UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
¨ | Preliminary Proxy Statement. |
¨ | Confidential, for Use of the Commission only (as permitted by Rule 14a-6(e)(2)). |
x | Definitive Proxy Statement. |
¨ | Definitive Additional Materials. |
¨ | Soliciting Material under § 240.14a-12. |
ENERGEN CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. |
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
¨ | Fee paid previously with preliminary materials. |
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
March 18, 2015
To Our Shareholders:
It is our pleasure to extend to you a cordial invitation to attend the Annual Meeting of Shareholders of Energen Corporation. The Annual Meeting will be held at the principal office of the Company in Birmingham, Alabama on Thursday, April 30, 2015, at 8:30 a.m., Central Daylight Time.
Details of the matters to be presented at this meeting are given in the Notice of the Annual Meeting and in the Proxy Statement that follow.
We hope that you will be able to attend this meeting so that we may have the opportunity of meeting with you and discussing the affairs of the Company. However, if you cannot attend, we would appreciate your submitting your proxy by telephone or by Internet, or by completing, signing and returning the enclosed proxy card as soon as convenient so that your stock may be voted.
Yours very truly,
Chairman of the Board
ENERGEN CORPORATION
Notice of Annual Meeting of Shareholders
To Be Held April 30, 2015
TIME AND DATE | 8:30 a.m., CDT, on Thursday, April 30, 2015 | |
PLACE | Energen Plaza 605 Richard Arrington Jr. Blvd. North Birmingham, Alabama 35203-2707 Directions to the Annual Meeting are available by calling Investor Relations at 1-800-654-3206. | |
AGENDA | (1) To elect four members of the Board of Directors for three-year terms.
(2) To ratify the appointment of PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm for 2015.
(3) To cast an advisory vote on the Companys executive compensation (Say-on-Pay vote).
(4) To consider and vote upon a shareholder proposal regarding preparation of a report on methane gas emissions, if properly presented at the Annual Meeting.
(5) To consider and vote upon a shareholder proposal regarding preparation of a report on climate change business risks, if properly presented at the Annual Meeting.
(6) To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof. | |
RECORD DATE | You can vote if you were a shareholder of record of the Company on February 23, 2015. | |
PROXY VOTING | It is important that your shares be represented and voted at the Annual Meeting. You can vote your shares by submitting your instructions by telephone or by Internet, or by completing, signing and returning a proxy card. |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD APRIL 30, 2015:
The Companys Proxy Statement on Schedule 14A, form of proxy card and 2014 annual report on Form 10-K are available at: www.annualmeeting.energen.com.
Birmingham, Alabama March 18, 2015 |
J. David Woodruff Secretary |
PROXY STATEMENT
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RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
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ADMINISTRATION OF EXECUTIVE COMPENSATION ROLES AND RESPONSIBILITIES |
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RETIREMENT INCOME PLAN AND RETIREMENT SUPPLEMENTAL AGREEMENTS |
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PROPOSAL RESPECTING PREPARATION OF REPORT ON METHANE GAS EMISSIONS |
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PROPOSAL REGARDING PREPARATION OF REPORT ON CLIMATE CHANGE BUSINESS RISKS |
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ANNUAL MEETING OF SHAREHOLDERS
OF ENERGEN CORPORATION
April 30, 2015
PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in this Proxy Statement. It does not include all of the information that you should consider and you should read the entire Proxy Statement before voting. In this Proxy Statement, Energen Corporation may also be referred to as we, us, Energen or the Company.
2015 ANNUAL MEETING OF STOCKHOLDERS
Date and Time: | Thursday, April 30, 2015, 8:30 a.m. CDT | |
Place: | Energen Plaza 605 Richard Arrington Jr. Blvd. North Birmingham, Alabama 35203-2707 | |
Record Date: | February 23, 2015 |
VOTING MATTERS AND BOARD RECOMMENDATIONS
Our Boards Recommendations | ||
Election of Director Nominees (page 9) |
FOR each Director Nominee | |
Ratification of Appointment of Independent Auditor (page 20) |
FOR | |
Advisory Vote to Approve Executive Compensation (page 50) |
FOR | |
Shareholder Proposal Methane Gas Emissions Report (page 52) |
AGAINST | |
Shareholder Proposal Climate Change Business Risks Report (page 55) |
AGAINST |
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DIRECTOR NOMINEES (BEGINNING ON PAGE 9)
The following table provides summary information about each Director nominee. Our Directors serve for three-year terms.
Name | Age | Director Since |
Primary Occupation | Committee Memberships |
Other Public Boards | |||||||
William G. Hargett * |
65 | _ | Former Chairman, President and CEO of Houston Exploration Company | A** | None | |||||||
Alan A. Kleier* |
61 | _ | Vice President Mid-Continent Business Unit of Chevron | A** | None | |||||||
Stephen A. Snider* |
67 | 2000 | Former Chief Executive Officer of Exterran Holdings, Inc. | C, G | Dresser-Rand Group, Inc. Thermon Group Holdings, Inc. | |||||||
Gary C. Youngblood* |
71 | 2003 | Former President and Chief Executive Officer of Alabama Gas Corporation | G | None |
*Independent Director.
A | Audit Committee |
C | Compensation Committee |
G | Governance and Nominations Committee |
** Messrs. Hargett and Kleier will serve on the Audit Committee if elected to the Board.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
1. | WHY DID I RECEIVE THESE PROXY MATERIALS? |
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2. | WHAT ITEMS WILL BE VOTED ON AT THE ANNUAL MEETING? |
3. | WHAT ARE THE BOARD OF DIRECTORS VOTING RECOMMENDATIONS? |
4. | WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING? |
5. | WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF RECORD AND AS A BENEFICIAL OWNER? |
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6. | HOW DO I VOTE? |
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7. | WHAT CAN I DO IF I CHANGE MY MIND AFTER I VOTE? |
8. | WHAT IS A QUORUM FOR THE ANNUAL MEETING? |
9. | WHAT IS A BROKER NON-VOTE? |
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10. | WHAT ARE THE VOTING REQUIREMENTS TO ELECT THE DIRECTORS AND TO APPROVE EACH OF THE PROPOSALS DISCUSSED IN THIS PROXY STATEMENT? |
11. | HOW WILL MY SHARES BE VOTED AT THE ANNUAL MEETING? |
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12. | COULD OTHER MATTERS BE DECIDED AT THE ANNUAL MEETING? |
13. | WHO WILL PAY FOR THE COST OF THIS PROXY SOLICITATION? |
14. | WHO WILL COUNT THE VOTES? |
Representatives of our transfer agent, Computershare, will tabulate the votes and act as inspectors of election.
15. | WHY DID I RECEIVE A NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS BUT NO PROXY MATERIALS? |
16. | CAN I ACCESS THE NOTICE OF ANNUAL MEETING, PROXY STATEMENT AND THE 2014 ANNUAL REPORT ON FORM 10-K ON THE INTERNET? |
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Our Board of Directors (or, the Board) has nominated four Directors for election. The Board is divided into three classes serving staggered three-year terms. The terms of two of the present Directors expire at this Annual Meeting: Stephen A. Snider and Gary C. Youngblood. Judy M. Merritt, prior to her passing in October 2014, was also a member of the 2015 class. Messrs. Snider and Youngblood have been nominated for re-election as Directors for terms expiring in 2018. The Board also has nominated William G. Hargett and Alan A. Kleier to serve as Directors for terms expiring in 2018.
Our Board of Directors recommends that William G. Hargett, Alan A. Kleier, Stephen A. Snider and Gary C. Youngblood be elected to serve in the class with terms expiring in 2018. Each nominee has agreed to be named in this Proxy Statement and to serve if elected. We expect each nominee for election as a Director to be able to serve if elected. Biographical data on these nominees and the other members of the Board of Directors is presented below under the caption Governance of the Company.
Unless you otherwise direct on the proxy form, the proxy holders intend to vote your shares in favor of the above listed nominees. To be elected, a nominee must receive a majority of the votes cast at the Annual Meeting in person or by proxy. If one or more of the nominees becomes unavailable for election or service as a Director, the proxy holders may vote your shares for one or more substitutes designated by the Board of Directors.
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The members of our Board of Directors, including the four nominees for election, are identified below.
