DEF 14A of Aes Corp, Mar 14, 2024

DEF 14A of Aes Corp

Filed Mar 14, 2024 · FY20230000874761-24-000023

Open on EDGAR

  1. (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

    | 2023 Option Exercises and Stock Vested | 57 | | 2023 Non-Qualified Deferred Compensation | 58 | | Narrative Disclosure Relating to the Non-Qualified Deferred Compensation Table | 58 | | Potential Payments Upon Termination or Change-in-Control | 60 | | Additional Information Relating to Potential Payments Upon Termination of Employment or Change-in-Control | 61 | | Payment of Long-Term Compensation Awards in the Event of Termination or Change-in-Control as Determined by the Provisions Set Forth in the 2003 Long-Term Compensation Plan (for all NEOs) | 62 | | CEO Pay Ratio | 63 | | Compensation Committee Report | 64 | | Risk Assessment | 64 | | PAY VERSUS PERFORMANCE DISCLOSURE | 66 | | AUDIT MATTERS | 69 | | Report of the Financial Audit Committee | 69 | | Information Regarding the Independent Registered Public Accounting Firm | 70 | | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS, AND EXECUTIVE OFFICERS | 72 | | Shares Beneficially Owned by Directors and Executive Officers | 72 | | Shares Beneficially Owned by Greater Than 5% Stockholders | 73 | | ANNUAL MEETING PROPOSALS | 75 | | Proposal 1: Election of Directors | 75 | | Proposal 2: Approval, on an Advisory Basis, of the Company’s Executive Compensation | 76 | | Proposal 3: Ratification of the Appointment of Ernst & Young LLP as the Independent Auditor of the Company for Fiscal Year 2024 | 77 | | IMPORTANT INFORMATION ABOUT AES’ VIRTUAL ANNUAL MEETING | 78 | | QUESTIONS AND ANSWERS REGARDING THE PROXY STATEMENT AND ANNUAL MEETING | 80 | | Appendix A: NON-GAAP MEASURES | 84 | | Appendix B: DEFINITION OF TERMS | 87 | | Appendix C: SHORT-TERM INCENTIVE PLAN PERFORMANCE TARGETS | 89 |

  2. Director Characteristics

    Director Characteristics 1 Tenure, for the purposes of this chart, is calculated based on service at any point during a board cycle and may include partial years of service. 2 Diversity characteristics based on information self-identified by each Director to the Company. 3 Mr. Morse joined the Board in December 2009, and has served 15 full Board years. Director Nominations by Stockholders The Governance Committee also considers potential nominations for Director provided by Stockholders and submits any such suggested nominations, when appropriate, to the Board for approval. Stockholders wishing to recommend persons for consideration by the Governance Committee as nominees for election to the Board can do so by writing to the Office of the Corporate Secretary, The AES Corporation, 4300 Wilson Boulevard, Arlington, Virginia, 22203, and providing the information and following the additional procedures set forth in our By-Laws. See Questions and Answers Regarding the Proxy Statement and Annual Meeting for more information. Board of Directors - Biographies The Board has nominated eleven Directors (the “Nominees”) for election at the Annual Meeting, each to serve a one-year term expiring at the Annual Meeting in 2025. Tarun Khanna, who has served as a member of the Board since 2009, is not standing for re-election at the Annual Meeting and will retire from the Board immediately upon the conclusion of the Annual Meeting. The Nominees’ biographies describe aspects of each candidate’s qualifications, relevant experience and committee service.

  3. Director Characteristics

    | | Qualifications | Committee Membership | | | Energy Sector Experience | Financial Audit Committee | | | Strategy and Growth | Innovation and Technology Committee | | | Senior Business Operations | | | | Public Policy and Regulatory | | | Gerard M. Anderson | Career Highlights | | | | Executive Chairman of DTE Energy Company, a diversified energy company (2019-2022) (retired) | | | | Chairman of DTE Energy Company (2011-2019) | | | | Chief Executive Officer of DTE Energy Company (2010-2019) | | | Independent Director since: July 2023 | President of DTE Energy Company (2004-2013) | | | | Chief Operating Officer of DTE Energy Company (2005-2010) | | | | Various other positions held at DTE Energy Company (1993-2004) | | | | Senior Consultant, McKinsey & Co. (1988-1993) | | | Age: 65 | Other Public Directorships | | | | Current | Past Five Years | | | The Andersons, Inc. (2008-present) | DTE Energy Company (2009-2022) |

  4. Director Characteristics

    | | Qualifications | Committee Membership | | | Technology and Cybersecurity | Innovation and Technology Committee | | | Innovation and Customer Solutions | | | | Senior Business Operations | | | Inderpal S. Bhandari | Career Highlights | | | | Global Chief Data Officer of International Business Machines Corporation (IBM) (2015-2023) (retired) | | | | Distinguished Executive in Residence of Carnegie Mellon University (2023-present) | | | | CDataO Program Advisory Board Chair and Strategic Advisor of Carnegie Mellon University, a private global research university (2021-2023) | | | | Senior Vice President and Chief Data Officer of Cambia Health Solutions, Inc., a regional health plan provider and healthcare investment firm (2014-2015) | | | Independent Director since: January 2024 | Vice President, Knowledge Solutions and Chief Data Officer of Express Scripts Inc., a pharmacy benefit management and pharmacy services company (acquired by The Cigna Group in 2018) (2012-2014) | | | | Chief Data Officer and Vice President, Health Data and Analytics of Medco Health Solutions, Inc., a pharmacy benefit management and pharmacy services company (acquired by Express Scripts Holding Company in 2012; now The Cigna Group) (2006-2012) | | | | Founder and Chairman of Virtual Gold (1997-present) | | | Age: 64 | Other Public Directorships | | | | Current | Past Five Years | | | Walgreens Boots Alliance, Inc. (2022-present) | |

  5. Director Characteristics

    | | Qualifications | Committee Membership | | | Technology and Cybersecurity | Compensation Committee | | | Innovation and Customer Solutions | Innovation and Technology Committee | | | Strategy and Growth | | | Janet G. Davidson | Career Highlights | | | | Executive Vice President, Quality & Customer Care of Alcatel Lucent, a communications and infrastructure solutions company (2008-2011) (retired) | | | | Chief Compliance Officer of Alcatel Lucent (2006-2008) | | | Independent Director since: February 2019 | Chief Strategy Officer of Alcatel Lucent (2005-2006) | | | | Group President Internetworking System of Alcatel Lucent (2001-2005) | | | | Various other positions held at Alcatel Lucent (formerly Bell Laboratories, Lucent Technology) (1979-2011) | | | Age: 67 | Other Public Directorships | | | | Current | Past Five Years | | | STMicroelectronics, N.V. (2013-present) | Millicom International Cellular (2016-2020) |

  6. Director Characteristics

    | | Qualifications | Committee Membership | | | Energy Sector Experience | Innovation and Technology Committee | | | Strategy and Growth | | | | Senior Business Operations | | | | Global Business/International Affairs | | | Andrés R. Gluski | Career Highlights | | | | President and CEO of The AES Corporation (2011-present) | | | | Chairman of Council of the Americas, an organization promoting free trade and open markets throughout the Americas (2015-present) | | | Director since: September 2011 | Executive Vice President and Chief Operating Officer of The AES Corporation (2007-2011) | | | | Other various senior roles at AES, including Regional President of Latin America and Senior Vice President for the Caribbean and Central America (2000-2007) | | | Age: 66 | Other Public Directorships | | | | Current | Past Five Years | | | Waste Management, Inc. (2015-present) | AES Andes S.A. (2006-2020) |

  7. Director Characteristics

    | | Qualifications | Committee Membership | | | Energy Sector Experience | Financial Audit Committee, Chair | | | Finance and Investment | Governance Committee | | | Strategy and Growth | Innovation and Technology Committee | | | Senior Business Operations | | | Holly K. Koeppel | Career Highlights | | | | Managing Director and Co-Head of Corsair Infrastructure Management, a private equity firm (2015-2017) (retired) | | | | Partner and Global Head of Citi Infrastructure Investors (2010-2015) | | | Independent Director since: April 2015 | Executive Vice President & Chief Financial Officer for American Electric Power (AEP) (2006-2009) | | | | Various executive positions at AEP (2000-2006) | | | | Other Public Directorships | | | | Current | Past Five Years | | Age: 65 | British American Tobacco p.l.c. (2017-present) | Vesuvius Plc (2017-2021) | | | Arch Resources, Inc. (2019-present) | | | | Flutter Entertainment plc (2021-present) | |

