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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant ý |
Filed by a Party other than the Registrant o |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12
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Dynegy Inc. |
(Name of Registrant as Specified In Its Charter) |
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
Payment of Filing Fee (Check the appropriate box): |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
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Form, Schedule or Registration Statement No.:
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Dynegy Inc.
601 Travis, Suite 1400
Houston, Texas 77002 |
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Pat Wood III
Chairman of the Board
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ANNUAL
MEETINGJune 3, 2015
April 13, 2015
To
our stockholders:
It
is my pleasure to invite you to attend the 2015 Annual Meeting of stockholders of Dynegy Inc., which will be held on June 3, 2015, at 10:00 a.m., Central Time. You will be able
to attend the 2015 Annual Meeting, vote, and submit your questions during the meeting via live webcast through the link
www.virtualshareholdermeeting.com/DYN15. You will need the 12-digit
control number included with these proxy materials to attend the Annual Meeting. Only persons who were stockholders of record at the close of business on April 6, 2015 are entitled to notice
of, and to vote at, the Annual Meeting.
We
intend to take advantage of the Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their stockholders over the internet. We believe that these rules allow us
to provide our stockholders with the information they desire while lowering costs of delivery and reducing the environmental impact.
As Dynegy stockholders, your vote is important; please vote your shares as soon as possible. You may vote your shares by internet or telephone (or,
if you received a printed set of materials by mail, by returning the accompanying proxy card). Voting in advance of the meeting will not deprive you of your right to participate in the virtual meeting
and to vote your shares during the live webcast if you so choose.
Sincerely,
Pat
Wood III
Chairman of the Board
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Dynegy Inc.
601 Travis, Suite 1400
Houston, Texas 77002 |
NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS
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Meeting Date: |
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June 3, 2015 |
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10:00 a.m. (Central) |
Via live webcast: |
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www.virtualshareholdermeeting.com/DYN15 |
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You will need the 12-digit control number provided on the Notice of Internet Availability of Proxy Materials or your proxy card (if applicable). |
ITEMS OF BUSINESS:
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To elect seven directors to serve until the 2016 Annual Meeting of Stockholders;
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To approve, on an advisory basis, the compensation of Dynegy's named executive officers as
described in this proxy statement; and
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To act upon a proposal to ratify the appointment of Ernst & Young LLP as Dynegy's
independent registered public accountants for the fiscal year ending December 31, 2015.
Additionally,
if needed, the stockholders may act upon any other matters that may properly come before the meeting (including a proposal to adjourn the meeting to solicit additional
proxies) or any reconvened meeting after an adjournment or postponement of the meeting.
The
close of business on April 6, 2015 has been fixed as the record date for the determination of stockholders entitled to receive notice of and to vote at the Annual Meeting and any reconvened
meeting after an adjournment or postponement of the meeting.
You
are cordially invited to attend the meeting. PLEASE VOTE AS SOON AS POSSIBLE.
By
Order of the Board of Directors,
Kelly
D. Tlachac
Corporate Secretary
April 13,
2015
PROXY SUMMARY INFORMATION
This summary is included to provide an introduction and overview of the information contained in this proxy
statement. This is a summary only and does not contain all of the information we have included in our 2015 proxy statement. You should refer to the full Proxy Statement that follows for more
information about us and the proposals you are being asked to consider.
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2014 BUSINESS HIGHLIGHTS |
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Capital Allocation
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- Met or Exceeded 2014 Guidance range for Adjusted EBITDA and Free Cash Flow.
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- Announced the acquisitions of EquiPower Resources Corp. and Brayton Point Holdings, LLC from Energy Capital Partners, or
EquiPower Acquisition, and also the acquisition of ownership interests in certain Midwest generation assets and a retail energy business from Duke Energy, or Duke Acquisition.
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- Completed $6.2 billion acquisition financing including common stock, mandatory convertible preferred stock and senior unsecured
notes in October 2014.
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- Successfully cleared an 80 megawatt turbine uprate at the Kendall facility in the 2017/2018 PJM capacity auction, with the first 40
megawatts already installed during 2014 and the second 40 megawatts scheduled for installation in 2016.
Customer Focus
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- Moss Landing 6&7 tolling agreement for 2016 received final approval from the California Public Utilities Commission.
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- Forward bilateral capacity sales in MISO exceed 1,200 megawatts and Illinois Power Holdings, LLC ("IPH") annual long-term
contracts for energy and capacity total 470 megawattsa contract for up to 120 megawatts was signed in July and IPH cleared 847 megawatts in the May PJM auction.
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- Initiated transmission project to reduce congestion at our Baldwin facility.
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- Created the operating model to manage the retail business as a profitable channel to market and effective hedge for generation while
achieving high ratings from satisfied customers for service and new product offerings.
Continuous Improvement
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- PRIDE initiatives delivered $90 million in EBITDA for 2014. Over 100 cash cost reduction initiatives identified including
efforts related to Marcellus gas sourcing, reliability improvements, refined coal, coal supplier diversity and optimizing plant performance.
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2015 Proxy Statement i
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Proxy Summary Information
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Executive Compensation |
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Corporate Governance Highlights |
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Our executive compensation program reflects a fundamental belief that rewards should be competitive, both in elements and amount, with the broad labor market in which we compete for executive talent and commensurate with the Company's and the
individual executive's performance. Pay for PerformanceOur total compensation for each individual provides reasonable upside potential for exceptional performance; as well as risk
of no payment, with respect to incentive compensation, when performance objectives are not achieved. Our variable pay programs are designed as forward-looking incentives that reflect individual and corporate performance during the year under review.
Alignment with Stockholder ValueOur LTI awards encourage share price improvement and a strong link to stockholder interests. Our compensation programs are designed and administered to
maximize stockholder value. Market CompetivenessOur overall compensation strategy recognizes that attraction and retention of key talent is critical to the attainment of
our stated business goals and objectives and to the creation of value for our stockholders. The mix of pay across base salary, short-term incentive and long-term incentive
awards are most heavily weighted towards at-risk pay, aligning performance with stockholder value. |
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Our practices include a number of policies and structures that we believe are "best practices", including: Separation of Chairman of the Board and Chief Executive Officer positions; Regular meetings of our
non-management and independent directors; Policies prohibiting pledging and hedging transactions involving our common stock by directors and executive officers; Stock ownership guidelines
applicable to directors and officers; Majority voting policy; No excise tax gross-ups; Change in control and severance benefits that are subject to "double trigger;"
An
independent executive compensation consultant hired by and reporting to the Compensation and Human Resources Committee; and
Clawback mechanism in place for incentive awards. |
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CEO Total Target Compensation |
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All Other NEOs Total Target Compensation |
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ii
2015 Proxy Statement
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Proxy Summary Information
PROPOSALS FOR STOCKHOLDER ACTION
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For More
Information |
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Board
Recommendation |
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Proposal 1: Election of Directors |
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Page 16 |
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ü For |
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Pat Wood III
Paul M. Barbas
Richard L. Kuersteiner
John R. Sult |
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Hilary E. Ackermann
Robert C. Flexon
Jeffrey S. Stein |
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Proposal 2: Advisory Vote on our 2014 Executive Compensation |
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Page 65 |
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ü For |
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Proposal 3: Ratification of Independent Registered Public Accountants for 2015 |
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Page 70 |
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ü For |
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ANNUAL MEETING INFORMATION
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Time and Date: |
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10:00 a.m. (CT) on Wednesday, June 3, 2015 |
Virtual Meeting: |
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Live webcast through the link
www.virtualshareholdermeeting.com/DYN15 |
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You will need the 12-digit control number provided on the Notice of Internet Availability of Proxy Materials or your proxy card (if applicable). |
Record Date: |
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April 6, 2015 |
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Voting Methods: |
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Attending the
meeting via live
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Submitting your proxy
by internet
(
http://www.proxyvote.com)
or telephone
1-800-690-6903 |
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If you request a printed copy of the proxy materials, completing, signing, dating and returning the proxy card in the envelope provided |
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Scanning this QR code to access the voting site from your mobile device |
Requesting Copies
of Materials: |
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Current and prospective investors can also access or order free copies of our Annual Report, proxy statement, Notice and other financial information through the Investor Relations section of our web site at
www.dynegy.com, by calling 713-507-6400 or by writing to Investor Relations Department, Dynegy Inc., 601 Travis, Suite 1400, Houston, Texas
77002.
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2015 Proxy Statement iii
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PROXY STATEMENT
GENERAL INFORMATION
Why am I receiving these materials?
The Board of Directors of Dynegy Inc., or the Board, has made these materials available to you over the internet, or has
delivered printed versions of these materials to you by mail, in connection with the Board's solicitation of proxies for use at the 2015 Annual Meeting of Stockholders, or the Annual Meeting. The
Annual Meeting is scheduled to be held on Wednesday, June 3, 2015 at 10:00 a.m., Central Time, via live webcast through the link
www.virtualshareholdermeeting.com/DYN15. You will need the 12-digit control
number provided on the Notice of Internet Availability of Proxy Materials or your proxy card (if applicable). This solicitation is for proxies for use at the Annual Meeting or at any reconvened
meeting after an adjournment or postponement of the Annual Meeting.
What is included with these materials?
These materials include our proxy statement for the Annual Meeting and our 2014 Annual Report to Stockholders, or Annual Report,
which includes our audited consolidated financial statements. If you received printed versions of these materials, a proxy card for the Annual Meeting is also included.
What items will be voted on at the Annual Meeting?
There are three items that will be voted on at the Annual Meeting:
- 1.
- The
election of seven directors to serve until the 2016 Annual Meeting of Stockholders;
- 2.
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proposal to approve, on an advisory basis, the compensation of Dynegy's named executive officers as described in this proxy statement; and
- 3.
- A
proposal to ratify the appointment of Ernst & Young LLP as Dynegy's independent registered public accountants for the fiscal year ending
December 31, 2015.
Additionally,
if needed, the stockholders may act upon any other matters that may properly come before the meeting (including a proposal to adjourn the meeting to solicit additional proxies) or any
reconvened meeting after an adjournment or postponement of the meeting.
What are the Board's voting recommendations?
The persons named as proxies were designated by the Board. Any proxy given pursuant to this solicitation and received prior to the
Annual Meeting will be voted as specified in the proxy card. If you return a properly executed proxy card but do not mark any voting selections, then your proxy will be voted as follows in accordance
with the recommendations of the Board:
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- Proposal 1
FOR the election of seven directors to the Board;
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- Proposal 2
FOR approval of the compensation of Dynegy's named executive officers
described in this proxy statement; and
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- Proposal 3
FOR ratification of the appointment of Ernst & Young LLP as
our independent registered public accountants.
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2015 Proxy Statement 1
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General Information
Why did I receive a one-page notice in the mail regarding the internet availability of proxy
materials instead of a full set of proxy materials?
Pursuant to the rules adopted by the Securities and Exchange Commission, or SEC, we are providing electronic access to our proxy
materials over the internet. Accordingly, we sent a Notice of Internet Availability of Proxy Materials, or Notice, to our stockholders of record and beneficial owners, which was first mailed on or
about April 13, 2015. Instructions on how to access the proxy materials over the internet are included in the Notice.
Stockholders
may also request via the internet to receive a printed set of the proxy materials at
www.proxyvote.com, by sending an email to
sendmaterial@proxyvote.com, or calling 1-800-579-1639. In addition,
stockholders may request via the internet, telephone or by email to receive proxy materials in printed form on an ongoing basis.
Current
and prospective investors can also access or order free copies of our Annual Report, proxy statement, Notice and other financial information through the Investor Relations section of our web
site at
www.dynegy.com, by calling 713-507-6400 or by writing to Investor Relations
Department, Dynegy Inc., 601 Travis, Suite 1400, Houston, Texas 77002.
How can I get electronic access to the proxy materials?
The Notice provides you with instructions regarding how to:
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- View proxy materials for the Annual Meeting on the internet; and
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- Instruct us to send our future proxy materials to you electronically by email.
Choosing
to receive your future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our Annual Meetings on the environment. If you
choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to
receive proxy materials by email will remain in effect until you terminate it. Internet/telephone voting for the Annual Meeting will close at 11:59 p.m., Eastern Time, on June 2, 2015.
Why did I only receive one set of materials when there is more than one stockholder at my address?
If two or more stockholders share one address, each such stockholder may not receive a separate copy of our Annual Report, proxy
statement or Notice. Stockholders who do not receive a separate copy of our Annual Report, proxy statement or Notice and want to receive a separate copy may request to receive a separate copy of, or
additional copies of, our Annual Report, proxy statement or Notice via the internet, email or telephone as outlined above. Stockholders who share an address and receive multiple copies of our Annual
Report, proxy statement or Notice may also request to receive a single copy by following the instructions above.
What is the quorum requirement for the Annual Meeting?
With respect to each matter to be considered at the Annual Meeting, a majority of the outstanding shares of our common stock entitled
to vote on each such matter, represented in person (through internet access) or by proxy, shall constitute a quorum for consideration of each such matter. Abstentions and broker non-votes shall be
counted in determining the number of outstanding shares represented in person (through internet access) or by proxy for each matter.
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2015 Proxy Statement
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General Information
Where is the Annual Meeting?
You are invited to attend the Annual Meeting online through the link
www.virtualshareholdermeeting.com/DYN15. The 12-digit Control Number
provided on your Notice or proxy card is necessary to access this site.
As
of the record date, April 6, 2015, there were outstanding 128,139,664 shares of common stock.
What is the difference between holding shares as a stockholder of record and as a beneficial owner
of shares held in street name?
Stockholder of Record. If your shares are registered in your name with our transfer agent, Computershare, you are considered the stockholder of
record with respect to those shares, and the Notice was sent directly to you by us.
Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a brokerage firm, bank, broker dealer or other similar
organization, then you are the beneficial owner of shares held in "street name," and the Notice was forwarded to you by that organization. The organization holding your account is considered the
stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account.
If I am a stockholder of record of Dynegy's shares, how do I vote?
If you are a stockholder of record you may vote by proxy over the internet by following the instructions provided in the Notice, by
telephone, or, if you received printed copies of the proxy materials, you may also vote by mail. You may also vote at the Annual Meeting through the link
www.virtualshareholdermeeting.com/DYN15. The 12-digit Control Number
provided on your Notice or proxy card is necessary to access this site. Please vote as soon as possible.
If I am a beneficial owner of shares held in street name, how do I vote?
If you are a beneficial owner of shares held in street name, please refer to the Notice, proxy card, or voting information form
forwarded to you by your broker or other nominee to see what voting options are available to you. Please vote as soon as possible.
What happens if I do not give specific voting instructions?
Stockholder of Record. If you are a stockholder of record and you:
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- indicate when voting on the internet or by telephone that you wish to vote as recommended by our Board; or
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- if you sign and return a proxy card without giving specific voting instructions,
then
the proxy holders will vote your shares in the manner recommended by our Board on Proposals 1-3 in this proxy statement and as the proxy holders may determine in their discretion with respect to
any other matters properly presented for a vote at the Annual Meeting.
Beneficial Owner of Shares Held in Street Name; "Broker Non-Votes." If you are a beneficial owner of shares held in street name and do not provide
the organization that holds your shares with specific voting instructions, under the rules of the New York Stock Exchange, or NYSE, the organization that holds your shares may generally vote on
routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the
organization that holds your shares will inform our Inspector of Election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a
"broker non-vote." When our Inspector of Election tabulates the votes for any particular matter, broker non-votes will be counted for purposes of determining whether a quorum is present for that
matter, but will not otherwise be counted.
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2015 Proxy Statement 3
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General Information
For example, please note that brokers may not vote your shares on the election of directors or the proposal regarding named executive officer compensation in the absence of
your specific instructions as to how to vote. Please provide your broker with voting instructions as soon as possible so that your vote can be counted. We encourage you to
provide voting instructions to the organization that holds your shares by carefully following the instructions provided in the Notice.
Which ballot measures are considered "routine" or "non-routine"?
Proposal 3 (Ratification of Appointment of Independent Registered Public Accountants) involves a matter that we believe will be
considered routine.
Proposal
1 (Election of Directors) and Proposal 2 (Approval of Compensation of our Named Executive Officers) involve matters that we believe will be considered non-routine.
How are abstentions and broker non-votes treated?
For the purpose of determining whether a quorum is present, abstentions and broker non-votes shall be counted in determining the
number of outstanding shares represented in person (through internet access) or by proxy for each matter.
For
each "non-routine" proposal, including whether the stockholders have elected the seven director nominees, broker non-votes are not counted. Please note that brokers may not
vote your shares on the election of directors or the proposal regarding named executive officer compensation in the absence of your specific instructions as to how to vote. Please provide your broker
with voting instructions as soon as possible so that your vote can be counted. You cannot abstain in the election of directorsyou can only vote FOR the director
nominees or WITHHOLD VOTES for such nominees.
For
each proposal other than the election of directors an abstention will have the same effect as a vote AGAINST such proposal.
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2015 Proxy Statement
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General Information
What is the voting requirement to approve each of the proposals?
The following table sets forth the voting requirement with respect to each of the proposals:
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Proposal 1 |
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Election of seven directors to serve until the 2016 Annual Meeting of Stockholders |
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Seven persons have been nominated by the Board for election to serve as directors for one-year terms. The holders of our common stock are entitled to vote on the election
of the directors. The directors are elected by a plurality of the shares of common stock represented in person (through internet access) or by proxy and entitled to vote on the election of directors, subject to our majority voting policy discussed
below. This means that the seven individuals nominated for election to the Board who receive the most FOR votes among votes properly cast in person (through internet access) or by proxy will be elected. Each holder of our common stock is entitled to
one vote for each share held and does not have cumulative voting rights. Only FOR or WITHHELD votes are counted in determining whether a plurality has been cast in favor of
a director nominee. You cannot abstain in the election of directors and broker non-votes are not counted. A WITHHELD vote will have the same effect as a vote AGAINST the election of a director nominee under our majority voting policy, which is
described below. |
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Majority voting policy: In an uncontested election, any director nominee who receives a greater number of votes WITHHELD for his or her election than votes FOR such election must offer his or her resignation to the Board
promptly following certification of the stockholder vote. The Corporate Governance and Nominating Committee, or Nominating Committee, is required to recommend to the Board whether such offered resignation should be accepted or rejected. The Board
will determine whether to accept or reject the resignation offer and will promptly disclose its decision making process and decision regarding an offered resignation in a document furnished to or filed with the SEC. Please read our Amended and
Restated Corporate Governance Guidelines posted in the "Corporate Governance" section of our web site at
www.dynegy.com for more information regarding our majority voting policy. |
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2015 Proxy Statement 5
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General Information
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Proposal 2 |
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Act upon a proposal to approve, on an advisory basis, the compensation of Dynegy's named executive officers as described in this proxy statement |
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The affirmative vote of a majority of the shares of common stock represented in person (through internet access) or by proxy at the meeting and entitled to vote is required to approve, on an advisory basis, the
compensation of Dynegy's named executive officers. Each holder of our common stock is entitled to one vote for each share held. Abstentions will have the same effect as a vote AGAINST this proposal. Broker non-votes are not counted. |
Proposal 3 |
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Ratification of the appointment of Ernst & Young LLP as Dynegy's independent registered public accountants for the fiscal year ending December 31, 2015 |
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The affirmative vote of a majority of the shares of common stock represented in person (through internet access) or by proxy at the meeting and entitled to vote is required to ratify the choice of independent
registered public accountants. Each holder of our common stock is entitled to one vote for each share held. Abstentions will have the same effect as a vote AGAINST this proposal. |
May I change my vote after I have voted?
You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting
by:
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- Executing and submitting a revised proxy (including a telephone or internet vote, which must be received by 11:59 p.m., Eastern
Time, on June 2, 2015);
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- Sending written notice of revocation to our Corporate Secretary at the address provided below (which must be received by
11:59 p.m., Eastern Time, on June 2, 2015); or
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- Voting at the Annual Meeting through the link
www.virtualshareholdermeeting.com/DYN15. The 12-digit Control Number
provided on your Notice or proxy card is necessary to access this site.
In
the absence of a revocation, shares represented by proxies will be voted at the Annual Meeting.
Is my vote confidential?
Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your
voting privacy. Your vote will not be disclosed either within Dynegy or to third parties, except:
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- As necessary to meet applicable legal requirements;
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- To allow for the tabulation and certification of votes; and
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- To facilitate a proxy solicitation.
Who is paying the cost of this proxy solicitation?
We will bear the cost of soliciting proxies. Proxies may be solicited by mail or facsimile, or by our directors, officers or
employees, without extra compensation, in person or by telephone. We have retained Morrow & Co., LLC to assist in the solicitation of proxies for a fee of approximately $9,000
plus out-of-pocket expenses and telephone solicitation expenses. We will reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for
forwarding solicitation material to the beneficial owners of our common stock.
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2015 Proxy Statement
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General Information
What if I have questions about the proposals?
Questions concerning the proposals to be acted upon at the Annual Meeting should be directed to:
Dynegy Inc.
Attention: Investor Relations Department
601 Travis, Suite 1400, Houston, Texas 77002
713.507.6400
OR
Morrow & Co., LLC
470 West Ave.
Stamford, CT 06902
1.800.662.5200
How can I find out if I am a stockholder of record entitled to vote?
For a period of at least ten days before the Annual Meeting, a complete list of stockholders of record entitled to vote at the Annual
Meeting will be available during ordinary business hours at our principal executive office, 601 Travis Street, Suite 1400, Houston, TX 77002, for inspection by stockholders of record for proper
purposes. The list of stockholders will also be available at the Annual Meeting through the link
www.virtualshareholdermeeting.com/DYN15. The 12-digit Control Number
provided on your Notice or proxy card is necessary to access this site.
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2015 Proxy Statement 7
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REFERENCES TO DYNEGY AND COMMON STOCK
Unless otherwise indicated, references to "Dynegy," the "Company," "we," "our," and "us" in the biographical and compensation
information for directors and executive officers below refers to Board membership, employment and compensation with respect to Dynegy Inc.
INCORPORATION BY REFERENCE
To the extent that this proxy statement is incorporated by reference into any other filing by us under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, or the Exchange Act, the sections of this proxy statement entitled "Compensation and Human Resources Committee Report" and "Audit Committee
Report" will not be deemed incorporated unless specifically provided otherwise in such filing, to the extent permitted by the rules of the SEC. Information contained on or connected to our web site is
not incorporated by reference into this proxy statement and should not be considered part of this proxy statement or any other filing that we make with the SEC.
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CORPORATE GOVERNANCE
GOVERNANCE DOCUMENTS
The following governance documents are posted in the "Corporate Governance" section of our web site at
www.dynegy.com and are available upon request to our Corporate
Secretary:
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- Third Amended and Restated Certificate of Incorporation;
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- Sixth Amended and Restated Bylaws;
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- Corporate Governance Guidelines;
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- Code of Business Conduct and Ethics;
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- Code of Ethics for Senior Financial Professionals;
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- Related Party Transactions Policy;
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- Complaint and Reporting Procedures for Accounting and Auditing Matters (Whistleblower Policy);
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- Policy for Communications with Directors;
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- Audit Committee Charter;
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- Compensation and Human Resources Committee Charter;
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- Corporate Governance and Nominating Committee Charter; and
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- Finance and Commercial Oversight Committee Charter.
CORPORATE GOVERNANCE GUIDELINES
Our Corporate Governance Guidelines govern the qualifications and conduct of the Board. The Corporate Governance Guidelines address,
among other things:
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- Our prohibition against directors and executive officers holding our securities in a margin account or pledging our securities, absent
Company approval;
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- Our prohibition against directors and executive officers engaging in any hedging transaction with respect to our securities held by
them;
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- The independence and other qualifications of our Board members, with respect to which we require that at least 75% of our Board
members be independent of Dynegy and our management;
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- The requirement that any director nominee in an uncontested election who receives a greater number of votes "withheld" for his or her
election than votes "for" such election must offer his or her resignation to the Board;
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- The separation of Chairman of the Board, or Chairman, and Chief Executive Officer positions;
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- The regular meetings of our non-management and independent directors;
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- The nomination of persons for election to our Board;
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- The evaluation of performance of our Board and its committees;
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- Our expectation that our Board members will attend all annual stockholder meetings;
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- Compensation of our Board and stock ownership guidelines for non-management directors;
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- The approval of the compensation of the Chief Executive Officer;
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- The review of development and succession plans for the Chief Executive Officer and other executive officers; and
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- The review of performance based compensation of our senior executives following a restatement that impacts the achievement of
performance targets relating to that compensation.
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Corporate Governance
CODE OF BUSINESS CONDUCT AND ETHICS
Our Code of Business Conduct and Ethics applies to all of our directors, officers and employees. The key principles of this code
include acting legally and ethically, notifying appropriate persons upon becoming aware of issues, obtaining confidential advice and dealing fairly with our stakeholders.
CODE OF ETHICS FOR SENIOR FINANCIAL PROFESSIONALS
Our Code of Ethics for Senior Financial Professionals applies to our Chief Executive Officer, Chief Financial Officer, Chief
Accounting Officer and other designated senior financial professionals. The key principles of this code include acting legally and ethically, promoting honest business conduct and providing timely and
meaningful financial disclosures to our stockholders.
COMPLAINT AND REPORTING PROCEDURES FOR ACCOUNTING AND AUDITING MATTERS
Our Complaint and Reporting Procedures for Accounting and Auditing Matters provide for (1) the receipt, retention and
treatment of complaints, reports and concerns regarding accounting, internal accounting controls or auditing matters, and (2) the confidential, anonymous submission of complaints, reports and
concerns by employees regarding questionable accounting or auditing matters, in each case relating to Dynegy. Complaints may be made through a toll free "Integrity Helpline" telephone number, operated
by an independent third party, and a dedicated email address. Complaints received are logged by the Ethics and Compliance Office, communicated to the chairman of our Audit Committee and investigated,
under the supervision of our Audit Committee, by our Internal Audit department or Ethics and Compliance Office. In accordance with applicable law, these procedures prohibit us from taking adverse
action against any person submitting a good faith complaint, report or concern.
POLICY FOR COMMUNICATIONS WITH DIRECTORS
Our Policy for Communications with Directors provides a means for stockholders and other interested parties to communicate with the
Board. Under this policy stockholders and other interested parties may communicate with the Board or specific members of the Board by sending a letter to Dynegy Inc., Communications with
Directors, Attn: Corporate Secretary, 601 Travis, Suite 1400, Houston, Texas 77002.
