COMPENSATION DISCUSSION AND ANALYSIS
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Executive
Compensation
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37
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Table of Contents
The
objectives of our executive compensation program are to align executive pay with stockholder value and to motivate executives to achieve our corporate goals. This CD&A describes the elements,
implementation, and 2017 results of our executive compensation program.
At
our 2017 Annual Meeting of Stockholders, we received 95% support for our say on pay proposal. As a result, we believe that our stockholders understand that our pay practices demonstrate our
commitment to pay for performance and that our compensation plans are designed to recognize the performance of the Company. We achieved many of our operational and financial goals in 2017, including
exceeding our Adjusted Free Cash Flow and Corporate Debt to Corporate EBITDA Ratio targets, despite the challenges in the markets in which we operate.
In
addition, during 2017, we announced a three-year, three-part plan, referred to as our Transformation Plan, which was designed to significantly strengthen earnings and cost competitiveness, lower
risk and volatility, and create significant shareholder value. In connection with our business strategy and incentive programs, the execution of our Transformation Plan produced the following
results:
-
-
The #1 performing stock of the S&P 500 for 2017 with a 134% value increase.
-
-
Completed refinancings and $604 million of planned corporate debt reduction resulting in incremental annual interest savings of
$55 million.
-
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Realized $150 million of cost savings for 2017, and $221 million of working capital improvements.
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-
Announced $3 billion of asset sales representing approximately 90% of our asset sale target under our Transformation Plan.
-
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On track to achieve our targeted 3.0x net debt to Adjusted EBITDA target.
-
-
Demonstrated another strong year with respect to safety in 2017, achieving top decile performance in our industry, matching the second best
safety year in our history.
The
achievements in 2017 resulted in payouts under the AIP as described in more detail in the section of this CD&A entitled "Annual Incentive Compensation", and our LTIP, as described in more detail
in the section of this CD&A entitled "Long-Term Incentive Compensation."
Consistent
with the objectives of our compensation program, the accomplishment of our corporate goals and the market performance of our common stock over the three-year performance period directly
impacted our compensation decisions and pay outcomes for 2017 as described below.
Our Compensation Committee approved modest increases to base salary for NEOs for 2017.
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The
Compensation Committee approved modest increases, ranging from 2%-4%, to NEO 2017 base salary
compensation
for NEOs other than the CEO. The Compensation Committee evaluated the level of Mr. Gutierrez's base salary by comparing it to compensation benchmark data provided by Pay
Governance, the Compensation Committee's independent advisor. Following such evaluation at the end of Mr. Gutierrez's first year as CEO, Mr. Gutierrez received a 9.3% increase in base
salary for 2017.
Due to the increase in TSR during the performance period ending January 2, 2018, our NEOs received a payout at 108% of target upon the vesting of their MSUs in 2018.
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Our
compensation program ties a significant portion of our NEOs' overall compensation to the achievement of increases in TSR through our long-term compensation program. In accordance
with the intended design of our long-term compensation program, there was no payout of stock for MSU awards for the performance period ending January 2, 2017 (vesting January 2, 2017) as
a result of the decline in TSR during the performance period. However, there was an 8% increase in TSR over the three-year performance period ending January 2, 2018 (vesting January 2,
2018) and, as a result, MSUs vesting as of such date vested at 8% above target. In each case, MSUs represented two-thirds of long-term compensation value granted to our NEOs in 2014 and 2015.
The AIP performance metrics were exceeded during 2017, which resulted in payments to our NEOs at levels greater than target.
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Our
Adjusted Free Cash Flow exceeded target, and our Corporate Debt to Corporate EBITDA Ratio greatly exceeded the maximum; however, Adjusted EBITDA did not meet target. Due to the
achievement of the AIP performance metrics, our NEOs received AIP bonuses at levels above target.
Performance-based equity was redesigned for 2017 to measure NRG's TSR performance relative to the TSR of a comparator group.
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Consistent
with market practice, in 2017, we shifted performance-based equity from MSUs to RPSUs. For each of the January 2017 and January 2018 grants, NEOs received two-thirds of
their equity awards in RPSUs in lieu of MSUs. The quantity of shares received by NEOs upon the vesting of an RPSU will be a function of the Company's
performance ranked against the Performance Peer Group (as defined in Elements of CompensationRelative Performance Stock Units). The Compensation Committee evaluated this comparator group
for an appropriate mix of industry-specific and market-influenced constituents, with a strong mathematical correlation to the Company's stock performance. RPSU awards granted in 2018 were updated to
limit the maximum award value that an NEO may receive to 6 times the fair market value of the target award, determined as of the date of grant.
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38
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Executive
Compensation
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Table of Contents
Key Governance Features of Our Executive Compensation Program
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Over
the past several years, we have modified our compensation programs and practices to incorporate several key governance features, adhering to the compensation best practices
described in the table below.
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ü
WHAT WE DO:
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X
WHAT WE DON'T DO:
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Pay for Performance, including
delivering a majority of long-term incentive
compensation using performance-based equity
requiring above-median performance for vesting of long-term incentive
compensation awards at target and
using quantitative metrics to determine annual incentive compensation
awards
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No excise tax gross-ups upon a change-in-control and no tax gross-ups on perquisites or benefits
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Target our peer group median for total direct compensation
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No pledging or hedging of the Company's stock by NEOs or directors
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Require a double trigger for the vesting of equity upon a change in control
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No employment agreements for executive officers with the exception of our CEO
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Include clawback policies in our compensation plans
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No guaranteed bonus payments for our NEOs
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Maintain robust stock ownership guidelines for our NEOs
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No supplemental executive retirement plans
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Provide market-level retirement benefits and limited perquisites
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No re-pricing of underwater stock options and no grants below 100% of fair market value
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Engage an independent compensation consultant to advise us on matters surrounding our compensation plans
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Prevent undue risk taking in our compensation practices and engage in robust risk monitoring
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Effective for 2018, expanded our performance-based pay cap beyond our annual incentive to include performance
equity
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NEO
compensation for 2017 consisted of (i) salary, earned and paid during the 2017 fiscal year, (ii) short-term incentive compensation pursuant to our AIP earned during
the 2017 fiscal year, (iii) RSU awards that were granted in January 2015 and vested at the end of the following three-year period, (iv) approximately one-third of RSUs that were granted
in January 2017 and vested on the one-year anniversary of the grant date and (v) MSU awards that were granted in January 2015, whose realized value in 2017 was based upon the Company's TSR
performance over the three-year performance period following the grant date.
The
Compensation Committee believes that in 2017, the Company's compensation of its NEOs was well aligned with our stock performance and our stockholder interests. Over the three-year performance
period ending January 2, 2018, there was an 8% increase in TSR. As a result, MSU awards that vested on January 2, 2018, were paid at 8% above target.
The
chart below illustrates our NEOs' realized pay for performance periods concluding at the end of 2017 versus target compensation.
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Executive
Compensation
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39
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Table of Contents
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1
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Target Total Direct Compensation (TDC) includes: 2017 Base Salary, 2017 Target AIP Award, 2015 Target LTIP Award (includes RSUs and MSUs at grant-date fair value), and approximately one-third of RSUs granted on January 3, 2017 (at grant-date
fair value). Reflects Base Salary, Target AIP and approximately one-third of RSUs granted on January 3, 2017 for Mr. Gutierrez as Chief Executive Officer during the 2016 and 2017 fiscal years and Target Long-Term Incentive Compensation for
Mr. Gutierrez as Chief Operating Officer for a portion of the 2015 fiscal year, resulting in a higher amount of realized pay in comparison to target pay than other NEOs.
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2
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Realized TDC includes: 2017 Base Salary, 2017 Realized AIP Award, 2015 Realized LTIP Award (including RSUs at vesting-date value and MSUs that vested at 108% of target at vesting-date value), and 2017 Realized LTIP Award (approximately one-third of
the RSUs granted on January 3, 2017 at vesting-date value).
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Executive Compensation Program
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2017 Named Executive Officers
|
This
CD&A describes our executive compensation program for our NEOs in 2017. For 2017, the NEOs were:
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NEO
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2017 TITLE
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Mauricio Gutierrez
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President and Chief Executive Officer
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Kirkland Andrews
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Executive Vice President and Chief Financial Officer
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John Chillemi
1
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Executive Vice President, National Business Development
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David R. Hill
2
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Executive Vice President and General Counsel
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Elizabeth Killinger
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Executive Vice President and President, NRG Retail
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1
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Effective March 16, 2018, Mr. Chillemi will be stepping down from his position as Executive Vice President, National Business Development. Mr. Chillemi will remain with the Company in an advisory role for several months to support the
transition of certain development projects for the Company.
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2
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Effective March 16, 2018, Mr. Hill will be stepping down from his position as Executive Vice President and General Counsel. Mr. Hill will remain with the Company in an advisory role for several months to support the transition of
certain regulatory and government affairs matters.
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40
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Executive
Compensation
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Table of Contents
Goals and Objectives of the Program
|
Our
Compensation Committee designs and implements an executive compensation program that:
-
-
closely aligns our executive compensation with stockholder value creation, avoiding plans that encourage executives to take excessive risk,
while driving long-term value to stockholders;
-
-
supports the Company's long-term business strategy, while rewarding our executive team for their individual accomplishments;
-
-
allows us to recruit and retain a top-tier executive team in a competitive industry and to motivate our executive team to achieve superior
performance for a sustained period; and
-
-
provides a competitive compensation opportunity while adhering to market standards for compensation.
The
Compensation Committee is responsible for the development and implementation of NRG's executive compensation program. The intent of our executive compensation program is to reward the achievement
of NRG's annual goals and objectives and the creation of long-term stockholder value.
The
Compensation Committee is committed to aligning executives' compensation with performance. The Compensation Committee's objectives are achieved through the use of both short-term and long-term
incentives. The Company currently targets pay at the median of our Compensation Peer Group (defined below). In addition, through the AIP, the NEOs are rewarded for achieving annual corporate and
individual goals. Our long-term incentive compensation program is designed to reward our NEOs for long-term TSR.
Pursuant
to its charter, the Compensation Committee is authorized to engage, at the expense of the Company, a compensation consultant to provide independent advice, support, and
expertise to assist the Compensation Committee in overseeing and reviewing our overall executive compensation strategy, structure, policies and programs, and to assess whether our compensation
structure establishes appropriate incentives for management and other key employees.
Pay
Governance, the Compensation Committee's independent compensation consultant since fiscal year 2015, assisted with executive and director pay decisions and worked with the Compensation Committee
to formulate the design of the executive compensation program for 2017.
Pay
Governance reported directly to the Compensation Committee and provided no other remunerated services to the Company. Pay Governance also provides services to the Compensation Committee of NRG
Yield, our majority-owned subsidiary, relating to its director compensation and executive pay decisions in 2017, and the design of its director compensation and executive compensation programs for
2018. Pay Governance does not provide services for any of our other affiliates. In accordance with SEC rules and requirements, the Company has affirmatively determined that no conflicts of interest
exist between the Company and Pay Governance (or any individuals working on the Company's account on behalf of Pay Governance).
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Executive
Compensation
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41
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Table of Contents
Compensation Peer Group Analysis
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Our 2017 Compensation Peer Group
The Compensation Committee, with support from its advisors, identifies the best possible comparator group within relevant industries. The Compensation
Committee performed a review of potential peer companies, considering factors such as industry, scope of operations, market value and relevance from a talent competition standpoint. In addition, a
peer of peer analysis was conducted to confirm the appropriateness of potential peer companies and to assess companies that NRG's peers use in their own peer groups. The Compensation Committee then
considered the overall reasonableness of the list of potential peer companies as a whole.
The
Compensation Committee aims to compare our executive compensation program to a consistent compensation peer group year-to-year, but given the dynamic nature of our industry and the companies that
comprise it, we annually examine the list for opportunities for improvement. In light of NRG's focus on its core generation and retail businesses, and with the assistance of Pay Governance, the
Compensation Committee identified a new peer group for compensation benchmarking purposes in 2017 (Compensation Peer Group). The updated Compensation Peer Group for 2017 is identified below.
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COMPANY
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NYSE TICKER
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COMPANY
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NYSE TICKER
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The AES Corporation
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AES
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First Solar, Inc.
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FSLR
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American Electric Power Co., Inc.
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AEP
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NextEra Energy, Inc.
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NEE
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Calpine Corporation
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CPN
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Public Service Enterprise Group, Inc.
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PEG
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Dynegy Inc.
