Edgar Filing: PIONEER NATURAL RESOURCES CO

Proxy14Webfilings

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934
(Amendment No. )



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Pioneer Natural Resources Company

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)



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PIONEER NATURAL RESOURCES COMPANY

5205 North O'Connor Boulevard

Suite 200

Irving, Texas 75039

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To the Stockholders of Pioneer Natural Resources Company:

Notice is hereby given that the Annual Meeting of Stockholders of Pioneer Natural Resources Company ("Pioneer" or the "Company") will be held at 5205 North O’Connor Boulevard, Suite 250, Irving, Texas 75039, on Wednesday, May 28, 2014, at 9:00 a.m. Central Time (the "Annual Meeting"). The Annual Meeting is being held for the following purposes:


1.	To elect eight directors, each for a term to expire at the 2015 Annual Meeting of Stockholders.


2.	To ratify the selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for 2014.


3.	To approve on an advisory basis named executive officer compensation.


4.	To reapprove the eligible employees, business criteria and maximum annual per person compensation limits under the Company's 2006 Long-Term Incentive Plan in order to comply with the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").


5.	To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

These proposals are described in the accompanying proxy materials. You will be able to vote at the Annual Meeting only if you were a stockholder of record at the close of business on April 3, 2014. If there are not sufficient votes represented for a quorum or to approve the foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned or postponed in order to permit further solicitation of proxies.

Beginning on or about April 17, 2014, the Company mailed a Notice Regarding the Internet Availability of Proxy Materials (the "Notice") to its stockholders containing instructions on how to access the proxy statement and vote online, and the Company made proxy materials available to the stockholders over the Internet. Instructions for requesting a paper copy of the proxy materials are contained in the Notice.

YOUR VOTE IS IMPORTANT

Please vote over the internet at www.cstproxyvote.com or by phone at 1-866-894-0537 promptly so that your shares may be voted in accordance with your wishes and so that we may have a quorum at the Annual Meeting. If you received a paper copy of the proxy materials (which includes the proxy card), you may also vote by completing, signing and returning the paper proxy card by mail.



		By Order of the Board of Directors,


Irving, Texas April 17, 2014		Mark H. Kleinman Senior Vice President, General Counsel and Secretary

TABLE OF CONTENTS



2014 Annual Meeting of Stockholders	1
Electronic Availability of Proxy Statement and Annual Report	1
Stockholders of Record and Beneficial Owners	1
Quorum and Voting	2
Participants in the Pioneer Natural Resources USA, Inc. 401(k) and Matching Plan	4
Item One Election of Directors	4
Directors and Executive Officers	5
Meetings and Committees of Directors	11
Compensation of Directors	13
Compensation Discussion and Analysis	15
Compensation and Management Development Committee Report	35
Executive Compensation Tables	36
Summary Compensation Table	36
2013 Grants of Plan-Based Awards	38
Narrative Disclosure for The 2013 Grants of Plan-Based Awards Table	39
2013 Outstanding Equity Awards at Fiscal Year End	42
2013 Option Exercises and Stock Vested	44
Pension Benefits	44
2013 Non-Qualified Deferred Compensation	44
Potential Payments Upon Termination or Change in Control	47
Compensation Programs and Risk Considerations	55
Compensation and Management Development Committee Interlocks and Insider Participation	56
Audit Committee Report	56
Corporate Governance	58
Corporate Governance Guidelines	58
Board Leadership	58
Director Independence	59
Financial Literacy of Audit Committee and Designation of Financial Experts	60
Oversight of Risk Management	60
Attendance at Annual Meetings	61
Procedure for Directly Contacting the Board and Whistleblower Policy	61
Security Ownership of Certain Beneficial Owners and Management	62
Section 16(a) Beneficial Ownership Reporting Compliance	63
Transactions with Related Persons	63
Item Two Ratification of Selection of Independent Registered Public Accounting Firm	64
Item Three Advisory Vote to Approve Named Executive Officer Compensation	65
Item Four Reapproval of the Eligible Employees, Business Criteria and Maximum Annual Per Person Compensation Limits under the Company's 2006 Long-Term Incentive Plan	66
Stockholder Proposals; Identification of Director Candidates	77
Solicitation of Proxies	80
Stockholder List	80
Annual Report and Other Information	81
Internet and Phone Voting	82

PIONEER NATURAL RESOURCES COMPANY

5205 North O'Connor Boulevard

Suite 200

Irving, Texas 75039

PROXY STATEMENT

2014 ANNUAL MEETING OF STOCKHOLDERS

The Board of Directors of the Company (the "Board") requests your Proxy for the Annual Meeting of Stockholders that will be held Wednesday, May 28, 2014, at 9:00 a.m. Central Time, at 5205 North O’Connor Boulevard, Suite 250, Irving, Texas 75039. By granting the Proxy, you authorize the persons named on the Proxy to represent you and vote your shares at the Annual Meeting. Those persons will also be authorized to vote your shares to adjourn the Annual Meeting from time to time and to vote your shares at any adjournments or postponements of the Annual Meeting.

If you attend the Annual Meeting, you may vote in person. If you are not present at the Annual Meeting, your shares may be voted only by a person to whom you have given a proper Proxy. You may revoke the Proxy in writing at any time before it is exercised at the Annual Meeting by (i) delivering a written notice of the revocation to the Secretary of the Company at 5205 North O’Connor Boulevard, Suite 200, Irving, Texas 75039 no later than 5:00 p.m., Central Time on May 27, 2014, (ii) submitting a new Proxy electronically through the internet or by phone, (iii) signing and delivering to the Secretary of the Company at 5205 North O’Connor Boulevard, Suite 200, Irving, Texas 75039 a new Proxy with a later date, or (iv) attending the Annual Meeting and voting your shares in person. Your attendance at the Annual Meeting will not revoke the Proxy unless you give written notice of revocation to the Company’s Secretary before the Proxy is exercised or unless you vote your shares in person at the Annual Meeting.

Electronic Availability of Proxy Statement and Annual Report

As permitted under the rules of the Securities and Exchange Commission (the "SEC"), the Company is making this Proxy Statement and its Annual Report available to its stockholders electronically via the internet. The Company is sending the Notice on or about April 17, 2014, to its stockholders of record as of the close of business on April 3, 2014. This Notice includes (i) instructions on how to access the Company's proxy materials electronically, (ii) the date, time and location of the Annual Meeting, (iii) a description of the matters intended to be acted upon at the Annual Meeting, (iv) a list of the materials being made available electronically, (v) instructions on how a stockholder can request paper or e-mail copies of the Company's proxy materials, (vi) any control/identification numbers that a stockholder needs to access the Proxy, and (vii) information about attending the Annual Meeting and voting in person.

Stockholders of Record and Beneficial Owners

Most of the Company's stockholders hold their shares through a broker, bank or nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.

Stockholders of Record. If your shares are registered directly in your name with the Company's transfer agent, you are considered the stockholder of record of those shares, and the Notice is being sent directly to you by the Company’s agent. If you are a stockholder of record, you have the right to vote by Proxy or to vote in person at the Annual Meeting. If you received a paper copy of the proxy materials by mail instead of the Notice, the proxy materials include a proxy card for the Annual Meeting.

Beneficial Owners. If you hold your shares in a brokerage account or through a bank or nominee, you are considered the beneficial owner of shares held in "street name," and the Notice will be forwarded to you by your broker or nominee. The broker or nominee is considered the stockholder of record of those shares. As the beneficial owner, you have the right to direct your broker how to vote. Beneficial owners that receive the Notice by mail from the stockholder of record should follow the instructions included in the Notice to view the Proxy Statement and transmit voting instructions. If you received a paper copy of the proxy materials by mail instead of the Notice, the proxy materials include a proxy card or voting instruction form for the Annual Meeting.

QUORUM AND VOTING

Voting Stock. The Company's common stock is the only class of securities that entitles holders to vote generally at meetings of the Company's stockholders. Each share of common stock outstanding on the record date is entitled to one vote. An automated system that the Company's transfer agent administers will tabulate the votes.

Record Date. The record date for stockholders entitled to notice of and to vote at the Annual Meeting was the close of business on April 3, 2014. As of the record date, 143,199,374 shares of common stock were outstanding and entitled to be voted at the Annual Meeting.

Quorum and Adjournments. The presence, in person or by Proxy, of the holders of a majority of the shares entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting. If a quorum is not present, the chairman of the Annual Meeting or the holders of a majority in voting power of the stock of the Company entitled to vote at the Annual Meeting who are present in person or by Proxy at the Annual Meeting have the power to adjourn the Annual Meeting from time to time, whether or not there is a quorum. No notice of the reconvened meeting is required to be given if the date, time and place are announced at the Annual Meeting. At any reconvened Annual Meeting at which a quorum is present, any business may be transacted that may have been transacted at the Annual Meeting had a quorum been present.

Effect of Broker Non-Votes and Abstentions; Vote Required. If you are a beneficial owner whose shares are held of record by a broker or nominee, you will receive instructions from the broker or nominee describing how to vote your shares. If you do not instruct your broker or nominee how to vote your shares, it may vote your shares as it decides with respect to any matter for which it has discretionary authority under the rules of the New York Stock Exchange ("NYSE").

There are also non-discretionary matters for which your broker or nominee does not have discretionary authority to vote unless it receives timely instructions from you. A broker non-vote results when a broker or nominee does not have discretion to vote on a particular matter, you have not given timely instructions on how the broker or nominee should vote your shares and the broker or nominee indicates it does not have authority to vote such shares on its Proxy. Although broker non-votes will be counted as present at the Annual Meeting for purposes of determining a quorum, they will be treated as not entitled to vote with respect to non-discretionary matters.

If your shares are held in street name and you do not give voting instructions, pursuant to NYSE Rule 452, the record holder will only be entitled to vote your shares in its discretion with respect to the ratification of the selection of the Company’s independent registered public accounting firm (Item 2). Without voting instructions from you, the record holder will not be permitted to vote your shares with respect to the election of directors (Item 1), the advisory vote regarding executive compensation (Item 3), and the proposal to reapprove the eligible employees, business criteria and maximum annual per person compensation limits under the Company's 2006 Long-Term Incentive Plan (Item 4). Your shares would therefore be considered "broker non-votes" with respect to these proposals.

Abstentions occur when stockholders are present at the Annual Meeting but fail to vote or voluntarily withhold their vote for any of the matters upon which the stockholders are voting.

The Company’s Third Amended and Restated Bylaws (the "Bylaws") provide that the election of directors (Item 1) shall be decided by the affirmative vote of a majority of the votes cast by the holders of shares entitled to vote in the election of directors at the Annual Meeting, unless, as of the tenth day preceding the date that the Company first distributes its proxy materials for the Annual Meeting, the number of nominees exceeds the number of directors to be elected at the Annual Meeting, in which case the directors shall be elected by a plurality of the votes cast by the holders of shares entitled to vote in the election of directors at the Annual Meeting. In order for a director nominee to be elected by the affirmative vote of a majority of the votes cast, the number of votes cast "For" the nominee must exceed the number of votes cast "Against" the nominee. Abstentions and broker non-votes will not be counted as votes cast either "For" or "Against" any nominee for director and will have no effect on the outcome of the vote for directors.

Ratification of the selection of the Company’s independent registered public accounting firm (Item 2) requires the affirmative vote of the holders of a majority of the shares present in person or by Proxy at the Annual Meeting and entitled to vote. Abstentions will be counted in determining the total number of shares "entitled to vote" on this proposal and will have the same effect as a vote "Against" the proposal. Because record holders have discretion to vote your shares on this proposal, there will be no broker non-votes.

The advisory vote to approve named executive officer compensation (Item 3) and the vote to reapprove the eligible employees, business criteria and maximum annual per person compensation limits under the Company's 2006 Long-Term Incentive Plan (Item 4) require the affirmative vote of the holders of a majority of the shares present in person or by Proxy at the Annual Meeting and entitled to vote. Abstentions will be counted in determining the total number of shares "entitled to vote" on these proposals and will have the same effect as a vote "Against" the proposals. Broker non-votes will have no effect on the outcome of the vote on these proposals. While the advisory vote to approve named executive officer compensation is required by law, it will not be binding on the Company or the Board, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, the Company or the Board. However, the Compensation and Management Development Committee of the Board will take into account the outcome of the vote when considering future executive compensation decisions.

Default Voting. A Proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the Proxy. If you properly complete and submit a Proxy, but do not indicate any contrary voting instructions, your shares will be voted as follows:


•	FOR the election of the eight persons named in this Proxy Statement as the Board’s nominees for election as directors.


•	FOR the ratification of the selection of Ernst & Young LLP as the Company's independent registered public accounting firm for 2014.

•FOR the advisory vote to approve named executive officer compensation.


•	FOR reapproval of the eligible employees, business criteria and maximum annual per person compensation limits under the Company's 2006 Long-Term Incentive Plan for purposes of Section 162(m) of the Code.

If any other business properly comes before the stockholders for a vote at the Annual Meeting, your shares will be voted in accordance with the discretion of the holders of the Proxy. The Board knows of no matters, other than those previously stated, to be presented for consideration at the Annual Meeting.

PARTICIPANTS IN THE PIONEER NATURAL RESOURCES USA, INC. 401(k) AND MATCHING PLAN

Participants in the Pioneer Natural Resources USA, Inc. 401(k) and Matching Plan (the "401(k) Plan") who have shares of common stock credited to their plan account as of the record date will have the right to direct the 401(k) Plan trustee how to vote those shares. The trustee will vote the shares in a participant's 401(k) Plan account in accordance with the participant's instructions or, if no instructions are received prior to 4:00 p.m., Central Time on May 25, 2014, the shares credited to that participant's account will be voted by the trustee in the same proportion as it votes shares for which it did receive timely instructions. Information as to how participants voted the shares credited to their 401(k) Plan account will not be disclosed to the Company.

If a participant holds common stock outside of the 401(k) Plan, the participant will need to vote those shares separately.

ITEM ONE

ELECTION OF DIRECTORS

The Company currently has a classified Board, with directors divided into three classes (Classes I, II and III). At the Company’s 2012 Annual Meeting of Stockholders, the stockholders of the Company approved an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation") to provide for the annual election of directors. As approved, the classified board structure is being eliminated over time, so that the terms of the persons nominated for election as Class I and II Directors at this Annual Meeting will expire at the 2015 Annual Meeting of Stockholders, as will the terms of the directors currently serving as Class III Directors. A director will hold office until the expiration of his or her term and until the director’s successor is elected and qualified or until the director’s earlier resignation or removal. The Board has nominated the following individuals for election as directors:

Class I Director Nominees:

Timothy L. Dove

Stacy P. Methvin

Charles E. Ramsey, Jr.

Frank A. Risch

Class II Directors Nominees:

Edison C. Buchanan

Larry R. Grillot

J. Kenneth Thompson

Jim A. Watson

Each of the above director nominees is currently serving as a director of the Company. Their biographical information is contained in the "Directors and Executive Officers" section below.

The Company’s Bylaws provide for the election of directors by the majority vote of stockholders in uncontested elections. This means the number of votes cast "For" a nominee’s election must exceed the number of votes cast "Against" such nominee’s election in order for him or her to be elected to the Board. As a condition to being nominated, each nominee for director is required to submit an irrevocable letter of resignation that becomes effective if the nominee does not receive a majority of the votes cast in an uncontested election and the Board decides to accept the resignation. If a nominee who is currently serving as a director does not receive a majority of the votes cast for his or her election, the Board will act on the tendered resignation within 90 days after the date of the certification of the election results. If the resignation is not accepted, the Board will publicly disclose its decision and its primary rationale, and the director will continue to serve as a director until his or her successor is elected and qualified or until his or her earlier resignation or removal. If the Board accepts the resignation, the Board may fill the vacancy in accordance with the Company’s Bylaws or may decrease the size of the Board.

The Board has no reason to believe that any of its nominees will be unable or unwilling to serve if elected. If a nominee becomes unable or unwilling to accept nomination or election, either the number of the Company's directors will be reduced or the persons acting under the Proxy will vote for the election of a substitute nominee that the Board recommends.

The Board unanimously recommends that stockholders vote FOR the election of each of the nominees.

DIRECTORS AND EXECUTIVE OFFICERS

Directors and Nominees

The following table sets forth certain information, as of the date of this Proxy Statement, regarding the Company’s director nominees and other directors who will continue to serve as directors following the Annual Meeting.



Name	Position and Offices	Age
Class I Director Nominees (For term expiring at the 2015 Annual Meeting)
Timothy L. Dove	Director; President and Chief Operating Officer	57
Stacy P. Methvin	Director	57
Charles E. Ramsey, Jr	Director	77
Frank A. Risch	Director	71
Class II Director Nominees (For term expiring at the 2015 Annual Meeting)
Edison C. Buchanan	Director	59
Larry R. Grillot	Director	67
J. Kenneth Thompson	Director	62
Jim A. Watson	Director	75
Class III Directors (Term expires at the 2015 Annual Meeting)
Scott D. Sheffield	Chairman of the Board and Chief Executive Officer	61
Andrew F. Cates	Director	43
Phoebe A. Wood	Director	60

In February 2014, Mr. R. Hartwell Gardner, a director of the Company since 1997, notified the Board that he did not wish to be nominated for re-election to the Board at the Annual Meeting, and Mr. Thomas D. Arthur, a director of the Company since 2009, notified the Board of his intention to retire as a director effective as of the Annual Meeting.

Set forth below is biographical information about each of the director nominees and other directors who will continue to serve as directors following the Annual Meeting.

Edison C. Buchanan. Mr. Buchanan became a Director of the Company in 2002. Mr. Buchanan received a Bachelor of Science degree in Civil Engineering from Tulane University in 1977 and a Master of Business Administration in Finance and International Business from Columbia University Graduate School of Business in 1981. From 1981 to 1997, Mr. Buchanan was a Managing Director of various groups in the Investment Banking Division of Dean Witter Reynolds in their New York and Dallas offices. In 1997, Mr. Buchanan joined Morgan Stanley Dean Witter as a Managing Director in the Real Estate Investment Banking group. During 2000, Mr. Buchanan served as Managing Director and head of the domestic Real Estate Investment Banking Group of Credit Suisse First Boston. Mr. Buchanan also served on the Board of Directors of MFA Financial, Inc. from March 2004 through May 2011. The Board believes that Mr. Buchanan is qualified to serve on the Board based on his experience and education, as summarized above, and particularly, his financial education, his extensive experience of over twenty years in investment banking, and his management experience as a senior executive with a large institution.

Andrew F. Cates. Mr. Cates became a Director of the Company in June 2009. Mr. Cates earned a Bachelor of Business Administration in Finance at the University of Texas at Austin. He is the Managing Member of Value Acquisition Fund and Chief Executive Officer of RVC Outdoor Destinations, a developer and operator of outdoor resorts. Mr. Cates has acquired and asset managed commercial real estate throughout the United States within various entities, including Value Acquisition Fund, an acquisition, development, and asset management company that he founded in 2004. After starting his career in Dallas, Texas with Crow Family Holdings and Viceroy Investments, he became the Project Developer and founding Board Chairman of Soulsville, one of the largest inner city revitalization projects in the United States. In 2000, he began working with a team of civic and business leaders that attracted the Vancouver Grizzlies NBA franchise to Memphis, Tennessee in 2001. Mr. Cates serves on the boards of The Soulsville Foundation and Myelin Repair Foundation. The Board believes that Mr. Cates is qualified to serve on the Board based on his experience and education, as summarized above, and particularly, his senior executive experience and experience in business operations and asset management, as well as evaluating investments.

