UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

		Commitment Runs Deep

2019

Notice of Annual Meeting

and Proxy Statement

Dear Fellow Stockholders,

It is with deep feeling that I write to you for the last time as Chairman of Devon’s Board of Directors. I will be retiring at our upcoming meeting after 12 years of service on Devon’s Board, but I am proud to be doing so when there is so much reason to look toward the future with excitement.

In 2018, we took significant steps toward achieving our long-term strategic goals, transitioning our franchise U.S. oil business into full-field development and high-grading our asset portfolio. Some key accomplishments included growing Delaware and STACK production by 27%, reducing consolidated debt by more than 40%, building per-share value by repurchasing 14% of our stock and raising the quarterly dividend by 33%. Looking ahead, we’re pursuing the separation of our Canadian and Barnett Shale assets to complete our transformation to a returns-driven U.S. oil-growth business.

I am as pleased to share with you how we—a company that explores for, develops and produces oil, natural gas and natural gas liquids—achieve results like these. In a word, we do so sustainably, something on which major third parties agree: Sustainalytics, ISS and MSCI each confer high scores on us for our environmental, social and governance (ESG) performance. And, over the past year, we have continued our engagement with stakeholders to further focus our ESG efforts. Since our last annual meeting, we have, among other things, released our 2018 Sustainability Report, our first Climate Change Assessment Report and our 2018 Political Activity and Lobbying Report. We have also nominated two new directors—Ann Fox and Keith Rattie—to serve on Devon’s Board. Ms. Fox and Mr. Rattie have impressive credentials and experience, and we believe they will bring fresh perspectives to our Board.

Before I turn over the gavel, I invite your input through any of the means we offer to make that possible. I ask for your voting support for the items described in more detail in the materials that follow. Finally, I thank you for your investment in a company to which I have given so much of my own time and energy and of which I expect to remain, like you, a fellow stockholder.

Sincerely,

John Richels

Chairman of the Board

DEVON ENERGY CORPORATION

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

BY ORDER OF THE BOARD OF DIRECTORS

Christopher J. Kirt

Vice President Corporate Governance

and Corporate Secretary

Oklahoma City, Oklahoma

April 24, 2019

We are furnishing you this Proxy Statement in connection with the solicitation of proxies by our Board of Directors (Board) to be used at the Annual Meeting and any adjournment thereof. The Annual Meeting will be held on Wednesday, June 5, 2019, at 8:00 a.m. (Central time).

All references in this Proxy Statement to we, our, us, Devon or the Company refer to Devon Energy Corporation.

Overview

Devon explores for, develops and produces oil, natural gas and natural gas liquids in areas where the oil and gas industry has long been active onshore in the United States and Canada. Founded in 1971, we have a formidable portfolio of exploration and production assets and operations that provide stable, environmentally responsible production and a platform for future growth.

As part of a focused development program, our drilling activity is concentrated in the Delaware Basin of southeast New Mexico, the STACK play in west-central Oklahoma, the Eagle Ford play in south Texas and the Powder River Basin in the Rockies. We are:

Financial and Operating Performance

2018 was a pivotal year for Devon as we took several significant steps toward achieving our long-term strategic financial and operating goals. Operationally, we successfully transitioned our franchise U.S. oil business into full-field development, with Delaware and STACK oil production increasing 37% in 2018 compared to 2017. In addition to this strong operating performance, we made substantial progress high-grading our asset portfolio with divestiture proceeds reaching approximately $5 billion, reduced consolidated debt by more than 40%, increased per-share value by repurchasing 14% of our stock through our industry-leading repurchase program and raised our quarterly dividend by 33%.

Following year end, our Board of Directors authorized the Company to pursue the separation of its Canadian and Barnett Shale assets to complete the transformation to a high-return U.S. oil growth business. The separation will allow Devon to focus on its top-tier, high-return U.S. oil assets and is aligned with the Company’s previously announced long-term strategic plan.

With our world-class U.S. oil resource plays rapidly building momentum and achieving operating scale, the final step in our multi-year transformation is an aggressive, transformational move that will accelerate value creation for our stockholders by further simplifying our resource-rich asset portfolio.

Sustainability Performance

At Devon, we are proud to be leaders in an industry delivering products that are essential to lives and livelihoods around the world. We produce a valuable commodity that is fundamental to society, and we do so in a safe, environmentally responsible and ethical way, while striving to deliver strong returns to stockholders.

Based in Oklahoma City, we employ approximately 2,600 men and women in the U.S. and Canada, operating under the motto: Commitment Runs Deep. We take this to heart and apply it to everyone who has a stake in our success – investors, employees and neighbors alike.

We make sure we hire the best people. Our people are team players who embrace honesty and integrity. They share our profound respect for the environment and the people and communities in which we operate. In return, we provide competitive compensation and benefits, including:

At Devon, we believe that keeping people safe is our moral obligation and, on this front, our work is never done.

Our core values guide our approach to environmental stewardship: We are committed to preserving the quality of the environment for future generations as we find and produce oil and natural gas, and we monitor and report on how our investments in environmental stewardship are reducing our environmental impact.

At Devon, we engage stakeholders every day to build relationships of trust and cooperation. Through formal meetings and informal conversations, we regularly engage with stockholders, neighbors, landowners, mineral-rights holders, policymakers, legislators, suppliers, vendors, service companies, our employees and their families.

Our Nominees for Election

Director Skills and Experience

The Board is committed to maintaining a diverse and inclusive membership with varying experience, characteristics and expertise that align with our business strategy. The matrix below provides a summary of certain key skills and experience of our Director nominees. Our Director nominees, individually and as a group, possess numerous skills and experience that are highly relevant for an upstream energy company like Devon. Our Director nominees are strategic thinkers with high expectations for Devon’s performance and are attuned to the demands of proper Board oversight and good governance practices.

