DEF 14A 1 lhal2020_def14a.htm HALLIBURTON CO - DEF 14A HALLIBURTON COMPANY - DEF 14A

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

SCHEDULE 14A

 

(RULE 14a-101)

 

INFORMATION REQUIRED IN PROXY STATEMENT

 

SCHEDULE 14A INFORMATION

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

Exchange Act of 1934 (Amendment No. )

         
 

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HALLIBURTON COMPANY

 

(Name of Registrant as Specified in its Charter)

 

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

   
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To Our Valued Shareholders:

 

April 7, 2020

 

 

 

Jeffrey A. Miller

Chairman of the Board,

President and Chief Executive Officer

Turning to 2020, . . . we will continue to deliver on our value proposition, stay focused on safety and service quality, exercise capital discipline, and work to drive margins, free cash flow, and returns.

 

On behalf of our Board of Directors, we are pleased to invite you to attend the Halliburton Company Annual Meeting of Shareholders. The meeting will occur at the Halliburton Life Center Auditorium, 3000 N. Sam Houston Parkway East, Houston, Texas 77032, on Tuesday, May 19, 2020, at 9:00 a.m. Central Daylight Time.

 

As we turn the page on Halliburton’s 100th year, we enter our next century with a clear sense of purpose – to help our customers satisfy the world’s need for the affordable and reliable energy provided by oil and gas, more effectively and efficiently, safely and ethically, while minimizing environmental impact. We will continue to do what we do best – collaborate and engineer solutions to maximize our customers’ asset value – while generating industry-leading returns and strong cash flow for our shareholders.

 

2019 marks the end of the first full decade of the shale revolution that propelled the United States to become the world’s top hydrocarbon producer. Our company was an early participant in this development and invested and innovated alongside our customers from the beginning. As unconventionals entered the maturation phase, our North America customers shifted their focus from growth to capital discipline, which impacted our business through reduced customer activity and additional pricing pressure. In contrast, the recovery in international markets continued in 2019, and our international growth outpaced the market. Overall, I am pleased with the performance of our hardworking and dedicated employees. The Halliburton team executed our value proposition, delivered exceptional safety and service quality, and stayed focused on generating healthy returns and strong free cash flow.

 

Turning to 2020, like other companies in the energy industry and beyond, our business is being impacted by the COVID-19 virus and the unprecedented decline in commodity prices. Halliburton has withstood many challenges in the past and grown stronger as a result; many times in fact over the last 100 years. I am confident that this time will be no different. Halliburton is a market leader in an industry that’s essential to the entire world. We have an excellent business, great customers, an outstanding workforce, and a strong balance sheet. The market will eventually recover. Until then, we will control what we can control and continue to deliver on our value proposition, stay focused on safety and service quality, exercise capital discipline, and work to drive margins, free cash flow, and returns.

 

Your vote and the representation of your shares are very important. Please review the proxy materials for detailed information on the proposals presented this year. We hope you will vote as soon as possible. If you attend the meeting, you may vote in person even if you have previously voted.

 

Thank you for your ongoing support of and continued interest in Halliburton. We look forward to seeing you at our Annual Meeting.

 

Sincerely,

 

 

Jeffrey A. Miller

Chairman of the Board,

President and Chief Executive Officer

 
Table of Contents  
 

 

Letter from the Chairman, President and Chief Executive Officer  
   
Proxy Statement Summary iii
   
Notice of Annual Meeting of Shareholders ix
   
Corporate Governance 1
   
The Board of Directors and Standing Committees of Directors 2
Communication to the Board 8
   
Proposal No. 1 Election of Directors 9
Information about Nominees for Director 11
   
Directors’ Compensation 14
   
Stock Ownership Information 18
   
Proposal No. 2 Ratification of Selection of Principal Independent Public Accountants 20
     
Audit Committee Report 21
   
Fees Paid to KPMG LLP 22
   
Proposal No. 3 Advisory Approval of Executive Compensation 23
     
Compensation Committee Report 23
   
Compensation Discussion and Analysis 24
   
Executive Compensation Tables 42
Summary Compensation Table 42
Grants of Plan-Based Awards in Fiscal 2019 45
Outstanding Equity Awards at Fiscal Year End 2019 46
2019 Option Exercises and Stock Vested 48
2019 Nonqualified Deferred Compensation 48
   
Employment Contracts and Change-in-Control Arrangements 49
   
Post-Termination or Change-in-Control Payments 50
   
Equity Compensation Plan Information 53
   
CEO Pay Ratio 53
   
Proposal No. 4 Proposal to Amend and Restate the Halliburton Company Stock and Incentive Plan 54
     
General Information 60
   
Additional Information 61
   
Other Matters 62
   
Appendix A   A-1

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      ii

 

Proxy Statement Summary

 

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. Page references are supplied to help you find further information in this proxy statement.

 

Eligibility to Vote (page 60)

 

You can vote if you were a shareholder of record at the close of business on March 20, 2020.

 

How to Cast Your Vote (page 60)

 

     
You can vote by any of the following methods:
                 
         
  INTERNET
www.proxyvote.com
until 11:59 p.m. Eastern Daylight Time on May 18, 2020
  BY TELEPHONE
until 11:59 p.m.
Eastern Daylight Time on May 18, 2020
  BY MAIL
Completing, signing, and returning your proxy or voting instruction card before May 19, 2020
  IN PERSON
at the annual meeting: If you are a shareholder of record, we have a record of your ownership. If your shares are held in the name of a broker, nominee, or other intermediary, you must bring a proxy issued in your name from the record holder to the meeting. Attendees will be asked to present valid picture identification, such as a driver’s license or passport.
 

 

Selection of Principal Independent Public Accountants (page 20)

 

During the year ended December 31, 2019, KPMG LLP served as our principal independent public accountants and provided certain tax and other services to us. Representatives of KPMG are expected to be present at the Annual Meeting and be available to respond to appropriate questions from shareholders.

 

As a matter of good corporate governance, we are requesting our shareholders to ratify the selection of KPMG LLP as our principal independent public accountants for the year ending December 31, 2020.


 

 

 

  HALLIBURTON  |  2020 Proxy Statement      iii

 

Voting Matters (pages 9, 20, 23, and 54)

 

  Board Vote
Recommendation
  Page Reference
(for more detail)
 
Election of Directors FOR Each Nominee   9  
Ratification of Selection of Principal Independent Public Accountants FOR   20  
Advisory Approval of Executive Compensation FOR   23  
Proposal to Amend and Restate the Halliburton Company Stock and Incentive Plan FOR   54  

 

Governance Highlights

 

Our Board has long maintained a formal statement of its responsibilities, our Corporate Governance Guidelines, to ensure effective governance in all areas of its responsibilities. Our governance practices, as specified in those Guidelines and our By-laws, Code of Business Conduct, and policies and business practices, include the following:

 

Size of Board 10   Supermajority Voting Threshold for Mergers No
Number of Independent Directors 9   Proxy Access Yes
Average Age of Directors 66   Shareholder Action by Written Consent Yes
Average Director Tenure 6.8   Shareholder Called Special Meetings Yes
Annual Election of Directors Yes   Poison Pill No
Mandatory Retirement Age 72   Code of Conduct for Directors, Officers, and Employees Yes
Women and Minority Board Members 50%   Stock Ownership Guidelines for Directors/Officers Yes
Majority Voting in Director Elections Yes   Anti-Hedging and Pledging Policy Yes
Lead Independent Director Yes   Compensation Recoupment Policy Yes
Related Persons Transactions Policy Yes   Corporate Political Contributions No

 

Success for Halliburton and our shareholders and customers results from adherence to our core values.

 


 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      iv

 

 

Board Nominees (pages 11-13)

 

     

Abdulaziz F. Al Khayyal
Retired Senior
Vice President,
Industrial Relations,
Saudi Aramco

 

Age: 66

 

Director since 2014
INDEPENDENT

 

Committees:

 

William E. Albrecht
Non-Executive Chairman
of the Board of California
Resources Corporation

 

Age: 68

 

Director since 2016
INDEPENDENT

 

Committees:

 

M. Katherine Banks
Vice Chancellor of
Engineering and National
Laboratories, The Texas
A&M University System

 

Age: 60

 

Director since 2019
INDEPENDENT

 

Committees:

 

Alan M. Bennett
Retired President
and CEO of H&R
Block, Inc.

 

Age: 69

 

Director since 2006
INDEPENDENT

 

Committees:

             
       

Milton Carroll
Executive Chairman of
the Board of CenterPoint
Energy, Inc.

 

Age: 69

 

Director since 2006

 

INDEPENDENT

 

Committees:

 

Nance K. Dicciani
Non-Executive Chair
of the Board
of AgroFresh Solutions, Inc.

 

Age: 72

 

Director since 2009

 

INDEPENDENT

 

Committees:

 

Murry S. Gerber
Retired Executive
Chairman of the Board
of EQT Corporation
Age: 67

 

Director since 2012

 

INDEPENDENT

 

Committees:

   
             
       

Patricia Hemingway
Hall
Retired President and
Chief Executive Officer
of Health Care Services
Corporation

 

Age: 67

 

Director since 2019

 

INDEPENDENT

 

Committees:

 

Robert A. Malone
Executive Chairman,
President and Chief
Executive Officer of First
Sonora Bancshares, Inc.

 

Age: 68
Director since 2009

 

INDEPENDENT

 

Committees:

 

Jeffrey A. Miller
Chairman of the Board,
President and CEO
of Halliburton

 

Age: 56

 

Director since 2014

 

NOT INDEPENDENT

 

Committees:
None

   

 

 

 

 Chair Audit  Compensation  Health, Safety and Environment  Nominating and Corporate Governance



 

 

 

  HALLIBURTON  |  2020 Proxy Statement      v

 

2019 Performance Highlights

 

     
         

We generated $22.4 billion of total company revenue, with improvements across all of our international regions. Our international business outgrew the international rig count for the second year in a row.

 

We achieved exceptional safety and service quality performance during 2019. Our total recordable incident rate and non-productive time improved over 20%, both historical bests across our business. This is a result of our employees’ continued commitment to safety and process execution.

 

 
         

We quickly adapted to market conditions by reducing our capital expenditures by 24% to approximately $1.5 billion in 2019. These capital expenditures were predominantly made in our Sperry Drilling, Production Enhancement, Artificial Lift, Wireline and Perforating, and Production Solutions product service lines.

 

During 2019, we generated $2.4 billion of operating cash flow and had $1.5 billion of capital expenditures, resulting in over $900 million of free cash flow. This demonstrates our ability to generate consistent free cash flow in different business environments. We additionally returned over $700 million to shareholders through dividends and share repurchases.

 

* Management believes free cash flow, defined as “operating cash flow” less “capital expenditures”, is an important liquidity measure and useful to investors and management for assessing the business’s ability to generate cash.


 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      vi

 

Named Executive Officers (page 25)

 

For 2019, our NEOs were:

 

Name   Age   Occupation
Jeffrey A. Miller   56   Chairman, President and Chief Executive Officer
Lance Loeffler   43   Executive Vice President and Chief Financial Officer
Eric J. Carre   54   Executive Vice President – Global Business Lines
Joe D. Rainey   63   President – Eastern Hemisphere
Mark J. Richard   58   President – Western Hemisphere

 

Executive Compensation (pages 23-53)

 

Objectives (page 29)

 

Our executive compensation program is composed of base salary, a short-term incentive, and long-term incentives and is designed to achieve the following objectives:

 

Provide a clear and direct relationship between executive pay and our performance on both a short-term and long-term basis;
Target market competitive pay levels with a comparator peer group;
Emphasize operating performance drivers;
Link executive pay to measures that drive shareholder value;
Support our business strategies; and
Maximize the return on our human resource investment.

 

2019 Shareholder Engagement

 

Halliburton has always maintained open communications with the shareholder community. Seeking feedback from our shareholders on a regular basis is a critical part of our approach to managing our executive compensation program. Our ongoing, open dialogue with our shareholders helps ensure that the Board and management have a regular pulse on the views of our shareholders. These communications provide us important perspectives on adjustments to improve and better explain our program.

 

During 2019, members of our senior management team participated in over 100 shareholder meetings and 19 conferences. As is our practice, in the fall of 2019, we also engaged in targeted outreach with numerous shareholders. During this fall outreach, we contacted shareholders representing more than 50% of our outstanding common stock and met with many of those shareholders, who collectively hold 31% of our outstanding common stock. We previewed changes to our compensation program under consideration by our Compensation Committee and solicited their feedback on our compensation program, as well as our company strategy and performance, corporate governance, sustainability, and other topics. Our newly-appointed Compensation Committee Chair participated in this outreach effort. Based on the most recent feedback from shareholders, we made several significant modifications to our compensation program for the 2020 plan year.


 

 

  HALLIBURTON  |  2020 Proxy Statement      vii

 

What we heard   What we did
(during our ongoing 2019 investor discussions)   (effective for the 2020 plan year)
Shareholders seek increased emphasis on free cash flow and capital discipline  

Replaced CVA with two distinct metrics that focus on our ability to manage cash and generate earnings, given our capital intensive, cyclically driven business. Short-term incentives will be based on the following independent metrics and weightings:

  75% NOPAT

  25% Asset Turns

Shareholders support the use of three-year relative ROCE for long-term incentives, but would like an additional performance component directly linked to stock price Introduced a relative TSR modifier that compares performance against the Oilfield Services Index (OSX); modifier imposes an award penalty for bottom quartile performance and provides an incentive for top quartile performance
Shareholders want more emphasis on performance-based long-term incentives Changed the mix of long-term incentive vehicles for NEOs (as illustrated below) to 70% performance units and 30% restricted stock; stock options have been eliminated
Shareholders expressed concern about PUP awards being paid 100% in cash Rebalanced the long-term incentive pay mix so that 65% is delivered in equity; changed PUP cycle to issue awards 50% in stock and 50% in cash (contingent on three-year performance period)

 

 

Increased Emphasis on Long-Term Performance-Based Equity

 

Historic Long-Term Incentive Mix New Long-Term Incentive Mix
   


 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      viii

 

   
 

 

Notice of Annual Meeting of Shareholders to be held May 19, 2020

 

April 7, 2020

 

Halliburton Company, a Delaware corporation, will hold its Annual Meeting of Shareholders on Tuesday, May 19, 2020, at 9:00 a.m. Central Daylight Time at its corporate office at 3000 N. Sam Houston Parkway East, Life Center - Auditorium, Houston, Texas 77032.

 

At the meeting, the shareholders will be asked to consider and act upon the matters discussed in the attached proxy statement as follows:

 

1.To elect the ten nominees named in the attached proxy statement as Directors to serve for the ensuing year and until their successors shall be elected and shall qualify.

 

2.To consider and act upon a proposal to ratify the appointment of KPMG LLP as principal independent public accountants to examine the financial statements and books and records of Halliburton for the year ending December 31, 2020.

 

3.To consider and act upon advisory approval of our executive compensation.

 

4.To consider and act upon a proposal to amend and restate the Halliburton Company Stock and Incentive Plan.

 

5.To transact any other business that properly comes before the meeting or any adjournment or adjournments of the meeting.

 

These items are fully described in the following pages, which are made a part of this Notice. The Board of Directors has set the close of business on March 20, 2020, as the record date for the determination of shareholders entitled to notice of and to vote at the meeting and at any adjournment of the meeting.

 

Internet Availability of Proxy Materials

 

On or about April 7, 2020, we mailed our shareholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our 2020 proxy statement and 2019 Annual Report on Form 10-K and how to vote online. The notice also provides instruction on how you can request a paper copy of these documents if you desire. If you received your Annual Meeting materials via e-mail, the e-mail contains voting instructions and links to the proxy statement and Form 10-K on the Internet.

 

If You Plan to Attend

 

Attendance at the meeting is limited to shareholders and one guest each. Admission will be on a first-come, first-served basis. Registration will begin at 8:00 a.m., and the meeting will begin at 9:00 a.m. Each shareholder holding stock in a brokerage account will need to bring a copy of a brokerage statement reflecting stock ownership as of the record date. Please note that you will be asked to present valid picture identification, such as a driver’s license or passport.

 

Potential Impact of Coronavirus (COVID-19) Pandemic on Meeting

 

We intend to hold our Annual Meeting in person. However, developments regarding the coronavirus (COVID-19) pandemic may change this. We are sensitive to the public health concerns our shareholders may have and the protocols that federal, state, and local governments may impose. In the event it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. We may also need to change the date or the time of the meeting. Please monitor our website at www.halliburton.com for updated information. If you are planning to attend our meeting, please check the website one week prior to the meeting date. As always, we encourage you to vote your shares prior to the Annual Meeting.

 

It is important that you retain a copy of the control number found on the proxy card, voting instruction form, or Notice of Internet Availability of Proxy Materials, as such number will be required in order for shareholders to gain access to any meeting held solely by means of remote communication.

 

By order of the Board of Directors,

 

Robb L. Voyles

Executive Vice President, Secretary and Chief Legal Officer

 

You are urged to vote your shares as promptly as possible by following the voting instructions in the Notice of Internet Availability of Proxy Materials.

 

Corporate Governance

 

Corporate Governance Guidelines and Committee Charters

 

Our Board has long maintained a formal statement of its responsibilities and guidelines to ensure effective governance in all areas of its responsibilities. Our Corporate Governance Guidelines are available on our website at www.halliburton.com by clicking on the tab “About Us”, and then the “Corporate Governance” link. The guidelines are reviewed periodically and revised as appropriate to reflect the dynamic and evolving processes relating to corporate governance, including the operation of the Board.

 

In order for our shareholders to understand how the Board conducts its affairs in all areas of its responsibility, the full text of the charters of our Audit; Compensation; Health, Safety and Environment; and Nominating and Corporate Governance Committees are also available on our website.

 

Except to the extent expressly stated otherwise, information contained on or accessible from our website or any other website is not incorporated by reference into and should not be considered part of this proxy statement.

 

Code of Business Conduct

 

Our Code of Business Conduct, which applies to all of our employees and Directors and serves as the code of ethics for our principal executive officer, principal financial officer, principal accounting officer or controller, and other persons performing similar functions, is available on our website. Any waivers to our Code of Business Conduct for our Directors or executive officers can only be made by our Audit Committee. There were no waivers of the Code of Business Conduct in 2019.

 

Related Persons Transactions Policy

 

Our Board has adopted a written policy governing related persons transactions as part of the Board’s commitment to good governance and independent oversight. The policy covers transactions involving any of our Directors, executive officers, nominees for Director, greater than 5% shareholders, or any of their immediate family members, among others.

 

The types of transactions covered by this policy are transactions, arrangements, or relationships, or any series of similar transactions, arrangements, or relationships, including any indebtedness or guarantee of indebtedness, in which (1) we or any of our subsidiaries were or will be a participant, (2) the aggregate amount involved exceeds $120,000 in any calendar year, and (3) any related person had, has, or will have a direct or indirect material interest.

 

Under the policy, we generally only enter into or ratify related persons transactions when the Board determines such transactions are in our best interests and the best interests of our shareholders. In determining whether to approve or ratify a related persons transaction, the Board will consider the following factors and other factors it deems appropriate:

 

whether the related persons transaction is on terms comparable to terms generally available with an unaffiliated third party under the same or similar circumstances;

 

the benefits of the transaction to us;

 

the extent of the related person’s interest in the transaction; and

 

whether there are alternative sources for the subject matter of the transaction.