Timothy L. Dove. Mr. Dove became a Director of the Company in May 2013 and has served as the Company’s President and Chief Operating Officer since December 2004. He held the positions for the Company of Executive Vice President and Chief Financial Officer from February 2000 to November 2004 and Executive Vice President - Business Development from August 1997 to January 2000. Mr. Dove earned a Bachelor of Science degree in Mechanical Engineering from Massachusetts Institute of Technology in 1979 and received his Master of Business Administration in 1981 from the University of Chicago. Mr. Dove also served as President and Chief Operating Officer of Pioneer Natural Resources GP LLC ("Pioneer GP"), the general partner of Pioneer Southwest Energy Partners L.P. ("Pioneer Southwest"), which was a majority-owned subsidiary of the Company, from June 2007 through the Company’s acquisition of Pioneer Southwest in December 2013. Mr. Dove joined Parker & Parsley Petroleum Company, a predecessor of the Company (together with its predecessor companies, "Parker & Parsley"), in 1994 as a Vice President and was promoted to Senior Vice President - Business Development in October 1996, in which position he served until the Company’s formation in August 1997. Before joining Parker & Parsley, Mr. Dove was employed with Diamond Shamrock Corp and its successor, Maxus Energy Corp., in various capacities in international exploration and production, marketing, refining, and planning and development. The Board believes that Mr. Dove is qualified to serve on the Board based on his experience and education, as summarized above, and particularly, his role as President and Chief Operating Officer of the Company, his experience as the former Chief Financial Officer of the Company, his educational background and work experience in petroleum engineering, his deep knowledge of the Company resulting from his long tenure with the Company and its predecessor, and his extensive knowledge of the energy industry.

Larry R. Grillot. Dr. Grillot became a Director of the Company in July 2013. Dr. Grillot graduated from Mississippi State University with a Bachelor of Science degree in Physics and then earned master’s and doctoral degrees in geological sciences from Brown University. Dr. Grillot is dean of the Mewbourne College of Earth and Energy at the University of Oklahoma, a position he has held since 2006. He also is a member of the American Association of Petroleum Geologists, the Society of Exploration Geophysicists and the Society of Petroleum Engineers. Prior to his role at the University of Oklahoma, from 1973 until his retirement in 2003, Dr. Grillot worked for Phillips Petroleum Company in a variety of technical and managerial positions in exploration and production, including Manager of E&P Technology and Services, Upstream Technology and Project Development, Manager of International Exploration, President and Region Manager for Phillips Petroleum Canada Limited and Manager of E&P Planning. The Board believes that Dr. Grillot is qualified to serve on the Board based on his experience and education, as summarized above, and particularly, his extensive technical experience as a geophysicist and his senior executive experience with a major integrated oil company.

Stacy P. Methvin. Ms. Methvin became a Director of the Company in July 2013. Ms. Methvin graduated from Princeton University with a Bachelor of Arts degree in Geological and Geophysical Sciences. From 2011 until her retirement in 2012, Ms. Methvin was Vice President, Refining Margin Optimization of Shell Oil Company ("Shell"), and from 2009 until 2010, she was Vice President, Global Distribution of Shell. Ms. Methvin also held various other operational and management roles in the upstream, downstream and chemical businesses during her tenure at Shell and its subsidiaries that began in 1979, including President, Shell Louisiana E&P Company, President, Shell Deer Park Refining Company, President Shell Pipeline Company LP, President, Shell Chemical LP, Vice President, Strategy and Portfolio for the downstream business. She also serves on the board of the Houston Zoo and is a member of the finance committee of the Board of Memorial Hermann Hospital System, the Chair of the San Jacinto Girl Scout Council and a trustee for the Springside Chestnut Hill Academy in Philadelphia. She has been an appointee on the Louisiana Governor’s Commission for Coastal Restoration and Protection since 2003. The Board believes that Ms. Methvin is qualified to serve on the Board based on her experience and education, as summarized above, and particularly, her extensive executive experience in upstream, downstream and chemical businesses with a major integrated oil company.

Charles E. Ramsey, Jr. Mr. Ramsey became a Director of the Company in August 1997. Mr. Ramsey is a graduate of the Colorado School of Mines with a Petroleum Engineering degree and a graduate of the Smaller Company Management program at the Harvard Graduate School of Business Administration. Mr. Ramsey served as a Director of Parker & Parsley from October 1991 until August 1997. From June 1958 until June 1986, he held various engineering and management positions in the oil and gas industry and, for six years before October 1991, he was a Senior Vice President in the Corporate Finance Department of Dean Witter Reynolds Inc. in its Dallas, Texas office. His industry experience includes 12 years of senior management experience with May Petroleum Inc. in the positions of President, Chief Executive Officer and Executive Vice President. Mr. Ramsey is also a former director of MBank Dallas, the Dallas Petroleum Club and Lear Petroleum Corporation. The Board believes that Mr. Ramsey is qualified to serve on the Board based on his experience and education, as summarized above, and particularly, his educational background in petroleum engineering and advanced degree in management, his deep knowledge of the Company resulting from his long tenure with the Company and its predecessor, his financial experience in the investment banking industry and his extensive knowledge of the energy industry through education as well as a career of over 25 years in operational and executive positions with oil and gas companies.

Frank A. Risch. Mr. Risch became a director of the Company in August 2005. Mr. Risch holds a Bachelor of Science degree in Business Administration from Pennsylvania State University and a Master of Science degree in Industrial Administration from Carnegie Mellon University. Mr. Risch joined Exxon Corporation in 1966 as a financial analyst in New York and subsequently held various positions in finance, planning, marketing and general management with Exxon and its operating affiliates in the U.S. and abroad for nearly 38 years. Mr. Risch retired in July 2004 as Vice President and Treasurer (and principal financial officer) of Exxon Mobil Corporation. Mr. Risch currently serves on the Board of Directors of the general partner of Susser Petroleum Partners LP, a master limited partnership engaged primarily in the wholesale motor fuel distribution business, and is a member of the Business Board of Advisors of the Tepper School of Business at Carnegie Mellon University. He is active in civic and community organizations, serving as Immediate Past Chairman and Life Trustee of the Board of the Dallas Theater Center; Chairman of the Board of Communities Foundation of Texas; and member of the Boards of the ATT Performing Arts Center, Dallas CASA (Court Appointed Special Advocates) and the Dallas Holocaust Museum. He is a member of Financial Executives International. The Board believes that Mr. Risch is qualified to serve on the Board based on his experience and education, as summarized above, and particularly, his extensive experience as an employee and

executive in the oil and gas industry for almost 40 years, including his role, at the time of his retirement, as principal financial officer of Exxon Mobil Corporation.

Scott D. Sheffield. Mr. Sheffield has held the position of Chief Executive Officer for the Company since August 1997 and assumed the position of Chairman of the Board of Directors for the Company in August 1999. He was President of the Company from August 1997 to November 2004. Mr. Sheffield is a distinguished graduate of The University of Texas with a Bachelor of Science degree in Petroleum Engineering. Mr. Sheffield also served as Chief Executive Officer and Director of Pioneer GP from June 2007 and Chairman of the Board of Pioneer GP from May 2008 through the Company’s acquisition of Pioneer Southwest in December 2013. He was the Chairman of the Board of Directors and Chief Executive Officer of Parker & Parsley from January 1989 until the Company was formed in August 1997. Mr. Sheffield joined Parker & Parsley as a petroleum engineer in 1979, was promoted to Vice President - Engineering in September 1981, was elected President and a Director in April 1985, and became Parker & Parsley’s Chairman of the Board and Chief Executive Officer in January 1989. Before joining Parker & Parsley, Mr. Sheffield was employed as a production and reservoir engineer for Amoco Production Company. Mr. Sheffield also serves as a director of Santos Limited, an Australian exploration and production company. The Board believes that Mr. Sheffield is qualified to serve on the Board based on his experience and education, as summarized above, and particularly, his role as Chief Executive Officer of the Company, his educational background and work experience in petroleum engineering, his deep knowledge of the Company resulting from his long tenure with the Company and its predecessor, and his extensive knowledge of the energy industry.

J. Kenneth Thompson. Mr. Thompson became a Director of the Company in August 2011. He received a Bachelor of Science degree in Petroleum Engineering from Missouri University of Science & Technology. He has served as the President and Chief Executive Officer of Pacific Star Energy LLC, a privately held oil and gas investment firm in Alaska, since September 2000, and as Managing Director of Alaska Venture Capital Group LLC, a privately held oil and gas exploration company in which Pacific Star Energy LLC owns an interest, from December 2004 to December 2012. Mr. Thompson’s experience includes serving as Executive Vice President of Atlantic Richfield Company’s ("ARCO") Asia Pacific oil and gas operating companies in Alaska, California, Indonesia, China and Singapore from 1998 to 2000, and President and Chief Executive Officer of ARCO Alaska, Inc., the parent company’s oil and gas producing division based in Anchorage, from June 1994 to January 1998. He also served as executive head of ARCO’s oil and gas research and technology center from 1993 to 1994. Mr. Thompson also serves as a director of Coeur d'Alene Mines Corporation, a company engaged in the operation, ownership, development and exploration of silver and gold mining property, Alaska Air Group, Inc., a holding company for Alaska Airlines and Horizon Air Industries, and Tetra Tech, Inc., an engineering consulting firm. The Board believes that Mr. Thompson is qualified to serve on the Board based on his experience and education, as summarized above, and particularly, his educational background in petroleum engineering and his senior executive experience with a major integrated oil company, including the role of chief executive officer, which bring to the Board significant leadership, risk management, operations, strategic planning, engineering, environmental, safety and regulatory experience.

Jim A. Watson. Mr. Watson became a Director of the Company in September 2004. He earned a Bachelor of Arts degree from The University of Texas in 1962 and graduated, with honors, from The University of Texas School of Law in 1964. Mr. Watson has served as Senior Counsel for the law firm of Carrington, Coleman, Sloman, & Blumenthal, L.L.P. in Dallas, Texas since June 2003. Before then, he was a partner at the law firm of Vinson & Elkins L.L.P. in Dallas, Texas. From 1987 to 1995, he held the position of Adjunct Professor at The University of Texas School of Law, and from 2000 to 2004, Mr. Watson was Chairman of the Advisory Board of the Clement Center for Southwestern Studies at Southern Methodist University, on which he continues as a member. Since 1989, Mr. Watson has been included in The Best Lawyers in America. The Board believes that Mr. Watson is qualified to serve on the Board based on his experience and education, as summarized above, and particularly, his education in the law and his extensive experience of over 40 years as a corporate attorney.

Phoebe A. Wood. Ms. Wood became a Director of the Company in July 2013. Ms. Wood graduated from Smith College with an A.B. degree in Psychology and then earned a Master of Business Administration from the University of California Los Angeles. Since 2008, Ms. Wood has been a principal at CompaniesWood, a consulting firm specializing in early stage investments. She was Executive Vice President and Chief Financial Officer of Brown-Forman Corporation, a diversified consumer products manufacturer, from 2001 to 2006, and Vice Chairman and Chief Financial Officer from 2006 to 2008. Prior to Brown-Forman Corporation, Ms. Wood was Vice President, Chief Financial Officer and a Director of Propel Corporation (a subsidiary of Motorola) from 2000 to 2001. Previously, Ms. Wood served in various capacities during her tenure at ARCO from 1976 to 2000. Ms. Wood currently serves on the Boards of Directors of Coca-Cola Enterprises Inc., a major bottler and distributor of Coca-Cola products, Invesco Ltd., a global investment management company, and Leggett & Platt, Incorporated, a diversified manufacturer, as well as on the boards of trustees for the University of Louisville, the Gheens Foundation and the American Printing House for the Blind. The Board believes that Ms. Wood is qualified to serve on the Board based on her experience and education, as summarized above, and particularly, her extensive experience as a financial executive, including in the oil and gas industry, and her experience on the boards and audit committees of a number of public companies.

Executive Officers

The following table sets forth certain information, as of the date of this Proxy Statement, regarding the Company’s executive officers. All of the Company’s executive officers serve at the discretion of the Board. There are no family relationships among any of the Company’s directors or executive officers.



Name	Position	Age
Scott D. Sheffield	Chairman of the Board and Chief Executive Officer	61
Timothy L. Dove	President and Chief Operating Officer	57
Mark S. Berg	Executive Vice President, Chief of Staff and Assistant Secretary	55
Chris J. Cheatwood	Executive Vice President, Business Development and Geoscience	53
Richard P. Dealy	Executive Vice President and Chief Financial Officer	48
William F. Hannes	Executive Vice President, Southern Wolfcamp Operations	54
Danny L. Kellum	Executive Vice President, Permian Operations	59
Margaret M. Montemayor	Vice President and Chief Accounting Officer	36

The biographical information for Messrs. Sheffield and Dove may be found above under "Directors and Nominees."

Mark S. Berg. Mr. Berg was elected the Company’s Executive Vice President, Chief of Staff and Assistant Secretary in January 2014, and prior to that served as Executive Vice President and General Counsel since April 2005. Mr. Berg also served as Executive Vice President, General Counsel and Assistant Secretary of Pioneer GP from June 2007 through the Company’s acquisition of Pioneer Southwest in December 2013. Prior to joining the Company, Mr. Berg served as Executive Vice President, General Counsel and Secretary of American General Corporation, a Fortune 200 diversified financial services company, from 1997 through 2002. Subsequent to the sale of American General to American International Group, Inc., Mr. Berg joined Hanover Compressor Company as Senior Vice President, General Counsel and Secretary. He served in that capacity from May 2002 through April 2004. Mr. Berg began his career in 1983 with the Houston-based law firm of Vinson & Elkins L.L.P. He was a partner with the firm from 1990 through 1997. Mr. Berg graduated Magna Cum Laude and Phi Beta Kappa with a Bachelor of Arts degree from Tulane University in 1980. He earned his Juris Doctorate with honors from The University of Texas Law School in 1983.

Chris J. Cheatwood. Mr. Cheatwood was elected the Company’s Executive Vice President, Business Development and Geoscience in November 2011. Mr. Cheatwood had previously served the Company as Executive Vice President, Business Development and Technology since February 2010, as Executive Vice President, Geoscience from November 2007 until February 2010, as Executive Vice President - Worldwide Exploration from January 2002 until November 2007, as Senior Vice President – Worldwide Exploration from December 2000 to January 2002, and as Vice President - Domestic Exploration from July 1998 to December 2000. Mr. Cheatwood also served as an Executive Vice President of Pioneer GP from June 2007 through the Company’s acquisition of Pioneer Southwest in December 2013. Before joining the Company, Mr. Cheatwood spent ten years with Exxon Corporation. Mr. Cheatwood is a graduate of the University of Oklahoma with a Bachelor of Science degree in Geology and earned his Master of Science degree in Geology from the University of Tulsa.

Richard P. Dealy. Mr. Dealy was elected the Company’s Executive Vice President and Chief Financial Officer in November 2004. Mr. Dealy held positions for the Company as Vice President and Chief Accounting Officer from February 1998 to November 2004, and Vice President and Controller from August 1997 to January 1998. Mr. Dealy also served as Executive Vice President, Chief Financial Officer, Treasurer and Director of Pioneer GP from June 2007 through the Company’s acquisition of Pioneer Southwest in December 2013. Mr. Dealy joined Parker & Parsley in July 1992 and was promoted to Vice President and Controller in 1996, in which position he served until August 1997. He is a Certified Public Accountant, and before joining Parker & Parsley, he was employed by KPMG LLP. Mr. Dealy graduated with honors from Eastern New Mexico University with a Bachelor of Business Administration degree in Accounting and Finance.

William F. Hannes. Mr. Hannes was elected the Company’s Executive Vice President, Southern Wolfcamp Operations in February 2013. Mr. Hannes had previously served the Company as Executive Vice President, South Texas Operations since February 2010, Executive Vice President, Business Development from December 2007 to February 2010, and Executive Vice President - Worldwide Business Development from November 2005 to December 2007. Mr. Hannes joined Parker & Parsley in July 1997 as Director of Business Development, and continued to serve the Company in this capacity after the Company's formation in August 1997 until he was promoted to Vice President – Engineering and Development in June 2001, which position he held until November 2005. Prior to joining Parker & Parsley, Mr. Hannes held engineering positions with Mobil Corporation and Superior Oil Company. He graduated from Texas A&M University in 1981 with a Bachelor of Science degree in Petroleum Engineering.

Danny L. Kellum. Mr. Kellum was elected the Company’s Executive Vice President - Permian Operations in February 2010. Mr. Kellum had previously served the Company as Executive Vice President - Domestic Operations since May 2000, and as Vice President - Domestic Operations from August 1999 until May 2000, and Vice President - Permian Division from August 1997 until December 1999. Mr. Kellum also served as an Executive Vice President from June 2007, and director from June 2009, of Pioneer GP through the Company’s acquisition of Pioneer Southwest in December 2013. Mr. Kellum joined Parker & Parsley as an operations engineer in 1981 after a brief career with Mobil Oil Corporation, and his service with Parker & Parsley included serving as Spraberry District Manager from 1989 until 1994 and as Vice President of the Spraberry and Permian Division until August 1997. He received a Bachelor of Science degree in Petroleum Engineering from Texas Tech University in 1979.

Margaret M. Montemayor. Ms. Montemayor was elected the Company’s Vice President and Chief Accounting Officer effective March 2014. Ms. Montemayor had previously served the Company as Vice President and Corporate Controller since January 2014, Corporate Controller from April 2012 to December 2013, and Director of Technical Accounting and Financial Reporting from June 2010 to March 2012. Prior to joining the Company, Ms. Montemayor served as Manager at PricewaterhouseCoopers LLP since June 2006. Ms. Montemayor graduated from St. Mary’s University in San Antonio, Texas with a Bachelor of Business Administration degree in Accounting and a Master of Business Administration.

MEETINGS AND COMMITTEES OF DIRECTORS

The Board held thirteen meetings during 2013, and its independent directors met in executive session four times during 2013. During 2013, each of the directors attended at least 75 percent of the aggregate of the total number of meetings of the Board and the total number of meetings of all committees of the Board on which that director served.

The Board has three standing committees: the Audit Committee, the Compensation and Management Development Committee, and the Nominating and Corporate Governance Committee. The Board has also formed ad hoc committees to assist the Board in overseeing the Company’s activities in the areas of health, safety and environmental and proved reserves.

Audit Committee. Information regarding the functions performed by the Audit Committee and its membership is set forth in the "Audit Committee Report" included herein and also in the "Audit Committee Charter" that is posted on the Company's website at www.pxd.com. The members of the Audit Committee are Messrs. Gardner (Chairman), Arthur, Risch and Watson, Dr. Grillot and Ms. Wood. The Audit Committee held nine meetings during 2013.

