Exhibit 10.1

2012 INCENTIVE COMPENSATION PLAN

DEVON ENERGY CORPORATION

2012 INCENTIVE COMPENSATION PLAN

Effective January 1, 2012

1.    Purpose of the Plan. The purpose of the Plan is to provide a link between
compensation and performance, to motivate participants to achieve corporate
performance objectives and to enable the Company to attract and retain high
quality Eligible Employees.

2.    Definitions. As used herein, the following definitions shall apply:

(a) “Affiliated Entity” means any partnership or limited liability company in
which a majority of the partnership or other similar interest thereof is owned
or controlled, directly or indirectly, by the Company or one or more of its
subsidiaries or Affiliated Entities or a combination thereof. For purposes
hereof, the Company, a subsidiary or an Affiliated Entity shall be deemed to
have a majority ownership interest in a partnership or limited liability company
if the Company, such subsidiary or Affiliated Entity shall be allocated a
majority of partnership or limited liability company gains or losses or shall be
or control a managing director or a general partner of such partnership or
limited liability company.

(b) “Board” means the Board of Directors of the Company.

(c) “Bonus” means a cash payment made pursuant to the Plan.

(d) “Code” means the Internal Revenue Code of 1986, as amended.

(e) “Committee” means the Compensation Committee of the Board.

(f) “Company” means Devon Energy Corporation, a Delaware corporation.

(g) “Covered Employee” means an Employee who is a “covered employee” under
Section 162(m) of the Code.

(h) “Director” means a non-Employee member of the Board.

(i) “Eligible Employee” means any Employee who is selected for participation in
the Plan by the Committee and (i) holds the title or position of Executive Vice
President or above or (ii) is an officer subject to the reporting requirements
of Section 16 of the Securities Exchange Act of 1934, as amended.

(j) “Employee” means any person who is in the employ of the Company, a
subsidiary or an Affiliated Entity, subject to the control and direction of the
Company, the subsidiary or the Affiliated Entity as to both the work to be
performed and the manner and method of performance. Neither service as a
Director nor fees received from the Company, the subsidiary or the Affiliated
Entity for service as a Director shall be sufficient to constitute Employee
status.

(k) “Performance-Based Compensation” means compensation qualifying as
“performance-based compensation” under Section 162(m) of the Code.

(l) “Performance Goal” means any measurable criterion tied to the success of the
Company and based on one or more of the business criteria described in
Section 6.

(m) “Performance Period” means a fixed period established by the Committee that
may range in duration from a minimum period of twelve (12) months to a maximum
period of thirty-six (36) months and over which the attainment of the applicable
Performance Goals set by the Committee is to be measured.

 

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(n) “Plan” means the Devon Energy Corporation 2012 Incentive Compensation Plan.

3.    Administration of the Plan.

(a) The Committee. The Plan shall be administered by the Committee (or a
subcommittee of the Committee) which shall be comprised solely of two or more
Directors eligible to serve on a committee awarding Bonus payments qualifying as
Performance-Based Compensation.

(b) Powers of the Committee. Subject the provisions of the Plan (including any
other powers given to the Committee hereunder), the Committee shall have the
authority, in its discretion, to:

(i) establish the duration of each Performance Period;

(ii) select the Eligible Employees who are to participate in the Plan for such
Performance Period;

(iii) determine the specific Performance Goal or Goals for each Performance
Period and the relative weighting of those goals, establish one or more
designated levels of attainment for each such goal and set the Bonus potential
for each participant at each corresponding level of attainment;

(iv) certify the level at which the applicable Performance Goal or Goals are
attained for the Performance Period and determine, on the basis of that
certification, the actual Bonus for each participant in an amount not to exceed
his or her maximum Bonus potential for the certified level of attainment;

(v) exercise discretionary authority, when appropriate, to reduce the actual
Bonus payable to any participant below his or her Bonus potential for the
attained level of the Performance Goal(s) for the Performance Period;

(vi) construe and interpret the terms of the Plan and Bonuses awarded under the
Plan;

(vii) establish additional terms, conditions, rules or procedures for the
administration of the Plan; provided, however, that no Bonus shall be awarded
under any such additional terms, conditions, rules or procedures which are
inconsistent with the provisions of the Plan; and

(viii) take such other action, not inconsistent with the terms of the Plan, as
the Committee deems appropriate.

All decisions and determinations by the Committee shall be final, conclusive and
binding on the Company, its subsidiaries, Affiliated Entities, the participants,
and any other persons having or claiming an interest hereunder.

