| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Annual Cash Incentive Plan
On March 5, 2024, the Compensation and Management Development Committee (the “Committee”) of the Board of Directors (“Board”) of Hess Corporation (the “Company”) approved annual incentive targets under the Company’s Annual Incentive Plan (the “Plan”) for all of the Company’s full-time employees worldwide, including the Company’s chief executive officer, chief financial officer and three other most highly compensated executive officers (the “Named Executive Officers”). The Plan is intended to promote alignment of pay and performance and an enhanced focus on creating long-term stockholder value.
Payout on awards is determined based on attainment of pre-established enterprise level metrics and individual performance objectives. The following are the enterprise metrics, each with pre-established threshold, target and maximum performance goals:
| | • | | Environment, health and safety (5 measures): |
| | • | | Bakken routine flare rate |
| | • | | Critical inspection compliance |
| | • | | Severe + significant safety incident rate |
| | • | | Loss of primary containment rate |
| | • | | Controllable Production; |
| | • | | Exploration and production capital and exploratory spend; and |
| | • | | Controllable operated cash costs. |
As part of its ongoing assessment of the Company’s compensation programs, the Committee determined to continue to use the enterprise-wide performance modifier introduced in 2023 to increase or decrease payout of the Plan by up to 25% based on five evaluation themes: strategy execution; capital allocation and risk management; social responsibility and stakeholder engagement; culture, people and leadership; and environment and sustainability.
The Committee also establishes annual incentive targets for each Named Executive Officer based upon position, responsibilities and competitive practice.
Payouts for the Named Executive Officers range from 0% to 200% of target based on attainment of the pre-established enterprise metrics, the strategic performance modifier and individual performance compared with individual goals pre-established at the beginning of the fiscal year.
Long-Term Incentive Program
On March 5, 2024, the Committee approved the value of awards to the Named Executive Officers under the Company’s long-term incentive program for 2024 (the “2024 Program”), effective March 6, 2024.
Due to the Company’s pending with merger with Chevron Corporation, the Named Executive Officers, including Mr. Hess, received long-term incentive awards in the form of restricted stock that vest in equal installments over a three-year period beginning on the first anniversary of the grant date, subject to accelerated vesting on certain terminations of employment pursuant to the terms of the Company’s 2017 Long-Term Incentive Plan, a copy of which was filed as Exhibit 10(1) to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 13, 2017, and the form of restricted stock award agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K, each of which is incorporated herein by reference.