 

 

  HALLIBURTON  |  2020 Proxy Statement      1

 

The Board of Directors and Standing Committees of Directors

 

The Board has standing Audit; Compensation; Health, Safety and Environment; and Nominating and Corporate Governance Committees. Each standing Committee is comprised of Directors who, in the business judgment of the Board, are independent, after considering all relevant facts and circumstances, including the independence standards set forth in our Corporate Governance Guidelines.

 

Our independence standards meet New York Stock Exchange, or NYSE, independence requirements. Our independence standards and compliance with those standards are periodically reviewed by the Nominating and Corporate Governance Committee. There were no relevant transactions, arrangements, or relationships not disclosed in this proxy statement that were considered by the Board in making its determination as to the independence of the Directors.

 

Board Leadership

 

Our Board believes that it is important to maintain flexibility to determine the appropriate leadership of the Board and whether the roles of Chairman and Chief Executive Officer should be combined or separate. Our Corporate Governance Guidelines provide that the Board consider annually whether it is appropriate for the same individual to fill both of those roles. When making that determination, the Board considers issues such as industry and financial expertise, in-depth knowledge of Halliburton and its business, and succession planning. In 2019, the Board decided that a combined leadership role would currently best serve the needs of the Company and its shareholders. The Board believes that Jeffrey A. Miller, our Chairman, President and Chief Executive Officer, with his industry expertise, financial expertise, and in-depth knowledge of Halliburton and its business, is the correct person to fill both roles. The Board also believes that Mr. Miller is best suited to lead the Board’s discussion and evaluation of the Company’s business, financial, and health, safety, environment and sustainability strategy and performance. With the exception of Mr. Miller, the Board is composed of independent Directors.

 

Robert A. Malone is our Lead Independent Director. The Lead Independent Director’s role and responsibilities are set forth in the Lead Independent Director Charter adopted by the Board. These include the following:

 

Robert A.
Malone
LEAD INDEPENDENT
DIRECTOR

  liaises between the independent Directors and the Chairman advises management on and approves information sent to the Board
  approves agendas for Board meetings approves schedules for meetings of the Board
  presides over meetings and executive sessions of the independent Directors authorizes the retention of outside advisors and consultants who report directly to the Board
  leads the Board’s annual evaluation of the CEO   schedules meetings of the independent Directors as appropriate

 

Our Lead Independent Director Charter is available on our website at www.halliburton.com.

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      2

 

Board and Committee Risk Oversight

 

We have implemented an Enterprise Risk Management (ERM) program to identify and analyze enterprise-level risks and their potential impact on our business. The objectives of our ERM program are to:

 

increase the probability of achieving higher returns on capital and reducing cash flow volatility by identifying:

 

 current and developing risks; and

 

 significant controls and potential gaps related to identified risks;

 

ensure that our key risks are being effectively managed; and

 

assess whether our compensation policies are reasonably likely to have a materially adverse effect on us.

 

Our internal processes to identify and manage risks include our Code of Business Conduct, extensive policies and business practices, our financial controls, Internal Assurance Services audits of our internal controls and health, safety, environment, and sustainability, the activities of the Ethics & Compliance group of the Law Department, and our ERM program.

 

The Board provides oversight of the ERM program. The Audit Committee receives an annual ERM report on risk assessment and risk management in which risks are identified and assigned a significance rating based on potential consequences of the risk and the likelihood of occurrence.

 

Our Chief Executive Officer, who is primarily responsible for managing our day-to-day business, is ultimately responsible to the Board for all risk categories. Our executive officers are assigned responsibility for the various risk categories. The Board has delegated to its Committees the responsibility to monitor certain risks and receive regular updates on those risks. Certain risks monitored by each Committee are shown below.

 

Board of Directors
             
     
             
             
Audit Committee   Compensation Committee   Nominating and Corporate
Governance Committee
  Health, Safety and
Environment Committee
             
             

  Financial reporting and internal controls

 

  Cybersecurity

 

  Compliance with anti-corruption laws and regulations

 

 

  Evolving competitive landscape

 

  Compensation-related risk

 

 

  Corporate governance

 

  Board and management succession

 

 

  Catastrophic events from wellsite activities

 

  Compliance with radioactive/explosives regulations

 

 

Independent Committees

 

The Board believes that it has a strong governance structure in place to ensure independent oversight on behalf of all shareholders. All standing Committees of the Board are comprised solely of independent Directors. We have established processes for the effective oversight of critical issues entrusted to independent Directors, such as:

 

the integrity of our financial statements;
CEO and senior management compensation;
CEO and senior management succession planning;
the election of our Lead Independent Director;
membership of our independent Committees;
Board, Committee, and Director evaluations; and
nominations of Directors.

 

 

  HALLIBURTON  |  2020 Proxy Statement      3

 

Members of the Committees of Our Board of Directors

 

Audit Committee Compensation Committee Health, Safety and
Environment Committee
Nominating and Corporate
Governance Committee
M. Katherine Banks William E. Albrecht Abdulaziz F. Al Khayyal Abdulaziz F. Al Khayyal
Alan M. Bennett* Milton Carroll William E. Albrecht Alan M. Bennett
Nance K. Dicciani Murry S. Gerber* M. Katherine Banks Milton Carroll*
Murry S. Gerber Patricia Hemingway Hall Nance K. Dicciani* Patricia Hemingway Hall
  Robert A. Malone   Robert A. Malone

 

* Chair

 

Audit Committee

 

2019 Meetings   Committee Members   Responsibilities
7   M. Katherine Banks
Alan M. Bennett (Chair)
Nance K. Dicciani
Murry S. Gerber
 

   Recommending to the Board the appointment of the independent public accountants to audit our financial statements (the principal independent public accountants);

 

   Together with the Board, being responsible for the appointment, compensation, retention, oversight of the work, and evaluation of the principal independent public accountants;

 

   Reviewing the scope of the principal independent public accountants’ examination;

 

   Reviewing the scope of activities of Internal Assurance Services and the Ethics & Compliance group;

 

   Reviewing our financial statements and our significant financial policies and accounting systems and controls; and

 

   Approving the services to be performed by the principal independent public accountants.

 

The Board has determined that all members of the Audit Committee are independent under our Corporate Governance Guidelines. The Board has determined that Alan M. Bennett, Nance K. Dicciani, and Murry S. Gerber are “audit committee financial experts” as defined by the Securities and Exchange Commission, or SEC. A copy of the Audit Committee Charter is available on our website at www.halliburton.com.

 

Compensation Committee

 

2019 Meetings   Committee Members   Responsibilities
3   William E. Albrecht
Milton Carroll
Murry S. Gerber (Chair)
Patricia Hemingway Hall
Robert A. Malone
 

   Developing an overall executive compensation philosophy and strategy;

 

   Overseeing the effectiveness of our compensation program in attracting, retaining, and motivating key employees;

 

   Utilizing our compensation program to reinforce business strategies and objectives to enhance shareholder value;

 

   Administering our compensation program, including our incentive plans, in a fair and equitable manner consistent with established policies and guidelines while monitoring risks associated with compensation plans; and

 

   Performing additional roles and activities with respect to executive compensation as described under Compensation Discussion and Analysis.

 

A copy of the Compensation Committee Charter is available on our website at www.halliburton.com.

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      4

 

Health, Safety and Environment Committee

 

2019 Meetings   Committee Members   Responsibilities
4   Abdulaziz F. Al Khayyal
William E. Albrecht
M. Katherine Banks
Nance K. Dicciani (Chair)
 

   Reviewing and assessing our health, safety, environmental, and sustainable development policies and practices;

 

   Overseeing the communication, implementation, and compliance with these policies, as well as applicable goals and legal requirements; and

 

   Assisting the Board with oversight of our risk-management processes relating to health, safety, the environment, and sustainability.

 

A copy of our Health, Safety and Environment Committee Charter is available on our website at www.halliburton.com.

 

Nominating and Corporate Governance Committee

 

2019 Meetings   Committee Members   Responsibilities
4   Abdulaziz F. Al Khayyal
Alan M. Bennett
Milton Carroll (Chair)
Patricia Hemingway Hall
Robert A. Malone
 

   Reviewing and recommending revisions to our Corporate Governance Guidelines;

 

   Overseeing our Director self-evaluation process and performance reviews;

 

   Identifying and screening candidates for Board and Committee membership;

 

   Reviewing the overall composition profile of the Board for the appropriate mix of skills, characteristics, experience, and expertise;

 

   Reviewing and making recommendations on Director compensation; and

 

   Reviewing the management succession planning process.

 

A copy of our Nominating and Corporate Governance Committee Charter is available on our website at www.halliburton.com.

 

Board Attendance

 

During 2019, the Board held 4 meetings and met in Executive Session, without management present, on 4 occasions.

 

Committee meetings were held as follows:

 

Audit Committee 7
Compensation Committee 3
Health, Safety and Environment Committee 4
Nominating and Corporate Governance Committee 4

 

Nine members of the Board attended 100% of the total number of meetings of the Board and the Committees on which he or she served during 2019 and all members of the Board attended at least 94% of those meetings.

 

All of our Directors attended the 2019 Annual Meeting, as required by our Corporate Governance Guidelines.

 

 

  HALLIBURTON  |  2020 Proxy Statement      5

 

Evaluation of Board and Director Performance

 

The Board believes that a rigorous evaluation process is an essential component of strong corporate governance practices. The Nominating and Corporate Governance Committee annually conducts a three-part evaluation process to evaluate Board effectiveness and aid in succession planning. This process consists of a full Board evaluation, Committee evaluations, and individual Director evaluations. The evaluations, which are distributed and obtained through a third party platform, seek feedback on Board and Committee performance, processes, effectiveness, and opportunities for improvement. The results of the evaluations are reviewed and discussed with the Board, its Committees, and each individual Director.

 

As part of the annual process, each Director also completes a skill set survey. The Board uses the survey responses to evaluate the experience and expertise of existing Directors and to identify the skills and characteristics of future Director candidates to achieve and maintain an optimum mix of skills and characteristics.

 

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      6

 

Shareholder Nominations of Directors

 

Our By-laws provide that shareholders may nominate persons for election to the Board at a meeting of shareholders.

 

Shareholder nominations require written notice to the Corporate Secretary at the address of our principal executive offices set forth on page 60 of this proxy statement, and for the Annual Meeting of Shareholders in 2021, must be received not less than 90 days nor more than 120 days prior to the anniversary date of the 2020 Annual Meeting of Shareholders, or no later than February 18, 2021, and no earlier than January 19, 2021. The shareholder notice must contain, among other things, certain information relating to the shareholder and the proposed nominee as described in our By-laws. In addition, the proposed nominee may be required to furnish other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as a Director.

 

Our By-laws also provide for proxy access for shareholder nominations of directors. The provision permits up to 20 shareholders owning 3% or more of our outstanding common stock continuously for at least three years to nominate and include in our proxy materials for a meeting of shareholders up to two directors or 20% of the Board, whichever is greater, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in the By-laws.

 

Our By-laws further provide that if a shareholder owning at least 1% of our issued and outstanding common stock continuously for at least one year as of the date the written notice of the nomination is submitted to us proposes a nominee not submitted under the proxy access provision, our Corporate Secretary will (i) obtain from such nominee any additional relevant information the nominee wishes to provide in consideration of his or her nomination, (ii) report on each such nominee to the Nominating and Corporate Governance Committee, and (iii) facilitate having each such nominee meet with the Nominating and Corporate Governance Committee as the Committee deems appropriate.

 

Qualifications of Directors

 

Candidates nominated for election or reelection to the Board should possess the following qualifications:

 

Personal characteristics:

 

 high personal and professional ethics, integrity, and values;
 an inquiring and independent mind; and
 practical wisdom and mature judgment;

 

Broad training and experience at the policy-making level in business, government, education, or technology;
Expertise that is useful to us and complementary to the background and experience of other Board members, so that an optimum balance of experience and expertise of members of the Board can be achieved and maintained;
Willingness to devote the required amount of time to carry out the duties and responsibilities of Board membership;
Commitment to serve on the Board for several years to develop knowledge about our business;
Willingness to represent the best interests of all of our shareholders and objectively evaluate management performance; and
Involvement only in activities or interests that do not create a conflict with the Director’s responsibilities to us and our shareholders.

 

The Nominating and Corporate Governance Committee is responsible for assessing the appropriate mix of skills and characteristics required of Board members and periodically reviews and updates the criteria. In selecting Director nominees, the Board considers the personal characteristics, experience, and other criteria as set forth in our Corporate Governance Guidelines, as well as our specific needs and the needs of our Board at the time.

 

We value all types of diversity, including diversity of our Board. In evaluating the overall qualifications of a potential nominee, the Committee and Board take into account overall Board diversity in personal background, race, gender, age, and nationality.

 

Process for the Selection of New Directors

 

The Board is responsible for filling vacancies on the Board and ensuring regular refreshment of the Board. Our Corporate Governance Guidelines provide that each non-management Director shall retire from the Board immediately prior to the annual meeting of shareholders following his or her seventy-second (72nd) birthday. The Board has delegated to the Nominating and Corporate Governance Committee the duty of selecting and recommending candidates to the Board for approval. The Nominating and Corporate Governance Committee will consider candidates for Board membership recommended by Board members, our management, and shareholders. The Committee may also retain an independent executive search firm to identify candidates for consideration and to gather additional information about the candidate’s background, experience, and reputation. A shareholder who wishes to recommend a candidate should notify our Corporate Secretary.

 

 

  HALLIBURTON  |  2020 Proxy Statement      7

 

The Nominating and Corporate Governance Committee, in consultation with the Board, will determine the specific criteria for a new Director candidate. After the Nominating and Corporate Governance Committee identifies a candidate, the Committee will determine the appropriate method to evaluate the candidate. The preliminary determination regarding a candidate is based on the likelihood that the candidate will meet the Board membership criteria listed in our Corporate Governance Guidelines. The Committee will determine, after discussion with the Chairman of the Board and other Board members, whether a candidate should continue to be considered. If a candidate warrants additional consideration, the Committee and others, as appropriate, will interview the candidate. Once the evaluation and interviews are completed, the Committee will recommend to the Board whether the candidate should be appointed to the Board or proposed for election by shareholders and the Board will act on such recommendation.

 

 

Communication to the Board

 

To foster better communication from our shareholders and other interested persons, we maintain a process for shareholders and others to communicate with the Audit Committee and the Board. The process has been approved by both the Audit Committee and the Board and meets the requirements of the NYSE and the SEC. The methods of communication with the Board include telephone, mail, and e-mail.

 

  888.312.2692
or
770.613.6348
  Board of Directors
c/o Director of Business Conduct
Halliburton Company
P.O. Box 42806
Houston, Texas 77242-2806
USA
    BoardofDirectors@halliburton.com

 

Our Director of Business Conduct, an employee, reviews all communications directed to the Audit Committee and the Board. The Chair of the Audit Committee is promptly notified of any substantive communication involving accounting, internal accounting controls, or auditing matters. The Lead Independent Director is promptly notified of any other significant communication, and any Board-related matters which are addressed to a named Director are promptly sent to that Director. Copies of all communications are available for review by any Director. Some communications, such as advertisements, business solicitations, junk mail, resumes, and any communication that is overly hostile, threatening, or illegal, will not be forwarded to the Board. Communications may be made anonymously or confidentially. Confidentiality shall be maintained unless disclosure is:

 

required or advisable in connection with any governmental investigation or report;
in the interests of Halliburton, consistent with the goals of our Code of Business Conduct; or
required or advisable in our legal defense of a matter.

 

Information regarding these methods of communication is also on our website at www.halliburton.com.

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      8

 

Proposal No. 1    Election of Directors

 

In considering whether a current Director should be nominated for election as a Director, the Nominating and Corporate Governance Committee and the Board considered, among other matters, the expertise and experience of the Director, the annual performance evaluation of the Director, the Director’s attendance at, preparation for, and engagement in Board and Committee meetings, the diversity of the Board, the tenure of the Director, and the overall distribution of tenure among Directors to ensure sufficient experience with the Company’s operations, performance, and technology and the cycles of the industry. A summary of the qualifications and experience of our non-management Directors is provided under Information about Nominees for Director.

 

AFTER CONSULTATION WITH THE NOMINATING AND CORPORATE GOVERNANCE COMMITTEE, THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE DIRECTOR NOMINEES LISTED UNDER INFORMATION ABOUT NOMINEES FOR DIRECTOR.

 

The ten nominees are all current Directors. If any nominee is unwilling or unable to serve, favorable and uninstructed proxies will be voted for a substitute nominee designated by the Board. If a suitable substitute is not available, the Board will reduce the number of Directors to be elected. Each nominee has indicated approval of his or her nomination and his or her willingness to serve if elected. The Directors elected will serve for the ensuing year and until their successors are elected and qualify.

 

Our Corporate Governance Guidelines provide that each non-management Director shall retire from the Board immediately prior to the annual meeting of shareholders following his or her seventy-second (72nd) birthday. Though she has reached age 72, the Board has requested that Nance K. Dicciani, Chair of the Board’s Health, Safety and Environment Committee and a long-term member of the Audit Committee, stand for reelection. Given the several recent additions to our Board and the Board’s tenure balance, the Board believes that it is in the best interest of the Company and its shareholders to retain Ms. Dicciani’s intimate knowledge of the Company, its health, safety, environment, and sustainability matters, and its financial statements and significant accounting systems and controls.

 

 

  HALLIBURTON  |  2020 Proxy Statement      9

 

NON-MANAGEMENT DIRECTOR QUALIFICATIONS AND EXPERIENCE

 

 

                  
TENURE                           
Year Elected  2014  2016  2019  2006  2006  2009  2012  2019  2009
Mandatory Retirement  2026  2024  2032  2023  2023  2020*  2025  2024  2024
                            
GENERAL                           
Independence                 
Diversity                      
Board or Board Committee Leadership                 
Public Company Experience                 
Private Company Experience                   
Not-for-Profit Experience                 
Government Experience                      
Academia                       
Community Leadership/Philanthropic                   
                            
DECISION-MAKING EXPERIENCE AT EXECUTIVE LEVEL OR OTHER SUBSTANTIAL EXPERIENCE                           
Energy Industry  A  A  B  A  A  A  A     A
Accounting/Finance  A  A  A  A     A  A  A  A
Technology/Engineering  A  A  A  A  A  A  A     A
Legal/Compliance  A  A  A  A     A  A  A  A
Mergers & Acquisitions  A  A     A  B  A  A  A  A
Human Resources/Compensation  A  A  A  A  A  A  A  A  A
Strategic Planning  A  A  A  A  A  A  A  A  A
International Business  A  A  A  A  A  A  A  A  A
Health, Safety & Environment and Sustainability  A  A  A  A     A  A     A
Public Policy  A  A  A  A  B  A  A  A  A
Corporate Governance  A  A  B  A  A  A  A  A  A

 

LEGEND
A Decision-making experience at Executive or Board level
B Other Substantial Experience

 

* As discussed above, the Board requested that Ms. Dicciani continue to serve beyond her retirement date.

