Mary Ellen Lutey
SM EnergyAbout Mary Ellen Lutey
Mary Ellen Lutey is Senior Vice President – Texas at SM Energy (appointed September 2024) and previously served as SVP – Exploration, Development & EHS (appointed November 2020), with 32+ years of technical, operating, and leadership experience across exploration, development, EHS, and regional operations . She joined SM Energy in June 2008 after roles at Chesapeake, ConocoPhillips/Burlington Resources (1994–2006), and others; she currently serves on the board of NuVista Energy Ltd. (TSX: NVA) . As of March 24, 2025, she is 53 years old and a named executive officer in 2024 disclosures, with pay-for-performance incentives tied to adjusted free cash flow, absolute and relative TSR, sustainability metrics, and annual STIP operational targets (cash flow, production, reserves, costs) . Company TSR was +13% in 2023 (boosting STIP) and +2% in 2024 (no impact), while multi-year LTIP results paid above target (1.81x for 2020–2023; 1.69x for 2021–2024) reflecting strong FCF and leverage targets .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| SM Energy | SVP – Texas | 2024–present | Leads Texas operations post-Uinta acquisition integration; capital efficiency and stewardship focus . |
| SM Energy | SVP – Exploration, Development & EHS | 2020–2024 | Drove exploration, development, and sustainability execution; FRM committee participation on risk oversight in 2023 . |
| SM Energy | SVP & Regional Manager – South Texas & Gulf Coast | 2015–2019 | Managed engineering, geoscience, operations, resource development and EHS, supporting Permian and South Texas strategy . |
| SM Energy | VP & Regional Manager – Mid-Continent | 2012–2015 | Led regional development and operations in Mid-Continent . |
| SM Energy | North Rockies Asset Manager | 2008–2012 | Asset stewardship and development leadership in Rockies . |
| Burlington Resources (acquired by ConocoPhillips) | Technical & leadership roles | 1994–2006 | Engineering, geoscience, BD, strategic planning across US and Canada; foundation for E&P leadership . |
| Chesapeake Energy; ConocoPhillips (predecessor companies) | Various roles | pre-2008 | Upstream operating experience spanning multiple basins . |
External Roles
| Organization | Position | Years | Notes |
|---|---|---|---|
| NuVista Energy Ltd. (TSX: NVA) | Director | 2023–present | Canadian E&P focused on WCSB; adds external board governance exposure . |
Fixed Compensation
| Metric | 2021 | 2022 | 2023 |
|---|---|---|---|
| Base Salary (USD) | $340,608 | $359,382 | $378,499 |
| Target Bonus (% of Salary) | 75% | 75% | 75% |
| STIP Multiplier | — | — | 1.65x (TSR +13% modifier) |
Notes:
- 2023 STIP payout: $468,300 (calculated under 75% target and 1.65x pool multiplier; disclosed in SCT breakout) .
- Other fixed elements include group life insurance (up to 2x salary, cap $2M) and broad-based benefits; executives eligible on same basis as employees .
Performance Compensation
Annual STIP – 2023 Design and Results (Company-wide)
| Metric (Weight) | Threshold | Target | Max | Actual | Contribution to Multiplier |
|---|---|---|---|---|---|
| Cash Flow (25%) | 1,426 | 1,677 | 2,096.85 | 1,708 ($mm) | 0.31 |
| Proved Developed Reserve Additions (20%) | 45.00 | 53.00 | 66.20 | 99.50 (MMBOE) | 0.40 |
| Finding & Development Costs (15%) | 24.42 | 21.23 | 15.93 | 10.72 ($/BOE) | 0.30 |
| Sustainability (15%) | 0.85 | 1.00 | 1.25 | 1.16 | 0.25 |
| Production Volume (15%) | 45.20 | 53.20 | 66.50 | 55.40 (MMBOE) | 0.20 |
| Cash Operating Costs (10%) | 15.34 | 13.34 | 10.00 | 11.96 ($/BOE) | 0.14 |
| Qualitative Inventory (±0.10) | — | — | — | 0.00 | 0.00 |
| TSR Modifier | — | +13% | — | +13% | +0.05 → Final 1.65x |
STIP mechanics emphasize adjusted free cash flow modifiers and an absolute TSR adjustment for SVP-level and above; payouts capped at 2.0x, with downward adjustment if annual absolute TSR ≤ -10% .
Long-Term Incentive Plan (LTIP)
- LTIP structure: RSUs vest ratably over three years; PSUs settle 0–200% based on three-year performance across adjusted FCF, absolute TSR, relative TSR, and sustainability metrics (GHG intensity, safety, spills) .
- Mary’s 2023 LTIP grant value: $750,005 (50% PSUs / 50% RSUs) .
