Securities Ownership of Certain Beneficial Owners
|
The
following table provides information as to persons who are known to us to beneficially own more than five percent of the common shares of Eversource Energy. We do not have any
other class of voting securities.
|
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percent of Class
|
|
|
|
|
|
|
|
|
|
|
|
The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, Pennsylvania 19355
|
|
|
32,046,699
|
(1)
|
|
10.11%
|
(1)
|
|
BlackRock, Inc.
55 East 52nd Street
New York, New York 10055
|
|
|
23,471,142
|
(2)
|
|
7.4%
|
(2)
|
|
The Bank of New York Mellon Corporation
225 Liberty Street
New York, NY 10286
|
|
|
18,020,954
|
(3)
|
|
5.69%
|
(3)
|
|
State Street Corporation
State Street Financial Center
One Lincoln Street
Boston MA 02111
|
|
|
15,912,698
|
(4)
|
|
5.02%
|
(4)
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Based
solely on a Schedule 13G/A filed with the SEC on March 10, 2017, reporting that as of February 28, 2017, The Vanguard Group, Inc.
had the sole power to vote or direct the vote of 544,381 common shares, the shared power to vote or direct the vote of 133,908 common shares, the sole power to dispose of or to direct the disposition
of 31,418,181 common shares, and the shared power to dispose of or to direct the disposition of 628,518 common shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard
Group, Inc., is the beneficial owner of 410,580 common shares as investment manager of collective trust accounts, and directs the voting of these shares. Vanguard Investments
Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 351,631 common shares as investment manager of Australian investment offerings.
-
(2)
-
Based
solely on a Schedule 13G/A filed with the SEC on January 23, 2017, reporting that as of December 31, 2016, BlackRock, Inc. and
certain subsidiaries beneficially owned and had the sole power to dispose or direct the disposition of all of these common shares, and the sole power to vote or direct the vote of 20,629,386 of these
common shares.
-
(3)
-
Based
solely on a Schedule 13G filed with the SEC on February 3, 2017, reporting that as of December 31, 2016, The Bank of New York Mellon
Corporation had the sole power to vote or direct the vote of 16,539,461 common shares, the sole power to dispose of or to direct the disposition of 17,990,243 common shares, the shared power to vote
or direct the vote of 3,142 common shares, and the shared power to dispose of or to direct the disposition of 5,507 common shares. The Bank of New York Mellon Corporation Schedule 13G also
states that MBC Investments Corporation is the beneficial owner of 16,053,234 common shares (5.07% beneficial ownership), with sole voting power with respect to 13,687,596 common shares and sole
dispositive power with respect to 16,053,234 common shares.
-
(4)
-
Based
solely on a Schedule 13G filed with the SEC on February 6, 2017, reporting that as of December 31, 2016, State Street Corporation and
certain subsidiaries beneficially owned and had the shared power to dispose or direct the disposition of all of these common shares, and the shared power to vote or direct the vote of 15,912,698 of
these common shares.
32
2017 Proxy Statement
Table of Contents
Common Share Ownership of Trustees and Management
|
The
table below shows the number of our common shares beneficially owned as of March 2, 2017, by each of our Trustees and each 2016 Named Executive Officer currently employed
by us, as well as the number of common shares beneficially owned by all of our Trustees and executive officers as a group. The table also includes information about restricted share units and deferred
shares credited to the accounts of our Trustees and executive officers under certain compensation and benefit plans. The address for the shareholders listed below is c/o Eversource Energy, 300 Cadwell
Drive, Springfield, Massachusetts 01104.
|
|
|
|
|
|
Name of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
(1)
(2)
|
|
Percent of
Class
|
|
|
|
|
|
|
Gregory B. Butler
|
|
|
75,676
|
(3)
|
*
|
John S. Clarkeson
|
|
|
12,692
|
|
*
|
Cotton M. Cleveland
|
|
|
60,981
|
|
*
|
Sanford Cloud, Jr.
|
|
|
48,318
|
(4)
|
*
|
James S. DiStasio
|
|
|
21,849
|
|
*
|
Francis A. Doyle
|
|
|
18,917
|
(5)
|
*
|
Charles K. Gifford
|
|
|
68,322
|
|
*
|
James J. Judge
|
|
|
217,490
|
(3)
|
*
|
Paul A. La Camera
|
|
|
53,449
|
|
*
|
Kenneth R. Leibler
|
|
|
32,924
|
|
*
|
Philip J. Lembo
|
|
|
29,364
|
(3)
(6)
|
*
|
Thomas J. May
|
|
|
278,874
|
(3)
(7)
|
*
|
Leon J. Olivier
|
|
|
125,923
|
(3)
|
*
|
Werner J. Schweiger
|
|
|
400,218
|
(3)
(8)
|
*
|
William C. Van Faasen
|
|
|
44,738
|
|
*
|
Frederica M. Williams
|
|
|
15,340
|
|
*
|
Dennis R. Wraase
|
|
|
27,652
|
(9)
|
*
|
All Trustees and Executive Officers as a group (20 persons)
|
|
|
1,689,179
|
(10)
|
*
|
|
|
|
|
|
|
-
*
-
Less
than 1% of Eversource Energy common shares outstanding.
-
(1)
-
The
persons named in the table have sole voting and investment power with respect to all shares beneficially owned by each of them, except as noted below.
-
(2)
-
Includes
restricted share units, deferred restricted share units and/or deferred shares, including dividend equivalents, as to which none of the individuals has
voting or investment power held by trustees and executive officers, as follows: Mr. Butler: 17,084; Mr. Clarkeson: 12,692 shares; Ms. Cleveland: 53,842 shares; Mr. Cloud:
31,718 shares; Mr. DiStasio: 21,849 shares; Mr. Doyle: 12,692 shares; Mr. Gifford: 60,669 shares; Mr. Judge: 145,140; Mr. La Camera: 53,449 shares;
Mr. Leibler: 12,692 shares; Mr. Lembo: 17,165; Mr. May: 3,611 shares; Mr. Olivier: 28,868 shares; Mr. Schweiger: 349,611 shares; Mr. Van Faasen: 43,279
shares; Ms. Williams: 13,881 shares; and Mr. Wraase: 23,652 shares.
-
(3)
-
Includes
common shares held as units in the 401k Plan invested in the Eversource Energy Common Shares Fund over which the holder has sole voting and investment power
(Mr. Butler: 5,458; Mr. Judge: 24,518 shares; Mr. Lembo: 2,548; Mr. May: 71,077 shares; Mr. Olivier: 4,159 shares; and Mr. Schweiger: 9,881 shares).
-
(4)
-
Includes
8,200 common shares held by Mr. Cloud's spouse. Mr. Cloud disclaims beneficial ownership of the common shares held by his spouse.
-
(5)
-
Includes
333 common shares held by Mr. Doyle's spouse. Mr. Doyle disclaims beneficial ownership of the common shares held by his spouse.
-
(6)
-
Includes
397 common shares held by Mr. Lembo in a custodial account for a minor child over which Mr. Lembo has sole voting and investment power.
-
(7)
-
Includes
1,842 common shares held by a family limited liability company over which Mr. May has no voting or investment power.
-
(8)
-
Includes
124,640 common shares issuable upon exercise of outstanding stock options exercisable within the 60-day period after March 2, 2017.
-
(9)
-
Includes
4,000 common shares owned jointly by Mr. Wraase and his spouse with whom he shares voting and investment power.
-
(10)
-
Includes
124,640 common shares issuable upon exercise of outstanding stock options exercisable within the 60-day period after March 2, 2017, and 984,819
unissued common shares. See note 2.
2017 Proxy Statement
33
Table of Contents
Section 16(a) Beneficial Ownership Reporting Compliance
|
Section 16(a) of the Securities Exchange Act of 1934 requires the Trustees and executive officers of Eversource Energy and persons who beneficially own
more than ten percent of the outstanding common shares of Eversource to file reports of ownership and changes in ownership with the SEC and the NYSE. We assist our Trustees and executive officers by
monitoring transactions and completing and filing Section 16 reports
on
their behalf. Based on such reports and the written representations of our Trustees and executive officers, we believe that for the year ended December 31, 2016, all such reporting
requirements were complied with in a timely manner, except that a single Uniform Gift to Minors Act account held by Mr. Lembo was inadvertently not included in his May 2016 Form 3.
34
2017 Proxy Statement
Table of Contents
Compensation Discussion and Analysis
|
This
Compensation Discussion and Analysis (CD&A) provides information about the principles behind our compensation objectives, plans, policies and actions for our Named Executive Officers. The
discussion describes the specific components of our compensation program, how Eversource Energy measures performance, and how our compensation principles were applied to compensation awards and
decisions that were made by the Compensation Committee for our Named Executive Officers, as presented in the tables and narratives that
follow.
While this discussion focuses primarily on 2016 information, it also addresses decisions that were made in other periods to the extent that these decisions are relevant to the full
understanding of our compensation program and the specific awards that were made for performance in 2016. The CD&A also contains a summary of 2016 performance, an assessment of the performance and the
compensation awards made by the Compensation Committee, and other information relating to our compensation program, including:
|
|
|
|
|
|
|
Description of our Long-Term Incentive Program, Grants and Performance Plan Results
|
|
|
|
Disclosure of our:
|
|
|
|
o
Clawback and No Hedging and No Pledging Policies
|
|
|
|
o
Share Ownership Guidelines
|
|
|
|
o
Other Benefits
|
|
|
|
Contractual Agreements
|
|
|
|
Tax and Accounting Considerations
|
|
|
|
Equity Grant Practices
|
Summary of 2016 Performance
|
In
2016, we achieved very positive overall financial results and solid operational performance results. The following is a summary of some of our most important accomplishments in
2016:
Financial Accomplishments
-
-
Our 2016 earnings were $2.96 per share, a 5.3% increase over 2015 results.
-
-
Our total shareholder return in 2016 was 11.6%, and over the longer term, our stock performance continues to outperform the industry. This
marks the seventh time in eight years that Eversource has achieved a double-digit total shareholder return. Only four other companies within the Edison Electric Institute (EEI) index of 44 utility
companies have achieved this level of return.
-
-
We increased our 2016 dividend to $1.78 per share, a 6.6% increase over 2015, continuing to significantly outperform the EEI Index companies.
-
-
We maintained our Standard & Poor's (S&P) Credit Rating of "A" and our outlook was raised by S&P and Fitch from Stable to Positive; our
S&P A Credit Rating remains the highest holding company credit rating in the industry.
-
-
We continued to successfully achieve operations and maintenance expense reductions in 2016, and our total operations and maintenance expenses
were $8 million under target.
2017 Proxy Statement
35
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
Earnings
Growth
2014 - 2016 recurring earnings per share have grown 5.7% on average, consistent with our long-term earnings
guidance and above the utility industry average. A reconciliation between reported earnings per share and the recurring earnings per share presented below appears under the caption entitled
"Management's Discussion and Analysis of Financial Condition and Results of Operations Overview" in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2016. Recurring earnings per share presented below for 2014 and 2015 exclude merger-related costs.
Dividend
Growth
As a result of our strong earnings growth, the Board of Trustees increased the annual dividend rate by 6.6% for 2016 to $1.78
per share, exceeding the EEI Index companies' median dividend growth rate of 3.8%. The dividend growth rate for the period 2014 - 2016 has averaged 6.5%, greater than our earnings per
share growth and well ahead of the utility industry average.
Total
Shareholder Return
Our Total Shareholder Return in 2016 was 11.6%, in line with the S&P 500. We outperformed the EEI Index
companies over the five-year period. An investment of $1,000 in our common shares at the beginning of the five-year period beginning January 1, 2012 was worth $1,679 on December 31,
2016. The following charts represent the
comparative
one- and five-year total shareholder returns for the periods ending December 31, 2016, respectively:
Operational Accomplishments
-
-
Our overall electric system reliability performance in 2016 was towards the top of the industry second quartile, though behind targeted
performance due to the significantly higher number of storm events. We experienced nearly double the number of storm events as compared with prior years.
-
-
NSTAR Electric Company, NSTAR Gas Company and Western Massachusetts Electric Company each met or exceeded Service Quality Index performance
targets established by regulators in Massachusetts, which is the only state in our service territory that has such performance targets.
-
-
We exceeded our established targets in safety performance and response to gas service calls. Our safety performance, which is measured by days
away or restricted time, was its best ever, and we exceeded our gas emergency response rate target.
-
-
We exceeded the target of having 35% of new hires and promotions within the supervisor and above management group be women or people of color.
We
continue to operate our electric and gas systems well. This is the result of the continuing implementation of best practices, focusing on investments in reliability improvements to reduce the
number and length of outages, and performing our work safely each and every day.
36
2017 Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
Reliability
While
we were affected in 2016 by an unusually high number of storms in our service territory, Electric System Reliability, which
is measured by months between interruptions and average time to restore power, was better than the industry average.
Safety
Safety
performance measured by days away or restricted time per 100 workers continued to improve for the fourth straight year.
Achievement
of the 2016 performance goals, additional accomplishments and the Compensation Committee's assessment of Company and executive performance are more fully described in the section titled
"2016 Annual Incentive Program." Specific decisions regarding executive compensation based upon the Committee's assessment of Company and executive performance and market data are also described
below.
The
Committee links our Named Executive Officers' compensation to performance that will ultimately benefit our customers and shareholders. Our compensation program is intended to attract and retain
the best executive talent in the industry, motivate our executives to meet or exceed specific stretch financial and operational goals set each year, and compensate our executives in a manner that
aligns compensation directly with performance. We strive to provide executives with base salary, performance-based annual incentive compensation, and performance-based long-term incentive compensation
opportunities that are competitive with market practices and that reward excellent performance.
Executive Compensation Governance
-
-
The Compensation Committee annually assesses the independence of its compensation consultant, Pay Governance LLC (Pay Governance), which
is retained directly by the Committee, performs no other consulting or other services for the Company, and has no relationship with the Company that could result in a conflict of interest. The
Committee has concluded that
-
-
Pay
Governance is independent and that no conflict of interest exists between Pay Governance and the Company.
-
-
The executive and Trustee share ownership and holding guidelines noted in this CD&A emphasize the importance of share ownership. Under the
share ownership guidelines, which include a six times base salary requirement for our Chief Executive Officer, we require our executives to hold 100% of the shares awarded under the Company's stock
compensation program until the share ownership guidelines have been met. In addition, 100% of Trustee stock compensation is deferred and not distributed until the Trustee's retirement from the Board.
-
-
The Compensation Committee has implemented a clawback policy that requires our executives and other eligible employees to reimburse the Company
for incentive compensation received if earnings were subsequently required to be restated as a result of noncompliance with accounting rules caused by fraud or misconduct.
-
-
The Company has discontinued the use of "gross-ups" in all new or materially amended executive compensation agreements.
2017 Proxy Statement
37
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
-
-
The Company has a "no hedging" and "no pledging" policy that prohibits all Trustees and executives from purchasing financial instruments or
otherwise entering into any transactions that are designed to have the effect of hedging or offsetting any decrease in the market value of our common shares. This policy also prohibits all pledges,
derivative transactions or short
-
-
sales
involving our common shares or the holding of any Company common shares in a margin account.
-
-
Our employment agreements provide for "double-trigger" change of control acceleration of awards assumed by the surviving company.
The
executive officers listed in the Summary Compensation Table and whose compensation is discussed in this CD&A are referred to as the "Named Executive Officers" under SEC regulations. For 2016, the
Named Executive Officers are:
Current
Executive Officers:
-
-
James J. Judge
, President and Chief Executive Officer, effective May 4, 2016
-
-
Philip J. Lembo
, Executive Vice President, Chief Financial Officer and Treasurer
-
-
Leon J. Olivier
, Executive Vice President, Enterprise Energy Strategy and Business Development
-
-
Werner J. Schweiger
, Executive Vice President and Chief Operating Officer
-
-
Gregory B. Butler
, Executive Vice President and General Counsel
Former
Executive Officers:
-
-
Thomas J. May
, Chairman of the Board; retired President and Chief Executive Officer
-
-
David R. McHale
, retired Executive Vice President and Chief Administrative Officer
Under
the SEC regulations, we are required to disclose the compensation of the Chief Executive Officer and the Chief Financial Officer, along with the three most highly compensated other current
employees, and up to two others who would have been Named Executive Officers if they were still employees at year end.
Overview of Our Compensation Program
|
The Role of the Compensation Committee.
The Board of Trustees has delegated to the Compensation Committee overall responsibility for establishing the compensation
program for those senior executive officers, whom we refer to in this CD&A as "executives" and whom are deemed to be "officers" under the SEC's regulations that determine the persons whose
compensation is subject to disclosure. In this role, the Committee sets compensation policy and compensation levels, reviews and approves performance goals and evaluates executive performance.
Although this discussion and analysis refers principally to compensation for the Named Executive Officers, the same compensation principles and practices apply to all executives. The compensation of
the Chief Executive Officer is subject to the further review and approval of all independent Trustees.
Elements of Compensation.
Total direct compensation consists of three elements: base salary, annual cash incentive
awards and long-term equity-based incentive awards. Indirect compensation is provided through certain retirement, perquisite, severance, and health and welfare benefit programs.
Our Compensation Objectives.
The objectives of our compensation program are to attract and retain superior executive talent, motivate our executives to achieve
annual and long-term performance goals set each year, and provide total compensation opportunities that are competitive with market practices. With respect to incentive compensation, the Committee
believes it is important to balance short-term goals, such as producing earnings, with longer-term goals, such as long-term value creation and maintaining a strong balance sheet. The Committee also
places great emphasis on system reliability and superior customer service. Our compensation program utilizes performance-based incentive compensation to reward individual and corporate performance and
to align the interests of executives with Eversource Energy's customers and shareholders. The Committee continually increases expectations to motivate our executives and employees to achieve
continuous improvement in carrying out their responsibilities to our customers to deliver energy reliably, safely, with respect for the environment and our employees, and at a reasonable cost, while
providing an above-average total shareholder return to our shareholders.
38
2017 Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
Setting Compensation Levels.
To ensure that the Company achieves its goal of providing market-based compensation levels to attract and retain top quality
management, the Committee provides our executives with target compensation opportunities approximately equal to median compensation levels for executive officers of companies in the utility industry
comparable to us in size. To achieve that goal, the Committee and its independent compensation consultant work together to determine the market values of executive direct compensation elements (base
salaries, annual incentives and long-term incentives), as well as total compensation, by using competitive market compensation data. The Committee reviews compensation data obtained from utility and
general industry surveys and a specific group of peer utility companies. Levels may be lower than median for those executives who are new to their roles, while long-tenured, high performing executives
may be compensated above median.
Role of the Compensation Consultant.
The Committee has retained Pay Governance as its independent compensation consultant. Pay Governance reports directly to the
Committee and does not provide any other services to the Company. With the consent of the Committee, Pay Governance works cooperatively with the Company's management to develop analyses and proposals
for presentation to the Committee. The Committee generally relies on Pay Governance for peer group market data and information as to market practices and trends to assess the competitiveness of the
compensation we pay to our executives and to review the Committee's proposed compensation decisions.
In
February 2017, the Committee assessed the independence of Pay Governance pursuant to SEC and NYSE rules and concluded that it is independent and that no conflict of interest exists that would
prevent Pay Governance from independently advising the Committee. In making this assessment, the Committee considered the independence factors enumerated in Rule 10C-1(b) under the Securities
Exchange Act of 1934, including the written representations of Pay Governance that Pay Governance does not provide any other services to the Company, the level of fees received from the Company as a
percentage of Pay Governance's total revenues, the policies and procedures employed by Pay Governance to prevent conflicts of interest, and whether the individual Pay Governance advisers with whom the
Committee consulted own any Eversource Energy common shares or have any business or personal relationships with members of the Committee or our executives.
Role of Management.
Management's roles, and specifically the roles of the Chief Executive Officer and the Executive Vice President of Human Resources, are to
provide current compensation information to the compensation consultant and analyses and recommendations on executive compensation to the Committee based on the market value of the position,
individual performance, experience and internal pay equity. The Chief Executive Officer also provides recommendations on the compensation for the other Named Executive Officers. None of the executives
makes recommendations that affect his or her individual compensation.
The
Compensation Committee seeks to provide our executives with target compensation opportunities using a range that is approximately equal to the median compensation levels for executive officers of
utility companies comparable to the Company. Set forth below is a description of the sources of the compensation data used by the Committee when reviewing 2016 compensation:
-
-
Utility and general industry survey
data.
The Committee reviews compensation information obtained from surveys of diverse groups of utility and general industry companies that
represent our market for executive officer talent. Utility industry data are based on a defined peer set, as discussed below, while general industry data is derived from compensation consultant
surveys. General industry data are
-
-
size-adjusted
to ensure a close correlation between the market data and the Company's scope of operations. The Committee used this information, which it
obtained from Pay Governance, to evaluate and determine base salaries and incentive opportunities.
-
-
Peer group data.
In support of our executive pay decisions during 2016, the Committee
consulted with Pay Governance, which provided the Committee with a competitive assessment analysis of the Company's executive compensation levels, as compared to the 20 peer group companies listed in
the table below. This peer group was chosen because these companies are similar to Eversource Energy in terms of size, business model and long-term strategies.
2017 Proxy Statement
39
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy Corporation
|
|
DTE Energy Company
|
|
PPL Corporation
|
|
|
|
|
Ameren Corporation
|
|
Edison International
|
|
Public Service Enterprise Group, Inc.
|
|
|
|
|
American Electric Power Co., Inc.
|
|
Entergy Corporation
|
|
SCANA Corp.
|
|
|
|
|
CenterPoint Energy, Inc.
|
|
First Energy Corp.
|
|
Sempra Energy
|
|
|
|
|
CMS Energy Corp.
|
|
NiSource, Inc.
|
|
WEC Energy Group, Inc.
|
|
|
|
|
Consolidated Edison, Inc.
|
|
PG&E Corporation
|
|
Xcel Energy Inc.
|
|
|
|
|
Dominion Resources, Inc.
|
|
Pinnacle West Capital Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Committee periodically adjusts the target percentages of annual and long-term incentives based on the survey data after discussion with the compensation consultant to ensure that they are
approximately equal to competitive median levels.
The
Committee also determines perquisites to the extent they serve business purposes and sets supplemental benefits at levels that provide market-based compensation opportunities to the executives.
The Committee periodically reviews the general market for supplemental benefits and perquisites using utility and general industry survey data, including data obtained from companies in the peer
group.
Mix of Compensation Elements.
We target the mix of compensation for our Chief Executive Officer and the other Named Executive Officers so that the percentages of
each compensation element are approximately equal to the competitive median market mix. The mix is heavily weighted toward incentive compensation, and incentive compensation is heavily weighted toward
long-term
compensation. Since our most senior positions have the greatest responsibility for implementing our long-term business plans and strategies, a greater proportion of total compensation is
based on performance with a long-term focus.
The
Committee determines the compensation for each executive based on the relative authority, duties and responsibilities of the executive. Our Chief Executive Officer's responsibilities for the
strategic direction and daily operations and management of Eversource are greater than the duties and responsibilities of our other executives. As a result, our Chief Executive Officer's compensation
is higher than the compensation of our other executives. Assisted by the compensation consultant, the Committee regularly reviews market compensation data for executive officer positions similar to
those held by our executives, including our Chief Executive Officer, and this market data continues to indicate that chief executive officers are paid significantly more than other executive officers.
The
following table sets forth the contribution to 2016 Total Direct Compensation (TDC) of each element of compensation, at target, reflected as a percentage of TDC, for the Named Executive Officers.
The percentages shown in this table are at target and therefore do not correspond to the amounts appearing in the Summary Compensation Table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of TDC at Target
|
|
|
|
|
|
|
|
|
|
Long-Term Incentives
|
|
|
|
Named Executive Officer (NEO)
|
|
Base
Salary
|
|
Annual
Incentive
(1)
|
|
Performance
Shares
(1)
|
|
RSUs
(2)
|
|
TDC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James J. Judge
|
|
|
17
|
%
|
|
19
|
%
|
|
32
|
%
|
|
32
|
%
|
|
100%
|
|
Philip J. Lembo
|
|
|
26
|
%
|
|
20
|
%
|
|
27
|
%
|
|
27
|
%
|
|
100%
|
|
Leon J. Olivier
|
|
|
26
|
%
|
|
20
|
%
|
|
27
|
%
|
|
27
|
%
|
|
100%
|
|
Werner J. Schweiger
|
|
|
26
|
%
|
|
20
|
%
|
|
27
|
%
|
|
27
|
%
|
|
100%
|
|
Gregory B. Butler
|
|
|
30
|
%
|
|
20
|
%
|
|
25
|
%
|
|
25
|
%
|
|
100%
|
|
Thomas J. May
|
|
|
15
|
%
|
|
17
|
%
|
|
34
|
%
|
|
34
|
%
|
|
100%
|
|
David R. McHale
|
|
|
26
|
%
|
|
20
|
%
|
|
27
|
%
|
|
27
|
%
|
|
100%
|
|
NEO average, excluding Mr. Judge and Mr. May
|
|
|
26
|
%
|
|
20
|
%
|
|
27
|
%
|
|
27
|
%
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
annual incentive compensation element and performance shares under the long-term incentive compensation element are performance-based.
-
(2)
-
Restricted
Share Units (RSUs) vest over three years contingent upon continued employment.
40
2017 Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
Total Direct Compensation - CEO
|
|
Total Direct Compensation - All other NEO's
|
|
|
|
|
|
|
Risk Analysis of Executive Compensation Program.
The overall compensation program includes a mix of compensation elements ranging from a fixed base salary that is
risk-neutral to annual and long-term incentive compensation programs intended to motivate officers and eligible employees to achieve individual and corporate performance goals that reflect an
appropriate level of risk. The fundamental objective of the compensation program is to foster the continued growth and success of our business. The design and implementation of the overall
compensation program provides the Committee with opportunities throughout the year to assess risks within the compensation program that may have a material effect on the Company and our shareholders.
In
2016, the Compensation Committee assessed the risks associated with the executive compensation program by reviewing the various elements of incentive compensation. The annual incentive program was
designed to ensure an appropriate balance between individual and corporate goals, which were deemed appropriate and supportive of the Company's annual business plan. Similarly, the long-term incentive
program was designed to ensure that the performance metrics were properly weighted and supportive of the Company's strategic plan. The Committee reviewed the overall compensation program in the
context of the annual operating and strategic plans, which were both previously subject to Enterprise Risk Management review.
The
annual and long-term incentive programs were designed to include mechanisms to mitigate risk. These mechanisms include realistic goal setting and discretion with respect to actual payments in
addition to:
-
-
A mix of annual and long-term performance awards to provide an appropriate balance of short- and long-term risk and reward horizon;
-
-
A variety of performance metrics including financial, operational, customer service and safety goals for
-
-
annual
performance awards to avoid excessive focus on a single measure of performance;
-
-
Metrics in the Company's long-term incentive compensation program that use recurring earnings per share and total shareholder return, which are
both robust measures of shareholder value and which reduce the risk that employees might be encouraged to pursue other objectives that increase risk or reduce financial performance;
-
-
The provisions of our annual and long-term incentive programs, which cap awards at 200% of target;
-
-
Our clawback provision on incentive compensation; and
-
-
Stock ownership requirements for all executives, including our Named Executive Officers, and prohibitions on hedging, pledging and other
derivative transactions related to our shares.
Based
on these factors, the Compensation Committee and the Board of Trustees believe the overall compensation program risks are mitigated to reduce overall compensation risk.
Results of Our 2016 Say-on-Pay Vote and 2017 Recommendation on Say-on-Pay-Frequency Vote.
We are requesting that Shareholders cast the annual advisory vote on
executive compensation (a "Say-on-Pay" proposal). At the Company's Annual Meeting of Shareholders held on May 4, 2016, 87% of the votes cast on the Say-on-Pay
proposal were voted to approve the 2015 compensation of the Named Executive Officers, as described in our 2016 proxy statement. The Committee has and will continue to consider the outcome of the
Company's Say-on-Pay votes when making future compensation decisions for the Named Executive Officers. We are also recommending to shareholders that they continue to support our practice of an annual
vote on Say-On-Pay. Please see Proposals 3 and 4 in this proxy statement.
