Herb Vogel
SM EnergyAbout Herb Vogel
Herbert S. “Herb” Vogel, age 64, is President, Chief Executive Officer and Director of SM Energy. He became CEO and joined the Board in November 2020 after serving as President & COO (July–Nov 2020), EVP & COO (2019–2020), and EVP–Operations (2014–2019); he joined SM in 2012 and has 40+ years of oil & gas experience at BP/ARCO across engineering, operations, LNG/gas marketing and trading. He holds a BS in Mechanical Engineering (University of Colorado Boulder) and an MSE in Mechanical Engineering (University of Texas at Austin) . Under his tenure, incentive scorecards show strong capital return and operational outcomes, including a 2024 STIP multiplier of 1.31x and a 2021–2024 LTIP payout of 1.69x with absolute TSR at +28% annualized (capped) .
Key performance markers
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Value of $100 investment (TSR) | $54.57 | $263.18 | $313.93 | $354.89 | $362.02 |
| Net Income (Loss) ($mm) | $(764.6) | $36.2 | $1,112.0 | $817.9 | $770.3 |
| Adjusted Free Cash Flow ($mm) | $240.9 | $482.5 | $804.0 | $285.4 | $306.0 |
2024 operating context and capital return
- 2024 STIP multiplier: 1.31x (final) .
- 2024 LTIP (2011–2024 cycle) multiplier: 1.69x; Absolute TSR: +28% annualized (capped), Free Cash Flow and Leverage metrics at max .
- 2024 capital return: $169mm returned ($84mm buybacks; $85mm dividends); fixed dividend raised 11% to $0.80/yr in 4Q24; repurchase authorization extended to $500mm through 2027 .
- 2024 operations: record oil production up ~20% YoY; proved reserves up 12%; inventory up ~40% with Uinta Basin acquisition; revolver balance reduced to $68.5mm at year-end 2024 from $190mm on Oct 1, 2024 .
Past Roles
| Organization | Role | Years | Strategic/Operational Impact |
|---|---|---|---|
| SM Energy | President, CEO and Director | Nov 2020–Present | Led capital returns; executed Uinta Basin acquisition; delivered record production/reserves and strong incentive outcomes . |
| SM Energy | President & COO | Jul 2020–Nov 2020 | Transition to CEO; operational leadership . |
| SM Energy | EVP & COO | 2019–Jul 2020 | Enterprise operations leadership . |
| SM Energy | EVP–Operations | 2014–2019 | Asset operations & execution . |
| SM Energy | SVP–Portfolio Development & Technical Services | 2012–2014 | Portfolio development and technical leadership . |
| BP Energy Co./BP plc | President, BP Energy Co.; Regional BU Leader, N. America Gas & Power; COO–NGL, Power & Financial Products; MD Gas Europe & Africa; Sr. VP Tangguh LNG | Various (pre‑2012) | Commercial gas/power leadership, hedging/risk expertise, global LNG/E&P execution . |
| ARCO Alaska/ARCO | Reservoir Engineer; roles across engineering/ops, new ventures, business unit management | Pre‑2000 to 2000 | Engineering and operations foundation across Permian/Alaska/Indonesia . |
External Roles
- Public company boards: None .
Fixed Compensation
| Item | 2023 | 2024 |
|---|---|---|
| Base Salary (approved) | $826,800 | $864,006 |
| Salary Paid (actual) | $814,200 | $853,989 |
| Target STIP (% of Base) | 120% | 120% |
Notes:
- No additional pay for Board service as employee director .
Performance Compensation
Short-Term Incentive Plan (STIP) – 2024 design and outcome
| Metric | Weight | Threshold | Target | Max | Actual | Weighted Multiplier |
|---|---|---|---|---|---|---|
| Cash Flow ($mm, adj FCF basis) | 25% | 1,453.0 | 1,720.0 | 2,141.0 | 1,858.0 | 0.35 |
| Proved Dev. Reserve Additions (MMBOE, adj FCF basis) | 20% | 75.5 | 89.4 | 111.3 | 94.0 | 0.26 |
| Finding & Development Costs ($/BOE) | 15% | 15.44 | 13.38 | 10.09 | 12.35 | 0.20 |
| Sustainability (composite) | 15% | 0.85 | 1.00 | 1.25 | 0.90 | 0.10 |
| Production Volume (MMBOE, adj FCF basis) | 15% | 48.5 | 57.4 | 71.5 | 59.1 | 0.17 |
| Cash Operating Costs ($/BOE) | 10% | 14.49 | 12.56 | 9.47 | 11.48 | 0.14 |
| Qualitative Inventory Growth Modifier | ±0.10 | — | — | — | +0.10 | +0.10 |
| Absolute TSR Modifier | — | — | — | — | +2% (no impact) | 0.00 |
| Final STIP Multiplier | — | — | — | — | — | 1.31x |
NEO payout (Vogel):
| 2024 STIP Inputs | Value |
|---|---|
| Target STIP (% base) | 120% |
| Salary Paid (2024) | $853,989 |
| Final Multiplier | 1.31x |
| STIP Paid (2025 for 2024) | $1,342,471 |
STIP design features: TSR modifier (± up to 20%), adjusted FCF-based calibration for key metrics; targets not modified for Uinta acquisition timing .