DIRECTOR ATTENDANCE AT ANNUAL MEETINGS
As detailed in our Corporate Governance Guidelines, Board members are requested and encouraged to attend the Annual Meeting. All of
the members of the Board then in office attended last year's annual meeting held on May 29, 2014.
BOARD RISK OVERSIGHT
The Board has ultimate responsibility for protecting stockholder value. Among other things, the Board is responsible for
understanding the risks to which we are exposed, approving management's strategy to manage these risks, establishing policies that monitor and manage defined risks and measuring management's
performance against the strategy. The Board's oversight responsibility for managing risk is detailed in our Risk Policy Statement.
The
Risk Policy Statement provides a structure around risk and defines the risks that we accept in the normal course of business. The Risk Policy Statement, in some instances, requires that separate
policy documentation be in place including Interest Rate Risk and Investment Policy, Disclosure Controls and Procedures Policy, Risk Management and Insurance Policy, Credit Risk Policy, Investment
Policy (Employee Benefit Plans), and Commodity Risk Policy. Although not mandated by the Risk Policy Statement, our Delegation of Authority policy and the Code of Business Conduct and Ethics are
complementary and critical to the risk management process. Our Executive Management Team is responsible for managing the above risks and reports on such
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Corporate Governance
matters
to the applicable Board committees. Further, our Ethics and Compliance Office reports functionally to the Audit Committee Chairman and meets regularly with the Audit Committee. The Risk Policy
Statement can be amended with the approval of our Audit Committee on behalf of the Board.
The
Audit Committee oversees the risks associated with the integrity of our financial statements and our compliance with legal and regulatory requirements. In addition, the Audit Committee discusses
policies with respect to risk assessment and risk management, including major financial risk exposure and the steps management has taken to monitor and control such exposures. The Audit Committee
reviews with management, internal auditors, and external auditors the accounting policies, the system of internal control over financial reporting and the quality and appropriateness of disclosure and
content in the financial statements or other external financial communications. The Audit Committee also performs oversight of the business ethics and compliance program, reviews the programs and
policies designed to assure compliance with our Code of Business Conduct and Ethics and applicable laws and regulations and monitors the results of the compliance efforts.
The
Compensation and Human Resources Committee, or Compensation Committee, oversees risks primarily associated with our ability to attract, motivate and retain quality talent, particularly executive
talent, and disclosure of our executive compensation philosophies, strategies and activities. As part of our ongoing formal process for assessing and monitoring risk related to our compensation
programs and for reviewing certain policies to ensure that the appropriate controls exist to mitigate any identified risk, the Compensation Committee conducted a risk assessment in 2015 to reaffirm
that our short-term incentive, or STI, programs, including specifically the lack of separate plans or incentives for individual functions, do not encourage excessive risk-taking. This involved a
review of a set of risk assessment considerations related to our STI and long-term incentive, or LTI, programs.
Following
this review, the Compensation Committee concluded that our STI programs collectively foster cooperation and focus award opportunities on measures that are aligned with our business strategy
and the interests of our stockholders and do not encourage excessive risk-taking and risk-taking behaviors.
The
Nominating Committee oversees risks primarily associated with our ability to attract, motivate and retain quality directors, and our corporate governance programs and practices and our compliance
therewith. Additionally, the Nominating Committee evaluates the performance of the Board, its committees and management annually and considers risk management effectiveness as part of their
evaluation.
The
Finance and Commercial Oversight Committee, or Finance Committee, oversees risks primarily with respect to oversight of our capital structure, financing and treasury matters and oversight of
management's process for the identification, evaluation and mitigation of our financial and commercial related risks. Further, as part of their risk assessment responsibility, the Finance Committee
oversees our commodity risk monitored by our risk control group and receives regular reporting regarding commodity risk management effectiveness.
The
full Board oversees risks primarily associated with our commercial and operating performance and our environmental, health and safety performance. The full Board also receives quarterly updates
from all Board committees, and they provide guidance to individual committee activities as appropriate.
BOARD LEADERSHIP STRUCTURE; SEPARATION OF POSITIONS OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER
As discussed in our Corporate Governance Guidelines, the Board believes the position of Chairman should be held by a non-management
director and not the Chief Executive Officer. Mr. Flexon, as President and Chief Executive Officer, is responsible for setting the strategic direction for the Company and the day-to-day
leadership and performance of the Company, while Mr. Wood, as Chairman, provides overall leadership to the Board in its oversight function. As such, he serves as the presiding director of
executive sessions of the non-management and independent directors.
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2015 Proxy Statement 11
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Corporate Governance
STOCK OWNERSHIP GUIDELINES
We have stock ownership guidelines for directors, members of the executive management team and other officers. We believe that a
significant ownership stake by directors and officers leads to a stronger alignment of interests between directors, officers and stockholders. These guidelines, which were developed with the
assistance of an independent compensation consultant, support our corporate governance focus and provide further alignment of interests among our directors and executive officers and stockholders.
Directors
Each non-management director is expected to own a meaningful amount of Dynegy common stock; specifically, it is expected that within
three years of joining the Board, a non-management director shall own at least the number of shares equivalent to three times their annual cash retainer. For purposes of this guideline:
(1) each share of common stock owned on any date (a "measuring date") by a director shall be deemed to have a value equal to the greater of (a) the trading price of a share of the
Company's common stock as of the date the applicable share was granted to the director or (b) the trading price of a share of the Company's common stock as of the measuring date; and
(2) shares owned outright, phantom stock units, shares or units of restricted stock and shares subject to deferred compensation shall be counted as shares of common stock owned by the director
(with the value thereof determined in accordance with clause (1) above).
Officers
The shares counted for purposes of our officers' common stock ownership guidelines include shares owned outright, unvested restricted
stock units, or RSUs, stock options (vested, in-the-money), and other share based equivalents that we may use from time to time. The holding requirements are expressed as a multiple of base salary and
vary by level, specifically for the Chief Executive Officer and Executive Vice President levels they are as follows:
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Executive Vice President |
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Upon
our emergence from bankruptcy on October 1, 2012 (the "Effective Date") and pursuant to the terms of our Plan of Reorganization, all outstanding equity awards of the Company as of the
Effective Date were cancelled. As such, the stock ownership guidelines for our executives are subject to a mandatory five-year compliance period that started on the Effective Date, and executives are
encouraged to accumulate one-fifth of their holding requirement during each year of the five-year period and may not sell any shares until executives have successfully met the holding requirement. The
Nominating Committee will monitor each executive's progress toward the required holding requirement on an annual basis. At the end of the five-year period, if any executive fails to attain the
required level of common stock ownership, action may be taken, in the discretion of the Nominating Committee considering all factors it deems relevant, including awarding annual incentive cash bonuses
in the form of restricted shares or requiring an executive to refrain from disposing of any vested shares and shares realized from any option exercise.
CHARITABLE CONTRIBUTIONS
During 2014, we did not make any contributions to any charitable organization in which an independent director served as an executive
officer.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than 10% of our equity
securities to file reports of ownership and changes in ownership with the SEC and the
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Corporate Governance
NYSE.
Executive officers, directors and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
Based
solely upon a review of the copies of such forms furnished to us in 2014 and upon written representations that no Forms 5 were required, we believe that all persons subject to these
reporting requirements filed the required reports on a timely basis.
REVIEW AND APPROVAL OF TRANSACTIONS WITH RELATED PERSONS
Our Board adopted a written policy relating to the approval of transactions with related parties. In general, for purposes of this
policy, a related party transaction is a transaction to which we are a party, or a material amendment to any such transaction, and with respect to which a related party is directly, or to our
knowledge, indirectly, a party. Under our policy, a "related party" is an executive officer, director or nominee for director of ours, a person known to us to be the beneficial owner of more than 5%
of our voting securities, an immediate family member of an executive officer, director, nominee for director or 5% stockholder, and any entity owned or controlled by any of the foregoing individuals
or in which any such individual serves as an executive officer or general partner or, together with any other such individuals, owns 10% or more of the equity interests of such an entity. Our policy
requires the Audit Committee or, at the Board's discretion, a majority of directors disinterested from the transaction, to review and approve related party transactions. In reviewing and approving any
related party transaction or material amendments to any such transaction, the Audit Committee must satisfy itself that it has been fully informed as to the related party's relationship and interest
and as to the material facts of the transaction and must determine that the related party transaction is fair to us.
A
copy of our related party transactions policy is available on our web site at
http://www.dynegy.com/downloads/Dynegy_Corporate_Governance_Related
_Party_Transactions.pdf.
AFFIRMATIVE DETERMINATIONS REGARDING DIRECTOR INDEPENDENCE AND OTHER MATTERS
The Board previously determined that each of the following directors who served in 2014 is "independent" as such term is defined in
the NYSE Listed Company Standards:
Pat
Wood III
Hilary E. Ackermann
Paul M. Barbas
Richard L. Kuersteiner
Jeffrey S. Stein
John R. Sult
The
Board has also determined that each member of the Audit Committee, the Compensation Committee and the Nominating Committee meets the independence requirements applicable to those committees
prescribed by the NYSE and the SEC. The Board has further determined that more than one of the members of the Audit Committee, including its current Chairman, Mr. Sult, are "audit committee
financial experts" as such term is defined in Item 407(d) of the SEC's Regulation S-K.
The
Nominating Committee reviewed the answers to annual questionnaires completed by the directors and nominees as well as the above described legal standards for Board and committee member
independence and the criteria applied to determine "audit committee financial expert" status. On the basis of this review, the Nominating Committee made its recommendation to the full Board and the
Board made its independence and "audit committee financial expert" determinations after consideration of the Nominating Committee's recommendation and a review of the materials made available to the
Nominating Committee.
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2015 Proxy Statement 13
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Corporate Governance
DIRECTOR NOMINATION PROCESS AND QUALIFICATION REVIEW OF DIRECTOR NOMINEES
Process
Our director nominees are approved by the Board after considering the recommendation of the Nominating Committee. A copy of the
Nominating Committee's charter is available in the "Corporate Governance" section of our web site at
www.dynegy.com.
Our
Certificate of Incorporation provides that the number of our directors shall be fixed from time to time exclusively by our Board. The Board has fixed the number of our directors currently at
seven, subject to adjustment by the Board in accordance with our Certificate of Incorporation.
The
Nominating Committee reviews annually the composition of the Board as a whole and recommends, if necessary, measures to be taken so that the Board reflects the appropriate balance of knowledge,
experience, skills, expertise and diversity required for the Board as a whole and contains at least the minimum number of independent directors required by applicable laws and regulations. The
Nominating Committee is responsible for ensuring that the composition of the Board accurately reflects the needs of our business and, in furtherance of this goal, proposing the nomination of directors
for purposes of obtaining the appropriate members and skills. The Nominating Committee identifies nominees in various ways. The committee considers the current directors that have expressed an
interest in and that continue to satisfy the criteria for serving on the Board as set forth in our Corporate Governance Guidelines. Other nominees that may be proposed by current directors, members of
management or by stockholders are also considered. From time to time, the committee engages a professional firm to identify and evaluate potential director nominees.
Qualifications
All director nominees, whether proposed by a stockholder or otherwise, are evaluated in accordance with the qualifications set forth
in our Corporate Governance Guidelines. These guidelines require that directors possess the highest personal and professional ethics, integrity and values and be committed to representing the
long-term interests of our stockholders at large. They must also have an inquisitive and objective perspective, practical wisdom, mature judgment and sufficient personal resources such that any
director compensation to be received from the Company would not be sufficiently meaningful to impact their judgment in reviewing matters coming before the Board. Finally, they must be able to work
compatibly with the other members of the Board and otherwise have the experience and skills necessary to enable them to serve as productive members of the Board. Directors also must be willing to
devote sufficient time to carrying out their fiduciary duties and other responsibilities effectively and should be committed to serve on the Board for an extended period of time. For additional
information, please read our Corporate Governance Guidelines.
In
connection with the director nominations for the 2015 Annual Meeting, the Nominating Committee also considered the nominees' (1) experience in the energy industry and understanding of the
energy and commodity markets, (2) experience in finance and commercial risk management, (3) publicly traded company and board experience, (4) knowledge in the areas of laws and
regulations related to environmental, health, safety, regulatory and other key industry issues, (5) strategic planning skills, (6) knowledge of corporate governance issues coupled with
an appreciation of their practical application, and (7) accounting expertise, including audit, internal controls and risk management.
Each
nominee brings a strong and unique background and set of skills to the Board, giving the Board as a whole competence and experience in a wide variety of areas, including energy, wholesale power
generation and marketing, commodities, risk management, strategic planning, legal, corporate governance and board service, executive management, regulatory and policy development, accounting and
finance, operations, and economics. For information concerning each director's various qualifications, attributes, skills and experience of our director nominees considered important by the Board in
determining that such nominee should serve as a director as well as each nominee's principal occupation, directorships and additional biographical information, please see "Proposal
1Election of DirectorsInformation on Director Nominees."
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2015 Proxy Statement
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Corporate Governance
Diversity
The Board does not have a formal policy with respect to Board nominee diversity. In recommending proposed nominees to the full Board,
the Nominating Committee is charged with building and maintaining a board that has an ideal mix of talent and experience to achieve our business objectives in the current environment. In particular,
the Nominating Committee is focused on relevant subject matter expertise, depth of knowledge in key areas that are important to us, and diversity of thought, background, perspective and experience so
as to facilitate robust debate and broad thinking on strategies and tactics pursued by us.
Future director nominations
For purposes of the 2016 Annual Meeting, the Nominating Committee will consider any director nominations from a stockholder received
by the Corporate Secretary by the close of business on March 5, 2016, but not before the close of business on February 4, 2016. See "Future Stockholder Proposals" below for more
information. Any such nomination must be accompanied in writing by all information relating to such person that is required under the federal securities laws, including such person's written consent
to be named in the proxy statement as a nominee and to serve as a director if elected. The nominating stockholder must also submit its name and address, as well as that of the beneficial owner if
applicable, and the number of shares of our common stock that are owned beneficially and of record by such stockholder and such beneficial owner. Finally, the nominating stockholder must discuss the
nominee's qualifications to serve as a director as described in our Corporate Governance Guidelines.
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2015 Proxy Statement 15
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PROPOSAL 1ELECTION OF DIRECTORS
DIRECTORS
Seven directors are to be elected at the Annual Meeting by the holders of common stock to each serve a one-year term. The directors
are elected by a plurality of the shares of common stock represented in person (through internet access) or by proxy and entitled to vote on the election of directors, subject to our majority voting
policy discussed below. This means that the seven individuals nominated for election to the Board as directors who receive the most
FOR votes among votes properly cast in person (through internet access) or
by proxy will be elected. Only
FOR or
WITHHELD votes are counted in determining whether a plurality has been cast
in favor of a director nominee. Under our Certificate of Incorporation, stockholders do not have cumulative voting rights. If you withhold authority to vote with respect to the election of some or all
of the director nominees, your shares will not be voted with respect to those nominees indicated.
Under
our majority voting policy, in an uncontested election, any director nominee who receives a greater number of votes
WITHHELD for his or her election than votes
FOR such election must offer his or her resignation to the Board promptly
following certification of the stockholder vote.
Broker
non-votes are not counted for purposes of election of directors. You cannot abstain in the election of directors.
Unless
you withhold authority to vote or instruct otherwise, a properly executed proxy will be voted
FOR the election of the nominees listed below as the proxies may determine.
Although the Board does not contemplate that any of the nominees will be unable to serve, if such a situation arises prior to the Annual
Meeting, the persons appointed as proxies will vote for the election of such other persons that may be nominated by the Board.
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Proposal 1Election of Directors
INFORMATION ON DIRECTOR NOMINEES
All of the nominees for director are currently directors of Dynegy. Below is biographical information regarding the nominees,
including their names, ages, business experience and qualifications to serve as a director, other directorships, if any, and the length of their service as a director of Dynegy.
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Robert C. Flexon, 56,
Director since 2011
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President and Chief Executive Officer
Prior Experience: UGI CorporationChief Financial Officer Foster Wheeler AGChief Executive Officer, Board Director NRG EnergyChief Financial
Officer, Chief Operating Officer Hercules and ARCOvarious financial roles Mr. Flexon, who oversaw
Dynegy's turnaround in 2012, brings executive management and operating experience in many areas of the energy business, including wholesale power generation. Mr. Flexon also has a broad background in accounting and finance, and significant
corporate financial expertise and management experience as a result of his service as a chief financial officer and other senior financial leadership positions.
Mr. Flexon has served as President and Chief Executive Officer since July 2011 and a director of Dynegy since June 2011. Prior to joining Dynegy, Mr. Flexon served as the Chief Financial Officer of UGI Corporation, a
distributor and marketer of energy products and related services from February 2011 to July 2011. Mr. Flexon was the Chief Executive Officer of Foster Wheeler AG from June to October 2010 and the President and Chief Executive Officer of
Foster Wheeler USA from November 2009 to May 2010. Prior to joining Foster Wheeler, Mr. Flexon was Executive Vice President and Chief Financial Officer of NRG Energy, Inc. from February to November 2009. Mr. Flexon previously
served as Executive Vice President and Chief Operating Officer of NRG Energy from March 2008 to February 2009 and as its Executive Vice President and Chief Financial Officer from 2004 to 2008. Prior to joining NRG Energy, Mr. Flexon held
executive positions with Hercules, Inc. and various key positions, including General Auditor, with Atlantic Richfield Company. Mr. Flexon holds a Bachelor of Science degree in Accounting from Villanova University. Mr. Flexon served on
the public board of directors of Foster Wheeler from 2006 until 2009 and from May to October 2010 and is currently serving on the Board of Neighborhood Centers, the largest not-for-profit in Texas. |
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2015 Proxy Statement 17
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Proposal 1Election of Directors
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Pat Wood III, 52,
Director since 2012
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Chairman of the Board
PrincipalWood3 Resources Current Public Directorships: Quanta Services Inc.; SunPower Corp. and Memorial Resources Development Prior
Experience: Federal Energy Regulatory CommissionChairman
Public Utility Commission of TexasChairman Mr. Wood
currently serves as our Board's non-executive Chairman. Mr. Wood brings significant strategic and operational management experience to the Board. Mr. Wood holds a Bachelor of Science in Civil Engineering and a Juris Doctor degree, and has
demonstrated strong leadership skills through nearly ten years of regulatory leadership in the energy sector. Mr. Wood brings a unique perspective from and extensive knowledge with regard to the energy regulatory process and energy policy
development at the government level, his years of service as a director of other public and private companies, and his energy infrastructure development expertise.
Mr. Wood is serving as the Board's non-executive Chairman and has served as a principal of Wood3 Resources, an energy infrastructure developer, since July 2005. From 2001 until July 2005, Mr. Wood served as chairman of the
Federal Energy Regulatory Commission. From 1995 until 2001, he chaired the Public Utility Commission of Texas. Prior to 1995, Mr. Wood was an attorney with Baker & Botts, a global law firm, and an associate project engineer with Arco
Indonesia, an oil and gas company, in Jakarta. Mr. Wood currently serves on the public boards of directors of Quanta Services Inc., SunPower Corp. and Memorial Resources Development. |
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Proposal 1Election of Directors
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Hilary E. Ackermann, 59,
Director since 2012
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Prior Experience:
Goldman Sachs Bank USAChief Risk Officer; Chaired Operational Risk, Credit Risk and Middle Market Loan
Committees; Vice Chair of Bank Risk Committee; Chair GS Group level Operational Risk Committee Goldman Sachs & CoManaging Director, Credit Risk Management & Advisory Swiss Bank
CorporationAssistant Department Head Ms. Ackermann brings extensive experience assessing credit for major banking institutions, covering a
variety of industries including the power generation, electrical utilities and natural resources sectors, as well as in depth coverage of commodities trading including, oil, natural gas and power as a risk manager. Ms. Ackerman currently serves
as our Chair of the Finance and Commercial Oversight Committee and, as chair, she contributes significantly to the review and evaluation of our business strategy, capital structure and risk management goals. Ms. Ackermann was Chief Risk Officer with Goldman Sachs Bank USA from October 2008 to 2011. In this role, she managed Credit, Market and Operational Risk for Goldman Sach's
commercial bank; developed the bank's risk management infrastructure including policies and procedures and processes; maintained ongoing relationship with bank regulators including New York Fed, NY State Banking Department and the FDIC; chaired
Operational risk, Credit risk and Middle Market Loan Committees; served as Vice Chair of Bank Risk Committee; was a member of Community Investment, Business Standards and New Activities Committees; was a member of GS Group level Credit Policy and
Capital Committees; and chaired GS Group level Operational Risk Committee. Ms. Ackermann served as Managing Director, Credit Department of Goldman, Sachs & Co. from January 2002 until October 2008, as VP, Credit Department from
1989 to 2001, and as an Associate in the Credit Department from 1985 to 1988. Prior to joining Goldman, Sachs, Ms. Ackermann served as Assistant Department Head of Swiss Bank Corporation from 1981 until 1985. |
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2015 Proxy Statement 19
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Proposal 1Election of Directors
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Paul M. Barbas, 58,
Director since 2012
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Current Public Directorship: Pepco Holdings,
Inc. Prior Experience:
DPL Inc. and DP&LPresident and Chief Executive Officer; Board Director
Chesapeake
Utilities CorporationExecutive Vice President & Chief Operating Officer; Vice President; Chesapeake Service CompanyPresident; Allegheny PowerExecutive
Vice President; President of Ventures unit Mr. Barbas brings extensive utility, management and oversight experience, having served in executive
management positions with various utility and other companies. He also has a broad background in finance and marketing and brings a strong understanding of power operations and energy markets. He contributes significantly to the oversight
responsibilities on matters relating to executive compensation and compensation strategy and serves as our Compensation and Human Resources Committee chair. Mr. Barbas was President and Chief Executive Officer of DPL Inc. and its principal subsidiary, The Dayton Power and Light Company (DP&L), from October 2006 until December 2011. He also served on the board of directors of
DPL Inc. and DP&L. He previously served as Executive Vice President and Chief Operating Officer of Chesapeake Utilities Corporation, a diversified utility company engaged in natural gas distribution, transmission and marketing, propane gas
distribution and wholesale marketing and other related services from 2005 until October 2006, as Executive Vice President from 2004 until 2005, and as President of Chesapeake Service Company and Vice President of Chesapeake Utilities Corporation,
from 2003 until 2004. From 2001 until 2003, he was Executive Vice President of Allegheny Power, responsible for the operational and strategic functions of a $2.7 billion company serving 1.6 million customers with 3,200 employees. He joined
Allegheny Energy in 1999 as President of its Ventures unit. Mr. Barbas also serves on the public board of Pepco Holdings, Inc. |
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Proposal 1Election of Directors
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Richard Lee Kuersteiner, 76,
Director since 2012
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Prior Experience:
Franklin Templeton InvestmentsAssociate General Counsel; Director of Restructuring; Managing Corporate
Counsel Dex Media, Inc.Board Director Mr. Kuersteiner has a broad background in corporate governance and complex
restructuring transactions and has been a long-standing member of the Stanford Institutional Investors Forum. He has employed his more than 40 years of legal experience by facilitating the restructuring of over 100 major corporations and has
served on, or chaired, numerous official creditors' committees, which provides the Board with a unique analytical view from the perspective of a large institutional investor. He leads the Board's corporate governance review and oversight processes
and serves as our Corporate Governance and Nominating Committee chair. Mr. Kuersteiner was a member of the Franklin Templeton Investments legal
department in San Mateo, California from 1990 until May 2012. At Franklin he served in various capacities including as Associate General Counsel and Director of Restructuring and Managing Corporate Counsel. For many years he also was an officer
of virtually all of the Franklin, Templeton and Mutual Series funds. In February 2010 when R H Donnelley Corporation emerged from Chapter 11 bankruptcy as Dex One Corporation, he joined its board of directors. On April 30,
2013, Dex One Corporation merged with Super Media, creating Dex Media, Inc. Mr. Kuersteiner stepped down as a director of Dex Media, Inc. upon completion of his term in May 2014. |
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2015 Proxy Statement 21
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Proposal 1Election of Directors
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Jeffrey S. Stein, 45,
Director since 2012
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Co-Founder and Managing Partner of Power Capital Partners LLC Current Public Directorship: Ambac Financial Group,
Inc.Chairman of the Board Current Private Directorship: Granite Ridge Holdings, LLC Prior Experience: Durham Asset
Management LLCCo-Founder and Principal; Co-Director of Research The Delaware Bay Company, Inc.Director Shearson Lehman BrothersAssociate in Capital Preservation & Restructuring Group
US Power Generating Company and KGen Power CorporationBoard Director Mr. Stein is an investment professional
with over 21 years of experience in the high yield, distressed debt and special situations asset class. Further, he has substantial experience investing in the merchant power and regulated electric utility industries. Mr. Stein has invested
in numerous power companies representing a broad array of power plants diversified by fuel source, position on the dispatch curve, geographical location and technology. He employs his finance skills by being actively involved in the hedging,
refinancing, restructuring and sale of various power assets. He currently serves, or has served, on the private boards of other power producers, and in such capacity has focused on plant operating and financial performance, capital structure
optimization, hedging and risk management. Mr. Stein is a Co-Founder and Managing Partner of Power Capital Partners LLC, a private equity
firm founded in January 2011. Previously Mr. Stein was a Co-Founder and Principal of Durham Asset Management LLC, a global event driven distressed debt and special situations asset management firm. From January 2003 through
December 2009, Mr. Stein served as the Co-Director of Research at Durham responsible for the identification, evaluation and management of investments for the various Durham portfolios. From July 1997 to December 2002, Mr. Stein was a
Director at The Delaware Bay Company, Inc., a boutique research and investment banking firm focused on the distressed debt and special situations asset class. From September 1991 to August 1995, Mr. Stein was an Associate at Shearson Lehman
Brothers in the Capital Preservation & Restructuring Group. Mr. Stein currently serves on the public board as Chairman of the Board of Ambac Financial Group, Inc. (NASDAQ: AMBC) and as a director on the private board of Granite
Ridge Holdings, LLC. Mr. Stein previously served as a director on the boards of US Power Generating Company and KGen Power Corporation. |
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22
2015 Proxy Statement
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Proposal 1Election of Directors
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John R. Sult, 55,
Director since 2012
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Executive Vice President and Chief Financial OfficerMarathon Oil Corporation Current Private Directorship: Melior Innovations Inc. Prior Experience: El Paso CorporationExecutive Vice President and Chief Financial Officer; Senior Vice President and Chief
Financial Officer; Senior Vice President and Controller; Chief Accounting Officer El Paso Pipeline GP Company, L.L.C.Executive Vice President, Chief Financial Officer and Director; Senior Vice President
and Chief Financial Officer; Senior Vice President, Chief Financial Officer and Controller El Paso Pipeline GroupSenior Vice President, Chief Financial Officer and Controller Halliburton Energy
ServicesVice President and Controller Arthur Andersen LLPAudit Partner Mr. Sult, through his
experience in executive financial positions with large public companies, brings significant knowledge of accounting, capital structures, finance, financial reporting, strategic planning and forecasting. Mr. Sult has extensive knowledge of the
energy industry. Further, he has served as an audit partner at a major accounting firm, which, in addition to his other experience, qualifies him as an "audit committee financial expert." He currently serves as the chair of the Audit Committee and,
as the chair, he contributes significantly to the oversight of the integrity of our financial statements, internal controls and ethics and compliance functions.
