DEF 14A of Avista Corp

Filed Mar 20, 2024 · FY20230001193125-24-072683

Open on EDGAR

Compensation Highlights — 2023
| Our Annual Cash Incentive 25% 2023 Payout | Our Cumulative Earnings Per Share Performance Shares 53% 2023 Payout | Our Total Shareholder Return Performance Shares 72.5% 2023 Payout | Our CEO’s pay was 60% Linked to Share Value In 2023 |
HIGHLIGHTS
| | The Compensation Committee approved base salary adjustments ranging from 4% to 27% for our NEOs based on market comparisons, its assessment of individual performance and other factors as discussed in more detail in the Compensation Discussion and Analysis. | | | In early 2024, our NEOs received a payout for one-third of their restricted stock units (“RSUs”) granted in each of 2021, 2022 and 2023, along with the associated dividend equivalents. These RSUs are time-based, and one-third vest each year over a three-year period. | | | Our Cumulative Earnings Per Share (“CEPS”) exceeded our three-year CEPS threshold, which resulted in payment of 53% of the performance shares (“PSUs”) related to CEPS granted in 2021 for the 2021-2023 performance period and the associated dividend equivalents. |
HIGHLIGHTS
| | Customer Satisfaction, Reliability, Average Response Time, and EID Scorecard metrics performed at or above target for our Short-Term Incentive Plan. Our Consolidated Earnings Per Share performance and Cost Per Customer metrics both landed below threshold, resulting in a total annual cash incentive payment of 25% of target. | | | Our Total Shareholder Return (“TSR”) exceeded our TSR threshold, which resulted in a final payment of 72.5% of the performance shares (“PSUs”) related to TSR granted in 2021 for the 2021-2023 performance period and the associated dividend equivalents. | | | Our CEO compensation strongly aligns with our shareholder interests: 60% in long-term incentive equity, 20% in annual cash incentive, and 20% base salary. | | | Our CEO’s pay is 27 times higher than our median employee’s pay. |
SUMMARY OF BOARD CORE COMPETENCIES
SUMMARY OF BOARD CORE COMPETENCIES Our director nominees bring a balance of relevant skills to the boardroom, as well as an effective mix of diversity and experience. A summary of the director nominees’ core competencies is shown below:
SUMMARY OF BOARD CORE COMPETENCIES
| Qualifications and Expertise | | | | | | | | | | | | Total | | Financial Leadership of a financial firm or management of the finance function of an enterprise, resulting in proficiency in complex financial management, capital allocation, and financial reporting processes. | | ● | ● | | ● | ● | ● | ● | ● | | ● | 8/11 | | Leadership Extended experience leading a significant enterprise, resulting in a practical understanding of organizations, processes, strategic planning, and risk management. Demonstrated strengths in developing talent, planning succession, and driving change and long-term growth. | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | 11/11 | | Business Innovation Experience driving business success, with an understanding of diverse business environments including regional considerations, economic conditions, cultures, and regulatory frameworks, as well as disruptive innovation. | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | 11/11 | | Energy and Utilities Experience with the unique operating, regulatory, and financial aspects of the utility industry and related risks, including energy and commodity markets. | | | | ● | | | ● | | | ● | | 3/11 | | Technology Experience working in operating and administrative technology, including expertise in cybersecurity. | ● | | | ● | ● | | ● | | | | ● | 5/11 | | Regulatory, Environmental and Risk Experience with and an understanding of the regulated nature of the utility industry, including environmental regulation, the clean energy transition, and oversight of risk. | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | 11/11 | | Mergers and Acquisitions The ability to analyze the fit of a company’s strategy and culture, accurately value transactions, and evaluate operational integration plans. | | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | 10/11 |
SUMMARY OF BOARD CORE COMPETENCIES
| 100% of our directors participate in Board Governance | 91% of our directors are independent | 36% of our directors added in the last 5 years | 60.7 yrs is the average age of our director nominees |
SUMMARY OF BOARD CORE COMPETENCIES
| 6 | |
SUMMARY OF BOARD CORE COMPETENCIES
Except as otherwise indicated, committee membership is as of December 31, 2023.
SUMMARY OF BOARD CORE COMPETENCIES
| Julie A. Bentz INDEPENDENT DIRECTOR NOMINEE Age: 59 Tenure: 2 Years Committees: • Environmental, Technology, Operations • Finance | MAJOR GENERAL (RETIRED) BENTZ is one of the principals of BDR LLC, a tree farm and fish hatchery management company, and the sole principal of HOMR LLC, a national security and leadership consulting firm. She retired in 2019 after a successful 33-year career spanning active, reserve and National Guard commissioned service. She has been a recurring member of the White House National Security Council Staff and Homeland Security Council for the Executive Office of the President. While working at the White House, her roles included Senior Advisor for Emerging Technologies and Director of Strategic Capabilities. She also held numerous roles in the Department of Defense at the Pentagon. Major General (Retired) Bentz holds a M.S. in National Security Strategy from the National Defense University, a Ph.D. and M.S. in Nuclear Engineering from the University of Missouri, and a B.A. in Radiological Health from Oregon State University. Board and Philanthropic Service: • Chair, External Advisory Board for National Security Programs, Sandia National Laboratory • Chair, External Review Committee for Strategic Deterrence, Lawrence Livermore National Laboratory • Board Member, External Review Committee for Global Security, Lawrence Livermore National Laboratory • Senior Advisor, Santiam Canyon Lionshead and Beachie Creek Wildfires Long Term Recovery Group • Member, CACI Strategic Advisory Group • Member, College of Engineering Dean’s Leadership Council, Oregon State University Reasons for Nomination: Ms. Bentz brings to the Board an extensive background in technology and security, both physical and cyber, as well as unique experience serving under three separate United States Presidents on security-related policy matters. Through her service on both the Finance Committee and the Environmental, Technology and Operations Committee, Ms. Bentz provides a unique and valuable perspective on a wide range of issues, including financial matters and investments, as well as issues involving climate change and clean energy transition, technology, and operational safety and security. |
SUMMARY OF BOARD CORE COMPETENCIES
| Donald C. Burke INDEPENDENT DIRECTOR NOMINEE Age: 63 Tenure: 12 Years Committees: • Vice Chair of the Board • Audit (Chair) • Executive • Governance | MR. BURKE was a managing director of BlackRock, Inc and served as the president and CEO of the BlackRock US mutual funds until his retirement in 2009. In this role, Mr. Burke was responsible for the accounting, tax and regulatory reporting requirements for over 300 open and closed-end mutual funds. Mr. Burke joined BlackRock in connection with the merger with Merrill Lynch Investment Managers (“MLIM”), taking a lead role in the integration of the two firms’ operating infrastructures. While at MLIM, Mr. Burke was the Head of Global Operations and Client Services and also served as the Treasurer and CFO of the MLIM mutual funds. He started his career in public accounting. Mr. Burke is a certified public accountant and received a B.S. in Accounting and Economics from the University of Delaware and a M.B.A. in Taxation from Pace University. Board and Philanthropic Service: • Trustee, Virtus mutual fund complex • Director and Audit Committee Chair, Duff & Phelps mutual fund complex • Former Trustee, Goldman Sachs mutual fund complex • Former Trustee, BlackRock global funds • Former Trustee and Treasurer, Crohn’s and Colitis Foundation Reasons for Nomination: Mr. Burke brings significant financial and accounting experience to the Board from his years in public accounting and his role as the treasurer and CFO of numerous mutual funds. Through his service as Chair of the Audit Committee and as the designated Audit Committee Financial Expert, Mr. Burke’s background enhances his performance of a critical leadership role in overseeing the integrity of the Company’s financial statements and related controls, compliance with legal and regulatory requirements, and the performance of the Company’s internal audit function and independent auditors. In addition, as a member of the Governance Committee, Mr. Burke provides a unique and valuable perspective on the Company’s corporate governance and corporate responsibility programs and activities. As a result of his demonstrated excellence in helping lead the Board, Mr. Burke was selected to serve as Vice Chair of the Board. |
SUMMARY OF BOARD CORE COMPETENCIES
| 2024 PROXY STATEMENT | 7 |
SUMMARY OF BOARD CORE COMPETENCIES
| Kevin B. Jacobsen INDEPENDENT DIRECTOR NOMINEE Age: 57 Tenure: 1 Year Committees: • Audit • Environmental, Technology, Operations | MR. JACOBSEN is the Chief Financial Officer of The Clorox Company (NYSE: CLX), a role he has held since 2018. As CFO, Mr. Jacobsen is the senior executive responsible for Clorox’s financial activities, including general accounting, external reporting, financial planning, treasury, tax, and investor relations, as well as oversight of the company’s internal audit function. From 2011 until his appointment as CFO, Mr. Jacobsen served as vice president of financial planning and analysis for Clorox. Prior to that, he served in various roles for Clorox, including as vice president of finance, business development and international; vice president of finance, specialty division; and finance management positions for the Kingsford, Cat Litter and Brazil businesses and the product supply organizations of Clorox. He started his career with Clorox in 1995 after spending five years with General Motors Corporation (NYSE:GM) in various finance and accounting roles. Board and Philanthropic Service: • Member of the Economic Advisory Council, Federal Reserve Bank of San Francisco Reasons for Nomination: Mr. Jacobsen brings a deep knowledge of financial and accounting issues to the Board, as well as experience as an executive of a publicly traded company operating in competitive product markets. Mr. Jacobsen’s background and experience enables him to provide a unique and valuable perspective on the Company’s business and operational risks through his anticipated service on the Environmental, Technology and Operations Committee. In addition, given his broad financial background, Mr. Jacobsen is a valuable member of the Board’s Audit Committee, where he provides important oversight over the integrity of the Company’s financial statements and related controls, compliance with legal and regulatory requirements, and the performance of the Company’s internal audit function and independent auditors. |
SUMMARY OF BOARD CORE COMPETENCIES
| Rebecca A. Klein INDEPENDENT DIRECTOR NOMINEE Age: 58 Tenure: 14 Years Committees: • Compensation • Environmental, Technology, Operations (Chair) | MS. KLEIN is the principal of Klein Energy, LLC, an energy consulting company based in Austin, Texas. Over the last 25 years, she has worked in Washington, DC and in Texas in the energy, telecommunications and national security arenas. Ms. Klein’s professional experience includes service with KPMG Consulting (now Deloitte) where she headed the development of the company’s Office of Government Affairs and Industry Relations in Washington, DC. She has served as a commissioner and chair of the Texas Public Utilities Commission and as a Senior Fellow with Georgetown University’s McDonough School of Business. She is a retired Lieutenant Colonel of the Air Force Reserve and a member of the State Bar of Texas. Ms. Klein holds a B.A. in Human Biology from Stanford University, an M.B.A. from MIT, an M.A. in National Securities Studies from Georgetown University, and a J.D. from St. Mary’s University School of Law in San Antonio, Texas. Board and Philanthropic Service: • Director, Diamondback Energy, an upstream oil and gas production company • Director, San Jose Water Group, a water utility with subsidiaries across the U.S. • Director, Riverbend Energy Group, an investment fund focused on the energy transition • Former Board Chair, Lower Colorado River Authority, a public power utility with generation, transmission, and water services across central Texas • Director and Faculty Member, Christian Latina Leadership Institute, a non-profit that provides leadership curriculum to Hispanic women in Mexico, Colombia, and the U.S. • Founder and Director, Texas Energy Poverty Research Institute, a non-profit focused on the nexus of energy and poverty Reasons for Nomination: Ms. Klein possesses a deep knowledge of the energy industry, energy markets and energy regulation, as well as legal expertise in energy and telecommunications and experience in technology and cybersecurity issues. She provides a unique diversity of background and perspective to the Board generally, but particularly in her role as chair of the Environmental, Technology & Operations Committee, Ms. Klein is able to provide critical leadership around the Company’s business and operational risks, environmental activities and objectives, and its strategies relating to physical and cyber security, technology, and data governance. As a member of the Compensation Committee, Ms. Klein helps provide oversight on executive compensation matters, as well as the Company’s strategies, objectives and performance relating to human capital management, including diversity, equity, and inclusion. |
SUMMARY OF BOARD CORE COMPETENCIES
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SUMMARY OF BOARD CORE COMPETENCIES
| Sena M. Kwawu INDEPENDENT DIRECTOR NOMINEE Age: 55 Tenure: 3 Years Committees: • Environmental, Technology, Operations • Finance (Chair) | MR. KWAWU is an operational and finance leader with more than 25 years of multifunctional experience in high growth and mature public companies across multiple industries. Mr. Kwawu currently serves as the President, In-Home Services for Cinch Home Services, one of the nation’s leading providers of home services solutions. From 2020 to 2022, Mr. Kwawu served as the senior vice president of operations of Frontdoor, Inc. (NASDAQ: FTDR), a home services company with services ranging from flexible home service plans to on-demand solutions. Mr. Kwawu was also formerly with Starbucks Corporation (NASDAQ: SBUX), where he was the senior vice president of finance and business operations. His career also includes global leadership roles with State Street Corporation (NYSE: STT), Genworth Financial (NYSE: GNW) and General Electric Company (NYSE: GE). He also holds a patent for a system and method for pool risk assessment for life insurance. Mr. Kwawu holds a B.B.A. from George Washington University and an M.B.A. from University of Michigan. Board and Philanthropic Service: • Board Member and Chair, VillageReach • Board Member, The Executive Leadership Council Reasons for Nomination: Mr. Kwawu has extensive background as a public company executive, which includes experience with risk management, supply chain management, finance, banking, mergers and acquisitions, technology and customer service. Mr. Kwawu’s background allows him to bring a diversity of perspective to Board-related matters. Mr. Kwawu’s experience with operational, supply chain and technology issues allow him to provide unique insights and perspective to his service on the Company’s Environmental, Technology & Operations Committee, which oversees the business and operational risks of the Company, the Company’s environmental performance and strategy, employee and public safety, supply chain risk, and physical and cyber security, technology and data management. Likewise, through his service as Chair of the Finance Committee, Mr. Kwawu is able to bring his extensive financial background to bear in helping ensure proper oversight of the Company’s strategies, budgets, forecasts and financial plans and programs to enable the Company to meet its short and long-term goals and objectives. |
SUMMARY OF BOARD CORE COMPETENCIES
| Scott H. Maw INDEPENDENT DIRECTOR NOMINEE Age: 56 Tenure: 7 Years Committees: • Compensation (Chair) • Governance | MR. MAW served as executive vice president and CFO of Starbucks Corporation (NASDAQ: SBUX) from February 2014 until his retirement in November 2018. In that capacity, Mr. Maw was responsible for the company’s Global Finance organization. Prior to that, he served as senior vice president of Corporate Finance of Starbucks where he was responsible for corporate finance, including accounting, tax and treasury. Mr. Maw also had oversight of all financial and securities-related regulatory filings. He joined Starbucks as global controller in 2011. Prior to joining Starbucks, Mr. Maw served as CFO of SeaBright Insurance Company, a specialty workers’ compensation insurer, from 2010 to 2011. From 2008 to 2010, he served as CFO of the Consumer Banking division of JPMorgan Chase & Co. (NYSE: JPM), having previously held a similar position at Washington Mutual Bank. From 1994 to 2003, he served in various finance leadership positions at General Electric Company, including serving as CFO of GE Insurance Holdings, Inc. in London. Mr. Maw graduated from Gonzaga University with a B.A. in Accounting. Board and Philanthropic Service: • Board of Trustees, Gonzaga University • Director and Audit Committee Chair, Alcon, Inc. (NYSE: ALC), a Swiss medical company specializing in eye care products • Lead Independent Director and Audit Committee Chair, Chipotle Mexican Grill, Inc. (NYSE: CMG) Reasons for Nomination: Mr. Maw brings more than 30 years of financial experience, including extensive experience as a senior executive of several public companies and deep expertise on financial matters and global business operations, to his service on the Board. Mr. Maw provides critical leadership to the Board through his role as Chair of the Compensation Committee, through which he helps ensure proper executive compensation practices and philosophies, provides oversight over the organizational structure and executive personnel of the Company, and helps ensure proper oversight of the Company’s strategies, objectives and performance relating to human capital management, including diversity, equity and inclusion. Likewise, Mr. Maw’s extensive executive experience allows him to bring a unique and valuable perspective to his service on the Board’s Governance Committee, as well as to the Company’s disclosure of corporate responsibility matters, including environmental, social and governance issues. |
SUMMARY OF BOARD CORE COMPETENCIES
| 2024 PROXY STATEMENT | 9 |
SUMMARY OF BOARD CORE COMPETENCIES
| Scott L. Morris INDEPENDENT DIRECTOR NOMINEE Age: 66 Tenure: 17 Years Committees: • Chairman of the Board • Executive (Chair) • Finance | MR. MORRIS has been Chairman of the Company since January 2008. From January 2008 to October 1, 2019, he also served as the Company’s CEO. From January 2008 to January 2018, he served as the Company’s President. From May 2006 to December 2007, he served as the Company’s President and Chief Operating Officer (“COO”). Mr. Morris was hired by the Company in 1981 and his experience includes management positions in construction and customer service, as well as management of the Company’s Oregon utility business. He was elected as a vice president in November 2000 and, in February 2002, he was elected as a senior vice president. Mr. Morris is a graduate of Gonzaga University and received his M.A. in organizational leadership from Gonzaga. He also completed the Stanford Business School Financial Management Program and the Kidder Peabody School of Financial Management. Board and Philanthropic Service: • Director, McKinstry Co., LLC, a building systems design, operation and maintenance company • Director, California Water Service, the largest regulated American water utility west of the Mississippi River and the third largest in the country • Director, Iron Horse Acquisitions, a diversity media and entertainment SPAC company • Trustee Emeritus, Gonzaga University • Board Member, Idaho Chapter of the Nature Conservancy • Board Member, various Spokane nonprofit and economic development Boards Reasons for Nomination: Mr. Morris, in his position as Chairman of the Board, leads the overall activities of the Board. He has extensive utility experience, having spent his entire career in the industry. He brings a deep knowledge and understanding of the Company and its subsidiaries, as well as the Company’s overall strategies, activities and objectives, including those relating to operational performance; environmental, social and governance issues; clean energy; employee development, retention and attraction; financial performance; and ethical corporate governance. Through his service on the Finance Committee, Mr. Morris helps ensure adequate oversight of the Company’s financial strategies, budgets, forecasts and financial plans and programs to enable the Company to meet its short and long-term goals and objectives. Mr. Morris also delivers keen insight into the economic, political and cultural characteristics of the Company’s service territories and the Pacific Northwest as a whole. |
SUMMARY OF BOARD CORE COMPETENCIES
| Jeffry L. Philipps INDEPENDENT DIRECTOR NOMINEE Age: 68 Tenure: 4 Years Committees: • Audit • Compensation | MR. PHILIPPS was President and CEO of Rosauers Supermarkets, Inc. from July 2000 until his retirement in August 2021, during which time he oversaw the strategy and all operations of a retail grocery company operating 22 retail stores across the Pacific Northwest. Over the span of his career, Mr. Philipps has also played an integral role in the economic vitality of the greater Spokane area and Inland Pacific Northwest region through his leadership roles in a multitude of different regional and national organizations and entities. Mr. Philipps is a member of the Public Library Foundation Citizen Hall of Fame and was named “Retailer of the Year” twice by the Washington Food Industry Association. Mr. Philipps is a graduate of Carroll College in Helena, Montana, where he earned B.A. degrees in Business, Economics and Accounting. Board and Philanthropic Service: • Chair, Washington Food Industry Association (2011-2012) • Chair, United Way of Spokane County Campaigns (2012, 2020) • Board Chair (2012-2013) and Board Member through 2023, Greater Spokane Incorporated (GSI) • Board Chair of Life Sciences Spokane, a GSI initiative to develop and support a life and bioscience economy in Spokane, Washington • Council President (2015-2017) and current Board Member, Inland NW Council of the Boy Scouts of America • Board Chair (2022) and Board Member through 2023, Providence Community Mission Board • Board Member, Innovia Foundation • Community Advisory Board Member, University of Washington and Gonzaga University Regional Health Partnership • Community Advisory Board Member (2016-2020), Washington State University Elson S. Floyd College of Medicine Reasons for Nomination: Mr. Philipps brings a long history of leadership, economic development, and innovation to the Board, including more than 20 years of experience as the CEO of a retail grocery company and a background in accounting and finance, mergers and acquisitions, supply chain, organizational development, human resources, economic development, political and regulatory affairs, and consumer retail sales. His extensive background in these areas make him a valuable member of the Compensation Committee of the Board, through which he helps ensure proper alignment of executive compensation and structure, as well as oversight of human capital management and diversity, equity and inclusion issues. Likewise, through his past service on the Finance Committee, and now the Audit Committee, Mr. Philipps brings his unique and valuable leadership and background to bear in helping provide oversight of the Company’s financial strategies and objectives. |
SUMMARY OF BOARD CORE COMPETENCIES
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SUMMARY OF BOARD CORE COMPETENCIES
| Heidi B. Stanley INDEPENDENT DIRECTOR NOMINEE Age: 67 Tenure: 18 Years Committees: • Audit • Executive • Governance | MS. STANLEY is co-owner and chair of Empire Bolt & Screw, Inc., a privately-held international distribution company headquartered in Spokane, Washington. Prior to that, Ms. Stanley spent 24 years in the banking industry. She served as CEO and chair of Sterling Savings Bank from January 2009 to October 2009. From January 2008 to December 2008, she served as director, vice chair, president & CEO. From October 2003 to December 2007, she served as director, vice chair and COO. Previously, she held a variety of leadership positions with increasingly higher levels of managerial responsibility. Prior to joining Sterling in 1985, Ms. Stanley worked for IBM in San Francisco, California and Tucson, Arizona. Throughout her career, Ms. Stanley has provided leadership to the greater Spokane area and the Inland Pacific Northwest region through her service on a variety of charitable, education and cultural organizations. Ms. Stanley graduated from Washington State University with a B.A. in Business Administration. Board and Philanthropic Service: • Director, Forterra, Inc., a for-profit, wholly-owned subsidiary of the Association of Washington Business • Founding Member, Greater Spokane Incorporated • Former Chair, Association of Washington Business • Former Chair, Inland Northwest YMCA • Former Board Member, Spokane Symphony • Board Member, Washington Policy Center • Board Member, various other charitable, education and cultural organizations Reasons for Nomination: Ms. Stanley’s varied business experiences provide a diverse business perspective on risk analysis, operations, policy development, mergers and acquisitions, organizational development, board governance and capital markets. In addition, she has a long history of leadership, economic development and community support activities, all of which allow her to provide valuable leadership on governance and corporate responsibility matters through her service on the Governance Committee. In addition, through her broad financial background, Ms. Stanley is a valuable member of the Board’s Audit Committee, where she plays an important role in ensuring proper oversight of the integrity of the Company’s financial statements and related controls, compliance with legal and regulatory requirements, and the performance of the Company’s internal audit function and independent auditors. In addition, Ms. Stanley provides deep understanding of the Company’s customer base, as well as economic and political issues throughout the Company’s service territories. |
SUMMARY OF BOARD CORE COMPETENCIES
| Dennis P. Vermillion NON-INDEPENDENT DIRECTOR NOMINEE Age: 62 Tenure: 6 Years Committees: • CEO • Executive | MR. VERMILLION has been CEO since October 1, 2019. In this capacity, he oversees all aspects of the Company’s business. Previously, he served as president of Avista from January 1, 2018 to October 1, 2023; senior vice president of Avista and president of the Avista Utilities division from 2009 to 2018. He also serves as chairman of the board for Avista subsidiary Alaska Electric Light and Power Company. Mr. Vermillion joined Avista in 1985 and has held various staff and management positions. His experience covers a broad range of activities, including leadership, energy trading and marketing, risk management, scheduling, resource operations, power/transmission contracting, resource planning and coordination, regulatory issues and production cost modeling. Mr. Vermillion has served as Vice President of Energy Resources of Avista Utilities and prior to that, as President and COO of Avista Energy from February 2001 until its sale in June 2007. Mr. Vermillion is a graduate of Washington State University with a B.S. in Electrical Engineering. Board and Philanthropic Service: • Board member, American Gas Association (AGA) • Board member, Edison Electric Institute (EEI) • Board member, Washington Roundtable • Board member, Greater Spokane Inc. • Board Member, Avista Foundation • Past Chair, Western Energy Institute • Past Chairman, United Way Spokane County campaign • Former Board Member, United Way Spokane County Reasons for Nomination: Mr. Vermillion brings extensive utility experience, together with a deep knowledge and understanding of the Company and its subsidiaries, to his service on the Board. He has devoted more than 37 years to the Company and to the energy industry as a whole and has served in a variety of executive leadership positions. He provides critical leadership in the establishment and implementation of the Company’s overall strategies, including its short- and long-term goals around such wide and varied issues as the transition to clean energy; employee development, retention and attraction; diversity, equity and inclusion; safety and security; operational excellence; ethical corporate governance; and financial performance. Mr. Vermillion is also the standard-bearer for the Company’s culture of integrity, which led to the Company’s recognition as one of Ethisphere’s “World’s Most Ethical Companies” in 2019, 2020, 2021, 2022, and 2023. |
SUMMARY OF BOARD CORE COMPETENCIES
| 2024 PROXY STATEMENT | 11 |
SUMMARY OF BOARD CORE COMPETENCIES
| Janet D. Widmann INDEPENDENT DIRECTOR NOMINEE Age: 57 Tenure: 10 Years Committees: • Finance • Governance (Chair) | MS. WIDMANN has more than 25 years of executive experience in health care service and technology-enabled health care companies. From 2022-2023, she served as the Executive Chairman and Interim CEO of Acorn Health, a national provider of services to children with autism. From 2016 until 2021, she also served as president and CEO of Kids Care Dental, a pediatric dental, orthodontic and oral surgery company. Prior, Ms. Widmann was executive vice president and chief executive of Blue Shield of California, a national health plan where she had overall profit and loss responsibility for $15 billion in annual revenue and 3.5 million members. Ms. Widmann began her career at Health Net, eventually serving as the COO of its dental and vision subsidiaries. Ms. Widmann has been consistently named one of the “Most Influential Women in the Bay Area by the San Francisco Business Journal. Ms. Widmann holds a B.S. in Health Administration from California State University, Northridge and a M.A. in Health Administration from the University of Southern California. Board and Philanthropic Service: • Advisory Board Member, VIDA Health • Former Strategic Advisor, Genney • Former Director, Delta Dental of California • Former Executive Chair, Acorn Health • Former Director, Cutera (NASDAQ: CUTR) • Former Member, California Health Professions Education Foundation and Former Board Member, Bay Area Business Council • Former Board Member, Versant Health • Member, The Committee of 200 • Member, McKinsey & Company’s Bay Area Women’s Executive Roundtable • Member, International Women’s Forum Reasons for Nomination: Ms. Widmann brings a strong background of executive leadership and economic development to her service on the Board. Her experience as CEO and COO of private companies includes risk management and oversight, finance and investment banking, mergers and acquisitions, technology and cybersecurity, organizational development and human resources, innovation, economic development and customer service. As the Chair of the Governance Committee, Ms. Widmann provides critical leadership in the oversight of governance-related issues, as well as the Company’s disclosure of corporate responsibility matters, including environmental, social and governance issues. In addition, Ms. Widmann is a valuable member of the Board’s Finance Committee which provides oversight of the Company’s financial strategies, plans, programs, goals and objectives. |
SUMMARY OF BOARD CORE COMPETENCIES
| | The Board recommends a vote “FOR” all director nominees. |
SUMMARY OF BOARD CORE COMPETENCIES
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Board Committees
The Board regularly reviews director compensation with the assistance of Meridian Compensation Partners (the same consultant used for executive compensation) to determine whether it is appropriate and competitive in light of market circumstances and prevailing best practices for corporate governance for the energy/utility industry. The Board targets overall director compensation to the median of the same peer group used to review executive compensation. (See “Competitive Analysis and Peer Group” in the Compensation Discussion and Analysis.) As a result of this review process, the annual retainer for directors was increased from $220,000 to $225,000 effective September 1, 2023. The additional retainer for the chair of the Compensation Committee increased from $15,000 to $17,500 effective September 1, 2023. The elements of director compensation reflect the Board’s view that compensation to the independent directors should consist of an appropriate mix of cash and stock. The cash portion of the retainer is paid quarterly, and the stock portion is paid annually (as soon as practicable following the Annual Meeting). Employee directors are not compensated for their Board service.
Elements of Director Compensation
Elements of Director Compensation
Elements of Director Compensation
| Pay Element | | Compensation | | Annual Retainer (cash and stock) | Board Members: | $225,000 | | | (Directors receive an annual retainer of $225,000, with $130,000 automatically paid in stock. Directors have the option of taking the balance in cash, stock or a combination of both cash and stock.) | | | Additional Committee Chair Retainers (Cash) | Audit Committee: | $20,000 | | | Compensation Committee: | $17,500 | | | Environmental Committee: | $15,000 | | | Finance Committee: | $15,000 | | | Governance Committee: | $15,000 | | | Vice Chair: | $30,000 | | | Non-Executive Chairman: | $100,000 |
Elements of Director Compensation
Each director is entitled to reimbursement of reasonable out-of-pocket expenses incurred in connection with meetings of the Board or its committees and related activities, including third party director education courses and materials. These expenses include travel to and from the meetings, as well as any expenses they incur while attending the meetings.
Director Compensation Table — 2023
Director Compensation Table — 2023
Director Compensation Table — 2023
| | Annual Retainer | | | | | Director Name | Director Compensation Paid in Cash ($)(2)(6) | Director Compensation Paid in Stock ($)(1)(2) | All Other Compensation ($)(3) | Total Compensation ($)(4) | | Julie A. Bentz | $95,029 | $126,637 | | $221,667 | | Kristianne Blake(5) | $222,026 | | $1,159 | $223,185 | | Donald C. Burke | $135,029 | $126,637 | | $261,667 | | Kevin B. Jacobsen | $21,696 | $126,637 | | $148,333 | | Rebecca A. Klein | $110,029 | $126,637 | | $236,667 | | Sena M. Kwawu | $105,029 | $126,637 | | $231,667 | | Scott H. Maw | $110,863 | $126,637 | | $237,500 | | Scott L. Morris | $195,029 | $126,637 | | $321,667 | | Jeffry L. Philipps | $95,029 | $126,637 | | $221,667 | | Heidi B. Stanley | $95,029 | $126,637 | | $221,667 | | Janet Widmann | $110,029 | $126,637 | | $236,667 | | Totals | $1,294,820 | $1,266,373 | $1,159 | $2,562,351 |
Director Compensation Table — 2023
| 1. | Amounts in these columns include cash retainers, stock issuances, Chair retainers, and Board and committee meeting fees. |
Director Compensation Table — 2023
| 2. | Stock is issued in whole shares based on the current market price at the time of issuance. Stock is fully vested upon issuance. All fractional shares are paid in cash. |
Director Compensation Table — 2023
| 3. | Amounts for Ms. Blake include dividends paid on those shares deferred prior to December 31, 2004, under the former Non-Employee Director Stock Plan. (Ms. Blake is the only director who deferred receipt of stock until a later date. Ms. Blake had 2,519 deferred shares until she cashed out those shares upon her retirement on May 11, 2023.) |
Director Compensation Table — 2023
| 4. | The Company does not provide perquisites or other personal benefits to its Board members. |
Director Compensation Table — 2023
| 5. | Ms. Blake retired from the Board on May 11, 2023. |
Director Compensation Table — 2023
| 6. | The Director Compensation Paid in Cash amount includes a cash out of Ms. Blake’s 2,519 deferred shares from the former Non-Employee Director Stock Plan. |
Director Compensation Table — 2023
| 22 | |
Other Information
Other Information The Company has been advised by Deloitte that neither the firm, nor any covered person of the firm, has any financial interest, direct or indirect, in any capacity in the Company or its subsidiaries. A representative of Deloitte is expected to attend the Annual Meeting with the opportunity to make a statement if he/she desires to do so and is expected to be available to respond to appropriate questions. Ratification of the appointment of the independent auditors requires the affirmative vote of a majority of the votes cast by the holders of the shares of common stock voting in person or by proxy at the Annual Meeting.
Other Information
| | The Board recommends a vote “FOR” the ratification of the appointment of Deloitte as the Independent Registered Public Accounting Firm. |
Other Information
| 2024 PROXY STATEMENT | 27 |
Other Information
This CD&A provides information about the compensation objectives and policies for our NEOs and puts in perspective the quantitative and narrative disclosures in the compensation tables included in this Proxy Statement. Our NEOs for 2023 were:
Other Information
| • Dennis P. Vermillion, Chief Executive Officer • Mark T. Thies, Former Executive Vice President, CFO, and Treasurer • Kevin J. Christie, Sr. Vice President, CFO, Treasurer, and Regulatory Affairs Officer | • Heather L. Rosentrater, President and Chief Operating Officer • Jason R. Thackston, Sr. Vice President, Chief Strategy and Clean Energy Officer • Wayne O. Manuel, Vice President, Chief Information Officer and Chief Security Officer |
Other Information
During 2023, the following leadership changes impacting our NEOs occurred:
Other Information
| • | Mr. Thies, Executive Vice President, CFO, and Treasurer announced his retirement from the Company, effective October 1, 2023. |
Other Information
| • | Effective May 11, 2023, Mr. Christie, who was previously serving as Sr. Vice President, External Affairs and Chief Customer Officer was elected Sr. Vice President, CFO, Treasurer, and Regulatory Affairs Officer. |
Other Information
| • | Ms. Rosentrater, who was previously serving as Sr. Vice President and Chief Operating Officer, was elected President and Chief Operating Officer, effective October 1, 2023. |
Other Information
| • | Mr. Manuel joined the Company as Vice President, Chief Information Officer and Chief Security Officer on June 1, 2023. |
Other Information
The CD&A also describes the following:
Other Information
| • | Our business results’ impact on incentive compensation; |
Other Information
| • | Our decision-making process on compensation design and pay levels, including our compensation governance approach; |
Other Information
| • | Our compensation philosophy and objectives; and |
Other Information
| • | The elements of the Company’s executive compensation program. |
BUSINESS RESULTS IMPACT ON INCENTIVE COMPENSATION
| RECENT PERFORMANCE RESULTS: SELECT ANNUAL INCENTIVE PLAN METRICS |
BUSINESS RESULTS IMPACT ON INCENTIVE COMPENSATION
| RECENT PERFORMANCE RESULTS: LONG-TERM INCENTIVE PLAN METRICS | | | | |
BUSINESS RESULTS IMPACT ON INCENTIVE COMPENSATION
| * The target amount shown for the RSUs is the grant date fair value of the portion of the 2021, 2022, and 2023 awards that could have vested if the CEO was not terminated on December 31, 2023. The target amount for the CEO’s PSUs represents the aggregate grant date fair value of the 2021 awards that could have vested if the TSR and the three-year CEPS performance conditions were met for the 2021-2023 performance period. The amount shown as the actual compensation realized by our CEO for 2023 includes his base salary, the actual annual cash incentive plan amount paid in early 2024 for 2023 performance, the value, as of the vesting date, of the RSUs that vested in early 2024, and the actual value, as of the vesting date, of the PSUs realized for the 2021 – 2023 performance period. Values for RSUs and PSUs do not include dividend equivalents. |
COMPENSATION GOVERNANCE PRACTICES
| Practices We Employ | Practices We Avoid | | • We align pay and performance • We mitigate undue risk (see Risk Mitigation Overview) • We maintain stock ownership guidelines consistent with market practices • We maintain a recoupment (i.e., clawback) policy that allows the Company to recoup compensation due to financial and other detrimental misconduct • We pay Change in Control (“CIC”) severance solely upon a double trigger • The Compensation Committee reviews NEO tally sheets annually • The Compensation Committee is composed entirely of independent directors • The Compensation Committee engages an independent compensation consultant • The Compensation Committee regularly meets in executive sessions without management present | • We do not provide perquisites • We do not permit hedging or short sales of Company stock by directors or officers • We do not permit pledging of company stock by directors or officers • We do not pay dividends or dividend equivalents on performance awards until the awards are earned • We do not provide any tax gross-ups under our CIC Plan • We no longer offer additional Supplemental Executive Retirement Plan (“SERP”) service credits as a recruitment tool for hiring executives |
ROLE OF THE COMPENSATION CONSULTANT
ROLE OF THE COMPENSATION CONSULTANT The Compensation Committee selects and retains an independent compensation consultant to support its oversight of our executive compensation programs. For 2023, the Compensation Committee engaged Meridian Compensation Partners (“Meridian”) as its independent compensation consultant. (The Committee also purchased survey information from the Willis Towers Watson (“WTW”) Energy Services Executive Compensation database but did not otherwise consult with WTW.) Meridian provides the Compensation Committee consulting services solely relating to executive compensation and related governance matters. In accordance with NYSE rules, the Compensation Committee determined Meridian is independent and, further, no conflicts of interest arose due to Meridian’s services rendered to the Compensation Committee. A representative of Meridian attended Compensation Committee meetings in 2023 and advised the Compensation Committee on the principal aspects of executive compensation, including the competitiveness of program design and award values and specific analyses for our executive officers. The Compensation Committee determines the work to be performed by Meridian. Meridian works with our Senior Vice President of Safety & Chief People Officer and his staff to gather data required in preparing its analyses for Compensation Committee review. Meridian provides services or advice to management only to the extent requested by the Compensation Committee. Meridian interacts with management to gather information and obtain recommendations, but the Compensation Committee Chair determines if and when Meridian’s advice and materials can be shared with management. When important pay decisions are made, Meridian provides advice to the Compensation Committee in an executive session without Company management present. This approach ensures the Compensation Committee receives objective advice from Meridian so the Compensation Committee can make independent decisions about executive pay.
RISK MITIGATION OVERVIEW
| • | Short and long-term incentive payments are capped; |
RISK MITIGATION OVERVIEW
| • | Annual cash incentive design balances key performance metrics focused on financial results and system sustainability over time; |
RISK MITIGATION OVERVIEW
| • | The total compensation program does not guarantee bonuses and has multiple financial and non-financial performance measures; |
RISK MITIGATION OVERVIEW
| • | The Compensation Committee reviews both short-term and long-term financial scenarios to ensure the plan design does not encourage executives to take excessive risks but also does not discourage appropriate risks; |
COMPENSATION PHILOSOPHY AND OBJECTIVES
COMPENSATION PHILOSOPHY AND OBJECTIVES Our executive compensation program is designed to align executive pay with our financial and operational performance and the creation of long-term value for our shareholders. To accomplish these objectives, our compensation program incents executive officers to achieve specific annual, long-term, and strategic goals and improves shareholder value. The Compensation Committee believes the overall compensation of our senior executives should be weighted toward variable performance-based compensation. As a result, a significant portion of compensation is linked with goals related to specific items of corporate performance likely to produce long-term shareholder and customer value. The charts below show the portion of target compensation that is variable and, therefore, is “at risk” for our CEO and the average for our other NEOs. Variable compensation includes annual incentives, RSUs and performance shares. The charts also show the portion of target compensation for our CEO and the average target compensation for our other NEOs directly linked to share value, including RSUs and performance shares.
COMPETITIVE ANALYSIS AND PEER GROUP
COMPETITIVE ANALYSIS AND PEER GROUP The Compensation Committee believes it is important to provide a compensation structure competitive with compensation paid to comparable executives of companies within the energy/utility industry to ensure the Company can attract and retain quality employees in key positions to lead the Company. To achieve this objective, the Compensation Committee works with Meridian to conduct an annual competitive review of its total compensation program for our CEO and other NEOs. Through the review process, the Compensation Committee generally targets overall total compensation levels (base, short-term incentive and long-term incentives) at the median of the peer group. Pay components for an individual NEO may be higher or lower than the median depending on an individual’s role, responsibilities, and performance within the Company. The Compensation Committee believes this target positioning is effective to attract and retain our executives. The Compensation Committee annually compares each element of NEO total compensation against a peer group of publicly traded companies within the energy/utility industry of similar revenue size and market capitalization. For 2023, our NEO compensation was compared with market data, as disclosed in proxy statements, from the sixteen companies in the S&P 400 Mid-Cap Utilities Index (“Proxy Peer Group”). This group is designed to be representative of the Company’s business, size and competitive market for talent. The use of publicly disclosed data allows the Company to maintain a consistent peer group. The Proxy Peer Group can change slightly from year to year due to changes in company size and weightings determined by S&P. Hawaiian Electric was removed and Vistra Corp was added in 2023. The companies comprising the 2023 Proxy Peer Group were:
COMPETITIVE ANALYSIS AND PEER GROUP
| ALLETE, Inc. | New Jersey Resources Corporation | Portland General Electric Co. | | Black Hills Corporation | NorthWestern Corporation | PNM Resources, Inc. | | Essential Utilities, Inc. | OGE Energy Corp | Southwest Gas Holdings, Inc. | | IDACORP, Inc. | ONE Gas, Inc. | Spire Inc. | | National Fuel Gas Company | Ormat Technologies, Inc. | UGI Corporation | | | | Vistra Corp. |
COMPETITIVE ANALYSIS AND PEER GROUP
To supplement market data derived from the Proxy Peer Group, the Compensation Committee also considered benchmark compensation data derived from the WTW Energy Services Executive Compensation database, which covered comparable diversified energy companies with revenues between $1 billion and $3 billion and with median revenues of $1.62 billion. This supplemental compensation data helped to inform the Compensation Committee on broad market compensation practices and trends within the energy services sector.
LONG-TERM EQUITY COMPENSATION
LONG-TERM EQUITY COMPENSATION The Compensation Committee believes equity-based compensation is the most effective way to create a long-term link between shareholder returns and the compensation provided to NEOs and other key management. This program encourages participants to focus on long-term Company performance and provides an opportunity for executive officers and designated key employees to increase their ownership in the Company through grants of Company stock that can be earned based on either service or performance, over a three-year cycle. Using long-term performance awards and time-based restricted stock (RSUs), the Company can compensate executives for sustained increases in the Company’s stock performance, as well as long-term growth relative to its peer group for the relevant cycle. The Company’s current Long-Term Incentive Plan (“LTIP”) authorizes various types of equity awards. As with all the components of executive compensation, the Compensation Committee determines all material aspects of the long-term incentive awards—who receives an award, the form of the award, the amount of the award, the timing of the award, as well as any other aspect of the award it may deem material. For 2023 equity grants, the Compensation Committee determined each NEO’s target LTIP value based on competitive market data and the NEO’s ability to influence overall Company performance. In addition, and as previously discussed, the Compensation Committee targets overall total compensation levels, which include base salaries, short-term incentives and long-term incentives, at the median of the Proxy Peer Group. The Compensation Committee determined 70% of the NEO’s target LTIP value would be granted in the form of performance share units (“PSUs”) and 30% of the NEO’s target LTIP value would be granted in the form of RSUs; this was updated from 2022 when the allocation mix was 75% and 25%, respectively. Awards are generally granted each year at the February Compensation Committee meeting and the granting of awards is not coordinated with the release of material non-public information.
Performance-Based Equity Awards
Performance-Based Equity Awards In February 2023, the Compensation Committee approved the grant of PSUs to each NEO. The 2023 PSUs are designed to provide a direct link to the long-term interests of shareholders by ensuring shares will be paid only if the Company attains specified performance levels. For 2023, 17.5% of the awards were contingent on our Total Shareholder Return (TSR) relative to our peers and 52.5% was measured by our Cumulative Earnings Per Share (CEPS) over a three-year period. For 2023, the Compensation Committee considered market data provided by Meridian regarding the total compensation levels for our CEO and all other NEOs compared to the median of the Proxy Peer Group. The peer group for TSR performance purposes consists of the sixteen companies comprising the S&P 400 Mid-Cap Utilities Index as of January 1 in the first year of the three-year performance cycle. Throughout the course of the performance cycle, companies may be added or dropped from the index by S&P due to mergers or other activities. At the end of the cycle, new companies added to the index are included in the rankings as if they had been in the ranking from the beginning, provided there is sufficient trading history to include them in the final calculation. When a company is dropped from the index, everything related to the company is excluded as if it were never in the index.
Performance-Based Equity Awards
| 2024 PROXY STATEMENT | 37 |
Performance-Based Equity Awards
The number of PSUs which vest is determined at the end of the three-year performance cycle based on the Company’s percentile rate-of-return ranking compared to the companies in the S&P 400 Mid-Cap Utilities Index, and is payable at the Compensation Committee’s discretion in cash, shares of Company common stock, or a combination of both. Dividend equivalents on performance awards are accumulated and paid upon vesting if the awards vest and are paid based on performance. If the Company’s relative TSR over the three-year performance period is below the threshold performance required to earn the award, accumulated dividends are forfeited as well. The second performance metric, Cumulative Earnings Per Share (CEPS), aligns with current competitive practices within the peer group based on market data provided by the Compensation Committee’s consultant. Each year the Compensation Committee reviews and establishes a threshold, target, and maximum performance level for CEPS. The Compensation Committee seeks to establish performance levels that assure the goals are realistic enough to be achievable yet difficult enough to incentivize outstanding performance. The amount of payment of any award is determined at the end of the three-year performance cycle based on the Company’s earnings and is payable at the Compensation Committee’s discretion in cash, shares of Company common stock, or a combination of both. Dividend equivalents on performance awards are accumulated and paid upon vesting if the awards vest and are paid based on performance. If the Company’s CEPS over the three-year performance period is below the threshold performance required to earn the award, accumulated dividends are forfeited as well.
Range of Award Opportunity for Performance Share Units
Range of Award Opportunity for Performance Share Units Each year, the Compensation Committee approves a grant to each NEO of a target number of performance share units that vest over a three-year performance cycle based on achieving pre-determined performance goals. The number of performance shares that may be earned at the end of the performance cycle can range from 0% to 200% of the target, depending upon the level of achieved performance. The target number of performance share units granted to each NEO was determined by dividing the NEO’s target LTIP value allocated to performance share units by the grant date share price of our common stock. The table below shows the changes made to the target value of performance share grants in 2023 for the 2023 through 2025 performance period for our NEOs. In general, the target value of performance shares aligns with market data for 2023, considering the allocation of PSUs changed from 75% in 2022 to 70% in 2023. Mr. Christie received additional grants in May 2023, valued as of the grant date, upon his promotion to CFO. Mr. Manuel joined the company in 2023.
Range of Award Opportunity for Performance Share Units
| | 2022 Grant ($) | % Change | 2023 Grant ($) | | D. P. Vermillion | $1,953,813 | (4.2)% | $1,872,560 | | M. T. Thies | $570,069 | (23.2)% | $437,558 | | K. J. Christie | $382,583 | 0.7% | $385,104 | | H. L. Rosentrater | $382,583 | 0.6% | $385,041 | | J. R. Thackston | $382,583 | (25.0)% | $287,059 | | W.O. Manuel | N/A | N/A | $147,021 |
Range of Award Opportunity for Performance Share Units
The table below outlines the target number of PSUs granted in 2023 by performance metric.
Range of Award Opportunity for Performance Share Units
| | Relative TSR | CEPS | 2023 Grant (#) | | D. P. Vermillion | 11,152 | 33,454 | 44,606 | | M. T. Thies | 2,606 | 7,817 | 10,423 | | K. J. Christie | 2,270 | 6,808 | 9,078 | | H. L. Rosentrater | 2,293 | 6,879 | 9,172 | | J. R. Thackston | 1,710 | 5,128 | 6,838 | | W.O. Manuel | 902 | 2,705 | 3,607 |
Range of Award Opportunity for Performance Share Units
| 38 | |
Range of Award Opportunity for Performance Share Units
The following graphs show the percentage of performance share units that will be earned at different levels of achieved performance.
2021-2023 Performance Shares Settlement
2021-2023 Performance Shares Settlement For performance shares linked to the Company’s TSR and granted in 2021 for the performance period ending December 31, 2023, the Compensation Committee held a special meeting on January 9, 2024, to review, certify, and settle the issuance of shares to executive officers. The Company’s cumulative TSR was 3.36% during the three-year performance cycle, which placed the Company at the 39th percentile among the S&P 400 Mid-Cap Utilities Index. Based on these results, our CEO and our other NEOs earned 72.5% of the performance share awards granted in 2021 vesting based on TSR. Accrued cash dividend equivalents were paid out on the same percentage of performance shares covered by the 2021 grant. For performance shares linked to the Company’s Cumulative Earnings Per Share (CEPS) and granted in 2021 for the performance period ending December 31, 2023, the Compensation Committee reviewed, certified and settled the issuance of shares to executive officers at its February 2023 meeting. The Company’s CEPS for the 2021-2023 performance cycle ended at $6.46. Based on these results, our CEO and our other NEOs earned 53% of the performance share awards granted in 2021 vesting based on CEPS, noting that Mr. Manuel did not receive this grant, as he joined the Company in 2023. Accrued cash dividend equivalents were paid out on the same percentage of performance shares covered by the 2021 grant.
2021-2023 Performance Shares Settlement
| | Realized Value Received | | | | | | | Performance Share Awards | | | | | | NEO | TSR (#) | CEPS (#) | Value | Dividend Equivalents | Total Realized Value | | D. P. Vermillion | 13,802 | 10,090 | $838,492 | $126,389 | $964,880 | | M. T. Thies(1) | 4,163 | 3,043 | $252,896 | $38,120 | $291,015 | | K. J. Christie | 2,398 | 1,753 | $145,680 | $21,959 | $167,639 | | H. L. Rosentrater | 2,398 | 1,753 | $145,680 | $21,959 | $167,639 | | J. R. Thackston | 2,979 | 2,178 | $180,985 | $27,281 | $208,266 |
2021-2023 Performance Shares Settlement
| 1. | Mr. Thies retired from the Company on October 1, 2023. Amounts shown are prorated based upon his retirement date. |
2021-2023 Performance Shares Settlement
| 2024 PROXY STATEMENT | 39 |
Restricted Stock Units (RSUs)
Restricted Stock Units (RSUs) In February 2023, the Compensation Committee approved the grant of RSUs to each NEO. The 2023 RSUs are designed to incent retention, link compensation to the value of the Company common stock and align the interests of our NEOs with those of our shareholders. The 2023 RSUs are subject to three-year ratable vesting. On each vesting date one-third of the RSUs are settled in shares, provided the NEO remains continuously employed by the Company through the vesting date. Dividend equivalents on RSUs accrue and are paid in cash to the extent the underlying RSUs vest. To the extent RSUs are forfeited, the accrued dividend equivalents on such RSUs also would be forfeited. The number of RSUs granted to each NEO was determined by dividing the NEO’s target LTIP value allocated to RSUs by the grant date share price of our common stock. The table below shows the changes made to the target value of RSU grants in 2023 for the 2023 through 2025 vesting period for our NEOs. As with performance share units, in general, the target value of RSUs increased to align with market data for 2023. Mr. Christie and Ms. Rosentrater received the highest increases to bring their respective target values closer to market in their new roles.
Restricted Stock Units (RSUs)
| | 2022 Grant ($) | % Change | 2023 Grant ($) | | D. P. Vermillion | $651,286 | 23.2% | $802,448 | | M. T. Thies | $190,008 | (1.3)% | $187,483 | | K. J. Christie | $127,513 | 29.3% | $164,935 | | H. L. Rosentrater | $127,513 | 29.4% | $164,981 | | J. R. Thackston | $127,513 | (3.6)% | $122,959 | | W.O. Manuel(1) | N/A | N/A | $188,026 |
Restricted Stock Units (RSUs)
| 1. | Mr. Manuel received an additional RSU grant valued at $125,000 (3,067 shares), as agreed upon in his offer of employment. The entirety of this grant vested on Dec 31, 2023. |
Restricted Stock Units (RSUs)
The following chart shows the value realized by our NEOs for the RSUs vested and issued along with the associated cash dividend equivalents.
Restricted Stock Units (RSUs)
| | Realized Value Received | | | | | | Restricted Stock Units | | | Total Realized Value | | NEO | # | Value | Dividend Equivalents | | | D. P. Vermillion | 15,507 | $559,027 | $61,005 | $620,033 | | M. T. Thies(1) | 4,064 | $126,268 | $5,608 | $131,877 | | K. J. Christie | 2,991 | $107,826 | $11,155 | $118,981 | | H. L. Rosentrater | 3,004 | $108,294 | $12,115 | $120,409 | | J. R. Thackston | 2,849 | $102,706 | $10,600 | $113,307 | | W.O. Manuel | 3,583 | $129,167 | $4,951 | $134,118 |
Restricted Stock Units (RSUs)
| 1. | Mr. Thies retired from the Company on October 1, 2023. Amounts shown are prorated based upon his retirement date. |
CHANGE IN CONTROL (“CIC”) AND SEVERANCE BENEFITS
CHANGE IN CONTROL (“CIC”) AND SEVERANCE BENEFITS The Compensation Committee believes it is in the interest of shareholders to provide severance to our executive officers in the event of a CIC, thereby reducing the inherent conflict of our executive officers pursuing a transaction that may result in their personal job loss. Effective January 1, 2020, our new Executive Change in Control Plan (“CIC Plan”) was put in place for all executive officers of the Company replacing individual agreements certain executive officers had regarding a CIC. The following are key features of the plan:
CHANGE IN CONTROL (“CIC”) AND SEVERANCE BENEFITS
| • | Severance multiple: NEOs prior to January 1, 2020 would receive three times the sum of the executive’s annual base salary and target annual bonus. Future NEOs and other officers would receive two times the sum of the executive’s annual base salary and target annual bonus. |
CHANGE IN CONTROL (“CIC”) AND SEVERANCE BENEFITS
| 2024 PROXY STATEMENT | 41 |
CHANGE IN CONTROL (“CIC”) AND SEVERANCE BENEFITS
| • | Severance also includes reimbursement of 18 months of COBRA premiums, if COBRA is elected by the individual. |
CHANGE IN CONTROL (“CIC”) AND SEVERANCE BENEFITS
| • | Payment of severance is conditioned on the individual’s delivery of a release of claims. |
CHANGE IN CONTROL (“CIC”) AND SEVERANCE BENEFITS
| • | “Good reason” includes material diminution of authority, responsibility, pay, bonus opportunity or budget overseen, material relocation or material breach by the Company of the plan. |
CHANGE IN CONTROL (“CIC”) AND SEVERANCE BENEFITS
| • | Certain protections, such as a minimum annual base salary, provided to executive officers during continued employment for up to two years following CIC. |
CHANGE IN CONTROL (“CIC”) AND SEVERANCE BENEFITS
| • | No 280G excise tax gross up; CIC benefits are limited to greater of, on an after-tax basis, the full amount of CIC benefits subject to excise tax or a reduced amount equal to the maximum amount of CIC benefits that could be paid without triggering the 280G excise tax. |
CHANGE IN CONTROL (“CIC”) AND SEVERANCE BENEFITS
Additional information regarding the CIC Plan, including definitions of certain key terms and a quantification of benefits that hypothetically would have been received by our NEOs under the CIC Plan, and an applicable termination occurred on December 31, 2023, due to a CIC can be found in the Potential Payment Upon Termination or CIC Tables.
Summary Compensation Table — 2023
Summary Compensation Table — 2023
Summary Compensation Table — 2023
| Name and Principal Position | Year | Salary(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension and Non-Qualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total Compensation ($) | | D. P. Vermillion CEO | 2023 | $878,769 | $2,728,537 | $219,692 | $1,384,964 | $18,000 | $5,229,962 | | | 2022 | $838,077 | $2,923,157 | $951,228 | N/A | $32,917 | $4,745,379 | | | 2021 | $769,038 | $1,986,445 | $855,587 | $905,751 | $60,718 | $4,577,539 | | M. T. Thies(6) Former Executive Vice President, CFO & Treasurer | 2023 | $272,029 | $637,549 | $44,205 | N/A | $32,969 | $986,752 | | | 2022 | $473,153 | $852,877 | $349,073 | N/A | $18,300 | $1,693,404 | | | 2021 | $461,615 | $653,436 | $333,818 | $197,793 | $17,400 | $1,664,062 | | K. J. Christie Sr. Vice President, CFO, Treasurer, and Regulatory Affairs Officer | 2023 | $386,446 | $565,941 | $57,967 | $218,552 | $14,850 | $1,243,756 | | | 2022 | $354,307 | $572,377 | $241,286 | N/A | $13,725 | $1,181,695 | | | 2021 | $343,461 | $345,109 | $229,269 | $186,490 | $13,050 | $1,117,379 | | H. L. Rosentrater President, and Chief Operating Officer | 2023 | $459,500 | $561,028 | $70,361 | $223,727 | $14,850 | $1,329,466 | | | 2022 | $365,858 | $572,377 | $249,152 | N/A | $13,725 | $1,201,111 | | | 2021 | $343,462 | $345,109 | $229,269 | $147,079 | $13,050 | $1,077,969 | | J. R. Thackston Sr. Vice President and Chief Strategy & Clean Energy Officer | 2023 | $389,386 | $418,227 | $58,408 | $337,139 | $17,322 | $1,220,482 | | | 2022 | $359,936 | $572,377 | $245,119 | N/A | $16,131 | $1,193,563 | | | 2021 | $343,463 | $428,659 | $229,270 | $152,208 | $15,196 | $1,168,796 | | W. O. Manuel(7) Vice President, Chief Information Officer & Chief Security Officer | 2023 | $196,616 | $344,861 | $36,000 | N/A | $331,500 | $908,977 |
Summary Compensation Table — 2023
| 1. | Amounts earned in the applicable year; includes regular pay, paid time-off, jury duty and holiday pay. The total amounts shown in this column also include any amounts an NEO elected to defer in accordance with the EDC Plan. See the “Non-Qualified Deferred Compensation Plan” table for more information. |
Summary Compensation Table — 2023
| 2. | Values shown represent the aggregate grant date fair value calculated in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 “Compensation—Stock Compensation” for RSUs and performance share awards granted in each of the years reported. Assumptions used in the calculation of these amounts are included in Note 1 of the Company’s audited financial statements for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC. In the case of performance share awards tied to TSR, the amounts reported in the Stock Awards column represent the aggregate grant date fair value of the target number of performance shares that may become vested if the applicable performance criteria are satisfied and computed in accordance with ASC 718. The aggregate grant date fair value for the target number of performance shares was calculated by using a Monte Carlo simulation, which produces a probable value for the awards. All performance share awards vest at the end of the vesting term, however the number of shares delivered vary based upon the attained level of performance and may range from 0 to 2.0 times the target number of performance shares awarded. For the 2023 performance share grant, if the maximum level of performance is achieved and using the closing stock price of $35.74 as reported on December 29, 2023, to calculate the value and add the dividend equivalents using an annual amount of $1.84 per share as declared in 2023 multiplied by three years, then the value of the payouts would be: Mr. Vermillion $3,680,887; Mr. Thies $860,106; Mr. Christie $749,117; Ms. Rosentrater $756,873; Mr. Thackston $564,272; and Mr. Manuel $297,650. |
Summary Compensation Table — 2023
| 3. | Amounts shown represent the annual short-term cash incentive awards paid in 2024 earned by our NEOs for 2023 performance in accordance with the 2023 Cash Incentive Plan. |
Summary Compensation Table — 2023
| 4. | Any increase in the present value of the accrued pension benefit at normal retirement age (the earliest age at which retirement benefits may be received by the NEO without any reduction in benefits) for any NEO between December 31, 2022, and December 31, 2023, is reported in this column. All NEOs experienced an increase in the present value of their respective accrued pension benefits during 2023. The present value as of December 31, 2023, utilizes the Pri-2012 mortality table with modified MP-2021 generational projection for males and females and a 5.86% discount rate for the retirement plan and a 5.95% discount rate for the SERP. Differences in the present value from year to year are attributable to increases in final average pay, additional service, discount rates fluctuations and mortality assumptions. There were no above-market earnings for the Company’s EDC Plan. Mr. Manuel is included in the company’s 401(k) plan only based upon his hire date. |
Summary Compensation Table — 2023
| 2024 PROXY STATEMENT | 45 |
Summary Compensation Table — 2023
| 5. | Includes employer matching contributions under both the EDC Plan and the Investment and Employee Stock Ownership Plan (the “401(k) plan”). The Company makes matching contributions on behalf of all its employees who make regular contributions of their wages, salary, cash incentive, and overtime to the 401(k) plan during the plan year. The Company matching contribution to the 401(k) plan is equal to $0.75 for every $1.00 of regular employee contributions up to a maximum 6% of compensation for non-employees hired prior to January 1, 2006. For non-bargaining employees hired after that date, the Company matching contribution is equal to $1.00 for every $1.00 of regular employee contributions up to a maximum of 6% of compensation. for those non-bargaining employees hired after January 1 2014, there is an additional enhanced contribution of 3/4/5% based on age. The Company matching contribution under the EDC Plan is equal to $0.75 for every $1.00 contributed up to a maximum of 6% of the executive’s base pay less the maximum contribution allowed under the 401(k) plan assuming the participant contributed the maximum allowed by law. Amounts shown in the All Other Compensation column for 2023 include the following: |
Summary Compensation Table — 2023
| Name | One-Leave Cash-Out | Special Pay | EDC Plan Company Match | 401(k) Plan Company Match | Non-Elective 401(k) Plan Company Contribution | Total All Other Compensation | | D. P. Vermillion | | | $3,150 | $14,850 | | $18,000 | | M. T. Thies(6) | | $13,169 | | $19,800 | | $32,969 | | K. J. Christie | | | | $14,850 | | $14,850 | | H. L. Rosentrater | | | | $14,850 | | $14,850 | | J. R. Thackston | | | $2,472 | $14,850 | | $17,322 | | W.O. Manuel(7) | | $315,000 | | | $16,500 | $331,500 |
Summary Compensation Table — 2023
| 6. | Mr. Thies retired from the Company on October 1, 2023. |
Summary Compensation Table — 2023
| 7. | Mr. Manuel joined the company on June 1, 2023. His offer of employment included the following items, listed under special pay: $75,000 signing bonus, $140,000 short-term incentive replacement, and $100,000 moving allowance. |
CEO PAY RATIO
CEO PAY RATIO The Compensation Committee reviewed a comparison of CEO total compensation to the total compensation of the median employee. The compensation for the CEO in 2023 was approximately 27 times the total compensation of our median employee. In 2023, we identified the median employee by first collecting pay records on all employees from all companies within the corporation including subsidiaries, 1,988 (full-time, part-time, seasonal, and temporary), who were employed by us on December 22, 2023. To determine our median employee, we used a definition that was not annual total compensation, as shown in the 2023 Summary Compensation Table above, and instead chose “base pay rate,” which we then annualized as if all employees worked full-time and were employed for all of 2023. We identified 237 employees whose annualized base pay was within a +/-5% range of the median annualized base pay rate. Total cash compensation from 2023 was collected for each of the 237 employees to further narrow down the population. We believe the use of total cash compensation for this group of employees is a consistently applied compensation measure because we do not widely distribute annual equity awards to employees. Fewer than 3% of our employees receive annual equity awards. We calculated annual total compensation for the employee using the same methodology we use for our NEOs as set forth in the 2023 Summary Compensation Table above. The annual total compensation for 2023 was $5,229,962 for our CEO and $196,535 for our median employee. The resulting ratio of our CEO’s pay to the pay of our median employee for 2023 is 27 to 1. The foregoing pay ratio disclosure, including but not limited to any assumptions, adjustments, methodologies and existing internal records used to identify our median employee, is a reasonable estimate calculated in a manner consistent with SEC Item 402(u) of Regulation S-K. The SEC rules for identifying the median employee and calculating that employee’s annual total compensation allow companies to make reasonable assumptions and estimates, and to apply a variety of methodologies and exclusions reflecting their compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different compensation practices, and may utilize different assumptions, estimates, methodologies and exclusions in calculating their own pay ratios.
CEO PAY RATIO
| 46 | |
Pay vs. Performance (“PvP”) Tabular Disclosure — 2023
Pay vs. Performance (“PvP”) Tabular Disclosure — 2023 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 “compensation actually paid” (“CAP”) to our CEO and to our other NEOs and certain financial performance metrics of the Company. Compensation actually paid, 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 pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the Compensation Discussion and Analysis.
Pay vs. Performance (“PvP”) Tabular Disclosure — 2023
| | Pay | | | | Performance | | | | | | CEO | | Average of Other NEOs | | Value of $100 Initial Investment Based On: | | | | | Year (1) | SCT Total Compensation | Compensation Actually Paid (2) | SCT Total Compensation | Compensation Actually Paid (2) | Cumulative TSR | Peer Group Cumulative TSR (3) | Net Income ($M) | EPS | | 2023 | $5,229,962 | $1,552,612 | $1,137,887 | $454,110 | $86 | $88 | $171.2 | $2.24 | | 2022 | $4,745,379 | $5,290,632 | $1,318,402 | $1,605,440 | $104 | $103 | $155.2 | $2.12 | | 2021 | $4,577,539 | $3,485,983 | $1,257,052 | $1,082,031 | $96 | $103 | $147.3 | $2.10 | | 2020 | $5,004,033 | $2,234,759 | $1,173,361 | $241,559 | $87 | $86 | $129.5 | $1.90 |
Pay vs. Performance (“PvP”) Tabular Disclosure — 2023
| 1. | The CEO in all four reporting years is Dennis Vermillion. The other NEOs in the 2023 reporting years are Mark Thies (ret.), Kevin Christie, Heather Rosentrater, Jason Thackston, and Wayne Manuel. The other NEOs in 2022 and 2021 reporting years were: Mark Thies (ret.), Jason Thackston, Heather Rosentrater, and Kevin Christie. The other NEOs in the 2020 reporting year are Mark Thies (ret.), Jason Thackston, Marian Durkin (ret.), Kevin Christie, and Heather Rosentrater. |
Pay vs. Performance (“PvP”) Tabular Disclosure — 2023
| 2. | Amounts reported in this column are based upon total compensation reported for our CEO and our other NEOs in the Summary Compensation Table for the indicated reporting years and adjusted as shown in the table below. Fair value of equity awards was computed in accordance with the Company’s methodology used for financial reporting purposes. |
Pay vs. Performance (“PvP”) Tabular Disclosure — 2023
| 2024 PROXY STATEMENT | 47 |
Pay vs. Performance (“PvP”) Tabular Disclosure — 2023
| | 2020 | | 2021 | | 2022 | | 2023 | | | | CEO | Other NEOs | CEO | Other NEOs | CEO | Other NEOs | CEO | Other NEOs | | Summary Compensation Table Reported Compensation | $5,004,033 | $1,173,361 | $4,577,539 | $1,257,052 | $4,745,379 | $1,318,402 | $5,229,962 | $1,137,887 | | Deduct: SCT reported change in pension value | $(2,290,317) | $(335,308) | $(905,751) | $(170,893) | $— | $— | $(1,384,964) | $(155,884) | | Add : “CAP” pension value | $985,475 | $73,716 | $6,658 | $118,549 | $3,813 | $115,378 | $804 | $35,117 | | Deduct: Grant date fair values of equity awards reported in “Stock Awards” column of the SCT for the covered FY | $(1,778,775) | $(432,640) | $(1,986,445) | $(443,078) | $(2,923,157) | $(642,502) | $(2,728,537) | $(505,521) | | Deduct : For any awards granted in any prior FY forfeited during the covered FY, the fair value at the end of the prior FY | $— | $(10,089) | $— | $— | $— | $— | $— | $(104,376) | | Add: Fair values as of the end of the covered FY of all equity awards granted during the covered FY outstanding and unvested as of the end of such covered FY | $798,823 | $154,306 | $1,865,542 | $416,058 | $2,626,495 | $577,278 | $1,767,071 | $242,652 | | Add : The change in fair value (whether positive or negative) as of the end of the covered FY of any equity awards granted in any prior FY outstanding and unvested as of the end of such covered FY | $(249,034) | $(176,959) | $(192,645) | $(63,103) | $268,274 | $61,234 | $(1,518,971) | $(240,617) | | Add : For awards granted and vested in the same FY, the fair value as of the vesting date | $109,542 | $23,708 | $179,733 | $40,100 | $217,488 | $63,451 | $227,735 | $58,177 | | Add: The change in fair value (whether positive or negative) as of the vesting date of any awards granted in any prior FY for which all applicable vesting conditions were satisfied at the end of or during the covered FY | $(410,431) | $(250,148) | $(197,784) | $(108,165) | $119,893 | $60,392 | $(183,866) | $(36,344) | | Add : The dollar value of any dividend equivalents or other earnings paid on stock or option awards in the covered FY prior to the vesting date not otherwise reflected in the fair value of such award | $65,443 | $21,612 | $139,135 | $35,511 | $232,446 | $51,807 | $143,377 | $23,019 | | Total Compensation Actually Paid | $2,234,759 | $241,559 | $3,485,983 | $1,082,031 | $5,290,632 | $1,605,440 | $1,552,612 | $454,110 |
Pay vs. Performance (“PvP”) Tabular Disclosure — 2023
| 3. | Amounts reported in this column represent returns on an initial $100 investment in the S&P 400 Utilities Index, which we chose as peer group for purposes of the PvP table. |
Compensation Actually Paid vs. Most Important Measures — 2023
Compensation Actually Paid vs. Most Important Measures — 2023 The graphs below describe the relationship between compensation actually paid to our NEOs and the Company’s cumulative Total Shareholder Return, net income, and EPS for the indicated years. In addition, the graph of CAP vs. TSR below compares the Company’s cumulative TSR and our peer group cumulative TSR.
Compensation Actually Paid vs. Most Important Measures — 2023
| 2024 PROXY STATEMENT | 49 |
Grants of Plan-Based Awards — 2023
Grants of Plan-Based Awards — 2023
Grants of Plan-Based Awards — 2023
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | | | All Other Stock Awards: Number of Shares of Stock or | Grant Date Fair Value of Stock and Option | | Name | Grant Date(1) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Units (#)(4) | Awards ($)(5) | | D. P. Vermillion | | | | | | | | | | | Annual Cash Award | 02/02/23 | $530,400 | $884,000 | $1,326,000 | | | | | | | Performance Award | 02/02/23 | | | | 5,576 | 11,152 | 22,304 | | 521,691 | | Performance Award | 02/02/23 | | | | 13,382 | 33,454 | 66,908 | | 1,404,399 | | Restricted Stock Units | 02/02/23 | | | | | | | 19,115 | 802,448 | | M. T. Thies(6) | | | | | | | | | | | Annual Cash Award | 02/02/23 | $193,050 | $321,750 | $482,625 | | | | | | | Performance Award | 02/02/23 | | | | 1,303 | 2,606 | 5,212 | | 121,909 | | Performance Award | 02/02/23 | | | | 3,127 | 7,817 | 15,634 | | 328,158 | | Restricted Stock Units | 02/02/23 | | | | | | | 4,466 | 187,483 | | K. J. Christie | | | | | | | | | | | Annual Cash Award | 02/02/23 | $144,000 | $240,000 | $360,000 | | | | | | | Performance Award | 02/02/23 | | | | 1,135 | 2,270 | 4,540 | | 112,199 | | Performance Award | 02/02/23 | | | | 2,723 | 6,808 | 13,616 | | 288,807 | | Restricted Stock Units | 02/02/23 | | | | | | | 3,888 | 164,935 | | H. L. Rosentrater | | | | | | | | | | | Annual Cash Award | 02/02/23 | $195,000 | $325,000 | $487,500 | | | | | | | Performance Award | 02/02/23 | | | | 1,147 | 2293 | 4,586 | | 107,267 | | Performance Award | 02/02/23 | | | | 2,752 | 6879 | 13,758 | | 288,780 | | Restricted Stock Units | 02/02/23 | | | | | | | 3,930 | 164,981 | | J. R. Thackston | | | | | | | | | | | Annual Cash Award | 02/02/23 | $141,120 | $235,200 | $352,800 | | | | | | | Performance Award | 02/02/23 | | | | 855 | 1,710 | 3,420 | | 79,994 | | Performance Award | 02/02/23 | | | | 2,051 | 5,128 | 10,256 | | 215,273 | | Restricted Stock Units | 02/02/23 | | | | | | | 2,929 | 122,959 | | W.O. Manuel(7) | | | | | | | | | | | Annual Cash Award | 06/01/23 | $86,400 | $144,000 | $216,000 | | | | | | | Performance Award | 06/01/23 | | | | 451 | 902 | 1,804 | | 46,579 | | Performance Award | 06/01/23 | | | | 1,082 | 2,705 | 5,410 | | 110,256 | | Restricted Stock Units | 06/01/23 | | | | | | | 4,613 | 188,026 |
Grants of Plan-Based Awards — 2023
| 1. | The grant date is the date the Compensation Committee and/or the Board approves the grant of performance share awards, RSUs or non-equity incentive awards. For NEOs new to the Company, the grant date is their hire date. |
Grants of Plan-Based Awards — 2023
| 2. | Potential annual cash incentive awards granted to NEOs for 2023 performance in accordance with the 2023 Cash Incentive Plan. The amounts actually paid to our NEOs for 2023 performance appear in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. See the CD&A for further explanation. |
Grants of Plan-Based Awards — 2023
| 3. | Performance share awards are granted under the LTIP and vest over a three-year period. The number of shares earned at the end of the three-year performance period depends on the level of performance achieved. See the CD&A for further explanation. |
Grants of Plan-Based Awards — 2023
| 4. | In 2023, all of our NEOs were awarded RSUs under the LTIP that vest over a three-year period. One-third of the shares vest and shares are issued on an annual basis, provided that the NEO is employed on the last day of the vesting period. Dividend equivalents accrue on the unvested RSUs and are paid in cash at the same time the underlying RSUs vest. Therefore, if an NEO’s employment ends prior to the last day of the vesting period, no RSUs or dividend equivalents are earned or paid. |
Grants of Plan-Based Awards — 2023
| 5. | The amounts shown for the grant date fair value of the target number of performance share awards tied to TSR were calculated in accordance with ASC 718. Assumptions used in the calculation of these amounts are included in Note 1 of the Company’s audited financial statements for the year ended December 31, 2023, included in the Company’s Form 10-K filed with the SEC on February 20, 2024. The grant date fair value for the target number of performance shares tied to TSR was calculated using a Monte Carlo simulation to produce a probable value for the awards, which resulted in a fair value per share higher than the closing price per share on the grant date. |
Grants of Plan-Based Awards — 2023
| 50 | |
Grants of Plan-Based Awards — 2023
| 6. | Mr. Thies retired from the Company on October 1, 2023. Awards were prorated and settled based upon his retirement date. |
Grants of Plan-Based Awards — 2023
| 7. | Mr. Manuel received an additional RSU grant of 3,067 shares as agreed upon in his offer of employment. The entirety of this grant vested on Dec 31, 2023. |
Outstanding Equity Awards at Year-End — 2023(1)
Outstanding Equity Awards at Year-End — 2023(1)
Outstanding Equity Awards at Year-End — 2023(1)
| | | Stock Awards | | | | | Name | Date of Grant | Number of Shares or Units of Stock Not Vested (#)(2) | Market Value of Shares or Units of Stock Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights Not Vested(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights Not Vested ($)(4) | | D. P. Vermillion | 02/03/22 | | | 44,144 | 1,577,707 | | D. P. Vermillion | 02/03/22 | 4,905 | 175,305 | | | | D. P. Vermillion | 02/02/23 | | | 44,606 | 1,594,218 | | D. P. Vermillion | 02/02/23 | 12,743 | 455,435 | | | | M. T. Thies(5) | 02/03/22 | | | 7,514 | 268,550 | | M. T. Thies | 02/03/22 | — | — | | | | M. T. Thies | 02/02/23 | | | 2,607 | 93,174 | | M. T. Thies | 02/02/23 | — | — | | | | K. J. Christie | 02/03/22 | | | 8,644 | 308,937 | | K. J. Christie | 02/03/22 | 960 | 34,310 | | | | K. J. Christie | 02/02/23 | | | 9,078 | 324,448 | | K. J. Christie | 02/02/23 | 2,591 | 92,602 | | | | H. L. Rosentrater | 02/03/22 | | | 8,644 | 308,937 | | H. L. Rosentrater | 02/03/22 | 960 | 34,310 | | | | H. L. Rosentrater | 02/02/23 | | | 9,172 | 327,807 | | H. L. Rosentrater | 02/02/23 | 2,620 | 93,639 | | | | J. R. Thackston | 02/03/22 | | | 8,644 | 308,937 | | J. R. Thackston | 02/03/22 | 960 | 34,310 | | | | J. R. Thackston | 02/02/23 | | | 6,838 | 244,390 | | J. R. Thackston | 02/02/23 | 1,952 | 69,764 | | | | W.O. Manuel | | | | | | | W.O. Manuel | | | | | | | W.O. Manuel | 06/01/23 | | | 3,607 | 128,914 | | W.O. Manuel | 06/01/23 | 1,030 | 36,812 | | |
Outstanding Equity Awards at Year-End — 2023(1)
| 1. | All of the 2021-2023 awards were settled at the end of 2023. Please see the “Stock Vested 2023” table for more information. |
Outstanding Equity Awards at Year-End — 2023(1)
| 2. | Number of time-based RSUs unvested as of December 31, 2023. (RSUs vest and shares are issuable over a three-year period, provided the NEO remains employed on the last day of each year of the vesting period.) |
Outstanding Equity Awards at Year-End — 2023(1)
| 3. | The market value of RSUs is based on the closing stock price ($35.74) as reported on December 29, 2023. |
Outstanding Equity Awards at Year-End — 2023(1)
| 4. | Performance share awards reflect the number of performance shares at the target performance level. The market value is based on the closing stock price ($35.74) as reported on December 29, 2023. The value for the 2022 performance share award is shown at the target level (100%) based on results (less than target) for the first two years of the 2021-2023 performance period. The value for the 2023 performance share awards are shown at the target level (100%) based on results (less than target) for the first year of the 2023-2025 performance period. |
Outstanding Equity Awards at Year-End — 2023(1)
| 5. | Mr. Thies retired from the Company on October 1, 2023. RSU shares were prorated and settled on his retirement date. |
Outstanding Equity Awards at Year-End — 2023(1)
| 2024 PROXY STATEMENT | 51 |
Stock Vested — 2023
Stock Vested — 2023
Stock Vested — 2023
| | Stock Awards(1)(2) | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | D. P. Vermillion | 13,802(1) | $499,770 | | D. P. Vermillion | 10,090(2) | $338,721 | | D. P. Vermillion | 4,230(3) | $152,492 | | D. P. Vermillion | 4,905(3) | $176,825 | | D. P. Vermillion | 6,372(3) | $229,711 | | M. T. Thies | 4,163(1) | $150,742 | | M. T. Thies | 3,043(2) | $102,154 | | M. T. Thies(4) | 1,276(3) | $39,645 | | M. T. Thies(4) | 1,670(3) | $51,887 | | M. T. Thies(4) | 1,118(3) | $34,736 | | K. J. Christie | 2,398(1) | $86,832 | | K. J. Christie | 1,753(2) | $58,848 | | K. J. Christie | 734(3) | $26,461 | | K. J. Christie | 960(3) | $34,608 | | K. J. Christie | 1,297(3) | $46,757 | | H. L. Rosentrater | 2,398(1) | $86,832 | | H. L. Rosentrater | 1,753(2) | $58,848 | | H. L. Rosentrater | 734(3) | $26,461 | | H. L. Rosentrater | 960(3) | $34,608 | | H. L. Rosentrater | 1,310(3) | $47,226 | | J. R. Thackston | 2,979(1) | $107,870 | | J. R. Thackston | 2,178(2) | $73,115 | | J. R. Thackston | 912(3) | $32,878 | | J. R. Thackston | 960(3) | $34,608 | | J. R. Thackston | 977(3) | $35,221 | | W.O. Manuel | —(1) | $— | | W.O. Manuel | —(2) | $— | | W.O. Manuel | —(3) | $— | | W.O. Manuel | —(3) | $— | | W.O. Manuel | 3,583(3) | $129,167 |
Stock Vested — 2023
| 1. | For the performance period ended December 31, 2023, our TSR placed us in the 39th percentile of companies included in our peer group, which resulted in issuing 72.5% of the performance shares granted in 2021 for the 2021-2023 performance period and the related dividend equivalents. Value is based on the closing stock price ($36.21) as reported on January 9, 2024, the day the Compensation Committee certified the performance target was met and the shares were issuable. Dividend equivalents were paid in cash at the same time the underlying performance shares vested. |
Stock Vested — 2023
| 2. | For the performance period ended December 31, 2023, our cumulative EPS was $6.46, which resulted in issuing 53% of the performance shares granted in 2021 for the 2021-2023 performance period and the related dividend equivalents. On February 7, 2024, the Compensation Committee certified the performance target was met and the shares were issuable. Value is based on the closing stock price ($33.57) as reported on February 16, 2024. Dividend equivalents were paid in cash at the same time the underlying performance shares vested. |
Stock Vested — 2023
| 3. | Our NEOs were granted RSUs in 2021, 2022 and 2023. One-third of each grant vests each year if an NEO remains employed on December 31. Therefore, one-third of each grant vested. Our NEOs received the last one-third of their RSUs granted in 2021 and one-third of their RSUs granted in 2022 and 2023. The value of all RSUs vested on December 31, 2023, is based on the closing stock price ($36.05) as reported on January 2, 2024, the day on which the shares were issuable to the recipient. Dividend equivalents were paid in cash at the same time the underlying RSUs vested. |
Stock Vested — 2023
| 4. | Mr. Thies retired from the Company on October 1, 2023. Amounts shown were prorated and RSU shares settled on his retirement date. |
Stock Vested — 2023
| 5. | Mr. Manuel received an additional RSU grant of 3,067 shares as agreed upon in his offer of employment. The entirety of this grant vested on Dec 31, 2023. |
Stock Vested — 2023
| 52 | |
Pension Benefits — 2023