  8. Director Characteristics

    | | Qualifications | Committee Membership | | | Strategy and Growth | Financial Audit Committee | | | Senior Business Operations | Innovation and Technology Committee | | | Public Policy and Regulatory | | | Julia M. Laulis | Career Highlights | | | | Chair of the Board of Cable One, Inc., a broadband telecommunications provider (2018-present) | | | | Director, President and CEO of Cable One, Inc. (2017-present) | | | | Director of C-SPAN, a cable and satellite television network (2017-present) | | | Independent Director since: April 2020 | President (from 2015) and Chief Operating Officer of Cable One, Inc. (2012-2017) | | | | Various other positions of Cable One, Inc. (1999-2012) | | | | Various management positions for Jones Communications | | | Age: 61 | Other Public Directorships | | | | Current | Past Five Years | | | Cable One, Inc. (2017-present) | None |

  9. Director Characteristics

    | | Qualifications | Committee Membership | | | Strategy and Growth | Compensation Committee, Chair | | | Senior Business Operations | Governance Committee | | | Global Business/International Affairs | Innovation and Technology Committee | | Alain Monié | Career Highlights | | | | Executive Chairman of Ingram Micro Inc., an information technology products and services company (2022-present) | | | | CEO of Ingram Micro Inc. (2012-2022) | | | Independent Director since: July 2017 | CEO of Asia Pacific Resources International Limited (2010-2012) | | | | President and COO of Ingram Micro Inc. (2007-2010) | | | | President of the Asia Pacific region for Ingram Micro Inc. (2004-2007) | | | | President of Latin America and head of Industrial and Building Automation for Honeywell (2000-2002) | | | | Various roles for AlliedSignal Inc. and Sogitec Inc. | | | Age: 73 | Other Public Directorships | | | | Current | Past Five Years | | | None | Expeditors International of Washington, Inc. (2017-2020) |

  10. Director Characteristics

    | | Qualifications | Committee Membership | | | Finance and Investment | As Chair of the Board and Lead Independent Director, Mr. Morse serves as an ex-officio member of each committee (with no voting authority as to such committees) | | | Strategy and Growth | | | | Senior Business Operations | | | John B. Morse, Jr. | Career Highlights | | | | Senior Vice President, Finance and Chief Financial Officer of the Washington Post Company, a diversified education and media company (1989-2008) (retired) | | | Independent Director since: December 2008 | Partner at Price Waterhouse (now PricewaterhouseCoopers) (1972-1989) | | | | Other Public Directorships | | | Age: 77 | Current | Past Five Years | | | None | Host Hotels & Resorts, Inc. (2003-2022) |

  11. Director Characteristics

    | | Qualifications | Committee Membership | | | Global Business/International Affairs | Compensation Committee | | | Public Policy and Regulatory | Governance Committee | | | Sustainability and Governance | Innovation and Technology Committee | | Moisés Naím | Career Highlights | | | | Distinguished Fellow of the Carnegie Endowment for International Peace, a nonpartisan international affairs think tank (2010-present) | | | | Host and Producer of Efecto Naím, a Spanish language news and analysis weekly program (2011-present) | | | Independent Director since: April 2013 | Chief International Columnist for El País and La Repubblica (2003-present) | | | | Editor in Chief of Foreign Policy magazine (first at The Carnegie Endowment for International Peace and then at The Washington Post) (1996-2010) | | | | Venezuela’s Minister of Industry and Trade and Director of Venezuela’s Central Bank (1989-1990) | | | Age: 71 | Other Public Directorships | | | | Current | Past Five Years | | | None | Fomento Económico Mexicano, S.A.B. de C.V. (2011-2020) |

  12. Director Characteristics

    | | Qualifications | Committee Membership | | | Finance and Investment | Compensation Committee | | | Sustainability and Governance | Governance Committee, Chair | | | Strategy and Growth | Innovation and Technology Committee | | Teresa M. Sebastian | Career Highlights | | | | President and CEO of The Dominion Asset Group, an angel investment and venture capital firm (2015-present) | | | | Director of Peckham Industries, Inc., a construction and materials partner (2023-present) | | | | Adjunct Professor for Accounting & Enterprise Risk Management, Vanderbilt Law School (2017-present) | | | Independent Director since: January 2021 | Adjunct Professor for Governance & Compliance & Enterprise Risk Management at the University of Michigan Law School (2016-present) | | | | Senior Vice President, General Counsel & Corporate Secretary, Darden Restaurants, Inc. (2010-2015) | | | | Vice President of Veyance Technologies, Inc. (2008-2010) | | | | Various legal and finance positions with banks and energy companies (1989-2007) | | | Age: 66 | Other Public Directorships | | | | Current | Past Five Years | | | Kaiser Aluminum Corporation (2019-present) | Terminix Global Holdings, Inc. (2021-2022) |

  13. Director Characteristics

    | | Qualifications | Committee Membership | | | Finance and Investment | Financial Audit Committee | | | Energy Sector Experience | Innovation and Technology Committee | | | Global Business/International Affairs | | | Maura Shaughnessy | Career Highlights | | | | Portfolio Manager of MFS Utilities Fund, a mutual fund (1992-2019) (retired) | | | | Diversified Global Fund Manager for MFS Investment Management (1994-2002) | | | | Equity Analyst for MFS Investment Management (1991-1994) | | | Independent Director since: July 2021 | Equity Research Analyst for Harvard Management Company (1987-1991) | | | | Research Assistant at the Board of Governors of the Federal Reserve (1983-1985) | | | Age: 62 | Other Public Directorships | | | | Current | Past Five Years | | | None | None |

  14. Director Characteristics

    DIRECTOR COMPENSATION Director Compensation Program The Governance Committee reviews, no less frequently than every two years, the level and form of compensation paid to Directors, including our Director compensation program’s underlying principles and how such compensation relates to director compensation of companies of comparable size, operating in a comparable industry and/or with equivalent complexity. Under the Corporate Governance Guidelines, a Director who is also an Officer of AES is not permitted to receive additional compensation for service as a Director. Any proposed changes to the Director compensation program are recommended by the Governance Committee to the Board for consideration and approval. Independent Committee Consultant The Governance Committee retained Meridian to assist with its review of Director compensation practices for 2023. Meridian reports directly to the Governance Committee and the Governance Committee can replace Meridian as to Director compensation matters or hire additional consultants at any time. The scope of Meridian’s engagement regarding Director compensation in 2023 included: •comparing how Director compensation relates and compares to that of similarly-sized general industry and power companies; •reviewing the elements of Director compensation (e.g., annual retainers, committee compensation and deferred compensation grants); •evaluating the mix of cash compensation and equity/deferred compensation that makes up total Director compensation; and •providing an evaluation of the Director compensation program design, including alternative recommendations for consideration. Director Compensation for 2023 The Board reviews the Board compensation structure on an annual basis. Board compensation is intended to meet the following goals: •promote the recruitment of talented and experienced Directors to the AES Board; •compensate outside Directors for the workload inherent in a public board Director position; and •retain a strong financial incentive for Directors to maintain and promote the long-term health and viability of the Company. The Governance Committee of the Board consulted various materials regarding current trends and best practices for determining compensation for boards of directors, as described above. Annual Retainer. For 2023, Directors elected at the annual meeting of Stockholders received an annual retainer of $100,000. Directors may elect to take the annual retainer in cash or deferred stock units. The Board also determined that the Chairman would receive compensation at an amount equal to 1.62 times the 2023 annual retainer of other AES Board members, and that such amount would be inclusive of all Board responsibilities. Committee Compensation. Committee chairpersons received compensation for their Committee service as outlined below.

