United States
Securities and Exchange
Commission
Washington, D.C.
20549
Schedule 14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed
by the Registrant
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Filed
by a Party other than the Registrant
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Check the appropriate
box:
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Preliminary Proxy Statement
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CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS
PERMITTED BY RULE 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
ss.240.14a-12
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(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):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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(1) Title of each class of securities to
which transaction applies:
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(2) Aggregate number of securities to which
transaction applies:
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(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):
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(4) Proposed maximum aggregate value of
transaction:
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(5) Total fee
paid:
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Fee
paid previously with preliminary materials.
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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.
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(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:
Notice of 2016 Annual Meeting of Stockholders and Proxy Statement
840 Gessner Road, Suite 1400, Houston, Texas
77024 | Wednesday, May 4, 2016, 8:00 a.m. (Central Time)
Dear Stockholder:
You are cordially invited to attend the
Annual Meeting of Stockholders of Cabot Oil & Gas Corporation to be held on Wednesday, May 4, 2016, at 8:00 a.m., Central Time,
in our offices, located at 840 Gessner Road, Suite 1400, Houston, Texas 77024.
The attached Notice of Annual Meeting of
Stockholders and Proxy Statement cover the formal business of the meeting. To better acquaint you with the directors, the Proxy
Statement contains biographical information on each nominee for director. Directors and officers of the Company will be present
at the meeting to respond to your questions.
Whether or not you plan to attend the Annual
Meeting, it is important that your shares be represented. Please complete, sign, date and return the enclosed proxy card in the
postage-paid envelope provided, or if your proxy card or voting instructions form so indicates, vote electronically via the Internet
or telephone.
If you plan to attend the Annual Meeting,
please bring a valid government-issued photo identification. If your shares are held in the name of a broker or other nominee,
please bring with you a letter (and a legal proxy if you wish to vote your shares) from your broker or nominee confirming your
ownership as of the record date.
Sincerely,
Dan O. Dinges
Chairman, President and
Chief Executive Officer
March 22, 2016
Notice of Annual Meeting of Stockholders
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May 4, 2016
8:00 a.m., Central Time,
840 Gessner Road, Suite 1400, Houston, Texas 77024
Purpose
of the Meeting:
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1.
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To elect each of the
six persons named in this proxy statement to the Board of Directors of the Company for a one-year term.
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2.
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To ratify the appointment
of the firm PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company for its 2016 fiscal
year.
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3.
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To approve, by non-binding
advisory vote, the compensation of our named executive officers.
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4.
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To consider two shareholder
proposals, if properly presented at the meeting.
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5.
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To transact such other
business as may properly come before the meeting or any adjournments or postponements thereof.
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Each of these items is fully described
in the attached proxy statement, which is made a part of this Notice.
Record date:
Only holders of record of our
common stock on March 7, 2016 will be entitled to notice of and to vote at the Annual Meeting.
Voting Procedures:
Please vote your shares as promptly
as possible, even if you plan to attend the Annual Meeting, by one of the following methods:
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By internet, using the instructions on the proxy card or voting instruction
form received from your broker or bank;
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By telephone, using the instructions on the proxy card or voting
instruction form received from your broker or bank (if available); or
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By mail, by completing and returning the enclosed proxy card or voting
instruction form in the postage-paid envelope provided.
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You may also vote in person if
you attend the Annual Meeting.
If you
plan to attend the Annual Meeting: Registered stockholders will be asked to present a valid
government-issued photo identification.
If your shares are held in the name of your broker, bank or other
nominee, you must bring to the meeting a valid government-issued
photo identification and an account
statement or letter (and a legal proxy if you wish to vote your shares) from the nominee
indicating that
you beneficially owned the shares on the record date for voting. For safety and security reasons, cameras,
camera phones, recording equipment, electronic devices, large bags, brief cases or packages will not be
permitted in the
meeting.
March
22, 2016
By Order
of the Board of Directors,
Deidre L. Shearer
Corporate Secretary and
Managing Counsel
Table of Contents
PROXY SUMMARY
This summary highlights information described
in other parts of this proxy statement, and does not contain all of the information you should consider in voting. Please read
the entire proxy statement before voting. For more complete information regarding our 2015 financial and operating performance,
please review our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which accompanies this Proxy Statement.
Annual Meeting Information
Date and Time
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Place
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May 4, 2016
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840 Gessner Road, Suite 1400
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8:00 a.m. Central Time
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Houston, Texas 77024
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Record Date
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Voting
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March 7, 2016
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Only holders of record of our common stock will be entitled to notice of
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Shares Outstanding: 474,891,615
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and to vote at the Annual Meeting.
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Voting Methods
Method
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Instruction
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log onto www.proxyvote.com and use the instructions on the proxy card or voting instruction form received from your broker or bank;
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By internet
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dial 1.800.690.6903 and use the instructions on the proxy card or voting instruction form received from your broker or bank (if available); or
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By telephone
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by completing and returning the enclosed proxy card or voting instruction form in the postage-paid envelope provided.
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By mail
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Matters to be Voted on and Recommendation
Proposal
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Matter
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Board Vote
Recommendation
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Page
Reference
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1.
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The election of director candidates named herein;
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FOR
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12
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2.
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Ratification of the appointment of the firm PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company for its 2016 fiscal year;
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FOR
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59
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3.
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The approval on an advisory basis of executive compensation;
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FOR
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59
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4.
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A shareholder proposal to provide a report on the Company’s political contributions, if properly presented at the meeting; and
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AGAINST
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60
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5.
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A shareholder proposal to amend the Company’s “proxy access” bylaw, if properly presented at the meeting.
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AGAINST
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63
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Cabot Oil & Gas Corporation
- 2016
Proxy Statement
8
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Director Nominees
Name
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Independent
Director
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Age
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Years
Served
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Primary Occupation
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Committee
Memberships
(1)
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Other Public Company
Boards
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Dan O. Dinges
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N
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62
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14
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Chairman, President and CEO of Cabot Oil & Gas
Corporation
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E
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United States Steel Corporation
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Dorothy M. Ables
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Y
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58
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*
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Chief Administrative Officer of Spectra Energy Corp.
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A, C
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Spectra Energy Partners, LP
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Rhys J. Best
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Y
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69
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7
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Non-Executive Chairman of the Board of Austin Industries, Inc. and former Chairman and CEO of Lone Star Technologies, Inc.
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A,
C
, CG
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Trinity Industries, Inc. MRC Global Inc. Commercial Metals
Company
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Robert S. Boswell
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Y
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58
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*
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Chairman and CEO of Laramie Energy II, LLC
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A, S
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Enerflex, Ltd. (Canadian)
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Robert Kelley
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Y
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70
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12
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Retired Chairman and former President and CEO of Noble Affiliates, Inc.
(now Noble Energy Inc.)
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A,
CG, S,
E
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OGE Energy Corporation
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W. Matt Ralls
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Y
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66
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4
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Chairman and former CEO and President of Rowan Companies plc
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C,
CG
,
S
, E
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Rowan Companies plc
Superior Energy
Services, Inc.
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*Board
member since 12/01/2015
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Average director tenure: 6.2 years
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(1)
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Bold font indicates Chairman of Committee
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A
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Audit Committee
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C
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Compensation Committee
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CG
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Corporate Governance & Nominations Committee
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S
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Safety & Environmental Affairs Committee
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E
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Executive Committee
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Governance Highlights
•
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Proxy access for stockholders
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•
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Separate Board committee devoted entirely to safety and environmental matters
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•
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Director orientation and continuing education
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Political contributions disclosures on our website
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A declassified Board
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Annual Board and committee self-assessments
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Majority voting for director elections
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Active Board oversight of Company risks
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Average director tenure is 6.2 years
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Sustainability disclosures on our website
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Our CEO is the only non-independent director
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Stockholders may act by written consent
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An independent lead director chairs executive sessions of independent directors at each regular Board meeting
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No poison pill
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•
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Mandatory director retirement at age 73
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Cabot Oil &
Gas Corporation
- 2016 Proxy Statement
9
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2015 Financial and Operational Highlights
In spite of the challenges in the energy
industry that began in the second half of 2014 and continued during 2015, our business strategy of delivering value by growing
reserves and production in a cost-effective manner continued to deliver solid operational results in 2015. Specifically:
•
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Total year-end proved reserves grew to 8.2 Tcfe in 2015, a 10.7% increase over 2014;
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Absolute production was 602.5 Bcfe, 13.3% higher than 2014 production; and
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The Company’s “all sources” finding cost was $0.57 per Mcfe for 2015 and $0.62 per Mcfe over the last three year period.
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These recent achievements are consistent
with the positive trend in these operating metrics experienced over the last several years, as highlighted below.
This substantial growth in reserves and production
over the last three years has been accompanied by a 20% decline in our finding costs per unit and a 36% decline in our total operating
costs per unit. These achievements translated into top tier operating performance for this period. As indicated below, during a
five year period, our TSR outpaced an index of our peer group.
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*
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Antero Resources Corp., Chesapeake Energy Corp., Cimarex Energy Company, Concho Resources Inc., Continental Resources Inc.,
Devon Energy Corp., Encana Corp., EQT Corp., Marathon Oil Corp., Murphy Oil Corp., Newfield Exploration Company,
Noble Energy Inc, Pioneer Natural Resources Company, QEP Resources Inc., Range Resources Corp.,
Southwestern Energy Company.
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Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
10
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Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
11
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PROPOSAL 1 ELECTION OF DIRECTORS
The size of the Board of Directors is currently
set at seven members, each of whose terms expire in 2016. Effective upon the date of the 2016 Annual Meeting, however, the size
of the Board of Directors will be reduced to six to reflect the retirement of Robert L. Keiser, one of our current directors, pursuant
to our mandatory director retirement policy. Accordingly, the Board of Directors has nominated six directors to be elected
at the 2016 Annual Meeting. The Board is fully declassified and all directors will stand for election for one-year terms.
Each of the nominees are currently directors
and have been nominated for election at the 2016 Annual Meeting for terms of one year, each to hold office until the expiration
of his or her term in 2017 and until his or her successor shall have been elected and shall have qualified. The business experience
of each nominee as well as the qualifications that led our Board to select each nominee for election to the Board is discussed
below.
The Board believes that the combination of
the various qualifications, skills and experiences of the 2016 director nominees would contribute to an effective and well-functioning
Board. Whether nominated by a shareholder or through the activities of the Committee, the Corporate Governance and Nominations
Committee seeks to select candidates who have:
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personal and professional integrity;
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•
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a record of achievement, and a position of leadership in his/her field with the interest
and intellect to be able to address energy industry challenges and opportunities;
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the ability to think strategically and the insight to assist management in placing
the Company in a competitive position within the industry; and
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the time to attend Board meetings and the commitment to devote any reasonable required
additional time to deal with Company business.
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The Board and the CGN Committee believe that,
individually and as a whole, the Board possesses the necessary qualifications, varied tenure and independence to provide effective
oversight of the business and quality advice and counsel to the Company’s management.
The persons named in the enclosed form of
proxy intend to vote such proxies
FOR
the election of each of the nominees for terms of one year. If any one of the nominees
is not available at the time of the Annual Meeting to serve, proxies received will be voted for substitute nominees to be designated
by the Board of Directors or, in the event no such designation is made by the Board, proxies will be voted for a lesser number
of nominees. In no event will the proxies be voted for more than the number of nominees set forth above.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE
FOR
THE ELECTION OF EACH OF THE NOMINEES TO THE BOARD OF DIRECTORS.
Certain Information Regarding Nominees
Set forth below, as of March 1, 2016, for
each nominee for election as a director of the Company, is biographical information and information regarding the business experience,
qualifications and skills of each director nominee that led the Board to conclude that the director is qualified to serve on our
Board. Mr. Dinges, Chairman, President and Chief Executive Officer, is the only employee or former employee of the Company
on the Board of Directors.
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Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
12
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Dorothy M. Ables
Age:
58
Director Since:
2015
Committee Memberships:
Audit,
Compensation
Business Experience:
•
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Spectra Energy Corp
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-
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Chief Administrative Officer – November 2008 to present
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-
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Vice President, Audit Services and Chief Ethics & Compliance Officer – 2007 to November 2008
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•
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Duke Energy Corporation
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Vice President, Audit Services – 2004 to 2006
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•
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Duke Energy Gas Transmission
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(Senior) Vice President and Chief Financial Officer – 1998 to 2004
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Other Directorships:
•
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Spectra Energy Partners, LP
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-
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2013 to present
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Key skills, attributes and qualifications:
Ms. Ables was appointed to our Board
of Directors in December 2015 and is being nominated for election by the stockholders for the first time. Ms. Ables brings
a depth of experience in the transportation aspects of our industry, having served in positions of leadership with Spectra Energy
Corp and its predecessor companies for over 30 years, as well as extensive financial expertise to our Board. The Board considered
Ms. Ables’ extensive experience in the pipeline, processing and midstream business as adding value to our stockholders
at a time in our business when transportation is crucial to our strategy. Ms. Ables’ financial expertise acquired through
serving as Chief Financial Officer of Duke Energy Gas Transmission and later as Vice President of Audit Services of both Spectra
Energy Corp and Duke Energy was also a key attribute leading to her appointment. Most recently, Ms. Ables has gained executive
experience as the Chief Administrative Officer of Spectra Energy Corp, with responsibility for human resources, information technology,
community relations and support services. Ms. Ables has prior governance experience gained from service on the Board of Directors
for Spectra Energy’s publicly traded master limited partnership, Spectra Energy Partners, LP, and is very active in community
and charitable endeavors, including serving on the Board of Trustees of United Way of Greater Houston since 2008. This diversity
of background and leadership experience makes her a valuable addition to our Board and to the Audit and Compensation Committees
of our Board.
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Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
13
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Rhys J. Best
Age:
69
Director Since:
2008
Committee Memberships:
Audit,
Compensation (Chairman), Corporate Governance and Nominations
Business Experience:
•
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Austin Industries, Inc.
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-
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Non-Executive Chairman of the Board – 2012 to present
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•
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Crosstex Energy L.P.
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-
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Chairman of the Board (non-executive) – 2009 to March 2014
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•
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Lone Star Technologies, Inc.
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-
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Chairman and Chief Executive Officer – 1999 to 2007
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Other Directorships:
•
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Crosstex Energy L.P. (until 2014)
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•
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Trinity Industries, Inc.
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•
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MRC Global Inc.
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•
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Commercial Metals Company
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Key skills, attributes and qualifications:
Mr. Best brings over 30 years of significant
management, leadership, transactional and financial experience to our Board. Recently, he served as Non-executive Chairman of the
Board of Crosstex Energy L.P., a large publicly traded midstream company, from 2009 through its combination with the midstream
assets of Devon Energy Corporation in March 2014 to create EnLink Midstream Partners, LP, one of the largest midstream companies
in the United States. This tremendous experience enables him to provide valuable insights into the transportation aspects of our
business and enhances the overall strategic oversight capabilities of our Board. Mr. Best’s distinguished career includes
serving as Chairman and CEO of Lone Star Technologies, Inc., a former publicly traded company servicing the oil and natural gas
industry, and holding positions of leadership in the banking industry. In addition to his considerable management and financial
expertise, Mr. Best brings to bear an extensive corporate governance background from his current and former service on public
company boards. This diverse experience enables Mr. Best to bring unique and valuable perspectives to the Board and make him
particularly qualified to serve as the Chairman of the Compensation Committee and a member of the Audit Committee of the Board.
In recognition of his exemplary service on corporate boards, the National Association of Corporate Directors named Mr. Best
“2014 Director of the Year.”
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Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
14
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Robert S. Boswell
Age:
66
Director Since:
2015
Committee Memberships:
Audit,
Safety and Environmental Affairs
Business Experience:
•
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Laramie Energy LLC
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-
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Chairman of the Board and Chief Executive Officer – 2007 to present
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•
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Laramie Energy I, LLC
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-
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Chairman of the Board and Chief Executive Officer – 2004 to 2007
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•
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Forest Oil Corporation
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-
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Chairman of the Board and Chief Executive Officer – 1989 to 2003
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Other Directorships:
•
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Enerflex, Ltd.
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-
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June 2011 to present
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Key skills, attributes and qualifications:
Mr. Boswell is one of the two directors
to join our board in December 2015 and is being nominated for election by the stockholders for the first time. Mr. Boswell
has management and operating experience as an executive in the upstream industry, and brings an extensive technical understanding
of the development of oil and gas reserves, as well as financial expertise to our Board. Mr. Boswell’s distinguished
career includes serving as Chairman and Chief Executive Officer of exploration and production companies for over 26 years, including
overseeing the turnaround of Forest Oil Corporation, a mid-sized public exploration and production company, and the sale of Laramie
Energy I, a private company which he founded, for over $1 billion. Throughout his career, Mr. Boswell has successfully led
a number of upstream companies through the life cycle of capital-raising; growing reserves, production and profitability through
both acquisitions and development of existing properties, and sale or merger and acquisition transactions. His most recent success
with private companies Laramie Energy I and his current venture, Laramie Energy LLC, operating in the Piceance Basin, has provided
him with tremendous experience in unconventional resource plays, which is relevant to the Company’s operations in both the
Marcellus shale and the Eagle Ford shale. He also brings extensive financial expertise gained through both acting as Chief Financial
Officer of public and private companies and supervising them as Chief Executive Officer. Mr. Boswell is currently serving
as a director of Enerflex Ltd., a Canadian public company that manufactures and sells natural gas transmission and process equipment
worldwide. Mr. Boswell’s management, technical and financial expertise makes him an invaluable addition to our Board,
as well as to the Audit and Safety and Environmental Committees of the Board.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
15
|
Dan O. Dinges
Age:
62
Director Since:
2001
Committee Memberships:
Executive
Position:
Chairman, President
and Chief Executive Officer
Business Experience:
•
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Cabot Oil & Gas Corporation
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-
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Chairman, President and Chief Executive - Officer – May 2002 to present
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Other Directorships:
•
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United States Steel Corporation
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Private/Non-profit Directorships:
•
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Spitzer Industries, Inc. (private company)
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•
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American Exploration & Production Council
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•
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Foundation for Energy Education
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Key skills, attributes and qualifications:
Mr. Dinges brings to the Board over
30 years of executive management experience in the oil and gas exploration and production business, and as our Chief Executive
Officer for the last 14 years, a deep knowledge of our business, operations, culture and long-term strategy and goals. Mr. Dinges
joined the Company in September 2001, after a successful 20 year career in various management positions with the predecessor to
Noble Energy, Inc., and has overseen an era of tremendous growth for the Company. His steadfast leadership as Chairman of the Board
provides the Board with extensive institutional knowledge and continuity, as well creating a vital link between management and
the Board. Mr. Dinges also possesses a diversity of corporate governance experience gained from service on the Board of United
States Steel Corporation and several charitable and industry organizations.
Robert Kelley
Age:
70
Director Since:
2003
Committee Memberships:
Audit
(Chairman), Executive (Chairman), Corporate Governance and Nominations, Safety and Environmental Affairs
Position:
Lead Director
Business Experience:
•
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Kellco Investments, Inc. (private investment company)
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-
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President – April 2001 to present
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•
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Noble Affiliates, Inc. (now Noble Energy Inc.)
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-
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Chairman of the Board – 1992 to April 2001
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-
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President and CEO – 1986 to October 2000
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Other Directorships:
Key skills, attributes and qualifications:
Mr. Kelley’s extensive experience
in the financial, accounting and executive management of public energy companies, as well as corporate governance experience as
a director of several public energy companies, makes him particularly valuable as a member of our Board and as our Audit Committee
Chairman for the past seven years. Mr. Kelley’s experience as President and CEO and later Chairman of the Board of Noble
Energy Inc. provides him with valuable operational, leadership and management experience. Mr. Kelley’s accounting and
finance background gained while serving industry clients as a CPA for a national public accounting firm and while serving in positions
of senior leadership in accounting and finance roles at a predecessor to Noble Energy also brings vital financial expertise to
our Audit Committee. Mr. Kelley’s 12 years of service to our Board provides a continuity of leadership and an understanding
of our business and strategy that is crucial to the effective functioning of our Board. This depth of experience with Cabot is
especially valuable in his role as our Lead Independent Director since 2015.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
16
|
W. Matt Ralls
Age:
66
Director Since:
2011
Committee Memberships:
Corporate
Governance and Nominations (Chairman), Safety and Environmental Affairs (Chairman), Compensation, Executive
Business Experience:
•
|
Rowan Companies plc
|
|
-
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Executive Chairman – April 2014 to present
|
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-
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Chief Executive Officer – 2013 to April 2014
|
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-
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President and Chief Executive Officer – 2009 to 2013
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Other Directorships:
•
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Rowan Companies plc
|
|
|
•
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Superior Energy Services, Inc.
|
Key skills, attributes and qualifications:
Mr. Ralls’ diverse operational,
financial and executive management experience in various roles in the oil and gas industry, including most recently within the
drilling segment of the industry, provides the Board with a wealth of expertise from which to draw. Mr. Ralls’ recent
service as President and CEO of Rowan Companies, and his combined fifteen years’ executive management experience at Rowan
and GlobalSanteFe Corporation, both international contract drilling companies, provides valuable management and financial expertise
and insight into an aspect of our business that represents a significant portion of our capital expenditure budget. Prior to his
drilling industry experience, Mr. Ralls served as Executive Vice President of a public upstream oil and gas company, which
gave him a thorough understanding of our core business. In his service to the Board, Mr. Ralls is also able to draw from his
17 years of experience in various banking management positions with three large Texas-based commercial lenders to the energy industry.
Mr. Ralls’ extensive public company board experience makes him an invaluable member of the Corporate Governance and
Nominations Committee and Chairman since 2015. His effectiveness chairing such committee is enhanced by his positions of leadership
on the boards of several industry trade associations, including the International Association of Drilling Contractors and the American
Petroleum Institute.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
17
|
SECURITY OWNERSHIP
Principal Stockholders
The following table reports beneficial ownership of the Common
Stock by holders of more than five percent of the Company’s Common Stock. Unless otherwise noted, all ownership information
is based upon filings made by such persons with the SEC.