NOMINEES FOR ELECTION AS DIRECTORS FOR THREE-YEAR TERMS EXPIRING IN 2018
Name and Year First Became Director |
Principal Occupation and Other Information | |
WILLIAM G. HARGETT |
Mr. Hargett, 65, has 35 years of North American oil and gas industry experience. He retired in 2008 as Chairman, President, and CEO of publicly-traded Houston Exploration Company, following its merger with Forest Oil. He joined Houston Exploration in 2001 as President and CEO and was elected Chairman in 2004. Mr. Hargett began his career in 1973 as Exploration Geologist with Amoco Production Company; in 1974 he joined Tenneco Oil Company serving in various exploration positions including Exploration Manager Gulf Coast Division from 1984 to 1988; in 1988 he became President and Director North Central Oil Company; in 1993 President Amax Oil and Gas Inc.; in 1994 President and Chief Operating Officer (USA) Greenhill Petroleum Corp.; and in 1997 President, Chief Operating Officer, and Director Snyder Oil Company and, following its 1999 merger, President North America Sante Fe Snider. Mr. Hargett is a graduate of the University of Alabama (B.S. geology; M.S. geology). | |
ALAN A. KLEIER |
Mr. Kleier, 61, retired in 2013 as Vice President of Chevrons Mid-Continent Business Unit, a position which he had held since 2011. He began his career in 1977 with Texaco Exploration and Production, Inc. as Field Engineer/Drilling Foreman, subsequently serving in roles of increasing responsibility. At the time of the 2001 Chevron-Texaco merger, Mr. Kleier was Texacos Vice President, Central United States Business Unit. After the merger, he held the following positions within the Chevron organization: 2001 Vice President Permian Basin Unit; 2003 Vice President International Upstream; and 2004 General Manager of Operations/Managing Director Southern Africa Strategic Business Unit (Angola). He recently accepted a position on the Industrial Board of Advisors for the University of Louisville J.B. Speed School of Engineering. Mr. Kleier is a graduate of the University of Louisville (B.S. mechanical engineering and M.E. mechanical engineering). | |
STEPHEN A. SNIDER Director since 2000 |
Mr. Snider, 67, retired in 2009 as Chief Executive Officer and director of Exterran Holdings, Inc., a global natural gas compression services company, and also retired as Chief Executive Officer and director for the general partner of Exterran Partners, L.P., a domestic natural gas contract compression services business. Mr. Snider has over 30 years of experience in senior management of operating companies. He serves as a director of two other publicly traded companies Dresser-Rand Group, Inc. (NYSE: DRC) and Thermon Group Holdings, Inc. (NYSE: THR). He has within the past five years served as a director of Seahawk Drilling Incorporated. Mr. Snider is a graduate of the University of Detroit (B.S. civil engineering) and the University of Colorado at Denver (M.B.A.). | |
GARY C. YOUNGBLOOD Director since 2003 |
Mr. Youngblood, 71, retired in 2003 as President and Chief Operating Officer of Alabama Gas Corporation, a former subsidiary of the Company. Mr. Youngblood was employed by Alabama Gas Corporation in various capacities for 34 years. He was elected its Executive Vice President in 1993, its Chief Operating Officer in 1995, and its President in 1997. Mr. Youngblood has served in a number of industry and civic leadership roles including Chairman of the Birmingham Chamber of Commerce, member of the Board of Directors of the Public Affairs Research Council of Alabama, President of the Alabama Natural Gas Association, President of the Southeast Gas Association, and member of the Leadership Council of the American Gas Association. He is a graduate of the University of Montevallo (B.S. business administration). |
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DIRECTORS WHOSE TERMS EXPIRE IN 2016
Name and Year First Became Director |
Principal Occupation and Other Information | |
T. MICHAEL GOODRICH Director since 2000 |
Mr. Goodrich, 69, retired in 2008 as Chairman of the Board and Chief Executive Officer of BE&K, Inc., an international engineering and construction firm headquartered in Birmingham, Alabama. Upon retirement, Mr. Goodrich founded an investment and consulting company, Timberline Management Co., Inc. He joined BE&K in 1972 as Assistant Secretary and General Counsel, was named President in 1989 and was named Chairman and Chief Executive Officer in 1995. Mr. Goodrich is active in a number of industry and civic organizations including the National Academy of Construction. In addition to Energen, Mr. Goodrich serves as a director of one other publicly traded company - Synovus Financial Corp. He is also a director of First Commercial Bank. Mr. Goodrich is a graduate of Tulane University (civil engineering) and the University of Alabama School of Law (J.D.). | |
JAY GRINNEY Director since 2012 |
Mr. Grinney, 64, is President, Chief Executive Officer and a director of HealthSouth Corporation (NYSE: HLS), one of the countrys largest providers of post-acute healthcare services . He was named to these positions in May 2004. Prior to joining HealthSouth, Mr. Grinney served in a number of senior management positions with HCA, Inc., or its predecessor companies, in particular, serving as president of HCAs Eastern Group from May 1996 to May 2004, president of the Greater Houston Division from October 1993 to April 1996 and as chief operating officer of the Houston region from November 1992 to September 1993. Before joining HCA, Mr. Grinney held several executive positions during a nine-year career at the Methodist Hospital System in Houston, TX. Mr. Grinney has served in a number of community and civic leadership roles and presently serves on the boards of directors of the Public Affairs Research Council of Alabama, the Community Foundation of Greater Birmingham and the Birmingham Business Alliance. He is a graduate of St. Olaf College (B.A. psychology), Washington University School of Medicine (M.H.A.), and Washington University Graduate School of Management (M.B.A.). | |
FRANCES POWELL HAWES Director since 2013 |
Ms. Frances Powell Hawes, 60, an independent financial consultant, has an extensive background in finance with publicly traded and private companies and is a CPA. Ms. Powell Hawes served as Chief Financial Officer of New Process Steel, L.P., a privately held steel distribution business in the United States and Mexico from September 2012 through December 2013; as Senior Vice President and Chief Financial Officer of American Electric Technologies, Inc. (NASDAQ: AETI) from 2011 to 2012, as Interim Chief Financial Officer of Sterling Chemicals, Inc. from 2009 to 2010; as Executive Vice President and Treasurer of NCI Building Systems, Inc. (NYSE: NCS) from 2005 to 2008; as a financial advisor to London Merchant Securities LPC, a real estate and investment company, from 2003 to 2005; and as Chief Financial Officer and Treasurer of Grant Prideco, Inc. (NYSE), a manufacturer of engineered tubular products for the energy industry, from 2000 to 2001. She is a graduate of the University of Houston (B.B.A.). |
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DIRECTORS WHOSE TERMS EXPIRE IN 2017
Name and Year First Became Director |
Principal Occupation and Other Information | |
KENNETH W. DEWEY Director since 2007 |
Mr. Dewey, 61, is a co-founder and board member of Caymus Capital Partners, a market-neutral energy equity fund manager. He also serves as a director of Impact Guidance Systems, Inc., a developer of downhole tools used by the oil and gas industry. Mr. Dewey was a co-founder of Randall & Dewey, a full-service transaction advisory firm specializing in oil and gas mergers, acquisitions and divestments. Randall & Dewey provided marketing, transaction, evaluation and research services for clients ranging from small, privately held firms to integrated energy companies and major oil companies. Mr. Dewey served as Randall & Deweys Chief Financial Officer from 1989 until his 2006 retirement following the firms 2005 acquisition by Jefferies & Company. From 1978 to 1989, Mr. Dewey held a variety of positions with Amoco Corporation and its subsidiaries. Mr. Dewey is a graduate of Stanford University (A.B. economics) and Wharton School, University of Pennsylvania (M.B.A.). | |
M. JAMES GORRIE Director since January 1, 2014 |
Mr. Gorrie, 52, is President and CEO of Brasfield & Gorrie, LLC, one of the largest privately held construction firms in the United States. It provides construction and construction management services for a wide variety of projects, including commercial, institutional, healthcare, industrial, and treatment plant construction. Mr. Gorrie joined Brasfield & Gorrie in 1984 and served in various roles prior to his election as President in 1994. He was elected to the additional position of CEO in 2011. Mr. Gorrie serves as a director of one other publicly traded company, ProAssurance Corporation (NYSE: PRA). He is a graduate of Auburn University (B.S. building science). | |
JAMES T. MCMANUS, II Director since 2006 |
Mr. McManus, 56, is Chairman of the Board, President and Chief Executive Officer of the Company. He has been employed by Energen Corporation and its subsidiaries in various capacities since 1986. He was elected Executive Vice President and Chief Operating Officer of Energen Resources Corporation in October 1995 and President of Energen Resources in April 1997. He was elected President and Chief Operating Officer of the Company effective January 1, 2006, Chief Executive Officer effective July 1, 2007, and Chairman of the Board effective January 1, 2008. Prior to joining the Company, Mr. McManus worked for PricewaterhouseCoopers. A certified public accountant, he is a graduate of the University of Alabama (B.S. accounting). |
Each of our Directors also serves as a Director of Energen Resources Corporation (Energen Resources), our principal subsidiary.
DIRECTOR SKILLS AND QUALIFICATIONS
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The following table summarizes the primary purpose and function of each committee.
Committee | Primary Purpose and Function | |
Audit |
Assist the Board in fulfilling its responsibility to oversee the integrity of the Companys financial statements, the Companys compliance with legal and regulatory requirements, the independent auditors qualifications and independence, and the performance of the Companys internal audit function and independent auditors;
appointment, compensation, retention, discharge and replacement of the Companys independent auditors; and
prepare a Committee report as required by the SEC to be included in the Companys annual Proxy Statement.
| |
Governance & Nominations |
Review and advise the Board on general governance and structure issues, including corporate governance principles and guidelines applicable to the Company;
lead the Boards Director succession planning;
review potential Board candidates and recommend Director nominations to the Board; and
review and recommend non-employee Director compensation to the Board.
| |
Compensation |
Review and approve corporate goals and objectives in the areas of salary and bonus compensation, benefits, and equity-based compensation, as these areas relate to the CEO, evaluating the CEOs performance based on those goals and |
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Committee | Primary Purpose and Function | |
objectives and, either as a committee or together with the other independent directors (as directed by the Board) determine and approve the CEOs compensation level based on that evaluation;
make recommendations to the Board with respect to non-CEO executive officer compensation, incentive compensation plans and equity-based plans that are subject to Board approval;
produce an annual report on executive compensation as required by the SEC to be included in or incorporated by reference into the Companys Proxy Statement or other applicable SEC filings; and
under delegation from our Board, determine and approve our compensation philosophy, the compensation of our non-CEO executive officers and equity-based compensation applicable to non-executive officer employees. |
The table below provides membership and meeting information for each of the standing Board committees for 2014. If elected as Directors, Mr. Hargett and Mr. Kleier will serve on the Audit Committee.
Name | Audit | Compensation |
Governance & Nominations | |||
Mr. Dewey* |
C | M | ||||
Mr. Goodrich* |
M | C | ||||
Mr. Gorrie (a)* |
M | |||||
Mr. Grinney* |
M | M | ||||
Ms. Powell Hawes* |
M | |||||
Mr. McManus (b) |
||||||
Dr. Merritt (c)* |
M | M | ||||
Mr. Snider* |
C | M | ||||
Mr. Youngblood* |
M | |||||
2014 Meetings |
5 | 6 | 2 |
C: Chair M: Member *Independent Director
(a) | Mr. Gorrie joined the Audit Committee effective April 1, 2014. |
(b) | Mr. McManus, as Chief Executive Officer of the Company, is not a member of any Committee. |
(c) | Dr. Merritt served as a member of the Audit and Governance and Nominations Committees until the date of her passing on October 19, 2014. |
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BOARD LEADERSHIP STRUCTURE AND ROLE IN RISK OVERSIGHT
COMMUNICATION WITH THE BOARD OF DIRECTORS
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AVAILABILITY OF CORPORATE GOVERNANCE DOCUMENTS.