  15. Director Characteristics

    | Financial Audit Committee Chair | $25,000 | | Compensation Committee Chair | $20,000 | | Governance Committee Chair | $20,000 | | Innovation and Technology Committee Chair | $20,000 |

  16. Director Characteristics

    Deferred Incentive Compensation Grant. Directors received an annual Deferred Incentive Compensation Grant valued at $175,000 in the form of deferred stock units, which are fully vested at the time of grant and are generally paid following termination of service on the Board. The Board also determined that the Chairman of the Board would receive such a grant in an amount equal to 1.74 times the Deferred Incentive Compensation Grant of other AES Board members. New Directors. Newly elected Directors receive an initial grant consisting of deferred stock units valued at $40,000 and Annual Retainers and a Deferred Incentive Compensation Grant pro-rated for the service provided until the next annual meeting of Stockholders. Non-Employee Director Stock Ownership Guidelines. The Board adopted stock ownership guidelines for Directors that provide for non-employee Directors to accumulate and maintain equity ownership in AES having a value of no less than five times the annual retainer within five years of the date of the Director’s appointment to the Board. All stock and equity interests of a Director are taken into consideration for purposes of considering compliance with the policy, including Director deferred stock units. All Directors have attained the stock ownership guidelines or are on track to attain the stock ownership guidelines within the five year period. Director Compensation (2023)* The following table contains information concerning the compensation of our Directors during 2023.

  17. Director Characteristics

    | Name(1) | Fees Earned or Paid in Cash(2) | Stock Awards(3) | Option Awards(4) | Total | | Gerard M. Anderson(5) | $75,616 | $172,329 | $0 | $247,945 | | Janet G. Davidson | $100,000 | $175,000 | $0 | $275,000 | | Tarun Khanna Chair—Innovation and Technology Committee | $120,000 | $175,000 | $0 | $295,000 | | Holly K. Koeppel Chair—Financial Audit Committee | $125,000 | $175,000 | $0 | $300,000 | | Julia M. Laulis | $100,000 | $175,000 | $0 | $275,000 | | James H. Miller(6) | $0 | $0 | $0 | $0 | | Alain Monié Chair—Compensation Committee | $120,000 | $175,000 | $0 | $295,000 | | John B. Morse, Jr. Chairman, Lead Independent Director | $161,500 | $304,000 | $0 | $465,500 | | Moisés Naím | $100,000 | $175,000 | $0 | $275,000 | | Teresa M. Sebastian Chair—Governance Committee | $120,000 | $175,000 | $0 | $295,000 | | Maura Shaughnessy | $100,000 | $175,000 | $0 | $275,000 |

  18. Director Characteristics

    (3) This column includes the aggregate grant date fair value of the annual Deferred Incentive Compensation Grant granted in 2023. For Mr. Anderson, this column also includes a new director initial grant of deferred stock units with a value of $40,000. The aggregate grant date fair values were computed in accordance with Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) Topic 718, “Compensation-Stock Compensation” (“FASB ASC Topic 718”), disregarding any estimates of forfeitures related to service-based vesting conditions. The grant date fair value of the deferred stock unit awards is based on the closing market price per share of our common stock on the grant date. As of December 31, 2023, Directors had the following total number of deferred stock units credited to their accounts under the 2003 Long Term Compensation Plan: Gerard M. Anderson - 8,060; Janet G. Davidson - 57,487; Tarun Khanna - 255,211; Holly K. Koeppel - 151,727; Julia M. Laulis - 56,294; James H. Miller - 0; Alain Monié - 93,750; John B. Morse, Jr. - 339,562; Moisés Naím - 180,027; Teresa M. Sebastian - 23,581; and Maura Shaughnessy - 32,451. (4) No stock option grants were made in in 2023. As of December 31, 2023, Directors held the following total number of options: Tarun Khanna - 20,000 and Alain Monié - 99,051. (5) Mr. Anderson joined our Board effective July 17, 2023. (6) Mr. Miller’s term ended on April 20, 2023. He did not receive compensation for the 2023-2024 Board Year. EXECUTIVE COMPENSATION COMPENSATION DISCUSSION AND ANALYSIS (“CD&A”) Our Executive Compensation Process The CD&A includes compensation details for our Named Executive Officers (NEOs):

  19. Director Characteristics

    Executive Summary 2023 was a strong year despite global macroeconomic challenges. We continued to maintain full investment grade credit ratings and advance towards our goal of becoming a global leader in renewables and clean technologies. We also delivered on our financial goals, specifically Adjusted Earnings Per Share (“EPS”), Adjusted EBITDA, and Parent Free Cash Flow (“Parent FCF”). These results flow from our focused strategy and the commitment of our people. The Company’s compensation philosophy remains unchanged and the compensation earned by our NEOs demonstrates alignment between our executive compensation program design and value creation to Stockholders. In summary: •AES’ philosophy is to target total compensation opportunities for executive officers within a competitive range of the 50th percentile of companies similar in revenue size and scope of operations. •On average, 76% of the NEOs’ target compensation is variable and “at risk”, whereby realized compensation will vary from target compensation based on AES’ performance against its target goals and the performance of AES’ stock. •Annual incentive plan payouts were above the target opportunity based on actual performance, including our strong financial results, and continued over-achievement vs. our growth targets. •Total Stockholder Return (“TSR”) during the three-year performance period (2021-2023) resulted in below target performance. As a result, and consistent with our pay for performance philosophy, the performance cash units (“PCUs”) with the TSR metrics did not payout in 2023, as AES was positioned below the 30th percentile for each of the indices that it compares itself against. •Despite the share price performance, the fundamentals of the business remain strong as is reflected by both our Adjusted EPS and Parent FCF annual incentive plan results. The performance of Adjusted EPS and Parent FCF, in addition to the performance of our other incentive plan metrics, resulted in an annual short-term incentive payout at 127%. Our actual 2023 performance was 6 cents above the midpoint for the Adjusted EPS incentive measure and $28 million above the midpoint for the Parent FCF incentive measure. The charts below outline the cumulative average for Adjusted EPS and Parent FCF for the last three years. See Appendix A for a reconciliation of Adjusted EPS and Parent FCF. •The Compensation Committee continues to align pay practices with Stockholder interests.

  20. Director Characteristics

    | What AES Does | What AES Doesn’t Do | | Pay-for-Performance Alignment - Annual review of AES’ Total Stockholder Return performance and its impact on realizable pay to confirm actual results are aligned to performance payouts | No “Single-Trigger” Vesting of Equity Awards with a Change in Control - All unvested, outstanding and future awards contain a “double-trigger” provision | | Target Total Compensation at Approximately the 50th Percentile - Based on similarly-sized companies’ target total compensation within a competitive range of the size-adjusted 50th percentile | No Special Retirement Benefit Formulas for NEOs - Our non-qualified retirement plan restores benefits capped under our broad-based plan due to statutory limits | | Heavy Weight on Performance Compensation - Majority of compensation is paid through annual incentive and long-term compensation plans | No Hedging or Pledging - Maintain a policy that prohibits all AES employees (including Officers) and Directors of AES from engaging in hedging activities or pledging AES stock | | Stock Ownership Guidelines - Maintain market-competitive guidelines to align NEO and Stockholder interests | No Change-In-Control Excise Tax Gross-Ups | | Change-In-Control Severance - Our plan is competitive with market practice and all benefits are conditioned upon a “double-trigger” acceleration provision | No Perquisites - No perquisites are provided to any NEOs, except for international relocation-related benefits | | Clawback Policy - We maintain a clawback policy that empowers the Company to recover certain incentive compensation erroneously awarded to a current or former executive officer in the event of an accounting restatement | No Backdating or Option Repricings | | Independent Consultant Retained by the Compensation Committee - Provides no other services to AES, other than Board services | No Payment of Dividends or Dividend Equivalents on Equity Awards Unless Earned and/or Vested | | Severance Policy - We maintain an executive officer Severance Policy that generally limits severance payments to our executive officers, without stockholder ratification, to 2.99 times base salary plus target incentive bonus | |

