DEF 14A of NorthWestern Energy Group, Inc., Mar 6, 2024

DEF 14A of NorthWestern Energy Group, Inc.

Filed Mar 6, 2024 · FY20230001993004-24-000020

Open on EDGAR

  1. Alignment of Pay with Shareholder and Customer Interests

    Alignment of Pay with Shareholder and Customer Interests Our executive pay program is designed to align the long-term interests of our executives, shareholders, and customers. For many years, the program has consisted of four components (base salary, annual cash incentive, long-term equity incentive, and executive retirement equity awards). In 2023, we made two changes to our pay program. First, we updated our long-term equity incentive awards, which now are split 70/30 between performance share units with a three-year performance period and restricted share units with a three-year restricted period. Previously, such awards were 100 percent performance share units with a three-year performance period. Second, we discontinued our executive retirement equity awards and intend to replace such awards in 2024 with a more traditional supplemental executive retirement contribution. These changes better align our executive pay program with our peers and the market. The full design of our compensation program and its components are detailed in the Compensation Discussion and Analysis, beginning on page 18.

  2. Alignment of Pay with Shareholder and Customer Interests

    | | | Percent of Total Compensation | | | Component | Description | CEO | Other NEO Avg. | | Base Salary Fixed, paid in cash | Target middle of competitive range of peer group, with adjustments for trade area economics, turnover, tenure, and experience | 25% | 44% | | Annual Cash Incentive Variable, paid in cash | Based on net income, safety, reliability, and customer satisfaction metrics and individual performance | 25% | 22% | | Long-Term Incentive Program Award Variable or at risk, paid in equity | 70 percent performance share units, based on EPS, ROAE and relative TSR performance over a three-year performance period and 30 percent restricted share units vesting over a three-year restricted period. | 50% | 34% |

  3. Performance Against Incentive Targets

    | 2023 Annual Cash Incentive Outcome | 77% | Long-Term Incentive Program Vesting in 2023 | 28% |

  4. Pay Versus Performance

    Pay Versus Performance Based on the information in our pay versus performance disclosure, beginning on page 45, the CAP (compensation actually paid) to our NEOs is less than the compensation disclosed in the Summary Compensation Table. In some respects, this appears to correlate with performance — CAP appeared to increase with increased TSR. With half of our LTIP awards tied to relative TSR, this result is not surprising. In other respects, CAP does not appear to correlate with performance — CAP increased even though net income and our supplemental Company selected metric (three-year ROAE) decreased. This result also is not surprising because these metrics represent a small percentage of incentive compensation. Corporate Governance Overview Corporate Governance is a pillar at NorthWestern Energy Group, Inc., and we believe our governance practices are sound, as demonstrated by our ranking from Moody’s Investor Service as the 5th best utility for governance practices. We provide details of our governance practices in the Corporate Governance section of this proxy statement. We are nominating nine individuals for election as director, each of whom were elected by shareholders at last year’s annual meeting by an average of 99.2 percent of the votes cast. Each of the nominees is independent, with the sole exception of our CEO. We consider our Board to be diverse from several perspectives (including four female and two ethnic minority nominees), as detailed in the biographies of our nominees provided later in this proxy statement. Our Board is led by an independent chair, and our four Board committees – Audit, Compensation, Governance, and Operations – are chaired by and composed entirely of independent directors.

  5. Pay Versus Performance

    | | | | | | | | Proposal 1 Election of Directors | 10 | Proposal 3 Advisory Vote to Approve Named Executive Officer Compensation | 14 | | | Proposal 2 Ratification of Appointment of Independent Registered Public Accounting Firm for 2024 | 12 | | | | | | | | |

  6. Pay Versus Performance

    Election of Directors Our Board is nominating nine people for election as directors at the 2024 annual meeting. All nominees currently serve as a director of our Board. Elected directors will serve for one year, until the next annual meeting of shareholders (or until a successor is able to serve). Our diverse slate of nominees is listed below, and we provide additional background information and individual qualifications for each nominee in the Corporate Governance—Individual Directors section of this proxy statement, beginning on page 57.

  7. Pay Versus Performance

    | | The Board of Directors recommends you vote “FOR” each of the nine director nominees. |

  8. Pay Versus Performance

    Unless you specifically withhold your authority to vote for the election of directors, the persons named in the accompanying proxy intend to vote “FOR” the election of each of the following director nominees:

  9. Pay Versus Performance

    | Name Occupation | Independent | Age | Director Since | Committee Membership | | Brian Bird President and CEO, NorthWestern Energy | No | 61 | 2023 | N/A | | Anthony Clark Senior Advisor, Wilkinson Barker Knauer, LLP; former Commissioner, FERC and NDPSC (and Chair) | Yes | 52 | 2016 | Comp; Gov. (Chair) | | Sherina Edwards Former Chief Strategy Officer, Mastec, Inc.; former Commissioner, Illinois Commerce Commission | Yes | 40 | 2023 | Comp; Gov. | | Jan Horsfall Chief Operations Officer, Sparq Games, Inc. | Yes | 63 | 2015 | Operations (Chair); Audit | | Britt Ide CEO, Ide Energy & Strategy | Yes | 52 | 2017 | Comp.; Gov. | | Kent Larson Retired Executive Vice President and Group President, Xcel Energy | Yes | 64 | 2022 | Audit; Operations | | Linda Sullivan Retired Executive Vice President and CFO, American Water | Yes | 60 | 2017 | Board Chair | | Mahvash Yazdi President, Feasible Management Consulting | Yes | 72 | 2019 | Comp. (Chair); Operations | | Jeffrey Yingling Co-Founder, General Partner, Energy Capital Ventures | Yes | 64 | 2019 | Audit (Chair); Gov. |

  10. Pay Versus Performance

    All nominees have advised the Board that they are able and willing to serve as a director. Although not anticipated, if any nominee becomes unavailable for any reason, the shares represented by the proxies may be voted for such other person or persons as may be determined by the holders of the proxies (unless a proxy contains instructions to the contrary). In no event will the proxy be voted for more than nine nominees.

  11. Vote Required

    | | | | | | | | Compensation Discussion & Analysis | 18 | 2023 Director Pay | 44 | | | Compensation Committee Report | 35 | Pay Versus Performance | 45 | | | 2023 Executive Pay | 36 | Supplemental Pay Versus Performance Information | 48 | | | | | | |

  12. Executive Summary

    Executive Summary 2023 Results In 2023, we continued to efficiently manage our business to achieve operational success while we set the framework for future growth through the completion of general rate reviews in Montana and South Dakota and implementation of our holding company structure. We worked as safely as ever while providing customers with reliable service better than our target, but our customer satisfaction ratings did not match those operational successes. Our negative 10.1 percent shareholder return for 2023 ranked 8th among our 13-member peer group, trailing the peer group average of negative 4.1 percent. Meanwhile, our net income increased over 2022, but fell slightly below expectations, and EPS did not meet our expectations due to our need to issue incremental equity in 2022.

  13. Executive Summary

    The overall pay our NEOs received in 2022 is in the bottom half of our 2023 peer group, which is identified on page 19 of this proxy statement. 2022 is the most recent year for which peer group executive compensation is publicly available at this time. Based on such 2022 compensation data: •Our NEOs had an average compensation per NEO that was less than all but four of the other 12 companies in our 2023 peer group ($1.85 million for us versus $1.96 million for the peer median) (excluding changes in pension value); and •Our CEO’s total compensation was approximately 75 percent of the median total compensation (excluding change in pension value) of the CEOs in our 2023 peer group.

  14. Our 2023 Peer Group

    Our 2023 Peer Group Our Compensation Committee (a) selects the members of our peer group and periodically examines whether peers continue to meet the criteria for inclusion described below, and (b) uses our peer group for both compensation and performance benchmarking. As part of the peer group selection process, the Compensation Committee receives advice from WTW to create a peer group that includes companies that: (1) maintain a regulated utility industry perspective which emphasizes operational excellence and customer satisfaction as a means to create shareholder value; (2) reflect our labor market for key executive talent and are part of high-cost geographic areas; and (3) have similar revenue, market capitalization and return-based measures of performance. For 2023, based on these criteria and the advice of WTW, our Compensation Committee did not make any changes to our peer group from 2022.

  15. Our 2023 Peer Group

    | 2023 Peer Group | Market Capitalization (1) | Revenue (2) | | ALLETE, Inc. (ALE) Avista Corporation (AVA) Black Hills Corporation (BKH) IDACORP, Inc. (IDA) MGE Energy Inc. (MGEE) NorthWestern Energy (NWE) Northwest Natural Holding Co. (NWN) OGE Energy Corp. (OGE) ONE Gas Inc. (OGS) Otter Tail Corporation (OTTR) PNM Resources Inc. (PNM) Portland General Electric Company (POR) Spire Inc. (SR) | | |

  16. Our 2023 Peer Group

    (1) Market capitalization range of our peer group as of February 29, 2024. (2) Range of publicly available trailing twelve months total revenues for our peer group as of February 29, 2024.

  17. Our Pay Practices

    Our Pay Practices Our executive pay program accomplishes our goals by incorporating certain pay practices while avoiding other, more problematic or controversial practices. What We Do •Place a significant portion of executive pay at risk by granting incentive awards that are paid, if earned, based on continuing annual and long-term individual and Company performance. •Utilize multiple performance metrics for long-term incentive awards that align executive and shareholder interests. •Target executive pay around the median of our peers, while also considering trade area economics, turn-over, tenure, experience, and other factors. What We Don’t Do •Use employment or golden parachute agreements. •Provide change in control payments exceeding three times base salary and target bonus. Our only change in control provision appears in our Equity Compensation Plan and provides for the immediate vesting or cash payment of any unvested equity awards upon a change in control. •Grant stock options. No stock options are currently outstanding, and none have been issued under our Equity Compensation Plan. •Allow option repricing or liberal share recycling. These practices are expressly prohibited under our Equity Compensation Plan. •Promise multi-year guarantees for salary increases. •Provide perquisites for executives that differ materially from those available to employees generally. •Maintain a non-performance-based top hat plan or separate retirement plan available only to our executive officers. In the past, we have maintained an executive retirement / retention program, with five-year cliff vesting of equity awards and a five-year payout period after the recipient’s separation from service. •Pay tax gross-ups to our executives. •Pay dividends or dividend equivalents on unvested performance shares or units. •Allow our executives or directors to hedge Company securities. Pay Package For 2023, our executive pay package included four components — base salary, an annual cash incentive award, a performance-based long-term equity incentive award, and a time-based long-term equity incentive award. Our annual cash incentive award and 70 percent of our long-term equity incentive award are performance-based. The table below provides a high level summary of our 2023 executive pay package. Please refer to the Pay Components section later in this CD&A for a more detailed summary of how we pay our executives.