Mr. Sult has served as Executive Vice President and Chief Financial Officer of Marathon Oil Corporation since September 2013. He was Executive Vice President and Chief Financial Officer of El Paso Corporation from March 2010
until May 2012. He previously served as Senior Vice President and Chief Financial Officer from November 2009 until March 2010, and as Senior Vice President and Controller from November 2005 until November 2009. Mr. Sult served as Executive
Vice President, Chief Financial Officer and director of El Paso Pipeline GP Company, L.L.C., the general partner of El Paso Pipeline Partners, L.P., from July 2010 until May 2012, as Senior Vice President and Chief Financial
Officer from November 2009 until July 2010, and as Senior Vice President, Chief Financial Officer and Controller from August 2007 until November 2009. Mr. Sult also served as Chief Accounting Officer of El Paso Corporation and as Senior
Vice President, Chief Financial Officer and Controller of El Paso's Pipeline Group from November 2005 to November 2009. Prior to joining El Paso, Mr. Sult served as Vice President and Controller of Halliburton Energy Services from
August 2004 until October 2005. Prior to joining Halliburton, Mr. Sult managed an independent consulting practice that provided a broad range of finance and accounting advisory services and assistance to public companies in the energy industry.
Prior to private practice, Mr. Sult was an audit partner with Arthur Andersen LLP. Mr. Sult currently serves on the private board of directors of Melior Innovations Inc. |
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The
Board unanimously recommends that stockholders vote
FOR the election of
these director nominees to the Board.
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2015 Proxy Statement 23
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DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD
Our Board held 13 meetings during 2014. Each director attended at least 92% of the total number of meetings of the Board and the
total number of meetings held by all committees on which he or she served during the period for which he or she has been a director. Under our Corporate Governance Guidelines, directors who are not
members of a particular committee are entitled to attend meetings of each such committee.
The
following table reflects the members of each of the committees of the Board and the number of meetings held during 2014.
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Name |
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Audit |
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Compensation &
Human
Resources |
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Corporate
Governance &
Nominating |
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Finance &
Commercial
Oversight |
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Robert C. Flexon |
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Pat Wood III(1) |
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X |
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Hilary E. Ackermann |
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X |
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Paul M. Barbas |
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X |
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Richard L. Kuersteiner |
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X |
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Jeffrey S. Stein |
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X |
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X |
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X |
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John R. Sult(2) |
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X |
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Number of Meetings |
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8 |
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7 |
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2 |
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4 |
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- (1)
- As
Chairman of the Board, Mr. Wood is an ex officio member of the Audit, Compensation and Finance committees and has a standing invitation to attend
all such committee meetings. He also serves as the presiding director of executive sessions of the non-management and independent directors.
- (2)
- Designated
Audit Committee Financial Expert.
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Committee Chair
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COMMITTEES
Committee Composition
The current members of each of the committees of the Board, as well as the current Chairman of each of the committees of the Board,
are identified in the following paragraphs.
Audit Committee. The Audit Committee, which is comprised of Messrs. Sult (Chairman) and Barbas and Ms. Ackermann, met a total of 8
times during 2014. Each member of the Audit Committee is independent as such term is defined in the NYSE and SEC rules. The Board has determined that each member of the Audit Committee possesses the
necessary level of financial literacy required to enable him or her to serve effectively as an Audit Committee member, and all members qualify as Audit Committee Financial Experts, including our
designated Financial Expert, Mr. Sult, our Audit Committee Chair. No Audit Committee member serves on more than three audit committees of public companies, including our Audit Committee. The
Audit Committee operates under a written charter adopted by the Board on October 30, 2012. The charter is reviewed annually and is available in the "Corporate Governance" section of our web
site at
http://www.dynegy.com/downloads/Dynegy_Audit_Committee_Charter.pdf.
We
maintain an Internal Audit department to provide management and the Audit Committee with ongoing assessments of our risk management processes, system of internal controls and our internal control
over financial reporting compliance activities. The Audit Committee, among other duties, assists the Board in its oversight of: the integrity of our financial statements, including a discussion of the
quality of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements; recommending to the Board the filing of our audited
financial statements; our disclosure controls and procedures and internal control over financial reporting; our compliance with legal and regulatory requirements and Code of Business Conduct and
Ethics; the evaluation, appointment and retention of our independent registered public accountant, including a review of their qualifications, services, independence,
24
2015 Proxy Statement
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Proposal 1Election of Directors
fees
and performance; the performance of our internal audit function; the performance of our business ethics and compliance function; and enterprise risk management process, policies and procedures.
The Audit Committee reviews in advance and pre-approves, explicitly, audit and permissible non-audit services provided to us by our independent registered public accountant. For more information
regarding the Audit Committee's approval procedures, please read "Audit Committee Pre-Approval Policy" below. Further, the Audit Committee provides an open venue of communication between management,
the internal audit function, ethics and compliance function, independent registered public accountants and Board. The Audit Committee meets with the Internal Audit department, Ethics and Compliance
Office and Ernst & Young LLP, or EY, with and without management present, to discuss the results of their examinations and evaluations.
Our
independent registered public accountants, EY are responsible for auditing our consolidated financial statements and the effectiveness of our internal control over financial reporting in
accordance with standards of the Public Company Accounting Oversight Board (United States) and issuing their reports based on that audit.
Compensation and Human Resources Committee. The Compensation Committee, which is comprised of Messrs. Barbas (Chairman), Kuersteiner and
Stein, met a total of 7 times during 2014. Each member of the Compensation Committee is independent as such term is defined in the NYSE and SEC rules. The
Compensation Committee operates under a written charter adopted by the Board. The charter is available in the "Corporate Governance" section of our web site at
http://www.dynegy.com/downloads/Dynegy_Compensation_and_Human_Resources_Committee_Charter.pdf.
The purpose of the Compensation Committee is to, among other duties, assist our Board in fulfilling the Board's oversight responsibilities on matters relating to executive compensation, oversee our
overall compensation strategy and our equity based compensation plans, prepare the annual Compensation and Compensation Committee report required by SEC rules and review and discuss with our
management the Compensation Discussion and Analysis to be included in our annual proxy statement to stockholders. The Compensation Committee does not assist the Board with respect to director
compensation, which is the responsibility of the Nominating Committee. For more information regarding the role and scope of authority of the Compensation Committee in determining executive
compensation, please read "Compensation Discussion and Analysis" below.
The
Compensation Committee may delegate specific responsibilities to one or more subcommittees to the extent permitted by law, NYSE listing standards and our governing documents. The Compensation
Committee has retained Meridian Compensation Partners, LLC, or Meridian, as its independent compensation consultant. Meridian reports directly to the Compensation Committee. For a discussion of
the role of the independent compensation consultant retained by the Compensation Committee in recommending executive compensation and the participation of our Chief Executive Officer in the review of
the compensation of other executives that report to the Chief Executive Officer, please read "Compensation Discussion and Analysis" below.
Corporate Governance and Nominating Committee. The Nominating Committee, which is comprised of Messrs. Kuersteiner (Chairman), Stein and
Wood, met a total of 2 times during 2014. Each member of the Nominating Committee is independent as such term is defined in the NYSE rules. The Nominating Committee operates under a written charter
adopted by the Board. The charter is available in the "Corporate Governance" section of our web site at
http://www.dynegy.com/downloads/Dynegy_Corporate_Governance_and_Nominating_Committee_Charter.pdf.
The Nominating Committee is responsible for identifying director nominees, assisting the Board with respect to director compensation, developing and reviewing our Corporate Governance Guidelines,
succession planning and overseeing the evaluation of the Board and management.
Finance and Commercial Oversight Committee. The Finance Committee, which is comprised of Ms. Ackermann (Chairman) and Messrs. Stein
and Sult, met a total of 4 times during 2014. The Finance Committee operates under a written charter adopted by the Board. The charter is available in the "Corporate Governance" section of our web
site at
http://www.dynegy.com/downloads/Dynegy_Finance_and_Commercial_Oversight_Committee_Charter.pdf.
The Finance Committee is responsible for oversight of the Company's capital structure, financing and treasury matters and oversight of management's process for the identification, evaluation and
mitigation of financial and commercial related risks to the Company.
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2015 Proxy Statement 25
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DIRECTOR COMPENSATION
DIRECTOR COMPENSATION FOR 2014
The key terms of our non-management director compensation include the following:
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Board Annual Retainer (paid in cash) |
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$75,000; paid in quarterly installments. |
Committee Annual Retainers (paid in cash)
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Chair (paid in quarterly installments) Audit$25,000 Human Resources$20,000 Finance & Commercial Oversight$20,000
Nominating$15,000 |
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Members (paid in quarterly installments) Audit$10,000 Human Resources$10,000 Finance & Commercial Oversight$10,000
Nominating$5,000 |
Annual Equity Award |
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Annual award value of $100,000 to be granted in RSUs using the closing stock price on the grant date. Beginning at the Annual Meeting for 2015, the Annual Equity Award value will be increased to $110,000 to be granted in
RSUs using the closing stock price on the grant date. Annual awards to be granted on the date of Dynegy's Annual Stockholder Meeting with one year vesting from the date of grant. |
Non-Executive Chairman Annual Retainer |
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Additional retainer of $150,000. Deliver through a mix of cash (50%), paid in quarterly installments, and RSUs (50%). RSUs to be granted on the date of
Dynegy's Annual Stockholder Meeting with one year vesting from the date of grant. |
Other |
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Reimbursement for reasonable out-of-pocket expenses incurred in connection with travel to and from, and attendance at, meetings of the Board or its committees and related activities, including director education courses and
materials. |
26
2015 Proxy Statement
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Director Compensation
The
following table sets forth certain information regarding the compensation earned by or awarded to each non-management director who served on our Board in 2014. Directors who were also employees of
Dynegy were not compensated for their services as directors.
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Name |
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Fees
Earned or
Paid in
Cash |
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Stock
Awards(1) |
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Option
Awards |
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Non-Equity
Incentive Plan
Compensation |
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Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings |
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All Other
Compensation |
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Total |
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Pat Wood III(2)(3) |
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$155,000 |
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$175,000 |
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$ |
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$ |
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$ |
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$ |
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$330,000 |
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Hilary E. Ackermann |
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$105,000 |
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$100,000 |
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$ |
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$ |
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$ |
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$ |
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$205,000 |
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Paul M. Barbas |
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$105,000 |
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$100,000 |
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$ |
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$ |
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$ |
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$ |
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$205,000 |
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Richard L. Kuersteiner |
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$100,000 |
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$100,000 |
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$ |
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$ |
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$ |
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$ |
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$200,000 |
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Jeffrey S. Stein(3) |
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$100,000 |
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$100,000 |
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$ |
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$ |
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$ |
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$ |
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$200,000 |
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John R. Sult |
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$110,000 |
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$100,000 |
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$ |
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$ |
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$ |
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$ |
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$210,000 |
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- (1)
- Directors
received an annual award granted under the Dynegy Inc. 2012 Long Term Incentive Plan, or 2012 Long Term Incentive Plan, in RSUs on
May 29, 2014 with a vesting date of May 29, 2015. The values shown under "Stock Awards" reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718.
- (2)
- Mr. Wood
is serving as our non-executive Chairman of the Board.
- (3)
- Mr. Wood
has deferred receipt of the amount realized from the vesting of the RSUs granted on May 29, 2014 until the earlier of
(1) July 4, 2019, or (2) his separation from service as a director of Dynegy. Mr. Stein has deferred receipt of the amount realized from the vesting of the RSUs granted on
May 29, 2014 until his separation from service as a director of Dynegy.
CERTAIN TRANSACTIONS AND OTHER MATTERS
For a description of certain transactions with management and others, certain business relationships and compliance with
Section 16(a) of the Exchange Act, see "Executive CompensationPotential Payments Upon Termination or Change in Control," "Transactions with Related Persons, Promoters and Certain
Control Persons" and "Section 16(a) Beneficial Ownership Reporting Compliance."
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2015 Proxy Statement 27
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 6, 2015 regarding the beneficial ownership of our common stock by:
(1) each of our current directors; (2) each of our current executive officers; (3) all of our directors and executive officers as a group; and (4) each person or entity we
know to beneficially own more than 5% of our outstanding shares of common stock.
Beneficial
ownership for the purposes of this table is determined in accordance with the rules and regulations of the SEC. Under such rules, beneficial ownership includes any shares as to which a
person has sole or shared voting power or investment power and any shares which the person has the right to dispose or acquire within 60 days of April 6, 2015. Common stock subject to
options and warrants, regardless of whether such arrangement is currently in the money, that are currently exercisable or exercisable within 60 days of April 6, 2015 are deemed to be
outstanding and beneficially owned by the person holding the options or warrants, and common stock issuable upon vesting of RSUs that is vested or will vest within 60 days of April 6,
2015 is deemed to be outstanding and beneficially owned by the person holding the RSUs. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any
other person. Percentage of beneficial ownership is based on 128,139,664 shares of common stock outstanding as of April 6, 2015. Except as disclosed in the footnotes to this table, we believe
that each stockholder identified in the table possesses sole voting and investment power over all shares of common stock shown as beneficially owned by the stockholder.
All
percentages and share amounts are approximate based on current information available to us. The information available to us may be incomplete.
28
2015 Proxy Statement
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Security Ownership of Certain Beneficial Owners and Management
Unless
otherwise noted, the address for each person listed on the table is c/o Dynegy Inc., 601 Travis, Suite 1400, Houston, Texas 77002. The address for Franklin Advisers, Inc.
is One Franklin Parkway, San Mateo, California 94403.
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Amount and Nature of Shares
Beneficially Owned(1) |
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Percent of Class |
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5% Stockholders |
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Franklin Advisers, Inc.(2) |
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15,460,910 |
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11.9% |
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Fidelity Management & Research Company |
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11,181,646 |
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8.7% |
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Oaktree Capital Management, LP |
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10,149,712 |
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7.9% |
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Blackrock Inc. |
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9,507,748 |
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7.4% |
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Massachusetts Financial Services Co. |
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7,315,652 |
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5.7% |
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Luminus Management, LLC. |
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7,188,553 |
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5.6% |
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Vanguard Group Inc. |
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6,950,024 |
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5.4% |
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|
|
|
Integrated Core Strategies (US) LLC. |
|
|
|
6,407,042 |
|
|
|
5.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officers and Directors |
|
|
|
|
|
|
|
|
|
|
Robert C. Flexon(3) |
|
|
|
394,575 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint C. Freeland(4) |
|
|
|
108,739 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine B. Callaway(5) |
|
|
|
102,187 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn J. Burke(6) |
|
|
|
100,384 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry D. Jones(7) |
|
|
|
83,780 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mario E. Alonso(8) |
|
|
|
23,191 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Julius Cox(9) |
|
|
|
15,958 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin W. Daley(10) |
|
|
|
23,983 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel P. Thompson(11) |
|
|
|
26,150 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sheree M. Petrone(12) |
|
|
|
11,375 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pat Wood III(13) |
|
|
|
29,416 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Hilary E. Ackermann(14) |
|
|
|
11,096 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul M. Barbas(15) |
|
|
|
14,679 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard L. Kuersteiner(16) |
|
|
|
18,596 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
John R. Sult(17) |
|
|
|
11,096 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey S. Stein(18) |
|
|
|
11,096 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
All executive officers and directors as a group (16 persons) |
|
|
|
986,301 |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
- *
- Percentage
ownership of less than one percent.
- (1)
- Shares
shown in the table above include shares held in the beneficial owner's name or jointly with others, or in the name of a bank, nominee or trustee for
the beneficial owner's account.
- (2)
- The
number of shares is as of March 25, 2015 and includes 1,533,887 shares issuable on the exercise of the Warrants. Notwithstanding the foregoing, a
holder may not exercise any Warrant if it would cause such holder's beneficial ownership of our common stock and any other of our equity securities on parity (with respect to dividends) with such
common stock (when aggregated with that of any of the holder's affiliates) to require the prior permission (including the expiration of applicable waiting periods) of any governmental or regulatory
authority applicable to us, unless we and such holder have made all filings and registrations with, and obtained such permission (including the expiration of any such waiting periods) from, any such
governmental and regulatory authorities, as are necessary or advisable.
- FAV,
an indirectly wholly owned subsidiary of Franklin Resources, Inc. ("FRI"), is deemed to be the beneficial owner of these shares for
purposes of Rule 13d-3 under the Exchange Act in its capacity as the investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940
and other accounts. When an investment management contract (including a sub-advisory agreement) delegates to FAV investment discretion or voting power over the securities held in the investment
advisory
|
|
2015 Proxy Statement 29
|
Security Ownership of Certain Beneficial Owners and Management
accounts
that are subject to that agreement, FRI treats FAV as having sole investment discretion or voting authority, as the case may be, unless the agreement specifies otherwise. Accordingly, FAV
reports for purposes of section 13(d) of the Exchange Act that it has sole investment discretion and voting authority over the securities covered by any such investment management agreement,
unless otherwise specifically noted.
- (3)
- Includes
for Mr. Flexon, 5,337 and 296,140 shares issuable upon the exercise of our warrants and options, respectively. Amount shown does not
include: 1) 35,093 RSUs and 91,019 options, each granted on October 29, 2012, pursuant to our 2012 Long Term Incentive Plan, which vest on October 29, 2015; 2) 21,645 RSUs
and 33,784 options, each granted on March 18, 2013, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years with the third vesting period taking place on
March 18, 2016; 3) 38,211 RSUs and 93,062 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second
vesting period taking place on March 3, 2016; and 4) 60,261 RSUs and 148,984 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest
ratably over three years, with the first vesting period taking place on March 3, 2016.
- (4)
- Includes
for Mr. Freeland, 1,055 and 80,966 shares issuable on the exercise of our warrants and options, respectively. Amount shown does not include:
1) 9,024 RSUs and 23,405 options, each granted on October 29, 2012, pursuant to the 2012 Long Term Incentive Plan, which vest on October 29, 2015; 2) 7,215 RSUs and 11,262
options, each granted on March 18, 2013, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years with the third vesting period taking place on March 18, 2016;
3) 9,553 RSUs and 23,266 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking
place on March 3, 2016; and 4) 14,134 RSUs and 34,943 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years,
with the first vesting period taking place on March 3, 2016.
- (5)
- Includes
for Ms. Callaway, 1,158 and 76,110 shares issuable on the exercise of our warrants and options, respectively. Amount shown does not include:
1) 9,024 RSUs and 23,405 options, each granted on October 29, 2012, pursuant to the 2012 Long Term Incentive Plan, which vest on October 29, 2015; 2) 5,772 RSUs and 9,010
options, each granted on March 18, 2013, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years with the third vesting period taking place on March 18, 2016;
3) 9,263 RSUs and 22,560 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking
place on March 3, 2016; and 4) 11,564 RSUs and 28,590 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years,
with the first vesting period taking place on March 3, 2016.
- (6)
- Includes
for Ms. Burke, 1,016 and 74,983 shares issuable on the exercise of our warrants and options, respectively. Amount shown does not include:
1) 9,024 RSUs and 23,405 options, each granted on October 29, 2012, pursuant to the 2012 Long Term Incentive Plan, which vest on October 29, 2015; 2) 5,411 RSUs and 8,446
options, each granted on March 18, 2013, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years with the third vesting period taking place on March 18, 2016;
3) 9,263 RSUs and 22,560 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking
place on March 3, 2016; and 4) 11,564 RSUs and 28,590 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years,
with the first vesting period taking place on March 3, 2016.
- (7)
- Includes
for Mr. Jones, 5 and 58,799 shares issuable on the exercise of warrants and options, respectively. Amount shown does not include:
1) 15,202 RSUs and 23,759 options, each granted on April 1, 2013, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years with the third vesting period taking
place on April 1, 2016; 2) 9,263 RSUs and 22,560 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the
second vesting period taking place on March 3, 2016; and 4) 11,564 RSUs and 28,590 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest
ratably over three years, with the first vesting period taking place on March 3, 2016.
- (8)
- Includes
for Mr. Alonso, 421 and 17,044 shares issuable on the exercise of our warrants and options, respectively. Amount shown does not include:
1) 1,357 RSUs and 3,519 options, each granted on October 29, 2012, pursuant to the 2012 Long Term Incentive Plan, which vest on October 29, 2015; 2) 1,623 RSUs and 2,534
options, each granted on March 18, 2013, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years with the third vesting period taking place on March 18, 2016;
3) 4,053 RSUs and 9,870 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking
place on March 3, 2016; and 4) 7,710 RSUs and 19,060 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with
the first vesting period taking place on March 3, 2016.
- (9)
- Includes
for Mr. Cox, 12,133 shares issuable on the exercise of our options. Amount shown does not include: 1) 2,651 RSUs and 6,877 options,
each granted on October 29, 2012, pursuant to the 2012 Long Term Incentive Plan, which vest on October 29, 2015; 2) 1,515 RSUs and 2,365 options, each granted on March 18,
2013, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years with the third vesting period taking place on March 18, 2016; 3) 2,374 RSUs and 5,781 options, each
granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking place on March 3, 2016; 4) 7,003
RSUs and 17,313 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking place on
March 3, 2016; and 5) 16,502 RSUs granted on April 1, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking
place on April 1, 2016.
- (10)
- Includes
for Mr. Daley 18,589 shares issuable on the exercise of options and 232 shares held indirectly. Amount shown does not include:
1) 2,258 RSUs and 5,856 options, each granted on October 29, 2012, pursuant to the 2012 Long Term Incentive Plan, which vest on October 29, 2015; 2) 1,299 RSUs and 2,027
options, each granted on March 18, 2013, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years with the third vesting period taking place on March 18, 2016;
3) 2,316 RSUs and 5,640 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking
place on March 3, 2016; 4) 7,067 RSUs and 17,472 options, each granted on March 3, 2015, pursuant
30
2015 Proxy Statement
|
|
|
Security Ownership of Certain Beneficial Owners and Management
to
the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking place on March 3, 2016; and 5) 721 RSUs held indirectly.
- (11)
- Includes
for Mr. Thompson 20,152 shares issuable on the exercise of options. Amount shown does not include: 1) 2,470 RSUs and 6,406 options,
each granted on October 29, 2012, pursuant to the 2012 Long Term Incentive Plan, which vest on October 29, 2015; 2) 1,335 RSUs and 2,083 options, each granted on March 18,
2013, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years with the third vesting period taking place on March 18, 2016; 3) 2,605 RSUs and 6,345 options, each
granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking place on March 3, 2016; and
4) 7,067 RSUs and 17,472 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the first vesting period taking
place on March 3, 2016.
- (12)
- Includes
for Ms. Petrone 9,221 shares issuable on the exercise of options. Amount shown does not include: 1) 4,291 RSUs and 12,672 options,
each granted on August 20, 2013, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years with the second vesting period taking place on August 20, 2015;
2) 2,258 RSUs and 5,499 options, each granted on March 3, 2014, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with the second vesting period taking
place on March 3, 2016; and 4) 5,782 RSUs and 14,295 options, each granted on March 3, 2015, pursuant to the 2012 Long Term Incentive Plan, and vest ratably over three years, with
the first vesting period taking place on March 3, 2016.
- (13)
- Includes
for Mr. Wood, 5,329 RSUs granted pursuant to the 2012 Long Term Incentive Plan, which vest on May 29, 2015.
- (14)
- Includes
for Ms. Ackermann, 3,046 RSUs granted pursuant to the 2012 Long Term Incentive Plan, which vest on May 29, 2015.
- (15)
- Includes
for Mr. Barbas, 3,046 RSUs granted pursuant to the 2012 Long Term Incentive Plan, which vest on May 29, 2015.
- (16)
- Includes
for Mr. Kuersteiner, 7,500 shares issuable upon the exercise of our warrants and 3,046 RSUs granted pursuant to the 2012 Long Term
Incentive Plan, which vest on May 29, 2015.
- (17)
- Includes
for Mr. Sult, 3,046 RSUs granted pursuant to the 2012 Long Term Incentive Plan, which vest on May 29, 2015.
