DEF 14A of Nisource Inc.
Filed Apr 1, 2024 · FY20230001140361-24-016755
NOTICE OF ANNUAL MEETING
| ■ | To consider a stockholder proposal requesting that our Board of Directors amend bylaws requiring stockholder approval of director compensation; and |
are available at https://www.nisource.com/filings
| ASSESSMENT OF RISK | 53 | | 2023 EXECUTIVE COMPENSATION | 54 | | 2023 Summary Compensation Table | 54 | | 2023 Grants of Plan-Based Awards | 56 | | Outstanding Equity Awards at 2023 Fiscal Year-End | 57 | | 2023 Option Exercises and Stock Vested | 59 | | 2023 Non-Qualified Deferred Compensation | 59 | | Potential Payments upon Termination of Employment or a Change-in-Control of the Company | 61 | | Pay Ratio | 64 | | 2023 PAY VERSUS PERFORMANCE | 65 | | EQUITY COMPENSATION PLAN INFORMATION | 72 | | PROPOSAL 2 – ADVISORY APPROVAL OF NEO COMPENSATION | 73 | | PROPOSAL 3 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 74 | | PROPOSAL 4 – APPROVAL OF OUR AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN (THE “PLAN”) TO INCREASE THE NUMBER OF SHARES AVAILABLE UNDER THE PLAN | 75 | | PROPOSAL 5 – STOCKHOLDER PROPOSAL REQUESTING THAT OUR BOARD AMEND BYLAWS REQUIRING STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION | 78 | | AUDIT COMMITTEE REPORT | 81 | | INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES | 83 | | DELINQUENT SECTION 16(A) REPORTS | 83 | | STOCKHOLDER PROPOSALS AND NOMINATIONS FOR 2025 ANNUAL MEETING | 83 | | FORM 10-K, ANNUAL REPORT AND FINANCIAL STATEMENTS | 84 | | AVAILABILITY OF PROXY MATERIALS | 84 | | MULTIPLE STOCKHOLDERS SHARING THE SAME ADDRESS — “HOUSEHOLDING” | 84 | | OTHER BUSINESS | 85 | | Appendix A | A-1 | | Appendix B | B-1 |
EXECUTIVE COMPENSATION HIGHLIGHTS
| | We DO Have This Practice | | We Do NOT Have This Practice | | ✔ | Incentive award metrics that are tied to key company performance measures | ✘ | Repricing of options without stockholder approval | | ✔ | Share ownership guidelines applicable to executive officers and independent directors | ✘ | Hedging or pledging transactions or short sales by executive officers or directors | | ✔ | Compensation recoupment policies | ✘ | Tax gross ups for Named Executive Officers | | ✔ | Limited perquisites | ✘ | Automatic single-trigger equity vesting upon a change-in-control | | ✔ | Prohibition against pledging unearned shares in our long-term incentive plan | ✘ | Excise tax gross-ups under change-in-control agreements | | ✔ | Double-trigger severance benefits upon a change-in-control | ✘ | Excessive pension benefits or defined benefit supplemental executive retirement plan | | ✔ | One-year minimum vesting for equity awards | ✘ | Excessive use of non-performance-based compensation | | ✔ | Significant portions of the executive compensation opportunity that are variable and entirely contingent on performance against pre-established Company and individual performance goals | ✘ | Excessive severance benefits | | ✔ | Independent compensation consultant | | | | ✔ | Annual Say-on-Pay vote by stockholders | | |
Corporate Website: www.nisource.com
| ■ | “AGAINST” the stockholder proposal requesting that our Board amend bylaws requiring stockholder approval of director compensation. |
Nominee Demographics, Skills and Biographies
Nominee Demographics, Skills and Biographies Our director nominees are diverse and possess the necessary breadth and depth of skills and experience to oversee our business operations and long-term strategy. The following tables and biographies identify the balance of experience, skills and qualifications that the director nominees bring to the Board. The fact that a particular skill or qualification is not designated as to one or more nominees does not mean that those nominees do not also possess the specific experience and qualification. * Percentages shown in this table represent the portion of the Board with the indicated skill or experience. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES LISTED BELOW.
Nominee Demographics, Skills and Biographies
| PETER A. ALTABEF | | | Age: 64 Director Since: 2017 Standing Board Committees: ■ Finance Committee (Chair*) ■ Environmental, Social, Nominating and Governance Committee ■ Executive Committee* *Until March 19, 2024 | Executive Experience: Mr. Altabef currently serves as Chair and CEO of Unisys Corporation, a global information technology company, a position he has held since January 2015 (becoming Chair in April 2018). He also served as President from January 2015 through March 2020 and from November 2021 to May 2022. Prior to his current role, he served as president and CEO of MICROS Systems, Inc., a provider of integrated software and hardware solutions to the hospitality and retail industries, from 2013 to 2014, when it was acquired by Oracle Corporation. Before that, he served as president and CEO of Perot Systems Corporation from 2004 to 2009, when it was acquired by Dell Inc. Following that transaction, Mr. Altabef served as president of Dell Services, the information technology services and business process solutions unit of Dell Inc., until his departure in 2011. Outside Board and Other Experience: Mr. Altabef is Chair of the board of directors of Unisys Corporation. He is also a member of the President’s National Security Telecommunications Advisory Committee (NSTAC), a trustee of the Committee for Economic Development (CED), a member of the advisory board of Merit Energy Company, LLC and of the board of directors of Petrus Trust Company, LTA. He has previously served as a senior advisor to 2M Companies, Inc., in 2012, and as a director of MICROS Systems, Perot Systems Corporation and Belo Corporation. He is also active in community service activities, having served on the boards and committees of several cultural, medical, educational and charitable organizations and events. Skills and Qualifications: Mr. Altabef has experience leading large organizations as CEO and a strong background in strategic planning, financial reporting, risk management, business operations and corporate governance. He also has more than 25 years of senior leadership experience at some of the world’s leading information technology companies. As a result, he has a deep understanding of the cybersecurity issues facing businesses today. His overall leadership experience and his cybersecurity background provide the Board with valuable perspective and insight into significant issues that we face. |
Nominee Demographics, Skills and Biographies
| SONDRA L. BARBOUR | | | Age: 61 Director Since: 2022 Standing Board Committees: ■ Audit Committee ■ Environmental, Social, Nominating and Governance Committee | Executive Experience: Ms. Barbour retired as Executive Vice President, Information Systems and Global Solutions, of Lockheed Martin Corporation (“Lockheed Martin”) in 2016 and served in a transition role at Leidos Holdings until her retirement in 2017. Ms. Barbour joined Lockheed Martin in 1986 and served in various leadership capacities and has extensive technology experience, notably in the design and development of large-scale information systems. From 2008 to 2013, Ms. Barbour served as Senior Vice President, Enterprise Business Services and Chief Information Officer, heading all of Lockheed Martin’s internal information technology operations, including protecting the company’s infrastructure and information from cyber threats. Prior to that role, Ms. Barbour served as Vice President, Corporate Shared Services and Vice President, Corporate Internal Audit providing oversight of supply chain activities, internal controls, and risk management. Outside Board and Other Experience: Ms. Barbour serves as a director of AGCO Corporation, where she chairs the Audit Committee, and is also a member of the Finance, Talent & Compensation and Executive Committees. Ms. Barbour previously served as a director for each of 3M Company and Perspecta Inc. Skills and Qualifications: Ms. Barbour’s significant experience with information technology systems and cybersecurity is valuable in helping steer our development of technology and management of cyber risks. Ms. Barbour brings 30 years of leadership experience at Lockheed Martin where she oversaw complex information technology systems of a 110,000+ employee business. She brings significant risk management knowledge related to technology and supply chain oversight, which are of key importance to our success. Ms. Barbour also enhances the Board’s public company experience in the areas of internal controls, accounting, audit, risk management and cybersecurity. |
Nominee Demographics, Skills and Biographies
| THEODORE H. BUNTING, JR. | | | Age: 65 Director Since: 2018 Standing Board Committees: ■ Audit Committee (Chair) ■ Compensation and Human Capital Committee ■ Executive Committee | Executive Experience: Mr. Bunting most recently served as group president, utility operations, at Entergy Corporation (“Entergy”), an integrated energy company, from 2012 until his retirement in 2017. Before that, he was senior vice president and chief accounting officer at Entergy from 2007 to 2012 and chief financial officer (“CFO”) of several subsidiaries from 2000 to 2007. He held other management positions of increasing responsibility in accounting and operations at Entergy since joining the company in 1983. Outside Board and Other Experience: Mr. Bunting has been a director of Unum Group since 2013 and is currently chair of its Regulatory Compliance Committee and a member of its Audit committee. Mr. Bunting has been a director of the Hanover Group since 2020 and is a member of the Audit Committee. Mr. Bunting previously served as a director of IEA from 2021 until October 2022 and as a member of the ESN&G and C&HC Committees. He previously served as a director of Imation Corp., a global data storage and information security company. He also serves on the board of Foundation for the Mid South and previously served on the board of Hendrix College. Skills and Qualifications: Mr. Bunting’s utility industry knowledge, including his experience in customer service, safety and regulatory relations, are valuable to us as we continue to execute on our robust long-term utility infrastructure investment plans. He also brings additional public company experience in the areas of strategic finance, accounting, auditing, and capital and risk management to the Board. He is a certified public accountant. |
Nominee Demographics, Skills and Biographies
| ERIC L. BUTLER | | | Age: 63 Director Since: 2017 Standing Board Committees: ■ Compensation and Human Capital Committee (Chair) ■ Audit Committee ■ Executive Committee | Executive Experience: Mr. Butler currently is President and CEO of Aswani-Butler Investment Associates, a private equity investment firm. Previously he served in a number of executive leadership roles at Union Pacific Corporation (“Union Pacific”), a transportation company located in Omaha, Nebraska, until his retirement in February 2018. He began his career at Union Pacific in 1986 and held leadership roles in finance, accounting, marketing and sales, supply, operations research and planning and human resources. He was Vice President of Financial Planning and Analysis from 1997 to 2000, Vice President of Purchasing and Supply Chain from 2000 to 2003, Vice President and General Manager of the Automotive Business from 2003 to 2005 and Vice President and General Manager of the Industrial Products Business from 2005 to 2012. He was Executive Vice President of Marketing and Sales and Chief Commercial Officer and ran the worldwide Commercial business from 2012 to 2017. He served as Executive Vice President, Chief Administrative Officer and Corporate Secretary from 2017 until his retirement.. Outside Board and Other Experience: Mr. Butler was appointed to the Federal Reserve Bank of Kansas City’s Omaha Branch Board in 2015 and in 2018 was elected chair. His term on the Federal Reserve board ended in December 2020. He currently serves on the board of the Omaha Airport Authority, which he joined in 2007, and the Eastman Chemical Company Board, which he joined in 2022, and the West Fraser Timber Co. Ltd, which he joined in 2023.. Skills and Qualifications: Mr. Butler developed and led strategic and financial planning, marketing, sales, commercial, and supply, procurement and purchasing for one of the largest transportation companies in the world, Union Pacific. He most recently led the corporate governance, human resources, labor relations and administration functions at Union Pacific. His knowledge of the railroad transportation industry and the challenges in maintaining top-tier safety, customer service and risk management standards while providing an important part of the nation’s infrastructure provides him with unique skills and insights that are valuable to the Board. In addition, he has experience in the purchase of fuel and energy materials and equipment. As a result, Mr. Butler has an understanding of the aging infrastructure, safety, organizational and regulatory issues facing utilities today and provides a viewpoint from an industry that is similarly positioned. His overall leadership experience and his regulated public company background provides the Board with another perspective on significant issues that we face. |
Nominee Demographics, Skills and Biographies
| DEBORAH A. HENRETTA | | | Age: 63 Director Since: 2015 Standing Board Committees: ■ Environmental, Social, Nominating and Governance Committee (Chair) ■ Compensation and Human Capital Committee ■ Executive Committee | Executive Experience: Ms. Henretta currently is a partner at Council Advisors company, where she serves as Senior Advisor spearheading digital transformation practice for SSA & Company, and is a senior advisor for G100 Companies, a C-suite learning and development company. She retired from Procter & Gamble Co. (“P&G”) in 2015, where she served as Group President of Global e-Business. Prior to her appointment as Group President of Global e-Business in January 2015, she held various senior positions throughout several P&G sectors, including as Group President of Global Beauty from 2012 to 2015 and as Group President of P&G Asia from 2007 to 2012. Prior to her appointment as Group President of P&G Asia, she was President of P&G’s business in ASEAN, Australia and India from 2005 to 2007. She joined P&G in 1985. Outside Board and Other Experience: Ms. Henretta has been a director at American Eagle Outfitters, Inc. since 2019, a director at Meritage Homes since 2017 and a director at Corning Incorporated since 2013. Ms. Henretta previously served as a director of Staples, Inc. from June 2016 until September 2017 and served on its C&HC Committee. Additionally, she serves on the board of trustees for Syracuse University. Skills and Qualifications: Ms. Henretta has over 30 years of business leadership experience with P&G in a multi-jurisdictional regulatory and competitive business environment. She has experience across many markets, including profit and loss responsibility for multi-billion-dollar businesses at P&G and responsibility for strategic planning, sales, marketing, e-business, government relations and customer service. Ms. Henretta led a dynamic business segment and is, therefore, keenly aware of the delicate balance of keeping pace with customer expectations in a changing environment, as well as maximizing the benefits that inclusion and diversity can provide. Because of this experience, Ms. Henretta brings valuable insights to the Board and strategic leadership to us as we operate in multiple regulatory environments and develop products and customer service programs to meet our customer commitments. In her previous partner role at G100 Companies where she continues as a senior advisor, she assisted in establishing a Board Excellence Program, which provides board director education. |
Nominee Demographics, Skills and Biographies
| DEBORAH A. P. HERSMAN | | | Age: 53 Director Since: 2019 Standing Board Committees: ■ Safety, Operations, Regulatory and Policy Committee ■ Finance Committee | Executive Experience: Ms. Hersman served as Chief Safety Officer and advisor at Waymo LLC, the self-driving car technology subsidiary of Alphabet Inc., from January 2019 to December 2020. From 2014 to 2019, she served as president and CEO of the National Safety Council, a nonprofit organization focused on eliminating preventable deaths at work, in homes and communities, and on the road through leadership, research, education and advocacy. Outside Board and Other Experience: From 2004 to 2014, Ms. Hersman served as a board member and from 2009-2014 as chair of the National Transportation Safety Board (the “NTSB”). Previously she served in a professional staff role for the U.S. Senate Commerce, Science and Transportation Committee where she played key roles in crafting the Pipeline Safety Improvement Act of 2002 and legislation establishing a new modal administration focused on bus and truck safety. On June 29, 2023, she was appointed to the Board of One Gas (NYSE: OGS). She previously served on the Board of Velodyne (NASDAQ: VLDR). Skills and Qualifications: Ms. Hersman is a seasoned executive, having previously served as the CEO of the National Safety Council and as the chair and chief executive at the NTSB. She has a successful track record running complex safety-focused organizations with numerous stakeholders. A widely respected safety leader driven by mission and a passion for preserving human life, Ms. Hersman also has expertise in the details of navigating crises and strong experience with safety policy legislation and advocacy. Ms. Hersman’s extensive safety experience is of great value to the Board as we continue to implement our safety management system and meet our safety commitments to our customers and stakeholders. |
Nominee Demographics, Skills and Biographies