- Multi-year performance outcomes:
LTIP Period FCF Net Debt/Adj. EBITDAX Sustainability Absolute TSR Final Multiplier 2020–2023 2.0x 2.0x 1.05x — 1.81x 2021–2024 2.0x 2.0x 0.76x 2.0x 1.69x
Vesting Schedules (as of 12/31/2023)
| Award Type | Units | Market Value (@ $38.72) | Vesting Schedule |
|---|---|---|---|
| RSUs (batch 1) | 3,757 | $145,471 | 1/3 on 7/1/2024 |
| RSUs (batch 2) | 6,358 | $246,182 | 1/3 on 7/1/2024; 1/3 on 7/1/2025 |
| RSUs (batch 3) | 11,856 | $459,064 | 1/3 on 7/1/2024; 1/3 on 7/1/2025; 1/3 on 7/1/2026 |
| PSUs (2022 grant) | 12,185 | $471,803 | 3-year performance; vests 7/1/2025 (payout 0–200%) |
| PSUs (2023 grant) | 12,530 | $485,162 | 3-year performance; vests 7/1/2026 (payout 0–200%) |
Equity Ownership & Alignment
| Measure | 3/24/2024 | Notes |
|---|---|---|
| Beneficial Ownership (Common) | 129,308 shares; <1% of outstanding | RSUs/PSUs excluded from “beneficial” common stock table . |
| RSUs (unvested) | 29,872 units | Counted toward ownership guideline compliance; PSUs excluded . |
| PSUs (unvested) | 33,579 units | Payout contingent on performance . |
| Ownership Guidelines | SVP: 1x annual base salary | Executives restricted from selling equity until in compliance (with limited exceptions) . |
| Hedging/Pledging | Prohibited (no hedges, margin accounts, pledges, options/derivatives) | Reinforces alignment and mitigates red flags. |
| Section 16 Compliance | All filings timely in 2023/2024 | Reduces regulatory risk indicators. |
Employment Terms
- At-will employment; no individual employment contracts for executives .
- Change-of-control severance: double-trigger agreements for VP+ with “good reason/without cause” within ~30 months; no excise tax gross-ups; equity awards accelerate at target upon qualifying termination per plan (subject to alternative award treatment if assumed by acquirer) .
- Clawback: SEC/NYSE-compliant recovery of incentive compensation upon restatement, regardless of fault, covering three prior fiscal years .
Compensation History (Summary Compensation Table)
| Year | Salary (USD) | Stock Awards (USD) | Non-Equity Incentive (USD) | Pension/NQDC (USD) | All Other Comp (USD) | Total (USD) |
|---|---|---|---|---|---|---|
| 2021 | $340,608 | $287,498 | $476,851 | $48,064 | $17,400 | $1,170,421 |
| 2022 | $359,382 | $649,987 | $320,748 | — | $68,474 | $1,398,591 |
| 2023 | $378,499 | $750,005 | $728,488 (incl. 2020 performance cash) | $60,869 | $61,965 | $1,979,826 |
STIP/Performance Cash details for 2023 payouts:
- STIP: $468,300; 2020 performance-based cash: $260,188 .
Compensation Structure Analysis
- Mix: Increasing equity weight post-2020/2021 cash-based performance substitution; restored PSUs from 2022 onward; Mary’s 2023 LTIP split 50% PSUs / 50% RSUs suggests balanced at-risk exposure vs. retention .
- Metrics rigor: Targets for STIP set above prior-year performance in several areas; absolute TSR caps on PSU payouts when negative; relative TSR requires above-median for target payout .
- Governance best practices: No excise tax gross-ups; clawback adopted; independent comp consultant (FW Cook) with no conflicts; robust ownership guidelines .
- Red flags mitigated: Hedging/pledging banned; Section 16 compliance timely; severance designed as double-trigger (reduces entrenchment risk) .
Related Party Transactions
- Spouse (Dean Lutey) appointed SVP – CIO (March 2025); total compensation of $1,136,048 in FY 2024; transaction reviewed and approved by Audit Committee per related-person policy .
Investment Implications
- Alignment: Mary’s equity exposure (beneficial shares + substantial unvested RSUs/PSUs) and strict no-pledge/hedge policy support strong skin-in-the-game and reduce misalignment risks .
- Performance levers: High weighting to FCF, leverage, and TSR—combined with above-target LTIP outcomes (1.81x, 1.69x)—indicate incentives aligned to capital discipline and shareholder returns, a positive for continuity in Texas operations execution .
- Retention/change-of-control: Double-trigger severance with target-level equity acceleration provides retention through M&A cycles without single-trigger windfalls; no tax gross-ups lowers shareholder-unfriendly optics .
- Watch items: Sustainability metric underperformance in 2021–2024 LTIP (0.76x) suggests execution risk on EHS/ESG targets; continued monitoring of Texas stewardship metrics advisable . The related-party employment of spouse is disclosed and overseen, but merits ongoing governance attention .
- Trading signals: With Section 16 compliance and no pledging allowed, insider selling pressure primarily tied to scheduled RSU vestings (not disclosed as pledged/hedged); monitor Form 4 activity around July 1 and January 1 vesting dates per schedule to assess discretionary sales vs. tax withholding patterns .