— DIRECTOR COMPENSATION SUMMARY FOR 2019

The table below sets forth certain information concerning the compensation paid or earned in 2019 by our non-employee directors.

NOBLE ENERGY • 2020 PROXY STATEMENT    19

PROPOSAL 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR

The Audit Committee of our Board is directly responsible for the appointment, compensation, retention and oversight of the independent external audit firm retained to audit our financial statements. The Audit Committee has appointed KPMG LLP as our independent external auditor for 2020. KPMG has been retained as our external auditor continuously since May 2002.

The Audit Committee is responsible for the negotiation of the audit fee associated with our retention of KPMG. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a rotation of the independent external audit firm.

In conjunction with the rotation of the audit firm’s lead engagement partner, the Audit Committee and its chairperson are directly involved in the selection of KPMG’s new lead engagement partner. The members of the Audit Committee and our Board believe that the continued retention of KPMG to serve as our independent external auditor is in our best interest and the best interest of our shareholders.

Although action by our shareholders on this matter is not required, our Audit Committee believes that it is important to seek shareholder ratification of this appointment in light of the critical role played by our independent auditor in maintaining the integrity of our financial controls and reporting. One or more representatives of KPMG are expected to be present at the Annual Meeting and will be able to make a statement if they so desire and respond to appropriate questions.

OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT AUDITOR.

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee approves all audit and non-audit services to be provided by our Independent Auditor prior to the receipt of such services. The Audit Committee Chair has the authority to pre-approve services of up to $50,000 rendered by our Independent Auditor. Any pre-approval of services by the Audit Committee Chair shall be reported to the Audit Committee at its next scheduled meeting.

The Audit Committee considers whether KPMG’s rendering of non-audit services to the Company is compatible with maintaining its independence. All audit-related services, tax services and other services for 2019 set forth in the table above were pre-approved by the Audit Committee Chair or the Audit Committee, as provided above, which in either case determined that such services would not impair the independence of our auditor and are consistent with the SEC’s rules on auditor independence.

NOBLE ENERGY • 2020 PROXY STATEMENT    20

REPORT OF THE AUDIT COMMITTEE

To the Shareholders of Noble Energy, Inc.:

The Audit Committee (the “Committee”) has reviewed and discussed the Company’s audited financial statements with management for the year ended December 31, 2019. The Committee has also discussed with KPMG, the Company’s Independent Auditor, the matters required to be discussed by Auditing Standard No. 1301, Communication with Audit Committees.

The Committee has received from KPMG the written disclosures required by applicable requirements of the Public Company Accounting Oversight Board concerning their independence and discussed the auditors’ independence with them.

Based on the Audit Committee’s discussions with management and KPMG, and its review of the representations of management and the report of KPMG to the Audit Committee, the Audit Committee recommended to the Board of Directors the inclusion of the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC.

Audit Committee

William T. Van Kleef, Chair
Michael A. Cawley
Barbara J. Duganier
Martha B. Wyrsch

NOBLE ENERGY • 2020 PROXY STATEMENT    21

PROPOSAL 3 ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

As we do each year, and as required by Section 14A of the Exchange Act, we provide our shareholders with the opportunity to vote to approve, on an advisory basis, the compensation of our Named Executive Officers as disclosed in this Proxy Statement in accordance with the SEC’s compensation disclosure rules.

Our executive compensation program is designed to attract and retain high quality individuals and to link their compensation to performance. We describe this program, including how it links executive compensation to Company performance, in the Compensation Discussion and Analysis portion of this Proxy Statement. We believe that our program continues to be appropriately designed to link compensation to performance.

The vote on this resolution is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our Named Executive Officers as disclosed in this Proxy Statement in accordance with the SEC’s compensation disclosure rules. The vote is advisory, which means that it is not binding on our Company, Board or Compensation Committee. To the extent there is any significant vote against our Named Executive Officer compensation as disclosed in this Proxy Statement, our Compensation Committee will evaluate whether any action is necessary to address the concerns of shareholders.

Accordingly, we ask our shareholders to vote on the following resolution at our annual meeting:

RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 2020 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the 2019 Summary Compensation Table and the other related tables and disclosures.

OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.

NOBLE ENERGY • 2020 PROXY STATEMENT    22

PROPOSAL 4   APPROVAL OF THE 2020 LONG-TERM INCENTIVE PLAN

At the 2020 Annual Meeting, our shareholders are being asked to approve the Noble Energy, Inc. 2020 Long-Term Incentive Plan (the “2020 Plan”). Based upon the recommendation of the Compensation Committee, on March 6, 2020 our Board approved the 2020 Plan. If approved by our shareholders, the 2020 Plan will become effective on April 28, 2020, the date of our Annual Meeting (the “Effective Date”), and our current 2017 Long-Term Incentive Plan (the “2017 Plan”) and our 2015 Stock Plan for Non-Employee Directors (the “2015 Plan”) will be frozen so that no further awards will be granted under these plans.

The 2020 Plan authorizes us to issue up to 14,800,000 shares of our common stock. This represents a decrease of 13,607,839 shares and 4,254,555 shares, over the shares remaining available under the 2017 Plan as of December 31, 2019 and March 2, 2020 (our record date), respectively. The 2017 Plan includes a fungible share formula under which shares subject to “full-value” awards (awards other than stock options and stock appreciation rights) reduce the share reserve by 2.39 shares for every one share underlying a full-value award, while the share reserve is reduced by one share for every share subject to a stock option or stock appreciation right. This fungible share formula is not included in the 2020 Plan, and so the Company will be able to grant more full-value awards under the 2020 Plan than it would be able to grant under the 2017 Plan, with a decrease to the share reserve needed under the 2020 Plan as compared to the shares remaining under the 2017 Plan. Outstanding awards under the 2017 Plan will continue to be governed by the terms of that plan until vested, exercised, expired or otherwise terminated or canceled.

As of December 31, 2019, there were a total of 483,150,040 shares of our common stock issued and outstanding. In addition to 28,407,839 shares remaining available for issuance under the 2017 Plan at December 31, 2019, there were 307,991 shares available for grant or award under the 2015 Plan. As of the record date of March 2, 2020, there were a total of 485,039,905 shares of our common stock issued and outstanding. In addition to 19,054,555 shares remaining available for issuance under the 2017 Plan as of March 2, 2020, there were 221,591 shares available for grant or award under the 2015 Plan. The Company had a total of 11,250,138 stock options outstanding with a weighted average exercise price of $45.13 and a weighted average remaining term of 3.98 years, and 8,581,458 shares of full value awards (restricted stock and performance share awards) outstanding, as of the record date.

If the 2020 Plan is not approved by shareholders, the 2017 Plan and 2015 Plan will continue in effect and we will continue to make grants under the 2017 Plan and 2015 Plan subject to the limits on shares available and the fungible share formula thereunder.

Equity Award Grants are an Essential Component of Our Compensation Program

Our compensation philosophy is based on the belief that we can best create shareholder value if officers, directors, employees, consultants and others performing services for us act and are rewarded as business owners. The 2020 Plan is designed to:

We believe that an equity stake through equity compensation programs effectively aligns service provider and shareholder interests by motivating and rewarding performance that will enhance shareholder value. Approval of the 2020 Plan is critical to our ability to continue our compensation programs that are aligned with shareholders’ interests.

NOBLE ENERGY • 2020 PROXY STATEMENT    23

The 2020 Plan will Allow us to Make Grants with a Decrease to Our Current Share Reserve

As of December 31, 2019, 19,054,555 shares of our common stock remained available for future awards under the 2017 Plan. Under the fungible share formula pursuant to which one full-value award is counted against the 2017 Plan’s share reserve as 2.39 shares, a maximum of 7,972,617 shares could be issued in respect of full-value awards. If our shareholders approve the 2020 Plan, then all 14,800,000 shares authorized for issuance under the 2020 Plan will be available for new awards under the 2020 Plan. The Board and the Compensation Committee believe that approval of the 2020 Plan will give us greater flexibility to structure future incentives and better attract, retain, motivate and reward officers, directors, employees, consultants and other individuals performing services for us.

The table below presents information about the number of shares that were subject to various outstanding equity awards and the shares remaining available for issuance under our existing long-term incentive plans (including the 2017 Plan and 2015 Plan), as of March 2, 2020.

In determining whether to recommend the approval of the 2020 Plan, including the share reserve under the 2020 Plan, our Compensation Committee and Board considered the following:

In light of the factors described above, and the fact that the ability to continue to grant equity compensation is vital to our ability to continue to attract and retain highly qualified individuals in the competitive labor markets in which we operate, the Board has determined that the size of the share reserve under the 2020 Plan is reasonable and appropriate at this time.

NOBLE ENERGY • 2020 PROXY STATEMENT    24

The 2020 Plan provides the LTIP Committee (as defined below) with the flexibility to effectively use the shares under the 2020 Plan to provide incentives to our personnel. The 2020 Plan contains provisions we believe are consistent with best practices in equity compensation and which we believe further protect our shareholders’ interests, including:

The following description of the 2020 Plan is a summary, does not purport to be a complete description of the 2020 Plan and is qualified in its entirety by the full text of the 2020 Plan. A copy of the 2020 Plan is attached to this proxy statement as Appendix C and is incorporated herein by reference.

Purposes

The 2020 Plan allows for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, stock awards and other incentive awards to officers, directors, employees, consultants and other service providers of the Company and its affiliates who are in a position to make a positive contribution to the success of the Company and its affiliates. The purposes of the 2020 Plan are to attract and retain highly qualified individuals to perform services for the Company and its affiliates, to further align the interests of those individuals with those of our shareholders and to more closely link compensation with Company performance. The 2020 Plan will provide an essential component of the Company’s total compensation package, reflecting the importance that we place on aligning the interests of our service providers with those of our shareholders.

NOBLE ENERGY • 2020 PROXY STATEMENT    25

Administration

The 2020 Plan provides for administration by the Board or a committee, which may be the Compensation Committee or such other committee as our Board may designate (the “LTIP Committee”). The LTIP Committee will have the authority to make all determinations under, prescribe all forms for use with and adopt rules for the administration of the 2020 Plan. The LTIP Committee has the right to delegate to one or more officers of the Compensation Committee any right granted to the LTIP Committee under the 2020 Plan, except where such delegation would violate state corporate law.

Eligibility

Officers, directors, employees, consultants and other service providers of the Company and its affiliates who, in the opinion of the LTIP Committee, are in a position to make a positive contribution to the success of the Company and our affiliates are eligible to participate in the 2020 Plan. The LTIP Committee determines the type and size of any awards and sets the terms, conditions, restrictions and limitations applicable to such awards within the confines of the 2020 Plan’s terms. As of the date hereof, we anticipate that approximately 900 current employees, including all of our executive officers, all of our non-employee directors, and no consultants, contractors or other advisors will be eligible to participate in the 2020 Plan.

Available Shares

The maximum number of shares of common stock that are available to be delivered in respect of awards granted under the 2020 Plan is 14,800,000. For purposes of this share limit, shares underlying any awards that are forfeited, canceled, reacquired by the Company prior to vesting, satisfied without the issuance of common stock or otherwise terminated (other than by exercise) under the 2020 Plan will not be deducted from the shares available for issuance under the 2020 Plan. Notwithstanding the foregoing, shares (i) tendered (either actually or by attestation) or withheld to satisfy an exercise price or tax withholding obligation for an award, or (ii) repurchased by the Company using stock option proceeds will not again be available for issuance under the 2020 Plan. The 2020 Plan contains anti-dilution provisions that provide that, in the event of an equity restructuring or certain other corporate transactions, adjustments will be made in the maximum number of shares available for delivery under the 2020 Plan, the award limits described below and the number and exercise price per share of outstanding awards.

Award Limits

The maximum number of shares of common stock that may be issued pursuant to incentive stock options under the 2020 Plan is 14,800,000 shares. The maximum grant date fair value that may be granted as awards under the 2020 Plan to any one non-employee director during a fiscal year is $750,000.