Additional Skills and Experience

Our Board has nominated eleven directors for election at the Annual Meeting. Each Director will serve for a term ending at the next Annual Meeting and until his or her successor is duly elected and qualified, subject to such Director’s earlier death, disqualification, resignation or removal. Nine of the nominees are currently Devon Directors and were elected by stockholders at the 2018 Annual Meeting. Ann G. Fox and Keith O. Rattie, neither of whom currently serve as a Director of the Company, have also been nominated for election at the Annual Meeting. A third-party search firm recommended Ms. Fox and Mr. Rattie to the Governance Committee for consideration as Director candidates for the Board.

Within each nominee’s biography and the matrix above, we have highlighted the notable skills and qualifications that contributed to his or her selection as a nominee to our Board.

We have no reason to believe that any of the nominees for Director will be unable to serve if elected. However, if any of these nominees becomes unavailable, the persons named in the proxy intend to vote for any alternate designated by the current Board. Proxies cannot be voted for a greater number of persons than the nominees named.

GOVERNANCE COMMITTEE REPORT

The Governance Committee is currently comprised of five independent Directors and operates under a written charter approved by the Board of Directors. The Governance Committee Charter may be viewed at www.devonenergy.com.

Corporate Governance

The Governance Committee plays a leadership role in shaping the Company’s corporate governance. It periodically reviews the Company’s corporate governance practices along with best practices followed by other companies to maintain a corporate governance framework for the Company that is effective and functional and that addresses the interests of the Company’s stakeholders. Highlights of our corporate governance framework are:

Additional corporate governance standards that have been approved by the Board are reflected in the:

The standards reflected in these documents implement and strengthen the Company’s corporate governance practices. These documents and others related to corporate governance are available at www.devonenergy.com.

Board of Director Nominations

The Governance Committee is responsible for nominating qualified candidates to serve on the Board of Directors and reviewing their qualifications with the Board, taking into account the composition and skills of the entire Board and specifically ensuring a sufficient number of the members of the Board are financially literate.

The Board takes reasonable steps to ensure that a diverse group of qualified candidates are in the pool from which the nominees for the Board are chosen. The Governance Committee may, at its discretion, seek third-party resources to assist in the process and make final director candidate recommendations to the Board. The Board considered the experience, qualifications, attributes and

skills of each of the nominees for Director at the 2019 Annual Meeting. As identified in our Corporate Governance Guidelines, the basic qualifications that the Governance Committee looks for in a Director include such factors as:

Following a Director’s election to the Board, the Corporate Governance Guidelines provide for:

The Governance Committee considers nominees recommended by stockholders and gives appropriate consideration in the same manner as given to other nominees. Stockholders who wish to submit recommendations for director nominees for election at our 2020 Annual Meeting of Stockholders may do so by submitting such nominee’s name in writing, in compliance with the procedures required by our Bylaws, to the Governance Committee of the Board of Directors, Attention: Chairman, c/o Office of the Corporate Secretary, Devon Energy Corporation, 333 W. Sheridan Avenue, Oklahoma City, Oklahoma 73102. Such a recommendation must be received between February 6, 2020 and March 7, 2020 in order to be considered a timely notice. The stockholder’s notice must contain, among other things:

With the Company’s fundamental corporate governance practices firmly in place and regularly evaluated, the Governance Committee is prepared to respond quickly to new regulatory requirements and emerging best practices. The Governance Committee intends to continue to require an annual evaluation of the effectiveness of the Board and its Committees to enable the Company to maintain corporate governance best practices.

Robert A. Mosbacher, Jr., Chairman

Barbara M. Baumann

Robert H. Henry

John Krenicki Jr.

Mary P. Ricciardello

Practices for Considering Diversity

The Charter of the Governance Committee provides that the Committee shall periodically review the appropriate skills and characteristics of members of the Board in the context of the then-current composition of the Board. This assessment includes the following factors: diversity (including diversity of skills, background and experience); business and professional background; financial literacy and expertise; availability and commitment; independence; and other criteria that the Committee or the full Board finds relevant. When searching for new director nominees, the Committee, as well as any third-party search firm that it engages, is committed to considering qualified candidates with a diversity of experience and perspective, including diversity with respect to areas of expertise, gender, race, ethnicity, experience and geography.

Our Board of Directors met nine times in 2018. All Directors attended at least 92% of the total meetings of the Board of Directors and the respective Committees on which they served.

The Board expects our Directors to attend our Annual Meetings of Stockholders. All Directors attended the 2018 Annual Meeting.

Copies of the following governance documents are available at www.devonenergy.com and in print to any stockholder upon request:

Amendments to and waivers from any provision of the Code of Ethics for the CEO, CFO, and CAO will be posted on our website.

Committees

The Board of Directors has four standing Committees: Audit, Compensation, Governance and Reserves. The Charters for these Committees are available on the Company’s website, www.devonenergy.com. The following table shows each Committee’s current membership, function and the number of meetings each Committee held in 2018:

Director Independence

The Company’s Corporate Governance Guidelines provide that an independent director is a director who meets the NYSE definition of independence, as determined by the Board. In making this determination, the Board considers transactions and relationships between each Director or any member of the Director’s immediate family and the Company, our subsidiaries and affiliates. The Board has affirmatively determined that (i) each of the current Directors, (ii) each Director nominee (iii) and each person who served as a Director during 2018, with the exception of John Richels and David A. Hager, was or is an independent Director as defined by the standards for director independence established by applicable laws, rules, and listing standards, including, without limitation, the standards for independent directors established by the NYSE and the SEC, has or had no material relationship with us that would interfere with the exercise of independent judgment and, therefore, is or was independent under our Corporate Governance Guidelines and the standards established by the NYSE.

