UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the
Registrant |
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Filed by a
Party other than the Registrant |
Check the
appropriate box: |
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Preliminary
Proxy Statement |
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CONFIDENTIAL, FOR USE
OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2)) |
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Definitive
Proxy Statement |
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Definitive
Additional Materials |
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Soliciting
Material Pursuant to ss.240.14a-12 |

NEW JERSEY RESOURCES CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of
Filing Fee (Check the appropriate box): |
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No fee
required. |
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11. |
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(1) |
Title of each
class of securities to which transaction applies: |
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(2) |
Aggregate
number of securities to which transaction applies: |
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(3) |
Per unit price
or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11
(set forth the
amount on which the filing fee is calculated and state how it was
determined): |
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(4) |
Proposed
maximum aggregate value of transaction: |
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(5) |
Total fee
paid: |
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Fee paid
previously with preliminary materials. |
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Check box
if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing. |
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(1) |
Amount
Previously Paid: |
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(2) |
Form, Schedule
or Registration Statement No.: |
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(3) |
Filing
Party: |
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(4) |
Date
Filed: |

Notice of
Annual Meeting
of Shareowners
LOGISTICS:
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WEDNESDAY, JANUARY 20, 2021
9:30 a.m., Eastern Time
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ONLINE, VIA WEBCAST AT
www.virtualshareholdermeeting.com/NJR2021
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REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:
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BY INTERNET
www.proxyvote.com or scan the Quick Response “QR” Barcode on your
proxy card.
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BY TELEPHONE
Call 1-800-690-6903 as noted on your proxy card.
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BY MAIL
Sign, date and return your proxy card in the enclosed envelope.
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AT THE VIRTUAL MEETING
You also may vote online during the annual meeting by following the
instructions provided on the website during the annual meeting. See
page 78 for instructions on how to attend the annual meeting.
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Please refer to the enclosed proxy materials or the information
forwarded by your bank, broker or other holder of record to see
which voting methods are available to you.
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In light of the ongoing coronavirus disease 2019 (COVID-19) pandemic, for the health and safety of all of our stakeholders, including our employees and shareowners, and taking into account recent federal, state and local guidance that has been issued, we have determined that the New Jersey Resources Corporation Annual Meeting of Shareowners (the “Meeting”) will be held in a virtual meeting format, via the internet, with no physical in-person meeting. We are permitted to hold the Meeting in this virtual format in accordance with recent legislation in the State of New Jersey that allows virtual meetings of shareowners during a state of emergency. The Meeting will not be held in-person unless the state of emergency is lifted in the State of New Jersey. In such event, we will announce alternative arrangements for the Meeting as promptly as practicable. Please monitor our Meeting website at www.virtualshareholdermeeting.com/NJR2021
for updated information.
If you plan to participate in the virtual Meeting, please see
“Questions and Answers About the Meeting” under Question 12, “How
do I attend the Meeting?” on page 78 of this proxy statement.
Shareowners will be able to attend, vote and submit questions
before and during the Meeting via the internet as described more
fully under Question 19, “How do I ask a question at the Meeting?”
on page 80 of this proxy statement. In future years, we intend to
resume holding in-person annual meetings of shareowners under
normal circumstances. To participate in the Meeting (e.g., submit
questions and/or vote), you will need the control number provided
on your proxy card, voting instruction card or Notice Regarding
Availability of Proxy Materials.
The Meeting is being held for the following purposes:
ITEMS OF BUSINESS
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To elect as directors the five nominees to the Board of Directors
named in the attached Proxy Statement, one for a term expiring in
2022 and four for terms expiring in 2024
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To approve a non-binding advisory resolution approving the
compensation of our named executive officers
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To ratify the appointment by the Audit Committee of Deloitte &
Touche LLP as our independent registered public accounting firm for
the fiscal year ending September 30, 2021
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To transact any other business that may properly be brought before
the Meeting or any adjournments or postponements thereof
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The Board of Directors has fixed the close of business on November
30, 2020, as the record date (the “Record Date”) for the
determination of the shareowners entitled to notice of, and to vote
at, the Meeting. Accordingly, only shareowners of record at the
close of business on that date will be entitled to vote at the
Meeting.
In accordance with U.S. Securities and Exchange Commission (“SEC”)
rules, we are furnishing proxy materials to our shareowners via the
internet. You may read, print and download our Annual Report and
Proxy Statement at
http://investor.njresources.com/annual-proxy.cfm.
On or about December 11, 2020, we will mail our shareowners a
notice containing instructions on how to access our 2020 Proxy
Statement and Annual Report, how to vote by internet, by telephone
or mail, and how to
attend the virtual Meeting. The notice will also provide
instructions on how to request a paper copy of these documents.
A cordial invitation is extended to you to attend our virtual
Meeting. Regardless of whether you plan to attend the Meeting, it
is important that your shares are represented and voted at the
Meeting. If you received a paper copy of the proxy card or voting
instructions by mail, you can vote by signing, dating and returning
that document. Your proxy may be revoked at any time before it is
exercised in the manner set forth in the Proxy Statement.
Registered shareowners and participants in plans holding shares of
our Common Stock may vote by telephone, by internet, or by mail. To
use these convenient services, follow the steps detailed in the
instructions for voting that are attached to the proxy card.
Beneficial owners of shares of our Common Stock held in street name
through a bank or brokerage account should follow the voting
instruction for voting their shares from the institution that holds
such shares. Please note that in the absence of specific
instructions as to how to vote, brokers may not vote your shares on
the election of directors or the non-binding proposal regarding the
compensation of our named executive officers. Please return your
proxy card so your vote can be counted. I hope you will attend the
Meeting, but even if you cannot, please vote your shares as
promptly as possible.
Thank you.
Wall, New Jersey
Dated:
December 11, 2020
Richard Reich
Corporate Secretary and Assistant
General Counsel

Message from our President and CEO
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“On behalf of our entire
company, thank you for
your continued confidence and investment in NJR.”
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Steve Westhoven
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Dear Shareowner,
Fiscal 2020 was my first full year as president and CEO and, in the face of many challenges, was another solid year for NJR. With our talented team and core strengths — a strong financial profile, disciplined capital allocation, and a diverse investment portfolio — we continue to deliver results. This year, we achieved net income of $2.05 per share and net financial earnings of $2.07 per share. We increased our dividend by 6.4 percent, which was our 27th
dividend
increase
over the past 25 years. We accomplished all of this during the global outbreak of COVID-19, which has fundamentally changed every aspect of our lives and how we work and engage as a team.
I encourage you to read our Annual Report to learn more about our
fiscal 2020 accomplishments, and I hope you will join us at our
Annual Meeting on January 20, 2021, at 9:30 a.m., Eastern Time, via
webcast at www.virtualshareholdermeeting.com/NJR2021.
During the Annual Meeting, we will vote on the following items:
1.
The election as directors of five nominees to our Board of
Directors named in our Proxy Statement — one for a term expiring in
2022 and four for terms expiring in 2024;
2.
Approval of a non-binding advisory resolution on the compensation
of our named executive officers; and
3.
Ratification of the appointment by our Audit Committee of Deloitte
& Touche LLP as our independent registered public accounting
firm for the fiscal year ending September 30, 2021.
Your vote is important. Whether or not you plan to attend the
Annual Meeting, I encourage you to vote via internet, telephone or
mail to ensure your shares are properly represented.
On behalf of our entire company, thank you for your continued
confidence and investment in NJR. Looking ahead, we have a strong
foundation for growth and will work to maximize our expertise to
identify strategic opportunities that support our long-term
goals.
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President and CEO
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December 11, 2020
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$2.07
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PER SHARE
NET FINANCIAL EARNINGS(1)
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+6.4%
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DIVIDEND INCREASE,
OUR 27TH OVER THE
PAST 25 YEARS
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Sincerely,
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(1)
NFE is a financial measure not calculated in accordance with
generally accepted accounting principles (GAAP) of the United
States and is discussed in greater detail beginning on page 40 of
this Proxy Statement under “Net Financial Earnings Component.” For
a full discussion of NFE and a reconciliation to net income, please
see our most recent Annual Report on Form 10-K filed on November
30, 2020, Part II, Item 7.
of Contents
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NEW JERSEY RESOURCES | 2020 Proxy Statement |
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Back to Contents
Proxy Statement
Annual Meeting of Shareowners January 20, 2021
This Proxy Statement sets forth certain information with respect to
the accompanying proxy to be used at the Annual Meeting of
Shareowners (the “Meeting”) of New Jersey Resources Corporation, or
at any adjournments or postponements thereof, for the purposes set
forth in the accompanying Notice of Annual Meeting. Due to public
health concerns relating to the coronavirus disease 2019
(“COVID-19”), the Board of Directors (the “Board”) is planning for
the Meeting to be held solely online. If the Governor of New Jersey
lifts the current state of emergency between now and the date of
the Meeting, we will be required by law to allow shareowners to
attend the Meeting in person. If we are required to host a physical
in-person 2021 Annual Meeting of Shareowners, we will announce the
decision to do so in advance and will set forth details on how to
participate in a press release available at njresources.com. The
Meeting will be called to order at 9:30 a.m., Eastern Time, on
Wednesday, January 20, 2021. The Board solicits this proxy and
urges you to vote immediately. Unless the context otherwise
indicates, reference to “New Jersey Resources,” “NJR,” “we,” “us,”
“our” or “the Company” means New Jersey Resources Corporation and
its affiliates.
The Board is making these materials available to you on the
internet or, upon your request, delivering printed versions of
these materials to you by mail. On or about December 11, 2020, we
will mail a notice to shareowners containing instructions on how to
access the Proxy Statement and Annual Report and how to vote.
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NEW JERSEY RESOURCES | 2020 Proxy Statement |
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Election of Directors
The Board currently consists of 12 members divided into three
classes with overlapping terms. Our Restated Certificate of
Incorporation, as amended, provides that the Board shall be divided
into three classes, which shall be as nearly equal in number as
possible. Five individuals have been nominated for election as
directors at the Meeting: M. William Howard has been nominated
for a one-year term expiring in 2022, and until his successor is
elected and has been qualified, given that he will have reached the
mandatory retirement age by the end of his term; and Donald L.
Correll, James H. DeGraffenreidt, Jr., M. Susan Hardwick and George
R. Zoffinger have each been nominated for a three-year term
expiring in 2024, and until their respective successors are elected
and have been qualified. Ms. Hardwick was elected as a director by
the Board, effective September 9, 2020.
Each of the nominees is currently serving as a director of the
Company and, with the exception of Ms. Hardwick, was previously
elected to the Board by our shareowners for a term expiring at the
Meeting. There were no nominee recommendations from shareowners
submitted in accordance with our By-Laws, as amended and restated.
Unless otherwise indicated on a proxy, the proxy holders intend to
vote the shares each proxy represents for all nominees for election
as directors.
Under New Jersey law, directors are elected by a plurality of the
votes cast at an election. The Company’s Corporate Governance
Guidelines provide, however, that any nominee for director in an
uncontested election who receives a greater number of shareowner
votes “withheld” from his or her election than votes “for” his or
her election must promptly tender his or her resignation to the
Board for consideration. The Board’s Nominating/Corporate
Governance Committee (“NCGC”) will then evaluate the best interests
of the Company and will recommend to the Board whether to accept or
reject the tendered resignation. Following the Board’s
determination, the Company will disclose the Board’s decision of
whether to accept the resignation and an explanation of how the
decision was reached.
Proxies solicited by the Board will be voted in favor of the
nominees listed below, unless otherwise specified in the proxy. All
of the nominees proposed by the Board have consented to serve if
elected. We know of no reason why the nominees would not be
available for election or, if elected, would be unable to serve.
While we do not anticipate that any of the nominees will be unable
to serve, if any should be unable to serve, the proxy holders
reserve the right to substitute any other person approved by the
Board.
The NCGC looks for our current and potential directors collectively
to have a mix of skills and qualifications that provide the
foundation for sound governance and align with the Company’s
strategy.
It is of critical importance to the Company that the NCGC recruit
directors who help achieve the goal of a well-rounded, diverse
Board that functions as a collegial and cohesive unit.
We have included a chart that summarizes the qualifications,
attributes, skills and experience of the full Board on page 7. As
part of each director’s biography, we have also included a brief
summary of qualifications and experience. Set forth below is
information for each nominee and director concerning the age,
principal occupation, employment and directorships during the past
five years, positions with the Company, the year in which he or she
first became a director of the Company and his or her term of
office as a director. Also, as part of each director’s biography,
is a brief discussion of the specific experience, qualifications,
attributes or skills that led to the Board’s conclusion that, in
light of our business and structure, each nominee and director
should serve as a director as of the date of this Proxy
Statement.
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NEW JERSEY RESOURCES | 2020 Proxy Statement |
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Summary of Director Qualifications and Experience
We believe effective oversight comes from a Board that represents a
diverse range of experience and perspectives that provides the
collective qualifications, attributes, skills and experience
necessary for sound governance. The NCGC establishes and regularly
reviews with the Board the qualifications, attributes, skills and
experience that it believes are desirable to be represented on the
Board to ensure that they align with the Company’s long-term
strategy. The most important of these are described below, and the
number of directors possessing those skills and experience is
indicated.
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Utility
Experience in operating a regulated utility
business, such as our principal subsidiary, New
Jersey Natural Gas Company
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Community/Public
Relations
Experience in community affairs, public
relations and/or marketing
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Regulatory/Government
Experience in interacting with regulators and policymakers and/or
working within government agencies
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Legal
Experience and/or formal education as an attorney
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Finance/Accounting/Risk
Management
Financial and risk management expertise, and/or experience as a
public company CFO or audit partner
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Environmental
Experience with oversight of environmental policy, regulation and
business operation matters
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Corporate
Governance
Experience in public company corporate governance-related issues
and best practices
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Renewable
Energy/Energy
Efficiency
Experience in the renewable energy
industry, including solar energy
generation and distribution and/or experience linking green
initiatives to commercial opportunities
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Technology/Cybersecurity
Experience with technology innovations and/or with oversight of
cybersecurity programs
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Leadership
Development/Succession
Planning
Experience in talent management,
leadership development and succession planning to ensure a pipeline
of leadership
for an organization
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Energy Services/Commodity Trading
Experience in the energy services industry, including wholesale
energy marketing, energy trading, and delivery of midstream energy
service and/or storage
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Strategic
Planning
Experience in strategic planning and
growth and value creation
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NEW JERSEY RESOURCES | 2020 Proxy Statement |
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Nominee for Election as Director for a One-Year Term Expiring in
2022
M. WILLIAM HOWARD,
JR. |

RETIRED Pastor,
Bethany Baptist
Church
Age 74
Director
since: 2005
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Biography:
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Retired. Pastor of Bethany Baptist Church, Newark, New Jersey, from
2000 to 2015; President, New York Theological Seminary, from 1992
to 2000; President of the National Council of Churches from 1979 to
1981; Past Chairman and Member, Rutgers University Board of
Governors, from 2004 to 2014; Director Emeritus, Choose New
Jersey.
Mr. Howard is an experienced local and national community leader
with extensive familiarity with communities and contacts within and
outside our service area. His work and experience in the public
sector, including his experience leading religious institutions,
bring unique and valuable perspectives and disciplines to the
Board’s deliberations and decision-making processes, particularly
with regard to issues of corporate citizenship and community
relations.
Other Public Company Directorships:
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None
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Nominees for Election as Director for a Three-Year Term Expiring in
2024
DONALD L.
CORRELL |

(Chairman of the NJR Board and Chair of the Executive Committee)
Chief Executive Officer and Co-Founder,
Water Capital Partners LLC
Age 70
Director
since: 2008
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Biography:
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Chief Executive Officer and Co-Founder, Water Capital Partners LLC,
a firm that invests in, advises about and manages water and
wastewater infrastructure assets and operations, since January
2011. President and Chief Executive Officer and member of the Board
of Directors of American Water Works, Inc., a New Jersey-based
public water utility holding company, from April 2006 to August
2010; President and Chief Executive Officer and member of the Board
of Directors of Pennichuck Corporation, a New Hampshire-based
public water utility holding company, from 2003 to 2006; Chairman,
President and Chief Executive Officer of United Water Resources, a
public water services company, from 1991 through 2001. From 2001 to
2003, Mr. Correll served as an independent advisor to water service
and investment firms on issues relating to marketing, acquisitions
and investments in the water services sector.
Mr. Correll’s experience with utility companies, through his
leadership of American Water Works and other water services
companies, has given him an understanding of the regulatory and
operational issues that we face. In his positions as a chief
executive officer, chairman and director of a public company and as
a certified public accountant, he gained experience in financial
policy and risk oversight that is essential to his position as a
member of the Audit Committee. In these roles he also gained
significant experience that is relevant to his position as the
Chairman of the Board of Directors of NJR and Chair of the
Executive Committee.
Other Public Company Directorships:
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Encompass Health Corporation (NYSE: EHC) (June 2005 – Present)
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NEW JERSEY RESOURCES | 2020 Proxy Statement |
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JAMES H.
DEGRAFFENREIDT, JR. |

RETIRED Chairman and Chief Executive Officer, WGL Holdings,
Inc.
Age 67
Director
since: 2019
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Biography:
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Retired. Chairman and Chief Executive Officer of WGL Holdings,
Inc., a public utility holding company, and Washington Gas Light
Company, a natural gas utility, from October 2001 to October 2009;
President, WGL Holdings, Inc., from 1994 to 2001. Past chair,
American Gas Association, from January 2007 to December 2007.
Director, Harbor Bankshares Corporation, from April 1996 to
present. Director, Massachusetts Mutual Life Insurance Company,
since 2002.
As the former chief executive officer of a New York Stock Exchange
listed public utility holding company and from his past service as
a chair of the American Gas Association, Mr. DeGraffenreidt brings
significant public utility experience to the Board and significant
public company experience. Mr. DeGraffenreidt’s experience as a
board member, including two years as industry co-chair, of the
Alliance to Save Energy, an organization which promotes energy
efficiency and environmental stewardship, brings an important
perspective to our Board’s oversight of those issues and aligns
with the Company’s business strategy. Earlier in his career, Mr.
DeGraffenreidt was an attorney with significant experience and
expertise in regulatory issues and he also previously served as a
utility consumer advocate, which provides him with particularly
unique insight regarding the perspectives of the Company’s
stakeholders and the regulatory matters affecting the Company. His
background and wide ranging expertise in the natural gas industry
enables him to provide valuable insight as a member of the
Board.
Other Public Company Directorships:
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Vectren Corporation (NYSE: VCC) (March 2010 – February 2019)
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M. SUSAN
HARDWICK |

Executive Vice President and Chief Financial Officer, American
Water Works Company, Inc.
Age 58
Director
since: 2020
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Biography:
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Executive Vice President and Chief Financial Officer of American
Water Works, Inc., the largest publicly traded U.S. water and
wastewater utility company, since July 2019, and Executive Vice
President - Finance from June 2019 to July 2019; Ms. Hardwick
previously served as the Executive Vice President and Chief
Financial Officer of Vectren Corporation, a diversified energy
holding company with utility subsidiaries in the natural gas and
electricity markets and other non-regulated businesses, which was
sold to CenterPoint Energy, Inc. on February 1, 2019. Ms. Hardwick
joined Vectren Corporation in January 2000 and served in a variety
of positions, including Vice President, Controller and Assistant
Treasurer; Senior Vice President, Finance; Senior Vice President,
Chief Financial Officer; and Executive Vice President and Chief
Financial Officer.
Ms. Hardwick’s experience as Chief Financial Officer of multiple
utility companies, her experience developing and executing business
and financial strategy for regulated utility and market-based
businesses as well as her experience overseeing accounting and
finance functions, enterprise risk management, investor relations
as well as customer operations and regulatory services provide her
with a wide-range of financial expertise that enhances the Board
and makes her uniquely qualified as a member of the Audit
Committee.
Other Public Company Directorships:
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None
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GEORGE R.
ZOFFINGER |

President and Chief Executive Officer, Constellation Capital
Corp.
Age 72
Director
since: 1996
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Biography:
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President and Chief Executive Officer, Constellation Capital Corp.,
a financial services company, since December 2007; President and
Chief Executive Officer, New Jersey Sports & Exposition
Authority, the operating company of MetLife Sports Complex, from
March 2002 to December 2007; Chairman, New Brunswick Development
Corporation, a not-for-profit urban real estate development
company.
Mr. Zoffinger’s leadership experience and work with public
companies has provided him financial, corporate governance and real
estate development expertise and experience with executive
compensation issues, which are important to his role as a member of
the NCGC. In addition, he brings to the Board corporate development
experience and knowledge gained from his leadership and board
positions, including his tenure on the Board.
Other Public Company Directorships:
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None
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THE BOARD RECOMMENDS THAT SHAREOWNERS VOTE “FOR” ALL OF THE PROPOSED DIRECTOR
NOMINEES LISTED ABOVE.
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Directors with Terms Expiring in 2022
GREGORY E.
ALIFF |

(Chair, Audit Committee) RETIRED Partner, Deloitte & Touche
LLP
Age 67
Director
since: 2019
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Biography:
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Retired. Partner, Deloitte & Touche LLP, an independent
accounting firm, from June 1987 to May 2015. From February 2002 to
May 2013, Mr. Aliff served as Vice Chairman and Senior Partner of
Energy & Resources, where he oversaw all professional services
to the sector. From June 2013 to May 2015, he led Deloitte’s U.S.
Energy and Natural Resources Management Services.
Mr. Aliff’s experience as a long-term partner at Deloitte &
Touche LLP, including in particular his focus on energy and natural
resources, provided him not only with an extensive financial and
accounting background that adds depth to our Audit Committee, but
also a focus on our industry that uniquely qualifies him to serve
on our Board and Chair of the Audit Committee. His service on the
board of directors of other regulated entities that are also public
companies provides him with important experience and perspectives
with respect to risk management, operations, the regulatory
compliance required for highly regulated businesses, and public
company best practices.
Other Public Company Directorships:
•
California Water Service Group, Inc. (NYSE: CWT) (September 2015 –
Present)
•
SCANA Corporation (NYSE: SCG) (October 2015 – December 2018)
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ROBERT B.
EVANS |

RETIRED President and Chief Executive Officer, Duke Energy
Americas
Age 72
Director
since: 2009
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Biography:
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Retired. President and Chief Executive Officer of Duke Energy
Americas, a business unit of Duke Energy Corp., (“Duke Energy”)
from 2004 to 2006; transition executive for Energy Services, a
business unit of Duke Energy, during 2003; President of Duke Energy
Gas Transmission, a business unit of Duke Energy, from 1998 to 2002
and President and Chief Executive Officer from 2002 to 2003.
Mr. Evans’ experience in senior leadership and board positions for
other energy companies has positioned him to bring executive,
corporate development, operational and financial experience and
industry knowledge to his role as a member of the Board. His
extensive executive experience with the natural gas transmission
business and wholesale natural gas trading business of Duke Energy
and Targa Resources Partners provides the Board with valuable
knowledge of those aspects of the energy industry and has provided
him with the experience and knowledge to serve on the Board.
Other Public Company Directorships:
•
Targa Resources Corp. (NYSE: TRGP) (March 2016 – Present)
•
ONE Gas, Inc. (NYSE: OGS) (2014 – Present)
•
Sprague Resources LP (NYSE: SRLP) (October 2013 – October 2018)
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THOMAS C.
O’CONNOR |