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      10

 

Information about Nominees for Director

 

ABDULAZIZ F. AL KHAYYAL

 

Age 66

 

Director
since: 2014

 

INDEPENDENT

 

  

Professional Experience:

•  Retired Senior Vice President of Industrial Relations of Saudi Arabian Oil Company (Saudi Aramco) (the world’s largest producer of crude oil)

•  Senior Vice President of Industrial Relations of Saudi Aramco from 2007 to 2014 and served as a director of Saudi Aramco from 2004 to 2014

 

 

Skills and Expertise:

The Board determined that Mr. Al Khayyal should be nominated for election as a Director because of his exceptional knowledge of the energy industry, including significant international industry experience and executive experience with the world’s largest producer of crude oil.

 

 

Other Company Directorships:

•  Marathon Petroleum Corporation (since 2016)

Former Directorships in the Past 5 Years:

•  None


 

 

WILLIAM E. ALBRECHT

 

Age 68

 

Director
since: 2016

 

INDEPENDENT

 

  

Professional Experience:

•  Non-Executive Chairman of the Board of California Resources Corporation (a publicly traded oil and natural gas exploration and production company) since 2016 and Executive Chairman of the Board from 2014 to 2016

•  Vice President of Occidental Petroleum Corporation from 2008 to 2014

•  President of Oxy Oil & Gas, Americas from 2012 to 2014

 

 

Skills and Expertise:

The Board determined that Mr. Albrecht should be nominated for election as a Director because of his extensive experience in the domestic oil and natural gas industry and executive experience with a public oil and gas exploration and production company and an international offshore drilling company.

 

 

Other Company Directorships:

•  Lead Independent Director of Valaris plc (since 2019)

Former Directorships in the Past 5 Years:

•  Chairman of the Board and director of Rowan Companies plc (2015-2019)


 

 

M. KATHERINE BANKS

 

Age 60

 

Director
since: 2019

 

INDEPENDENT

 

  

Professional Experience:

•  Vice Chancellor of Engineering and National Laboratories for The Texas A&M University System and Dean of the College of Engineering at Texas A&M University (a public research university) since 2012

 

 

Skills and Expertise:

The Board determined that Dr. Banks should be nominated for election as a Director because of her extensive experience in engineering and technology and executive experience in leading one of the largest engineering schools in the country and overseeing the engineering, academic, and research programs at seven universities.

 

 

Other Company Directorships:

•  None

Former Directorships in the Past 5 Years:

•  None


 

 

ALAN M. BENNETT

 

Age 69

 

Director
since: 2006 

 

INDEPENDENT

 

  

Professional Experience:

•  Retired President and Chief Executive Officer of H&R Block, Inc. (a tax and financial services provider)

•  President and Chief Executive Officer of H&R Block, Inc. from 2010 to 2011

•  Interim Chief Executive Officer of H&R Block, Inc. from 2007 to 2008

•  Senior Vice President and Chief Financial Officer of Aetna, Inc. from 2001 to 2007

 

 

Skills and Expertise:

The Board determined that Mr. Bennett should be nominated for election as a Director because of his business and financial expertise, ranging from internal audit to corporate controller to chief financial officer of a large, public company. He is a certified public accountant and also has chief executive officer experience.

 

 

Other Company Directorships:

•  Fluor Corporation (since 2011)

•  TJX Companies, Inc. (since 2007)

Former Directorships in the Past 5 Years:

•  None


 

 

 

  HALLIBURTON  |  2020 Proxy Statement      11

 

MILTON CARROLL

 

Age 69

 

Director
since: 2006

 

INDEPENDENT

 

  

Professional Experience:

•  Executive Chairman of the Board of CenterPoint Energy, Inc. (a public utility holding company) since 2013. In that role, Mr. Carroll’s primary function is to provide leadership for the CenterPoint Board and to coordinate its activities.

•  Non-Executive Chairman of the Board of CenterPoint Energy, Inc. from 2002 to 2013

 

 

Skills and Expertise:

The Board determined that Mr. Carroll should be nominated for election as a Director because of his public company board experience, corporate governance expertise, and knowledge of the oil and gas services industry. The Board also determined that Mr. Carroll’s duties as Chairman of CenterPoint do not impede his ability to fulfill his responsibilities as a Director.

 

 

Other Company Directorships:

•  Chairman of Health Care Service Corporation (since 2002)

Former Directorships in the Past 5 Years:

•  LyondellBasell Industries (2010-2016)

•  Western Gas Holdings, LLC, the general partner of Western Gas Partners L.P. (2008-2019)

•  Western Midstream Partners, LP (February 2019-August 2019)


 

 

NANCE K. DICCIANI

 

Age 72

 

Director
since: 2009

 

INDEPENDENT

 

  

Professional Experience:

•  Non-Executive Chair of the Board of AgroFresh Solutions, Inc. (a global leader in advanced proprietary technologies for the horticultural market) since 2015

•  Interim Co-Principal Executive Officer of AgroFresh Solutions, Inc. from March 2016 to October 2016

•  President and Chief Executive Officer of Honeywell International Specialty Materials (a diversified technology and manufacturing company) from 2001 to 2008

 

 

Skills and Expertise:

The Board determined that Ms. Dicciani should be nominated for election as a Director because of her technical expertise in the chemical industry, international operations expertise, executive experience as a chief executive officer of a multi-billion dollar strategic business group of a major multinational corporation, and her intimate knowledge of Halliburton’s health, safety, environment, and sustainability matters.

 

 

Other Company Directorships:

•  LyondellBasell Industries (since 2013)

•  Linde plc (since 2018)

Former Directorships in the Past 5 Years:

•  Praxair, Inc. (2008-2018)


 

 

MURRY S. GERBER

 

Age 67

 

Director
since: 2012

 

INDEPENDENT

 

  

Professional Experience:

•  Retired Executive Chairman of the Board of EQT Corporation (a leading producer of unconventional natural gas)

•  Executive Chairman of the Board of EQT Corporation from 2010 to 2011

•  Chairman and Chief Executive Officer of EQT Corporation from 2000 to 2010

•  Chief Executive Officer and President of EQT Corporation from 1998 to 2007

 

 

Skills and Expertise:

The Board determined that Mr. Gerber should be nominated for election as a Director because of his executive

leadership skills and extensive business experience in the energy industry and domestic unconventional oil and natural gas basins.

 

 

Other Company Directorships:

•  BlackRock, Inc. (since 2000)

•  United States Steel Corporation (since 2012)

Former Directorships in the Past 5 Years:

•  None


 

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      12

 

PATRICIA HEMINGWAY HALL

 

Age 67

 

Director
since: 2019

 

INDEPENDENT

 

  

Professional Experience:

•  Retired President and Chief Executive Officer of Health Care Service Corporation (nation’s largest mutual health insurance company which operates five Blue Cross and Blue Shield Plans)

•  Chief Executive Officer of Health Care Service Corporation from 2008 to 2015

•  President of Health Care Services Corporation from 2007 to 2015

 

 

Skills and Expertise:

The Board determined that Ms. Hemingway Hall should be nominated for election as a Director because of her executive leadership skills, business experience, public company board experience, and substantial corporate governance experience.

 

 

Other Company Directorships:

•  ManpowerGroup Inc. (since 2011)

•  Cardinal Health, Inc. (since 2013)

Former Directorships in the Past 5 Years:

•  Celgene Corporation (2018-2019)


 

 

ROBERT A. MALONE

 

Age 68

 

Director
since: 2009

 

INDEPENDENT

 

  

Professional Experience:

•  Executive Chairman, President and Chief Executive Officer of First Sonora Bancshares, Inc. (a bank holding company) since 2014

•  Chairman, President and Chief Executive Officer of The First National Bank of Sonora, Texas (a community bank owned by First Sonora Bancshares, Inc.) since 2014

•  Executive Vice President of BP plc, and Chairman of the Board and President, BP America Inc. (one of the nation’s largest producers of oil and natural gas) from 2006 to 2009

 

 

Skills and Expertise:

The Board determined that Mr. Malone should be nominated for election as a Director because of his energy industry expertise and executive leadership experience, including crisis management and safety performance.

 

 

Other Company Directorships:

•  Non-Executive Chairman of the Board of Peabody Energy Corporation (since 2016) following the Company’s emergence from bankruptcy and director (since 2009)

•  Teledyne Technologies Incorporated (since 2015)

•  BP Midstream Partners GP LLC, the general partner of BP Midstream (since 2017)

Former Directorships in the Past 5 Years:

•  None


 

 

JEFFREY A. MILLER

 

Age 56

 

Director
since: 2014

 

CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER

 

  

Professional Experience:

•  Chairman of the Board, President and Chief Executive Officer of Halliburton since 2019

•  Member of the Board of Directors, and President and Chief Executive Officer of Halliburton from 2017 to 2018

•  Member of the Board of Directors and President of Halliburton from 2014 to 2017

 

 

Skills and Expertise:

The Board determined that Mr. Miller should be nominated for election as a Director because of his energy industry expertise, executive and business development experience, and in-depth knowledge of Halliburton’s global operations.

 

 

Other Company Directorships:

•  None

Former Directorships in the Past 5 Years:

•  Atwood Oceanics, Inc. (2013-2017)


 

 

 

  HALLIBURTON  |  2020 Proxy Statement      13

 

Directors’ Compensation

 

Directors’ Fees

 

All non-management Directors receive an annual retainer of $115,000, which remains unchanged since 2014. The Lead Independent Director receives an additional annual retainer of $30,000, and the chair of each Committee receives an additional annual retainer for serving as chair as follows: Audit - $25,000; Compensation - $20,000; Health, Safety and Environment -$15,000; and Nominating and Corporate Governance - $15,000. Non-management Directors are permitted to defer all or part of their fees under the Directors’ Deferred Compensation Plan.

 

Directors’ Equity Awards

 

All non-management Directors receive an annual equity award with a value of approximately $185,000, which remains unchanged since 2014, consisting of restricted stock units (RSUs), each of which represents the right to receive a share of common stock at a future date. These annual awards are made on or about the first day of August. The actual number of RSUs is determined by dividing $185,000 by the average of the closing price of our common stock on the NYSE on each business day during the month of July. The value of the award may be more or less than $185,000 based on the methodology described above for determining the number of RSUs to be awarded and the closing price of our common stock on the NYSE on the date of the award. Non-management Directors are permitted to defer all of their RSUs under the Directors’ Deferred Compensation Plan.

 

Additionally, when a non-management Director first joins the Board, he or she receives an equity award shortly thereafter of RSUs equal to a prorated value of the annual equity award of $185,000. The factor used to determine the prorated award is the number of whole months of service from the beginning of the month in which Board service begins to the following first of August divided by 12. The number of RSUs awarded is determined by dividing the prorated award amount by the average of the closing price of our common stock on the NYSE on each business day during the month immediately preceding the Director joining the Board.

 

Directors may not sell, assign, otherwise transfer, or encumber restricted shares (which were previously granted to non-management Directors) or RSUs until the restrictions are removed. Restrictions on RSUs lapse 25% a year over four years of service with the applicable underlying shares of common stock distributed annually to the non-management Director unless the Director elected to defer receipt of the shares under the Directors’ Deferred Compensation Plan. If a non-management Director has a separation of service from the Board before completing four years of service from the applicable award date, any unvested RSUs would be forfeited, unless the Board determines to accelerate vesting. Restrictions on restricted shares and RSUs lapse following termination of Board service only under specified circumstances, which include death or disability, retirement under the Director mandatory retirement policy, or early retirement after at least four years of service.

 

During the restriction period, Directors have the right to (i) vote restricted shares, but not shares underlying RSUs, and (ii) receive dividends or dividend equivalents in cash on restricted shares and RSUs that have not been deferred. RSUs that have been deferred receive dividend equivalents under the Directors’ Deferred Compensation Plan.

 

Directors’ Deferred Compensation Plan

 

The Directors’ Deferred Compensation Plan is a nonqualified deferred compensation plan and participation is completely voluntary. Under the plan, non-management Directors are permitted to defer all or part of their retainer fees and all of the shares of common stock underlying their RSUs when they vest. If a non-management Director elects to defer retainer fees under the plan, then the Director may elect to have his or her deferred fees accumulate under an interest-bearing account or translate on a quarterly basis into Halliburton common stock equivalent units (SEUs) under a stock equivalents account. If a non-management Director elects to defer receipt of the shares of common stock underlying his or her RSUs when they vest, then those shares are retained as deferred RSUs under the plan. The interest-bearing account is credited daily with interest at the prime rate of Citibank, N.A. The SEUs and deferred RSUs are credited quarterly with dividend equivalents based on the same dividend rate as Halliburton common stock and those amounts are translated into additional SEUs or RSUs, respectively.

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      14

 

After a Director’s retirement, distributions under the plan are made to the Director in a single distribution or in annual installments over a 5- or 10-year period as elected by the Director. Distributions under the interest-bearing account are made in cash, while distributions of SEUs under the stock equivalents account and deferred RSUs are made in shares of Halliburton common stock. Ms. Dicciani and Messrs. Al Khayyal, Bennett, Boyd, and Carroll have deferred retainer fees under the plan. Ms. Dicciani and Messrs. Al Khayyal, Albrecht, Bennett, Boyd, Carroll, and Grubisich have deferred RSUs under the plan.

 

Directors’ Stock Ownership Requirements

 

We have stock ownership requirements for all non-management Directors to further align their interests with our shareholders. As a result, all non-management Directors are required to own Halliburton common stock in an amount equal to or in excess of the greater of (A) the annual base retainer in effect on the date the non-management Director is first elected to the Board multiplied by five or (B) $500,000. The Nominating and Corporate Governance Committee reviews the holdings of all non-management Directors, which include restricted shares, other Halliburton common stock, and RSUs owned by the Director, at each May meeting. Each non-management Director has five years to meet the requirements, measured from the date he or she is first elected to the Board. Each non-management Director currently meets the stock ownership requirements or is on track to do so within the requisite five-year period.

 

Director Clawback Policy

 

We have a clawback policy under which we will seek, in all appropriate cases, to recoup incentive compensation paid to, awarded to, or credited for the benefit of a Director, if and to the extent that:

 

it is determined that, in connection with the performance of that Director’s duties, he or she breached his or her fiduciary duty by knowingly or recklessly engaging in a material violation of a U.S. federal or state law, or recklessly disregarded his or her duty to exercise reasonable oversight; or
the Director is named as a defendant in a law enforcement proceeding for having breached his or her fiduciary duty by knowingly or recklessly engaging in a material violation of a U.S. federal or state law, the Director disagrees with the allegations relating to the proceeding, and either (A) we initiate a review and determine that the alleged action is not indemnifiable or (B) the Director does not prevail at trial, enters into a plea arrangement, agrees to the entry of a final administrative or judicial order imposing sanctions, or otherwise admits to the violation in a legal proceeding.

 

The disinterested members of the Board and the disinterested members of the Compensation Committee and the Nominating and Corporate Governance Committee may be involved in reviewing, considering, and making determinations regarding the Director’s alleged conduct, whether recoupment is appropriate or required, and the type and amount of incentive compensation to be recouped from the Director.

 

The policy also provides that, to the extent permitted by applicable law and not previously disclosed in a filing with the SEC, we will disclose in our proxy statement the circumstances of any recoupment arising under the policy or that there has not been any recoupment pursuant to the policy for the prior calendar year. There was no recoupment under the policy in 2019.

 

Matching Gift Programs

 

To further our support for charities, Directors may participate in the Halliburton Foundation’s matching gift programs for educational institutions, not-for-profit hospitals, and medical foundations. For each eligible contribution, the Halliburton Foundation makes a contribution of 2.25 times the amount contributed by the Director, subject to approval by its Trustees. The maximum aggregate of all contributions each calendar year by a Director eligible for matching is $50,000, resulting in a maximum aggregate amount contributed annually by the Halliburton Foundation in the form of matching gifts of $112,500 for any Director who participates in the programs. Neither the Halliburton Foundation nor we have made a charitable contribution, within the preceding three years, to any charitable organization in which a Director serves as an employee or an immediate family member of the Director serves as an executive officer that exceeds in any single year the greater of $1 million or 2% of such charitable organization’s consolidated gross revenues.

 

 

  HALLIBURTON  |  2020 Proxy Statement      15

 

2019 Director Compensation

 

Name  Fees Earned
or Paid in Cash
($)
  Stock
Awards
($)
  Change in Pension Value
and Nonqualified Deferred
Compensation Earnings
($)
  All Other
Compensation
($)
  Total
($)
Abdulaziz F. Al Khayyal  115,000  173,865  0  22,537  311,402
William E. Albrecht  115,000  173,865  0  12,792  301,657
M. Katherine Banks(1)  101,264  267,408  0  5,239  373,911
Alan M. Bennett  140,000  173,865  0  179,258  493,123
James R. Boyd(2)  50,440  0  0  88,789  139,229
Milton Carroll  130,000  173,865  0  63,991  367,856
Nance K. Dicciani  130,000  173,865  0  156,778  460,643
Murry S. Gerber  127,582  173,865  0  10,595  312,042
José C. Grubisich(3)  5,431  0  0  11,323  16,754
Patricia Hemingway Hall(4)  101,264  267,408  0  117,739  486,411
Robert A. Malone  145,000  173,865  0  132,342  451,207

 

(1) Dr. Banks joined the Board on February 13, 2019.
(2) Mr. Boyd retired from the Board on May 15, 2019.
(3) Mr. Grubisich resigned from the Board on January 17, 2019.
(4) Ms. Hemingway Hall joined the Board on February 13, 2019.

 

Fees Earned or Paid In Cash. The amounts in this column represent retainer fees earned in fiscal year 2019, but not necessarily paid in 2019. Refer to the section Directors’ Fees for information on annual retainer fees.

 

Stock Awards. The amounts in the Stock Awards column reflect the grant date fair value of RSUs awarded in 2019. We calculate the fair value of equity awards by multiplying the number of RSUs granted by the closing stock price as of the award’s grant date.

 

The number of restricted shares, RSUs, and SEUs held at December 31, 2019, by non-management Directors are:

 

Name  Restricted Shares   RSUs   SEUs
Abdulaziz F. Al Khayyal   0    29,142    8,215
William E. Albrecht   0    21,948    0
M. Katherine Banks   0    11,075    0
Alan M. Bennett   25,236    39,393    37,169
James R. Boyd   0    31,232    40,735
Milton Carroll   20,271    39,393    38,032
Nance K. Dicciani   14,843    35,639    14,466
Murry S. Gerber   2,000    14,373    0
José C. Grubisich   0    15,818    0
Patricia Hemingway Hall   0    11,075    0
Robert A. Malone   14,843    14,373    0

 

Change in Pension Value and Nonqualified Deferred Compensation Earnings. None of the Directors had a change in pension value or nonqualified deferred compensation earnings that represented above market earnings in 2019.

 

All Other Compensation. This column includes compensation related to the matching gift programs under the Halliburton Foundation, the Accidental Death and Dismemberment program, dividends or dividend equivalents on restricted shares or RSUs, and dividend equivalents associated with the Directors’ Deferred Compensation Plan.

 

Directors who participated in the matching gift program and the corresponding match provided by the Halliburton Foundation in 2019 are: Mr. Bennett - $112,500; Mr. Boyd - $33,750; Ms. Dicciani - $112,500; Ms. Hemingway Hall - $112,500; and Mr. Malone - $112,500.

 

Non-management Directors are provided an Accidental Death and Dismemberment benefit the annual premium for which is $155.

 

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  HALLIBURTON  |  2020 Proxy Statement      16

 

Directors who received dividends or dividend equivalents on restricted shares or RSUs held on Halliburton record dates are: Dr. Banks - $5,084; Mr. Bennett - $18,170; Mr. Boyd - $4,542; Mr. Carroll - $14,595; Ms. Dicciani - $18,157; Mr. Gerber - $10,440; Ms. Hemingway Hall - $5,084; and Mr. Malone - $19,687.

 

Directors who received dividend equivalents attributable to their stock equivalents account under the Directors’ Deferred Compensation Plan are: Mr. Al Khayyal - $4,665; Mr. Bennett - $23,480; Mr. Boyd - $28,291; Mr. Carroll - $24,287; and Ms. Dicciani - $10,213.

 

Directors who received dividend equivalents attributable to their deferred RSUs under the Directors’ Deferred Compensation Plan are: Mr. Al Khayyal - $17,717; Mr. Albrecht - $12,637; Mr. Bennett - $24,954; Mr. Boyd - $22,051; Mr. Carroll - $24,954; Ms. Dicciani - $15,752; and Mr. Grubisich - $11,168.

 

 

  HALLIBURTON  |  2020 Proxy Statement      17

 

Stock Ownership Information

 

Delinquent Section 16(a) Reports

 

The Company believes, based on our records and review of filings with the SEC, that during the fiscal year ended December 31, 2019, our Directors and executive officers complied with the filing requirements of Section 16(a) of the Securities Exchange Act of 1934, with one exception. A Form 4 required to be filed by Robb L. Voyles was filed one day late due to an administrative error, resulting in one transaction not being reported on a timely basis.

 

Stock Ownership of Certain Beneficial Owners and Management

 

The following table sets forth beneficial ownership information about persons or groups that own or have the right to acquire more than 5% of our common stock, based on information contained in Schedules 13G filed with the SEC.

 

Name and Address
of Beneficial Owner
  Amount and
Nature of
Beneficial
Ownership
   Percent
of Class
BlackRock, Inc.   61,944,873(1)    7.1%
55 East 52nd Street, New York, NY 10055          
Dodge & Cox   45,291,595(2)    5.2%
555 California Street, 40th Floor, San Francisco, CA 94104          
The Vanguard Group   96,217,135(3)    10.96%
100 Vanguard Blvd, Malvern, PA 19355          

 

(1) BlackRock, Inc. is a parent holding company and is deemed to be the beneficial owner of 61,944,873 shares. BlackRock has sole power to vote or to direct the vote of 53,384,788 shares and has sole power to dispose or to direct the disposition of 61,944,873 shares.
(2) Dodge & Cox is an investment adviser and is deemed to be the beneficial owner of 45,291,595 shares. Dodge & Cox has sole power to vote or to direct the vote of 42,943,745 shares and has sole power to dispose or to direct the disposition of 45,291,595 shares.
(3) The Vanguard Group is an investment adviser and is deemed to be the beneficial owner of 96,217,135 shares. The Vanguard Group has sole power to vote or to direct the vote of 1,311,320 shares and has sole power to dispose or to direct the disposition of 94,741,635 shares. The Vanguard Group has shared power to vote or to direct the vote of 249,359 shares and has shared power to dispose or to direct the disposition of 1,475,500 shares.

 

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  HALLIBURTON  |  2020 Proxy Statement      18

 

The following table sets forth information, as of March 16, 2020, regarding the beneficial ownership of our common stock by each Director, each Named Executive Officer, and by all Directors and executive officers as a group.

 

   Amount and Nature of Beneficial Ownership
Name of Beneficial Owner or
Number of Persons in Group
  Sole Voting
and
Investment
Power(1)
   Shared
Voting or
Investment
Power
   Percent of
Class
Abdulaziz F. Al Khayyal   0         *
William E. Albrecht   16,000         *
M. Katherine Banks   762         *
Alan M. Bennett   27,236         *
Eric J. Carre   277,019         *
Milton Carroll   20,271         *
Nance K. Dicciani   23,044         *
Murry S. Gerber   224,879         *
Patricia Hemingway Hall   762         *
Lance Loeffler   174,388         *
Robert A. Malone   37,096         *
Jeffrey A. Miller   1,141,051         *
Joe D. Rainey   584,655         *
Mark J. Richard   282,875         *
Shares owned by all current Directors and executive officers as a group (20 persons)   4,226,484         *

 

* Less than 1% of shares outstanding.
(1) The table includes shares of common stock eligible for purchase pursuant to outstanding stock options within 60 days of March 16, 2020, for the following: Mr. Carre – 112,336; Mr. Loeffler – 90,829; Mr. Miller – 482,234; Mr. Rainey – 309,167; Mr. Richard – 123,985; and six unnamed executive officers – 718,502. Until the options are exercised, these individuals will not have voting or investment power over the underlying shares of common stock, but will only have the right to acquire beneficial ownership of the shares through exercise of their respective options. The table also includes restricted shares of common stock over which the individuals have voting power but no investment power.

 

 

  HALLIBURTON  |  2020 Proxy Statement      19

 

Proposal No. 2   Ratification of Selection of Principal Independent Public Accountants

 

The Audit Committee is responsible for the appointment, compensation, retention, oversight of the work, and evaluation of the principal independent public accountants retained to audit our financial statements. The Audit Committee and Board have approved the selection of KPMG LLP as our principal independent public accountants to examine our financial statements and books and records for the year ended December 31, 2020, and a resolution will be presented at the Annual Meeting to ratify this selection. The Audit Committee and Board believe that the continued retention of KPMG to serve as our principal independent public accountants for the year ended December 31, 2020, is in the best interests of Halliburton and our shareholders. Representatives of KPMG are expected to be present at the Annual Meeting and be available to respond to appropriate questions from shareholders.

 

KPMG began serving as our principal independent public accountants for the year ended December 31, 2002. The Audit Committee routinely reviews the performance and retention of our independent public accountants, including an evaluation of service quality, the nature and extent of non-audit services, and other factors required to be considered when assessing independence from Halliburton and its management. The Audit Committee also periodically considers whether there should be a rotation of the principal independent public accountants.

 

The affirmative vote of the holders of a majority of the shares of our common stock represented at the Annual Meeting and entitled to vote on the matter is needed to approve the proposal.

 

If the shareholders do not ratify the selection of KPMG, the Board will reconsider the selection of independent public accountants.

 

  THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS PRINCIPAL INDEPENDENT PUBLIC ACCOUNTANTS TO EXAMINE OUR FINANCIAL STATEMENTS AND BOOKS AND RECORDS FOR THE YEAR ENDING DECEMBER 31, 2020.

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      20

 

Audit Committee Report

 

We operate under a written charter, a copy of which is available on Halliburton’s website at www.halliburton.com. As required by the charter, we review and reassess the charter annually and recommend any changes to the Board for approval. We are also mindful of the observations provided in the Securities and Exchange Commission’s Statement on Role of Audit Committees in Financial Reporting and Key Reminders Regarding Oversight Responsibilities.

 

Halliburton’s management is responsible for preparing Halliburton’s financial statements and the principal independent public accountants are responsible for auditing those financial statements. The Audit Committee’s role is to provide oversight of management in carrying out management’s responsibility and to appoint, compensate, retain, oversee the work of, and evaluate the principal independent public accountants. The Audit Committee is not providing any expert or special assurance as to Halliburton’s financial statements or any professional certification as to the principal independent public accountants’ work.

 

In fulfilling our oversight role for the year ended December 31, 2019, we:

 

reviewed and discussed Halliburton’s audited financial statements with management;
discussed with KPMG LLP, Halliburton’s principal independent public accountants, the matters required by Auditing Standard 1301 relating to the conduct of the audit;
received from KPMG the written disclosures and the letter required by the Public Company Accounting Oversight Board regarding KPMG’s independence;
evaluated KPMG’s service quality; and
discussed with KPMG its independence and reviewed other matters required to be considered under Securities and Exchange Commission rules regarding KPMG’s independence.

 

Based on the foregoing, we recommended to the Board that the audited financial statements be included in Halliburton’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, for filing with the Securities and Exchange Commission.

 

THE AUDIT COMMITTEE

 

M. Katherine Banks
Alan M. Bennett
Nance K. Dicciani
Murry S. Gerber

 

 

  HALLIBURTON  |  2020 Proxy Statement      21

 

Fees Paid to KPMG LLP

 

During 2018 and 2019, we incurred the following fees for services performed by KPMG LLP.

 

 2018 2019
 (In millions) (In millions)
Audit fees  $11.8   $10.7
Audit-related fees   0.2    0.1
Tax fees   0.3    0.5
TOTAL  $12.3   $11.3

 

Audit Fees

 

Audit fees represent the aggregate fees for professional services rendered by KPMG for the integrated audit of our annual financial statements for the fiscal years ended December 31, 2018, and December 31, 2019. Audit fees also include the audits of many of our subsidiaries in regards to compliance with statutory requirements in foreign countries and reviews of our financial statements included in the Forms 10-Q we filed during fiscal years 2018 and 2019.

 

Audit-Related Fees

 

Audit-related fees were incurred for assurance and related services that are traditionally performed by the independent public accountants. These services primarily include attestation engagements required by contractual or regulatory provisions.

 

Tax Fees

 

The aggregate fees for tax services primarily consisted of international tax compliance and tax return services related to our expatriate employees. In 2018, tax compliance and preparation fees total $0.2 million and tax advisory fees total $0.1 million, and in 2019, tax compliance and preparation fees total $0.1 million and tax advisory fees total $0.4 million.

 

Fee Approval Policies and Procedures

 

The Audit Committee has established a written policy that requires the approval by the Audit Committee of all services provided by KPMG as the principal independent public accountants that examine our financial statements and books and records and of all audit services provided by other independent public accountants. Prior to engaging KPMG for the annual audit, the Audit Committee reviews a Principal Independent Public Accountants Auditor Services Plan. KPMG then performs services throughout the year as approved by the Committee. KPMG reviews with the Committee, at least quarterly, a projection of KPMG’s fees for the year. Periodically, the Audit Committee approves revisions to the plan if the Committee determines changes are warranted. Our Audit Committee also considered whether KPMG’s provision of tax services as reported above are compatible with maintaining KPMG’s independence as our principal independent public accountants. All of the fees described above for services provided by KPMG were approved in accordance with the policy.

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      22

 

Proposal No. 3   Advisory Approval of Executive Compensation

 

Pursuant to Section 14A of the Securities Exchange Act of 1934, our shareholders are being presented with the opportunity to vote to approve, on an advisory basis, the compensation of our Named Executive Officers (NEOs) as disclosed in this proxy statement. As reaffirmed by our shareholders at the 2017 Annual Meeting of Shareholders, consistent with our Board’s recommendation, we are submitting this proposal for a non-binding vote on an annual basis.

 

As described in detail under Compensation Discussion and Analysis, our executive compensation program is designed to attract, motivate, and retain our NEOs, who are critical to our success. Under the program, our NEOs are rewarded for the achievement of specific annual, long-term, and strategic goals, corporate goals, and the realization of increased shareholder returns. Please read Compensation Discussion and Analysis for additional details about our executive compensation program, including information about the fiscal year 2019 compensation of our NEOs and our Board’s ongoing commitment to ensure that our program aligns with our long-term strategy and shareholder value creation.

 

The Compensation Committee continually reviews the compensation program for our NEOs to ensure the program achieves the desired goals of aligning our executive compensation structure with our shareholders’ interests and current market practices. We believe our executive compensation program achieves the following objectives identified under Compensation Discussion and Analysis:

 

Provide a clear and direct relationship between executive pay and our performance on both a short-term and long-term basis;
Target market competitive pay levels with comparator peer group;
Emphasize operating performance drivers;
Link executive pay to measures that drive shareholder returns;
Support our business strategies; and
Maximize the return on our human resource investment.

 

We are asking our shareholders to indicate their support for our NEOs’ compensation as described in this proxy statement and vote “FOR” the following resolution at the Annual Meeting:

 

“RESOLVED, that the compensation paid to Halliburton’s Named Executive Officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion, is hereby approved.”

 

Our Board and our Compensation Committee value the opinions of our shareholders. The say-on-pay vote is advisory and, therefore, not binding on us, our Board, or our Compensation Committee. However, the Compensation Committee considers shareholder feedback in its ongoing review of our executive compensation program.

 

  THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

 

Compensation Committee Report

 

We have reviewed and discussed the Compensation Discussion and Analysis with Company management and, based on such review and discussion, we recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

 

THE COMPENSATION COMMITTEE

 

William E. Albrecht
Milton Carroll
Murry S. Gerber
Patricia Hemingway Hall
Robert A. Malone

 

 

  HALLIBURTON  |  2020 Proxy Statement      23

 

Compensation Discussion and Analysis

 

2019 CD&A At-A-Glance

 

This year’s Compensation Discussion and Analysis (CD&A) reviews the objectives and elements of Halliburton’s executive compensation program and discusses the 2019 compensation earned by our NEOs. It also explains the significant actions the Compensation Committee took based on its ongoing commitment to consider shareholder feedback and to ensure our senior leadership team continues to deliver the reliable execution, strong cash flow, and industry-leading returns that our shareholders expect. During 2019, we:

 

Continued robust shareholder engagement, with a key focus on executive compensation matters Contacted shareholders representing more than 50% of our outstanding common stock to obtain their views on our program; we met with shareholders representing approximately 31% of our outstanding common stock
Continued robust Board involvement in shareholder engagement The newly-appointed Chair of the Compensation Committee participated in numerous shareholder meetings
Modified financial metrics for determining short-term incentives to increase our emphasis on free cash flow and capital discipline

Replaced CVA with two distinct metrics for the 2020 plan year:

 

   Net Operating Profit After-Taxes (NOPAT)

   Asset Turns

Increased emphasis on performance-based long-term incentives

Modified our long-term incentive mix starting with the 2020 plan year:

 

   Increased weight of performance units to 70% (up from 50%)

   Reduced weight of restricted stock to 30%

   Eliminated stock options for NEOs

Added a second financial metric for determining long-term performance-based awards under the Performance Unit Plan (PUP) Added a relative Total Shareholder Return (TSR) modifier for the 2020 PUP performance cycle; compares performance to the Oilfield Services Index (OSX); penalizes bottom quartile performance or rewards top-quartile performance
Increased equity component of long-term incentives Changed PUP to issue awards 50% in stock (previously delivered entirely in cash) starting in 2020 so that 65% of long-term incentives is delivered in equity (contingent on three-year performance period)
Approved new “double-trigger” change-of-control provisions Amended the Stock and Incentive Plan on February 13, 2019, for future grants

 

Despite the challenging market dynamics in 2019 with reduced customer activity and pricing pressure in North America, we grew revenue across all of our international regions and outperformed the international rig count for the second year in a row. In total, we generated $22.4 billion of revenue and approximately $2.4 billion of cash from operating activities during the year.

 

Our Return on Capital Employed (ROCE) for the three-year period ending December 31, 2019, was 3.36%, which positioned the Company above the 75th percentile relative to our performance peer group.

 

Despite outperforming our performance peer group, there were no annual incentives paid to any of our NEOs for the 2019 plan year. Additionally, the Compensation Committee decided base salaries would remain unchanged for 2020, except for Messrs. Loeffler and Richard, both of whom received the second half of their two-year promotion-related increases.

 

More information about our 2019 business achievements, and the resulting compensation actions taken by the Compensation Committee, are described in 2019 Performance Overview.

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      24

 

2019 Named Executive Officers

 

Name Age Occupation
Jeffrey A. Miller 56 Chairman, President and Chief Executive Officer
Lance Loeffler 43 Executive Vice President and Chief Financial Officer
Eric J. Carre 54 Executive Vice President – Global Business Lines
Joe D. Rainey 63 President – Eastern Hemisphere
Mark J. Richard 58 President – Western Hemisphere

 

Results of 2019 Advisory Vote on Executive Compensation

 

In 2019, our compensation program received the support of 63% of the total votes cast at our Annual Meeting. These results showed measurable improvement from the prior year and indicated that we are headed in a good direction. Nevertheless, as discussed below, we continued our extensive outreach efforts as part of our commitment to ensure shareholder support for our compensation program moving forward. During the fall of 2019, we contacted shareholders representing more than 50% of our outstanding common stock and met with many of those shareholders, who collectively hold 31% of our outstanding common stock.

 

We solicited their feedback on company strategy and performance, corporate governance, executive compensation, sustainability, and other topics. We continue to hear from our shareholders that they support our overall compensation program design and are appreciative of our ongoing efforts to consider their feedback as our program evolves. As detailed below, based on the most recent feedback from shareholders, the Committee made several significant modifications to our compensation program for the 2020 plan year.

 

Key Activities and Changes

 

Board Responsiveness to Shareholder Feedback

 

Halliburton has always maintained open communications with the shareholder community. Seeking feedback from our shareholders on a regular basis is a critical part of our approach to managing our executive compensation program. Our ongoing, open dialogue with our shareholders helps ensure that the Board and management have a regular pulse on the views of our shareholders. These communications validate that our shareholders continue to be broadly supportive of the overall philosophy, objectives, and design of our program. They also provide us important perspectives on how to improve and better explain our program. While continuing to emphasize performance-based pay, shareholder feedback has resulted in several enhancements to our compensation program over the years, including:

 

Increased transparency around the target setting process, metric selection rationale, and the associated payout calculations.
Eliminated special or one-time stock grants for internal promotions.
Eliminated most executive perquisites.
Implemented a double-trigger change-of-control provision in our Stock and Incentive Plan.

 

During 2019, members of our senior management team participated in over 100 shareholder meetings and 19 conferences. As is our practice, in the fall of 2019, we also engaged in targeted outreach with numerous shareholders. During this fall outreach, we contacted shareholders representing more than 50% of our outstanding common stock and met with many of those shareholders, who collectively hold 31% of our outstanding common stock. We previewed changes to our compensation program under consideration by our Compensation Committee and solicited their feedback on our compensation program, as well as our company strategy and performance, corporate governance, sustainability, and other topics. Our newly-appointed Compensation Committee Chair participated in this outreach effort. Based on the most recent feedback from shareholders, we made several significant modifications to our compensation program for the 2020 plan year.

