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Range Resources Executive Comp 2012

RESOLVED: The shareholders of Range Resources Corporation (the “Company”) ask the board of directors to adopt a policy that incentive compensation for senior executives should include a range of non-financial measures based on sustainability principles and reducing negative environmental impacts related to Company operations. For purposes of this resolution, “sustainability” refers to the methods by which environmental, social and economic considerations are integrated into long-term corporate strategy.
As shareholders, we support executive compensation policies that motivate and reward senior executives for actions that contribute to a company’s long-term growth.
An important element of senior executive compensation is incentive compensation, including both annual cash bonuses and long-term incentive awards. At-risk pay is the predominant form of compensation for the Company’s senior executives. According to last year’s proxy statement, such pay comprised approximately 80% of the total compensation for the five most senior executives that year.
Considering the significance of incentive pay in the Company’s compensation policies, we believe it is important for the board of directors to ensure that compensation incentives are aligned with business strategies for creating sustainable, long-term shareholder value and mitigating risks that could have a detrimental impact on value creation. The Company recognizes environmental performance as a key business risk, stating in its 2011 annual report, “Natural gas and oil operations are subject to many risks, including well blowouts, craterings, explosions, uncontrollable flows of oil, natural gas or well fluids, fires, formations with abnormal pressures, pipeline ruptures or spills, pollution, releases of toxic natural gas and other environmental hazards and risks. If any of these hazards occur, we could sustain substantial losses…” We note that the Company has experienced recent spills within both its Barnett Shale and Marcellus Shale operations and has been subject to fines and regulatory scrutiny.
Accordingly, we believe the board should consider and disclose a variety of factors in determining incentive pay, including metrics that promote sustainable value creation and reduce negative environmental impacts. In discussing the factors that go into setting compensation levels for senior executive compensation, the Company’s April 2011 proxy statement indicates that at-risk compensation is largely based on a mix of internal and external performance metrics. Although the proxy statement acknowledges the importance of mitigating risk, there is no mention of environmental, safety or sustainability issues or how avoiding risk in those areas is factored into incentive compensation for senior executives. By contrast, approximately two-thirds of the 42 energy firms in the S&P 500 index cite non-financial factors, such as environmental performance and worker safety, in their 2010 proxies.
We believe that the need for a greater emphasis on sustainability factors in incentive pay is illustrated by BP’s 2010 Deepwater Horizon oil spill, where a single incident caused significant losses to a company’s shareholders.
We believe that the Company can and should do more in this area, as a way of promoting long-term sustainability and growth. We urge you to vote FOR this proposal.