2017 Proxy Statement
41
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
Elements of 2016 Compensation
|
Base Salary
Base salary is designed to attract and retain key executives by providing an element of total compensation at levels competitive with those of
other executives employed by companies of similar size and complexity in the utility and general industries. In establishing base salary, the Compensation Committee relies on compensation data
obtained from independent third-party surveys of companies and from an industry peer group to ensure that the compensation opportunities we offer are capable of attracting and retaining executives
with the
experience and talent required to achieve our strategic objectives. Adjustments to base salaries are made on an annual basis except in instances of promotions.
When
setting or adjusting base salaries, the Committee considers annual executive performance appraisals; market pay movement across industries (determined through market analysis); targeted market
pay positioning for each executive; individual experience; strategic importance of a position; recommendations of the Chief Executive Officer; and internal equity.
Incentive Compensation
Annual incentive and long-term incentive compensation are provided under the Company's Incentive Plan, which
was
approved by our shareholders at the 2007 Annual Meeting of Shareholders and the material terms of performance goals of which were re-approved by our shareholders at the 2012 Annual Meeting of
Shareholders. Pursuant to Section 162(m) of the Internal Revenue Code, we are requesting that our shareholders re-approve these terms at this year's Annual Meeting. Please see proposal 5 in
this proxy statement. The annual incentive program provides cash compensation intended to reward performance under our annual operating plan. The long-term stock-based incentive program is designed to
reward demonstrated performance and leadership, motivate future performance, align the interests of the executives with those of our shareholders, and retain the executives during the term of grants.
The annual and long-term programs are designed to strike a balance between the Company's short- and long-term objectives so that the programs work in tandem.
In
addition to the specific performance goals, the Committee assesses other factors, as well as the executives' roles and individual performance and then makes annual incentive program awards at the
levels and amounts disclosed in this proxy statement.
2016 Annual Incentive Program
|
In
February 2016, the Committee established the terms of the 2016 Annual Incentive Program. As part of the overall program, and after consulting with Pay Governance, the Committee set target award
levels for each of the Named Executive Officers that ranged from 65% to 110% of base salary.
At
the February 2016 meeting, the Committee determined that for 2016 it would continue to base 70% of the annual incentive performance goals on the Company's overall financial performance and 30% of
the annual
performance goals on the Company's overall operational performance. The Committee also determined the specific goals to assess performance and that the individual goals would continue to be assessed
using
ratings ranging from 0% to 200%. The Committee assigned weightings to each of these specific goals. For the financial component, the earnings per share goal was weighted at 70%, the dividend
growth goal was weighted at 20% and the credit rating goal was weighted at 10%. For the operational component, the Committee determined the combined service reliability and restoration goals would be
weighted at 60%, the combined key strategic regional energy projects, success on aggressive regulatory targets and improvement of the customer experience goals would be weighted at 25%, and the
combined safety ratings, gas service response and diversity promotions and hires of leadership employee positions goals would be weighted at 15%.
42
2017 Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
At
the December 2016 meeting of the Committee, management provided an initial review of the Company's 2016 performance, followed in February 2017 by a full assessment of the performance goals, the
additional accomplishments noted below under the caption "Additional Factors" and the overall performance of the Company and each of the executives. In addition to these meetings, the Committee was
also provided updates during the year on corporate performance. At the February 2017 meeting, the Committee determined, based on its assessment of the financial and operational performance goals, to
set the level of achievement of combined financial and operational performance goals results at 152% of target, reflecting the overall strong performance of the Company and the executive team. In
arriving at this determination, the Committee determined that the financial performance goals result was 168% of target and the operational performance goals result was 115% of target. The individual
financial and operational performance goals results are as set forth below. The Chief Executive Officer recommended to the Committee payout levels for the executives (other than himself) based on his
assessment of each executive's individual performance towards achievement of the performance goals and the additional accomplishments of the Company, together with each executive's contributions to
the overall performance of the Company. The awards determined by the Committee were also based on the same three-component criteria.
Financial Performance Goals Assessment
-
-
Our earnings per share in 2016 were $2.96, exceeding the goal of $2.95 and representing a 5.3% increase over 2015. Our longer term earnings
growth of 5.7% from
-
-
2014
to 2016 is significantly above the long-term industry growth of nearly 4%. The earnings goal was exceeded despite several challenges, including
higher than planned storms costs and milder weather in 2016, which resulted in significantly lower than planned revenues, through the accomplishment of a challenging operations and maintenance cost
containment result that was $8 million under target despite an additional $20 million of storm response costs. The Committee determined the earnings per share goal to have attained a
165% performance result.
-
-
We increased our dividend to $1.78 per share, a 6.6% increase from the prior year, compared to the utility industry's median dividend growth of
3.8%. The Committee determined this goal to have attained a 160% performance.
-
-
The Company maintained its "A" credit rating and both S&P and Fitch raised the Company's Outlook to "Positive." This rating represents the
highest holding company S&P credit rating in the utility industry, and continues to provide the foundation for continued favorable financing opportunities during the year and in the future. The
industry average credit rating at S&P is "BBB+." The Committee determined this goal to have attained a 200% performance result.
Operational Performance Goals Assessment
-
-
While performance results were towards the top of the second quartile as measured against our peers, the Company's total electric system
reliability performance was behind targeted performance. Average months between interruptions equaled 13 months, behind the
2017 Proxy Statement
43
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
-
-
performance
zone established by the Committee of 15 to 17 months. System average restoration duration time equaled 97.9 minutes, behind the
performance zone established by the Committee of 85 to 69 minutes. Taking into consideration the significant number of storms experienced in 2016 and the Company's performance as compared to its
peers, the Committee determined these goals to have each attained a 100% performance result.
-
-
The Company successfully put its redesigned customer bill into place, expanded the functionality of its customer website and outage
communication systems and strengthened media outreach efforts. The Committee determined this goal to have attained a 125% performance result.
-
-
The Company continued to decrease financial risk and protect earnings through effective regulatory outcomes in each of the three states in
which Eversource provides service, and at the Federal Energy Regulatory Commission (FERC). This included the approved divestiture of our New Hampshire generation assets, a three-year Energy Efficiency
Program approval, recovery at FERC of transmission merger-related costs from the 2012 NSTAR merger, and the successful resolution of spent nuclear fuel costs liability. The Committee determined this
goal to have attained a 200% performance result.
-
-
We had mixed results related to our two major ongoing strategic projects, Access Northeast (ANE) and Northern Pass Transmission (NPT). Despite
making good progress on ANE, a Massachusetts Supreme
-
-
Judicial
Court decision not allowing electric distribution companies to execute gas capacity contracts has affected the project schedule. The Company is
currently assessing alternative plans for the project. NPT was not selected in the three-state Clean Energy RFP, and siting approval from the New Hampshire Site Evaluation Committee was delayed until
September 2017. However, NPT received approval from the New Hampshire Public Utilities Commission to operate as a public utility, and NE-ISO approved its Transmission Interconnection Application. In
addition to NPT and ANE, the Company advanced a number of new strategic clean energy opportunities. The Committee determined this goal to have attained a 100% performance result.
-
-
We exceeded the safety performance goal of between 1.4 - 1.1 Days Away or Restricted Time ("DART") per 1,000 employees; DART
equaled 0.95 in 2016. The Committee determined this goal to have attained a 150% performance result.
-
-
On-time response to gas customer emergency calls was 99.5%, which exceeded the goal of 99.1%. The Committee determined this goal to have
attained a 125% performance result.
-
-
In 2016, 39% of new hires and promotions into leadership roles were women or people of color, exceeding the goal of 35%. The Committee
determined this goal to have attained a 125% performance result.
44
2017 Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
2016 Annual Incentive Program Performance Assessments
|
Financial Performance Goals
|
|
|
|
|
|
|
|
|
Category
|
|
2016 Goal
|
|
Company Performance
|
|
Indicative
Assessment
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share
|
|
$2.95 per share
|
|
Exceeded $2.96 per share, a 5.3% increase over 2015, significantly outperforming industry growth median of nearly 4%
|
|
|
165%
|
|
Dividend Growth
|
|
Increase dividend $0.11 to $1.78 per share
|
|
Achieved Increased to $1.78 per share, a $0.11 increase and 6.6% growth, significantly exceeding the industry median of 3.8%
|
|
|
160%
|
|
Credit Rating
|
|
Maintain the Company's top tier S&P A credit rating
|
|
Achieved Maintained S&P rating of "A" (S&P and Fitch raised to "Positive" Outlook), the highest holding company credit rating in the utility industry
|
|
|
200%
|
|
|
|
|
|
|
|
|
|
|
Weightings = Earnings Per Share 70%; Dividend Growth 20%; Credit Rating 10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational Performance Goals
|
|
|
|
|
|
|
|
|
Category
|
|
2016 Goal
|
|
Company Performance
|
|
Indicative
Assessment
|
|
|
|
|
|
|
|
|
|
|
Reliability Avg. Months Between Interruptions (MBI)
|
|
Achieve MBI of within 15 to 17 months
|
|
Below MBI = 13 months. Behind targeted performance zone, driven by the unusually high level of storm activity but above the industry average
|
|
|
100%
|
|
Average Restoration Duration (SAIDI)
|
|
Achieve SAIDI of 85 to 69 minutes
|
|
Below SAIDI = 97.9 minutes. Behind targeted performance, driven by the unusually high level of storm activity but above the industry average
|
|
|
100%
|
|
Improve the Customer Experience
|
|
Customer bill redesign, enhanced communications, improved digital experience and positive media coverage
|
|
Exceeded Successful rollout of redesigned bill, expanded website functionality, enhanced outage communications. Completed other key customer and media initiatives
|
|
|
125%
|
|
Success on Aggressive Regulatory Agenda
|
|
NH Divestiture, three-year Energy Efficiency Plan, spent nuclear fuel, FERC merger cost recovery
|
|
Exceeded Very challenging regulatory proceedings have been approved by regulators with positive results, helping to drive EPS growth
|
|
|
200%
|
|
Positive Outcomes on Key Strategic Initiatives
|
|
NPT & ANE; major strategic initiatives
|
|
Met Ongoing major projects mixed, with delays on NPT and ANE. Significant progress on offshore wind, solar, energy storage and electric vehicle charging infrastructure
|
|
|
100%
|
|
Safety Rate
|
|
1.4 - 1.1 days away/restricted
|
|
Exceeded: 0.95 days away/restricted; 21% better than 2015
|
|
|
150%
|
|
Gas Service Response
|
|
99.1%
|
|
Exceeded: 99.5%; also met all regulatory mandated targets
|
|
|
125%
|
|
Diverse Leadership
|
|
35% hires or promotions of leadership level be women or people of color
|
|
Exceeded: 39%, 4 percentage points above target
|
|
|
125%
|
|
|
|
|
|
|
|
|
|
|
Weightings = Reliability and Restoration 60%; Key Corporate Initiatives 25%; Safety/Gas Service/Diversity 15%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Goals Assessment
|
|
|
|
|
|
|
Financial Performance (weighted 70%)
|
|
|
168%
|
|
Operational Performance (weighted 30%)
|
|
|
115%
|
|
Overall Performance
|
|
|
152%
|
|
|
|
|
|
|
2017 Proxy Statement
45
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
The
following key strategic results were also considered by the Committee in making an assessment of overall financial and operational performance, but were not given specific
weightings or assigned a specific performance assessment score:
-
-
We identified and made significant progress in new strategic investment opportunities, including execution of a partnership agreement to
develop a major offshore wind generation project. This positions us to be the first energy company to develop large scale offshore wind in North America.
-
-
We received approval from the Massachusetts Department of Public Utilities to invest $200 million in rate-base utility scale solar
generation and filed a plan to invest $145 million in innovative clean energy solutions related to energy storage and electric vehicle charging infrastructure.
-
-
We undertook and carried out a highly successful leadership transition process upon the retirement of our Chief Executive Officer, which was
very positively received by Wall Street and policy makers.
-
-
We effectively executed a robust capital plan totaling over $2.2 billion. This plan included electric and gas system investments
targeted to improve reliability and upgrade infrastructure to make our system more resilient and support growth.
-
-
We implemented a new organization model to centralize our Connecticut and Massachusetts electric operations to drive performance and employ
best practices, and we merged our electric transmission and distribution functions into one operation.
-
-
We continued to grow our natural gas business with over 12,000 new customers, reduced outstanding Class II leaks by 43%, and combined
our two state gas operations into one efficient operation.
Individual Performance Factors Considered by the Committee
|
The
goal of the Committee for 2016 was again to provide incentives for Company executives to work together as a highly effective, integrated team to achieve or exceed the
financial, operational, safety, customer, strategic and diversity goals and objectives. The Committee based the annual incentive payments on team performance
and also on the Committee's assessment of each executive's individual performance in supporting the performance goals, additional achievements and overall Company performance. The Committee and the
independent Trustees assessed the performance of our Chief Executive Officer and, based on the recommendations of the Chief Executive Officer, the Committee assessed the performance of the Named
Executive Officers to determine the individual incentive payments as disclosed in the Summary Compensation Table. Based on the Committee's review, which included its assessment of the performance
goals, the significant other accomplishments of the Company and the Named Executive Officers, and the overall performance of the Company and each of the Named Executive Officers, considered in its
totality by the Committee to have been excellent, the Committee approved annual incentive program payments for the Named Executive Officers at levels that ranged from 140% to 159% of target. These
payments reflected the individual and team contributions of Mr. Judge, Mr. Lembo, Mr. Olivier, Mr. Schweiger and Mr. Butler in achieving the goals and the additional
accomplishments and the overall performance of the Company.
In
determining Mr. Judge's annual incentive payment of $2,200,000, which was 159% of target, and which reflects his and the Company's continued strong performance, the Committee and the Board
considered the totality of the Company's success in accomplishing the goals set by the Committee, the additional accomplishments of the Company, and Mr. Judge's strategic leadership of the
Company.
2016 Annual Incentive Program Awards
|
|
|
|
|
|
Named Executive Officer
|
|
Award
|
|
|
|
|
|
|
James J. Judge
|
|
$
|
2,200,000
|
|
Philip J. Lembo
|
|
|
600,000
|
|
Leon J. Olivier
|
|
|
725,000
|
|
Werner J. Schweiger
|
|
|
700,000
|
|
Gregory B. Butler
|
|
|
575,000
|
|
46
2017 Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
Long-Term Incentive Program
|
Our
long-term incentive program is intended to focus on the Company's longer-term strategic goals and to help retain our executives. A new three-year program commences every year. For the
2016 - 2018 Long-Term Incentive Program, each grant consisted of 50% Eversource Energy Performance Shares and 50% (RSUs. Performance Shares are designed to reward achievement as measured
against pre-established performance measures. RSUs are designed to provide executives with an incentive to increase the value of Company common shares in alignment with shareholder interests, while
also serving as a retention component for executive talent. We believe these compensation elements create a focus on continued Company and share price growth to further align the interests of our
executives with the interests of our shareholders.
Performance
Shares are designed to reward future financial performance, measured by long-term earnings growth and shareholder returns over a three-year performance period, therefore aligning
compensation with performance.
Performance
Shares are granted as a target number of Eversource common shares. The number of Performance Shares granted are determined by dividing the target grant value in dollars by the average of
daily closing prices of Eversource common shares on the New York Stock Exchange for the ten business days preceding the grant date and rounding to the nearest whole share. Until the end of the
Performance Period, the value of dividends that would have been paid with respect to the Performance Shares had the Performance Shares been actual common shares will be deemed to be invested in
additional Performance Shares.
Performance Shares under the 2016 2018 Program
|
For
the 2016 - 2018 Program, the Committee measured performance using: (i) average diluted earnings per share growth (EPSG); and (ii) relative total shareholder return
(TSR) measured against the performance of companies that comprise the EEI Index. As in 2015 and 2014, the Committee selected EPSG and TSR as
performance
measures because the Committee continues to believe that they are generally recognized as the best indicators of overall corporate performance. Further, the Committee considers it a best
practice to use a combination of relative and absolute metrics, with EPS growth serving as a key input to shareholder value and TSR serving as the output.
The
number of Performance Shares awarded at the end of the three-year period ranges from 0% to 200% of target, depending on EPSG and relative TSR performance as set forth in the performance matrix
below. Performance Share grants are based on a percentage of annualized base salary at the time of the grant and measured in dollars. The target number of shares under the 2016 - 2018
Program ranged from 35% to 238% of
base salary. For the 2016 - 2018 Program, EPSG ranges from 0% to 9%, while TSR ranges from below the 10th percentile to above the 90th percentile. The Committee determined
that payout at 100% of target should be challenging but achievable. As a result, vesting at 100% of target occurs at various combinations of EPSG and TSR performance. In addition, the value of any
performance shares that actually vest may increase or decrease over the vesting period based on the Company's share price performance. The number of performance shares granted at target were approved
as set forth in the table below. The Committee and the independent Members of the Board determined the Performance Share grants for the Chief Executive Officer, and based on input from the Chief
Executive Officer, the Committee determined the Performance Share grants for each of the other executive officers, including the other Named Executive Officers.
Performance Shares under the 2015 2017 Program
|
For
the 2015 - 2017 Program, the Committee used the same performance measures of EPSG and TSR and the same criteria as in the 2016 - 2018 Program noted above.
The
performance matrix set forth below describes how the Performance Share payout will be determined under the 2015 - 2017 and 2016 - 2018 Long-Term Incentive Programs.
Three-year average EPSG is cross-referenced with the actual three-year TSR percentile to determine actual performance share payout as a percentage of target.
2017 Proxy Statement
47
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
2015 2017 and 2016 2018 Long-Term Incentive Programs Performance Share
Potential Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Year
|
|
|
|
|
|
|
Three-Year Relative Total Shareholder Return Percentiles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
EPS Growth
|
|
|
|
|
|
|
Below
10th
|
|
|
20th
|
|
|
30th
|
|
|
40th
|
|
|
50th
|
|
|
60th
|
|
|
70th
|
|
|
80th
|
|
|
90th
|
|
|
Above
90th
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9%
|
|
|
|
|
|
|
110%
|
|
|
120%
|
|
|
130%
|
|
|
140%
|
|
|
150%
|
|
|
160%
|
|
|
170%
|
|
|
180%
|
|
|
190%
|
|
|
200%
|
|
|
|
|
|
|
8%
|
|
|
|
|
|
|
100%
|
|
|
110%
|
|
|
120%
|
|
|
130%
|
|
|
140%
|
|
|
150%
|
|
|
160%
|
|
|
170%
|
|
|
180%
|
|
|
190%
|
|
|
|
|
|
|
7%
|
|
|
|
|
|
|
90%
|
|
|
100%
|
|
|
110%
|
|
|
120%
|
|
|
130%
|
|
|
140%
|
|
|
150%
|
|
|
160%
|
|
|
170%
|
|
|
180%
|
|
|
|
|
|
|
6%
|
|
|
|
|
|
|
80%
|
|
|
90%
|
|
|
100%
|
|
|
110%
|
|
|
120%
|
|
|
130%
|
|
|
140%
|
|
|
150%
|
|
|
160%
|
|
|
170%
|
|
|
|
|
|
|
5%
|
|
|
|
|
|
|
70%
|
|
|
80%
|
|
|
90%
|
|
|
100%
|
|
|
110%
|
|
|
120%
|
|
|
130%
|
|
|
140%
|
|
|
150%
|
|
|
160%
|
|
|
|
|
|
|
4%
|
|
|
|
|
|
|
60%
|
|
|
70%
|
|
|
80%
|
|
|
90%
|
|
|
100%
|
|
|
110%
|
|
|
120%
|
|
|
130%
|
|
|
140%
|
|
|
150%
|
|
|
|
|
|
|
3%
|
|
|
|
|
|
|
40%
|
|
|
50%
|
|
|
70%
|
|
|
80%
|
|
|
90%
|
|
|
100%
|
|
|
110%
|
|
|
120%
|
|
|
130%
|
|
|
140%
|
|
|
|
|
|
|
2%
|
|
|
|
|
|
|
20%
|
|
|
40%
|
|
|
60%
|
|
|
70%
|
|
|
80%
|
|
|
90%
|
|
|
100%
|
|
|
110%
|
|
|
120%
|
|
|
130%
|
|
|
|
|
|
|
1%
|
|
|
|
|
|
|
|
|
|
10%
|
|
|
40%
|
|
|
60%
|
|
|
70%
|
|
|
80%
|
|
|
90%
|
|
|
100%
|
|
|
110%
|
|
|
120%
|
|
|
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
20%
|
|
|
30%
|
|
|
50%
|
|
|
70%
|
|
|
80%
|
|
|
90%
|
|
|
100%
|
|
|
110%
|
|
|
|
|
|
|
Below 0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10%
|
|
|
20%
|
|
|
30%
|
|
|
40%
|
|
|
50%
|
|
|
60%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive Program Performance
Share Grants at Target
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
2015 2017
Performance
Share Grant
|
|
2016 2018
Performance
Share Grant
|
|
|
|
|
|
|
|
|
|
James J. Judge
|
|
|
9,800
|
|
|
12,004
|
|
Philip J. Lembo
|
|
|
1,700
|
|
|
1,844
|
|
Leon J. Olivier
|
|
|
10,300
|
|
|
12,607
|
|
Werner J. Schweiger
|
|
|
9,700
|
|
|
11,805
|
|
Gregory B. Butler
|
|
|
6,900
|
|
|
7,791
|
|
Thomas J. May
|
|
|
50,100
|
|
|
58,002
|
|
David R. McHale
|
|
|
9,800
|
|
|
12,004
|
|
Results of the 2014 2016 Performance Share Program
|
The
2014 2016 Program ended on December 31, 2016. The actual performance level achieved under the Program was a three-year average adjusted EPS
growth of 5.4% and a three-year total shareholder return at the 29
th
percentile, which when interpolated in accordance with the criteria established by the Committee in 2014,
resulted in vesting performance share units at 93% of target. This determination was made in accordance with the performance criteria as approved by the Committee at the commencement of the
performance period. At its February 2, 2017 meeting, the Committee confirmed that the actual results achieved were calculated in accordance with performance targets established, and it
considered all non-recurring items in determining that the adjusted EPS was in accordance with the plan
documents. The number of Performance Shares awarded to the Named Executive Officers were approved as set forth in the table below.
2014 2016 Long-Term Incentive Program
Performance Share Award
|
|
|
|
|
2014 2016 Long-Term Incentive Program
Performance Share Grants at Target
|
|
|
|
|
|
|
Named Executive Officer
|
|
|
Performance
Share Grant
|
|
|
|
|
|
|
James J. Judge
|
|
|
12,718
|
|
Philip J. Lembo
|
|
|
2,154
|
|
Leon J. Olivier
|
|
|
13,334
|
|
Werner J. Schweiger
|
|
|
8,923
|
|
Gregory B. Butler
|
|
|
8,821
|
|
Thomas J. May
|
|
|
57,336
|
|
David R. McHale
|
|
|
11,659
|
|
48
2017 Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
The
performance matrix set forth below describes how the Performance Share payout was determined under the 2014 2016 Long-Term Incentive Program.
Three-year average EPSG was cross-referenced with the actual three-year TSR percentile to determine actual performance share payout as a percentage of target.
2014 2016 Long-Term Incentive Program Performance Share Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Year
|
|
|
|
|
|
|
Three-Year Relative Total Shareholder Return Percentiles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
EPS Growth
|
|
|
|
|
|
|
Below 10th
|
|
|
|
|
20th
|
|
|
30th
|
|
|
|
|
40th
|
|
|
50th
|
|
|
60th
|
|
|
70th
|
|
|
80th
|
|
|
90th
|
|
|
Above
90th
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9%
|
|
|
|
|
|
|
110%
|
|
|
|
|
120%
|
|
|
130%
|
|
|
|
|
140%
|
|
|
150%
|
|
|
160%
|
|
|
170%
|
|
|
180%
|
|
|
190%
|
|
|
200%
|
|
|
|
|
|
|
8%
|
|
|
|
|
|
|
100%
|
|
|
|
|
110%
|
|
|
120%
|
|
|
|
|
130%
|
|
|
140%
|
|
|
150%
|
|
|
160%
|
|
|
170%
|
|
|
180%
|
|
|
190%
|
|
|
|
|
|
|
7%
|
|
|
|
|
|
|
90%
|
|
|
|
|
100%
|
|
|
110%
|
|
|
|
|
120%
|
|
|
130%
|
|
|
140%
|
|
|
150%
|
|
|
160%
|
|
|
170%
|
|
|
180%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6%
|
|
|
|
|
|
|
80%
|
|
|
|
|
90%
|
|
|
100%
|
|
|
|
|
110%
|
|
|
120%
|
|
|
130%
|
|
|
140%
|
|
|
150%
|
|
|
160%
|
|
|
170%
|
|
|
|
|
|
|
5%
|
|
|
|
|
|
|
70%
|
|
|
|
|
80%
|
|
|
90%
|
|
|
|
|
100%
|
|
|
110%
|
|
|
120%
|
|
|
130%
|
|
|
140%
|
|
|
150%
|
|
|
160%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4%
|
|
|
|
|
|
|
60%
|
|
|
|
|
70%
|
|
|
80%
|
|
|
|
|
90%
|
|
|
100%
|
|
|
110%
|
|
|
120%
|
|
|
130%
|
|
|
140%
|
|
|
150%
|
|
|
|
|
|
|
3%
|
|
|
|
|
|
|
40%
|
|
|
|
|
50%
|
|
|
70%
|
|
|
|
|
80%
|
|
|
90%
|
|
|
100%
|
|
|
110%
|
|
|
120%
|
|
|
130%
|
|
|
140%
|
|
|
|
|
|
|
2%
|
|
|
|
|
|
|
20%
|
|
|
|
|
40%
|
|
|
60%
|
|
|
|
|
70%
|
|
|
80%
|
|
|
90%
|
|
|
100%
|
|
|
110%
|
|
|
120%
|
|
|
130%
|
|
|
|
|
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
10%
|
|
|
40%
|
|
|
|
|
60%
|
|
|
70%
|
|
|
80%
|
|
|
90%
|
|
|
100%
|
|
|
110%
|
|
|
120%
|
|
|
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20%
|
|
|
|
|
30%
|
|
|
50%
|
|
|
70%
|
|
|
80%
|
|
|
90%
|
|
|
100%
|
|
|
110%
|
|
|
|
|
|
|
Below 0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10%
|
|
|
20%
|
|
|
30%
|
|
|
40%
|
|
|
50%
|
|
|
60%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Share Units (RSUs)
|
Each
RSU granted under the long-term incentive program entitles the holder to receive one Company common share at the time of vesting. All RSUs granted under the long-term incentive program vest in
equal annual installments over three years. RSU holders are eligible to receive reinvested dividend units on outstanding RSUs held by them to the same extent that dividends are declared and paid on
our common shares. Reinvested dividend equivalents are accounted for as additional RSUs that accrue and are distributed with the common shares issued upon vesting of the underlying RSUs. Common
shares, including any additional common shares in respect of reinvested dividend equivalents, are not issued for any RSUs that do not vest.
The
Committee determined RSU grants for each officer participating in the long-term incentive program. RSU grants are based on a percentage of annualized base
salary at the time of the grant and measured in dollars. In 2016, the percentage used for each executive officer was based on the executive officer's position
in the Company and ranged from 35% to 238% of base salary. The Committee reserves the right to increase or decrease the RSU grant from target for each officer under special circumstances. The
Committee and the independent Members of the Board determined the RSU grants for the Chief Executive Officer, and based on input from our Chief Executive Officer, the Committee determined the RSU
grants for each of the other executive officers, including the other Named Executive Officers.