  18. Our Pay Practices

    | Component | Description | Why we include this component | How we determine amount | Decisions for 2023 | Reason for Change | | Base Salary | Short-term fixed cash compensation | Provide a base level of compensation for executive talent | Target middle of competitive range of peer group, with adjustments for trade area economics, turnover, tenure, and experience | Three NEOs received increases to reflect recent promotions, and the other two NEOs received the same 4.5 percent increase provided to employees generally | Remain market competitive, provide cost of living adjustment, and reflect increased responsibilities | | Annual Cash Incentive | Short-term variable cash compensation, based on corporate performance against annually established metrics (financial, safety, reliability, and customer satisfaction) and individual performance | Motivate employees to meet and exceed annual Company objectives that are part of our strategic plan | Target middle of competitive range of peer group, with adjustments for trade area economics, turnover, tenure, and experience | Updated performance targets; increased incentive target for three NEOs to reflect recent promotions | Reflect increased responsibilities | | Performance Unit Awards under LTIP | Long-term variable, equity compensation, paid following three-year vesting period if financial performance metrics (EPS, ROAE, and TSR) are achieved | Provide market-competitive, performance-based compensation opportunities while aligning interests of executives and shareholders; value of award is substantially dependent upon the changing value of our common stock in the market | Market survey of similar peer group roles and responsibilities and assessment of the strategic value of each position | Reduced to 70 percent sub-component of LTIP target award. Updated performance targets; LTIP target opportunity (combined PSU+RSU) increased for NEOs. | Reflect increased responsibilities and align with market | | Restricted Unit Awards under LTIP | Long-term at risk, equity compensation, paid following three-year restricted period | Provide market-competitive, equity compensation opportunities while aligning interests of executives and shareholders; value of award is substantially dependent upon the changing value of our common stock in the market | Market survey of similar peer group roles and responsibilities and assessment of the strategic value of each position | New 30 percent sub-component of LTIP target award. LTIP target opportunity (combined PSU+RSU) increased for NEOs. | Reflect increased responsibilities and align with market |

  19. How We Set Pay

    Our Compensation Committee has the authority to delegate certain responsibilities and has delegated some of the administration of our executive compensation and benefits plans to our Compensation and Benefits Department. Independent Compensation Consultant To help determine executive pay, the Compensation Committee retains WTW, for advice regarding the general competitive landscape and trends in executive and director pay. While the Compensation Committee meets with WTW from time to time, the chair of the Compensation Committee also communicates directly with the consultant in between committee meetings. WTW advises the committee on several matters including (1) competitive analysis (including in relation to our 2023 peer group), (2) incentive plan design, (3) updates on trends in executive and director compensation, (4) peer group composition, and (5) other compensation-related matters as requested by the committee. Decision-Making Process and Role of Executive Officers The Compensation Committee works with WTW to analyze competitive market data to determine appropriate base salary levels, annual incentive target levels, and long-term incentive target levels for all of our executives, paying particular attention to applicable comparisons with our 2023 peer group. When making comparisons to the peer group, the Compensation Committee seeks to establish compensation levels that approximate its median. After determining appropriate levels, the Compensation Committee recommends both CEO and executive officer pay to the Board for approval. The CEO is not a member of the Compensation Committee and does not vote on Board matters concerning executive pay. With respect to our CEO’s pay, the Compensation Committee conducts an annual performance assessment of the CEO and determines appropriate adjustments to all elements of pay based on his individual performance and the Company’s performance. For the other executive officers, the CEO and CFO make recommendations to the Compensation Committee for all elements of pay based on individual performance, market data from our peer group and published survey data. The Compensation Committee reviews, discusses, modifies, and approves, as appropriate, these recommendations. The Compensation Committee’s annual process for setting executive pay follows the general timeline depicted below.

  20. How We Set Pay

    | July Review and discuss timeline for setting executive pay | October Review materials from independent compensation consultant: | | | •Executive pay overview •Peer compensation analysis •Preliminary design of annual and long-term incentive opportunities | | December Evaluate overall executive pay program: | February Finalize executive pay: | | •Review preliminary five-year financial plan •Approve upcoming annual incentive plan grants •Review proposed long-term incentive grants •Approve annual executive retention / retirement grants | •Review final five-year financial plan •Approve executive pay •Approve long-term incentive program grants •Review performance metrics results for prior year and approve payouts for current annual incentive plan and vesting of LTIP |

  21. Targeted Pay and Competitive Analysis

    Independent Compensation Consultant Data and Analysis As a component of the Compensation Committee’s review of executive pay, the committee’s independent compensation consultant, WTW, provides an analysis of the pay levels of our peer group, as well as published survey data that focuses on the energy and utility industry, which is size-adjusted based on our revenues for appropriate market comparison. The 2023 peer group data is a primary basis for setting pay for our CEO and CFO because these positions are common among our peers. Both the peer group and survey data are analyzed and considered in setting pay levels for the remaining NEOs because these positions or division of responsibilities may not be common among our peers. For long-term incentive purposes, WTW performs its analysis using the published survey data and focuses on companies in the energy services industry, specifically those with annual revenues similar to or less than ours. The Compensation Committee considers the responsibilities of the job performed by each of our executive officers and his or her performance, and adjusts each executive’s targeted pay amounts accordingly. As further detailed below, internal comparison with other officer positions also is considered. In addition, WTW prepares an analysis of market data for energy services executives. The analysis examines the target direct compensation opportunity for energy services executives, including base salary, target annual incentives, and the expected value of long-term incentives. Using regression analysis, WTW size-adjusts the data to reflect our revenue scope. We also conducted a separate internal analysis of the 2022 executive pay of the 12 other companies in our 2023 peer group. This internal analysis (which was based on proxy statement data) examined base salary, bonus, other annual compensation, equity awards, and non-equity incentive plan compensation (and excluded change in pension value). Using this analysis, our NEOs had average pay of $1.85 million in 2022, which was less than all but four of the 12 other companies in our 2023 peer group; while the peer group median had average pay per NEO of approximately $1.96 million. Our CEO’s total 2022 pay was approximately 75 percent of the median total pay of 2023 peer group CEOs. These analyses demonstrate that, on average, our highest paid employees are paid at a level that is below the median of our 2023 peer group and industry. We also are cognizant of prevailing economic conditions, internal pay equity, and executive turnover, which our Compensation Committee takes into account when determining executive compensation. CEO Pay Ratio

  22. Targeted Pay and Competitive Analysis

    Our CEO to median employee pay ratio is calculated in accordance with Item 402(u) of Regulation S-K. Although the applicable SEC rules would permit us to use the same median employee, we identified a new median employee for 2023 because that is the same process we have been using since our Compensation Committee first asked us to calculate our CEO pay ratio in 2010, and not because of any changes to our employee population or employee compensation arrangements that would significantly impact our pay ratio. We identified the new median employee this year by using the same methodology we used to identify last year’s median employee — by examining the 2023 total cash compensation for all individuals (excluding our CEO) who were employed by us on the last day of our payroll year (December 22, 2023). We included all employees, whether employed on a full-time, part-time, or seasonal basis. We did not make any assumptions, adjustments, or estimates with respect to total cash compensation, and we did not annualize the compensation for any full-time employees that were not employed by us for all of 2023. We believe the use of total cash compensation for all employees is a consistently applied compensation measure because we do not widely distribute annual equity awards to employees (six percent of our employees receive annual equity awards). After identifying the median employee based on total cash compensation, we calculated annual total compensation for that employee using the same methodology we use for our NEOs as set forth in the 2023 Summary Compensation Table later in this proxy statement and computed the ratio.

  23. Targeted Pay and Competitive Analysis

    | CEO to Median Employee Pay Ratio | | | | | | CEO | | Median Employee | | Base Salary | $794,519 | | $87,495 | | Stock Awards | $1,600,000 | | — | | Annual Incentive Plan Compensation | $616,000 | | $6,790 | | Change in Pension Value and Nonqualified Deferred Compensation Earnings (1) | $34,619 | | — | | All Other Compensation | $65,464 | | $42,518 | | TOTAL | $3,110,602 | | $136,803 | | CEO Pay to Median Employee Pay Ratio | 23 | : | 1 | | (1) These amounts are attributable to a change in the value of each individual’s defined benefit pension account balance and do not represent earned or paid compensation. Pension values are dependent on many variables including years of service, earnings, and actuarial assumptions. | | | |

  24. Pay Components

    | The primary pay components for our executive officers in 2023 were: | | •Base Salary; •Annual performance-based cash incentive awards; and •Long-term equity incentive awards split 70/30 between performance share units and restricted share units |

  25. Pay Components

    The Compensation Committee believes these pay components align the interests of our executives and our shareholders by placing a significant portion of total pay at risk based on achievement of our short- and long-term performance goals and/or continued employment. The specific mix among the individual components reflects market comparisons (primarily with respect to the median of our 2023 peer group) and individual position and performance. Base salary represents 25 percent of our CEO’s targeted total pay and, on average, 44 percent of our other NEOs’ targeted total pay. Performance-based awards (annual cash and long-term equity incentive) and time-based equity awards represent the remaining portion of targeted pay. The Compensation Committee also believes that our executive pay program appropriately mitigates the risk associated with incentive-based pay. The Compensation Committee has designed the entire program and metrics under our annual and long-term performance-based incentive awards to curb inappropriate risk taking. For example, we do not offer guaranteed bonuses. In addition, our annual and long-term performance-based incentive awards utilize multiple performance metrics which vary from plan to plan, and rewards under those plans are aligned with the interests of our shareholders. If our shareholders benefit from our performance, our executive officers are rewarded. Furthermore, we have limited severance packages, and our retirement, healthcare, and welfare benefit programs for executives are generally the same as for all employees and are discussed in the 2023 Executive Pay section. Finally, we maintain robust stock ownership guidelines for our executives (from 2x to 6x base pay, depending on position). In light of these pay practices, the Compensation Committee believes that our executive pay program appropriately addresses the risks associated with performance-based incentives. Base Salary The general guideline for determining salary levels for our executive officers, including the CEO, is to be near the median of our peer group, adjusted for other factors such as trade area economics, turn-over, tenure, and experience. Adjustments from peer group levels are made based on experience in the position, industry experience, and individual performance and responsibilities. While we are cognizant of the competitive range, our primary goal is to compensate our executives at a level that best represents our pay philosophy, whether or not this results in actual pay for some positions that may be higher or lower than the market median. We find that survey results for particular positions can vary from year to year. Thus, we consider market trends for certain positions over a period of several years rather than a one-year period in setting pay for such positions. The Compensation Committee considers adjustments to base salaries for executive officers on an annual basis. For 2023, the Compensation Committee felt that an increase to the base salaries of our executive officers, in line with the increases generally provided to our employees, was reasonable in light of the Company’s operating results in 2022. Additional increases for three NEOs were deemed advisable to reflect increased responsibilities as a result of promotions. At the beginning of 2023, we promoted Mr. Bird to CEO and Ms. Heim to the executive team as General Counsel and Vice President. Their respective base salary increases reflect the significant increased responsibilities associated with their respective promotions. Similarly, in early 2021, we announced that Ms. Lail

  26. Pay Components

    Annual Cash Incentive Awards The overall design of our 2023 annual cash incentive plan is the same as the 2022 plan. The plan uses financial and operational performance metrics to motivate employees to meet and exceed annual Company objectives that are part of our strategic plan. The performance metrics include targets for net income, reliability, and two metrics related to the social category of our ESG sustainability efforts in the form of employee safety and customer satisfaction targets, which have been part of our plan for numerous years. All regular, non-union employees (including executive officers) participate in the same annual incentive plan; while our union employees participate in a separate, but similar, management-designed program. Each participating employee has a targeted annual cash incentive award, expressed as a percentage of base salary. Actual payouts for awards reflect the Company’s performance against the metrics, as well as the employee’s individual performance. No portion of the annual cash incentive award is guaranteed. The Compensation Committee calculates the actual payout pursuant to this four-factor formula:

  27. (1) Base Salary

    (1) Base Salary Base salary is the first component in the calculation of the annual cash incentive award. It is described in the Base Salary section immediately preceding this Annual Cash Incentive Awards discussion.

  28. (2) Individual Target Opportunity

    | The table to the right shows the 2023 annual incentive target opportunity for our NEOs. In 2023, the Compensation Committee adjusted the annual incentive target opportunities for Mr. Bird, Ms. Heim, and Ms. Lail in connection with their recent promotions. The other NEOs remained at 2022 levels after the Compensation Committee determined that the existing target incentive opportunities were generally aligned with the incentive opportunity in the market place. | | 2023 | | | | | Name | Base Salary ($) | Target Incentive Opportunity (% of base salary) | Target Incentive Opportunity ($) | | | Brian Bird | 800,000 | 100% | 800,000 | | | Crystal Lail | 474,375 | 65% | 308,344 | | | Shannon Heim | 350,000 | 45% | 157,500 | | | John Hines | 330,383 | 40% | 132,153 | | | Bobbi Schroeppel | 329,002 | 40% | 131,601 |

  29. (3) Plan Funding Percentage

    | For our executives, the funding (as a percentage of target) under the annual incentive plan has ranged from 74 percent to 136 percent for the five previous years, as illustrated in the table to the right. | | Historical Funding of Annual Cash Incentive (as a percentage of target) | | | | | | | | 2018 | 2019 | 2020 | 2021 | 2022 | | | | 136% | 126% | 74% | 106% | 96% | | | For many years, including 2023, the annual incentive plan has used four categories of performance measures to determine the plan funding percentage – financial, safety, reliability, and customer satisfaction. The relative weightings of these measures are set forth in the graphic to the left. In order for any awards under the 2023 annual incentive plan to be earned and paid out, the Company must attain at least 90 percent of the budgeted net income target, which coincides with the threshold net income target for the plan. This metric for determining performance against our financial goal is derived from our audited financial statements. | | | | | |

  30. (3) Plan Funding Percentage

    In addition, the 2023 annual incentive plan provided that the lost-time incident rate portion of the safety metric would be forfeited in the event of a work-related fatality, unless the Compensation Committee determined that no actions on the part of the employee or the Company contributed to the incident. The Compensation Committee may use discretion in adjusting the plan funding percentage from actual performance due to specific facts and circumstances, such as current economic conditions as well as unusual one-time events that significantly impact financial or non-financial results. The Compensation Committee exercises this discretion only for unusual, non-operational items and did not exercise any such discretion for 2023. The table on the following page shows the associated performance metrics (including threshold, target, and maximum levels), weighting, and plan payout percentage for each of the 2023 performance measures, which resulted in the plan funding at 77 percent of target for our NEOs.

  31. (3) Plan Funding Percentage

    | | 2023 | | | | | | | | | Annual Incentive Plan Information | | | | | | | | Performance Measures | Weight (% of Total Plan Payout) | Performance Level | | | | Target % Achieved | Final Funding % of Total | | | | Threshold | Target | Maximum | Actual Achieved | | | | Financial (55%) (1) | | | | | | | | | Net Income ($ in millions) | 55% | $191.0 | $212.3 | $233.5 | $194.1 | 57.3 | 31.5 | | Safety (15%) (2) | | | | | | | | | Lost Time Incident Rate | 5% | 0.56 | 0.46 | 0.23 | 0.45 | 102.2 | 5.1 | | Total Recordable Incident Rate | 5% | 1.75 | 1.49 | 1.05 | 1.34 | 117.0 | 5.9 | | Safety Training Completion | 5% | 99.0% | 99.5% | 100.0% | 100.0% | 149.6 | 7.5 | | Reliability (15%) (3) | | | | | | | | | SAIDI (excluding major event days) | 5.0% | 116.00 | 102.00 | 89.00 | 88.80 | 150.0 | 7.5 | | SAIDI (including major event days) | 5.0% | 165.00 | 122.00 | 94.00 | 94.80 | 148.6 | 7.4 | | Gas – Leaks per 100 Miles of Main | 2.5% | 14.60 | 10.00 | 6.80 | 9.60 | 106.4 | 2.7 | | Gas – Damages per 1000 Locates | 2.5% | 3.80 | 3.00 | 1.20 | 3.10 | 96.3 | 2.4 | | Customer Satisfaction (15%) (4) | | | | | | | | | J.D. Power Residential Electric and Gas Survey Performance Ranking | 5% | 720.00 | 730.00 | 734.00 | 696.80 | — | — | | Operational Performance – Customer Survey by Flynn Wright | 5% | 33.48 | 37.20 | 40.92 | 35.20 | 73.1 | 3.7 | | Reputational Perceptions – Customer Survey by Flynn Wright | 5% | 32.17 | 35.75 | 39.32 | 33.40 | 66.5 | 3.3 | | | | | | TOTAL FUNDING PERCENTAGE | | | 77 |

  32. (3) Plan Funding Percentage

    (1)Financial. The net income target is based upon the Board approved budget for the plan year, and the actual achieved is determined by what is reported in our annual report on Form 10-K for the plan year. (2)Safety. Safety performance regarding Lost Time Incident Rate and Total Recordable Incident Rate is calculated according to OSHA standards. OSHA specifically defines what workplace injuries and illnesses should be recorded and, of those recorded, which must be considered lost time incidents. The threshold level for the safety measures (other than training completion) represents an improvement over our 2022 plan and 10 to 15 percent better than our Edison Electric Institute (EEI) peer group average; the target level is significantly above our peer group average, an improvement over our five-year average, and an improvement over our 2022 plan; and the maximum represents first quartile performance for our EEI peer group and a significant improvement over historical Company performance. Safety Training Completion includes completion of assigned safety training for all employees through an internal education portal, and is calculated by dividing the difference of total courses assigned less total courses overdue by the total courses assigned. (3)Reliability. SAIDI (excluding major event days). System Average Interruption Duration Index (SAIDI) is a system reliability index used by us and participating Institute of Electrical and Electronic Engineers, Inc. (IEEE), utilities to measure the duration of interruptions on a utility’s electric system. SAIDI indicates the total duration of interruption for the average customer during a predefined period of time. The threshold level for SAIDI, excluding major event days, was set at the same level as our 2022 plan; the target level represents the same level as our 2022 plan; and the maximum level is significantly better than the five-year average of first quartile performance of IEEE medium-sized utilities. SAIDI (including major event days). The threshold for SAIDI, including major event days, was set at the same level as our 2022 plan; the target level represents a two percent improvement over the Company’s 2022 target; and the maximum level is significantly better than first quartile performance of IEEE medium-sized utilities. Damages per 1000 Locates. This natural gas reliability metric assesses the effectiveness of the Company’s programs to prevent damage to its natural gas system. The threshold level was set at a six percent improvement over the 2022 threshold; the target level was maintained at the 2022 target, representing a five percent improvement over the Company’s 2019 results; and the maximum level represents first quartile average for American Gas Association companies. Leaks per 100 Miles of Main. This natural gas reliability metric assesses the overall performance of the Company’s natural gas system. The threshold level was set at six percent better than second quartile performance as reported by the American Gas Association; the target level was set at our three-year average and is 37 percent better than American Gas Association second quartile performance; and the maximum level represents first quartile average for American Gas Association companies. (4)Customer Satisfaction. J.D. Power. One customer satisfaction metric is measured by the broadly utilized J.D. Power residential electric and gas customer satisfaction surveys and studies, which include the following components: communications, corporate citizenship, billing and payment, price, power quality and reliability (electric) or field service (gas) and customer service. The threshold level represents the Company’s five-year average and a seven point improvement over the 2022 threshold; the target level is an improvement of one point over our 2022 results; and the maximum level is a five point improvement over our 2022 results. Flynn Wright Surveys. The remaining two customer satisfaction metrics are measured based on the results of a 2023 customer tracking survey conducted on our behalf by Flynn Wright, a full service advertising, marketing, public relations, web design, interactive and research advertising agency. For both of these metrics, the threshold level is set 10 percent below target; the target level represents our average score for three waves of surveys from Fall 2021 to Fall 2022; and the maximum level is set at 10 percent above target.

  33. (4) Individual Performance Multiple

    (4) Individual Performance Multiple After the Compensation Committee determines the plan funding percentage, it determines an individual performance multiple for each executive, which is factored into the incentive payout calculation. To make this determination, the Compensation Committee analyzes the total mix of available information, as well as actual performance measured against pre-established goals. The Company’s successes in 2023 were due to the substantial efforts of our executive officers and many other employees across all departments of the Company. As a result of the factors noted above, the Compensation Committee determined that it was appropriate to award each NEO (and the other executive officers) the annual cash incentive award as provided by the 2023 annual cash incentive plan, without the addition of any performance multiplier. Actual 2023 annual cash incentive awards for the NEOs are reflected in the table below.

  34. (4) Individual Performance Multiple

    | | 2023 | | | | | | | Name | Base Salary ($) | Target Cash Incentive, as % of Base Salary | Funding Percentage (%) | Individual Performance Multiple | Actual Cash Incentive, as % of Base Salary | Cash Incentive Award ($) | | Brian Bird | 800,000 | 100% | 77 | 1.0 | 77.0% | 616,000 | | Crystal Lail | 474,375 | 65% | 77 | 1.0 | 50.1% | 237,425 | | Shannon Heim | 350,000 | 45% | 77 | 1.0 | 34.7% | 121,275 | | John Hines | 330,383 | 40% | 77 | 1.0 | 30.8% | 101,758 | | Bobbi Schroeppel | 329,002 | 40% | 77 | 1.0 | 30.8% | 101,333 |

  35. (4) Individual Performance Multiple

    Long-Term Equity Incentive Awards The Equity Compensation Plan authorizes several types of stock-based awards, including restricted stock and a variety of performance-based awards. Historically, we have used our Equity Compensation Plan to provide annual long-term equity incentive awards, and, until 2023, all such awards included a performance metric. We used these performance-based awards to help us achieve our pay philosophy of being market competitive while simultaneously aligning the interests of our executives and shareholders. During 2022, our Compensation Committee reviewed the market for long-term equity incentive awards and concluded that our practice of using exclusively performance-based awards did not align with the practices of our peers or the market. To achieve better peer and market alignment in 2023, the Compensation Committee awarded long-term equity incentive grants in an aggregate amount consistent with our historical practice, but split such grants 70/30 between performance share units and restricted share units, as summarized in more detail below. Thus, in 2023, the Compensation Committee granted two types of long-term equity incentive awards to our executives under the Equity Compensation Plan: (1) LTIP performance share units which are earned (from 0 percent to 200 percent of target) based upon the satisfaction of specified performance metrics over a three-year, cliff-vesting performance period; and (2) LTIP restricted share units with cliff vesting in full after a three-year restricted period. Our 2023 LTIP awards are payable, if and when earned, in shares of our common stock. Because payout will be made in shares of common stock, the ultimate value of the awards will be substantially dependent upon the changing value of the Company’s common stock in the market. LTIP Performance Share Units. The Compensation Committee determines the terms and restrictions applicable to grants of LTIP performance share units. After the Company’s financial results are available for the prior year, the Compensation Committee approves the annual grant of LTIP performance share units to our executive officers (and approximately 70 other participants in 2023). The awards of LTIP performance share units are intended to provide a link between executive officer compensation and long-term shareholder interests as reflected in changes in our stock price, and to motivate and reward achievement of pre-established corporate financial goals and relative TSR. The Compensation Committee believes that making an annual grant of LTIP performance share units motivates our executive officers (and the other participants) to focus on long-term, sustainable improvement in shareholder value. By tying the award payout to financial performance and continued service over a three-year vesting period, the Compensation Committee has ensured that the ultimate value of the award is dependent upon the value of our stock. During the performance periods summarized in the table below, the performance measures for the LTIP performance share unit awards included (1) a combined financial metric comprised of ROAE and average EPS growth, contributing 50 percent of the payout, and (2) TSR relative to our peer group, also contributing 50 percent of the payout. The table shows, for the past five completed performance periods, the overall payout (expressed as a percentage of target).

  36. (4) Individual Performance Multiple

    | Historical Funding of LTIP (as a percentage of target) | | | | | | 2017-2019 | 2018-2020 | 2019-2021 | 2020-2022 | 2021-2023 | | 122.2% | 50% | 72.7% | 20% | 27.5% |

  37. (4) Individual Performance Multiple

    LTIP Restricted Share Units. Prior to 2023, the Compensation Committee only awarded performance share units under the LTIP. In 2023, to better align our compensation program with our peers and the market, the Compensation Committee made the first awards of restricted share units under the LTIP. Instead of granting 100 percent performance share units under the LTIP, the Compensation Committee split the grant 70/30 between performance share units and restricted share units. Like the awards of LTIP performance share units, the awards of LTIP restricted share units are intended to provide a link between executive officer compensation and long-term shareholder interests as reflected in changes in our stock price, and the Compensation Committee believes that making an annual grant of LTIP restricted share units motivates our executive officers (and the other participants) to focus on long-term, sustainable improvement in shareholder value. By tying the award payout to continued service over a three-year vesting period, the Compensation Committee has ensured that the ultimate value of the award is dependent upon the value of our stock. ERRP Restricted Share Units. In 2022, the Compensation Committee approved the last grant of annual ERRP restricted share units which began in 2011. The Company did not make any ERRP awards under the Equity Compensation plan in 2023. Historically, we used the ERRP awards to bring the amount of long-term incentive compensation of our executives in line with the median of our peers, while simultaneously encouraging executive retention with a five-year cliff vesting component and providing retirement benefits. However, the ERRP restricted share units were not comparable to any other compensation component used by our peers or the market. A number of ERRP restricted share unit awards remain outstanding and will continue to vest, subject to satisfaction of the performance metric with respect to such awards, over the coming years. Like the LTIP performance share units and restricted share units described above, these ERRP restricted share units were intended to provide a link between executive officer compensation, retirement planning and long-term shareholder interests, and to motivate and reward achievement of pre-established corporate financial goals. Further details concerning these ERRP awards are provided below in Vesting of 2018 Executive Retention / Retirement Program Grants in 2023.

  38. 2023 Long-Term Incentive Program Grants

    2023 Long-Term Incentive Program Grants In February 2023, the Compensation Committee approved grants under our LTIP. The target LTIP opportunities for each executive officer are derived from 2023 peer group and competitive survey data and from the Compensation Committee’s judgment on the internal equity of the positions and scope of job responsibilities. To determine the target value of each executive officer’s overall LTIP awards (which are split 70/30 between performance share units and restricted share units), the Compensation Committee considered the range for comparable roles within our peer group, with consideration given to the strategic value of each position. Based on these considerations, in 2023, the Compensation Committee increased the targeted opportunity (expressed as a percentage of base salary) associated with the LTIP awards for each of our named executive officers. Mr. Bird, Ms. Lail, and Ms. Heim received increases to reflect their increased responsibilities resulting from recent promotions. Mr. Hines and Ms. Schroeppel received increases to align overall compensation with the market. Each executive officer’s targeted LTIP opportunity for 2023 is divided to account for the 70/30 split and then converted into specific LTIP performance share unit grants and restricted share unit grants by dividing the total targeted value (the targeted percentage of base salary) by the applicable weighted average fair value of a share of our stock on the grant date, less the present value of expected dividends. The resulting calculation represents the number of LTIP performance share units and restricted share units that were granted and will vest on December 31, 2025, if (i) with respect to the performance share units, all performance goals are met at the target performance level and (ii) with respect to the restricted share units, employment continues through the three-year restricted period. The target equity opportunities (value at target and number of shares) for the 2023 grants of LTIP performance share units and restricted share units are shown in the table below. The table also shows any changes to the overall target LTIP opportunities (expressed as a percentage of base salary) from 2022 to 2023.

  39. 2023 Long-Term Incentive Program Grants

    | | | | | 70% Performance Share Units | | 30% Restricted Share Units | | | Name | 2022 Base Salary (%) | 2023 Base Salary (%) | 2023 Target LTIP Opportunity ($) | Target Value ($) | Target Units (#) (1) | Target Value ($) | Target Units (#) (2) | | Brian Bird | 140 | 200 | $1,600,000 | 1,119,974 | 20,052 | 480,005 | 9,355 | | Crystal Lail | 100 | 115 | $474,375 | 332,047 | 5,945 | 142,334 | 2,774 | | Shannon Heim | 20 | 65 | $227,500 | 159,236 | 2,851 | 68,242 | 1,330 | | John Hines | 55 | 60 | $189,694 | 132,761 | 2,377 | 56,903 | 1,109 | | Bobbi Schroeppel | 55 | 60 | $188,900 | 132,260 | 2,368 | 56,646 | 1,104 | | (1) Based on a weighted average grant date fair value of $55.85, which was calculated using (a) the closing stock price of $58.48 on February 17, 2023, less the present value of estimated dividends of $0.64 per quarter, using a 4.33% three-year treasury bond yield and (b) a Monte Carlo valuation. | | | | | | | | | (2) Based on a grant date fair value of $51.31, which was calculated using the closing stock price of $58.48 on February 17, 2023, less the present value of estimated dividends of $0.64 per quarter, using a 4.33% three-year treasury bond yield. | | | | | | | |

  40. 2023 Long-Term Incentive Program Grants

    LTIP Performance Share Units. After the performance period, the Compensation Committee calculates the actual Company performance relative to the performance goals and determines the number of LTIP performance share units that vest based on such performance. Depending on performance, the exact number of performance share units that vest will vary from zero to 200 percent of the target award. In addition, the value of the award on payout will depend on the market price of our common stock on the date of payout. The performance goals for these performance share unit awards are independent of each other. Vesting of awards also is contingent on maintaining investment grade secured and unsecured credit ratings. The performance measures for the 2023 LTIP performance share unit awards included (1) a combined financial metric comprised of ROAE and average EPS growth, contributing 50 percent of the payout, and (2) TSR relative to our peer group, also contributing 50 percent of the payout. The ROAE and simple average EPS growth levels are tied to management performance as these goals relate to revenue enhancement and cost containment. TSR is determined by our common stock price change and dividends paid over the performance period. We then compare our TSR with the TSR achieved by each of our 2023 peers over the same three-year period and determine our ranking. LTIP Restricted Share Units. After the three-year restricted period, the LTIP restricted share units will vest, and the actual value of the award payout will depend on the market price of our common stock on the date of payout.

  41. Vesting of 2021 Long-Term Incentive Program Performance Share Unit Grants in 2023

    Vesting of 2021 Long-Term Incentive Program Performance Share Unit Grants in 2023 In February 2021, the Compensation Committee approved grants of LTIP performance share units, subject to a three-year performance period. The 2021 LTIP performance share unit grants vested on December 31, 2023. The performance goals were independent of each other and equally weighted. The table below summarizes the performance measures which governed these 2021 grants.

  42. Vesting of 2021 Long-Term Incentive Program Performance Share Unit Grants in 2023

    | Performance Measures — 2021-2023 | Threshold | Target | Maximum | Actual | | Financial Goals – 50% | | | | | | ROAE | 8.05% | 8.50% | 8.95% | 7.71% | | Simple Average EPS Growth | 6.0% | 8.5% | 11.0% | 2.2% | | Market Goal – 50% | | | | | | Relative TSR Average vs. Peers | 13th | 6th | 1st | 9th |

  43. Vesting of 2021 Long-Term Incentive Program Performance Share Unit Grants in 2023

    Depending upon actual Company performance relative to these performance goals, the exact number of shares that could have vested ranged from zero to 200 percent of the target award. Our relative TSR metrics for the 2021 LTIP performance share unit grants were established at levels higher than many of our peers, according to a market analysis conducted at the time of such grants by WTW. At the conclusion of the performance period, the Compensation Committee calculated the Company’s performance relative to these goals during the three-year performance period to determine the vesting percentage for the 2021 LTIP performance share unit grants. For the financial goals related to the 2021 LTIP performance share unit grants, ROAE was 7.7 percent and simple average EPS growth was 2.2 percent. This financial performance resulted in a 0.0 percent vesting percentage for that half of the program. For our market goal, TSR was negative 0.5 percent, resulting in a ranking of 9th out of 13 with respect to our 2021 peers, and contributing 27.5 percent with respect to that half of the program. For purposes of our 2021 LTIP, we calculated TSR by comparing the average closing price for a share of common stock of us and our 2021 peers during the period beginning 10 days prior to the end of the performance period and ending 10 days after the performance period plus the cumulative dividends earned during the performance period, to the average closing price of a share of common stock of us and our 2021 peers during the period beginning 10 days prior to the start of the performance period and ending 10 days after the start of the performance period. Our Compensation Committee believes that calculating relative TSR using the 20-day average share price around the beginning and end of the performance period results in a more accurate reflection of return for the period that is less impacted by stock market activity on the first and last days of the performance period. Based on the calculation of these performance measures, the 2021 LTIP performance unit grants vested at 27.5 percent. The table below sets forth the results with respect to each of the performance measures applicable to the 2021 LTIP performance share unit grants and the corresponding contributions to the vesting percentage.

  44. Vesting of 2021 Long-Term Incentive Program Performance Share Unit Grants in 2023

    | Performance Measures — 2021-2023 | Result | Weight | Vesting | | Financial Goals – ROAE and Simple Avg. EPS Growth | — | 50.0% | —% | | Market Goal – TSR | 55.0% | 50.0% | 27.5% | | | | TOTAL | 27.5% |

  45. Vesting of 2021 Long-Term Incentive Program Performance Share Unit Grants in 2023

    The table below sets forth the number of shares awarded for the 2021 LTIP performance share unit grants and the number of shares paid out in 2023 with respect to such grants for our NEOs, based on vesting at 27.5 percent.

  46. Vesting of 2021 Long-Term Incentive Program Performance Share Unit Grants in 2023

    | | Vesting of 2021 Performance Unit Grants | | | | Name | Units at Grant Date (#) | Vesting Percentage (%) | Units upon Vesting (#) | | Brian Bird | 13,853 | 27.5% | 3,810 | | Crystal Lail | 6,679 | 27.5% | 1,837 | | Shannon Heim | 792 | 27.5% | 218 | | John Hines | 3,284 | 27.5% | 903 | | Bobbi Schroeppel | 3,239 | 27.5% | 891 |

  47. Other Pay Policies

    Other Pay Policies Retirement and Other Benefits Retirement benefits are offered to employees hired prior to January 1, 2009, through tax-qualified Company-funded pension plans and to employees through a 401(k) defined contribution plan. Both pension plans and 401(k) plans are common benefits provided in the utility and energy industry. Our executive officers, including the CEO, participate in some or all of these plans, and the terms governing the retirement benefits under these plans are the same as those available to substantially all employees. In 2023, we did not offer any supplemental retirement benefits to our executive officers. Our healthcare, insurance, and other welfare and employee-benefit programs are generally the same for substantially all employees, including the CEO and executive officers. We share the cost of health and welfare benefits with our employees, which is dependent on the benefit coverage option that each employee elects. Our executive officers do not receive any material perquisites or special benefits that differ materially from those available to employees generally. Severance and Post-Termination Benefits We provide severance and post-termination benefits to our executive officers under our severance plan. Severance and post-termination benefits are explained in detail under the 2021 Executive Pay—Pay After Employment Ends section, starting on page 40 of this proxy statement. Non-qualified Deferred Compensation The Company provides a non-qualified deferred compensation plan, which is intended to be an unfunded plan. The Officer Deferred Plan allows eligible officers to defer up to 100 percent of certain compensation, including base salary (subject to compliance with Section 409A of the Internal Revenue Code compensation limit), short-term incentive awards and awards earned under our Equity Compensation Plan. There are no Company contributions to the Officer Deferred Plan. Participants in the Officer Deferred Plan may elect to have deferrals credited to their account in Company stock (in the form of deferred share units issued under the Equity Compensation Plan) or cash investment options that substantially mirror the qualified employee 401(k) plan investment options. The value of each deferred compensation account is adjusted periodically to reflect the gains, losses, and dividends associated with the designated investments. Officer Deferred Plan participants do not pay income taxes on amounts deferred or earnings thereon until those amounts are distributed from the Officer Deferred Plan. A participant’s benefits under the Officer Deferred Plan are fully vested and are payable after terminating employment. Benefits are paid in a lump sum (cash for cash deferrals and stock for stock deferrals) unless a participant elects annual installments. No Employment Agreements We currently do not have employment agreements with any of our executives. We generally believe that ongoing employment agreements are not necessary to retain talented executives; however, agreements may be appropriate on a case-by-case basis. Due to the changing marketplace in which we compete for talent, the Compensation Committee regularly reviews this practice to help ensure that we remain competitive in our industry. Clawback of Incentive Compensation In October 2023, the Company adopted its Policy for the Recovery of Erroneously Awarded Compensation (Clawback Policy) that is intended to satisfy the requirements of Listing Rule 5608 of Nasdaq that was adopted to implement Rule 10D-1 under the Securities Exchange Act of 1934. The Clawback Policy provides that the Company will recover from each executive officer, reasonably promptly following an accounting restatement, the amount of Incentive-based Compensation (as defined in the Clawback Policy) that exceeds the amount of Incentive-based Compensation that otherwise would have been received had it been determined based on the restated amounts, computed without regard to any taxes paid. Tax Treatment of Certain Compensation Section 162(m) of the Internal Revenue Code limits the Company’s ability to deduct executive compensation paid to certain NEOs (and, beginning in 2018, certain former executive officers) to $1 million per year. The Compensation Committee believes that the tax deduction limitation should not compromise our ability to establish and implement incentive programs that support the compensation objectives discussed above. Accordingly, achieving these objectives and maintaining required flexibility in this regard may result in payments of compensation or grants of awards that are not deductible for federal income tax purposes. The Compensation Committee reserves the right to pay compensation that exceeds Section 162(m)’s deductibility limit. Compensation Committee Report The Compensation Committee reviewed and discussed the CD&A with management. Based on this, it recommended to the Board that the CD&A be included in the proxy statement and incorporated by reference into the Annual Report on Form 10-K for the year ended December 31, 2023. Compensation Committee Mahvash Yazdi, Chair Anthony Clark Sherina Edwards Britt Ide 2023 Executive Pay In this section, the tables, footnotes, and narratives provide information regarding the compensation, benefits, and equity holdings in the Company for the NEOs during the years ended December 31, 2023, 2022, and 2021. Please refer to the Compensation Discussion and Analysis on the previous pages for a description of our executive pay program necessary to gain an understanding of the information disclosed below.

  48. 2023 Summary Compensation Table

    2023 Summary Compensation Table The table below sets forth the compensation earned by our NEOs during 2023, 2022, and 2021.

  49. 2023 Summary Compensation Table

    | Name and Principal Position | Year (1) | Salary ($) | Stock Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (3) | All Other Compen- sation ($) (4) | Total ($) | | Brian Bird | | | | | | | | | President and Chief Executive Officer | 2023 | 794,519 | 1,600,000 | 616,000 | 34,619 | 65,464 | 3,110,602 | | | 2022 | 511,019 | 1,731,774 | 370,800 | — | 61,218 | 2,674,811 | | | 2021 | 494,774 | 850,000 | 397,500 | 8,196 | 62,157 | 1,812,627 | | Crystal Lail | | | | | | | | | Vice President and Chief Financial Officer | 2023 | 457,716 | 474,375 | 237,425 | 23,479 | 64,249 | 1,257,244 | | | 2022 | 402,548 | 498,750 | 217,800 | — | 62,937 | 1,182,035 | | | 2021 | 362,307 | 431,250 | 198,750 | 1,954 | 51,193 | 1,045,454 | | Shannon Heim | | | | | | | | | General Counsel and Vice President, Federal Gov't Affairs | 2023 | 347,369 | 227,500 | 121,275 | — | 73,966 | 770,110 | | John Hines | | | | | | | | | Vice President – Supply & Montana Government Affairs | 2023 | 326,553 | 189,694 | 101,758 | 123,663 | 42,373 | 784,041 | | Bobbi Schroeppel | | | | | | | | | Vice President – Customer Care, Communications and HR | 2023 | 325,187 | 188,900 | 101,333 | 33,634 | 86,529 | 735,583 | | | 2022 | 311,428 | 229,068 | 120,896 | — | 66,243 | 727,635 | | | 2021 | 300,832 | 224,045 | 128,048 | 1,509 | 54,834 | 709,268 |

  50. 2023 Summary Compensation Table

    (1)Ms. Heim and Mr. Hines became NEOs for the first time in 2023. (2)These values reflect the grant date fair value of these awards as calculated utilizing the provisions of Accounting Standards Codification 718, Stock Compensation, and do not represent earned or paid compensation as the shares are subject to performance and vesting conditions. The values in the table above assume payout at target (100 percent) based on grant date fair value. With respect to the LTIP performance units reflected above, the exact number of shares issued will vary from zero to 200 percent of the target award, depending on actual Company performance relative to the performance goals. See Note 15 to the consolidated financial statements in our 2023 Annual Report on Form 10-K for further information regarding assumptions underlying the valuation of equity awards. The value of awards granted in 2023 (LTIP performance units and LTIP restricted units) for each NEO assuming a maximum payout (with respect to the LTIP performance units) based on grant date fair value would be $2,719,953 for Mr. Bird; $806,427 for Ms. Lail; $386,713 for Ms. Heim; $322,425 for Mr. Hines; and $321,166 for Ms. Schroeppel. The stock awards value for Ms. Lail for 2022 has been updated in this Summary Compensation Table to correct the value reported for 2022 in last year’s table, although the company believes the difference is immaterial. (3)These amounts are attributable to a change in the value of each individual’s defined benefit pension account balances during the applicable year and do not represent earned or paid compensation. Pension values are dependent on many variables including years of service, earnings and actuarial assumptions. Our pension plans were closed prior to Ms. Heim joining the Company; therefore, she is not a participant in a pension plan. (4)The table on the following page identifies the items included in the “All Other Compensation” column for 2023. Employee benefits include employer contributions, as applicable, for health benefits (medical, dental, vision, employee assistance plan and health savings account), group term life and 401(k) plan, which are generally available to all employees on a nondiscriminatory basis. Life insurance also includes imputed income consistent with IRS guidelines for coverage amounts in excess of $50,000 for each of the NEOs. Mr. Bird’s other income includes imputed income (and related tax gross up) from executive physicals. Ms. Lail’s other income includes paid time off benefit sold back to the Company at a rate of 75 percent and imputed income (and related tax gross up) from executive physicals. Ms. Heim’s other income includes paid time off benefit sold back to the Company at a rate of 75 percent and tuition reimbursement. Ms. Schroeppel’s and Mr. Hines’ other income includes paid time off benefit sold back to the Company at a rate of 75 percent.

  51. 2023 Summary Compensation Table

    | | Health Benefits | Life Insurance | 401(k) Contributions | Other Income | Total All Other Compensation | | Brian Bird | $19,968 | $6,420 | $36,300 | $2,776 | $65,464 | | Crystal Lail | 19,968 | 2,110 | 33,000 | 9,171 | 64,249 | | Shannon Heim | 24,239 | 1,038 | 33,000 | 15,689 | 73,966 | | John Hines | 18,368 | 4,421 | 13,200 | 6,384 | 42,373 | | Bobbi Schroeppel | 25,969 | 3,497 | 36,300 | 20,763 | 86,529 |

  52. 2023 Grants of Plan-Based Awards

    2023 Grants of Plan-Based Awards The table below shows the range of each NEO’s annual and long-term incentive award opportunities granted for the fiscal year ended December 31, 2023. The narrative following the table describes the terms of each incentive award opportunity.

  53. 2023 Grants of Plan-Based Awards

    | Name | Grant Date | Estimated Future Payouts Under Non-equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards (1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards (2) ($) | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Brian Bird | | | | | | | | | | | Annual Cash Incentive | — | 400,000 | 800,000 | 1,200,000 | — | — | — | — | — | | LTIP Performance Units | 2/17/2023 | — | — | — | — | 20,052 | 40,104 | — | 1,119,974 | | LTIP Restricted Share Units | 2/17/2023 | — | — | — | — | 9,355 | 9,355 | — | 480,005 | | Crystal Lail | | | | | | | | | | | Annual Cash Incentive | — | 154,172 | 308,344 | 462,516 | — | — | — | — | — | | LTIP Performance Units | 2/17/2023 | — | — | — | — | 5,945 | 11,890 | — | 332,049 | | LTIP Restricted Share Units | 2/17/2023 | — | — | — | — | 2,774 | 2,774 | — | 142,334 | | Shannon Heim | | | | | | | | | | | Annual Cash Incentive | — | 78,750 | 157,500 | 236,250 | — | — | — | — | — | | LTIP Performance Units | 2/17/2023 | — | — | — | — | 2,851 | 5,702 | — | 159,238 | | LTIP Restricted Share Units | 2/17/2023 | — | — | — | — | 1,330 | 1,330 | — | 68,242 | | John Hines | | | | | | | | | | | Annual Cash Incentive | — | 66,077 | 132,153 | 198,230 | — | — | — | — | — | | LTIP Performance Units | 2/17/2023 | — | — | — | — | 2,377 | 4,754 | — | 132,764 | | LTIP Restricted Share Units | 2/17/2023 | — | — | — | — | 1,109 | 1,109 | — | 56,903 | | Bobbi Schroeppel | | | | | | | | | | | Annual Cash Incentive | — | 65,801 | 131,601 | 197,401 | — | — | — | — | — | | LTIP Performance Units | 2/17/2023 | — | — | — | — | 2,368 | 4,736 | — | 132,261 | | LTIP Restricted Share Units | 2/17/2023 | — | — | — | — | 1,104 | 1,104 | — | 56,646 |

  54. 2023 Grants of Plan-Based Awards

    (1) Reflects possible payout range of 2023 performance units and restricted share units awards. The performance units granted on February 17, 2023, have a weighted average grant date fair value of $55.85. The restricted share units granted on February 17, 2023, have a weighted average grant date fair value of $51.31. (2) These values reflect the grant date fair value of these awards as calculated utilizing the provisions of Accounting Standards Codification 718, Stock Compensation, and do not represent earned or paid compensation as the shares are subject to performance and vesting conditions. The values in the table above reflect grant date fair value assuming payment at target. See Note 15 to the consolidated financial statements in our 2023 Annual Report on Form 10-K for further information regarding assumptions underlying the valuation of equity awards. Non-equity Incentive Plan Awards Non-equity incentive plan compensation includes amounts earned under the NorthWestern Energy 2023 Annual Incentive Plan. Such amounts relate to 2023 performance and are actually paid in mid-March 2024. The Compensation Committee reviewed 2023 performance against plan targets and approved a plan payout of 77 percent, as discussed in the Compensation Discussion and Analysis—Pay Components—Annual Cash Incentive Awards section, starting on page 27 of this proxy statement. Equity Incentive Plan Awards As previously discussed in the Compensation Discussion and Analysis—Pay Components—Long-Term Performance-Based Equity Incentive Awards section in this proxy statement, the Board approved granting performance units and time-based restricted share units in 2023 under the Equity Compensation Plan. The values of the stock awards included in the table on the previous page reflect the grant date fair value of these awards as calculated utilizing the provisions of Accounting Standards Codification 718, Stock Compensation, and do not represent earned or paid compensation as the shares are subject to performance and vesting conditions. For the 2023 performance unit awards, the exact number of shares issued upon vesting will vary from zero to 200 percent of the target award, depending on actual Company performance relative to the performance goals. In addition, the value of a performance unit award (if earned) and a restricted share unit award on the vesting date, based on the fair market value of our stock on that future date, likely will differ from the value on the grant date, which is based on the fair market value of a share of our stock and, with respect to a performance unit award, is based on the target amount for such award. See Note 15 to the consolidated financial statements in our 2023 Annual Report on Form 10-K for further information regarding assumptions underlying the valuation of equity awards. Percentage of Salary Compared to Total Compensation For 2023, base salary for the NEOs accounted for approximately 25 to 44 percent of total direct compensation (i.e., salary plus targeted annual and long-term incentive compensation), while incentive compensation accounted for approximately 56 to 75 percent of total direct compensation, assuming achievement of a target level of performance for each NEO.

  55. 2023 Stock Vested

    2023 Stock Vested The table below shows the number of shares acquired and the dollar amounts realized during 2023 pursuant to the vesting of prior equity-based awards.

  56. 2023 Stock Vested

    | | Stock Awards | | | | | | | Name | Number of LTIP Shares Acquired on Vesting (#) (1) | Value Realized on LTIP Vesting ($) | Number of ERRP Shares Acquired on Vesting (#) (2) | Value Realized on ERRP Vesting ($) | Total Shares Acquired on Vesting (#) | Total Value Realized ($) | | Brian Bird | 3,810 | 193,869 | — | — | 3,810 | 193,869 | | Crystal Lail | 1,837 | 93,471 | — | — | 1,837 | 93,471 | | Shannon Heim | 218 | 11,084 | — | — | 218 | 11,084 | | John Hines | 903 | 45,959 | — | — | 903 | 45,959 | | Bobbi Schroeppel | 891 | 45,329 | — | — | 891 | 45,329 |

  57. 2023 Stock Vested

    (1) LTIP Shares vested consist of performance units for the 2021 – 2023 performance period that vested on December 31, 2023, at a performance level of 27.5 percent. We determined the value realized for the vesting of these shares using the fair market value of our common stock on the December 31, 2023, vesting date, which was $50.89. (2) The ERRP awards granted in 2018 did not vest because we did not satisfy the performance metric for the 2019 – 2023 performance period.

  58. Outstanding Equity Awards at 2023 Fiscal Year-End

    Outstanding Equity Awards at 2023 Fiscal Year-End The table below contains information regarding outstanding equity-based awards, including the potential dollar amounts realizable with respect to the awards for each NEO. Dividends are not paid or accrued on any unvested awards.

  59. Outstanding Equity Awards at 2023 Fiscal Year-End

    | | | | Stock Awards | | | | | | Type of Award | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested (1) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (1) | | Brian Bird | | | | | | | | | 2023 LTIP RSU(2) | 2/17/2023 | 9,355 | 476,076 | | | | | 2023 LTIP PSU(3) | 2/17/2023 | | | 20,052 | 1,020,446 | | | CEO RS Award | 12/13/2022 | 15,905 | 809,405 | | | | | 2022 ERRP(4) | 12/13/2022 | 4,927 | 250,735 | | | | | 2022 LTIP PSU(3) | 2/10/2022 | | | 13,563 | 690,221 | | | 2021 ERRP(4) | 12/14/2021 | | | 3,465 | 176,334 | | | 2020 ERRP(4) | 12/22/2020 | | | | | | | 2019 ERRP(5) | 12/18/2019 | | | 1,849 | 94,096 | | Crystal Lail | | | | | | | | | 2023 LTIP RSU(2) | 2/17/2023 | 2,774 | 141,169 | | | | | 2023 LTIP PSU(3) | 2/17/2023 | | | 5,945 | 302,541 | | | 2022 ERRP(4) | 12/13/2022 | 2,631 | 133,892 | | | | | 2022 LTIP PSU(3) | 2/10/2022 | | | 7,266 | 369,767 | | | 2021 ERRP(4) | 12/14/2021 | | | 2,166 | 110,228 | | | 2020 ERRP(4) | 12/22/2020 | | | | | | | 2019 ERRP(5) | 12/18/2019 | | | 638 | 32,468 | | Shannon Heim | | | | | | | | | 2023 LTIP RSU(2) | 2/17/2023 | 1,330 | 67,684 | | | | | 2023 LTIP PSU(3) | 2/17/2023 | | | 2,851 | 145,087 | | | 2022 LTIP PSU(3) | 2/10/2022 | | | 787 | 40,050 | | John Hines | | | | | | | | | 2023 LTIP RSU(2) | 2/17/2023 | 1,109 | 56,437 | | | | | 2023 LTIP PSU(3) | 2/17/2023 | | | 2,377 | 120,966 | | | 2022 ERRP(4) | 12/13/2022 | 1,344 | 68,396 | | | | | 2022 LTIP PSU(3) | 2/10/2022 | | | 3,263 | 166,054 | | | 2021 ERRP(4) | 12/14/2021 | | | 1,415 | 72,009 | | | 2020 ERRP(4) | 12/22/2020 | | | | | | | 2019 ERRP(5) | 12/18/2019 | | | 707 | 35,979 | | Bobbi Schroeppel | | | | | | | | | 2023 LTIP RSU(2) | 2/17/2023 | 1,104 | 56,183 | | | | | 2023 LTIP PSU(3) | 2/17/2023 | | | 2,368 | 120,508 | | | 2022 ERRP(4) | 12/13/2022 | 1339 | 68142 | | | | | 2022 LTIP PSU(3) | 2/10/2022 | | | 3,218 | 163,764 | | | 2021 ERRP(4) | 12/14/2021 | | | 1,395 | 70,992 | | | 2020 ERRP(4) | 12/22/2020 | | | | | | | 2019 ERRP(5) | 12/18/2019 | | | 710 | 36,132 |

  60. Outstanding Equity Awards at 2023 Fiscal Year-End

    (1) Values were calculated based on a $50.89 closing price of our common stock on December 29, 2023. (2) The 2023 LTIP restricted share unit awards do not have any performance criteria and will vest on December 31, 2025, subject to the recipient’s continued employment through such date. (3) The LTIP performance share units granted in February 2022 and 2023 will vest, if at all, on December 31, 2024 and 2025, respectively, subject to the satisfaction of the applicable performance and market criteria and generally subject to the recipient’s continued employment through such date. Based on performance through December 31, 2023, we are below target for payout of the 2022 and 2023 grants. As required by the SEC’s disclosure rules, the number of units and payout value shown for the 2022 grants and the 2023 grants assume a target level of performance (100 percent). (4) The performance-based restricted share units granted under the ERRP in December 2020 and 2021 will vest, if at all, on December 31, 2025 and 2026, respectively, subject to the satisfaction of the applicable performance criteria and generally subject to the recipient’s continued employment through such date. The 2022 ERRP award does not have any performance criteria and will vest on December 31, 2027, subject to the recipient’s continued employment through such date. (5) The 2019 ERRP awards will not meet the performance metrics associated with the awards and will not vest. However, such awards are presented in this table because they will not be forfeited until the Board takes formal action with respect to such awards following conclusion of the performance period.

  61. Equity Compensation Plan Change in Control Provision

    | 2023 Non-Employee Director Compensation Schedule | Cash ($) | Shares (#) | | New Member Initial Stock Grant | — | 1,000 | | Board Chair Annual Retainer (1) | 150,000 | 3,750 | | Board Member Annual Retainer | 50,000 | 2,750 | | Committee Chair Annual Retainer | 10,000 | — | | Committee Member Annual Retainer | 10,000 | — | | (1) The Board chair does not receive the Board Member annual cash and stock retainers. | | |

  62. Equity Compensation Plan Change in Control Provision

    | 2023 Director Pay |

  63. Equity Compensation Plan Change in Control Provision

    | | Fees Earned or Paid in Cash ($) | Stock Awards (1) ($) | Total ($) | | Dana Dykhouse, Board Chair | 150,000 | 222,525 | 372,525 | | Anthony Clark | 70,000 | 163,185 | 233,185 | | Sherina Edwards | 46,667 | 166,977 | 213,644 | | Jan Horsfall, Operations Chair | 80,000 | 163,185 | 243,185 | | Britt Ide | 70,000 | 163,185 | 233,185 | | Kent Larson | 70,000 | 163,185 | 233,185 | | Linda Sullivan, Audit Chair | 80,000 | 163,185 | 243,185 | | Mahvash Yazdi, Compensation Chair | 80,000 | 156,200 | 236,200 | | Jeffrey Yingling, Governance Chair | 80,000 | 156,200 | 236,200 |

  64. Compensation Actually Paid Table

    Compensation Actually Paid Table We are providing the following information about the relationship between executive compensation and certain measures of financial performance of our Company, as required by the SEC. However, the information does not necessarily align with how the Company or the Compensation Committee view the link between the Company's performance and the pay of its NEOs. The Compensation Discussion and Analysis, beginning on page 16, provides additional information about our pay-for-performance philosophy and how we align executive compensation with our performance. As described in more detail in our CD&A, the Company's annual incentive awards and a large portion of the long-term incentive awards that comprise a significant percentage of an executive's compensation are directly linked to performance. Payouts of these portions of an executive's compensation are placed at risk and require the accomplishment of specific results that are designed to benefit our shareholders and the Company, both in the long and short term. While the Company utilizes several performance measures to align executive compensation with Company performance, not all Company measures are presented in the compensation actually paid (CAP) table on the following page. Moreover, the Company generally seeks to incentivize long-term performance and therefore does not specifically align the Company's performance measures with compensation that is actually paid (as computed in accordance with SEC rules) for a particular year. The CAP table compares total compensation as reported in our Summary Compensation Table, that can be found on page 36, and CAP as determined in accordance with the calculations required by Item 402(v) of Regulation S-K for our principal executive officer (PEO) and the average of our other NEOs. As illustrated in the table, CAP was considerably less than the total compensation as calculated in the Summary Compensation Table. The CAP table also compares our compensation to our TSR, our peer group’s TSR, our net income, and our ROAE.

  65. Compensation Actually Paid Table

    | Year | Summary Compensation Table Total for PEO ($) (1) | Compensation Actually Paid to PEO ($) (1) (2) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers ($) (1) | Average Compensation Actually Paid to Non-PEO Named Executive Officers ($) (1) (2) | Value of Initial Fixed $100 Investment Based on | | Net Income ($ thousands) | Company Selected Measure (4) | SUPPLEMENTAL MEASURE: | | | | | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) (3) | | | 3-Year Return on Average Equity (4) | | 2023 | 3,110,602 | 2,386,099 | 886,745 | 720,910 | 84.56 | 92.96 | 194,131 | N/A | 7.7% | | 2022 | 3,375,572 | 2,901,778 | 1,472,753 | 1,398,178 | 94.09 | 98.79 | 212,600 | N/A | 7.4% | | 2021 | 3,445,367 | 1,956,479 | 1,116,582 | 813,050 | 86.70 | 97.40 | 186,840 | N/A | 8.5% | | 2020 | 3,102,048 | (436,483) | 985,536 | 454,150 | 84.94 | 82.86 | 155,215 | N/A | (12.9)% |

  66. Compensation Actually Paid Table

    (1) In 2023, Brian Bird was our PEO, and in all other years, Robert Rowe was our PEO. For 2023, our other NEOs were Crystal Lail, Shannon Heim, John Hines, and Bobbi Schroeppel. For 2022, our other NEOs were Brian Bird, Crystal Lail, Heather Grahame and Curtis Pohl. For 2021, our other NEOs were Brian Bird, Crystal Lail, Heather Grahame, Curtis Pohl and Bobbi Schroeppel. For 2020, our other NEOs were Brian Bird, Heather Grahame, Curtis Pohl and Bobbi Schroeppel. (2) The amounts shown for CAP have been calculated in accordance with SEC rules and do not reflect compensation actually earned, realized, or received by the Company's NEOs; instead, these amounts reflect the totals in the Summary Compensation Table with certain adjustments as described in the tables below. The following tables include the adjustments that were necessary to arrive at CAP for our PEO and non-NEOs during 2023, as represented in the CAP table above.

  67. Compensation Actually Paid Table

    | Adjustments to Determine CAP for PEO | 2023 | | Summary Compensation Table (SCT) Total | $3,110,602 | | Adjustments to arrive at CAP | | | Deduction for change in pension values reported in the SCT | $(34,619) | | Increase for "Service Cost" for Pension Plans | $11,907 | | Deduction for stock awards amounts reported in the SCT | $(1,600,063) | | Fair value of current year equity awards at year-end | $1,153,236 | | Change in value of prior years' awards unvested at year-end | $(449,141) | | Fair value of awards granted and vested in same year | $— | | Change in value of prior years' awards that vested during current year | $194,177 | | Deduction of value of prior years' awards that were forfeited during year | $— | | Dividends | $— | | Total adjustments | $(724,503) | | CAP Total | $2,386,099 | | Adjustments to Determine Average CAP for Non-PEO NEOs | 2023 | | Summary Compensation Table (SCT) Total | $886,745 | | Adjustments to arrive at CAP | | | Deduction for change in pension values reported in the SCT | $(45,194) | | Increase for "Service Cost" for Pension Plans | $14,984 | | Deduction for stock awards amounts reported in the SCT | $(270,122) | | Fair value of current year equity awards at year-end | $205,328 | | Change in value of prior years' awards unvested at year-end | $(97,899) | | Fair value of awards granted and vested in same year | $— | | Change in value of prior years' awards that vested during current year | $27,068 | | Deduction of value of prior years' awards that were forfeited during year | $— | | Dividends | $— | | Total adjustments | $(165,835) | | CAP Total | $720,910 |

  68. Compensation Actually Paid Table

    (3) See page 19 for a listing of our peer group. (4) Net income is the only single-year financial measure we use to link CAP to our NEOs for the most recently completed fiscal year. We use several multi-year performance measures as listed in the Most Important Performance Measures table on page 48. We have supplemented the information provided in the CAP table with one of these multi-year measures — ROAE over a three-year period.

  69. Nasdaq Director Diversity Disclosure

    Nasdaq Director Diversity Disclosure Nasdaq Board Diversity Rules Nasdaq Rule 5605 requires each Nasdaq-listed company to either have a diverse board or explain why it does not. To be a diverse board, Rule 5605 requires the board to have two “diverse” directors by the time of the Company’s annual meeting in 2025. Nasdaq Rule 5606 requires each Nasdaq-listed company to disclose its board diversity on an annual basis pursuant to a template Nasdaq has provided for such disclosure that may not be modified by the Company. Although Rule 5606 mandates a specific template for the form of required disclosure, it also allows a company to provide additional diversity disclosure. Nasdaq Diversity Nasdaq opted to follow the United States Census Bureau’s classifications of underrepresented demographics to define diversity. While Nasdaq’s use of a common standard for diversity likely will lead to uniform disclosures, we believe the classifications neglect various underrepresented minorities in the United States. To be “diverse,” Rule 5605 requires (a) at least one director who self identifies as female, and (b) at least one other director who self-identifies as an underrepresented demographic. The underrepresented demographics include: African American or Black; Alaskan Native or Native American; Asian; Hispanic or Latinx; Native Hawaiian or Pacific Islander; LGBTQ+; and anyone identifying with two or more demographics. We agree with these classifications. However, Nasdaq’s White classification (which is not an underrepresented demographic) includes a person having origins in the Middle East or North Africa. While the Nasdaq and the U.S. Census Bureau do not include Middle Eastern or North African individuals as an underrepresented demographic, other classification systems do. Based on the Nasdaq Rule 5605, our current Board includes four directors who self-identify as females and one who is African American or Black. Thus, as shown in the diversity matrix below, we meet the Rule’s diversity requirement of two diverse directors. Nasdaq Rule 5606 Disclosure Concerning Current Directors

  70. Nasdaq Director Diversity Disclosure

    | NorthWestern Energy Group, Inc., Board Diversity Matrix (as of March 8, 2024) | | | | | | Total Number of Directors | 10 | | | | | Part I: Gender Identity | Female | Male | Non-Binary | Did Not Disclose Gender | | Directors | 4 | 6 | 0 | 0 | | Part II: Demographic Background | | | | | | African American or Black | 1 | 0 | 0 | 0 | | Alaskan Native or Native American | 0 | 0 | 0 | 0 | | Asian | 0 | 0 | 0 | 0 | | Hispanic or Latinx | 0 | 0 | 0 | 0 | | Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 | | White | 3 | 6 | 0 | 0 | | Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | | LGBTQ+ | 0 | | | | | Did not disclose Demographic Background | 0 | | | |

  71. Nasdaq Director Diversity Disclosure

    Director Nominees Our nine director nominees currently serve on our Board and have been nominated for election to a one-year term on our Board. The biographies of these individuals follow.

  72. Nasdaq Director Diversity Disclosure

    | Brian Bird Director since 2023 Age 61 | | | President and Chief Executive Officer, NorthWestern Energy | | | Biography: Mr. Bird is the President and Chief Executive Officer of NorthWestern Energy (since January 2023). Prior to that he served as NorthWestern’s President and Chief Operating Officer (February 2021 to December 2022) and Chief Financial Officer (December 2003 to February 2021). Mr. Bird is a member of the Board of Directors of Energy Insurance Mutual Limited (since January 2023), a provider of insurance and risk management services to utilities and the energy services industry. He also shares his leadership and financial experience as a member of the Board of Directors for Feeding South Dakota (Treasurer), Sioux Empire United Way (2021 Campaign Chair), North Central Electric Association (Past President), and University of Idaho Utility Executive Course. Previously, he served on the Federal Reserve Board 9th District Advisory Council. Why have we nominated Mr. Bird? Our Board concluded that Mr. Bird is qualified to serve as a Board member because of his extensive experience with our Company over the past twenty years in three, high-profile leadership positions, including President and Chief Executive Officer, President and Chief Operating Officer, and Chief Financial Officer. While at NorthWestern he has led our finance function, our utility operations, and our enterprise risk management function. He also lives in our service territory, providing a personal understanding of issues facing our customers and communities. In addition, his leadership roles at the Company demonstrate expertise in public utility regulatory matters and technology and security issues and proficiencies in human capital management and innovation and transformation. | | | | Skill Highlights: Financial Executive Utility Operations Regulatory and Public Policy Risk Management / Oversight Technology and Security Customers and Communities Non-Independent Director NorthWestern Committees: None Other Public Boards: None |

  73. Nasdaq Director Diversity Disclosure

    | Anthony Clark Director since 2016 Age 52 | | | Senior Advisor, Wilkinson Barker; former Commissioner, FERC and NDPSC | | | Biography: Mr. Clark is a Senior Advisor with Wilkinson Barker Knauer, LLP (since 2016), a law firm providing advice and representation over a range of industries including energy, emerging technologies, media, and telecommunications. Prior to that he had a distinguished career as a public servant, serving as a Commissioner with the Federal Energy Regulatory Commission (2012-16) and a Commissioner with the North Dakota Public Service Commission (2001-12, including five years as its Chair). While serving as a Commissioner in North Dakota, Mr. Clark was an active member of the National Association of Regulatory Utility Commissioners (NARUC), serving as its President and in other prominent NARUC roles. Why have we nominated Mr. Clark? Our Board concluded that Mr. Clark is qualified to serve as a Board member because of his 15+ years of experience as a federal and state utility regulator. He has in-depth knowledge of the regulatory, public policy and market dynamics that impact current and future opportunities for electric and natural gas utilities. His extensive experience at the nexus of complex federal and state jurisdictional issues, including the development of electricity markets, market oversight and enforcement and permitting of large energy infrastructure projects is important for our Company. In addition, as a former resident in and adjacent to our South Dakota service territory, he brings a personal understanding of issues facing our customers and communities. | | | | Skill Highlights Utility Operations Regulatory and Public Policy Independent Director NorthWestern Committees Compensation, Governance Other Public Boards None |

  74. Nasdaq Director Diversity Disclosure

    | | Sherina Edwards Director since 2023 Age 40 | | | Former Chief Strategy Officer, MasTec, Inc. | | | Biography: Ms. Edwards is the former Chief Strategy Officer for MasTec (NYSE: MTZ), a Fortune 500 utility infrastructure company (2022). She previously served as President and Chief Executive Officer of INTREN, a subsidiary of MasTec (2020-21). Prior to that, her utility regulatory background includes positions as an energy and utilities regulatory partner at the Quarles & Brady law firm (2018-20) and as a Commissioner on the Illinois Commerce Commission (2013-17). In 2016, she was appointed by President Barack Obama and U.S. Secretary of Transportation Anthony Foxx as Co-Chair of the U.S. Department of Transportation’s Voluntary Information-Sharing System Working Group, where she provided recommendations on the protection of proprietary and security-sensitive information. Ms. Edwards is on the board of directors of (a) Midland States Bancorp, Inc. (Nasdaq; MSBI) a community-based financial holding company headquartered in Effingham, Illinois, and the sole shareholder of Midland States Bank, serving on its risk and trust committees; and (b) SouthWest Water Company, an American-owned regulated water and wastewater utility serving over half a million residential and business customers in seven states (AL, CA, FL, LA, OR, SC, and TX). Why have we nominated Ms. Edwards? Our Board concluded that Ms. Edwards is qualified to serve as a Board member because of her utility regulatory expertise and her leadership regarding innovation and transformation. Her experience as a state regulatory commissioner and a lawyer concerning state and federal regulatory strategies and innovation will help our Board oversee our regulatory relationships, and her leadership driving change as a chief strategy officer will help us evolve with our industry. In addition, through her career, she has developed proficiencies in the areas of utility operations, human capital management, and technology and security. | | Skill Highlights Regulatory and Public Policy Innovation and Transformation Independent Director NorthWestern Committees Compensation, Governance Other Public Boards Midland States Bancorp, Inc. | |

  75. Nasdaq Director Diversity Disclosure

    | | Jan Horsfall Director since 2015 Age 63 | | | Chief Operations Officer at Sparq, Inc. | | | Biography: Mr. Horsfall is the Chief Executive Officer at Sparq, Inc., a sports-centric, artificial intelligence (AI) enabled game publisher which enables college athletes and universitiesto benefit from the latest name, image, likeness (NIL) policy now governing college sports. He also is the Managing Partner (since 2019) of Red Surfboard, LLC, a business consultant practice focused on the sports, energy, agriculture, and consumer technology sectors. He also founded VoterVac (since 2015), an active marketing agency that takes a consumer-packaged goods, direct-response approach to targeting political voters. He sits on the board of advisors for Huvr, Inc., a virtual marketplace and technology platform connecting travelers from around the world to local geographic experts in global destinations real time. Why have we nominated Mr. Horsfall? Our Board concluded that Mr. Horsfall is qualified to serve as a Board member because of his expertise in the areas of technology and security, innovation and transformation, and customers and communities. The expertise he has developed over his career brings an entrepreneurial intellect to our Board and an intense understanding of leading edge technology and innovation in the energy and other sectors. Mr. Horsfall bolstered his understanding of technology and security issues by obtaining a CERT Certificate in Cybersecurity Oversight (issued by the CERT Division of the Software Engineering Institute at Carnegie Mellon University) in 2017 and attending the MIT Sloan + CSAIL Artificial Intelligence: Implications for Business Strategy Program. His marketing background (current roles at Red Surfboard and VoterVac and prior prominent marketing roles at Universal Lubricants, Lycos, and Valvoline) provides valuable insights for our interactions with the customers and communities we serve. In addition, Mr. Horsfall is financially literate under Nasdaq rules and has a developed proficiency in risk management and oversight. | | Skill Highlights Technology and Security Innovation and Transformation Customers and Communities Independent Director NorthWestern Committees Audit, Operations (Chair) Other Public Boards None | |

  76. Nasdaq Director Diversity Disclosure

    | Britt Ide Director since 2017 Age 52 | | | Chief Executive Officer, Ide Energy & Strategy | | | Biography: Ms. Ide is the Chief Executive Officer of Ide Energy & Strategy (since 2011), an energy and strategy consulting company. Previously she served as the interim Chief Executive Officer of the Big Sky Chamber of Commerce (2016) and Senior Counsel at Idaho Power Company. She is the lead independent director of the Board of Directors of Nxu, Inc. (Nasdaq: NXU, formerly Atlis Motor vehicles) (since 2021), an electric vehicle battery and charging innovator, and on the Board of Directors of TechnoSylva, a private equity backed software company helping utilities and fire agencies with wildfire prediction and risk analysis. She previously served (2021-22) as a director of the CleanTech Acquisition Corporation (formerly Nasdaq: CLAQ) (until its merger with Nauticus Robotics, Inc., in September of 2022) and the Big Sky Chamber of Commerce. She was appointed to Montana’s Clean Power Plan advisory council and as an ambassador for the Clean Energy Education & Empowerment Initiative, a U.S. Dept. of Energy, Massachusetts Institute of Technology and Stanford University collaboration. Why have we nominated Ms. Ide? Our Board concluded that Ms. Ide is qualified to serve as a Board member because of her experience and insight as a strategic consultant in the utility and energy industry and her involvement with related innovative and developing technologies. She is experienced in risk management and oversight (particularly ESG matters) and how companies integrate sustainability into their strategies and a national speaker on matters including how corporations balance climate solutions with business requirements. As a resident of our service territory, she also brings a local perspective on relevant regulatory, political, and community issues. In addition, she has demonstrated proficiency in the areas of utility operations and regulatory and public policy matters. | | | | Skill Highlights Risk Management / Oversight Innovation and Transformation Customers and Communities Independent Director NorthWestern Committees Compensation, Governance Other Public Boards Nxu, Inc. |

  77. Nasdaq Director Diversity Disclosure

    | Kent Larson Director since 2022 Age 64 | | | Retired Executive Vice President and Group President, Xcel Energy, Inc. | | | Biography: In 2020, Mr. Larson concluded a 38-year career with Xcel Energy, Inc., an electric and natural gas utility holding company, retiring as its Executive Vice President and Group President, following a series of progressive leadership roles with the company. He directed overall operations for Xcel Energy, including overseeing $45 billion of assets, a $5 billion annual capital budget, $3.5 billion annual operating and fuel budget, and 8,000 employees, as well as providing strategic direction and leadership to the company’s generation, transmission, distribution, gas, energy trading and supply chain businesses. He currently serves on the board of directors of Adolfson & Peterson Construction Company, a construction company, and Quanta Services West, a utility construction company and subsidiary of Quanta Services. He previously served on the board of directors of Regions Hospital, a hospital based in St. Paul, Minnesota, providing specialty care across the Twin Cities and western Wisconsin. Why have we nominated Mr. Larson? Our Board concluded that Mr. Larson is qualified to serve as a Board member because of his expertise and extensive career leading all facets of utility operations for Xcel Energy. Due to his experience, he possesses a keen understanding of the risks facing utilities and how to oversee, manage, and mitigate those risks, and he was responsible for interfacing with Xcel Energy’s communities, including South Dakota. His involvement in all areas of the operations of a large utility has developed proficiencies in the areas of finance, regulatory and public policy, human capital management, technology and security, and innovation and transformation. | | | | Skill Highlights Utility Operations Risk Management / Oversight Customers and Communities Independent Director NorthWestern Committees Audit, Operations Other Public Boards None |

  78. Nasdaq Director Diversity Disclosure

    | | Linda Sullivan Director since 2017 Age 60 | | | Retired Executive Vice President and Chief Financial Officer of American Water | | | Biography: Ms. Sullivan is the retired Executive Vice President and Chief Financial Officer (CFO) of American Water Works Company, Inc., the largest publicly traded U.S. water and wastewater utility company (2014-19). There, she also led operational responsibilities for technology, cyber and physical security, supply chain, research and development, and environmental compliance. Prior to that, Ms. Sullivan served in progressive leadership roles at the Edison International Companies for 22 years, ascending to Senior Vice President and CFO of Southern California Edison (2009-14). Early in her career, she was a Senior Auditor with Arthur Andersen, LLP. Ms. Sullivan has been a Certified Public Accountant since 1991 (inactive) and a Certified Management Accountant since 1995. Ms. Sullivan is a member of the Board of Directors of PPL Corporation, a regulated energy company (NYSE: PPL), serving on its finance and audit committees (since January 2023) and AltaGas Ltd., a North American energy infrastructure business (TSE: ALA), serving on its audit (chair since March 2022) and human resources and compensation committees. She previously served on the Financial Advisory Board of the U.S. Environmental Protection Agency and other non-profit boards supporting underserved communities. Why have we nominated Ms. Sullivan? Our Board concluded that Ms. Sullivan is qualified to serve as a Board member because of her experience as a financial executive, extensive expertise in the utility industry, and expertise with technology, cyber security and risk management oversight. Through her experience as an external auditor of utilities and progressive leadership roles (including chief financial officer) for utilities, she has developed expertise in financial reporting, internal controls, and capital structure, as well as risk management and oversight. Her experience also led to an intimate understanding of utility operations. She is an audit committee financial expert under SEC standards and financially literate under Nasdaq rules. Her career has led to proficiencies in matters concerning regulatory and public policy, human capital management, technology and security, innovation and transformation, and customers and communities. | | Skill Highlights Financial Executive Utility Operations Risk Management / Oversight Technology and Security Independent Director NorthWestern Committees Audit (Chair), Operations Other Public Boards AltaGas, Ltd. PPL Corporation | |

  79. Nasdaq Director Diversity Disclosure

    | | Mahvash Yazdi Director since 2019 Age 72 | | | President, Feasible Management Consulting | | | Biography: Ms. Yazdi is the President of Feasible Management Consulting, specializing in strategic consulting within the utility/power, telecommunications, electric transportation/mobility, and renewable energy industries (since 2012). She is the former Senior Vice President and Chief Information Officer (1997-2012) of Edison International and Southern California Edison. Ms. Yazdi is on the board of Anterix, Inc. (Nasdaq: ATEX), a leading wireless telecommunications company, and chairs its compensation committee. She is the Chair of the Energy Advisory Board for Prologis (NYSE: PLD), helping one of the world’s largest logistic companies navigate new ventures in renewable energy, mobility, and sustainability. She also is a member of the Advisory Board of Infosys Corporation and serves in a strategic advisory role for Energy Capital Ventures. Why have we nominated Ms. Yazdi? Our Board concluded that Ms. Yazdi is qualified to serve as a Board member because of her executive experience with a large public utility and expertise in the areas of human capital management, technology and security, and innovation and transformation. As a nationally recognized former chief information officer, she possesses cyber security expertise with extensive experience leading transformation and technology implementation, such as smart meter and smart grid programs. In the utility/power industry, she was charged with setting strategies and leading people to achieve greater growth, efficiency and performance. In addition, through her accomplished career, she has developed proficiencies in the areas of regulatory and public policy and risk management and oversight. | | Skill Highlights Utility Operations Human Capital Management Technology and Security Innovation and Transformation Independent Director NorthWestern Committees Compensation (Chair), Operations Other Public Boards Anterix, Inc. | |

  80. Nasdaq Director Diversity Disclosure

    | Jeffrey Yingling Director since 2019 Age 64 | | | Co-Founder, General Partner, Energy Capital Ventures | | | Biography: Mr. Yingling is a Co-Founder and General Partner of Energy Capital Ventures, a strategic venture fund formed to invest in early stage energy companies (since 2020). Immediately prior to forming this fund, Mr. Yingling concluded an investment banking career with over 30 years involved in the power and utility sector. Most recently, he served as Senior Advisor in Investment Banking at Guggenheim Securities, specializing in power, energy and renewables (2017-20). Prior to that, he held various roles at J.P. Morgan Securities, including as Managing Director and Head of Midwest Investment Banking, and at Morgan Stanley, Dean Witter Reynolds, and The First Boston Corporation. Mr. Yingling is a member of the board of directors of LendingPoint Consolidated, Inc., a data and technology platform that originates unsecured personal loans both direct to consumer online and at the point of sale . He previously served on the board of directors of Navigant Consulting, Inc. (formerly NYSE: NCI) (2018-19), before it was acquired by another company. Why have we nominated Mr. Yingling? Our Board concluded that Mr. Yingling is qualified to serve as a Board member because of his 35+ years of financial, managerial, and strategy experience acquired from senior executive and management-level positions at leading international financial institutions and in the professional service sector, particularly with respect to the power and energy industry. He is an audit committee financial expert under SEC standards and financially literate under Nasdaq rules. Mr. Yingling’s investment banking career and current position with Energy Capital Ventures has also provided him with expertise with respect to innovations and transformations occurring within the utility industry and managing the associated risks, as well as a developed proficiency concerning technology issues. | | | | Skill Highlights Financial Executive Risk Management / Oversight Innovation and Transformation Independent Director NorthWestern Committees Audit, Governance (Chair) Other Public Boards None |

  81. Nasdaq Director Diversity Disclosure

    Director Succession Planning Our Governance Committee leads the Board through a director succession planning process. It initiated the process to allow for a smooth and gradual transition from our directors who were nearing 15 years of service to new directors with the right skills for our Company’s future, while preserving the culture of the Board. The process includes an ongoing review of the individual skill sets of current members and consideration of additional skills that could be beneficial for the Board in the future, with a particular focus on the Company’s strategy and emerging risks. The Governance Committee also reviews the tenure of each existing Board member and discusses potential timing for inviting new members to join the Board. The director succession planning process has proved beneficial with the retirement of nine directors since April 2016. This process has allowed us to gradually refresh each of our independent directors in an orderly manner. The Governance Committee reviews the director succession planning process periodically to meet the Board’s and the Company’s ongoing needs.

  82. Future Shareholder Proposals and Director Nominations

    | Audit Committee | Audit, Finance, and Risk Committee | | Board | Board of Directors of NorthWestern Energy Group, Inc. | | CAP | Compensation actually paid, as determined in accordance with the calculations required by Item 402(v) of Regulation S-K | | CD&A | Compensation Discussion and Analysis | | CEO or PEO | Chief Executive Officer | | CFO | Chief Financial Officer | | COBRA | Consolidated Omnibus Budget Reconciliation Act | | Code of Conduct | Code of Conduct and Ethics | | Company | NorthWestern Energy Group, Inc., d/b/a NorthWestern Energy | | Compensation Committee | Human Resources Committee | | Deloitte | Deloitte & Touche LLP | | Director Deferred Plan | NorthWestern Energy Group, Inc. Deferred Compensation Plan for Non-Employee Directors | | DSU | Deferred share unit; a unit of Company common stock held in an individual’s deferred compensation account that cannot be sold or transferred until such individual departs the Company, subject to certain conditions | | Equity Compensation Plan or Plan | NorthWestern Energy Group, Inc., Amended and Restated Equity Compensation Plan | | EPS | Earnings per share | | ERM | Enterprise Risk Management and Business Continuity Programs | | ERRP | Executive Retention / Retirement Program | | ESG | Environmental, social, and governance | | Exchange Act | Securities and Exchange Act of 1934, as amended | | Executive Officer | The Named Executive Officers and other executives responsible for Company policy, strategy and operations. For 2023, there were ten executive officers serving on our executive team. | | Governance Committee | Nominating and Governance Committee | | Key Employee Severance Plan | NorthWestern Corporation Key Employee Severance Plan, effective Oct. 19, 2016 | | LTIP | Long-Term Incentive Program | | NACD | National Association of Corporate Directors | | Named Executive Officer or NEO | Anyone who served as CEO or CFO during 2023, and the three other most highly compensated individuals, other than the CEO and CFO, who were serving as executive officers at the end of 2023. Our named executive officers for 2023 are identified in the Compensation Discussion and Analysis section of this proxy statement. | | Nasdaq | The Nasdaq Stock Market LLC | | NorthWestern, NorthWestern Energy, our, us, or we | NorthWestern Energy Group, Inc. | | NYSE | New York Stock Exchange | | Officer Deferred Plan | NorthWestern Corporation 2009 Officer Deferred Compensation Plan | | Operations Committee | Safety, Environmental, Technology and Operations Committee | | OSHA | Occupational Safety and Health Administration | | PCAOB | Public Company Accounting Oversight Board | | Record Date | February 26, 2024 | | ROAE | Return on average equity | | SAIDI | System Average Interruption Duration Index | | SEC | Securities and Exchange Commission | | TSR | Total shareholder return | | WTW | The Compensation Committee’s independent compensation consultant |