- (18)
- Includes
for Mr. Stein, 3,046 RSUs granted pursuant to the 2012 Long Term Incentive Plan, which vest on May 29, 2015.
|
|
2015 Proxy Statement 31
|
EXECUTIVE OFFICERS
The following table sets forth the name and positions of our executive officers as of April 6, 2015, except as otherwise
noted, together with their ages and period of service with us.
|
|
|
|
|
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|
|
|
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|
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|
|
|
|
Executive Officer |
|
|
|
Position |
|
|
|
Age as of
April 6,
2015 |
|
|
|
Served with
Dynegy
Since |
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert C. Flexon |
|
|
|
President and Chief Executive Officer |
|
|
|
56 |
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mario E. Alonso |
|
|
|
Executive Vice President, Strategic Development |
|
|
|
44 |
|
|
|
2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn J. Burke |
|
|
|
Executive Vice President and Chief Integration Officer |
|
|
|
47 |
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine B. Callaway |
|
|
|
Executive Vice President, General Counsel and Chief Compliance Officer |
|
|
|
49 |
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Julius Cox |
|
|
|
Executive Vice President and Chief Administrative Officer |
|
|
|
43 |
|
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin W. Daley |
|
|
|
Executive Vice President, Plant OperationsGas |
|
|
|
59 |
|
|
|
2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint C. Freeland |
|
|
|
Executive Vice President and Chief Financial Officer |
|
|
|
46 |
|
|
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry D. Jones |
|
|
|
Executive Vice President and Chief Commercial Officer |
|
|
|
55 |
|
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sheree M. Petrone |
|
|
|
Executive Vice President, Retail |
|
|
|
58 |
|
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel P. Thompson |
|
|
|
Executive Vice President, Plant OperationsCoal |
|
|
|
61 |
|
|
|
2001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The
executive officers named above will serve in such capacities until the next annual meeting of our Board, or until their respective successors have been duly elected and qualified, or until their
earlier death, resignation, disqualification or removal from office.
|
|
|
|
|
|
|
|
|
Robert C. Flexon
|
|
Robert C. Flexon has served as President and Chief Executive Officer since July 2011 and a
director of Dynegy since June 2011. Prior to joining Dynegy, Mr. Flexon served as the Chief Financial Officer of UGI Corporation, a distributor and marketer of energy products and related services from February to July 2011. Mr. Flexon
was the Chief Executive Officer of Foster Wheeler AG from June to October 2010 and the President and Chief Executive Officer of Foster Wheeler USA from November 2009 to May 2010. Prior to joining Foster Wheeler, Mr. Flexon was Executive
Vice President and Chief Financial Officer of NRG Energy, Inc. from February to November 2009. Mr. Flexon previously served as Executive Vice President and Chief Operating Officer of NRG Energy from March 2008 to February 2009 and as
its Executive Vice President and Chief Financial Officer from 2004 to 2008. Prior to joining NRG Energy, Mr. Flexon held executive positions with Hercules, Inc. and various key positions, including General Auditor, with Atlantic Richfield
Company. Mr. Flexon holds a Bachelor of Science degree in Accounting from Villanova University. Mr. Flexon served on the public board of directors of Foster Wheeler from 2006 until 2009 and from May to October 2010 and is currently
serving on the Board of Neighborhood Centers, the largest not-for-profit in Texas. |
|
|
|
|
|
|
32
2015 Proxy Statement
|
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
Mario E. Alonso
|
|
Mario E. Alonso has served as Executive Vice President, Strategic Development since February
2014 and Vice President, Strategic Development from June 2012 to February 2014. Mr. Alonso is responsible for leading Dynegy's strategic planning and corporate development activities. Mr. Alonso served as Vice President and Treasurer from
July 2011 to June 2012, Vice PresidentStrategic Planning from December 2008 to July 2011 and Managing DirectorStrategic Planning from June 2007 to December 2008. Prior to June 2007, Mr. Alonso served in various roles within the
Company's Strategic Planning and Treasury Departments. Prior to joining Dynegy in 2001, Mr. Alonso was with Enron Corporation. |
|
|
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|
Carolyn J. Burke
|
|
Carolyn J. Burke has served as Executive Vice President and Chief Integration Officer since
October 2014. Ms. Burke is responsible for acquisition integrations, information technology and Dynegy's project management office. Ms. Burke served as Executive Vice President and Chief Administrative Officer from August 2011 to
October 2014. Prior to joining Dynegy, Ms. Burke served as Global Controller for J.P. Morgan's Global Commodities business from March 2008 to August 2011. Ms. Burke served as NRG Energy Inc.'s Vice President and Corporate
Controller from September 2006 to March 2008 and its Executive Director of Planning and Analysis from April 2004 to September 2006. Prior to joining NRG, Ms. Burke held various key financial roles at Yale University, the University of
Pennsylvania and at Atlantic Richfield Company (now British Petroleum). |
|
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|
Catherine B. Callaway
|
|
Catherine B. Callaway has served as Executive Vice President, General Counsel and Chief
Compliance Officer since September 2011. Ms. Callaway is responsible for managing all legal affairs, including legal services supporting Dynegy's operational, commercial and corporate areas, as well as ethics and compliance. Prior to joining
Dynegy, Ms. Callaway served as General Counsel for NRG Gulf Coast and Reliant Energy in August 2011. Ms. Callaway served as General Counsel for NRG Texas and Reliant Energy from August 2010 to August 2011 and as General Counsel for NRG
Texas from November 2007 to August 2010. Prior to joining NRG Energy, Inc., Ms. Callaway held various key legal roles at Calpine Corporation, Reliant Energy, The Coastal Corporation and Chevron. |
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|
|
Julius Cox
|
|
Julius Cox has served as Executive Vice President and Chief Administrative Officer since October
2014. Mr. Cox is responsible for Dynegy's corporate functions including Human Resources, Investor Relations, Communications, Regulatory Affairs and Business Services. Mr. Cox served as Vice President, Human Resources & Business
Services from May 2012 to October 2014, Vice President, Human Resources from January 2006 to May 2012 and Managing DirectorHR Business Services from May 2004 to January 2006. Prior to 2004, Mr. Cox served in various roles in Dynegy's HR
Business Partner and Compensation functions. Prior to joining Dynegy in 2001, Mr. Cox was a consultant at Arthur Andersen LLP and has also held various roles in human resources at Shell Oil and Neiman Marcus. |
|
|
|
|
|
|
|
|
2015 Proxy Statement 33
|
Executive Officers
|
|
|
|
|
|
|
|
|
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|
|
Martin W. Daley
|
|
Martin W. Daley has served as our Executive Vice PresidentPlant Operations, Gas since
April 2015. Mr. Daley is responsible for the management and operation of Dynegy's fleet of gas generating facilities and its Brayton Point coal fired facility. Mr. Daley served as Vice President and General Manager, Gas Operations from
July 2011 to April 2015, Managing Director, Asset ManagementEastern Region from March 2007 to June 2011, and as Senior Director, Regulatory Affairs & Administrative Services from February 2001 to March 2007. Prior to joining
Dynegy in February 2001, Mr. Daley held various positions within Central Hudson Gas & Electric, including SuperintendentGeneral Plant Services, Plant Services Supervisor, Production facilities, and Corporate Environmental
Affairs. |
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|
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|
|
Clint C. Freeland
|
|
Clint C. Freeland has served as Executive Vice President and Chief Financial Officer since July
2011. Mr. Freeland is responsible for Dynegy's financial affairs, including finance and accounting, treasury, tax and banking and credit agency relationships. Prior to joining Dynegy, Mr. Freeland served as Senior Vice President,
Strategy & Financial Structure of NRG Energy, Inc. from February 2009 to July 2011. Mr. Freeland served as NRG's Senior Vice President and Chief Financial Officer from February 2008 to February 2009 and its Vice President and
Treasurer from April 2006 to February 2008. Prior to joining NRG, Mr. Freeland held various key financial roles within the energy sector. |
|
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|
Henry D. Jones
|
|
Henry D. Jones has served as Executive Vice President and Chief Commercial Officer since
April 2013. Mr. Jones is responsible for Dynegy's commercial and asset management functions for its power generation business. In addition, Mr. Jones leads a team that develops and executes both hedging and term contracting options for the
entire fleet. Prior to joining Dynegy, Mr. Jones served as Managing Director, North American Power and Gas Sales, and Origination at Deutsche Bank starting in May 2010, and managed Deutsche Bank's North American Power and Gas trading activity
starting in August 2012. Prior to joining Deutsche Bank, Mr. Jones was the Chief Operating Officer and Head of Trading at EDF Trading North America from August 2009 to February 2010, Head of Electricity Trading at EDF Trading Markets Limited
from August 2008 to July 2009, and Director of Renewable Fuels Trading from July 2007 to July 2008. Mr. Jones was an investor, co-founder and chairman of Renewable Fuel Supply Limited from December 2003 to July 2007. Prior to 2003,
Mr. Jones served in a variety of commercial positions with several domestic and international energy companies, including AEP Energy Services Ltd. and Duke Energy Corporation. |
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|
|
34
2015 Proxy Statement
|
|
|
Executive Officers
|
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|
|
|
|
|
|
|
|
|
|
Sheree M. Petrone
|
|
Sheree M. Petrone has served as our Executive Vice President, Retail since April 2015.
Ms. Petrone is responsible for leading and overseeing all aspects of Dynegy's retail electric sales business, including business development, customer care and operations. Ms. Petrone also serves as President of Illinois Power Marketing
Company (d/b/a Homefield Energy) and Dynegy Energy Services, LLC, Dynegy's power marketing and energy entities, since December 2013. Ms. Petrone served as Vice President, Retail from August 2013 to April 2015. Prior to joining Dynegy
in August 2013, Ms. Petrone held various positions within Exelon Corporation from March 1999 to June 2013, including Vice President, Commercial Integration, Energy Trading & Marketing, Vice President, Fuels, Environmental Trading
and Marketing, Vice President, Retail Energy Company (Exelon Energy), and Director of Finance and Planning (PECO Energy). Ms. Petrone also held business development roles with Trigen, a cogeneration project developer majority owned by Suez
Lyonnaise des Eaux from May 1987 to March 1999. |
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Daniel P. Thompson
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Daniel P. Thompson has served as our Executive Vice PresidentPlant Operations, Coal
since April 2015. Mr. Thompson is responsible for the safe and efficient operation of our fleet of coal generating facilities. Mr. Thompson served as Vice President and General ManagerCoal Operations from October 2011 to April
2015, Vice President, OperationsWest Region from April 2007 to September 2011, and Vice President, OperationsNortheast Region from March 2001 to March 2007. Prior to joining Dynegy in March 2001, Mr. Thompson held various positions
within Illinois Power Company, including Vice President, EngineeringGeneration and Plant Manager, and held various maintenance management positions with both Pfizer, Inc. and Kilngas R&D (an Allis Chalmers subsidiary). |
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2015 Proxy Statement 35
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COMPENSATION DISCUSSION AND ANALYSIS
The following discussion should be read together with the compensation tables and disclosures for our named
executive officers included under "Executive Compensation." The following discussion contains statements regarding future company performance targets and goals. These targets and goals are disclosed
in the limited context of our compensation programs and should not be considered as statements of our expectations or estimates of results or other guidance; to that end, these targets and goals will
not be subject to updating.
INTRODUCTION
This section explains our executive compensation program, including philosophy, policies, practices and key compensation decisions
for 2014 as it relates to our following named executive officers (the "Named Executive Officers"). Compensation for our Named Executive Officers is further described in the Summary Compensation Tables
and other compensation tables contained in this proxy statement.
2014 Named Executive Officers
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Name |
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Title in 2014 |
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Robert C. Flexon |
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President and Chief Executive Officer |
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Clint C. Freeland |
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Executive Vice President and Chief Financial Officer |
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Carolyn J. Burke |
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Executive Vice President and Chief Integration Officer |
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Catherine B. Callaway |
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Executive Vice President, General Counsel and Chief Compliance Officer |
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Henry D. Jones |
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Executive Vice President and Chief Commercial Officer |
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These
Named Executive Officers, together with our other senior executives whose compensation is determined by the Compensation Committee and our Board, are referred to as our "Executive Management
Team".
BUSINESS HIGHLIGHTS AND PERFORMANCE
Dynegy's transformative performance in 2014 was driven by our talented and dedicated employees that executed our business strategy
centered on capital allocation, customer focus and
continuous improvement. As we entered the year, our focus was integrating the assets obtained from the Ameren Energy Resources acquisition and positioning us to pursue strategic opportunities to
further grow the business. Consistent with our continuous improvement strategy we safely and reliably operated our Midwest and Eastern region assets during the Polar Vortex that impacted much of the
country. As part of our capital allocation strategy, in the second half of 2014, we simultaneously announced two acquisitions of approximately 12,500 megawatts of coal and gas generation, from Duke
Energy and Energy Capital Partners, which increased our generation capacity to nearly 26,000 megawatts. These transactions have transformed Dynegy into the third largest independent power producer
with added scale in the structured markets of PJM and ISONE. The high quality of these acquired assets, combined with their favorable locations and strong capacity factors are expected to
result in significant accretive earnings and cash flows which may be used to further strengthen our balance sheet and liquidity position, make investments in existing assets, pursue additional growth
opportunities and support other high value capital allocation opportunities. These transactions have been favorably received in the equity market as evidenced by our 2014 stock price increasing over
40%, significantly outperforming our peer group.
36
2015 Proxy Statement
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Compensation Discussion and Analysis
2014 Business Highlights
Capital Allocation
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- Met or Exceeded 2014 Guidance range for Adjusted EBITDA(1) and Free Cash Flow.(2)
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- $351 million in consolidated Adjusted EBITDA for 2014 which exceeded the midpoint of 2014 Adjusted EBITDA guidance range
($330-360 million).
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- $104 million in Free Cash Flow from operations in 2014, which exceeded the 2014 FCF guidance range ($45-75 million).
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- Announced the EquiPower Acquisition and the Duke Acquisition.
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- Completed $6.2 billion acquisition financing including common stock, mandatory convertible preferred stock and senior unsecured
notes in October 2014.
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- Successfully cleared an 80 megawatt turbine uprate at the Kendall facility in the 2017/2018 PJM capacity auction, with the first 40
megawatts installed during 2014 and the second 40 megawatts scheduled for installation in 2016.
Customer Focus
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- Moss Landing 6&7 tolling agreement for 2016 received final approval from the California Public Utilities Commission.
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- Forward bilateral capacity sales in MISO exceed 1,200 megawatts and IPH annual long-term contracts for energy and capacity total 470
megawattsa contract for up to 120 megawatts was signed in July and IPH cleared 847 megawatts in the May PJM auction.
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- Initiated transmission project to reduce congestion at our Baldwin facility.
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- Created the operating model to manage the retail business as a profitable channel to market and effective hedge for generation while
achieving high ratings from satisfied customers for service and new product offerings.
Continuous Improvement
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- PRIDE initiatives delivered $90 million in EBITDA for 2014. Over 100 cash cost reduction initiatives identified including
efforts related to Marcellus gas sourcing, reliability improvements, refined coal, coal supplier diversity and optimizing plant performance. Of particular note:
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- Refined CoalAll Coal segment and IPH plants on line with a 2014 benefit of ~$17 million and annualized benefit of
~$30 million.
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- Independence Gas SupplySourced 97% of fuel from Marcellus in 2014 contributing a benefit of $20 million versus
2013, including $8 million of transportation optimization benefit.
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- Balance Sheet InitiativesDelivered $93 million of improvement in 2014. This includes the Newton scrubber contract
restructuring from a target price to a fixed price, which reduced total cost to complete by $30 million, emissions inventory monetization and MISO collateral optimization, which provides a
benefit of $8 million.
- (1)
- We
define Adjusted EBITDA as EBITDA adjusted to exclude (i) gains or losses on the sale of certain assets, (ii) the impacts of mark-to-market
changes on derivatives related to our generation portfolio, as well as interest rate swaps and warrants, (iii) the impact of impairment charges and certain other costs such as those associated
with the acquisition of Ameren Energy Resources, (iv) income or expense on up front premiums received or paid for financial options in periods other than the strike periods and
(v) income or losses attributable to noncontrolling interest.
- (2)
- We
define Free Cash Flow as cash flow from operations less maintenance and environmental capital expenditures, the cash impact of the AER acquisition and
debt refinance costs plus return on restricted cash. Free Cash Flow also includes receipts or payments related to interest rate swaps and excludes the impact of changes in
collateral.
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2015 Proxy Statement 37
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Compensation Discussion and Analysis
Key Features of our Executive Compensation Program
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We Do... |
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We Do Not... |
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ü Pay for Performance via a compensation structure that includes a competitive base salary and performance based STI and LTI awards that are aligned with
stockholder interests ü Provide LTI that include Performance Share Units based on Total Stockholder Return ("TSR") and cap these awards when TSR
outperforms the peer group but is negative ü Have change in control cash severance benefits that are subject to "double trigger" provisions which require both
the occurrence of a change in control event and involuntary termination ü Enforce stock ownership requirements for all officers that require
attainment of ownership levels before equity transactions can occur ü Have an independent compensation consultant that reports directly to the
Compensation Committee ü Conduct an annual incentive risk assessment to ensure that the structure and design of our compensation programs are not
reasonably likely to result in excessive risk-taking that could have a material adverse impact on the Company ü Have a claw-back mechanism in place for
incentive awards ü Establish a performance-based bonus pool |
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× Offer supplemental executive retirement plan benefits × Engage in option backdating or re-pricing × Permit hedging or
pledging of Company Stock by Directors or Officers × Provide excise tax assistance upon a change in control × Provide any material perquisites, other than reimbursement for financial planning and tax
advice × Encourage excessive risk or inappropriate risk taking though our incentive programs; our plans focus on aligning our compensation policies with the long-term interests of our
stockholders × Guarantee bonuses |
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EXECUTIVE COMPENSATION PROGRAM OVERVIEW
Philosophy and Objectives of our Executive Compensation Programs
The executive compensation program, administered by the Compensation Committee, is primarily designed to attract, motivate and retain
a highly qualified Executive Management Team capable of effectively managing and growing our business. Our executive compensation program reflects a fundamental belief that rewards should be
competitive, both in elements and amount, with the broad labor market in which we compete for executive talent and commensurate with the Company's and the individual executive's performance.
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- Pay for PerformanceOur total compensation for each individual provides
reasonable upside potential for exceptional performance; as well as risk of no payment, with respect to incentive compensation, when performance objectives are not achieved. Our variable pay programs
are designed as forward-looking incentives that reflect individual and corporate performance during the year under review.
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- Alignment with Stockholder ValueOur LTI awards encourage share price
improvement and a strong link to stockholder interests. Our compensation programs are designed and administered to maximize stockholder value.
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- Market CompetivenessOur overall compensation strategy recognizes that
attraction and retention of key talent is critical to the attainment of our stated business goals and objectives and to the creation of value for our stockholders.
38
2015 Proxy Statement
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Compensation Discussion and Analysis
Elements of our Executive Compensation Program
In 2014, the Compensation Committee refined our executive compensation program as detailed below. The Compensation Committee and the
Executive Management Team strive to promote a pay for performance culture. The executive compensation program was designed to incorporate three primary elements: base salary, STI, and LTI awards.
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Element |
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Key Characteristics |
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Pay at risk |
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Base Salary |
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Base Salaries reflect the Named Executive Officer's scope, experience, qualifications, and impact to the outcomes of the organization The Compensation Committee
considers job responsibilities, budget for annual merit increases, external benchmark data, internal pay equity, and individual performance to determine the level of base salary for each Named Executive Officer |
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No |
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Short-Term Incentive Awards |
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STI awards are based on annual performance against specific identified financial, strategic, and operational goals and are designed to motivate Named Executive Officers to achieve short-term outcomes critical to our success
and that provide sustainable long-term total return to our stockholders STI performance period is January 1 through December 31 of each year and are paid out on or before March 15 following the performance period
The annual STI opportunity (percent of annual base salary) for each Named Executive Officer have remained unchanged since each was hired A funding gate must be achieved
before any payout occurs Payout may range from zero to two times target |
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Yes; payout based on achievement of pre-established company goals and individual performance factors |
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Long-Term Incentive Awards |
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LTI awards are structured to achieve a variety of objectives. including attracting and retaining executives, aligning executives' financial interests with the interest of stockholders; and rewarding the achievement of
long-term strategic goals LTI Awards for our Named Executive Officers are awarded with a mix of Performance Share Unit Awards, Restricted Stock Unit Awards and Stock Options |
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Yes; payout strongly linked to share price performance |
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Performance Share Unit Awards ("PSU's") Significant portion of LTI mix PSUs reward for performance relative to our peer group of companies Award payouts capped if our Total
Stockholder Return or TSR, is negative |
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Yes; value linked to TSR |
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Restricted Stock Unit Awards Subject to three-year vesting |
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Yes, value linked to share price |
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Stock Option Awards Subject to three-year vesting |
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Yes, value present only when share price increases above the strike price (stock price on the day of grant) |
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2015 Proxy Statement 39
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Compensation Discussion and Analysis
The
mix of pay across base salary, STI, and LTI awards for the CEO and the Named Executive Officers are most heavily weighted towards at-risk pay, aligning performance with stockholder value.
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CEO Total Target Compensation |
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All Other NEOs Total Target Compensation |
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Peer Group and Benchmarking
The Compensation Committee uses compensation benchmarking data to provide a competitive market context to its decisions regarding
compensation for the Named Executive Officers. To assist the Compensation Committee with setting 2014 target compensation levels, Meridian prepared a benchmarking review to assess the competitiveness
of each element of compensation for the Named Executive Officers, and to provide information regarding incentive plan designs and pay practices within the energy industry.
The
Committee reviewed and discussed the benchmarking data, and used the data to inform its compensation decisions. The Committee believes the combination of these two data perspectives offers an
appropriate and credible basis for benchmarking the compensation of the Named Executive Officers. The Committee will continue to evaluate this approach and available data sources, and make changes as
appropriate.
Compensation
data in the benchmarking review are based primarily on public disclosures of the compensation of executives among a selected group of peer companies, and are supplemented by information
in surveys specific to the energy industry. The Compensation Committee believes the peer group companies are indicative of the competitive market for executive talent.
Selection
of the peer companies presents certain challenges, due to the limited number of directly-comparable companies. Therefore, the Committee elected to include companies from three segments of
the energy industryindependent power producers, electric utilities and multi-utilities (i.e., electric and gas)that are comparable to Dynegy. Specific factors
considered in selection of the peer group include:
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- Financial and Operational Metricsassets, revenues, market capitalization, enterprise value;
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- Operational Scopemerchant generation capacity, industry segment, commercial, retail and commodity focus;
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- Market-Based Factorslabor market requirements (e.g., finance, operations, commercial), competition for executive
talent, comparability of pay data; and
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- External stockholder and governance evaluations of Dynegy's pay levels and practices.
40
2015 Proxy Statement
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Compensation Discussion and Analysis
The Compensation Committee reviews the composition of the peer group annually and considers changes as warranted. For 2014, the peer group consisted of the following twelve
companies, which is the same set of companies that comprised our peer group in 2013, or our selected peer group.
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Peer Companies |
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AES Corporation |
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Entergy Corporation |
Ameren Corporation |
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First Energy Corporation |
Atlantic Power Corporation |
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NRG Energy Inc. |
Calpine Corporation |
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PPL Corporation |
DTE Energy Company |
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Public Service Enterprise Group Inc. |
Edison International |
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TransAlta Corporation |
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Survey
data used in the benchmarking review were from the Towers Watson 2014 CDB Energy Services Executive Compensation survey and the AonHewitt 2014 Energy Marketing and Trading survey, or the energy
industry survey data. Please see the table in Annex A for a complete listing of the companies included in the energy industry survey data. Position matches are developed for each of the Named
Executive Officers to positions with similar roles and responsibilities at both the peer companies and in the surveys.
2014 COMPENSATION
Base Salary
The Compensation Committee considers job responsibilities, external benchmark data, internal pay equity, and individual performance
to determine the level of base salary for each Named Executive Officer. In early 2014, the Compensation Committee reviewed these factors and base salaries for the Named Executive Officers and approved
increases as indicated below:
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Named Executive Officer |
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Base Salary
as of
December 2013 |
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Base Salary
as of
December 2014 |
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Percentage
Increase from
2013 |
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Robert Flexon |
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$900,000 |
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$1,000,000 |
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11% |
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Clint Freeland |
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$500,000 |
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$520,000 |
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4% |
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Carolyn Burke |
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$475,000 |
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$500,000 |
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5% |
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Catherine Callaway |
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$475,000 |
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$495,000 |
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4% |
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Henry Jones |
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$475,000 |
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$495,000 |
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4% |
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The
Compensation Committee recommended competitive increases for Mr. Freeland, Ms. Burke, Ms. Callaway, and Mr. Jones comparable to the peer market levels, job complexity,
and individual performance. Mr. Flexon's salary increase was based on benchmark data from our selected peer group, the Company's performance, and his individual contribution to the
organization's success. His base salary prior to the 2014 increase was positioned nearly 20% below the 50th percentile and 12% below the 25th percentile of
the selected peer group. Given Mr. Flexon's performance and contributions, the Compensation Committee sought to bring Mr. Flexon's salary closer to competitive benchmark levels. As such,
the Committee recommended, and the full Board approved, an adjustment that positioned his salary between the 25th percentile and median of the selected peer group.
Short-term Incentive Plan
The Dynegy Inc. Incentive Compensation Plan, or STI Plan, serves as a variable, at-risk mechanism to reward our Named
Executive Officers and other eligible employees for the achievement of short-term performance objectives critical to our success. The STI Plan contains a number of components established to emphasize
pay for performance by providing cash awards for the achievement of pre-determined levels of Company performance.
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2015 Proxy Statement 41
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Compensation Discussion and Analysis
Performance-Based Bonus Pool
Annual bonus awards are paid from a performance-based bonus pool designed to fund bonus awards paid to our Named Executive Officers
and other executives as determined through the STI Plan, and to allow for full tax deductibility of such bonuses. Each year, the Compensation Committee identifies executives covered under the bonus
pool for that year, the performance-based formula used to fund the bonus pool, and the individual share of the bonus pool for each employee covered under the bonus pool.
To
comply with Section 162(m) of the Internal Revenue Code, bonus awards that may be paid from the bonus pool are subject to the Compensation Committee's authority to reduce, but not increase,
the amount of each covered executive's share of the bonus pool. The Compensation Committee may, in its sole discretion, increase or decrease individual bonus awards calculated under the STI Plan (as
discussed below), provided that the resulting bonus award does not exceed the executive's individual share of the pool. Further, the exercise of negative discretion with respect to one covered
executive may not result in an increase in the amount payable to another covered executive; and the sum of all covered executives' allocable shares of the pool may not exceed 100% of the total bonus
pool.
In
early 2014, the Compensation Committee established that the 2014 bonus pool will be funded in an amount equal to 5% of the Company's forecasted Adjusted EBITDA for the year. The Compensation
Committee also identified the executives covered under the bonus pool, which included our Named Executive Officers, and assigned to the covered executives individual shares of the bonus pool. As
discussed below, the design of the STI Plan provides each of our Named Executive Officers with the opportunity to earn up to a maximum of 200% of their individual bonus target, based on the Company's
performance relative to pre-established performance components and levels of achievement. Provided that bonus award payouts to each executive covered under the pool does not exceed their individual
share, the award will be fully-deductible.
How Bonus Awards are Determined
Once a minimum performance level is achieved, STI awards are determined through the following calculation.
