DEF 14A 1 lrrc2021_def14a.htm RANGE RESOURCES CORP - DEF 14A RANGE RESOURCES CORPORATION - DEF 14A

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

 

 Filed by the Registrant  Filed by a Party other than the Registrant

 

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RANGE RESOURCES CORPORATION

 

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

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2021 Proxy Statement

Annual Meeting

Wednesday, May 12, 2021
8:00 a.m. Central Time

 

 

Please vote promptly by:

 

 

 

TELEPHONE

INTERNET

MAIL

MOBILE DEVICE

 

 

marking, signing and returning your proxy or voting instruction card

 



Range Resources Corporation
100 Throckmorton Street
Suite 1200
Fort Worth, Texas 76102

Greg G. Maxwell
Chairman of the Board

 

Dear Fellow Stockholders,

On behalf of the Board of Directors (the “Board”), we are pleased to invite you to participate in Range Resources’ 2021 Annual Meeting of Stockholders. Due to health and safety concerns relating to the COVID-19 pandemic, our annual meeting will be held telephonically, commencing at 8:00 a.m., Central Time, on Wednesday, May 12, 2021. To access the event, please call 1-877-928-8777 Conference ID 3565116. We enjoy engaging with our stockholders in person and if public health and safety conditions permit, we would like to resume our historic practice of meeting in person, beginning in 2022. The attached Notice of 2021 Annual Meeting of Stockholders and Proxy Statement provide information about the business we plan to conduct.

2020 was another year of executing on our key objectives that we believe carry long-term benefits, despite a low commodity price environment. We remain focused on driving safe and environmentally sound operational efficiencies, enhancing margins and returns, simplifying our portfolio and maintaining liquidity. In addition, we are continuing to protect the health of our employees and contractors consistent with our core values.

2020 Highlights

Continued to focus on our safety performance;

Focused on reducing unit costs;

Continued to achieve reductions in drilling and completion costs;

Improved our debt maturity ladder; and

Published our second formal corporate sustainability report where we announced a goal of net zero emissions by 2025.

Engagement remains important to our Board and management as a means to solicit feedback and to ensure accountability and responsiveness to our various stakeholders. During the fall of 2020, management and the Board met with a broad range of investors to discuss, among other things, corporate governance, our executive compensation program and sustainability. I personally met with those who accepted our invitation and was accompanied by the Chair of our Compensation Committee. Stockholder feedback is communicated to the full Board and the input we received directly impacted recent enhancements to our executive compensation programs and expanded disclosures in our proxy.

Moving into 2021, we remain keenly aware of the need to maintain capital and financial discipline in the face of natural gas, natural gas liquids and crude oil price volatility and the COVID-19 pandemic. Our industry will play an important role in helping our economy recover from the effects of the pandemic. We are proud of our 2020 performance and grateful for the dedication of our employees.

Your vote is very important. On behalf of the entire Board, I would like to thank all of our stockholders for your ongoing support and investment in Range. Welook forward to continuing to make progress on our strategic priorities and generating value for our stockholders for years tocome.

 

Sincerely yours,

Greg G. Maxwell
Chairman of the Board

April 2, 2021

 

RANGE RESOURCES CORPORATION - 2021 Proxy Statement    iii



 

 

Notice of 2021 Annual Meeting of Stockholders

 

To the Stockholders of Range Resources Corporation:

The 2021 Annual Meeting of Stockholders of Range Resources Corporation (the “Annual Meeting” or the “Meeting”), a Delaware corporation (“Range” or the “Company”), will be held telephonically on Wednesday, May 12, 2021, at 8:00 a.m., Central Time.

You will be able to participate in the Annual Meeting and submit your questions by accessing the meeting utilizing the following teleconference number: 1-877-928-8777 Conference ID 3565116.

The purposes of the Meeting, as more fully described in the attached Proxy Statement, are:

To elect the seven nominees named in the attached Proxy Statement to our Board, each for a term

expiring at the 2022 annual meeting or when their successors are duly elected and qualified;

To consider and vote on a non-binding proposal to approve our executive compensation philosophy (“say on pay”);

To consider and vote on a proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm as of and for the fiscal year ending December 31, 2021;

To seek the authorization to increase the number of shares of common stock issuable under the 2019 Equity-Based Compensation Plan from 11,000,000 shares to 14,000,000 shares; and

To transact any other business properly brought before the meeting.

This notice is being sent to holders of our common stock of record at the close of business on March26, 2021. Each such holder has the right to vote at the Meeting or any adjournment or postponement. The list of stockholders entitled to vote at the Meeting will be open to the examination of any stockholder for any purpose relevant to the Meeting during normal business hours for ten days before the Meeting at our Fort Worth offices. The list will also be available during the Meeting for inspection by stockholders.

MacKenzie Partners, Inc. has been retained to assist us in the process of obtaining your proxy. If you have any questions regarding the Meeting or require assistance in voting your shares, please contact them at 800-322-2885 or call them collect at 212-929-5500.

Whether or not you plan to attend the Meeting, please complete, date and sign the enclosed proxy and return it in the envelope provided or you may vote online at www.proxyvote.com using the control number printed on the proxy. You may revoke your proxy at any time before its exercise and vote at the Meeting.

By Order of the Board of Directors

David P. Poole
Corporate Secretary

April 2, 2021

 

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Table of Contents

 

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PROXY SUMMARY

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all the information that you should consider and you should read the entire proxy statement carefully before voting. For more complete information regarding our 2020 performance, please review our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

 

It is important that you vote. Please carefully review the proxy materials for the 2021 Annual Meeting and follow the instructions below to cast your vote on all of the voting matters.

 

 

We encourage you to vote right away using one of the following advance voting methods (see page71 for additional details), so your vote will be counted if you later decide to not attend the meeting telephonically. Make sure to have your proxy card or voting instruction forms in hand and follow the instructions.

You can vote in advance in one of four ways:

Visit the website listed on your proxy card/voting instruction form to vote VIA THE INTERNET

Call the telephone number on your proxy card/voting instruction form to vote BY TELEPHONE

Sign, date and return your proxy card/voting instruction form in the enclosed envelope to vote BY MAIL

Scan the QR code on your proxy card to vote by MOBILE DEVICE

 

 

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The annual meeting will begin promptly at 8:00 a.m. Central Time on May 12, 2021. You will be instructed on how to vote your shares at the Meeting at the beginning of the call.

 

The Board is committed to strong corporate governance policies and practice and continually evolving best practices in governance and seeks input on governance matters from Range’s stockholders. Range’s corporate governance highlights, which are discussed in more detail beginning on page21, include:

Independent board committees – Audit, Compensation, Governance and Nominating and Dividend;

Independent Chairman;

Committee Charters;

Independent Directors meet regularly without management;

Regular board and committee self-evaluation process;

Strong code of ethics;

Annual election of all directors;

Majority Vote Standard – No super majority voting requirement;

Stockholders have the right to call special meetings;

Stockholders may take action by written consent;

Stockholders have the right to proxy access;

Number of Board Meetings in 2020: 8;

1/3 of independent directors are women;

86% of Director Nominees are independent; and

There is at least one opportunity, on an annual basis, for at least five of the then-ten-largest stockholders to meet with two or more independent directors.

 

Management and, in many cases, multiple independent directors conduct regular outreach to gather feedback on our business strategy, corporate governance, executive compensation and sustainability oversight. We maintain a process for stockholders and interested parties to communicate with the Board. Stockholders and interested parties may write or call our Board as provided below:

WRITE

CALL

EMAIL

ATTEND

Corporate Secretary
Range Resources Corporation
100 Throckmorton Street,
Suite 1200
Fort Worth, TX 76102

Investor Relations
817-869-4267

ir@rangeresources.com

Range Annual Meeting

 

We are committed to a robust stockholder engagement program. The Board values our stockholders’ perspectives and feedback. These meetings are designed to better understand how our stockholders perceive Range and to provide our investors an opportunity to discuss matters that they think deserve attention. We solicit feedback from institutional investors including asset managers and the proxy advisory firms. In 2020, we reached out to 67% of our ownership and offered a call or in person meeting. During 2020, we held meetings with stockholders representing approximately 50% of our shares outstanding. A cross functional team of senior members from our investor relations, regulatory and governmental affairs teams, along with one or more of our independent directors met with those investors that accepted our invitation. The below represents the percentage of our outstanding shares for which we have requested engagement over the last three years:

 

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Prior to our 2021 Annual Meeting, we reached out to stockholders representing 67% of shares outstanding regarding many topics, including our compensation practices. At our 2020 Annual Meeting, our say on pay proposal received support from 59% of the votes cast. While the majority of stockholders supported our compensation program as designed, we continually look for ways to improve. We have proactively sought to understand our stockholder preferences and address any significant areas of concern through improvements to our disclosures and compensation programs. We are committed to constructive engagement with our stockholders and devote a meaningful amount of time to discussing the views voiced by our stockholders.

 

 

 

 

What We Learned From Our Meetings with Stockholders

Stockholders were interested in our process for refreshment of our Board and are interested in diversity

Stockholders commended changes to our compensation programs with a discussion of additional thoughts to consider

Stockholders generally agree with our strategic direction

Stockholders were interested in our governance and the Board’s oversight on ESG and provided positive feedback on our continued leadership in sustainability initiatives and disclosures

Stockholders appreciated the opportunity to meet for an open discussion and to directly ask management and our directors questions

 

 

 

Over the last several years, the Compensation Committee implemented a number of changes to our compensation program based on the feedback we received as we continually seek to align compensation and incentives with the current commodity price environment and our stockholders’ interests. For additional information see “Executive Compensation” below and “Stockholder Engagement and Responsiveness” in our CD&A beginning on page 36.

 

Topics Discussed with Stockholders and Actions Taken

 

Executive Compensation

Our compensation program is one of the most discussed topics in our annual outreach to stockholders. In most cases, investors supported recent changes made to our executive compensation program including adding or replacing new metrics that reflect our focus on areas such as safety,

 

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environmental leadership, balance sheet strength and generating competitive returns. General compensation decisions based on feedback from our stockholders include:

CEO base salary held constant for the last seven years (through 2021):

CEO Long-Term Incentive Equity Award voluntarily reduced in 2020 reflecting the annual stock performance;

Reduced CEO’s Long-Term Incentive Equity Award value granted in 2020, 2019 and 2018;

In 2021, changed restricted stock grant vesting to a three-year cliff from a three-year ratable (30%-30%-40%);

Annual Cash Incentive metrics continue to evolve to focus on key financial, operational and EHS performance goals; and

Long Term Incentive performance metrics adjusted to further focus on environmental leadership and the long-term interests of our stockholders.

 

 

 

Changes Informed by Stockholder Input

 

 

 

 

 

2019

Added new Annual Cash Incentive metric defined as absolute reduction in debt

Tightened targets for both finding and development costs and drilling rate of return

Increased weighting of the qualitative measure addressing health, safety and environmental performance to 20%

Tightened leverage target

 

2020

Removed the following Annual Cash Incentive metrics:

-

Drillbit F&D costs per mcfe

-

Debt/EBITDAX

-

Production per share - debt adjusted

-

Reserves per share - debt adjusted

Added new Annual Cash Incentive metrics of:

-

Drilling and completion costs per foot

-

Cash Unit Costs

-

Discretionary

Reduced amount of equity granted to ALL employees by 24% when compared to target amounts

Reduced independent director annual restricted stock grant along with adding a one-year vesting requirment for our directors

 

2021

Removed the following Annual Cash Incentives metrics:

-

Absolute Debt Reduction

-

Qualitative Debt measure

Added new Annual Cash Incentive metrics of:

-

Return on Average Capital Employed (ROACE)

Added S&P 500 as an additional Peer

Reduced total percentage of discretionary metrics for the Annual Cash Incentive calculation

Changed restricted stock grant vesting to three-year cliff vesting from a 30%-30%-40% vesting

Changed Long Term Incentive Measures from production and reserves growth per debt-adjusted shares to Debt/EBITDAX and Emissions Intensity.

 

 

 

 

 

 

 

 

 

Environmental, Social and Governance (ESG)

Our investors are interested in how we approach sustainable business practices and how we integrate sustainability into our business objectives and corporate culture. In these meetings, we reviewed topics from our 2020 Corporate Sustainability Report, which is available on our company website. We believe our focus on sustainability creates value for our stockholders and helps position us to continuously improve business performance. Our strategy focuses our efforts on the areas most significant to our business including health and safety, climate change and the environment and social responsibility. For additional information see “Commitment to Sustainability” on page 8.

 

Environmental Highlights

100% Domestic onshore, natural gas

Dedicated to vapor recovery and limited venting or flaring

100% recycled water

Charter member of the Environmental Partnership – devoted to improving natural gas and oil industry’s environmental performance;

Further reduction of methane emission through use of low/no-bleed controls;

Use multi-well pads to minimize impacts to land and communities;

Perform ongoing “leak detection and repair” inspections on new wells and voluntarily on wells not mandated for inspections to further reduce methane emissions;

Continued with our innovative water recycling program;

Utilize electric frac fleet to reduce diesel fuel consumption; and

Target of net-zero direct emissions by 2025.

 

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Board Refreshment, Structure and Diversity

Investors were generally supportive of our current approach and were particularly supportive of the Board’s refreshment practices. Many investors also expressed interest in making sure the Board maintains its focus on diversity and fostering a wide range of perspectives as part of its ongoing refreshment process. We have enhanced our disclosures throughout the proxy statement based on feedback we received.

 

Name

Age

Director

Since

Principal Occupation

Committee Membership

Audit

Compensation

Governance

and

Nominating

Dividend

               

Brenda A. Cline Independent

60

2015

Chief Financial Officer, Treasurer and Secretary of the Kimbell Art Foundation

Chair

 

 

Margaret K. Dorman Independent

57

2019

Former Chief Financial Officer of Smith International, Inc.

 

 

James M. Funk Independent

71

2008

Former Senior Vice President of EquitableResources

 

Chair

 

Steve D. Gray
Independent

61

2018

Former Chief Executive Officer of RSP Permian Inc.

 

 

Chair

 

 

Greg G. Maxwell Independent Chairman

64

2015

Former Executive Vice President, Finance and Chief Financial Officer of Phillips 66

 

 

Chair

Steffen E. Palko Independent

70

2016

Associate Professor at Texas Christian University. Former Co-Founder of XTO Energy, Inc.

 

 

 

Jeffrey L. Ventura

63

2005

Chief Executive Officer and President of Range Resources Corporation

 

 

 

 

The Governance and Nominating Committee regularly evaluates the size and composition of the Board and continually assesses whether the composition appropriately relates to our strategic needs which change as our business environment evolves. The Governance and Nominating Committee believes that annual board evaluations are a critical tool in assessing the effectiveness of the Board, its committee and its directors. The Governance and Nominating Committee considers the format of this evaluation process annually which, in recent years, has included anonymous questionnaires, one-on-one director interviews and the assistance of outside legal counsel. When conducting its review of the appropriate skills and qualifications of desired directors, the Governance and Nominating Committee considers diversity of skills, gender, age, ethnicity and any other self-disclosed factors. As shown on the following page, the Board balances interests in continuity with the need for fresh perspectives and diversity that board refreshment and director succession planning can provide.

 

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The following are some of the key qualifications and skills of our Board.

 

CEO/Senior

Officer

Experience

Industry

Experience

Financial

Reporting

Experience

Banking/

Finance

Experience

Engineering/

Geoscience

Technology

Risk

Management

Brenda A. Cline

 

 

 

Margaret K. Dorman

 

 

James M. Funk

 

 

 

Steve D. Gray

 

 

 

Greg G. Maxwell

 

Steffen E. Palko

 

 

 

Jeffrey L. Ventura

 

 

 

The lack of a mark for a particular item does not mean that the director does not possess that qualification, skill or experience. We look to each director to be knowledgeable in these areas; however, the mark indicates that the item is a particularly prominent qualification, characteristic, skill, or experience that the director brings to the Board.

The Board considers the following competencies when evaluating director nominees and board composition as a whole. The Board believes that a mix of these skills and qualifications provides the composition necessary to effectively oversee the Company’s execution of its strategy.

CEO/Senior Officer experience. We believe individuals with CEO experience have valuable insight and a practical understanding of organizations, processes, strategy and risk management. Through service as top leaders at other organizations, directors with CEO or senior officer experience bring valued perspectives on common issues affecting publicly traded companies such as Range.

Industry experience. We believe that experience as an executive, director or other leadership position in the energy industry is an important consideration for service on the Board. Individuals with specific industry experience bring pertinent background and knowledge to the Board, providing valuable perspective on issues specific to the Company’s business.

Financial Reporting/Finance/Banking experience. The Company measures its operating and strategic performance by reference to financial targets. In addition, accurate financial reporting and robust auditing are critical to the Company’s success. As a result, we believe it is important that directors have finance and financial reporting experience. We seek to have multiple directors who qualify as audit committee financial experts. In addition, we also believe it is important to have knowledge in capital markets, both debt and equity. We also expect all of our directors to be financially knowledgeable.