Compensation and Management Development Committee. The Board has established the Compensation and Management Development Committee (the "Compensation Committee") to assist the Board with its responsibilities relating to executive compensation and management development and succession, including among other duties:


•	reviewing and approving the compensation of the Company’s executive officers, including the individual elements of the total compensation of the Chief Executive Officer ("CEO");


•	monitoring the Company’s overall employee compensation and benefits philosophy and strategy;


•	administering the Company’s employee and executive benefit plans;


•	periodically reviewing and recommending to the full Board total compensation for each non-employee director for services as a member of the Board and its committees;


•	overseeing the Company’s succession planning for the CEO and other executive officers;


•	overseeing the Company’s management development activities; and


•	conducting an annual review of the CEO’s performance and discussing the CEO’s review of the other executive officers’ performance.

The Compensation Committee is delegated all authority of the Board as may be required or advisable to fulfill the purposes of the Compensation Committee. The Compensation Committee may form and delegate some or all of its authority to subcommittees when it deems appropriate. Meetings may, at the discretion of the Compensation Committee, include members of the Company's management, other members of the Board, consultants or advisors, and such other persons as the Compensation Committee or its chairperson may determine. Additional information regarding the functions performed by the Compensation Committee is set forth in the Compensation Committee’s Charter, which is posted on the Company's website at www.pxd.com.

The Senior Vice President, Administration and Risk Management of the Company, or such other officer as may from time to time be designated by the Compensation Committee, acts as the management liaison to the Compensation Committee and works with the Compensation Committee chairperson to prepare an agenda for regularly scheduled meetings. The Compensation Committee chairperson makes the final decision regarding the agenda for regularly scheduled meetings and develops the agenda for special meetings based on the information supplied by the persons requesting the special meeting. The CEO makes recommendations to the Compensation Committee regarding the compensation of other executive officers and provides information to the Compensation Committee regarding the executive officers' performance; however, the Compensation Committee makes all final decisions regarding the executive officers' compensation.

The Compensation Committee has the sole authority to retain, amend the engagement with, and terminate any compensation consultant to be used to assist in the evaluation of director, CEO or executive officer compensation. The Compensation Committee has sole authority to approve the consultant's fees and other retention terms and has authority to cause the Company to pay the fees and expenses of such consultants. During 2013, the Compensation Committee engaged the services of Meridian Compensation Partners LLC ("Meridian"). The terms of Meridian’s engagement are set forth in an engagement agreement that provides, among other things, that Meridian is engaged by, and reports only to, the Compensation Committee and will perform the compensation advisory services requested by the Compensation Committee. Among the services Meridian performed were apprising the Compensation Committee of compensation-related trends, developments in the marketplace and industry best practices; informing the Compensation Committee of compensation-related regulatory developments; providing peer group survey data to establish compensation ranges for the various elements of executive compensation; providing an evaluation of the competitiveness of the Company's executive compensation and benefits programs; assessing the relationship between executive pay and performance; advising on the design of the Company's incentive compensation programs, including metric selection and target setting and the design and administration of the Company's performance unit award program; advising the Compensation Committee on director compensation; and providing such additional reports and analyses as requested by the Compensation Committee from time to time. Meridian does not provide any services to the Company other than its services to the Compensation Committee. The Compensation Committee has assessed the independence of Meridian pursuant to applicable SEC and NYSE rules and concluded that Meridian’s work for the Compensation Committee does not raise any conflict of interest.

The members of the Compensation Committee are Messrs. Buchanan (Chairman), Cates, Ramsey and Thompson, and Ms. Methvin. The Compensation Committee held five meetings during 2013.

Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee assists the Board in evaluating potential new members of the Board, recommending committee members and structure, and advising the Board about corporate governance practices. Additional information regarding the functions performed by the Nominating and Corporate Governance Committee is set forth in the "Corporate Governance" section included herein and also in the "Nominating and Corporate Governance Committee Charter" that is posted on the Company's website at www.pxd.com. The members of the Nominating and Corporate Governance Committee are Messrs. Ramsey (Chairman), Arthur, Buchanan, Cates, Gardner, Risch, Thompson and Watson, Dr. Grillot, and Mses. Methvin and Wood. The Nominating and Corporate Governance Committee held three meetings during 2013.

COMPENSATION OF DIRECTORS

2013 Director Compensation Table

The table below summarizes the compensation paid by the Company to non-employee directors during 2013.



Name (a)	Fees Earned or Paid in Cash ($) (b)		Stock Awards (1) ($) (c)			All Other Compensation (2) ($) (g)	Total ($) (h)
Current Directors
Thomas D. Arthur(3)	$	25,052	$	254,909	$	1,384	$	281,345
Edison C. Buchanan	$	25,106	$	271,846	$	1,536	$	298,488
Andrew F. Cates	$	25,052	$	254,909	$	2,317	$	282,278
R. Hartwell Gardner(3)	$	25,106	$	271,846	$	2,104	$	299,056
Larry R. Grillot (4)	$	12,545	$	328,908	$	1,598	$	343,051
Stacy P. Methvin (4)	$	12,545	$	328,908	$	474	$	341,927
Charles E. Ramsey, Jr.	$	25,100	$	283,185	$	-	$	308,285
Frank A. Risch	$	25,052	$	254,909	$	1,323	$	281,284
J. Kenneth Thompson	$	25,052	$	254,909	$	2,971	$	282,932
Jim A. Watson	$	25,052	$	254,909	$	4,805	$	284,766
Phoebe A. Wood (4)	$	12,545	$	328,908	$	-	$	341,453
Former Directors
Andrew D. Lundquist (5)	$	-	$	-	$	-	$	-
Scott J. Reiman (5)	$	-	$	-	$	-	$	-

___________

(1)

Stock awards represent the aggregate grant date fair value attributable to restricted stock unit ("RSU") awards granted in 2013, determined in accordance with Financial Accounting Standards Board of Accounting Standards Codification Topic 718 ("FASB ASC 718"). Accordingly, the Company valued its RSU awards based on the market-quoted closing price of the Company's common stock on the last trading day prior to the grant date of the awards. Additional detail regarding the Company's share-based awards is included in Note H of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" in the Company's Annual Report on Form 10-K for the year ended December 31, 2013. Aggregate director stock awards for which restrictions had not lapsed as of December 31, 2013, totaled (i) 888 shares for Messrs. Arthur, Cates, Risch, and Watson; (ii) 947 shares for Messrs. Buchanan and Gardner; (iii) 1,750 shares for Dr. Grillot and Mses. Methvin and Wood; (iv) 987 shares for Mr. Ramsey; and (v) 1,476 for Mr. Thompson. In accordance with director deferral elections, awards for which restrictions had lapsed but for which share issuance has been deferred as of December 31, 2013 totaled 22,857 shares for Mr. Buchanan, 19,135 shares for Mr. Lundquist, 4,417 shares for Mr. Watson and 375 shares for Ms. Wood. The Company did not issue to the directors any options to purchase the Company's common stock during 2013, and the directors did not hold any unexercised stock options as of December 31, 2013.


(2)	All other compensation includes certain travel and entertainment costs of directors and travel and entertainment costs of directors' spouses.


(3)	In February 2014, Mr. Arthur notified the Board of his intention to retire as a director effective as of the Annual Meeting, and Mr. Gardner notified the Board that he did not wish to be nominated for re-election to the Board at the Annual Meeting.


(4)	Dr. Grillot and Mses. Methvin and Wood joined the Board in July 2013.


(5)	Messrs. Lundquist and Reiman resigned as directors of the Company in February 2013. They did not receive any compensation in 2013.

General

The elements of compensation for the Company’s non-employee directors for the 2013-2014 director year, which began as of the 2013 Annual Meeting, are as follows:


•	Each non-employee director received a cash annual base retainer fee of $50,000.


•	Each non-employee director received an annual grant of RSUs, valued at $225,000.


•	The Lead Director received an additional annual retainer of $25,000, and the chairmen of the Audit Committee and the Compensation Committee each received an additional annual retainer of $15,000, in each case, payable in the form of RSUs.

During 2013, prior to the start of the 2013-2014 director year, the elements of compensation for the Company’s non-employee directors were as follows:


•	Each non-employee director received an annual base retainer fee of $50,000, all of which was payable in the form of RSUs.


•	Each non-employee director received an annual grant of RSUs, valued at $200,000.


•	The Lead Director and the chairmen of the Audit Committee and the Compensation Committee each received an additional annual retainer of $15,000, all of which was payable in the form of RSUs.

All of the RSUs received in payment of directors' fees vest quarterly on a pro rata basis during the director year, and the price that is used to calculate the number of RSUs granted is based on an average of the closing stock prices over the 30 trading days prior to the date of the annual meeting of stockholders. The vesting of ownership and the lapse of transfer restrictions on RSUs awarded to non-employee directors is accelerated in the event of the death or disability of the director or a change in control of the Company.

Unless a deferral election is made, RSUs are paid in shares of the Company’s common stock promptly following the vesting date. Non-employee directors may elect to defer settlement of their RSUs until the earliest to occur of (i) their death, (ii) a change in control, (iii) a date certain, or (iv) the one-year anniversary of their retirement, resignation, or removal from the Board.

In July 2013, in connection with their initial election to the Board, each of Dr. Grillot and Mses. Methvin and Wood received grants of (i) RSUs valued at $168,750 as the pro rata portion of the normal annual grant of RSUs for directors, and (ii) RSUs valued at $150,000 as a one-time grant. The RSUs covered by these one-time grants are subject to vesting and transfer restrictions that lapse with respect to one third of the shares each year following the grant over a three year period. Retirement before the third anniversary of the grant results in pro rata vesting based on the number of quarterly meetings remaining in the three-year vesting period, and vesting is accelerated in full in the event of the death or disability of the director or a change in control of the Company.

Additionally, each non-employee director is provided information technology support by the Company and is also reimbursed for travel expenses to attend meetings of the Board or its committees, director education, seminars and trade publications. No additional fees are paid for attendance at Board or committee meetings. In addition, in those instances when a director’s spouse accompanies the director to Board meetings or director education seminars, the Company reimburses the spouse’s travel and related expenses. Mr. Sheffield, the Company's CEO, and Mr. Dove, the Company’s President and Chief Operating Officer, do not receive additional compensation for serving on the Board.

Stock Ownership Guidelines for Non-Employee Directors

To support the Company's commitment to significant stock ownership, the Company has established an ownership guideline that non-employee directors own stock with a value equal to at least ten times the cash annual base retainer fee of $50,000. The non-employee directors have three years after joining the Board to meet this guideline. In evaluating compliance by directors with the stock ownership guidelines, the Compensation Committee has established procedures to minimize the effect of stock price fluctuations on the deemed value of the individual's holdings. All non-employee directors are in compliance with this ownership guideline.

COMPENSATION DISCUSSION AND ANALYSIS

The purpose of this Compensation Discussion and Analysis is to explain the Compensation Committee’s philosophy for determining the compensation program for the Company’s CEO, Chief Financial Officer and three other most highly compensated executive officers for 2013 (the "NEOs") and to discuss how the 2013 compensation package for these executives was determined. Following this discussion are tables that include compensation information for the NEOs. The NEOs for 2013 are as follows:


•	Scott D. Sheffield, Chairman of the Board and Chief Executive Officer;


•	Timothy L. Dove, President and Chief Operating Officer;


•	Mark S. Berg, Executive Vice President, Chief of Staff (prior to January 2014, Mr. Berg served as Executive Vice President and General Counsel);


•	Chris J. Cheatwood, Executive Vice President, Business Development and Technology; and


•	Richard P. Dealy, Executive Vice President and Chief Financial Officer.

Executive Summary

Company Compensation Philosophy

The Company’s executive compensation program is designed to emphasize "pay for performance." The three main components of the executive compensation program, each of which is targeted at the median level of the Company’s peer group, are:


•	Base salary – fixed cash compensation component


•	Annual cash bonus incentive award – variable cash payout based on Company and individual performance


•	Long-term incentive plan awards - variable stock-based payout based on the performance of the Company’s common stock over a three-year period, with the opportunity to realize substantially more or less than the initial award

Company Performance

The Compensation Committee believes that the Company’s performance in 2013 was the best in its history. Highlights of the Company’s performance included:


•	In the Company’s Permian Basin area:


•	Demonstrated the prospectivity of the 600,000-acre northern portion of the Company’s Spraberry/Wolfcamp Shale position. The Company’s drilling program included wells with record initial production rates in the Wolfcamp B and D intervals, demonstrating the potential for significantly increasing proved reserves as the Company carries out its strategy.

•

Successfully closed a joint interest transaction with Sinochem Petroleum USA LLC ("Sinochem"), a U.S. subsidiary of the Sinochem Group, to accelerate development of the horizontal Wolfcamp play in the southern portion of the Company’s acreage position. The Company sold 40 percent of its interest in approximately 207,000 net acres leased by the Company in the horizontal Wolfcamp Shale play for total consideration of $1.8 billion, receiving net cash proceeds of $624 million, with Sinochem paying the remaining $1.2 billion of the transaction price by carrying 75 percent of the Company’s portion of ongoing drilling and facilities costs attributable to joint operations.


•	In the Company’s Eagle Ford Shale area:


•	Achieved record production in the fourth quarter as a result of continued strong drilling performance.


•	Added approximately 300 drilling locations in the liquids-rich area of the play as a result of downspacing.


•	Grew average production from continuing operations by 12% compared to 2012, driven by strong production growth in the liquids-rich Spraberry/Wolfcamp and the Eagle Ford Shale plays.

•

Added proved reserves totaling 141 million barrels oil equivalent ("MMBOE") from discoveries, extensions, improved recovery and technical revisions of previous estimates, or 211% of full-year production (excluding the reduction of 319 MMBOE of proved undeveloped ("PUD") reserves associated with vertical wells that are no longer expected to be drilled due to the decision to focus on drilling horizontal wells, and an increase of 30 MMBOE due to positive price revisions). The additions to proved reserves were primarily driven by the continued successful execution of the Company’s horizontal drilling programs in the Spraberry/Wolfcamp Shale and the Eagle Ford Shale.


•	Significantly improved the Company’s financial flexibility through the successful execution of an equity offering, which raised $1.3 billion to fund the acceleration of horizontal appraisal drilling in the northern portion of the Company’s Spraberry/Wolfcamp acreage. The Company also maintained its investment grade ratings.


•	Protected margins through attractive oil and gas derivative positions.

•

Instituted a "Drive to Zero" program setting the strategic direction, combined with establishing safety principles and policies, in order to reach a zero –injury and –incident workplace; the Company's Occupational Safety and Health Administration ("OSHA") recordable injury rates and lost time accident rates for 2013 dropped substantially from 2012 rates, and lost time accident rates were at a seven year low.


•	Further enhancing the Company’s focus on operating in a manner that respects the environment and protects people, completed the establishment of three separate departments, staffed with highly qualified professionals, focusing on the Company’s safety, environment and sustainable development initiatives.

The Company’s stock recorded another strong performance in 2013, with the Company’s stock price outperforming the average of the 11-company peer group used with respect to the Company’s 2013 performance unit award grants by 43 percentage points. See "— Elements of the Company’s Compensation Program—Long-Term Equity Incentives" for more information regarding this peer group. For 2013, Pioneer was the top performing energy stock and the 42nd best performer overall in the Standard & Poor’s 500 Index, and over the five-year period covering 2009 through 2013, the Company was the top performing energy stock and the seventh best performer overall in the Standard & Poor’s 500 Index. The Compensation Committee believes the catalyst for these results was the leadership, vision and hard work of the executive team and the dedication of the Company’s employees. See "— Executive Compensation Philosophy—Benchmarking" for more information regarding the Company’s peer group.

The following charts compare the Company’s cumulative total stockholder return on the Company’s common stock during the one-year, three-year and five-year periods ended December 31, 2013, with cumulative total return during the same period for Company’s peer group average, the Standard & Poor’s Oil and Gas Exploration & Production Index and the Standard & Poor’s 500 Index.

____________

Note: The total shareholder returns for the Company’s common stock and the indices in the chart are based on closing prices as of the first and last days in the periods depicted. The total shareholder returns for the Company’s common stock differ from those reported below with respect to the performance unit awards because the returns for the performance unit awards are based on average closing prices of the Company’s common stock over 60-day periods prior to the first and last days in the applicable periods.

Compensation Actions

The following is a summary of the compensation decisions made by the Compensation Committee for 2013:


•	Base salary - the Compensation Committee set base salaries for the NEOs for 2013 to approximate the median of the peer group for their respective positions, resulting in increases for the NEOs, other than the CEO, as follows:



NEO	Percent Increase
Scott D Sheffield	0%
Richard P. Dealy	9.6%
Mark S. Berg	5.1%
Chris J. Cheatwood	5.1%
Timothy L. Dove	9.2%

The Compensation Committee determined Mr. Sheffield’s base pay was at approximately the median level and, as a result, his base pay was not changed. Mr. Dove’s and Mr. Dealy’s base salaries were well below median and were accordingly increased to be closer to the median level of their respective peers. Mr. Cheatwood’s and Mr. Berg’s base salaries were also increased to a level at approximately the median level of their respective peers.


•	Annual cash bonus incentive award - the Compensation Committee approved the payout level for cash bonuses for 2013 at 250 percent of target to recognize the Company’s and the NEOs’ achievements.

•

Annual long-term incentive plan awards - in February 2013, the Compensation Committee granted long-term incentive awards valued at approximately the median level of the Company’s peer group, with 50 percent allocated in the form of performance units and 50 percent in the form of restricted stock. (In 2013, the Committee ceased granting stock options, and replaced the stock option component with an additional allocation to performance units.)

The following charts illustrate the various components of the total 2013 annual compensation for the CEO and the other NEOs as a group, and reflect the following: base salary for 2013, annual cash bonus incentive earned for 2013, the grant date fair value for the 2013 annual long-term incentive plan awards and other compensation.

More specific information regarding the Compensation Committee’s compensation decisions and the executive compensation program is contained in the remainder of this Compensation Discussion and Analysis section.

Good Governance and Best Practices

The Compensation Committee continually monitors developing practices in the areas of executive compensation and corporate governance as it relates to compensation. The following are some of the Company’s more significant practices and policies:


•	The Compensation Committee emphasizes long-term performance, with a majority of the NEOs’ total compensation being in the form of long-term incentive awards.


•	The Company maintains significant stock ownership guidelines.


•	The Company has a long-standing practice of granting stock-based compensation awards to substantially all of its employees.


•	The Company does not provide gross-ups for excise taxes on severance or other payments in connection with a change of control.


•	The Company has a policy that prohibits directors, officers and employees from engaging in short sales or in transactions involving derivatives based on the Company’s common stock.


•	The Company has a clawback policy pursuant to which, subject to the conditions of the policy, the Board, or a committee of the Board, has the right to cause the reimbursement by an executive officer of certain incentive compensation if the compensation was predicated upon the achievement of financial results that were subsequently the subject of a required restatement.


•	The Company’s 2006 Long-Term Incentive Plan expressly prohibits repricing of stock options, unless approved by stockholders.


•	All members of the Compensation Committee are independent as defined in the corporate governance listing standards of the NYSE.


•	The Compensation Committee has engaged a compensation consultant that is independent of management and free of conflicts of interest with the Company.


•	The annual cash bonus incentive awards and the performance unit awards are intended to qualify for tax deductibility as "performance-based compensation" under Section 162(m) of the Code.

Executive Compensation Philosophy

Philosophy and Objectives

The Company’s executive compensation program is designed to emphasize "pay for performance" by:


•	providing performance-driven compensation opportunities that attract, retain and motivate executives to achieve optimal results for the Company and its stockholders;


•	aligning compensation with the Company’s short- and long-term business objectives while providing sufficient flexibility to address the unique dynamics of the E&P industry; and


•	emphasizing the use of equity-based compensation to motivate the long-term retention of the Company’s executives and align their interests with those of stockholders.