In evaluating whether Ms. Fox is independent, the Board considered that Ms. Fox serves as Chief Executive Officer, President and Director of Nine Energy Services, Inc. (Nine), which provides services to Devon. The Board considered the nature and relative size of the services, the lack of Ms. Fox’s personal involvement in such transactions and the routine commercial nature of the services. In making its independence determination, the Board also took into account that Devon’s payments to Nine amounted to less than 2% of Nine’s consolidated gross revenues during each of the last three fiscal years and were made in the ordinary course of business. Based on these factors, the Board determined that Ms. Fox does not have a direct or indirect material interest in such transactions and that such transactions do not impair Ms. Fox’s independence.

In evaluating whether Mr. Rattie is independent, the Board considered that Mr. Rattie is a Director of Select Energy Services, Inc. (Select), a leading provider of water-management solutions that provides services to Devon. The Board considered the nature and relative size of the services, the lack of Mr. Rattie’s personal involvement in such transactions and the routine commercial nature of the services. In making its independence determination, the Board also took into account that Devon’s payments to Select amounted to less than 2% of Select’s consolidated gross revenues during each of the last three fiscal years and were made in the ordinary course of business. Based on these factors, the Board determined that Mr. Rattie does not have a direct or indirect material interest in such transactions and that such transactions do not impair Mr. Rattie’s independence.

Related Person Transactions

The Company maintains a policy concerning “related person” transactions as defined by the SEC. Related persons include the Company’s directors and executive officers and their immediate family members and beneficial owners of more than 5% of the Company’s common stock.

The Board’s Audit Committee considers information about transactions involving related persons. If the transaction at issue involves a member of the Audit Committee, or a family member of a Committee member, then that member of the Committee would not participate in discussions. In the event the Committee concludes that a related person has a material interest in any Company transaction, the Committee then reviews the transaction to determine whether to approve or ratify it. Any transaction that meets the monetary threshold under the SEC rules and is determined to have a direct or indirect material benefit to a related party would be disclosed in accordance with SEC rules. Pursuant to this review and approval process, the Audit Committee is disclosing the transactions described in the following paragraphs.

The son of Tony D. Vaughn, Chief Operating Officer, is employed by the Company as a Manager in Supply Chain. His total 2018 taxable compensation, including salary, bonus and stock grants, was approximately $186,000. Mr. Vaughn’s son-in-law was also employed by the Company as an Energy Marketing Professional until November 2018. His total 2018 taxable compensation, including salary, bonus and stock grants, was approximately $134,000. The compensation for both Mr. Vaughn’s son and Mr. Vaughn’s son-in-law was commensurate with the compensation provided to similarly situated employees of the Company and was determined in accordance with the Company’s standard human resources policies and procedures. Mr. Vaughn was not involved in the evaluation of his son’s or his son-in-law’s performance or compensation.

The son of David A. Hager, President and Chief Executive Officer, is employed by the Company as an Evaluation and Planning Professional. His total 2018 taxable compensation, including salary, bonus and stock grants, was approximately $132,000. This compensation was commensurate with the compensation provided to similarly situated employees of the Company and was determined in accordance with the Company’s standard human resources policies and procedures. Mr. Hager was not involved in the evaluation of his son’s performance or compensation.

Leadership Structure

As stated in the Company’s Corporate Governance Guidelines, the Board reserves the right to determine, from time to time, how to configure the leadership of the Board and the Company in the way that best serves the Company. The Board specifically reserves the right to vest the responsibilities of Chairman of the Board and CEO in the same or in different individuals. The Board currently has no fixed policy with respect to combining or separating the positions of Chairman of the Board and CEO.

John Richels serves as Chairman of the Board. David A. Hager serves as President and CEO. The structure has fostered consensus building and tactical execution of a Board-approved vision and strategy at the top levels of the Company, which we believe promotes long-term stockholder value. The Board believes this structure has been in the Company’s best interest; however, with Mr. Richels’ retirement at the Annual Meeting, the Board expects to adopt an approach that will lead to an independent Director serving as Chairman.

Lead Director

The Board has an independent Lead Director whose primary responsibility is to preside over the executive session of the Board meetings in which members of management do not participate. The Lead Director also performs other duties that the Board may from time to time delegate to assist the Board in the fulfillment of its responsibilities. Robert A. Mosbacher, Jr. has served as Lead Director since June 2015. In 2018, Mr. Mosbacher, as Lead Director, presided over four executive sessions of the Board. In the event the Board appoints an independent Chairman, the position of “Lead Director” will be discontinued.

Board Involvement in Risk Oversight

The full Board has primary responsibility for risk oversight, which includes, among other things, determining whether the Company’s risk-management programs are appropriately designed and implemented in light of the Company’s material risks. To assist it in this role, the Board has delegated to the four standing Board committees certain matters relating to the risks inherent in

the committees’ respective areas of oversight, with each committee regularly reporting to the full Board. Our management team is, in turn, responsible for executing the directives of the Board and its committees with respect to the Company’s risk management programs, including by overseeing and reporting on Devon’s day-to-day efforts to manage risk.

Devon employs a variety of governance and analytical measures to identify and evaluate the risks to our business. We use an enterprise-wide risk management framework that includes an annual analysis of the top risks to the Company. This analysis asks the Board, management and certain internal subject matter experts to consider the likelihood that certain risks could result in an impact to the Company and to identify, among other things, the Company’s level of preparedness for those risks. The Board and management then use the results from this analysis and other exercises to determine and prioritize the material risks to our business. For a more detailed discussion of the material risks of the Company, please see our Annual Report on Form 10-K for the year ended December 31, 2018.

Cybersecurity risk is an area of increasing focus for our Board, particularly as more and more of our operations rely on digital technologies. To mitigate this risk, Devon has adopted an information security program, which uses sophisticated technology and processes and is aligned with the National Institute of Standards and Technology Cybersecurity Framework for risk management. Our management team provides the Audit Committee and the full Board with regular updates regarding this program, as well as on trends in cyberattack activities and other developments impacting our digital security.

The Board believes it is important to cast a wide net for input to inform its decision making and considers input from stockholders to be critical. Accordingly, the Board maintains a number of ways to receive feedback from stockholders and other stakeholders.