Engineering/Geoscience experience. We believe that experience in these particular areas enables valuable perspectives on our operations and issues specific to our business. Individuals with an understanding in these areas bring background and experience to their duties that increase their effectiveness.

 

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Technology. Experience in information technology helps us pursue and achieve our business objectives. Leadership and understanding of areas such as cybersecurity risk, artificial intelligence, cloud computing and other areas of technology add exceptional value to our Board.

Risk Management experience. We seek individuals with experience managing risk to ensure that directors are capable of fulfilling their risk oversight responsibilities, bringing background and experience to their duties that increase their effectiveness.

 

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2020 Business Highlights

In 2020, Range continued our focus on delivering on financial and operational objectives that are within our control such as cost reductions, driving safe and environmentally sound operational efficiencies, maintaining liquidity and simplifying our portfolio. We also advanced with our strategy of developing inventory at a competitive cost through continuous improvement and debt management. Highlights of our operational, strategic and financial achievements are provided below.

OPERATIONAL

 

STRATEGIC

 

FINANCIAL

2,230.8 Mmcfe/day

Average natural gas and liquids production

-

71% natural gas

-

Mmcfe/day = thousands of mcf equivalent per day

 

17.2 Tcfe

Proved reserves

-

65% natural gas

-

Decrease of 5% from 2019 due to

asset sales

 

 

Reduced emissions

-

Compared to 2019 and increased frequency of leak detection testing

-

Announced goal of net zero direct emissions by 2025

 

Reduced injuries

Both contractor and employees compared to 2019

Sold North Louisiana Assets

For cash proceeds of $245 million

 

Proceeds

Directed to debt reduction

 

3,500 future drilling locations

Proven and unproven drilling locations in inventory

465,000 net acres in Southwest Pennsylvania

 

Reduced Drilling and Completion Costs

Now less than $600 per foot

 

Electric Frac Fleet

Continued to utilize which reduces emissions intensity and improves efficiencies

 

$1.2 billion

Repurchased various senior and senior subordinated notes

 

21% lower

Capital spending lower than original budget

 

$1.4 billion liquidity

-

Year-end liquidity includes $1.4 billion in available committed borrowing capacity with $600 million in additional borrowing base capacity available

-

Credit facility matures in May 2023

-

Reduced total debt $86 million

 

12% lower

Reduced general and administrative expense compared to 2019

 

8.2 million shares

Repurchased $23 million of common stock at $2.80 per share

 

Commitment to Sustainability

Sustainability is not a new commitment for Range or its leadership. The Board is actively engaged in overseeing our sustainability practices and works alongside senior management to ensure focus on these topics. We believe sustainability is ultimately about creating long-term value, which includes a commitment to environmental stewardship and positively contributing to the communities where we operate.

SAFETY

 

CLIMATE CHANGE & ENVIRONMENT

 

SOCIAL RESPONSIBILITY

 

Total Recordable Incident Rate of 0.37 for 2020 compared to 1.17 in 2019

 

Achieved a 68% reduction in contractor OSHA recordable injuries compared to 2019;

 

Achieved a 64% reduction in the number of preventable vehicle incidents compared to 2019

 

Announced a goal of net zero direct emissions by 2025

 

Recycled over 145% of produced water through our water sharing program

 

Board evaluates sustainability risks in making strategic decisions

 

Committed to having a positive impact on communities where we operate

 

Invest in community programs with a focus on education, workforce development and environmental stewardship

 

Amid COVID-19 pandemic donated personal protective equipment to first responders

 

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Corporate Culture and Human Capital Management

We are committed to having an engaged, diverse, and inclusive workplace that fosters learning, development and innovation. Our leadership team conducts a robust program of employee engagement, and we have invested in the personal and professional development of our employees through programs that focus on leadership as well as mentorship programs and employee resource groups.

Our leadership team holds regular “all hands” meetings. In general, the Board has opportunities throughout the year to meet with employees and visit our offices. We believe our employees provide the foundation of our success. Successful execution of our strategy is dependent on attracting, developing and retaining our skilled employees and members of our management team. The abilities, experience and industry knowledge of our employees significantly benefit our operations and performance and in order to maximize the contributions of our employees, we continuously evaluate, modify and enhance our policies and practices, including compensation to increase employee engagement, productivity and efficiency.

There are several ways in which we attract, develop and retain highly qualified talent including;

The safety and health of our employees is a top priority. We strive for zero workplace injuries.

Employee education and training is used to reinforce our core values. We conducted field safety orientations for approximately 7,000 people in 2020 (consisting of both Range employees and employees of our contractors). We have an education reimbursement program to encourage continued academic achievement and we provide in-house training and pay for outside training in a number of areas.

We emphasize employee development and provide a wide range of opportunities, skills and resources to aid in the success of our employees, including through programs such as our Leadership Excellence and Development (LEAD) program where high-performing employees are offered special management training and development.

We strive to enhance diversity and inclusion at every level of our organization. In 2020, we launched a voluntary employee resource group for women to foster inclusion and belonging.

Our compensation program includes eligibility for all full-time employees to receive equity awards which we believe is somewhat unique among our peers and encourages every employee to think like an owner of the business and be vested in its success. We have a robust talent and succession planning process and support the development of our talent pipeline for critical roles.

 

Executive Compensation Overview

The Compensation Committee believes that a program weighted toward variable, at-risk compensation helps align the interest of management and stockholders. The chart below illustrates our CEO’s 2020 at-risk compensation. A significant portion of reported compensation is an incentive for future performance and realized only if Range meets certain performance measures. We believe the alignment of interest with our stockholders is best reflected in realizable pay as shown on the Pay For Performance table below, which depicts our CEO’s “At-Risk” pay using our year-end stock price.

 

(1)

Amounts shown reflect salary paid in 2020. Annual Cash Incentive Award for 2020, which was paid in 2021 based on 2020 performance and the grant date fair value of Long-Term Incentive Awards granted in 2020.

 

 

Pay For Performance

Our executive compensation programs deliver payments aligned with performance achieved and are designed in a way that our performance impacts the realizable pay of our Named Executive Officers (“NEOs”). These graphics emphasize the realizable value of Mr. Ventura’s compensation is strongly aligned with stockholder value. As demonstrated below, the value actually received by our CEO can

 

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differ substantially from the grant date value (or values calculated and reported in the Summary Compensation Table (“SCT”) and related proxy tables as required by the U.S. Securities and Exchange Commission) ($ in millions).

The value actually received by our CEO can differ substantially from the grant date compensation reported in the SCT and related proxy tables.

The chart above compares reported pay and realizable pay for 2018, 2019 and 2020. The amounts include each direct compensation element, ie., salary, actual bonus paid for each year’s performance, the year-end value of restricted stock granted and an estimated prevailing value of performance awards. The ultimate value of stock-based awards will depend on our future stock price performance, our total shareholder return relative to a defined group of our peers and our performance compared to production and reserves per share (debt adjusted). Our stock price on the date of each grant was $15.22 in March 2018, $10.32 in March 2019 and $3.02 in February 2020. As of December 31, 2020, our closing stock price was $6.70 per share.

 

TSR-PSUs Payouts Demonstrate Alignment with Stockholders

Payout values of TSR-PSUs awards have declined as compared to grant date fair value, as shown below ($ in thousands):

 

(1)

For the award granted in 2017, the value shown is the final value.

 

These graphics emphasize the realizable value of Mr. Ventura’s TSR-PSUs are significantly aligned with stockholder value. Values for this illustration for 2018, 2019 and 2020 were determined with the following inputs:

Our closing stock price as of March 26, 2021 was $10.88; and

Our rank in our TSR peer group and the corresponding payout percentage as measured under our performance unit program: 100% for 2018 (rank=5) and 100% for 2019 (rank=5) and 188% for 2020 (rank=2).

 

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CEO Compensation Summary

The Annual Cash Incentive for 2020 (paid in February 2021) was 180% of our CEO’s base salary. His target annual cash incentive award was 120% of his base salary and his maximum award was 240%. The tables below detail the results of our Board’s CEO compensation decisions for the last five years (in thousands):

CEO COMPENSATION ELEMENTS FOR THE LAST FIVE YEARS

 

BASE SALARY(1)     ANNUAL CASH INCENTIVE AWARDS
HELD FLAT     REMAINED FLAT FOR 2020
       
   
       
(1)    Based on 26-week pay period.     (1)    Annual Cash Incentive for 2021 performance will be paid in first quarter 2022.

 

LONG-TERM INCENTIVE EQUITY AWARDS

(1)    Based on summary compensation table. Equity grants in 2020 were reduced company-wide and includes an additional voluntary reduction by the CEO in 2020.

(2)    Value to be reported in 2021 summary compensation table.

 

 

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Changes to the Compensation Program in Effect for 2020

Effective for the 2020 compensation period, the Compensation Committee:

Determined for the sixth year in a row not to increase CEO base salary;

Long-term Incentive Award value for the CEO voluntarily reduced compared to amounts granted over the last two years;

Added three new Annual Cash Incentive metrics to better align with the current state of the industry while removing four metrics when compared to the metrics used for 2019;

The three new Annual Cash Incentive metrics for 2020 are cash unit costs, drilling costs per foot and a discretionary component;

The four Annual Cash Incentive metrics removed were debt/EBITDAX, finding and development costs, production growth per share and reserves growth per share; and

Revised vesting for annual restricted stock grants to our non-employee directors to fully vested one year from the date of the grant.

 

Changes to the Compensation Program in Effect for 2021

Determined for the seventh year in a row not to increase CEO base salary and all other NEO salaries held flat;

When compared to the Annual Cash Incentive metrics for 2020, added one new metric to better align with our strategy while removing two metrics;

The new Annual Cash Incentive metric is Return on Average Capital Employed (ROACE);

Removed Absolute Debt Reduction and the Qualitative Measure metrics;

Revised Restricted Stock Grant Vesting to three-year cliff vesting versus a three-year ratable (30%-30%-40%) vesting; and

Changed Long Term Incentive measures from production and reserves growth per debt-adjusted share to Debt/EBITDAX and Emissions Intensity.

 

Status of Previously Granted Performance-Based Restricted Stock Awards

In May 2017, the Compensation Committee granted long-term incentive awards to the NEOs, which were allocated 50% Restricted Stock and 37.5% Performance-Based Restricted Stock based on a comparative performance of our common stock measured against a predetermined group of peer companies (“TSR-PSUs”), each of which was equivalent to one share of common stock. The TSR-PSUs awards granted in 2017 were payable in shares of common stock from zero to 150% of the target number granted. The performance period for the TSR-PSUs began May 2017 and ended May 2020. In May 2020 the Compensation Committee certified Range’s TSR over the performance period, which resulted in a payout of 80% of the award.

In March 2018, the Compensation Committee granted long-term incentive awards to NEOs that included Performance-Based Restricted Stock based on Reserves and Production Growth Per Share (debt adjusted). The performance period began January 1, 2018 and ended December 31, 2020 and was payable based on targets set by the Compensation Committee in common stock from zero to 200% of the target number granted which reflected a change to include no payout below a certain threshold. In February 2021, the Compensation Committee certified the results over the performance period, which resulted in a combined payout of 137% of the award.

 

Important Dates for 2022 Annual Meeting of Stockholders (page 70)

Stockholders proposals submitted for inclusion in our 2022 proxy statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), must be received by us no later than December 2, 2021.

 

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PROXY STATEMENT

We are furnishing you this proxy statement to solicit proxies to be voted at the 2021 Annual Meeting of Stockholders of Range Resources Corporation. The meeting will be held telephonically on May 12, 2021 at 8:00 a.m., Central Time. The proxies also may be voted at any adjournment or postponements of the meeting.

The mailing address of our principal office is 100 Throckmorton Street, Suite 1200, Fort Worth, Texas 76102. We are first furnishing these proxy materials to stockholders on April 2, 2021.

All properly executed written proxies and all properly completed proxies submitted by telephone, mobile device or internet that are delivered pursuant to this solicitation will be voted at the meeting in accordance with the directions given in the proxy, unless the proxy is revoked prior to completion of voting at the meeting.

Only owners of record of shares of Range common stock (“Common Stock”) as of the close of business on March 26, 2021, the record date, are entitled to notice of, and to vote at, the meeting or any adjournments or postponements of the meeting. Each owner of Common Stock on the record date is entitled to one vote for each share of Common Stock held. On March 26, 2021, there were 259,586,435 shares of Common Stock issued and outstanding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 12, 2021.

The Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2020 are available at www.rangeresources.com.

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All of our directors are elected to a single year term. As a result, the current term of all our directors expires at the 2021 Annual Meeting. Based on the recommendation received from the Governance and Nominating Committee, our Board of Directors proposes that each of the nominees, all of whom are currently serving as directors, be elected for a new term expiring at the 2022 annual meeting or when their successors are duly elected and qualified. Each of the nominees has agreed to serve if elected. If any one of them becomes unavailable to serve as a director, our Board may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by our Board. Our Board does not presently contemplate that any of the nominees will become unavailable for election.

Because it is an uncontested election of directors, each nominee must receive more votes “for” the nominee than votes cast “against” the nominee in order for the nominee to be elected to the Board of Directors. Under our by-laws, in the event a candidate for the Board does not receive more “for” votes than votes “against,” the candidate’s resignation from the Board will be considered by the Governance and Nominating Committee. A properly executed proxy marked “Abstain” with respect to the election of one or more of our directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether a quorum is present. Uninstructed shares are not entitled to vote on this proposal; therefore, broker non-votes will not affect the outcome of this proposal. Proxies cannot be voted for a greater number of persons than the number of nominees named. The reasons described at the end of each biographical summary for each nominee that discusses the skills, qualifications and attributes of such candidates, led the Governance and Nominating Committee to recommend such persons for election to the Board. In the event of a contested election of directors, a nominee would be required to receive a plurality of the votes of the holders of shares of our common stock present in person or by proxy and entitled to vote at the meeting. Under our by-laws, an “uncontested election” is an election in which the number of nominees for director is not greater than the number to be elected and a “contested election” is an election in which the number of nominees for director is greater than the number to be elected.

The Board of Directors recommends a vote FOR all of the nominees

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Our Corporate Governance Guidelines contain criteria that apply to nominees recommended by the Governance and Nominating Committee for positions on our Board. Under these criteria, members of our Board should:

have high professional and personal ethics and values;

expertise and perspective needed to govern the business and support senior management;

commit to enhancing stockholder value;

interest and enthusiasm in Range and a commitment to become involved in its future;

have sufficient time to carry out their duties and to provide insight and practical wisdom based on their experience and knowledge;

ability to constructively participate in discussions, sound business judgment and sufficiently broad perspective to make meaningful contributions; and

represent the interests of all stockholders.

Our Board prefers to have a reasonable number of directors who have experience within the oil and gas industry. Our Board has also adopted a policy with regard to the consideration of diversity in the selection of candidates for the Board of Directors and that policy has been included in the Governance and Nominating Committee’s charter.

In accordance with applicable laws, regulations, our Corporate Governance Principles and the rules of the New York Stock Exchange (“NYSE”), the Board must affirmatively determine the independence of each director and director nominee. The Governance and Nominating Committee considers all relevant facts and circumstances including, without limitation, transactions during the previous year between Range and the director directly, immediate family members of the director, organizations with which the director is affiliated, and the frequency and dollar amounts associated with these transactions. The Committee then makes a recommendation to the Board with respect to the independence of each director and director nominee. Based on these considerations, the Board determined the following directors are independent:

Brenda A. Cline

Greg G. Maxwell

Margaret K. Dorman

Steffen E. Palko

James M. Funk

Jeffrey L. Ventura*

Steve D. Gray

 

 

*  As CEO of the Company, Mr. Ventura is not independent.

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BRENDA A. CLINE

 

 

Independent Director

Age: 60

Director Since: 2015

Board Committees:

Audit (Chair)

Governance and Nominating

Ms. Cline became a director in July 2015. Since 1993, Ms. Cline has served as Chief Financial Officer, Treasurer, and Secretary of the Kimbell Art Foundation, a private operating foundation that holds significant investments in oil and gas interests and owns and operates the Kimbell Art Museum, Fort Worth, Texas. From 1993 until 2013, Ms. Cline also served as a contract author for Thomson Reuters, Fort Worth, Texas. Before 1993, Ms.Cline was a Senior Manager with Ernst & Young LLP. Ms. Cline also serves on the Board of Trustees of Texas Christian University. Ms. Cline is a certified public accountant. She received her Bachelor of Business Administration, Accounting degree, summa cum laude, from Texas Christian University.

