Item 11.
Executive Compensation
C
OMPENSATION
D
ISCUSSION
AND
A
NALYSIS
The following discussion should be read together with the compensation tables and disclosures for our named executive officers included under Executive
Compensation. The following discussion contains statements regarding future company performance targets and goals. These targets and goals are disclosed in the limited context of our compensation programs and should not be considered as
statements of our expectations or estimates of results or other guidance; to that end, these targets and goals will not be subject to updates.
INTRODUCTION
This section explains our executive compensation program, including philosophy, policies, practices and key compensation decisions for 2017 as it relates to
our named executive officers, or Named Executive Officers. Compensation for our Named Executive Officers is further described in the Summary Compensation Tables and other compensation tables contained in this Amendment No. 1 to the
Companys Annual Report on
Form 10-K.
2017 Named Executive Officers
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Name
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Title
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Robert C. Flexon
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President and Chief Executive Officer
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Clint C. Freeland
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Executive Vice President and Chief Financial Officer
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Carolyn J. Burke
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Executive Vice President, Strategy & Administration
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Catherine C. James
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Executive Vice President and General Counsel
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Henry D. Jones
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Executive Vice President and Chief Commercial Officer
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These Named Executive Officers, together with our other senior executives whose compensation is determined by the Compensation Committee
and our Board, are referred to as our Executive Management Team.
12
EXECUTIVE SUMMARY
The
Compensation Committee is committed to sound compensation and corporate governance practices. It further believes the decisions regarding 2017 compensation were made to ensure continued alignment of executive compensation with the Companys
results, strategic, operational and financial accomplishments and the long-term interests of our stockholders.
Our long-term incentive, or LTI, awards are
substantially performance-based aligned with stockholder interests. Our short-term incentive, or STI, plan is designed to reward the achievement of annual performance objectives critical to Dynegys success. These objectives are determined
annually based on an
in-depth
strategic planning process with the Board of Directors and the Executive Management Team and progress is reviewed frequently throughout the year. For 2017, the objectives were
categorized across five critical success factors weighted as follows for the purposes of determining STI funding for the year (Operations: 20% weighting; Strengthen the Balance Sheet: 30% weighting; Commercial and Retail: 25% weighting; Regulatory:
20% weighting; and Workforce Positioned to Succeed: 5% weighting).
The Compensation Committee and full Board reviewed LTI performance unit metrics and progress
along the above STI objectives throughout the year and the Companys and Named Executive Officers accomplishments in these areas impacted our compensation decisions and pay outcomes in 2017 as described below:
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Our STI plan achieved a quantitative result equal to 100.5% of target based on results relative to our
pre-established
goals.
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The Compensation Committee had continued the use of performance shares as the largest component of the 2017 LTI awards for our Named Executive Officers.
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The PSUs granted in 2015 (covering the 2015-2017 performance period) resulted in no payment, as the Companys total stockholder return, or TSR, performance threshold was not achieved.
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PSUs granted in 2016 and 2017 included a second performance metric: cumulative Free Cash Flow, or FCF. This second metric was added to enhance the line of sight for our management team, further align pay and performance
and in response to feedback we received from some of our largest stockholders.
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BUSINESS STRATEGY AND COMPANY PERFORMANCE
The Compensation Committee believes that our compensation plans and policies are
well-designed
and structured to ensure that the
compensation of our Named Executive Officers supports our compensation philosophy and objectives, which focus on pay and performance, alignment with stockholder value and market competiveness. This is especially important as the Compensation
Committee balances executive compensation decisions that reward performance, while recognizing the challenges stockholders in the Independent Power Producer, or IPP, industry have faced.
During 2017, we proactively managed aspects of our business that were within our direct control, including strengthening the balance sheet, cost management, operations
and portfolio management, and took an active and vocal leadership role on the regulatory front at the state and national level. Notable highlights from the past year include:
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Repaid/refinanced $1.25 billion of the 2019 debt maturity and repriced secured debt twice, reducing LIBOR spread by 1.25% and saving $25 million in interest expense per year.
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Completed the GENCO subsidiary financial restructuring, eliminating $825 million of unsecured Genco bonds in exchange for a portion of cash, notes and warrants.
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Closed the Engie acquisition and exceeded the synergy target of $90 million.
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Achieved top decile safety performance and significantly reduced the severity of injuries (SIF) across the fleet.
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Exercised cost management measures across the fleet to help mitigate margin losses due to market decline and/or reliability issues.
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13
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Completed a series of divestitures in order to reduce debt balances resulting in $785 million in proceeds from asset sales.
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●
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Completed the JOU unwind transactions with AEP and AES to improve operating efficiencies.
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Completed the Brayton Point decommissioning and sale.
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Our self-improvement program, PRIDE (Producing Results through Innovation by Dynegy Employees) exceeded the
pre-established
targets set for 2017, achieving $165 million in
balance sheet improvements and $89 million in identified EBITDA enhancements.
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●
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Initiated our Earnings and Cost Improvement program targeting $100 million in savings for 2018.
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Summary of
the Key Features of our Executive Compensation Program
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We Do...
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We Do Not...
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Pay for performance using a compensation structure that includes annual performance-based LTI awards that are aligned with stockholder interests
Have change in control benefits that are subject to double trigger provisions, requiring both the occurrence of a change in control event and an involuntary termination
Maintain stock ownership requirements for all officers that require attainment of ownership levels before equity transactions can occur
Have a
claw-back
mechanism in place for incentive awards
Establish a
performance-based
bonus pool
Outreach with our top stockholders to seek input on executive compensation programs
Have an independent compensation consultant that reports directly to the Compensation Committee
Conduct an annual risk assessment to ensure that the structure and design of our incentive compensation programs are not reasonably likely to result in excessive
risk-taking
that could have a material adverse impact on the Company
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Offer supplemental executive retirement plan benefits
Engage in option backdating or
re-pricing
Permit hedging or pledging of Company Stock by Directors or Officers
Provide excise tax assistance upon a change in control
Provide any material perquisites to executives, other than reimbursement for financial planning and tax advice
Have employment agreements for our Named Executive Officers, other than for our CEO
Encourage excessive risk or inappropriate risk taking though our incentive programs; our plans focus on aligning our compensation policies with the
long-term
interests of our stockholders
Guarantee bonuses
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Pay for Performance
The total
compensation for each Named Executive Officer provides reasonable upside potential based on performance as well as risk of no payment when performance objectives are not achieved. Our compensation structure includes a competitive base salary and
performance based STI and LTI awards that are aligned with stockholder interests.
For 2017, the mix of pay across base salary, STI, and LTI for the CEO and the
other Named Executive Officers was heavily weighted towards
at-risk
pay. As the two charts below illustrate, a total of 86% of total compensation allocated to Mr. Flexon, and 71% of the total compensation
allocated to the other NEOs, was
at-risk.
14
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2017 CEO Total Compensation
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2017 Total NEO Total Compensation
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Reported and Realizable Pay
The
transformation of our portfolio began in 2013 with the acquisition of Ameren Energy Resources and has been accelerated through a series of acquisitions culminating with the completion of the ENGIE Acquisition in early 2017. During the latter half of
this time period, we have seen the continuation of a low commodity price environment, significant shifts in the regulatory environment and a change in the stock price valuation for companies in the IPP sector. Over the course of this time period,
the Compensation Committee has sought to structure our executive compensation programs to reward our Named Executive Officers for the accomplishment of strategic and annual business objectives, while demonstrating alignment with sustainable
long-term stockholder value.
Reported Pay.
In the first quarter of each year, the Compensation Committee establishes the annual compensation opportunities
for the Named Executives. Decisions regarding base salary, annual STI targets and LTI awards are based on competitive pay levels and practices, Dynegys prior year performance, the executives individual performance, and progress on the
execution of the Companys strategic plan. Since our emergence from bankruptcy in 2012, Dynegy has made significant progress in enhancing the Companys ability to generate long-term value for stockholders. The impact of acquisitions and
other portfolio management decisions, cost reduction efforts, the realization of operational efficiencies and other actions within managements control has positioned the Company for future success. Chart 1 illustrates the nearly 5X growth in
Adjusted EBITDA
1
and generation capacity since 2013. In recognition of these results, during this time period the Compensation Committee has made moderate increases to Mr. Flexons
annual total compensation (excluding the
one-time
equity grant made in May 2015 in connection with execution of his amended employment contract), as shown in Chart 2.
1
We define Adjusted EBITDA as
EBITDA adjusted to exclude (i) gains or losses on the sale of certain assets, (ii) the impacts of
mark-to-market
changes on derivatives related to our
generation portfolio, as well as warrants, (iii) the impact of impairment charges: certain amounts such as those associated with the acquisitions, dispositions, and restructurings
(v) non-cash
compensation expenses (vi) gains or losses related to modification or extinguishment of debt, and (vii) other material or unusual items. For a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial
measure, for fiscal years 2015, 2016 and 2017, see Part II, Item 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsResults of Operations of the Original Form
10-K
and for a reconciliation of Adjusted EBITDA to net income for fiscal years 2013 and 2014, see Part II, Item 7. Managements Discussion and Analysis of Financial Condition and Results of
OperationsResults of Operations of our Annual Report on Form
10-K
for the fiscal year ended 2014.
15
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Chart 1 - Growth in Generation Capacity
and Adjusted EBITDA
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Chart 2 - 2013-2017 Reported CEO
Compensation
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Realizable Pay.
The Compensation Committee believes that both the mix and design of LTI award vehicles delivered to the Named
Executive Officers establish strong alignment with stockholders, and such awards are working as intended. The average realizable value of these awards is approximately 40% of their reported value, as measured on December 31, 2017.
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Chart 1 - Grant Value of LTI Previously
Awarded to the CEO vs. Realizable
Value (as
of Dec 31, 2017)
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Chart 2 Average Grant Value of LTI
Previously Awarded to the other NEOs vs.
Realizable Value (as of Dec 31, 2017)
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16
Note: Realizable Pay is defined using the following facts and assumptions:
(1)
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Dynegy closing stock price of $11.85 as of December 31, 2017.
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(2)
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2013, 2014 and 2015 PSUs resulted in no payment.
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(3)
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Assumes 2016 and 2017 PSUs vest at target
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(4)
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Chart 1 includes a
one-time
RSU grant to Mr. Flexon in May 2015 in connection with the renewal of his employment agreement.
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EXECUTIVE COMPENSATION PROGRAM OVERVIEW
Philosophy and Objectives of
our Executive Compensation Programs
The executive compensation program, administered by the Compensation Committee, is designed to attract, motivate and
retain a highly qualified Executive Management Team capable of effectively managing and growing our business. Our executive compensation program reflects a fundamental belief that rewards should be competitive, both in elements and amount, with the
broad labor market in which we compete for executive talent and commensurate with the Company and the individual executives performance. The primary objectives of our executive compensation program are:
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Pay for Performance
Our total compensation for each individual provides reasonable upside potential for exceptional performance; as well as risk of no payment, with respect to incentive compensation, when
performance objectives are not achieved. Our variable pay programs are designed as
forward-looking
incentives that reflect individual and corporate performance during the year under review.
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●
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Alignment with Stockholder Value
Our LTI awards encourage share price improvement and a strong link to stockholder interests. Our compensation programs are designed and administered to maximize
stockholder value.
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●
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Market Competiveness
Our overall compensation strategy recognizes that attraction and retention of key talent is critical. A market competitive pay program is necessary to the attainment of our stated
business goals and objectives and to the creation of value for our stockholders.
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The Compensation Committee considers these objectives in
making decisions regarding the design of our executive compensation program, as well as the level and structure of pay for our Named Executive Officers.
Elements of our Executive Compensation Program
The Compensation
Committee strives to promote a pay for performance culture. The executive compensation program was designed to incorporate three primary elements: base salary, STI, and LTI awards.
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Element
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Key Characteristics
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Pay at Risk
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Base Salary
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Reflects
each Named Executive Officers scope, experience, qualifications, and impact on the Companys business results
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No
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Short-Term Incentive Awards
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●
Designed to
motivate the achievement of
short-term
business results critical to our success and achievement of
long-term
value creation for our stockholders
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Based on annual performance against specific identified
financial, strategic, and operational goals
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Yes; payout is based on achievement of
pre-established
company goals and individual performance factors;
no payout occurs if threshold
performance goals are not achieved
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17
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Element
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Key Characteristics
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Pay at Risk
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Long-Term
Incentive Awards
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Structured to achieve multiple objectives, including: the
attraction and retention of executive talent; alignment of executives financial interests with the interests of stockholders; and rewarding the achievement of
long-term
strategic performance
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Delivered through a mix of award vehicles
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Yes; payout strongly linked to Dynegys stock price performance;
decline in stock price will reduce the value of LTI awards and an increase in stock price will enhance the value of LTI awards
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Performance Share
Units
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●
Largest
portion of total LTI mix
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Performance measured over a
3-year
period, across two metrics:
●
50% based on TSR relative to peers
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50% based on Dynegys cumulative FCF
2
●
Award
payouts are capped if Dynegys absolute TSR is negative
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Yes; value linked to Dynegys TSR relative to peers and FCF
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Restricted Stock
Units
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●
Subject to
three-year
vesting
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Yes; value linked to Dynegys stock price
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Stock Options
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Subject to
three-year
vesting
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Yes; value present only when Dynegys stock price increases above the strike price (stock price on the day of grant)
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Peer Group and Benchmarking
The
Compensation Committee uses compensation benchmarking data to provide a competitive market context to its decisions regarding compensation for the Named Executive Officers. To assist the Compensation Committee with setting 2017 target compensation
levels, Meridian Compensation Partners, LLC, or Meridian, prepared a benchmarking review to assess the competitiveness of each element of compensation for the Named Executive Officers, and to provide information regarding incentive plan designs and
pay practices within the energy industry.