No Repricing or Reload Rights

Except adjustment for certain corporate changes in accordance with the provisions of the 2020 Plan, no award may be repriced, replaced, regranted through cancellation or otherwise modified without shareholder approval, if the effect would be to reduce the exercise price for the shares underlying such award. Further, no stock option or stock appreciation right that is underwater may be canceled in exchange for a cash payment or for the purpose of granting a replacement award of a different type.

Stock Options

The 2020 Plan provides for the grant of incentive stock options intended to meet the requirements of Section 422 of the Code and nonqualified stock options that are not intended to meet those requirements. Incentive stock options may be granted only to employees of the Company and its affiliates. All stock options will be subject to terms, conditions, restrictions and limitations established by the LTIP Committee, including rules as to exercisability in the event of termination of employment or service, as long as they are consistent with the terms of the 2020 Plan.

Generally, the exercise price of a stock option granted under the 2020 Plan may not be less than the fair market value of the common stock on the date of grant. However, the exercise price may be less if the stock option is granted in connection with a transaction and complies with certain requirements of the Code. Incentive stock options must be granted at 100% of fair market value (or, in the case of an incentive stock option granted to a 10% shareholder, 110% of fair market value). The exercise price of a stock option may be paid in cash (or equivalents), in shares of Company common stock that the participant already owns, or such other consideration as the Compensation Committee approves.

NOBLE ENERGY • 2020 PROXY STATEMENT    26

Stock Appreciation Rights (“SARs”)

A stock appreciation right entitles the participant to receive an amount in cash and/or shares of common stock, as determined by the LTIP Committee, equal to the amount by which our common stock appreciates in value after the date of the award. The LTIP Committee will determine when the SAR will vest and become exercisable. Generally, the exercise price of a SAR will not be less than the fair market value of the common stock on the date of grant. However, the exercise price may be less if the stock is granted in connection with a transaction and complies with special rules under Section 409A of the Code. No SAR will be exercisable later than 10 years after the date of the grant. The LTIP Committee will set other terms, conditions, restrictions and limitations on SARs, including rules as to exercisability in the event of termination of employment or service.

Restricted Stock

Restricted stock is common stock that must be returned to us if certain conditions are not satisfied. The LTIP Committee will determine the restriction period and may impose other terms, conditions and restrictions on restricted stock, including vesting upon achievement of performance goals pursuant to a performance award and rules as to vesting in the event of termination of employment or service. The LTIP Committee also may require the participant to pay for restricted stock. Subject to the terms and conditions of the award agreement related to restricted stock (including completion of the vesting period), a participant holding restricted stock will have the right to receive dividends on the shares of restricted stock during the restriction period, vote the restricted stock and enjoy all other shareholder rights related to the shares of common stock. Restricted stock (and any associated dividends) generally will be held by the Company in escrow for the participant’s benefit until such time as the restricted stock is either forfeited by the participant or the restrictions thereon terminate. Upon expiration of the restriction period, the participant is entitled to receive shares of common stock not subject to restriction.

Restricted Stock Units (“RSUs”)

Restricted stock units are fictional shares of common stock. The LTIP Committee will determine the restriction period and may impose other terms, conditions and restrictions on RSUs, including vesting upon achievement of performance goals pursuant to a performance award and rules as to vesting in the event of termination of employment or service. Upon the lapse of restrictions, the participant is entitled to receive one share of common stock or an amount of cash equal to the fair market value of one share of common stock as provided in the award agreement. An award of RSUs may include the grant of a tandem dividend equivalent cash right or dividend equivalent unit right. A dividend equivalent cash right is a contingent right to receive an amount in cash equal to the cash distributions made with respect to a share of common stock during the period the RSU is outstanding. A dividend equivalent unit right is a contingent right to have additional RSUs credited to the participant equal to the number of shares of common stock (at fair market value) that may be purchased with the cash dividends. No dividend equivalent cash right or dividend equivalent unit right will vest or be payable sooner than the date on which the underlying RSU has vested.

Performance Awards

A performance award is an award payable in cash (including an annual bonus award) or common stock (or a combination thereof) upon the achievement of certain performance goals over a performance period. Performance awards may be combined with other awards to impose performance criteria as part of the terms of the other awards. The LTIP Committee will determine the terms, conditions and restrictions for each performance award as it deems advisable and may prescribe (i) the amount a participant may earn in the form of cash or shares of common stock or a formula for determining the amount payable to the participant; (ii) the performance criteria and level of achievement versus such performance criteria that will determine the amount payable or number of shares of common stock to be granted, issued, retained and/or vested; (iii) the performance period over which performance is to be measured, which may not be shorter than one year; (iv) the timing of any payments to be made; (v) restrictions on the transferability of the award and (vi) other terms and conditions that are not inconsistent with the 2020 Plan.

The performance measure(s) determined by the LTIP Committee for a performance award may be described in terms of objectives that are related to the individual participant or objectives that are company-wide or related to a subsidiary, division, department, region, function or business unit of the Company, or an affiliate in which the participant is employed or with respect to which the participant performs services.

The LTIP Committee has the authority to reduce and increase the amount payable in cash and the number of shares of common stock to be issued, retained or vested pursuant to such a performance award.

Stock Awards

Stock awards are shares of common stock awarded to participants that are subject to no restrictions. Stock awards may be issued for cash consideration or for no cash consideration.

NOBLE ENERGY • 2020 PROXY STATEMENT    27

Other Incentive Awards

The LTIP Committee may grant other incentive awards under the 2020 Plan based upon, payable in or otherwise related to shares of common stock if the LTIP Committee determines that the other incentive awards are consistent with the purposes of the 2020 Plan. Other incentive awards will be subject to any terms, conditions, restrictions or limitations established by the LTIP Committee. Payment of other incentive awards will be made at the times and in the forms — which may be cash, shares of common stock or other property — established by the LTIP Committee.

New Plan Benefits

As of the date of this Proxy Statement, no director, executive officer or other employee of the Compensation Company has been granted any awards under the 2020 Plan. The awards, if any, that will be granted to eligible persons under the 2020 Plan are subject to the discretion of the LTIP Committee and, therefore, are not determinable.

Change of Control

Upon a change of control where the Company is not the surviving entity (or survives only as a subsidiary of another entity), unless the LTIP Committee determines otherwise, all outstanding stock options and SARs that are not exercised at or before the occurrence of the change of control will be assumed by or replaced with comparable stock options and rights in the surviving entity (or a parent of the surviving entity) in accordance with Code requirements, and other outstanding awards will be converted into similar awards of the surviving entity (or a parent of the surviving entity), and any outstanding performance conditions associated with an award will be deemed achieved as of immediately prior to the change of control and assuming all performance criteria and other conditions to payment of such awards to be achieved at target performance. In the event of a change of control while a participant is employed by our Company or an affiliate followed by the termination of employment or service without cause or for good reason within the 12- to 24-month period following the change of control, each award outstanding under the 2020 Plan to such participant will become immediately vested and fully exercisable upon such termination and any restrictions applicable to the award will lapse on that date with any outstanding performance conditions associated with an award deemed achieved as of the date of such termination at target performance. The LTIP Committee also has discretion, no later than the commencement of the change of control, to require any participant holding an award to surrender such award in exchange for appropriate consideration as described in the 2020 Plan, assuming all performance criteria and other conditions to payment of such awards are achieved at target performance.

Withholding Taxes

All applicable withholding taxes will be deducted from any payment made under the 2020 Plan, withheld from other compensation payable to the participant, or be required to be paid by the participant (or be subject to a participant’s election to pay) prior to the making of any payment of cash or common stock under the 2020 Plan. Payment of withholding taxes may be made by withholding shares of common stock from any payment of common stock due or by the delivery by the participant to the Company or the applicable affiliate of previously acquired shares of common stock, in either case having an aggregate fair market value equal to the amount of the required withholding taxes.

Transferability

Generally, no award may be sold, transferred, pledged, exchanged or disposed of, except by will or the laws of descent and distribution. However, if provided in the award agreement, nonqualified stock options may be transferred by a participant to a permitted transferee.

Clawback Provision

By accepting or exercising any award granted under the 2020 Plan, each participant agrees to abide and be bound by any policies adopted by the Company, including our compensation recoupment policy as contained in our Code of Conduct, as amended from time to time, and any other policies adopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and any rules or exchange listing standards promulgated thereunder, providing for the repayment and/or forfeiture of any award or payment resulting from an accounting restatement or similar circumstances.

NOBLE ENERGY • 2020 PROXY STATEMENT    28

Amendment and Termination

Our Board may at any time suspend, terminate, amend or modify the 2020 Plan, but may not without shareholder approval make any modification or amendment that operates (i) to increase the total number of shares of common stock that may be issued under the 2020 Plan (other than adjustments in connection with certain corporate reorganizations and other events) or to change the designation or class of persons eligible to receive awards under the 2020 Plan, or (ii) to effect any change for which shareholder approval is required by or necessary to comply with applicable law or the listing requirements of an exchange or association on which the common stock is then listed or quoted. Upon termination of the 2020 Plan, the terms and provisions thereof will continue to apply to awards granted before termination. No suspension, termination, amendment or modification of the 2020 Plan will adversely affect in any material way any award previously granted under the 2020 Plan, without the consent of the participant.

Effectiveness

The 2020 Plan will become effective upon approval by the shareholders at the Company’s 2020 Annual Meeting. If so approved, unless terminated earlier, the 2020 Plan will terminate on April 27, 2030.

The following summary is based on an analysis of the Code as currently in effect, existing laws, judicial decisions, administrative rulings, regulations and proposed regulations, all of which are subject to change. Moreover, the following is only a summary of United States federal income tax consequences. Actual tax consequences to the employer and participants may be either more or less favorable than those described below depending on the employer’s or the participants’ particular circumstances. State and local tax consequences may in some cases differ from the federal tax consequences. The following summary of the income tax consequences in respect of the 2020 Plan is for general information only. Interested parties should consult their own advisors as to specific tax consequences of their awards, including the applicability and effect of state, local and foreign laws.

Incentive Stock Options

No income will be recognized by a participant for federal income tax purposes upon the grant or exercise of an incentive stock option. The basis of shares transferred to a participant upon exercise of an incentive stock option is the price paid for the shares. If the participant holds the shares for at least one year after the transfer of the shares to the participant and two years after the grant of the stock option, the participant will recognize capital gain or loss upon sale of the shares received upon exercise equal to the difference between the amount realized on the sale and the basis of the stock. In these circumstances, we will not be entitled to any deduction for federal income tax purposes. Generally, if the shares are not held for that period, the participant will recognize ordinary income upon disposition in an amount equal to the excess of the fair market value of the shares on the date of exercise over the amount paid for the shares, or if less (and if the disposition is a transaction in which loss, if any, will be recognized), the gain on disposition. Any additional gain realized by the participant upon the disposition will be a capital gain. If this occurs, we will be entitled to a tax deduction equal to the ordinary income amount the participant recognizes. The excess of the fair market value of shares received upon the exercise of an incentive stock option over the stock option price for the shares is an item of adjustment for the participant for purposes of the alternative minimum tax. Therefore, although no income is recognized upon exercise of an incentive stock option, a participant may be subject to alternative minimum tax as a result of the exercise.

Nonqualified Stock Options

No income is expected to be recognized by a participant for federal income tax purposes upon the grant of a nonqualified stock option. Upon exercise of a nonqualified stock option, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of the shares on the date of exercise over the amount paid for the shares. Income recognized upon the exercise of a nonqualified stock option will be considered compensation subject to withholding at the time the income is recognized, and, therefore, the participant’s employer must make the necessary arrangements with the participant to ensure that the amount of the tax required to be withheld is available for payment. Nonqualified stock options are designed to provide the employer with a deduction equal to the amount of ordinary income recognized by the participant at the time of the recognition by the participant, subject to the deduction limitations described below.