  21. Director Characteristics

    •AES directly links a portion of compensation to environmental and social metrics. AES’ 2023 Performance Incentive Plan included a goal weighted at 25% to achieve growth in renewable energy generation. In addition, since 2021, AES granted Restricted Stock Units (“RSUs”) with modifiers for environmental and social performance conditions (RSUs are 20% of the long-term compensation mix). •At the 2023 Annual Meeting, AES received over 96% support for its NEO compensation based on the shares voted in favor of the 2023 Say on Pay proposal. The Compensation Committee viewed the level of support for our executive compensation programs as an indication that no significant changes to our programs were warranted. AES’ compensation plans and practices for our NEOs align with Company performance and Stockholder value creation. Any non-GAAP measures discussed in this CD&A are reconciled to the nearest GAAP financial measure which can be found in “Appendix A: Non-GAAP Measures.” Our Executive Compensation Philosophy Our philosophy is to provide compensation opportunities within a competitive range of the 50th percentile of survey data specific to our revenue size and scope of operations. We design our incentive plans to pay for performance with additional compensation paid when performance exceeds expectations and less compensation paid when performance does not meet expectations. Thus, the actual compensation realized by an NEO will depend on our actual performance. In applying this philosophy, survey data is used to assess the impact of any changes on the competitiveness of target total compensation opportunities relative to the 50th percentile range. Our use of survey data is described further in the section titled “How We Use Survey Data in our Executive Compensation Process.” The Compensation Committee considers additional factors in making its decisions on each NEO’s target total compensation opportunity. The specific factors include: •An individual’s experience and expertise; •Position and scope of responsibilities; •An individual’s future prospects with the Company; and •The new target total compensation and the survey data. In making its decisions, the Compensation Committee does not apply formulaic weighting to any of the above factors. Role of the Compensation Committee, Independent Compensation Consultant, and Management

  22. Director Characteristics

    | | Compensation Committee | Independent Compensation Consultant | Management (CEO & CHRO) | | Provide overall oversight of the Company’s compensation and benefit plans, including plans in which the NEOs participate | l | | | | Annually review NEO compensation and, if appropriate, propose changes to target total compensation for Board of Directors’ approval | l | | | | Approve performance goals for annual and long-term incentive plans within the first three months of the performance period | l | | | | Based on an assessment of performance against pre-set goals, approve payouts to NEOs under incentive plans and propose for Board of Directors’ approval | l | | | | Participate in all Compensation Committee meetings | l | l | l | | Participate in executive sessions of the Compensation Committee | l | As requested | | | Prepare and summarize detailed information on the Company’s performance and, as applicable, performance of individual executives | | | l |

  23. Director Characteristics

    | | Compensation Committee | Independent Compensation Consultant | Management (CEO & CHRO) | | Prepare and provide (in advance whenever possible) additional materials regarding our executive compensation plans for review and discussion by the Compensation Committee in its meetings | | | l | | Based on business strategy, propose any changes to incentive plan designs | | | l | | With the Compensation Committee’s knowledge, provide background information to the independent consultant required for the consultant to carry out its duties | | | l | | Update the Compensation Committee on market trends, regulatory matters and governance best practices related to executive compensation | | l | | | Review and provide the Compensation Committee with feedback on market competitiveness of any changes to target total compensation proposed by management | | l | | | Review and provide the Compensation Committee with feedback on incentive plan changes proposed by management | | l | |

  24. Elements of Compensation

    | Objective | What It Rewards | Why We Pay | | Base Salary | | | | Provide fixed cash compensation that reflects the individual’s experience, responsibility and expertise | Accomplishment of daily job responsibilities, taking into account individual performance and retention considerations | To maintain market competitiveness and attract and retain our NEOs | | Performance Incentive Plan (AES’ Annual Incentive Plan) | | | | Provide performance-based, short-term cash compensation relative to the achievement of pre-set objectives, and performance, based on a payout range of 0-200% | Achievement of specific defined performance thresholds related to safety, financial, and strategic objectives | A direct incentive to achieve the Company's objectives for the year | | Long-Term Compensation (LTC) | | | | Provide awards that align the interests of our executives with those of our Stockholders to achieve long-term goals | Share price growth, and attainment of long-term financial goals | Directly links NEOs’ interests with those of Stockholders and AES’ long-term financial performance | | Retirement and Health and Welfare Benefits | | | | Provide retirement and health and welfare benefits that are comparable to those provided to our broad-based U.S. employee population | Promote healthiness and financial readiness for retirement | Market competitiveness |

  25. 2023 Performance Incentive Plan Payouts

    2023 Performance Incentive Plan Payouts 2023 Company Performance Score Targets: Our NEOs are eligible for annual incentive awards under The AES Corporation Performance Incentive Plan, a Stockholder-approved plan. As detailed below, in early 2023, the Compensation Committee established measures in three performance categories: Safety, Financials, and Strategic Objectives (which include the Green Growth and New Business Models categories). In setting these performance measures, the Compensation Committee considered information provided by management about the Company’s financial budget for the year as well as strategic objectives. AES continues to set strong, challenging, performance-based goals year-over-year. The Compensation Committee approved performance measures and objectives across all three performance categories. The metrics are defined by:

  26. 2023 Performance Incentive Plan Payouts

    | Strategic Goal | Metric | How Measured | Rationale | | Safety | Serious Safety Incidents | Number of serious safety incidents | Create an environment that allows all of our People to return home from work each and every day. Additionally, create an environment in which we continue to educate our employees proactively, test and implement precautions, and maintain business resilience | | | Non-Injury Significant Injuries and Potentials (SIP) Rate | Monitor and track the significant injuries and any potential injuries within the Company | | | | Safety Meetings | Attendance of Company-wide monthly Safety meetings | | | | Safety Walks | Number of completed assigned safety walks | | | Financials | Adjusted EPS | Diluted EPS from continuing operations excluding gains or losses of both consolidated entities and entities accounted for under the equity method | Key financial goals that are critical to the business, and that also drive value creation, which is aligned to the interests of our Stockholders | | | Adjusted EBITDA | Earnings before interest income and expense, taxes, depreciation and amortization, adjusted for the impact of Non-Controlling Interests | | | | Parent FCF | Parent FCF is the primary, recurring source of cash that is available for use by AES, the Parent Company | | | Green Growth | Growth and Commercial Operations Date (COD) | Megawatts (MW) acquired, signed, and closed through various projects during the year, as well as projects that commenced commercial operations | Continued greening and growth of the portfolio | | New Business Models | New Businesses or Products | Review a variety of strategic and financial metrics for AES businesses and other critical metrics to determine achievement | Highlight our business objectives which leverage our position to incubate, integrate, and grow new businesses or products |

  27. 2023 Performance Incentive Plan Payouts

    In early 2024, the Compensation Committee approved, and recommended to the Board of Directors to approve, the annual incentive payouts for 2023. The Committee’s decision was based on AES’ 2023 Corporate Performance Score, which reflected actual results against the pre-established performance measures shown below. The following table reflects the measures, weights, and targets approved by the Committee, as well as the 2023 results. (1)The AES Corporate Performance score is rounded to the nearest whole number. (2)Assuming the threshold requirement for each non-GAAP financial measure is met, the score ranges from 50% to 200%: 50% score corresponds to actual results at 90% of the target goal, and a 200% score corresponds to actual results at 110% of the target goal. (3)Assuming the threshold requirement for the Green Growth and COD metrics are met, the score ranges from 50% to 200%: 50% score corresponds to actual results at 80% of the target goal, and a 200% score corresponds to actual results at 120% of the target goal. (4)The 200% award in this category is based on the significant achievements AES made towards progressing Green Hydrogen as a business line. The following paragraph includes additional details. The Compensation Committee approved a performance assessment of 200% for the New Business Models metric to recognize the Company’s new business achievements and significant advancements. Some key achievements include: •AES was part of a group that was awarded two of the seven Regional Clean Hydrogen Hubs by the US Department of Energy (DOE). ◦AES was part of a group that was awarded the Alliance for Renewable Clean Energy System (ARCHES) Hub in California and the other group was awarded the HyVelocity Hub in the Gulf Coast of Texas and Louisiana, both of which were allocated up to $1.2 billion in DOE funding. ◦AES’s green hydrogen projects have been designed to meet even the most stringent (hourly) matching requirements for renewable power. •Among the first in the industry to use transferability of tax credits for renewable energy projects, as authorized under the Inflation Reduction Act. •Motor, a company majority-owned and incubated by AES that partners with utilities to promote electric vehicle adoption, raised $7M of external funding and secured it’s first non-AES utility customer in Green Mountain Power Final 2023 Annual Incentive Payouts: The following table shows the final award for each of our NEOs under the 2023 Performance Incentive Plan. The Compensation Committee and the Board approved the annual incentive payout as a percent of the target for each of the NEOs below based on the AES Corporate Performance Score. The NEO’s 2023 annual incentive targets were unchanged from 2022.