Long-Term Incentive Plan (LTIP)
Design (2024–2027 awards): mix of PSUs and RSUs (CEO 60% PSUs/40% RSUs); 3-year performance period; metrics include Adjusted Free Cash Flow, Absolute TSR, Relative TSR, and Sustainability (GHG intensity, safety, spills). Negative absolute TSR caps payouts at target; above-median relative TSR required for target on that metric .
2021–2024 performance cycle results:
| Metric (weight) | Threshold | Target | Max | Actual | Payout |
|---|---|---|---|---|---|
| Free Cash Flow Generation (25%) | $300mm | $1.0bn | $1.7bn | $1.99bn | 200% |
| Net Debt / Adj EBITDAX (25%) | 2.5x | 1.5x | 1.0x | 0.60x | 200% |
| Sustainability (25%) | See submetrics | See submetrics | See submetrics | Below target composite | 76% |
| Absolute TSR (25%) | +5% | +10% | +15% | +28% | 200% |
| Final LTIP Multiplier | — | — | — | — | 1.69x |
Vogel’s 2024 grants and vesting:
| Award | Grant Date | Shares/Units | Grant Date Fair Value | Vesting/Performance |
|---|---|---|---|---|
| RSUs | 7/1/2024 | 50,389 | $2,199,984 | CEO retirement-eligible: vests 1/6 on Jan 1 and Jul 1 of 2025–2027; shares release on Jul 1 dates . |
| PSUs (target) | 10/1/2024 | 77,177 (Target); 25% threshold 19,294; 200% max 154,354 | $3,300,000 | 3-year performance (to 6/30/2027); settles 7/1/2027 per plan metrics . |
No stock options were granted to directors or NEOs in 2024; the company has not issued options to directors since 2004 .
Equity Ownership & Alignment
| Ownership element | Detail |
|---|---|
| Beneficially owned common shares | 487,101; less than 1% of 114,461,934 shares outstanding as of 3/24/2025 . |
| Unvested/Outstanding equity at 12/31/2024 | RSUs: 17,606; 42,153; 50,389; PSUs: 101,229; 100,240; 77,177 (market value of unvested awards shown in Proxy based on $38.76) . |
| Aggregate RSUs/PSUs held (as of 3/24/2025) | RSUs: 110,148; PSUs: 278,646 (unsettled) . |
| Stock ownership guidelines | CEO: 5x annual base salary; directors: 5x annual cash retainer . |
| Hedging/pledging | Prohibited for officers/directors (no hedging, no pledging, no margin, options, derivatives) . |
Implications:
- Significant unvested RSUs (semiannual vesting) and PSUs (performance through mid‑2027) create ongoing retention hooks and may contribute to periodic insider sales upon share release; policy pre‑clearance applies to trading .
Employment Terms
| Term | Provision |
|---|---|
| Employment agreements | None; executives are “at will” (no written employment contracts) . |
| Clawback | SEC/NYSE-compliant; no-fault recovery of incentive pay upon qualifying restatements (3-year lookback) . |
| Change-in-control (CIC) | Double-trigger cash severance and equity vesting; window is within 2.5 years post-CIC; no excise tax gross-ups; CIC definition >50% stock/assets or >50% board change (with carve-outs) . |
| CEO CIC economics (hypothetical at 12/31/2024) | Base salary: $2,592,018; Cash bonus: $4,147,228; Accelerated vesting (RSUs/PSUs at target): $13,269,346; Continued benefits: $34,765; Total: $20,043,357 . |
| Death/Disability | Accelerated equity vesting (timing per plan) valued at $13,269,346 (as of 12/31/2024) . |
| Voluntary/Retirement | Pro-rata features for retirement-eligible awards (e.g., CEO RSUs/PSUs accrue daily and release on schedule per award terms) . |
| Non-compete/solicit | Not specified in proxy beyond “good reason” and termination definitions; trading policy and governance constraints apply . |
Board Governance (Vogel as Director)
- Board service: Director since 2020; only non‑independent member (CEO). Board otherwise entirely independent; independent Chairman (roles separated since 2007) .
- Committees: Executive Committee member; Executive Committee did not meet in 2024 .
- Attendance: In 2024, no director attended <90% of Board meetings; all directors had 100% attendance on committees on which they served .
- Director pay: As an employee director, Vogel receives no additional director compensation .
Dual-role implications:
- Separation of Chair/CEO mitigates concentration of power; strong independence profile (8 of 9 independent nominees) supports oversight of CEO compensation and performance .
Director Compensation (for completeness)
- Non-employee director structure: $95k cash retainer; ~$185k equity retainer; committee chair retainers ($25k Audit; $20k Compensation; $15k G&S); independent Chair retainer $140k paid in stock; no options; ownership guideline 5x cash retainer .