Name and Address of
Beneficial
Owner
|
|
Number of Shares
of Common Stock
Owned
|
|
|
Percent of
Class
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The Vanguard Group
|
|
36,735,278
|
(1)
|
|
|
8.87
|
%
|
Capital Research Global Investors
|
|
31,940,528
|
(2)
|
|
|
7.70
|
%
|
Viking Global Investors LP
O. Andreas
Halvorsen
David C. Ott
Daniel S. Sundheim
|
|
30,853,936
|
(3)
|
|
|
7.50
|
%
|
BlackRock, Inc.
|
|
28,169,844
|
(4)
|
|
|
6.80
|
%
|
State Street Corporation
|
|
25,896,080
|
(5)
|
|
|
6.30
|
%
|
FMR LLC,
Mr. Edward C. Johnson
3d and
Abigail P. Johnson
|
|
21,297,498
|
(6)
|
|
|
5.15
|
%
|
Viking Global Performance LLC
|
|
21,118,373
|
(7)
|
|
|
5.10
|
%
|
(1)
|
According to Amendment No. 5 to a Schedule 13G, dated February 10, 2016, filed
with the Commission by The Vanguard Group (100 Vanguard Blvd., Malvern, PA 19355), it has sole voting power over 775,340 of these
shares, shared voting power over 40,400 of these shares, shared dispositive power over 821,722 of these shares and sole dispositive
power over 35,913,556 of these shares.
|
(2)
|
According to Amendment No. 2 to a Schedule 13G, dated December 31, 2015, filed
with the Commission by Capital Research Global Investors (333 South Hope Street, Los Angeles, CA 90071), it has sole voting power
and sole dispositive power over all 31,940,528 of these shares.
|
(3)
|
According to Schedule 13G, dated January 21, 2016, filed with the Commission by
Viking Global Investors LP, or VGI, O. Andreas Halvorsen, David c. Ott and Daniel S. Sundheim (55 Railroad Avenue, Greenwich,
CT 06830), they each have shared voting power and shared dispositive power over all 30,853,936 of these shares. VGI does not directly
own any shares but has the authority to dispose of and vote the shares of Viking Global Equities LP, or VGE, Viking Global Equities
II LP, or VGEII, VGE III Portfolio Ltd., or VGEIII, Viking Long Fund Master Ltd., or VLFM, and Viking Global Opportunities Liquid
Portfolio Sub-Master LP, or Opportunities Fund, and may be deemed to beneficially own those shares. The shares reported by VGI
include those shares separately reported by VGE, VGEII, VGEIII, VLFM and Opportunities Fund. O. Andreas Halvorsen, David c. Ott
and Daniel S. Sundheim do not directly own any shares but have shared authority to dispose of and vote the shares of VGI, and
may each be deemed to beneficially own those shares.
|
(4)
|
According to Amendment No. 6 to a Schedule 13G, dated January 22, 2016, filed with
the Commission by BlackRock, Inc. (55 East 52nd Street, New York, NY 10055), it has sole voting power over 24,711,735 shares and
sole dispositive power over all 28,169,844 of these shares.
|
(5)
|
According to Schedule 13G, dated February 12, 2016, filed with the Commission by
State Street Corporation (One Lincoln Street, Boston, MA 02111), it has shared voting power and shared dispositive power over
all 25,869,080 of these shares.
|
(6)
|
According to Amendment No. 4 to a Schedule 13G, dated February 12, 2016, filed
with the Commission by FMR LLC, or FMR, Mr. Edward C. Johnson 3d and Abigail P. Johnson (245 Summer Street, Boston, MA 02210),
FMR has sole voting power with respect to 1,212,652 of these shares and sole dispositive power over all 21,297,498 shares as a
result of being a parent holding company or control person of several other entities in accordance with Rule 13d-1(b)(ii)(G).
Mr. Edward C. Johnson 3d and Abigail P. Johnson, together with members of their family, through direct or indirect ownership of
voting common shares of FMR, may be deemed to form a controlling group with respect to FMR and may, therefore, be considered to
be beneficial owners of the shares beneficially owned by FMR.
|
(7)
|
According to Schedule 13G, dated January 21, 2016, filed with the Commission by
Viking Global Performance LLC, or VGP (55 Railroad Avenue, Greenwich, CT 06830), it has shared voting power and shared dispositive
power over all 21,118,373 of these shares. VGP does not directly own any shares but has the authority to dispose of and vote the
shares of VGE and VGEII, and may be deemed to beneficially own those shares. The shares reported by VGP include those shares separately
reported by VGE and VGEII.
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
18
|
Directors and Executive Officers
The following table reports, as of February 1, 2016, beneficial
ownership of Common Stock by each director and nominee for director, by each named executive officer listed in the “Summary
Compensation Table” below and by all directors, nominees and executive officers as a group. Unless otherwise indicated, the
persons below have sole voting and investment power with respect to the shares of Common Stock showed as beneficially owned by
them.
Name of Beneficial Owner
|
|
|
Number of Outstanding
Shares of Common
Stock Held
|
|
|
Number of Shares of Common
Stock Beneficially Owned
|
|
|
Percent of Class
|
Dorothy
M. Ables
|
|
|
5,000
|
(1)
|
|
|
5,381
|
(1)(2)
|
|
|
*
|
|
Rhys J. Best
|
|
|
15,000
|
|
|
|
102,649
|
(2)
|
|
|
*
|
|
Robert S. Boswell
|
|
|
0
|
|
|
|
191
|
(2)
|
|
|
*
|
|
Robert L. Keiser
|
|
|
100,670
|
|
|
|
236,188
|
(2)
|
|
|
*
|
|
Robert Kelley
|
|
|
337,652
|
|
|
|
498,889
|
(2)
|
|
|
*
|
|
W. Matt Ralls
|
|
|
0
|
|
|
|
43,701
|
(2)
|
|
|
*
|
|
Dan O. Dinges
|
|
|
3,464,119
|
(7)
|
|
|
3,835,167
|
(3)(4)(7)
|
|
|
*
|
|
Scott C. Schroeder
|
|
|
1,359,058
|
(8)
|
|
|
1,391,750
|
(4)(8)
|
|
|
*
|
|
Jeffrey W. Hutton
|
|
|
598,025
|
|
|
|
647,689
|
(3)(4)(5)
|
|
|
*
|
|
Phillip L. Stalnaker
|
|
|
217,952
|
|
|
|
253,983
|
(3)(4)(5)
|
|
|
*
|
|
G. Kevin Cunningham
|
|
|
65,188
|
|
|
|
109,040
|
(3)(4)(5)
|
|
|
*
|
|
All
directors, nominees and executive officers as a group (16 individuals). . . . . . .
|
7,459,367
|
(1)(2)(3)(4)(5)(6)(7)
|
|
|
1.8%
|
(9)
|
|
|
|
|
|
|
|
*
|
Represents less than 1% of the outstanding Common Stock.
|
(1)
|
Includes 5,000 shares held by immediate family member, with respect to which Ms.
Ables has shared voting and investment power.
|
(2)
|
Includes the following restricted stock units held as of February 1, 2016, as to
which the restrictions lapse upon the holders’ retirement from the Board of Directors: Ms. Ables, 381; Mr. Best, 87,649;
Mr. Boswell 191; Mr. Keiser, 135,518; Mr. Kelley, 161,237; and Mr. Ralls, 43,701; and all directors, nominees and executive officers
as a group, 428,677. No executive officers hold restricted stock units.
|
(3)
|
Includes the following stock appreciation rights that are exercisable on or before
April 1, 2016: Mr. Dinges, 294,804; Mr. Hutton, 39,642; Mr. Stalnaker, 26,720; Mr. Cunningham, 34,978; and all directors, nominees
and executive officers as a group, 441,074. No directors or nominees hold stock appreciation rights. The SARs were granted prior
to 2013 and vest ratably over a three-year period after grant and have a seven year term. For more information on the SARs, see
footnote 1 to the “Outstanding Equity Awards at Fiscal Year-End 2015” table below.
|
(4)
|
Includes the following shares awarded pursuant to the hybrid performance share
awards granted in 2013, 2014 and 2015 that vested in February 2016, as a result of 2015 operating results meeting the performance
criteria established on the date of grant: Mr. Dinges, 76,244; Mr. Schroeder, 32,692; Mr. Hutton, 10,022; Mr. Stalnaker, 9,311;
Mr. Cunningham, 8,874; and all directors, nominees and executive officers as a group, 156,173. No directors or director nominees
hold hybrid performance shares. For more information on the hybrid performance shares see “Long-Term Incentives” in
the “Compensation Discussion and Analysis” below.
|
(5)
|
Includes the following shares held in the Company’s Savings Investment Plan
as of December 31, 2015 as to which the reporting person shares voting power with the trustee of the plan: Mr. Hutton, 6,759;
Mr. Cunningham, 17,965; Mr. Stalnaker, 16,439; and all directors, nominees and executive officers as a group, 69,976.
|
(6)
|
Includes the following shares awarded in 2013 pursuant to employee performance
awards that vested in March 2015, as a result of 2015 operating results meeting the performance criteria established on the date
of grant: all directors, nominees and executive officers as a group, 2,900.
|
(7)
|
Includes 902,810 shares held in trust for the benefit of an immediate family member,
with respect to which Mr. Dinges has shared voting and investment power.
|
(8)
|
Includes 15,102 shares held by immediate family members, with respect to which
Mr. Schroeder has shared voting and investment power.
|
(9)
|
There were 414,058,298 shares outstanding on February 1, 2016.
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
19
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company’s executive officers and directors to file initial reports of ownership and reports of changes in ownership of
Company Common Stock with the SEC and, pursuant to rules promulgated under Section 16(a), such individuals are required to furnish
the Company with copies of Section 16(a) reports they file. Based solely on a review of the copies of such reports furnished to
the Company, and written representations that those reports accurately reflect all reportable transactions and holdings, all reports
required by Section 16(a) were filed in 2015.
CORPORATE GOVERNANCE MATTERS
Board of Directors Independence
The Company’s Corporate Governance Guidelines require that
at least a majority of the Company’s directors be independent under the New York Stock Exchange (“NYSE”) listing
standards and all other applicable legal requirements. Additionally, all members of the Audit Committee, Compensation Committee
and Corporate Governance and Nominations Committee are required to be independent. The NYSE listing standards include objective
tests that can disqualify a director from being treated as independent, as well as a subjective element, under which the Board
must affirmatively determine that each independent director has no material relationship with the Company or management. In making
its independence determinations, the Board considered all material relationships with each director, and all transactions since
the start of 2013 between the Company and each director nominee, members of their immediate families or entities associated with
them.
The Board has adopted categorical standards to assist it in making
independence determinations. A relationship falls within these categorical standards if it:
•
|
Is a type of relationship addressed in Section 303A.02 (b) of the NYSE Listed Company
Manual, but under those rules does not preclude a determination of independence;
|
|
|
•
|
Is a type of relationship or transaction addressed in Item 404 of Regulation S-K,
but under that regulation does not require disclosure; or
|
|
|
•
|
Consists of charitable contributions by the Company to an organization where a director
is an executive officer which do not exceed the greater of $1 million or 2% of the organization’s gross revenue in any of
the last three years.
|
The Board of Directors has determined that each director’s
relationship with the Company, with the exception of Mr. Dinges, the Chairman, President and Chief Executive Officer, falls within
the categorical standards and that all directors, with the exception of Mr. Dinges, are independent. In making its subjective determination
that each non-employee director is independent, the Board reviewed and discussed additional information provided by the directors
and the Company with regard to each director’s business and personal activities as they may relate to the Company and the
Company’s management. The Board considered the transactions in the context of the NYSE’s objective listing standards,
the categorical standards noted above, the additional standards established for members of audit committees, and the SEC, U.S.
Internal Revenue Service and NYSE standards for compensation committee members. Some members of the Company’s Board also
serve as directors of other entities with which the Company does business. Each of these relationships is reviewed by the Board,
which examines the amount of business done by the Company and the other entities and the gross revenue for each of the other entities.
This review is for each of the last three fiscal years for which financial data is available. This review applied
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
20
|
to Ms. Ables and Messrs. Best and Ralls. Based on all of the foregoing,
the Board made a subjective determination that, because of the nature of the transaction, the director’s relationship with
the other entity and/or the amount involved, no relationships exist that, in the opinion of the Board, would impair the director’s
independence. Further, the Board of Directors has determined that all members of the Audit Committee, Compensation Committee and
Corporate Governance and Nominations Committee are independent.
Director Nominations and Qualifications
Under its charter, the Corporate Governance and Nominations (“CGN”)
Committee seeks out and evaluates qualified candidates to serve as Board members as necessary to fill vacancies or the additional
needs of the Board, and considers candidates recommended by shareholders and management of the Company. The CGN Committee identifies
nominees through a number of methods, which may include retention of professional executive search firms, use of publicly available
director databases or referral services and recommendations made by incumbent directors. A resume is reviewed and, if merited,
an interview follows. Any shareholder desiring to propose a nominee to the Board of Directors should submit such proposed nominee
for consideration by the CGN Committee, including the proposed nominee’s qualifications, to Ms. Deidre L. Shearer, Corporate
Secretary, Cabot Oil & Gas Corporation, 840 Gessner Road, Suite 1400, Houston, Texas 77024. Shareholders who meet certain requirements
specified in our by-laws may also nominate candidates for inclusion in our proxy materials for an annual meeting as described in
“General Information.” There are no differences in the manner in which the CGN Committee evaluates nominees for director
based on whether the nominee is recommended by a shareholder or the incumbent directors.
Whether nominated by a shareholder or through the activities of
the Committee, the CGN Committee seeks to select candidates who have personal and professional integrity, who have demonstrated
exceptional ability and judgment and who will be most effective, in conjunction with the other nominees and Board members, in collectively
serving the long-term interests of the Company and its shareholders. The CGN Committee’s assessment of candidates will include,
but not be limited to, considerations of character, judgment, diversity, age, expertise, industry experience, independence, other
board commitments and the ability and willingness to devote the time and effort necessary to be an effective board member. The
CGN Committee has adopted minimum criteria for Board membership that include (i) a strong commitment to his/her fiduciary responsibilities
to the Company’s shareholders, with no actual or perceived conflict of interest that would interfere with his/her responsibilities
to or relationships with the Company’s shareholders, employees, suppliers, and customers; (ii) the ability to think strategically
and the insight to assist management in placing the Company in a competitive position within the industry; (iii) a record of achievement,
and a position of leadership in his/her field, with the interest and intellect to be able to address energy industry challenges
and opportunities; and (iv) the time to attend Board meetings and the commitment to devote any reasonable required additional time
to deal with Company business.
Board of Directors Diversity
The Board of Directors encourages a diversity of backgrounds,
including with respect to race, gender and national origin, among its members; however, it does not have a formal diversity policy.
The Board considers candidates with significant direct or indirect energy industry experience that will provide the Board as a
whole the talents, skills, diversity and expertise to serve the long-term interests of the Company and its shareholders. For more
information on specific minimum qualifications that the CGN Committee has established for board candidates, see “Director
Nominations and Qualifications” above.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
21
|
Board of Directors Orientation and Continuing Education
Each new director appointed to fill a vacancy or elected at the
annual meeting of stockholders undergoes an orientation program immediately upon joining the Board. The program adopted by the
Company includes in-person meetings with the Chairman and CEO and other key officers to discuss Company business and strategy,
review of a comprehensive director handbook that encompasses all Board policies and procedures and corporate documents, access
to the Board’s portal containing all past board meeting materials and a briefing by the Corporate Secretary as to the legal
requirements and obligations of Board membership. New directors will typically attend all Board committee meetings for at least
the first year of membership, to familiarize them with the areas of responsibility of each committee. In December 2015, two newly-appointed
directors, Ms. Ables and Mr. Boswell, began the director orientation program.
All of our directors are encouraged to pursue continuing education
opportunities for directors of public companies, generally, and the Company will reimburse directors for reasonable expenses incurred
in connection with one such continuing education program each year.
Board of Directors Leadership Structure
Mr. Dinges serves as the Chairman of the Board, President and
Chief Executive Officer of the Company. We believe that our Board of Directors is best served by combining the roles of Chairman
and CEO and that Mr. Dinges is highly qualified to serve in this role.
The Chairman and CEO is responsible to the Board for the overall
management and functioning of the Company. The Chairman is joined in the leadership of the Board by our Lead Director, who is elected
by the non-management directors. In February 2015, the CGN Committee recommended and the non-management directors appointed, Mr.
Kelley as the Lead Director, replacing Mr. Peacock who served as Lead Director since 2005 and retired from the Board at the 2015
annual meeting. Mr. Kelley has significant board experience and has served on the Company’s Board since 2003 and on other
public company boards, as well as serving as the Company’s Audit Committee Chairman since 2008. Mr. Kelley performs an important
role in the leadership of the Board by presiding at executive sessions of the non-management directors, which are held at each
regular Board meeting, and setting the agenda for these sessions. Mr. Kelley also serves as a mentor to Mr. Dinges and as a liaison
between Mr. Dinges and the other independent directors. Mr. Kelley’s longevity on the Board enhances this leadership role
and provides for continuity among the non-employee directors.
In addition to the Lead Director, our Corporate Governance Guidelines
also contain strong checks and balances regarding the combined role of CEO and Chairman. Those provisions include the inability
of the CEO to serve on any committees of the Board other than the Executive Committee, as only non-management directors may do
so, and the requirement that a substantial majority of the directors be independent, as discussed above under “Board of Directors
Independence.” All of our directors, other than Mr. Dinges, are independent.
Our Board of Directors has determined that its current leadership
structure is appropriate. The Board believes that Mr. Dinges, acting in his capacity as CEO of the Company, is well positioned
to facilitate communications with the Board of Directors about our business. Mr. Dinges has served in this capacity since May 2002,
during which time the Company’s business has undergone signification changes. None of the returning independent directors
was serving at that time, so Mr. Dinges provides continuity and historical perspective to the Board. Under Mr. Dinges’ leadership,
the Company has grown from a market capitalization of approximately $800 million with operations in onshore Texas and Louisiana
Gulf Coast, the Rocky Mountains, the Anadarko Basin and Appalachia to an over $7.3 billion market capitalization company as of
December 31, 2015, with most of its reserves in the Marcellus Shale area in northeast Pennsylvania. Mr. Dinges has the full confidence
of the Board. For all these reasons, the Board has determined that the most appropriate form of leadership for the Board of Directors
currently is for the CEO, who is responsible for the day-to-day operations of the Company, to serve as Chairman, with strong and
independent oversight by the Lead Director and the other non-management directors.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
22
|
Board of Directors Oversight of Risk
The Board of Directors considers risk oversight to be an integral
part of its role, and discussions regarding risks faced by the Company are part of its meetings and deliberations throughout the
year. Our Corporate Governance Guidelines provide that the Board is responsible for assessing major risks facing the Company and
reviewing options for their mitigation. At the direction of the Board, management is responsible for implementing an enterprise
risk management process and reporting to the Board at least annually regarding its assessment of risks that could have a significant
impact on the Company and the strategies for their mitigation. In this way, the Board is engaged in risk oversight at the enterprise
level.
The Board is also engaged in risk oversight through regular reports
from the Audit Committee. The Audit Committee is charged with reviewing with management and the Company’s internal auditors
the Company’s major financial exposures and the steps management has taken to monitor and control those exposures. The Audit
Committee receives periodic reports from management on these areas of potential exposure, including litigation, commodity price
hedging, liquidity and capital resources, financial reporting and disclosures and regulatory risks, among others. The Audit Committee
also receives reports from management regarding compliance with our Code of Business Conduct. The Audit Committee reviews at least
annually the Company’s policies and guidelines concerning financial risk assessment and financial risk management, with the
assistance of the Company’s internal auditors, KPMG LLP. KPMG LLP conducts a process of assessing major risks, including
management interviews, and presents and discusses with the Audit Committee its conclusions regarding the Company’s major
risks. From this process, areas of concern are identified and considered and the internal audit plan is developed. Results of these
reviews and audits are presented to the Audit Committee throughout the year. At each regular Board meeting, the Audit Committee
Chairman reports to the Board regarding the activities of the Committee.
Corporate Governance Guidelines
Our Corporate Governance Guidelines outline the functions and
responsibilities of the Board, director qualifications, and various processes and procedures designed to ensure effective and responsive
governance. The guidelines are reviewed annually and revised as appropriate to reflect changing regulatory requirements and best
practices. The full text of the Corporate Governance Guidelines can be found on the Company’s website at
www.cabotog.com
by choosing “About Cabot,” and then choosing “Governance.”
Code of Business Conduct
All employees, officers and directors are required to comply with
the Company’s Code of Business Conduct to help ensure that the Company’s business is conducted in accordance with the
highest standards of moral and ethical behavior. The Code of Business Conduct covers all areas of professional conduct, including
conflicts of interest, customer relationships, insider trading, financial disclosure, intellectual property and confidential information,
as well as requiring strict adherence to all laws and regulations applicable to the Company’s business. Employees, officers
and directors are required annually to reply to a Code of Conduct Questionnaire, which is designed to elicit information related
to any known or possible violation of the Code. The full text of the Code of Business Conduct can be found on the Company’s
website at
www.cabotog.com
by choosing “About Cabot,” and then choosing “Governance.” The Company
will satisfy the requirement to disclose any amendments to or waivers from certain provisions of its Code of Business Conduct by
posting such information on the website at that location.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
23
|
Attendance at Board Meetings and Annual Meetings
The Board of Directors held six meetings during 2015. All directors
attended more than 75% of the meetings of the Board of Directors and of the committees on which they served.
The Company’s policy is that it expects all members of the
Board of Directors to attend the Company’s annual meeting of stockholders. In 2015, all of the continuing members of the
Board attended the annual meeting.
Director Compensation
Directors who are employees of the Company receive no additional
compensation for their duties as directors. During 2015, non-employee directors’ annual compensation included an annual retainer
fee of $75,000 each, payable quarterly, for their service on the Company’s Board of Directors and its committees. The Lead
Director received an additional $20,000 annual retainer, the Audit Committee Chairman and Compensation Committee Chairman each
received an additional $15,000 annual retainer, the Executive Committee Chairman received an additional $5,000 annual retainer
and the remaining committee chairmen received an additional $10,000 annual retainer, each payable quarterly, for this additional
service. Additionally, each non-employee director will receive $2,000 for each Board of Directors meeting attended in excess of
six in-person meetings per year. The directors did not receive additional meeting fees in 2015 because they did not attend in excess
of six in-person meetings.
In 2015, non-employee directors were also entitled to an annual
award of restricted stock units under the 2014 Incentive Plan, the restrictions on which lapse the date the non-employee director
leaves the Board of Directors, with a targeted award value at grant date of $200,000. The restricted stock units are paid cash
dividend equivalents in the amount of the cash dividend paid on our outstanding common stock from the date of grant through the
date the restrictions lapse. In 2015, these directors each received 7,220 restricted stock units.
Board members may participate in the Director Non-Qualified Deferred
Compensation Plan, which provides each non-employee director an opportunity to elect each year to take any, or all, of the director’s
annual cash retainer and additional fees for serving as lead director or as a committee chairman in restricted stock units, valued
at the closing price of the common stock on the date specified in the plan, in lieu of a quarterly cash payment of such amounts.
The terms of the restricted stock units are the same as those issued annually. All directors were also reimbursed for travel expenses
incurred for attending Board and committee meetings. For more information on director compensation, see “Director Compensation
Table” below.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
24
|
Director Compensation Table
The table below summarizes the total compensation paid to each
of the non-employee directors of the Company for the fiscal year ended December 31, 2015.