| MICHAEL E. JESANIS | | | Age: 67 Director Since: 2008 Standing Board Committees: ■ Finance Committee (Chair*) ■ Safety, Operations, Regulatory and Policy Committee ■ Executive Committee* *Effective March 19, 2024 | Executive Experience: Mr. Jesanis co-founded and was from 2013 to 2021 Managing Director of HotZero, LLC, a firm formed to develop hot water district energy systems in New England. Mr. Jesanis has served as an advisor to several startups in energy-related fields. From July 2004 through December 2006, Mr. Jesanis was President and CEO of National Grid USA, a natural gas and electric utility, and a subsidiary of National Grid plc, of which Mr. Jesanis was also an Executive Director. Prior to that position, Mr. Jesanis was COO and CFO of National Grid USA from January 2001 to July 2004 and CFO of its predecessor utility holding company from 1998 to 2000. Outside Board and Other Experience: Mr. Jesanis is a board member of El Paso Electric Company. He previously served as a director for several electric and energy companies, including Ameresco, Inc. Mr. Jesanis is the former chair of the board of a college and a past trustee (and past chair of the audit committee) of a university. Skills and Qualifications: By virtue of his former positions as President and CEO, COO and, prior thereto CFO, of a major electric and gas utility holding company as well as his role with an energy efficiency consulting firm, Mr. Jesanis has extensive experience with regulated utilities. He has strong financial acumen and extensive managerial experience, having led modernization efforts in the areas of operating infrastructure improvements, customer service enhancements and management team development. Mr. Jesanis also demonstrates a commitment to education as the former chair of the board of a college and a past trustee (and past chair of the audit committee) of a university. As a result of his former senior managerial roles and his non-profit board service, Mr. Jesanis also has expertise with board governance issues. |
Nominee Demographics, Skills and Biographies
| WILLIAM D. JOHNSON | | | Age: 70 Director Since: 2022 Standing Board Committees: ■ Compensation and Human Capital Committee* ■ Environmental, Social, Nominating and Governance Committee** ■ Safety, Operations, Regulatory and Policy Committee (Chair**) ■ Executive Committee** *Until March 19, 2024 **Effective March 19, 2024 | Executive Experience: Mr. Johnson most recently served as President and Chief Executive Officer of Pacific Gas & Electric Corporation, a utility company, from May 2019 through June 2020. Mr. Johnson also served as President and Chief Executive Officer of Tennessee Valley Authority, an electric utility company, from January 2013 to May 2019. Prior to joining Tennessee Valley Authority, Mr. Johnson held the positions of Chairman, President and CEO of Progress Energy, Inc. (“Progress”) from October 2007 to July 2012, and previously to that as President and Chief Operating Officer from 2005 to 2007. His career at Progress included leadership roles of increasing responsibility including as President, Energy Delivery from 2004 to 2005, President and Chief Executive Officer from 2002 to 2003, and Executive Vice President and General Counsel from 2000 to 2002 of Progress Energy Service Company. Mr. Johnson’s career began in 1992 at Carolina Power & Light Company (predecessor to Progress) where he held increasing senior management roles of Associate General Counsel and Manager, Legal Department; Vice President, Senior Counsel and Corporate Secretary and Senior Vice President and Corporate Secretary. Outside Board and Other Experience: Mr. Johnson has been a director of TC Energy Corp. since June 2021, where he currently serves on the Audit Committee and Human Resources Committee. Mr. Johnson previously served on the boards of the following utility industry groups or associations: Edison Electric Institute as Vice Chair, Nuclear Energy Institute as Chair, Institute of Nuclear Power Operations, World Association of Nuclear Operators as Governor and Nuclear Electric Insurance Limited. Skills and Qualifications: Mr. Johnson brings three decades of industry and leadership expertise to the Board. Mr. Johnson’s multiple tenures as CEO and vast experience with industry groups related to gas, electric, nuclear and other utilities provide him with extensive leadership skills in the utilities industry and a deep understanding of regulated industry operations. Mr. Johnson guided Pacific Gas & Electric Corporation through its emergence from bankruptcy and served as CEO of Progress during its merger with Duke Energy, through which he gained significant experience in complex corporate restructuring, transactions, and strategy. His experience has also informed an understanding of safety and risk oversight in the utilities industry that the Board values. This extensive experience and depth of knowledge gives Mr. Johnson a strong perspective on strategic operations within the industry and makes Mr. Johnson a valuable asset to the Board. |
Nominee Demographics, Skills and Biographies
| KEVIN T. KABAT | | | Age: 67 Director Since: 2015 Chair of the Board Standing Board Committees: ■ Environmental, Social, Nominating and Governance Committee ■ Executive Committee (Chair) | Executive Experience: From April 2007 to November 2015, Mr. Kabat was CEO of Fifth Third Bancorp, a bank holding company. He continued to serve as Vice Chair of the board of directors of Fifth Third Bancorp until his retirement in April 2016. Before becoming CEO, he served as Fifth Third Bancorp’s President from June 2006 to September 2012 and as Executive Vice President from December 2003 to June 2006. Additionally, he was previously President and CEO of Fifth Third Bank (Michigan). Prior to that position, he was Vice Chair and President of Old Kent Bank, which was acquired by Fifth Third Bancorp in 2001. Outside Board and Other Experience: Mr. Kabat has been a director of Unum Group since 2008 and is currently chair of the board. Mr. Kabat has been the director of Crown Castle Inc. since August 1, 2023. He previously served as a chair of the board of AltiGlobal Inc. from January 2023 to August 2023. He also previously served as the lead independent director of E*TRADE Financial Corporation. He has also held leadership positions on the boards and committees of local business, educational, cultural and charitable organizations and campaigns. Skills and Qualifications: Mr. Kabat has significant leadership experience as a CEO in a regulated industry at a public company. As a result, he has a deep understanding of operating in a regulatory environment and balancing the interests of many stakeholders. His extensive experience in strategic planning, risk management, financial reporting, internal controls and capital markets makes him an asset to the Board, as he is able to provide unique strategic insight, financial expertise and risk management skills. In addition, he has broad corporate governance skills and perspective gained from his service in leadership positions on the boards of other publicly traded companies. |
Nominee Demographics, Skills and Biographies
| CASSANDRA S. LEE | | | Age: 55 Director Since: 2022 Standing Board Committees: ■ Audit Committee ■ Finance Committee | Executive Experience: Ms. Lee is an experienced financial and operational leader with extensive knowledge of the telecommunication industry, currently serving as Senior Vice President and Chief Audit Executive for AT&T Inc. (“AT&T”), a position she has held since 2021. Ms. Lee joined AT&T in 1993 and has served in various leadership capacities, including Senior Vice President and Chief Financial Officer, AT&T Network, Technology and Capital Management from 2018 to 2021. Outside Board and Other Experience: Ms. Lee currently serves on the Board of Directors of Andretti Acquisition Corp., a special purpose acquisition company, where she chairs the Audit Committee. Skills and Qualifications: In more than three decades with AT&T, Ms. Lee has acquired a wealth of expertise in various areas including retail operations, distribution strategy, global supply chain, mergers, acquisitions, and integration, capital management, network and other capacity planning, and shared services operations. Her vast and multifaceted experience in the telecommunication industry translates well in her service on the Board. Ms. Lee also has significant public company financial oversight and leadership experience that strengthens the Board’s depth of financial acumen. Ms. Lee is a certified public accountant and veteran of the United States Army. |
Nominee Demographics, Skills and Biographies
| JOHN MCAVOY | | | Age: 63 Director Since: 2024 Retired President & CEO, Consolidated Edison, Inc. Standing Board Committees: ■ Compensation and Human Capital Committee ■ Safety, Operations, Regulatory and Policy Committee | Executive Experience: Mr. McAvoy most recently served as President and Chief Executive Officer of Consolidated Edison, Inc. (“ConEdison”) and Chief Executive Officer of Consolidated Edison Company of New York, Inc. (“ConEdison of New York”) from December 2013 through December 28, 2020. He continued to serve as director of ConEdison until his retirement in May 2023 after forty three years of experience with ConEdison, including serving as Non-executive Chairman of the Board of ConEdison and the Board of ConEdison of New York from January 2021 until December 2021 as well as Chairman of the Board of ConEdison and ConEdison New York from May 2014 until December 2020. Prior to Mr. McAvoy’s service as President and Chief Executive Officer, he was President and Chief Executive Officer of Orange and Rockland Utilities, Inc., a subsidiary of Consolidated Edison, Inc. from January 2013 to December 2013. Prior to that, Mr. McAvoy was Senior Vice President of Central Operations for Consolidated Edison Company of New York, Inc. from February 2009 to December 2012. Outside Board and Other Experience: Mr. McAvoy was a Trustee of the Intrepid Sea, Air & Space Museum and of Manhattan College until December 2023 and October 2023 respectively. Until January 2021, Mr. McAvoy served as a Director or Trustee of the American Gas Association, the Edison Electric Institute, the Mayor’s Fund to Advance New York City, the Partnership for New York City, and the Electric Power Research Institute. Mr. McAvoy also served as a Director and Chairman of the Board of Directors of Orange & Rockland until December 2020, and as a Director of the New York State Energy Research and Development Authority until 2018 and the Business Council of New York State Inc. until 2016. Mr. McAvoy was also a member of the Electric Subsector Coordinating Council and Chairman of the Members Executive Committee for the Electricity Information Sharing and Analysis Center. Skills and Qualifications: Mr. McAvoy has leadership, engineering, financial, and operations experience, as well as knowledge of the utility industry. Mr. McAvoy’s experience from his leadership positions at a public company and within a public utility, and his service on other boards, is critical to support in the Board’s oversight of the management, financial, operations, and strategic planning activities and relationships with stakeholders. |
Nominee Demographics, Skills and Biographies
| LLOYD M. YATES | | | Age: 63 Director Since: 2020 President and CEO since 2022 Standing Board Committees: ■ None | Executive Experience: Mr. Yates has served as President and CEO of NiSource since February 2022. Mr. Yates retired in 2019 from Duke Energy, where he most recently served as Executive Vice President, Customer and Delivery Operations, and President, Carolinas Region, since 2014. In this role, he was responsible for aligning customer-focused products and services to deliver a personalized end-to-end customer experience to position Duke Energy for long-term growth, as well as for the profit/loss, strategic direction and performance of Duke Energy’s regulated utilities in North Carolina and South Carolina. Previously, he served as Executive Vice President of Regulated Utilities at Duke Energy, overseeing Duke Energy’s utility operations in six states, federal government affairs, and environmental and energy policy at the state and federal levels, as well as Executive Vice President, Customer Operations, where he led the transmission, distribution, customer services, gas operations and grid modernization functions for millions of utility customers. He held various senior leadership roles at Progress Energy, Inc., prior to its merger with Duke Energy, from 2000 to 2012. Outside Board and Other Experience: Mr. Yates currently serves on the board of directors of Marsh & McLennan Companies. He previously served on the board of directors of American Water Works Company Inc. and Sonoco Products Company. Skills and Qualifications: Mr. Yates brings significant energy and regulated utility experience to our Board. He has over 40 years of experience in the energy industry, including in the areas of profit/loss management, customer service, nuclear and fossil generation and energy delivery. At Duke Energy, he used his operational experience to improve safety, reliability and the overall customer experience for millions of customers. He has expertise overseeing regulated utility operations, working with state regulators, and managing consumer and community affairs. He also has experience managing gas and grid modernization functions, which is valuable to our Board as we execute our business strategies. In addition, his experience as a director for other prominent public companies benefits our Board by bringing additional perspective to a variety of important areas of governance and strategic planning. |
ESN&G Committee
Director Compensation. This section describes compensation for our non-employee directors. To attract and retain highly qualified candidates to serve on the Board, we provide a combination of cash and equity awards. Our non-employee director compensation is reviewed annually by our ESN&G Committee with the assistance of Meridian Compensation Partners, LLC (“Meridian”), the C&HC Committee’s independent compensation consultant. A full-time employee who serves as a director does not receive any additional compensation for service on the Board. For 2023, each non-employee director received an annual retainer of $275,000, consisting of $110,000 in cash and an award of restricted stock units (“RSUs”) valued at $165,000 at the time of grant. The cash retainer is paid in arrears in four equal installments at the end of each calendar quarter. RSUs are awarded annually, and the number of RSUs is determined by dividing the value of the grant by the closing price of our common stock on the grant date. The RSUs granted at and after the 2020 annual meetings of stockholders were granted under the NiSource Inc. 2020 Omnibus Incentive Plan (“2020 Omnibus Plan”), while RSU awards granted prior to the 2020 annual meeting of stockholders were granted under the NiSource Inc. 2010 Omnibus Incentive Plan (“2010 Omnibus Plan”). Unless the non-employee director elects to defer receipt of his or her RSU awards, the RSUs are payable in shares of our common stock on the earlier to occur of: (a) the last day of the director’s annual term for which the RSUs are awarded; or (b) the date that the director separates from the Board due to a “Change-in-Control” (as defined in the 2020 Omnibus Plan or 2010 Omnibus Plan (the “Omnibus Plan”), as applicable); provided, however, that any director that commences service on the Board after the start of an annual term will vest on the first anniversary of the initial grant. The RSU awards also contain pro-rata vesting provisions for a separation from the Board due to retirement, death or disability. RSUs accrue dividends prior to settlement in shares of our common stock. If a non-employee director elects to defer receipt of his or her RSUs, then such deferred stock units will be paid in shares of our common stock upon the non-employee director’s separation from the Board or such other date selected by the non-employee director. Each non-employee director who serves as chair of a Board committee receives compensation for the additional responsibilities associated with such service. The 2023 committee chair fees were $20,000 for each of the standing committees. The Chair of the Board received additional annual compensation of $160,000 for his role. These fees are paid in cash in arrears in four equal installments and are prorated in the case of partial year service. All Other Compensation. The compensation included under the column “All Other Compensation” in the 2023 Director Compensation Table below consists of matching contributions made by the NiSource Charitable Foundation (the “Foundation”). Director Stock Ownership. The Board maintains stock ownership requirements for directors that are included in our Corporate Governance Guidelines. Within five years of becoming a non-employee director, each non-employee director is required to hold an amount of our stock with a value equal to five times the annual cash retainer paid to directors. Company stock that counts towards satisfaction of this requirement includes shares purchased on the open market, awards of restricted stock or RSUs, and shares beneficially owned in a trust or by a spouse or other immediate family member residing in the same household. All of the non-employee director nominees are in compliance with the stock ownership guideline or are within the five-year transition period included in the Corporate Governance Guidelines. Each director has a significant portion of his or her compensation directly aligned with long-term stockholder value. Approximately sixty percent (60%) of a non-employee director’s 2023 annual retainer (valued as of the time of award and excluding committee retainers) consisted of RSUs, which are converted into common stock when vested and distributed to the director. 2023 Director Compensation The table below sets forth all compensation earned by or paid to our non-employee directors in 2023. Mr. Yates did not receive any additional compensation for his service on the Board. Mr. Yates’ compensation for serving as President and CEO during 2023 is discussed in the Executive Compensation section of this Proxy Statement.