The Compensation Committee reviewed and discussed the benchmarking data, and used the data to inform its compensation
decisions. The Compensation Committee believes the combination of these two data perspectives offers an appropriate and credible basis for benchmarking the compensation of the Named Executive Officers. The Committee will continue to evaluate this
approach and available data sources, and make changes as appropriate.
2
We define Free Cash Flow in the 2017 award agreements as cash flow from operations less
non-discretionary
maintenance
and environmental capital expenditures, the cash impact of acquisition-related fees and financing costs plus the return of restricted cash. Free Cash Flow also includes receipts or payments related to interest rate swaps, excludes the impact of
changes in collateral and working capital and excludes certain capital costs related to compliance with environmental requirements.
18
The benchmarking approach for the 2017-2018 benchmarking cycle uses two sources of market data to assess the
competitiveness of Dynegys executive compensation programinformation contained in the public disclosures of a selected group of peer companies, and data from the 2017 Equilar Executive Compensation Survey database.
Selection of the peer companies presents certain challenges due to the limited number of directly comparable companies. Dynegy operates in competitive wholesale and
retail markets as an IPP. Given the relatively small number of direct competitors, the Committee has expanded the peer group to include companies from three segments of the power generation industrypublicly traded independent power producers,
electric utilities and
multi-utilities
who both possess competitive power generation operations to provide a more robust and statistically significant peer group. Specific factors considered in selection
of the peer group include:
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Financial and Operational Metricsassets, revenues, market capitalization, enterprise value;
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Operational Scopemerchant generation capacity, industry segment, commercial, retail and commodity focus;
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Market-Based
Factorslabor market requirements (e.g., finance, operations, commercial), competition for executive talent, comparability of pay data; and
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External stockholder and governance evaluations of Dynegys pay levels and practices.
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The resulting selection of
peer companies attempts to balance the above considerations with the need to identify companies that similarly face the unique challenges of the power generation market. The 2017 peer group consists of nine companies, plus Dynegy, that operate
merchant power businesses, with revenues ranging from $1.4 billion to $28.6 billion (median revenues of $10.2 billion).
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Peer
Companies
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IPPs
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Electric Utilities
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Multi-Utilities
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AES Corporation
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Calpine Corporation
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Capital Power Corporation
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NRG Energy Inc.
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TransAlta Corporation
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Entergy Corporation
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Exelon Corporation
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First Energy Corporation
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Public Service Enterprise Group Inc.
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In 2017, one company was removed from the peer group (Talen Energy), while one firm was added (TransAlta Corporation). These changes
were intended to further refine the benchmarking group, however our peer group is still comprised of companies that vary with respect to their core business model. The IPP peers operate portfolios that generate power in competitive, deregulated
markets, while the utility peer companies operate portfolios that are also supported by a regulated rate base. Additionally, the increase in state regulatory actions, that in some instances have resulted in
out-of-market
subsidies for utility-owned generation facilities, have further contributed to uneven competitive landscape across the companies that comprise our peer group.
The Compensation Committee reviews benchmark compensation data for the Named Executive Officers, based on position matches developed from analyses of publicly-disclosed
data from the peer group companies and supplemental benchmark data derived from the Equilar Executive Compensation Survey. This survey analysis included data from 32 energy industry companies with median revenues of $6.6 billion and 187 general
industry companies with median revenues of $4.7 billion. A listing of the companies included in the survey data is provided in the table in Annex A.
The
Compensation Committee does not target specific percentiles within the benchmark data provided by these sources when making compensation decisions. Rather, the Compensation Committee determines the appropriate competitive positioning for each Named
Executive Officer based on a variety of factors including market data, individual expertise and individual performance and corporate performance.
19
Stockholder Outreach and Say on Pay Results
Dynegy has maintained regular, year-round engagement with top stockholders through investor relations activities involving several members of our executive management
team. These activities include quarterly earnings calls, conferences,
face-to-face
visits and other communication channels. Our outreach efforts, which covered updates
to our strategic focus, executive compensation and overall governance practices, included discussions with several of our largest stockholders. These discussions provided feedback, on a number of areas, in support of the overall structure of our
executive compensation program, and also highlighted the need to continue to more clearly explain the link between our business results with executive compensation decisions. We focused on such suggested disclosures and incorporated a number of
suggested changes herein. We designed 2017 pay to address some stockholder concerns resulting in 80% Say on Pay results in 2017.
The primary participants in these
discussions were our Compensation Committee Chair, our Chief Administrative Officer and members of our Human Resources, Legal and Investor Relations teams.
2017
COMPENSATION
Base Salary
The Compensation Committee
considers job responsibilities, external benchmark data, internal pay equity, and individual performance to determine the level of base salary for each Named Executive Officer. In early 2017, the Compensation Committee reviewed these factors and
base salaries for the Named Executive Officers and approved increases as indicated below:
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Percentage
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Named Executive Officer
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2016 Base Salary
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2017 Base Salary
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Increase
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Robert Flexon
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$1,200,000
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$1,240,000
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3
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%
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Clint Freeland
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$587,000
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$602,000
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3
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%
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Carolyn Burke
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$530,000
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$547,000
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3
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%
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Catherine James
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$525,000
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$542,000
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3
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%
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Henry Jones
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$527,100
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$560,000
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6
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%
|
The Compensation Committee recommended increases for Mr. Flexon, Mr. Freeland, Ms. Burke, Ms. James, and
Mr. Jones consistent with the merit adjustment budget that was provided to
non-represented
employees and comparable to the peer market levels relative to their individual performance. The Compensation
Committee sought to adjust Mr. Joness salary upward in the competitive benchmark range commensurate with his experience and performance, and as such recommended a base salary adjustment, which was subsequently approved by the full Board.
Short-Term Incentive (STI) Plan
The Dynegy Inc. Incentive
Compensation Plan, or STI Plan, serves as a variable,
at-risk
mechanism to reward our Named Executive Officers and other eligible employees for the achievement of annual performance objectives critical to our
success. The STI Plan emphasizes pay for performance by providing cash awards for the achievement of
pre-determined
levels of Company performance. Annual STI awards are paid from a
performance-based
bonus pool designed to fund STI awards paid to our Named Executive Officers and other executives as determined through the STI Plan, and to allow for full tax deductibility of such STI awards.
20
Individual STI Targets.
The Compensation Committee reviews the STI target bonus opportunities for each Named
Executive Officer on an annual basis, and may make adjustments to reflect changes in an individual role or to maintain competitive alignment. The Compensation Committee believes the target STI opportunities for 2017 were appropriately positioned
relative to competitive benchmark levels and remain unchanged from 2016. The 2017 STI targets for each of the Named Executive Officers, expressed as a percentage of base salary, were as follows:
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Named Executive Officer
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Target STI Opportunity
(percent of base pay)
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Robert
Flexon
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125%
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Clint
Freeland
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75%
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Carolyn
Burke
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75%
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Catherine
James
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75%
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Henry
Jones
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75%
|
21
The design of the STI Plan provided each of our Named Executive Officers with the opportunity to earn up to a maximum of
200% of their individual STI target, based on the Companys performance relative to
pre-established
performance components and levels of achievement.
STI Performance Objectives.
Each year, the Board of Directors, the Executive Management Team, and internal and external subject matter experts convene to review,
discuss and determine the Companys five-year Strategic Plan. The key priorities required to accomplish our strategic plan form the basis for our annual business objectives, which we refer to as Critical Success Factors. Each of the Critical
Success Factors is weighted, and performance is measured against
year-end
performance to determine the overall funding for the STI program.
For 2017, the Committee approved five Critical Success Factors that were identified in the Strategic Plan to form the basis of performance goals under the STI Plan (see
table below). These Critical Success Factors were focused on being the safest, most reliable, lowest-cost platform in the industry while optimizing the portfolio through PRIDE, strengthening the balance sheet, and reducing debt. Performance goals
under Strengthen Balance Sheet, Commercial & Retail, Operations, and Workforce Positioned to Succeed (which collectively had an 80% weighting) included quantifiable performance metrics. In contrast, the performance goals under Regulatory
(which had a 20% weighting) included subjective performance metrics. At the start of the year, the Committee established specific goals that defined threshold, target and maximum performance levels. Details regarding the specific performance goals
are provided below in the section called 2017 STI Results.
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Critical Success Factors
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Weighting
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Strengthen Balance Sheet
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30%
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Operations
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20%
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Commercial & Retail
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25%
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Regulatory
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20%
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Workforce Positioned to Succeed
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5%
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Throughout the year, the Compensation Committee was provided with updates on progress against these performance goals. At the end of the
year, the Compensation Committee reviewed achieved performance and determines the percentage of target payout earned as a result of this performance.
STI
Funding Gate.
In order for our annual STI Plan to be funded at any performance level, a minimum level of performance must be first achieved. In the first quarter of each year, the Compensation Committee established this funding gate
based on a key financial performance metric. If this funding gate metric is not achieved, the STI program will not be funded, resulting in no STI payout to any employee, including our Named Executive Officers. For 2017, the Compensation Committee
approved the funding gate of $47 million of FCF.
2017 STI Results.
In February 2018, the Compensation Committee determined that the 2017 funding gate
had been successfully achieved. The Compensation Committee then reviewed the Companys performance relative to the 2017 Critical Success Factors and performance metrics and certified the quantitative result as 100.5% of target. The performance
results were reviewed and confirmed by the Companys Internal Audit team. The detailed performance results relative to the Critical Success Factors are summarized below:
22
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Strengthen the Balance Sheet (30%)
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Weight
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Achievement
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Financial Performance (40%)
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Adjusted EBITDA - $1,170MM
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50.0
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%
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50.0
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%
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FCF - $417MM
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50.0
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%
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200.0
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%
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Liability Management Part I (30%)
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Closed sale of Armstron, Troy, Milford, MA, Dighton, and Lee generating $785MM, Brayton Pt $8MM, Cash benefit avoidance $62MM
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100.0
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%
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100.0
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%
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Liability Management Part II (30%)
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GENCO/IPH consolidation completed as of Feb 2017. JOU swap and AEP complete, FERC approval for JOU rationalization with AES; Two tranches of PJM Capacity Forward Sale executed; Big three spending delayed two years improving 2017
and 2018 cash flow by $178M.
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100.0
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%
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150.0
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%
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Operations (20%)
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Weight
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Achievement
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Safety (includes ENGIE plants) (30%)
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Above target (25 OSHA recordables) performance
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60.0
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%
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150.0
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%
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Above target (4 VPP applications) completion
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10.0
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%
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150.0
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%
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Maximum achievement with 11 GAP Assessments completed
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10.0
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%
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200.0
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%
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100% of safety action plans submitted for Dynegy and ENGIE
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10.0
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%
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200.0
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%
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All quarterly reports completed
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10.0
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%
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150.0
|
%
|
|
|
|
|
Above target performance with 4 notice of violations at Dynegy plants
|
|
|
25.0
|
%
|
|
|
150.0
|
%
|
Environmental, NERC & CCB (10%)
|
|
|
|
Above target performance with 3 notice of violations at ENGIE plants
|
|
|
25.0
|
%
|
|
|
150.0
|
%
|
|
|
|
|
Coal Combustion Byproducts recycled at 79.4% - target
|
|
|
50.0
|
%
|
|
|
100.0
|
%
|
Achieve targeted reliability performance across the fleet (includeds ENGIE) (30%)
|
|
|
|
LOC - $72.6MM, below target
|
|
|
100.0
|
%
|
|
|
75.0
|
%
|
Achieve Maximo performance metric (10%)
|
|
|
|
Above target; entire fleet had 90% of critical performance metrics completed
|
|
|
100.0
|
%
|
|
|
150.0
|
%
|
|
|
|
|
|
|
|
|
|
PRIDE - $87 MM EBITDA (maximum achievement)
|
|
|
25.0
|
%
|
|
|
200.0
|
%
|
|
|
|
|
|
Achieve targeted PRIDE performance on EBITDA and Balance Sheet (10%)
|
|
|
|
PRIDE - $165MM Balance Sheet (maximum achievement)
|
|
|
25.0
|
%
|
|
|
200.0
|
%
|
|
|
|
|
|
|
|
|
|
ENGIE - $91MM EBITDA (target achievement)
|
|
|
25.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
ENGIE - $29MM Balance sheet (target achievement)
|
|
|
25.0
|
%
|
|
|
100.0
|
%
|
Improve strategic sourcing capabilities by effectively classifying all direct spend (~ $726M); includes ENGIE
(10%)
|
|
|
|
Achieved increased spend capture from current levels (5%) to target level (75%)
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Commercial & Retail (25%)
|
|
|
|
|
|
Weight
|
|
|
Achievement
|
|
|
|
|
|
Total MISO bilateral contracts, origination, exports PY 17/18 auction and/or incremental 2017 retail capacity sales above threshold at $64MM
|
|
|
50.0
|
%
|
|
|
50.0
|
%
|
Capacity Sales (50%)
|
|
|
|
Total
ISO-NE
bilateral contracts and/or origination capacity sales below threshold at $21MM
|
|
|
30.0
|
%
|
|
|
0.0
|
%
|
|
|
|
|
Total PJM bilateral contracts and/or origination capacity sales below threshold at $0
|
|
|
20.0
|
%
|
|
|
0.0
|
%
|
Energy Sales (15%)
|
|
|
|
Energy Sales Below Target
|
|
|
100.0
|
%
|
|
|
50.0
|
%
|
Fuel Procurement (excludes ENGIE) (10%)
|
|
|
|
Fuel Procurement 60% of firm transportation and/or delivered natural gas is now secured
|
|
|
100.0
|
%
|
|
|
150.0
|
%
|
Retail (25%)
|
|
|
|
EBITDA - below target by ($21MM) Variances driven by lower volumes due to weather and price competition especially IL. Lower volumes and the liquidation of excess hedge levels
|
|
|
50.0
|
%
|
|
|
0.0
|
%
|
|
|
|
Forward sales at 54.7 MM TWh exceeding target by 4.7TWh
|
|
|
50.0
|
%
|
|
|
150.0
|
%
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory (20%)
|
|
|
|
|
|
Weight
|
|
|
Achievement
|
|
Out-of-Market
Subsidies
(40%)
|
|
|
|
DYN is actively funding campaigns in CT, NJ, PA, OH. NY and IL litigation under apeal
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Market Design (40%)
|
|
|
|
PJM & ISONE: DYN actively participating in stakeholder processes on the capacity and energy market reforms
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Actively engage in Federal policy development and implementation (20%)
|
|
|
|
DYN actively worked to obtain a stay and reconsideration on the ELG rule; in addition, DYN is continuing to work wih the Illinois EPA staff on a combined Illinois MPS group
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Workforce Positioned to Succeed (5%)
|
|
|
|
|
|
Weight
|
|
|
Achievement
|
|
Conduct Inspired Energy sessions (50%)
|
|
|
|
Training on culture shaping initiative 100% completed at all locations
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Conduct live ethics and compliance sessions (50%)
|
|
|
|
Live ethics and compliance training sessions were conducted at 10 ENGIE plants
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
The table below summarizes the actual achievement under each Critical Success Factor and the resulting weighted performance factor.