RETIRED Chairman, President and Chief Executive Officer, DCP
Midstream, LLC
Age 64
Director
since: 2017
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Biography:
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Retired. Chairman, President and Chief Executive Officer, DCP
Midstream, LLC, one of the nation’s largest gas gatherers,
processors and marketers of natural gas liquids, from 2007 through
March 2013. From 1987 to 2007, held a variety of positions with
Duke Energy in that company’s natural gas pipeline, electric and
commercial business units.
Mr. O’Connor has extensive experience leading regulated and
unregulated natural gas and electric midstream and distribution
operations and wholesale energy trading businesses from his years
as an executive leading DCP Midstream and Duke Energy. He also has
board level experience in solar energy facility development,
operations and valuation. His vast knowledge and executive
leadership experience give him a strong operational and strategic
background with knowledge of many of the issues that face both
regulated and unregulated energy companies, particularly with
respect to the natural gas industry.
Other Public Company Directorships:
•
Keyera Corporation (TSO: KEY) (January 2014 – Present)
•
8Point3 Energy Partners LP (NASDAQ: CAFD)
(June 2015 – June 2018)
•
Andeavor Logistics LP (formerly Tesoro Logistics LP) (NYSE: ANDX)
(May 2011 – January 2018)
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Directors with Terms Expiring in 2023
STEPHEN D.
WESTHOVEN |

President and Chief Executive Officer, New Jersey Resources
Age 52
Director
since: 2018
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Biography:
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President and Chief Executive Officer of New Jersey Resources since
October 2019. Prior to his current role, Mr. Westhoven served as
President and Chief Operating Officer of New Jersey Resources from
October 2018 to September 2019; Executive Vice President and Chief
Operating Officer of New Jersey Resources from November 2017 to
September 2018; Senior Vice President and Chief Operating Officer
of NJR Energy Services (NJRES) and NJR Clean Energy Ventures
(NJRCEV) from October 2016 to November 2017; Senior Vice President
of NJRES from May 2010 to September 2016. Director, Choose New
Jersey; Director, American Gas Association.
Mr. Westhoven has been with the Company since 1990. His leadership
and contributions have been instrumental to the growth of our
businesses. His experience leading NJRES and NJRCEV, as well as his
knowledge of natural gas markets, provides the Board with unique
insight into the energy industry. Further, through Mr. Westhoven’s
years of service as an executive officer of the Company, he has
developed extensive knowledge in the areas of leadership, finance,
strategy, risk oversight, safety, management and corporate
governance, each of which provides great value to the Board. This
experience and Mr. Westhoven’s role in developing NJR’s
strategy are assets to the Board.
Other Public Company Directorships:
•
None
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JANE M.
KENNY |

(Chair, Nominating/ Corporate Governance Committee) Co-Owner and
Managing Partner, The Whitman Strategy Group, LLC
Age 69
Director
since: 2006
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Biography:
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Co-owner and Managing Partner, The Whitman Strategy Group, LLC, a
consulting firm specializing in governmental relations and
environmental and energy issues, since January 2005; Regional
Administrator of the Environmental Protection Agency, overseeing
the federal agency’s work in New York, New Jersey, Puerto Rico and
the Virgin Islands, from November 2001 to December 2004;
Commissioner of the New Jersey Department of Community Affairs from
May 1996 to November 2001; Chief of Policy to the Governor of New
Jersey from 1994 to 1996.
Ms. Kenny’s extensive public policy experience, especially with
respect to environmental, energy and government relations issues,
particularly as Administrator for Region 2 of the United States
Environmental Protection Agency and a top advisor to three
governors of New Jersey, is essential for the Board of a company
like ours that regularly faces such issues. That experience, as
well as her firm’s active consulting practice on environmental,
energy and public policy matters through which she is actively and
presently engaged in cutting-edge issues in the field, has provided
Ms. Kenny an understanding of the energy industry, which is
important in assisting the Board with monitoring and evaluating our
business.
Other Public Company Directorships:
•
None
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SHARON C.
TAYLOR |

(Chair, Leadership Development and Compensation Committee) RETIRED
Senior Vice President, Human Resources, Prudential Financial
Age 66
Director
since: 2012
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Biography:
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Retired. Senior Vice President, Human Resources, Prudential
Financial, a global financial services company, from June 2002 to
August 2017; Trustee of the Horizon Foundation for New Jersey;
Trustee of National Academy of Human Resources Foundation;
Director, Executive Leadership Council Foundation; Trustee,
Montclair Art Museum.
Ms. Taylor has an extensive background and expertise in human
resources, particularly in the areas of executive compensation,
employee benefits, talent and senior officer succession management,
diversity and inclusion, and labor and employee relations. She has
also worked in the areas of vendor governance, corporate social
responsibility and impact investing, operations and systems,
business continuity, risk management, and privacy. That background,
together with her broad experience as a senior executive officer of
one of the nation’s largest financial services companies and her
service on the boards of several organizations in key leadership
roles, provides the Board with an important perspective in the
critical areas of human capital planning and management, succession
and strategic planning, operational effectiveness, risk controls
and privacy. Her extensive experience in the aforementioned areas
provide her with an ideal background to serve as the Chair of NJR’s
Leadership Development and Compensation Committee (the “LDCC”).
Other Public Company Directorships:
•
None
|
DAVID A.
TRICE |

RETIRED President and Chief Executive Officer, Newfield Exploration
Company
Age 72
Director
since: 2004
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Biography:
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Retired. Chairman from September 2004 to May 2010, President and
Chief Executive Officer from February 2000 to May 2009, President
and Chief Operating Officer from 1999 to 2000, and Vice President —
Finance and International from 1997 to 1999, Newfield Exploration
Company, a public independent crude oil and natural gas exploration
and production company.
A career with over 30 years of experience with energy companies
such as Newfield Exploration Company has given Mr. Trice extensive
knowledge of the energy industry, particularly natural gas, as well
as other operational expertise, which is essential to our Board in
understanding and evaluating our business. Mr. Trice also brings to
our Board experience gained from holding senior leadership and
board positions with public companies and industry groups,
including the areas of risk oversight, financial policy, executive
compensation and corporate governance matters, which are
particularly relevant to his service on the LDCC and the NCGC. In
addition, Mr. Trice’s extensive experience in the energy industry
and his familiarity with the relevant issues provide the Board with
a valuable perspective.
Other Public Company Directorships:
•
McDermott International, Inc. (NYSE: MDR)
(May 2009 – May 2018)
•
Chair, QEP Resources, Inc. (NYSE: QEP)
(May 2011 – May 2020)
•
Select Energy Services, Inc. (NYSE: WTTR)
(November 2017 – Present)
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Director Nominations and Evaluation Processes
Director Candidate Recommendations and Nominations by
Shareowners
The NCGC’s charter provides that the NCGC will consider qualified
director candidate recommendations by shareowners. Shareowner
nominees will be evaluated under the same standards as nominees
recommended by management or the non-management members of the
Board. Recommendations should be sent to Office of the Corporate
Secretary, New Jersey Resources Corporation, 1415 Wyckoff Road,
Wall, New Jersey 07719. Under our By-Laws, as amended and restated,
the Corporate Secretary must receive any nomination for director on
or before October 22, 2021, for consideration at the 2022 Annual
Meeting of Shareowners. In addition, in accordance with our
By-Laws, as amended and restated, any shareowner entitled to vote
for the election of directors may nominate persons for election to
the Board if such shareowner complies with the procedures set forth
in the By-Laws, as amended and restated, and summarized under
“Questions and Answers About the Meeting” under Question 20, “How
do I make a shareowner proposal for the 2022 Annual Meeting of
Shareowners?” on page 80. The NCGC did not receive any
recommendations from any shareowners in connection with the
Meeting.
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NCGC Process for Identifying and Evaluating Director
Candidates
The NCGC identifies and evaluates all director candidates in
accordance with the director qualification standards described in
the Corporate Governance Guidelines. The NCGC evaluates a
candidate’s qualifications to serve as a member of the Board based
on the background and expertise of individual Board members, as
well as the background and expertise of the Board as a whole.
Successful nominees bring the skills, talents, knowledge and
expertise to ensure that the composition, structure and operation
of the Board serves the best interests of our shareowners. In
addition, the NCGC will evaluate a candidate’s independence and his
or her background and expertise in the context of the Board’s
needs.
The NCGC considers, when identifying first-time candidates to the
Board, the appropriate skills and characteristics required of Board
members in the context of the Company’s business and strategy and
the current make-up of the Board. The NCGC also regularly assesses
the appropriate skills and characteristics of Board members. This
assessment of Board skills, experience, and background includes
numerous factors, such as understanding of, and experience in,
relevant industries; accounting, finance, legal, environmental
issues, technology and senior leadership expertise; and diversity
with respect to race, ethnicity, gender and the communities we
serve. The NCGC is committed to actively seeking women and minority
candidates for the pool from which Board candidates are chosen.
To ensure that the Board’s composition reflects the particular
needs of the Board and the Company, the NCGC incorporates this
broad view of diversity into its review and evaluation of new
candidates and incumbent nominees in its director nomination
process. The NCGC and Board monitor the effectiveness of this
process through the Board’s self-evaluation process.
Sources of Nominees
The nomination of Ms. Hardwick was recommended by a non-management
director currently serving on our Board. After considering the
Board’s needs and Ms. Hardwick’s skills and experience, including
her role as an executive with several regulated utilities, along
with the other factors identified above, the NCGC determined to
recommend Ms. Hardwick to the Board. Upon the recommendation of the
NCGC, on August 13, 2020, the Board elected Ms. Hardwick, effective
September 9, 2020.
The NCGC is authorized to engage professional search firms at the
Company’s expense to assist with the identification, evaluation and
due diligence on potential nominees for Board vacancies. In 2020,
the Company retained Korn/Ferry International, a third-party search
firm that was paid a fee for its services, to assist with
identifying potential nominees to the Board and performing
appropriate due diligence on such candidates.
As described under “Election of Directors” on page 6, the NCGC and
the Board believe that the current composition of the Board
reflects a group of highly talented individuals with diverse
backgrounds, skills, professional and industry experience, and
other personal qualities and attributes best suited to perform
oversight responsibilities for the Company and its shareowners.
Annual Director Performance Evaluations
As required by our Corporate Governance Guidelines, the Board
conducts an evaluation of its performance on an annual basis. The
Board has the authority to retain advisors or consultants and to
provide for their compensation by the Company, as the Board deems
appropriate, to assist in designing and implementing such
evaluation. Annually, all Board members participate in a
self-assessment that is administered by the NCGC. The
self-assessment focuses on the following areas: board structure and
leadership, logistics, conduct of the meetings, discharge of board
responsibilities, and Board culture and ethics. The Board members
are also asked to identify ways to improve the effectiveness of the
Board. During fiscal year 2020, the NCGC Chair interviewed each
Board member to solicit their views on the Board’s performance. The
results of the interviews were shared with the NCGC and discussed
with the Board. Feedback from the leadership team was also provided
to the Board informally at the Board’s request. Each of the Audit
Committee, NCGC and the LDCC also conduct a self-evaluation
administered by their committee chair on an annual basis.
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Corporate Governance and
Related Matters
Our business and affairs are managed under the direction of the
Board in accordance with the New Jersey Business Corporation Act
and our Restated Certificate of Incorporation and By-Laws, as
amended and restated. Members of the Board are kept informed of our
business through discussions with the Chief Executive Officer and
other officers, by reviewing materials provided to them and by
participating in meetings of the Board and its committees. The
corporate governance practices we follow are summarized below.
Corporate Governance Policies
 |
Board Structure and Independence
|
 |
All of our directors and nominees are independent, except for our
CEO
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Split chair and CEO roles
|
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Our CEO is the only management director
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100% independent Board committee members
|
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Chairman of the Board can call special meetings of the Board and
actively supervises meeting materials, agendas and schedules
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Robust code of conduct applicable to directors, officers and
employees and vendors of NJR
|
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Regular executive sessions of independent directors
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Board Oversight
|
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Strong Board and management succession planning process
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Rigorous stock ownership guidelines for directors and
executives
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Employees, directors and officers prohibited from hedging or
pledging our stock
|
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Board responsible for risk oversight with specific risk areas
delegated to relevant Board committees
|
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Robust Enterprise Risk Management (ERM) program to enable Board
identification and monitoring of risk
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Shareholder Rights
|
 |
Special meeting right for shareholders
|
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Classified Board
|
 |
Shareholders may act by written consent
|
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No “poison-pill” shareholders rights plan
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Board Composition
|
 |
Diverse Board with effective mix of skills, experiences, and
perspectives
|
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Diverse Board leadership on two committees
|
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Active Board refreshment with three new directors in last
20 months
|
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Effective annual Board and Board committee director evaluation
process
|
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Director resignation policy in uncontested director elections
|
In connection with the Board’s periodic review of our governance
documents, in July 2020 the Board updated our bylaws in order to,
among other things: set the maximum size of the Board at 13
directors; revise and update the timing and information
requirements of the advance notice provisions for director
nominations and stockholder proposals; clarify the procedures for
filling vacancies and newly created directorships; allow for
special meetings of the Board with one day notice or less, if
necessary or appropriate under the circumstances; clarify the
procedures for Board meetings, including those held solely by means
of remote communication, clarify the procedures for stockholder
meetings, including those held solely by means of remote
communication; revise and update the timing for business to be
properly brought before an annual meeting by a proponent; clarify
the powers of the presiding person of a stockholder meeting to
adjourn or recess a meeting and to regulate the conduct of such
meeting; add provisions regarding appointing inspectors of
election; authorize the formation of an Emergency Management
Committee in the event of a catastrophic event if a quorum of the
Board cannot be convened to act; revise and update the
indemnification provisions applicable to officers and directors of
the Company; and make technical, conforming or clarifying changes
to certain other provisions. We have reflected these bylaw updates
in this Proxy Statement.
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Board Meetings and Attendance at Annual Meeting of
Shareowners
During fiscal year 2020, there were nine meetings of the Board.
Each director attended more than 75 percent of the combined
meetings of the Board and the committees on which she or he served
during the fiscal year. We encourage all directors to attend our
annual shareowners’ meetings. All of the directors serving at the
time of the 2020 Annual Meeting of Shareowners held in January 2020
attended the annual meeting.
Board Standards of Independence
The Board sets our independence standards (“Company Independence
Guidelines”) in our Corporate Governance Guidelines. The Company
Independence Guidelines provide that a majority of the Board must
be independent under the independence standards established by the
Corporate Governance Guidelines, the New York Stock Exchange
(“NYSE”) and the SEC as in effect from time to time. For a Board
member or candidate for election to the Board to qualify as
independent, the Board must determine that the person and his or
her immediate family members do not have a material relationship
with us (either directly or as a partner, shareowner or officer of
an organization that has a relationship with us) or any of our
affiliates. Under the categorical standards adopted by the Board, a
member of the Board is not independent if:
•
the director is, or has been within the last three years, our
employee, or an immediate family member is, or has been within the
last three years, an executive officer of the Company
•
the director has received, or has an immediate family member who
has received, during any 12-month period within the last three
years, more than $120,000 in direct compensation from us, other
than director and committee fees and pension or other forms of
deferred compensation for prior service (provided such compensation
is not contingent in any way on continued service)
•
(I) the director is a current partner or employee of a firm that is
our internal or external auditor; (II) the director has an
immediate family member who is a current partner of such a firm;
(III) the director has an immediate family member who is a current
employee of such a firm and personally works on our audit; or (IV)
the director or an immediate family member was, within the last
three years, a partner or employee of such a firm and personally
worked on our audit within that time
•
the director or an immediate family member is, or has been within
the last three years, employed as an executive officer of another
company where any of our present executive officers at the same
time serves or served on that company’s compensation committee
•
the director is a current employee, or an immediate family member
is a current executive officer, of a company that has made payments
to, or received payments from, us for property or services in an
amount which, in any of the last three fiscal years, exceeds the
greater of $1 million, or two percent, of such other company’s
consolidated gross revenues
The Board will also consider a director’s charitable relationships.
Contributions to tax-exempt organizations are not considered
payments for purposes of the test in the final bullet point above,
provided that we are required to disclose in our annual proxy
statement any such contributions made by us to any tax-exempt
organization in which any independent director serves as an
executive officer if, within the preceding three years,
contributions in any single fiscal year from us to the organization
exceeded the greater of $1 million, or two percent, of such
tax-exempt organization’s consolidated gross revenues.
For purposes of the above independence standards, an “immediate
family member” includes a person’s spouse, parents, children,
siblings, mothers- and fathers-in-law, sons- and daughters-in-law,
brothers- and sisters-in-law and anyone (other than domestic
employees) who shares such person’s home. When applying the
look-back provisions set forth above, the Board need not consider
individuals who are no longer immediate family members as a result
of legal separation or divorce, or those who have died or become
incapacitated.
A Board member may sit on the board of any of our affiliates if,
except for being a director on each such board of directors, the
member otherwise meets the independence requirements for each such
entity, including the receipt of only ordinary-course compensation
for serving as a member of the board of directors. Each member of
the Board must submit a letter of resignation to the Chairman of
the Board when the member changes his or her principal occupation
or employment, or leaves or retires from the business with which
such occupation or employment was carried out. The letter will be
submitted to the NCGC, which will make a recommendation to the
Board regarding such director’s continued service on the Board. The
Board will then determine whether to accept such resignation.
With the exception of Mr. Westhoven, the President and Chief
Executive Officer, the Board has affirmatively determined that each
current member of the Board is independent in accordance with the
above standards. Additionally, we made no contributions during
fiscal year 2020 to any charitable organization in which an
independent director had served as an executive officer in any
single fiscal year within the preceding three fiscal years in an
amount in excess of the greater of $1 million, or two percent, of
the charitable organization’s consolidated gross revenues. The
Company Independence Guidelines are described in the Corporate
Governance Guidelines available free of charge on our website at
investor.njresources.com under the caption “Corporate
Governance.”
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Where to Find Our Corporate
Governance Documents:
Copies of the following Board committee charters and governance
documents can be found at
https://investor.njresources.com/governance/governance-documents/default.aspx:
Corporate Governance Guidelines; the charters of the Audit
Committee, Leadership Development and Compensation Committee, and
Nominating/Corporate Governance Committee; the By-laws, as amended;
the NJR Code of Conduct; and the Wholesale Trading Code of Conduct.
A printed copy of each of these documents is available free of
charge to any shareowner who requests it by contacting the
Corporate Secretary in writing at Office of the Corporate
Secretary, New Jersey Resources Corporation, 1415 Wyckoff Road,
Wall, New Jersey 07719.
Certain Relationships and Related Person Transactions
Our Board has adopted a written related person transaction policy
that governs the review, approval or ratification of covered
related person transactions. Our Audit Committee manages this
policy. The policy generally provides that we may enter into a
related person transaction only if:
•
the Audit Committee approves or ratifies such transaction in
accordance with the guidelines set forth in the policy,
•
the transaction is on terms comparable to those that could be
obtained in arm’s length dealings with an unrelated
third party,
•
the transaction is approved by the disinterested members of the
Board, or
•
the transaction involves compensation approved by the LDCC.
In the event our management recommends a related person transaction
to the Audit Committee, that transaction must be presented to the
Audit Committee for approval. After review, the Audit Committee
will approve or disapprove such transaction. Our management will
update the Audit Committee as to any material change to the
proposed related person transaction at each subsequently scheduled
Audit Committee meeting. When our General Counsel, in consultation
with our Chief Executive Officer or our Chief Financial Officer,
determines that it is not practicable or desirable for us to wait
until the next Audit Committee meeting for approval of the
transaction, the Chairman of the Audit Committee possesses
delegated authority to act on behalf of the Audit Committee. The
Audit Committee or the Chairman approves only those related person
transactions that are in, or not inconsistent with, our best
interests and the best interests of our shareowners, as the Audit
Committee or the Chairman determines in good faith.
For purposes of this policy, a “related person transaction” is a
transaction, arrangement or relationship (or any series of similar
transactions, arrangements or relationships) in which we (or any of
our subsidiaries) were, are or will be a participant, and the
amount involved exceeds $120,000 and in which any related person
had, has or will have a direct or indirect material interest. For
purposes of determining whether a transaction is a related person
transaction, the Audit Committee relies upon Item 404 of Regulation
S-K, promulgated under the Securities Exchange Act of 1934, as
amended (“Exchange Act”).
A “related person” is defined as:
•
Any person who is, or at any time since the beginning of our last
fiscal year was, one of our directors or executive officers or a
nominee to become one of our directors
•
Any person who is known to be the beneficial owner of more than
five percent of any class of our voting securities
•
Any immediate family member of any of the foregoing persons, which
means any child, stepchild, parent, stepparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law of the director, executive officer,
nominee or more than five percent beneficial owner and any person
(other than a tenant or employee) sharing the household of such
director, executive officer, nominee or more than five percent
beneficial owner
•
Any firm, corporation, or other entity in which any of the
foregoing persons is employed or is a general partner or principal
or in a similar position or in which such person has a five percent
or greater beneficial ownership interest
Except as discussed below, there have been no related person
transactions or proposed transactions since the beginning of fiscal
year 2020 between the Company and our directors or executive
officers, either directly or indirectly. Additionally, there are no
legal proceedings to which any director, officer, principal
shareowner or any affiliate thereof is a party that would be
material and adverse to us.
Andrew Westhoven, the brother of Stephen D. Westhoven (President
and Chief Executive Officer of the Company) is employed by NJR
Clean Energy Ventures Corporation (“NJRCEV”), a wholly-owned
subsidiary of NJR, serving as Senior Project Manager-Construction
and Engineering. The total compensation paid to Andrew Westhoven
during 2020 was within the range set for employees with comparable
qualifications and responsibilities who hold similar positions at
the Company (salary of $130,000 to $237,819, plus short-term annual
incentive compensation targeted between 15 to 50 percent of
salary). He also received health insurance and other benefits
available to all other employees in a similar position. His
compensation was determined in accordance with our compensation
practices applicable to employees who hold similar positions.
Stephen D. Westhoven did not and does not have any direct
responsibility for reviewing his brother’s work or any influence
over his brother’s compensation or the other terms of his
employment. The Audit Committee reviewed, approved and ratified the
compensation of Andrew Westhoven.
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Ms. Hardwick, a director on our Board, has served as the Executive
Vice President and Chief Financial Officer of American Water Works
Company, Inc., a NYSE-traded geographically diverse publicly traded
U.S. water and wastewater utility company, since July 2019. NJR,
through NJRCEV, is in the process of developing a net-metered,
floating solar photovoltaic electric system in Milburn, New Jersey,
with New Jersey American Water (“NJAW”), a subsidiary of American
Water. Under the proposed project, NJAW would make the site
available under a long-term lease and all of the electrical output
will be sold to NJAW under a power purchase agreement. NJRCEV plans
to invest approximately $22 million in connection with the project,
which was negotiated on arm’s-length terms. Although Ms. Hardwick
has no involvement with the proposed project and will not receive
any compensation in connection therewith, in accordance with NJR’s
written related person transaction policy, the proposed transaction
was referred to and approved and ratified by the Audit
Committee.
Board Refreshment and Succession Planning
The Board recognizes the importance of Board refreshment and
succession planning to ensure that our directors possess a
composite set of skills, experience and qualifications necessary
for the Board to successfully establish and oversee management’s
execution of the Company’s strategic priorities (see “Election of
Directors” and “Summary of Director Qualifications and Experience”
above for a discussion of the key qualifications considered by the
NCGC in evaluating candidates). In order to promote thoughtful
Board refreshment, the Board adopted a director retirement policy,
as discussed below.
Director Retirement Policy
The Company’s Corporate Governance Guidelines provide that no
director may serve beyond the date of the first annual meeting of
shareowners following her or his 75th birthday. Only
under extraordinary circumstances, as determined by the Board, may
a retired director remain on the Board as a director emeritus.
Board Succession Planning Activities
With a number of retirements expected over the next several years,
the NCGC discussed Board succession planning and refreshment
throughout fiscal year 2020. As a result of those efforts, a new
director was added to the Board during the fiscal year. By the 2024
annual meeting of shareowners, we expect at least four director
retirements due to mandatory retirement age.