Name
|
|
Fees Earned or
Paid in Cash*
($)
|
|
Stock Awards
($)(1)
|
|
Option Awards
($)
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($)(2)
|
|
Total
($)
|
Dorothy M. Ables
|
|
$
|
6,250
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
-
|
|
|
$
|
6,250
|
|
Rhys J. Best
|
|
$
|
90,000
|
|
|
$
|
200,066
|
|
|
-
|
|
-
|
|
-
|
|
|
$ 6,868
|
|
|
$
|
296,934
|
|
Robert S. Boswell
|
|
$
|
6,250
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
-
|
|
|
$
|
6,250
|
|
James R. Gibbs
(3)
|
|
$
|
63,750
|
|
|
$
|
200,066
|
|
|
-
|
|
-
|
|
-
|
|
|
$ 2,459
|
|
|
$
|
266,275
|
|
Robert L. Keiser
(4)
|
|
$
|
85,000
|
|
|
$
|
200,066
|
|
|
-
|
|
-
|
|
-
|
|
|
$ 10,498
|
|
|
$
|
295,564
|
|
Robert Kelley
|
|
$
|
100,000
|
|
|
$
|
200,066
|
|
|
-
|
|
-
|
|
-
|
|
|
$ 12,755
|
|
|
$
|
312,821
|
|
P. Dexter Peacock
(5)
|
|
$
|
47,500
|
|
|
$
|
200,066
|
|
|
-
|
|
-
|
|
-
|
|
|
$ 3,134
|
|
|
$
|
250,700
|
|
W. Matt Ralls
|
|
$
|
80,000
|
|
|
$
|
200,066
|
|
|
-
|
|
-
|
|
-
|
|
|
$ 3,146
|
|
|
$
|
283,212
|
|
*
|
Restricted stock units were issued pursuant to the Company’s Non-Employee Director Deferred Compensation Plan in lieu of quarterly cash retainer and leadership fees totaling $63,750 for Mr. Gibbs, $85,000 for Mr. Keiser and $80,000 for Mr. Ralls. Ms. Ables and Mr. Boswell were issued 381 and 191 RSUs, respectively, as of January 15, 2016, in lieu of quarterly cash retainer for the period from December 1 through December 31, 2015.
|
(1)
|
The amounts in this column reflect the grant date fair value with respect to restricted stock units in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 for the fiscal year ended December 31, 2015. Assumptions used in the calculation of these amounts are included in Note 13 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (the “Form 10-K”). In February 2015, each non-employee director (other than Ms. Ables and Mr. Boswell) received a grant of 7,220 restricted stock units, with a grant date fair value of $200,066 based on the closing price of the Common Stock on the February 19, 2015 grant date. The restricted stock units vest on the grant date, but are not payable by the Company in shares of Common Stock until the date the non-employee director ceases to be a director of the Company. The aggregate number of restricted stock units outstanding at December 31, 2015, including those issued in lieu of quarterly cash retainer and fees, were as follows:
|
|
|
|
|
|
Name
|
|
Stock Awards
|
Dorothy M. Ables
|
|
|
0
|
|
Rhys J. Best
|
|
|
87,649
|
|
Robert S. Boswell
|
|
|
0
|
|
James R. Gibbs
|
|
|
0
|
|
Robert L. Keiser
|
|
|
134,223
|
|
Robert Kelley
|
|
|
161,237
|
|
P. Dexter Peacock
|
|
|
0
|
|
W. Matt Ralls
|
|
|
42,329
|
|
(2)
|
The amounts in this column for each director include quarterly cash dividend equivalents paid on the restricted stock units.
|
(3)
|
Mr. Gibbs retired from service as a director as of July 22, 2015.
|
(4)
|
Mr. Keiser will retire from service as a director as of the date of annual meeting pursuant to Cabot’s director retirement policy.
|
(5)
|
Mr. Peacock retired from service as a director as of April 23, 2015, pursuant to Cabot’s director retirement policy.
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
25
|
Director Retirement
It is the policy of the Board of Directors
that directors of the Company retire at the annual meeting following their 73
rd
birthday. It is also the policy of the
Board of Directors that a retiring CEO of the Company retires from service on the Board, unless a determination is otherwise made
by the Board of Directors.
Information on Standing Committees of the Board of Directors
Information on each of the Board’s
standing committees as of the date hereof is discussed below. The charters of each of the Board committees can be found on the
Company’s website at
www.cabotog.com
by choosing “About Cabot,” and then choosing “Governance.”
Committees
|
|
Independent?
|
|
2015
Meetings
|
|
Dinges
|
|
Ables
|
|
Best
|
|
Boswell
|
|
Kelley
|
|
Ralls
|
CGN
|
|
Yes
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
C
|
Audit
|
|
Yes
|
|
4
|
|
|
|
|
|
|
|
|
|
C
|
|
|
Compensation
|
|
Yes
|
|
4
|
|
|
|
|
|
C
|
|
|
|
|
|
|
Safety
|
|
Yes
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
C
|
Executive
|
|
No
|
|
0
|
|
|
|
|
|
|
|
|
|
C
|
|
|
C
|
– Chairman of committee
|
|
– Member of committee
|
Corporate Governance and Nominations Committee.
The function of the Corporate Governance and Nominations (“CGN”)
Committee is to assist the Board in fulfilling its responsibility to the stockholders by:
•
|
Identifying qualified individuals to become Board members and assisting the Board in determining the composition of the Board and its committees;
|
|
|
•
|
Assessing Board and committee effectiveness;
|
|
|
•
|
Developing and implementing the Company’s corporate governance guidelines; and
|
|
|
•
|
Taking a leadership role in shaping the corporate governance of the Company.
|
In accordance with its charter, the CGN Committee has adopted
minimum criteria for Board membership, which are discussed in more detail at “Director Nominations and Qualifications”
above.
Audit Committee.
The
function of the Audit Committee is to assist the Board in overseeing:
•
|
The integrity of the financial statements of the Company;
|
|
|
•
|
The compliance by the Company with legal and regulatory requirements;
|
|
|
•
|
The independence, qualifications, performance and compensation of the Company’s independent auditors; and
|
|
|
•
|
The performance of the Company’s internal audit function.
|
It is the policy of the Audit Committee to
pre-approve all audit, review or attest engagements and permissible non-audit services, including the fees and terms thereof, to
be performed by the independent auditors, subject to, and in compliance with, the
de minimis
exception for non-audit services
described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934 and the applicable rules and regulations of the Securities
and Exchange Commission (the “SEC”). The Audit Committee has delegated to each member of the Audit Committee authority
to pre-approve permissible services to be performed by the independent auditors. Decisions of a member to pre-approve permissible
services must be reported to the full Audit Committee at its next scheduled meeting.
Each member of the Audit Committee satisfies
the financial literacy and independence requirements of the NYSE listing standards. The Board has determined that Mr. Kelley meets
the requirements of an “audit committee financial expert” as defined by the SEC.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
26
|
Compensation
Committee.
The function of the Compensation Committee is to:
•
|
Review and approve corporate goals and objectives relevant to the CEO’s compensation, evaluate the CEO’s performance in light of those goals and objectives, and determine, subject to ratification by the Board, the CEO’s compensation level based on this evaluation;
|
|
|
•
|
Provide counsel and oversight of the evaluation and compensation of management of the Company, including base salaries, incentive compensation and equity-based compensation;
|
|
|
•
|
Discharge any duties imposed on the Compensation Committee by the Company’s incentive compensation and equity-based compensation plans, including making grants;
|
|
|
•
|
Evaluate the independence of, and retain or replace any compensation consultant engaged to assist in evaluating the compensation of the Company’s directors, CEO and other officers and to approve such consultant’s fees and other terms of retention; and
|
|
|
•
|
Review the annual compensation of the directors.
|
During 2015, no member of the Compensation
Committee was an officer or employee of the Company or any of its subsidiaries, or formerly an officer of the Company or any of
its subsidiaries. During 2015, the Company had no compensation committee interlocks.
Safety and
Environmental Affairs Committee.
The function of the Safety and Environmental Affairs (Safety) Committee is to assist
the Board in providing oversight and support of the Company’s safety and environmental policies, programs and initiatives.
Among other things, the Safety Committee reviews our compliance with environmental, health and safety laws and regulations, pending
legislative and regulatory initiatives, training initiatives and, as needed, consults with outside and internal advisors regarding
the management of the Company’s safety and environmental policies, programs and initiatives.
Executive
Committee.
The function of the Executive Committee is to exercise all power and authority of the Board of Directors
in the event action is needed between regularly scheduled Board Meetings and a meeting of the full Board is deemed unnecessary,
except as limited by the Company’s by-laws or applicable law. The Executive Committee did not meet during 2015.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
27
|
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
This Compensation Discussion and Analysis
(“CD&A”) provides stockholders with an understanding of our compensation philosophy, objectives, policies and practices
in place during 2015, as well as the factors considered by our Compensation Committee of the Board of Directors in making compensation
decisions for 2015. This CD&A focuses on the compensation of our Chief Executive Officer, our Chief Financial Officer and our
three other most highly compensated officers for 2015 (the “NEOs”), namely:
Dan O. Dinges
|
Chairman, President & Chief Executive Officer
|
Scott C. Schroeder
|
Executive Vice President & Chief Financial Officer
|
Jeffrey W. Hutton
|
Senior Vice President, Marketing
|
Phillip L. Stalnaker
|
Vice President & Regional Manager, North Region
|
G. Kevin Cunningham
|
Vice President & General Counsel
|
Our compensation plans and practices are
designed to align the financial interests of the above NEOs with the financial interests of our shareholders. To that end, we provide
our NEOs with a competitive base salary, an annual cash bonus opportunity based on the achievement of specific goals aligned with
shareholder value creation and long-term incentives tied to long-term total shareholder return and annual cash flow attainment.
For the NEOs, in 2015 the level of at-risk pay ranged from 72% to 90% of the total annual compensation opportunity, with the CEO
having the highest level of at-risk pay.
2015 Performance Highlights
In 2015, we continued to face the difficult
commodity pricing and capacity environment in our industry that began in 2014, which impacted our overall performance. Over the
last two years, we experienced a sharp decline in commodity prices resulting from an oversupply of both crude oil and natural gas.
Adding to this dynamic was suppressed demand for natural gas due to a lack of new pipeline takeaway capacity. As a result of this
market imbalance, stock prices across the industry continued to fall in 2015, and Cabot’s stock price was no exception. The
Company’s fiscal discipline and strong financial position, however, as well the quality of our asset base, place Cabot in
a good position to continue to weather these challenges until market conditions improve.
In spite of the continued challenges in the
energy industry that began in the second half of 2014 and continued during 2015, our business strategy of delivering value by growing
reserves and production in a cost-effective manner continued to deliver solid operational results in 2015. Specifically:
•
|
Total year-end proved reserves grew to 8.2 Tcfe in 2015, a 10.7% increase over 2014;
|
|
|
•
|
Absolute production was 602.5 Bcfe, 13.3% higher than 2014 production; and
|
|
|
•
|
The Company’s “all sources” finding cost was $0.57 per Mcfe for 2015 and $0.62 per Mcfe over the last three year period.
|
|
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
28
|
These recent achievements are consistent
with the positive trend in these operating metrics experienced over the last several years, as highlighted below.
This substantial growth in reserves and production
over the last three years has been accompanied by a 20% decline in our finding costs per unit and a 36% decline in our total operating
costs per unit. These achievements translated into top tier operating performance for this period. As indicated below, during a
five year period, our TSR outpaced an index of our peer group.
*
|
Antero Resources Corp., Chesapeake Energy Corp., Cimarex Energy Company, Concho Resources Inc., Continental Resources Inc.,
Devon Energy Corp., Encana Corp., EQT Corp., Marathon Oil Corp., Murphy Oil Corp., Newfield Exploration Company, Noble Energy Inc,
Pioneer Natural Resources Company, QEP Resources Inc., Range Resources Corp., Southwestern Energy Company.
|
|
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
29
|
2015 Compensation Highlights
Compensation outcomes in 2015 rewarded important near-term operating
successes while aligning executives with the same stock price performance results experienced by our long-term stockholders:
•
|
Due to our sixth-place ranking among our peer group, performance shares granted to
our executives in 2013 with vesting contingent upon our relative three-year total shareholder return (“TSR”), vested
at 140% of target. The underlying shares depreciated in value approximately 33%, consistent with the Company’s stock price,
over that three-year period, while only five of our 13 peers outperformed our TSR for the period.
|
|
|
•
|
Two of the four operating and financial performance metrics for the 2015 annual cash
incentive awards significantly exceeded the target range and two metrics fell around target ranges. Taking into account the macro
environment in our industry, and the resulting negative discretion being applied to the payout amount, the awards were paid out
at 110% of target for the NEOs.
|
|
|
•
|
Our performance target for our hybrid performance shares of achieving at least $100
million of operating cash flow in 2015 was met, resulting in the annual vesting of hybrid performance shares granted to executives
over the last three years.
|
|
|
•
|
Outstanding long-term incentive awards made in February 2015 had declined in value
by 36% by the end of the year, consistent with the Company’s stock price performance in 2015.
|
|
|
•
|
At our most recent annual meeting in May 2015, over 98% of the votes cast supported
our executive compensation practices. Consistent with this strong support, the Compensation Committee of our Board of Directors
(“Committee”) determined to continue our 2014 compensation practices substantially unchanged in 2015.
|
CEO Compensation and Performance-Based Pay
We have maintained consistent and disciplined
performance-based compensation programs for all of our executives. For many years, the Committee has awarded compensation opportunities
to our CEO and other executives that require meaningful absolute and relative stock price and financial performance to deliver
targeted realized compensation levels. The allocation of 2015 compensation among salary, short-term incentives and long-term incentives
for our CEO and the other NEOs, on a weighted average basis, reflects this guiding principle, as show below:
|
|
In 2015, the Committee awarded 60% of each executive’s long-term
incentive opportunity in the form of performance shares payable solely on the basis of our total shareholder return relative to
our industry peer group over a three year performance period (“TSR performance shares”). Our TSR performance over the
past three years relative to our peers generated above-target payments for executives from the TSR performance shares, although
the underlying value of the shares, and therefore, the value of the award, declined over that period, reflecting the strong correlation
of pay to performance of this award. The CEO’s awards and the relative performance achieved for the most recently completed
performance period, plus the current ranking for the two remaining unvested awards, are as follows:
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
30
|
CEO TSR PERFORMANCE SHARE AWARDS
|
|
Target Value Awarded
|
|
Peer Rank Achieved
|
|
Percentage of Target
Achieved
|
|
Earned Award Value
|
Performance Period Achieved
(1)
|
|
|
|
|
|
|
|
|
2013-2015
|
|
$3,000,000
|
|
6
th
of 14
|
|
140%
|
|
$2,741,125
|
(1)
|
This performance period ended December 31, 2015. Target value awarded is based
on the number of performance shares awarded multiplied by the closing stock price on date of grant, which was $26.62. The earned
award value is based on the average of the high and low trading prices of the Company’s common stock on December 31, 2015,
which was $17.37.
|
|
|
Grant Date Target Value Awarded
|
|
Target Value of Award at
December 31, 2015
|
Performance Periods In Progress
(2)
|
|
|
|
|
2014-2016
|
|
$3,600,000
|
|
$1,615,115
|
2015-2017
|
|
$3,900,000
|
|
$2,489,744
|
(2)
|
These performance periods are in progress. Target value awarded is based on the
number of performance shares awarded multiplied by the closing stock price on date of grant. The target value at December 31,
2015 is based on the Company’s closing stock price on that day, which was $17.69. The actual value received by the CEO may
be higher or lower than this value, depending on Cabot’s peer rank achieved during the performance period, which affects
the number of shares received and the value of the underlying common stock on the last day of the performance period. Cabot’s
peer rank for the 2014-2016 award and the 2015-2017 award as of December 31, 2015 was at or near the 50
th
percentile
of its peer groups for each of those award years. Those peer ranks equate with payouts of 120% and 100%, respectively, of the
target number of shares. For more information about the TSR performance shares, see “Executive Compensation – TSR
Performance Shares” below.
|
In 2015, we awarded 40% of each executive’s long-term incentive
value through hybrid performance shares that require threshold achievement based on a financial metric (see “Hybrid Performance
Shares” below). The hybrid performance shares vest on a three year graduated schedule, with 25% of the award vesting on each
of the first two anniversaries of the date of grant and 50% vesting on the third anniversary. To date, all of the CEO’s hybrid
performance share awards have satisfied the required performance criteria at their scheduled vesting date.
Philosophy and Objectives of Our Compensation Programs
The Committee oversees an executive compensation program designed
to attract, retain, and engage highly qualified executives. The primary objectives of our compensation programs are:
•
|
To align executive compensation with our business strategy;
|
|
|
•
|
To encourage management to create sustained value for the shareholders while managing
inherent business risks;
|
|
|
•
|
To attract, retain, and engage talented executives; and
|
|
|
•
|
To support a long-term performance-based culture throughout the Company.
|
We achieve these objectives by:
•
|
Assigning the vast majority of NEO compensation to at-risk, performance-based incentive
opportunities;
|
|
|
•
|
Tying incentive plan metrics and goals to shareholder value principles; and
|
|
|
•
|
Having balanced, open and objective reviews of goals and performance.
|
The Committee believes that each of these objectives carries an
equal amount of importance in our compensation program.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
31
|
Elements of Our Compensation Program
We use various components of executive compensation, with an emphasis
on variable compensation and long-term incentives. The components of executive compensation are presented in the table below and
discussed in more detail later in this section of the proxy statement.
Compensation Component
|
|
Purpose
|
|
Competitive Positioning
|
Base Salary
|
|
Compensation for position, experience, expertise and competencies.
|
|
Base salaries are targeted to approximate the compensation peer group median, taking into account the competitive environment, as well as the experience and accomplishments of each executive.
|
Annual cash incentive bonus
|
|
Reward the achievement of annual business
objectives, including:
• Financial goals (unit
costs, finding costs)
•
Operational goals (specific objectives tied to
production
growth and reserve growth)
•
Individual objectives
aligned with corporate
strategy
•
Committee evaluation of
qualitative
performance
|
|
Annual bonus opportunities are established as
a percentage of base salary and are targeted to match industry bonus percentage levels for comparable executive positions.
Realizing target bonus opportunities requires
achieving key annual financial and operating goals aligned with long-term shareholder value
creation.
|
Long-term Incentives
|
|
Prominent part of total compensation to maintain
alignment with shareholder value creation:
•
TSR performance shares
(earned and vested
based
on Total Shareholder Return versus
peers)
•
Hybrid performance shares (time vested and
tied
to operating cash flow results)
•
Stock ownership guidelines
|
|
Long-term incentives are intended to promote
long-term value creation for shareholders and to retain executives through extended vesting
periods.
To place relatively greater emphasis on the
importance of shareholder return performance, the value of equity awards is generally targeted
above the median of the peer group, although
other individual and Company circumstances
influence the award amounts.
|
Executive Benefits and Perquisites
|
|
Comprehensive programs to build financial security, manage personal financial risk and limit Company costs.
|
|
Value of benefits and perquisites is generally targeted to be competitive with market levels and comprises a minor component of total compensation.
|
Total Compensation
|
|
Designed to attract, retain, align and engage highly qualified executives, while creating a strong connection to financial and operational performance and long-term shareholder value.
|
|
Total compensation is highly correlated with Company and individual performance and is evaluated for its competitiveness when compared to the peer group.
|
In making compensation decisions, the Committee includes comparisons
of each element of total compensation against a peer group of publicly traded exploration and production companies. In that total,
a greater weight is placed on long-term equity awards versus salary and annual cash incentive bonus to foster an environment where
stock price appreciation over the long-term is a major executive focus. This focus in turn aligns the interests of the executives
with those of the shareholders. The competitive market is determined by reference to the compensation practices of an industry
peer group as set forth below.
Industry Peer Group
We use one peer group for both compensation competitive analysis
and to measure the relative performance of our TSR performance shares. The Committee chose these companies because they represent
our direct competitors of similar size and scope in the exploration and production sector of the energy industry, and include several
companies that compete in our core areas of operation for both business opportunities and executive talent. The peer group changes
from time to time due to organic changes in the Company or its peers, business combinations, asset sales and other types
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
32
|
of transactions that cause peer companies to no longer exist or
to no longer be comparable. The Committee approves all revisions to the peer group. Based on 2015 year-end closing market prices,
the market capitalization of companies in our industry peer group ranged from approximately $2.3 billion to $18.7 billion. Our
market capitalization at 2015 year-end was approximately $7.3 billion.
In February 2016, the Committee affirmed the application of the
current peer group to the 2016 - 2018 performance cycle. Our peer group is as follows:
•
|
Antero Resources Corporation
|
•
|
Marathon Oil Corporation
|
•
|
Chesapeake Energy Company
|
•
|
Murphy Oil Corporation
|
•
|
Cimarex Energy Company
|
•
|
Newfield Exploration Company
|
•
|
Concho Resources Inc.
|
•
|
Noble Energy Inc.
|
•
|
Continental Resources Inc.
|
•
|
Pioneer Natural Resources Company
|
•
|
Devon Energy Corporation
|
•
|
QEP Resources Inc.
|
•
|
Encana Corporation
|
•
|
Range Resources Corporation
|
•
|
EQT Corporation
|
•
|
Southwestern Energy Company
|
2015 Committee Activity
During 2015, the Committee held three regular meetings, one in
each of February, July and October. The Committee held a special meeting in early January 2015 for the purpose of certifying the
results for the TSR performance share awards with a performance period of 2012-2014 that vested on December 31, 2014.
At the time the 2015 grants were made and periodically throughout
the year, the Committee referenced the Fall 2014 competitive market study of the peer group by Meridian Compensation Partners,
LLC (Meridian), the Committee’s independent compensation consultant. Based on the study and the CEO’s recommendations
with respect to the other Company officers, the Committee determined 2015 salaries, bonus payouts for 2014 performance, certified
the 2014 results for payouts of one-third of each of the hybrid performance shares granted from 2012 to 2014, and the annual grant
of long-term incentive awards for our officers. A detailed discussion of each item of compensation can be found below under “Elements
of Compensation.”
Also at the February 2015 meeting and prior to making any compensation decisions, the Committee reviewed
a detailed analysis of stock ownership and retention levels for each NEO. The Committee does not use tally sheets, but over the
course of the year reviews each element of compensation for the NEOs, including elements of total direct compensation and payments
upon severance or change of control, as well as other benefits and perquisites. Lastly, at the February 2015 meeting, the Committee
and the Board of Directors discussed the 2015 measurement criteria for the 2015 cash bonus plan and, after further analysis and
review, approved the measurement criteria by written consent in April, 2015.
During 2015, the Committee reviewed an analysis prepared by Meridian
of 2014 executive compensation reported by our peer group. From the available 2014 survey information, the Committee evaluated
its compensation decisions relative to our peer group. The Committee also reviewed an analysis prepared and presented by Meridian
of current compensation issues and trends, including a 2015 competitive market study of executive compensation among the peer companies.
This analysis, along with other data and reports, is utilized in the Committee’s review of all components of compensation
in the following February meeting.
Elements of Compensation
We believe the following executive compensation policies and programs
effectively serve the interests of the shareholders and the Company. The Committee has worked over the years to devise, manage
and provide an executive compensation program that designed to meet its intended objectives and contribute to the Company’s
overall success.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
33
|
Elements of In-Service Compensation
There are three major elements of the executive in-service compensation
program: (1) base salary, (2) annual cash incentive bonus and (3) long-term incentive equity awards. Company perquisites are a
minor element of the executive compensation program. This design generally mirrors the pay practices of the exploration and production
industry generally and our selected industry peer group. Our compensation is intentionally weighted toward long-term equity-based
compensation. Each element is described below.
Mr. Dinges, our Chairman, President and Chief Executive Officer,
has a significantly broader scope of responsibilities than the other named executive officers. The difference in compensation for
Mr. Dinges described below primarily reflects these differing responsibilities and, except as described below, does not result
from the application of different policies or decisions with respect to Mr. Dinges.
Base Salary
The Committee believes base salary is a critical element of executive
compensation because it provides executives with a base level of monthly income. The base salary of each executive, including the
NEOs, is reviewed annually by the Committee. The CEO’s salary is established by the Committee (and ratified by the Board
of Directors) and the other executives’ salaries are established jointly by the CEO and the Committee. Base salary is targeted
for all executive positions near the median level of the peer group. Individual salaries take into account our established salary
policies and our current salary budget; the individual’s levels of responsibility, contribution and value to the Company;
individual performance; prior relevant experience; breadth of knowledge; and internal and external equity issues. In February 2015,
the Committee also considered the impact of the low commodity price environment on operating results and cash flow in setting base
salaries. The Committee determined that base salaries in 2015 would remain at 2014 levels for all but one of the NEOs.