Current Public Company Directorships: Tyler Technologies; American Beacon Funds; Cushing Funds

Public Company Directorships Within the Past Five Years: None

Key Attributes, Skills and Experience

Ms. Cline has extensive experience in a number of areas including accounting and finance. She serves as chair of the Company’s Audit Committee. Her experience as a current chief financial officer, her public accounting experience and her work as an independent board member are the primary factors in the Board having elected Ms. Cline as a Director of the Company and for the Governance and Nominating Committee’s recommendation that she be nominated for re-election to the Board.

MARGARET K. DORMAN

 

 

Independent Director

Age: 57

Director Since: 2019

Board Committees:

Audit

Governance and Nominating

 

Margaret K. Dorman became a director in 2019, Ms. Dorman has 30 years of experience in the energy industry, largely focused in the oilfield service and equipment sector. In 2009, she retired as the Executive Vice President, Chief Financial Officer and Treasurer of Smith International, Inc. (now part of Schlumberger Limited) after spending more than a decade in that role. Previously, she held management positions at Landmark Graphics, prior to its acquisition by Halliburton Corporation, and Ernst & Young, LLP. Ms. Dorman received a Bachelor of Arts degree in Economics-Business from Hendrix College and is a certified public accountant.

Current Public Company Directorships: Equitrans Midstream Corporation

Public Company Directorships Within the Past Five Years: EQT Corporation

Key Attributes, Skills and Experience

Ms. Dorman has over ten years of executive level management in the energy industry. She was elected to the Board upon mutual approval of the Company and SailingStone Capital Partners, LLC in accordance with the Voting and Nomination Support Agreement dated July 9, 2018. Ms. Dorman brings a variety of accounting, financial and executive experience and perspective to the Board. Ms. Dorman’s background and experience led the Board to select and appoint Ms. Dorman as a director in 2019 and for the Governance and Nominating Committee to nominate her for re-election to the Board.

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JAMES M. FUNK

 

 

Independent Director

Age: 71

Director Since: 2008

Board Committees:

Governance and Nominating (Chair)

Compensation

 

Mr. Funk is an independent consultant and producer with over 40 years of experience in the energy industry. Mr. Funk served as Senior Vice President of Equitable Resources and President of Equitable Production Co. from June 2000 until December 2003. Previously, Mr. Funk was employed by Shell Oil Company for 23 years in senior management and technical positions. Mr. Funk has previously served on the boards of Westport Resources (2000 to 2004), and Matador Resources Company (2003 to 2008). Mr. Funk received a B.A. degree in Geology from Wittenberg University, a M.S. in Geology from the University of Connecticut, and a PhD in Geology from the University of Kansas. Mr. Funk is a Certified Petroleum Geologist.

Current Public Company Directorships: None

Public Company Directorships Within the Past Five Years: Superior Energy Services

Key Attributes, Skills and Experience

Mr. Funk was selected to serve as a Director based on his strong technical experience in geology as well as his knowledge of the Appalachian basin where all of the Company’s current exploration is being conducted. He has significant technical expertise in unconventional oil and gas resources and knowledge of oil and gas exploration and development generally as well as reserves determination and reporting in particular as a result of his service at Shell and Equitable Production, one of the leading companies in the Appalachian basin, where he served as President. Mr. Funk has knowledge from his service with Equitable regarding the regulatory, political and environmental arenas in Pennsylvania, where all of the Company’s exploration is currently occurring, and he has a strong background in compensation policies and practices of oil and gas companies, including establishing energy industry-specific performance based compensation metrics. All of these skills and attributes were considered by the Board in originally selecting Mr. Funk to join the Board and led the Governance and Nominating Committee to nominate him for re-election to the Board.

STEVE D. GRAY

 

 

Independent Director

Age: 61

Director Since: 2018

Board Committees:

Compensation (Chair)

 

Steve Gray became a director in 2018. Mr. Gray served as a founder, director and Chief Executive Officer of RSP Permian Inc. from its inception in 2010 until its merger with Concho Resources in 2018. After the merger with Concho, he joined Concho’s Board of Directors and served until Concho’s merger with Conoco Phillips. Prior to forming RSP Permian, Mr. Gray founded several successful oil and gas ventures spanning nearly 20 years in partnerships with Natural Gas Partners, an Irving, Texas based private equity company. Prior to going into business for himself, Mr. Gray spent 11years employed in the oil and gas industry in various capacities as a petroleum engineer. Mr. Gray is on the Board of Directors of the Texas Tech Foundation. In addition, he is a member of the Petroleum Engineering Academy and serves on the Dean’s Advisory Council for the College of Engineering at Texas Tech University – the institution from which he earned a Bachelor of Science in Petroleum Engineering in 1982. He is also a member of the Executive Advisory Council of the George W. Bush Presidential Center in Dallas, Texas.

Current Public Company Directorships: None

Public Company Directorships Within the Past Five Years: RSP Permian Inc.; Concho Resources, Inc.

Key Attributes, Skills and Experience

Mr. Gray was selected to serve as a Director based on his extensive experience as an oil and gas business executive who has over 30 years of experience in the industry. He was elected to the Board upon mutual approval of the Company and SailingStone Capital Partners, LLC in accordance with the Voting and Nomination Support Agreement dated July 9, 2018. Mr. Gray has held leadership positions in public oil and gas companies, including as CEO, which provides him invaluable board skills and experience. Mr. Gray’s background and experience led the Board to select and appoint Mr. Gray as a director in 2018 and for the Governance and Nominating Committee to nominate him for re-election to the Board.

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GREG G. MAXWELL

 

 

Chairman of the Board

Age: 64

Director Since: 2015

Board Committees:

Audit

Dividend (Chair)

 

Mr. Maxwell became a director in September 2015. Mr. Maxwell served as executive vice president, finance, and chief financial officer for Phillips 66, a diversified energy manufacturing and logistics company until his retirement on December 31, 2015. Mr. Maxwell has over 37 years of experience in various financial roles within the petrochemical and oil and gas industries. Mr. Maxwell served as senior vice president, chief financial officer and controller for Chevron Phillips Chemical Company from 2003 until joining Phillips 66 in 2012. He joined Phillips Petroleum Company in 1978 and held various positions within the comptroller’s group including the corporate planning and development group, the corporate treasury department and downstream business units. He is a certified public accountant and a certified internal auditor. He earned a Bachelor of Accountancy degree from New Mexico State University in 1978.

Current Public Company Directorships: Jeld – Wen Holding, Inc.

Public Company Directorships Within the Past Five Years: None

Key Attributes, Skills and Experience

Mr. Maxwell’s background includes a significant amount of experience in public company finance and financial reporting and, as a result, he has significant experience with SEC filings required of public companies in the energy business. His wide and varied experience in the energy business, including information technology, have provided him with an understanding and insight concerning the risks faced by oil and gas companies. He currently serves as the Chairman of the Board, chair of the Dividend Committee and is a member of the Audit Committee. Mr. Maxwell’s corporate finance, accounting, technology and financial reporting experience led the Governance and Nominating Committee to nominate him for re-election to the Board.

STEFFEN E. PALKO

 

 

Independent Director

Age: 70

Director Since: 2016

Board Committees:

Compensation

 

Mr. Palko was a co-founder of XTO Energy Inc., serving as President and Vice-Chairman from 1986 to 2005. XTO became the largest independent natural gas producer in the United States in 2009. Previously, Mr. Palko served as a trustee for the Fort Worth ISD school board, and assumed numerous educational leadership roles at the state and national levels, including chair of the National Assessment of Vocational Education for the United States Department of Education and Commissioner for the U.S. Department of Labor SCANS committee. Mr. Palko earned his Doctorate in Educational Leadership from Texas Christian University where he currently serves as an Associate Professor. He earned his Bachelor of Science in Electrical Engineering from the University of Texas at El Paso.

Current Public Company Directorships: None

Public Company Directorships Within the Past Five Years: None

Key Attributes, Skills and Experience

Mr. Palko was elected to the Board upon the mutual approval of the Company and SailingStone Capital Partners, LLC in accordance with the Voting and Nomination Support Agreement dated August 7, 2016 by and between the Company and SailingStone. Mr. Palko’s background and experience in the exploration and production business including his extensive technical background and his experience with XTO Energy led the Board to select and appoint Mr. Palko as a director and for the Governance and Nominating Committee to nominate him for re-election to the Board.

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JEFFREY L. VENTURA

 

 

Age: 63

Director Since: 2005


Board Committees:

Dividend

 

Mr. Ventura is the Company’s Chief Executive Officer and President, having joined Range in 2003 as Chief Operating Officer. Mr. Ventura was named President effective May 2008 and Chief Executive Officer in January 2012. Previously, Mr. Ventura served as President and Chief Operating Officer of Matador Petroleum Corporation, which he joined in 1997. Prior to his service at Matador, Mr. Ventura spent eight years at Maxus Energy Corporation where he managed various engineering, exploration and development operations and was responsible for coordination of engineering technology. Previously, Mr. Ventura was with Tenneco Oil Exploration and Production, where he held various engineering and operating positions. Mr. Ventura earned a Bachelor of Science degree in Petroleum and Natural Gas Engineering from the Pennsylvania State University.

Current Public Company Directorships: None

Public Company Directorships Within the Past Five Years: None

Key Attributes, Skills and Experience

Mr. Ventura is a highly experienced oil and gas business executive who has a very deep technical understanding of the development of oil and gas reserves, particularly oil and gas reserves from unconventional resources. Additionally, Mr. Ventura has significant experience in the evaluation and reporting of oil and gas reserves, analysis of producing properties considered for divestiture and management and development of technical human resources. The Governance and Nominating Committee considers having the benefit of the technical management perspective provided to the Board from Mr. Ventura, a Pittsburgh native, highly desirable and beneficial to the long term growth and development of the Company because its exploration and development strategies, especially in the Marcellus Shale play, are important to stockholder value. The Governance and Nominating Committee also believes having the point of view of the Chief Executive Officer represented on the Board is in the best interest of the stockholders and therefore, the Governance and Nominating Committee nominated Mr. Ventura as a director for re-election to the Board.

The policy of our Governance and Nominating Committee is to consider stockholder nominations for director candidates as described below under “Identifying and Evaluating Board Nominees for Directors, including Diversity considerations.” In evaluating such nominations and in evaluating the composition of the Board, our Governance and Nominating Committee seeks to achieve a balance of knowledge, experience and capability on our Board and to address the membership criteria set forth above under “Director Qualifications”. Any stockholder nominations proposed for consideration by our Governance and Nominating Committee should include the nominee’s name and qualifications for Board of Directors membership, meet the requirements set forth in our by-laws and should be addressed to: Corporate Secretary, Range Resources Corporation, 100 Throckmorton Street, Suite 1200, Fort Worth, Texas 76102.

Our Governance and Nominating Committee uses a variety of avenues to identify and evaluate director nominees. The Committee regularly assesses the appropriate size of our Board and whether any vacancies are expected due to retirement or otherwise. If vacancies are anticipated, or otherwise arise, our Governance and Nominating Committee considers various potential candidates for the Board. Candidates may come to the attention of the Committee through current Board members, stockholders or other persons. Candidates may be evaluated at regular or special meetings of the Committee and may be considered at any point during the year.

The Board ensures refreshment and continued effectiveness through evaluation, nomination and other policies, processes and practices. For example:

The Governance and Nominating Committee annually reviews with the Board the qualifications for Board members and the composition of the Board as a whole.

The Governance and Nominating Committee annually reviews each director’s continuation on the Board and makes recommendations to the full Board.

Each committee member performs an annual self-assessment and the Governance and Nominating Committee oversees an annual self-assessment of the full Board.

The Committee also considers any stockholder nominations for candidates for our Board. Following verification of the stockholder status of persons proposing candidates, recommendations are provided to and considered by our Governance and Nominating Committee at a regularly scheduled meeting, which is generally the first or second meeting before the issuance of the proxy statement for our annual meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials are forwarded to our Governance and Nominating Committee. Our Governance and Nominating Committee also reviews materials provided by other parties in connection with a nominee who is not

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proposed by a stockholder. In evaluating such nominations, our Governance and Nominating Committee seeks to achieve a balance of knowledge, experience and capability on our Board of Directors and evaluates the experience, skills, abilities and qualifications of each candidate and considers the diversity of the current members of the Board. Our Governance and Nominating Committee has in the past used a paid third-party to identify potential directors and if it doesengage such third party, it is committed to having any such third party seek candidates, regardless of gender, ethnicity or national origin, as part of the Board’s commitment to consideration of diversity as described in the Company’s Corporate Governance Guidelines and theCommittee’s charter. The Governance and Nominating Committee annually assesses the effectiveness of the Company’s diversity policy in connection with the selection of individual candidates for election or re-election to the Board. As the Board evolves, racial and ethnic diversity will be an important factor considered in assessing the overall mix of skills, experience, background and characteristics. We recognize the importance of diversity and welcome continued dialogue with our investors on this topic.

The Company’s By-Laws allow a stockholder or group of stockholders that meet certain criteria and requirements to nominate candidates for election to the Board and have such persons included in the Company’s proxy statement. The basic requirements to be met in order to submit a candidate for election to the Board utilizing proxy access are that a stockholder or group of stockholders comprised of no more than 20 unaffiliated stockholders must have owned at least 3% of the outstanding common stock of the Company for at least 3 years in order to submit a nominee. The maximum number of nominees is 20% of the Board or 2, whichever is greater. If you wish to utilize the Company’s proxy access process, youmust submit the information required under the By-Laws to theCompany not less than one hundred and twenty (120) days nor more than one hundred and fifty (150) days prior to the first anniversary of the date that the Company first distributed its proxy statement to stockholders for the previous year’s Annual Meeting (i.e. April 2, 2021). Copies of the Company’s By-laws are available on the Company’s website at www.rangeresources.com or upon request addressed to the Company’s Corporate Secretary. Any questions regarding the Company’s proxy access procedures may be directed to the Company’s Corporate Secretary.

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CORPORATE GOVERNANCE

We are committed to having sound and strong corporate governance principles. We believe having such principles and using them in the daily conduct of our business is essential to running our business efficiently and to maintaining our integrity in the marketplace and among the Company’s various constituents, including the public and you, our stockholders. The Board continually reviews evolving best practices in governance and seeks input from Range’s stockholders through our ongoing stockholder engagement program. Our website contains a number of documents, available free of charge, that are helpful to your understanding of our corporate governance practices, including:

Corporate Governance Guidelines;

Certificate of Incorporation;

By-laws (including proxy access);

Board Committee Charters;

Code of Business Conduct and Ethics and information about how to report concerns;

Background and Experience of our Board;

Background and Experience of Senior Management; and

Stock ownership guidelines.

A summary of key governance highlights are noted below:

Director retirement age of 75

Corporate governance guidelines

Ability of stockholders to act by written consent

Stockholders have the right to proxy access

Ability of stockholders to call special meetings

Board and Audit Committee risk oversight

Majority voting for directors

Compensation risk assessment

Annual election of all directors

Review of related party transactions

Diverse board skills and experience

Non-hedging and pledging policies of Company stock

Annual board, committee and director evaluations

Clawback policy

Stockholder outreach to 67% of outstanding shares before the 2021 Annual Meeting

Management and director stock ownership guidelines

Code of business conduct and ethics

Executive sessions of independent directors held at each regularly scheduled Board Meeting.

Board Overview

Independent Chairman of the Board;

Active engagement by all directors;

6 of our 7 director nominees are independent; and

All members of the Audit Committee, the Governance and Nominating Committee and the Compensation Committee are independent.

Chairman and CEO Roles

At different times in the Company’s history, the positions of chairman and chief executive officer have been split or combined as circumstances have warranted. The Board recognizes that no single leadership structure is right for all companies at all times. Accordingly, annually the Board may elect as Chairman any member of the Board, including the CEO. Currently, the Chairman is independent. The Chairman of the Board presides at the Board meetings and meetings of stockholders and his responsibilities include, among other things:

Call meetings of the independent directors and chair executive sessions of the Board at which no members of management are present;

Approve the agendas for Board meetings;

Propose a schedule of Board meetings and the information to be provided by management for Board consideration;

Recommend the retention of consultants who report directly to the Board;

Assist in assuring compliance with the Corporate Governance Guidelines and recommend revisions to the policies;

Evaluate, along with the other independent directors, the performance of the Chief Executive Officer;

Consult with Board members as to recommendations on membership and chairpersons of Board committees and discuss recommendations with the Corporate Governance and Nominating Committee;

Communicate the views of the independent directors and the Board committees with respect to objectives set for management by the Board; and

Serve as a liaison between the Board and Range’s stockholders.

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Attendance

The Board of Directors met eight times in 2020. Each director attended at least 75% of the meetings held by the Board and the committees on which he or she served during the year. Directors are expected to attend all meetings of stockholders, the Board and the committees which they serve. All of our directors attended the 2020 Annual Meeting of Stockholders.