All
RSUs are granted on the date of the Committee meeting at which they are approved. RSU grants are subsequently converted from dollars into common share equivalents by dividing the value of each
grant by the average closing price for our common shares over the ten trading days prior to the date of the grant. RSU grants at 100% of target were approved as set forth in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs Awarded
|
|
Named Executive Officer
|
|
2014
|
|
2015
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
James J. Judge
|
|
|
12,400
|
|
|
9,800
|
|
|
12,004
|
|
Philip J. Lembo
|
|
|
2,100
|
|
|
1,700
|
|
|
1,844
|
|
Leon J. Olivier
|
|
|
13,000
|
|
|
10,300
|
|
|
12,607
|
|
Werner J. Schweiger
|
|
|
8,700
|
|
|
9,700
|
|
|
11,805
|
|
Gregory B. Butler
|
|
|
8,600
|
|
|
6,900
|
|
|
7,791
|
|
Thomas J. May
|
|
|
55,900
|
|
|
50,100
|
|
|
58,002
|
|
David R. McHale
|
|
|
12,400
|
|
|
9,800
|
|
|
12,004
|
|
2017 Proxy Statement
49
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
If our earnings were to be restated as a result of noncompliance with accounting rules caused by fraud or misconduct, the Company would require all executives
and other eligible employees to reimburse us for certain incentive compensation received by each of them. To the extent that reimbursement was not required under SEC rules or NYSE listing standards,
our Incentive Plan would require any employee whose misconduct or fraud caused such restatement, as determined by the Board of
Trustees,
to reimburse us for any incentive compensation received by him or her.
In
addition, once final rules are adopted by the SEC regarding any additional clawback requirements, we will review our clawback policy and compensation plans and amend them as necessary to comply
with the new mandates.
No Hedging and No Pledging Policy
|
We have adopted a policy prohibiting the purchase of financial instruments or otherwise entering into transactions designed to have the effect of hedging or
offsetting any decrease in the value of our common shares by our Trustees and executives. This policy also
prohibits
all pledging, derivative transactions of short sales involving our common shares or the holding of any Company common shares in a margin account.
Share Ownership Guidelines and Retention Requirements
|
The Committee has approved share ownership guidelines to further emphasize the importance of share ownership by our officers. As indicated in the table below,
the guidelines call for the Chief Executive Officer to own common shares equal to six times base salary, executive vice presidents and senior vice presidents to own a number of common shares equal to
three times base salary and all other officers to own a number of common shares equal to one to two times base salary.
|
|
|
|
|
Executive Officer
|
|
Base Salary
Multiple
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
6
|
|
Executive Vice Presidents/Senior Vice Presidents
|
|
|
3
|
|
Operating Company Presidents
|
|
|
2
|
|
Vice Presidents
|
|
|
1-1.5
|
|
|
|
|
|
|
We
require that our officers attain these ownership levels within five years. All of our officers, including the Named Executive Officers, have satisfied the share ownership guidelines or are expected
to satisfy them within the applicable timeframe. Common shares, whether held of record, in street name, or in individual 401(k) accounts, and RSUs satisfy the guideline requirements to hold 100% of
the net shares. Unexercised stock options and unvested performance shares do not count toward the ownership guidelines. In addition to the share ownership guidelines noted above, all officers must
hold all the shares awarded under the Company's stock compensation plan until the share ownership guidelines have been met.
50
2017 Proxy Statement
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
Retirement Benefits
The Company provides a qualified defined benefit pension program for certain officers, which is a final average pay program subject to tax
code limits. Because of such limits, we also maintain a supplemental non-qualified pension program. Benefits are based on base salary and certain incentive payments, which is consistent with the goal
of providing a retirement benefit that replaces a percentage of pre-retirement income. The supplemental program compensates for benefits barred by tax code limits, and generally provides (together
with the qualified pension program) benefits equal to approximately 60% of pre-retirement compensation (subject to certain reductions) for Messrs. Judge, Lembo and Schweiger, and approximately
50% of such compensation for Mr. Butler. The supplemental program has been discontinued for newly-elected officers.
For
certain participants, the benefits payable under the Supplemental Non-Qualified Pension Program (Program) differ from those described above. Upon retirement, Mr. May received the
alternative benefit provided under the Key Executive Benefit Plan as further described in this proxy statement. Mr. Olivier's employment agreement provides retirement benefits similar to those
of a previous employer instead of the supplemental program benefits described above. Under this agreement, he will receive a pension based on a prescribed formula if he meets certain eligibility
requirements. The Program benefit payable to Mr. Schweiger is fully vested and is further reduced by benefits he is entitled to receive under previous employers' retirement plans.
Also
see the narrative accompanying the "Pension Benefits" table and accompanying notes for more detail on the above program.
401(k) Benefits
The Company offers a qualified 401k program for all employees, including executives, subject to tax code limits. After applying these limits,
the program provides a maximum match of up to $10,600 for Messrs. Judge, Lembo and Schweiger, which is equal to 50% of the first 8% of eligible base salary and annual cash incentive. For
Messrs. Olivier and Butler, we provide a maximum match of up to $7,950, which is equal to 3% of eligible base salary and annual cash incentive.
Deferred Compensation
The Company offers a non-qualified deferred compensation program for our executives. In 2016, the program allowed deferral of up to 100% of
base salary, annual incentives and long-term incentive awards. The program allows participants to select investment measures for deferrals based on an array of deemed investment options (including
certain mutual funds and publicly traded securities).
See
the Non-Qualified Deferred Compensation Table and accompanying notes for additional details on the above program.
Perquisites
The Company provides executives with limited financial planning, vehicle leasing and access to tickets to sporting events, perquisites that we
believe are consistent with peer companies. The current level of perquisites does not factor into decisions on total compensation.
2017 Proxy Statement
51
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
|
We
maintain contractual agreements with all of our Named Executive Officers that provide for potential compensation in the event of certain terminations following a Change of Control. We believe these
agreements are necessary to attract and retain high quality executives and to ensure executive focus on Company business during the period leading up to a potential Change of Control. The agreements
are "double-trigger" agreements that provide executives with compensation in the event of a Change of Control followed by termination of employment due to one or
more
of the events set forth in the agreements, while still providing an incentive to remain employed with the Company for the transition period that follows.
Under
the agreements, certain compensation is generally payable if, during the applicable change of control period, the executive is involuntarily terminated (other than for cause) or terminates
employment for "good reason." These agreements are described more fully in the Tables following this CD&A under "Potential Payments upon Termination or Change of Control."
Tax and Accounting Considerations
|
The
Company's incentive plan was approved by shareholders and permits annual incentive and performance share awards intended to qualify as performance-based compensation under Section 162(m) of
the Internal Revenue Code. However, the Company believes that the availability of a tax deduction for forms of compensation is secondary to the goal of providing market-based compensation to attract
and retain highly qualified executives.
The
Company has adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718,
Compensation Stock Compensation
. In general, the
Company and the Committee do not consider accounting considerations in
structuring compensation arrangements.
Equity
awards noted in the compensation tables are made annually at the February meeting of the Compensation Committee (subject to further approval by all of the independent members of the Board of
Trustees of the Chief Executive Officer's award) when the Committee also determines base salary, annual and
long-term
incentive compensation targets and annual incentive awards. The date of this meeting is chosen at least a year in advance, and therefore awards are not coordinated with the release of
material non-public information.
Compensation Committee Report
|
The
Compensation Committee of the Board of Trustees has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based
on this review and discussion, the Compensation Committee has
recommended
to the Board of Trustees that the Compensation Discussion and Analysis be included in the 2017 proxy statement and our Annual Report on Form 10-K.
The
Compensation Committee
Charles
K. Gifford, Chair
John S. Clarkeson
Sanford Cloud, Jr.
James S. DiStasio
William C. Van Faasen
Dennis R. Wraase
February 21, 2017
52
2017 Proxy Statement
Table of Contents
SUMMARY COMPENSATION TABLE
|
The table below summarizes the total compensation paid or earned by James J. Judge, our principal executive officer (PEO); Philip J. Lembo, our principal
financial officer (PFO); Leon J. Olivier, our Executive Vice President-Energy Enterprise Strategy and Business Development, Werner J. Schweiger, our Executive Vice President and Chief Operating
Officer, and Gregory B. Butler, our Executive Vice President and General Counsel, who in 2016 were respectively the PEO, PFO and the three other most highly compensated executive officers other than
the PEO and PFO who were serving as executive officers at the end of 2016. We also disclose the compensation of Thomas J. May, our retired Chief Executive Officer, and of David R. McHale, a retired
executive, in accordance with the regulations of the Securities and Exchange Commission (SEC). All of these individuals are collectively referred to as the Named Executive Officers. The table presents
information regarding the compensation of the Named Executive officers for 2016 and also for 2015 and 2014 with regard to those individuals who were also Named Executive Officers for those years. In
determining who the most highly compensated officers are, we compute in
accordance
with the SEC's regulations all of the compensation noted in the tables below, except for changes in pension value, which under the regulations are not included in the determination. The
total compensation presented below does not represent the actual amounts paid to or realized by the Named Executive Officers for Stock Awards during 2014 - 2016, but represents the
aggregate grant date fair value of awards granted in those years for financial reporting purposes. Likewise, the amounts under "Change in Pension Value and Non-Qualified Deferred Compensation
Earnings" do not reflect amounts paid to or realized by our Named Executive Officers during 2014 - 2016. As explained in the footnotes below, the amounts reflect the economic benefit to
each Named Executive Officer of the compensation item paid or accrued on the executive's behalf for the fiscal year ended December 31, 2016. All salaries, annual incentive amounts and long-term
incentive amounts shown for each Named Executive Officer were paid for all services rendered to the Company and its subsidiaries, in all its capacities.
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Name and Principal Position
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Year
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Salary
(6)
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|
Stock
Awards
(7)
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|
Non-Equity
Incentive
Plan
(8)
|
|
Change in
Pension Value
and Non-Qualified
Deferred
Earnings
(9)
|
|
All Other
Compensation
(10)
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|
Total
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Current Executive Officers
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James J. Judge
(1)
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2016
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$
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959,690
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$
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1,382,021
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$
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2,200,000
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$
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1,616,742
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$
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24,809
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$
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6,183,262
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|
President and Chief Executive Officer
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2015
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605,650
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1,135,526
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690,000
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895,929
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20,672
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3,347,777
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2014
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587,975
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|
1,170,436
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660,000
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|
1,587,879
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20,346
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4,026,636
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Philip J. Lembo
(2)
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2016
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439,208
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212,300
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600,000
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543,133
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21,285
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1,815,926
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Executive Vice President,
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Chief Financial Officer and Treasurer
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Leon J. Olivier
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2016
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654,832
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1,451,444
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725,000
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389,011
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14,034
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3,234,320
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Executive Vice President-Energy Enterprise
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2015
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635,766
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1,193,461
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680,000
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423,029
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13,134
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2,945,390
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Strategy and Business Development
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2014
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617,225
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|
|
1,227,070
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680,000
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|
|
1,376,886
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|
7,877
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|
|
3,909,058
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Werner J. Schweiger
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2016
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592,108
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1,359,110
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700,000
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1,156,328
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21,135
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3,828,681
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Executive Vice President and
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2015
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600,000
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1,123,939
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680,000
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746,734
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21,135
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3,171,808
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Chief Operating Officer
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2014
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538,950
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821,193
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600,000
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1,174,893
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205,073
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3,340,109
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Gregory B. Butler
(3)
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2016
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514,494
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896,978
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575,000
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539,638
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12,886
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2,538,996
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Executive Vice President and
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General Counsel
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|
2017 Proxy Statement
53
Table of Contents
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Name and Principal Position
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Year
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Salary
(6)
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Stock
Awards
(7)
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Non-Equity
Incentive
Plan
(8)
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Change in
Pension Value
and Non-Qualified
Deferred
Earnings
(9)
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All Other
Compensation
(10)
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Total
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Former Executive Officers
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Thomas J. May
(4)
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2016
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743,048
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6,677,885
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3,775,105
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52,408
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11,248,446
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|
Chairman of the Board
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2015
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1,232,250
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5,805,087
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2,400,000
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165,239
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82,260
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|
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9,684,836
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2014
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1,196,325
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5,276,401
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2,250,000
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|
|
182,787
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|
75,004
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8,980,517
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David R. McHale
(5)
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2016
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524,380
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|
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1,382,021
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3,355,960
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2,247,988
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7,510,349
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|
Former Executive Vice President and
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2015
|
|
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605,308
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|
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1,135,526
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630,000
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252,131
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14,987
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2,637,952
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Chief Administrative Officer
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2014
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587,643
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1,170,436
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660,000
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2,136,933
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10,348
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4,565,360
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-
(1)
-
Mr. Judge
was elected President and Chief Executive Officer on April 6, 2016, effective as of the May 4, 2016 Board of Trustees meeting. He was
previously Executive Vice President and Chief Financial Officer.
-
(2)
-
Mr. Lembo
was elected Senior Vice President, Chief Financial Officer and Treasurer on May 4, 2016 and Executive Vice President, Chief Financial Officer
and Treasurer on June 30, 2016, effective as of August 8, 2016. Mr. Lembo did not meet the requirements for inclusion in the Summary Compensation Table and was not a Named
Executive Officer for 2015 or 2014.
-
(3)
-
Mr. Butler
was elected Executive Vice President and General Counsel on June 30, 2016, effective as of August 8, 2016. He was previously Senior
Vice President and General Counsel. Mr. Butler did not meet the requirements for inclusion in the Summary Compensation Table and was not a Named Executive Officer for 2015 or 2014.
-
(4)
-
Mr. May
retired as President and CEO upon the completion of the Annual Meeting of Shareholders on May 4, 2016. Mr. May currently serves as the
non-executive Chairman of the Board.
-
(5)
-
Mr. McHale
retired effective September 30, 2016.
-
(6)
-
Includes
amounts deferred in 2016 under the deferred compensation program for Mr. Olivier of $130,966 and for Mr. McHale of $9,690. For more
information, see the Executive Contributions in the Last Fiscal Year column of the Non-Qualified Deferred Compensation Plans Table.
-
(7)
-
Reflects
the aggregate grant date fair value of restricted share units (RSUs) and performance shares granted in each fiscal year, calculated in accordance with FASB
ASC Topic 718.
RSUs
were granted to each Named Executive Officer as long-term compensation, which vests in equal annual installments over three years.
In
2016, each of the Named Executive Officers was granted performance shares as long-term incentive compensation. These performance shares will vest based on the extent to which the two performance
conditions described in the Compensation Discussion and Analysis are achieved as of December 31, 2018. The grant date fair values for the performance shares, assuming achievement of the highest
level of both performance conditions, are as follows: Mr. Judge: $1,043,868; Mr. Lembo: $160,354; Mr. Olivier: $1,096,305; Mr. Schweiger: $1,026,563; Mr. Butler:
$677,505 Mr. May: $5,043,941 and Mr. McHale: $1,043,868.
RSU
and performance share holders are eligible to receive dividend equivalent units on outstanding awards to the same extent that dividends are declared and paid on our common shares. Dividend
equivalent units are accounted for as additional common shares that accrue and are distributed simultaneously with the common shares issued upon vesting of the underlying RSUs and performance shares.
-
(8)
-
Includes
payments to the Named Executive Officers under the 2016 Annual Incentive Program (Mr. Judge: $2,200,000, Mr. Lembo: $600,000;
Mr. Olivier: $725,000; Mr. Schweiger: $700,000; and Mr. Butler: $575,000).
-
(9)
-
Includes
the actuarial increase in the present value from December 31, 2015 to December 31, 2016, of the Named Executive Officers' accumulated benefits
under all of our defined benefit pension program and agreements, determined using interest rate and mortality rate assumptions consistent with those appearing in the footnotes to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2016. The Named Executive Officer may not be fully vested in such amounts. More information on this topic is set forth in the Pension
Benefits table. There were no above-market earnings in deferred compensation value during 2016, as the terms of the Deferred Compensation Plan provide for market-based investments, including
Eversource common shares.
-
(10)
-
Includes
matching contributions allocated by us to the accounts of Named Executive Officers under the 401k Plan as follows: $10,600 for each of
Messrs. Judge, Lembo, Schweiger and May, and $7,950 for each of Messrs. Olivier, Butler and McHale. For Mr. May, the value shown includes $28,681 attributable to the premium on a
previously granted $6.155 million present value life insurance benefit, financial planning services valued at $9,500, and $3,627 paid by the Company for a Company-leased vehicle. For
Mr. Judge, the value shown includes financial planning services valued at $5,000 and $9,209 paid by the Company for a Company-leased vehicle. For Mr. Schweiger, the value shown includes
financial planning services valued at $5,000 and $5,535 paid by the Company for a Company-leased vehicle. None of the other Named Executive Officers received perquisites valued in the aggregate in
excess of $10,000. The payment made to Mr. McHale under his agreement with the Company totaled $2,234,400.
54
2017 Proxy Statement
Table of Contents
Grants of Plan-Based Awards During 2016
|
The
Grants of Plan-Based Awards Table provides information on the range of potential payouts under all incentive plan awards during the fiscal year ended December 31, 2016. The table also
discloses the
underlying
equity awards and the grant date for equity-based awards. We have not granted any stock options since 2002.
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Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
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Estimated Future Payouts
Under Equity Incentive
Plan Awards
(1)
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All Other Stock
Awards: Number
of Shares of
Stock or Units
(#)
(2)
|
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Grant Date
Fair Value
of Stock and
Option Awards
($)
(3)
|
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Name
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Grant
Date
|
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Threshold
($)
|
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Target
($)
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Maximum
($)
|
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Threshold
($)
|
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Target
(#)
|
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Maximum
(#)
|
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|
|
|
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Current Executive Officers
|
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|
James J. Judge
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Annual Incentive
(4)
|
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02/03/16
|
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$
|
690,000
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$
|
1,380,000
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$
|
2,760,000
|
|
$
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|
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|
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|
|
|
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|
|
$
|
|
|
Long-Term Incentive
(5)
|
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|
02/03/16
|
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|
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|
|
|
|
|
|
|
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|
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12,004
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|
|
24,008
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|
|
12,004
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|
|
1,382,021
|
|
Philip J. Lembo
|
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|
Annual Incentive
(4)
|
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|
02/03/16
|
|
|
214,000
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|
|
428,000
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|
856,000
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|
|
|
|
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|
|
|
|
|
|
|
Long-Term Incentive
(5)
|
|
|
02/03/16
|
|
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1,844
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|
|
3,688
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|
|
1,844
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|
|
212,300
|
|
Leon J. Olivier
|
|
|
|
|
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|
Annual Incentive
(4)
|
|
|
02/03/16
|
|
|
247,500
|
|
|
495,000
|
|
|
990,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive
(5)
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,607
|
|
|
25,214
|
|
|
12,607
|
|
|
1,451,444
|
|
Werner J. Schweiger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
(4)
|
|
|
02/03/16
|
|
|
232,000
|
|
|
464,000
|
|
|
928,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive
(5)
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,805
|
|
|
23,610
|
|
|
11,805
|
|
|
1,359,110
|
|
Gregory B. Butler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
(4)
|
|
|
02/03/16
|
|
|
182,000
|
|
|
364,000
|
|
|
728,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive
(5)
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,791
|
|
|
15,582
|
|
|
7,791
|
|
|
896,978
|
|
Former Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. May
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
(4)
|
|
|
02/03/16
|
|
|
735,000
|
|
|
1,470,000
|
|
|
2,940,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive
(5)
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,003
|
|
|
116,006
|
|
|
58,003
|
|
|
6,677,885
|
|
David R. McHale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
(4)
|
|
|
02/03/16
|
|
|
235,500
|
|
|
471,000
|
|
|
942,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive
(5)
|
|
|
02/03/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,004
|
|
|
24,008
|
|
|
12,004
|
|
|
1,382,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Reflects
the number of performance shares granted to each of the Named Executive Officers on February 3, 2016 under the 2016 - 2018 Long-Term
Incentive Program. Performance shares were granted subject to a three-year Performance Period that ends on December 31, 2018. At the end of the Performance Period, common shares will be awarded
based on actual performance results as a percentage of target, subject to reduction for applicable payroll withholding taxes. Holders of performance shares are eligible to receive dividend equivalent
units on outstanding performance shares awarded to them to the same extent that dividends are declared and paid on our common shares. Dividend equivalent units are accounted for as additional common
shares that accrue and are distributed simultaneously with the common shares underlying the performance shares. The Annual Incentive Program does not include an equity component.
-
(2)
-
Reflects
the number of RSUs granted to each of the Named Executive Officers on February 3, 2016 under the 2016 - 2018 Long-Term Incentive
Program. RSUs vest in equal installments on February 3, 2017, 2018 and 2019. We will distribute common shares with respect to vested RSUs on a one-for-one basis following vesting, after
reduction for applicable payroll withholding taxes. Holders of RSUs are eligible to receive dividend equivalent units on outstanding RSUs awarded to them to the same extent that dividends are declared
and paid on our common shares. Dividend equivalent units are accounted for as additional common shares that accrue and are distributed simultaneously with the common shares distributed in respect of
the underlying RSUs.
-
(3)
-
Reflects
the grant date fair value, determined in accordance with FASB ASC Topic 718, of RSUs and performance shares granted to the Named Executive Officers on
February 3, 2016 under the 2016 - 2018 Long-Term Incentive Program.
-
(4)
-
Amounts
reflect the range of potential payouts, if any, under the 2016 Annual Incentive Program for each Named Executive Officer, as described in the Compensation
Discussion and Analysis. Mr. Judge's Annual Incentive Program potential payouts were adjusted by the Compensation Committee and the independent Trustees on April 6, 2016.
Mr. Lembo's Annual Incentive Program potential payouts were adjusted by the Compensation Committee on May 2, 2016 in anticipation of his election by the Board of Trustees on
May 4, 2016. The threshold payment under the Annual Incentive Program is 50% of target. The actual payments in 2017 for performance in 2016 are set forth in the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table.
-
(5)
-
Reflects
the range of potential payouts, if any, pursuant to performance share awards under the 2016 - 2018 Long-Term Incentive Program, as described
in the Compensation Discussion and Analysis.
2017 Proxy Statement
55
Table of Contents
Equity Grants Outstanding at December 31, 2016
|
The
following table sets forth option, RSU and performance share grants outstanding at the end of our fiscal year ended December 31, 2016 for each of the
Named
Executive Officers. All outstanding options were fully vested as of April 10, 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
(1)
|
|
Stock Awards
(2)
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)
(3)
|
|
Market Value
of Shares
or Units of
Stock That
Have Not
Vested
($)
(4)
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested
(#)
(5)
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other Rights
That Have Not
Vested
($)
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James J. Judge
|
|
|
|
|
|
|
|
|
|
|
|
23,916
|
|
|
1,320,894
|
|
|
36,518
|
|
|
2,016,880
|
|
Philip J. Lembo
|
|
|
|
|
|
|
|
|
|
|
|
3,885
|
|
|
214,544
|
|
|
6,033
|
|
|
333,179
|
|
Leon J. Olivier
|
|
|
|
|
|
|
|
|
|
|
|
25,114
|
|
|
1,387,061
|
|
|
38,335
|
|
|
2,117,254
|
|
Werner J. Schweiger
|
|
|
39,360
|
|
|
24.74
|
|
|
1/24/2018
|
|
|
22,278
|
|
|
1,230,440
|
|
|
32,125
|
|
|
1,774,271
|
|
|
|
|
48,544
|
|
|
25.93
|
|
|
1/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,736
|
|
|
26.90
|
|
|
1/28/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory B. Butler
|
|
|
|
|
|
|
|
|
|
|
|
16,109
|
|
|
889,676
|
|
|
24,886
|
|
|
1,374,439
|
|
Former Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. May
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David R. McHale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Options
held by Mr. Schweiger were granted by NSTAR (which merged into Eversource Energy in 2012) and were assumed by the Company.
-
(2)
-
Awards
and market values of awards appearing in the table and the accompanying notes have been rounded to whole units.
-
(3)
-
A
total of 45,966 unvested RSUs vested after January 1 and on or before February 4, 2017 (Mr. Judge: 12,173; Mr. Lembo: 2,011;
Mr. Olivier: 12,778; Mr. Schweiger: 10,708; and Mr. Butler: 8,296). A total of 29,498 unvested RSUs will vest on February 5, 2018 (Mr. Judge: 7,614;
Mr. Lembo: 1,239; Mr. Olivier: 8,000; Mr. Schweiger: 7,511; and Mr. Butler: 5,134). A total of 15,837 unvested RSUs will vest on February 4, 2019 (Mr. Judge:
4,128; Mr. Lembo: 634, Mr. Olivier: 4,336; Mr. Schweiger: 4,060; Mr. Butler: 2,679).
-
(4)
-
The
market value of RSUs is determined by multiplying the number of RSUs by $55.23, the closing price per share of common shares on December 30, 2016, the
last trading day of the year.
-
(5)
-
Reflects
the target payout level for performance shares granted under the 2014 - 2016 Program, the 2015 - 2017 Program and the
2016 - 2018 Program.
The
performance period for the 2014 - 2016 program ended on December 31, 2016. Payouts under that Program are set forth in the Compensation Discussion & Analysis under the
"Results of the 2014 - 2016 Performance Share Program."
The
performance shares payout for 2015 - 2017 Program and the 2016 - 2018 Program will be based on actual performance results as a percentage of target, subject to
reduction for applicable payroll withholding taxes. As described more fully under "Performance Shares" in the Compensation Discussion and Analysis and footnote (1) to the Grants of Plan-Based
Awards table, performance shares will vest following a three-year performance period based on the extent to which the two performance conditions are achieved. Under the 2015 - 2017
Program, a total of 40,977 unearned performance shares (including accrued dividend equivalents) will vest based on the extent to which the two performance conditions described in the Compensation
Discussion & Analysis are achieved as of December 31, 2017. Assuming achievement of these conditions at a target level of performance, the amount of the awards would be as follows:
(Mr. Judge: 10,458; Mr. Lembo: 1,814; Mr. Olivier: 10,991; Mr. Schweiger: 10,351 and Mr. Butler: 7,363). Under the 2016 - 2018 Program, a total of
47,510 unearned performance shares (including accrued dividend equivalents) will vest based on the extent to which the two performance conditions described in the Compensation Discussion &
Analysis are achieved as of December 31, 2018, assuming achievement of these conditions at a target level of performance: (Mr. Judge: 12,384; Mr. Lembo: 1,902; Mr. Olivier:
13,007; Mr. Schweiger: 12,179 and Mr. Butler: 8,038).
-
(6)
-
The
market value is determined by multiplying the number of performance shares in the adjacent column by $55.23, the closing price of Eversource Energy common shares
on December 30, 2016, the last trading day of the year.
56
2017 Proxy Statement
Table of Contents
Option Exercises and Stock Vested in 2016
|
The
following table reports amounts realized on equity compensation during the fiscal year ended December 31, 2016. The Stock Awards columns report the vesting of
RSU
and performance share grants to the Named Executive Officers in 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired
on Exercise
(#)
|
|
Value Realized
on Exercise
(1)
|
|
Number of
Shares
Acquired on
Vesting
(#)
(2)
|
|
Value Realized
on Vesting
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James J. Judge
|
|
|
|
|
$
|
|
|
|
29,156
|
|
$
|
1,579,312
|
|
Philip J. Lembo
|
|
|
|
|
|
|
|
|
4,922
|
|
|
266,571
|
|
Leon J. Olivier
|
|
|
|
|
|
|
|
|
30,684
|
|
|
1,662,073
|
|
Werner J. Schweiger
|
|
|
47,232
|
|
|
597,437
|
|
|
21,608
|
|
|
1,169,834
|
|
Gregory B. Butler
|
|
|
|
|
|
|
|
|
20,282
|
|
|
1,098,605
|
|
Former Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. May
|
|
|
|
|
|
|
|
|
236,147
|
|
|
13,291,143
|
|
David R. McHale
|
|
|
|
|
|
|
|
|
37,207
|
|
|
1,995,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Represents
the amounts realized upon option exercises, which is the difference between the option exercise price and the market price at the time of exercise.
-
(2)
-
Includes
RSUs and performance shares granted to our Named Executive Officers under our long-term incentive programs, including dividend reinvestments, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
2013 Program
|
|
2014 Program
|
|
2015 Program
|
|
2016 Program
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James J. Judge
|
|
|
21,360
|
|
|
4,418
|
|
|
3,378
|
|
|
|
|
Philip J. Lembo
|
|
|
3,588
|
|
|
748
|
|
|
585
|
|
|
|
|
Leon J. Olivier
|
|
|
22,501
|
|
|
4,632
|
|
|
3,551
|
|
|
|
|
Werner J. Schweiger
|
|
|
15,164
|
|
|
3,100
|
|
|
3,344
|
|
|
|
|
Gregory B. Butler
|
|
|
14,838
|
|
|
3,065
|
|
|
2,379
|
|
|
|
|
Former Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. May
|
|
|
84,786
|
|
|
40,140
|
|
|
52,341
|
|
|
58,880
|
|
David R. McHale
|
|
|
21,360
|
|
|
7,433
|
|
|
5,684
|
|
|
2,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
all cases, we reduce the distribution of common shares by that number of shares valued in an amount sufficient to satisfy payroll tax withholding obligations.