 

 

  HALLIBURTON  |  2020 Proxy Statement      25

 

What we heard     What we did
(during our ongoing 2019 investor discussions)     (effective for the 2020 plan year)
Shareholders seek increased emphasis on free cash flow and capital discipline   Replaced CVA with two distinct metrics that focus on our ability to manage cash and generate earnings, given our capital intensive, cyclically driven business. Short-term incentives will be based on the following independent metrics and weightings:
    75% NOPAT
    25% Asset Turns
Shareholders support the use of three-year relative ROCE for long-term incentives, but would like an additional performance component directly linked to stock price   Introduced a relative TSR modifier that compares performance against the Oilfield Services Index (OSX); modifier imposes an award penalty for bottom quartile performance and provides an incentive for top quartile performance
Shareholders want more emphasis on performance-based long-term incentives   Changed the mix of long-term incentive vehicles for NEOs (as illustrated below) to 70% performance units and 30% restricted stock; stock options have been eliminated
Shareholders expressed concern about PUP awards being paid 100% in cash   Rebalanced the long-term incentive pay mix so that 65% is delivered in equity; changed PUP cycle to issue awards 50% in stock and 50% in cash (contingent on three-year performance period)

 

Increased Emphasis on Long-Term Performance-Based Equity

 

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      26

 

2019 Performance Overview

 

We experienced challenging market dynamics in 2019 as our customers in the North American market fundamentally shifted from growth to capital discipline, impacting our business through reduced customer activity and additional pricing pressure, while the international markets continued on the road to recovery. We executed our value proposition, delivered exceptional safety and service quality, and remained focused on generating healthy returns and strong cash flow. 2019 marked the end of the first full decade of the shale revolution that propelled the United States to become the world's top hydrocarbon producer. Our company was an early participant in this development and invested and innovated alongside our customers since the beginning. As unconventionals enter the maturation phase, we are committed to the North American market and are taking appropriate actions to thrive in the new environment. We intend to continue our cost containment measures and to right size our fleet, high grade our customer portfolio, systematically improve our service delivery, grow our share of services per well, and develop differentiating technology that benefits both Halliburton and our customers. Internationally, we will continue focusing on profitable growth and improving our margins. We believe we have the right footprint and an enhanced technology portfolio to compete successfully across the international markets.

 

 
     
We generated $22.4 billion of total company revenue, with improvements across all of our international regions. Our international business outgrew the international rig count for the second year in a row.   We achieved exceptional safety and service quality performance during 2019. Our total recordable incident rate and non-productive time improved over 20%, both historical bests across our business. This is a result of our employees’ continued commitment to safety and process execution.
     
 
     
We quickly adapted to market conditions by reducing our capital expenditures by 24% to approximately $1.5 billion in 2019. These capital expenditures were predominantly made in our Sperry Drilling, Production Enhancement, Artificial Lift, Wireline and Perforating, and Production Solutions product service lines.   During 2019, we generated $2.4 billion of operating cash flow and had $1.5 billion of capital expenditures, resulting in over $900 million of free cash flow. This demonstrates our ability to generate consistent free cash flow in different business environments. We additionally returned over $700 million to shareholders through dividends and share repurchases.

 

* Management believes free cash flow, defined as “operating cash flow” less “capital expenditures”, is an important liquidity measure and useful to investors and management for assessing the business’s ability to generate cash.

 

 

  HALLIBURTON  |  2020 Proxy Statement      27

 

We delivered superior ROCE performance over the one-, three-, and five-year period ending December 31, 2019, relative to the Oilfield Services Index (OSX), our two largest competitors, and our performance peer group. The details are depicted in the chart below:

 

 

We delivered TSR over the three-, five-, and ten-year period ending December 31, 2019, that exceeded the TSR of the OSX. We also outperformed our two largest competitors and our performance peer group for the five- and ten-year period ending December 31, 2019. The details are depicted in the chart below:

 

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      28

 

CEO Pay: Reported vs. Realized

 

In reviewing executive compensation, the Compensation Committee considers the difference between total compensation as reported in the Summary Compensation Table (“reported pay”) and realized pay. Since Mr. Miller was appointed CEO in 2017, his realized pay was consistently lower than reported pay, demonstrating the “at-risk” nature of his compensation and our compensation program’s pay-for-performance design. In the illustration below, total realized compensation consisted of the following:

 

base salary paid;
cash incentive payouts under the Halliburton Annual Performance Pay Plan;
the value realized upon exercise of stock options;
value of restricted stock vested during the year; and
performance-based award paid for the year.

 

In 2017, Mr. Miller received a one-time stock award in connection with his promotion to President and CEO, a practice that was discontinued in 2018 in response to shareholder feedback. The chart shows Mr. Miller’s 2017 reported pay with and without this internal promotion grant. It also shows how TSR aligns with CEO pay over three years.

 

CEO: Reported Pay vs. Realized Pay

(in 000’s)

 

 

* TSR has been indexed to December 31, 2017

 

Our Executive Compensation Program Objectives

 

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

 

Provide a clear and direct relationship between executive pay and our performance on both a short-term and long-term basis;
Target market competive pay levels with comparator peer group;
Emphasize operating performance drivers;
Link executive pay to measures that drive shareholder returns;
Support our business strategies; and
Maximize the return on our human resource investment.

 

 

  HALLIBURTON  |  2020 Proxy Statement      29

 

Good Compensation Governance Practices At-A-Glance

 

What We Do         What We Don’t Do
Use mix of relative and absolute financial metrics   No repricing of underwater stock options
The majority of total direct compensation opportunity is performance-based, at-risk, and long-term (65% of long-term incentives is equity-based effective 2020)   No excessive perquisites
Deliver rewards that are based on the achievement of long-term objectives and the creation of shareholder value   No guaranteed bonuses or uncapped incentives
Maintain a clawback policy in the event of a material financial restatement or fraud   No single trigger vesting upon a change of control (applicable to awards to NEOs for 2019 forward)
Maintain robust executive and Director stock ownership requirements   No excise tax gross-ups
Use an independent, external compensation consultant   No hedging or pledging of company securities by executives and Directors
Benchmark against a relevant group of peer companies   No buyout or exchange of underwater options
Rigorous oversight of incentive metrics, goals, and pay-for-performance relationship   No special or one-time stock grants for internal promotions
Hold an annual say-on-pay vote   No liberal share counting or recycling

 

Elements of our Executive Compensation Program for 2019

 

Halliburton’s executive compensation program for the 2019 plan year was composed of base salary, a short-term incentive, and long-term incentives as described below (changes for the 2020 plan year are highlighted in red):

 

    Reward
Element
  Objective   Key Features   How Award Value
is Determined
  2019 Decisions
FIXED   Base Salary   Compensates executives based on their responsibilities, experience, and skillset.   Fixed element of compensation paid in cash.   Benchmarked against a group of comparably sized corporations and industry peers.   Base salaries were adjusted consistent with our compensation philosophy. (Page 35)
AT
RISK
  Short-Term Incentive   To motivate and incentivize performance over a one-year period.   Award value and measures are reviewed annually. Targets are set at the beginning of the year.   Performance measured against Cash Value Added (CVA) performance measures.   Award values were targeted at the market median for 2019. (Page 35)
              For 2020, performance measured against:    
             

•  75% NOPAT

 

•  25% Asset Turns

   
  Long-Term Incentives   To motivate and incentivize sustained performance over the long-term. Aligns interests of our NEOs with long-term shareholders.   Value is delivered 50% performance units; 35% restricted stock; and 15% stock options. Performance units measured over three years against targets set at the beginning of the performance period.   The 2019 performance units measured against ROCE performance relative to performance peers. Restricted stock and stock options have time-based vesting and value is driven by our share price.   Awards were targeted at the market median for 2019. (Page 36)
         

For 2020:

 

•  70% performance units measured over three years (1/2 in stock; 1/2 in cash) with relative TSR modifier

 

•  30% restricted stock

 

•  Stock options eliminated

       

 

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  HALLIBURTON  |  2020 Proxy Statement      30

 

As illustrated below, the majority of our CEO’s and NEOs’ total direct compensation opportunity is performance-based, at-risk, and long-term. The graphs depict the mix of total target direct compensation set for our CEO and NEOs for the 2019 plan year. As part of its process, the Compensation Committee makes decisions about target long-term incentive award opportunities for the following year during its regular December meeting. For the 2019 plan year, the Compensation Committee approved restricted stock and stock option grants in December 2018.

 

  (1) Reflects the compensation mix of Messrs. Loeffler, Carre, and Rainey. Mr. Richard was not included because he was not a NEO for the entire year.

 

Setting Executive Compensation

 

Role of the Compensation Committee

 

The Compensation Committee oversees the executive compensation program and has overall responsibility for making final decisions about total compensation for all of the NEOs, except for the CEO, which is set by the entire Board of Directors. As part of its annual process, the Committee works closely with senior management (as appropriate) and the Committee’s independent compensation consultant. This process ensures consistency from year to year and adherence to the responsibilities listed in the Committee’s Charter, which is available on our website.

 

The CEO does not provide recommendations concerning his own compensation, nor is he present when his compensation is discussed by the Committee. The Committee, with input from its independent compensation consultant, discusses the elements of his compensation in executive session and makes a recommendation to all of the non-management Directors for discussion and final approval. At the Committee’s request, a member of our management team may attend the executive session to answer questions from the Committee.

 

The CEO, with input from the Committee’s independent compensation consultant, assists the Committee in setting compensation for the other NEOs.

 

Use of Independent Consultants and Advisors

 

The Committee engaged Pearl Meyer as its independent compensation consultant during 2019. Pearl Meyer does not provide any other services to us. The primary responsibilities of the independent compensation consultant were to:

 

Provide independent and objective market data;
Conduct compensation analysis;
Recommend potential changes to the comparator peer group and performance peer group;
Recommend plan design changes;
Advise on risks associated with compensation plans; and
Review and advise on pay programs and pay levels.

 

These services are provided as requested by the Committee throughout the year. Based on their review of our executive compensation program, Pearl Meyer concluded that our compensation plans do not appear to present any material risks to the Company or its shareholders in the design, metrics, interaction between, or administration of the incentive plans.

 

 

  HALLIBURTON  |  2020 Proxy Statement      31

 

Role of Benchmarking, Peer Companies, and Market Data

 

The Committee regularly assesses the market competitiveness of the Company’s executive compensation program based on data from a comparator peer group. The companies comprising the comparator peer group are selected based on the following considerations:

 

Market capitalization;
Revenue and number of employees;
Global impact and reach; and
Industry affiliation.

 

Industry affiliation includes companies that are involved in the oil and natural gas and energy services industries. The comparator peer group is reviewed annually by the Committee to ensure relevance, with data provided to the Committee by the independent compensation consultant.

 

The 2019 comparator peer group was composed of the following peer companies within the energy industry, as well as selected companies representing general industry. This peer group was utilized to determine market levels of total compensation for the 2019 plan year and was unchanged from 2018:

 

3M Company Hess Corporation
Anadarko Petroleum Corporation Honeywell International Inc.
Apache Corporation Johnson Controls International plc
Baker Hughes National Oilwell Varco, Inc.
Caterpillar Inc. Occidental Petroleum Corporation
ConocoPhillips Raytheon Company
Deere and Company Schlumberger Limited
Emerson Electric Co. Transocean Ltd.
Fluor Corporation Weatherford International plc

 

Because of variances in market capitalization and revenue size among the companies comprising our comparator peer group, the market data is size adjusted by revenue as necessary so that it is comparable with our trailing 12 months revenue. These adjusted values are used to compare our executives’ compensation to those of the comparator peer group.

 

Total compensation for each NEO is structured to target market competitive pay levels in base salary and short- and long-term incentive opportunities. We also place an emphasis on variable pay at risk, which enables this compensation structure to position actual pay above or below the 50th percentile of our comparator peer group depending on performance.

 

A consistent pre-tax, present value methodology is used in assessing stock-based and other long-term incentive awards.

 

The independent compensation consultant gathers and performs an analysis of market data for each NEO, comparing each of their individual components of compensation and total compensation to that of the comparator peer group. This competitive analysis consists of comparing the market data of each of the pay elements and total compensation at the 25th, 50th, and 75th percentiles of the comparator peer group to current compensation for each NEO.

 

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  HALLIBURTON  |  2020 Proxy Statement      32

 

Pay for Performance Analysis

 

As part of its analysis, the Committee reviews one-, three-, and five-year pay for performance against our performance peer group as identified in the section entitled “Long-term Incentives”. The review examines the degree of alignment between our ROCE performance compared to the ROCE performance of our performance peer group and our CEO’s realizable compensation relative to the realizable compensation of the CEOs in our comparator peer group.

 

Total realizable compensation consisted of the following:

 

base salary paid;
cash incentive payouts;
in-the-money value of stock options grants during the one-, three-, and five-year periods valued as of December 31, 2018;
face value of restricted stock grants during the one-, three-, and five-year periods valued as of December 31, 2018; and
for performance-based awards, (i) target value for awards still outstanding as of December 31, 2018, and (ii) realized value for performance periods beginning and ending within the one-, three-, and five-year periods.

 

This analysis supported the Committee’s determination that our pay and performance are appropriately aligned.

 

Pay for Performance Analysis
Periods Ending December 31, 2018

 

Determination of CEO and NEO Target Total Compensation

 

When determining target total compensation for the CEO, the Committee takes into consideration competitive market pay levels for the CEOs in the comparator peer group. The Committee also considers the CEO’s performance and accomplishments in the areas of business development and expansion, management succession, development and retention of management, ethical leadership, and the achievement of financial and operational objectives.

 

Each year, our CEO and the members of the Board agree upon a set of objectives addressing the following areas:

 

Leadership and vision;
Integrity;
Keeping the Board informed on matters affecting Halliburton;
Performance of the business;
Development and implementation of initiatives that provide long-term economic benefits;
Accomplishment of strategic objectives; and
Development of management.

 

 

  HALLIBURTON  |  2020 Proxy Statement      33

 

The Board determined that Mr. Miller met these objectives in 2019 through the following achievements:

 

  LEADERSHIP AND VISION

 

  Managed through a seamless CFO and Western Hemisphere leadership transition
  Facilitated the addition of two Directors to the Board
  Led the organization through the business cycle with effective stakeholder communication and maintained high visibility with employees, shareholders, and customers

 

  INTEGRITY

 

  Maintained unwavering commitment to our Code of Business Conduct

 

  KEEPING THE BOARD INFORMED

 

  Communicated regularly with the members of the Board providing status reports and notifications on business issues and providing unfettered access to management and subject matter experts

 

  PERFORMANCE OF THE BUSINESS

 

  Outperformed the OSX, our two largest competitors, and our performance peer group in terms of ROCE over the one-, three-, and five-year periods ending December 31, 2019; delivered superior TSR performance relative to the OSX over the three-, five-, and ten-year periods ending December 31, 2019, and outperformed our two largest competitors and our performance peer group and in terms of TSR for the five- and ten-year period ending December 31, 2019
  Maintained unwavering commitment to our Health, Safety and Environment program

 

  DEVELOP AND IMPLEMENT INITIATIVES THAT PROVIDE LONG-TERM ECONOMIC BENEFITS

 

  Continued Company focus on evolving market trends, first of its kind technology development, and automation
  Continued to institutionalize Continuous Improvement which drives profitability, capacity, and greater flexibility

 

  ACCOMPLISHMENT OF STRATEGIC OBJECTIVES

 

  Continued our international diversification by strengthening our international business
  Executed key integration initiatives across multiple segments of the business

 

  DEVELOPMENT OF MANAGEMENT

 

  Exposed the next generation of management to the Board, further enhanced the management/employee succession process, and focused senior management on talent development and diversity initiatives

 

 

Other NEO compensation is determined similar to that of the CEO by evaluating each NEO’s performance and considering the market competitive pay levels of the comparator peer group for the NEO’s position. The Compensation Committee also considers the importance of keeping our management team focused and stable, especially given that other oilfield services companies have aggressively recruited our NEOs and other executives in the past. In fact, over thirty of our former executives have departed to become CEOs and/or senior executives of other oilfield services companies.

 

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  HALLIBURTON  |  2020 Proxy Statement      34

 

2019 Executive Compensation Outcomes

 

Base Salary

 

The Committee generally targets base salaries at the median of the comparator peer group. The Committee also considers the following factors when setting base salary:

 

Level of responsibility;
Experience in current role and equitable compensation relationships among internal peers;
Performance and leadership; and
External factors involving competitive positioning, general economic conditions, and marketplace compensation trends.

 

No specific formula is applied to determine the weight of each factor.

 

Salary reviews are conducted annually to evaluate each executive. Individual salaries are not necessarily adjusted each year.

 

The Committee approved the following base salary adjustments effective January 1, 2019:

 

Mr. Miller received a 7.1% increase in annual base salary ($1,400,000 to $1,500,000) to align his base salary with the market median of our comparator peer group;
Mr. Loeffler received a 73.3% increase in annual base salary ($375,000 to $650,000) in recognition of his promotion to CFO in November 2018. While this adjustment was significant, it still positions Mr. Loeffler’s salary below the market median for a CFO role. As per its normal practice, the Committee intends to bring Mr. Loffler’s base salary to the market median over a multi-year period.
Mr. Carre received a 6.7% increase in annual base salary ($750,000 to $800,000) to position his base salary at the market median of our comparator peer group; and
Mr. Rainey received a 4.0% increase in annual base salary ($875,000 to $910,000) based on performance and internal equity.

 

The Committee approved the following base salary adjustments effective February 1, 2019:

 

Mr. Richard received a 16.0% increase in annual base salary ($625,000 to $725,000) in recognition of his promotion to President – Western Hemisphere. Mr. Richard’s salary is still positioned below the market median for his role. The Committee intends to bring Mr. Richard’s base salary to the market median over a multi-year period.

 

At its regular December 2019 meeting, the Compensation Committee determined that base salaries for our NEOs would remain unchanged for 2020, with the exceptions of Messrs. Loeffler and Richard, both of whom received the second half of their two-year promotion-related increases.

 

Short-term (Annual) Incentive

 

The Annual Performance Pay Plan is designed to reward executives and other key members of management for improving financial results that drive the creation of economic value for our shareholders and provide a means to connect individual cash compensation directly to our performance. It is administered in accordance with the terms of the Stock and Incentive Plan.

 

The Annual Performance Pay Plan provides an incentive to our NEOs to generate more earnings than normally expected by the investors who have provided us with capital to grow our business. For 2019, we measured achievement of this objective using Cash Value Added, or CVA. CVA is a financial measurement that demonstrates the amount of economic value added to our business.

 

The Committee selected CVA for our Annual Performance Pay Plan because it is a key financial measure on which we set our performance expectations for the year and we believe it is a proven driver of value creation for shareholders. However, the Committee also considers other business performance factors that are important to our investors, including health, safety, environment, and service quality, in determining the final payout amounts under the Annual Performance Pay Plan.

 

 

 

  HALLIBURTON  |  2020 Proxy Statement      35

 

At the beginning of each plan year, the Committee approves an incentive award schedule that equates levels of CVA performance with cash reward opportunities. The performance goals range from “Threshold” to “Target” to “Maximum”. Threshold reflects the minimum CVA performance level which must be achieved in order for any award to be earned and Maximum reflects the maximum awards that can be earned.

 

The performance goals are based on our annual operating plan, as reviewed and approved by our Board, and are set at levels to meet or exceed shareholder expectations of our performance, as well as expectations of the relative performance to our competitors. Given the cyclical nature of our business, our performance goals vary from year to year, which can similarly impact the difficulty in achieving the goals.

 

CVA is computed monthly and aggregated throughout the calendar year. Adjustments in the calculation of CVA may, at times, be approved by the Committee and can include the treatment of unusual items that may have impacted our actual results.