Executive Sessions of Non-Employee Directors

Non-employee directors ordinarily meet in executive session without management present at each regularly scheduled Board meeting and may meet at other times at the discretion of the Chairman or at the request of any non-employee director.

Review and Approval of Related Person Transactions

Our Governance and Nominating Committee Charter includes a provision regarding the review and approval of related person transactions. Our Governance and Nominating Committee is charged with reviewing transactions which would require disclosure under our filings under the Exchange Act, and related rules, as a related person transaction, and making a recommendation to our Board regarding the initial authorization or ratification of any such transaction. If our Board of Directors considers ratification of a related person transaction and determines not to ratify the transaction, management is required to make all reasonable efforts to cancel or annul such transaction.

In determining whether or not to recommend the approval or ratification of a related person transaction, our Governance and Nominating Committee will consider the relevant facts and circumstances including, if applicable:

whether there is an appropriate business justification for the transaction;

the benefits that accrue to us as a result of the transaction;

the terms available to unrelated third parties entering into similar transactions;

the impact of the transaction on a director’s independence (in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer);

the availability of other sources for comparable products or services;

whether it is a single transaction or a series of ongoing, related transactions; and

whether entering into the transaction would be consistent with our Code of Business Conduct and Ethics.

No related person transaction in an amount exceeding $120,000 occurred during 2020.

Code of Business Conduct and Ethics

We have a written Code of Business Conduct and Ethics which is applicable to all of our directors and employees including our principal executive officer and our principal financial officer. We intend to post amendments to and waivers, if any, from our code of ethics (to the extent applicable to our principal executive and financial officers and directors) on our website at www.rangeresources.com under the section titled “Corporate Governance.” The latest change to our Code of Business Conduct and Ethics was posted February 20, 2013. The Code of Business Conduct and Ethics was reviewed by our Board of Directors and our Governance and Nominating Committee in 2020.

A summary of the allocation of general risk oversight function among management, the Board and its Committees is as follows:

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The Board’s role in risk oversight recognizes the multifaceted nature of risk management. It is a control and compliance function, but it also involves strategic considerations in normal business decisions, finance, security, cybersecurity, safety, health and environmental concerns.

The Board has empowered its Committees with risk oversight responsibilities. However, the Board retains the oversight of environmental, health and safety issues and any related social concerns rather than delegating that responsibility to a committee of the Board. Each of the Committees meets regularly with management to review, as appropriate, compliance with existing policies and procedures and to discuss change or improvement that may be required or desirable. In addition, the Board receives regular and detailed reports from management covering cybersecurity and other risks involving technology.

The Audit Committee plays a central role in the Board’s oversight of internal risks, by evaluating the Company’s financial reporting, by supervising the internal audit function, interfacing with the independent auditor, regularly communicating with the Chief Financial Officer and other members of management, monitoring the Company’s compliance programs, including the Company’s third party anonymous hotline for the notification of compliance concerns, supervising the investigation of any alleged financial fraud, monitoring the Company’s internal risk forums and the Company’s enterprise risk management program (theresponsibility for which the Audit Committee shares with the Board). The Compensation Committee considers the possible risk implications of the Company’s various compensation programs and plans and monitors the elements of such compensation programs so that risk in the behavior of the employees of the Company, including our NEOs, is considered in such policies and programs and do not incentivize excess risk taking. The Governance and Nominating Committee is responsible for the oversight of the Company’s governance processes and monitors those processes, including the Company’s Code of Business Conduct and Business Ethics, compliance function, Board Committee Charters and Board annual evaluations, to evaluate their effectiveness in avoiding the creation of risk to the Company and providing for proper and effective governance of the Company.

While the Board and its committees oversee risk management, Range management is responsible for managing risk. We have a robust enterprise risk management process for identifying, assessing and managing risk and monitoring risk mitigation strategies. Under the leadership of our Principal Accounting Officer, a committee of officers and senior managers work across the business to manage each enterprise level risk and to identify emerging risks and the results are reported annually to the Board.

Our commitment to acting responsibly and ethically guides our work each day, influencing every aspect of our operations from the boardroom to the well pad. We are committed to operating in a sustainable manner and proactively working with the communities where we operate to ensure that our team can deliver long-term, sustainable value to our stockholders, business partners and community members, all while protecting the environment and creating economic opportunity.

Range has maintained a constructive dialogue over the past years with many of our stockholders and other stakeholders as we continuously seek to be responsive to those who are interested in matters of corporate responsibility, which includes our public health and safety, as well as environmental stewardship and sustainability performance.

Our corporate sustainability (“CS”) strategy is guided by the following four key tenets aimed at delivering long-term, sustainable value to our stockholders, business partners and community members:

1.

Safety Leadership: We uphold the highest standards when it comes to operating in a safe, compliant and ethical manner. Our goal is simple: Provide a safe workplace with zero safety incidents. We work every day to achieve this critical business goal.

2.

Environmental Stewardship: We are committed stewards of the environment, leveraging new technologies to develop clean-burning natural gas to contribute to broader emission reduction goals and incorporating sustainable practices into our operations. We strive to meet or exceed both expectations and regulatory requirements and seek improvement to guidelines and procedures when we feel the standards are not high enough.

3.

Community Impact: Our resource development is a partnership, from creating jobs, partnering with local contractors, generating royalties for lessors, to providing significant tax revenues. Range works hard every day to create economic opportunities for our business regions, community members and stockholders.

4.

Corporate Governance: Range and its Board are committed to implementing sound, transparent corporate governance principles that strengthen confidence and trust with our stakeholders.

Our Board feels strongly that executing on these key tenets is important to our long-term sustainable growth. As a result, in 2021, 25% of our executive officers’ respective Annual Incentive Awards is tied to goals in the area of CS.

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Safety Leadership

Range upholds the highest standards when it comes to operating in a safe, compliant and ethical manner. We ensure each and every one of our employees understands the important roles they play in making safety, one of our core values, a top priority.

Range is open and proactive in our efforts to mitigate safety incidents and impacts. To measure and continuously improve the Company’s safety and environmental performance, Range uses a data-driven approach to track our progress against our broader safety goals. Range also compares this statistical data against OSHA’s criteria for determining rates for injuries and incidents that result in lost time or restricted duty. In addition, we evaluate our performance against industry peers and other industrial groups, ensuring we are constantly striving for top tier safety performance.

The company maintains a robust outreach team that works with a variety of stakeholders, including citizens, nongovernmental organizations, local and state government officials, area school districts, and first responders to promote a safe operating environment in the communities where we work.

When it comes to safety, our goal is simple, zero safety incidents.

Environmental Stewardship

As a dedicated steward of the environment, we focus on incorporating leading sustainability practices into every aspect of our business. Our commitment starts at the top of our organization, with strong board-level engagement and oversight, as well as dedicated reporting metrics on critical environmental, social and governance (ESG) driven matters across the business.

Environmental Compliance is integral to everything we do. We have a team of experts who are responsible for guiding and overseeing the most basic to most complex operating functions of our business. This ensures we are constantly advancing the standards of environmental performance for ourselves and the industry.

At Range, we have a commitment to sustainable operations that keep our people and environment safe. This includes our goal of working toward achieving net zero direct emissions across our operations through innovative emissions-reducing technologies and enhanced emission capture and control on site. Our commitment to water recycling and implementation of above-ground water storage and transfer facilities has reduced traffic and associated emissions with our operations, providing a positive impact on our air, water and community alike.

By returning to existing locations and expanding lateral well length, Range has been able to significantly reduce impacted surface use.

Our industry leading water management and recycling program, as well as a water sharing program with other operators helps to reduce well costs and fresh water consumption. The contribution of these programs has allowed us to reuse approximately 150% of our own water production by recycling water produced by other operators.

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Community Impact

Range has established civic engagement programs that are designed to have long-term positive impacts on organizations within our core operating footprint. The Range corporate partnership platform takes a long-term perspective and aims to build relationships with those who seek to enhance the standard of living in our community. This platform is supported by direct monetary investments, collaborations with our non-profit partners and a robust employee volunteerism program.

Corporate Governance

Key elements of Range’s corporate governance include Board succession planning, executive and independent leadership on the Board, Board self-evaluations, Board oversight of corporate responsibility and risk management processes and company-wide compliance with our Code of Business Conduct and Ethics and other company policies.

Other corporate governance highlights are set forth on page 21 of this Proxy Statement.

Our Audit Committee, Compensation Committee and Governance and Nominating Committee are each composed of independent directors. The primary responsibilities of the committees are described below. From time to time, the Board delegates additional duties to the standing committees.

Audit Committee

Meetings in 2020: 6*

Members: Brenda A. Cline (Chair), Margaret K. Dorman, Greg G. Maxwell

Primary Responsibilities

prepares the Audit Committee report for inclusion in the annual proxy statement;

annually reviews our Audit Committee charter and our Audit Committee’s performance;

appoints, evaluates and determines the compensation of our independent registered public accounting firm;

reviews and approves the scope of the annual audit; the audit fee and the financial statements;

reviews our disclosure controls and procedures;

supervises our internal audit functions;

reviews our corporate policies with respect to financial information and earnings guidance;

oversees any investigations into complaints concerning financial matters; and

reviews any risks that may have a significant impact on our financial statements.

The Audit Committee members are independent within the meaning of the listing standards of the NYSE, SEC regulations and our Corporate Governance Guidelines and are financially literate. The Board has determined that Ms. Cline is the “audit committee financial expert” within the meaning of the SEC’s regulations. In addition, the other members of the committee, Ms. Dorman and Mr.Maxwell also qualify as a “financial expert” under the applicable standards.

*

The Committee met with the Company’s internal audit and independent auditor at all six meetings, with and without management present.

 

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Compensation Committee

Meetings in 2020: 6

Members: Steve D. Gray (Chair), James M. Funk, Steffen E. Palko

Primary Responsibilities

discharges our Board of Director’s responsibilities to compensation of our executives and directors;

produces an annual report on executive compensation for inclusion in our proxy statement;

provides oversight of our compensation structure, including our equity compensation plans and benefits programs;

reviews and provides guidance on our human resources programs;

provides guidance on succession planning for our senior management;

retains and approves the terms of the retention of any compensation consultants and other compensation experts;

evaluates human resources and compensation strategies and oversees our total incentive compensation program including considering the risks associated with such programs;

reviews and approves objectives relevant to executive officer compensation and evaluates performance;

determines the compensation of executive officers in accordance with those objectives;

approves and amends our incentive compensation and equity award or share-based payment program (subject to stockholder approval, if required);

recommends director compensation to our Board of Directors;

monitors director and executive stock ownership; and

annually evaluates its performance and its charter.

All of the members of our Compensation Committee are independent within the meaning of the listing standards of the NYSE, SEC regulations and our Corporate Governance Guidelines. The report of our Compensation Committee is included in this Proxy Statement. The Compensation Committee’s Charter was prepared by the Compensation Committee and approved by the Governance and Nominating Committee and the Board of Directors.

 

 

Governance and Nominating Committee

Meetings in 2020: 2

Members: James M. Funk (Chair), Brenda A. Cline, Margaret K. Dorman

Primary Responsibilities

identifies individuals qualified to become directors (including receiving and considering stockholder suggested nominees) consistent with criteria approved by our Board of Directors;

oversees the organization of our Board of Directors to discharge our Board of Directors’ duties and responsibilities properly and efficiently;

reviews, when necessary, any potential related person transaction of our Company;

identifies best practices and recommends corporate governance principles to our Board, including giving proper attention and making effective responses to stockholder concerns regarding corporate governance;

annually assesses the size and composition of our Board of Directors including the diversity of the Board;

develops membership qualifications for our Board committees;

determines director independence;

monitors compliance with our Board of Directors and our Board committee membership criteria;

annually reviews and recommends directors for election to the Board;

reviews governance-related stockholder proposals and recommends our Board of Directors’ response; and

oversees the evaluation of our Board and management, including succession.

All of the members of the Governance and Nominating Committee are independent within the meaning of the listing standard of the NYSE, SEC regulations and our Corporate Governance Guidelines.

 

Dividend Committee

 

Members: Greg G. Maxwell (Chair), Jeffrey L. Ventura

Primary Responsibilities

The Dividend Committee is authorized to declare and set the record and payment dates of dividends in accordance with Board of Directors’ directives and established dividend policy. In January 2020, the Board suspended the dividend on our common stock.

 

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Director compensation is set by the Compensation Committee after working with its independent compensation consultant and a review of a peer group of companies (the “Peer Group”). The Compensation Committee generally approves compensation for directors just prior to the Board of Directors’ meeting following the election of directors at the Annual Meeting. Compensation arrangements for directors are effective with each election to the Board at the Annual Meeting. In the past several years, the Compensation Committee has also approved the payment of annual stock awards to the directors for a portion of their overall director compensation. Directors who are company employees do not receive any separate compensation for service on the Board or committees of the Board.

CASH COMPENSATION

The following are the annual cash retainers and fees we paid to our non-employee directors for the 2020-2021 term:

Type of Fee

 

Amount

Annual Board Retainer

$

75,000

Additional Retainer for Chairman

$

180,000

Additional fee for Audit Committee Chair

$

20,000

Directors do not receive meeting fees for attendance at Board or Committee meetings.

 

EQUITY-BASED COMPENSATION AND STOCK OWNERSHIP REQUIREMENTS

 

For 2020, non-employee directors received an annual restricted stock award valued at $180,000. In addition, the Chairman received additional restricted stock award valued at $85,500. Non-employee directors may defer all or a portion of their cash fees and their stock awards in our Active Deferred Compensation Plan. Directors have the power to change their tracking investment options in the Deferred Compensation Plan among the funds listed on page 58. Beginning in May 2020, Annual Stock Awards are fully vested one year from the date of grant or upon the director’s departure from our Board.

If a director has not achieved the required level of share ownership, the director is required to retain an amount equal to 50% of the shares received as a result of any equity awards granted to the director by the Company until he or she is in compliance with the stock ownership policy. A director must continue to retain shares in the amount required for as long as the director serves on the Board. As of the date of this Proxy Statement, all of our directors except Mr. Maxwell, are in compliance with the stock ownership guidelines and he is currently required to retain a minimum of 50% of each award. The requirement to retain 50% was established to allow limited sales as necessary to satisfy tax withholding obligations.

 

2020 DIRECTOR COMPENSATION

Name

Fees Earned or

Paid in Cash(1)

Stock Awards(2)

Total

(a)

(b)

(c)

(h)

Brenda A. Cline

$

95,000

$

180,000

$

275,000

Margaret K. Dorman

$

75,000

$

180,000

$

255,000

James M. Funk

$

75,000

$

180,000

$

255,000

Steve D. Gray

$

75,000

$

180,000

$

255,000

Greg G. Maxwell

$

255,000

$

265,500

$

520,500

Steffen E. Palko

$

75,000

$

180,000

$

255,000

Columns (d), (e), (f) and (g) covering stock appreciation rights (“SARs”), Non-Equity Incentive Plan Compensation, Changes in Pension Values and all other Compensation, respectively, have been deleted from the SEC-prescribed table format because the directors do not receive any such compensation.

(1)

Reflects annual cash retainer and committee chair retainer paid or earned by our non-employee directors.

(2)

Reflects the aggregate fair value for restricted stock awarded to our non-employee directors which are fully vested one year from the date of grant. Each non-employee director received an award of 33,457 shares of restricted stock on May 13, 2020. Mr. Maxwell, as Chairman, received 49,349 shares of restricted stock on May 13, 2020.

The Governance and Nominating and Compensation Committees continue to monitor the activities and time responsibilities of each director to determine if a change in circumstances would warrant a change in the director fee structure. The directors are reimbursed for their travel and out-of-pocket expenses in connection with their duties as a director. In addition, the directors are allowed to participate in our Deferred Compensation Plan but their deferrals do not qualify for our Company match. We do not provide to directors any of the following: any legacy awards or charitable awards programs for directors upon retirement, tax reimbursement arrangements, payments in connection with a Change in Control, securities or products purchased at a discount or life insurance arrangements. However, any unvested restricted stock will become vested in connection with a Change in Control.

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The Compensation Committee of our Board of Directors at fiscal year ended December 31, 2020, consisted of Messrs. Funk, Gray, and Palko. None of the members of the Compensation Committee were at any time during 2020 an officer or employee of the Company. None of our executive officers serve as a member of a board of directors or a compensation committee of any entity that has one or more executive officers serving as a member of our Board or Compensation Committee.