Individual Bonus Targets. The STI target opportunity for each Named Executive Officer was set within their respective employment agreements upon
hire and has remained unchanged. The Compensation Committee, in conjunction with the external compensation consultant, reviews the STI targets each year for competitive alignment. The Compensation
Committee believes the target opportunities are appropriately positioned within the energy industry survey data and selected peer group. Current bonus targets for the Named Executive Officers,
expressed as a percentage of base salary, are as follows:
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Named Executive Officer |
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Target Bonus
(percent of base pay) |
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Robert Flexon |
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100% |
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Clint Freeland |
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75% |
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Carolyn Burke |
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75% |
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Catherine Callaway |
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75% |
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Henry Jones |
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75% |
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42
2015 Proxy Statement
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Compensation Discussion and Analysis
STI Award Funding. Performance objectives for the STI program are approved annually by the Compensation Committee and Board. Each year the
Compensation Committee establishes a minimum performance funding gate. If the funding gate metric is not achieved, no STI awards are paid to any employee, including the Named Executive Officers. The
Compensation Committee established a funding gate for 2014 as Operating Cash Flow of $25 million.
Individual
funding for the STI awards is based on performance relative to Compensation Committee-approved Critical Success Factors and related performance metrics, which represent specific financial,
strategic, operational and safety goals that are important indicators of our overall performance. The attainment of these goals directly relates to the achievement of sustainable long-term total
returns for our stockholders. Each of the Critical Success Factors is weighted, and performance is measured against overall year-end performance to determine the overall funding of the STI program. In
early 2014, the Board reviewed and the Compensation Committee approved the Critical Success Factors and associated objectives and metrics to be used in determining STI awards for the 2014 performance
year, as follows:
Individual Performance Adjustment. In addition to the formulaic calculation of overall Company results, individual performance adjustments are made
to determine bonus awards under the STI Plan. The individual performance adjustment is designed to adjust for each Named Executive Officer's individual achievements for the respective performance year
and may result in STI award payouts above or below actual funding percentage determined through the formulaic calculation.
2014 STI Results. In February 2015, the Compensation Committee determined that the 2014 funding gate of $25 million in Operating Cash Flow
had been achieved. The Compensation Committee also reviewed the
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2015 Proxy Statement 43
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Compensation Discussion and Analysis
Company's
performance relative to the 2014 Critical Success Factors and approved funding of the STI Plan at 122% of target, as summarized in the table below:
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Critical Success Factors |
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Earned
Payout |
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Capital Allocation (50%) Adjusted EBITDA: Achieved $350 million vs. Target of $241 million Free Cash Flow for
Dynegy Inc.: Achieved $244 million vs. Target of $36 million Free Cash Flow for IPH: Achieved $(57.5) million vs. Target of $(95) million Secured $25 million
receivable-backed line of credit for Illinois Power Marketing Company vs. Target of $50 million Announced the EquiPower Acquisition and the Duke Acquisition in 2014 Permitting processes underway at
key facilities to position sites for possible combined cycle gas turbine installation |
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74.2% |
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Customer Focus (25%) Secured several bilateral and multi-year capacity agreements either meeting or exceeding target megawatts Entered and signed 3 ultra-low
sulfur coal contracts Supplied 97% of natural gas supply needs at Independence from Marcellus vs. Target of 90% Achieved a capacity factor of 25%
at Casco Bay Demand Side Management pilot program completed and demonstrated estimated capacity PLC reduction from previous year Improved retail customer
satisfaction score to 61% compared to 57% since 2011 Implemented refined coal at all coal facilities with annual ongoing benefit of $30 million |
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31.3% |
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Continuous Improvement (25%) Safety targets not met for employee and contractor recordable/lost time injuries: Employee Recordables Actual 34 vs. Target <13; Employee Lost Time Injuries
Actual 7 vs. Target 0; Contractor Recordables Actual 16 vs. Target of <9, Contractor Lost Time Injuries Actual 5 vs. Target 0 Equivalent Availability Factor for
Coal segment was 84.6% vs. Target of 87% In Market Availability for Gas segment was 98.7% vs. Target of 98% PRIDE program captured $568.7 million fixed cash, $90.3 million balance sheet improvements,
and $64.4 million in gross margin gains vs. target of $560 million, $58 million and $55 million, respectively
Investor relations outreach shifted investor base to 61% of long-only core investors vs. 44% in 2013
Ethics and compliance training was completed by 100% of the organization |
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16.6% |
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Total STI Funding |
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122% |
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44
2015 Proxy Statement
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Compensation Discussion and Analysis
Approved 2014 STI Bonus Awards. In March 2015, the Compensation approved the following bonus awards for our Named Executive Officers, based on the
Company's overall performance relative to the 2014 Critical Success Factors and assessments of their individual performance during the year.
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Named Executive Officer |
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2014
STI Award
Value |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Flexon |
|
|
|
100% |
|
|
|
119% |
|
|
|
120% |
|
|
|
$1,428,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Clint Freeland |
|
|
|
75% |
|
|
|
119% |
|
|
|
120% |
|
|
|
$556,920 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Burke |
|
|
|
75% |
|
|
|
119% |
|
|
|
115% |
|
|
|
$513,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine Callaway |
|
|
|
75% |
|
|
|
119% |
|
|
|
115% |
|
|
|
$508,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Henry Jones |
|
|
|
75% |
|
|
|
119% |
|
|
|
115% |
|
|
|
$508,056 |
|
|
|
|
|
|
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|
Robert Flexon:
As Chief Executive Officer, Mr. Flexon led the organization through its continued efforts to grow the business in what we
believe are the most attractive markets. Additional accomplishments in 2014 included:
-
- Steered the Company through a deliberate and focused review of growth opportunities during 2014. These efforts culminated in the
announcement on August 22, 2014 of the EquiPower Acquisition and the Duke Acquisition, which have transformed our business. With the EquiPower Acquisition and the Duke Acquisition,
Mr. Flexon has helped grow the company to nearly 26,000 MW of generating capacity with added scale in diverse markets and a balanced portfolio of coal and gas fired assets.
-
- The Company under Mr. Flexon's leadership met or exceeded our 2014 financial goals and targets. At the end of 2014, Dynegy
shares were among the best performing equities among the Integrated, Hybrid, and Independent Power Producers. The Company has been positioned as an attractive investment with support from a much
broader coverage group with a target price nearly double the October 2012 post-emergence stock price.
-
- Demonstrated exemplary traits in leading the organization through execution of its strategic business plan and building a management
team that is respected across the industry. He steered the organization through meaningful commercial and retail accomplishments in 2014 and his stewardship of the PRIDE program in 2014, exceeded its
EBITDA and balance sheet efficiency and improvement targets such that we will achieve our three-year targets by the end of 2015a full year ahead of schedule. Additionally,
Mr. Flexon has developed a leadership team that sets clear direction, maintains high visibility both internally and externally, has operated with a high transparency of communications and is
focused on creating a strong culture of safety, collaboration, accountability and agility.
Clint Freeland:
As EVP and Chief Financial Officer, Mr. Freeland leads the finance organization, which had an excellent year in 2014, both in
their contributions to both day to day operations and execution of the acquisition transactions, including:
-
- Led the preparation, review and analysis of Dynegy's external financial reporting activities, including the Company meeting or
exceeding 2014 public guidance ranges for Adjusted EBITDA and Free Cash Flow.
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2015 Proxy Statement 45
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Compensation Discussion and Analysis
-
- Completed $6.2 billion acquisition financing including common stock, mandatory convertible preferred stock and senior unsecured
notes.
-
- Managed the capital allocation process and balance sheet liquidity to ensure Dynegy's financial health and stability.
Carolyn Burke:
As Chief Integration Officer, Ms. Burke oversees restructuring the business processes for the Company, which will serve to be
the backbone of the revitalization of Dynegy. Specific accomplishments in 2014 included:
-
- Championed the culture change effort, branded as Inspired Energy, throughout the organization. This initiative to influence the Dynegy
culture across the Company will ultimately enhance our long-term performance.
-
- Implemented Project Management methodologies to improve the speed and effectiveness of implementing improvements in our business model
and processes across the organization, setting standards for project management, focus, cost effectiveness, and change management at Dynegy.
-
- Redesigned our Crisis Management protocol and replaced outdated policies and procedures and performed drills that will improve our
readiness in the face of a crisis.
-
- Developed and led our integration planning and synergy capture for the EquiPower Acquisition and the Duke Acquisition.
Catherine Callaway:
As EVP, General Counsel and Chief Compliance Officer, Ms. Callaway leads the legal organization, which provides impactful
support and guidance to their customers throughout Dynegy. The legal team played a key role in 2014, assisting with a number of challenging and complex matters, including:
-
- Designed, planned and implemented the IPH governance structure to ensure the proper protocols are in place and being appropriately
followed.
-
- Prepared valuable counsel to help secure California Public Utilities Commission approval of year 3 for the Moss Landing tolling
contract.
-
- Provided strong legal counsel in support the Company's acquisition activities, including all phases including due diligence,
acquisition structuring and negotiation, financing and pursuing regulatory approvals.
Hank Jones:
As EVP and Chief Commercial Officer, Mr. Jones oversaw significant improvements in the organization in 2014. Specific
achievements included:
-
- Implemented power transmission projects to improve energy price realization for our Baldwin facility.
-
- Sold over 7,000 MW's in forward MISO capacity, which secures a substantial increase in value to Dynegy as compared to past capacity
sales.
-
- Secured and optimized fuel for generation assets that facilitated achievement of capacity factor goals at key facilities, increased
sourcing of Marcellus gas to expand margins, and implemented refined coal at all locations to reduce coal costs.
Long-term Incentive Awards
Our LTI awards focus on the attainment of long-term performance goals and objectives, which are deemed instrumental in creating
long-term value for stockholders and long-term retention incentives for our executives. The Compensation Committee, in conjunction with Meridian reviews the LTI targets each year for competitive
46
2015 Proxy Statement
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|
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Compensation Discussion and Analysis
alignment.
The Compensation Committee also reviews industry trends related to the award mix and determines the appropriate mix of equity instruments considering benchmark data. While some within our
select peer group have moved to a less-diverse mix of equity instruments, the Compensation Committee has strived to provide our Named Executive Officers with a balanced mix of LTI during each annual
grant. The Compensation Committee increased the use of PSUs in 2014 but still believes that the use of stock options and RSUs provide incentives that are aligned with stockholder interest and provide
the necessary retention incentives for our Named Executive Officers.
In
February 2014, the Compensation Committee approved the following mix and grant of LTI awards (based on award values): 40% RSUs, 25% stock options, and 35% PSUs. The awards for Mr. Freeland,
Ms. Burke, Ms. Callaway and Mr. Jones were recommended by Mr. Flexon and reviewed and approved by the Compensation Committee. All awards were within the targeted range of
100-200% of base salary. The award levels reflect the contributions each have made and Mr. Flexon's and the Compensation Committee's desire to both retain each Named Executive Officer and
ensure continued alignment with long-term stockholders' interests. Mr. Flexon's award, which was recommended by the Compensation Committee and approved by the full Board, was within his
targeted range of 200-400% of his salary. In determining the award level, the Committee took into account Mr. Flexon's efforts and contributions in leading the Company, successful
execution on critical objectives and the importance of retaining him as the Company pursues strategic opportunities to further grow the business.
The
table below illustrates the 2014 LTI award grant value for each of the Named Executive Officers.
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Named Executive Officer |
|
|
|
Value of
2014 Long-term
Incentive Award |
|
|
|
Stock Option
Value |
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|
|
Restricted Stock
Unit Value |
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|
|
Performance
Share Unit
Target Value |
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|
|
|
|
|
|
|
|
|
|
|
|
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|
Robert Flexon |
|
|
|
$3,300,000 |
|
|
|
$825,000 |
|
|
|
$1,320,000 |
|
|
|
$1,155,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint Freeland |
|
|
|
$825,000 |
|
|
|
$206,250 |
|
|
|
$330,000 |
|
|
|
$288,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Burke |
|
|
|
$800,000 |
|
|
|
$200,000 |
|
|
|
$320,000 |
|
|
|
$280,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine Callaway |
|
|
|
$800,000 |
|
|
|
$200,000 |
|
|
|
$320,000 |
|
|
|
$280,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry Jones |
|
|
|
$800,000 |
|
|
|
$200,000 |
|
|
|
$320,000 |
|
|
|
$280,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Units. PSUs are earned over a three-year performance period starting on January 1, 2014 based on TSR over that period
relative to the performance of a selected group of energy industry peer-companies. The Compensation Committee selected TSR as the performance measurement since it directly aligns with the long-term
interests of our stockholders. In addition, the Compensation Committee selected the peer companies because they are similar to the Company in terms of operations and business focus. Therefore, the
peer companies provide an appropriate reference point against which to compare the Company's TSR. The number of PSUs granted to each Named Executive Officers was based on the PSU Target Value shown
above divided by the closing stock price of our common stock on the day of grant. Each PSU corresponds in value to a single share of our common stock.
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2014 TSR Peer Companies |
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|
|
AES Corporation |
|
|
|
Edison International |
|
|
|
NRG Energy Inc. |
|
|
Ameren Corporation |
|
|
|
Entergy Corporation |
|
|
|
PPL Corporation |
|
|
Calpine Corporation |
|
|
|
Exelon |
|
|
|
Public Service Enterprise Group Inc. |
|
|
Dominion Resources |
|
|
|
First Energy Corporation |
|
|
|
Sempra Energy |
|
|
DTE Energy Company |
|
|
|
Nextera Energy Inc. |
|
|
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|
|
|
|
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|
|
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|
Set
forth below are the key provisions of PSUs granted to our Named Executive Officers in 2014:
-
- Payout opportunity of 0-200% of target, intended to be settled in shares;
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2015 Proxy Statement 47
|
Compensation Discussion and Analysis
-
- DYN 3-year Cumulative TSR percentile ranking calculated at the end of the performance period and applied to a pre-established payout
scale to determine the number of earned/vested PSUs;
-
- TSR calculated using and average stock price at the beginning and end of the performance period.
-
- The 20-day average price calculation will be a period that is +/-10 days around the measurement dates.
-
- If absolute TSR is negative, the PSU award will be capped at 100% of the target number of PSUs granted, regardless of relative TSR
positioning.
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Percentile Rank Relative TSR |
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|
|
Payout % of Target
(# of Shares) |
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|
90th percentile or better |
|
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|
200% |
|
|
|
|
|
|
|
|
|
75th percentile |
|
|
|
175% |
|
|
|
|
|
|
|
|
|
50th percentile |
|
|
|
100% |
|
|
|
|
|
|
|
|
|
25th percentile |
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|
|
50% |
|
|
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|
|
|
|
|
|
<25th percentile |
|
|
|
0% |
|
|
|
|
|
|
|
|
|
Restricted Stock Units. The number of RSUs granted to each Named Executive Officers was based on the RSU Value shown above divided by the closing
stock price of our common stock on the day of grant. Each RSU corresponds in value to a single share of our common stock. RSU awards will vest in three equal annual installments starting on the first
anniversary of the award's grant date. On each vesting date, the number of RSUs that vest will be settled and paid in a corresponding number of shares of our common stock.
Stock Options. In 2014, we granted stock options to each Named Executive Officer that allows for the purchase of a fixed number of shares of our
common stock at a fixed price (i.e., exercise price) over a ten-year period. The exercise price is set at the closing price of a share of our common stock on the date of grant. The stock
options vest in three equal annual installments starting on the first anniversary of the award's grant date. The number of stock options granted to each Named Executive Officers was based on the Stock
Option Value shown above divided by the Black Scholes value of a single option determined on the day of grant.
2012 Long-Term Incentive Program-Cash. During 2014, final installment payments were paid to our executives for compensation earned as a result of
the successful bankruptcy emergence on October 1, 2012. Shortly after the start of their employment in 2011 and continuing over the course of 2012, our executives worked to restore the
Company's financial health by restructuring the organization's balance sheet. Additionally, executives were tasked with improving operating margins, while reducing fixed costs, and successfully
operating and commercializing our assets. In connection with our financial restructuring, on January 5, 2012, the former compensation and human resources committee established the 2012 Long
Term Incentive ProgramCash, or the Cash Incentive Program, for our executives and certain other members of management. The Cash Incentive Program was intended
to:
-
- provide an incentive to remain employed by us during the ongoing restructuring program;
-
- provide an incentive to assist us in successfully emerging from bankruptcy pursuant to the Plan of Reorganization; and
-
- promote our long-term growth.
Awards
earned under the Cash Incentive Program were paid out in three installments, the first upon the Effective Date, the remaining on the second and third anniversaries of the Effective Date. The
final installment
payments were made on October 1, 2014. Additional information regarding these payments can be found on the Summary Compensation Table.
48
2015 Proxy Statement
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Compensation Discussion and Analysis
Retirement Benefit Plans
Our Named Executive Officers, similar to all employees, participate in our two qualified retirement plans: the Dynegy Inc.
401(k) Plan and the Dynegy Inc. Retirement Plan. The Dynegy 401(k) Plan provides for a dollar-for-dollar match for each dollar contributed (on a pre-tax basis) up to 5% of salary (with such
elective contributions capped at $17,500 for 2014). Our matching contributions to the Dynegy 401(k) Plan vest at a rate of 50% per year of service.
The
Dynegy Inc. Retirement Plan provides a monthly benefit at retirement. The amount of the retirement benefit is based, in part, on amounts contributed by the Company to each participant's
retirement account. The contribution rate is equal to 6% of a participant's salary (with such salary capped at $225,000 for plan purposes for 2014).
Our
Named Executive Officers, who are all fully vested in the 401(k) and Retirement Plans, do not participate in any supplemental executive retirement plans.
Executive Perquisites
On an annual basis, the Compensation Committee reviews executive perquisites. For 2014, each Named Executive Officer is eligible to
receive an annual reimbursement for reasonable costs incurred for individual tax and financial planning advice up to $10,000. The total value of perquisites for each of our Named Executive Officers
represents less than 1% of their total compensation in 2014.
Employment Agreements
In 2011, the company entered into employment agreements with Mr. Flexon, Mr. Freeland, Ms. Burke, and
Ms. Callaway. This was important in order for the company to attract talented and qualified executives. In 2013, Mr. Jones entered into a similar agreement upon his employment. These
employment agreements were originally set to expire on December 31, 2014 but the Committee elected to allow them to extend, per the terms of the individual agreements, for an additional term
through December 31, 2015.
Severance and Change in Control
We have entered into arrangements and maintain plans under which specified payments and benefits would be provided to the Named
Executive Officers in connection with a change in control. The Dynegy Inc. Executive Change in Control Severance Pay Plan, as amended, or Change in Control Plan, provides for certain severance
benefits payable in the event of an involuntary termination in connection with a change in control (i.e., "double trigger"). Also, certain LTI award agreements provide for accelerated vesting
of outstanding equity-based awards in the event of a change in control. We believe these arrangements are important competitive benefits that assist in the attraction and retention of critical talent.
Please read "Executive CompensationPotential Payments Upon Termination or Change in Control" for further details on our change in control plans.
We
also maintain the Dynegy Inc. Executive Severance Pay Plan, as amended, or Executive Severance Pay Plan, that provides for payment of certain severance benefits in the event of a termination
not in connection with a change in control. We believe the Executive Severance Pay Plan is an important competitive benefit that assists in the attraction and retention of critical talent. For details
regarding the Executive Severance Pay Plan, please read "Executive CompensationPotential Payments Upon Termination or Change in ControlSeverance-Eligible Terminations."
GOVERNANCE OF OUR EXECUTIVE COMPENSATION PRACTICES
Role of Compensation Committee
The Compensation Committee has overall responsibility for reviewing and approving the principal terms of any employment, change of
control, severance, or other like agreement between the Company and its executive
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2015 Proxy Statement 49
|
Compensation Discussion and Analysis
officers.
The Compensation Committee established the overall compensation strategy and reviews such strategy at least annually for alignment with our business strategy and with similar programs
offered by our competitors to ensure compensation arrangements are designed to provide incentives that are consistent with our stakeholders of the Company but do not encourage senior executives to
take excessive risks that threaten the value of the Company.
Role of Compensation Consultant
As set forth in its charter, the Compensation Committee has the authority to retain or obtain the advice of a compensation
consultant, and shall be directly responsible for the appointment, compensation and oversight of the work of the consultant. The Committee utilized the services of Meridian in 2014 to provide
information, analyses, and advice regarding executive compensation matters
Stock Ownership Guidelines
We have established Stock Ownership Guidelines for officers to provide further alignment of interests among our executive officers
and our stockholders. These guidelines are mandatory for all members of the executive management team and other officers. Executives are required to achieve ownership levels within five years of hire
or appointment. For those executives in place at bankruptcy emergence on October 1, 2012, the five year ramp up period was reset to the emergence date. Individuals holding the following titles
are included in this group: Chief Executive Officer and President, Executive Vice President, Senior Vice President and Vice President. As of December 31, 2014 each of the Named Executive
Officers has met their required stockownership guidelines.
The
shares counted for purposes of the stock ownership guidelines include shares owned outright, unvested restricted shares, vested stock options (in-the-money), and other share-based equivalents that
may be used by Dynegy from time to time. The guidelines are expressed as a multiple of base salary and vary by level. Targets for the Named Executive Officers are as follows:
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Chief Executive Officer |
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|
5 × annual base salary |
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|
Executive Vice President |
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|
|
3 × annual base salary |
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|
Risk Analysis
The Compensation Committee annually conducts an incentive risk assessment to ensure the structure and design of our Compensation
programs are not reasonably likely to result in excessive risk taking that could have a material adverse impact on the company.
Say on Pay
At our annual meeting of stockholders held in May 2014, we received a favorable result on our Say on Pay proposal, with 95.4% of our
stockholders represented in person (through internet access) or by proxy voting to approve the compensation of our Named Executive Officers. In advance of the annual meeting, members of the management
team also proactively reached out to a number of our largest institutional stockholders to provide review highlights our executive compensation program. These discussions proved informative and helped
to ensure that our philosophy, programs and actions were consistent with our efforts to be aligned with long-term stockholder interests. The Compensation Committee believes that our stockholder
outreach efforts and the Say on Pay result provide a strong indication that a significant majority of our stockholders are satisfied with our executive compensation policies and decisions, and that
our executive compensation program effectively aligns the interests of the Named Executive Officers with the interests of our stockholders. The Compensation Committee will continue to consider the
outcomes of our Say on Pay votes when making future compensation decisions.
50
2015 Proxy Statement
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Compensation Discussion and Analysis
Potential Impact of Restatements and Ability to Claw Back Compensation Awards
The Compensation Committee has a mechanism to address any restatements, if they occur, that may impact our key financial metrics and
our financial performance. The Compensation Committee will take action, as it determines to be appropriate, with respect to bonuses or other incentive or equity compensation awards to the extent such
specified performance targets were not achieved in light of a restatement, which could include seeking to recover amounts paid. We believe this mechanism allows for remedial action to be taken if
executive compensation is awarded for achievement of financial performance that is later determined not to have been achieved and further aligns our Named Executive Officers' interests with those of
our stockholders.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for individual
compensation paid to the Chief Executive Officer and the other four highest compensated executive officers to the extent the compensation exceeds $1 million in any year. Performance-based
compensation paid pursuant to a stockholder-approved incentive plan is not subject to the Section 162(m) limitations if certain requirements are met. As part of its role, the Compensation
Committee reviews and considers the financial reporting and income tax deductibility of the compensation of our executive officers. Our policy is to utilize available tax deductions whenever
appropriate and consistent with our compensation philosophy and objectives. However, the Compensation Committee retains the discretion to provide compensation to our executive officers that may not be
fully deductible.
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|
2015 Proxy Statement 51
|
COMPENSATION AND HUMAN RESOURCES COMMITTEE REPORT
Our executive compensation program is administered and reviewed by the Compensation Committee, which consists of
Messrs. Barbas (Chairman), Kuersteiner and Stein, all of whom are independent directors as such term is defined in the NYSE and SEC Rules. The Compensation Committee has reviewed and discussed
the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Compensation Committee recommended to the
Board that the Compensation Discussion and Analysis be included in this proxy statement.
This
report is submitted by the members of the Compensation Committee of the Board as of March 2, 2015:
Paul
M. Barbas, Chairman
Richard L. Kuersteiner
Jeffrey S. Stein
COMPENSATION AND HUMAN RESOURCES COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Barbas, Kuersteiner and Stein currently serve on the Compensation Committee. None of these members is a current or
former officer or employee of Dynegy or any of its subsidiaries, is involved in any relationship requiring disclosure as an interlocking executive officer or director, or had any relationship
requiring disclosure under Item 404 of Regulation S-K.
