SM Energy Co

For the period ended Dec 31, 2024. Filed Apr 7, 2025.

About this filing

What shareholders are asked to vote on at a company's meeting. It is where to find what directors and top executives are paid, and who owns the most shares.

Dec 31, 2024 · Filed Apr 7, 2025

SM$29.92+1.0%Stored close · as of Nov 6, 2026

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Contents

Section 2—A

SECTION 2—Aligning Strategy with Stockholder Value Creation: Our Compensation Philosophy and Objectives

Executive Compensation Philosophy and Stockholder-Focused Objectives

We designed our executive compensation program to incentivize long-term value creation by linking pay to a balanced mix of financial, operational, and sustainability-based metrics over time. Our Compensation Committee regularly evaluates and, as appropriate, modifies our program to align executive pay with Company performance and our stockholders’ experience throughout industry cycles. The philosophy and objectives of our executive compensation program include:

linking compensation and performance incentives to our short-term and long-term financial and operational objectives, ensuring that our executives remain focused on Company performance over varying time periods;

incorporating TSR and adjusted free cash flow generation into our incentive programs in order to align with our stockholders’ priorities;

heavily weighting total target compensation toward variable and performance-based program designs;

utilizing sustainability-focused metrics to prioritize responsible deployment of capital for the long-term benefit of all stakeholders while maintaining standards consistent with evolving best practices;

maintaining rigor in goal setting, measurement, review and accountability;

providing competitive total compensation opportunities that allow us to attract, retain, compensate, and motivate talented leaders; and

discouraging excessive or imprudent risk-taking.

Compensation Best Practices and Corporate Governance Highlights

Our leadership and culture encourage long-term stockholder value creation through the implementation of best practices in compensation and corporate governance matters. We align certain areas of our employee compensation structure with that of our executives to maintain internal equity and ensure consistent pay practices across the Company. We evaluate performance using both quantitative and qualitative factors and review not only “what” is achieved, but also “how” it is achieved. Our stockholder engagement efforts serve an important role in conducting this evaluation and ensuring that our executive compensation practices meet or exceed the expectations of our Board and our stockholders. Some best practices of our executive compensation program are set forth in the table below:

WHAT WE DO:
P	Pay-for-Performance: A significant majority of our executive pay is variable and linked to meeting our short-term and long-term financial, operational, and sustainability-based goals, aligning incentives with long-term stockholder value creation.	P	Caps on Incentive Awards: Performance-based equity awards are capped at target payout if absolute TSR is negative for the performance period. The annual cash bonus for executives with the title of Senior Vice President and above is subject to a downward adjustment if absolute TSR is negative by 10 percent or more.
P	Performance-Weighted Compensation: A significant portion of executive compensation is in the form of performance-based awards, with 60 percent of our CEO’s 2024 target LTIP value delivered in performance-based awards and 88% of our CEO’s total target direct compensation variable and tied to performance.	P	Clawback Policy: We maintain a clawback policy applicable to our executive officers that requires the repayment of certain incentive-based compensation following an accounting restatement resulting from material noncompliance with financial reporting requirements, and that otherwise conforms to SEC rules and NYSE listing standards.
P	Proper Incentives: Our short-term incentive plan (“STIP”) includes mechanisms to modify payout based on TSR and adjusted free cash flow performance to align incentives with our stockholders’ priorities.	P	Equity Ownership Requirements: We require executive officers and directors to maintain meaningful ownership of our stock to ensure their interests are appropriately aligned with the long-term financial interests of our stockholders.
P	Compensation Risk Assessment: The Compensation Committee annually reviews an analysis of our incentive compensation plans prepared by its independent compensation consultant to ensure our plans are designed appropriately and do not encourage excessive risk taking, while considering market changes and peer group comparisons.	P	Sustainability-Based Incentives: Quantitative and qualitative sustainability metrics, including measures related to safety performance and training, spill performance, and greenhouse gas emissions (gross and methane intensity) comprise substantial weightings in our incentive plans.
P	Target the Median: We generally target pay opportunities for our executives at the market median.	P	Independent Compensation Consultant: The Compensation Committee retains an independent compensation consultant.

WHAT WE DO NOT DO:
O	No Excise Tax Gross-ups: We do not provide golden parachute excise tax payments or gross-ups.	O	Prohibited Transactions: We do not permit officers, employees, or directors to enter into transactions that hedge the value of our securities owned by them, hold our securities in margin accounts, pledge our securities to secure indebtedness, or buy or sell options or derivatives with respect to our securities.
O	Limited Severance: We typically do not provide severance benefits in the event of termination without cause, unless it is related to a change of control.
O	No Single-Trigger Change of Control Severance: We do not provide “single-trigger” cash severance or equity vesting acceleration upon a change of control.	O	No Excess Perquisites: Executive perquisites are minimal and comprise a very small portion of the executive compensation package.
O	No Dividends on Unvested Equity: We do not pay dividends or dividend equivalents on unvested equity awards.	O	No Unlimited Cash Bonuses: Annual cash incentive awards are capped regardless of performance against our short-term metrics.
O	No Guaranteed Base Salary Increases: Base salary levels are reviewed annually and periodically adjusted based on market conditions, competitiveness, and internal considerations.	O	No Employment Contracts: The employment of our executives is “at will,” and there are no written employment agreements with any executive officers.

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The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.