Other definitive proxy statements – Form DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

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

Check the appropriate box:

Dear Fellow Stockholders:

We write this year with a sense of excitement as we integrate Devon Energy and WPX Energy following the transformative merger of the companies that closed early this year. The merger is already creating strong momentum for our go-forward company. Our momentum is bolstered by a milestone: This year we will recognize Devon Energy’s 50^th anniversary as a company. Our excitement is tempered, of course, by our concern for families, friends and associates amid the ongoing COVID-19 pandemic.

We have navigated the pandemic by focusing on our dual priorities of protecting human health and preserving business continuity. It is with gratitude to our employees and contractors, and their remarkable perseverance over the past year, that we’re able to focus forward with a clear vision to thrive in the energy marketplace.

Operationally, the merger expanded and diversified our footprint. Devon operates in the best areas of the best oil and natural gas plays in the United States. We look forward to the ongoing integration of our operating teams and their business processes to increase value. Financially, we’ve begun to capture the synergies that can help us strengthen our leading position among onshore independent E&Ps. And strategically, our disciplined approach to capital spending, in tandem with our demonstrated commitment to returning cash to shareholders through fixed-plus-variable dividends, has set a new standard for our industry.

We believe industry-leading performance includes top-tier ESG performance—in the environmental, social and safety, and governance areas. Performance on ESG impacts every aspect of our business, including our social license to operate over the long term. We’re focused as always on progressive corporate governance, including shareholder-friendly practices such as majority voting, proxy access, special meeting rights and de-classified board elections. Once we fully integrate our operations from the merger, one of our top goals is to establish quantitative targets for our environmental priorities, including the reduction of GHG emissions. We have also evolved our approach to executive compensation to further enhance alignment with our stockholders and advanced inclusion and diversity within our corporate culture.

The bottom line is this: We are committed to responsible operations to benefit the interests of all stockholders. We respectfully ask for your voting support for the items described in more detail in the materials that follow.

		Sincerely,
		Dave Hager				Rick Muncrief
		Executive Chair				President and CEO

DEVON ENERGY CORPORATION

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

BY ORDER OF THE BOARD OF DIRECTORS

Christopher J. Kirt

Vice President Corporate Governance

and Secretary

Oklahoma City, Oklahoma

April 23, 2021

We are furnishing you this Proxy Statement in connection with the solicitation of proxies by our Board of Directors (Board) to be used at the Annual Meeting and any adjournment thereof. The Annual Meeting will be held on Wednesday, June 9, 2021, at 8:00 a.m. (Central time).

All references in this Proxy Statement to we, our, us, Devon, or the Company refer to Devon Energy Corporation.

Overview and Strategy

Devon explores for, develops, and produces oil, natural gas, and natural gas liquids in areas where the oil and gas industry has long been active onshore in the United States. In early 2021, Devon and WPX Energy, Inc. (WPX) completed an all-stock merger of equals (the Merger). The combined company operates under the name Devon.

Following the Merger, our drilling activity is concentrated in five core areas: the Delaware Basin of southeast New Mexico and west Texas, the Eagle Ford play in south Texas, the Powder River Basin and Williston Basin in the Rockies, and the Anadarko Basin in west-central Oklahoma.

Devon’s business strategy is focused on delivering a consistently competitive shareholder return among our peer group. Because the business of exploring for, developing and producing oil and natural gas is capital intensive, delivering sustainable, capital efficient cash flow growth is a key tenet to our success. While our cash flow is highly dependent on volatile and uncertain commodity prices, we pursue our strategy throughout all commodity price cycles with four fundamental principles:

Financial and Operating Performance

With the Merger and continuous improvement initiatives, we are building a leading U.S. energy company. Our cash-return business model is designed to moderate production growth, emphasize

capital efficiencies, maximize returns and prioritize the return of increasing amounts of cash to shareholders. In February 2021, Devon delivered on this model with the announcement of an industry-first variable cash dividend. With continued success, this approach strengthens Devon’s position to be a prominent and consistent builder of economic value through all commodity price cycles.

We invite you to review our most recent reports, including our Annual Report on Form 10-K for the year ended December 31, 2020, and the other documents we file and furnish to the Securities and Exchange Commission (SEC) for more information about our financial and operational performance.

Sustainability Performance

Devon is proud to be a leader in the energy industry, producing energy that’s essential to lives and livelihoods around the world, while delivering results to our stakeholders in the right way. Doing the right thing is a core value at Devon that motivates us to find and produce oil and natural gas in ways that are safe, ethical and environmentally and socially responsible. Another core value—delivering results—keeps us focused on generating the strong financial returns and long-term value our stockholders expect.

Based in Oklahoma City, we have approximately 1,600 employees, operating under the motto: Commitment Runs Deep. We take this to heart and apply it to everyone who has a stake in our success—investors, employees, and neighbors alike.

Devon seeks to hire the best people and we expect them to do the right thing, to be team players and good neighbors, and to deliver results. The guiding principles of our workforce strategy are fairness, opportunity and the chance for every employee to fully participate and be heard. We want our employees to make an impact every day.

Providing a safe and healthy workplace is the right thing to do for our employees, our contractors, their families and our communities, and it contributes to our culture of trust, optimism and teamwork at Devon.

At Devon, we believe exemplary environmental performance is essential to managing risk, meeting stakeholder expectations and differentiating Devon from peer companies. But above all, it’s the right thing to do.

Devon employees engage with a variety of stakeholders every day, including our employees and their families, shareholders, neighbors, landowners, mineral-rights holders, policymakers, and vendors. We strive to build relationships founded in trust and cooperation. We place a high priority on working together to find solutions that benefit communities and stakeholders where we operate.

Our Nominees for Election

Director Skills and Experience

The Board is committed to maintaining a diverse and inclusive membership with varying experience, characteristics and expertise that align with our business strategy. The matrix below provides a summary of certain key skills and experience of our Director nominees. Our Director nominees, individually and as a group, possess numerous skills and experience that are highly relevant for an upstream energy company like Devon. Our Director nominees are strategic thinkers with high expectations for Devon’s performance and are attuned to the demands of proper Board oversight and good governance practices.