  28. 2023 Performance Incentive Plan Payouts

    | NEO | 2023 Base Salary | 2023 Target Annual Incentive (% of base salary) | Actual 2023 Annual Incentive Award | | | | | | Dollar Value(1) | % of Target Annual Incentive(2) | | Mr. Gluski | $1,241,000 | 150% | $2,364,105 | 127% | | Mr. Coughlin | $597,000 | 100% | $758,190 | 127% | | Mr. Rubiolo | $530,000 | 100% | $673,100 | 127% | | Mr. Da Santos | $644,000 | 100% | $817,880 | 127% | | Ms. Mendoza | $577,000 | 100% | $732,790 | 127% |

  29. 2023 Performance Incentive Plan Payouts

    (1) Dollar values are rounded to the nearest hundred. (2) Actual performance results above are rounded to the nearest whole number.

  30. Long-Term Compensation

    Long-Term Compensation 2023 Long-term Compensation Mix: In 2023, we utilized the same overall long-term compensation vehicles as in prior years. The mix was based on the following: •Compensation philosophy which emphasizes alignment between executive compensation and Stockholder value creation; •Long-term strategic and financial objectives; •Goal of retaining our NEOs; and •Review of relevant market practices. Performance Stock Units (“PSUs”): PSUs represent the right to receive a single share of AES common stock subject to performance and service-based vesting conditions. PSUs granted in 2023 are eligible to vest subject to our three-year cumulative Parent FCF performance. Cumulative Parent FCF is a strategically important non-GAAP financial metric to the Company as it reflects the ability of our businesses to generate cash for our investors that can be either reinvested in the business or paid to investors through dividends, and additionally is a key metric for ratings agencies. The final value of the PSU award depends upon the level of cumulative Parent FCF achieved over the three-year measurement period as well as our share price performance over the period since the award is stock-settled. If a threshold level of cumulative Parent FCF is achieved, units vest and are settled in the calendar year that immediately follows the end of the performance period. The following table illustrates the vesting percentage at each cumulative Parent FCF level for targets set for the 2023-2025 performance period:

  31. Long-Term Compensation

    | Performance Level | Vesting Percentage | | Below 90% of Performance Target | 0% | | Equal to 90% of Performance Target | 50% | | Equal to 100% of Performance Target | 100% | | Equal to or Greater Than 110% of Performance Target | 200% |

  32. Long-Term Compensation

    Between the cumulative Parent FCF levels listed in the above table, straight-line interpolation is used to determine the vesting percentage for the award. The ability to earn PSUs is also generally subject to the continued employment of the NEO. The Compensation Committee approved the Parent Free Cash Flow target for the 2023 PSUs, which they believed to be challenging, but achievable and required growth over the prior year’s goals. Performance Cash Units (“PCUs”): PCUs represent the right to receive a cash-based payment subject to performance- and service-based vesting conditions. PCUs granted in 2023 to each NEO are eligible to vest subject to AES’ Total Stockholder Return (“TSR”) from January 1, 2023 through December 31, 2025 relative to companies in three different indices. The indices and their weightings are as follows: •S&P 500 Utilities Index - 50% •S&P 500 Index - 25% •MSCI Latin America Emerging Markets Index - 25% We use TSR as a performance measure to align our NEOs’ compensation with our Stockholders’ interests since the ability to earn the award is linked directly to stock price and dividend performance over a period of time. TSR is defined as the appreciation in stock price and dividends paid over the performance period as a percentage of the beginning stock price. To determine share price appreciation, we use a 90-day average stock price for AES relative to the S&P 500 Utilities Index companies, the S&P 500 Index companies, and the MSCI Latin America Emerging Markets Index companies at the beginning and end of the three-year performance period. This avoids short-term volatility impacting the calculation. The value of each PCU is equal to $1.00, and the number of PCUs that vest depends upon AES’ percentile rank against the companies in each of the indices. If AES’ TSR is above the threshold percentile rank established for the performance period, a percentage of the units vest and are settled in cash in the calendar year that immediately follows the end of the performance period. The following table illustrates the vesting percentage at each percentile rank for the 2023-2025 performance period:

  33. Long-Term Compensation

    | AES 3-Year TSR Percentile Rank | Vesting Percentage | | Below 30th percentile | 0% | | Equal to 30th percentile | 50% | | Equal to 50th percentile | 100% | | Equal to 70th percentile | 150% | | Equal to or Greater Than 90th percentile | 200% |

  34. Long-Term Compensation

    Between the percentile ranks listed in the above table, straight-line interpolation is used to determine the vesting percentage for the award. The ability to earn these PCUs is also generally subject to the continued employment of the NEO. Restricted Stock Units (“RSUs”): RSUs represent the right to receive a single share of AES common stock subject to service-based vesting conditions. The Company grants RSUs to assist in retaining our NEOs and also to increase their ownership of AES common stock, which further aligns our NEOs’ interests with those of Stockholders. RSUs generally vest based on continued service with the Company in three equal installments beginning on the first anniversary of the grant date. For the 2023 RSU awards, the Compensation Committee again approved a performance modifier, in addition to the three-year ratable vesting schedule, for NEOs’ awards. For each NEO, the first and second tranches of the 2023 RSU awards vest on the first and second anniversaries of the grant date, respectively, based solely on continued service with the Company. The third tranche vests on the third anniversary of the grant date based on continued service with the Company but subject to a modifier based on the achievement of environmental and social goals measured over the three-year period ending December 31, 2025. The number of RSUs in the third tranche that are eligible to vest on the third anniversary of the grant date will be adjusted up or down by an amount equal to up to 15% of the target number of RSUs comprising the full award granted on the grant date, based on the achievement of the environmental and social goals described below. The Compensation Committee approved performance measures and objectives for the environmental and social goals that it considered to be challenging, but achievable. For the environmental goal, between the performance levels listed in the below table, straight-line interpolation will be used to determine the adjustment percentage for the award. For the social goals, the Compensation Committee will assign an adjustment percentage based on its qualitative assessment of Company performance.

  35. Long-Term Compensation

    | Goals | Weight | Measure (Performance during the period of January 1, 2023 to December 31, 2025) | Performance Level | Adjustment Percentage | | Environmental | 7.5% | Reduction of gigawatt hours from coal generation across the Company’s portfolio of fuel sources by the end of the fiscal year ending December 31, 2025 | Maximum | +15.0% | | | | | Target | 0.0% | | | | | Below Target | -15.0% | | Social | 7.5% | Qualitative assessment by the Compensation Committee of Company performance in: (1) improving diversity measured by the increase of the representation of women within leadership roles and increasing the representation of historically underrepresented groups in the Company’s employee population in the United States; and (2) creating a culture of inclusion measured by the reduction of the voluntary attrition of underrepresented groups. | Maximum | +15.0% | | | | | Target | 0.0% | | | | | Below Target | -15.0% |

  36. Long-Term Compensation

    Mr. Rubiolo received an additional time-based RSU award in 2023 in recognition of outstanding performance in connection with executing business objectives. His award is not subject to the modifier tied to the environmental and social goals. 2023 Long-Term Compensation Grants: In February 2023, consistent with our practice in prior years, the Company granted long-term compensation to the NEOs. The target grant values below are based upon the grant date closing stock price per share of AES common stock for PSUs and RSUs, and a per unit value of $1.00 for PCUs. Mr. Gluski’s 2023 long-term incentive target is unchanged from 2022.