As our longest-tenured directors retire from the Board, we are
continuing with our director recruitment efforts to help ensure
that the size and expertise of the Board are maintained at the
level the Board believes appropriate and in alignment with the
strategic direction of our Company. For example, in 2020, following
the departure of one of our directors, the Board appointed one new
director: Ms. Hardwick. Ms. Hardwick’s experience as a Chief
Financial Officer of a publicly traded utility made her an
excellent choice to join the Board. The Board actively considers
director candidates as part of its Board refreshment
initiatives.
Board Leadership Structure and Role in Risk Oversight
Board Leadership Structure
As provided in the Corporate Governance Guidelines, the Board does
not have a policy on whether the roles of the Chief Executive
Officer and Chairman of the Board should be separate or, if they
are to be separate, whether the Chairman should be selected from
the non-employee directors or be an employee. Following our
recently completed Chief Executive Officer succession plan,
immediately following the 2020 Annual Meeting, the Board created a
new leadership structure separating the positions of Chairman of
the Board and Chief Executive Officer.
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As of January 22, 2020, Mr. Correll, who was serving as our Lead
Director, became our independent Chairman of the Board and Mr.
Westhoven continued serving as a director and our Chief Executive
Officer. The Board elected Mr. Correll as Chairman of the Board in
January 2020, replacing Laurence M. Downes, our former Chief
Executive Officer, who served as Chairman from October 1, 2019,
until his retirement on January 22, 2020.
Mr. Correll, as our Chairman of the Board, ensures that the
independent directors play a leading role in our current leadership
structure. In addition, we maintain a significant majority of
independent directors (Mr. Westhoven is the only non-independent
director) and independent Board committees. The Chairman of the
Board is in frequent contact, and regularly consults, with the
Chief Executive Officer. The Chairman of the Board is elected by
the independent directors and ensures that the Board operates
independently of management and that shareowners have an
independent leadership contact. The Chairman of the Board also
presides over the executive sessions of the non-management
directors.
Our independent Chairman has the
following specific roles and
responsibilities:
•
Ensures that the Board and its committees function independently of
management
•
Develops the agenda for the Board meetings and schedules for Board
and committee meetings
•
Provides advice and counsel on Board meeting schedules to ensure
there is sufficient time for all agenda items
•
Calls meetings and sets agendas for executive sessions of the
independent directors
•
Evaluates and oversees the quality, quantity and timeliness of the
information submitted by management to the independent directors
•
Acts as a liaison between the independent directors and senior
management
•
Confers with the NCGC Chair as to the membership of the various
committees and committee chairs
•
Coordinates with the NCGC Chair in the performance evaluation of
the Board and its committees
•
Coordinates with the LDCC in the performance evaluation of the
Chief Executive Officer
•
Is available for consultation and direct communication, under
appropriate circumstances, if requested by major shareowners
•
Retains advisors and consultants at the request of the independent
directors
•
Performs such other duties and responsibilities as may be delegated
to the Chairman by the Board from time to time
The Board has four standing Committees: the Audit Committee, the
LDCC, the NCGC and the Executive Committee. With the exception of
the Executive Committee, each Committee has a separate chairperson
and each committee is composed solely of independent directors.
Given our current circumstances and operating strategies, we
believe having a separate Chairman of the Board and Chief Executive
Officer and independent standing Board committees is the most
appropriate structure for our shareowners and us. We believe this
structure demonstrates clear leadership to our employees,
shareowners and other stakeholders.
As part of the Board’s annual assessment process, the Board
evaluates our board leadership structure to ensure that it remains
appropriate. The Board has implemented a structure with separation
of the roles of Chief Executive Officer and Chairman of the Board,
but believes that the absence of a policy requiring either the
separation or combination of the roles of Chairman and Chief
Executive Officer provides the Board with the flexibility to
determine the best leadership structure in the future.
Board Review of Committee and Subsidiary Board Roles and
Structure
Management and the Board periodically review the roles, structure
and meeting practices of the committees of the Board and NJR’s
subsidiary boards of directors in order to ensure proper governance
and to improve processes and efficiency, including improved meeting
agendas and committee planners.
Specifically, among other things, the Board delegated oversight of
environmental and sustainability issues to the NCGC and the Board
enhanced oversight of cybersecurity at the Audit Committee.
During fiscal year 2020, management conducted a detailed survey of
the Board to elicit the directors’ opinions regarding board
practices and structure to enhance the governance and efficiency of
the Board. To implement certain findings of this survey, management
effectuated the following changes with the Board’s agreement:
•
Restructured the boards of the principal subsidiaries of NJR,
eliminating independent directors from NJRCEV, NJRES and NJR Energy
Investments boards of directors
•
Combined the role of Chairman of the NJR and New Jersey Natural Gas
Boards
•
Re-assigned directors who had leadership roles that were replaced
by management to subsidiary boards to provide for Committee
succession planning and equitable distribution of director
responsibilities.
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Board’s Role in Risk Oversight
The Board is responsible for our risk oversight. Management is
responsible for our risk management, including providing oversight
and monitoring to ensure our policies are carried out and processes
are executed in accordance with our performance goals and risk
tolerance. Our management team holds regular meetings that
identify, discuss and assess financial risk from current
macro-economic, industry and company perspectives. In carrying out
its risk oversight function, the Board’s three active standing
committees are responsible for risk oversight within their
respective areas of responsibility. Each committee regularly
reports to the Board. Each of the committee’s charters, other than
the Executive Committee charter, reflects such responsibilities.
Generally, the Board’s committees and subsidiary boards of
directors oversee the risks detailed below.
Audit Committee:
As part of its regular reporting process, management reports and
reviews with the Audit Committee our material risks, including, but
not limited to, proposed risk factors and other public disclosures,
mitigation strategies and our internal controls over financial
reporting.
The Audit Committee also engages in periodic discussions with the
Chief Financial Officer and other members of management regarding
risks, as appropriate. Our internal Risk Management Committee
(“RMC”) was established by the Audit Committee to develop,
implement and enforce risk management procedures for NJRES, NJNG
and NJRCEV, and continuously monitors our credit risk management,
risks related to trading positions, and trading risk policies and
procedures applicable to those entities. The RMC comprises
individuals from our affiliated companies that meet approximately
once a month and provides periodic reports to the Audit Committee.
The RMC’s duties include, but are not limited to, evaluating the
effectiveness of existing credit policies and procedures, reviewing
material transactions and discussing emerging issues.
The Audit Committee continues to monitor cybersecurity risks, with
a focus on major financial and cybersecurity risk exposures and the
steps management has taken to monitor and control such exposures,
including our risk assessment and risk management policies, and
continues to receive regular updates on technology upgrades and
enhancements that impact the assessment of risk.
LDCC: Considers succession planning, human resources risks,
human capital management and risks that may result from our
executive compensation programs.
NCGC: Considers risks related to corporate governance
structure, board refreshment and succession planning, corporate
governance policies and practices, and risks related to
environmental stewardship, sustainability and corporate social
responsibility.
Each committee regularly reports to the Board. Moreover, the Board
reviews and oversees our various financial policies, financing
programs, capital and operating plans, benefit plan management,
technology projects and certain risk management policies.
NJNG Board of Directors: The board of
directors of NJNG, our principal wholly-owned subsidiary, is
composed largely of non-management directors and enhances our
operational and financial risk oversight. The NJNG board of
directors typically meets on the same day as the NJR Board and,
effective January 1, 2021, shares the same Chairman as the NJR
Board, Mr. Correll.
Other Subsidiary Boards of
Directors: Effective January 1, 2021, the boards of
directors of NJR’s wholly-owned subsidiaries other than NJNG are
made up of management directors. The NJR Board provides operational
and financial risk oversight to the principal subsidiaries of the
Company, and frequently discusses material risks and operations of
those businesses.
We believe the current leadership structure of the Board supports
the risk oversight functions described above by providing
independent leadership at the committee and subsidiary board level,
with ultimate oversight by the full Board as led by the Chairman of
the Board.
Board’s Role in Human Capital Management
Our Board believes that human capital management is an important
component of our continued growth and success, and is essential for
our ability to attract, retain and develop talented and skilled
employees. We pride ourselves on a culture that respects co-workers
and values concern for others. Fostering a culture and environment
that values diversity and ethics helps create an inclusive
organization where we embrace, leverage and respect the differences
of our employees, customers and the communities where we live, work
and serve.
Management regularly reports to the LDCC on human capital
management topics, including corporate culture, diversity and
inclusion, employee development and compensation and benefits. The
LDCC has regular involvement in talent retention and development,
and succession planning, and the Board provides input on important
decisions in each of these areas. The Board has primary
responsibility for Chief Executive Officer succession planning and
monitors management’s succession plans for other key executives.
The Board believes that the establishment of a strong management
team is the best way to prepare for an unanticipated executive
departure.
Each year, we conduct an employee feedback survey designed to help
us measure overall employee engagement. The feedback employees
provide during the survey helps us evaluate employee programs and
benefits and monitor our current practices for potential areas of
improvement. Our LDCC maintains oversight of matters related to
human capital management and in that capacity reviews the results
of the employee feedback survey.
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Information About the Board’s Committees
The Board has established various committees to assist with the
performance of its responsibilities. The information below provides
a description of the roles of each committee, as well as membership
and meeting information for fiscal year 2020.
Audit Committee
|
Members: Gregory E. Aliff (Chair)
Donald L. Correll
Robert B. Evans
M. Susan Hardwick*
Thomas C. O’Connor
George R. Zoffinger
Meetings
Held: Eight
*Effective January 1, 2021
|
Independence
|
All members are independent within the meaning of the listing
standards of the NYSE and the independence standards set by the
Board as discussed under “Corporate Governance and Related Matters
— Board Standards of Independence” on page 15, and as set forth in
Rule 10A-3(b) of the Exchange Act.
J. Terry Strange served as the Chair of the Audit Committee until
his retirement on January 22, 2020. M. Susan Hardwick was appointed
to the Committee effective January 1, 2021.
|
Qualifications
|
All members are “financially literate” and, as required by the NYSE
listing standards, at least one member of the Audit Committee has
accounting or related financial management expertise, as such terms
are interpreted by the Board in its business judgment. The Board
has also determined that each member of the Audit Committee is an
“audit committee financial expert,” as such term is defined in the
rules promulgated by the SEC under the Sarbanes-Oxley Act of
2002.
Under the corporate governance requirements of the NYSE listing
standards, if an audit committee member simultaneously serves on
the audit committee of more than three public companies, the board
must determine that such simultaneous service would not impair the
ability of such member to effectively serve on the listed company’s
audit committee.
|
Responsibilities:
|
•
Oversees management’s responsibilities for accounting, internal
control over financial reporting and financial reporting
•
Selects, appoints, compensates and oversees the independent
registered public accounting firm each fiscal year, approves the
retention of, and retains, such firm for any other purposes; and
approves the audit and non-audit fees we pay to such firm
•
Reviews the scope and the results of the work of the independent
registered public accounting firm and internal auditors
•
Reviews the adequacy of internal control over financial
reporting
•
Monitors major financial risk and cybersecurity risk exposures
•
Prepares the Audit Committee Report
|
The functions and responsibilities of the Audit Committee are
described in more detail in the “Audit Committee Report” on page
75.
The Audit Committee operates under a written charter adopted by the
Board that is available free of charge on our website at
investor.njresources.com under the caption “Corporate
Governance.”
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Leadership Development and Compensation Committee (LDCC)
|
Members: Sharon C.
Taylor (Chair)
Donald L. Correll
M. William Howard
Jane M. Kenny
David A. Trice
Meetings
Held: Four
|
Independence
|
The Board has determined that the members are “non-employee
directors” (within the meaning of Rule 16b-3 of the Exchange Act),
and “independent directors” (as defined under the applicable NYSE
listing standards and our Corporate Governance Guidelines as
discussed above under “Corporate Governance and Related Matters —
Board Standards of Independence” on page 15). In addition, no LDCC
member is a current or former employee of the Company or any of our
subsidiaries.
|
Responsibilities:
|
•
Performs the responsibilities of the Board relating to compensation
of our executives
•
Oversees the performance and qualifications of senior management
and interprets, implements and administers the annual compensation
and benefits for all of the Company’s and our subsidiaries’
officers
•
Reviews and approves financial corporate goals and objectives
relevant to compensation of our Chief Executive Officer and other
executive officers
•
Evaluates the performance of our Chief Executive Officer and our
other executive officers in light of those goals and objectives
•
Determines and approves compensation levels for our Chief Executive
Officer and our other executive officers based on this
evaluation
•
Makes recommendations to the Board with respect to annual and
long-term incentive compensation plans; and evaluates the
performance of, and determines the salaries, incentive compensation
and executive benefits for officers
•
Administers our equity-based and other executive compensation
plans
•
Oversees our leadership development, including review of our
succession planning for senior management, officer promotions and
affirmative action and diversity plans
•
Considers the impact of our executive compensation program, and the
incentives created by the compensation awards that the LDCC
administers, on our risk profile
•
Reviews all our compensation policies and procedures, including the
incentives that they create and factors that may reduce the
likelihood of excessive risk taking, to determine whether they
present a significant risk to us
•
Prepares the Report of the LDCC on page 57
|
The LDCC operates under a written charter adopted by the Board that
is available free of charge on our website at
investor.njresources.com under the caption “Corporate
Governance.”
|
The Chairman of the LDCC works with our Chief Executive Officer,
Senior Vice President and Chief Human Resources Officer and our
Legal Department to establish the agenda for LDCC meetings. The
Senior Vice President and Chief Human Resources Officer and
management personnel reporting to her prepare data and materials
for review by the LDCC using market data from both broad-based and
targeted national and regional compensation surveys. Competitive
industry analysis is enhanced through review by the LDCC’s
independent compensation consultant of peer company proxy data,
professional research consortia and nationally recognized
compensation databases.
The LDCC reviews the performance and compensation of our Chief
Executive Officer with input from the full Board (in the form of
written evaluations) and our Chief Executive Officer’s
self-evaluation. The LDCC approves the compensation of the other
executive officers based upon the evaluation and recommendation of
our Chief Executive Officer and its own review of each executive
officer’s individual performance highlights. When it deems
appropriate, the LDCC engages its independent compensation
consultant or other appropriate advisors to analyze compensation
trends and competitiveness of pay packages and to support the
LDCC’s duty to establish each of the executive officers’ targeted
overall compensation levels.
Our Board remains focused on its responsibilities in the areas of
succession planning and talent development to ensure strong
internal leadership capabilities that will support NJR’s strategic
plan. The Chief Executive Officer provides a review of the
performance and long-term leadership potential of our team,
including possible succession candidates for key leadership
positions. The Board receives updates throughout the year. The
Board engages outside resources as needed to assist with the
process. The Board also has in place a confidential plan for
emergency succession in the event of the unexpected departure of
the Chief Executive Officer.
The LDCC reports regularly to the Board on matters relating to the
LDCC’s responsibilities. In addition, the LDCC follows regulatory
and legislative developments and considers corporate governance
best practices in performing its duties. For additional information
regarding the compensation-related activities of the LDCC, see the
sections entitled “Compensation Discussion and Analysis” on page 31
and “Report of the Leadership Development and Compensation
Committee” on page 57 of this Proxy Statement.
The LDCC is authorized to retain experts, consultants and other
advisors to aid in the discharge of its duties. For fiscal year
2020, the LDCC retained Frederic W. Cook & Co. Inc. (“FW Cook”)
as its independent compensation consultant. The independent
compensation consultant was retained to (I) assist in gathering and
analyzing market data, (II) advise the LDCC on
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compensation standards and trends, (III) provide an annual risk
assessment of our compensation policies, and (IV) assist in the
implementation of policies and programs during fiscal year 2020. In
retaining FW Cook, the LDCC separately considered the six factors
set forth in Section 10C-1(b)(4)(i) through (vi) of the Exchange
Act, and based on such consideration, determined that the work of
FW Cook did not raise any conflicts of interest. For a further
discussion of the role of FW Cook, please see the section entitled
“The Compensation Review Process–Role of Compensation Consultant”
on page 36.
Nominating/Corporate Governance Committee (NCGC)
|
Members: Jane M. Kenny
(Chair)
James H. DeGraffenreidt*
M. William Howard*
Sharon C. Taylor
David A. Trice
George R. Zoffinger
Meetings
Held: Six
*Effective January 1, 2021
|
Independence
|
All members are “independent” within the meaning of the listing
standards of the NYSE and the independence standards set by the
Board as discussed under “Corporate Governance and Related Matters
— Board Standards of Independence” on page 15.
James H. DeGraffenreidt and M. William Howard were appointed to the
NCGC effective January 1, 2021.
|
Responsibilities:
|
•
Assesses the corporate needs for an effective Board
•
Makes recommendations to the Board regarding Board composition,
size, compensation, skills and talent needs
•
Identifies individuals qualified to be directors, consistent with
the criteria approved by the Board and set forth in the Corporate
Governance Guidelines (for information on the nomination process
see “Director Nominations and Evaluations Processes” on page
12)
•
Leads the annual self-evaluation performance review of the
Board
•
Recommends to the Board the selection of nominees for election to
the Board
•
Recommends to the Board the individual directors to serve on the
committees of the Board
•
Recommends to the Board corporate governance guidelines and
oversees related governance matters
•
Advises the Board on environmental stewardship, sustainability and
matters that impact corporate social responsibility, advocacy and
our reputation
•
Fulfills its oversight responsibility for risk management by
periodically assessing and responding to, as appropriate, material
risks that may arise in connection with governance structures and
processes
|
For information on how to nominate a director see “Director
Nominations and Evaluations Processes” on page 12.
The NCGC operates under a written charter that is available free of
charge on our website at investor.njresources.com under the caption
“Corporate Governance.”
|
Executive Committee
|
Members*: Donald L.
Correll (Chair)
Gregory E. Aliff
Jane M. Kenny
Sharon C. Taylor
Stephen D. Westhoven
Meetings
Held: None
*Effective January 1, 2021
|
Independence
|
All members, other than Stephen D. Westhoven, are independent
within the meaning of the listing standards of the NYSE and the
independence standards set by the Board as discussed under
“Corporate Governance and Related Matters — Board Standards of
Independence” on page 15.
|
Responsibilities:
|
During the interval between meetings of the Board, the Executive
Committee is authorized under our By-Laws, as amended and restated,
to exercise all powers of the Board, unless specifically directed
otherwise by the Board or otherwise proscribed by law.
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Corporate Governance Guidelines
The Board has adopted Corporate Governance Guidelines that set
forth the practices of the Board, including the following:
•
qualification, selection and election of directors
•
director orientation and continuing education
•
director responsibilities
•
Board composition and performance
•
director access to management and independent advisors
•
director compensation and share ownership guidelines
•
management evaluation and succession
•
policies regarding a Lead Director, if applicable
•
meetings of the non-management directors
•
the policy on communicating with the non-management directors
Compensation Committee Interlocks and Insider Participation
No member of the LDCC was at any time an officer or employee of the
Company, or is related to any other member of the LDCC, any other
member of the Board or any executive officer of the Company.
Code of Business Conduct and Ethics
The Board has adopted the Code of Conduct, a code for all
directors, officers, employees, temporary employees, agents,
contractors and vendors of the Company, as required by the NYSE
rules, which also satisfies the requirements of the Sarbanes-Oxley
Act of 2002 and the rules promulgated thereunder by the SEC with
respect to our principal executive officer and senior financial
officers. The Board has also adopted a Wholesale Trading Code of
Conduct, a code applicable to all officers, employees, agents and
others authorized to act on the Company’s behalf who are directly
or indirectly involved in the submission of offers or bids to buy
or sell natural gas or pipeline or storage capacity (together with
the Code of Conduct, the “Codes”). The Codes form the foundation of
a comprehensive process that includes compliance with all corporate
policies and procedures, an open relationship among colleagues that
contributes to good business conduct, and the high integrity level
of our employees. The Codes cover all areas of professional
conduct, including employment policies, conflicts of interest,
intellectual property and the protection of confidential
information, as well as strict adherence to all laws and
regulations applicable to the conduct of our business. Copies of
the Codes are available free of charge on our website at
investor.njresources.com under the caption “Corporate
Governance.”
Communications with the Board
Any shareowner or interested party wishing to communicate with the
Chairman, the non-management directors, any Board committee or
specific individual director on an anonymous basis may do so by
calling Ethicspoint, Inc., an unaffiliated toll-free hotline
service, at 1-866-384-4277 or by submitting a report via its secure
website at www.ethicspoint.com. Ethicspoint, Inc. will then forward
all communications to the General Counsel and Chief Compliance
Officer, the Chairperson of the Audit Committee, and the Chairman
by the next business day. In addition, any shareowner may
communicate in writing to non-management directors by mailing
communications to them c/o New Jersey Resources Corporation, 1415
Wyckoff Road, P.O. Box 1468, Wall, New Jersey 07719, Attention:
Chairman of the Board, Donald L. Correll. The Chairman of the Board
and his duly authorized agents are responsible for collecting and
organizing shareowner communications with the Board.
Each credible complaint that is received will be reviewed and
investigated by one or more of the General Counsel and Chief
Compliance Officer, the Chair of the Audit Committee and/or the
Chairman of the Board, or such other person that the Chairman of
the Board determines to be appropriate, unless a separate
sub-committee of the Board is created to handle the