52
2015 Proxy Statement
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|
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE FOR 2012, 2013 AND 2014
The following table sets forth certain information regarding the compensation earned by or awarded to our Named Executive Officers
for 2012, 2013 and 2014 (with information only for the years during which each individual was named a Named Executive Officer):
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Name and
Principal Position |
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Year(1) |
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|
Salary(2) |
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|
Bonus(3) |
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Stock Awards(4) |
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|
|
Option/SAR Awards(4) |
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Non-Equity Incentive Plan Comp.(5) |
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Change in Pension Value and Nonqualified Deferred Compensation Earnings(6) |
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All Other Comp.(7) |
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Total |
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Robert Flexon |
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2012 |
|
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|
$875,000 |
|
|
|
$670,833 |
|
|
|
$1,968,750 |
|
|
|
$1,968,750 |
|
|
|
$525,000 |
|
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|
$16,693 |
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|
$136,706 |
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|
$6,161,732 |
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|
President & |
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2013 |
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|
$896,154 |
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|
$670,833 |
|
|
|
$2,489,322 |
|
|
|
$750,000 |
|
|
|
$1,100,000 |
|
|
|
$17,844 |
|
|
|
$38,429 |
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|
|
$5,962,582 |
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|
Chief Executive Officer |
|
|
|
2014 |
|
|
|
$984,615 |
|
|
|
$670,833 |
|
|
|
$2,761,881 |
|
|
|
$825,000 |
|
|
|
$1,428,000 |
|
|
|
$18,520 |
|
|
|
$38,708 |
|
|
|
$6,727,557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint Freeland |
|
|
|
2012 |
|
|
|
$450,000 |
|
|
|
$210,000 |
|
|
|
$506,250 |
|
|
|
$506,250 |
|
|
|
$225,000 |
|
|
|
$16,509 |
|
|
|
$152,959 |
|
|
|
$2,066,968 |
|
|
Executive Vice President & |
|
|
|
2013 |
|
|
|
$492,308 |
|
|
|
$210,000 |
|
|
|
$829,799 |
|
|
|
$250,000 |
|
|
|
$410,000 |
|
|
|
$16,085 |
|
|
|
$30,122 |
|
|
|
$2,238,314 |
|
|
Chief Financial Officer |
|
|
|
2014 |
|
|
|
$516,923 |
|
|
|
$210,000 |
|
|
|
$690,487 |
|
|
|
$206,250 |
|
|
|
$556,920 |
|
|
|
$17,271 |
|
|
|
$30,570 |
|
|
|
$2,228,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Burke |
|
|
|
2012 |
|
|
|
$450,000 |
|
|
|
$177,000 |
|
|
|
$506,250 |
|
|
|
$506,250 |
|
|
|
$200,000 |
|
|
|
$15,318 |
|
|
|
$223,034 |
|
|
|
$2,077,852 |
|
|
Executive Vice President & |
|
|
|
2013 |
|
|
|
$471,154 |
|
|
|
$177,000 |
|
|
|
$622,330 |
|
|
|
$187,500 |
|
|
|
$435,000 |
|
|
|
$15,966 |
|
|
|
$31,863 |
|
|
|
$1,940,813 |
|
|
Chief Integration Officer |
|
|
|
2014 |
|
|
|
$496,154 |
|
|
|
$177,000 |
|
|
|
$669,573 |
|
|
|
$200,000 |
|
|
|
$513,188 |
|
|
|
$17,104 |
|
|
|
$32,696 |
|
|
|
$2,105,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine Callaway |
|
|
|
2012 |
|
|
|
$450,000 |
|
|
|
$210,000 |
|
|
|
$506,250 |
|
|
|
$506,250 |
|
|
|
$225,000 |
|
|
|
$15,246 |
|
|
|
$29,962 |
|
|
|
$1,942,708 |
|
|
Executive Vice President, |
|
|
|
2013 |
|
|
|
$471,154 |
|
|
|
$210,000 |
|
|
|
$663,862 |
|
|
|
$200,000 |
|
|
|
$410,000 |
|
|
|
$15,909 |
|
|
|
$33,575 |
|
|
|
$2,004,500 |
|
|
General Counsel & Chief
Compliance Officer |
|
|
|
2014 |
|
|
|
$491,923 |
|
|
|
$210,000 |
|
|
|
$669,573 |
|
|
|
$200,000 |
|
|
|
$508,056 |
|
|
|
$17,025 |
|
|
|
$34,416 |
|
|
|
$2,130,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry Jones |
|
|
|
2012 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Executive Vice President & |
|
|
|
2013 |
|
|
|
$347,115 |
|
|
|
$500,000 |
|
|
|
$1,794,824 |
|
|
|
$550,000 |
|
|
|
$300,000 |
|
|
|
$15,300 |
|
|
|
$32,896 |
|
|
|
$3,540,135 |
|
|
Chief Commercial Officer |
|
|
|
2014 |
|
|
|
$491,923 |
|
|
|
$ |
|
|
|
$669,573 |
|
|
|
$200,000 |
|
|
|
$508,056 |
|
|
|
$16,175 |
|
|
|
$35,280 |
|
|
|
$1,921,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- Mr. Jones
was not included as a Named Executive Officer for 2012.
- (2)
- Amounts
include salary earned for a full 12 months. Actual salary earned in any calendar year may vary from the annual base salary due to timing of
pay cycles and time of service.
- (3)
- Amounts
shown for 2012, 2013 and 2014 under Bonus, except for Mr. Jones, include amounts paid in 2012, 2013 and 2014 under the Cash Incentive
Program. The Named Executive Officers received one-third of the total amount upon the Effective Date (October 2012) and the first and second anniversary dates. For Mr. Jones, the amount for
2013 includes a cash sign-on bonus received upon commencement of employment.
- (4)
- The
amounts shown under "Stock Awards" for 2012, 2013 and 2014 reflect the aggregate grant date fair value for RSUs and, in 2013 and 2014, PSUs (using the
Monte Carlo valuation model) calculated in accordance with FASB ASC Topic 718. The amounts shown under "Option/SAR Awards" for 2012, 2013 and 2014 reflect the aggregate grand date fair value for
options (using the Black Scholes valuation model) calculated in accordance with FASB ASC Topic 718. Please read the discussion of the assumptions used in such valuation in Notes 16 and 17 of
the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2014.
- For
2012, RSUs and stock options have a three-year ratable vesting schedule, with 1/3 of each award vesting each year beginning
on October 29, 2013. For 2013, RSUs and stock options have a three-year ratable vesting schedule, with 1/3 of each award vesting each year beginning on March 18, 2014. For
2014, RSUs and stock options have a three-year ratable vesting schedule, with 1/3 of each award vesting each year beginning on March 3, 2015. The PSUs for 2013 and 2014 require
performance goals to be attained over a three-year period following the granting of the opportunity for any actual award to be earned. For the grant date fair value of the PSUs, the value reported in
the table is based on the probable outcome of the performance conditions as of the grant date using the Monte Carlo valuation model. Based on the share price at grant and assuming the maximum market
and financial performance conditions are achieved, the maximum value of the PSUs granted in fiscal year 2013, payable following completion of the 2013-2015 performance period, are: Mr. Flexon
$1,500,022, Mr. Freeland $500,023, Ms. Burke $375,005, Ms. Callaway $400,046 and Mr. Jones $1,100,017. For fiscal year 2014, payable following completion of the 2014-2016
performance period are: Mr. Flexon $2,310,001, Mr. Freeland $577,500, Ms. Burke $560,054, Ms. Callaway $560,044 and Mr. Jones $560,044.
- Please
read Compensation Discussion and Analysis2014 CompensationLong-term Incentive for a breakdown of the 2014 LTI
award values for RSUs, stock options and PSUs for each Named Executive Officer.
- (5)
- The
amounts shown under "Non-Equity Incentive Plan Compensation" for 2012, 2013 and 2014 reflect cash bonuses awarded under the STI Plan. The 2012 incentive
payments were earned in 2012 and paid in March 2013, the 2013 incentive payments were earned in 2013 and paid in March 2014 and the 2014 incentive payments were earned in 2014 and paid in March 2015.
|
|
2015 Proxy Statement 53
|
Executive Compensation
- (6)
- The
amounts shown for the Named Executive Officers reflect changes in pension value under the Retirement Plan and the Dynegy Inc. Restoration Pension
Plan, as amended, or the Restoration Pension Plan.
- (7)
- The
amounts shown as "All Other Compensation" for 2012, 2013 and 2014 are identified in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
|
|
Year |
|
|
|
Perquisites
and Other
Personal
Benefits
($)(1) |
|
|
|
Tax
Reimbursements
($)(2) |
|
|
|
401(k)
Plan
Contributions |
|
|
|
Restoration
401(k)
Savings Plan
Contributions |
|
|
|
Portable
Retirement
Plan
Contributions |
|
|
|
Restoration
Pension
Plan
Contributions |
|
|
|
Life
Insurance
Premiums |
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Flexon |
|
|
|
2012 |
|
|
|
$80,812 |
|
|
|
$25,760 |
|
|
|
$12,500 |
|
|
|
$ |
|
|
|
$15,000 |
|
|
|
$ |
|
|
|
$2,634 |
|
|
|
$136,706 |
|
|
|
|
|
|
2013 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$12,500 |
|
|
|
$ |
|
|
|
$15,300 |
|
|
|
$ |
|
|
|
$10,629 |
|
|
|
$38,429 |
|
|
|
|
|
|
2014 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$13,000 |
|
|
|
$ |
|
|
|
$15,600 |
|
|
|
$ |
|
|
|
$10,108 |
|
|
|
$38,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint Freeland |
|
|
|
2012 |
|
|
|
$89,549 |
|
|
|
$35,564 |
|
|
|
$10,385 |
|
|
|
$ |
|
|
|
$15,000 |
|
|
|
$ |
|
|
|
$2,462 |
|
|
|
$152,960 |
|
|
|
|
|
|
2013 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$9,231 |
|
|
|
$ |
|
|
|
$15,300 |
|
|
|
$ |
|
|
|
$5,591 |
|
|
|
$30,122 |
|
|
|
|
|
|
2014 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$8,846 |
|
|
|
$ |
|
|
|
$15,600 |
|
|
|
$ |
|
|
|
$6,124 |
|
|
|
$30,570 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Burke |
|
|
|
2012 |
|
|
|
$144,433 |
|
|
|
$48,639 |
|
|
|
$12,500 |
|
|
|
$ |
|
|
|
$15,000 |
|
|
|
$ |
|
|
|
$2,462 |
|
|
|
$223,034 |
|
|
|
|
|
|
2013 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$11,038 |
|
|
|
$ |
|
|
|
$15,300 |
|
|
|
$ |
|
|
|
$5,525 |
|
|
|
$31,863 |
|
|
|
|
|
|
2014 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$11,269 |
|
|
|
$ |
|
|
|
$15,600 |
|
|
|
$ |
|
|
|
$5,827 |
|
|
|
$32,696 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine Callaway |
|
|
|
2012 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$12,500 |
|
|
|
$ |
|
|
|
$15,000 |
|
|
|
$ |
|
|
|
$2,462 |
|
|
|
$29,962 |
|
|
|
|
|
|
2013 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$12,750 |
|
|
|
$ |
|
|
|
$15,300 |
|
|
|
$ |
|
|
|
$5,525 |
|
|
|
$33,575 |
|
|
|
|
|
|
2014 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$13,000 |
|
|
|
$ |
|
|
|
$15,600 |
|
|
|
$ |
|
|
|
$5,816 |
|
|
|
$34,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry Jones |
|
|
|
2012 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
2013 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$12,750 |
|
|
|
$ |
|
|
|
$15,300 |
|
|
|
$ |
|
|
|
$4,846 |
|
|
|
$32,896 |
|
|
|
|
|
|
2014 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$13,000 |
|
|
|
$ |
|
|
|
$15,600 |
|
|
|
$ |
|
|
|
$6,680 |
|
|
|
$35,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- Amounts
shown for 2012 include relocation expenses for Messrs. Flexon, Freeland and Ms. Burke in the amount of $70,812, $89,549 and $134,433,
respectively. In addition, Mr. Flexon and Ms. Burke received reimbursement for tax services per their respective employment agreements in the amount of $10,000 each. The remaining Named
Executive Officers did not receive perquisites in 2012 that exceeded the $10,000 threshold for reporting purposes. For 2013 and 2014, the Named Executive Officers did not receive perquisites that
exceeded the $10,000 threshold for reporting purposes.
- (2)
- Amounts
shown for 2012 under "Tax Reimbursements" represent tax gross-ups for the Named Executive Officers for their Perquisites and Other Personal
Benefits.
GRANTS OF PLAN-BASED AWARDS IN 2014
The following table sets forth certain information with respect to each grant of an award made to the Named Executive Officers in
2014 under the 2012 Long Term Incentive Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payments Under Non-Equity Incentive Plan Awards(1) |
|
|
|
Estimated Future Payouts
Under Equity
Incentive Plan Awards(2) |
|
|
|
All Other
Stock Awards
Number of
Shares of |
|
|
|
All Other
Option/SAR
Awards
Number of
Securities
Underlying |
|
|
|
Exercise
or Base
Price of
Option |
|
|
|
Grant Date
Fair
Value of
Stock and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
|
|
Grant Date |
|
|
|
Threshold |
|
|
|
|
Target |
|
|
|
Maximum |
|
|
|
Threshold |
|
|
|
Target |
|
|
|
Maximum |
|
|
|
Stock or
Units(3) |
|
|
|
Options/
SARs(4) |
|
|
|
SAR Awards |
|
|
|
Option/SAR
Awards(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Flexon |
|
|
|
3/3/14 |
|
|
|
$ |
|
|
|
|
1,000,000 |
|
|
|
$ |
|
|
|
25,076 |
|
|
|
50,152 |
|
|
|
100,304 |
|
|
|
57,317 |
|
|
|
139,594 |
|
|
|
$23.03 |
|
|
|
$3,586,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint Freeland |
|
|
|
3/3/14 |
|
|
|
$ |
|
|
|
|
390,000 |
|
|
|
$ |
|
|
|
6,269 |
|
|
|
12,538 |
|
|
|
25,076 |
|
|
|
14,330 |
|
|
|
34,899 |
|
|
|
$23.03 |
|
|
|
$896,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Burke |
|
|
|
3/3/14 |
|
|
|
$ |
|
|
|
|
375,000 |
|
|
|
$ |
|
|
|
6,080 |
|
|
|
12,159 |
|
|
|
24,318 |
|
|
|
13,895 |
|
|
|
33,841 |
|
|
|
$23.03 |
|
|
|
$869,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine Callaway |
|
|
|
3/3/14 |
|
|
|
$ |
|
|
|
|
371,250 |
|
|
|
$ |
|
|
|
6,080 |
|
|
|
12,159 |
|
|
|
24,318 |
|
|
|
13,895 |
|
|
|
33,841 |
|
|
|
$23.03 |
|
|
|
$869,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry Jones |
|
|
|
3/3/14 |
|
|
|
$ |
|
|
|
|
371,250 |
|
|
|
$ |
|
|
|
6,080 |
|
|
|
12,159 |
|
|
|
24,318 |
|
|
|
13,895 |
|
|
|
33,841 |
|
|
|
$23.03 |
|
|
|
$869,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- The
amounts shown represent the awards that could be earned by the Named Executive Officers under the STI Plan for 2014. Based upon Mr. Flexon's
employment agreement, target is set at 100% of base salary and target is set at 75% of base salary for Messrs. Freeland and Jones and Mses. Burke and Callaway based upon their respective
employment agreements. The actual payouts to eligible executives under the STI Plan were determined in March 2015 and are shown in the Summary Compensation Table under "Non-Equity Incentive Plan
Compensation."
- (2)
- In
March 2014, PSUs were granted under the 2012 Long Term Incentive Plan. The PSUs require performance goals to be attained over a three-year period
following the granting of the opportunity for any actual award to be earned. For the grant date fair value of the PSUs, the value reported in the table is based on the probable outcome of the
performance conditions as of the grant date, March 3, 2014, using the Monte Carlo valuation model.
54
2015 Proxy Statement
|
|
|
Executive Compensation
- (3)
- The
amounts shown under "All Other Stock Awards" for the Named Executive Officers reflect awards in the form of RSUs granted under the 2012 Long Term
Incentive Plan. Each RSU represents a contingent right to receive one share of common stock. The RSUs have a three-year ratable vesting schedule, with 1/3 of each award vesting each
year beginning on March 3, 2015.
- (4)
- The
amounts shown under "All Other Option/SAR Awards" reflect the number of shares of common stock underlying stock option awards granted to the Named
Executive Officers under the 2012 Long Term Incentive Plan. The stock options have a three-year ratable vesting schedule, with 1/3 of each award vesting each year beginning on
March 3, 2015.
- (5)
- The
amounts shown under "Grant Date Fair Value of Stock and Option Awards" reflect the grant date fair value for the RSUs, PSUs (using the Monte Carlo
valuation model) and stock options (using the Black Scholes valuation model) computed in accordance with FASB ASC Topic 718. Please read the discussion of the assumptions used in such valuation in
Notes 16 and 17 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2014.
OUTSTANDING EQUITY AWARDS AT 2014 FISCAL YEAR-END
Upon our emergence from bankruptcy and pursuant to the Plan of Reorganization, all outstanding equity awards of the Company as of the
Effective Date were cancelled. The following table sets forth certain information regarding unexercised option awards and unvested stock awards granted to each Named Executive Officer following
emergence from bankruptcy that were outstanding as of December 31, 2014. The table does not include information regarding equity based awards related to 2014 performance that were or may be
granted to the Named Executive Officers in 2015. The vesting schedules for each type of award are described in the footnotes to the table, and the vesting date for each award can be determined by
referring to the grant date for each award in the table.
|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option/SAR Awards |
|
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
|
|
Grant
Date |
|
|
|
Number of
Securities
Underlying
Unexercised
Options/SARs
Exercisable(1) |
|
|
|
Number of
Securities
Underlying
Unexercised
Options/SARs
Unexercisable(1) |
|
|
|
Option/
SAR
Exercise
Price |
|
|
|
Option/
SAR
Expiration
Date |
|
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested(2) |
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(3) |
|
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not
Vested(4) |
|
|
|
Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not
Vested(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Flexon |
|
|
|
10/29/12 |
|
|
|
182,040 |
|
|
|
91,019 |
|
|
|
$18.70 |
|
|
|
10/29/2022 |
|
|
|
35,093 |
|
|
|
$1,065,073 |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
3/18/13 |
|
|
|
33,784 |
|
|
|
67,568 |
|
|
|
$23.10 |
|
|
|
3/18/2023 |
|
|
|
43,290 |
|
|
|
$1,313,852 |
|
|
|
32,468 |
|
|
|
$985,404 |
|
|
|
|
|
|
3/3/14 |
|
|
|
|
|
|
|
139,594 |
|
|
|
$23.03 |
|
|
|
3/3/2024 |
|
|
|
57,317 |
|
|
|
$1,739,571 |
|
|
|
50,152 |
|
|
|
$1,522,113 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint Freeland |
|
|
|
10/29/12 |
|
|
|
46,810 |
|
|
|
23,405 |
|
|
|
$18.70 |
|
|
|
10/29/2022 |
|
|
|
9,024 |
|
|
|
$273,878 |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
3/18/13 |
|
|
|
11,262 |
|
|
|
22,522 |
|
|
|
$23.10 |
|
|
|
3/18/2023 |
|
|
|
14,430 |
|
|
|
$437,951 |
|
|
|
10,823 |
|
|
|
$328,478 |
|
|
|
|
|
|
3/3/14 |
|
|
|
|
|
|
|
34,899 |
|
|
|
$23.03 |
|
|
|
3/3/2024 |
|
|
|
14,330 |
|
|
|
$434,916 |
|
|
|
12,538 |
|
|
|
$380,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Burke |
|
|
|
10/29/12 |
|
|
|
46,810 |
|
|
|
23,405 |
|
|
|
$18.70 |
|
|
|
10/29/2022 |
|
|
|
9,024 |
|
|
|
$273,878 |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
3/18/13 |
|
|
|
8,446 |
|
|
|
16,892 |
|
|
|
$23.10 |
|
|
|
3/18/2023 |
|
|
|
10,822 |
|
|
|
$328,448 |
|
|
|
8,117 |
|
|
|
$246,351 |
|
|
|
|
|
|
3/3/14 |
|
|
|
|
|
|
|
33,841 |
|
|
|
$23.03 |
|
|
|
3/3/2024 |
|
|
|
13,895 |
|
|
|
$421,713 |
|
|
|
12,159 |
|
|
|
$369,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine Callaway |
|
|
|
10/29/12 |
|
|
|
46,810 |
|
|
|
23,405 |
|
|
|
$18.70 |
|
|
|
10/29/2022 |
|
|
|
9,024 |
|
|
|
$273,878 |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
3/18/13 |
|
|
|
9,010 |
|
|
|
18,018 |
|
|
|
$23.10 |
|
|
|
3/18/2023 |
|
|
|
11,544 |
|
|
|
$350,360 |
|
|
|
8,659 |
|
|
|
$262,801 |
|
|
|
|
|
|
3/3/14 |
|
|
|
|
|
|
|
33,841 |
|
|
|
$23.03 |
|
|
|
3/3/2024 |
|
|
|
13,895 |
|
|
|
$421,713 |
|
|
|
12,159 |
|
|
|
$369,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry Jones |
|
|
|
4/1/13 |
|
|
|
23,759 |
|
|
|
47,518 |
|
|
|
$24.12 |
|
|
|
4/1/2023 |
|
|
|
30,404 |
|
|
|
$922,761 |
|
|
|
22,803 |
|
|
|
$692,071 |
|
|
|
|
|
|
3/3/14 |
|
|
|
|
|
|
|
33,841 |
|
|
|
$23.03 |
|
|
|
3/3/2024 |
|
|
|
13,895 |
|
|
|
$421,713 |
|
|
|
12,159 |
|
|
|
$369,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- Stock
options have a three-year ratable vesting schedule, with 1/3 of each award vesting each year.
- (2)
- RSUs
have a three-year ratable vesting schedule, with 1/3 of each award vesting each year.
- (3)
- The
market value of the RSUs and PSUs (at "target" level) is based on the closing market price of our common stock on December 31, 2014 of $30.35.
- (4)
- The
PSUs require performance goals to be attained over a three-year period following the granting of the opportunity for any actual award to be earned. The
PSUs are payable, if performance criteria are met, in common stock.
|
|
2015 Proxy Statement 55
|
Executive Compensation
OPTION EXERCISES AND STOCK VESTED IN 2014
The following table sets forth certain information regarding the exercise of options and the vesting of stock awards by each Named
Executive Officer during 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
|
|
Number of Shares
Acquired on
Exercise (#) |
|
|
|
Value Realized on
Exercise ($) |
|
|
|
Number of Shares
Acquired on
Vesting(1) (#) |
|
|
|
Value Realized on
Vesting ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Flexon |
|
|
|
|
|
|
|
$ |
|
|
|
56,740 |
|
|
|
$1,539,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint Freeland |
|
|
|
|
|
|
|
$ |
|
|
|
16,240 |
|
|
|
$436,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Burke |
|
|
|
|
|
|
|
$ |
|
|
|
14,436 |
|
|
|
$392,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine Callaway |
|
|
|
|
|
|
|
$ |
|
|
|
14,797 |
|
|
|
$401,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry Jones |
|
|
|
|
|
|
|
$ |
|
|
|
15,202 |
|
|
|
$377,314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- Number
of shares acquired are pre-tax and do not account for shares withheld to pay taxes.
PENSION BENEFITS
The following table sets forth certain information with respect to the Retirement Plan and Restoration Pension Plan, except as
otherwise noted, as they provide for payment at, following, or in connection with retirement for the Named Executive Officers as of December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
|
|
Plan Name |
|
|
|
Number of
Years
Credited
Service(1) |
|
|
|
Present Value of
Accumulated
Benefit |
|
|
|
Payments
During Last
Fiscal Year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Flexon |
|
|
|
Retirement Plan |
|
|
|
3.48 |
|
|
|
$63,718 |
|
|
|
|
|
|
|
|
|
|
Restoration Pension Plan |
|
|
|
|
|
|
|
$12,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint Freeland |
|
|
|
Retirement Plan |
|
|
|
3.49 |
|
|
|
$61,703 |
|
|
|
|
|
|
|
|
|
|
Restoration Pension Plan |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Burke |
|
|
|
Retirement Plan |
|
|
|
3.34 |
|
|
|
$57,112 |
|
|
|
|
|
|
|
|
|
|
Restoration Pension Plan |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine Callaway |
|
|
|
Retirement Plan |
|
|
|
3.27 |
|
|
|
$54,931 |
|
|
|
|
|
|
|
|
|
|
Restoration Pension Plan |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry Jones |
|
|
|
Retirement Plan |
|
|
|
1.75 |
|
|
|
$31,475 |
|
|
|
|
|
|
|
|
|
|
Restoration Pension Plan |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- Dynegy's
allocations to the Retirement Plan for the PRB component of that plan vest at a rate of 33%, 67% and 100% after completion of each year of service
over three years. Our allocations to the Restoration Pension Plan vested at the same rate as under the PRB component of the Retirement Plan. Effective January 1, 2012, participation in the
Restoration Pension Plan was frozen, and benefit accruals were suspended.
Our
Named Executive Officers are eligible for qualified pension benefits under the Retirement Plan. The pension benefit is based on the PRB portion of the Retirement Plan, which provides a defined
benefit that grows each year at a variable rate (30-year Treasury rate). This benefit, which was introduced in 2001, provides an annual contribution of 6% of each eligible employee's, including each
Named Executive Officer's, salary, capped at $260,000 for 2014. Our Named Executive Officers were eligible in 2011 to participate in the Restoration Pension Plan, which is an unfunded, nonqualified
plan designed to provide an allocation or benefit to certain employees that are highly compensated and whose company pension contributions are limited under certain Internal Revenue Service, or IRS,
requirements for qualified plans. Under the Restoration Pension Plan the allocations or benefits were intended to supplement or make up for what affected employees would have received under the
Retirement Plan but for the IRS limitations. The participation in the Restoration Pension
56
2015 Proxy Statement
|
|
|
Executive Compensation
Plan
was frozen, effective for periods on and after January 1, 2012, and benefit accruals have also been suspended.
The
present values of accumulated benefits payable to each of the Named Executive Officers under the Retirement Plan and Restoration Pension Plan were determined using assumptions consistent with
those used in Note 17 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2014.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
We have entered into certain employment agreements and maintain certain plans, as described below, which require us to provide
specified payments and benefits to our Named Executive Officers as a result of severance eligible events, a change in control, retirement, death, and disability.
Employment Agreements
Robert Flexon. The initial term of Mr. Flexon's employment commenced on July 11, 2011 and ended on December 31, 2014.
Mr. Flexon's employment agreement includes automatic one-year renewals commencing on December 31, 2014, unless either party gives notice of nonrenewal at least 90 days prior to
any such renewal date. On December 31, 2014, Mr. Flexon's employment agreement automatically renewed for an additional year. His base salary was initially set at $875,000 annually,
subject to review by the Board from time to time for increases. He participates in our STI Plan with a target award of 100% of his base salary.
Furthermore,
Mr. Flexon is eligible to receive additional annual award grants pursuant to our LTI programs and he participates in our other employee benefit plans and programs.
Mr. Flexon is entitled to participate in the Executive Severance Pay Plan and the Change in Control Plan; provided that, to the extent he is eligible to receive severance payable under the
Executive Severance Pay Plan, the amount payable to Mr. Flexon is increased by an amount equal to two times the current target award as in effect immediately prior to the date of the
termination. If Mr. Flexon is terminated for any reason as described in his employment agreement, we are obligated to pay or provide to Mr. Flexon (or his estate, if applicable) in a
lump sum within 30 days following such termination, or at such other time prescribed by any applicable plan: (1) any base salary payable to him pursuant to the agreement, accrued up to
and including the date on which Mr. Flexon's employment terminates; (2) any employee benefits to which he is entitled upon termination of his employment in accordance with the terms and
conditions of the applicable plans; (3) reimbursement for any unreimbursed business expenses incurred prior to his date of termination; and (4) payment for accrued but unused vacation
time as of the date of his termination, in accordance with our policies.
Clint Freeland. The initial term of Mr. Freeland's employment commenced on July 5, 2011 and ended on December 31, 2014.