|
|
|
|
|
|
|
|
|
|
|
|
|
Critical Success Factors
|
|
Target
Weighting
|
|
|
Actual
Achievement
|
|
|
Weighted
Performance
Factor
|
|
Operations
|
|
|
20
|
%
|
|
|
123.0
|
%
|
|
|
24.6
|
%
|
Strengthen the Balance Sheet
|
|
|
30
|
%
|
|
|
125.0
|
%
|
|
|
37.50
|
%
|
Commercial & Retail
|
|
|
25
|
%
|
|
|
53.80
|
%
|
|
|
13.40
|
%
|
Regulatory
|
|
|
20
|
%
|
|
|
100.0
|
%
|
|
|
20.0
|
%
|
Worforce Positioned to Succeed
|
|
|
5
|
%
|
|
|
100.0
|
%
|
|
|
5.0
|
%
|
Total Achievement Result
|
|
|
|
|
|
|
|
|
|
|
100.5
|
%
|
Compensation Committee Recommendation
|
|
|
|
|
|
|
|
|
|
|
100.0
|
%
|
Approved 2017 STI Awards.
In February 2017, the Compensation Committee approved the STI awards for our Named Executive Officers
as set forth in the below table. The awards for Mr. Freeland, Ms. Burke, Ms. James and Mr. Jones were recommended by Mr. Flexon and reviewed and approved by the Compensation Committee. The award levels reflect the
contributions each made relative to the 2017 Critical Success Factors and assessment of their individual performance during the year. Mr. Flexons award was recommended by the Compensation Committee and approved by the full Board. All
awards for the Named Executive Officers were above target and the quantitative result. The Compensation Committee and Boards review of individual performance and contributions resulted in final payouts above the 100% funding percentage.
Robert Flexon:
As Chief Executive Officer, Mr. Flexon led the organization through its efforts to grow the business in what we believe are the most
attractive competitive markets. Additional accomplishments in 2017 included:
|
●
|
|
Drove the balance sheet improvement through multiple debt refinancings, $785 million in asset sales, and $87 million and $165 million in EBITDA and Balance Sheet improvements, respectively.
|
|
|
|
Negotiated and reached agreement with the Genco creditor group which resulted in the extinguishment of over $600 million in debt.
|
|
|
|
Led and directed the Vistra negotiations and activities which led to overwhelming shareholder approval.
|
|
|
|
Responsible for our culture shaping efforts, including safety programs. Safety performance in 2017 was the best performing year since 2010.
|
Clint Freeland:
As EVP and Chief Financial Officer, Mr. Freeland leads
the finance organization, which achieved the following in 2017:
|
|
|
Successfully provided financing and financial integration of the ENGIE acquisition and the financial framework and analysis for Vistra transaction and for IPH/Genco restructuring.
|
|
|
|
Orchestrated the repayment/refinancing of $1.25 billion of the 2019 debt maturity.
|
24
|
|
|
Led repricing DYNs ~$2 billion secured debt
twice
, saving $25MM/yr. in interest expense.
|
|
|
|
Supported PRIDE and ECI initiatives and analysis.
|
Carolyn Burke:
As EVP, Strategy & Administration, Ms. Burke leads the Companys strategic planning activities. She has also taken on additional
responsibilities of administration functions including Human Resources and Information Technology. Other accomplishments included:
|
|
|
Led Dynegys M&A activities, including the Vistra combination analysis and synergy identification.
|
|
|
|
Successful integration of ENGIE capturing $90+mm in synergies.
|
|
|
|
Completed asset sales of Lee, Dighton, Milford, Armstrong and Troy and JOU rationalization.
|
|
|
|
Established robust strategic planning process that clearly delineated strategic priorities.
|
|
|
|
Developed culture of project management supported by sponsored project management teams.
|
Catherine James:
As EVP and General Counsel, Ms. James leads the Companys legal team that played a key role in 2017, navigating the organization through a number of
challenging and complex matters, which included:
|
|
|
Led legal management of Dynegys M&A activities, including the Vistra transaction, ENGIE acquisition, and due diligence, negotiation, documentation, and regulatory approvals for the sales of Lee, Dighton,
Milford, Armstrong and Troy and consolidation of the JOU ownership in Zimmer and Miami Fort.
|
|
|
|
Led legal efforts to achieve the restructuring of $825mm of debt at GENCO and provided legal support for numerous other financings during year.
|
|
|
|
Successful management of litigation, including denial of class certification in the Gas Index case, dismissal of Section 16(b) lawsuit brought by JD Jordan, and Schaefer spoliation claim.
|
Hank Jones:
As EVP and Chief Commercial Officer, Mr. Jones oversaw
significant improvements in the organization in 2017. Specific achievements included:
|
|
|
Successfully managed active hedging program which reduced earnings volatility and locked in significant economic value.
|
|
|
|
Execution of fuel procurement and logistics strategy, securing firm delivery of natural gas for 60% of our average daily fuel burn and reducing our year on year delivered coal cost by approximately
$65 million.
|
|
|
|
Secured $120 million in forward capacity sales outside of auction process, creating increased future earnings certainty.
|
|
|
|
Successfully obtained rail and coal commercial modifications to reduced costs and to provide additional operational flexibility.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
STI
Target
%
|
|
|
STI Target $
|
|
|
2017 STI Funding
(based
on
Performance
Achievement
Percentage (100.5%)
|
|
|
Actual 2017
STI Award
Value
|
|
|
2017 STI
Award as a
Percentage of
Target
|
|
Robert
Flexon
|
|
|
125
|
%
|
|
|
1,540,385
|
|
|
|
1,548,087
|
|
|
|
1,600,000
|
|
|
|
104
|
%
|
Clint
Freeland
|
|
|
75
|
%
|
|
|
449,337
|
|
|
|
451,584
|
|
|
|
475,000
|
|
|
|
106
|
%
|
Carolyn
Burke
|
|
|
75
|
%
|
|
|
407,799
|
|
|
|
409,838
|
|
|
|
475,000
|
|
|
|
116
|
%
|
Catherine
James
|
|
|
75
|
%
|
|
|
404,049
|
|
|
|
406,069
|
|
|
|
430,000
|
|
|
|
106
|
%
|
Henry
Jones
|
|
|
75
|
%
|
|
|
415,255
|
|
|
|
417,332
|
|
|
|
420,000
|
|
|
|
101
|
%
|
25
Long-Term
Incentive (LTI) Awards
Our LTI awards focus on the attainment of
long-term
performance goals and objectives, which are deemed instrumental in creating
value for stockholders and supporting retention incentives for our executives. The Compensation Committee reviews the LTI targets each year for competitive alignment. The Compensation Committee also reviews market trends related to the award mix and
determines the appropriate target LTI value and mix of equity instruments considering market benchmark data.
In February 2017, the Compensation Committee approved
each Named Executive Officers 2017 target grant value and the allocation of this value among the following LTI awards (based on award values): 35% RSUs, 25% stock options, and 40% PSUs. The Compensation Committee believes this mix of LTI
instruments provides performance incentives that are aligned with stockholder interest and retention incentives for our Named Executive Officers.
The awards for
Mr. Freeland, Ms. Burke, Ms. James and Mr. Jones were recommended by Mr. Flexon and reviewed and approved by the Compensation Committee. The award levels reflect the contributions each have made and Mr. Flexons
and the Compensation Committees desire to both retain each Named Executive Officer and ensure continued alignment with
long-term
stockholders interests. Mr. Flexons award was recommended
by the Compensation Committee and approved by the full Board. In determining the award level, the Compensation Committee took into account Mr. Flexons efforts and contributions in leading the Company, successful execution on critical
objectives and the importance of retaining him.
The table below illustrates the 2017 LTI award grant value for each of the Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Target Grant Value
of 2017 Long-term
Incentive Award
(1)
|
|
|
Stock Option
Value
|
|
|
Restricted Stock
Unit Value
|
|
|
Performance
Share Unit
Target Value
|
|
Robert Flexon
|
|
|
$5,232,000
|
|
|
|
$1,308,000
|
|
|
|
$1,831,200
|
|
|
|
$2,092,800
|
|
Clint Freeland
|
|
|
$900,000
|
|
|
|
$225,000
|
|
|
|
$315,000
|
|
|
|
$360,000
|
|
Carolyn Burke
|
|
|
$850,000
|
|
|
|
$212,500
|
|
|
|
$297,500
|
|
|
|
$340,000
|
|
Catherine James
|
|
|
$850,000
|
|
|
|
$212,500
|
|
|
|
$297,500
|
|
|
|
$340,000
|
|
Henry Jones
|
|
|
$900,000
|
|
|
|
$225,000
|
|
|
|
$315,000
|
|
|
|
$360,000
|
|
(1)
|
Note that the actual amount realized under these LTI awards may materially differ from the grant values shown in the chart above.
|
Performance Share Units.
The PSUs granted to our Named Executive Officers in 2017 may be earned over a
three-year
performance period starting on January 1, 2017 based on our performance across two metrics, each weighted 50%: 1) our Total Shareholder Return (TSR) relative to a selected group of energy industry peer companies, and 2) cumulative Free Cash
Flow relative to
pre-established
goals. The Compensation Committee selected TSR as a performance measure because it aligns with the
long-term
interests of our
stockholders. The energy industry peer companies selected for TSR are the same as the companies disclosed under the prior Peer Group and Benchmarking section.
Free Cash Flow was selected because it represents a critical
measure used by our stockholders to assess the strength of our business and success of our strategic efforts. The Compensation Committee set Free Cash Flow goals that were designed to be reasonably achievable but challenging. The number of PSUs
granted to each Named Executive Officer was based on the PSU Target Value shown above divided by the closing stock price of our common stock on the day of grant.
Set forth below are the key provisions of PSUs granted to our Named Executive Officers in 2017.
|
|
|
|
|
PSUs
|
|
●
50% relative TSR vs. peer
group companies
|
|
|
|
26
|
|
|
|
|
●
50% cumulative FCF vs.
pre-established
goals in Strategic Plan
|
|
|
|
|
|
|
|
Payout
|
|
●
Dynegy
3-year
Cumulative TSR percentile ranking and cumulative FCF calculated at the end of the performance period and applied to a
pre-established
payout scale to determine the
number of earned/vested PSUs
●
Payout opportunity
of
0-200%
of granted PSUs at target
●
Earned PSUs are intended to be settled in
shares
|
|
|
|
|
|
|
Calculation
|
|
●
TSR calculated using an average
stock price at the beginning and end of the performance period.
●
20-day
average stock price calculation will be based on a period that is
+/-
10 days around the measurement dates.
●
If absolute TSR is negative, the PSU award will be
capped at 100% of the target number of PSUs granted, regardless of relative TSR positioning.
●
Cumulative FCF adjusted to account for acquisitions and divestitures
|
|
|
|
|
|
|
|
|
Percentile Rank Relative TSR
|
|
Payout % of Target
(# of Shares)
|
90th percentile +
|
|
200%
|
75
th
percentile
|
|
175%
|
50
th
percentile
|
|
100%
|
25
th
percentile
|
|
50%
|
<25
th
percentile
|
|
0%
|
Restricted Stock Units.
The number of RSUs granted to each Named Executive Officer was based on the RSU Value shown above
divided by the closing stock price of our common stock on the day of grant. Each RSU corresponds in value to a single share of our common stock. RSU awards will vest in three equal annual installments starting on the first anniversary of the
awards grant date. On each vesting date, the number of RSUs that vest will be settled and paid in a corresponding number of shares of our common stock.
Stock Options.
The number of stock options granted to each Named Executive Officer was based on the Stock Option Value shown above divided by the Black
Scholes value of a single option determined on the day of grant. Stock options granted to each Named Executive Officer allows for the purchase of a fixed number of shares of our common stock at a fixed price (i.e., exercise price) over a
ten-year
period. The exercise price is set at the closing price of a share of our common stock on the date of grant. The stock options vest in three equal annual installments, on the anniversary date of the grant,
over the three-year vesting period.
