DIAMONDBACK ENERGY, INC. - DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

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DIAMONDBACK ENERGY, INC.

(Name of Registrant as Specified In Its Charter)

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

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About Diamondback

Diamondback is an independent oil and natural gas company headquartered in Midland, Texas focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas.

Core Values

Diamondback Energy and the culture we have developed are grounded in a unique set of core values that are adhered to throughout the entire organization. By establishing core values, we have set the bar extremely high for all of our employees in terms of how they operate and interact, both within the office and out in the field.

MESSAGE FROM OUR CHAIRMAN AND CEO

500 West Texas, Suite 100

Midland, Texas 79701

TRAVIS D. STICE

CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER

April 25, 2024

Dear Diamondback Energy, Inc. Stockholder:

On behalf of your board of directors and management, I am pleased to invite you to attend our Annual Meeting of Stockholders to be held on Thursday, June 6, 2024, at 9:30 a.m., local time at the Petroleum Club of Midland, 501 West Wall Street, Midland, TX 79701.

It is important that your shares be represented at the meeting. Whether or not you plan to attend the meeting in person, we urge you to grant your proxy to vote your shares by telephone or through the Internet by following the instructions included on the Notice of Internet Availability of Proxy Materials that you received, or if you requested to receive a paper copy of the proxy card, to mark, date, sign and return the proxy card in the envelope provided. Please note that submitting a proxy will not prevent you from attending the meeting in person and voting at such meeting. Please note, however, if a broker or other nominee holds your shares of record and you wish to vote at the meeting, you must obtain from that registered holder a proxy card issued in your name.

You will find information regarding the matters to be voted on at the meeting in the proxy statement. Your interest in Diamondback Energy, Inc. is appreciated. We look forward to your vote at the annual meeting to be held on June 6, 2024.

Sincerely,

Notice of Annual Meeting of Stockholders

TO BE HELD ON
JUNE 6, 2024

9:30 a.m., local time

Petroleum Club of Midland

501 West Wall Street

Midland, TX 79701

TO THE STOCKHOLDERS OF DIAMONDBACK ENERGY, INC.:

The Annual Meeting of Stockholders of Diamondback Energy, Inc. will be held on June 6, 2024 at 9:30 a.m., local time, at the Petroleum Club of Midland, 501 West Wall Street, Midland, TX 79701, for the following purposes:

To elect nine directors to serve until the Company’s 2025 Annual Meeting of Stockholders;

To approve, on an advisory basis, the compensation of the Company’s named executive officers;

To ratify the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2024; and

To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.

We are providing access to our proxy materials, including this proxy statement and our 2023 Annual Report on Form 10-K, over the Internet. As a result, we are mailing to our stockholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of our proxy materials. The notice contains instructions on how to access those proxy materials over the Internet, as well as instructions on how to request a paper or email copy of our proxy materials. Those stockholders who request a paper copy of our proxy materials as provided in the Notice of Internet Availability will receive such proxy materials by mail. This electronic distribution process reduces the environmental impact and lowers the costs of printing and distributing our proxy materials.

DIAMONDBACK ENERGY, INC. • 2024 PROXY STATEMENT 2

Your vote is important. Please carefully consider the proposals and vote in one of these ways:


INTERNET Follow the instructions on the Notice of Internet Availability of Proxy Materials or the proxy card to vote through the Internet		BY TELEPHONE Follow the instructions on the proxy card to vote by phone		BY MAIL If you request to receive a paper copy of our proxy materials, mark, sign, date and promptly return the proxy card in the postage-paid envelope		ANNUAL MEETING Submit a ballot at the Annual Meeting

Only stockholders of record at the close of business on April 11, 2024 or their proxy holders may vote at the meeting.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 6, 2024. THIS PROXY STATEMENT AND THE COMPANY’S 2023 ANNUAL REPORT ON FORM 10-K ARE AVAILABLE AT WWW.ENVISIONREPORTS.COM/FANG.

By Order of the Board of Directors,

Matt Zmigrosky

Executive Vice President,

Chief Legal and Administrative Officer and Secretary

April 25, 2024

The Notice of Internet Availability of Proxy Materials is first being mailed to stockholders on April 25, 2024.