COMPENSATION COMMITTEE PROCESS
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
2014 Director Compensation
Name |
Fees Earned Paid in Cash ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings |
All Other Compensation ($) |
Total ($) |
|||||||||||||||
(a) | (b) | (c)(1) | (d) | (e) | (f) | (g)(2) | (h) | |||||||||||||||
Dewey
|
|
88,500
|
|
|
105,805
|
|
|
1,607
|
|
|
195,912
|
| ||||||||||
Goodrich
|
|
76,500
|
|
|
105,805
|
|
|
2,224
|
|
|
184,529
|
| ||||||||||
Gorrie(3)
|
|
67,875
|
|
|
-
|
|
|
1,854
|
|
|
61,854
|
| ||||||||||
Grinney
|
|
76,500
|
|
|
105,805
|
|
|
-
|
|
|
182,305
|
| ||||||||||
Merritt (4)
|
|
62,500
|
|
|
105,805
|
|
|
-
|
|
|
168,305
|
| ||||||||||
Powell Hawes
|
|
70,500
|
|
|
105,805
|
|
|
1,967
|
|
|
178,272
|
| ||||||||||
Snider
|
|
80,500
|
|
|
105,805
|
|
|
2,373
|
|
|
188,678
|
| ||||||||||
Youngblood
|
|
64,500
|
|
|
105,805
|
|
|
-
|
|
|
170,305
|
|
(1) The Stock Awards in column (c) reflect the January 2014 grant of 1480 unrestricted shares under the Companys Directors Stock Plan with a grant date value of $71.49 per share. There were no stock awards outstanding at year-end.
(2) Column (g) reflects income tax reimbursements related to Company paid spousal travel expenses. The aggregate amount of perquisites and other personal benefits, or property, including Company paid spousal travel expenses was less than $10,000 for each Director.
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(3) Mr. Gorrie joined the Board of Directors effective January 1, 2014.
(4) Dr. Merritt served as a member of the Board until the date of her passing on October 19, 2014.
The Governance and Nominations Committee charter provides that:
At such times as it determines appropriate or as requested by the Board, the Committee will review and make recommendations with respect to Director compensation. Such compensation is intended to be sufficient to attract and retain qualified candidates and may include a combination of cash and stock based compensation.
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RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
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In compliance with the requirements of the NYSE, the Audit Committee has a formal written charter approved by the Board of Directors, a copy of which is available on our website under the heading Investor Relations and subheading Corporate Governance (www.energen.com). In connection with the performance of its responsibility under its charter, the Audit Committee has:
| Reviewed and discussed the audited financial statements of the Company with management; |
| Discussed with the independent auditors the matters required to be discussed by PCAOB Auditing Standard No. 16 (required communication by external auditors with audit committees); |
| Received from the independent auditors disclosures regarding the auditors independence required by the applicable requirements of the Public Company Accounting Oversight Board and discussed with the auditors the auditors independence; and |
| Recommended, based on the review and discussion noted above, to the Board of Directors that the audited financial statements be included in the Companys Annual Report on Form 10-K for the year ended December 31, 2014 for filing with the SEC. |
The Audit Committee has also considered whether the independent registered public accountants provision of non-audit services to the Company is compatible with maintaining their independence.
AUDIT COMMITTEE
Kenneth W. Dewey, Chair
M. James Gorrie
Jay Grinney
Frances Powell Hawes
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The only persons known by the Company to be beneficial owners of more than five percent (5%) of the Companys common stock are the following:
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned (1) |
Percent of Class Beneficially Owned (1) | ||
BlackRock, Inc. (2) 40 East 52nd Street New York, NY 10022 |
4,978,588 | 6.8% | ||
State Street Corporation (3) State Street Financial Center One Lincoln Street Boston, MA 02111 |
4,070,197 | 5.6% | ||
The Vanguard Group (4) 100 Vanguard Blvd. Malvern, PA 19355 |
5,100,994 | 6.96% | ||
Wellington Management Group LLP (5) c/o Wellington Management Company LLP 280 Congress Street Boston, MA 02210 |
8,276,329 | 11.31% | ||
Boston Partners (6) One Beacon Street Boston, MA 02108 |
6,629,178 | 9.06% | ||
JPMorgan Chase & Co. (7) 270 Park Avenue New York, NY 10017 |
4,792,547 | 6.5% |
(1) | Reflects shares reported on Schedule 13G as beneficially owned as of December 31, 2014. |
(2) | In a Schedule 13G dated January 12, 2015, BlackRock, Inc., together with certain affiliated entities (BlackRock), reported having sole power to vote 4,620,621 shares of common stock and sole power to dispose or direct the disposition of 4,978,588 shares of common stock. All information in this footnote was obtained from the Schedule 13G filed by BlackRock. |
(3) | In a Schedule 13G dated February 11, 2015, State Street Corporation, together with certain affiliated entities (State Street), reported having shared power to vote 4,070,197 shares of common stock and shared power to dispose or direct the disposition of 4,070,197 shares of common stock. All information in this footnote was obtained from the Schedule 13G filed by State Street. |
(4) | In a Schedule 13G dated February 9, 2015, The Vanguard Group, together with certain affiliated entities (Vanguard), reported having sole power to vote 68,481 shares of common stock, sole power to dispose or direct the disposition of 5,039,174 shares of common stock and shared power to dispose or direct the disposition of 61,820 shares of common stock. All information in this footnote was obtained from the Schedule 13G filed by Vanguard. |
23
(5) | In a Schedule 13G dated February 12, 2015, Wellington Management Group LLP, together with certain affiliated entities (Wellington), reported having shared power to vote 3,934,911 shares of common stock and shared power to dispose or direct the disposition of 8,276,329 shares of common stock. All information in this footnote was obtained from the Schedule 13G filed by Wellington. |
(6) | In a Schedule 13G dated February 9, 2015, Boston Partners reported having sole power to vote 4,975,199 shares of common stock, shared power to vote 13,500 shares of common stock and sole power to dispose or direct the disposition of 6,629,178 shares of common stock. All information in this footnote was obtained from the Schedule 13G filed by Boston Partners. |
(7) | In a Schedule 13G dated January 27, 2015, JPMorgan Chase & Co., together with certain affiliated entities (JPMorgan), reported having sole power to vote 4,627,029 shares of common stock, shared power to vote 8,648 shares of common stock, sole power to dispose or direct the disposition of 4,760,963 shares of common stock and shared power to dispose or direct the disposition of 15,984 shares of common stock. All information in this footnote was obtained from the Schedule 13G filed by JPMorgan. |
24
DIRECTORS AND EXECUTIVE OFFICERS
As of February 25, 2015, our Directors, Director nominees and executive officers beneficially owned shares of our common stock as described in the table below. Beneficial ownership includes shares that each person has the right to acquire within sixty (60) days of February 25, 2015. Except as we have noted below, each individual listed below has sole voting power and sole investment power with respect to shares they beneficially own, and has not pledged any of their shares of our common stock. The final column indicates common stock share equivalents held under the Energen Corporation Deferred Compensation Plan as of February 25, 2015. Company policy prohibits our officers and directors from pledging our common stock or trading in derivatives of our common stock.
Name of Entity, Individual or Persons in Group |
Number of Shares Beneficially Owned (1)(2) |
Percent of Class Beneficially Owned (2) |
Share Under Deferred Plan (3) | |||
Kenneth W. Dewey |
15,000 | * | 21,737 | |||
David Godsey |
23,843 | * | 264 | |||
T. Michael Goodrich |
16,940 | * | 26,036 | |||
M. James Gorrie |
3,070 | * | 0 | |||
Jay Grinney |
2,500 | * | 8,542 | |||
William G. Hargett |
1,000 | * | 0 | |||
Frances Powell Hawes |
2,990 | * | 2,117 | |||
Alan A. Kleier |
500 | * | 0 | |||
James T. McManus, II |
310,412 | * | 0 | |||
Charles W. Porter, Jr. |
68,061 | * | 946 | |||
John S. Richardson |
165,568 | * | 3,065 | |||
Stephen A. Snider |
28,870 | * | 4,477 | |||
J. David Woodruff |
179,936 | * | 830 | |||
Gary C. Youngblood |
46,118 | * | 0 | |||
All Directors, Director nominees and executive officers (17 persons) | 907,643 | 1.24% | 69,867 |
* | Less than one percent. |
(1) | The shares of common stock shown above include shares owned by spouses and children, as well as shares held in trust. The shares of common stock shown above for Messrs. Godsey, McManus, Porter, Richardson, Woodruff and the other executive officers of the Company include shares that are held for their respective accounts under the Energen Corporation Employee Savings Plan. Messrs. Godsey, McManus, Porter, Richardson, Woodruff and all Directors and executive officers as a group hold presently exercisable options to acquire 5,087, 158,645, 40,199, 105,171, 84,004, and 409,857 shares of common stock, respectively, which amounts are included in the above table. |
(2) | The number and percentage of common stock beneficially owned does not include shares of common stock credited to Company Stock Accounts under the Energen Corporation Deferred Compensation Plan. |
25
(3) | Represents shares of common stock credited to Company Stock Accounts under the Energen Corporation Deferred Compensation Plan. The value of Company Stock Accounts tracks the performance of the common stock, with reinvestment of dividends. The Company Stock Accounts have no voting rights. |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
26
COMPENSATION DISCUSSION AND ANALYSIS
27
28
Allocation of Target Compensation by Percentage
29
30
31
Performance Factors and 2014 Results: The performance factors as well as actual 2014 results were as follows:
Performance Factor
|
||||||||
Threshold |
Target |
Maximum |
2014 Actual | |||||
Energen |
0.50 | 1.00 | 2.00 | 0.86 | ||||
Energen Resources |
0.50 | 1.00 | 2.00 | 1.07 | ||||
Alagasco |
0.75 | 1.00 | 1.25 | 1.00 |
32
The performance factor scores were calculated based on the following criteria, results and weights:
Threshold |
Target |
Maximum |
2014 Result |
2014 |
Weight | |||||||
Energen |
||||||||||||
Adjusted Earnings per share |
$1.74 | $2.17 | $2.60 | $2.05 | 0.86 | 100% | ||||||
Energen Resources |
||||||||||||
Adjusted Net Income (millions) |
$127 | $159 | $191 | $149 | 0.85 | 70% | ||||||
Total Production (excluding acquisitions and divestitures) MMBOE |
23.6 | 24.9 | 26.1 | 25.7 | 1.67 | 5% | ||||||
Operating Cost per BOE (excluding severance tax) |
$12.15 | $11.46 | $10.77 | $11.72 | 0.81 | 5% | ||||||
Exploitation percentage production replacement (excluding acquisitions and divestitures) |
50% | 100% | 150% | 213% | 2.00 | 10% | ||||||
Safety-Percentage of industry Average |
150% | 100% | 50% | 1.53 | 10% | |||||||
Vehicle Frequency (40%) |
150% | 100% | 50% | 42% | ||||||||
DART Rate (20%) |
150% | 100% | 50% | 84% | ||||||||
Lost Time (20%) |
150% | 100% | 50% | 118% | ||||||||
Recordable Incident Rate (20%) |
150% | 100% | 50% | 75% | ||||||||
Total Weighted Score |
1.07 |
Alagasco
Alagascos target factors are not included because, due to the divestiture, the Alagasco performance factor scores were all included at target, as explained above.