(c) Indemnification. In addition to such other rights of indemnification as they
may have as members of the Board, members of the Committee who administer the
Plan shall be defended and indemnified by the Company, to the extent permitted
by law, on an after-tax basis against (i) all reasonable expenses (including
attorneys’ fees) actually and necessarily incurred in connection with the
defense of any claim, investigation, action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Bonus awarded hereunder and (ii) all amounts paid by them in
settlement thereof (provided such settlement is approved by the Company) or paid
by them in satisfaction of a judgment in any such claim, investigation, action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such claim, investigation, action, suit or proceeding that such
person is liable for gross negligence, bad faith or intentional misconduct;
provided, however, that within 30 days after the institution of such claim,
investigation, action, suit or proceeding, such person shall offer to the
Company, in writing, the opportunity at the Company’s expense to handle and
defend the same.

 

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4.    Coverage. All Eligible Employees shall be covered by the Plan, except to
the extent the Committee may elect to exclude one or more Eligible Employees
from participation in a designated Performance Period.

5.    Terms and Conditions of Bonus Awards.

(a) Pre-Established Performance Goals. Payment of Bonuses shall be based solely
on account of the attainment of one or more pre-established, objective
Performance Goals over the designated Performance Period. The Committee shall
establish one or more objective Performance Goals with respect to each Eligible
Employee in writing not later than 90 days after the commencement of the
Performance Period to which the Performance Goals relate or the date on which
twenty-five percent (25%) of such Performance Period has been completed (or such
other date as may be required or permitted under Section 162(m) of the Code),
provided that the outcome of the Performance Goals must be substantially
uncertain at the time of their establishment. Performance Goals shall be based
solely on one or more of the business criteria described in the Section 6 and
shall be weighted, equally or in such other proportion as the Committee shall
determine at the time such Performance Goals are established, for purposes of
determining the actual Bonus amounts that may become payable upon the attainment
of those goals. For each Performance Goal, the Committee may establish one or
more designated levels of attainment and set the Bonus potential for each
Eligible Employee at each designated performance level. Alternatively, the
Committee may establish a linear formula for determining the Bonus potential at
various points of Performance Goal attainment. Under no circumstance, however,
shall the aggregate Bonus potential for any participant for any Performance
Period exceed the applicable maximum dollar amount set forth in Section 5(d).

(b) Committee Certification. As soon as administratively practicable following
the completion of the Performance Period, the Committee shall certify the actual
levels at which the Performance Goal or Goals for that period have been attained
and determine, on the basis of such certified levels, the actual Bonus amount to
be paid to each Eligible Employee for that Performance Period. Such
certification shall be final, conclusive and binding on the participant, and on
all other persons, to the maximum extent permitted by law.

(c) Committee Discretion. The Committee, in determining the amount of the Bonus
actually to be paid to an Eligible Employee, shall in no event award a Bonus in
excess of the dollar amount determined on the basis of the Bonus potential
established for the particular level at which each of the applicable Performance
Goals for the Performance Period is attained. If the actual level of attainment
is between two of the designated performance levels, the Bonus amounts will be
interpolated on a straight-line basis between those two levels. In addition, the
Committee shall have the discretion to reduce or eliminate the Bonus that would
otherwise be payable with respect to one or more Performance Goals on the basis
of the certified level of attained performance of those goals. In exercising its
discretion to reduce the Bonus payable to any participant, the Committee may
utilize such objective or subjective criteria as the Committee deems appropriate
in its sole and absolute discretion. The Committee shall not waive any
Performance Goal applicable to a participant’s Bonus potential for a particular
Performance Period, provided that, the Committee may, in its sole discretion,
waive the Performance Goal for a particular Performance Period in the event of
the participant’s death or disability or under such circumstances as the
Committee deems appropriate in the event a Change in Control should occur prior
to the completion of that Performance Period. For purposes of the Plan, a Change
in Control shall have the same definition as set forth in the Company’s 2009
Long-Term Incentive Plan (or any successor to that plan).

(d) Individual Limitations on Awards. Notwithstanding any other provision of the
Plan, the maximum amount of any Bonus paid to a Covered Employee or other
Eligible Employee under the Plan shall be limited to Five Million Dollars
($5,000,000) per each twelve (12)-month period (or portion thereof) included
within the applicable Performance Period.

 

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(e) Payment Date. Payment of such Bonus amounts shall be made as soon as
administratively practicable thereafter, but in any event, no later than
March 15 of the year following the year in which the Performance Period ends. No
participant shall accrue any right to receive a Bonus award under the Plan
unless that participant remains in Employee status until the payment date for
that Bonus following the completion of the Performance Period. Accordingly, no
Bonus payment shall be made to any participant who ceases Employee status prior
to the payment date for that Bonus; provided, however, that the Committee shall
have complete discretion to award a full or pro-rated Bonus, based on the level
at which the applicable Performance Goals are attained for the Performance
Period, to a participant who ceases Employee status prior to such payment date
by reason of death or disability or in connection with an involuntary reduction
in force. A participant may also defer the payment of the Bonus pursuant to the
terms and conditions of the Company’s Deferred Compensation Plan (or any
successor plan) and in compliance with Section 409A of the Code.