Additional Skills and Experience

Our Board has nominated eleven directors for election at the Annual Meeting. Each Director will serve for a term ending at the next Annual Meeting and until his or her successor is duly elected and qualified, subject to such Director’s earlier death, disqualification, resignation or removal. All of the nominees are currently Devon Directors.

Within each nominee’s biography and the matrix above, we have highlighted the notable skills and qualifications that contributed to his or her selection as a nominee to our Board.

We have no reason to believe that any of the nominees for Director will be unable to serve if elected. However, if any of these nominees becomes unavailable, the persons named in the proxy intend to vote for any alternate designated by the current Board. Proxies cannot be voted for a greater number of persons than the nominees named.

GOVERNANCE, ENVIRONMENTAL, AND PUBLIC POLICY COMMITTEE REPORT

The Governance, Environmental, and Public Policy Committee (the “GEPP Committee”) is currently comprised of four independent Directors and operates under a written charter approved by the Board. In March 2021, the GEPP Committee modified the scope of its responsibilities to memorialize oversight in the areas of environmental, health and safety, public policy, stockholder engagement and sustainability. This prompted a change in the name of the GEPP Committee from “Governance Committee” to “Governance, Environmental, and Public Policy Committee.” The GEPP Committee Charter may be viewed at www.devonenergy.com.

Corporate Governance

The GEPP Committee plays a leadership role in shaping the Company’s corporate governance. It periodically reviews the Company’s corporate governance practices along with best practices followed by other companies to maintain a corporate governance framework for the Company that is effective and functional and that addresses the interests of the Company’s stakeholders. Highlights of our corporate governance framework are:

Additional corporate governance standards that have been approved by the Board are reflected in the:

The standards reflected in these documents implement and strengthen the Company’s corporate governance practices. These documents and others related to corporate governance are available at www.devonenergy.com.

Board of Director Nominations

The GEPP Committee is responsible for nominating qualified candidates to serve on the Board and reviewing their qualifications with the Board, taking into account the composition and skills of the entire Board and specifically ensuring a sufficient number of the members of the Board are financially literate.

The Board takes reasonable steps to ensure that a diverse group of qualified candidates is in the pool from which the nominees for the Board are chosen. The GEPP Committee may, at its discretion, seek third-party resources to assist in the process and make final director candidate recommendations to the Board. The Board considered the experience, qualifications, attributes, and skills of each of the nominees for Director at the 2021 Annual Meeting. As identified in our Corporate Governance Guidelines, the basic qualifications that the GEPP Committee looks for in a Director include such factors as:

Following a Director’s election to the Board, the Corporate Governance Guidelines provide for:

The GEPP Committee considers nominees recommended by stockholders and gives appropriate consideration in the same manner as given to other nominees. Stockholders who wish to submit recommendations for director nominees for election at our 2022 Annual Meeting of Stockholders may do so by submitting such nominee’s name in writing, in compliance with the procedures required by our Bylaws, to the Governance, Environmental, and Public Policy Committee of the Board of Directors, Attention: Chair of the Board of Directors, c/o Office of the Corporate Secretary, Devon Energy Corporation, 333 W. Sheridan Avenue, Oklahoma City, Oklahoma 73102. Such a

recommendation must be received between February 9, 2022, and March 11, 2022, in order to be considered a timely notice. The stockholder’s notice must contain, among other things:

With the Company’s fundamental corporate governance practices firmly in place and regularly evaluated, the GEPP Committee is prepared to respond quickly to new regulatory requirements and emerging best practices. The GEPP Committee intends to continue to require an annual evaluation of the effectiveness of the Board and its Committees to enable the Company to maintain corporate governance best practices.

Barbara M. Baumann, Chair

Kelt Kindick

Karl F. Kurz

Robert A. Mosbacher, Jr.

Practices for Considering Diversity

The Charter of the GEPP Committee provides that the Committee shall periodically review the appropriate skills and characteristics of members of the Board in the context of the then-current composition of the Board. This assessment includes the following factors: diversity (including diversity of skills, background, and experience); business and professional background; financial literacy and expertise; availability and commitment; independence; and other criteria that the Committee or the full Board finds relevant. When searching for new director nominees, the Committee, as well as any third-party search firm that it engages, is committed to considering qualified candidates with a diversity of experience and perspective, including diversity with respect to areas of expertise, gender, race, ethnicity, experience, and geography.

Our Board met twenty-six times in 2020. All Directors attended at least 87% of the total meetings of the Board and the respective Committees on which they served.

All Directors are expected to attend the Annual Meeting of Stockholders, unless there are extenuating circumstances. All of our Directors attended our 2020 Annual Meeting of Stockholders.

Copies of the following governance documents are available at www.devonenergy.com and in print to any stockholder upon request:

Amendments to and waivers from any provision of the Code of Ethics for the CEO, CFO, and CAO will be posted on our website.

Committees

During 2020, the Board had four standing Committees: Audit, Compensation, Governance (which was re-named the “Governance, Environmental, and Public Policy Committee” in March 2021), and Reserves. In February 2021, the Board formed a Dividend Committee to assist the Board with its duties and responsibilities in the declaration and payment of dividends on Devon’s common stock. The Charters for these Committees are available on the Company’s website, www.devonenergy.com. The following table shows each Committee’s current membership and function and the number of meetings each Committee held in 2020:

Director Independence

The Company’s Corporate Governance Guidelines provide that an independent director is a director who, as determined by the Board, meets the NYSE definition of independence. In making this determination, the Board considers transactions and relationships between each Director or any member of the Director’s immediate family and the Company, our subsidiaries, and our affiliates. The Board has considered the status of each person who served as a Director during 2020 or to date in 2021 and each Director nominee named in this Proxy Statement and affirmatively determined that, with the exception of David A. Hager, Richard E. Muncrief, and Ann G. Fox, each individual (i) is (or, with respect to any Director who is no longer serving on the Board, was at the time of his or her service on the Board) an independent Director as defined by the standards for director independence established by applicable laws, rules, and listing standards, including, without limitation, the standards for independent directors established by the NYSE and the SEC, and (ii) has (or, with respect to any Director who is no longer serving on the Board, had at the time of his or her service on the Board) no material relationship with us that would interfere with the exercise of independent judgment.

