UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, DC 20549

 

SCHEDULE 14A INFORMATION

 

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Amendment No.    )

 

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SCHLUMBERGER N.V. (SCHLUMBERGER LIMITED)

 

 

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Notice of 2019 Annual General Meeting of Stockholders

 

 

 

 

April 3, 2019

10:00 a.m. Curaçao time

Avila Beach Hotel, Penstraat 130, Willemstad, Curaçao

 

ITEMS OF BUSINESS

 

	1.	Election of the 10 director nominees named in this proxy statement.
	2.	Approval of the advisory resolution regarding our executive compensation.
	3.	Report on the course of business during the year ended December 31, 2018; approval of our consolidated balance sheet as at December 31, 2018; our consolidated statement of income for the year ended December 31, 2018; and our Board of Directors’ declarations of dividends in 2018, as reflected in our 2018 Annual Report to Stockholders.
	4.	Ratification of the appointment of PricewaterhouseCoopers LLP as our independent auditors for 2019.
	5.	Approval of an amended and restated 2004 Stock and Deferral Plan for Non-Employee Directors.

 

Such other matters as may properly be brought before the meeting.

 

RECORD DATE

 

February 13, 2019

 

PROXY VOTING

 

Your vote is very important. Whether or not you plan to attend the annual general meeting in person, please (i) sign, date and promptly return the enclosed proxy card in the enclosed envelope, or (ii) grant a proxy and give voting instructions by telephone or internet, so that you may be represented at the meeting. Voting instructions are provided on your proxy card or on the voting instruction form provided by your broker.

 

Brokers cannot vote for Items 1, 2 or 5 without your instructions.

 

February 21, 2019

 

By order of the Board of Directors,

 

 

 

Alexander C. Juden

Secretary

 

Important Notice Regarding the Availability of Proxy Materials for the Annual General Meeting of Stockholders to Be Held on April 3, 2019:   This proxy statement, along with our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and our 2018 Annual Report to Stockholders, are available free of charge on our website at http://investorcenter.slb.com.

Table of Contents

 

General Information		5
ITEM 1. Election of Directors		7
Corporate Governance		13
Policy Against Lobbying and Political Contributions		14
Our Commitment to Stewardship		14
Communication with Board		15
Shareholder Engagement		15
Corporate Governance Guidelines		16
Board Independence		16
Board Tenure		16
Director Nominations		17
Board Adoption of Proxy Access		18
Board Leadership Structure		18
The Board’s Role in Risk Oversight		19
Meetings of the Board of Directors and its Committees		20
Board Committees		20
Director Attendance at 2018 Annual General Meeting		24
Policies and Procedures for Approval of Related Person Transactions		24
Code of Conduct		24
ITEM 2.	Advisory Resolution to Approve Our Executive Compensation	25
Compensation Discussion and Analysis		26
2018 — Executive Overview		26
Stockholder Outreach; Changes to our Executive Compensation Program		26
Overview of Compensation Decisions for 2018		28
Our Executive Compensation Best Practices		28
Framework for Setting Executive Compensation in 2018		29
Elements of Total Direct Compensation; 2018 Decisions		34
Other Aspects of our Executive Compensation Framework		41
Long-Term Equity Awards — Granting Process		46
Executive Stock Ownership Guidelines		46
Other Executive Benefits and Policies		47
Impact of Tax Treatment		48
Compensation Committee Report		48
Executive Compensation Tables and Accompanying Narrative		49
Nonqualified Deferred Compensation for Fiscal Year 2018		57
Pay Ratio of CEO to Median Employee		58
Potential Payments Upon Termination or Change in Control for Fiscal Year 2018		58
Director Compensation in Fiscal Year 2018		62
Director Stock Ownership Guidelines		63
Equity Compensation Plan Information		64
ITEM 3.	Approval of Financial Statements and Dividends	65
ITEM 4.	Ratification of Appointment of Independent Auditors for 2019	66
Audit Committee Report		67
ITEM 5.	Approval of the Amendment and Restatement of the 2004 Stock and Deferral Plan for Non-Employee Directors	68
Stock Ownership Information		71
Security Ownership by Management		71
Other Information		73
Appendix A		A-1
Appendix B		B-1

General Information

February 21, 2019

 

	Items to be Voted on at the Annual General Meeting
	Agenda Item			Board Recommendation
	Item 1	Election of the 10 director nominees named in this proxy statement.		FOR
	Item 2	Approval of the advisory resolution regarding our executive compensation.		FOR
	Item 3	Approval of our consolidated balance sheet as at December 31, 2018, our consolidated statement of income for the year ended December 31, 2018, and the declarations of dividends by our Board in 2018.		FOR
	Item 4	Ratification of the appointment of PricewaterhouseCoopers LLP as our independent auditors for 2019.		FOR
	Item 5	Approval of an amended and restated 2004 Stock and Deferral Plan for Non-Employee Directors.		FOR

 

General

 

This proxy statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of Schlumberger Limited (Schlumberger N.V.) of proxies to be voted at its 2019 annual general meeting of stockholders, which will be held at the Avila Beach Hotel, Penstraat 130, Willemstad, Curaçao, on Wednesday, April 3, 2019 beginning at 10:00 a.m., Curaçao time, and at any postponement(s) or adjournment(s) thereof.

 

In this Proxy Statement, we may also refer to Schlumberger Limited and its subsidiaries as “we,” “our,” “the Company” or “Schlumberger.”

 

To be admitted to the meeting, stockholders of record and beneficial owners as of the close of business on the record date for the meeting, February 13, 2019, must present a passport or other government-issued identification bearing a photograph and, for beneficial owners, proof of ownership as of the record date, such as the Notice of Internet Availability, top half of the proxy card or voting instruction card that was sent to you with this proxy statement.

 

The mailing date of this proxy statement is February 21, 2019. Business at the meeting will be conducted in accordance with the procedures determined by the Chairman of the meeting and will be limited to matters properly brought before the meeting by or at the direction of our Board of Directors or by a stockholder.

 

We are providing our 2018 Annual Report to Stockholders concurrently with this proxy statement. You should refer to its contents in considering agenda Item 3.

 

Proxy Materials are Available on the Internet

 

This year we are using an SEC rule that allows us to use the internet as the primary means of furnishing proxy materials to shareholders. We are sending a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) to our stockholders with instructions on how to access the proxy materials online or request a printed copy of the materials.

 

Stockholders may follow the instructions in the Notice of Internet Availability to elect to receive future proxy materials in print by mail or electronically by email. We encourage stockholders to take advantage of the availability of the proxy materials online to help reduce the environmental impact of our annual meetings.

 

Our proxy materials are also available at http://investorcenter.slb.com.

 

Record Date; Proxies

 

Each stockholder of record at the close of business on the record date, February 13, 2019, is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on with respect to each share registered in the stockholder’s name. A stockholder of record is a person or entity who held shares on that date registered in its name on the records of Computershare Trust Company, N.A. (“Computershare”), Schlumberger’s stock transfer agent. Persons who held shares on the record date through a broker, bank or other nominee are referred to as beneficial owners.

 

Shares cannot be voted at the meeting unless the owner of record is present in person or is represented by proxy. Schlumberger is incorporated in Curaçao and, as required by Curaçao law, meetings of stockholders are held in Curaçao. Because many stockholders cannot personally attend the meeting, it is necessary that a large number be represented by proxy.

 

Shares Outstanding

 

On February 13, 2019, there were 1,385,972,615 shares of Schlumberger common stock outstanding and entitled to vote.

 

Schlumberger Limited  2019 Proxy Statement

5

Quorum

 

Holders of at least one-half of the outstanding shares entitling the holders thereof to vote at the meeting must be present in person or by proxy to constitute a quorum for the taking of any action at the meeting.

 

Abstentions and proxies submitted on your behalf by brokers, banks or other holders of record that do not indicate a vote because they do not have discretionary voting authority and have not received instructions from the beneficial owner of the shares as to how to vote on a proposal (so-called “broker non-votes”) will be considered as present for quorum purposes. If a quorum is not present at the meeting, the Board may call a second general meeting of stockholders, at which the quorum requirement will not apply.

 

Votes Required to Adopt Proposals

 

To be elected, director nominees must receive a majority of votes cast (the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee). Approval of each of the other matters on the agenda also requires the affirmative vote of the majority of votes cast.

 

Important Voting Information for Beneficial Owners

 

If your Schlumberger shares are held for you in street name (i.e. you own your shares through a brokerage, bank or other institutional account), you are considered the beneficial owner of those shares, but not the record holder. This means that you vote by providing instructions to your broker rather than directly to Schlumberger. Unless you provide specific voting instructions, your broker is not permitted to vote your shares on your behalf, except on Item 3 and Item 4.

 

Effect of Abstentions and Broker Non-Votes

 

Brokers holding shares must vote according to specific instructions they receive from the beneficial owners of those shares. If brokers do not receive specific instructions, brokers may in some cases vote the shares in their discretion. However, the New York Stock Exchange (the “NYSE”) precludes brokers from exercising voting discretion on other proposals without specific instructions from the beneficial owner, as follows:

 

	•	Discretionary Items. Under NYSE rules, brokers will have discretion to vote on both Item 3 (approval of financial statements and dividends) and Item 4 (ratification of appointment of independent auditors for 2019) without instructions from the beneficial owners.
	•	Nondiscretionary Items. Brokers, banks or other holders of record cannot vote on Items 1 (election of directors), 2 (advisory vote to approve executive compensation) or 5 (approval of amendment and restatement of our 2004 Stock and Deferral Plan for Non-Employee Directors) without instructions from the beneficial owners. Therefore, if your shares are held in street name and you do not instruct your broker, bank or other holder of record how to vote on the election of directors, the advisory vote to approve executive compensation, or our amended and restated 2004 Stock and Deferral Plan for Non-Employee Directors, your shares will not be voted on those matters.

 

Abstentions and broker non-votes are not considered as votes cast and will not be counted in determining the outcome of the vote on the election of directors or on any of the other proposals, except that for purposes of satisfying NYSE rules, abstentions are counted in the denominator for determining the total votes cast on Item 5.

 

How to Vote

 

Stockholders with shares registered in their names with Computershare may authorize a proxy:

 

	by the internet at the following internet address: http://www.proxyvote.com;
	telephonically by calling 1-800-690-6903; or
	by completing and mailing their proxy card.

 

The internet and telephone voting facilities for stockholders of record will close at 11:59 p.m. Eastern time on Tuesday, April 2, 2019. The internet and telephone voting procedures have been designed to authenticate stockholders and to allow you to vote your shares and to confirm that your instructions have been properly recorded.

 

A number of banks and brokerage firms participate in programs that also permit beneficial stockholders to direct their vote by the internet or telephone. If you are a beneficial owner whose shares are held in an account at a bank or brokerage firm that participates in such a program, you may direct the vote of those shares by the internet or telephone by following the instructions on the voting form.

 

All shares entitled to vote and represented by properly executed proxies received prior to the meeting and not revoked will be voted at the meeting in accordance with your instructions. If you are a stockholder with shares registered in your name with Computershare and you submit a properly executed proxy card but do not direct how to vote on each item, the persons named as proxies will vote as the Board recommends on each proposal.

 

By providing your voting instructions promptly, you may save us the expense of a second mailing.

 

Changing Your Vote or Revoking Your Proxy

 

If you are a stockholder of record, you can change your vote or revoke your proxy at any time by timely delivery of a properly executed, later-dated proxy (including an internet or telephone vote) or by voting by ballot at the meeting. If you hold shares through a broker, bank or other holder of record, you must follow the instructions of your broker, bank or other holder of record to change or revoke your voting instructions.

 

 

Schlumberger Limited  2019 Proxy Statement

6

ITEM 1.

Election of Directors

 

All of our directors are elected annually at our annual general meeting of stockholders. Our stockholders are requested to elect 10 nominees to the Board, each to hold office until the next annual general meeting of stockholders and until a director’s successor is elected and qualified or until a director’s death, resignation or removal. Each of the nominees is now a director and was previously elected by our stockholders at the 2018 annual general meeting of stockholders, except for Dr. Mitrova and Mr. Papa, who were both appointed by the Board to serve as directors effective October 2018, based upon the recommendations of the Nominating and Governance Committee of the Board.

 

Having exceeded the normal retirement age of 70 under our Corporate Governance Guidelines, V. Maureen Kempston Darkes will not be standing for re-election at our annual general meeting of stockholders. Our Board extends gratitude to Ms. Kempston Darkes for four years of service as a member of the Board. Michael Marks also will not stand for re-election at our annual general meeting of stockholders. Our Board extends gratitude to Mr. Marks for 13 years of service as a member of the Board.

 

All of the nominees for election have consented to being named in this proxy statement and to serve if elected. If any nominee is unable or unwilling to serve, the Board may designate a substitute nominee. If the Board designates a substitute nominee, proxies may be voted for that substitute nominee. The Board knows of no reason why any nominee will be unable or unwilling to serve if elected.

 

Shares represented by properly executed proxies will be voted, if authority to do so is not withheld, for the election of each of the 10 nominees named below.

 

At our 2016 annual general meeting of stockholders, our stockholders voted to fix the number of directors constituting the Board at 12, as permitted under our Articles of Incorporation. However, because Ms. Kempston Darkes and Mr. Marks are not standing for re-election, only 10 directors have been nominated for election at the 2019 annual general meeting of stockholders. The Board believes that it is advisable and in the best interest of our stockholders for the authorized number of directors constituting the Board to remain at 12. This will allow the Board to conduct a search for, and add, up to two additional directors during the year who have not yet been identified at the time of our 2019 annual general meeting.

 

At this annual general meeting, votes may not be cast for a greater number of persons than the number of director nominees named in this proxy statement.

 

Required Vote

 

Each director nominee must receive a majority of the votes cast to be elected. If you hold your shares in street name, please be aware that brokers, banks and other holders of record do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker, bank or other holder of record how to vote on this proposal, they will deliver a non-vote on this proposal.

 

The Board of Directors Recommends a Vote FOR All Director Nominees.

 

Director Nominees

 

The Board believes that each director nominee possesses the qualities and experience that the Nominating and Governance Committee believes that nominees should possess, as described in detail below in the section entitled “Corporate Governance—Director Nominations” beginning on page 17. The Board seeks out, and the Board is comprised of, individuals whose background and experience complement those of other Board members. The nominees for election to the Board, together with biographical information furnished by each of them and information regarding each nominee’s director qualifications, are set forth on the following pages.

 

There are no family relationships among any executive officers and directors of the Company.

 

Schlumberger Limited  2019 Proxy Statement

7

Peter L.S. Currie

		Lead Independent Director President, Currie Capital LLC   Director since 2010   Age: 62   Other Current Public Boards: None		Board Committees • Nominating and Governance, Chair • Compensation
		Former Public Directorships Held During the Past 5 Years • Twitter, Inc. • New Relic, Inc.		Other Experience and Education • Former chief financial officer of public companies • President of Board of Trustees at Phillips Academy • MBA from Stanford University • Former director of several privately-held companies
PETER L.S. CURRIE has been President of Currie Capital LLC, a private investment firm, since April 2004. From November 2010 to May 2016, Mr. Currie served on the board of Twitter, Inc., where he chaired both its audit committee and its nominating and governance committee and was the lead independent director. He has also served on the board of directors of New Relic, Inc. (from March 2013 to August 2016), where he chaired its audit committee and was a member of its compensation committee. Mr. Currie has also served on the boards of directors of Clearwire Corporation, CNET Networks, Inc., Safeco Corporation and Sun Microsystems, Inc.
Relevant Skills and Expertise Mr. Currie brings to the Board strong financial and operational expertise as a result of his extensive board and committee experience at both public and privately-held companies; experience as chief financial officer of two public companies (McCaw Cellular Communications and Netscape Communications); and experience in senior operating positions in investment banking, venture capital and private equity.

 

Miguel M. Galuccio

		Chairman and Chief Executive Officer, Vista Oil and Gas   Director since 2017   Age: 50   Other Current Public Boards: None		Board Committees • Finance • Science and Technology
		Former Directorships Held During the Past 5 Years • YPF S.A.		Other Experience and Education • BS in Petroleum Engineering from Technological Institute of Buenos Aires • Schlumberger training and expertise • Latin America energy policy expertise
MIGUEL GALUCCIO is the Chairman and Chief Executive Officer of Vista Oil and Gas, an oil and gas company incorporated in Mexico, and has held that position since July 2017. From May 2012 to March 2016, he was the Chairman and Chief Executive Officer of YPF, Argentina’s national oil company. From 1999 to 2012, he was an employee of Schlumberger and held a number of international positions, his last being President, Schlumberger Production Management (“SPM”). Prior to his employment at Schlumberger, he served in various executive positions at YPF and its subsidiaries from 1994 to 1999, including YPF International.
Relevant Skills and Expertise Mr. Galuccio brings to the Board strong leadership and operational expertise from his experience as chairman and chief executive officer of Argentina’s national oil company, which under his leadership became the world’s largest producer of shale oil outside of North America. He has valuable insight into the domestic and international energy policies of Argentina, Mexico, Venezuela, Ecuador and other countries that are strategically important to Schlumberger. He has extensive experience negotiating with Schlumberger customers in Latin America, Russia and China, including global energy companies and national oil companies, and remains active in the oil and gas exploration and production industry as a chief executive officer of an oil and gas company.

 

Schlumberger Limited  2019 Proxy Statement

8

Paal Kibsgaard

		Chairman and Chief Executive Officer   Director since 2011   Age: 51   Other Current Public Boards: None		Board Committees • None
		Former Public Directorships Held During the Past 5 Years • None		Other Experience and Education • Qualified petroleum engineer • Master’s Degree from Norwegian Institute of Technology • Schlumberger training and expertise
PAAL KIBSGAARD has been a director and Chief Executive Officer of the Company since 2011. He became the Chairman of the Board in April 2015. He was the Company’s Chief Operating Officer from February 2010 to July 2011, and President of the Reservoir Characterization Group from May 2009 to February 2010. Prior to that, Mr. Kibsgaard served as Vice President, Engineering, Manufacturing and Sustaining, from November 2007 to May 2009, and as Vice President of Personnel from April 2006 to November 2007. Mr. Kibsgaard has been with the Company since 1997, and began his career as a reservoir engineer. He has held numerous operational and administrative management positions within the Company in the Middle East, Europe and the U.S.
Relevant Skills and Expertise Mr. Kibsgaard brings to the Board a unique operational perspective and thorough knowledge of the Company’s operational activities worldwide as a result of his service in various global leadership positions in the Company. The Board believes that Mr. Kibsgaard’s service as Chairman and Chief Executive Officer is an important link between management and the Board, enabling the Board to perform its oversight function with the benefit of his perspectives on the Company’s business and operations.

 

Nikolay Kudryavtsev

		Rector, Moscow Institute of Physics and Technology   Director since 2007   Age: 68   Other Current Public Boards: None		Board Committees • Audit • Finance • Science and Technology
		Former Public Directorships Held During the Past 5 Years • None		Other Experience and Education • Prior Chair, Molecular Physics Department at the Moscow Institute of Physics and Technology • PhD in physics and mathematics, Moscow Institute of Physics and Technology • Member, Russian Academy of Sciences
NIKOLAY KUDRYAVTSEV has been the Rector of the Moscow Institute of Physics and Technology since June 1997. He has also been chairman of the Board of Rectors of the City of Moscow and Moscow Region since 2012, and was elected Vice President of the Board of Rectors of Universities of the Russian Federation in 2014, and became a member of its board in 2018.
Relevant Skills and Expertise Mr. Kudryavtsev brings to the Board valuable management experience, as well as deep scientific and technological expertise. This provides the Board with insight regarding the Company, its products and technologies, as well as the future technological needs of the Company and the industry. Mr. Kudryavtsev also provides the Board with a particularly valuable Russian vantage point, which is useful for both the development of the Company’s business and an understanding of the needs of the Company’s Russian employees. The Board is aided immensely by Mr. Kudryavtsev’s sensitivity to Russian culture and risk at the operational level.