-
(3)
-
Values
realized on vesting of RSUs granted under the 2013 - 2015, 2014 - 2016 and 2015 - 2017 Programs were based on $53.51
per share, the closing price of Eversource Energy common shares on February 16, 2016. Values realized on vesting of performance shares granted under the 2013 - 2015 Program were
based on $54.67 per share, the closing price of Eversource Energy common shares on February 15, 2016.
The Pension Benefits Table shows the estimated present value of accumulated retirement benefits payable to each Named Executive Officer upon retirement based
on the assumptions described below. The table distinguishes between benefits available under the qualified pension program, the supplemental pension program, and any additional benefits available
under contractual agreements. See the narrative above in the Compensation Discussion and Analysis under the caption "OTHER- Retirement Benefits" and
"CONTRACTUAL
AGREEMENTS" for more detail on benefits under these plans and our agreements.
The
values shown in the Pension Benefits Table for Messrs. Judge, Lembo and Schweiger were calculated as of December 31, 2016 based on benefit payments in the form of a lump sum. The
values for Mr. May were calculated as of June 30, 2016. For Mr. Olivier, we assumed a lump sum payment of his special retirement benefits under his agreement, and payment of his
qualified pension program benefit as a life annuity
2017 Proxy Statement
57
Table of Contents
with
a one-third spousal contingent annuitant option (the typical payment form under that Plan). For Mr. Butler, we assumed a payment of benefits in the form of a contingent annuitant option.
Such earned pension program benefit value could otherwise have changed because of the reduction in mortality factors and potentially rising interest rates. The amount of Messrs. May's and
McHale's actual pension benefit is as set forth in the Pension Benefits Table, below.
The
values shown in this Table for the Named Executive Officers were based on benefit payments commencing at the actual age of retirement for Mr. May and Mr. McHale and the earliest
possible ages for retirement with
unreduced benefits for the other Named Executive Officers: Mr. Judge: age 60, Mr. Lembo, age 62, Mr. Olivier: age 65, Mr. Schweiger: age 60, Mr. Butler: age 62,
Mr. May: age 69 and Mr. McHale: age 56.
In
addition, we determined benefits under the qualified pension program using tax code limits in effect on December 31, 2016. For Messrs. Judge, Lembo, Schweiger, May and McHale, the
values shown reflect actual 2016 salary and annual incentives earned in 2015
but
paid in 2016 (per applicable supplemental program rules). For Mr. Butler, the values shown reflect actual 2016 salary and annual incentives earned in 2016 but paid in 2017 (per applicable
supplemental program rules). Mr. Olivier's benefit was calculated as is set forth in the footnote (1) below.
We
determined the present value of benefits at retirement age using the discount rate within a range of 3.96% to 4.20% under ACS 715-30 pension accounting for the 2016 fiscal year end measurement (as
of December 31, 2016). This present value assumes no pre-retirement mortality, turnover or disability. However, for the postretirement period beginning at retirement age, we used the RP2014
Employee Table Projected Generationally with Scale MP2015 (the 1983 Group Annuity Mortality Table for Mr. Olivier per his agreement). This new mortality table (as published by the Society of
Actuaries in 2014) and projection scale were used by the Eversource Pension Plan for year-end 2016 financial disclosure. Additional assumptions appear in the footnotes to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number
of Years
Credited
Service (#)
|
|
Present
Value of
Accumulation
Benefit
|
|
During Last
Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
James J. Judge
|
|
Retirement Plan
|
|
|
39.33
|
|
$
|
2,694,015
|
|
$
|
|
|
|
|
Supplemental Plan
|
|
|
20.00
|
|
|
5,494,788
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
39.33
|
|
|
4,124,864
|
|
|
|
|
Philip J. Lembo
|
|
Retirement Plan
|
|
|
7.75
|
|
|
1,149,272
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
7.75
|
|
|
1,295,189
|
|
|
|
|
Leon J. Olivier (1)
|
|
Retirement Plan
|
|
|
17.83
|
|
|
781,806
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
15.33
|
|
|
6,092,095
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
31.27
|
|
|
1,211,100
|
|
|
105,966
|
|
Werner J. Schweiger
|
|
Retirement Plan
|
|
|
14.83
|
|
|
455,118
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
14.83
|
|
|
1,646,494
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
14.00
|
|
|
5,158,454
|
|
|
|
|
Gregory B. Butler
|
|
Retirement Plan
|
|
|
20.00
|
|
|
942,621
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
20.00
|
|
|
5,462,980
|
|
|
|
|
Former Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. May
|
|
Retirement Plan
|
|
|
40.00
|
|
|
3,405,910
|
|
|
432,624
|
|
|
|
Supplemental Plan
|
|
|
20.00
|
|
|
4,948,334
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
40.00
|
|
|
18,823,787
|
|
|
152,749
|
|
David R. McHale
|
|
Retirement Plan
|
|
|
35.08
|
|
|
2,300,808
|
|
|
29,988
|
|
|
|
Supplemental Plan
|
|
|
35.08
|
|
|
9,554,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Mr. Olivier
was employed with Northeast Nuclear Energy Company, one of our subsidiaries, from October of 1998 through March of 2001. In connection with this
employment, he received a retirement benefit that provided credit for service with his previous employer, Boston Edison Company (BECO). The benefit, which commenced upon Mr. Olivier's
55th birthday, provides an annuity of $105,966 per year. The present value of future payments under this benefit was calculated using the actuarial assumptions currently used by the pension
program. Mr. Olivier was rehired by us from Entergy in September 2001. Mr. Olivier's current employment agreement provides for certain supplemental pension benefits in lieu of benefits
under the supplemental program equal to three percent of final average compensation for each of his first 15 years of service since September 10, 2001, plus one percent of final average
compensation for each of the second 15 years of service. Alternatively, if Mr. Olivier voluntarily terminates his employment with us, he is eligible to receive upon retirement a lump sum
payment of $2,050,000. These benefits will be offset by the value of any benefits he receives from the pension program. Amounts reported in the table assume the termination of his employment with our
consent on December 31, 2016, and payment of the lump sum benefit of $6,092,095 offset by pension program benefits.
58
2017 Proxy Statement
Table of Contents
Nonqualified Deferred Compensation in 2016
|
See the narrative above in the Compensation Discussion and Analysis under the caption "ELEMENTS OF 2016 COMPENSATION - OTHER - Deferred
Compensation"
for more detail on our non-qualified deferred compensation program.
|
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Name
|
|
Executive
Contributions
in Last FY
(1)
|
|
Registrant
Contributions
in Last FY
|
|
Aggregate
Earnings in
in Last FY
|
|
Aggregate
Withdrawals/
Distributions
|
|
Aggregate
Balance at
Last FYE
(2)
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Current Executive Officers
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
James J. Judge
|
|
$
|
|
|
$
|
|
|
$
|
498,096
|
|
$
|
|
|
$
|
4,824,595
|
|
Philip J. Lembo
|
|
|
|
|
|
|
|
|
104,094
|
|
|
|
|
|
1,175,374
|
|
Leon J. Olivier
|
|
|
130,966
|
|
|
|
|
|
105,799
|
|
|
|
|
|
3,240,294
|
|
Werner J. Schweiger
|
|
|
|
|
|
|
|
|
1,121,557
|
|
|
|
|
|
14,883,568
|
|
Gregory B. Butler
|
|
|
|
|
|
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|
|
1,631
|
|
|
|
|
|
17,569
|
|
Former Executive Officers
|
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Thomas J. May
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|
|
|
|
|
|
|
|
4,818,742
|
|
|
(48,070,673
|
)
|
|
12,686,520
|
|
David R. McHale
|
|
|
9,690
|
|
|
|
|
|
11,360
|
|
|
|
|
|
147,854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Includes
deferrals in 2016 under our deferred compensation program by Mr. Olivier of $130,966 and by Mr. McHale of $9,690. Named Executive Officers who
participate in this program are provided with a variety of investment opportunities, which the individual can modify and reallocate under the program terms. Contributions by the Named Executive
Officer are vested at all times. The amounts reported in this column for each Named Executive Officer are reflected as compensation to such Named Executive Officer in the Summary Compensation Table.
-
(2)
-
Includes
the total market value of deferred compensation program balances at December 31, 2016, plus the value of vested RSUs or other awards for which the
distribution of common shares is currently deferred, based on $55.23, the closing price of our common shares on December 30, 2016, the last trading day of the year. The aggregate balances
reflect a significant level of earnings on previously earned and deferred compensation.
Potential Payments Upon Termination or Change of Control
|
Generally,
a "change of control" means a change in ownership or control effected through (i) the acquisition of 30% or more of the combined voting power of common shares or other voting
securities (20% for Messrs. Butler and Olivier, excluding certain defined transactions), (ii) the acquisition of more than 50% of our common shares, excluding certain defined
transactions (for Messrs. Judge, Lembo and Schweiger), (iii) a change in the majority of the Board of Trustees, unless approved by a majority of the incumbent Trustees,
(iv) certain reorganizations, mergers or consolidations where substantially all of the persons who were the beneficial owners of the outstanding common shares immediately prior to such business
combination do not beneficially own more than 50% (75% for Mr. Olivier) of the voting power of the resulting business entity (excluding in certain cases defined transactions), and
(v) complete liquidation or dissolution of the Company, or a sale or disposition of all or substantially all of the assets of the Company other than, for Mr. Butler, to an entity with
respect to which following completion of the transaction more than 50% (75% for Mr. Olivier) of common shares or other voting securities is then owned
by
all or substantially all of the persons who were the beneficial owners of common shares and other voting securities immediately prior to such transaction.
In
the event of a change of control, the Named Executive Officers are generally entitled to receive compensation and benefits following either involuntary termination of employment without "cause" or
voluntary termination of employment for "good reason" within the applicable period (generally two years following a change of control). The Committee believes that termination for good reason is
conceptually the same as termination "without cause" and, in the absence of this provision, potential acquirers would have an incentive to constructively terminate executives to avoid paying
severance. Termination for "cause" generally means termination due to a felony or certain other convictions; fraud, embezzlement, or theft in the course of employment; intentional, wrongful damage to
Company property; gross misconduct or gross negligence in the course of employment or gross neglect of duties harmful to the Company; or a material breach of obligations under the agreement. "Good
reason" for
2017 Proxy Statement
59
Table of Contents
termination
generally exists after assignment of duties inconsistent with executive's position, a material reduction in compensation or benefits, a transfer more than 50 miles from the executive's
pre-change of control principal business location (or for Messrs. Judge, Lembo and Schweiger, an involuntary transfer outside the Greater Boston Metropolitan Area), or requiring business travel
to a substantially greater extent than required prior to the change of control.
The
discussion and tables below show compensation payable to each Named Executive Officer who is still an employee of the Company, in the event of: (i) termination for cause;
(ii) voluntary termination; (iii) involuntary
not-for-cause termination; (iv) termination in the event of death or disability; and (v) termination following change of control. The amounts shown assume that each termination was
effective as of December 31, 2016, the last business day of the fiscal year.
The
summaries above do not purport to be complete and are qualified in their entirety by the actual terms and provisions of the agreements and plans, copies of which have been filed as exhibits to our
Annual Report on Form 10-K for the year ended December 31, 2016.
Payments Upon Termination
|
Regardless
of the manner in which the employment of a Named Executive Officer terminates, the executive is
entitled
to receive certain amounts earned during the executive's term of employment. Such amounts include:
-
-
Vested RSUs and certain other vested awards;
-
-
Amounts contributed and any vested matching contributions under the deferred compensation program;
-
-
Pay for unused vacation; and
-
-
Amounts accrued and vested under the pension/supplemental and 401k programs (except in the event of a termination for cause under the
supplemental program).
See
the section above captioned "PENSION BENEFITS IN 2016" for information about the pension program, supplemental program and other benefits, and the section captioned "NONQUALIFIED DEFERRED
COMPENSATION IN 2016."
I. Post-Employment Compensation: Termination for Cause
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|
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|
|
|
|
|
|
|
|
|
Type of Payment
|
|
Judge
($)
|
|
Lembo
($)
|
|
Olivier
($)
|
|
Schweiger
($)
|
|
Butler
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Programs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferral Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Cash Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise Tax & Gross-Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation Payment for Non-Compete Agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation Payment for Liquidated Damages
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60
2017 Proxy Statement
Table of Contents
II. Post-Employment Compensation: Voluntary Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Payment
|
|
Judge
($)
|
|
Lembo
($)
|
|
Olivier
($)
|
|
Schweiger
($)
|
|
Butler
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Programs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentives
(1)
|
|
|
2,200,000
|
|
|
600,000
|
|
|
725,000
|
|
|
700,000
|
|
|
575,000
|
|
Performance Shares
(2)
|
|
|
1,368,004
|
|
|
229,718
|
|
|
2,117,254
|
|
|
1,134,938
|
|
|
942,805
|
|
RSUs
(3)
|
|
|
618,548
|
|
|
102,158
|
|
|
1,387,061
|
|
|
544,092
|
|
|
421,513
|
|
Pension and Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferral Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise Tax & Gross-Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation Payment for Non-Compete Agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation Payment for Liquidated Damages
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,186,552
|
|
|
931,876
|
|
|
4,229,315
|
|
|
2,379,030
|
|
|
1,939,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Represents
actual 2016 annual incentive awards, determined as described in the Compensation Discussion and Analysis.
-
(2)
-
For
Mr. Olivier: represents 100 percent of the performance share awards under each of the 2014 - 2016 Long-Term Incentive Program, the
2015 - 2017 Long-Term Incentive Program and the 2016 - 2018 Long-Term Incentive Plan. For Messrs. Judge, Lembo, Schweiger and Butler: represents 100 percent
of the performance share awards under the 2014 - 2016 Long-Term Incentive Program, 67 percent of the performance share awards under the 2015 - 2017 Long-Term
Incentive Program and 33 percent of the performance share awards under the 2016 - 2018 Long-Term Incentive Program.
-
(3)
-
Represents
values of RSUs granted under our long-term incentive programs that, at year-end 2016, were unvested under applicable vesting schedules. Under these
programs, RSUs vest pro rata based on credited service years and age at termination, and time worked during the vesting period. The values were calculated by multiplying the number of RSUs by $55.23,
the closing price of our common shares on December 30, 2016, the last trading day of the year.
III. Post-Employment Compensation: Involuntary Termination, Not for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Payment
|
|
Judge
($)
|
|
Lembo
($)
|
|
Olivier
($)
|
|
Schweiger
($)
|
|
Butler
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Programs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentives
(1)
|
|
|
2,200,000
|
|
|
600,000
|
|
|
725,000
|
|
|
700,000
|
|
|
575,000
|
|
Performance Shares
(2)
|
|
|
1,368,004
|
|
|
229,718
|
|
|
2,117,254
|
|
|
1,134,938
|
|
|
942,805
|
|
RSUs
(3)
|
|
|
618,548
|
|
|
102,158
|
|
|
1,387,061
|
|
|
544,092
|
|
|
421,513
|
|
Pension and Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Retirement Benefit
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500,256
|
|
Deferral Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,974
|
|
Perquisites
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
Separation Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise Tax & Gross-Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation Payment for Non-Compete Agreement
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
924,000
|
|
Separation Payment for Liquidated Damages
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
924,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,186,552
|
|
|
931,876
|
|
|
4,229,315
|
|
|
2,379,030
|
|
|
7,330,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Represents
actual 2016 Named Executive Officer annual incentive awards, determined as described in the Compensation Discussion and Analysis.
2017 Proxy Statement
61
Table of Contents
-
(2)
-
For
Mr. Olivier: represents 100 percent of the performance share awards under each of the 2014 - 2016 Long-Term Incentive Program, the
2015 - 2017 Long-Term Incentive Program and the 2016 - 2018 Long-Term Incentive Program. For Messrs. Judge, Lembo, Schweiger and Butler: represents
100 percent of the performance share awards under the 2014 - 2016 Long-Term Incentive Program, 67 percent of the performance share awards under 2015 - 2017
Long-Term Incentive Program and 33 percent of the performance share awards under the 2016 - 2018 Long-Term Incentive Program.
-
(3)
-
Represents
values of RSUs under our long-term incentive programs that, at year-end 2016, were unvested under applicable vesting schedules. Under these programs, RSUs
vest pro rata based on credited service years and age at termination, and time worked during the vesting period. The values were calculated by multiplying the number of RSUs by $55.23, the closing
price of our common shares on December 30, 2016, the last trading day of the year.
-
(4)
-
Represents
actuarial present values at year-end 2016 of amounts payable solely under employment agreements upon termination (which are in addition to amounts due
under the pension program).
-
(5)
-
Represents
estimated Company cost at year-end 2016 of providing post-employment health and welfare benefits beyond those available to non-executives upon involuntary
termination. The amount reported in the table for Mr. Butler represents the value of two years employer contributions toward active health, long-term disability, and life insurance benefits,
plus a payment to offset any taxes thereon.
-
(6)
-
Represents
Company cost of reimbursing Mr. Butler for two years financial planning and tax preparation fees.
-
(7)
-
Represents
consideration for an agreement not to compete with the Company following termination. The employment agreement with Mr. Butler provides for a
lump-sum payment equal to the sum of his base salary plus annual incentive award. This payment does not replace, offset or otherwise affect the calculation or payment of the annual incentive award.
-
(8)
-
Represents
a severance payment in addition to any non-compete agreement payment described in the prior note.
IV. Post-Employment Compensation: Termination Upon Death or Disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Payment
|
|
Judge
($)
|
|
Lembo
($)
|
|
Olivier
($)
|
|
Schweiger
($)
|
|
Butler
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Programs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentives
(1)
|
|
|
2,200,000
|
|
|
600,000
|
|
|
725,000
|
|
|
700,000
|
|
|
575,000
|
|
Performance Shares
(2)
|
|
|
1,368,004
|
|
|
229,718
|
|
|
2,117,254
|
|
|
1,134,938
|
|
|
942,805
|
|
RSUs
(3)
|
|
|
618,548
|
|
|
102,158
|
|
|
1,387,061
|
|
|
544,092
|
|
|
421,513
|
|
Pension and Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Retirement Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferral Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise Tax & Gross-Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation Payment for Non-Compete Agreement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation Payment for Liquidated Damages
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,186,552
|
|
|
931,876
|
|
|
4,229,315
|
|
|
2,379,030
|
|
|
1,939,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Represents
actual 2016 Named Executive Officer annual incentive awards, determined as described in the Compensation Discussion and Analysis.
-
(2)
-
For
Mr. Olivier: represents 100 percent of the performance share awards under each of the 2014 - 2016 Long-Term Incentive Program, the
2015 - 2017 Long-Term Incentive Program and the 2016 - 2108 Long-Term Incentive Program. For Messrs. Judge, Lembo, Schweiger and Butler: represents
100 percent of the performance share awards under the 2014 - 2016 Long-Term Incentive Program, 67 percent of the performance share awards under the
2015 - 2017 Long-Term Incentive Program and 33 percent of the performance share awards under the 2016 - 2018 Long-Term Incentive Program.
-
(3)
-
Represents
values of RSUs under our long-term incentive programs that, at year-end 2016, were unvested under applicable vesting schedules. Under these programs, upon
termination due to disability, awards vest in full or on a prorated basis based on credited service years and age at termination, and time worked during the vesting period. The values were calculated
by multiplying the number of RSUs by $55.23, the closing price of our common shares on December 30, 2016, the last trading day of the year.
Payments Made Upon a Change of Control
|
The
agreements with Messrs. Judge, Lembo, Schweiger and Butler include change of control benefits. Mr. Olivier participates in the Special Severance Program for Officers (SSP), which
also provides change
of
control benefits. The agreements and the SSP are binding on us and on certain of our majority-owned subsidiaries.
Pursuant
to the agreements and the SSP, if an involuntary non-"cause" termination of employment occurs following a change of control (see definition of
62
2017 Proxy Statement
Table of Contents
"cause" above under the heading of "POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL"), or in the event of a voluntary termination for
"good reason" (as described above under such heading), then the Named Executive Officers generally will receive the benefits listed below:
-
-
For Messrs. Judge and Schweiger, a lump sum severance payment of three times (two times for Messrs. Lembo and Butler and one-time
for Mr. Olivier) the sum of the executive's base salary plus annual incentive award for the relevant year (Base Compensation), plus one additional year for Mr. Olivier and two additional
years for Mr. Butler as consideration for an agreement not to compete;
-
-
Three years health benefits continuation (two years for Messrs. Olivier and Lembo);
-
-
Automatic vesting and distribution of long-term performance awards (with performance shares vesting at target) and certain other awards; and
-
-
A lump sum equal to any excise taxes incurred under the Internal Revenue Code due to receipt of change of control payments, plus an amount to
offset any taxes incurred on such payments except for Mr. Olivier. The Company has discontinued the practice of providing such payments in contractual agreements for newly elected executives.
The
above summaries do not purport to be complete and are qualified in their entirety by the actual terms and provisions of the agreements and programs (including component plans), copies of which
have been filed as exhibits to our Annual Report on Form 10-K for the year ended December 31, 2016 (where applicable).
V. Post-Employment Compensation: Termination Following a Change of Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Payment
|
|
Judge
($)
|
|
Lembo
($)
|
|
Olivier
($)
|
|
Schweiger
($)
|
|
Butler
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Programs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentives
(1)
|
|
|
2,200,000
|
|
|
600,000
|
|
|
725,000
|
|
|
700,000
|
|
|
575,000
|
|
Performance Shares
(2)
|
|
|
2,016,880
|
|
|
333,179
|
|
|
2,117,254
|
|
|
1,774,271
|
|
|
1,374,439
|
|
RSUs
(3)
|
|
|
1,320,894
|
|
|
214,544
|
|
|
1,387,061
|
|
|
1,230,440
|
|
|
889,676
|
|
Pension and Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special Retirement Benefit
(4)
|
|
|
17,564,449
|
|
|
2,424,168
|
|
|
|
|
|
2,332,385
|
|
|
4,566,266
|
|
Deferral Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
(5)
|
|
|
73,335
|
|
|
33,116
|
|
|
32,682
|
|
|
70,575
|
|
|
49,461
|
|
Perquisites
(6)
|
|
|
15,000
|
|
|
10,000
|
|
|
|
|
|
15,000
|
|
|
15,000
|
|
Separation Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise Tax and Gross-Up
(7)
|
|
|
11,902,782
|
|
|
|
|
|
|
|
|
|
|
|
3,152,941
|
|
Separation Payment for Non-Compete Agreement
(8)
|
|
|
|
|
|
|
|
|
1,089,000
|
|
|
|
|
|
924,000
|
|
Separation Payment for Liquidated Damages
(9)
|
|
|
10,200,000
|
|
|
2,340,000
|
|
|
1,089,000
|
|
|
3,954,000
|
|
|
1,848,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
45,293,340
|
|
|
5,955,007
|
|
|
6,439,997
|
|
|
10,076,671
|
|
|
13,394,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Represents
actual 2016 annual incentive awards, determined as described in the Compensation Discussion and Analysis.
-
(2)
-
Represents
100 percent of the performance share awards, under each of the 2014 - 2016 Long-Term Incentive Program, the 2015 - 2017
Long-Term Incentive Program and the 2016 - 2018 Long-Term Incentive Program.
-
(3)
-
Represents
values of RSUs under our long-term incentive programs that, at year-end 2016, were unvested under applicable vesting schedules. Under these programs, upon
termination in certain cases without cause or for good reason following a change of control, awards generally vest in full. The values were calculated by multiplying the number of shares subject to
awards by $55.23, the closing price of our common shares on December 30, 2016, the last trading day of the year.
-
(4)
-
Represents
actuarial present value at year-end 2016 of amounts payable solely as a result of provisions in employment agreements (which are in addition to amounts
payable under the pension program). For Messrs. Judge and Schweiger, pension benefits were calculated by adding three years of service (two years for Mr. Lembo). A lump sum of this
benefit value is payable to Messrs. Judge, Lembo and Schweiger. Pension amounts shown in the table are present values at year-end 2016 of benefits payable upon termination as described with
respect to the Pension Benefits Table above.
-
(5)
-
Represents
Company cost at year-end 2016 (estimated by our benefits consultants) of providing post-employment welfare benefits beyond those benefits provided to
non-executives upon involuntary termination. The amounts shown in the table for Messrs. Judge and Schweiger represent the value of three years (two years for Mr. Lembo) continued health
and welfare plan participation. The amounts shown in the table for Mr. Butler represent the value of three years employer contributions toward active health, long-term disability, and life
insurance benefits, plus a payment to offset any taxes on the value of these benefits (gross-up), less the value of one year retiree health coverage at
2017 Proxy Statement
63
Table of Contents
retiree
rates. The amounts reported in the table for Mr. Olivier represent the value of two years employer contributions toward active health benefits, plus a payment to offset any taxes on the
value of these benefits (gross-up), less the value of two years retiree health coverage at retiree rates.
-
(6)
-
Represents
cost of reimbursing financial planning and tax preparation fees for three years (two years for Mr. Lembo).
-
(7)
-
Represents
payments made to offset costs associated with certain excise taxes under Section 280G of the Internal Revenue Code. Executives may be subject to
certain excise taxes under Section 280G if they receive payments and benefits related to a termination following a Change of Control that exceed specified Internal Revenue Service limits.
Contractual agreements with the above executives provide for a grossed-up reimbursement of these excise taxes. The amounts in the table are based on the Section 280G excise tax rate of 20%, the
statutory federal income tax withholding rate of 35%, the applicable state income tax rate, and the Medicare tax rate of 1.45%.
-
(8)
-
Represents
payments made under agreements or the SSP as consideration for agreement not to compete with the Company following termination of employment equal to the
sum of base salary plus relevant annual incentive award. These payments do not replace, offset or otherwise affect the calculation or payment of the annual incentive awards.
-
(9)
-
Represents
severance payments in addition to any non-compete agreement payments described in the prior note. For Messrs. Judge and Schweiger, this payment
equals three-times the sum of base salary plus relevant annual incentive awards (two-times the sum for Messrs. Lembo and Butler, and one-times the sum for Mr. Olivier.) These payments do
not replace, offset or otherwise affect the calculation or payment of the annual incentive awards.
Payments to Retired Named Executive Officers
|
As
noted, both Mr. May and Mr. McHale retired in 2016. Mr. May received an aggregate of 116,034 RSUs granted under the 2014, 2015 and 2016 programs valued at
$6,418,988, based on a price per common share of $55.32 on February 3, 2017, the distribution date, and 57,336 performance shares granted under the program ended December 31, 2016,
valued at $3,332,368, based on a price per common share of $58.12 on February 23, 2017, the determination date. A total of 50,100 performance shares granted under the program ending in 2017,
having a grant date fair value of $2,902,544, and 58,003 performance shares granted under the program ending in 2018, having a grant date fair value of $3,338,943, will be finally determined and
distributed in 2018 and 2019, respectively, under the terms of those programs.
Mr. McHale
received a payment of $2,234,000 as noted in the Summary Compensation Table pursuant to his agreement with the Company, which represents two
times
base salary, 75% of 2016 target bonus, and $35,000 for financial and career planning services. He also received an aggregate of 8,050 RSUs granted under the 2014, 2015 and 2016 programs valued
at $436,149, based on a price per common share of $54.18 on September 30, 2016, the vesting date, and 11,659 performance shares granted under the program ended December 31, 2016, valued
at $677,621, based on a price per common share of $58.12 on February 23, 2017, the determination date. A total of 6,100 performance shares granted under the program ending in 2017, having a
grant date fair value of $353,404, and 3,096 performance shares granted under the program ending in 2018, having a grant date fair value of $178,221, will be finally determined and distributed in 2018
and 2019, respectively, under the terms of those programs.