 

The Committee set the 2019 performance goals for our NEOs based on company-wide consolidated CVA results. Threshold CVA was based on 90% of planned Operating Income, Target CVA on 100% of planned Operating Income, and Maximum CVA on 110% of planned Operating Income.

 

The Committee set the 2019 award levels, targeted to the market median, for our NEOs based on the company-wide consolidated CVA results. The performance goals for the 2019 plan year are noted in the table below:

 

Metric Threshold Target Maximum Actual
CVA $5 M $57 M $238 M -$2,208 M

 

Individual incentive award opportunities are established as a percentage of base salary at the beginning of the plan year based on market competitive targets. The maximum award a NEO can receive is limited to two times the target opportunity level. The level of achievement of annual CVA performance determines the dollar amount of incentive compensation payable to participants following completion of the plan year.

 

The Committee set incentive award opportunities under the plan as follows:

 

NEO Threshold Target Maximum
Mr. Miller 60% 150% 300%
Mr. Loeffler 40% 100% 200%
Mr. Carre 40% 100% 200%
Mr. Rainey 44% 110% 220%
Mr. Richard 44% 110% 220%

 

Threshold, Target, and Maximum opportunity dollar amounts can be found in the Grants of Plan-Based Awards in Fiscal 2019 table.

 

Because the 2019 CVA actual results were below Threshold, our NEOs did not receive a CVA payout.

 

Over the past ten years, the Annual Performance Pay Plan achieved Maximum performance levels five times, Target performance levels two times, and fell short of the Threshold performance level three times, resulting in no payout.

 

Long-Term Incentives

 

The Stock and Incentive Plan is designed to reward consistent achievement of value creation and operating performance goals, align management with shareholder interests, and encourage long-term perspective and commitment. Long-term incentives represent the largest component of total executive compensation opportunity.

 

Using a mix of incentive vehicles allows us to provide a diversified yet balanced long-term incentive program that effectively addresses volatility in our industry and in the stock market, in addition to maintaining an incentive to meet performance goals. For the 2019 plan year, the Committee used the following combination of equity vehicles for long-term incentive grants:

 

Vehicle Weighting Purpose
Performance Units 50% of Award Rewards achievement of specific financial goals measured over a three-year performance period
Restricted Stock(1) 35% of Award Supports leadership retention/stability objectives; five-year vesting period
Stock Options(2) 15% of Award Rewards for stock price appreciation; three-year vesting period
(1) Restricted stock grants are generally subject to a graded vesting schedule of 20% per year over five years. However, different vesting schedules may be utilized at the discretion of the Committee. Shares of restricted stock receive dividend or dividend equivalent payments.
(2) Stock option awards vest over a three-year graded vesting period with 33 1/3% of the grant vesting each year. All options are priced at the closing stock price on the date the grant is approved by the Committee.

 

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  HALLIBURTON  |  2020 Proxy Statement      36

 

In determining the size of long-term incentive awards, the Committee first considers market data for comparable positions and then may adjust the awards upwards or downwards based on the Committee’s review of internal equity. This can result in positions of similar magnitude and pay receiving awards of varying size. Awards are targeted to the market median.

 

As part of its process, the Compensation Committee makes decisions about target long-term incentive award opportunities for the following year during its regular December meeting. For the 2019 plan year, the Compensation Committee approved restricted stock and stock option grants in December 2018. Exercise prices for stock options are set at the closing stock price on the date the grant is approved.

 

For the 2020 plan year, grants of restricted stock for NEOs were approved by the Compensation Committee at its December 2019 meeting using the new equity mix (70% performance units and 30% restricted stock). We also added a TSR modifier that increases or decreases the long-term incentives payout based on our relative TSR performance. Stock Options were eliminated for NEOs beginning with the 2020 plan year.

 

2017 Cycle Performance Unit Program

 

The 2017 cycle Performance Unit Program provides NEOs and other selected executives with incentive opportunities based on our consolidated ROCE during a three-year performance period. This program reinforces our objectives for sustained long-term performance and value creation. It also reinforces strategic planning processes and balances short- and long-term decision making.

 

Based on feedback from our shareholders and to more closely align with our strategy of delivering industry-leading returns across the business cycle, in 2015, we modified the metrics in our Performance Unit Program to 100% relative ROCE. The program measures ROCE on a relative basis to the results of our performance peer group used for the Performance Unit Program. The three-year performance period aligns this measurement with our and our performance peer group’s business cycles.

 

ROCE indicates the efficiency and profitability of our capital investments and is determined based on the ratio of earnings divided by average capital employed. The calculation is as follows:

 

 

Why ROCE?
Highly correlated to stock price performance over the long-term, applying drivers that management can directly influence.         Overwhelmingly supported by our shareholders.
Aligned with our strategy of delivering industry-leading returns across the business cycle.   Eliminates the subjectivity inherent in setting long-term absolute targets in a cyclical industry.
Reinforces the Company’s objective for sustained long-term performance and value creation.   Provides our management team with clear line of sight to long-term financial results.

 

The performance peer group used for the Performance Unit Program is comprised of oilfield equipment and services companies and domestic and international exploration and production companies. This peer group is used for the Performance Unit Program because these companies represent the timing, cyclicality, and volatility of the oil and natural gas industry and provide an appropriate industry group for measuring our relative performance. The peer group, disclosed in our 2018 proxy statement, was used for the 2017 cycle of the Performance Unit Program.

 

The table below shows the incentive opportunity based on Halliburton’s ROCE performance relative to that of our performance peer group. The 2017 cycle of the Performance Unit Program ended on December 31, 2019, and we achieved ROCE of 3.36%, which was above the 75th percentile of our performance peer group’s ROCE of 1.28% and yielded an award paid at 200% of the target opportunity level.

 

 

  HALLIBURTON  |  2020 Proxy Statement      37

 

2017 Cycle – Performance Matrix

 

Halliburton Ranking vs. Performance Peer Group Threshold
25th Percentile
Target
50th Percentile
Maximum
75th Percentile
Incentive Opportunity as a % of Target 25% 100% 200%

 

The NEOs received payments in 2020 as set forth in the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table. The program allows for rewards to be paid in cash, stock, or a combination of cash and stock.

 

2019 Cycle Performance Unit Program

 

The Committee set the performance measures on a 100% relative ROCE basis for the 2019 cycle of the Performance Unit Program, with performance measured for the three-year period ending December 31, 2021.

 

The performance peer group for the 2019 cycle Performance Unit Program is the same as the performance peer group used for the 2018 cycle Performance Unit Program and consists of the following companies:

 

Anadarko Petroleum Corporation Nabors Industries Ltd.
Apache Corporation National Oilwell Varco, Inc.
Baker Hughes Schlumberger Limited
Chesapeake Energy Corporation Superior Energy Services, Inc
Devon Energy Corporation TechnipFMC
Hess Corporation Transocean Ltd.
Marathon Oil Corporation Weatherford International plc
Murphy Oil Corporation The Williams Companies, Inc.

 

At the end of the three-year performance period, the ROCE of the Company and the performance peer group will be calculated and percentiles will be determined. The table below details the incentive opportunity based on Halliburton’s performance relative to the performance peer group. If Halliburton’s relative performance ranking is below the 25th percentile, there will be no payment. If Halliburton’s relative performance ranking is between the 25th, 50th, and 75th percentiles, the payout will be interpolated accordingly.

 

2019 Cycle – Performance Matrix

 

Halliburton Ranking vs. Performance Peer Group Threshold
25th Percentile
Target
50th Percentile
Maximum
75th Percentile
Incentive Opportunity as a % of Target 25% 100% 200%

 

Individual incentive opportunities are established based on market references and the NEO’s role within the organization. The Threshold, Target, and Maximum columns under the heading Estimated Future Payouts Under Non-Equity Incentive Plan Awards in the Grants of Plan-Based Awards in Fiscal 2019 table indicate the potential payout for each NEO under the Performance Unit Program for the 2019 cycle. The potential payouts are performance driven and completely at risk. Actual payout amounts, if any, will not be determined until the three-year cycle closes on December 31, 2021.

 

Supplemental Executive Retirement Plan

 

The objective of the Supplemental Executive Retirement Plan, or SERP, is to provide a competitive level of pay replacement upon retirement. The current pay replacement target is 75% of base salary at age 65 with 25 years of service, using the highest annual salary during the last three years of employment.

 

The material factors and guidelines considered in making an allocation include: (i) retirement benefits provided, both qualified and nonqualified; (ii) current compensation; (iii) length of service; and (iv) years of service to normal retirement.

 

The calculation takes into account the following variables: (i) base salary; (ii) years of service; (iii) age; (iv) employer portion of qualified plan savings; (v) age 65 value of any defined benefit plan; and (vi) existing nonqualified plan balances and any other retirement plans.

 

Several assumptions are made annually and include a base salary increase percentage, qualified and nonqualified plan contributions and investment earnings, and an annuity rate. These factors are reviewed and approved annually by the Committee in advance of calculating any awards.

 

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To determine the annual benefit, external actuaries calculate the total lump sum retirement benefit needed at age 65 from all company retirement sources to produce an annual retirement benefit of 75% of highest annual salary during the last three years of employment. Company retirement sources include any Company contributions to qualified benefit plans and contributions to nonqualified benefit plans. If the combination of these two sources does not yield a total retirement balance that will meet the 75% objective, then contributions may be made annually through the SERP to bring the total benefit up to the targeted level.

 

To illustrate, assume $10 million is needed at age 65 to produce an annual retirement benefit equal to 75% of base salary. The participant is projected to have $3 million in his qualified benefit plans resulting from Company contributions at retirement and $4 million in his nonqualified retirement plans resulting from Company contributions at retirement. Since the total of these two sources is $7 million, a shortfall of $3 million results. This is the amount needed to achieve the 75% pay replacement objective. This shortfall may be offset through annual contributions to the SERP.

 

Participation in the SERP is limited to the direct reports of the CEO and other selected executives as recommended by the CEO and approved at the discretion of the Committee. However, participation one year does not guarantee future participation. In 2019, the Committee authorized retirement allocations under the SERP to all NEOs as listed in the Supplemental Table: All Other Compensation and the 2019 Nonqualified Deferred Compensation table.

 

All of the NEOs, except Mr. Loeffler, are fully vested in their respective account balances. Balances for active and terminated participants earn interest at an annual rate of 5% and 10%, respectively.

 

Other Executive Benefits and Policies

 

Retirement and Savings Plan

 

All NEOs may participate in the Halliburton Retirement and Savings Plan, which is the defined contribution benefit plan available to all eligible U.S. employees. The matching contribution amounts we contributed on behalf of each NEO are included in the Supplemental Table: All Other Compensation.

 

Elective Deferral Plan

 

All NEOs may participate in the Halliburton Elective Deferral Plan, which was established to provide highly compensated employees with an opportunity to defer earned base salary and incentive compensation in order to help meet retirement and other future income needs.

 

Participants may elect to defer up to 75% of their annual base salary and up to 75% of their incentive compensation into the plan. Deferral elections must be made on an annual basis, including the type and timing of distribution. Plan earnings are based on the NEO’s choice of up to 12 investment options with varying degrees of risk, including the risk of loss. Investment options may be changed by the NEO daily.

 

In 2019, none of our NEOs participated in this plan. Messrs. Rainey and Richard have account balances from participation in the plan in prior years. Messrs. Miller, Loeffler, and Carre are not participants in the plan. Further details can be found in the 2019 Nonqualified Deferred Compensation table.

 

Benefit Restoration Plan

 

The Halliburton Company Benefit Restoration Plan provides a vehicle to restore qualified plan benefits which are reduced as a result of limitations on contributions imposed under the Internal Revenue Code or due to participation in other plans we sponsor and to defer compensation that would otherwise be treated as excessive remuneration within the meaning of Section 162(m) of the Internal Revenue Code. Awards are made annually to those who meet these criteria and earned interest at an annual rate as defined by the plan document. Awards and corresponding interest balances are 100% vested and distributed upon separation.

 

In accordance with the plan document, participants earn monthly interest at the 120% AFR rate, provided the interest rate shall be no less than 6% per annum or greater than 10% per annum. Because the 120% AFR rate was below the 6% minimum interest threshold, plan participants earned interest at an annual rate of 6% in 2019.

 

In 2019, all NEOs received awards under this plan in the amounts included in the Supplemental Table: All Other Compensation and the 2019 Nonqualified Deferred Compensation table.

 

 

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Perquisites

 

Effective January 1, 2019, we eliminated several perquisites including tax gross ups for personal use of corporate aircraft, executive physical examinations, and financial planning reimbursements. We also eliminated reimbursements for country club dues for all of our NEOs.

 

We do not provide cars to our NEOs. However, a car and part-time driver is available for Mr. Miller’s limited use as needed for security purposes and so that he can work while in transit to meet customers or attend business-related functions.

 

We provided security at the personal residences of Messrs. Miller and Loeffler during 2019.

 

As a result of the recommendations provided by an independent, third-party security consultant, the Board has determined that Mr. Miller must use company aircraft for all travel. The security study also recommends that his spouse and children use company-provided aircraft. The only personal use of the company aircraft in 2019 for other NEOs is for spousal and dependent travel on select business trips.

 

Mr. Rainey is an expatriate under our long-term expatriate business practice. A differential is commonly paid to expatriates in assignment locations where the cost of goods and services is greater than the cost for the same goods and services in the expatriate’s home country. Differentials are determined by Mercer/ORC, a third-party consultant. Mr. Rainey receives certain assignment allowances, including a goods and services differential and host country housing and utilities. He also participates in our tax equalization program, which neutralizes the tax effect of the international assignment and approximates the tax obligation the expatriate would pay in his home country.

 

Specific amounts for the above-mentioned perquisites are detailed for each NEO in the Supplemental Table: All Other Compensation.

 

Clawback Policy

 

We have a clawback policy under which we will seek to recoup incentive compensation in all appropriate cases paid to, awarded, or credited for the benefit of any of our executive officers, which include all NEOs, if and to the extent that:

 

The amount of incentive compensation was calculated based on the achievement of financial results that were subsequently reduced due to a restatement of our financial results;
The officer engaged in fraudulent conduct that caused the need for the restatement; and
The amount of incentive compensation that would have been paid to, awarded, or credited for the benefit of the officer, had our financial results been properly reported, would have been lower than the amount actually paid, awarded, or credited.

 

The policy also provides that we will seek to recoup incentive compensation in all appropriate cases paid to, awarded to, or credited for the benefit of any of our executive officers, which include all NEOs, and certain other senior officers, if and to the extent that:

 

It is determined that, in connection with the performance of that officer’s duties, he or she breached his or her fiduciary duty by knowingly or recklessly engaging in a material violation of a U.S. federal or state law, or failed to supervise an employee who substantially participated in such a violation; or
The officer is named as a defendant in a law enforcement proceeding for having breached his or her fiduciary duty by knowingly or recklessly engaging in a material violation of a U.S. federal or state law, the officer disagrees with the allegations relating to the proceeding, and either (i) we initiate a review and determine that the alleged action is not indemnifiable or (ii) the officer does not prevail at trial, enters into a plea arrangement, agrees to the entry of a final administrative or judicial order imposing sanctions, or otherwise admits to the violation in a legal proceeding.

 

The disinterested members of the Board and the disinterested members of the Compensation Committee and the Nominating and Corporate Governance Committee may be involved in reviewing, considering, and making determinations regarding the officer’s alleged conduct, whether recoupment is appropriate or required, and the type and amount of incentive compensation to be recouped from the officer.

 

The policy also provides that, to the extent permitted by applicable law and not previously disclosed in a filing with the SEC, we will disclose in our proxy statement the circumstances of any recoupment arising under the policy or that there has not been any recoupment pursuant to the policy for the prior calendar year. There was no recoupment under the policy in 2019.

 

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  HALLIBURTON  |  2020 Proxy Statement      40

 

Stock Ownership Requirements

 

We have stock ownership requirements for our executive officers, which include all the NEOs, to further align their interests with our shareholders.

 

Our CEO is required to own Halliburton common stock in an amount equal to or in excess of six times his annual base salary. Executive officers that report directly to the CEO are required to own an amount of Halliburton common stock equal to or in excess of three times their annual base salary, and all other executive officers are required to own an amount of Halliburton common stock equal to or in excess of two times their annual base salary. The Committee reviews their holdings, which include restricted shares and all other Halliburton common stock owned by the officer, at each December meeting. Each executive officer has five years to meet the requirements, measured from the date the officer becomes subject to the ownership level for the applicable office.

 

After the five-year stock ownership period, as described above, executive officers who have not met their minimum ownership requirement must retain 100% of the net shares acquired upon restricted stock vesting until they achieve their required ownership level. During this time period, any stock option exercise must be an exercise and hold.

 

As of December 31, 2019, all NEOs met the requirements.

 

Hedging and Pledging Policy

 

We have a policy under which our Directors and executive officers, which include all NEOs, and certain senior officers are prohibited from:

 

hedging activities related to Halliburton securities; and
the pledging of Halliburton securities.

 

The policy defines hedging activities as the use of any financial instrument designed to hedge or offset a change in the market value of any Halliburton security, and defines pledging as the use of a Halliburton security or any related derivative security as collateral for any form of indebtedness.

 

Additionally, the policy:

 

discourages all employees and Directors from speculative activities in Halliburton securities and related derivative securities, such as puts or call options;
applies to all Halliburton securities, including restricted stock, restricted stock units, options, and debt securities, which are issued by any Halliburton entity, and any other security directly or indirectly exercisable for or convertible or exchangeable into any Halliburton security; and
applies regardless of whether or not the securities were acquired from our equity compensation plans.

 

Elements of Post-Termination Compensation and Benefits

 

Termination events that trigger payments and benefits include normal or early retirement, cause, death, disability, and voluntary termination. Post-termination or change-in-control payments may include severance, accelerated vesting of restricted stock and stock options, payments under cash-based short- and long-term incentive plans, payout of nonqualified account balances, and health benefits, among others. The impact of various events on each element of compensation for the NEOs is detailed in the Post-Termination or Change-In-Control Payment table.

 

Impact of Regulatory Requirements on Compensation

 

Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation paid to the CEO, CFO, or any of the three other most highly compensated officers to the extent the compensation exceeds $1 million in any year. Effective for tax years beginning after December 31, 2017, Section 162(m) has been revised to eliminate the performance-based compensation exception.

 

Prior to this change in the tax law, our Stock and Incentive Plan enabled qualification of stock options, stock appreciation rights, and performance share awards, as well as short- and long-term cash performance plans under Section 162(m). Our policy is to utilize available tax deductions whenever appropriate and consistent with our compensation philosophy. When designing and implementing our executive compensation program, the Committee considers all relevant factors, including tax deductibility of compensation, and will consider the federal tax deductibility of compensation in excess of $1 million a year to the extent doing so is consistent with our executive compensation objectives.

 

 

  HALLIBURTON  |  2020 Proxy Statement      41

 

Executive Compensation Tables

 

Summary Compensation Table

 

The following tables set forth information regarding our CEO, CFO, and our three other most highly compensated executive officers for the fiscal year ended December 31, 2019.

