DEF 14A of Mge Energy Inc
Filed Apr 5, 2024 · FY20230000950170-24-042079
Our Director Nominees
Our Director Nominees Directors Ackerman, Anderson, Keebler and Wolter are currently Class II directors whose terms expire at the 2024 Annual Meeting of Shareholders and who have been recommended by our Corporate Governance Committee and nominated by our board for reelection. Each of the nominees has indicated a willingness to serve if elected, and the board has no reason to believe that any nominee will be unavailable for that service. If any nominee should become unable to serve, it is presently intended that your proxy will be voted for a substitute nominee designated by the board. Under the Company's retirement guidelines, directors are expected to retire no later than the date and time of the Annual Meeting of Shareholders following the date on which he or she attains the age of 75, unless requested to remain by the board. Director Bugher, a Class III director, and Director Stolper, a Class I director, have attained the age of 75 and will be retiring from the Board of Directors at the 2024 Annual Meeting of Shareholders. The balanced tenure of our directors promotes experience and stability while also allowing for a broader understanding of the issues that affect our business. We have a mix of seasoned directors who provide in-depth knowledge and historical perspective of the industry and of new directors who bring fresh ideas. The board believes the directors of MGE Energy collectively have backgrounds and skills important for MGE Energy's business and the makeup of the board serves to ensure that members are able to provide oversight and guidance, balanced with our overall Company strategies.
Our Director Nominees
| | Your Board recommends a vote for each nominee. |
Nominee Biographies
Nominee Biographies
Class II – Term Expiring in 2024
Class II – Term Expiring in 2024
Class II – Term Expiring in 2024
| Director since 2024* Independent Age 63 | Experience ▪ Retired Senior Vice President, Investor Relations, Corporate Responsibility and Sustainability and Treasurer of A.O. Smith, a global water heater and boiler manufacturing company ▪ Served as the Management representative for A.O. Smith's Audit Committee and ESG advisor to the Board ▪ Serves on the board of directors for the American Red Cross for Southeast Wisconsin, Investment Policy Committee for Aurora Healthcare, and a Finance Committee Member for the Wisconsin Multiple Sclerosis Society ▪ External Advisory Board member for the University of Wisconsin School of Business and is immediate past chair for Milwaukee Women, Inc. ▪ Has her MBA from Marquette University | | | | Skills ▪ Strategic Leadership/Governance ▪ Financial Acumen ▪ Customer/Community/Workforce | ▪ Environmental/Safety ▪ Legal/Regulated Industry |
Class II – Term Expiring in 2024
| Director since 2018 Independent Age 66 | Experience ▪ Retired Clerk of Court of U.S. Bankruptcy Court - Western District of Wisconsin ▪ Has a Juris Doctor from Rutgers University School of Law and a Master of Strategic Studies from the U.S. Army War College ▪ Retired from the Army in May 2016 with a rank of Major General ▪ Worked for General Public Utilities Corporation early in her career ▪ Serves on the board of directors for the Green Bay Packers and Nicolet National Bank | | | | Skills ▪ Strategic Leadership/Governance ▪ Financial Acumen ▪ Customer/Community/Workforce | ▪ Legal/Regulated Industry ▪ Operations ▪ Environmental/Safety |
Class II – Term Expiring in 2024
| Director since 2017 Age 52 | Experience ▪ Chairman of MGE Energy, Inc., and Madison Gas and Electric Company since October 1, 2018 ▪ President and Chief Executive Officer of MGE Energy, Inc., and Madison Gas and Electric Company since March 1, 2017 ▪ Was Senior Vice President - Energy Supply and Planning of Madison Gas and Electric Company, a position he held since July 2015 ▪ Was Assistant Vice President - Energy Supply and Customer Service, a position he held since January 2012 ▪ Has been employed at Madison Gas and Electric Company since 1995 ▪ Has a Master of Business Administration and has been involved in the public utility business for more than 25 years ▪ Holds the following directorships: Director of ATC Management Inc. and ATC Development Manager Inc., Director of the University of Wisconsin Research Park and Director of United Way of Dane County | | | | Skills ▪ Strategic Leadership/Governance ▪ Financial Acumen ▪ Customer/Community/Workforce ▪ Legal/Regulated Industry | ▪ Technology/Security ▪ Operations ▪ Environmental/Safety |
Class II – Term Expiring in 2024
| Director since 2000 Age 69 | Experience ▪ Past Chairman, President and Chief Executive Officer of MGE Energy, Inc., and Madison Gas and Electric Company until March 1, 2017, and was an officer since 1989 and an employee since 1984 ▪ Is an attorney ▪ Has been involved in the public utility business for 40 years ▪ Holds or has held the following directorships: Director of National Guardian Life Insurance Company, Director of the Oscar Rennebohm Foundation, and former Chair of the Board of Authority for the University of Wisconsin Hospitals and Clinics | | | | Skills ▪ Strategic Leadership/Governance ▪ Financial Acumen ▪ Customer/Community/Workforce ▪ Legal/Regulated Industry | ▪ Technology/Security ▪ Operations ▪ Environmental/Safety |
Other Members of the Board of Directors
Other Members of the Board of Directors
Other Members of the Board of Directors
| Director since 2010+ Independent Age 75 | Experience ▪ Retired Director of University Research Park, University of Wisconsin-Madison ▪ Served the State of Wisconsin as Secretary of Administration from 1996 to 1999 and as Secretary of Revenue from 1988 to 1996 ▪ Serves on the board of First Business Financial Services, Inc., as a member of the corporate governance committee and chairs the compensation committee ▪ Chairs the board of Marshfield Clinic Health System, a $3 billion multispecialty health care system ▪ Recognized leader in the Madison business community ▪ Brings an understanding of the business environment and economy within our service area | | | | Skills ▪ Strategic Leadership/Governance ▪ Financial Acumen ▪ Customer/Community/Workforce Class III – Term Expiring in 2025 | ▪ Legal/Regulated Industry ▪ Operations |
Other Members of the Board of Directors
| Director since 2024* Independent Age 61 | Experience ▪ Retired Chief Underwriting Officer of American Family Insurance, an insurance company ▪ Served as American Family's Chief Financial Officer, beginning in 2011, where accountabilities included Controller, Enterprise Risk Management, Reinsurance, Investment Policy, Internal Audit and Facilities ▪ Serves on the University of Wisconsin-Madison School of Business Dean's Advisory Board since 2012, the Risk Management and Insurance MBA Advisory Board since 2017, and the University of Wisconsin Carbone Cancer Center Advisory Board since 2020 ▪ Served on Edgewood College School of Business Advisory Board from 2018-2020 ▪ Is a certified public accountant and has his MBA from the University of Wisconsin-Madison | | | | Skills ▪ Strategic Leadership/Governance ▪ Financial Acumen Class III – Term Expiring in 2025 | ▪ Legal/Regulated Industry ▪ Customer/Community/Workforce |
Other Members of the Board of Directors
| Director since 2009 Independent Age 72 | Experience ▪ Is a certified public accountant and holds degrees in accounting and law from the University of Wisconsin-Madison ▪ Former partner at Grant Thornton LLP where he advised on tax- and financial-related matters ▪ Was a past member of the Audit, Finance, and Insurance Council of Oakwood Lutheran Homes Association, Inc. | | | | Skills ▪ Strategic Leadership/Governance ▪ Financial Acumen Class III – Term Expiring in 2025 | ▪ Legal/Regulated Industry ▪ Customer/Community/Workforce |
Other Members of the Board of Directors
| Director since 2021 Independent Age 63 | Experience ▪ Retired Chief of Police, City of Madison ▪ Helped lead the national initiative to implement President Obama's "21st Century Policing" recommendations ▪ Currently serves on Wisconsin Governor's Pardon Advisory Board ▪ Co-chaired past Wisconsin Governor Doyle's State Commission on Reducing Racial Disparity in the Criminal Justice System ▪ Since 2014, has consulted in a number of cities, including Ferguson, MO.; Baltimore and New York ▪ Holds a Bachelor of Science degree in Criminal Justice from the University of Wisconsin-Milwaukee ▪ Graduate of the Wisconsin Department of Justice Executive Leadership Course ▪ Received an honorary Doctor of Philosophy in Social Welfare degree from the University of Wisconsin-Milwaukee ▪ Certified trainer/consultant for both Stephen Covey and COPS Office Fair and Impartial Policing ▪ In addition to serving on many community boards, in 2014, served as Interim President and CEO of the Urban League of Greater Madison | | | | Skills ▪ Strategic Leadership/Governance ▪ Legal/Regulated Industry ▪ Financial Acumen ▪ Customer/Community/Workforce Class III – Term Expiring in 2025 | ▪ Environmental/Safety ▪ Operations ▪ Technology/Security |
Other Members of the Board of Directors
| Director since 2018 Independent Age 60 | Experience ▪ Former Chairman and CEO of Berbee Information Network Corp. ▪ Chair of the Wisconsin Alumni Research Foundation and holds several patents ▪ Master of Science in mechanical engineering and a Master of Business Administration from the University of Wisconsin-Madison ▪ Graduated from Stanford University School of Medicine ▪ Emergency department physician | | | | Skills ▪ Strategic Leadership/Governance ▪ Financial Acumen ▪ Technology/Security Class I – Term Expiring in 2026 | ▪ Legal/Regulated Industry ▪ Customer/Community/Workforce |
Other Members of the Board of Directors
| Director since 2008 Independent Age 63 | Experience ▪ Chief Executive Officer of QTI Management Services, Inc., a human resources and staffing company ▪ Past President of the Private Client Group and Market President at U.S. Bank where she was an employee from 1982 to 2007 and an Officer from 1985 to 2007 ▪ Holds the following directorships: American Family Insurance; Wealth Management Company, Northwestern Mutual Life; and Puelicher Center (UW business school). Past directorships include: Board Chair Meriter Health Services and Meriter Hospital, Wausau Paper Inc., Board Chair Edgewood College, University of Wisconsin Family Business Center, Board Chair United Way of Dane County and Foundation, and Board Chair Greater Madison Chamber of Commerce | | | | Skills ▪ Strategic Leadership/Governance ▪ Financial Acumen ▪ Customer/Community/Workforce Class I – Term Expiring in 2026 | ▪ Legal/Regulated Industry ▪ Environmental/Safety |
Other Members of the Board of Directors
| Director since 2024* Independent Age 56 | Experience ▪ Executive Vice President, Chief Transformation Officer at Lands' End, a clothing and home decor retailer, where she is responsible for all aspects of the product lifecycle, from initial development through final sales ▪ Prior to her current position, she held several progressively advanced leadership roles at Lands' End, including Senior Vice President of International and Wholesale; Planning and Inventory ▪ Serves on boards of Thrivent Financial, American Family Children's Hospital Development Partners Advisory Board, Clean Lakes Alliance, and Women in Retail Leadership Circle | | | | Skills ▪ Strategic Leadership/Governance ▪ Financial Acumen ▪ Customer/Community/Workforce Class I – Term Expiring in 2026 | ▪ Environmental/Safety ▪ Legal/Regulated Industry ▪ Operations |
Other Members of the Board of Directors
| Director since 2008+ Independent Age 75 | Experience ▪ Management consultant at Purple Cow Organics (manufacturer of premium compost) for more than 10 years ▪ Formerly of Deibel Laboratories (food quality assurance) for eight years ▪ Former Executive Vice President and Director of ProActive Solutions USA LLC, a manufacturer of cleaning and sanitizing products, for 14 years ▪ Certified public accountant with more than 40 years in public accounting ▪ Was a partner in Clifton Gunderson LLP, certified public accountants and consultants, for 31 years and was an elected member of the firm's national board for 12 years ▪ Has served on numerous community and civic boards for more than 30 years, including three terms as an elected public official ▪ Co-founded TRAC Microbiology Inc. | | | | Skills ▪ Strategic Leadership/Governance ▪ Financial Acumen Class I – Term Expiring in 2026 | ▪ Legal/Regulated Industry ▪ Customer/Community/Workforce |
Other Members of the Board of Directors
*Appointments effective as of March 1, 2024. +Retiring at the 2024 Annual Meeting. NOTES: Ages as of Dec. 31, 2023. All current directors, besides Director Wolter, became directors of MGE simultaneously when they were elected directors of MGE Energy, Inc. Director Wolter became director of MGE Energy, Inc., when it became the holding company of MGE in August 2002.
Other Members of the Board of Directors
| Governance Snapshot |
Other Members of the Board of Directors
| Board Structure | Board Independence | | ▪ Eight out of ten continuing directors are independent ▪ 100% independent key board committees: Corporate Governance, Audit, and Human Resources and Compensation ▪ Ongoing board refreshment: Six new directors since 2018 ▪ Strong Lead Independent Director role ▪ Continuing director tenure average of seven years | |
Other Members of the Board of Directors
| Gender Diversity | Ethnic/Racial Diversity | Director Tenure | | | | | | The above information includes MGE Energy's three new directors effective as of March 1, 2024, and excludes the two directors who will be retiring at the 2024 Annual Meeting. | | |
Other Members of the Board of Directors
| Board Refreshment 6 new directors have been added since 2018 | | | | |
Other Members of the Board of Directors
| Board Practices ▪ Ten full board meetings per year; ten committee meetings in 2024 ▪ Annual board self-assessment covering board structure, meetings, committees, responsibilities and management of the board ▪ Peer evaluation and individual self-assessment every three years before director nominations and as part of succession planning ▪ Board oversight of environmental, social and governance (ESG) matters and regular engagement with management ▪ Periodic strategic planning and review sessions with company officers ▪ Director orientation and opportunities for continuing director education on key topics and emerging issues ▪ Biannual risk assessments and biennial risk exercise with company officers ▪ Board commitment to diversity, equity and inclusion | Board Accountability ▪ Shareholder engagement and outreach program ▪ Clawback policy that includes cash-based and/or stock-based awards ▪ Anti-pledging and hedging policies ▪ Overboarding policy ▪ Stock ownership guidelines ▪ Retirement guidelines for directors ▪ Modified plurality voting: Directors who receive a higher number of "withheld" votes resign ▪ Code of Ethics affirmation by all MGE Energy directors (as well as MGE officers and employees) |
Other Members of the Board of Directors
| Risk Assessment and Oversight |
Other Members of the Board of Directors
Enterprise-wide risk assessment and oversight are fundamental responsibilities of our board. Directors are involved in the process of overseeing the primary risks we face in the conduct of our business. Trends in economic, business and commodity market conditions and trends in legislative and regulatory initiatives are reviewed by the board as part of the Company's Enterprise Risk Management program. The board receives, on an ongoing basis, information from management related to key business risks and mitigation strategies. These business risks include existing and emerging risks related to environmental performance and sustainability, information technology systems and cybersecurity, operational risks, financial risks, reliability risks and regulatory risks. The Company's Internal Audit department, on behalf of MGE management and the Board of Directors' Audit Committee, facilitates an annual Enterprise Risk Management process with each officer of the Company. The sessions with individual Company officers and management update existing areas of risk, classify new or emerging areas of risk and identify owners responsible for assessing, managing and/or mitigating areas of risk. This serves to complement ongoing and regular presentations and reports from Company officers and subject matter experts on risk and emerging risk identification, assessment and mitigation strategies. In addition, the board engages in a biannual comprehensive risk assessment and mitigation exercise. On a biennial basis, the board conducts a broad-based exercise with Company officers on risk and emerging risk identification, assessment and mitigation strategies. The board last conducted this exercise in 2023, with particular focus on risks associated with the Company's ongoing transition toward deep decarbonization while maintaining safe, reliable and affordable service to customers. Our comprehensive approach encourages all our directors to initiate discussion at any time, either directly or through our Lead Independent Director, on any areas of concern, including risk identification and assessment, controls, management and oversight. The board and MGE management have created a culture of environmental sustainability and risk management. Responsibility for risk is assigned as indicated in the table below.
Other Members of the Board of Directors
| Full Board | | | | Enterprise Risk Management Corporate Sustainability and ESG Customer and Community Engagement | Financial Performance Operations Public and Regulatory Policy | Security - Cyber and Physical Strategic Risk Management | | Committees | | | | Audit | Human Resources and Compensation | Governance | | Financial Reporting Compliance Code of Conduct Cyber Compliance Disclosure Ethics | Executive Compensation and Benefits Human Resources Strategies: ▪ Diversity, Equity and Inclusion ▪ Workplace Environment and Culture ▪ Employee Engagement ▪ Talent Development | Board Succession and Composition Board and Corporate Governance CEO Succession |
Other Members of the Board of Directors
| Sustainability Governance |
Other Members of the Board of Directors
Our Company seeks to foster a proactive and forward-thinking approach to ESG-related matters, beginning with board oversight of and executive leadership on key topics and emerging issues. The board takes seriously its responsibility to oversee corporate responsibility and environmental performance of the Company. Board members bring a variety of expertise to this responsibility; for example, oversight and administration related to environmental areas, education and training related to environmental matters, and experience holding managerial and/or public positions with environmental purview. The board also draws on external expertise as appropriate for education on key topics relevant to ESG matters and to its risk oversight responsibilities. The board's engagement with management and the Company's participation in third-party benchmarking and evaluation programs help to assess performance and promote continuous improvement. Directors are kept informed and educated through collaboration with and numerous presentations by officers of the Company and various subject matter experts, including experts from outside the Company and through industry and director training opportunities and reports provided to them by senior management on a regular basis. Our governance structure helps to ensure that oversight and management of ESG and sustainability-related risks and initiatives throughout the Company are incorporated into our long-term strategy and day-to-day management and operations. Our approach to these matters extends from the Board of Directors to our executive officers to our Sustainability Steering Team, leaders and internal subject matter experts.
Other Members of the Board of Directors
| Environmental and Sustainability Policy Our environmental and sustainability policy guides our commitment to corporate responsibility and environmental accountability throughout the organization | Sustainability Executive Team ▪ Has officer representation from across MGE to provide input and oversight to the Steering Team ▪ Keeps the Board of Directors informed on sustainability initiatives and ESG-related matters | Sustainability Steering Team ▪ Is composed of employees from across the Company ▪ Supports sustainability engagement and benchmarking ▪ Assembles the Continuous Improvement Sustainability Teams, which address specific improvement initiatives and tasks ▪ Oversees MGE's Environmental Management System (EMS) |
Other Members of the Board of Directors
| Shareholder Engagement and Outreach |
Other Members of the Board of Directors
Our investor relations efforts help Company officers and the board understand how investors view the Company's policies and practices, strategies and long-term direction and help leadership assess and address emerging areas of interest to investors. We are committed to accountability and transparency and believe that understanding and considering shareholder perspectives advances those priorities. Shareholder feedback from our shareholder engagement and outreach and our investor relations program is shared with board members.
Other Members of the Board of Directors
| How We Engage Company officers engage shareholders in several ways, including through: ▪ In-person and virtual meetings with institutional shareholders and others. ▪ Presentations at industry conferences and investor meetings. ▪ Annual disclosure documents, including financial and corporate responsibility and sustainability reports and related disclosures. ▪ Annual Meeting of Shareholders, during which shareholders may ask questions, which are answered either at the meeting or in follow-up afterward. ▪ Review and board discussion of Annual Meeting proxy voting results to understand voting and any shareholder comments. ▪ Responses to inquiries taken through the Company's investor site, board email and in-house Shareholder Services staff. ▪ Annual shareholder newsletters and our investor website, which is updated regularly. These efforts are in addition to the Company's regular and ongoing investor relations program. | Who We Engage Our Vice President Chief Financial Officer and Treasurer, Vice President General Counsel and Secretary, and Vice President Chief Accounting Officer and Controller join other officers and members of management to engage stakeholders, including: ▪ Institutional shareholders ▪ Retail shareholders ▪ Analysts and investment firms ▪ ESG ratings firms ▪ Proxy advisory firms | | | Topics Discussed in 2023 ▪ Our business strategy for a more sustainable future and related initiatives ▪ Investment opportunities ▪ Climate change and deep decarbonization ▪ Financial performance ▪ Board oversight and general corporate governance matters ▪ Executive compensation |
Other Members of the Board of Directors
| Engagement Calendar | | | | | Post-Annual Meeting: ▪ Review feedback and results from the Annual Meeting and continue to review the Company's governance and compensation practices. ▪ Start planning for fall engagement. ▪ Continue preparation of the Company's annual Corporate Responsibility and Sustainability Report. | Fall: ▪ The board's Corporate Governance Committee typically meets to review emerging governance issues. ▪ Management begins institutional shareholder engagement and outreach. ▪ Begin review of updates to the annual Proxy Statement. ▪ Share with investors our annual Corporate Responsibility and Sustainability Report. | Pre-Proxy Meeting: ▪ Shareholder feedback from the engagement discussions is shared with the board. ▪ The board considers any potential changes to governance, compensation or other proxy disclosures. ▪ Publish the Form 10-K. | Post-Proxy Meeting: ▪ Publish Annual Report and Proxy Statement. ▪ Conduct follow-up shareholder discussions, if warranted, to discuss important Annual Meeting matters. ▪ Host Annual Meeting of Shareholders in mid-May. |
Other Members of the Board of Directors
| Board of Directors Information |
Nonemployee Director Compensation
Nonemployee Director Compensation In 2023, nonemployee directors received compensation as shown below. Directors who are our employees receive no additional fee for service as a director or a committee member.
Nonemployee Director Compensation
| 2023 Director Compensation | | | | | | | | | Name | Fees Earned or Paid in Cash | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | | (a) | ($)(1)(2) (b) | ($)(3) (c) | ($) (d) | ($) (e) | ($) (f) | ($) (g) | ($) (h) | | Marcia M. Anderson | 90,000 | 80,000 | - | - | - | - | 170,000 | | James G. Berbee | 80,000 | 80,000 | - | - | - | - | 160,000 | | Mark D. Bugher | 89,500 | 80,000 | - | - | - | - | 169,500 | | Londa J. Dewey | 81,500 | 80,000 | - | - | - | - | 161,500 | | James L. Possin | 91,000 | 80,000 | - | - | - | - | 171,000 | | Thomas R. Stolper | 81,500 | 80,000 | - | - | - | - | 161,500 | | Gary J. Wolter | 77,000 | 80,000 | - | - | - | - | 157,000 | | Noble L. Wray | 75,500 | 80,000 | - | - | - | - | 155,500 |
Nonemployee Director Compensation
(1) Consists of the amounts described below under "Cash Compensation." (2) Includes amounts paid for attending director educational activities. (3) Restricted (time based) units were awarded to each of our directors in March 2023 under our 2021 Long-Term Incentive Plan (2021 LTI Plan). Awards granted under the 2021 LTI Plan vest at the end of a three-year period and allow for continued vesting in the event of death, disability or retirement or immediate vesting due to a change of control. The amount shown represents the March 2023 grant date fair value of that award. The award will be settled in stock or a combination of cash and stock, which, in the case of the awards granted in March 2023, will be issued or paid during the first quarter of 2026. The accounting treatment for awards determines the presentation under applicable SEC disclosure rules. At December 31, 2023, there were three awards outstanding for each director representing 2,596 units, except for Director Wray who joined our board in September 2021 and has two awards outstanding representing 1,836 units.
Executive Summary
Executive Summary Our compensation program is designed to compensate our executives fairly based upon an assessment of compensation available in the marketplace where we compete for executive personnel and our desire to achieve a balance of short-term and long-term rewards for maintaining and improving Company performance and shareholder value. It is administered by our Committee, which is composed of independent directors. They are assisted by Willis Towers Watson, who was hired by the Committee as an independent compensation consultant. Our approach to establishing executive compensation is to benchmark periodically the ranges of comparable executive compensation and then to set overall compensation within a competitive market range. Market-based salary ranges are examined for each position, and an executive's positioning within that range is determined by that individual's experience in their position as well as the Committee's evaluation of that individual's performance during the year. Our overall executive compensation for 2023 included: • Base salary; • Short-term incentive compensation, based upon both objective measures (as shown in 2023 Short-Term Incentives section) and a subjective assessment of annual performance, which in both cases are designed to encourage and reward the accomplishment of goals intended to benefit the Company and its shareholders; and • Long-term incentive compensation involving stock-based awards under our 2021 LTI Plan and cash-based awards under a legacy plan, all of which are designed to reward performance over a period of time and to tie a portion of executive compensation more directly to the creation of long-term shareholder value. Due to their structure, awards under our legacy 2006 Performance Unit Plan are shown according to applicable guidelines as stock-based incentives in the various compensation tables that follow; however, no stock is issuable or issued under that cash-based Plan. Prior to shareholder approval of our 2021 LTI Plan in May 2020, we did not have a plan allowing the issuance of awards payable in stock. Our compensation program is designed to link a significant portion of the compensation of our named executive officers to defined performance standards that promote a balance of the drive for near-term earnings and returns with growth in long-term shareholder value. We believe our compensation program has assisted us in achieving performance for our customers, employees and shareholders. During 2023, we exceeded our performance goals related to electric reliability and customer satisfaction targets. In addition, our earnings per share in 2023 exceeded our target by 12% (see target shown in Metric-Specific Targets table). At the end of 2023, our five-year annualized total shareholder return was 6%.
2021 Long-Term Incentive Plan
2021 Long-Term Incentive Plan In 2023, we issued awards under our 2021 LTI Plan. Under that Plan, eligible employees who are officers or otherwise determined to be key employees may receive awards of: • "Performance units," entitling the holder to receive a stock or cash payment equal to the value of a designated number of shares of our common stock, plus dividend equivalent payments thereon in cash, based upon the achievement of specified performance goals during a performance period set by the Committee. • "Restricted units," entitling the holder to receive a stock payment equal to the value of a designated number of shares of our common stock, plus dividend equivalent payments in cash thereon, at the end of a time period set by the Committee, with the stock payment being subject to the Company's tax withholding obligations. • "Restricted stock," which is an award of stock granted subject to restrictions on transfer and possible forfeiture if the conditions for the removal of the restrictions are not met. The restrictions may be based upon the passage of time or the occurrence of other events, as determined by the committee. No restricted stock was awarded in 2023. Non-employee directors may receive awards of restricted units and restricted stock under the Plan but may not receive awards of performance units. Restricted units are subject to the director's election to receive up to 25% in cash to the extent authorized by the board or set forth in the related award agreement. The 2021 LTI Plan does not allow the grant of stock options or stock appreciation rights. Awards under the 2021 LTI Plan provide for 100% vesting at the end of the performance period, in the case of performance units, and at the end of the time period, in the case of restricted units and restricted stock, in each case as determined by the Committee. The discussion that follows focuses on our compensation programs that were in effect during 2023, which would include our 2021 LTI Plan and our legacy 2006 Performance Unit Plan. References to "Performance Unit Plan" in that discussion refer to the 2006 Performance Unit Plan. The 2006 Performance Unit Plan and the 2021 LTI Plan are collectively, referred to as "Incentive Plans."
Compensation Objective and Strategy
Compensation Objective and Strategy The principal goal of our compensation program has been to pay our employees, including all our executive officers, at levels which are: • Reflective of how well we are achieving our corporate mission as well as realizing both short-term and long-term corporate strategy; • Consistent with our current financial condition, recent earnings, rates and total shareholder return; • Reflective of each individual's performance, experience, and overall actual and potential contribution to our Company; • Competitive in the marketplace for similarly situated employees; and • Provide the ability to attract and retain the talent we need. Our Committee strives to administer our compensation programs in a fair and consistent manner over time. Through our compensation design (and with the help of the Committee's compensation consultant), the Committee seeks to: • Foster an organizational culture to encourage executives to make decisions that create shareholder value within the framework of our corporate objectives; • Use a clear, simple-to-understand reward design to allow the Company to attract and retain competent management talent necessary to continue to improve the Company's long-term performance; • Offer employees competitive pay with an additional opportunity to earn additional rewards when Company and individual performance exceeds expectations; and • Support our compensation program with appropriate performance management and communications efforts. Our compensation program considers performance goals that are critical to our business success. These goals include specific objectives developed by our Committee with input from our management and Board of Directors. These goals include earnings, system reliability and customer satisfaction. The Committee and board also consider other corporate performance measures, such as debt ratings, cost containment, environmental performance and management of day-to-day operations as well as individual performance measures. In addition to its review of external competitive factors, the Committee considers internal equity among colleagues in determining compensation levels. This means that while the Committee considers competitive pay data for specific positions, such data is not the sole factor considered in setting pay levels as the Committee believes promoting internal equity helps to provide long-term stability among its senior management. Our Committee believes it is important to place a significant amount of an executive's total compensation at risk in the form of variable pay, including both short-term and long-term incentives, in order to better align the Company's pay packages with the interests of our shareholders and customers. Actual award levels are determined based on a variety of factors examined by the Committee, including Company performance, individual performance and market data. In addition, the board considers progress on long-term corporate strategy and performance in setting incentive targets under this program. An additional element of our compensation strategy is to promote a long-term commitment to the Company. As a consequence, while we believe compensation should have a strong performance link, we also believe the Company benefits from creating a team of tenured, seasoned professionals with significant industry experience. To encourage the long-term commitment we seek, the long-term incentive portion of our compensation structure offers awards that vary in value directly with increases and decreases in our stock price and dividends paid to shareholders. The purpose of this long-term compensation mechanism, including vesting requirements and annual grant design, is to promote long-term retention and stability among the senior management team by creating significant potential forfeitures of value for employees who depart for other employment opportunities. The Committee believes this approach will appropriately reward our executives while protecting the Company's long-term investment in its executives. Our Committee does not believe that our policies and practices with respect to executive and nonexecutive compensation are likely to encourage risk taking outside our established policies, practices and risk management programs.
Role of the Human Resources and Compensation Committee
Role of the Human Resources and Compensation Committee Our Human Resources and Compensation Committee (Committee) was composed of four directors during 2023–Marcia M. Anderson (Chair), James G. Berbee, Mark D. Bugher and Thomas R. Stolper–all of whom have been determined by our board to be independent directors under the Nasdaq Stock Market, Inc., governance requirements. The Committee's function is described in its charter, which can be found on our website mgeenergy.com/governance. The Committee, in consultation with its compensation consultant and the other independent directors on our board, determines the amounts and elements of compensation for our executive officers and provides overall guidance for our executive compensation policies and programs. Our independent directors are responsible for the final approval of those recommendations, as they relate to the compensation of our CEO; and our board, including our CEO, is responsible for the final approval of those recommendations as they relate to the compensation of our executive officers other than our CEO. Under its charter, our Committee is empowered to retain, compensate and terminate compensation consultants and other advisors as considered necessary to the accomplishment of its work. Willis Towers Watson was hired as an independent compensation consultant in 2013 to assist the Committee with a review and benchmarking of the Company's compensation programs and levels. Willis Towers Watson has provided benchmarking updates, most recently in December 2023. The consultant was hired directly by the Committee, and the Committee retains full autonomy to direct the consultant's activities. The consultant has no prior relationship with our CEO or any of our Company's senior management. The consultant was determined by the Committee to be independent in connection with its original retention and was redetermined to be independent in 2023, after considering the independence factors prescribed by Nasdaq Stock Market, Inc., in connection with the selection of compensation consultants. In the process of assisting the Committee, the compensation consultant may interact directly with our CEO, Company General Counsel, Chief Financial Officer, head of Human Resources and their staffs to provide the Committee with relevant compensation and performance data for our executives and the Company. In addition, the consultant may seek comments and feedback from specific members of our Company's management to the extent the consultant finds it necessary or desirable to do so. To arrive at informed decisions, the Committee collects and/or considers input from various sources and may invite certain senior executives or non-Committee board members to attend Committee meetings to discuss executive compensation and individual performance. Subject to the Committee's direction, invitees provide additional insight, suggestions or recommendations regarding compensation decisions. Deliberations generally occur with input from the compensation consultant, management or other board members. Only independent board members may vote on compensation decisions for the CEO, which are always done without the CEO or any other members of management being present. The Committee also considers the results of the shareholder advisory vote on executive compensation. That vote, which last occurred at our Annual Meeting in 2023, expressed strong approval for our executive compensation programs. As a result, the Committee has not changed its basic compensation policies. Shareholders are being asked at this Annual Meeting to consider and vote on a shareholder advisory resolution on executive compensation.
Pay Levels
Pay Levels Pay levels for all employees, including our named executive officers, are determined based on a number of factors, including each individual's roles and responsibilities, the individual's experience and expertise and expected contribution, pay levels for peer positions within the Company, pay levels for similar job functions in the marketplace and performance of our Company as a whole. The Committee asked its compensation consultant to develop an approach and conduct studies to determine "competitive market" compensation. Working with the Committee, the compensation consultant identified a peer group for the study, looking at general industry survey data, industry-specific survey data and information available from published proxy statements. The objective was to identify companies representing the Company's broad labor market for talent while maintaining comparability, having sufficient size to avoid distortions from a single company, and ensuring sufficient and credible data are available. Willis Towers Watson provided updates regarding this peer group to the Committee, most recently in December 2023. The industry-specific and general industry survey data are based on companies from the Willis Towers Watson's Energy Services Executive Compensation Survey and were not selected by the Committee. The survey samples used for the named executive officers are controlled to reflect only organizations of comparable size to the Company in terms of revenues. The industry peer group companies selected by Willis Towers Watson from the database, as updated in December 2023, are listed below. The changes in the composition of the peer group reflected mergers and acquisitions involving prior members of the group as well as adjustments for peer revenues and industry focus.
Pay Levels
| Companies Used for Compensation and Benchmark Purposes | | | | ALLETE, Inc. | Northwest Natural Holding Company | Sunnova Energy International, Inc. | | Avista Corporation | NorthWestern Energy Group, Inc. | Unitil Corporation | | Chesapeake Utilities Corporation | Ormat Technologies Inc. | | | Genie Energy Ltd. | Otter Tail Corporation | | | IDACORP, Inc. | Suburban Propane Partners, L.P. | |
Pay Levels
When reviewing competitive market data, the Committee examines the range of market data but does not set a specific targeted percentile as part of its compensation philosophy. An executive's positioning against the competitive labor market is intended to reflect that executive's experience, marketability and performance over a period of time. While we use benchmarking as described above in determining appropriate compensation ranges, the Committee avoids making "automatic" adjustments based on an employee's positioning relative to the market. The Committee believes this approach better utilizes competitive data to facilitate rather than drive the Company's pay decisions, which results in appropriate recognition of our top performers. Depending on whether the Company and individual performance meets expectations, realized total compensation during any given year may be above or below the benchmark compensation levels. The amount and structure of compensation can also vary by executive due to negotiations and competitive pressures inherent in attracting and hiring experienced utility managerial talent in the utilities industry. To help attract and retain such talent, the Committee also seeks to provide an appropriate level of employee benefits comparable to those in the utility industry and to publicly traded companies.
2023 Executive Compensation Determination
2023 Executive Compensation Determination For 2023, these pay-mix components reflected the following decisions and determinations: • 2023 Base Salaries For 2023, the adjustment of named executive officer base salaries reflects a combination of annual adjustments and increased salaries due to promotions and the assumption of additional duties and responsibilities. When adjusting base salaries on an annual basis or in the event of organizational realignment, due to promotions or retirements, we take into consideration the external market, changes in responsibilities and performance against job expectations. We also consider skills and experience of the named executive officer, internal equity and his or her past performance. Additionally, expectations with respect to the economy and regulatory climate at the time of the review are considered. • 2023 Short-Term Incentives The size of the 2023 short-term incentive pool at the target level of named executive officer performance was $1,021,699 an increase of $111,702 from the amount of that pool for 2022. The number of named executive officers did not change from 2022 to 2023. The pool size, as a percentage of base salary, changed for the CEO as a result of an increase in the target percentage from 55% to 60%. The Committee determined that incentive opportunities are appropriate after reviewing market benchmark data. For 2023, the target bonus amount for our CEO was set at 60% and the remaining named executive officers was set at 35% to 45% of annualized base pay at December 31, 2023. The actual award may be above or below the target, with the maximum equal to 150% of the target. In assessing the short-term incentive payout for the CEO versus the targeted levels, we took into consideration the strong overall performance level of the Company in 2023, which is discussed below. The actual payout for the CEO was 129% of the target amount and 86% of the maximum opportunity set for 2023. The actual aggregate payouts to the named executive officers for 2023 were $1,286,567, which was 126% of the incentive pool at the target level of performance and 84% of the incentive pool at the maximum level of performance. The three components that make up the target bonus opportunity–objective targets, subjective assessment of the achievement of specified corporate goals and subjective assessment of the achievement of individual goals–are discussed below and on the following pages: o Metric-Specific Targets (40% at targeted level of performance) Consistent with the approach used in recent years, the Committee developed objective targets for 2023 based on earnings per share, customer satisfaction ratings and service reliability. Those targets are shown below. Actual payouts for the named executive officers reflected an assessment that performance exceeded the target level of performance, resulting in a payout equal to 53.6% of the overall incentive pool versus a targeted level of 40%.
2023 Executive Compensation Determination
Incentive paid at 50% of Target at the Threshold level, 100% at Target level and 150% of Target at the Maximum level. (2) Scale of 1 to 5, with 1 being very dissatisfied and 5 being very satisfied. The survey was conducted during 2023 by an independent market research firm. (3) SAIFI (System Average Interruption Frequency Index) is an industry-recognized measure defined by the Institute of Electrical and Electronic Engineers (IEEE) as the number of outages a typical customer experiences in a year. SAIDI (System Average Interruption Duration Index) is an industry-recognized measure defined by the IEEE as the length of time a typical customer experiences a loss of service annually. The survey results exclude major events such as major storm events. (4) Total gas response time minutes divided by total gas responses. o Other Corporate Goals (30% at targeted level of performance) For 2023, the Committee and board determined that management's performance on the measures discussed under "Pay Mix - Short-Term Incentives" above will be compensated at 35% versus the target level of 30%. All named executive officers are compensated at the same percentage of target for the Other Corporate Goals category because of the interrelated nature of these items amongst the officers. We believe this encourages a team approach. In considering the decision, our Committee and board took into account the following management and Company achievements: ▪ Achieved a top position for debt credit ratings again in 2023. ▪ Raised its dividend rate for the 48th consecutive year. ▪ Advanced Energy 2030 framework and efforts to achieve carbon emissions reduction goals under Energy 2030 and Energy 2050. ➣ Continued the progress to retire the coal-fired Columbia Energy Center by mid-year 2026 and the planned transition of the Elm Road Generating Station from coal to natural gas. ➣ Reduced carbon emissions nearly 40% from 2005 levels, our baseline, by year-end 2022. ➣ Added nearly 60 MW of renewable generation capacity with the purchase of 10% of the Red Barn Wind Farm and the second phase of the Badger Hollow Solar Farm becoming operational. ➣ Announced partnership to introduce an innovative, first-of-its-kind in the United States long-duration energy storage system at the site of the Columbia Energy Center. ▪ Continued to benefit shareholders and customers with cost-containment efforts. ▪ Continued our work to invest in our people and our systems to deliver safety and reliability and to collaborate across our communities. ▪ Continued to expand and fine-tune our cybersecurity capabilities by continuing to focus on training for all employees. ▪ Ranked second in 2022 (latest available year) for the fewest number of electric outages per customer, according to results from an annual industry survey of more than 75 electric utilities. MGE has ranked in the top three utilities in the country for the fewest number of outages in each of the last 16 years. ▪ Enhanced communications with customers and developed community partnerships. ▪ Earned Green Master designation for the tenth consecutive year in 2023. ▪ Developed four new EV pilots for managed charging. ▪ Established new renewable natural gas tariff offering. Implemented Employee Resource Groups (Employee Volunteer Network and Women's Leadership) with strong initial engagement from employees. Individual Performance Goals (30% at targeted level of performance) When determining the CEO's individual performance percentage for 2023, we considered the Company's strong performance against the metrics-driven targets discussed above, such as strong earnings and continued top-decile performance in electric reliability, as well as the subjective assessment of management's overall performance against other measures identified by the board. As a result, our CEO will be compensated at 40% versus the target level of 30% for his individual performance. Similar considerations were taken into account for the remaining named executive officers, including the strong financial performance of the Company and the degree of accomplishment of individual goals within their respective functions. The remaining named executive officers will be compensated between 32% and 40% for their individual performance. • 2023 Long-Term Incentives In 2023, we issued awards under the 2021 LTI Plan that are intended to align long-term compensation incentives with shareholders' interests. Each award consists of equal amounts of restricted units and performance units: o Restricted units are time-based awards that vest 100% on December 31, 2025. o Performance units are performance-based awards whose payout depends on the achievement of specified performance and market measures over a three-year performance period ending December 31, 2025. The number of units ultimately earned will range between 0% and 200% of the performance units initially granted for which: ▪ Up to 150% is based on the achievement of average return on equity weighted based on outstanding equity during the performance period and cumulative earnings per share over that three-year period, which constitute the performance measures; and ▪ An additional 50% is based on the achievement of a total shareholder return (stock price changes and dividends over that three-year period) relative to the total shareholder return of the Edison Electric Institute (EEI) Index companies, which constitutes the market measure. The two performance measures are equally weighted and were set to be moderately difficult to achieve. Each performance measure is measured using a threshold, target and maximum level of 50%, 100% and 150%, with performance below threshold resulting in no contribution of that measure to aggregate performance measures. Our board retained limited rights to adjust the measures for circumstances beyond the control of management; however, no such adjustments have been made since the issuance of the awards. Actual targets used in our performance unit cycles are not disclosed until each cycle is completed to safeguard the confidentiality of our long-term outlook on projected performance. This policy supports our long-standing disclosure practices not to provide performance guidance. Market performance accounts for up to 50% of the award target. If the Company's relative total shareholder return compared to the EEI index companies is at or below 50%, between 50% to 75%, or at or above 75%, the numbers of units earned will be 0%, 25% and 50% of the initial units granted, respectively. The total number of performance units ultimately settled shall equal the percentage achievement of the performance measures plus the percentage achievement of the market measure, multiplied by the initial number of performance units granted. For 2023, our CEO was granted aggregate restricted and performance units equal to 70% of base salary, while the remaining named executive officers were granted aggregate restricted and performance units equal to 40% to 50% of base salary. Granted units were valued at the grant date price of a share of our stock. • 2023 Payouts under the 2021 LTI Plan Awards Granted in 2021
2023 Executive Compensation Determination
The board granted performance unit awards to participants under the 2021 LTI Plan in 2021. Payouts on those performance units were measured over a three-year period ended December 31, 2023, based upon a target cumulative Earnings Per Share over the three-year period of $7.93 and a target Return on Equity of 9.22% for the three-year period. Similar to the performance units awarded in 2023, as described above, the number of units earned was subject to adjustment, from 0% to 50%, based upon total shareholder return over the three-year period relative to the total shareholder return of the Edison Electric Institute (EEI) Index companies. Our total shareholder return for that three-year period was at the 46th percentile of the peer group, resulting in no adjustment. The cumulative three-year impact of the Company's performance against the additional performance measures, Earnings Per Share and Return on Equity, was a 50% increase in the vesting percentage of the performance units for a total vesting level of 150%. The actual payouts were determined by multiplying the number of vested performance units by the closing price of our common stock on February 28, 2024.
Post-Termination Compensation
Post-Termination Compensation The Company recognizes that, as with any public company, it is possible that a change in control of the Company may take place in the future. The Company also recognizes the threat or occurrence of a change in control can result in significant distractions of key management personnel because of the uncertainties inherent in such a situation. The Company also believes that it is essential and in the best interests of its shareholders to retain the services of its key management personnel in the event of a threat or occurrence of a change in control and to ensure their continued dedication and efforts in such event. In keeping with this belief and its objective of retaining and motivating highly talented individuals to fill key positions, the Company has entered into severance agreements with all of the named executive officers. The severance agreements guarantee the named executive officers specific payments and benefits upon termination of employment as a result of change in control of the Company or if the employee voluntarily terminates employment within a specified period following a change in control. Effective December 30, 2010, these agreements were amended to limit the payments under those agreements as well as to eliminate a provision that required the Company to "gross-up" the executive for any excise tax due as a result of the change in control payments. Additional details of the terms of the change in control agreements are provided below in the Potential Payments on Employment Termination or Change in Control section of this Proxy Statement.
2023 Summary Compensation Table
2023 Summary Compensation Table Shown below, are the elements of compensation paid or earned by our CEO, our CFO and our three most highly compensated executive officers (other than our CEO and CFO) during the past fiscal year. As described in the preceding "Executive Compensation - Compensation Discussion and Analysis," that compensation includes, among other things, base salary, shown in the "Salary" column; annual bonus awards (short-term incentives), shown in the "Bonus" column; and the stock-based awards under the 2021 LTI Plan, shown in the "Stock Awards" column. Awards under the 2021 LTI Plan are paid in a combination of stock or cash. The performance portion of awards made under 2021 LTI Plan will be valued at settlement based on performance measures for earnings per share, return on equity and relative total shareholder return.
2023 Summary Compensation Table
| 2023 Summary Compensation Table | | | | | | | | | | | | Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | Total Without Change in Pension Value* | | (1) (a) | (b) | ($) (c) | ($) (d) | ($) (2) (e) | ($) (3) (f) | ($) (g) | ($) (4) (h) | ($) (5) (i) | ($) (j) | | | Jeffrey M. Keebler Chairman, President | 2023 | 710,710 | 559,337 | 546,536 | - | - | 740,314 | 9,900 | 2,566,797 | 1,842,707 | | and Chief Executive | 2022 | 671,666 | 474,849 | 504,032 | - | - | 19,170 | 9,150 | 1,678,867 | 1,678,867 | | Officer (PEO) | 2021 | 643,333 | 455,512 | 494,528 | - | - | 1,025,955 | 8,700 | 2,628,028 | 1,622,517 | | Jared J. Bushek Vice President, | 2023 | 347,519 | 208,584 | 184,206 | - | - | 4,212 | 76,358 | 820,879 | 820,879 | | Chief Financial | 2022 | 307,787 | 161,532 | 139,492 | - | - | 4,647 | 229,761 | 843,219 | 843,219 | | Officer and Treasurer (PFO) | 2021 | 277,089 | 137,011 | 137,139 | - | - | 4,707 | 39,569 | 595,515 | 595,515 | | Lynn K. Hobbie Executive Vice | 2023 | 358,790 | 197,270 | 199,890 | - | - | 241,087 | 9,900 | 1,006,937 | 765,850 | | President Marketing | 2022 | 346,078 | 189,501 | 187,969 | - | - | - | 9,150 | 732,698 | 732,698 | | Communications | 2021 | 335,998 | 186,906 | 184,672 | - | - | 415,318 | 8,700 | 1,131,594 | 716,276 | | Cari Anne Renlund Vice President, | 2023 | 377,048 | 184,846 | 187,887 | - | - | - | 82,938 | 832,719 | 832,719 | | General Counsel | 2022 | 359,093 | 175,874 | 173,362 | - | - | - | 352,631 | 1,060,959 | 1,060,959 | | and Secretary | 2021 | 344,135 | 165,993 | 170,354 | - | - | - | 43,437 | 723,919 | 723,919 | | Tamara J. Johnson Vice President, Chief | 2023 | 303,197 | 136,531 | 134,274 | - | - | 341,678 | 4,548 | 920,228 | 589,059 | | Accounting Officer | 2022 | 288,759 | 123,748 | 123,921 | - | - | 11,153 | 4,163 | 551,744 | 551,744 | | and Controller | 2021 | 276,731 | 116,795 | 121,787 | - | - | 268,322 | 8,302 | 791,938 | 533,208 |
2023 Summary Compensation Table
* In order to show the effect that the year-over-year change in pension value had on total compensation, as determined under applicable SEC rules, we have included an additional column to show total compensation minus the change in pension value. The amounts reported in the Total Without Change in Pension Value column may differ substantially from the amounts reported in the Total column required under SEC rules and are not a substitute for total compensation. Total Without Change in Pension Value represents total compensation, as determined under applicable SEC rules, minus the change in pension value reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column. The change in pension value is subject to many external variables, such as interest rates, that are not related to Company performance. Therefore, we believe that total compensation minus the change in pension value provides helpful additional information for comparative purposes. (1) Principal Position. The table reflects the principal position held by the named executive officer as of December 31, 2023. J. Bushek served in the role of Vice President Finance, Chief Information Officer and Treasurer; and as of March 1, 2023, he was named Vice President, Chief Financial Officer and Treasurer. T. Johnson served in the role of Vice President Accounting and Controller and as of March 1, 2023, she was named Vice President, Chief Accounting Officer and Controller. (2) Stock Awards. The amounts in this column reflect the grant date fair value of the stock-based awards made to the named executive officers under the 2021 LTI Plan. Under the 2021 LTI Plan, an award was made to each named executive officer in 2023, 2022 and 2021. Terms of the 2021 LTI Plan are further described above under "Compensation/Benefits Structure - Pay Mix - Long-Term Incentives." The determination of the grant date fair value of the 2023 awards is described in the "2023 Grants of Plan-Based Awards Table." The vesting and payment options applicable to awards under the 2021 LTI Plan are described in the Outstanding Equity Awards at December 31, 2023, table. (3) Option Awards. During 2023, 2022 and 2021, we did not have any stock option plans or grant any stock options. Change in Pension Value and Nonqualified Deferred Compensation Earnings. The amounts shown in these entries reflect the change in actuarial present values of a named executive officer's respective accumulated benefits under our Pension Plan and income continuation agreements and the above-market earnings on nonqualified deferred compensation. We are required to calculate the change in pension value by using the same discount rate assumption used for financial reporting purposes. The discount rate methodology calculates the interest and service cost components of each plan's expense in the future. This results in an effective discount rate for each named executive officer for the Pension Plan and income continuation agreement that is based on the participant-specific cash flows as applied to the December 31, 2023, Empower Above Mean curve. In 2023, the discount rate by participant ranges from 5.10% to 5.12% for both the Pension Plan and income continuation agreements; in 2022, the range was higher at 5.46% to 5.53%. The change in the present value of pension benefits was greater than the prior year for several reasons, with the main reasons being the decrease in the discount rate and increase in average earnings. The change in pension values represents the present values of future retirement benefits and does not represent cash transactions made to the named executive officers during 2023 or in prior years. The change in the actuarial present value of accumulated pension benefits in 2023 are $724,090 for J. Keebler, $241,087 for L. Hobbie and $331,169 for T. Johnson. Above-market earnings on nonqualified deferred compensation in 2023 are $16,224 for J. Keebler, $4,212 for J. Bushek and $10,509 for T. Johnson. There is no amount for J. Bushek and C. A. Renlund as they were hired subsequent to December 31, 2006, when the Pension Plan was replaced by a 401(k) retirement plan for employees hired after that date. J. Bushek and C. A. Renlund were covered prior to January 1, 2023, under a separate nonqualified defined contribution retirement agreement reflected in the "All Other Compensation" column and described in the 2023 Nonqualified Deferred Compensation Table. All Other Compensation. Amounts shown for all other compensation for each named executive officer include Company contributions to a 401(k) defined contribution plan. 401(k) contribution amounts are $9,900 for J. Keebler and L. Hobbie; $29,700 for J. Bushek and C. A. Renlund; and $4,548 for T. Johnson. In addition, employer contributions to the 2023 Deferred Compensation Supplemental Executive Plan (2023 DCSERP) are included for J. Bushek and C.A. Renlund. J. Bushek had a supplemental contribution of $30,543 and a restoration contribution of $16,115, and C.A. Renlund had a supplemental contribution of $33,175 and a restoration contribution of $20,063. Contributions under the 2023 DCSERP are unfunded credits.
2023 Summary Compensation Table
| 2023 Grants of Plan-Based Awards Table | | | | | | | | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | | | | Name | Grant Date | Threshold | Target 100% | Maximum 200% | All Other Stock Awards: Number of Shares of Stock or Units | Grant Date Fair Value of Stock and Option Awards | | (a) | (b) | (#) (f) | (#) (g) | (#) (h) | (#) (i) | ($) (l) | | Jeffrey M. Keebler (PEO) | 03/01/2023(1) | 1,708 | 3,415 | 6,830 | | 307,657 | | | 03/01/2023(2) | | | | 3,415 | 238,879 | | Jared J. Bushek (PFO) | 03/01/2023(1) | 576 | 1,151 | 2,302 | | 103,694 | | | 03/01/2023(2) | | | | 1,151 | 80,512 | | Lynn K. Hobbie | 03/01/2023(1) | 625 | 1,249 | 2,498 | | 112,522 | | | 03/01/2023(2) | | | | 1,249 | 87,368 | | Cari Anne Renlund | 03/01/2023(1) | 587 | 1,174 | 2,348 | | 105,766 | | | 03/01/2023(2) | | | | 1,174 | 82,121 | | Tamara J. Johnson | 03/01/2023(1) | 420 | 839 | 1,678 | | 75,586 | | | 03/01/2023(2) | | | | 839 | 58,688 |
2023 Summary Compensation Table
Identification letters in the above columns conform to the prescribed disclosure format. Columns without entries have been eliminated to improve readability of the table. (1) The amounts show the threshold, target and maximum payouts for grants of performance units that were awarded in 2023 to the named executive officers under our 2021 LTI Plan. Performance units are dependent on the level of achievement over a three-year period of the performance conditions described more fully in the Compensation Discussion and Analysis section, with each individual having the opportunity to earn from 0% to 200% of the target performance share award based on the level of achievement. The grant date fair value was determined by a calculation in accordance with FASB ASC 718 and is $90.09. (2) The amounts shown represent the number of time-based restricted stock units that were awarded in 2023 to the named executive officers under our 2021 LTI Plan as described more fully below. For the restricted stock units, the grant date fair value was calculated in accordance with FASB ASC 718 and is the closing price of our common stock on March 1, 2023, and is $69.95. We have a long-term incentive plan, which we refer to as the 2021 LTI Plan, under which certain key executives of the Company may be awarded performance units, whose value is tied to the achievement of performance conditions described more fully under the 2023 Long-Term Incentives section, and restricted stock units, whose value is tied to changes in the Company's share price and any dividend payments made by the Company during the vesting period applicable to the awarded units. Performance units are settled by the Company in cash, stock or a combination of cash and stock. Restricted stock units are settled by the Company in stock. The awards are accounted for in accordance with FASB ASC 718 as stock-based awards. That accounting also determines the presentation under applicable SEC disclosure rules, including the tables presented above and below. The 2023 awards under the 2021 LTI Plan vest on a three-year cliff vesting period. In the event of a bona fide retirement, not followed by work for a competitor, the executive will receive full vesting credit for each outstanding award. The awards vest 100% on the occurrence of a change in control. See the Potential Payments on Employment Termination or Change in Control section below. For 2023, the Company made awards under the 2021 LTI Plan equal to 70% of base salary for the CEO and between 40% to 50% of base salary for each other named executive officer. Award values are based on the Company's share price on the date of grant plus dividend equivalents to be received over the three-year term of the award. Actual value of units upon settlement may increase or decrease from the targeted values shown in the table based upon changes in the Company's share price and any changes in the actual dividends declared over the three-year term of the awards.
2023 Summary Compensation Table
| Outstanding Equity Awards at December 31, 2023 | | | | | | | | | Stock Awards | | | | | Name | Grant Year | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | | (a) | | (#) (1) (2) (g) | ($) (4) (h) | (#) (2) (3) (i) | ($) (3) (4) (j) | | Jeffrey M. Keebler (PEO) | 2022 | 3,140 | 242,659 | 4,710 | 363,989 | | | 2023 | 3,415 | 264,321 | 5,123 | 396,520 | | Jared J. Bushek (PFO) | 2022 | 869 | 67,156 | 1,304 | 100,773 | | | 2023 | 1,151 | 89,087 | 1,727 | 133,670 | | Lynn K. Hobbie | 2022 | - | - | - | - | | | 2023 | - | - | - | - | | Cari Anne Renlund | 2022 | 1,080 | 83,462 | 1,620 | 125,194 | | | 2023 | 1,174 | 90,868 | 1,761 | 136,301 | | Tamara J. Johnson | 2022 | 772 | 59,660 | 1,158 | 89,490 | | | 2023 | 839 | 64,939 | 1,259 | 97,447 |
2023 Summary Compensation Table
Identification letters in the above columns conform to the prescribed disclosure format. Columns without entries have been eliminated to improve readability of the table. (1) This column reflects outstanding time-based unit awards made under our 2021 LTI Plan, which will be issued in stock. Issuance of stock under these awards are subject to the passage of time. At December 31, 2023, each named executive officer had two awards currently outstanding under the 2021 LTI Plan and vest at the end of the three-year performance period ending December 31, 2024, and December 31, 2025. (2) Awards under the 2021 LTI Plan provide for continued vesting in the event of a bona fide retirement by satisfying one of the following conditions: on or after age 65, on or after age 60 and has completed 10 years of service as an employee, or on or after age 55 and has completed 10 years as an officer or approval by the board. Based on age and years of service as an MGE officer, L. Hobbie qualified for such continued vesting. Therefore, as of December 31, 2023, all outstanding awards for L. Hobbie are deemed vested for purposes of this table. (3) This column reflects outstanding performance unit awards made under our 2021 LTI Plan, which will be settled in cash, stock or a combination of cash and stock as elected by the officer at the time of 100% vesting of the award. As described in the Compensation Discussion and Analysis section, payouts under these awards are subject to the achievement of specified performance metrics, and these awards fully vest at the end of a three-year period. The values in the table assume maximum level performance for performance units based on earnings per share and return on equity and target level performance for performance units based on the Company's relative total shareholder return. The market value shown for the units composing each of the awards is based on the closing price of our common stock on December 31, 2023, plus the actual and projected dividends. The projected dividends are based on the undiscounted value of the dividends to be earned during the remaining term of the award based on the dividend rate of $1.71 per share as of December 31, 2023.
2023 Summary Compensation Table
| 2023 Option Exercises and Stock Vested | | | | | | Stock Awards | | | | Name | Long-term Equity Awards | Number of Shares Acquired on Vesting | Value Realized on Vesting | | (a) | (1) | (#) (2) (d) | ($) (e) | | Jeffrey M. Keebler (PEO) | Performance Units | 5,025 | 387,352(3) | | | Time-Based Units | 4,319 | 336,556(3) | | Jared J. Bushek (PFO) | Performance Units | 1,394 | 107,456(3) | | | Time-Based Units | 1,088 | 84,453(3) | | Lynn K. Hobbie | Performance Units | 1,249 | 123,126(4) | | | Time-Based Units | 1,249 | 87,368(4) | | Cari Anne Renlund | Performance Units | 1,731 | 133,434(3) | | | Time-Based Units | 1,435 | 111,694(3) | | Tamara J. Johnson | Performance Units | 1,238 | 95,431(3) | | | Time-Based Units | 981 | 76,242(3) |
2023 Summary Compensation Table
Identification letters in the above columns conform to the prescribed disclosure format. Columns without entries have been eliminated to improve readability of the table. Time-based units include all units awarded under our 2006 Performance Unit Plan and all time-based restricted stock awards under our 2021 LTI Plan. Performance units include performance units awarded under our 2021 LTI Plan. (2) This table reflects awards under our Incentive Plans that vested during 2023 and are paid in cash upon the conclusion of a five-year performance period in the case of our 2006 Performance Unit Plan; or settled in stock, cash or a combination of stock or cash upon conclusion of a three-year performance period in the case of our 2021 LTI Plan. See Note (2) to the Outstanding Equity Awards at December 31, 2023, table for information regarding vesting for retirement-eligible employees. For the purposes of this table, the awards granted to L. Hobbie are shown to have vested upon grant due to retirement eligibility. (3) Reflects the dollars vested during 2023 under the Incentive Plans. For the time-based units granted under the 2006 Performance Unit Plan in 2019 and the 2021 LTI Plan in 2021, the amounts were calculated by multiplying the number of units shown in Column (d) by the sum of the market price of our stock on the vesting date for those units, plus dividends at the rate in effect on the vesting date for the five-year period for awards under the 2006 Performance Unit Plan and three-year period for awards under the 2021 LTI Plan. (4) Reflects the dollars vested during 2023 under the 2021 LTI Plan. For the time-based restricted stock awards granted under the 2021 LTI Plan, the amounts were calculated by multiplying the number of units shown in Column (d) by the market price of our stock at the close of the grant date of March 1, 2023, for those units. For the performance units granted under the 2021 LTI Plan, the amounts were calculated by multiplying the number of units by the fair market value, calculated in accordance with FASB ASC 718, and is $98.58.
