SM Energy Co

SECTION 4—Primary Elements of 2025 Compensation and Executive Compensation Results

The table below sets forth the primary elements of our executive compensation design:

2025 Incentive Plan Results

The graphic below illustrates the relationship between our STIP and LTIP performance metrics and our incentive plan results.

Total Direct Compensation Mix

The graphs below show the 2025 target total direct compensation mix for our former Chief Executive Officer and the average mix for our other NEOs. As the charts illustrate,88 percent and 80 percentof target total direct compensation for our Chief Executive Officer and other NEOs, respectively, is attributable to performance-based STIP and LTIP awards, and thus is variable and tied to performance (i.e., “at risk”).

(1) Herbert S. Vogel, Former Chief Executive Officer

Base Salary

Base salary is intended to provide a foundation of cash compensation that recognizes the level of responsibility, authority, and experience of each individual executive, and compensates such executive for day-to-day contributions to our success. The Compensation Committee generally sets base salaries at or near the median of our peers, but considers individual circumstances such as responsibilities, skills, and experience. The table below reflects the 2025 base salaries of each of our NEOs, which were effective as of March 30, 2025, and a comparison to their respective 2024 base salaries. Our NEOs’ base salary increases in 2025 reflect market adjustments based on peer data comparative analysis.

Short-Term Incentive Plan

Short-Term Incentive Plan—Objectives

Our STIP is designed to incentivize the successful execution of our annual business plan, measured by achievement of the Company’s annual performance goals. These performance objectives are established in the first quarter of each year by the Compensation Committee in consultation with management and FW Cook. At the discretion of the Compensation Committee, these goals may be adjusted from time-to-time during the year due to significant changes in our business. The Compensation Committee did not modify our STIP performance goals or target performance levels during 2025. STIP awards are paid in cash under the SM Energy Company Cash Bonus Plan (the “Cash Bonus Plan”).

The Compensation Committee determines amounts earned under the STIP not only by the extent to which management achieved the designated performance goals, but also by evaluating how management achieved those goals, as well as overall market and industry conditions. The Compensation Committee’s exercise of judgment and discretion protects the STIP from having an illogical outcome if circumstances change during the year such that the formulaic goals do not reflect reasonable outcomes.

For the 2025 plan year, the Compensation Committee made no changes to the prior year’s STIP design (other than adding a qualitative evaluation of the Company’s performance in integrating the Uinta Basin asset), determining that it appropriately incentivized stockholder value creation in the current environment. The 2025 STIP metrics, including weighting and target and actual performance, are reflected in the table below under the heading titled “Short-Term Incentive Plan - 2025 Performance.”

Consistent with prior years, the Compensation Committee determined that generation of free cash flow is an important component of our business strategy and absolute TSR reflects the experience of our stockholders. Accordingly, the Compensation Committee continued to incorporate these metrics into the 2025 STIP design through two mechanisms:

•Adjusted Free Cash Flow: The cash flow, production volume and proved developed reserve addition metrics are calculated on an adjusted free cash flow basis. Any adjustment to these metrics on the basis of the Company’s generation of adjusted free cash flow is limited to a range of 80 percent to 120 percent of the unadjusted result.

•Absolute TSR Modifier: The STIP multiplier is subject to a modifier that increases payout for all employees, or decreases payout for our NEOs, if absolute TSR for the year increases or decreases by an amount between 10 and 30 percent in either direction. Specifically, if absolute TSR increases by an amount between 10 percent and 30 percent, then payout for all employees may be increased by up to 1.2 times (subject to an overall STIP multiplier cap of 2.0 times), and if absolute TSR for the year decreases by an amount between negative 10 percent and negative 30 percent, then payout for our NEOs may be reduced down to 0.8 times. The modifier is determined by interpolating the change in TSR within the stated range, capping the upside adjustment at 1.2 times and limiting downside adjustment for our NEOs to 0.8 times.

Each NEO is assigned a target bonus as a percentage of his or her base salary, based on the pay level that the Compensation Committee deems to be competitive and appropriate assuming all of our performance goals are achieved at the target level. Actual bonuses can range from zero to two times a participant’s target percentage, regardless of the level of outperformance that may be achieved in any given year.