All
awards and payments noted in this section are disclosed in the preceding Tables; none are incremental or in addition to the noted payments.
64
2017 Proxy Statement
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Proposal 2: Approval of the Proposed Amendment to our Declaration of Trust to Implement Proxy Access
|
We are asking shareholders to approve an amendment to our Declaration of Trust to add a proxy access provision. The Board of Trustees believes that proxy access
provides shareholders with an important and meaningful voice in Board elections, as it serves to enhance a shareholder's ability to participate in Trustee elections while also potentially increasing
Board accountability and responsiveness. In considering the significant number of companies that have adopted proxy access, including the majority of companies in our compensation peer group, the
interest in proxy access expressed by many of our shareholders at shareholder engagement sessions and otherwise, and the
filing of a recent shareholder proposal asking us to adopt a proxy access provision, the Board is recommending that shareholders approve an amendment to the Declaration of Trust to include new
Article 4 that will allow for proxy access. The text of new Article 4 is set forth in Appendix A to this proxy statement.
As
further described in Article 4(a), to qualify as an "Eligible Shareholder," a shareholder or a group of shareholders must own continuously, for at least three years as of the date of the
shareholder Notice, at least three percent of the issued and outstanding common shares of the Company that are entitled to vote generally in the election of Trustees. For purposes of satisfying the
share ownership requirements, a group of no more than 20 shareholders and/or beneficial owners may aggregate the number of common shares that are entitled to vote generally in the election of Trustees
that each group member has owned as of the date of the shareholder Notice. As required by Article 4(j), the maximum number of shareholder Nominees submitted by all Eligible Shareholders that
may be included in the Company's proxy materials pursuant to Article 4 shall not exceed the greater of two or twenty percent of the Board. Eligible Shareholders and shareholder Nominees must
also satisfy the additional requirements specified in the Declaration of Trust, including all provisions of new Article 4.
The
Board believes that these proxy access provisions are structured in a way that:
-
-
provide shareholders who hold a significant and continuing ownership interest in the Company with the opportunity to include Board candidates
in our proxy statement;
-
-
align with similar proxy access bylaws adopted by companies within our peer group and other public companies;
-
-
require a sustained commitment to the Company in terms of shareholders' ownership holding periods, which maintains our focus on managing the
business with a long term outlook;
-
-
allow proxy access by more than just the very largest shareholders by permitting aggregation of an appropriate number of shareholders to meet
the ownership requirement;
-
-
minimize the potential for abuse by investors who wish to promote special interests that are not aligned with the interests of other
shareholders; and
-
-
provide substantive and procedural requirements to facilitate the timely and cost-effective evaluation of shareholder nominations.
The
approval of the holders of two-thirds of the outstanding common shares is required for this proposal to be approved. You may vote either "FOR" or "AGAINST" the proposal or you may abstain from
voting. Broker non-votes and abstentions will have the same effect as a vote against the proposal. By unanimous vote of the Trustees at a meeting of the Board held on February 2, 2017, the
Board approved this proposal and recommends that shareholders also approve it.
The Board of Trustees recommends that shareholders vote FOR this proposal.
2017 Proxy Statement
65
Table of Contents
Proposal 3: Advisory Vote on Executive Compensation
|
We are asking shareholders to vote on an advisory proposal to approve the compensation of our Named Executive Officers, (commonly known as "Say-on-Pay"), as
disclosed in the Compensation Discussion and Analysis, compensation tables and narrative discussion in this proxy statement. The Board of Trustees has taken and will continue to take the results of
the advisory vote into consideration when making future decisions regarding the compensation of our Named Executive Officers.
The
fundamental objective of our Executive Compensation Program is to motivate executives and key employees to support our strategy of investing in and operating businesses that benefit customers,
employees, our communities and shareholders. We strive to provide executives with base salary, performance-based annual incentive compensation opportunities, and long-term incentive compensation
opportunities that are competitive with the market and that align pay with performance. We believe that based upon our strong financial and operating performance in 2016 that such alignment exists.
Shareholders are encouraged to read the Compensation Discussion and Analysis, compensation tables and narrative discussion in this proxy statement.
Our
2016 Executive Compensation Program included the following material elements:
-
-
Base Salary
-
-
Annual Incentive Program
-
-
Long-Term Incentives
-
-
Nonqualified Deferred Compensation
-
-
Supplemental Executive Retirement Plan
-
-
Certain officer perquisites; and
-
-
Employment Agreements that provide payments and benefits upon involuntary termination of employment and termination of employment resulting
from a change of control.
The
Executive Compensation Program also features share ownership guidelines and a holding period requirement to emphasize the importance of share ownership, along with policies that call for the
clawback of compensation under the circumstances described in this proxy statement and that prohibit the pledging or hedging of our common shares.
The
compensation of our Named Executive Officers during 2016 was consistent with the following positive overall financial and operational performance
results:
-
-
Our 2016 recurring earnings were $2.96 per share, a 5.3% increase over 2015 results.
-
-
Our total shareholder return in 2016 was 11.6%, and over the longer term, our stock performance continues to outperform the industry. This
marks the seventh time in eight years that Eversource has achieved a double-digit total shareholder return. Only four other companies within the Edison Electric Institute (EEI) index of 44 utility
companies have achieved this level of return.
-
-
We increased our 2016 dividend to $1.78 per share, a 6.6% increase over 2015, continuing to outperform the EEI Index companies.
-
-
We maintained our Standard & Poor's (S&P) Credit Rating of "A" and our outlook was raised by S&P and Fitch from Stable to Positive; our
S&P A Credit Rating remains the highest holding company credit rating in the industry.
-
-
We continued to successfully achieve operations and maintenance expense reductions in 2016, and our total operations and maintenance expenses
were $8 million under target.
-
-
Our overall electric system reliability performance in 2016 was towards the top of the industry second quartile, though behind targeted
performance due to the significantly higher number of storm events. We experienced nearly double the number of storm events as compared with prior years.
-
-
NSTAR Electric Company, NSTAR Gas Company and Western Massachusetts Electric Company each met or exceeded Service Quality Index performance
targets established by regulators in Massachusetts, which is the only state in our service territory that has such performance targets.
-
-
We exceeded our established targets in safety performance and response to gas service calls. Our safety performance, which is measured by days
away or restricted time, was its best ever, and we exceeded our gas emergency response rate target.
-
-
We exceeded the target of having 35% of new hires and promotions within the supervisor and above management group be women or people of color.
66
2017 Proxy Statement
Table of Contents
PROPOSAL 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION
|
We
continue to believe that the compensation of our Named Executive Officers is aligned with our performance. We achieved very positive financial, operational, and strategic results in 2016, and as a
result, the Compensation Committee provided base pay increases and annual incentive awards to the executive officers, including the Named Executive Officers, reflecting our performance.
The
affirmative vote of a majority of those votes cast at the meeting is required to approve the advisory proposal. This means that the number of shares voted "FOR" the proposal must exceed the number
voted "AGAINST". You may vote either "FOR" or "AGAINST" the proposal or you may abstain from voting. Abstentions and broker non-votes will have no effect on the outcome of the vote as they do not
count as votes cast.
The
Compensation Committee and the Board of Trustees believe that our Executive Compensation Program is effective in implementing our compensation philosophy and in achieving its goals. We are
requesting your non-binding vote on the following resolution:
"RESOLVED,
that the compensation paid to the Company's Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the
Compensation Discussion and Analysis, the compensation tables and related material disclosed in this proxy statement, is hereby APPROVED."
The Board of Trustees recommends that shareholders vote FOR this proposal.
2017 Proxy Statement
67
Table of Contents
Proposal 4: Advisory Vote on Frequency of Executive Compensation Vote
|
We are asking shareholders to vote on a non-binding advisory proposal regarding the frequency of our shareholder Say-on-Pay vote, as required by
Section 14A of the Exchange Act. It gives shareholders the opportunity to cast an advisory vote on how often we should include a Say-on-Pay proposal in our proxy materials for future annual or
other shareholder meetings at which Trustees will be elected and for which SEC rules require executive compensation disclosure (a "Say-on-Pay Frequency" proposal). Under this proposal, shareholders
may vote to have the Say-on-Pay vote every year, every two years, or every three years.
Our
shareholders voted on a similar proposal in 2011, with the majority voting to hold the Say-on-Pay vote every year. This is our current practice. We believe that Say-on-Pay votes should continue to
be conducted every year so that our shareholders may express their views annually on our executive compensation program.
The
Compensation Committee and the Board value the opinions expressed by shareholders in their votes on this
proposal,
and both the Corporate Governance Committee and the Board of Trustees voted on February 2, 2017 to recommend an annual Say-on-Pay vote.
It
is expected that the next vote on a Say-on-Pay frequency proposal will occur at the 2023 Annual Meeting of Shareholders.
Shareholders
may cast their advisory vote to conduct advisory votes on executive compensation every "One Year," "Two Years," or "Three Years," or may abstain from voting. Our Declaration of Trust
requires matters properly brought before the meeting to be decided by a majority of the votes cast. If none of the alternatives receives a majority of the votes cast, the Board of Trustees will
consider the alternative that receives the most votes. Abstentions and broker non-votes will have no effect on the outcome of the vote as they do not count as votes cast.
The Board of Trustees unanimously recommends that the advisory vote on executive compensation be conducted
annually.
68
2017 Proxy Statement
Table of Contents
Proposal 5: Re-Approve the Material Terms of Performance Goals Under the 2009 Eversource Incentive Plan
|
We
are asking Shareholders to re-approve the material terms of the performance goals under the Eversource Incentive Plan as amended and restated effective January 1, 2009 (the "Plan"). A
description of such material terms of the Plan is included below. The description is qualified in its entirety by reference to the Plan, a copy of which is attached to this proxy statement as
Appendix B. You may also obtain a copy upon written request to our Secretary at the address set forth on page 10 of this proxy statement.
You
are being asked to re-approve the material terms of the performance goals currently included in the Plan so that we may be able to continue to deduct from our federal income
taxes the full amount of incentive awards paid under the Plan that otherwise qualify as "performance-based compensation" under Section 162(m) of the Internal Revenue Code of 1986, as amended
(Section 162(m)). Under Section 162(m) and related regulations, compensation in excess of $1 million paid in any one year to a public company's covered employees may not be so
deducted unless such compensation qualifies as "performance-based compensation" under Section 162(m) (or another exception is met). Covered employees in most instances include our Chief
Executive Officer, our Chief Financial Officer and our three other most highly compensated executive officers.
For
compensation to qualify as "performance-based," Section 162(m) requires our shareholders to re-approve the material terms of the Plan's performance goals every five years. Such material
terms were re-approved by shareholders five years ago at our 2012 Annual Meeting of Shareholders. Eligible compensation paid to our covered employees under the Plan is intended to be fully tax
deductible by the Company if the Plan's performance goals are re-approved at this Annual Meeting of Shareholders (and if other applicable Section 162(m) requirements are met). If the Plan's
performance goals are not re-approved at this Annual Meeting of Shareholders, then otherwise eligible amounts paid to our covered employees will not qualify as "performance-based compensation." As a
result, we will be subject to Section 162(m)'s disallowance of deductions for covered employee compensation in excess of $1 million.
Under
the Plan, the Compensation Committee of the Board is authorized: (a) to make annual incentive awards to officers of the Company at or above the Vice President level (the
"Awards"), and (b) to grant incentive stock options, nonqualified stock options, restricted stock, restricted share units, stock appreciation rights and performance units to selected Company
employees (including employees who are also Trustees of the Company), non-employee Trustees of the Company (with respect to all of the foregoing except incentive stock options) and Company contractors
(with respect to nonqualified stock options only) (collectively, the "Grants"). The number of persons eligible to participate in the Plan and the number of participants may vary from year to year.
To
determine the payouts and/or vesting with respect to Awards and Grants under the Plan that are designed to qualify as performance-based compensation under Section 162(m),
the Plan permits the Compensation Committee to use any one or more of the following objective performance measures:
Cash
flow; earnings (including, but not limited to, earnings before interest, taxes, depreciation and amortization or operating earnings); earnings per share from continuing operations; inventory
turnover; debt; credit rating; return on investment; net or gross sales; economic value added; change in assets; unit volume; delivery performance; safety record; return on equity; return on capital;
revenue; operating income or net operating income; gross margin; completion of acquisitions, divestitures, business expansion, product diversification, new or expanded market penetration; other
strategic business criteria consisting of one or more objectives based on satisfaction of specified revenue goals, geographic business expansion goals, or cost targets; cash flow from operations;
earnings per share, diluted or basic; net asset turnover; capital expenditures; debt reduction; working capital; return on sales; market share; cost of capital; expense reduction levels; productivity;
service levels; stock price; total shareholder return; return on assets or net assets; income or net income; operating profit or net operating profit; operating margin or profit margin; and other
2017 Proxy Statement
69
Table of Contents
PROPOSAL 5: RE-APPROVE THE MATERIAL TERMS OF PERFORMANCE GOALS UNDER THE 2009 EVERSOURCE INCENTIVE PLAN
|
non-financial operating and management performance objectives.
The
Compensation Committee establishes in writing the objective performance measures (based on the measures listed above) and other conditions of the Awards and Grants within the time required by
Section 162(m) (where applicable). At the end of the applicable performance period, the Compensation Committee certifies the results of the performance measures and the extent to which the
performance measures have been achieved.
With
respect to Awards and Grants intended to qualify as performance-based compensation (and to the extent consistent with Section 162(m) and the regulations thereunder), the Compensation
Committee may, unless it otherwise determines at the time such performance measures are established, adjust such performance measures to exclude the effect of any of the following events that occur
during a Performance Period: the impairment of tangible or intangible assets; litigation or claim judgments or settlements; changes in tax law, accounting principles or other such laws or provisions
affecting reported results; business combinations, reorganizations and/or restructuring programs that have been approved by the Board; reductions in force and early retirement incentives; and any
extraordinary, unusual, infrequent or non-recurring items separately identified in the financial statements and/or notes thereto in accordance with generally accepted accounting principles. With
respect to Awards and Grants intended to qualify as performance-based compensation (except as provided above or in the Plan), the Compensation Committee does not have discretion to increase the amount
of compensation payable upon achievement of pre-established performance measures.
The
following maximums apply under the Plan:
-
-
The aggregate number of common shares of Eversource Energy par value $5.00 that may be subject to grants of incentive stock options and
nonqualified stock options, or transferred on account of other Grants or Awards under the Plan, shall not exceed 4.5 million shares.
-
-
No individual may receive aggregate Grants and Awards in excess of 1 million shares over the term of the Plan.
-
-
Annual incentive Awards for any individual shall not exceed $4 million.
-
-
The number of performance units paid in cash to any individual with respect to a performance period shall not exceed $4 million.
-
-
The number of performance units granted and paid in shares shall not exceed 4.5 million shares.
Other Key Provisions of the Plan
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The
terms of the Plan will remain unchanged, and the re-approval does not affect the nature and amount of Awards and Grants under the Plan. The Compensation Committee or the Board of
Trustees may amend, suspend or terminate the Plan, in whole or in part, at any time; however, any amendment must be made with shareholder approval where such approval is required by
Section 162(m).
Subject
to certain anti-dilution and other adjustments, the number of common shares of the Company that may be issued under the Plan is limited to 4.5 million shares. If an Award or Grant
lapses or is forfeited, the common shares of Company that would have been issued in connection with that Award or Grant become available to be used for other Awards or Grants. The Awards and Grants
that have been made under the Plan for the last three completed fiscal years to named executive officers are presented in the "Summary Compensation Table" on pages 53 - 54 of this
proxy statement.
The
affirmative vote of the holders of a majority of those votes cast at the meeting is required to re-approve the material terms of the performance goals under the Incentive Plan. This means that the
number of shares voted "FOR" the proposal must exceed the number voted "AGAINST". You may vote either "FOR" or "AGAINST" the proposal or abstain from voting. Abstentions and broker non-votes will have
no effect on the outcome of the vote because an abstention does not count as a vote cast.
The Board of Trustees recommends that shareholders vote FOR this proposal.
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Proposal 6: Ratification of the Selection of the Independent Registered Public Accounting Firm
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The
Audit Committee selected the independent registered public accounting firm of Deloitte & Touche LLP to serve as the independent registered public accounting firm of Eversource Energy
and its subsidiaries for fiscal year 2017. In 2016, 98% of shareholders that voted approved the selection of Deloitte & Touche LLP. Pursuant to the recommendation of the Audit Committee,
the Board of Trustees recommends that shareholders ratify the selection of Deloitte & Touche LLP to conduct an audit of Eversource Energy for 2017. Our Declaration of Trust does not
require that our shareholders ratify the selection of the independent registered public accounting firm. The Board is submitting the selection of Deloitte & Touche LLP to our
shareholders for ratification as a matter of good
corporate practice. Whether or not the selection of Deloitte & Touche LLP is ratified by our shareholders, the Audit Committee may, in its discretion, change the selection at any time
during the year if it determines that such change would be in the best interests of the Company and its shareholders. This is consistent with the responsibilities of the Audit Committee as outlined in
its charter.
The
Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company's financial
statements. Deloitte & Touche LLP has served as Eversource Energy's independent registered public accounting firm continuously since 2002. The Audit Committee is responsible for the
audit fee negotiations associated with the retention of Deloitte & Touche LLP. In order to
ensure
continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered public accounting firm. Further, in
conjunction with the mandated rotation of the auditing firm's lead engagement partner, the Audit Committee and its Chair will continue to be directly involved in the selection of Deloitte &
Touche LLP's new lead engagement partner. The members of the Audit Committee and the Board believe that the continued retention of Deloitte & Touche LLP to serve as the Company's
independent registered public accounting firm is in the best interests of Eversource Energy and its shareholders.
Representatives
of Deloitte & Touche LLP are expected to be present at the Annual Meeting. They will have the opportunity to make a statement, if they desire to do so, and to respond to
appropriate questions raised by shareholders at the meeting.
The
affirmative vote of the holders of a majority of those votes cast at the meeting is required to ratify the selection of Deloitte & Touche LLP. This means that the number of shares
voted "FOR" the proposal must exceed the number voted "AGAINST." You may vote either "FOR" or "AGAINST" the proposal or abstain from voting. Abstentions will have no effect on the outcome of the vote
because an abstention does not count as a vote cast.
The Board of Trustees recommends that shareholders vote FOR this proposal.
Relationship With Independent Registered Public Accounting Firm
|
Fees Billed By Principal Independent Registered Public Accounting Firm
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The
aggregate fees billed to the Company and its subsidiaries by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates
(collectively, the Deloitte Entities), for the years ended December 31, 2016 and 2015 totaled $4,336,626 and $4,066,126, respectively. In addition, affiliates of Deloitte &
Touche LLP as noted below
provide
other accounting services to the Company. Fees consisted of the following:
The
aggregate fees billed to the Company and its subsidiaries by Deloitte & Touche LLP for audit services rendered for the years ended December 31, 2016 and 2015
totaled $3,988,000 and $3,895,500, respectively. The audit fees were incurred for audits of consolidated financial statements of Eversource Energy and its subsidiaries, reviews of financial statements
included in
2017 Proxy Statement
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PROPOSAL 6: RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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the
Combined Quarterly Reports on Form 10-Q of Eversource Energy and its subsidiaries, comfort letters, consents and other costs related to registration statements and financings. The fees also
included audits of internal controls over financial reporting as of December 31, 2016 and 2015.
The
aggregate fees billed to the Company and its subsidiaries by the Deloitte Entities for audit related services rendered for the years ended December 31, 2016 and 2015
totaled $346,000 and $168,000, respectively. The audit related fees were incurred for procedures performed in the ordinary course of business in support of certain regulatory filings.
There
were no tax fees for the years ended December 31, 2016 and 2015.
The
aggregate fees billed to the Company and its subsidiaries by the Deloitte Entities for services other than the services described above for the years ended December 31,
2016 and 2015 totaled $2,626 and $2,626,
respectively.
This fee was for a license for access to an accounting standards research tool in both 2016 and 2015.
The
Audit Committee pre-approves all auditing services and permitted audit related or other services (including the fees and terms thereof) to be performed for us by our independent registered public
accounting firm, subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, which are approved by the Audit Committee
prior to the completion of the audit. The Audit Committee may form and delegate its authority to subcommittees consisting of one or more members when appropriate, including the authority to grant
pre-approvals of audit and permitted non-audit services, provided
that decisions of such subcommittee to grant pre-approvals are presented to the full Audit Committee at its next scheduled meeting. During 2016, all services described above were pre-approved by the
Audit Committee.
The
Audit Committee has considered whether the provision by the Deloitte Entities of the non-audit services described above was allowed under Rule 2-01(c)(4) of Regulation S-X and was
compatible with maintaining the independence of the registered public accountants and has concluded that the Deloitte Entities were and are independent of us in all respects.
Report of the Audit Committee
|
The
Audit Committee of the Board of Trustees is comprised of the five Trustees named below. The Board has determined that each member of the Audit Committee is independent as required by the listing
standards of the NYSE and the SEC's audit committee independence rules. The primary function of the Audit Committee is to assist the Board of Trustees in its oversight responsibilities with respect to
the integrity of the Company's financial statements, the performance of the Company's internal audit function, the qualifications, independence and performance of the Company's independent registered
public accounting firm, Deloitte & Touche LLP, and the compliance by the Company with legal and regulatory requirements. The Audit Committee is solely responsible for oversight of the
relationship of the Company with our independent registered public accounting firm on behalf of the Board of Trustees. As part of these responsibilities, during 2016, the Audit
Committee:
-
-
Received the written disclosures and the letter from Deloitte & Touche LLP as required by applicable requirements of the Public
Company Accounting
-
-
Oversight
Board (PCAOB) regarding Deloitte & Touche's communications with the Audit Committee concerning independence, and the Audit Committee has
further discussed with Deloitte & Touche LLP the firm's independence from the Company as required by the SEC's independence rules, Rule 2-01 of Regulation S-X;
-
-
Discussed with Deloitte & Touche LLP the matters required to be discussed by Auditing Standard No. 16, Communications with
Audit Committees, as adopted by the PCAOB; and
-
-
Reviewed and discussed with management the audited consolidated financial statements of Eversource Energy for the years ended
December 31, 2016 and 2015.
Management
is responsible for the Company's financial statements, the overall reporting process and the system of internal control over financial reporting. Deloitte & Touche LLP, as our
independent registered public accounting firm, is responsible for conducting annual audits and quarterly reviews of the Company's financial statements and expressing an opinion as to the
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PROPOSAL 6: RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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conformity,
in all material respects, of the annual financial statements with generally accepted accounting principles in the United States and expressing an opinion on the effectiveness of our
internal control over financial reporting as of the end of the fiscal year.
In
performing their oversight responsibility, the Audit Committee, whose members are all financially literate and whose Chair is an audit committee financial expert as defined by SEC rules, rely
without independent verification on the information provided to them, and on the representations made by management and Deloitte & Touche LLP.
Based
upon the review and discussions described in this report, the Audit Committee recommended to the Board of Trustees that the audited consolidated financial statements be included in Eversource
Energy's Annual Report on Form 10-K for the year ended December 31, 2016 for filing with the SEC.
The
Audit Committee has directed the preparation of this report and has approved its content and submission to shareholders.
Respectfully
submitted,
Francis
A. Doyle (Chair)
John S. Clarkeson
Kenneth R. Leibler
William C. Van Faasen
Frederica M. Williams
February 21,
2017
2017 Proxy Statement
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Table of Contents
The
Board of Trustees knows of no matters other than those we have presented in this proxy statement to come before the meeting. However, if any other matters come before the meeting, the persons
named in the enclosed proxy will vote in their discretion with respect to such other matters.
If
you would like us to consider including a proposal in our proxy statement for the 2018 Annual Meeting of Shareholders, your proposal must be received by the Secretary's office no later than
November 24, 2017, and must satisfy the conditions established by the SEC. Written notice of proposals of shareholders to be considered at the 2018 Annual Meeting without inclusion in next
year's proxy statement must be received on or before February 7, 2018. If a notice is received after February 7, 2018, then the notice will be considered untimely and the proxies held by
management may provide the discretion to vote against such proposal, even though the proposal is not discussed in the proxy statement. Eversource Energy considers these dates to be reasonable
deadlines for submission of proposals before we begin to print and mail our proxy materials for
the
2018 Annual Meeting of Shareholders. Proposals should be addressed to: Richard J. Morrison, Secretary, Eversource Energy, 800 Boylston Street, 17
th
Floor, Boston,
Massachusetts 02199-7050.
2016 Annual Report and Annual Report on Form 10-K
|
The
Company's Annual Report for the year ended December 31, 2016, including financial statements, was mailed with this proxy statement or made available to shareholders on the Internet. We will
mail an additional copy of the 2016 Annual Report to any shareholder upon request. We will provide shareholders with a copy of our Annual Report on Form 10-K for the year ended
December 31, 2016, filed with the Securities and Exchange Commission
on February 23, 2017, including the financial statements and schedules thereto, without charge, upon receipt of a written request sent to:
|
|
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Richard J. Morrison
Secretary
Eversource Energy
800 Boylston Street, 17
th
Floor
Boston, Massachusetts 02199-7050
|
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2017 Proxy Statement
APPENDIX A
PROPOSED AMENDMENT TO DECLARATION OF TRUST
-
1.
-
Set
forth below is Article 4 of the Eversource Energy Declaration of Trust as it currently exists:
"NUMBER, ELECTION, QUALIFICATION,
RESIGNATION AND COMPENSATION OF TRUSTEES
(4) At
each annual meeting of the Shareholders they may elect a new board of Trustees for the ensuing year of such number as may be then fixed as hereinbefore provided, and
any one or more or all of the Trustees previously in office may be re-elected to the new board, and at any meeting at which the number of Trustees is increased the Shareholders may elect all or less
than all the additional Trustees so provided for, but no Trustee shall be elected unless he receives the affirmative votes of at least a majority of the number of shares then outstanding hereunder of
such class or classes as then have general voting power."
-
2.
-
The
proposed amendment to the Declaration of Trust would restate Article 4 in its entirety to add the Proxy Access provisions. Set forth below is Article 4, restated
in its entirety to include such Proxy Access provisions:
"NUMBER, ELECTION, QUALIFICATION,
RESIGNATION AND COMPENSATION OF TRUSTEES
(4) At
each annual meeting of the Shareholders they may elect a new board of Trustees for the ensuing year of such number as may be then fixed as hereinbefore provided, and
any one or more or all of the Trustees previously in office may be re-elected to the new board, and at any meeting at which the number of Trustees is increased the Shareholders may elect all or less
than all the additional Trustees so provided for, but no Trustee shall be elected unless he receives the affirmative votes of at least a majority of the number of shares then outstanding hereunder of
such class or classes as then have general voting power.
Proxy
Access for Trustee Nominations. Subject to the terms and conditions of this declaration of trust, in connection with an annual meeting of Shareholders at which Trustees are to be
elected, the association will include in its proxy statement and on its form of proxy the name of a nominee for election to the Board submitted pursuant to this Article 4 (a "Shareholder
Nominee") and will include in its proxy statement the "Required Information" (as defined in Article 4(c)), if: (1) the Shareholder Nominee satisfies the eligibility requirements in this
Article 4; (2) the Shareholder Nominee is identified in a timely notice (the "Shareholder Notice") that satisfies this Article 4 and is delivered by a shareholder that qualifies
as, or is acting on behalf of, an Eligible Shareholder (as defined in Article 4(a)); (3) the Eligible Shareholder expressly elects at the time of the delivery of the Shareholder Notice
to have the Shareholder Nominee included in the association's proxy materials; and (4) the additional requirements of the declaration of trust are met.
(a) To
qualify as an "Eligible Shareholder," a shareholder or a group as described in this Article 4(a) must: (i) Own and have Owned (as defined below),
continuously for at least three years as of the date of the Shareholder Notice, a number of the issued and outstanding common shares (as adjusted to account for any stock dividend, stock split,
subdivision, combination, reclassification or recapitalization of common stock) that represents at least three percent of the issued and outstanding common shares that are entitled to vote generally
in the election of Trustees as of the date of the Shareholder Notice (the "Required Shares"); and (ii) thereafter continue to Own the Required Shares through such annual meeting of
shareholders.