investigation.
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Director Compensation
The Board, at the recommendation of the NCGC, sets compensation for
directors who are not employees of either the Company or our
subsidiaries. The NCGC reviews the form and amount of compensation
of non-employee directors at least once a year to ensure that the
directors are being compensated appropriately. In September 2019,
the NCGC considered a competitive review of director compensation
among the Company’s peer group companies that was prepared by FW
Cook, an independent compensation consultant. See “The Compensation
Review Process—Fiscal Year 2020 Peer Group” on page 37 for more
information.
Based on FW Cook’s review, which informed the Board on changes to
director compensation in the context of market data, as well as
trends and recent developments, the NCGC recommended and the Board
approved effective January 1, 2020, an increase in the value of the
annual cash retainer from $68,000 to $78,000. In addition,
effective January 1, 2020, the Board, pursuant to the
recommendation of the NCGC, approved changes to the administration
of the Company’s non-employee director compensation plan (the
“Plan”). Under the Plan, the annual equity retainer payable to
non-employee directors is now paid in the form of restricted stock
units (“RSUs”), which will vest upon the earlier of the first
anniversary of the grant date or the date of the Company’s next
annual meeting of shareowners following the grant date.
Additionally, the cash portion of the annual retainer payable under
the Plan is paid in two equal semi-annual installments—with the
first payment made after the annual meeting of shareowners and the
second payment made after the Company’s Board meeting in July.
In addition, the independent members of the Board, pursuant to the
recommendation of the LDCC, determined the compensation of Mr.
Laurence M. Downes as the non-executive Chairman of the Board,
effective October 1, 2019. Mr. Downes received cash and equity
compensation consistent with non-employee director compensation as
described below, and an additional annual cash retainer (pro-rated
based upon the number of days served) of $175,000. Mr. Downes also
received a pro-rated stock retainer when he became the Chairman of
the Board, as well as a Deferred Retention Stock Unit Award of
24,624 share units of Common Stock valued at $999,981 based on the
grant date closing price of $40.61 on November 12, 2019, for
his outstanding performance as Chief Executive Officer during
fiscal year 2019, including successful execution of our leadership
succession.
On January 21, 2020, the Board, pursuant to the recommendation of
the NCGC upon the election of Mr. Correll as non-executive
Chairman, (x) approved an additional annual retainer for the
non-executive Chairman in the amount of $80,000, divided equally
between cash and RSUs and (y) eliminated the additional annual cash
retainer for the Chair of the Board’s Executive Committee.
Compensation for directors who were not officers of the Company or
our subsidiaries under the Plan following these changes is detailed
in the below table.
|
|
|
|
Director Annual Cash
Retainer(1)
|
$
|
78,000
|
|
Director Annual RSU Retainer (in
Common
Stock
equivalent)(2)
|
$
|
110,000
|
(the number of RSUs based upon the closing price of a share of
Common Stock on the date of the grant)
|
Non-Executive Chairman Annual Cash
Retainer(1)
|
$
|
40,000
|
|
Non-Executive Chairman RSU
Retainer(2)
|
$
|
40,000
|
|
Annual Retainer- Committee Members
|
|
|
|
Audit Committee
|
$
|
12,000
|
|
LDCC
|
$
|
6,000
|
|
NCGC
|
$
|
6,000
|
|
Additional Annual Retainer for
Committee Chairs:
|
|
|
|
Audit, LDCC, NCGC
|
$
|
15,000
|
|
Subsidiary Board
Retainer(3)
|
|
|
|
Member(4)
|
$
|
9,000
|
|
Additional Annual Retainer- Subsidiary Board Lead
Director(5)
|
$
|
15,000
|
|
(1)
Cash retainers will be paid in two equal semi-annual installments,
as soon as practicable after the annual meeting of shareowners and
after the July Board of Directors meeting.
(2)
Grants of the annual equity retainer in the form of RSUs will be
made at the time of the annual meeting of shareowners. The number
of RSUs will be based upon the closing price of a share of Common
Stock on the date of the grant. The RSUs will accrue dividends and
will vest on the earlier of (i) the first anniversary of the grant
date or (ii) the date of the following annual meeting of
shareowners. The RSUs will be prorated through a director’s
termination date if a director leaves the Board before the RSUs
have vested. Upon vesting, the RSUs and accrued dividends will be
converted into shares of Common Stock. The cash and equity
retainers are pro-rated for directors who serve only a portion of
the year.
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(3)
Subsidiary Boards include the Boards of Directors for NJNG, NJRES,
NJRCEV and NJR Energy Investments Corporation.
(4)
Subsidiary Board member annual retainers and any additional meeting
fees are based upon each member only being compensated for one
meeting when joint Boards of Directors meetings occur.
(5)
Chairs of more than one subsidiary Board will only be paid a single
annual retainer of $15,000 for service as Chair on those
Boards.
|
In the event of extraordinary circumstances resulting in an
excessive number of Board or Committee meetings beyond the typical
number of meetings of a Board or Committee in a given year, the
Board retains discretion to pay an additional per meeting fee of
$1,500 to each attending non-employee director that is a member of
such Board or Committee.
Pursuant to our 2017 Stock Award and Incentive Plan, each
non-employee director’s annual cash and equity compensation is
limited to no more than $500,000 per fiscal year (calculating the
value of any equity compensation based on the grant date fair
value). Exceptions can be made only for a non-executive chair of
the Board or, in extraordinary circumstances in the LDCC’s
discretion, other individual non-employee directors.
Directors’ Deferred Compensation Plan
Non-employee directors of the Company are eligible to defer up to
100 percent of their Board compensation under the NJR Directors’
Deferred Compensation Plan (the “Directors’ Deferred Compensation
Plan”). This includes the deferral of the payment of annual Board
and committee retainers, Board meeting fees and committee meeting
fees. At the director’s election, deferred amounts are credited to
either an “interest account” or a “stock account.”
If deferred amounts are credited to a stock account, such account
is credited with a number of shares based on the closing price of
our Common Stock on the date we allocate such fees (no later than
90 days after the deferred fees would have been paid) and such
account is credited with additional shares based on the deemed
reinvestment of dividends. An interest account is credited monthly
with interest at a rate equal to the Prime Rate listed in the Wall
Street Journal plus two percent, based on the average daily balance
credited to the account for that month. The rate is adjusted on a
monthly basis. At the election of the participating director,
deferred balances in the stock and/or interest accounts are payable
after termination of Board service in a lump sum or in installments
over a period not to exceed five years after termination of Board
service.
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Fiscal Year 2020 Director Compensation
The following table presents information relating to total
compensation of our non-employee directors for the fiscal year
ended September 30, 2020.
Name
|
Fees Earned or
Paid in Cash(1)
($)
|
Stock
Awards(2)
($)
|
Change in Pension
Value and Non-
Qualified Deferred
Compensation
Earnings(3)
($)
|
All Other
Compensation(4)
($)
|
Total
($)
|
Gregory E. Aliff
|
105,000
|
110,000
|
—
|
58
|
215,058
|
Donald L. Correll
|
145,000
|
150,000
|
—
|
58
|
295,058
|
James H. DeGraffenreidt, Jr.
|
97,757
|
125,369
|
—
|
58
|
223,184
|
Laurence M. Downes
|
83,813
|
1,034,321
|
—
|
60,478
|
1,178,612
|
Robert B. Evans
|
114,000
|
110,000
|
—
|
58
|
224,058
|
M. Susan Hardwick
|
24,295
|
34,262
|
—
|
58
|
58,615
|
M. William Howard, Jr.
|
108,000
|
110,000
|
—
|
58
|
218,058
|
Jane M. Kenny
|
114,000
|
110,000
|
—
|
308
|
224,308
|
Thomas C. O’Connor
|
90,000
|
110,000
|
—
|
308
|
200,308
|
J. Terry Strange
|
6,851
|
6,610
|
—
|
58
|
13,519
|
Sharon C. Taylor
|
114,000
|
110,000
|
18,864
|
58
|
242,922
|
David A. Trice
|
114,000
|
110,000
|
—
|
58
|
224,058
|
George R. Zoffinger
|
105,000
|
110,000
|
16,104
|
58
|
231,162
|
(1)
This column reports the amount of cash compensation earned in
fiscal year 2020 for Board (including Subsidiary Boards) and
committee service. For fiscal year 2020, each non-employee director
received an annual cash retainer of $78,000, other than Messrs.
Downes and Strange and Ms. Hardwick, who received a pro-rated
payment based upon the number of days serving on the Board during
fiscal year 2020. The total for Mr. DeGraffenreidt includes the
pro-rated payment he received upon joining the Board in November
2019. The total for Mr. Downes includes the Chairman pro-rated
retainer paid out on October 1, 2019.
(2)
These amounts are calculated in accordance with the share-based
compensation provisions of Financial Accounting Standards Board
(FASB) ASC Topic 718. Each director serving on January 1, 2020,
received an annual retainer of 2,529.317 RSUs valued at $110,000
based on the grant date closing price of $43.49 on January 22,
2020. Mr. Correll received a total retainer of 3,449.069 RSUs
valued at $150,000 based on the grant date closing price of $43.49
on January 22, 2020 reflecting his additional retainer as Chairman
of the Board. Messrs. Downes and Strange received a pro-rated
retainer, based upon the number of days serving on the Board during
calendar year 2020, of 152 RSUs valued at $6,610 based on the grant
date closing price of $43.49. Mr. Downes also received a pro-rated
stock retainer when he became the Chairman of the Board on October
1, 2019, of 623 shares based on the grant date closing price of
$44.51, as well as a Deferred Retention Stock Unit Award of 24,624
share units of Common Stock valued at $999,981 based on the grant
date closing price of $40.61 on November 12, 2019, for his
outstanding performance during fiscal year 2019 as the Chief
Executive Officer, including successful execution of our leadership
succession plan (this award was reported in our 2019 Proxy
Statement on page 46). Ms. Hardwick received a pro-rated retainer,
based upon the number of days serving on the Board during calendar
year 2020, of 1,179 RSUs valued at $34,262 based on the grant date
closing price of $29.06. The total for Mr. DeGraffenreidt includes
a pro-rated retainer of NJR restricted stock for his service during
calendar year 2019 based upon the number of days he served in
calendar year 2019 of 378 shares of Common Stock valued at $15,369
based on the grant date closing price of $40.66.
(3)
Amounts in this column show the amount contributed by us in fiscal
year 2020, as we provide a return on directors’ deferred
compensation at the federal prime rate plus two percent as part of
our Directors’ Deferred Compensation Plan.
(4)
Amounts in this column for all non-employee directors do not
represent compensation paid to the non-employee directors. These
amounts comprise our matching contributions to eligible
organizations made in fiscal year 2020 as part of our overall
support of charitable organizations under our Matching Gift
Program, premiums we paid in fiscal year 2020 for a Directors and
Officers Travel Insurance Policy in the amount of approximately $58
per director and, for Mr. Downes, the use of an administrative
assistant based upon the number of days serving on the Board during
calendar years 2019 and 2020, valued at $35,420.
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Non-Employee Director Share Ownership Guidelines
All non-employee directors are required to own shares of our Common
Stock with a market value equal to five times the annual cash
retainer, to foster a mutual interest between Board members and
shareowners of the Company. We expect non-employee Board members to
retain at least 50 percent of the Common Stock received from the
Company as part of their annual stock retainer until the share
ownership requirements are met. These requirements are designed to
ensure that non-employee directors acquire and retain a meaningful
and significant ownership interest in the Company during their
tenure on the Board. All of our non-employee directors are in
compliance with these guidelines.
None of the non-employee directors hold stock options. The
aggregate number of shares of Common Stock held by each
non-employee director (including deferred stock and unvested RSUs)
as of September 30, 2020, was as follows:
Directors
|
|
Shares of
Common Stock
|
Gregory E. Aliff
|
|
1,502
|
Donald L. Correll
|
|
26,164
|
James H. DeGraffenreidt, Jr.
|
|
1,378
|
Robert B. Evans
|
|
33,820
|
M. Susan Hardwick
|
|
—
|
M. William Howard, Jr.
|
|
31,399
|
Jane M. Kenny
|
|
31,069
|
Thomas C. O’Connor
|
|
9,423
|
Sharon C. Taylor
|
|
34,642
|
David A. Trice
|
|
37,313
|
George R. Zoffinger
|
|
102,061
|
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Stock Ownership
Principal Shareowners
The following table sets forth, as of November 30, 2020, certain
information with respect to the beneficial ownership of shares of
Common Stock by each person or group we know to beneficially own
more than five percent of the outstanding shares of such stock.
Name and Address of Beneficial Owners
|
Number of
Shares
|
|
Percent of
Class(1)
|
BlackRock, Inc.
55 East 52nd Street
New York, NY 10022
|
13,778,337
|
(2)
|
14.3%
|
The Vanguard Group, Inc.
100 Vanguard Boulevard
Malvern, PA 19355
|
10,172,544
|
(3)
|
10.6%
|
State Street Corporation
State Street Financial Center
One Lincoln Street
Boston, MA 02111
|
7,705,401
|
(4)
|
8.0%
|
(1)
The percentage shown in the table is based on 96,132,544 shares of
Common Stock outstanding on November 30, 2020.
(2)
As reported on an Amendment No. 10 to Schedule 13G filed with the
SEC on February 4, 2020. BlackRock, Inc. (“BlackRock”) held sole
voting power over 13,454,158 shares of Common Stock and sole
dispositive power over 13,778,337 shares of Common Stock. The
number of shares of Common Stock owned by BlackRock may have
changed since the filing of Amendment No. 10 to Schedule 13G.
(3)
As reported on an Amendment No. 12 to Schedule 13G filed with the
SEC on February 12, 2020. Vanguard Fiduciary Trust Company
(“VFTC”), a wholly-owned subsidiary of The Vanguard Group, Inc., is
the beneficial owner of 82,343 shares of Common Stock as a result
of serving as investment manager of collective trust accounts. VFTC
directs the voting of these shares of Common Stock. Amendment No.
12 to Schedule 13G also indicates that Vanguard Investments
Australia, Ltd. (“VIA”), a wholly-owned subsidiary of The Vanguard
Group, Inc., is the beneficial owner of 29,713 shares of Common
Stock as a result of serving as investment manager of Australian
investment offerings. VIA directs the voting of these shares. The
Vanguard Group, Inc. reported that it held sole voting power over
94,489 shares of Common Stock, sole dispositive power over
10,172,544 shares of Common Stock, shared voting power over 17,567
shares of Common Stock, and shared dispositive power over 99,910
shares of Common Stock. The number of shares of Common Stock held
by The Vanguard Group, Inc. may have changed since the filing of
Amendment No. 12 to Schedule 13G.
(4)
As reported on Schedule 13G filed with the SEC on February 14,
2020. State Street Corporation (“State Street”) reported that it
held shared voting power over 7,355,284 shares of Common Stock,
shared dispositive power over 7,705,401 shares of Common Stock,
sole voting power over 0 shares of Common Stock, and sole
dispositive power over 0 shares of Common Stock. The number of
shares of Common Stock owned by State Street may have changed since
the filing of the Schedule 13G.
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Directors and Executive Officers
The following table sets forth, as of November 30, 2020, the
beneficial ownership of our Common Stock of each of the directors,
each of our executive officers listed in the Summary Compensation
Table below, and all of our directors and executive officers as a
group. Except as otherwise noted, each person has sole voting and
investment power as to his or her shares (or shares such powers
with his or her spouse). The beneficial ownership of each director
and executive officer is less than one percent of the outstanding
shares. The shares owned by all such persons as a group constitute
approximately 0.61 percent of the total shares of Common Stock
outstanding.
Name
|
Amount and
Nature of
Beneficial
Ownership(1)(2)
|
|
Gregory E. Aliff
|
1,502
|
|
Donald L. Correll
|
26,164
|
|
Amy Cradic
|
1,679
|
|
James H. DeGraffenreidt, Jr.
|
1,378
|
|
Robert B. Evans
|
33,820
|
|
M. Susan Hardwick
|
—
|
|
M. William Howard, Jr.
|
31,399
|
|
Jane M. Kenny
|
31,069
|
|
Patrick J. Migliaccio
|
23,547
|
|
Amanda E. Mullan
|
19,964
|
|
Thomas C. O’Connor
|
9,423
|
|
Sharon C. Taylor
|
34,642
|
|
David A. Trice
|
37,313
|
|
Nancy A. Washington
|
4,780
|
|
Stephen D. Westhoven
|
144,923
|
|
George R. Zoffinger
|
102,061
|
|
All Directors and Executive Officers as a Group (20 Persons)
|
581,882
|
(2)
|
(1)
Each individual has furnished information as to the amount and
nature of beneficial ownership not within our knowledge.
(2)
Includes deferred shares of Common Stock held by the directors and
executive officers pursuant to the Directors’ Deferred Compensation
Plan or the Officers’ Deferred Compensation Plan over which they
have sole voting power but no investment power, as follows: Mr.
Aliff – 1,502 shares, Mr. Correll— 22,606 shares, Mr.
Howard—11,664 shares, Ms. Kenny— 11,664 shares, Mr. O’Connor— 9,423
shares, Ms. Taylor—28,537 shares, Mr. Trice—25,728 shares, Mr.
Zoffinger— 99,060 shares, and all directors and executive officers
as a group— 215,658 shares.
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Securities Authorized for
Issuance Under Equity Compensation Plans
The following table presents information, as of September 30, 2020,
with respect to equity compensation plans under which shares of
Common Stock are authorized for issuance.
Plan Category
|
Number of
Securities to
be Issued
Upon Exercise
of Outstanding
Options, Warrants
and Rights(1)
|
Weighted Average
Exercise Price
of Outstanding
Options, Warrants
and Rights(2)
|
Number of
Securities Remaining
Available for
Future Issuance
Under Equity
Compensation Plans
|
Equity Compensation Plans Approved by Shareowners
|
508,205
|
—
|
2,681,345
|
Equity Compensation Plans Not Approved by
Shareowners(3)
|
—
|
—
|
—
|
TOTAL
|
508,205
|
—
|
2,681,345
|
(1)
There are no outstanding options, warrants or rights. This amount
includes restricted stock units, deferred retention stock units and
performance share units that may vest based upon certain conditions
and would be paid in the form of shares of Common Stock on a
one-to-one basis upon vesting. This amount does not include
outstanding shares of restricted stock. Assumes vesting at the
maximum payout level for performance-based awards.
(2)
There is no weighted-average exercise price for this column as none
of the outstanding awards have an exercise price.
(3)
We do not have equity compensation plans that have not been
approved by shareowners.
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Compensation Discussion and
Analysis
This discussion and analysis of our compensation program for named
executive officers should be read in conjunction with the tables
and text elsewhere in this Proxy Statement that describe the
compensation awarded to, earned by, or paid to the named executive
officers.
Executive Summary
The purpose of the Compensation Discussion and Analysis is to
explain the process the LDCC of the Board uses to determine
compensation and benefits for the following individuals, who are
our “named executive officers” for the fiscal year ended September
30, 2020, and to provide the rationale and context for those
compensation decisions.
Stephen D. Westhoven
|
President and Chief Executive Officer
|
Patrick J. Migliaccio
|
Senior Vice President and Chief Financial Officer
|
Nancy A. Washington
|
Senior Vice President and General Counsel
|
Amanda E. Mullan
|
Senior Vice President and Chief Human Resources Officer
|
Amy Cradic
|
Senior Vice President and Chief Operating Officer of Non-Utility
Businesses, Strategy and External Affairs
|
Compensation of our named executive officers is determined under
our compensation and benefits program for senior executives, which
is governed by the LDCC. Information with respect to the LDCC can
be found on page 21 of this Proxy Statement.
At our 2020 Annual Meeting of Shareowners, 90.3 percent of the
votes cast on the “say-on-pay” proposal were voted in favor of the
compensation we paid to our named executive officers.
The LDCC, which is composed exclusively of independent directors,
believes that the shareowner vote confirms the philosophy and
objective of linking our executive compensation to performance, our
commitment to stakeholders, enhancement of our shareowner value and
executive leadership. We view this level of shareowner support as
an affirmation of our current pay practices and, as a result, no
significant changes were made to our executive compensation pay
practices for fiscal year 2020. Our Board and the LDCC will
continue to consider the outcome of the Company’s say-on-pay votes
when making future compensation decisions for the named executive
officers.
Our Guiding Philosophy
Our compensation philosophy is guided by the principle of
pay-for-performance. While aligning each executive’s compensation
with our short-term and long-term business goals, we aim to provide
the incentives needed to attract, motivate, reward and retain our
management talent, which is crucial to our long-term success.
Our compensation programs are designed to support our business
goals by rewarding achievement of short-term and long-term
objectives in a manner that links compensation of our executive
officers with the value created for our shareowners.
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Developments in our Executive Compensation Program for Fiscal Year
2020
During fiscal year 2020, we undertook our annual review of our
executive compensation practices to ensure that our plans and
practices were supportive of the goals of the organization,
competitive with industry practice, and in keeping with the best
interests of our shareowners. As a result of that review, the LDCC
made no significant changes to the executive compensation program
for fiscal year 2020, which featured the following:
•
An Officer Incentive Program for fiscal year 2020 (the “2020 OIP”),
which consists of goals that need to be met to earn an annual
short-term incentive award, including Net Financial Earnings
(“NFE”)(1) goals, Commitment to Stakeholders (“CTS”)
operational measures (several of which link to sustainability
goals), and individual leadership goals.
•
A long-term equity incentive award program for our executive
officers (other than Mr. Westhoven) that includes a mix of
performance share awards with performance criteria based on
cumulative NFE per basic share (“NFEPS”) over a 36-month period
(“FY 2020 NFE Performance Share Units”) and total shareowner return
(“TSR”) versus an industry comparator group over a 36-month period
(“FY 2020 TSR Performance Share Units”) and Time-Vested Restricted
Stock Unit awards, each granted under our 2017 Stock Award and
Incentive Plan (the “2017 Plan”).
•
A long-term equity incentive award package for Mr. Westhoven,
consisting entirely of “at-risk” equity awards, including FY 2020
NFE Performance Share Units and FY 2020 TSR Performance Share Units
along with Performance- Based Restricted Stock Units payable in
three annual installments, with vesting subject to achievement of a
NFEPS goal for the fiscal year ended September 30, 2020.
•
Our long-term equity incentive awards for fiscal year 2020 include
non-competition and non-solicitation covenants designed to protect
us from paying out awards to departed executives who engage in
certain activities that could harm the Company.
•
On November 12, 2019, we expanded our compensation recoupment
policy to cover detrimental conduct that results in material
financial or reputational harm to the Company. For more information
regarding the recoupment policy, please see “Compensation
Recoupment (“Clawback”) Policy” on page 55.
To implement our pay-for-performance philosophy, the LDCC sets
reasonable but rigorous goals for our 2020 OIP and performance
share units granted to our named executive officers.
Fiscal Year 2020 Performance Highlights
Fiscal year 2020 was a solid year for NJR, with financial
performance just short of meeting our expectations. NJR’s NFE of
$196.2 million was 99 percent of the target set in the 2020 OIP.
Our performance was driven primarily by NFE from our regulated
businesses and a strong contribution from our clean energy segment,
despite lower than expected NFE at NJRES due to lack of sustained
cold weather and related price volatility. The above-target payout
on our fiscal year 2018 NFE-based performance share units rewarded
our executives for strong NFE performance over the 36-month period
ended September 30, 2020, while our total shareowner return
relative to industry comparators over the same period resulted in
no payout for our executives on our fiscal year 2018 TSR-based
performance share units.
New Jersey Resources (NJR)
•
NFEPS of $2.07 was within our guidance of $2.05 to $2.15 per
share.
•
NJR’s NFE of $196.2 million was slightly below the 2020 OIP NFE
target of $197.1 million.
•
We increased our annual dividend rate by 6.4 percent, which
represented the 27th dividend increase over the past
25 years.
•
Strong operational performance as measured against our CTS
metrics.
•
Helped nearly 1,800 nonprofit and community organizations,
including the NJ Pandemic Relief Fund, Fulfill (formerly the Food
Bank of Monmouth and Ocean Counties) and Interfaith Food Pantry, to
help support the needs of our communities during these difficult
times.
New Jersey Natural Gas (NJNG)
•
NJNG added 8,349 new customers during fiscal year 2020.
•
For the 27th consecutive year, NJNG recorded the lowest
number of complaints per 1,000 customers with the New Jersey Board
of Public Utilities when compared to other major New Jersey
utilities.
•
For the sixth consecutive year, NJNG ranked highest in customer
satisfaction with residential natural gas service in the East among
large utilities, according to the J.D. Power 2020 Gas Residential
Customer Satisfaction StudySM. This represents the
15th J.D. Power award NJNG has received since 2002.
•
NJNG continues to have the fewest leaks per mile and best leak
response time of any natural gas utility in New Jersey.
•
NJNG replaced 70 miles of unprotected steel main in its system
through our SAFE II program and completed about 80% of our Southern