In evaluating whether Ms. Fox is independent, the Board considered that Ms. Fox serves as Chief Executive Officer, President, and Secretary, and as a Director of Nine Energy Service, Inc. (Nine), which provides services to Devon. Devon purchases services from Nine in the ordinary course of business, and Ms. Fox is not personally involved in such transactions. For 2020, Devon’s payments to Nine amounted to less than 2% of Nine’s consolidated gross revenues. However, based on a categorical test under applicable NYSE standards, the Board did not determine that Ms. Fox is independent since Devon’s payments to Nine represented 2.18% of Nine’s consolidated gross revenue in 2019. Devon’s payments to Nine represented less than 2% of Nine’s consolidated gross revenue in 2018 and 2017.

The Board also considered the business relationships between Devon and EnCap Investments L.P. (EnCap) in connection with determining the independence of a former Director, D. Martin Phillips, who served on Devon’s Board as the designee of EnCap. Mr. Philips joined the Board upon the closing of the Merger. He is a founder and managing director of EnCap and serves on the boards of directors of several EnCap portfolio companies. Since it was founded, EnCap has raised 21 institutional oil and gas investment funds totaling more than $37 billion and has invested in more than 250 upstream and midstream companies. Diligence reflected that Devon does business with several EnCap portfolio companies; for example, some of those companies own working interests in wells operated by Devon. However, those transactions (i) are not material, (ii) occur in the ordinary course of business, and (iii) do not implicate any categorical tests under NYSE standards. Mr. Phillips is not personally involved in those transactions since the EnCap portfolio companies have their own management teams. On March 5, 2021, Mr. Phillips resigned from the Board after EnCap no longer satisfied the ownership threshold of outstanding shares of common stock of the Company that allowed EnCap, pursuant to an agreement with Devon, to nominate a director for appointment and election to the Board.

Related Person Transactions

The Company maintains a policy concerning “related person transactions” as defined by the SEC. Related persons include the Company’s directors and executive officers and their immediate family members and beneficial owners of more than five percent of the Company’s common stock.

The Board’s Audit Committee considers information about transactions involving related persons. If the transaction at issue involves a member of the Audit Committee, or a family member of a Committee member, then that member of the Committee would not participate in discussions. In the event the Committee concludes that a related person has a material interest in any Company transaction, the Committee then reviews the transaction to determine whether to approve or ratify it. Any transaction that meets the monetary threshold under the SEC rules and is determined to have a direct or indirect material benefit to a related party would be disclosed in accordance with SEC rules. Since the beginning of the last fiscal year, the Company has not participated in any related party transaction in which any related party had or will have a direct or indirect material interest.

Leadership Structure

As stated in the Company’s Corporate Governance Guidelines, the Board reserves the right to determine, from time to time, how to configure the leadership of the Board and the Company in the way that best serves the Company. The Board specifically reserves the right to vest the responsibilities of Chair of the Board and CEO in the same or in different individuals. The Board currently has no fixed policy with respect to combining or separating the positions of Chair of the Board and CEO. Upon the closing of the Merger, the Board appointed David A. Hager as Executive Chair and named Richard E. Muncrief to replace Mr. Hager as President and CEO of the Company. In accordance with Devon’s Corporate Governance Guidelines, the Board appointed a Lead Director upon selecting a non-independent Chair of the Board.

Devon’s Board and Board leadership consistently emphasize open, substantive communication among members of the Board and between the Board and management, with a view toward consensus-building and alignment. The Board regularly engages in practices that allow for fulsome discussions about the effectiveness of the Chair and Lead Director, as well as the Board and Board Committees.

Lead Director

Prior to Mr. Hager’s appointment as Executive Chair in January 2021, the Board had an independent Chair, Duane C. Radtke. The Board appointed Kelt Kindick as Lead Director effective with the closing of the Merger. Pursuant to Devon’s Corporate Governance Guidelines, the Lead Director must be an independent Director and meet certain other qualifications, which include familiarity with corporate governance best practices and related procedures. The Lead Director is responsible for presiding over, and is authorized to convene, executive sessions of the Board in which members of management are not present, as well as executive sessions in which only independent Directors are present. Among other duties and responsibilities, the Lead Director provides input to the Executive Chair and President and CEO on Board agendas, items of discussion, and meeting materials, and serves as a resource for fostering communication among the Board and management.

Board Involvement in Risk Oversight

The full Board has primary responsibility for risk oversight, which includes, among other things, determining whether the Company’s risk-management programs are appropriately designed and implemented in light of the Company’s material risks. To assist it in this role, the Board has delegated to four standing Board Committees certain matters relating to the risks inherent in the Committees’ respective areas of oversight, with each Committee regularly reporting to the full Board. Our management team is, in turn, responsible for executing the directives of the Board and

those Committees with respect to the Company’s risk management programs, including by overseeing and reporting on Devon’s day-to-day efforts to manage risk.

Devon employs a variety of governance and analytical measures to identify and evaluate the risks to our business. We use an enterprise-wide risk management framework that includes an annual analysis of the top risks to the Company. This analysis asks the Board, management, and certain internal subject matter experts to consider the likelihood that certain risks could result in an impact to the Company and to identify, among other things, the Company’s level of preparedness for those risks. The Board and management then use the results from this analysis and other exercises to determine and prioritize the material risks to our business. In addition to this annual review process, the Board also considers significant developments as they arise to assess the risk they pose to the Company. For example, the Board and management have closely monitored the COVID-19 pandemic and its ongoing and potential impacts to the Company, including its effect on personnel, commodity prices and supply chains. For a more detailed discussion of the material risks of the Company, please see our Annual Report on Form 10-K for the year ended December 31, 2020 and our other filings with the SEC.

