Incentive Plans

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Deferred compensation retirement plan. The Company's deferred compensation retirement plan allows for qualified officers and certain key employees of the Company to contribute up to 50 percent of their base salary and 100 percent of their annual bonus. The Company provides a matching contribution of 100 percent of the officer's and key employee's contribution limited up to the first 10 percent of their salary. The Company's matching contribution vests immediately. A trust fund has been established by the Company to accumulate the contributions made under this retirement plan.

The Company match for the deferred compensation plan is as follows:


	Year Ended December 31,
	2023		2022		2021
	(in millions)
Deferred compensation plan	$	3	$	2	$	2

In accordance with the terms of the deferred compensation plan, in the event of a change in control all participant accounts will be cashed out as soon as administratively possible. Therefore, the entire liability will become current. As of December 31, 2023, $6 million and $59 million is included in other current and noncurrent liabilities, respectively, in the consolidated balance sheets.

401(k) plan. The Pioneer Natural Resources USA, Inc. ("Pioneer USA," a wholly-owned subsidiary of the Company) 401(k) and Matching Plan (the "401(k) Plan") is a defined contribution plan established under the Internal Revenue Code Section 401. All regular full-time and part-time employees of Pioneer USA are eligible to participate in the 401(k) Plan on the first day of the month following their date of hire. Participants may contribute up to 80 percent of their annual base salary into the 401(k) Plan. Matching contributions are made to the 401(k) Plan in cash by Pioneer USA in amounts equal to 200 percent of a participant's contributions to the 401(k) Plan that are not in excess of five percent of the participant's annual base salary (the "Matching Contribution"). Each participant's account is credited with the participant's contributions, Matching Contribution and allocations of earnings. Participants are fully vested in their account balances except for Matching Contributions and their proportionate share of 401(k) Plan earnings attributable to Matching Contributions, which proportionately vest over a four-year period that begins on the participant's date of hire. Eligible employees are automatically enrolled in the 401(k) Plan at a contribution rate of five percent of the employee's annual base salary, unless the employee opts out of participation or makes an alternate election within 30 days of becoming eligible for participation.

The Company match for the 401(k) Plan is as follows:


	Year Ended December 31,
	2023		2022		2021
	(in millions)
401(k) Plan Matching Contributions	$	29	$	21	$	17

Long-Term Incentive Plan. The Company's Amended and Restated 2006 Long-Term Incentive Plan ("LTIP") provides for the granting of various forms of awards, including stock options, stock appreciation rights, performance units, restricted shares and restricted stock units to directors, officers and employees of the Company. As of December 31, 2023, the Company has 13.5 million common shares authorized for the issuance of awards (including 880 thousand shares available to the LTIP from an acquired LTIP), of which 4.0 million shares are available for future grant. In accordance with the Merger Agreement, beginning in 2024, total annual grants are limited to 325,000 common shares per year without the prior consent of ExxonMobil.

Employee Stock Purchase Plan. The Company's Employee Stock Purchase Plan ("ESPP") allows eligible employees to annually purchase the Company's common shares at a discounted price. Officers of the Company are not eligible to participate in the ESPP. Employee contributions to the ESPP are limited to $21,250 during the eight-month offering period (January 1 to August 31). Participants in the ESPP purchase the Company's common shares at a price that is 15 percent below the closing sales price of the Company's common shares on either the first day or the last day of each offering period, whichever closing sales price is lower. As of December 31, 2023, the Company has 2.5 million common shares authorized for awards under the ESPP, of which 1.2 million shares are available for future grant.

Share-based compensation expense and the associated income tax benefit for awards issued under both the LTIP and ESPP are as follows:


	Year Ended December 31,
		2023		2022		2021
		(in millions)
Equity Awards (a)		$	54	$	44	$	44
Liability Awards (b)		14		21		17
Restricted stock and performance units - Parsley awards (c)		—		—		33

Performance Awards (a) (d)		136		32		27
ESPP		3		2		2

		$	207	$	99	$	123
Capitalized share-based compensation expense (d)		$	27	$	18	$	17
Income tax benefit		$	33	$	8	$	14

______________________

(a)In February 2023, the Company changed the retirement eligibility provisions for 2023 share-based compensation awards issued to officers, which shortened the requisite service period over which the expense is recognized.

(b)Liability Awards are expected to be settled on their vesting date in cash. As of December 31, 2023 and December 31, 2022, accounts payable – due to affiliates included $5 million and $6 million, respectively, of liabilities attributable to Liability Awards.

(c)Represents the accelerated vesting of restricted stock and performance units upon completion of the Parsley Acquisition, which was recorded in other expense in the consolidated statements of operations.

(d)In December 2023, the Company modified the Performance Awards granted in 2021 to vest at the maximum payout percentage, resulting in incremental expense of $97 million, of which $8 million was capitalized.

