclusively to the C&MDC, which has sole authority to retain any compensation consultant to be used by the C&MDC to assist in the evaluation of compensation for our Chief Executive Officer and other executive officers, as well as our overall executive compensation structure.

 

Performance Considerations.  We generally take into account the following items of corporate performance in making compensation decisions for our executive officers:

 

 

In assessing a specific executive officer’s impact during the year and his or her overall value to our Company, we generally take into account long-term and current-year performance in the officer’s primary area of responsibility, strategic initiatives, leadership, the officer’s role in succession planning and development, and other intangible qualities that contribute to corporate and individual success. See “Compensation Decisions” below.

 

Role of Consultants.

 

Committee Consultant.  The C&MDC’s Consultant (Hewitt, then Meridian in October 2010) assists the C&MDC in developing a competitive total compensation program that is consistent with our philosophy of “goal-oriented pay for performance” and that will allow us to attract, retain and motivate talented executives. The Consultant’s services include providing an annual analysis of the compensation of our top executive officers and their counterparts at peer companies. The analysis consists of a comparison of each element of compensation and a comparison of total compensation, which we consider to include salary, annual cash incentive awards and long-term incentive awards. The Consultant also provides the C&MDC with assistance in the design of compensation and benefit programs and ongoing support with respect to regulatory and other considerations impacting compensation and benefit programs, as requested by the C&MDC. For example, as described above, the C&MDC retained the Consultant to assist with the C&MDC’s in-depth assessment of our compensation programs to help the C&MDC understand alternative compensation structures the Company may want to consider. This assessment extended beyond the traditional elements of total compensation analyzed by Meridian annually and covered broader aspects of executive compensation structure, such as risks associated with different types of compensation, vesting periods for time-based and performance-based equity awards, the structure of change of control and severance benefits and stock ownership guidelines. The Consultant attended or participated in four committee meetings during 2010. Meridian does not provide any other services for our Company.

 

Management Consultant.  In response to the C&MDC’s request for management to reassess our executive officer compensation programs and recommend improvements, in 2009 and 2010, the Company retained Longnecker & Associates, an executive compensation consulting firm, to assist management. Longnecker’s services included: (i) evaluating the market competitiveness of, and providing recommendations for, the total direct compensation of our executive officers; (ii) reviewing market competitive practices regarding executive stock ownership guidelines; and (iii) providing information, guidance and advice to management on current market trends and human resources best practices with respect to compensation, benefits and perquisites.

Peer Groups.  In November 2009, Hewitt Associates provided an analysis of Newfield’s 2009 compensation relative to prevailing compensation levels at industry peers, considering the relative enterprise value of Newfield among those peers. The C&MDC referenced this analysis in the February 2010 compensation review process where the C&MDC determined 2010 base salaries, the annual incentive cash awards for 2009 performance, and grants of 2010 long-term incentive awards. The peer companies used by Hewitt for the February 2010 analysis were:

 

November 2009 Hewitt Peer Group

 

 

The peer group was developed taking into consideration peer company metrics such as asset size and enterprise value, comparability of asset portfolio and the availability of compensation data. The C&MDC reviews the peer group periodically for reasonableness.

 

As a result of the review process, the C&MDC and Meridian have amended the list over time based on factors that either diminish or improve comparability to Newfield (such as business combinations, divestitures or changes in asset strategy). In Meridian’s November 2010 analysis for purposes of the February 2011 C&MDC review process, Meridian used a revised peer group of companies reflective of domestic independent E&P companies with scopes both larger and smaller than us. The peer companies used by Meridian for the February 2011 analysis by the C&MDC were:

 

November 2010 Meridian Peer Group

 

 

The Hewitt and Meridian data have provided the primary benchmark reference points in the C&MDC’s evaluation and approval of officer compensation and awards. As a supplemental reference, in November 2010, management provided the C&MDC with a copy of the analysis that Longnecker prepared for management in preparation for the 2011 compensation review. For its analysis, Longnecker used a peer group consisting of the following companies:

 

November 2010 Longnecker Peer Group

 

 

Longnecker consulted with management and developed this peer group by screening exploration and production companies primarily based upon market capitalization, competition in capital markets, the geographic location and nature of the assets, the geographic location of the company’s headquarters and company culture.

 

Although the Longnecker peer group has a tighter range of peer company sizes (based upon revenues, market capitalization and assets), there is overlap between the Longnecker and Meridian peer groups. The two analyses generally yielded similar results, see “Compensation Decisions” below.