NOBLE ENERGY • 2020 PROXY STATEMENT    29

Stock Appreciation Rights

There is expected to be no federal income tax consequences to either the participant or the employer upon the grant of SARs. Generally, the participant will recognize ordinary income subject to withholding upon the receipt of payment pursuant to SARs in an amount equal to the aggregate amount of cash and the fair market value of any common stock received. Subject to the deduction limitations described below, the employer generally will be entitled to a corresponding tax deduction equal to the amount includible in the participant’s income.

Restricted Stock

If the restrictions on an award of shares of restricted stock are of a nature that the shares are both subject to a substantial risk of forfeiture and are not freely transferable (within the meaning of Section 83 of the Code), the participant will not recognize income for federal income tax purposes at the time of the award unless the participant affirmatively elects to include the fair market value of the shares of restricted stock on the date of the award, less any amount paid for the shares, in gross income for the year of the award pursuant to Section 83(b) of the Code. In the absence of this election, the participant will be required to include in income for federal income tax purposes on the date the shares either become freely transferable or are no longer subject to a substantial risk of forfeiture (within the meaning of Section 83 of the Code) the fair market value of the shares of restricted stock on such date, less any amount paid for the shares. The employer will be entitled to a deduction at the time of income recognition to the participant in an amount equal to the amount the participant is required to include in income with respect to the shares, subject to the deduction limitations described below. If a Section 83(b) election is made within 30 days after the date the restricted stock is received, the participant will recognize ordinary income at the time of the receipt of the restricted stock, and the employer will be entitled to a corresponding deduction, equal to the fair market value of the shares at the time, less the amount paid, if any, by the participant for the restricted stock. If a Section 83(b) election is made, no additional income will be recognized by the participant upon the lapse of restrictions on the restricted stock, but, if the restricted stock is subsequently forfeited, the participant may not deduct the income that was recognized pursuant to the Section 83(b) election at the time of the receipt of the restricted stock.

Dividends on restricted stock accumulated during the restricted period that are paid to the participant at the end of the restricted period will be additional compensation taxable as ordinary income to the participant subject to withholding, unless the participant made an election under Section 83(b) of the Code. Subject to the deduction limitations described below, the employer generally will be entitled to a corresponding tax deduction equal to the dividends includible in the participant’s income as compensation. If the participant has made a Section 83(b) election, the dividends will be dividend income, rather than additional compensation, to the participant.

If the restrictions on an award of restricted stock are not of a nature that the shares are both subject to a substantial risk of forfeiture and not freely transferable, within the meaning of Section 83 of the Code, the participant will recognize ordinary income for federal income tax purposes at the time of the transfer of the shares in an amount equal to the fair market value of the shares of restricted stock on the date of the transfer, less any amount paid therefor. The employer will be entitled to a deduction at that time in an amount equal to the amount the participant is required to include in income with respect to the shares, subject to the deduction limitations described below.

Restricted Stock Units

There will be no federal income tax consequences to either the participant or the employer upon the grant of restricted stock units. Generally, the participant will recognize ordinary income subject to withholding upon the receipt of cash and/or transfer of shares of common stock in payment of the restricted stock units in an amount equal to the aggregate of the cash received and the fair market value of the common stock so transferred. Subject to the deduction limitations described below, the employer generally will be entitled to a corresponding tax deduction equal to the amount includible in the participant’s income.

Dividend Equivalents

Generally, a participant will recognize ordinary income subject to withholding upon the receipt of cash and/or transfer of shares of common stock in payment of any dividend equivalent cash rights or dividend equivalent unit rights in an amount equal to the cash the participant receives or the fair market value of the common stock so transferred, as applicable. Subject to the deduction limitations described below, the employer generally will be entitled to a corresponding tax deduction equal to the amount includible in the participant’s income.

NOBLE ENERGY • 2020 PROXY STATEMENT    30

Performance Awards

There will be no federal income tax consequences to either the participant or the employer upon the grant of performance awards. Generally, the participant will recognize ordinary income subject to withholding upon the receipt of cash and/or shares of common stock in payment of performance awards in an amount equal to the aggregate of the cash received and the fair market value of the common stock so transferred. Subject to the deduction limitations described below, the employer generally will be entitled to a corresponding tax deduction equal to the amount includible in the participant’s income.

Stock Awards

The participant will recognize income for federal income tax purposes at the time of the stock award and, subject to the deduction limitations described below, the employer will be entitled to a corresponding deduction.

Other Incentive Awards

The tax treatment of other incentive awards will depend on the type of award. In general, the participant will be subject to income tax withholding at the time when the ordinary income is recognized. Subject to the deduction limitations described below, the participant’s employer will be entitled to a tax deduction at the same time and for the same amount.

Limitations on the Employer’s Compensation Deduction

Section 162(m) of the Code limits the deduction certain publicly held employers may claim for otherwise deductible compensation payable to certain current and former executive officers of the employer to the extent the compensation paid to such an officer for the year exceeds $1 million. All awards granted under the 2020 Plan to such current and former executive officers are subject to the deduction limit under Section 162(m).

Excess Parachute Payments

Section 280G of the Code limits the deduction that the employer may take for otherwise deductible compensation payable to certain individuals if the compensation constitutes an “excess parachute payment.” Excess parachute payments arise from payments made to disqualified individuals that are in the nature of compensation and are contingent on changes in ownership or control of the employer or certain affiliates. Accelerated vesting or payment of awards under the 2020 Plan upon a change in ownership or control of the employer or its affiliates could result in excess parachute payments. In addition to the deduction limitation, a disqualified individual receiving an excess parachute payment is subject to a 20% excise tax on the amount thereof.

Application of Section 409A of the Code

Section 409A of the Code imposes an additional 20% tax and interest on an individual receiving nonqualified deferred compensation under a plan that fails to satisfy certain requirements. For purposes of Section 409A, “nonqualified deferred compensation” includes equity-based incentive programs, including some stock options, stock appreciation rights and restricted stock unit programs. The awards made pursuant to the 2020 Plan will be designed to comply with the requirements of Section 409A of the Code to the extent the awards granted under the 2020 Plan are not exempt from coverage. However, if the 2020 Plan fails to comply with Section 409A in operation, a participant could be subject to the additional taxes and interest.

OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE NOBLE ENERGY, INC. 2020 LONG-TERM INCENTIVE PLAN.

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COMPENSATION DISCUSSION AND ANALYSIS   TABLE OF CONTENTS

 

EXECUTIVE SUMMARY	32
DELIVERING KEY OUTCOMES FOR 2019	33
WHAT WE PAY AND WHY: 2019 COMPENSATION PROGRAM STRUCTURE	37
2019 COMPENSATION TARGETS FOR NAMED EXECUTIVE OFFICERS	37
2019 NAMED EXECUTIVE OFFICER TOTAL TARGET COMPENSATION MIX	38
ELEMENTS OF EXECUTIVE COMPENSATION	39
2019 EXECUTIVE COMPENSATION RESULTS	42

 

— EXECUTIVE SUMMARY

 

This Compensation Discussion and Analysis describes our executive compensation program, the decisions our Compensation Committee has made under that program, and the factors considered in making those decisions. This discussion focuses on the compensation of our Named Executive Officers for 2019, who were:

 

 

Biographical information for our Named Executive Officers and other key executives appears in Appendix B to this Proxy Statement.

 

2019 Performance Highlights

 

2019 was a hallmark year for Noble Energy. We delivered results significantly better than target in free cash flow generation, capital spend and cost control, and we strengthened our Company in many ways in 2019 including:

 

•	Delivering on key strategic initiatives, including Leviathan first gas and the Alen Gas Project sanction;
•	Completing the midstream strategic review, selling the remaining midstream assets and incentive distribution rights to NBLX;
•	Improving corporate returns beyond targets;
•	Demonstrating top-quartile economic performance in key onshore basins;
•	Developing our inaugural Climate Resilience Report and analysis; and
•	Growing our reserve base.

 

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We believe these actions were recognized by our shareholders, as Noble shares and our Total Shareholder Return outperformed the S&P 500 and most of our E&P peers in 2019. In summary, our organization executed extremely well in 2019 in each area of our Company. Our strong safety, operational and financial performance would not have been possible without the commitment, skill and determination of all employees. During 2019, we continued our commitment to building a culture of open and direct communications, caring and collaboration and making Noble Energy a great company at which to work.

 

Executive compensation in 2019 reflects a year of financial, operational, strategic and safety outperformance.

 

— DELIVERING KEY OUTCOMES FOR 2019

 

 

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TOTAL SHAREHOLDER RETURN - 2019^*

 

 

*	Total Shareholder Return measured from January 1, 2019 to December 31, 2019.

 

2019 Key Compensation Actions

 

Each year, our Compensation Committee focuses on ensuring a clear connection between performance and pay. The members of the Compensation Committee considered financial and strategic achievements against business goals and plans, and the Committee recognized Noble Energy’s outperformance with its compensation decisions.

 

•	2019 Short-Term Incentive Plan payout approved at 180% of target.
•	2017 performance shares vested at 83% of target shares based on the Company’s three-year relative TSR performance. Although the Company’s relative TSR for 2019 was second in the peer group, the overall performance share results were impacted by lower relative TSR in 2017 and 2018.
•	Effective February 1, 2019, the Compensation Committee approved an increase in the base salary and target award opportunity under the Long-Term Incentive Plan (LTIP) for Mr. Stover to reward his leadership in Company performance and to bring him closer to the median of our compensation benchmarking peer group. Additionally, the Committee approved Mr. Stover’s recommendation for an increase in the base salary for Mr. Elliott to recognize the scope and complexity of his position and his outstanding leadership of, and results in, our Eastern Mediterranean assets.

 

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Our Executive Compensation Philosophy and Objectives

 

Our executive compensation program is designed to achieve the following objectives:

 

•	Target a competitive compensation package to attract, motivate and retain executive talent needed to deliver the business;
•	Provide a clear and direct relationship between executive pay and our performance on both a short- and long-term basis;
•	Reward Company and individual performance for delivery of business results and creation of shareholder value;
•	Support our business strategy; and
•	Link executive pay to measures that drive shareholder returns.

 

Sound Executive Compensation Governance At-A-Glance

 

WHAT WE DO			WHAT WE DON’T DO
	Place a majority of weight on performance-based, at-risk, long-term compensation.			No buyouts or repricing of underwater stock options.
	Maintain a clawback policy in the event of a material financial restatement or fraud.			No employment contracts.
	Use a mix of relative and absolute financial performance metrics in our incentive plans.			No excessive perquisites.
	Include “double-trigger” change of control provisions in our equity compensation plan.			No excise tax reimbursements or gross-ups upon a change of control.
	Apply stock ownership guidelines to executive officers and non-employee directors.			No permitted pledging or hedging of Company stock.
	Use an independent, external compensation consultant.
	Benchmark against a relevant group of peer companies.
	Engage with institutional investors regarding the executive compensation program.
	Provide clarity with respect to Company objectives and incentive targets; balance downside outcomes with upside opportunities.

 

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Shareholder Engagement and Results of 2019 Say-on-Pay Vote

 

At the 2019 Annual Meeting of Shareholders, we held our annual advisory vote on executive compensation. Our executive compensation programs have historically received strong shareholder support (averaging over 95% for 2016, 2017 and 2018). Following our late fourth quarter 2018 leadership transition, some shareholders expressed concern about the separation payment made to a departing executive. This concern was reflected in the 81.3% shareholder support for the 2019 Say-on-Pay vote.

 

In response to the 2019 Say-on-Pay vote, and in line with our commitment to robust shareholder engagement, we sought opportunities to engage with shareholders, obtain feedback and respond to questions. We requested meetings with our top 30 shareholders, representing over 80% of our outstanding stock. The table below shows a summary of the topics our shareholders asked us to consider and upon consideration of their feedback, the changes we implemented.