Cybersecurity risk is an area of increasing focus for our Board, particularly as more and more of our operations rely on digital technologies. To mitigate this risk, Devon has adopted an information security program, which uses sophisticated technology and processes and is aligned with the National Institute of Standards and Technology Cybersecurity Framework for risk management. Our management team provides the Audit Committee and the full Board with regular updates regarding this program, as well as on trends in cyberattack activities and other developments impacting our digital security.

The Board believes it is important to cast a wide net for input to inform its decision making and considers input from stockholders to be critical. Accordingly, the Board maintains a number of ways to receive feedback from stockholders and other stakeholders.

Devon has a long-standing practice of engagement with our stockholders throughout the year with respect to corporate governance topics and our executive compensation program. Over the past year, Devon has continued to emphasize engagement with our stockholders, especially with respect to ESG matters. The Company has participated in numerous one-on-one meetings with investors who have a wide range of perspectives. Our Board receives frequent updates on these engagements and has been keen to hear specific input. We value the dialogue and feedback received from this engagement and, as a result, have been responsive by making meaningful changes to our programs and practices.

High-Level Oversight and Coordination of ESG Efforts

The Company recognizes that ESG matters are important for Devon and Devon’s stakeholders. In order to provide support for the Company’s ongoing efforts in this area, the Company formed an Environmental, Social, and Governance Steering Committee (the ESG Committee) in the fall of 2017. The ESG Committee is comprised of leaders for several key functions at the Company, including EHS, operations, legal, investor relations, government affairs, corporate governance, finance, human resources, and communications. The ESG Committee meets on a quarterly basis and more frequently as necessary. In addition, the ESG Committee frequently tasks internal subject matter experts and working groups with addressing discrete ESG matters. During 2020, working groups of the ESG Committee provided support for Devon’s strategy for ESG performance, publication of a new Climate Change Assessment Report, additional reporting of ESG data that investors value, and progression in aligning the Company’s ESG reporting with ESG frameworks. A copy of the ESG Committee’s charter is available on our website. Devon’s Executive Committee, Board Governance, Environmental, and Public Policy Committee, and the full Board receive regular updates on our ESG efforts and expect high performance in this area.

Affirmation of Our ESG Practices and Performance

Devon’s work on ESG matters has resulted in greater disclosure about the Company’s existing practices and prompted new and renewed actions by Devon. We make ESG-oriented materials available on our website, including the following: Devon’s 2020 Sustainability Report, Climate Change Assessment Report, Political Activity and Lobbying Report, and CDP Questionnaires. Notably, the Climate Change Assessment Report published in late 2020, which updated Devon’s previous report, is intended to further align Devon’s climate reporting with the principles of the voluntary reporting framework of the TCFD.

Devon also regularly participates in many surveys and questionnaires, which has resulted in more transparency about Devon’s operations and improved the accuracy of Devon’s information included in those materials. Major third-party surveys on ESG matters validate our performance in this area.

Contact Information for Communicating with Board Members

Any stockholder or other stakeholder may contact any of our Non-Management Directors or Non-Management Directors as a group, by:

A Management Director may be contacted by:

If requested, calls or correspondence remain anonymous and will be kept confidential to the extent possible. All such communications, other than advertisements or commercial solicitations, will be forwarded to the appropriate Director(s) for review.

Director Compensation for the Year Ended December 31, 2020

Under our Corporate Governance Guidelines, Non-Management Director compensation is determined annually by the Board acting upon the recommendation of the Compensation Committee. Devon employees receive no additional compensation for serving as Directors. The standard arrangement for compensating our Directors consists of cash and equity awards.

Annual Retainers

The annual retainers in effect for 2020 are set forth in the table below:

Each Non-Management Director is reimbursed for out-of-pocket expenses incurred while serving as a Director. The Company eliminated “per meeting” fees effective January 1, 2020.

Equity Awards to Directors

The Board also compensates Directors in part through restricted stock awards (RSAs) in order to align the Directors’ and stockholders’ interests in the long-term performance of the Company. During 2020, Directors were granted RSAs under our 2017 Long-Term Incentive Plan (the 2017 LTIP) having a value of $230,000. Stock awards to Non-Management Directors are granted immediately following each Annual Meeting. These RSA shares fully vest on the first anniversary of the date of grant subject to the conditions set forth in the 2017 LTIP and applicable grant agreements. Cash dividends will accrue on these shares of restricted stock until the shares vest, at which time the dividends will be paid.

Total Compensation for Non-Management Directors for 2020

The following table reflects the fees earned or paid to our Directors for Board service in 2020 and the stock awards granted to our Directors in 2020.

Changes in Director Compensation Structure for 2021

In September 2020, oversight of compensation for Non-Management Directors transitioned from the GEPP Committee to the Compensation Committee. Continuing the annual practice of the GEPP Committee, the Compensation Committee obtained a report on the director compensation for Devon’s principal competitors and other comparable companies. The report reflected that the overall compensation of Devon’s directors is within the range of Devon’s peer group for 2020. The report was considered as the Compensation Committee reviewed director compensation at its fourth-quarter 2020 meeting in which the Committee approved no changes in Board compensation for 2021. The Committee reviewed and reconfirmed Director compensation following the closing of the Merger.

Compensation Committee Interlocks and Insider Participation

Throughout 2020, the Compensation Committee was solely comprised of independent Directors with no interlocking relationships as defined by the SEC.