Based on the performance criteria and the 2014 results detailed above, the named executive officers received AICP incentive payments in January 2015 as reflected in the table below (also reflected in the column (g) 2014 disclosure in the Summary Compensation Table). The table also reflects the amounts that would have been paid to each named executive officer at target performance.
Named Executive Officer |
AICP Target ($) |
AICP Actual ($) |
Actual as | |||
McManus |
837,000 | 745,293 | 89% | |||
Porter |
342,400 | 304,884 | 89% | |||
Richardson |
392,700 | 399,867 | 102% | |||
Godsey |
240,500 | 244,889 | 102% | |||
Woodruff |
221.400 | 197,142 | 89% |
Earned AICP incentives are calculated by the following formula for each business unit - base salary x target incentive opportunity x business unit allocation factor x business unit performance factor. No incentives are paid unless Energen achieves its threshold earnings per share. If a subsidiary does not
33
achieve its threshold income performance factor, no incentive is paid with respect to that subsidiary. The minimum score for the other subsidiary performance factors is the threshold score. For example, Mr. McManuss 2014 AICP incentive was calculated as follows:
Calculation of McManus Actual AICP Incentive
Business Unit | Base Salary |
Target Incentive Opportunity |
Business Unit Target Allocator |
Business Unit Performance Factor |
Actual Incentive | |||||
Energen |
$837,000 | 100% | 80% | 0.86 | $575,856 | |||||
Energen Resources |
$837,000 | 100% | 10% | 1.07 | $ 89,643 | |||||
Alagasco target(1) |
$837,000 | 100% | 6.7% | 1.00 | $ 55,803 | |||||
Alagasco-Energen(1) |
$837,000 | 100% | 3.3% | 0.86 | $ 23,991 | |||||
TOTAL |
$745,293 |
(1) | As discussed above, when setting objectives the Compensation Committee provided that, in the event of a divestiture of Alagasco, the Alagasco allocation factor would be scored at target for the period prior to divestiture and measured by Energen performance for the remainder of the year. |
34
LONG-TERM EQUITY INCENTIVE COMPENSATION
35
OWNERSHIP GUIDELINES/ANTI-HEDGING AND PLEDGING
1997 DEFERRED COMPENSATION PLAN
RETIREMENT INCOME PLAN AND RETIREMENT SUPPLEMENTAL AGREEMENTS
36
SEVERANCE COMPENSATION AGREEMENTS AND CHANGE IN CONTROL
37
38
RESULTS OF 2014 ADVISORY VOTE ON EXECUTIVE COMPENSATION
39
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and based on that review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
COMPENSATION COMMITTEE:
Stephen A. Snider, Chair
Kenneth W. Dewey
T. Michael Goodrich
Jay Grinney
40
The following table sets forth the information required by Item 402 of Regulation S-K promulgated by the SEC. The amounts shown represent the compensation paid to our named executive officers for each fiscal year noted in the table, for services rendered to us. For a more complete discussion of the elements of compensation included in this table, please refer to the discussion reflected in Compensation Discussion and Analysis beginning on page 27 of this Proxy Statement.
Name and Principal Position |
Year | Salary ($) |
Bonus ($)
|
Stock ($)(1)(2) |
Option Awards ($)(1) |
Non- Equity sation Earnings ($)(3) |
Change in ($)(4)(5) |
All Other Compensation ($)(6) |
Total ($) | |||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
McManus, II, |
|
2014
|
|
837,000 | 250,000 | 3,025,561 | 1,016,091 | 745,293 | - | 83,865 | 5,957,810 | |||||||||||||||||||||||||
|
2013
|
|
805,000 | - | 4,370,603 | 809,876 | 788,578 | - | 87,174 | 6,861,231 | ||||||||||||||||||||||||||
|
2012
|
|
775,000 | 127,348 | - | 2,423,008 | 412,378 | 3,303,947 | 64,071 | 7,105,752 | ||||||||||||||||||||||||||
Porter,
Jr., |
|
2014
|
|
428,000 | 171,200 | 928,255 | 311,734 | 304,884 | 171,734 | 34,781 | 2,350,588 | |||||||||||||||||||||||||
|
2013
|
|
400,000 | - | 1,085,840 | 201,219 | 293,880 | - | 31,780 | 2,012,719 | ||||||||||||||||||||||||||
|
2012
|
|
380,000 | 40,587 | - | 613,813 | 131,429 | 1,203,330 | 39,826 | 2,408,985 | ||||||||||||||||||||||||||
Richardson,
|
|
2014
|
|
462,000 | - | 1,113,306 | 373,848 | 399,867 | 592,818 | 47,850 | 2,989,689 | |||||||||||||||||||||||||
|
2013
|
|
440,000 | - | 1,343,771 | 249,000 | 342,304 | - | 42,425 | 2,417,500 | ||||||||||||||||||||||||||
|
2012
|
|
420,000 | 155,642 | - | 809,755 | 40,438 | 1,646,828 | 50,060 | 3,122,723 | ||||||||||||||||||||||||||
Godsey,
|
2014 | 370,000 | - | 416,104 | 139,698 | 244,889 | 62,010 | 37,440 | 1,270,141 | |||||||||||||||||||||||||||
Woodruff, J. |
|
2014
|
|
369,000 | 110,700 | 355,636 | 119,433 | 197,142 | 315,181 | 38,569 | 1,505,661 | |||||||||||||||||||||||||
|
2013
|
|
355,000 | - | 409,598 | 75,920 | 173,879 | - | 34,028 | 1,048,425 | ||||||||||||||||||||||||||
|
2012
|
|
340,000 | 27,934 | - | 301,185 | 90,457 | 1,006,339 | 42,666 | 1,808,581 |
41
(1) | The amounts in columns (e) and (f) reflect grant date fair value. The valuation assumptions are discussed in Note 6 to the Companys financial statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2014. |
(2) | Column (e), Stock Awards, includes restricted stock and performance share awards. 66.75% of the grant date value represents performance shares, and the remaining 33.25% represents restricted stock. See footnote 3 to the Grants of Plan-Based Awards table on page 43 for more detail about the performance share awards. If the highest level of performance conditions is achieved, the value of the stock awards reflected in column (e) for Messrs. McManus, Porter, Richardson, Godsey and Woodruff would be $5,044,992, $1,547,848, $1,856,391, $693,818, and $593,025, respectively. |
(3) | The amounts in column (g) reflect Annual Incentive Compensation payouts as discussed on pages 32 - 34 of this Proxy Statement. |
(4) | The amounts in column (h) reflect that there was an increase in pension value for each of our named executive officers, except for Mr. McManus. |
(5) | The benefits for which changes in value are reflected in column (h) are the Supplemental Agreements and the Retirement Income Plan. The Company terminated the Supplemental Agreements as of December 31, 2014. The actual lump sums that will be paid to participants pursuant to the terminated Supplemental Agreements were used for purposes of computing the present value of accumulated benefits thereunder. In addition, the Company froze the accrual of benefits under the Retirement Income Plan as of December 31, 2014 and terminated the Plan effective January 31, 2015. The 2014 changes in pension value are primarily due to the shortened discount periods, an increase in accrued benefits, and the termination of the plans. |
(6) | The amounts reported in column (i) for 2014 reflect the Companys contributions to defined contribution plans, MedJet insurance, dinner club memberships, life insurance premiums, financial planning, spousal travel, and tax reimbursements related to spousal travel. |
Defined Contributions ($) |
Spousal Travel Tax ($) | |||
McManus |
70,996 | 4,245 | ||
Porter |
27,717 | 2,402 | ||
Richardson |
39,172 | 2,670 | ||
Godsey |
31,362 | 1,259 | ||
Woodruff |
31,307 | 2,215 |
42
The following table sets forth information with respect to annual cash incentives and long-term equity incentives to our named executive officers. For a more complete discussion of the awards, please refer to the discussion of these incentives contained in Compensation Discussion and Analysis, beginning on page 27 of this Proxy Statement.
Name
|
Grant Date
|
Meeting
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2)
|
Estimated Future Payouts Under Equity Incentive Plan Awards
|
All Other
|
All Other Option Securities
|
Exercise
|
Grant Date Fair
|
||||||||||||||||||||||||||||||||||||||||
Threshold ($)
|
Target ($)
|
Maximum
|
Threshold (#)
|
Target
|
Maximum (#)
|
|||||||||||||||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | |||||||||||||||||||||||||||||||||||||
McManus |
1/22/14 | 1/21/14 | 439,425 | 837,000 | 1,611,225 | 5,421 | 21,684 | 43,368 | 14,235 | 36,855 | 72.39 | 4,041,652 | ||||||||||||||||||||||||||||||||||||
Porter |
1/22/14 | 1/21/14 | 179,760 | 342,400 | 659,120 | 1,663 | 6,653 | 13,306 | 4,367 | 11,307 | 72.39 | 1,239,989 | ||||||||||||||||||||||||||||||||||||
Richardson |
1/22/14 | 1/21/14 | 196,350 | 392,700 | 785,400 | 1,995 | 7,979 | 15,958 | 5,238 | 13,560 | 72.39 | 1,487,154 | ||||||||||||||||||||||||||||||||||||
Godsey |
1/22/14 | 1/21/14 | 120,250 | 240,500 | 481,000 | 746 | 2,982 | 5,964 | 1,958 | 5,067 | 72.39 | 555,802 | ||||||||||||||||||||||||||||||||||||
Woodruff |
1/22/14 | 1/21/14 | 116,235 | 221,400 | 426,195 | 637 | 2,549 | 5,098 | 1,673 | 4,332 | 72.39 | 475,069 |
(1) | The Compensation Committee generally sets award amounts at a meeting that occurs the day prior to the grant date. |
(2) | Columns (c) (e) reflect the annual cash incentive payout values for each named executive officer for 2014 if the threshold, target or maximum goals had been satisfied. The actual payout is reflected in column (g) of the Summary Compensation Table. For a discussion of the criteria applied when determining amounts payable, see the description of Annual Incentive Compensation in Compensation Discussion and Analysis beginning on page 32 of this Proxy Statement. |
(3) | Payment of performance share awards will be based on the Companys total shareholder return (TSR) relative to companies in the S&P Supercomposite E&P Index as comprised on the first day of the applicable award period (the peer companies). Columns (f) (h) reflect the payment of performance share awards for each named executive officer if the threshold, target or maximum goals are met. The threshold goal will be met if the Companys TSR percentile ranking relative to the peer companies is at least 35th, the target goal will be met if the Companys TSR percentile ranking relative to the peer companies is 50th, and the maximum goal will be met if the Companys TSR percentile ranking relative to the peer companies is 80th at the end of the respective award period. |
(4) | These performance shares have a three-year award period ending December 31, 2017. |
(5) | These restricted stock units granted January 22, 2014 vest on January 21, 2017. |
(6) | The stock options granted January 22, 2014 vest in equal installments on January 24, 2015, 2016, and 2017. |
(7) | Column (l) represents the sum of the grant date fair values of all stock and option awards, as reflected in columns (e) and (f) of the Summary Compensation Table. |
43
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth information with respect to outstanding equity awards held by our named executive officers as of December 31, 2014. This table includes unexercised and unvested option awards and unvested restricted stock and performance share awards. Each equity grant is shown separately for each named executive officer. The vesting schedule for each grant is shown following this table. For additional information about the outstanding equity awards, see the description of long-term incentive compensation in Compensation Discussion and Analysis beginning on page 27.