Mr. Freeland's employment agreement includes automatic one-year renewals commencing on December 31, 2014, unless either party gives notice of nonrenewal at least 90 days prior to
any such renewal date. On December 31, 2014, Mr. Freeland's employment agreement automatically renewed for an additional year. His base salary was initially set at $450,000 annually,
subject to review from time to time for increases. He participates in our STI Plan with a target award of 75% of his base salary.
Furthermore,
Mr. Freeland is eligible to receive additional annual award grants pursuant to our LTI programs and he participates in our other employee benefit plans and programs.
Mr. Freeland is entitled to participate in the Executive Severance Pay Plan and the Change in Control Plan; provided that, to the extent he is eligible to receive severance payable under the
Executive Severance Pay Plan, the amount payable to Mr. Freeland is increased by an amount equal to two times the current target award as in effect immediately prior to the date of the
termination. Also, for purposes of the Executive Severance Pay Plan, Mr. Freeland will be entitled to 24 months of base pay as severance pay. If Mr. Freeland is terminated for any
reason as described in his employment agreement, we are obligated to pay or provide to Mr. Freeland (or his estate, if applicable) in a lump sum within 30 days following such
termination, or at such other time prescribed by any applicable plan: (1) any base salary payable to him pursuant to the agreement, accrued up to and including the date on which
|
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2015 Proxy Statement 57
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Executive Compensation
Mr. Freeland's
employment terminates; (2) any employee benefits to which he is entitled upon termination of his employment in accordance with the terms and conditions of the applicable
plans; (3) reimbursement for any unreimbursed business expenses incurred prior to his date of termination; and (4) payment for accrued but unused vacation time as of the date of his
termination, in accordance with our policies.
Carolyn Burke. The initial term of Ms. Burke's employment commenced on August 30, 2011 and ended on December 31, 2014.
Ms. Burke's employment agreement includes automatic one-year renewals commencing on December 31, 2014, unless either party gives notice of nonrenewal at least 90 days prior to any
such renewal date. On December 31, 2014, Ms. Burke's employment agreement automatically renewed for an additional year. Her base salary was initially set at $450,000 annually, subject to
review from time to time for increases. She participates in our STI Plan with a target award of 75% of her base salary.
Furthermore,
Ms. Burke is eligible to receive additional annual award grants pursuant to our LTI programs and she participates in our other employee benefit plans and programs. Ms. Burke
is entitled to participate in the Executive Severance Pay Plan and the Change in Control Plan; provided that, to the extent she is eligible to receive severance payable under the Executive Severance
Pay Plan, the amount payable to Ms. Burke is increased by an amount equal to two times the current target award as in effect immediately prior to the date of the termination. Also, for purposes
of the Executive Severance Pay Plan, Ms. Burke will be entitled to 24 months of base pay as severance pay. If Ms. Burke is terminated for any reason as described in her employment
agreement, we are obligated to pay or provide to Ms. Burke (or her estate, if applicable) in a lump sum within 30 days following such termination, or at such other time prescribed by any
applicable plan: (1) any
base salary payable to her pursuant to the agreement, accrued up to and including the date on which Ms. Burke's employment terminates; (2) any employee benefits to which she is entitled
upon termination of her employment in accordance with the terms and conditions of the applicable plans; (3) reimbursement for any unreimbursed business expenses incurred prior to her date of
termination; and (4) payment for accrued but unused vacation time as of the date of her termination, in accordance with our policies.
Catherine Callaway. The initial term of Ms. Callaway's employment commenced on September 26, 2011 and ended on December 31,
2014. Ms. Callaway's employment agreement includes automatic one-year renewals commencing on December 31, 2014, unless either party gives notice of nonrenewal at least 90 days
prior to any such renewal date. On December 31, 2014, Ms. Callaway's employment agreement automatically renewed for an additional year. Her base salary was initially set at $450,000
annually, subject to review from time to time for increases. She participates in our STI Plan with a target award of 75% of her base salary.
Furthermore,
Ms. Callaway is eligible to receive additional annual award grants pursuant to our LTI programs and she participates in our other employee benefit plans and programs.
Ms. Callaway is entitled to participate in the Executive Severance Pay Plan and the Change in Control Plan; provided that, to the extent she is eligible to receive severance payable under the
Executive Severance Pay Plan, the amount payable to Ms. Callaway is increased by an amount equal to two times the current target award as in effect immediately prior to the date of the
termination. Also, for purposes of the Executive Severance Pay Plan, Ms. Callaway will be entitled to 24 months of base pay as severance pay. If Ms. Callaway is terminated for any
reason as described in her employment agreement, we are obligated to pay or provide to Ms. Callaway (or her estate, if applicable) in a lump sum within 30 days following such
termination, or at such other time prescribed by any applicable plan: (1) any base salary payable to her pursuant to the agreement, accrued up to and including the date on which
Ms. Callaway's employment terminates; (2) any employee benefits to which she is entitled upon termination of her employment in accordance with the terms and conditions of the applicable
plans; (3) reimbursement for any unreimbursed business expenses incurred prior to her date of termination; and (4) payment for accrued but unused vacation time as of the date of her
termination, in accordance with our policies.
Henry Jones. The initial term of Mr. Jones employment commenced on April 1, 2013 and ended on December 31, 2014.
Mr. Jones' employment agreement includes automatic one-year renewals commencing on December 31, 2014, unless either party gives notice of nonrenewal at least 90 days prior to such
renewal date. On December 31, 2014, Mr. Jones' employment agreement automatically renewed for an additional year.
58
2015 Proxy Statement
|
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Executive Compensation
His
base salary was initially set at $475,000 annually, subject to review from time to time for increases, and a sign-on bonus consisting of a one-time lump-sum cash payment of $500,000. He
participates in our STI Plan with a target award of 75% of his base salary. He received a LTI award in the amount of $2,200,000 which was converted on his employment commencement date in the following
percentages: 50% as RSUs; 25% in the form of non-qualified stock options; and 25% in the form of PSUs.
Furthermore,
Mr. Jones is eligible to receive additional annual award grants pursuant to our LTI programs and he participates in our other employee benefit plans and programs. Mr. Jones
is entitled to participate in the Executive Severance Pay Plan and the Change in Control Plan; provided that, to the extent he is eligible to receive severance payable under the Executive Severance
Pay Plan, the amount payable to Mr. Jones is increased by an amount equal to two times the current target award as in effect immediately prior to the date of the termination. Also, for purposes
of the Executive Severance Pay Plan, Mr. Jones will be entitled to 24 months of base pay as severance pay. If Mr. Jones is terminated for any reason as described in his employment
agreement, we are obligated to pay or provide to Mr. Jones (or his estate, if applicable) in a lump sum within 30 days following such termination, or at such other time prescribed by any
applicable plan: (1) any base salary payable to him pursuant to the agreement, accrued up to and including the date on which Mr. Jones's employment terminates; (2) any employee
benefits to which he is entitled upon termination of his employment in accordance with the terms and conditions of the applicable plans; (3) reimbursement for any unreimbursed business expenses
incurred prior to his date of termination; and (4) payment for accrued but unused vacation time as of the date of his termination, in accordance with our policies.
Voluntary Resignation and Termination for Cause
Except as otherwise described under "Severance Eligible Terminations" and "Change in Control," our Named Executive Officers are not
entitled to payments or benefits in connection with a voluntary resignation or termination for cause, other than payments for amounts due before such termination. Under our company policy applicable
to all employees, a Named Executive Officer terminated under such circumstances would be entitled to vacation pay accrued up to the month of termination. A Named Executive Officer would be able to
exercise any options vested before the date of termination upon termination for cause and for a 90-day period after the date of termination upon a voluntary resignation, or through the end of the
option term, if less. Vested options that were not exercised before the date of termination, in the case of termination for cause, or before the end of the 90-day period, or end of the option term if
less, in the case of voluntary resignation, unvested options, RSUs and PSUs would all be forfeited as a result of termination in accordance with the applicable award agreement.
Severance Eligible Terminations
Any outstanding stock options, RSUs, phantom stock units, PSUs and other equity based awards previously granted to our executives
will vest based upon the applicable LTI award agreement.
In
addition, pursuant to our Executive Severance Pay Plan, our executives are entitled to payment of severance benefits if their employment is terminated due to a reduction in work force, a position
elimination or an office closing, or an involuntary termination without cause or upon a "good reason" termination. A good reason termination is defined as a voluntary resignation following a material
reduction in base salary. Severance benefits under the Executive Severance Pay Plan, which are payable in a lump sum, include:
-
- severance pay equal to one month of base pay for each full, completed year of service with us and a pro-rated amount for each partial
year of service, subject to the following requirements:
-
- for the Chief Executive Officer, 24 months of base pay;
-
- for any Executive Vice President, 12 months of base pay;
-
- for any Senior Vice President, minimum nine months and a maximum of 12 months of base pay; and
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2015 Proxy Statement 59
|
Executive Compensation
-
- for any Vice President or Managing Director, minimum six months and a maximum of 12 months of base pay;
-
- continued participation in our group health care plan that provides medical and dental coverage for a period of time equal to the
number of months of base pay such executive receives under the Executive Severance Pay Plan, provided the executive continues to pay premiums at active employee rates, with such coverage ending
immediately upon the executive obtaining new employment and eligibility for similar coverage; and
-
- outplacement assistance benefits, as determined by the plan administrator, for a period of time equal to the minimum number of months
of base pay such executive is entitled to receive under the Executive Severance Pay Plan (but in any event not beyond the end of the second calendar year following the calendar year in which the
executive terminated employment), with such benefits paid directly to the outplacement assistance provider and not to the executive in a lump sum.
The
foregoing benefits may be subject to the following material conditions or obligations:
-
- execution and performance of a confidentiality and nondisparagement agreement; and
-
- execution and performance of a release and waiver of liability agreement with respect to his or her employment and termination.
Change in Control
In the event of a change in control or Corporate Change, the RSUs and option awards granted under the 2012 Long Term Incentive Plan
require a double trigger, both the occurrence of a Corporate Change and an involuntary termination, to vest. For PSUs, upon a Corporate Change, the Name Executive Officers would be entitled to receive
payment as prescribed by the award agreement regardless of whether the Named Executive Officer is terminated.
In
addition, each of our executives is entitled to severance benefits if, no earlier than 60 days before and in connection with or within two years after a "change in control," such executive
is subject to an "involuntary termination," as defined in the Change in Control Plan. In general, such an executive experiences an "involuntary termination" if such
executive:
-
- is terminated without cause; or
-
- terminates for "good reason," generally meaning he or she suffers a material reduction in authority or duties, a material reduction in
total compensation or relocation to a location 50 miles or more from the previous principal employment location.
Severance
benefits under the Change in Control Plan include:
-
- a lump sum cash payment equal to:
-
- for the Chief Executive Officer or Chief Operating Officer, 2.99 times such executive's "compensation," which is defined in the Change
in Control Plan as the sum of any covered executive's (1) annual base salary based on the greatest rate in effect (a) immediately prior to the "change in control," (b) sixty days
prior to the date of such executive's involuntary termination or (c) as of the date of such executive's involuntary termination and (2) target cash bonus under our STI Plan, for
(a) the fiscal year in which the "change in control" occurs, (b) any fiscal year beginning after the fiscal year in which the "change in control" occurs and before the fiscal year in
which such executive's involuntary termination occurs or (c) the fiscal year in which such executive's involuntary termination occurs, whichever is greatest;
-
- for any Executive Vice President (other than the Chief Operating Officer), 2.50 times such executive's compensation;
-
- for any Senior Vice President, 2.00 times such executive's compensation;
-
- for any Vice President, 1.50 times such executive's compensation; or
60
2015 Proxy Statement
|
|
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Executive Compensation
-
- for any Managing Director, 1.00 times such executive's compensation;
-
- a lump sum cash payment equal to the aggregate target annual incentive compensation under any applicable STI Plan for the fiscal year
during which such involuntary termination of employment occurs (determined as if all applicable goals and targets had been satisfied in full), pro-rated to the date of such executive's termination,
plus the aggregate target annual incentive compensation under any applicable STI Plan earned but not yet paid (if any) for the fiscal year prior to the fiscal year during which the involuntary
termination occurs;
-
- all medical, dental, vision and life insurance benefits maintained for such executive as of the termination date, contingent upon
continued payment of premiums by such executive at a cost that is no greater than the lesser of the cost of such coverage paid by such executive immediately prior to the date of the
(a) executive's involuntary termination or (b) the "change in control" for a period equal to (1) 36 months from termination for the Chief Executive Officer,
(2) 30 months from termination for any Executive Vice President, (3) 24 months from termination for any Senior Vice President, (4) 18 months from termination
for any Vice President, and (5) 12 months from termination for any Managing Director;
-
- benefits resulting from a change of control would be cut back if doing so would result in greater after-tax proceeds to an executive
absent such cut back "Best Net provision". Otherwise, the executive would receive payment of all change of control related benefits and would be responsible for paying any excise tax incurred under
Internal Revenue Code section 280(G); and
-
- outplacement assistance benefits at least equivalent to those that would have been provided to the Named Executive Officer before the
"change in control" (but in any event not beyond the end of the second calendar year following the calendar year in which the executive terminated employment), with such benefits paid directly to the
outplacement assistance provider and not to the executive in a lump sum.
The
foregoing benefits may be subject to the following material conditions or obligations:
-
- execution and performance of a confidentiality and nondisparagement agreement;
-
- execution and performance of a non-solicitation agreement for a period of 24 months; and
-
- execution and performance of a release and waiver of liability agreement with respect to his or her employment and termination.
Retirement
As of December 31, 2014, none of our Named Executive Officers have reached eligibility age for payments upon retirement.
Disability or Death
All of our employees may elect to participate in our disability policy, and any participating employee would be entitled to long-term
disability benefits under such disability policy if he or she paid any required premiums. All of our Named Executive Officers have elected to participate in our disability policy. Under such policy,
all employees at the level of Vice President or above are entitled to 12 months of the monthly base salary that is in effect on the date that the employee is determined to be disabled.
Additionally, employees at the level of Vice President or above are also provided with additional basic life insurance coverage as supplemental life insurance equal to 12 months of monthly base
salary.
Further,
in the event of death, the medical, dental and vision benefits that we maintained for the deceased employee at the level of Vice President or above and his or her family would be maintained
for 12 months after the date of death, provided that such employee's covered dependents continue to pay the required premiums. Such employee's Dynegy 401(k) Plan distributions and Retirement
Plan benefits would generally be paid to his or her beneficiary. Health benefits in the event of disability vary depending on the type of disability.
|
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2015 Proxy Statement 61
|
Executive Compensation
In
addition, each Named Executive Officer's equity based awards would vest upon death or disability in accordance with the applicable LTI award agreement.
Potential Payments and Benefits
The following tables describe the estimated potential payments we would have been required to make to our Named Executive Officers
under the severance and change in control plans, as applicable, upon termination of their employment under various circumstances. The following assumptions and general principles apply with respect to
these tables:
-
- The amounts shown assume the applicable termination event took place on December 31, 2014, the last business day of the year;
accordingly, values associated with LTI awards made in March 2015 are not included;
-
- The price per share used to calculate the value of the equity based payments is the closing price of our common stock on
December 31, 2014 of $30.35;
-
- The amounts shown as "Base salary" under the "Change in Control" column are the lump sum cash payments described as annual
compensation under "Change in Control";
-
- The amounts shown for "Medical, dental and vision benefits" under the "Severance eligible terminations" column assume that the
applicable Named Executive Officer continued to participate in our group health care for the maximum period of time permitted for such Named Executive Officer under the Executive Severance Pay Plan;
and
-
- The amounts shown for "Accidental death & dismemberment insurance proceeds" under the "Disability" column represent the maximum
payment available under the applicable accidental death and disability policy. The actual value could be lower depending on the type of disability. Under the "Death" column is the maximum payment if
death occurred from an accident covered under the applicable accidental death and disability policy.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
Resignation /
For Cause
Termination(1) |
|
|
|
Severance-
Eligible
Termination(2) |
|
|
|
|
Change in
Control(2) |
|
|
|
|
Disability |
|
|
|
|
Death |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Flexon |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary |
|
|
|
$ |
|
|
|
$2,000,000 |
|
|
|
|
$5,980,000 |
|
|
|
|
$1,000,000 |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term incentive bonus |
|
|
|
|
|
|
|
2,000,000 |
|
|
|
|
1,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested/accelerated stock options |
|
|
|
2,365,700 |
|
|
|
4,937,767 |
|
|
|
|
4,937,767 |
|
|
|
|
4,937,767 |
|
|
|
|
4,937,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated restricted stock units |
|
|
|
|
|
|
|
4,118,495 |
|
|
|
|
4,118,495 |
|
|
|
|
4,118,495 |
|
|
|
|
4,118,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated performance units(3) |
|
|
|
|
|
|
|
1,006,671 |
|
|
|
|
2,507,517 |
|
|
|
|
2,507,517 |
|
|
|
|
2,507,517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incremental non-qualified pension |
|
|
|
12,414 |
|
|
|
12,414 |
|
|
|
|
12,414 |
|
|
|
|
12,414 |
|
|
|
|
12,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical, dental and vision benefits |
|
|
|
|
|
|
|
30,910 |
|
|
|
|
46,364 |
|
|
|
|
|
|
|
|
|
30,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accidental death & dismemberment insurance proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000,000 |
|
|
|
|
2,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Out-placement services |
|
|
|
|
|
|
|
20,000 |
|
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
$2,378,114 |
|
|
|
$14,126,257 |
|
|
|
|
$18,622,558 |
|
|
|
|
$14,576,193 |
|
|
|
|
$15,607,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62
2015 Proxy Statement
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|
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Executive Compensation
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
Resignation /
For Cause
Termination(1) |
|
|
|
Severance-
Eligible
Termination(2) |
|
|
|
|
Change in
Control(2) |
|
|
|
|
Disability |
|
|
|
|
Death |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint Freeland |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary |
|
|
|
$ |
|
|
|
$1,040,000 |
|
|
|
|
$2,275,000 |
|
|
|
|
$520,000 |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term incentive bonus |
|
|
|
|
|
|
|
780,000 |
|
|
|
|
390,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested/accelerated stock options |
|
|
|
626,986 |
|
|
|
1,318,399 |
|
|
|
|
1,318,399 |
|
|
|
|
1,318,399 |
|
|
|
|
1,318,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated restricted stock units |
|
|
|
|
|
|
|
1,146,744 |
|
|
|
|
1,146,744 |
|
|
|
|
1,146,744 |
|
|
|
|
1,146,744 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated performance units(3) |
|
|
|
|
|
|
|
300,564 |
|
|
|
|
709,006 |
|
|
|
|
709,006 |
|
|
|
|
709,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incremental non-qualified pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical, dental and vision benefits |
|
|
|
|
|
|
|
15,455 |
|
|
|
|
38,637 |
|
|
|
|
|
|
|
|
|
15,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,040,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accidental death & dismemberment insurance proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,040,000 |
|
|
|
|
1,040,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Out-placement services |
|
|
|
|
|
|
|
20,000 |
|
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
$626,986 |
|
|
|
$4,621,162 |
|
|
|
|
$5,897,786 |
|
|
|
|
$4,734,149 |
|
|
|
|
$5,269,604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Burke |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary |
|
|
|
$ |
|
|
|
$1,000,000 |
|
|
|
|
$2,187,500 |
|
|
|
|
$500,000 |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term incentive bonus |
|
|
|
|
|
|
|
750,000 |
|
|
|
|
375,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested/accelerated stock options |
|
|
|
606,570 |
|
|
|
1,249,421 |
|
|
|
|
1,249,421 |
|
|
|
|
1,249,421 |
|
|
|
|
1,249,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated restricted stock units |
|
|
|
|
|
|
|
1,024,039 |
|
|
|
|
1,024,039 |
|
|
|
|
1,024,039 |
|
|
|
|
1,024,039 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated performance units(3) |
|
|
|
|
|
|
|
247,469 |
|
|
|
|
615,377 |
|
|
|
|
615,377 |
|
|
|
|
615,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incremental non-qualified pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical, dental and vision benefits |
|
|
|
|
|
|
|
5,219 |
|
|
|
|
13,048 |
|
|
|
|
|
|
|
|
|
5,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accidental death & dismemberment insurance proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000 |
|
|
|
|
1,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Out-placement services |
|
|
|
|
|
|
|
20,000 |
|
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
$606,570 |
|
|
|
$4,296,148 |
|
|
|
|
$5,484,385 |
|
|
|
|
$4,388,837 |
|
|
|
|
$4,894,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine Callaway |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary |
|
|
|
$ |
|
|
|
$990,000 |
|
|
|
|
$2,165,625 |
|
|
|
|
$495,000 |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term incentive bonus |
|
|
|
|
|
|
|
742,500 |
|
|
|
|
371,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested/accelerated stock options |
|
|
|
610,659 |
|
|
|
1,261,674 |
|
|
|
|
1,261,674 |
|
|
|
|
1,261,674 |
|
|
|
|
1,261,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated restricted stock units |
|
|
|
|
|
|
|
1,045,952 |
|
|
|
|
1,045,952 |
|
|
|
|
1,045,952 |
|
|
|
|
1,045,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated performance units(3) |
|
|
|
|
|
|
|
258,287 |
|
|
|
|
631,826 |
|
|
|
|
631,826 |
|
|
|
|
631,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incremental non-qualified pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical, dental and vision benefits |
|
|
|
|
|
|
|
4,997 |
|
|
|
|
12,493 |
|
|
|
|
|
|
|
|
|
4,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
990,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accidental death & dismemberment insurance proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
990,000 |
|
|
|
|
990,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Out-placement services |
|
|
|
|
|
|
|
20,000 |
|
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
$610,659 |
|
|
|
$4,323,410 |
|
|
|
|
$5,508,820 |
|
|
|
|
$4,424,452 |
|
|
|
|
$4,924,449 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Proxy Statement 63
|
Executive Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
Resignation /
For Cause
Termination(1) |
|
|
|
Severance-
Eligible
Termination(2) |
|
|
|
|
Change in
Control(2) |
|
|
|
|
Disability |
|
|
|
|
Death |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry Jones |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary |
|
|
|
$ |
|
|
|
$990,000 |
|
|
|
|
$2,165,625 |
|
|
|
|
$495,000 |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term incentive bonus |
|
|
|
|
|
|
|
742,500 |
|
|
|
|
371,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested/accelerated stock options |
|
|
|
148,019 |
|
|
|
691,772 |
|
|
|
|
691,772 |
|
|
|
|
691,772 |
|
|
|
|
691,772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated restricted stock units |
|
|
|
|
|
|
|
1,344,475 |
|
|
|
|
1,344,475 |
|
|
|
|
1,344,475 |
|
|
|
|
1,344,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated performance units(3) |
|
|
|
|
|
|
|
505,532 |
|
|
|
|
1,061,097 |
|
|
|
|
1,061,097 |
|
|
|
|
1,061,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incremental non-qualified pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical, dental and vision benefits |
|
|
|
|
|
|
|
30,910 |
|
|
|
|
46,364 |
|
|
|
|
|
|
|
|
|
30,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
990,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accidental death & dismemberment insurance proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
990,000 |
|
|
|
|
990,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Out-placement services |
|
|
|
|
|
|
|
20,000 |
|
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
$148,019 |
|
|
|
$4,325,189 |
|
|
|
|
$5,700,583 |
|
|
|
|
$4,582,344 |
|
|
|
|
$5,108,254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- The
Named Executive Officers would be able to exercise any options vested before the day of termination for cause or for a 90-day period after the date of
termination upon a voluntary resignation, or through the end of the option term, if less.
- (2)
- The
Named Executive Officers are eligible to participate in the Executive Severance Pay Plan and the Change in Control Plan. Under the Executive Severance
Pay Plan and/or per the terms of the respective Employment Agreements, in the event of an Involuntary Termination occurs each is eligible to receive two times his or her base salary and two times his
or her target annual bonus under the applicable STI Plan. The Executive Severance Pay Plan also provides for medical, dental, and vision benefits at the active employee rates for 24 months.
Under the Change in Control Plan, in the event of an Involuntary Termination, Mr. Flexon is eligible to receive a severance payment equal to 2.99 times his annual base salary plus annual target
bonus under the STI Plan and 36 months of medical, dental, and vision benefits coverage at the active employee rates. Messrs. Freeland and Jones and Mses. Burke and Callaway are eligible
to receive a severance payment equal to 2.50 times their annual base salary plus annual target bonus under the STI Plan and 30 months of medical, dental, and vision benefits coverage at the
active employee rates. In the event of a change in control and subsequent Involuntary Termination, the Named Executive Officers will also have accelerated vesting treatment on the Incremental
non-qualified pension. Outplacement services are made available under both plans for all eligible employees.
- (3)
- Under
the PSU award agreement, the Name Executive Officers would be entitled to a pro-rata vesting of the PSUs at the "target" level of the award for an
involuntary termination without cause. Upon a Corporate Change, each Name Executive Officer would be entitled to receive payment as prescribed by the award agreement regardless of whether he or she is
terminated. For purposes of this table, the value for a corporate change was calculated using the "target" level.
64
2015 Proxy Statement
|
|
|
PROPOSAL 2APPROVAL OF COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
A proposal will be presented at the meeting asking stockholders to approve on an advisory basis the compensation of Dynegy's Named
Executive Officers as described in this proxy statement. Please see our "Compensation Discussion and Analysis" section beginning on page 36 for a discussion of our compensation program for our Named
Executive Officers.
Consistent
with the stated philosophy and objectives of our executive compensation programs as described in our Compensation Discussion and Analysis, the structure of our compensation program reflects
the following key objectives:
-
- Pay for PerformanceOur total compensation for each individual provides
reasonable upside potential for exceptional performance; as well as risk of no payment, with respect to incentive compensation, when performance objectives are not achieved. Our variable pay programs
are designed as forward-looking incentives that reflect individual and corporate performance during the year under review.
-
- Alignment with Stockholder ValueOur LTI awards encourage share price
improvement and a strong link to stockholder interests. Our compensation programs are designed and administered to maximize stockholder value.
-
- Market CompetivenessOur overall compensation strategy recognizes that
attraction and retention of key talent is critical to the attainment of our stated business goals and objectives and to the creation of value for our stockholders.