The following table shows, as of March 26, 2021, the number of shares of common stock “beneficially owned,” as determined in accordance with Rule 13d-3 under the Exchange Act, by the directors, the NEOs, and all senior executive officers and directors, as a group:

 

Total Common Shares Beneficially Owned

Shares in

Deferred

Compensation

Plans(e)

Total

Common

Shares

Controlled

Percent of

Outstanding

Shares

Shares

Directly

Owned

Shares in

IRA/ 401(k)

Accounts

Shares

Owned by

Family(d)

Percent of

Class

Brenda A. Cline(a)

89,121

*

89,121

*

Margaret K. Dorman(a)

90,690

*

90,690

*

James M. Funk

22,942

39,000

*

87,667

149,609

*

Steve D. Gray(a)(b)

232,313

*

232,313

*

Greg G. Maxwell

43,790

*

80,401

124,191

*

Steffen E. Palko(a)

1,033,457

*

1,033,457

*

Jeffrey L. Ventura(c)

729,725

3,585

*

1,597,444

2,330,754

*

Mark S. Scucchi(c)

46,711

37,791

*

486,530

571,032

*

Dennis L. Degner(c)

40,381

*

534,528

574,909

*

Alan W. Farquharson(c)

135,602

6,302

4,824

*

584,908

731,636

*

David P. Poole(c)

159,094

28,162

*

799,708

986,964

*

All directors and senior executive officers as a group (13 individuals)

2,725,976

130,960

4,824

1.1%

4,890,884

7,752,644

3.0%

*

Less than one percent

(a)

Includes unvested restricted stock of: Ms. Cline - 33,457; Ms. Dorman - 33,457; Mr. Gray - 33,457; Mr. Palko - 33,457.

(b)

Included 150,000 shares held by SD Gray Partnership LP which Mr. Gray owns 50% and his wife owns 50%.

(c)

Does not include target performance share units that are subject to performance and vesting to the extent certain performance objectives are achieved of: Mr. Ventura - 665,407; Mr. Scucchi - 485,891; Mr. Degner - 452,275; Mr. Farquharson - 40,782; Mr. Poole - 67,188.

(d)

Individuals disclaim beneficial ownership.

(e)

Includes unvested restricted stock of: Mr. Funk - 33,457; Mr. Maxwell - 49,349; Mr. Ventura - 206,897; Mr. Scucchi - 355,997; Mr. Degner - 378,348; Mr. Farquharson - 101,035; Mr. Poole - 166,487.

 

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The following table reflects the beneficial ownership of our common stock based upon the 255,684,829 common shares outstanding as of March 26, 2021 by each person known to us to be the beneficial owner of more than 5% of the outstanding shares of our common stock. Unless otherwise indicated, to our knowledge, each stockholder has sole voting and dispositive power with respect to the securities beneficially owned by that stockholder and no such securities were subject to a pledge.

Name and address of Beneficial Owner

Common Stock

Number of Shares

Beneficially

Owned

 

Percent of

Class

 

Sole Voting

Shares

Shared

Voting

Shares

Sole

Investment

Shares

Shared

Investment

Shares

BlackRock, Inc.

55 East 52nd Street

New York, New York 10055

37,165,801

(1)

14.5

%

36,758,198

37,165,801

The Vanguard Group

100 Vanguard Blvd

Malvern, PA 19355

27,116,592

(2)

10.6

%

242,125

26,670,497

446,095

State Street Corporation

State Street Financial Center

One Lincoln Street

Boston, MA 02111

15,759,774

(3) 

6.2

%

12,487,303

15,759,774

Dimensional Fund Advisors LP

Building One

6300 Bee Cave Road

Austin, Texas 78746

15,236,922

(4)

5.9

%

15,061,113

15,236,922

SailingStone Capital Partners LLC

One California Street, 30th Floor

San Francisco, CA 94111

14,904,506

(5)

5.8

%

14,904,506

14,904,506

(1)

Based on Schedule 13G/A filed with the SEC dated February 19, 2021.

(2)

Based on Schedule 13G filed with the SEC dated January 26, 2021.

(3)

Based on Schedule 13G/A filed with the SEC dated February 10, 2021.

(4)

Based on Schedule 13G filed with the SEC dated February 10, 2021.

(5)

Based on Schedule 13G/A filed with the SEC dated February 12, 2021.

 

Section 16(a) of the Exchange Act requires our directors, executive officers and any person beneficially owning more than 10% of our common stock to file reports of ownership and any changes in ownership with the SEC. Based solely on our review of such reports filed with the SEC and representations provide to us by persons required to file reports under section 16 of the Exchange Act, our directors, executive officers and greater than ten-percent beneficial owners timely complied with their Section 16(a) filing requirements during 2020, except that due to technical errors by personnel responsible for making the filings, a Form 4 for Jeff Ventura was inadvertently one day late, a Form 4 for David Poole was inadvertently one day late and two Form 4’s for Dori Ginn were inadvertently 24 days late and another Form 4 for Dori Ginn was inadvertently one day late.

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As we do each year, and as required by Section 14A of the Exchange Act, we provide our stockholders with the opportunity to vote to approve, on an advisory basis, the compensation of our NEOs as disclosed in the Proxy Statement in accordance with the SEC’s compensation disclosure rules. The executive compensation program is described in the Compensation Discussion and Analysis section beginning on page 32 and the other tables and narrative disclosures in this Proxy Statement.

The executive compensation program for the NEOs includes many best-practice features that are intended to enhance the alignment of compensation with the interests of Range’s stockholders:

 

What We Do

Seek stockholder engagement and incorporate feedback

 

Maintain robust stock ownership goals for senior executives

Exercise negative discretion with declining Company performance

 

Engage an independent compensation consultant to advise the committee

Majority of NEO compensation is at risk and performance based, which links pay to performance

 

Offer minimal perquisites

All long-term incentive awards are payable in stock

 

Dedicate time to executive succession planning and leadership development each year

Financial performance metrics underlying long-term incentive awards are objective and aligned with stockholders’ interests

 

Compensation Peer Group reviewed annually

Perform annual say-on-pay advisory vote for stockholders

 

 

 

Executive Compensation Program Objectives

In 2020, the Compensation Committee continued to strive to develop a compensation program not only to be consistent with industry practice but also to attract and retain outstanding executives by providing incentives to reward them for superior performance that supports Range’s long-term strategic objectives.

The 2020 executive compensation program is expected to:

Be highly aligned with stockholder interests;

Preserve performance accountability through commodity cycles;

Build long-term share ownership;

Simplify the executive compensation program; and

Match or exceed prevailing governance standards for performance-based compensation.

We are therefore asking stockholders to vote on the following resolution:

RESOLVED, that the stockholders approve the compensation of the NEOs as disclosed in this Proxy Statement pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion and Analysis and the compensation tables.

As an advisory vote, the matter for which stockholders have the opportunity to vote under Proposal 2 is non-binding. Although the vote is non-binding, the Board of Directors and the Compensation Committee value the opinions of our stockholders and will carefully consider the outcome of the vote when making future compensation decisions for our NEOs.

If you own shares through a bank, broker or other holder of record, you must instruct them how to vote so that your vote can be counted on this proposal as uninstructed shares are not entitled to vote with regard to Proposal 2. The affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote is required to approve this Proposal 2.

The Board of Directors recommends a vote FOR Proposal 2

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EXECUTIVE COMPENSATION

As the independent Compensation Committee of Range Resources, our most important mandate is to structure our executive compensation programs to create close alignment with our stockholders’ interests, while continuing to attract and retain talented executives to execute our strategy and create long-term value. Our compensation program is guided by the philosophy that our ability to provide sustainable value is driven by superior individual performance. We believe that a company must offer competitive compensation to attract and retain experienced, talented and motivated employees. In addition, we believe employees in leadership roles are motivated to perform at their highest levels when performance - based pay represents a significant portion of their compensation.

We understand the importance of assessing our corporate governance and compensation practices regularly. Since our 2020 Annual Meeting, we have reached out to stockholders representing 67% of shares outstanding and met with those that accepted our invitation. We held meetings with stockholders representing approximately 50% of our shares outstanding.

During the fall 2020, the following topics were the most prevalent items discussed amongst our stockholders:

Alignment between our strategy and our executive compensation practices;

Our approach to corporate citizenship and environmental responsibility;

Board structure, diversity and refreshment; and

Strategic direction and our focus on areas that are within our control.

We believe ongoing communication, dialogue and a sharing of individual perspectives with our stockholders allow our committee the ability to balance our compensation programs with our strategic plan and stockholder interests. These discussions are key drivers in our compensation design and thought processes. We will continue to incorporate stockholder feedback into our future compensation planning.

We regularly seek feedback from our stockholders regarding our compensation practices. Over the course of the past year:

Prior to our 2020 Annual Meeting, we reached out to stockholders representing 66% of shares outstanding.

After our 2020 Annual Meeting, we reached out to stockholders representing 67% of shares outstanding. We considered our stockholder feedback, and we identified opportunities to further strengthen our compensation practices which is more fully discussed in “Stockholder Engagement and Responsiveness” beginning on page 36.

We encourage you to review the information included in this disclosure and vote “FOR” Proposal 2 or contact us to discuss why you did not choose to vote in favor of the proposal.

Steve D. Gray, Chair
James M. Funk
Steffen E. Palko

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This Compensation Discussion and Analysis (CD&A) describes the material elements, objectives and principals of Range’s executive compensation program, compensation decisions made in 2020 and 2021 (through the date of this proxy statement filing) and the factors the Compensation Committee considered in making those decisions.

For 2020, our named executive officers, or NEOs were:

Named Executive Officer

Officer Since

Title

Jeffrey L. Ventura

2003

President and Chief Executive Officer

Mark S. Scucchi

2012

Senior Vice President – Chief Financial Officer

Dennis L. Degner

2014

Senior Vice President – Chief Operating Officer

Alan W. Farquharson

2000

Senior Vice President – Reservoir Engineering & Economics

David P. Poole

2008

Senior Vice President – General Counsel and Corporate Secretary

The 2020 Compensation of these NEOs is explained in the following sections and in the compensation tables and related disclosures under “Executive Compensation Tables” (beginning on page 51) that follows this CD&A. This CD&A is divided into six sections:

 

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The executive compensation program for the NEOs includes many best practice features that are intended to enhance the alignment of compensation with the interests of Range’s stockholders:

What We Do

 

What We Don’t Do

Seek stockholder engagement and incorporate feedback

 

Grant annual cash bonuses or long-term incentive awards to executive officers that are not subject to clawback

Exercise negative discretion with declining stock performance

 

No individual change-in-control contracts

Majority of NEOs compensation is at risk and performance based, which links pay to performance

 

No backdating or repricing of stock options

All long-term incentive awards are payable in stock

 

No employment contracts

Receive annual say-on-pay advisory vote from stockholders

 

No margin, derivatives or speculative transactions, such as hedges, pledges and margin accounts

Maintain robust stock ownership goals for senior executives

 

No individual supplemental executive retirement arrangements

Engage an independent compensation consultant to advise the committee

 

No reward to executives for excessive, inappropriate or unnecessary risk-taking

Offer minimal perquisites

 

 

 

Dedicate time to executive succession planning and leadership development each year

 

 

 

Compensation Peer Group reviewed annually

 

 

 

 

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The Compensation Committee strives to develop a compensation program designed not only to be consistent with the industry practice but to also attract and retain executives by providing incentives to reward them for performance that supports Range’s long-term strategic objectives. Our compensation program has the following characteristics:

Be highly aligned with stockholder interests;

Preserve performance accountability in both strong and weak commodity price environments;

Build long-term share ownership;

Provide a consistent retention incentive; and

Match or exceed prevailing governance standards for performance-based compensation.

Principal Elements of Executive Compensation. We principally use three elements of executive compensation to carry out the design of our executive compensation program:

Element

Purpose

Base Salary

Retain executive team and, when appropriate, attract executives.

Annual Cash Incentive award

Reward executives for short-term financial and operational results.

Annual Long-Term Equity Incentive award

Focus executive efforts on activities and results that lead to long-term stockholder value. Our restricted stock awards vest based on continued employment and the passage of time, which promotes retention. The remainder of the awards vest based on performance measures tied to either relative stock price performance or internal performance metrics which promotes the long-term interests of our stockholders and aligns executives’ interests with stockholders’ interests.

Compensation Program Emphasizes Performance

(1)

Amounts shown reflect salary paid in 2020, annual cash incentive award for 2020 which was paid in 2021 based on 2020 performance, the grant date fair value for Long-Term Incentive Awards granted in 2020 and other compensation as detailed on page 51.

 

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Our overarching business objective is to build stockholder value through returns focused development of our natural gas properties. Our strategy to achieve our business objective is primarily to generate consistent cash flow from reserves and production through internally generated drilling projects coupled with occasional acquisitions and divestitures. In addition, we target funding our capital spending to at or below operating cash flow. Our strategy requires us to make significant investments and financial commitments in technical staff, acreage, seismic data, drilling and completion technology and gathering and transportation arrangements to build drilling inventory and market our products. Our strategy has the following key elements:

Commit to environmental protection and worker and community safety;

Concentrate on our core operating area;

Focus on cost efficiency;

Maintain a multi-year drilling inventory;

Maintain a long-life reserve base with a low base decline rate;

Market our products to a large number of customers in diverse markets under a variety of commercial terms;

Maintain operational and financial flexibility; and

Provide employee equity-ownership and incentive compensation aligned with our stakeholders’ interests.

These elements are anchored by our interests in the Marcellus Shale located in Pennsylvania which we believe has a remaining productive life in excess of 50 years.

Reduced total unit costs per mcfe in 2020 by greater than 19% compared to 2019 levels and more than 14% in 2019 compared to 2018 levels;

Spent 21% less than our initial 2020 capital budget of $520.0 million and during 2019, spent 4% less than our original 2019 capital budget;

Reduced total debt by $86.0 million in 2020 compared to year-end 2019 and reduced total debt by $667.6 million during 2019 compared to year-end 2018;

Significantly improved our debt maturity ladder during 2020 with the repurchase of $1.2 billion of various senior and senior subordinated notes due 2021, 2022 and 2023;

Increased our banks’ committed borrowing capacity from $2.0 billion to $2.4 billion in 2019;

Implemented innovative ways to enhance margins;

Produced 2.2 Bcfe per day in 2020 compared to 2.3 Bcfe per day in 2019 and 2.2 Bcfe per day in 2018, primarily attributable to the Marcellus Shale;

Published our formal corporate sustainability report;

Continued with our innovative water recycling program;

Successfully tested and began utilizing an electric frac fleet in 2019;

Reduced emissions in 2020 compared to 2019 and increased the frequency of leak detection inspections;

68% reduction in contractor OSHA recordable injuries versus 2019;

64% reduction in number of preventable vehicle incidents versus 2019; and

As of December 31, 2020, we had approximately $1.4 billion of liquidity.

Operate safely and efficiently;

Generate meaningful free cash flow while prudently setting capital investment budget;

Reduce direct emissions and target net-zero direct emissions by 2025;

Achieve competitive returns on investments;

Preserve liquidity and improve financial strength;

Focus on organic opportunities through disciplined capital investment;

Improve operational efficiencies and economic returns;

Attract and retain quality employees; and

Align incentives with our stockholders’ interests and key business objectives.

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Our relationship with our stockholders is an integral part of our corporate governance practices. In addition to our customary participation at industry and investor conferences, road shows and meetings, we held meetings to better understand the views of stockholders on a range of topics including executive compensation, governance practices and business strategy. The Compensation Committee and management continued our review of our compensation program with input from the Board’s independent compensation consultant. This review included direct engagement with our stockholders to ensure full understanding of their perspectives and their feedback was incorporated into the Compensation Committee’s deliberations and decisions in early 2021 and 2020.

 

Mr. Maxwell, our Chairman, and Mr. Gray, the Chairman of our Compensation Committee, led the stockholder outreach effort, joined by members of senior management. We reached out to stockholders representing approximately 67% of our outstanding shares since our May 2020 Annual Meeting; these investors were typically our larger stockholders. We held meetings with each stockholder who accepted our invitation to engage, which in the fall of 2020 represented approximately 50% of our shares outstanding. During these conversations, stockholders were invited to provide direct feedback on our current compensation programs. We also spoke with proxy advisory firms that provide vote recommendations to gain insight into their views on our executive compensation programs and address their questions.

In these meetings, we discussed our strategy, corporate governance, executive compensation and our commitment to the environment. For the fall of 2020, the feedback received from our stockholders on these and other topics was generally positive.

The key themes from this year’s stockholder engagement that we considered in our design were:

Stockholders applauded our recent Corporate Sustainability Report, our net zero emissions target and position on emissions intensity;

Stockholders emphasized the importance of our oversight of environmental efforts;

Stockholders appreciated a discussion of the Range culture of doing the right thing;

Stockholders appreciated gender diversity, composition and refreshment of our Board;

Stockholders were interested in the annual incentive focus on the balance sheet improvements and ESG;

Stockholders expressed concerns over duplication of measures in short and long-term incentives, time periods for equity grant vesting, use of a growth metric and the general rigor of metric targets;

Stockholders appreciated the opportunity to meet and the open discussion directly with management and our directors; and

Stockholders generally agreed with the strategic direction and our focus on controlling what we can control.