 

Name and
Principal Position
  Year   Salary
($)
  Bonus
($)
  Stock
Awards
($)
  Option
Awards
($)
  Non-Equity
Incentive Plan
Compensation
($)
  Change In
Pension Value
and NQDC
Earnings
($)
  All Other
Compensation
($)
  Total
($)
 

Jeffrey A. Miller

Chairman, President and Chief Executive Officer

  2019   1,500,000   0   3,584,073   0   5,730,380   139,300   1,799,861   12,753,614  
  2018   1,400,000   0   3,137,712   1,253,184   9,628,708   47,006   1,533,288   16,999,898  
  2017   1,175,000   0   10,168,098   1,506,020   8,692,468   59,532   1,477,246   23,078,364  

Lance Loeffler

Executive Vice President and Chief Financial Officer

  2019   650,000   0   888,858   0   0   4,656   465,091   2,008,605  
  2018   375,000   0   1,316,925   626,190   60,626   269   218,632   2,597,642  

Eric J. Carre

Executive Vice President – Global Business Lines

  2019   800,000   0   848,065   0   2,485,124   45,466   737,503   4,916,158  

Joe D. Rainey

President – Eastern Hemisphere

  2019   910,000   0   1,129,322   0   3,307,924   409,467   2,368,494   8,125,207  
  2018   875,000   0   1,223,016   488,976   5,240,944   11,626   3,135,200   10,974,762  
  2017   835,000   0   3,703,772   537,948   5,040,420   241,270   3,636,965   13,995,375  

Mark J. Richard

President – Western Hemisphere

  2019   716,678   0   1,129,322   0   1,656,000   88,574   1,321,431   4,912,005  

 

Salary. The amounts in the Salary column reflect the salary earned by each NEO.

 

Stock Awards. The amounts in the Stock Awards column reflect the grant date fair value of the restricted stock awarded in 2019. Except where there is a distinction to make between the two types of awards, this proxy statement refers to both restricted stock and restricted stock units as “restricted stock”. We calculate the fair value of restricted stock awards by multiplying the number of restricted shares or units granted by the closing stock price on the grant date.

 

Option Awards. As discussed in Compensation Discussion and Analysis, we discontinued granting Option Awards to NEOs in 2019.

 

Non-Equity Incentive Plan Compensation. The Non-Equity Incentive Plan Compensation column reflect amounts earned in 2019 and paid in 2020 for the 2017 cycle Performance Unit Program.

 

The 2017 cycle Performance Unit Program amounts paid to each NEO are: $5,730,380 for Mr. Miller; $2,485,124 for Mr. Carre; $3,307,924 for Mr. Rainey; and $1,656,000 for Mr. Richard. Mr. Loeffler was not a participant in the 2017 cycle Performance Unit Program. The amounts paid to the NEOs for the 2017 cycle Performance Unit Program differ from what is shown in the Grants of Plan-Based Awards in Fiscal Year 2019 table under Estimated Future Payments Under Non-Equity Incentive Plan Awards. That table indicates the potential award amounts under the 2019 cycle Performance Unit Program, which will close on December 31, 2021.

 

As discussed in the Compensation Discussion and Analysis, no amounts were earned by our NEOs under the 2019 Halliburton Annual Performance Pay Plan because the minimum threshold performance level was not achieved.

 

Change in Pension Value and NQDC Earnings. The amounts in the Change in Pension Value and NQDC Earnings column are attributable to the above-market earnings for various nonqualified plans. The methodology for determining what constitutes above-

 

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  HALLIBURTON  |  2020 Proxy Statement      42

 

market earnings is the difference between the interest rate as stated in the applicable nonqualified plan document and the Internal Revenue Service Long-Term 120% AFR rate as of December 31, 2019. The 120% AFR rate used for determining above-market earnings in 2019 was 2.52%.

 

Supplemental Executive Retirement Plan Above-Market Earnings. The current interest rate for active participant accounts in the Supplemental Executive Retirement Plan is 5% as defined by the plan document. The above-market earnings for active participants equaled 2.48% (5% (plan interest) minus 2.52%) for 2019.

 

NEOs earned above-market earnings for their balances associated with the plan as follows: $122,789 for Mr. Miller; $3,920 for Mr. Loeffler; $37,791 for Mr. Carre; and $132,303 for Mr. Rainey.

 

Benefit Restoration Plan Above-Market Earnings. In accordance with the plan document, participants earn monthly interest at the 120% AFR rate, provided the interest rate shall be no less than 6% per annum or greater than 10% per annum. Because the 120% AFR rate was below the 6% minimum interest threshold, the above-market earnings associated with this plan were 3.48% (6% (plan interest) minus 2.52%) for 2019.

 

NEOs earned above-market earnings for their balances associated with the plan as follows: $16,511 for Mr. Miller; $736 for Mr. Loeffler; $7,675 for Mr. Carre; $16,212 for Mr. Rainey; and $4,582 for Mr. Richard.

 

Elective Deferral Plan Above-Market Earnings. The average NEO earnings for the balances associated with the Elective Deferral Plan were 9.02% for 2019. The above-market earnings associated with this plan equaled 6.50% (9.02% minus 2.52%) for 2019.

 

NEOs earned above-market earnings for balances associated with the plan as follows: $260,952 for Mr. Rainey; and $83,992 for Mr. Richard. Messrs. Miller, Loeffler, and Carre are not participants in and do not have any prior balances in the Elective Deferral Plan.

 

The amounts shown in this column differ from the amounts shown for the Supplemental Executive Retirement Plan, the Benefit Restoration Plan, and the Elective Deferral Plan in the 2019 Nonqualified Deferred Compensation table under the Aggregate Earnings in Last Fiscal Year column because that table includes all earnings and losses and the Summary Compensation Table shows above-market earnings only.

 

All Other Compensation. Detailed information for amounts included in the All Other Compensation column can be found in the Supplemental Table: All Other Compensation.

 

Supplemental Table: All Other Compensation

 

The following table details the components of the All Other Compensation column of the Summary Compensation Table for 2019.

 

Name  Halliburton
Foundation
($)
  Halliburton
Giving
Choices
($)
  HALPAC
($)
  Restricted
Stock
Dividends
($)
  HRSP
Employer
Match
($)
  HRSP
Basic
($)
  Benefit
Restoration
Plan
($)
  SERP
($)
  Expatriate
Assignment
($)
  All
Other
($)
  Total
($)
Jeffrey A. Miller  112,500  1,000  5,000  309,412  13,750  5,600  85,400  1,205,000  0  62,199  1,799,861
Lance Loeffler  0  75  5,000  47,400  14,000  5,600  25,900  332,000  0  35,116  465,091
Eric J. Carre  0  1,000  0  88,503  14,000  5,600  36,400  592,000  0  0  737,503
Joe D. Rainey  0  0  0  0  14,000  5,600  44,100  983,000  1,321,794  0  2,368,494
Mark J. Richard  45,000  80  5,000  45,473  13,177  5,600  30,567  1,129,000  0  47,534  1,321,431

 

Halliburton Foundation. The Halliburton Foundation allows NEOs and other employees to donate to approved universities, medical hospitals, and primary schools of their choice. In 2019, the Halliburton Foundation matched donations up to $20,000 on a 2.25 for 1 basis. Mr. Miller participated in the Halliburton Foundation’s matching program for Directors, which allowed his 2019 contributions up to $50,000 to qualified organizations to be matched on a 2.25 for 1 basis.

 

Halliburton Giving Choices. The Halliburton Giving Choices Program allows NEOs and other employees to donate to approved not-for-profit charities of their choice. We match donations by contributing ten cents for every dollar contributed by employees. The amounts shown represent the match amounts the program donated to charities on behalf of the NEOs in 2019.

 

Halliburton Political Action Committee. The Halliburton Political Action Committee, or HALPAC, allows NEOs and other eligible employees to donate to political candidates and participate in the political process. We match the NEOs’ and other employees’ donations to HALPAC dollar-for-dollar to a 501(c)(3) status nonprofit organization of the contributor’s choice. The amounts shown represent the match amounts donated to charities on behalf of the NEOs in 2019.

 

 

  HALLIBURTON  |  2020 Proxy Statement      43

 

Restricted Stock Dividends. This is the amount of dividends paid on restricted stock held by NEOs in 2019. Restricted stock units granted to employees do not receive dividend payments.

 

Retirement and Savings Plan Employer Match. This is the contribution we made on behalf of each NEO to the Retirement and Savings Plan, our defined contribution plan. We match employee contributions up to 5% of each employee’s eligible base salary up to the 401(a)(17) compensation limit of $280,000 in 2019.

 

Retirement and Savings Plan Basic Contribution. This is the contribution we made on behalf of each NEO to the Retirement and Savings Plan. If actively employed on December 31, 2019, or if they meet retirement eligibility requirements of the plan as of their separation date, each employee receives a contribution equal to 2% of their eligible base pay up to the 401(a)(17) compensation limit of $280,000 in 2019.

 

Benefit Restoration Plan. This is the award earned under the Benefit Restoration Plan in 2019 as discussed in the Benefit Restoration Plan section of Compensation Discussion and Analysis. Associated interest, awards, and beginning and ending balances for the Benefit Restoration Plan are included in the 2019 Nonqualified Deferred Compensation table.

 

Supplemental Executive Retirement Plan. This is the award approved under the Supplemental Executive Retirement Plan in 2019 as discussed in the Supplemental Executive Retirement Plan section of Compensation Discussion and Analysis. Associated interest, awards, and beginning and ending balances for the Supplemental Executive Retirement Plan are included in the 2019 Nonqualified Deferred Compensation table.

 

Expatriate Assignment. In 2019, Mr. Rainey received compensation associated with his expatriate assignment similar in type to that received by other expatriates on comparable assignments. He received $89,392 for cost of living adjustment; $91,000 mobility premium; $1,002,226 for tax equalization; $112,786 for imputed housing allowance; $13,320 for imputed vacation travel; and $13,070 for auto imputed allowance.

 

All Other.

 

Aircraft Usage. As a result of the recommendations provided by an independent, third-party security consultant, the Board has determined that Mr. Miller must use company aircraft for all travel. The security study also recommends that his spouse and children use company-provided aircraft. The only personal use of company aircraft in 2019 for other NEOs was for spousal and dependent travel on select business trips. For 2019, the incremental cost to us for this personal use of our aircraft was as follows: $50,214 for Mr. Miller and $9,839 for Mr. Loeffler. For total compensation purposes in 2019, we valued the incremental cost of the personal use of aircraft using a method that takes into account: landing, parking, hanger, flight planning services, and dead-head costs; crew travel expenses; supplies and catering; aircraft fuel and oil expenses per hour of flight; any customs, foreign permit, and similar fees; and passenger ground transportation. NEOs are not reimbursed for the tax impact of any imputed income resulting from aircraft usage.
Home Security. We provide security for residences based on risk assessments. In 2019, home security costs were as follows: $3,363 for Mr. Miller and $25,277 for Mr. Loeffler.
Car/Driver. A car and part-time driver is available for Mr. Miller’s limited use as needed for security purposes and so that he can work while in transit to meet customers or attend business-related functions. In 2019, the cost to us was $8,622.
Other Compensation for Mr. Richard. In 2019, Mr. Richard received $37,184 in imputed income for relocation and $10,350 in service anniversary gifts.

 

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  HALLIBURTON  |  2020 Proxy Statement      44

 

Grants of Plan-Based Awards in Fiscal 2019

 

The following table represents amounts associated with the 2019 cycle Performance Unit Program, the 2019 Annual Performance Pay Plan, and restricted stock awards granted in 2019 to our NEOs.

 

      Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
    All Other
Stock
Awards:
Number of
Shares of
  Grant Date
Fair Value
of Stock and
Options
Name  Grant Date  Threshold
($)
  Target
($)
  Maximum
($)
    Stock or
Units (#)
  Awards
($)
Jeffrey A. Miller     1,203,958  4,815,832  9,631,664(1)        
      900,000  2,250,000  4,500,000(2)        
   12/04/2019             166,934  3,584,073
Lance Loeffler     359,869  1,439,476  2,878,952(1)        
      260,000  650,000  1,300,000(2)        
   12/04/2019             41,400  888,858
Eric J. Carre     352,174  1,408,696  2,817,392(1)        
      320,000  800,000  1,600,000(2)        
   12/04/2019             39,500  848,065
Joe D. Rainey     469,847  1,879,388  3,758,776(1)        
      400,400  1,001,000  2,002,000(2)        
   12/04/2019             52,600  1,129,322
Mark J. Richard     469,847  1,879,388  3,758,776(1)        
      275,000  687,500  1,375,000(2)        
   12/04/2019             52,600  1,129,322
(1) Opportunity levels under the 2019 cycle of the Performance Unit Program.
(2) Opportunity levels under the 2019 Halliburton Annual Performance Pay Plan.

 

As indicated by footnote (1), the opportunities for each NEO under the 2019 cycle Performance Unit Program if the Threshold, Target, or Maximum levels are achieved are reflected under Estimated Future Payouts Under Non-Equity Incentive Plan Awards. The potential payouts are performance driven and completely at risk. For more information on the 2019 cycle Performance Unit Program, refer to Long-term Incentives in Compensation Discussion and Analysis.

 

As indicated by footnote (2), the opportunities for each NEO under the 2019 Halliburton Annual Performance Pay Plan are also reflected under Estimated Future Payouts Under Non-Equity Incentive Plan Awards. The potential payouts are performance driven and completely at risk. For more information on the 2019 Halliburton Annual Performance Pay Program, refer to Short-term (Annual) Incentive in Compensation Discussion and Analysis. No amounts were earned by our NEOs under the 2019 Halliburton Annual Performance Pay Plan because the minimum threshold performance level was not achieved.

 

All restricted stock awards are granted under the Stock and Incentive Plan. The awards listed under All Other Stock Awards: Number of Shares of Stock or Units were awarded to each NEO on the date indicated by the Compensation Committee.

 

The restricted stock grants awarded to the NEOs during 2019 are subject to a graded vesting schedule of 20% per year over five years. All restricted shares are priced at fair market value on the date of grant. Quarterly dividends are paid on the restricted shares at the same time and rate payable on our common stock, which was $0.18 per share during 2019. The shares may not be sold or transferred until fully vested. The shares remain subject to forfeiture during the restricted period in the event of the NEO’s termination of employment or an unapproved early retirement.

 

 

  HALLIBURTON  |  2020 Proxy Statement      45

 

Outstanding Equity Awards at Fiscal Year End 2019

 

The following table represents outstanding stock option and restricted stock awards for our NEOs as of December 31, 2019. The market value of shares or units of stock not vested was determined by multiplying the number of unvested restricted shares at year end by the closing price of our common stock on the NYSE of $24.47 on December 31, 2019.

 

      Option Awards  Stock Awards
Name  Grant Date  Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
  Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
  Option
Exercise
Price
($)
  Option
Expiration
Date
  Number of
Shares
or Units
of Stock
Not Vested
(#)
  Market Value
of Shares
or Units of
Stock
Not Vested
($)
Jeffrey A. Miller(1)  12/4/2013  55,700    50.62  12/4/2023   
   12/3/2014  115,100    40.75  12/3/2024   
   12/2/2015  99,200    38.95  12/2/2025  11,140  272,596
   12/7/2016  69,500    53.54  12/7/2026  16,720  409,138
   6/1/2017            150,000  3,670,500
   12/6/2017  85,667  42,833  43.38  12/6/2027  46,260  1,131,982
   12/5/2018  57,067  114,133  31.44  12/5/2028  79,840  1,953,685
   12/4/2019            166,934  4,084,875
TOTAL     482,234  156,966        470,894  11,522,776
Lance Loeffler(2)  1/2/2015  15,594    39.49  1/2/2025  1,646  40,278
   5/1/2015            203  4,967
   1/4/2016  27,912    34.48  1/4/2026  4,176  102,187
   1/3/2017  11,119  5,559  55.68  1/3/2017  3,889  95,164
   5/3/2017            8,840  216,315
   1/2/2018  6,806  13,610  49.61  1/2/2028  6,128  149,952
   12/5/2018  17,034  34,066  31.44  12/5/2028  23,840  583,365
   12/4/2019            41,400  1,013,058
TOTAL     78,465  53,235        90,122  2,205,286
Eric J. Carre(3)  1/2/2014  8,300    50.01  1/2/2024   
   1/2/2015  24,750    39.49  1/2/2025  3,495  85,523
   1/4/2016  9,534    34.48  1/4/2026  6,682  163,509
   5/1/2016            40,000  978,800
   12/7/2016  30,100    53.54  12/7/2026  7,240  177,163
   12/6/2017  22,951  11,474  43.38  12/6/2027  12,420  303,917
   12/5/2018  16,701  33,399  31.44  12/5/2028  23,360  571,619
   12/4/2019            39,500  966,565
TOTAL     112,336  44,873        132,697  3,247,096

 

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  HALLIBURTON  |  2020 Proxy Statement      46

 

      Option Awards  Stock Awards
Name  Grant Date  Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
  Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
  Option
Exercise
Price
($)
  Option
Expiration
Date
  Number of
Shares
or Units
of Stock
Not Vested
(#)
  Market Value
of Shares
or Units of
Stock
Not Vested
($)
Joe D. Rainey(4)  12/6/2011  14,566    35.57  12/6/2021   
   12/5/2012  37,933    33.50  12/5/2022   
   12/4/2013  45,500    50.62  12/4/2023   
   12/3/2014  59,500    40.75  12/3/2024   
   12/2/2015  58,700    38.95  12/2/2025  6,580  161,013
   12/7/2016  40,100    53.54  12/7/2026  9,680  236,870
   5/17/2017            54,089  1,323,558
   12/6/2017  30,601  15,299  43.38  12/6/2027  16,560  405,223
   12/5/2018  22,267  44,533  31.44  12/5/2028  31,120  761,506
   12/4/2019            52,600  1,287,122
TOTAL     309,167  59,832        170,629  4,175,292
Mark J. Richard(5)  1/5/2010  7,000    31.65  1/5/2020   
   1/1/2011  4,600    40.83  1/1/2021   
   1/3/2012  6,400    34.15  1/3/2022   
   1/3/2013  13,900    36.31  1/3/2023   
   1/2/2014  7,900    50.01  1/2/2024   
   1/2/2015  14,807    39.49  1/2/2025  2,091  51,167
   10/27/2015            2,134  52,219
   1/4/2016  28,604    34.48  1/4/2026  6,682  163,509
   1/3/2017  11,413  5,706  55.68  1/3/2027  6,245  152,815
   1/2/2018  8,007  16,012  49.61  1/2/2028  11,288  276,217
   12/20/2018  14,642  29,282  27.14  12/20/2028  20,633  504,890
   12/4/2019            52,600  1,287,122
TOTAL     117,273  51,000        101,673  2,487,939
(1) Mr. Miller’s stock option awards vest annually in equal amounts over three-year vesting schedules. His restricted stock awards vest in equal amounts over each grant’s five-year vesting schedule, except for the June 1, 2017, award, which will vest 100% five years from the date of grant.
(2) Mr. Loeffler’s stock option awards vest annually in equal amounts over three-year vesting schedules. His restricted stock awards vest in equal amounts over each grant’s five-year vesting schedule, except for the May 3, 2017, award, which will vest 100% three years from the date of grant.
(3) Mr. Carre’s stock option awards vest annually in equal amounts over three-year vesting schedules. His restricted stock awards vest in equal amounts over each grant’s five-year vesting schedule, except for the May 1, 2016, award, which will vest 100% five years from the date of grant.
(4) Mr. Rainey’s stock option awards vest annually in equal amounts over three-year vesting schedules. His restricted stock awards vest in equal amounts over each grant’s five-year vesting schedule, except for the May 17, 2017, award, which will vest 100% five years from the date of grant.
(5) Mr. Richard’s stock option awards vest annually in equal amounts over three-year vesting schedules. His restricted stock awards vest in equal amounts over each grant’s five-year vesting schedule.