  37. Long-Term Compensation

    | NEO | February 2023 Long-Term Compensation Target Value | | | | As % of Base Salary | Dollar Amount | | Mr. Gluski | 840% | $10,424,400 | | Mr. Coughlin | 255% | $1,522,350 | | Mr. Rubiolo | 381% | $2,019,300 | | Mr. Da Santos | 252% | $1,622,880 | | Ms. Mendoza | 238% | $1,373,260 |

  38. Long-Term Compensation

    The values in the table above differ from the Stock Awards column in the “2023 Summary Compensation Table” because the PCUs contain a market condition that results in a fair market value, for financial accounting purposes, that differs from the $1 per unit value the Company uses to determine the grant. Prior Year PSUs Vesting in 2023: All of the NEOs, with the exception of Mr. Coughlin, received a grant of PSUs in February 2021 for the performance period of January 1, 2021 through December 31, 2023. Performance was based on the Company’s cumulative Parent FCF performance during the three-year performance period. The 2021 PSU award paid out at 153.68% of the target number of shares based on our actual cumulative Parent FCF results of $2,748M during the three-year performance period, which was 105.37% of the target cumulative Parent FCF. As previously disclosed, the performance scale for these awards was 100% vesting for performance equal to 100% of target, 50% vesting for performance equal to 90% of target, and 200% vesting for performance equal to or greater than 110% of target. The actual performance payout level is derived using straight-line interpolation: for every one percentage point performance is above the target goal, the payout is increased by approximately ten percentage points.

  39. Long-Term Compensation

    | NEO | Target Number of PSUs | % of Target Vested Based on Cumulative Parent FCF | Final Shares Vested | | Mr. Gluski | 98,631 | 153.68% | 151,576 | | Mr. Rubiolo | 6,517 | 153.68% | 10,015 | | Mr. Da Santos | 13,591 | 153.68% | 20,887 | | Ms. Mendoza | 11,612 | 153.68% | 17,845 |

  40. Long-Term Compensation

    Prior Year PCUs Vesting in 2023: All of the NEOs, with the exception of Mr. Coughlin, received an executive grant of PCUs in February 2021 for the performance period of January 1, 2021 through December 31, 2023. Performance was based on the Company’s TSR relative to the S&P 500 Utilities Index (50% weight), S&P 500 Index (25% weight), and MSCI Latin America Emerging Markets Index (25% weight), and with the same performance scales for each index as the 2023 PCUs described above. TSR for the Company over the 2021-2023 performance period was -15%, which resulted in the Company ranking in the bottom quartiles of TSR for the S&P 500 Utilities Index, S&P 500 Index, and MSCI Latin America Emerging Markets Index. As described above, TSR for purposes of PCUs is calculated using a 90-day average stock price for AES relative to each index, at the beginning and end of the three-year performance period. This avoids short-term volatility impacting the calculation. Since AES’ TSR performance was below threshold compared to the three indices, the overall payout for the 2021 executive PCUs was 0% of target.

  41. Long-Term Compensation

    | NEO | Target Number of Units | % of Target Vested Based on TSR | Resulting Cash Payout | | Mr. Gluski | 4,653,750 | 0% | $0 | | Mr. Rubiolo | 307,500 | 0% | $0 | | Mr. Da Santos | 641,250 | 0% | $0 | | Ms. Mendoza | 547,875 | 0% | $0 |

  42. Long-Term Compensation

    As Mr. Coughlin was not an executive officer at the time of the 2021 award, he received a non-executive grant of 271,418 PCUs in February 2021 for the performance period of January 1, 2021 through December 31, 2023. Performance was based on the Company’s cumulative Parent FCF performance during the three-year performance period. The award paid out at 153.68% and settles in the form of cash, resulting in Mr. Coughlin receiving $417,115. Further details on the 2021-2023 PSU and PCU payouts to our NEOs can be found in the “2023 Option Exercises and Stock Vested” table. Prior Year RSUs Vesting in 2023: All of the NEOs, with the exception of Mr. Coughlin, received an executive grant of RSUs in February 2021. The first and second tranches vested on the first and second anniversaries of the grant date, respectively, based solely on continued service with the Company. The third tranche was subject to a modifier based on the achievement of environmental and social goals measured over the three-year period ended December 31, 2023. The number of RSUs in the third tranche that were eligible to vest was subject to upward or downward adjustment by up to 15% of the target number of RSUs comprising the full award. The environmental goal (7.5% weight) was to reduce the number of gigawatt hours from coal generation across the Company’s portfolio of fuel sources, with a target range of 25-27%. Results were determined based on the performance scale in the table below (with straight-line interpolation used between the performance levels listed below). Subsequent to the end of the three-year performance period, the Committee approved the award at 97% of target, based on the achievement of 28% of gigawatt hours from coal generation across the Company’s portfolio of fuel sources as of December 31, 2023.

  43. Long-Term Compensation

    | Performance Level | Vesting Percentage | | 32% or Greater Gigawatt Hours from Coal | 85% | | 25-27% of Gigawatt Hours from Coal | 100% | | Less than 22% Gigawatt Hours from Coal | 115% |

  44. Long-Term Compensation

    The social goal (7.5% weight) was based on a qualitative assessment of Company’s performance in improving AES’ existing culture of inclusion and representation in the workforce. Subsequent to the end of the three-year performance period the Committee approved Company performance at 100% of target, based on several factors including developing programming to foster a culture of enhanced inclusion at AES. Based on the above performance assessments, the Committee determined that the environmental and social goals were collectively earned at 98.5% of target, resulting in a 1.5% downward adjustment of the full award being applied to the vesting of the third tranche, as reflected in the table below.

  45. Long-Term Compensation

    | NEO | Total RSUs Awarded in 2021 and Subject to Modifier | Total RSUs Awarded in 2021 and now Vested Based on Modifier | % of Total RSUs Awarded in 2021 Vested | Third Tranche of RSUs Vesting in 2023 (at target) | Final Vesting of Third Tranche of RSUs Vesting in 2023 with Modifier | | Mr. Gluski | 65,754 | 64,768 | 98.5% | 21,918 | 20,932 | | Mr. Rubiolo | 4,345 | 4,280 | 98.5% | 1,449 | 1,384 | | Mr. Da Santos | 9,060 | 8,924 | 98.5% | 3,020 | 2,884 | | Ms. Mendoza | 7,741 | 7,625 | 98.5% | 2,581 | 2,465 |

  46. 2023 CEO Realizable Long-Term Compensation Pay

    2023 CEO Realizable Long-Term Compensation Pay As noted in the “Overview of AES Total Compensation,” our CEO’s compensation is predominantly performance-based. Taking into consideration the performance of the PSU, PCU, and RSU awards, Mr. Gluski’s payout of his long-term compensation grants in 2023 demonstrates AES’s continued practice of pay for performance. The following chart outlines our CEO’s long-term compensation award values at grant and the current realizable values in 2023. (1) In the case of RSUs and PSUs, the “Value at Grant” amounts were calculated by multiplying the applicable closing prices per share of the Company’s common stock on the grant date of such award by the number of shares subject to such RSU or PSU award as described in footnotes 2 and 3, respectively. For the purposes of calculating the “Current Value” amounts, the closing price per share of the Company’s common stock on December 29, 2023 ($19.25) was multiplied by the number of shares subject to such RSU or PSU award as described in footnotes 2 and 3, respectively. (2) The 2021 RSUs are reflected at 98.5% based on actual performance as of December 31, 2023. The 2022 and 2023 RSUs are assumed at target. (3) The 2021 PSUs are reflected at 153.68% based on actual performance as of December 31, 2023. The current value estimates for the 2022 and 2023 PSUs are reflected between target and maximum based on period to-date results as of December 31, 2023. (4) The PCUs are valued at $1 per unit. The 2021 PCUs are reflected at 0% based on actual performance. The current value estimates for the 2022 and 2023 PCUs are reflected between minimum and target performance based on period to-date results as of December 31, 2023. Other Relevant Compensation Elements, Policies, and Information

  47. Severance Policy

    Severance Policy The Board has adopted a severance policy to seek Stockholder approval of severance or termination pay in appropriate circumstances. The severance policy generally provides that AES will not enter into any employment agreement or severance agreement with an executive officer (defined as an “officer” within the meaning of Rule 16a-1(f) of the Exchange Act) that provides for “cash severance benefits” exceeding 2.99 times the sum of the executive’s annual base salary plus target annual bonus opportunity without seeking Stockholder ratification of the agreement (with limited exceptions). Under the severance policy, “cash severance benefits” are defined to include cash payments made in connection with the termination of the executive's employment (excluding payments relating to (A) long-incentive awards (i.e., an original aggregate vesting schedule of greater than one year) previously granted and that become payable as a result of employment termination and (B) any accrued amounts that become payable under deferred compensation, retirement, and other similar plans); for any consulting services; to secure an agreement not to compete with AES; that are not generally available to similarly situated management employees; in excess of, or outside of, the terms of a plan or policy; and to offset tax liability in respect of any of the foregoing.