(f) Withholding Tax. To the extent required by applicable federal, state, local
or foreign law, each employer shall withhold all applicable taxes from all Bonus
amounts.

6.    Business Criteria.

(a) Permitted Criteria. Performance Goals established by the Committee may be
based on any one of, or combination of, the following: earnings; earnings per
share (actual or targeted growth); earnings before interest and taxes; pretax
earnings before interest, depreciation, amortization, exploration and
abandonment costs; pretax operating earnings after interest expense and before
incentives, service fees, and extraordinary or special items or operating
income; revenues; sales; debt level; cost reduction targets;
interest-sensitivity gap levels; cash flow (including but not limited to free
cash flow, net cash flow, net cash flow before financing activities, cash flow
from operations, increase in cash flow return); capital expenditures; weighted
average cost of capital; debt/proved reserves; net income or gross income
(including but not limited to income after capital costs and income before or
after taxes); operating income; expense; working capital; operating or profit
margin; pre-tax margin; contribution margin; return factors (including, but not
limited to return on equity, capital employed, or investment; risk adjusted
return on capital; return on investors’ capital; return on average equity;
return on assets; and return on net assets); book value; operating expenses
(including, but not limited to lease operating expenses, severance taxes and
other production taxes, gathering and transportation and general and
administrative costs); unit costs; net borrowing, debt leverage levels, credit
quality, or debt ratings; accomplishment of mergers, acquisitions, dispositions,
or similar business transactions (including, but not limited to acquisition
goals based on value of assets acquired or similar objectives); debt to debt
plus stockholder equity; debt to EBIT or EBITDA; interest coverage; total
shareholder return; comparative shareholder return; market price per share; book
value per share; net asset value per share; growth measures; debt to total
capitalization ratio; asset quality levels; investments; economic value added;
stock price appreciation; market capitalization; accounts receivables day sales
outstanding; accounts receivables to sales; achievement of balance sheet or
income statement objectives; market share; assets; asset sale targets;
non-performing assets; satisfactory internal or external audits; improvement of
financial ratings; charge-offs; regulatory compliance; employee
retention/attrition rates; individual business objectives; risk management
activities, corporate value measures which may be objectively determined
(including ethics, compliance, environmental, diversity commitment, and safety);
amount of the oil and gas reserves; costs of finding oil and gas reserves;
reserve replacement ratio, reserve additions, or other reserve level measures;
drilling results; natural gas and/or oil production, production and reserve
growth; implementation or completion of critical projects or processes;
production volume; sales volume; production efficiency; inventory to sales; and
inventory turns. Such Performance Goals may be measured not only in terms of the
Company’s performance but also in terms of its

 

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performance relative to the performance of other entities or may be measured on
the basis of the performance of any of the Company’s business units or divisions
or any parent or subsidiary entity. Performance may also be measured on an
absolute basis, relative to internal business plans, or based on growth. As may
be applicable, they may also be measured in aggregate or on a per-share basis.
Performance Goals need not be uniform as among participants.

(b) Authorized Adjustments. To the extent applicable, subject to the following
sentence and unless the Committee determines otherwise, the determination of the
achievement of Performance Goals shall be determined based on the relevant
financial measure, computed in accordance with U.S. generally accepted
accounting principles (“GAAP”), and in a manner consistent with the methods used
in the Company’s audited financial statements. To the extent permitted by
Section 162(m) of the Code, in setting the Performance Goals within the period
prescribed in Section 5(a), the Committee may provide for appropriate adjustment
as it deems appropriate, including for one or more of the following items: asset
write-downs; litigation or claim judgments or settlements; changes in accounting
principles; changes in tax law or other laws affecting reported results; changes
in commodity prices; severance, contract termination, and other costs related to
exiting, modifying or reducing any business activities; costs of, and gains and
losses from, the acquisition, disposition, or abandonment of businesses or
assets; gains and losses from the early extinguishment of debt; gains and losses
in connection with the termination or withdrawal from a pension plan; stock
compensation costs and other non-cash expenses; any extraordinary non-recurring
items as described in applicable Accounting Principles Board opinions or
Financial Accounting Standards Board statements or in management’s discussion
and analysis of financial condition and results of operation appearing in the
Company’s annual report to stockholders for the applicable year; and any other
specified non-operating items as determined by the Committee in setting
Performance Goals.

7.    Effective Date and Term of Plan. The Plan is effective on January 1, 2012,
but no Bonus shall be paid under this Plan to a Covered Employee unless the Plan
is approved by the Company stockholders at the 2012 annual meeting. Assuming
that such stockholder approval is obtained, the Plan shall continue in effect
until the Board terminates it or until stockholder approval again is required
for the Plan to meet the requirements of Code Section 162(m) but is not
obtained.