DIAMONDBACK ENERGY, INC. • 2024 PROXY STATEMENT 3

Table of Contents

PROXY SUMMARY	06
VOTING MATTERS	06

PROPOSAL 1: ELECTION OF DIRECTORS	10
DIRECTOR NOMINATIONS	10

CORPORATE GOVERNANCE MATTERS	19
CORPORATE GOVERNANCE HIGHLIGHTS	19
CORPORATE GOVERNANCE GUIDELINES	20
DIRECTOR QUALIFICATIONS AND NOMINATION PROCESS	22
DIRECTOR INDEPENDENCE	23
BOARD LEADERSHIP STRUCTURE	24
BOARD MEETINGS, COMMITTEES AND MEMBERSHIP	25
ANNUAL BOARD AND COMMITTEE EVALUATIONS	28
THE BOARD’S ROLE IN RISK OVERSIGHT	29
STOCKHOLDER ENGAGEMENT	30
CODE OF BUSINESS CONDUCT AND ETHICS	31
COMMUNICATIONS WITH THE BOARD	31
DIRECTOR COMPENSATION	32
CORPORATE RESPONSIBILITY AND SUSTAINABILITY	32

AUDIT COMMITTEE REPORT	38

EXECUTIVE OFFICERS	39

COMPENSATION DISCUSSION AND ANALYSIS	41
EXECUTIVE SUMMARY	41
HIGHLIGHTS OF EXECUTIVE COMPENSATION BEST PRACTICES	44
EXECUTIVE COMPENSATION POLICY AND OBJECTIVES	45
COMPETITIVE BENCHMARKING	46
2023 COMPENSATION PROGRAM DESIGN AND STRUCTURE	48
EXECUTIVE COMPENSATION PROGRAM ELEMENTS	49
OTHER SIGNIFICANT COMPENSATION AND BENEFIT PLANS, POLICIES AND PRACTICES	56
COMPENSATION COMMITTEE REPORT	61
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION	61

COMPENSATION TABLES	62
SUMMARY COMPENSATION TABLE	62
2023 GRANTS OF PLAN-BASED AWARDS UNDER DIAMONDBACK’S EQUITY INCENTIVE PLAN	64
2023 GRANTS OF PLAN-BASED AWARDS UNDER THE VIPER LTIP	65
OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR-END UNDER DIAMONDBACK’S EQUITY INCENTIVE PLAN	65
OUTSTANDING EQUITY AWARDS UNDER THE VIPER LTIP AT FISCAL 2023 YEAR-END	67
STOCK VESTED DURING FISCAL YEAR 2023 UNDER DIAMONDBACK’S EQUITY INCENTIVE PLAN	67
RESTRICTED STOCK UNITS VESTED UNDER THE VIPER LTIP DURING FISCAL YEAR 2023	68
POTENTIAL PAYMENTS UPON TERMINATION, RESIGNATION OR CHANGE OF CONTROL FOR FISCAL YEAR 2023	68
PAY RATIO DISCLOSURE	70
PAY VERSUS PERFORMANCE DISCLOSURE	70
2023 EQUITY COMPENSATION PLAN INFORMATION	75
2023 DIRECTOR COMPENSATION	75

STOCK OWNERSHIP	78
HOLDINGS OF MAJOR STOCKHOLDERS	78
HOLDINGS OF OFFICERS AND DIRECTORS	79

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STOCK PERFORMANCE GRAPH	81

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	82
REVIEW AND APPROVAL OF RELATED PARTY TRANSACTIONS	82

PROPOSAL 2: APPROVE, ON AN ADVISORY BASIS, THE COMPANY’S EXECUTIVE COMPENSATION	83
BOARD VOTING RECOMMENDATION	83

PROPOSAL 3: RATIFY THE APPOINTMENT OF OUR INDEPENDENT AUDITORS	84
WHAT AM I VOTING ON?	84
WHAT SERVICES DO THE INDEPENDENT AUDITORS PROVIDE?	84
HOW MUCH WERE THE INDEPENDENT AUDITORS PAID IN 2023 AND 2022?	84
DOES THE AUDIT COMMITTEE APPROVE THE SERVICES PROVIDED BY GRANT THORNTON?	85
WILL A REPRESENTATIVE OF GRANT THORNTON BE PRESENT AT THE MEETING?	85
WHAT VOTE IS REQUIRED TO APPROVE THIS PROPOSAL?	85
HAS GRANT THORNTON ALWAYS SERVED AS DIAMONDBACK’S INDEPENDENT AUDITORS?	85
WHAT DOES THE BOARD OF DIRECTORS RECOMMEND?	85

FREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING	86

SUBMISSION OF FUTURE STOCKHOLDER PROPOSALS	90

OTHER MATTERS	91

SCHEDULE A NON-GAAP RECONCILIATIONS	92

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	PROXY SUMMARY

	THE SUMMARY BELOW HIGHLIGHTS SELECTED INFORMATION IN THIS PROXY STATEMENT. PLEASE REVIEW THE ENTIRE PROXY STATEMENT BEFORE VOTING YOUR SHARES.

— VOTING MATTERS

Proposal	Board Recommendation	Page Reference
Proposal 1: Election of Directors	FOR each Director	10
Proposal 2: Approve, on an Advisory Basis, the Company’s Executive Compensation	FOR	83
Proposal 3: Ratify the Appointment of Our Independent Auditors	FOR	84

Director Nominees

				Committee Memberships
Nominee	Age	Director Since	Independent	Audit	Compensation	Nominating and Corporate Governance	Safety, Sustainability and Corporate Responsibility	Other Current Public Boards
Vincent K. Brooks	65	2020						2
David L. Houston	71	2012						0
Rebecca A. Klein	59	2022						2
Stephanie K. Mains	56	2020						2
Mark L. Plaumann	68	2012						0
Travis D. Stice*	62	2012						1
Melanie M. Trent**	59	2018						2
Frank D. Tsuru	64	2022						0
Steven E. West	63	2011						1

Chairperson

Chairman of the Board

Lead Independent Director

DIAMONDBACK ENERGY, INC. • 2024 PROXY STATEMENT 6

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Stockholder Outreach

As in the past, we conducted a robust stockholder outreach program during 2023 and through the first quarter of 2024 to solicit feedback on our executive compensation programs, environmental, social and corporate governance (ESG) matters, human capital, corporate responsibility and sustainability and other important issues.

2023 and First Quarter 2024 stockholder outreach highlights:

•	Initiated contact with stockholders representing approximately 62% of our outstanding shares as of June 30, 2023
•	Met (telephonically or through video conference) with stockholders representing approximately 41% of our outstanding shares as of June 30, 2022, including six of our 10 largest stockholders
•	Attended approximately 13 virtual or in person investor conferences and hosted approximately 20 virtual or in person bus tours
•	Attained approximately 96.5% favorable stockholder vote for our 2023 say-on-pay proposal

ESG Highlights

•	56% of Diamondback’s current board of directors are gender or ethnically diverse (three female directors and three ethnically diverse directors based on information self-identified by each director of the Company)
•	Amended Diamondback’s governing documents to remove supermajority voting provisions and to provide Diamondback stockholders with the right to call a special meeting
•	Announced execution of a Joint Development Agreement with Verde Clean Fuels, Inc. for the development, construction and operation of a facility to produce commodity-grade gasoline utilizing associated natural gas feedstock supplied from Diamondback’s operations in the Permian Basin
•	Achieved and exceeded goal of implementing continuous emission monitoring systems on Diamondback’s facilities to cover at least 90% of operated oil production by the end of 2023
•	Achieved and exceeded goal of sourcing over 65% of our water used for drilling and completion operations from recycled sources by 2025
•	Released our 2023 Corporate Sustainability Report in September 2023, which included a calculation of Diamondback’s Scope 3 GHG emissions and our 2022 EEO-1 Data
•	Completed the 2023 CDP Water Security Questionnaire and the 2023 CDP Climate Change Questionnaire
•	Received a first-tier score of 87.1% for the 2023 CPA-Zicklin Index of Corporate Political Accountability and Disclosure
•	Joined the Oil & Gas Methane Partnership 2.0 (OGMP 2.0), the flagship oil and gas reporting and mitigation program of the United Nations Environment Programme
•	Established ambitious environmental targets, including initiatives to:

		•	reduce Scope 1 GHG intensity by at least 50% from 2019 levels by 2024;
		•	reduce methane intensity by at least 70% from 2019 levels by 2024;
		•	end routine flaring (as defined by the World Bank) by 2025;
		•	source over 65% of our water used for drilling and completion operations from recycled sources by 2025 *(achieved in 2023)*; and
		•	reduce combined Scope 1 and Scope 2 GHG intensity by at least 50% from 2020 levels by 2030

Diamondback appreciates our social and environmental license to operate as a public oil and gas company in the United States and acknowledges that such license will continue to be largely influenced by our stockholders and the alignment of our ESG approach with their expectations. We regularly engage with our stockholders on ESG matters to ensure alignment. At its core, our environmental strategy recognizes and prepares us for the fact that the United States is transitioning to a lower carbon economy. The foremost authorities on energy demand continue to forecast that oil and gas will account for a substantial portion of global energy demand well into the future, in even the most carbon constrained projections. However, we continue to integrate sustainability into our core, thus allowing for our continued success in the new energy economy.

DIAMONDBACK ENERGY, INC. • 2024 PROXY STATEMENT 7

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As Diamondback’s ESG strategy evolves, management regularly interacts with the board and its committees regarding ESG matters, including its audit committee, compensation committee, nominating and corporate governance committee, and safety, sustainability and corporate responsibility committee. The safety, sustainability and corporate responsibility committee was formed in 2019 to (i) review Diamondback’s policies and performance regarding, and provide guidance on, ESG matters, (ii) advise the board of directors and management on significant public issues that are pertinent to the Company and (iii) assist management in setting strategy, establishing goals and integrating ESG matters into strategic and tactical business activities across the Company.

In 2023, Diamondback continued to include specific, measurable environmental and safety performance metrics in our short-term incentive compensation program that incentivize performance on key metrics, including flaring, greenhouse gas (GHG) emissions, recycled water usage, fluid spill control and safety.

Diamondback also released its sixth annual Corporate Sustainability Report in September 2023, which included content aligned to voluntary frameworks and standards maintained by the Sustainability Accounting Standards Board (SASB), Task Force on Climate-Related Financial Disclosures (TCFD), Global Reporting Initiative (GRI), International Petroleum Industry Environmental Conservation Association (IPIECA) and the American Exploration and Production Council (AXPC). Our 2023 Corporate Sustainability Report also included:

	•	our Scope 1 and Scope 2 GHG emissions;
	•	a calculation of our Scope 3 GHG emissions;
	•	an assessment of our portfolio under various low carbon scenarios as outlined by the International Energy Agency;
	•	our 2022 EEO-1 data; and
	•	a limited assurance attestation from our independent auditor.

Further, Diamondback completed CDP Global’s (CDP) water security and climate change questionnaires. Both the 2023 Corporate Sustainability Report and a link to our CDP water security and climate change questionnaires can be found on our website under the tab “Sustainability.”

Diamondback remains committed to conducting its business in a manner that respects and promotes the fundamental rights and dignity of all people in accordance with its robust Human Rights Policy. A copy of Diamondback’s Human Rights Policy can be found on our website under the tab “Investors—Corporate Governance.”

For additional information regarding our commitment to ESG matters, please see “Corporate Responsibility and Sustainability” beginning on page 32.

Performance Highlights

Financial and Operational Highlights

• Maintained investment grade credit ratings from all three major ratings agencies

• Generated full year 2023 net cash provided by operating activities of $5.9 billion and Free Cash Flow⁽¹⁾of $2.9 billion

• Declared total base plus variable dividends of $8.12 per share for the full year 2023

• Total full year 2023 return of capital of $2.3 billion from stock repurchases and declared base plus variable dividends (approximately 79% of Free Cash Flow)

• In 2023, repurchased 6.24 million shares of Diamondback’s common stock for $838 million, excluding excise tax (at a weighted average price of $134.37 per share)

• Full year 2023 consolidated net debt/adjusted EBITDA⁽²⁾of 0.97x, essentially flat year over year despite an 18% decline in oil prices and a 59% decline in natural gas prices

• Repurchased $130.2 million of aggregate principal amount across Diamondback’s existing 2026 and 2029 senior notes at approximately 95.5% of par, achieving approximately $4.5 million of annual interest savings

Strategic Transactions

• Announced in February 2024 the pending merger transaction with Endeavor Energy Resources, L.P.