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||||||||||
Name | Grant Date |
Number of Securities (#) Exercisable |
Number
of (#) Unexercisable |
Equity (#) N/A |
Option ($) |
Option Expiration Date |
Number (#) |
Market Value Stock That ($) |
Equity (#) |
Equity Market or Rights That ($) |
||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||
McManus | 1/25/12 | 70,968 | 42,984(1) | 54.11 | 1/24/2022 | |||||||||||||||||||||||||||
1/24/13 | 16,204 | 32,408(2) | 48.36 | 1/23/2023 | 16,722(4) | 1,066,195 | 58,302(7) | 3,717,336 | ||||||||||||||||||||||||
1/22/14 | 36,855(3) | 72.39 | 1/21/2024 | 14,235(5) | 907,624 | 43,368(8) | 2,765,144 | |||||||||||||||||||||||||
Porter | 1/26/11 | 12,045 | 54.99 | 1/25/2021 | ||||||||||||||||||||||||||||
1/25/12 | 5,444 | 10,889(1) | 54.11 | 1/24/2022 | ||||||||||||||||||||||||||||
1/24/13 | 4,026 | 8,052(2) | 48.36 | 1/23/2023 | 4,155(4) | 264,923 | 14,484(7) | 923,500 | ||||||||||||||||||||||||
1/22/14 | 11,307(3) | 72.39 | 1/21/2024 | 4,367(5) | 278,440 | 13,306(8) | 848,391 | |||||||||||||||||||||||||
Richardson | 1/23/08 | 21,275 | 60.56 | 1/22/2018 | ||||||||||||||||||||||||||||
1/26/11 | 31,317 | 54.99 | 1/25/2021 | |||||||||||||||||||||||||||||
1/25/12 | 23,730 | 14,365(1) | 54.11 | 1/24/2022 | ||||||||||||||||||||||||||||
1/24/13 | 4,982 | 9,964(2) | 48.36 | 1/23/2023 | 5,141(4) | 327,790 | 17,926(7) | 1,142,962 | ||||||||||||||||||||||||
1/22/14 | 13,560(3) | 72.39 | 1/21/2024 | 5,238(5) | 333,975 | 15,958(8) | 1,017,482 | |||||||||||||||||||||||||
Godsey | 12/12/12 | 11,115(6) | 708,692 | |||||||||||||||||||||||||||||
1/24/13 | 1,699 | 3,398(2) | 48.36 | 1/23/2023 | 1,753(4) | 111,771 | 6,110(7) | 389,574 | ||||||||||||||||||||||||
1/22/14 | 5,067(3) | 72.39 | 1/21/2024 | 1,958(5) | 124,842 | 5,964(8) | 380,265 | |||||||||||||||||||||||||
Woodruff | 1/24/07 | 13,855 | 46.45 | 1/23/2017 | ||||||||||||||||||||||||||||
1/23/08 | 12,100 | 60.56 | 1/22/2018 | |||||||||||||||||||||||||||||
1/28/09 | 7,281 | 29.79 | 1/27/2019 | |||||||||||||||||||||||||||||
1/27/10 | 15,468 | 46.69 | 1/26/2020 | |||||||||||||||||||||||||||||
1/26/11 | 14,789 | 54.99 | 1/25/2021 | |||||||||||||||||||||||||||||
1/25/12 | 10,686 | 5,343(1) | 54.11 | 1/24/2022 | ||||||||||||||||||||||||||||
1/24/13 | 1,519 | 3,038(2) | 48.36 | 1/23/2023 | 1,567(4) | 99,912 | 5,464(7) | 348,385 | ||||||||||||||||||||||||
1/22/14 | 4,332(3) | 72.39 | 1/21/2024 | 1,673(5) | 106,670 | 5,098(8) | 325,048 |
Vesting Dates:
(1) | These options vest on January 25, 2015. |
44
(2) | These options vest in two equal installments on January 24, 2015 and 2016. |
(3) | These options vest in three equal installments on January 22, 2015, 2016 and 2017. |
(4) | This restricted stock vests January 24, 2016. |
(5) | These restricted stock units vest January 22, 2017. |
(6) | This restricted stock vests December 12, 2015. |
(7) | These performance shares have a three-year award period that ends December 31, 2015. Payout amounts are calculated at maximum (200%) due to 2014 performance exceeding target performance measures. |
(8) | These performance shares have a three-year award period that ends December 31, 2016. Payout amounts are calculated at a maximum (200%) due to 2014 performance exceeding target performance measures. |
OPTION EXERCISES AND STOCK VESTED IN 2014
The following table provides information, for the named executive officers, on (1) stock option exercises during 2014, including the number of shares acquired upon exercise and the value realized and (2) the number of shares acquired upon the vesting of stock awards and the value realized, each before payment of any applicable withholding tax and broker commissions.
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($) |
||||||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||||||
McManus |
172,767 | 5,472,600 | 60,458 | 3,993,855 | ||||||||||||
Porter |
60,101 | 2,126,494 | 15,020 | 992,221 | ||||||||||||
Richardson |
31,091 | 1,108,852 | 18,588 | 1,227,923 | ||||||||||||
Godsey |
- | - | 8,214 | 542,617 | ||||||||||||
Woodruff |
14,000 | 837,885 | 5,666 | 374,296 |
45
Name
|
Plan Name
|
Number of (#)
|
Present Value of ($)(1)
|
Payments During ($)
| ||||
(a) | (b) | (c) | (d) | (e) | ||||
McManus |
Retirement Income Plan | 29 | 2,025,500 | - | ||||
SERP |
29 | 9,316,403 | - | |||||
Porter |
Retirement Income Plan | 25 | 875,665 | - | ||||
SERP |
25 | 2,499,339 | - | |||||
Richardson |
Retirement Income Plan | 29 | 1,745,822 | - | ||||
SERP |
29 | 4,259,191 | - | |||||
Godsey |
Retirement Income Plan | 2 | 112,222 | - | ||||
SERP |
N/A | N/A | N/A | |||||
Woodruff |
Retirement Income Plan | 29 | 2,256,644 | - | ||||
SERP |
29 | 2,690,935 | - |
(1) | Benefit values assume a retirement age of 60. Other assumptions are set forth in Note 5 to the Companys financial statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2014. |
No pension benefits were paid to any of the named executive officers during 2014; however, some of our named executive officers will begin receiving payments in 2015 in connection with the termination of the pension plans.
46
NONQUALIFIED DEFERRED COMPENSATION TABLE IN 2014
The table below provides information on the non-qualified deferred compensation of the named executive officers in 2014 pursuant to the Companys 1997 Deferred Compensation Plan. For a more detailed discussion of the 1997 Deferred Compensation Plan, refer to Compensation Discussion and Analysis beginning on page 27 of this Proxy Statement.
Name |
Executive ($) |
Registrant ($) |
Aggregate ($) |
Aggregate Distributions ($) |
Aggregate at Last FYE ($) | |||||
(a) | (b) | (c) (1) | (d) | (e) | (f) | |||||
McManus |
34,620 | 48,896 | (10,402) | 460,197 | 75,263 | |||||
Porter |
10,080 | 10,817 | (2,950) | - | 108,434 | |||||
Richardson |
12,120 | 17,072 | (11,606) | 87,597 | 232,596 | |||||
Godsey |
6,600 | 9,262 | (1,760) | - | 29,772 | |||||
Woodruff |
6,540 | 9,207 | (3,186) | - | 87,131 |
(1) | Amounts reported in column (c) are reported in the Summary Compensation Table. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
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McManus $ |
Porter $ |
Richardson $ |
Godsey $ |
Woodruff $ | ||||||
Cash Severance |
5,372,892 | 2,165,640 | 2,422,035 | 1,155,906 | 1,680,360 | |||||
Health & Welfare Benefit (1) |
34,450 | 33,146 | 27,408 | 26,838 | 26,816 | |||||
Excise Tax reimbursement (2) |
- | 1,372,988 | - | N/A | - |
(1) | Represents the incremental value of two years continuation of medical, life and disability insurance benefits. |
(2) | Tax gross-up reflects the additional compensation provided to cover excise taxes incurred when the executives parachute payment exceeds 2.99 times the Code Section 280G base amount. Base amount is defined as the executives five-year average W-2 earnings. |
The Stock Incentive Plan also provides that in the event of a termination of employment, other than a qualified termination or a change in control termination, all unvested options expire and all unvested restricted stock and outstanding restricted stock units and performance shares are forfeited. In the
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event of a qualified termination, unvested options, unvested restricted stock and restricted stock units with a grant date at least ten months prior to the date of termination vest and outstanding performance shares remain eligible for payout subject to the applicable award period and performance conditions. Under the Stock Incentive Plan the term qualified termination means:
(1) | a termination expressly agreed in writing by the executive and the Company to constitute a qualified termination; |
(2) | death or disability; or |
(3) | retirement. |
In the event of a change in control termination, unvested options, unvested restricted stock and restricted stock units vest and outstanding performance shares pay out at target performance within thirty days of termination. The Board of Directors defined change in control termination to mean:
(1) | an involuntary termination other than for cause after the occurrence of a change in control; or |
(2) | a voluntary termination for good reason entitling the employee to severance compensation under a written change in control severance agreement. |
The following table contains a schedule of unvested options, restricted stock and restricted stock units that would vest upon a qualified termination or a change in control termination, valued as of December 31, 2014:
Name |
Shares (#) |
Value of ($) |
Restricted (#) |
Value of ($) |
Restricted Stock Units (#) |
Value of Restricted Stock Units ($) | ||||||
McManus |
112,247 | 913,879 | 16,722 | 1,066,195 | 14,235 | 907,624 | ||||||
Porter |
30,248 | 229,080 | 4,155 | 264,923 | 4,367 | 278,440 | ||||||
Richardson |
37,889 | 292,068 | 5,141 | 327,790 | 5,238 | 333,975 | ||||||
Godsey |
8,465 | 52,329 | 12,868 | 820,464 | 1,958 | 124,842 | ||||||
Woodruff |
12,713 | 98,345 | 1,567 | 99,912 | 1,673 | 106,670 |
The following table contains a schedule of unvested performance shares that would vest upon a change in control termination, valued as of December 31, 2014:
Name | Performance Shares(#) |
Value of Performance Shares($) | ||
McManus |
50,835 | 3,241,240 | ||
Porter |
13,895 | 885,945 | ||
Richardson |
16,942 | 1,080,222 | ||
Godsey |
6,037 | 384,919 | ||
Woodruff |
5,281 | 336,717 |
Our Annual Incentive Compensation Plan provides that upon a change in control and termination of a participants employment, the participant will receive a pro rata incentive based on target performance and the number of days of employment during the Plan year. The Annual Incentive Compensation Plan also provides that in the event a participant terminates employment due to retirement, death or disability during a performance period, the participant shall receive an incentive equal to the amount the participant would have received as an incentive if the participant had remained an employee
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through the end of the performance period multiplied by a fraction which reduces the award in proportion to the amount of time remaining in the performance period. If a participants employment is terminated for any other reason during a performance period, the participant shall receive no incentive payment for such performance period unless the Compensation Committee, in its discretion, determines to pay such participant (other than a participant terminated for cause) up to a pro rata incentive payment. Assuming a December 31, 2014 triggering event, there would be no pro rata target performance pay out, since the performance period would have concluded and the amounts owed to the participants could be determined in accordance with the terms of the Annual Incentive Compensation Plan.