Effect of Merger on Outstanding LTI Awards
Under the Merger Agreement, we agreed that at Merger Effective Time, each outstanding stock option would be converted into an option to purchase shares of Vistra Energy
Common Stock, on the same terms and conditions that were applicable under such stock options immediately prior to the effective time (including any accelerated vesting provisions), equal to the product of (A) the total number of shares of
Dynegy common stock subject to such stock option and (B) the Exchange Ratio, rounded down to the nearest whole number of shares of Vistra Energy Common Stock. The
per-share
exercise price of each
converted Vistra Energy option would be equal to the quotient determined by dividing (1) the exercise price per share applicable to the Dynegy option by (2) the Exchange Ratio, rounded up to the nearest whole cent.
At the Merger Effective Time, each outstanding RSU would be converted into a number of Vistra Energy restricted stock units equal to the product of (A) the number
of Dynegy RSUs held by such holder immediately prior to the effective time and (B) the Exchange Ratio, and remain outstanding on the same terms and conditions as were applicable to such award prior to the effective time (including any
accelerated vesting provisions).
27
At the Merger Effective Time, each outstanding PSU would be converted into the right to receive a number of shares of
Vistra Energy Common Stock (and cash in lieu of fractional shares to be paid by the surviving corporation to the holder) equal to the product of (A) the total number of shares of Dynegy common stock that would be payable in respect of such
Dynegy PSU (1) in the case of Dynegy PSUs granted in 2015, at the actual level of performance applicable to such Dynegy PSU as determined in accordance with the applicable award agreement and (2) in the case of Dynegy PSUs granted in 2016
and 2017, (x) at the actual level of performance applicable to such portion of such Dynegy PSU that relates to total stockholder return, as determined in accordance with the applicable award agreement, and (y) at the target level of performance
applicable to such portion of such Dynegy PSU that relates to free cash flow, and (B) the Exchange Ratio.
Additionally, on December 19, 2017, the Board
approved the acceleration of vesting of restricted stock units granted to Messrs. Flexon and Jones in 2015 that were otherwise scheduled to vest on March 3, 2018 and April 20, 2018 for Mr. Flexon and March 3, 2018 for
Mr. Jones. The Board approved the accelerated vesting of such grants, and the related withholding of shares to pay taxes, in order to mitigate potential adverse tax consequences of Section 280G of the Internal Revenue Code in connection
with the pending Merger.
Retirement Benefit Plans
Our Named
Executive Officers, similar to all employees, participate in our two qualified retirement plans: the Dynegy Inc. 401(k) Plan and the Dynegy Inc. Retirement Plan. The Dynegy 401(k) Plan provides for a
dollar-for-dollar
match for each dollar contributed (on a
pre-tax
basis) up to 5% of salary (with such elective contributions capped at $18,000 for 2017). Our matching
contributions to the Dynegy 401(k) Plan vest at a rate of 50% per year of service.
The Dynegy Inc. Retirement Plan provides a monthly benefit at retirement.
The amount of the retirement benefit is based, in part, on amounts contributed by the Company to each participants retirement account. The contribution rate is equal to 6% of a participants salary (with such salary capped at $265,000 for
plan purposes for 2017).
Our Named Executive Officers are all fully vested in the 401(k) and Retirement Plans and do not participate in any supplemental executive
retirement plans.
Executive Perquisites
For 2017, each Named
Executive Officer is eligible to receive an annual reimbursement for reasonable costs incurred for individual tax and financial planning advice up to $10,000. The total value of perquisites for each of our Named Executive Officers represents less
than 1% of their total compensation in 2017. On an annual basis, the Compensation Committee reviews executive perquisites.
Executive Agreements
Mr. Flexon was the sole Named Executive Officer who had an employment agreement with the Company which was amended to extend an additional term. The remaining
Named Executive Officers were covered under Executive Participation Agreements, which replaced these executive officers employment agreements. These agreements provided a specific level of participation under our executive Severance and Change
in Control Plans, which cannot be modified without consent from each individual Named Executive Officer.
Severance and Change in Control
We maintain a Severance Pay Plan under which specified payments and benefits would be provided to the Named Executive Officers in connection with a change in control.
The Severance Pay Plan provides for payment of certain severance benefits in the event of a termination. The change in control severance benefits for our Named Executive Officers include a double trigger provision required to receive any
severance payment. We believe these arrangements are important competitive benefits that assist in the attraction and retention of critical talent. Please read Executive CompensationPotential Payments Upon Termination or Change in
Control for further details on our Severance Pay Plan.
28
GOVERNANCE OF OUR EXECUTIVE COMPENSATION PRACTICES
Role of Compensation Committee
The Compensation Committee has overall
responsibility for reviewing and approving the principal terms of any employment, change of control, severance, or other like agreement between the Company and its executive officers. The Compensation Committee established the overall compensation
strategy and reviews such strategy at least annually for alignment with our business strategy and with similar programs offered by our competitors to ensure compensation arrangements are designed to provide incentives that are consistent with our
stakeholders of the Company but do not encourage senior executives to take excessive risks that threaten the value of the Company.
Role of Compensation
Consultant
As set forth in its charter, the Compensation Committee has the authority to retain or obtain the advice of a compensation consultant, and shall
be directly responsible for the appointment, compensation and oversight of the work of the consultant. Since 2012, the Compensation Committee has retained Meridian as its independent advisor. Meridian is an independent compensation consulting firm
and does not provide any other services to the Company outside of matters pertaining to executive and director compensation and related corporate governance matters. Meridian reports directly to the Compensation Committee, which is the sole party
responsible for determining the scope of services performed by Meridian, the directions given to Meridian regarding the performance of those services, and the approval of the payment of invoices for those services. The Compensation Committee
utilized Meridian in 2017 to provide information, analyses, and advice regarding executive compensation matters.
The Compensation Committee determined that the
services provided by Meridian to the Compensation Committee during 2017 did not give rise to any conflicts of interest. The Compensation Committee made this determination by assessing the independence of Meridian under the applicable rules adopted
by the SEC and incorporated into the NYSE Corporate Governance Listing Standards. In making this assessment, the Compensation Committee also considered Meridians written correspondence to the Compensation Committee that affirmed the
independence of Meridian and the partners, consultants and employees who provide services to the Compensation Committee on executive and director compensation matters.
Stock Ownership Guidelines
We have established Stock Ownership
Guidelines for officers to provide further alignment of interests among our executive officers and our stockholders. These guidelines are mandatory for all members of the executive management team and other officers. Executives are required to
achieve ownership levels within five years of hire or appointment. For those executives in place at bankruptcy emergence on October 1, 2012, the five year ramp up period was reset to the emergence date. Individuals holding the following titles
are included in this group: Chief Executive Officer and President, Executive Vice President, Senior Vice President and Vice President. The shares counted for purposes of the stock ownership guidelines include shares owned outright, unvested
restricted shares, vested stock options
(in-the-money),
and other
share-based
equivalents that may be used by Dynegy from time to
time. All officers, including our Named Executive officers are restricted from divesting any securities until their ownership multiples are attained, except to make a required tax payment, and must maintain their ownership level after any such
transaction. The table below sets forth the ownership levels set for our Named Executive Officers, expressed as a multiple of annual base salary.
|
|
|
|
|
Named Executive Officer
|
|
Stock
Ownership Multiple
(Multiple of Annual Base Salary)
|
|
|
Robert Flexon
|
|
5x
|
|
|
Clint Freeland
|
|
3x
|
|
|
Carolyn Burke
|
|
3x
|
|
|
Catherine James
|
|
3x
|
|
|
Henry Jones
|
|
3x
|
|
|
29
Risk Assessment
The
Compensation Committee annually conducts an incentive risk assessment to ensure the structure and design of our Compensation programs are not reasonably likely to result in excessive risk taking that could have a material adverse impact on the
company.
Potential Impact of Restatements and Ability to Claw Back Compensation Awards
The Compensation Committee has a mechanism to address any restatements, if they occur, that may impact our key financial metrics and our financial performance. The
Compensation Committee will take action, as it determines to be appropriate, with respect to STI awards or other incentive or equity compensation awards to the extent such specified performance targets were not achieved in light of a restatement,
which could include seeking to recover amounts paid. We believe this mechanism allows for remedial action to be taken if executive compensation is awarded for achievement of financial performance that is later determined not to have been achieved
and further aligns our Named Executive Officers interests with those of our stockholders.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the amount that a publicly-traded corporation may deduct for compensation paid to
the Chief Executive Officer or one of the companys other three most highly compensated executives (other than the Chief Financial Officer) who is employed on the last day of the year. Performance-based compensation, as defined
under Internal Revenue Service rules and regulations, was excluded from this $1 million limitation. Our compensation programs are structured to support organizational goals and priorities and shareholder interests. In making compensation
decisions for 2017, the Compensation Committee considered the implications of Section 162(m) of the Internal Revenue Code.
The Tax Reform and Jobs Act of 2017
(the Act) eliminated the ability of companies to rely on the performance-based compensation exception under Section 162(m) and the $1 million limitation on deductibility generally was expanded to include all named
executive officers (including the principal financial officer). As a result, beginning in 2018, we will longer be able to take a deduction for any compensation paid to our named executive officers in excess of $1 million unless the compensation
originally qualified for the performance-based compensation exception and qualifies for transition relief applicable to certain arrangements in place on November 2, 2017. Despite the Compensation Committees efforts to
structure the executive compensation in a manner intended to be exempt from Section 162(m) and therefore not subject to its deduction limits, because of ambiguities and uncertainties as to the application and interpretation of
Section 162(m) and the regulations issued thereunder as amended by the Act, including the uncertain scope of the transition relief under the Act, no assurance can be given that compensation intended to satisfy the requirements for exemption
from Section 162(m) in fact will. Further, the Compensation Committee reserves the right to modify compensation that was initially intended to be exempt from Section 162(m) if it determines that such modifications are consistent with
Dynegys business needs.
In general, our philosophy is to seek to preserve the tax deductibility of executive compensation only to the extent practicable and
consistent with the overall compensation objectives discussed above. We do not make compensation determinations based on the accounting treatment of any particular type of award.
30
CEO P
AY
R
ATIO
We identified the median employee by examining 2017
W-2
wages obtained from internal payroll records for all employees,
excluding our CEO, who were employed by us on October 31, 2017. We included all employees, whether employed on a full-time or part-time basis. As of October 31, 2017 we analyzed 2,522 employees. We did not make any assumptions,
adjustments, or estimates with respect to the
W-2
wages, and we did not annualize the compensation for any employees that were not employed by us for all of 2017. We believe the use of
W-2
wages is the most appropriate compensation measure since it reflects actual wages.
After identifying the median employee based
on
W-2
wages, we calculated annual 2017 compensation for the median employee using the same methodology used to calculate the chief executive officers total compensation as reflected in the Summary
Compensation Table below. The median employees annual 2017 compensation was as follows:
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|
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|
|
|
Name
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards
|
|
|
Non-Equity
Incentive Plan
Compensation
|
|
|
Change in Pension
Value and
Nonqualified Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
|
|
|
Total
|
|
Median Employee
|
|
|
2017
|
|
|
|
$115,258
|
|
|
|
$
|
|
|
|
$5,205
|
|
|
|
$9,405
|
|
|
|
$5,894
|
|
|
|
$10,437
|
|
|
|
$146,199
|
|
The annual total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table below, was $8,569,751.
Our 2017 ratio of Chief Executive Officer total compensation to the median employees total compensation is reasonably estimated to be 58.62:1.
C
OMPENSATION
AND
H
UMAN
R
ESOURCES
C
OMMITTEE
R
EPORT
Our executive compensation program is administered and reviewed by the Compensation Committee, which consists of Messrs. Barbas (Chairman),
Kuersteiner and Stein, all of whom are independent directors as such term is defined in the NYSE and SEC Rules. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of
Regulation S-K
with management and, based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Amendment
No. 1 to the Companys Annual Report on Form
10-K.
This report is submitted by the members of the Compensation
Committee of the Board [as of April 8, 2018]:
Paul M. Barbas, Chairman
Richard L. Kuersteiner
Jeffrey S. Stein
C
OMPENSATION
AND
H
UMAN
R
ESOURCES
C
OMMITTEE
I
NTERLOCKS
AND
I
NSIDER
P
ARTICIPATION
Messrs. Barbas, Kuersteiner and Stein served on the Compensation Committee during fiscal 2017. None of these members is a current or former officer or employee of
Dynegy or any of its subsidiaries, is involved in any relationship requiring disclosure as an interlocking executive officer or director, or had any relationship requiring disclosure under Item 404 of
Regulation S-K.