Actual awards are based on the Compensation Committee’s assessment of the Company’s performance and the individual performance of each of our NEOs. Target bonuses as of December 31, 2025, as a percentage of base salary for each of the NEOs, were as set forth in the following table.

Short-Term Incentive Plan— 2025 Performance

In determining 2025 annual cash bonus awards for our NEOs, the Compensation Committee assessed Company performance with respect to six quantitative metrics and two qualitative metrics. The Compensation

Committee’s evaluation of our performance under the quantitative metrics is set forth below, and resulted in an initial multiplier of 0.96 times each NEO’s target bonus level:

Our method of calculating our results, and the reasons that we believe such performance metrics incentivize superior business performance and stockholder value creation, are as follows:

In addition to the quantitative metrics described above, the Compensation Committee assessed Company performance with respect to two qualitative metrics: inventory growth and integration of the Company’s recently acquired Uinta Basin assets.

Our inventory growth goals were as follows:

•grow the Company’s total resources by 100 MMBOE;

•advance our plans for upcoming inventory opportunities, including testing exploration wells and applying advanced technology on existing acreage;

•identify exploration plays and make investment-ready recommendations;

•identify and recommend acreage or acquisition targets of sufficient scale and capable of competing with 2027-2029 inventory;

•enhance our existing processes to track industry-wide exploration activity to identify new prospects; and

•demonstrate application of new technologies that enhance returns or inventory.

Our Uinta Basin integration goal did not designate specific factors or benchmarks, but was based on the Compensation Committee’s holistic evaluation of management’s efforts to, and achievements in, effectively and efficiently integrating the Uinta Basin asset. In evaluating this effort, the Compensation Committee reviewed progress toward key integration objectives, including operational alignment and realization of anticipated strategic and operational benefits.

With respect to each of these qualitative measures, the Compensation Committee may adjust the initial multiplier either upward or downward by up to 0.10. A determination of 0.00 represents performance in line with expectations during the year.

Following its evaluation of the Company’s quantitative STIP metrics and initial determination of a 0.96 multiplier, the Compensation Committee determined that the Company achieved and exceeded its qualitative inventory growth goals. Although total resources added during the year did not exceed the target goal of 100 MMBOE, the Compensation Committee acknowledged the transformative nature of the Merger with Civitas and its expected future impact on the Company’s total resources and determined that the Company was successful in accomplishing all of its other growth goals.

Furthermore, the Compensation Committee determined that the Company achieved and exceeded its qualitative Uinta Basin integration goals by outperforming budget with regard to certain critical operating results (including production, cash flow, operating expenses per BOE, and adding proved reserves); exceeding budget with regard to critical sustainability metrics (including water recycling, spill rate, flaring and emissions); accomplishing a significant offer acceptance rate with low turnover; and establishing a foundational methodology for IT system integrations for future acquisitions, which has proved valuable as part of our integration efforts following the Merger with Civitas. As a result, the Compensation Committee adjusted the quantitative STIP result by the maximum amount of 0.10 for inventory growth and by the maximum amount of 0.10 for Uinta Basin integration.

As stated above, the STIP multiplier may be further adjusted if the Company’s TSR for the annual performance period (inclusive of dividends) increases by an amount greater than 10 percent or decreases by an amount less than negative 10 percent. Any increase or decrease within the range of positive 10 percent and negative 10 percent has no impact on the multiplier. The Company’s 2025 TSR was equal to negative 50 percent (inclusive of dividends); therefore, the maximum downward adjustment was applied to the multiplier based on the TSR modifier (equal to 80 percent of the pre-adjusted multiplier). Accordingly, the total pool multiplier for the 2025 STIP was 0.93, as shown in the following table:

The table below sets forth our NEO’s base salaries actually earned in 2025, their target STIP payouts as a percentage of base salary, the STIP multiplier applied to each NEO’s STIP calculation, and their final STIP payouts.