Devon has a long-standing practice of engagement with our stockholders throughout the year with respect to corporate governance topics and our executive compensation program. Over the past year, Devon has redoubled its efforts to engage with our stockholders, especially with respect to ESG matters. The Company has participated in numerous one-on-one meetings and telephone calls with investors who have a wide range of perspectives. Our Board receives frequent updates on these engagements and has been keen to hear specific input. We value the dialogue and feedback received from this engagement and, as a result, have been responsive by making meaningful changes to our programs and practices.

High-Level Oversight and Coordination of ESG Efforts

The Company recognizes that ESG matters are important for Devon and Devon’s stakeholders. In order to provide support for the Company’s on-going efforts in this area, the Company formed an Environmental, Social, and Governance Steering Committee (the ESG Committee) in the fall of 2017. The ESG Committee is comprised of leaders for several key functions at the Company, including environmental, health, and safety, operations, legal, investor relations, government affairs, corporate governance, finance, human resources and communications. A copy of the Committee’s charter is available on our web-site. Devon’s Executive Committee and Board receive regular updates on our ESG efforts and expect high performance in this area.

Affirmation of Our Practices

Devon’s efforts have resulted in greater disclosure about the Company’s existing practices on ESG matters and prompted new and renewed actions by Devon. In each of the past two years, the Company has published a Political Activity and Lobbying Report that, among other things, provides details on Devon’s political spending. Another area of stockholder engagement has been on environmental matters, including potential impacts associated with climate change policies. At the end of 2018, we published our first Climate Change Assessment Report. The Report chiefly evaluates Devon’s assets under a range of carbon-constrained scenarios, but also reflects Devon’s risk management practices and considers the physical impacts of climate change. Devon also has participated in several surveys and questionnaires, which has resulted in more transparency about Devon’s operations and improved the accuracy of Devon’s information included in those materials. Major third party surveys on ESG matters validate our performance in this area: as of March 31, 2019, Sustainalytics puts our ESG performance at the 77th percentile compared to our peer group, ISS ranks our combined ESG scores 41% above our peer group and MSCI gives us top half scores.

Contact Information for Communicating with Board Members

Any stockholder or other stakeholder may contact any of our Non-Management Directors, including the Lead Director or Non-Management Directors as a group, by:

A Management Director may be contacted by:

All calls or correspondence are anonymous and kept confidential to the extent possible. All such communications, other than advertisements or commercial solicitations, will be forwarded to the appropriate Director(s) for review.

Director Compensation for the Year Ended December 31, 2018

Under our Corporate Governance Guidelines, Non-Management Director compensation is determined annually by the Board of Directors acting upon the recommendation of the Governance Committee. Devon employees receive no additional compensation for serving as Directors. The standard arrangement for compensating our Directors consists of cash and equity awards.

Annual Retainer and Meeting Fees

The cash component of compensation for our Directors includes retainers and meeting fees. The following table reflects the annual retainers and meeting fees:

Each Non-Management Director is reimbursed for out-of-pocket expenses incurred while serving as a Director.

In June 2018, the Board adopted an annual retainer for the Chairman of the Board in the amount of $100,000. This retainer was established in recognition that Devon’s Chairman is expected to attend all Board and most Board Committee meetings and performs many other responsibilities as Chairman. Other than the foregoing, the annual retainers and meeting fees for Non-Management Directors in effect during 2018 remained the same as in 2017.

Equity Awards to Directors

The Board also elects to compensate Directors in part through restricted stock awards (RSAs) in order to align the Directors’ and stockholders’ interests in the long-term performance of the Company. During 2018, Directors were granted RSAs under our 2017 Long-Term Incentive Plan having a value of $230,000. Stock awards to Non-Management Directors are granted immediately following each Annual Meeting. These RSA shares will fully vest on the first anniversary of the date of grant subject to the Director’s continued service to the Company. Cash dividends will accrue on these shares of restricted stock until the shares vest, at which time the dividends will be paid.

Total Compensation for Non-Management Directors for 2018

The following table reflects the fees earned or paid to our Directors for Board service in 2018 and the stock awards granted to our Directors in 2018.

Changes to Director Compensation

The Board of Directors determined that the annual retainers and meeting fees would remain the same in 2019 as they were in 2018 with no changes. The Governance Committee obtained a survey prepared by an external compensation consultant in connection with its review of the overall Board compensation and compensation elements in connection with making this determination.

Compensation Committee Interlocks and Insider Participation

During 2018, Messrs. Bethancourt, Mosbacher and Radtke served on the Compensation Committee. Following his election to the Board in June 2018, Mr. Krenicki joined the Committee. Throughout 2018, the Compensation Committee was solely comprised of independent Directors with no interlocking relationships as defined by the SEC.

The Audit Committee is currently comprised of four independent Directors. The Board and the Audit Committee believe that the Audit Committee’s current membership satisfies the rules of the NYSE and the SEC that govern audit committee composition, including the requirement that audit committee members all be independent directors, as that term is defined under the listing standards of the NYSE, and the requirement that at least one member of the Audit Committee is a financial expert. The Audit Committee operates under a written charter approved by the Board of Directors. The Audit Committee Charter is available at www.devonenergy.com.

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the preparation of the financial statements and the establishment and maintenance of the system of internal controls. This system is designed to provide reasonable assurance regarding the achievement of objectives in the areas of reliability of financial reporting, effectiveness and efficiency of operations and compliance with applicable laws and regulations. In fulfilling its oversight responsibilities, the Audit Committee reviewed with management its internal controls over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board and the audited financial statements in the Annual Report. This review included a discussion of the quality and the acceptability of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.