As an executive’s leadership role expands, and the scope, duties and responsibilities of the executive’s position increases, the Compensation Committee believes a greater portion of total compensation should be performance-driven and have a longer duration and base salary should be a relatively smaller portion of senior executive total compensation. The Committee believes that the majority of an executive’s realized compensation should be driven by the performance of the Company.

Executive Compensation Components

The purpose and components of the Company’s executive compensation program for 2013 are described in the table below.



Compensation Component	Description	Purpose and Philosophy`
Base Salary	Fixed annual cash compensation	Ÿ Provides a stable, fixed element of cash compensation Ÿ Recognizes and considers the internal value of the position within the Company and the individual’s experience, leadership potential, and demonstrated performance
Annual Cash Bonus Incentive	Performance-based annual cash compensation based on annual performance goals	Ÿ Rewards executives for the achievement of specific annual financial, operating and strategic goals and individual performance Ÿ Allows the Committee to evaluate both objective and subjective considerations when determining final payout amounts Ÿ Emphasizes team performance; however, individual executives may receive bonus payments above the team level if the individual’s performance adds significant value, or below the team level if performance does not meet expectations
Long-Term Incentive, in two components – • Performance Units • Restricted Stock	Performance units - equity compensation with payout based on total stockholder return in relation to peers Restricted stock - equity compensation with time-based, three-year cliff vesting	• Ensures that realized value to the executive aligns with value delivered to stockholders. Realized value is dependent on Company performance over the long-term (three years), with performance unit payout being dependent on relative total stockholder return against industry peers Ÿ Reinforces executive stock ownership Ÿ Through a combination of award types, encourages executives to take the proper level of risk in developing and executing the Company’s business plan with a true long-term focus. Ÿ Critical to the Company’s ability to attract, motivate and retain the Company’s key executives
Other Compensation	Health and life insurance, retirement benefits and limited perquisites	Ÿ Addresses health and post-retirement welfare of executives and provides certain other limited benefits

In determining compensation components and their design, the Compensation Committee also considers the typical practices of the Company’s direct industry peers. Compensation opportunities approximate the median of the Company’s peers based on values at the date of Committee approval; however, the values ultimately realized by the NEOs are largely based on the Company’s performance.

Role of the Compensation and Management Development Committee. As a part of its oversight of the Company's executive compensation program, the Compensation Committee:


•	administers the Company's executive compensation program;


•	establishes the Company's overall compensation philosophy and strategy; and


•	ensures the NEOs are rewarded appropriately in light of the guiding principles as described in the sections above.

In determining the compensation of the NEOs, other than the CEO, the Compensation Committee considers the evaluation of their performance by the CEO and recommendations of the CEO as to their compensation, but makes all final decisions regarding the NEOs' compensation. In determining the compensation of the CEO, the Committee determines the individual elements of the CEO’s total compensation and benefits; approves specific annual corporate goals and objectives relative to the CEO’s compensation; reviews the CEO’s performance in meeting these corporate goals and objectives; and prior to finalizing compensation for the CEO, reviews the Committee’s intentions with the other independent directors on the Board and receives their input.

The Compensation Committee utilizes tally sheets to review each NEO's total compensation and potential payouts in the event of a change in control and for various employment termination events, including the NEO’s potential "walk-away" benefits. The Committee also reviews historical target and actual compensation levels to determine whether the compensation plan design is meeting the Committee's objectives of providing fair compensation and effective retention.

A further description of the duties and responsibilities of the Compensation Committee can be found in "Meetings and Committees of Directors - Compensation and Management Development Committee."

Role of Management. The Company's Administration and Human Resources Departments assist the Compensation Committee and its independent compensation consultant, Meridian, in gathering the information needed for their respective reviews of the Company's executive compensation program. This assistance includes assembling requested compensation data for the NEOs. As referenced in the section above, the CEO develops pay recommendations for the other NEOs for review and discussion with the Compensation Committee. The Committee, in executive session and without executive officers present, approves the CEO's pay levels.

Role of the Compensation Consultant. For 2013, the Compensation Committee retained Meridian to serve as an independent consultant to the Committee to provide information and objective advice regarding executive and director compensation. All of the decisions with respect to the Company's executive compensation, however, are made by the Committee. The Committee did not direct Meridian to perform its services in any particular manner or under any particular method. The Committee has the final authority to hire and terminate the compensation consultant, and the Committee evaluates the compensation consultant annually. Meridian does not provide any services to the Company other than its role as advisor to the Committee and the Committee has determined that no conflicts of interest exist as a result of the engagement of Meridian. The Committee has retained Meridian as its independent consultant on executive and director compensation for 2014.

Meridian may, from time to time, contact the Company's executive officers for information necessary to fulfill its assignment and may make reports and presentations to and on behalf of the Compensation Committee that the Company's executive officers also receive.

Benchmarking. In conjunction with Meridian, its independent consultant, the Compensation Committee annually benchmarks the competitiveness of its compensation programs to determine how well target and actual compensation levels reflect the Company’s overall philosophy and compare to the external market. Each year the Committee identifies a peer group consisting of independent oil and gas exploration and production companies that have similar operational and capital investment profiles as the Company. The Committee believes these metrics are appropriate for determining peers in this context because these metrics are likely to result in identification of the companies with which the Company should expect to compete for executive talent. Thus, the Committee believes this peer group provides a reasonable point of reference for comparing the compensation of the Company’s executives to others holding similar positions and having similar responsibilities. The Committee's overall objective is to construct a peer group with roughly equal numbers of companies that are larger than and smaller than the Company, primarily taking into consideration the companies’ relative sizes in terms of market capitalization and enterprise value, but also considering total assets and revenue. The Compensation Committee reviews the peer group each year and makes changes as needed.

The Company's benchmarking consists of all components of direct compensation, including base salary, annual cash bonus incentive awards and long-term incentive plan awards. Information gathered from the proxy statements of the peer group companies and Meridian's proprietary databases are reviewed as a part of the benchmarking effort.

For the 2013 compensation decisions, the Compensation Committee used a peer group of 16 companies and grouped those companies into two tiers as follows:



Tier 1 Companies	Market Cap. ($ million) *	Enterprise Value ($ million)*
EOG Resources, Inc.	30,256	34,988
Devon Energy Corporation	24,472	28,030
Noble Energy, Inc.	16,486	20,238
Chesapeake Energy Corporation	12,556	28,898
Southwestern Energy Company	12,142	13,626
Range Resources Corporation	11,353	13,976
Concho Resources Inc.	9,882	12,438
QEP Resources, Inc.	5,628	7,348
Plains Exploration and Production Company	4,834	7,888
Newfield Exploration Company	4,228	7,167

Pioneer	12,845*	15,813*



Tier 2 Companies	Market Cap. ($ million)*	Enterprise Value ($ million)*
Cimarex Energy Co.	5,035	5,688
Whiting Petroleum Corporation	5,573	6,987
Denbury Resources Inc.	6,322	9,272
Continental Resources, Inc.	14,863	17,089
Apache Corporation	33,828	44,932
Anadarko Petroleum Company	34,938	46,976

____________

*As of September 30, 2012.

The tier one companies were selected as companies the Compensation Committee believed were most closely related to the Company in size and operations. The tier two group represents tier one companies plus the next six companies closest in size and operations to the Company. The Committee believes a tiered approach to analyzing benchmarking data provides additional insight to determine the most comparable levels of compensation for each NEO. The Compensation Committee relies primarily on the market survey data of the tier one companies to make its compensation decisions. For 2013, in order to simplify the Committee’s processes, the Committee decided to revise the peer group for benchmarking purposes by organizing the companies into two tiers rather than three, as was the case in 2012. Overall, the peer companies remained primarily the same, except that Petrohawk Energy was removed, since it had been acquired, and Forest Oil Corporation, Quicksilver Resources, Inc. and Ultra Petroleum Corp. were replaced by Continental Resources, Inc., Denbury Resources Inc. and Southwestern Energy Company.

Elements of the Company’s Compensation Program

The following sections describe in greater detail each of the components of the Company's executive compensation program and how the amounts of each element were determined for 2013.

Base Salary

The Compensation Committee initially reviewed with Meridian its base salary survey data and analyzed how effectively the survey data matched each executive’s duties and responsibilities. The Committee determined that Mr. Sheffield’s 2012 base salary was at approximately the survey median level in comparison to the Company’s peer group and did not change his base salary for 2013. Mr. Dove’s and Mr. Dealy’s 2012 base salaries were determined to be well below the median and Mr. Berg’s and Mr. Cheatwood’s base salaries were also determined to be below median, but to a lesser extent. The Compensation Committee set the 2013 base salaries of the NEOs, as follows:



NEO	2012 Base Salary	2013 Base Salary	% Change
Scott D. Sheffield	956,000	956,000	--
Richard P. Dealy	406,000	445,000	9.6
Mark S. Berg	376,000	395,000	5.1
Chris J. Cheatwood	376,000	395,000	5.1
Timothy L. Dove	531,000	580,000	9.2

While the Compensation Committee increased Mr. Dove’s and Mr. Dealy’s base salaries for 2013, their base salaries were not increased all the way to the respective median levels for 2013 because the Committee believed a one year increase of base salary should not exceed ten percent. Mr. Berg’s and Mr. Cheatwood’s base salaries were set at approximately the median level.

Annual Cash Bonus Incentive Program

The annual cash bonus incentive program is implemented as part of the Company’s 2006 Long-Term Incentive Plan and for 2013 was administered as follows:


•	At the beginning of the year, the Compensation Committee:


•	established each NEO’s target bonus level as a percent of the executive’s base salary, with the target bonus level to be near the median level of companies in the Company’s peer group, and each NEO’s maximum award level as 250 percent of the NEO’s target bonus level;


•	established a baseline performance hurdle that must be achieved prior to any payout under the program (the baseline performance hurdle also facilitates the Committee’s intention that the annual cash bonus incentive program qualify for tax deductibility under Section 162(m) of the Code); and


•	worked with senior management to establish operational and financial performance goals, as well as a smaller number of strategic goals and individual goals, for purposes of evaluation of performance following the end of the year.


•	In February 2014, the Committee evaluated the Company’s and the NEOs’ performance for 2013 and determined the actual payout to each NEO.

After reviewing the benchmarking data with Meridian, in February 2013, the Compensation Committee determined that the target bonus levels for Messrs. Sheffield and Dove approximated the median level; however, the market data indicated that the target bonus levels for the other NEOs were below median. As a result, the Committee increased the target bonus percents for Messrs. Dealy, Berg and Cheatwood to approximate the median levels for their positions and set the target bonus levels for 2013 as follows:



NEO	2012 Bonus %	2013 Target Bonus %
Scott D. Sheffield	100	100
Richard P. Dealy	85	100
Mark S. Berg	75	80
Chris J. Cheatwood	75	80
Timothy L. Dove	100	100

The Compensation Committee then worked with senior management to establish strategic and performance goals that the Committee used to evaluate the NEO’s and the Company’s performance. The strategic goals were considered to be critical to positioning the Company for current and future success and the financial and operating performance goals were intended to measure how the Company performed against the business plan. For each of the specific financial and operating goals, the Committee established both target and stretch goals for each performance metric. Management of the Company then cascaded these goals down to the department and individual level with the intention to support achievement of Company-wide goals, including goals related to safety. The goals also support the Company’s budgeting and planning process. The CEO also worked with the NEO’s to develop individual goals to support the Company goals, and reviewed them with the Committee as part of its management development and succession planning function.

Because the annual cash bonus incentive program is intended to qualify each NEO’s cash bonus incentive award as tax deductible "performance-based compensation" under Section 162(m) of the Code, the Compensation Committee established a baseline performance hurdle, the achievement of which was a condition to the payout of the annual cash bonus incentive awards to the NEOs. See " - Baseline performance hurdle" below. In early 2014, the Compensation Committee determined the baseline performance hurdle had been exceeded, permitting the payment to each NEO of up to the maximum bonus award opportunity of 250 percent times the NEO’s target bonus. The Committee then reviewed the strategic and performance goals to determine actual bonus payouts.

Overall, the Compensation Committee determined that the Company’s performance for 2013 was the best in its history, primarily due to the accomplishment of the following strategic goals:



Goal	Result
Evaluate the potential of the Wolfcamp Shale in the northern part of the play	Through its drilling program, the Company demonstrated the prospectivity of the 600,000-acre northern portion of its Spraberry/Wolfcamp Shale position. The Company’s drilling program included wells with record initial production rates in the Wolfcamp B and D intervals, demonstrating the potential for significantly increasing proved reserves as the Company carries out its strategy.
Deliver on Wolfcamp joint interest transaction	The Company successfully closed the joint interest transaction with Sinochem, selling 40 percent of the Company’s interest in approximately 207,000 net acres leased by the Company in the horizontal Wolfcamp Shale play for total consideration of $1.8 billion.
Increase financial flexibility and maintain investment grade metrics	The Company successfully executed an equity offering, raising $1.3 billion. The Company also improved its credit metrics and maintained its investment grade ratings.
Evaluate the potential for divestiture of the Company’s Alaska and Barnett Shale assets	The Company has announced the sale of Alaska and Barnett Shale assets.
Protect capital expenditures with more derivatives	The Company has entered into derivatives to protect its margins, with coverage of approximately 90% of forecasted 2014 oil production at $93 per barrel or higher.

In addition, the Compensation Committee considered the Company’s performance with regard to the 2013 financial and operating performance metrics, which are set forth in the chart below, and particularly noted the following accomplishments:

•

Production - The Company’s achieved total production of 64 MMBOE (which includes production from the Company’s Alaska and Barnett Shale assets), driven by strong production growth in the liquids-rich Spraberry/Wolfcamp and the Eagle Ford Shale plays, despite the impact of the unexpected severe winter weather in Texas late in the year. Average daily production from continuing operations in 2013 increased by 12% compared to 2012 (reflects Alaska and Barnett Shale as discontinued operations).

•

Reserve replacement - The Company added 141 MMBOE of proved reserves from discoveries, extensions, improved recovery and technical revisions of previous estimates, or 211% of full-year production (excluding the reduction of 319 MMBOE of PUD reserves that are no longer expected to be drilled due to the decision to focus on drilling horizontal wells rather than vertical wells, and an increase of 30 MMBOE due to positive price revisions).


•	Net debt metrics - The Company well exceeded the goals related to debt, primarily as a result of the successful execution of the equity offering discussed above.

In addition to the Company’s 2013 financial and operating performance against the specific goals established at the beginning of the year, the Compensation Committee noted the following:


•	In the Company's Eagle Ford Shale area:


•	achievement of record production in the fourth quarter as a result of continued strong drilling performance,


•	addition of approximately 300 drilling locations in the liquids-rich area of the play as a result of downspacing,


•	successful completion of the Company’s first well in the Upper Eagle Ford Shale, and


•	through improvements in well completions, an increase in the proved reserves expected to be produced from each well with minimal increases in completion capital.

•

The Company made significant improvements in the area of safety, where the Company's CEO and executive management team instituted a new program to reinforce safety as an essential part of the Company's culture, and to make awareness of safety a part of every employee's day-to-day activities. While the process is an ongoing one, the Company's OSHA recordable injury rates and lost time accident rates for 2013 dropped substantially from 2012 rates, and lost time accident rates were at a seven-year low.

The Compensation Committee believes that these outstanding accomplishments merited a general bonus payout level for the NEOs for 2013 at 250 percent of target, the maximum amount that could be paid under the program. The Committee then reviewed the individual performance of the NEOs with Mr. Sheffield and concluded that each of the NEOs performed at a high level and contributed to the Company’s success, thus meriting the payout at the 250 percent level.

The Committee met with the full Board to review Mr. Sheffield’s performance and concluded that he continued to provide excellent leadership and strategic direction for the Company in 2013. Accordingly, Mr. Sheffield also received the maximum 250 percent payout.

The Committee used subjective discretion in evaluating the Company’s performance in light of industry conditions and opportunities and the individual performance of each NEO. The Committee did not apply a particular weighting to any achievement or goal but did determine that the impact of the accomplishments of the strategic goals made such a tremendous impact on the Company for 2013 and in the future that the strategic goals were the primary drivers in determining the 2013 NEO bonus payout.

The following is a list of the 2013 performance metrics, goal ranges and results:



Metric	Target Goal	Stretch Goal	Result(1)
Production	61 MMBOE - 64 MMBOE	Greater than 64 MMBOE	64 MMBOE
Production Growth	10% - 13%	Greater than 13%	12%
Debt-adjusted Production/Share Growth	8% - 10%	Greater than 10%	10%
Operating Costs ($/BOE)
Base	$12.00 - $13.00	Less than $12.00	$11.08
Total Operating Cost	$15.50 - $16.50	Less than $15.50	$14.40
G&A Overhead ($/BOE) at Target Bonus(2)	$4.25 - $4.75	Less than $4.25	$4.21
Net Debt	$2.8 billion - $3.0 billion	Less than $2.8 billion	$2.3 billion
Net Debt/Book Capitalization	27% - 29%	Less than 27%	25%
Net Debt/EBITDAX (3)	1.35 - 1.45 times	Less than 1.35 times	1.02 times
Drillbit Finding Cost ($/BOE) (4)	$15.00 - $18.00	Less than $15.00	$19.70
Drillbit Reserve Replacement Percentage(5)	150% - 200%	Greater than 200%	211%
Return on Equity (6)	5.0% - 8.0%	Greater than 8.0%	9%
Return on Capital Employed (7)	4.0% - 6.0%	Greater than 6.0%	8%

____________


(1)	Actual results include the Company’s Alaska and Barnett Shale assets and assume no divestitures of those assets.


(2)	The goal is set at the beginning of the year based on the target bonus level for the entire Company. Taking into account the actual 2013 bonus payout levels, G&A overhead per BOE was $4.65.

(3)

"EBITDAX" represents earnings before depletion, depreciation and amortization expense; impairment of oil and gas properties; exploration and abandonments; accretion of discount on asset retirement obligations; interest expense; income taxes; gain or loss on the disposition of assets; gain or loss on extinguishment of debt; noncash effects from discontinued operations; noncash derivative related activity; amortization of stock-based compensation; amortization of deferred revenue; and other noncash items.

(4)

"Drillbit Finding Cost" is determined by dividing exploration and development costs incurred by the summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates (excluding PUDs removed and price revisions), improved recovery and extensions and discoveries. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.


(5)	"Drillbit Reserve Replacement Percentage" is the summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates (excluding PUDs removed and price revisions),improved recovery and extensions and discoveries, if any, divided by annual production of oil, natural gas liquids and gas, on a BOE basis.


(6)	"Return on Equity" is the quotient of (i) annual net income or loss before the after tax effects of gains or losses on dispositions of assets, noncash derivative gains or losses, impairment of oil and gas properties, inventory impairments and noncash adjustments to reduce the carrying value of assets held for sale to their estimated sales value, divided by (ii) average total equity.

(7)

"Return on Capital Employed" is the quotient of (i) annual net income or loss before the after tax effects of gains or losses on dispositions of assets, noncash derivative gains or losses, impairment of oil and gas properties, inventory impairments, interest expense and noncash adjustments to reduce the carrying value of assets held for sale to their estimated sales value, divided by (ii) the sum of the average carrying value of debt and average total equity.