 

 

  HALLIBURTON  |  2020 Proxy Statement      47

 

2019 Option Exercises and Stock Vested

 

The following table represents stock options exercised and restricted shares that vested during fiscal year 2019 for our NEOs.

 

   Option Awards  Stock Awards
Name  Number of Shares
Acquired on Exercise
(#)
  Value Realized
on Exercise
($)
  Number of Shares
Acquired on Vesting
(#)
  Value Realized
on Vesting
($)
Jeffrey A. Miller      112,580  2,434,715
Lance Loeffler      13,726  333,642
Eric J. Carre      46,596  1,149,906
Joe D. Rainey      31,120  671,131
Mark J. Richard      68,730  1,970,666

 

The value realized for vested restricted stock awards was determined by multiplying the fair market value of the shares (closing price of our common stock on the NYSE on the vesting date) by the number of shares that vested. Shares vested on various dates throughout the year. The value listed represents the aggregate value of all shares that vested for each NEO in 2019.

 

2019 Nonqualified Deferred Compensation

 

The 2019 Nonqualified Deferred Compensation table reflects balances in our nonqualified plans as of January 1, 2019, contributions made by the NEO and us during 2019, earnings (the net of the gains and losses on funds, as applicable), distributions, and the ending balance as of December 31, 2019. The plans are described in Compensation Discussion and Analysis.

 

Name  Plan  01/01/19
Balance
($)
  Executive
Contributions
In Last
Fiscal Year
($)
  Registrant
Contributions
In Last
Fiscal Year
($)
  Aggregate
Earnings
In Last
Fiscal Year
($)
  Aggregate
Distributions
($)
  Aggregate
Balance At
Last Fiscal
Year End
($)
Jeffrey A. Miller  SERP  4,956,791  0  1,205,000  247,700  0  6,409,491
   Benefit Restoration  477,957  0  85,400  28,556  0  591,913
   TOTAL  5,434,748  0  1,290,400  276,256  0  7,001,404
Lance Loeffler  SERP  159,000  0  332,000  7,927  0  498,927
   Benefit Restoration  21,366  0  25,900  1,275  0  48,541
   TOTAL  180,366  0  357,900  9,202  0  547,468
Eric J. Carre  SERP  1,526,623  0  592,000  76,262  0  2,194,885
   Benefits Restoration  222,110  0  36,400  13,272  0  271,782
   TOTAL  1,748,733  0  628,400  89,534  0  2,466,667
Joe D. Rainey  SERP  5,338,166  0  983,000  266,825  0  6,587,991
   Benefit Restoration  468,779  0  44,100  28,025  0  540,904
   Elective Deferral  3,854,001  0  0  358,073  0  4,212,074
   TOTAL  9,660,946  0  1,027,100  652,923  0  11,340,969
Mark J. Richard  SERP  0  0  1,129,000  0  0  1,129,000
   Benefit Restoration  132,636  0  30,567  7,924  0  171,127
   Elective Deferral  1,450,417  0  0  120,542  0  1,570,959
   TOTAL  1,583,053  0  1,159,567  128,466  0  2,871,086

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      48

 

Employment Contracts and Change-in-Control Arrangements

 

Employment Contracts

 

All of our NEOs have employment agreements with us that contain substantial non-compete and non-solicitation provisions post separation.

 

The employment agreements provide that if the agreement is terminated by the employee for good reason or by death, disability, or retirement or his employment is terminated by the Company for any reason other than cause or a fiduciary violation, all restrictions on restricted stock and units will lapse. In addition, in the case of a termination by the employee for good reason or termination by the Company for any reason other than cause or a fiduciary violation, the employee will receive a lump sum cash payment equal to two years of his base salary then in effect.

 

Change-In-Control Arrangements

 

We do not maintain individual change-in-control agreements or provide for excise tax gross-ups on any payments associated with a change-in-control. Some of our compensation plans, however, contain change-in-control provisions, which could result in payment of specific benefits.

 

Under the Stock and Incentive Plan, in the event of a change-in-control, awards granted after February 13, 2019, are subject to double-trigger vesting, such that, if a participant is terminated due to involuntary termination without cause, death, disability, good reason (as defined in an employment agreement, or a similar constructive termination event, in each case, only if a severance benefit is payable upon termination of employment due to such event pursuant to an employment agreement) or other event as specified in the participant’s award document within the period beginning on the date of the public announcement of a transaction that, if consummated, would constitute a corporate change and ending on the date that is the earlier of the announcement of the termination of the proposed transaction or two years after the consummation of the transaction (a Qualifying Termination), the following will occur automatically:

 

any outstanding options and stock appreciation rights shall become immediately vested and fully exercisable for the full term thereof;
any restrictions on restricted stock awards shall immediately lapse;
all performance measures upon which an outstanding performance award is contingent are deemed achieved and the holder shall receive a payment equal to the target amount of the award he or she would have been entitled to receive; and
any outstanding cash awards, including stock value equivalent awards, immediately vest and are paid based on the vested value of the award.

 

Under the Annual Performance Pay Plan:

 

in the event of a change-in-control during a plan year, a participant experiencing a Qualifying Termination will be entitled to payment equal to the target amount of the award he or she would have been entitled to receive, without proration; and
in the event of a change-in-control after the end of a plan year but before the payment date, a participant will be entitled to an immediate cash payment equal to the incentive earned for the plan year.

 

Under the Performance Unit Program:

 

in the event of a change-in-control during a performance cycle, a participant experiencing a Qualifying Termination will be entitled to payment equal to the target amount of the award he or she would have been entitled to receive, without proration; and
in the event of a change-in-control after the end of a performance cycle but before the payment date, a participant will be entitled to an immediate cash payment equal to the award earned for that performance cycle.

 

Under the Employee Stock Purchase Plan, in the event of a change-in-control, unless the successor corporation assumes or substitutes new stock purchase rights:

 

the purchase date for the outstanding stock purchase rights will be accelerated to a date fixed by the Compensation Committee prior to the effective date of the change-in-control; and
upon such effective date, any unexercised stock purchase rights will expire and we will refund to each participant the amount of his or her payroll deductions made for purposes of the Employee Stock Purchase Plan that have not yet been used to purchase stock.

 

 

  HALLIBURTON  |  2020 Proxy Statement      49

 

Post-Termination or Change-in-Control Payments

 

The following tables and narratives represent the impact of certain termination events or a change-in-control on each element of compensation for NEOs as of December 31, 2019.

 

    Termination Event  
Name Payments   Resignation
($)
  Early
Retirement
w/o
Approval
($)
  Early
Retirement
w/Approval
($)
  Normal
Retirement
($)
  Term
for Cause
($)
  Term
w/o
Cause
($)
  Change in
Control
($)
Jeffrey A. Miller Severance   0   0   0   0   0   3,000,000   0
Annual Perf. Pay Plan   0   0   0   0   0   0   0
Restricted Stock   0   0   11,522,776   11,522,776   0   11,522,776   7,437,901
  Stock Options   0   0   0   0   0   0   0
  Performance Units   0   0   9,515,164   9,515,164   0   0   12,034,989
  Nonqualified Plans   7,001,404   7,001,404   7,001,404   7,001,404   7,001,404   7,001,404   0
  Health Benefits   0   12,000   12,000   0   0   0   0
  TOTAL   7,001,404   7,013,404   28,051,344   28,039,344   7,001,404   21,524,180   19,472,890
Lance Loeffler Severance   0   0   0   0   0   1,300,000   0
Annual Perf. Pay Plan   0   0   0   0   0   0   0
  Restricted Stock   0   0   2,205,286   2,205,286   0   2,205,286   1,192,228
  Stock Options   0   0   0   0   0   0   0
  Performance Units   0   0   959,651   959,651   0   0   0
  Nonqualified Plans   48,541   48,541   48,541   48,541   48,541   48,541   0
  Health Benefits   0   0   0   0   0   0   0
  TOTAL   48,541   48,541   3,213,478   3,213,478   48,541   3,553,827   1,192,228
Eric J. Carre Severance   0   0   0   0   0   1,600,000   0
  Annual Perf. Pay Plan   0   0   0   0   0   0   0
  Restricted Stock   0   0   3,247,096   3,247,096   0   3,247,096   2,280,531
  Stock Options   0   0   0   0   0   0   0
  Performance Units   0   0   2,628,527   2,628,527   0   0   4,174,520
  Nonqualified Plans   2,466,667   2,466,667   2,466,667   2,466,667   2,466,667   2,466,667   0
  Health Benefits   0   0   0   0   0   0   0
  TOTAL   2,466,667   2,466,667   8,342,290   8,342,290   2,466,667   7,313,763   6,455,051
Joe D. Rainey Severance   0   0   0   0   0   1,820,000   0
  Annual Perf. Pay Plan   0   0   0   0   0   0   0
  Restricted Stock   0   0   4,175,292   4,175,292   0   4,175,292   2,888,170
  Stock Options   0   0   0   0   0   0   0
  Performance Units   0   0   3,505,453   3,505,453   0   0   5,560,452
  Nonqualified Plans   11,340,969   11,340,969   11,340,969   11,340,969   11,340,969   11,340,969   0
  Health Benefits   0   12,000   12,000   0   0   0   0
  TOTAL   11,340,969   11,352,969   19,033,714   19,021,714   11,340,969   17,336,261   8,448,622
Mark J. Richard Severance   0   0   0   0   0   1,450,000   0
Annual Perf. Pay Plan   0   0   0   0   0   0   0
Restricted Stock   0   0   2,487,939   2,487,939   0   2,487,939   1,200,817
  Stock Options   0   0   0   0   0   0   0
  Performance Units   0   0   2,586,258   2,586,258   0   0   2,989,333
  Nonqualified Plans   2,871,086   2,871,086   2,871,086   2,871,086   2,871,086   2,871,086   0
  Health Benefits   0   12,000   12,000   0   0   0   0
  TOTAL   2,871,086   2,883,086   7,957,283   7,945,283   2,871,086   6,809,025   4,190,150

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      50

 

Resignation. Resignation is defined as leaving employment with us voluntarily, without having attained early or normal retirement status (see the applicable sections below for information on what constitutes these statuses). Upon resignation, the following actions will occur for the NEO’s various elements of compensation:

 

Severance Pay. No severance would be paid to the NEO.
Restricted Stock. Any restricted stock holdings would be forfeited upon the date of resignation. Restricted stock holdings information can be found in the Outstanding Equity Awards at Fiscal Year End 2019 table.
Stock Options. The NEO must exercise outstanding, vested options within 30 - 90 days after the NEO’s resignation or the options will be forfeited as per the terms of the stock option agreements. Any unvested stock options would be forfeited. Stock option information can be found in the Outstanding Equity Awards at Fiscal Year End 2019 table.
Performance Units. The NEO would not be eligible to receive payments under the Performance Unit Program.
Nonqualified Plans. The NEO is entitled to any vested benefits under the applicable nonqualified plans as shown in the 2019 Nonqualified Deferred Compensation table. Payments from the Supplemental Executive Retirement Plan and Benefit Restoration Plan are paid out of an irrevocable grantor trust. The principal and income of the trust are treated as our assets and income for federal income tax purposes and are subject to the claims of our general creditors to the extent provided in the plan. The Elective Deferral Plan is unfunded and we make payments from our general assets. Payments from these plans may be paid in a lump sum or in annual installments for a maximum ten-year period.
Health Benefits. The NEO is not eligible for the $12,000 credit to assist in paying for retiree medical costs.

 

Early Retirement. A NEO becomes eligible for early retirement when the NEO has attained age 55 with ten years of service or when the NEO’s age and years of service equals 70 points. Eligibility for early retirement does not guarantee retention of stock awards (lapse of forfeiture restrictions on restricted stock and ability to exercise outstanding options for the remainder of the stated term). Early retirement eligibility is a condition that must be met before the Compensation Committee will consider retention of stock awards upon separation from employment. For example, if a NEO is eligible for early retirement but is leaving us to go to work for a competitor, then the NEO’s stock awards would not be considered for retention.

 

Early Retirement (Without Approval). The impact on the NEO’s various elements of compensation is the same as described under Resignation except as follows:

 

Health Benefits. A NEO that was age 40 or older as of December 31, 2004, and qualifies for early retirement under our health and welfare plans, which require that the NEO has attained age 55 with ten years of service or that the NEO’s age and years of service equals 70 points with a minimum of ten years of service, is eligible for a $12,000 credit toward retiree medical costs incurred prior to age 65. The credit is only applicable if the NEO chooses Halliburton retiree medical coverage. This benefit is amortized as a monthly credit applied to the cost of retiree medical coverage based on the number of months from the time of early retirement to age 65. For example, if a NEO is 10 years or 120 months away from age 65 at the time of the NEO’s early retirement, the NEO will receive a monthly credit in the amount of $100 ($12,000/120 months). Should the NEO choose not to elect coverage with Halliburton after the NEO’s separation, the NEO would not receive any cash in lieu of the credit.

 

Early Retirement (With Approval). The following actions will occur for the NEO’s various elements of compensation:

 

Severance Pay. No severance would be paid to the NEO.
Restricted Stock. Any stock holdings restrictions would lapse upon the date of retirement. Restricted stock holdings information can be found in the Outstanding Equity Awards at Fiscal Year End 2019 table.
Stock Options. The NEO will be granted retention of the NEO’s option awards. The unvested awards will continue to vest per the vesting schedule outlined in the NEO stock option agreements and any vested options will not expire until 10 years from the grant award date. Stock option information can be found in the Outstanding Equity Awards at Fiscal Year End 2019 table.
Performance Units. The NEO will participate on a prorated basis for any Performance Unit Program cycles that have not been completed at the time of the NEO’s retirement. These payments, if earned, are paid out and the NEO would receive payments at the same time as other participants, which is usually no later than March of the year following the close of the cycle.
Nonqualified Plans. The NEO is entitled to any vested benefits under the applicable nonqualified plans as shown in the 2019 Nonqualified Deferred Compensation table. Refer above to Resignation for more information on Nonqualified Plans.
Health Benefits. Same as described under Early Retirement (Without Approval).

 

Normal Retirement. A NEO would be eligible for normal retirement should the NEO cease employment at age 65 or later. The impact on the NEO’s various elements of compensation is the same as described under Early Retirement (With Approval) except as follows:

 

Health Benefits. The NEO is not eligible for the $12,000 credit to assist in paying for retiree medical costs.

 

Termination (For Cause). Should we terminate a NEO for cause, such as violating our Code of Business Conduct, the impact on the NEO’s various elements of compensation is the same as described under Resignation.

 

 

  HALLIBURTON  |  2020 Proxy Statement      51

 

Termination (Without Cause). Should we terminate a NEO without cause, such as termination at our convenience, then the provisions of the NEO’s employment agreement related to severance payments and lapsing of stock restrictions would apply. Payments for these items are conditioned on a release agreement being executed by the NEO. The impact on the NEO’s various elements of compensation is the same as described under Normal Retirement except as follows:

 

Severance Pay. Severance is paid according to terms of the applicable employment agreement. Each NEO would receive severance in the amount of two times base salary at the time of termination.
Performance Units. No payment would be paid to the NEO under the Performance Unit Program.

 

Change-in-Control. Should a change-in-control take place, the following actions will occur for the NEO’s various elements of compensation:

 

Annual Performance Pay Plan. A NEO experiencing a Qualifying Termination will be entitled to payment equal to the target amount of the award he or she would have been entitled to receive, without proration. In the event of a change-in-control after the end of a plan year but before the payment date, the NEO is entitled to an immediate cash payment equal to the incentive earned for the plan year.
Restricted Stock. Restricted shares granted under the Stock and Incentive Plan prior to February 13, 2019, are automatically vested. Restricted shares granted on or after February 13, 2019, only vest in the event of a Qualifying Termination. Restricted stock holdings information can be found in the Outstanding Equity Awards at Fiscal Year End 2019 table.
  Stock Options. Any outstanding options granted under the Stock and Incentive Plan prior to February 13, 2019, shall become immediately vested and fully exercisable by the NEO. No stock options were granted to NEOs in 2019. Stock option information can be found in the Outstanding Equity Awards at Fiscal Year End 2019 table.
Performance Units. For performance cycles beginning prior to 2019, in the event of a change-in-control during a performance cycle, the NEO will be entitled to an immediate cash payment equal to the maximum amount he or she would have been entitled to receive for the performance cycle, prorated through the date of the change-in-control. For the 2019 performance cycle, a NEO experiencing a Qualifying Termination will be entitled to payment equal to the target amount of the award he or she would have been entitled to receive, without proration. In the event of a change-in-control after the end of a performance cycle but before the payment date, the NEO is entitled to an immediate cash payment equal to the incentive earned for that performance cycle.

 

www.halliburton.com  

 

  HALLIBURTON  |  2020 Proxy Statement      52

 

Equity Compensation Plan Information

 

The following table provides certain information, as of December 31, 2019, with respect to our equity compensation plans.

 

Plan Category   Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
(a)
  Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b)
  Number of Securities
Remaining Available for
Future Issuance Under Equity
Compensation Plans (Excluding
Securities Reflected in
Column (a))
(c)
Equity compensation plans approved by security holders   25,320,569   $ 41.58   37,442,196
Equity compensation plans not approved by security holders      
TOTAL   25,320,569   $ 41.58   37,442,196

 

CEO Pay Ratio

 

For 2019, the annual total compensation of our CEO was 146 times the median of the annual total compensation of all employees, based on annual total compensation of $12,770,467 for the CEO and $87,289 for the median employee. There was no material change in our employee demographics and compensation structure; therefore, the median employee identified in 2017 was utilized in our 2019 analysis. What follows is a description of the methodology used from 2017.

 

This disclosure is based on an October 1, 2017, employee population of 52,833, of which 21,862 were U.S. employees and 30,971 were non-U.S. employees. We excluded from this employee population 2,637 non-U.S. employees from 47  countries as the total number of employees from these non-U.S. jurisdictions was less than 5% of our total employee population. After applying the exclusion, the total employee population was 50,196.

 

Non-U.S. Employee Country Exclusions
Country Headcount   Country Headcount   Country Headcount   Country Headcount
Ecuador 442   Cameroon 55   Chile 17   Ukraine 4
Azerbaijan 417   Panama 51   Spain 14   Hungary 3
Kazakhstan 378   Poland 48   Belgium 11   Kenya 3
Congo 158   Romania 46   Philippines 11   Uganda 3
Germany 113   France 35   Mozambique 10   Switzerland 2
Italy