In fulfilling its duties during 2018, the Audit Committee:

Fees to Independent Auditor

Under the terms of its Charter, the Audit Committee has the responsibility to approve the fees paid to the independent auditors. For the years ended December 31, 2017 and December 31, 2018, the following fees were paid to KPMG LLP:

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee has pre-approval policies and procedures related to the provision of audit and non-audit services. Under these procedures, the Audit Committee pre-approves both the type of services to be provided by KPMG LLP and the estimated fees related to these services. During the approval process, the Audit Committee considers the impact of the types of services and the related fees on the independence of the auditors. The services and fees must be deemed compatible with the maintenance of the auditors’ independence, including compliance with SEC rules and regulations.

All of the 2018 and 2017 audit and non-audit services provided by KPMG LLP were approved by the Audit Committee. The non-audit services that were approved by the Audit Committee were also reviewed to ensure compatibility with maintaining the auditors’ independence, and the Audit Committee determined the auditors’ independence was not impaired.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 that has been filed with the SEC.

Mary P. Ricciardello, Chairperson

Barbara M. Baumann

Robert H. Henry

Michael M. Kanovsky

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent auditing firm retained to audit the Company’s financial statements. To carry out this responsibility, the Audit Committee engages in a comprehensive annual evaluation of the independent auditor’s qualifications, performance and independence; considers whether the auditing firm should be rotated, including the advisability and potential impact of selecting a different independent registered public accounting firm and adopting a policy of regular rotation; and negotiates the audit fees associated with the Company’s retention of the independent auditing firm. The Audit Committee has appointed KPMG LLP (KPMG) to serve as our independent auditing firm for 2019.

In accordance with SEC rules and KPMG policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide service to our Company. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. The selection of the Company’s lead audit partner pursuant to this rotation policy involves a rigorous process, including interviews of potential audit partner candidates with the Audit Committee.

The Audit Committee and the Board believe that the continued retention of KPMG as our independent registered public accounting firm is in the best interest of the Company and our stockholders. In furtherance of its commitment to corporate governance practices, the Board is asking our stockholders to ratify the selection of KPMG as our independent registered public accounting firm for 2019. In the event that our stockholders fail to ratify the appointment of KPMG, the Audit Committee will consider the selection of a different independent auditing firm for 2020.

Representatives of KPMG will be present at the Annual Meeting to answer questions. They also will have the opportunity to make a statement if they desire to do so.

The Reserves Committee is currently comprised of three independent Directors and operates under a written charter approved by the Board of Directors. The Reserves Committee Charter is available at www.devonenergy.com. The Reserves Committee oversees, on behalf of the Board, the integrity of the Company’s oil, bitumen, natural gas and natural gas liquids reserves data. Management and our independent engineering consultants have the primary responsibility for the preparation of the reserves reports. In fulfilling its oversight responsibilities, the Reserves Committee reviewed with management the internal procedures relating to the disclosure of reserves in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, having regard to industry practices and all applicable laws and regulations. In fulfilling its duties during 2018, the Reserves Committee:

In reliance on the reviews and discussions referred to above, the Reserves Committee recommended to the Board, and the Board approved, that the reserves information be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 that has been filed with the SEC.

Michael M. Kanovsky, Chairman

John E. Bethancourt

Duane C. Radtke

Our Officers

Information concerning our executive officers is set forth below. Information concerning David A. Hager, our President and Chief Executive Officer, is set forth under the caption “Our Nominees for Election.”

Jeffrey L. Ritenour, Executive Vice President and Chief Financial Officer

Mr. Ritenour, 45, was elected to the position of Executive Vice President and Chief Financial Officer in April 2017. Mr. Ritenour joined the Company in 2001 and has served in various other positions at Devon, including most recently as Senior Vice President Corporate Finance, Investor Relations and Treasurer. Prior to joining Devon, Mr. Ritenour was an auditor with the firm of Ernst and Young. He earned both a bachelor’s degree in accounting and a master’s degree in business administration from the University of Oklahoma. Mr. Ritenour previously served on the boards of the managing member and general partner of EnLink Midstream, LLC and EnLink Midstream Partners, LP, respectively.

Lyndon C. Taylor, Executive Vice President and General Counsel

Mr. Taylor, 60, was elected to the position of Executive Vice President and General Counsel in 2007 and has been with the Company since 2005. He served as Deputy General Counsel from the time he joined the Company in 2005 until 2007. Prior to joining Devon, Mr. Taylor was with Skadden, Arps, Slate, Meagher & Flom LLP for 20 years, most recently as managing partner of the energy practice in Houston. He is admitted to practice law in Oklahoma and Texas. Mr. Taylor earned a bachelor’s degree in industrial engineering from Oklahoma State University and a juris doctorate degree from the University of Oklahoma. Mr. Taylor previously served on the boards of the managing member and general partner of EnLink Midstream, LLC and EnLink Midstream Partners, LP, respectively.

Tony D. Vaughn, Chief Operating Officer

Mr. Vaughn, 61, was elected to the position of Chief Operating Officer in February 2016. From 1999 until February 2016, Mr. Vaughn served in various other positions at Devon, including most recently as Executive Vice President Exploration and Production. Before joining Devon in 1999, Mr. Vaughn spent 12 years with Kerr-McGee Corporation, most recently as manager of the Rocky Mountain District. Before joining Kerr-McGee, Mr. Vaughn worked as an operations engineer for Amoco Production Company. He earned a bachelor of science degree in petroleum engineering from the University of Tulsa and a bachelor of science degree in business management from Oral Roberts University. He is a member of the Society of Petroleum Engineers. Mr. Vaughn previously served on the boards of the managing member and general partner of EnLink Midstream Partners, LP, respectively.

In accordance with Section 14A of the Securities Exchange Act of 1934, we are asking our stockholders to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement. At the 2017 Annual Meeting, you approved our proposal to provide you with this opportunity on an annual basis. This vote is not intended to address any specific item of compensation, but rather our overall compensation policies and practices relating to our named executive officers as disclosed in our Compensation Discussion and Analysis, the Summary Compensation Table, and other related tables and narrative disclosure. Accordingly, we will ask our stockholders to vote “FOR” the following resolution at the 2019 Annual Meeting:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2018 Summary Compensation Table and the other related tables and narrative disclosure.”