 

Role of the Chief Executive Officer.  Annually, our Chief Executive Officer provides the C&MDC with an evaluation of his performance that is based, in large part, upon the items listed above under “Performance Considerations,” as well as his broader leadership roles as Chairman of our Board of Directors and as our lead

representative to the investment community. The C&MDC evaluates our Chief Executive Officer on these and other criteria. The total compensation package for our Chief Executive Officer is determined based on the C&MDC’s evaluation and input from Meridian, and reflects his performance, the performance of our Company and competitive industry practices.

 

Lee K. Boothby became our President and Chief Executive Officer in May 2009. Mr. Boothby’s incentive compensation award for 2008 and his annual base salary and equity awards for 2009 were determined in February 2009 prior to his promotion, using the same process as described for all other executive officers. In May 2009, in connection with his promotion to Chief Executive Officer, the C&MDC increased Mr. Boothby’s compensation as described below under “Compensation Decisions” below.

 

Role of Other Executive Officers.  Our Chief Executive Officer makes recommendations to the C&MDC on all compensation actions (other than his own compensation) affecting our executive officers. In developing his recommendation for an executive officer, our Chief Executive Officer considers the self-evaluation prepared by the executive officer, the recommendations of his executive team, input from Longnecker, as well as his own evaluation. Our Chief Executive Officer’s evaluation includes an assessment of the impact that the executive officer has had on our Company during the award year and the executive officer’s overall value to the Company as a senior leader, taking into account the items listed above under “Performance Considerations”.

 

The C&MDC is provided with our Chief Executive Officer’s evaluation of each officer’s performance and contributions to our Company. Meridian reviews and provides comments to the C&MDC on our Chief Executive Officer’s recommendations. The C&MDC considers the information and recommendations provided by our Chief Executive Officer and Meridian when it establishes base salaries, annual incentive cash awards and grants of long-term incentive awards.

 

Compensation Decisions

 

In February 2010, the C&MDC determined the 2010 annual base salaries, the 2010 long-term incentive awards and the annual incentive cash awards for the 2009 performance period for our executive officers. Similarly, in February 2011, the C&MDC determined the 2011 annual base salaries, the 2011 long-term incentive awards and the annual incentive cash awards for the 2010 performance period for our executive officers.

 

The Hewitt and Meridian analyses for the C&MDC provided valuable data points at both the February 2010 and February 2011 meetings. The consultants’ analyses aided in the C&MDC’s consideration of the level of total compensation for our executive officers, allocations between cash compensation and long-term incentive compensation and the types of long-term incentive awards.

 

As described above under “Compensation Overview and Objectives,” the C&MDC began a comprehensive analysis of our executive compensation structure in mid-2009 and restructured our executive officers’ compensation beginning in 2010. The C&MDC decided to increase base salaries to a more competitive level, approximating the median for comparable positions at a selected group of peer companies. To determine annual incentive payments for the 2009 and 2010 performance periods, the C&MDC considered performance and the C&MDC’s desire to alter the mix of total annual compensation paid to our executive officers by reducing the percentage of total annual compensation paid to our executive officers in cash. To facilitate the C&MDC’s analysis, the Meridian and Longnecker analyses included data regarding base salary, total cash compensation (base salaries plus cash incentive awards) and total compensation (base salaries plus cash incentive awards plus equity awards).

 

The executive officers who lead our business units, such as Messrs. Dunn and Schneider, have broad responsibilities for all aspects of the operations in their regional business units. We consider their responsibilities to be similar to those of a chief executive officer or chief operating officer of a smaller company similar in size to our different business units. As a result, we concluded that it was difficult to find comparable positions at peer companies against which to benchmark their compensation. Accordingly, when determining their compensation for 2010, we reviewed compensation data for vice president positions at the Meridian and

Longnecker peer group companies, as well as compensation data for chief executive officers and chief operating officers of a variety of additional smaller energy companies similar in size to our different business units. These additional companies included:

 

Smaller Company Comparisons

 

 

However, we did not use the data from the two peer groups or the additional smaller energy companies as a benchmark against which we would set a specific percentile of compensation for Messrs. Dunn and Schneider. Rather, the C&MDC used all of the available information as well as the C&MDC’s knowledge of the broad responsibilities of our individual business unit leaders when making compensation decisions for our business unit leaders (including Messrs. Dunn and Schneider).

 

Early in 2010, our executives set their corporate goals, which included increasing production between 8% and 12% over 2009, focusing on large domestic resource plays, increasing our investment in oil plays, achieving top quartile share price performance against our peers, and maintaining a strong balance sheet. Despite the adverse economic conditions that continued during 2010, we feel that our Company performed extremely well operationally and financially, and we believe our 50% increase in stock price is reflective of this performance. Specifically, we made the following 2010 corporate achievements:

 

 

In making compensation decisions, the C&MDC specifically considered these factors as well as overall leadership effectiveness during 2010.