 

GENERAL EXECUTIVE COMPENSATION STRUCTURE

 

What Shareholders Said	How We Responded
Separation payment made to a departing executive exceeded estimated severance benefit in Termination Payments Table for 2018 (2019 Proxy document)	►Noble Energy does not have a separate non-change-of-control severance plan for executives. The severance benefits disclosed in the Termination Payments Table are the minimum benefits payable in the event of an involuntary termination. Our Compensation Committee retains the discretion to evaluate the circumstances of each termination when an executive exits the Company, giving consideration to the terms of the separation and any agreements and protective provisions needed to maintain business continuity during the transition. This executive exit was part of a broader leadership transition, and additional agreements and protective covenants were put in place to protect business continuity during the period of change. Consistent with the advice of the Compensation Committee’s independent consultant and considering market practice, our Compensation Committee exercised discretion and provided consideration to the departing executive in exchange for those protective covenants. Other executives have departed without additional separation payments.
Incorporate more returns-based measures into incentive plan design	►We introduced Cash Return on Capital Employed (“CROCE”) as a performance condition to the 2020 long-term performance share awards.
Demonstrate linkage between climate and sustainability performance and executive compensation	►We incorporated Environmental, Social and Governance (“ESG”) performance measures into the 2020 Short-Term and Long-Term Incentive Plan designs.

 

SHORT-TERM INCENTIVE (“STI”)

 

What Shareholders Said	How We Responded
Improve disclosures around STI targets, threshold and maximum performance levels	►We increased disclosure around 2019 STI targets, results and payouts.
Increase proportion of quantitative goals in STI program	►We increased quantitative goals by 10% in the 2020 STI Plan from 60% to 70%. ►We increased the emphasis on Free Cash Flow to 30% in the 2020 STI Plan.
Simplify STI Plan	►We introduced clarity by simplifying STI metrics to focus on Financial Performance, Operating Excellence and Strategic Execution in alignment with Noble Energy’s strategy of creating value as a diversified, low-cost producer with moderate growth and sustainable free cash flow. ►We focused the Strategic Execution qualitative component of the STI Plan on Balance Sheet Strength (including liquidity and leverage), ESG Performance and Portfolio Optimization.

 

LONG-TERM INCENTIVE (“LTI”)

 

What Shareholders Said	How We Responded
Long-term performance awards should be measured with multiple measures, rather than a single metric (relative TSR)	►We introduced two new long-term vesting criteria to the 2020 performance share awards: CROCE and ESG performance.

 

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— WHAT WE PAY AND WHY: 2019 COMPENSATION PROGRAM STRUCTURE

 

	Compensation Element	Purpose	Form of Compensation
FIXED	Base Salary	Provide a fixed level of compensation for performing day-to-day functions based on level of responsibility, experience and individual performance	►CASH
VARIABLE	Annual Short-Term Incentive	Reward short-term financial and operational performance over a one-year performance period	►CASH
	LTI – Performance-based Share Award	Align interests of our NEOs with our long-term shareholders.	►COMMON STOCK
	LTI – Time-Vested Restricted Shares	Facilitate stock ownership, provide a retention incentive and align with long-term shareholder interests.	►COMMON STOCK AND CASH(1)
	LTI – Stock Options	Motivate and incentivize sustained performance over the long-term.	►OPTIONS

 

(1)	A portion of the 2019 Time-Vested Restricted Share award was granted as cash-settled phantom shares to minimize the impact of share dilution.

 

— 2019 COMPENSATION TARGETS FOR NAMED EXECUTIVE OFFICERS

 

The Compensation Committee finalized 2019 compensation targets for our Named Executive Officers in January 2019. The following table provides the target value of each officer’s total 2019 target direct compensation.

 

Name		2019 Base Salary ($)		2019 STIP Target (% of Salary)		2019 STIP Target Opportunity ($)		2019 LTIP Target Opportunity ($)(1)		2019 Total Direct Compensation Target ($)
David L. Stover		1,050,000		130%		1,365,000		8,335,000		10,750,000
Brent J. Smolik		750,000		110%		825,000		4,100,000		5,675,000
Kenneth M. Fisher		640,000		95%		608,000		2,350,000		3,598,000
Rachel G. Clingman		540,000		80%		432,000		1,500,000		2,472,000
John K. Elliott		480,000		75%		360,000		1,550,000		2,390,000

 

(1)	Equity values reflect the target LTIP values the Committee approved. These differ from the expense valuations shown in the Summary Compensation Table and Grants of Plan Based Awards Table.

 

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Pay-for-Performance

 

The global compensation program at Noble Energy is designed to promote a pay-for-performance culture that motivates continuous improvement of business results, while maintaining a strong sense of teamwork. Our executive compensation program places a substantial portion of the total compensation opportunity at-risk. For 2019, 90% of the total compensation for the CEO and 83% of total compensation for other Named Executive Officers was contingent on Noble Energy achieving financial, operational and strategic outcomes or was linked to stock price performance. We believe the structure of our executive compensation program is consistent with the objectives of our compensation philosophy, provides an appropriate mix of fixed and performance-based compensation, and aligns compensation to the interests of shareholders.

 

— 2019 NAMED EXECUTIVE OFFICER TOTAL TARGET COMPENSATION MIX

 

 

CEO Pay: Target Versus Realizable Compensation

 

The Company’s performance has had a significant impact on the at-risk portions of compensation opportunities described above. As a result, our CEO’s realized and realizable compensation has trailed the target opportunity when the Company has underperformed.

 

The target compensation opportunity is defined as: (i) annual base salary, (ii) short-term incentive opportunity as a percent of base salary, and (iii) long-term incentive opportunity on the date of grant. Realizable pay is the combination of the (i) actual annual base salary, (ii) the actual short-term incentive award earned for the performance year, and (iii) estimated value of vested and unvested long-term incentive awards on track to be earned based on the current share price and actual or target relative TSR performance for vested and unvested performance shares, respectively. For any given year, annual performance incentives and long-term incentive compensation actually earned by our Named Executive Officers may differ from the target opportunity due to actual performance relative to the applicable incentive plan performance measures and stock price performance.

 

By design, the Committee intends that the Company should meet the following criteria for executives to receive their target compensation value:

 

 

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In 2017 and 2018, when Noble Energy underperformed the peer group on relative stock performance or fell short on certain financial and operational goals, our executives realized less than 100% of their total target pay opportunity and in certain years, substantially less. This is the intended result of our compensation program’s pay-for-performance design and our Compensation Committee’s use of their discretion in aligning executive pay with Company performance and shareholder return.

 

As illustrated in the below chart, our pay-for-performance philosophy is set forth by the difference in CEO target pay opportunity and realizable pay over the past three years. Our CEO did not receive payment of any performance share awards in two out of the last three years. In addition, our Compensation Committee exercised negative discretion to reduce the 2018 Short-Term Incentive (STIP) payout to 85% of target.

 

By design, in years where we achieved below-target results, the CEO’s compensation fell short of the target opportunity. For 2019, reflecting a year of outstanding financial and operational performance, CEO realizable compensation exceeded the target opportunity as of December 31, 2019, thereby in the Committee’s view, continuing the effective linkage between pay and performance. If we considered the impact on our stock price due to macro economic factors and recasted this analysis as of February 28, 2020, CEO realizable compensation is lower, reinforcing the strong tie to stock price performance.

 

CEO TARGET VERSUS REALIZABLE COMPENSATION HISTORY⁽¹⁾

 

 

(1)    All unvested performance share awards are reflected at target.

 

— ELEMENTS OF EXECUTIVE COMPENSATION

 

Process for Determining Executive Compensation

 

Role of Compensation Committee

 

The Compensation Committee oversees and approves our executive compensation program with the aim of reinforcing our financial and operational results, enhancing our culture and establishing a strong connection between pay and performance as well as alignment between executives, employees and shareholders. In its oversight role, the Compensation Committee is responsible for making compensation decisions involving our CEO and other executive officers. During the annual meeting cycle, the Compensation Committee reviews program design, peer groups, performance targets, compensation levels, market practices, benchmark data and ongoing Company and individual performance to inform annual compensation decisions. Compensation decisions reflect input from our senior management and the independent compensation consultant engaged by the Compensation Committee and reflect not only the annual results of the Company, but the longer-term issues surrounding all producers of hydrocarbons. The Compensation Committee puts in place a compensation structure that is perceived by management to be both rigorous and fair.

 

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January Final Company and CEO performance review Determine CEO and business goals Approve prior year incentive payouts Set new performance year incentive plan design; approve performance measures and targets Establish NEO target compensation opportunity April Spring Shareholder Engagement; feedback shared with Board Annual shareholder meeting and voting Review shareholder advisory reports July Independent compensation consultant review of market trends and proxy data Evaluate compensation and performance peer groups Assess progress on annual goals and priorities October Fall Shareholder Engagement; feedback shared with Board Consultant reviews market data for executive roles Assess progress on annual goals and priorities December Compensation program risk assessment Early full-year performance review Review proposed long-term incentive program Review officer and non-employee director stock ownership holdings

 

Role of Our CEO

 

Our Compensation Committee receives an assessment from our CEO on individual performance, leadership and suggested compensation levels of other executive officers. The CEO is not present during the Compensation Committee’s deliberations regarding his own compensation. The Compensation Committee makes all final decisions regarding the compensation of executive officers in executive session with no members of management present.

 

Role of Compensation Consultant

 

Our Compensation Committee retains, at the Company’s expense, Meridian Compensation Partners, LLC, an independent compensation consultant (“Meridian”) to assist with executive compensation matters. The Compensation Committee met with Meridian numerous times during 2019, with and without management, to review findings based on market research, and to consider those findings in determining and adjusting our executive compensation program.

 

Our Compensation Committee continued to retain Meridian for 2019 after confirming Meridian’s independence from our management and members of our Compensation Committee, and based on the following additional considerations:

 

•	expertise and comprehensive range of services associated exclusively with executive compensation;
•	contemporary, up-to-date insight on executive compensation matters and shareholder perspectives;
•	familiarity with our executive compensation program and the programs of our compensation peer group;
•	no conflicts of interest; and
•	maintenance of policies and procedures that prevent conflicts of interest.

 

In 2019, Meridian assisted in reviewing our executive compensation program and provided comparative market data and trends on compensation practices and programs based on an analysis of our peer companies. Representatives of Meridian participated in all regular meetings of the Compensation Committee, including executive sessions without management.

 

Risk Assessment

 

The Compensation Committee takes into consideration potential risks associated with the executive compensation program and structures compensation to provide appropriate incentives without encouraging excessive risk-taking. It is the Compensation Committee’s practice to annually assess compensation program risk in consultation with Meridian. The Compensation Committee requested Meridian conduct a risk assessment of Noble Energy’s executive compensation program. Based upon this review, Meridian determined the executive compensation program does not encourage unnecessary risk-taking, and the Compensation Committee and Management agreed with this assessment.

 

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Compensation Benchmarking and Performance Peer Groups

 

Our Compensation Committee annually reviews our executive officers’ compensation relative to E&P peers and general industry companies based on information provided by Meridian and its own judgement and analysis. We believe this material provides the Compensation Committee with a strong and sufficient basis to understand and compare the competitive executive compensation landscape.

 

The Compensation Committee reviews the composition of the peer group annually to ensure that it remains relevant for comparative purposes. In 2018, management recommended, and the Compensation Committee agreed, that we should have two distinct peer groups: one for compensation benchmarking and one for relative Company performance assessment.

 

The companies in the compensation benchmarking peer group reflect the industry companies within a comparable size range against which we compete for executive talent. Performance peers are those companies in our industry that share a similar long-term business strategy, multi-basin operating presence including a mix of domestic and international presence, and similar production commodity mix risk. By composing two separate peer groups, the Compensation Committee seeks to benchmark the form and magnitude of compensation granted to our Named Executive Officers against the industry in which we compete for talent, while at the same time evaluating our Company’s performance against peers that share our business operations and strategy.