Name
|
|
2014 Base Salary
|
|
2015 Base Salary
|
Mr. Dinges
|
|
$900,000
|
|
$900,000
|
Mr. Schroeder
|
|
$475,000
|
|
$475,000
|
Mr. Hutton
|
|
$355,000
|
|
$355,000
|
Mr. Stalnaker
|
|
$320,000
|
|
$350,000
|
Mr. Cunningham
|
|
$348,000
|
|
$348,000
|
In 2015, the Committee reviewed two competitive market studies
for compensation of the peer group, prepared by our independent consultant. The Committee noted that Mr. Dinges’ 2015 base
salary of $900,000 and Mr. Schroeder’s 2015 base salary of $475,000 were both between the 25
th
and 50
th
percentile
of the industry peer group for the 2015 competitive data. The base salaries of the other NEOs ranged between the 25
th
and
75
th
percentile of the peer group, with individual base salaries varying from the median of the peer group by position
due to individual experience in each role and differences in peer organization management structures relative to ours. The Committee
views these salary levels as consistent with its compensation philosophy, given the ongoing changes in peer compensation levels
and the intention of delivering a relatively higher percentage of NEO compensation through long-term incentives. The Committee
took no additional action to revise base salaries during the year.
In February 2016, in recognition of the continued depressed realized
price for oil and natural gas and its current and future anticipated effect on our industry, as well the positioning of our NEOs’
salaries relative to available 2015 peer benchmarking data, the Compensation Committee decided not to increase salaries for 2016
for any of our NEOs.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
34
|
Annual Cash Incentive Bonus
The annual cash incentive bonus opportunity is based upon our
pay-for-performance philosophy. The opportunity provides the NEOs, as well as other executives and key employees, with an incentive
in the form of an annual cash bonus to achieve overall business goals. The bonus opportunity is stated as a percentage of base
salary and is set using the Committee’s philosophy to target bonus levels (as a percentage of base salary) consistent with
the competitive market for executives in similar positions. Annual bonus opportunities are based on specific goals that are of
primary importance to the Company during the coming year and motivate executives to achieve those goals.
During 2015, the bonus opportunity for the NEOs was as follows:
Executive
|
|
Target Bonus
(as a % of Salary)
|
|
Target Bonus
Value (100%)
|
Mr. Dinges
|
|
|
125
|
%
|
|
$
|
1,125,000
|
|
Mr. Schroeder
|
|
|
100
|
%
|
|
$
|
475,000
|
|
Mr. Hutton
|
|
|
75
|
%
|
|
$
|
266,250
|
|
Mr. Stalnaker
|
|
|
75
|
%
|
|
$
|
262,500
|
|
Mr. Cunningham
|
|
|
70
|
%
|
|
$
|
243,600
|
|
The bonus metrics for 2015 were
unchanged from 2014, although, in recognition of the continued volatile market conditions, the Committee established a range
of values rather than a discreet goal for target performance for each metric in 2015. The bonus plan was designed to
emphasize value-generating metrics, to link related metrics together to take into account the interrelated impacts of such
metrics on value creation, and to increase the overall payout potential for a breakout year, while reducing overall
discretion. Also, the bonus plan places a cap on the payment for performance for each metric at 275% of target payout, which
allows for some additional benefit for above-range performance, but removes the potential of one metric creating a
disproportionate payout. The bonus plan has a maximum award payout of 250% of target in the aggregate, but individual awards
can vary, at the discretion of the Committee. The metrics, their weightings and the performance goals for each level of
payout are listed in the table below.
|
|
2015 Bonus Performance Goals (% of Target)
|
|
|
Weighting
|
|
0%
|
|
100%
|
|
200%
|
Reserve Growth
|
|
|
25
|
%
|
|
|
3%
|
|
|
|
7%-10%
|
|
|
|
15%
|
Finding Costs (per Mcfe)
|
|
|
15
|
%
|
|
$
|
0.94
|
|
|
|
$0.84-$0.79
|
|
|
$
|
0.69
|
Production Growth
|
|
|
25
|
%
|
|
|
8%
|
|
|
|
13%-15%
|
|
|
|
20%
|
Unit Costs (per Mcfe)
|
|
|
15
|
%
|
|
$
|
2.72
|
|
|
|
$2.61-$2.56
|
|
|
$
|
2.45
|
Strategic Evaluation (Discretionary)
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
At the start of each year the bonus metric performance goals are
established with the target level of performance based on the operating budget approved by the Board of Directors. The performance
goals for a payout at 200% of target are also created at this time. Upon completion of each fiscal year, the CEO makes recommendations
to the Committee for annual bonuses to be paid to each executive officer (other than the CEO) using the formula established for
the bonus plan for that year. The Committee references both the CEO’s recommendations and the formulaic output in determining
the bonuses to be paid to the NEOs other than the CEO. With respect to the strategic evaluation component, the Compensation Committee
evaluates key influences on Company performance not otherwise considered through the metrics. These may include the management
of capital spending, environmental and safety performance, net income performance, organizational leadership and other factors
the Committee deems to have been important in the prior year’s performance, and may vary from year to year. The Committee
follows no formulaic structure relating to these factors. In general, the Committee expects to award the target 20% of the strategic
evaluation component in years when the Company meets internal and external performance expectations with respect to these factors,
although the strategic component can range from 0% to 55% in the weighting of the bonus payout calculation. Acquisitions and divestitures
are
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
35
|
not part of establishing the target metrics because the Company
does not budget these activities. When acquisition or divestiture activity occurs, the Committee assesses its impact and exercises
its discretion to adjust for the impact.
Additional parameters for the 2015 annual cash incentive bonus
plan include a payout multiplier of 1.5 times for each of two grouped metrics if the grouped metrics both achieve target, subject
to the 275% maximum payout per metric. The grouped metrics are (1) Reserve Growth and Finding Costs, and (2) Production Growth
and Unit Costs. The Committee established the incentive on the grouped metrics to encourage a balanced approach to achieving operational
goals and to discourage over-achievement of one metric in a manner that adversely affects the grouped metric. For example, undisciplined
spending on a development program could help achieve the reserve growth metric at levels above target levels, but cause finding
costs to increase to unacceptable levels. By grouping the reserve growth and finding costs metrics together, and using a payout
multiplier of 1.5 for achieving target in both metrics, the Committee is rewarding efficiency in operations.
In 2015, actual performance under these metrics compared to established
performance goals follows:
|
|
Actual Results
|
|
Bonus Plan Target
(100%)
|
|
Bonus Plan 200%
|
Reserve Growth
|
|
|
10.7%
|
|
|
7%-10%
|
|
|
|
15%
|
|
Finding Costs (per Mcfe)
|
|
|
$0.57
|
|
|
$0.84-$0.79
|
|
|
$
|
0.69
|
|
Production Growth
|
|
|
13.3%
|
|
|
13%-15%
|
|
|
|
20%
|
|
Unit Costs (per Mcfe)
|
|
|
$2.37
|
|
|
$2.61-$2.56
|
|
|
$
|
2.45
|
|
Our proved reserves at December 31, 2015 were 8.2 Tcfe, representing
reserve growth of 10.7% over 2014. These reserves were added at a very efficient $0.57 per Mcfe. Production growth of 13.3% helped
drive down unit costs to the lowest level since 1998. In reaching a conclusion on the strategic evaluation component of the bonus
metrics, the Committee considered the Company’s level of performance in 2015—recording record levels of production
and reserves—however, in light of the challenging macro environment for the oil and gas industry, applied negative discretion
to reduce the payout that would have been dictated by the bonus formula. In so doing, the Committee evaluated the strategies utilized
by the executive team to maximize the Company’s financial and operational results for the year and also to place it in a
position for long-term success. The Committee found that the strategies that were employed for long-term value generation for our
stockholders remain sound. The result of 2015 performance against all the bonus metrics, including the strategic evaluation component,
was that the total allocation for corporate performance was approved at 110% of target, prior to adjustment for regional or individual
performance.
Upon completion of each fiscal year, the Committee determines
the CEO’s annual cash incentive bonus based on Company performance, the results of the bonus plan formula described above
and the Board’s annual CEO performance evaluation. The independent directors of the Board discuss and ratify the CEO’s
annual cash incentive bonus payment, considering the factors stated above and any factors relating to performance that were particularly
significant in the year in question.
For 2015, the Committee noted in particular:
•
|
the Company’s record operational accomplishments, including a 10.7% increase
in reserves;
|
|
|
•
|
the financial stability of the Company and its positioning to optimize performance
during the macro-economic volatility facing the industry;
|
|
|
•
|
further reduction in overall unit costs and operating expenses;
|
|
|
•
|
conservative management, a relatively small workforce and comparatively low general
and administrative costs, resulting in a competitive advantage, especially during the low commodity price cycle; and
|
|
|
•
|
further strengthening of the Company’s balance sheet through taking advantage
of attractive capital markets, as well as instituting programs to ensure debt covenant compliance.
|
The Committee evaluated these factors and concluded that they
provide Cabot a solid foundation for 2016 and beyond. Based on this evaluation, the Committee approved the CEO’s bonus payout
for 2015 at 110% of target. The bonus payout for the other NEOs was also 110% of target. See “Executive Compensation–Summary
Compensation Table” below for actual bonuses paid to the NEOs.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
36
|
Long-Term Incentives
In 2015, the Committee continued its established
practice of awarding two types of performance shares—TSR performance shares and hybrid performance shares—to provide
long-term incentives to our NEOs. The award allocation to NEOs in 2015 is designed to provide 60% of the targeted grant-date value
from TSR performance shares and 40% from hybrid performance shares. This allocation is more heavily weighted toward performance-based
awards than our peer group, based on peers’ 2015 compensation data, as shown below.
|
The total size of the long-term incentive
awards is based on a number of factors, including peer group and related industry competitive practice, which is used as a point
of reference to gauge appropriate total compensation levels for a company of our size, business complexity and growth profile.
The Committee does not typically consider prior period long-term incentive awards, such as the amount of equity previously granted
and outstanding, or the number of shares owned, when determining annual long-term incentive awards.
All long-term incentives awarded to our NEOs in 2015 were granted
under the 2014 Incentive Plan.
TSR Performance Shares.
The
Committee believes performance shares based on the Company’s total shareholder return relative to that of its peers
provides a strong link between the performance of the executive group and their pay, whereas other types of equity awards,
such as stock options, may not. The Committee also believes that a relative comparison of performance against peers over a
three-year period, as opposed to a single year, provides a better evaluation of how management performed under changing
economic conditions. For these reasons, the Committee believes that our TSR performance share awards are a good measure of
performance versus the peer group and appropriately link stock performance and compensation. To allow for payouts in excess
of target without excessive dilution or the need to reserve shares in excess of target, all payouts in excess of 100% of
target are paid in the cash value of the shares, based on the average of the high and low trading prices of our common stock
on the last day of the performance period. For additional information about the TSR performance shares, see the table
“Grants of Plan-Based Awards” below.
Hybrid Performance Shares.
Due
to restricted stock share limitations under the 2014 Incentive Plan and Section 162(m) tax considerations, in 2015 the
Committee again awarded hybrid performance shares instead of restricted stock. The hybrid performance shares vest over a
three year period from the date of grant, with 25% vesting in each of the first two years and 50% vesting in the third year,
provided the Company has $100 million or more operating cash flow in the fiscal year prior to the vesting date. Applying a
cash flow threshold on share vesting allows these awards to remain fully tax deductible to the Company upon vesting. Hybrid
performance shares also have less underlying volatility than do traditional performance shares, and therefore help manage
attrition risk by creating a more sustained forfeitable stake in the Company. For additional information about the hybrid
performance shares, see the table “Grants of Plan-Based Awards” below.
Stock Appreciation Rights
(SARs).
The Committee ceased awarding SARs after 2012, but SARs granted previously to the NEOs remain outstanding. All
SARs granted to date vested ratably over a three year period and have a seven-year term.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
37
|
Personal Benefits and Perquisites
We provide the NEOs with perquisites and
other personal benefits that the Company and the Committee believe are reasonable and consistent with the overall compensation
program to better enable us to attract and retain superior employees for key positions. The Committee periodically reviews the
level of perquisites and other personal benefits provided to the NEOs. In an effort to promote physical and financial health of
the NEOs, they are provided with club membership dues, a Company-paid physical examination for the NEO and his or her spouse, a
financial and tax planning stipend of up to $3,000 annually, life insurance, and spouse travel to certain business meetings. The
NEOs are reimbursed for these expenses only if they are incurred. The aggregate cost to the Company of the perquisites and personal
benefits described above for the NEOs for 2015 are included under “All Other Compensation” in the Summary Compensation
Table below.
Other Compensation
We offer all of our employees, including
the NEOs, industry competitive benefits including medical and dental reimbursement, short-term and long-term disability plans,
basic life and accident insurance and an employee assistance program. We offer a retirement program consisting of both qualified
and non-qualified defined contribution savings plans. See “Elements of Post-Termination Compensation” below for further
descriptions of these programs.
Impact of Regulatory Requirements
Our performance shares, both TSR and hybrid,
are intended to constitute “qualified performance based compensation” as defined under Section 162(m) of the Internal
Revenue Code. The effect of that qualification is that compensation paid to covered employees pursuant to the performance shares
should remain fully deductible. It is the Committee’s intent that the majority of long-term incentive awards and annual cash
incentive bonuses will qualify under Section 162(m) and with respect to 2015 compensation, we believe that to be the case. However,
a loss of deductibility may occur from year to year and is not considered a material factor in setting compensation.
In addition, in order to permit the Committee
the flexibility to use subjective and discretionary components in setting annual cash incentive awards without the Company’s
loss of deduction under Section 162(m), we use a “negative discretion” plan for executive officers to whom Section
162(m) might be applicable. Under this plan, the Committee sets one or more financial or operating performance targets early in
the year to create a bonus pool intended to meet the requirements of Section 162(m) for such executive officers and reserves the
right to reduce or otherwise set the cash incentive amounts taking other factors into account. As a result, the Section 162(m)
metrics are not the primary metrics used in determining the relevant cash incentive awards to these executive officers.
Clawback Provisions
We have not adopted express “clawback”
provisions with respect to compensation elements which would allow the Company to recoup paid compensation from designated officers
in the event of a financial restatement. The Committee has deferred taking action on clawbacks until such time as the proposed
regulations published by the SEC in July 2015 pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection
Act are finalized, in order to ensure our policy will comply with the final regulations. The Committee will continue to consider
the appropriateness of clawback provisions in future compensation decisions. Our 2014 Incentive Plan makes any award pursuant to
that plan subject to any future clawback policy we adopt.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
38
|
Elements of Post-Termination Compensation
Savings Investment Plan
The savings investment plan is a tax-qualified
retirement savings plan, or 401(k) plan, in which all employees, including the NEOs, may participate. It allows participants to
contribute the lesser of up to 50% of their annual salary, or the limit prescribed by the Internal Revenue Service, on a pre-tax
basis. We match 100% of the first six percent of a participant’s eligible pre-tax contribution. Participants are 100% vested
in the Company’s contributions after five years of service, vesting 20% per year.
During 2015, we contributed 9% of salary
and bonus of all eligible employees, including all eligible NEOs, into the 401(k) plan (or into the non-qualified deferred compensation
plan to the extent in excess of the qualified plan limits). Participants are 100% vested in the Company’s contributions after
five years of service, vesting 20% per year. The 9% contribution is approved annually by the Board of Directors and in October
2015, the Board approved continuation of the contribution for 2016.
Deferred Compensation Plan
The non-qualified deferred compensation plan
provides supplemental retirement income benefits for our NEOs, other officers and other key employees, through voluntary deferrals
of salary, bonus and certain long-term incentives. It also allows for the Company to provide its full 6% match and 9% non-elective
contribution when contributions of the matching amount cannot be made to our 401(k) plan due to federal income tax limitations.
The plan allows the officers to defer the receipt and taxation of income until retirement from the Company. We make no additional
contributions to, nor do we pay in excess of market interest rates on, the deferred compensation plan. Amounts deferred by an officer
under the deferred compensation plan are held and invested by the Company in various mutual funds and other investment options
selected by the officer at the time of deferral. For additional information about the deferred compensation plan, including the
investment options and the manner of distributions, see “Non-Qualified Deferred Compensation” below.
Retiree Medical Coverage
NEOs are eligible for certain health benefits
for retired employees, including their spouses, eligible dependents and surviving spouses. The health care plans are contributory
with participants’ contributions adjusted annually. Employees become eligible for this benefit if they meet certain age and
service requirements at retirement.
Change in Control Agreements
We have change in control agreements with
the NEOs and the other executive officers that provide for cash payments and certain other benefits in the event that the employee
is actually or constructively terminated within two years of a change in control event. When approving the plan, the Committee
reviewed data regarding similar plans within the peer group and the Company’s industry generally and applied its judgment
to determine whether triggering events and benefit levels under these agreements were necessary to meet the Committee’s objectives
of encouraging such employees to remain with the Company in the event of a change in control during circumstances suggesting a
change in control might occur. The Committee believes this program is important in recruiting and retaining strong leadership and
to encourage retention in these situations and that the “double-trigger” for cash payouts meets the stockholders’
expectations that employees not be unjustly enriched upon a change in control.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
39
|
The cash payments include three times the
sum of base salary and the highest bonus paid in the last three years or targeted to be paid in the year of termination. Benefits
include continued eligibility for medical, dental and life insurance for three years, provided the employee pays the premiums,
three years service credit in retirement plans, limited outplacement assistance and tax gross-up on excise taxes for agreements
that were in place prior to 2010. In 2010, the Committee adopted a policy to exclude excise tax gross-up provisions for change
in control agreements adopted after that date. The award agreements for the equity awards also contain accelerated vesting immediately
upon a change in control, subject, in the case of the TSR performance shares, to the level of the Company’s TSR performance
relative to its peers as of the last day of the month immediately preceding the month in which the change in control event occurs.
The Committee generally views the potential
payments and benefits under the change in control agreements as a separate compensation element because such payments and benefits
are not expected to be paid in a particular year and serve a different purpose for the executive other than elements of compensation.
Accordingly, those payments and benefits do not significantly affect decisions regarding other elements of compensation.
Stock Ownership Guidelines
The Corporate Governance and Nominations
Committee and the Board of Directors have adopted stock ownership guidelines for our officers and directors. Under those guidelines,
the Chief Executive Officer and the Chief Financial Officer are expected to hold 30% of the after-tax shares received upon the
vesting or exercise of an equity award until such time as they have accumulated six times their base salary, and to maintain that
level of ownership, once achieved. All other executive officers are expected to hold 30% of the after-tax shares received upon
the vesting or exercise of an equity award until such time as they have accumulated three times their base salary, likewise maintaining
that level of ownership, once achieved. All of the NEOs have reached the required level of shareholdings under the stock ownership
guidelines and currently hold the required level of shares. Non-employee directors must hold 100% of their restricted stock units
until they cease to be a director.
Anti-hedging Policy
We have a policy prohibiting directors and
officers from speculative trading in Company securities, including hedging transactions, short selling, and trading in put options,
call options, swaps or collars. To our knowledge, all directors and executive officers are in compliance with the policy. The Company’s
policy also strongly discourages all other employees from engaging in hedging activities in our stock and any such transaction
requires notice and pre-approval, and will only be considered with a valid justification. Since the adoption of the policy in 2013,
we are not aware of any hedging activities by our employees.
Effect of Say on Pay Votes and Shareholder Outreach
In setting 2015 executive compensation, the
Committee considered the outcome of the say-on-pay vote at the two most recent annual meetings as strongly supportive of our pay
practices and programs. Those results were as follows:
•
|
98.2% in favor at the 2014 annual meeting; and
|
|
|
•
|
98.4% in favor of the 2015 annual meeting.
|
Furthermore, our stockholders have supported
our compensation programs since the imposition of the say-on-pay vote, with approval rates exceeding 95% since the first vote in
2011. As a result, the Committee concluded that the 2015 compensation paid to our NEOs and our overall pay practices did not require
substantial revision to address shareholder concerns. This conclusion was further affirmed by input received from our top institutional
shareholders in our regular outreach program during the period after the 2015 annual meeting and preceding the filing of this proxy
statement. This continued positive support from both the annual say-on-pay vote and communications with shareholders was considered
by the Committee in February 2016 in its decision to continue the elements and design of the 2015 program when setting 2016 executive
compensation.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
40
|
Compensation Consultant
The Committee employs the services of an
executive compensation consultant. In 2015, the Committee engaged Meridian as its independent consultant, and Meridian has also
been retained by the Committee for 2016. Meridian is responsible for preparing and presenting a comprehensive competitive market
study of the compensation levels and practices for a group of industry peers. The Committee-approved industry peer group is listed
and described in more detail above at “Industry Peer Group.” Meridian is also responsible for preparing and presenting
an outside director compensation study using the same industry peer group. The Committee relies on Meridian for input on pay philosophy,
current market trends, legal and regulatory considerations and prevalence of benefit and perquisite programs. A representative
of Meridian attends all regular meetings of the Committee and participates in most executive sessions.
In October 2015, the Committee reviewed the
independence of Meridian, and found it to be independent and without conflicts of interest in providing services to the Committee.
In making such determination, the Committee considered the six factors established by the NYSE. Fees paid by the Company to Meridian
account for less than 1% of Meridian’s total annual revenues. The Committee reviewed Meridian’s policies and procedures
designed to prevent conflicts of interest. To the knowledge of Meridian, there are no personal relationships among Meridian partners,
consultants or employees and members of the Committee or the Company’s management. To the knowledge of Meridian, none of
the Meridian partners, consultants or employees providing services the Committee owns Company stock. Meridian works exclusively
for the Committee and performs no services directly for management. Management does not retain the services of a compensation consultant.
Role of Executives in Establishing Compensation
The President and CEO, the Executive Vice
President and CFO, and the Corporate Secretary and Managing Counsel each play a role in our compensation process. With the benefit
of Meridian’s independent competitive market study, the CEO makes compensation recommendations to the Committee for our other
officers, but not for his own compensation. The CEO considers internal pay equity issues, individual performance and Company performance
in making his recommendations to the Committee. The Executive Vice President and CFO makes recommendations to the CEO for the officers
who are his direct reports. The Human Resources Department provides the Committee survey data from a wider group of companies in
the energy sector than the industry peer group described above, which the Committee uses for evaluation of non-executive compensation
trends, and general administrative support implementing the Committee’s decisions. The executives listed above, together
with the Corporate Secretary and Managing Counsel, prepare materials and agendas for the Committee meetings and also prepare the
long-term equity plans as directed by the Committee for its review and consideration. Certain of the noted officers attend the
Committee meetings; however, the officers are generally excused from the meetings to enable the Committee to meet privately in
executive session, both with and without the compensation consultant also being present. The Committee has delegated to management
authority to administer the long-term incentive plans in accordance with the terms and conditions of the shareholder approved plans,
the specific award agreements and the specific individual awards approved by the Committee and, as needed, by the Board of Directors.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
41
|
Executive Compensation Business Risk Review
The ownership stake in the Company
provided by our equity-based compensation, the extended vesting of these awards and our stock ownership guidelines are
designed to align the interests of our NEOs with our shareholders, maximize performance and promote executive retention. At
the same time, the Committee believes, with the concurrence of our independent consultant, that our executive compensation
program does not encourage management to take unreasonable risks related to the Company’s business. The factors that
support this conclusion are our focus on long-term incentive compensation, our use of balanced long-term incentives, the
metric diversification and capped opportunities in our annual bonus plan and long-term incentives and our stock ownership
guidelines.
Compensation Committee Report
The following report of the Compensation
Committee of the Board of Directors shall not be deemed to be “soliciting material” or to be “filed” with
the SEC or subject to the SEC’s proxy rules, except for the required disclosure in this Proxy Statement, or subject to the
liabilities of Section 18 of the Securities Exchange Act of 1934 (Exchange Act”), and the information shall not be deemed
to be incorporated by reference into any filing made by the company under the Securities Act of 1933 or the Exchange Act.
The Compensation Committee of the Board of
Directors has reviewed and discussed with management the above Compensation Discussion and Analysis. Based on such review and discussions,
the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement
and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 for
filing with the SEC.