Long-Term Incentive Plan

Long-Term Incentive Plan—Design

Our LTIP is an equity compensation program that utilizes PSUs and RSUs to compensate our NEOs and other key employees for execution of our long-term business strategy. Awards of PSUs and RSUs in 2025 were issued pursuant to our stockholder-approved 2025 Equity Incentive Compensation Plan, as it may be amended from time to time (the “Equity Plan”). RSUs are generally granted with a three-year vesting schedule, with one-third of the RSUs in each grant vesting on each of the first three anniversaries of the award date, subject to continued employment. RSUs are settled in shares of our common stock shortly after vesting. PSUs are performance-based awards that are settled in shares of our common stock, with the number of resulting shares falling within a range of zero to 200 percent of the number of PSUs originally granted, dependent on the Company’s performance with respect to certain metrics determined by the Compensation Committee over a three-year performance period, and also generally subject to continued employment.

2022-2025 LTIP Performance Period Results

At the completion of the 2022-2025 performance period on June 30, 2025, PSU awards were earned and settled at 28 percent of target. The four performance metrics applicable to this period are set forth in the table below, and we achieved the stated result based upon our actual performance with regard to these metrics, as compared to the targets set at the beginning of the performance period. The Company’s actual performance with regard to each metric fell short of target, and the absolute and relative TSR metrics fell below the threshold level of performance resulting in no contribution to the overall multiplier.

(1) Free cash flow is measured as net cash provided by operating activities less net cash used in investing activities excluding acquisitions and before all returns of capital.

(2) Reduction in metric tons of CO2e per gross MBoe produced (scope 1 + scope 2) from January 2022 through December 2024.

(3) Total recordable incident rate as compared to the AXPC three-year average relative ranking.

(4) Spill volumes (bbls/1000 bbls produced) as compared to the AXPC three-year average relative ranking.

2025-2028 LTIP Performance Period Design and Awards

For the 2025-2028 performance period, the Compensation Committee evaluated LTIP designs among peer companies and considered a variety of alternatives presented by FW Cook (including maintaining the current design). Ultimately, the Compensation Committee, in consultation with FW Cook, established revised PSU performance metrics, weighting each of absolute and relative TSR at 50 percent. In making this decision, the Compensation Committee recognized that free cash flow and sustainability performance were less prevalent among peer companies’ LTIP designs and remained components of the Company’s STIP design. Furthermore, the Compensation Committee elected to retain the LTIP design feature that caps payout at target if absolute TSR is negative during the performance period, in order to align payouts to the experience of the Company’s stockholders in lower commodity price environments.

With respect to both TSR metrics, a threshold level of performance is required in order to receive any payout based on that metric: absolute TSR must be positive, and relative TSR must rank higher than the 25th percentile. Further, a target level of performance is required to achieve target payout: for absolute TSR the target is 10 percent annualized return, and for relative TSR the target is ranking in the 55th percentile. Finally, a maximum level of performance is established beyond which payout is capped at 200 percent: for absolute TSR the maximum performance is 20 percent annualized return, and for relative TSR the maximum performance is ranking at or above the 80th percentile. We interpolate payout levels for performance falling between the threshold and maximum levels. No payout is awarded for performance below the threshold level, and negative absolute TSR caps the payout at target. The table below illustrates the LTIP’s absolute and relative TSR design:

In determining the total LTIP grant values for 2025, the Compensation Committee considered various factors, including share price performance, historical fair value transfer (or the percentage of market capitalization transferred to employees annually in the form of stock-based awards, “FVT”) under our long-term incentive compensation system compared to our peer group companies, input from FW Cook on expected trends in LTIP design and FVT for the subject period as well as the value of our compensation peers’ long term incentive awards following FW Cook’s executive compensation review, and shares available under our Equity Plan. Following such consideration, the Compensation Committee approved the following 2025 target LTIP award values:

RSUs and PSUs were approved in June 2025 and awarded on July 1, 2025, consistent with our typical equity grant timing, with the PSUs subject to the measurement period beginning July 1, 2025, and ending June 30, 2028. The graphic below reflects the structure of our 2025 long-term incentive awards to our NEOs: