DEF 14A of Southwest Gas Holdings, Inc., Mar 18, 2024

DEF 14A of Southwest Gas Holdings, Inc.

Filed Mar 18, 2024 · FY20230001692115-24-000052

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS

  2. ELECTION OF DIRECTORS

    | The Board Recommends a Vote “FOR” each of the Nominees Named Below |

  3. ELECTION OF DIRECTORS

    The authorized number of directors is currently fixed at eleven. At our Annual Meeting, stockholders will elect directors to hold office until the next annual meeting of stockholders or until their successors shall be elected and duly qualified. Based on the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated E. Renae Conley, Andrew W. Evans, Karen S. Haller, Jane Lewis-Raymond, Henry P. Linginfelter, Anne L. Mariucci, Carlos A. Ruisanchez, Ruby Sharma, Andrew J. Teno, A. Randall Thoman, and Leslie T. Thornton to serve as directors of the Company. All of the nominees are independent under the NYSE corporate governance rules except for Ms. Haller. Each of the nominees was elected to his or her present term of office by stockholders at our 2023 Annual Meeting. If any nominee for any reason is unable or unwilling to serve, the proxies may be voted for such substitute nominee as the proxy holder may determine, unless the Board, in its discretion, reduces the number of directors serving on the Board. The eleven nominees for director who receive the highest number of votes “FOR” election will be elected as directors. Pursuant to our Majority Voting Policy, if any director nominee receives a greater number of votes “WITHHELD” from his or her election than “FOR” his or her election, such director nominee must promptly tender his or her resignation. For more details of our majority voting policy, see “Governance of the Company - Majority Voting Policy” above.

  4. ELECTION OF DIRECTORS

    | Names, Qualifications and Reasons for Selection of Nominees |

  5. ELECTION OF DIRECTORS

    The Board’s director nominees, as outlined below, possess core competencies in management, operations, finance, administration and strategic transactions, and they have significant expertise in the industries that matter most to our business. The nominees have also demonstrated personal integrity and strong leadership while overseeing impressive growth in both of the Company’s business segments. They bring diverse and unique perspectives, are able to challenge management and also possess vast experience with mergers and acquisitions. We believe that the nominees’ skills and experience, including their combined knowledge of financial, legal and regulatory matters, enhance the Board’s ability to make decisions that create stockholder value. The table below lists some of the skills and experiences that we consider important for our director nominees in light of our current business strategy and structure. The director nominees’ biographies note their relevant experience, qualifications and skills relative to the list below.

  6. ELECTION OF DIRECTORS

    | Board Skills and Composition Matrix |

  7. ELECTION OF DIRECTORS

    The following matrix sets forth the board members’ experience, skills, expertise and demographic background as of December 31, 2023.

  8. ELECTION OF DIRECTORS

    | | Haller | Conley | Evans | Lewis- Raymond | Lingin- felter | Mariucci | Ruisanchez | Sharma | Teno | Thoman | Thornton | | Experience, Skills, Expertise | | | | | | | | | | | | | Public Company Board Service | | ✓ | | | | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Public Company Executive Officer | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | | | ✓ | | Legal/Regulatory | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | | | ✓ | | Finance/Accounting | ✓ | ✓ | ✓ | | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | | Energy Utility | ✓ | ✓ | ✓ | ✓ | ✓ | | | | ✓ | | ✓ | | Technology/Cybersecurity | | | | ✓ | | | | | | | ✓ | | ESG | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | ✓ | ✓ | | ✓ | | Operations Responsibility | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | | ✓ | | | Demographic Background | | | | | | | | | | | | | Board Tenure (Years) | 2 | 2 | 2 | 5 | 2 | 18 | 2 | 1 | 2 | 14 | 5 | | Age | 60 | 66 | 57 | 57 | 62 | 66 | 52 | 57 | 38 | 72 | 65 | | Male | | | M | | M | | M | | M | M | | | Female | F | F | | F | | F | | F | | | F | | African American | | | | | | | | | | | ✓ | | Caucasian | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | | ✓ | ✓ | | | Asian | | | | | | | | ✓ | | | | | Hispanic/Latino | | | | | | | ✓ | | | | |

  9. ELECTION OF DIRECTORS

    The names of the nominees, their principal occupation and the Board’s reasons for their selection are set forth below. Except as noted, each of the nominees has held the position listed beside their name for at least the past five years.

  10. ELECTION OF DIRECTORS

    | E. Renae Conley | | | | | Ms. Conley, 66, is the CEO of ER Solutions, LLC, an energy consulting firm. She has over 30 years of business experience in the energy industry, including leadership positions in finance, management, operations and human resources. Ms. Conley served as EVP, Human Resources and Administration and Chief Diversity Officer of Entergy Corporation from 2010 to 2013. | CEO, ER Solutions, LLC Former Utility Company Executive | | | | Director Since: 2022 Chair of the Board Board Committees: Audit, Compensation Qualifications, Skills and Experience The Board determined that Ms. Conley should serve as a director given her strong energy background and substantial ESG expertise. She brings vast knowledge and experience in the energy utility industry, financial topics, and legal and regulatory affairs, along with experience in corporate functional leadership and with public company governance processes. Number of Other Public Company Boards: 1 | | She previously served as Chairman, President and CEO of Entergy Louisiana and Gulf States Louisiana (2000 – 2010). Prior to joining Entergy, Ms. Conley held a variety of positions at PSI Energy/Cinergy Corporation, including President of Cincinnati Gas and Electric. Ms. Conley formerly served on the Ball State University Board of Trustees as Chair of the Board. She is a director of PNM Resources, Inc. (NYSE: PNM), an electricity utility company. She has a B.S. in Accounting and an M.B.A. from Ball State University Miller College of Business. | | |

  11. ELECTION OF DIRECTORS

    | Andrew W. Evans | | | | | Mr. Evans, 57, is the retired Chief Financial Officer of Southern Company, an electrical and natural gas utility holding company. He served as CFO from 2018 to 2021, with responsibility for investor relations, public reporting, information technology, cybersecurity, business development, risk and capital deployment. Prior to that Mr. Evans | Retired Utility Company Executive, Southern Company | | | | Director Since: 2022 Board Committees: Audit, Strategic Transactions Qualifications, Skills and Experience The Board determined that Mr. Evans should serve as a director because of his broad knowledge of the utility industry and his experience with enterprise risk management. He also was Chief Executive Officer and Chief Financial Officer for publicly traded natural gas and electrical utilities. Number of Other Public Company Boards: 0 | | served as Chairman, President and Chief Executive Officer of AGL Resources, Inc., the largest publicly traded gas distribution system in the U.S. During his 15 years at AGL, Mr. Evans served as Treasurer, CFO, and COO before becoming CEO. Prior to AGL, Mr. Evans worked at the Federal Reserve Bank of Boston, and at Mirant Corp, a global energy provider. He is currently a trustee of Emory University and is a director of Georgia Power. Mr. Evans has served as chair of several philanthropic organizations, including the Grady Hospital Foundation and Zoo Atlanta. Mr. Evans was selected for his position as a director pursuant to the terms of the Company’s Cooperation Agreement with the Icahn Group. | | |

  12. ELECTION OF DIRECTORS

    | Karen S. Haller | | | | | Ms. Haller, 60, is President and CEO of the Company and CEO of Southwest Gas Corporation, the Company’s gas utility. She is a director of the Company and several of its operating subsidiaries. As leader of the Company’s regulated and unregulated businesses, Ms. Haller is responsible for improving financial and operational performance and implementing the Company’s strategy, growth initiatives, and investment plans. | President and Chief Executive Officer Southwest Gas Holdings, Inc. Chief Executive Officer Southwest Gas Corporation | | | | Director Since: 2022 Board Committees: None Qualifications, Skills and Experience The Board determined that Ms. Haller should serve as a director because, as President and Chief Executive Officer of the Company, she has a unique understanding of the Company’s businesses, customers, end markets, supply chains, utility operations, talent development, policies and internal functions through her service in a wide range of management roles. Ms. Haller also brings experience with financial, environmental, regulatory and legal issues of importance to the Company and its subsidiaries. Number of Other Public Company Boards: 0 | | Ms. Haller served in multiple leadership positions during her 27-year tenure with Southwest Gas, most recently serving as Executive Vice President and Chief Legal and Administrative Officer. Prior to joining Southwest Gas, Ms. Haller worked as a lawyer in private practice, focused primarily on commercial litigation, business transactions, and corporate law. She is a member of the State Bars of Arizona, California, and Nevada. Ms. Haller serves on the Boards of Directors of the Legal Aid Center of Southern Nevada, Las Vegas Global Economic Alliance and the American Gas Association. She received a B.S. in finance with honors from the University of Wyoming and a J.D. from Cornell Law School. | | |

  13. ELECTION OF DIRECTORS

    | Jane Lewis-Raymond | | | | | Ms. Lewis-Raymond, 57, is principal of Hilltop Strategies, a strategy and consulting firm engaged with corporate leaders on strategic leadership. Ms. Lewis-Raymond has served the natural gas industry as an attorney and executive for over three decades. She was previously an attorney with Parker Poe Adams and Bernstein LLP and Senior Vice | Principal, Hilltop Strategies Retired Executive, Piedmont Natural Gas Company, Inc. | | | | Director Since: 2019 Board Committees: Audit, Compensation (Chair), Strategic Transactions Qualifications, Skills and Experience The Board determined that Ms. Lewis-Raymond should serve as a director of the Company because of her legal and public company director experience, as well as her work as a natural gas industry senior executive. In addition, her knowledge and experience with ESG topics and with corporate governance initiatives relating to enterprise risk management, federal regulatory pipeline safety, cybersecurity and crisis management planning were key to the Board’s recommendation. Number of Other Public Company Boards: 0 | | President and Chief Legal, Compliance and External Relations Officer of Piedmont Natural Gas Company, Inc., where she led top line growth and measurable strategic and sustainability directives to build long-term value for shareholders. Earlier in her career, she served as the American Gas Association’s Vice President of Regulatory Affairs. Ms. Lewis-Raymond serves on the board of MeckEd, where she chairs the Governance Committee and on the board of Keystone Energy, where she is a member of the Steering Committee. She served on the National Advisory Council for Teach For America and is a member of Women Executives, Charlotte. She previously served as Chair of Teach for America’s Charlotte-Piedmont Triad Advisory Board. In 2021, she earned a certificate in ESG: Navigating the Board’s Role from Berkeley Law Executive Education. She is a graduate of the University of Maryland and an Order of the Coif graduate of the University of Maryland School of Law. | | |

  14. ELECTION OF DIRECTORS

    | Henry P. Linginfelter | | | | | Mr. Linginfelter, 62, is the retired Executive Vice President of Southern Company Gas, the largest gas utility in the U.S. He was responsible for all operations, safety, construction, customer service, engineering, environmental, gas supply and control, budgeting and planning, and financial | Retired Executive, Southern Company Gas | | | | Director Since: 2022 Board Committees: Nominating and Corporate Governance, Strategic Transactions Qualifications, Skills and Experience The Board determined that Mr. Lingin-felter should serve as a director because of his experience in the natural gas industry. His experience in operations, safety, customer service and risk management were important to the Board’s recommendation. Number of Other Public Company Boards: 1 | | planning, among others. He served on the board of the Southern Company’s captive insurance business, which assessed and mitigated risk and liability issues across the corporation. He has broad executive and operating experience, as well as extensive experience in regulatory and legislative affairs. Mr. Linginfelter is the former Chair of the Southern Gas Association, and served on the American Gas Association Leadership Council for several years. He serves on the board of American Electric Power Company, Inc. (NASDAQ: AEP) in addition to several not-for-profit boards, and is former Chief of the Georgia Chamber of Commerce. Mr. Linginfelter was selected for his position as a director pursuant to the terms of the Company’s Cooperation Agreement with the Icahn Group. | | |

  15. ELECTION OF DIRECTORS

    | Anne L. Mariucci | | | | | Ms. Mariucci, 66, has over 30 years of experience in finance, construction and real estate development. She currently serves as the General Partner of MFLP, a family office and investment entity. Ms. Mariucci previously held a number of senior executive management roles with Del Webb Corporation and was responsible for its large-scale community development and homebuilding business. She also served as | Private Investor Retired Real Estate Development and Homebuilding Executive | | | | Director Since: 2006 Board Committees: Compensation, Nominating and Corporate Governance, Strategic Transactions (Chair) Qualifications, Skills and Experience The Board determined that Ms. Mariucci should serve as a director of the Company because of her business, investment and financial expertise and experience in the housing and construction industry with Del Webb Corporation and Pulte Homes throughout the Company’s service territories. She also brings valuable public company board experience. Number of Other Public Company Boards: 3 | | President of Del Webb following its merger with Pulte Homes, Inc. in 2001 until 2003. She serves as a director of CoreCivic, Inc. (NYSE: CXW), Taylor Morrison Home Corporation (NYSE: TMHC), Berry Corporation (NASDAQ: BRY), and is currently Chair of the Board of Directors for Banner Health, a large non-profit healthcare system. She is an investor and Advisory Board member of Hawkeye Partners, a real estate private equity firm. Ms. Mariucci is a past chair of the Arizona Board of Regents, and a past director of the Arizona State Retirement System, HonorHealth and Action Performance Companies. Ms. Mariucci received her undergraduate degree in accounting and finance from the University of Arizona. She completed the Corporate Financial Management Program at Stanford’s Graduate School of Business, and has been certified as a CPA and a FINRA Securities Financial and Operations Principal. | | |

  16. ELECTION OF DIRECTORS

    | Carlos A. Ruisanchez | | | | | Carlos A. Ruisanchez, 52, is the co-founder of Sorelle Capital, a firm investing in and developing hospitality, consumer and real estate businesses. Prior to Sorelle, he served as President and Chief Financial Officer of Pinnacle Entertainment, Inc., a leading gaming entertainment company, until its sale in 2018. He joined Pinnacle in 2008 as Executive Vice President, Strategic Planning and Development. He became Pinnacle’s Chief Financial Officer in | Co-founder, Sorelle Capital | | | | Director Since: 2022 Board Committees: Audit, Nominating and Corporate Governance, Strategic Transactions Qualifications, Skills and Experience The Board determined that Mr. Ruisanchez should serve as a director of the Company because of his expertise in corporate finance, investment banking, and highly regulated industries - areas of importance to the Company and its subsidiaries. Mr. Ruisanchez also brings public company leadership and board experience. Number of Other Public Company Boards: 1 | | 2011, President and Chief Financial Officer in 2013, and Board Member in 2016. Prior to joining Pinnacle Entertainment, Inc., Mr. Ruisanchez was Senior Managing Director at Bear Stearns & Co., Inc., an investment banking firm, where he held various positions from 1997 to 2008. As Senior Managing Director of Bear Stearns & Co., he was responsible for corporate clients in the gaming, lodging and leisure industries, as well as financial sponsor banking relationships. He is an independent board member of Cedar Fair Entertainment Company (NYSE: FUN), where he serves on the Compensation Committee and chairs the Audit Committee. He has a B.S. in Finance from University of Connecticut School of Business and an M.B.A from University of California Berkeley, HAAS School of Business. | | |

  17. ELECTION OF DIRECTORS

    | Ruby Sharma | | | | | Ms. Sharma, 57, is a Fellow Chartered Accountant of the Institute of Chartered Accountants in England and Wales. She was the Managing Partner of RNB Strategic Advisors, a strategic advisory firm from 2018 until 2022. Ms. Sharma served as a Partner at Ernst & Young LLP (now known as EY) from 2002 until 2017, where she founded and led the Center for Board Matters, focused on global strategy and execution and providing | Former Partner, EY LLP | | | | Director Since: 2022 Board Committees: Compensation, Nominating and Corporate Governance Qualifications, Skills and Experience The Board determined that Ms. Sharma should serve as a director because of her expertise in accounting, auditing and corporate governance. Ms. Sharma also brings public company board experience. Number of Other Public Company Boards: 3 | | governance services to boards and the C-suite, and worked in Fraud Investigations and Dispute Services. Her prior experience includes serving as Senior Manager of Forensic and Litigation Services at Arthur Andersen LLP from 1999 to 2002. She is a multi-cultural, global business advisor and a frequent keynote speaker and panelist on corporate governance topics, and has authored several audit committee handbooks, white papers on governance, value protection and diversity and inclusion topics. Ms. Sharma is a member of the boards of directors of ATI, Inc. (NYSE: ATI), S&C Electric Company (private), Bowflex, Inc. (formerly Nautilus, Inc.) (NYSE: BFX), and SoundThinking, Inc. (formerly ShotSpotter) (NASDAQ: SSTI). Ms. Sharma was selected for her position as a director pursuant to the terms of the Company’s Cooperation Agreement with the Icahn Group. | | |

  18. ELECTION OF DIRECTORS

    | Andrew J. Teno | | | | | Mr. Teno, 38, is President and Chief Executive Officer of Icahn Enterprises L.P., a diversified holding company engaged in various businesses, including investment, energy, automotive, food packaging and others. Prior to his appointment to this role in February 2024, Mr. Teno was a portfolio manager at Icahn Capital. Prior to joining Icahn Capital in 2020, Mr. Teno worked for Fir Tree Partners from 2011 to 2020, a New York based private investment firm. | President and Chief Executive Officer, Icahn Enterprises L.P. | | | | Director Since: 2022 Board Committees: Compensation, Strategic Transactions Qualifications, Skills and Experience The Board determined that Mr. Teno should serve as a director because of his business, finance and energy industry expertise. Mr. Teno also brings public company board experience. Number of Other Public Company Boards: 2 | | Mr. Teno received an undergraduate business degree from the Wharton School at the University of Pennsylvania in 2007. He is currently a director of Icahn Enterprises L.P. (NASDAQ: IEP) and Illumina (NASDAQ: ILMN) a biotechnology company. He previously served as a director of Cheniere Energy, Inc., a liquified natural gas company, FirstEnergy Corp., and Crown Holdings, Inc. Mr. Teno has broad business and investment experience, has experience as a public company director, including as an Audit Committee member, and has familiarity with the utilities and infrastructure services industries, as well as other national and international business matters. Mr. Teno was selected for his position as a director pursuant to the terms of the Company’s Cooperation Agreement with the Icahn Group. | | |

  19. ELECTION OF DIRECTORS

    | A. Randall Thoman | | | | | Mr. Thoman, 72, is principal of Thoman International, LLC, a business advisory and consulting firm. He has been a Certified Public Accountant for more than 40 years. He began his career with Deloitte & Touche LLP and became a Partner in June 1991. For 15 years, Mr. Thoman was the Partner with primary responsibility for the | Principal, Thoman International, LLC Retired Partner, Deloitte & Touche LLP | | | | Director Since: 2010 Board Committees: Audit (Chair), Compensation Qualifications, Skills and Experience The Board determined that Mr. Thoman should serve as a director of the Company because of his business, accounting and auditing experience with Deloitte & Touche LLP, his leadership positions at the firm and his experience with SEC reporting and compliance, as well as his experience as a director of another publicly traded company. Mr. Thoman’s comprehensive corporate auditing and finance experience qualifies him to provide guidance and oversight in his role as Chair of the Audit Committee. Number of Other Public Company Boards: 1 | | technical interpretation and application of accounting principles and audit standards and the review of all reporting issues and financial statements for Nevada-based companies registered with the SEC. He retired from Deloitte & Touche LLP in October 2009. Mr. Thoman serves on the board of Boyd Gaming Corporation (NYSE: BYD) and previously served on the board of SHFL entertainment, Inc. until its acquisition in 2013. Mr. Thoman received his degree in accounting from the University of Utah. Due to his experience and Audit Committee leadership skills, the Board approved an exception to the Company’s Corporate Governance Guidelines, enabling Mr. Thoman to stand for reelection at the Annual Meeting despite his having attained the retirement age set forth in the Guidelines. | | |

  20. ELECTION OF DIRECTORS

    | Leslie T. Thornton | | | | | Leslie T. Thornton, 65, is a retired utility company executive and former law firm partner at two Washington D.C. based national law firms. In the Clinton administration, she served in various senior roles including Chief of Staff to the U.S. Secretary of Education and Deputy Advisor for the 1996 Presidential Debates. She previously served as Senior Vice President, General Counsel & Corporate Secretary, and Merger Transition Counsel, at WGL Holdings, Inc. until her retirement | Retired Executive, WGL Holdings, Inc. & Washington Gas Light Company | | | | Director Since: 2019 Board Committees: Audit, Nominating and Corporate Governance (Chair) Qualifications, Skills and Experience The Board determined that Ms. Thornton should serve as a director because of her legal experience, service as a utility industry senior executive, and her expertise in the areas of critical infrastructure cybersecurity and data protection, labor and employment issues, corporate governance, and corporate transactional matters. She also brings extensive public affairs expertise, as well as public company board experience. Number of Other Public Company Boards: 1 | | in 2018. During her tenure with WGL, Ms. Thornton earned her Master of Laws degree in National Security Law with a cybersecurity focus. Since 2005, she has been a member of the Board of Directors of Perdoceo Education Corporation (NASDAQ: PRDO). Ms. Thornton also serves on the Boards of Trustees for the University of the District of Columbia David A. Clarke School of Law and the D.C. Public Defender, and is on the Advisory Boards of the Association of Corporate Counsel Leadership Academy and Aiden Technologies, Inc. Ms. Thornton was a Board Leadership Fellow for the National Association of Corporate Directors. She is a frequent speaker on governance, compliance, cybersecurity and data protection, and diversity and inclusion. She is a graduate of the University of Pennsylvania and Georgetown University Law Center. | | |

  21. COMPENSATION DISCUSSION AND ANALYSIS

    Philosophy and Objectives We believe in the importance of aligning the financial interests of the Company’s executives with those of stockholders. By emphasizing our goal to build stockholder value by focusing on fundamental business strategies of operational excellence, strategic growth and financial stewardship, and by operating true to our core values of safety, excellence, quality, partnership, stewardship and value, we motivate achievements that are the platform for increased stockholder returns. A significant portion of our NEOs’ compensation is designed to be variable and tied to the achievement of key financial and strategic performance objectives, which helps us to incentivize our NEOs to create long-term value for our stockholders. In our utility segment, we strive to work collaboratively with regulators to achieve positive results for both customers and stockholders, and we recognize that customer satisfaction and the Company’s safety record are both essential elements in the regulatory process. Safety is also critical to the success of our utility infrastructure services segment, and safety goals carry significant weight under Centuri’s annual incentive plan. In particular, the Company’s compensation program has been designed to accomplish the following objectives: ▪Establish competitive compensation plans to attract, retain and motivate high performing senior leaders; ▪Emphasize a pay-for-performance culture to reward both annual and long-term Company performance while not encouraging excessive risk-taking; ▪Create long-term alignment between the interests of senior executives and stockholders; and ▪Support our strategic initiatives and financial goals. Pay for Performance With respect to each of our NEOs, all annual cash incentives and long-term equity incentives are “at risk,” as those awards are either variable based on the level of performance against incentive targets or are subject to continued employment during a three-year vesting period. The portion of total direct compensation designed to be at risk depends upon the NEO’s position and the ability to influence outcomes, as well as market pay levels and risk mitigation considerations. Ms. Haller, the Company’s CEO, has the largest portion of pay at risk. In 2023, the percentage of her targeted total direct compensation opportunity at risk was 82%. For the other NEOs, the average percentage of such compensation at risk was 72%.

  22. COMPENSATION DISCUSSION AND ANALYSIS

    Role of the Committee The Committee oversees our executive compensation program and is responsible for reviewing and approving all executive compensation and benefit plans of the Company’s executive officers, including its NEOs. The Committee meets regularly throughout the year to review and discuss, among other items, our compensation philosophy, changes in compensation governance, composition of our peer group, corporate goals and objectives relevant to the CEO’s compensation, the CEO’s performance in relation to such goals and objectives and, together with the other Independent Directors of the Board, the CEO’s actual compensation. The Committee also reviews, based on the recommendations provided by the CEO, and approves the salaries and incentive compensation for the other executive officers, including the NEOs. The Committee’s Charter is available on the Company’s website at www.swgasholdings.com. Role of Management Management, including the NEOs, receives direction from the Committee regarding executive compensation. Management annually provides information to the Committee regarding market practices and pay levels of the various elements of direct compensation (including target awards for incentive compensation), as well as the thresholds, targets and maximums of the performance measures. Information is gathered from Company operating data, external independent surveys and publicly available compensation comparisons. Decisions regarding CEO compensation are made solely by the Committee meeting in executive session without the CEO or any other NEOs present. Decisions regarding the compensation of other NEOs are also made by the Committee, in consultation with the CEO, but without the other NEOs being present. Role of Independent Compensation Consultant Korn Ferry served as the independent compensation consultant to the Committee from January to March 2023. In April 2023, the Committee directly retained Aon’s Human Capital Solutions practice, a division of Aon (“Aon”), as an independent compensation consultant to the Committee. Centuri management engaged Meridian Compensation Partners (“Meridian”) to advise on executive compensation. Aon’s engagement with the Committee as its independent compensation consultant included a review and analysis of several aspects of the executive compensation program, including the following: ▪Peer group review; ▪Providing and analyzing compensation market data; ▪Analyzing incentive plan design; ▪Advising on the reasonableness of our NEO compensation levels and programs; ▪Review of our Compensation Discussion and Analysis disclosure; ▪Performing benchmarking and analysis of our Board of Directors’ compensation; and ▪Attending each Committee meeting, including meeting with the Compensation Committee in private executive sessions, without management present. Korn Ferry did not receive fees from the Company for services other than executive compensation services requested by the Committee. In addition to serving as the Committee’s independent compensation consultant, Aon also performed retirement plan consulting services for Southwest. In 2023, Aon received approximately $1,153,780 from the Company and Southwest, including approximately $129,021 for executive compensation services. During 2023, Meridian did not receive fees from the Company or Centuri for services other than executive compensation services. For 2023, the Committee analyzed whether the work of Korn Ferry, Aon, Meridian or any other executive compensation adviser raised any conflicts of interest, taking into consideration all relevant factors, including those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Exchange Act. The Committee determined, based on its analysis of all relevant factors, that no conflicts of interest were present.

  23. COMPENSATION DISCUSSION AND ANALYSIS

    We operate in a competitive environment for talented executives, and the Committee analyzes a variety of information as it seeks to identify competitive levels of compensation within the relevant markets in which we operate. Peer Group The companies in the compensation peer group for the Southwest Officers were selected because they represent those publicly traded companies considered by the Committee to be the most comparable to the Company in terms of revenue, market capitalization, business operations, operational complexity and overall financial performance. To maintain a meaningful comparison, the Committee reviews the peer group regularly for changes due to M&A activity or shifts in our peers’ business focus or operations. For setting 2023 executive compensation, the Committee reviewed the peer group used in 2022 and determined to remove South Jersey Industries because it became a private company and no longer reported compensation information. The peer group was composed of 19 companies in the utility industry.

  24. COMPENSATION DISCUSSION AND ANALYSIS

    | Element | Purpose | Summary of Features | | Base Salary | ▪Recognize leadership responsibilities and value of executive’s role to the Company. ▪Serve as a competitive compensation foundation. | ▪Targeted at 50th percentile of relevant peer group companies. ▪Adjustments are made based upon the value of the position to the business, individual performance and pay relative to the appropriate market. | | Annual Cash Incentives | ▪Encourage and reward NEO contributions in achieving short-term performance goals, including important social goals of safety and customer satisfaction. ▪Align management interests with customers and stockholders. | ▪For Southwest Officers, no awards paid unless at least 80% of target adjusted net income is achieved. For Centuri, no awards paid unless at least 50% of target free cash flow performance is achieved. ▪Awards paid out annually in cash. ▪Award values are subject to downward adjustment to avoid windfalls and maintain internal equity. | | Long-Term Equity Incentives | ▪Provide executives with long-term performance goals to work toward. ▪Align management interests with customers and stockholders. ▪Retain management with awards subject to service vesting. | ▪Southwest Officers receive long-term incentives through both time-lapse RSUs and Performance Share Units. ▪The former Centuri CEO received time-lapse RSUs and Performance Share Units, both with three-year vesting. ▪Southwest Officers’ performance awards are earned based on three-year financial performance. ▪Due to the planned Centuri IPO, the former Centuri CEO’s performance awards are earned based on free cash flow performance of Centuri during 2023, with two additional years of time-based vesting following the end of the performance period. | | Executive Health, Welfare and Retirement Benefits | ▪Provide executives reasonable and competitive benefits. ▪Encourage savings for retirement. ▪Retain executives with postretirement benefits subject to service vesting. | ▪Health and welfare benefits consistent with standard benefits provided to all employees. ▪401(k) plan and nonqualified deferred compensation plans allow for deferral of compensation and Company contributions. ▪Qualified and supplemental nonqualified pension benefits for the Southwest Officers hired before January 1, 2022. |

  25. COMPENSATION DISCUSSION AND ANALYSIS

    | Element | Purpose | Summary of Features | | Southwest Change in Control Agreements | ▪Ensure attention and dedication to performance without distraction in the circumstance of a potential change in control. ▪Enables executives to maintain objectivity with respect to merger or acquisition offers considered by the Board. | ▪Double trigger change in control severance agreements without any excise tax gross-up. ▪Accelerated vesting of equity awards upon certain terminations following change in control. ▪Potential increase to supplemental pension benefit for Southwest Officers hired before January 1, 2022. | | Southwest Chief Financial Officer Employment Agreement | ▪Ensure attention and dedication to performance without distraction in the circumstance of strategic alternatives review. ▪Provide an incentive to enter into executive employment relationship. ▪Protect the Company’s interests. | ▪Provides severance outside of change in control scenario. ▪Includes signing bonus and special grant of time-lapse RSUs vesting over three years. | | Centuri CEO Employment Agreement and Separation Agreement* | ▪Ensure attention and dedication to performance without distraction in the circumstance of a potential change in control. ▪Provide an incentive to enter into executive employment relationship. ▪Protect the Company’s interests. | ▪Two-year term, with automatic renewals. ▪Provides change in control severance and severance outside of change in control scenario. ▪Non-competition and non-solicitation restrictive covenants. |

  26. COMPENSATION DISCUSSION AND ANALYSIS

    * On December 13, 2023, the Company and Centuri entered into a Transition and Separation Letter Agreement with Mr. Daily (the “Daily Separation Agreement”). The existing employment agreement between the Company, Centuri, and Mr. Daily, dated as of April 18, 2016, remained in effect, except for the severance provisions. For more information on this, see “Executive Compensation - Compensation Discussion and Analysis - Post-Termination Benefits.” Base Salaries Salaries for the NEOs are established based on the scope of their responsibilities, taking into account competitive market compensation paid by the peer group for similar positions. The competitive market processes and data regarding the 50th percentile pay level of peer companies were used by the Committee to help ensure that salaries are reasonable, competitive and properly address position responsibilities. The market data on the range of salaries at the peer companies serves as a reference point and provides information on the range of competitive pay levels and current compensation practices in our industry. Salaries are reviewed annually and are subject to mid-year adjustment to maintain alignment with the market and to reflect changes in individual responsibilities, performance, and experience. In 2023, the Committee approved merit increases of varying amounts for the Southwest Officers to reflect performance achievements and to ensure market competitiveness. Annual Incentive Compensation We establish cash incentive opportunities on an annual basis, expressed as a percentage of each individual’s base salary. The target level of annual incentive opportunities granted to NEOs is based primarily on the competitive compensation benchmarking. The target incentive opportunities for the NEOs were set at the following percentages of base salary for 2023:

  27. COMPENSATION DISCUSSION AND ANALYSIS

    Southwest Annual Incentives. Annual incentive opportunities are payable entirely in cash, only if at least 80% of target adjusted net income is achieved. The 2023 performance measures for Southwest Officers were tied to measures of financial performance, customer satisfaction, productivity and safety. For 2023, the Committee derived the targets for our four performance measures as follows:

  28. COMPENSATION DISCUSSION AND ANALYSIS

    Actual awards for each measure are determined as of year-end by comparing the Company’s performance to the threshold, target and maximum levels set by the Committee at the beginning of the year for each performance measure. When threshold performance for any measure is achieved, an award with respect to that measure is earned. Award payouts can range from 50% (at threshold) to 100% (at target) to 200% (at maximum) of the assigned incentive opportunity for each measure, based on where actual results fall in the range from threshold to target to maximum. No awards are paid with respect to any measure if 80% of target adjusted net income is not achieved. We determine actual payouts through linear interpolation. The Committee may adjust the financial measures for the Company’s annual incentive program to ensure that operating results are computed on a comparative basis from year to year and exclude items that may have been out of the control of Company executives. In recognition of the events that took place in 2023 that were not contemplated when the annual incentive targets were set, the Committee adjusted the operations and maintenance expense on a per customer basis (“O&M per customer”), utility adjusted net income and Centuri free cash flow performance measures in determining the actual performance result for purposes of the 2023 annual incentive program. These adjustments were largely the result of extraordinary events which the Board tasked the NEOs with managing toward a successful resolution for our stockholders and customers while transforming the Company for greater long-term value creation. The thresholds, targets and maximums and actual results under the four core performance measures for 2023 are set forth below:

  29. COMPENSATION DISCUSSION AND ANALYSIS

    | Measure | | Threshold | Target | Maximum | Actual | Weighting | Payout (% of target) | | Holdings Officers: | | | | | | | | | | Utility Net Income (adjusted) (000s)(1) | $190,464 | $204,800 | $215,040 | $240,348 | 30% | 60.00% | | | Centuri free cash flow (000s)(2) | $121,400 | $161,900 | $186,200 | $177,978 | 10% | 16.62% | | | Productivity (O&M per Customer)(3) | $224 | $219 | $215 | $219 | 30% | 29.88% | | | Customer Service Satisfaction | 92% | 95% | 96% | 94.9% | 15% | 14.75% | | | Safety - Damage per 1,000 Tickets | 1.19 | 0.99 | 0.89 | 0.998 | 7.5% | 7.35% | | | Safety - Response Times within 30 minutes | 70% | 75% | 78% | 76.4% | 7.5% | 11.00% | | | Rounded Total: | | | | | 100% | 140% | | Utility Officers: | | | | | | | | | | Utility Net Income (adjusted) (000s)(1) | $190,464 | $204,800 | $215,040 | $240,348 | 40% | 80.00% | | | Productivity (O&M per Customer) (000s)(3) | $224 | $219 | $215 | $219 | 30% | 29.88% | | | Customer Service Satisfaction | 92% | 95% | 96% | 94.9% | 15% | 14.75% | | | Safety - Damage per 1,000 Tickets | 1.19 | 0.99 | 0.89 | 0.998 | 7.5% | 7.35% | | | Safety - Response Times within 30 minutes | 70% | 75% | 78% | 76.4% | 7.5% | 11.00% | | | Rounded Total: | | | | | 100% | 143% | | Total: | | | | | | | | | | Holdings Officers | | | | | | 140% | | | Utility Officers | | | | | | 143% |

  30. COMPENSATION DISCUSSION AND ANALYSIS

    (1)Utility adjusted net income is a non-GAAP measure and may differ from results provided in earnings releases furnished to the SEC. In the calculation of the actual result, in addition to the adjustments made with respect to the O&M per customer measure as discussed below, which also impact the utility adjusted income measure (except for the excess internal-use fuel at Southwest that only impacts O&M per customer), the Committee adjusted the utility net income measure by excluding losses in 2023 related to held-for-sale property related to the previous corporate campus and earnings related to changes in values (including any death benefits) associated with Southwest’s company-owned life insurance (“COLI”) policies. Pursuant to the Committee’s adjustment policy, COLI results are always removed, regardless of whether there are resulting earnings or losses. (2)Centuri free cash flow is a non-GAAP measure and may differ from components provided in earnings releases furnished to the SEC. For Ms. Haller and Mr. Stefani, the annual incentive program also includes a performance measure related to Centuri that is comparable to a free cash flow determination, calculated as Centuri earnings before interest, taxes, depreciation and amortization (“EBITDA”), less capital expenditures on a gross basis (including amounts not yet paid, but recognized in liabilities). The Committee determined that certain items impacting Centuri EBITDA warranted adjustment due to their being unusual or not fully within the control of management, including Centuri’s severance costs, incremental audit fees to support Centuri becoming a separate public company registrant, separation planning and employee retention costs, costs allocated to Centuri related to the Strategic Transactions Committee and differences on foreign currency translation associated with EBITDA components as compared to the expected exchange rate when the target was set. (3)With respect to the O&M per customer measure, the Committee approved adjustments for certain costs that differed from targeted amounts, including: postretirement benefit costs, corporate costs, medical benefit costs, excess internal-use fuel costs at Southwest, costs allocated to Southwest associated with the incremental Strategic Transactions Committee undertakings, and costs associated with the utility optimization consultation and review. The Committee has the discretion to reduce an NEO’s overall award that would otherwise be earned to avoid windfalls and for other reasons, including internal equity. The Committee reviews the CEO’s individual performance to determine whether there will be any downward adjustment. For 2023, individual performance objectives for the CEO included: implementing Southwest’s Utility Optimization Process; executing on the Board’s strategic direction for the separation of Centuri and the sale of MountainWest; enhancing senior leadership capability, investor relations, human capital planning, and financial planning/analysis functions; leading the Company’s sustainability vision; and ensuring employee and community safety remains the top priority at all levels of the Company. The CEO reviews the Southwest Officers’ individual performance to determine whether there will be any downward adjustment in the performance awards. As a result of such review, if the CEO recommends a downward adjustment in the performance awards, the CEO will bring the matter before the Committee for review and approval. The Committee reviewed the performance achievements of the CEO and other eligible Southwest Officers and determined that no reductions to their annual incentive awards were warranted with respect to 2023. Utility adjusted net income exceeded 80% of our target, and achievements under the performance measures aggregated for a payout of 140% of the target incentive award opportunity for Ms. Haller and Mr. Stefani, and 143% of target for Messrs. Brown and Gabe. These aggregated percentage payouts are multiplied by the total incentive opportunity (expressed above as a percentage of base salary) to determine the overall dollar value of the annual award. The following table details the actual payouts associated with the 2023 annual incentive awards for the eligible Southwest Officers:

  31. COMPENSATION DISCUSSION AND ANALYSIS

    | | Incentive Opportunities (% of salary) | Total Achievement of Performance Measures (% of target) | Incentive Earned (% of salary) | Incentive Earned | | Karen S. Haller | 125% | 140% | 175.0% | $1,575,000 | | Robert J. Stefani | 70% | 140% | 98.0% | $563,500 | | Justin L. Brown | 75% | 143% | 107.3% | $595,238 | | Randall P. Gabe | 60% | 143% | 85.8% | $345,774 |

  32. COMPENSATION DISCUSSION AND ANALYSIS

    Centuri Annual Incentives. For Centuri, the Committee selected financial performance and safety goals for the 2023 annual incentive opportunities. In 2023, the financial metric was changed from earnings before tax and amortization to free cash flow, which is a common metric used for valuing companies in the infrastructure services industry. Free cash flow is a non-GAAP measure and is defined as EBITDA less capital expenditures on a gross basis (including amounts not yet paid, but recognized in liabilities). No awards are paid unless at least 50% of target free cash flow is achieved.

  33. COMPENSATION DISCUSSION AND ANALYSIS

    Actual awards for each measure are determined as of year-end by comparing Centuri’s performance to the threshold, target and maximum levels set by the Committee at the beginning of the year for each performance measure. When threshold performance for any measure is achieved, an award with respect to that measure is earned. Award payouts can range from 65% (at threshold) to 170% (at maximum) of the assigned incentive opportunity for each measure, based on where actual results fall in the range from threshold to target to maximum. We determine actual payouts through linear interpolation. The thresholds, targets and maximums and actual results under the performance measures for 2023 are set forth below:

  34. COMPENSATION DISCUSSION AND ANALYSIS

    | Measure | Threshold | | Target | | Maximum | | Actual | | Weighting | Payout (% of target) | | Free Cash Flow | $121.4 | million | $161.9 | million | $186.2 | million | $178.0 | million | 80% | 146.5% | | Safety (DART) | 0.65 | | 0.37 | | 0.30 | | 0.32 | | 10% | 149.3% | | Safety (TRIR) | 1.55 | | 0.93 | | 0.60 | | 1.05 | | 10% | 93.4% | | Total | | | | | | | | | | 141.5% |

  35. COMPENSATION DISCUSSION AND ANALYSIS

    No annual incentive awards are paid in any year unless 50% of target free cash flow is achieved. In 2023, free cash flow exceeded 50% of target, and achievements under the other performance measures aggregated for a payout of 141.5% of the target incentive award opportunity for Mr. Daily. The aggregated percentage payout is multiplied by the total incentive opportunity (expressed above as a percentage of base salary) to determine the overall dollar value of the incentive award. As discussed above, for the annual incentive program for Company Officers for 2023, the Committee approved certain adjustments to Centuri free cash flow when determining achievement. The Committee reviews Mr. Daily’s individual performance to determine whether there will be any downward adjustment in his performance award. For 2023, individual performance objectives for Mr. Daily focused on executing the Board’s strategic direction for the separation of Centuri by improving margins, implementing organizational efficiencies, and implementing Centuri’s sustainability and safety programs. The Committee reviewed the performance achievements of Mr. Daily and determined that no reduction to his annual incentive award was warranted with respect to 2023. The following table details the potential and actual payouts associated with the 2023 annual incentive award to Mr. Daily:

  36. COMPENSATION DISCUSSION AND ANALYSIS

    | | Annual Incentive Opportunity (% of base salary) | Total Achievement of All Performance Measures (% of target)* | Annual Incentive Earned (% of base salary)* | Annual Incentive Earned | | Paul M. Daily | 110% | 141.5% | 155.6% | $1,260,338 |

  37. COMPENSATION DISCUSSION AND ANALYSIS

    *Rounded to the nearest tenth of a percent. Long-Term Incentive Compensation Our long-term incentive compensation is designed to provide incentives for maintaining long-term performance and strengthening customer and stockholder value over a three-year performance period. NEOs are incentivized with equity compensation in the form of time-lapse RSUs and Performance Share Units. The Committee determined the value of incentive awards granted to NEOs primarily based on competitive compensation benchmarking. For 2023, the target long-term incentive opportunities for the NEOs were set at the percentages of base salary shown in the following table. The Committee adjusted the mix between time-lapse RSUs and Performance Share Units for the NEOs, following the Committee’s analysis of competitive market data, the growth in their management responsibilities, and the desire to increase the portion of their time-lapse RSUs for retention purposes. For Ms. Haller and Messrs. Stefani and Brown, performance based incentive opportunities remained greater than time based incentive opportunities.

  38. COMPENSATION DISCUSSION AND ANALYSIS

    | | Incentive Opportunities (% of salary) | | | | | Time-Lapse RSUs | Performance Share Units | Total | | Karen S. Haller | 138% | 206% | 344% | | Robert J. Stefani | 76% | 114% | 190% | | Paul M. Daily | 157.5% | 67.5% | 225% | | Justin L. Brown | 68% | 102% | 170% | | Randall P. Gabe | 45% | 45% | 90% |

  39. COMPENSATION DISCUSSION AND ANALYSIS

    Southwest Long-Term Incentives. Long-term incentives for the Southwest Officers are composed of time-lapse RSUs and Performance Share Units. ▪Time-Lapse RSUs. The Committee believes that grants of time-lapse RSUs promote and encourage long-term retention and service to the Company, align the interests of the Southwest Officers with those of our customers and stockholders through increased share ownership, and provide a balanced approach to long-term compensation. At its March 2023 meeting, the Committee approved the 2023 grants under this Board-approved program. The number of time-lapse RSUs granted was determined based on the closing price for our Common Stock for the last trading day of 2022 ($61.88 per share). The time-lapse RSUs granted in 2023 vest 40% one year after the award year, 30% two years after the award year, and 30% three years after the award year, subject to the NEOs’ continued service with the Company through the applicable vesting date. The table below illustrates the long-term incentive opportunity granted as time-lapse RSUs.

  40. COMPENSATION DISCUSSION AND ANALYSIS

    | | Time-Lapse RSU Component (% of salary) | Time-Lapse RSU Component | Time-Lapse RSUs Granted | | Karen S. Haller | 138% | $1,181,832 | 19,099 | | Robert J. Stefani | 76% | $418,000 | 6,755 | | Justin L. Brown | 68% | $350,200 | 5,659 | | Randall P. Gabe | 45% | $174,375 | 2,818 |

  41. COMPENSATION DISCUSSION AND ANALYSIS

    ▪Performance Share Units. The Committee believes that the payment of long-term incentive compensation in the form of Performance Share Units, measured over a three-year performance period, rewards our NEOs for improved financial performance of the Company, thereby giving them an incentive to enhance long-term customer and stockholder value. The target number of Performance Share Units granted was determined based on the closing price for our Common Stock on the last trading day of 2022 ($61.88 per share). Performance Share Units granted in 2023 are earned upon achievement of financial performance goals for the three-year period from 2023 through 2025. The table below illustrates the target long-term incentive opportunity granted as Performance Share Units, and the number of Performance Share Units granted:

  42. COMPENSATION DISCUSSION AND ANALYSIS

    | | PSU Component (% of salary) | Target PSU Component | Target PSUs Granted | | Karen S. Haller | 206% | $1,764,199 | 28,510 | | Robert J. Stefani | 114% | $627,030 | 10,133 | | Justin L. Brown | 102% | $525,299 | 8,489 | | Randall P. Gabe | 45% | $174,378 | 2,818 |

  43. COMPENSATION DISCUSSION AND ANALYSIS

    For Performance Share Units granted in 2023 to Ms. Haller and Mr. Stefani, 60% are earnable based on a consolidated cumulative three-year adjusted earnings per share (“EPS”) performance measure, and 40% are earnable based on a three-year average utility segment return on equity (“ROE”) performance measure. Adjusted EPS is a non-GAAP measure and is calculated by dividing consolidated adjusted net income for each year by the Company’s average basic common shares outstanding for each year. Consolidated adjusted net income is calculated by adding or subtracting the adjustments approved by the Committee to consolidated net income at the end of the performance period. Cumulative three-year adjusted EPS is calculated by adding together the adjusted EPS for each of 2023, 2024, and 2025. ROE is a non-GAAP measure and is calculated by averaging the calculated ROE for 2023, 2024 and 2025. The ROE for each of the three years is calculated by dividing each year’s utility adjusted net income by the average utility equity balance. Utility adjusted net income is calculated by adding or subtracting the adjustments approved by the Committee to utility net income at the end of the performance period. The average utility equity balance is calculated by averaging the equity balance of the applicable previous five quarters. For Messrs. Brown and Gabe, 60% of the Performance Share Units granted in 2023 are earnable based on cumulative three-year utility adjusted net income, and 40% are earnable based on three-year average utility ROE. Cumulative three-year utility adjusted net income is a non-GAAP measure and is calculated by adding together the utility adjusted net income for each of 2023, 2024 and 2025. At its meeting in March 2023, the Committee established the threshold, target and maximum performance levels for the Performance Share Units awarded for the 2023 through 2025 performance period, and the Board subsequently approved the grants of Performance Share Units to the Southwest Officers. The target levels were based on Company and Southwest business plans and budgets and took into account such factors as budgeted capital expenditures, expected growth within the markets that the Company serves, competitive factors from other service providers, and other business considerations embedded in the Company’s annual business planning process. The following table shows the performance criteria for such three-year performance period:

  44. COMPENSATION DISCUSSION AND ANALYSIS

    | Performance Level | 3-year Adjusted EPS | 3-year Utility Adjusted Net Income (000s) | 3-year Average Utility ROE | Percentage of Target Award Earned | | Below Threshold | <$8.68 | <$636,232 | <6.4% | No award | | Threshold | $8.68 | $636,232 | 6.4% | 50% | | Target | $9.64 | $684,120 | 7.3% | 100% | | Maximum | $10.60 | $718,326 | 8.2% | 200% |

  45. COMPENSATION DISCUSSION AND ANALYSIS

    Linear interpolation will be used to compute the percentage of the target award earned. If earned, the awards are payable in the form of Common Stock, and the Southwest Officers are also entitled to cumulative dividend equivalents over the three-year performance period on the Performance Share Units earned. If the threshold level of performance is met, the number of Performance Share Units earned will range between 50% to 200% of the target number of Performance Share Units. ▪2021-2023 Performance Share Unit Vesting. In 2021 the Committee approved and the Company granted Performance Share Units to the Southwest Officers. Performance for the 2021 Performance Share Units was measured over a three-year period commencing on January 1, 2021 and continuing through December 31, 2023. For Performance Share Units granted in 2021 to Ms. Haller, 60% were earnable based on a consolidated cumulative three-year adjusted EPS performance measure, and 40% were earnable based on a three-year average utility ROE performance measure. For Messrs. Brown and Gabe, 60% of the 2021 Performance Share Units were earnable based on three-year utility adjusted net income, and 40% were earnable based on three-year average utility ROE. Three-year utility adjusted net income was calculated by adding together the utility adjusted net income for each of 2021, 2022 and 2023. Three-year average utility ROE was calculated by averaging the calculated ROE for 2021, 2022 and 2023. The ROE for each of the three years is calculated by dividing each year’s adjusted net income by the average utility equity balance. The average utility equity balance is calculated by averaging the equity balance of the applicable previous five quarters. The Committee may adjust financial measures for the Company’s long-term incentive program to ensure that operating results are computed on a comparative basis from year to year and exclude items that may have been out of the control of Company executives. In 2023, the Committee approved adjustments to the EPS, three-year utility adjusted net income, and three-year average utility ROE results in determining the number of 2021 Performance Share Units earned. Costs associated with these adjustments were largely the result of extraordinary events at the Company and Southwest for which the Board tasked the NEOs with managing toward a successful resolution for our stockholders while transforming the Company for greater long-term value creation. For the three-year period 2021-2023, the total shareholder return for the Company was between the 25th and 75th percentile of the peer group of companies selected for such 2021 awards, and therefore no adjustment was applied to the results to determine ultimate payout. The thresholds, targets and maximums, and actual results for the Performance Share Units granted in 2021 are set forth below. Because Mr. Stefani was not an employee of the Company during 2021, he did not receive an award under this program. The number of 2021-2023 Performance Share Units that vested are included in the “Stock Vested During 2023” table.

  46. COMPENSATION DISCUSSION AND ANALYSIS

    | Measure | | Threshold | Target | Maximum | Actual | Weighting | Payout (% of target) | | Karen S. Haller | | | | | | | | | | 3-year Adjusted EPS(1)(2) | $11.15 | $12.39 | $13.63 | $10.42 | 60% | 0.00% | | | 3-year Average Utility ROE(1)(3) | 6.50% | 7.50% | 8.50% | 7.50% | 40% | 39.96% | | | Rounded Total: | | | | | 100% | 40% | | Justin L. Brown and Randall P. Gabe | | | | | | | | | | 3-year Utility Adjusted Net Income (000s)(1)(3) | $514,290 | $553,000 | $591,710 | $597,275 | 60% | 90.00% | | | 3-year Average Utility ROE(1)(3) | 6.50% | 7.50% | 8.50% | 7.50% | 40% | 39.96% | | | Rounded Total: | | | | | 100% | 130% |

  47. COMPENSATION DISCUSSION AND ANALYSIS

    (1)Consistent with the Committee’s policy on adjustments, each of these measures was adjusted to remove the impact of COLI income or losses in 2021, 2022 and 2023. (2)In determining the three-year adjusted EPS performance result, for 2023, the Committee applied the adjustments made to the 2023 annual incentive program results as discussed above. In addition, for 2023, the EPS result was also adjusted for utility optimization consulting arrangement costs incurred at the Company; advisory, legal and other costs incurred by the Company in association with the Centuri separation; total segment net loss reported for MountainWest; disintegration costs related to MountainWest; incremental borrowing costs in 2023 related to the Company’s term loan used to finance the 2021 acquisition of MountainWest; and incremental goodwill impairment and loss on the sale of MountainWest recorded in the 2023 period. For 2022, the Committee excluded $536.2 million in other one-time adjustments as described in the Company’s proxy statement filed on March 21, 2023 (the “2023 Proxy”) and, for 2021, the Committee excluded one-time transaction costs and partial period operating results related to the acquisitions of MountainWest and Riggs Distler and stockholder activism response costs as described in the 2023 Proxy. (3)In determining the three-year average utility ROE and three-year utility adjusted net income performance results, for 2023, the Committee applied the adjustments made to the 2023 annual incentive program results as discussed above, and in addition, an incremental adjustment for the 2023 budgeted amount of utility optimization consulting arrangement costs (as opposed to the excess over budget for purpose of the annual incentive adjustment) was approved. For 2022, the Committee excluded $22.8 million in other one-time adjustments as described in the 2023 Proxy. There were no additional adjustments on utility ROE and utility adjusted net income for 2021. Centuri Long-Term Incentives. In 2023, the former Centuri CEO received time-lapse RSUs and Performance Share Units as long-term incentive compensation. Mr. Daily was granted 20,617 time-lapse RSUs with a value of $1,275,750 with three-year cliff vesting on January 1, 2026, and 8,836 Performance Share Units with a value of $546,750 which vest on January 1, 2026, based on achievement of performance goals between January 1, 2023 to December 31, 2023. Both the time-lapse RSUs and Performance Share Units are subject to satisfaction of applicable vesting conditions. The number of time-lapse RSUs and Performance Share Units granted and their dollar value was determined based on the closing price of our Common Stock on the last trading day of 2022 ($61.88 per share). The Performance Share Units granted in 2023 are earnable based upon the level of achievement of Centuri’s free cash flow over a one-year performance cycle beginning on January 1, 2023 and ending on December 31, 2023. The Committee chose a one-year performance cycle for these Centuri Performance Share Units in anticipation of the Centuri IPO, which is expected to take place during 2024. While the performance cycle for these awards is one year, vesting of the awards does not take place until January 1, 2026 and is subject to satisfaction of applicable vesting conditions. The Committee established the threshold, target and maximum performance levels for free cash flow, and the target level was based on Centuri’s business plan and budget, and took into account such factors as budgeted capital expenditures, expected growth within the markets that Centuri serves, competitive factors from other service providers and other business considerations embedded in Centuri’s annual business planning process. The following table summarizes the financial performance levels and associated award earned:

  48. COMPENSATION DISCUSSION AND ANALYSIS

    | Centuri Performance Level | Free Cash Flow | Percentage of Target Award Earned | | Below Threshold | <$121,400,000 | No award | | Threshold | $121,400,000 | 50% | | Target | $161,900,000 | 100% | | Maximum | $194,300,000 | 200% |

  49. 2023 Realized Compensation Table

    | Name and Principal Position | Year | Salary ($) | Bonus ($)(2) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) | Total Realized Compensation ($) | Difference Between Total Realized Compensation and Total Direct Compensation as Reported in Summary Compensation Table ($) | | Karen S. Haller President and Chief Executive Officer | 2023 | 874,796 | 500,000 | 737,842 | — | 2,112,638 | 3,328,417 |

  50. 2023 Realized Compensation Table

    (1)Amount shown in this column for stock awards was determined by multiplying the per-share closing price of Common Stock on the vesting date (January 4, 2023 for time-lapse RSUs and December 31, 2022 for Performance Share Units) by the number of shares issued pursuant to the awards in 2023. The amounts reflected include 7,232.591 shares of Common Stock issued in the first quarter of 2023 under time-lapse RSUs (30% of the time-lapse RSUs granted in 2020 and 2021, and 40% of the time-lapse RSUs granted in 2022), and 4,400.129 shares of Common Stock issued in the first quarter of 2023 under Performance Share Units granted in 2020 with a three-year performance period beginning in January 2020 and ending in December 2022. (2)Amount shown in this column represents the special cash bonus earned for fiscal year 2022, which was paid to Ms. Haller in the first quarter of 2023. This special bonus was paid to recognize her effective leadership of the Company through a year of unprecedented change, as she implemented the Board’s strategic direction to simplify the Company’s business mix. This information is supplemental to, and should be read in connection with and not in lieu of, the “Summary Compensation Table.” Perquisites The Company provides a limited number of perquisites to its executive officers. The NEOs are eligible to receive reimbursement for annual physical examinations and social club memberships. The Southwest Officers also are eligible to receive reimbursement once every three years to assist in financial and estate planning. The CEO of Centuri is eligible to receive a car allowance, personal use of the Centuri gasoline card, event tickets, life insurance, and reimbursement annually for financial planning, estate planning and tax preparation. Some NEOs did not use all of the perquisites for which they were eligible. Retirement Benefits Southwest Retirement Benefits. Four retirement benefit plans are available to the Southwest Officers. Two of the plans, the Retirement Plan for Employees of Southwest (“Retirement Plan”) and the Employee Investment Plan (“EIP”), both tax-qualified plans, are available to all Southwest employees. The Retirement Plan is no longer offered to Southwest employees who started with Southwest after December 31, 2021. Two additional plans are offered to officers, the Supplemental Executive Retirement Plan (“SERP”) and the Executive Deferral Plan (“EDP”). The SERP is no longer offered to officers who started with Southwest after December 31, 2021. These additional plans were established to attract and retain qualified executives and to address the dollar limitations imposed on the two tax-qualified plans. ▪Retirement Plan for Employees Hired on or Before December 31, 2021. Benefits under the Retirement Plan are based on (i) the executive’s years of service with the Company, up to a maximum of 30 years, and (ii) the average of the executive’s highest five consecutive years’ salaries, within the final 10 years of service, not to exceed an annual maximum compensation level of $330,000 (in 2023) established by the Internal Revenue Service. ▪SERP for Officers Hired on or Before December 31, 2021. The SERP is designed to supplement the benefits under the Retirement Plan to a level of 50 - 60% of salary. To qualify for benefits under the SERP, which is based on a 12-month average of the highest consecutive 36-months of salary, an executive is required to have reached (i) age 55, with 20 years of service with the Company, or (ii) age 65, with 10 years of service. ▪EIP. Southwest Officers may participate in the EIP and defer salary up to the maximum annual dollar amount permitted for 401(k) plans under the Internal Revenue Code. Investments of these deferrals are controlled by the individual executives from a selection of investment options offered through the EIP. There are no employer matching contributions for executive deferrals into the EIP, except for Mr. Stefani. Because Mr. Stefani is not eligible to participate in the Retirement Plan or the SERP, he receives a non-elective employer contribution of 3% of his salary and employer matching contributions on the first 7% of his EIP contributions. ▪EDP. The EDP supplements the deferral opportunities by permitting executives to defer up to 100% of their annual salary and non-equity incentive compensation. As part of the EDP, the Company provides matching contributions up to 3.5% of annual salary, which vest immediately. Amounts deferred and Company matching contributions bear interest at 150% of the Moody’s Seasoned Corporate Bond Rate (“Bond Rate”). At retirement with five years of service with the Company, the Southwest Officers will receive EDP balances paid out at the election of the participant over a period of 10, 15 or 20 years, and will be credited during the applicable payment period with interest at 150% of the average of the Bond Rate on each January 1st for the five years prior to the start of retirement. Centuri Retirement Benefits. Centuri maintains two plans which provide retirement benefits for the Centuri executives, including Mr. Daily: a 401(k) plan and a nonqualified deferred compensation plan, the Executive Deferred Compensation Plan (“EDCP”). ▪Centuri 401(k) Plan. Mr. Daily receives matching contributions from Centuri to his account in the Centuri 401(k) plan, consistent with all other employees participating in the plan. Centuri matches 100% of Mr. Daily’s pre-tax contributions up to the first 3% of his base salary and 50% on the next 4%. All matching contributions are subject to certain limits as determined by law. ▪EDCP. Under the nonqualified deferred compensation plan maintained by Centuri, certain employees, including Mr. Daily, are permitted to voluntarily defer receipt of up to 80% of base salary and up to 80% of other cash compensation. Employer matching contributions in the deferred compensation plan are equal to the first 5% of the salary compensation deferred by the employee under the plan. Matching contributions vest immediately. Participants may allocate deferred cash amounts among (i) a group of notional accounts that mirror the gains and/or losses of various investment alternatives that do not provide for above-market or preferential earnings and (ii) an account with returns based on Centuri’s financial performance (“LTCIP Fund”). Mr. Daily must invest at least 25% of his annual incentive compensation in the LTCIP Fund until he meets the established investment requirement of two times his base salary. LTCIP Fund investments grow or depreciate based on Centuri’s Company Growth rate. The maximum annual loss of the LTCIP Fund is negative 5% and the maximum annual gain is 20%. Executive Agreements Southwest Change in Control Agreements. The Company offers change in control agreements to the Southwest Officers to align their interests with stockholders and to retain and motivate high caliber executive talent. Providing change in control benefits is designed to reduce the reluctance of management to pursue potential change in control transactions that may be in the best interests of stockholders and helps ensure stability and continued performance during the potentially protracted process of merging with or acquiring entities subject to utility regulation. These change in control agreements do not include gross-up payments to reimburse the executive for certain excise taxes imposed under Internal Revenue Code Section 4999. Instead, the change in control agreements employ a “best net” approach whereby change in control benefits would be reduced if a reduced benefit would result in a greater after-tax benefit to the officer after the application of the excise taxes under Internal Revenue Code Section 4999.