  48. Severance and Change-in-Control Arrangements

    Severance and Change-in-Control Arrangements The Company maintains certain severance and change-in-control arrangements, including the Executive Severance Plan and change-in-control provisions in the long-term compensation award agreements. Executive Severance Plan: The Compensation Committee has included all of the Company’s Executive Officers in a single Executive Severance Plan, the design of which is consistent with current market practices. Newly hired or promoted executives are generally included in this plan beginning on the first date of their executive appointment. The Executive Severance Plan does not contain any excise tax gross-ups and, thus, none of our NEOs are eligible for an excise tax gross-up. The Company provides severance benefits for qualifying termination both related and unrelated to a change-in-control to enable the attraction and retention of key executive talent. Also, in the case of severance benefits upon a qualifying termination related to a change-in-control, the Company believes these benefits will help to align the NEOs’ interests with those of Stockholders by mitigating any uncertainties the NEOs may have about their ongoing employment if the change-in-control is pursued. The Company provides severance benefits after a change-in-control only if there is a qualifying termination of employment following the change-in-control (i.e., “double-trigger benefits”). Further details on the Executive Severance Plan and qualifying termination events can be found in the section titled “Additional Information Relating to Potential Payments Upon Termination of Employment or Change-in-Control.” Double-Trigger Vesting of Long-term Compensation Awards Upon Change-in-Control: Upon a change-in-control, the unvested portion of all outstanding awards will vest only upon a double-trigger (at target performance levels for performance awards). The double-trigger only allows for vesting if a qualifying termination occurs in connection with the change-in-control. All unvested, outstanding awards include a double-trigger vesting provision.

  49. Potential Payments upon Termination under the Executive Severance Plan

    Potential Payments upon Termination under the Executive Severance Plan Executive Officers are eligible to receive payments and benefits upon termination, including termination in connection with a change-in-control, under our Executive Severance Plan. This plan was adopted during 2011 and does not include a Section 280G excise tax gross-up consistent with our policy prohibiting change-in-control tax gross-ups. Payments and benefits provided to the NEOs upon each termination circumstance are detailed below. In the event of termination due to disability, the NEO is entitled to receive the following payments: •Disability benefits under our long-term disability program in effect at the time; •Base salary through the termination date or, if earlier, the end of the month preceding the month in which disability benefits commence; and •In the case of Mr. Gluski, a pro-rata portion of his annual bonus to the extent earned, based upon the number of days he was employed during the year (“Pro-Rata Bonus”). In the event of termination due to death, the NEO’s legal representative is entitled to his or her base salary through the termination date and, in the case of Mr. Gluski, the Pro-Rata Bonus. In the event the NEO’s employment is terminated for cause or the NEO voluntarily resigns, the NEO is only entitled to receive his or her base salary through the termination date. If we terminate the NEO’s employment without cause, or in the case or Mr. Gluski, he terminates for “Good Reason,” the NEO is entitled to receive: •Base salary through the termination date, the Pro-Rata Bonus, and a lump sum severance payment equal to one times (two times in the case of Mr. Gluski) the sum of the NEO’s base salary and target bonus for the year in which the termination of employment occurs; •Continued participation for 12 months (24 months in the case of Mr. Gluski) in all medical, dental, and vision benefit programs that the Executive Officer was participating in at the time of termination; and •Outplacement assistance from the time of termination until December 31st of the second calendar year following the calendar year in which the termination occurred. If within two years following a “change-in-control,” the NEO terminates employment for “Good Reason” or if we terminate the NEO’s employment, other than for cause or disability, the NEO is entitled to receive: •Base salary through the termination date, the Pro-Rata Bonus, and a lump sum severance payment equal to two times (three times in the case of Mr. Gluski) the sum of the NEO’s base salary and target bonus for the year in which the termination of employment occurs; •Continued participation for 18 months (36 months in the case of Mr. Gluski) in all medical, dental, and vision benefit programs that the NEO was participating in at the time of termination; and •Outplacement assistance from the time of termination until December 31st of the second calendar year following the calendar year in which the termination occurred. In addition, the NEOs are subject to certain non-competition, non-solicitation, non-disparagement, and confidentiality obligations that are outlined in the Executive Severance Plan, and the execution of a general release of claims against the Company. The non-competition and non-solicitation obligations must be complied with for 12 months after termination of employment with us. Payment of Long-Term Compensation Awards in the Event of Termination or Change-in-Control as Determined by the Provisions Set Forth in the 2003 Long-Term Compensation Plan (for all NEOs) The vesting of PSUs, PCUs, and RSUs and the ability of our NEOs to exercise or receive payments under those awards changes in the case of (1) termination of their employment or (2) as a result of a change-in-control. The vesting conditions are defined by the provisions set forth in the “2003 Long Term Compensation Plan” as outlined below:

  50. Supplemental Disclosure - CEO Pay Ratio

    Supplemental Disclosure - CEO Pay Ratio The Company has a significant global footprint with approximately 62% of its workforce located outside of the United States. For 2023, the median of the annual total compensation of our US-based Clean Energy Business Unit, Utilities Business Unit, and Corporate office employees (other than our CEO) was $165,240. The same methodology was used as described above, except for limiting this review to these employees only. The ratio of the total annual compensation of our CEO to the median of the total annual compensation of our US-based Clean Energy Business Unit, Utilities Business Unit, and Corporate office employees for fiscal 2023 is 77:1.

  51. Supplemental Disclosure - CEO Pay Ratio

    | | Global | U.S. Only | | AES 2023 CEO Pay Ratio | 244:1 | 77:1 |

  52. Supplemental Disclosure - CEO Pay Ratio

    Compensation Committee Report The Compensation Committee has reviewed and discussed the CD&A with AES’ Management and, based on this review and discussion, recommended to the Board that it be included in AES’ Proxy Statement and incorporated by reference into the AES Form 10-K for the year ended December 31, 2023. The Compensation Committee of the Board of Directors, Alain Monié, Chair Janet G. Davidson Moisés Naím Teresa M. Sebastian Risk Assessment We believe that the general design of our compensation program reflects an appropriate mix of compensation elements and balances current and long-term performance objectives, cash and equity compensation, and risks and rewards associated with our executives’ roles. The following features of the program illustrate this point: •Our program reflects a balanced mix of compensation awards to avoid excessive weight on any one performance measure and is designed to promote stability and growth in the short-term through the annual incentive award based on quantifiable goals and in the long-term, through the payment of awards, the value of which are tied directly to AES share price performance; •Our annual incentive plan, PSUs, and PCUs provide a defined range of payout opportunities from 0% - 200% of target; •Total compensation levels are heavily weighted on long-term incentive awards; •The Company has stock ownership guidelines so that the NEOs’ to have direct ties to the long-term success of the Company; and •The Compensation Committee retains discretion to adjust or modify compensation based on the Company’s and executives’ performance. In 2023, with the assistance of its independent advisor, the Compensation Committee analyzed all of the Company’s compensation programs from a risk perspective. In that review, Meridian identified several risk mitigators including: •Balance of fixed and variable pay opportunities; •Capped incentive plans and multiple incentive measures; •Mix of measurement time periods; •Long-term stock ownership requirements and holding requirements; •Allowable Compensation Committee discretion for the incentive plans; •Compensation Committee oversight, including plan results and approval of goals; •Moderate severance program; and •Clawback policy. Because of the presence of the risk mitigators identified above and the design of our compensation program, we believe that the risks arising from our employee compensation program are not reasonably likely to have a material adverse effect upon AES. Pay Versus Performance Disclosure