Baseline performance hurdle. The annual cash bonus incentive program is implemented as part of the Company’s 2006 Long-Term Incentive Plan, which was approved by the Company’s stockholders in May 2006, and is intended to qualify each NEO’s cash bonus incentive award as tax deductible "performance-based compensation" under Section 162(m) of the Code. As part of this program, the Compensation Committee established a baseline performance hurdle the achievement of which was a condition to the payout of the annual cash bonus incentive awards to the NEOs. The Committee also established for each NEO a target and maximum bonus incentive award opportunity. Although the achievement of the baseline performance hurdle permits a payout at the maximum bonus level for each NEO, the Committee, in determining actual awards, may apply its subjective judgment, taking into consideration the Company’s performance against other goals and other factors, to reduce the amount of the bonus payout. The Committee does not have the discretion to increase the award above the maximum bonus award opportunity. For 2013, the Committee established as the baseline performance hurdle the Company’s achievement of cash flows from operations of at least $1.5 billion and a maximum bonus incentive award opportunity of 250 percent times the NEO’s target bonus.

Long-Term Equity Incentives

Annual long-term incentive awards

In late 2012, the Compensation Committee began the process of determining the total dollar amount of the 2013 annual long-term incentive awards to be granted to each NEO by meeting with Meridian to review benchmarking data related to long-term incentive awards, including median award levels at companies within the Company’s peer group, in accordance with the Company’s compensation philosophy. In January 2013, the Committee then reviewed each NEO’s total compensation level and each NEO’s performance to determine if unique performance issues, positive or negative, existed that should affect the value of the 2013 annual long-term incentive award. Although the Committee reviews the size and current value of prior long-term incentive awards, it did not consider these values in determining the 2013 long-term incentive award for the NEOs. The Committee believes that prior years’ awards were a component of those specific years’ total compensation and were not excessive, and future awards should be competitive with the NEO’s current peer group positions in order to retain and motivate the NEO. At the Committee’s regularly scheduled February 2013 meeting, the Committee concluded that each NEO should be eligible for an annual long-term incentive award targeted at approximately the median level for the NEO’s position and accordingly made equity awards at that level.

The Compensation Committee next reviewed the Company's approach for delivering long-term incentives to NEOs. As a part of its review, the Committee considered the balance of risk in the long-term incentive program, peer company practices, and input from senior management and Meridian. To further enhance the pay-for-performance philosophy of the Company’s compensation program, the Compensation Committee approved altering the mix of long-term incentives from prior years, replacing the prior allocation of 25 percent to stock options with an additional allocation to performance units. As a result, the mix of long-term incentives for NEOs for 2013 was 50 percent performance units and 50 percent restricted shares. The Committee believes this mix of long-term incentive awards provides a good balance of risk, where restricted stock awards are time-based, full value awards, which avoid an "all or nothing" mentality, and performance units provide benefits based on the performance of the Company’s stock price over a three-year period in relation to the Company’s peer group stock price.

For 2013, the approved dollar amounts of the aggregate long-term incentive awards granted to each NEO, and the allocation among the different types of awards, are shown in the table below. To arrive at the resulting number of restricted shares and target performance units awarded, the dollar value of the award was divided by the 30 trading day average closing price of the Company’s common stock prior to February 1, 2013.



		Allocation Among Awards(1)
NEO	Total Value	Restricted Stock/RSU Awards(2)	Performance Units
Scott D. Sheffield	$6,800,000	$3,400,000	$3,400,000
Richard P. Dealy	2,200,000	1,100,000	1,100,000
Mark S. Berg	1,300,000	650,000	650,000
Chris J. Cheatwood	1,600,000	800,000	800,000
Timothy L. Dove	3,100,000	1,550,000	1,550,000

____________

(1)

These dollar amounts may vary from the amounts disclosed in the Summary Compensation Table and the 2013 Grants of Plan-Based Awards table below, which amounts are calculated based on the grant date fair value of the awards in accordance with SEC rules. See the footnotes to those tables for further information regarding the methodology for determining the values of the awards for purposes of those tables.

(2)

Similar to the past several years, with regard to the awards to Messrs. Sheffield and Dealy and in recognition of their substantial involvement in the management of Pioneer Southwest, the Committee desired that, of the 50 percent award value allocated to restricted stock awards, 42.5 percent be allocated to restricted stock or RSUs of the Company and 7.5 percent be allocated to phantom units of Pioneer Southwest. Accordingly, the Committee recommended to the Board of Directors of the general partner of Pioneer Southwest that it consider the grant to those executives, who were also executive officers of the general partner in February 2013, of awards of phantom units of Pioneer Southwest, having substantially similar terms to the Company’s restricted stock awards. To arrive at the resulting number of Pioneer Southwest common units subject to such awards, the dollar value of the award was divided by the 30 trading day average closing price of Pioneer Southwest common units prior to February 1, 2013. The Board of Directors of the general partner of Pioneer Southwest approved those awards in February 2013. As a result of the Pioneer Southwest merger, these Pioneer Southwest awards were converted into equivalent RSUs of the Company, with adjustments in the number of shares to reflect the merger exchange ratio, but otherwise on the same terms and conditions as were applicable prior to the merger.

Restricted Stock and RSU Awards. For the 2013 restricted stock and RSU award program, the awards cliff vest on the third anniversary of the date of grant, subject to the NEO remaining employed with the Company continuously through the vesting date. For tax reasons, NEOs who have attained or who will attain the stated retirement age under the awards (which is age 60 for the 2013 awards) during the vesting period of the awards are awarded RSUs instead of restricted stock. Additional information regarding the terms of these awards is described below under "Executive Compensation Tables—Narrative Disclosure for the 2013 Grants of Plan-Based Awards Table."

Performance Unit Awards. For the 2013 performance unit award program, the Compensation Committee determined, as it has since it began awarding performance units in 2007, that performance should be measured objectively rather than subjectively and should be based on relative total shareholder return, or "TSR" (as defined in the award agreements) over a three-year performance period. The Committee believes relative TSR is an appropriate long-term performance metric because it generally reflects all elements of a company’s performance and provides the best alignment of the interests of management and the Company’s stockholders. The Committee also believes that the performance unit program provides a good balance to the restricted stock program.

The peer group used in measuring relative TSR with respect to the performance unit grants in 2013 was the same group of eleven companies used in connection with the 2012 performance units award grant, except that Plains Exploration and Production Company ("Plains"), which had agreed to be acquired at the time the performance units were granted in 2013, was replaced by Concho Resources Inc. ("Concho"), with the final group of companies being Apache Corporation ("Apache"), Chesapeake Energy Corporation ("Chesapeake"), Cimarex Energy Co. ("Cimarex"), Concho, Devon Energy Corporation ("Devon"), EOG Resources, Inc. ("EOG"), Newfield Exploration Company ("Newfield"), Noble Energy, Inc. ("Noble"), Range Resources Corporation ("Range"), QEP Resources, Inc. ("QEP") and Southwestern Energy Company ("Southwestern"). As depicted in the following table, the payout will range from zero percent to 250 percent of a target number of performance units awarded based on the Company’s relative ranking in the peer group at the end of the three-year performance period that ends December 31, 2015:



TSR Rank Against Peers	Percentage of Performance Units Earned (1)
1	250%
2	200%
3	175%
4	150%
5	125%
6	110%
7	75%
8	50%
9	25%
10	0%
11	0%
12	0%

____________


(1)	See the 2013 Grants of Plan-Based Awards table below, and the description of the performance units following the table, for additional information regarding the terms of the performance units.

The performance unit awards granted each year provide additional balance of risk to the long-term incentive award program because a new three-year performance period starts at the beginning of each year. As depicted in the table below, with respect to the performance units granted in 2011, for the period January 1, 2011 to December 31, 2013, the Company’s TSR resulted in a ranking of first place, providing a payout of 250 percent of target.



Ranking	Company (1)	TSR (%)
1	Pioneer	129
2	EOG	86
3	Range	85
4	Noble	74
5	Cimarex	21
6	Chesapeake	20
7	Devon	(13)
8	Apache	(19)
9	Newfield	(60)
10	Quicksilver	(82)
11	Forest	(89)

____________


(1)	In accordance with the terms of the performance units, Plains was removed from the list of peers because its common stock ceased to be publicly traded following its acquisition in May 2013.

Accordingly, the performance shares earned by the NEOs for the 2011 to 2013 performance period were as follows:



NEO	Target Payout of Shares	Payout % of Target	Actual Payout of Shares
Sheffield	16,065	250%	40,163
Dealy	5,612	250%	14,030
Berg	2,806	250%	7,015
Cheatwood	3,367	250%	8,418
Dove	7,787	250%	19,468

The following table shows the relative TSR rankings of the Company and each of the named companies for the currently outstanding performance unit awards, which have periods that began January 1, 2012, or two years into the three year performance period, and January 1, 2013, or one year into the three year performance period.



Rank	Period Beginning January 1, 2012(1)		Period Beginning January 1, 2013
Rank	Company	TSR (%)	Company	TSR (%)
1	Pioneer	108	Pioneer	77
2	EOG	71	Cimarex	69
3	Cimarex	58	Chesapeake	57
4	Noble	56	Noble	47
5	Range	18	EOG	42
6	Chesapeake	12	Concho	30
7	Southwestern	3	Range	20
8	QEP	0	Devon	16
9	Devon	(2)	Apache	16
10	Apache	(4)	Southwestern	10
11	Newfield	(33)	QEP	10
12			Newfield	7

____________


(1)	In accordance with the terms of the performance units, Plains was removed from the list of peers because its common stock ceased to be publicly traded following its acquisition in May 2013.

To demonstrate the pay-for-performance nature of the performance unit program, the following table shows the resulting realized value of the performance unit program for performance unit awards granted to the CEO since the program began in 2007:



Performance Period	Min Payout of Shares	Target Payout of Shares	Max Payout of Shares	Actual Earned Date	TSR Rank	Payout % of Target	Actual Payout of Shares
1/1/2007-12/31/2009	0	34,998	87,495	12/31/2009	7	75	26,249
1/1/2008-12/31/2010	0	38,478	96,195	12/31/2010	2	200	76,956
1/1/2009-12/31/2011	0	60,459	151,148	12/31/2011	1	250	151,148
1/1/2010-12/31/2012	0	28,222	70,555	12/31/2012	1	250	70,555
1/1/2011-12/31/2013	0	16,065	40,163	12/31/2013	1	250	40,163
1/1/2012-12/31/2014	0	17,553	43,883	12/31/2014	Not yet determined
1/1/2013-12/31/2015	0	30,540	76,350	12/31/2015	Not yet determined

In administering the annual long-term incentive plan, awards are currently made to NEOs under the following guidelines:


•	All long-term incentive awards are approved during the regularly scheduled February Compensation Committee meeting.


•	The Company does not time the release of material non-public information to affect the value of the executive equity compensation awards.


•	All annual awards cliff vest after three years.

Total Direct Compensation

In determining the extent to which the Company’s executive compensation program meets the Compensation Committee’s compensation philosophy and objectives, the Committee emphasizes the competitiveness of total compensation (the aggregate of base salary, annual cash bonus incentive payment, and the grant value of long-term incentive plan awards) rather than just the individual compensation components. In reviewing the benchmarking data from Meridian’s industry study and discussing with Meridian the pay practices of the Company’s peers, the Committee concluded that for 2013, all NEOs, including Mr. Sheffield, were targeted at approximately the median level for total compensation.

Stockholder Advisory Vote and Compensation Program Adjustments to Reflect Pay for Performance

In each of the last three years, the Company received a favorable advisory vote on its executive compensation program, with over 97 percent of the votes cast being voted to approve the executive compensation program pursuant to the most recent advisory vote that occurred in 2013. The Compensation Committee believes this affirms the stockholders’ support of the Company’s executive compensation program, and the Committee did not change its approach to executive compensation matters in 2013 based on the results of the advisory vote on the Company’s 2012 executive compensation program. Nevertheless, the Committee monitors trends and best practices in compensation, and noted particularly the trend toward increasing the relation between performance and pay. To that end, for 2013, the Committee approved replacing the stock option component of the long term incentive awards with additional performance units.

In addition, going forward beginning with the 2014 annual cash bonus incentive award portion of the Company executive compensation program, the Committee has approved a change from the current approach of a large number of quantifiable goals without specific weighting, to a more structured approach that will have fewer goals that are most critical to the overall strategy of the Company, each with an assigned weighting. Specifically, the areas for which goals were set for 2014 and the related weightings are:



Performance Goal	Relative Weight
Production growth	25%
Ratio of net debt to EBITDAX	15%
Proved reserve additions	20%
Base lease operating and general and administrative costs/BOE	10%
Certain strategic goals (including safety)	30%

Following the end of 2014, the Compensation Committee will assess the Company’s performance against the pre-established targets, and determine an actual payout percentage for each goal based on performance, which can range from zero to 250 percent. The Committee retains discretion to adjust the amount of the payout, positively or negatively, by up to 33 percent, to recognize critical performance factors, industry conditions or individual performance factors, but the total payout may not exceed 250 percent of the executive’s target bonus.

Other Compensation

Overview

The Compensation Committee believes that providing some perquisites, as well as health, welfare and retirement benefits, as components of total compensation is important in attracting and retaining qualified personnel; however, because the Company has chosen to emphasize variable, performance-based pay, the Company takes a conservative approach to these fixed benefits. The Company’s perquisite, retirement and other benefit programs are established based upon an assessment of competitive market factors and a determination of what is needed to attract, retain and motivate high caliber executives.

Perquisites

The perquisites provided to the NEOs are the payment of the costs of financial counseling services, annual medical physical exams and personal use of the Company’s cell phones and computers. The Company also pays for the costs for the NEOs’ spouses to participate in certain business dinners or events, which the Company expects to be minimal; however, the Company does not reimburse Mr. Sheffield for any transportation expenses for his spouse.

Each year, the Company purchases a certain number of hours of flight time through a fractional aircraft ownership arrangement. These hours are made available for business use to the executive officers and other employees of the Company. The Company’s policy is to not permit employees, including executive officers, to use these hours for personal use. The Company expects there will be occasions when a personal guest (including a family member) will accompany an employee on a business-related flight. In such instances, the Company will follow the Internal Revenue Service rules and, where required, impute income to the employee based on the Standard Industry Fare Level rates provided by the Internal Revenue Service.

Health and Welfare Benefits

The Company’s NEOs participate in the Company’s health and welfare benefit plans, including medical, dental, disability and life insurance arrangements, on the same basis as the Company’s other employees.

Retirement Plans

All eligible employees of the Company, including the NEOs, may participate in the Company’s 401(k) Plan. The Company contributes two dollars for every one dollar of base compensation (up to five percent of base compensation and subject to the Internal Revenue Service imposed maximum contribution limits) contributed by the participant. The participant’s contributions are fully vested at all times, and the Company’s matching contributions vest over the first four years of service, after which time the matching contributions vest immediately. Participants may make additional pre-tax and after-tax contributions to the plan. All contributions are subject to plan and Internal Revenue Service limits.

The Company provides a non-qualified deferred compensation plan with a fixed Company matching contribution rate to certain of its more highly compensated employees, which includes the NEOs. The plan allows each participant to contribute up to 25 percent of base salary and 100 percent of annual cash bonus incentive payments. Each year, the Company provides a matching contribution equal to the NEO’s contribution, but limited to a maximum of ten percent of annual base salary. The Company’s matching contribution vests immediately. The non-qualified deferred compensation plan permits each participant to make investment allocation choices for both their contribution and the Company match to designated mutual funds offered as investment options under the non-qualified deferred compensation plan. The Company retains the right to maintain these investment choices as hypothetical investments or to actually invest in the participant’s investment choices. To date, the Company has chosen to actually invest the funds in the investment options selected so that the investment returns are funded and do not create unfunded liabilities to the Company. The Company believes the plan is administered in operational compliance with all applicable rules and law. For more information on the non-qualified deferred compensation plan provisions, see "Executive Compensation—2013 Non-Qualified Deferred Compensation."

Severance and Change in Control Arrangements

The Compensation Committee believes compensation issues related to severance and change in control events for the NEOs should be addressed through contractual arrangements. As a result, while the Company has not entered into employment agreements with its executive officers, the Company enters into severance and change in control agreements with each of its executive officers, including each NEO, to recruit and retain executives, provide continuity of management in the event of an actual or threatened change in control and provide the executive with the security to make decisions that are in the best long-term interest of the stockholders. The change in control agreements with the Company’s executive officers were amended in 2013 to remove excise tax gross ups from the agreements, and it is the Company’s policy that it will not provide such gross up benefits in future change in control or severance agreements. The terms of these agreements are described later in "Potential Payments Upon Termination or Change in Control."

Stock Ownership Guidelines

To support the commitment to significant stock ownership by NEOs, the Company's common stock ownership guidelines are as follows:



Officer	Required Stock Ownership - Multiple of Annual Base Salary
Chairman of the Board and CEO	6x
President and Chief Operating Officer	5x
Other Executive Officers	3x

An NEO generally has three years after becoming an executive officer to meet the stock ownership guideline. In evaluating compliance by executive officers and directors with the stock ownership guidelines, the Compensation Committee has established procedures to minimize the effect of stock price fluctuations on the deemed value of the individual's holdings. All

NEOs, including Mr. Sheffield, exceeded their minimum ownership guidelines. Given these robust requirements for stock ownership and the executives’ historical levels of actual stock ownership, the Committee does not believe that it is necessary to adopt a separate policy requiring executives to retain stock following the vesting or exercise of their long-term incentive plan awards.

Prohibited Equity Transactions

The Company has a policy that prohibits directors, officers or employees from engaging in short sales or in transactions involving derivatives based on the Company’s common stock, such as option contracts, straddles, collars, hedges and writing puts or calls. In addition, the Company has a policy that prohibits directors and executive officers from pledging Company securities as collateral for a loan or holding Company securities in a margin account without advance approval from the Board. In addition, the Company’s policy requires that directors and executive officers must obtain authorization from the Board before entering into a trading plan that, under the SEC’s Rule 10b5-1, would permit the sale of the Company’s stock including at times when the director or executive officer is in the possession of material nonpublic information.

Policy on Recovery of Compensation and Clawbacks

The Board has adopted a clawback policy under which the Board, or a committee of the Board, has the right to cause the reimbursement by an executive officer of the Company of certain incentive compensation if the compensation was predicated upon the achievement of certain financial results that were subsequently the subject of a required restatement of the Company’s financial statements and the executive officer engaged in fraudulent or intentional illegal conduct that caused the need for the restatement.

Indemnification Agreements

The Company has entered into indemnification agreements with each of its directors and executive officers, including the NEOs. Each indemnification agreement requires the Company to indemnify each indemnitee to the fullest extent permitted by the Delaware General Corporation Law. This means, among other things, that the Company must indemnify the director or executive officer against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement that are actually and reasonably incurred in a legal proceeding by reason of the fact that the person is or was a director, officer, employee or agent of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another entity if the indemnitee meets the standard of conduct provided under Delaware law. Also as permitted under Delaware law, the indemnification agreements require the Company to advance expenses in defending such an action provided that the director or executive officer undertakes to repay the amounts if the person ultimately is determined not to be entitled to indemnification from the Company. The Company will also make the indemnitee whole for taxes imposed on the indemnification payments and for costs in any action to establish the indemnitee's right to indemnification, whether or not wholly successful. The Company also maintains customary directors' and officers' insurance coverage.

