SUMMARY OF COMPENSATION ARRANGEMENTS FOR NON-EMPLOYEE DIRECTORS

The following is a description of the standard arrangements pursuant to which directors of SM Energy are compensated for services provided as a director, including additional amounts payable for committee participation:

Employee directors do not receive additional compensation for serving on the Board of Directors or any committee.

For service in 2014 - 2015 as it relates to the fiscal period from May 2014 through May 2015, target compensation for each member of the Board of Directors has been set at $180,000 annually, plus a retainer paid in lieu of committee and attendance fees. As described more fully below, the actual value of compensation may be higher or lower depending on the results of the restricted stock component of director compensation. Primary director compensation is in the form of stock grants and is fully described below. The retainer component of director compensation for non-employee directors consists of an annual retainer of $90,000 for committee and board meeting fees paid in SM Energy common stock or cash as selected by the director; provided that in the event any director attends in excess of 30 Board and committee meetings in the aggregate during the period from May 2014 through May 2015, such director shall receive $1,500 per meeting for each meeting in excess of 30. In addition, each non-employee director is reimbursed for expenses incurred in attending Board and committee meetings and director education programs.

The committee chairs receive the cash payments identified in the list below in recognition of the additional workload of their respective committee assignments. These amounts are paid at the beginning of the annual service period.        

The stock compensation for non-employee directors is as follows:

Energy.