The Compensation Committee
Rhys J. Best (Chairman)
Robert L. Keiser
W. Matt Ralls
February 16, 2016
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
42
|
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below summarizes the total compensation
paid to or earned by each of the CEO, the CFO and the next three most highly compensated executive officers (“NEOs”)
for the fiscal year ended December 31, 2015. Cash bonus amounts paid under the Company’s 2014 Incentive Plan (2004 Incentive
Plan for the 2014 and 2013 bonuses), which are listed in the column titled “Non-Equity
Incentive Plan Compensation,” were determined by the Committee at its February 2016 meeting for 2015 performance and, to
the extent not deferred by the executive, were paid out shortly thereafter. For additional information about Non-Equity Incentive
Plan Compensation, see “Annual Cash Incentive Bonus” above.
Name and
Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)(1)
|
|
Stock
Awards
($)(2)
|
|
Option
Awards
($)
|
|
Non-Equity
Incentive Plan
Compensation
($)(3)
|
|
|
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($)(4)
|
|
Total
($)
|
|
Dan O. Dinges
|
|
2015
|
|
$
|
900,016
|
|
-
|
|
$
|
6,573,177
|
|
|
-
|
|
|
|
$ 1,237,500
|
|
|
|
|
-
|
|
|
|
$ 288,048
|
|
|
$
|
8,998,741
|
|
Chairman, President and
|
|
2014
|
|
$
|
885,592
|
|
-
|
|
$
|
6,831,737
|
|
|
-
|
|
|
|
$ 1,800,000
|
|
|
|
|
-
|
|
|
|
$ 297,484
|
|
|
$
|
9,814,813
|
|
Chief Executive Officer
|
|
2013
|
|
$
|
800,962
|
|
-
|
|
$
|
6,045,748
|
|
|
-
|
|
|
|
$ 2,000,000
|
|
|
|
|
-
|
|
|
|
$ 266,154
|
|
|
$
|
9,112,864
|
|
Scott C. Schroeder
|
|
2015
|
|
$
|
475,010
|
|
-
|
|
$
|
3,033,773
|
|
|
-
|
|
|
|
$ 522,500
|
|
|
|
|
-
|
|
|
|
$ 174,646
|
|
|
$
|
4,205,929
|
|
Executive Vice President
|
|
2014
|
|
$
|
470,202
|
|
-
|
|
$
|
2,561,903
|
|
|
-
|
|
|
|
$ 760,000
|
|
|
|
|
-
|
|
|
|
$ 174,881
|
|
|
$
|
3,966,986
|
|
and Chief Financial Officer
|
|
2013
|
|
$
|
444,231
|
|
-
|
|
$
|
2,599,587
|
|
|
-
|
|
|
|
$ 1,112,500
|
|
|
|
|
-
|
|
|
|
$ 173,144
|
|
|
$
|
4,329,462
|
|
Jeffrey W. Hutton
|
|
2015
|
|
$
|
355,014
|
|
-
|
|
$
|
783,720
|
|
|
-
|
|
|
|
$ 292,875
|
|
|
|
|
-
|
|
|
|
$ 121,624
|
|
|
$
|
1,553,233
|
|
Senior Vice President,
|
|
2014
|
|
$
|
352,130
|
|
-
|
|
$
|
882,431
|
|
|
-
|
|
|
|
$ 397,000
|
|
|
|
|
-
|
|
|
|
$ 120,400
|
|
|
$
|
1,751,961
|
|
Marketing
|
|
2013
|
|
$
|
336,154
|
|
-
|
|
$
|
846,386
|
|
|
-
|
|
|
|
$ 595,000
|
|
|
|
|
-
|
|
|
|
$ 114,134
|
|
|
$
|
1,891,674
|
|
Phillip L. Stalnaker
|
|
2015
|
|
$
|
344,234
|
|
-
|
|
$
|
758,443
|
|
|
-
|
|
|
|
$ 288,750
|
|
|
|
|
-
|
|
|
|
$ 101,197
|
|
|
$
|
1,492,624
|
|
Vice President
|
|
2014
|
|
$
|
316,164
|
|
-
|
|
$
|
774,231
|
|
|
-
|
|
|
|
$ 350,000
|
|
|
|
|
-
|
|
|
|
$ 106,131
|
|
|
$
|
1,546,526
|
|
and Regional
Manager,
North Region
|
|
2013
|
|
$
|
295,192
|
|
-
|
|
$
|
785,958
|
|
|
-
|
|
|
|
$ 575,000
|
|
|
|
|
-
|
|
|
|
$ 89,540
|
|
|
$
|
1,745,690
|
|
G. Kevin Cunningham
|
|
2015
|
|
$
|
348,005
|
|
-
|
|
$
|
657,312
|
|
|
-
|
|
|
|
$ 267,960
|
|
|
|
|
-
|
|
|
|
$ 83,115
|
|
|
$
|
1,356,392
|
|
Vice President and
|
|
2014
|
|
$
|
345,505
|
|
-
|
|
$
|
740,110
|
|
|
-
|
|
|
|
$ 150,000
|
|
|
|
|
-
|
|
|
|
$ 104,372
|
|
|
$
|
1,339,987
|
|
General Counsel
|
|
2013
|
|
$
|
332,115
|
|
-
|
|
$
|
785,958
|
|
|
-
|
|
|
|
$ 527,630
|
|
|
|
|
-
|
|
|
|
$ 101,170
|
|
|
$
|
1,746,873
|
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
43
|
(1)
|
Cash bonuses paid pursuant to the 2014 Incentive Plan for 2015 annual performance (2004 Incentive Plan for the 2014 and 2013 bonuses) are listed under the column “Non-Equity Incentive Plan Compensation.”
|
(2)
|
The amounts in this column reflect the grant date fair value with respect to both the TSR and the hybrid performance share awards for the relevant fiscal year in accordance with the FASB ASC Topic 718. The grant date fair value of the hybrid performance share awards for 2015 awards was the closing stock trading price on the date of grant and for 2013 and 2014 awards was the average of the Company’s high and low stock trading price on the date of grant. The grant date fair values per share used to compute the amounts in this column for the hybrid performance shares are as follows:
|
|
|
|
|
|
Grant Date
|
|
Grant Date Fair Value per Share
|
|
Award Types Included
|
February 21, 2013
|
|
$26.62
|
|
Hybrid Performance Shares
|
February 20, 2014
|
|
$39.43
|
|
Hybrid Performance Shares
|
February 19, 2015
|
|
$27.71
|
|
Hybrid Performance Shares
|
|
|
|
|
|
|
TSR performance shares granted on February 21, 2013, February 20, 2014 and February 19, 2015 were valued using a Monte Carlo model and the grant date fair values per share used for financial reporting purposes, including the liability component for cash payments over 100% of target, were $35.89, $48.54 and $28.23, respectively. Assumptions used in the Monte Carlo model for these grants, as well as additional information regarding accounting for performance share awards, are included in Note 13 of the Notes to the Consolidated Financial Statements included in the Company’s Form 10-K for the years shown.
|
(3)
|
The amounts in this column reflect cash incentive awards to the NEOs under the 2014 Incentive Plan (2004 Incentive Plan for the 2014 and 2013 bonuses), which is discussed in detail above under “Annual Cash Incentive Bonus.”
|
(4)
|
The amounts in this column include the Company’s matching contribution to the Savings Investment Plan (401(k) Plan), which is discussed above under “Elements of Post-Termination Compensation-Savings Investment Plan.” For 2015, such contribution totaled $15,900 for each NEO. The amounts also include the 9% Company retirement contribution to the 401(k) plan or to the deferred compensation plan, to the extent in excess of the 401(k) plan limits. Such contribution for 2015 totaled $249,640 for Mr. Dinges; $128,971 for Mr. Schroeder; $85,822 for Mr. Hutton; $45,551 for Mr. Cunningham and $76,062 for Mr. Stalnaker. The amounts also include for each NEO some or all of the following:
|
|
•
|
Premiums paid on executive term life insurance;
|
|
•
|
Club dues;
|
|
•
|
Executive physical examination for the NEOs and their spouses;
|
|
•
|
A financial and tax planning stipend of up to $3,000 per year; and
|
|
•
|
Accrued dividends on unvested awards paid on stock awards that vested during the year.
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
44
|
2015 Grants of Plan-Based Awards
The table below reports all grants of plan-based
awards made during 2015. All grants of awards were made under the Company’s 2014 Incentive Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
Awards:
|
|
Exercise
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Number of
|
|
or Base
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Awards:
|
|
Securities
|
|
Price Of
|
|
of Stock
|
|
|
|
|
|
Estimated Possible Payouts Under
|
|
|
Under Equity Incentive Plan
|
|
|
Number
|
|
Underlying
|
|
Option
|
|
and Option
|
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
|
Awards
|
|
|
of Shares
|
|
Options
|
|
Awards
|
|
Awards
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
|
|
($)
|
|
($)
|
|
($) (1)
|
|
|
(#)
|
|
|
(#) (2)
|
|
|
(#) (3)
|
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
|
($) (4)
|
|
Dan O. Dinges
|
|
02/19/2015
|
|
$0
|
|
$
|
1,125,000
|
|
$
|
2,812,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/19/2015
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
140,743
|
|
|
281,486
|
|
|
|
|
|
|
|
|
$
|
3,973,175
|
|
|
|
02/19/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,829
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,600,002
|
|
Scott C.
|
|
02/19/2015
|
|
$0
|
|
$
|
475,000
|
|
$
|
1,187,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schroeder
|
|
02/19/2015
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
64,958
|
|
|
129,916
|
|
|
|
|
|
|
|
|
$
|
1,833,764
|
|
|
|
02/19/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,306
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,200,009
|
|
Jeffrey W.
|
|
02/19/2015
|
|
$0
|
|
$
|
266,250
|
|
$
|
665,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hutton
|
|
02/19/2015
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
16,781
|
|
|
33,562
|
|
|
|
|
|
|
|
|
$
|
473,728
|
|
|
|
02/19/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,187
|
|
|
|
|
|
|
|
|
|
|
|
$
|
309,992
|
|
Phillip L.
|
|
02/19/2015
|
|
$0
|
|
$
|
262,500
|
|
$
|
656,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stalnaker
|
|
02/19/2015
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
16,240
|
|
|
32,480
|
|
|
|
|
|
|
|
|
$
|
458,455
|
|
|
|
02/19/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,826
|
|
|
|
|
|
|
|
|
|
|
|
$
|
299,988
|
|
G. Kevin
|
|
02/19/2015
|
|
$0
|
|
$
|
243,600
|
|
$
|
609,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cunningham
|
|
02/19/2015
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
14,074
|
|
|
28,148
|
|
|
|
|
|
|
|
|
$
|
397,309
|
|
|
|
02/19/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,383
|
|
|
|
|
|
|
|
|
|
|
|
$
|
260,003
|
|
(1)
|
Amounts
in this column represent a bonus payout of 250% of target. See discussion of the bonus factor applicable to the 2015 annual
cash incentive bonus in the “Compensation Discussion and Analysis” above under “Annual Cash Incentive Bonus.”
See also the actual bonus awards for 2015 in the “Non-Equity Incentive Plan Compensation” column of the “2015
Summary Compensation Table” above.
|
(2)
|
The first amount in
this column for each NEO represents 100% of TSR performance shares, which will be paid out based on the relative total shareholder
return on the Company’s stock over the three year period from January 1, 2015 to December 31, 2017, if the Company’s
total shareholder return ranks 9th or higher out of its peer group of seventeen companies, including the Company. The second
amount in this column for each NEO represents 100% of hybrid performance shares, which vest 25% on each of the first and second
anniversaries of the date of grant and 50% on the third anniversary of the date of grant, provided the Company has $100 million
or more operating cash flow in the fiscal year prior to the vesting date.
|
(3)
|
Amounts in this column
represent 200% of the targeted TSR performance shares, although amounts earned in excess of 100% up to 200% are paid in cash,
rather than shares, based on the closing trading prices of a share of Common Stock on the last day of the performance period.
See discussion of the additional terms of the TSR performance shares below.
|
(4)
|
The amounts in this
column reflect the grant date fair value of the TSR performance shares and the hybrid performance shares granted in 2015,
as computed in accordance with ASC Topic 718. The TSR performance share awards were valued using a Monte Carlo model and the
grant date fair value per share used for financial reporting purposes was $28.23. The hybrid performance share awards were
valued using the Company’s closing stock trading price on the date of grant, which was $27.71. Additional assumptions
used in the Monte Carlo model for TSR performance shares and other assumptions used in the calculation of these amounts, are
included in Note 13 of the Notes to the Consolidated Financial Statements included in the Form 10-K for the period ended December
31, 2015.
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
45
|
TSR performance shares
The TSR performance shares awarded in 2015
have a three-year performance period, which commenced January 1, 2015 and ends December 31, 2017. Each TSR performance share represents
the right to receive, after the end of the performance period, from 0% to 200% of a share of Common Stock (with amounts over 100%
paid in cash), based on the Company’s performance. The performance criteria that determines the payout per performance share
is the relative total shareholder return on the Company’s Common Stock as compared to the total shareholder return on the
common equity of each company in a comparator group. For this purpose, total shareholder return is expressed as a percentage equal
to common stock price appreciation as averaged for the first and last month of the performance period, plus dividends (on a cumulative
reinvested basis). The comparator group consists of the companies listed above under “Industry Peer Group.” If any
member of the comparator group ceases to have publicly traded common stock or if as a result of other business transactions becomes
incomparable, it may be removed from the comparator group and a replacement company added by the Compensation Committee, or the
Committee may decide to reduce the peer group to the remaining companies.
After the end of the performance period,
the Company will issue shares of Common Stock and pay cash in respect of each TSR performance share based on the relative ranking
of the Company versus the comparator group for total shareholder return during the performance period using the following scale:
Company Relative Placement
|
Percent Performance Shares
|
Value Consideration
|
1-2 (highest)
|
200%
|
100% stock / 100% cash
|
3
|
185%
|
100% stock / 85% cash
|
4
|
170%
|
100% stock / 70% cash
|
5
|
155%
|
100% stock / 55% cash
|
6
|
140%
|
100% stock / 40% cash
|
7
|
125%
|
100% stock / 25% cash
|
8
|
110%
|
100% stock / 10% cash
|
9
|
100%
|
Stock
|
10
|
90%
|
Stock
|
11
|
75%
|
Stock
|
12
|
60%
|
Stock
|
13
|
45%
|
Stock
|
14
|
30%
|
Stock
|
15
|
15%
|
Stock
|
16-17 (lowest)
|
0%
|
|
As noted above, in the event of a relative
ranking of 1 through 8, corresponding to a percentage payout above 100%, a share of TSR performance stock will entitle the participant
to receive one full share of Common Stock with respect to the first 100% of the payout and the balance of the payout in cash, in
an amount based on the fair market value of a share of Common Stock at the end of the performance period. The Committee certifies
the Company’s relative placement and the resulting level of achievement of the performance share awards prior to the issuance
of Common Stock and cash, if any.
If a participant is not an employee on the
last day of the performance period due to death, disability or retirement, Common Stock will be issued on the original performance
period schedule and the level of payout will be determined as with all other participants, except that (i) if the participant retires
and thereafter accepts an offer of employment from a competitor at any time prior to the receipt of Common Stock, the participant
will forfeit the right to receive such Common Stock and (ii) in the case of a retirement, the participant must be an employee on
September 30
th
of the year the award is granted in order to continue vesting in the award. If a participant is not an
employee on the date the Compensation Committee certifies the Company’s achievement level with respect to the TSR performance
shares due to any other voluntary or involuntary termination, no Common Stock or cash will be issued in respect of the participant’s
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
46
|
TSR performance share award unless otherwise
determined by the Compensation Committee. Prior to the issuance of shares of Common Stock in respect of a TSR performance share
award, the participant will have no right to vote or receive dividends on the shares. The TSR performance share award may not be
assigned or transferred except by will or the laws of descent and distribution. In the event of a Change In Control (as defined)
all unvested TSR performance shares shall vest to the extent of actual performance as of the Change In Control. Actual performance
as of the Change In Control is based on the greater of (i) total shareholder return through the end of the month prior to the Change
In Control or (ii) total shareholder return through the end of the month prior to the Change In Control calculated using the value
realized by shareholders in the Change In Control event. In the event the Company ceases to have publicly traded Common Stock as
a result of a business combination or other extraordinary transaction, the performance period will be terminated effective upon
the date of such cessation.
Hybrid performance shares
The hybrid performance shares awarded in
2015 vest 25% on each of the first two anniversaries of the date of grant and 50% on the third anniversary of the date of grant,
provided the Company has $100 million or more operating cash flow in the fiscal year prior to the vesting date. If the performance
metric is not met in any given year, then the respective tranche of hybrid performance shares will be forfeited. Unvested hybrid
performance shares will be forfeited if, during the three-year vesting period, the executive voluntarily leaves the Company. In
the event of an involuntary termination by the Company, the Compensation Committee will determine whether the unvested hybrid performance
shares will be forfeited. In the event of an employment termination due to death, disability or retirement, all unvested hybrid
performance shares will vest in accordance with the original vesting schedule except that (i) if the participant retires and thereafter
accepts an offer of employment from a competitor at any time prior to the receipt of hybrid performance shares, the participant
will lose the right to receive such hybrid performance shares and (ii) in the case of a retirement, the participant must be an
employee on September 30
th
of the year the award is granted in order to continue vesting in the award. Prior to vesting,
the participant has no right to vote or receive dividends on such shares but the unvested shares accrue dividends that are paid
in cash upon vesting. Accrued dividends are forfeited if the shares never vest. The hybrid performance shares may not be assigned
or transferred except by will or the laws of descent and distribution. In the event of a Change In Control (as defined), the unvested
hybrid performance shares will vest.
In the event of any merger, reorganization,
recapitalization, separation, liquidation, stock dividend, share combination or other change in the corporate structure of the
Company affecting the performance shares, the number of performance shares will be equitably adjusted by the Compensation Committee
to prevent dilution or enlargement of rights.
For additional information about the treatment
of certain of Mr. Dinges’ awards in the event of an employment termination, see “Potential Payments Upon Termination
or Change In Control” below.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
47
|
Outstanding Equity Awards at Fiscal Year-End 2015
The table below reports for each NEO outstanding equity awards
at December 31, 2015.
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(1)
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
|
|
Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
($)
|
|
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#) (2)
|
|
Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested
($) (3)
|
|
Dan O. Dinges
|
|
180,548
|
|
|
-
|
|
-
|
|
$10.19
|
|
2/17/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
114,256
|
|
|
-
|
|
-
|
|
$17.59
|
|
2/16/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
232,044
|
|
|
$4,104,858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
177,050
|
|
|
$3,132,015
|
|
Scott C.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,196
|
|
|
$1,754,777
|
|
Schroeder
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,585
|
|
|
$1,354,789
|
|
Jeffrey W.
|
|
24,952
|
|
|
-
|
|
-
|
|
$10.19
|
|
2/17/2018
|
|
|
|
|
|
|
|
|
|
|
Hutton
|
|
14,690
|
|
|
-
|
|
-
|
|
$17.59
|
|
2/16/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,574
|
|
|
$ 505,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,344
|
|
|
$ 395,265
|
|
Phillip L.
|
|
16,228
|
|
|
-
|
|
-
|
|
$10.19
|
|
2/17/2018
|
|
|
|
|
|
|
|
|
|
|
Stalnaker
|
|
10,492
|
|
|
-
|
|
-
|
|
$17.59
|
|
2/16/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,587
|
|
|
$ 470,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,880
|
|
|
$ 369,367
|
|
G. Kevin
|
|
20,288
|
|
|
-
|
|
-
|
|
$10.19
|
|
2/17/2018
|
|
|
|
|
|
|
|
|
|
|
Cunningham
|
|
14,690
|
|
|
-
|
|
-
|
|
$17.59
|
|
2/16/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,965
|
|
|
$ 423,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,209
|
|
|
$ 339,807
|
|
(1)
|
Amounts in this column
represent the exercisable portion of SARs granted in various years, all of which were fully vested as of December 31, 2015
and have a seven-year term. SARs must be exercised within 90 days if the executive voluntarily leaves the Company. In the
event of an involuntary termination by the Company, the Compensation Committee may extend the exercise period for vested SARs
to the earlier of 36 months or the expiration of the term of the SAR. In the event of death, retirement or disability, the
exercise period will be the earlier of 36 months or the expiration of the term of the SAR, except that if the participant
retires and thereafter accepts an offer of employment from a competitor at any time prior to the exercise of the SARs, the
participant will lose the right to exercise any remaining SARs and the remaining SARs shall be forfeited. The SAR awards may
not be assigned or transferred except by will or the laws of descent and distribution. In the event of a Change In Control,
all vested SARs will remain exercisable throughout the term of the SAR, provided the Company’s stock is still trading
on a national stock exchange.
|
(2)
|
The first amount in this column for
each NEO is TSR performance share awards. The terms and conditions of the TSR performance share awards are described in the
narrative following the “2015 Grants of Plan-Based Awards” table above. The TSR performance shares vest, if at
all, for each executive as follows (assuming 100% payout):
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
48
|
Date
|
Dan O. Dinges
|
Scott C. Schroeder
|
Jeffrey W. Hutton
|
Phillip L. Stalnaker
|
G. Kevin Cunningham
|
12/31/2016
|
91,301
|
34,238
|
11,793
|
10,347
|
9,891
|
12/31/2017
|
140,743
|
64,958
|
16,781
|
16,240
|
14,074
|
The second amount in this column for each NEO is hybrid performance shares. The terms and conditions of the hybrid performance share awards are described in the narrative following the “2015 Grants of Plan-Based Awards” table above. The hybrid performance shares vest, if at all, for each executive as follows:
|
Date
|
Dan O. Dinges
|
Scott C. Schroeder
|
Jeffrey W. Hutton
|
Phillip L. Stalnaker
|
G. Kevin Cunningham
|
2/19/2016
|
23,457
|
10,826
|
2,796
|
2,706
|
2,345
|
2/19/2017
|
23,457
|
10,827
|
2,797
|
2,707
|
2,346
|
2/19/2018
|
46,915
|
21,653
|
5,594
|
5,413
|
4,692
|
2/20/2016
|
15,217
|
5,706
|
1,966
|
1,725
|
1,649
|
2/20/2017
|
30,434
|
11,413
|
3,931
|
3,449
|
3,297
|
2/21/2016
|
37,570
|
16,160
|
5,260
|
4,880
|
4,880
|
(3)
|
Market value is based on the $17.69 per share closing price of the Company’s common stock on December 31, 2015.
|
2015 Option Exercises and Stock Vested
The table below reports stock options that were exercised and
performance shares that vested during 2015.
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of Shares
Acquired on Exercise
(#)
|
|
Value Realized
on Exercise
($) (1)
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
Value Realized
on Vesting
($)
|
Dan O. Dinges
|
|
|
-
|
|
|
|
-
|
|
|
|
183,864
|
(2)
|
|
$
|
3,937,172
|
(2)(4)
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
$
|
783,179
|
(3)
|
Scott C. Schroeder
|
|
|
109,218
|
|
|
|
$2,247,289
|
|
|
|
76,648
|
(2)
|
|
$
|
1,625,940
|
(2)(4)
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
$
|
336,700
|
(3)
|
Jeffrey W. Hutton
|
|
|
-
|
|
|
|
-
|
|
|
|
25,151
|
(2)
|
|
$
|
534,800
|
(2)(4)
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
$
|
109,639
|
(3)
|
Phillip L. Stalnaker
|
|
|
-
|
|
|
|
-
|
|
|
|
22,236
|
(2)
|
|
$
|
465,409
|
(2)(4)
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
$
|
101,858
|
(3)
|
G. Kevin Cunningham
|
|
|
-
|
|
|
|
-
|
|
|
|
23,524
|
(2)
|
|
$
|
501,241
|
(2)(4)
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
$
|
101,858
|
(3)
|
(1)
|
The amount in this column
relates to exercises of SARs and represents the difference between the closing price of the Company’s common stock on
the dates of exercise and the exercise price of the SARs, times the number of shares of common stock underlying the SARs exercised.