For
purposes of satisfying the ownership requirements of this Article 4(a), a group of no more than twenty shareholders and/or beneficial owners may aggregate the number of common
shares that
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are
entitled to vote generally in the election of Trustees that each group member has Owned continuously for at least three years as of the date of the Shareholder Notice. No shares may be attributed
to more than one Eligible Shareholder, and no shareholder or beneficial owner, alone or together with any of its affiliates, may individually or as a member of a group qualify as or constitute more
than one Eligible Shareholder under this Article 4. Each of the following shall be treated as one shareholder or beneficial owner: (x) a group of any two or more funds that are under
common management and investment control; (y) a group of any two or more funds that are under common management and funded primarily by a single employer; or (z) a group of investment
companies, as such term is defined in Section 12(d)(l)(G)(ii) of the Investment Company Act of 1940, as amended. Whenever an Eligible Shareholder consists of a group of shareholders and/or
beneficial owners, any and all requirements and obligations for an Eligible Shareholder set forth in this Article 4 must be satisfied by and as to each such shareholder or beneficial owner,
except that shares may be aggregated as specified in this Article 4(a) and except as otherwise provided in this Article 4. For purposes of this Article 4, the term "affiliate" or
"affiliates" shall have the meanings ascribed thereto under the rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) For
purposes of this Article 4:
(i) A
shareholder or beneficial owner shall be deemed to "Own" only those issued and outstanding common shares that are entitled to vote generally in the election of
Trustees and as to which such person possesses both (a) the full voting and investment rights pertaining to the shares and (b) the full economic interest in (including the opportunity
for profit and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (a) and (b) shall not include any shares (1) sold by such
person or any of its affiliates in any transaction that has not been settled or closed, (2) borrowed by such person or any of its affiliates for any purposes or purchased by such person or any
of its affiliates pursuant to an agreement to resell or (3) subject to any option, warrant, forward contract, swap, contract of sale or other derivative or similar agreement entered into by
such person or
any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of the issued and outstanding common shares that are
entitled to vote generally in the election of Trustees, in any such case which instrument or agreement has, or is intended to have, or if exercised would have, the purpose or effect of
(x) reducing in any manner, to any extent or at any time in the future, such person's or its affiliates' full right to vote or direct the voting of any such shares and/or (y) hedging,
offsetting or altering to any degree any gain or loss arising from the full economic ownership of such shares by such person or its affiliate. The terms "Owned," "Owning," "Ownership" and other
variations of the word "Own," when used with respect to a shareholder or beneficial owner, shall have correlative meanings.
(ii) A
shareholder or beneficial owner shall "Own" shares held in the name of a nominee or other intermediary so long as the person retains the right to instruct how the
shares are voted with respect to the election of trustees and the right to direct the disposition thereof and possesses the full economic interest in the shares. The person's Ownership of shares shall
be deemed to continue during any period in which the person has delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement that is revocable at any time by
the shareholder.
(iii) A
shareholder or beneficial owner's Ownership of shares shall be deemed to continue during any period in which the person has loaned such shares provided that the
person has the power to recall such loaned shares on five business days' notice.
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(c) For
purposes of this Article 4, the "Required Information" that the association will include in its proxy statement is:
(i) the
information set forth in the Schedule 14N provided with the Shareholder Notice concerning each Shareholder Nominee and the Eligible Shareholder that is
required to be disclosed in the association's proxy statement by the applicable requirements of the Exchange Act and the rules and regulations thereunder, and
(ii) if
the Eligible Shareholder so elects, a written statement of the Eligible Shareholder (or, in the case of a group, a written statement of the group), not to exceed 500
words, in support of each Shareholder Nominee, which must be provided at the same time as the Shareholder Notice for inclusion in the association's proxy statement for the annual meeting (the
"Statement").
Notwithstanding
anything to the contrary contained in this Article 4, the association may omit from its proxy materials any information or Statement that it, in good faith,
believes is untrue in any material respect (or omits a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading) or would
violate any applicable law, rule, regulation or listing standard. Nothing in this Article 4 shall limit the association's ability to solicit against and include in its proxy materials its own
statements relating to any Eligible Shareholder or Shareholder Nominee.
(d) The
Shareholder Notice shall set forth the following information, representations and agreements:
(i) as
to each Shareholder Nominee, all information relating to such person that is required to be disclosed in solicitations of proxies for election of Trustees in an
election contest, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Exchange Act; provided, however, that, in addition to the information
required in the Shareholder Notice pursuant to this Article 4, the association may require each such person to furnish such other information as may reasonably be required by the association to
determine the eligibility of such person to serve as a Trustee, including information relevant to a determination whether such person can be considered an independent Trustee,
(ii) a
representation addressed to the association that the Shareholder delivering the Shareholder Notice (or a Qualified Representative as defined in Article 4(m) of
such Shareholder) intends to appear in person or by proxy at the meeting to present its Shareholder Nominee or Shareholder Nominees,
(iii) as
to each Eligible Shareholder giving the Shareholder Notice (and in the case of a group, as to each shareholder or beneficial owner whose shares are aggregated for
purposes of constituting an Eligible Shareholder) and if any such Eligible Shareholder, Shareholder or beneficial owner is an entity, as to each director, executive officer, managing member or control
person of such entity (any such individual or control person, a "Control Person"):
(a) the
name and address of such Eligible Shareholder and any Control Person (in the case of any record holder(s), as they appear on the association's books);
(b) the
number of common shares which are owned of record or beneficially owned by the Eligible Shareholder and/or by any Control Person as of the date of the Shareholder
Notice, and for purposes of this clause, an Eligible Shareholder or Control Person shall be deemed to beneficially own common shares if the Eligible Shareholder or Control Person owns such shares,
directly or indirectly, for purposes of Section 13(d) of the Exchange Act and Regulations 13D and 13G thereunder or has or shares pursuant to any agreement, arrangement or understanding
(whether or not in writing) (x) the right to acquire such shares (whether such right is exercisable immediately or only after the passage of time or the
A-3
fulfillment
of a condition or both), (y) the right to vote such shares, or instruct how the shares are voted, alone or in concert with others and/or (z) investment power with respect to
such shares, including the power to dispose of, or to direct the disposition of, such shares;
(c) a
description of any agreement, arrangement or understanding with respect to the nomination between or among the Eligible Shareholder or any Control Person and any other
person, including without limitation any agreements that would be required to be disclosed pursuant to Item 5 or Item 6 of Exchange Act Schedule 13D (regardless of whether the
requirement to file a Schedule 13D is applicable); and
(d) a
description of any agreement, arrangement or understanding (including, without limitation, any derivative or short positions, profit interests, options, hedging
transactions, and borrowed shares) that has been entered into as of the date of the Shareholder Notice by, or on behalf of, the Eligible Shareholder or Control Person, the effect or intent of which is
to mitigate loss, manage risk or benefit from changes in the price of the common shares, or maintain, increase or decrease the voting power of the Eligible Shareholder or Control Person with respect
to securities of the association,
(iv) a
copy of the Schedule 14N that has been or concurrently is filed with the Securities and Exchange Commission under the Exchange Act,
(v) a
statement of the Eligible Shareholder (and in the case of a group, the written statement of each shareholder or beneficial owner whose shares are aggregated for
purposes of constituting an Eligible Shareholder), which statement(s) shall also be included in the Schedule 14N filed with the Securities and Exchange Commission: (a) setting forth and
certifying to the number of common shares that are entitled to vote generally in the election of Trustees the Eligible Shareholder Owns and has Owned (as defined in Article 4(b)(i))
continuously for at least three years as of the date of the Shareholder Notice; and (b) agreeing to continue to Own such shares through the annual meeting of the Shareholders,
(vi) the
written agreement of the Eligible Shareholder (and in the case of a group, the written agreement of each shareholder or beneficial owner whose shares are aggregated
for purposes of constituting an Eligible Shareholder) addressed to the association, setting forth the following additional agreements, representations and warranties:
(a) it
will provide (1) no later than two weeks after the record date for the annual meeting both the information required under Article 4(d)(ii-iii) above and
notification in writing verifying the Eligible Shareholder's continuous Ownership of the Required Shares, in each case, as of the record date for the annual meeting, and (2) immediate notice to
the association if the Eligible Shareholder ceases to own any of the Required Shares prior to the annual meeting of Shareholders;
(b) it
(1) acquired the Required Shares in the ordinary course of business and not with the intent to change or influence control at the association and does not
presently have any such intent, (2) has not nominated and will not nominate for election to the Board at the annual meeting of Shareholders any person other than the Shareholder Nominee(s)
being nominated pursuant to this Article 4, (3) has not engaged and will not engage in, and has not been and will not be a participant (as defined in Item 4 of Exchange Act
Schedule 14A) in, a solicitation within the meaning of Exchange Act Rule 14a-1(1), in support of the election of any individual as a Trustee at the annual meeting other than its
Shareholder Nominee or a nominee of the Board and (4) will not distribute to any shareholder any form of proxy for the annual meeting other than the form distributed by the association; and
(c) it
will (1) assume all liability stemming from any legal or regulatory violation arising out of the Eligible Shareholder's communications with the shareholders of
the association or
A-4
out
of the information that the Eligible Shareholder provided to the association, (2) indemnify and hold harmless the association and each of its Trustees, officers and employees individually
against any liability, loss or damages in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the association or any of its
Trustees, officers or employees arising out of the nomination or solicitation process pursuant to this Article 4, (3) comply with all laws,rules, regulations and listing standards
applicable to any solicitation in connection with the annual meeting, (4) file all materials described below in Article 4(f)(iii) with the Securities and Exchange Commission, regardless
of whether any such filing is required under Exchange Act Regulation 14A, or whether any exemption from filing is available for such materials under Exchange Act Regulation 14A and
(5) at the request of the association, promptly, but in any event within five business days after such request, provide to the association prior to the day of the annual meeting such additional
information as reasonably requested by the association, and
(vii) in
the case of a nomination by a group, the designation by all group members of one group member that is authorized to act on behalf of all members of the group with
respect to the nomination and matters related thereto, including withdrawal of the nomination.
(e) To
be timely under this Article 4, the written Shareholder Notice must be delivered by a shareholder to the Corporate Secretary of the association at the
principal executive offices of the association not later than the Close of Business (as defined in Article 4(m) below) on the 20th day or earlier than the Close of Business on the
150th day prior to the first anniversary of the date (as stated in the association's proxy materials) that the definitive proxy statement was first sent to Shareholders in connection with the
preceding year's annual meeting of Shareholders; provided, however, that in the event the annual meeting is more than 30 days before or after the anniversary of the previous year's annual
meeting, or if no annual meeting was held in the preceding year, to be timely, the Shareholder Notice must be so delivered not earlier than the Close of Business on the 150th day prior to such
annual meeting and not later than the Close of Business on the later of the 20th day prior to such annual meeting or the 10th day following the day on which Public Announcement (as
defined in Article 4(m) below) of the date of such meeting is first made by the association. In no event shall an adjournment or recess of an annual meeting, or a postponement of an annual
meeting for which notice has been given or with respect to which there has been a Public Announcement of the date of the meeting, commence a new time period (or extend any time period) for the giving
of the Shareholder Notice as described above.
(f) An
Eligible Shareholder must:
(i) within
two weeks after the date of the Shareholder Notice, provide to the association one or more written statements from the record holder(s) of the Required Shares
and from each intermediary through which the Required Shares are or have been held, in each case during the requisite three-year holding period, specifying the number of shares that the Eligible
Shareholder Owns, and has Owned continuously in compliance with this Article 4;
(ii) include
in the Schedule 14N filed with the Securities and Exchange Commission a statement by the Eligible Shareholder (and in the case of a group, by each
shareholder or beneficial owner whose shares are aggregated for purposesof constituting an Eligible Shareholder) certifying (a) the number of common shares that are entitled to vote generally
in the election of Trustees that it Owns and has Owned continuously for at least three years as of the date of the Shareholder Notice and (b) that it Owns and has Owned such shares within the
meaning of Article 4(b);
(iii) file
with the Securities and Exchange Commission any solicitation by or on behalf of the Eligible Shareholder relating to the annual meeting of Shareholders, one or
more of the Trustees or Trustee nominees or any Shareholder Nominee, regardless of whether any such filing is required
A-5
under
Exchange Act Regulation 14A or whether any exemption from filing is available for such solicitation or other communication under Exchange Act Regulation 14A; and
(iv) in
the case of any group, provide to the association documentation reasonably satisfactory to the association demonstrating that the number of shareholders and/or
beneficial owners within such group does not exceed twenty, including whether a group of funds qualifies as one shareholder or beneficial owner within the meaning of Article 4(a).
The
information provided pursuant to this Article 4(f) shall be deemed part of the Shareholder Notice for purposes of this Article 4(f).
(g) Within
the time period for delivery of the Shareholder Notice, a written representation and agreement of each Shareholder Nominee shall be delivered to the Corporate
Secretary of the association at the principal executive offices of the association, which shall be signed by each Shareholder Nominee and shall represent and agree that such Shareholder Nominee:
(i) consents
to being named in the association's proxy statement and form of proxy as a nominee and to serving as a Trustee if elected;
(ii) is
not and will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how
such Shareholder Nominee, if elected as a Trustee, will act or vote on any issue or question that has not been disclosed to the association;
(iii) is
not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the association with respect to any direct or
indirect compensation, reimbursement or indemnification in connection with service or action as a Trustee that has not been disclosed to the association; and
(iv) if
elected as a Trustee, will comply with the association's Code of Business Conduct, as well as all corporate governance, conflict of interest, confidentiality,
insider trading and share ownership policies and guidelines and any other policies and guidelines applicable to Trustees.
At
the request of the association, the Shareholder Nominee must promptly, but in any event within two weeks after such request, submit all completed and signed questionnaires required of
the Trustees and provide to the association such other information as it may reasonably request. The association may request such additional information as necessary to permit the Board to determine
if each Shareholder Nominee satisfies the requirements of this Article 4.
(h) In
the event that any information or communications provided by the Eligible Shareholder or any Shareholder Nominees to the association or its Shareholders is not, when
provided, or thereafter ceases to be, true, correct and complete in all material respects (including omitting a material fact necessary to make the statements made, in light of the circumstances under
which they were made, not misleading), such Eligible Shareholder or Shareholder Nominee, as the case may be, shall promptly notify the Corporate Secretary and provide the information that is required
to make such information or communication true, correct, complete and not misleading; it being understood that providing any such notification shall not be deemed to cure any defect or limit the
association's right to omit a Shareholder Nominee from its proxy materials as provided in this Article 4.
(i) Notwithstanding
anything to the contrary contained in this Article 4, the association may omit from its proxy materials any Shareholder Nominee, and such
nomination shall be disregarded and no vote on such Shareholder Nominee will occur, notwithstanding that proxies in respect of such vote may have been received by the association, if:
(i) the
Eligible Shareholder or Shareholder Nominee breaches any of its respective agreements, representations or warranties set forth in the Shareholder Notice (or
otherwise
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submitted
pursuant to this Article 4), any of the information in the Shareholder Notice (or otherwise submitted pursuant to this Article 4) was not, when provided, true, correct and
complete, or the Eligible Shareholder or applicable Shareholder Nominee otherwise fails to comply with its obligations pursuant to this declaration of trust, including, but not limited to, its
obligations under this Article 4;
(ii) the
Shareholder Nominee (a) is not independent under any applicable listing standards of the New York Stock Exchange (as such standards may change from time to
time), any applicable rules of the Securities and Exchange Commission and any publicly disclosed standards used by the Board in determining and disclosing the independence of the Trustees,
(b) is or has been, within the past three years, an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, as amended, (c) is a
director or officer of any public utility company regulated by the Federal Energy Regulatory Commission, (d) is a director serving on more than four Boards of other publicly held companies
(e) is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) or has been convicted in a criminal proceeding (excluding traffic violations and
other minor offenses) within the past ten years or (f) is subject to any order of the type specified in Rule 506(d) of Regulation D promulgated under the Securities Act of 1933,
as amended;
(iii) the
association has received a notice (whether or not subsequently withdrawn) that a shareholder of record intends to nominate any candidate for election to the Board
(other than pursuant to this Article 4) so that the number of nominees would exceed the number of Trustees to be elected at the applicable annual meeting; provided that, for the avoidance of
doubt, unless otherwise required by law or otherwise determined by the Chairman of the meeting or the Board, if the association receives such notice after the proxy materials for the applicable annual
meeting have been distributed to the Shareholders, any nomination or nominations pursuant to this Article 4 shall be disregarded, notwithstanding that proxies in respect of the election of any
Shareholder Nominee or Shareholder Nominees may have been received by the association, but only to the extent the maximum number of Shareholder Nominees after such restriction with respect to this
clause equals or exceeds one; or
(iv) the
election of the Shareholder Nominee to the Board would cause the association to violate this declaration of trust, any applicable law, rule, regulation or listing
standard.
(j) The
maximum number of Shareholder Nominees submitted by all Eligible Shareholders that may be included in the association's proxy materials pursuant to this
Article 4 shall not exceed the greater of (x) two or (y) twenty percent of the number of Trustees in office as of the last day on which a Shareholder Notice may be delivered
pursuant to this Article 4 with respect to the annual meeting, or if such amount is not a whole number, the closest whole number (rounding down) below twenty percent (such resulting number, the
"Permitted Number"), provided that the Permitted Number shall be reduced by:
(i) any
Shareholder Nominee whose name was submitted for inclusion in the association's proxy materials pursuant to this Article 4 but whom the Board of Trustees
decides to nominate as a Board nominee; and
(ii) any
nominees who were previously elected to the Board as Shareholder Nominees at any of the preceding two annual meetings and who are nominated for election at such
annual meeting by the Board as a Board nominee.
An
Eligible Shareholder submitting more than one Shareholder Nominee for inclusion in the association's proxy materials pursuant to this Article 4 shall rank such Shareholder
Nominees based on the order that the Eligible Shareholder desires such Shareholder Nominees to be selected for inclusion in the association's proxy materials and include such specified rank in its
Shareholder Notice submitted
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to
the association. In the event that the number of Shareholder Nominees submitted by Eligible Shareholders pursuant to this Article 4 exceeds the Permitted Number, the association shall
determine which Shareholder Nominees shall be included in the association's proxy materials in accordance with the following provisions: the highest ranking Shareholder Nominee of each Eligible
Shareholder will be selected for inclusion in the association's proxy materials until the Permitted Number is reached, going in order of the amount (largest to smallest) of shares of the association
each Eligible Shareholder disclosed as Owned in its respective Shareholder Notice submitted to the association. If the Permitted Number is not reached after each Eligible Shareholder has had one
Shareholder Nominee selected, this selection process will continue as many times as necessary, following the same order each time, until the Permitted Number is reached. Following such determination,
if any Shareholder Nominee who satisfies the eligibility requirements in this Article 4 thereafter is nominated by the Board, thereafter is not included in the association's proxy materials or
thereafter is not submitted for Trustee election for any reason (including the Eligible Shareholder's or Shareholder Nominee's failure to comply with this Article 4), no other nominee or
nominees shall be included in the association's proxy materials or otherwise submitted for election as a Trustee at the applicable annual meeting in substitution for such Shareholder Nominee(s).
Notwithstanding the number of Shareholder Nominees, the number of Trustees elected at any annual meeting shall not exceed the number of nominees proposed by the Board of Trustees.
(k) Any
Shareholder Nominee who is included in the association's proxy materials for a particular annual meeting of Shareholders but withdraws from or becomes ineligible or
unavailable for election at the annual meeting for any reason, including for the failure to comply with any provision of this declaration of trust (provided that in no event shall any such withdrawal,
ineligibility or unavailability commence a new time period (or extend any time period) for the giving of a Shareholder Notice) will be ineligible to be a Shareholder Nominee pursuant to this
Article 4 for the next two annual meetings.
(1) The
Board (and any other person or body authorized by the Board) shall have the power and authority to interpret this Article 4 and to make any and all
determinations necessary or advisable to apply this Article 4 to any persons, facts or circumstances, including the power to determine (i) whether one or more shareholders or beneficial
owners qualifies as an Eligible Shareholder, (ii) whether a Shareholder Notice complies with this Article 4 and otherwise meets the requirements of this Article 4,
(iii) whether a Shareholder Nominee satisfies the qualifications and requirements in this Article 4, and (iv) whether the requirements of this Article 4 have been
satisfied.. Notwithstanding the foregoing provisions of this Article 4, unless otherwise required by law or otherwise determined by the Chairman of the meeting or the Board, if the shareholder
(or a Qualified Representative of the shareholder, as defined in Article 4(m)) does not appear at the annual meeting of Shareholders to present its Shareholder Nominee or Shareholder Nominees,
such nomination or nominations shall be disregarded, notwithstanding that proxies in respect of the election of the Shareholder Nominee or Shareholder Nominees may have been received by the
association. This Article 4 shall be the exclusive method for shareholders to include nominees for Trustee election in the association's proxy materials.
(m) For
purposes of this Article 4, (i) the "Close of Business" shall mean 6:00 p.m. Eastern Time at the principal executive offices of the association
on any calendar day, whether or not the day is a business day, (ii) "Public Announcement" shall mean disclosure in a press release reported by a national news service or in a document publicly
filed by the association with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act and (iii) a "Qualified Representative" of a shareholder
shall mean a person who is a duly authorized officer, manager or partner of such shareholder or authorized by a writing executed by such shareholder (or a reliable reproduction or electronic
transmission of the writing) delivered to the association prior to the making of a nomination for Trustee at a meeting of the shareholders by such shareholder stating that such person is authorized to
act for such shareholder as proxy at the meeting of shareholders."
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Appendix B
Amended,
Restated and Adopted by Eversource
Energy Compensation Committee of the Board of
Trustees on February 13, 2007
as Amended and Restated January 1, 2009
ARTICLE I
PURPOSE
The purpose of the Eversource Incentive Plan (the "Plan") is to provide (i) designated employees of the Company (as hereinafter defined
in Article X) and (ii) non-employee members of the Board of Trustees (the "Board") of Eversource, a Massachusetts business trust, ("Eversource") with the opportunity to receive annual
incentive compensation and grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted shares, restricted share units and performance units. The Company
believes that the Plan will assist it in recruiting talented employees who will contribute materially to the growth of the Company, thereby benefiting Eversource's shareholders and aligning the
economic interests of the participants with those of the shareholders.
For
purposes of the Plan, definitions appear in the Plan and as set forth in Article XIV.
ARTICLE II
ADMINISTRATION
1.
Committee.
The Plan shall be administered and interpreted by the Board's Compensation Committee, or the
person or persons to which such committee delegates any of its functions under the Plan (the "Committee"). The Committee may consist of two or more persons appointed by the Board, all of whom shall be
"outside directors" as defined under section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") and related Treasury regulations and "non-employee directors" as defined under
Rule 16b-3 under the Exchange Act. Members of the Committee shall be "independent" as defined under the listing standards of the New York Stock Exchange. However, the Board may ratify or
approve any grants as it deems appropriate or as are submitted by the Committee.
2.
Committee Authority.
The Committee shall have the authority to amend or terminate the Plan as provided in
Article XII. The Committee shall have the sole authority to (a) establish, and review the Company's and the Grantee's, as defined below, performance against annual goals for purpose of
the annual incentives to be distributed and determine the individuals to whom grants shall be made under the Plan, (b) determine the type, size and terms of the grants to be made to each such
individual, (c) determine the time when the grants will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration
of exercisability (d) establish such rules and regulations or take such action as it deems necessary or advisable for the
proper administration of the Plan, including the delegation of day-to-day plan administration, and (e) deal with any other matters arising under the Plan.
3.
Committee Determinations.
The Committee shall have full power and authority to administer and interpret the
Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and for the conduct of its business as it deems necessary or
advisable, in its sole discretion. The Committee's interpretations of the Plan and all determinations made by the Committee pursuant to the powers vested in it hereunder shall be conclusive and
binding on all persons having any interest in the Plan or in any awards granted hereunder including, but not limited to, the Company, the Committee, the Board, the affected Participants, and their
respective successors in interest. All powers of the Committee shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of
the Plan and need not be uniform as to similarly situated individuals.
ARTICLE III
ANNUAL INCENTIVE AWARDS
1.
Eligibility for Participation.
Each employee of the Company classified as a Vice President or higher (an
"Executive Employee") shall be eligible to receive an annual incentive award (an "Award") under the Plan
-
2.
-
Annual Awards
.
(a) As
soon as practicable after the start of each fiscal year of Eversource, but in any event within 90 days, the Committee shall set the Performance Goals for the
Company which shall be the basis for
determining the Awards to be paid to each Executive Employee for such fiscal year and the Committee shall communicate the target and the percentages (including minimums and maximums) for each
Executive Employee applicable to each level of achievement against the target set. In no event may an individual Award for an Executive Employee exceed $4,000,000.
(b) The
maximum amount of an Award for an Executive Employee shall be based upon the Company's performance compared against the Performance Goals set for that fiscal year.
The actual amount of the Award for any Executive Employee shall be reduced, accordingly, by the Committee if the Executive Employee does not satisfy one or more individual financial or nonfinancial
objectives set by the Committee for that Executive Employee as of the beginning of the relevant fiscal year. Any such objectives for an Executive Employee shall be set by the Committee and announced
to the affected Executive Employee no later than 90 days after the commencement of the relevant fiscal year of Eversource.
(c) The
Committee shall certify and announce the Awards that will be paid by the Company to each Executive Employee as soon as practicable following the final determination
of the Company's financial results for the relevant fiscal year. Payment of Awards that an Executive Employee has not expressly deferred pursuant to Section 3 below shall be made in cash, or in
shares of Company Stock or Options, the value of which shall equal the amount to be distributed, all as determined by the Committee, after the end of the relevant fiscal year but not later than two
and one-half months after the end of such fiscal year, provided that the Executive Employee has not separated from employment by the Company prior to the date that payment is due except as otherwise
specifically provided in a contract between the Company and the Executive Employee. The Committee may provide for complete or partial exceptions to this requirement if an Executive Employee's
employment terminated on account of Retirement, termination without Cause, death, Disability or a Change of Control.
3.
Deferral of Annual Awards.
The Committee may permit an Executive Employee to defer an Award in accordance
with such procedures as the Committee may from time to time specify subject to the limitations set forth in Section 3 of Article XIII of this Plan.
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ARTICLE IV
STOCK-BASED GRANTS
1.
Grants.
Grants under the Plan may consist of grants of incentive stock options ("Incentive Stock Options") or
nonqualified stock options ("Nonqualified Stock Options")(Incentive Stock Options and Nonqualified Stock Options are collectively referred to as "Options"), restricted stock ("Restricted Stock"),
restricted share units (Restricted Share Units" or "RSUs"), stock appreciation rights ("SARs"), and/or performance units ("Performance Units") (hereinafter collectively referred to as "Grants").
Grants may be awarded singly, in combination or in tandem with other Grants. All Grants shall be subject to the terms and conditions set forth herein and to such other terms and conditions consistent
with this Plan as the Committee deems appropriate and as are specified in writing by the Committee in program documents applicable to particular years and/or Grants and in individual grant instruments
or amendments to the same (each a "Grant Instrument"). The Committee shall approve the form and provisions of each Grant Instrument. Grants under a particular Section of the Plan need not be uniform
as among the Grantees, as defined below.
2.
Eligibility for Participation.
(a)
Eligible Persons.
All employees of the Company ("Employees"), including Employees who are officers or
members of the Board, contractors of the Company ("Contractors"), and members of the Board who are not Employees ("Non-Employee Trustees") shall be eligible to receive Grants under the Plan.
Contractors shall be eligible to receive Grants only of Nonqualified Stock Options.
(b)
Selection of Grantees.
The Committee shall select the Employees and Contractors to receive Grants and shall
determine the number of shares of Company Stock subject to a particular Grant in such manner as the Committee determines. Employees, Contractors and Non-Employee Trustees who receive Grants under this
Plan shall hereinafter be referred to as "Grantees".
(c)
Collective Bargaining Employees.
Anything to the contrary in this Plan notwithstanding, no Employee whose
terms and conditions of employment are subject to negotiation with a collective bargaining agent shall be eligible to receive Grants under this Plan until the agreement between the Company and such
collective bargaining agent with respect to the Employee provides for participation in the Plan.
3.
Granting of Options.
(a)
Number of Shares.
The Committee shall determine the number of shares of Company Stock that will be subject
to each Grant of Options to Employees and Contractors subject to the overall limits of Article IX.
(b)
Type of Option and Price.
(i) The
Committee may grant Incentive Stock Options that are intended to qualify as "incentive stock options" within the meaning of section 422 of the Code or
Nonqualified Stock Options that are not intended so to qualify or any combination of Incentive Stock Options and Nonqualified Stock Options, all in accordance with the terms and conditions set forth
herein. Incentive Stock Options may be granted only to Employees. Nonqualified Stock Options may be granted to Employees, Contractors and Non-Employee Trustees.
(ii) The
purchase price (the "Exercise Price") of Company Stock subject to an Option shall be determined by the Committee and shall be equal to or greater than the Fair
Market Value (as defined below) of a share of Company Stock on the date the Option is granted; provided, however, that an Incentive Stock Option may not be granted to an Employee who, at the time of
grant, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any parent or subsidiary of the Company,
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unless
the Exercise Price per share is not less than 110% of the Fair Market Value of Company Stock on the date of grant. The Committee may not modify the applicable Exercise Price after the date of
Grant.
(iii) If
the Company Stock is publicly traded, then the Fair Market Value per share shall be the closing price of the Company Stock as reported in the Wall Street Journal as
composite transactions for the relevant date (or the latest date for which such price was reported if such date is not a business day), or if not available, determined as follows: (A) if the
principal trading market for the Company Stock is the New York Stock Exchange, the last reported sale price thereof on the relevant date or (if there were no trades on that date) the latest preceding
date upon which a sale was reported, (B) if the principal trading market for the Company Stock is a national securities exchange other than the New York Stock Exchange or is the NASDAQ National
Market, the last reported sale price thereof on the relevant date or (if there were no trades on that date) the latest preceding date upon which a sale was reported, or (C) if the Company Stock
is not principally traded on such exchange or market, the mean between the last reported "bid" and "asked" prices of Company Stock on the relevant date, as reported on NASDAQ or, if not so reported,
as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable and as the Committee determines. If the Company Stock is not
publicly traded or, if publicly traded, is not subject to reported transactions or "bid" or "asked" quotations as set forth above, the Fair Market Value per share shall be as determined by the
Committee in accordance with the requirements of Section 1.409A-1(b)(5)(iv)(B) of the Treasury Regulations.
(c)
Option Term.
The Committee shall determine the term of each Option. The term of any Option shall not exceed
ten years from the date of grant. However, an Incentive Stock Option that is granted to an Employee who, at the time of grant, owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company, or any parent or subsidiary of the Company, may not have a term that exceeds five years from the date of grant.
(d)
Exercisability of Options.
Options shall become exercisable in accordance with such terms and conditions,
consistent with the Plan, as may be determined by the Committee and specified in the Grant Instrument. The Committee may accelerate the exercisability of any or all outstanding Options at any time for
any reason.
(e)
Termination of Employment, Retirement, Disability or Death.
(i) Except
as provided below, an Option may be exercised only while the Grantee is employed by, or providing service to, the Company as an Employee, a Contractor, or a
member of the Board. In the event that a Grantee ceases to be employed by, or provide service to, the Company then, unless the Committee deems otherwise, all outstanding Options will expire upon
termination from employment or service with the Board for Cause, or any other reason, including termination on account of "Retirement," "Disability," or death.
(ii) For
purposes of this Plan and programs thereunder:
(A) "Cause"
shall mean, except to the extent specified otherwise by the Committee acting on behalf of the Company, (x) the Grantee's conviction of a felony,
(y) in the reasonable determination of the Committee, the Grantee's (I) commission of an act of fraud, embezzlement, or theft in connection with the Grantee's duties in the course of the
Grantee's employment with the Company, (II) acts or omissions causing intentional, wrongful damage to the property of the Company or intentional and wrongful disclosure of confidential
information of the Company, or (III) engaging in gross misconduct or gross negligence in the course of the Grantee's employment with the Company, or (z) the
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Grantee's
material breach of his or her obligations under any written agreement with the Company if such breach shall not have been remedied within 30 days after receiving written notice from
the
Committee specifying the details thereof. For purposes of this Program, an act or omission on the part of a Grantee shall be deemed "intentional" only if it was not due primarily to an error in
judgment or negligence and was done by Grantee not in good faith and without reasonable belief that the act or omission was in the best interest of the Company. In the event a Grantee's employment or
service is terminated for cause, in addition to the immediate termination of all Grants, the Grantee shall automatically forfeit all shares underlying any exercised portion of an Option for which the
Company has not yet delivered the share certificates, upon refund by the Company of the Exercise Price paid by the Grantee for such shares.
(B) "Disability"
shall mean a Grantee's being determined to be disabled within the meaning of the long-term disability plan or program that is a part of the Eversource
Energy Service Company Flexible Benefits Plan (or any successor plan or program, hereafter, the "LTD Program").
(C) "Employed
by, or provide service to, the Company" shall mean employment or service as an Employee, Contractor or member of the Board (so that, for purposes of exercising
Options and SARs and satisfying conditions with respect to Restricted Stock, RSUs and Performance Units, a Grantee shall not be considered to have terminated employment or service until the Grantee
ceases to be an Employee, Contractor and member of the Board), unless the Committee determines otherwise.
(D) "Retired"
shall mean a termination of employment from the Company, other than for "Cause" on or after the earlier to occur of (x) attainment of age 65,
(y) eligibility for pension payments under the Supplemental Executive Retirement Plan for Officers of Eversource Energy System Companies, or employment-related agreement with the Company, or
(z) attainment of age 55 after completing at least ten years of vesting service under the Eversource Energy Service Company 401k Plan.
(f)
Exercise of Options.
A Grantee may exercise an Option that has become exercisable, in whole or in part, by
delivering a notice of exercise to the Company with payment of the Exercise Price. The Grantee shall pay the Exercise Price for an Option as specified by the Committee:
(i) in
cash,
(ii) with
the approval of the Committee, by delivering shares of Company Stock owned by the Grantee (including Company Stock acquired in connection with the exercise of an
Option or Restricted Stock, as defined below, granted under this Plan, subject to such restrictions as the Committee deems appropriate including placing the same restrictions on the shares of Company
Stock obtained through the exchange of the Restricted Stock) and having a Fair Market Value on the date of exercise equal to the Exercise Price, or
(iii) by
such other method as the Committee may approve, including payment through a broker in accordance with procedures permitted by Regulation T of the Federal
Reserve Board. The Grantee shall pay the Exercise Price and the amount of any withholding tax due at the time of exercise.
(g)
Limits on Incentive Stock Options.
Each Incentive Stock Option shall provide that, if the aggregate Fair
Market Value of the stock on the date of the grant with respect to which Incentive Stock Options are exercisable for the first time by a Grantee during any calendar year, under the Plan or any other
stock option plan of the Company exceeds $100,000, then the option, as to the excess, shall be treated as a Nonqualified Stock Option. An Incentive Stock Option shall not be granted to any person who
is not an Employee of the Company.
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ARTICLE V
STOCK-BASED GRANTS TO NON-EMPLOYEE TRUSTEES
1.
Eligibility for Participation.
Non-Employee Trustees shall be eligible to receive Grants as set forth in
Article IV; provided, that the number of shares of Company Stock subject to each Grant of Options, as well as the terms of all Grants, to Non-Employee Trustees shall be approved by the Board,
in accordance with Article (9) of the Declaration of Trust of Eversource Energy, as amended.
2.
Terms of Retirement.
The words "age 65" in the definition of "Retired" in Section 3(e)(ii)(D) of
Article IV shall be read as "age 70" with respect to Non-Employee Trustees.
ARTICLE VI
RESTRICTED STOCK AND RESTRICTED SHARE UNIT GRANTS
1.
Restricted Stock Grants.
Subject to the terms and conditions of the Plan, the Committee may issue or transfer
shares of Company Stock to a Grantee with such restrictions as the Committee deems appropriate ("Restricted Stock"). The following provisions are applicable to Restricted Stock:
(a)
General Requirements.
Shares of Company Stock issued or transferred pursuant to Restricted Stock Grants may
be issued or transferred in exchange for services performed or to be performed. The Committee may establish conditions under which restrictions on shares of Restricted Stock shall lapse over a period
of time or according to such other criteria as the Committee deems appropriate. The period of time during which the Restricted Stock will remain subject to restrictions (the "Restriction Period") will
be designated in the Grant Instrument
(b)
Number of Shares.
The Committee shall determine the number of shares of Company Stock to be issued or
transferred pursuant to a Restricted Stock Grant and the restrictions applicable to such shares, subject to the limitations contained in Article IX.
(c)
Requirement of Employment or Service.
If the Grantee ceases to be employed by, or provide service to, the
Company during the Restriction Period, or if other specified conditions are not met, the Restricted Stock Grant shall terminate as to all shares covered by the Grant as to which the restrictions have
not lapsed, and those shares of Company Stock must be immediately returned to the Company. The Committee may, however, provide for complete or partial exceptions to this requirement as it deems
appropriate.
(d)
Restrictions on Transfer and Legend on Share Certificate.
During the Restriction Period, a Grantee may not
sell, assign, transfer, pledge or otherwise dispose of the shares of Restricted Stock except to a Successor Grantee, as defined below. The Committee may determine that the Company will issue
certificates for shares of Restricted Stock, in which case each certificate for a share of Restricted Stock shall contain a legend giving appropriate notice of the restrictions in the Grant. The
Grantee shall be entitled to have the legend removed from the share certificate covering the shares subject to restrictions when all restrictions on such shares have lapsed. The Committee may
determine that the Company will not issue certificates for shares of Restricted Stock until all restrictions on such shares have lapsed, or that the Company will retain possession of certificates for
shares of Restricted Stock until all restrictions on such shares have lapsed.
(e)
Right to Vote and to Receive Dividends.
Unless the Committee determines otherwise, the Grantee shall have
the right to vote Restricted Stock and to receive any dividends or other distributions paid on such shares during the Restriction Period subject to any restrictions deemed appropriate by the
Committee.
(f)
Lapse of Restrictions.
All restrictions imposed on Restricted Stock shall lapse upon the expiration of the
applicable Restriction Period and the satisfaction of all conditions imposed by the
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Committee.
The Committee may determine, as to any or all Restricted Stock Grants, that the restrictions shall lapse without regard to any Restriction Period.
2.
Restricted Share Unit Grants.
(a)
Restriction Period.
The Committee may make Grants of Restricted Share Units to Employees and Non-Employee
Trustees representing the right to receive shares of Company Stock, cash, or both, as determined by the Committee (hereafter, "Restricted Share Units"). Between the end of the Restriction Period and
the second payroll date following the end of the Restriction Period, subject to any deferral election that may be made or applied to the Grant pursuant to subsection (e) below and further
subject to the limitations set forth in Section 3 of Article XIII of this Plan with respect to a Grant of Restricted Share Units that is subject to Section 409A of the Code, cash
or shares or both shall be delivered to the Grantee (unless previously forfeited). Restricted Share Units may not be sold, assigned, transferred, pledged or otherwise encumbered during the Restriction
Period. A Grantee of Restricted Share Units shall have none of the rights of a holder of Company Stock unless and until shares of Company Stock are actually delivered in satisfaction of such
Restricted Share Units.
(b)
Number of Units.
The Committee shall determine the number of Restricted Share Units pursuant to a Restricted
Share Unit Grant and the restrictions applicable to such shares, subject to the limitations contained in Article IX.
(c)
Requirement of Employment or Service.
If the Grantee ceases to be employed by, or provide service to, the
Company during a period designated in the Grant Instrument as the Restriction Period, or if other specified conditions are not met, the Restricted Share Unit Grant shall terminate as to all Restricted
Share Units covered by the Grant as to which the restrictions have not lapsed. The Committee may, however, provide in the Grant Instrument for complete or partial exceptions to this requirement if an
Employee's employment or Non-Employee Trustee's service with the Board ends on account of Retirement, termination without Cause, death or Disability or due to a Change of Control, as it deems
appropriate subject to the limitations set forth in Section 3 of Article XIII of this Plan.
(d)
Dividend Equivalents.
The Committee may determine that a Grant Instrument with respect to Restricted Share
Units may provide that the Grantee shall be entitled to receive as compensation from the Company dividend equivalents with respect thereto, in the form determined by the Committee from the effective
date of the Grant Instrument through the earlier of (i) the date the Restricted Share Unit
is forfeited, and (ii) the date Company Stock representing such Restricted Share Units or cash is delivered to the Grantee as provided herein.
(e)
Deferrals of Restricted Share Units.
The Committee may provide in the Grant Instrument for the automatic
deferral of the payment of Restricted Share Units upon the lapse of restrictions on the Grant or permit a Grantee to elect deferral by filing a written election with the Committee in accordance with
such procedures as the Committee may from time to time specify, subject to the limitations set forth in Section 3 of Article XIII of this Plan.
3.
Withholding.
The Company shall have the right to deduct from any settlement of a Grant of Restricted Shares
or Restricted Share Units, including the delivery or vesting of shares or dividend equivalents, an amount sufficient to cover withholding required by law for any federal, state or local taxes or to
take such other action as may be necessary to satisfy any withholding obligations. The Committee may permit shares to be used to satisfy required tax withholding, and such shares shall be valued at
the fair market value as of the settlement date of the applicable Grant.
4.
Section 162(m).
Notwithstanding any other provision of the Plan or the terms of any Grant or Award
issued hereunder, Grants of Restricted Stock or Restricted Share Units under this Article VI
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are
not intended to be or meet the requirements for "qualified performance based compensation" under Section 162(m) of the Code or Treasury Regulation § 1.162-27(e).
ARTICLE VII
STOCK APPRECIATION RIGHTS
1.
Stock Appreciation Rights.
(a)
General Requirements.
The Committee may grant stock appreciation rights ("SARs") to a Grantee separately or
in tandem with any Option (for all or a portion of the applicable Option). Tandem SARs
may be granted either at the time the Option is granted or at any time thereafter while the Option remains outstanding; provided, however, that, in the case of an Incentive Stock Option, SARs may be
granted only at the time of the Grant of the Incentive Stock Option. The Committee shall establish the base amount of the SAR at the time the SAR is granted. The base amount of each SAR shall be equal
to the per share Exercise Price of the related Option or, if there is no related Option, the Fair Market Value of a share of Company Stock as of the date of Grant of the SAR ("Base Amount"). The
Committee may not modify the applicable Base Amount of the SAR after the date of Grant.
(b)
Tandem SARs.
In the case of tandem SARs, the number of SARs granted to a Grantee that shall be exercisable
during a specified period shall not exceed the number of shares of Company Stock that the Grantee may purchase upon the exercise of the related Option during such period. Upon the exercise of an
Option, the SARs relating to the Company Stock covered by such Option shall terminate. Upon the exercise of SARs, the related Option shall terminate to the extent of an equal number of shares of
Company Stock.
(c)
Exercisability.
An SAR shall be exercisable during the period specified by the Committee in the Grant
Instrument and shall be subject to such vesting and other restrictions as may be specified in the Grant Instrument. SARs may only be exercised while the Grantee is employed by the Company or during
the applicable period after termination of employment as described in Article IV, Section 3(e). A tandem SAR shall be exercisable only during the period when the Option to which it is
related is also exercisable.
(d)
Value of SARs.
When a Grantee exercises SARs, the Grantee shall receive in settlement of such SARs an amount
equal to the "spread value" for the number of SARs exercised, payable in cash.. The "spread value" for an SAR is the amount representing the difference by which the Fair Market Value of the underlying
Company Stock on the date of exercise of the SAR exceeds the base amount of the SAR as described in Subsection (a).
(e)
Form of Payment.
For purposes of calculating the amount of cash to be received, shares of Company Stock
shall be valued at their Fair Market Value on the date of exercise of the SAR and cash shall be distributed, net of applicable withholding taxes.
ARTICLE VIII
PERFORMANCE UNITS
1.
Performance Units.
(a)
General Requirements.
The Committee may grant performance units ("Performance Units") to an Employee. Each
Performance Unit shall represent the right of the Grantee to receive an amount based on the value of the Performance Unit, if performance goals established by the Committee are met. A Performance Unit
shall be based on the Fair Market Value of a share of Company Stock or on such other measurement base as the Committee deems appropriate. The Committee shall determine the number of Performance Units
to be granted and the requirements applicable to such Units, subject to the limitations contained in Article IX.
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(b)
Performance Period and Performance Goals.
When Performance Units are granted, the Committee shall establish
the Performance Period during which performance shall be measured, Performance Goals applicable to the Units and such other conditions of the Grant as the Committee deems appropriate. Performance
Goals may relate to the financial performance of the Company or its operating units, the performance of Company Stock, individual performance, or such other criteria as the Committee deems
appropriate.
(c)
Payment with respect to Performance Units.
At the end of each Performance Period, the Committee shall
determine to what extent the Performance Goals and other conditions of the Performance Units are met and the amount, if any, to be paid with respect to the Performance Units. Payments with respect to
Performance Units shall be made in cash, in Company Stock, or in a combination of the two, as determined by the Committee after the end of the relevant Performance Period but not later than two and
one-half months after the end of such Performance Period subject to any deferral election that may be made or applied to the Grant pursuant to subsection (e) below and further subject to the
limitations set forth in Section 3 of Article XIII of this Plan with respect to a Grant of Performance Units that is subject to Section 409A of the Code.
(d)
Requirement of Employment or Service.
If the Grantee ceases to be employed by, or provide service to, the
Company (as defined in Article IV, Section 3(e)) during a Performance Period, or if other conditions established by the Committee are not met, the Grantee's Performance Units shall be
forfeited. The Committee may, however, provide in the Grant Instrument for complete or partial exceptions to this requirement if an Employee's employment ends on account of Retirement, termination
without Cause, death or Disability or due to a Change of Control, as it deems appropriate subject to the limitations set forth in Section 3 of Article XIII of this Plan..
(e)
Deferrals of Performance Units.
The Committee may provide in the Grant Instrument for the automatic deferral
of the payment of Performance Units at the end of the Performance Period or permit a Grantee to elect deferral by filing a written election with the Committee in accordance with such procedures as the
Committee may from time to time specify subject to the limitations set forth in Section 3 of Article XIII of this Plan.
(f)
Designation as Qualified Performance-Based Compensation.
The Committee may determine that Performance Units
granted to a Grantee shall be considered "qualified performance-based compensation" under Section 162(m) of the Code. The provisions of this subsection (e) shall apply to Grants of
Performance Units that are to be considered "qualified performance-based compensation" under Section 162(m) of the Code.
(i)
Performance Goals.
When Performance Units that are to be considered "qualified performance-based
compensation" are Granted, the Committee shall establish in writing (A) the objective Performance Goals that must be met in order for amounts to be paid under the Performance Units,
(B) the Performance Period during which the performance goals must be met, (C) the threshold, target and maximum amounts that may be paid if the Performance Goals are met, and
(D) any other conditions, including without limitation provisions relating to death, disability, other termination of employment or Change of Control, that the Committee deems appropriate and
consistent with the Plan and Section 162(m) of the Code. The performance goals may relate to the Employee's business unit or the performance of the Company and its subsidiaries as a whole, or
any combination of the foregoing.
(ii)
Establishment of Goals.
The Committee shall establish the Performance Goals in writing either before the
beginning of the Performance Period or during a period ending no later than the earlier of (A) 90 days after the beginning of the Performance Period or (B) the date on which 25%
of the Performance Period has been completed, or such other date as may
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be
required or permitted under applicable regulations under Section 162(m) of the Code. The performance goals shall satisfy the requirements for "qualified performance-based compensation,"
including the requirement that the achievement of the goals be substantially uncertain at the time they are established and that the goals be established in such a way that a third party with
knowledge of the relevant facts could determine whether and to what extent the performance goals have been met. The Committee shall not have discretion to increase the amount of compensation that is
payable upon achievement of the designated performance goals.
(iii)
Maximum Payment.
The number of Performance Units granted and paid in shares shall not exceed the limit
specified under Article IX(1)(a). If Performance Units are paid in cash, the maximum amount that may be paid to an Employee with respect to a Performance Period is $4,000,000.
(iv)
Announcement of Grants.
The Committee shall certify and announce the results for each Performance Period to
all Grantees immediately following the announcement of the Company's financial results for the Performance Period. If and to the extent that the Committee does not so certify that the performance
goals have been met, the grants of Performance Units for the Performance Period shall be forfeited.
ARTICLE IX
AUTHORIZED SHARES
1.
Shares Subject to the Plan.
(a)
Shares Reserved for Grants and Awards.
The aggregate number of common shares of Eversource, par value $5.00,
("Company Stock") that may be subject to Grants of Options, or transferred on account of other Grants or Awards under the Plan may not exceed 4.5 million shares. The shares may be authorized
but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Plan. If and to the extent
(i) Options or SARs granted under the Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered without having been exercised (other than for reasons of the Exercise Price of
the Option being less than the current Fair Market Value thereof), or (ii) any shares of Restricted Stock, RSUs or Performance Units are forfeited, or (iii) Company Stock, including
RSUs, are used by the Participant to pay withholding taxes or as payment for the Exercise Price of the Grant, then the shares not made the subject of Grants and Awards, and the shares subject to such
terminated, expired, canceled, forfeited, exchanged or surrendered Grants and Awards shall again be available for purposes of the Plan in addition to the number of shares of Company Stock otherwise
available for Grants and Awards. No Participant under the Plan may receive aggregate Grants and Awards in excess of one million shares over the term of the Plan.
(b)
Adjustments.
If there is any change in the number or kind of shares of Company Stock outstanding
(i) by reason of a stock dividend, spinoff, recapitalization, stock split, or combination or exchange of shares, (ii) by reason of a merger, reorganization or consolidation in which
Eversource is the surviving entity, (iii) by reason of a reclassification or change in par value, or (iv) by reason of any other extraordinary or unusual event affecting the outstanding
Company Stock as a class without Eversource's receipt of consideration, or (v) otherwise in the event of an equity restructuring within the meaning of Statement of Financial Accounting
Standards No. 123 (revised 2004), other than (A) any distribution of
securities or other property by the Company to shareholders in a spin-off or split-off that does not qualify as a tax-free spin-off or split-up under Section 355 of the Code (or any successor
provision of the Code) or (B) any cash dividend (other than an extraordinary cash dividend or distribution), then the maximum number of shares of Company Stock available for Grants, the number
of shares covered by outstanding Grants, the
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kind
of shares issued under the Plan, and the price per share or the applicable market value of such Grants, including the per share exercise price of Options and Stock Appreciation Rights, shall be
appropriately adjusted by the Committee to reflect any increase or decrease in the number of, or change in the kind or value of, issued shares of Company Stock to preclude, to the extent practicable,
the enlargement or dilution of rights and benefits under such Grants; provided, however, that any fractional shares resulting from such adjustment shall be eliminated and, provided further, that any
substitution of a new stock right or assumption of an outstanding stock right pursuant to a corporate transaction shall comply with the requirements of Section 1.409A-1(b)(5)(v)(D) of the
Treasury Regulations and any adjustment of a stock right to reflect a stock split or stock dividend shall comply with the requirements of Section 1.409A-1(b)(5)(v)(H) of the Treasury
Regulations. Any increase to the number or kind of shares of Company Stock outstanding under this Article IX(1)(b) occurring on or after May 9, 2007 shall result in the adjustment in the
4.5 million shares authorized under Article IX(1)(a). No such adjustment shall be required to reflect the events described in clauses (x) and (y) above, or any other change
in capitalization that does not constitute an equity restructuring; however, such adjustment may be made if the Committee determines that such adjustment is appropriate; provided, however, that any
such adjustment shall comply with the requirements of Section 1.409A-1(b)(5)(v) of the Treasury Regulations. Any adjustments determined by the Committee shall be final, binding and conclusive.
(c)
Minimum Vesting Requirement.
Grants of Restricted Stock or RSUs made pursuant to the Plan shall vest ratably
no sooner than the first business day of each of the three years following the calendar year of the Grant. Grants of Options shall vest no sooner than the first business day of the year following the
calendar year of the Grant. The Committee may, in its discretion, determine such other vesting schedule as it deems appropriate, except that any such other vesting schedule must fulfill at least the
applicable minimum requirements set forth in the prior two sentences. The Committee may provide in the Grant Instrument for complete or partial exceptions to these requirements as it deems appropriate
in the case of a Participant whose service with the Company ends for reason of Retirement, Death, or Disability, or in the case of a Grant to a Non-Employee Trustee or a newly-hired Employee, or upon
a Change of Control of Eversource subject to the limitations set forth in Section 3 of Article XIII of this Plan.
ARTICLE X
OPERATING RULES
1.
Withholding of Taxes.
All Grants under the Plan shall be subject to applicable federal (including FICA),
state and local tax withholding requirements. The Company shall have the right to deduct from all Grants paid in cash, or from other wages paid to the Grantee, any federal, state or local taxes
required by law to be withheld with respect to such Grants. In the case of Options and other Grants paid in Company Stock, the Company may require the Grantee or other person receiving such shares to
pay to the Company the amount of any such taxes that the Company is required to withhold with respect to such Grants, or the Company may deduct from other wages paid by the Company the amount of any
withholding taxes due with respect to such Grants. If the Committee so permits, a Grantee may elect to satisfy the Company's income tax withholding obligation with respect to an Option, SAR,
Restricted Stock, Restricted Share Units or Performance Units that are paid in Company Stock, by having shares withheld up to an amount that does not exceed the Grantee's minimum applicable
withholding tax rate for federal (including FICA), state and local tax liabilities. The election must be in a form and manner prescribed by the Committee.
2.
Transferability of Grants.
(a)
Nontransferability of Grants.
Except as provided below, only the Grantee may exercise rights under a Grant
during the Grantee's lifetime. A Grantee may not transfer those rights except
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by
will or by the laws of descent and distribution or, with respect to Grants other than Incentive Stock Options, if permitted in any specific case by the Committee, pursuant to a domestic relations
order (as defined under the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the regulations thereunder). When a Grantee dies, the personal representative or
other person entitled to succeed to the rights of the Grantee ("Successor Grantee") may exercise such rights. A Successor Grantee must furnish proof satisfactory to the Company of his or her right to
receive the Grant under the Grantee's will or under the applicable laws of descent and distribution.
(b)
Transfer of Nonqualified Stock Options.
Notwithstanding the foregoing, the Committee may provide, in a Grant
Instrument, that a Grantee may transfer Nonqualified Stock Options to family members, one or more trusts for the benefit of family members, or one or more partnerships of which family members are the
only partners, according to such terms as the Committee may determine; provided that the Grantee receives no consideration for the transfer of an Option and the transferred Option shall continue to be
subject to the same terms and conditions as were applicable to the Option immediately before the transfer.
3.
Requirements for Issuance or Transfer of Shares.
No Company Stock shall be issued or transferred in
connection with any Grant hereunder unless and until all legal requirements applicable to the issuance or transfer of such Company Stock have been complied with to the satisfaction of the Committee.
The Committee shall have the right to condition any Grant made to any Grantee hereunder on such Grantee's undertaking in writing to comply with such restrictions on his or her subsequent disposition
of such shares of Company Stock as the Committee shall deem necessary or advisable as a result of any applicable law, regulation or official interpretation thereof, and certificates representing such
shares may be legended to reflect any such restrictions. Certificates representing shares of Company Stock issued or transferred under the Plan will be subject to such stop-transfer orders and other
restrictions as may be required by applicable laws, regulations and interpretations, including any requirement that a legend be placed thereon.
4.
Funding of the Plan.
This Plan shall be unfunded. The Company shall not be required to establish any special
or separate fund or to make any other segregation of assets to assure the payment of any Grants under this Plan. In no event shall interest be paid or accrued on any Grant, including unpaid
installments of Grants.
5.
Rights of Participants.