31
E
XECUTIVE
C
OMPENSATION
SUMMARY COMPENSATION TABLE FOR 2015, 2016 AND 2017
The following table sets
forth certain information regarding the compensation earned by or awarded to our Named Executive Officers for 2015, 2016 and 2017 (with information only for the years during which each individual was named a Named Executive Officer):
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Name and
Principal Position
|
|
Year
|
|
|
Salary(1)
|
|
|
Bonus(2)
|
|
|
Stock
Awards(3)
|
|
|
Option
Awards(3)
|
|
|
Non-Equity
Incentive
Plan
Comp.(4)
|
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(5)
|
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All Other
Comp.(6)
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Total
|
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|
|
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|
|
|
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|
|
Robert Flexon
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|
2015
|
|
|
|
$1,080,769
|
|
|
|
$
|
|
|
|
$8,716,574
|
|
|
|
$1,172,504
|
|
|
|
$1,028,500
|
|
|
|
$19,239
|
|
|
|
$39,449
|
|
|
|
$12,057,035
|
|
|
|
|
|
|
|
|
|
|
|
President &
|
|
|
2016
|
|
|
|
$1,180,769
|
|
|
|
$
|
|
|
|
$4,357,798
|
|
|
|
$1,362,500
|
|
|
|
$1,357,884
|
|
|
|
$19,671
|
|
|
|
$40,204
|
|
|
|
$8,318,826
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
2017
|
|
|
|
$1,232,308
|
|
|
|
$51,913
|
|
|
|
$4,367,621
|
|
|
|
$1,308,001
|
|
|
|
$1,548,087
|
|
|
|
$20,053
|
|
|
|
$41,768
|
|
|
|
$8,569,751
|
|
|
|
|
|
|
|
|
|
|
|
Clint Freeland
|
|
|
2015
|
|
|
|
$560,385
|
|
|
|
$
|
|
|
|
$871,700
|
|
|
|
$275,001
|
|
|
|
$336,021
|
|
|
|
$17,874
|
|
|
|
$31,739
|
|
|
|
$2,092,720
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President &
|
|
|
2016
|
|
|
|
$583,731
|
|
|
|
$
|
|
|
|
$821,395
|
|
|
|
$256,816
|
|
|
|
$400,000
|
|
|
|
$18,176
|
|
|
|
$31,615
|
|
|
|
$2,111,733
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
2017
|
|
|
|
$599,115
|
|
|
|
$23,416
|
|
|
|
$751,313
|
|
|
|
$225,000
|
|
|
|
$451,584
|
|
|
|
$18,418
|
|
|
|
$32,173
|
|
|
|
$2,101,020
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Burke
|
|
|
2015
|
|
|
|
$512,115
|
|
|
|
$
|
|
|
|
$713,201
|
|
|
|
$225,003
|
|
|
|
$326,378
|
|
|
|
$17,728
|
|
|
|
$33,565
|
|
|
|
$1,827,990
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President,
|
|
|
2016
|
|
|
|
$527,115
|
|
|
|
$
|
|
|
|
$741,628
|
|
|
|
$231,877
|
|
|
|
$370,000
|
|
|
|
$18,040
|
|
|
|
$33,548
|
|
|
|
$1,922,208
|
|
|
|
|
|
|
|
|
|
|
|
Strategic Development
|
|
|
2017
|
|
|
|
$543,731
|
|
|
|
$65,162
|
|
|
|
$709,581
|
|
|
|
$212,501
|
|
|
|
$409,838
|
|
|
|
$18,308
|
|
|
|
$35,233
|
|
|
|
$1,994,354
|
|
|
|
|
|
|
|
|
|
|
|
Catherine James
|
|
|
2015
|
|
|
|
$507,115
|
|
|
|
$
|
|
|
|
$713,201
|
|
|
|
$225,003
|
|
|
|
$304,079
|
|
|
|
$17,658
|
|
|
|
$36,106
|
|
|
|
$1,803,162
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President,
|
|
|
2016
|
|
|
|
$522,115
|
|
|
|
$
|
|
|
|
$734,630
|
|
|
|
$229,692
|
|
|
|
$365,000
|
|
|
|
$17,976
|
|
|
|
$36,308
|
|
|
|
$1,905,721
|
|
|
|
|
|
|
|
|
|
|
|
General Counsel
|
|
|
2017
|
|
|
|
$538,731
|
|
|
|
$23,931
|
|
|
|
$709,581
|
|
|
|
$212,501
|
|
|
|
$406,069
|
|
|
|
$18,255
|
|
|
|
$37,252
|
|
|
|
$1,946,320
|
|
|
|
|
|
|
|
|
|
|
|
Henry Jones
|
|
|
2015
|
|
|
|
$507,115
|
|
|
|
$
|
|
|
|
$713,201
|
|
|
|
$225,003
|
|
|
|
$323,191
|
|
|
|
$16,907
|
|
|
|
$33,795
|
|
|
|
$1,819,212
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President &
|
|
|
2016
|
|
|
|
$523,812
|
|
|
|
$
|
|
|
|
$842,943
|
|
|
|
$263,550
|
|
|
|
$360,000
|
|
|
|
$17,284
|
|
|
|
$34,349
|
|
|
|
$2,041,938
|
|
|
|
|
|
|
|
|
|
|
|
Chief Commercial Officer
|
|
|
2017
|
|
|
|
$553,673
|
|
|
|
$2,669
|
|
|
|
$751,313
|
|
|
|
$225,000
|
|
|
|
$417,331
|
|
|
|
$17,690
|
|
|
|
$34,549
|
|
|
|
$2,002,226
|
|
(1)
|
Amounts include salary earned for a full 12 months. Actual salary earned in any calendar year may vary from the annual base salary due to timing of pay cycles and time of service.
|
(2)
|
Represents additional discretionary amounts paid to the Named Executive Officers above amounts actually earned pursuant to the STI Plan.
|
(3)
|
The amounts shown under Stock Awards for 2015, 2016 and 2017 reflect the aggregate grant date fair value for RSUs and PSUs (using the Monte Carlo valuation model) calculated in accordance with FASB ASC Topic
718. The amounts shown under Option/SAR Awards for 2015, 2016 and 2017 reflect the aggregate grant date fair value for options (using the Black Scholes valuation model) calculated in accordance with FASB ASC Topic 718. Please read the
discussion of the assumptions used in such valuation in Notes 15 and 17 of the Notes to Consolidated Financial Statements in our Original Form
10-K.
|
|
For 2015, RSUs and stock options have a three-year ratable vesting schedule, with
1
/
3
of each award vesting
each year beginning on March 3, 2016. For 2016, RSUs and stock options have a three-year ratable vesting schedule, with
1
/
3
of each
award vesting each year beginning on March 8, 2017. For 2017, RSUs and stock options have a three-year ratable vesting schedule, with
1
/
3
of each award vesting each year beginning on March 1, 2018. The PSUs for 2015, 2016 and 2017 require performance goals to be
attained over a three-year period following the granting of the opportunity for any actual award to be earned. For the grant date fair value of the PSUs, the value reported in the table is based on the probable outcome of the performance conditions
as of the grant date using the Monte Carlo valuation model. Based on the share price at grant and assuming the maximum market and financial performance conditions are achieved, the maximum value of the PSUs granted in fiscal year 2015, payable
following completion of the 2015-2017 performance period are: Mr. Flexon $3,752,038, Mr. Freeland $880,015, Ms. Burke $720,008, Ms. James $720,008 and Mr. Jones $720,008. The performance criteria for the 2015 PSUs were not
met resulting in no payment, thereby reducing the total value realization of the 2015 PSUs. For fiscal year 2016, payable following completion of the 2016-2018 performance period are: Mr. Flexon $4,360,021, Mr. Freeland $821,811,
Ms. Burke $742,008, Ms. James $735,002 and Mr. Jones $843,380. For fiscal year 2017, payable following completion of the 2017-2019 performance period are: Mr. Flexon $4,185,605, Mr. Freeland $720,004, Ms. Burke
$680,016, Ms. James $680,016 and Mr. Jones $720,004. Please read Compensation Discussion and AnalysisExecutive Compensation Program OverviewReported and Realizable Pay above for further discussion of value
realization of LTI awards.
|
|
Please also read Compensation Discussion and Analysis2017 CompensationLong-term Incentive Awards for a breakdown of the 2017 LTI award grant date values for RSUs, stock options and PSUs for each
Named Executive Officer.
|
(4)
|
The amounts shown under
Non-Equity
Incentive Plan Compensation for 2015, 2016 and 2017 reflect cash bonuses awarded under the STI Plan. The 2015 incentive payments
were earned in 2015 and paid in March 2016, the 2016 incentive payments were earned in 2016 and paid in March 2017 and the 2017 incentive payments were earned in 2017 and were partially paid in December 2017 and March 2018. To mitigate the potential
impact of Section 280G with respect to the pending Merger on Dynegy and the named executive officers, on December 19, 2017, the Board approved payment during 2017 of 75% of the annual bonus that it expected it would have otherwise paid to
each respective named executive officer in early 2018.
|
32
(5)
|
The amounts shown for the Named Executive Officers reflect changes in pension value under the Retirement Plan and the Dynegy Inc. Restoration Pension Plan, as amended, or the Restoration Pension Plan.
|
(6)
|
The amounts shown as All Other Compensation for 2015, 2016 and 2017 are identified in the following table:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Year
|
|
|
Perquisites
and Other
Personal
Benefits
($)(1)
|
|
|
Tax
Reimbursements
($)
|
|
|
401(k)
Plan
Contributions
|
|
|
Restoration
401(k)
Savings Plan
Contributions
|
|
|
Portable
Retirement
Plan
Contributions
|
|
|
Restoration
Pension
Plan
Contributions
|
|
|
Life
Insurance
Premiums
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Robert Flexon
|
|
|
2015
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$13,250
|
|
|
|
$
|
|
|
|
$15,900
|
|
|
|
$
|
|
|
|
$10,299
|
|
|
|
$39,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$13,250
|
|
|
|
$
|
|
|
|
$15,900
|
|
|
|
$
|
|
|
|
$11,054
|
|
|
|
$40,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$13,500
|
|
|
|
$
|
|
|
|
$16,200
|
|
|
|
$
|
|
|
|
$12,068
|
|
|
|
$41,768
|
|
|
|
|
|
|
|
|
|
|
|
Clint Freeland
|
|
|
2015
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$9,385
|
|
|
|
$
|
|
|
|
$15,900
|
|
|
|
$
|
|
|
|
$6,454
|
|
|
|
$31,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$9,133
|
|
|
|
$
|
|
|
|
$15,900
|
|
|
|
$
|
|
|
|
$6,582
|
|
|
|
$31,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$9,117
|
|
|
|
$
|
|
|
|
$16,200
|
|
|
|
$
|
|
|
|
$6,856
|
|
|
|
$32,173
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Burke
|
|
|
2015
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$11,550
|
|
|
|
$
|
|
|
|
$15,900
|
|
|
|
$
|
|
|
|
$6,115
|
|
|
|
$33,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$11,360
|
|
|
|
$
|
|
|
|
$15,900
|
|
|
|
$
|
|
|
|
$6,288
|
|
|
|
$33,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$11,408
|
|
|
|
$
|
|
|
|
$16,200
|
|
|
|
$
|
|
|
|
$7,625
|
|
|
|
$35,233
|
|
|
|
|
|
|
|
|
|
|
|
Catherine James
|
|
|
2015
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$13,250
|
|
|
|
$
|
|
|
|
$15,900
|
|
|
|
$
|
|
|
|
$6,956
|
|
|
|
$36,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$13,250
|
|
|
|
$
|
|
|
|
$15,900
|
|
|
|
$
|
|
|
|
$7,158
|
|
|
|
$36,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$13,500
|
|
|
|
$
|
|
|
|
$16,200
|
|
|
|
$
|
|
|
|
$7,552
|
|
|
|
$37,252
|
|
|
|
|
|
|
|
|
|
|
|
Henry Jones
|
|
|
2015
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$8,683
|
|
|
|
$
|
|
|
|
$15,900
|
|
|
|
$
|
|
|
|
$9,212
|
|
|
|
$33,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$8,958
|
|
|
|
$
|
|
|
|
$15,900
|
|
|
|
$
|
|
|
|
$9,491
|
|
|
|
$34,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$8,299
|
|
|
|
$
|
|
|
|
$16,200
|
|
|
|
$
|
|
|
|
$10,050
|
|
|
|
$35,549
|
|
(1)
|
For 2015, 2016 and 2017, the Named Executive Officers did not receive perquisites that exceeded the $10,000 threshold for reporting purposes.
|
GRANTS OF PLAN-BASED AWARDS IN 2017
The following table sets forth certain
information with respect to each grant of an award made to the Named Executive Officers in 2017 under the 2012 Long Term Incentive Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payments
Under
Non-Equity
Incentive
Plan
Awards(1)
|
|
|
Estimated Future Payouts
Under Equity
Incentive Plan Awards(2)
|
|
|
All Other
Stock
Awards:
Number of
Shares of
|
|
|
All Other
Option/SAR
Awards:
Number of
Securities
Underlying
|
|
|
Exercise
or Base
Price of
Option/
|
|
|
Grant Date
Fair
Value of
Stock and
|
|
Name
|
|
Grant
Date
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Stock or
Units(3)
|
|
|
Options/
SARs(4)
|
|
|
SAR
Awards
|
|
|
Option/SAR
Awards(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Flexon
|
|
|
3/1/17
|
|
|
|
$
|
|
|
|
$1,550,000
|
|
|
|
$
|
|
|
|
130,474
|
|
|
|
260,948
|
|
|
|
521,896
|
|
|
|
228,330
|
|
|
|
352,561
|
|
|
|
$8.02
|
|
|
|
$5,675,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint Freeland
|
|
|
3/1/17
|
|
|
|
$
|
|
|
|
$451,500
|
|
|
|
$
|
|
|
|
22,444
|
|
|
|
44,888
|
|
|
|
89,776
|
|
|
|
39,277
|
|
|
|
60,647
|
|
|
|
$8.02
|
|
|
|
$976,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Burke
|
|
|
3/1/17
|
|
|
|
$
|
|
|
|
$410,250
|
|
|
|
$
|
|
|
|
21,198
|
|
|
|
42,395
|
|
|
|
84,790
|
|
|
|
37,095
|
|
|
|
57,278
|
|
|
|
$8.02
|
|
|
|
$922,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine James
|
|
|
3/1/17
|
|
|
|
$
|
|
|
|
$406,500
|
|
|
|
$
|
|
|
|
21,198
|
|
|
|
42,395
|
|
|
|
84,790
|
|
|
|
37,095
|
|
|
|
57,278
|
|
|
|
$8.02
|
|
|
|
$922,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry Jones
|
|
|
3/1/17
|
|
|
|
$
|
|
|
|
$420,000
|
|
|
|
$
|
|
|
|
22,444
|
|
|
|
44,888
|
|
|
|
89,776
|
|
|
|
39,277
|
|
|
|
60,647
|
|
|
|
$8.02
|
|
|
|
$976,313
|
|
(1)
|
The amounts shown represent the awards that could be earned by the Named Executive Officers under the STI Plan for 2017. Mr. Flexons target is set at 125% of base salary and target is set at 75% of base
salary for Messrs. Freeland and Jones and Mses. Burke and James. The actual payouts to eligible executives under the STI Plan were determined in February 2018 and are shown in the Summary Compensation Table under
Non-Equity
Incentive Plan Compensation.
|
(2)
|
In March 2017, PSUs were granted under the Dynegy Inc. Amended and Restated 2012 Long Term Incentive Plan, or 2012 Long Term Incentive Plan. The PSUs require performance goals to be attained over a three-year period,
subject to certain exceptions, upon the granting of the opportunity for any actual award to be earned. For the grant date fair value of the PSUs, the value reported in the table is based on the probable outcome of the performance conditions as of
the grant date, March 1, 2017, using the Monte Carlo valuation model.
|
(3)
|
The amounts shown under All Other Stock Awards for the Named Executive Officers reflect awards in the form of RSUs granted under the 2012 Long Term Incentive Plan. Each RSU represents a contingent right to
receive one share of common stock. The RSUs granted on March 1, 2017 have a three-year ratable vesting schedule, subject to certain exceptions, with
1
/
3
of each award vesting each year beginning on March 1, 2018.
|
(4)
|
The amounts shown under All Other Option/SAR Awards reflect the number of shares of common stock underlying stock option awards granted to the Named Executive Officers under the 2012 Long Term Incentive
Plan. The stock options have a three-year ratable vesting schedule, subject to certain exceptions, with
1
/
3
of each award vesting each year
beginning on March 1, 2018.
|
33
(5)
|
The amounts shown under Grant Date Fair Value of Stock and Option Awards reflect the grant date fair value for the RSUs, PSUs (using the Monte Carlo valuation model) and stock options (using the Black
Scholes valuation model) computed in accordance with FASB ASC Topic 718. Please read the discussion of the assumptions used in such valuation in Notes 15 and 17 of the Notes to Consolidated Financial Statements in our Original Form
10-K.
|
34
OUTSTANDING EQUITY AWARDS AT 2017 FISCAL
YEAR-END
Upon our emergence from bankruptcy in 2012 and pursuant to the plan of reorganization, all outstanding equity awards of the Company as of the effective date were
cancelled. The following table sets forth certain information regarding unexercised option awards and unvested stock awards granted to each Named Executive Officer following emergence from bankruptcy that were outstanding as of December 31,
2017. The table does not include information regarding equity based awards related to 2017 performance that were or may be granted to the Named Executive Officers in 2018. The vesting schedules for each type of award are described in the footnotes
to the table, and the vesting date for each award can be determined by referring to the grant date for each award in the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option/SAR Awards
|
|
|
Stock Awards
|
|
Name
|
|
Grant
Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options/SARs
Exercisable(1)
|
|
|
Number of
Securities
Underlying
Unexercised
Options/SARs
Unexercisable(1)
|
|
|
Option/
SAR
Exercise
Price
|
|
|
Option/
SAR
Expiration
Date
|
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested(2)
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(3)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested(4)
|
|
|
Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not
Vested(3)
|
|
Robert Flexon
|
|
|
10/29/12
|
|
|
|
273,059
|
|
|
|
|
|
|
|
$18.70
|
|
|
|
10/29/2022
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/18/13
|
|
|
|
101,352
|
|
|
|
|
|
|
|
$23.10
|
|
|
|
3/18/2023
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/3/14
|
|
|
|
139,594
|
|
|
|
|
|
|
|
$23.03
|
|
|
|
3/3/2024
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/3/15
|
|
|
|
99,323
|
|
|
|
49,661
|
|
|
|
$27.24
|
|
|
|
3/3/2025
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
5/11/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/8/16
|
|
|
|
103,929
|
|
|
|
207,856
|
|
|
|
$11.05
|
|
|
|
3/8/2026
|
|
|
|
115,083
|
|
|
|
$1,363,734
|
|
|
|
197,286
|
|
|
|
$2,337,839
|
|
|
|
|
3/1/17
|
|
|
|
|
|
|
|
352,561
|
|
|
|
$8.02
|
|
|
|
3/1/2027
|
|
|
|
228,330
|
|
|
|
$2,705,711
|
|
|
|
456,659
|
|
|
|
$5,411,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint Freeland
|
|
|
10/29/12
|
|
|
|
70,215
|
|
|
|
|
|
|
|
$18.70
|
|
|
|
10/29/2022
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/18/13
|
|
|
|
33,784
|
|
|
|
|
|
|
|
$23.10
|
|
|
|
3/18/2023
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/3/14
|
|
|
|
34,899
|
|
|
|
|
|
|
|
$23.03
|
|
|
|
3/3/2024
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/3/15
|
|
|
|
23,296
|
|
|
|
11,647
|
|
|
|
$27.24
|
|
|
|
3/3/2025
|
|
|
|
4,711
|
|
|
|
$55,825
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/8/16
|
|
|
|
19,590
|
|
|
|
39,178
|
|
|
|
$11.05
|
|
|
|
3/8/2026
|
|
|
|
21,692
|
|
|
|
$257,050
|
|
|
|
37,186
|
|
|
|
$440,654
|
|
|
|
|
3/1/17
|
|
|
|
|
|
|
|
60,647
|
|
|
|
$8.02
|
|
|
|
3/1/2027
|
|
|
|
39,277
|
|
|
|
$465,432
|
|
|
|
78,554
|
|
|
|
$1,629,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carolyn Burke
|
|
|
10/29/12
|
|
|
|
70,215
|
|
|
|
|
|
|
|
$18.70
|
|
|
|
10/29/2022
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/18/13
|
|
|
|
25,338
|
|
|
|
|
|
|
|
$23.10
|
|
|
|
3/18/2023
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/3/14
|
|
|
|
33,841
|
|
|
|
|
|
|
|
$23.03
|
|
|
|
3/3/2024
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/3/15
|
|
|
|
19,060
|
|
|
|
9,530
|
|
|
|
$27.24
|
|
|
|
3/3/2025
|
|
|
|
3,854
|
|
|
|
$45,670
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/8/16
|
|
|
|
17,687
|
|
|
|
35,374
|
|
|
|
$11.05
|
|
|
|
3/8/2026
|
|
|
|
19,585
|
|
|
|
$232,082
|
|
|
|
33,575
|
|
|
|
$397,864
|
|
|
|
|
3/1/17
|
|
|
|
|
|
|
|
57,278
|
|
|
|
$8.02
|
|
|
|
3/1/2027
|
|
|
|
37,095
|
|
|
|
$439,576
|
|
|
|
74.191
|
|
|
|
$879,166
|
|
|
|
|
|
|
|
|
|
|
|
Catherine James
|
|
|
10/29/12
|
|
|
|
70,215
|
|
|
|
|
|
|
|
$18.70
|
|
|
|
10/29/2022
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/18/13
|
|
|
|
27,028
|
|
|
|
|
|
|
|
$23.10
|
|
|
|
3/18/2023
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/3/14
|
|
|
|
33,841
|
|
|
|
|
|
|
|
$23.03
|
|
|
|
3/3/2024
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/3/15
|
|
|
|
19,060
|
|
|
|
9,530
|
|
|
|
$27.24
|
|
|
|
3/3/2025
|
|
|
|
3,854
|
|
|
|
$45,670
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/8/16
|
|
|
|
17,521
|
|
|
|
35,040
|
|
|
|
$11.05
|
|
|
|
3/8/2026
|
|
|
|
19,401
|
|
|
|
$229,902
|
|
|
|
33,258
|
|
|
|
$394,107
|
|
|
|
|
3/1/17
|
|
|
|
|
|
|
|
57,278
|
|
|
|
$8.02
|
|
|
|
3/1/2027
|
|
|
|
37,095
|
|
|
|
$439,576
|
|
|
|
74,191
|
|
|
|
$879,166
|
|
|
|
|
|
|
|
|
|
|
|
Henry Jones
|
|
|
4/1/13
|
|
|
|
71,277
|
|
|
|
|
|
|
|
$24.12
|
|
|
|
4/1/2023
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/3/14
|
|
|
|
33,841
|
|
|
|
|
|
|
|
$23.03
|
|
|
|
3/3/2024
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/3/15
|
|
|
|
19,060
|
|
|
|
9,530
|
|
|
|
$27.24
|
|
|
|
3/3/2025
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3/8/16
|
|
|
|
20,103
|
|
|
|
40,206
|
|
|
|
$11.05
|
|
|
|
3/8/2026
|
|
|
|
22,261
|
|
|
|
$263,793
|
|
|
|
38,162
|
|
|
|
$452,220
|
|
|
|
|
3/1/17
|
|
|
|
|
|
|
|
60,647
|
|
|
|
$8.02
|
|
|
|
3/1/2027
|
|
|
|
39,277
|
|
|
|
$465,432
|
|
|
|
78,554
|
|
|
|
$930,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Stock options have a three-year ratable vesting schedule, subject to certain exceptions, with
1
/
3
of each
award vesting each year.
|
(2)
|
RSUs have a three-year ratable vesting schedule, subject to certain exceptions, with
1
/
3
of each award vesting
each year. On December 19, 2017, the Board approved the acceleration of vesting of restricted stock units granted to Messrs. Flexon and Jones in 2015 that were otherwise scheduled to vest on March 3, 2018 and April 20, 2018 for
Mr. Flexon and March 3, 2018 for Mr. Jones. The Board approved the accelerated vesting of such grants, and the related withholding of shares to pay taxes, in order to mitigate potential adverse tax consequences of Section 280G of
the Internal Revenue Code in connection with the pending Merger.
|
35
(3)
|
The market value of the RSUs and PSUs (at target level) is based on the closing market price of our common stock on December 29, 2017 of $11.85. The performance criteria for the 2015 PSUs were not met
resulting in no payment, thereby reducing the total value realization of the 2015 PSUs. Please read Compensation Discussion and AnalysisExecutive Compensation Program OverviewReported and Realizable Pay above for further
discussion of value realization of LTI awards.
|
(4)
|
The PSUs require performance goals to be attained over a three-year period, subject to certain exceptions, upon the granting of the opportunity for any actual award to be earned. The PSUs are payable, if performance
criteria are met, in common stock.
|
36
OPTION EXERCISES AND STOCK VESTED IN 2017
The following table sets forth certain information regarding the exercise of options and the vesting of stock awards by each Named Executive Officer during 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Number of Shares
Acquired on
Exercise (#)
|
|
|
Value Realized on
Exercise ($)
|
|
|
Number of Shares
Acquired on
Vesting(1) (#)
|
|
|
Value Realized on
Vesting ($)
|
|
Robert Flexon (2)
|
|
|
|
|
|
|
$
|
|
|
|
270,384
|
|
|
|
$2,755,137
|
|
Clint
Freeland
|
|
|
|
|
|
|
$
|
|
|
|
20,333
|
|
|
|
$161,294
|
|
Carolyn Burke
|
|
|
|
|
|
|
$
|
|
|
|
18,279
|
|
|
|
$144,972
|
|
Catherine
James
|
|
|
|
|
|
|
$
|
|
|
|
18,186
|
|
|
|
$144,263
|
|
Henry Jones (2)
|
|
|
|
|
|
|
$
|
|
|
|
23,470
|
|
|
|
$199,365
|
|
(1)
|
Number of shares acquired are
pre-tax
and do not account for shares withheld to pay taxes.
|
(2)
|
On December 19, 2017, the Board approved the acceleration of vesting of restricted stock units granted to Messrs. Flexon and Jones in 2015 that were otherwise scheduled to vest on March 3, 2018 and
April 20, 2018 for Mr. Flexon and March 3, 2018 for Mr. Jones. The Board approved the accelerated vesting of such grants, and the related withholding of shares to pay taxes, in order to mitigate potential adverse tax consequences
of Section 280G of the Internal Revenue Code in connection with the pending Merger.
|
PENSION BENEFITS
The following table sets forth certain information with respect to the Retirement Plan and Restoration Pension Plan, except as otherwise noted, as they provide for
payment at, following, or in connection with retirement for the Named Executive Officers as of December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of
Years
Credited
Service(1)
|
|
|
Present Value of
Accumulated
Benefit
|
|
|
Payments
During Last
Fiscal Year
|
|
Robert Flexon
|
|
Retirement Plan
|
|
|
6.5
|
|
|
$
|
118,359
|
|
|
|
|
|
|
|
Restoration Pension Plan
|
|
|
|
|
|
$
|
16,736
|
|
|
|
|
|
Clint
Freeland
|
|
Retirement Plan
|
|
|
6.5
|
|
|
$
|
116,171
|
|
|
|
|
|
|
|
Restoration Pension Plan
|
|
|
|
|
|
$
|
|
|
|
|
|
|
Carolyn Burke
|
|
Retirement Plan
|
|
|
6.3
|
|
|
$
|
111,187
|
|
|
|
|
|
|
|
Restoration Pension Plan
|
|
|
|
|
|
$
|
|
|
|
|
|
|
Catherine James
|
|
Retirement Plan
|
|
|
6.3
|
|
|
$
|
108,820
|
|
|
|
|
|
|
|
Restoration Pension Plan
|
|
|
|
|
|
$
|
|
|
|
|
|
|
Henry Jones
|
|
Retirement Plan
|
|
|
4.8
|
|
|
$
|
83,357
|
|
|
|
|
|
|
|
Restoration Pension Plan
|
|
|
|
|
|
$
|
|
|
|
|
|
|
(1)
|
Dynegys allocations to the Retirement Plan for the PRB component of that plan vest at a rate of 33%, 67% and 100% after completion of each year of service over three years. Our allocations to the Restoration
Pension Plan vested at the same rate as under the PRB component of the Retirement Plan. Effective January 1, 2012, participation in the Restoration Pension Plan was frozen, and benefit accruals were suspended.
|
Our Named Executive Officers are eligible for qualified pension benefits under the Retirement Plan. The pension benefit is based on the PRB portion of the Retirement
Plan, which provides a defined benefit that grows each year at a variable rate
(30-year
Treasury rate). This benefit, which was introduced in 2001, provides an annual contribution of 6% of each eligible
employees salary, including each Named Executive Officers salary, capped at $270,000 for 2017. Our Named Executive Officers were eligible in 2011 to participate in the Restoration Pension Plan, which is an unfunded, nonqualified plan
designed to provide an allocation or benefit to certain employees that are highly compensated and whose company pension contributions are limited under certain Internal Revenue Service, or IRS, requirements for qualified plans. Under the Restoration
Pension Plan the allocations or benefits were intended to supplement or make up for what affected employees would have received under the Retirement Plan but for the IRS limitations. The participation in the Restoration Pension plan was frozen,
effective for periods on and after January 1, 2012, and benefit accruals have also been suspended.