 

Company Name		Enterprise Value (MM)(1)				Market Cap (MM)(1)				Multiple Basins		International & Domestic Operations		Compensation Peer		Performance Peer
EOG Resources		$	53,192			$	48,729
Hess Corporation		$	27,177			$	20,357
Pioneer Natural Resources Company		$	27,096			$	25,074
Concho Resources Inc.		$	21,907			$	17,467
Diamondback Energy, Inc.		$	21,018			$	14,899
Apache Corporation		$	20,373			$	9,623
Continental Resources, Inc.		$	18,527			$	12,619
Marathon Oil Corporation		$	15,433			$	10,863
Ovintiv Inc. (formerly known as Encana Corporation)		$	14,428			$	6,090
Devon Energy Corporation		$	13,158			$	9,975
Chesapeake Energy Corporation		$	12,642			$	1,600
Parsley Energy, Inc.		$	8,451			$	5,318
Cabot Oil & Gas Corporation		$	8,277			$	7,102
EQT Corporation		$	8,005			$	2,787
WPX Energy, Inc.		$	8,005			$	5,726
Cimarex Energy Co.		$	7,587			$	5,250
Murphy Oil Corporation		$	7,365			$	4,098
Noble Energy, Inc.		$	20,390			$	11,881

 

(1)	Market cap and enterprise value data is as of December 31, 2019 and sourced from Standard & Poor’s Capital IQ.

 

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— 2019 EXECUTIVE COMPENSATION RESULTS

 

Base Salary

 

To determine base salary, the Compensation Committee considers, among other things, compensation levels, market data provided by Meridian, internal equity, the complexity of the individual’s role at the Company, and an individual’s expertise, experience, and performance. In early 2019, the Committee evaluated these factors and made the following adjustments:

 

Named Executive Officer	2018 Base Salary				2019 Base Salary
David L. Stover		$	1,000,000			$	1,050,000
Brent J. Smolik		$	750,000			$	750,000
Kenneth M. Fisher		$	640,000			$	640,000
Rachel G. Clingman		$	540,000			$	540,000
John K. Elliott		$	460,000			$	480,000

 

Short-Term Incentive Plan (“STIP”)

 

Our STIP is designed to incentivize and reward the annual achievement of Company performance goals and individual performance during the year. The performance measures and targets reflect short-term financial, operational, and strategic goals that we believe drive shareholder value. The Compensation Committee believes that linking short-term incentive pay to operating performance and shareholder value is best achieved by establishing clear metrics that reflect how the Company measures overall business success and how we believe shareholders evaluate total Company performance.

 

The Company STIP pool can range from 0 – 250% of the target opportunity. At the conclusion of the year, the Compensation Committee reviews the quantitative and qualitative performance results provided by management in order to determine the Company Performance Factor. The Compensation Committee retains discretion to adjust the final Company Performance Factor positively or negatively based on additional considerations such as unforeseen events at the Company, in the industry and/or exceptional operational complexity.

 

ILLUSTRATION OF SHORT- TERM INCENTIVE PLAN DESIGN

 

Target Cash Incentive Opportunity ($)

Company Performance Factor

Adjusted for Individual Performance

Individual Short- Term Incentive Award ($)

 

Performance Measure Selection

 

The Compensation Committee reviews and approves annual performance measures that support our business strategy and contribute to shareholder value. In selecting the performance measures, targets and ranges, the Committee considers the annual business plan and prevailing economic and industry conditions. Each year’s metrics and targets fit that year’s unique circumstances and plan. We set challenging goals with maximum payout ranges that can only be realized through exceptional, industry-leading performance.

 

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2019 Short-Term Incentive Plan Outcomes

 

In 2019, actual performance for the STIP metrics compared to targets was as follows:

 

Performance Levels QUANTITATIVE PERFORMANCE METRICS (60%) 0% Target (100%) 250% Result Factor Free Cash Flow (15%) Measures financial capacity and cost discipline Free Cash Flow(1) ($MM) Divestment Proceeds(2) ($MM) (1,711) 412 Target (1,311) Target 812 Maximum (911) Maximum 1,212 Actual Free Actual Divestment Proceeds: $843 Cash Flow: ($840) 207% 0.31 U.S. Onshore Capital Efficiency (15%) Measures capital discipline and project returns $76.33 Target $54.52 Maximum $38.16 Actual: $51.03 132% 0.20 Relative Cash Costs per Boe(3) (10%) Evaluates cost structure relative to peers 10th Target 6th Maximum 1st Actual: 6th 111% 0.11 Cash Cost per Boe(4) (10%) Measures organization’s focus on cost $13.69 Target $12.44 Maximum $11.51 Actual: $11.75 211% 0.21 Sales Volume (10%) Assesses delivery of budgeted volumes 333 Target 354 MBoepd Maximum 372 Accttuuaall:: 336611 MBooeepd 146% 0.15 FINAL QUANTITATIVE FACTOR AT 60% WEIGHTING 0.98

(1)	Non-GAAP financial measure, see reconciliation schedule in Appendix A.
(2)	Divestment proceeds includes cash received from NBLX purchasing assets from NBL.
(3)	Based on publicly reported information. Relative cash costs per Boe includes lease operating expense and general administrative costs.
(4)	Cash costs per Boe includes lease operating expense, gathering, transportation and processing expense and general and administrative costs for upstream Noble Energy and excludes NBLX.

 

QUALITATIVE PERFORMANCE METRICS (40%)
Total Shareholder Return (Absolute and Relative)		Outperformed S&P 500 average for 2019. 2nd in peer group, achieved +35% TSR.
Strategic Initiatives		Delivered critical strategic actions to position the Company for long-term success including: (1) Successfully brought Leviathan online under budget and ahead of schedule. (2) Acquired interest in EMG pipeline. (3) Sanctioned Alen Gas Project. (4) Maintained investment grade ratings with all credit agencies; upgraded by Fitch. (5) Concluded Midstream strategic review; executed drop/simplification.
Returns-Based Metrics		Demonstrated our commitment to optimizing returns through continuous cost and capital efficiency improvements with above-target 2019 returns-based metrics (including ROACE, CROCI and Debt Adjusted Per Share Cash Flow Growth).
Safety Performance		Delivered industry-leading safety performance with record low U.S. Onshore TRIR (Total Recordable Incident Rate). Evaluated risk and published inaugural Climate Resilience Report using TCFD framework.
Top Quartile Relative Performance by Basin		Achieved significant capital efficiency improvements and delivered top-quartile safety, economic and return performance in our key basins. Established industry-leading new drilling benchmarks.
Additions to Proved Reserves/ Exploration Performance		Realized reserve additions of 305 MMBoe,~2.3x greater than production. Executed Colombia Exploration Agreement for 40% WI in 2MM gross acres.

FINAL QUALITATIVE FACTOR AT 40% WEIGHTING	0.82
OVERALL COMPANY PERFORMANCE FACTOR	1.80

 

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In assessing the quantitative and qualitative factors shown above, our Compensation Committee approved the overall Company Performance Factor at 180% of target, the highest Company Performance Factor in a decade.

 

2019 Short-Term Incentive Awards for Named Executive Officers

 

		Base salary as of						Actual 2019 STIP
		Dec. 31, 2019		Target STIP		Target STIP		Award		Actual 2019 STIP
Name		($)		(% of salary)		($)		($)(1)		Award as % of Target
David L. Stover		1,050,000		130%		1,365,000		2,457,000		180%
Brent J. Smolik		750,000		110%		825,000		1,633,500		198%
Kenneth M. Fisher		640,000		95%		608,000		1,121,760		185%
Rachel G. Clingman		540,000		80%		432,000		855,360		198%
John K. Elliott		480,000		75%		360,000		745,200		207%

 

(1)	Actual 2019 STIP award includes adjustments for individual performance.

 

Individual Performance

 

The Committee approved individual performance adjustments for certain NEOs in recognition of their leadership in delivering on critical strategic outcomes, producing extraordinary success with the Leviathan project in 2019 and achieving market recognition with industry-leading performance.

 

Long-Term Incentive Plan (“LTIP”)

 

Our LTIP is designed to provide incentive compensation linked to relative shareholder value. The Compensation Committee historically awards long-term incentive compensation on or about February 1 of each year. Effective for awards granted in 2018 and thereafter, the Compensation Committee set the performance share component of the annual long-term incentive award to 50% of the total long-term incentive value. The vesting period for the long-term incentive award is three years to ensure these awards incent and reward longer-term Company performance.

 

2019 Long-Term Incentive Plan

 

Type of Award		Percent of 2019 Award Value		Vesting Criteria		Vesting Schedule
Performance Share Award		50%		•  Performance awards earned based on Company’s total shareholder return relative to its performance peers		Percentile Rank 90th or higher		Payout 200%
				•  Three-year performance period beginning on January 1 of 2019 and ending on December 31 of 2021		75th or higher 50th or higher 25th or higher		150% 100% 50%
						Below 25th		0%
						If TSR is between two levels, straight line interpolation is used.
						If TSR is negative, the maximum payout is 100%.
Restricted Shares(1)		35%		•  Time-based awards		Vest after three years
Stock Options		15%		•  Awards that provide the right to purchase common stock at the grant date fair value for a period of up to 10 years		Vest ratably over three years

 

(1)	A portion of the 2019 Time-Vested Restricted Share award was granted as cliff-vested, cash-settled phantom shares to minimize share dilution impact.

 

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2019 LTI Awards for Named Executive Officers

 

				Restricted Share
		Performance-Based		Time-Based		Stock Options		Target Total Value
Name		($)		($)(1)		($)		($)
David L. Stover		4,167,500		2,917,250		1,250,250		8,335,000
Brent J. Smolik		2,050,000		1,435,000		615,000		4,100,000
Kenneth M. Fisher		1,175,000		822,500		352,500		2,350,000
Rachel G. Clingman		750,000		525,000		225,000		1,500,000
John K. Elliott		775,000		542,500		232,500		1,550,000

 

(1)	A portion of the 2019 Time-Vested Restricted Share award was granted as cliff-vested, cash-settled phantom shares to minimize share dilution impact.

 

Payout of Performance Share Award Granted in 2017

 

The 2017 Performance Share Award matured at the end of 2019. The graphic below depicts the value as a percent of target that could be earned based on Noble Energy’s relative TSR over that period, as well as the actual achievement for the most recent and historical performance periods. Payout of performance share awards can range from 0-200% of target. Although Noble Energy ranked 2^nd overall in our E&P peer group for 2019 shareholder return (as measured based on one-month trailing average on each end of the performance period), we ranked 8^th out of 13 peer companies in TSR performance for the three-year period from 2017 to 2019. As a result, the 2017 performance share awards vested at 83% of target.

 

2017 PERFORMANCE SHARE AWARDS: ACTUAL OUTCOMES

 

 

2020 Compensation Program Enhancements

 

In 2019, we undertook a series of initiatives to transform the Company, centering on a new multi-year strategy as a diversified, low-cost producer, delivering moderate growth and sustainable free cash flow. Our key strategic objectives are to maintain robust financial capacity, top-tier operational execution, a high-quality investment portfolio and to enhance safety, environmental, social and governance performance. As part of our pay-for-performance culture, our Compensation Committee designed a compensation program that it believes underscores the importance of delivering on these strategic goals. The Committee approved changes to our executive compensation framework effective for the 2020 plan year. Provided below is a summary of certain significant compensation decisions.

 

Short-Term Incentive Plan

 

Partly in response to shareholder feedback, the Compensation Committee approved enhancements to our Short-Term Incentive Plan design for the 2020 performance year. These enhancements are intended to simplify the plan design and further strengthen the link between STIP metrics and Noble Energy’s strategy for long-term value creation. The 2020 performance metrics reflect the foundational components of our strategy as described below:

 

•	Financial Performance (30%): In line with our objective to deliver significant free cash flow in 2020, the highest-weighted component of the 2020 STIP is Free Cash Flow.
•	Operational Excellence (40%): Includes (1) safety and environmental performance, (2) cash cost / BOE, (3) capital efficiency, and (4) sales volume. By utilizing this mix of metrics, the organization is incentivized to deliver on our 2020 business plan but not at the expense of profitability or safety.
•	Strategic Execution (30%): Measured by our (1) balance sheet strength, (2) portfolio optimization and (3) ESG performance. These metrics are designed to drive long-term Company and shareholder value and sustainability through delivery of our annual business plan.