Reliability Link project.
(1)
NFE is a financial measure not calculated in accordance with
generally accepted accounting principles (GAAP) of the United
States and is discussed in greater detail beginning on page 40 of
this Proxy Statement under “Net Financial Earnings Component.” For
a full discussion of NFE and a reconciliation to net income, please
see our most recent Annual Report on Form 10-K filed on November
30, 2020, Part II, Item 7.
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NJR Energy Services (NJRES)
•
Despite extremely challenging natural gas market conditions, our
team at NJRES was able to leverage their expertise to increase the
value of our storage and transportation books and negotiate nearly
eight billion cubic feet (BCF) of incremental Park and Loan
transactions and over 100 new transportation contracts to
strengthen our position heading into the new fiscal year.
NJR Clean Energy Ventures (NJRCEV)
•
NJRCEV placed eight commercial solar projects into service and
acquired one operational asset in fiscal 2020, bringing our total
installed capacity to more than 350 megawatts.
•
The Sunlight Advantage®, NJRCEV’s residential solar
leasing program, added 481 residential solar lease customers and
now serves over 8,600 residential customers in New Jersey.
Storage and Transportation (S&T)
•
S&T (formerly known as the Midstream segment) reported fiscal
2020 NFE of $18.3 million compared with $14.7 million during fiscal
2019.
•
Completed our acquisition of two significant midstream assets, Leaf
River Energy Center and Adelphia Gateway, and for the first time in
our history own and operate an interstate pipeline and natural gas
storage facility.
NJR Home Services (NJRHS)
•
Handled over 70,000 service calls and 3,500 HVAC and plumbing
installations and expanded our marketing efforts at NJRHS,
including the launch of a new website, which helped us achieve a
net customer retention rate of 99%.
Our Pay-for-Performance Link
Our financial and operational performance in fiscal year 2020
largely met or exceeded the financial and operational goals set
forth in our 2020 OIP, resulting in annual short-term incentive
award payouts to our named executive officers of between 98.3 and
118.3 percent of their respective target award amounts under our
2020 OIP. Our NFEPS for fiscal year 2020 of $2.07 was within the
NFE guidance range we issued in November 2019, but total NFE of
$196.2 million was slightly below our target of $197.1 million. Our
strong operational execution was reflected by our performance
against our 2020 OIP Commitment to Stakeholders targets, which
included activities that are not measured by financial metrics. Due
to our strong cumulative financial performance, we paid out 114
percent of the fiscal year 2018 NFE-based performance share units.
However, due to below-threshold total shareowner return relative to
our industry comparator group over the last three fiscal years, we
paid out none of the fiscal year 2018 TSR-based performance share
units. Additionally, our NFE goal for the fiscal year 2020
Performance-Based Restricted Stock Units was achieved, triggering
vesting of such awards based on continued service.
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Key Compensation Corporate Governance Practices
The LDCC and our NCGC continuously review evolving practices in
executive compensation and corporate governance. We have adopted
certain policies and practices that we believe are consistent with
industry best practices.
WHAT WE DO
|
 |
Use an appropriate balance between short-term and long-term
compensation.
|
 |
Use multiple performance metrics under the 2020 OIP to encourage
executives to focus on financial and operational goals important to
the Company and other stakeholders.
|
 |
Link realized value from long-term equity incentives to absolute
and relative stock price performance.
|
 |
Link annual short-term incentive compensation directly to certain
environmental and social goals through our Commitment to
Stakeholders.
|
 |
Conduct an annual review and assessment of potential and existing
risks arising from our compensation programs and policies.
|
 |
Develop and adhere to meaningful share ownership guidelines for our
directors and executive officers.
|
 |
Subject cash and equity incentive compensation paid to our
executive officers to our Compensation Recoupment Policy (“Clawback
Policy”).
|
 |
Prohibit hedging and pledging of our stock by our directors,
officers and employees.
|
 |
Require a “double trigger” for acceleration of equity award grants
following a change of control.
|
 |
Engage an independent advisor, who performs no other work for the
Company, to advise the LDCC on executive compensation matters and
the NCGC on director compensation matters.
|
WHAT WE DO NOT DO
|
 |
Enter into employment agreements with any executive officer or
guarantee any executive officer a minimum base salary, bonus or
equity awards.
|
 |
Provide executive officers any excise tax payment or tax gross-up
for change of control-related payments, or a tax gross-up on any
perquisites.
|
 |
Provide excessive perquisites.
|
 |
Allow repricing of stock options or buyout of underwater stock
options without shareowner approval.
|
Principles of Our Compensation Framework
The LDCC believes that the compensation program for executive
officers should reward the achievement of our short-term and
long-term objectives and that compensation should be related to the
value created for our shareowners. Furthermore, the compensation
program should reflect competitive and best practices in the
marketplace. The following objectives serve as the LDCC’s guiding
principles for all compensation decisions.
•
Our executive compensation and benefits should attract, motivate,
reward and retain the management talent necessary to achieve our
business objectives at compensation levels that are fair and
competitive with those of comparable companies.
•
Compensation should be set based on the leadership and contribution
of each executive officer, taking into account individual skill
sets, experience and achievement.
•
Compensation should also be based upon our “Commitment to
Stakeholders” key performance measures for safe, reliable, and
competitively priced service; customer service; quality; valuing
employees; and corporate citizenship.
•
Compensation should be linked to corporate performance as measured
by financial performance and creation of long-term value for our
shareowners.
•
Compensation should consist of an appropriate mix and weighting
among base salary, annual short-term incentive awards and long-term
equity incentive awards such that an adequate amount of each
executive officer’s total compensation is performance-based or “at
risk.” Further, as an executive’s responsibilities increase, the
portion of “at-risk” compensation for the executive should increase
as a percentage of total compensation.
In addition, the LDCC believes that the various elements of our
compensation program should effectively align compensation with
performance measures that are directly related to our financial
goals and creation of shareowner value without encouraging
executives to take unnecessary and excessive risks.
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Elements of Our Compensation Program for Named Executive
Officers
The LDCC has a specific mix of compensation components that it
targets, with the intent to make each component of total direct
compensation competitive with that of other companies of similar
size and operational characteristics, while also linking
compensation to individual and corporate performance and
encouraging share ownership by senior management. The table below
describes each compensatory element available in our compensation
program for executives and briefly explains how it promotes our
objectives. We believe the combination of these elements provides
an appropriate balance of rewards, incentives and benefits to our
executives; and enables us to meet our desired compensation
objectives; strengthens our ability to attract and retain highly
qualified individuals and to appropriately link pay to
performance.
Element of
Compensation
|
Description
|
How This Element Promotes Company Objectives
|
Annual Short-Term Compensation:
|
Base Salary
|
Fixed annual compensation that is certain in payment and provides
continuous income.
|
Aids in both recruitment and retention; designed to be competitive
in the marketplace.
|
Annual Short-Term Incentive Awards
|
Performance-based compensation for achieving established annual
goals based on NFE, individual leadership and our Commitment to
Stakeholders.
|
Motivates and rewards achievement of annual corporate objectives by
providing at-risk pay opportunities linked to Company and
individual performance.
|
Long-term Compensation:
|
Performance
Share Awards
|
Grants of stock units that are payable in Common Stock and earned
based on TSR performance relative to an industry comparator group
and cumulative NFEPS, each over a three-year period.
|
Provides strong performance incentives to executives by aligning a
portion of their compensation to our long-term NFEPS and to the TSR
on our Common Stock versus that of an industry comparator
group.
|
Time-Vested Restricted Stock Unit Awards
|
Grants of time-vested stock units that are payable in Common Stock,
which are part of our long-term incentive program and may also be
used for special recognition of superior performance; time-based
vesting over a specified period.
|
Promotes retention, increases equity ownership, and aligns
executive and long-term shareowner interests by linking a portion
of executive compensation to changes in Company stock price and
dividend payments.
|
Performance-
Based Restricted Stock Unit Awards
|
Grants of stock units with time-based vesting if we achieve annual
NFEPS goals.
|
Provides strong performance incentives to executives by aligning a
portion of their compensation to our financial performance,
promotes retention, and supports shareowner alignment
objectives.
|
Deferred Retention Stock Awards
|
Grants of deferred retention stock units that are payable in Common
Stock (“Deferred Retention Stock”) that may be part of our
long-term incentive program and are also used to recognize and
reward superior performance; executive must comply with
non-competition and non-solicitation covenants to receive share
payout at a future date.
|
Promotes retention by providing a disincentive for executives to
leave us for a competitor and aligns executive and long-term
shareowner interests by linking a portion of executive compensation
to changes in Company stock price and dividend payments.
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Other Compensation:
|
|
Deferred Compensation
|
Opportunity to defer receipt of specified portions of compensation
and to have such deferred amounts treated as if invested in
specified investment vehicles.
|
Provides an opportunity for executives to defer compensation based
on personal financial needs and objectives.
|
Post-Termination Payments and Benefits
|
Payments and benefits upon termination of an executive’s employment
in specified circumstances, such as retirement, death, disability
or a change of control, as described in greater detail beginning on
page 68.
|
Provides assurance of financial security, which is desirable in
lateral recruiting and executive retention and permits objective
evaluation by executives of potential changes to our strategy and
structure.
|
Other Benefits
|
Executives participate in employee benefit plans generally
available to our employees, including our Employees’ Retirement
Savings Plan; qualified defined benefit plan for retirement
allowances; medical, dental, life, accidental death and
dismemberment, travel and accident and long-term disability
insurance; and certain limited perquisites.
|
Fair and competitive programs to provide family protection and
facilitate recruitment and retention as part of our broad-based
total compensation.
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The Compensation Review Process
Process for Approval of Compensation Measures
Our planning process begins in May (the third quarter of our fiscal
year) when management identifies financial and operational goals,
performance measures, and action plans that are tied to our
Commitment to Stakeholders and that will be executed by the
business units and approved by our management in August (the fourth
quarter of our fiscal year) for the following fiscal year. These
metrics are typically presented to the Board in September for
approval. Upon approval by the Board, the financial and
operational goals become the compensation measures for the
executive officers and are the foundation for our Commitment to
Stakeholders, which is also communicated to the entire organization
through the performance planning and evaluation process and through
management presentations to employees.
Role of the LDCC and the Chief Executive Officer
Governance of our compensation program is the responsibility of the
LDCC, which consists solely of independent directors. The LDCC
works with management, in particular our Chief Executive Officer
and the Senior Vice President and Chief Human Resources Officer, in
making decisions regarding our compensation program. The LDCC
reviews and takes into account all elements of executive
compensation in setting policies and determining compensation
amounts. The Chief Executive Officer is responsible for
recommending to the LDCC the compensation amounts of each of our
named executive officers, other than himself. Mr. Westhoven
attended meetings of the LDCC, but did not participate in the
portion of the meetings when his compensation or performance was
discussed during fiscal year 2020.
Role of Compensation Consultant
The LDCC is authorized to retain experts, consultants and other
advisors to aid in the discharge of its duties. For fiscal year
2020, the LDCC retained FW Cook as its independent compensation
consultant. All work completed by the independent compensation
consultant is subject to the approval of the LDCC. The independent
compensation consultant’s role, with respect to the LDCC, is to
provide independent advice and counsel. Prior to each meeting of
the LDCC, the independent compensation consultant meets with the
Chief Executive Officer or his executive officer designee and the
Chair of the LDCC, followed, as deemed necessary by the LDCC Chair,
by a private meeting with only the LDCC Chair. The LDCC also
periodically meets in executive session with its independent
compensation consultant to discuss our compensation program. During
fiscal year 2020, the independent compensation consultant
periodically met with management at the direction of the LDCC,
participated in LDCC meetings, reviewed materials in advance,
provided additional data to the LDCC on market trends and overall
compensation design, and reviewed recommendations for base salary
and annual short-term and long-term equity incentive awards for our
named executive officers.
In May 2020, the LDCC determined that FW Cook had no other
financial ties to the Company or our management and that it does
not have any conflicts of interest after considering the relevant
factors, including those prescribed under SEC and NYSE rules.
Peer Group Analysis
So that we can successfully attract and retain the high-quality
executive talent critical to our long-term success, we intend that
the levels of compensation available to executive officers who
enhance corporate value are competitive with the compensation
offered by publicly held companies that are similar to us with
regard to size and industry focus. To understand the competitive
market for pay and set the compensation terms for our program, we
analyze the compensation programs of a peer group of companies.
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Fiscal Year 2020 Peer Group
In September 2019, with assistance from FW Cook, the LDCC undertook
a comprehensive review of the peer group for fiscal year 2020
compensation in the wake of merger and acquisition activity that
resulted in the loss of two companies from the 2019 Peer Group
(Vectren and WGL). In order to increase the statistical reliability
of the group and to allow the group to withstand further industry
consolidation, the following companies (including seven new
companies) were selected based on business model, similarities,
size and other growth and business factors to form the peer group
for fiscal year 2020 compensation (the “2020 Peer Group”):
AltaGas Ltd.*
|
NiSource Inc.
|
Ameren Corporation*
|
Northwest Natural Holding Company
|
Atmos Energy Corporation
|
Northwestern Corporation*
|
Avista Corporation
|
ONE Gas, Inc.
|
Black Hills Corporation
|
PNM Resources, Inc.*
|
Chesapeake Utilities Corporation*
|
South Jersey Industries, Inc.
|
IDACORP, Inc.*
|
Southwest Gas Holdings, Inc.
|
MDU Resources Group, Inc.*
|
Spire Inc.
|
National Fuel Gas Company
|
|
* Added to the peer group for fiscal year 2020.
|
As of October 15, 2020, our market capitalization was at the
27th percentile of the 2020 Peer Group, and our revenues
were at the 64th percentile of the 2020 Peer Group.
Establishing Total Direct Compensation
Total direct compensation is the sum of base salary, annual
short-term incentive awards and long-term equity incentive awards.
A significant portion of each named executive officer’s
compensation is established by performance-based incentives, which
require achievement of performance goals as a condition to earning
annual short-term incentive awards and long-term equity incentive
awards. The at-risk portion of total direct compensation provides
increased pay for higher levels of performance and lower pay for
performance below target levels.
In setting each named executive officer’s total direct compensation
opportunity, the LDCC takes into account other factors such as the
responsibilities, experience, performance, contributions and
service of the executive. As a result, we do not set total direct
compensation or the component parts at levels to achieve a
mathematically precise market position. In determining executive
compensation, the LDCC reviews all components of our Chief
Executive Officer’s and each other named executive officer’s total
direct compensation to ensure such compensation meets the goals of
the program. As a part of this review, the LDCC considers corporate
performance information, compensation survey data, the advice of
its independent consultant, and the recommendations of management.
The LDCC also takes into consideration individual and overall
Company operating performance to ensure executive compensation
reflects past performance as well as future potential, and
adequately differentiates among employees based on the scope and
complexity of each employee’s job position, market comparisons,
individual performance and experience, and our ability to pay. The
LDCC reviews annually our Chief Executive Officer’s and each other
named executive officers’ performance prior to considering changes
in compensation. Our Chief Executive Officer’s performance, and the
performance of each other named executive officer, is evaluated in
light of our overall performance (as described in greater detail
below) and non-financial goals and strategic objectives approved by
the LDCC and the Board. Based on its latest review, the LDCC
believes total compensation for each of the named executive
officers is reasonable.
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The following table shows the target total direct compensation
opportunity that the LDCC approved for fiscal year 2020. The table
states the annual salary of each named executive officer as of
January 1, 2020. The table includes the amount of the annual
short-term incentive award that could have been earned by a named
executive officer meeting target performance goals relating to NFE,
our Commitment to Stakeholders and individual leadership described
below. Annually, the LDCC uses long-term equity incentive awards as
a component of the named executive officers’ compensation. The
table below shows the target value of long-term equity incentive
awards granted to each of the named executive officers in fiscal
year 2020.
Name
|
Salary
($)
|
Target Annual
Short-Term
Incentive Amount(1)
($)
|
Long-Term
Equity
Incentive Value(2)
($)
|
Target
Total Direct
Compensation
($)
|
Stephen D. Westhoven
|
750,000
|
750,000
|
1,488,418
|
2,988,418
|
Patrick J. Migliaccio
|
400,000
|
240,000
|
496,152
|
1,136,152
|
Nancy A. Washington
|
375,000
|
187,500
|
367,185
|
929,685
|
Amanda E. Mullan
|
330,004
|
165,002
|
337,368
|
832,374
|
Amy Cradic
|
320,000
|
192,000
|
297,693
|
809,693
|
(1)
The target annual short-term incentive amount for Mr. Westhoven was
100 percent of annual salary. For Mr. Migliaccio and Ms. Cradic,
the target short-term incentive amount was 60 percent of annual
salary. For Mses. Mullan and Washington, the target amount was 50
percent of annual salary.
(2)
Represents grant date fair market value of long-term equity
incentive awards granted in fiscal year 2020. For more information
regarding the grant of long-term equity incentive awards in fiscal
year 2020, please see “Long-Term Equity Incentive Awards” on page
47.
|
Below is a graphic representation of the components of the fiscal
year 2020 total target direct compensation opportunity for each
named executive officer, which highlights that for each of the
named executive officers, a substantial part of compensation is
at-risk and subject to the named executive officer and the Company
meeting certain performance goals and/or changes in Company stock
price.
FISCAL YEAR 2020 TOTAL TARGET DIRECT COMPENSATION
OPPORTUNITY
68 percent of our NEOs total target direct compensation opportunity
for fiscal year 2020 was at-risk, including 75 percent of Mr.
Westhoven’s total.
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Components of Compensation
Base Salary
Base salary increases for our named executive officers, with the
exception of our Chief Executive Officer, are recommended by our
Chief Executive Officer and subject to review and approval by the
LDCC and the Board. Base salary increases for our Chief Executive
Officer are recommended by the LDCC and approved by the independent
members of the Board. In setting the base salary level of each
executive officer, the LDCC considers marketplace compensation data
compiled and presented by its independent compensation consultant,
as well as the executive’s experience level, demonstrated
capabilities, time and placement in position, our geographic
region, and the actual performance of the Company and the
executive. No particular weight is assigned to any one factor. In
November 2019, the Board approved increases in base salary for
three named executive officers (other than Mr. Westhoven and Ms.
Cradic) of up to 6.4 percent, effective January 1, 2020. Mr.
Westhoven did not receive any increase in his base salary in fiscal
year 2020, as his base salary was set in September 2019, when he
was named Chief Executive Officer, effective October 1, 2019. Ms.
Cradic’s base salary was increased 4.9 percent in November 2019,
and then an additional 18.5 percent in March 2020, due to her
promotion to her role as Senior Vice President and Chief Operating
Officer of Non-Utility Businesses, Strategy and External
Affairs.
Name
|
Base Salary as of
10/1/2019 ($)
|
Increase
(%)
|
Increase
($)
|
Base Salary as of
1/1/2020
|
Stephen D. Westhoven
|
750,000
|
0
|
0
|
750,000
|
Patrick J. Migliaccio
|
375,950
|
6.4
|
24,050
|
400,000
|
Nancy A. Washington
|
357,500
|
4.9
|
17,500
|
375,000
|
Amanda E. Mullan
|
320,392
|
3.0
|
9,612
|
330,004
|
Amy Cradic
|
257,500
|
24.3
|
62,500
|
320,000
|
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Annual Short-Term Incentive Awards
We maintain a strong link between performance and pay within our
executive compensation program through emphasis on incentives and
utilization of financial, operational and leadership measures,
which we believe are key drivers of long-term value creation for
shareowners. The LDCC reviews and approves the annual performance
objectives for the Company and our named executive officers at the
start of each fiscal year. In November 2019, the LDCC approved the
2020 OIP. Our objectives for the 2020 OIP considered the results of
a review of our compensation programs by FW Cook and their
accompanying recommendations.
Our objectives for the 2020 OIP were to maintain a line of sight
for each executive officer by providing them with an understanding
of their individual objectives and how they could be achieved based
on areas that they impact, to continue the linkage to corporate
results, and to provide flexibility to determine awards based on
qualitative performance assessments.
The 2020 OIP sought to motivate our senior executives by rewarding
them when our annual financial and operational performance goals
and their individual performance goals were met or exceeded. After
the end of fiscal year 2020, the Chief Executive Officer and the
LDCC evaluated the degree to which the Company and our named
executive officers met or exceeded their respective goals. Under
the 2020 OIP, the Chief Executive Officer recommends the annual
short-term incentive awards to the LDCC for executive officers
other than himself.
2020 OIP Annual Short-Term Incentive Awards
Under the 2020 OIP, the performance hurdle approved by the LDCC for
the named executive officers’ annual short-term incentive awards in
November 2019 was NFE of $147.8 million (“2020 OIP Performance
Hurdle”), which was 75 percent of the NJR target NFE amount for
fiscal year 2020 of $197.1 million. An explanation of NFE is
provided directly below under “Net Financial
Earnings Component.” No awards would be paid to
officers under the 2020 Plan unless the 2020 OIP Performance Hurdle
was achieved.
In addition, under the 2020 OIP, based upon the recommendations of
the Chief Executive Officer, the LDCC reserves the ability to
modify, based upon its qualitative assessment, any annual
short-term incentive award payable, subject to the maximum payout
limit. Our Chief Executive Officer, subject to LDCC approval, also
may recommend special recognition awards to named executive
officers (other than the Chief Executive Officer) who have made
significant contributions and have demonstrated a sustained level
of outstanding performance. The LDCC may approve special
recognition awards to the Chief Executive Officer. The Chief
Executive Officer engages in extensive discussions, evaluation and
review of his recommendations with the LDCC to reach a consensus on
the annual short-term incentive awards.
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The Chief Executive Officer uses the criteria set forth in the 2020
OIP to guide his recommendations of the annual short-term incentive
awards for the named executive officers, other than himself, to the
LDCC. The criteria that guides the Chief Executive Officer’s
recommendations are: (I) NFE, (II) Commitment to Stakeholders and
(III) Leadership. Each named executive officer’s annual short-term
incentive award is based 50 percent on our NFE, 30 percent on the