37
The present values of accumulated benefits payable to each of the Named Executive Officers under the Retirement Plan and
Restoration Pension Plan were determined using assumptions consistent with those used in Note 17 of the Notes to Consolidated Financial Statements in our Original
Form 10-K.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
We have entered
into certain agreements and maintain certain plans, as described below, which require us to provide specified payments and benefits to our Named Executive Officers as a result of severance eligible events, a change in control, retirement, death, and
disability.
In connection with the Merger, certain executive officers of Dynegy (including its current named executive officers) may become entitled to payments
and benefits that may be treated as excess parachute payments within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (Section 280G). To mitigate the potential impact of Section 280G
on Dynegy and the named executive officers, on December 19, 2017, Dynegys Board of Directors approved (i) payment during 2017 of 75% of the annual bonus that it presently expects would otherwise be paid to each respective named
executive officer in early 2018 and (ii) the immediate vesting and settlement of 173,650 restricted stock units previously granted to Mr. Flexon and 3,854 restricted stock units previously granted to Mr. Jones. Those restricted stock
units were granted in 2015 and were otherwise scheduled to vest, in the case of Mr. Flexon, on March 3, 2018 and April 20, 2018, and, in the case of Mr. Jones, on March 3, 2018.
Also, on December 19, 2017, Dynegy entered into an acknowledgment (the Acknowledgment) with the named executive officers. Each named executive officer agreed
to repay the accelerated annual bonus payment amounts to the extent it was subsequently determined that the right to payment would have been forfeited before payment otherwise would have been made in the ordinary course.
For information regarding the treatment of outstanding LTI awards in connection with the Merger, see Compensation Discussion and Analysis2017
CompensationEffect of Merger on Outstanding LTI Awards
Employment Agreement
Robert Flexon.
Mr. Flexons employment agreement commenced on July 11, 2011 and on May 6, 2015 was amended and restated through
April 30, 2018. Under the amended and restated agreement, Mr. Flexons base salary was initially set at $1,100,000, subject to review by the Board from time to time for increases. He participates in our STI Plan with a current target
award of 125%, of his base salary subject to review by the Board from time to time for increases. In connection with execution of the amended and restated agreement, Mr. Flexon received a restricted stock unit award grant on May 11, 2015
with a grant date value of $5,000,000, which, as stated above, vested on December 19, 2017. On October 29, 2017, the board of directors of Dynegy approved and entered into an amendment to the Amended and Restated Employment
Agreement. The amendment extended the term of Mr. Flexons employment agreement for an additional term, which shall commence on May 1, 2018 and conclude on April 30, 2019.
Furthermore, Mr. Flexon is eligible to receive additional annual award grants pursuant to our LTI programs and he participates in our other employee benefit plans
and programs, including severance benefits described below. If Mr. Flexon is terminated for any reason as described in his employment agreement, we are obligated to pay or provide to Mr. Flexon (or his estate, if applicable) in a lump sum
within 30 days following such termination, or at such other time prescribed by any applicable plan: (1) any base salary payable to him pursuant to the agreement, accrued up to and including the date on which Mr. Flexons
employment terminates; (2) any employee benefits to which he is entitled upon termination of his employment in accordance with the terms and conditions of the applicable plans; (3) reimbursement for any unreimbursed business expenses
incurred prior to his date of termination; and (4) payment for accrued but unused vacation time as of the date of his termination, in accordance with our policies.
In connection with the consummation of the Merger, Mr. Flexon received the amounts to which he was entitled pursuant to his employment agreement as described
above.
38
Participation Agreements
On October 28, 2015, the EVPs entered into Participation Agreements. Simultaneous with the commencement of the Participation Agreements all existing EVP employment
agreements, including the Named Executive Officers agreements, were terminated. The Participation Agreements provide for guaranteed participation rights and protections in certain compensation and benefits plans, including our LTI programs and
the Severance Pay Plan.
Voluntary Resignation and Termination for Cause
Except as otherwise described under Severance Eligible Terminations and Change in Control, our Named Executive Officers are not entitled to
payments or benefits in connection with a voluntary resignation or termination for cause, other than payments for amounts due before such termination. Under our company policy applicable to all employees, a Named Executive Officer terminated under
such circumstances would be entitled to vacation pay accrued up to the month of termination. A Named Executive Officer would be able to exercise any options vested before the date of termination upon termination for cause and for a
90-day
period after the date of termination upon a voluntary resignation, or through the end of the option term, if less. Vested options that were not exercised before the date of termination, in the case of
termination for cause, or before the end of the
90-day
period, or end of the option term if less, in the case of voluntary resignation, unvested options, RSUs and PSUs would all be forfeited as a result of
termination in accordance with the applicable award agreement.
39
Severance Eligible Terminations
Any outstanding stock options, RSUs, phantom stock units, PSUs and other equity based awards previously granted to our executives will vest based upon the applicable LTI
award agreement.
In addition, pursuant to our Severance Pay Plan, our executives are entitled to payment of severance benefits if their employment is terminated
due to an involuntary termination without cause or upon a good reason termination. A good reason termination is defined as a voluntary resignation following a material reduction in the nature or scope of the executives authority or
duties, a material diminution in the executives base salary or STI target, or a change in the location of the executives principal place of employment by 50 miles or more. Severance benefits for executives under the Severance Pay Plan,
which are payable in a lump sum, include:
|
|
for the Chief Executive Officer and Executive Vice President, 200% of compensation (defined as base salary plus target bonus);
|
|
|
for any Senior Vice President or Vice President, 100% of compensation (defined as base salary plus target bonus);
|
|
|
the executive shall be eligible to receive a
pro-rata
bonus payment (determined by actual performance of the Company), which shall be paid at the same time as STI payments are
made if the executives termination occurs on or after July 1. In addition, the executive shall be eligible to receive any STI payment for the prior year that has not been paid as of the termination date;
|
|
|
continued participation in our group health care plan that provides medical and dental for 24 months for a Chief Executive Officer and Executive Vice President and 12 months for a Senior Vice President and
Vice President, provided the executive continues to pay premiums at active employee rates, with such coverage ending immediately upon the executive obtaining new employment and eligibility for similar coverage;
|
|
|
benefits resulting from a change of control would be cut back if doing so would result in greater
after-tax
proceeds to an executive absent such cut back Best Net
provision. Otherwise, the executive would receive payment of all change of control related benefits and would be responsible for paying any excise tax incurred under Internal Revenue Code section 280(G); and
|
|
|
outplacement assistance benefits, as determined by the plan administrator, for a period of time equal to the minimum number of months of base pay such executive is entitled to receive under the Executive Severance Pay
Plan (but in any event not beyond the end of the second calendar year following the calendar year in which the executive terminated employment), with such benefits paid directly to the outplacement assistance provider and not to the executive in a
lump sum.
|
The foregoing benefits may be subject to the following material conditions or obligations:
|
|
non-competition,
non-disclosure,
non-disparagement,
and
non-solicitation
requirements; and
|
|
|
execution and performance of a release and waiver of liability agreement with respect to his or her employment and termination.
|
Change in Control
In the event of a change in control or Corporate
Change, the RSUs and option awards granted under the 2012 Long Term Incentive Plan require a double trigger, both the occurrence of a Corporate Change and an involuntary termination, to vest. For PSUs, upon a Corporate Change, the Named Executive
Officers would be entitled to receive payment as prescribed by the award agreement regardless of whether the Named Executive Officer is terminated.
In addition,
each of our executives is entitled to severance benefits if, no earlier than 60 days before and in connection with or within two years after a change in control, such executive is subject to an involuntary termination or termination for good
reason, as defined in the Severance Pay Plan. A good reason termination is defined as a voluntary resignation following a material reduction in the nature or scope of the executives authority or duties, a material diminution in the
executives base salary or STI target, or a change in the location of the executives principal place of employment by 50 miles or more.
40
Change in control benefits under the Severance Pay Plan include:
|
|
for the Chief Executive Officer, 299% of compensation (defined as base salary plus target bonus);
|
|
|
for any Executive Vice President, 250% of compensation (defined as base salary plus target bonus);
|
|
|
for any Senior Vice President or Vice President, 150% of compensation (defined as base salary plus target bonus);
|
|
|
the executive shall be eligible to receive a
pro-rata
bonus payment, which shall be paid at the same time as STI payments. In addition, the executive shall be eligible to receive
any STI payment for the prior year that has not been paid as of the termination date;
|
|
|
continued participation in our group health care plan that provides medical and dental for 36 months for a Chief Executive Officer, 30 months for an Executive Vice President and 18 months for a Senior
Vice President or Vice President, provided the executive continues to pay premiums at active employee rates, with such coverage ending immediately upon the executive obtaining new employment and eligibility for similar coverage;
|
|
|
benefits resulting from a change of control would be cut back if doing so would result in greater
after-tax
proceeds to an executive absent such cut back Best Net
provision. Otherwise, the executive would receive payment of all change of control related benefits and would be responsible for paying any excise tax incurred under Internal Revenue Code section 280(G); and
|
|
|
outplacement assistance benefits at least equivalent to those that would have been provided to the Named Executive Officer before the change in control (but in any event not beyond the end of the second calendar year
following the calendar year in which the executive terminated employment), with such benefits paid directly to the outplacement assistance provider and not to the executive in a lump sum.
|
The foregoing benefits may be subject to the following material conditions or obligations:
|
|
non-competition,
non-disclosure,
non-disparagement,
and
non-solicitation
requirements; and
|
|
|
execution and performance of a release and waiver of liability agreement with respect to his or her employment and termination.
|
Retirement
As of December 31, 2017, none of our Named Executive
Officers have reached eligibility age for payments upon retirement.
Disability or Death
All of our employees may elect to participate in our disability policy, and any participating employee would be entitled to long-term disability benefits under such
disability policy if he or she paid any required premiums. All of our Named Executive Officers have elected to participate in our disability policy. Under such policy, all employees at the level of Vice President or above are entitled to
12 months of the monthly base salary that is in effect on the date that the employee is determined to be disabled. Additionally, employees at the level of Vice President or above are also provided with additional basic life insurance coverage
as supplemental life insurance equal to 12 months of monthly base salary.
Further, in the event of death, the medical, dental and vision benefits that we
maintained for the deceased employee at the level of Vice President or above and his or her family would be maintained for 12 months after the date of death, provided that such employees covered dependents continue to pay the required
premiums. Such employees Dynegy 401(k) Plan distributions and Retirement Plan benefits would generally be paid to his or her beneficiary. Health benefits in the event of disability vary depending on the type of disability.
In addition, each Named Executive Officers equity based awards would vest upon death or disability in accordance with the applicable LTI award agreement.