2023 Summary Compensation Table
| 2023 Pension Benefits Table | | | | | | Name | Plan Name | Number of Years of Credited Service | Present Value of Accumulated Benefit | Payments during 2023 | | (a) | (b) | (#) (c) | ($) (d) | (e) | | Jeffrey M. Keebler | Retirement Plan | 29 | 1,011,842 | - | | | Income Continuation Agreement | 29 | 2,940,426 | - | | Jared J. Bushek* | - | - | - | - | | | - | - | - | - | | Lynn K. Hobbie | Retirement Plan | 32 | 1,646,974 | - | | | Income Continuation Agreement | 32 | 3,202,920 | - | | Cari Anne Renlund* | - | - | - | - | | | - | - | - | - | | Tamara J. Johnson | Retirement Plan | 29 | 1,395,416 | - | | | Income Continuation Agreement | 29 | 806,260 | - |
2023 Summary Compensation Table
* J. Bushek and C. A. Renlund were hired subsequent to December 31, 2006, when the Retirement Plan was replaced by a 401(k) retirement plan for employees hired after that date. The Madison Gas and Electric Company Retirement Plan (Retirement Plan) is a funded, tax-qualified, noncontributory defined benefit pension plan closed to new entrants hired after December 31, 2006. Benefits are payable at retirement in the form of an annuity. Earnings, for purposes of calculation of benefits under the Retirement Plan, include salary and bonus but exclude payments from awards made under the Incentive Plans and pay deferred under nonqualified deferred compensation agreements. The amount of annual earnings that may be considered in calculating benefits under the Retirement Plan is limited by law. For 2023, the annual limitation is $330,000. In 2024, it increased to $345,000. Benefits under the Retirement Plan are calculated as an annuity based upon the employee's years of service to a maximum of 30 and the employee's highest average earnings for the 60 consecutive calendar month period during the 120 consecutive calendar month period preceding the employee's retirement multiplied by 1.4% for each year of service. The Retirement Plan currently limits pensions paid under the Retirement Plan to an annual maximum in 2023 of $265,000 payable at age 65 in accordance with Internal Revenue Service requirements. Contributions to the Retirement Plan are made entirely by MGE and paid into a trust fund from which benefits of participants will be paid. Eligibility for early retirement under the Retirement Plan is age 55 and five years of service. Benefits in the form of an annuity are available on a reduced basis at age 55 and an unreduced basis at age 65 or at age 62 with 15 years of service. L. Hobbie qualifies for unreduced benefits, T. Johnson qualifies for reduced benefits and J. Keebler is not yet eligible for retirement. J. Bushek and C. A. Renlund are not eligible to participate in the Retirement Plan. Each named executive officer, except J. Bushek and C. A. Renlund, has also entered into an income continuation agreement to supplement benefits from the Retirement Plan. The income continuation agreements are unfunded, and benefits are paid from the Company's general assets. Benefits are payable upon the six-month anniversary of the employee's retirement in the form of a 10‑year and life certain annuity. Earnings, for purposes of the income continuation agreements, include salary, bonus and nonqualified deferred compensation but exclude payments from awards made under the Incentive Plans. Benefits under the income continuation agreement for J. Keebler range from 41% at age 52 to 65% at age 65 of the employee's highest average earnings for the 60 consecutive calendar month period during the 120 consecutive calendar month period preceding the employee's separation of service less the benefit from the Retirement Plan, if any. Benefits under the income continuation agreement for L. Hobbie are 70% at age 65 of the employee's highest average earnings for the 60 consecutive calendar month period during the 120 consecutive calendar month period preceding the employee's retirement less the benefit from the Retirement Plan. Benefits under the income continuation agreements for T. Johnson range from 50% at age 60 to 55% at age 65 of the employee's highest average earnings for the 60 consecutive calendar month period during the 120 consecutive calendar month period preceding the employee's retirement less the benefit from the Retirement Plan. In all agreements, the designated percentage is based on the employee's age at retirement. If J. Keebler were to separate from service prior to age 55, the designated percentage is based on his age at separation of service. A grantor trust has been established through which the Company pays benefits. In the event of a potential change in control or an actual change in control, we are required to fund the trust with cash or marketable securities in an amount equal to 100% of the present value of the aggregate amounts required to pay beneficiaries under all income continuation and nonqualified deferred compensation agreements plus an amount to cover the expense of maintaining the trust. Amounts shown in the 2023 Pension Benefits Table above use a discount rate by participant which ranges from 5.10% to 5.12% for both the Pension Plan and income continuation agreements. For all named executive officers, benefits are calculated at the earliest unreduced retirement age of 62 for the Retirement Plan and age 65 for the income continuation agreements. All benefits are calculated using Pri-2012/MP-2021 combined white collar mortality tables with fully generational scale MP‑2021. No preretirement decrement is assumed. Benefits are payable in the form of a life annuity for the Retirement Plan and a 10-year and life certain annuity for the income continuation agreements. See Footnote 11.c. of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023, for additional information regarding the assumptions used to determine benefit obligations.
2023 Summary Compensation Table
| 2023 Nonqualified Deferred Compensation Table | | | | | | | Name | Executive Contributions in 2023 | Registrant Contributions in 2023 | Aggregate Earnings in 2023 | Aggregate Withdrawals/ Distributions | Aggregate Balance as of 12/31/23 | | (a) | ($) (1) (2) (b) | ($) (2) (3) (c) | ($) (3) (d) | ($) (e) | ($) (4) (f) | | Jeffrey M. Keebler (PEO) | | | | | | | Deferred Compensation Plan | - | - | 50,083 | - | 745,415 | | 2023 Deferred Compensation Supplemental | 127,928 | - | 4,880 | - | 132,808 | | Executive Retirement Plan | | | | | | | Jared J. Bushek (PFO) | | | | | | | Deferred Compensation Plan | - | - | 13,004 | - | 193,548 | | 2023 Deferred Compensation Supplemental | 17,376 | 46,658 | 23,187 | - | 289,532 | | Executive Retirement Plan | | | | | | | Lynn K. Hobbie | | | | | | | Deferred Compensation Plan | - | - | - | - | - | | Cari Anne Renlund | | | | | | | 2023 Deferred Compensation Supplemental | - | 53,238 | 51,290 | - | 429,709 | | Executive Retirement Plan | | | | | | | Tamara J. Johnson | | | | | | | Deferred Compensation Plan | - | - | 32,441 | - | 482,836 | | 2023 Deferred Compensation Supplemental | 151,598 | - | 3,570 | - | 155,168 | | Executive Retirement Plan | | | | | |
2023 Summary Compensation Table
Amounts in this column are included in the "Salary" column in the 2023 Summary Compensation Table. (2) For J. Keebler and T. Johnson, amounts for the 2023 Deferred Compensation Supplemental Executive Retirement Plan (2023 DCSERP) represent elective employee contributions and earnings; for J. Bushek, amounts represent elective employee contributions and earnings and Company contributions and earnings; and for C. A. Renlund, amounts represent Company contributions and earnings. (3) For J. Keebler, J. Bushek and T. Johnson, other than above-market earnings, amounts in this column for the Deferred Compensation Plan are not included in the 2023 Summary Compensation Table. For J. Bushek and C. A. Renlund, registrant contributions for the 2023 DCSERP are included under All Other Compensation in the 2023 Summary Compensation Table. (4) For J. Keebler, J. Bushek and T. Johnson, employee salary deferrals and above-market earnings for prior years have been previously reported in the Summary Compensation Table for those years. The aggregate balances for the prior year for the legacy Deferred Compensation Plan were $695,332 for J. Keebler; $180,544 for J. Bushek, and $450,395 for T. Johnson. The aggregate balance for the prior year for the 2023 DCSERP was $202,311 for J. Bushek and $325,181 for C. A. Renlund. The 2023 Nonqualified Deferred Compensation Table presents amounts deferred under a legacy Deferred Compensation Plan for employee contributions made prior to 2023 and employee contributions and Company contributions under the 2023 Deferred Compensation Supplemental Executive Retirement Plan.
Potential Payments on Employment Termination or Change in Control
Potential Payments on Employment Termination or Change in Control For purposes of potential payments on employment termination or change in control, each of our named executive officers is a participant in the Madison Gas and Electric Company General Severance Plan (Severance Plan) that covers our salaried employees. In addition, MGE has entered into individual severance agreements (Severance Agreements) with each of our named executive officers that provide for payments in connection with the officer's termination of employment in the event of a change in control.
Employment Terminations in Connection With a Change in Control
Employment Terminations in Connection With a Change in Control For employment terminations in connection with a change in control, our benefits arrangements provide enhancements, which are described in the remainder of this section. Benefits receivable under our Retirement Plan and employee individual deferred compensation agreements are not separately valued in this section as they are described above under 2023 Pension Benefits Table and 2023 Nonqualified Deferred Compensation Table and are not affected by a change in control. To the extent not vested, registrant (employer) contributions under the 2023 DCSERP described in the 2023 Nonqualified Deferred Compensation Table are fully vested in the event of a change in control; however, the 2023 registrant contributions shown in the 2023 Nonqualified Deferred Compensation Table were fully vested when made. Under the form of Severance Agreements, for all new executive officers named in 2012 or later, such as J. Keebler, J. Bushek, C. A. Renlund and T. Johnson, they are entitled to a severance payment following a "change in control" if, within 24 months after the change in control, the officer's employment is terminated by: (i) MGE, other than for cause, or (ii) the employee for "good reason." The definition of "good reason" in these agreements is a material diminution in the employee's base compensation, authority, duties or responsibilities, authority or duties of the employee's supervisor, or a material diminution in the budget over which the employee retains authority. The employee must notify the Company within 90 days of the occurrence of the good reason condition, and the Company must be provided at least 30 days to remedy the condition. Currently, L. Hobbie is entitled to a severance payment following a "change in control" if, within 24 months after the change in control, employment is terminated by: (i) MGE, other than for cause; (ii) the employee for "good reason"; or (iii) the employee for any reason during the 30-day period commencing one year after the date of the change in control. "Good reason" is defined to include a material reduction in the employee's position, duties or responsibilities; any reduction in compensation or benefits; or failure to provide benefits comparable to peer employees and a required relocation of the employee from Dane County, Wisconsin. The employee's good faith determination of good reason is considered conclusive. Under all agreements, the employee must remain with the Company voluntarily until an attempted change in control terminates or until 90 days following a change in control. The employee agrees to keep confidential trade secrets and other nonpublic information concerning MGE. "Change in control" is defined to include: • The acquisition by any person, subject to certain exceptions, of beneficial ownership of 20% or more of our common stock; • A change in the majority of our Board of Directors; • Certain mergers or similar transactions involving MGE's assets where, among other conditions, the current shareholders do not constitute at least 60% of the shareholders of the resulting or acquiring entity; or • A liquidation or dissolution of MGE. Severance payments to L. Hobbie will be equal to any unpaid salary and accrued vacation pay and three times the employee's annual base salary plus three times the highest bonus paid during any of the five years immediately preceding a change in control, reduced to avoid triggering excise tax under Section 280G of the Internal Revenue Code. Severance payments to J. Keebler, J. Bushek, C. A. Renlund and T. Johnson will be equal to any unpaid salary and accrued vacation pay and two times the annual base salary plus two times the highest bonus paid during any of the five years preceding a change in control, reduced to avoid triggering excise tax under Section 280G of the Internal Revenue Code. The agreement with L. Hobbie was entered into in 1994. J. Keebler's, J. Bushek's, C. A. Renlund's and T. Johnson's agreements were entered into in connection with being named an officer of the Company in January 2012 for J. Keebler, July 2015 for J. Bushek and T. Johnson, and November 2015 for C. A. Renlund. Severance payments are payable upon the six-month anniversary of the date of separation. Subject to Section 280G limitations referenced above, in addition to severance, MGE is obligated to pay any legal expenses incurred by the employee for disputes in which the employee prevails. Employees are not obligated to seek other employment or otherwise take action to mitigate the amounts payable by MGE. Over age 67, benefits are subject to reduction (eventually to zero); no benefits are payable beyond age 70 or if the employee dies. The table below was prepared to illustrate the benefits payable under the Severance Agreements; Incentive Plans for J. Keebler, J. Bushek, C. A. Renlund and T. Johnson; and nonqualified income continuation agreement for T. Johnson as though a change in control occurred and the named executive officers' employment was terminated, on December 31, 2023. However, no change in control of MGE has actually occurred, and no executive has received any of the severance indicated. If a change in control did occur in the future, the actual payments to the named executive officers would depend upon the circumstances in effect at the time, including relative salaries, bonuses and ages.
Employment Terminations in Connection With a Change in Control
| Executive Benefits Upon Termination | Jeffrey M. Keebler | Jared J. Bushek | Lynn K. Hobbie | Cari Anne Renlund | Tamara J. Johnson | | | ($) | ($) | ($) | ($) | ($) | | Severance: (1) | | | | | | | Salary | 1,487,771 | 558,428 | 1,032,803 | 869,099 | 453,633 | | Bonus | 1,148,107 | 323,202 | 560,576 | 419,309 | 201,030 | | Pro Rata Bonus - Year of Termination (2) | 559,337 | 208,584 | 197,270 | 184,846 | 136,531 | | Incentive Plans - Unvested (3) | 1,267,489 | 390,686 | - | 435,825 | 311,536 | | Income Continuation Agreement (4) | - | - | - | - | 1,199,002 | | Total | 4,462,704 | 1,480,900 | 1,790,649 | 1,909,079 | 2,301,732 |
Employment Terminations in Connection With a Change in Control
(1) Value reflects two or three times the amount of the executive's base salary plus the highest paid or payable bonus in the past five years, reduced to avoid triggering excise tax under Section 280G of the Internal Revenue Code. (2) Executives are entitled to a pro-rated bonus, depending on the time of the year in which the termination occurs, based upon the highest bonus paid or payable in the past three fiscal years immediately preceding the year in which a change in control occurs. (3) Unvested values of Incentive Plan awards are shown only for executives who are not deemed eligible for retirement. As explained under the Outstanding Equity Awards at December 31, 2023 table, awards under the Incentive Plans will continue to vest if the executive is eligible to retire under the terms of the Incentive Plans, which is assumed in the event of a change in control. Represents present value of accelerated vesting from 0% to 100% that would occur under T. Johnson's nonqualified income continuation agreement if a change in control had occurred and her employment had been terminated.
Pay Versus Performance
Pay Versus Performance
Pay Versus Performance
| Pay Versus Performance | | | | | | | | | | | | | | | Value of Initial Fixed $100 Investment Based on: | | | Company Selected Measure | | Year (a) | Summary Compensation Table Total for PEO ($)(1) (b) | Compensation Actually Paid to PEO ($)(2)(3) (c) | Average Summary Compensation Table Total for Non-PEO NEOs ($)(4) (d) | Average Compensation Actually Paid to Non-PEO NEOs ($)(2)(4)(5) (e) | Total Shareholder Return ($) (f) | Peer Group Total Shareholder Return ($)(6) (g) | Net Income ($) (h) | Earnings Per Share - Basic and Diluted ($) (i) | | 2023 | 2,566,797 | 2,206,732 | 895,191 | 838,196 | 100 | 107 | 117,699,000 | 3.25 | | 2022 | 1,678,867 | 1,590,003 | 797,155 | 731,318 | 95 | 117 | 110,952,000 | 3.07 | | 2021 | 2,628,028 | 2,189,827 | 863,501 | 766,775 | 109 | 116 | 105,761,000 | 2.92 | | 2020 | 2,711,113 | 1,522,389 | 1,589,557 | 709,072 | 91 | 99 | 92,418,000 | 2.60 |
Pay Versus Performance
Reflects amounts reported in the "Summary Compensation Table" for J. Keebler (PEO). (2) Compensation Actually Paid (CAP) includes adjustments in accordance with the SEC methodology to the total executive compensation reported from the summary compensation table. The adjustments include a deduction for actuarial present value of accumulated benefit of all defined benefit and actuarial pension plans reported in the summary compensation table; addition of actuarially determined service costs for services rendered by the executive during the covered fiscal period, deduction of grant date fair value of equity award amounts reported in the summary compensation table; and addition or subtraction of the change in fair value of the equity awards unvested and vested during the fiscal period. Compensation "actually paid" is prescribed by the rules of the disclosure and does not represent the compensation actually received by the table participants on a cash basis for any time period shown above. (3) To calculate CAP for the PEO, the following adjustments were made to Summary Compensation Table total compensation, calculated in accordance with the SEC methodology for determining CAP for 2023:
Pay Versus Performance
| Year | Deduction for Actuarial Pension Present Value | Addition for Service Cost for Pension | Deduction of Grant Date Fair Value of Awards Granted in FY | Addition of Fair Value of Equity Awards Granted in FY | Change in Fair Value of Prior Years’ Unvested Equity Awards | Change in Fair Value of Prior Years’ Awards Vested in FY | Total Adjustment to CAP | | 2023 | (724,090) | 130,777 | (546,536) | 600,699 | 30,992 | 148,093 | (360,065) |
Pay Versus Performance
(4) For fiscal years 2020 through 2023, J. Bushek, L. Hobbie, C.A. Renlund and T. Johnson are included as other named executive officers. For fiscal year 2021, D. Peterson; and for fiscal year 2020, J. Newman were also included as other named executive officers. (5) To calculate CAP for the average named executive officers, the following average adjustments were made to Summary Compensation Table total compensation, calculated in accordance with the SEC methodology for determining CAP for 2023:
Pay Versus Performance
| Year | Deduction for Actuarial Pension Present Value | Addition for Service Cost for Pension | Deduction of Grant Date Fair Value of Awards Granted in FY | Addition of Fair Value of Equity Awards Granted in FY | Change in Fair Value of Prior Years’ Unvested Equity Awards | Change in Fair Value of Prior Years’ Awards Vested in FY | Total Adjustment to CAP | | 2023 | (143,064) | 13,751 | (176,564) | 194,062 | 9,604 | 45,216 | (56,995) |
Pay Versus Performance
(6) Peer Group Total Shareholder Return of the Edison Electric Institute (EEI) Index companies. The Human Resources and Compensation Committee did not consider the required "Pay versus Performance" disclosures in its decision-making process. The chart below illustrates the relationship of executive compensation actually paid and MGE Energy total shareholder return (TSR). Also included is the relationship of MGE Energy TSR and peer group TSR. The chart below illustrates the relationship of executive compensation actually paid and Earnings Per Share (EPS). The chart below illustrates the relationship of executive compensation actually paid and Net Income. The following table identifies the financial and non-financial most important performance measures used by our Human Resources and Compensation Committee to link compensation actually paid to our named executive officers to Company performance. See further discussion in the Compensation Discussion and Analysis for description of metrics and impact to executive compensation
Pay Versus Performance
| Performance Measures | | Earnings Per Share | | Return on Equity | | Relative Total Shareholder Return | | Customer Satisfaction Rating | | Service Reliability |
Pay Versus Performance
| Voting Information |