  53. Pay Versus Performance Table

    Pay Versus Performance Table

  54. Pay Versus Performance Table

    | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year (a) | Summary Compensation Table Total for PEO1 (b) | Compensation Actually Paid to PEO1,2 (c) | Average Summary Compensation Table for Non-PEO NEOs1 (d) | Average Compensation Actually Paid to Non-PEO NEOs 1,2 (e) | Total Shareholder Return3 (f) | Peer Group Total Shareholder Return3 (g) | Net Income ($M) (h) | Parent Free Cash Flow ($M)4 (i) | | 2023 | $12,716,194 | ($5,546,374) | $3,023,432 | $31,596 | $109 | $112 | ($182) | $1,003 | | 2022 | $12,525,258 | $27,934,235 | $3,210,492 | $4,525,790 | $158 | $120 | ($505) | $906 | | 2021 | $14,379,190 | $13,464,027 | $3,363,281 | $2,482,306 | $129 | $118 | ($409) | $839 | | 2020 | $11,468,027 | $15,372,256 | $2,098,237 | $2,583,769 | $122 | $101 | $46 | $777 |

  55. Pay Versus Performance Table

    (1) Mr. Gluski served as our principal executive officer (“PEO”) for the full year for each of 2023, 2022, 2021 and 2020. For 2023, our non-PEO named executive officers (NEOs) included Mr. Coughlin, Mr. Rubiolo, Mr. Da Santos, and Ms. Mendoza. For 2022, our non-PEO NEOs included Mr. Coughlin, Mr. Da Santos, Mr. Rubiolo, Ms. Mendoza, and Mr. Nebreda. For 2021, our non-PEO NEOs included Mr. Coughlin, Mr. Pimenta, Mr. Da Santos, Ms. Mendoza, and Ms. Krueger. For 2020, our non-PEO NEOs included Mr. Pimenta, Mr. Da Santos, Ms. Mendoza, and Ms. Krueger. (2) For each of 2023, 2022, 2021 and 2020, the values included in this column for the compensation actually paid (CAP) to our PEO and the average compensation actually paid to our Non-PEO NEOs reflect the following adjustments to the values included in column (b) and column (d), respectively:

  56. Pay Versus Performance Table

    | Mr. Andres Gluski | | 2023 | 2022 | 2021 | 2020 | | Summary Compensation Table Total for PEO (column (b))* | | $12,716,194 | $12,525,258 | $14,379,190 | $11,468,027 | | - | Summary Compensation Table “Stock Awards” column value | ($8,796,107) | ($8,627,752) | ($10,623,105) | ($7,931,169) | | - | Summary Compensation Table “Options Awards” column value | $0 | $0 | $0 | $0 | | + | Year-end fair value of equity awards granted in the covered year that are outstanding and unvested as of the covered year-end | $6,333,456 | $16,022,414 | $8,027,727 | $9,410,569 | | + | Year-over-year change in fair value of equity awards granted in prior years that are outstanding and unvested as of the covered year-end | ($7,783,926) | $4,561,038 | $262,049 | $951,397 | | + | Vesting date fair value of equity awards granted and vested in the covered year | $0 | $0 | $0 | $0 | | + | Year-over-year change in fair value of equity awards granted in prior years that vested in the covered year | ($1,472,353) | $3,453,277 | $1,418,166 | $1,473,432 | | - | Fair value as of prior-year end of equity awards granted in prior years that failed to vest in the covered year | ($6,543,638) | $0 | $0 | $0 | | + | Dollar value of dividends/earnings paid on equity awards in the covered year | $0 | $0 | $0 | $0 | | + | Excess fair value for equity award modifications | $0 | $0 | $0 | $0 | | Compensation Actually Paid to PEO (column (c)) | | ($5,546,374) | $27,934,235 | $13,464,027 | $15,372,256 |

  57. Pay Versus Performance Table

    *Pension calculations excluded from the above table as AES’ PEO does not participate in any pension plan.

  58. Pay Versus Performance Table

    | Average for Non-PEO NEOs | | 2023 | 2022 | 2021 | 2020 | | Summary Compensation Table Average Total for Non-PEO NEOs (column (d))* | | $3,023,432 | $3,210,492 | $3,363,281 | $2,098,237 | | - | Summary Compensation Table “Stock Awards” Column Value | ($1,405,625) | ($1,605,414) | ($1,772,678) | ($991,531) | | - | Summary Compensation Table “Options Awards” Column Value | $0 | $0 | ($574,563) | $0 | | + | Year-end fair value of equity awards granted in the covered year that are outstanding and unvested as of the covered year-end | $1,018,912 | $2,361,757 | $704,650 | $1,176,481 | | + | Year-over-year change in fair value of equity awards granted in prior years that are outstanding and unvested as of the covered year-end | ($1,092,528) | $394,713 | $18,412 | $146,602 | | + | Vesting date fair value of equity awards granted and vested in the covered year | $0 | $0 | $1,146,227 | $0 | | + | Year-over-year change in fair value of equity awards granted in prior years that vested in the covered year | ($986,494) | $251,276 | $139,807 | $153,980 | | - | Fair value as of prior-year end of equity awards granted in prior years that failed to vest in the covered year | ($526,101) | ($87,034) | ($542,830) | $0 | | + | Dollar value of dividends/earnings paid on equity awards in the covered year | $0 | $0 | $0 | $0 | | + | Excess fair value for equity award modifications | $0 | $0 | $0 | $0 | | Average Compensation Actually Paid to Non-PEO NEOs (column (e)) | | $31,596 | $4,525,790 | $2,482,306 | $2,583,769 |

  59. Pay Versus Performance Table

    *Pension calculations excluded from the above table as AES Non-PEO NEOs do not participate in any pension plan. (3) Total shareholder return (TSR) for the Company and the peer group was calculated as the yearly percentage change in cumulative TSR based on a deemed fixed investment of $100 at market close on December 31, 2019 and in accordance with Items 201(e) and 402(v) of Regulation S-K. For purposes of this pay versus performance disclosure, our peer group is the S&P 500 Utilities Index. Because fiscal years are presented in the table in reverse chronological order (from top to bottom), the table should be read from bottom to top for purposes of understanding the cumulative returns over time. (4) Parent Free Cash Flow is calculated as set forth in Appendix A: Non-GAAP Measures.

  60. Pay Versus Performance Relationship Descriptions

    Pay Versus Performance Relationship Descriptions

  61. Pay Versus Performance Relationship Descriptions

    | Period | Compensation Actually Paid to PEO | Average Compensation Actually Paid to Non-PEO NEOs | AES’ TSR | Peer Group TSR | Net Income | Parent Free Cash Flow | | 2020 to 2023 | Decrease by 136% | Decrease by 99% | 8.8% | 11.6% | Decrease of $228M | Increase of $226M |

  62. Pay Versus Performance Relationship Descriptions

    •Relationship between Compensation Actually Paid to our PEO and the Average of Compensation Actually Paid to Non-PEO NEOs and AES’ Cumulative TSR. From 2020 through 2023, the compensation actually paid to our PEO and the average of the compensation actually paid to the Non-PEO NEOs decreased by 136% and 99%, respectively, compared to AES’ cumulative TSR of 8.8% over the same time period. In 2023, CAP decreased for our PEO and Non-PEO NEOs largely due to the TSR results, further emphasizing the link between pay and performance for our executives. •Relationship Between Compensation Actually Paid to our PEO and the Average of the Compensation Actually Paid to the Non-PEO NEOs and the Company’s Net Income. From 2020 through 2023, the compensation actually paid to our PEO and the average of the compensation actually paid to the Non-PEO NEOs decreased by 136% and 99%, respectively, compared to a decrease of $228M in our Net Income over the same time period. Net Income included in the Pay Versus Performance table is calculated in accordance with GAAP and includes the impact of asset impairments which are largely due to AES’ continued execution of its energy transition strategy to exit from coal generation. •Relationship Between Compensation Actually Paid to our PEO and the Average of the Compensation Actually Paid to the Non-PEO NEOs and the Company’s Parent Free Cash Flow. From 2020 through 2023, the compensation actually paid to our PEO and the average of the compensation actually paid to the Non-PEO NEOs decreased by 136% and 99%, respectively, compared to a $226M increase in our Parent Free Cash Flow over the same period. •Relationship Between the Company’s TSR and the Peer Group TSR. AES’ cumulative TSR for the 2020 through 2023 period of 8.8% which lagged that of the peer group (S&P 500 Utilities Index) which was 11.6% over the same period.