ESN&G Committee
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | All Other Compensation ($)(4) | Total ($) | | Peter A. Altabef | 130,000 | 165,000 | 5,000 | 300,000 | | Sondra L. Barbour | 110,000 | 165,000 | — | 275,000 | | Theodore H. Bunting, Jr. | 130,000 | 165,000 | — | 295,000 | | Eric L. Butler | 130,000 | 165,000 | — | 295,000 | | Aristides S. Candris | 130,000 | 165,000 | 10,000 | 305,000 | | Deborah A. Henretta | 130,000 | 165,000 | — | 295,000 | | Deborah A.P. Hersman | 110,000 | 165,000 | 3,000 | 278,000 | | Michael E. Jesanis | 110,000 | 165,000 | 9,000 | 284,000 | | William D. Johnson | 110,000 | 165,000 | — | 275,000 | | Kevin T. Kabat | 270,000 | 165,000 | — | 435,000 | | Cassandra S. Lee | 110,000 | 165,000 | — | 275,000 |
ESN&G Committee
| (2) The amounts shown reflect the grant date fair value of awards computed in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. For RSUs, the grant date fair value is the number of shares multiplied by the closing price of our stock on the award date. On May 23 2023, each non-employee director received an award of RSUs valued at $165,000, which was equal to approximately 6,031 RSUs valued at $27.36 per unit, the closing price of our common stock on that date. For information on the valuation assumptions used in these computations, see Note 17 to our consolidated financial statements included in our 2023 Annual Report on Form 10-K. |
ESN&G Committee
| (3) As of December 31, 2023, the number of equity awards (in the form of RSUs or deferred stock units) that were outstanding for each non-employee director was as follows: Mr. Altabef, 6,146.431; Ms. Barbour, 13,465.424, Mr. Bunting, 22,109.502; Mr. Butler, 6,146.431; Dr. Candris, 75,862.1510; Ms. Henretta, 58,100.0740; Ms. Hersman, 30,282.3980; Mr. Jesanis, 6,146.431; Mr. Johnson, 12,749.884, Mr. Kabat, 6,146.431; and Ms. Lee, 13,256.846. For Mr. Yates, the number of RSUs or deferred stock units he received while serving as a non-employee director which were outstanding as of December 31, 2023 was 14,320.551. |
Long-Term Stock Performance
Long-Term Stock Performance Total shareholder return shown in the chart below reflects growth in the price of a share of our common stock, assuming dividends are reinvested.
2023 Executive Compensation Pay Mix Summary
2023 Executive Compensation Pay Mix Summary For 2023, the C&HC Committee approved a mix of pay that balanced short-term and long-term incentives and focused the efforts of our NEOs on the achievement of both short-term business objectives and long-term strategic objectives. The majority of our NEOs’ total target direct compensation was in the form of equity awards to align the interests of our NEOs with those of our stockholders. The mix of key elements of compensation (expressed as a proportion of total compensation) awarded to our NEOs, including the CEO, reflects a significant portion of the total target direct compensation being both performance-based and at-risk, which is consistent with our pay for performance philosophy. For more information, see “Components of 2023 Executive Compensation Program”. The following charts show the mix of 2023 total target direct compensation for our CEO, the average total target direct compensation for other NEOs and the portion that is performance based and/or at-risk.
Overview of Target Total Direct Compensation
| NEO(1) | Base Salary as of 12/31/23 ($) | Annual Short- Term Incentive Target as % of Base Salary | Annual Short- Term Incentive Target as of 12/31/23 ($) | PSUs at Target ($) | RSUs ($) | Total Target Direct Compensation ($) | | Lloyd Yates | 1,050,000 | 115% | 1,207,500 | 4,000,000 | 1,000,000 | 7,257,500 | | Shawn Anderson | 550,000 | 75% | 412,500 | 880,000 | 220,000 | 2,062,500 | | Donald Brown | 645,000 | 75% | 483,750 | 1,032,000 | 258,000 | 2,418,750 | | Melody Birmingham | 645,000 | 75% | 483,750 | 1,032,000 | 258,000 | 2,418,750 | | William Jefferson | 550,000 | 75% | 412,500 | 880,000 | 220,000 | 2,062,500 | | Michael Luhrs | 550,000 | 75% | 412,500 | 880,000 | 220,000 | 2,062,500 |
2023 Short-Term Incentive (STI) Program Design and Results
2023 Short-Term Incentive (STI) Program Design and Results The 2023 STI program provides the NEOs with the opportunity to earn a cash incentive award tied to achievement of goals in the categories of financial performance, operational excellence, occupational health and safety, and customer satisfaction over a one-year performance period. The result of each goal is calculated, and the sum of the weighted results creates the formulaic incentive opportunity. If threshold performance was not achieved with respect to a performance measure, then no STI award would have been paid for that specific measure. The C&HC Committee retains discretion to adjust STI awards, either on a formulaic or discretionary basis. The C&HC Committee reviewed the Pay Factors (defined below) and peer group data to establish the STI target percentage (expressed as a percentage of base salary) for NEOs except for Mr. Yates. The C&HC Committee evaluated and made a recommendation to the Board of Directors who approved the STI target percentage for Mr. Yates, which was unchanged from last year. To reflect peer group practice and help ensure retention of our executive talent, the C&HC Committee approved an increase in Mr. Anderson’s STI target percentage from 60% to 75% and Mr. Jefferson’s STI target percentage from 70% to 75%. 2023 STI Performance Measures. In January 2023, the C&HC Committee approved the following performance measures to be used to determine the 2023 STI payouts for the NEOs. These measures were chosen because they align with our commitment to deliver safe, reliable energy to our customers.
2023 Short-Term Incentive (STI) Program Design and Results
| Performance Measure | Description | | NOEPS (Net Operating Earnings Per Share) | The C&HC Committee selected NOEPS as a financial measure because it is representative of our fundamental profitability, aligned with stockholder value creation, used internally for budgeting and reporting to the Board, and generally consistent with our external reporting of results. The definition of NOEPS is income from continuing operations determined in accordance with GAAP, including, without limitation, the impact of incentive payouts and adjusted for certain items, such as fluctuations in weather and other significant unusual events disclosed in our earnings reports (examples of which may include transaction-related costs, debt extinguishment costs or certain income tax items). Appendix A to this Proxy Statement contains a full reconciliation of GAAP earnings per share to NOEPS. | | Operational Excellence | The C&HC Committee selected Operational Excellence as a performance measure to emphasize the on-going mandate for the company to maintain safe operations and processes. Operational Excellence is measured against the number of significant injuries or fatalities (SIF) or Pipeline and Hazardous Materials Safety Administration (PHMSA) reportable incidents due to operations or process failures. | | Occupational Health and Safety | The C&HC Committee selected Occupational Health and Safety (“OHS”) as a performance measure to drive the company toward top performance. OHS was composed of two performance measures: Days Away, Restricted or Transferred (“DART”) rate and Preventable Vehicle Collisions (“PVC”) rate. DART and PVC rate goals were based upon a 5-year glidepath for the company to be top decile of American Gas Association (“AGA”) gas and electric combined utilities by 2026. ○ DART: incident rate relates to all injuries meeting OSHA reportability that require an employee to not report to work, to restrict their duties or transfer to another role due to the injury ○ PVC: rate relates to all vehicle crashes deemed to be the responsibility of the company-employed driver | | Customer Satisfaction | The C&HC Committee selected Customer Satisfaction as a performance measure to ensure that our customers’ needs and expectations are met. The Customer Satisfaction Survey measures five post-transactional customer channels (Customer Service Representatives, Field Service, Interactive Voice Response, Online, and Project Work/Site Restoration) and one customer relationship survey that measures our customer’s overall satisfaction with our Columbia Gas companies and NIPSCO. |
2023 Short-Term Incentive (STI) Program Design and Results
2023 STI Scorecard: Performance Goals and Achieved Results. The table below shows each performance measure, goals, results and percentage of target earned. The 2023 overall scorecard results were 170% of target.
2023 Short-Term Incentive (STI) Program Design and Results
| Measure | Threshold | Target | Stretch | Result(1) | Weight | Formulaic Result as % Target(1) | Weighted % Achievement | | NOEPS | $1.51 | $1.56 | $1.61 | $1.60(2) | 70% | 180% | 126% | | Operational Excellence | — | 0 | — | 0 | 10% | 100% | 10% | | Occupational Health and Safety | | | | | | | | | --DART | 0.74 | 0.70 | 0.63 | 0.65 | 5% | 171% | 9% | | --PVC | 1.73 | 1.65 | 1.49 | 1.49 | 5% | 200% | 10% | | Customer Satisfaction | 67% | 70% | 73% | 71.5% | 10% | 150% | 15% | | | | | | | | Overall STI Scorecard Result | 170% |
2023 Short-Term Incentive (STI) Program Design and Results
| (1) If performance results fall between two performance levels (for example, between target and stretch goals), the incentive opportunity is determined by interpolation where threshold is 50%, target is 100% and stretch is 200%. |
2023 Short-Term Incentive (STI) Program Design and Results
| (2) Appendix A to this Proxy Statement contains a full reconciliation of GAAP earnings per share to NOEPS. |
2023 Short-Term Incentive (STI) Program Design and Results
Calculation of 2023 STI Awards The 2023 STI Scorecard results, employee’s earnings during 2023, employee’s target STI percent, and employee’s Individual Performance Modifier drive the Final Annual STI Award value. For Individual Performance, employee performance is reviewed on an annual basis, and employees receive a performance rating at the end of the performance period. An employee whose performance was rated as exceptional is eligible for 110-140% of the formulaic STI award value, as effective is eligible for 80-110% of the formulaic STI award value, and if needs improvement then 0-50% of the formulaic STI award value. The following chart and table illustrate how STI awards were calculated. For Mr. Yates, an exceptional performance modifier was applied to recognize his leadership in 2023, completing another strong year of building upon our track record of consistent execution and growth. For Mr. Anderson, an exceptional performance modifier was applied to recognize his leadership in the execution of strengthening our balance sheet and funding ongoing capital needs associated with the renewable generation transition underway and by driving the completion of a 19.9% indirect equity interest transaction for NIPSCO with an affiliate of Blackstone Infrastructure Partners. For Mr. Jefferson, an exceptional performance modifier was applied in recognition of his leadership in driving operational excellence to support our goal of maintaining a safety and people-first mindset, in addition to driving industry-leading, risk-informed asset management. For Messrs. Brown and Luhrs and for Ms. Birmingham, their performance was rated as effective, and they were awarded within the appropriate performance range.
2023 Short-Term Incentive (STI) Program Design and Results
| NEO | 2023 STI Target % | Earnings Paid During Year | STI Scorecard Results | Individual Performance Modifier | Final Annual STI Award $ | | Lloyd Yates | 115 | $1,041,667 | 170% | 122.76% | $2,500,000 | | Shawn Anderson | 75 | $518,478 | 170% | 122.5% | $809,798 | | Donald Brown | 75 | $642,560 | 170% | 95% | $778,301 | | Melody Birmingham | 75 | $641,667 | 170% | 100% | $818,125 | | William Jefferson | 75 | $537,500 | 170% | 117.5% | $805,242 | | Michael Luhrs | 75 | $422,464 | 170% | 100% | $538,641 |
2023 Long-Term Incentive (LTI) Program Design and Results
2023 Long-Term Incentive (LTI) Program Design and Results For 2023, the C&HC Committee approved the following mix of LTI awards granted to our NEOs: * Mr. Anderson’s initial grant, prior to his promotion to CFO on March 27, 2023, was a mix of 70% performance share units and 30% Restricted Stock Units. The C&HC Committee reviewed each of the Pay Factors to establish LTI target values for each NEO, other than Mr. Yates. For Mr. Yates, the C&HC Committee evaluated and made a recommendation to the Board of Directors who approved the LTI target value.
2023 Performance Share Units (“PSU”)
2023 Performance Share Units (“PSU”) PSU Objectives. The key objectives of our 2023 PSU grants are to:
2023 Performance Share Units (“PSU”)
| ■ | Motivate NEOs to achieve critical long-term financial and relative total shareholder return goals (relative to peers) and achieve critical business imperatives related to operational excellence and safety, workforce, and sustainability |
2023 Performance Share Units (“PSU”)
| ■ | Align the interests of NEOs with stockholders |
2023 Performance Share Units (“PSU”)
| ■ | Retain NEOs |
2023 Performance Share Units (“PSU”)
| ■ | Provide market competitive performance-based LTI opportunities (when aggregated with RSU grants, which are discussed below) |
PSU Overview
PSU Overview The PSUs provide our NEOs the opportunity to earn shares of our common stock based on achievement of set performance goals over a three-year performance period ending December 31, 2025, as outlined in the table below.
PSU Overview
| Performance Goal | Description | | Three Year Cumulative NOEPS | The C&HC Committee selected this measure because it aligns the interests of our NEOs with those of our stockholders, and it supports the creation of sustainable stockholder value by growing earnings and providing a strong dividend. | | | The target three-year cumulative NOEPS performance goal is based upon our three-year financial plan. For the definition and calculation of NOEPS, see above under “2023 STI Performance Measures.” | | Three Year Relative Total Shareholder Return (RTSR) | The C&HC Committee selected this measure because it aligns the interests of our NEOs with those of our stockholders, and it supports the creation of sustainable stockholder value. RTSR ranks the Company’s total shareholder return over the 3-year period ending on December 31, 2025 relative to the total shareholder return of each company within a 31-company peer group. |
PSU Overview
Workforce and Sustainability: The C&HC Committee also chose the following measures because they support our aspirations of excellence, safety, employee, and sustainability:
PSU Overview
| Employee: Engagement Index Score | The Engagement Index Score is measured over the three-year performance period through an employee survey. | | Economic Inclusion: Supplier Diversity | Economic inclusion goal measures Company spend on Tier 1 and Tier 2 diverse suppliers as a proportion of total supplier spend. | | Environmental: Greenhouse Gas (GHG) Reduction | This goal measures the Company’s reduction in GHG. | | Annual Operational Excellence and Safety Index Scorecard: 3 Year Average | Safety Index Scorecard measures the effectiveness of our strategy to proactively mitigate risk. These measures are recognized as top-tier industry risk-reduction programs. The 2023 goals relate to the following measures: (i) ILI Miles, (ii) Pipe Installed, (iii) SAIFI, (iv) electric poles inspected, (v) Cross Bore Inspections and (vi) Cyber Behavior Accountability. The 2024 and 2025 goals will be determined by the C&HC Committee at the beginning of 2024 and 2025. |
PSU Overview
Depending on the level of achieved performance, an NEO may earn up to 200% of the NEO’s target PSUs. If threshold performance is not achieved with respect to a performance measure, then no PSUs would be paid for that measure. The number of PSUs earned and vested at the end of the three-year performance period will be settled in a like number of shares of our common stock. Annual PSUs granted in 2023 will vest on February 27, 2026 for all NEOs as long as the NEO is continuously employed through that date except Mr. Yates who must be continuously employed through January 1, 2026. Special vesting rules apply in the event of death, disability, retirement, termination from January 1, 2024 - December 31, 2025 in the case of Mr. Yates only, or a qualifying termination following a change in control of the Company prior to the vesting date. Termination for any other reason prior to such NEO’s continuous employment date will result in forfeiture of the 2023 PSUs. The number of PSUs that vest at the end of the service period will be settled in a like number of shares of our common stock. If the Company declares a cash dividend or distribution on Shares, dividend equivalent rights will be credited on each PSU and will be deemed to be reinvested in additional PSUs, which will be subject to the same terms regarding vesting and forfeiture as the underlying award. Any credited dividend equivalents are paid in cash at the time the underlying PSUs are settled. 2023 PSU Performance Measures. In January 2023, the C&HC Committee approved the following performance measures and goals to determine each NEO’s payouts under their respective 2023 PSU grants.
2023 PSU Performance Measures and Goals
2023 PSU Performance Measures and Goals
2023 PSU Performance Measures and Goals
| Measures | Weight | Threshold | Target | Stretch | | Three-Year Cumulative NOEPS | 50% | $4.86 | $5.01 | $5.16 | | RTSR | 25% | 30th Percentile | 50th Percentile | 80th Percentile | | Operational Excellence and Safety | | | | | | Annual Operational Excellence and Safety Index Scorecard: 3 Year Average | 10% | See performance measures outlined above | | | | Workforce and Sustainability | | | | | | Employee: Engagement Index Score | 5% | 77% | 79% | 81% | | Economic Inclusion: Supplier Diversity Spend (as a proportion of total supplier spend) | 5% | 22% | 25% | 30% | | Environmental: Greenhouse Gas Emission Reduction | 5% | Greenhouse Gas Emission Reduction relates to the level we are able to successfully reduce vented methane emissions from retiring NIPSCO R.M. Schahfer Generating Station coal units and reducing LDC fugitive and vented methane emissions | | |
2023 Restricted Stock Units (“RSU”)
2023 Restricted Stock Units (“RSU”) The C&HC Committee chose to grant RSUs to the NEOs because RSUs reward long-term service, help to retain NEOs over a multi-year service period, and align the interests of our NEOs with those of our stockholders. Annual RSUs granted in 2023 will vest on February 27, 2026 for all NEOs as long as the NEO is continuously employed through that date except Mr. Yates who must be continuously employed through January 1, 2026. Special vesting rules apply in the event of death, disability, retirement, termination from January 1, 2024 - December 31, 2025 in the case of Mr. Yates only, or a qualifying termination following a change in control of the Company prior to the vesting date. Termination for any other reason prior to such NEO’s continuous employment date will result in forfeiture of the 2023 RSUs. The RSUs that vest at the end of the service period will be settled in a like number of shares of our common stock. If the Company declares a cash dividend or distribution on shares, the NEOs will be entitled to receive a cash payment equal to the amount of the cash dividend, subject to the same terms regarding vesting and forfeiture as the underlying award.
New Hire Award
New Hire Award Upon his hire, Mr. Luhrs received an inducement award of RSUs with a grant value of $300,000. These RSUs vest upon Mr. Luhrs’ completion of two years of service (March 27, 2025). The RSUs that vest at the end of the two-year service period will be settled in a like number of shares of our common stock.
Promotional Award
Promotional Award Upon his promotion in March 2023, Mr. Anderson received an incremental grant under the Company’s long-term incentive program with a grant date fair value of $425,000. This grant was awarded as a combination of service-based RSUs (20%) and performance-based PSUs (80%) that will vest in the first quarter of 2026.
Final Settlement of 2021-2023 PSU Awards
Final Settlement of 2021-2023 PSU Awards In 2021, the C&HC Committee approved LTI awards to Messrs. Anderson and Brown (the only two of the current NEOs at NiSource at that time) in the form of PSUs. The Company achieved a Three-Year Cumulative NOEPS of $4.44, resulting in 173% of the target achievement. The Company achieved RTSR at the 75th percentile, resulting in 183% of target achievement. For purposes of calculating RTSR achievement, the Company utilized a performance peer group consisting of the following companies: Alliant Energy Corp, Ameren Corporation, Avista Corporation, Black Hills Corporation, CenterPoint Energy, Inc., CMS Energy Corporation, Consolidated Edison, Inc., Dominion Energy, DTE Energy Company Inc, Duke Energy Corporation, Edison International, Entergy Corporation, Eversource Energy, FirstEnergy Corp., New Jersey Resources Corporation, MDU Resources Group, Inc., NextEra Energy, Inc., OGE Energy Corp., ONE Gas, Inc., Pinnacle West Capital Corporation, PNM Resources, Inc., PPL Corporation, Public Service Enterprise Group Inc, Sempra, Southern Company, Southwest Gas Holdings, Inc., Spire Inc., UGI Corporation, WEC Energy Group Inc, Xcel Energy Inc. After the application of the performance modifier for safety (104% average safety scorecard results for 4% achievement), environmental (reduction of CO2 emissions by 10.2 million tonnes and reduction of methane emissions by 215,243 tonnes, each over a 2005 baseline, for 10% achievement), and DE&I goals (8 categories met for -10% achievement), an aggregate of 186% of the target PSUs vested. Vesting of the 2021 PSUs remained subject to the executive’s continued employment through February 28, 2024. The following table shows the target number of shares subject to the 2021 PSUs as well as the number of shares of common stock that vested pursuant to the terms of the 2021 PSUs.
Final Settlement of 2021-2023 PSU Awards
| NEO | Target Number of 2021 PSUs Awarded | Number of 2021 PSUs Vested | | Shawn Anderson | 10,420 | 19,381 | | Donald Brown | 43,302 | 80,542 |
Final Settlement of 2021-2023 Special PSU Awards
Final Settlement of 2021-2023 Special PSU Awards 2021 Special PSUs. In January 2021, the C&HC Committee granted special PSU awards to Messrs. Anderson and Brown. The Company achieved RTSR at the 75th percentile, resulting in 157% of target achievement. For purposes of calculating RTSR achievement, the Company utilized a performance peer group consistent with the peer group disclosed above in the “Final Settlement of the 2021-2023 PSU Awards” section. After the application of the performance modifier for safety (104% average safety scorecard results for 4% achievement), an aggregate of 164% of the target special PSUs vested. Vesting of the 2021 Special PSUs remained subject to the executive’s continued employment through February 28, 2024. The following table shows the target number of shares of 2021 Special PSUs award and the number of shares of common stock that vested pursuant to the terms of the 2021 Special PSUs.
Final Settlement of 2021-2023 Special PSU Awards
| NEO(1) | Target Number of 2021 Special PSUs Originally Awarded | Number of 2021 Special PSUs Distributed(1) After Two-Year Performance Period | Number of 2021 Special PSUs Distributed(2) After Three-Year Performance Period | | Shawn Anderson | 7,442 | 8,726 | 3,479 | | Donald Brown | 27,064 | 31,731 | 12,654 |
Final Settlement of 2021-2023 Special PSU Awards
| (1) After the two-year performance period ending 12/31/22, 67% of the original PSUs awarded vested at 175% target. |
Final Settlement of 2021-2023 Special PSU Awards
| (2) After the three-year performance period ending 12/31/23, per the award agreements, the original PSU award was calculated at 164% of target then the number of PSUs eligible to vest was reduced by the number of PSUs that vested referred to in footnote (1). |
Independent Compensation Consultant
Independent Compensation Consultant For 2023, the C&HC Committee engaged the services of Meridian Compensation Partners as its independent compensation consultant to advise it with respect to executive compensation design, comparative compensation practices and compensation matters relating to the Board. The C&HC Committee takes recommendations from Meridian into consideration along with its evaluation of the individual performance of each executive officer. Each year, the C&HC Committee evaluates the independence and quality of the services provided by its independent compensation consultant. In reviewing Meridian’s engagement for 2023, the C&HC Committee considered the factors set forth in SEC Rule 10C-1(b)(4) and the applicable NYSE rules and determined that Meridian was independent and there were no conflicts of interest with respect to Meridian’s work for the C&HC Committee.
Competitive Market Review
Competitive Market Review In connection with its compensation decision making, the C&HC Committee reviews the executive compensation practices in effect at other companies in the Comparator Group. The compensation data is provided by Meridian and other third-party data and is used to obtain a general understanding of current market practices when designing our executive compensation program – it is not used exclusively, but rather as a reference point in conjunction with other factors. The Comparator Group consists of a mix of gas, electric, and multi-line utilities that are operationally similar to us, with which we compete for similar executive talent, and with similar trailing 12-month revenue and market capitalization data. For 2023, the C&HC Committee determined no changes were necessary to the prior year’s Comparator Group. The Comparator Group for purposes of evaluating 2023 compensation practices is shown below.
Competitive Market Review
| Compensation Comparator Group | | | | Alliant Energy Corporation | CMS Energy Corporation | ONE Gas, Inc. | | Ameren Corporation | Dominion Energy, Inc. | PNM Resources, Inc. | | American Electric Power Company, Inc. | DTE Energy Company | PPL Corporation | | Atmos Energy Corporation | Eversource Energy | Sempra Energy | | Avista Corporation | FirstEnergy Corp. | Southwest Gas Holdings, Inc. | | Black Hills Corporation | New Jersey Resources Corporation | Spire, Inc. | | CenterPoint Energy, Inc. | OGE Energy Corp. | WEC Energy Group, Inc. |
Other Compensation and Benefits
Other Compensation and Benefits Our NEOs also may elect to participate in an executive deferred compensation plan, have change-in-control agreements, and are eligible for an executive severance policy. In addition, we provide our NEOs with a limited number of perquisites and other broad-based employee benefits that are generally extended to our entire employee population. We believe that these other forms of compensation and benefits are aligned with our compensation objectives and are generally comparable to those that are provided to similarly situated executives at other comparable companies. Severance and Change-in-Control Benefits. Each NEO is covered under a separate change-in-control and termination agreement (“CIC Agreement”). The CIC Agreements are intended to ensure that the NEOs continue to apply thoroughly objective judgment to appropriately safeguard stockholder value and maximize investor return in relation to any potential change-in-control. The CIC Agreements provide cash severance benefits upon a double-trigger (meaning there must be both a qualifying change-in-control and termination of employment) and do not include any “gross-up” payments to cover an executive’s excise taxes incurred by an executive with respect to the receipt of payments in connection with a change-in-control. Each NEO is subject to our executive severance policy. Our 2020 Omnibus Plan provides for double-trigger vesting for equity awards that are assumed or replaced by an acquiring company upon a change-in-control. In the event equity awards are not assumed or replaced in a change-in-control, then the outstanding equity awards will vest upon the occurrence of such change-in-control. For further information regarding the benefits to be received upon termination of employment or change-in-control, see the section entitled “2023 Executive Compensation – Potential Payments upon Termination of Employment or a Change-in-Control of the Company.” Perquisites. Perquisites are not a principal element of our executive compensation program. We provide a limited number of perquisites to each NEO. We do not reimburse NEOs for the payment of individual income taxes they might incur in connection with their receipt of these benefits. For information regarding 2023 perquisites, see the 2023 Summary Compensation Table and footnote (6) to that table. Deferred Compensation Plan. Eligible executives, including the NEOs, may elect to defer between 5% and 80% of their base salary and/or STI payout under our Executive Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan provides an opportunity for eligible executives to defer their cash compensation without regard to the limits imposed by the Internal Revenue Service (“IRS”) for amounts that may be deferred under our 401(k) Plan. For information regarding the Deferred Compensation Plan, see the 2023 Non-Qualified Deferred Compensation table and accompanying narrative. Savings Programs. The NEOs are eligible to participate in the same tax-qualified 401(k) Plan as most employees and in a non-qualified defined contribution plan (the “Savings Restoration Plan”) maintained for eligible executives. The 401(k) Plan includes a Company match that varies depending on the pension plan in which the employee participates and a Company profit sharing contribution for most employees of between 0.5% and 1.5% of the employee’s eligible earnings based on achievement of the overall STI results. In addition, for salaried employees hired after January 1, 2010 and non-union non-exempt employees hired after January 1, 2013, the 401(k) Plan now includes a 4.5% Company contribution to the employee accounts. The Savings Restoration Plan provides for Company contributions in excess of IRS limits under the 401(k) Plan for eligible employees, including the NEOs. For information regarding the Savings Restoration Plan, see the 2023 Non-Qualified Deferred Compensation table and accompanying narrative. Health and Welfare Benefits. We also provide the NEOs other broad-based benefits such as medical, dental, life insurance and long-term disability coverage on the same terms and conditions to all employees.
Risk Management Policies and Guidelines
| ■ | Sound Performance Criteria—Performance measures for incentive awards are consistent with long-term stockholder value and operational excellence; measures and underlying goals are approved by the C&HC Committee of the Board; |
Risk Management Policies and Guidelines
| ■ | Long-term Focus—Executive compensation is weighted toward LTI, aligning executives with long-term results and stockholders; |
Risk Management Policies and Guidelines
| ■ | Performance Focus—LTI awards for executives are predominately performance-based; |
2023 Summary Compensation Table
2023 Summary Compensation Table
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($)(2) | Bonus ($)(3) | Stock Awards ($)(4) | Non-equity Incentive Plan Compensation ($)(5) | All Other Compensation ($)(6) | Total ($) | | Lloyd Yates(1) President and CEO | 2023 | 1,041,667 | — | 5,208,422 | 2,500,000 | 466,592 | 9,216,680 | | | 2022 | 879,167 | 500,000 | 4,671,273 | 954,828 | 108,238 | 7,113,506 | | | 2021 | — | — | — | — | — | — | | Shawn Anderson(1) EVP and CFO | 2023 | 518,478 | — | 1,137,093 | 809,798 | 95,367 | 2,560,736 | | | 2022 | 391,667 | — | 953,324 | 332,901 | 43,408 | 1,712,300 | | | 2021 | — | — | — | — | — | — | | Donald Brown EVP and Chief Innovation Officer, Former CFO | 2023 | 642,560 | 500,000 | 1,335,553 | 778,301 | 116,422 | 3,372,837 | | | 2022 | 628,300 | 500,000 | 1,245,681 | 445,025 | 56,234 | 2,875,240 | | | 2021 | 615,000 | — | 1,738,219 | 520,000 | 59,722 | 2,932,941 | | Melody Birmingham(1) EVP and Group President, Utilities | 2023 | 641,667 | — | 1,335,553 | 818,125 | 112,704 | 2,908,049 | | | 2022 | 312,500 | 225,000 | 2.397,721 | 276,680 | 127,324 | 3,339,225 | | | 2021 | — | — | — | — | — | — | | William Jefferson(1) EVP Operations and Chief Safety Officer | 2023 | 537,500 | — | 1,138,849 | 805,242 | 96,247 | 2,577,838 | | | 2022 | 237,500 | 150,000 | 1,496,725 | 196,258 | 116,493 | 2,196,976 | | | 2021 | — | — | — | — | — | — | | Michael Luhrs(1) EVP Risk and Strategy and Chief Commercial Officer | 2023 | 422,464 | 350,000 | 1,443,585 | 538,641 | 171,754 | 2,926,443 | | | 2022 | — | — | — | — | — | — | | | 2021 | — | — | — | — | — | — |
2023 Summary Compensation Table
| (1) Messrs. Yates, Anderson, and Jefferson and Ms. Birmingham were not NEOs during 2021. Mr. Luhrs was not an NEO during 2021 or 2022. |
2023 Summary Compensation Table
| (2) Any salary deferred at the election of the NEO is reported as salary in the year in which such salary was earned. |
2023 Summary Compensation Table
| (3) Amounts reported in this column for 2023 represent, for Mr. Brown, a $500,000 retention bonus that paid out as a result of his continued employment through January 30, 2023 and, for Mr. Luhrs, a $350,000 sign on bonus. |
2023 Summary Compensation Table
| (4) Amounts reported in this column for 2023 represent the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, with respect to the PSUs and RSUs granted in 2023. For information on the valuation assumptions used in these computations, see Note 17 to our consolidated financial statements included in our 2023 Annual Report on Form 10-K. The PSUs are subject to performance conditions; therefore, the value reported in this column for these awards is based upon the target outcome of such conditions. |
2023 Summary Compensation Table
The following table shows the number of PSU and RSU shares awarded in 2023 and the value of the PSUs at the grant date assuming that the highest level of performance conditions are achieved.
2023 Summary Compensation Table
| NEO | 2023 Number of RSUs Awarded | 2023 Number of PSUs Awarded | Maximum PSU Fair Value | | Lloyd Yates | 36,311 | 145,243 | $8,418,287 | | Shawn Anderson | 10,484 | 29,702 | $1,703,246 | | Donald Brown | 9,355 | 37,418 | $2,159,574 | | Melody Birmingham | 9,355 | 37,418 | $2,159,574 | | William Jefferson | 7,977 | 31,907 | $1,841,515 | | Michael Luhrs | 19,224 | 32,532 | $1,849,119 |
2023 Summary Compensation Table
| (5) Amounts reported in this column represent each NEOs 2023 STI payout. For a discussion of the STI awards, please see the “2023 Short-Term Incentive (STI) Program Design Results” section in the CD&A under “Components of 2023 Executive Compensation Program” above. |
2023 Summary Compensation Table
| (6) The table below provides a breakdown of the amounts shown in the “All Other Compensation” column for each NEO in 2023. |
2023 Summary Compensation Table
| | Other Compensation | | | | | | Name | Perquisites and Personal Benefits(a) ($) | Company Contributions To 401(k) Plan(b) ($) | Company Contributions To Savings Restoration Plan(c) ($) | Value of Stock Dividends ($)(d) | Total ($) | | Lloyd Yates | 223,998 | 30,360 | 65,473 | 146,760 | 466,592 | | Shawn Anderson | 17,804 | 30,360 | 17,340 | 29,863 | 95,367 | | Donald Brown | 19,497 | 30,360 | 28,756 | 37,809 | 116,422 | | Melody Birmingham | 15,861 | 30,360 | 28,673 | 37,809 | 112,704 | | William Jefferson | 14,557 | 30,360 | 19,090 | 32,240 | 96,247 | | Michael Luhrs | 100,000 | 30,360 | 8,507 | 32,887 | 171,754 |
2023 Summary Compensation Table
| (a) All perquisites are valued based on the aggregate incremental cost to the Company, as required by applicable SEC regulations. Please see the “Other Compensation and Benefits – Perquisites” section above in the CD&A under “Executive Compensation Elements” for additional information about the perquisites we provide to the NEOs. For Messrs. Jefferson, Brown, Anderson, and Ms. Birmingham, the perquisite amount listed above represents the cost of financial planning and tax services. For Mr. Luhrs, the perquisite amount listed above represents relocation assistance payments. For Mr. Yates, the perquisite amount listed above represents relocation assistance payments ($176,015) and the value of his personal use of Company or leased aircraft ($47,983.11). The incremental cost to the Company of Mr. Yates’ personal use of Company aircraft is determined based on calculating the average cost per hour to operate the aircraft taking into account direct costs such as fuel costs, trip-related maintenance, universal weather-monitoring costs, on-board catering, landing/ramp fees, and other miscellaneous variable costs, and multiplying the calculated average cost by the time of each trip assessed. Fixed costs which do not change based on usage, such as pilots’ salaries, the amortized costs of the aircraft, and the cost of maintenance not related to trips are excluded. With respect to flights on a leased or chartered airplane, aggregate incremental cost equals the amount that the third-party charges the Company for such trip. NEOs are also permitted to invite their spouse or other guests to accompany them on business trips when space is available. |
2023 Summary Compensation Table
| (b) This column reflects Company matching contributions and profit-sharing contributions and a Company non-elective contribution of 4.5% of compensation under the 401(k) Plan. The 401(k) Plan is a tax-qualified defined contribution plan, as described above in the “Other Compensation and Benefits – Savings Programs” section in the CD&A under “Executive Compensation Elements”. |
2023 Summary Compensation Table
| (c) This column reflects Company matching contributions and profit-sharing contributions and a Company non-elective contribution of 4.5% of compensation in excess of IRS limits to the Savings Restoration Plan. The Savings Restoration Plan is a non-qualified defined contribution plan, as described above in the “Other Compensation and Benefits – Savings Programs” section in the CD&A under “Executive Compensation Elements” above, and in the narrative following the 2023 Non-Qualified Deferred Compensation Table. |
2023 Summary Compensation Table
| (d) The amounts included in this column reflect cash dividends paid on 2023 RSUs granted, and the cash value of the Dividend Equivalent Rights credited and reinvested related to the EPS portion of 2023 PSU shares granted. |
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards The following table provides information for plan-based awards granted under the 2020 Omnibus Plan to the NEOs in 2023.
2023 Grants of Plan-Based Awards
| Name | Grant Date | Date Approved | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards Number of Shares of Stock or Units (#)(3) | Grant Date Fair Value of Stock and Option Awards ($)(4) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Lloyd Yates | — | — | 504,000 | 1,207,500 | 2,415,000 | — | — | — | — | — | | | 1/26/2023 | 1/26/2023 | — | — | — | 63,544 | 145,243 | 290,486 | — | 4,209,144 | | | 1/26/2023 | 1/26/2023 | — | — | — | — | — | — | 36,311 | 999,279 | | Shawn Anderson | — | — | 165,000 | 412,500 | 825,000 | — | — | — | — | — | | | 1/25/2023 | 1/25/2023 | — | — | — | 7,495 | 17,132 | 34,264 | — | 494,387 | | | 3/27/2023 | 3/13/2023 | — | — | — | 5,500 | 12,570 | 25,140 | — | 357,236 | | | 1/25/2023 | 1/25/2023 | — | — | — | — | — | — | 7,342 | 200,730 | | | 3/27/2023 | 3/13/2023 | — | — | — | — | — | — | 3,142 | 84,740 | | Donald Brown | — | — | 193,500 | 483,750 | 967,500 | — | — | — | — | — | | | 1/25/2023 | 1/25/2023 | — | — | — | 16,371 | 37,418 | 74,836 | — | 1,079,787 | | | 1/25/2023 | 1/25/2023 | — | — | — | — | — | — | 9,355 | 255,766 | | Melody Birmingham | — | — | 193,500 | 483,750 | 967,500 | — | — | — | — | — | | | 1/25/2023 | 1/25/2023 | — | — | — | 16,371 | 37,418 | 74,836 | — | 1,079,787 | | | 1/25/2023 | 1/25/2023 | — | — | — | — | — | — | 9,355 | 255,766 | | William Jefferson | — | — | 165,000 | 412,500 | 825,000 | — | — | — | — | — | | | 1/25/2023 | 1/25/2023 | — | — | — | 13,959 | 31,907 | 63,814 | — | 920,758 | | | 1/25/2023 | 1/25/2023 | — | — | — | — | — | — | 7,977 | 218,091 | | Michael Luhrs | — | — | 165,000 | 412,500 | 825,000 | — | — | — | — | — | | | 3/27/2023 | 1/11/2023 | — | — | — | 14,233 | 32,532 | 65,064 | — | 924,559 | | | 3/27/2023 | 1/11/2023 | — | — | — | — | — | — | 8,133 | 219,347 | | | 3/27/2023 | 1/11/2023 | — | — | — | — | — | — | 11,091 | 299,679 |
2023 Grants of Plan-Based Awards
| (1) The information in the “Threshold,” “Target,” and “Maximum” columns reflects potential payouts based on the performance targets set under the STI program excluding any individual performance modifiers that may be applied. The amount reported in the “Threshold” column represents the threshold level of achievement of each incentive plan goal. The amount reported in the “Target” column represents target achievement of each goal. The amount reported in the “Maximum” column represents maximum achievement of each goal. The amounts actually paid based on Company performance appear in the “Non-Equity Incentive Plan Compensation” column of the 2023 Summary Compensation Table. For a discussion of the STI awards, please see the “2023 Short-Term Incentive (STI) Program Design and Results” section in the CD&A under “Components of 2023 Executive Compensation Program” above. |
2023 Grants of Plan-Based Awards
| (2) The information in the “Threshold,” “Target,” and “Maximum” columns reflects the potential share payouts under the portion of the 2023 LTI award granted in the form of PSUs. Under the terms of the PSU awards, the PSUs will be earned based on continued employment and the achievement of pre-determined performance goals. The amount reported in the “Threshold” column represents the minimum level of the PSUs that may vest based on the achievement of the threshold level of achievement for each goal. The amount reported in the “Target” column represents target achievement of each goal. The amount reported in the “Maximum” column represents maximum achievement of each goal. For further information regarding these awards, please see the “2023 Long-Term Incentive (LTI) Program Design and Results” section in the CD&A under “Components of 2023 Executive Compensation Program” above. |
2023 Grants of Plan-Based Awards
| (3) Represents the portion of the 2023 LTI award granted in the form of RSUs. For further information regarding these awards, please see the “2023 Long-Term Incentive (LTI) Program Design and Results” section in the CD&A under “Components of 2023 Executive Compensation Program” above. |
2023 Grants of Plan-Based Awards
| (4) Amounts reported in this column represent the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, with respect to the PSUs and RSUs granted in 2023. All the PSUs are subject to performance conditions and the values reported in this column for the PSU awards are based upon the probable outcome of such conditions target performance. The values set forth in this table may not correspond to the actual values that may ultimately be realized by the NEOs upon vesting and settlement. |
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End The following table sets forth information at fiscal year-end concerning outstanding grants of equity awards to the NEOs. At fiscal year-end, none of our NEOs held any outstanding option awards with respect to the Company.
Outstanding Equity Awards at 2023 Fiscal Year-End
| Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | 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 ($)(2) | | Lloyd Yates | 30,747(3) | 816,333 | — | — | | | 36,311(5) | 964,057 | — | — | | | — | — | 245,988(4) | 6,530,981 | | | — | — | 301,503(6) | 8,004,898 | | Shawn Anderson | 5,124(3) | 136,042 | — | — | | | 7,342(5) | 194,930 | — | — | | | 3,142(8) | 83,420 | — | — | | | 4,465(9) | 118,546 | — | — | | | — | — | 23,916(4) | 634,970 | | | 17,082(14) | 453,527 | — | — | | | — | — | 35,563(6) | 944,210 | | | — | — | 25,855(7) | 686,458 | | | — | — | 20,840(10) | 553,302 | | | — | — | 4,912(11) | 130,414 | | Donald Brown | 8,200(3) | 217,710 | — | — | | | 9,355(5) | 248,375 | — | — | | | 10,825(9) | 287,404 | — | — | | | 34,364(12) | 912,364 | — | — | | | — | — | 65,596(4) | 1,741,574 | | | — | — | 77,674(6) | 2,062,249 | | | — | — | 86,604(10) | 2,299,336 | | | — | — | 17,864(11) | 474,289 | | Melody Birmingham | 8,319(3) | 220,869 | — | — | | | 9,355(5) | 248,375 | — | — | | | 23,199(13) | 615,933 | — | — | | | — | — | 66,556(4) | 1,767,062 | | | — | — | 77,674(6) | 2,062,249 | | William Jefferson | 4,742(3) | 125,900 | — | — | | | 7,977(5) | 211,789 | — | — | | | 13,311(13) | 353,407 | — | — | | | — | — | 37,936(4) | 1,007,201 | | | — | — | 66,234(6) | 1,758,517 | | Michael Luhrs | 8,133(8) | 215,931 | — | — | | | 11,091(15) | 294,466 | — | — | | | — | — | 66,915(7) | 1,776,598 |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (1) Amounts shown represent the market value of the unvested RSUs calculated using the closing sale price of our common stock on December 29, 2023, the last trading day of fiscal 2023, which was $26.55 per share. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (2) Amounts shown represent the market value of the unvested PSUs, calculated using the closing sale price of our common stock on December 29, 2023, the last trading day of fiscal 2023, which was $26.55 per share. The amounts presented are based on achieving the maximum performance level. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (3) The awards shown represent RSUs granted on January 28, 2022, except for Ms. Birmingham and Mr. Jefferson’s awards, which were granted on July 1, 2022. These shares will vest on February 28, 2025, provided the executive continues to be employed through such date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (4) The awards shown represent 2022 PSUs granted on January 28, 2022, except for Ms. Birmingham and Mr. Jefferson’s awards, which were granted on July 1, 2022. The number of shares that will vest is dependent upon our performance relative to three-year performance goals over the 2022-2024 performance period and the executive's continued employment through February 28, 2025. The amounts presented are based on achieving the maximum performance level. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (5) The awards shown represent RSUs granted on January 25, 2023, except for Mr. Yates’ award, which was granted on January 26, 2023. These shares will vest on February 27, 2026, provided the executive continues to be employed through such date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (6) The awards shown represent 2023 PSUs granted on January 25, 2023, except for Mr. Yates’ award, which was granted on January 26, 2023. The number of shares that will vest is dependent upon our performance relative to three-year performance goals over the 2023-2025 performance period and the executive's continued employment through February 27, 2026. The amounts presented are based on achieving the maximum performance level. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (7) The awards shown represent 2023 PSUs granted on March 27, 2023. The number of shares that will vest is dependent upon our performance relative to three-year performance goals over the 2023-2025 performance period and the executive's continued employment through February 27, 2026. The amounts presented are based on achieving the maximum performance level. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (8) The awards shown represent RSUs granted on March 27, 2023. These shares will vest on February 27, 2026, provided the executive continues to be employed through such date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (9) The awards shown represent RSUs granted on January 28, 2021. These shares will vest on February 28, 2024, provided the executive continues to be employed through such date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (10) The awards shown represent 2021 PSUs granted on January 28, 2021. The number of shares that will vest is dependent upon our performance relative to three-year performance goals over the 2021-2023 performance period and the executive's continued employment through February 28, 2024. The amounts presented are based on achieving the maximum performance level. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (11) The awards shown represent the unvested portion of 2021 PSUs granted on January 28, 2021. The number of shares that will vest is dependent upon our performance relative three-year performance goals over the 2021-2023 performance period minus shares awarded based upon the 2021-2022 performance period and the executive's continued employment through February 28, 2024. The amounts presented are based on achieving the maximum performance level. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (12) The award shown represents a special retention award of service based RSUs granted on January 30, 2020. The award vests on January 30, 2024, provided the executive continues to be employed through such date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (13) The awards shown represent special retention awards of service based RSUs granted on July 1, 2022. The awards vest on July 1, 2023 and July 1, 2024, provided the executive continues to be employed through the applicable date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (14) The award shown represents a special retention award of service based RSUs granted on January 28, 2022. The award vests on January 28, 2025, provided the executive continues to be employed through such date. |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (15) The award shown represents a special retention award of service based RSUs granted on March 27, 2023. The award vests on March 27, 2025, provided the executive continues to be employed by us through such date. For more information regarding this award, please see the “New Hire Award” section in the CD&A under “2023 Restricted Stock Units (“RSU”). |
2023 Option Exercises and Stock Vested
2023 Option Exercises and Stock Vested The following table sets forth information regarding the vesting of stock awards during 2023. During 2023, none of our NEOs exercised or held option awards with respect to the Company.
2023 Option Exercises and Stock Vested
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(4) | | Lloyd Yates | — | — | | Shawn Anderson | 28,166(1) | 618,056 | | Donald Brown | 64,466(2) | 1,768,302 | | Melody Birmingham | 15,465(3) | 422,968 | | William Jefferson | 13,311(3) | 364,056 | | Michael Luhrs | — | — |
2023 Option Exercises and Stock Vested
| (1) This amount represents 2020 PSUs and RSUs which vested on February 28, 2023, 2020 RSUs which vested on January 30, 2023, and 2021 PSUs which vested on February 28, 2023. |
2023 Option Exercises and Stock Vested
| (2) This amount represents 2020 PSUs and RSUs which vested on February 28, 2023, and 2021 PSUs which vested on February 28, 2023. |
2023 Option Exercises and Stock Vested
| (3) This amount represents 2022 RSUs which vested on July 1, 2023. |
2023 Option Exercises and Stock Vested
| (4) Amounts shown reflect the value realized upon the vesting of stock awards during 2023, computed by multiplying the number of shares that vested by the market value of our common stock on the applicable vesting date. |
2023 Non-Qualified Deferred Compensation
2023 Non-Qualified Deferred Compensation The following table provides information regarding deferred compensation with respect to our NEOs under the Deferred Compensation Plan and the Savings Restoration Plan.
2023 Non-Qualified Deferred Compensation
| Name | Plan Name(5)(6) | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(4) | | Lloyd Yates | Deferred Compensation Plan | — | — | — | — | — | | | Savings Restoration Plan | — | 65,473 | 2,968 | — | 68,441 | | Shawn Anderson | Deferred Compensation Plan | — | — | — | — | — | | | Savings Restoration Plan | — | 17,340 | 826 | — | 22,785 | | Donald Brown | Deferred Compensation Plan | 44,503 | — | 106,600 | — | 343,615 | | | Savings Restoration Plan | — | 28,756 | 55,260 | — | 236,145 | | Melody Birmingham | Deferred Compensation Plan | — | — | — | — | — | | | Savings Restoration Plan | — | 28,673 | 39 | — | 28,712 | | William Jefferson | Deferred Compensation Plan | — | — | — | — | — | | | Savings Restoration Plan | — | 19,090 | — | — | 19,090 | | Michael Luhrs | Deferred Compensation Plan | — | — | — | — | — | | | Savings Restoration Plan | — | 8,507 | — | — | 8,507 |
2023 Non-Qualified Deferred Compensation
| (1) Amounts shown, if any, were deferred under our Deferred Compensation Plan. The NEOs may elect to defer and invest between 5% and 80% of their base compensation and/or between 5% and 80% of their bonus on a pre-tax basis. Participant deferrals are fully vested. |
2023 Non-Qualified Deferred Compensation
| (2) The amount of Company contributions for each NEO in this column is included in each NEO’s compensation reported in the 2023 Summary Compensation Table under the column “All Other Compensation.” |
2023 Non-Qualified Deferred Compensation
| (3) The aggregate earnings in this column are not reported in the 2023 Summary Compensation Table. For a discussion of investment options under these plans, see the narrative accompanying this table. |
2023 Non-Qualified Deferred Compensation
| (4) The aggregate balance includes amounts for each NEO that would have been previously reported as compensation in the Summary Compensation Table for prior years had he or she been a NEO in those prior years with the exception of any amounts shown for the aggregate earnings on deferred compensation. |
2023 Non-Qualified Deferred Compensation
| (5) For a description of the Deferred Compensation Plan, please see the “Other Compensation and Benefits – Deferred Compensation Plan” section in the CD&A under “Establishing Executive Compensation” and the narrative accompanying this table. |
2023 Non-Qualified Deferred Compensation
| (6) For a description of the Savings Restoration Plan, please see the “Other Compensation and Benefits – Savings Programs” section in the CD&A under “Establishing Executive Compensation” and the narrative accompanying this table. These contributions are fully vested. |
2023 Non-Qualified Deferred Compensation
We sponsor the Savings Restoration Plan and the Deferred Compensation Plan, two non-qualified defined contribution plans, neither of which credits above-market or preferential earnings. Amounts due under the plans are unsecured contractual obligations that are paid from our general assets. Savings Restoration Plan. The Savings Restoration Plan provides a supplemental benefit to eligible employees, including the NEOs, equal to the difference between: (i) the employer contributions (including matching and profit sharing contributions) an employee would have received under our Retirement Savings Plan had such benefit not been limited by Sections 415 (a limitation on annual contributions under a defined contribution plan of $66,000 for 2023) and 401(a)(17) (a limitation on annual compensation of $330,000 for 2023) of the Code, and the Retirement Savings Plan’s definition of compensation, which excludes deferrals into our Deferred Compensation Plan for purposes of calculating certain employer contributions, minus (ii) the actual employer contributions the employee received under the Retirement Savings Plan. Amounts credited under the Savings Restoration Plan are deferred on a pre-tax basis. Participants’ accounts under the Savings Restoration Plan are 100% vested. Employees designate how these contributions will be invested, with the investment options generally the same as those available under our Retirement Savings Plan. Under the Savings Restoration Plan, payment generally occurs within 45 days after separation from service, although specified employees (within the meaning of Section 409A of the Code) are subject to a six-month payment delay in accordance with Section 409A of the Code. Amounts may be distributed upon an unforeseeable emergency, as determined in accordance with the terms of the Savings Restoration Plan. The form of payment depends on when the participant made the payment election, as reflected below:
2023 Non-Qualified Deferred Compensation
| (1) If the election was made before January 1, 2014, the payment options were the following: lump sum, monthly installments, semi-annual installments, and annual installments. Such installments are substantially equal and made over the period of time elected, not greater than 15 years. |
2023 Non-Qualified Deferred Compensation
| (2) If elected on or after January 1, 2014, and before November 1, 2020, the payment options were the following: lump sum or annual installments. Installment payments are substantially equal and made over the period of time elected, not greater than 15 years. |
2023 Non-Qualified Deferred Compensation
| (3) If elected on and after November 1, 2020, the only payment option is one lump sum. |
2023 Non-Qualified Deferred Compensation
| (4) If a participant has not made a timely and valid election as to the form of payment, payment is made in one lump sum. |
2023 Non-Qualified Deferred Compensation
Deferred Compensation Plan. The Deferred Compensation Plan provides employees at certain job levels, including the NEOs, the ability to defer compensation on a pre-tax basis, including compensation that would otherwise be limited by the Code. Participants may elect to defer and invest between 5% and 80% of their base compensation and/or between 5% and 80% of their annual bonus on a pre-tax basis. Employees designate how their contributions will be invested, with the investment options generally similar to those available under our Retirement Savings Plan. Employee contributions and any earnings thereon are 100% vested. The timing of payment under the Deferred Compensation Plan generally is the March 31st after the date of the participant’s separation from service. This timing applies both to the Pre-409A Amounts and Post-409A Amounts. In the case of Post-409A Amounts payable to specified employees within the meaning of Section 409A of the Code, payments generally will not be payable until six months after the date of separation from service. Participants also may elect to receive in-service distributions of both Pre-409A Amounts and Post-409A Amounts. If a participant requests an in-service distribution of a Pre-409A Amount with less than 12 months’ advance notice, however, the distribution is subject to a 10% reduction. Participants may delay the commencement of distributions for five years after their originally scheduled payment date, in accordance with the subsequent deferral procedures under Section 409A of the Code. Both Pre-409A Amounts and Post-409A Amounts also may be paid upon an unforeseeable emergency, as determined in accordance with the terms of the plan. The form of payment for both amounts may be either a lump sum or annual installments of up to 15 years, as elected by the participant.