Nothing in this Plan shall entitle any Employee or Non-Employee Trustee or other
person to any claim or right to be granted a Grant under this Plan except as provided in Article V. Neither this Plan nor any action taken hereunder shall be construed as giving any individual
any rights to be retained by or in the employ of the Company or any other employment rights, nor shall they interfere in any way with the right of the Company, a subsidiary or an affiliate to
terminate the employment of any Employee at any time.
6.
Headings.
Section headings are for reference only. In the event of a conflict between a title and the content
of a Section, the content of the Section shall control.
7.
Effective Date of the Plan.
Subject to approval by Eversource's shareholders, if required, the Plan as
amended and restated, is effective on January 1, 2009.
8.
Definition of Company.
"Company" means Eversource and any Affiliate which is authorized by the Board to adopt
the Plan and cover its eligible employees and whose designation as such has become effective upon acceptance of such status by the board of directors of the Affiliate. An Affiliate may
revoke its acceptance of such designation at any time, but until such acceptance has been revoked, all the provisions of the Plan, including the authority of the Board and the Committee, and
amendments thereto shall apply to the eligible employees of the Affiliate. In the event the designation is revoked by the board of directors of an Affiliate, the Plan shall be deemed terminated only
with
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respect
to such Affiliate. For the purposes hereof, "Affiliate" means each direct and indirect affiliated company that directly or through one or more intermediaries, controls, is controlled by, or is
under common control with Eversource.
ARTICLE XI
CHANGE OF CONTROL OF EVERSOURCE
1.
Change of Control of Eversource.
As
used herein, a "Change of Control" shall mean a change in ownership or control effected through any one or more of the following:
(a) When
any "person," as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than the Company, its
affiliates, or any Company or Eversource employee benefit plan (including any trustee of such plan acting as trustee), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Eversource representing more than 20% of the combined voting power of either (i) the then outstanding common shares of Eversource (the
"Outstanding Common Shares") or (ii) the then outstanding voting securities of Eversource entitled to vote generally in the election of directors (the "Voting Securities"); or
(b) Individuals
who, as of the beginning of any twenty-four month period, constitute the Trustees (the "Incumbent Trustees") cease for any reason to constitute at least a
majority of the Trustees or cease to be able to exercise the powers of the majority of the Trustees, provided that any individual becoming a trustee subsequent to the beginning of such period whose
election or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the trustees then comprising
the Incumbent Trustees shall be considered as though such individual were a member of the Incumbent Trustees, but excluding, for this purpose, any such individual whose initial assumption of office is
in connection with an actual or threatened election contest relating to the election of the Trustees of Eversource (as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act); or
(c) Consummation
by Eversource of a reorganization, merger or consolidation (a "Business Combination"), in each case, with respect to which all or substantially all of the
individuals and entities who were the respective beneficial owners of the Outstanding Common Shares and Voting Securities immediately prior to such Business Combination do not, following consummation
of all transactions intended to constitute part of such Business Combination, beneficially own, directly or indirectly, more than 75% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation, business trust or other entity
resulting from or being the surviving entity in such Business Combination in substantially the same proportion as their ownership immediately prior to such Business Combination of the Outstanding
Common Shares and Voting Securities, as the case may be; or
(d) Consummation
of a complete liquidation or dissolution of Eversource or sale or other disposition of all or substantially all of the assets of Eversource other than to a
corporation, business trust or other entity with respect to which, following consummation of all transactions intended to constitute part of such sale or disposition, more than 75% of, respectively,
the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, is then
owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Common Shares and Voting
Securities immediately prior to such sale or disposition in substantially the same proportion as
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their
ownership of the Outstanding Common Shares and Voting Securities, as the case may be, immediately prior to such sale or disposition.
2.
Consequences of a Change of Control.
(a)
Notice.
Upon a Change of Control, the Company shall provide each Grantee with outstanding Grants written
notice of such Change of Control.
(b)
Assumption of Grants.
Upon a Change of Control where the Company is not the surviving corporation (or
survives only as a subsidiary of another corporation), unless the Committee determines otherwise, all outstanding Options and SARs that are not exercised and all outstanding restricted shares,
restricted share units and Performance Units that are denominated in shares of Company Stock shall be assumed by, or replaced with comparable options, rights or entitlements by, the surviving
corporation, subject to compliance with Section 1.409A-1(b)(5)(v) of the Treasury Regulations.
(c)
Other Alternatives.
Notwithstanding the foregoing, subject to subsection (d) below and compliance
with Section 1.409A-1(b)(5)(v) of the Treasury Regulations, in the event of a Change of Control, the Committee may provide in annual program documents that, notwithstanding any deferral
election or deferral provision, take any of the following actions: (i) eliminate all risk of forfeiture remaining on any Options, SARs, restricted shares, restricted share units and Performance
Units outstanding at the time of a Change of Control; (ii) require that Grantees surrender their outstanding Options, SARs, restricted shares, restricted share units and Performance Units that
are denominated in shares of Company Stock in exchange for a payment by the Company, in cash or Company Stock as determined by the Committee, in an amount equal to the restricted shares, restricted
share units or Performance Units (based on the then Fair Market Value of shares of Company Stock) (except that a distribution of any award that is a 409A Award may only be made, other than on
Termination, upon a change of control that qualifies as a "change in control" under Section 1.409A -3(i)(5) of the Treasury Regulations), or with respect to unexercised Options or SARs, in the
amount by which the then Fair Market Value of the shares of Company Stock subject to the Grantee's unexercised Options and SARs exceeds the Exercise Price of the Options or the base amount of the
SARs, as applicable, or (iii) after giving Grantees an opportunity to exercise their outstanding Options and SARs, terminate any or all unexercised Options and SARs at such time as the
Committee deems appropriate. Such surrender or termination shall take place as of the date of the Change of Control or such other date as the Committee may specify.
(d)
Committee.
The Committee making the determinations under this Article XI, Section 2(d)
following a Change of Control must comprise the same members as those on the Committee immediately before the Change of Control. If the Committee members do not meet this requirement, the automatic
provisions of Subsections (a) and (b) shall apply, and the Committee shall not have discretion to vary them.
(e)
Limitations.
Notwithstanding anything in the Plan to the contrary, in the event of a Change of Control, the
Committee shall not have the right to take any actions described in the Plan (including without limitation actions described in Subsection (c) above) that would make the Change of Control
ineligible for pooling of interests accounting treatment or that would make the Change of Control ineligible for desired tax treatment if, in the absence of such right, the Change of Control would
qualify for such treatment and the Company intends to use such treatment with respect to the Change of Control.
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ARTICLE XII
AMENDMENT AND TERMINATION
1.
Amendment and Termination of the Plan.
(a)
Amendment.
Subject to the limitations set forth in Section 3 of Article XIII of this Plan, the
Board or the Committee may amend or terminate the Plan at any time; provided, however, that neither the Board nor the Committee shall amend the Plan without shareholder approval if such approval is
required by Sections 162(m) or 422 of the Code.
(b)
Termination of the Plan.
The Plan shall terminate on the day preceding the tenth anniversary of its
effective date, unless the Plan is terminated earlier by the Board or the Committee in accordance with Subsection (a) above, or is extended by the Board or the Committee with the approval of
the shareholders.
(c)
Termination and Amendment of Outstanding Grants.
A termination or amendment of the Plan that occurs after a
Grant is made shall not materially impair the rights of a Grantee unless the Grantee consents, unless the Committee acts under Article XI, Section 2(c), or unless the amendment or
termination is required under statute, regulation, other law, or rule of a governing or administrative body having the effect of a statute or regulation or unless such an amendment is necessary to
bring a Grant into compliance with, or obtain an exemption from, the requirements of Section 409A of the Code. The termination of the Plan shall not impair the power and authority of the
Committee with respect to an outstanding Grant.
(d)
Governing Document.
The Plan shall be the controlling document. No other statements, representations,
explanatory materials or examples, oral or written, may amend the Plan in any manner. The Plan shall be binding upon and enforceable against the Company and its successors and assigns.
ARTICLE XIII
MISCELLANEOUS
1.
Grants in Connection with Corporate Transactions and Otherwise.
Nothing contained in this Plan shall be
construed to (a) limit the right of the Committee to make Grants under this Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business or
assets of any corporation, firm or association, including Grants to employees thereof who become Employees of the Company, or for other proper corporate purposes, or (b) limit the right of the
Company to grant stock options or make other awards outside of this Plan. Without limiting the foregoing, the Committee may make a Grant to an employee of another corporation who becomes an Employee
by reason of a corporate merger, consolidation, acquisition of stock or property, reorganization or liquidation involving the Company or any of its subsidiaries in substitution for a stock option or
restricted stock grant made by such corporation. The terms and conditions of the substitute grants may vary from the terms and conditions required by the Plan and from those of the substituted stock
incentives. The Committee shall prescribe the provisions of the substitute grants.
2.
Compliance with Law.
The Plan, the exercise of Options and SARs and the obligations of the Company to issue
or transfer shares of Company Stock under Grants shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required. With respect to persons subject
to section 16 of the Exchange Act, it is the intent of the Company that the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or its successors
under the Exchange Act. In addition, it is the intent of the Company that the Plan and applicable Grants under the Plan comply with the applicable provisions of sections 162(m) and 422 of the
Code, and any other applicable law or regulation having the effect of law. To the extent that any legal requirement of section 16 of the Exchange Act or section 162(m) or 422 of the Code
as set forth in the Plan ceases to
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be
required under section 16 of the Exchange Act or section 162(m) or 422 of the Code, that Plan provision shall cease to apply. Anything in this Plan to the contrary notwithstanding,
the terms of this Plan shall be interpreted and applied in a manner consistent with the requirements of Section 409A of the Code and the Treasury Regulations thereunder and the Company shall
have no right to make any payment under this Plan except to the extent permitted under Section 409A of the Code. It is intended that payments made under this Plan on or before the
15th day of the third month following the end of the Participant's first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture shall be exempt
from compliance with Section 409A of the Code pursuant to the exception for short-term deferrals set forth in Section 1.409A-1(b)(4) of the Treasury Regulations. The Company shall have
no obligation, however, to reimburse a Participant for any tax penalty or interest payable or provide a gross-up payment in connection with any tax liability of a Participant under Section 409A
of the Code except that this provision shall not apply in the event of the Company's negligence or willful disregard in interpreting the application of Section 409A of the Code to the Plan
which negligence or willful disregard causes the Participant to become subject to a tax penalty or interest payable under Section 409A of the Code, in which case the Company will reimburse the
Participant on an after-tax basis for any such tax penalty or interest not later than the last day of the Participant's taxable year next following the Participant's taxable year in which the
Participant remits the applicable taxes and interest. To the extent permitted by applicable law, the Committee may revoke any Grant if it is contrary to law or modify a Grant to bring it into
compliance with any valid and mandatory government regulation. The Committee may also adopt rules regarding the withholding of taxes on payments to Grantees. The Committee may, in its sole discretion,
agree to limit its authority under this Section.
3.
Deferred Compensation.
(a) 409A Awards.
Anything in this Plan to the contrary notwithstanding, the following rules shall apply to 409A Awards and shall constitute further restrictions on
terms of Awards and Grants set forth elsewhere in this Plan:
(i) The
Committee may permit a Participant to elect to defer a Grant or Award, or any payment under a Grant or Award, in 2005 or thereafter, only if such election is either
made before the beginning of the fiscal year for which the Grant or Award is granted or complies with an exception set forth in the Treasury Regulations under Section 409A of the Code or the
transition rules set forth in Q&A 19(c) of IRS Notice 2005-1 as extended by the Treasury Regulations and IRS Notices 2006-79 and 2007-86 (collectively, the "Transition Rules").
(ii) The
Committee may, in its discretion, for the period beginning January 1, 2005 through December 31, 2008, require or permit on an elective basis (one or
more times) a change in the distribution terms applicable to 409A Awards (and Non-409A Awards that qualify for the short-term deferral exemption under Section 409A) in accordance with, and to
the fullest extent permitted by, the Transition Rules.
(iii) The
Committee shall have no authority to accelerate distributions relating to 409A Awards in excess of the authority permitted under Section 1.409A-3(j)
of the Treasury Regulations.
(iv) Any
distribution of a 409A Award triggered by a Participant's termination of employment and intended to qualify under Section 409A(a)(2)(A)(i) of the Code shall
be made only at the time that the Participant has had a Termination (or at such earlier time, after a termination of employment, that there occurs another event triggering a distribution under the
Plan or the applicable Grant Instrument in compliance with Section 409A).
(v) Any
distribution of a 409A Award triggered by a Participant's Termination shall be delayed for six months following the date of such Termination if such Participant is a
Specified
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Employee
on such date. In the event of any such delay in the distribution date, the 409A Award will be paid at the beginning of the seventh month following the Participant's Termination. In the
event of the Participant's death during such six-month period, payment will be made in the payroll period next following the payroll period in which the Participant's death occurs.
Any
payment due within such six-month period will be adjusted to reflect the deferred payment date by multiplying the payment by the product of the interest discount rate used for
financial accounting purposes to compute the present value liability of the Supplemental Executive Retirement Plan for Officers of Eversource Energy System Companies for the plan year immediately
preceding the date of the Specified Employee's Termination, multiplied by a fraction, the numerator of which is the number of days by which such payment was delayed and the denominator of which is
365.
(vi) In
the case of any distribution of a 409A Award, if the timing of such distribution is not otherwise specified in the Plan or a Grant Instrument, the distribution shall
be made on or after the date at which the settlement of the Award is specified to occur and on or before the 75th day following the date at which the settlement of the Award is specified to
occur, determined in the sole discretion of the Committee, except as otherwise provided in Subsection (v) above.
(vii) No
amendment or termination of the Plan or a Grant pursuant to Article XII shall be effective with respect to 409A Awards except insofar as it complies
with the requirements of Section 409A of the Code and the Treasury Regulations thereunder or the Transition Rules, including without limitation, the requirements set forth in Treasury
Regulations Section 1.409A-2(b) governing subsequent changes in time and form of payment and Section 1.409A-3(j)(4)(ix) governing plan terminations.
(b) Grandfathered
Grants. Any Grant that was both granted and vested before 2005 and which otherwise might constitute a deferral of compensation under Section 409A is
intended to be "grandfathered" under Section 409A. No amendment or change to the Plan or other change (including an exercise of discretion) with respect to such a grandfathered Grant after
October 3, 2004, shall be effective if such change would constitute a "material modification" within the meaning of the Treasury Regulations under Section 409A, except in the case of a
Grant that is specifically modified to become compliant as a 409A Award or compliant with an exemption under Section 409A.
(c) Distributions
Upon Vesting. In the case of any Grant providing for a distribution upon the lapse of a risk of forfeiture, if the timing of such distribution is not
otherwise specified in the Plan or a Grant Instrument, the distribution shall be made on or after January 1 and on or before March 15 of the year following the year in which the risk of
forfeiture lapsed.
(d) Scope
and Application of this Provision. For purposes of this Section 3 and Section 2 above, references to a term or event (including any authority or
right of the Company or a Participant) being "permitted" under or in "compliance" with Section 409A and the Treasury Regulations thereunder or the Transition Rules mean that the term or event
will not cause the Participant to be deemed to be in constructive receipt of compensation relating to the 409A Award prior to the distribution of cash, shares or other property or to be liable for
payment of interest or a tax penalty under Section 409A.
4.
Clawback.
Upon written demand of the Company, an Employee will reimburse or forfeit all or a portion of any
Award or Grant paid to the Employee under the Plan where: (a) payment of the Award or Grant was predicated on the achievement of certain financial results that were subsequently the subject of
a substantial restatement of the financial statements of the Company, (b) in the
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judgment
of the Board the Employee engaged in fraud or misconduct that caused or partially caused the need for the substantial restatement, and (c) a lower payment would have been made to the
Employee based on the restated financial results. In the event the Employee fails to make prompt reimbursement of any such Award or Grant previously paid or delivered, the Company may, to the extent
permitted by applicable law, deduct the amount required to be reimbursed from the Grantee's compensation otherwise due from the Company; provided, however, that the Company will not seek to
recover upon Awards or Grants paid more than three years prior to the date the applicable restatement is disclosed.
5.
Governing Law.
The validity, construction, interpretation and effect of the Plan and Grant Instruments issued
under the Plan shall exclusively be governed by and determined in accordance with the law of the State of Connecticut.
6.
Disclaimer of Liability.
The Declaration of Trust of Eversource provides that no shareholder of Eversource
shall be held to any liability whatever for the payment of any sum of money, or for damages or otherwise under any contract, obligation or undertaking made, entered into or issued by the Board or by
any officer, agent or representative elected or appointed by the Board, and no such contract, obligation or undertaking shall be enforceable against the Board or any of them in their or his or her
individual capacities or capacity and all such contracts, obligations and undertakings shall be enforceable only against the Board as such, and every person or entity, having any claim or demand
arising out of any such contract, obligation or undertaking shall look only to the trust estate for the payment or satisfaction thereof.
ARTICLE XIV
DEFINITIONS
When used herein, each of the following terms shall have the corresponding meaning set forth below unless a different meaning is plainly
required by the context in which a term is used:
14.1 "
Award
" is an annual incentive award made to an Employee as provided in Article III.
14.2 "
Cause
" is described in Article IV(3)(e)(ii)(A).
14.3 "
Change of Control
" is described in Article XI(1).
14.4 "
Code
" is the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.
14.5 "
Committee
" is described in Article II(1).
14.6 "
Company Stock
" or "
Stock
" is Eversource Energy common shares, as
described in Article IX(1)(a).
14.7 "
Company
" or "
Eversource
" is described in Article X.
14.8 "
Disability
" is described in Article IV(3)(e)(ii)(B).
14.9 "
Exchange Act
" is the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto.
14.10 "
Exercise Price
" is described in Article IV(3)(b)(ii).
14.11 "
409A Award
" is an Award or Grant that constitutes a deferral of compensation subject to Code Section 409A and
the Treasury Regulations thereunder. "Non-409A Award" is an Award or Grant other than a 409A Award (including Awards and Grants exempt under the short-term deferral exception set forth in Treasury
Regulation Section 1.409A-1(b)(4) and Awards and Grants that vested before 2005 and therefore are "grandfathered" under Section 409A). Although the Committee retains authority under the
Plan to grant Options and Stock Appreciation Rights on
B-18
terms
that will cause those Grants to be 409A Awards, Options and Stock Appreciation Rights are intended to be Non-409A Awards unless otherwise expressly specified by the Committee.
14.12 \"
Fair Market Value
" is, as of any given date, the value of Company Stock, as provided in Article IV(3)(b)(iii),
or as otherwise determined by the Committee.
14.13 "Grant"
is described in Article IV(1).
14.14 "
Grantee
" is the individual to whom a Grant is made, as provided in Article IV, Section 2(b).
14.15 "
Grant Instrument
" is described in Article IV(1).
14.16 "
Stock Option
" is described in Article IV(3)(b).
14.17 "
Nonqualified Stock Option
" is described in Article IV(3)(b).
14.18 "
Option
" is an Incentive Stock Option or a Nonqualified Stock Option, as described in Article IV(3)(b).
14.19 "
Participant
" is any eligible individual to whom an Award or Grant is made.
14.20 "
Performance Goals
" means the objectives for the Company or any subsidiary or affiliate or any unit thereof or any
individual that may be established by the Committee for a Performance Period with respect to any performance-based Awards or Grants contingently awarded under the Plan. The Performance Goals for
Awards or Grants that are intended to constitute "performance-based" compensation within the meaning of Section 162(m) (or any amended or successor provision) of the Code shall be based on one
or more of the following criteria, either individually, alternatively or in any combination, and subject to such modifications or variations as specified by the Committee, applied to either the
Company as a whole or to a business unit or subsidiary entity thereof, either individually, alternatively or in any combination, and measured over a period of time including any portion of a year,
annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years' results or to a designated comparison group, in each case as specified
by the Committee: cash flow; cash flow from operations; earnings (including, but not limited to, earnings before interest, taxes, depreciation and amortization or operating earnings); earnings per
share, diluted or basic; earnings per share from continuing operations; net asset turnover; inventory turnover; capital expenditures; debt; debt reduction; credit rating; working capital; return on
investment; return on sales; net or gross sales; market share; economic value added; cost of capital; change in assets; expense reduction levels; unit volume; productivity; delivery performance;
service levels; safety record; stock price; return on equity; total shareholder return; return on capital; return on assets or net assets; revenue; income or net income; operating income or net
operating income; operating profit or net operating profit; gross margin, operating margin or profit margin; and completion of acquisitions, divestitures, business expansion, product diversification,
new or expanded market penetration and other non-financial operating and management performance objectives, or other strategic business criteria consisting of one or more objectives based on
satisfaction of specified revenue goals, geographic business expansion goals or cost targets.
With
respect to awards that are intended to qualify as performance-based compensation within the meaning of Section 162(m) and to the extent consistent with Section 162(m)
of the Code and the regulations promulgated thereunder, the Committee may, unless otherwise determined by the Committee at the time the Performance Goals are established, adjust the Performance Goals
to exclude the effect of any of the following events that occur during a Performance Period: the impairment of tangible or intangible assets; litigation or claim judgments or settlements; changes in
tax law, accounting principles or other such laws or provisions affecting reported results; business combinations, reorganizations and/or restructuring programs that have been approved by the
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Board;
reductions in force and early retirement incentives; and any extraordinary, unusual, infrequent or non-recurring items separately identified in the financial statements and/or notes thereto in
accordance with generally accepted accounting principles. Notwithstanding the foregoing and with respect to awards that are not intended to qualify as performance-based compensation within the meaning
of Section 162(m) of the Code, the Committee may, in its discretion, adjust Performance Goals as it considers necessary or appropriate.
14.21 "
Performance Period
" is the period selected by the Committee during which the performance of the Company or any
subsidiary, affiliate or unit thereof or any individual is measured for the purpose of determining the extent to which an Award or Grant subject to Performance Goals or time vesting has been earned.
14.22 "
Performance Unit
" is described in Article VIII(1)(a).
14.23 "
Plan
" is this Eversource Energy Incentive Plan, as amended from time to time.
14.24 "
Qualified Performance-Based Compensation
" is described in Article VIII(1)(e).
14.25 "
Restriction Period
" is described in Article VI(1)(a) and (2)(a).
14.26 "
Restricted Stock
" is a Grant described in Article VI.
14.27 "
Restricted Share Units
" or "
RSUs
" is a Grant described in
Article VI.
14.28 "
Retired
" or "
Retirement
" is described in
Article IV(3)(e)(ii)(D).
14.29 "
Specified Employee
" is a Vice President or more senior officer of the Company at any time during a calendar year in
which case such employee shall be considered a Specified Employee for the 12-month period beginning on the first day of the fourth month immediately following the end of such calendar year.
14.30 "
Stock Appreciation Right
" or "
SAR
" is a right granted pursuant to
Article VII.
14.31 "
Termination
" is a termination of employment with the Company and any affiliate of the Company in all capacities,
including as a common law employee and independent contractor. Whether a Participant has had a Termination shall be determined by the Committee on the basis of all relevant facts and circumstances
with reference to Treasury Regulations Section 1.409A-1(h) regarding a "separation from service" and the default provisions set forth in Regulations Sections 1.409A-1(h)(1)(ii) and
1.409A-1(n).
14.32 "
Termination on Account of Change of Control
" of a Participant shall mean a Termination during the period beginning on
the earlier of (a) approval by the shareholders of Eversource of a Change of Control or (b) consummation of a Change of Control and, in either case, ending on the second anniversary of
the consummation of the transaction that constitutes the Change of Control (or if such period started on shareholder approval and after such shareholder approval the Board abandoned the transaction,
on the date the Board abandoned the transaction) either:
(i) initiated
by the Company for any reason other than the Participant's (A) Disability, (B) death, (C) retirement on or after attaining age 65, or
(D) Cause, or
(ii) initiated
by the Participant upon written notice to the Company provided within 90 days of the initial existence of any of the following circumstances unless
such circumstances are corrected within 30 days after the Company's receipt of such notice (A) upon any significant reduction by the Company of the authority, duties or responsibilities
of the Participant, (B) any material reduction of the Participant's base compensation as in effect immediately prior to the Change of Control, (C) the assignment to the Participant of
duties which are materially inconsistent with the duties of the Participant's position with the Company or those of his or her supervisor, or (D) if the Participant is transferred, without the
Participant's written consent, to a location that is more than 50 miles from the Participant's principal place of business immediately preceding the Change of Control.
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MMMMMMMMMMMM . MMMMMMMMMMMMMMM C123456789 000004 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE______________ SACKPACK_____________ Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Time, on May 2, 2017 (11:59 p.m., Eastern Time, April 30, 2017 for participants in the Eversource 401k Plan). Vote by Internet Go to www.envisionreports.com/ES Or scan the QR code with your smartphone Follow the steps outlined on the secure website MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Vote by telephone Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada Follow the instructions provided by the recorded message Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proposals The Board of Trustees recommends a vote FOR all nominees, FOR Proposals 2, 3, 5, 6 and 1 Year for Proposal 4. 1. Election of Trustees: + For Against Abstain For Against Abstain For Against Abstain 01 - John S. Clarkeson 02 - Cotton M. Cleveland 03 - Sanford Cloud, Jr. 04 - James S. DiStasio 05 - Francis A. Doyle 06 - Charles K. Gifford 07 - James J. Judge 08 - Paul A. La Camera 09 - Kenneth R. Leibler 10 - William C. Van Faasen 11 - Frederica M. Williams 12 - Dennis R. Wraase ForAgainst Abstain 2. Approve proposed amendment to the Companys Declaration of Trust to include a proxy access provision. 3. Consider an advisory proposal approving the compensation of our Named Executive Officers. 1 Year 2 Years 3 Years Abstain 4. Consider an advisory proposal on the frequency of future advisory proposals on executive compensation. ForAgainst Abstain 5. Re-approve the material terms of the performance goals under the 2009 Eversource Incentive Plan as required by Section 162(m) of the Internal Revenue Code. 6. Ratify the selection of Deloitte & Touche LLP as the independent registered public accounting firm for 2017. MMMMMMMC 1234567890 J N T 9 3 1 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 1 P C F 3 1 4 1 02IUQD MMMMMMMMM A Annual Meeting Proxy/Vote Authorization Card1234 5678 9012 345 X IMPORTANT ANNUAL MEETING INFORMATION
. You can access your account online. You can access your registered shareholder information on the following secure Internet site: http://www.computershare.com/investor. Step 1: Register (1st time users only) Click on Create Login and follow the instructions. Step 2: Log In (Returning users) Click Login and follow the instructions. Step 3: View your account details and perform multiple transactions, such as: View account balances View transaction history View payment history View common share quotes Change your address View electronic shareholder communications Buy or sell shares Check replacements If you are not an Internet user and wish to contact Eversource Energy, you may use one of the following methods: Call: 1-800-999-7269 Write: Eversource Energy, c/o Computershare, P.O. Box 43078, Providence, RI 02940-3078 Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders. The proxy statement and 2016 Annual Report to shareholders are available at www.envisionreports.com/ES. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy/Vote Authorization Form EVERSOURCE ENERGY + Annual Meeting of Shareholders May 3, 2017 Proxy/Vote Authorization Form is Solicited by the Board of Trustees of the Company The undersigned appoints James J. Judge, Sanford Cloud, Jr. and Gregory B. Butler, and each of them, proxies of the undersigned, with power to act without the other and full power of substitution, to act for and to vote all common shares of Eversource Energy that the undersigned would be entitled to cast if present in person at the 2017 Annual Meeting of Shareholders to be held on May 3, 2017, and at any postponement or adjournment thereof, upon the matters indicated on the reverse side of this card. This card also constitutes voting instructions for participants in the Eversource 401k Plan. The undersigned hereby directs the applicable trustee to vote all common shares credited to the undersigneds account at the Annual Meeting and any adjournment thereof. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, THE PROXIES WILL VOTE YOUR COMMON SHARES CONSISTENT WITH THE RECOMMENDATIONS OF OUR BOARD OF TRUSTEES. (Continued and to be marked, dated and signed, on the reverse side.) Non-Voting Items Change of Address Please print your new address below. Comments Please print your comments below. Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting. Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below Please sign exactly as name(s) appears above. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within the box. Signature 2 Please keep signature within the box. + IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD. C B
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