Deductibility of Executive Compensation

Section 162(m) of the Code places restrictions on the deductibility of executive compensation paid by public companies. Under the restrictions, the Company is not able to deduct compensation paid to any of the NEOs (other than the Chief Financial Officer) in excess of $1,000,000 unless the compensation meets the definition of "performance-based compensation" as required in Section 162(m) of the Code. Non-deductibility results in additional tax costs to the Company.

The Company’s annual cash bonus incentive payments and awards under the performance unit award program granted by the Company are intended to qualify for deductibility under Section 162(m), but the restricted stock and RSU awards do not qualify as performance-based compensation under Section 162(m). Accordingly, certain portions of compensation paid to the Company's NEOs in 2013 that exceeded $1,000,000 are not deductible. The Compensation Committee believes it is in the best interest of stockholders to use restricted stock and RSUs as a part of the NEOs’ long-term incentive awards. With respect to the Company’s annual cash bonus incentive payments and awards under the performance unit award program, because of the uncertainties associated with the application and interpretation of Section 162(m) and the regulations issued thereunder, there can be no assurance that compensation intended to satisfy the requirements for deductibility under Section 162(m) will in fact be deductible.

COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE REPORT

The information contained in this Compensation and Management Development Committee Report shall not be deemed to be "soliciting material" or to be "filed" with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 (the "Exchange Act"), except to the extent that the Company specifically incorporates such information by reference to such filing.

During the last fiscal year, and this year in preparation for the filing of this Proxy Statement with the SEC, the Compensation and Management Development Committee of the Board of Directors:


•	reviewed and discussed the disclosure set forth under the heading "Compensation Discussion and Analysis" with management as required by Item 402(b) of Regulation S-K; and


•	based on the reviews and discussions referred to above, recommended to the Board of Directors that the disclosure set forth under the heading "Compensation Discussion and Analysis" be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Respectfully submitted by the Compensation and Management Development Committee of the Board of Directors,

Edison C. Buchanan, Chairman

Andrew F. Cates

Stacy P. Methvin

Charles E. Ramsey, Jr.

J. Kenneth Thompson

EXECUTIVE COMPENSATION TABLES

Summary Compensation Table

The compensation paid to the Company's executive officers consisted of a base salary, annual cash bonus incentive payments, awards of restricted stock or RSUs and performance units, contributions to the Company's non-qualified deferred compensation plan, contributions to the Company's 401(k) Plan and certain perquisites, which elements of compensation are described in greater detail above in the "Compensation Discussion and Analysis" and in the tables that follow. The following table summarizes the total compensation for 2013, 2012 and 2011 awarded to, earned by or paid to the NEOs. The dollar values of stock awards for the four NEOs other than the CEO in 2012 include the value of special 2012 retention awards, which have a longer vesting period than the Company’s typical equity awards.



Name and Principal Position (a)	Year (b)		Salary (1)($) (c)		Stock Awards (2)($) (e)			Option Awards (2)($) (f)		Non-Equity Incentive Plan Compensation (3)($) (g)		All Other Comp-ensation (4)($) (i)		Total ($) (j)
Scott D. Sheffield Chairman of the Board and Chief Executive Officer	2013	$	956,001	$	9,763,092		$	-	$	2,390,000	$	141,517	$	13,250,610
	2012	$	956,001	$	6,913,317		$	2,039,499	$	1,434,000	$	146,134	$	11,488,951
	2011	$	956,001	$	5,315,904		$	1,592,382	$	1,720,800	$	142,011	$	9,727,098
Richard P. Dealy Executive Vice President and Chief Financial Officer	2013	$	439,000	$	3,158,811		$	-	$	1,112,500	$	77,971	$	4,788,282
	2012	$	406,001	$	4,966,915	(5)	$	679,871	$	517,650	$	68,148	$	6,638,586
	2011	$	406,001	$	1,857,114		$	556,277	$	690,200	$	73,551	$	3,583,143
Mark S. Berg Executive Vice President and Chief of Staff	2013	$	392,077	$	1,878,266		$	-	$	790,000	$	75,488	$	3,135,831
	2012	$	376,002	$	2,842,955	(5)	$	386,318	$	423,000	$	72,454	$	4,100,729
	2011	$	376,002	$	931,760		$	278,163	$	564,000	$	73,033	$	2,222,958
Chris J. Cheatwood Executive Vice President, Business Development and Geoscience	2013	$	392,077	$	2,311,563		$	-	$	790,000	$	78,772	$	3,572,412
	2012	$	376,002	$	3,411,500	(5)	$	463,548	$	423,000	$	74,675	$	4,748,725
	2011	$	376,002	$	1,118,145		$	333,776	$	564,000	$	74,010	$	2,465,933
Timothy L. Dove President and Chief Operating Officer	2013	$	572,462	$	4,478,694		$	-	$	1,450,000	$	91,829	$	6,592,985
	2012	$	531,001	$	6,822,942	(5)	$	927,096	$	796,500	$	87,174	$	9,164,713
	2011	$	531,001	$	2,585,751		$	771,832	$	849,600	$	82,750	$	4,820,934

______________


(1)	The base salary levels for Messrs. Dealy, Berg, Cheatwood, and Dove were adjusted effective February 21, 2013 from $406,000 to $445,000 for Mr. Dealy; from $376,000 to $395,000 for each of Messrs. Berg and Cheatwood, and from $531,000 to $580,000 for Mr. Dove. The Compensation Committee did not make any changes to Mr. Sheffield’s base salary in 2013.

(2)

Amounts reported for Stock Awards and Option Awards represent the grant date fair value of restricted stock, RSUs, performance unit and stock option awards, computed in accordance with FASB ASC Topic 718. Stock awards for Messrs. Sheffield and Dealy include grants by the general partner of Pioneer Southwest of phantom unit awards that were to be settled in common units of Pioneer Southwest. These phantom unit awards are also reported based on their grant date fair value, computed in accordance with FASB ASC Topic 718. As

a result of the Company’s acquisition of Pioneer Southwest, these Pioneer Southwest awards were converted into equivalent RSUs of the Company, with adjustments in the number of shares issuable upon vesting to reflect the merger exchange ratio. Pursuant to SEC rules, all amounts shown in this column exclude the effect of estimated forfeitures related to service-based vesting conditions. The values shown for restricted stock, RSUs and phantom unit awards are based on the market-quoted closing price of the Company's common stock and Pioneer Southwest’s common units, as applicable, on the last trading day prior to the grant date of the awards. The Company's performance units are valued using the Monte Carlo simulation method assuming a target number of shares would be issued because this is deemed to be the "probable" payout percentage at the time of grant consistent with the estimate of aggregate compensation cost to be recognized over the service period. Actual payouts with respect to performance units can range from zero percent to 250 percent of a target number of units based on relative ranking of the Company’s TSR in comparison to the peer group over the three-year performance period. If the Company's performance is below the threshold performance, no shares will be paid. If the Company’s performance places it first among its peers, a maximum of 250 percent of the target number of shares will be paid. In that instance, the grant date fair value of the maximum number of shares for each of the NEOs pursuant to performance units granted in 2013 would be as follows: Mr. Sheffield, $14,447,397; Mr. Dealy, $4,674,447; Mr. Berg, $2,762,320; Mr. Cheatwood, $3,399,443; and Mr. Dove, $6,586,575. Additional detail regarding the Company's share-based awards is included in Note H of Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 and under the 2013 Grants of Plan-Based Awards table below. Stock option awards, which were granted in 2012 and 2011, were valued as of their grant dates using the Black-Scholes option pricing model. For additional information regarding restricted stock, RSUs, performance units and stock options, as applicable, owned by the NEOs as of December 31, 2013, see below under "2013 Outstanding Equity Awards at Fiscal Year End."

(3)

Commencing in 2011, the Compensation Committee approved an annual cash bonus incentive program, which is described above in the section entitled "Compensation Discussion and Analysis," pursuant to which the Committee established a baseline performance hurdle, the achievement of which was a condition to the payment of a cash bonus to the NEOs. The amounts in column (g) reflect the actual payouts under this annual cash bonus incentive program for 2013, 2012 and 2011, which were paid in March of the year following the year for which they were earned.


(4)	Amounts reported in the All Other Compensation column include the Company contributions to the NEOs' 401(k) Plan accounts and non-qualified deferred compensation plan, life insurance premiums and other perquisites, as shown in the following table:



	Year ended December 31, 2013
	Scott D. Sheffield		Richard P. Dealy		Mark S. Berg		Chris J. Cheatwood		Timothy L. Dove
401(k) contributions	$	25,500	$	25,500	$	25,500	$	25,500	$	25,500
Non-qualified deferred compensation plan contributions	$	95,600	$	43,900	$	37,000	$	39,208	$	57,246
Life insurance premiums	$	7,524	$	1,491	$	3,789	$	3,066	$	5,962
Medical premium credit	$	300	$	300	$	300	$	-	$	240
Financial counseling	$	7,978	$	940	$	8,000	$	10,335	$	-
Spousal travel & entertainment costs(a)	$	4,615	$	5,840	$	899	$	663	$	2,881
Totals	$	141,517	$	77,971	$	75,488	$	78,772	$	91,829

______________


(a)	Spousal travel & entertainment costs are included to the extent of the incremental costs incurred by the Company for travel and entertainment of spouses when accompanying the NEOs on Company-related business trips.

(5)

The amounts for Stock Awards in 2012 for Messrs. Dealy, Berg, Cheatwood and Dove include the grant date fair value of special retention awards granted in February 2012. These retention awards consist of restricted stock awards or RSUs that will vest in equal one-third installments on the third, fourth and fifth anniversaries of the date of grant, subject to the NEO remaining employed with the Company continuously through each vesting date.

Mr. Sheffield, directly or indirectly, holds working interests in wells operated by the Company or a subsidiary of the Company. These interests were initially acquired in 1990 or earlier with his personal funds pursuant to a program offered by the Company's predecessor. As such, Mr. Sheffield participates in the costs and revenues attributable to these working interests in accordance with customary industry terms. During 2013, the aggregate amount of the distributions made to Mr. Sheffield was $14,139 (this amount is not included in the Summary Compensation Table).

2013 Grants of Plan-Based Awards

The following table sets forth, for each NEO, information about grants of plan-based awards during 2013.



	Grant Date (b)									All Other Stock Awards: Number of Shares of Stock or Units (#) (i)		Grant Date Fair Value of Stock and Option Awards (5)(6) ($) (l)
		Estimated Future Payouts under Non-Equity Incentive Plan Awards (1)			Estimated Future Payouts Under Equity Incentive Plan Awards (2)
Name (a)		Threshold ($) (c)	Target ($) (d)	Maximum ($) (e)	Threshold (#) (f)		Target (#) (g)	Maximum (#) (h)
Scott D. Sheffield	02/20/2013 02/20/2013 02/20/2013 02/20/2013	-	$956,000	$2,390,000	7,635	30,540			76,350	25,959(3) 4,948(4)	$ $ $	5,778,959 3,438,270 545,863
Richard P. Dealy	02/20/2013 02/20/2013 02/20/2013 02/20/2013	-	$445,000	$1,112,500	2,471	9,881			24,703	8,399(3) 1,601(4)	$ $ $	1,869,741 1,112,448 176,622
Mark S. Berg	02/20/2013 02/20/2013 02/20/2013	-	$395,000	$790,000	1,460	5,839			14,598	5,839(3)	$ $	1,104,890 773,376
Chris J. Cheatwood	02/20/2013 02/20/2013 02/20/2013	-	$395,000	$790,000	1,797	7,186			17,965	7,186(3)	$ $	1,359,777 951,786
Timothy L. Dove	02/20/2013 02/20/2013 02/20/2013	-	$580,000	$1,450,000	3,481	13,923			34,808	13,923(3)	$ $	2,634,592 1,844,101

______________

(1)

The amounts in columns (c), (d) and (e) represent the threshold, target and maximum payment levels with respect to the Company’s 2013 annual cash bonus incentive program under the Company’s 2006 Long-Term Incentive Plan, as discussed above. If the Company’s performance does not exceed the minimum baseline performance hurdle, then the payout under this program will be zero. The amounts shown in the "Target" column reflect a payout of 100 percent of the target bonus, and the amounts shown in the "Maximum" column reflect the highest possible payout of 250 percent of target bonus. Actual bonus payouts for 2013, which were paid in March 2014, are reflected in the "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table.

(2)

The amounts in columns (f), (g) and (h) represent the number of shares deliverable upon threshold, target and maximum performance with respect to the grants of performance units in 2013 under the Company’s 2006 Long-Term Incentive Plan. The number of shares shown in the "Threshold" column reflects the lowest possible payout (other than zero), representing 25 percent of the number of performance units granted. If performance is below the threshold, no shares are paid. The number of shares shown in the "Target" column reflects a payout of 100 percent of the number of performance units granted. The number of shares shown in the "Maximum" column reflects the highest possible payout of 250 percent of the number of performance units granted.


(3)	The amounts reported are the number of restricted shares of the Company’s common stock or RSUs granted to each NEO in 2013 under the Company’s 2006 Long-Term Incentive Plan in connection with the annual grant of awards as described above.

(4)

The amounts reported are the number of shares of the Company’s common stock, after adjusting for the merger exchange ratio, underlying phantom units of Pioneer Southwest that were awarded by the general partner of Pioneer Southwest in 2013 under Pioneer Southwest’s 2008 Long-Term Incentive Plan. As a result of the Company’s acquisition of Pioneer Southwest, these Pioneer Southwest awards were converted into equivalent RSUs of the Company, with adjustments in the number of shares issuable upon vesting to reflect the merger exchange ratio. The number of common units of Pioneer Southwest underlying the phantom units as originally granted were as follows: Mr. Sheffield, 21,285 and Mr. Dealy, 6,887.


(5)	The Company did not grant any stock options in 2013.

(6)

Amounts for restricted stock, RSUs, performance units and Pioneer Southwest phantom unit awards represent each award’s grant date fair value computed in accordance with FASB ASC Topic 718. The value of performance units was determined on the grant date using the Monte Carlo simulation method assuming a target number of shares would be issued, and is consistent with the estimate of aggregate compensation costs that the Company would expense in its financial statements over the awards' three-year performance period, in accordance with FASB ASC Topic 718. See footnote 2 to the Summary Compensation Table for additional information about the assumptions used in calculating these amounts.

Narrative Disclosure for the 2013 Grants of Plan-Based Awards Table

The 2013 annual cash bonus incentive awards and the 2013 awards of performance units, restricted stock and RSUs were granted to the NEOs under the Company's 2006 Long-Term Incentive Plan. The Pioneer Southwest phantom units granted to Messrs. Sheffield and Dealy were awarded by the general partner of Pioneer Southwest under its 2008 Long-Term Incentive Plan. The material terms of these awards are described below. Defined terms impacting the accelerated settlement or vesting of awards can be found below in "Potential Payments Upon Termination or Change in Control."

Annual Cash Bonus Incentives

The 2013 annual cash bonus incentive program included a baseline performance hurdle, the achievement of which was a condition to the payment of any cash bonuses to the NEOs for 2013. The baseline performance hurdle required the Company to achieve cash flow from operations of at least $1.5 billion. In early 2014, the Compensation Committee determined that the Company had exceeded the baseline performance hurdle for 2013 and, as a result, each NEO was eligible to receive an annual cash bonus payment up to the maximum bonus award opportunity of 250 percent times the NEO’s target bonus. The dollar values of the target and maximum bonus award opportunities for each NEO are reported in the "2013 Grants of Plan-Based Awards Table" above. In determining the actual amounts paid to the NEOs for 2013, the Committee applied its subjective judgment, taking into account the Company’s performance in light of industry conditions and opportunities and each NEO’s performance, as described in greater detail above under "Compensation Discussion & Analysis—Elements of the Company’s Compensation Program—Annual Cash Bonus Incentives." The amounts actually paid to each NEO with respect to the 2013 annual cash bonus incentives are reported in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.

Performance Units

The performance unit awards represent the right to receive between zero percent and 250 percent of the initial number of performance units awarded, contingent on the continued employment of the NEO and the Company's achievement of the specified performance objective at the end of the performance period. The 2013 awards have a three-year performance period (January 2013 to December 2015), and the number of performance units earned will be based on the Company's TSR ranking for this three-year period compared to the TSR of the following peer companies: Apache, Chesapeake, Cimarex, Concho, Devon, EOG, Newfield, Noble, QEP, Range and Southwestern, in accordance with the following:



TSR Rank Against Peers	Percentage of Performance Units Earned
1	250%
2	200%
3	175%
4	150%
5	125%
6	110%
7	75%
8	50%
9	25%
10	0%
11	0%
12	0%

TSR means the annualized rate of return stockholders receive through stock price changes and the assumed reinvestment of dividends paid over the performance period. For purposes of determining the TSR for the Company and each of the peer companies, the change in the price of the Company’s common stock and of the common stock of each peer company is based upon the average of the closing stock prices over the 60-day periods preceding the start and the end of the performance period.

Performance units earned will generally be paid in shares of the Company's common stock (unless the Compensation Committee determines to pay in cash) no later than March 15th of the year following the year in which the performance period ends. The NEOs will also earn dividend equivalents on the performance units actually earned up to a maximum of the initial number awarded, which will be paid at the time the performance units are settled.

If an NEO's employment with the Company is terminated during the performance period, the following rules will determine the number of performance units, if any, the NEO will earn: (1) if the NEO's employment is terminated due to death or disability, the NEO will receive settlement of a number of performance units equal to the initial number of performance units awarded multiplied by a fraction, the numerator of which is the number of months during the performance period that the NEO was employed and the denominator of which is 36 (the "pro ration fraction"); (2) if the NEO's employment is terminated due to the NEO’s normal retirement on or after the attainment of age 60, the NEO will receive settlement of a number of performance units equal to the number of performance units that would have been earned if the NEO had continued employment through the end of the performance period multiplied by the pro ration fraction; (3) if the NEO's employment is terminated by the Company without cause or by the NEO for good reason, then (A) Messrs. Sheffield and Dove will receive a number of performance units equal to the number of performance units that would have been earned if they had continued employment through the end of the performance period, and (B) the other NEOs will receive settlement of a number of performance units equal to the number of performance units that would have been earned if the NEOs had continued employment through the end of the performance period multiplied by the pro ration fraction; and (4) if an NEO's employment is terminated for any other reason, the NEO will not receive settlement of any of the performance units.

In the event of a change in control, the date of the change in control will be treated as the last day of the performance period and achievement of the performance objective will be measured based on the Company's actual performance as of that date.

Additional information regarding the performance unit awards can be found above under "Compensation Discussion and Analysis — Elements of the Company's Compensation Program — Long-Term Equity Incentives."

Restricted Stock and RSUs

In general, the restricted stock awards vest on the third anniversary of the date of grant, subject to the NEO remaining employed with the Company continuously through the vesting date. While an NEO holds restricted shares, he is entitled to vote with holders of the Company’s common stock and receive dividends on the shares at the same rate and time as other stockholders. RSU awards are similar to restricted stock awards in that they vest on the third anniversary of the date of grant and are settled in common stock of the Company, subject to the NEO remaining employed with the Company continuously through the vesting date, and the NEO has the right to receive payments equivalent to the dividends paid on the common stock at the same rate and time as other stockholders; however, the NEO has no voting rights in respect of RSUs.