named executive officer achieving an individual leadership
component, and 20 percent on the Company meeting the goals of an
overall Commitment to Stakeholders component. These criteria are
used to balance our focus on affordability with the use of
non-financial metrics that are leading indicators of the creation
of long-term shareowner value. While these criteria serve as
guidelines, the Chief Executive Officer has discretion to recommend
a modification of the actual awards to the LDCC. The target
percentage of base salary for the annual short-term award
opportunity for each of our named executive officers is set forth
below.
Name
|
Target Annual Short-Term Incentive
Award Opportunity
|
Stephen D. Westhoven
|
100%
|
Patrick J. Migliaccio
|
60%
|
Nancy A. Washington
|
50%
|
Amanda E. Mullan
|
50%
|
Amy Cradic
|
60%
|
Actual fiscal year 2020 short-term incentive award payments under
the 2020 OIP, if earned, could range from 0 percent up to 150
percent of this targeted amount for each of the named executive
officers. Amounts payable under the 2020 OIP (in excess of target)
could be paid in full, or in part, in the form of cash, restricted
stock or deferred retention stock based on our Chief Executive
Officer’s recommendation and subsequent approval by the LDCC. The
actual payouts of the 2020 annual short-term incentive awards are
described in the section of this Proxy Statement entitled — “Actual
Fiscal Year 2020 Short-Term Incentive Award Payouts Under the 2020
OIP,” on page 43.
ANNUAL SHORT-TERM
INCENTIVE AWARDS
Net Financial Earnings Component
NFE represents net income excluding the accounting impact and
resulting volatility in our GAAP earnings due to unrealized gains
and losses from certain derivative instruments, net of applicable
tax adjustments. NFE is not an alternative to a measure derived
from GAAP, such as earnings per share or any other GAAP measure of
liquidity or financial performance. We use NFE as a key performance
measure for compensatory purposes because we believe it strongly
encourages capital discipline and better investment decisions and
leads to enhanced cash flow and shareowner value. Our Chief
Executive Officer is our chief operating decision maker, and he
uses NFE as a measure of profit or loss in measuring the results of
our operations.
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No annual short-term incentive award is payable to our named
executive officers under the 2020 OIP unless we achieve the 2020
OIP Performance Hurdle. However, the LDCC retains the ability to
pay an annual short-term incentive award if we do not achieve the
2020 OIP Performance Hurdle as there may be circumstances under
which the LDCC may decide that an annual short-term incentive award
is still appropriate.
While an annual short-term incentive award may be paid if we
achieve the 2020 OIP Performance Hurdle, if we do not achieve at
least 80 percent of NJR’s target NFE amount (“Threshold NFE”), no
portion of the annual short-term incentive award would be paid
attributable to the NFE component. Achievement of 120 percent of
NJR’s target NFE amount (“Maximum NFE”) or greater would result in
a payout of 150 percent of the target amount for the NFE
component.
The 2020 OIP allows the LDCC to approve the exclusion of certain
expenses in excess of budgeted amounts from the calculation of NFE
used for purposes of the NFE component of the annual short-term
incentive award formula. These adjustments are designed to allow us
to make certain investments and expenditures in years with strong
financial performance at NJR without penalizing our executives. The
LDCC did not make any such adjustments for fiscal year 2020.
For fiscal year 2020, the target NFE amount for NJR was $197.1
million. Therefore, the Threshold NFE was $157.7 million. The
fiscal year 2020 NFE target was based on compound annual growth
rate consistent with our NFE guidance from fiscal year 2018 through
fiscal year 2020. NJR’s actual NFE for fiscal year 2020 was $196.2
million.
The graph below shows the Threshold NFE and the performance/payout
curve for the NFE component of the annual short-term incentive
awards. The maximum level of payout for the NFE component was 150
percent of the target amount, while achievement of Threshold NFE
would result in a payout of 50 percent of the target amount.
Payouts for performance between the stated performance levels are
interpolated.
PAYOUT FOR NFE PERFORMANCE
Leadership Component
The LDCC assesses the leadership component for our Chief Executive
Officer based on a review of his performance in comparison with his
specific individual objectives for the past fiscal year. The
leadership component of the annual short-term incentive award for
the other named executive officers is determined based on our Chief
Executive Officer’s review of established business unit initiatives
and individual performance assessments, which is then discussed and
ratified by the LDCC. As part of his review, our Chief Executive
Officer seeks and considers specific examples of how each named
executive officer met the applicable objectives. The maximum payout
for this portion of the annual short-term incentive award is equal
to 150 percent of the targeted amount.
Mr. Westhoven’s leadership objectives for fiscal year 2020
included:
•
Achieve the goals and objectives enumerated in our fiscal year 2020
business and financial plans
•
Implement the initiatives contained in our fiscal year 2020
Commitment to Stakeholders
•
Focus on implementation of NJNG’s regulatory agenda
•
Enhance our strong relationships with all key external
stakeholders
•
Continue to make progress on our senior leadership succession plan
and implementation of our long-term strategic plan
The leadership objectives of the other named executive officers for
fiscal year 2020 included:
•
Executing the initiatives contained in our fiscal year 2020
Commitment to Stakeholders
•
Creating an atmosphere that emphasizes strategic thinking and
innovation
•
Expanding their breadth of knowledge about our business to identify
and support new growth opportunities
•
Executing their job responsibilities
•
Fostering collaboration and teamwork throughout the
organization
Commitment to Stakeholders (CTS) Component
The CTS component of the annual short-term incentive award is
determined based on a subset of the 55 specific performance
measures that the LDCC views as important to our stakeholders, and
that encompass a broader range of our activities that are not
necessarily reflected in our financial metrics, including many that
relate to the sustainability efforts being undertaken by NJR. These
performance measures are company-wide and fall into the following
five categories:
•
Safe, reliable and competitively
priced service: Measures employee safety, system
safety and reliability, service reliability and competitive
pricing
•
Customer satisfaction: Measures customer care,
problem resolution, billing accuracy and timely response
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•
Quality: Measures quality of processes throughout the
organization
•
Valuing employees: Measures provision of feedback to
employees, leadership development, workforce relations and positive
work environment
•
Corporate citizenship: Measures customer and
community outreach, environmental focus, promotion of ethical
behavior and fostering of community and business relationships
The 55 performance measures were established through a process that
began early in the third quarter of fiscal year 2019. A team of
employees from across our business units selected these performance
measures spanning the five CTS categories listed above. The set of
55 performance measures was reviewed by our Chief Executive Officer
and Chief Financial Officer, who made further revisions to and
recommendations regarding the measures, which were then approved by
our Chief Executive Officer.
The LDCC and management use these metrics to measure our overall
effort to provide our customers, shareowners, communities and other
stakeholders with the highest quality service and performance. Each
of the performance measures is objective and quantifiable. For
instance, one way we measure corporate citizenship is by
calculating the total number of employee volunteer hours and
calculating the total number of people reached by our customer and
community outreach programs using data compiled at each volunteer
event during the course of the fiscal year.
For each performance measure, a performance target was developed
based upon historical company information, peer information,
comparative data, trends, and, in certain cases, benchmarks
required by state regulations. Performance targets were set by the
appropriate business unit leaders, reviewed by our Financial
Planning & Analysis Department, and approved by our senior
executive team, including our Chief Executive Officer. The
performance measures and targets were published and distributed to
our employees shortly after the beginning of fiscal year 2020.
Separately, the senior executive team recommended a subset of the
55 performance measures to the Chief Executive Officer and the LDCC
for purposes of determining the CTS component of the annual
short-term incentive award. The Chief Executive Officer and the
LDCC then reviewed the subset. The LDCC and the Board ultimately
approved a final subset of six performance measures (the
“Performance Measures”). When selecting the Performance Measures,
the Chief Executive Officer and the LDCC selected one or more
significant measures in each of the five CTS categories to
encompass a broad spectrum of our performance, thereby allowing
them to best gauge, on a company-wide basis, how well the executive
management team is fulfilling the CTS. As a result, the LDCC
considers the Performance Measures as those most useful for a broad
assessment of executive performance.
When determining the CTS component of the annual short-term
incentive award, the LDCC, in consultation with the Chief Executive
Officer, establishes threshold, target and maximum performance
levels for each of the Performance Measures. The threshold level is
based on a level of performance that was believed to be achievable,
the target level is based on a level of performance that was
believed to be aggressive, but attainable, and the maximum level is
based on a level of performance that was believed to be attainable
by achieving exceptional performance. Each of these Performance
Measures is weighted equally and an overall average measurement is
obtained. The overall average measurement reflects the average
company-wide performance on the Performance Measures (each weighted
equally) on a scale of 0 to 150 percent of the target goal and is
used for purposes of determining the CTS component of the annual
short-term incentive award. For example, if we were to meet the
maximum of 150 percent of the target goal for each of the
Performance Measures, the average company-wide performance amount
would be 150 percent.
We maintain a meaningful link between executive compensation and
our sustainability efforts to create long-term value in areas such
as human capital management, safety and corporate citizenship by
including performance metrics in our Commitment to Stakeholders
that reward executives for performance with respect to:
|
Safety
 |
Human Capital Management
 |
Corporate Citizenship
 |
Emergency response time
and DART incident rate
|
Diversity training efficacy
|
Employee Volunteer Hours
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The table below shows the six equally-weighted Performance
Measures, and indicates our threshold, target and maximum
performance levels, as well as our actual performance for each of
the Performance Measures:
*
This goal was modified below the original target due to the lack of
volunteer opportunities during the COVID-19 pandemic. The LDCC
approved the adjustment but measured performance at target as the
Company was on track to exceed the original goal as of March
2020.
As illustrated in the table above this paragraph, during fiscal
year 2020, the average company-wide performance equaled
119.2 percent of the target goals. This corresponded to a
payout of 23.8 percent of the target payout amount for the
CTS component of the annual short-term incentive award formula.
Actual Fiscal Year 2020 Annual Short-Term Incentive Award Payouts
under the 2020 OIP
In November 2020, the LDCC reviewed our NFE against the 2020 OIP
Performance Hurdle before considering whether each of the named
executive officers qualified for an annual short-term incentive
award under the 2020 OIP as set forth below:
2020 OIP Performance Hurdle:
$147.8 million NFE
2020 OIP NFE Target: $197.1
million NFE
Actual 2020 Performance: $196.2
million NFE
The LDCC reviewed the results of the 2020 OIP for
Mr. Westhoven and then reviewed the results of the 2020 OIP
for the other named executive officers based on the recommendations
made by the Chief Executive Officer. The amount of the annual
short-term incentive award approved by the LDCC for the Chief
Executive Officer and the amounts of the annual short-term
incentive awards recommended by the Chief Executive Officer to the
LDCC, and subsequently approved by the LDCC, for the other named
executive officers, are set forth on page 46.
For fiscal year 2020, the NFE, CTS and leadership components
comprised 50 percent, 20 percent and 30 percent, respectively,
of the annual short-term incentive awards under the 2020 OIP for
each of our named executive officers. This totaled payout amounts
between 98.3 and 118.3 percent of the target amount for the fiscal
year 2020 total annual short-term incentive award for each named
executive officer, calculated as set forth below.
NFE Component
For fiscal year 2020, our NFE was $196.2 million, which
corresponded to a payout amount equal to 49.4 percent of the total
target annual short-term incentive award related to the NFE
component for the named executive officers. We calculated this
payout amount as follows:
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NFE Component Calculation
(In millions)
|
|
|
|
|
|
|
|
|
|
NJR Actual
NFE
|
NJR Target
NFE
|
Percent
of Target
|
|
Percent of Target
Payout Amount
|
|
Component
Percentage
|
|
Amount Earned
as Percent of
Total Annual
Short-Term
Incentive
Award
|
|
$196.2
|
$197.1
|
99.5
|
%
|
98.9
|
%
|
50
|
%
|
49.4
|
%
|
Leadership Component
Our Chief Executive Officer submitted individual leadership
performance reviews for each of the named executive officers for
discussion and consideration by the LDCC. The LDCC reviewed each of
the named executive officer’s 2020 individual leadership results,
including results for our Chief Executive Officer, and assessed
these results against such named executive officer’s objectives.
Below is a summary of certain 2020 individual performance
highlights for each of our named executive officers that were
factored into their 2020 annual short-term incentive award and the
setting of 2020 total targeted direct compensation.
Name
|
Fiscal Year 2020 Performance Highlights
|
|
•
Delivered NFE within our guidance range despite COVID-19 pandemic,
challenges at NJRES and infrastructure delays
•
NJNG successfully completed base rate case filing, delivered over
$62 million to base rates
•
Completed Section 2 of the Southern Reliability Link (“SRL”) and
began construction of Section 1; remain on track for 2021
in-service date
•
Met or exceeded the key metrics in our Commitment to Stakeholder
Index
•
NJNG ranked #1 by J.D. Power for customer satisfaction with
residential natural gas service in the East among large utilities
for the sixth consecutive year
•
Completed the acquisition of two significant midstream assets, Leaf
River Energy Center and Adelphia Gateway
•
Developed a far-reaching sustainability agenda, including emission
reduction targets aligned with the State of New Jersey Governor’s
Energy Master Plan
•
Strengthened our commitment to diversity and inclusion with the
addition of three business resource groups, and assisted nearly
1800 nonprofit and community organizations including the NJ
Pandemic Relief Fund, Fulfill and the Interfaith Food Pantry
|
|
•
Delivered NFE within our guidance range despite the COVID-19
pandemic, challenges at NJRES, and infrastructure delays
•
Successful completion of NJR’s planned equity offering to support
the acquisition of Leaf River
•
Oversaw the financing of $200 million of New Jersey Natural Gas
first mortgage bonds at rates competitive within the
marketplace
•
Oversaw the financing of $460 million New Jersey Resources private
placement; NJR’s largest ever at rates competitive within the
marketplace and designated a portion of the proceeds as green bonds
– supporting NJR’s ESG efforts
•
Oversaw the migration of the Internal Audit program to an
outsourced model that improved audit quality at a cost neutral
level
|
|
•
Supported all aspects of the transition of the CEO and Chairman of
the Board roles
•
Led legal strategy and support to further business priorities,
including infrastructure projects, accounting issues,
sustainability and cybersecurity
•
Guided Finance and Treasury through equity issuance, financing
decisions, earnings announcements and the formation of an
investment committee
•
Supported every aspect of the Company’s business continuity plan
through the COVID-19 pandemic, including the evaluation and
interpretation of new legislation, executive orders, regulatory
requests and industry guidance
•
Oversaw all litigation, threatened litigation and claims
management
•
Ensured strong corporate governance practices at the Board and
executive level, including keeping the Board apprised of judicial,
regulatory and legislative developments
•
Provided counsel to the Board on fiduciary duties, compliance,
disclosure requirements, investor issues and policies of
institutional investors and proxy advisors
•
Managed all code of conduct enforcement, reporting and complaint
investigations
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Name
|
Fiscal Year 2020 Performance Highlights
|
|
•
Led NJR’s business continuity efforts associated with the
coronavirus pandemic in compliance with all federal and state
guidelines, including all response protocols, decision making,
internal and external communications, remote work implementation,
policy development and return to work planning
•
Implemented several cost-saving Health and Welfare plan design
strategies to reduce or avoid medical and dental plan expenses
•
Developed CEO Succession, Emergency Succession and Business Unit
Succession plans
•
Developed a multi-year Diversity and Inclusion Strategy integrating
workforce, community and supplier initiatives
•
Led personnel integration efforts related to Adelphia Gateway and
Leaf River Energy Center
•
Planned and facilitated all meetings and agenda items for the
LDCC.
|
|
•
Guided development of the strategy and five-year business plans of
the non-utility businesses to ensure achievement of financial
metrics
•
Oversaw, prioritized and advanced midstream infrastructure
development projects
•
Strategically navigated regulatory hurdles on Adelphia and SRL to
ensure required approvals were obtained and timelines were met
•
Established coordinated decision making and cross-functional
communications across non-utility businesses to improve critical
path prioritization
•
Formalized the Office of Sustainability and established the NJR
methane emissions inventory and reduction target
•
Coordinated multi-utility and stakeholder effort, which led to
critical language being included on capacity concerns adopted in NJ
2019 Energy Master Plan
•
Completed Harvard Accelerated Management Program
|
The Chief Executive Officer advised the LDCC that Mr. Migliaccio
and Ms. Cradic achieved 150 percent of their leadership goals and
that Ms. Washington and Ms. Mullan achieved 83.3 percent and 133.3
percent of their leadership goals, respectively. For Mr. Migliaccio
and Ms. Cradic, these achievements corresponded to a payout amount
equal to 45 percent of their total target annual short-term
incentive awards. For Ms. Washington and Mr. Mullan, these
achievements corresponded to 25 percent and 40 percent of their
total target annual short-term incentive awards, respectively. The
LDCC determined that Mr. Westhoven achieved 150 percent of his
leadership goals, which corresponded to a payout amount equal to 45
percent of his total target annual short-term incentive award. We
calculated the payout amount for the Leadership Component for each
named executive officer as follows:
Name
|
Percent of Target
Payout Amount for
Leadership Component
|
Component
Percentage
|
|
Amount Earned as
Percent of Total Annual
Short-Term Incentive
Award
|
|
Stephen D. Westhoven
|
150%
|
30%
|
|
45%
|
|
Patrick J. Migliaccio
|
150%
|
30%
|
|
45%
|
|
Nancy A. Washington
|
83.3%
|
30%
|
|
25%
|
|
Amanda E. Mullan
|
133.3%
|
30%
|
|
40%
|
|
Amy Cradic
|
150%
|
30%
|
|
45%
|
|
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CTS Component
We achieved 119.2 percent of our CTS targets, which corresponded to
a payout amount equal to 23.8 percent of the total target annual
short-term incentive award. We calculated this payout amount as
follows:
Actual
Performance
as a Percentage
of Commitment to
Stakeholders Target
|
|
Percent of
Target Payout
Amount
|
|
Component
Percentage
|
|
Amount Earned
as Percent of
Total Annual
Short-Term
Incentive
Award
|
|
119.2
|
%
|
119.2
|
%
|
20
|
%
|
23.8
|
%
|
Mr. Westhoven:
|
|
|
|
|
|
|
|
|
|
PAYOUT FOR NFE
|
|
PAYOUT FOR
LEADERSHIP
|
|
PAYOUT FOR CTS
|
|
A PERCENTAGE OF TARGET AMOUNT(1)
|
|
|
49.4%
|
+
|
45%
|
+
|
23.8%
|
=
|
118.3%
|
|
Mr. Migliaccio:
|
|
|
|
|
|
|
|
|
|
PAYOUT FOR NFE
|
|
PAYOUT FOR LEADERSHIP
|
|
PAYOUT FOR CTS
|
|
A PERCENTAGE OF TARGET AMOUNT(1)
|
|
|
49.4%
|
+
|
45%
|
+
|
23.8%
|
=
|
118.3%
|
|
Ms. Washington:
|
|
|
|
|
|
|
|
|
|
PAYOUT FOR NFE
|
|
PAYOUT FOR LEADERSHIP
|
|
PAYOUT FOR CTS
|
|
A PERCENTAGE OF TARGET AMOUNT(1)
|
|
|
49.4%
|
+
|
25%
|
+
|
23.8%
|
=
|
98.3%
|
|
Ms. Mullan:
|
|
|
|
|
|
|
|
|
|
PAYOUT FOR NFE
|
|
PAYOUT FOR LEADERSHIP
|
|
PAYOUT FOR CTS
|
|
A PERCENTAGE OF TARGET AMOUNT(1)
|
|
|
49.4%
|
+
|
40%
|
+
|
23.8%
|
=
|
113.3%
|
|
Ms. Cradic:
|
|
|
|
|
|
|
|
|
|
PAYOUT FOR NFE
|
|
PAYOUT FOR LEADERSHIP
|
|
PAYOUT FOR CTS
|
|
A PERCENTAGE OF TARGET AMOUNT(1)
|
|
|
49.4%
|
+
|
45%
|
+
|
23.8%
|
=
|
118.3%
|
|
|
|
|
|
|
|
|
|
|
(1) Totals have been adjusted
for rounding.
These annual short-term incentive award amounts are set forth in
the table below and in the “Non-Equity Incentive Plan Compensation”
column of the Summary Compensation Table on page 58 of this Proxy
Statement.
Name
|
Fiscal Year 2020 Annual Short-Term
Incentive Award Paid ($)(1)
|
Stephen D. Westhoven
|
887,250
|
Patrick J. Migliaccio
|
283,920
|
Nancy A. Washington
|
184,313
|
Amanda E. Mullan
|
186,947
|
Amy Cradic
|
227,136
|
(1)
These awards were paid in cash.
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Long-Term Equity Incentive Awards
Our primary objectives in granting long-term equity incentive
awards are to encourage significant ownership of our Common Stock
by management and to provide long-term financial incentives linked
directly to the long-term performance of the Company. The LDCC
believes that significant ownership of our Common Stock by senior
management is the optimal method for aligning the interests of
management and our shareowners. Our equity incentive program is
effectively designed to further this objective.
In November 2019, after consulting with FW Cook, the LDCC
determined that a portion of our executive officers’ total
compensation should continue to be delivered in a mix of
Time-Vested Restricted Stock Units and performance-based awards.
For fiscal year 2020, the Board approved, pursuant to the
recommendation of the Chief Executive Officer, the long-term
incentive program granting four types of awards:
1)
FY 2020 TSR Performance Share
Units. Performance share units that will vest, if at all, if
the total shareowner return for NJR Common Stock, measured against
an industry comparator group, meets or exceeds the threshold
performance goal over a 36-month period beginning on October 1,
2019, and ending on September 30, 2022.
2)
FY 2020 NFE Performance Share
Units. Performance share units that will vest, if at all,
based upon our cumulative NFEPS over the 36-month period beginning
on October 1, 2019, and ending on September 30, 2022.
3)
Performance-Based Restricted Stock
Units. Restricted stock units awarded to our President and
Chief Executive Officer that will vest in three equal installments
on September 30, 2020, September 30, 2021, and September 30, 2022,
if the NFEPS performance goal for the fiscal year ending September
30, 2020, is achieved, subject to his continued employment, except
under certain conditions.
4)
Time-Vested Restricted Stock Units.
Restricted stock units awarded to certain named executive officers,
other than our President and Chief Executive Officer, that will
vest in three equal installments on October 15, 2020, October 15,
2021, and October 15, 2022, subject to continued employment of the
recipient, except under certain conditions. Restricted stock units
are settled in an equal number of shares of our Common Stock.
The long-term incentive equity awards granted to the President and
Chief Executive Officer were entirely “at-risk,” consisting of
performance share units and Performance-Based Restricted Stock
Units, which could become worthless if the applicable performance
goals are not met. Approximately 51 percent of the shares that make
up the awards to our other named executive officers were “at-risk,”
while the remaining 49 percent of the awards were in the form of
Time-Vested Restricted Stock Units. Equity awards were granted to
promote retention of the named executive officers, while the FY
2020 TSR Performance Share Units benchmark our performance against
an industry comparator group over an extended period of time and
the FY 2020 NFE Performance Share Units measure our performance
against cumulative NFEPS-based goals set by the LDCC.
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The graphic on the left below shows that 100 percent of
Mr. Westhoven’s
long-term incentive plan (“LTIP”) grants in fiscal year 2020 were
performance-based equity grants. The graphic in the middle
illustrates the split in the number of shares granted between
Time-Vested Restricted Stock Unit grants and the performance-based
equity grants to our named executive officers, other than Mr.
Westhoven, in fiscal year 2020. The graphic below on the right
shows the historical mix between the Time-Vested Restricted Stock
Unit or Deferred Retention Stock grants and performance-based
awards to named executive officers between 2016 and 2020 based upon
the number of shares granted. These graphics highlight our emphasis
over the past five years on awarding a mix of performance-based
awards, such as performance share units and Performance-Based
Restricted Stock Units, and Time-Vested Restricted Stock Units or
Deferred Retention Stock awards. The actual value a named executive
officer may receive will depend upon the number of shares received
and the market price of our Common Stock at the time the awards
vest.