Pension Benefits — 2023 The table below reflects benefits accrued under the Retirement Plan for Employees and the two SERPs (for purposes of the discussion below, we refer to both the pre-2005 SERP and the post-2004 SERP as the “SERP”) for our NEOs. The Company’s Retirement Plan for Employees provides a retirement benefit based upon employees’ compensation and years of credited service. The retirement benefit under the Retirement Plan is based on a participant’s final average annual base salary for the highest 36 consecutive months during the last 120 months of service with the Company. Base salary for our NEOs is the amount under “Salary” in the Summary Compensation Table. The SERP provides additional pension benefits to executive officers of the Company, who have attained the age of 55 and a minimum of 15 years of vesting service with the Company. The SERP is intended to provide benefits to executive officers whose pension benefits under the Company’s Retirement Plan are reduced due to the application of limitations on qualified plans under the Code and the deferral of salary pursuant to the EDC Plan. When combined with the Retirement Plan, the SERP will provide benefits to executive officers, other than our CEO, who retire at age 62 or older, of 2.5% of the final average annual base salary during the highest 60 consecutive months during the last 120 months of service for each credited year of service up to 30 years. When combined with the Retirement Plan, the SERP will provide higher benefits to our CEO, if he retires on or after age 65, of 3% of final average base salary during the highest 60 consecutive months during the last 120 months of service for each credited year of service up to 30 years. Benefits will be reduced for executives who retire before age 62. Reductions are either 4% or 5% for each year of retirement before age 62 as prescribed in the Retirement Plan.
Pension Benefits — 2023
| Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($) | Payments During Last Year ($) | | D. P. Vermillion | Retirement Plan | 35.83 | $1,999,612 | $— | | | SERP—pre 2005(2) | 16.83 | $249,287 | $— | | | SERP 2005+(3) | 30.00 | $5,822,268 | $— | | M. T. Thies(4) | Retirement Plan | 15.00 | $514,994 | $— | | | SERP—pre 2005(2) | N/A | N/A | $— | | | SERP 2005+(3) | 18.00 | $1,092,676 | $— | | K. J. Christie | Retirement Plan | 18.50 | $839,957 | $— | | | SERP—pre 2005(2) | N/A | N/A | $— | | | SERP 2005+(3) | 18.50 | $283,220 | $— | | H. L. Rosentrater | Retirement Plan | 20.92 | $697,861 | $— | | | SERP—pre 2005(2) | N/A | N/A | $— | | | SERP 2005+(3) | 20.92 | $236,588 | $— | | J. R. Thackston | Retirement Plan | 27.50 | $1,200,604 | $— | | | SERP—pre 2005(2) | N/A | N/A | $— | | | SERP 2005+(3) | 27.50 | $919,514 | $— | | W.O. Manuel | Retirement Plan | N/A | N/A | $— | | | Enhanced 401(k) Contribution(2) | .5833 | $16,500 | $— | | | SERP 2005+(3) | N/A | N/A | $— |
Pension Benefits — 2023
| 1. | SERP participants are limited to a maximum of 30 years of credited service under the SERP no matter how many years of service they actually have with the Company. Mr. Vermillion’s credited service under the SERP 2005+ Plan has reached the maximum of 30 years. This column represents number of years of benefit service. |
Pension Benefits — 2023
| 2.-3. | Effective January 1, 2005, the SERP was modified to comply with requirements of Code Section 409A. This plan is noted as SERP 2005+. The plan prior to this date, SERP pre-2005, is grandfathered and is not subject to Code Section 409A. SERP pre-2005 benefits were frozen as of December 31, 2004. |
Pension Benefits — 2023
| 4. | Mr. Thies received a “two for one” credit for vesting service only for each completed year of full-time service from year six through year ten (employment service). Once Mr. Thies completed his twelfth year of employment, his vesting credit now accumulates year-for-year based on actual service for any future years. |
Pension Benefits — 2023
| 5. | Mr. Manuel is not eligible for the pension and/or SERP benefit. |
Pension Benefits — 2023
| 2024 PROXY STATEMENT | 53 |
Non-Qualified Deferred Compensation Plan — 2023
Non-Qualified Deferred Compensation Plan — 2023 The following table shows the non-qualified deferred compensation activity for our NEOs accrued through December 31, 2023:
Non-Qualified Deferred Compensation Plan — 2023
| Name | Executive Contributions in Last Fiscal Year ($)(1) | Registrant Contributions in Last Fiscal Year (Company Match) ($)(2) | Aggregate Earnings in Last Fiscal Year ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year-End ($) | | D. P. Vermillion | $2,000 | $3,150 | $503,750 | $— | $3,061,525 | | J. R. Thackston | $183,295 | $2,472 | $195,353 | $— | $1,159,950 |
Non-Qualified Deferred Compensation Plan — 2023
| 1. | Eligible employees may elect to defer up to 75% of their base annual salary and up to 100% of their annual bonus. This column represents deferrals of this compensation during the last year. See the Summary Compensation Table for further explanation. |
Non-Qualified Deferred Compensation Plan — 2023
| 2. | The Company matching contribution under the EDC Plan is equal to $0.75 for every $1.00 contributed up to a maximum of 6% of the executive’s base pay less the maximum contribution allowed under the 401(k) plan assuming the participant contributed up to the limit set forth in Code Section 402(g) for the plan year. See “All Other Compensation” column of the Summary Compensation Table for further explanation. |
Non-Qualified Deferred Compensation Plan — 2023
| 3. | Earnings reflect the market returns of the NEO’s investment allocations. The earnings accrued for deferred compensation are determined by actual earnings of Avista common stock and selected mutual funds. None of the earnings are included as compensation on the Summary Compensation Table since none are above market earnings. The Compensation Committee selects the mutual funds available for investment under the EDC Plan, and the participants may allocate their accounts among these investments, including Avista common stock. |
Potential Payment Upon Termination or Change in Control (“CIC”)
Potential Payment Upon Termination or Change in Control (“CIC”) Effective January 1, 2020, the Company’s new CIC Plan covers all NEOs and replaced individual CIC agreements in effect on December 31, 2019 for our NEOs who had such agreements. Under the new CIC Plan, the cash component is paid in a lump sum and is based on a multiple of the sum of base salary and annual bonus. No participant in the CIC Plan is eligible to receive cash severance in excess of the sum of (i) pro-rated annual bonus plus (ii) a multiple greater than three times base salary and annual bonus. The CIC Plan has a double trigger providing for a severance payment only upon the occurrence of both a CIC and a termination of the NEO’s employment within two years thereafter either by the Company without “Cause” or by the NEO for “Good Reason” (each as defined in the CIC Plan). Good Reason with a material diminution in the executive officer’s authority, duties or responsibilities material diminution in the executive’s annual salary or bonus opportunity, or material relocation of the executive officer’s principal place of employment by more than 50 miles. The CIC Plan also provides compensation and benefits to our NEOs during employment following a CIC of the Company. Pursuant to the terms of the CIC Plan, during the two years following a CIC of the Company, an NEO will receive an annual base salary no less than as in effect immediately prior to the CIC. In addition, each NEO will receive an annual bonus no less than the NEO’s target annual bonus as in effect immediately prior to the CIC. If employment is terminated by the Company without Cause or by such executive officer for Good Reason during the first two years after a CIC, the executive officer will receive: (i) the earned but unpaid base salary due to such executive officer as of the date of termination; (ii) any earned but unpaid annual bonus; (iii) any accrued, unused vacation pay; (iv) a pro-rated target annual bonus due to such executive officer for the portion of the year worked prior to the termination; (v) a lump sum payment equal to two or three times (depending on the officer’s level) the sum of the NEO’s annual base salary and the target annual bonus; and (vi) reimbursement of COBRA continuation coverage premiums for up to 18 months. For Code Sections 280G and 4999 and excise taxes thereunder, the CIC Plan provides no gross up for such taxes. The CIC Plan provides that the NEO will receive the greater of, on an after-tax basis, the full amount of CIC benefits subject to the excise tax or a reduced amount equal to the maximum amount of CIC benefits that could be paid without triggering the 280G excise tax. The excise tax amount in the tables below is based on the Company’s estimate of the individual’s liabilities under Code Sections 280G and 4999, assuming the NEO was terminated in connection with a CIC on December 31, 2023. The Board may amend or terminate the CIC Plan at any time, provided any amendment or termination will not take effect for 12 months following the date of such Board action. The Board may not, prior to a CIC, amend the Plan in a manner adversely affecting any participant’s eligibility to participate in the CIC Plan or payments or benefits thereunder. If employment terminates for any reason other than for retirement, death or disability during a performance cycle, all performance-based awards are forfeited. If employment terminates due to retirement, death or disability, the payment amount is still determined at
Potential Payment Upon Termination or Change in Control (“CIC”)
| 54 | |
Potential Payment Upon Termination or Change in Control (“CIC”)
the end of the three-year performance cycle and is prorated based on the number of months of active service during the cycle. If employment terminates in connection with a CIC, RSUs are fully accelerated and performance shares have prorated acceleration based on target performance. Participation in the CIC Plan is subject to various conditions including, but not limited to: (i) agreement to maintain confidence as to participation in the Plan and terms of the Plan, as well as the Company’s business plans and strategies and other information that is not common knowledge, (ii) a general release of liability for any and all claims relating to or arising out of, among other things, the participant’s employment or the termination of employment and (iii) a general non-disparagement agreement. The charts below assume a CIC occurred and a termination thereafter occurred on December 31, 2023.
Potential Payment Upon Termination or Change in Control (“CIC”)
| | Potential Payment Upon Termination After Change in Control(1) | | | | | | | | Termination Without Cause or With Good Reason after a CIC | Voluntary Termination | Retirement | Death | Disability | Involuntary Termination With or Without Cause | | Dennis P. Vermillion | | | | | | | | Chief Executive Officer | | | | | | | | Compensation Components | | | | | | | | Severance(2) | $6,188,000 | $— | $— | $— | $— | $— | | Value of Accelerated Equity(3) | $4,218,840 | $— | $3,790,461 | $3,790,461 | $3,790,461 | $— | | Retiree Medical(4) | $— | $— | $— | $— | $— | $— | | Health Benefits(5) | $46,312 | $— | $— | $— | $— | $— | | Death Benefit(6) | $— | $— | $— | $1,768,000 | $— | $— | | Supplemental Disability Benefit(7) | $— | $— | $— | $— | $1,448,332 | $— | | Section 280G Tax Gross-Up | $— | $— | $— | $— | $— | $— | | Total | $10,453,152 | $— | $3,790,461 | $5,558,461 | $5,238,793 | $— |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 1. | All scenarios assume termination occurred on December 29, 2023, and a stock price of $35.74, the closing price of Company stock on that date. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 2. | Amount equals three times the sum of the executive’s annual base pay and target bonus, plus an amount equal to their prorated target bonus. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 3. | Assumes full acceleration of RSUs and prorated acceleration of performance shares and applicable dividend equivalents (granted in 2021, 2022 and 2023) upon termination in connection with a CIC, and also assumes prorated acceleration of performance shares and RSUs in the event of death, disability, and retirement, and assumes all shares are forfeited in the event of voluntary or involuntary termination with cause. Under death, disability, and retirement, achievement of performance goals were assumed to be 100%, although the participant must wait until the end of the performance period to receive his/her prorated amount using the actual performance for the entire measurement period. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 4. | Retiree medical benefits are generally available to all employees who meet age and service eligibility requirements. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 5. | Payment by the Company for continued health coverage is for 18 months based on 2023 amounts. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 6. | The “death benefit” is explained in the CD&A under “Company Self-Funded Death Benefit Plan.” Amount shown is twice the annual base salary and is paid in a lump sum. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 7. | The supplemental disability benefit is 60% of base annual pay and is comprised of benefits available from the Avista Supplemental Executive Disability Plan, Long-term Disability Plan, Workers Compensation (if applicable), and Social Security. Amount shown is the present value of the annual disability benefit payable to age 65. Present value was determined by using an interest rate of 6.19% and the Pri-2012 mortality table with modified MP-2021 generational projection for males and females. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| | Potential Payment Upon Termination After Change in Control(1) | | | | | | | | Termination Without Cause or With Good Reason after a CIC | Voluntary Termination | Retirement | Death | Disability | Involuntary Termination With or Without Cause | | Kevin J. Christie | | | | | | | | Senior Vice President, External Affairs and Chief Customer Officer | | | | | | | | Compensation Components | | | | | | | | Severance(2) | $1,520,000 | $— | $— | $— | $— | $— | | Value of Accelerated Equity(3) | $801,670 | $— | $715,928 | $715,928 | $715,928 | $— | | Retiree Medical(4) | $— | $— | $— | $— | $— | $— | | Health Benefits(5) | $46,312 | $— | $— | $— | $— | $— | | Death Benefit(6) | $— | $— | $— | $800,000 | $— | $— | | Supplemental Disability Benefit(7) | $— | $— | $— | $— | $850,722 | $— | | Section 280G Tax Gross-Up | $— | $— | $— | $— | $— | $— | | Total | $2,367,982 | $— | $715,928 | $1,515,928 | $1,566,650 | $— |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 1. | All scenarios assume termination occurred on December 29, 2023, and a stock price of $35.74, the closing price of Company stock on that date. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 2024 PROXY STATEMENT | 55 |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 2. | Amount equals three times the sum of the executive’s annual base pay and target bonus, plus an amount equal to their prorated target bonus. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 3. | Assumes full acceleration of RSUs and prorated acceleration of performance shares and applicable dividends (granted in 2021, 2022 and 2023) upon termination in connection with a CIC, and also assumes prorated acceleration of performance shares and RSUs in the event of death, disability, and retirement, and assumes all shares are forfeited in the event of voluntary or involuntary termination with cause. Under death, disability, and retirement, achievement of performance goals were assumed to be 100%, although the participant must wait until the end of the performance period to receive his/her prorated amount using the actual performance for the entire measurement period. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 4. | Retiree medical benefits are generally available to all employees who meet age and service eligibility requirements. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 5. | Payment by the Company for continued health coverage is for 18 months based on 2023 amounts. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 6. | The “death benefit” is explained in the CD&A under “Company Self-Funded Death Benefit Plan.” Amount shown is twice the annual base salary and is paid in a lump sum. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 7. | The supplemental disability benefit is 60% of base annual pay and is comprised of benefits available from the Avista Supplemental Executive Disability Plan, Long-term Disability Plan, Workers Compensation (if applicable), and Social Security. Amount shown is the present value of the annual disability benefit payable to age 65. Present value was determined by using an interest rate of 6.19% and the Pri-2012 mortality table with modified MP-2021 generational projection for males and females. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| | Potential Payment Upon Termination After Change in Control(1) | | | | | | | | Termination Without Cause or With Good Reason after a CIC | Voluntary Termination | Retirement | Death | Disability | Involuntary Termination With or Without Cause | | Heather L. Rosentrater | | | | | | | | President and Chief Operating Officer | | | | | | | | Compensation Components | | | | | | | | Severance(2) | $1,900,000 | $— | $— | $— | $— | $— | | Value of Accelerated Equity(3) | $804,365 | $— | $717,941 | $717,941 | $717,941 | $— | | Retiree Medical(4) | $— | $— | $— | $— | $— | $— | | Health Benefits(5) | $30,465 | $— | $— | $— | $— | $— | | Death Benefit(6) | $— | $— | $— | $1,000,000 | $— | $— | | Supplemental Disability Benefit(7) | $— | $— | $— | $— | $1,773,155 | $— | | Section 280G Tax Gross-Up | $— | $— | $— | $— | $— | $— | | Total | $2,734,830 | $— | $717,941 | $1,717,941 | $2,491,096 | $— |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 1. | All scenarios assume termination occurred on December 29, 2023, and a stock price of $35.74, the closing price of Company stock on that date. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 2. | Amount equals two times the sum of the executive’s annual base pay and target bonus, plus an amount equal to their prorated target bonus. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 3. | Assumes full acceleration of RSUs and prorated acceleration of performance shares and applicable dividends (granted in 2021, 2022 and 2023) upon termination in connection with a CIC, and also assumes prorated acceleration of performance shares and RSUs in the event of death, disability, and retirement, and assumes all shares are forfeited in the event of voluntary or involuntary termination with cause. Under death, disability, and retirement, achievement of performance goals were assumed to be 100%, although the participant must wait until the end of the performance period to receive his/her prorated amount using the actual performance for the entire measurement period. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 4. | Retiree medical benefits are generally available to all employees who meet age and service eligibility requirements. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 5. | Payment by the Company for continued health coverage is for 18 months based on 2023 amounts. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 6. | The “death benefit” is explained in the CD&A under “Company Self-Funded Death Benefit Plan.” Amount shown is twice the annual base salary and is paid in a lump sum. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 7. | The supplemental disability benefit is 60% of base annual pay and is comprised of benefits available from the Avista Supplemental Executive Disability Plan, Long-term Disability Plan, Workers Compensation (if applicable), and Social Security. Amount shown is the present value of the annual disability benefit payable to age 65. Present value was determined by using an interest rate of 6.19% and the Pri-2012 mortality table with modified MP-2021 generational projection for males and females. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| | Potential Payment Upon Termination After Change in Control(1) | | | | | | | | Termination Without Cause or With Good Reason after a CIC | Voluntary Termination | Retirement | Death | Disability | Involuntary Termination With or Without Cause | | Jason R. Thackston | | | | | | | | Senior Vice President, Chief Strategy and Clean Energy Officer | | | | | | | | Compensation Components | | | | | | | | Severance(2) | $1,489,600 | $— | $— | $— | $— | $— | | Value of Accelerated Equity(3) | $803,635 | $— | $732,529 | $732,529 | $732,529 | $— | | Retiree Medical(4) | $— | $— | $— | $— | $— | $— | | Health Benefits(5) | $46,312 | $— | $— | $— | $— | $— | | Death Benefit(6) | $— | $— | $— | $784,000 | $— | $— | | Supplemental Disability Benefit(7) | $— | $— | $— | $— | $975,233 | $— | | Section 280G Tax Gross-Up | $— | $— | $— | $— | $— | $— | | Total | $2,339,547 | $— | $732,529 | $1,516,529 | $1,707,762 | $— |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 1. | All scenarios assume termination occurred on December 29, 2023, and a stock price of $35.74, the closing price of Company stock on that date. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 56 | |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 2. | Amount equals two times the sum of the executive’s annual base pay and target bonus, plus an amount equal to their prorated target bonus. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 3. | Assumes full acceleration of RSUs and prorated acceleration of performance shares and applicable dividends (granted in 2021, 2022 and 2023) upon termination in connection with a CIC, and also assumes prorated acceleration of performance shares and RSUs in the event of death, disability, and retirement, and assumes all shares are forfeited in the event of voluntary or involuntary termination with cause. Under death, disability, and retirement, achievement of performance goals were assumed to be 100%, although the participant must wait until the end of the performance period to receive his/her prorated amount using the actual performance for the entire measurement period. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 4. | Retiree medical benefits are generally available to all employees who meet age and service eligibility requirements. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 5. | Payment by the Company for continued health coverage is for 18 months based on 2023 amounts. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 6. | The “death benefit” is explained in the CD&A under “Company Self-Funded Death Benefit Plan.” Amount shown is twice the annual base salary and is paid in a lump sum. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 7. | The supplemental disability benefit is 60% of base annual pay and is comprised of benefits available from the Avista Supplemental Executive Disability Plan, Long-term Disability Plan, Workers Compensation (if applicable), and Social Security. Amount shown is the present value of the annual disability benefit payable to age 65. Present value was determined by using an interest rate of 6.19% and the Pri-2012 mortality table with modified MP-2021 generational projection for males and females. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| | Potential Payment Upon Termination After Change in Control(1) | | | | | | | | Termination Without Cause or With Good Reason after a CIC | Voluntary Termination | Retirement | Death | Disability | Involuntary Termination With or Without Cause | | Wayne O. Manuel | | | | | | | | VP, Chief Information Officer and Chief Security Officer | | | | | | | | Compensation Components | | | | | | | | Severance(2) | $1,656,000 | $— | $— | $— | $— | $— | | Value of Accelerated Equity(3) | $99,530 | $— | $72,216 | $72,216 | $72,216 | $— | | Retiree Medical(4) | $— | $— | $— | $— | $— | $— | | Health Benefits(5) | $46,336 | $— | $— | $— | $— | $— | | Death Benefit(6) | $— | $— | $— | $720,000 | | $— | | Supplemental Disability Benefit(7) | $— | $— | $— | $— | N/A | $— | | Section 280G Tax Gross-Up | $— | $— | $— | $— | $— | $— | | Total | $1,801,866 | $— | $72,216 | $792,216 | $72,216 | $— |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 1. | All scenarios assume termination occurred on December 29, 2023, and a stock price of $35.74, the closing price of Company stock on that date. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 2. | Amount equals two times the sum of the executive’s annual base pay and target bonus, plus an amount equal to their prorated target bonus. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 3. | Assumes full acceleration of RSUs and prorated acceleration of performance shares and applicable dividends (granted in 2021, 2022 and 2023) upon termination in connection with a CIC, and also assumes prorated acceleration of performance shares and RSUs in the event of death, disability, and retirement, and assumes all shares are forfeited in the event of voluntary or involuntary termination with cause. Under death, disability, and retirement, achievement of performance goals were assumed to be 100%, although the participant must wait until the end of the performance period to receive his/her prorated amount using the actual performance for the entire measurement period. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 4. | Retiree medical benefits are generally available to all employees who meet age and service eligibility requirements. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 5. | Payment by the Company for continued health coverage is for 18 months based on 2023 amounts. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 6. | The “death benefit” is explained in the CD&A under “Company Self-Funded Death Benefit Plan.” Amount shown is twice the annual base salary and is paid in a lump sum. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 7. | The supplemental disability benefit is 60% of base annual pay and is comprised of benefits available from the Avista Supplemental Executive Disability Plan, Long-term Disability Plan, Workers Compensation (if applicable), and Social Security. Amount shown is the present value of the annual disability benefit payable to age 65. Present value was determined by using an interest rate of 6.19% and the Pri-2012 mortality table with modified MP-2021 generational projection for males and females. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 2024 PROXY STATEMENT | 57 |
Potential Payment Upon Termination or Change in Control (“CIC”)
PROPOSAL 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION Proposal 3: Advisory Vote on Executive Compensation
Potential Payment Upon Termination or Change in Control (“CIC”)
| What are you voting on? | Shareholders are being asked to approve, on an advisory basis, the compensation of the Company’s NEOs. | | Voting Recommendation: | The Board unanimously recommends a vote FOR this proposal and urges beneficial owners, if they are not the record holders, to instruct their brokers or other nominees to vote for Proposal 3. |
Potential Payment Upon Termination or Change in Control (“CIC”)
As required by the Exchange Act, the Board is submitting a separate resolution, to be voted on by shareholders in a non-binding vote, approving, on an advisory basis, the Company’s executive compensation. The text of the resolution in respect of this Proposal 3 is as follows: “Resolved, that the shareholders approve, on an advisory basis, the compensation of the Company’s NEOs as disclosed in the Company’s proxy statement, pursuant to the compensation disclosure rules of the SEC, under the “CD&A,” “Executive Compensation Tables” and the related narrative disclosure.” The Board recommends a vote for this resolution. As described in this proxy statement under the CD&A, the Company’s compensation program is designed to focus Company executives on the achievement of specific annual, long-term and strategic goals set by the Company. The goals are structured to align executives’ interests with those of shareholders by rewarding performance that maintains and improves shareholder value. The following features of the compensation structure reflect this approach:
Potential Payment Upon Termination or Change in Control (“CIC”)
| • | Executive compensation programs have both short and long-term components. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| • | Annual cash incentive components focus on both the actual results and the sustainability and quality of those results. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| • | The total compensation program does not provide for guaranteed bonuses and has multiple performance measures. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| • | The Company has a recoupment policy that authorizes the Board to recover incentive payouts based on performance results that are subsequently revised or restated to levels that would have produced payouts lower than the original incentive plan payouts. The recoupment policy includes up to three years of incentive compensation if an officer engages in detrimental conduct. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| • | The CIC Plan, effective January 1, 2020, replaced individual CIC agreements for current officers who had such agreements and the tax gross-up provision was removed. |
Potential Payment Upon Termination or Change in Control (“CIC”)
The Board believes the Company’s current executive compensation program properly focuses our executives on the achievement of specific annual, long-term and strategic goals. The Board also believes the Company’s executive compensation program properly aligns the executives’ interests with those of shareholders. Shareholders are urged to read the CD&A section of this proxy statement, which discusses in greater detail how the Company’s compensation program implements the specific goals set by the Company.
Potential Payment Upon Termination or Change in Control (“CIC”)
| | The Board recommends a vote “FOR” the approval, on an advisory basis, of the compensation of the Company’s NEOs. |
Potential Payment Upon Termination or Change in Control (“CIC”)
Although the advisory vote on Proposal 3 is non-binding, the Board and the Compensation Committee will review the results of the vote and, consistent with our record of shareholder engagement, are expected to take the outcome of the vote into consideration, along with other relevant factors, in determining future executive compensation and the frequency of such advisory votes.
Potential Payment Upon Termination or Change in Control (“CIC”)
| 58 | |
Potential Payment Upon Termination or Change in Control (“CIC”)
The following table shows the number of shares of common stock of the Company held beneficially, as of March 1, 2024, by (i) each director and nominee, (ii) each of our NEOs in the Summary Compensation Table, (iii) all current directors and executive officers as a group and (iv) each person who is known to the Company to be the beneficial owner of more than 5% of our common stock. No director or executive officer owns in excess of 1% of the stock of any indirect subsidiaries of the Company. None of the directors or NEOs has pledged Company common stock as security. As of March 1, 2024, there were 78,186,011 shares of common stock outstanding. Beneficial ownership, as shown below under the heading “Shares Beneficially Owned,” was determined in accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire shares (for example, upon the exercise of an option or warrant or the vesting of an equity award) within 60 days of the date as of which the information is provided. Shares shown under the heading “Other” are not considered beneficially owned in accordance with Rule 13d-3 but are considered by the Company in determining whether an individual has met the Company’s share ownership guidelines. In computing the percentage ownership of any person, the number of shares is deemed to include the number of shares beneficially owned by such person by reason of such acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the table may not necessarily reflect the person’s actual voting power at any particular date. To our knowledge, except as indicated in footnotes to the table, the persons named in the table have sole voting and investment power for all shares of common stock shown as beneficially owned by them.
Potential Payment Upon Termination or Change in Control (“CIC”)
| 2024 PROXY STATEMENT | 59 |
Potential Payment Upon Termination or Change in Control (“CIC”)
| Name | Shares Beneficially Owned | | Other | | Total | Percent of Class | | | Direct | Indirect | Deferred Shares(1) | RSUs Not Yet Vested(2) | | | | Directors and NEOs | | | | | | | | Julie A. Bentz | 6,371 | | | | 6,371 | * | | Donald C. Burke | 25,605 | | | | 25,605 | * | | Kevin J. Christie | 20,976 | 3,277(3) | | 8,608 | 32,861 | * | | Kevin B. Jacobsen | 3,543 | | | | 3,543 | * | | Rebecca A. Klein | 19,493 | | | | 19,493 | * | | Sena M. Kwawu | 7,978 | | | | 7,978 | * | | Wayne O. Manuel | 2,480 | | | 7,157 | 9,637 | * | | Scott H. Maw | 22,948 | | | | 22,948 | * | | Scott L. Morris | 128,219 | | | | 128,219 | * | | Jeffry L. Philipps | 10,496 | | | | 10,496 | * | | Heather L. Rosentrater | 22,523 | 695(6) | | 10,474 | 33,692 | * | | Heidi B. Stanley | 20,846 | 9,248(4) | | | 30,094 | * | | Jason R. Thackston | 28,327 | | | 6,679 | 35,006 | * | | Mark T. Thies | 91,741 | 5,751(5) | | | 97,492 | * | | Dennis P. Vermillion | 127,626 | 116(3) | | 43,382 | 171,124 | * | | Janet D. Widmann | 19,747 | | | | 19,747 | * | | All directors and executive officers as a group, including those listed above (23 individuals) | 612,595 | 26,795 | 3,487 | 108,611 | 751,488 | * | | 5% Beneficial Owners | | | | | | | | BlackRock, Inc.(7) | 15,042,850 | | | | 15,042,850 | 19.4% | | The Vanguard Group, Inc.(8) | 9,526,035 | | | | 9,526,035 | 12.31% | | State Street Corporation(9) | 4,624,876 | | | | 4,624,876 | 5.98% |
Potential Payment Upon Termination or Change in Control (“CIC”)
| * As of March 1, 2024, the officers and directors as a group hold less than 1% of the shares outstanding. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 1. | Shares deferred under the EDC Plan or under the former Non-Employee Director Stock Plan. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 2. | Time-based RSUs granted to executive officers but not yet vested. RSUs vest in three equal annual increments, provided the officer remains employed by the Company. If the employment of an executive officer terminates, all unvested shares are forfeited. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 3. | Shares held in the Company’s 401(k) plan. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 4. | Shares held by Empire Bolt in a profit-sharing plan not administered by the Company. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 5. | Shares held by Mr. Thies’ spouse, Elizabeth Thies. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 6. | Shares held by Ms. Rosentrater’s spouse, Eric Rosentrater. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 7. | As shown on Schedule 13G filed with the SEC on January 19, 2024, by BlackRock, Inc., a parent holding company, the beneficial owner has sole voting power over 14,835,468 shares and sole dispositive power over 15,042,850 shares. The aggregate amount beneficially owned by each reporting person is 15,042,850 shares. The mailing address of the beneficial owner is 50 Hudson Yards, New York, New York 10001. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 8. | As shown on Schedule 13G filed with the SEC on February 13, 2024, Vanguard has shared voting power over 87,756 shares, sole dispositive power over 9,365,269 shares and shared dispositive power over 160,766 shares. The aggregate amount beneficially owned by each reporting person is 9,526,035. The address of the beneficial owner is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 9. | As shown on Schedule 13G filed with the SEC on January 25, 2024, State Street Corporation (“State Street”) has shared voting power over 4,134,350 shares and shared dispositive power over 4,611,776 shares, with an aggregate number of shares beneficially owned of 4,624,876 shares. The mailing address is State Street Financial Center, 1 Congress Street, Suite 1, Boston, Massachusetts 02114-2016. |
Potential Payment Upon Termination or Change in Control (“CIC”)
| 60 | |

DEF 14A of Avista Corp

Compensation Highlights — 2023

HIGHLIGHTS

HIGHLIGHTS

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

SUMMARY OF BOARD CORE COMPETENCIES

Board Committees

Elements of Director Compensation

Elements of Director Compensation

Elements of Director Compensation

Director Compensation Table — 2023

Director Compensation Table — 2023

Director Compensation Table — 2023

Director Compensation Table — 2023

Director Compensation Table — 2023

Director Compensation Table — 2023

Director Compensation Table — 2023

Director Compensation Table — 2023

Director Compensation Table — 2023

Other Information

Other Information

Other Information

Other Information

Other Information

Other Information

Other Information

Other Information

Other Information

Other Information

Other Information

Other Information

Other Information

Other Information

Other Information

BUSINESS RESULTS IMPACT ON INCENTIVE COMPENSATION

BUSINESS RESULTS IMPACT ON INCENTIVE COMPENSATION

BUSINESS RESULTS IMPACT ON INCENTIVE COMPENSATION

COMPENSATION GOVERNANCE PRACTICES

ROLE OF THE COMPENSATION CONSULTANT

RISK MITIGATION OVERVIEW

RISK MITIGATION OVERVIEW

RISK MITIGATION OVERVIEW

RISK MITIGATION OVERVIEW

COMPENSATION PHILOSOPHY AND OBJECTIVES

COMPETITIVE ANALYSIS AND PEER GROUP

COMPETITIVE ANALYSIS AND PEER GROUP

COMPETITIVE ANALYSIS AND PEER GROUP

LONG-TERM EQUITY COMPENSATION

Performance-Based Equity Awards

Performance-Based Equity Awards

Performance-Based Equity Awards

Range of Award Opportunity for Performance Share Units

Range of Award Opportunity for Performance Share Units

Range of Award Opportunity for Performance Share Units

Range of Award Opportunity for Performance Share Units

Range of Award Opportunity for Performance Share Units

Range of Award Opportunity for Performance Share Units

2021-2023 Performance Shares Settlement

2021-2023 Performance Shares Settlement