2023 Executive Compensation - Potential Payments upon Termination of Employment or a Change-in-Control of the Company
2023 Executive Compensation - Potential Payments upon Termination of Employment or a Change-in-Control of the Company Each NEO is eligible for certain benefits, upon certain types of terminations of employment, including a termination of employment involving a change-in-control of the Company (“CIC”). These benefits are in addition to the benefits to which all employees would be entitled upon a termination of employment generally (i.e., (i) vested retirement benefits accrued as of the date of termination, (ii) stock-based awards that are vested as of the date of termination, and (iii) the right to continue medical coverage pursuant to COBRA). The additional benefits are described below. Executive Severance Policy. Our Executive Severance Policy provides severance pay and other benefits to terminated employees at a certain job level, including our NEOs, provided they satisfy the terms of the policy. No severance pay or other benefits are paid under this policy if the termination of employment occurs in connection with a Change-in-Control. Under the Executive Severance Policy, an employee becomes eligible to receive benefits only if he or she is terminated under any of the following scenarios: (a) a position elimination due to a reduction in force or other restructuring; (b) the position is moved to a principal employment location outside of a 50 mile radius from the Participant’s principal employment location on the date of termination of employment and such move would result in the Participant having a commute more than 20 miles longer, and provided that the Participant chooses not to relocate to the new location for such position; or (c) employment is constructively terminated. Constructive termination means a material reduction with respect to: (1) the scope of the employee’s position; (2) the employee’s base pay; or (3) the employee’s annual incentive opportunity; and as a result of any such event, the employee chooses to terminate employment. Under our Executive Severance Policy, an eligible employee receives severance pay in the amount of 52 weeks of base salary at the rate in effect on the date of termination. The employee also receives a lump sum amount equivalent to 130% of 52 weeks of COBRA (as defined in the Code and the Employee Retirement Income Security Act of 1974) continuation coverage premiums and outplacement services. Change-in-Control and Termination Agreements. As of December 31, 2023, we had CIC and Termination Agreements with each of the NEOs. We entered into these agreements based upon our belief that they are in the best interests of the stockholders. They are designed to help ensure that in the event of extraordinary events, a thoroughly objective judgment is made on any potential corporate transaction, so that stockholder value is appropriately safeguarded and maximized. The CIC and Termination Agreements provide for cash severance benefits if the executive terminates employment for “Good Reason” (as defined below) or is terminated by the Company for any reason other than “Good Cause” (as defined below) within 24 months following certain Change-in-Control events (referred to as a “double trigger”). In addition, pursuant to the terms of the 2020 Omnibus Plan and 2010 Omnibus Plan, the executives’ equity awards are subject to double trigger accelerated vesting in the event of a Change-in-Control unless an acquiring company does not assume or replace such awards upon the Change-in-Control. None of the agreements contain a “gross-up” provision to reimburse executives for excise taxes incurred with respect to benefits received under a CIC and Termination Agreement. The CIC and Termination Agreements can be terminated on twelve months’ notice to the participant. For purposes of the CIC and Termination Agreements: “Good Cause” shall be deemed to exist if, and only if, we notify the executive, in writing, within 60 days of our knowledge that one of the following events occurred: (1) the executive has engaged in acts or omissions constituting dishonesty, intentional breach of fiduciary obligation or intentional wrongdoing or malfeasance, in each case that results in substantial harm to the Company; or (2) the executive has been convicted of a criminal violation involving fraud or dishonesty. “Good Reason” shall be deemed to exist if, and only if: (1) there is a significant diminution in the nature or the scope of the executive’s authorities or duties; (2) there is a significant reduction in the executive’s monthly rate of base salary and the executive’s opportunity to earn a bonus under an incentive bonus compensation plan we maintain or the executive’s benefits; (3) we change by 50 miles or more the principal location at which the executive is required to perform services as of the date of a Change-in-Control; or (4) there is a material breach of the CIC and Termination Agreement. The CIC and Termination Agreements provide for a lump sum payment of two (three in the case of Mr. Yates) times the executive’s current annual base salary and target annual incentive bonus compensation. The executive will also receive a pro rata portion of the executive’s targeted annual incentive bonus for the year of termination. The CIC and Termination Agreements also provide that in the event of a Change-in-Control, the executive’s total Change-in-Control related payments will be equal to the best “net benefit” which is equal to the greater of: (i) the after-tax value of the executive’s total Change-in-Control related payments reduced by the 20% excise tax and other federal, state, local and other taxes; and (ii) the after-tax value of the executive’s Change-in-Control related payments that has been reduced to the extent necessary so that it would not trigger an excise tax, reduced for federal, state, local and other taxes (in each case, without a gross-up). In addition, the CIC and Termination Agreements provide for the executives to receive a lump sum amount equivalent to 130% of the COBRA continuation premiums due for the two-year period (three in the case of Mr. Yates) following termination. In the event of a Change-in-Control, all outstanding equity awards granted to each of the NEOs under the applicable Omnibus Plan as of December 31, 2023 will vest only upon a termination of employment in connection with a Change-in-Control. For the NEOs, we have quantified the potential payments upon termination under various termination scenarios as of December 31, 2023.
2023 Executive Compensation - Potential Payments upon Termination of Employment or a Change-in-Control of the Company
| Potential Payments upon Termination of Employment or a Change-in-Control of the Company at December 31, 2023(1) | | | | | | | | | | Severance ($) | Pro Rata Bonus Payment (5) ($) | Equity Grants ($) | Cash Awards ($) | Welfare Benefits ($) | Outplacement ($) | Total Payment ($) | | Lloyd Yates | | | | | | | | | Voluntary Termination | — | — | — | — | — | — | — | | Retirement(2) | — | — | — | — | — | — | — | | Disability(2) | — | 2,036,459 | 4,146,367 | — | — | — | 6,182,825 | | Death(2) | — | 2,036,459 | 4,146,367 | — | — | — | 6,182,825 | | Involuntary Termination(3) | 1,050,000 | — | — | — | 25,927 | 25,000 | 1,100,927 | | Change-in-Control(4) | 9,259,376 | 2,036,459 | 9,048,330 | — | 86,206 | 25,000 | 20,455,370 | | Shawn Anderson | | | | | | | | | Voluntary Termination | — | — | — | — | — | — | — | | Retirement(2) | — | — | — | — | — | — | — | | Disability(2) | — | 661,060 | 1,345,952 | — | — | — | 2,007,012 | | Death(2) | — | 661,060 | 1,345,952 | — | — | — | 2,007,012 | | Involuntary Termination(3) | 550,000 | — | — | — | 25,707 | 25,000 | 600,707 | | Change-in-Control(4) | 2,422,120 | 661,060 | 2,461,142 | — | 55,533 | 25,000 | 5,624,855 | | Donald Brown | | | | | | | | | Voluntary Termination | — | — | — | — | — | — | — | | Retirement(2) | — | — | — | — | — | — | — | | Disability(2) | — | 819,264 | 3,571,320 | — | — | — | 4,390,584 | | Death(2) | — | 819,264 | 3,571,320 | — | — | — | 4,390,584 | | Involuntary Termination(3) | 645,000 | — | — | — | 34,583 | 25,000 | 704,583 | | Change-in-Control(4) | 2,928,529 | 819,264 | 4,954,577 | — | 73,996 | 25,000 | 8,801,367 | | Melody Birmingham | | | | | | | | | Voluntary Termination | — | — | — | — | — | — | — | | Retirement(2) | — | — | — | — | — | — | — | | Disability(2) | — | 818,125 | 1,487,172 | — | — | — | 2,395,297 | | Death(2) | — | 818,125 | 1,487,172 | — | — | — | 2,305,297 | | Involuntary Termination(3) | 645,000 | — | — | — | 23,168 | 25,000 | 693,168 | | Change-in-Control(4) | 2,926,250 | 818,125 | 2,999,834 | — | 51,165 | 25,000 | 6,820,374 | | William Jefferson | | | | | | | | | Voluntary Termination | — | — | — | — | — | — | — | | Retirement(2) | — | — | — | — | — | — | — | | Disability(2) | — | 685,313 | 963,685 | — | — | — | 1,648,998 | | Death(2) | — | 685,313 | 963,685 | — | — | — | 1,648,998 | | Involuntary Termination(3) | 550,000 | — | — | — | 25,927 | 25,000 | 600,927 | | Change-in-Control(4) | 2,470,625 | 685,313 | 2,073,955 | — | 55,973 | 25,000 | 5,310,867 |
2023 Executive Compensation - Potential Payments upon Termination of Employment or a Change-in-Control of the Company
| Potential Payments upon Termination of Employment or a Change-in-Control of the Company at December 31, 2023(1) | | | | | | | | | | Severance ($) | Pro Rata Bonus Payment (5) ($) | Equity Grants ($) | Cash Awards ($) | Welfare Benefits ($) | Outplacement ($) | Total Payment ($) | | Michael Luhrs | | | | | | | | | Voluntary Termination | — | — | — | — | — | — | — | | Retirement(2) | — | — | — | — | — | — | — | | Disability(2) | — | 538,641 | 442,535 | — | — | — | 981,177 | | Death(2) | — | 538,641 | 442,535 | — | — | — | 981,177 | | Involuntary Termination(3) | 550,000 | — | — | — | 34,881 | 25,000 | 609,881 | | Change-in-Control(4) | 2,177,283 | 538,641 | 1,398,696 | — | 73,880 | 25,000 | 4,213,500 |
2023 Executive Compensation - Potential Payments upon Termination of Employment or a Change-in-Control of the Company
| (1) Amounts payable to each of the NEOs as shown in the Pension Benefits Table and the Non-Qualified Deferred Compensation Table and under the tax-qualified, nondiscriminatory 401(k) Plan are not included in the table. |
2023 Executive Compensation - Potential Payments upon Termination of Employment or a Change-in-Control of the Company
| (2) For all NEO’s, special vesting rules apply in the event the applicable NEO’s employment terminates following the NEO becoming retirement eligible or as a result of the NEO’s death or disability. None of the NEO’s were retirement eligible as of December 31, 2023. If an NEO’s employment had terminated as a result of the NEO’s death or disability as of December 31, 2023, the NEO would have been entitled to pro-rata vesting as of the termination date, with the PSUs vesting based on actual performance; provided that, for the 2022 and 2023 PSUs, the PSU vesting would have been based on target performance if termination resulted from the NEO’s death. The figures above represent target performance because as of December 31, 2023 actual performance was not yet known. Mr. Yates’s equity award agreements also provide for certain pro rata vesting upon voluntary termination; however, only if such voluntary termination occurs after December 31, 2023. The value of the equity grants was determined by multiplying the closing price of our common stock on December 29, 2023, which was $26.55 per share, by the number of shares that would have vested upon termination of employment as a result of the NEO’s retirement, disability or death, as applicable. |
2023 Executive Compensation - Potential Payments upon Termination of Employment or a Change-in-Control of the Company
| (3) Amounts shown reflect payments that would be made upon the involuntary termination of each NEO eligible under our Executive Severance Policy described above. |
2023 Executive Compensation - Potential Payments upon Termination of Employment or a Change-in-Control of the Company
| (4) Amounts shown reflect payments to be made upon termination of employment in the event of a Change-in-Control of the Company under the CIC and Termination Agreements as described above in the CIC and Termination Agreements section. |
2023 Executive Compensation - Potential Payments upon Termination of Employment or a Change-in-Control of the Company
| (5) Bonus Payments were calculated using the NEO’s eligible earnings for 2023 and known company STI scorecard results for 2023. |
Pay Ratio
Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following disclosure about the relationship of the annual total compensation of our employees to the annual total compensation of our CEO. For 2023, the ratio of the compensation of Mr. Yates, our CEO during 2023, to the compensation of the median employee is 53 to 1. To identify the median of the annual total compensation of all our employees (other than our CEO), as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps consistent with Item 402(u) of Regulation S-K:
Pay Ratio
| 1. | To identify the “median employee” from our employee population, we prepared a full census of all our employees (except our CEO) using our existing centralized payroll database of base cash compensation (base salary plus overtime and shift premiums, calculated based on the hours worked during the relevant period) that is used internally to calculate annual cash (STI) incentive compensation and profit-sharing eligibility. We used base cash compensation as our compensation measure as it is the principal form of compensation delivered to all of our employees. We used the same median employee for 2021, 2022, and 2023. In 2021, we used the following methodology to identify the median employee: |
Pay Ratio
| ■ | We determined that, as of December 31, 2023, our employee population consisted of approximately 7,443 employees, with all of our employees located in the United States. This population consisted of our full-time, part-time and temporary employees, as determined for employment law purposes. |
Pay Ratio
We adjusted as of December 31, 2021, the compensation of 638 full-time employees and 19 part-time employees hired during 2021 to annualize compensation for any portion of the measurement period that they were not with the Company.
Pay Ratio
| ■ | Although all of our employees are eligible for an annual cash (STI) incentive (paid in 2024 for 2023 individual and Company performance), we excluded this for all employees because we determined its inclusion would not have a meaningful effect on the determination of the median employee. |
Pay Ratio
| ■ | Since we do not widely distribute annual equity awards to our employees, such awards were excluded from our compensation measure. |
Pay Ratio
| 2. | We identified our median employee from a full census report compiled using base cash compensation as our consistently applied compensation measure. Since all our employees are located in the United States, as is our CEO, we did not make any cost-of-living adjustments identifying the “median employee.” |
Pay Ratio
| 3. | Once we identified our median employee, we combined all of the elements of such employee’s compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $174,408. |
Pay Ratio
| 4. | For the year ended December 31, 2023, the total compensation for our CEO, Mr. Yates, was $9,216,680 as reported in the “Total” column of the Summary Compensation Table of this Proxy Statement. |
Pay Ratio
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive Compensation Actually Paid (“CAP”) to our CEO and to our non-CEO NEOs and certain financial performance of the Company. CAP, as determined under SEC requirements, does not reflect the actual amount of compensation earned by or paid to our executive officers during a covered year. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the “Compensation Discussion and Analysis (CD&A)” section above.
Pay Ratio
| Year | CEO | | Former CEO | | Other NEO Pay | | Value of Initial Fixed $100 Invested Based on: | | Net Income (in millions) | Net Operating Earnings Per Share (NOEPS)(7) | | | Summary Compen- sation Table Total for CEO | Compen- sation Actually Paid to CEO(5) | Summary Compen- sation Table Total for Former CEO | Compensation Actually Paid to Former CEO(5) | Average Summary Compen- sation Table Total for Other NEO's | Average Compen- sation Actually Paid to Other NEO's | Total Share- holder Return (TSR) | Dow Jones Utilities Index Peer Group TSR | | | | 2023(1) | $9,216,680 | $9,913,336 | $0 | $0 | $2,869,181 | $3,127,806 | $109 | $110 | $674.35 | $1.60 | | 2022(2) | $7,113,506 | $6,720,202 | $1,352,993 | ($3,953,194)(6) | $2,221,932 | $1,305,705 | $109 | $118 | $791.80 | $1.47 | | 2021(3) | $0 | $0 | $9,535,782 | $13,795,347 | $2,491,010 | $3,453,360 | $106 | $117 | $588.80 | $1.37 | | 2020(4) | $0 | $0 | $6,457,725 | $2,329,180 | $3,093,801 | $1,632,643 | $85 | $99 | ($14.20) | $1.32 |
Pay Ratio
| (1) For 2023, the table includes Lloyd Yates as CEO. The other NEOs were Donald E. Brown, Shawn Anderson, Melody Birmingham, William Jefferson and Michael Luhrs. |
Pay Ratio
| (2) For 2022, the table includes Lloyd Yates as CEO and Joseph Hamrock as Former CEO. The other NEOs were Donald E. Brown, Shawn Anderson, Melody Birmingham, William Jefferson and Pablo A. Vegas. |
Pay Ratio
| (3) For 2021, the table includes Joseph Hamrock as CEO. The other NEOs were Donald E. Brown, Pablo A. Vegas, Violet G. Sistovaris and Charles E. Shafer. |
Pay Ratio
| (4) For 2020, the table includes Joseph Hamrock as CEO. The other NEOs were Donald E. Brown, Pablo A. Vegas, Violet G. Sistovaris and Carrie J. Hightman. |
Pay Ratio
| (5) In accordance with the SEC rules, the amounts reported in these columns for each year were calculated by making the adjustments shown in the following tables to amounts reported for the CEOs in the Summary Compensation Table in the total column. Amounts for each year do not reflect the actual amount of compensation earned by or paid to the CEO during the applicable year. |
Pay Ratio
| (6) A pro rata portion of all outstanding, unvested equity awards vesting in connection with Mr. Hamrock’s retirement in 2022. |
Pay Ratio
| (7) NOEPS is a non-GAAP financial measure. Appendix A to this Proxy Statement contains a full reconciliation of GAAP earnings per share to NOEPS. |
Pay Ratio
To calculate CAP, the following amounts were deducted from and added to Summary Compensation Table (“SCT”) total compensation: CEO SCT to CAP Reconciliation:
Pay Ratio
| Year | Reported SCT Total for Covered Year | | Reported Value of Equity Awards in SCT for Covered Year(a) | | Equity Award Adjustments for Covered Year(b) | | Reported Change in the Actuarial Present Value of Pension Benefits for Covered Year | | Pension Benefits Adjustments for Covered Year | | Compensation Actually Paid for Covered Year | | 2023 | $9,216,680 | – | $5,208,422 | + | $5,905,078 | – | $0 | + | $0 | = | $9,913,336 | | 2022 | $7,113,506 | – | $4,671,273 | + | $4,277,969 | – | $0 | + | $0 | = | $6,720,202 |
Pay Ratio
Former CEO SCT to CAP Reconciliation:
Pay Ratio
| Year | Reported SCT Total for Covered Year | | Reported Value of Equity Awards in SCT for Covered Year(a) | | Equity Award Adjustments for Covered Year(b) | | Reported Change in the Actuarial Present Value of Pension Benefits for Covered Year | | Pension Benefits Adjustments for Covered Year | | Compensation Actually Paid for Covered Year | | 2022 | $1,352,993 | – | $0 | + | ($5,306,187) | – | $0 | + | $0 | = | ($3,953,194) | | 2021 | $9,535,782 | – | $6,953,903 | + | $11,213,468 | – | $0 | + | $0 | = | $13,795,347 | | 2020 | $6,457,725 | – | $4,901,916 | + | $773,371 | – | $0 | + | $0 | = | $2,329,180 |
Pay Ratio
Other NEOs SCT to CAP Reconciliation:
Pay Ratio
| Year | Average Reported SCT Total for Covered Year | | Average Reported Value of Equity Awards in SCT for Covered Year(a) | | Average Equity Award Adjustments for Covered Year(b) | | Average Reported Change in the Actuarial Present Value of Pension Benefits for Covered Year | | Average Pension Benefits Adjustments for Covered Year(c) | | Average of Compensation Actually Paid for Covered Year | | 2023 | $2,869,181 | – | $1,278,127 | + | $1,536,752 | – | $0 | + | $0 | = | $3,127,806 | | 2022 | $2,221,932 | – | $1,218,690 | + | $302,463 | – | $0 | + | $0 | = | $1,305,705 | | 2021 | $2,491,010 | – | $1,449,191 | + | $2,415,827 | – | $22,263 | + | $17,977 | = | $3,453,360 | | 2020 | $3,093,801 | – | $2,002,865 | + | $613,661 | – | $87,911 | + | $15,957 | = | $1,632,643 |
Pay Ratio
| (a) Represents the amounts reported in the Summary Compensation Table in the Stock Awards Column. |
Pay Ratio
| (b) See reconciliation of the Equity Award Adjustments below. |
Pay Ratio
| (c) See reconciliation of the Average Pension Benefits Adjustments below. |
Pay Ratio
CEO Equity Adjustment to CAP Reconciliation
Pay Ratio
| Year | Covered Year- End Fair Value of Equity Awards Granted During Covered Year That Remained Outstanding and Unvested as of Last Day of Covered Year ($) | Change in Fair Value as of Last Day of Covered Year (as compared to Last Day of Prior Year) of Equity Awards Granted Prior to Covered Year and Outstanding and Unvested as of Last Day of Covered Year ($) | Vesting Date Fair Value of Equity Awards Granted During Covered Year that Vested During Covered Year ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Equity Awards Granted Prior to Covered Year that Vested During Covered Year ($) | Fair Value as of Last Day of Prior Year of Equity Awards that Failed to Meet Vesting Conditions During the Covered Year ($) | Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included as of Last Day of Covered Year ($) | Total - Inclusion of Equity Values ($) | | 2023 | $5,285,822 | $619,256 | $0 | $0 | $0 | $0 | $5,905,078 | | 2022 | $4,277,969 | $0 | $0 | $0 | $0 | $0 | $4,277,969 |
Pay Ratio
Former CEO Equity Adjustment to CAP Reconciliation
Pay Ratio
| Year | Covered Year-End Fair Value of Equity Awards Granted During Covered Year That Remained Outstanding and Unvested as of Last Day of Covered Year ($) | Change in Fair Value as of Last Day of Covered Year (as compared to Last Day of Prior Year) of Equity Awards Granted Prior to Covered Year and Outstanding and Unvested as of Last Day of Covered Year ($) | Vesting Date Fair Value of Equity Awards Granted During Covered Year that Vested During Covered Year ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Equity Awards Granted Prior to Covered Year that Vested During Covered Year ($) | Fair Value as of Last Day of Prior Year of Equity Awards that Failed to Meet Vesting Conditions During the Covered Year ($) | Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included as of Last Day of Covered Year ($) | Total - Inclusion of Equity Values ($) | | 2022 | $0 | $632,393 | $0 | $171,491 | $6,110,071 | $0 | ($5,306,187) | | 2021 | $10,469,546 | $1,256,857 | $0 | ($512,935) | $0 | $0 | $11,213,468 | | 2020 | $3,087,464 | ($2,202,427) | $0 | ($111,666) | $0 | $0 | $773,371 |
Pay Ratio
Other NEOs Equity Adjustment to CAP Reconciliation
Pay Ratio
| Year | Average Covered Year- End Fair Value of Equity Awards Granted During Covered Year That Remained Outstanding and Unvested as of Last Day of Covered Year ($) | Average Change in Fair Value as of Last Day of Covered Year (as compared to Last Day of Prior Year) of Equity Awards Granted Prior to Covered Year and Outstanding and Unvested as of Last Day of Covered Year ($) | Average Vesting Date Fair Value of Equity Awards Granted During Covered Year that Vested During Covered Year ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Equity Awards Granted Prior to Covered Year that Vested During Covered Year ($) | Average Fair Value as of Last Day of Prior Year of Equity Awards that Failed to Meet Vesting Conditions During the Covered Year ($) | Average Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included as of Last Day of Covered Year ($) | Total - Average Inclusion of Equity Values ($) | | 2023 | $1,298,315 | $235,107 | $0 | $3,330 | $0 | $0 | $1,536,752 | | 2022 | $1,138,202 | $85,612 | $0 | $18,799 | $940,151 | $0 | $302,463 | | 2021 | $2,174,652 | $323,747 | $0 | ($82,573) | $0 | $0 | $2,415,827 | | 2020 | $1,092,084 | ($449,434) | $0 | ($28,990) | $0 | $0 | $613,661 |
Pay Ratio
Fair values reported in this table are computed in accordance with FASB ASC Topic 718. Other NEOs Pension Adjustment to CAP Reconciliation
Pay Ratio
| Year | Plan | Service Cost | Prior Service Cost | Total Average Pension Benefit Adjustment (Service Cost ÷ by number of Other NEOs in applicable year) | | 2023 | Pension Plan | $0 | $0 | $0 | | | Pension Restoration Plan | $0 | $0 | $0 | | | Total | $0 | $0 | $0 | | 2022 | Pension Plan | $0 | $0 | $0 | | | Pension Restoration Plan | $0 | $0 | $0 | | | Total | $0 | $0 | $0 | | 2021 | Pension Plan | $41,946 | $0 | $10,486 | | | Pension Restoration Plan | $29,963 | $0 | $7,491 | | | Total | $71,909 | $0 | $17,977 | | 2020 | Pension Plan | $35,124 | $0 | $8,781 | | | Pension Restoration Plan | $28,702 | $0 | $7,176 | | | Total | $63,826 | $0 | $15,957 |
Proposal 5 - Bylaw Amendment: Stockholder Approval of Director Compensation
Proposal 5 - Bylaw Amendment: Stockholder Approval of Director Compensation The Bylaws of NiSource Inc. are amended as follows: Article V (f) is deleted and replaced in its entirety as follows: Compensation. Each director of the Corporation shall be entitled to receive per meeting of the Board of Directors or committee thereof attended such director's reasonable expenses of attendance at such meeting. Directors who are full-time employees of the Corporation shall not receive any compensation for their service as director. The Board of Directors shall not have any authority to fix the compensation of directors. The compensation of directors the corporation pays shall be fixed at $1 in a fiscal year; provided, however, the corporation may pay, grant, or award compensation greater than $ 1 in a fiscal year if such compensation has been (I) disclosed to stockholders in advance of the fiscal year in which the corporation will pay, grant, or award such compensation; (2) submitted to an approval vote of stockholders at an annual or special meeting of stockholders in advance of the fiscal year in which the corporation will pay, grant, or award such disclosed compensation; and (3) approved by a majority of stockholder votes present in person or represented by proxies and entitled to vote cast in favor of the disclosed annual compensation at an annual or special meeting of stockholders in advance of the fiscal year in which the corporation will pay, grant, or award such compensation, which majority shall include only stockholder votes of stockholders that are not directors of the Company.
PROPOSAL 5 – STOCKHOLDER PROPOSAL REQUESTING THAT OUR BOARD AMEND BYLAWS REQUIRING STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION
PROPOSAL 5 – STOCKHOLDER PROPOSAL REQUESTING THAT OUR BOARD AMEND BYLAWS REQUIRING STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION I urge stockholders to approve this bylaw amendment and assume proper authority over the compensation of directors who represent us.
Board of Directors’ Statement in Opposition
| ■ | Our director compensation is reasonable and appropriate for a company of our size and scope. |
Board of Directors’ Statement in Opposition
| ■ | Our existing governance practices around director compensation promote effective and equitable pay, including the utilization of a leading independent compensation consultant to assess and recommend director compensation and robust stock ownership guidelines. |
Board of Directors’ Statement in Opposition
| ■ | The adoption of this proposal would be a significant divergence from the practice of our peers and would harm the current director compensation structure, which is comparable to others in our industry. |
PROPOSAL 5 – STOCKHOLDER PROPOSAL REQUESTING THAT OUR BOARD AMEND BYLAWS REQUIRING STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION
PROPOSAL 5 – STOCKHOLDER PROPOSAL REQUESTING THAT OUR BOARD AMEND BYLAWS REQUIRING STOCKHOLDER APPROVAL OF DIRECTOR COMPENSATION independent compensation consultant serves to support this assessment. Amending our bylaws so that non-employee director compensation is $1 and reliant on stockholder approval annually would be a significant divergence from the practice of our peers and would harm the current compensation structure, thereby making it difficult, if not impossible, to attract or retain qualified directors. This radical proposal is not in response to problematic compensation practices at NiSource. The Environmental, Social, Nominating and Governance Committee believes it has thoughtfully and effectively constructed a non-employee director compensation program that aligns with Company and stockholder interests and conforms with current best practices. If stockholders felt differently, they could express their concern or disapproval by virtue of voting either “against” our annual Say-on-Pay vote or “against” our Compensation Committee and/or Environmental, Social, Nominating and Governance Committee members. This has overwhelmingly not been the case. Over the last five years, the Company has received an average of 96% of the votes cast by our stockholders in favor of our annual Say-on-Pay vote. Likewise, over the last five years, our directors have received an average of approximately 98% of the votes cast by our stockholders in favor of their election. In fact, over the last five years, only once has a director received less than 90% of the votes cast by our stockholders in favor of their election. In addition to the practical reasons noted above, we believe the bylaw provision contained in this proposal, if adopted, would violate Delaware law. Under Section 212(a) of the Delaware General Corporation Law, unless otherwise provided in a company’s certificate of incorporation, “each stockholder shall be entitled to 1 vote for each share of capital stock held by such stockholder.” NiSource’s Amended and Restated Certificate of Incorporation does not contain an exemption from this general rule. Therefore, the proposal’s prohibition of directors voting their NiSource shares on the contemplated annual director compensation approval vote would cause the Company to violate Delaware law.