• Closed the acquisition of all leasehold interests and related assets of Lario and successfully completed the integration of the Lario assets and previously acquired Firebird assets

• Closed non-core asset divestiture transactions resulting in $1.7 billion of gross proceeds since initiating the non-core asset sale program, substantially exceeding $1 billion non-core asset sale target

• Formed Deep Blue Midland Basin LLC, a strategic midstream joint venture with Five Point Energy LLC, to create the largest independent water infrastructure platform in the Midland Basin

(1)	When used throughout this proxy statement, “Free Cash Flow” is as defined and reconciled on Schedule A to this proxy statement.
(2)	Defined as consolidated total debt less cash and cash equivalents at year-end divided by consolidated adjusted EBITDA for the full year as defined and reconciled on Schedule A to this proxy statement.

DIAMONDBACK ENERGY, INC. • 2024 PROXY STATEMENT 8

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Governance and Compensation Highlights

• Maintained the weighting of the ESG performance metrics in the 2023 annual incentive compensation plan at 25%

• Maintained the XOP Index and double weighted the S&P 500 as peers in our 2023 TSR performance peer group

• Provide stock ownership opportunity for 100% of our employees, all of whom are eligible for discretionary long-term equity incentive awards and discretionary short-term cash incentive awards based on both specific Company performance metrics tied to the same scorecard as our executive annual incentive compensation and individual performance outcomes

• Adopted clawback policy compliant with Nasdaq listing standards to implement Rule 10D-1 under the Exchange Act

• Publicly disclosed Diamondback’s 2023 corporate political contribution activity on our website

• Received a first tier score of approximately 87.1% for the 2022 CPA-Zicklin Index of Corporate Political Accountability and Disclosure

• Eliminated the 66 2/3% supermajority vote requirements in our charter and provided stockholders with the right to call a special meeting

• In response to stockholder feedback, publicly disclosed for the second time our 2022 Equal Employment Opportunity (EEO-1) data as of December 31, 2022 in our 2023 Corporate Sustainability Report

Compensation Highlights

Diamondback’s compensation program reflects our commitment to paying for performance and reflects appropriate governance practices that ensures alignment between successful execution of our strategy and the long-term interests of our stockholders.

(1)

Each of these pay mix illustrations consist of the annual base salary, annual incentive bonus paid and the grant date fair value of the performance-based and time-based stock awards granted in 2023. These pay mix illustrations exclude amounts listed in the column titled “All Other Compensation” in the Summary Compensation Table set forth on page 65.

DIAMONDBACK ENERGY, INC. • 2024 PROXY STATEMENT 9

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PROPOSAL 1

ELECTION OF DIRECTORS

— DIRECTOR NOMINATIONS

The board is committed to recruiting and nominating directors for election who will collectively provide the board with the necessary diversity of skills, backgrounds and experiences to meet the Company’s ongoing needs and support oversight of our business strategy and priorities, while maintaining institutional knowledge. In recommending candidates for election to the board, the nominating and corporate governance committee evaluates a candidate’s character, judgment, skill set, experience, independence, other time commitments and any other factors that the nominating and corporate governance committee deems relevant in light of the current needs of the board. The board believes that an important factor in its composition is diversity and as a result, have an experienced and diverse nominee slate.

To reflect the determination to keep our board diverse, the nominating and corporate governance committee seeks to include diverse candidates in all current or future director searches, including by affirmatively instructing any search firms retained to assist the committee in identifying director candidates to seek to include diverse candidates. In addition, in determining whether to recommend in

MESSAGE FROM OUR CHAIRMAN AND CEO

PROXY SUMMARY

— VOTING MATTERS

Director Nominees

Stockholder Outreach

2023 and First Quarter 2024 stockholder outreach highlights:

ESG Highlights

Performance Highlights

Compensation Highlights

PROPOSAL 1

ELECTION OF DIRECTORS

— DIRECTOR NOMINATIONS

SEC Form DEF 14A filed by Diamondback Energy Inc.