 

A description of the C&MDC’s decisions and analyses relating to 2010 compensation for each compensation element, as well as the C&MDC’s more recent decisions and analyses regarding 2011 compensation, is provided below.

 

Base Salary.  For 2010 and 2011, the C&MDC generally increased executive bases salaries to be more competitive with salaries for comparable positions within our industry, providing a stable base of competitive cash compensation while rewarding performance through annual cash incentive awards and performance-based equity awards. As mentioned above, the C&MDC made this change from past practice as part of its effort to alter the overall mix of executive compensation. At its February 2010 meeting, the C&MDC increased the annual base salaries for our named executive officers between 2% and 30% compared to 2009 base salaries (30% for Mr. Boothby, 6% for Mr. Rathert, 13% for Mr. Packer, 2% for Mr. Dunn and 6% for Mr. Schneider).

 

The peer group information reviewed by the C&MDC indicated that the base salaries for Messrs. Boothby, Rathert and Packer were below their peers, especially for Messrs. Boothby and Packer in their first year serving as our Chief Executive Officer and Chief Operating Officer, respectively. The increases in February 2010 brought the base salaries for these three named executive officers closer to (but still below, in the cases of Messrs. Boothby and Packer) the median salaries for comparable positions at peer companies. In addition to the peer group information (and, in the case of Messrs. Dunn and Schneider, the smaller energy company information), the increases also were based on general levels of market salary increases, individual performance and our overall financial and operating results, without any specific relative weight assigned to any of these factors.

 

At its February 2011 meeting, the C&MDC increased the annual base salaries for our named executive officers between 3.5% and 11.5% compared to 2010 base salaries (11.5% for Mr. Boothby, 3.5% for Mr. Rathert, 5.6% for Mr. Packer, 11.1% for Mr. Dunn and 9.4% for Mr. Schneider). The increases in February 2011 were intended to bring the named executive officers’ base salaries closer to the median, taking into consideration their individual performance as compared to a market benchmark.

 

Consistent with our pay for performance philosophy, the base salaries for our named executive officers represented between 12% and 18% of their total compensation for 2010, as set forth in the Summary Compensation Table on page 42 of this Proxy Statement.

 

Annual Incentive Bonus.  As described above under “Compensation Overview and Objectives”, the C&MDC restructured our executive compensation programs beginning in February 2010 and altered the mix of total annual compensation paid to our executive officers, which influenced the size of the cash incentive compensation awards to our executive officers in February 2010 and February 2011. In addition, as part of the restructuring of our executive officers’ compensation, the C&MDC is no longer providing long-term cash awards for our executive officers and long-term incentive awards are being used to balance retention incentives with a strong tie to relative long-term stockholder return. See “Long-term Incentive Awards” below.

 

The amount of each employee’s annual incentive cash award was based upon the employee’s impact on our 2010 results. The C&MDC established annual incentive cash awards for each of our named executive officers after considering the recommendations of our Chief Executive Officer (with respect to the other named executive officers), Mr. Boothby’s self-evaluation and Meridian’s recommendations.

 

Annual incentive cash award amounts for our named executive officers represented between 23% and 33% of their total compensation for 2010, as set forth in the Summary Compensation Table on page 42 of this Proxy Statement. The cash incentive compensation awards granted to Messrs. Boothby, Rathert and Packer for the 2010 performance period increased as compared to the 2009 performance period by between 6% and 42% (42% for Mr. Boothby, 7% for Mr. Rathert and 6% for Mr. Packer). Mr. Dunn’s award for the 2010 performance period declined 4% and Mr. Schneider’s award for the 2010 performance period declined 13%. As part of our goal-oriented pay for performance program, executives are graded based on their performance against stated organizational and individual goals. For the 2010 performance year, we had a difference in the delivery of performance against goals both at the organizational, unit and individual level that resulted in a

variance of the annual bonus for the named executive officers. In addition, with respect to Messrs. Boothby, Packer and Rathert (whose awards increased), the decisions regarding their awards were made in recognition of the critical roles that they play in the continued growth and strong leadership of the Company. In setting the award for Mr. Boothby, the C&MDC recognized his strong overall corporate leadership in his first full year serving as our Chief Executive Officer, including his success in his roles as a member of our Board of Directors and our lead representative in the investment community.

 

Long-term Incentive Awards.  Beginning in February 2010, the C&MDC began to alter the mix of compensation for our executive officers by increasing the percentage of total annual compensation provided through long-term incentive awards and to include both time-vesting and performance-based long-term incentive awards. The ratio of time-vesting to performance-based vesting awards varies by officer, based on the officer’s ability to influence overall corporate results, with more senior executive officers’ awards being more heavily weighted toward awards with performance-based vesting. By providing both types of awards each year, the C&MDC feels it will be better able to consistently balance the retention incentive provided by the time-vesting awards with the strong tie to relative long-term stockholder return provided by the performance-based awards.

