- Corporate Responsibility
- Royalty Owners
Strong corporate governance is a cornerstone of being a responsible corporate citizen. We are focused on minimizing the Company’s impact on the environment and the communities where we work and live. In 2020, we made continued progress in expanding the ways we do so through our Environmental, Social and Governance (ESG) policies and oversight.
Our executive leadership team, led by the CEO, is responsible for managing the Company’s operations, under the oversight of the Board of Directors (the “Board”). The Board has adopted corporate governance principles that serve as the framework for the Board and its committees. The Board regularly reviews and revises its corporate governance policies in response to changing regulatory requirements, evolving best practices and the perspective of our shareholders and other stakeholders.
To underpin accountability for ESG performance, our executives’ bonus compensation includes several ESG-related metrics including Total Recordable Injury Rate, Total Recordable Environmental Rate and Recordable Vehicular Incident Rate. In 2020, these criteria represented 10% of total bonus compensation. Based on feedback from shareholders, in 2021 we have added a methane intensity metric and increased the weighting of ESG-related metrics to 15%.
The Board is elected by SWN shareholders. SWN’s Corporate Governance Guidelines require that a majority of the members of the Board be independent of the company’s executive leadership and significant shareholders. The independent directors are required to meet in executive sessions as appropriate matters for their consideration arise, no less than once a year, and historically they do so at every scheduled meeting.
Our Board includes the following Committees, which are composed entirely of independent directors:
- Health, Safety, Environment & Corporate Responsibility (HSE & CR) committee
- Audit Committee
- Compensation Committee
- Nominating and Governance Committee
Please see the section below entitled “Enterprise Risk Management and Corporate Responsibility Oversight” for additional information regarding Board oversight.
Diversity and Tenure
We seek Board members who bring a diversity of perspectives and backgrounds. As of May 2020, 44% of our Directors were diverse in gender, ethnicity or nationality. The average tenure of our Board members is between four to six years, which we believe helps to ensure fresh thinking and awareness of emerging issues.
Board Skills and Expertise
In addition to diversity of perspective and backgrounds, we seek Board members with specific skills and expertise, including in health, safety, the environment and corporate responsibility. The far reaching skill set of our Board helps us to reach our goal of creating long-term, sustainable value, as well as protecting the health and safety of the environment and our employees, contractors and communities.
Best Practices and Culture
Our Board is committed to the highest standards of corporate governance and follows many governance best practices, including regular shareholder engagement, an annual “Say-on-Pay” vote, the annual election of all Directors and no supermajority voting standards, as set out in the table below:
The Board has adopted corporate governance principles that serve as the framework of the Board and its committees. From time to time, the Board revises its corporate governance policies in response to changing regulatory requirements, evolving best practices and the perspective of our shareholders and other stakeholders.
2020 Board Meetings
The Company’s Corporate Governance Guidelines state that directors are expected to attend all or substantially all Board meetings and meetings of the committees of the Board on which they serve and to attend the Annual Meeting. During 2020, the Board held 14 regular or special meetings.
Communicating with the Board
Our Board and the Company are committed to an environment where open, honest communication is the expectation, not the exception. The Board is steadfast in performing its responsibilities with honesty, accountability and transparency, and welcomes comments or concerns from our stakeholders. The Board may be contacted, anonymously or confidentially, through either of the following avenues:
- Direct communication with our Corporate Secretary or Investor Relations
- The SWN confidential website at http://www.swn.ethicspoint.com/
- The SWN confidential hotline number at 877-516-3496
- Written correspondence to the Board in care of the Corporate Secretary at P. O. Box 12359, Spring, Texas 77391-2359
As part of our corporate governance strategy, throughout the year SWN maintains an ongoing, proactive outreach effort with our shareholders to better understand their perspectives on key issues. In 2020 we reached out to every shareholder for whom we were able to identify contact information, whose holdings combined amounted to approximately 83% of outstanding shares. The graphic below illustrates our shareholder engagement process in 2020, including key topics discussed with shareholders, such as ESG, long-term strategy, our response to the COVID-19 pandemic, risk management, board structure, and executive compensation:
In response to specific shareholder feedback, we made three key changes to our compensation program for 2021:
Director and Executive Compensation
SWN strongly believes that its executive and non-employee director compensation programs, which emphasize equity-based awards and performance-based cash incentives, are strongly aligned with the interests of its stakeholders.
Annually the Compensation Committee and the Board, with assistance from an independent compensation consultant, review and approve target compensation for the executive officers by setting base salaries and setting long-term and annual incentive targets.
Highlights of the executive compensation program include the following:
- A significant stock ownership requirement.
- A compensation recoupment or “clawback” policy applicable to all executive officers that allows us to recover incentive compensation that was paid or granted in the three-year period prior to the restatement, regardless of whether misconduct caused the restatement.
- A maximum payout that limits annual incentive bonuses or performance units.
- CEO salary constitutes no more than 11% of the target compensation package, with the remainder generally being equity-based or otherwise contingent upon Company and individual performance.
- Long-term incentive compensation aligns executive and shareholder interests to achieve long-term performance objectives and constitutes the major component of at-risk compensation.
- Each executive officer is employed at-will and is expected to demonstrate exceptional personal performance to continue serving as a member of the executive team.
- Cash severance in connection with a change-in-control is paid only if an actual or constructive termination of employment also occurs.
- No repricing of stock options without shareholder approval.
- No pledging or hedging of Company securities.
- No automatic base salary increases.
- No tax gross-ups.
To sustain the trust we’ve built with our stakeholders and to maintain the alignment with their interests, we annually solicit feedback on our compensation programs through our Say-on-Pay proposal. On average over the last five years, investors have voted in favor of our compensation programs almost 90% of the time, and in 2021 97% voted in favor of the proposal.
For additional information regarding our executive compensation programs, please see the Compensation, Discussion and Analysis section of SWN’s 2021 proxy statement.
The non-employee director compensation, which is annually reviewed and recommended by the Nominating and Governance Committee and approved by the Board, includes an annual cash retainer and equity incentive award for service as a director, an annual cash retainer for each Chairman of a committee, and an annual fee paid quarterly to the Board Chairman in cash or common stock. Additional information regarding non-employee director compensation can be found in SWN’s 2021 proxy statement.