As of December 31, 2023, there was $90 million of unrecognized share-based compensation expense related to unvested share-based compensation awards of which $17 million is attributable to Liability Awards. The unrecognized compensation expense will be recognized on a straight-line basis over the remaining requisite service periods of the awards, which is a period of less than three years on a weighted average basis. Expense for the Performance Awards granted in 2023 is estimated based upon the achievement of certain financial performance targets and is reassessed periodically. The cumulative impact of any change in estimate is reflected in the period of the change.

Restricted share awards. The Company routinely awards Equity Awards and Liability Awards as compensation to directors, officers and employees of the Company.


	Year Ended December 31,
	2023		2022		2021
	(in millions, except per share data)
Equity Awards granted:
Weighted average grant-date fair value per share	$	231.16	$	223.05	$	141.82
Equity Awards vested:
Grant-date fair value	$	59	$	62	$	50
Total fair value at vesting	$	79	$	109	$	51
Liability Awards vested:
Cash paid	$	15	$	24	$	14

Performance Awards. Each year, at its discretion, the Company's Board of Directors (the "Board") awards performance units to the Company's officers under the LTIP. For the Performance Awards granted in 2021 and 2022, the number of common shares to be issued at vesting is determined by comparing the Company's total shareholder return to the total shareholder return of a predetermined group of peer companies over the performance period. For the Performance Awards granted in 2023, the number of common shares to be issued at vesting is determined based upon the Company's achievement of certain financial performance targets over the performance period subject to an adjustment (up or down by up to 25 percent) based upon the Company's total shareholder return over the performance period relative to a predetermined group of peer companies. The Performance Awards vest over a service period of approximately three years.

The grant-date fair value of Performance Awards is recorded as share-based compensation expense ratably over the service period.


	Year Ended December 31,
	2023		2022		2021
	(in millions, except per share data)
Performance Awards granted:
Weighted average grant-date fair value per share	$	236.01	$	331.58	$	165.32
Performance Awards vested:
Grant-date fair value	$	27	$	26	$	13
Total fair value at vesting	$	90	$	30	$	14

The fair value of Performance Awards that are based upon the Company's relative total shareholder return are determined using a Monte Carlo simulation model that utilizes multiple input variables to determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award. Expected volatilities utilized in the model were estimated using a historical period consistent with the performance period of approximately three years. The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the expected life of the grant.

Assumptions used to estimate the fair value of Performance Awards granted in each of the following years are as follows:


	2023			2022			2021
Risk-free interest rate	4.02%			1.37%			0.18%
Range of volatilities	23%	-	68%	25%	-	105%	25%	-	104%

Per the change in control terms of award agreements, any Equity Awards, Liability Awards and Performance Awards that were granted prior to the Merger Agreement and are outstanding immediately prior to the completion of a change in control event will become vested. Additionally, in accordance with the Merger Agreement, outstanding Performance Awards will vest at their maximum payout percentage, which may impact future share-based compensation expense based upon the fair value of the awards as of the modification date.

Activity for Equity Awards, Liability Awards, and Performance Awards is as follows:


	Year Ended December 31, 2023
	Equity Awards			Liability Awards	Performance Awards (a)
	Number of Shares	Weighted Average Grant- Date Fair Value		Number of shares	Number of units (a)	Weighted Average Grant- Date Fair Value
Beginning awards	481,293	$	174.44	119,695	268,003	$	233.92
Awards granted	279,615	$	231.16	54,599	83,727	$	236.01
Awards forfeited	(11,274)	$	204.15	(6,667)	(153)	$	236.90
Awards vested (b) (c)	(346,310)	$	169.46	(64,995)	(159,799)	$	167.78
Ending awards	403,324	$	217.20	102,632	191,778	$	289.95

______________________

(a)Reflects the number of performance units initially granted assuming a target payout percentage. In accordance with the Merger Agreement, outstanding Performance Awards will vest at their maximum payout percentage upon closing.

(b)Per the terms of award agreements and elections, the issuance of common shares may be deferred for certain Equity Awards that vest during the period.

(c)For Performance Awards, the awards vested reflects the number of performance units that vested upon retirement or departure of eligible officers or when the performance period of the award ended. Awards that vest upon retirement or departure of eligible officers are not transferred to the officer until the original performance period of the award lapses. Of the 159,799 units that vested, 2,383 are associated with eligible officer retirements and departures during year ended December 31, 2023 that will be issued in future years when the original performance period ends. On December 15, 2023, the performance period ended on 170,554 Performance Awards that earned 2.50 shares for each vested award resulting in 426,392 aggregate shares of common shares being issued on that date. Of the 170,554 Performance Awards that lapsed, 13,138 units were associated with Performance Awards that vested in prior years upon retirement or departure of eligible officers.