The Audit Committee is currently comprised of four independent Directors. The Board and the Audit Committee believe that the Audit Committee’s current membership satisfies the rules of the NYSE and the SEC that govern audit committee composition, including the requirement that all audit committee members be independent, as that term is defined under the listing standards of the NYSE, and the requirement that at least one member of the Audit Committee is a financial expert. The Audit Committee operates under a written charter approved by the Board of Directors. The Audit Committee Charter is available at www.devonenergy.com.

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the preparation of the financial statements and the establishment and maintenance of the system of internal controls. This system is designed to provide reasonable assurance regarding the achievement of objectives in the areas of reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations. In fulfilling its oversight responsibilities, the Audit Committee reviewed with management its internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board and the audited financial statements in the Annual Report. This review included a discussion of the quality and the acceptability of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.

In fulfilling its duties during 2020, the Audit Committee:

Fees to Independent Auditor

Under the terms of its Charter, the Audit Committee has the responsibility to approve the fees paid to the independent auditors. For the years ended December 31, 2019 and December 31, 2020, the following fees were paid to KPMG LLP:

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee has pre-approval policies and procedures related to the provision of audit and non-audit services. Under these procedures, the Audit Committee pre-approves both the type of services to be provided by KPMG LLP and the estimated fees related to these services. During the approval process, the Audit Committee considers the impact of the types of services and the related fees on the independence of the auditors. The services and fees must be deemed compatible with the maintenance of the auditors’ independence, including compliance with SEC rules and regulations.

All of the 2020 and 2019 audit and non-audit services provided by KPMG LLP were approved by the Audit Committee. The non-audit services that were approved by the Audit Committee were also reviewed to ensure compatibility with maintaining the auditors’ independence, and the Audit Committee determined the auditors’ independence was not impaired.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 that has been filed with the SEC.

Valerie M. Williams, Chair

Barbara M. Baumann

Kelt Kindick

John Krenicki Jr.

The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent auditing firm retained to audit the Company’s financial statements. To carry out this responsibility, the Audit Committee engages in a comprehensive annual evaluation of the independent auditor’s qualifications, performance, and independence; considers whether the auditing firm should be rotated, including the advisability and potential impact of selecting a different independent registered public accounting firm and adopting a policy of regular rotation; and negotiates the audit fees associated with the Company’s retention of the independent auditing firm. The Audit Committee has appointed KPMG LLP (KPMG) to serve as our independent auditing firm for 2021.

In accordance with SEC rules and KPMG policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide service to our Company. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. The selection of the Company’s lead audit partner pursuant to this rotation policy involves a rigorous process, including interviews of potential audit partner candidates with the Audit Committee, which occurred in 2019 as Devon’s lead audit partner rotated off Devon’s audit team at the completion of Devon’s audit for the year-ended December 31, 2019.

The Audit Committee and the Board believe that the continued retention of KPMG as our independent registered public accounting firm is in the best interest of the Company and our stockholders. In furtherance of its commitment to corporate governance practices, the Board is asking our stockholders to ratify the selection of KPMG as our independent registered public accounting firm for 2021. In the event that our stockholders fail to ratify the appointment of KPMG, the Audit Committee will consider the selection of a different independent auditing firm for 2022.

Representatives of KPMG will be present at the Annual Meeting to answer questions. They also will have the opportunity to make a statement if they desire to do so.

The Reserves Committee is currently comprised of five independent Directors and operates under a written charter approved by the Board of Directors. The Reserves Committee Charter is available at www.devonenergy.com. The Reserves Committee oversees, on behalf of the Board, the integrity of the Company’s oil, natural gas, and natural gas liquids reserves data. Management and our independent engineering consultants have the primary responsibility for the preparation of the reserves reports. In connection with its oversight responsibilities, the Reserves Committee reviewed with management the internal procedures relating to the disclosure of reserves in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, having regard to industry practices and all applicable laws and regulations.

In fulfilling its duties for the year, the Reserves Committee:

In reliance on the reviews and discussions referred to above, the Reserves Committee recommended to the Board, and the Board approved, that the reserves information be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 that has been filed with the SEC.

John E. Bethancourt, Chair

John Krenicki Jr.

Karl F. Kurz

Duane C. Radtke

Valerie M. Williams

Our Officers

Information concerning our executive officers is set forth below. Information concerning Richard E. Muncrief, our President and Chief Executive Officer, is set forth under the caption “Our Nominees for Election.”

Dennis C. Cameron, Executive Vice President and General Counsel

Mr. Cameron, 58, was appointed executive vice president and general counsel in January 2021 following the Merger. He is responsible for Devon’s legal and public and government affairs functions. Cameron most recently served as executive vice president and general counsel of WPX Energy where he was responsible for similar functions as his current role with the Company. He joined WPX in 2012, previously serving as senior vice president and general counsel, vice president and deputy general counsel and assistant general counsel. Cameron has over 25 years of legal experience. He began his career in 1987 at GableGotwals, a private, full-service firm he was with until joining WPX. Cameron is a member of the Oklahoma, Texas, Tulsa County and American Bar associations, as well as the Rocky Mountain Mineral Law Foundation. He holds a bachelor’s degree in mechanical engineering and a law degree, both from the University of Oklahoma.

Tana K. Cashion, Senior Vice President Human Resources and Administration

Ms. Cashion, 49, was elected to the position of senior vice president of human resources in 2016, with her position as lead of administration added in January 2021. In addition to human resources she is responsible for corporate real estate, corporate communications, community relations and multiple administration functions. Cashion joined Devon in 2005 and has held roles of increasing responsibility, including vice president of human resources. Before joining Devon, Cashion worked in the retail, wholesale and tourism industries. She has a bachelor’s degree in political science from Pepperdine University and a master’s degree in business administration from the University of Oklahoma.