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DYN
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Talen Energy
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TLN
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Exelon Corporation
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EXC
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Vistra Energy Corp.
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VST
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We
use the median percentile of our Compensation Peer Group as a guidepost in establishing the targeted total direct compensation (cash and equity) levels for our NEOs. We expect
that, over time, targeted total direct compensation of our NEOs will continue to land near the median of our Compensation Peer Group, and actual pay in a given year will increase or decrease based on
the
achievement of defined performance-based compensation metrics.
While
a portion of our compensation is fixed, a significant percentage is risk-based and payable and/or realizable only if certain performance objectives are met. The following charts illustrate the
target percentage of annual fixed compensation, time-based compensation and performance-based compensation payable to our NEOs.
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42
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Executive
Compensation
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Table of Contents
Base
salary compensates NEOs for their level of experience and position responsibilities and for the continued expectation of superior performance. Recommendations on increases to
base salary take into account, among other factors, the NEO's individual performance, the general contributions of the NEO to overall corporate performance, and the level of responsibility of the NEO
with respect to his or her specific position. For 2017, the base salary for each NEO was as follows:
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NAMED EXECUTIVE OFFICER
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2017 ANNUALIZED
BASE SALARY ($)
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|
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PERCENTAGE INCREASE
OVER 2016 (%)
1
|
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ACTUAL 2017 BASE
SALARY EARNINGS ($)
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Mauricio Gutierrez
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1,230,000
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9.3
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%
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1,225,962
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Kirkland Andrews
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662,240
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3.0
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%
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661,498
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John Chillemi
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489,250
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3.0
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%
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488,702
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David R. Hill
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520,000
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4.0
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%
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519,231
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Elizabeth Killinger
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520,200
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2.0
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%
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519,808
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1
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As compared to the December 31, 2016 annualized base salary.
|
The
Compensation Committee approved modest increases to base salary for Executive Vice Presidents. The Compensation Committee also evaluated the level of Mr. Gutierrez's base salary and total
compensation by comparing it to compensation benchmark data provided by Pay Governance. Following such evaluation at the end of Mr. Gutierrez's first year as CEO, Mr. Gutierrez received
a 9.3% increase in base salary for 2017.
Annual Incentive Compensation
|
Overview
Annual incentive compensation awards (AIP bonuses) are made under our AIP. AIP bonuses are short-term compensation designed to compensate NEOs for meeting
annual individual and Company goals, both financial and non-financial. The annual incentive compensation opportunity is defined as a percentage of each NEO's annual base salary. AIP bonuses are
subject to the following requirements:
-
-
A threshold Adjusted Free Cash Flow performance metric (AIP Gate) is established for each plan year. For 2017, the AIP Gate was
$894 million, a level the Compensation Committee believes was appropriate for a minimally acceptable level of financial performance. If the AIP Gate is not achieved, no AIP bonuses are paid,
regardless of performance in any other metrics.
-
-
Performance metrics for 2017 once again included the Company's Corporate Debt to Corporate EBITDA Ratio, which was added in 2016 in response to
stockholder engagement in order to support the Company's near-term focus on debt reduction, as well as Adjusted Free Cash Flow and Adjusted EBITDA.
-
-
Adjusted Free Cash Flow, Adjusted EBITDA and Corporate Debt to Corporate EBITDA Ratio performance metrics were established at threshold, target
and maximum levels for purposes of determining the elements of the bonus that were based on financial performance. For 2017, the performance levels were:
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PERFORMANCE METRIC
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THRESHOLD
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TARGET
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MAXIMUM
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Adjusted Free Cash Flow
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$
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894
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$
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1,219
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$
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1,523
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Adjusted EBITDA
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$
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1,824
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$
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2,608
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$
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2,871
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Corporate Debt to Corporate EBITDA Ratio
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4.65x
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4.15x
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4.00x
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In
addition, each NEO is evaluated on his or her achievement of individual performance criteria, which include measures that NRG values in the leadership of the business. Such measures may include
safety, cost control, succession planning and staff development, and individual performance in furtherance of the Company's goals. Additional criteria may be chosen, as appropriate, and may change
from time to time throughout the year. For 2017, individual performance criteria were measured against the achievement of the 2017 components of the Transformation Plan, which included the realization
of annual cost savings of $250 million, executing asset sales of 322 MW for aggregate cash consideration of $150 million, reducing net corporate debt by $603 million and realizing
$175 million of working capital improvements and $44 million of one-time costs to achieve. The Compensation Committee assesses performance of each NEO relative to the performance
criteria applicable to each NEO and adjusts the total AIP bonus for each NEO within a range of plus or minus 20%, based on recommendations from the CEO for each NEO other than himself. The
Compensation Committee retains sole discretion under the AIP to reduce the amount of, or eliminate any, AIP bonuses that are otherwise payable under the AIP.
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Executive
Compensation
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43
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Table of Contents
AIP Bonus Opportunity
The threshold, target and maximum AIP bonus opportunities for the NEOs for 2017, expressed as a percentage of base salary, were:
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NAMED EXECUTIVE OFFICER
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GATE NOT
MET (%)
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THRESHOLD
(%)
1
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|
TARGET
(%)
1
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MAXIMUM
(%)
|
|
TARGET
AMOUNT
($)
|
Mauricio Gutierrez
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0
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62.5
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125
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250
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1,537,500
|
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|
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|
|
|
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Kirkland Andrews
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0
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50.0
|
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100
|
|
200
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662,240
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|
|
|
|
|
|
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John Chillemi
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0
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37.5
|
|
75
|
|
150
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366,938
|
|
|
|
|
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|
|
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David R. Hill
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0
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|
37.5
|
|
75
|
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150
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390,000
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|
|
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Elizabeth Killinger
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0
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37.5
|
|
75
|
|
150
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390,150
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1
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This assumes that each of the financial performance metrics and all other quantitative and qualitative goals are achieved at threshold or target levels, respectively.
|
2017 AIP Bonus Performance Criteria
The AIP bonus performance criteria applicable to all NEOs are based upon our 2017 corporate business strategy and individual performance. The table below sets
forth the 2017 AIP performance criteria and weighting applicable to all NEOs.
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GOAL
|
|
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WEIGHT
|
|
Adjusted Free Cash Flow (before growth)
1,2
|
|
|
35
|
%
|
|
|
|
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Adjusted EBITDA
1,3
|
|
|
35
|
%
|
|
|
|
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|
Corporate Debt to Corporate EBITDA Ratio
4
|
|
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30
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%
|
|
|
|
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Overall Funding
|
|
|
100
|
%
|
|
|
|
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|
Individual Performance Criteria Modifier
|
|
|
±
20
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%
|
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1
|
|
Our Statement of Operations and Statement of Cash Flows are found in Item 15Consolidated Financial Statements to our Annual Report on Form 10-K.
|
2
|
|
Cash Flow from Operations, excluding changes in nuclear decommissioning trust liability and changes in collateral deposits supporting energy risk management activities, less maintenance and environmental capital expenditures (net of financings) and
including net payments to settle acquired derivatives that include financing elements and purchases and sales of emission allowances.
|
3
|
|
Net Income before Interest Expense, Income Tax, Depreciation and Amortization (EBITDA), as further adjusted for certain non-recurring items and to exclude mark-to-market movements of economic hedges since a portion of these forward sales and
purchases are not afforded cash flow hedge accounting treatment.
|
4
|
|
Corporate Debt is recourse debt to NRG and includes our term loan facility, senior notes, tax exempt bonds and any incremental debt that would either be secured or guaranteed by NRG's guarantor companies or its assets. Corporate EBITDA is defined as
Adjusted EBITDA (as defined above); less Adjusted EBITDA from non-guarantor companies and equity investments; plus cash distributions from non-guarantor companies and equity investments to the Company and any guarantor of the Company; plus non-cash
amortizations excluded by the credit agreement for our senior secured credit facility and the indentures for our senior notes, including equity compensation, nuclear fuel amortization and bad debt expenses.
|
2017 Bonuses
As noted above, with respect to AIP bonuses for 2017, the AIP Gate was $894 million, the Adjusted Free Cash Flow target was $1,219 million, the
Adjusted EBITDA goal was $2,608 million, and the Corporate Debt to Corporate EBITDA Ratio goal was 4.15x. For 2017, the AIP Gate was surpassed, the Adjusted Free Cash Flow was above target at
approximately $1,483 million, the Adjusted EBITDA was approximately $2,494 million, and the Corporate Debt to Corporate EBITDA Ratio achieved maximum at 3.36x.
The
AIP bonuses paid to each of the NEOs for 2017 were:
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|
|
|
|
|
|
|
|
NAMED EXECUTIVE OFFICER
|
|
PERCENTAGE OF
ANNUAL BASE
SALARY (%)
|
|
PERCENT OF
TARGET
ACHIEVED (%)
|
|
INDIVIDUAL
PERFORMANCE
CRITERIA MODIFIER
(%)
|
|
ANNUAL
INCENTIVE
PAYMENT ($)
|
Mauricio Gutierrez
|
|
207
|
|
158
|
|
+5
|
|
2,550,713
|
|
|
|
|
|
|
|
|
|
Kirkland Andrews
|
|
174
|
|
158
|
|
+10
|
|
1,150,973
|
|
|
|
|
|
|
|
|
|
John Chillemi
|
|
118
|
|
158
|
|
0
|
|
579,761
|
|
|
|
|
|
|
|
|
|
David R. Hill
|
|
119
|
|
158
|
|
0
|
|
616,200
|
|
|
|
|
|
|
|
|
|
Elizabeth Killinger
|
|
119
|
|
158
|
|
0
|
|
616,437
|
|
|
|
|
|
|
|
|
|
Mr. Gutierrez
received a 5% modifier, and Mr. Andrews received a 10% modifier each based on the successful achievement of the 2017 components of the Transformation Plan.
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|
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44
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Executive
Compensation
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Table of Contents
Long-Term Incentive Compensation
|
We
believe that equity awards directly align our NEOs' interests with those of our stockholders. For our 2017 grants, we awarded to our NEOs a combination of performance-based RPSUs,
which are based on the Company's TSR performance relative to its peers, and time-based RSUs. To enhance our compensation program's focus on company performance, the large majority of long-term
incentive compensation (67%) was delivered using RPSUs. Although a critical component of our long-term design due to the retention aspects of the award, RSUs comprised only 33% of each NEO's grant
date award opportunity for the 2017 grant. We believe that our AIP appropriately focuses our executive team on shorter-term (one-year) financial metrics while our LTIP emphasizes long-term stockholder
value creation (i.e., three-year TSR performance).
Range of LTIP compensation
The aggregate value of equity awards granted to each NEO for fiscal year 2017 was reviewed relative to NEO compensation data from our Compensation Peer
Group. Pay Governance provided compensation benchmark data for the Compensation Peer Group, as well as for broader industry practice, to the Compensation Committee. Our practice is to issue annual
equity awards on the first trading day of the calendar year. For fiscal year 2017, the grant date was January 3, 2017. The closing price per share of the Company's stock on the grant
date was $12.30 per share.
Relative Performance Stock Units
Consistent with market practice, in 2017, we shifted performance-based equity from MSUs to RPSUs. Each RPSU represents the potential to receive one
share of common stock after the completion of three years of service from the date of grant based on the Company's TSR performance ranked against the TSR performance of a strongly correlated
comparator group (the Performance Peer Group). Relative measures are designed to compensate for externalities, ensuring the program
appropriately reflects management's impact on the Company's TSR by including peer companies and indices that are similarly impacted by market conditions.
The
payout of shares of common stock at the end of the three-year performance period will be based on the Company's TSR performance percentile rank, compared with the TSR performance of the
Performance Peer Group. To ensure a rigorous program design, the target-level payout (100% of shares granted) requires the Company to perform above median, in the 55
th
percentile.
To induce management to achieve greater than target-level performance in a down market, in the event that NRG's TSR performance declines by more than 15% over the performance period, target-level
payout (100% of shares granted) will require an even greater relative achievement at the 65
th
percentile performance. The Compensation Committee believes that this increased
performance requirement addresses the concern that a disproportionate award may be paid in the event that our relative performance is high, but absolute performance is low.