41
Potential Payments and Benefits
The following tables describe the estimated potential payments we would have been required to make to our Named Executive Officers under the severance and change in
control plans, as applicable, upon termination of their employment under various circumstances. The following assumptions and general principles apply with respect to these tables:
|
|
The amounts shown assume the applicable termination event took place on December 29, 2017, the last business day of the year; accordingly, values associated with LTI awards made in March 2018 are not included;
|
|
|
The price per share used to calculate the value of the equity based payments is the closing price of our common stock on December 29, 2017 of $11.85;
|
|
|
The amounts shown as Base salary under the Severance Eligible Termination and Change in Control columns are the lump sum cash payments described above as compensation under
Severance Eligible and Change in Control, respectively;
|
|
|
The amounts shown as Short-term Incentive Bonus under the Severance Eligible Termination and Change in Control columns are calculated based upon achieving target; however, actual
results could differ based upon Company performance;
|
|
|
The amounts shown for Medical, dental and vision benefits under the Severance eligible terminations column assume that the applicable Named Executive Officer continued to participate in our group
health care for the maximum period of time permitted for such Named Executive Officer under the Executive Severance Pay Plan; and
|
|
|
The amounts shown for Accidental death & dismemberment insurance proceeds under the Disability column represent the maximum payment available under the applicable accidental death and
disability policy. The actual value could be lower depending on the type of disability. Under the Death column is the maximum payment if death occurred from an accident covered under the applicable accidental death and disability policy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
Resignation /
For Cause
Termination(1)
|
|
|
Severance
Eligible
Termination(2)
|
|
|
Change
in
Control(2)
|
|
|
Disability
|
|
|
Death
|
|
Robert Flexon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary
|
|
|
$
|
|
|
|
$5,580,000
|
|
|
|
$8,342,100
|
|
|
|
$1,240,000
|
|
|
|
$
|
|
Short-term incentive bonus
|
|
|
|
|
|
|
1,550,000
|
|
|
|
1,550,000
|
|
|
|
|
|
|
|
|
|
Vested/accelerated stock options
|
|
|
83,143
|
|
|
|
1,599,737
|
|
|
|
1,599,737
|
|
|
|
1,599,737
|
|
|
|
1,599,737
|
|
Accelerated restricted stock units
|
|
|
|
|
|
|
4,069,444
|
|
|
|
4,069,444
|
|
|
|
4,069,444
|
|
|
|
4,069,444
|
|
Accelerated performance units(3)
|
|
|
|
|
|
|
3,041,739
|
|
|
|
6,246,182
|
|
|
|
6,246,182
|
|
|
|
6,246,182
|
|
Incremental
non-qualified
pension
|
|
|
12,414
|
|
|
|
12,414
|
|
|
|
12,414
|
|
|
|
12,414
|
|
|
|
12,414
|
|
Medical, dental and vision benefits
|
|
|
|
|
|
|
33,233
|
|
|
|
49,850
|
|
|
|
|
|
|
|
33,233
|
|
Life insurance proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,480,000
|
|
Accidental death & dismemberment insurance
proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,480,000
|
|
|
|
2,480,000
|
|
Out-placement
services
|
|
|
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$95,557
|
|
|
|
$15,906,567
|
|
|
|
$21,889,727
|
|
|
|
$15,647,777
|
|
|
|
$16,921,010
|
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
Resignation /
For Cause
Termination(1)
|
|
|
Severance
Eligible
Termination(2)
|
|
|
Change in
Control(2)
|
|
|
Disability
|
|
|
Death
|
|
Clint Freeland
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary
|
|
|
$
|
|
|
|
$2,107,000
|
|
|
|
$2,633,750
|
|
|
|
$602,000
|
|
|
|
$
|
|
Short-term incentive bonus
|
|
|
|
|
|
|
451,500
|
|
|
|
451,500
|
|
|
|
|
|
|
|
|
|
Vested/accelerated stock options
|
|
|
15,672
|
|
|
|
279,292
|
|
|
|
279,292
|
|
|
|
279,292
|
|
|
|
279,292
|
|
Accelerated restricted stock units
|
|
|
|
|
|
|
778,308
|
|
|
|
778,308
|
|
|
|
778,308
|
|
|
|
778,308
|
|
Accelerated performance units(3)
|
|
|
|
|
|
|
594,613
|
|
|
|
1,163,990
|
|
|
|
1,163,990
|
|
|
|
1,163,990
|
|
Incremental
non-qualified
pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical, dental and vision benefits
|
|
|
|
|
|
|
16,617
|
|
|
|
41,542
|
|
|
|
|
|
|
|
16,617
|
|
Life insurance proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,204,000
|
|
Accidental death & dismemberment insurance
proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,204,000
|
|
|
|
1,204,000
|
|
Out-placement
services
|
|
|
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$15,672
|
|
|
|
$4,247,330
|
|
|
|
$5,368,382
|
|
|
|
$4,027,590
|
|
|
|
$4,646,207
|
|
Carolyn Burke
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary
|
|
|
$
|
|
|
|
$1,914,500
|
|
|
|
$2,393,125
|
|
|
|
$547,000
|
|
|
|
$
|
|
Short-term incentive bonus
|
|
|
|
|
|
|
410,250
|
|
|
|
410,250
|
|
|
|
|
|
|
|
|
|
Vested/accelerated stock options
|
|
|
14,150
|
|
|
|
245,905
|
|
|
|
245,905
|
|
|
|
245,905
|
|
|
|
245,905
|
|
Accelerated restricted stock units
|
|
|
|
|
|
|
717,328
|
|
|
|
717,328
|
|
|
|
717,328
|
|
|
|
717,328
|
|
Accelerated performance units(3)
|
|
|
|
|
|
|
527,729
|
|
|
|
1,056,854
|
|
|
|
1,056,854
|
|
|
|
1,056,854
|
|
Incremental
non-qualified
pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical, dental and vision benefits
|
|
|
|
|
|
|
5,687
|
|
|
|
14,216
|
|
|
|
|
|
|
|
5,687
|
|
Life insurance proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,094,000
|
|
Accidental death & dismemberment insurance
proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,094,000
|
|
|
|
1,094,000
|
|
Out-placement
services
|
|
|
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$14,150
|
|
|
|
$3,841,399
|
|
|
|
$4,857,679
|
|
|
|
$3,661,087
|
|
|
|
$4,213,774
|
|
Catherine James
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary
|
|
|
$
|
|
|
|
$1,897,000
|
|
|
|
$2,371,250
|
|
|
|
$542,000
|
|
|
|
$
|
|
Short-term incentive bonus
|
|
|
|
|
|
|
406,500
|
|
|
|
406,500
|
|
|
|
|
|
|
|
|
|
Vested/accelerated stock options
|
|
|
14,017
|
|
|
|
261,424
|
|
|
|
261,424
|
|
|
|
261,424
|
|
|
|
261,424
|
|
Accelerated restricted stock units
|
|
|
|
|
|
|
715,148
|
|
|
|
715,148
|
|
|
|
715,148
|
|
|
|
715,148
|
|
Accelerated performance units(3)
|
|
|
|
|
|
|
525,458
|
|
|
|
1,053,098
|
|
|
|
1,053,098
|
|
|
|
1,053,098
|
|
Incremental
non-qualified
pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical, dental and vision benefits
|
|
|
|
|
|
|
5,471
|
|
|
|
13,676
|
|
|
|
|
|
|
|
5,471
|
|
Life insurance proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,084,000
|
|
Accidental death & dismemberment insurance
proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,084,000
|
|
|
|
1,084,000
|
|
Out-placement
services
|
|
|
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$14,017
|
|
|
|
$3,831,000
|
|
|
|
$4,841,095
|
|
|
|
$3,655,669
|
|
|
|
$4,203,139
|
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
Resignation /
For Cause
Termination(1)
|
|
|
Severance
Eligible
Termination(2)
|
|
|
Change in
Control(2)
|
|
|
Disability
|
|
|
Death
|
|
Henry Jones
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary
|
|
|
$
|
|
|
|
$1,960,000
|
|
|
|
$2,450,000
|
|
|
|
$560,000
|
|
|
|
$
|
|
Short-term incentive bonus
|
|
|
|
|
|
|
420,000
|
|
|
|
420,000
|
|
|
|
|
|
|
|
|
|
Vested/accelerated stock options
|
|
|
16,082
|
|
|
|
280,525
|
|
|
|
280,525
|
|
|
|
280,525
|
|
|
|
280,525
|
|
Accelerated restricted stock units
|
|
|
|
|
|
|
729,225
|
|
|
|
729,225
|
|
|
|
729,225
|
|
|
|
729,225
|
|
Accelerated performance units(3)
|
|
|
|
|
|
|
568,801
|
|
|
|
1,140,752
|
|
|
|
1,140,752
|
|
|
|
1,140,752
|
|
Incremental
non-qualified
pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical, dental and vision benefits
|
|
|
|
|
|
|
16,617
|
|
|
|
41,542
|
|
|
|
|
|
|
|
16,617
|
|
Life insurance proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,120,000
|
|
Accidental death & dismemberment insurance
proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,120,000
|
|
|
|
1,120,000
|
|
Out-placement
services
|
|
|
|
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$16,082
|
|
|
|
$3,995,168
|
|
|
|
$5,082,044
|
|
|
|
$3,830,503
|
|
|
|
$4,407,119
|
|
(1)
|
The Named Executive Officers would be able to exercise any options vested before the day of termination for cause or for a
30-day
period after the date of termination upon a
voluntary resignation, or through the end of the option term, if less. If Mr. Flexons Employment Agreement, as amended, terminates according to its terms, Mr. Flexon would be able to exercise any options within 10 years from the
effective date of the option.
|
(2)
|
The Named Executive Officers are eligible to participate in the Severance Pay Plan. Under the Severance Pay Plan, in the event an Involuntary Termination occurs each is eligible to receive 200% his or her compensation
(annual base salary plus target STI award). The executives shall also be eligible to receive a
pro-rata
bonus payment (determined by actual performance of the Company), which shall be paid at the same time as
STI payments are made if the executives termination occurs on or after July 1. The Severance Pay Plan also provides for medical, dental, and vision benefits at the active employee rates for 24 months. Under the Change in Control provision of the
Severance Pay Plan, in the event of an Involuntary Termination, Mr. Flexon is eligible to receive a severance payment equal to 299% his compensation (annual base salary plus target STI award), a
pro-rata
bonus payment (determined by actual performance of the Company), which shall be paid at the same time as STI payments are made, 36 months of medical, dental, and vision benefits coverage at the active employee rates. Messrs. Freeland and Jones and
Mses. Burke and James are eligible to receive a severance payment equal to 250% their compensation (annual base salary plus target STI award), a
pro-rata
bonus payment (determined by actual performance of the
Company), which shall be paid at the same time as STI payments are made, and 30 months of medical, dental, and vision benefits coverage at the active employee rates. In the event of a change in control and subsequent Involuntary Termination, the
Named Executive Officers will also have accelerated vesting treatment on the Incremental
non-qualified
pension. Outplacement services are made available under both plans for all eligible employees.
|
(3)
|
Under the PSU award agreements granted in 2015, the Named Executive Officers would be entitled to a
pro-rata
vesting of the PSUs at the target level of the award for
an involuntary termination without cause. Under the PSU award agreements granted in 2016 and 2017, the Named Executive Officers would be entitled to, upon an involuntary termination without cause, vesting of the PSUs upon completion of the
performance period based solely upon the actual level of performance of the Company. Upon a Corporate Change for awards issued in 2015, 2016 and 2017, each Named Executive Officer would be entitled to receive payment as prescribed by the award
agreement regardless of whether he or she is terminated. For purposes of this table, the value for a corporate change was calculated using the target level.
|
44
D
IRECTOR
C
OMPENSATION
DIRECTOR COMPENSATION FOR 2017
The key terms of our
non-management
independent director compensation include the following:
|
|
|
|
|
Board Annual Retainer (paid in cash)
|
|
●
$75,000; paid in quarterly
installments.
|
Committee Annual Retainers (paid in cash)
|
|
Chair
(paid in quarterly installments)
●
Audit$25,000
●
Compensation$20,000
●
Finance & Commercial Oversight$20,000
●
Nominating$15,000
|
|
Members
(paid in quarterly installments)
●
Audit$10,000
●
Compensation$10,000
●
Finance & Commercial Oversight$10,000
●
Nominating$5,000
|
Annual Equity Award
|
|
●
Annual award value of $110,000 to be
granted in RSUs using the closing stock price on the grant date.
●
Annual awards to be granted on the date of Dynegys Annual
Stockholder Meeting with one year vesting from the date of grant.
|
Non-Executive
Chairman Annual Retainer
|
|
●
Additional retainer of $150,000.
●
Deliver through a mix of cash (50%), paid in quarterly installments, and
RSUs (50%).
●
RSUs to be granted on the date of Dynegys Annual Stockholder
Meeting with one year vesting from the date of grant.
|
Other(1)
|
|
●
Reimbursement for reasonable
out-of-pocket
expenses incurred in connection with travel to and from, and attendance at, meetings of the Board or its committees and related activities, including director
education courses and materials.
|
(1)
|
From February to November 2017, Tyler Reeder served on the Board. Mr. Reeder, as the Designated Director as defined in the Investor Rights Agreement, was not compensated for his service on the Board, but he did
receive the same reimbursement of reasonable
out-of-pocket
expenses as our other
non-management
directors received.
|
The following table sets forth certain information regarding the compensation earned by or awarded to each
non-management
independent director who served on our Board in 2017. The Designated Director and Directors who are also employees of Dynegy are not compensated for their services as directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned
or
Paid in
Cash
|
|
|
Stock
Awards(1)
|
|
|
Option
Awards
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
|
|
|
Total
|
|
Pat Wood
III(2)(3)
|
|
|
$155,000
|
|
|
|
$185,000
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$340,000
|
|
Hilary E.
Ackermann
|
|
|
$105,000
|
|
|
|
$110,000
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$215,000
|
|
Paul M.
Barbas
|
|
|
$105,000
|
|
|
|
$110,000
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$215,000
|
|
Richard L. Kuersteiner
|
|
|
$100,000
|
|
|
|
$110,000
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$210,000
|
|
Jeffrey S.
Stein(3)
|
|
|
$100,000
|
|
|
|
$110,000
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$210,000
|
|
John R.
Sult
|
|
|
$110,000
|
|
|
|
$110,000
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$220,000
|
|
Tyler
Reeder
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
(1)
|
Directors received an annual award granted under 2012 Long Term Incentive Plan in RSUs on May 18, 2017 with a vesting date of May 18, 2018. The values shown under Stock Awards reflect the aggregate
grant date fair value computed in accordance with FASB ASC Topic 718. The aggregate number of restricted stock units outstanding as of December 31, 2017 for our
non-employee
directors was as follows:
46,391 restricted stock units for Mr. Wood, 18,545 restricted stock units for Ms. Ackerman, 21,022 restricted stock units for Mr. Barbas, 15,152 restricted stock units for Mr. Kuersteiner, 21,591 restricted stock units for
Mr. Stein and 27,461 restricted stock units for Mr. Sult.
|
(2)
|
Mr. Wood is serving as our
non-executive
Chairman of the Board.
|
45
(3)
|
Messrs. Wood, Barbas, Stein and Sult and Ms. Ackermann each have deferred receipt of the amount realized from the vesting of the RSUs granted on May 18, 2017 until their separation from service as a director
of Dynegy.
|