 

The February 2010 and February 2011 time-vesting awards vest in three equal annual installments, beginning on the first anniversary of the grant. The February 2010 and 2011 performance-based awards vest, if at all, based on our total stockholder return relative to a peer group. The peer group for the performance-based awards includes the following peer companies (or their successors): Berry Petroleum Corporation, Cabot Oil and Gas Corporation, Chesapeake Energy Corporation, Cimarex Energy Co., Comstock Resources, Inc., Denbury Resources Inc., EXCO Resources Inc., Forest Oil Corporation, Noble Energy, Inc., Petrohawk Energy Corporation, Pioneer Natural Resources, Plains Exploration & Production Company, Range Resources Corporation, SandRidge Energy, Southwestern Energy Company, Ultra Petroleum Corp., Whiting Petroleum Corporation, as well as the Dow Jones Industrial Average Index and the S&P 500 Index. Vesting under the 2010 performance-based awards has the possibility of occurring monthly from April 15, 2013 through April 15, 2015 and vesting under the 2011 performance-based awards has the possibility of occurring monthly from

April 15, 2014 through April 15, 2016, based on our total stockholder return ranking, as measured at the end of each immediately preceding month, as follows:

 

Ranking Relative to Peers — Percent Earned

 

 

Total stockholder return for a particular month means the rate of return (expressed as percentage) achieved with respect to our common stock, the primary common equity security of each other company and index in the peer group if: (1) $100 was invested in each security or index on the last day of March for the applicable grant year, assuming a purchase price equal to the average closing price of the security or index for all of the trading days in March for the applicable grant year; (2) if the record date for any dividend with respect to a particular security occurs during the period beginning March 31 of the applicable grant year and ending on the last day of the determination month, such dividend was reinvested in the security as of the record date for the dividend (using the closing price of the security on the record date); and (3) the valuation of such security or index at the end of the determination month is based on the average closing price for all of the trading days in the determination month. In view of the competitive conditions in our industry, all restricted stock unit awards continue to contain qualified retirement vesting provisions that are conditioned upon the signing of a non-compete agreement and providing a specific amount of advance notice before retirement to allow adequate time for a smooth transition.

 

For more information regarding the terms of the 2010 awards, as well as the fair value of the 2010 awards on their grant date, see “Grants of Plan-Based Equity Awards in 2010” beginning on page 44 of this Proxy Statement.

The following table sets forth information with respect to the compensation of our Chief Executive Officer, our Chief Financial Officer, and our three other most highly compensated executive officers (referred to as our “named executive officers”) for the years ended December 31, 2010, 2009 and 2008.

 

 

 

 

 

 

 

 

All Other Compensation Table

 

 

The following table contains information about grants of plan-based restricted stock and restricted stock units to our named executive officers during 2010.

 

 

 

 

 

The time-vested restricted stock granted to Messrs. Boothby, Rathert, Packer, Dunn and Schneider in February 2010 vests, subject to continuous employment, in three equal annual installments beginning on the second anniversary of the grant date. Generally, upon death, disability (as defined in the award agreement) or a change of control (as defined in our 2009 Omnibus Stock Plan), all of the restricted stock will vest. In addition, if the executive’s employment with us is terminated due to a qualified retirement (as defined in the award agreement), a pro rata portion of the restricted stock not previously forfeited will vest and the remainder will be forfeited. The pro rata portion that will vest is determined by multiplying the number of shares of restricted stock with respect to which forfeiture restrictions would otherwise have lapsed on the next anniversary of the grant date by the fraction that results from dividing (1) the number of days elapsed (excluding the retirement date) since the most recent anniversary date by (2) 365. In order for the pro rata portion to vest on qualified retirement, the employee must meet the conditions in the award agreement by (1) providing the required notice, (2) having at least 10 years of qualified service and (3) if the employee is not at least 62 years old at the time of the retirement, signing a non-compete agreement until age 62. See also “Potential Payments Upon Termination or Change of Control” beginning on page 51 of this Proxy Statement.

 

The February 2010 performance-based awards vest, if at all, based on our total stockholder return relative to a peer group. Vesting of these 2010 performance-based awards has the possibility of occurring monthly from April 15, 2013 through April 15, 2015. For details on the performance vesting requirements, see “Compensation Discussion & Analysis — Compensation Decisions” on page 37 of this Proxy Statement.

The following table contains information about our named executive officers’ outstanding equity awards at December 31, 2010.