Clay M. Gaspar, Executive Vice President and Chief Operating Officer

Mr. Gaspar, 49, was appointed executive vice president and chief operating officer in January 2021 following the Merger. He is responsible for Devon’s geosciences, reservoir, production, drilling, completions, facilities, field operations, environmental, health and safety and ESG functions. Gaspar most recently served as president and chief operating officer of WPX and served on the company’s board of directors. He joined WPX in 2014, previously serving as senior vice president and chief operating officer and senior vice president of operations and resource development. Prior to joining WPX, he worked for Newfield Exploration, Anadarko Petroleum and Mewbourne Oil serving in a number of technical and leadership roles. Gaspar is a registered professional engineer and a member of the Society of Petroleum Engineers. He holds a bachelor’s degree in petroleum engineering from Texas A&M University and a master’s degree in petroleum and geosciences engineering from the University of Texas.

David G. Harris, Executive Vice President and Chief Corporate Development Officer

Mr. Harris, 47, was elected to the position of executive vice president and chief corporate development officer in January 2021. Harris is responsible for Devon’s business development, land and technology functions. Prior to the Merger, he served as executive vice president of exploration and production responsible for all of Devon’s business units, as well as land, technology, subsurface and environment, health and safety groups. He has previously served as senior vice president of exploration and production, senior vice president of business development, vice president of corporate finance and treasurer, and as associate general counsel. Harris has been with Devon since 2007. Prior to joining Devon, he was a partner in the Dallas office of Thompson & Knight LLP, specializing in corporate and securities matters. Harris holds a bachelor’s degree from the University of Tulsa and a law degree from the University of Oklahoma.

Jeffrey L. Ritenour, Executive Vice President and Chief Financial Officer

Mr. Ritenour, 47, was elected to the position of executive vice president and chief financial officer in April 2017. Ritenour is responsible for Devon’s corporate finance, treasury, planning, reserves, accounting, tax, internal audit, investor relations, marketing and supply chain functions. He has been with Devon since 2001, serving in various leadership roles, most recently as senior vice president of corporate finance, investor relations and treasury. Before joining Devon, Ritenour was with Ernst & Young in Dallas. He is a certified public accountant and holds a bachelor’s degree in accounting and a master’s degree in business administration, both from the University of Oklahoma.

In accordance with Section 14A of the Securities Exchange Act of 1934, we are asking our stockholders to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement. At the 2017 Annual Meeting, you approved our proposal to provide you with this opportunity on an annual basis. This vote is not intended to address any specific item of compensation, but rather our overall compensation policies and practices relating to our named executive officers as disclosed in our Compensation Discussion and Analysis, the Summary Compensation Table, and other related tables and narrative disclosure. Accordingly, we will ask our stockholders to vote “FOR” the following resolution at the 2021 Annual Meeting:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2021 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2020 Summary Compensation Table and the other related tables and narrative disclosure.”

This vote, normally called a “say-on-pay” vote, is advisory, and therefore not binding on the Company, the Compensation Committee, or the Board. The Board will, however, as it has in prior years, take into account the outcome of the vote when considering future compensation arrangements.

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

Purpose of Compensation Discussion and Analysis

This Compensation Discussion and Analysis (CD&A) outlines Devon’s compensation philosophy and describes the material components of the Company’s executive compensation program for its named executive officers (NEOs). This CD&A also summarizes decisions the Compensation Committee of the Board of Directors (the Committee) made under the program, focusing on the decisions made during the Committee’s January 2020 meetings and December 2020 meeting. In addition, this CD&A addresses the following three topics:

Additional information about the compensation of the named executive officers is provided in the 2020 Summary Compensation Table and other compensation tables that follow this CD&A. Pursuant to SEC rules, the outcome of the Committee’s January 2021 decisions on base salaries for 2021 and 2021 long-term incentive (LTI) grants will appear in next year’s Summary Compensation Table while the performance bonus is shown in the “Non-Equity Incentive Plan Compensation” column of this year’s Summary Compensation Table.

Named Executive Officers

The named executive officers for 2020 are the following individuals:

The Summary Compensation Table and narrative sections of this CD&A disclose 2020 compensation for the above NEOs. However, effective upon the Merger, the executive team was reconstituted as shown below. This CD&A’s disclosures of on-going or newly implemented executive compensation practices or policies apply to the executives below.

Executive Summary

Compensation Philosophy and Objectives

Devon was formed in 1971 and has been publicly held since 1988. Since 2010, the Company has successfully transitioned to a liquids-rich (oil and natural gas liquids), higher-margin, onshore North American production base and continues to transform its organizational structures and processes to allocate capital investments to the Company’s most promising assets. Devon is committed to delivering strong returns on its investments through a dynamic culture focused on innovation, safety, operational excellence, environmental stewardship, and social responsibility. The Company focuses its business on generating operating returns by managing a premier asset portfolio, delivering superior execution, and exercising discipline in Devon’s capital allocation. Devon also maintains a strong commitment to financial strength and flexibility through all commodity price cycles, as reflected in the Company’s investment grade credit ratings.

The success of Devon’s strategy is founded on a pay-for-performance compensation philosophy intended to motivate near-term operational and financial success as well as long-term stockholder value creation. The Committee utilizes a range of quantitative and strategic measures to evaluate performance, increasing the rigor of the associated goals and evolving the measures as appropriate. Overall, an executive officer’s total compensation is weighted in favor of long-term incentives to emphasize value creation and shareholder alignment.

The objectives of Devon’s compensation program are to:

The primary components of Devon’s executive compensation program are base salary, a performance bonus, and LTI. The Committee generally targets each component, as well as the aggregate of the components, at approximately the 50^th percentile of the Company’s peer group.

Individual compensation levels may vary from these targets based on performance, expertise, experience, responsibilities, or other factors unique to the individual’s role within the Company. The Committee also provides retirement and other benefits typical for Devon’s peer group.