This vote, normally called a “say-on-pay” vote, is advisory, and therefore not binding on the Company, the Compensation Committee, or the Board. The Board will, however, as it has in prior years, take into account the outcome of the vote when considering future compensation arrangements.

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

Purpose of Compensation Discussion and Analysis

This Compensation Discussion and Analysis (CD&A) outlines Devon’s compensation philosophy and describes the material components of the Company’s executive compensation program for its “named executive officers.” This CD&A also summarizes decisions the Compensation Committee of the Board of Directors (the Committee) made under the program and the processes utilized and factors considered in making those decisions. In particular, this CD&A focuses on the decisions the Committee made during its January 2019 meetings at which the Committee evaluated the Company’s performance in 2018 as well as each executive officer’s performance for the year, including the performance of the business or organizational unit for which the officer was responsible. At the January 2019 meetings, the Committee considered prospective salary adjustments, cash bonuses for 2018 performance (Performance Bonus) and long-term equity incentive awards (LTI). Additional information about the compensation of the named executive officers is provided in the 2018 Summary Compensation Table (the SCT) and other compensation tables that follow this CD&A. Pursuant to SEC rules, the outcome of the Committee’s January 2019 decisions on base salaries for 2019 and LTI will appear in next year’s SCT while the Performance Bonus is shown in the “Non-Equity Incentive Plan Compensation” column of this year’s SCT.

Named Executive Officers

The named executive officers for 2018 are the following individuals:

Although Mr. Alan Marcum left the Company in August 2018, SEC rules require Devon to include him as a named executive officer in this CD&A. The SCT and other tables that follow this CD&A reflect Mr. Marcum’s compensation for 2018 prior to his departure and the severance package he received upon his departure. Mr. Marcum was not part of the Committee’s year-end performance and pay decision-making processes. Therefore, minimal references are made to Mr. Marcum in the CD&A.

Executive Summary

Company Performance and Pay Alignment

Devon was formed in 1971 and has been publicly held since 1988. Recently, the Company has successfully transitioned to a liquids-rich (oil and natural gas liquids), higher-margin, onshore North American production base and progressively improved its portfolio of assets. Although our top U.S. oil growth plays in the STACK and Delaware continue to improve with our successful drilling programs, the prolonged weakness in commodity prices experienced during 2018 presented extraordinary challenges for many metrics utilized in assessing Company performance. The Company took significant steps to monetize non-core assets, reduce long-term debt and re-align its overall cost structure, including a strategic exit from the Company’s entire midstream business ownership for $3.125 billion. The Company expects to continue to evolve and achieve additional efficiencies across its portfolio into 2019.

The Committee determined that “cash return on capital employed” and “all-in rate of return” will continue to be among the metrics used to determine cash bonuses for 2019 performance. The Company believes that returns measures, in particular cash return on capital employed, correlate with total stockholder returns over the medium to long-term. All-in rate of return provides the Company data on its capital allocation decisions and subsequent value creation. It is an asset-driven measure that focuses on the multi-year well-head rate of return (inclusive of the overhead costs associated with the business) of Devon’s drilling program.

The structure of the Company’s compensation program coupled with the Committee’s processes and decision-making ensure a strong tie between Company performance and executive pay. This is especially illustrated by the compensation outcomes for Devon’s executives over the last three years. The chart below, “Summary of President and CEO Pay,” spotlights the relationship between total stockholder return (which is measured by stock price changes and dividend payment value (TSR) and the realizable pay of Devon’s CEO based on the pay the Committee has awarded to him. Additional comparative detail about the tie between Company performance and named executive officer pay may be found below in the sections titled “Snapshot Comparison of Compensation Decisions Made Following 2018 and 2017” and “Effect of Company Performance on President and CEO Realizable Pay” found on page 49.

2018 Company Performance Highlights

Devon believes setting challenging annual performance goals is key to continuous improvement in the returns it achieves on its assets and capital investments. In 2018, the Company met several of its targets for financial and operational goals. However, as reflected in the Company’s performance scorecard (see pages 45 and 46) and due in large part to commodity price challenges and disappointing results on TSR, Devon’s performance score came in at 90% of target for 2018. Even with these challenges, the actions and leadership of the executives during the year led to many achievements. The following performance highlights provide further context for the Committee’s considerations with respect to executive compensation for 2018:

Operational and financial achievements

Total stockholder return

Compensation Philosophy and Objectives

Devon is committed to delivering strong returns on its investments through a highly engaged culture focused on innovation, safety, operational excellence, environmental stewardship and social responsibility. The Company focuses its business on generating operating returns by managing a premier asset portfolio, delivering superior execution and exercising discipline in Devon’s capital allocation. Devon also maintains a strong commitment to financial strength and flexibility through all commodity price cycles, as reflected in the Company’s investment grade credit ratings.

This strategy requires a compensation philosophy that recognizes near-term operational and financial success as well as decision-making that supports long-term value creation. For these reasons, the Committee utilizes a range of measures in its compensation program and, when appropriate, adds new goals year-over-year to motivate and reward executives for improved performance over the contemplated time horizon. Overall, the value of an executive officer’s total compensation is weighted in favor of long-term incentives in order to focus the officer’s efforts on the long-term performance of the Company and to encourage the executive to remain at the Company.

The objectives of Devon’s compensation program are to:

The primary components of Devon’s executive compensation program consist of base salary, a performance bonus and LTI. The Committee generally targets each component, as well as the aggregate of the components, at approximately the 50^th percentile of the Company’s peer group.

Individual compensation levels may vary from these targets based on performance, expertise, experience, or other factors unique to the individual’s role within the Company. The Committee also provides retirement and other benefits typical for Devon’s peer group.