Each of our named executive officers has vested benefits under the Retirement Income Plan and, except for Mr. Godsey, under the Supplemental Agreements. Although both the Retirement Income Plan and the Supplemental Agreements were frozen as of December 31, 2014, the benefits under both such plans would not have increased or accelerated upon termination or a change in control. For a description of our Retirement Income Plan and Supplemental Agreements, see Executive Compensation Pension Benefits in 2014 beginning on page 45 of this Proxy Statement.
ADVISORY VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY VOTE)
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE EXECUTIVE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.
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SHAREHOLDER PROPOSAL METHANE GAS EMISSIONS REPORT
We expect the following proposal to be presented by a shareholder at the Annual Meeting. Following SEC rules, other than minor formatting changes, we are reprinting the proposal and supporting statement as they were submitted to us. To ensure that readers can easily distinguish between the materials provided by the proponent and the materials we have provided, we have placed a box around material provided by the proponent.
The Board recommends you vote AGAINST the shareholder proposal for the reasons we give after the proposal.
PROPOSAL RESPECTING PREPARATION OF REPORT ON METHANE GAS EMISSIONS
This proposal was submitted by Miller/Howard Investments, Inc., 324 Upper Byrdcliffe Road, Woodstock, New York 12498 on behalf of Lowell Miller. Mr. Miller beneficially owned, as of November 24, 2014, 228 shares of Energen common stock. Clean Yield Asset Management, 6 Curtis Street, Salem, Massachusetts 01970 was a co-filer of the proposal on behalf of Marie Hausman. Ms. Hausman beneficially owned, as of November 24, 2014, 1,200 shares of Energen common stock. Finally, Domini Social Investments, 532 Broadway, 9th Floor, New York, New York 10012-3939 also was a co-filer of the proposal on behalf of the Domini Social Equity Fund. The Domini Social Equity Fund beneficially owned, as of November 24, 2014, 187 shares of Energen common stock.
Shareholder Proposal
METHANE EMISSIONS REPORTING
WHEREAS: Methane emissions are a significant contributor to climate change, with an impact on global temperature roughly 86x that of CO2 over a 20-year period. Methane represents over 25% of 20-year CO2 equivalent emissions according to the Environmental Protection Agency (EPA) Greenhouse Gas Inventory.
Studies from the National Oceanic and Atmospheric Administration (NOAA), Harvard University and others estimate highly varied methane leakage rates as a percentage of production. The attendant uncertainty surrounding methane leakage has, according to the New York Times, made it the Achilles heel of hydraulic fracturing.
A 2013 study, Anthropogenic Emissions of Methane in the United States, finds EPA prescribed methodologies underestimate methane emissions nationally by a factor of 1.5. The EPAs auditor refers to current emissions estimates as being of questionable quality.
The International Energy Agency (IEA) highlights the risk of failing to implement best practice methane management in Golden Rules for a Golden Age of Gas, recommending actions necessary to realize the economic and energy security benefits [of gas development] while meeting public concerns, including eliminating venting, minimizing flaring and setting targets on emissions.
Reducing methane emissions in upstream oil and gas production is one of four policies proposed by the IEA that could stop the growth in global energy-related emissions by the end of this decade at no net economic cost. The policies rely only on existing technologies and would not harm economic growth.
A failure by companies to proactively reduce methane emissions may invite more rigorous regulations. The Presidents Climate Action Plans Strategy to Reduce Methane Emissions empowers the EPA to determine how to reduce methane emissions.
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States have begun to adopt stricter regulations. In 2014, Colorado approved regulations to fix persistent methane leaks. Industry representatives who helped craft the regulations called them the right thing to do for our business, noting that the regulations are needed to ensure their investments pay off.
Methane leakage has a direct economic impact on Energen Corp., as lost gas is not available for sale. The Natural Resources Defense Council estimates control processes could generate $2 billion in annual revenues for the industry and reduce methane pollution 80%, while ICF International estimates currently available controls could cut emissions 40%, with the most-cost effective opportunities creating $164 million in net savings.
A strong program of measurement, mitigation, target setting and disclosure would reduce regulatory and legal risk, maximize gas for sale and potentially bolster shareholder value.
RESOLVED: Shareholders request that Energen Corp. issue a report (by September 2015, at reasonable cost, omitting proprietary information) reviewing the Companys policies, actions and plans to measure, mitigate, disclose and set quantitative reduction targets for methane emissions resulting from all operations under the Companys financial or operational control.
SUPPORTING STATEMENT: The report can include the leakage rate as a percentage of production, best practices, worst performing assets, environmental impact, quantitative reduction targets and methods to track progress over time. Real-time measurement and monitoring technologies are recommended.
THE COMPANYS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL
COMPANY STATEMENT IN OPPOSITION
Energen has worked for many years to reduce methane emissions. These efforts include voluntary implementation of emissions reduction activities and equipment as well as compliance with methane emission control, reduction, and reporting regulations.
Since 2003, the Company has participated in the United States Environmental Protection Agency (EPA) Natural Gas STAR Program. Gas STAR is a voluntary program that encourages oil and natural gas companies to employ technologies and practices to improve operational efficiency and methane emission reduction. Since joining, the Company has achieved Gas STAR estimated cumulative methane emission reductions of over 5.2 billion cubic feet through the end of 2013. This number reflects only voluntary reductions, which are over and above regulatory-driven reductions. These voluntary reductions were achieved through:
| Installation of electric motors on pumping units and compressors previously natural gas fueled |
| Installation of vapor recovery units (VRUs) |
| Installation of pumping units on gas wells to reduce venting while removing fluids from gas well bores |
| Capture of casinghead gas by VRU or compressor |
| Reduction of blanket gas blow-by to atmosphere |
| Flaring instead of venting where gas could not be captured into a pipeline system |
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In addition to the initiatives reported under the Gas STAR Program, the Company has taken, and continues to take, other actions to reduce methane emissions, including:
| Installation of low-bleed or no-bleed pneumatic devices and installation of no-bleed level controllers where electricity is available |
| Implementation of reduced emission completions |
| Optimization of plunger lift installations |
| Pipeline/Flowline leak monitoring |
| Installation of vapor combustors and flares on tank batteries |
| Instituting a thief hatch/enardo valve inspection program |
The Company expects to achieve further reductions through these and other initiatives and through implementation of regulatory-mandated procedures and equipment modifications under the EPAs New Source Performance Standards (NSPS) Subpart OOOO (Quad O) regulations and National Emissions Standards for Hazardous Air Pollutants (NESHAPS) Subpart HH regulations.
The majority of the Companys methane emissions are disclosed via existing regulatory programs. Annual methane emission reports are made to the EPA pursuant to EPAs Mandatory Greenhouse Gas Reporting regulations (40 CFR Part 98). Under Subpart W, the Company reports direct methane emissions via EPAs online electronic greenhouse gas reporting tool (e-GGRT). Reported data is publicly available on the EPAs website.
Comprehensive, independently derived methane emission factors and disclosure methodologies are currently incomplete. The Environmental Defense Fund has organized a comprehensive research initiative involving a series of studies to measure and evaluate methane emissions from the natural gas value chain. Until these and other studies have been completed and peer-reviewed emission factors and reporting methodologies have been established, disclosure of estimated methane emissions, beyond current regulatory disclosures, would lack adequate qualitative and quantitative controls.
The Company believes that a report of the type requested by the proposal would be of limited usefulness to shareholders and management and duplicative of past and ongoing Company and regulatory activities. Given the limited value of such a report, it is the judgment of the Board of Directors that its preparation would be an inefficient use of corporate resources and an unnecessary expense.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE AGAINST THIS SHAREHOLDER PROPOSAL.
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SHAREHOLDER PROPOSAL CLIMATE CHANGE BUSINESS RISKS REPORT
We expect the following proposal to be presented by a shareholder at the Annual Meeting. Following SEC rules, other than minor formatting changes, we are reprinting the proposal and supporting statements as they were submitted to us. To ensure that readers can easily distinguish between the materials provided by the proponent and the materials we have provided, we have placed a box around material provided by the proponent.
The Board recommends you vote AGAINST the shareholder proposal for the reasons we give after the proposal.
PROPOSAL REGARDING PREPARATION OF REPORT ON CLIMATE CHANGE BUSINESS RISKS
This proposal was submitted by Connecticut Retirement Plans and Trust Funds, 55 Elm Street, Hartford, Connecticut 01606-1773. Connecticut Retirement Plans and Trust Funds beneficially owned, as of November 24, 2014, 15,800 shares of Energen common stock.