  51. 2023 Realized Compensation Table

    The terms of the change in control agreements, as well as an estimate of the compensation that would have been payable had they been triggered as of fiscal year-end, are discussed in more detail under “Post-Termination Benefits” below. Company and Southwest Chief Financial Officer Employment Agreement. The Company and Southwest are currently party to an employment agreement with Mr. Stefani (“Stefani Employment Agreement”). Mr. Stefani received a signing bonus for joining the Company and Southwest, but if his employment is terminated for a defined cause or Mr. Stefani leaves employment other than for a defined good reason before November 21, 2024, he must pay back his entire signing bonus. Under the terms of the Stefani Employment Agreement, Mr. Stefani is entitled to payments and benefits upon certain employment termination events in the absence of a change in control event for the Company. He also has a Change in Control Agreement, as discussed above, to provide payments and benefits in the event of termination following a change in control of the Company. The termination provisions of the Stefani Employment Agreement provide Mr. Stefani with a fixed amount of compensation upon termination as an incentive to forgo other opportunities in order to begin employment with the Company and Southwest during the time both companies were subject to a strategic alternatives review that could have resulted in a sale of either company shortly after his employment began. To receive termination benefits, Mr. Stefani agreed to execute a release of all claims against the Company. He is subject to confidentiality and non-disparagement provisions that are perpetual. The Stefani Employment Agreement does not contain excise tax gross-up provisions. More detailed discussion of the Stefani Employment Agreement, as well as an estimate of the compensation that would have been payable had various provisions been triggered as of fiscal year-end, are described in “Post-Termination Benefits” below. Centuri CEO Employment and Separation Agreements. On December 13, 2023, the Company and Centuri entered into a Transition and Separation Letter Agreement (the “Daily Separation Agreement”) with Mr. Daily. Under the Daily Separation Agreement, Mr. Daily was entitled to a retention bonus of $2.2 million and certain benefits if he remained employed through the successful transition of his duties and responsibilities to a successor or if his employment were to be terminated earlier under certain scenarios described in the Daily Separation Agreement. At the time of entering into this agreement, we considered our need to retain Mr. Daily as the Centuri CEO until his successor was appointed. On January 12, 2024, William J. Fehrman began serving as the Centuri CEO and on January 31, 2024, and, pursuant to the Daily Separation Agreement, Mr. Daily’s employment terminated. The confidentiality, non-competition, non-disparagement and other restrictive covenants included in the employment agreement between Centuri and Mr. Daily, dated April 18, 2016 (the “Daily Employment Agreement”) remain in effect. Neither the Daily Separation Agreement nor the Daily Employment Agreement contain excise tax gross-up provisions. More detailed discussion of the Daily Separation Agreement, as well as an estimate of the compensation that would have been payable had various provisions been triggered as of fiscal year-end, are described in “Post-Termination Benefits” below.

  52. 2023 Realized Compensation Table

    | Directors and Officers Share Ownership Guidelines |

  53. 2023 Realized Compensation Table

    In order to better align the interests of management and the Board with those of all stockholders, the Company has adopted Common Stock ownership guidelines for directors and officers. Each non-employee director is required to retain at least five times the value of his or her annual cash retainer in Common Stock (or equivalents). Each non-employee director is required to fulfill the requirement within five years of being elected to the Board. All non-employee directors are currently in compliance with these guidelines. Each Company officer and each officer of Southwest is required to accumulate Common Stock with a target value equal to a multiple of the officer’s base salary, ranging from one times base salary for vice presidents, three times base salary at the senior vice president level and above, and five times base salary for the Chief Executive Officer. If an officer has not yet reached the applicable target ownership requirement, he or she is required to retain a portion of the shares of Common Stock acquired from any stock option exercise or the vesting of restricted stock units or performance share units. The applicable retention rate is 75% for the Chief Executive Officer and 50% for all other officers. Qualified shares include Common Stock owned directly by the officer or his or her spouse, Common Stock held by the officer or his or her spouse in Southwest’s EIP or Dividend Reinvestment Plan and earned but unvested time-lapse RSUs and performance share units. The Centuri Chief Executive Officer is required to accumulate Common Stock with a target value equal to two times base salary. Certain senior officers of Centuri, including Centuri’s Chief Executive Officer, are required to defer cash compensation into a deferral plan account with returns based on Centuri’s financial performance.

  54. 2023 Realized Compensation Table

    | Pledging, Hedging and Other Transactions in Company Securities |

  55. 2023 Realized Compensation Table

    Our Insider Trading Policy, which applies to officers, directors and employees considered insiders, is designed to promote compliance with insider trading laws, rules and regulations, and any applicable NYSE listing standards, and expressly prohibits them from purchasing or selling our securities while in possession of material, non-public information, or otherwise using such information for their personal benefit. Our Insider Trading Policy prohibits directors and officers of the Company from pledging Company securities as collateral for a loan. Transactions by directors and officers in Company securities involving short sales, puts, calls or other derivative securities, on an exchange or in any other organized market, are prohibited. Directors and officers are also prohibited from entering into hedging, monetization transactions or similar arrangements involving Company securities. Directors and officers are prohibited from holding Company securities in margin accounts. We believe these prohibitions ensure that levels of stock ownership in accordance with our stock ownership guidelines are effective in aligning each individual’s interests with those of our stockholders. Our Insider Trading Policy expressly discourages, but does not prohibit, other Company employees from engaging in any hedging or pledging transactions involving Company securities.

  56. 2023 Realized Compensation Table

    | Policies and Practices Regarding Equity Grants |

  57. 2023 Realized Compensation Table

    The Compensation Committee makes annual equity awards at approximately the same time each year. We do not have any program, plan, or obligation that requires us to grant equity awards on specified dates, although historically we have granted such awards to our existing executive officers and employees at least annually and to newly-hired employees upon the commencement of their employment. The Committee does not have a practice or policy of granting equity awards in anticipation of the release of material nonpublic information and, in any event, we do not time the release of material non-public information in coordination with grants of equity awards in a manner that intentionally benefits our NEOs. Equity awards may occasionally be granted following a significant change in job responsibilities or to meet other special retention or performance objectives.

  58. 2023 Realized Compensation Table

    | Clawback Policy |

  59. 2023 Realized Compensation Table

    On August 2, 2023, the Board approved an updated clawback policy for executive officers, in compliance with NYSE rules and SEC regulations. The Company’s clawback policy allows the Company to recoup the value of any excess incentive compensation paid and granted, earned, or vested based on the attainment of performance conditions containing financial reporting measures, in the event the Company is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws. The clawback policy covers any excess incentive compensation received during the three fiscal years preceding the date on which the Company is required to prepare such accounting restatement and covers, among other types of incentive compensation, time-based RSUs and Performance Share Units. The Company also has a separate clawback policy that is applicable to any employee who receives incentive compensation. Administration of the Company’s clawback policies is the responsibility of the Compensation Committee.

  60. EXECUTIVE COMPENSATION TABLES

    | Summary Compensation Table (2023, 2022 and 2021) |

  61. EXECUTIVE COMPENSATION TABLES

    | Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(10)(11)(12) | Stock Awards ($)(2)(3) | Non-Equity Incentive Plan Compensation ($)(1)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6)(7)(8) | Total ($) | | Karen S. Haller | 2023 | 874,796 | — | 2,991,259 | 1,575,000 | 1,657,725 | 30,561 | 7,129,341 | | President and Chief Executive Officer | 2022 | 745,497 | 500,000 | 2,921,572 | — | 145,812 | 42,917 | 4,355,798 | | | 2021 | 494,301 | — | 789,542 | 411,765 | 329,860 | 41,075 | 2,066,543 | | Robert J. Stefani(9) | 2023 | 560,548 | — | 1,061,074 | 563,500 | 3,482 | 87,828 | 2,276,432 | | Senior Vice President/Chief Financial Officer | 2022 | 61,781 | 625,000 | 2,100,000 | — | 190 | 2,750 | 2,789,721 | | | 2021 | — | — | — | — | — | — | — | | Paul M. Daily | 2023 | 806,308 | — | 1,850,480 | 1,350,786 | 3,961 | 104,195 | 4,115,730 | | Former President and Chief Executive Officer, Centuri Group, Inc. | 2022 | 786,000 | — | 2,240,353 | 65,026 | — | 102,067 | 3,193,446 | | | 2021 | 755,231 | — | 1,220,797 | 1,554,192 | 5,603 | 96,883 | 3,632,706 | | Justin L. Brown(9) | 2023 | 531,877 | — | 888,940 | 595,238 | 592,495 | 7,956 | 2,616,506 | | President, Southwest Gas Corporation | 2022 | 459,759 | 224,025 | 319,567 | 142,913 | 11,735 | 14,677 | 1,172,676 | | | 2021 | — | — | — | — | — | — | — | | Randall P. Gabe(9) | 2023 | 394,040 | — | 354,107 | 345,774 | 474,034 | 8,603 | 1,576,558 | | Senior Vice President/Chief Administrative Officer, Southwest Gas Corporation | 2022 | — | — | — | — | — | — | — | | | 2021 | — | — | — | — | — | — | — |

  62. EXECUTIVE COMPENSATION TABLES

    | Grants of Plan-Based Awards (2023) |

  63. EXECUTIVE COMPENSATION TABLES

    | Outstanding Equity Awards at Fiscal Year-End 2023 |

  64. EXECUTIVE COMPENSATION TABLES

    | Stock Vested During 2023 |

  65. EXECUTIVE COMPENSATION TABLES

    | Pension Benefits |

  66. EXECUTIVE COMPENSATION TABLES

    | Nonqualified Deferred Compensation (2023) |

  67. EXECUTIVE COMPENSATION TABLES

    | Pay Ratio Disclosure |

  68. EXECUTIVE COMPENSATION TABLES

    | Pay Versus Performance |

  69. EXECUTIVE COMPENSATION TABLES

    | Year | Summary Compen- sation Table Total for PEO ($)(1) | Summary Compensation Table Total for Former PEO ($)(2) | Compensation Actually Paid to PEO ($)(1)(5) | Compensation Actually Paid to Former PEO ($)(2)(6) | Average Summary Compensation Table Total for Non-PEO NEOs ($)(3) | Average Compensation Actually Paid to Non-PEO NEOs ($)(3)(7) | Value of Initial Fixed $100 Investment Based On: | | GAAP Consolidated Net Income/(Loss) ($)(9) | Utility Adjusted Net Income ($)(10) | | | | | | | | | TSR(8) | Peer Group TSR(4) | | | | 2023 | 7,129,341 | — | 5,840,814 | — | 2,646,306 | 2,400,319 | 95.87 | 97.20 | 150,889,000 | 240,348,000 | | 2022 | 4,355,798 | 6,129,727 | 3,648,614 | 1,664,481 | 1,823,386 | 1,319,319 | 89.96 | 104.87 | (203,290,000) | 177,110,000 | | 2021 | — | 5,674,579 | — | 6,424,725 | 2,139,255 | 2,303,196 | 98.48 | 101.63 | 200,779,000 | 182,135,000 | | 2020 | — | 6,511,777 | — | 4,293,622 | 2,499,520 | 1,790,098 | 82.51 | 83.11 | 232,324,000 | 149,918,000 |

  70. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION

  71. DIRECTOR COMPENSATION

    | 2023 Director Compensation Table |

  72. DIRECTOR COMPENSATION

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2)(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | | E. Renae Conley | 208,200 | 140,979 | — | 105 | 349,284 | | Andrew W. Evans | 144,200 | 140,979 | — | 105 | 285,284 | | Jane Lewis-Raymond | 164,200 | 140,979 | — | 105 | 305,284 | | Henry P. Linginfelter | 144,200 | 140,979 | — | 105 | 285,284 | | Anne L. Mariucci | 162,200 | 140,979 | 58,875 | 105 | 362,159 | | Carlos A. Ruisanchez | 144,200 | 140,979 | — | 105 | 285,284 | | Ruby Sharma | 106,550 | 140,979 | — | 105 | 247,634 | | Andrew J. Teno | 144,200 | 140,979 | — | 105 | 285,284 | | A. Randall Thoman | 128,200 | 140,979 | 51,545 | 105 | 320,829 | | Leslie T. Thornton | 123,200 | 140,979 | 14,936 | 105 | 279,220 |

  73. DIRECTOR COMPENSATION

    (1)On February 23, 2023, each director serving at that time received a stock award of 2,182 shares which vested immediately, but receipt of the stock award may be deferred by the director. The grant date fair value of the stock award was $140,979. The Company does not issue option awards. (2)The stock awards are valued at the closing price of Common Stock on the date of grant. The grant date fair value of the stock award granted on February 23, 2023 was based on the closing price of Common Stock of $64.61 on February 23, 2023. The amounts were determined in accordance with FASB ASC Topic 718. The assumptions used to calculate these amounts are included in “Note 9 - Share-Based Compensation” included in the footnotes to the consolidated financial statements in our 2023 Annual Report on Form 10-K. (3)The director deferred stock awards outstanding at December 31, 2023, for each of the listed directors are as follows. There are no outstanding option awards.

  74. DIRECTOR COMPENSATION

    | | Stock Awards(#) | | Ms. Conley | 2,273 | | Mr. Evans | 2,273 | | Ms. Lewis-Raymond | 10,636 | | Mr. Linginfelter | 2,273 | | Ms. Mariucci | 31,342 | | Mr. Ruisanchez | — | | Ms. Sharma | 2,273 | | Mr. Teno | 2,273 | | Mr. Thoman | 33,505 | | Ms. Thornton | 8,362 |

  75. DIRECTOR COMPENSATION

    (4)The amounts in this column reflect above-market interest on nonqualified deferred compensation balances for 2023. (5)The amounts in the All Other Compensation column represent the cost of life insurance for directors.

  76. DIRECTOR COMPENSATION

    | Director Compensation Narrative |

  77. DIRECTOR COMPENSATION

    In 2023, the Compensation Committee conducted a review of the types and amounts of director compensation. The independent compensation consultant conducted a benchmarking analysis of peer company director pay practices. Based on that analysis, the Committee decided that no changes to the director compensation program were necessary. The Committee uses a retainer-based model for director cash compensation (without regular individual meeting fees) and determines the value of annual equity grants for directors based on a set dollar amount. Cash retainers are paid on a quarterly basis. The annual cash retainer for non-employee directors is $95,000. Additional annual cash retainers for the Chairs of the Audit, Compensation, and Nominating and Corporate Governance Committees are $20,000, $20,000 and $15,000, respectively. The additional annual cash retainer paid to our Chair of the Board is $100,000. Individual cash meeting fees of $1,650 are only payable when the number of meetings of the Board or a committee exceeds regularly scheduled meetings by three or more. The annual cash retainer for members of the Strategic Transactions Committee is $36,000 and the Chair of the Strategic Transactions Committee receives an annual cash retainer of $54,000. Individual cash meeting fees of $1,200 are only payable when the number of meetings of the Strategic Transactions Committee exceeds 20 per calendar year. Total Strategic Transactions Committee fees are capped at $90,000 per calendar year for the Chair and members. Cash compensation received by the non-employee directors may be deferred until retirement or termination of their status as directors pursuant to the Directors Deferral Plan. Amounts deferred bear interest at 150% of the Moody’s Seasoned Corporate Bond Rate (“Bond Rate”). At retirement or termination, such deferrals will be paid out over 5, 10, 15 or 20 years, and will be credited during the applicable payment period with interest at 150% of the average of the Bond Rate on January 1 for the five years prior to retirement or termination. A fixed dollar value ($135,000 for 2024) will be granted annually in the form of equity compensation under the Company’s Omnibus Incentive Plan during the February Board meeting. The fixed dollar value is converted into awards representing a number of shares of Common Stock based on the closing share price for the last trading session of the most recently completed fiscal year. Under this program, each member of the Board was granted the equivalent of 2,131 shares of Common Stock on February 22, 2024. Non-employee director equity compensation vests immediately upon grant, and the directors are provided the option to defer receipt of equity compensation until they leave the Board. Deferred stock units are credited with notional dividends at the same time, in the same form, and in equivalent amounts as dividends that are payable from time to time on Common Stock. Such notional dividends are valued as of the date on which they are credited to the director and are reallocated into additional deferred stock units. When a director leaves the Board, any deferred stock units of such director will be converted into shares of Common Stock. By Board policy, each non-employee director is required to retain at least five times the value of his or her annual cash retainer in Common Stock (or equivalents). Each non-employee director is required to fulfill this requirement within five years of being elected to the Board. For 2023, the maximum number of shares of Common Stock which may be awarded to any non-employee director during any fiscal year is 5,000 shares, which taken together with any cash fees paid by the Company to such non-employee director shall not exceed $500,000 in total value (calculating the value of any award based on the fair market value of the shares on the grant date of such award). These limitations were approved by stockholders on May 4, 2017. Directors are prohibited by Company policy from pledging or engaging in financial hedging of their investment risk in our Common Stock. Directors are entitled to participate in the same gift matching program that is available to all of our employees. Under this program, the Company matches contributions to qualified charitable organizations up to a maximum of $2,500 in any calendar year. Directors who are full-time employees of the Company or its subsidiaries receive no additional compensation for serving on the Board.