These amounts do not indicate that there was a sale of these shares by the NEO.
|
(2)
|
Represents the number of shares and
value realized for: (a) TSR performance shares, the performance period for which was January 1, 2013 through December 31,
2015 and which paid out at 140% of target upon the Compensation Committee’s certification of the results on January
5, 2016, and (b) hybrid performance shares that vested in February 2015, upon the Compensation Committee’s certification
of the performance metric of achieving at least $100 million of operating cash flow in 2014.
|
(3)
|
Represents the cash portion of the
TSR performance share award for performance in excess of 100% of target.
|
(4)
|
These amounts represent the closing
price of the Company’s common stock on the vesting dates times the number of shares acquired and do not indicate that
there was a sale of these shares by the NEO.
|
|
Cabot
Oil &
Gas Corporation
-
2016
Proxy Statement
49
|
2015 Non-Qualified Deferred Compensation
The table below reports NEO contributions, Company contributions,
earnings, and aggregate balances in the Company’s Deferred Compensation Plan for 2015.
Name
|
|
Executive
Contributions in Last
FY ($) (1)
|
|
Registrant
Contributions in Last
FY ($) (2)
|
|
Aggregate Earnings in
Last FY ($) (3)
|
|
Aggregate
Withdrawals/
Distributions ($) (4)
|
|
Aggregate Balance at
Last FYE ($) (5)
|
Dan O. Dinges
|
|
$
|
0
|
|
|
$
|
230,540
|
|
|
$
|
(3,218,080
|
)
|
|
$
|
323,136
|
|
|
$
|
8,959,263
|
|
Scott C. Schroeder
|
|
$
|
0
|
|
|
$
|
109,871
|
|
|
$
|
(2,669,395
|
)
|
|
$
|
0
|
|
|
$
|
5,202,923
|
|
Jeffrey W. Hutton
|
|
$
|
0
|
|
|
$
|
66,722
|
|
|
$
|
139
|
|
|
$
|
0
|
|
|
$
|
947,950
|
|
Phillip L. Stalnaker
|
|
$
|
34,712
|
|
|
$
|
56,962
|
|
|
$
|
(15,610
|
)
|
|
$
|
0
|
|
|
$
|
441,157
|
|
G. Kevin Cunningham
|
|
$
|
0
|
|
|
$
|
26,450
|
|
|
$
|
33
|
|
|
$
|
0
|
|
|
$
|
233,278
|
|
(1)
|
Amounts reported in this column are included in the Summary Compensation Table as salary and non-equity incentive plan compensation, as applicable.
|
(2)
|
Amounts reported in this column are included in the Summary Compensation Table as all other compensation.
|
(3)
|
Amounts reported in this column are not included in the Summary Compensation Table.
|
(4)
|
Distribution pursuant to election by the NEO.
|
(5)
|
Of the aggregate deferred compensation balances in this column, the following amounts are the total deferred amounts previously reported as compensation to the NEOs in prior years’ summary compensation tables, or would have been reported but for the executive not being an NEO in prior years, as salary, stock awards and non-equity incentive plan compensation, as applicable:
|
Dan O. Dinges
|
|
$
|
4,833,437
|
|
Scott C. Schroeder
|
|
$
|
2,592,540
|
|
Jeffrey W. Hutton
|
|
$
|
553,350
|
|
Phillip L. Stalnaker
|
|
$
|
145,815
|
|
G. Kevin Cunningham
|
|
$
|
0
|
|
Up to 100% of salary and annual cash incentive
bonus are permitted to be deferred into the Deferred Compensation Plan, subject to payment of Social Security, Medicare, incomes
taxes (on compensation not deferred) and employee benefit plan withholding requirements. Prior to June 1, 2008, TSR performance
shares were permitted to be deferred into the Deferred Compensation Plan. The Company also makes contributions to make up for certain
matching and profit-sharing contributions which, due to IRS limitations, cannot be contributed to the Company’s tax-qualified
savings investment plan (401(k) plan). Earnings on the deferred balances are determined by the executive’s investment selections
at the time of deferral. The Company holds deferred amounts and earnings thereon as corporate assets, which are invested as elected
by the executive. For 2015, the investment options and their respective rates of return follow:
Fund Name
|
|
Rate of Return
|
|
Fund Name
|
|
Rate of Return
|
Fidelity Retirement Money Market
|
|
|
0.02
|
%
|
|
FID Freedom K 2005
|
|
|
-0.17
|
%
|
Fidelity Spartan U.S. Bond Index
|
|
|
0.59
|
%
|
|
FID Freedom K 2010
|
|
|
-0.23
|
%
|
Oakmark Equity & Income
|
|
|
-4.60
|
%
|
|
FID Freedom K 2015
|
|
|
-0.22
|
%
|
John Hancock Disciplined Value R6
|
|
|
-4.81
|
%
|
|
FID Freedom K 2020
|
|
|
-0.14
|
%
|
Oakmark Fund I
|
|
|
-3.95
|
%
|
|
FID Freedom K 2025
|
|
|
-0.15
|
%
|
Davis NY Venture
|
|
|
3.21
|
%
|
|
FID Freedom K 2030
|
|
|
-0.13
|
%
|
Spartan 500 Index
|
|
|
1.35
|
%
|
|
FID Freedom K 2035
|
|
|
-0.13
|
%
|
Fidelity Capital Appreciation K
|
|
|
1.76
|
%
|
|
FID Freedom K 2040
|
|
|
-0.12
|
%
|
Lord Abbett Mid Cap Stock
|
|
|
-3.31
|
%
|
|
FID Freedom K 2045
|
|
|
-0.14
|
%
|
Glenmede Small Cap Equity IS
|
|
|
-2.74
|
%
|
|
FID Freedom K 2050
|
|
|
-0.15
|
%
|
Fidelity International Discovery K
|
|
|
4.94
|
%
|
|
FID Freedom K 2055
|
|
|
-0.11
|
%
|
Cabot Oil & Gas Common Stock
|
|
|
-40.08
|
%
|
|
FID Freedom K 2060
|
|
|
-0.16
|
%
|
|
|
|
|
|
|
FID Freedom K Income
|
|
|
-0.32
|
%
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
50
|
Distributions from the Deferred Compensation Plan are based on
the executive’s election at the time of deferral. Distribution elections may be modified, provided that the modification
is made at least one year prior to the original time elected and the new election is moved out at least five years past the original
time-based distribution election. Distribution elections can only be delayed not accelerated.
Potential Payments Upon Termination or Change In Control
Change In Control Benefits
The Company has entered into change in control agreements with
each NEO and certain other officers of the Company. The Committee believes that these agreements encourage these executives to
remain employed and to carry out their duties with the Company in the event of a change in control of the Company and during circumstances
suggesting a change in control might occur. The Committee believes this program is important to maintaining strong leadership in
those situations.
In the agreements, a “change in control” is generally
defined to include:
•
|
any person or group becoming the beneficial owner of 35% or more of either the Company’s common stock or the combined voting power of the Company’s outstanding voting securities, with certain exceptions;
|
|
|
|
•
|
specified changes in a majority of the members of the Board of Directors;
|
|
|
|
•
|
a reorganization, merger or consolidation or sale or other disposition of substantially all of the Company’s assets being consummated, unless, following the transaction:
|
|
|
|
-
|
the persons who were the beneficial owners of the Company prior to the transaction
continue to own at least 50% of the common stock or other securities entitled to vote in the election of directors of the resulting
entity in substantially the same proportions as prior to the transaction,
|
|
|
|
|
-
|
no individual or entity (other than an entity resulting from the transaction) beneficially
owns 35% or more of the common equity or voting power of the entity resulting from the transaction, except to the extent that
such ownership existed prior to the transaction, and
|
|
|
|
|
-
|
at least a majority of the members of the Board of Directors of the entity resulting
from the transaction were members of the Company’s Board at the time the transaction was approved or entered into; and
|
|
|
|
•
|
a liquidation or dissolution of the Company.
|
The agreements provide that, in the event of a change in control
or upon an occurrence deemed to be in anticipation of a change in control, the executives will receive certain benefits, provided
that their employment is terminated within two years of such event. The executive will receive these benefits unless termination
is:
•
|
for cause;
|
|
|
•
|
voluntary on the part of the executive (but not a constructive termination without
cause); or
|
|
|
•
|
due to death or disability.
|
Benefits under the change in control agreements generally include:
•
|
a lump-sum cash payment equal to three times the sum of:
|
|
|
|
-
|
the executive’s base salary in effect immediately prior to the change in control
or the executive’s termination, whichever is greater, and
|
|
|
|
|
-
|
the greater of (1) the executive’s target bonus for the year during which the
change in control occurred or, if greater, the year during which the executive’s termination occurred, or (2) the executive’s
actual bonus paid in any of the three fiscal years immediately preceding the change in control or, if termination of employment
occurs prior to a change in control, termination of employment;
|
|
|
|
•
|
three years of continued medical, dental and life insurance coverage at the premium rate applicable to active executives; and
|
|
|
•
|
outplacement assistance in an amount up to 15% of the executive’s base salary.
|
Beginning in 2010, the Company ceased entering into agreements
containing tax gross-up payments on payments to executives by the Company upon a change in control. The agreements in place prior
to that time with all of the NEOs except Mr. Cunningham, who became an officer in September 2010, provide that in the event
that excise taxes apply to payments to the executives by the Company upon a change
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
51
|
in control, the Company will make an additional tax gross-up payment
to the executive in an amount necessary to leave the executive “whole,” as if no excise tax had applied. No payments
have been made to any of the NEOs under these agreements.
The award agreements for all of the NEOs’ long-term equity
awards also include provisions for the immediate vesting of all unvested awards upon the change in control event, as follows:
•
|
payment with respect to traditional performance shares based on performance through
the change in control event as more fully described above under “Grants of Plan-Based Awards;”
|
|
|
•
|
immediate vesting and exercisability of all of the executive’s stock options
and SAR awards, with exercisability extended for the full term of the award;
|
|
|
•
|
immediate vesting and lapse of restrictions on any outstanding restricted stock grants;
and
|
|
|
•
|
immediate vesting of any outstanding hybrid performance shares.
|
For a more detailed discussion of the terms of these awards, see
above under “Grants of Plan-Based Awards.”
CEO Employment Agreement
In addition to a change in control agreement, we have entered
into an employment agreement with Mr. Dinges. Under the terms of Mr. Dinges’ employment agreement, in the event
of a change in control, Mr. Dinges will receive the more generous of the benefits and payments, as determined on a benefit-by-benefit
basis, under either his change in control agreement or his employment agreement, but not both. The employment agreement provides
that if Mr. Dinges terminates his employment for good reason (as defined) or if the Company terminates his employment other
than for cause (as defined), Mr. Dinges will receive:
•
|
a lump-sum cash payment equal to two times his annual base salary plus two times his
annual target bonus;
|
|
|
•
|
a
24-month continuation of medical and life insurance programs at the premium rate applicable to active executives;
|
|
|
•
|
full vesting
of all of his restricted stock awards;
|
|
|
•
|
full vesting of all of his stock option awards and SAR awards, with exercisability
extending for 36 months following termination (or the expiration of the original term, if earlier); and
|
|
|
•
|
full vesting of all of his performance shares, subject to the payout provisions in
the underlying award agreements.
|
Potential Payments to NEOs
The tables below reflect the compensation payable to each NEO
upon voluntary termination, retirement, involuntary not-for-cause termination, for cause termination, termination following a change
in control and in the event of disability or death of the executive. The actual amounts to be paid out can only be determined at
the time of such executive’s separation from the Company.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
52
|
DAN O. DINGES, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
|
|
Voluntary
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Not For
|
|
|
|
|
|
Change In
|
|
|
|
|
|
|
|
Executive
Benefit and Payments
|
|
for Good
|
|
|
Voluntary
|
|
|
Retirement
|
|
|
Cause
|
|
|
For Cause
|
|
|
Control
|
|
|
|
|
|
|
|
Upon
Separation
|
|
Reason
|
|
|
Termination
|
|
|
(1)
|
|
|
Termination
|
|
|
Termination
|
|
|
(2)
|
|
|
Disability
|
|
|
Death
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multiple
of Salary (0x, 2x or 3x)
|
|
$
|
1,800,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1,800,000
|
|
|
|
-
|
|
|
$
|
2,700,000
|
|
|
|
-
|
|
|
|
-
|
|
Multiple of Bonus
(-x, 2x or 3x)
|
|
$
|
4,000,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
4,000,000
|
|
|
|
-
|
|
|
$
|
6,000,000
|
|
|
|
-
|
|
|
|
-
|
|
Long-Term Incentive Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share
Vesting
(3)
|
|
$
|
7,236,873
|
|
|
|
-
|
|
|
$
|
7,236,873
|
|
|
$
|
7,236,873
|
|
|
|
-
|
|
|
$
|
7,236,873
|
|
|
$
|
7,236,873
|
|
|
$
|
7,236,873
|
|
Benefits
& Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout of Deferred
|
|
$
|
8,959,263
|
|
|
$
|
8,959,263
|
|
|
$
|
8,959,263
|
|
|
$
|
8,959,263
|
|
|
$
|
8,959,263
|
|
|
$
|
8,959,263
|
|
|
$
|
8,959,263
|
|
|
$
|
8,959,263
|
|
Compensation
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health, Life, and Welfare
|
|
$
|
30,707
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
30,707
|
|
|
|
-
|
|
|
$
|
46,060
|
|
|
|
-
|
|
|
|
-
|
|
Benefits Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise Tax & Gross-Up
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outplacement Services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
135,000
|
|
|
|
-
|
|
|
|
-
|
|
Earned Vacation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
22,026,843
|
|
|
$
|
8,959,263
|
|
|
$
|
16,196,136
|
|
|
$
|
22,026,843
|
|
|
$
|
8,959,263
|
|
|
$
|
25,077,196
|
|
|
$
|
16,196,136
|
|
|
$
|
16,196,136
|
|
(1)
|
Mr. Dinges was retirement eligible on December 31, 2015.
|
(2)
|
Amounts in this column representing accelerated vestings of long-term incentive
compensation will occur immediately upon the change in control event, pursuant to the terms of the awards.
|
(3)
|
The amounts set forth in this row represent a payout at achievement of 100% of
pre-established performance objectives. Under normal conditions, the actual payout of the TSR performance awards will occur at
the end of the relevant performance period, and may be higher or lower than 100% (up to a maximum of 200%) depending on the Company’s
actual Total Shareholder Return ranking for the performance period. However, in the event of a change in control, the performance
period will be shortened and payout will occur immediately following the change in control based on the greater of (i) Total Shareholder
Return through the end of the month prior to the change in control, or (ii) Total Shareholder Return through the end of the month
prior to the change in control using the value realized by shareholders in the change in control event. For hybrid performance
shares, receipt of the full payout will occur at the original vesting dates set forth in the award agreements only if the relevant
operating income targets are achieved, except in the case of a change in control, in which case full payout will be made immediately
upon the change in control. These values were computed using the closing price of the Company’s common stock on December
31, 2015 of $17.69.
|
(4)
|
Amounts in this row represent earned compensation voluntarily deferred by the NEO
under the terms of the deferred compensation plan. For more information, see “2015 Nonqualified Deferred Compensation”
above. For termination of employment due to retirement, payment of the deferred compensation is based upon the NEO’s election
at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months
from the date of termination.
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
53
|
SCOTT C. SCHROEDER, EXECUTIVE VICE PRESIDENT AND CFO
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
Change In
|
|
|
|
|
|
|
|
Executive Benefit and Payments
|
|
Voluntary
|
|
|
Retirement
|
|
|
Not For Cause
|
|
For Cause
|
|
|
Control
|
|
|
|
|
|
|
|
Upon Separation
|
|
Termination
|
|
|
(1)
|
|
|
Termination
|
|
Termination
|
|
|
(2)
|
|
|
Disability
|
|
|
Death
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multiple of Salary (0x or 3x)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1,425,000
|
|
|
|
-
|
|
|
|
-
|
|
Multiple of Bonus (0x or 3x)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,337,500
|
|
|
|
-
|
|
|
|
-
|
|
Long-Term Incentive Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Vesting
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,109,566
|
|
|
$
|
3,109,566
|
|
|
$
|
3,109,566
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout of Deferred Compensation
(4)
|
|
$
|
5,202,923
|
|
|
$
|
5,202,923
|
|
|
$
|
5,202,923
|
|
|
$
|
5,202,923
|
|
|
$
|
5,202,923
|
|
|
$
|
5,202,923
|
|
|
$
|
5,202,923
|
|
Health, Life, and Welfare Benefits
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
75,047
|
|
|
|
-
|
|
|
|
-
|
|
Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise Tax & Gross-Up
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outplacement Services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
71,250
|
|
|
|
-
|
|
|
|
-
|
|
Earned Vacation
|
|
$
|
3,302
|
|
|
$
|
3,302
|
|
|
$
|
3,302
|
|
|
$
|
3,302
|
|
|
$
|
3,302
|
|
|
$
|
3,302
|
|
|
$
|
3,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,206,225
|
|
|
$
|
5,206,225
|
|
|
$
|
5,206,225
|
|
|
$
|
5,206,225
|
|
|
$
|
13,224,588
|
|
|
$
|
8,315,791
|
|
|
$
|
8,315,791
|
|
(1)
|
Mr. Schroeder was not retirement eligible on December 31, 2015.
|
(2)
|
Amounts in this column representing accelerated vestings of long-term incentive
compensation will occur immediately upon the change in control event, pursuant to the terms of the awards.
|
(3)
|
The amounts set forth in this row represent a payout at achievement of 100% of
pre-established performance objectives. Under normal conditions, the actual payout of the TSR performance awards will occur at
the end of the relevant performance period, and may be higher or lower than 100% (up to a maximum of 200%) depending on the Company’s
actual Total Shareholder Return ranking for the performance period. However, in the event of a change in control, the performance
period will be shortened and payout will occur immediately following the change in control based on the greater of (i) Total Shareholder
Return through the end of the month prior to the change in control, or (ii) Total Shareholder Return through the end of the month
prior to the change in control using the value realized by shareholders in the change in control event. For hybrid performance
shares, receipt of the full payout will occur at the original vesting dates set forth in the award agreements only if the relevant
operating income targets are achieved, except in the case of a change in control, in which case full payout will be made immediately
upon the change in control. These values were computed using the closing price of the Company’s common stock on December
31, 2015 of $17.69.
|
(4)
|
Amounts in this row represent earned compensation voluntarily deferred by the NEO
under the terms of the deferred compensation plan. For more information, see “2015 Nonqualified Deferred Compensation”
above. For termination of employment due to retirement, payment of the deferred compensation is based upon the NEO’s election
at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months
from the date of termination.
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
54
|
JEFFREY W. HUTTON, SENIOR VICE PRESIDENT,
MARKETING
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
Change In
|
|
|
|
|
|
|
|
Executive Benefit and Payments
|
|
Voluntary
|
|
|
Retirement
|
|
|
Not For Cause
|
|
For Cause
|
|
Control
|
|
|
|
|
|
|
|
Upon Separation
|
|
Termination
|
|
|
(1)
|
|
|
Termination
|
|
Termination
|
|
(2)
|
|
|
Disability
|
|
|
Death
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multiple of Salary (0x or 3x)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1,065,000
|
|
|
|
-
|
|
|
|
-
|
|
Multiple of Bonus (0x or 3x)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1,785,000
|
|
|
|
-
|
|
|
|
-
|
|
Long-Term Incentive Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Vesting
(3)
|
|
|
-
|
|
|
$
|
900,739
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
900,739
|
|
|
$
|
900,739
|
|
|
$
|
900,739
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout of Deferred Compensation
(4)
|
|
$
|
947,950
|
|
|
$
|
947,950
|
|
|
$
|
947,950
|
|
|
$
|
947,950
|
|
|
$
|
947,950
|
|
|
$
|
947,950
|
|
|
$
|
947,950
|
|
Health, Life, and Welfare Benefits
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
35,959
|
|
|
|
-
|
|
|
|
-
|
|
Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise Tax & Gross-Up
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outplacement Services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
53,250
|
|
|
|
-
|
|
|
|
-
|
|
Earned Vacation
|
|
$
|
11,172
|
|
|
$
|
11,172
|
|
|
$
|
11,172
|
|
|
$
|
11,172
|
|
|
$
|
11,172
|
|
|
$
|
11,172
|
|
|
$
|
11,172
|
|
Total
|
|
$
|
959,122
|
|
|
$
|
1,859,861
|
|
|
$
|
959,122
|
|
|
$
|
959,122
|
|
|
$
|
4,799,070
|
|
|
$
|
1,859,861
|
|
|
$
|
1,859,861
|
|
(1)
|
Mr. Hutton was retirement eligible on December 31, 2015.
|
(2)
|
Amounts in this column representing accelerated vestings of long-term incentive
compensation will occur immediately upon the change in control event, pursuant to the terms of the awards.
|
(3)
|
The amounts set forth in this row represent a payout at achievement of 100% of
pre-established performance objectives. Under normal conditions, the actual payout of the TSR performance awards will occur at
the end of the relevant performance period, and may be higher or lower than 100% (up to a maximum of 200%) depending on the Company’s
actual Total Shareholder Return ranking for the performance period. However, in the event of a change in control, the performance
period will be shortened and payout will occur immediately following the change in control based on the greater of (i) Total Shareholder
Return through the end of the month prior to the change in control, or (ii) Total Shareholder Return through the end of the month
prior to the change in control using the value realized by shareholders in the change in control event. For hybrid performance
shares, receipt of the full payout will occur at the original vesting dates set forth in the award agreements only if the relevant
operating income targets are achieved, except in the case of a change in control, in which case full payout will be made immediately
upon the change in control. These values were computed using the closing price of the Company’s common stock on December
31, 2015 of $17.69.
|
(4)
|
Amounts in this row represent earned compensation voluntarily deferred by the NEO
under the terms of the deferred compensation plan. For more information, see “2015 Nonqualified Deferred Compensation”
above. For termination of employment due to retirement, payment of the deferred compensation is based upon the NEO’s election
at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months
from the date of termination.