 

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Long-Term Incentive Plan

 

The Compensation Committee revised the long-term incentive program in 2020 to link a portion of long-term compensation to Noble Energy’s absolute CROCE over a three-year period and Noble Energy’s continuous improvement in ESG performance. For 2020, performance shares will continue to make up 50% of the total long-term incentive value for our NEOs. The target number of performance shares will be determined at the beginning of the three-year performance period and the number of shares earned at the end of the three-year period will range from 0% to 200% of the target number of shares, depending on Noble Energy’s performance across relative TSR, CROCE and ESG. Effective with the 2020 annual LTIP grant, we discontinued the use of stock options.

 

2020 Individual Performance Achievements

 

In January 2020, the Committee granted authority to the CEO to award one-time discretionary bonuses to certain employees in recognition of extraordinary individual contributions. In connection with those awards, Mr. Elliott received a one-time discretionary, project-based bonus of $840,000 in recognition of his outstanding leadership and performance over the past three years delivering the Leviathan project ahead of schedule and more than $200 million under budget.

 

Benefit Programs

 

We offer a number of other benefits to our executive officers pursuant to benefit programs that provide for broad-based employee participation. These benefit programs include medical, dental and vision insurance, wellbeing programs, long- and short-term disability insurance, life and accidental death and dismemberment insurance, health and dependent care flexible spending accounts, relocation/expatriate programs and services, educational assistance, and employee assistance. The Company is committed to its employees’ health and wellbeing and by extension, the communities where we operate.

 

Retirement and Savings Plan

 

Our 401(k) Plan is a tax-qualified retirement savings plan generally available to our employees, including our Named Executive Officers. Our 401(k) Plan allows participants to contribute the lesser of up to 50% of their basic compensation or the limit prescribed by the Code. We match such contributions dollar-for-dollar up to 100% of the first six percent of a participant’s eligible compensation. The Company’s matching contributions vest 34% after one year of service, 67% after two years of service, and are fully vested after three years of service.

 

In addition, we make the following age-weighted contribution to the 401(k) Plan for each participant:

 

		Contribution		Contribution
		Percentage (Below		Percentage (Above
		the FICA Taxable		the FICA Taxable
Age of Participant		Wage Base)		Wage Base)
Under 35		4%		8%
At least 35 but under 48		7%		10%
At least 48		9%		12%

 

These contributions cliff vest in full after three years of service.

 

Elective Deferred Compensation Plan

 

Due to the regulatory limitations that restrict the amount of benefits payable under tax-qualified plans, we also sponsor a Non-Qualified Deferred Compensation Plan. Under the Deferred Compensation Plan, participants are allowed to defer portions of their salary and bonus and to receive certain matching, age-weighted and transition contributions that would have been made to our 401(k) Plan if the 401(k) Plan had not been subject to the regulatory limitations. Amounts deferred, if any, under the 401(k) Plan and the Deferred Compensation Plan by the NEOs are included, respectively, in the “Salary” columns of the Summary Compensation Table. Our matching contributions, age-weighted contributions and transition contributions allocated to the NEOs under the 401(k) Plan and the Deferred Compensation Plan are included in the “All Other Compensation” column of the Summary Compensation Table.

 

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Termination Benefits

 

As described later in the section titled “Potential Payments and Benefits Upon Termination of Employment,” our NEOs are eligible for a variety of benefit payments in association with a termination of employment for reasons of involuntary termination, potential change in control, disability and death.

 

We have no employment agreements with any of our NEOs. In the instance of an involuntary termination, the only guaranteed severance payments for our NEOs are service-based benefits set forth in our all-employee severance plan. Based on the specific circumstances of each situation, the Committee may extend additional cash and/or equity vesting consideration at its discretion in exchange for certain post-termination restrictions on the executive, including non-solicitation of employees and non-competition restrictions.

 

Executive Compensation Policies and Practices

 

Clawback Policy

 

Our Compensation Committee has adopted a policy that allows the Compensation Committee, under certain circumstances (such as a restatement of financial information or reserves or material noncompliance with federal securities laws or the Company’s Code of Conduct), to recoup incentive-based compensation from current or former executive officers.

 

Stock Ownership Guidelines

 

We have stock ownership guidelines for our executive officers that apply to all the NEOs. Our CEO is required to own Noble Energy common stock in an amount equal to or in excess of 6 times his annual base salary. Executive Vice Presidents are required to own an amount of common stock equal to or in excess of 3 times their annual base salary and Senior Vice Presidents are required to own 2.5 times their base salary. The Compensation Committee reviews holdings annually, which include restricted shares and all other Noble Energy common stock owned by the officer as of each December meeting. Each executive officer has five years to meet his or her requirements, measured from the date the officer becomes subject to the ownership level for the applicable role. As of December 31, 2019, all NEOs met their requirements.

 

Anti-Hedging/Anti-Pledging

 

Our executive officers are prohibited from hedging activities related to Noble Energy or Noble Midstream Partners securities and the pledging of Noble Energy securities.

 

Impact of Regulatory Requirements on Compensation (Section 162(m))

 

Pursuant to tax law changes effective in 2018, all taxable compensation paid to our Named Executive Officers in 2020 (other than certain “grandfathered” amounts) will be subject to the annual $1,000,000 per person limit on deductibility contained in Section 162(m) of the Code. “Grandfathered” amounts that satisfy the “performance-based compensation” exception under prior law include stock options granted under the 1992 Plan that satisfied the performance-based compensation exemption requirements when granted, so long as not materially modified. No other taxable compensation paid to our Named Executive Officers, including performance-based restricted shares and related cash awards granted under the 1992 Plan, awards granted under the 2017 Plan, all salary and STIP payouts, time-vested restricted stock awards and time-vested cash awards, and certain payments provided for under our change of control arrangements, is exempt from the Section 162(m) deduction limit. Although we consider tax deductibility in the design and administration of our executive compensation plans and program, we believe the Company’s interests are best served by providing competitive levels of compensation to our Named Executive Officers, even if certain amounts of compensation are not tax deductible.

 

Rules under GAAP determine the manner in which we account in our consolidated financial statements for grants of equity-based compensation to our employees. Our accounting policies for equity-based compensation are further discussed in Note 16 to our consolidated financial statements, included in our 2019 Annual Report contained in our Form 10-K.

 

Perquisites

 

We do not consider perquisites to be a material component of our executive compensation. In 2019, certain of our executive officers received minimal personal benefits that have a sound value to our business, such as club membership dues reimbursement and comprehensive physical examinations. We do not permit personal use of a corporate aircraft by executive officers or directors. Although family members and invited guests are occasionally permitted to accompany executive officers and directors on business flights, the aggregate incremental cost to the Company is de minimis. We do not provide any tax gross-ups on perquisites.

 

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CEO Pay Ratio

 

As required by Section 953(b), the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual compensation of our CEO. For our 2017 calculation, we calculated our median employee under the final adopted CEO pay ratio rules. The CEO pay ratio disclosure rules permit the use of a median employee for up to three years unless there has been a meaningful change to the employee population. The pay ratio calculated by the Company is a reasonable estimate calculated in accordance with SEC rules and methods for disclosure. Due to estimates, assumptions, adjustments and statistical sampling permitted under the rules, pay ratio disclosures may involve a degree of imprecision and may not be consistent with the methodologies used by other companies.

 

		Mr. Stover		Mr. Stover		Median Employee				Pay Ratio of CEO
		Total		Total Realizable		Total		Pay Ratio of CEO		Realizable
		Compensation		Compensation		Compensation		Compensation to		Compensation to
Year		($)		($)		($)		Median Employee		Median Employee
2019		13,038,313		12,116,508		142,118		92:1		85:1
2018		11,213,168		5,866,662		124,842		90:1		47:1
2017		11,262,048		6,010,732		127,488		88:1		47:1

 

2019 CEO Pay Ratio Methodology

 

During 2019, the individual selected in 2017 as our median employee terminated employment with the Company. In light of this employment termination, it was no longer appropriate for the Company to use the 2017 median employee for our 2019 fiscal year and therefore, in order to prepare our 2019 calculation, we selected a new median employee from the employee population calculated in 2017 under the final adopted CEO pay ratio rules. The newly selected 2019 median employee has compensation that is substantially similar to our 2017 median employee based on the compensation measure used to select our original 2017 median employee. The Company believes the change in median employee will not have a significant impact on the CEO pay ratio disclosure presented.

 

CEO Pay Ratio Methodology

 

To identify the median of the total annual compensation of all our employees, we took the following steps:

 

•	We utilized a determination date of October 1, 2017, a date within the last three months of the 2017 fiscal year, to enable us to make an identification in an efficient manner.
•	Our employee population consisted of 2,219 out of 2,285 employees, including full-time, part-time and temporary employees (summer interns) with 88% of the employees on our U.S. payroll and 12% on other payrolls (Israel, Equatorial Guinea, Cyprus, Cameroon and the United Kingdom). In accordance with the methodology, this population did not include independent contractors engaged by the Company.
•	Part-time and temporary employees represent less than 2% of our total employee population.
•	We excluded 66 employees from our employee population that were added in the Clayton Williams Energy, Inc. acquisition that closed in April 2017.
•	We annualized approximately 286 employees who did not work for the full 12-month period.
•	Foreign salaries were converted to U.S. dollars at the average exchange rate over the 12-month period.
•	No cost of living adjustments were utilized in the compensation calculation.
•	To identify the median employee, we compared the amount of annualized base salary and cash incentive bonus for each employee as reflected in our internal records.
•	Once the median employee was identified, the total compensation per the chart above was calculated under the same methodology as required by the summary compensation table disclosed elsewhere in this Proxy Statement. Mr. Stover’s total compensation was calculated under the same methodology.

 

Once the median employee was identified, the total realizable compensation as disclosed was determined by including CEO annual base salary, actual Short-Term Incentive Plan payout for the year, realizable equity value of the 2019 long-term incentive award based on NBL share price as of December 31, 2019 and all other actual compensation (including non-qualified deferred compensation and other compensation elements as disclosed in the summary compensation).

 

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REPORT OF THE COMPENSATION, BENEFITS AND STOCK OPTION COMMITTEE ON EXECUTIVE COMPENSATION

 

The following report of the Compensation, Benefits and Stock Option 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, Benefits and Stock Option Committee has reviewed the Compensation Discussion and Analysis contained in this Proxy Statement and discussed this disclosure with management. Based on this review and discussions with management, the Compensation, Benefits and Stock Option Committee recommended to the Board of Directors 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, 2019 for filing with the SEC.

 

Compensation, Benefits and
Stock Option Committee

 

Jeffrey L. Berenson, Chair
James E. Craddock
Thomas J. Edelman
Scott D. Urban

 

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COMPENSATION TABLES

 

— SUMMARY COMPENSATION TABLE

 

The following table sets forth summary compensation information for our Named Executive Officers during 2017, 2018 and 2019.