The following summarizes our response to the feedback we heard from our investors and the changes we made to our executive pay program over the past two compensation cycles.

Specific 2020/2021 changes to the compensation program include:

CEO total compensation for 2020 was 20% lower than 2019;

CEO base salary held flat for seven consecutive years (through 2021);

Added one new return-focused metric to the short-term Annual Cash Incentive performance target;

Removed two metrics in the Annual Cash Incentive performance targets;

Aligned long-term incentives with strategic priorities of balance sheet strength and environmental leadership; and

Changed restricted stock vesting from 30%-30%-40% to cliff vesting after three years.

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The Compensation Committee is responsible for establishing and overseeing our executive compensation program and policies that are consistent with our overall compensation philosophy. In making such decisions, the Committee considers a variety of factors, including views expressed by stockholders and stockholder advisory groups, information provided byits independent compensation consultant, our CEO’s input, Peer Group data, each executive’s experience in the role, Company and individual performance, internal pay equity and any other information the Committee deems relevant in its discretion. The Committee is responsible for all compensation decisions involving our CEO and other executive officers.

The Committee considers the outcomes of the Company’s advisory stockholder vote on our executive compensation program and our stockholder outreach initiatives when making compensation decisions. To continue our focus on best practices, we enhanced our stockholder engagement program in the past few years to solicit specific valuable feedback from investors on executive compensation which we then share with the Committee and theBoard. We contact a broad base of institutional investors andspeak with those interested in meeting and sharing feedback with us.

We believe our incentive program changes have been highly responsive to the feedback received from our stockholders and serve to strengthen thealignment with our strategic objectives. We will continue our dialogue with stockholders on compensation issues as part of ourongoing engagement.

Through our compensation cycle that ended February 2020, our CEO submitted recommendations to the Compensation Committee for adjustments to the salary, Annual Cash Incentives and Long-Term Equity Incentive awards payable to all NEO’s (except himself), Senior Vice Presidents and Vice Presidents. The Compensation Committee considers the recommendations of our CEO as only one factor, in addition to the other factors described in this CD&A, in setting our executive officer and other employee compensation. The CEO is not present during deliberations by the Compensation Committee regarding his own compensation. The Committee’s independent consultant provides independent analysis and recommendations for Mr. Ventura for consideration by our Compensation Committee. At the request of the Compensation Committee, our CEO and our CFO attend certain meetings and working sessions of the Compensation Committee. Senior members of the human resources team and other members of senior management interact with the compensation consultant as necessary and prepare materials for each Compensation Committee meeting.

For 2020, the Committee directly engaged Longnecker and Associates (“Longnecker”) as its independent compensation consultant to advise the Committee on executive compensation matters. Longnecker provided the Committee with information on industry trends, market practices and legislative issues. With the approval of the Compensation Committee, the Company also retained Alvarez and Marsal (or “A&M”) to provide valuation services related to the use of performance-based restricted stock awards based on TSR. In 2020, the Company paid Longnecker a total of $119,000 for consulting services related to executive and director compensation. The Company paid A&M a total of $4,800 for valuation services in 2020.

Longnecker interacted with several of our officers and employees as necessary. In addition, Longnecker may seek input and feedback from members of our management regarding its work product prior to presentation to the Committee to confirm that information is accurate or address other issues. We believe that Longnecker provides an independent perspective to the Committee.

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In support of our compensation objectives and in order to determine an appropriate total value and mix of pay for executives, we reference the 25th, 50th and 75th percentiles of the Compensation Peer Group. These percentiles are reference points only; we do not automatically compensate each executive at these levels. Several variables, including individual and division performance, time employed in the position, annual Company performance and one-and three-year relative stock price performance influence the actual executive compensation decisions. We look at our individual NEO and total NEO Total Direct Compensation compared to individual NEO and total NEO Total Direct Compensation of companies in our Compensation Peer Group. Because not all of our NEO positions are directly comparable to NEO positions of other companies in our Compensation Peer Group, we believe that reviewing the aggregate total direct compensation of all NEOs provides an appropriate reference for comparative purposes and allows us to compare our total cost of management for all NEOs to our peers’ total cost of management.

Peer Group benchmarking is one of several factors the Compensation Committee considers in setting pay. The Committee seeks to maintain a Peer Group that is generally similar to us with respect to business activity and specifically focuses on companies engaged in exploration for and production of oil and gas resources with Range having a market capitalization near the median of the Peer Group. The Compensation Committee reviews the composition of the Peer Group with advice from the independent compensation consultant in the first quarter of each calendar year and any additions or deletions are made to the Peer Group at that time. For 2020, the peer group was adjusted to continue to target the mid-point of the group. The S&P 500 index was added in 2021 based on a recommendation from Longnecker to better test performance against a broad index. Each year, companies that are acquired or merged during the year are eliminated from that year’s Peer Group to the extent such acquisitions or mergers prevent the company from being an appropriate member of the Peer Group.

This chart describes the oil and gas exploration and production companies that have been included in the Peer Group in the last two years:

Company

Peer Group

2021

2020

Antero Resources Corporation

Cabot Oil & Gas Corporation

Chesapeake Energy Corporation

-

Cimarex Energy Co.

CNX Resources

Comstock Resources, Inc.

-

EQT Corporation

Gulfport Energy Corporation

-

Matador Resources

Murphy Oil

Oasis Petroleum

-

PDC Energy Inc.

QEP Resources, Inc.

SM Energy Company

Southwestern Energy Company

S&P 500

-

Whiting Petroleum

-

WPX Energy

-

” denotes companies included in our Peer Group

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The majority of compensation for the NEOs is based on the long-term performance of Range. The elements of our 2020 executive compensation program are summarized in the table below and are described further under “Elements of Executive Compensation” on page 40.

 

Element

Objective

Form of

Payout

How Payout Value is

Calculated

2020 Decisions

FIXED

Base Salary

Provide a competitive level of fixed compensation to attract and retain employees.

Cash

Review of compensation surveys, publicly available peer company data, internal pay equity, individual responsibilities and performance assessment. Base salaries are reviewed annually and as circumstances warrant.

In 2020, our CEO salary remained unchanged (based on a 26-week pay period).

Salaries of Mr. Scucchi, Mr. Degner and Mr. Poole were increased with the remaining NEOs salaries unchanged.

 

Annual Cash Incentive

Align executives with performance metrics that are critical to Range’s success.

Motivate financial and operational performance over a one-year period.

Cash

Criteria and weighting pre-established by the Compensation Committee in March 2020. All six performance criteria are internal company performance measures.

The Annual Cash Incentive award is described in more detail under “Elements of the 2020 Compensation Program-Annual Cash Incentive Awards” beginning on page 40.

For the Chief Executive Officer:

Target bonus % salary equal to 120%.

For CFO and COO:

Target bonus % salary equal to 100%.

For the other NEOs:

Target bonus % of salary equal to 75%.

Actual payment for 2020 performance was 150% of target bonus for all NEOs.

VARIABLE OR AT-RISK

Long-Term Incentive – Performance-Based Total Stockholder Return (TSR) awards

Align executives interest with interests of stockholders.

Reward higher returns in Range common stock over a three-year performance period.

Stock

A comparison of Range’s TSR to that of the peer group over a three-year performance period. In addition, if Range’s absolute TSR is negative for the period, payout of the award is capped at no more than target.

The terms and conditions of the TSR award are described in more detail under “Long-Term Equity Incentive Program” beginning on page 43.

For the Chief Executive Officer:

The TSR award accounts for 27% of the target 2020 long-term incentive award value.

Actual grant for 2020 reduced 24% and Mr Ventura voluntarily reduced his grant another 11%.

For the CFO and COO:

The TSR award accounts for 30% of the target 2020 long-term incentive award value.

Actual grant for 2020 was reduced 24%.

 

Long-Term Incentive – Performance-Based – Production and Reserve Growth Per Share awards (Debt Adjusted)

Align executives interest with interests of stockholders

Rewards performance annually over a three-year period.

Stock

A comparison of reported production and year-end reserves (adjusted for price revisions), debt adjusted to a performance target.

The terms and conditions of this award is described in more detail under “Long-Term Equity Incentive Program” beginning on page 43.

For Chief Executive Officer:

The award accounts for 27% of the target 2020 long-term incentive award value.

Actual grant for 2020 reduced 24% and Mr. Ventura voluntarily reduced his grant another 11%.

For the CFO and COO:

The award accounts for 30% of the target 2020 long-term incentive award value.

Actual grant for 2020 reduced 24%.

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Element

Objective

Form of

Payout

How Payout Value is

Calculated

2020 Decisions

 

Long-Term Incentive – Time-Based Restricted Stock

Provide a retention incentive that promotes sustained stock ownership

Tie ultimate value realized tied to the performance of Range’s common stock

Stock

Generally vest in three tranches over a three-year period (30%, 30% 40%), subject to continued employment.

The terms and conditions of these awards are described in more detail under “Long-Term Equity Incentive Program” beginning on page 43.

For the Chief Executive Officer:

The stock award accounts for 46% of the target 2020 long-term incentive award value.

Actual grant for 2020 was reduced 24% and Mr. Ventura reduced his grant another 11%.

For the CFO and COO:

The stock award accounts for 40% of the target 2020 long-term incentive award value.

Actual grant for 2020 was reduced 24%.

For the other NEOs:

Actual grant for 2020 was reduced 24%.

Base Salary

The Compensation Committee reviews base salaries on an annual basis, at the time of a promotion or changes in responsibilities and when market conditions warrant. Base salaries for our NEOs are targeted at the 50th percentile of the Peer Group adjusted for certain factors. Base salary is based on an evaluation of the following:

the complexity of their respective positions and specific technical experience required;

experience and tenure;

the base salaries of comparable positions at Peer Group companies;

competitive market conditions; and

internal pay equity among our senior executives.

Salary adjustments are approved by the Compensation Committee in the first quarter of each year and take effect on the first payroll period after approval. The timing of these salary adjustments allows the Compensation Committee to consider the audited financial results of our Peer Group companies and allows for disclosure of our current compensaiton decisions in our proxy. In February 2020, the Committee’s independent consultant reviewed the NEO’s base salaries compared to Peer Group data and broader market data and initially recommended a 3.5% increase in base salaries for each NEO. The compensation consultant noted that, in general, each NEO’s base salary was below the 50th percentile of the Peer Group. The compensation consultant noted maintaining alignment of base salary between 50th and 75th percentile of the Peer Group was more desirable. The Committee considered the recommendations of Longnecker and management and determined to not increase base salary for Mr. Ventura but approved base salary increases for three of the four remaining NEOs. In February 2021, Longnecker reviewed the NEOs’ base salary compared to a peer group and various published survey sources and initially recommended an increase of 3.5%, noting the aggregate NEO salaries were lower than the 50th percentile. The Committee reviewed the comparisons to peers and broader market data and determined to not increase the base salary for the NEOs. The Committee recommended, and the Board approved, the following base salaries effective February 2021.

 

 

Base Salary(1)

As of

February 2021

As of

February 2020

As of

March 2019

Jeffrey L. Ventura

$

925,000

$

925,000

$

925,000

Mark S. Scucchi

$

475,000

$

475,000

$

435,000

Dennis L. Degner

$

475,000

$

475,000

$

400,000

David P. Poole

$

450,000

$

450,000

$

415,000

Alan W. Farquharson

$

376,000

$

376,000

$

376,000

(1)   Based on 26 week pay period

 

 

 

 

 

 

Annual Cash Incentive Awards

The Annual cash bonus award is intended to compensate the NEOs based on the achievement of annual financial, operating and strategic goals. It emphasizes team performance. We refer to cash awards as “Annual Cash Incentives.” The Annual Cash Incentives are paid to our NEOs based on a formulaic application of certain performance criteria that are discussed more fully below.

The Annual Cash Incentives are subject to the negative discretion of the Compensation Committee. Annual Cash Incentives are determined without reference to Peer Group data, because each performance criteria has been pre-established by the Compensation Committee. The Annual Cash Incentive related to our 2020 performance was paid in February 2021 as detailed in the table below:

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Annual Incentive Payout

Actual Payment

Achieved(1)

Actual Payout

for 2020

Difference

CEO

$

1,665,000

$

1,665,000

$

-

CFO and COO

$

1,425,000

$

1,425,000

$

-

Remaining Senior Vice Presidents

$

1,656,000

$

1,656,000

$

-

(1)

Reflects the payout earned prior to negative discretion applied by the Compensation Committee.

 

The Compensation Committee develops the performance criteria to be used for the Annual Cash Incentives, reviews the performance criteria with the independent compensation consultants and then discusses the performance criteria with our CEO and CFO. The Committee then sets the criteria as well as the weighting and performance achievement levels necessary to calculate Annual Cash Incentives based upon payout percentages established for our NEOs. For 2020, the performance criteria were based upon either industry standards or our annual business plan (the “Annual Business Plan”). Our Annual Business Plan is a forecast of expected business results for the applicable fiscal year based upon certain assumptions made by our management. The Compensation Committee believes that the performance criteria, taken together, are strong objective indicators of the Company’s performance, thus similar factors are typically used in determining the Company’s performance relative to its Peer Group for setting total compensation and long-term incentive equity awards as described above. Target Annual Cash Incentives are determined as a percentage of each NEOs base salary. This target percentage is established through an analysis of compensation for comparable positions in the Peer Group and is intended to provide a competitive level of compensation if the Company achieves the performance criteria established by the Compensation Committee.

The performance criteria selected with respect to the Annual Cash Incentive awards for 2020 (which were paid in February 2021) are shown in the table below, together with the target levels of achievement with respect to each criterion. The payouts were achieved as described below. All six of the performance criteria are internal performance measures.

 

  Criterion

2020

Weighting

 

Unit of

Measurement

Actual for

2019

  2020 Performance Levels

Actual for

2020

 

Payout%

Achieved(1)

 
Threshold   Target   Excellent  
  Absolute Debt Reduction 15 % $ decrease (millions) $ 668   $ 150   $ 500   $ 900   $ 86   0 %
  Cash Unit Costs 15 % $ per mcfe $ N/A   $ 2.05   $ 2.00   $ 1.95   $ 1.88   240 %
  Drilling &
Completion Cost
Per Foot
15 % $ per foot $ N/A   $ 650   $ 625   $ 600   $ 571   240 %
  Drilling Rate of
Return
15 % Percentage Increase   34 %   25 %   30 %   35 %   35 % 240 %
  Qualitative
measure
20 % Various
HSE
  Excellent                 Excellent   240 %
  Discretionary 20 % Various   N/A                 Target   120 %

(1)   The Payout percentage achieved is shown for the CEO and is prorated for other officers.

Absolute Debt Reduction

The first criterion the Compensation committee selected for 2020 was an absolute decrease in debt. The Committee believed in the current commodity environment, focus on absolute debt reduction is important. While leverage, as measured by Debt/EBITDAX is commonly used by analysts and investors in comparing across companies, absolute debt puts the emphasis on the leverage component, or debt, that management has more control over as a commodity producer. During 2020, we reduced debt by $86 million which was below the threshold set for 2020 resulting in a 0% payout and reflects the low commodity price environment in 2020.

Cash Unit Costs

The second criterion the Compensation Committee selected for 2020 was Cash Unit Costs. Cash Unit Costs is calculated by adding direct operating costs, gathering, processing and transportation costs, production and ad valorem tax expense, general and administrative and interest expense (excluding stock-based compensation and the amortization of deferred financing costs) and net broker margin on a per mcfe basis. The Compensation Committee selected this criterion to measure our ability to focus on areas that are within our control. The performance target was achieved in 2020 by the disposition of higher cost assets, workforce assessments and the full utilization of our midstream infrastructure.

Drilling and Completion Cost per Foot

The third criterion the Compensation Committee selected for 2020 was drilling and completion cost per foot. This metric was selected to continue to improve capital efficiency which is dependent upon team performance, lateral lengths, effective planning and logistics among other factors. This metric is measured based on actual capital expenditures divided by actual lateral feet for wells turned to sales. In setting the performance levels (i.e. threshold, target and excellent) for drilling on completions cost per foot, the compensation committee considered publicly stated objectives of our peers along with historical internal cost efficiencies already achieved. The target levels set and achieved in 2020 made us the leader in well costs amongst Appalachia peers. The performance target was achieved in 2020 as we successfully executed our operational plan while spending under budget. In addition, we continue to focus on innovative and emission-reducing technologies such as an electric fracturing fleet and improving our water reuse program.