Impact of the COVID-19 Pandemic on Company Operations and Compensation Decisions

The worldwide COVID-19 pandemic has presented unprecedented challenges for communities and individual health as well as economies, businesses, and the stockholders who invest in them. Devon dedicated extensive resources throughout 2020 to promote employee health, community health, and business continuity. Included in the measures taken was the creation of a COVID-19 Incident Management team in February, regular meetings of the Board on the progress of the Company’s COVID-19 response, the expansion of flexible work-from-home arrangements, the deployment of enhanced virtual meeting tools, the distribution of masks, gloves, and hand sanitizer to employees, enhancement of its workplace sanitation protocols, reconfiguration of workspaces to allow for social distancing, contact tracing, and early adoption of cost-free COVID-19 testing for employees.

Devon also demonstrated its “Be A Good Neighbor” core value during the pandemic. The Company partnered with the NBA’s Oklahoma City Thunder to distribute more than 200,000 masks to the Oklahoma City community. Devon accelerated the Company’s 2020 planned charitable giving so that its United Way and food pantry partners could provide additional services to their clients during the height of the pandemic. In addition, Devon and its charitable partners provided more than 10,000 take-home Science, Technology, Engineering, and Mathematics project kits to students in Oklahoma, Texas, and New Mexico.

During 2020, Devon did not seek any Federal Governmental loans or stimulus money. Devon did choose to defer the remittance of 2020 payroll taxes as permitted by the Coronavirus Aid, Relief and Economic Security Act (CARES Act).

The full economic impact of the COVID-19 pandemic, including the unexpected and irregular results and market volatility resulting from the pandemic, was not known at the time the Committee met in January 2020 to establish 2020 performance goals. Soon thereafter, Devon recognized that these unprecedented impacts required the Company to reformulate its go-forward plans. The original go-forward plan established in January 2020 is referred to throughout this CD&A as the January Capital Plan and the revised go-forward plan is referred to throughout this CD&A as the Updated March Capital Plan, both of which are described further in the performance scorecard on pages 43 and 44.

2020 Company Performance Highlights and the Impact on Compensation

Devon believes setting challenging annual performance goals is key to continuous improvement in the returns it achieves on its assets and capital investments. Throughout 2020, stock prices declined across the oil and gas industry due to concerns over the potential economic impact of the COVID-19 pandemic and the substantial decline in market demand for oil and natural gas. However, due to the 2019 efforts to monetize certain assets, improve well performance, reduce long-term debt, and re-align its overall cost structure, the Company was able to exceed its 2020 goals on many of its performance metrics. In addition, the Company announced the Merger, which enhances the scale of the Company’s operations, builds a dominant position in the Delaware Basin, and accelerates Devon’s cash-return business model that prioritizes free cash flow generation and the return of capital to stockholders.

Although the Company met and exceeded several of its 2020 performance goals, the Committee chose to acknowledge challenging industry and broader market conditions by decreasing the amount of performance bonus that would have otherwise been paid by approximately half. Although the Committee typically does not adjust the scorecard’s Total Weighted Score, when the performance bonus amount was calculated at 153% of target, the Committee exercised its discretion to reduce the performance bonus amount to 75% of target. The performance scorecard on pages 43 and 44 sets forth the Company’s performance for both the January 2020 goals and the Updated March Capital Plan. The following performance highlights provide further context for the Committee’s considerations with respect to executive compensation for 2020:

Operational and financial achievements

Total stockholder return

Response to Stockholder Feedback

Devon has a strong record of conducting investor outreach throughout each year to ensure that management and the Board understand the compensation issues that matter to Devon’s stockholders. For a more detailed description of Devon’s history of stockholder outreach, see prior Proxy Statements.

In 2020, approximately 63% of voting stockholders voted “for” Devon’s executive compensation (say-on-pay vote). This vote was significantly lower than the say-on-pay votes over the three years’ prior, which were at 95%, 95%, and 94%, respectively. Following the 2020 say-on-pay vote, Devon formulated a plan to reach out to its institutional investors to seek feedback on proxy disclosure and solicit investor perspective on the proxy voting items. Throughout the Company’s communications with its investors regarding the 2020 say-on-pay vote, Devon reached out to approximately 100 governance representatives of its institutional investors. Devon interacted with representatives from each of the institutions that expressed interest in further discussions, totaling in excess of 46% of outstanding shares, and analyzed the feedback resulting from these outreach efforts. Devon also analyzed the critiques contained in various governance reports received in response to Devon’s 2020 Proxy Statement.

The Committee dedicated a significant portion of its 2020 meeting time to reviewing this feedback, analyzing possible responses, and determining the appropriate course of action. The chart below provides a comprehensive description of Devon’s responses to stockholder critiques of Devon’s executive compensation program.

The Committee believes the changes detailed above directly and appropriately address the stockholder feedback received in 2020. Devon has compiled this information in order to demonstrate the responsiveness by the Company and the Committee and is hopeful that this additional disclosure

will again garner the Company’s previously strong stockholder support of its say-on-pay proposal at the 2021 Annual Meeting. As it has done in the past, the Committee intends to continue its active pursuit of reviewing and responding to stockholder feedback to improve Devon’s business and further align stockholder and executive interests.

What Devon Does and Doesn’t Do

Elements of 2020 Compensation

Overview of 2020 Pay Decisions

The Committee undertook executive compensation award considerations at two different times in 2020. At the January 2020 meetings, the Committee considered 2020 LTI grants and salary increases. At the Committee’s December 2020 meeting, the Committee considered the award of 2020 performance bonuses. The January decisions preceded (i) the results of the Company’s say-on-pay vote described earlier in this Proxy Statement and (ii) the onset of the COVID-19 pandemic and associated economic turmoil, but these factors were taken into account by the Committee at its December meeting and heavily influenced the Committee’s decision at that meeting. The Committee’s decisions are described in further detail below.

January 2020 Committee Meetings

December 2020 Committee Meeting

As illustrated below, an overwhelming majority of the Company’s 2020 compensation opportunity was delivered through performance bonuses and LTI awards, each of which correlate directly with Company performance. Approximately 89% of the value of total direct compensation awarded to the President and CEO, and an average of approximately 82% of the value of total direct compensation awarded to the other named executive officers, was delivered through performance bonuses and LTI.