In
the event relative performance is below the 25
th
percentile, the award is forfeited. In the event relative performance is at the 25
th
percentile, the
quantity of shares paid out is equal to 25% of target. In the event relative performance is between the 25
th
percentile and the 55
th
percentile (or the
65
th
percentile if our TSR performance declines by more than 15% over the performance period), payout will be based on an interpolated calculation. In the event relative
performance reaches the 55
th
percentile (or the 65
th
percentile if our TSR performance declines by more than 15% over the performance period), 100% of the
target award will be paid. In the event relative performance is between the 55
th
percentile (or the 65
th
percentile if our TSR performance declines by more
than 15% over the performance period) and the 75
th
percentile, payout will be based on an interpolated calculation. In the event relative performance is at or above the
75
th
percentile, the quantity of shares paid out is equal to 200% of target. The table below illustrates the design of our RPSUs.
RPSU
awards granted in 2018 were updated to limit the maximum award value that an NEO may receive to 6 times the fair market value of the target award, determined as of the date of
grant.
Market Stock Units
Each MSU represents the potential to receive common stock after the completion of three years of service from the date of grant based on absolute NRG stock
price
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Executive
Compensation
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45
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Table of Contents
change (plus dividends) versus the baseline. The number of shares of common stock to be paid as of the vesting date for each MSU is equal to the TSR Multiplier
times the target MSUs on the date of grant. The "TSR Multiplier" is the 20-trading day average closing price on the vesting date divided by the 20-trading day average closing price on the grant date,
taking into account any dividends issued during the performance period, presumed reinvested as of the ex-dividend date. To reinforce the importance of performance on MSU awards, the Compensation
Committee included a threshold level of TSR performance and a maximum level of TSR performance applicable to the TSR Multiplier. Another critical aspect of the importance of performance on the MSU
design is the "valuation premium" associated with the award, which causes an MSU to have greater realized value only if the Company's stock performs well above target and sustains that performance
over time. The TSR Multiplier thresholds and the valuation premium attributable to the awards are the features that tie the value of our MSU awards to NRG's performance. Payouts of stock for MSU
awards are based on TSR performance over the three-year performance period. In accordance with the intended design of our long-term compensation program, there was no payout of stock for MSU awards
with performance periods ending January 2, 2016 (vesting January 2, 2016) and January 2, 2017 (vesting January 2, 2017) as a result of the decline in TSR below the
performance threshold over their respective performance periods. However, there was an 8% increase in TSR over the three-year performance period ending January 2, 2018 (vesting
January 2, 2018) and, as a result, MSUs vesting as of such date vested at 8% above target.
Restricted Stock Units
Each RSU represents the right to receive one share of common stock after the completion of the applicable vesting period. The RSUs granted in 2017 vest
ratably, meaning that one-third of the award vests each year on the anniversary of the grant date, over a three-year period. Ratable vesting is more in line with peer practices, and represents a
change from the three-year cliff vesting approach that was applicable to previously issued RSU awards. Occasionally, the Compensation Committee will use alternate RSU vesting periods, but only on an
exception basis, such as for a new-hire with a specific skill set or to serve as an enhanced retention tool.
The
Company has a "clawback" policy with regard to awards made under the AIP and LTIP in the case of a material financial restatement, including a restatement that was the result of
employee misconduct, or in the case of fraud, embezzlement or other serious misconduct that was materially detrimental to the Company. The Compensation Committee retains discretion regarding
application of the policy. The policy is incremental to other remedies that are available to the Company. In addition to NRG's clawback policy, if the Company is required to restate its earnings as a
result of noncompliance with a financial reporting
requirement due to misconduct, under the Sarbanes-Oxley Act of 2002 (SOX), the CEO and the CFO would also be subject to a clawback, as required by SOX.
NEOs
participate in the same retirement, life insurance, health and welfare plans as other salaried employees of the Company. To generally support more complicated financial planning
and estate planning matters, NEOs are reimbursed for personal financial services up to $12,000 each year, not including the financial advisor's travel or out-of-pocket expenses. Additionally, pursuant
to the terms of his employment agreement entered into in December 2015, described in more detail in the section entitled "Employment Agreements" below, for 2017, Mr. Gutierrez may
receive additional benefits in the form of term life insurance with a death benefit of $7.75 million, and up to $10,000 for reimbursement of disability insurance premiums. We do not provide any
gross-ups on perquisites for executive officers.
Potential Severance and Change-in-Control Benefits
|
Mr. Gutierrez,
pursuant to his employment agreement, and the other NEOs, pursuant to the Company's 2009 Executive Change-in-Control and General Severance Plan (CIC Plan), are
entitled to severance payments and benefits in the event of termination of employment under certain circumstances, including following a change-in-control. We choose to pay severance and
change-in-control benefits to assist with career transitions of our executives as well as to create an environment that provides for an adequate business transition and knowledge transfer during times
of change.
Change-in-control
agreements are market practice among publicly-held companies. Most often, these agreements are utilized to encourage executives to remain with the company during periods of extreme
job uncertainty and to evaluate a potential transaction in an impartial manner. In order to enable a smooth transition during an interim period, change-in-control agreements provide a defined level of
security for the executive and the company, enabling a more seamless implementation of a particular acquisition or an asset sale or purchase, and subsequent integration.
Under
the CIC Plan, NEOs are entitled to a change-in-control benefit, which shall be limited to $1 less than the amount subject to the excise tax under Section 4999 of the Code, or the full
payment that is subject to the excise tax (which is then payable by the NEO), whichever is more favorable to the NEO.
For
a more detailed discussion, including the quantification of potential payments, please see the section entitled "Severance and Change-in-Control" following the executive compensation tables below.
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46
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Executive
Compensation
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Table of Contents
Stock Ownership Guidelines
|
The
Compensation Committee and the Board require the CEO to hold NRG stock with a value equal to 6.0 times his base salary until his termination. All other NEOs are required, absent
a hardship, to hold NRG Stock with a value equal to 2.5 times their base salary until they separate from the Company. Personal holdings, vested awards and vested options with an exercise price that is
less than the current stock price count towards the ownership multiple. Although the NEOs are not required to make purchases of our common stock to meet their target ownership multiple, NEOs are
restricted from divesting any securities until such ownership multiples are attained, except in the event of a hardship or to make a required tax payment, and must maintain their ownership multiple
after any such transactions. The current stock ownership for NEOs as of March 1, 2018 is shown below, based on a share price of $26.92 on March 1, 2018:
|
|
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|
|
NAMED EXECUTIVE OFFICER
|
|
TARGET
OWNERSHIP
MULTIPLE
|
|
ACTUAL
OWNERSHIP
MULTIPLE
|
Mauricio Gutierrez
|
|
6.0x
|
|
7.6x
|
|
|
|
|
|
Kirkland Andrews
|
|
2.5x
|
|
13.0x
|
|
|
|
|
|
John Chillemi
|
|
2.5x
|
|
2.9x
|
|
|
|
|
|
David R. Hill
|
|
2.5x
|
|
4.6x
|
|
|
|
|
|
Elizabeth Killinger
|
|
2.5x
|
|
5.7x
|
|
|
|
|
|
Tax and Accounting Considerations
|
Section 162(m)
of the Code precludes us, as a public company, from taking a tax deduction for individual compensation to any NEO in excess of $1 million, subject to
certain exemptions, including an exemption applicable during 2017 for performance-based compensation within the meaning of Section 162(m). The Tax Cuts and Jobs Act, enacted in
December 2017, amended certain aspects of Section 162(m) specifically affecting the exclusion of performance-based compensation from the $1 million limit in future years. The
Compensation Committee believes tax deductibility of compensation is an important consideration and, where possible, tries to preserve the deductibility of compensation to NEOs under
Section 162(m) where appropriate. For 2017, the Compensation Committee considered the implications and exemptions to such limitation. However, the Compensation Committee also believes
that it is important to retain flexibility in designing compensation programs, and as a result, has not adopted a policy that any particular amount of compensation must be deductible to NRG under
Section 162(m).
The
Compensation Committee also takes into account tax consequences to NEOs in designing the various elements of our compensation program, such as designing the terms of awards to defer immediate
income recognition in accordance with Section 409A of the Code. The Compensation Committee remains informed of and takes into account the accounting implications of its compensation programs.
However, the Compensation Committee approves programs based on their total alignment with our strategy and long-term goals.
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Executive
Compensation
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47
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Table of Contents
Summary Compensation Table for
Fiscal Year Ended December 31, 2017
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|
|
|
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|
|
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|
|
|
|
|
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|
NAME AND PRINCIPAL POSITION
|
|
|
YEAR
|
|
|
SALARY
($)
1
|
|
|
BONUS
($)
2
|
|
|
STOCK
AWARDS
($)
3
|
|
|
OPTION
AWARDS
($)
3
|
|
|
NON-EQUITY
INCENTIVE PLAN
COMPENSATION
($)
4
|
|
|
CHANGE IN
PENSION VALUE
AND
NONQUALIFIED
DEFERRED
COMPENSATION
EARNINGS
($)
|
|
|
ALL OTHER
COMPENSATION
($)
|
|
|
TOTAL
($)
|
|
Mauricio Gutierrez
President and Chief
|
|
|
2017
|
|
|
1,225,962
|
|
|
|
|
|
5,227,515
|
|
|
|
|
|
2,550,713
|
|
|
|
|
|
45,472
|
|
|
9,049,662
|
|
Executive Officer
|
|
|
2016
|
|
|
1,125,000
|
|
|
|
|
|
4,781,263
|
|
|
|
|
|
2,294,578
|
|
|
|
|
|
62,730
|
|
|
8,263,571
|
|
|
|
|
2015
|
|
|
664,624
|
|
|
|
|
|
1,285,914
|
|
|
|
|
|
525,613
|
|
|
|
|
|
26,763
|
|
|
2,502,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kirkland Andrews
Executive Vice
|
|
|
2017
|
|
|
661,498
|
|
|
|
|
|
1,324,493
|
|
|
|
|
|
1,150,973
|
|
|
|
|
|
22,868
|
|
|
3,159,832
|
|
President and Chief
|
|
|
2016
|
|
|
642,952
|
|
|
150,000
|
|
|
1,028,739
|
|
|
|
|
|
1,039,653
|
|
|
|
|
|
20,548
|
|
|
2,881,892
|
|
Financial Officer
|
|
|
2015
|
|
|
647,177
|
|
|
|
|
|
1,285,914
|
|
|
|
|
|
472,570
|
|
|
|
|
|
20,607
|
|
|
2,426,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Chillemi
Executive Vice
|
|
|
2017
|
|
|
488,702
|
|
|
|
|
|
978,515
|
|
|
|
|
|
579,761
|
|
|
39,337
|
|
|
12,800
|
|
|
2,099,115
|
|
President, National
|
|
|
2016
|
|
|
475,001
|
|
|
75,000
|
|
|
760,010
|
|
|
|
|
|
549,872
|
|
|
21,521
|
|
|
15,035
|
|
|
1,896,439
|
|
Business Development
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David R. Hill
Executive Vice
|
|
|
2017
|
|
|
519,231
|
|
|
|
|
|
1,040,017
|
|
|
|
|
|
616,200
|
|
|
|
|
|
30,548
|
|
|
2,205,996
|
|
President and
|
|
|
2016
|
|
|
500,000
|
|
|
75,000
|
|
|
800,016
|
|
|
|
|
|
551,250
|
|
|
|
|
|
30,336
|
|
|
1,956,602
|
|
General Counsel
|
|
|
2015
|
|
|
499,294
|
|
|
|
|
|
1,000,003
|
|
|
|
|
|
275,625
|
|
|
|
|
|
30,215
|
|
|
1,805,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elizabeth Killinger
Executive Vice
|
|
|
2017
|
|
|
519,808
|
|
|
|
|
|
1,040,423
|
|
|
|
|
|
616,437
|
|
|
|
|
|
18,750
|
|
|
2,195,418
|
|
President and
|
|
|
2016
|
|
|
504,634
|
|
|
|
|
|
927,010
|
|
|
|
|
|
618,502
|
|
|
|
|
|
18,550
|
|
|
2,068,696
|
|
President, Retail
|
|
|
2015
|
|
|
460,904
|
|
|
|
|
|
899,987
|
|
|
|
|
|
412,283
|
|
|
|
|
|
16,420
|
|
|
1,789,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Reflects base salary earnings.
|
2
|
|
Represents discretionary income awarded to Messrs. Andrews, Chillemi and Hill based on exceptional achievements during the fiscal year, above and beyond the performance goals and metrics set forth under the AIP.
|
3
|
|
Reflects the grant date fair value determined in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718, ComparisonStock Compensation. The assumptions made in these valuations are discussed in our
Annual Report on Form 10-K in Item 15Consolidated Financial Statements. For performance-based RPSUs granted in 2017, if the maximum level of performance is achieved, the fair value will be approximately $7,004,855 for
Mr. Gutierrez, $1,774,824 for Mr. Andrews, $1,311,207 for Mr. Chillemi, $1,393,621 for Mr. Hill and $1,394,161 for Ms. Killinger.
|
4
|
|
The amounts shown in this column represent the AIP bonuses paid to the NEOs. Further information regarding the AIP bonuses is included in the "2017 Bonuses" section of this Proxy Statement.
|
The
amounts provided in the Non-Equity Incentive Plan Compensation column represent values earned under NRG's 2017, 2016 and 2015 AIP payable in March 2018, March 2017, and
March 2016, respectively. NEOs were provided the opportunity to earn a cash incentive payment based on the attainment of certain pre-established Company and individual goals for fiscal
years 2017, 2016 and 2015. The performance criteria and weight given to each NEO are described in detail in this CD&A. The dollar amounts in the table represent payouts for
actual 2017, 2016 and 2015 Company performance.
Only
one NEO, Mr. Chillemi, participated in the NRG Pension Plan for Non-Bargained Employees, which was closed to new employees hired on or after December 5,
2003. The value shown in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column represents the 2017 year-over-year increase
in the value of the defined benefit pension plan.
The
amounts provided in the All Other Compensation column represent the additional benefits payable by NRG and include insurance benefits, the employer match under the Company's 401(k) plan, financial
counseling services up to $12,000, including the financial advisor's travel or out-of-pocket expenses, and the amount payable under NRG's all-employee discretionary contribution to the 401(k) plan.
The following table identifies the additional compensation for each NEO.
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48
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Executive
Compensation
|
|
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NAME
|
|
|
YEAR
|
|
|
LIFE
INSURANCE
REIMBURSEMENT
($)
|
|
|
DISABILITY
INSURANCE
($)
|
|
|
FINANCIAL
ADVISOR
SERVICES
($)
|
|
|
401(K)
EMPLOYER
MATCHING
CONTRIBUTION
($)
|
|
|
401(K)
DISCRETIONARY
CONTRIBUTION
($)
|
|
|
LEGAL
SERVICES
($)
|
|
|
TOTAL
($)
|
|
Mauricio Gutierrez
|
|
|
2017
|
|
|
4,952
|
|
|
9,794
|
|
|
12,052
|
|
|
10,724
|
|
|
7,950
|
|
|
|
|
|
45,472
|
|
|
|
|
2016
|
|
|
4,952
|
|
|
9,331
|
|
|
11,897
|
|
|
10,600
|
|
|
7,950
|
|
|
18,000
|
|
|
62,730
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
11,869
|
|
|
7,094
|
|
|
7,800
|
|
|
|
|
|
26,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kirkland Andrews
|
|
|
2017
|
|
|
|
|
|
|
|
|
4,447
|
|
|
10,471
|
|
|
7,950
|
|
|
|
|
|
22,868
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
2,117
|
|
|
10,481
|
|
|
7,950
|
|
|
|
|
|
20,548
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
2,136
|
|
|
10,671
|
|
|
7,800
|
|
|
|
|
|
20,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Chillemi
|
|
|
2017
|
|
|
|
|
|
|
|
|
2,000
|
|
|
10,800
|
|
|
|
|
|
|
|
|
12,800
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
4,435
|
|
|
10,600
|
|
|
|
|
|
|
|
|
15,035
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David R. Hill
|
|
|
2017
|
|
|
|
|
|
|
|
|
12,000
|
|
|
10,598
|
|
|
7,950
|
|
|
|
|
|
30,548
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
11,815
|
|
|
10,571
|
|
|
7,950
|
|
|
|
|
|
30,336
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
11,815
|
|
|
10,600
|
|
|
7,800
|
|
|
|
|
|
30,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elizabeth Killinger
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
10,800
|
|
|
7,950
|
|
|
|
|
|
18,750
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
10,600
|
|
|
7,950
|
|
|
|
|
|
18,550
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
8,620
|
|
|
7,800
|
|
|
|
|
|
16,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grants of Plan-Based Awards
for Fiscal Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESTIMATED POSSIBLE
PAYOUTS UNDER NON-EQUITY
INCENTIVE PLAN AWARDS
|
|
|
ESTIMATED FUTURE
PAYOUTS UNDER EQUITY
INCENTIVE PLAN AWARDS
|
|
|
ALL OTHER
STOCK AWARDS:
NUMBER OF
SHARES OF
STOCK
|
|
|
GRANT DATE
FAIR VALUE
OF STOCK
AND OPTION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NAME
|
|
AWARD TYPE
|
|
|
GRANT DATE
|
|
|
APPROVAL DATE
|
|
|
THRESHOLD
1
($)
|
|
|
TARGET
2
($)
|
|
|
MAXIMUM
3
($)
|
|
|
THRESHOLD
(#)
|
|
|
TARGET
(#)
|
|
|
MAXIMUM
(#)
|
|
|
OR UNITS
(#)
|
|
|
AWARDS
($)
4
|
|
Mauricio Gutierrez
|
|
AIP
|
|
|
|
|
|
|
|
|
768,750
|
|
|
1,537,500
|
|
|
3,075,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPSU
|
|
|
1/3/2017
|
|
|
11/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
55,035
|
|
|
220,140
|
|
|
440,280
|
|
|
|
|
|
3,502,427
|
|
|
|
RSU
|
|
|
1/3/2017
|
|
|
11/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140,251
|
|
|
1,725,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kirkland Andrews
|
|
AIP
|
|
|
|
|
|
|
|
|
331,120
|
|
|
662,240
|
|
|
1,324,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPSU
|
|
|
1/3/2017
|
|
|
11/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
13,944
|
|
|
55,777
|
|
|
111,554
|
|
|
|
|
|
887,412
|
|
|
|
RSU
|
|
|
1/3/2017
|
|
|
11/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,535
|
|
|
437,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Chillemi
|
|
AIP
|
|
|
|
|
|
|
|
|
183,469
|
|
|
366,938
|
|
|
733,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPSU
|
|
|
1/3/2017
|
|
|
11/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
10,301
|
|
|
41,207
|
|
|
82,414
|
|
|
|
|
|
655,603
|
|
|
|
RSU
|
|
|
1/3/2017
|
|
|
11/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,253
|
|
|
322,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David R. Hill
|
|
AIP
|
|
|
|
|
|
|
|
|
195,000
|
|
|
390,000
|
|
|
780,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPSU
|
|
|
1/3/2017
|
|
|
11/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
10,949
|
|
|
43,797
|
|
|
87,594
|
|
|
|
|
|
696,810
|
|
|
|
RSU
|
|
|
1/3/2017
|
|
|
11/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,903
|
|
|
343,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elizabeth Killinger
|
|
AIP
|
|
|
|
|
|
|
|
|
195,075
|
|
|
390,150
|
|
|
780,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RPSU
|
|
|
1/3/2017
|
|
|
11/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
10,953
|
|
|
43,814
|
|
|
87,628
|
|
|
|
|
|
697,081
|
|
|
|
RSU
|
|
|
1/3/2017
|
|
|
11/20/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,914
|
|
|
343,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Threshold non-equity incentive plan awards include annual incentive plan threshold payments, as presented in the CD&A.
|
2
|
|
Target non-equity incentive plan awards include annual incentive plan target payments, as presented in the CD&A.
|
3
|
|
Maximum non-equity incentive plan awards include annual incentive plan maximum payments, as presented in the CD&A.
|
4
|
|
The assumptions made in these valuations are discussed in our Annual Report on Form 10-K in Item 15Exhibits, Financial Statement Schedules.
|
2017 Annual Incentive Plan
NEOs were provided the opportunity to earn an AIP bonus based on the attainment of certain pre-established Company and individual goals for fiscal year 2017.
The performance criteria and weight given to each are described in detail in the CD&A. The dollar amount of the possible AIP bonus payouts for achieving the threshold, target or maximum levels of
performance during the fiscal
year 2017 are shown in the above table. If the Company is required to prepare an accounting restatement because it is in material noncompliance with any
financial reporting requirements, then any NEO who has received a payment under the AIP may be required to reimburse the Company for all or a portion of the payment (commonly referred to as a
clawback).
|
|
|
|
Executive
Compensation
|
|
49
|
Table of Contents
2017 Long-Term Equity Incentives
Long-term equity incentive grants to NEOs in 2017 consisted of RPSUs and RSUs. Consistent with our policy, these awards were granted to NEOs as of the
first trading day of the fiscal year, i.e. January 3, 2017. In February 2013, the Compensation Committee approved a change to awards made under the LTIP so that the awards no longer
contain a "single trigger" provision. For equity awards made after February 2013, a "double trigger" provision applies, meaning the vesting of the awards will not accelerate unless there is a
termination of employment in connection with a change-in-control.
Relative Performance Stock Units
Each RPSU represents the potential to receive common stock after the completion of three years of service from the date of grant based on the Company's TSR
performance ranked against the TSR performance of a strongly correlated comparator group (the Performance Peer Group). Relative measures are designed to compensate for externalities, ensuring the
program appropriately reflects management's impact on the Company's TSR by including peer companies and indices that are similarly impacted by market conditions.
The
payout of shares of common stock at the end of the three-year performance period will be based on the Company's TSR performance percentile rank, compared with the TSR performance of the
Performance Peer Group. To ensure a rigorous program design, the target-level payout (100% of shares granted) requires the Company to perform above median, at the 55
th
percentile.
To induce management to achieve greater than target-level performance in a down market, in the event that NRG's TSR performance declines by more than 15% over the performance period, target-level
payout (100% of shares granted) will require an even greater achievement at the 65
th
percentile performance. The Compensation Committee believes that this increased performance
requirement addresses the concern that a disproportionate award may be paid in the event that our relative performance is high, but absolute performance is low.
In
the event relative performance is below the 25
th
percentile, the award is forfeited. In the event relative performance is at the 25
th
percentile, the
quantity of shares paid out is equal to 25% of target. In the event relative performance is between the 25
th
percentile and the 55
th
percentile (or the
65
th
percentile if our TSR performance declines by more than 15% over the performance period), payout will be based on an interpolated calculation. In the event relative
performance reaches the 55
th
percentile (or the 65
th
percentile if our TSR performance declines by more than 15% over the performance period), 100% of the
target award will be paid. In the event relative performance is between the 55
th
percentile (or the 65
th
percentile if our TSR performance declines by more
than 15% over the performance period) and the 75
th
percentile, payout will be
based on an interpolated calculation. In the event relative performance is at or above the 75
th
percentile, the quantity of shares paid out
is equal to 200% of target. RPSU awards granted in 2018 were updated to limit the maximum award value that an NEO may receive to 6 times the fair market value of the target award,
determined as of the date of grant.
If
the NEO's employment is terminated as a result of a change-in-control, a final RPSU award, if any, will be determined by the Compensation Committee. If the NEO's employment is terminated for any
reason other than death, a qualifying disability, or a qualifying retirement, including, without limitation, termination of service as a result of voluntary resignation or termination for cause, the
RPSU award will expire and be forfeited. In the event of a termination of service by reason of death or a qualifying disability, whereby the NEO's employment is terminated due to a total and permanent
disability, the RPSU award will vest in full at the target level and the common stock underlying the award will be issued to the NEO or in the case of death, the NEO's legal representatives, heirs,
legatees, or distributees. A qualifying retirement occurs in the event that an NEO, who is at least 55 years of age at the time of retirement, retires with more than 10 years of service
to the Company. In such event, if the retirement occurs at least 12 months after the grant date, the final RPSU award will continue to vest throughout the remainder of the performance period.
Restricted Stock Units
Each RSU represents the right to receive one share of common stock as of the vesting date for the award. RSUs granted in 2017 vest ratably, meaning
that one-third of the award vests each year on the anniversary of the grant date, over a three-year period. If the NEO's employment is terminated as a result of a change-in-control, an RSU award vests
in full upon the later of such change-in-control or termination of employment and the common stock underlying the RSU shall be issued and delivered to the NEO. Any unvested portion of the RSU award is
forfeited if the NEO's employment is terminated for any reason other than death of the NEO, a qualifying disability, or a qualifying retirement, including, without limitation, termination of service
as a result of voluntary resignation or termination for cause. In the event of a termination of service by reason of death or a qualifying disability, whereby the NEO's employment is terminated due to
a total and permanent disability, the RSU award will vest in full and the common stock underlying the award will be issued to the NEO or in the case of death, the NEO's legal representatives, heirs,
legatees, or distributees. A qualifying retirement occurs in the event that an NEO, who is at least 55 years of age at the time of retirement, retires with more than 10 years of service
to the Company. In such event, if the retirement occurs at least 12 months after the grant date, the unvested portion of an RSU will continue to vest according to the vesting schedule.
|
|
|
50
|
|
Executive
Compensation
|
|
Table of Contents
Outstanding Equity Awards at Fiscal Year-End
for Fiscal Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPTION AWARDS
|
|
|
STOCK AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NUMBER OF
|
|
|
NUMBER OF
|
|
|
|
|
|
|
|
|
NUMBER OF
|
|
|
MARKET
VALUE OF
|
|
|
EQUITY INCENTIVE PLAN AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NAME
|
|
|
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
(#)
EXERCISABLE
|
|
|
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
(#)
UNEXERCISABLE
|
|
|
OPTION
EXERCISE
PRICE
($)
|
|
|
OPTION
EXPIRATION
DATE
|
|
|
SHARES OR
UNITS OF
STOCK THAT
HAVE NOT
VESTED
(#)
|
|
|
SHARES OR
UNITS OF
STOCK THAT
HAVE NOT
VESTED
($)
|
|
|
NUMBER OF
UNEARNED
SHARES THAT
HAVE
NOT VESTED
(#)
|
|
|
MARKET VALUE
OF UNEARNED
SHARES THAT
HAVE
NOT VESTED
($)
1
|
|
Mauricio Gutierrez
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
292,527
|
2
|
|
8,331,169
|
|
|
466,190
|
3
|
|
13,277,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kirkland Andrews
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,410
|
4
|
|
2,290,077
|
|
|
131,026
|
5
|
|
3,731,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Chillemi
|
|
|
2,604
|
|
|
|
|
|
30.19
|
|
|
3/3/2019
|
|
|
54,005
|
6
|
|
1,538,062
|
|
|
86,852
|
7
|
|
2,473,545
|
|
|
|
|
2,947
|
|
|
|
|
|
38.33
|
|
|
3/11/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,835
|
|
|
|
|
|
31.34
|
|
|
2/22/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,109
|
|
|
|
|
|
20.07
|
|
|
2/26/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David R. Hill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,800
|
8
|
|
1,788,544
|
|
|
102,316
|
9
|
|
2,913,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elizabeth Killinger
|
|
|
4,500
|
|
|
|
|
|
23.87
|
|
|
1/4/2020
|
|
|
65,246
|
10
|
|
1,858,206
|
|
|
105,902
|
11
|
|
3,016,089
|
|
|
|
|
14,200
|
|
|
|
|
|
19.83
|
|
|
1/3/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Assumes achievement at target award levels for 2015 MSU, 2016 MSU, and 2017 RPSU awards as discussed in the CD&A. On January 2, 2018, the 2015 MSU awards vested at 108% of target based on TSR performance over the three-year performance
period.
|
2
|
|
This amount represents 15,431 RSUs that vested on January 2, 2018, 46,703 RSUs that vested on January 3, 2018, 46,704 RSUs that will vest on January 3, 2019, 136,845 RSUs that will vest on January 4, 2019, and 46,844 RSUs that
will vest on January 3, 2020.
|
3
|
|
This amount represents 28,425 MSUs that vested January 2, 2018, 217,625 MSUs that will vest on January 4, 2019, and 220,140 RPSUs that will vest on January 3, 2020.
|
4
|
|
This amount represents 15,431 RSUs that vested on January 2, 2018, 11,833 RSUs that vested on January 3, 2018, 11,833 RSUs that will vest on January 3, 2019, 29,444 RSUs that will vest on January 4, 2019, and 11,869 RSUs that
will vest on January 3, 2020.
|
5
|
|
This amount represents 28,425 MSUs that vested January 2, 2018, 46,824 MSUs that will vest on January 4, 2019, and 55,777 RPSUs that will vest on January 3, 2020.
|
6
|
|
This amount represents 6,000 RSUs that vested on January 2, 2018, 8,742 RSUs that vested on January 3, 2018, 8,742 RSUs that will vest on January 3, 2019, 21,752 RSUs that will vest on January 4, 2019, and 8,769 RSUs that will
vest on January 3, 2020.
|
7
|
|
This amount represents 11,052 MSUs that vested January 2, 2018, 34,593 MSUs that will vest on January 4, 2019, and 41,207 RPSUs that will vest on January 3, 2020.
|
8
|
|
This amount represents 12,000 RSUs that vested on January 2, 2018, 9,291 RSUs that vested on January 3, 2018, 9,292 RSUs that will vest on January 3, 2019, 22,897 RSUs that will vest on January 4, 2019, and 9,320 RSUs that will
vest on January 3, 2020.
|
9
|
|
This amount represents 22,105 MSUs that vested January 2, 2018, 36,414 MSUs that will vest on January 4, 2019, and 43,797 RPSUs that will vest on January 3, 2020.
|
10
|
|
This amount represents 10,800 RSUs that vested on January 2, 2018, 9,295 RSUs that vested on January 3, 2018, 9,295 RSUs that will vest on January 3, 2019, 26,532 RSUs that will vest on January 4, 2019, and 9,324 RSUs that will
vest on January 3, 2020.
|
11
|
|
This amount represents 19,894 MSUs that vested January 2, 2018, 42,194 MSUs that will vest on January 4, 2019, and 43,814 RPSUs that will vest on January 3, 2020.
|
|
|
|
|
Executive
Compensation
|
|
51
|
Table of Contents
Option Exercises and Stock Vested for Fiscal Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
($)
2
|
|
Mauricio Gutierrez
|
|
|
|
|
|
|
15,412
|
3
|
|
188,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kirkland Andrews
|
|
|
|
|
|
|
15,412
|
4
|
|
188,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Chillemi
|
|
|
|
|
|
|
6,172
|
5
|
|
75,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David R. Hill
|
|
|
|
|
|
|
11,779
|
6
|
|
144,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elizabeth Killinger
|
|
|
|
|
|
|
6,481
|
7
|
|
79,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Includes shares of DERs that vested and converted to common stock pursuant to underlying Awards vested in 2017.
|
2
|
|
Awards and DERs that vested on January 2, 2017. As January 2, 2017 was not a trading day, the values are based on a share price of $12.26 on December 30, 2016.
|
3
|
|
Represents 14,415 RSUs granted on January 2, 2014 and 997 DERs which vested on January 2, 2017.
|
4
|
|
Represents 14,415 RSUs granted on January 2, 2014 and 997 DERs which vested on January 2, 2017.
|
5
|
|
Represents 5,773 RSUs granted on January 2, 2014 and 399 DERs which vested on January 2, 2017.
|
6
|
|
Represents 11,017 RSUs granted on January 2, 2014 and 762 DERs which vested on January 2, 2017.
|
7
|
|
Represents 6,062 RSUs granted on January 2, 2014 and 419 DERs which vested on January 2, 2017.
|
Pension Benefits for Fiscal Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
NAME
|
|
PLAN NAME
|
|
NUMBER OF YEARS
CREDITED SERVICE
(#)
|
|
PRESENT VALUE OF
ACCUMULATED BENEFIT
($)
|
|
PAYMENTS DURING
LAST FISCAL YEAR
($)
|
Mauricio Gutierrez
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kirkland Andrews
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Chillemi
|
|
NRG Pension Plan
for Non-Bargained
Employees
|
|
15.25
|
|
247,432
|
|
|
|
|
|
|
|
|
|
|
|
David R. Hill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elizabeth Killinger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
NRG Pension Plan for Non-Bargained Employees provides qualified retirement income benefits to most NRG employees who were hired prior to December 5, 2003. The plan was closed to new
employees as of that date. Mr. Chillemi is the only NEO eligible to receive benefits under this plan. He is covered under the "Final Average Pay" formula which provides a single life annuity
equal to 1% of three year average pay times years of credited service. The service period has been frozen as of April 1, 2001. However, pay continues to grow. Annual pension earnings include
base pay and is capped by the Internal Revenue Service qualified plan pay limit each year. For example, the 2017 pay limit was $270,000. Pension benefits are 100% vested after five years of service
and a participant may retire as early as age 50. At retirement, the participant will receive a monthly annuity. None of the named executives are covered by any nonqualified pension programs. Actuarial
equivalent annuities are determined using factors defined in a plan document. For additional information on the assumptions used in calculating the present value of the accumulated benefit under the
plan,
see Item 15, Consolidated Financial Statements in our Annual Report on Form 10-K.
Mr. Gutierrez
serves as the President and CEO of the Company pursuant to the terms of an employment agreement with the Company effective December 3, 2015. The term of
the employment agreement will continue until the date that Mr. Gutierrez's employment is terminated by either Mr. Gutierrez or the Company.
Each
year, Mr. Gutierrez's base salary will be reviewed and may be increased by the Board. The Board may decrease Mr. Gutierrez's base salary solely in the case of an across the board
adjustment for senior executives, but not in excess of the same percentage as other senior executives as a group. Pursuant to the terms of the employment agreement, for the 2017 fiscal year,
Mr. Gutierrez is eligible to receive an annual incentive award with a target amount of up to 125% of his base salary, and an additional
|
|
|
52
|
|
Executive
Compensation
|
|
Table of Contents
maximum incentive award with a target amount of up to 125% of his base salary, each based upon the achievement of criteria determined at the beginning of the
fiscal year by the Compensation Committee with input from Mr. Gutierrez.
The
employment agreement also provides that Mr. Gutierrez is eligible to participate in the Company's LTIP in accordance with its terms. For the 2018 fiscal year, Mr. Gutierrez's target
LTIP award is 425% of his base salary. Mr. Gutierrez is also entitled to health, welfare and retirement benefits, term life insurance of $7.75 million, five weeks paid vacation, and
coverage under the Company's director and officer liability insurance coverage, in addition to reimbursement of reasonable business expenses, financial planning expenses, and disability insurance
premiums. Mr. Gutierrez's employment agreement also entitles him to certain severance payments and benefits in the event his employment terminates under certain circumstances. These severance
payments and benefits are described and quantified under the section "Severance and Change-in-Control" below. In addition, under the employment agreement, the Company has agreed to indemnify
Mr. Gutierrez against any claims arising as a result of his position with the Company to the maximum extent permitted by law.
The
Company has not entered into employment agreements with NEOs other than Mr. Gutierrez.
Severance and Change-In-Control
|
Mr. Gutierrez,
pursuant to his employment agreement, and the other NEOs, pursuant to the CIC Plan, are entitled to certain severance payments and benefits in the event of
termination of employment under certain circumstances.
In
the event Mr. Gutierrez's employment with the Company is terminated by the Company "without cause" or by Mr. Gutierrez for "good reason" (including a reduction of his base salary),
Mr. Gutierrez will be entitled to two times his base salary (without regard for any reduction of base salary); 50% of the bonus he would have received upon satisfaction of the underlying
performance conditions, prorated for the number of days he was employed with the Company in the year of termination; immediate vesting of the 2016 LTIP Award to the extent not already vested;
reimbursement for COBRA benefits continuation cost for 18 months; and earned but unpaid base salary, bonuses, deferred compensation, vacation pay, and retirement benefits.
In
the event Mr. Gutierrez's employment with the Company is terminated by the Company "without cause" or by Mr. Gutierrez for "good reason" (including a reduction on his base salary),
each within 24 months following a change-in-control, in lieu of the above severance benefits, Mr. Gutierrez will be entitled to three times the sum of his base salary (without regard for
any reduction of base salary) plus his annual target bonus for the year of termination. Mr. Gutierrez will also be entitled to a payment equal to the bonus he would have received upon
satisfaction of the underlying performance conditions, prorated for the number of days he was employed with the Company in the year of termination; immediate
vesting of the 2016 LTIP Award to the extent not already vested; reimbursement for COBRA benefits continuation cost for 18 months; and earned but unpaid base salary, bonuses, deferred
compensation, vacation pay, and retirement benefits.
In
the event Mr. Gutierrez's employment with the Company is terminated due to his death or disability, Mr. Gutierrez (or his estate) will be entitled to receive 50% of the target annual
bonus, prorated for the number of days he was employed with the Company in the year of termination; earned but unpaid base salary, bonuses, deferred compensation, vacation pay and retirement benefit.
As
the Company has eliminated all tax gross-ups for all NEOs, if an excise tax under section 4999 of Internal Revenue Code (Code) would be triggered by any payments under the employment
agreement or otherwise upon a change in control, the Company will either (a) pay Mr. Gutierrez any amounts subject to section 4999 of the Code (and Mr. Gutierrez will be
responsible for the excise tax), or (b) reduce such payments so that no amounts are subject to section 4999 of the Code, whichever results in a better after-tax amount for
Mr. Gutierrez (known as the "best net" approach).
Under
each of Mr. Gutierrez's employment agreement and the CIC Plan, the applicable executive agrees not to divulge confidential information or, during and for a period of one year after the
termination of the employment agreement, compete with, or solicit the customers or employees of the Company. Effective January 1, 2018, the CIC Plan was amended to also require that executives
not disparage the Company during and for a period of one year after termination.
Under
the CIC Plan, the NEOs other than Mr. Gutierrez are entitled to a general severance benefit equal to 1.5 times base salary in the event of involuntary termination without cause payable in
a lump sum amount and reimbursement for COBRA benefits continuation cost for a period of 18 months.
The
CIC Plan also provides a change-in-control benefit in the event that within 24 months following a change-in-control, NEO employment is either involuntarily terminated by the Company without
cause or voluntarily terminated by the executive for good reason. Effective January 1, 2018, the CIC Plan amended the period during which an NEO is eligible to receive a change-in-control
benefit to include the period that is 6 months prior to, as well as 24 months following, a change-in-control. This change-in-control benefit consists of an amount equal to 2.99 times the
sum of the executive's base salary plus the annual target incentive for the year of termination, payable in a lump sum amount; an amount equal to the NEO's target bonus for the year of termination,
prorated for the number of days during the performance period that the NEO was employed by the Company; and reimbursement
|
|
|
|
Executive
Compensation
|
|
53
|
Table of Contents
for COBRA benefits continuation cost for a period of 18 months. In the event of a change-in-control, vesting of equity awards will not accelerate unless
the NEO is terminated in connection with the change-in-control.
In
general, under Mr. Gutierrez's employment agreement and the CIC Plan, a "change-in-control" occurs in the event: (a) any person or entity becoming the direct or indirect beneficial
owner of 50% or more of the Company's voting stock, (b) directors serving on the Board as of a specified date cease to constitute at least a majority of the Board unless such directors are
approved by a vote of at least two-thirds (
2
/
3
) of the incumbent directors, provided that a person whose assumption of office is in connection with an actual or threatened election
contest or actual or threatened solicitation of proxies including by reason of agreement intended to avoid or settle such contest shall not be considered to be an incumbent director, (c) any
reorganization, merger, consolidation, sale of all or substantially all of the assets of the Company or other transaction is consummated and the previous stockholders of the Company fail to own at
least 50% of the combined voting power of the resulting entity or (d) the stockholders approve a plan or proposal to liquidate or dissolve the Company. An involuntary termination without
"cause" means the NEO's termination by the Company for any reason other than the NEO's conviction of, or agreement to a plea of nolo contendere to, a felony or other crime involving moral turpitude,
willful failure to perform his duties
or willful gross neglect or willful gross misconduct. Effective January 1, 2018, the CIC Plan was amended to add the following actions as the basis of a
termination for cause, (i) the NEO's performance of any material act of theft, fraud, malfeasance or dishonesty, (ii) the NEO's breach of any written agreement between the NEO and the
Company or a violation of the Company's code of conduct or other written policies, and (iii) any material breach of the NEO's obligations to the Company with respect to confidentiality,
noncompetition, nonsolicitation and nondisparagement. A voluntary
termination for "good reason" means the resignation of the NEO in the event of a material reduction in his compensation or benefits, a material diminution in his title, authority, duties or
responsibilities, or the failure of a successor to the Company to assume the CIC Plan. In the case of Mr. Gutierrez only, "good reason" also includes any material failure by the Company to
comply with his employment agreement, his removal from the Board, the failure to elect him to the Board during any regular election, or a change in reporting structure of the Company requiring
Mr. Gutierrez to report to anyone other than the Board. The amount of compensation payable to each NEO in each circumstance is shown in the table below, assuming that termination of employment
occurred as of December 31, 2017, and including payments that would have been earned as of such date. The amounts shown below do not include benefits payable under the 401(k) plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NAMED EXECUTIVE OFFICER
|
|
|
INVOLUNTARY
TERMINATION
NOT
FOR CAUSE ($)
|
|
|
VOLUNTARY
TERMINATION
FOR
GOOD REASON
($)
|
|
|
INVOLUNTARY NOT
FOR
CAUSE OR
VOLUNTARY
FOR GOOD REASON
FOLLOWING
A CHANGE IN
CONTROL ($)
|
|
|
DEATH
($)
|
|
|
DISABILITY
($)
|
|
Mauricio Gutierrez
|
|
|
13,626,452
|
|
|
13,626,452
|
|
|
31,884,115
|
|
|
22,782,431
|
|
|
22,782,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kirkland Andrews
|
|
|
1,023,794
|
|
|
1,023,794
|
|
|
9,805,433
|
|
|
6,829,319
|
|
|
6,829,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Chillemi
|
|
|
764,309
|
|
|
764,309
|
|
|
7,051,518
|
|
|
4,461,084
|
|
|
4,461,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David R. Hill
|
|
|
810,434
|
|
|
810,434
|
|
|
7,957,014
|
|
|
5,205,681
|
|
|
5,205,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elizabeth Killinger
|
|
|
810,734
|
|
|
810,734
|
|
|
8,131,704
|
|
|
5,379,324
|
|
|
5,379,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54
|
|
Executive
Compensation
|
|
Table of Contents
We believe our executive compensation program must be internally consistent and equitable to motivate our employees to create stockholder value. We monitor the
relationship between the compensation of our executive officers and the compensation of our non-managerial employees. For 2017, the total compensation of Mauricio Gutierrez, our President and Chief
Executive Officer of $9,049,662, as shown in the Summary Compensation Table (CEO Compensation), was approximately 80 times the total compensation of a median employee, calculated in the same manner,
of $112,446.
We
calculated the ratio of the pay of our Chief Executive Officer to that of our median employee as permitted under SEC rules. As of December 31, 2017, we and our consolidated subsidiaries had
5,940 employees in the United States and 190 employees located in Australia. As allowed under Item 402 of Regulation S-K, we excluded the 190 employees in Australia from our median
employee determination, which represented less than 5% of our total employees.
For
purposes of determining the median employee, we compared the total taxable wages as reported on each employee's Form W-2, as of December 31, 2017, for all individuals, other than our
chief executive officer, who were employed by us on December 31, 2017 (whether employed
on
a full-time, part-time, or seasonal basis). We then identified a median employee from that group for purposes of preparing the ratio of chief executive officer pay to median employee pay. We
calculated the compensation for our median employee based upon the same components of compensation used to determine CEO Compensation. The median employee identified was hired mid-year and as a
result, such employee's total taxable wages only reflected partial annual wages, as well as compensation related to hiring. On an annualized basis, total compensation of such employee is not
representative of the Company's median employee compensation. As such, we determined that such employee had anomalous compensation characteristics. In order to establish a representative median, as
permitted under SEC rules, we substituted another employee with substantially similar total compensation (absent any anomalous pay characteristics), based on total taxable wages as reported on the
employee's Form W-2. We believe that the ratio of CEO Compensation to that of this median employee is a reasonable estimate calculated in a manner consistent with Item 402(u) of
Regulation S-K. Given the different methodologies that various public companies will use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a
basis for comparison between companies.
|
|
|
|
Executive
Compensation
|
|
55
|
Table of Contents
Compensation Committee Report on Executive Compensation
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement required by Item 402(b) of
Regulation S-K with management and, based upon such review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in
this Proxy Statement.
|
|
|
|
|
Compensation Committee:
|
|
|
E. Spencer Abraham
Kirbyjon H. Caldwell
William E. Hantke
|
Compensation Committee Interlocks and Insider Participation
No member of our Compensation Committee has served as one of our officers or employees at any time. None of our executive officers serves as a member of the
compensation committee of any other company that has an executive officer serving as a member of the Board. None of our executive officers serves as a member of the board of directors of any other
company that has an executive officer serving as a member of our Compensation Committee.
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than ten percent of a registered class of our equity
securities, to file reports of securities ownership and changes in such ownership with the SEC. Officers, directors and greater than ten percent stockholders also are required by SEC rules to furnish
us with copies of all Section 16(a) forms they file. Based upon a review of the copies of such forms furnished to us and any written representations that no Forms 5 were required, we
believe that all Section 16(a) filing requirements were timely met during the 2017 fiscal year, except Mr. Smitherman filed a late Form 4 that reported one transaction related to
the issuance of DSUs.
|
|
|
|
|
Compensation
Committee
Report
on
Executive
Compensation
Compensation
Committee
Interlocks
and
Insider
Participation
|
56
|
|
Section 16(A)
Beneficial
Ownership
Reporting
Compliance
❘
|
Table of Contents
The
primary purpose of the Audit Committee is to assist the Board in its general oversight of the Company's financial reporting process. The Audit Committee's function is more fully described
previously in this Proxy Statement and in its charter. The Audit Committee reviews the charter on an annual basis. The Board annually reviews the New York Stock Exchange listing standards' definition
of independence for audit committee members and has determined that each member of the Audit Committee meets that standard. The Board has also determined that in 2017 three of the five members of the
Audit Committee, William E. Hantke, Terry G. Dallas and Walter R. Young, meet the requirements of an "audit committee financial expert." The Board has further determined that Barry T. Smitherman and
Thomas H. Wiedemeyer meet the "financial literacy" requirements set forth in the listing standards under the New York Stock Exchange.
Management
is responsible for the preparation, presentation, and integrity of the Company's financial statements, accounting and financial reporting principles, internal controls and procedures
designed to ensure compliance with accounting standards, applicable laws, and regulations. The Company's independent registered public accounting firm for the fiscal year 2017, KPMG LLP, is
responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting
principles and auditing the Company's internal control over financial reporting.
The
Audit Committee has reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 31, 2017 with the Company's management and has discussed with
KPMG LLP the matters required to be discussed. In addition, KPMG LLP has provided the Audit Committee with the written disclosures and the letter required by Statement on the PCAOB
Auditing Standard No. 1301, "Communication with Audit Committees," and the Audit Committee has discussed with KPMG LLP their independence. The Audit Committee also reviewed, and
discussed with management and KPMG LLP, management's report and KPMG LLP's report and attestation on internal control over financial reporting in accordance with Section 404 of
the Sarbanes-Oxley Act of 2002.
Based
on these reviews and discussions, the Audit Committee recommended to the Board that the audited financial statements be included in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2017, for filing with the Securities and Exchange Commission.
|
|
|
|
|
Audit Committee:
|
|
|
William E. Hantke, Chair
Terry G. Dallas
Thomas H. Weidemeyer
|
|
|
|
|
Audit
Committee
Report
|
|
57
|
Table of Contents
Independent Registered Public Accounting Firm
The
following table presents fees for professional services rendered by KPMG LLP, our principal independent registered public accounting firm, for the years ended
December 31, 2017, and December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
YEAR ENDED
DECEMBER 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
(IN THOUSANDS)
|
|
Audit Fees
|
|
|
$13,714
|
|
|
$14,297
|
|
Audit-Related Fees
|
|
|
|
|
|
150
|
|
Tax Fees
|
|
|
3,898
|
|
|
2,111
|
|
All Other Fees
|
|
|
|
|
|
130
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$17,612
|
|
|
$16,498
|
|
|
|
|
|
|
|
|
|
For
2017 and 2016 audit services, KPMG LLP billed us approximately $13,713,500 and $14,296,825, respectively, for the integrated audit of the Company's annual consolidated
financial statements, internal control over financial reporting, and the review of the Company's quarterly consolidated financial statements on Form 10-Q that are customary under the standards
of the Public Company Accounting Oversight Board (United States), and in connection with subsidiary financial statement audits. The audit fees for 2017 include approximately $2,886,700 of audit fees
incurred by NRG Yield and certain of its consolidated subsidiaries, which amounts were paid directly by NRG Yield or such consolidated subsidiary, as applicable.
Audit-related
fees in 2016 primarily consisted of attestation fees for grant applications. For 2016, audit-related fees billed to us by KPMG LLP totaled approximately
$150,000. No audit-related fees were billed to us by KPMG LLP for 2017.
Tax
fees relate to services provided for tax compliance, tax planning, advice on mergers and acquisitions, technical assistance, and advice on both domestic and international
matters. For 2017 and 2016 tax services, KPMG LLP billed us approximately $3,897,654 and $2,110,745, respectively.
All
other fees consisted of services provided for an attestation report on the Company's sustainability report in 2016. For 2016, KPMG LLP billed us approximately $129,791 for
such services. There were no other fees billed to us by KPMG LLP for 2017.
Policy on Audit Committee Pre-Approval
|
The
Audit Committee is responsible for appointing, setting compensation for, and overseeing the work of the independent registered public accounting firm. The Audit Committee has
established a policy regarding pre-approval of all audit and permissible nonaudit services provided by the independent registered public accounting firm.
The
Audit Committee annually reviews and pre-approves services that are expected to be provided by the independent registered public accounting firm. The term of the pre-approval is 12 months
from the date of the pre-approval, unless the Audit Committee approves a shorter time period. The Audit Committee may periodically amend and/or supplement the pre-approved services based on subsequent
determinations.
Unless
the Audit Committee has pre-approved Audit Services or a specified category of nonaudit services, any engagement to provide such services must be pre-approved by the Audit Committee if it is to
be provided by the independent registered public accounting firm. The Audit Committee must also pre-approve any proposed services exceeding the pre-approved budgeted fee levels for a specified type of
service.
The
Audit Committee has authorized its Chair to pre-approve services in amounts up to $500,000 per engagement. Engagements exceeding $500,000 must be approved by the full Audit Committee. Engagements
pre-approved by the Chair are reported to the Audit Committee at its next scheduled meeting.
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Independent
Registered
Public
Accounting
Firm
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Table of Contents
What is the Purpose of the Annual Meeting?
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The
purpose of the Annual Meeting is to:
-
1.
-
elect
twelve directors;
-
2.
-
approve,
on a non-binding advisory basis, the Say on Pay Proposal;
-
3.
-
ratify
the KPMG LLP Appointment Proposal;
-
4.
-
vote
on the Political Expenditures Stockholder Proposal, if properly presented at the meeting;
-
5.
-
conduct
such other business as may properly come before the Annual Meeting and any adjournment or postponement.
Other
than these proposals, the Board is not aware of any other matters to be presented for a vote at the Annual Meeting.
Who is Entitled to Vote at the Annual Meeting?
|
All
of our stockholders may attend the Annual Meeting. However, only stockholders who owned our common stock at the close of business on March 1, 2018, the record date for the
Annual Meeting, or their duly appointed proxies, are entitled to vote at the Annual Meeting.
Many
stockholders hold their shares through a stockbroker, bank, trustee, or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held
of record and those owned beneficially:
-
-
Stockholder of Record
If your shares are registered directly in your name with our
transfer agent, Computershare, you are considered the stockholder of record of those shares.
-
-
Beneficial Owner
If your shares are held in a stock brokerage account, or by a
bank, trustee, or other nominee, you are considered the beneficial owner of shares held in "street name." As the beneficial owner, you have the right to direct your broker, trustee or nominee on how
to vote and you are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you follow the
procedures of your broker, trustee or nominee for obtaining a legal proxy. Your broker, trustee, or nominee is obligated to provide you with a voting instruction card for you to use to vote in person
at the annual meeting.
How Many Votes do I Have?
|
You
have one vote for each share of our common stock you owned as of the record date for the Annual Meeting.
What are the Recommendations of the Board of Directors?
|
The
Board recommends a vote:
-
1.
-
FOR
the election of the director nominees;
-
2.
-
FOR
the approval, on a non-binding advisory basis, of the Say on Pay Proposal;
-
3.
-
FOR
the ratification of the KPMG LLP Appointment Proposal; and
-
4.
-
AGAINST
the Political Expenditures Stockholder Proposal.
If
you grant a proxy and any additional matters are properly presented for a vote at the Annual Meeting, either of the persons named as proxy holders, Mauricio Gutierrez or Brian E. Curci, will have
the discretion to vote your shares.
How Many Votes Must be Present to Hold the Annual Meeting?
|
We
will have a quorum, and will be able to conduct the business of the Annual Meeting, if the holders of a majority of the outstanding shares of our common stock entitled to vote at
the Annual Meeting are represented in person or by proxy at the Annual Meeting. As of the record date, 317,666,137 shares of our common stock, representing the same number of votes, were outstanding.
The presence of the holders of at least 158,833,069 shares of our common stock will be required to establish a quorum. Both abstentions and broker non-votes, if any, are counted as present for
determining the presence of a quorum. For more information regarding the treatment of abstentions and broker non-votes, see "What are abstentions and broker non-votes and how are they treated?"
What Vote is Required to Approve Each Proposal?
|
-
1.
-
Election of Directors
The nominees for election as directors at the Annual Meeting will be elected by a
majority of the votes cast at the Annual Meeting. A majority of the votes cast means that the number of shares voted "FOR" the director nominee must exceed the number of votes cast "AGAINST" that
director nominee. In a contested election, each director nominee will be elected by the vote of a plurality of the shares represented in person or by proxy at the Annual Meeting and entitled to vote
on the election of directors. This means that the director nominees who receive the most votes will be elected to fill the available seats on the Board.
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Answers
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2.
-
Say on Pay Proposal
This proposal requires the affirmative vote of a majority of shares present in person
or represented by proxy at the Annual Meeting and entitled to vote on the proposal. While this is an advisory vote, the Board and the Compensation Committee value the opinions of stockholders and if
there are a significant number of votes against this proposal, the Board and the Compensation Committee will consider stockholders' concerns and evaluate actions necessary to address those concerns.
-
3.
-
Ratification of the KPMG LLP Appointment Proposal
This proposal requires the affirmative vote of a
majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the proposal. If the selection of KPMG LLP as our independent registered public
accounting firm is not ratified, the Audit Committee will reconsider its selection.
-
4.
-
Political Expenditures Stockholder Proposal
This proposal requires the affirmative vote of a majority
of
shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the proposal. If approved by stockholders, the Political Expenditures Disclosure Proposal, which is
advisory in nature, would constitute a recommendation to the Board that the Company provide disclosure regarding its political expenditures.
What are Abstentions and Broker Non-Votes and How are They Treated?
|
An
abstention occurs when a stockholder abstains from voting or does not vote on a proposal. A "broker non-vote" occurs when a broker has not received voting instructions from the
beneficial owner and the broker does not have discretionary authority to vote the shares because the proposal is non-routine. Brokers who do not receive instructions from the beneficial owner are
entitled to vote on the ratification of KPMG LLP's appointment for the 2018 fiscal year, but not on the other proposals. Broker non-votes and abstentions, if any, will be treated as follows
with respect to votes on each of the proposals:
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PROPOSAL
|
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TREATMENT OF ABSTENTIONS
|
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TREATMENT OF BROKER
NON-VOTES
|
1. Election of Directors
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Not considered votes properly cast and therefore will have no effect on this proposal.
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No effect on this proposal.
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2. Say on Pay Proposal
|
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Counted toward the tabulation of votes on this proposal and will have the same effect as a vote AGAINST this proposal.
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No effect on this proposal.
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3. Ratification of KPMG LLP's Appointment
|
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Counted toward the tabulation of votes on this proposal and will have the same effect as a vote AGAINST this proposal
|
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Not applicable since brokers have discretionary authority to vote on this proposal.
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4. Political Expenditures Stockholder Proposal, if properly presented at the meeting
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Counted toward the tabulation of votes on this proposal and will have the same effect as a vote AGAINST this proposal.
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No effect on this proposal.
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If
you hold shares directly as the stockholder of record, you may vote by granting a proxy or, if you hold shares in street name (through a bank, broker, trustee or other nominee),
by submitting voting instructions to your bank, broker, trustee, or nominee. You may vote over the Internet, by telephone, by mail if you have a paper copy of the proxy materials, or in person at the
Annual Meeting. Please refer to the summary instructions below and those included on your proxy card or, for shares held in street name, the
voting instruction card included by your bank, broker, trustee, or nominee.
-
-
Vote By Internet
: If you have Internet access, you may submit your proxy from any
location in the world 24 hours a day, 7 days a week, up until 11:59 p.m., Eastern Time on April 25, 2018 by visiting the website provided on the Notice of Internet
Availability of Proxy Materials (Notice of Availability) or voting instruction card. If you vote by using the Internet, you do not need to return your proxy card or voting instruction card.
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Answers
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Table of Contents
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Vote By Telephone
: If you live in the United States, you may use any touch-tone
telephone to vote your proxy toll-free 24 hours a day, 7 days a week, up until 11:59 p.m., Eastern Time on April 25, 2018. The telephone number is printed on your proxy
card or voting instruction card. If you vote by telephone, you do not need to return your proxy card or voting instruction card.
-
-
Vote By Mail
: If you received or requested a paper copy of the materials, you may
submit your proxy by signing your proxy card or, for shares held in street name, the voting instruction card included by your broker, trustee, or nominee, and mailing it in the enclosed, postage-paid,
addressed envelope. If you provide specific voting instructions, your shares will be voted as you instruct. If you sign, but do not provide instructions, your shares will be voted as the Board
recommends. Mark, sign and date your proxy card and return it in the postage-paid envelope provided as soon as possible as it must be received by the Company prior to April 26, 2018, the Annual
Meeting date.
-
-
Vote In Person
: For information on how record holders and beneficial owners of
shares held in street name can vote in person, please refer to "How can I vote at the Annual Meeting if I attend in person?" below. Record holders, beneficial owners and legal proxy holders should
also refer to "What should I bring to the Annual Meeting if I attend in person?" below for the Annual Meeting admission and voting requirements. Stockholders holding shares in a joint account may
attend the meeting if they provide proof of joint ownership, and if each Stockholder follows the admission requirements described below.
You
may change your proxy instructions or revoke your proxy at any time prior to the vote at the Annual Meeting.
For
shares held directly in your name, you may accomplish this by: (a) delivering a written notice of revocation bearing a later date than the proxy being revoked, (b) signing and
delivering a later dated written proxy relating to the same shares, or (c) attending the Annual Meeting and voting in person (although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy). For shares held in street name, you may change your vote by submitting new voting instructions to your bank, broker, trustee, or nominee, or by obtaining a legal
proxy from your broker and voting your shares by ballot at the Annual Meeting.
What Should I Bring to the Annual Meeting if I Attend in Person?
|
Registration
for the Annual Meeting will begin at 8 a.m., Eastern Time. Please allow ample time for check-in. No cameras, recording equipment, electronic devices, large bags,
briefcases or packages will be permitted in the Annual Meeting. For admission to the Annual Meeting, all
individuals attending must provide personal identification (such as a driver's license or passport), as well as the following:
If you are a record holder (i.e., you hold your shares through our transfer agent, Computershare),
you must bring either a copy of the proxy card
you received as part of your proxy materials, a copy of your Computershare account statement indicating your ownership of our common stock as of the record date, or the Notice of Availability, if you
received one.
If you hold your shares in street name (i.e., through a bank, broker, trustee or other nominee)
, you must bring either the voting instruction
card you received from your bank, broker, trustee or other nominee as part of your proxy materials, a copy of your brokerage statement indicating your ownership of our common stock as of the record
date, or the Notice of Availability, if you received one.
If you are not a stockholder, but are attending the meeting as proxy for a stockholder,
you must bring a valid legal proxy. If you attend as a proxy for
a record holder, you must present a valid legal proxy from the record holder to you. If you attend as a proxy for a street name holder, you must present a valid legal proxy from the record holder
(i.e., the bank, broker, trustee or other nominee) to the street name holder that is assignable, as well as a valid legal proxy from the street name holder to you. Stockholders may only appoint
one proxy holder to attend the Annual Meeting on their behalf.
How Can I Vote at the Annual Meeting if I Attend in Person?
|
Beneficial Owners
If you are a beneficial owner of shares held in street name
and wish to vote your shares in person at the Annual
Meeting
, you will need to ask your bank, broker, trustee or other nominee to furnish you with a legal proxy. You will need to bring proof of ownership as described above and
the legal proxy with you to the Annual Meeting and hand it in with a signed ballot that will be provided to you at the Annual Meeting. You will not be able to vote your shares at the Annual Meeting
without a legal proxy. If you do not have a legal proxy, you can still attend the Annual Meeting but you will not be able to vote your shares at the Annual Meeting. Accordingly, we encourage you to
vote your shares in advance, even if you intend to attend the Annual Meeting. Please note that if you request a legal proxy, any previously executed proxy will be revoked, and your vote will not be
counted unless you appear at the Annual Meeting and vote in person or legally appoint another proxy to vote on your behalf.