 

Name and Principal Position		Year		Salary ($)(1)		Bonus ($)(2)		Stock Awards ($)(3)		Option Awards ($)(4)		Non-Equity Incentive Plan Compensation ($)(5)		Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)(6)		All Other Compensation ($)(7)		Total ($)
David L. Stover		2019		1,043,366		—		7,942,802		1,250,246		2,457,000		—		344,899		13,038,313
Chairman and Chief Executive Officer		2018		1,000,000		—		7,619,890		1,162,495		1,105,000		23,701		302,082		11,213,168
		2017		994,231		—		5,758,478		2,583,326		1,560,000		78,105		287,908		11,262,048
Brent J. Smolik		2019		750,000		—		3,907,041		614,994		1,633,500		—		228,641		7,134,176
President and Chief Operating Officer		2018		59,135		—		3,499,989		1,000,000		86,580		—		8,870		4,654,574
Kenneth M. Fisher		2019		640,000		—		2,239,380		352,497		1,121,760		—		150,887		4,504,524
Executive Vice President and Chief Financial Officer		2018		636,921		—		2,703,780		412,497		493,899		2,114		140,907		4,390,118
		2017		623,269		—		1,708,887		766,653		666,663		7,016		136,053		3,908,541
Rachel G. Clingman		2019		540,000		—		1,429,397		224,996		855,360		—		106,055		3,155,808
Senior Vice President, General Counsel and Corporate Secretary		2018		311,539		—		1,199,967		599,996		221,754		—		57,181		2,390,437
John K. Elliott		2019		477,346		—		1,477,016		232,497		745,200		—		89,807		3,021,866
Senior Vice President, Offshore		2018		454,868		—		1,523,972		232,497		315,421		1,149		78,383		2,606,290
		2017		433,846		100,000		985,428		399,988		370,755		3,294		70,085		2,363,396

(1)	Certain of our Named Executive Officers deferred a portion of their base salaries under our Deferred Compensation Plan:

 

	Year		Percentage of Salary Deferred		Amount Deferred ($)
David L. Stover	2019		5%		52,168
	2018		5%		50,000
	2017		5%		49,712
Brent J. Smolik	2019		4%		30,000
Kenneth M. Fisher	2019		7%		44,800
	2018		7%		44,585
	2017		6%		37,396

 

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(2)	Reflects discretionary project based bonus. In 2017, Mr. Elliott received a $100,000 cash bonus for the completion of the Leviathan sanction.
(3)	Reflects the aggregate grant date fair value of stock awards under our 2017 Plan as of February 1, 2019, which was computed in accordance with FASB ASC Topic 718. Restricted shares awarded will vest according to the following schedule: 40% after year one, 40% after year two and 20% after year three for 2019 grants. Phantom unit cash awards granted in 2019 will vest 100% after year three. Performance share awards awarded will vest three years after the date of grant upon, and subject to a formula related to, our achievement of certain levels of total shareholder return relative to a pre-determined compensation peer group. See the Grants of Plan-Based Awards table for information on stock awards in 2019.
(4)	Reflects the aggregate grant date fair value of non-qualified stock options granted under our 2017 Plan. Options represent the right to purchase shares of common stock at a price per share equal to fair market value on the date of grant. Options will vest ratably over three years in equal installments on the first, second and third anniversaries of the date of grant. Vesting of these options is not contingent upon the satisfaction of any performance goals, although none of the options may be exercised before the first anniversary (absent a change of control) or after the tenth anniversary of the date of grant. See the Grants of Plan-Based Awards table for information on stock options granted in 2019.
(5)	Reflects payments under our STIP based on the achievement of certain performance goals during the year indicated. STIP awards earned during the year indicated were paid or deferred in March of the following year.
(6)	Reflects during year indicated the above-market Deferred Compensation Plan earnings. There were no above-market earnings in 2019 as the plan crediting rate was 3.50% and 120% of the annual long-term Applicable Federal Rate as of September 2018 was 3.63%. The above-market earnings in 2018 are based on the difference between the plan crediting rate of 3.64% and 120% of the annual long-term Applicable Federal Rate as of September 2017 (3.12%); and earnings in 2017 are based on the difference between the plan crediting rate of 4.07% and 120% of the annual long-term Applicable Federal Rate as of September 2016 (2.28%).

 

	Year		Deferred Compensation Above-Market Earnings ($)
David L. Stover	2019		—
	2018		23,701
	2017		78,105
Kenneth M. Fisher	2019		—
	2018		2,114
	2017		7,016
John K. Elliott	2019		—
	2018		1,149
	2017		3,294

(7)	All other compensation includes:

 

		Year		401(k) Matching Contrib. ($)		401(k) Retirement Savings Contrib. ($)		Deferred Comp. Plan Registrant Contrib. ($)(a)		Club Dues ($)		Physical Exam ($)		Accrued Dividends ($)(b)
David L. Stover		2019		16,800		20,200		209,421		7,576		2,150		88,752
		2018		16,500		20,000		199,648		9,134		2,150		54,650
		2017		16,200		19,800		198,800		9,512		—		43,596
Brent J. Smolik		2019		16,800		20,200		94,013		—		2,150		95,478
		2018		3,548		5,322		—		—		—		—
Kenneth M. Fisher		2019		16,800		20,200		74,213		10,496		2,150		27,028
		2018		16,500		20,000		74,294		11,703		—		18,410
		2017		16,200		19,800		72,372		16,799		2,150		8,732
Rachel G. Clingman		2019		16,800		20,200		40,613		—		2,150		26,292
		2018		16,500		22,600		10,933		—		—		7,148
John K. Elliott		2019		16,800		20,200		33,095		—		2,150		17,562
		2018		16,500		20,000		30,732		—		—		11,151
		2017		16,200		19,800		28,446		—		—		5,639

 

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(a)	The following amounts were credited to the Named Executive Officer’s Non-Qualified Deferred Compensation Plan Account:

 

		Year		Matching Contribution ($)		Retirement Savings Contribution ($)		Transition Contribution ($)(c)		Total Deferred Compensation Plan Registrant Contributions ($)
David L. Stover		2019		45,802		101,017		62,602		209,421
		2018		43,500		96,148		60,000		199,648
		2017		43,454		95,692		59,654		198,800
Brent J. Smolik		2019		28,200		65,813		—		94,013
		2018		—		—		—		—
Kenneth M. Fisher		2019		21,600		52,613		—		74,213
		2018		21,715		52,579		—		74,294
		2017		21,196		51,176		—		72,372
Rachel G. Clingman		2019		—		40,613		—		40,613
		2018		—		10,933		—		10,933
John K. Elliott		2019		—		33,095		—		33,095
		2018		—		30,732		—		30,732
		2017		—		28,446		—		28,446

(b)	Dividends are credited on unvested restricted awards.
(c)	Effective beginning in 2014, an additional transition contribution equal to 6% of a participant’s basic compensation will be made to the accounts of certain eligible employees who were participants in our defined benefit pension plan when it terminated on December 31, 2013. The annual transition contribution will end in 2023.

 

— SALARY AS A PERCENTAGE OF TOTAL COMPENSATION

 

As reflected in the Summary Compensation Table above, the salary received by each of our Named Executive Officers as a percentage of their respective total compensation during the year indicated was as follows:

 

		Percentage of Total Compensation
		2019	2018	2017
David L. Stover		8.0%	8.9%	8.8%
Brent J. Smolik(++)		10.5%	1.3%	—
Kenneth M. Fisher		14.2%	14.5%	15.9%
Rachel G. Clingman(++)		17.1%	13.0%	—
John K. Elliott(+)		15.8%	17.5%	18.4%

(+)	Became a Named Executive Officer for 2017.
(++)	Became a Named Executive Officer for 2018.

 

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— GRANTS OF PLAN-BASED AWARDS FOR 2019

 

The table below sets forth information regarding grants of plan-based awards made to our Named Executive Officers during 2019.

 

						Estimated Future Payouts Under Non-Equity Incentive Plan Awards						Estimated Future Payouts Under Equity Incentive Plan Awards(2)						All Other Stock Awards: Number of Shares of				All Other Option Awards: Number of Securities		Exercise or Base Price		Grant Date Fair Value of Stock
		Approval Date(1)		Grant Date(1)		Threshold ($)		Target ($)		Max ($)		Threshold (#)		Target (#)		Max (#)		Stock or Units (#)				Underlying Options (#)(5)		of Option Awards ($/Sh)(6)		and Option Awards ($)(7)
David L. Stover		1/28/2019		2/1/2019		—		1,365,000		—		—		—		—			—			—		—			—
		1/28/2019		2/1/2019		—		—		—		93,066		186,132		372,264			—			—		—			5,025,564
		1/28/2019		2/1/2019		—		—		—		—		—		—			93,066	(3)		—		—			2,083,748
		1/28/2019		2/1/2019		—		—		—		—		—		—			37,226	(4)		—		—			833,490
		1/28/2019		2/1/2019		—		—		—		—		—		—			—			165,158		22.39			1,250,246
Brent J. Smolik		1/28/2019		2/1/2019		—		825,000		—		—		—		—			—			—		—			—
		1/28/2019		2/1/2019		—		—		—		45,779		91,558		183,116			—			—		—			2,472,066
		1/28/2019		2/1/2019		—		—		—		—		—		—			45,779	(3)		—		—			1,024,992
		1/28/2019		2/1/2019		—		—		—		—		—		—			18,311	(4)		—		—			409,983
		1/28/2019		2/1/2019		—		—		—		—		—		—			—			81,241		22.39			614,994
Kenneth M. Fisher		1/28/2019		2/1/2019		—		608,000		—		—		—		—			—			—		—			—
		1/28/2019		2/1/2019		—		—		—		26,239		52,478		104,956			—			—		—			1,416,906
		1/28/2019		2/1/2019		—		—		—		—		—		—			26,239	(3)		—		—			587,491
		1/28/2019		2/1/2019		—		—		—		—		—		—			10,495	(4)		—		—			234,983
		1/28/2019		2/1/2019		—		—		—		—		—		—			—			46,565		22.39			352,497
Rachel G. Clingman		1/28/2019		2/1/2019		—		432,000		—		—		—		—			—			—		—			—
		1/28/2019		2/1/2019		—		—		—		16,749		33,497		66,994			—			—		—			904,419
		1/28/2019		2/1/2019		—		—		—		—		—		—			16,748	(3)		—		—			374,988
		1/28/2019		2/1/2019		—		—		—		—		—		—			6,699	(4)		—		—			149,991
		1/28/2019		2/1/2019		—		—		—		—		—		—			—			29,722		22.39			224,996
John K. Elliott		1/28/2019		2/1/2019		—		360,000		—		—		—		—			—			—		—			—
		1/28/2019		2/1/2019		—		—		—		17,307		34,613		69,226			—			—		—			934,551
		1/28/2019		2/1/2019		—		—		—		—		—		—			17,306	(3)		—		—			387,481
		1/28/2019		2/1/2019		—		—		—		—		—		—			6,922	(4)		—		—			154,984
		1/28/2019		2/1/2019		—		—		—		—		—		—			—			30,713		22.39			232,497

(1)	All grants were approved by our Compensation Committee and were effective and priced on the date of grant.
(2)	Represents the performance share awards granted under our 2017 Plan as of February 1, 2019. The awards will vest on February 1, 2022 if specified performance goals are satisfied. Performance goals for determining vesting are described in the CD&A under the heading “Long-Term Incentive Compensation.” Dividend equivalents with respect to the performance share awards are accrued during the three-year restricted period and will be paid upon vesting of the awards.
(3)	Represents the shares of restricted stock awarded under our 2017 Plan in 2019. The shares will vest according to the following schedule: 40% of the award will vest on the first anniversary, 40% of the award will vest on the second anniversary and 20% of the award will vest on the third anniversary of the award date. Dividends declared on shares of restricted stock are accrued during the three-year restricted period and will be paid upon vesting of restricted shares.
(4)	Represents phantom units which are the economic equivalent of one share of Company stock. The award will vest 100% on the third anniversary date of the grant and will settle in cash. Dividends declared on shares of phantom units are accrued during the three-year restricted period and will be paid upon vesting of such phantom units.
(5)	Represents grants of non-qualified stock options under our 2017 Plan in 2019. Options represent the right to purchase shares of common stock at the price per share (equal to fair market value on the date of grant) indicated in the table. Options will vest ratably over three years in equal installments on the first, second and third anniversaries of the award date.
(6)	Exercise price at “fair market value” was defined in our 2017 Plan as the closing price of our common stock on the NYSE on the date of grant. The closing price of our common stock on February 1, 2019 was $22.39.
(7)	Reflects aggregate grant date fair value of restricted stock; performance share awards awarded and non-qualified stock options granted to our Named Executive Officers on February 1, 2019 computed in accordance with FASB ASC Topic 718.

 

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— OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2019

 

The following table sets forth certain information with respect to restricted stock and stock options held by our Named Executive Officers as of December 31, 2019.