In designing the long-term equity incentive program, the LDCC
established the following key objectives:
•
Selecting long-term equity incentive levels and vehicles that are
competitive with our peer group
•
Distributing restricted stock units with meaningful vesting periods
to encourage retention of key executives
•
Using performance share unit awards and Performance-Based
Restricted Stock Units based upon NFEPS or relative TSR to link
compensation to Company performance criteria that are meaningful to
shareowners
•
Providing flexibility for granting awards by allowing balance among
different types of long-term equity awards that relate to the
objectives of retention and performance
With the exception of significant promotions and new hires, equity
grants, including long-term equity incentive awards, are generally
awarded at the first regularly scheduled LDCC meeting following the
conclusion of the fiscal year. The LDCC selects this timing because
it enables us to consider the prior year performance of the Company
and the participants and our expectations for the next performance
period, while also ensuring that regular awards will be made after
we publicly disclose our performance for the year. The awards are
made as early as practicable in our fiscal year to maximize the
time period for the incentives associated with the awards.
Fiscal Year 2020 (“FY 2020”) TSR Performance Share Unit
Awards
In November 2019, the LDCC approved the grant of the FY 2020
TSR Performance Share Units with performance criteria based upon
the Company’s TSR, pursuant to the 2017 Plan. As set forth in the
table below, the FY 2020 TSR Performance Share Unit awards were
granted to the named executive officers as of November 12, 2019.
Each FY 2020 TSR Performance Share Unit is equal to one share of
Common Stock. The FY 2020 TSR Performance Share Unit awards vest at
the end of a 36-month performance period beginning on October 1,
2019, and ending on September 30, 2022, based on Company TSR versus
an 18-company industry comparator group selected based on objective
screening criteria and used solely for purposes of this award,
which is listed below.
Ameren Corporation
|
Atmos Energy Corporation
|
Avista Corp.
|
Black Hills Corporation
|
CenterPoint Energy, Inc.
|
Chesapeake Utilities Corporation
|
CMS Energy Corp.
|
MDU Resources Group Inc.
|
National Fuel Gas Company
|
NiSource Inc.
|
Northwest Natural Gas Company
|
Northwestern Corporation
|
ONE Gas, Inc.
|
South Jersey Industries, Inc.
|
Southwest Gas Corporation
|
Spire Inc.
|
UGI Corporation
|
Unitil Corporation
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The industry comparator group set forth on the prior page includes
natural gas and multi-utility companies with a market
capitalization between one-fifth and five times that of NJR as of
May 31, 2019, and includes 14 of the companies that make up the
Fiscal Year 2020 peer group. FY 2020 TSR Performance Share Units
will not vest if performance during the 36-month performance period
does not meet the threshold level. If the performance meets or
exceeds the maximum expectations, 150 percent of the target number
of awarded FY 2020 TSR Performance Share Units will be earned.
Name
|
Grant Date
|
Number of FY 2020
TSR Performance
Share Units (Target)
|
Grant Date
Fair Value(1)
Target ($)
|
Stephen D. Westhoven
|
11/12/2019
|
10,037
|
363,440
|
Patrick J. Migliaccio
|
11/12/2019
|
3,346
|
121,159
|
Nancy A. Washington
|
11/12/2019
|
2,476
|
89,656
|
Amanda E. Mullan
|
11/12/2019
|
2,275
|
82,378
|
Amy Cradic
|
11/12/2019
|
2,007
|
72,673
|
(1)
Target amounts represent grant date fair value calculated in
accordance with FASB ASC Topic 718 and based upon the closing price
of our Common Stock of $40.61 on November 12, 2019, utilizing a
lattice model. The actual value of these awards will be determined
based upon the number of FY 2020 TSR Performance Share Units that
vest at the end of the performance period on September 30, 2022,
and the closing price of our Common Stock on September 30, 2022. As
described below, the “threshold” number of shares would be 40
percent of the target award amount, while the “maximum” number of
shares that may be awarded would equal 150 percent of the target
award amount.
|
The number of FY 2020 TSR Performance Share Units earned will be
determined based on the following table:
Relative TSR Percentile
|
% of Target Award to Vest
|
|
<25th
|
0
|
%
|
25th (threshold)
|
40
|
%
|
55th (target)
|
100
|
%
|
80th and above (maximum)
|
150
|
%
|
TSR is computed as follows:
TSR = (Priceend – Pricebegin + Dividends) /
Pricebegin
Pricebegin = the average of the closing share
price of the Common Stock over the 20 trading days beginning
October 1, 2019.
Priceend = the average of the closing
share price of the Common Stock over the 20 trading days ending
September 30, 2022.
Dividends = dividends or other distributions paid to
shareowners with respect to the Common Stock with ex-dividend dates
falling within the 36-month period between October 1, 2019, and
September 30, 2022 (with such dividends and other distributions
deemed reinvested in shares of Common Stock as of the ex-dividend
date based on the price of the Common Stock on the ex-dividend date
where not paid in shares of Common Stock).
Price = the closing price of the Common Stock as of the
applicable date.
Upon achievement of TSR at a percentile between any two specified
percentiles, the TSR Performance Share Units earned will be
determined by mathematical interpolation on a straight-line
basis.
Fiscal Year 2020 (“FY 2020”) NFE Performance Share Unit
Awards
In November 2019, the LDCC approved the grant of FY 2020 NFE
Performance Share Unit awards with performance criteria based upon
the Company’s cumulative NFEPS, pursuant to the 2017 Plan. Each FY
2020 NFE Performance Share Unit is equal to one share of Common
Stock. The FY 2020 NFE Performance Share Units vest, if at all,
based upon our Cumulative NFEPS (defined below) over the 36-month
period beginning on October 1, 2019, and ending on September 30,
2022. The NFEPS targets are based upon our three-year financial
plan and are designed to challenge our executives by being
aggressive, but achievable, and to encourage and reward continued
growth in our NFE on a per share basis. The cumulative NFE
Performance Share target of $6.61 represents an annual compound
growth rate consistent with our long-term NFE guidance using fiscal
year 2018 NFE per basic share as a baseline. The number of FY 2020
NFE Performance Share Units earned will be determined based on the
following table.
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Cumulative NFEPS
|
Performance Share Units Earned as a Percentage of
Target Performance Shares
|
|
Less than $5.29
|
0
|
%
|
$5.29 (threshold)
|
50
|
%
|
$6.61 (target)
|
100
|
%
|
$7.93 or Greater (maximum)
|
150
|
%
|
“NFEPS” is the NFE per basic share of Common Stock that the Company
reports on a quarterly and annual basis to the public and in its
quarterly reports on Form 10-Q and annual report on Form 10-K that
are filed with the SEC.
“Cumulative NFEPS” is the sum of the annual NFEPS for the three
fiscal years ended September 30, 2020, 2021 and 2022, calculated as
follows:
CumulativeNFEPS = NFEPSFY2020 +
NFEPSFY2021 + NFEPSFY2022
FY 2020 NFE Performance Share Units will not vest if performance
does not meet the threshold level. If the performance meets or
exceeds the maximum expectations, 150 percent of the target number
of awarded FY 2020 NFE Performance Shares will be earned. Payout
for performance between the measures for the threshold and maximum
payout will be interpolated. The earned FY 2020 NFE Performance
Share Units will be delivered to participants at the end of the
performance period, upon the determination of the LDCC that the
performance objectives have been met.
Name
|
Grant Date
|
Number of FY 2020 NFE
Performance Share
Units (Target) Granted
|
Grant Date Fair Value(1)
Target ($)
|
Stephen D. Westhoven
|
11/12/2019
|
9,234
|
374,993
|
Patrick J. Migliaccio
|
11/12/2019
|
3,078
|
124,998
|
Nancy A. Washington
|
11/12/2019
|
2,278
|
92,510
|
Amanda E. Mullan
|
11/12/2019
|
2,093
|
84,997
|
Amy Cradic
|
11/12/2019
|
1,847
|
75,007
|
(1)
Target amounts represent grant date fair value calculated in
accordance with FASB ASC Topic 718 and based upon the closing price
of our Common Stock of $40.61 on November 12, 2019. The actual
value of these awards will be determined based upon the number of
performance share units that vest at the end of the performance
period on September 30, 2022, and the closing price of our Common
Stock on September 30, 2022. The “threshold” number of shares would
be 50 percent of the target award amount, while the “maximum”
number of shares that may be awarded would equal 150 percent of the
target award amount.
|
FY 2020 Performance-Based Restricted Stock Unit Awards
In November 2019, Mr. Westhoven was granted Performance-Based
Restricted Stock Units (“PBRS”) with performance criteria based
upon NJR’s NFEPS in the fiscal year ended September 30, 2020. The
PBRS award would vest in up to three equal installments on
September 30, 2020, September 30, 2021, and September 30, 2022, if
the performance goal of $1.56 NFEPS for the fiscal year ended
September 30, 2020, was achieved.
Name
|
Number of Shares of
PBRS Granted
|
Grant Date Fair Value ($)
|
Stephen D. Westhoven
|
18,468
|
749,985
|
The performance goal of $1.56 NFEPS for NJR for the fiscal year
ended September 30, 2020, was met and certified by the LDCC on
November 9, 2020, resulting in an earnout of 18,468 shares for Mr.
Westhoven, of which 6,156 shares, including accumulated dividends,
vested on November 9, 2020. Mr. Westhoven’s remaining shares will
vest in equal installments in September 2021 and September
2022.
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FY 2020 Time-Vested Restricted Stock Units
On November 12, 2019, the LDCC approved the grant of Time-Vested
Restricted Stock Unit (“RSU”) awards to named executive officers
other than our President and CEO as recognition for performance
during fiscal year 2019 and as a retention vehicle pursuant to the
2017 Plan. These RSU awards will vest in up to three equal
installments on September 30, 2020, September 30, 2021, and
September 30, 2022. The LDCC values Time-Vested Restricted Stock
Unit awards at the fair market value of the number of shares of our
Common Stock on the date of grant.
Name
|
Number of Shares of
Time-Vested Restricted Stock Units Granted
|
Grant Date Fair Value ($)(1)
|
Patrick J. Migliaccio
|
6,156
|
249,995
|
Nancy A. Washington
|
4,556
|
185,019
|
Amanda E. Mullan
|
4,186
|
169,993
|
Amy Cradic
|
3,694
|
150,013
|
(1)
Represents full grant date fair value calculated in accordance with
FASB ASC Topic 718 and based upon the closing price of our Common
Stock of $40.61 on November 12, 2019.
|
Fiscal Year 2018 (“FY 2018”) NFE Performance Shares Vesting
In November 2017, the LDCC approved the grant of FY 2018 NFE
Performance Share Unit awards with performance criteria based upon
the Company’s cumulative NFEPS to certain of our named executive
officers pursuant to the 2017 Plan. Each FY 2018 NFE Performance
Share Unit was equal to one share of Common Stock. The FY 2018 NFE
Performance Shares were eligible for vesting at the end of a
36-month performance period beginning on October 1, 2017, and
ending on September 30, 2020, based upon our Cumulative NFEPS over
the 36-month period. As illustrated in the tables below, 114
percent of FY 2018 NFE Performance Shares vested as our actual
performance was certified by the LDCC as $6.09 per share.
Cumulative NFEPS
|
Performance Share Units Earned as a Percentage of
Target Performance Shares
|
|
Less than $4.61
|
0
|
%
|
$4.61 (threshold)
|
50
|
%
|
$5.76 (target)
|
100
|
%
|
$6.09 (actual)
|
114
|
%
|
$6.91 or Greater (maximum)
|
150
|
%
|
“NFEPS” is the NFE per basic share of Common Stock that the Company
reports on a quarterly and annual basis to the public and in its
quarterly reports on Form 10-Q and annual report on Form 10-K that
are filed with the SEC, as adjusted by the LDCC to remove the
one-time benefit to NFE from the revaluation of NJR’s deferred tax
assets and liabilities resulting from the Tax Cut and Jobs Act
(“Tax Act”).
“Cumulative NFEPS” is the sum of the annual NFEPS for the three
fiscal years ended September 30, 2018, 2019 and 2020, calculated as
follows:
CumulativeNFEPS = NFEPSFY2018 +
NFEPSFY2019 + NFEPSFY2020
Name
|
Grant Date
|
Number of FY 2018 NFE
Performance Share Units (Target) Granted
|
Number of Shares
Actually Vested
|
Stephen D. Westhoven
|
11/14/2017
|
3,306
|
3,769
|
Patrick J. Migliaccio
|
11/14/2017
|
2,236
|
2,549
|
Nancy A. Washington
|
11/14/2017
|
1,486
|
1,694
|
Amanda E. Mullan
|
11/14/2017
|
2,228
|
2,540
|
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FY 2018 TSR Performance Shares Vesting
In November 2017, the LDCC approved the grant of FY 2018 TSR
Performance Share Unit awards with performance criteria based on
TSR performance relative to an industry comparator group to certain
of our named executive officers pursuant to the 2017 Plan. Each FY
2018 TSR Performance Share Unit was equal to one share of Common
Stock. The FY 2018 TSR Performance Shares were eligible for vesting
at the end of a 36-month performance period beginning on October 1,
2017, and ending on September 30, 2020, based upon our relative TSR
versus the established comparator group used for compensation
purposes at the time of grant. As illustrated in the tables below,
none of the FY 2018 TSR Performance Shares vested. At the end of
the performance period, our actual performance, as certified by the
LDCC, was in the 6th
percentile.
Relative TSR Percentile
|
% of Target Award to Vest
|
|
6th
(actual)
|
0
|
%
|
<25th
|
0
|
%
|
25th (threshold)
|
40
|
%
|
55th (target)
|
100
|
%
|
80th and above (maximum)
|
150
|
%
|
TSR was computed as follows:
TSR = (Priceend – Pricebegin + Dividends) /
Pricebegin
Pricebegin = the average of the closing
share price of Common Stock over the 20 trading days beginning
October 1, 2017
Priceend = the average of the closing
share price of Common Stock over the 20 trading days ending
September 30, 2020
Dividends = dividends or other distributions paid to
shareowners with respect to the Common Stock with ex-dividend dates
falling within the 36-month period between October 1, 2017, and
September 30, 2020 (with such dividends and other distributions
deemed reinvested in shares of Common Stock as of the ex-dividend
date based on the price of the Common Stock on the ex-dividend date
where not paid in shares of Common Stock)
Price = the closing price of the Common Stock as of the
applicable date
Upon achievement of Total Shareowner Return at a percentile between
any two specified percentiles, any TSR Performance Share Units
earned would have been determined by mathematical interpolation on
a straight-line basis.
Name
|
Grant Date
|
Number of FY 2017 TSR
Performance Share Units (Target) Granted
|
Number of Shares
Actually Vested
|
Stephen D. Westhoven
|
11/14/2017
|
3,554
|
0
|
Patrick J. Migliaccio
|
11/14/2017
|
2,404
|
0
|
Nancy A. Washington
|
11/14/2017
|
1,598
|
0
|
Amanda E. Mullan
|
11/14/2017
|
2,395
|
0
|
Retirement Programs
Our retirement programs for senior executives provide an
opportunity for each participating executive, through long-term
service to us, to receive certain retirement benefits. Three of our
named executive officers participate in the New Jersey Natural Gas
Company Plan for Retirement Allowances for Non-Represented
Employees (the “Non-Represented Plan”), which is a trusteed
noncontributory defined benefit retirement plan. Each of our named
executive officers also participates in our NJR Employees’
Retirement Savings Plan (our 401(k) Plan), which is a trusteed
defined contribution plan. All of our non-represented employees
hired on or after October 1, 2009, are covered by an enhanced
defined contribution plan feature of our 401(k) Plan instead of the
Non-Represented Plan. These plans provide retirement benefits to
broad groups of employees and executives. Each of our named
executive officers, with the exception of Ms. Cradic, also
participates in the Savings Equalization Plan of NJR, which we
refer to as the SEP, and two of our named executive officers
participate in the Pension Equalization Plan of NJR, which we refer
to as the PEP, both of which are unfunded non-qualified plans.
These plans provide benefits that would have been made under the
Non-Represented Plan and the 401(k) Plan, but for the
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limitations on compensation and contributions imposed by Sections
401(a)(4), 401(a)(17), 401(k), 401(m) and 415 of the Internal
Revenue Code. In addition, the named executive officers and certain
other officers have supplemental retirement agreements. Under the
Supplemental Executive Retirement Plan Agreements, which we also
refer to as SERP Agreements, benefits are payable over a 60-month
period commencing at age 65. At projected retirement, the total
maximum amount payable to Mr. Westhoven under his SERP Agreement is
currently $250,000. Mr. Migliaccio and Mses. Washington, Mullan and
Cradic would each be entitled to maximum amounts of $125,000 under
their respective SERP Agreements as of September 30, 2020. These
are described more fully in the narrative following the Pension
Benefits table on page 66 of this Proxy Statement.
We also sponsor health care plans that provide post-employment
medical and life insurance benefits to union and non-union
employees who meet the eligibility requirements. Retirees must meet
certain age and service requirements to be eligible. Depending on
the year of retirement, benefits may be subject to annual
deductibles, coinsurance requirements and retiree contributions. As
of September 30, 2020, none of the named executive officers have
completed the age and service requirements to be eligible for
post-employment health coverage.
Severance Policies
Severance protection is provided to our senior executives in their
employment continuation agreements with the Company (defined below)
and only in the event that a senior executive is terminated
following a “change of control.” This protection is designed to be
fair and competitive and to aid in attracting and retaining
experienced executives. We believe that the protection we provide,
including the level of severance payments and post-termination
benefits, is appropriate and within the range of competitive
practice.
Severance protection following a change of control provides a
number of important benefits to us. First, it permits an executive
to evaluate a potential change of control while relatively free of
concern for the executive’s own situation or the need to seek
employment elsewhere. Second, change of control transactions take
time to unfold, and a stable management team can help preserve our
operations — either to enhance the value delivered to a buyer in
the transaction or, if no transaction is consummated, to ensure
that our business will continue without undue disruption. Finally,
we believe that the change of control protections in place
encourage management to consider, on an ongoing basis, whether a
strategic transaction might be advantageous to our shareowners —
even one that would vest control of the Company in a third
party.
Amended and Restated Employment Continuation Agreements
Each of our named executive officers has entered into an Employment
Continuation Agreement with the Company (“Employment Continuation
Agreement”). The Employment Continuation Agreements provide each
executive certain rights in the event that his or her employment is
terminated within two years following the occurrence of a “Change
of Control” (as defined in the agreements) (I) by us without
“Cause” (as defined in the agreements) or (II) by the executive for
“Good Reason” (as defined in the agreements). Subject to the
limitation described in the next paragraph, upon such termination
of employment, the executive, in the case of Mr. Westhoven, will
receive three times the sum or, in the case of the other named
executive officers, two times the sum, of (x) annual base salary
and (y) the average of annual bonuses paid or payable with respect
to the last three calendar years ended prior to the Change of
Control.
The Employment Continuation Agreements contain a “best net”
provision where, if any excise tax is due, NJR will not make a
gross-up payment, but instead will reduce payments to the executive
to the extent necessary to avoid the imposition of an excise tax if
such reduction will provide the executive the best net after-tax
result. If full payment to an executive will result in the best net
after-tax result, the full amount will be paid, but the executive
will be solely responsible for any potential excise tax
payment.
The Board decided to amend and restate the Employment Continuation
Agreements effective November 12, 2019, to (i) update the
restrictive covenants and (ii) update the provisions addressing the
timing of payment of benefits after the required release of claims
has become effective and irrevocable in order to maintain
compliance with Section 409A of the Internal Revenue Code, as
amended.
For purposes of the Employment Continuation Agreements, a “change
of control” generally means:
•
The acquisition, within a 12-month period, by any person or group
of beneficial ownership of securities representing 50 percent
or more of the combined voting power of our securities;
•
Within any 12-month period, the persons who were our directors
immediately before such period (the “Incumbent Directors”) and
directors whose nomination or election is approved by a majority of
the Incumbent Directors and directors previously approved by the
Incumbent Directors cease to constitute a majority of the Board;
or
•
The consummation of a merger, consolidation, share exchange,
division, sale or other disposition of all or
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substantially all of our assets, or a complete liquidation as a
result of which the shareowners immediately prior to such event do
not hold, directly or indirectly, a majority of the Voting Power
(as defined in the Employment Continuation Agreements) of the
acquiring or surviving corporation.
As a condition of the right of an executive to receive payments
under the Employment Continuation Agreement, the executive will
not, for a period of two years following termination of employment,
acting alone or in conjunction with others, directly or
indirectly:
•
Compete with the business of the Company by performing activities
that are the same as or similar to those in which he or she has
been directly engaged on behalf of us or any affiliate, during the
last two years prior to such termination, in the geographic area
where such business was conducted;
•
Induce any customers of the Company or any of our affiliates with
whom the executive has had direct contact or relationships, during
and within the scope of his or her employment with the Company, to
curtail or cancel their business with us or any such affiliate;
•
Induce, or attempt to influence, any employee of the Company or any
of our affiliates to terminate employment with the Company or any
such affiliates;
•
Solicit or assist any third party in the solicitation of any person
who during the 12 months prior to such solicitation was an employee
of the Company or any of its affiliates; or
•
Directly or indirectly use, copy, disclose, publish or otherwise
distribute confidential information or trade secrets of the
Company.
The payments that may be due under the Employment Continuation
Agreements in the event of a Change of Control are described in
more detail below in the section entitled “Potential Payments Upon
Termination or Change of Control” beginning on page 68 of this
Proxy Statement.
Deferred Compensation
To enhance the competitiveness of our executive compensation
program and increase our ability to attract and retain qualified
key personnel necessary for our continued success and progress, we
offer an Officers’ Deferred Compensation Plan to provide a select
group of management and highly compensated employees of the Company
and its affiliates a means to defer receipt of specified portions
of compensation and to have such deferred amounts treated as if
invested in specified investment vehicles. Participants in the
Officers’ Deferred Compensation Plan may defer the receipt of
compensation or awards, which may be in the form of cash, stock or
stock-denominated awards, including salary, annual bonus awards,