The vesting of the restricted shares and RSUs will accelerate in full upon a change in control. In addition, if an NEO terminates employment prior to the vesting date, the following rules will apply: (1) if an NEO is terminated by the Company for cause or by the NEO without good reason, all of the restricted shares or RSUs subject to the award will be forfeited to the Company, (2) if an NEO is terminated due to death, disability, normal retirement (on or after attainment of age 60), by the Company without cause or by the NEO for good reason, a number of restricted shares or RSUs will vest equal to the total number of shares subject to the award multiplied by a fraction, the numerator of which is the number of months following the date of grant during which the NEO was employed by the Company and the denominator of which is 36, and (3) notwithstanding clause (2) of this paragraph, if Messrs. Sheffield and Dove are terminated by the Company without cause or they terminate their employment for good reason, all of the restricted shares or RSUs subject to their awards will vest in full.

Pioneer Southwest Phantom Units

In general, the phantom unit awards vest on the third anniversary of the date of grant, subject to the NEO remaining employed with the Company or an affiliate continuously through the vesting date. Upon vesting, the phantom units entitled the holder to receive common units of Pioneer Southwest equal to the number of vested phantom units. The phantom units were granted with distribution equivalent rights, which means that, while an NEO holds phantom units, he was entitled to receive distributions on the common units underlying the phantom units at the same rate and time as limited partners of Pioneer Southwest. Any distributions received by the NEOs are vested upon receipt and are not subject to forfeiture. The vesting of the phantom units accelerate in full upon a change in control of the Company. In addition, if an NEO terminates employment with the Company or an affiliate prior to the vesting date, the rules described above with respect to restricted stock will also apply to the phantom units. As a result of the Company’s acquisition of Pioneer Southwest, each Pioneer Southwest phantom unit award was converted into an equivalent RSU of the Company, with adjustments made to the number of shares of the Company’s common stock to reflect the merger exchange ratio, but otherwise on the same terms and conditions as were applicable prior to the acquisition.

2013 Outstanding Equity Awards at Fiscal Year End

The following table sets forth, for each NEO, information regarding stock options, restricted stock, RSUs, performance units and Pioneer Southwest phantom units that were held as of December 31, 2013, including awards that were granted prior to 2013:



	Option Awards					Stock Awards
Name (a)	Number of Securities Underlying Unexercised Options (1)(#) Exercisable (b)	Number of Securities Underlying Unexercised Options (1)(#) Unexercisable (c)	Option Exercise Price ($) (e)		Option Expiration Date (f)	Number of Shares or Units of Stock that have not Vested (1)(#) (g)	Market Value of Shares or Units of Stock that have not Vested (1)($) (h)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested (1)(#) (i)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That have not Vested (1)($) (j)
Scott D. Sheffield	-	32,098 (2)		$98.69	02/15/2021	25,704 (4)		$4,731,335	43,883 (10)		$8,077,544
	-	36,232 (3)		$113.76	02/22/2022	28,085 (5)		$5,169,606	76,350 (11)		$14,053,745
						25,959 (6)		$4,778,273
						4,450 (7)		$819,112
						5,723 (8)		$1,053,433
						4,948 (9)		$910,778
Richard P. Dealy	-	11,213 (2)		$98.69	02/15/2021	8,980 (4)		$1,652,949	14,628 (10)		$2,692,576
	-	12,078 (3)		$113.76	02/22/2022	9,362 (5)		$1,723,263	24,703 (11)		$4,547,081
						8,399 (6)		$1,546,004
						23,404 (14)		$4,307,974
						1,554 (7)		$286,045
						1,907 (8)		$351,021
						1,601 (9)		$294,696
Mark S. Berg	7,120 (12)	-		$47.10	02/16/2020	5,612 (4)		$1,033,001	8,313 (10)		$1,530,174
	-	5,607 (2)		$98.69	02/15/2021	6,649 (5)		$1,223,881	14,598 (11)		$2,687,054
	-	6,863 (3)		$113.76	02/22/2022	5,839 (6)		$1,074,785
						13,298 (14)		$2,447,763
Chris J. Cheatwood	-	6,728 (2)		$98.69	02/15/2021	6,735 (4)		$1,239,711	9,975 (10)		$1,836,098
	-	8,235 (3)		$113.76	02/22/2022	7,979 (5)		$1,468,695	17,965 (11)		$3,306,818
						7,186 (6)		$1,322,727
						15,957 (14)		$2,937,205
Timothy L. Dove	44,000 (13)	-		$15.62	02/18/2019	15,574 (4)		$2,866,706	19,948 (10)		$3,671,828
	19,680 (12)	-		$47.10	02/16/2020	15,958 (5)		$2,937,389	34,808 (11)		$6,407,109
		15,558 (2)		$98.69	02/15/2021	13,923 (6)		$2,562,807
		16,470 (3)		$113.76	02/22/2022	31,915 (14)		$5,874,594

______________

(1)

Amounts in column (g) represent shares of the Company’s common stock underlying restricted stock or RSUs unvested as of December 31, 2013, and amounts in column (i) represent performance units which will vest, if at all, in amounts that depend on the relative performance of the Company’s common stock over a three-year performance period, all as described below. Dollar amounts in columns (h) and (j) are based on the closing price of $184.07 of the Company's common stock on December 31, 2013. With respect to performance units reported in columns (i) and (j), the number reported is calculated assuming maximum payout of each award. In addition to the vesting schedules described below, the vesting of all awards will accelerate upon a change in control, and the termination of the NEO's employment prior to the vesting date will affect the vesting of the award, all as described above in the section entitled "Narrative Disclosure for the 2013 Grants of Plan Based Awards Table."


(2)	This award of stock options vested in full on February 15, 2014, which was the third anniversary of the grant date, but these options were unexercisable on December 31, 2013.


(3)	This award of stock options vests in full on February 22, 2015, which is the third anniversary of the grant date.


(4)	This award of restricted stock, or RSUs in the case of Mr. Sheffield, vested in full on February 15, 2014, which was the third anniversary of the grant date, but was outstanding on December 31, 2013.


(5)	This award of restricted stock, or RSUs in the case of Mr. Sheffield, vests in full on February 22, 2015, which is the third anniversary of the grant date.


(6)	This award of restricted stock, or RSUs in the case of Mr. Sheffield, vests in full on February 20, 2016, which is the third anniversary of the grant date.


(7)	This award of Pioneer Southwest phantom units, as converted into RSUs of the Company, vested in full on February 15, 2014, which was the third anniversary of the grant date, but was outstanding on December 31, 2013.


(8)	This award of Pioneer Southwest phantom units, as converted into RSUs of the Company, vests in full on February 22, 2015, which is the third anniversary of the grant date.


(9)	This award of Pioneer Southwest phantom units, as converted into RSUs of the Company, vests in full on February 20, 2016, which is the third anniversary of the grant date.

(10)

This award of performance units was made in 2012 and has a three-year performance period (January 2012 to December 2014). The number of shares reported represents the number of performance units that would vest on December 31, 2014 if the Company’s relative TSR resulted in a ranking of first out of the twelve peer companies, which would be 250% of the "Target" number of performance units awarded, in accordance with the table in the section above entitled "Narrative Disclosure for the 2013 Grants of Plan-Based Awards Table." As of December 31, 2013, the Company’s relative TSR for this performance period would have resulted in a ranking of first place.

(11)

This award of performance units was made in 2013 and has a three-year performance period (January 2013 to December 2015). The conditions for vesting of this award are described above in "Narrative Disclosure for the 2013 Grants of Plan Based Awards Table." The number of shares reported represents the number of performance units that would vest on December 31, 2015 if the Company’s relative TSR resulted in a ranking of first out of the twelve peer companies, which would be 250% of the "Target" number of performance units awarded, in accordance with the table in the section above entitled "Narrative Disclosure for the 2013 Grants of Plan-Based Awards Table." As of December 31, 2013, the Company’s relative TSR for this performance period would have resulted in a ranking of first place.


(12)	This award of stock options vested in full on February 16, 2013, which was the third anniversary of the grant date, but was outstanding on December 31, 2012.


(13)	This award of stock options vested in full on February 18, 2012, which was the third anniversary of the grant date.


(14)	This retention award of restricted stock, or RSUs in the case of Mr. Dove, does not begin to vest until February 22, 2015, which is the third anniversary of the date of grant, at which time it begins vesting in equal one-third increments.

2013 Option Exercises and Stock Vested

The following table sets forth, for each NEO, information about exercises of stock options, the lapse of restrictions on stock awards and the vesting of performance units during 2013:



	Option Awards			Stock Awards
Name (a)	Number of Shares Acquired on Exercise (#) (b)		Value Realized on Exercise (1)($) (c)	Number of Shares Acquired on Vesting (#) (d)			Value Realized on Vesting ($) (e)
Scott D. Sheffield	44,000	$	4,382,280	45,156 40,163 24,144	(3) (4)	$ $ $	5,895,567 (2) 7,392,803 (3) 551,690 (4)
Richard P. Dealy	42,368	$	5,396,429	12,315 14,030 6,585	(3) (4)	$ $ $	1,607,846 (2) 2,582,502 (3) 150,467 (4)
Mark S. Berg	-	$	-	9,134 7,015	(3)	$ $	1,192,535 (2) 1,291,251 (3)
Chris J. Cheatwood	17,963	$	1,802,965	9,750 8,418	(3)	$ $	1,272,960 (2) 1,549,501 (3)
Timothy L. Dove	22,100	$	3,676,998	25,246 19,468	(3)	$ $	3,296,118 (2) 3,583,475 (3)

______________


(1)	The value realized per share acquired is based on the difference between the closing price per share of the Company's common stock on the date of exercise and the exercise price per share of the stock options.


(2)	The value realized with respect to vesting of restricted stock is based on the closing price per share of $130.56 of the Company's common stock on February 15, 2013, the most recent closing price of the Company’s common stock prior to the date of vesting of the awards on February 16, 2013.

(3)

These shares vested as of December 31, 2013, in respect of the performance unit awards granted in 2011, with the number of shares of stock earned with respect to such awards determined on the basis of the Company’s achievement of performance objectives for the performance period beginning January 1, 2011 and ending on December 31, 2013. For this performance period, the Company’s TSR resulted in a ranking of first place, providing a payout of 250 percent of the "Target" number of performance units awarded, in accordance with the table in the section above entitled "Narrative Disclosure for the 2013 Grants of Plan-Based Awards Table." The value realized with respect to these earned performance units is based on the closing price of $184.07 of the Company's common stock on December 31, 2013.


(4)	The number reported in column (d) is the number of common units of Pioneer Southwest that were issued (before tax) upon vesting of Pioneer Southwest phantom units. The value realized with respect to the vesting of the Pioneer Southwest phantom awards, as reported in column (e), is based on the closing price of $22.85 per Pioneer Southwest common unit on March 4, 2013, the date of vesting.

Pension Benefits

The Company does not sponsor or maintain any plans that provide for specified retirement payments or benefits, such as tax-qualified defined benefit plans or supplemental executive retirement plans, for its NEOs.

2013 Non-Qualified Deferred Compensation

The Company's NEOs participate in the 401(k) Plan, a Company-sponsored defined contribution retirement plan, and a non-qualified deferred compensation plan. The following table provides information about participation of each NEO in the Company's non-qualified deferred compensation plan:



Name (a)		Executive Contributions in Last FY (1) ($)(b)		Registrant Contributions in Last FY (2) ($)(c)		Aggregate Earnings in Last FY (3) ($)(d)		Aggregate Balance at Last FYE (4) ($)(f)
Scott D. Sheffield	$	95,600	$	95,600	$	2,970,193	$	8,789,678
Richard P. Dealy	$	65,850	$	43,900	$	337,740	$	1,997,737
Mark S. Berg	$	37,000	$	37,000	$	23,944	$	680,264
Chris Cheatwood	$	98,019	$	39,208	$	45,748	$	1,567,906
Timothy L. Dove	$	57,246	$	57,246	$	380,919	$	2,218,429

______________


(1)	The amounts reported in this column were deferred at the election of the NEO and are also included in the amounts reported in the Salary or Non-Equity Incentive Plan Compensation column of the "Summary Compensation Table" for 2013.


(2)	The amounts in this column are also included in the All Other Compensation column of the "Summary Compensation Table" for 2013.


(3)	The amounts in this column represent aggregate earnings on the investments made in the non-qualified deferred compensation plan that accrued during 2013 on amounts of salary and/or bonus deferred at the election of the NEO and the contributions made by the Company for each NEO pursuant to the Company's non-qualified deferred compensation plan.

(4)

The aggregate balance for each NEO reflects the cumulative value, as of December 31, 2013, of the contributions to the Company’s non-qualified deferred compensation plan made by that NEO and the Company for the NEO’s account, and any earnings on these amounts, since the NEO began participating in the plan. The Company has previously reported the Company contributions, executive contributions and above-market returns (to the extent the NEO’s compensation was required to be reported for the NEO pursuant to SEC rules) in its Summary Compensation Table since the 2006 fiscal year. The total amount previously reported in the Summary Compensation Table for each of the NEOs was as follows: Mr. Sheffield, $2,624,455; Mr. Dealy, $871,404; Mr. Berg, $422,766; Mr. Cheatwood, $873,457; and Mr. Dove, $989,505.

The non-qualified deferred compensation plan allows each participant to contribute up to 25 percent of base salary and 100 percent of annual cash bonus incentive payments. In addition, the Company may provide a matching contribution of 100 percent of the participant's contribution up to the first ten percent of an executive officer's base salary. The Company's matching contribution vests immediately.

The non-qualified deferred compensation plan permits each executive officer to make investment allocation choices for both the executive officer's contributions and the Company matching contributions made on the executive's behalf among the designated mutual funds offered as investment options under the non-qualified deferred compensation plan. The Company retains the right to maintain these investment choices as hypothetical investments or to actually invest the plan account pursuant to the executive officer's investment choices. To date, the Company has chosen to actually invest the funds in the investment options selected by the executive officers so that the investment returns are funded, but such funds remain assets subject to the claims of the Company's general creditors. If a participant fails to make an investment election, then amounts allocated to his or her account shall be deemed to be invested in the investments designated by the plan administrator from time to time; the default investment for the 2013 year was the Vanguard Target Retirement Fund that most closely matches the year in which the participant would retire. An executive is permitted to change his or her investment choices at any time. No earnings on amounts deferred under the non-qualified deferred compensation plan are above-market or preferential. The following table lists the mutual fund investment options for the non-qualified deferred compensation plan in 2013, all of which were also investments options available to participants in the 401(k) Plan for 2013, with the annual rate of return for each fund:



Investment Funds	Rate of Return	Investment Funds	Rate of Return
500 Index Fund Inv	32.18%	Target Retirement 2010	9.10%
American Funds EuroPacific Gr R4	20.58%	Target Retirement 2015	13.00%
Artisan Mid Cap Value Investor	35.80%	Target Retirement 2020	15.85%
Columbia Acorn International Z	22.33%	Target Retirement 2025	18.14%
Eagle Small Cap Value Inv	34.52%	Target Retirement 2030	20.49%
Extended Mkt Index Inv	38.19%	Target Retirement 2035	22.82%
Inflation-Protect Sec Inv	-8.92%	Target Retirement 2040	24.37%
Inter-Term Treasury Inv	-3.09%	Target Retirement 2045	24.37%
Invesco Real Estate Institutional	2.18%	Target Retirement 2050	24.34%
JPMorgan Small Cap Equity Sel	36.44%	Target Retirement 2055	24.33%
Loomis Sayles Bond Instl	5.88%	Target Retirement 2060	24.35%
Oppenheimer Developing Markets	8.85%	Target Retirement Income	5.87%
PIMCO Total Return Admin	-1.92%	Templeton Global Bond A	2.41%
Prime Money Mkt Fund	0.02%	Total Bond Mkt Index Inv	-2.26%
PRIMECAP Fund Investor	39.73%	Total Intl Stock Ix Inv	15.04%
Prudential Jennison Natural Resources	10.08%	Total Stock Mkt Idx Inv	33.35%
Small-Cap Value Index Admiral	36.58%	Wellington Fund Inv	19.66%
T. Rowe Price Mid-Cap Growth	36.89%	Windsor II Fund Inv	30.69%

A participant's vested benefits may, at the option of the participant, be distributed in one cash lump sum payment, in five annual installments or in ten annual installments. Participants elect to receive this account balance under the Company’s non-qualified deferred compensation plan either upon separation from service or the first day of the plan year following the participant’s separation from service. Payments upon separation from service will be delayed six months in accordance with Section 409A of the Code in the event a participant is a "specified employee" for purposes of Section 409A.

A participant may be entitled to make a withdrawal prior to his or her termination of employment if the plan administrator determines that the participant has experienced an unforeseeable financial emergency, to the extent necessary to satisfy the participant's needs. An unforeseeable emergency is defined in the plan as a severe financial hardship to the participant that results from: (a) an illness or accident of the participant, the participant’s spouse, the participant’s beneficiary or the participant’s dependent, (b) a loss of the participant’s property due to casualty, or (c) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant.

In the event of a change in control, the entire amount credited to a participant under the non-qualified deferred compensation plan will be paid to the participant in a single lump sum cash payment. The plan relies upon the definition of a "change in control" as it exists in the Company’s 2006 Long-Term Incentive Plan at the time of occurrence of the change in control.

If a participant dies prior to the complete payment of his account, the entire amount remaining under the non-qualified deferred compensation plan will be paid in a single lump sum cash payment to the participant’s beneficiary in the first calendar quarter following the participant’s death.

Potential Payments Upon Termination or Change in Control

The Company is party to severance agreements and change in control agreements with each of its executive officers listed in the section entitled "Directors and Executive Officers." Salaries and annual cash bonus incentive payments are set by the Compensation Committee independent of these agreements and the Compensation Committee can increase or decrease base salaries and annual cash bonus opportunities at its discretion. See "Compensation Discussion and Analysis—Elements of the Company’s Compensation Program" for more information.

Equity Awards

For information about accelerated vesting of various equity awards, see the Narrative Disclosure for the 2013 Grants of Plan-Based Awards Table and the footnotes that follow the tables below quantifying payments under various termination scenarios and upon a change in control.

Severance Agreements

The severance agreements provide for the following payments upon a termination of employment due to death, disability or a normal retirement: (1) any earned but unpaid salary, (2) all accrued or vested obligations due to the executive pursuant to the Company’s employee benefit plans at the time of the termination, including any compensation that had previously been deferred by the executive, and (3) a separation payment in the amount of the executive officer’s base salary.