 

	Option Awards											Stock Awards
		Number of Securities Underlying Unexercised Options   (# Exercisable)			Number of Securities Underlying Unexercised Options (# Unexercisable)			Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date			Number of Shares or Units of Stock Held That Have Not Vested (#)				Market Value of Shares or Units of Stock Held That Have Not Vested ($)(12)				Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(12)
David L. Stover		111,682			—			—		37.55		2/1/2020			58,541	(6)			1,454,158				54,337	(13)			1,349,731
		97,482			—			—		45.20		2/1/2021			93,066	(7)			2,311,759				250,890	(14)			6,232,108
		113,122			—			—		50.91		2/1/2022			37,226	(8)			924,694				372,264	(15)			9,247,038
		94,184			—			—		54.60		2/1/2023			—				—				—				—
		82,230			—			—		62.33		1/31/2024			—				—				—				—
		160,485			—			—		47.74		1/30/2025			—				—				—				—
		227,310			—			—		31.65		2/1/2026			—				—				—				—
		129,880			64,941	(1)		—		39.46		2/1/2027			—				—				—				—
		37,010			74,021	(2)		—		30.89		2/1/2028			—				—				—				—
		—			165,158	(3)		—		22.39		2/1/2029			—				—				—				—
Brent J. Smolik		39,032			78,064	(4)		—		25.17		11/16/2028			139,054	(9)			3,454,101				183,116	(15)			4,548,601
		—			81,241	(3)		—		22.39		2/1/2029			45,779	(7)			1,137,150
															18,311	(8)			454,845
Kenneth M. Fisher		53,792			—			—		37.55		2/1/2020			20,272	(6)			503,556				16,125	(13)			400,545
		54,158			—			—		45.20		2/1/2021			26,239	(7)			651,777				89,024	(14)			2,211,356
		57,818			—			—		50.91		2/1/2022			10,495	(8)			260,696				104,956	(15)			2,607,107
		51,802			—			—		54.60		2/1/2023			—				—				—				—
		43,121			—			—		62.33		1/31/2024			—				—				—				—
		57,507			—			—		47.74		1/30/2025			—				—				—				—
		75,247			—			—		31.65		2/1/2026			—				—				—				—
		38,544			19,273	(1)		—		39.46		2/1/2027			—				—				—				—
		13,132			26,266	(2)		—		30.89		2/1/2028			—				—				—				—
		—			46,565	(3)		—		22.39		2/1/2029			—				—				—				—
Rachel G. Clingman		15,860			31,721	(5)		—		36.93		5/21/2028			32,493	(11)			807,126				66,994	(15)			1,664,131
		—			29,722	(3)		—		22.39		2/1/2029			16,748	(7)			416,020
															6,699	(8)			166,403
John K. Elliott		14,990			—			—		45.20		2/1/2021			1,430	(10)			35,521				8,412	(13)			208,954
		20,990			—			—		50.91		2/1/2022			11,708	(6)			290,827				50,178	(14)			1,246,422
		22,958			—			—		54.60		2/1/2023			17,306	(7)			429,881				69,226	(15)			1,719,574
		2,324			—			—		56.52		4/29/2023			6,922	(8)			171,942				—				—
		20,056			—			—		62.33		1/31/2024			—				—				—				—
		26,748			—			—		47.74		1/30/2025			—				—				—				—
		34,488			—			—		31.65		2/1/2026			—				—				—				—
		20,110			10,055	(1)		—		39.46		2/1/2027			—				—				—				—
		7,402			14,804	(2)		—		30.89		2/1/2028			—				—				—				—
		—			30,713	(3)		—		22.39		2/1/2029			—				—				—				—

 

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(1)	Stock options vested February 1, 2020.
(2)	50% of stock options vested February 1, 2020; and 50% of stock options vest February 1, 2021.
(3)	33 1/3% of stock options vested February 1, 2020; 33 1/3% of stock options vest February 1, 2021; and 33 1/3% of stock options vest February 1, 2022.
(4)	50% of stock options vest November 16, 2020; and 50% of stock options vest November 16, 2021.
(5)	50% of stock options vest May 21, 2020; and 50% of stock options vest May 21, 2021.
(6)	50% of restricted stock vested February 1, 2020; and 50% of restricted stock vests February 1, 2021.
(7)	40% of restricted stock vested February 1, 2020; 40% of restricted stock vests February 1, 2021; and 20% of restricted stock vests February 1, 2022.
(8)	100% of phantom units will settle in cash and vest on February 1, 2022.
(9)	100% of restricted stock vests November 16, 2021.
(10)	100% of restricted stock vests March 24, 2020.
(11)	100% of restricted stock vests May 21, 2021.
(12)	Market value based on December 31, 2019 (last business day of the year) closing price of $24.84.
(13)	Based on the Company’s formula for calculating TSR relative to peers, 83% of the performance restricted stock vested on February 1, 2020 and these shares reflect the number of shares earned based on that percentage. Performance goals for determining vesting are described in the CD&A under the heading “Long-Term Incentive Compensation.”
(14)	These shares of performance based restricted stock will vest February 1, 2021, subject to achievement of total stockholder return levels relative to a pre-determined industry peer group. Because performance as of December 31, 2019 was trending at target, these shares reflect the number of shares that would be earned based on maximum achievement of the applicable performance metrics. The actual number of shares that vest at the end of the performance period may differ substantially from the number of shares reported herein. Performance goals for determining vesting are described in the CD&A under the heading “Long-Term Incentive Compensation.”
(15)	These shares of performance based restricted stock will vest February 1, 2022, subject to achievement of total stockholder return levels relative to a pre-determined industry peer group. Because performance as of December 31, 2019 was trending at maximum, these shares reflect the number of shares that would be earned based on maximum achievement of the applicable performance metrics. The actual number of shares that vest at the end of the performance period may differ substantially from the number of shares reported herein. Performance goals for determining vesting are described in the CD&A under the heading “Long-Term Incentive Compensation.”

 

— STOCK OPTION EXERCISES AND STOCK VESTING FOR 2019

 

The table below sets forth certain information with respect to vesting of restricted stock and the exercise of stock options held by our Named Executive Officers during fiscal year 2019.

 

		Option Awards				Stock Awards
Name		Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)		Number of Shares Acquired on Vesting (#)		Stock Awards Value Realized on Vesting ($)(1)
David L. Stover		—		—		68,551		1,534,857
Kenneth M. Fisher		—		—		22,043		493,543
John K. Elliott		—		—		12,794		287,813

(1)

Shares of restricted stock awarded to our Named Executive Officers on February 1, 2017 and February 1, 2018 vested on February 1, 2019. Mr. Elliott had an additional grant on March 24, 2017 that vested on March 24, 2019. Income was recognized on vesting based on the closing trading price of our common stock of $22.39 on February 1, 2019 and $23.97 on March 24, 2019. Dividends that accrued on shares of restricted stock that vested were paid in 2019 as follows: Mr. Stover — $45,189; Mr. Fisher — $14,141; and Mr. Elliott— $8,515.

 

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— EQUITY PLAN COMPENSATION INFORMATION FOR 2019

 

The following table summarizes information regarding the number of shares of our common stock that are available for issuance under all of our existing equity compensation plans as of December 31, 2019.

 

Plan Category		Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)		Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (b)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity Compensation Plans Approved by Security Holders		12,575,753	(1)	$44.62		28,715,830	(2)
Equity Compensation Plans Not Approved by Security Holders		—		—		—
TOTAL		12,575,753		—		28,715,830

(1)	1992 Plan – 11,190,521 shares; 2005 Plan – 257,187 shares 2015 Plan – 178,819 shares; and 2017 Plan – 949,226 shares.
(2)	2017 Plan – 28,407,839 shares and 2015 Plan – 307,991 shares.

 

— NON-QUALIFIED DEFERRED COMPENSATION TABLE FOR 2019

 

The following table sets forth certain information with respect to contributions made to our Deferred Compensation Plan by our Named Executive Officers during fiscal year 2019.

 

		Executive Contributions in Last FY ($)(1)		Registrant Contributions in Last FY ($)		Aggregate Earnings in Last FY ($)(5)		Aggregate Withdrawals/ Distributions in Last FY ($)		Aggregate Balance at Last FYE ($)(6)
David L. Stover		129,518		209,421	(2)	2,137,214		—		14,178,133
Brent J. Smolik		30,000		94,013	(3)	2,641		—		126,654
Kenneth M. Fisher		44,800		74,213	(3)	153,798		—		1,247,727
Rachel G. Clingman		—		40,613	(4)	320		—		51,865
John K. Elliott		—		33,095	(4)	9,007		—		300,821

(1)	Mr. Stover deferred 7% ($77,350) of the STIP payment he earned in 2018 (otherwise paid in 2019) and 5% ($52,168) of base salary in 2019. Mr. Smolik deferred 4% ($30,000) of base salary in 2019. Mr. Fisher deferred 7% ($44,800) of base salary in 2019.
(2)	Represents matching contributions, retirement savings contributions and transition contributions that could not be made to the Noble Energy, Inc. 401(k) Plan as a result of Code limitations.
(3)	Represents matching contributions and retirement savings contributions that could not be made to the Noble Energy, Inc. 401(k) Plan as a result of Code limitations.
(4)	Represents retirement savings contributions that could not be made to the Noble Energy, Inc. 401(k) Plan as a result of Code limitations.
(5)	Earnings are credited in accordance with the Named Executive Officer’s investment direction.
(6)	All Named Executive Officers are 100% vested in these balances, except for Mr. Smolik who will be vested on November 16, 2021 and Ms. Clingman who will be vested on May 21, 2021.

 

The Company’s Matching Contributions, Retirement Savings Contributions, Transition Contributions and a portion of the interest earnings credited to the Deferred Compensation Plan accounts of our Named Executive Officers are reflected in the “All Other Compensation” and the “Change in Pension Value” columns of the Summary Compensation Table above, respectively.

 

NOBLE ENERGY • 2020 PROXY STATEMENT    56

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—	POTENTIAL PAYMENTS AND BENEFITS UPON TERMINATION OF EMPLOYMENT

 

The tables below estimate the amount of compensation payable to each of our Named Executive Officers upon involuntary termination of employment, termination following a change of control and in the event of disability or death, in each case effective as of December 31, 2019. The actual amount of compensation payable to each of our Named Executive Officers can only be determined at the time of his or her separation from the Company. For purposes of this discussion, with respect to the payment of compensation that is deferred compensation subject to Section 409A of the Code, an individual’s termination of employment should be interpreted to mean the date as of which the individual has a “separation from service” for the purposes of Section 409A. No additional payments to our Named Executive Officers will be triggered upon a voluntary termination event.

 

Payments Made Upon Termination

 

Upon termination of employment for reasons other than disability, death or in connection with a change of control, each Named Executive Officer is entitled to receive amounts earned during his or her term of employment. Such amounts include:

 

•	amounts credited under our Deferred Compensation Plan;
•	unused vacation pay; and
•	amounts accrued and vested under our 401(k) Plan.

 

Payments Made Upon Retirement

 

In the event of the retirement of a Named Executive Officer, in addition to the items identified above, the Named Executive Officer will have until the earlier of (1) the fifth anniversary of his or her retirement date or (2) the expiration of the remainder of the outstanding 10-year option term, to exercise all stock options that are vested as of his or her retirement date.

 

Payments Made Upon Death or Disability

 

In the event of the death or disability of a Named Executive Officer, in addition to the benefits listed under the headings “Payments Made Upon Termination” and “Payments Made Upon Retirement” above, the Named Executive Officer or his or her named beneficiary will receive benefits under our disability plan or payments under our life insurance plan, as appropriate.

 

Payments Made Upon a Change of Control

 

We have adopted change of control arrangements for our Named Executive Officers. If a Named Executive Officer’s employment is terminated within two years after a change of control, he or she may be entitled to receive certain severance benefits pursuant to the terms of his or her change of control arrangement. These benefits are described more fully under the heading “Change of Control Arrangements” in our CD&A section.

 

Payments of Vested Benefits

 

In addition to the payments our Named Executive Officers may receive upon the termination of their employment, they will continue to hold stock options that were vested immediately prior to their termination. Our Named Executive Officers will also be entitled to receive the vested balance of their contributions to our Deferred Compensation Plan and the 401(k) Plan.