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Drilling Rate of Return

The fourth criterion the Compensation Committee selected for 2020 was drilling rate of return. This metric supports our focus on improving corporate returns. The Compensation Committee added drilling rate of return in 2017 in response to stockholder feedback and to encourage a balanced approach to operational goals and encourage efficiency of capital spending. This metric continues to encourage focus on reducing drilling costs particularly in response to the continued weak commodity price environment. The drilling rate of return is measured based on actual capital expenditures and the year-end proved reserves estimates of drilling results. Commodity prices effective on the first day of the year are used in the calculation. The target is set based on our expectation of capital allocation and capital efficiency for the year and our prior year drilling results. The performance target was achieved in 2020 by achieving our 2020 drilling plan for less than budgeted as a result of lower well costs and places us in the top quartile amongst our peers.

Qualitative Measure (HSE)

The fifth criterion the Compensation Committee selected for 2020 was a qualitative measure which includes elements of environmental, health and safety performance (“HSE”). Range continues to be committed to ensuring it provides a safe work place and instilling a culture of safety and environmental responsibility at every level of our organization. Priorities include elements of safety performance, emissions and water management and corporate citizenship. We focus on transparency around HSE and encourage reporting of all incidents involving our employees and contractors (including near misses) and we have used examples of incidents reported as a vehicle to educate our employees and contractors to improve our HSE practices. There are also quantitative measures evaluated such as reductions in emissions, number of spills, auto accidents, leak detection inspections and notices of violations. The performance target was achieved in 2020 by the committee’s review and analysis of several HSE results including:

a reduction of 59% for non-fresh water spills;

notice of violations were similar to 2019;

a 38% reduction in the component leak rate despite increasing the frequency of inspections;

contractor recordable incidents reduced to 5 in 2020 from 25 in 2019;

employee recordable incidents down 60% from 2019; and

preventable vehicle incident rate declined 64% with 0% with serious potential.

Discretionary Measure

The last criterion includes factors not otherwise captured in the previously described objective performance measures. Factors would include portfolio management, succession planning, talent development and other factors. These factors are deemed by the Compensation Committee to have been important in the years’ performance and may vary from year to year. The Committee follows no set performance targets relating to these factors. In general, the Committee expects to award the target (100%) level of performance in years where the Company meets internal and external performance expectations with respect to these factors. The performance target was achieved in 2020 by successfully managing through the disruptions caused by COVID-19 and continuing to further strengthen our financial foundation.

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In addition to selecting the performance criteria, the Compensation Committee determined, after consultation with Longnecker, the respective performance payout percentages for each of our NEOs. In determining these payout percentages, the Compensation Committee attempted to ensure that the payouts provided appropriate incentives to each of our senior executives. For 2020, the annual incentive payout percentage was a weighted average of the payout percentage for each category using the percentages set forth below in the table. When actual results achieved fall between the performance levels, the percentile performance used to determine the payout percentage is proportionately adjusted between the performance levels. For 2020, the Compensation Committee awarded bonuses based on the formulaically determined award as shown in the table below:

 

Threshold

Annual Cash Incentive Payout % of Salary

 

Target

 

Excellent

 

Payout %

Achieved

 

Actual

Payment %

For 2020

 

CEO

60

%

120

%

240

%

180

%

180

%

CFO and COO

50

%

100

%

200

%

150

%

150

%

Remaining Senior Vice Presidents

37.5

%

75

%

150

%

113

%

113

%

The following table sets forth the total amount of cash paid to our NEOs for 2020 performance (paid in February 2021), for 2019 performance (paid in March 2020) and for 2018 performance (paid in March 2019).

 

Annual Cash Incentive Earned

2020

2019

2018

Jeffrey L. Ventura

$

1,665,000

$

1,652,216

$

1,500,000

Mark S. Scucchi

$

712,500

$

466,193

$

436,248

Dennis L. Degner

$

712,500

$

466,193

$

400,000

David P. Poole

$

506,250

$

444,759

$

418,378

Alan W. Farquharson(1)

$

423,000

$

402,962

$

(1)

Mr. Farquharson was not an NEO in 2018.

The 2021 performance criteria, weighting and target levels of achievement with respect to each of the 2021 criterion are shown in the table below.

  Criterion Weighting  

Unit of

Measurement

2021 Performance Levels
Threshold   Target   Excellent  
  Cash Unit Cost 20 % $ per mcfe $ 2.03   $ 1.94   $ 1.85  
  Return on average capital employed (ROACE) 15 % % Return   10 %   12 %   14 %
  Drilling and Completion Cost per foot 20 % $ per foot $ 600   $ 570   $ 540  
 

Drilling rate of return

20

%

Percentage Increase

25

%

30

%

 

40

%

  Discretionary(1) 25 % Various HSE and other            

(1)   This measure includes environmental, health and safety performance quantitative metrics.

 

The 2021 performance criteria, weighting and performance achievement levels were selected based on discussions with management and the independent compensation consultants. Cash unit costs was chosen for the second year in a row to focus on competitive corporate profitability. Return on average capital employed was added for 2021 to focus on operating profit relative total debt and equity. The third criterion is drilling and completion costs per foot which was added in 2020 to continue to focus on capital efficiency to enhance returns. Drilling rate of return supports our continuing focus on stringent capital allocations based on project level returns sufficient to drive improving corporate returns. The final criterion is a discretionary measure that will be focused on quantitiative HSE measures such as fresh water spills, number of notices of violation, vehicle incidents and leak rate. The Committee combined two measures (entitled Qualitative and Discretionary in 2020) to one measure and decreased the weighting from 40% to 25%.

 

Long-Term Equity Incentive Program

The following table sets forth the value of long-term incentives granted to our NEOs for the last three years.

 

Long-Term Equity Incentive

 

2021

 

2020

 

2019

Jeffrey L. Ventura

$

4,800,000

$

3,923,000

$

5,749,992

Mark S. Scucchi

$

2,300,000

$

2,052,000

$

2,199,991

Dennis L. Degner

$

2,280,000

$

2,280,000

$

1,300,002

David P. Poole

$

1,500,000

$

1,368,000

$

1,815,071

Alan W. Farquharson

$

900,000

$

836,000

$

1,101,727

 

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The 2020 Long-Term Equity Incentive program consists of Performance-Based Restricted Stock Awards and Time-Based Restricted Stock Awards. We grant long-term equity-based compensation to substantially all of our employees to promote a company wide ownership and entrepreneurialism. In 2020, all NEO Long-Term Equity Incentive grants were reduced 24%. In addition, the CEO voluntarily reduced his grant another 11% in light of the continuing price environment and to align with stockholder feedback.

(1)

CEO allocation impacted by voluntary reduction in grant.

 

Performance-Based TSR Stock Units (“TSR-PSUs”). The Committee believes that a performance unit program based on TSR relative to peer companies aligns pay and Company performance. The industry peers selected for each performance cycle generally match the industry peers comprising the prevailing Peer Group used for compensation benchmarking. TSR is determined using the average stock price of each company at the beginning of the performance period based on the average closing price in a 10 day period prior to and ending at the close of business on the date of grant and at the end of the performance period using the 10 day period prior to and ending on the 3 year anniversary date of the grant date. Reinvestment of dividends is assumed. If the TSR at the end of the performance period is negative, the payout percentage is capped at 100% regardless of ranking. The TSR-PSUs award is denominated in performance stock units (PSUs), each of which is equivalent to one share of common stock.

2020 TSR PSUs. In February 2020, the Committee awarded the NEOs performance units that will vest based on relative TSR for the three-year performance period ending February 2023. The value of each underlying unit tracks the price of a share of our common stock. The percentage of units earned ranges from 0% to 200% of the units granted with no payout for being in the bottom 35%. When the award is settled, NEOs will receive dividend equivalents paid in shares equal to the number of units granted, multiplied by the payout percentage. Dividend equivalents accrue and are paid based on performance at the end of the performance period. Earned awards are paid in stock shortly after the completion of the performance period. A table illustrating the potential payouts based on relative and absolute TSR performance for the TSR-PSUs granted in 2020 is set forth below:

 

 

2020 TSR-PSUs. The performance units granted in February 2020 have a performance end date of February 2023 with a target payout percentages at the median performance compared to 16 peer companies.

2019 TSR-PSUs. The performance units granted in March 2019 have a performance end date of March 2022 with a target payout percentages at the median performance compared to 14 peer companies.

2018 TSR-PSUs. The performance units granted in March 2018 have a performance end date of March 2021 with target payout percentages at the median performance compared to 14 peer companies.

2017 TSR-PSUs. The performance units granted in May 2017 have a performance end date of May 2020 with target payout percentages at the median performance compared to 21 peer companies. For the performance period, we ranked 13th out of 21 companies and the Committee determined the final payout was 80% of the award.

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TSR-PSUs Payouts Demonstrate Alignment with Stockholders

Payout values of TSR-PSUs awards have changed as compared to grant date fair value, as shown below ($ in thousands):

 

(1) For the award granted in 2017, the value shown is the final value.

 

These graphics emphasize the realizable value of Mr. Ventura’s TSR-PSUs are significantly aligned with stockholder value. Values for this illustration for 2018, 2019 and 2020 were determined with the following inputs:

Our closing stock price as of March 26, 2021 was $10.88; and

Our rank in our TSR peer group and the corresponding payout percentage as measured under our performance unit program: 100% for 2018, 100% for 2019 and 188% for 2020.

Performance Based Reserves and Production Growth Per Share (Debt Adjusted). In 2017, the Committee added Production and Reserves Growth per share to the long-term incentive program, calculated on an absolute basis and debt-adjusted. This metric measures our ability to increase production and reserves without commensurate increase in debt or shares outstanding. The use of a debt adjusted measure mitigates the risk that management increases reserves and production by increasing the drilling budget using debt imprudently.

2020 PSUs PGPS/RGPS. The performance period began January 1, 2020 and ends December 31, 2022. The number of shares earned at the end of the three-year period will be determined as follows, based on the annual payout percentages over the three year period: (i) 1/3 of the award is based on 2020 targets; (ii) 1/3 of the award will be based on performance targets to be established for 2021 and (iii) 1/3 of the award will be based on performance to be established for 2022. For each year, a minimum performance level has been or will be established. For performance at the minimum level, shares will be forfeited and will not carry over to any future period. Performance is measured relative to a target determined by the Compensation Committee. The table below summarizes these grants in 2020.

 

Performance Metric

Production Growth Per Share (PGPS)

Reserves Growth Per Share (RGPS)

Performance Period

3 years

3 years

Form of Payout

Stock

Stock

Performance basis

Debt-adjusted production growth per
share – absolute basis

Debt adjusted reserve growth per
share – absolute basis

Minimum Payout

0%

0%

Performance Resulting in Minimum Payout

PGPS of less than 0%

RGPS of less than 0%

Target Payout

100%

100%

Performance Resulting in Target Payout

PGPS of greater than or equal to 3%

RGPS of greater than or equal to 3%

Maximum Payout

200%

200%

Performance Resulting in Maximum Payout

PGPS of greater than or equal to 10%

RGPS of greater than or equal to 10%

2019 PSUs-PGPS/RGPS. PGPS/RGPS. The performance units granted in February 2019 have a performance end date of December 31, 2021.

2018 PSUs-PGPS/RGPS. The performance units granted in March 2018 had a performance end date of December 31, 2020. For these awards, the final payout was a combined payout of 137%.

Time-Based Restricted Stock. The Committee awards restricted stock for diversification of the long-term incentive award mix, for consistent alignment between executives and stockholders and for retention purposes. Restricted stock awards were made according to the then applicable annual grant schedule and vest over three years (30%, 30% and 40%). Prior to vesting, restricted stock recipients have the right to vote and receive dividends on the restricted shares. In 2021, vesting was changed to a three-year cliff.

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The Compensation Committee engaged Longnecker to assist with the analysis of the actual delivery of compensation verses the performance of the Company. The following changes have been made for 2021:

Determined for the seventh year in a row not to increase CEO base salary nor increase any other NEO base salary;

Our CEO, CFO and COO Long-Term Incentive grant mix was 40% Time-Based Restricted Stock and 60% Performance-Based Restricted Stock; all other NEO’s grant mix were 100% Time-Based Restricted Stock;

Target Annual Cash Incentive Payouts were set at 120% for our CEO; 100% for our CFO and COO; 75% for our Senior Vice Presidents;

Added one new Annual Cash Incentive performance target to better align with the current commodity cycle and incorporate stockholder feedback;

Revised the internal Performance Share metrics used in the Long-Term Incentive program to be Debt/EBITDAX using a pre-defined mid-cycle price and Emission Performance targets to focus on debt reduction and to include an environmental component;

Reduced the discretionary weighting and set one metric (two metrics reduced to one metric); and

Changed three year Restricted Stock vesting from 30%-30%-40% to three-year cliff vesting.

The following table details Long Term Incentive grants for 2020 and 2021:

 

 

Long-Term Incentive

Grant in February 2020(1)

Long-Term Incentive

Grant in February 2021

Jeffrey L. Ventura

$

3,923,000

$

4,800,000

Mark S. Scucchi

$

2,052,000

$

2,300,000

Dennis L. Degner

$

2,280,000

$

2,280,000

David P. Poole

$

1,368,000

$

1,500,000

Alan W. Farquharson

$

836,000

$

900,000

(1)

Based on summary compensation table.

The table below illustrates the potential payouts based on relative and absolute TSR performance for the TSR-PSUs granted in February 2021:

 

 

Range’s Rank Among

Peer Companies

Percentage of

TSR-PSUs Earned

 

 

Maximum

1

200.0%

 

 

 

2

183.3%

 

 

 

3

166.7%

 

 

 

4

150.0%

 

 

 

5

133.3%

 

 

 

6

116.7%

 

 

Target 

7

100.0%

 

 

 

8

75.0%

 

 

 

9

50.0%

 

 

 

10

0.0%

 

 

 

11

0.0%

 

 

 

12

0.0%

 

 

 

13

0.0%

 

 

Minimum 

14

0.0%

 

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The table below illustrates potential payouts for Performance-Based Debt/EBITDAX and Emissions Performance for grants in February 2021:

Performance Metric

Debt/EBITDAX(1)

Emissions Performance (EP)

Performance Period

3 years

3 years

Form of Payout

Stock

Stock

Performance basis

Debt/EBITDAX using a

pre-defined mid-cycle price(1)

Scope 1 Emission Intensity net of

offsets on a CO2e/mmcfe basis

Minimum Payout

0%

0%

Performance Resulting in Minimum Payout

Debt/EBITDAX of more than 2.0x

EP of more than 0.12

Target Payout

100%

100%

Performance Resulting in Target Payout

Debt/EBITDAX of 1.5x

EP of 0.10

Maximum Payout

200%

200%

Performance Resulting in Maximum Payout

Debt/EBITDAX of less than 1.0x

EP lower than 0.05

(1)

Uses a pre-defined mid-cycle price of $2.90 per Mcfe.

Deferred Compensation Plan

Members of management and our directors are entitled to participate in our deferred compensation plan. Currently we have one active deferred compensation plan (the “Active Deferred Compensation Plan”) and we have a second deferred compensation plan in which participation was frozen at the end of 2004 (the “Frozen Deferred Compensation Plan”). These deferred compensation plans are described in greater detail in the section of this Proxy Statement entitled “Non-Qualified Deferred Compensation Plans.” Under the Active Deferred Compensation Plan, employee participants may defer a dollar amount or percentage amount of their base salary and/or annual bonus. Non-employee directors may defer a dollar amount or percentage of their annual fees and/or their annual equity award. Currently, we match the voluntary deferrals of the employee participants, up to 10% of their base salary. Employee participants can elect to have the match paid in cash or stock (the “Match Award”). The Compensation Committee considers the matching contributions, whether paid in cash or by stock, as additional cash compensation in calculating the total compensation for each NEO. We understand that the matching component of the Active Deferred Compensation Plan is not common among the Peer Group. However, the matching component is a significant component to our compensation practices because we do not provide any pension or retirement benefits other than the 401(k) Plan. In fourth quarter 2017, we implemented a post-retirement benefit plan to assist in providing health care to officers who are active employees and have met certain age and service requirements up until the time they are eligible for Medicare. See “Other Benefits” below for additional information.

In addition, when our NEOs receive Time-Based Restricted Stock Awards as described above, we contribute the awards to the Active Deferred Compensation Plan on our NEOs behalf, and such contributions constitute unvested discretionary contributions. The investment tracking options are described in greater detail in the section of this Proxy Statement entitled “Non-Qualified Deferred Compensation Plans”. Performance Units, when awarded, are not placed into the Active Deferred Compensation Plan.

401(k) Plan

The Company sponsors a 401(k) Plan which is a tax-qualified retirement savings plan pursuant to which all of our full-time and part-time employees are eligible to contribute the lesser of up to 75% of their annual salary or the limit prescribed by law to the 401(k) Plan on a before-tax basis. In addition, participants age 50 or over may contribute additional before-tax amounts up to the annual catch-up contribution limit determined by the IRS and any participant may contribute rollover amounts from certain other qualified plans. Participants may also receive matching contributions, payable in cash, in an amount equal to 100% of their before-tax contributions to the 401(k) Plan up to a maximum matching contribution of 6% of their base salaries and cash bonus. The Company has adopted an auto-enrollment process for new employees which results in the employees participating in the 401(k) plan unless they determine not to participate.