Record Holders
If you are a record holder and wish to vote your shares in person at the Annual Meeting, you will need to bring proof of ownership as described above
and a ballot will be provided to you at the Annual Meeting.
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Answers
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Table of Contents
What Happens if I Do Not Provide Instructions as to How to Vote?
|
If
you sign your proxy card or voting instruction card with no further instructions, your shares will be voted in accordance with the recommendations of the Board.
Where Can I Obtain the List of Stockholders Entitled to Vote?
|
The
names of stockholders of record entitled to vote at the Annual Meeting will be available at the Annual Meeting and for 10 days prior to the Annual Meeting for any purpose
germane to the Annual Meeting, between the hours of 8:30 a.m. and 5:00 p.m., Eastern Time, at our principal executive offices at 804 Carnegie Center, Princeton, New Jersey 08540. Please
contact our Corporate Secretary if you wish to review the list of stockholders at our principal executive offices.
Who Pays the Cost of Solicitation of Proxies?
|
We
will pay for the cost of preparing, assembling, printing, mailing and distributing these proxy materials. Our directors, officers and employees may solicit proxies or votes in
person, by telephone, or by electronic communication. Such individuals will not receive any additional compensation for these solicitation activities. We have retained MacKenzie Partners, Inc.
to assist us in soliciting your proxy for an estimated fee of $27,500, plus reasonable out-of-pocket expenses. We will also reimburse brokerage houses and other custodians, nominees, and fiduciaries
for their reasonable out-of-pocket expenses for forwarding proxy and any other solicitation materials to beneficial owners of our common stock.
Who is the Company's Transfer Agent?
|
Our
transfer agent is Computershare. All communications concerning stockholder inquiries can be handled by contacting NRG Energy, Inc. c/o Computershare, Computershare
Investor Services, P.O. Box 505000, Louisville, Kentucky 40233-5000, or by telephone at 1-877-498-8861, or 1-781-575-2725 (outside the U.S. and Canada), or (800) 952-9245 (Hearing
Impaired-TTY). Their website is:
http://www.computershare.com
. Certificates for transfer and address changes should be sent to: Computershare,
P.O. Box 505000, Louisville, Kentucky 40233-5000.
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 rules adopted by the SEC, we are using the Internet as the primary means of furnishing proxy materials to stockholders. Accordingly, we are sending a Notice of
Availability to our stockholders. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice of Availability or request a printed set of
the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice of
Availability. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We encourage stockholders to take advantage of
the availability of the proxy materials on the Internet to help reduce the environmental impact of our annual meetings.
Where Can I Find Directions to the Annual Meeting?
|
Directions
to the Annual Meeting can be found on the Hyatt Regency Princeton's website at
http://www.princeton.regency.hyatt.com/en/hotel/our-hotel/map-and-directions.html.
We
have adopted a procedure approved by the SEC called "householding." Under this procedure, multiple stockholders who share the same last name and address and do not participate in
electronic delivery will receive
only one copy of the proxy materials or the Notice of Availability. We have undertaken householding to reduce our printing costs and postage fees. Stockholders may elect to receive individual copies
of the proxy materials or Notice of Availability at the same address by contacting Broadridge Financial Solutions, Inc. by telephone at 1-866-540-7095, by mail at Broadridge Financial
Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York 11717, or by e-mail at
sendmaterial@proxyvote.com
. Stockholders who
are receiving individual copies of such materials and who would like to receive single copies at a shared address may contact Broadridge Financial Solutions, Inc. with this request by using the
contact information provided above.
How Can I Request Additional Materials?
|
Stockholders
may request additional copies of the proxy materials or Notice of Availability by contacting Broadridge Financial Solutions, Inc. by telephone at 1-800-579-1639
or by e-mail at
sendmaterial@proxyvote.com
.
Whom Should I Call If I Have Questions About the Annual Meeting?
|
If
you have any questions or need any assistance in voting your shares, please contact our proxy solicitor:
MacKenzie
Partners, Inc.
105 Madison Avenue,
New York, New York 10016
Toll
Free: (800) 322-2885
Collect: (212) 929-5500
Fax: (212) 929-0308
Email:
proxy@mackenziepartners.com
*
* *
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Answers
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Table of Contents
Stockholder Proposals and Director Nominations for
the 2019 Annual Meeting of Stockholders
Stockholder Proposals for Inclusion in the Proxy Materials for the 2019 Annual Meeting of Stockholders
|
In
order for a stockholder proposal to be considered for inclusion in our proxy materials for the 2019 Annual Meeting of Stockholders (2019 Annual Meeting), our Corporate Secretary
must receive the proposal no later than the close of business on November 15, 2018, the 120th day prior to the first anniversary of the date on which this Proxy Statement was first
released to our stockholders in connection with this year's Annual Meeting. If we change the date of the 2019 Annual Meeting by more than 30 days from the anniversary of this year's Annual
Meeting, stockholder proposals must be received a reasonable time before we begin to print and mail the proxy materials for the 2019 Annual Meeting in order to be considered for inclusion in the proxy
materials.
Proposals
must be sent via registered, certified, or express mail (or other means that allows the stockholder to determine when the proposal was received by the Corporate Secretary) to the Corporate
Secretary, NRG Energy, Inc., 804 Carnegie Center, Princeton, New Jersey 08540. Proposals must contain the information required under our Bylaws, a copy of which is available upon request to our
Corporate Secretary, and also must comply with the SEC's regulations regarding the inclusion of stockholder proposals in company-sponsored proxy materials.
Director Nominees for Inclusion in the Proxy Materials for the 2019 Annual Meeting of Stockholders (Proxy Access)
|
Eligible
stockholders who do not seek to use the advance notice provisions for nomination of directors in Article II, Section 11 of our Bylaws as described below, but
who instead intend to nominate a person for election as director under the proxy access provision in our Bylaws for inclusion in our proxy materials for the 2019 Annual Meeting, must comply with the
requirements set forth in Article II, Section 15 of our Bylaws and summarized below:
-
-
Stockholder Eligibility to Submit Nominees
: A stockholder, or group of up to 20 stockholders,
continuously owning at least 3% of our outstanding common stock for a period of at least three years prior to the date of the nomination may submit director nominations for inclusion in our proxy
materials for the 2019 Annual Meeting.
-
-
Number of Nominees
: An eligible stockholder or group of stockholders (as described above) may
nominate directors constituting up to 20% of the Board.
-
-
Deadline
: For the 2019 Annual Meeting, our Corporate Secretary must receive the nomination
between October 16, 2018 and the close of business on November 15, 2018. If the 2019 Annual Meeting is held earlier than March 27, 2019 or later than May 26, 2019, the
nomination must be received by the later of the close of business on (a) the date that is 150 days prior to such annual meeting or (b) the 10th day following the
announcement of the date of such annual meeting.
-
-
Nomination Information
: The nomination must contain the information required by
Article II, Section 15 of the Bylaws, a copy of which is available upon request to our Corporate Secretary.
If
the stockholder does not meet the applicable deadlines or comply with the requirements of Article II, Section 15 of our Bylaws, we may omit the nomination from our proxy materials for
the 2019 Annual Meeting.
Stockholder Proposals and Business to be Brought Before the 2019 Annual Meeting of Stockholders (Without Being Included in the Proxy Materials)
|
Stockholders
intending to present a proposal or nominate a director for election at the 2019 Annual Meeting without having the proposal or nomination included in our proxy materials
must comply with the requirements set forth in our Bylaws and summarized below.
Our
Bylaws require, among other things, that our Corporate Secretary receive the proposal or nomination no earlier than the close of business on the 120th day, and no later than the close of
business on the 90th day, prior to the first anniversary of this year's Annual Meeting, unless the 2019 Annual Meeting is more than 30 days before or more than 70 days after such
anniversary date. For our 2019 Annual Meeting, our Corporate Secretary must receive the proposal or nomination between December 27, 2018 and the close of business on January 26, 2019. If
the 2019 Annual Meeting is held earlier than March 27, 2019 or later than July 5, 2019, the proposal or nomination should be received no earlier than the
close of business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of (a) the 90th day prior to the date of the
2018 Annual Meeting or (b) the 10th day following the day on which the date of the 2019 Annual Meeting is first publicly announced by the Company.
The
proposal or nomination must contain the information required by Article II, Section 11 of the Bylaws, a copy of which is available upon request to our Corporate Secretary. If the
stockholder does not meet the applicable deadlines
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Stockholder
Proposals
and
Director
Nominations
for
the
2019
Annual
Meeting
of
Stockholders
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63
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Table of Contents
or comply with the requirements of SEC Rule 14a-4, we may exercise discretionary voting authority under proxies we solicit to vote, in accordance with
our best judgment, on any such proposal.
Stockholder Recommendations for Director Candidates
|
The
Governance and Nominating Committee will also consider nominations by stockholders who recommend
candidates
for election to the Board. A stockholder seeking to recommend a prospective candidate for the Committee's consideration may do so by writing to the Corporate Secretary, NRG
Energy, Inc., 804 Carnegie Center, Princeton, New Jersey 08540 and by following the requirements to submit nominees discussed under "Stockholder Proposals and Business to be Brought Before the
2019 Annual Meeting of Stockholders (Without Being Included in the Proxy Materials)."
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64
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Stockholder
Proposals
and
Director
Nominations
for
the
2019
Annual
Meeting
of
Stockholders
|
|
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time, on April 25, 2018. 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. NRG ENERGY, INC. C/O OFFICE OF GENERAL COUNSEL 804 CARNEGIE CENTER PRINCETON, NJ 08540-6213 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 above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. 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, on April 25, 2018. 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. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E39855-P02671 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. NRG ENERGY, INC. The Board of Directors recommends a vote FOR the nominees listed under Proposal 1 and FOR Proposals 2 and 3. 1. Election of Directors Nominees: For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. E. Spencer Abraham For Against Abstain 2. To approve, on a non-binding advisory basis, the compensation of the Company's named executive officers. To ratify the appointment of KPMG LLP as the Company's independent registered public accounting firm for fiscal year 2018. ! ! ! ! ! ! 1b. Kirbyjon H. Caldwell 1c. Matthew Carter, Jr. 3. 1d. Lawrence S. Coben The Board of Directors recommends you vote AGAINST Proposal 4: For Against Abstain 1e. Heather Cox 4. To vote on a stockholder proposal regarding disclosure of political expenditures, if properly presented at the meeting. ! ! ! 1f. Terry G. Dallas 1g. Mauricio Gutierrez NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 1h. William E. Hantke 1i. Paul W. Hobby 1j. Anne C. Schaumburg 1k. Thomas H. Weidemeyer 1l. C. John Wilder Please sign exactly as your name(s) appear(s) hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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. IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. E39856-P02671 Proxy NRG Energy, Inc. ANNUAL MEETING OF STOCKHOLDERS April 26, 2018 9:00 A.M. Hyatt Regency Princeton 102 Carnegie Center, Princeton, New Jersey 08540 This Proxy/Voting Instruction Card is Solicited on Behalf of the Board of Directors for the 2018 Annual Meeting of Stockholders. The undersigned hereby constitutes and appoints Mauricio Gutierrez and Brian E. Curci, and each of them, attorneys and proxies with full power of substitution, to represent the undersigned and to vote all shares of common stock, $0.01 par value, of NRG Energy, Inc. (the "Company"), that the undersigned would be entitled to vote if personally present at the 2018 Annual Meeting of Stockholders of the Company to be held on April 26, 2018, at 9:00 a.m. (Eastern Time) at the Hyatt Regency Princeton, 102 Carnegie Center, Princeton, New Jersey 08540, and at any and all adjournments or postponements thereof (the "Meeting"), as herein specified and in such proxyholders' discretion upon any other matter that may properly come before the Meeting including without limitation to vote on the election of such substitute nominees as such proxies may select in the event nominee(s) named on the card become(s) unable to serve as director(s). By granting this proxy, the undersigned hereby revokes any proxy previously granted by the undersigned. THIS PROXY WILL BE VOTED AS DIRECTED. IF NOT OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED "FOR" THE NOMINEES LISTED UNDER PROPOSAL 1, "FOR" PROPOSALS 2 AND 3 AND "AGAINST" PROPOSAL 4. PLEASE MARK DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING. (Continued and to be signed on reverse side)
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