Each year, the Committee refers to the following factors in considering any compensation decisions for the NEOs:

The Committee regularly reviews the above-listed factors when considering compensation decisions and from time to time changes or supplements its analysis with other factors.

Base Salary

Base salary typically represents a smaller portion of total executive compensation than the combination of long-term incentives and performance bonus, which vary year-to-year based on performance. Competitive salaries, however, are vital to ensuring that the Company attracts and retains executives who have a combination of business acumen, significant industry experience, and longevity with the Company. In evaluating salary levels each year, the Committee generally considers the following factors:

Based on the foregoing considerations, the Committee approved the following salary changes at its January 2020 meetings. The Summary Compensation Table’s entries for “Salary” reflect the base salary received by the named executive officers during 2020, which in some cases is lower than the rates listed below due to the fact that the new compensation did not begin immediately in January 2020.

¹ Dollar amounts shown in thousands.

Annual Performance Cash Bonus

In awarding performance bonuses, the Committee uses a formula that establishes a performance-bonus target for each named executive officer based on a percentage of his or her base salary. In establishing performance-bonus targets, the Committee considers industry benchmarks for the relevant officer position as well as the scope of responsibility associated with the position. For 2020, performance-bonus targets for named executive officers ranged from 60% to 135% of base salaries.

Performance-bonus payouts depend on the Company’s performance in relation to the structured and measurable goals approved by the Board at the beginning of the year and the individual executive’s contributions to achievement of those goals. While the Committee was evaluating the Company’s 2020 achievements, the Committee analyzed both the January 2020 plan objectives and the Updated March Capital Plan during its decision making, as detailed further in the performance scorecard below. The goals were selected because they are critical to the Company’s near-term performance, its prospects for sustainable growth in returns, and the creation of long-term value for the Company and its stockholders.

The table below provides detail on the Company’s performance on the goals set for 2020. As reflected in the table, the Committee assigns a separate weighting to each performance measure in order to reflect the relative importance of those areas for the year. The Committee aggregates the weighted performance score for each measure to arrive at an overall Company performance score. For further transparency, the goals associated with the January Capital Plan and the Updated March Capital Plan are included in the table below.

The process for determining performance bonuses relies on Company performance measures and the application of set formulas to arrive at the bonus amounts. However, the Committee maintains the authority to adjust the amount of an executive’s performance bonus within the range of the bonus pool (0% to 200% of target) based upon individual contributions, market conditions, or other factors. The Committee made no such adjustments for 2020.

The performance scorecard reflects that the Company substantially outperformed the targets on all quantitative goals associated with the Updated March Capital Plan except those in the Environmental, Health and Safety category. While the Committee did not formally score against the January Capital Plan goals, achievement at the level of 2020 would have historically led to a score of between 100% and 120%. To acknowledge the challenging industry and broader market conditions presented by the pandemic, the Company’s management proposed that the Committee exercise discretion on the Total Weighted Score for the performance bonus pool. The Committee took this proposal under advisement during its deliberations. While the Committee typically does not adjust the scorecard’s Total Weighted Score, the Committee determined it was appropriate to apply discretion for 2020 as proposed by the Company’s management. Therefore, although the performance bonus amount was calculated at 153% of target based on achievement against the Updated March Capital Plan, the Committee exercised its discretion to reduce the performance bonus amount to 75% of target.

The following table outlines the calculations made for the bonuses awarded to NEOs for 2020¹:

Please note that the Summary Compensation Table’s entries for Non-Equity Incentive Plan Compensation in 2020 reflect the annual performance bonuses listed under the column above titled “Process Determined Performance Bonus Amount.”

The Committee did not make any individual adjustments for the 2020 NEO performance bonus amounts.

Long-Term Incentives

A key element of Devon’s compensation program is to align pay and performance by rewarding executive officers for long-term strategic accomplishments and enhancement of long-term stockholder value through equity-based incentives that vest over an extended period of time. LTI compensation plays an essential role in attracting and retaining executive officers and aligns their interests with the long-term interests of Devon’s stockholders.

At its January 2020 meetings, the Committee determined that the 2020 awards of LTI should continue the past practice of tracking a target at the 50^th percentile compared to peers. The Committee further determined that the pursuit of strategic Company goals and creation of stockholder value would best be promoted by linking half of the LTI awarded for the 2020 year to Company performance and the other half to long-term stock ownership, thereby strengthening the alignment of interests of executives and stockholders. Accordingly, the two types of LTI granted to named executive officers were Performance Share Units (PSU) and time-based restricted stock awards (RSA), respectively.

LTI Granted in 2020¹

¹ Dollar amounts shown in thousands.

The following table describes the purpose and structure of the LTI granted to the named executive officers at the Committee’s meetings in January 2020:

Additionally, at its January 2021 meetings, the Committee certified that the Company achieved the 8th highest TSR out of a 15-company peer group for the three-year period associated with the PSUs granted in February of 2018. Pursuant to the grant’s applicable terms and conditions, 90% of the grants’ target number of shares vested for Messrs. Hager, Ritenour, and Taylor. For Mr. Harris and Ms. Cashion, whose grants were made prior to their respective appointments as Executive Officers with a slightly different earnings scale, 100% of the grants’ target number of shares vested. Further information about this grant is provided in the “Outstanding Equity Awards at Fiscal Year End” table below and corresponding footnotes.

Effect of Company Performance on NEO Realizable Pay

Changes in Devon’s stock price and performance against the Company’s scorecard goals impact executive compensation. The measurement of realizable pay includes such changes when comparing pay received, or projected to be received, to the target pay granted. The chart below illustrates this relationship. As a supplement to the Summary Compensation Table, the chart below provides information regarding the direct compensation components awarded to our NEOs (the target) and the value of those components at year end.

NEO Realizable Pay¹