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
55
|
PHILLIP L. STALNAKER, VICE PRESIDENT AND REGIONAL MANAGER,
NORTH REGION
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
Change In
|
|
|
|
|
|
|
|
Executive Benefit and Payments
|
|
Voluntary
|
|
Retirement
|
|
|
Not For Cause
|
|
For Cause
|
|
Control
|
|
|
|
|
|
|
|
Upon Separation
|
|
Termination
|
|
(1)
|
|
|
Termination
|
|
Termination
|
|
(2)
|
|
|
Disability
|
|
|
Death
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multiple of Salary (0x or 3x)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1,050,000
|
|
|
|
-
|
|
|
|
-
|
|
Multiple of Bonus (0x or 3x)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1,725,000
|
|
|
|
-
|
|
|
|
-
|
|
Long-Term Incentive Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Vesting
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
839,691
|
|
|
$
|
839,691
|
|
|
$
|
839,691
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout of Deferred Compensation
(4)
|
|
$
|
441,157
|
|
|
$
|
441,157
|
|
|
$
|
441,157
|
|
|
$
|
441,157
|
|
|
$
|
441,157
|
|
|
$
|
441,157
|
|
|
$
|
441,157
|
|
Health, Life, and Welfare Benefits
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
74,483
|
|
|
|
-
|
|
|
|
-
|
|
Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise Tax & Gross-Up
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outplacement Services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
52,500
|
|
|
|
-
|
|
|
|
-
|
|
Earned Vacation
|
|
$
|
2,396
|
|
|
$
|
2,396
|
|
|
$
|
2,396
|
|
|
$
|
2,396
|
|
|
$
|
2,396
|
|
|
$
|
2,396
|
|
|
$
|
2,396
|
|
Total
|
|
$
|
443,553
|
|
|
$
|
443,553
|
|
|
$
|
443,553
|
|
|
$
|
443,553
|
|
|
$
|
4,185,227
|
|
|
$
|
1,283,244
|
|
|
$
|
1,283,244
|
|
(1)
|
Mr. Stalnaker was retirement eligible on December 31, 2015.
|
(2)
|
Amounts in this column representing accelerated vestings of long-term incentive
compensation will occur immediately upon the change in control event, pursuant to the terms of the awards.
|
(3)
|
The amounts set forth in this row represent a payout at achievement of 100% of
pre-established performance objectives. Under normal conditions, the actual payout of the TSR performance awards will occur at
the end of the relevant performance period, and may be higher or lower than 100% (up to a maximum of 200%) depending on the Company’s
actual Total Shareholder Return ranking for the performance period. However, in the event of a change in control, the performance
period will be shortened and payout will occur immediately following the change in control based on the greater of (i) Total Shareholder
Return through the end of the month prior to the change in control, or (ii) Total Shareholder Return through the end of the month
prior to the change in control using the value realized by shareholders in the change in control event. For hybrid performance
shares, receipt of the full payout will occur at the original vesting dates set forth in the award agreements only if the relevant
operating income targets are achieved, except in the case of a change in control, in which case full payout will be made immediately
upon the change in control. These values were computed using the closing price of the Company’s common stock on December
31, 2015 of $17.69.
|
(4)
|
Amounts in this row represent earned compensation voluntarily deferred by the NEO
under the terms of the deferred compensation plan. For more information, see “2015 Nonqualified Deferred Compensation”
above. For termination of employment due to retirement, payment of the deferred compensation is based upon the NEO’s election
at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months
from the date of termination.
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
56
|
G. KEVIN CUNNINGHAM, VICE PRESIDENT AND GENERAL COUNSEL
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
Change In
|
|
|
|
|
|
|
|
Executive Benefit and Payments
|
|
Voluntary
|
|
Retirement
|
|
|
Not For Cause
|
|
For Cause
|
|
Control
|
|
|
|
|
|
|
|
Upon Separation
|
|
Termination
|
|
(1)
|
|
|
Termination
|
|
Termination
|
|
(2)
|
|
|
Disability
|
|
|
Death
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multiple of Salary (0x or 3x)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1,044,000
|
|
|
|
-
|
|
|
|
-
|
|
Multiple of Bonus (0x or 3x)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1,582,890
|
|
|
|
-
|
|
|
|
-
|
|
Long-Term Incentive Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Vesting
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
763,748
|
|
|
$
|
763,748
|
|
|
$
|
763,748
|
|
Benefits & Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout of Deferred Compensation
(4)
|
|
$
|
233,278
|
|
|
$
|
233,278
|
|
|
$
|
233,278
|
|
|
$
|
233,278
|
|
|
$
|
233,278
|
|
|
$
|
233,278
|
|
|
$
|
233,278
|
|
Health, Life, and Welfare Benefits
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
38,566
|
|
|
|
-
|
|
|
|
-
|
|
Continuation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise Tax & Gross-Up
(5)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outplacement Services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
52,200
|
|
|
|
-
|
|
|
|
-
|
|
Earned Vacation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
233,278
|
|
|
$
|
233,278
|
|
|
$
|
233,278
|
|
|
$
|
233,278
|
|
|
$
|
3,714,682
|
|
|
$
|
997,026
|
|
|
$
|
997,026
|
|
(1)
|
Mr. Cunningham was not retirement eligible on December 31, 2015.
|
(2)
|
Amounts in this column representing accelerated vestings of long-term incentive
compensation will occur immediately upon the change in control event, pursuant to the terms of the awards.
|
(3)
|
The amounts set forth in this row represent a payout at achievement of 100% of
pre-established performance objectives. Under normal conditions, the actual payout of the TSR performance awards will occur at
the end of the relevant performance period, and may be higher or lower than 100% (up to a maximum of 200%) depending on the Company’s
actual Total Shareholder Return ranking for the performance period. However, in the event of a change in control, the performance
period will be shortened and payout will occur immediately following the change in control based on the greater of (i) Total Shareholder
Return through the end of the month prior to the change in control, or (ii) Total Shareholder Return through the end of the month
prior to the change in control using the value realized by shareholders in the change in control event. For hybrid performance
shares, receipt of the full payout will occur at the original vesting dates set forth in the award agreements only if the relevant
operating income targets are achieved, except in the case of a change in control, in which case full payout will be made immediately
upon the change in control. These values were computed using the closing price of the Company’s common stock on December
31, 2015 of $17.69.
|
(4)
|
Amounts in this row represent earned compensation voluntarily deferred by the NEO
under the terms of the deferred compensation plan. For more information, see “2015 Nonqualified Deferred Compensation”
above. For termination of employment due to retirement, payment of the deferred compensation is based upon the NEO’s election
at the time of deferral. For all other terminations of employment, payment of the deferred compensation is in a lump sum six months
from the date of termination.
|
(5)
|
Mr. Cunningham became an officer in 2010, after we eliminated excise tax gross-ups
for new officers, so this benefit does not apply to him.
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
57
|
AUDIT COMMITTEE REPORT
The Audit Committee is composed of three independent, non-employee
directors. The Board of Directors has made a determination that the members of the Audit Committee satisfy the requirements of
the NYSE listing standards as to independence, financial literacy and experience. The Board determined that one of the members
of the Audit Committee, Mr. Kelley, is an “audit committee financial expert” as defined by rules of the SEC. The responsibilities
of the Audit Committee are set forth in the Audit Committee Charter, as amended from time to time by the Board of Directors, which
is included on the Company’s website at
www.cabotog.com
. The function of the Audit Committee is to review and report
to the Board of Directors with respect to various auditing and accounting matters, including overseeing the integrity of the financial
statements of the Company, the compliance by the Company with legal and regulatory requirements, the selection, independence, qualifications,
performance and compensation of the Company’s independent registered public accounting firm and the performance of the Company’s
internal audit function. The Audit Committee also reviews its charter annually. This is a report on the Audit Committee’s
activities relating to 2015.
Review of Audited Financial Statements with Management
The Audit Committee reviewed and discussed
the audited financial statements and management’s discussion and analysis of the Company’s financial condition and
results of operations with the management of the Company.
Review of Financial Statements and Other Matters with Independent
Registered Public Accounting Firm
The Audit Committee discussed with the independent registered
public accounting firm the matters required to be discussed as described in Statement on Auditing Standards (“SAS”)
No. 16 - Communication with Audit Committees. The Audit Committee has received and reviewed the written disclosures and the letter
from PricewaterhouseCoopers LLP (“PWC”), the Company’s independent registered public accounting firm, required
by applicable Public Company Accounting Oversight Board requirements regarding the firm’s communications with the Audit Committee
concerning independence and has discussed with PWC the independent registered public accounting firm’s independence. These
discussions included a review of all audit and non-audit services (including tax services) provided by PWC to the Company.
Recommendation that Financial Statements be Included in
the Annual Report
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2015 and filed with the SEC.
Audit Committee
Robert Kelley (Chairman)
Rhys J. Best
Robert L. Keiser
February 16, 2016
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
58
|
FEES BILLED BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR SERVICES IN 2015 AND 2014
Fee Type*
|
|
2015
|
|
|
2014
|
|
Audit Fees
|
|
$
|
1,700,000
|
|
|
$
|
1,635,100
|
|
Audit Related Fees
|
|
$
|
-
|
|
|
|
-
|
|
Tax Fees
(1)
|
|
$
|
346,912
|
|
|
$
|
579,457
|
|
All Other Fees
(2)
|
|
$
|
1,919
|
|
|
$
|
1,919
|
|
*
|
No pre-approved requirements were waived under the de minimis exception.
|
(1)
|
Consists of federal, state and sales tax planning, tax compliance and tax advice.
|
(2)
|
Consists of an accounting research software license.
|
PROPOSAL 2
|
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
The Audit Committee has approved and recommended the appointment
of PricewaterhouseCoopers LLP as the independent registered public accounting firm to examine the Company’s financial statements
for 2016. The persons named in the accompanying proxy will vote in accordance with the choice specified thereon, or, if no choice
is properly indicated, in favor of the ratification of PricewaterhouseCoopers LLP as the independent registered public accounting
firm for the Company. A representative of PricewaterhouseCoopers LLP is not expected to be in attendance at the Annual Meeting.
See “Audit Committee Report” above for further information.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR RATIFICATION OF THE APPOINTMENT OF THE FIRM OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE COMPANY FOR ITS 2016 FISCAL YEAR.
PROPOSAL 3
|
TO APPROVE, BY NON-BINDING ADVISORY VOTE, THE COMPENSATION OF OUR NAMED EXECUTIVE
OFFICERS
|
The shareholders of the Company are entitled to vote at the Annual
Meeting to approve the compensation of the Company’s NEOs, as disclosed in this Proxy Statement. The shareholder vote on
executive compensation is an advisory vote only, and it is not binding on the Company or the Board of Directors. Although the vote
is non-binding, the Compensation Committee and the Board value the opinions of the shareholders and will consider the outcome of
the vote when making future compensation decisions.
As described more fully in the Compensation Discussion and Analysis
section of this Proxy Statement, the Company’s executive compensation program is designed to:
•
|
Align executive compensation with our business strategy;
|
|
|
•
|
Encourage management to create sustained value for the shareholders while managing
inherent business risks;
|
|
|
•
|
Attract, retain, and engage talented executives; and
|
|
|
•
|
Support a long-term performance-based culture throughout the Company.
|
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
59
|
The executive compensation program seeks to align executive compensation
with shareholder value on an annual and long-term basis through a combination of base pay, annual cash incentive bonus and long-term
equity award incentives. The annual cash incentive bonus is based on Company-wide performance for year-over-year oil and natural
gas reserve and production growth, along with absolute levels for finding costs and unit production costs. For 2015, the aggregate
bonus award pool for the annual cash incentive bonus was 110% of the target bonus.
In addition, in 2015 long-term incentive awards were comprised
of (i) TSR performance shares, which are based on total shareholder return relative to an industry peer group over a three-year
performance period, and (ii) hybrid performance shares, which are based on annual operating cash flow and vest over a three year
period.
At-risk compensation for the Chief Executive Officer in 2015 was
targeted at 90% and for the other NEOs was targeted at an average of 81%. The Company also has several governance programs in place
to align executive compensation with shareholder interests. These programs include: an annual advisory vote on executive compensation,
stock ownership guidelines, an anti-hedging policy, limited perquisites and the use of wealth accumulation spreadsheets. For information
on the Company’s 2015 operational and financial accomplishments, see “Compensation Discussion and Analysis” above.
The advisory vote regarding the compensation of the NEOs described
in this Proposal 3 will be approved if a majority of the shares present in person or by proxy at the meeting and entitled to vote
on the proposal vote in favor of the proposal. Abstentions will have the same effect as votes against the proposal, but broker
non-votes will not affect the outcome of the voting on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
APPROVAL OF THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS.
PROPOSAL 4 REPORT ON POLITICAL CONTRIBUTIONS
The Comptroller of the City of New York, Scott M. Stringer (the
“Comptroller”), as custodian and a trustee of the New York City Employees’ Retirement System and the New York
City Fire Department Pension Fund (the “Systems”), has notified us that it intends to present the following proposal
at the Annual Meeting. The proponent has furnished evidence of ownership of at least $2,000 in market value of the Company’s
common stock for at least one year prior to the date the proposal was submitted.
The Company is not responsible for the contents
of this proposal or the supporting statement and recommends that you vote
AGAINST
the following shareholder proposal for
the reasons set forth in the Company’s opposition statement following the proposal.
RESOLVED: The shareholders of Cabot Oil & Gas Corporation
(“Cabot”) hereby request that the Company prepare and periodically update a report, to be presented to the pertinent
board of directors committee and posted on the Company’s website, that discloses monetary and non-monetary expenditures that
Cabot makes on political activities, including:
•
|
expenditures that Cabot cannot deduct as an “ordinary and necessary” business
expense under section 162(e) of the Internal Revenue Code (the “Code”) because they are incurred in connection with
(a) influencing legislation; (b) participating or intervening in any political campaign on behalf of (or in opposition to) any
candidate for public office; and (c) attempting to influence the general public, or segments thereof, with respect to elections,
legislative matters, or referenda;
|
|
|
•
|
contributions to or expenditures in support of or opposition to political candidates,
political parties, and political committees;
|
|
|
•
|
dues, contributions or other payments made to tax-exempt “social welfare”
organizations and “political committees” operating under sections 501(c)(4) and 527 of the Code, respectively, and
to tax-exempt entities that write model legislation and operate under section 501(c)(3) of the Code; and
|
|
|
•
|
the portion of dues or other payments made to a tax-exempt entity such as a trade
association that is used for an expenditure or contribution and that would not be deductible under section 162(e) of the Code
if made directly by the Company.
|
The report shall identify all recipients and the amount paid to
each recipient from Company funds.
|
Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
60
|
STOCKHOLDER SUPPORTING STATEMENT
As long-term shareholders, we support
transparency and accountability in corporate spending on political activities. Disclosure is consistent with public policy
and in the best interest of Cabot and its shareholders. Indeed, the Supreme Court’s 2010 Citizens United decision
– which liberalized rules for corporate participation in election-related activities – recognized the importance
of disclosure to shareholders, saying: “[D]isclosure permits citizens and shareholders to react to the speech of
corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper
weight to different speakers and messages.”
Although the Supreme Court cited the importance of disclosure, companies
may anonymously channel significant amounts of money into the political process through trade associations and non-profit
groups that need not disclose contributions. Such payments can dwarf the contributions that must be publicly reported.
Cabot states on its website, “Cabot supports organizations
that are active in the public policy and political engagement processes…” (http//www. cabotog.com/about-cabot/governance/political-contributions/).
However, Cabot does not identify whether the board exercises oversight of political spending and does not disclose monetary contributions
to organizations such as 527 groups, 501(c)(4) organizations, or individual payments to trade associations used for political activities.
Consequently, Cabot lags many energy companies that provide more robust disclosure, including Cabot peers Noble Energy, Pioneer
Natural Resources, and Southwestern Energy.
In our view, in the absence of a system of transparency and accountability,
company assets could be used for policy objectives that may be inimical to the long-term interests of, and may pose risks to, Cabot
and its shareholders.
CABOT’S STATEMENT
IN OPPOSITION TO PROPOSAL 4
Our Board of Directors has carefully
considered this proposal and believes that the proposal is not in the best interest of Cabot or our stockholders.
This is
the third consecutive year we have received a proposal of this nature from the Comptroller. In both 2015 and 2014, the holders
of fewer than one-third of our shares present at the Annual Meeting supported the Comptroller’s proposal. Our Board believes
that the last two years’ voting results indicate that our stockholders support our current policies and practices with respect
to political contributions and related disclosures and that the requested report is, therefore, both unnecessary and an unproductive
use of Company resources.
We disclose our policies
and our political spending on our website.
We describe both our overall approach to political contributions
and the amounts of our political contributions on our website on the “About Cabot/Governance/Political Contributions”
page. Furthermore, our Policy on Political Contributions and Activities is contained in our Code of Business Conduct found on our
website on the “About Cabot/Governance” page. Like all public companies, we are prohibited by law and our policy from
directly participating in federal elections or campaigns. Cabot has also never engaged in “independent expenditures,”
which are aimed at the general public and advocate the election or defeat of a specific candidate and were allowed by the decision
of the U.S. Supreme Court in the
Citizens United
case in 2010. We participate in the political process primarily indirectly,
through sponsorship of the non-partisan Cabot Oil & Gas Political Action Committee (“COGPAC”), which is financed
completely through voluntary employee contributions, and through our participation in trade associations, as discussed below.
From time to time, however, we contribute to organizations that
are active in the political process on a state level, state candidates or ballot initiatives. For 2015, we elected not to make
any political contributions of this type. In 2014, the total amount we contributed was $50,000. These contributions, if any, are
reported by the recipients to the appropriate state agencies and available to the public. As mentioned above, we also disclose
the total annual amount of these corporate political contributions on our website. The Board believes this disclosure provides
stockholders the transparency they need in order to make informed investment decisions about Cabot stock and that naming individual
recipients is neither necessary nor in the best interest of our stockholders.
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We disclose all trade association
memberships and the non-deductible portion of our dues on our website.
Consistent with our business strategy, we are members of a number
of business and industry trade groups disclosed by name on our website that engage in collaborative activities and information
sharing regarding issues that affect our industry. The primary reason for Cabot’s membership in trade associations is to
further business goals and initiatives. Some of these associations also engage in lobbying activities that seek to promote legislative
solutions that are consistent with Cabot’s and our industry’s business goals and interests. Some of our trade associations
have notified us that a small portion (generally 6% or less) of our dues paid in 2015 may have been used for non-deductible lobbying
expenses. The total non-deductible portion of our dues paid to all business and trade associations in which we participate, as
reported to us by those associations, was approximately $370,000. The total annual amount of non-deductible expenditures and the
names of each of our trade associations are disclosed on our website and we believe that reasonable investors could only consider
such amount to be immaterial. Accordingly, our Board believes it is not necessary to separately report the amount of our dues,
or the non-deductible portions, paid to each such association, as requested by the Comptroller.
Our Board of Directors
oversees any political spending.
Finally, we believe that the Comptrollers’ stated concern
regarding the risk of Company assets in the form of political contributions being used for “policy objectives” that
are adverse to the long-term interests of the Company or the stockholders is misplaced. As discussed above, our participation in
the political process is minimal and ancillary to other valid business objectives. Furthermore, our Board reviews a report each
year detailing all political contributions by the COGPAC, as well as any direct political contributions by Cabot. Additionally,
the Chairman of the Board and CEO approves the Company’s participation in, and levels of contributions to, all business and
trade associations each year. In this way, our Board oversees our political contributions process and compliance with our policies
and seeks to ensure that our participation in the political process is consistent with the best interests of the Company and our
stockholders.
For the reasons stated above, the Board believes that the stockholders
as a whole would not benefit from the additional report outlined in the proposal and urges that you vote against it.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
AGAINST
APPROVAL OF THE SHAREHOLDER PROPOSAL.
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Oil &
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PROPOSAL 5 PROXY ACCESS
The Comptroller of the City of New
York, Scott M. Stringer (the “Comptroller”), as custodian and trustee of the New York City Employees’
Retirement System, the New York City Police Pension Fund and New York City Teachers Retirement System (the
“Systems”), has notified us that it intends to present the following proposal at the Annual Meeting. The
proponent has furnished evidence of ownership of at least $2,000 in market value of the Company’s common stock for at
least one year prior to the date the proposal was submitted.
The Company is not responsible for the contents of this
proposal or the supporting statement and recommends that you vote
AGAINST
the following shareholder proposal for the
reasons set forth in the Company’s opposition statement following the proposal.
RESOLVED:
Article V,
Section (E) of the Corporation’s Bylaws is hereby amended as follows:
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(E)(1)
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Delete “of not more than 10 stockholders.”
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(E)(3)
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Replace “20%” with “25%.”
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(E)(5)
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Replace “5%” with “3%” and change “maintaining qualifying ownership of the Required Shares” to “remaining a stockholder.”
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(E)(10)
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Replace “25%” with “10%.”
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(E)(13)
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[NEW] “Notwithstanding Article XXXIX of these Bylaws, this Section (E) may not be amended by the directors.”
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STOCKHOLDER SUPPORTING STATEMENT
The proxy access bylaw enacted by the Board of Directors in 2015
is effectively unusable by all but the Company’s largest shareholders. Among other onerous provisions, it requires 5% share
ownership by the nominating shareholder(s), limits the number of shareholders (to 10) that can aggregate shares to satisfy the
ownership requirement, and permits nomination of only 20% of the Board. See Cabot bylaws at: http://www.cabotog.com/wp-content/
uploads/2013/03/COG-Amended-and-Restated-Bylaws-031115.pdf.
In contrast, the SEC, following extensive analysis when enacting
its since-vacated proxy access Rule, concluded that (a) a 5% ownership threshold “may not be consistently and realistically
viable, even by shareholder groups,” and so set a 3% threshold, (b) rejected a limit on the size of the shareholder group,
and (c) allowed nomination of 25% of the Board.
Based on public filings by the company’s largest shareholders
during the past two years, it is impossible to form a group of just 10 qualifying shareholders with 5% ownership unless one or
more of the 10 to 20 largest beneficial owners of Cabot shares joined in. Cabot’s bylaw could thus deprive all shareholders
of the ability to vote for alternate nominees on its proxy card.
The proposed amendments lower from 5% to 3% the ownership requirement,
eliminate the limit of 10 on shareholders aggregating shares, increase the maximum slate size from 20% to 25% of the Board, and
lower from 25% to 10% the vote required to be eligible for re-nomination. They also change Section (E)(5)(vi), per above, because
long-term investors whose shareholdings may fluctuate because they (a) hold indexed shares and/or (b) delegate discretionary investment
authority to external managers, could not readily represent that they will still own all Required Shares one year after the annual
meeting. We believe the three-year prior shareholding requirement, which remains unchanged, is sufficient to demonstrate long-term
ownership.
We believe viable proxy access will enhance shareholder value.
A 2014 CFA Institute study concluded that proxy access would “benefit both the markets and corporate boardrooms, with little
cost or disruption” and could raise overall US market capitalization by up to $140.3 billion if adopted market-wide. (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1)
The proposed amendments will generally align the Company’s
bylaw terms with those in:
1.
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a 2015 shareholder proposal that received 45% of votes cast at the Company;
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2.
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the SEC Rule on which the 2015 shareholder proposal was based (https://www.sec.gov/rules/final/2010/33-9136.pdf); and
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3.
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the Council of Institutional Investors’ “Proxy Access: Best Practices”
(http://www.cii.org/files/publications/misc/08_05_15_Best%20 Practices%20-%20Proxy%20Access.pdf).
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Through November 2015, at least 65 companies have enacted proxy
access bylaws with a 3% ownership threshold.
We urge shareholders to vote FOR this proposal.
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Oil &
Gas Corporation
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CABOT’S STATEMENT
IN OPPOSITION TO PROPOSAL 5
The Board of Directors has carefully
considered this proposal and recommends a vote
AGAINST
this proposal.
The Board of Directors amended the
Company’s bylaws in 2015 to provide proxy access for stockholders. At our 2015 annual meeting, our stockholders
effectively endorsed our bylaws, as so amended, when they rejected the Comptroller’s proxy access proposal at that
meeting. Our recent engagement with our top investors affirmed that our stockholders continue to support our current proxy
access bylaws. The Comptroller, however, seeks to impose a one-size-fits-all approach to proxy access by lowering the
ownership threshold for nominating candidates using proxy access, removing a limitation on the number of stockholders whose
ownership can be aggregated to meet that threshold and completely eliminating our Board’s ability to further amend not
only those provisions but any proxy access-related provisions of our bylaws. Our Board of Directors believes this amendment
would not serve the interests of our stockholders and, therefore, recommends against this proposal.