Participants are 100% vested in all contributions to the 401(k) Plan. In addition to the other investment options available under the 401(k) Plan, participants may invest all or a portion of their 401(k) Plan account in our common stock. The 401(k) Plan investment options for 2020 are listed in the section of this Proxy Statement entitled “Non-Qualified Deferred Compensation Plans.

Other Benefits

We provide certain other limited personal benefits that the Compensation Committee has determined are reasonable and consistent with our overall compensation philosophy. The Compensation Committee believes that these benefits are consistent with those provided to executive officers of our Peer Group companies, are an important retention factor and are in accordance with general compensation practices in our industry. Moreover, the Compensation Committee considers the cost and value of any such benefits as additional cash compensation when calculating the total cash compensation for purposes of determining the performance adjusted amount of long-term equity incentive compensation to award to our NEOs. We offer medical, dental, vision and life insurance and disability benefits to all eligible employees. We also provide our NEOs with the following benefits: (i) supplemental disability plans and

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(ii) reimbursement for approved spousal travel expenses related to Company business. We only provide club membership dues reimbursement and reimbursement of certain expenses to certain of our executives to the extent such membership dues and expenses are related to the conduct of our business. The Compensation Committee believes these particular benefits help our executives to network and foster relationships in the oil and gas industry and community that are valuable and important to our Company. Any executive must reimburse us for any personal club use or use by a member of his family.

Effective fourth quarter 2017 to facilitate an orderly management succession process, we implemented a post-retirement benefit plan to assist in providing health care to officers who are active employees (including their spouses) and have met certain age and service requirements. These benefits are not funded in advance and are provided up to age 65 or on the date they become eligible for Medicare, subject to various cost-sharing features. In combination with the implementation of this succession plan enhancement, certain officers that qualify for the post-retirement benefit plan were also immediately vested in all equity grants (excluding any involuntary termination for cause). Effective October 2018, officers who qualify for the new post-retirement health care plan are required to provide reasonable notice of retirement and, since 2019, are fully vested after one year of service following the grant date.

Change in Control Arrangements

There are no employment agreements currently in effect between us and any employee. None of our employees are covered under any general severance plan. In the event an executive terminates employment, any severance benefits payable would be determined by the Compensation Committee at its discretion, unless such termination occurred following a change in control, in which case severance may be payable pursuant to the Range Resources Corporation Amended and Restated Executive Change in Control Severance Benefit Plan (the “Management CIC Plan”).

The Management CIC Plan was adopted in March 2005. Pursuant to the Management CIC Plan, all our corporate officers and certain other employees selected by the Compensation Committee (the “Management Group”) may be entitled to receive certain payments and benefits if there is a “Change in Control” of the Company and a member of the Management Group is terminated other than for “Cause” or resigns for “Good Reason” within the “Protection Period.” The terms Change in Control, Cause, Good Reason, and Protection Period, as used in the Management CIC Plan, are defined in the section of this Proxy Statement entitled “Potential Payments upon Termination and Change in Control.” If a member of the Management Group is terminated without Cause or resigns for Good Reason within the Protection Period, that participant will receive:

a lump sum payment equal to (i) the participant’s “benefit multiple” multiplied by (ii) the sum of (A) the average of the bonuses paid or awarded to the participant for the three prior fiscal years or the individual’s current year target bonus, whichever is higher, plus (B) the participant’s base salary; and

for a period of years equal to the participant’s “benefit multiple,” continued participation in any medical, dental, life, disability, and any other insurance arrangement for the participant (and, if applicable, the participant’s spouse and eligible children) in which such person(s) were participating immediately prior to (i) the date of the participant’s termination as determined under the Management CIC Plan, or, if greater, (ii) the occurrence of the Change in Control.

The “benefit multiples” applicable to the NEOs in 2020 were as follows: Mr. Ventura – three; Mr. Scucchi – three; Mr. Degner – three, Mr. Poole – three and Mr. Farquharson - three. In early 2020, based on proxy voting guidelines we received from a large stockholder, the benefit multiples were increased to three times for all Senior Vice Presidents. In addition, any non-vested equity based compensation awards held by each participant vest upon the occurrence of a Change in Control. A more detailed description of these provisions is provided in the section of this Proxy Statement entitled “Potential Payments upon Termination and Change in Control.

Risk Assessment of Compensation Policies and Practices

Although the majority of the executive compensation program pay is performance-based, the Compensation Committee believes the program does not encourage unnecessary or excessive risk-taking. The Compensation Committee believes that any potential risk of the executive compensation program influencing behavior that could be inconsistent with the overall interests of Range and its stockholders is mitigated by several factors, including:

Program elements use both annual and longer-term performance periods;

Use of a transparent, external performance metric, TSR, for a large portion of the long-term incentive program opportunity for the CEO, CFO and COO;

Relative nature of the TSR performance measure, which minimizes the impact that volatile commodity prices have on Range’s TSR award;

Forfeiture and recoupment provisions for awards in the event of violations of Range’s Code of Business Conduct;

Payouts of long-term incentive awards that are 100% in stock rather than cash; and

Meaningful stock ownership guidelines for executives that encourage a long-term perspective.

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Impact of Prior Equity Awards on Current Awards – No Repricing or Cash Buyouts

Each year, the Compensation Committee grants long-term equity incentive awards based on the prior year’s relative performance of the Company to the Peer Group and generally applies a three-year vesting to such awards for retention purposes. Because the equity grants are determined annually based on the Company’s actual performance for the year for which the compensation is being paid, the Compensation Committee does not feel it is appropriate to consider past awards and adjust compensation (including long-term equity awards). Likewise, the Committee has a practice that it does not compensate employees with additional amounts of pay if the value of prior grants of long-term equity awards is lower than valued at the time of the grant, thus the Committee does not re-price equity awards or pay cash buy outs for equity awards that are not “in the money.” In this way, the Committee believes that the actual performance of the Company directly affects the employee’s compensation actually received from the equity award. The Committee’s philosophy in this regard is the same with the use of Performance Units, including the fact that such awards are intentionally designed such that the payout varies between 0% to 200% of the number of shares initially awarded.

Tax Deductibility of Compensation

The Tax Cuts and Jobs Act of 2017 that was signed into law in December 2017, expands the definition of what types of compensation are subject to the $1,000,000 limitation under Section 162(m) to include performance-based compensation and includes the CFO as a covered employee. In addition, the new rule expands the definition of a “covered employee” to include any individuals who have previously been a covered employee for any years after December 31, 2016. Thus, once an individual is identified as one of the top 5 covered employees, the $1,000,000 deduction limitation applies to compensation paid to that individual, even after the individual no longer holds that position or has separated from service.

Financial Restatement/Clawback Policy

The Board of Directors’ policy is that the Compensation Committee, to the extent permitted by governing law, retains the sole and absolute authority to make retroactive adjustments to any cash or equity-based incentive compensation paid to our executives where the payment of such amounts was predicated upon the achievement of certain financial results that were subsequently the subject of a restatement. Where applicable, we will seek to recover (or “clawback”) any amount determined to have been inappropriately received by an individual.

Grant Timing

The Compensation Committee does not time, nor has the Compensation Committee in the past timed, equity grants in coordination with the release of material non-public information. Instead, we grant equity at the time or times dictated by our normal compensation process as developed by the Compensation Committee.

None of our employees have attempted to time long-term equity incentive award grants by making grant recommendations to the Compensation Committee. Certain executives are authorized to make requests to the Compensation Committee regarding awards for new personnel as part of the hiring process, to existing employees who are promoted or where market conditions could reduce our ability to retain key employees. However, these are market driven occurrences and not timing issues, and such executives only provide recommendations that may or may not be approved by the Compensation Committee.

Stock Ownership Requirements for Executive Officers

Each officer listed below is expected to own a number of our shares with a value that is a multiple of the officer’s current base salary:

Position

Multiple

Chief Executive Officer

5.0 x base salary

Senior Vice President

3.0 x base salary

Unless the officer has achieved the required level of share ownership, the officer is required to retain an amount equal to 50% of the net shares received as a result of any equity awards granted to the officer by the Company until he or she is in compliance with the stock ownership policy. An officer must continue to retain shares in the amount required for as long as the officer is subject to the policy. As of the date of this proxy, all of the senior officers satisfy the ownership requirement. The requirement to retain 50% was established to allow limited sales as necessary to satisfy tax withholding obligations.

 

Trading in the Company’s Stock Derivatives and Pledging Limitation

It is our policy that directors and all officers, including our NEOs, may not purchase or sell options on our common stock, nor engage in short sales with respect to our common stock. Trading by officers and directors in puts, calls, straddles, equity swaps or other derivative securities that are directly linked to our common stock is also prohibited.

Pledging of Company equity to secure any new credit is prohibited. As of the date of this proxy, no NEOs or directors have any pledged Company equity.

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The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with our management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our Proxy Statement.

Steve D. Gray, Chair
James M. Funk
Steffen E. Palko

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EXECUTIVE COMPENSATION TABLES

Summary Compensation Table

 

The following table summarizes total compensation for each NEO for the years shown:

Name
and Principal Position
  Year    Salary(1)    Stock
Awards(2)
   Non-Equity
Incentive Plan
Compensation(3)
   All Other
Compensation(5)
   Total  
Jeffrey L. Ventura  2020   $960,577   $3,922,995   $1,665,000   $156,216   $6,704,788 
President & CEO  2019   $925,000   $5,749,992   $1,652,216   $57,312   $8,384,520 
   2018   $925,000   $6,137,133   $1,500,000   $149,055   $8,711,188 
Mark S. Scucchi  2020   $488,654   $2,051,999   $712,500   $75,319   $3,328,472 
SVP & CFO  2019   $430,385   $2,199,991   $466,193   $67,136   $3,163,705 
   2018   $361,979   $421,851   $436,248   $56,939   $1,277,017 
Dennis L. Degner  2020   $488,654   $2,279,996   $712,500   $77,016   $3,558,166 
SVP & COO  2019   $410,000   $1,300,002   $466,193   $66,421   $2,242,616 
   2018   $346,778   $1,143,317   $400,000   $169,573   $2,059,668 
David P. Poole  2020   $463,269   $1,368,000   $506,250   $79,861   $2,417,380 
SVP  2019   $411,077   $1,815,071   $444,759   $70,519   $2,741,426 
   2018   $398,000   $1,368,202   $418,378   $27,168   $2,211,748 
Alan W. Farquharson(4)   2020   $390,462   $835,999   $423,000   $69,465   $1,718,926 
SVP  2019   $373,462   $1,101,727   $402,962   $66,205   $1,944,356 
(1)

For 2020, salary payments include cash payments for 27 weeks versus 26 weeks in 2019 and 2018.

(2)

This column reflects the aggregate fair values calculated in accordance with generally accepted accounting principles in the United States regarding stock compensation, without taking into account estimated forfeitures and does not reflect the actual value that may be recognized by each NEO. Restricted stock generally will vest according to the following schedule: 30% after year one, 60% after year two and 100% after year three. Performance restricted stock generally will vest three years after the date of grant upon our achievement of certain criteria including total stockholder return relative to a pre-determined peer group and certain internally developed performance metrics. Performance restricted stock is valued assuming a target number of shares would be issued. If our achievement of the defined criteria resulted in 200% of the award being paid, the grant date fair value for 2020 would have been as follows: Mr. Ventura ($6,021,992); Mr. Scucchi ($3,283,198); Mr. Degner ($3,647,996); Mr. Poole ($1,368,000) and Mr. Farquharson ($835,999). See grants of Plan-Based Awards table for more information. As of the fourth quarter 2020, Mr. Scucchi and Mr. Degner do not qualify for our post-retirement health care benefit plan.

(3)

The amounts shown as “Non-Equity Incentive Plan Compensation” are equal to the cash incentive awards granted by the Compensation Committee for each of our NEOs performance for the applicable calendar year. While these awards are based on performance criteria established by the Compensation Committee, the actual amounts awarded are not determined until early in the year following the calendar year being evaluated. These amounts were accrued during the calendar year being evaluated on an estimated basis and then adjusted to reflect the actual amounts awarded. The cash incentive awards were determined and paid in accordance with our Amended and Restated 2019 Equity Plan.

(4)

Under applicable SEC rules, Mr. Farquharson’s compensation for 2018 is excluded as he was not a named executive in that year.

(5)

The following table describes each component of the “All Other Compensation” column for 2020 in the Summary Compensation Table above.

 

   Active Deferred
Compensation
Plan Match
   401(k) Plan
Match
    Executive
Disability
Premium
   Total  
Jeffrey L. Ventura  $96,058   $17,100    $43,058   $ 156,216  
Mark S. Scucchi  $48,865   $17,100    $9,354   $ 75,319  
Dennis L. Degner  $48,865   $17,100    $11,051   $ 77,016  
David P. Poole  $46,328   $17,100    $16,433   $ 79,861  
Alan W. Farquharson  $39,047   $17,100    $13,318   $ 69,465  

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CEO Pay Ratio of 43 to 1

 

Pursuant to Item 402(u) of Regulation S-K, we have prepared a comparison of the annual total compensation of Mr. Ventura, our Chief Executive Officer and President, for fiscal year 2020 to the median of annual total compensation of all other Company employees for the same period.

We identified the median employee for this review by examining the 2020 annual total compensation for all employees, excluding our Chief Executive Officer, who were employed by us on December 31, 2020 because it allowed us to make the identification in a reasonably efficient manner. We included all employees, whether employed on a full-time, part-time, or seasonal basis. For this purpose and using reasonable estimates, the calculation of annual total compensation of all employees, excluding our Chief Executive Officer, was determined by using the wages and compensation similar to the salary components used to determine Mr. Ventura’s total compensation. We chose this method because it is readily available in our existing payroll system, it is determined on a consistent basis for each employee, and because we believe it is a reasonable proxy for total compensation for purposes of determining the median employee. We annualized the compensation for any employee that was not employed by us for all of 2020. For the total annual compensation of our Chief Executive Officer, we used the “Total Compensation” shown for Mr. Ventura in the “Summary Compensation Table” on page 51 of this Proxy Statement.

Following our review, we have determined that for 2020:

the median of the annual total compensation of all employees of the Company (other than our Chief Executive Officer) was $156,000;

the annual total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table above was $6.7million; and

as a result, we estimate Mr. Ventura’s 2020 annual total compensation was approximately 43 times that of our median employee.

The above determination is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. The SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their comparison to the ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

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Grants of Plan-Based Awards in 2020

 

The table below shows the plan-based awards granted by the Compensation Committee to the NEOs in 2020. The awards are abbreviated in the table as follows: (i) Annual Cash Incentive Award (ACI); (ii) Matching Award (MA); (iii) Time-Based Restricted Stock (RS); and (iv) Performance-Based Awards (PBA).

      Estimated Future Payouts Under  Estimated Future Payouts Under  All Other    Grant Date
Fair Value
 
      Non-Equity Incentive Plan Awards(1)  Equity Incentive Plan Awards(2)  Stock Awards:    of Stock  
   Grant    Threshold    Target    Maximum    Threshold    Target    Maximum    # of Shares of    and Option  
Name  Date    ($)    ($)    ($)    (#)    (#)    (#)    Stock or Units    Awards(4)  
(a)  (b)    (c)    (d)    (e)    (f)    (g)    (h)    (i)    (l)  
Jeffrey L. Ventura                                             
ACI       $555,000   $1,110,000   $2,220,000                          
MA   02/21/20                                 (3)   96,058 
RS   02/04/20                                 603,973(5)  $1,823,998 
PBA   02/04/20                      620,113    1,240,226        $2,098,997 
Mark S. Scucchi                                             
ACI       $237,500   $475,000   $950,000                          
MA   03/15/20                                 (3)  $10,500 
MA   06/19/20                                 (3)  $12,789 
MA   09/25/20                                 (3)  $12,788 
MA   12/30/20                                 (3)  $12,788 
RS   02/04/20                                 271,788(5)  $820,800 
PBA   02/04/20                      363,737    727,474        $1,231,199 
Dennis L. Degner                                             
ACI       $237,500   $475,000   $950,000                          
MA   03/15/20                                 3,723 (3)  $10,500 
MA   06/19/20                                 2,042 (3)  $12,789 
MA   09/25/20                                 1,809 (3)  $12,788 
MA   12/30/20                                 1,908 (3)  $12,788 
RS   02/04/20                                 301,986 (5)  $911,998 
PBA   02/04/20                      404,152    808,304        $1,367,999 
David P. Poole                                             
ACI       $168,750   $337,500   $675,000                          
MA   03/15/20                                 3,539 (3)  $9,981 
MA   06/19/20                                 1,935 (3)  $12,115 
MA   09/25/20