 

Schlumberger Limited  2019 Proxy Statement

9

Tatiana A. Mitrova

		Director of SKOLKOVO Energy Center, Moscow School of Management   Director since 2018   Age: 44   Other Current Public Boards: None		Board Committees • Audit
		Former Public Directorships Held During the Past 5 Years • Unipro PJSC		Other Experience and Education • Senior Visiting Research Fellow at Oxford Institute for Energy Studies • Fellow at Columbia University SIPA Center on Global Energy Policy • Director of several privately-held companies
TATIANA A. MITROVA has been the Director of the SKOLKOVO Energy Center of the Moscow School of Management, a graduate business school, since February 2017. She has also been the Head of Research in the Oil and Gas Department in the Energy Research Institute of the Russian Academy of Sciences since January 2011; a visiting professor at the Paris School of International Affairs (PSIA), part of the Paris Institute of Political Studies, since January 2014; and an assistant professor at the Gubkin Russian State University of Oil and Gas since January 2008. Dr. Mitrova was a Visiting Researcher at the King Abdullah Petroleum Studies and Research Center (KAPSARC) from April 2016 to April 2017. She was a member of the board of directors of Unipro PJSC from June 2014 to December 2017 and was a member of its appointment and remuneration committees.
Relevant Skills and Expertise Dr. Mitrova brings to the Board valuable expertise regarding energy market dynamics and the various factors affecting supply and demand for Schlumberger’s products and services. The Board values Dr. Mitrova’s connections to the Russia market and her ties to the academic community. Her global economic perspective provides insight into emerging markets and trends, and is useful for the development of the Company’s business strategy. She provides additional ties to universities worldwide, assisting Schlumberger in its effort to attract talented new employees.

 

Indra K. Nooyi

		Former Chairman and Chief Executive Officer PepsiCo, Inc.   Director since 2015   Age: 63   Other Current Public Boards: None		Board Committees • Audit • Compensation, Chair
		Former Public Directorships Held During the Past 5 Years • PepsiCo., Inc.		Other Experience and Education • Former chief executive officer of a public company • Board of Trustees, the World Economic Forum • Member, Temasek International Advisory Panel • MBA, Indian Institute of Management • Master’s Degree in Public and Private Management, Yale University
INDRA K. NOOYI is the former Chairman and CEO of PepsiCo, Inc., a global food and beverage company. She was appointed PepsiCo’s Chief Executive Officer in October 2006 and assumed the role of Chairman of PepsiCo’s board of directors in May 2007. In October 2018, Ms. Nooyi stepped down as PepsiCo’s CEO, and retired as its Chairman and as a member of PepsiCo’s board of directors effective February 1, 2019. Ms. Nooyi was elected to PepsiCo’s board of directors and became President and Chief Financial Officer in 2001, after serving as Senior Vice President and Chief Financial Officer since 2000. Ms. Nooyi also was PepsiCo’s Senior Vice President, Corporate Strategy and Development from 1996 until 2000, and its Senior Vice President, Strategic Planning from 1994 until 1996. She also serves on the boards of several non-profit entities.
Relevant Skills and Expertise The Board benefits greatly from Ms. Nooyi’s leadership as the former Chairman and CEO of PepsiCo, Inc., a global company with one of the world’s most recognized brands. Ms. Nooyi’s expertise in developing and directing corporate strategy and finance and in mergers and acquisitions, as well as her valuable insight into organizational management and talent development, enable her to make valuable contributions to the Board.

 

Schlumberger Limited  2019 Proxy Statement

10

Lubna S. Olayan

		Chief Executive Officer and Deputy Chairperson, Olayan Financing Company   Director since 2011   Age: 63   Other Current Public Boards: Alawwal Bank and Ma’aden		Board Committees • Nominating and Governance • Finance
		Former Public Directorships Held During the Past 5 Years • None		Other Experience and Education • Current chief executive officer • Trustee, King Abdullah University of Science and Technology and Cornell University • Member, Harvard Global Advisory Council • Serves on boards of various non-governmental and educational organizations • MBA, Indiana University
LUBNA S. OLAYAN is the Chief Executive Officer and deputy chairperson of Riyadh-based Olayan Financing Company, the holding company for The Olayan Group’s operations in the Kingdom of Saudi Arabia and the Middle East. Ms. Olayan is a Principal and a board member of Olayan Investments Company Establishment, the parent company of The Olayan Group, a private multinational enterprise with diverse commercial and industrial operations in the Middle East and an actively managed portfolio of international investments. Since December 2004, she has been a director of Alawwal Bank, and was the first woman to join the board of a Saudi publicly-listed company. She was elected Vice Chairman in January 2014 and is a member of its executive committee and its nomination and remuneration committee. Ms. Olayan has been a member of the board of directors of Ma’aden, a Saudi Arabian mining company, since April 2016, and is a member of its nomination and remuneration committee. She is a member of numerous international advisory boards.
Relevant Skills and Expertise Ms. Olayan brings to the Board extensive business experience in Saudi Arabia and the Middle East and a deep understanding of those areas, which are critical to the Company. The Board benefits from her proven leadership abilities, extensive CEO experience and expertise in corporate finance, international banking, distribution and manufacturing. Ms. Olayan also brings a critical international perspective on business and global best practices. Ms. Olayan’s connections to the scientific community and experience in university relations also are of great value to Schlumberger and its efforts in technology leadership and employee recruiting and retention.

 

Mark G. Papa

		Chairman and Chief Executive Officer, Centennial Resource Development   Director since 2018   Age: 72   Other Current Public Boards: Centennial Resource Development		Board Committees • Finance
		Former Public Directorships Held During the Past 5 Years • EOG Resources • Oil States International		Other Experience and Education • Current chief executive officer of a public company • BS in Petroleum Engineering • North American energy industry pioneer
MARK G. PAPA has been the Chief Executive Officer and Chairman of the Board of Centennial Resource Development Inc., an independent oil producer, since October 2016. Prior to that, Mr. Papa served as Chief Executive Officer and Chairman of the Board of Silver Run Acquisition Corp. from November 2015 until its business combination with Centennial Resource Production, LLC in October 2016. Mr. Papa is also an advisor to Riverstone Holdings, LLC, a private equity firm specializing in energy investments. Prior to joining Riverstone in February 2015, Mr. Papa was Chairman and CEO of EOG Resources, an independent oil company, from August 1999 to December 2013. Mr. Papa served as a member of EOG’s board of directors from August 1999 until December 2014. He worked at EOG for 32 years in various management positions. Mr. Papa was retired from December 2013 through February 2015. Mr. Papa also served on the board of Oil States International, Inc., an international field services company, from February 2001 to August 2018 and was a member of its compensation and nominating and corporate governance committees. He has served on the board of Casa de Esperanza, a non-profit organization serving children in crisis situations, since November 2006.
Relevant Skills and Expertise Mr. Papa brings decades of experience in the oil and gas industry and a unique insight into the North American market. He is a pioneer in the U.S. shale oil industry and built EOG Resources into one of the most profitable U.S. shale companies. He provides the Board with his valuable insight on this market and Schlumberger’s customers in North America. He also brings valuable leadership experience to the Board through his experience as CEO and chairman of multiple public companies. Mr. Papa has been involved in succession planning, compensation, employee management and the evaluation of acquisition opportunities, and provides the Board with valuable insight regarding the challenges and opportunities facing Schlumberger in these areas.

 

Schlumberger Limited  2019 Proxy Statement

11

Leo Rafael Reif

		President, Massachusetts Institute of Technology   Director since 2007   Age: 68   Other Current Public Boards: None.		Board Committees • Compensation • Nominating and Governance • Science and Technology, Chair
		Former Public Directorships Held During the Past 5 Years • Alcoa, Inc. • Arconic Inc.		Other Experience and Education • Fellow, The Institute for Electrical and Electronic Engineers • Doctorate in electrical engineering, Stanford University • Member of the American Academy of Arts and Sciences • Board of Trustees, The World Economic Forum
LEO RAFAEL REIF has been President of the Massachusetts Institute of Technology (“MIT”) since July 2012, and was its Provost, Chief Academic Officer and Chief Budget Officer from August 2005 to July 2012. Dr. Reif was head of MIT’s Electrical Engineering and Computer Science Department from September 2004 to July 2005, and an Associate Department Head for Electrical Engineering in MIT’s Department of Electrical Engineering and Computer Science from January 1999 to August 2004. In 2015, Dr. Reif joined the board of directors of Alcoa, Inc., an industrial aluminum company, and remained on its board until resigning in November 2016 as part of Alcoa’s public spin-off of Arconic Inc., a provider of precision-engineered products and solutions. In connection with the spin-off, Dr. Reif was a member of the board of directors of Arconic Inc. from November 2016 to May 2017.
Relevant Skills and Expertise Dr. Reif brings to the Board valuable management and finance expertise. As a scientist, he has deep scientific and technological knowledge about the Company’s products and technology, as well as about anticipated future technological needs of the Company and the industry. The Board values Dr. Reif’s connections to the U.S. scientific community, as well as his expertise in university relations and collaborations, which are of high importance to Schlumberger and its efforts in technology leadership and employee retention. Dr. Reif provides the Board with a critical U.S. scientific perspective, which is of immense value in the oversight of the Company’s strategy.

 

Henri Seydoux

		Chairman and Chief Executive Officer, Parrot S.A.   Director since 2009   Age: 58   Other Current Public Boards: Parrot S.A.		Board Committees • Compensation • Nominating and Governance • Science and Technology
		Former Public Directorships Held During the Past 5 Years • None		Other Experience and Education • Current chief executive officer • Technology leadership • Entrepreneurial and management expertise • Director of privately-held company
HENRI SEYDOUX has been Chairman and Chief Executive Officer of Parrot S.A., a global wireless products manufacturer, since 1994. Mr. Seydoux is an entrepreneur with great initiative. He founded Parrot S.A. in 1994 as a private company and took it public in 2007. He also serves on the board of directors of Sigfox, a privately-held global communications service provider for the Internet.
Relevant Skills and Expertise Mr. Seydoux, as the chief executive of a dynamic and innovative technology company, brings to the Board entrepreneurial drive and management skills. He also has family ties to the founding Schlumberger brothers. Having grown up in the Schlumberger family culture, Mr. Seydoux is well placed to see that the Company continues its historical commitment to Schlumberger’s core values. His service on the Board addresses the Company’s need to preserve the Company’s unique culture and history while helping to foster innovation.

 

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Corporate Governance

 

The following are some highlights of our corporate governance practices and policies:

 

Board Independence; Committees Structure

 

	•	All of our director nominees are independent of the Company and management, except for our CEO and Messrs. Papa and Galuccio. This is above the NYSE requirement that a majority of directors be independent.
	•	All non-executive directors meet regularly in executive session.
	•	Only independent directors serve on our Audit, Compensation and Nominating and Governance Committees.

 

Majority Voting; Stockholder Rights

 

	•	We have a majority vote standard for uncontested director elections.
	•	All of our directors are elected annually. We do not have a staggered board.
	•	One or more stockholders representing 10% or more of our outstanding shares can call a special meeting.
	•	We proactively adopted proxy access in early 2017.

 

Executive Stock Ownership Guidelines

 

We have executive stock ownership guidelines, which are designed to align executive and stockholder interests. For a description of the guidelines applicable to our executive officers and other senior members of management, see “Compensation Discussion and Analysis—Executive Stock Ownership Guidelines” starting on page 46.

 

Risk Oversight

 

The Board of Directors and the its Committees oversee Schlumberger’s risk management policies, processes and practices to ensure that the Company employs the appropriate risk management systems. The Board and its Committees exercise their risk oversight responsibilities in a variety of ways, including the following:

 

Board of Directors	Oversees the risk management by the CEO and other members of our senior management team; oversees assessment of major risks facing the Company. The risks that the Board routinely considers include operational, financial, geopolitical/legislative, strategic, capital project execution, civil unrest, legal and technology/cybersecurity risks.
Audit Committee	Reviews and assesses financial reporting risk. Reviews all significant finance-related violations of Company policies brought to its attention, and annually reviews and assesses finance-related violations. Meets with and reviews reports from Schlumberger’s independent registered public accounting firm and internal auditors.
Finance Committee	Oversees finance-related risks on a quarterly basis and recommends guidelines to control pension and other investments, banking relationships and currency exposures. Assesses financial aspects of all proposed strategic transactions above a certain dollar threshold.
Compensation Committee	Reviews and assesses the Company’s overall compensation program and its effectiveness at linking executive pay to performance, aligning the interests of our executives and our stockholders and providing for appropriate incentives.
Nominating and Governance Committee	Oversees compliance-related risk, related person transactions, the Company’s Ethics and Compliance Program and environmental, social and governance risks.

 

Prohibition on Hedging or Pledging of Schlumberger Stock

 

Our directors and executive officers are prohibited from using any strategies or products (such as derivative securities or short-selling techniques) to hedge against the potential changes in the value of Schlumberger common stock. In addition, our directors and executive officers, and other key employees, are prohibited from holding Schlumberger securities in a margin account or pledging Schlumberger securities as collateral for a loan. Our insider trading policy strongly discourages, but does not prohibit, other employees from engaging in speculative transactions, including hedging or other financial mechanisms, holding Schlumberger securities in a margin account or pledging Schlumberger securities.

 

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Policy Against Lobbying and Political Contributions

 

Schlumberger has a strong culture of being politically neutral, and has a long-standing policy against lobbying and making financial or in-kind contributions to political parties or candidates, even when permitted by law. This policy, as set forth in Schlumberger’s code of conduct, entitled The Blue Print and The Blue Print in Action (our “Code of Conduct”), prohibits the use of Company funds or assets for political purposes, including for contributions to any political party, candidate or committee, whether federal, state or local. In addition, the Company does not lobby. As a result of the Company’s policy of political neutrality, Schlumberger does not have a political action committee, nor does it contribute to any third-party political action committees or other political entities organized under Section 527 of the Internal Revenue Code.

 

In 2018, the Center for Political Accountability (“CPA”), a non-profit, non-partisan organization, assessed our disclosure for its annual CPA-Zicklin Index of Corporate Political Disclosure and Accountability (“CPA-Zicklin Index”). The CPA-Zicklin Index measures the transparency, policies and practices of the Standard & Poor’s 500. As a result of our enhanced disclosure regarding our prohibition on political lobbying and contributions, we achieved a perfect score of 100% in the 2018 CPA-Zicklin Index.

 

Our Commitment to Stewardship

 

Our Board, along with our customers, investors, employees and other stakeholders, understands that a modern approach to running our Company must be aligned with a commitment to global stewardship. Our stewardship journey, which has evolved over the past decades, is gaining momentum as we continue to work with our customers to address their environmental, social, and governance objectives; mitigate social and environmental risks; and lower their greenhouse gas emissions in field operations. We endeavor to be at the forefront of change, leading technology innovation and training and development of our employees. For example, most recently, we adopted a requirement that all of our employees receive sustainability and stewardship training every two years.

 

We believe our more than 90 years of industry experience and leadership will be invaluable to the ongoing worldwide energy transition. We have engaged three main strategies to this end:

 

Endeavoring to make stewardship a part of our operations

 

We do this through several risk assessment and mitigation programs in aspects of our operations where we have determined that we can have the most effective impact. For example, to assist us in an environmental impact review of our operations in one country where we have sizable operations, we engaged an independent consultant specializing in helping companies implement positive change in response to climate and carbon challenges, while also driving commercial performance. The independent consultant analyzed the various climate risks, including sea level change, that would reasonably be expected to affect the location, and provided us with mitigation options to address those risks.

 

Similarly, we chose 11 of the 17 United Nations Sustainable Development Goals (“SDGs”) at the corporate level that we believe we can impact as a company. From this portfolio of 11 SDGs that we chose, each of our GeoMarket regions will select SDGs to focus on and will further set targets related to each SDG that we expect will measurably improve environmental and social conditions in the countries and regions where we operate. To find out more about our Global Stewardship Program, and how we seek to align ourselves with the United Nations SDGs, see our annual Global Stewardship Report, which is available at www.slb.com/globalstewardship.

 

 

 

(bolded items are part of Schlumberger portfolio of goals)

 

Promoting technological growth with positive environmental outcomes

 

We believe that our ability to develop cutting-edge technology differentiates us from our competitors. We have a global network of six research centers and 10 technology centers that develop products and processes that both maximize the recovery from a given well, as well as reduce the impact of our operations on the environment. For example, we began our research on geologic storage of carbon in the mid 1990’s. An environmental benefit of carbon sequestration is that it can help reduce carbon dioxide emissions. Our carbon services employees have published 229 technical papers and journal articles. They also currently lead or participate in more than 60 carbon sequestration projects globally, including nine of the 13 projects under development by the U.S. Department of Energy’s

 

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Carbon Storage Assurance Facility Enterprise (CarbonSAFE). One environmental benefit of carbon sequestration is that it can help mitigate carbon dioxide emissions. In 2018, we continued this work by partnering with Stanford University, ExxonMobil and the Environmental Defense Fund (EDF) to test 12 different methane detectors and the ability to mount these detectors on trucks, aircraft or drones. While current methane detectors can monitor a single location like a well site, these new technologies can identify and characterize leaks over a large area of otherwise unmonitored land and allow for remediation.

 

Engaging in a global dialogue

 

We have an active voice in the global energy and sustainability dialogue. In 2016, we hosted a global conference on the future of energy at our research facility in Cambridge, Massachusetts. The conference addressed topics such as the evolution of the energy transition; the future of world energy after the international climate agreement at the 2015 Paris Climate Conference (COP21); and climate change. At the conference, more than 40 thought leaders in engaged in open, frank discussions regarding climate change and related issues. Some of the attendees included representatives from the MIT Energy Initiative; the Yale Climate and Energy Institute; the U.S. Department of Energy; the International Energy Agency; the U.S. National Renewable Energy Laboratory, and scientists and other policy makers from various other institutions and governmental agencies.

 

We also share our views with several influential educational and policy studies organizations. Some of these include The Aspen Institute; the Royal Institute of International Affairs (Chatham House); Energy Intelligence Group; SustainAbility; the Center for Strategic and International Studies; Resources for the Future; the Bloomberg Sustainable Business Forum, and other sustainability forums.

 

In addition, we are a part of, or otherwise support, numerous industry groups including the International Petroleum Industry Environmental Conservation Association (IPIECA); the American Geosciences Institute; the National Ocean Industries Association; the Permian Strategic Partnership; the American Petroleum Institute; the Center for Strategic and International Studies; the National Petroleum Council; the Petroleum Equipment & Services Association; the Independent Petroleum Association of America; and the International Association of Oil & Gas Producers. Finally, we provide educational and advisory services to governmental organizations such as the United States Department of Energy, the United States Department of the Interior and the Texas Railroad Commission.

 

Communication with Board

 

The Board recommends that stockholders initiate communications with the Board, the Chairman, the Lead Independent Director or any Board committee by writing to our Corporate Secretary. This process assists the Board in reviewing and responding to stockholder communications. The Board has instructed our Corporate Secretary to review correspondence directed to the Board (including the Chairman, the Lead Independent Director and any Board committee) and, at the Secretary’s discretion, to forward those items that he deems appropriate for the Board’s consideration. Stockholders can send communications to the following address:

 

Schlumberger Limited Attention: Corporate Secretary 5599 San Felipe, 17th Floor Houston, Texas 77056

 

Shareholder Engagement

 

Our relationship and on-going dialogue with our stockholders is an important part of our Board’s corporate governance commitment. Our Investor Relations, Environmental, Social and Governance (“ESG”), Legal and Human Resources teams engage with stockholders to seek their views on key matters and to inform our management and our Board about the issues and emerging governance trends that our stockholders tell us matter most to them. Our Lead Independent Director and the chairman of our Compensation Committee also participate in our engagement efforts when requested. These engagements routinely cover governance, social, environmental, compensation, safety, human rights and other current and emerging issues.

 

We typically reach out to our largest institutional stockholders annually in the fall. We then report the feedback we receive from stockholders to the Board and relevant committees, allowing the Board to better understand our stockholders’ priorities and perspectives. In addition to this annual outreach, we may engage with our large institutional stockholders at other times in the year when we believe that there are appropriate topics to discuss. For more detail on our 2018 engagement with our stockholders, see pages 26-27.

 

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Corporate Governance Guidelines

 

Schlumberger is committed to adhering to sound principles of corporate governance and has adopted corporate governance guidelines that the Board believes are consistent with Schlumberger’s values, and that promote the effective functioning of the Board, its committees and the Company. Our Board periodically, and at least annually, reviews and revises, as appropriate, our Corporate Governance Guidelines to ensure that they reflect the Board’s corporate governance objectives and commitments. Our Corporate Governance Guidelines are on our website at http://www.slb.com/ about/guiding_principles/corpgovernance/corpgov_guidelines.aspx.

 

Board Independence

 

Schlumberger’s Corporate Governance Guidelines provide that at least a majority of the Board must consist of independent directors. This standard reflects the NYSE corporate governance listing standards.

 

Our Board has adopted director independence standards, which can be found in Attachment A to our Corporate Governance Guidelines, and which meet or exceed the independence requirements in the NYSE listing standards. Based on the review and recommendation by the Nominating and Governance Committee, the Board has determined that each current director and director nominee listed above under “Election of Directors” is “independent” under the listing standards of the NYSE and our director independence standards, except Mr. Kibsgaard, who is our CEO and therefore does not qualify as independent, and Messrs. Galuccio and Papa. Additionally, Mr. Helge Lund and Mr. Tore Sandvold were independent throughout the period in 2018 that each served on the Board.