Compensation & Incentives: Structure Highlights
- Targeting median pay levels; heavy emphasis on performance-based compensation (88% of CEO target direct compensation is variable in 2024; 60% of CEO LTIP in PSUs) .
- STIP includes adjusted FCF and absolute TSR modifiers; LTIP includes absolute and relative TSR and sustainability; negative absolute TSR caps payouts at target .
- No gross-ups; no single-trigger CIC; clawback policy in place; prohibited hedging/pledging; option/SAR repricing prohibited without shareholder approval .
Multi-year compensation (SCT)
| Year | Salary | Stock Awards | Non-Equity Incentive (incl. 2021 perf. cash payout) | Pension/NQDC Change | All Other | Total |
|---|---|---|---|---|---|---|
| 2024 | $853,989 | $5,499,984 | $5,398,471 (incl. $1,342,471 STIP; $4,056,000 2021 perf. cash) | $319,552 | $168,666 | $12,240,662 |
| 2023 | $814,200 | $4,999,989 | $4,815,816 | $295,736 | $134,889 | $11,060,630 |
| 2022 | $773,077 | $4,500,021 | $1,103,954 | $188,143 | $167,841 | $6,733,036 |
Notes: 2020–2021 LTIP cycles used performance cash in lieu of PSUs; payouts recognized upon achievement in 2023–2024 per SEC rules .
Compensation Peer Group (2024 benchmarking)
| Peers | |
|---|---|
| Antero Resources; California Resources; Chord Energy; Civitas Resources; CNX Resources; Comstock Resources; Gulfport Energy; Kosmos Energy; Magnolia Oil & Gas; Marathon Oil; Matador Resources; Murphy Oil; Northern Oil & Gas; Ovintiv; Permian Resources; Range Resources; Talos Energy; Vital Energy . |
Performance & Track Record
Operational and capital allocation outcomes (2024):
- Returned $169mm to shareholders ($84mm repurchases; $85mm dividends) and lifted fixed dividend 11% to $0.80 annualized; buyback authorization to $500mm through 2027 .
- Achieved record oil production (up ~20% YoY) and proved reserves (up 12% YoY); expanded gross drilling inventory ~40% with Uinta Basin acquisition; reduced revolver to $68.5mm by YE 2024 .
- STIP final multiplier 1.31x with strong outcomes on cash flow, reserves, F&D, costs; qualitative inventory goals exceeded (resource adds ~303 MMBOE vs 80 MMBOE target) .
Pay vs performance (select data shown above) links compensation actually paid to TSR and adjusted FCF as primary drivers .
Risk Indicators & Red Flags
- Hedging/pledging/margin transactions prohibited for executives/directors .
- No excise tax gross-ups; double-trigger CIC only; option/SAR repricing prohibited without shareholder approval; robust clawback .
- Related party transactions: none involving Vogel; the only disclosed related-person transaction pertains to another officer’s spouse and was approved by the Audit Committee .
- Governance: Independent Chair; 8/9 independent nominees; strong attendance .
Compensation Committee Oversight
- Compensation Committee (all independent): Rose M. Robeson (Chair), Stephen R. Brand, Anita M. Powers, William D. Sullivan; 10 meetings in 2024 .
- Independent consultant: FW Cook; no conflicts; annual compensation risk assessment deemed not reasonably likely to have a material adverse effect .
Equity Vesting & Potential Insider Selling Pressure
- CEO RSUs (2024 grant) vest in six semiannual tranches through July 1, 2027 (retirement-eligibility prorating), creating periodic delivery events; PSUs cliff-settle July 1, 2027, subject to 3-year performance .
- Outstanding unvested balances (RSUs and PSUs) are substantial (see tables above), aligning retention but potentially leading to scheduled share releases; pre-clearance and blackout rules apply .
Employment & Retention Considerations
- Significant CIC protection with double-trigger and equity acceleration (target-level for PSUs) provides stability during strategic transactions; no single-trigger cash severance or gross-ups .
- Participation in defined benefit pension/SERP; present value at 12/31/2024: Qualified Pension $714,550; SERP $1,082,618 .
Investment Implications
- Alignment: High variable pay (88% of CEO target) tied to capital efficiency, FCF, TSR, and sustainability supports shareholder alignment; no hedging/pledging, clawback and ownership guidelines add discipline .
- Execution track record: Strong 2021–2024 LTIP outcome (1.69x) with capped absolute TSR, maxed FCF/leverage, and robust 2024 operating/capital return delivery indicate effective capital allocation under Vogel .
- Retention and selling pressure: Meaningful unvested equity with defined vesting calendar (semiannual RSU releases; PSU cliff in mid‑2027) fosters retention but can create episodic insider sale windows; trading policy mitigates risk .
- Transaction resilience: Double-trigger CIC and no gross-ups reduce optics risk and facilitate neutral posture in M&A; quantified CEO CIC value (~$20.0mm at 12/31/2024) should be factored into deal modeling .
- Governance balance: Independent chair, majority-independent board (8/9) and 100% committee attendance provide counterweight to CEO dual role (CEO/Director) and support pay-for-performance oversight .