long-term awards and compensation payable under other plans and
programs, employment agreements or other arrangements. Deferrals
under the Officers’ Deferred Compensation Plan must comply with the
requirements of Section 409A of the Internal Revenue Code, U.S.
federal income tax laws and regulations of the U.S. Treasury
Department. Although all of the named executive officers are
eligible to participate in the Officers’ Deferred Compensation
Plan, none of our named executive officers have any amounts in such
plan.
Other Benefits
The LDCC believes employee benefits are an essential component of
our competitive total compensation package. These benefits are
designed to attract and retain our employees. The named executive
officers may participate in the same benefit plans as our salaried
employees, which include medical, health and dental insurance,
long-term disability insurance, accidental death and disability
insurance, travel and accident insurance, and our 401(k) Plan. As
part of the 401(k) Plan, we generally match 80 percent of the first
six percent of compensation contributed by the employee into the
401(k) Plan, subject to the Internal Revenue Code and our 401(k)
Plan limits. The matching contribution is limited to 70 percent for
represented employees of NJRHS. Additionally, we contribute between
3.5 and 4.5 percent of base compensation, depending upon years of
service, into the 401(k) Plan on behalf of employees who are not
eligible to participate in the defined benefit plans. We have
disclosed all Company matches for our named executive officers in
the column labeled “All Other Compensation,” in the Summary
Compensation Table on page 58, and separately disclosed each amount
in Footnote 5 to that table on page 59 of this Proxy Statement.
The LDCC provides our executives, including named executive
officers, with additional benefits that we believe provide security
for current and future needs of the executives and their families
and therefore assist in attracting and retaining them. These other
benefits are structured to be within the competitive range relative
to our peer group. The additional benefits we provide, or have
provided to some of our executives, consist of the following, and
are included in the amounts set forth in the column labeled “All
Other Compensation” in the Summary Compensation Table on page 58,
and separately disclosed in Footnote 5 to that table on page 59 of
this Proxy Statement: car allowance, preventative health
maintenance program and executive insurance program. In addition to
the cash and equity compensation discussed above, we provide our
Chief Executive Officer and the other named executive officers
with
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the same benefits package available to all of our salaried
employees. The package includes:
•
Health and dental insurance (portion of costs)
•
Long-term disability insurance
•
Participation in our 401(k) Plan, including company matching
contributions
•
Participation in our Non-Represented Plan, which is available to
all non-union employees who were employed before October 1,
2009
•
Matching certain charitable contributions
For business purposes, it may be appropriate for certain members of
senior management to belong to a golf or social club so that such
executives have an appropriate entertainment forum for customers
and appropriate interaction with their communities.
Share Ownership Guidelines
The LDCC believes it is important to align the interests of senior
management with our shareowners. While the LDCC considers this
principle when determining the appropriate mix of base salary,
annual short-term incentive awards and long-term equity incentive
awards, the LDCC also established share ownership guidelines that
encourage the accumulation and retention of our Common Stock.
We believe that executive ownership is important to create a
mutuality of interest with shareowners. Therefore, executive
officers are required to meet established share ownership
levels.
These guidelines are subject to annual review by the LDCC and no
changes were made in fiscal year 2020.
Under the share ownership guidelines, officers of the Company are
required to own shares of our Common Stock with a total share value
as set forth in the following table.
Position
|
Minimum Common Stock
Ownership Requirement
|
Chief Executive Officer (CEO)
|
5 x Base Salary
|
Chief Operating Officer (COO)(1)
|
4 x Base Salary
|
Section 16 Officers (other than CEO and NJR COO)
|
3 x Base Salary
|
Other Officers
|
1 x Base Salary
|
(1)
The COO refers to the NJR COO rather than the COO of our
non-utility businesses. NJR does not currently have a COO.
|
Until an officer achieves the minimum share ownership under the
guidelines described above, he or she must retain 50 percent of all shares awarded
to him or her under the Company’s stock award and incentive plans,
net of the number of shares the officer has applied to the payment
of taxes on such awards. Compliance with these guidelines will be
determined annually on October 1 using the average quarter-end
closing price of the Company’s Common Stock for the most recently
completed fiscal year. Once the minimum stock ownership threshold
is achieved, a named executive officer will remain in compliance
with the guidelines despite future changes in stock price and base
salary, as long as his or her holdings do not decline below the
number of shares at the time the minimum stock ownership
requirement was met.
Each of the named executive officers was in compliance with these
share ownership guidelines as of September 30, 2020, and all of our
officers either meet the minimum share ownership requirements under
the guidelines or have met the retention requirements applicable to
those who do not yet meet the minimum share ownership
requirements.
Compensation Recoupment (“Clawback”) Policy
Effective November 12, 2019, we amended our Clawback Policy, which
applies to incentive compensation awarded to executive officers, to
expand coverage to certain conduct that results in material
financial or reputational harm to the Company.
Under the revised Clawback Policy, in the event of (a) an
accounting restatement resulting from material noncompliance with
financial reporting requirements under the applicable securities
laws or (b) specified detrimental conduct that, in the discretion
of the LDCC, is likely to cause or has caused material financial or
reputational harm to the Company, incentive compensation may be
recouped from the named executive officers or others covered by the
Clawback Policy.
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Anti-Hedging and Pledging Policy
To ensure alignment of the interests of our shareowners, directors
and executive officers, including our named executive officers, the
Company’s Code of Conduct does not permit directors, officers or
employees to engage in short-term or speculative transactions
involving the Company’s securities, including short sales,
publicly-traded options, or hedging transactions. Directors,
officers and certain employees, as designated by the Company’s
Senior Vice President and General Counsel, are prohibited from
pledging the Company’s securities as collateral.
United States Federal Income Tax Limits on Deductibility
Section 162(m) of the Internal Revenue Code generally sets a limit
of $1 million on the amount of compensation that we may deduct for
federal income tax purposes in any given year with respect to the
compensation of each of our named executive officers. We consider
the impact of the deduction limit under Section 162(m) when
developing and implementing our executive compensation programs. We
intend to design our executive compensation arrangements to be
consistent with our best interests and the interests of our
shareowners. We believe that it is important to preserve
flexibility in administering compensation programs to promote
various corporate goals. Accordingly, we have not adopted a policy
that all compensation must be deductible under Section 162(m) of
the Internal Revenue Code. Amounts paid under our compensation
programs may not be deductible as the result of Section 162(m).
Advisory Votes on Executive Compensation
As required by the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 and the subsequent rules and regulations
promulgated by the SEC, we are including a non-binding advisory
resolution approving the compensation of our named executive
officers. The vote on this proposal will be non-binding on the
Board and us and will not be construed as overruling a decision by
the Board or us. This vote will not create or imply any change to
our fiduciary duties or create or imply any additional fiduciary
duties for the Board or us. However, the LDCC values the opinions
that our shareowners express in their votes and will consider the
outcome of the vote when making future decisions on executive
compensation, as it deems appropriate.
At the 2020 Annual Meeting of Shareowners, 90.3 percent of the
votes cast on the proposal were voted for the non-binding advisory
resolution approving the compensation of our named executive
officers. In light of that result, the Board of Directors
implemented similar objectives, program and rationale for the
compensation of our named executive officers in fiscal year 2020,
as disclosed in the Compensation Discussion and Analysis, the
compensation tables, and the accompanying narrative as set forth in
this Proxy Statement.
In addition, at the 2018 Annual Meeting of Shareowners, a large
majority of our shareowners approved, on a non-binding basis, the
holding of the non-binding vote on the compensation of our named
executive officers on an annual basis (“say-on-pay frequency”). The
next say-on-pay frequency advisory vote will be held at our 2024
Annual Meeting. As previously disclosed, the Board and management
determined to implement an annual advisory vote on the compensation
of our named executive officers. As a result, we are including the
non-binding advisory resolution approving the compensation of our
named executive officers again in this Proxy Statement. See Item 2
on page 72 of this Proxy Statement.
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Report of the Leadership Development and Compensation
Committee
The LDCC has reviewed and discussed the Compensation Discussion and
Analysis section of this Proxy Statement with management and, based
on such review and discussion, the LDCC recommends to the Board
that it be included in this Proxy Statement.
Sharon C. Taylor (Chair)
Donald L. Correll
M. William Howard, Jr.
Jane M. Kenny
David A. Trice
Dated: November 9, 2020
The “Report of the Leadership Development and Compensation
Committee” will not be deemed incorporated by reference by any
general statement incorporating this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended, except to the extent
that we specifically incorporate this information by reference, and
will not otherwise be deemed filed under such Acts.
Compensation Risk Assessment
As part of its oversight of our executive compensation program, the
LDCC considers the impact of our executive compensation program,
and the incentives created by the compensation awards that it
administers, on our risk profile. In addition, we review all our
compensation policies and procedures, including the incentives they
create and factors that may reduce the likelihood of excessive
risk-taking, to determine whether they present a significant risk
to us. At the LDCC’s direction, FW Cook provided the LDCC with a
risk assessment of our executive compensation policies and
practices. Based on its independent assessment, FW Cook concluded
that our compensation policies and practices for executives do not
create risks that are reasonably likely to have a material adverse
effect on us.
The LDCC reviewed the findings of its own assessment, together with
the FW Cook assessment, and concluded that our compensation
programs are designed with the appropriate balance of risk and
reward in relation to our overall business strategy and that the
balance of compensation elements discourages excessive risk-taking.
The LDCC, therefore, determined that the risks arising from our
compensation policies and practices for employees are not
reasonably likely to have a material adverse effect on us. The LDCC
will continue to consider compensation risk implications while
deliberating on the design of our executive compensation programs.
In its discussions, the LDCC considered the attributes of our
programs, including:
•
Appropriate pay philosophy, peer group and market positioning in
light of NJR’s business model;
•
Cash compensation is not overly weighted toward short-term
incentives and there is an appropriate balance of cash and equity
opportunity in the overall program to align management and
shareowner interests;
•
Short- and long-term incentives focused on profitability, with
consideration of other critical stakeholder issues;
•
Performance goals are set to levels that encourage strong
performance and that can support the resulting compensation
expense, but are based upon operating levels that can be attained
without taking inappropriate risks or deviating from approved
strategies. In light of the overall balance of the program, the
performance goals discourage pursuit of excessively risky business
strategies;
•
Long-term incentives have multi-year vesting and/or performance
periods (three years) to ensure a long-term focus and appropriate
balance against short-term goals. The relative TSR metric for the
TSR performance share units does not require highest-of peers
performance for maximum payout. Realized value from long-term
incentives is linked to absolute and relative stock price
performance;
•
Short- and long-term incentive payouts are generally capped at 150
percent of target;
•
Incentive pool for NJRES plan participants is uncapped; however,
the following risk mitigators are in place: (I) incentive pool
funding and allocation of awards are subject to LDCC discretion,
(II) practice has been to pay at least 50 percent of incentive in
Deferred Retention Stock awards for executive officers and other
key employees, and (III) awards are subject to a clawback
provision;
•
Independent LDCC oversight, with LDCC discretion to reduce
incentives based on subjective evaluation of individual
performance; and
•
Substantial share ownership guidelines, anti-hedging/pledging
policies, and a comprehensive clawback policy.
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Executive Compensation
Summary Compensation Table
The following table provides information relating to total
compensation for the fiscal years ended September 30, 2020, 2019
and 2018, as applicable. The individuals named below include our
Chief Executive Officer for fiscal year 2020, and our other named
executive officers (as defined on page 31).
Name and
Principal Position
|
Year
|
Salary(1)
($)
|
Stock
Awards(2)
($)
|
Non-Equity
Incentive Plan
Compensation(3)
($)
|
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings(4)
($)
|
All Other
Compensation(5)
($)
|
Total
($)
|
Stephen D. Westhoven
President and Current Chief Executive Officer
|
2020
|
755,776
|
1,488,418
|
887,250
|
974,980
|
64,253
|
4,170,677
|
2019
|
501,924
|
1,109,030
|
428,625
|
695,871
|
45,702
|
2,781,152
|
2018
|
419,044
|
602,801
|
432,863
|
115,447
|
42,777
|
1,612,932
|
Patrick J. Migliaccio
Senior Vice President and Chief Financial Officer
|
2020
|
397,623
|
496,152
|
283,920
|
193,992
|
30,414
|
1,402,101
|
2019
|
374,869
|
648,991
|
257,827
|
189,459
|
26,105
|
1,497,251
|
2018
|
332,278
|
407,744
|
307,695
|
39,524
|
25,312
|
1,112,553
|
Nancy A. Washington
Senior Vice President and General Counsel
|
2020
|
373,916
|
367,185
|
184,313
|
—
|
35,675
|
961,089
|
2019
|
351,375
|
574,173
|
204,311
|
—
|
36,748
|
1,166,607
|
2018
|
319,230
|
270,994
|
236,438
|
—
|
25,208
|
851,870
|
Amanda E. Mullan
Senior Vice President and Chief Human Resources Officer
|
2020
|
330,368
|
337,368
|
186,947
|
—
|
26,851
|
881,534
|
2019
|
319,471
|
565,695
|
183,104
|
—
|
35,141
|
1,103,411
|
2018
|
308,971
|
406,268
|
226,296
|
—
|
23,836
|
965,371
|
Amy Cradic
Senior Vice President and Chief Operating Officer of Non-Utility
Businesses, Strategy and External Affairs
|
2020
|
297,131
|
297,693
|
227,136
|
—
|
19,463
|
841,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Salary amounts include cash compensation earned by each named
executive officer during fiscal years 2020, 2019 and 2018, as
applicable, as well as any amounts earned in fiscal years 2020,
2019 and 2018, as the case may be, but contributed under our 401(k)
Plan.
(2)
The amounts included are the grant date fair value of the stock
awards granted in fiscal years 2020, 2019 and 2018, determined
under share-based compensation accounting guidance in accordance
with FASB ASC Topic 718. There were no options granted to the named
executive officers in fiscal years 2020, 2019 and 2018. These
amounts reflect the aggregate grant date fair value for these
awards. For the FY 2020 TSR Performance Share Unit awards and the
FY 2020 NFE Performance Share Unit awards granted in fiscal year
2020 to the named executive officers pursuant to the 2017 Plan that
are subject to performance conditions, the values in the Summary
Compensation Table above reflect the probable outcome of such
performance conditions. The grant date fair values of the FY 2020
NFE Performance Share Unit awards, assuming the highest level of
performance conditions for each of the named executive officers,
are: Mr. Westhoven: $562,489; Mr. Migliaccio: $187,496; Ms.
Washington: $138,764; Ms. Mullan: $127,495; and Ms. Cradic:
$112,510. With respect to the FY 2020 TSR Performance Share Units,
the maximum amount that could be earned based upon the grant date
fair value for each of the named executive officers is Mr.
Westhoven: $545,160; Mr. Migliaccio: $181,738; Ms. Washington:
$134,484, Ms. Mullan: $123,567; and Ms. Cradic: $109,010. The
amounts in this column include the grant date fair value of
Deferred Retention Stock Units the named executive officers
received in fiscal year 2019, in addition to their fiscal year 2018
annual incentive awards as follows: Mr. Westhoven: $300,019;
Mr. Migliaccio: $199,981; Ms. Washington: $199,981; and Ms.
Mullan: $199,981. The amounts in this column include the grant date
fair value of PBRS to Mr. Westhoven in the amount of $749,985.
Assumptions used in the calculation of the foregoing award amounts
are included in Note 10, Note 10 and Note 9 to the consolidated
financial statements included in our Annual Reports on Form 10-K
for the fiscal years ended September 30, 2020, 2019, and 2018,
respectively, and incorporated by reference into this Proxy
Statement. Information on individual equity awards granted to the
named executive officers in fiscal year 2020 is set forth in the
section entitled “Grants of Plan-Based Awards” on page 60 of this
Proxy Statement. Information on the vesting of restricted stock and
deferred retention stock units in fiscal year 2020 is set forth in
the section entitled “Stock Vested” on page 65 of this Proxy
Statement.
(3)
The amounts represent cash awards to the named executive officers
under our performance-based annual incentive plans for fiscal years
2020, 2019 and 2018, which is discussed in the section entitled
“Annual Short-Term Incentive Awards” beginning on page 39 of this
Proxy Statement. While the amounts for all of the named executive
officers were earned for fiscal years 2020, 2019 and 2018
performance, as the case may be, they were not paid to the named
executive officers until November 2020, November 2019 and November
2018, respectively.
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(4)
The amounts shown in this column for Messrs. Westhoven and
Migliaccio represent the change in the actuarial present value of
the accumulated benefits under all of our pension plans for the
named executive officers. For those named executive officers, the
change in the pension value was calculated using the same actuarial
assumptions, with the exception of turnover, retirement, disability
and pre-retirement mortality as used to compute the accumulated
benefit obligations as of September 30, 2020, 2019, and 2018, as
stated in our Annual Report on Form 10-K for the years ended
September 30, 2020, 2019, and 2018, respectively. These assumptions
included an interest rate of 4.35 percent as of September 30, 2018,
3.35 percent as of September 30, 2019, and 2.92 percent as of
September 30, 2020. The present value of the benefits has been
calculated assuming the named executive officers stay in employment
until age 60, which is the earliest age an executive could collect
a benefit without reduction for early retirement. The change in the
actuarial present value of the accumulated pension benefits under
our pension plan for the fiscal year ended September 30, 2020, reflects (i) the
value of benefits accrued this fiscal year plus (ii) the increase
in value of previously accrued benefits due to time plus (iii) the
change in value for benefits accrued in all prior years of
employment due to change in interest rate. For the named executive
officer group as a whole, there was a 33 percent increase
attributable to the increase in benefits to be paid and a 13
percent increase due to the change in interest rate from 3.35
percent to 2.92 percent. The largest contribution to the change in
fiscal year 2019 was the change in interest rate, and the largest
contribution to the change in fiscal year 2018 was the value of
benefits accrued during that year. The interest rate used to
determine the present value is set each year in accordance with
GAAP to match the yield of AA bonds with similar duration at the
end of the fiscal year and is reviewed by our independent actuaries
and accountants.
(5)
The table below reflects the types and dollar amounts of
perquisites, additional compensation, and other personal benefits
provided to the named executive officers during fiscal year 2020.
For purposes of computing the dollar amounts of the items listed
below, we used the actual out-of-pocket costs to us of providing
the perquisite or other personal benefit to the named executive
officer. The named executive officers paid any taxes associated
with these benefits without reimbursement from us. Each perquisite
and personal benefit included in the table below is described in
more detail in the narratives immediately following the table.
|
All Other Compensation Table
Name
|
Car Allowance
($)(a)
|
Company-Paid
Insurance
Premiums
($)(b)
|
401(k) Plan/
SEP Matching
Contribution
($)(c)
|
Charitable
Matching
Contribution
($)(d)
|
Total
($)
|
Stephen D. Westhoven
|
7,000
|
6,659
|
34,594
|
16,000
|
64,253
|
Patrick J. Migliaccio
|
7,000
|
1,959
|
18,755
|
2,700
|
30,414
|
Nancy A. Washington
|
7,000
|
4,127
|
17,548
|
7,000
|
35,675
|
Amanda E. Mullan
|
7,000
|
3,839
|
15,512
|
500
|
26,851
|
Amy Cradic
|
7,000
|
2,964
|
9,199
|
300
|
19,463
|
(a)
We provide a car allowance to certain executive officers, including
our named executive officers. The purpose of the car allowance is
to make our compensation program competitive with other companies’
programs and because cars are predominantly used for business
purposes.
(b)
The amounts listed represent aggregate premiums we paid in fiscal
year 2020 for our group life insurance policy, for a Directors and
Officers Travel Insurance Policy, and an insurance policy that is
used to support our obligations under the SERP agreements with each
of the named executive officers.
(c)
Each named executive officer is eligible to participate in our
401(k) Plan, which offers them an opportunity to defer income and
receive matching contributions from us subject to certain limits.
The amounts set forth in the table above represent Company
contributions under our 401(k) Plan and our SEP for fiscal year
2020. Information about the 401(k) Plan and SEP is set forth in the
section entitled “Pension Benefits” beginning on page 66 of this
Proxy Statement.
(d)
Each named executive officer is eligible to participate in our
matching gifts programs through which we match employees’
contributions to certain charities and qualified educational
institutions.
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Grants of Plan-Based Awards
The following table presents information regarding grants of
plan-based awards to the named executive officers during the fiscal
year ended September 30, 2020.
Name
|
Grant Date
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards(2)
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(3)
(#)
|
Grant
Date Fair
|