Key Features of our Executive Compensation Program
|
|
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|
|
|
|
|
|
|
We Do... |
|
|
|
We Do Not... |
|
|
|
|
|
ü Pay for Performance via a compensation structure that includes a competitive base salary and performance based STI and LTI awards that are aligned with
stockholder interests ü Provide LTI that include Performance Share Units based on Total Stockholder Return ("TSR") and cap these awards when TSR
outperforms the peer group but is negative ü Have change in control cash severance benefits that are subject to "double trigger" provisions which require both
the occurrence of a change in control event and involuntary termination ü Enforce stock ownership requirements for all officers that require
attainment of ownership levels before equity transactions can occur ü Have an independent compensation consultant that reports directly to the
Compensation Committee ü Conduct an annual incentive risk assessment to ensure that the structure and design of our compensation programs are not
reasonably likely to result in excessive risk-taking that could have a material adverse impact on the Company ü Have a claw-back mechanism in place for
incentive awards ü Establish a performance-based bonus pool |
|
|
|
× Offer supplemental executive retirement plan benefits × Engage in option backdating or re-pricing × Permit hedging or
pledging of Company Stock by Directors or Officers × Provide excise tax assistance upon a change in control × Provide any material perquisites, other than reimbursement for financial planning and tax
advice × Encourage excessive risk or inappropriate risk taking though our incentive programs; our plans focus on aligning our compensation policies with the long-term interests of our
stockholders × Guarantee bonuses |
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|
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|
2015 Proxy Statement 65
|
Proposal 2Approval of Compensation of Our Named Executive Officers
The
advisory vote on following resolution is not intended to address any specific element of compensation; rather, it relates to the overall compensation of the Company's Named Executive Officers, as
well as the philosophy, policies and practices described in this proxy statement. You have the opportunity to vote for, against or abstain from voting on the following resolution relating to executive
compensation:
THEREFORE, BE IT RESOLVED, that the stockholders of Dynegy approve, on an advisory basis, the compensation of Dynegy's Named Executive Officers listed
in the 2014 Summary Compensation Table included in the proxy statement for this meeting, as such compensation is disclosed pursuant to Item 402 of Regulation S-K in this proxy statement
under the section entitled "Executive Compensation," including the compensation tables and other narrative executive compensation disclosures set forth under that section, as well as the section in
the proxy statement entitled "Compensation Discussion and Analysis."
This
advisory vote on the compensation of Dynegy's Named Executive Officers gives stockholders another mechanism to convey their views about Dynegy's compensation programs and policies. Although your
vote on executive compensation is not binding on us, the Board values the views of stockholders. The Board and Compensation Committee will review the results of the vote and take them into
consideration in addressing future compensation policies and decisions.
The
Board unanimously recommends that stockholders vote
FOR the proposal to approve the compensation of our Named Executive
Officers.
66
2015 Proxy Statement
|
|
|
AUDIT COMMITTEE PRE-APPROVAL POLICY
The Audit Committee is responsible for appointing, setting compensation for and overseeing the work of our independent registered
public accountants. The Audit Committee has established a policy requiring its pre-approval of all audit and permissible non-audit services to be provided by our independent registered public
accountants in order to assure that the provision of such services does not impair the auditors' independence. The policy, as amended, provides for the general pre-approval of specific types of
services, gives detailed guidance to management as to the specific audit, audit related and tax services that are eligible for general pre-approval and provides specific fee limits for each such
service type on an annual basis. The policy requires specific pre-approval of the annual audit engagement, statutory or subsidiary audits and all permissible non-audit services for which no general
pre-approval exists. For both audit and non-audit pre-approvals, the Audit Committee considers whether such services are consistent with applicable law and SEC rules and regulations concerning auditor
independence.
The
Audit Committee Charter provides that the Audit Committee may delegate to the Audit Committee Chairman the authority to grant pre-approvals only if such approvals are presented to the Audit
Committee at a subsequent meeting. The policy prohibits the Audit Committee from delegating to management such committee's responsibility to pre-approve services performed by the independent
registered public
accountants. When we engage the independent registered public accountants to perform services based on a general pre-approval, our Chief Financial Officer or, in his absence, our Chief Accounting
Officer is required to, as soon thereafter as reasonably practicable, notify the chairman of such engagement and provide a detailed description of the type and scope of services, proposed staffing, a
budget of the proposed fees for such services and a general timetable for the performance of such services.
Requests
for pre-approval of services must be detailed as to the particular services proposed to be provided and are to be submitted by our Chief Financial Officer or, in his or her absence, our Chief
Accounting Officer. Generally, each such request must include a joint statement to the effect that neither the submitting officer nor the independent registered public accountants believe the proposed
engagement would impair the auditors' independence. In addition, each such request generally must include a detailed description of the type and scope of services, proposed staffing, a budget of the
proposed fees for such services and a general timetable for the performance of such services.
AUDIT COMMITTEE REPORT
Our Board has established an Audit Committee of independent directors, which operates under a written charter adopted by the Board on
October 30, 2012. The charter is reviewed annually and is available in the "Corporate Governance" section of our web site at
http://www.dynegy.com/downloads/Dynegy_Audit_Committee_Charter.pdf. The
Audit Committee held 8 meetings in 2014 and currently is comprised of three members: Messrs. Sult (Chair) and Barbas and Ms. Ackermann. The Board has determined that each member of the
Audit Committee possesses the necessary level of financial literacy required to enable him or her to serve effectively as an Audit Committee member, and all members qualify as Audit Committee
Financial Experts, including our designated Financial Expert, Mr. Sult, our Audit Committee Chair. For more information regarding each member of the Audit Committee's industry background and
credentials, please read "Proposal 1Election of DirectorsInformation on Director Nominees." above.
Our
management is responsible for establishing a system of internal controls, assessing such controls and for preparing our consolidated financial statements in accordance with generally accepted
accounting principles. Our independent registered public accountants are responsible for auditing our consolidated financial statements and the effectiveness of our internal control over financial
reporting in accordance with standards
|
|
2015 Proxy Statement 67
|
Audit Committee Report
of
the Public Company Accounting Oversight Board (United States) (the "PCAOB") and issuing their reports based on those audits.
Under
the Audit Committee's charter, the primary function of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities as to, among other duties: (1) the integrity
of our financial statements, including a review of the application of accounting principles, significant financial reporting issues and judgments in connection with the preparation of the financial
statements, and the effects of regulatory and accounting initiatives on the financial statements; (2) recommending to the Board the filing of our audited financial statements; (3) our
disclosure controls and procedures and internal control over financial reporting, including review of any material issues as to the adequacy of internal control over financial reporting;
(4) our compliance with legal and regulatory requirements and Code of Business Conduct and Ethics; (5) the performance of our internal audit function; (6) the performance of our
business ethics and compliance function; (7) enterprise risk management process, policies and procedures; and (8) the evaluation, appointment and retention of our independent registered
public accountants including, the selection of the lead partner, and a review of the firm's qualifications, services, independence, fees and performance. In connection with the evaluation, appointment
and retention of the independent registered public accountants, each year the Audit Committee reviews and evaluates the qualifications, performance and independence of the independent registered
public accountants and lead partner, including taking into account the opinions of management and our internal auditor. In doing so, the Audit Committee considers a number of factors including, but
not limited to: quality of services provided; technical expertise and knowledge of the industry; effective communication; objectivity; and independence. Based on this evaluation, the Audit Committee
has retained Ernst & Young LLP, or EY, as our independent registered public accountants for 2015. EY has been our independent registered public accountants since 2007.
The
Audit Committee and Board believe that it is in the best interests of the Company and its stockholders to continue retention of EY to serve as our independent registered public accountants.
Although the Audit Committee has the sole authority to appoint the independent registered public accountants, the Audit Committee will continue to recommend that the Board request the stockholders, at
the Annual Meeting, to ratify the appointment of the independent registered public accountants.
Further,
the Audit Committee reviews in advance and pre-approves, explicitly, audit and permissible non-audit services provided to us by our independent registered public accountants. For more
information regarding the Audit Committee's approval procedures, please read "Audit Committee Pre-Approval Policy" above. The Audit Committee is also directly responsible for reviewing with the
independent registered public accountants the plans and scope of the audit engagement and providing an open venue of communication between our management, the internal audit function, ethics and
compliance function, the independent registered public
accountants and the Board. The Audit Committee meets with the Internal Audit department, Ethics and Compliance Office and EY, with and without management present, to discuss the results of their
examinations and evaluations.
In
connection with the preparation of the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31,
2014:
-
- The Audit Committee reviewed and discussed the audited financial statements and the effectiveness of our internal control over
financial reporting and associated audit with the independent registered public accountants and management.
-
- The Audit Committee discussed with the independent registered public accountants the matters required to be discussed by Auditing
Standard No. 16 "Communications with Audit Committees" as adopted by the PCAOB. In general, these auditing standards require the independent registered public accountants to communicate to the
Audit Committee certain matters that are incidental to the audit, such as any initiation of, or changes to, significant accounting policies, management judgments, accounting estimates and audit
adjustments; disagreements with management; the independent registered public accountants' judgment about the quality of our accounting principles; significant audit risks identified and any changes
from planned
68
2015 Proxy Statement
|
|
|
Audit Committee Report
audit
strategy; the use of specialists on the audit team; and issues for which the independent registered public accountants have consulted outside the engagement team.
-
- The Audit Committee has received the written disclosures and the letter from the independent registered public accountants required by
applicable requirements of the PCAOB regarding the independent registered public accountants' communication with the Audit Committee concerning independence, and has discussed the independent
registered public accountants' independence with the independent registered public accountants. The Audit Committee also considered whether the independent registered public accountants' provision of
non-audit services to us was compatible with maintaining their independence.
Based
on the review and discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial statements for the year ended December 31, 2014 be included
in our Annual Report on Form 10-K filed with the SEC.
This
report is submitted by the members of the Audit Committee of the Board as of February 19, 2015:
John
R. Sult, Chairman
Hilary E. Ackermann
Paul M. Barbas
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
PRINCIPAL ACCOUNTANT FEES AND SERVICES
EY served as our independent registered public accountants for the years ending December 31, 2014 and 2013. Set forth below is
a summary of the fees we paid EY for professional services rendered for the years ended December 31, 2014 and 2013.
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
2014 |
|
|
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit Fees(1) |
|
|
|
|
$2,620 |
|
|
|
|
$2,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit Related Fees(2) |
|
|
|
|
566 |
|
|
|
|
250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Fees |
|
|
|
|
68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees |
|
|
|
|
$3,254 |
|
|
|
|
$2,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- Audit
fees relate to the audit of Dynegy's financial statements and the effectiveness of our internal control over financial reporting for the years ended
December 31, 2014 and 2013.
- (2)
- Audit
related fees include fees of $50,000 and $0 in 2014 and 2013, respectively, for the audits of separate financial statements of certain of our
consolidated subsidiaries. Additionally, 2014 and 2013 fees included $516,000 and $250,000, respectively, for services rendered related to Dynegy Inc. registration statements.
All
of the fees and services described above under the captions "Audit Fees," "Audit Related Fees," "Tax Fees" and "All Other Fees" were approved under the Audit Committee's pre-approval policy and
pursuant to Section 202 of SOX. None of the services described above were provided pursuant to the de minimus exception provided for in applicable SEC rules and regulations.
|
|
2015 Proxy Statement 69
|
PROPOSAL 3RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Audit Committee has appointed the firm of Ernst & Young LLP, or EY, as our independent registered public
accountants for us and our subsidiaries for the fiscal year ending December 31, 2015, and the Board recommends that the stockholders ratify that appointment. Ratification requires the
affirmative vote of a majority of the shares of common stock represented in person (through internet access) or by proxy at the meeting and entitled to vote on the matter. Unless you withhold
authority to vote or instruct otherwise, a properly executed proxy will be voted
FOR ratification of such appointment.
The
Audit Committee and Board believe that it is in the best interests of the Company and it stockholders to continue retention of EY to serve as our independent registered public accountants.
Although there is no requirement that we submit the appointment of independent registered public accountants to stockholders for ratification or that the appointed auditors be terminated if the
ratification fails, the Audit Committee will consider the appointment of other independent registered public accountants if the stockholders choose not to ratify the appointment of EY and may retain
that firm or another without re-submitting the matter to our stockholders. Even if the appointment is ratified, the Audit Committee may terminate the appointment of EY as our independent registered
public accountants without the approval of the stockholders whenever the Audit Committee deems such termination appropriate.
Representatives
of EY are expected to attend the Annual Meeting and will be available to respond to appropriate questions. The representatives will also have the opportunity to make a statement if
they wish to do so.
The
Board unanimously recommends that stockholders vote
FOR ratification of the appointment of Ernst & Young LLP as
our independent registered public accountants for the fiscal year ending December 31, 2015.
70
2015 Proxy Statement
|
|
|
FUTURE STOCKHOLDER PROPOSALS
If a stockholder wants us to include a proposal in our proxy statement and form of proxy for presentation at the 2016 Annual Meeting
of stockholders, under the rules of the SEC, the proposal must be received by our Corporate Secretary at the address indicated on the first page of this proxy statement on or before the close of
business on Tuesday, December 15, 2015 (the 120th day before the one-year anniversary date of the release of these proxy materials to stockholders).
If
a stockholder wishes to introduce a director nominee or other item of business for consideration at an Annual Meeting of stockholders, the stockholder must comply with the procedures specified in
our Bylaws, as permitted by the rules of the SEC. These procedures require that director nominations or other items of business to be introduced at an Annual Meeting of stockholders must be submitted
in writing to our Corporate Secretary at the address indicated on the first page of this proxy statement. Under our Bylaws, we must receive notice of a stockholder's intention to introduce a
nomination or proposed item of business at our 2016 Annual Meeting of Stockholders:
-
- By the close of business on March 5, 2016 (not later than the 90th day before the one-year anniversary date of the 2015
Annual Meeting) nor earlier than the close of business on February 4, 2016 (not earlier than the 120th day before the one-year anniversary date of the 2015 Annual Meeting), if the 2016
Annual Meeting of stockholders is held within 30 days before or 60 days after June 3, 2016 (the one-year anniversary date of the 2015 Annual Meeting); or
-
- By the close of business on the 120th day before the 2016 Annual Meeting but not before the close of business on the
90th day before the 2016 Annual Meeting or the tenth day following the public announcement of the 2016 Annual Meeting date, if the 2016 Annual Meeting is held more than 30 days before or
more than 60 days after June 3, 2016 (the one-year anniversary date of the 2015 Annual Meeting).
Assuming
our 2016 Annual Meeting of stockholders is held on a schedule similar to that of the 2015 Annual Meeting, we must receive notice of your intention to introduce a nomination or another item of
business at that meeting by the dates specified in the first bullet point above. Our Bylaws specify the information that must be contained in a stockholder's notice for director nominees or an item of
business to be introduced at an Annual Meeting of stockholders. Please read our Bylaws, which are available free of charge through the SEC's web site at
www.sec.gov and through our web site at
www.dynegy.com, for additional information regarding stockholder
proposals.
OTHER MATTERS
The Board does not know of any other matters that are to be presented for action at the Annual Meeting. However, if any other matters
properly come before the Annual Meeting or any adjournment or postponement thereof, it is intended that the enclosed proxy will be voted in accordance with the judgment of the persons named in the
proxy card.
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By Order of the Board of Directors, |
|
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|
Kelly D. Tlachac Corporate Secretary |
April 13,
2015
|
|
2015 Proxy Statement 71
|
ANNEX ASURVEY DATA
Benchmarking Approach
Survey Groups
|
|
|
Energy Industry (n=36) |
|
ALLETE, Inc.; Alliant Energy Corp.; Ameren Corp.; Black Hills Corp.; Cleco Corp.; CMS Energy Corp.; Dominion Resources, Inc.; DTE Energy Co.; Edison International;
FirstEnergy Corp.; Hawaiian Electric Industries Inc.; Integrys Energy Group, Inc.; ITC Holdings; MDU Resources Group Inc.; National Fuel Gas Co.; NextEra Energy, Inc.; NRG Energy, Inc.; OGE Energy Corp.; One
Gas; Otter Tail Corp.; PG&E Corp.; Pinnacle West Capital Corp.; PNM Resources, Inc.; PPL Corp.; Public Service Enterprise Group Inc.; Questar Corp.; Sempra Energy; South Jersey Industries, Inc.; Southwest
Gas Corp.; The Laclede Group, Inc.; TransAlta Corp.; UIL Holdings Corp.; Unitil Corp.; Vectren Corp.; Wisconsin Energy Corp.; Xcel Energy Inc. |
|
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|
General Industry (n=176) |
ADT |
|
CDW Corporation |
|
Gannett Co., Inc. |
|
Molina Healthcare, Inc. |
|
Sanmina Corporation |
Advanced Micro Devices, Inc. |
|
Celanese Corporation |
|
Genesis Energy LP |
|
Molson Coors Brewing Company |
|
Science Applications Intl. Corp |
AECOM Technology Corporation |
|
Charter Communications |
|
Graham Holdings Company |
|
Mosaic |
|
Sempra Energy |
AGCO Corporation |
|
Church & Dwight Co. Inc. |
|
Greif, Inc. |
|
Motorola Solutions, Inc. |
|
Snap-on Inc. |
Air Products & Chemicals Inc. |
|
Cintas Corporation |
|
H&R Block, Inc. |
|
MRC Global Inc. |
|
Sonoco Products Co. |
Airgas, Inc. |
|
Clorox |
|
Harley-Davidson, Inc. |
|
Murphy Oil Corporation |
|
Southwestern Energy Co. |
AK Steel Holding Corporation |
|
CMS Energy Corp. |
|
Harman International Industries, |
|
Navistar International Corporation |
|
Spectra Energy Corp. |
Allergan Inc. |
|
Coach, Inc. |
|
Hasbro Inc. |
|
NetApp, Inc. |
|
SPX Corporation |
Alliance Data Systems Corporation |
|
Coca-Cola Enterprises Inc. |
|
Hawaiian Electric Industries Inc. |
|
Newell Rubbermaid Inc. |
|
Stryker Corporation |
Alliant Energy Corporation |
|
Colfax Corporation |
|
Helmerich & Payne, Inc. |
|
Newmont Mining Corporation |
|
Terex Corp. |
Alliant Techsystems Inc. |
|
Commercial Metals Company |
|
Hertz Global Holdings, Inc. |
|
Noble Energy Entity |
|
The Andersons, Inc. |
Alpha Natural Resources, Inc. |
|
CONSOL Energy Inc. |
|
Hormel Foods Corporation |
|
Norfolk Southern Corporation |
|
The Estee Lauder Companies |
Ameren Corporation |
|
Constellation Brands Inc. |
|
Hospira Inc. |
|
NuStar Energy L.P. |
|
The Hershey Company |
American Axle & Manufacturing Holdings |
|
Con-way Inc. |
|
Huntington Ingalls Industries, Inc. |
|
ON Semiconductor Corp. |
|
Timken Co. |
American Water Works Company |
|
Coming Inc. |
|
Huntsman Corporation |
|
Owens & Minor Inc. |
|
Trinity Industries Inc. |
Ametek Inc. |
|
Coty, Inc. |
|
Integrys Energy Group, Inc. |
|
Owens-Illinois, Inc. |
|
Unisys Corporation |
Amphenol Corporation |
|
Dana Holding Corporation |
|
International Flavors & Fragrances |
|
Peabody Energy Corp. |
|
United Natural Foods, Inc. |
Apollo Education Group, Inc. |
|
DCP Midstream Partners LP |
|
JB Hunt Transport Services Inc. |
|
Pinnacle West Capital Corporation |
|
United Rentals, Inc. |
Applied Materials, Inc. |
|
Dean Foods Company |
|
KBR, Inc. |
|
Pitney Bowes Inc. |
|
Universal Health Services Inc. |
Ashland Inc. |
|
Discovery Communications |
|
Kelly Services, Inc. |
|
Polaris Industries, Inc. |
|
Valmont Industries, Inc. |
Avery Dennison Corporation |
|
Dover Corporation |
|
Kindred Healthcare Inc. |
|
PolyOne Corporation |
|
Valspar |
Avis Budget Group, Inc. |
|
Dr Pepper Snapple Group |
|
Leggett & Platt, Incorporated |
|
PPL Corporation |
|
Visteon Corporation |
Becton, Dickinson and Company |
|
DTE Energy Company |
|
Leidos Holdings, Inc. |
|
Public Service Enterprise Group Inc. |
|
WellCare Health Plans, Inc. |
Berry Plastics Group, Inc. |
|
EchoStar Corp. |
|
Lennox International, Inc. |
|
PulteGroup, Inc. |
|
WESCO International Inc. |
Boise Cascade Company |
|
EMCOR Group Inc. |
|
Level 3 Communications, Inc. |
|
PVH Corp. |
|
Westlake Chemical Corp. |
BorgWamer Inc. |
|
Energizer Holdings Inc. |
|
Magellan Health Inc. |
|
Quest Diagnostics Inc. |
|
Whiting Petroleum Corp. |
Boston Scientific Corporation |
|
Exelis Inc. |
|
Marathon Oil Corporation |
|
Quintiles Transnational Holdings |
|
Williams Companies, Inc. |
Brinks |
|
Federal-Mogul Corporation |
|
Masco Corporation |
|
Ralph Lauren Corporation |
|
Windstream Holdings, Inc. |
Broadcom Corp. |
|
First Solar, Inc. |
|
Mattel, Inc. |
|
Reliance Steel & Aluminum Co. |
|
Wisconsin Energy Corp. |
Brunswick Corporation |
|
Fiserv, Inc. |
|
McCormick & Company, Incorporated |
|
Republic Services |
|
Worthington Industries, Inc. |
C. R. Bard |
|
Flowers Foods, Inc. |
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MDU Resources Group Inc. |
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Reynolds American Inc. |
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WPX Energy, Inc. |
Cablevision Systems Corporation |
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Flowserve Corp. |
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Mead Johnson Nutrition Company |
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Rock-Tenn Company |
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Xcel Energy Inc. |
Cameron International Corporation |
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Fossil Group, Inc. |
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MeadWestvaco Corporation |
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Rockwell Automation Inc. |
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Xylem Inc. |
Campbell Soup Company |
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Freescale Semiconductor |
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Mentor, Inc. |
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Rockwell Collins Inc. |
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YRC Worldwide Inc. |
CareFusion Corporation |
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Frontier Communications Corp |
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Mohawk Industries Inc. |
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Ryder System, Inc. |
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Zimmer Holdings, Inc. |
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Zoetis |
72
2015 Proxy Statement
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Signature
[PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date KEEP THIS PORTION
FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS
BELOW IN BLUE OR BLACK INK AS FOLLOWS: THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED. M86385-P62214 To withhold authority to vote for any
individual nominee(s), mark For All Except and write the number(s) of the
nominee(s) on the line below. For All Withhold All For All Except ! ! ! VOTE
BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR code
above Use the Internet to transmit your voting instructions and for
electronic delivery of information up until 11:59 P.M. Eastern Time the day
before the cut-off date or meeting date. Have your proxy card in hand when
you access the web site and follow the instructions to obtain your records
and to create an electronic voting instruction form. During The Meeting - Go
to www.virtualshareholdermeeting.com/DYN15 You may attend the Meeting via the
Internet and vote during the Meeting. Have the information that is printed in
the box marked by the arrow available and follow the instructions. VOTE BY
PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in hand when you call and then follow
the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return
it in the postage-paid envelope we have provided or return it to Vote
Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. ! ! ! ! ! !
! For Against Abstain SCAN TO VIEW MATERIALS & VOTE DYNEGY INC. ATTN: CORPORATE
SECRETARY 601 TRAVIS, SUITE 1400 HOUSTON, TEXAS 77002 DYNEGY INC. 2. To
approve, on an advisory basis, the compensation of Dynegy's named executive
officers. 3. To act upon a proposal to ratify the appointment of Ernst &
Young LLP as Dynegy's independent registered public accountants for the
fiscal year ending December 31, 2015. For address changes and/or comments,
please check this box and write them on the back where indicated. 01) Hilary
E. Ackermann 02) Paul M. Barbas 03) Robert C. Flexon 04) Richard L.
Kuersteiner 05) Jeffrey S. Stein 06) John R. Sult 07) Pat Wood III 1.
Election of Directors THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
"FOR" THE FOLLOWING PROPOSALS: Please sign exactly as your name(s)
appear(s) hereon. When signing as attorney, executor, administrator, or other
fiduciary, please give full title as such. Joint owners should each sign personally.
All holders must sign. If a corporation or partnership, please sign in full
corporate or partnership name by authorized officer.
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M86386-P62214
Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting: The Notice and Proxy Statement and Annual Report are available at
www.proxyvote.com. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would
like to reduce the costs incurred by our company in mailing proxy materials,
you can consent to receiving all future proxy statements, proxy cards and
annual reports electronically via e-mail or the Internet. To sign up for
electronic delivery, please follow the instructions on the reverse side to
vote using the Internet and, when prompted, indicate that you agree to
receive or access proxy materials electronically in future years. Address
Changes/Comments: (If you noted any Address Changes/Comments above, please
mark corresponding box on the reverse side.) DYNEGY INC. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS ANNUAL MEETING OF STOCKHOLDERS
June 3, 2015 The Stockholder(s) hereby appoint(s) Robert C. Flexon, Heidi D.
Lewis and Kelly D. Tlachac, and each of them, as proxies, each with the power
to appoint his/her substitute, and hereby authorize(s) them to represent and to
vote, as designated on the reverse side of this ballot, all of the shares of
Common Stock of Dynegy Inc. that the Stockholder(s) is/are entitled to vote
at the Annual Meeting of Stockholders to be held at 10:00 a.m., Central Time
on June 3, 2015 via live webcast: www.virtualshareholdermeeting.com/DYN15,
and any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO SUCH DIRECTION
IS MADE, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE. Continued and to be signed on reverse side
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QuickLinks
NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS
PROXY SUMMARY INFORMATION
PROXY STATEMENT
GENERAL INFORMATION
REFERENCES TO DYNEGY AND COMMON STOCK
CORPORATE GOVERNANCE
PROPOSAL 1ELECTION OF DIRECTORS
DIRECTOR COMPENSATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
EXECUTIVE OFFICERS
COMPENSATION DISCUSSION AND ANALYSIS
COMPENSATION AND HUMAN RESOURCES COMMITTEE REPORT
COMPENSATION AND HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
EXECUTIVE COMPENSATION
PROPOSAL 2APPROVAL OF COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
AUDIT COMMITTEE PRE-APPROVAL POLICY
AUDIT COMMITTEE REPORT
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
PROPOSAL 3RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
FUTURE STOCKHOLDER PROPOSALS
OTHER MATTERS
ANNEX ASURVEY DATA
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