The White Sox have agreed to terms on a two-year, $29-million contract extension with right-handed pitcher Jake Peavy.

Peavy will receive $14.5 million in both 2013 and 2014. If he reaches certain innings pitched thresholds over the course of both the 2013 and 2014 seasons, he can elect to extend the contract to include the 2015 season at a salary of $15 million. Peavy will receive the $4-million buyout payment due under terms of his previous contract in equal installments between 2016-19.

The Sox also picked up the option on right-hander Gavin Floyd and declined options on third baseman Kevin Youkilis and right-hander Brett Myers.