The binding amendment is
an “all or nothing” proposition.
Because this is a binding proposal to amend our Bylaws, approval
requires the affirmative vote of a majority of the outstanding shares, not just those properly represented at the meeting.
The
Comptroller’s proposal is not a recommendation that the Board take certain actions but rather a binding amendment to the
Company’s bylaws, which, if approved by our stockholders, will be implemented in its entirety and may not be further revised
by our Board. It is important, therefore, that you consider each part of the Comptroller’s proposal.
A comparison of the terms of the Company’s current proxy
access right and the one proposed by the Comptroller follows:
Bylaw
Provision
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Cabot’s
Current Bylaws
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NYC
Comptroller’s Proposal
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Required share ownership
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5%
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3%
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Number of stockholders that may aggregate their holdings to reach required share ownership
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10 stockholders
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Unlimited
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Maximum number of proxy access nominees
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20% of the board (at current board size, results in one potential nominee)
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25% of the board (at current board size, results in one potential nominee)
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Amendment
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Either the board of directors or holders of a majority of our outstanding common stock may amend
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Only holders of a majority of our outstanding common stock may amend
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Limitation of re-nomination of proxy access nominees
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Proxy access nominees who receive less than 25% of the vote are excluded from re-nomination for next two years
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Proxy access nominees can be re-nominated repeatedly if they receive as little as 10% of the vote
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Nominators’ intention with respect to continued share ownership
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Must state intention with respect to
holding the threshold shares for one year
after the meeting date (no
requirement
to hold ownership threshold for any
period of time after meeting)
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Must state intention with respect to
being a stockholder at any level for
one year after the meeting date (no
requirement
to remain a stockholder any
period of time after meeting date)
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Our
stockholders have already determined that our current proxy access ownership thresholds, limit on aggregation and number of nominees
are appropriate for the Company.
The Comptroller’s proposal seeks to lower the ownership
threshold required to exercise the proxy access right and also to allow an unlimited number of stockholders to aggregate their
shares to reach the threshold ownership. In our continual outreach to our investors, a majority of our largest investors have expressed
support for our current ownership threshold and limits on the numbers of holders that can aggregate to get to that threshold. As
of October 2015, our top 25 investors held over 70% of our outstanding stock and many of them could exercise our proxy access right
individually, or in combination with just one or two other holders. Based on the feedback we have received from many of our largest
stockholders, we believe our current ownership threshold and aggregation limits strike the right balance of providing significant
long-term stockholders an inexpensive mechanism to affect the director election process without having that mechanism become a
tool for ideologically or
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politically-minded stockholders to air their views at the Company’s
and the stockholders’ expense. The Comptroller has presented itself as such a stockholder by making fossil fuel companies
one of the primary targets for its governance campaign, regardless of the target company’s operational or stock performance.
We believe that this is an indication of the type of misuse of the proxy access right that is fostered by the Comptroller’s
proposal, and that the majority of our stockholders are opposed to this type of misuse. Maintaining our current proxy access bylaw
helps to ensure that at least one stockholder with a significant financial stake in the Company will be a participant in any proxy
access nomination, thereby reducing the likelihood of abuse by stockholders with interests not shared by a majority of the stockholders.
The Comptroller also proposes to increase the number of directors
that may be nominated using proxy access from our current level of 20% of the Board, rounded down to the nearest whole number,
to 25% of the Board. For our six member Board, both the current proxy access right and the Comptroller’s proposed formulation
allow the nomination of one director. The proposed increase would not make a difference in the number of nominees unless we increased
the size of our Board to eight or more directors, which we have not done in the last eight years, other than for a brief period
of transition in 2011. Therefore, the Comptroller’s proposal to increase the number of nominees to 25% of the Board is unlikely
to have any effect on the proxy access right in the foreseeable future and is unnecessary.
The
Comptroller’s proposal is overly restrictive in that it prevents the Board from making any changes to the proxy access bylaw
without a stockholder meeting.
Currently, either the Board or holders of a majority of our outstanding
shares may amend our bylaws. In February 2015, the Board used its ability to amend the bylaws to adopt proxy access in response
to the stockholders who told us in our outreach efforts that they supported the right. The proxy access bylaw amendment that the
Board adopted is a detailed, carefully drafted mechanism to provide an important right to stockholders, while providing procedural
protections to ensure the integrity, legality and efficiency of the director election process.
Many aspects of the proxy access bylaws at Cabot and other companies
are currently being evaluated by the governance community for practicality and fairness in operation, and best practices are still
evolving. Cabot, like all companies, has a fluid set of stockholders, circumstances and applicable market conditions, and our Board
may believe that it is in the best interest of stockholders to take action to amend our proxy access bylaw to prevent unintended
limitations or consequences as changes in those factors occur. One example of such a situation is the concern expressed by some
investors that some companies’ proxy access bylaws do not expressly provide that loaned securities count toward the ownership
threshold during the required minimum holding period. Our bylaws currently do not directly address this issue, and the Board may
decide to clarify this issue with a bylaw amendment if necessary to accommodate the business practices of our institutional stockholders.
Our Board may determine that this or other technical amendments are in the best interest of our stockholders. The Comptroller’s
proposal would eliminate the Board’s ability to do so and require any amendment to the proxy access bylaw to be approved
by the stockholders, which involves the expense and efforts of proxy solicitation, including the expenses of a special meeting
of stockholders if an amendment is desired prior to an annual meeting. The Board believes that this additional time and expense
are not in the best interest of our stockholders.
For all of the reasons stated above, the Board believes that the
stockholders as a whole would not benefit from the amendment of our proxy access bylaw as proposed by the Comptroller.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
AGAINST
APPROVAL OF THE STOCKHOLDER PROPOSAL.
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Oil &
Gas Corporation
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CONFLICT OF INTEREST AND
RELATED PERSON POLICIES
Under our Code of Business Conduct, directors, officers and employees
are required to avoid situations that present a potential conflict between their personal interests and the interests of the Company.
The Code requires that, at all times, directors, officers and employees make a prompt disclosure in writing to the Company’s
Corporate Secretary of any fact or circumstance that may involve an actual or potential conflict of interest, as well as any information
necessary to determine the existence or likely development of conflicts of interest. This specifically includes any material transaction
or relationship that could reasonably be expected to give rise to a conflict of interest. This requirement includes situations
that create even the appearance of a conflict of interest.
For executive officers of the Company other than the CEO, the
Corporate Secretary reviews the written disclosure described above with the CEO, and a determination is made whether to approve
the transaction resulting in the conflict of interest or potential conflict of interest. The CEO and the Corporate Secretary may
refer the matter to our Board of Directors as circumstances require. If the transaction involves the CEO or a member of the Board
of Directors, the matter is referred to the full Board of Directors for review and approval. In each case the standard applied
in approving the transaction is the best interests of the Company without regard to the interests of the individual officer or
director involved in the transaction. These procedures for reviewing and approving conflict of interest transactions are based
on the Company’s past practice and are not contained in any written policy.
Mineral and Royalty Interest Plan
In 2006, we implemented a Mineral, Royalty and Overriding Royalty
Interest Plan (“Plan”), under which we may offer to a number of our employees, including our executive officers, the
opportunity to purchase a portion of the mineral, participating and non-participating royalty and overriding royalty interests
acquired by the Company from time to time for cash at a price determined using the same cost basis as we acquired such interests.
In accordance with the Plan, the Company makes all determinations with respect to the acquisition, exploration, development, maintenance
and operation of any property subject to an interest under the Plan using the same criteria (or criteria less favorable to the
property subject to an interest) as it would use were such property not subject to such an interest (that is, the Company will
not favor properties subject to interests under the Plan over properties not subject to such interests when allocating Company
resources in the acquisition, exploration, development, maintenance and operation of its properties).
In 2006, we offered to 73 participants, including ten officers,
whose participation was approved by the Compensation Committee, the opportunity to purchase an aggregate of $2.3 million of the
mineral, royalty and overriding royalty interests acquired by the Company in the McCampbell Field, located in Aransas Pass, Texas.
Interests were offered to the key professional employees in the region in which the interest was located and to management level
employees in the other regions and the corporate office. Participants were offered an interest commensurate with their level of
responsibility and their income. Each participant was offered an interest in the same property. Each of the officers participating
in the Plan, including each NEO other than Mr. Cunningham who was not employed at the time, purchased interests in the field. No
individual officer purchased in excess of $115,000 of the interests offered.
In 2010, we offered to 85 participants, including ten officers,
whose participation was approved by the Compensation Committee, the opportunity to purchase an aggregate of $1.4 million of the
mineral, royalty and overriding royalty interests acquired by the Company from Guardian Oil & Gas, Inc. and located in Shelby,
San Augustine and Nacogdoches Counties, Texas. Similar to the McCampbell Field, interests were offered to key professional employees
in the region in which the interest was located and to management level employees in the other region and the corporate office.
Participants were offered an interest commensurate with their level of responsibility and their income. Each participant was offered
an interest in the same property. Each of the officers participating in the Plan, including each NEO, purchased interests in the
field. No individual officer purchased in excess of $102,000 of the interest offered.
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Oil &
Gas Corporation
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Proxy Statement
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In 2012, we offered to 66 participants, including 11 officers,
whose participation was approved by the Compensation Committee, the opportunity to purchase an aggregate of approximately $608,000
of the mineral, royalty and overriding royalty interests acquired by the Company from the period of October 2011 to July 2012,
located in Frio, Atascosa and McMullen counties, Texas, in the Buckhorn operating area. All of the properties are operated by the
Company. Similar to the previous offerings, interests were offered to key professional employees in the region in which the interest
was located and to management level employees in the other region and the corporate office. Participants were offered an interest
commensurate with their level of responsibility and their income. Each participant was offered an interest in the same property.
Each of the officers participating in the Plan, including each NEO, purchased interests in the field. No individual officer purchased
in excess of $44,000 of the interest offered.
No interests were offered under the Plan to participants in 2015.
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Oil &
Gas Corporation
- 2016
Proxy Statement
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GENERAL INFORMATION
Why did I receive these proxy materials?
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Cabot Oil & Gas Corporation (the “Company”) of proxies for use at its 2016 Annual
Meeting of Stockholders, to be held at the Company’s offices, 840 Gessner Road, Suite 1400, Houston, Texas 77024 on Wednesday,
May 4, 2016, at 8:00 a.m. Central Time, or any adjournment or postponement thereof (the “Annual Meeting”). The purposes
of the meeting, and information about the Company’s governance and executive compensation, are set forth in the accompanying
Notice of Annual Meeting of Stockholders. Please review these materials carefully before casting your vote. We are asking that
you vote on five proposals.
Who is entitled to vote?
Only holders of record of the Company’s Common Stock as
of the close of business on March 7, 2016, are entitled to vote at the Annual Meeting. As of that date, the Company had outstanding
and entitled to vote 474,891,615 shares of Common Stock. Each share of Common Stock is entitled to one vote per share. There is
no provision for cumulative voting.
What am I being asked to vote on, and what are the recommendations
of the Board?
At the meeting, stockholders will be asked to consider and act
upon the following matters discussed in the attached proxy statement. Proxies delivered by record stockholders without voting instructions
marked will be voted in accordance with the recommendations of the Board. Proxies will be voted in the best judgment of the proxy
holders on any other matters that may properly come before the meeting.
Proposal
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Board
Recommendation
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PROPOSAL 1
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The election of director candidates named
herein;
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FOR
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PROPOSAL 2
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Ratification of the appointment of the firm PricewaterhouseCoopers
LLP as the independent registered public accounting firm for the Company for its 2016 fiscal year;
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FOR
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PROPOSAL 3
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The approval on an advisory basis of executive compensation;
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FOR
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PROPOSAL 4
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The shareholder proposal, if properly presented at the
meeting; and
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AGAINST
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PROPOSAL
5
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The shareholder proposal,
if properly presented at the meeting.
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AGAINST
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How do I vote?
On or about March 22, 2016, we mailed a notice to our stockholders
who have not elected otherwise advising them that our materials for this meeting are available on the internet. Certain other stockholders
who elected to receive paper copies have received these materials by U.S. mail. In either case, you may vote your shares:
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In person:
you may vote in person at the Annual Meeting;
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•
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By internet:
log onto www.proxyvote.com and use the instructions on the proxy
card or voting instruction form received from your broker or bank;
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Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
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•
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By telephone:
dial 1.800.690.6903 and use the instructions on the proxy card
or voting instruction form received from your broker or bank (if available); or
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•
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By mail:
by completing and returning the enclosed proxy card or voting instruction
form in the postage-paid envelope provided, (for those receiving paper copies only).
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What is the difference between holding shares as a stockholder
of record and as a beneficial owner?
If your shares are registered directly in your name with Cabot’s
registrar and transfer agent, Wells Fargo Bank, N.A., you are a stockholder of record with respect to these shares. If, as is
more typical, your shares are held in a brokerage account or by your bank, broker or other third party, you are the beneficial
owner of these shares. Because a beneficial owner is not the stockholder of record, you may not vote these shares in person at
the meeting unless you obtain a proxy from the broker, trustee or nominee that holds your shares, giving you the right to vote
the shares at the meeting. Your broker, trustee or nominee has enclosed or provided voting instructions for you to use in directing
the broker, trustee or nominee how to vote your shares.
What if I hold my shares through a broker and do not give
voting instructions to my broker?
Brokers holding shares must vote according
to specific instructions they receive from the beneficial owners of those shares. If brokers do not receive specific instructions,
brokers may in some cases vote the shares in their discretion. However, the New York Stock Exchange (the “NYSE”) precludes
brokers from exercising voting discretion on certain proposals without specific instructions from the beneficial owner. Under
NYSE rules, at our Annual Meeting brokers will have discretion to vote only on Proposal 2 (ratification of appointment of auditor).
Brokers cannot vote on any of the other proposals to be presented at our Annual Meeting without instructions from the beneficial
owners.
If you do not instruct your broker how to vote on each of the other proposals, your broker will not vote for you.
Your
shares will be considered “broker non-votes.”
What constitutes a quorum of shareholders?
We must have a quorum to conduct the meeting. A quorum is the
presence at the Annual Meeting in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to
be cast as of the record date. Because there were 474,891,615 shares of common stock outstanding on March 7, 2016, the record
date, the quorum for the Annual Meeting requires the presence at the meeting in person or by proxy of stockholders entitled to
vote at least 237,445,808 shares. Broker non-votes, abstentions and withhold-authority votes COUNT for purposes of determining
a quorum.
What are my voting options and what is the voting requirement
for each of the proposals?
For each matter to be presented at the Annual Meeting, you may
choose to vote “for,” “against” or “abstain.”
Proposal No. 1 – Election of Directors:
You
will be allowed to vote “for,” “against” or “abstain” on each director nominee. Any nominee
who receives a greater number of votes cast “for” his or her election than votes cast “against” his or
her election will be elected to the Board. Shares not represented in person or by proxy at the Annual Meeting, abstentions and
broker non-votes will have no effect on the election of directors.
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Oil &
Gas Corporation
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Proxy Statement
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Proposal No. 2 – Ratification of Independent Registered
Public Accounting Firm:
The affirmative vote of holders of a majority of the shares properly represented at the meeting,
either in person or by proxy, on Proposal No. 2 is required to ratify the appointment of PwC as our independent registered public
accounting firm. Therefore, abstentions will have the same effect as a vote “against.” Brokers generally have discretionary
authority to vote on the ratification of our independent registered public accounting firm. Therefore, we do not expect any broker
non-votes on this proposal.
Proposal No. 3 – An Advisory Vote to Approve Our Executive
Compensation:
Because Proposal No. 3 is an advisory vote, there is no minimum vote that constitutes approval of this proposal.
We will consider this proposal approved if a majority of the votes properly cast are “for” this proposal. Therefore,
abstentions will have the same effect as a vote “against” this proposal. Broker non-votes will have no effect on the
outcome of this proposal.
Proposal No. 4 – Stockholder Proposal Regarding Political
Contributions:
The affirmative vote of holders of a majority of the shares properly represented at the meeting, either
in person or by proxy, is required to approve this stockholder proposal. Therefore, abstentions will have the same effect as a
vote “against.” Broker non-votes will have no effect on the outcome of this proposal. Because the stockholder proposal
is phrased as a request for our Board to take action on the subject of the proposal, we will not be required to take the requested
action if a proposal is approved; however, we will consider the voting results in reevaluating the subject of the proposal.
Proposal No. 5 –Stockholder Proposal to Amend Our
Proxy Access Bylaw:
The affirmative vote of a majority of our outstanding shares, not just those properly represented at
the meeting, is required to approve the proposal to amend our bylaws. Because Proposal No. 5 is a binding proposal, if it is approved
at the meeting by a majority of the outstanding shares as of the record date, our bylaws will be amended as specified in the proposal
with no further action by our Board. Abstentions and broker non-votes will have the same effect as a vote “against”
this proposal. If the proposal is not approved by a majority of the outstanding shares, there will be no change to our bylaws as
a result of the proposal, but the Board will retain the right to amend our proxy access bylaw in the future.
How will my shares be voted on other matters raised at the
meeting?
We do not know of any matters to be presented at the Annual Meeting
other than those listed above. However, if any other matters properly come before the Annual Meeting, the persons named on your
proxy card or voting instruction form from your broker will vote in accordance with their best judgment. The persons named on the
Company’s form of proxy are members of Cabot’s management.
What can I do if I change my mind after I vote my shares?
Stockholders attending the Annual Meeting may vote their shares
in person even though they have already executed a proxy. Properly executed proxies not revoked will be voted in accordance with
the specifications thereon at the Annual Meeting and at any adjournment or postponement thereof. You may revoke your proxy at any
time prior to the Annual Meeting by a written communication to Ms. Deidre L. Shearer, Corporate Secretary of the Company, or by
a duly executed proxy bearing a later date.
When will Cabot announce the voting results?
We will announce the preliminary voting results at the Annual
Meeting of Stockholders. We will report the final results in a Current Report on Form 8-K filed with the SEC within a few days
of the meeting.
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Oil &
Gas Corporation
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Proxy Statement
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How are proxies solicited, and what is the cost?
The cost of soliciting proxies in the enclosed form will be borne
by the Company. In addition to solicitation by mail, officers, employees or agents of the Company may solicit proxies personally.
The Company may request banks and brokers or other similar agents or fiduciaries to transmit the proxy material to the beneficial
owners for their voting instructions and will reimburse them for their expenses in so doing. Okapi Partners LLC has been retained
to assist the Company in the solicitation of proxies at a fee estimated not to exceed $7,000, plus expenses.
What is householding?
As permitted by the SEC rules, only one copy of this Proxy Statement
is being delivered to stockholders residing at the same address, unless the stockholders have notified Cabot of their desires to
receive multiple copies of the Proxy Statement. This is known as “householding.” Upon oral or written request, we will
promptly deliver a separate copy of the Proxy Statement to any stockholder residing at an address to which only one copy was mailed.
You may direct requests for additional copies for the current year or future years to our Corporate Secretary or our Investor Relations
team. Stockholders of record residing at the same address and currently receiving multiple copies of the Proxy Statement may contact
our registrar and transfer agent, Wells Fargo Bank, N.A., to request a single copy be mailed in the future. Beneficial owners should
contact their broker or bank.
How can I communicate with Cabot’s Board of Directors
or individual directors?
You can address communications to the “Board of Directors,”
a specified committee of the Board, an individual director (including the Lead Director) or the “Non-management Directors”
in care of:
Corporate Secretary and Managing Counsel
Corporate Legal Department
840 Gessner Road, Suite 1400
Houston, Texas 77024
(281)589-4600
(281)589-4808 (fax)
(Outside the U.S. or U.S. long distance-call collect)
Deidre.Shearer@cabotog.com (email)
All
communications received as described above will be relayed to the appropriate directors.
How do I submit a stockholder proposal for action at the 2017
Annual Meeting of Stockholders?
You may send any stockholder proposal intended for inclusion in
the proxy statement for the 2017 Annual Meeting of Stockholders of the Company and otherwise eligible, to Ms. Deidre L. Shearer,
Corporate Secretary and Managing Counsel, Cabot Oil & Gas Corporation, 840 Gessner Road, Suite 1400, Houston, Texas 77024.
A notice of stockholder proposal to be presented at the 2017 Annual Meeting of Stockholders must be received by November 22, 2016.
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Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
71
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How do I nominate a director or present other items for action
at the 2017 Annual Meeting of Stockholders?
The bylaws of the Company require timely advance written notice
of stockholder nominations of director candidates (other than proxy access nominations, which are discussed below) and of any other
business to be presented by a stockholder at an annual meeting of stockholders. To be timely, the bylaws require advance written
notice be delivered to the Company’s Secretary at the principal executive offices of the Company not later than the close
of business on the 90
th
day, nor earlier than the close of business on the 120
th
day, prior to the anniversary
of the preceding year’s annual meeting (with certain exceptions if the date of the annual meeting is different by more than
specified amounts from the anniversary date). The deadline for submission for the 2017 Annual Meeting of Stockholders is currently
February 3, 2017. To be valid, a notice must set forth certain information specified in the bylaws. You also must attend the meeting
and present the nomination or other item of business.
How do I nominate a director for inclusion in the Company’s
proxy statement for the 2017 Annual Meeting of Stockholders?
The bylaws of the Company currently permit any stockholder or
group of not more than 10 stockholders that have continuously held at least 5% of our outstanding Common Stock for at least three
years to nominate candidates for up to 20% of the available Board seats and have such candidates included in the proxy statement
for the 2017 Annual Meeting of Stockholders of the Company. To be timely, the bylaws require advance written notice to be delivered
to the Company’s Secretary at the principal executive offices of the Company not later than the close of business on the
120
th
day, nor earlier than the close of business on the 150
th
day, prior to the anniversary of the date
on which the Company first mailed proxy materials for the preceding year’s annual meeting. The deadline for submission for
the 2017 Annual Meeting of Stockholders is currently November 22, 2016. To be valid, a notice must set forth certain information
specified in the bylaws and the stockholder or group of stockholders providing such a notice must comply with the eligibility and
other requirements specified in the bylaws.
By Order of the Board of Directors,
Deidre L. Shearer
Corporate Secretary and Managing Counsel
March 22, 2016
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Cabot
Oil &
Gas Corporation
- 2016
Proxy Statement
72
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Cabot Oil & Gas Corporation
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Three Memorial City Plaza
840 Gessner Road, Suite 1400
Houston, Texas 77024
(281) 589-4600
www.cabotog.com
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ATTN: DEIDRE L. SHEARER
840 GESSNER RD., SUITE 1400
HOUSTON, TX 77024
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VOTE
BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
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ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
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VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
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VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN THIS PORTION ONLY
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Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Annual Report, Form 10-K, Notice & Proxy
Statement is/are available at
www.proxyvote.com
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CABOT OIL & GAS CORPORATION
Annual Meeting of Stockholders
May 04, 2016 8:00 AM
This proxy is solicited by the Board of
Directors
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The stockholder(s) hereby appoint(s) Scott C. Schroeder and Deidre L. Shearer, or either of them, as proxies, each with the
power to appoint his or her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse
side of this ballot, all of the shares of Common Stock of CABOT OIL & GAS CORPORATION that the stockholder(s) is/are entitled
to vote at the Annual Meeting of stockholder(s) to be held at 08:00 AM, CDT on May 4, 2016, at 840 Gessner Road, Suite 1400
Houston, TX 77024, and any adjournment or postponement thereof.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy
will be voted in accordance with the Board of Directors’ recommendations.
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Address
change/comments:
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(If
you noted any Address Changes
and/or Comments above, please mark corresponding box on
the reverse side.)
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Continued and to be signed on reverse side
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