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National Oilwell Varco Executive Comp 2012

RESOLVED: That the shareholders of National Oilwell Varco (“National Oilwell Varco” or “Company”) request the Board’s Compensation Committee, when setting senior executive compensation, include sustainability as one of the performance measures for senior executives under the Company’s annual and/or long-term incentive plans. Sustainability is defined as how environmental, social and financial considerations are integrated into corporate strategy over the long term. 
 
Supporting Statement 
 
We believe that the long-term interests of shareholders, as well as other important constituents, are best served by companies that operate their businesses in a sustainable manner focused on long-term value creation. As the recent financial crisis demonstrates, those boards of directors and management that operate their companies with integrity and a focus on the long term are much more likely to prosper than ones that are dominated by a short-term focus. The best means of demonstrating a company’s commitment to the concept of sustainability is through incorporating it as a performance measure in the Company’s annual and/or long-term incentive plans. 
 
We note that the Company has consistently affirmed its commitment to the concept of sustainability. In the Company’s 2010 Corporate Sustainability Report the Company states: 
 
Sustainability is the result of the pivotal connections of environmental stewardship, long-term company profitability and positive community impact.  In addition, sustainability remains a multi-faceted and never-ending goal, encompassing, among other things, social responsibility, environment and financial stability, and NOV’s continued success.
 
The CEO letter serving as introduction to the report states: 
 
…Meeting the challenges requires that we effectively address and engage in many complex issues while simultaneously meeting our customers’ needs and our stakeholders’ expectations.  We are committed to ethical and transparent practices, respecting human rights and being a positive force for economic development in the communities where we operate.  Further we are committed to safe and environmentally sound operations in every aspect of what we do. 
 
While these words are laudable, incorporating them into the Company’s senior executive compensation program would give them real impact. Yet today, neither the Company’s annual incentive plan nor its long-term incentive plan utilizes any performance measures related to sustainability. We believe that this represents a serious shortcoming. 
 
Other companies have added sustainability to the metrics that they use when determining executive compensation. British utility company National Grid announced in 2009 it would partly base executive compensation on meeting targets for reducing carbon emissions. In addition, Xcel Energy in its 2009 proxy statement discloses that certain annual incentive payments are dependent on green house gas emission reductions alongside the weight given to meeting earnings per share targets. Also Intel Corporation calculates every employee’s annual bonus based on the firm’s performance on measures that include energy efficiency, completion of renewable energy and clean energy projects, and the company’s reputation for environmental leadership.