CONOCOPHILLIPS
For the period ended May 14, 2024. Filed Apr 1, 2024.
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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.
May 14, 2024 · Filed Apr 1, 2024
Contents
2023 Compensation Program Structure
Each year the HRCC, advised by its independent compensation consultant and informed by feedback from stockholders, undertakes a rigorous process to establish and review executive compensation. The HRCC believes a substantial portion of our executive compensation should be equity-based and focused on rewarding long-term performance andfurthermore, that this approach most closely aligns the interests of our top executives with those of our stockholders.
The four primary elements of our executive compensation program are designed to provide a target total value for compensation that is competitive with our peers and attracts and retains the talented executives necessary to manage a large and complex company like ConocoPhillips. The following chart summarizes the principal components of our executive compensation program and the performance drivers of each element.
| 2023 Element of Pay | Overview | Key Benchmarks/Performance Measures | ||||
|---|---|---|---|---|---|---|
| Annual | ||||||
| Salary | Fixed cash compensation to attract and retain executives and balance at-risk compensation Range: Salary grade minimum/maximum | ● Benchmarked to compensation reference group median; adjusted for experience, responsibility, performance, and potential | ||||
| Variable Cash Incentive Program (“VCIP”) | Variable annual cash compensation to motivate and reward executives for achieving annual goals and Strategic Milestones and Energy Transition Milestones that are critical to our strategic priorities Range: 0% –200% of target | ● Health, Safety, and Environmental (20%) ● Operational (30%) ● Financial—Relative Adjusted ROCE (30%) ● Strategic Milestones (10%) ● Energy Transition Milestones (10%) | ||||
| One-year performance period | ||||||
| Long-Term Incentive Program (“LTIP”) | ||||||
| PerformanceShareProgram (“PSP”) (65% of LTIP) | Variable long-term equity-based compensation to motivate and reward executives for achieving multi-year strategic priorities Granted at beginning of three-year performance period with final cash payout following the conclusion of the performance period based on HRCC assessment of the pre-established corporate performance metrics and stock price value as of the settlement date Range: 0% –200% of total target award, inclusive of corporate performance adjustments | ● Relative TSR (60%) ● Financial—Relative Adjusted ROCE (40%) ● Stock value | ||||
| Three-year performance period | ||||||
| ExecutiveRestricted Stock Unit Program (35% of LTIP) | Long-term equity-based compensation designed to encourage executive retention and promote stock ownership while incentivizing absolute performance that is aligned with stockholder interests Annual award settles in stock on third anniversary of grant date based on the stock value on the settlement date Range: 0% –100% of target | ● Stock value | ||||
| Three-year cliff vesting | ||||||
2024 Proxy Statement** 67**
2023 SHORT-TERM INCENTIVE (VCIP) PAYOUT: 130% OF TARGET
The HRCC carefully considered the final results of the metrics and, based on multiple reviews throughout the year, approved a payout that reflected the degree of difficulty in achieving the results against the aggressive targets that were established. No individual performance adjustments were made for the NEOs. Following is a summary of the key items considered and deliberated. For additional details, refer topages 85-91.
Metric
| HSE – 85%20% weighting | Operational – 125%30% weighting | Financial (Relative AdjustedROCE) – 122%30% weighting | ||
| ● Remained an industry leader among our peers ● Experienced an increase in serious incidents, including one fatality ● Top quartile Total Recordable Rate (“TRR”) performance among our peers ● Fewer process safety events compared to prior year ● Zero spills > 100 barrels | ● Exceeded production target, including delivering record Lower 48 and total company production, while managing inflationary pressures to achieve disciplined capital expenditures below target; however, operating and overhead costs came in above target ● Successfully achieved or exceeded all but one operational milestone ● Considering the degree of difficulty of the milestones, the record production, and the operational targets as a whole, the HRCC assessed the performance payout at a slightly above target payout | ● Finished 4th (58th percentile) relative to performance peers (122% per matrix; page 84) | ||
| Strategic Milestones – 200%10% weighting | Energy TransitionMilestones – 190%10% weighting | |||
| ● Significantly progressed the LNG business through advancing new PALNG, NFE and NFS projects, securing several regasification and offtake agreements, and building out our LNG organization by staffing key roles to enable integration and development of commercial strategies ● Identified priority environmental and social risks (E&S) and implemented action plans for risk mitigations ● Launched our refreshed DEI strategy globally and identified how to assess progress on each component of diversity, equity, and inclusion | ● Demonstrated meaningful progress toward our Plan for the Net-Zero Energy Transition, including by increasing our GHG intensity reduction target from 40-50% to 50-60%(1) gross operated emissions ● Achieved annual GHG emissions intensity aligned with our 2030 target trajectory range ● Executed approved MACC projects below allotted capital and cost budget ● Advanced multiple low carbon opportunities | |||
| (1) | Using a 2016 baseline. |
PSP 21 LONG-TERM INCENTIVE PAYOUT: 151% OF TARGET
Metric
| TSR (relative)* – 160%60% weighting | Financial (Relative Adjusted ROCE) – 137% 40% weighting | |
| ● Finished in the 71st percentile relative to performance peers with three-year TSR of approximately 46% ● Payout formulaic following matrix (see page 84) | ● Finished in the 63rd percentile relative to performance peers ● Payout formulaic following matrix (see page 84) |
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| * | See methodology for calculating TSR on pages 82-83. |
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For additional details, refer topages 92-93.
68ConocoPhillips
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