The severance agreements also provide that, if the executive officer terminates employment for good reason or if an executive’s employment with the Company terminates other than for cause, death, disability or normal retirement, the Company must pay the executive officer a separation payment in addition to earned salary and vested benefits. The separation payment is an amount equal to the sum of (1) one times the executive officer's base salary (three times base salary for Mr. Sheffield and 2.5 times base salary in the case of Mr. Dove), (2) 18 times the monthly cost for the executive officer to continue coverage for himself and his eligible dependents under the Company's group medical plans (36 times the monthly cost in the case of Mr. Sheffield and 30 times the monthly cost in the case of Mr. Dove), and (3) one-twelfth of the executive officer's base salary if the date of termination is less than 30 days following the notice of termination and the executive officer's employment is terminated by the Company. In the case of Messrs. Sheffield and Dove, the severance agreements also provide for the immediate vesting of certain equity awards under the Company's 2006 Long-Term Incentive Plan (for more information, see the footnotes to the tables quantifying potential payments in this section). Payment of an executive’s annual cash bonus incentive for the year of termination on any type of termination, other than a change in control termination (discussed below), is at the discretion of the Compensation Committee. The severance agreements terminate upon a change in control of the Company.

The severance agreements contain certain confidentiality, non-solicitation and non-interference provisions. The confidentiality provisions generally extend until three years following an executive’s termination of employment, while the non-solicitation of employees and non-interference with business relationships provisions extend for two years following the executive’s termination date.

Change in Control Agreements

The change in control agreements provide that, if the executive officer terminates employment (1) for good reason or (2) if an executive officer's employment with the Company terminates other than for cause, death, disability or normal retirement, in either case in connection with or within two years following a change in control, then the

Company must (A) pay the executive officer a separation payment, (B) provide the executive officer with continued group medical coverage at a cost equivalent to a similarly situated active employee for approximately three years (in the case of Messrs. Sheffield and Dove, until the date the executive is eligible for full medical benefits under the provisions of Medicare), (C) pay earned salary and vested benefits, and (D) fully vest all the executive officer's outstanding equity awards under the Company's 2006 Long-Term Incentive Plan. The separation payment is an amount equal to the sum of (1) 2.99 times the sum of the executive officer's base salary and target bonus determined in accordance with the terms of each agreement, (2) a pro-rated portion of the defined target bonus based on the days elapsed in the calendar year of termination, and (3) one-twelfth of the executive officer's annual base salary if the date of termination is less than 30 days following the notice of termination and the executive officer's employment is terminated by the Company.

The agreements do not provide a "gross-up" payment for excise taxes that might be imposed on payments under the change in control agreements by Section 4999 of the Code. The agreements contain a best-of-net provision, so that, in the event that excise taxes would be imposed on payments under the change in control agreements, the executive officer will either (1) pay the excise tax without assistance from the Company or (2) will have the payments reduced to an amount at which an excise tax no longer applies, based on which result is more favorable to the executive officer on an after-tax basis.

If the Company terminates an executive officer without cause following a potential change in control and if a change in control actually occurs within 12 months following the termination, the executive officer will be entitled upon the change in control to receive the difference between (1) any payments that the executive already received from the Company upon the executive’s actual termination date, and (2) those payments or benefits that would have been paid to the executive if the executive had been terminated without cause immediately following the change in control, plus a payment equal to the value of the executive officer's outstanding equity-based awards that were forfeited when his or her employment was terminated. If, after a change in control, an executive officer terminates employment because he is required to relocate more than 50 miles, but is not otherwise entitled to terminate employment for good reason, then the Company must (1) pay the executive officer a reduced separation payment equal to one times his or her annualized base salary, (2) pay the executive officer earned salary and vested benefits, and (3) provide the executive officer with continued coverage for one year under the Company’s group medical benefit plans. The change in control agreements continue for two years following a change in control that occurs during the term of the agreement.

The change in control agreements also provide for a payment equal to one times the executive officer's annual base salary in the event of his or her death, disability or normal retirement within two years following a change in control.

All payments, other than continued medical benefits, received under both the severance agreements and the change in control agreements are distributed as a lump sum. Cash separation payments under the severance agreements will only be made following the executive officer’s execution of a general release in favor of the Company. While the lump sum payments will be made within a ten day period following a termination of employment where possible, in the event that the individual is considered a "specified employee" pursuant to the regulations promulgated under Section 409A of the Code, certain payments or benefits may be delayed for a period of six months as required by the federal tax regulations in order to prevent an excise tax of 20 percent from being imposed on such payments.

Definitions. For purposes of the severance and change in control agreements, the terms set forth below generally have the meanings described below:

A "change in control" generally includes the occurrence of any of the following events or circumstances: (1) a person or group acquires securities of the Company that, together with any other securities held by such person, constitutes 40 percent or more of either (x) the then outstanding shares of the Company's common stock or (y) the

combined voting power of the then outstanding voting securities of the Company, except for acquisitions directly from the Company and acquisitions by an employee benefit plan sponsored or maintained by the Company; (2) a majority of the members of the Board changes, other than new members elected or nominated by at least a majority of the then-current Board, absent an election contest or similar proxy dispute; (3) the Company merges or engages in a similar transaction, or sells all or substantially all of its assets, unless the Company's stockholders prior to the transaction own more than half of the voting interest of the Company or the resulting entity (in substantially the same ratios) after the transaction, and neither of the events in items (1) and (2) above has occurred for the Company or the resulting entity; or (4) the Company's stockholders approve a complete liquidation or dissolution of the Company. The change in control agreements also restrict the definition of a "change in control" to a change in control event for purposes of Section 409A of the Code in the event that an executive officer would receive payments under the agreement due to a termination of employment following a "potential change in control" but prior to the occurrence of a "change in control."

A "potential change in control" will be deemed to have occurred if (1) a person or group announces publicly an intention to effect a change in control, or commences an action that, if successful, could reasonably be expected to result in a change in control; (2) the Company enters into an agreement that would constitute a change in control; or (3) any other event occurs which the Board declares to be a potential change in control.

"Cause" generally means any of the following circumstances: (1) the officer's failure to substantially perform his or her duties, unless the failure is due to physical or mental incapacity, or to comply with a material written policy of the Company; (2) the officer's engaging in an act of gross misconduct that results in, or is intended to result in, material damage to the Company's business or reputation; (3) the officer's failure to cooperate in connection with an investigation or proceeding into the business practices or operations of the Company; or (4) the officer's conviction of a felony or a crime or misdemeanor involving moral turpitude or financial misconduct. In addition, in the severance agreements, "cause" includes a material violation by the officer of the provisions of the confidentiality and non-solicitation restrictions in the agreement.

A "disability" shall mean the employee’s physical or mental impairment or incapacity of such severity that, in the opinion of the Company’s chosen physician, the employee is unable to continue to perform his or her duties. A "disability" will also be deemed to have occurred if the employee becomes entitled to long-term disability benefits under any of the Company’s employee benefit plans.

"Good reason," in the change in control agreements, generally means any of the following circumstances: (1) the assignment to the officer of duties materially inconsistent with his or her position as compared to his or her duties immediately prior to the potential change in control or change in control; (2) a reduction in the officer's base salary; or (3) the failure to provide the officer the opportunity to earn annual bonuses and long-term incentive compensation, and to participate in retirement, deferred compensation, medical and similar benefits, all in a manner consistent with the Company's then existing practices.

The definition of "good reason" in Mr. Sheffield's and Mr. Dove's severance agreements is substantially similar to the definition in the change in control agreement, except that, in Mr. Sheffield's agreement, "good reason" also includes the failure of the Company to nominate him for re-election to the Board, or any failure of the stockholders to re-elect him to the Board, unless due to his death, disability, termination for cause or voluntary resignation. In the severance agreements for officers other than Messrs. Sheffield and Dove, "good reason" generally means a demotion of the officer to an officer position junior to his then existing position, or to a non-officer position, or a reduction in base salary that is not a Company-wide reduction and that is greater than 80 percent, or any reduction in base salary that is greater than 65 percent.

An executive will be considered eligible for "normal retirement" upon reaching the age of 60 years.

The following tables quantify the payments and benefits provided to the NEOs upon the events specified below. The value of the accelerated vesting or settlement of equity awards is based on the closing price of $184.07 of the Company's common stock on December 31, 2013.

Scott D. Sheffield. The following table shows, as of December 31, 2013, the estimated potential payments and benefits that would be received by Mr. Sheffield upon the termination of his employment in each of the circumstances indicated in the table.



Benefits and Payments Upon Termination (1)	Voluntary Termination or Termination for Cause		Termination Not for Cause or Termination for Good Reason		Normal Retirement or Death/Disability		Change in Control Termination
Long-Term Incentive Compensation:
Restricted Stock/RSUs (2)	$	-	$	17,462,537	$	10,625,349	$	17,462,537
Performance Units (3)	$	-	$	22,136,448	$	10,072,236	$	22,136,448
Stock options (2)	$	-	$	5,287,999	$	4,145,099	$	5,287,999
Benefits & Perquisites:
Severance Payment	$	-	$	2,868,000	$	956,000	$	5,716,881
Prorated Bonus Payment (4)	$	-	$	956,000	$	956,000	$	956,000
Medical Benefit Continuation (5)	$	-	$	38,889	$	-	$	48,730
Pay in lieu of 30-day Notice (6)	$	-	$	79,667	$	-	$	79,667
Best-of-Net Tax Adjustment
Total	$	-	$	48,829,540	$	26,754,684	$	51,688,262

______________

(1)

The benefits and payments quantified in the table do not contemplate the payments that the Company is obligated to make to the executive officer (i) if the Company terminates the executive officer without cause following a potential change in control or a change in control occurs within 12 months following the termination, or (ii) if the executive officer terminates employment following a change in control because he is required to relocate more than 50 miles, in both cases as described in the summary of the change in control agreements set forth above. Additionally, the benefits and payments quantified herein have been determined as of December 31, 2013, and therefore do not contemplate the effect on the long-term incentive compensation component resulting from the vesting in February 2014 of 25,704 RSUs and the grants of awards made in February 2014 under the Company’s Long Term Incentive Plan.

(2)

Unvested RSU and stock option awards automatically vest upon a change in control, regardless of whether employment is subsequently terminated. Unvested RSU and stock option awards also automatically vest upon a termination not for cause or a termination for good reason. In the case of normal retirement, death or disability, vesting of the awards is accelerated pro rata to the end of the month of termination.

(3)

Unvested performance unit awards automatically vest upon a change in control with the award of shares subject to performance measured on the date of the change in control, regardless of whether employment is subsequently terminated. Unvested performance unit awards also automatically vest with the award of shares subject to performance measured at the end of the three-year performance period upon a termination not for cause or a termination for good reason. In the case of normal retirement, performance unit awards vest pro rata to the end of the month with the award of shares subject to performance measured at the end of the three-year performance period. In the case of death or disability, unvested performance unit awards vest pro rata to the end of the month with shares paid at target (because the performance units would be measured at target and not based on assumed performance, the amount shown in the table for the estimated potential payments of the performance units would actually be $4,030,506). Except in the case of a termination due to death or disability, the number of shares underlying performance units is calculated assuming the rankings specified in footnotes (10) and (11) of the 2013 Outstanding Equity Awards at Fiscal Year End table.


(4)	Other than in connection with a change in control termination, payment of a bonus is subject to Compensation Committee discretion. This table assumes a bonus payment in the amount indicated.

(5)

These amounts equal the cost of continued medical coverage for a period of 36 months in the event of a termination not for cause or a termination for good reason. In the event of a termination in connection with a change in control, the change in control agreements provide continued coverage until Mr. Sheffield is eligible to receive Medicare benefits; thus, the period of continued coverage is three years and six months as of December 31, 2013.


(6)	This amount is payable only if employment is terminated by the Company and the date of termination is less than 30 days after the date of notice of termination.

Richard P. Dealy. The following table shows, as of December 31, 2013, the estimated potential payments and benefits that would be received by Mr. Dealy upon the termination of his employment in each of the circumstances indicated in the table.



Benefits and Payments Upon Termination (1)	Voluntary Termination or Termination for Cause		Termination Not for Cause or Termination for Good Reason		Normal Retirement or Death/Disability			Change in Control Termination
Long-Term Incentive Compensation:
Restricted Stock (2)	$	-	$	3,610,196	$	3,610,196	$	5,853,978
Performance Units (3)	$	-	$	3,311,847	$	3,311,847	$	7,241,200
Stock options (2)	$	-	$	1,423,218	$	1,423,218	$	1,806,570
Retention Award (2)	$	-	$	-	$	-	$	4,307,974
Benefits & Perquisites:
Severance Payment	$	-	$	445,000	$	445,000	$	2,461,966
Prorated Bonus Payment (4)	$	-	$	445,000	$	445,000	$	378,400
Medical Benefit Continuation (5)	$	-	$	28,372	$	-	$	48,091
Pay in lieu of 30-day Notice (6)	$	-	$	37,083	$	-	$	37,083
Total	$	-	$	9,300,716	$	9,235,261	$	22,135,262

______________

(1)

The benefits and payments quantified in the table do not contemplate the payments that the Company is obligated to make to the executive officer (i) if the Company terminates the executive officer without cause following a potential change in control or a change in control occurs within 12 months following the termination, or (ii) if the executive officer terminates employment following a change in control because he is required to relocate more than 50 miles, in both cases as described in the summary of the change in control agreements set forth above. Additionally, the benefits and payments quantified herein have been determined as of December 31, 2013, and therefore do not contemplate the effect on the long-term incentive compensation component resulting from the vesting in February 2014 of 8,980 shares of restricted stock and the grants of awards made in February 2014 under the Company’s Long Term Incentive Plan.

(2)

Unvested restricted stock, stock option, retention and RSU awards automatically vest upon a change in control, regardless of whether employment is subsequently terminated. In the case of a termination not for cause, a termination for good reason, or normal retirement, death or disability, vesting of the awards, other than retention awards, is accelerated pro rata to the end of the month of termination. Upon a termination as described in the preceding sentence prior to the third anniversary of the date of grant, the restricted shares subject to the retention awards are forfeited to the Company. As a result, assuming a triggering event on December 31, 2013, only a change of control would result in vesting with respect to the restricted shares subject to the retention awards.

(3)

Unvested performance unit awards automatically vest upon a change in control with the award of shares subject to performance measured on the date of the change in control, regardless of whether employment is subsequently terminated. Unvested performance unit awards also automatically vest pro rata to the end of the month with the award of shares subject to performance measured at the end of the three-year performance period upon a termination not for cause or a termination for good reason. In the case of normal retirement, performance unit awards vest pro rata to the end of the month with the award of shares subject to performance measured at the end of the three-year performance period. In the case of death or disability, unvested performance unit awards vest pro rata to the end of the month with shares paid at target (because the performance units would be measured at target and not based on assumed performance, the amount shown in the table for the estimated potential payments of the performance units would actually be $1,325,271). Except in the case of a termination due to death or disability, the number of shares underlying performance units is calculated assuming the rankings specified in footnotes (10) and (11) of the 2013 Outstanding Equity Awards at Fiscal Year End table.


(4)	Other than in connection with a change in control termination, payment of a bonus is subject to Compensation Committee discretion. This table assumes a bonus payment in the amount indicated.


(5)	These amounts equal the cost of continued medical coverage for a period of 18 months in the event of a termination not for cause or a termination for good reason pursuant to the severance agreements. In the event of a termination in connection with a change in control, the change in control agreements provide continued coverage for a period of 36 months.


(6)	This amount is payable only if employment is terminated by the Company and the date of termination is less than 30 days after the date of notice of termination.

Mark S. Berg. The following table shows, as of December 31, 2013, the estimated potential payments and benefits that would be received by Mr. Berg upon the termination of his employment in each of the circumstances indicated in the table.



Benefits and Payments Upon Termination (1)	Voluntary Termination or Termination for Cause		Termination Not for Cause or Termination for Good Reason		Normal Retirement or Death/Disability		Change in Control Termination
Long-Term Incentive Compensation:
Restricted Stock (2)	$	-	$	2,022,091	$	2,022,091	$	3,331,667
Performance Units (3)	$	-	$	1,916,679	$	1,916,679	$	4,218,043
Stock options (2)	$	-	$	747,123	$	747,123	$	961,263
Retention Award (2)	$	-	$	-	$	-	$	2,447,763
Benefits & Perquisites:
Severance Payment	$	-	$	395,000	$	395,000	$	2,058,117
Prorated Bonus Payment (4)	$	-	$	316,000	$	316,000	$	293,333
Medical Benefit Continuation (5)	$	-	$	28,372	$	-	$	48,091
Pay in lieu of 30-day Notice (6)	$	-	$	32,917	$	-	$	32,917
Total	$	-	$	5,458,182	$	5,396,893	$	13,391,194

______________

(1)

The benefits and payments quantified in the table do not contemplate the payments that the Company is obligated to make to the executive officer (i) if the Company terminates the executive officer without cause following a potential change in control or a change in control occurs within 12 months following the termination, or (ii) if the executive officer terminates employment following a change in control because he is required to relocate more than 50 miles, in both cases as described in the summary of the change in control agreements set forth above. Additionally, the benefits and payments quantified herein have been determined as of December 31, 2013, and therefore do not contemplate the effect on the long-term incentive compensation component resulting from the vesting in February 2014 of 5,612 shares of restricted stock and the grants of awards made in February 2014 under the Company’s Long Term Incentive Plan.

(2)

Unvested restricted stock, stock option and retention awards automatically vest upon a change in control, regardless of whether employment is subsequently terminated. In the case of a termination not for cause, a termination for good reason, or normal retirement, death or disability, vesting of the awards, other than retention awards, is accelerated pro rata to the end of the month of termination. Upon a termination as described in the preceding sentence prior to the third anniversary of the date of grant, the restricted shares subject to the retention awards are forfeited to the Company. As a result, assuming a triggering event on December 31, 2013, only a change of control would result in vesting with respect to the restricted shares subject to the retention awards.

(3)

Unvested performance unit awards automatically vest upon a change in control with the award of shares subject to performance measured on the date of the change in control, regardless of whether employment is subsequently terminated. Unvested performance unit awards also automatically vest pro rata to the end of the month with the award of shares subject to performance measured at the end of the three-year performance period upon a termination not for cause or a termination for good reason. In the case of normal retirement, performance unit awards vest pro rata to the end of the month with the award of shares subject to performance measured at the end of the three-year performance period. In the case of death or disability, unvested performance unit awards vest pro rata to the end of the month with shares paid at target (because the performance units would be measured at target and not based on assumed performance, the amount shown in the table for the estimated potential payments of the performance units would actually be $766,978). Except in the case of a termination due to death or disability, the number of shares underlying performance units is calculated assuming the rankings specified in footnotes (10) and (11) of the 2013 Outstanding Equity Awards at Fiscal Year End table.


(4)	Other than in connection with a change in control termination, payment of a bonus is subject to Compensation Committee discretion. This table assumes a bonus payment in the amount indicated.


(5)	These amounts equal the cost of continued medical coverage for a period of 18 months in the event of a termination not for cause or a termination for good reason pursuant to the severance agreements. In the event of a termination in connection with a change in control, the change in control agreements provide continued coverage for a period of 36 months.


(6)	This amount is payable only if employment is terminated by the Company and the date of termination is less than 30 days after the date of notice of termination.

Chris J. Cheatwood. The following table shows, as of December 31, 2013, the estimated potential payments and benefits that would be received by Mr. Cheatwood upon the termination of his employment in each of the circumstances indicated in the table.



Benefits and Payments Upon Termination (1)	Voluntary Termination or Termination for Cause		Termination Not for Cause or Termination for Good Reason		Normal Retirement or Death/Disability		Change in Control Termination
Long-Term Incentive Compensation:
Restricted Stock (2)	$	-	$	2,435,798	$	2,435,798