 

In addition to the Board-level standards for director independence, each member of the Audit Committee meets the heightened independence standards required for audit committee members under the NYSE’s listing standards and SEC rules, and each member of the Compensation Committee meets the heightened independence standards for compensation committee members under NYSE listing standards adopted in 2013, which Schlumberger implemented in advance of the required compliance date.

 

Transactions Considered in Independence Determinations

 

The Board’s independence determinations included a review of transactions that occurred since the beginning of 2016 with entities associated with our directors or members of their immediate family. In making its independence determinations, the Board considered that Ms. Kempston Darkes, Mr. Kudryavtsev, Mr. Marks, Dr. Mitrova, Ms. Nooyi, Ms. Olayan, Dr. Reif and Mr. Sandvold each have served as directors, executive officers, trustees, outside consultants or advisory board members at companies and universities that have had commercial business relationships with the Company, all of which were ordinary course commercial transactions involving significantly less than the greater of $1 million or 2% of the other entity’s annual revenues. The Board also considered that the Company made charitable contributions in 2018 to the Moscow School of Management SKOLKOVO, where Dr. Mitrova is Director of the Energy Centre, of approximately $500,000, relating to educational grants and sponsored fellowships, for which Dr. Mitrova received no personal benefit. This amount was significantly less than the greater of $1 million or 2% of the university’s consolidated gross revenues for any of the past three years.

 

Board Tenure

 

We believe that Board tenure diversity is important and directors with many years of service provide the Board with a deep knowledge of our company, while newer directors lend fresh perspectives. The chart below reflects the Board tenure of our current director nominees.

 

Under our Corporate Governance Guidelines, non-executive directors are eligible to be nominated or renominated to the Board up to their 70^th birthday, and executive directors are eligible to be nominated or renominated up to their 65^th birthday, after which directors may no longer be nominated or renominated to the Board. Our Board may waive this policy on a case-by-case basis on the recommendation of the Nominating and Governance Committee if it deems a waiver to be in the best interest of the Company. The Board waived this policy for Mr. Papa upon the recommendation of the Nominating and Governance Committee because it believes that retaining the expertise of Mr. Papa is in the best interest of our Company and our stockholders.

 

Diversified Director Nominee Tenure

 

 

 

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Director Nominations

 

The Nominating and Governance Committee believes that director nominees should, in the judgment of the Board, be persons of integrity and honesty, be able to exercise sound, mature and independent business judgment in the best interests of our stockholders as a whole, be recognized leaders in business or professional activity, have background and experience that will complement those of other Board members, be able to actively participate in Board and Committee meetings and related activities, be able to work professionally and effectively with other Board members and Schlumberger management, be available to remain on the Board long enough to make an effective contribution and have no material relationship with competitors, customers or other third parties that could present realistic possibilities of conflict of interest or legal issues.

 

	Board Diversity Highlights:
	3	director nominees are women
	6	director nominees are non-US citizens

 

The Nominating and Governance Committee also promotes Schlumberger’s diversity policy that the Board should ensure that qualified candidates reflecting gender, cultural and geographical diversity are considered as potential director nominees. Schlumberger has approximately 100,000 employees worldwide, representing more than 140 nationalities, and values gender, cultural and geographical diversity in its directors as well. We also have a culture of recruiting, hiring and training where we operate, as described in our Code of Conduct. This culture also influences the composition of our Board. Three of our 10 director nominees are women. Of the 10 director nominees, four are citizens of the United States of America, two are citizens of Russia, and one is a citizen of each of Norway, France, and Saudi Arabia, while one of our directors is a dual citizen of both Argentina and the United Kingdom.

 

Our geographically diverse Board also evidences the Board’s commitment to have directors who represent countries where Schlumberger operates. In addition, the exceptionally broad and diverse experience of our Board nominees is in keeping with the goal of having directors whose background and experience complement those of other directors. The Nominating and Governance Committee’s evaluation of director nominees takes into account their ability to contribute to the Board’s diversity, and the Nominating and Governance Committee annually reviews its effectiveness in balancing these considerations in the context of its consideration of director nominees.

 

One of the other goals of our Nominating and Governance Committee is to ensure that the nominees have experience, skills and other attributes that complement the whole of our Board as a governing body. We believe that the nominees are able to provide a well-rounded set of expertise that will assist in effective oversight of management at Schlumberger. The following matrix identifies the primary skills, core competencies and other attributes that each director brings to bear in their service to our Board and committees. Each director possesses numerous other skills and competencies not identified below. We believe identifying primary skills is a more meaningful presentation of the key contributions and value that each director nominee brings to their service on the Board and to our stockholders. Further information on each director nominee, including some of their specific experience, skills and other attributes is set forth in the biographies beginning on page 8 of this proxy statement.

 

Summary of Individual Director Primary Skills, Core Competencies and other Attributes

Current or former CEO or president

Energy industry expertise

Risk management experience

Corporate finance/capital management expertise

Academic relations

Scientific and technological innovation experience

M&A experience

Experience in key Schlumberger markets

Government /public policy and regulatory insights

 

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Applying the criteria above, the Nominating and Governance Committee recommends to the Board the number and names of persons to be proposed by the Board for election as directors at our annual general meeting of stockholders. In obtaining the names of possible nominees, the Nominating and Governance Committee makes its own inquiries and will receive suggestions from other directors and management. From time to time, the Committee retains executive search and board advisory consulting firms to assist in identifying and evaluating potential nominees. To further our diversity policy, we request that such firms retained by us include women and ethnically diverse candidates in the proposals they present to us. During 2018, the Committee used the services of Spencer Stuart, a third-party executive search firm, for this purpose. Consideration of new Board candidates typically involves a series of internal discussions, review of information concerning candidates, and interviews with selected candidates. Our CEO suggested each of Dr. Mitrova and Mr. Papa as prospective Board candidates.

 

The Nominating and Governance Committee will consider nominees recommended by stockholders who meet the eligibility requirements for submitting stockholder proposals for inclusion in the next proxy statement and submit their recommendations in writing to:

 

Chair, Nominating and Governance Committee

c/o Secretary, Schlumberger Limited

5599 San Felipe, 17^th Floor

Houston, Texas 77056.

 

Such recommendations must be submitted by the deadline for stockholder proposals referred to at the end of this proxy statement. Unsolicited recommendations must contain all of the information that would be required in a proxy statement soliciting proxies for the election of the candidate as a director, a description of all direct or indirect arrangements or understandings between the recommending security holder and the candidate, all other companies to which the candidate is being recommended as a nominee for director, and a signed consent of the candidate to cooperate with reasonable background checks and personal interviews, and to serve as a member of our Board, if elected.

 

Board Adoption of Proxy Access

 

Although we had not received a stockholder proposal requesting a proxy access bylaw, we proactively adopted proxy access bylaw provisions in January 2017. These provisions permit a stockholder, or a group of up to 20 stockholders, owning at least three percent (3%) of our outstanding common stock, for at least three (3) years, to include two (2) director nominees, or 20% of the current Board, whichever is greater, in our proxy for the annual general meeting.

 

Board Leadership Structure

 

The Board recognizes that one of its key responsibilities is to evaluate and determine an appropriate board leadership structure to provide for independent oversight of management. The Board believes that there is no single, generally accepted board leadership structure that is appropriate for all companies, and that the right structure may vary for a single company as circumstances change. As such, our independent directors consider the Board’s leadership structure at least annually, and may modify this structure to best address the Company’s unique circumstances and advance the best interests of all stockholders, as and when appropriate.

 

From 2011 to 2015, the Board was led by a non-executive chairman of the Board. In connection with the chairman’s retirement in 2015, the independent members of the Board gave thoughtful consideration to the Board’s leadership structure and determined that recombining the Chairman and CEO positions under the leadership of Mr. Kibsgaard upon the independent chair’s retirement was in the best interests of the Company and its stockholders. This determination was based on the Board’s strong belief that, as the individual with primary responsibility for managing the Company’s day-to-day operations and with extensive knowledge and understanding of the Company, Mr. Kibsgaard was best positioned to chair regular Board meetings as the directors discuss key business and strategic issues and to focus the Board’s attention on the issues of greatest importance to the Company and its stockholders. Furthermore, the Board believed that combining the roles of Chairman and CEO in Mr. Kibsgaard created a clear line of authority that promotes decisive and effective leadership, both within and outside the Company. In making this judgment, the Board took into account its evaluation of Mr. Kibsgaard’s performance as CEO and as a then-current member of the Board, his positive relationships with the other directors, and the strategic perspective he would bring to the role of Chairman.

 

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In considering its leadership structure, the Board also took into account that Schlumberger’s current governance practices provide for strong independent leadership, active participation by independent directors and independent evaluation of, and communication with, many members of senior management. These governance practices are reflected in our Corporate Governance Guidelines and our various committee charters, which are available on our website. The Board believes that its risk oversight programs, discussed immediately below, are effective under a variety of board leadership frameworks and therefore do not materially affect the Board’s choice of leadership structure.

 

 

 

The Board’s Role in Risk Oversight

 

As set forth in our Corporate Governance Guidelines, the Board routinely assesses major risks facing the Company and options for their mitigation, in order to promote the Company’s stockholders’ and other stakeholders’ interests in the long-term health and the overall success of the Company and its financial strength.

 

The full Board is actively involved in overseeing risk management for the Company. We believe that our Board composition provides the Company with robust experience in several areas of risk oversight. Several of our Board members, including Messrs. Galuccio, Kibsgaard, and Papa and Dr. Mitrova have valuable experience in the regulatory, economic and commodity risks that are specific to our industry, while Messrs. Kudryatsev, Reif and Seydoux have valuable experience in science and technology issues. In addition, many members of our Board, including Messrs. Currie, Reif and Seydoux and Msses. Nooyi and Olayan, all provide expertise in general business governance, capital allocation, management and economic trends relevant to our business.

 

The Board also manages risk in part through its oversight of the Company’s Executive Risk Committee (the “ERC”) comprised of more than half a dozen top executives of the Company from various functions, each of whom supervises day-to-day risk management throughout the Company. The ERC is not a committee of the Board. The ERC ensures that the Company identifies all potential material risks facing the Company and implements appropriate mitigation measures. The Company’s risk identification is performed annually at two levels: the ERC performs a corporate-level risk mapping exercise, which involves the CEO and several other members of senior management, and while maintaining oversight, delegates operational (field-level) risk assessment and management to the Company’s various GeoMarkets, Technologies and Functions and to its Research, Engineering, Manufacturing and Sustaining organization. To the extent that the ERC identifies recurring themes from the operational risk mapping exercises, they are acted on at the corporate level. Members of the ERC meet formally at least once a year, and more frequently on an ad hoc basis, to define and improve

 

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the risk mapping process, and to review and monitor the results of those exercises and those that have been delegated. The ERC reports directly to the CEO and to the full Board, and annually presents to the full Board a comprehensive report as to its risk mapping efforts for that year.

 

In addition, each of our Board committees considers the risks within its areas of responsibility. For example, the Finance Committee considers finance-related risks on a quarterly basis and recommends guidelines to control pension and other investments, banking relationships and currency exposures. The Compensation Committee reviews and assesses the Company’s overall compensation program and its effectiveness at linking executive pay to performance, aligning the interests of our executives and our stockholders and providing for appropriate incentives. The Science and Technology Committee reviews and assesses risks affecting the Company’s technology direction and research and development. The Nominating and Governance Committee oversees governance- and compliance-related risks, related person transactions, and reviews and discusses the Company’s Ethics and Compliance Program’s quarterly statistical report and the various allegations, disciplinary actions and training statistics brought to its attention. The Nominating and Governance Committee also considers ESG risks. The Audit Committee reviews and assesses risks related to financial reporting. The Audit Committee also discusses all significant finance-related violations of Company policies brought to its attention from time to time, and annually reviews a summary of all finance-related violations. Additionally, the outcome of the Company’s Audit Risk assessment is presented to the Audit Committee annually; this assessment identifies internal controls risks and drives the internal audit plan for the coming year. All significant violations of the Company’s Code of Conduct and related corporate policies are reported to the Nominating and Governance Committee and (if finance-related) to the Audit Committee, and, when appropriate, are reported to the full Board. Once a year, the Director of Compliance delivers to the full Board a comprehensive Annual Compliance Report. The risks identified within the Ethics and Compliance Program are incorporated into the ERC’s enterprise risk management program described above.

 

Meetings of the Board of Directors and its Committees

 

During 2018, the Board held 5 meetings. Schlumberger has an Audit, a Compensation, a Nominating and Governance, a Finance, and a Science and Technology Committee. During 2018, each of our committees met four times.

 

Each of our current directors attended at least 75% of the meetings of the Board and the committees on which he or she served in 2018 (held during the period he or she served).

 

From time to time between meetings, Board and committee members confer with each other and with management and independent consultants regarding relevant issues, and representatives of management may meet with such consultants on behalf of the relevant committee.

 

Board Committees

 

MEMBERS OF THE COMMITTEES OF THE BOARD OF DIRECTORS AS OF FEBRUARY 1, 2019

 

			Nominating		Science and
	Audit	Compensation	and Governance	Finance	Technology
Name of Director	Committee	Committee	Committee	Committee	Committee
Peter L.S. Currie*			Chair
Miguel Galuccio				Chair
V. Maureen Kempston Darkes(1)	Chair
Nikolay Kudryavtsev
Michael E. Marks(1)
Tatiana Mitrova
Indra K. Nooyi		Chair
Lubna S. Olayan
Leo Rafael Reif					Chair
Mark G. Papa
Henri Seydoux

*	Lead independent director.
(1)	Not standing for re-election at our 2019 annual general meeting.

 

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Audit Committee

 

The Audit Committee consists of five directors, each of whom meets the independence and other requirements of the NYSE’s listing standards and SEC rules (including the heightened requirements that apply to audit committee members). The Audit Committee assists the Board in its oversight of the accounting and financial reporting process of the Company, including the audit of the Company’s financial statements and the integrity of the Company’s financial statements, legal and regulatory compliance, the independent registered public accounting firm’s qualifications, independence, performance and related matters, and the performance of the Company’s internal audit function.

 

The authority and responsibilities of the Audit Committee include the following:

 

	•	recommend for stockholder approval the independent registered public accounting firm to audit the accounts of the Company for the year;
	•	evaluate the independence and qualification of the Company’s independent registered public accounting firm;
	•	review with the Company’s independent registered public accounting firm the scope and results of its audit, and any audit issues or difficulties and management’s response;
	•	discuss the Company’s annual audited financial statements and quarterly unaudited financial statements with management and the Company’s independent registered public accounting firm;
	•	review with management, the internal audit department and the independent registered public accounting firm the adequacy and effectiveness of the Company’s disclosure and internal control procedures, including any material changes or deficiencies in such controls;
	•	discuss with management the Company’s risk assessment and risk management policies;
	•	discuss the Company’s earnings press releases with management, as well as the type of financial information and earnings guidance, if any, provided to analysts;
	•	review the Company’s financial reporting and accounting standards and principles, significant changes in such standards or principles or in their application and the key accounting decisions affecting the Company’s financial statements;
	•	review with the internal audit department the status and results of the Company’s annual internal audit plan, assessments of the adequacy and effectiveness of internal controls, and the sufficiency of the department’s resources;
	•	establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, or auditing matters, as well as for confidential submission by employees, and others, if requested, of concerns regarding questionable accounting or auditing matters;
	•	review material relevant related party transactions governed by applicable accounting standards;
	•	oversee the preparation of an annual audit committee report for the Company’s proxy statement; and
	•	oversee management’s policies for the hiring of employees or former employees of the independent auditor.

 

The Company’s independent registered public accounting firm is accountable to the Audit Committee. The Audit Committee pre-approves all engagements, including the fees and terms for the integrated audit of the Company’s consolidated financial statements.

 

The Board has determined that each Committee member has sufficient knowledge in financial and auditing matters to serve on the Committee. In addition, the Board has determined that Ms. Nooyi qualifies as an “audit committee financial expert” under applicable SEC rules. The Audit Committee operates pursuant to a written charter, which is available on the Company’s website at http://www.slb.com/about/guiding_principles/corpgovernance/audit_committee.aspx.

 

Compensation Committee

 

The Compensation Committee consists of four directors, each of whom meets the independence requirements of the NYSE’s listing standards (including the heightened requirements that apply to compensation committee members). The purposes of the Compensation Committee are to assist our Board in discharging its responsibilities with regard to executive compensation; periodically review non-executive directors’ compensation; oversee the Company’s general compensation philosophy, policy and programs; serve as the administrative committee under the Company’s stock plans; and prepare the annual Compensation Committee Report required by the rules of the SEC.

 

The authority and responsibilities of the Compensation Committee include the following:

 

	•	annually review and approve the objectives, evaluate the performance, and review and recommend the compensation of the Company’s CEO to the Board’s independent directors, meeting in executive session;
	•	annually review, approve and oversee management’s implementation and maintenance of a robust and written performance evaluation process for the Company’s executive officers
	•	anually review and approve the compensation structure for the Company’s executive officers and approve their compensation (other than that of the CEO), including base salary, annual cash incentive and long-term incentives;
	•	select appropriate peer companies against which the Company’s executive compensation is compared;
	•	review incentive compensation and equity-based plans, and, at least annually, advise management and the Board on the design and structure of the Company’s compensation and benefits programs and policies, and to approve changes thereto, or to recommend changes to the Board, as the Committee determines appropriate;

 

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	•	administer and make awards under the Company’s stock plans, and review and approve annual stock allocation under those plans;
	•	review and approve or recommend to the Board, as appropriate, any employment or severance contracts or arrangements with executive officers;
	•	monitor trends and best practices in, and periodically review and assess the adequacy of, director compensation and stock ownership policies, and recommend changes to the Board as it deems appropriate in accordance with the Company’s Corporate Governance Guidelines;
	•	monitor and review the Company’s overall compensation and benefits program design to assess such programs’ continued competitiveness and consistency with established Company compensation philosophy, corporate strategy and objectives, linkage of pay to performance, and alignment with stockholder interests, including any material risks of such programs;
	•	review people-related strategies, programs and initiatives, including recruitment, retention, engagement, talent management and diversity;
	•	establish and administer stock ownership policies for executive officers and other key position holders;
	•	assess the results of the Company’s most recent advisory vote on executive compensation;
	•	review and discuss with the Company’s management the Compensation Discussion and Analysis required to be included in the Company’s annual proxy statement;
	•	review and make recommendations to the Board regarding the Company’s response to any proposal presented by stockholders for consideration at the annual general meeting of stockholders relating to the Company’s executive or director compensation practices;
	•	produce a Compensation Committee Report to be included in the Company’s annual proxy statement; and
	•	be directly responsible for the appointment, compensation and oversight of the work of any consultants and other advisors retained by the Compensation Committee.

 

The Compensation Committee may delegate specific responsibilities to one or more individual committee members to the extent permitted by law, regulation, NYSE listing standards and Schlumberger’s governing documents. The design and day-to-day administration of all compensation and benefits plans and related policies, as applicable to executive officers and other salaried employees, are handled by teams of the Company’s human resources, finance and legal department employees. The Compensation Committee operates pursuant to a written charter, which is available on the Company’s website at http://www.slb.com/about/guiding_principles/corpgovernance/compensation_committee.aspx.

 

Nominating and Governance Committee

 

The Nominating and Governance Committee consists of four directors, each of whom meets the independence requirements of the NYSE’s listing standards.

 

The authority and responsibilities of the Nominating and Governance Committee include the following:

 

	•	lead the search for individuals qualified to become members of the Board;
	•	evaluate the suitability of potential nominees for membership on the Board;
	•	recommend to the Board the number and names of director nominees at the next annual general meeting of stockholders, or otherwise to recommend directors nominees in the event that the authorized number of directors exceeds the number elected by stockholders at such annual general meeting, and to propose director nominees to fill any vacancies on the Board;
	•	annually review the qualifications and criteria taken into consideration in the evaluation of potential nominees for membership on the Board;
	•	consider the resignation of a director who has changed his or her principal occupation or employer, and inform the Board as to whether or not the Nominating and Governance Committee recommends that the Board accept the resignation;
	•	assist the Board with its determination of the independence of its members;
	•	monitor trends, changes in law and NYSE listing standards, as well as best practices in corporate governance, and to periodically review the Company’s Corporate Governance Guidelines and recommend changes as it deems appropriate in those guidelines, in the corporate governance provisions of the Company’s bylaws and in the policies and practices of the Board in light of such trends, changes and best practices as appropriate;
	•	consider issues involving “related person transactions” with directors and similar issues, including approval or ratification of any such transactions as appropriate;
	•	periodically review the Company’s Ethics and Compliance Program including significant compliance allegations with the Company’s General Counsel or Director of Compliance, and oversee the Company’s Code of Conduct and policies and procedures for monitoring compliance;
	•	periodically review the Company’s ESG Program, including its Global Stewardship reporting efforts, and trends in environmental, social and governance issues affecting the Company and its key public policy positions;
	•	review and make recommendations to the Board regarding the Company’s response to any proposals presented by stockholders for consideration at the annual general meeting of stockholders, other than any such proposals relating solely to the Company’s executive or director compensation practices;

 

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	•	periodically review the state of the Company’s relationships with key stakeholders, how those constituencies view the Company and the issues raised by them;
	•	periodically review the Company’s policies, programs and activities related to political and charitable contributions;
	•	oversee the annual evaluation of Board effectiveness and report to the Board;
	•	annually review and make recommendations to the Board regarding its process for evaluating the effectiveness of the Board and its committees;
	•	annually review and make recommendations to the Board regarding new director orientation and director continuing education on governance issues;
	•	annually recommend to the Board committee membership and chairs, and review periodically with the Board committee rotation practices;
	•	approve the membership of any Schlumberger executive officer on another listed company’s board, and receive timely information from non-employee directors of any new listed company board to which they have been nominated for election as director and of any change in their status as director on any other listed company board;
	•	advise the Board on succession planning; and
	•	periodically review the Board’s leadership structure, and recommend changes to the Board as appropriate, including the appointment and duties of the lead independent director.

 

The Nominating and Governance Committee operates pursuant to a written charter, which is available on the Company’s website at http://www.slb.com/about/guiding_principles/corpgovernance/nomgov_committee.aspx.

 

Finance Committee

 

The Finance Committee consists of five directors, each of whom, except for Messrs. Galuccio and Papa, meets the independence requirements of the NYSE’s listing standards. The Finance Committee advises the Board and management of the Company on various matters, including dividends, financial policies and the investment of funds.

 

The authority and responsibilities of the Finance Committee include the following:

 

	•	recommend investment and derivative guidelines for the cash and currency exposures of the Company and its subsidiaries;
	•	review the actual and projected financial situation and capital needs of the Company as needed, regarding:

		–	the capital structure of the Company, including among other matters, the respective level of debt and equity, the sources of financing and equity, and the Company’s financial ratios and credit rating policy;
		–	the Company’s dividend policy; and
		–	the issuance and repurchase of Company stock;

	•	review the insurance principles and coverage of the Company and its subsidiaries, as well as financing risks, including those associated with currency and interest rates;
	•	review the investor relations and stockholder services of the Company;
	•	review the financial aspects of any acquisitions submitted to the Board and, as delegated to the Finance Committee by the Board, review and approve any acquisitions covered by such delegation;
	•	review the administration of the employee benefit plans of the Company and the performance of fiduciary responsibilities of the administrators of the plans; and
	•	function as the Finance Committee for pension and profit-sharing trusts as required by U.S. law.

 

The Finance Committee operates pursuant to a written charter, which is available on the Company’s website at http://www.slb.com/ about/guiding_principles/corpgovernance/finance_committee.aspx.

 

Science and Technology Committee

 

The Science and Technology Committee consists of four directors. The Science and Technology Committee advises the Board and management on matters involving the Company’s research and development programs.

 

The authority and responsibilities of the Science and Technology Committee includes overseeing the following:

 

	•	the research and development portfolio;
	•	the location and distribution of research and development resources;
	•	interactions with acedemic institutions;
	•	information technologies and systems;
	•	manufacturing technologies; and
	•	the acquisition of new technologies.

 

The Science and Technology Committee operates pursuant to a written charter, which is available on the Company’s website at http://www.slb.com/about/guiding_principles/corpgovernance/tech_committee.aspx.

 

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Director Attendance at 2018 Annual General Meeting

 

The Board’s policy regarding director attendance at annual general meetings of stockholders is that directors are welcome, but not required, to attend, and that the Company will make all appropriate arrangements for directors who choose to attend. No director attended our annual general meeting of stockholders in 2018.

 

Policies and Procedures for Approval of Related Person Transactions

 

In January 2007, the Board formally adopted a written policy with respect to “related person transactions” to document procedures pursuant to which such transactions are reviewed, approved or ratified. Under SEC rules, “related persons” include any director, executive officer, director nominee, or greater than 5% stockholder of the Company since the beginning of the previous fiscal year, and their immediate family members. The policy applies to any transaction in which:

 

	•	the Company is a participant;
	•	any related person has a direct or indirect material interest; and
	•	the amount involved exceeds $120,000, but excludes any transaction that does not require disclosure under Item 404(a) of SEC Regulation S-K.

 

The Nominating and Governance Committee, with assistance from the Company’s Secretary and General Counsel, is responsible for reviewing and, where appropriate, approving or ratifying any related person transaction involving Schlumberger or its subsidiaries and related persons. The Nominating and Governance Committee approves only those related person transactions that are in, or are not inconsistent with, the best interests of the Company and its stockholders.

 

Since the beginning of 2018, there were no related person transactions under the relevant standards.

 

Code of Conduct

 

Schlumberger has adopted a code of conduct entitled The Blue Print and The Blue Print in Action, which applies to all of its directors, officers and employees. Together, these documents describe the purpose, ambition and mindset of the Company and expectations for its employees. Both documents are located at www.slb.com/about/codeofconduct.aspx.

 

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ITEM 2.

Advisory Resolution to Approve Our Executive Compensation

 

We are asking our stockholders to approve, on an advisory basis, the Company’s executive compensation as reported in this proxy statement. As described below in the “Compensation Discussion and Analysis” section of this proxy statement, the Compensation Committee has structured our executive compensation program to achieve the following key objectives:

 

	•	to attract, motivate and retain talented executive officers;
	•	to motivate progress toward Company-wide financial and personal objectives while balancing rewards for short-term and long-term performance; and
	•	to align the interests of our executive officers with those of stockholders.

 

We urge stockholders to read the “Compensation Discussion and Analysis” beginning on page 26 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative, appearing on pages 49-61, which provide detailed information on the compensation of our named executive officers. The Compensation Committee and the Board believe that the policies and procedures articulated in the “Compensation Discussion and Analysis” are effective in achieving our goals and that the compensation of our named executive officers reported in this proxy statement has contributed to the Company’s long-term success.

 

In accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, we are asking stockholders to approve the following advisory resolution at the 2019 annual general meeting of stockholders:

 

RESOLVED, that the stockholders of Schlumberger Limited (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 2019 annual general meeting of stockholders.

 

This advisory resolution, commonly referred to as a “say-on-pay” resolution, is non-binding on our Board. Although non-binding, our Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program.

 

The Board has adopted a policy providing for an annual “say-on-pay” advisory vote. Unless the Board of Directors modifies its policy on the frequency of holding “say-on-pay” advisory votes, the next “say-on-pay” advisory vote will occur in 2020.

 

Required Vote

 

A majority of the votes cast is required to approve this Item 2.

 

If you hold your shares in street name, please note that brokers, banks and holders of record do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker, bank or holder of record how to vote on this proposal, they will deliver a non-vote on this proposal.

 

The Board of Directors Recommends a Vote FOR Item 2.

 

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Compensation Discussion and Analysis

 

The following Compensation Discussion and Analysis (“CD&A”) describes Schlumberger’s compensation policies and practices as they relate to our executive officers identified in the Summary Compensation Table below (the “named executive officers,” or the “NEOs”). The purpose of the CD&A is to explain what the elements of their compensation are; why the Compensation Committee selects these elements; how the Compensation Committee determines the relative size of each element of compensation; the decisions the Compensation Committee made with respect to the 2018 compensation of the NEOs, and the reasons for those decisions.

 

2018 — Executive Overview

 

2018 was a difficult year for Schlumberger, as well as for oilfield services companies as a whole. Our common share price suffered a 46% decline year-over-year. This was very similar to the average year-over year share price decline of all companies, including our largest competitors, comprising the Philadelphia Oil Service Sector Index. The year was characterized by — and our share price was affected by — continued industry uncertainty, muted customer spending, sluggish pricing improvement and a dramatic decrease in oil prices in the fourth quarter of 2018. Our named executive officers’ 2018 cash incentive payouts, which were subject primarily to achievement of rigorous quantitative Company 2018 financial goals, paid out at less than 38% of target, underscoring the alignment between our shareholders’ experience and our executives’ 2018 cash incentive compensation. See “Elements of Total Direct Compensation; 2018 Decisions—Annual Cash Incentive Awards” beginning on page 34.

 

Against this backdrop, however, our senior management team delivered strong operational results in 2018. Our consolidated revenues grew for a second year in a row, increasing 8% over our 2017 revenue. We also generated $2.5 billion in free cash flow in 2018, representing a 48% increase year-over-year.⁽¹⁾ Over the course of 2018, our management set a solid foundation for our 2019 plans, including improving our liquidity through our focus on revenue growth, incremental margins, capital discipline and careful management of working capital.

 

Our strong results in the first half of 2018 were led by our OneStim^® business in North America. The vertical integration of our supply chain gave us a competitive advantage in our hydraulic fracturing service lines and ensured supply-chain security in a volatile market. Also in 2018, we continued to ramp up our integrated drilling services (IDS) business in the international market, capitalizing on one of our core strengths. We believe this will result in higher margins and faster returns for these projects in 2019. Our OneSubsea product line booked $1 billion in orders during the second half of 2018, providing a solid platform for growth.

 

We continued our transformation by modernizing all of our internal workflows, as well as our organizational structure. This included further professionalizing our support functions, introducing cutting-edge planning, execution and collaboration tools, and adjusting our operations to increase teamwork and functional accountability. Our modernized operating platform will allow us to significantly improve our efficiency and reduce operating costs of our asset base through improved planning, distribution and maintenance. We believe that this will maximize our operational agility and competitiveness for the long-term.

 

Stockholder Outreach; Changes to our Executive Compensation Program

 

In 2018, 66.2% of the votes cast at our annual general meeting of stockholders voted in favor of our executive compensation program. Prior to our annual meeting, we contacted 20 of our largest stockholders, representing 47% of our outstanding stock, and met with 14 of them, representing 35% of our outstanding common stock, to seek their views on our executive compensation program.

 

Further, in August 2018, we reached out to 18 of our largest stockholders, representing 41% of our outstanding stock, and spoke to eight of these stockholders, representing 24% of our outstanding common stock. Senior members of our management team engaged these stockholders in frank and productive discussions regarding our executive compensation program and some of the alternatives we were considering in light of the stockholder feedback we received prior to the annual meeting. Our Lead Independent Director and the chairman of our Compensation Committee also participated in our engagement efforts when requested. Our management team then reported on these discussions to our Compensation Committee and our Board. In response to stockholder feedback, the Compensation Committee approved three changes to our executive compensation program, which we summarize below. One of these changes is effective for our 2018 executive compensation program, while the other two went into effect this year. Thus, the full impact of these decisions will be reflected in our 2019 executive compensation program, and will be presented in next year’s proxy statement.

 

(1)	See the reconciliation of non-GAAP measures to the comparable GAAP measures in Appendix A.

 

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Annual Cash Incentive

 

WHAT WE HEARD		WHAT WE DID – EFFECTIVE FOR 2018 COMPENSATION
•   Some stockholders said our NEOs’ key personal objectives constituted too large a portion of their annual cash incentive opportunity, and preferred that a larger portion of their annual cash incentive awards be based on achieving quantitative Company results.		•   We reduced the weighting of our NEOs’ key personal objectives under our annual cash incentive plan from 50% to 30%, and correspondingly increased the weighting of quantitative Company financial objectives under that plan. As a result: •   50% of our NEOs’ 2018 cash incentive plan continued to be based on achievement of adjusted EPS targets; •   10% of our NEOs’ 2018 cash incentive plan was based on revenue targets; and •   10% of our NEOs’ 2018 cash incentive plan was based on pre-tax operating income (“PTOI”) targets.

 

Long-Term Incentive (“LTI”) Equity Awards

 

WHAT WE HEARD		WHAT WE DID – EFFECTIVE FOR 2019 COMPENSATION
•   Some stockholders encouraged us to incorporate a total shareholder return (“TSR”) metric into our performance-based equity awards. The rationale for including this metric would be to better tie our executives’ compensation to the creation of stockholder value.		•  We introduced a modifier based on relative TSR to all of our 2019 performance share unit (“PSU”) awards. Under this modifier, the number of shares earned upon vesting will be reduced by 25 percentage points if our cumulative TSR during the three-year TSR performance period is ranked in the bottom 33rd percentile relative to the TSR of the companies comprising the Philadelphia Oil Service Sector (OSX) Index. The relative TSR modifier will only reduce the number of shares earned under a PSU award, but will not increase the number of shares earned.
•  Some stockholders requested that the performance and vesting period for all future PSUs be at least three years.		•   As a result of our introduction of the three-year relative TSR modifier described above, all 2019 PSUs granted to our NEOs are subject to a three-year TSR performance metric. •   For 2019, half of the PSUs awarded to our NEOs are also subject to a two-year performance metric based on the percentage of our net income that we are able to convert to free cash flow in addition to the three-year TSR modifier. Other PSUs are subject to a three-year return on capital employed (“ROCE”) performance condition in addition to the three-year TSR modifier. As a result, all 2019 PSUs will vest, if at all, only after a three-year performance period.

 

Some Key Facts about our 2018 Executive Compensation   •  The 2014-2018 realized pay of our CEO is generally aligned with our TSR over the same period, demonstrating our commitment to pay for performance. See page 33.   •  Our CEO’s 2018 total compensation was $4.5 million less, or 22% lower, than his 2017 total compensation. See page 49.   •  Because our CEO and other NEOs did not achieve their baseline goals for adjusted EPS and PTOI, they earned less than 38% of their 2018 cash incentive target opportunity.   •  100% of our CEO’s stock options were “under water” as of January 31, 2019.

 

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Overview of Compensation Decisions for 2018

 

In 2018, the Compensation Committee continued to focus on strengthening the link between pay and performance; retaining and motivating our top executives; and appropriately compensating them for outperforming our competitors and increasing long-term stockholder value.

 

In this context, and as more fully discussed elsewhere in this CD&A, the Compensation Committee approved the following actions for our NEOs’ 2018 compensation:

 

	•	We did not increase the 2018 LTI grant values for any of our NEOs, nor did we increase any of their 2018 target annual cash incentive opportunity.
	•	We held base salaries flat for all NEOs except Messrs. Al Mogharbel and Gatt Floridia, who each received a $70,000 increase in 2018 as a result of promotions.
	•	Our 2018 earnings per share, excluding charges and credits (“adjusted EPS”)(1), was $1.62, while our 2018 pre-tax operating income (“PTOI”) was $4.19 billion. Because our 2018 adjusted EPS and PTOI were both below our threshold targets under our 2018 cash incentive program, our CEO and other NEOs earned no payout under these components of our 2018 cash incentive program.
	•	Our 2018 revenue was $32.82 billion, representing achievement of 96.5% of target and resulting in a payout of 78.1% of the revenue portion of the annual cash incentive. As discussed above, we increased the percentage of our NEOs’ annual cash incentive opportunity based on quantitative financial goals to 70% and we reduced the percentage that is based on key personal objectives to 30%.
	•	For PSUs granted to our NEOs in January 2016, our average annual return on capital employed (“ROCE”) for the period from 2016 to the third quarter of 2018 was 310 basis points above the average ROCE of the comparator group. As a result, our NEOs earned 171% of the target shares of our common stock under these PSUs, with the final number of shares to be certified when all companies comprising our ROCE peer group report their 2018 audited results.
	•	For PSUs granted to our NEOs in January 2017, we converted 133% of our cumulative net income, before charges and credits and noncontrolling interests, into free cash flow (“FCF”), over the 2017 to 2018 performance period. Our conversion rate far exceeded the maximum performance level of 115% necessary to result in that payout. As a result, our NEOs earned 250% of the target shares of our common stock under these PSUs.

 

Our Executive Compensation Best Practices

 

The following is a summary of some of our executive compensation best practices and policies.

 

WHAT WE DO		WHAT WE DON’T DO
Pay for Performance. 100% of our NEOs’ annual equity-based compensation is performance-based, using a variety of performance measures. At Risk Pay. A significant portion of our NEOs’ pay is at risk, and is based on a mix of absolute and relative financial and operational metrics. 88% of our CEO’s 2018 total direct compensation was at risk. Short-Term Incentive. At least 70% of our NEOs’ annual cash incentive plan is based on achievement of rigorous quantitative, financial goals. Clawback Policy. Our clawback policy, and the terms of our equity awards, allow our Board to recoup performance-based cash and equity awards in specified instances. Robust Executive Stock Ownership Guidelines. Our CEO must own our stock valued at six times his annual base salary; our executive vice presidents and CFO must own at least three times their annual base salary; and all other executive officers must own at least two times their annual base salary. Annual Peer Compensation Review. We review the compensation opportunities for all of our officers against our peer groups annually. Limit on Maximum Incentive Payouts. We cap the amount that can be earned under our incentive compensation arrangements as a multiple of target.		Our executive officers have no employment, severance or change-in-control agreements. No gross-ups on excise taxes. No hedging or pledging of Schlumberger stock by directors or executive officers. No automatic acceleration of equity awards upon a change in control. Our executive officers receive only very limited perquisites. No executive pension or insurance plans exclusively for executive officers. We do not dilute our shareholders with excessive equity grants to employees. Our 2018 “burn rate,” or stock awards granted as a percentage of common shares outstanding, was only 0.37%. No repricing or exchange of underwater options without stockholder approval.

 

(1)	See the reconciliation of non-GAAP measures to the comparable GAAP measures in Appendix A.

 

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Framework for Setting Executive Compensation in 2018

 

Executive Compensation Philosophy and Goals

 

Our compensation program is designed so that the higher an executive’s position in the Company, the greater the percentage of compensation that is “at risk” — that is, contingent on our financial performance, long-term stock price performance and individual performance. See “—Relative Size of Direct Compensation Elements” beginning on page 30. The Company believes that having a significant portion of our executives’ compensation at risk more closely aligns their interests with the long-term interests of Schlumberger and its stockholders.

 

The table below sets out the elements of our NEOs’ 2018 total direct compensation; certain key features of each element; how we determine their size; and why we use these elements.

 

 

In setting our executives’ compensation, we believe that:

 

	•	the pay of our named executive officers and other senior executives should be strongly linked to performance that is evaluated against strategic, operational and personal objectives, as described below in the section entitled “Elements of Total Direct Compensation; 2018 Decisions—Annual Cash Incentive Awards” beginning on page 34;
	•	our compensation program should enable us to recruit, develop, motivate and retain top global talent, both in the short-term and long-term, by providing compensation that is competitive and by promoting the Company’s values of people, technology and profit;
	•	LTI awards should encourage the creation of long-term stockholder value, align our executives’ compensation with the stockholder returns, and incentivize our executives to achieve difficult but attainable strategic and financial goals that support our long-term performance and leadership position in our industry; and
	•	Through our executive stock ownership guidelines, our executives should be required to hold stock acquired through LTI awards, thereby aligning their interests with those of our other stockholders.

 

Promotion from within the Company is a key principle at Schlumberger, and all of our named executive officers have reached their current positions through career development within the Company. Schlumberger sees diversity of its workforce as both a very important part of its cultural philosophy and a business imperative, as it enables the Company to serve clients anywhere in the world. Schlumberger believes that its use of a consistent approach to compensation at all levels irrespective of nationality is a strong factor in achieving a diverse workforce comprising top global talent.

 

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Relative Size of Direct Compensation Elements

 

Our executive compensation program consists of three primary elements, comprising our executives’ total direct compensation:

 

	•	LTI awards;
	•	annual cash incentives; and
	•	base salary.

 

These elements allow the Company to remain competitive and attract, retain and motivate top executive talent with current and potential future financial rewards. At the same time, this relatively simple compensation program is applied and communicated consistently to our exempt employees of more than 140 nationalities operating in more than 85 countries.

 

The Compensation Committee reviews the elements of total direct compensation for the NEOs throughout the year, to evaluate whether each element of direct compensation remains at levels that are competitive with companies in Schlumberger’s two main peer groups as described in “Other Aspects of our Executive Compensation Framework – Peer Group Companies” below. The Compensation Committee relies on its own judgment in making these compensation decisions after its review of external market practices of companies in our executive compensation peer groups, including the size and mix of direct compensation for executives in those companies. The Compensation Committee seeks to achieve an appropriate balance between annual cash rewards that encourage achievement of annual financial and non-financial objectives, and LTI awards that encourage positive long-term stock price performance, with a greater emphasis on LTI awards for more senior executives.

 

While external market data provide important guidance in making decisions on executive compensation, the Compensation Committee does not set compensation based on market data alone. When determining the size and mix of each element of an NEO’s total direct compensation, the Compensation Committee also considers the following factors:

 

	•	the size and complexity of the executive’s scope of responsibilities;
	•	leadership, management and technical expertise, performance history, growth potential, and position in reporting structure;
	•	overall Company and individual performance;
	•	retention needs;
	•	the recommendations of the CEO (except for his own compensation); and
	•	internal pay equity.

 

The charts below show the percentage of 2018 base salary, target annual cash incentive and LTI compensation established by the Compensation Committee in January 2018 for our CEO and other NEOs. Approximately 88% of the direct compensation of our CEO and 83% for our other NEOs was at risk, demonstrating management’s alignment with our stockholders. In 2018, the portion of our CEO’s total compensation, as well as that of our other NEOs as a group, that was at risk is as follows:

 

Schlumberger CEO 2018 Pay Mix		Schlumberger Other NEO 2018 Pay Mix

 

Based on market data provided by our independent compensation consultant, Schlumberger’s pay mix is generally more weighted toward long-term incentive compensation than that of the companies in our main comparator groups. The Compensation Committee may, at its discretion, modify the CEO’s, or any other NEO’s mix of base pay, annual cash incentive and LTIs, or otherwise adjust an NEO’s total compensation, to best fit their specific circumstances. This has historically provided flexibility to the Compensation Committee to compensate NEOs appropriately as they near retirement, when they might not receive any LTI awards for their final years of service. The Compensation Committee may also increase the size of an LTI award to an NEO if the aggregate career LTI awards granted do not adequately reflect the executive’s current position and level of responsibility within the Company, taking into account external market practices and the other factors described above.

 

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The Competition for our Executive Talent

 

A primary consideration of the Compensation Committee in overseeing our executive compensation program is the need to motivate and retain what it considers to be the best executive talent in the energy industry. We are the world’s largest oilfield services company and a constituent of Standard & Poor’s S&P 100 Index. The Compensation Committee believes that our success in delivering strong long-term stockholder returns and financial and operational results is a result of our ability to attract, develop and retain the best talent globally. A highly competitive compensation package is critical to this objective and, to this end, the Compensation Committee generally seeks to target total direct compensation for our NEOs between the 50^th and 75^th percentiles of the Company’s executive compensation comparator groups. An NEO’s target total direct compensation depends on a variety of factors, including tenure in a particular position, individual and Company performance, and internal pay equity. For example, the Compensation Committee generally seeks to position an executive with a relatively short tenure in a position at the 50^th percentile of the Company’s executive compensation comparator groups.

 

Our Compensation Committee believes that the 50^th to 75^th percentiles is an appropriate range to target because of Schlumberger’s leading position in the oilfield services industry; because competition for our executive talent in the oil and gas industry is exceptionally fierce; and because our executives are very highly sought after, not only by our direct oilfield service competitors but by other leading companies.

 

In approving this target range and when setting compensation in 2018, the Compensation Committee considered that many current and former senior executive officers of leading companies in the energy industry have previously served as senior executives at Schlumberger.

 

We consider ourselves the “University to the Industry.” Former senior Schlumberger executives have either been, or are, senior executives at the following competitors and customers:

 

Baker Hughes, a GE company (past Chairman and CEO, and multiple current senior executive positions)		TechnipFMC (current Chairman, CEO, GC and multiple other senior executive positions)		Weatherford International (past acting CEO, CFO and multiple current senior executive positions)
Key Energy Services (past CEO)		Sentinel Energy Services (current CEO and Chairman)		Calfrac Well Services (current CEO)
Ensco (current CEO, current GC, current COO)		OILSERV (current CEO and other senior executive positions)		Carbo Ceramics (current President & CEO as well as other senior executive positions)
Smith International (past CEO)		BG Group (past Chairman and past COO)		Shelf Drilling Holdings Limited (current CEO and as well as other senior executive positions)
Patterson-UTI Energy (current CEO)		Frank’s International (past CEO)		Altus Intervention (multiple current senior executive positions)
Shawcor (current CEO)		CGG –Veritas (current CEO and CFO)		ConocoPhillips (past CTO)
YPF (past CEO)		BAE Systems (current CEO and current Chief Human Resources Officer)		Archer Limited (current Chairman, past CFO and GC, as well as other senior executive positions)
Dover Energy (past CFO)		National Petroleum Services (current CEO)		Team Inc. (current CEO)
Aker Solutions (current COO and other senior executive positions)		Expro (current CEO, past CEO and current CFO)		Flowserve (current CEO)
Nabors (current CFO)		Dril-Quip (current GC)		Tetra Technologies (past COO and multiple current senior executive positions)
ExLog (current Chairman)		RigNet (current GC)		Keane Group (current CEO)
Noble Corporation (current GC)		Speedcast International (current COO)

 

CEO = Chief Executive Officer

CFO = Chief Financial Officer

COO = Chief Operating Officer

GC = General Counsel

 

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The Compensation Committee retains the flexibility to set elements of target compensation at higher percentiles based on strong business performance, retention needs, for key skills in critical demand, and for positions that are of high internal value. Elements of our executives’ total direct compensation and actual payments may also be below our main comparator groups’ median as a result of our pay-for-performance philosophy, as discussed below.

 

Pay-for-Performance — Executive Pay and Alignment

 

As part of the Compensation Committee’s annual review of our executive compensation program, in July 2018 the Committee directed its independent compensation consultant, Pay Governance LLC (“Pay Governance”), to prepare a comparative pay-for-performance assessment against companies in our oil industry executive compensation peer group as identified in the section entitled “Other Aspects of our Executive Compensation Framework—Peer Group Companies” beginning on page 41. The purpose of the comparative assessment was to determine the degree of alignment between our NEOs’ total realizable compensation and our performance relative to these companies as measured by TSR, free cash flow growth and ROCE. We selected these metrics for their effectiveness in assessing long-term Company performance. TSR reflects share price appreciation, adjusted for dividends and stock splits.

 

We assessed performance on a three- and five-year basis ending on December 31, 2017, because the Compensation Committee believes that alignment of pay and performance is more effectively assessed over the mid- and long-term. The Compensation Committee reviewed the total realizable compensation of our CEO against that of other CEOs in our oil industry compensation peer group. It then separately reviewed the total realizable compensation of our NEOs as a group against that of named executive officers at other companies comprising that peer group.

 

As a result of the assessment, the Committee determined that the total realizable compensation of our CEO and the other NEOs was generally aligned with performance, with especially strong alignment between their realizable compensation and ROCE performance over both periods.

 

“Total realizable compensation” for each period consisted of the following:

 

	•	actual base salary paid;
	•	actual cash incentive payouts; and
	•	the December 31, 2017 market value of the following:

 

	–	the value of in-the-money stock options granted during the applicable period;
	–	the value of any unvested restricted stock units (“RSUs”); and
	–	for performance-based incentive awards, (i) the actual award payout value of awards vesting during the applicable period and (ii) the estimated payout values for awards granted in 2016 and 2017, based on company disclosures (and in all cases based on actual stock prices as of the end of the period, not as of the date of grant).

 

CEO Realized Pay

 

In the course of the Compensation Committee’s review of our executive compensation program, the Compensation Committee noted that for the past several years, the realized pay of Mr. Kibsgaard, our CEO, was, in general, substantially less than his total compensation as reported in in the Summary Compensation Table of our proxy statements (his “reported pay”). This is because the largest element of Mr. Kibsgaard’s pay consists of LTI awards, which are reported in the Summary Compensation Table based on their grant date accounting value, and thus do not reflect the value that could be earned or is actually received from these grants. Realized pay, on the other hand (also known as actual pay), is what Mr. Kibsgaard received during a given fiscal year. As a result, we believe that it is useful to compare his realized pay for each year, with his reported pay for the same period as illustrated in the chart below.

 

We calculate “realized pay” for a given year by adding together:

 

	•	actual base salary paid;
	•	the annual cash incentive payouts for that year;
	•	the value of RSUs and PSUs that vested during the year, valuing the shares based on the closing price of our common stock on the last business day of the year;
	•	the value of any perquisites; and
	•	the gain on any stock options that were exercised that year, based on the closing price of the stock on the day of the exercise compared to the exercise price of the option.

 

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The chart below shows the actual compensation received by our CEO from 2014 to 2018, and demonstrates that his realized pay was significantly lower than his reported pay for all but one year during this period. Most of the compensation of our CEO, like that of our other NEOs, was at risk.

 

CEO Reported Pay vs. Realized Pay

 

 

For the years 2014-2018, our CEO’s realized pay was 102.3%, 48.6%, 62.3%, 30.3% and 19.6% of his reported pay, respectively. Our CEO’s 2014 realized pay was comparable to his 2014 reported pay because he exercised stock options in 2014, some of which were granted as early as 2006, and because one-time transitional PSUs that were awarded in 2013 vested in 2014.

 

In addition, the following chart compares the realized pay of our CEO for the years 2014-2018 to our TSR over the same period, and demonstrates that his realized pay generally correlates to our TSR over that period.

 

CEO Realized Pay and TSR

 

 

Pay Mix and Internal Pay Equity Review

 

In January 2018, the Compensation Committee analyzed the mix of our executives’ compensation elements. In carrying out its analysis, the Compensation Committee considered the relative size of direct compensation elements of companies in Schlumberger’s two main executive compensation comparator groups in the section entitled “Other Aspects of our Executive Compensation Framework—Peer Group Companies” as well as internal factors. With regard to pay mix, the Compensation Committee also reviewed the elements of compensation for the Company’s NEOs, both in relation to one another and in comparison with the average pay mix of the Company’s executive officers. Based on its review, the Compensation Committee concluded that the mix of base salary, target annual cash incentive and LTI was appropriate for each of Schlumberger’s NEOs.

 

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The Compensation Committee also reviewed internal pay equity at its January 2018 and October 2018 meetings. Our executive officers operate as a team. Therefore, the Compensation Committee considers internal pay equity to be an important factor in its executive compensation decisions. The Compensation Committee reviewed the compensation of the CEO in relation to the compensation of our other executive officer positions, and our executives’ compensation both in relation to one another and compared to the average compensation of our other executive officer positions. The Compensation Committee noted that the ratio of target total direct compensation between the CEO and the second-highest paid executive officer was similar to that in the three prior years. The Compensation Committee also noted that the levels of target total direct compensation for the third- to the fifth-highest paid officers were very closely clustered together, consistent with their relative positions within the Company. As a result, the Compensation Committee concluded that internal pay equity was appropriate.

 

Elements of Total Direct Compensation; 2018 Decisions

 

Base Salary

 

Base salary is the fixed portion of an executive’s annual compensation, which provides some stability of income since the other compensation elements are variable and not guaranteed. On appointment to an executive officer position, base salary is set at a level that is competitive with base salaries in the applicable peer compensation groups for that position and takes into account other factors described below.

 

Base salaries for each executive officer position are compared annually with similar positions in the applicable compensation peer groups. Base salary changes for executive officers, except the CEO, are recommended by the CEO and subject to approval by the Compensation Committee, taking into account:

 

	•	comparable salaries for executives with similar responsibilities in the applicable peer groups;
	•	comparison to internal peer positions;
	•	the Company’s performance during the year relative to the previous year and to its market peers;
	•	individual business experience and potential; and
	•	overall individual performance.

 

The Compensation Committee reviews the base salary of the CEO in executive session and recommends his base salary to the non-executive members of our Board for approval, based on the criteria described above. In addition to periodic reviews based on the factors described above, the Compensation Committee may adjust an executive officer’s base salary during the year if he or she is promoted or if there is a significant change in his or her responsibilities. In this situation, the CEO (in the case of executive officers other than himself) and the Compensation Committee carefully consider these new responsibilities, external pay practices, retention considerations and internal pay equity, as well as past performance and experience. Base salary may also be reduced when an executive officer moves to a position of lesser responsibility in the Company. Alternatively, an executive’s base salary can be frozen for a number of years until it falls in line with comparable positions in the applicable compensation peer groups.

 

Base Salary Decisions in 2018

 

The Compensation Committee reviewed the compensation of each of our NEOs in January 2018. Upon review of comparative market data, the Compensation Committee determined to maintain the base salaries of our CEO and CFO at their current levels, and to increase the base salary of Messrs. Al Mogharbel and Gatt Floridia by $70,000 each in recognition of their promotions. Two of our current NEOs have had their base salaries frozen since 2011, and our CEO’s base salary has been frozen since 2015.

 

Annual Cash Incentive Awards

 

The Company pays annual performance-based cash incentives to its executives to foster a results-driven, pay-for-performance culture and to align their interests with those of our stockholders.

 

The Compensation Committee selects performance-based measures that it believes strike a balance between motivating an executive to increase near-term operating and financial results and driving profitable long-term Company growth and value for stockholders. Annual cash incentive awards are earned according to the achievement of financial, strategic, operational and personal objectives, as described below. The Compensation Committee reviews and approves the financial and other objectives applicable to the NEOs (and, in the case of the CEO, recommends to the independent directors of the Board the financial objectives applicable to the CEO). The Compensation Committee believes that, with regard to Company financial targets or performance goals, as well as our NEOs’ personal objectives, it is important to establish criteria that, while very difficult to achieve in an uncertain global economy, are realistic.

 

As discussed above, based on stockholder feedback, the Compensation Committee tied 70% of our NEOs’ 2018 annual cash incentive payout opportunity to the achievement of quantitative financial goals, while the remaining 30% is based on our NEOs’ achievement of pre-established personal objectives, which typically contain key strategic, operational and individual goals (“KPOs”).

 

In making this change, we introduced two new financial measures to our 2018 cash incentive program: revenue and PTOI. Each of these metrics accounted for 10% of our NEOs’ 2018 cash incentive opportunity. The Compensation Committee believes using PTOI as a performance metric incentivizes our executives to increase earnings by entering into contracts that generate strong returns for the Company. The Compensation Committee also believes that, in

 

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this stage of the industry recovery, using revenue as a performance metric incentivizes our executives to continue to grow the business and gain market share for the long-term. In addition to these financial performance measures, 50% of the 2018 cash incentive opportunity continued to be tied to adjusted EPS.

 

In response to stockholder feedback, we reduced the weighting of our NEOs’ key personal objectives under our annual cash incentive plan from 50% to 30%, and increased the weighting of quantifiable financial objectives.

 

As a result of these changes, the quantitative financial component of our 2018 annual cash incentive program included three different metrics: adjusted EPS, revenue and PTOI, as reflected by the following chart:

 

 

Adjusted EPS

 

The maximum cash incentive opportunity for our NEOs under the adjusted EPS portion of our annual cash incentive plan can be up to 300% of target, based on achievement of superior financial results. However, the remaining objectives are not subject to a maximum performance multiplier, meaning the maximum payout with respect to this half of the target annual cash incentive is 100% of target. As a result, an executive’s maximum annual cash incentive payment cannot exceed 200% of target.

 

The Compensation Committee determined that it was appropriate in 2018 to continue to tie a substantial portion of our NEOs’ annual cash incentive opportunity to achievement of adjusted EPS goals, because it best reflects stockholder value creation and aligns the interests of management with those of our stockholders. The Compensation Committee selected adjusted EPS as an absolute measure because it is the primary absolute basis on which we set our performance expectations for the year. We believe that consistent adjusted EPS growth leads to long-term stockholder value.

 

As a general matter, when considering the Company’s operating results for purposes of the financial portion of the annual cash incentive, the Compensation Committee may take into account unusual or infrequent charges or gains, depending on the nature of the item. The Compensation Committee may make adjustments when it believes that our executives would be inappropriately penalized by, or would inappropriately benefit from, these items. For example, the Compensation Committee may determine to exclude charges that arise from actions that management takes to proactively address events beyond its control, such as the recent industry downturn. Consistent with prior years, the Compensation Committee evaluated our 2018 performance based on adjusted EPS. For purposes of the adjusted EPS portion of our 2018 cash incentive program, the Compensation Committee believed that it was appropriate to modify earnings per share based on GAAP for items that did not reflect Schlumberger’s operating trends, such as a gain on divestiture of a business and certain asset impairment charges.

 

Key Personal Objectives

 

Our NEOs’ personal objectives are approved at the start of the fiscal year. The Compensation Committee reviews and, subject to approval by the independent directors of the Board, approves the strategic personal objectives of the CEO. and assesses his performance against those objectives in determining a portion of his annual cash incentive award, taking into account performance for the just-completed fiscal year versus predefined commitments for the fiscal year; unforeseen financial, operational and strategic issues of the Company; and any other information it determines is relevant. The CEO reviews and approves the personal strategic objectives of the other NEOs, and assesses their performance against their pre-approved objectives in a similar way.

 

Each NEO’s annual cash incentive opportunity is tied to achievement of quantitative and qualitative goals that are specific to that NEO’s position, and may relate to:

 

	•	profitability or revenue growth in the NEO’s area of responsibility;
	•	market penetration;
	•	acquisitions or divestitures;
	•	non-financial goals that are important to the Company’s success, including:

 

	–	people-related objectives such as retention, engagement and diversity;
	–	ethics, compliance and governance;
	–	health, safety and environmental objectives;
	–	new technology introduction; and

 

•

any other business priorities.

 

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2018 Annual Cash Incentive Results

 

Upon review of market data of the applicable compensation peer groups, and taking into consideration internal pay equity and that the target annual cash incentive of our NEOs was already positioned competitively from a market perspective, the Compensation Committee determined in January 2018 to leave the target annual cash incentive opportunity for all NEOs unchanged from 2017. As a result, the 2018 target annual cash incentive for our CEO was 150% of his base salary and 100% of base salary for our other NEOs.

 

All of our NEOs earned less than 38% of their respective annual cash incentive opportunity in 2018. In addition, the 2018 total compensation of our CEO, as reported in the Summary Compensation Table, was approximately $4.5 million less than his 2017 total compensation. This was largely as a result of the zero payout under the adjusted EPS and PTOI portions of our annual cash incentive program.

 

2018 Adjusted EPS Targets and Results

 

The process used to set annual adjusted EPS targets starts at the end of each year with an extensive review of plans and projections for the following year following bottom-up planning from the field. Adjusted EPS targets are subject to increase or decrease year-over-year, taking into account:

 

	•	industry cycles;
	•	anticipated customer spending;
	•	activity growth potential;
	•	pricing;
	•	introduction of new technology; and
	•	commodity prices.

 

At the January 2018 meeting, the Compensation Committee approved the following full-year adjusted EPS targets and corresponding payouts for 2018:

 

2018 Adjusted EPS Performance Targets				% of Adjusted EPS Portion (Payout %)
Less than	$1.75				0%
	$1.75				50%
	$1.90				100%
	$2.40				300%

 

For adjusted EPS results between any two targets, payout is prorated. No cash incentive is earned if we do not achieve the minimum adjusted EPS target.

 

For 2018, the Compensation Committee approved adjusted EPS targets at levels that reflected expected improvement from adjusted EPS of $1.50 achieved in 2017, which took into account factors that would potentially limit adjusted EPS gains, such as market conditions, management’s low visibility as to when customer spending would meaningfully improve, and its view that our business would not immediately recover pricing concessions extended to customers in the recent downturn.

 

Our 2018 adjusted EPS⁽²⁾ was $1.62, while 2018 earnings per share on a GAAP basis was $1.53. Because we did not achieve our threshold adjusted EPS target, our NEOs earned no payout under the adjusted EPS component of the 2018 cash incentive plan.

 

2018 Revenue Targets and Results

 

The process used to set annual revenue targets starts with a review of plans and projections following analysis of expected customer spend, projects and internal planning. Revenue targets may increase or decrease year-over-year, taking into account the same factors listed under adjusted EPS above.

 

The Compensation Committee set the following full-year revenue targets and corresponding payouts for 2018. In setting these goals for 2018, the Compensation Committee approved revenue targets at levels that reflected expected improvement from 2017 revenue of $30.4 billion.

 

2018 Revenue Performance Targets				% of Revenue Portion (Payout %)
Less than	$31.28 billion				0%
	$31.28 billion				50%
	$34.00 billion				100%

 

For revenue results between the minimum and maximum target, payout is prorated. No cash incentive is earned if we do not achieve the minimum revenue target.

 

Our 2018 revenue was $32.82 billion, representing achievement of 97% of target. This resulted in a payout of 78.1% of the revenue portion of the 2018 cash incentive plan.

 

2018 PTOI Targets and Results

 

The process used to set annual consolidated PTOI targets starts with a review of plans and projections following bottom-up planning from the field. PTOI targets may increase or decrease year-over-year, taking into account the same factors listed under adjusted EPS above.

 

The Compensation Committee set the following full-year PTOI targets and corresponding payouts for 2018. In setting these goals, the Compensation Committee approved PTOI targets at levels that reflected expected improvement from 2017 revenue of $3.9 billion.

 

2018 PTOI Performance Targets				% of PTOI Portion (Payout %)
Less than	$4.4 billion				0%
	$4.4 billion				50%
	$4.8 billion				100%

 

For PTOI results between any two targets, payout is prorated. No cash incentive is earned if we do not achieve the minimum PTOI target.

 

Our 2018 PTOI was $4.19 billion. Because we did not achieve our threshold PTOI target, our NEOs earned no payout under the PTOI component of the 2018 cash incentive plan.

 

(2)	See the reconciliation of non-GAAP measures to the comparable GAAP measures in Appendix A.

 

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2018 Key Personal Objectives and Results

 

	Mr. Kibsgaard was evaluated against the following objectives, which were established at the beginning of the year:
	GOAL		ACHIEVEMENT
	•  Maintain net inventory levels while business activity grows. This was an important goal because it resulted in efficient use of current assets and disciplined investment during the industry recovery.		•  Achieved.
	•  Establish a strategic joint venture for subsea engineering and bidding. This will provide additional integrated service offerings to our offshore customers and proactive engineering solutions over the life of the field.		•  Achieved.
	•  Oversee the development of several key organizational programs, including the creation and deployment of the leadership development program.		•  Achieved.
	•  Establish the Organizational Planning & Resource Management organization and significantly improve cost control for operational expenditures. This organization will optimize personnel and asset allocation worldwide.		•  Achieved.
	In addition to the above objectives, Mr. Kibsgaard was evaluated against strategic personal objectives such as effective capacity gain and other objectives related to cost reductions.
	Mr. Kibsgaard earned 100% of his total 2018 cash incentive award opportunity under his personal objectives.

 

	Mr. Ayat had the following key personal objectives:
	GOAL		ACHIEVEMENT
	•  Fully resolve major commercial dispute with significant customer.		•  Substantially Achieved.
	•  Complete the divestiture of our WesternGeco seismic fleet on satisfactory financial terms.		•  Achieved.
	•  Prepare executive succession plan and training.		•  Achieved.
	Mr. Ayat earned 93.3% of his total 2018 cash incentive award opportunity under his personal objectives.

 

	Mr. Belani had the following key personal objectives:
	GOAL		ACHIEVEMENT
	•  Reduce engineering and manufacturing inventory to specified base amount. This reduces storage costs and promotes efficiency through the production of high-demand tools.		•  Achieved.
	•  Complete the roll-out of specific products into Schlumberger rigs.		•  Achieved.
	•  Reduce the costs of manufacturing products in business lines by a pre-established target.		•  Achieved.
	Mr. Belani earned 100% of his total 2018 cash incentive award opportunity under his personal objectives.

 

	Mr. Gatt Floridia had the following key personal objectives:
	GOAL		ACHIEVEMENT
	•  Reduce North American days sales outstanding (“DSO”) by a pre-established target.		•  Substantially Achieved.
	•  Reduce total reportable incident frequency (“TRIF”) in the Western Hemisphere to a target threshold.		•  Substantially Achieved.
	•  Oversee leadership development program for all senior managers.		•  Achieved.
	Mr. Gatt Floridia earned 86.7% of his total 2018 cash incentive award opportunity under his personal objectives.

 

	Mr. Al Mogharbel had the following key personal objectives:
	GOAL		ACHIEVEMENT
	•  Reduce International DSO by a pre-established target.		•  Achieved.
	•  Reduce TRIF in the Eastern Hemisphere to a target threshold.		•  Achieved.
	•  Oversee leadership development program for all senior managers.		•  Achieved.
	Mr. Al Mogharbel earned 100% of his total 2018 cash incentive award opportunity under his personal objectives.

 

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2018 Annual Cash Incentive Results

 

Name		Incentive Target as percentage of Base Salary (%)		Financial Objectives Weighting (%)		Financial Portion Achieved (%)		Personal Objectives Weighting (%)		Personal Portion Achieved (%)		Total 2018 Incentive Paid as % of Target	(1)
P. Kibsgaard		150		70		11.7		30		100.0		37.8
S. Ayat		100		70		11.7		30		93.3		35.7
A. Belani		100		70		11.7		30		100.0		37.8
A. Gatt Floridia		100		70		11.7		30		86.7		33.8
K. Al Mogharbel		100		70		11.7		30		100.0		37.8

(1)	Equals the sum of both the financial portion and the personal portion of the annual cash incentive achieved, expressed as a percentage of target.

 

Long-Term Equity Incentive Awards

 

LTI awards are designed to give NEOs and other high-value employees a long-term stake in the Company, provide incentives for the creation of sustained stockholder value, act as long-term retention and motivation tools, and directly tie employee and stockholder interests over the long term.

 

Based on feedback from our stockholders, beginning in 2017 the Compensation Committee granted 100% of our executives’ LTI awards in the form of PSUs, with payouts contingent on achievement of both absolute and relative Company financial performance goals. In prior years, our NEOs and other executive officers received 50% of their target LTI compensation in the form of performance-based equity awards and 50% in the form of stock options.

 

The Compensation Committee believes that granting solely PSUs serves the following objectives:

 

	•	to create a stronger and more visible link between executive pay and Company performance;
	•	to further align our executives’ interests with those of our stockholders;
	•	to mitigate the impact of the volatility of the stock market and the cyclical nature of our industry on our LTI program;
	•	to better incentivize and retain our senior executives during any business cycle; and
	•	to tie management incentives to key metrics that our management can more readily control.

 

Awards of PSUs are currently limited to our NEOs and other senior executive officers. No shares will vest under the PSUs awarded to our NEOs if we do not achieve pre-established threshold performance levels. No dividends will accrue or be paid on any unvested PSUs during the applicable performance periods.

 

Payouts under 2016 Three-Year ROCE PSUs and 2017 Two-Year Free Cash Flow PSUs

 

In early 2016, our Compensation Committee granted PSUs to our NEOs and conditioned payout based on our average annual ROCE achieved over a three-year performance period as compared to the average annual ROCE of key oilfield services competitors taken together over the same period (the “2016 ROCE PSUs”). These competitors were Halliburton, Baker Hughes, a GE company, Weatherford, National Oilwell Varco and TechnipFMC.

 

In early 2017, our Compensation Committee granted PSUs to our NEOs and conditioned payout based on the cumulative free cash flow generated from January 1, 2017 to December 31, 2018, as a percentage of net income generated over that same period, excluding charges and credits (the “2017 FCF PSUs”).

 

At its meeting in early 2019, the Compensation Committee approved the results of (a) the three-year performance period for the 2016 ROCE PSUs and (b) the two-year performance period for the 2017 FCF PSUs, both relative to the performance criteria that the Committee had previously approved. Specifically:

 

	•	the Compensation Committee determined that we achieved cumulative FCF of 133% for the two-year performance period, representing achievement of 250% of target. As a result, our NEOs earned 250% of the target shares under the 2017 FCF PSUs. We issued the shares that were earned under the FCF PSUs in the form of restricted stock. These shares are subject to a mandatory one-year hold period. They will convert to non-restricted shares at the end of the one-year hold period, contingent on continued employment with us as of that date.
	•	the Compensation Committee determined that, based on the available reported results of the ROCE comparator companies, the 2016 ROCE PSUs had been earned at 171% of target, based on annual average ROCE of 310 basis points above the average of the comparator group through September 30, 2018, being the most recent fiscal period end reported by the companies comprising the comparator group. Because most of the companies in the ROCE comparator group had not yet reported their 2018 audited results, and because the award agreements for the 2016 ROCE PSUs

 

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provide that the PSUs are earned and settled in common stock as soon as practicable following the end of the performance period, the Compensation Committee approved the issuance of 90% of the shares that the Compensation Committee determined had been earned under the 2016 ROCE PSUs according to the information available to the Committee at the time. Any additional shares finally determined to have been earned will be issued after all of the ROCE comparator companies disclose their full-year 2018 audited results.

 

Due to our recent stock price, the earned value of our NEOs’ PSU payouts in January 2019 was substantially less than the grant values that the Committee approved when it awarded the PSUs. Although the 2016 ROCE PSUs paid out at 171% of target and the 2017 FCF PSUs paid out at 250% of target, the actual earned value of each of these grants in January 2019 was approximately 135% of the grant value.

 

How We Determined the Value of 2018 LTI Equity Awards

 

The value of an executive’s LTI grant increases with the level of an executive’s responsibility at the Company. For the CEO and our other NEOs, it is the largest element of their total direct compensation package. In determining the value of LTI awards granted to NEOs, the Compensation Committee (in recommending approval by the Board of the CEO’s awards) and the CEO (in recommending awards for the other NEOs) first considers market data regarding the LTI value for the most comparable positions in the Company’s executive compensation comparator groups, as well as several other factors, which may include:

 

	•	the Company’s financial and operating performance during the relevant period;
	•	the size and mix of the compensation elements for the executive officer;
	•	retention;
	•	achievement of non-financial goals;
	•	the executive officer’s contribution to the Company’s success;
	•	the level of competition for executives with comparable skills and experience;
	•	the total value and number of equity-based awards granted to an executive over the course of his or her career, together with the retentive effect of additional equity-based awards; and
	•	internal equity of peer position career grants.

 

The Compensation Committee approved the target dollar value of LTI awards for our NEOs in 2018 at its January meeting, based on the relevant factors above.

 

LTI Grants to our NEOs in 2018

 

The Compensation Committee decided to hold 2018 target LTI grant values flat for all our NEOs, based on its review of comparator peer group data and the current market environment. The actual grant date fair value of each grant, computed in accordance with applicable accounting standards, is disclosed in the Grants of Plan-Based Awards for Fiscal Year 2018 table below. The tables below detail the estimated grant date fair value and number of ROCE PSUs and FCF PSUs granted to the NEOs.

 

In January 2018, the Compensation Committee approved (and in the case of our CEO, the non-executive members of the Board approved) PSUs with a three-year performance period. They will vest, if at all, based on our average annual ROCE achieved over a three-year performance period commencing in 2018 as compared to the average annual ROCE of several oilfield services competitors taken together, over the same period (the “2018 ROCE PSUs”). The Compensation Committee selected Halliburton, Baker Hughes, a GE company, Weatherford, National Oilwell Varco and TechnipFMC as the comparator group of oilfield services companies for the 2018 ROCE PSUs. The 2018 ROCE PSUs constitute 50% of our executives’ 2018 target LTI dollar value. See “—2018 ROCE PSUs: Performance Measure and Goals.”

 

Also in January 2018, the Compensation Committee approved (and in the case of our CEO, the non-executive members of the Board approved) PSUs with a two-year performance period and an additional mandatory one-year hold period. These will vest, if at all, based on the percentage of our cumulative net income, excluding charges and credits, that we are able to convert to free cash flow in 2018 and 2019 (the “2018 FCF PSUs”). The 2018 FCF PSUs constitute the other 50% of our executives’ 2018 target LTI dollar value. Any 2018 FCF PSUs earned will be issued in the form of restricted stock during the mandatory one-year hold period. They will convert to non-restricted shares at the conclusion of the one-year hold period, contingent on continued employment with us as of that date. See “—2018 Free Cash Flow PSUs: Performance Measure and Goals.”

 

The following table shows the grant values of the NEOs’ 2018 LTI awards and the year-over-year percentage change between the two amounts.

 

Name		Target Number of ROCE PSUs		Target Number of FCF PSUs		Target Value of 2018 Grants		Target Value of 2017 Grants		% Change
P. Kibsgaard		84,100		82,000		$12,000,000		$12,000,000		0%
S. Ayat		28,000		27,300		$4,000,000		$4,000,000		0%
A. Belani		25,200		24,600		$3,600,000		$3,600,000		0%
A. Gatt Floridia		22,400		21,900		$3,200,000		$3,200,000		0%
K. Al Mogharbel		22,400		21,900		$3,200,000		$3,200,000		0%

 

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2018 ROCE PSUs: Performance Measure and Goals

 

In January 2018, the Compensation Committee set goals for the 2018 ROCE PSUs based on our average annual ROCE over a three-year performance period as compared to the average annual ROCE of the oilfield services competitors previously described, taken together over the same period. ROCE is a measure of the efficiency of our capital employed and is a comprehensive indicator of long-term Company and management performance. The performance period for the 2018 ROCE PSUs began on January 1, 2018 and ends on December 31, 2020.

 

We selected a ROCE metric that is relative because it allows us to directly compare how we deploy our capital against these key comparator companies in oilfield services. This is also the metric that the Compensation Committee approved for the PSUs issued to our NEOs in 2017.

 

Our selection of ROCE as the performance metric for the 2018 ROCE PSUs is also consistent with our strategic direction and transformation initiatives. Furthermore, ROCE measures performance in a way that is tracked and understood by many of our investors. The Compensation Committee believes that tying a part of our senior executives’ LTI pay to our efficiency goals and comparing them to that of key comparator companies in oilfield services will motivate our executives to continue to be innovative. The Compensation Committee also believes that improvements in efficiency through innovation will increase revenue and improve margins through our continued focus on pricing and cost control.

 

Vesting of the 2018 ROCE PSUs is conditioned on the Company’s achievement of a pre-determined threshold of relative annual ROCE of no fewer than 600 basis points below the average of all companies comprising the comparator group for the performance period. In calculating this achievement, the Compensation Committee will certify the average ROCE for each of the Company and the comparator group as a whole, in each case over the three-year performance period. If the relative ROCE achieved is less than or equal to 600 basis points below the average of the competitor group, no shares will be earned.

 

The number of PSUs that will vest and convert to shares as of the vesting date can range from 0% to 250% of the number of 2018 ROCE PSUs awarded. In no event will payout exceed 250%. The percentage achieved will depend on our performance compared to that of our competitors during the performance period as illustrated in the following graph. At the end of the performance period, the Compensation Committee will determine the percentage of shares earned based on the graph below.

 

2018 ROCE PSU Payout Matrix

 

 

We calculate ROCE as a ratio, the numerator of which is (a) income from continuing operations, excluding charges and credits plus (b) after-tax net interest expense, and the denominator of which is (x) stockholders’ equity, including non-controlling interests (average of beginning and end of each quarter in the year), plus (y) net debt (average of beginning and end of each quarter in the year). The Compensation Committee may adjust the Company’s income from continuing operations to take into account the effect of significant impacts or activities that are not representative of underlying business operations, such as acquisitions, divestitures, asset impairments and restructurings. Furthermore, the Compensation Committee evaluates, and may adjust for, the effect of acquisitions or divestments on a case-by-case basis for purposes of the ROCE calculation.

 

As stated previously, the ROCE PSUs issued to our NEOs in January 2019 are subject to a three-year relative TSR modifier.

 

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2018 Free Cash Flow PSUs: Performance Measure and Goals

 

In January 2018, the Compensation Committee set goals for the 2018 FCF PSUs based on the percentage of our cumulative net income, excluding charges and credits, that we are able to convert to free cash flow over a two-year performance period. Free cash flow is an important liquidity measure for the Company and is useful to investors and to management as a measure of the Company’s ability to generate cash. The performance period for the FCF PSUs began on January 1, 2018 and ends on December 31, 2019. The Committee believed it was appropriate to set two-year performance FCF goals due to the difficulty in setting meaningful performance targets over longer periods of time in our cyclical industry. The Compensation Committee set the target FCF conversion goal at 70% due to higher year-over-year capital expenditures and mobilization costs expected to be required to capture new business in 2018.

 

Our selection of free cash flow as a percentage of net income as the performance metric for the 2018 FCF PSUs is also part of our goal to align executive compensation with stockholder return. We present free cash flow to our investors as a measure of our ability to generate cash. Once business needs and obligations are met, this cash can be used to reinvest in the Company for future growth or to return to stockholders through dividend payments or share repurchases. The Compensation Committee believes that tying a part of our NEO’s LTI pay to our efficiency in converting net income to free cash flow will incentivize our management to seek out appropriate opportunities to increase the liquidity of the Company in accordance with our transformation goals.

 

Free cash flow represents cash flow from operations less capital expenditures, SPM investments and multiclient seismic data costs capitalized. For purposes of the 2018 FCF PSUs, free cash flow will also exclude the acquisition of baseline production and investments up to first production for SPM projects. Not excluding these payments would create a potential disincentive to invest in the SPM business because such costs would reduce free cash flow. The Compensation Committee has the discretion to adjust the Company’s income from continuing operations to take into account the effect of significant impacts or activities that are not representative of underlying business operations, such as acquisitions, divestitures, asset impairments and restructurings. Furthermore, the Compensation Committee evaluates, and may adjust for, the effect of acquisitions or divestments on a case-by-case basis for purposes of the free cash flow calculations.

 

Vesting of the 2018 FCF PSUs requires us to convert no less than 50% of our net income to free cash flow over the performance period. In calculating this achievement, the Compensation Committee will certify the cumulative free cash flow and net income generated by the Company over the two-year performance period. If the percentage of free cash flow conversion is less than or equal to 50%, no shares of our common stock will be earned.

 

The number of PSUs that will convert to shares at the end of the performance period can range from 0% to 250% of the number of 2018 FCF PSUs awarded. In no event will payout exceed 250%. The percentage achieved will depend on our performance over the performance period as illustrated in the following table. At the end of the performance period, the Compensation Committee will determine the number of shares earned based on the table below.

 

Cumulative Free Cash Flow Conversion Percentage	% of Target Shares Earned (Payout %)	(1)
Less than or equal to 50%	0%
60%	50%
70%	100%
90%	200%
Equal to or greater than 100%	250%

(1)	Fractional shares rounded up to the next whole share. Number of shares determined by linear interpolation between performance levels.

 

Any 2018 FCF PSUs earned will initially be issued in the form of restricted common stock and be subject to a mandatory one-year hold period. The restricted shares will convert to non-restricted shares at the end of the one-year hold period, contingent on continued employment with us as of that date. We believe this mandatory hold period fosters retention of our executive talent and better aligns the interests of our executives with that of our stockholders.

 

As stated previously, the FCF PSUs issued to our NEOs in January 2019 are subject to a three-year relative TSR modifier (but not a one-year hold period). As a result of the relative TSR modifier applicable to the 2019 FCF PSUs, all performance-based equity awards issued to our NEOs in 2019 will vest, if at all, only after a full three-year performance period.

 

Other Aspects of our Executive Compensation Framework

 

Peer Group Companies

 

The Compensation Committee considers formal executive compensation survey data prepared by Pay Governance when it reviews and determines executive compensation. The Compensation Committee also reviews information on the executive compensation practices at various “peer group” companies when considering changes to the Company’s executive compensation program. To prepare for its executive compensation analysis, the Company’s executive compensation department works with Pay Governance to match Company positions and responsibilities against survey positions and responsibilities and to compile the annual compensation data for each executive officer.

 

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The Company has two main executive compensation peer groups, the oil industry and general industry peer groups (our “main comparator groups”). The survey data prepared by Pay Governance summarize the compensation levels and practices of our main comparator groups, as follows:

 

	•	the “oil industry peer group,” which comprises companies in the oil services industry, as well as E&P companies and integrated oil and gas companies, in each case with annual revenues between $5.7 billion and $103 billion; and
	•	the “general industry peer group,” which comprises other large technology-focused companies with significant international operations and annual revenues between $13 billion and $62 billion and market capitalizations of greater than $7 billion.

 

The Compensation Committee’s selection criteria for companies comprising the main comparator groups include:

 

	•	potential competition for executive talent;
	•	revenue and market capitalization;
	•	global presence and scope of international operations; and
	•	companies viewed as leaders in their industry.

 

The Compensation Committee, with the assistance of Pay Governance, annually reviews specific criteria and recommendations regarding companies to add to or remove from the comparator groups. As a general matter, the Company selects suitable comparator companies such that companies in each of our two main comparator groups, at the median, approximate Schlumberger’s estimated revenue in the then-current year and its then-current market capitalization. The Compensation Committee modifies the peer group criteria as appropriate while seeking a satisfactory degree of stability, to provide a consistent basis for comparison. A challenge facing the Company in determining the companies appropriate for inclusion in our two main comparator peer groups for 2018 executive compensation decisions was the Company’s high market capitalization relative to its revenue, rendering it difficult to position Schlumberger at the median of each group.

 

Oil Industry Peer Group

 

The oil industry peer group comprises companies in the oil services industry with revenues greater than $5.7 billion, as well as E&P companies and integrated oil and gas companies, all with annual revenues between $7.5 billion and $103 billion. The broad revenue range is due to the limited number of peer companies in Schlumberger’s immediate revenue range, and the fact that all other oilfield service companies have lower revenue than Schlumberger. Because of Schlumberger’s significant international operations, this peer group includes non-U.S. energy and energy-related companies that also meet the criteria set forth above. Some members of this peer group frequently target Company executives for positions at the peer company. See “—The Competition for our Executive Talent,” on page 31.

 

The Compensation Committee decided to include E&P companies in this peer group based on a number of factors. First, because Schlumberger was significantly larger than all of its direct competitors in the oilfield services industry in terms of revenue and market capitalization, the Compensation Committee believed that the addition of E&P companies provided a more appropriate and complete comparator group. In addition, the Compensation Committee believed that the inclusion of E&P companies is appropriate because our executives have been hired by E&P companies in the past, and market consolidation has reduced the number of direct competitors in the oilfield services industry, thus increasing the prominence of E&P companies as competitors for executive talent.

 

In July 2017, the Compensation Committee reviewed the companies constituting our two main comparator groups effective for 2018 executive compensation decisions, based on the criteria set forth above. At the time of its review, Schlumberger’s full-year 2017 revenue was forecast to be approximately $30 billion. Applying the selection criteria set forth above, the Compensation Committee approved the removal of Apache Corporation from the oil industry peer group because it did not meet the revenue criterion described above. The Compensation Committee also approved the addition of Petrofac and TechnipFMC to this group based on the selection criteria set forth above, effective for 2018 compensation decisions.

 

As a result of the foregoing, Schlumberger was in the 71^st percentile of the oil industry peer group in terms of revenue, and in the 95^th percentile of the oil industry peer group in terms of market capitalization.

 

The following companies constitute the oil industry peer group effective for relevant 2018 compensation decisions:

 

 

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General Industry Peer Group

 

The Compensation Committee considers data from the general industry peer group as it deems necessary or advisable to the extent that data from the first peer group may not exist, or may be insufficient, for some executive officer positions. The second group is also particularly relevant for non-operations positions, where the skills and experience may be easily transferable to other industries outside the oil and gas industry.

 

The general industry peer group provides data from large companies with significant international operations, and supplements the compensation data from the oil industry peer group, whose companies are closer to Schlumberger in industry type but have widely varying revenue sizes. The general industry peer group:

 

	•	includes multi-national companies with (i) non-U.S. annual revenue of at least 20% of consolidated revenue; (ii) a technical focus; (iii) annual revenues between $13 billion and $62 billion; and (iv) market capitalization of at least $7 billion;
	•	excludes companies that do not have a significant international scope;
	•	includes less than 25% of the companies within a peer group in any single industry; and
	•	excludes companies in industries that are least comparable to Schlumberger’s, such as entertainment, finance and retail.

 

In July 2017, the Compensation Committee, applying the selection criteria set forth above, approved the addition of 10 companies — Abbott, AbbVie, Eli Lily, Emerson Electric, Freeport-McMoRan, Gilead Sciences, HP, HP Enterprise, Medtronic and SAP — to the general industry peer group, effective for 2018 compensation decisions. Seven companies were removed from this peer group. The Compensation Committee approved the removal of Coca-Cola and Unilever because these companies did not meet the technology focus criterion above. Alphabet, Airbus, Johnson & Johnson, PepsiCo and Procter & Gamble were removed because they did not meet the revenue criteria described above.

 

As a result of the foregoing, Schlumberger was positioned at the 46^th percentile of the general industry peer group in terms of revenue, and the 77^th percentile of that peer group in terms of market capitalization.

 

The following companies constitute the general industry peer group effective for relevant 2018 compensation decisions:

 

 

Additional Peer Groups for Select Positions

 

The Compensation Committee refers to two additional executive compensation peer groups, which were effective for 2018 compensation decisions only as to our EVP Technology. These are:

 

	•	the “lower-revenue oil industry peer group,” which comprise smaller companies in the oil services, E&P, refining and pipeline industries with annual revenues between $0.9 billion and $8.9 billion; and
	•	an “R&D-focused peer group,” which comprise various companies from the S&P 500 Index with research and development (“R&D”) expenditures, at the median, close to Schlumberger’s R&D expenditures.

 

These two additional peer groups serve as points of reference for the Compensation Committee, given the scope and level of responsibility of executive positions as to which the Compensation Committee requires additional compensation data. Prior to the introduction of these two peer groups, the Compensation Committee had determined that select executives who held very senior positions within the Company (including our EVP Technology) could, by virtue of their leadership experience and professional background at Schlumberger, become chief executives of other, smaller companies in the oil and gas industry.

 

The Compensation Committee applies the same selection criteria for companies comprising these two peer groups as for the main comparator groups; however, the global scope of international operations criteria does not apply to the lower-revenue oil industry peer group.

 

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Lower-Revenue Oil Industry Peer Group

 

Among our NEOs, the lower-revenue oil industry peer group is relevant only for the compensation of our EVP Technology. In July 2017, the Compensation Committee decided to make no changes to the lower-revenue oil industry peer group, effective for 2018 compensation decisions.

 

As a result of the foregoing, the following companies constitute this peer group effective for relevant 2018 compensation decisions:

 

 

R&D Focused Peer Group — Similar R&D Expenditures

 

The R&D-focused peer group comprises large companies with significant international operations, some of which also are in our general industry peer group. While the 2016 consolidated revenue of these companies varied greatly, their R&D expenditures, at the median, approximated Schlumberger’s R&D expenditures in that year. As with the lower-revenue oil industry peer group, this peer group is relevant only for the compensation of our EVP Technology.

 

In July 2017, the Compensation Committee reviewed the criteria for the R&D-focused peer group. The Compensation Committee made substantial changes to this peer group, removing 21 companies from the list and adding 21 new companies. The 21 companies removed were 3M, Allergan, AT&T, Biogen, Broadcom Limited, Caterpillar, Dell EMC, Delphi Automotive, Exxon Mobil, Gilead Sciences, Harris Corporation, Honeywell International, HP Enterprise, Lockheed Martin, Medtronic, PepsiCo, Proctor & Gamble, Regeneron Pharmaceuticals, Rockwell Collins, Textron and Vertex Pharmaceuticals.

 

The following 50 companies constitute the R&D-focused peer group effective for relevant 2018 compensation decisions:

 

 

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Role of the Independent Executive Compensation Consultant

 

The Compensation Committee has retained Pay Governance as its independent consultant with respect to executive compensation matters. Pay Governance reports only to, and acts solely at the direction of, the Compensation Committee. Schlumberger’s management does not direct or oversee the activities of Pay Governance with respect to the Company’s executive compensation program. Pay Governance prepares compensation surveys for review by the Compensation Committee at its October meeting. One of the purposes of the October meeting is to assess compensation decisions made in January of that year in light of comparative data to date; another purpose of the October meeting is to prepare for the annual executive officer compensation review the following January.

 

Pay Governance works with the Company’s executive compensation department to compare compensation opportunities of the Company’s executive officers with compensation opportunities for comparable positions at companies included in the compensation surveys conducted by Pay Governance at the direction of the Compensation Committee. Pay Governance and the Company’s executive compensation department also compile annual compensation data for each executive officer. The Compensation Committee has also instructed Pay Governance to prepare an analysis of each named executive officer’s compensation. The Compensation Committee has also retained Pay Governance as an independent consulting firm with respect to non-employee director compensation matters. Pay Governance prepares an analysis of competitive non-employee director compensation levels and market trends using the same two main peer groups as those used in the executive compensation review.

 

The Compensation Committee has assessed the independence of Pay Governance pursuant to SEC rules and has concluded that its work did not raise any conflict of interest that would prevent Pay Governance from independently representing the Compensation Committee.

 

Procedure for Determining Executive Compensation; Role of Management

 

The Compensation Committee evaluates all elements of executive officer compensation each January, after a review of the achievement of financial and personal objectives with respect to the prior year’s results. The purpose is to determine whether any changes in an officer’s compensation may be appropriate. The CEO does not participate in the Compensation Committee’s deliberations with regard to his own compensation. At the Compensation Committee’s request, the CEO reviews with the Compensation Committee the performance of the other executive officers, but no other named executive officer has any input in executive compensation decisions. The Compensation Committee gives substantial weight to the CEO’s evaluations and recommendations because he is particularly able to assess the other executive officers’ performance and contributions to the Company. Our Vice President of Human of Resources assists the CEO in developing the executive officers’ performance reviews and reviewing market compensation data to determine compensation recommendations for our executives. The Compensation Committee independently determines each executive officer’s mix of total direct compensation based on the factors described in “Compensation Discussion and Analysis—Other Aspects of our Executive Compensation Framework—Relative Size of Direct Compensation Elements.” Early in the calendar year, financial and personal objectives for each executive officer are determined for that year. The Compensation Committee may, however, review and adjust compensation at other times as the result of new appointments or promotions during the year.

 

The following table summarizes the approximate timing of significant executive compensation events:

 

EVENT		TIMING
Establish Company financial objectives		January of each fiscal year for current year
Establish CEO personal objectives		Early in the first quarter of the fiscal year for current year
Review and approve the peer group companies used for compensation benchmarking		July of each fiscal year
Perform competitive assessment to determine how Schlumberger’s compensation decisions compared to decisions made by companies included in the compensation surveys		October of each fiscal year for current year
Independent compensation consultant provides analysis for the Compensation Committee to evaluate executive compensation		October of each year for compensation in the following fiscal year
Evaluate Company and executive performance (achievement of objectives established in previous fiscal year) and recommend incentive compensation based on those results		Results approved in January of each fiscal year for annual cash incentive compensation with respect to prior year. The incentive earned in prior fiscal year is paid in February of the current fiscal year
Review and recommend executive base salary and determine equity-based grants		January of each fiscal year for base salary for that year and for equity-based grants

 

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Long-Term Equity Awards — Granting Process

 

The Compensation Committee is responsible for granting long-term equity-based compensation under our omnibus stock incentive plans. The Compensation Committee approves a preliminary budget for equity-based grants for the following year at each October meeting. Management determines the allocation for groups within the Company and individual recommendations are made by the heads of the Groups and approved by the CEO. The Compensation Committee approves all equity-based awards, including executive officer awards, which are recommended by the CEO, except for his own. Awards for executive officers other than the CEO are granted by the Compensation Committee and discussed with the Board. Awards for the CEO are granted by the Compensation Committee following approval by the full Board.

 

In addition to considering the value of each equity-based award, management and the Compensation Committee also consider the overall potential stockholder dilution impact and “burn rate,” which is the rate at which awards are granted as a percentage of common shares outstanding. Each year, the Compensation Committee reviews a budgeted grant date value of equity-based awards to our executives and other eligible employees and makes a recommendation to the Board for approval. This review and recommendation process includes an analysis of potential dilution levels and burn rates resulting from the potential grant of such awards. The Compensation Committee and management use this analysis regarding dilution levels and burn rates as an additional factor in approving long-term equity awards.

 

The regular Board and Compensation Committee meeting schedule is set at least a year in advance with Board meetings held quarterly, generally toward the end of January, April, July and October. The timing of these committee meetings is not determined by any of the Company’s executive officers and is usually two days in advance of the Company’s announcement of earnings. The Compensation Committee sets the equity award grant date as the day of the Board meeting. The Company does not time the release of material non-public information for the purpose of affecting the values of executive compensation. At the time equity grant decisions are made, the Compensation Committee is aware of the earnings results and takes them into account, but it does not adjust the size or the mix of grants to reflect possible market reaction.

 

Annual grants of equity-based awards to the NEOs, other stenior executive officers and the rest of the Company’s eligible employees are made at the January meeting of the Compensation Committee. However, specific grants may be made at other regular meetings, to recognize the promotion of an employee, a change in responsibility or a specific achievement. The exercise price for all stock options granted to executive officers and other employees is the average of the high and low trading prices of the Schlumberger common stock on the NYSE on the date of grant, which has been Schlumberger’s practice for many years. The Board and the Compensation Committee have the discretion to grant equity awards with different vesting schedules as they deem appropriate or necessary.

 

Executive Stock Ownership Guidelines

 

The Compensation Committee and management believe strongly in linking executive long-term rewards to stockholder value. Our Board, upon recommendation of the Nominating and Governance Committee and the Compensation Committee, adopted revised executive stock ownership guidelines in early 2019 applicable to executive officers and other key position holders.

 

Senior executives are required to hold the numbers of shares equal to the multiple of base salary set forth below.

 

Title	Stock Ownership Multiple
Chief Executive Officer	6x base salary
Executive Vice Presidents	3x base salary
Executive Officers (non-EVP)	2x base salary
Key Staff Positions	1x base salary

 

All executives subject to the guidelines must retain 50% of net shares acquired upon the exercise of stock options and after the vesting of PSUs and RSUs, after payment of applicable taxes, until they achieve the required ownership level.

 

The guidelines provide that executives have five years to satisfy the ownership requirements. After the five-year period, executives who have not met their minimum stock ownership requirement must retain 100% of the net shares acquired upon stock option exercises and any PSU and RSU vesting until they achieve their required ownership level. Stock ownership for the purpose of these guidelines does not include shares underlying vested or unvested stock options, unvested RSUs or unvested PSUs.

 

As of January 31, 2019, all of our NEOs were in compliance with our stock ownership guidelines.

 

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Other Executive Benefits and Policies

 

Retirement Benefits

 

In line with Schlumberger’s aim to encourage long-term careers with the Company and to promote retention, retirement plans are provided, where possible, for all employees, including named executive officers, according to local market practice. Schlumberger considers long-term benefit plans to be an important element of the total compensation package. The pension plans provide for lifetime benefits for certain employees upon retirement after a specified number of years of service and take into account local practice with respect to retirement ages. They are designed to complement but not be a substitute for local government plans, which may vary considerably in terms of the replacement income they provide, and other Company sponsored savings plans. Employees may participate in multiple retirement plans in the course of their career with the Company or its subsidiaries, in which case they become entitled to a benefit from each plan based upon the benefits earned during the years of service related to each plan. The qualified plans are funded through cash contributions made by the Company and its subsidiaries based on actuarial valuations and/or regulatory requirements.

 

Some of the Schlumberger U.S. retirement plans are non-qualified plans that provide an eligible employee with additional retirement savings opportunities that cannot be achieved with tax-qualified plans due to limits on annual compensation that can be taken into account or annual benefits that can be provided under qualified plans.

 

Officers and other employees in the United States whose compensation exceeds the qualified plan limits are eligible to participate in non-qualified excess benefit programs for 401(k), profit-sharing and pension, whereby they receive correspondingly higher benefits. Employees and executive officers assigned outside the United States are entitled to participate in the applicable plans of the country where they are assigned, including supplemental plans where available.

 

Retirement Practices

 

The Company has a practice of phased retirement, which, at the discretion of the Company, may be offered to executive officers from time to time (other than the CEO) who are approaching retirement. This practice involves a transition into retirement whereby the individual ceases being an executive officer and relinquishes primary responsibilities. He or she remains an employee and generally receives lesser salary over time for reduced responsibilities and reduced working time. The arrangements are typically in place for an average of two to three years, as agreed at the start of the term. The purpose is to allow the outgoing executive officer to support the incoming executive officer for a period of time to provide for a smooth succession and to provide resources to the Company in particular areas of expertise while agreeing not to join a competitor during the employment period. In these circumstances, the Company maintains pension contributions and other benefits such as medical and insurance, and the executive officer continues to vest in previously-granted LTI awards. During this period, however, the executive officer is no longer eligible for additional equity incentive compensation or, once his or her work time is reduced, for an annual cash incentive opportunity.

 

Other Benefits

 

Schlumberger seeks to provide benefit plans, such as medical coverage and life and disability insurance, on a country-by-country basis in line with market conditions. Where the local practice is considered to be less than the Schlumberger minimum standard, the Company generally offers the Schlumberger standard. Our named executive officers are eligible for the same benefit plans provided to other employees, including medical coverage and life and disability insurance as well as supplemental plans chosen and paid for by employees who wish additional coverage. There are no special insurance plans for our named executive officers.

 

Limited Perquisites

 

Schlumberger provides only limited perquisites to its named executive officers, which are identified in the narrative notes to the Summary Compensation Table.

 

No Employment Agreements or Other Arrangements

 

Our named executive officers do not have employment, severance or change-in-control agreements, but serve at the will of the Board. This enables the Company to terminate their employment using judgment as to the terms of any severance arrangement and based on specific circumstances at the time they cease being executive officers.

 

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Recoupment of Performance-Based Cash and Equity Awards (Clawback)

 

In January 2019, our Board, upon the recommendation of the Compensation Committee, adopted a revised policy regarding recoupment of performance-based incentive compensation, whether paid in the form of equity or cash, in the event of specified restatements of financial results. Under the revised policy, if financial results are restated due to fraud or other intentional misconduct, the Compensation Committee will review any performance-based or incentive compensation paid to executive officers who are found to be personally responsible for the fraud or other intentional misconduct that caused, in whole or in part, the need for the restatement. Based on that review, the Committee will take such actions as it deems appropriate or necessary, including recoupment of any amounts paid in excess of the amounts that would have been paid based on the restated financial results. In addition, our performance-based equity awards and any shares of stock that are issued as a result of vesting of these awards are subject to recoupment under the terms of those awards.

 

Prohibition on Hedging or Pledging of Schlumberger Stock

 

Our directors and executive officers are prohibited from using any strategies or products (such as derivative securities or short-selling techniques) to hedge against the potential changes in the value of Schlumberger common stock. In addition, our directors and executive officers, and other key employees, are prohibited from holding Schlumberger securities in a margin account or pledging Schlumberger securities as collateral for a loan. Our insider trading policy strongly discourages, but does not prohibit, other employees from engaging in speculative transactions, including hedging or other financial mechanisms, holding Schlumberger securities in a margin account or pledging Schlumberger securities.

 

Impact of Tax Treatment

 

Section 162(m) of the Internal Revenue Code limits the amount of compensation that may be deducted per covered employee to $1 million per taxable year. Following the enactment of the Tax Cuts and Jobs Act, beginning with the 2018 calendar year, this $1 million annual deduction limitation applies to all compensation paid to any individual who is the Chief Executive Officer, Chief Financial Officer or one of the other three most highly compensated executive officers for 2017 or any subsequent calendar year. There is no longer any exception to this limitation for qualified performance-based compensation (as there was for periods prior to 2018). Thus, it is expected that compensation deductions for any covered individual will be subject to a $1 million annual deduction limitation (other than for certain compensation that satisfies requirements for grandfathering under the new law). Although the deductibility of compensation is a consideration evaluated by the Compensation Committee, the Compensation Committee believes that the lost deduction on compensation payable in excess of the $1 million limitation for the named executive officers is not material relative to the benefit of being able to attract and retain talented management. Accordingly, the Compensation Committee will continue to retain the discretion to pay compensation that is not deductible.

 

Compensation Committee Report

 

The Compensation Committee has reviewed and discussed with the Company’s management the Compensation Discussion and Analysis included in this proxy statement. Based on that review and discussion, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

 

SUBMITTED BY THE COMPENSATION COMMITTEE OF THE SCHLUMBERGER BOARD OF DIRECTORS

 

Indra K. Nooyi, Chair

Peter L.S. Currie

Leo Rafael Reif

Henri Seydoux

 

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Executive Compensation Tables and Accompanying Narrative

 

2018 Summary Compensation Table

 

The following table sets forth the compensation paid by the Company and its subsidiaries for the fiscal year ended December 31, 2018 to the Chief Executive Officer, the Chief Financial Officer and the next three most highly compensated executive officers who were serving as executive officers as of December 31, 2018 (each an “NEO” or a “named executive officer”).

 

Name		Year		Salary ($)		Bonus ($)		(1)		Stock Awards ($)		(2)		Option Awards ($)				Non-Equity Incentive Plan Compensation ($)		(1)		Change in Pension Value & Nonqualified Deferred Compensation Earnings ($)		(3)		All Other Compensation ($)		(4)		Total ($)
Paal Kibsgaard Chairman & CEO		2018		2,000,000			N/A				11,998,751				0				1,132,500				1,014,077				53,872	(5)			16,199,200
		2017		2,000,000			N/A				11,998,506				0				4,275,000				2,344,577				141,257				20,759,340
		2016		2,000,000			N/A				6,000,813				5,998,080				2,775,000				1,733,155				52,546				18,559,594
Simon Ayat EVP & CFO		2018		1,000,000			N/A				3,994,767				0				358,100				163,106				72,045	(6)			5,588,018
		2017		1,000,000			N/A				5,206,165				0				1,401,500				745,143				105,875				8,458,683
		2016		1,000,000			N/A				2,000,271				1,999,360				925,000				539,375				84,616				6,548,982
Ashok Belani EVP Technology		2018		900,000			N/A				3,597,486				0				340,290				124,870				65,083	(7)			5,027,729
		2017		900,000			N/A				4,810,285				0				1,269,450				763,364				94,050				7,837,149
		2016		900,000			N/A				2,907,663				1,802,240				810,000				609,364				84,466				7,113,733
Aaron Gatt Floridia EVP Western Hemisphere		2018		834,167			N/A				3,200,205				0				282,032				(263,400	)			323,283	(8)			4,376,287
		2017		770,000			N/A				4,406,252				0				1,092,245				1,011,797				160,790				7,441,084
		2016		770,000			N/A				2,712,458				1,605,120				696,850				762,504				153,626				6,700,558
Khaled Al Mogharbel EVP Eastern Hemisphere		2018		834,167			N/A				3,200,205				0				315,399				(116,122	)			284,222	(9)			4,517,871
		2017		770,000			N/A				4,406,252				0				1,063,755				195,703				244,757				6,680,467
		2016		770,000			N/A				2,711,558				1,605,120				693,000				119,065				254,702				6,153,445

(1)	The annual cash incentive paid to our NEOs is included in the column “Non-Equity Incentive Plan Compensation.”
(2)	Includes the value of PSU awards and RSU awards. For 2016, each amount reflected in the “Stock Award” column is the aggregate grant date fair value for standard three-year PSUs at target level performance that were granted in January 2016 and, for Messrs. Belani, Gatt Floridia and Al Mogharbel, the RSU awards that were granted to each of them in July 2016. For 2017, each amount reflected in the “Stock Awards” column is the aggregate grant date fair value for both the FCF and ROCE PSUs at target level performance that were granted in January 2017, and the RSU awards that were granted to Messrs. Ayat, Belani, Gatt Floridia and Al Mogharbel in October 2017. For 2018, each amount reflected in the “Stock Awards” column is the aggregate grant date fair value for both the FCF and ROCE PSUs at target level performance that were granted in January 2018. Each amount reflects an accounting expense and does not correspond to actual value that may be realized by an NEO in the future. The number of equity awards granted in 2018 to each NEO is provided in the Grants of Plan-Based Awards for Fiscal Year 2018 table on page 51. The grant date fair value of these awards is calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (ASC Topic 718), as described in Note 13, “Stock-based Compensation Plans,” to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018.
	The value of the 2018 PSUs at the grant date, assuming achievement of the maximum performance level of 250%, would be: Mr. Kibsgaard — $29,996,878; Mr. Ayat — $9,986,918; Mr. Belani — $8,993,715; Mr. Gatt Floridia — $8,000,513; and Mr. Al Mogharbel — $8,000,513.
	The NEOs may never realize any value from these PSUs and, to the extent that they do, the amounts realized may have no correlation to the amounts reported above.
(3)	The changes in pension value reported in this column represent the increase in the actuarial present value of a named executive officer’s accumulated benefit under all benefit and actuarial pension plans in which he or she participates. This change in present value is not a current cash payment. It represents the change in the value of the named executive officer’s pensions, which are only paid after retirement. There are no nonqualified deferred compensation earnings reflected in this column because no NEO received above-market or preferential earnings on such compensation during 2018, 2017 or 2016. Due to an increase in the Discount Rate to 4.3%in 2018 from 3.7% in 2017, some NEOs recorded negative pension value changes.
(4)	All of the perquisites included in the column “All Other Compensation” and described in the accompanying footnotes are generally available to all of the Company’s professional-level employees. Relocation assistance is provided to all employees on a Company-wide basis.
(5)	The amount disclosed for Mr. Kibsgaard consists of the following:

 

	Perquisites:
	Housing Allowance		$	53,872
	TOTAL		$	53,872

 

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(6)	The amount disclosed for Mr. Ayat consists of the following:
	Unfunded credits to the Schlumberger Restoration Savings Plan		$	63,795
	Contributions to Schlumberger 401(k) Plan			8,250
	TOTAL		$	72,045
(7)	The amount disclosed for Mr. Belani consists of the following:
	Unfunded matching credits to the Schlumberger Restoration Savings Plan		$	56,833
	Contributions to Schlumberger 401(k) Plan			8,250
	TOTAL		$	65,083
(8)	The amount disclosed for Mr. Gatt Floridia consists of the following:
	Unfunded credits to the Schlumberger Restoration Savings Plan		$	98,094
	Contributions to Schlumberger 401(k) Plan			16,500
	Perquisites:
	Mobility Payment			40,000
	Relocation Allowance			30,000
	Temporary Living Allowance			6,000
	Vacation Travel Allowance			6,729
	Children’s Education			19,261
	Housing Allowance			101,022
	Relocation Fees			4,444
	Expatriate Tax Assistance			1,233
	TOTAL		$	323,283
(9)	The amount disclosed for Mr. Al Mogharbel consists of the following:
	Unfunded credits to the Schlumberger Restoration Savings Plan		$	97,273
	Contributions to Schlumberger 401(k) Plan			16,500
	Perquisites:
	Vacation Travel Allowance			42,603
	Children’s Education			127,846
	TOTAL		$	284,222

 

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Grants of Plan-Based Awards for Fiscal Year 2018

 

The following table provides additional information about stock and option awards and equity incentive plan awards granted to our named executive officers in 2018.

 

						Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2)												Estimated Possible Payouts Under Equity Incentive Plan Awards(3)												All Other Stock Awards: Number				All Other Option Awards: Number of				Exercise or Base				Full Grant Date Fair Value
Name		Award Type(1)		Grant Date		Threshold ($)				Target ($)				Maximum ($)				Threshold (#)				Target (#)				Maximum (#)				of Shares of Stock or Units (#)				Securities Underlying Options (#)				Price of Option Awards ($/Sh)				of Stock and Option Awards ($)
P. Kibsgaard							1,059,000				2,775,000				6,000,000
		FCF PSU		1/17/18																		82,000				205,000																6,001,580
		ROCE PSU		1/17/18																		84,100				210,250																5,997,171
S. Ayat							353,000				925,000				2,000,000
		FCF PSU		1/17/18																		27,300				68,250																1,998,087
		ROCE PSU		1/17/18																		28,000				70,000																1,996,680
A. Belani							317,700				832,500				1,800,000
		FCF PSU		1/17/18																		24,600				61,500																1,800,474
		ROCE PSU		1/17/18																		25,200				63,000																1,797,012
A. Gatt Floridia							294,461				771,604				1,668,334
		FCF PSU		1/17/18																		21,900				54,750																1,602,861
		ROCE PSU		1/17/18																		22,400				56,000																1,597,344
K. Al Mogharbel							294,461				771,604				1,668,334
		FCF PSU		1/17/18																		21,900				54,750																1,602,861
		ROCE PSU		1/17/18																		22,400				56,000																1,597,344

(1)	All equity awards to our NEOs in 2018 were in the form of PSUs. All such PSUs were awarded under our 2013 Omnibus Stock Incentive Plan.
(2)	These columns show the possible payouts for each NEO for fiscal year 2018. Possible payouts are performance-driven. Threshold, target and maximum potential payouts are based on the annual cash incentive range established for each NEO, which is expressed as a percentage of base salary for the year.
	Actual cash incentive amounts earned for 2018 are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. For information regarding the annual cash incentive paid to our NEOs with respect to 2018 performance, see “Compensation Discussion and Analysis—Elements of Total Direct Compensation; 2018 Decisions—Annual Cash Incentive Awards” beginning on page 34.
(3)	See “Compensation Discussion and Analysis—Elements of Total Direct Compensation; 2018 Decisions—Long-Term Equity Incentive Awards” beginning on page 38 for a detailed description of our PSUs, including the criteria to be applied in determining vesting of PSUs. See also “—Potential Payments Upon Termination or Change in Control for Fiscal Year 2018—Termination of Employment—PSUs” and “—Potential Payments Upon Termination or Change in Control for Fiscal Year 2018—Change in Control—PSUs and RSUs,” beginning on page 61. We valued the PSUs by multiplying the number of PSUs (at threshold, target or maximum, as applicable) by $73.19 for the January FCF PSUs and $71.31 for the January ROCE PSUs, the applicable grant date fair values for the PSUs. “Target” represents the number of PSUs awarded in 2018, and “Maximum” reflects the highest possible payout (250% of the grant). The award agreements under which the PSUs were issued provide that no PSUs will vest unless a specified threshold level of performance is achieved. Vested PSUs are paid in shares of our common stock, and the payout, if any, with respect to PSUs will occur at the end of the performance period (January 2018 through December 2020 for the ROCE PSUs and January 2018 through December 2019 for the FCF PSUs), and is calculated in the manner described in the sections of the CD&A entitled “LTI Grants to our NEOs in 2018—2018 ROCE PSUs: Performance Measure and Goals” and “LTI Grants to our NEOs in 2018—2018 Free Cash Flow PSUs: Performance Measure and Goals,” beginning on page 41. PSUs do not accrue dividends or dividend equivalents prior to vesting.

 

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Outstanding Equity Awards at Fiscal Year-End 2018

 

The following table provides information regarding unexercised stock options outstanding and outstanding PSU and RSU awards for each of our NEOs as of December 31, 2018.

 

		Option Awards																Stock Awards
Name		Option/ PSU/RSU Grant Date		Number of Securities Underlying Unexercised Options Exercisable (#)		(1)		Number of Securities Underlying Unexercised Option Unexercisable (#)		(1)		Option Exercise Price ($)				Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested ($)		(2)		Equity Incentive Plan Awards Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)		(2)
P. Kibsgaard		1/21/2010			9,400				0				68.505			1/21/2020
		2/4/2010			12,800				0				63.760			2/4/2020
		1/20/2011			138,000				0				83.885			1/20/2021
		7/21/2011			125,000				0				89.995			7/21/2021
		1/19/2012			257,400				0				72.110			1/19/2022
		1/17/2013			184,800				0				73.250			1/17/2023
		1/16/2014			159,200				39,800				88.765			1/16/2024
		1/15/2015			159,600				106,400				77.795			1/15/2025
		1/21/2016																									107,100	(3)			3,864,168
		1/21/2016			170,400				255,600				61.920			1/21/2026
		1/19/2017																									71,900	(4)			2,594,152
		1/19/2017																									73,600	(5)			2,655,488
		1/17/2018																									82,000	(6)			2,958,560
		1/17/2018																									84,100	(7)			3,034,328
S. Ayat		1/21/2010			95,000				0				68.505			1/21/2020
		1/20/2011			188,000				0				83.885			1/20/2021
		1/19/2012			137,000				0				72.110			1/19/2022
		1/17/2013			80,000				0				73.250			1/17/2023
		1/16/2014			52,800				13,200				88.765			1/16/2024
		1/15/2015			53,400				35,600				77.795			1/15/2025
		1/21/2016																									35,700	(3)			1,288,056
		1/21/2016			56,800				85,200				61.920			1/21/2026
		1/19/2017																									24,000	(4)			865,920
		1/19/2017																									24,500	(5)			883,960
		10/18/2017																	20,000	(8)			721,600
		1/17/2018																									27,300	(6)			984,984
		1/17/2018																									28,000	(7)			1,010,240
A. Belani		1/22/2009			125,000				0				37.845			1/22/2019
		1/21/2010			59,000				0				68.505			1/21/2020
		1/20/2011			51,600				0				83.885			1/20/2021
		1/19/2012			127,000				0				72.110			1/19/2022
		1/17/2013			72,000				0				73.250			1/17/2023
		1/16/2014			48,000				12,000				88.765			1/16/2024
		1/15/2015			48,000				32,000				77.795			1/15/2025
		1/21/2016																									32,100	(3)			1,158,168
		1/21/2016			51,200				76,800				61.920			1/21/2026
		7/20/2016																	15,000	(9)			541,200
		1/19/2017																									21,600	(4)			779,328
		1/19/2017																									22,100	(5)			797,368
		10/18/2017																	20,000	(8)			721,600
		1/17/2018																									24,600	(6)			887,568
		1/17/2018																									25,200	(7)			909,216

 

Schlumberger Limited  2019 Proxy Statement

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		Option Awards																Stock Awards
Name		Option/ PSU/RSU Grant Date		Number of Securities Underlying Unexercised Options Exercisable (#)		(1)		Number of Securities Underlying Unexercised Option Unexercisable (#)		(1)		Option Exercise Price ($)				Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested ($)		(2)		Equity Incentive Plan Awards Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)		(2)
A. Gatt Floridia		1/21/2010			30,000				0				68.505			1/21/2020
		1/20/2011			30,000				0				83.885			1/20/2021
		7/21/2011			20,000				0				89.995			7/21/2021
		1/19/2012			62,000				0				72.110			1/19/2022
		1/17/2013			50,000				0				73.250			1/17/2023
		1/16/2014			42,400				10,600				88.765			1/16/2024
		1/15/2015			42,600				28,400				77.795			1/15/2025
		1/21/2016																									28,600	(3)			1,031,888
		1/21/2016			45,600				68,400				61.920			1/21/2026
		7/20/2016																	15,000	(9)			541,200
		1/19/2017																									19,200	(4)			692,736
		1/19/2017																									19,600	(5)			707,168
		10/18/2017																	20,000	(8)			721,600
		1/17/2018																									21,900	(6)			790,152
		1/17/2018																									22,400	(7)			808,192
K. Al Mogharbel		1/22/2009			1,600				0				37.845			1/22/2019
		1/19/2012			15,000				0				72.110			1/19/2022
		4/18/2013			20,000				0				70.925			4/18/2023
		7/18/2013			50,000				0				78.305			7/18/2023
		1/16/2014			42,400				10,600				88.765			1/16/2024
		1/15/2015			42,600				28,400				77.795			1/15/2025
		1/21/2016																									28,600	(3)			1,031,888
		1/21/2016			45,600				68,400				61.920			1/21/2026
		7/20/2016																	15,000	(9)			541,200
		1/19/2017																									19,600	(4)			692,736
		1/19/2017																									19,200	(5)			707,168
		10/18/2017																	20,000	(8)			721,600
		1/17/2018																									21,900	(6)			790,152
		1/17/2018																									22,400	(7)			808,192

(1)	Stock options granted after January 2006 and prior to April 2013 vest ratably over five years (except for options granted to employees in France, which vest all at once (“cliff” vesting) after four years. All stock options granted from and after April 2013 vest ratably over five years.
(2)	Market value equal to the product of (x) $36.08, the closing price of Schlumberger’s common stock at December 31, 2018, and (y) the number of unvested PSUs or RSUs, as applicable, reflected in the previous column.
(3)	Reflects the target number of three-year PSUs that were issued in January 2016 and that are scheduled to vest on January 18, 2019, subject to the achievement of performance conditions.
(4)	Reflects the target number of FCF PSUs that were issued in January 2017 and that are scheduled to vest on January 18, 2019, subject to the achievement of performance conditions.
(5)	Reflects the target number of ROCE PSUs that were issued in January 2017 and that will vest, if at all, on January 17, 2020, subject to the achievement of performance conditions.
(6)	Reflects the target number of FCF PSUs that were issued in January 2018 and that will vest, if at all, on January 17, 2020, subject to the achievement of performance conditions.
(7)	Reflects the target number of ROCE PSUs that were issued in January 2018 and that will vest, if at all, on January 22, 2021, subject to the achievement of performance conditions.
(8)	Reflects the number of three-year RSUs that were issued in October 2017 and that will vest on October 18, 2020, subject to continued employment with the Company.
(9)	Reflects the number of three-year RSUs that were issued in July 2016 and that will vest on July 20, 2019, subject to continued employment with the Company.

 

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Option Exercises and Stock Vested for Fiscal Year 2018

 

The following table sets forth certain information with respect to stock options exercised, and PSUs and RSUs that vested during 2018 for our NEOs.

 

	Option Awards			Stock Awards
Name (a)	Number of Shares Acquired on Exercise (#) (b)	Value Realized on Exercise ($) (c)		Number of Shares Acquired on Vesting (#) (d)	Value Realized on Vesting ($) (e)
P. Kibsgaard	0	0		0	0
S. Ayat	125,000	3,169,375		0	0
A. Belani	0	0		0	0
A. Gatt Floridia	0	0		0	0
K. Al Mogharbel	0	0		0	0

 

Pension Benefits for Fiscal Year 2018

 

Schlumberger maintains the following pension plans for its named executive officers and other employees, which provide for lifetime pensions upon retirement, based on years of service:

 

•	Schlumberger Limited Pension Plan (“SLB Pension Plan”);
•	Schlumberger Technology Corporation Pension Plan (“STC Pension Plan”);
•	Schlumberger Pension Plan for U.S. Taxpayers Employed Abroad (“SLB USAB Pension Plan”);
•	Schlumberger Limited Supplementary Benefit Plan (“SLB Supplementary Plan”);
•	Schlumberger Technology Corporation Supplementary Benefit Plan (“STC Supplementary Plan”);
•	Schlumberger French Supplementary Pension Plan (“SLB French Supplementary Plan”); and
•	Schlumberger International Staff Pension Plan (“SLB International Staff Pension Plan”).

 

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The following table and narrative disclosure set forth certain information with respect to pension benefits payable to the named executive officers.

 

Name	Plan Name	Number of Years of Credited Service (#)	(1)	Present Value of Accumulated Benefits ($)	(2)	Payments During Last Fiscal Year
P. Kibsgaard	SLB Pension Plan	10.75		605,254		0
	STC Pension Plan	5.00		245,870		0
	SLB Supplementary Plan	10.75		8,911,924		0
	STC Supplementary Plan	4.25		348,604		0
	SLB International Staff Pension Plan	3.20		327,659		0
S. Ayat	SLB Pension Plan	12.25		845,870		0
	STC Pension Plan	0.75		68,490		0
	SLB Supplementary Plan	12.25		5,035,417		0
	STC Supplementary Plan	0.50		4,954		0
	SLB French Supplementary Plan	0.75		179,711		0
	SLB International Staff Pension Plan	10.60		786,249		0
A. Belani	SLB Pension Plan	13.75		1,064,830		0
	STC Pension Plan	2.58		50,005		0
	SLB Supplementary Plan	13.75		4,760,502		0
	STC Supplementary Plan	2.58		122,074		0
	SLB International Staff Pension Plan	10.00		602,541		0
A. Gatt Floridia	SLB French Supplementary Plan	2.83		893,788		0
	SLB International Staff Pension Plan	15.92		2,789,129		0
K. Al Mogharbel	SLB International Staff Pension Plan	16.20		1,312,037		0

(1)

The Company does not grant and does not expect to grant extra years of credited service to its named executive officers under the pension plans. The “Number of Years of Credited Service” column reflects each named executive officer’s actual years of service as a participant in each plan.

(2)

The present value of accumulated benefits is calculated using the RP 2014 with Generational Scale SSA Mortality Table and a discount rate of 4.30% at December 31, 2018. Retirement in each case is assumed to be the earlier of normal retirement age or December 31, 2018 if the named executive officer is employed after normal retirement age, or, as to Schlumberger’s U.S. plans, the date that the sum of the named executive officer’s age plus years of service has reached, or is expected to reach, 85, but not before the named executive officer reaches age 55. Additional assumptions used by the Company in calculating the present value of accumulated benefits are incorporated herein by reference to Note 18, “Pension and other Benefit Plans” to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018.

 

Tax-Qualified Pension Plans

 

The SLB Pension Plan, the STC Pension Plan and the SLB USAB Pension Plan are all U.S. tax-qualified pension plans. The SLB Pension Plan and the STC Pension Plan have substantially identical terms. The SLB USAB Pension Plan, the material terms of which are described below, has similar, but not identical, terms. Employees may participate in any one of these plans in the course of their careers with Schlumberger, in which case they become entitled to a pension from each such plan based upon the benefits accrued during the years of service related to such plan. These plans are funded through cash contributions made by the Company and its subsidiaries based on actuarial valuations and regulatory requirements. Benefits under these plans are based on an employee’s admissible compensation (generally base salary and cash incentive) for each year in which an employee participates in the plan, and the employee’s length of service with Schlumberger.

 

Since January 1, 1989, the benefit earned under the SLB Pension Plan and the STC Pension Plan has been 1.5% of admissible compensation for service prior to the employee’s completion of 15 years of active service and 2% of admissible compensation for service after completion of 15 years of active service. Since 2009, the benefit earned under the SLB USAB Pension Plan has been 3.5% of admissible compensation for all service. Normal retirement under these plans is at age 65; however, early retirement with a reduced benefit is possible at age 55 or as early as age 50 with 20 years of service. Additionally, under the “rule of 85,” an employee or executive officer who terminates employment after age 55 and whose combined age and service is 85 or more, is eligible for retirement with an unreduced pension. Messrs. Ayat and Belani are eligible for retirement with an unreduced pension under the rule of 85. The benefits are usually paid as a lifetime annuity.

 

In 2004, we amended the SLB Pension Plan and the STC Pension Plan to generally provide that employees hired on or after October 1, 2004 would not be eligible to participate. Newly-hired employees are eligible to participate in an enhanced defined contribution plan, which provides a Company contribution, depending on an employee’s 401(k) contribution and the profitability of the Company in a given year.

 

Schlumberger Limited  2019 Proxy Statement

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Schlumberger Supplementary Benefit Plans—Nonqualified Pension

 

The SLB Supplementary Plan and the STC Supplementary Plan each provide non-tax-qualified pension benefits. Each of these plans, which have substantially identical terms, provides an eligible employee with benefits equal to the benefits that the employee is unable to receive under the applicable qualified pension plan due