Shareholder Proposal
Connecticut Retirement Plans and Trust Funds (CRPTF)
WHEREAS:
Recognizing the risks of climate change, nearly all nations signed the Cancun Agreement proclaiming the increase in global temperature should be below 2 degrees Celsius. In light of these goals, the International Energy Agency (IEA) has developed scenarios to help policymakers and market participants understand potential energy demand futures. Oil demand would need to begin to decline starting in 2020 under a scenario consistent with policymakers 2 degree target. Per HSBC, the equity valuation of oil producers could drop by 40-60 percent under such a low carbon emissions scenario.
Climate change concerns are already affecting oil demand through policies related to air quality, fuel efficiency, and lower-carbon energy. Analysts from Citi, Deutsche Bank and Statoil, among others, predict that global oil demand could peak in the next 10-15 years. Any action to address climate change will only accelerate these trends.
Industry production costs have risen significantly in recent years, leaving many companies vulnerable to any downturn in demand. Carbon Tracker estimates that projects which require over $95/barrel to be sanctioned are clearly in excess of the requirements for fossil fuel investment in a 2 degree scenario, and that there is an estimated $1.1 trillion of capital expenditures (capex) earmarked for high cost projects out to 2025 needing a price of over $95 to generate an economic return, raising the risk of stranded, or unprofitable, resources.
We recognize the importance of the oil and gas sector in meeting continuing energy needs. However, we are concerned that Energen Corporations current business strategy is not sustainable given the changing nature of demand, emerging technologies, and policy interventions aimed at reducing pollution.
Investors require additional information on how Energen is preparing for market conditions in which demand growth for oil and gas is reduced due to a combination of factors.
Resolved: Shareholders request that Energen prepare a report analyzing the consistency of company capital expenditure strategies with policymakers goals to limit climate change, including analysis of long- and short- term financial risks to the company associated with high-cost projects in low-demand
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scenarios, as well as analysis of options to mitigate related risk. The report should be overseen by a committee of independent directors, omit proprietary information, and be prepared at reasonable cost by September 2015.
SUPPORTING STATEMENT:
We recommend the report include:
| Assumptions regarding breakeven costs of production for the companys highest cost projects. |
| Consideration of a range of lower-demand scenarios accounting for more-rapid-than-expected policy and/or technology developments, including the 2 degree scenario as outlined by the MA. |
| An assessment of different capital allocation strategies in the face of low-demand scenarios. |
| How the company will manage risks under these scenarios, such as reducing the carbon intensity of its assets or returning capital to shareholders. |
| The Board of Directors role in overseeing climate risk reduction strategies and related capital allocation. |
THE COMPANYS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL
COMPANY STATEMENT IN OPPOSITION
Energen recognizes the importance of environmental protection and strives to conduct its business operations in an environmentally responsible manner. The Company is also aware of and experienced in responding to the business risks and opportunities of changes in market supply and demand generated by a variety of factors and events.
The Company Already Provides Disclosures that Address Concerns Regarding Business Risks Including Risks Associated With Environmental Policy Making.
To the extent that the proposal seeks a report on the Companys long- and short-term financial and operational risks associated with policymaker goals to limit climate change, our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 provides information directly responsive to the proposal. Similar disclosures can be found in our 2014 Form 10-K. Specifically, the Companys 2013 Form 10-K addresses the following risks and matters:
Environmental Matters and Climate Change [pages 8-9]
. . . .
Federal, state and local legislative bodies and agencies frequently exercise their respective authority to adopt new laws and regulations and to amend and interpret existing laws and regulations. Such law and regulation changes may occur with little prior notification, subject the Company to cost increases, and impose restrictions and limitations on the Companys operations. Currently, there are various proposed law and regulatory changes with the potential to materially impact the Company. Such proposals include, but are not limited to, measures dealing with hydraulic fracturing, emission limits and reporting and the repeal of certain oil and gas tax incentives and deductions. Due to the nature of the political and regulatory processes and based on its consideration of existing proposals, the Company is unable to determine whether such proposed laws and regulations are reasonably likely to be enacted or to determine, if enacted, the magnitude of the potential impact of such laws.
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. . . .
Various states in which we operate have adopted a variety of well construction, set back, and disclosure regulations limiting how drilling can be performed and requiring various degrees of chemical and water usage disclosure for operators that employ hydraulic fracturing. We are complying with these additional regulations as part of our routine operations and within the normal execution of our business plan. The adoption of additional federal or state regulations, however, could impose significant new costs and challenges. For example, adoption of new hydraulic fracturing permitting requirements could significantly delay or prevent new drilling. Adoption of new regulatory restrictions on the use of hydraulic fracturing could reduce the amount of oil and gas that we are able to recover from our reserves. The degree to which additional oil and gas industry regulation may impact our future operations and results will depend on the extent to which we utilize the regulated activity and whether the geographic locations in which we operate are subject to the new regulation.
Existing federal, state and local environmental laws and regulations also have the potential to increase costs, reduce liquidity, delay operations and otherwise alter business operations. These existing laws and regulations include, but are not limited to, the Clean Air Act; the Clean Water Act; Oil Pollution Prevention: Spill Prevention, Control, and Countermeasure regulations; Toxic Substances Control Act; Resource Conservation and Recovery Act; and the Federal Endangered Species Act. . . . .
Climate change, whether arising through natural occurrences or through the impact of human activities, may have a significant impact upon the operations of [the Company]. Volatile weather patterns and the resulting environmental impact may adversely impact the results of operations, financial position and cash flows of the Company. The Company is unable to predict the timing or manifestation of climate change or reliably estimate the impact to the Company. However, climate change could affect the operations of the Company as follows:
| sustained increases or decreases to the supply and demand of oil, natural gas and natural gas liquids; |
. . . .
| potential disruption to third party facilities to which [Company] delivers . . . . |
Such facilities include third party oil and gas gathering, transportation, processing and storage facilities and are typically limited in number and geographically concentrated.
Commodity prices for crude oil and natural gas are volatile, and a substantial reduction in commodity prices could adversely affect the Companys results and the carrying value of its oil and natural gas properties [page 10]: The Company [is] significantly influenced by commodity prices. Historical markets for oil, natural gas and natural gas liquids have been volatile. Energen Resources revenues, operating results, profitability and cash flows depend primarily upon the prices realized for its oil, gas and natural gas liquid production. Additionally, downward commodity price trends may impact expected cash flows from future production and potentially reduce the carrying value of Company-owned oil and natural gas properties. . . . .
The Companys oil and natural gas reserves are estimates, and actual future production may vary significantly and may also be negatively impacted by its inability to invest in production on planned timelines [page 11]: There are numerous uncertainties inherent in estimating quantities of proved oil and gas reserves and in projecting future rates of production
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and timing of development expenditures. The total amount or timing of actual future production may vary significantly from reserve and production estimates. In the event Energen Resources is unable to fully invest its planned development, acquisition and exploratory expenditures, future operating revenues, production, and proved reserves could be negatively affected. The drilling of development and exploratory wells can involve significant risks, including those related to timing, success rates and cost overruns, and these risks can be affected by lease and rig availability, complex geology and other factors. Anticipated drilling plans and capital expenditures may also change due to weather, manpower and equipment availability, changing emphasis by management and a variety of other factors which could result in actual drilling and capital expenditures being substantially different than currently planned.
The Company is subject to numerous federal, state and local laws and regulations that may require significant expenditures or impose significant restrictions on its operations [Page 11]: [The Company is] subject to extensive federal, state and local regulation which significantly influences operations. Although the Company believes that operations generally comply with applicable laws and regulations, failure to comply could result in the suspension or termination of operations and subject the Company to administrative, civil and criminal penalties. Federal, state and local legislative bodies and agencies frequently exercise their respective authority to adopt new laws and regulations and to amend, modify and interpret existing laws and regulations. Such changes can subject the Company to significant tax or cost increases and can impose significant restrictions and limitations on the Companys operations.
The Requested Report is Unlikely to be of Value to Shareholders
As a mid-cap, independent oil and gas exploration and production company with operations primarily in Texas and New Mexico, Energen has commodity price exposure but does not generally participate in the high-cost projects referenced in the proposal. The oil and gas business has a history of price volatility reflecting, in large part, the impact of changes in supply-and-demand. The late 2014 and early 2015 oil price decline provides a recent illustration of supply out stripping demand.
Energens history demonstrates an ability to weather market volatility and, within relatively short time frames, successfully adjust drilling and development programs and capital investment plans in response to changing circumstances and opportunities. Discussions and updates of Energens capital investment plans can be found in our quarterly earnings releases (available in the Investor Relations section of our website: energen.com). We have no particular expertise in predicting future governmental policies and actions with respect to climate change or other matters and do not believe that preparation of the requested report is a wise use of management time and corporate funds or likely to generate beneficial information beyond what the Company already provides.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE AGAINST THIS SHAREHOLDER PROPOSAL.
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SHAREHOLDER PROPOSALS FOR 2016 ANNUAL MEETING
In order to be considered for inclusion in our Proxy Statement and form of proxy, proposals of shareholders intended to be presented at the 2016 Annual Meeting must be received at the Companys principal executive offices no later than November 19, 2015. If a shareholder desires to bring other business before the 2016 Annual Meeting without including such proposal in the Companys Proxy Statement, the shareholder must notify the Company in writing no earlier than January 1, 2016 and no later than January 31, 2016. Shareholders who wish to nominate individuals to serve on the Board of Directors must follow the requirements set forth in Section 1.11 of the Companys Bylaws. In order to be eligible to nominate a person for election to our Board of Directors a shareholder must (i) comply with the notice procedures set forth in the Bylaws and (ii) be a shareholder of record on the date of giving such notice as well as on the meeting date. To be timely, any shareholder who wishes to make a nomination to be considered at the 2016 Annual Meeting must deliver the notice specified by our Bylaws between January 1, 2016 and January 31, 2016. The Bylaws contain a number of substantive and procedural requirements that should be reviewed by any interested shareholder. Shareholder proposals and director nominations should be directed to J. David Woodruff, Secretary, Energen Corporation, 605 Richard Arrington Jr. Blvd. North, Birmingham, Alabama 35203-2707.
ENERGEN CORPORATION
Chairman of the Board
Birmingham, Alabama
March 18, 2015
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The following peer groups are referred to on page 28 of the Proxy Statement.