What Devon Does and Doesn’t Do

Response to Stockholder Feedback

Devon conducts investor outreach throughout the year to ensure that management and the Board understand the compensation issues that matter to Devon’s stockholders. During 2018, the Company contacted a majority of its 50 largest stockholders and had productive interactions with many stockholders, both inside and outside of that group, including several in-person meetings. The Committee reviews the feedback resulting from these outreach efforts. Devon also considers the results of the most recent advisory vote on executive compensation by Devon’s stockholders (“say-on-pay vote”), which for 2018 reflected that approximately 95% of voting stockholders voted “for” Devon’s executive compensation in 2017.

The chart set forth below highlights compensation program changes made over the past few years. The Committee generally utilizes compensation metrics that the investor community considers most important in valuing the Company, which traditionally have included measures like relative TSR and production growth. In addition to traditional measures, the Company reviews existing metrics in light of developments in pay practices and has been responsive to investor input regarding the addition and deletion of various measures, as seen in the chart below.

Compensation Decisions for 2018

Overview of Pay Decisions

Because executive officers have the greatest influence over Devon’s results, a significant portion of their overall compensation consists of performance bonuses and LTI awards that vary based on performance. This practice is consistent with norms in the oil and gas industry.

As illustrated below, compensation decisions made by the Committee during its January 2019 meetings resulted in awards heavily weighted toward TSR and achievement of other 2018 Company performance measures. Approximately 89% of the value of total direct compensation awarded to the President and CEO and an average of approximately 83% for the other named executive officers were delivered through performance bonuses and LTI aligned with TSR, dependent on 2018 performance, or both.

Each year, the Committee refers to the following factors in considering any compensation decisions for the named executive officers:

The Committee regularly reviews the above-listed factors when considering compensation decisions and from time to time changes or supplements its analysis with other factors.

Base Salary

Base salary typically represents a smaller portion of executive pay than compensation elements that vary year-to-year based on performance. Competitive salaries, however, are vital to ensuring that the Company attracts and retains executives who have a combination of business acumen, significant industry experience and longevity with the Company. In evaluating salary levels each year, the Committee generally considers the following factors:

Based on the foregoing considerations, the Committee determined in its January 2019 meetings that no salary increases were warranted. Please note that the SCT’s entries for “Salary” reflect the salaries received by the named executive officers during 2018. The footnotes that accompany this year’s SCT and the discussion of salaries in last year’s CD&A provide additional information on salaries in effect for 2018.

Annual Performance Cash Bonus

In awarding Performance Bonuses, the Committee utilizes a formula that establishes a Performance Bonus target for each named executive officer based on a percentage of his base salary. In establishing Performance Bonus targets, the Committee considers industry benchmarks for the relevant officer position as well as the scope of responsibility associated with the position. For 2018, Performance Bonus targets for named executive officers ranged from 90% to 135% of base salaries.

Performance Bonus payouts depend on the Company’s performance in relation to the structured and measurable goals approved by the Board at the beginning of the year and the individual executive’s contributions to achievement of those goals. The goals were selected because they are critical to the Company’s near-term performance, its prospects for sustainable growth in returns, and the creation of long-term value for the Company and its stockholders.

The table below provides detail on the Company’s performance on the goals set for 2018. As reflected in the table, the Committee assigns a separate weighting to each performance measure in order to reflect the relative importance of those areas for the year. The Committee aggregates the weighted performance score for each measure to arrive at an overall Company performance score.

For operational and financial goals, the Committee generally views (i) a 30% or greater shortfall from a goal as the threshold at which a score of no more than 25% may be assigned for the goal, and (ii) a 30% or greater outperformance on a goal as maximizing performance such that a score of up to 200% could be assigned for the goal. Although the structure of the Performance Bonus process relies on Company performance measures and the application of set formulas to arrive at Performance Bonus amounts, the Committee maintains the authority to adjust the amount of an executive’s Performance Bonus within the range of the Bonus pool (0% to 200% of target) based on individual contributions. However, the Committee made no such adjustments for 2018.

The performance scorecard reflects that the Company performed well on several operational measures in the challenging commodity price environment of 2018 but also recorded disappointing results on important criteria such as TSR and environmental, health and safety measures.

The following table outlines the calculations made for the Bonuses awarded for 2018¹:

Please note that the SCT’s entries for “Non-Equity Incentive Plan Compensation” in 2018 reflect the annual Performance Bonuses listed under the column above titled “Process Determined Performance Bonus Amount.”

Long-Term Incentives

A key element of Devon’s compensation program is to reward executive officers for long-term strategic accomplishments and enhancement of long-term stockholder value through equity-based incentives that vest over an extended period of time. LTI compensation plays an essential role in attracting and retaining executive officers and aligns their interests with the long-term interests of Devon’s stockholders.

At its January 2019 meetings, the Committee determined that the 2019 awards of LTI should generally continue the past practice of tracking a target at the 50^th percentile compared to peers. In making this decision, the Committee considered the factors it generally references for compensation decisions and took into account the Company’s progress on strategic objectives intended to increase returns on Devon’s investments, as well as each executive’s leadership in support of such performance.

For Mr. Ritenour, the Committee awarded aggregate LTI valued at $300,000 more than his awards granted in 2018. With this increase the Committee sought to better align Mr. Ritenour’s 2019 LTI awards with competitive norms for his position.

The table below details the awards made to named executive officers. The SCT in next year’s proxy statement will reflect the value of these grants as “Stock Awards” for 2019.

LTI Granted in 2019¹

¹ Dollar amounts shown in thousands.

At its January 2019 meetings, the Committee certified that the relative total shareholder return for the three-year period of the performance share units (“PSU”) granted in the first quarter of 2016 did not meet the threshold for payment. Pursuant to the grant’s terms and the practices and policies of the Committee, the grant was cancelled with no payout or further consideration provided to the executives. Further information about this grant is provided in the “Outstanding Equity Awards at Fiscal Year End” table below and corresponding footnotes.