8.    Amendment, Suspension or Termination of the Plan. The Board may at any
time amend, suspend or terminate the Plan. However, any amendment or
modification of the Plan shall be subject to stockholder approval to the extent
required under Code Section 162(m) or other applicable law or regulation.

9.    General Provisions.

(a) Transferability. No participant in the Plan shall have the right to
transfer, alienate, pledge or encumber his or her interest in the Plan, and such
interest shall not (to the maximum permitted by law) be subject to the claims of
the participant’s creditors or to attachment, execution or other process of law.
However, should a participant die before payment is made of the actual Bonus to
which he or she has become entitled under the Plan, then that Bonus shall be
paid to the executor or other legal representative of his or her estate.

(b) No Rights to Employment. Neither the action of the Company in establishing
or maintaining the Plan, nor any action taken under the Plan by the Committee,
nor any provision of the Plan itself shall be construed so as to grant any
person the right to remain in Employee status for any period of specific
duration, and each participant shall at all times remain an Employee at-will and
may accordingly be discharged at any time, with or without cause and with or
without advance notice of such discharge.

 

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(c) Acknowledgement of Authority. All Bonuses shall be awarded conditional upon
the participant’s acknowledgement, by participation in the Plan, that all
decisions and determinations of the Committee shall be final and binding on the
participant, his or her beneficiaries and any other person having or claiming an
interest in such Bonus.

(d) Company Policies. All Bonuses under the Plan shall be subject to any
applicable clawback or recoupment policy of the Company adopted from time to
time by the Board.

(e) Unfunded Obligation. Eligible Employees eligible to participate in the Plan
shall have the status of general unsecured creditors of the Company. Any amounts
payable to such Employees pursuant to the Plan shall be unfunded and unsecured
obligations for all purposes, including (without limitation) Title I of the
Employee Retirement Income Security Act of 1974, as amended. The Company shall
not be required to segregate any monies from its general funds, or to create any
trusts, or establish any special accounts with respect to such obligations.
Employees shall have no claim against the Company for any changes in the value
of any assets that may be invested or reinvested by the Company with respect to
the Plan.

(f) Reliance on Reports. Each member of the Committee shall be fully justified
in relying or acting in good faith upon any report made by the independent
public accountants of the Company and its subsidiaries or Affiliated Entities
and upon any other information furnished in connection with the Plan by any
person or persons other than himself or herself. In no event shall any person
who is or shall have been a member of the Committee or of the Board be liable
for any determination made or other action taken or any omission to act in
reliance upon any such report or information or for any action taken, including
the furnishing of information, or failure to act, if in good faith.

(g) Successors. The terms and conditions of the Plan, together with the
obligations and liabilities of the Company that accrue hereunder, shall be
binding upon any successor to the Company, whether by way of merger,
consolidation, reorganization or other change in ownership or control of the
Company.

(h) Section 409A. The Plan is intended to comply with the short-term deferral
rule set forth in the regulations under Section 409A of the Code in order to
avoid application of Section 409A of the Code to the Plan. If and to the extent
that any payment under this Plan is deemed to be deferred compensation subject
to the requirements of Section 409A of the Code, this Plan shall be administered
so that such payments are made in accordance with the requirements of
Section 409A of the Code. If an award is subject to Section 409A of the Code,
(i) distributions shall only be made in a manner and upon an event permitted
under Section 409A of the Code, (ii) payments to be made upon a termination of
employment shall only be made upon a “separation from service” under
Section 409A of the Code, and (iii) in no event shall a participant, directly or
indirectly, designate the calendar year in which a distribution is made except
in accordance with Section 409A of the Code. Any award granted under the Plan
that is subject to Section 409A of the Code and that is to be distributed to a
key employee (as defined below) upon separation from service shall be
administered so that any distribution with respect to such award shall be
postponed for six months following the date of the participant’s separation from
service, if required by Section 409A of the Code. If a distribution is delayed
pursuant to Section 409A of the Code, the distribution shall be paid within 30
days after the end of the six-month period. If the participant dies during such
six-month period, any postponed amounts shall be paid within 90 days of the
participant’s death. The determination of key employees, including the number
and identity of persons considered key employees and the identification date,
shall be made by the Committee or its delegate each year in accordance with
Section 416(i) of the Code and the “specified employee” requirements of
Section 409A of the Code.

 

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(i) Governing Law. The validity, construction, interpretation and effect of the
Plan shall be governed and construed by and determined in accordance with the
laws of the State of Delaware, without giving effect to the conflict of laws
provisions thereof.

 

 

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