CUSTOM PEER GROUP DATA BASE
AGL Resources Inc. | Piedmont Natural Gas Co Inc | |
Atmos Energy Corp | Pioneer Natural Resources Co | |
Cabot Oil & Gas Corp | QEP Resources | |
Cimarex Energy Co | Questar Corp | |
Comstock Resources Inc | Quicksilver Resources Inc | |
Concho Resources | Range Resources Corp | |
Denbury Resources Inc | SM Energy Co | |
EQT Corp | Southwestern Energy Co | |
Forest Oil Corp | Ultra Petroleum Corp | |
Linn Energy | Vectren Corp | |
MDU Resources Group Inc | WGL Holdings Inc | |
Newfield Exploration Co | Whiting Petroleum Corp | |
Noble Energy Inc | Williams Companies Inc | |
Oneok Inc |
OIL AND GAS DATA BASE
Anadarko Petroleum | Irving Oil Commercial G.P. | |
Apache | Magellan Midstream Partners | |
BG US Services | Marathon Oil | |
Devon Energy | McDermott International | |
EnCana Oil & Gas USA | MDU Resources | |
EQT Corporation | Noble Energy | |
Exterran | Occidental Petroleum | |
Hercules Offshore | Rowan Companies | |
Hess | Suburban Propane | |
Holly Frontier Corporation | Tesoro | |
Hunt Consolidated | Transocean | |
ION Geophysical |
ENERGY SECTOR DATA BASE
A-1
UTILITY INDUSTRY DATA BASE
A-2
Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income is a Non-GAAP financial measure (GAAP refers to generally accepted accounting principles) that excludes certain non-cash mark-to-market derivative financial instruments; a gain on disposal of discontinued operations; a non-cash write-off of proved property and unproved leaseholds; unbudgeted reorganizations costs; and income from discontinued operations. The Compensation Committee believes that adjusting for the impact of these items is appropriate in evaluating Energens performance for purposes of its Annual Incentive Compensation Plan.
Year-to-Date Ended 12/31/2014 | ||||
Consolidated Net Income ($ in millions except per share data) |
Net Income | Per Diluted Share | ||
Net Income (GAAP) | 568.0 | 7.75 | ||
Non-cash mark-to-market gains (net of $113.7 tax) | (201.8) | (2.75) | ||
Gain on disposal of discontinued operations (net of $285.5 tax) | (439.1) | (5.99) | ||
Income from discontinued operations (net of $17.9 tax) | (29.3) | (0.40) | ||
Non-cash proved property and unproved leasehold write-off (net of $159.5 tax) | 257.3 | 3.51 | ||
Unbudgeted reorganization costs net of related finance cost savings (net of $3.3 tax) |
(4.80) | (0.07) | ||
Adjusted Net Income (Non-GAAP) | $150.30 | $2.05 | ||
Note: Amounts may not sum due to rounding |
B-1
ENERGEN CORPORATION
605 Richard Arrington, Jr. Blvd. North
Birmingham, Alabama 35203-2707
(205) 326-2700
IMPORTANT ANNUAL MEETING INFORMATION |
Electronic Voting Instructions | ||||||||
Available 24 hours a day, 7 days a week! | ||||||||
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. | ||||||||
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. | ||||||||
Proxies submitted by the Internet or telephone must be received by 11:59 p.m. Eastern Time on April 29, 2015. (April 27, 2015 for Employee Savings Plan Participants) | ||||||||
Vote by Internet | ||||||||
Go to www.investorvote.com/EGN | ||||||||
Or scan the QR code with your smartphone | ||||||||
Follow the steps outlined on the secure website | ||||||||
Vote by telephone | ||||||||
Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone | ||||||||
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. | x |
Follow the instructions provided by the recorded message |
q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
A | Proposals The Board of Directors recommends a vote FOR all the nominees listed, FOR Proposals 2 and 3, and AGAINST Proposals 4 and 5. |
1. Election of Directors- Nominees:
For | Against | Abstain | For | Against | Abstain | +
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01 - William G. Hargett | ¨
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2. Ratification of the appointment of the independent registered public accounting firm. |
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02 - Alan A. Kleier |
3. Approval of the advisory (non-binding) resolution relating to executive compensation. |
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03 - Stephen A. Snider |
Management recommends a vote AGAINST the Shareholder Proposals. | |||||||||||||||||
04 - Gary C. Youngblood |
For | Against | Abstain | |||||||||||||||
4. Shareholder Proposal Methane Gas Emissions Report |
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5. Shareholder Proposal Climate Change Business Risks Report |
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In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
B | Non-Voting Items |
Change of Address Please print new address below. | Comments Please print your comments below. | |||
C | Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below |
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee, guardian, or custodian, please give full title as such.
Date (mm/dd/yyyy) Please print date below. | Signature 1 Please keep signature within the box. | Signature 2 Please keep signature within the box. | ||||||
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0205ED
NOTICE TO EMPLOYEE SAVINGS PLAN PARTICIPANTS. If you are a participant in the Energen Corporation Employee Savings Plan (the Plan) you have the right to direct the Trustee under the Plan how full shares of the Companys Common Stock allocable to your account under the Plan as of February 23, 2015, should be voted at the Annual Meeting of Shareholders of Energen Corporation (the Company). Energens stock transfer agent, Computershare, will forward your instructions to the Vanguard Fiduciary Trust Company, Trustee of the Plan. If directions are not received by the transfer agent on or before April 27, 2015, you will be treated as directing the Plans Trustee to vote your shares in the same proportion as the shares for which the Trustee has received timely instructions from others who do vote.
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders.
The Proxy Statement and the 2014 Annual Report to Shareholders are available at:
www.annualmeeting.energen.com
q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy ENERGEN CORPORATION
Annual Meeting of Shareholders April 30, 2015
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints James T. McManus, II and J. David Woodruff, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Energen Corporation Common Stock which the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Shareholders of the Company to be held April 30, 2015, or at any adjournment or postponement thereof, with all powers which the undersigned would possess if present at the Meeting.
(Continued and to be marked, dated and signed, on the other side)
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IMPORTANT ANNUAL MEETING INFORMATION |
Vote by Internet
Go to www.investorvote.com/EGN
Or scan the QR code with your smartphone
Follow the steps outlined on the secure website |
Important Notice Regarding the Availability of Proxy Materials for the
Energen Shareholder Meeting to be Held on April 30, 2015
Under Securities and Exchange Commission rules, you are receiving this notice that the proxy materials for the annual shareholders meeting are available on the Internet. Follow the instructions below to view the materials and vote online or request a copy. The items to be voted on and location of the annual meeting are on the reverse side. Your vote is important!
This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The proxy statement and annual report to shareholders are available at:
Easy Online Access A Convenient Way to View Proxy Materials and Vote | ||
When you go online to view materials, you can also vote your shares. | ||
Step 1: Go to www.investorvote.com/EGN. | ||
Step 2: Click on the icon on the right to view current meeting materials. | ||
Step 3: Return to the investorvote.com window and follow the instructions on the screen to log in. | ||
Step 4: Make your selection as instructed on each screen to select delivery preferences and vote. |
When you go online, you can also help the environment by consenting to receive electronic delivery of future materials.
Obtaining a Copy of the Proxy Materials If you want to receive a copy of these documents, you must request one. There is no charge to you for requesting a copy. Please make your request for a copy as instructed on the reverse side on or before April 20, 2015 to facilitate timely delivery. | ||
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Energens Annual Meeting of Shareholders will be held on April 30, 2015 at 605 Richard Arrington, Jr. Blvd. N. Birmingham, Alabama at 8:30 a.m. Central Time.
Proposals to be voted on at the meeting are listed below along with the Board of Directors recommendations.
The Board of Directors recommends that you vote FOR the following Proposals:
1. | Election of Directors: William G. Hargett; Alan A. Kleier; Stephen A. Snider; Gary C. Youngblood |
2. | Ratification of Appointment of Independent Registered Public Accounting Firm |
3. | Approval of the advisory (non-binding) resolution relating to executive compensation |
The Board of Directors recommends that you vote AGAINST the following proposals:
4. | Shareholder proposal Methane Gas Emissions Report |
5. | Shareholder proposal Climate Change Business Risks Report |
PLEASE NOTE YOU CANNOT VOTE BY RETURNING THIS NOTICE. To vote your shares you must vote online or request a paper copy of the proxy materials to receive a proxy card. If you wish to attend and vote at the meeting, please bring this notice with you.
NOTICE TO EMPLOYEE SAVINGS PLAN PARTICIPANTS. If you are a participant in the Energen Corporation Employee Savings Plan (the Plan) you have the right to direct the Trustee under the Plan how full shares of the Companys Common Stock allocable to your account under the Plan as of February 23, 2015, should be voted at the Annual Meeting of Shareholders of Energen Corporation (the Company). Energens stock transfer agent, Computershare, will forward your instructions to the Vanguard Fiduciary Trust Company, Trustee of the Plan. If directions are not received by the transfer agent on or before April 27, 2015, you will be treated as directing the Plans Trustee to vote your shares in the same proportion as the shares for which the Trustee has received timely instructions from others who do vote.
Directions to the Energen Corporation 2015 Annual Meeting
Directions to the Energen Corporation 2015 annual
meeting are available by calling Investor Relations at
1-800-654-3206.
Heres how to order a copy of the proxy materials and select a future delivery preference: | ||||
Paper copies: Current and future paper delivery requests can be submitted via the telephone, Internet or email options below. | ||||
Email copies: Current and future email delivery requests must be submitted via the Internet following the instructions below. | ||||
If you request an email copy of current materials you will receive an email with a link to the materials. | ||||
PLEASE NOTE: You must use the number in the shaded bar on the reverse side when requesting a set of proxy materials. | ||||
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Internet Go to www.investorvote.com/EGN. Follow the instructions to log in and order a copy of the current meeting materials and submit your preference for email or paper delivery of future meeting materials. | |||
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Telephone Call us free of charge at 1-866-641-4276 and follow the instructions to log in and order a paper copy of the materials by mail for the current meeting. You can also submit a preference to receive a paper copy for future meetings. | |||
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Email Send email to investorvote@computershare.com with Proxy Materials Energen in the subject line. Include in the message your full name and address, plus the number located in the shaded bar on the reverse, and state in the email that you want a paper copy of current meeting materials. You can also state your preference to receive a paper copy for future meetings. | |||
To facilitate timely delivery, all requests for a paper copy of the proxy materials must be received by April 20, 2015. |
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