At the same meetings in January, the Committee made LTI grants for 2019. The Committee determined that the pursuit of strategic Company goals and creation of stockholder value would best be promoted by linking half the LTI awarded for the year to Company performance and half to long-term stock ownership thereby strengthening the alignment of interests of executives and stockholders. Accordingly, the two types of LTI granted to named executive officers were PSU and RSA, respectively.

The following table describes the purpose and structure of the LTI granted to the named executive officers at the Committee’s meetings in January 2019:

Snapshot Comparison of Compensation Decisions Made Following 2018 and 2017

Pursuant to the Company’s 2018 performance and pay cycle, the Committee, at its January 2019 meetings, considered salary adjustments, Performance Bonus awards for 2018 and LTI grants. In accordance with SEC guidance, the base salary and LTI grants approved at the meetings will appear in next year’s SCT as compensation for 2019, while the Performance Bonuses are reported in this year’s SCT as compensation for 2018.

The table below illustrates the total direct compensation awarded by the Committee to the named executive officers in its January 2019 and 2018 meetings, respectively.

Comparison of Year-Over-Year Total Direct Pay Awarded¹

Individual NEO Total Direct Pay Awarded

Effect of Company Performance on President and CEO Realizable Pay

Changes in stock price and performance over the vesting or performance period of LTI cause the value ultimately received by the executive to differ from the target grant value. The measurement of realizable pay includes such changes when comparing pay received, or trending to be received, to the target pay granted. The chart illustrates the strong correlation between TSR performance and President and CEO realizable pay. By design, strong relative and overall TSR performance results in higher realizable pay and weak relative and overall TSR performance results in lower realizable pay.

President and CEO Realizable Pay¹

Explanatory notes to “President and CEO Realizable Pay” chart

Amounts shown for each “Target” column reflect (1) base salary paid during the year, (2) Performance Bonus target for the year and (3) face value (shares multiplied by grant date fair market value) of the Restricted Stock and Performance Share Units granted at the beginning of the year. For 2016, the Committee approved an LTI grant valued at approximately one-third less than the targeted value.

Amounts shown for each “Realizable” column reflect (1) base salary paid during the year, (2) the Performance Bonus awarded for the year through the Committee’s Performance Bonus determination process and (3) the value of (a) the Restricted Stock based on the closing price of Devon’s common stock as of 2018 year end without respect to interim vesting, and (b) the Performance Share Units based on a payout percentage for Devon’s position within the peer group for the relevant performance period up to December 31, 2018. Following year end, the Performance Share Units granted in 2016 were determined not to meet the threshold for any payout and the Performance Share Units granted in 2017 and 2018, respectively, were trending to pay out at 50% and 0% of target, respectively.

“% TSR Change” covers, (a) for the first column, the period from December 31, 2015 to December 31, 2018, (b) for the second column, the period from December 31, 2016 to December 31, 2018, and (c) for the third column, the period from December 31, 2017 to December 31, 2018.

“% Difference between Realizable and Target Pay” reflects the difference, expressed as a percentage of “Target,” between “Target” and “Realizable” pay as of December 31, 2018 for each respective column.

Compensation Process Background

The Committee is responsible for and directs the process of reviewing and determining compensation for the named executive officers. The Committee retains an external compensation consultant to provide assistance with the process. The role of the Committee and the compensation consultant, which includes the development of a peer group the Committee uses for benchmarking and comparing the executive officers’ compensation, is further described in the following sections.

Role of the Committee

The Committee establishes the Company’s executive compensation philosophy and administers the overall executive compensation program. The Committee operates under a written charter approved by the Board of Directors, a copy of which is available at the Company’s website, www.devonenergy.com.

Every year, the Committee conducts an individual, in-depth, confidential interview with each executive officer to discuss the officer’s analysis of the Company’s overall performance for the year, performance within the officer’s area of responsibility, and any issues or concerns the officer may have regarding the Company’s operations and results. The Committee believes this is a highly effective tool in the Committee’s oversight of the executive compensation process. In addition, the President and CEO discusses with the Committee his evaluation of each executive officer’s performance, development, and potential to take on greater or different responsibilities. The President and CEO also provides compensation recommendations to the Committee for all executive officers (other than himself).

The Committee considers the various factors described in this CD&A, including its interviews with executive officers and the President and CEO’s evaluations of each executive officer’s performance and, in a closed session without the President and CEO present, the Committee sets the President and CEO’s compensation. The Committee then determines whether to approve the compensation recommendations provided by the President and CEO for the other executive officers.

Role of the Compensation Consultant

For 2018, the Committee retained Meridian Compensation Partners, LLC (the “Compensation Consultant”) as its external compensation consultant. The Compensation Consultant evaluated the competitiveness of the Company’s program and reviewed the executive compensation program design. The Committee has the final authority to hire and terminate the Compensation Consultant, and the Committee annually evaluates the performance of the Compensation Consultant.

In selecting its consultant, the Committee considers factors that could affect the consultant’s independence, including whether the consultant provides services to the Company other than under its engagement by the Committee, and the other factors set forth in the Committee’s charter. Based on this review, the Committee determined that the Compensation Consultant had no conflicts of interest.

Use of Peer Groups

To successfully compete for executive talent, the Committee, working with the Compensation Consultant, annually compares the compensation of the executive officers to the compensation of

similarly situated executives at peer companies with business operations focused on the exploration and production of oil and gas. In establishing a peer group, the Committee primarily seeks companies with asset and market values similar to the Company. The Committee also considers enterprise values, calculated as common equity value plus net long-term debt and preferred stock, of the companies. The Committee believes these metrics are appropriate for determining peers because they provide a reasonable point of reference for comparing executives with similar positions and responsibilities. At the time the Committee approved the peer group for 2018, the Company was generally positioned between the 50^th and 75^th percentiles of the peer group on each of these metrics.

The approved peer group for 2018 consisted of the 14 companies listed below: