stock and (b) the average of the closing prices for the last 20 trading days of 2019, as compared to the same calculation for a specified group of the Company’s peers. Table of Contents Index to Financial Statements • 50% Return on Average Capital Employed – calculated by dividing (i) the average of net cash provided by operating activities from the Consolidated Statement of Cash Flows less “changes in assets and liabilities” included in the Operating Activities section of the Consolidated Statement of Cash Flows for the performance period by the sum of (ii) the product of the twenty-day average stock price immediately prior to the first day of the performance period and the diluted weighted average number of shares of common stock of the Company outstanding for the fourth quarter of the year prior to the beginning of the performance period, (iii) gross debt of the Company (net of cash and cash equivalents) outstanding on December 31 of the year prior to the beginning of the performance period, and (iv) the sum of (a) the product of the number of shares of common stock the Company issued during the performance period and the price of said shares and (b) the amount of additional net debt incurred during the performance period, which sum shall then be reduced by (c) the amount by which any net debt is reduced during the performance period and (d) the product of the number of shares of common stock of the company purchased by the company during the performance period and the price of said shares, with each occurrence of the above in (a) – (d) multiplied by a fraction in which the denominator equals the total number of quarters in the Performance Period (12) and the numerator equals the remaining number of quarters following each occurrence of the above in (a) – (d) plus one. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Code of Business Ethics and Conduct for Directors and Employees ITEM 11. EXECUTIVE COMPENSATION Performance at target level for both metrics will result in a payout of 100%, and performance at maximum for both metrics entitles the holder to 200%. The Relative Total Shareholder Return portion will be deemed not to exceed the target level if absolute total shareholder return is negative. William J. Way, President and Chief Executive Officer, was granted 1,863,500 of each type of award; Clay Carrell, Executive Vice President and Chief Operating Officer, was granted 883,440 of each type of award; Julian M. Bott, Executive Vice President and Chief Financial Officer, was granted 690,190 of each type of award; J. David Cecil, Executive Vice President, Corporate Development was granted 759,210 of each type of award; John C. Ale, Senior Vice President, General Counsel and Secretary, was granted 488,660 of each type of unit award. There was no additional information required to be disclosed in a current report on Form 8-K during the fourth quarter of the fiscal year ended December 31, 2019, that was not reported on such form. The definitive proxy statement to holders of the Company’s common stock in connection with the solicitation of proxies to be used in voting at the Annual Meeting of Stockholders to be held on or about May 19, 2020 (the “Proxy Statement”), is hereby incorporated by reference for the purpose of providing information about the Company’s directors, and for discussion of its audit committee and its audit committee financial expert. Refer to the sections “Proposal No. 1: Election of Directors” and “Share Ownership of Management, Directors and Nominees” in the Proxy Statement for information concerning our directors. Refer to the section “Corporate Governance – Committees of the Board of Directors” in the 2020 Proxy Statement for discussion of its audit committee and its audit committee financial expert. Information concerning the Company’s executive officers is presented in Part I of this Annual Report. The Company refers you to the section “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement for information relating to compliance with Section 16(a) of the Exchange Act. The Company has adopted Business Conduct Guidelines that apply to its Chief Executive Officer, Chief Financial Officer and Controller as well as other officers and employees. We have posted a copy of our Business Conduct Guidelines on the “Corporate Governance” section of our website at www.swn.com, and it is available free of charge in print to any stockholder who requests it. Requests for copies should be addressed to the Secretary at 10000 Energy Drive, Spring, Texas 77389. Any amendments to, or waivers from, our code of ethics that apply to our executive officers and directors will be posted on the “Corporate Governance” section of our website. Information required by Item 11 of Part III will be included in our Proxy Statement relating to our 2020 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A on or before May 19, 2020, and is incorporated herein by reference.* 134